Wrap Text
Unaudited interim results for the six months ended 30 June 2018
Brimstone Investment Corporation Limited
ISIN Number: ZAE000015277 | Share Code: BRT
ISIN Number: ZAE000015285 | Share Code: BRN
Company Registration Number: 1995/010442/06
(Incorporated in the Republic of South Africa)
("Brimstone" or "the Company" or "the Group")
Brimstone: UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018
SIGNIFICANT EVENTS
- Operating profit increased by 18%
- R73 million increase in equity accounted earnings
- Downward revaluation of Life Healthcare, Equites and STADIO of
R421 million
- Sea Harvest's acquisition of Viking Fishing and Aquaculture concluded
on 2 July 2018
COMMENTARY
The Company reported a loss for the period under review of R227.1 million
compared to a loss of R201 million in the comparative period. The current
period loss is mainly due to the downward revaluation of listed investments,
which offset a reduced loss from subsidiary Lion of Africa Insurance
Company, an increase in dividend income and an increase in equity accounted
earnings.
Gross assets decreased to R7.8 billion, from R8.7 billion at 31 December
2017. Intrinsic net asset value decreased to R4.0 billion from R4.3 billion
at 31 December 2017.
Brimstone Portfolio
Subsidiaries
Sea Harvest (54.9%)
The Sea Harvest Group delivered headline earnings for the six months ended
30 June 2018 of R111.3 million, an increase of 1% compared to the same
period last year (2017: R110.6 million), after absorbing transaction costs
relating to the Viking acquisition. Group revenue for the period decreased
by 5% to R1.0 billion (2017: R1.1 billion), impacted by the 5% reduction in
Total Allowable Catch in South Africa and the delayed start to the prawn
fishing season in Australia. Gross profit for the period increased by 4% to
R368 million (2017: R354 million) and the gross profit margin improved to
36.6% (2017: 33.4%), benefiting from further efficiency gains across both
the fleet and factory operations, an increase in higher margin export
volumes, price increases and a weaker Rand. Group operating profit before
joint venture and associate income for the period of R165.0 million was 2%
lower than the same period last year (2017: R167.7 million), impacted by the
lower revenue and the Viking transaction costs referred to above. Operating
profit before net finance cost and taxation of R166 million was 18% lower
than the prior period (2017: R205.6 million), as a result of a number of
one-off, non-cash benefits recorded in the first half of 2017, including a
gain on disposal of interest in joint venture of R23 million and a fair
value gain on the initial measurement of an option of R14 million. Profit
after tax of R111 million for the period decreased by 18% compared to the
prior period (2017: R135 million), in line with the decrease in operating
profit before net finance cost and taxation. On 2 July 2018, the acquisition
of the business of Viking Fishing as part of a BBBEE consortium, and 51% of
the shares of Viking Aquaculture, became effective. This is a
transformational transaction for the Sea Harvest Group and will be earnings
accretive from the outset. During the period Sea Harvest achieved Level 1
BBBEE contributor status, making it one of the most transformed businesses
in the fishing sector.
Lion of Africa Insurance Company (Lion of Africa) (100%)
Lion of Africa reported a reduced net loss for the six months ended 30 June
2018 of R7.7 million compared to a loss of R38 million for the same period
last year. This is a significant improvement from the prior year, which is
as a result of the continuous remedial action. The claims ratio has improved
to 64.0% compared to the loss ratio of 71.0% in the prior period. In
addition to these improved claims ratios, gross written premium has
increased by 55.4% on the prior period results.
House of Monatic (100%)
Revenue decreased by 12% to R78 million for the first six months, resulting
in a loss of R17.9 million compared to a loss of R17.5 million in the
comparative period, mainly due to the poor retail climate adversely
affecting sales volumes. This together with changes in the sales mix
resulted in reduced levels of production, shorter production runs and the
under-recovery of fixed factory overheads.
ASSOCIATES AND JOINT VENTURES
Oceana (17%)
Brimstone holds 23 million shares in Oceana with a market value of R1.8
billion. Oceana's share price closed at R79.00 per share, down from R85.00
per share at 31 December 2017. Brimstone accrued R25.8 million in dividends
during the period under review and recorded R46.2 million in equity
accounted earnings based on Oceana's reported six months earnings to
31 March 2018. An amount of R101 million was recorded as Brimstone's
share of Oceana's other comprehensive loss, which is largely attributable
to the decrease in Oceana's foreign currency translation reserves.
Grindrod (6.1%)
Brimstone accounts for its share of the results in the Consortium SPV as a
joint venture. Brimstone wrote its investment in the consortium down to nil
at 31 December 2017 as the value of the debt of the Consortium SPV exceeded
the value of the investment, which position remained unchanged at 30 June
2018. During the period under review Grindrod Limited effectively unbundled
its shipping business to its shareholders such that Grindrod shareholders
received 2.5 Grindrod Shipping Holdings Limited ("GSH") shares for every 100
Grindrod Limited shares held. As a result, the Consortium SPV received
1.6 million GSH shares, representing a shareholding in GSH of 8.4%, with
Brimstone's effective shareholding in GSH being 6.1%. GSH is a Singapore
registered company and was listed on the Nasdaq on Monday, 18 June 2018 with
a secondary listing on the JSE which commenced trading on Tuesday, 19 June
2018.
Aon Re Africa (18%)
Brimstone, after adjusting for the non-controlling shareholder's share,
received a dividend of R5.1 million from Aon Re Africa and recorded R6.3
million in equity accounted earnings during the period under review.
South African Enterprise Development (SAED) (25%)
SAED is an investment vehicle providing equity growth capital to high
potential small and medium sized enterprises. SAED contributed R15.4 million
in equity accounted earnings to Brimstone over the period. SAED has acquired
an effective 32.5% in Allergy Free Kitchen and 35% in Dough Re Mi during the
period. Its other interests include stakes in High Duty Castings (33.3%),
Tombake Holdings (32.6%), Decision Inc. Holdings (25.3%), ASG Holdings (47%)
and ZAR X (29.5%).
Vuna Fishing Company (Vuna) (49.8%)
Vuna contributed R0.9 million in equity accounted earnings during the period
under review.
Milpark Education (Milpark) (12.8%)
During the period, Brimstone acquired an effective 30% stake in Milpark
Education, a private provider of higher management education, together with
STADIO Holdings Limited. Subsequently, Brimstone entered into an asset-for-
share agreement with STADIO in terms of which Brimstone sold 17.2% in
Milpark to STADIO for approximately R50.9 million worth of STADIO ordinary
shares issued at a 20% discount to the 30 day VWAP. Brimstone uses the
equity method to account for the remaining interest in Milpark and
recognised R0.8 million in equity accounted earnings during the period,
after adjusting for STADIO's share.
INVESTMENTS
Equites (7.7%)
Equites' share price closed at R17.60 per share, down from R21 per share at
31 December 2017. The investment was revalued downwards by R118.6 million to
R614.2 million at period end.
FPG Property Fund (10%)
Brimstone acquired 10% of FPG Property Fund, a Cape-based black-owned and
managed unlisted property fund with a portfolio of properties catering for
the retail, industrial and office sectors for a consideration of R131.7
million.
Life Healthcare (3.4%)
Life Healthcare's share price closed at R24.88 per share, down from R27.75
per share at 31 December 2017. Brimstone disposed of 15.3 million Life
Healthcare shares for an aggregate consideration of R409.1 million during
the period. The total investment was revalued downwards by R158.2 million to
R1.23 billion. Brimstone received a dividend of 38 cents per share resulting
in total dividend receipts from Life Healthcare of R18.8 million for the
period.
Long4Life (3.9%)
Long4Life's share price closed at R5.63, up from R4.90 at 31 December 2017.
The investment was revalued upwards by R25.9 million to R199.9 million at
period end.
MTN Zakhele Futhi (1.5%)
Brimstone holds 1.8 million MTN Zakhele Futhi shares which are accounted for
as options. The independently calculated option valuation was based on a MTN
Group closing share price of R107.90 per share, down from R136.60 per share
at 31 December 2017. The investment was revalued downwards by R24 million to
R46.5 million.
Phuthuma Nathi (7%)
The Phuthuma Nathi 1 and Phuthuma Nathi 2 shares closed at R103.50 and
R108.50 per share respectively (R99.90 and R98 per share respectively at
31 December 2017). The investment was revalued upwards by R28.8 million to
R498.9 million. Phuthuma Nathi has recommended a dividend payable in
September 2018. This dividend should amount to R92.7 million for Brimstone.
STADIO (5.3%)
After the asset-for-share swap of Milpark shares referred to above,
Brimstone holds 43.6 million STADIO ordinary shares. STADIO's share price
closed at R4.09 per share, down from R8.05 per share at 31 December 2017.
The investment was revalued downwards by R144.6 million to R178.2 million.
INTRINSIC NET ASSET VALUE (INAV)
INAV at 30 June 2018 calculated on a line-by-line basis, totalled R4.02
billion, or R16.54 per share (31 December 2017: R4.32 billion or R18.01 per
share), representing a decrease of 6.9% from 31 December 2017 (a decrease of
8.2% on a per share basis). As at 30 June 2018, Brimstone Ordinary shares
were trading at a discount of 39.5% to INAV (31 December 2017: 27.8%).
Brimstone "N" Ordinary shares traded at a discount of 39.5% to Brimstone's
INAV (31 December 2017: 37.5%). The analysis of INAV is available on the
Company's website at www.brimstone.co.za.
The INAV information presented in this report has been prepared on a basis
consistent with that used in the integrated report for the year ended 31
December 2017.
BASIS OF PREPARATION
The condensed consolidated interim financial information has been prepared
in accordance with and containing the information required by IAS 34 Interim
Financial Reporting as well as the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council, the
JSE Listings Requirements and Companies Act of South Africa. The condensed
consolidated interim financial statements have been prepared using
accounting policies that comply with IFRS which are consistent with those
applied in the financial statements for the year ended 31 December 2017,
except for the adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue
from Contracts with Customers that became effective on 1 January 2018. The
adoption of these standards did not have a material impact on the Group. The
condensed financial information was prepared under the supervision of the
Group Financial Director, Geoffrey George Fortuin CA(SA).
The results have not been audited or reviewed by the Group's auditors,
Deloitte & Touche.
Dividend
In line with previous years, no interim dividend is declared for the half
year.
Prospects
The Group will continue to maintain its positive long-term view on its
investments and pursue value accretive opportunities.
F Robertson MA Brey
Executive Chairman Chief Executive Officer
28 August 2018
DIRECTORATE AND ADMINISTRATION
Registered office: Boundary Terraces, 1 Mariendahl Lane, Newlands 7700,
Cape Town
Transfer Secretaries: Computershare Investor Services (Pty) Ltd,
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Sponsor: Nedbank CIB, 135 Rivonia Road, Sandton 2196
Directorate: F Robertson (Executive Chairman)*, MA Brey (Chief Executive
Officer)*, GG Fortuin (Financial)*,MI Khan (Chief Operating Officer)*,
T Moodley*, PL Campher (Lead Independent), M Hewu, N Khan, KR Moloko,
MK Ndebele, LA Parker, FD Roman
*Executive
Website: www.brimstone.co.za
E-mail: info@brimstone.co.za
Condensed Consolidated Statement of Profit or Loss
for the 6 months ended 30 June 2018
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
R'000 2018 2017 2017
Revenue 1 369 620 1 307 279 2 783 431
Sales and fee income 1 284 489 1 234 142 2 560 328
Dividends received 85 131 73 137 223 103
Operating expenses (1 185 963) (1 151 416) (2 408 978)
Operating profit 183 657 155 863 374 453
Fair value (losses)/gains (403 659) (255 117) 71 359
Share of profits of associates
and joint ventures 76 901 3 976 58 116
(Loss)/profit before net finance costs (143 101) (95 278) 503 928
Income from investments 28 932 22 292 48 942
Finance costs (158 890) (149 947) (290 506)
Net (loss)/profit before taxation (273 059) (222 933) 262 364
Taxation credit/(charge) 45 915 21 958 (115 290)
(Loss)/profit for the period (227 144) (200 975) 147 074
(Loss)/profit attributable to:
Equity holders of the parent (282 120) (244 102) 45 958
Non-controlling interests 54 976 43 127 101 116
(227 144) (200 975) 147 074
(Loss)/earnings per share (cents)
Basic (117.7) (101.6) 19.1
Diluted (117.7) (101.6) 18.6
Condensed Consolidated Statement of Other Comprehensive Income
for the 6 months ended 30 June 2018
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
R'000 2018 2017 2017
(Loss)/profit for the period (227 144) (200 975) 147 074
Other comprehensive loss, net of tax (99 376) (40 948) (49 607)
Items that may be reclassified
subsequently to profit or loss
Cash flow hedges
Loss arising during the period (27 985) (17 917) (20 224)
Foreign currency translation
Profit/(loss) arising during
the period 24 037 7 382 (11 573)
Share of non-distributable reserves
of associates (95 809) (31 336) (28 553)
Revaluation of available-for-sale asset
Gain arising during the year - - 12 368
Items that will not be reclassified
subsequently to profit or loss
Remeasurement of defined benefit plans - - 1 625
Share of non-distributable reserve of
associates 381 923 (3 250)
Total comprehensive (loss)/income
for the period (326 520) (241 923) 97 467
Total comprehensive (loss)/income
attributable to:
Equity holders of the parent (383 370) (288 634) 6 425
Non-controlling interests 56 850 46 711 91 042
(326 520) (241 923) 97 467
Condensed Consolidated Statement of Financial Position
as at 30 June 2018
Restated*
Unaudited Unaudited Audited
30 June 30 June 31 December
R'000 2018 2017 2017
ASSETS
Non-current assets 6 175 534 5 807 452 6 535 734
Property, plant and equipment 971 796 598 634 915 799
Investment properties 80 884 - 80 884
Goodwill and intangible assets 652 883 611 014 590 566
Investments in associate companies
and joint ventures 1 270 485 1 167 855 1 208 196
Investments 3 010 633 3 366 717 3 630 102
Loans and receivables 10 134 - 6 110
Loans to supplier partners 980 - 1 959
Deferred taxation 114 845 28 025 29 838
Insurance assets 36 814 19 924 47 455
Other financial assets 26 080 15 283 24 825
Current assets 2 159 085 2 500 091 2 649 370
Inventories 485 046 411 447 404 976
Trade and other receivables 719 138 720 787 615 164
Insurance assets 311 401 234 807 355 833
Other financial assets 2 991 27 689 41 896
Taxation 3 957 8 878 6 827
Investments - 322 408 444 457
Cash and cash equivalents 636 552 774 075 780 217
TOTAL ASSETS 8 334 619 8 307 543 9 185 104
EQUITY AND LIABILITIES
Capital and reserves 3 174 136 3 267 620 3 561 722
Share capital 42 41 41
Capital reserves 254 958 317 662 307 630
Revaluation reserves 19 600 7 223 19 592
Cash flow hedging reserve (4 336) 14 010 11 987
Foreign currency translation reserve (10 476) (15 917) (21 315)
Changes in ownership 578 872 580 602 579 857
Retained earnings 1 499 765 1 646 438 1 884 210
Attributable to equity holders
of the parent 2 338 425 2 550 059 2 782 002
Non-controlling interests 835 711 717 561 779 720
Non-current liabilities 3 244 220 3 226 664 3 491 320
Long-term interest bearing
borrowings 2 537 685 2 575 567 2 671 147
Long-term provisions 26 373 26 703 26 342
Deferred grant income 11 498 14 501 12 109
Other financial liabilities 46 257 61 267 61 223
Insurance liabilities 67 948 28 735 82 406
Share-based payment liability 25 373 - 18 789
Deferred taxation 529 086 519 891 619 304
Current liabilities 1 916 263 1 813 259 2 132 062
Short-term interest bearing borrowings 610 251 679 817 774 659
Bank overdrafts 76 654 55 832 104 731
Trade payables 450 301 456 204 470 521
Other payables 123 871 161 445 82 356
Deferred grant income - - 1 505
Insurance liabilities 547 605 406 765 579 190
Other financial liabilities 38 748 22 548 69 165
Short-term provisions 20 727 7 576 38 291
Taxation 48 106 23 072 11 644
TOTAL EQUITY AND LIABILITIES 8 334 619 8 307 543 9 185 104
NAV per share (cents) 961.8 1 060.1 1 160.3
Shares in issue at end of
period (000's) 243 129 240 548 239 767
* Refer to note 1.
Condensed Consolidated Statement of Cash Flows
for the 6 months ended 30 June 2018
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
R'000 2018 2017 2017
Operating activities
Net attributable (loss)/profit (227 144) (200 975) 147 074
Adjustments for non-cash items 375 513 298 950 101 235
Operating cash flows before
movements in working capital 148 369 97 975 248 309
Increase in inventories (73 726) (23 364) (21 890)
Increase in trade and other receivables (98 528) (157 192) (56 945)
Increase in trade and other payables 16 992 117 537 55 741
Net decrease in insurance assets 55 073 197 603 49 046
Net (decrease)/increase in insurance
liabilities (46 043) (169 661) 56 435
Cash generated from operations 2 137 62 898 330 696
Interest received 28 932 21 086 48 942
Dividends received from associates
and joint ventures 34 642 26 631 32 578
Dividends received from other
equity investments 50 489 46 506 190 525
Income taxes paid (82 929) (45 757) (95 447)
Finance costs (120 514) (109 463) (238 129)
Net cash (used in)/generated from
operating activities (87 243) 1 901 269 165
Investing activities
Loans and receivable advanced (4 024) - (7 833)
Proceeds on disposal of investments 848 738 80 311 160 105
Proceeds on disposal of property,
plant, equipment and vehicles 59 392 1 2 855
Acquisition of property, plant,
equipment and vehicles (154 125) (54 499) (430 870)
Acquisition of intangible assets (36 565) (3 460) (3 687)
Investment property acquired - - (51 258)
Acquisition of investments (263 362) (648 470) (755 827)
Net cash generated from/(used in)
investing activities 450 054 (626 117) (1 086 515)
Financing activities
Dividends paid by Company and
subsidiaries (104 652) (104 943) (108 056)
Repayments of borrowings (414 925) (388 857) (480 064)
Loans raised 66 813 365 834 643 125
Repayment of financial liabilities (61 269) (23 912) (22 253)
Further investment in subsidiary - - (1 479)
Shares repurchased - - (23 851)
Proceeds on issue of trust units/shares - 6 844 15 172
Issue of shares by subsidiary 38 400 1 239 943 1 253 995
Distributions made to participants
of share trusts and repurchase
of shares by subsidiary - (167 321) (248 733)
Units/shares repurchased (2 881) (55 831) (5 699)
(Decrease)/increase in bank overdrafts (28 077) 31 442 80 341
Net cash (used in)/generated from
financing activities (506 591) 903 199 1 102 498
Net (decrease)/increase in cash
and cash equivalents (143 780) 278 983 285 148
Cash and cash equivalents at
beginning of period 780 217 495 082 495 082
Foreign exchange differences 115 10 (13)
Cash and cash equivalents at
end of period
Bank balances and cash 636 552 774 075 780 217
Condensed Consolidated Statement of Changes in Equity
for the 6 months ended 30 June 2018
Revalu-
Share Capital ation
R'000 capital reserves reserves
Balance at 1 January 2017
- Audited 41 380 181 14 143
Attributable profit
for the year ended
31 December 2017 - - -
Other comprehensive loss - (30 730) 12 368
Total comprehensive income - (30 730) 12 368
Recognition of share-based payments - 32 074 -
Dividend paid - - -
Recognition of forfeitable share
plan reserves - (78 396) -
Recognition of change in value
of share option liability
directly in equity - (5 613) -
Transfer to share-based payment
liability (modification) - (19 789) -
Acquisition of non-controlling
interest in subsidiary - - -
Share of distribution made by associate - - -
Distributions made to participants
of share trusts and share repurchase - - -
Shares issued by subsidiaries - 20 885 (6 919)
Issue of share capital - 38 568 -
Repurchase of trust units - (5 699) -
Treasury shares acquired - (23 851) -
Change in investment in subsidiary - - -
Balance at 31 December 2017 - Audited 41 307 630 19 592
Attributable loss for the
six months ended 30 June 2018 - - -
Other comprehensive loss - (95 784) -
Total comprehensive loss - (95 784) -
Dividend paid 1 36 855 -
Recognition of change in value of
share option liability directly in equity - 6 282 -
Shares repurchased by subsidiary - (25) 8
Shares issued by subsidiary - - -
Balance at 30 June 2018 - Unaudited 42 254 958 19 600
1 January 2017 to 30 June 2017
- Unaudited
Balance at 1 January 2017
- Audited (as previously disclosed) 41 380 181 14 143
Adjustment for restatement following
finalisation of purchase price
allocation of the Mareterram
acquisition (refer to note 1) - - -
41 380 181 14 143
Attributable profit for
the six months ended 30 June 2017 - - -
Other comprehensive loss - (30 782) -
Total comprehensive loss - (30 782) -
Recognition of share-based payments - (1 913) -
Dividend paid - - -
Recognition of forfeitable
share plan reserves - (55 001) -
Shares repurchased by subsidiary - - -
Shares issued by subsidiary - 20 885 (6 920)
Distributions made to participants
of share trusts of subsidiary - - -
Issue of share capital - 6 844 -
Share of non-distributable reserves
of associates transferred
directly to equity - (2 552) -
Balance at 30 June 2017
- Unaudited 41 317 662 7 223
Condensed Consolidated Statement of Changes in Equity
for the 6 months ended 30 June 2018 (continued)
Foreign
Cash flow currency Changes
hedging translation in
R'000 reserve reserve ownership
Balance at 1 January 2017
- Audited 32 534 (29 119) (163 938)
Attributable profit
for the year ended
31 December 2017 - - -
Other comprehensive loss (7 869) (13 302) -
Total comprehensive income (7 869) (13 302) -
Recognition of share-based payments - - -
Dividend paid - - -
Recognition of forfeitable share
plan reserves - - -
Recognition of change in value
of share option liability
directly in equity - - -
Transfer to share-based payment
liability (modification) - - -
Acquisition of non-controlling
interest in subsidiary - - (399)
Share of distribution made by associate - - -
Distributions made to participants
of share trusts and share repurchase - - -
Shares issued by subsidiaries (12 678) 21 106 744 024
Issue of share capital - - -
Repurchase of trust units - - -
Treasury shares acquired - - -
Change in investment in subsidiary - - 170
Balance at 31 December 2017 - Audited 11 987 (21 315) 579 857
Attributable loss for the
six months ended 30 June 2018 - - -
Other comprehensive loss (16 324) 10 858 -
Total comprehensive loss (16 324) 10 858 -
Dividend paid - - -
Recognition of change in value of
share option liability directly in equity - - -
Shares repurchased by subsidiary 1 (19) (985)
Shares issued by subsidiary - - -
Balance at 30 June 2018 - Unaudited (4 336) (10 476) 578 872
1 January 2017 to 30 June 2017
- Unaudited
Balance at 1 January 2017
- Audited (as previously disclosed) 32 534 (29 119) (163 938)
Adjustment for restatement following
finalisation of purchase price
allocation of the Mareterram
acquisition (refer to note 1) - - -
32 534 (29 119) (163 938)
Attributable profit for
the six months ended 30 June 2017 - - -
Other comprehensive loss (5 846) (7 904) -
Total comprehensive loss (5 846) (7 904) -
Recognition of share-based payments - - -
Dividend paid - - -
Recognition of forfeitable
share plan reserves - - -
Shares repurchased by subsidiary - - -
Shares issued by subsidiary (12 678) 21 106 744 540
Distributions made to participants
of share trusts of subsidiary - - -
Issue of share capital - - -
Share of non-distributable reserves
of associates transferred
directly to equity - - -
Balance at 30 June 2017
- Unaudited 14 010 (15 917) 580 602
Condensed Consolidated Statement of Changes in Equity
for the 6 months ended 30 June 2018 (continued)
Attribu-
table to
equity
holders Non-
R'000 Retained of the controlling
earnings parent interests Total
Balance at 1 January 2017
- Audited 2 193 293 2 427 135 175 252 2 602 387
Attributable profit
for the year ended
31 December 2017 45 958 45 958 101 116 147 074
Other comprehensive loss - (39 533) (10 074) (49 607)
Total comprehensive income 45 958 6 425 91 042 97 467
Recognition of
share-based payments - 32 074 (1 843) 30 231
Dividend paid (102 743) (102 743) (2 200) (104 943)
Recognition of
forfeitable share
plan reserves - (78 396) - (78 396)
Recognition of change
in value of share option
liability directly in equity - (5 613) (988) (6 601)
Transfer to share-based
payment liability
(modification) - (19 789) - (19 789)
Acquisition of
non-controlling interest
in subsidiary - (399) (1 080) (1 479)
Share of distribution made
by associate (23 323) (23 323) - (23 323)
Distributions made to
participants of share
trusts and share
repurchase (248 733) (248 733) (3 113) (251 846)
Shares issued by
subsidiaries 19 758 786 176 522 820 1 308 996
Issue of share capital - 38 568 - 38 568
Repurchase of trust units - (5 699) - (5 699)
Treasury shares acquired - (23 851) - (23 851)
Change in investment in
subsidiary - 170 (170) -
Balance at
31 December 2017
- Audited 1 884 210 2 782 002 779 720 3 561 722
Attributable loss for
the six months ended
30 June 2018 (282 120) (282 120) 54 976 (227 144)
Other comprehensive loss - (101 250) 1 874 (99 376)
Total comprehensive loss (282 120) (383 370) 56 850 (326 520)
Dividend paid (102 415) (65 559) (39 093) (104 652)
Recognition of change
in value of share option
liability directly in equity - 6 282 1 785 8 067
Shares repurchased by
subsidiary 90 (930) (1 951) (2 881)
Shares issued by subsidiary - - 38 400 38 400
Balance at 30 June 2018
- Unaudited 1 499 765 2 338 425 835 711 3 174 136
1 January 2017 to
30 June 2017 - Unaudited
Balance at 1 January 2017
- Audited
(as previously
disclosed) 2 193 293 2 427 135 160 896 2 588 031
Adjustment for
restatement following
finalisation of purchase
price allocation of
the Mareterram acquisition
(refer to note 1) - - 14 356 14 356
2 193 293 2 427 135 175 252 2 602 387
Attributable profit
for the six months
ended 30 June 2017 (244 102) (244 102) 43 127 (200 975)
Other comprehensive loss - (44 532) 3 584 (40 948)
Total comprehensive loss (244 102) (288 634) 46 711 (241 923)
Recognition of
share-based payments (1 018) (2 931) (6 053) (8 984)
Dividend paid (102 743) (102 743) (2 200) (104 943)
Recognition of forfeitable
share plan reserves - (55 001) - (55 001)
Shares repurchased by
subsidiary (51 429) (51 429) (4 401) (55 830)
Shares issued by subsidiary 19 758 786 691 508 252 1 294 943
Distributions made to
participants of share
trusts of subsidiary (167 321) (167 321) - (167 321)
Issue of share capital - 6 844 - 6 844
Share of non-distributable
reserves of associates
transferred directly
to equity - (2 552) - (2 552)
Balance at 30 June 2017
- Unaudited 1 646 438 2 550 059 717 561 3 267 620
HEADLINE (LOSS)/EARNINGS PER SHARE
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
R'000 2018 2017 2017
Headline (loss)/earnings per share (cents)
Basic (118.6) (101.4) 11.2
Diluted (118.6) (101.4) 10.9
Headline (loss)/earnings calculation
Net (loss)/profit attributable
to equity holders of the parent (282 120) (244 102) 45 958
(Profit)/loss on disposal
of property, plant, equipment
and vehicles (2 466) 234 (1 938)
Impairment of property,
plant and equipment - 707 -
Reversal of impairment
of property, plant and equipment - (251) -
Gain on remeasurement of
investment property - - (20 000)
Adjustments relating to
results of associates (684) (47) (2 496)
Total tax effects of adjustments 882 (161) 5 433
Headline (loss)/earnings (284 388) (243 620) 26 957
Weighted average number of
shares on which (loss)/earnings
and headline (loss)/earnings
per share is based (000's) 239 770 240 329 240 170
Weighted average number of shares
on which diluted (loss)/earnings
and diluted headline (loss)/earnings
per share is based (000's) 239 770 240 329 246 566
INTRINSIC NET ASSET VALUE (INAV)
Change
Unaudited Unaudited since
30 June 31 December 31 December
2018 2017 2017
INAV of Brimstone (R'm) 4 021 4 318 -6.9%
INAV per share (cents) 1 654 1 801 -8.2%
Fully diluted INAV per share (cents) 1 614 1 751 -7.8%
Market price per share (cents)
Ordinary shares 1 000 1 300 -23.1%
"N" Ordinary shares 1 000 1 125 -11.1%
Discount to INAV
Ordinary shares 39.5% 27.8%
"N" Ordinary shares 39.5% 37.5%
The breakdown of INAV which has been prepared on the same basis as that used
in the integrated report for the year ended 31 December 2017, is available
on the Company's website at www.brimstone.co.za.
FURTHER INFORMATION
1. Restatement of the financial results for the year ended
31 December 2016
The audited financial results for the year ended 31 December 2016
have been restated for the finalisation of the purchase price
allocation of the Mareterram business combination.
In the 2016 financial year the Group acquired a 55.89% interest in
Mareterram Limited, a fishing and fish processing business situated
on the Australian West Coast and listed on the Australian Stock
Exchange. The initial accounting for the business combination in
the 2016 financial year was prepared using provisional values as
permitted in terms of IFRS 3 Business Combinations paragraph 45.
Subsequent to the end of the 2016 reporting period the purchase
price allocation was finalised within the measurement period, being
a period not exceeding 12 months from the acquisition date in
July 2016 and the provisional values adjusted in terms of IFRS 3
paragraph 49.
The relevant effects of the adjustment to the prior period statement
of financial position and statement of changes in equity are
summarised as follows:
R'000
Estimated
Assets acquired fair value 31 Dec 2016
and liabilities at time Measurement Exchange Adjusted
assumed at date of period rate closing
of acquisition acquisition adjustments differences balance
Intangible assets 310 918 157 648 (15 660) 452 906
Deferred tax
assets/(liabilities) 30 181 (121 512) 12 071 (79 260)
Total adjustment 341 099 36 136 (3 589) 373 646
Less: non-controlling
interest's share (137 546) (15 940) 1 583 (151 903)
Equity holders
of the parent's
share 203 553 20 196 (2 006) 221 743
Goodwill relating
to the parent 115 722 (20 196) 2 006 97 532
2. Segmental information
Information reported to the Group's operating decision makers for the
purpose of resource allocation and assessment of segment performance
is specifically focused on the individual entity in which Brimstone
has invested. The Group's reportable segments under IFRS 8 Operating
Segments, are therefore fishing, insurance, clothing and investments.
Investments include investments in associates, joint ventures,
investments at fair value through profit or loss (FVTPL), an
investment at fair value through other comprehensive income (FVTOCI)
and the Group's property portfolio.
Unaudited Unaudited Audited
6 months 6 months Year
R'000 ended ended ended
Segment revenues and results 30 June 30 June 31 Dec
Segment revenue 2018 2017 2017
Fishing 1 015 147 1 056 960 2 142 632
Insurance 187 599 83 063 234 442
Clothing 78 085 88 447 174 402
Investments 88 789 78 809 231 955
Total revenue 1 369 620 1 307 279 2 783 431
Segment profit/(loss) from operations
Fishing 165 027 167 715 333 812
Insurance (17 988) (43 343) (104 544)
Clothing (14 481) (14 351) (8 674)
Investments 51 099 45 842 153 859
Total profit from operations 183 657 155 863 374 453
Fair value (losses)/gains (403 659) (255 117) 71 359
Share of profits of associates
and joint ventures 76 901 3 976 58 116
Income from investments 28 932 22 292 48 942
Finance costs (158 890) (149 947) (290 506)
Taxation 45 915 21 958 (115 290)
Net (loss)/profit after taxation (227 144) (200 975) 147 074
3. Fair value measurements
This note provides information about how the Company determines fair
values of various financial assets and financial liabilities.
Fair value of the Company's financial assets and financial
liabilities that are measured on a fair value basis on a recurring
basis. Some of the Company's financial assets and financial
liabilities are measured at fair value at the end of each financial
reporting period. The following table gives information about how
the fair values of these financial assets and financial liabilities
are determined (in particular, the valuation technique(s) and inputs
used).
The directors consider that the carrying amounts of financial
assets and financial liabilities not measured at fair value on a
recurring basis (but fair value disclosures are required) recognised
in the consolidated financial statements approximate their fair values.
R'000
30 June 2018 Level 1 Level 2 Level 3 Total
Financial assets
at FVTPL*
Derivative financial
assets - 75 605(3) - 75 605
Listed shares 2 289 546 - - 2 289 546
Unlisted shares 498 949 - 131 685(1) 630 634
Unlisted shares - - 18 654(4) 18 654
Non-financial
assets at fair value
Investment properties - - 80 884(2) 80 884
Financial asset at
FVTOCI**
Unlisted shares - - 25 265(2) 25 265
Total 2 788 495 75 605 256 488 3 120 588
Financial
liabilities at
FVTPL*
Derivative financial
liabilities - 85 005(3) - 85 005
R'000
30 June 2017 Level 1 Level 2 Level 3 Total
Financial assets
at FVTPL*
Derivative financial
assets - 402 000(3) 15 057(3) 417 057
Listed shares 2 624 153 - - 2 624 153
Unlisted shares
and loan 663 399 - 5(1) 663 404
Available-for-sale
financial assets
Unlisted shares - - 25 265(2) 25 265
Unlisted shares - - 2 218(4) 2 218
Total 3 287 552 402 000 42 545 3 732 097
Financial
liabilities at FVTPL*
Derivative financial
liabilities - 83 815(3) - 83 815
R'000
31 December 2017 Level 1 Level 2 Level 3 Total
Financial assets
at FVTPL*
Derivative financial
assets - 581 742(3) - 581 742
Listed shares 3 045 465 - - 3 045 465
Unlisted shares
and loan 470 149 - 5(1) 470 154
Non-financial assets
at fair value
Investment properties - - 80 884(2) 80 884
Available-for-sale
financial assets
Unlisted shares - - 25 265(2) 25 265
Unlisted shares - - 18 654(4) 18 654
Total 3 515 614 581 742 124 808 4 222 164
Financial liabilities
at FVTPL*
Derivative
financial liabilities - 130 388(3) - 130 388
* FVTPL = Fair value through profit or loss
** FVTOCI = Fair value through other comprehensive income
The table provided analyses financial instruments that are measured
subsequent to initial recognition at fair value, grouped in Levels 1
to 3 based on the degree to which fair value is observable:
- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities.
- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
- Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are
not based on observable market data (unobservable inputs).
There were no transfers between levels 1, 2 and 3 in the current or
prior period.
Notes
1. At cost or historical valuation.
2. Value determined by an independent valuer:
- non-financial assets represented by investment properties are
valued using the capitalisation of income method, other than
where the acquisition price is current and thus more indicative
of fair value.
- financial assets represented by unlisted shares in a vessel
owning company are valued based on the cash flows related to
the vessel.
3. The following methods and inputs are used in valuing level 2
financial assets and liabilities:
- Options are independently valued using the Monte Carlo method,
taking into account the number of option shares, the spot
price per share, the risk free rate, dividend yield,
volatility and outstanding debt of the relevant share.
- The fair value of interest rate swaps is calculated as the
present value of the estimated future cash flows based on
observable yield curves.
- The fair value of forward exchange contracts is determined
using forward exchange spot and forward rates at the reporting
date.
- The fair value of forward share sale contracts is calculated
by an independent valuer, taking into account the number of
shares, the forward price per the contract, the spot price, a
discount factor and any expected dividends.
4. Value is based on the effective interest held in the net assets of
the underlying entity.
There are no changes to unobservable inputs that might result in a
significantly higher or lower fair value measurement within level 2
and level 3 financial assets and liabilities.
Unaudited Unaudited Audited
30 June 30 June 31 Dec
4. Share Capital (number) 2018 2017 2017
In issue (number)
Ordinary shares 39 874 146 40 620 604 40 620 604
Held as treasury shares (105 044) (2 136 074) (2 136 074)
39 769 102 38 484 530 38 484 530
"N" ordinary shares 227 955 544 235 907 107 227 911 954
Held as treasury shares (24 596 140) (33 843 442) (26 629 290)
203 359 404 202 063 665 201 282 664
Total net of treasury shares 243 128 506 240 548 195 239 767 194
Weighted average
number of shares on which
(loss)/earnings and headline
(loss)/earnings per share
is based: 239 770 496 240 328 910 240 732 715
Weighted average number of
shares on which diluted
(loss)/earnings and diluted
headline (loss)/earnings
per share is based: 239 770 496 240 328 910 248 409 451
Reconciliation of weighted
average number of shares between
basic and diluted earnings per
share and headline earnings
and diluted headline earnings
per share.
Basic 239 770 496 240 328 910 240 170 204
Dilutive instruments - - 6 395 715
Diluted 239 770 496 240 328 910 246 565 919
Number of instruments
treated as anti-dilutive 1 021 329 4 073 316 1 307 703
Closing share price (cents)
Ordinary shares 1 000 1 300 1 300
"N" ordinary shares 1 000 1 300 1 125
The following share movements
occurred during the period
under review
Ordinary "N" ordinary
Shares issued (number)
23 April 2018 - Scrip dividend 1 284 572 2 073 438
Shares repurchased
and cancelled (number)
19 June 2018 2 031 030 2 029 848
5. Related party transactions
In terms of a supply agreement between joint venture group, Vuna
Fishing Company Proprietary Limited ("Vuna") and SeaVuna Fishing
Company Proprietary Limited ("SeaVuna"), and Sea Harvest Group
Limited's subsidiary, Sea Harvest Corporation Proprietary Limited
("Sea Harvest Corporation"), fish caught by Vuna and SeaVuna is
marketed by Sea Harvest Corporation. Purchases from SeaVuna during
the period amounted to R103.2 million compared to R75.4 million for
the comparative period and R165.7 million for the year ended
31 December 2017.
6. Subsequent events
a) As announced on SENS on 13 June 2018 and the transaction becoming
unconditional on 25 June 2018, Sea Harvest Group Limited, with
effect from 2 July 2018, has together with a consortium of
broad-based black economic empowerment investors, acquired the
entire fishing business of Viking Fishing Holdings Proprietary
Limited by way of the purchase of selected assets, liabilities and
businesses from, and selected shareholdings in, the respective
Viking Fishing group businesses; and 51% of the issued share capital
of Viking Aquaculture Proprietary Limited for a consideration of
R885 million. Sea Harvest is in the process of determining the fair
values of assets and liabilities for IFRS 3 purposes.
b) On 27 August 2018 Sea Harvest has, through its subsidiary
Cape Harvest Food Group Proprietary Limited, signed a share
purchase agreement to acquire the entire issued share capital
of Ladismith Cheese Company Proprietary Limited for a
consideration of R527 million, to be settled in cash. The
transaction is subject to competition commission approval.
Date: 28/08/2018 04:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
