Brimstone narrows its losses


Brimstone narrows its losses

Published Date: 2019-09-03 | Source: Stephen Gunnion | Author: Stephen Gunnion

Brimstone narrows its losses

A big rise in earnings at subsidiary Sea Harvest helped offset the cost of exiting the consortium that is taking Clover private.

Brimstone has reported another first-half loss after it stepped back from taking a stake in dairy group Clover, which resulted in a number of once-off costs and transactions fees. The investment group's first-half performance was also weighed down by higher finance costs, an increasing in valuation provisions in its Lion of Africa insurance business and a higher tax charge. However, these were partly offset by increased profitability at subsidiary Sea Harvest and fair value gains on some of its other investments.

The investment company found a new black investor to replace in in the consortium that plans to buy Clover after it faced mounting pressure from shareholders and communities against the involvement of consortium leader, Israel's Central Bottling Company. In particular, the Food and Allied Workers Union (FAWU) and Boycott, Divestment, Sanctions against Israel in South Africa (BDS SA), an organisation promoting solidarity with Palestinians, railed against the R25 per share buyout.

Sea Harvest grew headline earnings per share by 32% to 61.1c in the six months to end-June, but Lion of Africa reported a net loss of R55.2 million. Brimstone placed the insurance business in run-off last November. House of Monatic, which owns local fashion brands Carducci, Squared and Viyella, also had a tough first half, with revenue falling 13% to R67.5 million. However, it said the right-sizing of the business had resulted in an increased gross profit margin.

During the period it bought an additional 8 million shares in Oceana for R581 million, taking its stake to 22.9%. It received cash dividends of R108 million from the fishing group during the period and recognised R53 million as its share of profit.

Other associates and joint ventures include reinsurance broker Aon Re Africa, South African Enterprise Development, Milpark Education and Obsidian Health. The group also has a number of listed investments.

Overall, revenue increased by 52% to R2.08 billion in the six months to end-June but operating profit declined by 3% to R178 million. It narrowed its loss for the period to R84.3 million from R227 million, resulting in a headline loss per share of 64.1c, down from 118.6c previously. Its intrinsic gross asset value rose 20% to R8.9 billion while its net asset value declined 5% to R3.7 billion. Like last year, it isn't paying an interim dividend.

Its shares didn't trade yesterday, closing unchanged at R8.

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