EMPOWERMENT: Brimstone Posts Good Results
Recent Western Cape Business News
Cape Town empowerment company, Brimstone produced a strong set of results for the year ended 31 December 2009. Headline earnings have risen significantly to R 311.9 million with headline earnings per share reflecting a value of 130.9 cents per share. The Group continued to generate firm revenues from its underlying investments with dividends received totaling an amount of more than R161 million for the 2009 period.
Profit for the year is up considerably to R332.7 million on the back of the loss of R106.4 million posted at year end 2008.
Brimstone has grown its balance sheet considerably, with total assets rising to R5.6 billion – this from a company that started on the Cape Flats with just R3 million capital raised from the community. Overall net asset value of the Group is now valued at R2.5 billion, representing a net asset value per share of R10.30 at year-end. Intrinsic net asset value as at 31 December 2009 is estimated to be R2.7 billion or R11.37 per share.
The company’s growth in assets was boosted by the high level of activity in its deal pipeline - in a year that was decidedly difficult for most investment businesses.
Successfully concluded transactions during 2009 included:
– the acquisition by a Brimstone-led consortium of control of Sea Harvest. Sea Harvest is
now a subsidiary of Brimstone and the company’s second largest investment by value
– the successful acquisition of a further 35% of Lion of Africa Insurance Company from short-term insurer, Santam – increasing Brimstone’s original shareholding from an effective 39% of the Lion to a controlling 74%
– the selection of Brimstone as a preferential empowerment partner in the Tiger Brands Phase II BEE transaction, which provided Brimstone with the option to subscribe for 1% of Tiger Brands
Total assets under Brimstone’s control have increased from R3.8 billion in 2008 to R5.6 billion in 2009 and which can be largely attributable to the effects of the Sea Harvest and Lion of Africa transactions.
In addition, the upward valuation of its investments in Life Healthcare, Nedbank and
Old Mutual plc has also had a positive effect on the Group balance sheet.
On the downside, Brimstone subsidiary House of Monatic reported a year-end consolidated loss of R30.2 million which incorporated write-offs and provisions relating to the liquidation of the Fifth Element clothing cluster and the closure and sale of its denim manufacturing facility in Atlantis. However, the Group is confident that the steps taken by House of Monatic in consolidating its activities should effect a positive turnaround in its clothing and textile operations.
Commenting on the results, Brimstone Chief Executive, Mustaq Brey said, “given the prevailing economic environment and the uncertainty in the markets for the 12 months under review, we are satisfied with the performance of our investments. Although we have exercised caution in our investment decisions we have not been shy to pursue opportunities that we believe hold value and could generate longer-term revenues for our business and ultimately our shareholders.”
Brey added that, “As a majority, black-owned and managed company with a 15 year track record, we have a solid portfolio of performing investments, good governance procedures in place and a management team that is focused on delivering long-term shareholder value.”
A dividend of 32 cents per share has been declared. In 2008 shareholders benefitted from a 24c dividend declaration. Shareholders will this year for the first time have the option to receive script dividends in lieu of a cash dividend.
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