Brimstone lifted headline earnings per share a robust 110% to 71.9 cents for the six months to June 30 mainly due to fair value gains and the increase in Brimstone’s share of profits of fishing products group Oceana.
Brimstone’s investment portfolio is heavily tilted, at about 76%, towards the fishing industry. CEO Mustaq Brey said in an interview they were happy with this level of investment, as their fishing investments were performing well and producing good returns, and fishing products were a sustainable and growing sector, and “even through Covid, we carried on eating”.
Fair value gains from investments of R76.2 million were reported compared to fair value losses of R40.3m in the prior period, and Brimstone’s share of profits of Oceana increased to R187m from R94.9m. During the period, R357.6m was repaid to funders.
Brey said they had undertaken to their funders to repay some R600m of debt by December 2025, and so far some R250m had been repaid, while the group was on target to repay the full amount. “We have no pressure in this regard,” he said.
“Brimstone produced solid results with an increase in headline earnings of 110%. In interpreting our results, while our financial statements may seem vastly different to the prior period, one has to recognise the fundamental change in the treatment of Sea Harvest from a subsidiary to an associate,” Brey said.
Brimstone held 159.6 million shares (44.5% stake) in Sea Harvest with a fair value of R1.3 billion at June 30, compared with R1.5bn at December 31, 2023. Sea Harvest’s share price closed at R8.09 per share, down from R9.45 per share at December 31, 2023.
During the period, Sea Harvest had acquired certain subsidiaries of Terrasan, which resulted in Sea Harvest issuing 60 million shares to Terrasan, which in turn diluted existing shareholders. Consequently, Sea Harvest was no longer a subsidiary of Brimstone, and was accounted for as an associate, with effect from May 14, 2024.
Brimstone directors still retain the chairmanship and two seats on the Sea Harvest board, and it remains by far the biggest shareholder in Sea Harvest.
The deconsolidation of Sea Harvest resulted in a loss on deemed disposal of R562.1m. After the effective date, Brimstone recognised R90.2m as its share of profits of the associate based on Sea Harvest’s reported profit for the period to June 30, 2024.
Brimstone held 32.7 million shares (25.1% stake) in Oceana Group with a market value of R2.4bn at June 30, compared with R2.3bn at December 31, 2023.
Brimstone recognised R187m as its share of profits of the associate based on Oceana’s reported profit. Brimstone received R63.8m in dividends from Oceana.
Bristone’s N shares increased sharply by 5.36% to R5.90 yesterday afternoon. The intrinsic value per share fell 5.7% to 1 231.3 cents per share, meaning they were trading at an approximate 56.5% discount to intrinsic value per share. Brey said discounts such as these were normal for investment holding companies.
Brimstone’s 18% stake in Aon Re Africa, a reinsurance broker operating in Africa, contributed R24.9m to profits and delivered a dividend of R24.3m.
The investment in FPG Property Fund, a Cape-based, black-owned and managed unlisted property fund specialising in the retail convenience market, was revalued upwards by R38.8m to R401.4m. Its R9bn portfolio includes 36 convenience shopping centres in South Africa with an expanding footprint in the UK.
Brimstone’s subsidiary Obsidian Health, a supplier of innovative healthcare solutions within sub-Saharan Africa, contributed R6.1m (R2.8m) to group profit. Obsidian saw revenue growth of 40% mostly due to the inclusion of the new Life Sciences division.
BUSINESS REPORT