Diverse holdings help Brimstone post strong earnings - Assets pass R3 billion mark
22 August 2007 | Company News & Results | General | Brimstone Investment Corporation
HighlightsHeadline earnings per share up 86.9%
Assets exceed R3 billion for the first time
Brimstone Investment Corporation (Brimstone) results for the six months to 30 June 2007 released today show that the group has continued on its dynamic growth path, with assets exceeding R3 billion for the first time. The group has grown its assets by more than R2 billion over the last twelve months, from R1,06 billion to R3,24 billion. Intrinsic net asset value per share increased 11,3% over the last six months from 763 cents to 849 cents.
"This strong asset growth has been complimented by strong earnings growth, with headline earnings per share increasing by 86.9% to 101.1 cents from 54.1 cents during the comparable period last year. Net attributable profit for the last six months amounted to R235 million.
"These results once again reflect Brimstones ability to consistently produce solid earnings in all economic conditions due to the diversity of its investments in both listed and unlisted companies." says Brimstone CEO Mustaq Brey. "Unlisted companies now make up more than 80% of our holdings, making us also far less exposed to volatile stock market movements."
These unlisted investments include a host of solid, well placed unlisted companies which include Life Healthcare, The Scientific Group, Sea Harvest, Aon, Aon Re, Lion of Africa Insurance Company and House of Monatic, with its strong apparel brands such as Carducci, Viyella, O Neill, Canterbury and Lylle and Scott. Listed investments include Old Mutual, Nedbank and Oceana.
The group completed some significant acquisitions over the last six months. House of Monatic, Brimstones wholly-owned subsidiary, acquired an effective 51% of Canterbury South Africa on 1 March 2007. Canterbury SA is the official kit supplier to the Rugby Springboks as well as The Lions, Sharks and Cheetahs. These are high profile contracts that are expected to impact positively on future earnings.
"We are moving forward with our strategy to strengthen the House of Monatic Groups marketing, design and manufacturing portfolio through the acquisition and development of premium brands," says Brimstone Deputy Chairman, Fred Robertson.
During the period Brimstone also acquired an effective 18% of established reinsurance brokers, Aon Re Africa, which boasts a client base across Sub Saharan Africa.
A significant increase in the underlying value of Life Healthcare contributed substantially to headline earnings for the period under review. Life Healthcare is one of South Africas largest private hospital groups and we expect that future earnings from this investment will continue to impress, says Brey.
The Scientific Group, a supplier of medial equipment, also continued to perform well and benefited from a wider market presence. Future prospects are promising in a niche sector of the healthcare industry which we believe will continue to expand.
There were positive signs from the groups fishing interests. Renewed fish supplies providing sustainable volumes of white fish have positively influenced Sea Harvests results for the period, while Oceana experienced positive growth and was a major contributor to earnings for the period.
Oceana supplies a diverse product range of fish, crustaceans and fish products. Although sales volumes of Lucky Star canned fish decreased significantly compared to the previous year because of shortage of supply, the fishmeal operation more than compensated for this decrease as a result of significantly higher prices achieved in export markets. Oceana is in a strong position to increase earnings for the full year, says Brey.
The groups financial services holdings produced mixed results. A steady performance by Aon for the period produced satisfying results, while Lion of Africa Insurance Company was negatively impacted by higher fire and motor related claims.
Brimstones rights to Old Mutual plc and Nedbank shares - acquired in 2005 and accounted for as options, contributed negatively to earnings in line with the overall performance of the share markets and the reduction of both companies underlying share prices. Nevertheless, the Brimstone/Mtha consortium continues to contribute positively to both Old Mutual and Nedbank.
Brey says Brimstone will continue to actively seek and assess new opportunities for cash generative investments while simultaneously evaluating opportunities to strengthen and grow the value of its existing investment portfolio of listed and unlisted companies. "We are confident that our investment portfolio will continue to prosper under existing market conditions."
