Brimstone CEO Mustaq Brey says the company’s internal team is investigating transactions but nothing to report.
Gallo Images / Hetty Zantman
- Brimstone CEO Mustaq Brey is optimistic about the investment holding’s outlook and says it has shed excess weight.
- All of its operating subsidiaries were classified as essential service providers and continued to operate during the country’s Covid-19 lockdown.
- Sea Harvest and Oceana together account for approximately 78% of the company’s gross asset value.
Investment holding Brimstone was “busy in the gym” and is now ready to hit the streets again after losing excess weight, said its CEO Mustaq Brey on Tuesday at their earnings meeting for the six months to June 30, 2021.
After two years of losses, the company posted a profit of R430.2 million, compared to a loss of R97.8 million in the same period.
The gain was mainly due to the strong performance of some of the Group’s subsidiaries, such as Sea Harvest, along with the appreciation of some of its investments, an increase in the profit share of associates and joint ventures, and a decrease in financing costs.
“We are optimistic about the outlook. We turned the company around. We said we would cut costs, and we did. Our in-house team is reviewing transactions, but there are still no warnings of being under stress and, as the saying goes, one person’s debt is the other’s gain, “said Brey.
“All of our operating subsidiaries were classified as essential service providers and continued to work under extended, tough Covid-19 lockdown conditions. These results indicate the resilience of these investments. “
Brey said that when the lockdowns began last year, the company set a goal of reducing debt. “We are pleased that our total debt has been reduced by around ZAR 2 billion since the beginning of blocking level 5 last year.”
“As a group, we continue to review all value-enhancing mechanisms, including buying back our own shares. During the period, the company repurchased 5.7 million Brimstone shares, which is value-enhancing for all of our shareholders. We were also committed to increasing costs at the company level reduce what we have successfully done. The overall effect of these cost reductions should be reflected in the full year result. “
Aside from additional security costs and safeguards related to the Covid-19 pandemic, Brey said one of the biggest challenges for the group was uncertainty about catch quotas.
Earnings and dividend growth
Brimstone subsidiary Sea Harvest posted a total profit of ZAR 202.2 million for the period ended June 30, 2021, an increase of 19% over the same period of the previous year. Earnings per share rose by 27% to 77.7 cents. The fair value of Brimstone’s investment in Sea Harvest was R 2.2 billion as of June 30, 2021.
Brimstone owns 32.6 million shares of Oceana with a market value of R2.1 billion at the end of the period, representing a 25.01% stake in the group. Brimstone booked R81 million as a share of profits from Oceana and R35.9 million in dividends during the period.
Sea Harvest and Oceana together account for approximately 78% of Brimstone’s gross asset value. Although they are very different companies operating in different markets, they are both subject to the fishing rights allocation process that resumed in October 2020 and is expected to be completed by the end of this year, Brey said,
Brimstone also owns 80% of Obsidian, a provider of health solutions to both the private and public health sectors in sub-Saharan Africa. Obsidian contributed R12.5 million versus R2.5 million to Brimstone’s profits for the period.
The clothing supplier and manufacturer House of Monatic has meanwhile sold its production facilities and transferred the associated factory staff to a subsidiary of TFG on April 1, 2021. Amid difficult trading conditions, the company posted a loss of R18.6 million compared to a loss of R29.3 million in the previous comparable period.
Brimstone’s 18% stake in Aon Re Africa, a reinsurance broker licensed and operating in Africa, contributed R17.1 million to profits and delivered a dividend of R8.1 million for the period.
Milpark Education, a college and apprenticeship provider, controlled 7.5 million during the period. Brimstone also received a dividend of R17.1 million from Milpark during the period.
The holding’s stake in Equites has meanwhile been revalued by R 21.1 million to R 263.5 million at the end of the reporting period. Brimstone received a dividend of R 11.2 million from the real estate fund.
Brimstone’s stake in MTN Zakhele Futhi was revalued by R 10.6 million to R 28.2 million at the end of the reporting period. MultiChoice’s investment in Phuthuma Nathi was upgraded by R 44.1 million to R 269.2 million at the end of the reporting period. Brimstone expects to receive a dividend of R42.1 million from Phuthuma Nathi in September 2021.
Finally, the Group’s investment in the listed university group STADIO was revalued by R 49.7 million to R 134.6 million at the end of the reporting period.