BRIMSTONE REPORTS INCREASE IN HEPS AND REDUCES DEBT

Brimstone reported Headline Earnings per share of 108 cents, up 51% from the prior year. However, due to the deconsolidation of Sea Harvest following the Terrasan transaction, a loss on deemed disposal of R562.1 million was recognised, resulting in a loss per share for the year.

The Group fully disposed of its investments in Milpark, STADIO and Equites, and partially disposed of its investments in Phuthuma Nathi and MTN Zakhele Futhi for a total consideration of R673.6 million, in line with its stated objective to reduce debt through disposals.

During the year, R516.8 million was used to repay debt and at year end the Group’s long-term debt was R1.7 billion, down from R2.2 billion at prior year end. The debt-reduction process is ongoing and the Group is on track to meet its own target of reducing debt by R600 million by the end of 2025.

Enhancing shareholder returns remains a focus for the Board and management, and the Group repurchased 4.5 million shares for R21.7 million during the year. A further 861 325 shares were repurchased for R4.3 million subsequent to the year end.

“The business environment remains challenging. The year under review saw a volatile Rand, elevated interest rates and easing inflation. While loadshedding eased significantly, persistent pressure on the domestic transport network and on water and sanitation infrastructure weighed in on the economy and impacted growth. High unemployment also continued to curb consumer spending, further straining an already pressured economy.

Notwithstanding these economic circumstances, Brimstone still produced strong results reporting a 51% increase in headline earnings per share to 108 cents per share.

When comparing these financial results to the prior year, one has to recognise the change in accounting treatment and classification of Sea Harvest from a subsidiary to an associate, and its resultant impact causing a loss on deemed disposal. In simple terms, we still hold the exact number of shares in Sea Harvest, but our percentage holding has decreased from 53.4% to 44.5% therefore changing the accounting treatment,” says Brimstone’s CEO Mustaq Brey.

FOOD

Brimstone held 32.7 million shares (25.1% stake) in Oceana Group with a market value of R2.2 billion at year end, down from R2.3 billion at the prior year end. Brimstone recognised R299.6 million as its share of profits from Oceana based on Oceana’s reported earnings for the year to 30 September 2024. Brimstone received cash dividends of R162 million from Oceana during the year under review.

Brimstone held 159.6 million shares (44.5% stake) in Sea Harvest with a fair value of R1.3 billion at year end (31 Dec 2023: R1.5 billion). Sea Harvest’s share price closed at R8.35 per share, down from R9.45 per share at 31 December 2023.

During the period under review, Sea Harvest concluded its acquisition of certain subsidiaries of Terrasan Group Limited, which resulted in Sea Harvest issuing 60 million shares to Terrasan, diluting existing shareholders. Consequently, Sea Harvest is no longer a subsidiary of Brimstone, and has been accounted for as an associate.

This deconsolidation of Sea Harvest, resulted in a loss on deemed disposal of R562.1 million.

After the effective date, Brimstone recognised R111.4 million as its share of profits of the associate based on Sea Harvest’s reported profit for the year to 31 December 2024.

FINANCIAL SERVICES AND PROPERTY

Brimstone’s 18% stake in Aon Re Africa, a leading reinsurance broker operating in Sub-Saharan Africa and the rest of Africa, contributed R21.3 million to profits and delivered a dividend of R24.3 million during the year under review.

FPG Property Fund is a Cape-based black-owned and managed unlisted property fund specialising in the retail convenience market. It owns 38 convenience shopping centres in South Africa with an expanding footprint in the United Kingdom. The property portfolio is valued in excess of R10 billion on a gross basis. The investment was revalued upwards by R77.8 million to R440.4 million at year end. Brimstone received a dividend of R5.3 million from FPG Property Fund during the year under review.

During the year under review, Brimstone acquired 1.6 million shares in FPG Investments for

R50 million. FPG Investments has interests in a chain of franchised fast-food retail outlets and an has a 20% interest in an ice cream manufacturing business. FPG Investments is also the holding company of FPG Property Fund owning 86.4% of the Fund. Brimstone received a dividend of R0.4 million from FPG Investments.

RESTRICTED BEE

Brimstone disposed of 137 746 MTN Zakhele Futhi shares for a total cash consideration of R2.0 million during the year under review. The remaining shares were revalued downwards by R15.4 million to R13.4 million at year end.

Brimstone disposed of 1 million Phuthuma Nathi shares for a total cash consideration of R100 million. The remaining 895 425 shares were revalued downwards by R10.7 million to R72.5 million at year end. Brimstone received a dividend of R18.2 million from Phuthuma Nathi during the year under review.

HEALTHCARE

Brimstone’s subsidiary Obsidian Health is a leading supplier of innovative healthcare solutions to both the private and public healthcare sectors within Sub-Saharan Africa.

Obsidian contributed R13.8 million (2023: R3.7 million) to Group profit after tax during the year under review. Obsidian achieved strong revenue growth of 29% which contributed to a 63% growth in its EBITDA, largely as a result of additional revenue generated from the new Life Sciences division. In addition to the increased revenue, profitability was positively impacted through margin improvement, as well as a strong focus on cost management.

OTHER INVESTMENTS

South African Enterprise Development (SAED), an investment vehicle providing equity growth capital to high potential small and medium sized enterprises. Its main investments include holdings in Decision Inc. Proprietary Limited (48.4%) and ASG Holdings Proprietary Limited (33.5%). SAED contributed R0.2 million in equity accounted earnings for the year. Brimstone accrued a dividend of R3.5 million from SAED for the year under review.

“In line with our stated objective of reducing debt through disposals, Brimstone fully disposed of three and partially disposed of two investments during the year. This decisive action resulted in debt reduction of at least half a billion Rand during the year. This process is on-going and we will continue to rationalise the portfolio. We have also continued to repurchase our own shares as we believe it presents considerable value and it remains a means to restore value to all shareholders. Cost-cutting and further rationalisation has commenced and we should see the benefits of these measures during the next reporting period,” says Fred Robertson, Executive Chairman of Brimstone.