Ann Crotty
BROAD-based black economic empowerment (BEE) group Brimstone declared a dividend of 18c a share for the 12 months to December yesterday.
It will be the ninth consecutive dividend to be paid out by what has proved to be one of the country’s most successful BEE companies.
The group’s subsidiaries include fishing firm Sea Harvest, short-term insurer Lion of Africa and clothing manufacturer House of Monatic.
Its associates include stakes in the Oceana fishing group, reinsurance broker Aon Re Africa and Scientific Group. Its investments include stakes in Rex Trueform, Life Healthcare, Nedbank options, Old Mutual options, MTN Zakhele options and Tiger Brands options.
While the group’s operating performance was unexciting, it was able to report a strong rise in earnings because of an increase in the marked-to-market value of assets.
Headline earnings, which exclude the effect of the mark-to-market valuation gains, were up by 3.5 percent to R429.9 million from R415.4m. Basic headline earnings a share inched up to R1.763 from R1.727 the previous year.
Comparison between the two years is complicated by a number of transactions as well as significant changes to the group’s tax liability. Therefore, a tax credit of R297.6m in 2010 compares with a tax charge of R129m last year.
Fair value gains totalled R477m, of which R32m was attributable to the appreciation in Brimstone’s 5.6 percent holding in Life Healthcare. The remaining R156m was attributable to appreciations in the value of options held in Old Mutual, Nedbank, MTN Zakhele and Tiger Brands.
For financial 2011, after-tax profit increased by 14 percent to R468.8m.
Deep sea fishing company Sea Harvest benefited from the continuation of the previous year’s good fishing conditions. It was also assisted by a 10 percent increase in total allowable hake catch, which came into effect from the start of 2011.
Exports to North America, northern Europe and Australia continued to advance and a modest recovery in the southern European market was recorded. Local market conditions were favourable as well.
But despite the benefits of the weaker exchange rate between the rand and the euro, good catches and efficiency improvements, management said costs increases were ahead of inflation “driven mainly by the fuel price and other regulated costs such as electricity”.
Lion of Africa’s contribution was held back by a slump in net underwriting profit and an increase in the net loss ratio.
After five years of losses, House of Monatic, which has been helped by government incentives, turned in an operating profit of R7m.
Brimstone chief executive Mustaq Brey acknowledged that it was difficult to compare the group’s year-on-year performance. He said the most appropriate measurement was Brimstone’s intrinsic net asset value, which had increased 31 percent to R10.20 a share at year-end. Its shares were untraded at R12.99 yesterday.