JSE-listed investment holding company Brimstone Investments reported a staggering surge in profit for the full year ended December 2021, which it says was supported by the strong performance of some of its subsidiaries and positive investment returns. The group has been reporting full-year losses since 2018.
The group’s headline earnings per share (Heps) for the period increased by 586% to 289.9 cents, up from the loss it reported in the previous comparable period 0f 61.5 cents and the last profit gain it reported in the 2017 comparable period of 11.2 cents.
“This solid set of results is testimony to the resilience of our investments that performed exceptionally well despite still operating during periods of partial lockdown,” Brimstone CEO Mustaq Brey says in a statement.
“Brimstone is anchored by quality assets in the food sector which have proven their defensive nature during this challenging economic period.”
The group also reported that its profit before tax for the year came in at R920.9 million, significantly better than the loss of R43.8 million it reported in the previous comparable period.
“The profit is mainly due to strong performances by certain of the Group’s subsidiaries, the upward revaluation of investments held at fair value through profit or loss, an increase of R103.6 million in share of profits of associates and joint ventures and a significant reduction of R181.6 million in finance costs compared to the comparative period,” the group says.
In its latest results, Brimstone says it has managed to reduce its debt by R1.2 billion in the current period and by R2 billion since the beginning of 2020, placing its balance sheet in stronger territory.
“We are delighted that our total debt has reduced by another R1.2 billion in the year under review resulting in a cumulative reduction in debt of approximately R2 billion since the start of lockdown in 2020,” Brey says.
“This reduction in debt has commensurately reduced finance costs which is pleasing in the current environment of an upward interest rate cycle,” he adds.
Subsidiaries boost performance
The group’s JSE-listed subsidiary Sea Harvest contributed to Brimstone’s recovery, posting a strong set of results with revenue for the period up 5% to R4.6 billion.
The subsidiary also reported profit after tax of R434 million, up from the R398 million posted in the previous year.
According to Brimstone, Seas Harvest’s performance was boosted by the good performance of the South African fishing industry and that of the Australian operations.
Healthcare solutions supplier Obsidian Health – which Brimstone owns a 70% stake in – made a significant contribution to group profit this period, increasing its contribution to R20.7 million from R6.9 million in the previous comparable period.
Further, the group’s investment interests registered good returns, with Brimstone reporting an upward revaluation of its key investments.
The group’s equity portfolio was revalued up by R78.4 million to R320.9 million, while its FPG Property Fund was revalued upwards by R47.1 million to R229.7 million, its stake in MTN Zakhele Futhi was bumped up by R38.8 million to R56.4 million and its Phuthuma Nathi stake moved by R30.7 million to R255.8 million in the period.
“The solid performance of our investments together with our de-gearing strategy have had an exceptional impact on our results, despite the constraints of operating within and around a pandemic,” Brey says.
“At the start of the pandemic when the outlook was so uncertain, we decided to temporarily suspend paying any cash dividends and thereby preserve cash,” he adds.
After deciding to withhold dividends in efforts to preserve cash, Brimstone says it will now resume dividends at 30 cents this period.
Listen to Fifi Peters’s interview with Brimstone CEO Mustaq Brey (or read the transcript here):