Brimstone weathers the storm

2015-03-02 06:00

It has survived a downturn in the textiles sector, botched fishing rights allocations and caused a deluge of empowerment company delistings on the JSE, but Brimstone Investment Corporation is still standing.

The black-controlled company, led by chairperson Fred Robertson and CEO Mustaq Brey, kicked off its 20th anniversary with a mixed set of results on Tuesday, showing a 16.1% increase in the value of its portfolio, to R4.86?billion, in the year ended December 2014.

Profits fell almost 45% to R306.5?million, dragged down by poor performance in insurer Lion of Africa, but Brimstone was able to declare a final dividend of 30c a share, with a special dividend of 20c a share on top.

Brimstone wrote down the Lion of Africa investment to R20?million, from R140?million.

Brey said the insurer experienced losses in the corporate and commercial areas because of claims resulting from storm damage.

“We had a lot of industrial claims, particularly because of floods,” said Brey.

Despite the blemish from Lion of Africa’s poor showing, Brey said it was not enough

for them to abandon the company and his team was bringing in people with insurance-industry expertise. “We have customers and 140 jobs – families – to look after and maintain,” Brey said.

House of Monatic, its wholly owned clothing and accessories brand, delivered a cheerier set of results, with its revenue rising to R184?million from R180?million.

Operating profit fell 31%, to R7.2?million.

Brey said Brimstone invested in the business, which was more than a century old and manufactured clothing for designer brands Carducci and Viyella in 1998.

“We keep 850 people at work,” he said.

House of Monatic is a beneficiary of the department of trade and industry’s production incentive for the clothing and textile industry, which enabled the business to upgrade its factories and equipment to the tune of R15?million in the three years to 2013.

The incentive appears to have had ripple effects throughout the economy. Finance Minister Nhlanhla Nene referred to the sector’s recovery in his budget speech this week.

Nene said that while the manufacturing sector as a whole had not performed well in recent years, there was encouraging growth in investment – especially in upgrading machinery and equipment – since 2010.

“The turnaround in footwear and textiles is also welcome, and should boost job creation over the period ahead,” Nene said.

Another moneymaker was fishing company Oceana, in which Brimstone has a 16.8% interest. The company paid out R75.8?million in dividends to Brimstone. It made distributions to its staff share trust, and Brimstone’s share of this windfall was R58.9?million.

This was despite the department of agriculture and fisheries’ controversial 2013 fishing-rights allocation process, which awarded new allocations to replace those that expired in December that year.

Former agriculture and fisheries minister Tina Joemat-Pettersson commissioned an audit into the process after an outcry from fishing communities, which made damning findings against Desmond Stevens, the official delegated to oversee the process.

The Hawks told City Press last year it was investigating Stevens after a tip-off from a whistle-blower.

Brey said Oceana survived the drama in the fisheries department because of the “carry-over from the previous year”. There were also increases in food prices, which were positive for the group.

In any case, the fishing company was sheltered from the drama, because its existing fishing quotas were valid until 2020. Some quotas expire in 2016.

Brimstone nearly did not make it as Oceana’s empowerment partner. Brey previously told the Daily Maverick his company was originally cut out by former Oceana chairperson Don Ncube and his company, Real Africa Holdings, when Real Africa sold its stake in the empowerment vehicle that invested in the company.

Oceana gave Brimstone a piece of the deal, which saw Brimstone end up with a 10% stake. Real Africa delisted from the JSE in 2012 after a buyout by casino group Sun International. It was founded in 1994, a year before Brimstone.

New Africa Investments, an empowerment company founded by Nthato Motlana in 1993, delisted in 2013 after a sale to media company Primedia.

Five months later, Tokyo Sexwale’s New Bond Capital (formerly the Mvelaphanda Group) also delisted. Mvelaphanda was established in the same year as Brimstone.

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