Brimstone Investment Corporation [JSE: BRN] has reported a profit of R75.3 million for the year ended December 31, 2019, up from R71.3 million the previous year.
Profit before net finance costs increased by R321 million to R659 million for the year.
However, Brimstone has not declared a dividend for the financial year, opting instead to issue new shares.
Brimstone CEO Mustaq Brey has attributed the year's profit largely to reduced fair value losses as well as increased profitability at Sea Harvest. During the year, Brimstone acquired a further 21.4 million Sea Harvest shares for R300 million, increasing its stake to 54.2%.
The fair value of Brimstone's investment in Sea Harvest at year end was R2.3 billion. Brimstone expects to receive a dividend of R79.7 million from Sea Harvest in April 2020.
During the year, Brimstone acquired an additional 9.5 million shares in Oceana Group for a cash consideration of R686.3 million, increasing its shareholding to 24%. Brimstone received dividends of R186.1 million from Oceana compared to R25.8 million in the prior year.
"Oceana was our first investment in Brimstone. Now 25 years on, we are proud that we are the single largest shareholder in Oceana. This is a significant achievement for B-BBEE and an example of Brimstone’s long-term view on its investments," says Brey.
Brey says Brimstone's performance was offset by the cost of participating in and exiting the Clover transaction, the raising of fair value provisions at Lion of Africa Insurance Company, increased finance costs and increases in the tax charge.
For Brimstone subsidiary House of Monatic, trading conditions were tough in 2019, with poor economic growth putting pressure on all customers. The company is relocating its factory to new premises in Epping. The move is expected to result in a more efficient manufacturing process.
Brimstone's 18% stake in reinsurance broker Aon Re Africa delivered a dividend of R16.2 million during the year, up from R8.5 million in the previous year.
South African Enterprise Development (SAED), an investment vehicle providing equity growth capital to high potential small and medium sized enterprises, of which Brimstone owns 25%, contributed R1.4 million to share of profits of associates.
Brimstone's 25.1% stake in Obsidian Health, meanwhile, contributed R2 million as its share of profits during the period. Obsidian, which services both the private and public healthcare sectors, works within within Sub-Saharan Africa. Subsequent to year end, Brimstone acquired a further 55% of Obsidian for a cash consideration of R35.7 million.
Brimstone's investment in Equites was revalued upwards by R22 million and paid dividends of R50.5 million to Brimstone in the year under review.
Brimstone's investment in FPG Property Fund was revalued upwards by R26 million to R174 million at year-end.
Brimstone received dividends of R10.5 million from Life Healthcare during the period.
"Our investment in Life Healthcare was used as security in a Zero-Cost-Collar funding arrangement enabling the Company to raise funding of R1.2 billion," says Brey.
During the year MTN Zakhele Futhi listed on the JSE. The investment was revalued downwards by R13.4 million to R24 million.
Brimstone's investment in Milpark Education paid a dividend of R11.3 million during the year, while the investment in Stadio was revalued down to R89.1 million.
* Compiled by Carin Smith