Brimstone falters in slow economy
Brimstone did not escape tough trading conditions imposed by SA’s stagnant economy in 2017, which resulted in intrinsic net-asset value shrinking at the end of December.
Investment holding company Brimstone did not escape tough trading conditions imposed by SA’s stagnant economy in 2017, which resulted in intrinsic net asset value (NAV) shrinking at the end of December.
On Tuesday, the investment holding company’s results for the year to December showed total intrinsic NAV fell 15.9% to R4.32bn, or R18.01 per share.
Its black economic empowerment (BEE) share in industrials group Grindrod was revised to zero, followed by the downwards revisions of interests in Life Healthcare and MultiChoice BEE vehicle Phuthuma Nathi.
“These are pure mark-tomarket adjustments of JSElisted shares,” said CEO Mustaq Brey. “Or in the case of MTN Zakhele Futhi and Phuthuma Nathi, being linked to the value of listed shares.”
Brimstone recently sold a portion of its investment in Life Healthcare to buy a 4% interest in Brian Joffe’s Long4Life lifestyle group at R5 per share, but this also had to be revised downwards by R5.7m.
“Brimstone has a track record of backing entrepreneurs and in this case we are following a great entrepreneur in the form of Brian Joffe,” Brey said.
Investments in property group Equites, MTN Zakhele Futhi and Curro offshoot Stadio were revised upwards by R181.5m, R3.8m and R172m respectively, representing a few green shoots in Brimstone’s portfolio.
But insurance subsidiary Lion of Africa had an exceptionally bad year, with losses widening to R92.3m from R15.4m the previous year.
“We have had a surge of claims from the public sector for public liability including damages for vehicle repairs and appliance repairs emanating from potholes and electrical surges,” said Brey.
Brimstone has changed all policy wording – effective January 2018 – to exclude liability if maintenance plans in terms of the Public Finance and Management Act are not adhered to.
“Also, we are seeking further reinsurance protection to guard against this should we see a repeat of this,” said Brey.