Brimstone subsidiaries show mixed set of results

Covid-19 pandemic has been hitting the group’s manufacturing business hard

JSE-LISTED investment holding company Brimstone Investment’s subsidiaries produced a mixed set of results for the six months to the end of June, with Covid-19 hitting the group’s manufacturing business.

Brimstone chief executive Mustaq Brey said the lockdown had a severe impact on trading conditions for the group’s unlisted subsidiary, House of Monatic, and its customers.

House of Monatic’s revenue declined by 58 percent to R28.3 million during the period.

“However, on the positive side, the pandemic has led large South African retailers to indicate that they will look to increase the amount of local sourcing, and House of Monatic is optimistic that this will have a positive impact on the 2021 winter season,” Brey said.

House of Monatic is involved in the design, marketing and manufacturing of men’s and women’s clothing.

The group’s other subsidiary, Lion of Africa, turned around last year’s loss of R55.2m into a profit of R82.8m in the current period.

The insurance company’s profit increased primarily due to claim recoveries and reserve releases.

Brimstone released its half-year results after the market closed on Monday. It reported a 1.92 percent increase in revenue to R2.12 billion, while operating profit surged 70.91 percent to R304.5m, with the group crediting the resilience of its core investments during the period.

Its headline loss widened to 77.3 cents a share compared with 59.9c a year earlier.

However, profit before net finance costs decreased to R154.9m compared with R234.4m a year earlier, mainly due to downward adjustments in the fair value of listed investments.

The downward revaluation of investments including Equites, Multichoice Group and Stadio contributed to the after-tax loss of R129.6m.

These fair value losses track a pattern of downward movement in share prices on the JSE over the same reporting period in which the markets were hardest hit by Covid-19.

“These losses offset the R82.8m profit at subsidiary Lion of Africa,” Brey said.

Brimstone implemented its de-gearing strategy and utilised R496.7m generated from the disposals of part of its investments in Equites and Phuthuma Nathi to settle debt funding of R528.1m during the period.

Brimstone has invested in unlisted and listed companies. It has a 54.2 percent stake in Sea Harvest. The fishing group reported a 7 percent increase in revenue to R2bn and headline earnings of R170m. Brimstone’s fair value investment in Sea Harvest was R2.3bn at the end of the period.

The group also has a 25 percent stake in Oceana Group.

Brimstone shares closed 2.29 percent lower at R4.69 yesterday.