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Brimstone released its results for the year ended December 31, 2018 on Monday, reporting a profit of R71.3m, down from R141.7m for the prior year - a drop just shy of 50%.
It put down the decline to the downward revaluation of listed investments and an increased loss from subsidiary Lion of Africa Insurance Company, which it added was partially offset by an increase in equity accounted earnings.
In the statement, it described its results as a "mixed bag".
Other significant events included total assets exceeding R10bn for the first time, as well as its Tiger Brands transaction maturing and being successfully realised, Brimstone said.
Mixed bag
"It was a mixed bag of results for Brimstone; on the one hand our total assets cracked the R10bn mark in value for the first time in our company's 23-year history and we recorded a healthy R112m increase in equity earnings," CEO Mustaq Brey said in a statement.
"On the other hand, a downward revaluation of listed investments reflective of equity market conditions led to a decline in profitability; our intrinsic gross asset value decreased to R7.4bn from R8.7bn, while intrinsic net asset value decreased to R3.9bn from R4.3bn for the period."
A dividend of 45 cents per share was declared. Brimstone has managed to pay dividends for the past 16 years.
Focus areas
According to Brey, the food sector remains one of Brimstone's key focus areas. Subsidiary Sea Harvest reported headline earnings for the period of R278m, an increase of 18% compared to the previous year.
The inclusion of Viking Fishing and Viking Aquaculture for the six months post acquisition helped boost revenue, increasing it by 21% to R2.58bn over the recorded period.
"Unfortunately, other subsidiaries have not performed as well in this economic climate," said Brey.
House of Monatic's revenue was down by 9% and a loss of R44.1m was recorded due to tough trading conditions in South Africa.
Loss-making subsidiary Lion of Africa Insurance Company was placed into run-off in November 2018. Lion reported a net loss of R132.2m compared to a loss of R94.7m in the prior year. The reported loss includes provisions for the run-off.
Associates
Oceana delivered dividends of R25.7m and accounted for R140.8m in earnings for Brimstone, up from R67m in 2017.
Among other associates, Milpark Education realised R3.2m in equity accounted earnings, while South African Enterprise and Development (SAED) contributed R15.4m in equity accounted earnings and a dividend of R1.5m.
Brimstone's 25.07% stake in Obsidian Health delivered a dividend of R5.5m, while its 18% stake in Aon Re Africa delivered a dividend of R8.5m.
Investments
Brimstone's investment in Phuthuma Nathi was revalued upwards by R171.3m, paying a dividend of R92.7m to Brimstone in the period under review.
The investment corporation made a 10% acquisition of the Cape-based black-owned and managed unlisted FPG Property Fund, with the investment revalued upwards by R16.4m to R148.1m at year-end. Brimstone received a dividend of R1.6m during the year, the statement said.
Life Healthcare, Equites and STADIO were revalued downward by R311m over this period, which had a negative effect on Brimstone's overall profitability.
Subsidiary Sea Harvest acquired Viking Fishing and Viking Aquaculture during the financial year, and Ladismith Cheese Company after financial year-end.
In February, Sea Harvest announced its bid to acquire all the issued shares of its Australian subsidiary Mareterram.
Brimstone will also acquire 8 million shares in Oceana Group, increasing its stake from to 22.88%.
