Investment company Brimstone, sitting on a pile of cash and unutilised credit lines, can be choosy about what businesses to buy into as it looks back on a profitable six months to June, in which it increased total assets to R5.2 billion from R4.6bn at the end of 2011.
Contributing to the upbeat interim results posted yesterday were two acquisitions and the revaluing of its marked-to-market assets.
Brimstone invests mainly in defensive sectors such as food, financial services and health care. It houses brands like Sea Harvest, Lion of Africa Insurance and House of Monatic and has investments in Life Healthcare‚ Nedbank‚ Old Mutual and Tiger Brands, among others.
Chief executive Mustaq Brey said the company was looking across the spectrum for new investment opportunities.
“We will continue to exercise prudence and strict criteria when considering potential investment opportunities,” Brey said, adding that Brimstone had been offered a number of opportunities that were turned down as it did not see sufficient value in them.
Brimstone’s investment in Life Healthcare was revalued by R598 million during the period as the share price rose by half. A 12.3 percent stake in Taste Holdings was acquired for R37m during the period, and it was revalued at R72m as at June 30.
Brimstone now had a net asset value of R2.4bn, 19 percent up over the six months. The intrinsic net asset value a share increased to R12.12.
Brimstone’s headline earnings in the six months to June grew 140 percent to R474.8m. Basic headline earnings a share jumped to R1.946 from 81.2c. The comprehensive income for the period jumped 109 percent from a year earlier to R478.3m.
Brimstone’s investments in the fishing industry posted pleasing results. Sea Harvest experienced firm demand for hake because of lower supply from Namibia and Argentina. Marginal price increases were achieved in traditional European markets.
Oceana increased headline earnings a share by 21 percent as performance across its operating divisions improved.
The group’s investments in the health-care sector were boosted by a strong performance in Life Healthcare as it raised its revenue by 11.7 percent to R5.27bn in the six months to March. Brimstone disposed of 4.5 million shares in Life Healthcare in July, cutting its shareholding from 5.47 percent to 5.04 percent.
But Brey said the company intended to hold on to the remaining 52 million shares because it was impressed with Life Healthcare’s performance.
Jean Pierre Verster, an analyst at 36One Asset Management, said the increase in net asset value a share to R12.12 was driven by the revaluing of Brimstone’s investment portfolio, mostly as a result of the strong increases in the share prices of its associate businesses over the interim period. This showed that the company had a good investment portfolio.
“The historical performance of the specific companies that they have invested in show that they have a good eye for value and that is the reason why they’ve grown their net asset value at an above-average rate over the years,” Verster said.
He said more than half of Brimstone’s net asset value was attributable to Life Healthcare, pinning it as an exceptionally good investment.
Brimstone was untraded at R10.40 yesterday.