Spectre of closure hanging over House of Monatic
CAPE TOWN – House of Monatic, the Brimstone Investment Corporation owned short, trouser and jacket maker and retailer in Cape Town that has been operating for about 100 years, might face closure if its operations do not improve following a “right-sizing”.
That was the word from Brimstone executives at an investment analysts' presentation on the investment group’s results that were released last week.
Brimstone’s revenue rose sharply to R3.38billion in the 12 months to end- December 2018, operating profit increased to R388.6million from R374.5m, while the attributable loss to shareholders came to R78.5m, from a R46m profit in 2017.
The attributable loss was blamed on the R44.1m loss at House of Monatic, and acquisitions at Sea Harvest.
Chief operating officer Iqbal Khan said in the presentation that part of the restructuring at House of Monatic involved operating at a lower capacity utilisation of 85percent, rather than keeping large stockpiles of clothing.
Some 140 staff would be impacted by the “right-sizing” as the group was over-staffed, demand for locally produced clothing was slack and production inputs were too high.
Chief executive Fred Robertson said part of the problem at House of Monatic was that a foreign-owned retailer had last year indicated some interest in buying House of Monatic, but had pulled out of the talks right at the end of the year.
If these talks had not taken place, steps would have been taken to restore House of Monatic to profitability at a much earlier stage, he said.
He was responding to an analyst who suggested that while the performance of the group rested mainly in investments in listed companies, where Brimstone had limited impact on operations, its biggest problems appeared to be in its 100 percent-owned unlisted subsidiaries where the group could exert more influence.
Brimstone’s unlisted short-term insurance company Lion of Africa is in “run-off”, a process that could take two years. Lion of Africa reported a net loss of R132.2m after another “difficult year".
The value of Brimstone’s investments topped R10bn for the first time last year (93 percent of which is in listed companies), and Brimstone’s management said that it remained concerned about the almost 40 percent discount to intrinsic net asset value that its shares trade at.