UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2017

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1 Profitability. Empowerment. Positive Social Impact. ISIN Number: ZAE Share Code: BRT ISIN Number: ZAE Share Code: BRN Company Registration Number: 1995/010442/06 (Incorporated in the Republic of South Africa) ( Brimstone or the Company or the Group ) UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2017 SIGNIFICANT EVENTS Operating profit increased by 27% Successful listing of Sea Harvest on the JSE Downward revaluation of Life Healthcare and Tiger Brands of R380 million COMMENTARY The Company reported a 27% increase in operating profit to R155.9 million (2016: R123.2 million) which is primarily attributable to its subsidiary Sea Harvest increasing its operating profit by 117% to R167.7 million compared to the comparative period. This positive feature of the result was offset by the relatively poor results from operating subsidiaries, Lion of Africa Insurance Company and House of Monatic and by the downward revaluation of investments, the effect of which can be seen in both fair value adjustments and share of profits of associates and joint ventures. The Company consequently reported a loss for the period of R201.0 million compared to a profit of R48.3 million in the comparative period. During the period under review Sea Harvest listed on the JSE diluting Brimstone s holding from 85% to 55% (including treasury shares) resulting in a gain of R744.5 million which was credited to equity as changes in ownership as required by IFRS. Gross assets increased to R8.2 billion from R7.7 billion at 31 December 2016 while intrinsic net asset value decreased to R4.5 billion from R5.1 billion at 31 December UNDERLYING INVESTMENTS 1

2 Brimstone Portfolio SUBSIDIARIES Sea Harvest (55%) 1 Sea Harvest was listed on the JSE on 23 March 2017, raising R1.24 billion net after listing costs. Brimstone s shareholding diluted from 85% to 55% (including treasury shares) following the listing. The share listed at R12.50 and closed at R13.70 on 30 June The group delivered headline earnings of R110.6 million for the six months to 30 June 2017 which is an increase of 217% on the R34.9 million for the same period last year, benefiting from the improved performance of its South African operations as a result of investments in both fleet and land-based operations, continued strong global demand for hake and the acquisition of a controlling interest in Australian-listed Mareterram Limited in July Lion of Africa Insurance Company (Lion of Africa) (100%) Lion of Africa reported a net loss for the six months 30 June 2017 of R38.0 million compared to a loss of R3.4 million for the same period last year. While this is disappointing, Lion of Africa has been in the process of eliminating unprofitable business and, to this end, have been successful as evidenced by satisfactory claims ratios. The reduction in premium as a result of eliminating unprofitable business has resulted in severe strain on its acquisition ratios. The challenge is to grow premium income from good business in order to fully absorb Lion of Africa s acquisition costs. House of Monatic (Monatic) (100%) Revenue decreased by 15% to R88.4 million for the first six months, resulting in a loss of R17.5 million compared to a profit of R0.3 million in the comparative period. This is mainly due to the poor retail climate adversely affecting Monatic s nine retail outlets, sales to independent retailers and chain stores. Profitability was further impacted by Stuttafords going into liquidation. As a result of the aforementioned factors, the factory suffered 19 days of short-time during the period. ASSOCIATES AND JOINT VENTURES Oceana (17%) 2 Brimstone holds 23 million shares with a market value of R2.1 billion in Oceana. Oceana s share price closed at R90.90 per share, down from R per share at 31 December Brimstone received R20.7 million in dividends during the period under review and recorded R18.9 million in equity accounted earnings based on Oceana s reported six month earnings to 31 March An amount of R33.9 million negatively impacted Brimstone s share of Oceana s non-distributable reserves, which is largely attributable to the decrease in Oceana s foreign currency translation and cash flow hedging reserves. Grindrod (6.7%) Brimstone accounts for its share of the results in the Consortium SPV as a joint venture. Brimstone wrote its investment in the consortium down by R20.8 million to nil at 30 June Grindrod s share price closed at R11.06 on 30 June 2017, down from R13.45 per share at 31 December Aon Re Africa (18%) Brimstone, after adjusting for the non-controlling shareholder s share, received a dividend of R3.3 million from Aon Re Africa and recorded R1.4 million in equity accounted earnings during the period under review. South African Enterprise Development (SAED) (25%) SAED is an investment vehicle providing equity growth capital to high potential small and medium sized enterprises. SAED made a positive contribution of R1.7 million to earnings during the period under review % net of treasury shares % net of treasury shares 2

3 INVESTMENTS Equites (10%) 3 Equites share price closed at R17.12 per share, up from R15.80 per share at 31 December The investment was revalued upwards by R46.1 million to R597.4 million at period end. Life Healthcare (4.7%) Life Healthcare s share price closed at R25.65 per share, down from R32.60 per share at 31 December Brimstone subscribed for 17.2 million Life Healthcare shares at R24.50 per share in terms of the rights offer undertaken by the company during the period, investing an additional R420.5 million. The total investment was revalued downwards by R328.8 million to R1.7 billion. Brimstone received a dividend of 35 cents per share resulting in total dividend receipts from Life Healthcare of R23.6 million, down from R36.6 million for the comparative period. Long4Life (9.9%) Brimstone subscribed for 40 million shares in Long4Life at R5.00 per share during the period, investing R200.0 million in total. The Long4Life share price closed at R6.10 per share at 30 June 2017, resulting in the investment being revalued upwards by R44.0 million to R244.0 million at period end. MTN Group and MTN Zakhele Futhi (1.5%) Brimstone disposed of its remaining MTN Group shares during March 2017 at an average price of R per share. Brimstone holds 1.8 million MTN Zakhele Futhi shares which are accounted for as options. The independently calculated option valuation was based on a MTN Group closing share price of R per share, down from R per share at 31 December The investment was revalued downwards by R15.1 million to R51.7 million. Phuthuma Nathi (7%) The Phuthuma Nathi 1 shares and Phuthuma Nathi 2 shares both closed at R per share (R and R per share respectively at 31 December 2016). The investment was revalued upwards by R43.5 million to R663.4 million. Phuthuma Nathi has recomm a dividend that, if approved by shareholders, will be payable in September This dividend amounts to R91.3 million for Brimstone. Tiger Brands (0.9%) Brimstone s rights to Tiger Brands shares, accounted for as options, have been revalued at period end. The independently calculated option valuation was based on a closing share price of R per share, down from R per share at 31 December The investment was revalued downwards by R50.9 million to R322.4 million which includes the value of a forward sale transaction that Brimstone entered into enabling it to sell Tiger Brands shares in the first quarter of 2018 at R per share. INTRINSIC NET ASSET VALUE (INAV) INAV at 30 June 2017 calculated on a line-by-line basis, totalled R4.53 billion, or R18.84 per share (31 December 2016: R5.13 billion or R21.40 per share), representing a decrease of 11.7% from 31 December 2016 (a decrease of 11.9% on a per share basis). As at 30 June 2017, Brimstone Ordinary shares were trading at a discount of 31.0% to INAV (31 December 2016: 39.3%). Brimstone N Ordinary shares traded at a discount of 31.0% to Brimstone s INAV (31 December 2016: 43.9%). The analysis of INAV is available on the Company s website at The INAV information presented in this report has been prepared on a basis consistent with that used in the integrated report for the year 31 December Subsequent to 30 June 2017 Brimstone s interest reduced to 8.5% following a share placement by Equites 3

4 BASIS OF PREPARATION The condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standard, IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the Listings Requirements of the JSE Limited and the requirements of the Companies Act of South Africa, No. 71 of The report has been prepared using accounting policies that comply with International Financial Reporting Standards which are consistent with those applied in the financial statements for the year 31 December The condensed financial information has been prepared under the supervision of the Group Financial Director, Geoffrey George Fortuin CA(SA). The information has not been audited or reviewed by the Group s auditors, Deloitte & Touche. DIVIDEND In line with previous years, no interim dividend is declared for the half year. PROSPECTS The Group will continue to maintain its positive long-term view on its investments and pursue value accretive opportunities. On behalf of the board F Robertson Executive Chairman MA Brey Chief Executive Officer 23 August 2017 DIRECTORATE AND ADMINISTRATION Registered office: Boundary Terraces, 1 Mariendahl Lane, Newlands 7700, Cape Town Transfer Secretaries: Computershare Investor Services (Pty) Ltd, Rosebank Towers, 15 Biermann Avenue, Rosebank 2196 Sponsor: Nedbank CIB, 135 Rivonia Road, Sandton 2196 Directorate: F Robertson (Executive Chairman)*, MA Brey (Chief Executive Officer)*, GG Fortuin (Financial)*, MI Khan (Chief Operating Officer)*, PL Campher (Lead Independent), M Hewu, N Khan, KR Moloko, MK Ndebele, LA Parker, FD Roman *Executive Website: info@brimstone.co.za 4

5 CONDENSED CONSOLIDATED INCOME STATEMENT for the six months 30 June 2017 Unaudited Unaudited Audited Year 30 June 30 June 31 December R Revenue Sales and fee income Dividends received Operating expenses ( ) ( ) ( ) Operating profit Fair value (losses)/gains ( ) (70 803) Other investment gains Share of profits of associates and joint ventures (Loss)/profit before net finance costs (95 278) Income from investments Finance costs ( ) ( ) ( ) Net (loss)/profit before taxation ( ) Taxation ( ) (86 173) (Loss)/profit for the period ( ) (Loss)/profit attributable to: Equity holders of the parent ( ) Non-controlling interests ( ) (Loss)/earnings per share (cents) Basic (101.6) Diluted (101.6)

6 CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME for the six months 30 June 2017 Unaudited Unaudited Audited Year 30 June 30 June 31 December R (Loss)/profit for the period ( ) Other comprehensive (loss)/income, net of tax (40 948) Items that may be reclassified subsequently to profit or loss Cash flow hedges (Loss)/gain arising during the period (17 917) Foreign currency translation Gain/(loss) arising during the period (44 292) Share of non-distributable reserves of associates (31 336) (12 662) Items that will not be reclassified subsequently to profit or loss Share of non-distributable reserves of associates Total comprehensive (loss)/income for the period ( ) Total comprehensive (loss)/income attributable to: Equity holders of the parent ( ) Non-controlling interests ( )

7 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2017 Unaudited Unaudited Audited 30 June 30 June 31 December R ASSETS Non-current assets Property, plant, equipment and vehicles Goodwill and intangible assets Investments in associate companies and joint ventures Investments Deferred taxation Insurance assets Other financial assets Current assets Inventories Trade and other receivables Insurance assets Other financial assets Taxation Investments Cash and cash equivalents TOTAL ASSETS EQUITY AND LIABILITIES Capital and reserves Share capital Capital reserves Revaluation reserves Cash flow hedging reserve (13 892) Foreign currency translation reserve (15 917) (29 119) Changes in ownership ( ) ( ) Retained earnings Attributable to equity holders of the parent Non-controlling interests Non-current liabilities Long-term interest bearing borrowings Long-term provisions Deferred grant income Other financial liabilities Insurance liabilities Deferred taxation Current liabilities Short-term interest bearing borrowings Bank overdrafts Trade payables Other payables Insurance liabilities Other financial liabilities Short-term provisions Taxation TOTAL EQUITY AND LIABILITIES NAV per share (cents) Shares in issue at end of period (000 s)

8 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the six months 30 June 2017 Unaudited Unaudited Audited Year 30 June 30 June 31 December R Operating activities Net attributable (loss)/profit ( ) Adjustments for non-cash items Operating cash flows before movements in working capital Increase in inventories (23 364) (4 541) (23 992) (Increase)/decrease in trade and other receivables ( ) Increase/(decrease) in trade and other payables ( ) ( ) Net decrease in insurance assets Net decrease in insurance liabilities ( ) ( ) ( ) Cash generated from operations Interest received Dividends received from associates and joint ventures Dividends received from other equity investments Income taxes paid (45 757) (11 306) (64 177) Finance costs ( ) ( ) ( ) Net cash generated from operating activities Investing activities Loan repayments and recoveries from associate and investments Proceeds on disposal of investments Proceeds on disposal of property, plant, equipment and vehicles Acquisition of property, plant, equipment and vehicles (54 499) (61 522) ( ) Acquisition of subsidiaries shares acquired and loans advanced ( ) Acquisition of intangible assets (3 460) (700) (7 611) Proceeds from receipt of a government grant Acquisition of investments ( ) (20 032) ( ) Net cash (utilised in)/generated from investing activities ( ) Financing activities Dividends paid by Company and subsidiaries ( ) (91 516) (91 517) Distributions made to participants of share trusts of subsidiary ( ) Distributions made to participants of share trusts of Company (38 923) Repayments of borrowings ( ) (54 796) ( ) Loans raised Repayment of financial liabilities (23 912) Further investment in subsidiary ( ) ( ) Shares repurchased (49 900) (62 950) Disposal of treasury shares by subsidiary Proceeds on issue of trust units/shares Issue of shares by subsidiary Redemption of non-controlling shareholder s preference shares (88 994) (85 756) Shares/units repurchased by subsidiaries (55 831) (108) Increase in bank overdrafts Net cash generated from/(utilised in) financing activities ( ) ( ) Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Foreign exchange differences 10 (53) Cash and cash equivalents at end of period Bank balances and cash

9 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months 30 June 2017 R 000 Share capital Capital reserves Revaluation reserves Cash flow hedging reserve Foreign currency translation reserve Retained earnings Changes in ownership Attributable to equity holders of the parent Noncontrolling interests Total Balance at 1 January 2016 Audited (42 414) (11 839) Attributable profit for the year 31 December Other comprehensive (loss)/income (6 888) (29 119) Total comprehensive (loss)/income (6 888) (29 119) Recognition of share-based payments (9 788) (9 788) 665 (9 123) Amount reclassified to share options reserve Dividend paid (85 791) (85 791) (5 726) (91 517) Distributions made to participants of share trusts (38 923) (38 923) (38 923) Subsidiary s accrual for preference dividends Non-controlling interest arising on recognition of subsidiary Acquisition of non-controlling interest in subsidiary (15 188) (15 188) Redemption of preference shares by subsidiary (88 994) (88 994) Disposal of treasury shares by subsidiary Shares/units purchased by subsidiary (108) (108) Issue of share capital Sale of trust units (1 576) (584) Recognition of change in value of share option liability directly in equity (1 535) (1 535) (1 535) Treasury shares acquired (62 950) (62 950) (62 950) Further acquisition of investment in subsidiary ( ) ( ) ( ) Share of non-distributable reserves of associates transferred directly to equity (1 176) (1 146) Balance at 31 December 2016 Audited (29 119) ( )

10 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED) for the six months 30 June 2017 R 000 Share capital Capital reserves Revaluation reserves Cash flow hedging reserve Foreign currency translation reserve Retained earnings Changes in ownership Attributable to equity holders of the parent Noncontrolling interests Total Balance at 1 January 2017 Audited (29 119) ( ) Attributable (loss)/profit for the six months 30 June 2017 ( ) ( ) ( ) Other comprehensive (loss)/income (30 782) (5 846) (7 904) (44 532) (40 948) Total comprehensive (loss)/income (30 782) (5 846) (7 904) ( ) ( ) ( ) Recognition of share-based payments (1 913) (1 018) (2 931) (6 053) (8 984) Dividend paid ( ) ( ) (2 200) ( ) Distributions made to participants of share trusts of subsidiary ( ) ( ) ( ) Recognition of forfeitable share plan reserves (55 001) (55 001) (55 001) Shares repurchased by subsidiary (51 429) (51 429) (4 401) (55 830) Shares issued by subsidiary (6 920) (12 678) Issue of share capital Share of non-distributable reserves of associates transferred directly to equity (2 552) (2 552) (2 552) Balance at 30 June Unaudited (15 917) January 2016 to 30 June 2016 Unaudited Balance at 1 January 2016 Audited (42 414) (11 839) Attributable profit for the six months 30 June Other comprehensive income Total comprehensive income Recognition of share-based payments Dividend paid (85 791) (85 791) (5 725) (91 516) Subsidiary s accrual for preference dividends Acquisition of non-controlling interest in subsidiary ( ) ( ) (8 968) ( ) Redemption of preference shares by subsidiary (88 994) (88 994) Issue of share capital Treasury shares acquired (49 900) (49 900) (49 900) Share of non-distributable reserves of associates transferred directly to equity (367) Balance at 30 June Unaudited (13 892) ( )

11 HEADLINE (LOSS)/EARNINGS PER SHARE Unaudited Unaudited Audited Year 30 June 30 June 31 December Headline (loss)/earnings per share (cents) Basic (101.4) Diluted (101.4) Headline (loss)/earnings calculation (Loss)/profit attributable to equity holders of the parent ( ) Loss/(profit) on disposal of property, plant, equipment and vehicles 234 (1 670) (2 098) Impairment of property, plant, equipment and vehicles 707 Reversal of impairment of property, plant, equipment and vehicles (251) Realised loss on disposal of associate Gain on remeasurement of previously held interest in subsidiary (38 649) Adjustments relating to results of associates (47) (1 217) (28 727) Total tax effects of adjustments (161) Headline (loss)/earnings ( ) Weighted average number of shares on which basic (loss)/earnings and basic headline (loss)/earnings per share is based (000 s) Weighted average number of shares on which diluted (loss)/earnings and diluted headline (loss)/earnings per share is based (000 s) INTRINSIC NET ASSET VALUE (INAV) Unaudited 30 June 2017 Unaudited 31 December 2016 Change since 31 December 2016 INAV of Brimstone (R m) % INAV per share (cents) % Fully diluted INAV per share (cents) % Market price per share (cents) Ordinary shares % N Ordinary shares % Discount to INAV Ordinary shares 31.0% 39.3% N Ordinary shares 31.0% 43.9% The breakdown of INAV which has been prepared on the same basis as that used in the integrated report for the year 31 December 2016, is available on the Company s website at 11

12 FURTHER INFORMATION Unaudited Unaudited Audited Year 30 June 30 June 31 December R Segmental information Information reported to the Group s operating decision makers for the purpose of resource allocation and assessment of segment performance is specifically focused on the individual entity in which Brimstone has invested. The Group s reportable segments under IFRS 8: Operating Segments, are therefore fishing, insurance, clothing and investments. Investments include investments in associates, joint ventures, available-for-sale investments, investments at fair value through profit or loss and the Group s property portfolio. Segment revenues and results Segment revenue Fishing Insurance Clothing Investments Total revenue Segment profit/(loss) from operations Fishing Insurance (43 343) (9 696) (30 868) Clothing (14 351) Investments Total profit from operations Fair value (losses)/gains ( ) (70 803) Other investment gains Share of profits of associates and joint ventures Income from investments Finance costs ( ) ( ) ( ) Taxation ( ) (86 173) (Loss)/profit for the period ( )

13 FURTHER INFORMATION (CONTINUED) 2. Fair value measurements This note provides information about how the Group determines fair values of various financial assets and financial liabilities. Fair value of the Group s financial assets and financial liabilities that are measured on a fair value basis on a recurring basis Some of the Group s financial assets and financial liabilities are measured at fair value at the end of each financial reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used). The directors consider that the carrying amounts of financial assets and financial liabilities not measured at fair value on a recurring basis (but fair value disclosures are required) recognised in the consolidated financial statements approximate their fair values. R June 2017 Level 1 Level 2 Level 3 Total Financial assets at FVTPL* Derivative financial assets ³ ³ Listed shares Unlisted shares ¹ Available-for-sale financial assets Unlisted shares ² Unlisted shares 2 218¹ Total June 2016 Level 1 Level 2 Level 3 Total Financial assets at FVTPL* Derivative financial assets ³ Listed shares Unlisted shares and loan ¹ Other investments Available-for-sale financial assets Unlisted shares ² Unlisted shares 2 218¹ Total

14 FURTHER INFORMATION (CONTINUED) 2. Fair value measurements (continued) R December 2016 Level 1 Level 2 Level 3 Total Financial assets at FVTPL* Derivative financial assets ³ Listed shares Unlisted shares and loan ¹ Available-for-sale financial assets Unlisted shares ² Unlisted shares 2 218¹ Total Financial liabilities at FVTPL* Derivative financial liabilities 2 698³ˆ *FVTPL = Fair value through profit or loss ˆAdjusted for fishing licence liabilities of R100.9 million carried at amortised cost The table provided analyses financial instruments that are measured subsequent to initial recognition at fair value, grouped in Levels 1 to 3 based on the degree to which fair value is observable. Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). There were no transfers between levels 1, 2 and 3 in the current or prior period. Notes 1. At cost or historical valuation. 2. Value determined by an independent valuer based on current market values. 3. The following methods and inputs are used in valuing level 2 financial assets and liabilities: Options are independently valued using the Monte Carlo method, taking into account the number of option shares, the spot price per share, the risk free rate, dividend yield, volatility and outstanding debt of the relevant share. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves. The fair value of forward exchange contracts is determined using forward exchange spot and forward rates at the reporting date. There are no changes to unobservable inputs that might result in a significantly higher or lower fair value measurement within level 2 and level 3 financial assets and liabilities. 14

15 FURTHER INFORMATION (CONTINUED) Unaudited Unaudited Audited 30 June 30 June 31 December Share Capital (number) In issue Ordinary shares Held as treasury shares ( ) ( ) ( ) N Ordinary shares Held as treasury shares ( ) ( ) ( ) Total net of treasury shares Weighted average number of shares on which basic (loss)/earnings and basic headline (loss)/earnings per share is based: Weighted average number of shares on which diluted (loss)/earnings and diluted headline (loss)/earnings per share is based: Reconciliation of weighted average number of shares used in the calculation of basic and diluted earnings per share and headline earnings and diluted headline earnings per share. Basic Dilutive instruments Diluted Number of instruments treated as anti-dilutive Closing share price (cents) Ordinary shares N Ordinary shares The following movements in the number of shares occurred during the period under review: Shares issued Ordinary N Ordinary 9 March April Shares repurchased and cancelled 23 May