integrated report 2017 - brimstone.co.za · our history group structure ... in keeping with our...

INTEGRATED REPORT 2017

T H I S I N T E G R A T E D R E P O R T I S P R I N T E D O N C O C O O N S I L K .

1 0 0 % R E C Y C L E D ( P C W ) / F S C T M 1 0 0 % R E C Y C L E D C E R T I F I E D .

ABOUT THIS REPORT . . . . . . . . . . . . . . . .Inside front cover

OUR HISTORYGroup Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Salient Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Five Year Financial Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Historic Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

OUR BUSINESSOur Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8External Factors Impacting Our Business Model . . . . . . . . 10Managing Our Material Risks . . . . . . . . . . . . . . . . . . . . . . . . . . 12Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Team Brimstone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Chairman’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Chief Executive Officer’s Report . . . . . . . . . . . . . . . . . . . . . . 22Group Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26Intrinsic Net Asset Value Report . . . . . . . . . . . . . . . . . . . . . .28Corporate Social Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . .30Unlisted Subsidiary Reports . . . . . . . . . . . . . . . . . . . . . . . . . .34

GOVERNANCEGovernance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38Social and Ethics Committee Report . . . . . . . . . . . . . . . . . .44Remuneration Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46Audit and Risk Committee Report . . . . . . . . . . . . . . . . . . . . 53

AUDITED ANNUAL FINANCIAL STATEMENTSContents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55Notes to the Annual Financial Statements . . . . . . . . . . . . . 67Shareholding Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 155Notice of Annual General Meeting . . . . . . . . . . . . . . . . . . . 158Curriculum Vitae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165Proxy Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167Corporate Information . . . . . . . . . . . . . . . . .Inside back cover

CONTENTS

ABOUT THIS REPORT

Report Profile This report is for the year ended 31 December 2017.

This is the ninth Integrated Report produced by Brimstone. It is intended to continue along this journey of Integrated Reporting to enable the

Company to refine the report to fully comply with King IV and the JSE Limited Listings Requirements.

For any enquiries on this report please contact Nisaar Pangarker ([email protected]),

Michael O’Dea ([email protected]) or Tiloshani Moodley ([email protected])

at the e-mail addresses provided or telephone number +27 21 683 1444.

Report Scope and Boundary As an investment holding company Brimstone reports on all unlisted businesses which it controls. Where the

business is separately listed or Brimstone does not enjoy control, it has chosen to influence the principles

of sustainability within the context of that business, but will however not report on the landscape and progress. Brimstone currently has three operating

subsidiaries, i.e. House of Monatic, Lion of Africa and Sea Harvest. Sea Harvest is listed and the other two

subsidiaries are unlisted but all are operated and managed as independent entities with their own

boards of directors.

MaterialityIn keeping with our mission statement, we focus on material aspects that impact our ability to be

profitable, empowering and have a positive social impact in the communities in which we operate. Material aspects are defined as any significant

developments that would influence an assessment of Brimstone’s performance or opportunities. In achieving our mission, various capitals are

consumed.

Primary Reporting FrameworkThis report is prepared under the guidance of the

International Integrated Reporting <IR> Framework which has been adopted by the Board.

Independent AssuranceIndependent assurance and assessment has been

provided over the financial and certain non-financial information presented in this report. Deloitte & Touche as our external auditors has issued an

unqualified audit opinion on the consolidated and separate annual financial statements. Empowerdex

and Premier Verification have issued certificates verifying the B-BBEE ratings presented.

Report ApprovalThe Board believes that the Integrated Report has been prepared in accordance with best practice,

appropriately addresses material aspects of Brimstone’s business and is a fair representation of

the integrated performance of the Group.

CORPORATE PROFILE

BRIMSTONE IS A BLACK CONTROLLED AND MANAGED INVESTMENT HOLDING COMPANYincorporated and domiciled in the Republic of South Africa, employing in excess of 3 000 employees in its subsidiaries and more than 24 000 in its associates and companies in which it has invested. Brimstone seeks to achieve above average returns for its shareholders by investing in wealth creating businesses and entering into strategic alliances to which it contributes capital, innovative ideas, management expertise, impeccable empowerment credentials and a values driven corporate identity.

MISSION STATEMENTBrimstone Investment Corporation Limited seeks to be Profitable, Empowering and to have a Positive Social Impact on the businesses and the individuals with whom it is involved, including shareholders, e mployees, suppliers, customers and the greater community.

B R I M STO N E I N V E ST M E N T CO R P O RAT I O N L I M I T E D – I N T EG RAT E D R E P O RT 2 01 7 1

GROUP STRUCTURE

A schematic representation of Brimstone and its

operating subsidiaries,

including information regarding their

number of employees and

ownership interest. Only summarised

disclosures relating to the profitability,

empowerment and positive social impact

of Brimstone’s unlisted operating

subsidiaries are provided in this

report.

Associates, Joint Ventures,

Investments, and Option Investments

OUR HISTORY

2 B R I M STO N E I N V E ST M E N T CO R P O RAT I O N L I M I T E D – I N T EG RAT E D R E P O RT 2 01 7

Shareholding:

54.9%Number of employees:

2 254

Shareholding:

100%Number of employees:

723

Shareholding:

100%Number of employees:

95


for the year ended 31 December 2017

SALIENT FINANCIAL HIGHLIGHTS

OUR HISTORY


FIVE YEAR FINANCIAL REVIEW

Year ended Year ended Year ended Year ended Year ended31 December 31 December 31 December 31 December 31 December

2017 2016 2015 2014 2013

Operating results (R’ 000)Revenue 2 783 431 2 688 490 2 208 137 2 221 054 2 086 376 Operating Profit 374 453 459 480 185 743 101 858 64 386 Headline Earnings/(Loss) 26 957 115 581 (724 541) 286 238 460 581

Financial Position (R’000)Total Assets 9 185 104 7 770 5141 7 652 595 7 933 066 6 799 593 Net Assets 2 782 002 2 427 135 2 530 310 3 324 984 3 237 646

Performance per share (cents)Headline Earnings/(Loss) 11.2 48.0 (295.3) 116.9 188.4 Dividend 42.0 42.0 35.0 30.0 30.0 Special dividend — — — 20.0 10.0 Net Asset Value 1 160.3 1 011.5 1 044.0 1 356.3 1 324.0 Intrinsic Net Asset Value 1 800.9 2 139.5 1 741.4 1 979.4 1 708.8

Share statisticsWeighted average number of shares in issue net of treasury shares 240 170 204 240 732 715 245 392 252 244 918 888 244 413 514 Shares in issue at end of year net of treasury shares 239 767 194 239 955 798 242 370 966 245 151 175 244 531 075 Closing share price: Ordinary (cents) 1 300 1 299 1 350 1 700 1 400 Closing share price: “N” Ordinary (cents) 1 125 1 200 1 270 1 650 1 400

Market capitalisation: Ordinary shares (R’000)2 500 299 499 9141 523 861 726 917 598 638 Market capitalisation: “N” Ordinary shares (R’000)2 2 269 881 2 417 655 2 585 294 3 339 457 2 824 798 Total (R’000) 2 770 180 2 917 569 3 109 155 4 066 374 3 423 436

1 Restated

2 Net of treasury shares

PercentageR’000 2017 2016 Change

Revenue 2 783 431 2 688 490 4%Operating Profit 374 453 459 480 (19%)Headline Earnings 26 957 115 581 (77%)Total Assets 9 185 104 7 770 5141 18%

Weighted average number of shares in issue net of treasury shares (000’s) 240 170 240 733 (0%)Shares in issue at end of year net of treasury shares (000’s) 239 767 239 956 (0%)

Performance per share (cents)Headline Earnings 11.2 48.0 (77%)Net Asset Value 1 160.3 1 011.5 15%

REVENUE

2013 2014 2015 2016 2017

3 000 000

2 500 000

2 000 000

1 500 000

1 000 000

500 000

0

2 086 376 2 221 054 2 208 137

2 688 490 2 783 431

R’0

00

2013 2014 2015 2016 2017

10 000 000

9 000 000

8 000 000

7 000 000

6 000 000

5 000 000

4 000 000

3 000 000

2 000 000

1 000 000

0

TOTAL ASSETS

6 799 593

7 933 066 7 770 514

9 185 104

7 652 595

R’0

00

2 500

2 000

1 500

1 000

500

0

INAV PER SHARE

2013 2014 2015 2016 2017

1 708.8

1 979.4

2 139.5

1 800.91 741.4

CEN

TS

OPERATING PROFIT

2013 2014 2015 2016 2017

500 000

400 000

300 000

200 000

100 000

0

64 386

101 858

459 480

374 453

185 743

R’0

00

NAV PER SHARE

2013 2014 2015 2016 2017

1 500

1 200

900

600

300

0

1 324.0 1 356.3

1 011.5

1 160.31 044.0

CEN

TS

MARKET CAPITALISATION

2013 2014 2015 2016 2017

5 000 000

4 000 000

3 000 000

2 000 000

1 000 000

0

3 423 436

4 066 374

3 047 469

2 770 180

3 109 155

R’0

00


BRT Share Price(cents)

BRN Share Price(cents)

34 3229 32

580

140

475

125

75 5275 50 60 5560 55 42 5840 56 64

137

80 120

96

155

105 17

0 200

380

165

377

600 72

5

490

685

1998

Raised R85m in various share issues

Asset base R300m

Sold stake in Norwich at profit of R21m

Acquired House of Monatic

Listed on JSE

Sold off non-core assets raising R62m

Acquired stake in Sea Harvest

Acquired stake in Nandos Group

1999

Paid back 150cps to all shareholders

Acquired 30% of Lion of Africa

Prof Jakes Gerwel appointed as Chairman of board

2000

Acquired stake in Peoples Bank

Sold stake in KFM Radio

Started BrimEquity, a JV withCoronationCapital

2001

Received empowerment deal of the year award for Peoples Bank

Disposed of property investments

Acquisition of further shares in Sea Harvest

Market capitalisation drops to below R40m

2002

Declared maiden dividend of 4cps

2003

Disposed of stake in Nandos Group

Acquired 25% in Lenco Holdings for R52m

Doubled stake in Sea Harvest to 21.52% for R85.3m

Specific share repurchase

Paid maiden dividend of 4cps

2004 2005

Acquired stakes in Old Mutual and Nedbank

Acquired 18% stake in Life Healthcare

Clawback offer of R110m

2006

Acquired a further 10% stake in Oceana for R176m

Increased stake in Life Healthcare to 21.9%

1995

Incorporated in October

Acquired stake in Oceana for R7.5m

Raised initial capital of R3m from community share-holders

1996

Raised R13m from shareholders

Total investments R17.4m

Acquired stakes in Plessey Cellular, KFM Radio and Norwich Holdings

1997

Restructure of share capital

First AGM held

Raised more than R45m from previously disadvan taged shareholders

Raised R104m from institutions

150

121084

Special Dividend (cents)

HISTORIC REVIEW


400

450510

400

850

865

779

670

560

810

530

780

1 125

760

1 125

510

870 1 0

00

725 82

0

990 1 1

25

984

1 195

1 350 1 4

00

1 375

1 40

0

1 50

0 1 70

0

1 525 1 6

50

1 60

0

1 3501 4

95

1 270 1 3

50

1 30

0

1 30

0

1 180

1 1251 2

00

1 30

0

1 299

2007

Sold Lenco stake for R203m

Acquired 18% stake in Aon Re Africa

2008

10 years on the JSE

Acquired Phuthuma Nathi shares

2009

Increased stake in Sea Harvest to 55.7%

Increased stake in Lion of Africa to 74%

Acquired option to subscribe for 1% of Tiger Brands

2010

Unbundled part of Life Healthcare stake to shareholders

Acquisition of remaining 26% of Lion of Africa

Acquired MTN Zakhele shares

2011

Increased stake in Scientific Group to 28.2%

Acquired further 8.5m shares in Oceana for R382m

2012

Acquired 12.3% of Taste Holdings

Disposed of 4.5m shares in Life Healthcare realising R140m

Acquired 25.1% of Afena Capital

2013

Total assets increase by R1.1bn

2014

Acquired 4.97% of Grindrod

Acquired further 1.16m MTN Zakhele shares

Acquired further 1.1m Phuthuma Nathi shares

2015

Subscribed for additional 2.8m shares in Oceana rights offer

Acquired further 19.7m shares in Taste Holdings

Old Mutual and Nedbank transactions matured

Disposed of investment in Scientific Group at a profit of R44.8m

Increased shareholding in Grindrod to effective 6.62%

Acquired further 1.96m Phuthuma Nathi shares

Acquired 10% of Equites for R350m

2016

Increased stake in Sea Harvest to 85%

Disposed of investment in Rex Trueform and African & Overseas realising R51.8m

Disposed of investment in Taste Holdings realising R143.4m

Disposed of investment in Afena Capital realising R11m

Participated in Equites private placement of shares in the amount of R100m

2017

Listing of Sea Harvest on the JSE

Acquired 17.2m shares in Life Healthcare rights offer

Acquired 40m shares in Long4Life ahead of its listing

Disposed of investment in MTN Group

Acquired 33.8m shares in Stadio BEE transaction

2018

Disposed of investment in Tiger Brands

Acquired 10% of FPG Property Fund

10 20

30 35 42 423025181532243216Ordinary Dividend

(cents)


KEY INPUTS

HUMAN CAPITAL

– Market sensing investment team– Strong and committed leadership and back office– Professional service providers

SOCIAL AND RELATIONSHIP CAPITAL

– Business networks– Unique and broad shareholder profile– Long-term investment focus– Proven track record of successful partnering– Strong BEE credentials

INTELLECTUAL CAPITAL

– Track record of adding value– Reputation for fair and ethical business practices– Balance sheet management expertise– Optimisation of financial capital

FINANCIAL CAPITAL

– Debt and equity funding– Vendor funding– Reinvestment of retained earnings– Available borrowing facilities

OUR ACTIVITIES

IDENTIFY INVESTMENT OPPORTUNITIES

– Leveraging networks – Researching publicly available information– Approaches from investment banks and corporate finance

houses– Approaches from businesses seeking BEE partner– Restricted BEE equity ownership schemes

RIGOROUS EVALUATION OF OPPORTUNITIES

– Preferred sectors– Good growth potential– Strong cash flows and record of profitability– Minimum hurdle rates met, including Positive Social Impact– Minimise discount to INAV– Listed vs unlisted and control vs non-control– Ethical, competent and like-minded management team– Board representation required where possible

ROBUST NEGOTIATION AND CONSIDER SOURCES OF FUNDS

– Robust negotiation for the best terms– Optimal funding and investment holding structure– Involving necessary specialists in process– Approvals framework adhered to

MONITORING INVESTMENT PERFORMANCE

– Board representation and committee involvement– Contribution of management expertise to investee– Providing strategic insight to investee– Dedicated executives assigned to subsidiaries– Regular review of performance– Robust discussions with investee

OUR BUSINESS MODEL

GOVERNANCE

OUR BUSINESS


OUR BUSINESS CONTEXT

EXTERNAL FACTORS

– Amendments to B-BBEE Act and Sector Codes– Government’s Black Industrialist’s Programme– Macro-economic factors on South African economy– Increased volatility of equity market

OUR MATERIAL RISKS

1. Lion of Africa Insurance Company profitability2. Political and economic landscape3. Reputational risk4. Investment concentration in highly regulated industries5. Sustained stock market shock6. Net asset value volatility7. Technology, skills and knowledge gap8. Suitability, affordability and compatibility of deals9. Succession planning10. Ineffective oversight of subsidiary companies

OUTPUT

VALUE DELIVERED

FINANCIAL RETURNS

KEY OUTCOMES

R95 millionTaxes paid to SARS

3 098Total workforce in Group

R2 167millionPaid to employees and suppliers

R12 millionCSI spend (Including R6.4 million worth of shares

allotted to BEST)

R238 millionInterest paid to financiers

42 cents per shareDividends declared to shareholders

R1 884 millionReinvested

R4 318millionIntrinsic Net Asset Value

P11

P12


BRIMSTONE WITH ITS

22-YEAR TRACK RECORD OF

DEAL-MAKING IS WELL

PLACED TO PARTNER WITH

COMPANIES LOOKING FOR

A B-BBEE PARTNER.

EXTERNAL FACTORS IMPACTING OUR BUSINESS MODEL

Amendments to B-BBEE Act and Sector Codes

Increased Volatility of Equity Market

Macro-Economic Factors on South African Economy

Black Industrialist’s Programme

OUR BUSINESS


The amendments to the Broad-Based Black Economic Empowerment (B-BBEE) Act of 2003 and the various sector codes have had the effect of reducing the compliance levels of companies by two to three levels. A company will no longer be able to achieve a reasonable level of B-BBEE compliance without meeting the priority elements of the relevant sector code.

Ownership remains a critical element in most of the sector codes and the procurement element is heavily weighted towards procuring from black-owned businesses as opposed to the highest-rated businesses. While 2017 has shown an increase over 2016 in the number of transactions to ensure that businesses become black-owned or significantly black-owned, the level of activity in this area is still considered to be low. Increasing political pressure to address the racial wealth gap in South Africa, together with the coming into effect of the amended sector codes and the clarity it brings is likely to lead to an increase in activity in the medium term.

Brimstone with its strong black ownership credentials of about 64% black economic interest and 70% black voting rights, together with its 22-year track record of deal-making, is well placed to partner with companies looking for a B-BBEE partner.

The Black Industrialist Programme was introduced to transform the structure of the South African economy. The concept of black industrialists refers to black people directly involved in the origination, creation, significant ownership, management and operation of industrial enterprises that derive value from the manufacturing of goods and services on a large scale; acting to unlock the productive potential of our country’s capital assets for massive employment locally. The following are important elements of being an industrialist: – Significant influence in an enterprise or industry;– Control of an enterprise through shareholding; – Board and executive management control; and – Production of products (goods and/or services) with significant wide use.

The Group through its subsidiaries and investee companies is well positioned to benefit from the programme in the area of green technology particularly in the Western Cape which is experiencing a severe drought and in respect of production efficiency projects.

South Africa has since 2012 been affected by the decline in international commodity prices for its four key exports: coal, platinum, iron ore and gold. Economic growth slowed, which was exacerbated by domestic structural weaknesses and low investor confidence. Economic growth increased from 0.3% in 2016 to 1.3% in 2017 and is projected to reach 1.5% in 2018 and 2.1% by 2020.

The most prominent threat to the South African economy in 2016 was a sovereign credit rating downgrade to below investment grade, which materialised in November 2017 by Standard & Poor’s downgrading South Africa’s sovereign credit rating two steps below investment grade. While Moody’s maintains South Africa’s sovereign credit rating at investment grade, South Africa will not be removed from the World Government Bond Index, making higher capital outflows unlikely. The improvement in the political landscape in the first quarter of 2018 is expected to prevent a downgrade by Moody’s.

The South African Reserve Bank reduced interest rates by 25 basis points during 2017 and with a lower inflation forecast and the stronger Rand versus the US Dollar it is widely expected that interest rates will be cut further in 2018.

While a stronger Rand does negatively impact certain of Brimstone’s investments which earn a significant portion of their revenue from exports, it does benefit those entities sourcing raw material globally. Lower interest rates will positively impact the Group due to the level of interest-bearing borrowings.

Investments in listed companies represent more than 40% of the intrinsic gross asset value of Brimstone’s investment portfolio. Consequently, fluctuations in the market price of listed shares result in significant volatility in the income statement.


MANAGING OUR MATERIAL RISKS

INH

EREN

T R

ISK

EX

POSU

RE

Extr

eme

Hig

hM

oder

ate

Low

Insi

gnifi

cant

Very good Good Satisfactory Needs improvement Unsatisfactory

CONTROL EFFECTIVENESS

IMPA

CT

Cat

astr

ophi

cC

ritic

alSe

rious

Sign

ifica

ntM

inor

Rare Unlikely Possible Likely Almost certain

LIKELIHOOD

10

10

8

8

7 96

976

5

5

43

43

2

2

1

1

Heat maps Top 10 material risks (by residual risk EXPOSURE)

Inherent Risk Exposure

1 Lion of Africa Insurance Company profitability

2 Political and economic landscape

3 Reputational risk

4 Investment concentration in highly regulated industries

Residual Risk Exposure5 Sustained stock market shock

6 Net asset value volatility

7 Technology, skills and knowledge gap

8 Suitability, affordability and compatibility of deals

9 Succession planning

10 Ineffective oversight of subsidiary companies

OUR BUSINESS


Risk context Response measures

– Significant losses incurred – Inadequate statutory solvency levels

– Adequate capitalisation to maintain statutory solvency levels– Relationship with a technical strategic partner to improve

underwriting and credit rating and reduce management expenses

– Continuous liaison with the regulator

– Risk of credit rating downgrade to sub-investment grade by a third rating agency

– New political leadership’s ability to create policy certainty– Government’s ability to stabalise state owned entities’ finances

and effectively deal with ongoing allegations of corruption– Low investor confidence– Sluggish economic growth impacting investment returns– Volatility of the Rand

– Increase sources of foreign income– Optimise hedging strategies of group entities exposed to

foreign currencies– Deleverage balance sheet as much as possible to limit impact

of interest rate hikes– Prudent cost management

– Impact of poor brand or reputation in the market based on information in the public domain

– Inadequate stakeholder engagement

– Formalise programme for monitoring brand and reputation– Implement formal programme for stakeholder engagement

– Group has interests in the fishing, insurance and healthcare industries which are subject to strict regulation

– Monitor policy and legislative changes, and engage actively with relevant authorities on policy and legislative framework

– Geographic diversification of sources of revenue

– Significant investments in listed companies, exposes Group to market volatility

– Market conditions in relation to interest rates and exchange rates impacting negatively on subsidiaries

– Increase in interest rates driving up cost of capital

– Determine optimal mix of investments– Increase exposure to unlisted investments– Reduce debt whenever possible– Monitor compliance with foreign exchange hedging policies

– Impact of market perception of Brimstone’s investment philosophy

– Formalise the strategy and plan to enable a more focused investment philosophy

– Brimstone board representatives’ inability to question subsidiaries in order to identify disruptive technology risks or similar developments in their markets

– Brimstone representatives on subsidiary boards to assess the IT capability on the boards and make recommendations to enhance the collective IT knowledge and skills

– Lack of growth in investment portfolio and dividend income– Ability to appropriately diversify investment portfolio

– Maintain relationships with banks and advisors – Develop relationships with unlisted company service providers

and advisors– Investment Committee to determine appropriate investment

hedging strategy for offshore investments

– Lack of director and senior management succession planning– Team alignment

– Formalise succession plan for Board, and all key senior positions

– Consider staff succession planning at Nomination Committee meetings

– Investment holding company which is removed from the day to day operations of the subsidiaries

– Lack of transparency in reporting by investee companies

– Group governance framework to be developed and formally adopted by subsidiary boards


BOARD OF DIRECTORS

Fred Robertson (63)Executive Chairman

Qualifications: DPhil (h.c.)

Date appointed to the Board:21 October 1995

Member of: Social and ethics committee

Directorships: Aon Re Africa (Pty) Ltd; House of Monatic (Pty) Ltd (chairman); Lion of Africa Insurance Company Ltd (chairman); Lion of Africa Life Assurance Company Ltd (chairman); MyDomain (Pty) Ltd; Remgro Ltd; Sea Harvest Group Ltd (chairman); Swiss Re Life and Health Africa Ltd

Executive directors

Mustaq Brey (64)Chief Executive Officer

Qualifications: BCompt (Hons); CA(SA)

Date appointed to the Board:1 November 1995

Member of: Social and ethics committee

Directorships: Aon Re Africa (Pty) Ltd; Equites Property Fund Ltd; FPG Investments (Pty) Ltd; House of Monatic (Pty) Ltd; International Frontier Technologies SOC Ltd; Life Healthcare Group Ltd (chairman); Lion of Africa Insurance Company Ltd; MyDomain (Pty) Ltd; Oceana Group Ltd (chairman); Western Province Cricket Association

Iqbal Khan (51)Chief Operating Officer

Qualifications: BCompt (Hons); CA(SA)

Date appointed to the Board:9 May 2016

Directorships: Cricket South Africa; Lion of Africa Insurance Company Ltd; Sea Harvest Group Ltd

Geoff Fortuin (51)Financial Director

Qualifications: BCom (Acc) (Hons); CA(SA)

Date appointed to the Board:9 May 2016

Directorships: Oceana Group Ltd;Quantum Foods Holdings Ltd

OUR BUSINESS


Mpho Ndebele (69)

Qualifications: BA(Economics); MSW(Social Planning)

Date appointed to the Board:7 March 2006

Member of: Nominations committee; Remuneration committee

Directorships: Desmond Tutu HIV Foundation

Liyaqat Parker (64)


Member of: Audit and risk committee; Investment committee

Directorships: FPG Foods (Pty) Ltd; FPG Holdings (Pty) Ltd; FPG Investments (Pty) Ltd; FPG Property Fund (Pty) Ltd

Felicia Roman (54)

Qualifications: BA; Post Graduate Secondary Teacher’s Diploma


Member of: Audit and risk committee

Directorships: Direng Investment Holdings (Pty) Ltd; Distinct Few (Pty) Ltd; Omega Gaming (Pty) Ltd; Signature Gaming (Pty) Ltd; Umlingo (Pty) Ltd

Independent non-executive directors

Leon Campher (70)Lead Independent Director

Qualifications: BEcon


Member of: Audit and risk committee; Investment committee; Nominations committee; Remuneration committee; Social and ethics committee

Directorships: Business Unity South Africa (BUSA); Equites Property Fund Ltd; International Investment Funds Association; Savings and Investments Association of South Africa (ASISA); Sun International Ltd

Mzwandile Hewu (54)

Qualifications: BCom (Hons); BPhil(Hons)

Date appointed to the Board: 15 September 1997

Member of: Nominations committee; Remuneration committee

Directorships: Elevated 154 Property Investment (Pty) Ltd

Nazeem Khan (61)

Qualifications: BSc(QS); MAQS; AAArb


Member of: Audit and risk committee; Investment committee; Social and ethics committee

Directorships: Bham Tayob Khan Matunda CT Inc; Business Park Development Company (Pty) Ltd; Equites Property Fund Ltd; MyDomain (Pty) Ltd; Perthpark Properties (Pty) Ltd; Proman Project Management Services (Pty) Ltd; Stonefountain Properties (Pty) Ltd

Keneilwe Moloko (49)

Qualifications: NDip (Building Survey); BSc(QS); BCom; PGDA; CA(SA)


Member of: Audit and risk committee

Directorships: Attacq Ltd; Fairvest Property Holdings Ltd; Long4Life Ltd


TEAM BRIMSTONE

Mvikeli Hlope Tiloshani Moodley Virginia Feleza Wandile Mlomo

Fatima Allie Jeanette Mosia Nisaar Pangarker Roxanne Carolissen

Sisonke Dyonta Gerhard Kotze Zaheerah Harribi

OUR BUSINESS


Sabira Dhansay Takula Tapela Connie Vanda Lorraine Ramgopaul

Sebastian Patel Zikhona Kwatshana Nangamso Ngoma Nazeema Jogee

Thandeka Mankayi Mike O’Dea Tamlyn Brink


CHAIRMAN’S REPORT

OUR BUSINESS


The World and South Africa When I grew up in District Six in the 1960s, I spent lots of time in my When I grew up in District Six in the 1960s, I spent lots of time in my neighbourhood, selling newspapers, fruit, vegetables and fish in the neighbourhood, selling newspapers, fruit, vegetables and fish in the streets and snacks in the cinema. My universe was small, and not streets and snacks in the cinema. My universe was small, and not just because I was young, but this treasured community and space just because I was young, but this treasured community and space of District Six was all I knew. By any account, the world itself was far of District Six was all I knew. By any account, the world itself was far less complicated or interconnected. A trip out of the city to the less complicated or interconnected. A trip out of the city to the suburbs was a luxury, let alone a trip by aircraft. There was no suburbs was a luxury, let alone a trip by aircraft. There was no television and we all listened to radio. So was a telephone call, let television and we all listened to radio. So was a telephone call, let alone a mobile phone call. A computer meant a room filled with alone a mobile phone call. A computer meant a room filled with hardware, not a device you could carry in the palm of your hand. hardware, not a device you could carry in the palm of your hand.

Over the next few decades, international trade, globalisation, Over the next few decades, international trade, globalisation, innovation, and more recently, disruptive technology and the fourth innovation, and more recently, disruptive technology and the fourth industrial revolution have transformed the world into a more industrial revolution have transformed the world into a more prosperous place for some. The combination of these together with prosperous place for some. The combination of these together with political change have created unprecedented opportunities that I political change have created unprecedented opportunities that I would barely have imagined in the 1960s. Yet the same factors that would barely have imagined in the 1960s. Yet the same factors that have created these opportunities have also widened income have created these opportunities have also widened income disparities and have left those isolated from the global economy disparities and have left those isolated from the global economy further behind. Look, for example, at the conflict between traditional further behind. Look, for example, at the conflict between traditional taxi operators and Uber operators in many countries. The results can taxi operators and Uber operators in many countries. The results can now be seen in a growing sense of frustration and futility. Against now be seen in a growing sense of frustration and futility. Against this backdrop companies now face a more challenging environment this backdrop companies now face a more challenging environment than ever before. than ever before.

The world witnessed significant events in 2017. Brexit separation The world witnessed significant events in 2017. Brexit separation negotiations commenced, increased tension in the Middle East, negotiations commenced, increased tension in the Middle East, radical changes in US foreign policy driven by President Donald radical changes in US foreign policy driven by President Donald Trump, the Rohingya crisis, further nuclear testing in North Korea, Trump, the Rohingya crisis, further nuclear testing in North Korea, increased killing and destruction in Syria, and closer to home, the increased killing and destruction in Syria, and closer to home, the end of Robert Mugabe’s reign in Zimbabwe. end of Robert Mugabe’s reign in Zimbabwe.

While these events may have a delayed or more indirect impact on While these events may have a delayed or more indirect impact on South Africa, we had our fair share of equally significant issues. South Africa, we had our fair share of equally significant issues. These include, drought in Cape Town and other parts of the country, These include, drought in Cape Town and other parts of the country, Knysna fires, a major cabinet reshuffle, economic downgrades, and Knysna fires, a major cabinet reshuffle, economic downgrades, and the Life Esidimeni tragedy. Much to our disgust and great the Life Esidimeni tragedy. Much to our disgust and great disappointment, a number of leading corporates were implicated in disappointment, a number of leading corporates were implicated in

corrupt dealings. The year climaxed with the hotly contested African National Congress Elective Conference which saw seven candidates running for the presidential position to lead South Africa’s ruling party. Cyril Ramaphosa overcame a strong challenge from former African Union chair, Nkosazana Dlamini-Zuma, winning by a slim margin of 179 votes to emerge victorious as the 14th president of Africa’s oldest liberation movement.

Two months later Cyril Ramaphosa was sworn in as the 5th president of the Republic of South Africa and we can already feel a new wave of optimism and renewed business confidence in the country. This can be seen in the strength of the Rand and general local financial market indicators. President Ramaphosa has promised to deliver good governance, eradicate corruption, and follow economic policies that support employment, transformation and economic growth.

Stats SA reported higher than expected GDP growth for South Africa in 2017, showing that the economy grew by 1.3%, exceeding National Treasury’s expectation of 1.0%. Whilst National Treasury currently anticipates growth of 1.5% in 2018, rising to 2.1% in 2020, the Organisation for Economic Co-operation and Development (OECD) has revised South Africa’s expected GDP growth rate upward to 1.9% in 2018, and 2.1% in 2019 on the back of positive sentiment around the economy and changes to the political landscape. It was clear that South Africans were becoming increasingly frustrated with an economy that failed to live up to its potential, but the pendulum appears to be swinging in a more favorable direction now.

Delivering results in a challenging environment2017 was a turbulent year, especially for investors in South Africa. Nobody could fully predict the year’s events. Now, superimpose the global economic and political developments and it causes one to rethink certain assumptions and perceptions of the world. In today’s rapidly changing environment, shareholders are looking more than ever before for direction from corporate South Africa, and the responsibility that we feel to our shareholders is even greater than before. While the reporting period highlighted that a variety of

“ In today’s rapidly changing environment, shareholders are looking more than ever before for direction from corporate South Africa, and the responsibility that we feel to our shareholders is even greater than before.”

Fred Robertson Executive Chairman

B R I M STO N E I N V E ST M E N T CO R P O RAT I O N L I M I T E D – I N T EG RAT E D R E P O RT 2 01 7 B R I M STO N E I N V E ST M E N T CO R P O RAT I O N L I M I T E D – I N T EG RAT E D R E P O RT 2 01 7 19

CHAIRMAN’S REPORT (CONTINUED)

exogenous factors can impact our investments we remain committed to creating long-term value for our shareholders.

The Group’s key investment sectors are food, financial services and property, healthcare and infrastructure. During the year under review we successfully entered the private tertiary education sector through our investment in newly listed Stadio Holdings.

As part of our value creation strategy, our subsidiary Sea Harvest listed on the JSE on 23 March 2017. The Sea Harvest listing resulted in a R786 million increase in the net asset value of Brimstone. Sea Harvest is a leading internationally recognised seafood business with operations in South Africa and Australia that service retail and food service customers in over 22 countries. The listing of Sea Harvest was a natural progression on its trajectory as we grow this business into a vertically integrated global business. Sea Harvest delivered excellent results for the year under review. I would like to congratulate the Sea Harvest team for their dedication and hard work which enabled them to achieve their objectives during the year.

Whilst Sea Harvest reported a stellar performance, we felt the strain in the economy through the losses suffered at subsidiaries Lion of Africa Insurance Company and House of Monatic, as well as the decrease in dividends received from investments such as Oceana and Life Healthcare. With the outlook for the economy being more positive for the year ahead, coupled with further interventions at our subsidiaries we anticipate better performance from these investments for the year ahead.

Whilst our Book Net Asset Value increased by 14.6% to R 2.8 billion, our Intrinsic Net Asset Value (INAV) decreased by 15.9% to R4.32 billion at year end. Our publicly traded share price does not reflect the share’s INAV. At year end, Brimstone Ordinary shares were trading at a discount of 27.8% to INAV and “N” Ordinary shares traded at a discount of 37.5% to INAV. This discount to INAV is a common feature of investment holding companies. We are continuously looking at ways of narrowing this discount.

An important component of delivering value to our shareholders is returning capital in a consistent way. Two key mechanisms of doing this are, paying dividends and repurchasing our undervalued shares. This year the Board considered the results and approved a dividend of 42 cents per share, unchanged from the previous year. In addition, shareholders have the option of receiving the dividend in cash or shares. This is the 16th consecutive dividend declared by Brimstone. During the year under review, the Company also repurchased approximately 2.1 million Brimstone Ordinary shares and 13.5 million Brimstone “N” Ordinary shares.

Social responsibilityBrimstone’s social commitment is an extension of its mission statement of being profitable, empowering and to have a positive social impact on the businesses and the individuals with whom it is social impact on the businesses and the individuals with whom it is involved. As part of that mission, we seek to be active and engaged corporate citizens of the communities in which we operate.

During the year under review Brimstone Empowerment Share Trust (BEST) awarded 50 000 Brimstone “N” Ordinary shares to The Sozo Foundation, a non-profit organisation, based in the impoverished community of Vrygrond, Cape Town. This organisation creates opportunities for holistic development through key areas focusing on youth, education, health, and skills development. To date we have allotted shares with a value in excess of R20 million to 30 organisations across South Africa. These NGO/NPO shareholders support more than 3.5 million beneficiaries who come from the poorest of the poor communities across South African society. At Brimstone we aim to remain true to our vision of being profitable, empowering, and to have a positive social impact.

Governance and the boardThis is our 9th Integrated Report and we are committed that good governance should be a cornerstone of our business. For this reason we constantly review, modify or adapt our risk and governance policies to ensure a sustainable, responsible business. Brimstone is fortunate to have an effective board of directors reviewing aspects of the Company’s strategy and engaging continuously in detail about the Company’s direction. Mr Leon Campher continues to serve as lead independent non-executive director.

Thank youBuilding and growing a company like Brimstone requires total commitment and a team effort. I wish to thank my fellow executive directors and the entire board for their invaluable good counsel and continued dedication to excellence in corporate governance. Thank you to our executive team and staff as well as the management and staff of all our subsidiaries and investee companies for their continued commitment in delivering on our growth strategy.

I also thank all our shareholders who continue to support, trust and believe in the Company’s ability to deliver to their expectations. We look forward to growing the Company for the benefit of all our stakeholders.

In conclusion, back in the 1960s a dream of a company like Brimstone was beyond my universe. Today we can proudly confirm that Brimstone has empowered generations who claim their roots back to District Six, in the same way it has empowered communities in Saldanha or Soweto, and individuals across the vast demographic of South Africa irrespective of age, gender, class, social status, or race. May we always do what is in the best interest of our society, all stakeholders, and even of our smallest shareholder.

Fred RobertsonExecutive Chairman

OUR BUSINESS


“ The listing of Sea Harvest was a natural progression on its trajectory as we grow this business into a vertically integrated global business. I would like to congratulate the Sea Harvest team for their dedication and hard work which enabled them to achieve their objectives during the year.”


CHIEF EXECUTIVE OFFICER’S REPORTCHIEF EXECUTIVE OFFICER’S REPORT


OUR BUSINESS

“ The past year was particularly challenging, operating in an environment of low economic growth and political uncertainty. Despite these conditions we still declared a dividend and for the first time this year are giving shareholders the option to take the dividend in shares.”

Mustaq Brey Chief Executive Officer

IntroductionThe Group reported a profit for the year under review of R147.1 million compared to a profit of R197.3 million in the prior year.The significant contributors to the movement in earnings were:– the excellent result produced by Sea Harvest– an increase in fair value gains of R142.2 million– losses at Lion of Africa and House of Monatic and a decrease

of R117 million in dividends received– a decrease in other investment gains and share of profits of

associates and joint ventures of R70.4 million.

2017 was a defining year for our subsidiary Sea Harvest. The company listed on the JSE on 23 March 2017 raising R1.24 billion net of listing costs. This listing resulted in a R786 million increase in the net asset value of Brimstone.

Intrinsic Net Asset Value (INAV)INAV at 31 December 2017 calculated on a line-by-line basis, totalled R4.32 billion, or R18.01 per share (31 December 2016: R5.13 billion or R21.40 per share), representing a decrease of 15.9% from 2016 (a decrease of 15.8% on a per share basis). As at 31 December 2017, Brimstone Ordinary shares were trading at a discount of 27.8% to INAV (31 December 2016: 39.3%) and “N” Ordinary shares traded at a discount of 37.5% to INAV (31 December 2016: 43.9%). The analysis of INAV is available on the Company’s website at www.brimstone.co.za.

Brimstone Portfolio

Subsidiaries

Sea Harvest (54.9%)Sea Harvest reported earnings before interest and tax of R383 million and profit after tax of R267 million for the year ended 31 December 2017, an increase of 53% and 103% respectively on the same period last year, benefiting from the improved performance of

its South African operations as a result of strong market demand and exceptional performance of the Saldanha Bay factories. Revenue for the year increased by 10% to R2.1 billion (2016: R1.9 billion). Continued strong global demand for high value, sustainably certified wild caught seafood with limited supply drove strong pricing across all channels and markets, partially offsetting the impact of the stronger Rand. Sea Harvest reported a gross profit of R717 million (2016: R605 million) and gross profit margin expanded to 34% (2016: 31%), benefiting from efficiency improvement projects in the South African operations.

Lion of Africa Insurance Company (Lion of Africa) (100%)Lion of Africa reported a net loss for the year under review of R92.3 million compared to a loss of R15.4 million in the prior year. The losses for the year were mainly as a result of larger than anticipated claims experienced, notably on the property, liability and motor classes within the Public Sector business. These claims resulted in a gross loss ratio of 74.3% compared to 66.3% in the prior year. The management team has however been proactive in addressing these losses and has already implemented steps to ensure these losses do not recur. The positive results of these plans were seen during the 4th quarter of 2017 where a reduction in the loss ratio was achieved, from 84.5% for the first 9-months to 74.3% for the full year.

House of Monatic (Monatic) (100%)Revenue decreased by 16% to R174.4 million (2016: R207.7 million) and a loss of R14.4 million (2016: Profit R0.04 million) was reported. This is mainly due to the poor retail climate affecting Monatic’s own retail outlets and sales to independent retailers, which were exacerbated by independent customers going into liquidation or business rescue. Due to the aforementioned factors, the factory suffered 21 days of short-time, which resulted in the under-recovery of factory overheads of about R17 million. This is in accordance with Monatic’s strategy of not producing inventory unless it is necessary to satisfy confirmed orders.


CHIEF EXECUTIVE OFFICER’S REPORT (CONTINUED)

Associates and joint ventures

Oceana (17%)Brimstone holds 23 million shares in Oceana with a market value of R1.96 billion. Oceana’s share price closed at R85.00 per share, down from R120.00 per share at 31 December 2016. Brimstone received dividends of R20.7 million (2016: R107.9 million) from Oceana during the year under review and recognised R65.7 million (2016: R67.7 million) in equity accounted earnings based on Oceana’s reported full year earnings to 30 September 2017.

Grindrod (6.7%)Brimstone accounts for its share of the results in the Consortium SPV as a joint venture. Brimstone has written its investment in the consortium down to nil at 31 December 2017 as the value of the debt of the Consortium SPV exceeded the value of the investment, despite Grindrod’s share price closing at R13.65 at 31 December 2017, up from R13.45 per share at 31 December 2016. At 31 December 2016 the carrying value of the investment via the Consortium SPV was R21 million.

Aon Re Africa (18%)Aon Re Africa is a leading reinsurance broker licensed and operating in South Africa and the rest of Africa. Brimstone recorded R3.7 million in equity accounted earnings after receiving a dividend of R5.55 million from Aon Re Africa during the year under review.

Obsidian Health (Obsidian) (25.07%)Obsidian is a distributor of medical equipment, medical consumables and pharmaceutical products. The company contributed positively to Brimstone’s profits during the year 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 holds investments in Decision Inc. (Pty) Ltd (a business intelligence and data analytics solutions provider), ASG Holdings (Pty) Ltd (involved primarily in the wholesale distribution of high-end branded cycling products), ZAR X (Pty) Ltd (a newly formed licensed stock exchange), High Duty Castings (Pty) Ltd (an iron foundry involved in the manufacture of castings) and Tombake Holdings (Pty) Ltd (involved in the supply and manufacture of baking and confectionary equipment). SAED made a positive contribution to earnings during the year under review.

Vuna Fishing Company (Vuna) (49.8%)Vuna, which holds 100% of SeaVuna Fishing Company (Pty) Ltd, was acquired from Sea Harvest on 1 January 2017. Vuna contributed R4.8 million in equity accounted earnings during the year under review.

Investments

Equites (8.5%)Equites’ share price closed at R21.00 per share at 31 December 2017, up from R15.80 per share at 31 December 2016. Brimstone received a dividend of R40.8 million (2016: R29.6 million) from Equites during the year under review. The investment was revalued upwards by R181.5 million to R732.8 million at year end.

Life Healthcare (4.5%)Life Healthcare’s share price closed at R27.75 per share at 31 December 2017, down from R32.60 per share at 31 December 2016. Brimstone followed its rights in April 2017 in terms of the Life Healthcare rights offer and acquired 17.2 million shares at R24.50 per share for an aggregate R420.5 million. In September 2017, 2.5 million shares were sold at an average price of R23.36 per share. The investment was revalued downwards by R198.5 million to R1 799 million at year end. Brimstone received dividends of R52.8 million from Life Healthcare during the year under review, down from R82.8 million for the prior year. Subsequent to year-end, Brimstone sold 13.5 million shares at an average price of R26.78 per share.

Long4Life (4.0%)Brimstone acquired 40 million shares in Long4Life ahead of its listing on the JSE in April 2017 at R5.00 per share. Long4Life’s share price closed at R4.90 per share at 31 December 2017. In December 2017, 4.5 million shares were sold at an average price of R4.51 per share. The investment was revalued downwards by R5.7 million to R173.95 million at year end.

MTN Group and MTN Zakhele Futhi (1.5%)Brimstone disposed of its remaining 570 000 MTN Group shares during March 2017 at an average price of R127.56. Brimstone holds 1 818 795 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 R136.60 per share, up from R126.17 per share at 31 December 2016. The investment was revalued upwards by R3.8 million to R70.6 million.

Phuthuma Nathi (7%)The Phuthuma Nathi 1 shares and Phuthuma Nathi 2 shares closed at R99.90 and R98.00 per share at 31 December 2017 (R129.60 and R132.99 per share at 31 December 2016) respectively. The investment was revalued downwards by R149.7 million to R470.1 million. Brimstone received a dividend of R91.3 million (2016: R91.3 million) from Phuthuma Nathi during the year under review.

Stadio (4.3%)Brimstone acquired 33.8 million shares in Stadio as part of its B-BBEE transaction in November 2017 at R2.96 per share. Stadio’s share price closed at R8.05 per share at 31 December 2017. The investment was revalued upwards by R172 million to R272 million at year end.

OUR BUSINESS


Tiger Brands (0.9%)The lock-in period applicable to Brimstone’s Tiger Brands stake ended on 31 December 2017. On expiry of the lock-in period, Tiger Brands was entitled to repurchase a number of Tiger Brands shares from Brimstone to settle the outstanding notional vendor funding owing to Tiger Brands that arose in terms of the 2009 Tiger Brands BEE transaction. At year end the number of shares to be repurchased by Tiger Brands was 861 257 at a price of R7.40 per share. Brimstone’s remaining unencumbered shareholding in Tiger Brands was valued at R389.8 million which included a R48.3 million derivative loss as Brimstone had entered into a forward sale transaction enabling it to sell 600 000 Tiger Brands shares in early 2018 at R374.80 per share (Tiger Brands’ closing price was R460.00 at 31 December 2017). Subsequent to year end, Tiger Brands repurchased the aforementioned shares and Brimstone disposed of its residual stake for an aggregate of R387.3 million.

Share repurchasesDuring May 2017 Brimstone repurchased 2 137 000 Brimstone Ordinary shares at an average price of R14.76 per share and 4 809 174 at an average price of R15.00 per share Brimstone “N” Ordinary shares in terms of a special resolution passed at the annual general meeting on 10 May 2017. The shares which were held by wholly-owned subsidiary, Septen Investments (Pty) Ltd, were delisted and cancelled on 23 May 2017.

During November 2017 Brimstone repurchased 8 717 629 Brimstone “N” Ordinary shares following the exercise of the Unencumbered Brimstone Share Call Option as set out in the circular to share-holders dated 15 August 2016. The shares were acquired from The Brimstone Black Executives Investment Trust, The Brimstone General Staff Investment Trust and The Brimstone Broad-Based BEE Trust, in terms of the trust deeds. The average price paid for the shares repurchased in terms of the Brimstone Share Call Option, i.e. 4 378 229 “N” Ordinary shares at R0.5075 per share and 4 339 400 “N” Ordinary shares at R12.10 per share (per listing application dated 15 November 2017). The shares were duly delisted and cancelled on 21 November 2017.

Acquisition of treasury sharesDuring the year under review Brimstone acquired, via a wholly-owned subsidiary, 2 029 848 Brimstone “N” Ordinary shares in the open market for an aggregate consideration of R23.9 million at an average price of R11.75 per share including costs. These shares have been accounted for as treasury shares.

Dividend declaredBrimstone’s board has declared a final cash dividend of 42 cents per share for the year ended 31 December 2017, unchanged from the previous year, payable on Monday, 23 April 2018. In addition, shareholders have been provided with an election to receive the cash dividend or the scrip dividend alternative, with the default election being the scrip dividend alternative. This is the 16th consecutive dividend paid by Brimstone, a feat for a truly black owned company.

ProspectsThe Group has a track record of more than 20 years of creating and unlocking shareholder value in a sustainable way and has the team with the skills and experience to conclude value adding deals. The Group is defined by bona fide empowerment credentials, and its ability to enhance NAV and pay dividends. Brimstone has over the years demonstrated its resilience to withstand tough economic conditions as it has once again shown during the 2017 financial year. Brimstone remains well capitalised to pursue value enhancing transactions based on cash generative quality assets and will continue to maintain a long-term view and partnership approach to its underlying investments.

ConclusionThe past year was particularly challenging, operating in an environment of low economic growth and political uncertainty. Despite these conditions we still declared a dividend and for the first time this year are giving shareholders the option to take the dividend in shares. I would like to thank my fellow executive directors, non-executive directors, executive team, management and staff for their contributions to the success of Brimstone. I am confident that Brimstone is well positioned to continue to live up to its philosophy of profitability, empowerment and positive social impact.

MA BreyChief Executive Officer


Company Interest Company information

54.9%

– Listed on the JSE– The Sea Harvest group is a leading, internationally recognised vertically integrated fishing and

branded FMCG business established in 1964 with operations in South Africa and Australia. The principal business of the group is fishing of MSC-certified Cape hake and Shark Bay tiger and king prawns, processing of the catch into frozen and chilled seafood, and the marketing of these products, locally and internationally.

www.seaharvest.co.za

17%

– Listed on the JSE – Oceana engages in the catching, processing and procurement of marine species including

pilchard, sardine anchovy, redeye herring, lobster, horse mackerel, squid, tuna, hake and other deep sea species. Products are sold through international and local marketing channels. In addition, Oceana provides refrigerated warehouse facilities and logistical support services.

www.oceana.co.za

100%

– Unlisted– Formed in August 1999, Lion of Africa is an established, growing insurance brand on

the South African insurance landscape. It is a Level 1 short-term B-BBEE Insurer.

www.lionsure.com

18%

– Unlisted– Aon Re Africa is a leading reinsurance and retrocession intermediary in Sub-Saharan Africa,

based in Johannesburg, South Africa with an office in Harare, Zimbabwe.

www.aon.com

8.5%

– Listed on the JSE– A specialist logistics property developer and landlord listed as a REIT.

www.equites.co.za

4.5%

– Listed on the JSE– Principal business is acute hospital care and comprises one of the widest geographic spreads

of acute care hospitals and day surgical centres in South Africa– Investments in India, Poland, United Kingdom and Europe.

www.lifehealthcare.co.za

25.07%– Unlisted– A leading supplier of innovative solutions to healthcare providers and clinicians within

Sub-Saharan Africa

GROUP PROFILE

RE AFRICA

OUR BUSINESS


Company Interest Company information

6.7%

– Listed on the JSE– Integrated logistics company providing end-to-end solutions for the movement of cargo by

road, rail and sea using specialised assets and infrastructure focused on dry-bulk and liquid-bulk commodities, vehicles and containers.

www.grindrod.co.za

100%

– Unlisted– Company involved in the design, marketing and manufacturing of mens and ladies clothing

and accessories.– C2 and Carducci retail stores

www.monatic.co.za

4%

– Listed on the JSE– Investment holding company with interests in sports goods retail, beverages, and the

wellness sectors.

www.long4life.co.za

4.3%

– Listed on the JSE– Focussed on the acquisition of, investment in, growth and development of higher

education institutions.

www.stadio.co.za

7%

– OTC market– Black-owned investment company that holds 20% of MultiChoice South Africa.

www.phuthumanathi.co.za

1.5%

– OTC market– Black-owned investment company that holds approximately 4% of MTN Group.

www.mtnzakhele.co.za

25%– Unlisted– Provides equity capital to high growth potential small and medium sized enterprises.

49.8%– Unlisted– Hake-inshore trawl fishery and processing


INTRINSIC NET ASSET VALUE REPORT

The INAV of Brimstone at 31 December 2017 was R4 317.9 million (2016: R5 133.9 million), translating to 1 801 cents per share (2016: 2 140 cents per share), based on 239.8 million shares (2016: 239.95 million shares) in issue, net of treasury shares. Fully Diluted INAV per share was 1 751 cents per share (2016: 2 043 cents per share), based on 246.9 million shares (2016: 251.8 million) in issue, net of treasury shares after taking into account the notionally realised shares issued in terms of the circular to shareholders dated 18 November 2010 and fully diluted for outstanding share options and unvested forfeitable shares.

The Book Net Asset Value (Book NAV) of Brimstone on 31 December 2017 was R2 782.0 million (2016: R2 427.1 million), translating to 1 160 cents per share (2016: 1 012 cents per share), based on the respective number of shares in issue.

The closing share prices on 31 December 2017 of Brimstone Ordinary and “N” Ordinary shares on the JSE were 1 300 cents and 1 125 cents (2016: 1 299 cents and 1 200 cents) per share respectively.

31 December 2017

31 December 2016

INAV of Brimstone (R’m) 4 317.9 5 133.9Book NAV (R’m) 2 782.0 2 427.1INAV per share (cents) 1 801 2 140Fully Diluted INAV per share (cents) 1 751 2 043Book NAV per share (cents) 1 160 1 012Market price per share (cents)– Ordinary shares– “N” Ordinary shares

1 3001 125

1 2991 200

Discount to INAV:– Ordinary shares %– “N” Ordinary shares %

27.8%37.5%

39.3%43.9%

OceanaThe INAV of the 23 million shares in Oceana was based on the closing share price of Oceana on the JSE at 31 December 2017 of R85.00 per share.

Sea HarvestThe INAV of the 54.9% shareholding in Sea Harvest was based on the closing share price of Sea Harvest on the JSE at 31 December 2017 of R12.50 per share.

Life HealthcareThe 4.5% interest was valued at the closing share price of Life Healthcare on the JSE at 31 December 2017 of R27.75 per share.

EquitesThe 8.5% interest was valued at the closing share price of Equites Property Fund on the JSE at 31 December 2017 of R21.00 per share.

GrindrodThe 6.1% interest in Grindrod held via the BEE Consortium and the directly held shareholding in Grindrod of 0.6% were valued at the closing share price of Grindrod on the JSE at 31 December 2017 of R13.65 per share.

Phuthuma NathiThe 7.0% interest was valued at the closing share price of Phuthuma Nathi on the Over-the-Counter trading platform at 31 December 2017 of R99.90 for PN 1 and R98.00 for PN 2 per share.

Tiger BrandsThe Tiger Brands shares are valued as an option as disclosed in Appendix 4 to the annual financial statements.

StadioThe 4.3% interest was valued at the closing share price of Stadio on the JSE at 31 December 2017 of R8.05 per share.

Long4LifeThe 4.0% interest was valued at the closing share price of Long4Life on the JSE at 31 December 2017 of R4.90 per share.

Lion of AfricaThe INAV of the 100% shareholding in Lion of Africa was based on book value.

MTN Zakhele FuthiThe 1.5% interest was valued as an option as disclosed in Appendix 4 to the annual financial statements.

INAV analysis by assetAn analysis of the INAV of Brimstone as at 31 December 2017 is set out below, including the valuation basis of each asset. Where applicable, INAV is net of ring-fenced debt and potential CGT relating to that asset.

OUR BUSINESS


Asset % held Valuation basisGross Value

(R’000)Debt

(R’000)CGT

(R’000)INAV

(R’000)

Oceana 17.0% Market value per share 1 955 605 (611 680) (261 301) 1 082 624Sea Harvest* 54.9% Market value per share 1 725 504 — — 1 725 504Life Healthcare 4.5% Market value per share 1 798 794 (214 625) (305 366) 1 278 803Equites 8.5% Market value per share 732 828 (406 083) (57 686) 269 059Grindrod – BEE** 6.1% Market value per share 632 211 (794 333) 118 261 —Grindrod – direct 0.6% Market value per share 57 634 — 604 58 238Phuthuma Nathi 7.0% Market value per share 470 149 (161 499) — 308 650Tiger Brands option 0.9% Option valuation 396 140 — (85 728) 310 413Stadio 4.3% Market value per share 271 959 — (38 519) 233 441Long4Life 4.0% Market value per share 173 950 — 10 090 184 040Investment properties 100.0% Capitalisation rate 219 868 (60 675) (22 627) 136 566Lion of Africa 100.0% Book value 90 581 — 109 806 200 387MTN Zakhele Futhi 1.5% Option valuation 70 564 — (2 272) 68 292Aon Re Africa 18.0% PE valuation 64 496 — (12 659) 51 837House of Monatic 100.0% Book value 16 320 — — 16 320Other investments Various Book value 101 141 — (8 278) 92 863Cash / (net debt) 100.0% Book value (52 944) (1 646 161) — (1 699 105)

8 724 800 (3 895 056) (555 675) 4 317 930

INAV per share (cents)*** 3 639 (1 625) (232) 1 801Fully Diluted INAV per share (cents)**** 3 536 (1 578) (225) 1 751

* No CGT provided on shareholding in Sea Harvest due to potential use of the corporate relief provisions of the Income Tax Act.** Due to the limited recourse nature of the Grindrod BEE funding structure, Brimstone’s investment is shown at a minimum value of zero.*** Based on 239.8 million shares (December 2016: 239.95 million shares) in issue, net of treasury shares.**** Based on 246.9 million shares (December 2016: 251.8 million shares) in issue, net of treasury shares after taking into account the notionally realised shares issued in

terms of the circular to shareholders dated 18 November 2010 and fully diluted for outstanding share options and unvested forfeitable shares.


CORPORATE SOCIAL INITIATIVES

Nature, scope and effectiveness of all programmes on communities

Brimstone’s social commitment is an extension of its mission statement of being profitable, empowering and to have a positive social impact on the businesses and the individuals with whom it is involved.

A large number of these employees have been shareholders in Brimstone since its early start-up days more than two decades ago, which makes the Group’s stakeholder community arguably unique among JSE listed companies. This inevitably means that the nature and scope of Brimstone’s involvement in the community also requires a unique approach.

For this reason, Brimstone through its own corporate social initiatives and those of its subsidiaries and investments is involved in education, training and development, the

arts and the support of specific charitable and social campaigns.

Apart from its internal corporate social investment programmes, Brimstone has established The Brimstone Foundation and the Brimstone Empowerment Share Trust to extend the long-term reach and sustainable impact of its initiatives.

Brimstone Empowerment Share Trust (BEST)BEST was established in 2005 with the intention of supporting a broad range of NGOs and not-for-profit organisations through the allotment of Brimstone shares. These shares have a vested value and can be sold by the nominated beneficiaries after a period of five years, in tranches of 20% per annum. The beneficiary organisations participate fully in any dividends declared by Brimstone from the date of receipt of the shares.

As presented in this Integrated Report, the Group’s activities and its impact, be it corporate, social or environmental are measured against these yardsticks to ensure long-term sustainability.

Brimstone directly employs in excess of 3 000 individuals in its subsidiaries and more than 24 000 in its associates and investments.

OUR BUSINESS


TOP: BARISTAS IN TRAINING AT THE SOZO FOUNDATION

LEFT: CANCER DIALOGUE WITH CANCER SURVIVORS AND MEDICAL PROFESSIONALS

ABOVE: LAUNCH OF BRIMSTONE ITHEKO SPORT ATHLETIC CLUB


CORPORATE SOCIAL INITIATIVES (CONTINUED)

During the year under review, The Sozo Foundation was awarded 50 000 Brimstone “N” Ordinary shares. The Sozo Foundation is a non-profit organisation, based in the impoverished community of Vrygrond, Cape Town. This organisation creates opportu-nities for holistic development through key areas focusing on youth, education, health, and skills development.

To date, BEST has allotted 1 677 554 Brimstone shares to 30 organisations across South Africa. The market value of these shares as at 31 December 2017 was approximately R19 million. These share-holders support more than 3.5 million bene-ficiaries across South Africa.

Corporate Social Initiatives Brimstone’s CSI spend was R2.1 million in cash, in addition to the further R6.4 million worth of shares allotted to BEST. During the year under review Brimstone contributed to various social initiatives covering the areas of Art & Culture, Education, Health & Wellness, Social Cohesion, Sport, Welfare and Poverty Relief.

Some of the beneficiaries include:

Art & Culture Association of Mouth and Foot Painters, Emerging local artists, Die Suidoosterfees

Education Fun Learning for Youth, House of Monatic family members’ bursaries, Imam Abdullah Haron Education Trust, Life Healthcare Nursing College, Mitchells Plain Bursary and

Role Model Trust, Progressive Principal Association, The Click Foundation, University of the Western Cape

Health & WellnessCANSA, Dialogue on Cancer, Lifeline SA, SA Red Cross, St Lukes Hospice

Social CohesionMitchells Plain Community Advice & Development Centre

SportBrimstone Itheko Sport Athletic Club, Langa Cricket Club, Marlin Swimming Club, Siyavuselela Sports and Life

Welfare and Poverty Relief Animal Anti-Cruelty League, Blind SA, Operation Winter Warmth, Saabri & Ashrafi Relief Fund, Youth Unemployment Prevention Project

OUR BUSINESS


TOP: PIANIST QDEN BLAAUW IN CONCERT WITH THE CAPE TOWN PHILHARMONIC YOUTH ORCHESTRA

AT DIE SUIDOOSTERFEES

LEFT: RUNNERS REFRESHED BY TEAM BRIMSTONE AT THE OLD MUTUAL TWO OCEANS MARATHON

ABOVE: LIFE HEALTHCARE NURSING COLLEGE GRADUATES WITH KURT WILEY, DR SHARON VASUTHEVAN

AND BRIONY BERNING.


Lion of Africa Insurance Company Limited (Lion of Africa or Lion)

UNLISTED SUBSIDIARY REPORTS

Lion of Africa is a South African non-life insurance company, licensed by the Financial Services Board in terms of the Short-Term Insurance Act No. 53 of 1998 on 23 August 1999.

The current market is highly competitive with a few insurers taking up a large part of the market. However, Lion is still the market leader with respect to the Municipality Sector. Although there are new participants in this space, Lion is still the only insurer with a proven track record.

The industry is vigorously exploring the use of digital systems in order to offer an improved customer experience. The most extensive use is where the insured can register and track progress of their own claims. Lion has successfully rolled out a new insurance system. The system is web based and will offer many deployment possibilities, chief amongst these will be its ability to integrate with the broker systems.

The fires in Knysna, recurring rains as well as the prolonged drought are indisputable proof that the planet is facing a changing climate. Lion expects that this will impact the insurance market as a whole. Through the capabilities of its technical underwriting team, Lion will continue to select risks carefully to mitigate the impact of this risk and will always structure a reinsurance programme that is proactive.

Lion’s Year Under Review

Strategic Review2016 was the year in which Lion turned around its performance, while 2017 is the year where larger than normal claims were incurred which hampered the results. Management has been able to successfully continue driving the board approved strategy.

The organisation’s strategy is centred around five pillars, which are:– Profitable growth– Capability improvement– Service excellence– Expense management– Product development

Profitable growthAlthough the company did not achieve its GWP budget (shortfall of 12%), the Public Sector business unit (which is currently the largest business unit) has far exceeded its budget for the year. Focus will now be to consolidate this book and to target other parts of the Public Sector, specifically SOEs.

In addition, the Risk Appetite Grid (RAG) is fully embedded within the Commercial business. The results to date have shown improved loss ratios across this area, indicative that the RAG is operating effectively.

Lion has also been able to establish new distribution channels for its Marine and Engineering business, which will be operating as UMAs with separate branding and FSP licences. These entities will operate as UMAs from the beginning of 2018.In addition, new relationships were formed during the year with various UMAs to further build partnerships for future growth.

Capability improvement– As mentioned previously, the RAG has

been fully implemented on the Commercial business and the positive impact have already been seen in the results.

– The actuarial and underwriting teams are enhancing the pricing capabilities within the business, which will be embedded in the underwriting system for all products.

– The in-house actuarial team have now been employed for 18 months and are making good progress on enhancing the actuarial skills within the business.

Since its inception, Lion has committed itself to playing a leading role in empowerment and transformation within the financial services sector; the company is also the first South African short-term insurer to achieve a Level 1 B-BBEE contributor status. Lion of Africa’s short-term insurance activities are primarily focused in public sector, commercial, marine and engineering, and has recently been extended to niche markets which include:– Construction guarantees and

performance bonds– Taxi, Uber, metered cabs,

and minibus taxis– Wildlife

Lion of Africa’s vision is to be the preferred insurance partner within its chosen markets. Its mission is to:– Provide reliable and innovative

insurance solutions to customers– Provide the best service at affordable

cost– Create success for stakeholders by

living its values– Contribute to the communities it

serves

Current MarketOver the past few years the insurance industry has been preparing for the implementation of Solvency Assessment and Management (SAM). SAM is extremely important for the insurance industry as it will force insurers to have a better understanding of the risks they face and to hold appropriate levels of capital in order to survive catastrophic events. The FSB started the process of developing the new solvency legislation during 2010, and over the past seven the years various consultations and impact assessments were conducted. In addition, insurers have been reporting results on a SAM basis to the FSB in parallel to the current legislative requirements. It is expected that SAM will be implemented with an effective date of 01 July 2018.

OUR BUSINESS


Service excellence– All employees have formalised

performance contracts which is in line with the strategy of the company, as well as KPIs aligned to best practice.

– A Customer Experience Specialist was employed since December 2016 to specifically deal with customers. Complaints and compliments are now actively managed.

– The Lion website was relaunched in July 2017

– Formalised internal newsletters as well as broker welcome packs rolled out during the year.

– A TCF (Treating Customers Fairly) forum has been established which is represented by all areas of the business.

– The new underwriting and accounting systems which were implemented at the end of 2016 are now fully functional and efficiencies have already been seen.

Product development– Water loss scheme for municipalities

was launched on Public Sector policies.– Niche products have been rolled out

during the year with new niche products planned to be rolled out during the course of 2018.

Expense management– Management were successful in

reducing the expense ratio to 24% of GWP, previous year at 27%, which will be reduced further in 2018.

– A dedicated resource has been assigned to manage salvages and recoveries.

Highlights of 2017– GWP exceeding the prior year and

close to budget– Maintained level 1 BEE status– Improved credit rating– Successful renewal of reinsurance

program– Successful public sector renewal– Relaunched website– Public Sector broker indaba held at the

end of 2017– Improvement in claims processes– Standard operating procedures

completed across the business– Binder audits conducted by Lion

compliance team

Financial Performance ReviewLion has produced adverse results compared to 2016, reporting a net loss of R92.3 million compared to a net loss of R15.4 million in the prior year. The resultant losses are largely as a result of increased claims experienced, specifically within the public sector business unit, notably on property, liability and motor claims. The Lion team have however been proactive in addressing these losses and have already implemented steps to ensure these losses do not recur.

Ratings: B-BBEE and CreditLion has renewed its B-BBEE level 1 rating. This achievement once again confirms Lion as the first short-term insurer to achieve this accolade. This rating further affirms that Lion stands for all that is transformation in the financial services sector as well as respecting and embracing the transfor-mation aspirations of the country.

In May 2017, Global Credit Ratings (GCR) assigned an initial national scale claims paying ability rating to Lion of BBB(ZA), with the outlook accorded as Stable. The rating and outlook issued by GCR is as a result of the strategic turnaround implemented during the previous 24 months, which includes the exiting of the corporate and personal lines businesses, effective implementation of the RAG (Risk Appetite Grid), as well as enhancing the underwriting skills and pricing capabilities. In addition, the focus on strengthening the balance sheet and resultant improvement in solvency gives comfort that Lion can cover its claims.

Financial Services BoardManagement adopted a proactive approach and scheduled regular stakeholder engagements with the Financial Services Board (FSB). The engagements with the FSB have proven very valuable and the management team have been able to build a good relationship with the regulator.

Skills DevelopmentLion has, over the years, supported skills development through the offering of learnerships and graduate programmes. Since inception, Lion has trained over 200 learners. These learners have now acquired technical skills in a highly technical industry. They have gone on to work for some of the larger insurance companies as well as reinsurers in the country. At its core, Lion’s philosophy is one of transforming the insurance industry through the up-skilling of young minds.

Lion has for the past few years also offered financial literacy programmes to its staff. Employees have enjoyed interventions in the areas of retirement planning, wills and estate planning and debt management. Through these interventions, the company has been able to reduce the number of staff that have adverse judgments and those with garnishee or emolument attachment orders against them. The ideal is to have employees that are not weighed down by bad financial decisions.


House of Monatic (Pty) Limited (House of Monatic or Monatic)

House of Monatic, is a medium sized business that was founded in 1909 and is known for its tailoring heritage. It now has 723 employees with its head office in Cape Town. There are 9 retail stores located in premium shopping malls across the country, a factory located in Salt River, three depots in Cape Town, Johannesburg and Durban respectively and two outlet stores.

Financial Performance2017 2016

Revenue (R) 169 301 517 207 141 660Operating Loss (27 296 843) (1 781 316)Operating Margin (16.12%) (0.86%)

UNLISTED SUBSIDIARY REPORTS

Empowering and Social ImpactHouse of Monatic employs over 700 staff, with 75% being women. Many of the women employed by the company are bread-winners in their homes and have come to rely on the sustainable income from the company.

Training and development of staff remains key in the various divisions of House of Monatic. During 2017, 1 985 training hours have been spent on those employed by the company, as well as on unemployed people particularly on sewing machine learnerships, amounting to R1.6 million. The training centre at House of Monatic houses 2 experienced training officers who continuously upskill the staff in the factory in sewing skills to improve the quality offering.

House of Monatic partners with technical universities on placing young undergraduate and recently qualified fashion design learners within the various departments in the business to allow them to gain much needed experience for their futures.

For 2017 House of Monatic maintained its level 2 B-BBEE rating.

House of Monatic’s social involvement varied from community projects to sponsoring individuals to enhance their careers particularly in music.

The poor retail environment within South Africa heavily affected not only Monatic’s retail stores but also its retail customers. The continued downturn in trade resulted in some of Monatic’s larger customers going into liquidation or business rescue during 2017.

The market for corporate clothing and chains has as a result of the overall poor economic conditions become a lot more aggressive on pricing as manufacturers compete for available work. In order to mitigate the effects of the downturn in the economy, short-time was introduced in the production facility which contributed approximately R17 million to the loss suffered through unabsorbed overheads. The pressure on available cash flow resulted in a deferment of capital expenditure, and therefore a delay in the claiming of funding from the Department of Trade and Industry, which resulted in a lower than prior year recognised grant income of approximately R4 million.

Growth Strategy and Challenges2017 presented the business with many great challenges, but despite these conditions, the business was able to achieve the majority of its action plans that were defined in the 2017-2019 Strategy and Action Plan.

Key challenges:– Weak economic conditions– Challenging and competitive corporate

market– Volatile currency– Aggressive market entrants– Loss of independent market– Expensive fixed cost structure– Poor retail sales

With some challenges there have been some achievements under difficult circumstances:– Sustained cash availability– Expanded product offering through

retail stores– Investment in an ERP system, including

the hardware requirements– Investment in a new website and

development of e-commerce– Investment in direct marketing activ-

ities– Engaged overseas markets– Careful management and reduction of

costs– Critical evaluation of major supply

agreements– Restructuring of external financing

OUR BUSINESS


Brands

Brand description

Carducci is a much-loved designer brand in Southern Africa since being established in 1978. The flamboyant spirit of the Italian poet Giosue Carducci, was the original inspiration for the brand which is sold in over 300 outlets across Southern Africa and East Africa.

C2 is South Africa’s cutting edge formalwear brand. The retail stores house a bold array of colourful product for the buck-cool ‘IT’ guys in South Africa. C2 aims to capture the imagination of the upwardly mobile young male consumer who is extremely status conscious and not afraid to stand out.

Viyella is originally a unique fabric brand from the English midlands. The brand has been available in South Africa for nearly a century, synonymous with fine shirting, and has evolved to become a complete lifestyle collection. The brand is known for its luxurious fabrics and quirky take on the classics. The clothing expresses itself through its understated elegance, sophisticated designs and immaculate tailoring

The Monatic brand is a classic brand for the client who wants to project a tailored and professional image. This brand is used under corporate wear and is known for its premium quality.

Brand offering

Suits, tailored jackets, trousers, casual wear, shoes & accessories



Corporate wear clothing

LSM category Upper Across all from Band 5 and up

Upper Across all bands

Retail stores Yes Yes No No

Number of stores

2 5 1 multi brand store

Store m2 280 408 171.63


GOVERNANCE REPORT

Governance and Stakeholder Engagement

Corporate Governance Approach The board of directors (the Board) remains fully committed to the principles of integrity, competence, responsibility, fairness, transparency and accountability in its dealings with all its stakeholders. The Board is the focal point of the Company’s corporate governance system and remains ultimately accountable and responsible for its performance and affairs.

Application of and compliance with King IVThe King IV Report on Corporate Governance for South Africa (King IV) was published on 1 November 2016. The Board is satisfied that Brimstone is in substantive alignment with the principles of King IV. The Board has recognised that it is the custodian of corporate governance of the Company and has ensured that directors lead ethically and effectively; supported an ethical culture; set the strategic direction for the Company for the year ahead; approved policies and planning and administered and monitored the Company’s risks and opportunities, strategy, business model, performance and sustainable development. The full King IV disclosure report is available on Brimstone’s website at www.brimstone.co.za.

Ethical leadership The Board is responsible for providing leadership, either directly or through its committees, to Brimstone and its subsidiaries in order to deliver long term value to shareholders and other stakeholders. A formal Code of Conduct was approved by Brimstone and its subsidiary companies and requires directors and employees to observe the highest ethical standards when conducting the Group’s business.

Governance framework and structure

Board of directorsThe Board has a formal charter setting out, inter alia, its composition, meeting frequency, powers and responsibilities, particularly with regard to financial, statutory, administrative, regulatory and human resource matters. Key responsibilities in terms of the charter include the following: – Determining the Company’s vision, mission and key objectives; – Determining the Group’s values and incorporating them into

the Code of Conduct; – Appointment of new directors;– Providing strategic direction to the Company, and taking

responsibility for the adoption of strategic plans; – Monitoring compliance with laws and regulations and codes

of best business practice; – Ensuring that relevant and accurate information is timeously

communicated to stakeholders; and– Evaluating the going concern status of the Company and the

Group.

The Board is satisfied that it has discharged its duties and obligations as described in the board charter, during the past financial year.

To ensure a balance with no individual having unfettered powers of decision-making, a clear division of responsibilities exists between the Board and executive management.

The Board provides effective leadership and vision, aiming to enhance shareholder value and ensure long-term sustainable development and growth of the Company for the benefit of shareholders and other stakeholders over time.

The Board meets at least four times a year. Additional meetings are convened as and when necessary. All members of the Board have unlimited access to the services of the Company Secretary and senior management, as well as all Company records.

The diagram that follows sets out Brimstone’s group governance structure, reflecting the Brimstone board as having ultimate oversight:

SHAREHOLDERS

Board

Audit and Risk

Committee

Investment Committee

Remuneration and

Nominations Committee

Social and Ethics

Committee

Composition of the BoardThe composition of the Board reflects a balance of executive and non-executive directors.

The Board has formally adopted a board Diversity Policy which reflects the Board’s view that ensuring gender and race diversity at board level is an essential and important element to maintain a competitive advantage as well as contributing to society at large.

In reviewing the Board’s composition, the nominations committee is committed to considering the benefits of all aspects of diversity, specifically gender diversity, in order to effectively discharge its duties and responsibilities. The nominations committee will discuss and agree on an annual basis the objectives for achieving gender and race diversity at board level and duly recommend such objectives to the Board.

GOVERNANCE


Taking into account the size of the Board, diversity and demographics, the majority of directors are independent. The Board believes that the current mix of knowledge, skill and experience meet the requirements to lead the Company effectively. The demographics of the Board are depicted in the graphs below:

Demographics

� ACI* male � ACI* female � White male

*African, Coloured, Indian

Gender

� Male � Female

Independence

� Independent non-executive directors � Executive directors

At year end, the Board consisted of four executive and seven independent non-executive directors (one of whom is the Lead Independent Director).

Non-executive directors are selected to serve on the Board for their broader knowledge and experience and are expected to contribute effectively to decision-making and the formulation of policy. The independence of non-executive directors, who have served on the Board for more than nine years, is subject to review by the Board.

In terms of the memorandum of incorporation (MOI) of the Company at least one third of the directors must retire by rotation annually and may make themselves available for re-election at an annual general meeting.

The roles and responsibilities of the Chairman of the Board and the Chief Executive Officer are separated. One of the principles of King IV is that the Chairman of the Board be an independent non-executive director. Mr F Robertson was appointed Executive Chairman early in 2013. The Board believes that Mr Robertson (who previously served as Executive Deputy Chairman since 2002) has the required level of expertise and experience to act as Chairman of the Company and oversee the strategy of unlocking shareholder value for the benefit of shareholders. Mr PL Campher serves as Lead Independent Director, in compliance with King IV and the JSE Limited Listings Requirements.

Evaluation of the Board, board committees and individual directorsThe Board and subcommittees are evaluated by its members. The results of these evaluations are not disclosed in the Integrated Report, but the nomination for reappointment of directors only occurs after the evaluation of the members by the Board.

Induction of directors To assist directors, the Board has established an orientation programme for new directors which include background material, meetings with executive directors and senior management and visits to the various Group Companies’ locations. In addition,new directors will also receive information on the Companies Act and the JSE Limited Listings Requirements and the obligations they impose on directors.

Should circumstances arise where a non-executive director needs to obtain independent professional advice in order to act in the best interest of the Company, that director is encouraged to seek such advice with all reasonable costs being borne by the Company.

Company Secretary’s role and responsibilitiesAll directors have unlimited access to the services of the Company Secretary, Mrs T Moodley, who is responsible to the Board for ensuring that proper corporate governance principles are adhered to and that board member induction and training is provided where appropriate. The Board has considered and satisfied itself of the competence and qualifications of the Company Secretary.

The Company Secretary is not a director of Brimstone and has an arm’s length relationship with the Board and the directors.

Board committees (see tables overleaf)Specific responsibilities have been delegated to board committees with defined terms of reference set out in their respective charters. Copies of the Board and committee charters, which are reviewed annually, are available on request from the Company Secretary. Each committee adopted its charter with the terms of reference approved by the Board. All committee charters were reviewed during the year with changes being made to take into account new regulatory requirements and King IV to ensure best governance practices. At a meeting of the nominations committee held on 21 February 2018 it was agreed that the remuneration and nominations committee be combined into one committee. The current subcommittees of the Board are the audit and risk committee, investment committee, remuneration and nominations committee and the social and ethics committee.

Notwithstanding the delegation of functions to board committees, the Board remains ultimately responsible for the proper fulfilment of such functions, except for the functions of the audit and risk committee relating to the appointment, fees and terms of engagement of the external auditor.

Policy on trading in Company securitiesIn accordance with the JSE Limited Listings Requirements, the Company has adopted a Code of Conduct for insider trading. Directors and employees may not trade in Company securities during prohibited and closed periods.

Directors and designated employees may only deal in the Company’s securities outside of the prohibited and closed periods, with the approval of the Chairman, Chief Executive Officer or Lead Independent Director.

7 3

8 3

7 4

1


GOVERNANCE REPORT (CONTINUED)

Risk management The Board is responsible for overseeing governance and risk. The Board charter outlines the directors’ responsibilities for ensuring that an appropriate system and process of risk management is implemented and maintained.

ComplianceThe Board is ultimately responsible for the governance of compliance with applicable laws, codes and standards and was satisfied with the compliance to the relevant legal and regulatory requirements. Compliance is monitored through anonymous whistleblower reports. A maturity assessment was conducted by Deloitte Risk Advisory Services during the year and all recommendations made are being considered by management for implementation within the Group and/or Company.

Conflicts of interestsAll directors of the Company and its subsidiaries and senior management, are reminded of the requirement to submit, at least annually, a list of all their directorships and interests in contracts with Brimstone.

Directors are required to disclose their personal financial interests, and those of persons related to them, in contracts or other matters in which Brimstone has a material interest or which are to be considered at a Board or committee meeting. Where a potential conflict exists; directors are expected to recuse themselves from relevant discussions and decisions.

Name Role, purpose and principal functions Key focus for the year under review

Rem

uner

atio

n Co

mm

ittee

PL Campher(chairman)Appointed: February 2012

MJT HewuAppointed: July 2013

MK NdebeleAppointed: February 2007

– Determine, approve and develop the Company’s (a) general philosophy on remuneration and (b) specific philosophy in respect of executive remuneration

– Review and determine the remuneration packages of executives, including bonus incentive schemes, increases and shares

– Prepare for inclusion in the Company’s Integrated Report an annual remuneration policy

– Review the general level of remuneration for directors of the Board, including its committees. Put forward to the Board the necessary proposals in this respect for final approval by shareholders at the annual general meeting

– Approve appointments and promotions of senior executives– Annually review the effectiveness of the Company’s Code of

Conduct – Evaluate cases of unethical behaviour by senior managers and

executives of the Company – The approval of amendments to the Brimstone Group’s share

schemes– Ensure the Company has proper succession planning in place. Put

forward to the Board the necessary proposals – Make recommendations to the Board in respect of senior manage-

ment succession and senior talent development and education

– Reviewed long-term and short-term incentive payments to executive directors and management

– Reviewed bonus calculations against approved targets

– Reviewed Remuneration Report for inclusion in the Integrated Report before recommending to the Board for approval

– Reviewed management’s recommendations on proposed increases to non-executive directors fees for review by the Board and then approval by shareholders

– Approved annual salary increases for staff

GOVERNANCE



Aud

it an

d R

isk

Com

mitt

ee

N Khan (chairman)Date first appointed to the Committee: January 1999

PL CampherDate first appointed: November 2006

LA ParkerDate first appointed: January 1999

KR MolokoDate first appointed: November 2013

F Roman Date first appointed: May 2009

– The Audit and Risk Committee shall provide an open avenue of communication between the internal auditors, external auditors, and the Board

– Consider in consultation with external and internal auditors, their audit scope and plans

– Review with the head of internal audit and the representative of the external auditors the co-ordination of audit effort to ensure completeness of coverage, reduction of redundant efforts and effective use of audit resources

– The Audit and Risk Committee shall review with the internal and the external auditors:

• The adequacy and effectiveness of the Company’s internal controls, including computerised information system controls and security;

• The quality of financial information produced to ensure integrity and reliability;

• Compliance with the requirements for Audit and Risk Committees as set out by the King Report on Corporate Governance;

• Any related significant findings and recommendations of the internal and external auditors together with management’s responses thereto;

• The effectiveness of the risk management process • Oversee the external audit function and internal audit function • Examine and review the interim and annual financial statements

before submission to the Board and prior to public announcements

– Determine the nature and extent of any non-audit services which the auditor may provide to the Company

– To review significant cases of employee conflicts of interest, misconduct or fraud

– Considers other topics as defined by the board of directors from time to time and to investigate any activity which the Audit and Risk Committee, in its sole discretion, considers to fall within the scope of its powers

– Review the Risk Management Policy for approval by the Board annually

– Review policies and procedures with respect to senior executive discretionary expenditure including their expense accounts and use of corporate assets and consider the results of any review of these areas by the internal or external auditors

– Obtain the requisite resources for the effective discharge of its responsibilities

– Review the expertise, resources and experience of the Company’s finance function, including satisfying itself of the suitability, expertise and experience of the Financial Director annually as required by the JSE Listings Requirements and disclose the results of the review in the Integrated Report

See the full Audit and Risk Committee Report on page 53.


GOVERNANCE REPORT (CONTINUED)


Nom

inat

ions

Com

mitt

ee

MJT Hewu (chairman)Appointed:July 2013

PL Campher Appointed: February 2012

MK Ndebele Appointed: February 2007

– Review the structure, size and composition of the Board– Make recommendations to the Board with regard to the appoint-

ment of new directors – Identify and nominate candidates to fill board vacancies– Ensure that formal succession plans for the Chairman, Chief

Executive Officer, Financial Director and senior management are developed and implemented

– Review the board and committee charters

– Reviewed and monitored implementation of succession plans for executive directors, senior management and unlisted subsidiary companies.

– Reviewed profiles of directors coming up for re-election at the annual general meeting

Inve

stm

ent

Com

mitt

ee

PL Campher (chairman)Appointed: August 2006

N Khan Appointed: February 2007

LA ParkerAppointed: August 2013

– Provide advice to the Board regarding investment principles, objectives and guidelines

– Considers and recommends to the Board proposals for the investment of financial resources in new enterprises that are of strategic interest to the Company

– Advises the Board on policy regarding borrowings, and recommend action to be taken within established policy in relation to requirements per the Company’s delegated levels of authority

– The investment committee, in carrying out its tasks under its terms of reference, may obtain such independent professional advice as it considers necessary to effectively carry out its duties

– Considers the impact of investments on cash resources

– Considered and recommended to the Board the annual year-end valuation of investments

– Considered and recommended to the Board the Intrinsic Net Asset Values of investments

– Considered and approved the further capitalisation of Lion of Africa

– Considered and approved disposal of • Tiger Brands shares • A portion of Life Healthcare

shares • A portion of Long4Life shares– Considered and approved

the investment in: • Stadio/Milpark • FPG Property Fund – Monitored the Company’s

c ompliance with debt covenants in respect of its borrowing facilities

Soci

al a

nd E

thic

s Co

mm

ittee

M Hewu (Chairman) Appointed: February 2018

F Robertson Appointed: February 2013

MA BreyAppointed: November 2012

PL Campher Appointed:November 2012

N Khan Appointed: November 2012

– Monitors the Company’s activities, having regard to any relevant legislation, other legal requirements or prevailing codes of best practice

– Considers and ensures appropriate resources and committees are in place to ensure transformation within the Group

– Ensures the promotion of equality, prevention of unfair discrimination and reduction of corruption within the Group

– Monitors targets in respect of the B-BBEE Act within the Group– Considers and ensures appropriate programmes are in place in

respect of CSI targets within the Group – Assists the Board in ensuring that the Company’s ethical standards

are integrated into all the Company’s strategies and operations

See the full Social and Ethics Committee Report on page 44.

GOVERNANCE


Directors’ attendance at meetings

BoardAudit and

Risk CommitteeInvestment Committee

Remuneration Committee

Nominations Committee

Social and Ethics

Committee

Attendance by directors Po

ssib

le

Att

ende

d

Poss

ible

Att

ende

d

Poss

ible

Att

ende

d

Poss

ible

Att

ende

d

Poss

ible

Att

ende

d

Poss

ible

Att

ende

d

F Robertson 5 5 3 3 4 4 2 2 2 2 2 2MA Brey 5 5 3 3 4 3 2 2 2 2 2 2MI Khan 5 5 3 3 4 4 2 2 2 2 2 2GG Fortuin 5 5 3 3 4 4 2 2 2 2 2 2PL Campher 5 5 3 3 4 4 2 2 2 2 2 2MJ Hewu 5 5 — — — — 2 2 2 2 — —N Khan 5 5 3 3 4 4 — — — — 2 2MK Ndebele 5 5 — — — — 2 2 2 2 — —LA Parker 5 5 3 2 4 4 — — — — — —K Moloko 5 4 3 3 — — — — — — — —FD Roman 5 5 3 3 — — — — — — — —

Stakeholder Engagement

Prescribed engagement activities Targeted groupings

JSE SENS announcements* AllThe publication of our interim and annual results in printed media AllThe distribution of our Integrated Report and notice of AGM AllPosting of our interim and annual financial results on our website AllOur AGM and other shareholder meetings All shareholders

* The JSE provides an investor service to facilitate a listed company’s prescribed and voluntary disclosures to the general investor public. SENS is an acronym for Stock Exchange News Service.

Proactive engagement activities Target groupings

Bi-annual results presentations posted on our website Institutional investorsAnalysts and financial media

Responded where necessary to analyst and media reports to improve accuracy Analysts and financial mediaPress announcements, together with media interviews for interim and annual results AllOur website provides a wide range of information, including dividend announcements, SENS announcements, share price information and our Integrated Report All

2018 Investor diary

Shareholders Date

2017 Annual financial results 06 March 20182017 Cash Dividend incorporating an election to receive the cash dividend or scrip dividend 23 April 2018AGM 09 May 2018


SOCIAL AND ETHICS COMMITTEE REPORT

The Social and Ethics committee (“the committee”) was established to assist in monitoring the Group’s performance as a good and responsible corporate citizen and to perform the statutory functions required of a social and ethics committee in terms of the Companies Act, 71 of 2008, as amended (‘’the Companies Act’’). This report is presented by the committee to describe how it has discharged its duties in terms of the Companies Act as well as its additional duties assigned to it by the Board in respect of the financial year ended 31 December 2017.

The Social and Ethics committee (“the committee”) was established to assist in monitoring the The Social and Ethics committee (“the committee”) was established to assist in monitoring the The Social and Ethics committee (“the committee”) was established to assist in monitoring the Group’s performance as a good and responsible corporate citizen and to perform the statutory Group’s performance as a good and responsible corporate citizen and to perform the statutory Group’s performance as a good and responsible corporate citizen and to perform the statutory functions required of a social and ethics committee in terms of the Companies Act, 71 of 2008, functions required of a social and ethics committee in terms of the Companies Act, 71 of 2008, functions required of a social and ethics committee in terms of the Companies Act, 71 of 2008, as amended (‘’the Companies Act’’). This report is presented by the committee to describe as amended (‘’the Companies Act’’). This report is presented by the committee to describe as amended (‘’the Companies Act’’). This report is presented by the committee to describe how it has discharged its duties in terms of the Companies Act as well as its additional duties how it has discharged its duties in terms of the Companies Act as well as its additional duties how it has discharged its duties in terms of the Companies Act as well as its additional duties assigned to it by the Board in respect of the financial year ended 31 December 2017. assigned to it by the Board in respect of the financial year ended 31 December 2017.assigned to it by the Board in respect of the financial year ended 31 December 2017. assigned to it by the Board in respect of the financial year ended 31 December 2017.

Membership The current members are as follows: M Hewu (Chairman)F Robertson MA BreyPL CampherN Khan

Composition of the committeeFor the period under review the committee consisted of executive chairman, Mr F Robertson, lead independent director, Mr PL Campher, non-executive director, Mr N Khan and executive director, Mr MA Brey. Subsequent to the year-end Mr M Hewu was appointed as chairman of the committee to comply with King IV. Mr F Robertson remains a member of the committee.

The chief executive officer and/or managing directors and/or designated representatives of the Group’s subsidiary companies, House of Monatic and Lion of Africa are invited to attend all committee meetings. In terms of the committee’s mandate at least two meetings should be held annually. Attendance of these meetings is set out in the table on page 43 in this report.

The committee’s role and responsibilities

RoleThe committee fulfils an oversight role with accountability to the Board. The main objective of the committee is to assist the Board in monitoring the Group’s performance as a good corporate citizen.

ResponsibilitiesThe committee performs all the necessary functions to fulfil its role as stated above, including the following statutory duties: (a) Monitoring the Group’s activities, having regard to any relevant

legislation, other legal requirements or prevailing codes of best practice, with regard to matters relating to:

– Social and economic development, including the Group’s standing in terms of the goals and purposes of:

• The 10 principles set out in the United Nations Global Compact Principles;

• The Organisation for Economic Co-Operation and Development recommendations regarding corruption;

• The Employment Equity Act; and • The Broad-Based Black Economic Empowerment Act. – Good corporate citizenship, including the Group’s • Promotion of equality, prevention of unfair

discrimination, and reduction of corruption; • Contribution to the development of the communities

in which its activities are predominantly conducted or within which its products or services are predominantly marketed; and

• Record of sponsorship, donations and charitable giving.

– The environment, health and public safety, including the impact of the Group’s activities and of its products or services;

– Consumer relationships, including the Group’s advertising, public relations and compliance with consumer protection laws; and

– Labour and employment, including: • The Group’s standing in terms of the International

Labour Organisation Protocol on decent work and working conditions; and

• The Group’s employment relationships, and its contribution toward the educational development of its employees;

GOVERNANCE


(b) Ensure that the Group’s ethics risks and opportunities are assessed and that an ethics risk profile is compiled;

(c) Ensure that the ethical standards guiding the Group’s relationships with internal and external stakeholders are clearly identified;

(d) Ensure that the Group’s ethical standards are integrated into all the Group’s strategies and operations;

(e) Ensure that the Group’s ethics performance is assessed, monitored, reported and disclosed;

(f) To draw matters within its mandate to the attention of the Board as may be required; and

(g) To report, through one of its members, to the shareholders at the Company’s annual general meeting on matters within its mandate.

In addition, the committee performs the following duties delegated by the Board:– The Group’s Integrated Report contains a large amount of

information reviewed and considered during the course of the committee’s activities. The committee will review the content of the Integrated Report that is relevant to the committee.

OutcomesThe committee confirmed the Group’s Code of Conduct and ensured that the required policies and procedures were in place in the following areas: – Fraud detection and awareness– Whistleblowing

Report to shareholdersThe committee has reviewed and is satisfied with the content in the Integrated Report that is relevant to the activities and responsibil-ities of the committee.


REMUNERATION REPORT

Part 1: Remuneration Background Statement Presented on the following pages is the remuneration report for 2017 on behalf of the Remuneration Committee (“the Committee”). In line with the recommendations of the King IV Report on Corporate Governance™ (“King IV”) we have split the report into three parts:– Part 1: Remuneration background statement– Part 2: Remuneration policy and philosophy– Part 3: Implementation report

We have adopted a number of the recommended practices set out in King IV and will continue our journey to enhance our disclosure on remuneration in the coming years.

At the Annual General Meeting (“AGM”) held on the 10 May 2017, 96.8% of shareholders voted in favour of the remuneration policy resolution and 100% voted in favour of the non-executive directors’ fees. At the 2018 AGM, in line with the JSE Listings Requirements we will be putting Parts 2 and 3 of this report (containing the 2018 remuneration policy and 2017 implementation report respectively) to two non-binding votes.

Brimstone is committed to maintaining an open dialogue with shareholders and welcomes any feedback or comments.

In determining the remuneration structure, Brimstone is committed to responsible corporate governance practices, creating sustainable shareholder value through consistent growth in Intrinsic Net Asset Value (“INAV”), growth in assets under management and cash gen-eration. The Committee is satisfied that the remuneration policy (as set out in Part 2) is aligned with the Company’s strategy and for 2017 has achieved its stated objectives. No changes have been made to the remuneration policy for 2018.

Part 2: Remuneration Policy and Philosophy

Remuneration CommitteeThe Committee has been appointed by the Board, has its own delegated authority framework to act on behalf of the Board and its own charter to guide it. All the members of the Committee are independent, non-executive directors. The Committee meets regularly to deal with remuneration related matters. The attendance record of members is set out on page 43. Should any relevant matters be raised by shareholders, these would be dealt with by the Committee. No matters were raised at the AGM held on 10 May 2017 or any other meeting held during the year.

Activities during the year included:– Recommending the remuneration of non-executive directors;– Determining the performance criteria and targets for both

short-term and long-term incentives; and– Approving the allocation and award of Forfeitable Share Plan

(“FSP”) shares in terms of the Company’s long-term incentive plan rules.

During the year the Committee obtained advice from Pricewater-house Coopers (“PwC”) on matters related to remuneration. The Committee is satisfied that PwC acted independently and objectively.

Remuneration policy and philosophyThe forward-looking remuneration policy deals with remuneration of non-executive directors, executive directors, senior management and other employees. The remuneration mix between guaranteed and variable pay is linked to each job and its expected deliverables.

In determining the remuneration policy, the Committee gives due consideration to the principle of fair and responsible remuneration. As there is no “one-size-fits-all” solution, the Committee as well as the Board must develop initiatives, policies and arrangements to give effect to this principle in line with best practice, bearing in mind the Company’s strategic objectives. The Committee takes the necessary steps to ensure that executive remuneration is justifiable in the context of overall employee remuneration. The Committee will continue to monitor remuneration to ensure that, to the extent possible, they are adhering to the principle of fair and responsible remuneration.

Non-executive directorsNon-executive directors’ remuneration is benchmarked by man-agement to companies of a similar size, nature and complexity to Brimstone, in addition to a further comparison to an independent benchmarking survey published by PwC. Where the benchmarking reveals a significant difference in remuneration, base adjustments are made with a view of achieving parity over a reasonable period of time. More specifically, the remuneration of the lead independent director has been set, taking into account the fact that Brimstone has an executive chairman and consequently the lead independent director has to perform more extensive duties. The remuneration of the audit and risk committee chairman and members was found to lag the market and was increased after taking into account the scope of the statutory duties which this committee performs. Following the benchmarking exercise, management presents their proposal to the committee for approval by shareholders.

Remuneration for board meetings is fixed and does not depend on attendance, while that of sub-committees is based on a fee per meeting attended. Non-executive directors do not receive any benefits or variable incentives. Travel expenses incurred during the course and scope of their duties are reimbursed by the Company.

GOVERNANCE


The fees excluding VAT for non-executive directors are as follows (R):

1/1/2017 to31/12/17

(Approved)

1/1/2018 to31/12/18

(For approval)

Board (Annual fee) Chairman — —Lead independent director 371 295 393 573Member 192 270 213 806

Committee (Per meeting)Audit Committee:

Chairman 34 608 48 351Member 19 227 25 381

Investment and Social and Ethics Committees:

Chairman 28 841 35 571Member 19 227 20 381

Remuneration and Nominations Committee:*

Chairman 28 841 35 571Member 19 227 20 381

* These were separate committees in 2017.

With effect from 1 June 2017 non-executive directors are required to register as VAT vendors if the value of their taxable supplies exceed the compulsory registration threshold of R1 million. Therefore, in addition to the fees, shareholders will be asked to approve the payment of the VAT on the fees.

All employeesThe mix of remuneration varies per grade with higher grades, which have the ability to influence performance, receiving a higher proportion of variable pay.

In line with the Company’s human resources and business strategies, the objective of the remuneration policy is to align the reward practices to create sustainable shareholder value. The principles of the remune-ration policy are designed to attract, retain, motivate and to reward employee performance and contributions made to the strategic direction of the business. Total remuneration including the pay mix is regularly benchmarked against appropriate surveys. Guaranteed pay is reviewed regularly and benchmarked to appropriate market data.

Benefits provided include medical aid, provident fund, group life and personal accident insurance cover.

A condition of employment for employees is to be a member of the Company’s retirement fund. Contributions to the fund are used primarily for retirement funding and risk benefits. The risk benefits include benefits such as death and disability cover. An umbrella fund arrangement is in place for provident fund members, which offers investment choice.

All employees are eligible to participate in the short-term incentive scheme (“STI”), which requires the achievement of individual performance criteria and predetermined financial targets. See below for further details.

Executive directors and senior managementIn addition to the STI, executive directors and senior managers are eligible to participate in the long-term incentive scheme (“LTI”). The LTI is a FSP which also requires the achievement of individual performance criteria and predetermined financial targets. See below for further details.

Short and long-term incentives

STIUnder the STI, eligible employees have, on an annual basis, the opportunity to receive a cash payment based on the achievement of individual and corporate performance measures. The weighting of these measures varies according to grade.

The maximum amount that can be earned under the STI is:% of annual CTC*

Executive Chairman and Chief Executive Officer 95%Other executive directors and senior management 60% Junior management and specialist staff 30%-45%Junior staff 17%-25%

* CTC = Cost to company

LTIThe purpose of the FSP is to retain, motivate and reward those senior managers and executive directors who are able to influence the performance of the Company and align their interests with those of the Company’s shareholders.

The LTI takes the form of an FSP under which, eligible employees, on an annual basis are granted a share award. The awards vest after 3 years provided the employee remains in employment and subject to the achievement of individual and corporate performance measures. During the vesting period, employees enjoy normal share-holders rights including the right to vote and right to dividends.

As part of the FSP structure a notional amount, equal to a per-centage of the value of the shares awarded is also determined. The notional amount is determined by the Committee on award date and accrues notional interest over the vesting period. The notional amount results in the FSP having partly the characteristics of an option in that a portion of the share price on award date has to be “outgrown” on vesting date for any value to be realised.

The maximum expected value of shares that can be granted under the LTI is:

% of annual CTC

Executive Chairman and Chief Executive Officer 60%Other executive directors and senior management 17%-40% Junior management and specialist staff 15%

The Company historically operated a share option plan however the last grant under this plan to executive directors and senior managers was made in 2015 and no future grants are planned.


REMUNERATION REPORT (CONTINUED)

Performance measuresBoth the STI and LTI use the same performance measures which focus on growth in INAV, deal creation, achievement of strategic objectives, cash management and personal performance of the individual. For the STI, performance is tested to the end of the financial year, for the LTI, performance is tested over the three financial years between grant and vesting date. Details including the relative weightings are set out below:

Weighting/ Maximum

1.1 Growth in INAV per share over a 12 month period relative to the FINDI 10%

1.2 Growth in INAV per share over a 36 month period relative to the FINDI 10%

1.3 Growth in INAV per share above CPI over a 36 month period 10%

2. Cash at the centre – Sufficient cash must be held at the centre to pay the planned dividend when it falls due 30%

3. Deal creation: Threshold: Deals worth R300 million over a 3 year

rolling period – 8.33%, Stretch: Deals worth R900 million over a 3 year rolling period 25%

4. Individual key performance indicators 15%

100%

Share dilution limitsIn terms of the rules of the FSP, the maximum aggregate number of shares that may be allocated to all participants shall not exceed 2 157 271 Ordinary shares and 12 293 329 “N” Ordinary shares. For any one participant the maximum aggregate number allocated shall not exceed 215 727 Ordinary shares and 1 229 333 “N” Ordinary shares. As at 31 December 2017, the actual number of shares that had been allocated to participants under the FSP is, in aggregate, 3 161 337 “N” Ordinary shares. No Ordinary shares have been awarded to participants.

Pay mixPay for performance is a key principle of our remuneration philosophy and a high weighting is placed on variable pay. The charts below set out the mix between fixed and variable pay (STI and LTI) for each of our executive directors on a minimum, on-target and maximum basis.

Element Minimum On-target MaximumFixed (annual CTC)

Salary and benefits in line with those paid in the 2017 financial year (as reported in the single

figure table)

STI Nil 50% of stretch 60% – 95% of annual CTC

LTI Nil The maximum number of

instruments granted in 2017

multiplied by the fair value on

grant.

The maximum number of

instruments granted in 2017

multiplied by the share price on

grant.

Service agreementsAll executive directors have service agreements in place and contain notice periods of one month by either party. No additional payments are made to executive directors upon termination of employment (apart from those required in terms of labour legislation). In the event of an executive director ceasing employment as a “bad leaver”, all STI and unvested LTI awards will be forfeited. In other circumstances, STI and LTI awards will be treated in accordance with the relevant plan rules.

5 255

CEO PAY MIX (R’000) FINANCIAL DIRECTOR PAY MIX (R’000)

STRETCH

ON-TARGET

MINIMUM

32%

49%

32%

25%

3 264

36%

26%

10 241

6 639

STRETCH

ON-TARGET

MINIMUM

42%

60%

100%

27%

19%

2 193

31%

21% 3 673

6 167

EXECUTIVE CHAIRMAN PAY MIX (R’000) COO PAY MIX (R’000)

STRETCH

ON-TARGET

MINIMUM

32%

50%

100%

32%

25%

3 315

35%

26%

10 292

6 690

STRETCH

ON-TARGET

MINIMUM

42%

60%

100%

27%

19%

2 584

31%

21% 4 316

� Fixed � Bonus � LTI � Fixed � Bonus � LTI

� Fixed � Bonus � LTI � Fixed � Bonus � LTI

��

��

100%

GOVERNANCE


Shareholder engagementAs mentioned in Part 1, we will be putting both the remuneration policy (Part 2 of this report) and the implementation report (Part 3 of this report) to a vote at the 2018 AGM. In the event that 25% or more of the shareholders vote against either or both the remuneration policy, or the implementation report, the Committee will commence engagement with shareholders to ascertain their reasons and legitimate concerns underlying their votes. Should this occur, the Committee will extend an invitation to shareholders in a Stock Exchange News Service announcement together with the results of the AGM, setting out the precise details of the manner, date and timing of engagement.

Weighting/ maximum

Actual performance

Achievement as % of total

award

1.1 Growth in INAV per share over a 12 month period relative to the FINDI 10% Below FINDI 0%1.2 Growth in INAV per share over a 36 month period relative to the FINDI 10% Below FINDI 0%1.3 Growth in INAV per share above CPI over a 36 month period 10% Below CPI 0%2. Cash at the centre – Sufficient cash must be held at the centre to pay the planned

dividend when it falls due 30% Achieved 30%3. Deal creation: Threshold: Deals worth R300 million over a 3 year rolling period – 8.33%,

Stretch: Deals worth R900 million over a 3 year rolling period – 25% 25%Achieved

above stretch 25%4. Individual key performance indicators 15% 8% – 12.5% 8% – 12.5%

100% No total

The performance detailed above resulted in the following STI payments to be made to executive directors in respect of the financial year.

Name

Achievement of financial

targets

Achievement of individual

targets

Total as % of

maximum

Maximum Bonus (%

of CTC) Bonus (R’000)

MA Brey 55% 12.5% 67.5% 95% 2 245 F Robertson 55% 12.5% 67.5% 95% 2 245 GG Fortuin 55% 8.0% 63.0% 60% 894 MI Khan 55% 12.0% 67.0% 60% 1 118

LTI The first grant under the FSP was made in February 2015 with awards vesting subject to performance conditions and continued employment. The performance conditions are as set out on page 48. The February 2015 award vested in February 2018.

The share options that vested and were exercised during the year are set out on page 52.

LTI awards granted in the yearDuring the financial year the Company made awards under the FSP as detailed in the policy. Details of the awards are set out in the table on executive director’s interests on page 52.

Part 3: Implementation reportThis section of the report sets out how the policy was applied during 2017 and the resulting remuneration outcomes.

Guaranteed payBrimstone strives to pay its staff members in a manner which is both fair to them and to the shareholders of the Company. The average increase paid to staff members was 6% in line with inflation with the average increase paid to executive directors also 6%.

STIDetails of performance in respect of the period ended 31 December 2017 are set out below: The measures for growth in INAV were not achieved (0% out of a total of 30%) while the cash at the centre and deal creation metrics were fully achieved. Individual key performance indicators were assessed and varied from 7.5% to 12.5% out of a possible 15%.


Remuneration of directors Executive directors’ remunerationThe table below sets out details of the amounts paid to or receivable by executive directors in respect of the financial year. We note the recommendation in terms of King IV to move towards disclosure of a single figure of remuneration. The table below includes all elements of remuneration other than LTI which we will disclose from next year.

2017R’000Paid by the Company Fees paid OtherName Basic salary by subsidiary benefits* STI Total

MA Brey 2 951 207 313 2 245 5 716F Robertson 3 045 993 270 2 245 6 553GG Fortuin 1 970 — 223 894 3 087MI Khan 2 331 — 253 1 118 3 702

10 297 1 200 1 059 6 502 19 058

Mr LZ Brozin, who retired as a director on 9 May 2016, exercised all outstanding options to Brimstone “N” Ordinary shares to which he was entitled in terms of the rules of the Brimstone Investment Corporation Limited Share Trust during February 2017, realising a gain of R346 355.

2016R’000Paid by the CompanyName Basic salary

Fees paid by subsidiary

Other benefits* STI+ Total

MA Brey 2 548 228 365 2 815 5 956F Robertson 2 604 534 298 2 815 6 251LZ Brozin^ 1 566 — 100 — 1 666GG Fortuin# 1 005 — 139 1 039 2 183MI Khan# 1 179 — 154 1 307 2 640

8 902 762 1 056 7 434 18 696

^ Retired as a director on 9 May 2016# Appointed as directors on 9 May 2016* Company contributions to retirement fund and medical aid.+ Restated


GOVERNANCE


Non-executive directors’ remunerationNon-executive directors receive fees for membership of the Brimstone Investment Corporation Limited Board and a subsidiary company. They also receive fees for work done on committees of the Board. The amounts below are exclusive of VAT.

2017R’000Name Board fees

Board fees paid by subsidiary

Committeefees Total

PL Campher 371 26 308 705MJT Hewu 192 — 96 288N Khan 192 26 219 437MK Ndebele 192 — 77 269K Moloko 192 — 58 250LA Parker 192 — 116 308FD Roman 192 — 58 250Total 1 523 52 932 2 507

2016R’000Name Board fees

Board fees paid by subsidiary

Committeefees Total

PL Campher 350 39 318 707MJT Hewu 181 — 109 316N Khan 181 26 207 388MK Ndebele 181 — 92 273K Moloko 181 — 55 236LA Parker 181 — 127 308FD Roman 181 — 54 235Total 1 436 65 962 2 463


Prescribed officersThe Board has determined that there are no prescribed officers in the employ of the Company as defined by the Companies Act No.71 of 2008.

Executive directors’ interestsThe table below sets out details of all awards made under variable remuneration incentive schemes in the current and prior years that, at the end of the financial year had not yet vested. The options do not have any performance measures attached to them. The performance measures attached to the FSP’s are set out in the remuneration policy. The table also sets out, in respect of options awards exercised during the year. Note, options vest annually in 20%


tranches after the expiry of 1 year from date of award. They must be exercised within 6 years from date of award. The date shown in the table is the date that the last tranche of options will vest.

Under King IV principles, it is recommended that the Company provides an indication of the fair value of awards at the end of each reporting period. The Company is currently in the process of determining the most appropriate methodology to use in respect of this and as such has not included such disclosure this year. The Company will however look to include this detail in its reporting next year. Based on a year-end share price of R11.25 the outstanding options are all “under water”.

Executive Director

Date of grant

Final vesting date

Number of instruments

awarded

Options: Strike

price (R)

Number of instruments vested and

exercised

Closing number of

unvested instruments

Number exercised

in year

Share price at which

instruments were

exercised

Cash value of

instruments exercised in

year (R’000)

MA Brey Options over “N” Ordinary Shares16-Feb-12 15-Feb-17 214 800 9.00 214 800 — 42 960 13.75 204 06027-Feb-13 26-Feb-18 152 500 12.50 122 000 30 500 30 500 13.75 38 12524-Feb-14 23-Feb-19 99 700 13.00 59 820 39 880 19 940 13.75 14 955FSPs – “N” Ordinary Shares24-Feb-15 24-Feb-18 182 063 — — 182 063 — — —29-Feb-16 03-Mar-19 326 211 — — 326 211 — — —27-Feb-17 26-Feb-20 273 079 — — 273 079 — — —

F Robertson Options over “N” Ordinary Shares16-Feb-12 15-Feb-17 193 300 9.00 193 300 — 38 660 13.75 183 63527-Feb-13 26-Feb-18 137 200 12.50 109 760 27 440 54 880 13.75 68 60024-Feb-14 23-Feb-19 99 700 13.00 59 820 39 880 39 880 13.75 29 910FSPs – “N” Ordinary Shares24-Feb-15 24-Feb-18 182 063 — — 182 063 — — —29-Feb-16 03-Mar-19 326 211 — — 326 211 — — —27-Feb-17 26-Feb-20 273 079 — — 273 079 — — —

MI Khan FSPs – “N” Ordinary Shares24-Feb-15 24-Feb-18 60 243 — — 60 243 — — —29-Feb-16 03-Mar-19 106 936 — — 106 936 — — —27-Feb-17 26-Feb-20 143 230 — — 143 230 — — —

GG Fortuin FSPs – “N” Ordinary Shares29-Feb-16 03-Mar-19 91 812 — — 91 812 — — —27-Feb-17 26-Feb-20 122 973 — — 122 973 — — —

ApprovalThe remuneration report was approved by the Remuneration Committee of Brimstone Investment Corporation Limited.

GOVERNANCE


Introduction

AUDIT AND RISK COMMITTEE REPORT

The Audit and Risk Committee (“the committee”) is a formal committee of the Board. The responsibilities of the committee are outlined in its written terms of reference which are reviewed annually and are in line with the Companies Act, King IV and the JSE Limited Listings Requirements. The committee has an independent role with accountability to the Board and shareholders.

this committee at each meeting by way of report back by the respective chairpersons of the subsidiary’s audit or finance committee or invited representatives.

In the case of Lion of Africa, a wholly-owned subsidiary, its own audit committee comprises three independent non-executive directors and consequently fulfils its responsibilities independent of the committee.

Statutory dutiesIn the conduct of its duties, the committee has performed the following statutory duties: – Deloitte & Touche has been Brimstone’s external auditor since

1995. Mr Lester Peter Cotten is currently the designated audit partner and was appointed as such on 22 May 2013. Mr Cotten has confirmed to the committee that Deloitte have complied with the independence requirements in terms of the Independent Regulatory Board for Auditors (IRBA) and the South African Institute of Chartered Accountants standards. At the conclusion of the 2017 audit Mr Cotten will be replaced by Mr Brian Botes as designated auditor subject to shareholder approval. Mr Botes’ experience and knowledge has been assessed and is considered appropriate, and as such the committee recommends to the shareholders the approval of his appointment at the annual general meeting scheduled for 9 May 2018. This change in the designated auditor provides further independence to the external audit function. The committee wishes to extend its thanks and gratitude to Mr Cotten for his immense contribution to the committee and the Group during his tenure as designated auditor;

– Determined the fees to be paid to the external auditor and their terms of engagement;

– Ensured that the appointment of the external auditor complies with the provisions of the Companies Act and any other legislation relating to the appointment of the external auditor;

– Determined the nature and extent of any non-audit services; and

– Pre-approved any proposed agreement with the auditors for the provision of non-audit services.

Appointment of external and internal auditorsThe committee is satisfied that the Company’s external auditor, Deloitte & Touche is independent of the Company and is able to

This report of the committee is presented to the shareholders in terms of section 94(7)(f) of the Companies Act and as recommended by King IV.

The members of the committee were recommended by the Board and appointed by shareholders for the 2017 financial year.

Committee members and attendance at meetingsThe committee comprises five independent non-executive directors (as set out in the table below) and is chaired by Mr N Khan. All the committee members are suitably skilled and experienced. The committee meets at least three times per year.

Committee MemberNumber of

meetings held

Number ofmeetings attended

N Khan (chairman) 3 3PL Campher 3 3KR Moloko 3 3LA Parker 3 2FD Roman 3 3

The executive directors and senior management make themselves available to attend meetings and answer questions.

Representatives from Brimstone’s subsidiary companies attend the meetings by invitation.

The committee chairman and Brimstone’s lead independent director are representatives at House of Monatic’s finance committee.

Roles and responsibilitiesThe committee has a charter approved by the Board. The charter was reviewed to ensure alignment with King IV.

The committee’s roles and responsibilities include its statutory duties in accordance with the Companies Act, as well as the responsibilities assigned to it by the Board.

The audit or finance committees of Brimstone’s operating subsidiary companies, namely, Lion of Africa and House of Monatic report to

The Audit and Risk Committee (“the committee”) is a formal committee of the Board. The Audit and Risk Committee (“the committee”) is a formal committee of the Board. The Audit and Risk Committee (“the committee”) is a formal committee of the Board. The responsibilities of the committee are outlined in its written terms of reference which The responsibilities of the committee are outlined in its written terms of reference which The responsibilities of the committee are outlined in its written terms of reference which are reviewed annually and are in line with the Companies Act, King IV and the JSE Limited are reviewed annually and are in line with the Companies Act, King IV and the JSE Limited are reviewed annually and are in line with the Companies Act, King IV and the JSE Limited Listings Requirements. The committee has an independent role with accountability to the Listings Requirements. The committee has an independent role with accountability to the Listings Requirements. The committee has an independent role with accountability to the Board and shareholders. Board and shareholders. Board and shareholders.


AUDIT AND RISK COMMITTEE REPORT (CONTINUED)

conduct their audit functions without any influence from the Company. The committee has rules regulating the services and conditions of use of non-audit services provided by the external auditor. The committee has furthermore been provided with the latest IRBA audit firm and registered auditor review findings which were used in the consideration of the external auditor’s appointment.

In terms of its charter this committee is responsible for the appointment of the Company’s internal auditors. Brimstone has established an in-house internal audit function, which focused in the main on performing internal audits at certain subsidiary companies and the follow up of findings identified by KPMG in prior years at head office. KPMG’s services as co-sourced internal auditors were terminated during the year.

The committee meets at least three times a year with the Company’s internal and external auditors together with man-agement to review accounting, internal and external auditing, internal control and financial reporting issues. Both the internal and external auditors enjoy unrestricted access to the Audit and Risk Committee and vice versa.

The committee chairman meets at least three times per year with both internal and external audit without management being present.

The committee approves the fees and scope of external and internal audit services. It is responsible for the maintenance of a professional relationship with both the external and internal auditors and oversees co-operation between these two parties.

Internal financial controls Brimstone is responsible for ensuring that a sound system of internal control exists to safeguard shareholders’ investments and the assets of the Group. The Group’s internal controls, systems and procedures are designed to provide reasonable, but not absolute assurance as to the integrity and reliability of the annual financial statements, that assets are adequately safeguarded against material loss and that transactions are properly authorised and recorded.

Expertise and experience of the Financial Director and finance function The committee has satisfied itself of the appropriateness and experience of the Financial Director, Mr GG Fortuin. The committee experience of the Financial Director, Mr GG Fortuin. The committee has furthermore considered and has satisfied itself of the appropriateness of the expertise and adequacy of resources of the appropriateness of the expertise and adequacy of resources of the Company’s finance function and the experience of the senior members of management responsible for the finance function.

Financial statements and going concernThe committee reviewed the annual financial statements and consolidated annual financial statements and is satisfied that they comply with International Financial Reporting Standards and the requirements of the Companies Act, and that the accounting policies used are appropriate.

In addition, the committee in reviewing the annual financial statements and consolidated annual financial statements considered the findings in the JSE’s report titled, “Reporting Back on Proactive Monitoring of Financial Statements in 2017’’ issued on 20 February 2018, to ensure that matters raised in the report have been appropriately addressed.

The committee has also reviewed a documented assessment by management of the going concern premise of the Company before recommending to the Board that the Company will be a going concern for the foreseeable future.

Risk management In giving effect to risk management responsibilities the Group has implemented a continuous risk management review programme to ensure a coherent governance approach throughout the Group. The Group has ensured that no undue, unexpected or unusual risks have been undertaken in pursuit of reward.

ComplianceThe committee is responsible for reviewing any major breach of relevant legal, regulatory and other responsibilities. The committee is satisfied with the compliance to these standards and with the applicable laws and regulations. Furthermore, the committee is satisfied that it has complied with all its legal, regulatory and other responsibilities during the year under review.

A maturity assessment was conducted by Deloitte Risk Advisory Services during the year and all recommendations made are being considered by management for implementation.

IT and Technology Governance The committee has oversight responsibility for IT governance and risk management. The IT policies in particular those relating to disaster recovery and management have been presented and approved by the committee.

Recommendation of the Integrated Report for approval by the BoardThe committee has reviewed and considered the Integrated Report, including the annual financial statements and consolidated annual financial statements, and has recommended it for approval by the Board.

N KhanChairman of the Audit and Risk Committee

22 March 2018

GOVERNANCE



Directors’ Approval of Annual Financial Statements, Preparation of Annual Financial Statements and Certificate by Secretary . . . . . . . . . . . . . . . . . . . . . . . . . 56Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . 57Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61Income Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62Statements of Comprehensive Income . . . . . . . . . . . . . . . . 62Statements of Financial Position . . . . . . . . . . . . . . . . . . . . . . 63Statements of Changes in Equity . . . . . . . . . . . . . . . . . . . . . 64Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . 66Notes to the Annual Financial Statements . . . . . . . . . . . . . 67

SUPPLEMENTARY REPORTS ON INVESTMENTS

Interest in Subsidiaries (Appendix 1) . . . . . . . . . . . . . . . . . 149Investments in Associate and Joint Venture Companies (Appendix 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 151Investments (Appendix 3) . . . . . . . . . . . . . . . . . . . . . . . . . . 152Valuation of Options (Appendix 4) . . . . . . . . . . . . . . . . . . . 153

Directors’ Interests in Shares (Appendix 5) . . . . . . . . . . . . 154Shareholding Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

Notice of Annual General Meeting . . . . . . . . . . . . . . . . . . . 158Curriculum Vitae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165Proxy Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167Corporate Information . . . . . . . . . . . . . . . . . . Inside back cover

AUDITED ANNUAL FINANCIAL STATEMENTSCONTENTS


ANNUAL FINANCIAL STATEMENTS

DIRECTORS’ APPROVAL OF ANNUAL FINANCIAL STATEMENTS, PREPARATION OF ANNUAL FINANCIAL STATEMENTS AND CERTIFICATE BY SECRETARY

The directors of the Company are responsible for the preparation, integrity and objectivity of the consolidated and separate annual financial statements as well as for all other information contained in this Integrated Report. To fulfil this responsibility, the Company and Group maintain controls to provide reasonable assurance that assets are safeguarded and that records accurately reflect the transactions of the Company and Group.

The consolidated and separate annual financial statements are prepared in terms of International Financial Reporting Standards and have been reported on by our auditors in conformity with International Standards on Auditing and the Companies Act of South Africa. The consolidated and separate annual financial statements for the year ended 31 December 2017 which appear on pages 53 and 54 and 61 to 157 were approved by the Board and authorised for issue on 22 March 2018.

On behalf of the Board:

F Robertson MA BreyExecutive Chairman Chief Executive Officer

Preparation of financial statementsThe consolidated and separate annual financial statements of Brimstone Investment Corporation Limited for the year ended 31 December 2017 have been prepared under the supervision of GG Fortuin (Financial Director) BCom (Acc) (Hons); CA(SA).

Certificate by secretaryIn terms of section 88 (2)(e) of the Companies Act, I certify that the Company has lodged with the Commissioner all such returns and notices as are required by the Companies Act and that all such returns and notices are true, correct and up to date.

T MoodleyCompany Secretary

22 March 2018


INDEPENDENT AUDITOR’S REPORTto the Shareholders of Brimstone Investment Corporation Limited

Report on the Audit of the Consolidated and Separate Financial Statements

Opinion We have audited the consolidated and separate financial statements of Brimstone Investment Corporation Limited (the Group) set out on pages 62 to 154, which comprise the statements of financial position as at 31 December 2017 and the income statements and statements of other comprehensive income, the statements of changes in equity and the statements of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of the Group as at 31 December 2017, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

Basis for OpinionWe conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements section of our report. We are independent of the Group in accordance with the Independent Regulatory Board for Auditors Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit MattersKey audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter How the matter was addressed in the audit

Valuation of complex financial instruments in Tiger Brands (consolidated and separate)

At 31 December 2017, Brimstone held rights to a number of shares in Tiger Brands Limited (Tiger Brands) which were restricted by an option held by Tiger Brands to repurchase a determinable amount of these shares on or after 31 December 2017. These shares are valued and disclosed as options, details of which can be found in Appendix 3 and 4.

For a portion of the options, Brimstone entered into a forward sale agreement. The forward sale option liability was valued separately at year end and is included in other financial liabilities.

Significant assumptions and complex calculations are required in performing the valuation of these options.

The Monte Carlo method is used to perform the valuations.

The Brimstone directors engage with specialists in performing the valuations. The significant assumptions and inputs used in the valuation of these instruments are as follows:– Dividend yield, and – Volatility

As a result, this was identified as a key audit matter.

In evaluating the valuation of the share options, we have focused our attention on the significant assumptions and inputs used in the valuation of these financial instruments.

Our audit procedures have included the following:– Evaluating the design and implementation of key controls that address this

risk; – Engaging our internal valuation specialist to assist with: • Critically evaluating whether the method used by the directors to value

the share option is appropriate; and • Validating the assumptions used in the valuation by comparing them to

relevant market information; – Testing of inputs used in the valuation by comparing to source information;– Performing an independent valuation and comparing the results to that of

the directors; and– Subjecting the key assumptions to sensitivity analysis and assessing the

appropriateness of the directors’ disclosures.

In addition, in relation to the forward sale option liability, our audit procedures included the following:– Assessing the rights and obligations created by the forward sale agreement;

and– Determining whether the accounting entries recognise the economic

substance of the transaction.

The valuation method, assumptions and inputs used by the directors were found to be appropriate and we are satisfied that the options have been accounted for and disclosed appropriately.



INDEPENDENT AUDITOR’S REPORT (CONTINUED)to the Shareholders of Brimstone Investment Corporation Limited

Key Audit Matter How the matter was addressed in the audit

Compliance with debt covenants (consolidated)

The Brimstone group engages in regular asset acquisitions of significant size. Significant financing arrangements are often entered into to fund such acquisitions.

These funding arrangements can be complex in nature, often including debt covenants, guarantees and contingencies.

Non-compliance with debt covenants could have a significant impact on the liquidity of the Group should the Group be required to make significant payments within a short timeframe.

As a result, this was identified as a key audit matter. Details of significant funding arrangements are disclosed in note 32 of the consolidated and separate financial statements.

Our audit procedures included the following: – Evaluating the design and implementation of key controls that address this

risk; – Reviewing all funding arrangements to ensure all debt covenants, guarantees

and contingencies have been identified appropriately;– Assess compliance with all debt covenants, if applicable;– Reviewing remedial steps taken where debt covenants have been breached,

if applicable;– Considering the impact of breached covenants on the consolidated and

separate financial statements; and– Reviewing disclosure in the financial statements of debt covenants,

guarantees and contingencies to ensure that it is adequate and appropriate.

We concur with the directors’ assessment that in the one instance of potential non-compliance that occurred during the year, proactive steps were taken to manage the situation satisfactorily with the relevant funders and that the disclosure of these arrangements is adequate and complete.

Statutory solvency ratio and regulatory compliance (consolidated)

The Capital Adequacy Ratio (CAR) is determined in accordance with the Short Term Insurance Act No.53 of 1998 (the Act) and is monitored by the Financial Services Board (FSB). Whilst the CAR specified in the Act is set at 1, the FSB has in previous years set a requirement for Lion of Africa Insurance Company Limited (Lion of Africa) to maintain a CAR of 1.3. This was not maintained by Lion of Africa throughout the 2017 financial year, and at year end this was at 1.07.

Non-compliance with the CAR and asset spreading requirements can have serious ramifications for an insurance provider, as this can prevent an entity from continuing to provide insurance services and thus the appropriateness of the going concern basis for preparation of the consolidated financial statements of the insurance subsidiary.

As a result, this was identified as a key audit matter. Further details of the Group’s capital risk management processes can be found in note 45.1 of the consolidated and separate financial statements.

Our audit procedures included the following: – Evaluating the design and implementation of key controls that address this

risk; – Recalculating the CAR;– Recalculating asset spreading; and– Considering the impact of any breaches and potential breaches of the ratios,

including evaluating directors’ actions thereon.

A letter of support has been issued by Brimstone to the FSB, stating its willingness to capitalise Lion of Africa should the need arise.

We concur with the directors’ assessment of the statutory position of Lion of Africa at year end and consider the disclosures made in this regard to be sufficient and appropriate.

Insurance provisions subject to estimates and judgement (consolidated)

The Group has various technical insurance provisions. The determination of these provisions involves a high degree of subjectivity, estimation and judgement by the directors.

These provisions include:– Incurred but not Reported (IBNR); and– Outstanding Claims (OCR)

The IBNR is calculated using the Chain ladder method and Bornhuetter-Fergusson (BF) method. Key assumptions are:– Development triangles per line of business;– Loss ratios per line of business; and– Level of large claims per line of business.

OCR is based on the Directors’ best case estimate and is dependent on the underlying contract value per customer. The OCR provision is subject to a considerable amount of volatility and judgement and contributes to the volatility of the IBNR provision.

As a result, this was identified as a key audit matter. Technical insurance provisions are disclosed in note 24 of the consolidated and separate financial statements.

Our approach has focused on the accuracy and completeness of the methodologies and results of the Group’s provisioning policies. This included a combination of the following audit procedures:– Evaluating the design and implementation of key controls that address this

risk; – Engaging our actuarial specialists to perform the following: • Analysis of claims payment triangles; • Assess compliance with the Professional Actuarial Guidance for

methodologies adopted; and • Assess the validity of actuarial assumptions;– Testing of inputs in the calculation against relevant market information and

industry norms; and– Subjecting the key assumptions to sensitivity analysis and assessing the

appropriateness of the directors’ disclosures.

We are satisfied that the overall level of technical insurance provisions is prudent and the disclosure of these provisions is adequate and complete.


Accounting for Sea Harvest Group Limited listing (consolidated)

In March 2017, Sea Harvest Group Limited (Sea Harvest) listed on the main board of the JSE Limited.

As a result of this transaction, Brimstone’s holding in Sea Harvest diluted from 85% to 55% (including treasury shares), resulting in a gain of R744 million to the Group; which is credited to equity as “changes in ownership” in the statement of changes in equity as required by IFRS.

Given the significance of this transaction to Brimstone’s overall results, this was identified as a key audit matter. The consequences of this transaction are dealt with in the consolidated statement of changes in equity.

Our procedures to address this risk included:– Evaluating the design and implementation of key controls that address this risk;– Recalculating the gain arising on listing; and– Evaluating the accounting entries in line with the requirements of IFRS.

We concur with management’s treatment of this transaction and consider the disclosures made to be adequate and complete.

Other InformationThe directors are responsible for the other information. The other information comprises the Directors’ Report, the Audit and Risk Committee’s Report and the Company Secretary’s Certificate as required by the Companies Act of South Africa, and the Integrated Report, which we obtained prior to the date of this report. The other information does not include the consolidated and separate financial statements and our auditor’s report thereon.

Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Consolidated and Separate Financial StatementsThe directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and / or the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial StatementsOur objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: – Identify and assess the risks of material misstatement of the

consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

– Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.

– Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

– Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are



INDEPENDENT AUDITOR’S REPORT (CONTINUED)for the year ended 31 December 2017

inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and / or the Company to cease to continue as a going concern.

– Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

– Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory RequirementsIn terms of the Independent Regulatory Board for Auditors Rule published in Government Gazette Number 39475 dated 4 December 2015, we report that Deloitte & Touche has been the auditor of Brimstone Investment Corporation Limited for 22 years. Deloitte & Touche and two other firms were the joint auditors for 4 years.

Deloitte & Touche Registered AuditorPer: Lester Cotten Partner

22 March 2018

1st Floor The SquareCape Quarter27 Somerset RoadGreenpoint8005


DIRECTORS’ REPORTfor the year ended 31 December 2017

Principal activities of the GroupBrimstone is an investment holding company. The successful model of active partnership with well-established players in the sectors of choice will continue to be the focus going forward.

Review of operationsThe results for the year under review are set out in the attached financial statements.

Declaration of a Cash Dividend (“Cash Dividend”) incorporating an election to receive the Cash Dividend or a Scrip Dividend as an alternative (the “Scrip Dividend Alternative”), with the default election being the Scrip Dividend AlternativeBrimstone’s board declared a final Cash Dividend of 42 cents per Brimstone share (“Share”) for the year ended 31 December 2017 (2016: 42 cents per Share) payable on Monday, 23 April 2018. In addition, shareholders have been provided with an election to receive the Cash Dividend or the Scrip Dividend Alternative, with the default election being the Scrip Dividend Alternative.

A circular providing full details of the Cash Dividend and Scrip Dividend Alternative, including the procedures to be followed by shareholders and the form of election was posted to shareholders on Thursday, 8 March 2018.

Voting rightsOrdinary shares carry 100 votes per share, while “N” Ordinary shares carry one vote per share. “N” Ordinary shares rank pari passu with Ordinary shares in all other respects, including receipt of dividends and proceeds on the winding up of the Company.

Share capital The following share movements occurred during the year under review:

Ordinary “N” Ordinary

Shares issued9 March 2017 1 892 59411 April 2017 400 00022 November 2017 699 07611 December 2017 23 400

Shares repurchased and cancelled23 May 2017 (2 137 000) (4 809 174)21 November 2017 (8 717 629)

There were no changes to the authorised Ordinary and “N” Ordinary share capital.

The unissued shares are the subject of a general authority granted to the directors in terms of the Companies Act, which authority remains valid only until the forthcoming annual general meeting.

General authorityThe Board is proposing that the general authority granted at the last annual general meeting held in May 2017, to permit the Company or a subsidiary to acquire the Company’s own shares and

to permit the Company to issue shares for cash, be renewed at the forthcoming annual general meeting. Full details are set out in the notice to shareholders on page 160.

Interest in and earnings of subsidiariesDetails of the Company’s interests in and share of aggregate profits and losses of its subsidiaries are set out in Appendix 1 on page 149.

Directors’ interests in contractsDetails of relevant transactions during the year are included in note 47 to the financial statements.

Interests of directors in the shares of the CompanyThe details of directors’ interest in the shares of the Company are set out on page 154. Details of the director’s interest in options held and forfeitable shares in terms of the Company’s share incentive scheme are set out on pages 122 to 125.

Insurance, interest rate and currency risk managementThe Board utilises appropriate expertise in controlling and managing material identified risks in asset holdings, borrowings and foreign currency exposure both in the holding company and in advising and assisting subsidiaries and associates.

Going concernThe directors believe that the Group and Company will be a going concern for the foreseeable future.

Directors and secretaryThe names of the directors in office at the date of this report appear on pages 14 to 15 of the Integrated Report. MA Brey, PL Campher, MJT Hewu and MK Ndebele are due to retire by rotation in terms of the Company’s memorandum of incorporation and, being eligible, offer themselves for re-election.

The company secretary’s name and her business and postal address appear on the inside back cover of the Integrated Report.

Audit and Risk Committee ReportThe Audit and Risk Committee Report on the performance of its duties in terms of section 94(7) of the Companies Act is set out on pages 53 to 54 of the Integrated Report.

Events subsequent to 31 December 2017 Subsequent to year-end, Brimstone sold 13.5 million Life Healthcare shares at an average price of R26.78 per share. Brimstone also disposed of its residual stake in Tiger Brands for an aggregate of R387.3 million. Brimstone reduced its debt by R633 million as a result of these disposals.

On 28 February 2018, Brimstone, through its wholly-owned subsidiary, Newshelf 1416 (Pty) Ltd, acquired a 10% interest in FPG Property Fund Ltd, a Cape-based black-owned and managed unlisted property fund with a portfolio of properties operating in the retail, industrial and office sectors, for a consideration of R131 681 380.

LitigationThere is no material litigation outstanding for the Company or its subsidiaries.




INCOME STATEMENTS

GROUP COMPANYYear ended Year ended Year ended Year ended

31 December 31 December 31 December 31 DecemberR’000 Notes 2017 2016 2017 2016

Revenue 2 2 783 431 2 688 490 90 916 37 494 Sales and fee income 2 560 328 2 348 592 8 315 3 371 Dividends received 223 103 339 898 82 601 34 123 Operating expenses 3 (2 408 978) (2 229 010) (82 128) (56 398)

Operating profit/(loss) 374 453 459 480 8 788 (18 904)Fair value gains/(losses) 4 71 359 (70 803) 71 427 141 108 Other investment gains/(losses) 5 — 30 189 (92 337) (53 067)Share of profits of associates and joint ventures 58 116 98 300 — —

Profit/(loss) before net finance costs 6 503 928 517 166 (12 122) 69 137 Income from investments 8 48 942 27 042 30 137 13 508 Finance costs 9 (290 506) (260 708) (16 952) (2 974)

Net profit/(loss) before taxation 262 364 283 500 1 063 79 671 Taxation (charge)/credit 10 (115 290) (86 173) 6 244 (15 525)

Profit for the year 147 074 197 327 7 307 64 146

Profit attributable to:Equity holders of the parent 45 958 170 739 Non-controlling interests 101 116 26 588

147 074 197 327

Earnings per share (cents)Basic 12 19.1 70.9 Diluted 18.6 68.7

STATEMENTS OF COMPREHENSIVE INCOME

for the year ended 31 December 2017GROUP COMPANY

RestatedYear ended Year ended Year ended Year ended

31 December 31 December 31 December 31 DecemberR’000 2017 2016 2017 2016

Profit for the year 147 074 197 327 7 307 64 146 Other comprehensive (loss)/income, net of tax (49 607) 41 894 12 368 — Items that may be reclassified subsequently to profit or lossCash flow hedges

(Loss)/profit arising during the year (20 224) 94 728 — — Foreign currency translation Loss arising during the year (11 573) (45 947) — — Share of non-distributable reserves of associates (28 553) (12 662) — — Revaluation of available-for-sale asset

Gain arising during the year 12 368 — 12 368 —

Items that will not be reclassified subsequently to profit or lossRemeasurement of defined benefit plans 1 625 — — — Share of non-distributable reserves of associates (3 250) 5 775 — —

Total comprehensive income for the year 97 467 239 221 19 675 64 146

Total comprehensive income attributable to:Equity holders of the parent 6 425 209 680 Non-controlling interests 91 042 29 541

97 467 239 221


at 31 December 2017

STATEMENTS OF FINANCIAL POSITION

GROUP COMPANYRestated

Year ended Year ended Year ended Year ended 31 December 31 December 31 December 31 December

R’000 Notes 2017 2016 2017 2016

ASSETSNon-current assets 6 535 734 5 496 345 1 222 863 1 607 114 Property, plant, equipment and vehicles 13 915 799 607 721 4 014 4 155 Investment properties 14 80 884 — — — Goodwill 15 96 360 98 174 — — Intangible assets 16 494 206 505 557 — — Interest in subsidiaries 17 — — 1 068 991 1 488 551 Investments in associate companies and joint ventures 18 1 208 196 1 171 960 39 843 34 019 Investments 19 3 630 102 3 043 768 86 593 68 038 Loans and receivables 20 6 110 — 6 110 — Loans to supplier partners 1 959 — — — Deferred taxation 35 29 838 12 351 17 312 12 351 Insurance assets 24 47 455 55 581 — — Other financial assets 21 24 825 1 233 — —

Current assets 2 649 370 2 274 169 458 913 394 902 Inventories 22 404 976 385 097 — — Trade and other receivables 23 615 164 561 938 6 772 9 812 Insurance assets 24 355 833 396 753 — — Other financial assets 21 41 896 46 800 — 170 Taxation 6 827 15 242 6 302 8 808 Investments 19 444 457 373 257 444 457 373 257 Cash and cash equivalents 780 217 495 082 1 382 2 855 TOTAL ASSETS 9 185 104 7 770 514 1 681 776 2 002 016

EQUITY AND LIABILITIESCapital and reserves 3 561 722 2 602 387 817 072 1 037 037 Share capital 25 41 41 43 45 Capital reserves 26 307 630 380 181 192 520 325 550 Revaluation reserves 27 19 592 14 143 14 098 1 730 Cash flow hedging reserve 28 11 987 32 534 — — Foreign currency translation reserve 29 (21 315) (29 119) — — Changes in ownership 30 579 857 (163 938) — — Retained earnings 1 884 210 2 193 293 610 411 709 712 Attributable to equity holders of the parent 2 782 002 2 427 135 817 072 1 037 037 Non-controlling interests 31 779 720 175 252 — —

Non-current liabilities 3 491 320 3 585 018 795 478 937 551 Long-term interest bearing borrowings 32 2 671 147 2 783 204 100 000 100 000 Interest in subsidiaries 17 — — 695 478 837 551 Long-term provisions 33 26 342 31 209 — — Deferred grant income 12 109 13 733 — — Other financial liabilities 34 61 223 82 448 — — Insurance liabilities 24 82 406 75 377 — — Share-based payment liability 18 789 — — Deferred taxation 35 619 304 599 047 — —

Current liabilities 2 132 062 1 583 109 69 226 27 428 Short-term interest bearing borrowings 36 774 659 452 094 — — Bank overdrafts 37 104 731 24 390 46 384 1 307 Trade payables 470 521 409 482 2 413 2 105 Other payables 82 356 90 014 20 429 24 016 Deferred grant income 1 505 — — — Insurance liabilities 24 579 190 529 784 — — Other financial liabilities 34 69 165 21 121 — — Short-term provisions 33 38 291 47 754 — — Taxation 11 644 8 470 — — TOTAL EQUITY AND LIABILITIES 9 185 104 7 770 514 1 681 776 2 002 016

NAV per share (cents) 1 160.3 1 011.5 Shares in issue at end of year (000’s) 239 767 239 956




STATEMENTS OF CHANGES IN EQUITY

R’000Share

capital Capital

reserves

Revalu- ation

reserves

Cash flow

hedging reserve

Foreign currency

transla-tion

reserve

Changes in

owner-ship

Retained earnings

Attribu- table to

equity holders

of the parent

Non-controlling

interests Total

GROUPBalance at 1 January 2016 41 427 049 14 143 (42 414) — (11 839) 2 143 330 2 530 310 96 662 2 626 972 Attributable profit for the year ended 31 December 2016 — — — — — — 170 739 170 739 26 588 197 327 Other comprehensive income/(loss) – Restated — (6 888) — 74 948 (29 119) — — 38 941 2 953 41 894 Total comprehensive income/(loss) – Restated — (6 888) — 74 948 (29 119) — 170 739 209 680 29 541 239 221 Recognition of share-based payments — (9 788) — — — — — (9 788) 665 (9 123)Amount reclassified to share options reserve — 17 747 — — — — — 17 747 — 17 747 Dividend paid — — — — — — (85 791) (85 791) (5 726) (91 517)Subsidiary’s accrual for preference dividends — — — — — — — — 3 238 3 238 Non-controlling interests related to subsidiary – Restated — — — — — — — — 157 914 157 914 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 — — — — — — 3 938 3 938 — 3 938 Distributions made to participants of share trusts — — — — — — (38 923) (38 923) — (38 923)Reduction of subsidiary’s share capital — — — — — — — — (108) (108)Issue of share capital — 15 524 — — — — — 15 524 — 15 524 Sale of trust units — 992 — — — — — 992 (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 — — — — — (152 099) — (152 099) — (152 099)Share of non-distributable reserves of associates transferred directly to equity — 30 — — — — — 30 (1 176) (1 146)

Balance at 31 December 2016 41 380 181 14 143 32 534 (29 119) (163 938) 2 193 293 2 427 135 175 252 2 602 387 Attributable profit for the year ended 31 December 2017 — — — — — — 45 958 45 958 101 116 147 074 Other comprehensive income/(loss) — (30 730) 12 368 (7 869) (13 302) — — (39 533) (10 074) (49 607)Total comprehensive income/(loss) — (30 730) 12 368 (7 869) (13 302) — 45 958 6 425 91 042 97 467 Recognition of share-based payments — 32 074 — — — — — 32 074 (1 843) 30 231 Dividend paid — — — — — — (102 743) (102 743) (2 200) (104 943)Recognition of forfeitable share plan reserves — (78 396) — — — — — (78 396) — (78 396)Recognition of change in value of share-based payment liability directly in equity — (5 613) — — — — — (5 613) (988) (6 601)Transfer to share-based payment liability (modification) — (19 789) — — — — — (19 789) — (19 789)Acquisition of non-controlling interest in subsidiary — — — — — (399) — (399) (1 080) (1 479)Share of distribution made by associate — — — — — — (23 323) (23 323) — (23 323)Distributions made to participants of share trusts and share repurchase by subsidiary — — — — — — (248 733) (248 733) (3 113) (251 846)Shares issued by subsidiaries — 20 885 (6 919) (12 678) 21 106 744 024 19 758 786 176 522 820 1 308 996 Issue of share capital — 38 568 — — — — — 38 568 — 38 568 Repurchase of trust units — (5 699) — — — — — (5 699) — (5 699)Treasury shares acquired — (23 851) — — — — — (23 851) — (23 851)Change in investment in subsidiary — — — — — 170 — 170 (170) — Balance at 31 December 2017 41 307 630 19 592 11 987 (21 315) 579 857 1 884 210 2 782 002 779 720 3 561 722


R’000Share

capital Capital

reserves

Revalu- ation

reserves

Cash flow

hedging reserve

Foreign currency

translation reserve

Changes in ownership

Retained earnings Total

COMPANYBalance at 1 January 2016 45 372 452 1 730 — — — 732 975 1 107 202 Attributable profit for the year ended 31 December 2016 — — — — — — 64 146 64 146 Dividend paid — — — — — — (87 409) (87 409)Repurchase of shares — (64 041) — — — — — (64 041)Issue of share capital — 15 524 — — — — — 15 524 Amount reclassified to share options reserve — 17 747 — — — — — 17 747 Recognition of share-based payments — (16 132) — — — — — (16 132)

Balance at 31 December 2016 45 325 550 1 730 — — — 709 712 1 037 037 Attributable profit for the year ended 31 December 2017 — — — — — — 7 307 7 307Other comprehensive income — — 12 368 — — — — 12 368 Total comprehensive income — — 12 368 — — — 7 307 19 675Dividend paid — — — — — — (106 608) (106 608)Repurchase of shares (2) (157 639) — — — — — (157 641)Issue of share capital — 15 172 — — — — — 15 172 Recognition of share-based payments — 9 437 — — — — — 9 437 Balance at 31 December 2017 43 192 520 14 098 — — — 610 411 817 072




STATEMENTS OF CASH FLOWS

GROUP COMPANYYear ended Year ended Year ended Year ended

31 December 31 December 31 December 31 DecemberR’000 Notes 2017 2016 2017 2016

Operating activitiesNet attributable profit 147 074 197 327 7 307 64 146 Adjustments for non-cash items

Share of profits of associates and joint ventures (90 694) (229 280) — — Income from investments (239 467) (235 960) (112 738) (47 631)Government grant income (1 669) (2 098) — — (Increase)/decrease in fair value of investments (71 359) 70 803 (71 427) (141 108)Gain on remeasurement of previously held interest in subsidiary — (39 640) — — Impairment of loans to subsidiaries — — 92 337 54 606 Amortisation of intangible assets 6 012 16 324 — — Unrealised foreign exchange gains (22 302) — — — Finance costs 290 506 260 708 16 952 2 974 Taxation 115 290 86 173 (6 244) 15 525 Depreciation of property, plant, equipment and vehicles 108 710 111 684 1 328 1 200 Share-based payment expense/(income) 22 630 (9 788) 9 437 (16 132)Realised loss/(profit) on disposal of associate — 9 451 — (1 539)(Decrease)/ increase in long and short-term provisions (14 466) 34 356 — — Other movement in non-cash items 1 628 — — — (Profit)/loss on disposal of property, plant, equipment and vehicles (3 584) (2 583) — 332

Operating cash flows before movements in working capital 248 309 267 477 (63 048) (67 627)Increase in inventories (21 890) (23 992) — — (Increase)/decrease in trade and other receivables (56 945) 117 999 3 040 21 297 Increase/(decrease) in trade and other payables 55 741 (181 238) (3 279) 5 603 Net decrease in insurance assets 49 046 284 221 — — Net increase/(decrease) in insurance liabilities 56 435 (351 151) — — Cash generated from/(used in) operations 330 696 113 316 (63 287) (40 727)Interest received 48 942 27 042 30 137 17 382 Dividends received from associates and joint ventures 32 578 130 980 6 322 — Dividends received from other equity investments 190 525 208 918 4 439 3 952 Dividends received from subsidiaries — — 71 840 30 171 Taxes paid 38.1 (95 447) (64 177) (279) (7 281)Finance costs 38.2 (238 129) (207 545) (14 048) (770)Net cash generated from operating activities 269 165 208 534 35 124 2 727 Investing activitiesCash effect of change in investment in subsidiaries 38.3 — — 182 246 (4 422)Loans and receivables advanced (7 833) — (7 833) —Loan repayments and recoveries from associate and investments — 1 098 — — Proceeds on disposal of investments 160 105 658 802 2 100 60 995 Proceeds on disposal of property, plant, equipment and vehicles 2 855 3 829 — — Acquisition of property, plant, equipment and vehicles (430 870) (126 084) (1 187) (3 746)Acquisition of subsidiaries– shares acquired and loans advanced — (195 859) — — Acquisition of intangible assets (3 687) (7 611) — — Proceeds from receipt of a government grant — 15 831 — — Investment property acquired (51 258) — — — Acquisition of investments (755 827) (134 548) (7 923) (22 548)Net cash (used in)/generated from investing activities (1 086 515) 215 458 167 403 30 279 Financing activitiesDividends paid by Company and subsidiaries (108 056) (91 517) (106 608) (87 409)Repayments of borrowings (480 064) (248 716) — — Loans raised 643 125 490 472 — 100 000 Further investment in subsidiary (1 479) (167 287) — — Shares repurchased (23 851) (62 950) (157 641) (64 041)Disposal of treasury shares by subsidiary — 3 938 — — Proceeds on issue of trust units/shares 15 172 19 870 15 172 15 524 Issue of shares by subsidiaries 1 253 995 — — — Repayment of other financial liabilities (22 253) — — — Redemption of non-controlling shareholder’s preference shares — (85 756) — — Distributions made to participants of share trusts and repurchase of shares by subsidiary (248 733) (38 923) — — Units/shares repurchased (5 699) (108) — — Increase in bank overdrafts 80 341 2 746 45 077 1 173 Net cash generated from/(used in) financing activities 1 102 498 (178 231) (204 000) (34 753)Net increase/(decrease) in cash and cash equivalents 285 148 245 761 (1 473) (1 747)Cash and cash equivalents at beginning of year 495 082 249 374 2 855 4 602 Foreign exchange differences (13) (53) — — Cash and cash equivalents at end of yearBank balances and cash 780 217 495 082 1 382 2 855


NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 December 2017

1. Accounting policies and basis of preparation The consolidated (or “Group”) and separate (or “Company”)

annual financial statements (“financial statements”) are prepared in accordance with International Financial Reporting Standards (IFRS) of the International Accounting Standards Board, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the Financial Pronouncements issued by the Financial Reporting Standards Council, the requirements of the JSE Limited’s Listings Requirements and the Companies Act of South Africa.

The financial statements have been prepared on the historical

cost basis except for the revaluation of certain financial instruments and investment properties. The principal accounting policies set out below, have been applied on a basis consistent with the previous year.

The principal accounting policies are:

1.1 Basis of consolidation The consolidated financial statements incorporate the

financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company has power over the investee, is exposed, or has rights to variable returns from its involvement with the investee and has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of these three elements of control.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement and statement of other comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income is attributed to the Company and to the non-controlling interests even if it results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Changes in the Group’s ownership interests in subsidiaries that do not result in a loss of control are accounted for as

equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidi-aries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill) and liabilities of the subsidiary and any non- controlling interests. Amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under lAS 39 Financial instruments: Recognition and Measurement (lAS 39) or, when applicable, the cost on initial recognition of an investment in an associate or joint venture.

Any write-down of an investment in a subsidiary is apportioned and deducted from the underlying assets of the subsidiary.

1.2 Business combinations Acquisitions of subsidiaries and businesses are accounted

for using the acquisition method. The consideration transferred for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

At the acquisition date, identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:

– deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes (IAS 12) and IAS 19 Employee Benefits (IAS 19) respectively;

– liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment awards are measured in accordance with IFRS 2 Share-based Payment (IFRS 2) at the acquisition date; and



– assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (IFRS 5) are measured in accordance with that Standard.

Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interests of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity.

When the consideration transferred for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value of a contingent consideration classified as an asset or liability are accounted for in accordance with relevant IFRSs. Changes in the fair value of a contingent consideration classified as equity are not recognised.

When a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acqui-sition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete infor-mation about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year.

1.3 Investments in associates and joint ventures An associate is an entity over which the Group has

significant influence. Significant influence includes the power to participate in the financial and operating policy decisions of the investee.

A joint venture is a joint arrangement whereby the parties of the arrangement have rights to the net assets of the arrangement. A joint arrangement is an arrangement over which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The results and assets and liabilities of associates and joint ventures are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, an investment in an associate or a joint venture is carried at cost less any accumulated impairment in the consolidated statement of financial position plus the Group’s share of the net post-acquisition profit or loss and other comprehensive income, if applicable, of the associate or joint venture. In the income statement and statement of other compre-hensive income the Group recognises its share of after-tax profits or losses and other comprehensive income. When the Group’s share of losses exceeds the Group’s interest in that associate or joint venture, the Group discontinues recognising its share of further losses. Further losses are only recognised to the extent that the Group has incurred obligations in respect of the associate or joint venture.

An investment in an associate or joint venture is accounted for using the equity method from the date on which the investment becomes an associate or joint venture. Application of the equity method ceases when an associate or joint venture no longer qualifies as such.

An investment in an associate or joint venture is tested for impairment, in accordance with IAS 36 Impairment of Assets (IAS 36), when the Group has determined that objective evidence of impairment exists. Where objective evidence of impairment exists, the Group recognises an impairment loss in the income statement being the difference between the recoverable amount and the carrying value (including goodwill) of the affected associate or joint venture. Any reversal of that

NOTES (CONTINUED)for the year ended 31 December 2017


impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

When the Group reduces its ownership interest in an associate or joint venture but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

Unrealised profits or losses from transactions between group entities and an associate or joint venture are eliminated to the extent of the Group’s interest.

1.4 Goodwill

Initial recognition and measurement of goodwill Goodwill arising on consolidation is initially measured at

cost being the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or joint venture at the date of acquisition. Goodwill is included in the carrying amount of the investment in an associate or joint venture but separately recognised on consolidation of a subsidiary. If the Group’s interest in the net fair value of the acquiree’s net identifiable assets exceeds the cost of acquisition, the excess is recognised immediately in profit or loss as a bargain purchase gain.

Subsequent measurement of goodwill Subsequent to initial recognition goodwill arising on

acquisition of a subsidiary is not amortised but subjected to an annual impairment test. Consequently, goodwill is carried at cost as determined upon acquisition less any accumulated impairment losses.

If the initial accounting for a business combination has been determined provisionally, then adjustments to the fair values of assets and liabilities resulting from the emergence of new information within the measurement period relating to acquisition date are made against goodwill. In addition, goodwill is adjusted for changes in the fair value of contingent considerations that qualify as measurement period adjustments.

Impairment of goodwill For the purpose of impairment testing, goodwill is

allocated to cash-generating units. The allocation can be made to a single cash-generating unit or to a group of cash-generating units. Goodwill is not amortised but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

Impairment is determined by assessing the recoverable amount, which is the higher of fair value less costs to sell and value-in-use of the cash-generating unit to which the goodwill is allocated. Where the cash-generating unit’s recoverable amount is less than its carrying amount an impairment loss is recognised. The impairment loss is allocated first to reduce the carrying amount of goodwill allocated to the cash-generating unit and then to other-assets of the unit pro rata, based on the carrying amount of each asset in the unit. In assessing the value-in-use, the future expected cash flows to be derived from the cash-generating unit are discounted to their present value using a pre-tax discount rate that reflects current market assessments. Any impairment loss for goodwill is recognised directly in profit or loss. Impairment losses recognised for goodwill cannot be reversed in subsequent periods.

Derecognition of goodwill On disposal of the relevant cash-generating unit, the

attributable amount of goodwill is included in the deter-mination of the profit or loss on disposal.

1.5 Financial assets All financial assets are recognised and derecognised on

trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the time frame established by the market concerned and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Financial assets at FVTPL Financial assets are classified as at FVTPL where the

financial asset is either held for trading or it is designated as at FVTPL.

A financial asset is classified as held for trading if: – It has been acquired principally for the purpose of

selling it in the near future; or – On initial recognition it is a part of an identified

portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit taking; or

– It is a derivative that is not designated and effective as a hedging instrument.



A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:

– Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

– The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy and information about the grouping is provided internally on that basis; or

– It forms part of a contract containing one or more embedded derivatives and IAS 39 permits the entire combined contract (asset or liability) to be desig-nated as at FVTPL.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset. Fair value is determined in the manner described in note 45.12.

AFS financial assets Unlisted shares and linked loans held by the Group are

classified as being AFS and are stated at fair value based on the most recent traded prices. Gains and losses arising from changes in fair value are recognised directly in equity in the investments revaluation reserve with the exception of impairment losses and interest calculated using the effective interest method, which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is included in profit or loss for the period.

Dividends on AFS equity instruments are recognised in profit or loss when the Group’s right to receive the dividends is established.

Loans and receivables Trade receivables, loans and other receivables that have

fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables where the recognition of interest would be immaterial.

Impairment of financial assets Financial assets, other than those at FVTPL, are assessed

for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of AFS equity securities, any increase in fair value subsequent to an impairment loss is recognised directly in equity.

Derecognition of financial assets The Group derecognises a financial asset only when the

contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a secured borrowing for the proceeds received.



1.6 Financial liabilities and equity instruments issued by the Group

Classification as debt or equity Debt and equity instruments are classified as either

financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments An equity instrument is any contract that evidences a

residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Treasury shares A repurchase of the Company’s own equity instruments is

treated and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

Compound instruments The component parts of compound instruments

(re-deemable preference shares) issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar redeemable instrument. This amount is recorded as a liability on an amortised cost basis using the effective interest method until the instrument’s redemption date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity, net of tax effects and is not subsequently remeasured.

Financial liabilities Financial liabilities are classified as either financial liabil-

ities at FVTPL, other financial liabilities or insurance liabil-ities.

Financial liabilities at FVTPL Financial liabilities are classified as at FVTPL where the

financial liability is either held for trading or it is desig-nated as at FVTPL.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:

– Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

– The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy and information about the grouping is provided internally on that basis; or

– It forms part of a contract containing one or more embedded derivatives and IAS 39 permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Fair value is determined in the manner described in note 45.12.

Other financial liabilities Other financial liabilities, including borrowings, are

initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Insurance liabilities One of the purposes of insurance is to enable policy-

holders to protect themselves against uncertain future events. This uncertainty as reflected in the financial state-ments of the insurer principally arises in respect of the insurance liabilities of the Group.

The estimation of the ultimate liability arising from claims made under insurance contracts is a critical accounting estimate. There are several sources of uncertainty that need to be considered in the estimate of the liability that the Group will ultimately pay for such claims. These sources of uncertainty include:

– Judicial decisions – courts may set new levels of award or compensation for existing claim categories which may be difficult to predict;

– Decisions relating to imprecise policy wordings may lead to the admission of new claim types not currently allowed for in pricing; and

– Changes in attitudes to policyholders claiming.



Refer to note 24.1 for the processes used to decide on assumptions for outstanding claims and claims incurred but not reported.

Derecognition of financial liabilities The Group derecognises financial liabilities when and

only when, the Group’s obligations are discharged, cancelled or they expire.

1.7 Derivative financial instruments The Group enters into a variety of derivative financial

instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts and interest rate swaps.

Further details of derivative financial instruments are disclosed in notes 21, 34 and 45.6.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

(a) Hedge accounting The Group designates certain hedging instruments,

which include derivatives, embedded derivatives and derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.

At the inception of the hedge relationship, the entity

documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument that is used in a hedging relationship is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.

(b) Cash flow hedges The effective portion of changes in the fair value of

derivatives that are designated and qualify as cash flow hedges are deferred in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line of the statement of comprehensive income as the recognised hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-fi-nancial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive income and accumulated in equity, are transferred from equity and included in the initial measurement of the cost of the non-financial asset or liability.

Hedge accounting is discontinued when the Group

revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any gain or loss recog-nised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.

1.8 Non-current assets held for sale Non-current assets are classified as held for sale if their

carrying amount will be recovered through a sale transaction rather than through continuing use. The asset must be available for immediate sale in its present condition within one year from the date of classification. Non-current assets held for sale are measured at the lower of the assets’ previous carrying amount and fair value less costs to sell in accordance with IFRS 5, except for financial assets within the scope of IAS 39 which continue to be measured in accordance with that Standard.

1.9 Borrowing costs Interest costs are charged against income in the period in

which incurred, unless they are directly attributable to the acquisition, construction or production of a qualifying asset, in which case they are capitalised to the cost of the asset. Dividends on preference shares, classified as liabilities, are recognised as finance costs.

1.10 Revenue recognition Included in revenue are net invoiced sales, excluding VAT,

to customers for goods delivered, where title has passed.

Management fees, performance fees and royalties are recognised on an accrual basis in accordance with the substance of the relevant agreements. Cash dividends and the full cash equivalent of capitalisation share awards are recognised when the right to receive payment or transfer is established. Interest is recognised on a time



proportion basis, taking account of the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Group.

Fee income from insurance contracts arises from administering alternative risk transfer policies. The income is recognised in profit or loss, as the service is provided on a straight-line basis. Fee income is included as part of premium income.

1.11 Property, plant and equipment Fixed property utilised for manufacturing and

administration is stated at its deemed cost less accumulated depreciation. Plant, equipment and vehicles are stated in the financial statements at cost to the Group less accumulated depreciation. Depreciation is recognised in profit or loss and is calculated on the straight line method to write assets down to estimated net residual values at the end of their useful lives at the following rates: Fishing trawlers (including refits) 5.5% – 50%, plant and machinery and computers 20% – 33.3%, office furniture and equipment 10% – 17%, motor vehicles 20% and improvements to leasehold premises 20%. The residual value of fixed property utilised for manufacturing and administration is estimated and the difference between cost and the estimated residual value is written off on the straight line method at 10% per annum, and is recognised as expenses in the income statement. The depreciation methods, estimated remaining useful lives and residual values are reviewed at each reporting date with the effect of any changes accounted for on a prospective basis. Land is not depreciated.

Derecognition An item of property, plant and equipment is derecog-

nised on disposal or when no future economic benefits are expected through its continued use or disposal. Gains or losses which arise on derecognition are included in the income statement in the period of derecognition. The gain or loss is calculated as the difference between the net disposal proceeds and the carrying amount of the item at the date disposal.

1.12 Investment property Investment properties are properties held to earn rentals

and/or for capital appreciation. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition investment properties are measured at fair value, determined annually, and at least every three years by an independent valuer, on the highest and-best-use basis. Changes in fair values are recognised in profit or loss.

On disposal of an investment property, the difference between the disposal proceeds and the carrying amount is recognised in profit or loss.

1.13 Intangible assets (other than goodwill – see note 1.4)

Intangible assets consist of computer software and fishing rights.

Intangible assets acquired separately are initially measured at cost. Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date.

Subsequent to initial recognition, intangible assets with finite useful lives, acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses and at cost less accumulated impairment losses in the case of such assets with indefinite useful lives. Amortisation is charged on a straight-line basis over the assets estimated useful lives, and is recognised as expenses in the income statement. The estimated useful lives and amortisation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

1.14 Assets acquired under suspensive sale agreements Finance costs are accrued and expensed annually, based

on the effective rate of interest applied consistently to the remaining balance on the liability.

1.15 Impairment of assets The carrying amounts of the Group’s assets are reviewed

at each reporting date to determine whether there is any indication of impairment, except for goodwill and other intangible assets with indefinite useful lives, which are tested for impairment annually. If any such indication exists, the recoverable amount is estimated as the higher of fair value less costs to sell and value in use. Impairment losses are recognised in profit or loss.

1.16 Inventories Inventories are stated at the lower of cost and estimated

net realisable value. Cost is determined on the first-in, first-out basis. Finished goods and work-in-progress include labour costs and an appropriate portion of related fixed and variable overhead expenses based on the normal level of activity.

1.17 Cash and cash equivalents Actual bank balances are reflected. Outstanding cheques

and deposits are included in accounts payable and accounts receivable respectively. For the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand and deposits held with banks. Bank overdraft is considered to be a financing activity.



1.18 Taxation The tax expense for the year comprises current and

deferred tax. Tax is recognised in profit or loss, except that tax attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income. The current income tax charge is calculated on the basis of tax rates (and tax laws) that have been enacted or substantively enacted by the reporting date. Deferred taxation is provided for at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the reporting date. Full provision is made for all temporary differences between the tax base of an asset or liability and its carrying amount. Where the tax effects of temporary differences arising from computed tax losses give rise to a deferred tax asset, the asset is recognised only to the extent that it is probable that future taxable income will be sufficient to realise the tax benefit of the losses.

1.19 Retirement benefit costs Payments to defined contribution retirement benefit plans

are charged as an expense as they fall due. Payments made to industry-managed retirement benefit schemes are dealt with as defined contribution plans where the Group’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit plan.

1.20 Government grants Government grants are not recognised until there is

reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

1.21 Foreign currencies The financial results of entities in the Group are

accounted for in its functional currency. The functional currency of the Company is the South African Rand. Group entities with different functional currencies are translated on consolidation.

Translation of foreign currency transactions

Initial recognition Transactions in foreign currencies are translated at

exchange rates prevailing at the date of the transaction.

Subsequent measurement Monetary assets and liabilities are translated at exchange

rates prevailing at the reporting date. Non-monetary items carried at cost are translated using the exchange rate at the date of the transaction, while those carried at fair value are translated at the exchange rate when the fair value was determined.

Exchange differences on monetary items are recognised in the income statement when they arise.

Translation of foreign operations On consolidation, the financial statements of foreign

operations are translated into the Group’s presentation currency which is the South African Rand. Assets and liabilities are translated at the closing rate on the reporting date. Income, expenses and equity transactions (such as dividends) are translated at average exchange rates or at the prevailing rates on the transaction dates, if more appropriate. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are translated at the closing rate on the reporting date.

Exchange differences arising on translation are recog-nised in other comprehensive income in the foreign currency translation reserve (FCTR). On disposal of part or all of the investment, the proportionate share of the related cumulative gain or loss previously recognised in the FCTR is included in determining the profit or loss on disposal of that investment and recognised in the income statement.

1.22 Segment reporting The primary business segments of the Group are fishing,

insurance, clothing and investments. The basis of segment reporting is representative of the internal structure used for management reporting purposes.



1.23 Share-based payments Equity-settled share-based payments to certain

employees are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.

Fair value is measured using the Binomial Tree pricing model and Monte Carlo Method. The expected life used in the model is adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural conditions.

1.24 Operating leases Leases are classified as operating leases, where

substantially all the risks and rewards associated with ownership of the asset are not transferred from the lessor to the lessee. Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease.

1.25 Key sources of estimation uncertainty and critical judgements

Management use their judgement in selecting an appropriate valuation technique for financial instruments not quoted in an active market. Valuation techniques commonly used by market practitioners are applied. The estimation of fair value of unlisted shares and options includes some assumptions not supported by observable market prices, indicators or rates. In its fishing business, management exercises judgement to determine the useful lives and residual values used to calculate depreciation of property, plant and equipment and amortisation of intangible assets. Deferred taxation assets are recognised to the extent that management believes it is probable that the asset will be realised. In addition, refer below for details of judgements made in the determination of insurance liabilities and to note 44 for details of the assumptions used in the post-retirement medical assistance plan.

Except for the aforegoing and as disclosed in the relevant notes or appendices, management has not made any critical judgements or estimations that have a significant effect on the amounts recognised in the financial statements.

1.26 Insurance contracts The existing accounting policies implemented by the

Group are in accordance with the policies for recognition and measurement of short-term insurance contracts as outlined in Circular 2/2007 issued by the South African Institute of Chartered Accountants and IFRS 4 Insurance Contracts (IFRS 4).

Recognition and measurement

(a) Short-term insurance contracts Insurance claims and loss adjustment expenses are

recognised in profit or loss as incurred based on the estimated liability for compensation owed to contract holders or third parties damaged by the contract holders. The costs include direct claims settlement costs and arise from events that have occurred up to the reporting date, even if they have not yet been reported to the Group. The Group does not discount its liabilities for unpaid claims. Liabilities for unpaid claims are estimated using the input of assessments for individual cases reported to the Group and statistical analyses for the claims incurred but not reported and to estimate the expected ultimate cost of more complex claims that may be affected by external factors (such as court decisions).

(b) Premiums For all insurance contracts underwritten by the Group,

premiums are recognised as revenue over the period of coverage, which is in line with the risk profile of the contracts. Premiums are shown before deduction of commission.

Outward reinsurance premiums are recognised as an

expense in accordance with the pattern of indemnity received.

(c) Unearned premiums provision The portion of premium received on in-force contracts

that relates to unexpired risks at the reporting date is reported as the unearned premiums provision. Unearned premium is calculated using the 365th method or released over the risk profile.

Premiums are recognised as revenue (earned premiums)

proportionally over the period of coverage. Premiums are shown before deduction of commission and are gross of any taxes or duties levied on premiums.

(d) Provision for unexpired risk Where it is anticipated that unearned premiums will be

insufficient to cover future claims and expenses attributable to the unexpired periods of policies in force at the reporting date, a provision is raised for unexpired risks.



(e) Claims incurred Insurance claims and loss adjustment expenses are

recognised in profit or loss as incurred based on the estimated liability for compensation owed to contract holders or third parties damaged by the contract holders. The costs include direct claims settlement costs and arise from events that have occurred up to the reporting date, even if they have not yet been reported to the Group.

(f) Provision for outstanding claims Provision is made for the estimated final cost of all claims

that had not been settled by the reporting date, less amounts already paid. Liabilities for unpaid claims are estimated using the input of assessments for individual cases reported to the Group and statistical analyses to estimate the expected ultimate cost of more complex claims that may be affected by external factors (such as court decisions). The Group does not discount its liabilities for unpaid claims.

(g) Provision for claims incurred but not reported (IBNR)

Provision is also made for claims arising from insured events that occurred before the end of the reporting period, but which had not been reported to the Group at that date. Statistical analysis is used to estimate the claims incurred but not reported.

Deterministic methods project the value of ultimate

losses with no probability of occurrence. Stochastic methods project a range of ultimate losses with each value having a probability of occurrence. IBNR reserves were projected using both claims paid and incurred claims development patterns.

(h) Deferred acquisition costs (DAC) Commissions and other acquisition costs that vary with

and are related to securing new contracts and renewing existing contracts are capitalised as an intangible asset and are amortised over the term of the policies as premiums are earned. All other costs are recognised as expenses when incurred.

(i) Income from reinsurance contracts Commissions received on reinsurance contracts are

deferred and recognised as revenue evenly over the life of the reinsurance contract.

(j) Liability adequacy test At each reporting date, liability adequacy tests are

performed to ensure the adequacy of the contract liabilities net of related DAC. In performing these tests, current best estimates of premiums to be collected, outstanding claims and future claims handling and administration expenses are discounted. Any deficiency

is immediately recognised in profit or loss initially by writing off DAC and by subsequently establishing a provision for losses arising from liability adequacy tests. Any DAC written off as a result of this test cannot subsequently be reinstated.

(k) Reinsurance contracts held Contracts entered into with reinsurers, under which the

Group is compensated for losses on one or more contracts issued by the Group and that meet the classifi-cation requirements for insurance contracts, are classified as reinsurance contracts held.

The benefits to which the Group is entitled under its

reinsurance contracts held are recognised as reinsurance assets. These assets consist of short-term balances due from reinsurers, as well as longer term receivables that are dependent on the expected claims and benefits arising under the related reinsured insurance contracts. Amounts recoverable from or due to reinsurers are measured consistently with the amounts associated with the reinsured insurance contracts and in accordance with the terms of each reinsurance contract. Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are recognised as an expense when due.

The Group assesses its reinsurance assets for impairment

on an annual basis. The Group follows the same process adopted for impairment of financial assets described in note 1.5.

Contracts that do not meet the classification

requirements are classified as financial assets.

(l) Receivables and payables related to insurance contracts

Receivables and payables are recognised when due. These include amounts due to and from agents, brokers and insurance contract holders.

If there is objective evidence that the insurance receivable is impaired, the Group follows the same process adopted for impairment of financial assets described in note 1.5.

(m) Salvage and subrogation reimbursements Insurance contracts allow the Group to sell property

acquired when settling a claim. The Group may also have the right to pursue third parties for payment of some or all costs incurred in the settlement of any claim. Recoveries of this nature are recognised as reimbursements and set off against claims incurred when recoverable.



1.27 Adoption of new and revised standards The following new and revised IFRSs have been adopted

in these financial statements. The application of these new and revised IFRSs has not had any material impact on the amounts reported for the current and prior years but may affect the accounting for future transactions or arrangements:

Amendments to IFRS 2 – Share-based Payment Amendments to IFRS 4 – Insurance Contracts Amendments to IFRS 12 – Disclosure of Interests in Other Entities

Amendments to IAS 7 – Statements of Cash Flows Amendments to IAS 12 – Income Taxes Amendments to IAS 28 – Investments in Associates

At the date of approval of these financial statements, the following relevant new or revised standards and interpretation were in issue, but not yet effective:

IFRS 9 – Financial Instruments (effective for year ending 31 December 2018)

IFRS 15 – Revenue from Contracts with Customers (effective for year ending 31 December 2018)

IFRS 16 – Leases (effective for year ending 31 December 2019)

IFRIC 22 – Foreign Currency Transactions and Advance Consideration (effective for year ending 31 December 2018)

The Group is in the process of evaluating the effects of

these standards and interpretation and note below the high level expected impact of certain of these standards. These standards and interpretation will be effective for the year ending December 2018 and subsequent years. The Group has decided not to early adopt any of these new or revised standards or interpretation.

IFRS 9 IFRS 9 replaces IAS 39 and is based on the concept that

financial assets should be classified and measured at fair value, with changes in fair value recognised in profit or loss as they arise. It is thus expected to impact Brimstone’s financial statements with respect to the classification of certain investments in equity instruments currently classified as available-for-sale, and fair valued through other comprehensive income. However, an entity may irrevocably elect at initial recognition to classify investments in equity instruments at fair value through other comprehensive income (OCI) but no recycling of changes in fair value accumulated in equity through OCI is permitted on disposal or impairment of the investments.

IFRS 15 The new standard contains a single model that is applied

when recognising revenue from contracts with customers. It replaces among others IAS 18 Revenue (IAS 18).

The new standard does not include guidance on the accounting for dividend income. Instead, guidance that is consistent with the existing requirements of IAS 18 has been incorporated into the financial instruments standards. It is thus expected to impact Brimstone’s financial statements with respect to the presentation of dividend income. Although dividend income arises in the ordinary course of Brimstone’s activities, it does not arise from contracts with customers and therefore may not be presented as revenue.



NOTES (CONTINUED)

GROUP COMPANYR’000 2017 2016 2017 2016

2. RevenueThe Group’s revenue comprises sales of insurance products, fish, formal and casual clothing, rentals, dividends, royalties and management, performance and other fees received.

Revenue from industrial and other operationsSales 2 315 554 2 134 470 — — Management and performance fees received 5 064 — 3 050 2 854 Rental income 4 245 1 749 — — Other 6 086 5 287 5 265 517 Total revenue from industrial and other operations 2 330 949 2 141 506 8 315 3 371

Revenue from insurance operationsShort-term insurance contracts– Gross written premiums 513 885 439 702 — — – Change in unearned premium provision (40 096) 42 125 — — Insurance premium revenue 473 789 481 827 — — Short-term reinsurance contracts– Premiums payable (292 111) (353 505) — — – Change in unearned premium provision (14 679) (26 301) — — Premium ceded to reinsurers on insurance contracts issued (306 790) (379 806) — —

Net insurance premium revenue 166 999 102 021 — — Fee income from insurance contracts 75 105 065 — — Income from reinsurance contracts ceded 62 305 — — — Total revenue from insurance operations 229 379 207 086 — —

Total sales and fee income 2 560 328 2 348 592 8 315 3 371

Dividends received:– associate companies and joint ventures 32 577 123 067 6 322 443 – listed investments 95 182 114 648 356 885 – unlisted investments 95 344 102 183 4 083 2 624 – subsidiaries — — 71 840 30 171 Total dividends received 223 103 339 898 82 601 34 123



GROUP COMPANYR’000 2017 2016 2017 2016

Business and geographic segments:The clothing and fish products mentioned above are processed and manufactured in the Group’s factories in the Western Cape and sold throughout South Africa, as well as the United States of America, Great Britain, Italy, Germany, the Netherlands, Spain, Portugal, Sweden, Australia, France, the SADC countries and other parts of Africa. All other revenue is sourced from within South Africa. The table below shows the geographical breakdown of the clothing and fish sales.

Sales revenue by geographical market:South Africa 1 012 815 986 914 — — Other SADC countries 33 357 33 882 — — United States of America 11 330 17 961 — — Great Britain 23 448 13 467 — — Italy 249 222 272 375 — — Germany 82 452 56 141 — — Netherlands 77 903 66 612 — — Spain 191 211 151 426 — — Australia 466 206 344 424 — — France 20 114 36 685 — — Portugal 95 176 92 491 — — Sweden 19 880 17 751 — — Japan 14 281 — — — Hong Kong 6 255 — — — Other 11 904 44 341 — —

2 315 554 2 134 470 — —

3. Operating expenses

Operating expenses industrial and other operationsProduction, selling and administration expenses 528 484 599 278 82 128 56 398 Raw materials and consumables used 1 541 508 1 390 185 — — Total operating expenses industrial and other operations 2 069 992 1 989 463 82 128 56 398

Operating expenses insurance operationsNet insurance claims 144 675 52 615 — — Insurance claims and loss adjustment expenses 354 239 319 466 — — Insurance claims and loss adjustment expenses recovered from reinsurers (209 564) (266 851) — —

ExpensesExpenses for the acquisition of insurance contracts 67 426 69 935 — — Selling and administration expenses 126 019 116 568 — — Asset management services received 866 429 — — Total operating expenses insurance operations 338 986 239 547 — —

Total operating expenses 2 408 978 2 229 010 82 128 56 398



NOTES (CONTINUED)

GROUP COMPANYR’000 2017 2016 2017 2016

4. Fair value gains/(losses)Changes in fair value of financial assets designated as at fair value through profit or loss– mark-to-market revaluation of listed investments 3 651 (71 280) 2 120 17 834 – mark-to-market revaluation of unlisted investments (1 723) (158 573) (1 723) — – revaluation of options 49 431 159 050 71 030 123 274 – revaluation of investment property 20 000 — — —

71 359 (70 803) 71 427 141 108

5. Other investment gains/(losses)Gains– on disposal of associates and joint venture companies — 1 539 — 1 539 – on remeasurement of previously held interest

in subsidiary — 39 640 — — Total gains — 41 179 — 1 539

Losses– on disposal of associates and joint venture companies — (10 990) — — – impairment in value of investment in subsidiaries¹ — — (92 337) (54 606)Total losses — (10 990) (92 337) (54 606)

Net amount — 30 189 (92 337) (53 067)

1. Impairment due to losses incurred.



GROUP COMPANYR’000 2017 2016 2017 2016

6. Profit/(loss) before net finance costsProfit/(loss) before net finance costs includes the following items of income and expenditure not shown separately in the income statement:

6.1 IncomeProfit on disposal of property, plant, equipment and vehicles 3 885 3 057 — — Foreign exchange gains 66 334 1 473 — — Government grants– Capital and interest subsidies 5 643 2 098 — —– Training refunds 425 6 323 — —

6.2 ExpenditureAuditors’ remuneration 12 648 8 122 3 508 2 646 Fees – current year 10 179 6 497 1 887 1 379 – under/(over) provided previous year 797 275 259 (69)Other services 1 672 1 350 1 362 1 336

Depreciation Property, plant, equipment and vehicles 108 710 111 684 1 328 1 200 Amortisation of intangible assets 6 012 16 324 — — Loss on disposal of equipment and vehicles 301 472 — 332 Foreign exchange losses 7 161 62 798 — — Rentals under operating leases Land and buildings 23 619 15 645 2 118 1 601 Plant, equipment and vehicles 9 108 6 143 — — Staff costs 725 872 686 101 29 000 46 739

Retirement benefit plan contributions Defined contribution plans 28 829 29 867 2 007 2 054 Royalties paid for use of trademarks 2 031 3 332 — — Fees for services Secretarial 476 495 476 495 Other professional 8 061 18 654 6 511 5 380 Write down of inventory to net realisable value 6 820 7 637 — —



NOTES (CONTINUED)

GROUP COMPANYR’000 2017 2016 2017 2016

7. Directors’ emoluments

Paid by CompanyFees for services as directorsNon-executive directors 2 455 2 398

2 455 2 398 Management and other servicesExecutive directors 19 326 17 392

19 326 17 392 Gain on exercise of optionsExecutive directors 539 1 245

539 1 245 Total paid by Company 22 320 21 035

Paid by subsidiariesFees for services as directorsExecutive directors 1 200 762 Non-executive directors 52 65 Total paid by subsidiary companies 1 252 827 Total paid by Company and subsidiaries 23 572 21 862

Executive directors do not have fixed term contracts. They have employment agreements with the Company which are subject to a one month notice period by either party. Detailed information appears in the remuneration report on page 46.

8. Income from investmentsInterest received on bank deposits and loans to associates and subsidiaries 48 942 27 042 30 137 13 508

48 942 27 042 30 137 13 508

9. Finance costsInterest on borrowings 97 002 72 315 16 307 637 Interest rate swap 645 2 337 645 2 337 Preference dividends 190 165 185 900 — — Other 2 694 156 — —

290 506 260 708 16 952 2 974



GROUP COMPANYR’000 2017 2016 2017 2016

10. Taxation charge/(credit)10.1 Taxation charge/(credit)

SA normal taxation 112 678 84 909 (6 524) 15 248 Current – current year 94 496 55 095 — 2 110 – under/(over) provision prior year 8 057 (1 350) 2 506 — Deferred – current year 6 861 (34 433) (9 051) 19 981 – under/(over) provision prior year 1 570 (1 175) 21 (1 167) – rate change 1 694 66 772 — (5 676)

Dividends taxCurrent – current year 398 453 — —

Securities transfer taxCurrent – current year 2 214 811 280 277

115 290 86 173 (6 244) 15 525

Unutilised computed tax losses carried forward 528 859 404 706 — — Saving in taxation attributable thereto at current rate 148 081 113 318 — — No deferred tax asset was raised in respect of estimated tax losses in the insurance subsidiary amounting to 95 255 75 905*

* Restated from 31 December 2016

10.2 Reconciliation of taxation charge/(credit)Net profit before taxation 262 364 283 500 1 063 79 671

Tax at statutory rates (28%-45%) (2016: 28%-41%) 69 343 76 389 298 22 308 Under/(over) provided previous year 9 627 (2 525) 2 527 (1 167)Tax effect of change in tax rate 1 694 66 772 — (5 676)Tax effect of share of results of associates and joint ventures (16 273) (27 010) — — Disposal of deferred tax (156) — — — Tax effect of fair value gains (345 705) (61 167) (20 047) (39 510)Tax effect of fair value losses 339 243 90 286 — — Deferred taxation arising on recognition of subsidiary — 3 485 — — Non-controlling shareholder’s share of deferred taxation on recognition of subsidiary — (3 485) — — Tax effect of impairment of investment in associate/subsidiary — 10 985 25 854 15 290 Tax effect of non-deductible expenses* 64 910 54 912 12 618 6 466 Tax effect of non-taxable income** (48 443) (105 163) (23 128) (9 985)Tax effect of utilisation of prior year losses (12 438) (2 384) — — Deferred tax asset not raised 42 864 9 479 — — Tax effect of tax rates of subsidiaries operating in other jurisdictions (267) 779 — — Dividends tax 398 453 — — Securities transfer tax 2 214 811 280 277 Capital gains tax 8 279 (26 444) (4 646) 27 522 Taxation charge/(credit) 115 290 86 173 (6 244) 15 525

* Non-deductible expenses consists primarily of preference dividends included in finance costs and the non-deductible portion of expenditure relating to an investment holding company.

** Non-taxable income consists primarily of dividends received.



NOTES (CONTINUED)

GROUP2017 2016

11. DividendsOn 24 April 2017, a cash dividend of 42 cents per share (total dividend R106 607 712) was paid to shareholders. In April 2016, a cash dividend of 35 cents per share was paid (total dividend R87 408 554). In respect of the current year, a dividend of 42 cents per share or a scrip dividend alternative will be paid (or share certificates posted) to shareholders on 23 April 2018. The proposed dividend will be paid to shareholders recorded in the books of the Company on 20 April 2018. The total cost of dividends payable (including scrip dividend share certificates issued) is estimated at R104 214 834.

12. Earnings per share (R’000)The following is a reconciliation of the profit figures used in the earnings per share calculations:

Basic earningsNet profit attributable to equity holders of the parent 45 958 170 739

Gross Net Gross Net2017 2017 2016 2016

Headline earnings calculationNet profit attributable to equity holders of the parent 45 958 170 739 Profit on disposal of property, plant, equipment and vehicles (1 939) (1 313) (2 098) (1 455)Realised loss on disposal of associates — — 9 451 9 738 Gain on remeasurement of previously held interest in subsidiary — — (38 649) (38 649)Gain on remeasurement of investment property (20 000) (15 520) — —Adjustments relating to results of associates (2 496) (2 168) (28 727) (24 792)Headline earnings No total 26 957 No total 115 581

Headline earnings per share (cents) 11.2 48.0 Diluted headline earnings per share (cents) 10.9 46.5

Weighted average number of shares on which earnings and headline earnings per share is based is 240 170 204 (2016: 240 732 715)

Weighted average number of shares on which diluted earnings and diluted headline earnings per share is based is 246 565 919 (2016: 248 409 451)

GROUP 2017 2016

Reconciliation of weighted average number of shares between basic and diluted earnings per share and headline earnings and diluted headline earnings per share.Basic 240 170 204 240 732 715 Dilutive instruments 6 395 715 7 676 736 Diluted 246 565 919 248 409 451 Number of instruments treated as anti-dilutive 1 307 703 1 200 737* * Restated from 31 December 2016



GROUP COMPANYR’000 2017 2016 2017 2016

13. Property, plant, equipment and vehicles13.1 Land and buildings – freehold

Carrying value 1 January 52 200 31 581 — — Deemed cost 52 815 31 698 — — Accumulated depreciation and impairment losses (615) (117) — — Additions 53 426 1 476 — — Transfers at cost (8 760) — — — Acquisitions through business combinations — 22 005 — — Disposals (13) (23) — — Depreciation for the year (1 211) (595) — — Accumulated depreciation on transfers — — — — Effect of foreign currency exchange differences on cost 87 (2 341) — — Effect of foreign currency exchange differences on depreciation and amortisation (507) 97 — — Carrying value 31 December 95 221 52 200 — — Deemed cost 97 555 52 815 — — Accumulated depreciation and impairment losses (2 334) (615) — — Depreciation rate: Buildings 10%

13.2 Land and buildings – leasehold improvementsCarrying value 1 January 14 704 14 065 2 232 753 Deemed cost 36 268 32 660 2 637 1 650 Accumulated depreciation and impairment losses (21 564) (18 595) (405) (897)Additions 1 520 3 936 600 2 154 Transfers at cost (865) — — — Acquisitions through business combinations — 931 — — Disposals — (1 167) — (1 167)Depreciation for the year (3 853) (3 941) (579) (480)Accumulated depreciation on disposals — 972 — 972 Effect of foreign currency exchange differences on cost 27 (92) — — Carrying value 31 December 11 533 14 704 2 253 2 232 Deemed cost 36 950 36 268 3 237 2 637 Accumulated depreciation and impairment losses (25 417) (21 564) (984) (405)Depreciation rate: 20%



NOTES (CONTINUED)

GROUP COMPANYR’000 2017 2016 2017 2016

13. Property, plant, equipment and vehicles (continued)

13.3 Plant and machineryCarrying value 1 January 114 510 101 304 — — Cost 223 778 191 465 — — Accumulated depreciation and impairment losses (109 268) (90 161) — — Additions 79 657 31 335 — — Transfers at cost 411 — — — Acquisitions through business combinations — 2 846 — — Disposals (46) (1 479) — — Depreciation for the year (19 943) (20 118) — — Accumulated depreciation on transfers 126 — — — Accumulated depreciation on disposals 36 963 — — Effect of foreign currency exchange differences on cost (921) (389) — — Effect of foreign currency exchange differences on depreciation and amortisation (268) 48 — — Carrying value 31 December 173 562 114 510 — — Cost 302 879 223 778 — — Accumulated depreciation and impairment losses (129 317) (109 268) — — Depreciation rates: 20 – 33.33%

13.4 Fishing trawlers (including refits)Carrying value 1 January 396 623 332 321 — — Cost 768 868 627 128 — — Accumulated depreciation and impairment losses (372 245) (294 807) — — Additions 283 024 72 066 — — Transfers at cost (494) — — — Acquisitions through business combinations — 78 671 — — Disposals (53 072) (721) — — Depreciation for the year (72 837) (78 194) — — Accumulated depreciation on transfers 6 — — — Accumulated depreciation on disposals 52 207 414 — — Effect of foreign currency exchange differences on cost 407 (8 276) — — Effect of foreign currency exchange differences on depreciation and amortisation (1 660) 342 — — Carrying value 31 December 604 204 396 623 — — Cost 998 733 768 868 — — Accumulated depreciation and impairment losses (394 529) (372 245) — — Depreciation rates: 5.5 – 50%



GROUP COMPANYR’000 2017 2016 2017 2016

13.5 ComputersCarrying value 1 January 2 100 2 854 531 365 Cost 10 734 11 060 878 1 345 Accumulated depreciation and impairment losses (8 634) (8 206) (347) (980)Additions 1 837 1 071 479 456 Disposals (141) (1 397) — (923)Depreciation for the year (1 567) (1 795) (357) (273)Accumulated depreciation on disposals 126 1 367 — 906 Carrying value 31 December 2 355 2 100 653 531 Cost 12 430 10 734 1 357 878 Accumulated depreciation and impairment losses (10 075) (8 634) (704) (347)Depreciation rates: 20 – 33.33%

13.6 Office furniture and equipmentCarrying value 1 January 25 533 15 982 1 377 732 Cost 53 048 38 694 2 411 2 082 Accumulated depreciation and impairment losses (27 515) (22 712) (1 034) (1 350)Additions 11 131 16 156 108 1 136 Transfers at cost 113 — — — Acquisitions through business combinations — 219 — — Disposals (2 083) (1 615) — (807)Depreciation for the year (8 527) (6 257) (377) (371)Accumulated depreciation on transfers (127) — — — Accumulated depreciation on disposals 1 763 1 440 — 687 Effect of foreign currency exchange differences on cost (554) (406) — — Effect of foreign currency exchange differences on depreciation and amortisation 169 14 — — Carrying value 31 December 27 418 25 533 1 108 1 377 Cost 61 655 53 048 2 519 2 411 Accumulated depreciation and impairment losses (34 237) (27 515) (1 411) (1 034)Depreciation rates: 10 – 17%



NOTES (CONTINUED)

GROUP COMPANYR’000 2017 2016 2017 2016

13. Property, plant, equipment and vehicles (continued)

13.7 Motor vehiclesCarrying value 1 January 2 051 1 835 15 91 Cost 4 993 4 018 379 379 Accumulated depreciation and impairment losses (2 942) (2 183) (364) (288)Additions 275 44 — — Transfers at cost (31) — — — Acquisitions through business combinations — 1 051 — — Disposals (54) — — — Depreciation for the year (772) (784) (15) (76)Accumulated depreciation on transfers (4) — — — Accumulated depreciation on disposals 47 — — — Effect of foreign currency exchange differences on cost 133 (120) — — Effect of foreign currency exchange differences on depreciation and amortisation (139) 25 — — Carrying value 31 December 1 506 2 051 — 15 Cost 5 316 4 993 379 379 Accumulated depreciation and impairment losses (3 810) (2 942) (379) (364)Depreciation rate: 20%

Total property, plant, equipment and vehiclesCarrying value 1 January 607 721 499 942 4 155 1 941 Cost/deemed cost 1 150 504 936 723 6 305 5 456 Accumulated depreciation and impairment losses (542 783) (436 781) (2 150) (3 515)Additions 430 870 126 084 1 187 3 746 Transfers at cost (9 626) — — — Acquisitions through business combinations — 105 723 — — Disposals (55 409) (6 402) — (2 897)Depreciation for the year (108 710) (111 684) (1 328) (1 200)Accumulated depreciation on disposals 54 179 5 156 — 2 565 Effect of foreign currency exchange differences on cost (821) (11 624) — — Effect of foreign currency exchange differences on depreciation and amortisation (2 405) 526 — — Carrying value 31 December 915 799 607 721 4 014 4 155 Cost/deemed cost 1 515 518 1 150 504 7 492 6 305 Accumulated depreciation and impairment losses (599 719) (542 783) (3 478) (2 150)

Cost of fully depreciated property, plant, equipment and vehicles 160 390 99 282 1 221 13

Details of land and buildings are contained in a register which is open for inspection by shareholders or their duly authorised repre-sentatives at the registered office of the Company.



GROUP COMPANYR’000 2017 2016 2017 2016

Review of useful lives:The useful lives of the majority of the Group’s fishing trawlers were extended by between 4 and 13 years taking into account management’s operational plan to utilise these fishing trawlers. A prospective adjustment of R13.8 million has decreased the depreciation charge for the year and therefore the accumulated depreciation balance. The impact on future years is set out below.

Decrease/(increase) in depreciationWithin one to five years 50 275 Within six to ten years 15 594 Thereafter (79 678)

(13 809)

Details of encumbered assetsOther items of property, plant, equipment and vehicles with a net book value of R808.2 million (2016: R529 million) are encumbered by a notarial bond (refer note 32).

14. Investment propertiesBalance at 1 January — — — — Additions 51 258 — — — Transfers at cost 9 626 — — — Revaluation 20 000 — — — Balance at 31 December – at fair value 80 884 — — —

Refer to note 45.13 for further details.

15. GoodwillBalance at 1 January 98 174 12 140 — — Arising on acquisition of subsidiary – Restated — 97 532 — — Foreign currency translation adjustment (1 814) (11 498) — — Balance at 31 December 96 360 98 174 — —

Goodwill has been allocated for impairment testing purposes to Lion of Africa Holdings Company (Pty) Ltd (R12.1 million) and Mareterram Ltd (R84.2 million). The recoverable amounts of these investments are determined in terms of IAS 36.

Lion of AfricaThe recoverable amount of this investment is determined on a price:book multiple of 1 times.

MareterramThe recoverable amount of this cash-generating unit (“CGU”) is determined based on a value in use calculation, which uses the cash flow projections based on financial budgets approved by the board of Mareterram, covering a five year period. The present value of the expected future cash flows for this CGU was determined using a pre-tax discount rate of 14.6% and growth in product margin per annum of 0.4%.

An increase in the weighted average cost of capital rate of 3.5%, with all other variables remaining the same, would result in the aggregate carrying value of the CGU exceeding the recoverable amount, and in impairment. A decrease in the growth of product margin of 2.5%, with all other variables remaining the same, would result in impairment.



NOTES (CONTINUED)

GROUP COMPANYR’000 2017 2016 2017 2016

16. Intangible assets

Long-term fishing rights and permitsCarrying value 1 January 498 376 92 440 — — Cost 620 457 198 437 — — Accumulated amortisation (122 081) (105 997) — — Additions 1 526 — — — Amortisation (4 029) (16 084) — — Acquisitions through business combinations — 468 566 — — Effect of foreign currency exchange differences on cost (8 972) (46 546) — — Effect of foreign currency exchange differences on amortisation 8 — — — Carrying value 31 December 486 909 498 376 — — Cost 613 011 620 457 — — Accumulated amortisation (126 102) (122 081) — — Amortisation rate: 10 – 15 years and indefinite

Retail agency rightsCarrying value 1 January 2 958 — — — Cost 2 958 — — — Additions — 3 164 — — Effect of foreign currency exchange differences on cost (62) (206) — — Carrying value 31 December 2 896 2 958 — — Cost 2 896 2 958 — — Amortisation rate: Indefinite

Computer software developmentCarrying value 1 January 4 223 15 — — Cost 33 428 29 229 — — Accumulated amortisation (29 205) (29 214) — — Additions 2 161 4 448 — — Amortisation (1 983) (240) — — Disposals — (249)Accumulated amortisation on disposals — 249 — — Carrying value 31 December 4 401 4 223 — — Cost 35 589 33 428 — — Accumulated amortisation (31 188) (29 205) — — Amortisation rate: 1 – 3 years



GROUP COMPANYR’000 2017 2016 2017 2016

Total intangible assetsCarrying value 1 January 505 557 92 455 — — Cost 656 843 227 666 — — Accumulated amortisation (151 286) (135 211) — — Additions – Restated 3 687 7 612 — — Amortisation (6 012) (16 324) — — Acquisitions through business combinations – Restated — 468 566 — — Disposals — (249) — — Accumulated amortisation on disposals — 249 — — Effect of foreign currency exchange differences on cost – Restated (9 034) (46 752) — — Effect of foreign currency exchange differences on amortisation 8 — — — Carrying value 31 December 494 206 505 557 — — Cost 651 496 656 843 — — Accumulated amortisation (157 290) (151 286) — —

Cost of fully amortised intangible assets 40 617 40 541 — —

The fishing licences that were acquired as part of the Mareterram Ltd’s acquisition (refer to note 49) have an indefinite life. The licences represent 10 of 18 licences issued by the Western Australian Department of Fisheries for the Shark Bay Prawn Managed Fishery and are held in perpetuity by the Group subject to compliance with regulatory and financial obligations. There have been no breaches of financial or regulatory obligations.

In addition, the Group acquired retail agency rights which have an indefinite life and are reviewed annually for any indications of impairment. There are no indications of impairment at the end of the reporting period.

Review of useful lives:The fishing rights (that are part of the South African operations) have a definite useful life and were previously amortised over the estimated useful life ending in 2021, the date at which the Department of Agriculture, Forestry and Fisheries will perform its next review. During the current year, the useful life of these fishing rights was reassessed to take into account the renewal period after 2021 based on management’s opinion that it’s more than likely that these rights will be renewed for another 15 years, given the outcome of the 2015/2016 fishing rights allocation process. A prospective adjustment of R12.7 million has decreased the amortisation charge for the year and therefore the accumulated amortisation balance. The impact on future years is set out below.

Decrease/(increase) in amortisationWithin one to five years 40 386Within six to ten years (19 402)Thereafter (33 672)

(12 688)



NOTES (CONTINUED)

GROUP COMPANYR’000 2017 2016 2017 2016

17. Interest in subsidiariesShares at cost less amounts written off 519 825 513 093 Loans owing by subsidiaries less amounts written off 549 166 975 458

1 068 991 1 488 551

Loans owing to subsidiaries 695 478 837 551

The loans owing by/to subsidiaries are interest free, unse-cured and have no fixed terms of repayment except for a loan to a subsidiary of R62.2 million (2016: R56.1 million) which bears interest at the prime bank overdraft rate, a loan of R52.9 million (2016: nil) which bears interest at 8.725%, a loan of R100 million (2016: R100 million) which bears interest at JIBAR +6% and a loan to a subsidiary of R9 million (2016: R9.9 million) which bears interest at 16.5%. The intention of the directors is not to call on these loans within the next 12 months.

Refer to Appendix 1 for details of subsidiary companies.

Brimstone has written down its investment in the clothingsubsidiary to what it considers to be the recoverable amount.

For Group purposes, this write-down has been appliedproportionately to the subsidiary’s assets as follows:

Plant and machinery 2 623 2 623 — — Inventory — 14 477 — —

2 623 17 100 — —



Details of non-wholly-owned subsidiaries that have material non-controlling interestsProportion of owners hip

interests and voting rights held by non-controlling interests

2017 2016 Name of subsidiary % %

Sea Harvest Group Ltd 42.5% 2.5%Brimsure (Pty) Ltd 40% 40%Mareterram Ltd (a subsidiary of Sea Harvest Group Ltd) 43.7% 1.1%

Summarised financial information in respect of each of the Group’s subsidiaries that have material non-controlling interests is set out below. The subsidiaries’ year end dates are the same as that of the Group. The summarised financial information below represents amounts before intragroup eliminations.

Sea Harvest Group Ltd (R’000)Current assets 1 061 523 786 299 Non-current assets 1 461 928 1 086 970 Current liabilities 364 850 395 394 Non-current liabilities 592 621 1 191 194 Equity attributable to owners of the Company 803 981 145 269 Non-controlling interests 761 998 141 412 – Share of equity 761 998 3 725 – Preference shares — 137 687

Revenue 2 142 632 1 931 979 Profit for the year 266 944 125 947 Profit attributable to owners of the Company 169 517 112 441 Profit attributable to the non-controlling interests 97 427 13 506

Total comprehensive income attributable to owners of the Company 149 281 200 895 Total comprehensive income attributable to the non-controlling interests – Restated 87 491 6 204 Total comprehensive income for the year – Restated 236 772 207 099

Net cash inflow from operating activities 267 614 249 240 Net cash outflow from investing activities (368 547) (302 876)Net cash inflow from financing activities 329 591 131 675 Net cash inflow 228 658 78 039



NOTES (CONTINUED)

17. Interest in subsidiaries (continued)

R’000 2017 2016

Brimsure (Pty) LtdCurrent assets 17 17 Non-current assets 29 951 26 594 Current liabilities 27 26 Non-current liabilities (24) — Equity attributable to owners of the Company 17 979 15 951 Non-controlling interests 11 986 10 634

Revenue 5 550 14 337 Profit for the year 9 223 12 054 Profit attributable to owners of the Company 5 534 8 610 Profit attributable to the non-controlling interests 3 689 3 444

Total comprehensive income attributable to owners of the Company 5 328 8 610 Total comprehensive income attributable to the non-controlling interests 3 552 3 444 Total comprehensive income for the year 8 880 12 054

Dividends paid to non-controlling interests 2 200 5 726

No details of cash flows have been supplied for Brimsure (Pty) Ltd as the company does not transact in cash. Any expenses incurred and dividends declared are paid by the company’s holding company, Brimstone Investment Corporation Limited, via the intercompany loan account. Any receipts of income are paid into the bank account of the company’s holding company and are accounted for via the intercompany loan account.

Financial supportRefer to note 40 for details of financial support given by the Company to its subsidiaries.



GROUP COMPANYR’000 2017 2016 2017 2016

18. Investments in associate companies and joint ventures Cost of investment in associate companies and joint ventures 1 306 373 1 306 373 1 542 1 542 Loans to associate companies 65 721 32 477 38 301 32 477 Share of non-distributable reserves of associates 87 630 119 432 — — Share of distributions made by associates (82 267) (58 945) — — Share of post-acquisition losses, net of dividends received (169 261) (227 377) — — Total carrying value 1 208 196 1 171 960 39 843 34 019

AssociatesRefer to Appendix 2 for full details of associate companies. The aggregate assets, liabilities and results of operations of associate companies are summarised below:

18.1 Details of material associateDetails of the Group’s material associate are as follows:

Proportion of ownership interest and voting power

held by the Group

Name of associatePrincipal

activity

Place of incorporation

and operation 30 September

2017 30 September

2016

Oceana Group Ltd Fishing South Africa 19.706% 19.719%

The above associate is accounted for using the equity method in these consolidated financial statements.

The financial year end of Oceana Group Ltd is 30 September. Brimstone does not have the authority to change this date. For purposes of applying the equity method of accounting, the financial statements of Oceana Group Ltd for the year ended30 September 2017 has been used and appropriate adjustments have been made for the effects of significant transactions between that date and 31 December 2017. As at 31 December 2017, the fair value of the Group’s interest in Oceana Group Ltd, which is listed on the JSE, was R1 955 604 605 (2016: R2 760 853 560) based on the quoted market price available on the JSE, which is a level 1 input in terms of IFRS 13.



NOTES (CONTINUED)

18. Investments in associate companies and joint ventures (continued)18.1 Details of material associate (continued)

R’000 30 September

2017 30 September

2016

Non-current assets 6 493 594 6 735 686 Current assets 3 549 631 4 371 115 Total assets 10 043 225 11 106 801

Non-current liabilities 3 924 245 5 121 783 Current liabilities 2 362 351 1 977 319 Total liabilities 6 286 596 7 099 102

Non-controlling interests 91 937 102 634

Revenue 6 807 927 8 243 988 Profit for the year 479 350 958 289 Other comprehensive loss for the year (144 489) (69 383)Total comprehensive income for the year 334 861 888 906 Dividends received from the associate during the year 20 706 107 903

Reconciliation of the above summarised financial information to the carrying amount of the interest in Oceana Group Ltd recognised in the consolidated financial statements.

Net assets of the associate 3 664 692 3 905 065 Proportion of the Group’s ownership interest in Oceana Group Ltd 19.706% 19.719%Share of net assets 722 153 770 055 Goodwill 371 328 371 328 Dividend accrued — (82 135)Carrying amount of the Group’s interest in Oceana Group Ltd 1 093 481 1 059 248

18.2 Aggregate information of associates that are not individually materialGroup’s share of profit/(loss) 8 409 (4 191)Group’s share of other comprehensive (loss)/income (343) 906 Group’s share of total comprehensive income/(loss) 8 066 (3 285)Aggregate carrying amount of the Group’s interests in these associates 84 008 70 117



Joint venturesRefer to Appendix 2 for full details of joint ventures. The aggregate assets, liabilities and results of operations of joint ventures are summarised below:

18.3 Details of material joint venturesProportion of ownership

interest and voting power held by the Group

Name of joint venturePrincipal

activity

Place of incorporation

and operation 31 December

2017 31 December

2016

Friedshelf 1534 (Pty) LtdInvestment

holding South Africa 72.368% 72.368%

The above joint venture is accounted for using the equity method in these consolidated financial statements.

Brimstone equity accounts for the results of Friedshelf 1534 (Pty) Ltd because, although it owns 72.4% (2016: 72.4%)of the company, there are certain matters contained in the shareholders’ agreement which require a 75% majority vote in order to proceed. Brimstone therefore does not have majority control over the company and is therefore not permitted to consolidate the subsidiary. Friedshelf 1534 (Pty) Ltd holds 100% of the shares in Newshelf 1279 (Pty) Ltd, the company which holds 64 million shares in Grindrod Limited, a company listed on the JSE. This investment is fair valued in the books of Newshelf 1279 (Pty) Ltd based on the quoted market price available on the JSE, which is a level 1 input in terms of IFRS 13.

R’000

Non-current assets 1 036 314 1 027 082 Current assets 45 45 Total assets 1 036 359 1 027 127

Non-current liabilities 1 097 665 998 216 Current liabilities 366 238 Total liabilities 1 098 031 998 454

Other venturer’s interests — 7 923

Revenue — 3 840 (Loss)/profit for the year (90 345) 58 078 Total comprehensive (loss)/income for the year (90 345) 58 078

Reconciliation of the above summarised financial information to the carrying amount of the interest in Friedshelf 1534 (Pty) Ltd recognised in the consolidated financial statements.

Net (liabilities)/assets of the joint venture (61 672) 28 673 Proportion of the Group’s ownership interest in Friedshelf 1534 (Pty) Ltd 72.368% 72.368%Carrying amount of the Group’s interest in Friedshelf 1534 (Pty) Ltd — 20 750

18.4 Aggregate information of joint venture that is not individually materialGroup’s share of profit 4 764 13 815 Group’s share of total comprehensive income 4 764 13 815 Aggregate carrying amount of the Group’s interest in this joint venture 30 707 21 845



NOTES (CONTINUED)

GROUP COMPANYR’000 2017 2016 2017 2016

19. Investments

Available-for-sale investmentsUnlisted investments:Shares at fair value 43 919 27 483 18 654 2 218 Total available-for-sale investments 43 919 27 483 18 654 2 218

Investments designated as at fair value through profit or lossListed investments:Shares at fair value 3 045 465 2 329 598 67 934 65 815 Total listed investments 3 045 465 2 329 598 67 934 65 815

Unlisted investments:Shares and units at fair value 470 154 619 891 5 5 Options at fair value 515 021 440 053 444 457 373 257 Total unlisted investments 985 175 1 059 944 444 462 373 262

Unlisted investmentsNon-current 540 718 686 687 5 5 Current 444 457 373 257 444 457 373 257

985 175 1 059 944 444 462 373 262

Total investments designated as at fair value through profit or loss 4 030 640 3 389 542 512 396 439 077

Total investmentsNon-current 3 630 102 3 043 768 86 593 68 038 Current 444 457 373 257 444 457 373 257

4 074 559 3 417 025 531 050 441 295

Refer to Appendix 3 for full details of the investments.



GROUP COMPANYR’000 2017 2016 2017 2016

20. Loans and receivablesBalance at 1 January — — — — Advances made 7 833 — 7 833 — Fair value adjustment (1 723) — (1 723) — Balance at 31 December – at amortised cost 6 110 — 6 110 —

21. Other financial assetsFinancial assets carried at fair value through profit or loss:Financial derivative assets 41 896 47 863 — — Vuna Fishing Group call option 24 825 — — — Interest rate swap – not designated in hedge accounting relationship — 170 — 170

66 721 48 033 — 170

Non-current 24 825 1 233 — — Current 41 896 46 800 — 170

66 721 48 033 — 170

Financial derivative assets and liabilities arise from hedging contracts entered into by the Group for the purposes of minimising the Group’s exposure to foreign currency and commodity prices volatility. Interest rate swap agreements linked to prime and for a period of five years have been concluded to convert floating rates to fixed rates. The notional value of the two swaps in 2016 was R121 million and the fixed rate was 9.187% .

22. InventoriesRaw materials 62 581 77 662 — — Work in progress 40 433 35 030 — — Finished goods 249 138 236 281 — — Consumable stores 52 824 36 124 — —

404 976 385 097 — —

Inventories with a net book value of R304 million (2016: R291.8 million) are encumbered by a notarial bond (refer note 32). Inventories have been stated at the lower of cost and net realisable value by the Group’s subsidiaries with a total amount in their books of R32 184 964 (2016: R20 489 452) being shown at net realisable value.



NOTES (CONTINUED)

GROUP COMPANYR’000 2017 2016 2017 2016

23. Trade receivables and other receivablesAmounts receivable from the sale of goods or insurance and reinsurance contracts 474 246 412 494 — — Less: Allowance for irrecoverable amounts (8 606) (9 530) — — Trade receivables 465 640 402 964 — — Other receivables 149 524 158 974 6 772 9 812

615 164 561 938 6 772 9 812

Refer to page 144 for details of how the Group manages credit risk in its insurance business. The average credit period on sales of goods is 50 days (2016: 50 days). No interest is charged on the trade receivables within agreed credit terms. Thereafter, interest is charged at prime bank overdraft rates on the overdue balance. The Group has provided fully for all receivables over 180 days, except where recovery is considered probable and where recovery is considered doubtful following investigations into the specific debtor whose debt is outstanding for less than 180 days. Before accepting any new customer, the Group uses credit agency reports to assess creditworthiness together with reports from agents, visits to and interviews with the customer when deemed necessary. Credit limits are set and debtor balances are reviewed monthly. In some instances, security by way of personal surety, cession of debtors or notarial bond over assets is obtained.

There are no uninsured customers who represent more than 5% of the total balance of trade receivables. Included in the Group’s trade receivable balance are receivables with a carrying value of R113 366 329 (2016: R150 601 789) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral over these balances.

Age analysis of trade receivables past due but not provided for:31 to 60 days 90 466 81 639 — — 61 to 90 days 10 266 14 132 — — 91 to 120 days 3 535 9 515 — — over 120 days 15 098 45 316 — —

119 365 150 602 — — Age analysis of trade receivables past due and provided for:31 to 60 days 148 — — — 61 to 90 days 148 — — — 91 to 120 days 32 — — — over 120 days 8 278 9 530 — —

8 606 9 530 — —



GROUP COMPANYR’000 2017 2016 2017 2016

Movement in the allowance for doubtful debtsBalance at beginning of the year 9 530 16 442 — — Amounts written off during the year (2 484) (42) — — Increase/(decrease) in allowance recognised in profit or loss 1 560 (6 870) — — Balance at end of the year 8 606 9 530 — —

In determining the recoverability of trade receivables, the Group considers any change in the credit quality of trade receivables from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited because of the customer base being large and unrelated and large credit risks are insured against irrecoverability. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.

Trade receivables with a value of R42 866 934 (2016: Rnil) have been ceded as security for a bank overdraft facility (refer note 37). Trade receivables with a value of Rnil (2016: R56 889 095) were ceded as security for a discounting facility (refer note 36).

Trade and other receivables with a value of R332.6 million (2016: R282.7 million) are encumbered by a notarial bond (refer note 32).

24. Insurance assets and liabilities

Insurance contract liabilities and reinsurance contract assetsInsurance contract liabilitiesShort-term insurance contracts:– claims reported and loss adjustment expenses 433 823 443 520 — — – claims incurred but not reported 75 521 49 482 — — – unearned premiums provision 152 252 112 159 — — Total insurance liabilities, gross 661 596 605 161 — —

Insurance contract assetsShort-term insurance contracts:– claims reported and loss adjustment expenses 284 443 315 142 — — – claims incurred but not reported 26 814 39 204 — — – unearned premiums provision 68 914 83 592 — — Total reinsurers’ share of insurance liabilities 380 171 437 938 — —



NOTES (CONTINUED)

GROUP COMPANYR’000 2017 2016 2017 2016

Deferred acquisition costsCommissions related to securing new insurance contracts and renewing existing contracts are deferred when incurred and recognised in profit or loss over the terms of the policies as premiums are earned.

Balance at 1 January 14 395 22 008 — — Costs deferred during the year 23 117 14 396 — — Costs amortised during the year (14 394) (22 008) — — Balance at 31 December 23 118 14 396 — —

AssetsNon-current 47 455 55 581 — — Current 355 833 396 753 — —

403 288 452 334 — —

LiabilitiesNon-current 82 406 75 377 — — Current 579 190 529 784 — —

661 596 605 161 — —

24. Insurance assets and liabilities (continued)

Claims and loss adjustment expenses – analysis of movements 2017 2016

R’000 Gross Reinsurance Net Gross Reinsurance Net

Balance at 1 JanuaryNotified claims 443 521 315 143 128 378 721 750 563 692 158 058 Incurred but not reported 49 482 39 204 10 278 80 772 40 962 39 810

493 003 354 347 138 656 802 522 604 654 197 868 Increase in liabilities 354 239 209 564 144 675 319 466 266 851 52 615 Claims paid during the year (337 898) (252 654) (85 244) (628 985) (517 158) (111 827)Balance at 31 December 509 344 311 257 198 087 493 003 354 347 138 656 Comprising:– notified claims 433 823 284 443 149 380 443 521 315 143 128 378 – incurred but not

reported 75 521 26 814 48 707 49 482 39 204 10 278 509 344 311 257 198 087 493 003 354 347 138 656

Unearned premiums provision – analysis of movement 2017 2016

Gross Reinsurance Net Gross Reinsurance Net

Balance at 1 January 112 158 83 593 28 565 153 790 109 893 43 897 Increase in the year 156 891 72 839 84 052 105 422 78 297 27 125 Release in the year (116 795) (87 518) (29 277) (147 054) (104 597) (42 457)Balance at 31 December 152 254 68 914 83 340 112 158 83 593 28 565



24.1 Process used to estimate insurance liabilitiesInsurance risks are unpredictable and the Group recognises that it is impossible to forecast with absolute precision, future claims payable under existing insurance contracts. Over time the Group has developed methodologies that are aimed at establishing insurance provisions that have a reasonable likelihood of being adequate to settle all its insurance obligations. These liabilities comprise of reported claims not yet paid (outstanding claims), a provision for claims incurred but not yet reported (IBNR) and an unearned premium provision at the reporting date.

Outstanding claimsClaims on insurance contracts are recognised on a claims-made basis. This means that the Group is liable for all insured events that occurred and for which the claim is first made in writing, during the term of the contract. The outstanding liability in respect of claims is the Group’s best estimate of the current commitment to its policyholders at any particular time.

The estimated cost of claims includes direct expenses to be incurred in settling claims, net of the expected subrogation value and other recoveries. The Group takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures. However, given the uncertainty in establishing claims provisions, it is likely that the final outcome will prove to be different from the original liability established.

Initial estimates of outstanding claims are based on historical trends per class of business and are updated as soon as new information is available. The outstanding liability is reduced commensurate with any interim payments that may be made. On settlement of the claim, the outstanding liability is reduced to nil.

Claims incurred but not reported (IBNR)The IBNR reserve relates to the uncertainty concerning the eventual outcome of claims resulting from events which have taken place, but of which the insurer has not received notices or reports of the loss.

The provision for claims IBNR is based on actuarially calculated deterministic methods, which are applied on a gross basis to project the ultimate claims. The IBNR provisions have been calculated on an undiscounted basis. The deterministic calculations provide a “best estimate” of the reserve by applying a combination of the Chain Ladder and Bornhuetter-Ferguson methods to paid claims triangles with smoothed development factors.

The Chain Ladder method is based upon the assumption that the incurred losses will continue in a similar manner in the future for all accident years, whilst the Bornhuetter-Ferguson method is used in the modelling of very recent periods where there hasn’t been sufficient claim development to rely on the chain ladder results.

To align with the new proposed solvency regulations Solvency Assessment and Management (SAM), the risk margin has been calculated using a cost of capital approach rather than the 75th percentile used at the previous valuation. Method three as set out in the SAM Quantitative Impact Study Technical Specifications was applied. The rate used in the determination of the cost of providing that amount of eligible own funds is called the Cost-of-Capital rate. This method takes into consideration the cost of capital risk margin methodology as per the SAM technical specifications issued by the FSB.

In addition to the above, the Group also establishes provisions for unallocated loss adjustment expenses on IBNR losses on an undiscounted basis.

Unearned premiums provisionThe Group raises provisions for unearned premiums on a basis that reflects the underlying risk profile of its insurance contracts. An unearned premiums provision is created at the commencement of each insurance contract and is then released as the risk under the contract expires. The majority of the Group’s insurance contracts have an even risk profile and therefore the unearned premiums provisions are released evenly over the period of insurance using the 365th time proportionate basis. For the remainder of the insurance portfolio, for example the engineering class, the unearned premium is released on a basis consistent with the increasing, decreasing or uneven risk profile of the contracts. The provisions for unearned premiums are first determined on a gross level and thereafter the reinsurance impact is recognised.



GROUP COMPANYR’000 2017 2016 2017 2016

25. Share capital25.1 Authorised

500 000 000 ordinary shares of 0.1 cents each 500 500 500 500 1 000 000 000 “N” ordinary shares of 0.001 cents each 10 10 10 10

510 510 510 510

25.2 Issued and fully paid

Ordinary sharesAt beginning of year42 757 604 (2016: 43 145 435) ordinary shares of 0.1 cents each 43 43 43 43 Specific repurchase – repurchased and cancelled(2 137 000) (2016: nil) ordinary shares of 0.1 cents each (2) — (2) — At end of year40 620 604 (2016: 42 757 604) ordinary shares of 0.1 cents each 41 43 41 43

“N” ordinary sharesAt beginning of year238 423 687 (2016: 244 103 200) “N” ordinary sharesof 0.001 cents each 2 2 2 2Specific repurchase – repurchased and cancelled(4 809 174) (2016: nil) “N” ordinary shares of of 0.001 cents each — — — —Repurchased in terms of the Brimstone call option and cancelled(8 717 629) (2016: (8 809 969)) “N” ordinary shares of of 0.001 cents each — — — —Issued in terms of forfeitable share plan1 700 197 (2016: 1 647 883) “N” ordinary shares of 0.001 cents each — — — —Issued in terms of employee share option plan1 314 873 (2016: 778 244) “N” ordinary shares of 0.001 cents each — — — —Issued in terms of staff BEE schemes599 376 (2016: 697 329) “N” ordinary shares of 0.001 cents each — — — —At end of year227 911 954 (2016: 238 423 687) “N” ordinary sharesof 0.001 cents each 2 2 2 2



GROUP COMPANYR’000 2017 2016 2017 2016

25.3 Held as treasury shares

Ordinary sharesAt beginning of year4 273 074 (2016: 3 953 087) ordinary shares of 0.1 cents each (4) (4)Repurchased for cashNil (2016: 319 987) ordinary shares of 0.1 cents each — —Specific repurchase – sold to holding company(2 137 000) (2016: nil)) ordinary shares of 0.1 cents each 2 — At end of year2 136 074 (2016: 4 273 074) ordinary shares of 0.1 cents each (2) (4) — —

“N” ordinary sharesAt beginning of year36 952 419 (2016: 40 536 751) “N” ordinary sharesof 0.001 cents each — —Repurchased for cash2 029 848 (2016: 4 759 174) “N” ordinary sharesof 0.001 cents each — —Specific repurchase – sold to holding company(4 809 174) (2016: nil) “N” ordinary shares of 0.001 cents each — — Forfeitable share plan shares1 700 197 (2016: 1 647 883) “N” ordinary shares of 0.001 cents each — —Nil (2016: (497 389)) “N” ordinary shares of 0.001 cents each sold — —Disposal in terms of staff BEE schemes(9 244 000) (2016: (9 494 000)) “N” ordinary shares of 0.001 cents each — — At end of year26 629 290 (2016: 36 952 419) “N” ordinary sharesof 0.001 cents each — — — —Total at end of year 41 41 43 45

25.4 Unissued shares (number)Under option in terms of the Company’s share option scheme“N” ordinary shares at 820 cents exercisable until 31 December 2017 — 40 000“N” ordinary shares at 900 cents exercisable until 16 February 2018 — 260 760“N” ordinary shares at 1250 cents exercisable until 16 February 2019 257 403 507 800 “N” ordinary shares at 1400 cents exercisable until 2 January 2020 100 000 100 000 “N” ordinary shares at 1300 cents exercisable until 24 February 2020 261 916 430 536

619 319 1 339 096

The directors are authorised, by resolution of the shareholders and until the forthcoming annual general meeting, to dispose of the unissued shares for any purpose and upon such terms and conditions as they see fit.



GROUP COMPANYR’000 2017 2016 2017 2016

26. Capital reserves

Share premiumBalance at 1 January 218 610 247 642 291 511 322 626 Issue of share capital 38 590 32 973 38 590 32 973 Share issue expenses (22) (47) (22) (47)Specific repurchase of shares 526 (3 040) (157 640) (64 041)Repurchase of trust units (6 225) 992 — — Increase in treasury shares (23 851) (59 910) — — Balance at 31 December 227 628 218 610 172 439 291 511

Share options reserveBalance at 1 January 6 761 28 822 1 952 28 822 Dilution on issue of shares by subsidiary 20 885 — — — Recognition of share-based payments 29 243 (9 123) 9 437 (16 132)Forfeitable share plan share issue (78 396) (17 402) (23 395) (17 402)Amount reclassified to share options reserve — 17 747 — 17 747 Recognition of change in value of share option liability directly in equity (5 613) (1 535) — — Transfer to share options exercised reserve 44 034 (11 083) 44 034 (11 083)Transfer to share based payment liability (modification) (19 789) — — — Non-controlling shareholders’ share of reserves 2 831 (665) — — Balance at 31 December (44) 6 761 32 028 1 952

Share options exercised reserveBalance at 1 January 32 087 21 004 32 087 21 004 Transfer from share options reserve (44 034) 11 083 (44 034) 11 083 Balance at 31 December (11 947) 32 087 (11 947) 32 087

Capital redemption reserve fundBalance at 1 January and 31 December 3 655 3 655 — —

Actuarial gains reserveBalance at 1 January — — — — Current year movement 1 625 — — — Non-controlling shareholders’ share of reserve (690) — — — Balance at 31 December 935 — — —

Share of non-distributable reserves of associatesBalance at 1 January 119 068 125 926 — — Current year movement (31 802) (9 713) — — Reversal on disposal — 1 679 — — Non-controlling shareholders’ share of reserves 137 1 176 — — Balance at 31 December 87 403 119 068 — — Total capital reserves 307 630 380 181 192 520 325 550



GROUP COMPANYR’000 2017 2016 2017 2016

27. Revaluation reservesProperties revaluation reserveBalance at 1 January 2 297 2 297 — —

Investments revaluation reserveBalance at 1 January 11 846 11 846 1 730 1 730 Dilution on issue of shares by subsidiary (6 919) — — —Current year movement 16 437 — 16 437 — Less deferred taxation (4 069) — (4 069) — Balance at 31 December 17 295 11 846 14 098 1 730

Total revaluation reserves 19 592 14 143 14 098 1 730

28. Cash flow hedging reserveBalance at 1 January 32 534 (42 414) — — Dilution on issue of shares by subsidiary (12 678) — — — Current year movement (28 223) 134 421 — — Less deferred taxation 8 000 (39 763) — — Non-controlling shareholders’ share of reserve 12 354 (19 710) — — Balance at 31 December 11 987 32 534 — —

29. Foreign currency translation reserveBalance at 1 January (29 119) — — — Dilution on issue of shares by subsidiary 21 106 — — — Current year movement (11 573) (44 292) — — Non-controlling shareholders’ share of reserve (1 729) 15 173 — — Balance at 31 December (21 315) (29 119) — —

30. Changes in ownershipBalance at 1 January (163 938) (11 839) — — Arising on issue of/(acquisition of) shares in subsidiary 743 625 (152 099) — — Non-controlling shareholders’ share of reserve 170 — — — Balance at 31 December 579 857 (163 938) — —



GROUP COMPANYR’000 2017 2016 2017 2016

31. Non-controlling interestsBalance at 1 January 175 252 96 662 Share of profit for the year 101 116 26 588 Share of other comprehensive (loss)/income for the year – Restated (10 074) 2 953 Dividend paid (2 200) (5 726)Distributions made to participants of share trusts (3 113) — Recognition of share-based payments (2 831) (511)Subsidiary’s accrual for preference shares and repurchase of shares — 3 238 Issue of/(reduction in) share capital 14 970 (108)Dilution on issue of shares by subsidiary 507 850 — Sale of trust units — (1 576)Recognition of treasury shares and non-controlling interest arising from share trusts — 4 428 Redemption of preference shares by subsidiary — (88 994)Acquisition of non-controlling interest in subsidiary (1 080) (15 188)Effect of changes in ownership (170) — Non-controlling interest arising on recognition of subsidiary — 153 486 Balance at 31 December 779 720 175 252

32. Long-term interest bearing borrowingsLoan from financial institution to the property owning subsidiary secured by a first mortgage bond over the property. The loan bears interest at a rate of 0.75% below prime and is repayable by 1 June 2020. At 31 December 2017 the monthly instalment payable was R110 712. 12 643 13 475 — —

Loan from a financial institution to the property owningsubsidiary secured by a second mortgage bond over the property. The loan bore interest at prime minus 0.75% and was repayable by 1 June 2020. The loan was repaid in the current year. — 296 — —

Loan from a financial institution to the property owning subsidiary secured by the three properties held. The loan bears interest at a rate of 0.5% below prime and is repayable by 2 May 2019. At 31 December 2017 the monthly instalment payable was R385 859. 48 562 — — —



GROUP COMPANYR’000 2017 2016 2017 2016

Loans from financial institutions to Sea Harvest Corporation (Pty) Ltd– Loan was repayable in full on expiry on 29 March 2019.

The loan was subject to a variable interest rate of Jibar plus 1.8% and was effective from 31 March 2014. The average quarterly repayment was R8.7 million. The loan was repaid in full on 24 March 2017 from proceeds of the listing. The loan was secured by a general notarial bond over all of Sea Harvest Corporation (Pty) Ltd’s moveable assets (refer notes 13 and 22). — 70 975 — —

– The loan was repayable in quarterly instalments, inclu-sive of interest, as from 1 April 2014. Until such time, interest payments were made quarterly in arrears. Interest was charged at a variable rate linked to a 3 month Jibar and matures on 29 March 2019. The loan was repaid in full on 24 March 2017 from proceeds of the listing. The loan was secured by a general notarial bond over all of Sea Harvest Corporation (Pty) Ltd’s moveable assets (refer notes 13 and 22). — 197 000 — —

– Loan was repayable in full on expiry on 29 March 2019. Interest payments were made quarterly in arrears. Interest was charged at a variable rate linked to a 3 month Jibar and matured on 29 March 2019. The loan was repaid in full on 24 March 2017 from proceeds of the listing. The loan was secured by a general notarial bond over all of Sea Harvest Corporation (Pty) Ltd’s moveable assets (refer notes 13 and 22). — 27 200 — —

– Subsequent to the repayment of the loans above a new facility of R550 million was negotiated of which R180 million was drawn down in November 2017. The loan is repayable in full on expiry on 25 August 2022. Interest payments are made quarterly in arrears. Interest is charged at a variable rate linked to a 3 month Jibar and matures on 25 August 2022. The loan is secured by marine bonds over Sea Harvest Corporation vessels and a general notarial bond over all of Sea Harvest Corporation (Pty) Ltd’s moveable assets (refer notes 13 and 22). 180 000 — — —

– Instalment sale agreements repayable in monthly instalments of R13 363, inclusive of interest, as from 1 August 2014. Interest payments are made monthly. Interest is charged at a rate of 9.25% and the agreements mature on 1 October 2018. The assets subject to the instalment sale agreements serve as security for the outstanding loan amount. 121 264 — —



GROUP COMPANYR’000 2017 2016 2017 2016

32. Long-term interest bearing borrowings (continued)– Instalment sale agreements repayable in monthly

instalments of R6 893, inclusive of interest, as from 1 October 2014. Interest payments are made monthly. Interest is charged at a rate of 9.25% and the agreements mature on 1 September 2019. The assets subject to the instalment sale agreements serve as security for the outstanding loan amount. 134 202 — —

– Instalment sale agreements repayable in monthly instalments of R8 501, inclusive of interest, as from 1 August 2014. Interest payments are made monthly. Interest is charged at a rate of 8.25% and the agreements mature on 1 September 2019. The assets subject to the instalment sale agreements serve as security for the outstanding loan amount. 113 201 — —

– Instalment sale agreements repayable in monthly instalments of R8 762, inclusive of interest, as from 1 October 2014. Interest payments are made monthly. Interest is charged at a rate of 9.25% and the agreements mature on 1 September 2019. The assets subject to the instalment sale agreements serve as security for the outstanding loan amount. 131 221 — —

– Instalment sale agreements repayable in monthly instalments of R26 406, inclusive of interest, as from 1 October 2014. Interest payments are made monthly. Interest is charged at a rate of 9.25% and the agreements mature on 1 September 2019. The assets subject to the instalment sale agreements serve as security for the outstanding loan amount. 206 491 — —

– Term loan with National Australia Bank; – Senior debt (variable interest rate) The loan is effective from 11 December 2015 and is subject to a variable interest rate of 100% floating at BBSY plus customer margin of 2.38%. Repayments are interest only for an initial two year period from the Commencement Date (Interest Only Period). Thereafter principal amount and interest payments will be amortised over a maximum 15-year term on terms to be agreed between the borrower and the bank. The average quarterly repayment is R1.2 million.

An additional loan facility of R19.3 million, effective from 14 November 2017 was put in place to assist with the purchase of mackerel fishing vessels and mackerel fishing licences. It is subject to a variable interest rate of 100% floating at BBSY plus customer margin of 2.38%. The loan’s expiry date is 31 October 2020. The Facility Limit will automatically reduce to R12.5 million on 30 June 2018. The loan is secured by a security interest and charge in the form of a General Security Agreement on the Personal Property Securities Register (PPSR) over all of Mareterram Ltd’s assets. 135 135 118 323 — —



GROUP COMPANYR’000 2017 2016 2017 2016

Corporate receivables finance loan with National Australian Bank (variable interest rate) The loan expires on 11 December 2018 and is thereafter reviewed annually on 31 October. Interest payments are made quarterly in arrears and the loan is subject to a variable interest rate of 100% floating at Lender Indicator rate plus customer margin of 2.38% plus purchase charge rate of 0.45% on facility limit (effective) from 11 December 2017. The average quarterly repayment is R0.391 million.

The loan was reviewed in October 2017 and increased from R48.2 million of available funding to R67.5 million. Interest payments are made quarterly in arrears and the loan is subject to a variable interest rate of 100% floating at Lender Indicator rate plus customer margin of 1.39% plus purchase charge rate of 1.00% on facility limit. 30 417 8 993 — —

– Instalment sale agreements repayable in monthly instalments of R5 840, inclusive of interest, as from 1 July 2016. Interest payments are made monthly. Interest is charged at a rate of 4.8% and the agreements mature on 30 June 2021. The assets subject to the instalment sale agreements serve as security for the outstanding loan amount. 312 394 — —

– Instalment sale agreements repayable in monthly instalments of R6 502, inclusive of interest, as from 1 December 2016. Interest payments are made monthly. Interest is charged at a rate of 4.93% and the agreements mature on 28 November 2021. The assets subject to the instalment sale agreements serve as security for the outstanding loan amount. 263 187 — —

– Other: Macquarie Pacific Funding (premium funding for annual insurance). Monthly loan repayment of 10 instal-ments at an interest rate of 2.3307%. Last instalment is payable on 30 September 2018. 289 — — —

Class D floating rate cumulative redeemable non-participating preference shares of R200 million issued by a subsidiary, Newshelf 831(RF) (Pty) Ltd, on 15 December 2010 with a redemption date of 13 March 2018. The dividend rate is 79% of the prime bank lending rate. Preference share dividends are payable not later than 4 business days following the payment of interim and final dividends by Life Healthcare Group Holdings Limited. The Class D floating rate preference shares (together with the other preference shares issued by Newshelf 831 (RF) (Pty) Ltd) are secured by a cession and pledge of 30.9 million (2016: 23 million) shares in Life Healthcare Group Holdings Limited held by Newshelf 831 (RF) (Pty) Ltd. 122 728 146 987 — —



GROUP COMPANYR’000 2017 2016 2017 2016

32. Long-term interest bearing borrowings (continued)Class E floating rate cumulative redeemable non-participating preference shares of R50 million issued by a subsidiary, Newshelf 831 (RF) (Pty) Ltd, on 7 June 2011 with a redemption date of 13 March 2018. The dividend rate is 79% of the prime bank lending rate. Preference share dividends are payable not later than 4 business days following the payment of interim and final dividends by Life Healthcare Group Holdings Limited. The Class E floating rate preference shares (together with the other preference shares issued by Newshelf 831 (RF) (Pty) Ltd) are secured by a cession and pledge of 30.9 million (2016: 23 million) shares in Life Healthcare Group Holdings Limited held by Newshelf 831 (RF) (Pty) Ltd. 35 432 42 434 — —

Class F floating rate cumulative redeemable non-participating preference shares of R80 million issued by a subsidiary, Newshelf 831 (RF) (Pty) Ltd, on 1 October 2014 and have a redemption date of 13 March 2018. The dividend rate is 79% of the prime bank lending rate. Preference share dividends are payable not later than 4 business days following the payment of interim and final dividends by Life Healthcare Group Holdings Limited. The Class F floating rate preference shares (together with the other preference shares issued by Newshelf 831 (RF) (Pty) Ltd) are secured by a cession and pledge of 30.9 million (2016: 23 million) shares in Life Healthcare Group Holdings Limited held by Newshelf 831 (RF) (Pty) Ltd. 56 690 67 895 — —

Class A floating rate cumulative redeemable preference shares of R285 million issued by a subsidiary, Newshelf 1064 (RF) (Pty) Ltd, on 4 December 2015. The preference shares are redeemable in full on 31 October 2021. The dividend rate is 92.5% of the prime bank lending rate. The preference shares are secured by a cession and pledge of 9 688 652 (2016: 9 688 652) shares in Oceana Group Limited held by Newshelf (RF) 1064 (Pty) Ltd. 253 477 274 904 — —

Class A floating rate cumulative redeemable non-participating preference shares of R297.44 million issued by a subsidiary, Newshelf 1269 (RF) (Pty) Ltd, in tranches commencing on 22 April 2014. The preference shares are redeemable in full in 5 years from date of first issue. The dividend rate is 90% of the prime bank lending rate. Newshelf 1063 (RF) (Pty) Ltd, the sole shareholder of Newshelf 1269 (RF) (Pty) Ltd has given the preference shareholder a limited recourse guarantee secured by a pledge and cession of its shares and claims in and against Newshelf 1269 (RF) (Pty) Ltd. 129 172 183 931 — —



GROUP COMPANYR’000 2017 2016 2017 2016

Class B participating redeemable preference share issued on 22 April 2014. The terms of the Class B preference share allow for the Class B preference shareholder to receive one seventh of any distribution payable to the ordinary shareholder of Newshelf 1269 (RF) (Pty) Ltd as well as a Class B Final Preference Dividend which is between 10% and 12.5% of the amount by which the market value of the relevant assets in Newshelf 1269 (RF) (Pty) Ltd exceeds the aggregate of the outstanding Class A preference shares and all potential tax liabilities and costs in Newshelf 1269 (RF) (Pty) Ltd. The preference share is redeemable in full in 5 years from date of first issue. 32 162 40 506 — —

Class A3 variable rate cumulative redeemable preference shares of R1 132.8 million issued by a subsidiary, Newshelf 1063 (RF) (Pty) Ltd, which were previously designated as Class A1 and Class A2 variable rate cumulative redeemable preference shares and reclassified on 4 November 2015 and are redeemable in full on 4 November 2020. The dividend rate in respect of the preference shares is 87% of the prime bank lending rate nominal annual compounded monthly. The company is not obliged (but is entitled) to declare and pay any scheduled preference share dividends that are deemed to accrue during the first three years after 4 November 2015 on 1 March and 1 September of these years. The company is obliged to declare and pay any scheduled preference share dividends that are deemed to accrue during the fourth and fifth years after 4 November 2015 on 1 March and 1 September of these years. Brimstone has agreed to guarantee to the holders of the preference shares the due and full performance by the company of the guaranteed liabilities and to pay all guaranteed amounts and gross up amounts to the holders. 1 105 973 1 081 550 — —



GROUP COMPANYR’000 2017 2016 2017 2016

32. Long-term interest bearing borrowings (continued)Class A4 variable rate cumulative redeemable preference shares of R408 million issued by a subsidiary, Newshelf 1063 (RF) (Pty) Ltd, in tranches and are redeemable in full on 12 November 2020. The dividend rate in respect of the preference shares is 87% of the prime bank lending rate nominal annual compounded monthly. The company is not obliged (but is entitled) to declare and pay any scheduled preference share dividends that are deemed to accrue during the first three years after 12 November 2015 on 1 March and 1 September of these years. The company is obliged to declare and pay any scheduled preference share dividends that are deemed to accrue during the fourth and fifth years after 12 November 2015 on 1 March and 1 September of these years. Brimstone has agreed to guarantee to the holders of the preference shares the due and full performance by the company of the guaranteed liabilities and to pay all guaranteed amounts and gross up amounts to the holders. 440 188 430 468 — —

Term loan from financial institution repayable in full upon expiry on 18 November 2020. Interest is charged at a variable rate linked to 3 month Jibar. Interest is capitalised on a quarterly basis and is payable upon receipt of distributions from the underlying investment in Equites Property Fund Limited. The loan is secured by a cession and pledge of 34.9 million shares in Equites Property Fund Limited and 23 million (2016: 16.5 million) shares in Life Healthcare Group Holdings Limited. 404 687 404 650 — —

Loan facility of R450 million with Nedbank issued to a subsidiary, Newshelf 1354. The loan was issued on 13 April 2017 and is repayable on 15 March 2018. Newshelf 1354 has utilised R340 million of the facility. The interest rate is based on the 3-month JIBAR plus an applicable margin calculated on a nominal annual compounded quarterly basis. 356 971 — — —

Term loan from a financial institution to Brimstone Investment Corporation Limited repayable in full on 15 December 2022. The loan bears interest at the 3 month JIBAR rate plus 6%, which is payable on 31 March, 30 June, 30 September and 31 December in any year. The loan is unsecured and is subordinated to the claims of the holders of the Class A3 and Class A4 variable rate cumulative redeemable preference shares issued by a subsidiary, Newshelf 1063 (RF) Pty Ltd, as set out in more detail elsewhere in this note. 100 000 100 000 100 000 100 000

Total 3 445 806 3 211 547 100 000 100 000 Less: amount transferred to short-term borrowings (note 36) (774 659) (428 343) — —

2 671 147 2 783 204 100 000 100 000



GROUP COMPANYR’000 2017 2016 2017 2016

33. Provisions

Long-term provisionsPost-retirement medical assistancePresent value of unfunded obligations 26 191 26 703 — — Refer to note 45 for details of the post-retirement medical assistance plan.

Leave payCarrying value 1 January 4 506 — — — Acquisitions through business combinations — 3 043 — — Additional provision 159 1 888 — — Effect of foreign currency exchange differences 136 (425) — — Provision utilised (4 650) — — —

151 4 506 — —

Total carrying amount – long-term 26 342 31 209 — —

Short-term provisionsProduct claimsCarrying value 1 January 343 — — — Additional provision 130 343 — — Provision utilised (343) — — —

130 343 — —

BonusCarrying value 1 January 24 526 — — — Additional provision 34 105 24 526 — — Provision utilised (24 526) — — —

34 105 24 526 — —

Leave payCarrying value 1 January 22 885 19 180 — — Acquisitions through business combinations — 4 948 — — Additional provision 20 653 24 538 — — Effect of foreign currency exchange differences (164) (437) — — Provision utilised (17 318) (25 344) — — Provision reallocated to accruals (22 000) — — —

4 056 22 885 — —

Total carrying amount – short-term 38 291 47 754 — —



GROUP COMPANYR’000 2017 2016 2017 2016

34. Other financial liabilitiesFinancial derivative liabilities:

– Fishing licence liability 80 065 100 871 — — – Forward exchange contracts – designated and

effective in hedge accounting relationship 131 — — Financial liabilities carried at fair value through profit or loss 50 192 2 698 — —

130 388 103 569 — —

Non-current 61 223 82 448 — — Current 69 165 21 121 — —

130 388 103 569 — —

Refer note 21 for further disclosures regarding the interest rate swap agreements.

The fishing licence liability relates to the Shark Bay Prawn Managed Fishery Voluntary Fisheries Adjustment Scheme (VFAS), which was established on 12 November 2010 pursuant to the Fisheries Adjustment Schemes Act 1987 (WA). The VFAS operates from 12 November 2010 until 1 July 2021, and for the period 2015 to 2021 an annual fee of R1.9 million is payable by the holder of a licence that authorises fishing in the Shark Bay region. Mareterram Ltd owns ten fishing licences in the Shark Bay region. The values represent present values discounted at the 5-year Australian Corporate Bond rate.



GROUP COMPANYR’000 2017 2016 2017 2016

35. Deferred taxationDeferred taxation asset – Restated (29 838) (12 351) (17 312) (12 351)Deferred taxation liability – Restated 619 304 599 047 — — Net deferred taxation liability/(asset) 589 466 586 696 (17 312) (12 351)

The major components of the deferred tax provisiontogether with movements during the year were as follows:Difference between tax wear and tear allowancesand depreciation charges on assets 83 005 119 049 115 123 Difference between doubtful debt allowance andamount allowable for tax purposes (947) (924) — — Taxation allowance for future trawler repairs 40 256 — — — Fair value adjustment on fishing rights 118 913 114 467 — — Borrowing costs (26 744) — — — Inventory 376 — — — Other 18 533 (12 658) — — Derivative instruments (5 262) 48 — 48 Revaluation of properties (taken directly to equity) 6 738 2 668 4 069 — Revaluation of investment properties property 4 480 — — — Arising from cash flow hedging reserve (taken directly to equity) 3 538 11 508 — — Arising from unrealised profit in inventory of associate (420) — — — Prepayments 419 664 — — Government grants — 1 355 — — Leases — (2 136) — — Investments 393 184 380 247 (12 900) (7 783)Provisions (26 920) (24 645) (3 524) (4 739)Utilisation of estimated tax losses (19 683) (2 947) (5 072) — Deferred tax liability/(asset) – 31 December 589 466 586 696 (17 312) (12 351)



GROUP COMPANYR’000 2017 2016 2017 2016

35. Deferred taxation (continued)Reconciliation between deferred taxation opening and and closing balances:Deferred tax liability/(asset) – 1 January 586 696 442 007 (12 351) (25 489)Over provided previous year 1 570 (1 165) 21 (1 167)Acquisitions through business combinations — 95 075 — — Effects of change in tax rate – capital gains tax 1 600 65 849 — (5 676)Statement of comprehensive income effect of temporary differences in value of assets 11 845 15 111 (29) 47 Statement of comprehensive income effect of temporary differences in doubtful debt allowance (1 365) (915) — — Taxation allowance for future trawler repairs 5 558 — — — Provisions (2 622) (3 756) 1 215 (1 145)Arising from unrealised profit in inventory of associate (420) — — — Prepayments deducted for normal tax 177 (25) — — Inventory (4 833) — — — Government grants — 587 — — Leases — (177) — — Investments (15 051) (45 081) (5 117) 22 781 Fair value adjustment on available-for-sale investments — (2 873) — — Deferred tax asset not raised 27 250 — — — Derivative instruments (1 165) (1 702) (48) (1 702)Revaluation of properties (taken directly to equity) 4 069 — 4 069 — Revaluation of investment property 4 480 — — — Arising from cash flow hedging reserve (taken directly to equity) (8 000) 39 763 — — Effect of foreign currency exchange differences (1 350) (9 108) — — Estimated tax losses (9 065) (2 891) (5 072) — Other (9 908) (4 003) — —

589 466 586 696 (17 312) (12 351)

36. Short-term interest bearing borrowingsCurrent portion of long-term borrowings (note 32) 774 659 428 343 — —

Amount owing to bank resulting from the discounting of a subsidiary company’s sales invoices to its customers, secured by a cession of its debtors book and limited guarantee (note 37) by the holding company and bearing interest at the bank’s prime overdraft rate. — 23 751 — —

774 659 452 094 — —



37. Bank overdraftsThe Company has an overdraft facility amounting to R60 million (2016: R60 million). The facility bears interest at the bank’s prime lending rate. The overdraft facility is unsecured.

The Company has signed a limited guarantee for the overdraft facility of a wholly-owned subsidiary to the extent of R65 000 000 (2016: R30 000 000). At the end of the year, the overdraft secured by this limited guarantee was R58 345 706 (2016: R23 083 242). The subsidiary has also pledged trade receivables amounting to R42.1 million as security for the overdraft facility.

38. Notes to the statements of cash flows

GROUP COMPANYR’000 2017 2016 2017 2016

38.1 Taxes paid

Income taxPrepaid at the beginning of the year (6 772) (6 583) (8 808) (3 914)Foreign currency translation movements (204) 443 — — Arising on sale of joint venture 2 075 — — —Acquisitions through business combinations — 8 267 — —

(4 901) 2 127 (8 808) (3 914)Provided during year 102 553 53 745 2 506 2 110 Prepaid at the end of the year (4 817) 6 772 6 302 8 808 Income tax paid 92 835 62 644 — 7 004

Dividends taxDividends tax paid 398 453 — —

Securities transfer taxUnpaid at the beginning of the year — 269 — — Provided during year 2 214 811 280 277 Other — — (1) —Unpaid at end of year — — — —Securities transfer tax paid 2 214 1 080 279 277

STCPrepaid at the beginning of the year (11) (11) — — Prepaid at the end of the year 11 11 — — STC paid — — — —Total taxes paid 95 477 64 177 279 7 281

38.2 Finance costsFinance costs recognised in profit or loss 290 506 260 708 16 952 2 974 Adjustment for non-cash items (52 377) (53 163) (2 904) (2 204) Finance costs paid 238 129 207 545 14 048 770

38.3 Cash effect of change in investment in subsidiariesNet decrease in investment — — 277 487 50 184 Adjustment for non-cash items — — (95 241) (54 606)

— — 182 246 (4 422)



GROUPR’000 2017 2016

39. Segmental informationInformation 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 are therefore fishing, insurance, clothing and investments. Investments include investments in associates and joint ventures, available-for-sale investments, investments at fair value through profit or loss, the Group’s property portfolio and administrative head office.

Segment revenues and resultsSegment revenue Fishing 2 142 632 1 931 979 Insurance 234 442 208 679 Clothing 174 402 207 651 Investments 231 955 340 181 Total revenue 2 783 431 2 688 490 Segment profit/(loss) from operations Fishing 333 812 196 562 Insurance (104 544) (30 868) Clothing (8 674) 5 918 Investments 153 859 287 868 Total profit from operations 374 453 459 480 Fair value gains/(losses) 71 359 (70 803)Other investment gains — 30 189 Share of profits of associates and joint ventures 58 116 98 300 Income from investments 48 942 27 042 Net finance costs (290 506) (260 708)Taxation charge (115 290) (86 173)Profit for the year 147 074 197 327

GROUP2017 2017 2016 2016

Segment assets and liabilities Gross Net Gross NetSegment assets Fishing 2 523 049 2 523 049 1 963 522 1 963 522 Insurance 1 001 637 1 001 637 931 652 931 652 Clothing 171 776 171 776 195 445 195 445

3 696 462 3 696 462 3 090 619 3 090 619 Investments 6 198 870 5 488 642 5 967 671 4 679 895 Intergroup balances 710 228 — 1 287 776 — Other 5 488 642 5 488 642 4 679 895 4 679 895 Total segment assets 9 895 332 9 185 104 9 058 290 7 770 514

Segment liabilities Fishing 1 004 416 1 004 416 1 662 485 1 104 008 Insurance 1 275 989 911 055 1 171 667 788 733 Clothing 155 457 75 178 150 255 68 905

2 435 862 1 990 649 2 984 407 1 961 646 Investments 3 187 520 3 187 520 2 183 720 2 183 720 Total segment liabilities 5 623 382 5 178 169 5 168 127 4 145 366



GROUPR’000 2017 2016

Other segmental informationDepreciation and amortisation Fishing 103 065 118 712 Insurance 2 866 1 590 Clothing 7 463 6 506 Investments 1 328 1 200 Total segment depreciation and amortisation 114 722 128 008

Additions to non-current assets Fishing 371 403 110 612 Insurance 3 177 4 797 Clothing 5 599 14 540 Investments 105 636 3 746 Total segment additions to non-current assets 485 815 133 695

The Group operates in two principal geographical areas – Republic of South Africa and Australia.

The Group’s revenue from continuing operations from external customers by location of operations and information about its non-current assets by location of assets are detailed below.

Revenue from external customers Non-current assets (Restated)

2017 2016 2017 2016

South Africa 2 302 609 2 408 747 6 094 129 5 093 749 Australia 480 822 279 743 388 118 402 596

2 783 431 2 688 490 6 482 247 5 496 345

40. Contingent liabilitiesThe Company has irrevocably and unconditionally guaranteed the due and punctual payment and performance by Newshelf 1063 (RF) (Pty) Ltd for preference shares issued by Newshelf 1063 (RF) (Pty) Ltd to a financial institution.

The Company has subordinated its rights and claims of any nature against Newshelf 1269 (RF) (Pty) Ltd for the benefit and in favour of funders and preference shareholders.

The Company has guaranteed the post-redemption obligations of Newshelf 1064 (RF) (Pty) Ltd, Oceana SPV (Pty) Ltd, Newshelf 1279 (RF) (Pty) Ltd, Newshelf 1269 (Pty) Ltd and Friedshelf 1535 (RF) (Pty) Ltd for preference shares issued by those subsidiaries.

The Company has issued a suretyship of R15 million to the financial institution which provided loan finance to the property owning subsidiary, H Investments No. 219 (Pty) Ltd, as detailed in note 32.

The Company has issued a letter of support to the Financial Services Board in respect of its insurance subsidiary, stating its willingness to capitalise this subsidiary should the need arise.



GROUP COMPANYR’000 2017 2016 2017 2016

41. Capital commitmentsCommitments for the acquisition of property, plant, equipment and vehicles:Contracted for 155 665 8 677 — — Authorised by directors but not contracted for 128 691 6 142 — — Total commitments 284 356 14 819 — —

The increase in capital commitments relates predominantly to Sea Harvest’s new freezer vessel conversion and further investment in the fish processing factory in Saldanha Bay. The commitments will be funded from internal cash resources.

42. Lease commitmentsAt the reporting date the Group and Company had outstanding commitments under non-cancellableoperating leases with a term of more than one year,which fall due as follows: Within one year 28 037 22 795 1 494 1 362 In the second to fifth years inclusive 42 738 59 938 2 164 3 672 Beyond five years 1 915 20 617 — —

72 690 103 350 3 658 5 034

The Group has entered into operating leases on land and manufacturing/office buildings with lease terms between 3 and 10 years. The Group has the option on some of its leases to lease the assets for additional terms of 3 to 5 years.

43. Share-based paymentsThe Company has a share option scheme for its employees. Options are exercisable at a price equal to the middle market price of the share on the most recent trading day on the JSE immediately preceding the date on which the option is granted. No options are exercisable in the first year from the date of granting of the options. Thereafter, options up to a maximum of 20% may be exercised annually. The sale arising from the exercise of options must be implemented by not later than 6 years from the date on which an option is granted. The share option scheme has been replaced by a forfeitable share plan, details of which are set out below.

Details of share options outstanding are as follows:Weighted Weighted

average averageNumber of exercise price Number of exercise price

share options (cents) share options (cents)2017 2017 2016 2016

“N” ordinary sharesOutstanding at beginning of year 1 339 096 1 196 2 117 340 1 060 Forfeited (4 280) 1 279 — — Exercised during the year (715 497) 1 110 (778 244) 825 Outstanding at end of year 619 319 1 295 1 339 096 1 196 Exercisable at the end of the year 277 379 429 696



“N” Ordinary shares

The options outstanding at the end of the year have a weighted average remaining contractual life of 0.71 years (2016: 1.3 years).

The estimated fair values of the options were calculated using the Binomial Tree option pricing model. The results of the calculations and inputs into the model are set out below:

Options issued 27 February 2013Fair value (cents) 400 Exercise price (cents) 1 250 Expected volatility (%) 27.21 Expected life 5.0 Risk free rate (%) 6.29 Dividend forecast (cents)2014 19 2015 19 2016 19 2017 19 2018 19

Options issued 2 January 2014Fair value (cents) 462 Exercise price (cents) 1 400 Expected volatility (%) 22.19 Expected life 5.0Risk free rate (%) 7.77 Dividend forecast (cents)2015 25 2016 25 2017 25 2018 25 2019 25

Options issued 24 February 2014Fair value (cents) 473 Exercise price (cents) 1 300 Expected volatility (%) 26.34 Expected life 5 Risk free rate (%) 8.25 Dividend forecast (cents)2015 25 2016 25 2017 25 2018 25 2019 25

Expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous five years.The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability,exercise restrictions and behavioural considerations. The Company recognised total expenses of R9 437 182 (2016: income R16 132 025) related to share-based payment transactions during the year.



43. Share-based payments (continued)

Forfeitable share planThe Company adopted a forfeitable share plan which was approved by shareholders on 18 December 2014. In terms of the forfeita-ble share plan, executive directors, top and senior managers will be awarded performance shares in the Company. The performance shares are linked to a requirement of continued employment over the prescribed period, the Company’s performance and strategic, individual performance conditions which have to be met.

Weighted Weightedaverage average

Number of exercise price Number of exercise priceshare options (cents) share options (cents)

2017 2017 2016 2016

“N” ordinary sharesOutstanding at beginning of year 2 497 245 1 267 849 362 1 676 Awarded during year 1 700 197 1 376 1 647 883 1 056 Outstanding at end of year 4 197 442 1 311 2 497 245 1 267

The estimated fair values of the forfeitable shares were calculated using a Monte Carlo model. The results of the calculations and inputs into the model are set out below:

“N” ordinaryshares

Forfeitable shares issued 9 March 2015Fair value (cents) 653 Award price (cents) 1 676 Expected volatility (%) 31.96 Expected life (years) 3 Risk free rate (%) 6.68 Dividend yield % 2.185

Forfeitable shares issued 10 March 2016Fair value (cents) 474 Award price (cents) 1 056 Expected volatility (%) 38.53 Expected life (years) 3 Risk free rate (%) 8.161Dividend yield % 2.990

Forfeitable shares issued 9 March 2017Fair value (cents) 627Award price (cents) 1 337 Expected volatility (%) 42.56 Expected life (years) 3 Risk free rate (%) 7.336Dividend yield % 2.878



“N” ordinaryshares

Forfeitable shares issued 11 April 2017Fair value (cents) 805Award price (cents) 1 503 Expected volatility (%) 49.13 Expected life (years) 3 Risk free rate (%) 7.366Dividend yield % 2.943

Volatility was determined using the historical volatility of the Company’s “N” ordinary shares.

Share Incentive SchemeOn 31 December 2010, a share scheme, Cocoon, was introduced for employees of Brimstone. In terms of the scheme, participants subscribed for 39 140 000 newly issued Brimstone “N” ordinary shares at a subscription price of R0.5075 per share. The scheme involves three distinct participants, namely:1. The Brimstone Black Executives Investment Trust, an executive equity investment scheme established for the benefit of the

second tier management of Brimstone which holds 35 140 000 “N” ordinary shares;2. The Brimstone General Staff Investment Trust, an employee equity investment scheme established in line with the requirements

of the BEE codes for the benefit of the broader staff of Brimstone which holds 1 500 000 “N” ordinary shares; and3. The Brimstone Broad-based BEE Trust, a broad-based equity investment scheme, which holds 2 500 000 “N” ordinary shares.

The difference between the subscription price and the subscription VWAP (the volume weighted average price of traded securities at the close of business on the day before any particular date) are notionally funded by Brimstone through notional vendor funding. The outstanding balance accrues interest at the hurdle rate (8.5% fixed nominal rate) and any distributions received (including interest, dividends and capital contributions) will be used to reduce the notional funding.

At the relevant fund date, Brimstone will, in terms of a call option, be entitled to repurchase that number of subscriptionshares which, at the then market value, have a value equal to the then outstanding notional vendor funding.

At a general meeting of shareholders held on 20 September 2016, shareholders approved changes to the The Brimstone Black Executives Investment Trust and The Brimstone General Staff Investment Trust deeds amending the Brimstone call option to five tranches as follows:– Tranche 1 comprising 22.5% of the Subscription Shares with the Revised Final Date of 31 October 2016;– Tranche 2 comprising 22.5% of the Subscription Shares with the Revised Final Date of 31 October 2017;– Tranche 3 comprising 22.5% of the Subscription Shares with the Revised Final Date of 31 October 2018;– Tranche 4 comprising 22.5% of the Subscription Shares with the Revised Final Date of 31 October 2019; and– Tranche 5 comprising 10% of the Subscription Shares with the Revised Final Date of 31 October 2020.

The Brimstone Broad-based BEE Trust was not amended and remains at 3 tranches being 50% on 31 October 2016, 40% on 31 October 2017 and 10% on 31 October 2018.

Fair valueR’000 2017 2016

Brimstone Black Executives Investment Trust Equity-Settled 26 924 26 924 Brimstone General Staff Investment Trust Equity-Settled 1 589 1 589 Brimstone Broad-based BEE Trust Equity-Settled 4 260 4 260

The equity-settled schemes were valued at inception of the schemes using the Black-Scholes method.

The value of the Brimstone Black Executive Investment Trust and the Brimstone General Staff Investment Trust is expensed over the 6 year vesting period. The Brimstone Broad-based BEE Trust scheme has no vesting conditions, the full value was therefore expensed immediately and no subsequent change in fair value is recognised.



44. Retirement benefit plansThe Company’s Provident Fund is administered by the Old Mutual SuperFund Provident Fund with effect from June 2014. Contributions payable to the fund and charged against income amounted during the year to R2 006 828 (2016: R2 054 118). Wholly-owned subsidiary, House of Monatic (Pty) Ltd, is a member of the Clothing Industry National Bargaining Council and as such, it is compulsory for all qualifying employees to be members of the Clothing Industry Bargaining Council Provident Fund. Employees of House of Monatic (Pty) Ltd who do not qualify for membership of the Provident Fund are members of the House of Monatic Pension Fund. The fund is administered by Fairsure Employee Benefits, in terms of the Pension Funds Act, 1956. The assets of the fund are held separately from those of the company, under the control of the fund’s trustees. The contributions payable to the funds by the employer in terms of the rules of the funds are charged against income and during the year amounted to R4 409 305 (2016: R4 982 208). The contributions vest immediately upon payment in the members of the funds. All permanent staff of Brimstone Investment Corporation Limited and its subsidiaries were members of a retirement fund.

Sea Harvest Group LtdSea Harvest Old Mutual Superfund Pension and Provident FundsThese funds have been set up as a result of negotiations with employees. A total of 2 078 (2016: 2 101) employees of the group were members of these funds at the year end. These defined contribution funds are not exempt from actuarial valuations.

Post-retirement medical assistanceThe group has undertaken to subsidise a portion of medical aid subscriptions for certain employees who meet specific criteria. The projected unit credit method was used to value the liability, as prescribed by IAS 19. The latest full actuarial valuation was performed on 31 December 2017. The group has no separately identified plan assets to fund the liability. At 31 December 2017 there were 43 (2016: 43) employees who qualified for the benefit.



GROUP COMPANYR’000 2017 2016 2017 2016

Contributions paidThe contributions payable to these funds by the employer in terms of the rules of the fund and that are charged against income during the year amounted to R23.8 million (2016: R22.8 million).

Amounts recognised in profit or loss in respect of these defined benefit schemes are as follows:

Current service cost 132 121 — — Interest cost 2 298 2 646 — — Actuarial gain recognised (1 625) — — —

805 2 767 — —

Changes in the present value of the defined benefit obligation are as follows:

Defined benefit obligation at beginning of year 26 703 25 427 — — Current service cost 132 121 — — Interest cost 2 298 2 646 — — Actuarial gain arising in the current year (1 625) — — — Benefits paid (1 317) (1 491) — — Defined benefit obligation at year end 26 191 26 703 — — The principal assumptions of the actuarial valuation are:Discount rate (%) 10.4% 10.7%Health care cost inflation (%) 8.7% – 9.2% 9.8% – 10.3%Retirement age 63 or 65 63 or 65

The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions above occurring at the end of the reporting period, while holding all other assumptions constant.– If the discount rate is 100 basis points higher (lower), the defined benefit obligation would decrease by R2 431 000 (increase by

R2 902 000).– If the expected healthcare cost inflation increases by 1%, the defined benefit obligation would increase by R3 122 546 (decrease

by R2 615 580).– If the expected retirement age increases (decreases) by one year for both men and women, the defined benefit obligation

would decrease by R48 000 (increase by R83 000).

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the statement of financial position. There are no changes in the methods and assumptions used in preparing the sensitivity analysis from prior years.



44. Retirement benefit plans (continued)

Sea Harvest Group Ltd (continued)Contributions paid (continued)The risks faced by the Group as a result of the post-retirement healthcare obligation can be summarised as follows:– Inflation: The risk that future CPI inflation and healthcare cost inflation are higher than expected and uncontrolled.– Longevity: The risk that pensioners live longer than expected and thus their healthcare benefit is payable for longer than

expected.– Open-ended, long-term liability: The risk that the liability may be volatile in the future and uncertain.– Future changes in legislation: The risk that changes to legislation with respect to the post-employment liability may increase

the liability for the Group.– Future changes in the tax environment: The risk that changes in the tax legislation governing employee benefits may increase

the liability for the Group.– Perceived inequality by non-eligible employees: The risk of dissatisfaction of employees who are not eligible for a post-

employment healthcare subsidy.– Administration: Administration of this liability poses a burden to the Group.– Enforcement of eligibility criteria.

The average duration of the benefit obligation at 31 December 2017 is 12.1 years (2016: 13.1 years).

The Group expects to make a contribution of R1.7 million (2016: R1.5 million) to the defined benefit plans during the next financial year.

Lion of Africa Holdings Company (Pty) LtdThe group operates a pension scheme on a defined contribution basis. This pension scheme is governed by the Pension Funds Act, 1956. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. The scheme is funded through payments to trustee-administered funds on a mandatory basis. The group has no legal or constructive obligations to pay further contributions once the contributions have been paid. The contributions are recognised as an employee benefit expense when they are due. Contributions of R5 374 911 (2016: R5 291 407) were paid during the year.

45. Financial instruments45.1 Capital risk management

The Group manages its capital to ensure that entities within the group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the borrowings disclosed in notes 32 and 36, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves as disclosed in notes 25 to 30 and retained earnings. The Group’s board reviews the capital structure on a regular basis and in particular when an acquisition of an investment is planned. As a part of this review, the Board considers the cost of capital and the risks associated with each class of capital. The Group will balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the issue of new debt or the redemption of existing debt. The Group’s overall strategy remains unchanged from the previous year.

The Financial Services Board (FSB), sets and monitors capital requirements for short-term insurers registered in South Africa. Effective 01 January 2012, the prescribed requirements for the calculation of the value of the assets, liabilities, and the capital adequacy requirement (CAR) of short-term insurers were amended in terms of Board Notice 169 of 2011. This was done as an interim measure pending the comprehensive implementation of the SAM risk based capital regime during 2017.

On a SAM Interim Measures basis, the Lion of Africa’s net assets at 31 December 2017 are R72.8 million, which is R5.3 million above CAR, i.e. a CAR cover ratio of 1.07 times. This is below the FSB’s prescribed minimum of 1.3 times.

45.2 Significant accounting policiesDetails of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statements.



GROUP COMPANYR’000 2017 2016 2017 2016

45.3 Categories of financial instruments

Financial assetsDesignated as at fair value through profit or loss 4 030 640 3 389 542 512 395 439 076 Derivative not in a hedge accounting relationship carried at fair value 66 723 48 033 — 170 Loans and receivables (including cash and cash equivalents) 1 461 102 1 089 498 46 454 45 144 Trade and other receivables 615 164 561 939 6 772 9 812 Cash and cash equivalents 780 217 495 082 1 381 2 855 Loans to associate companies 65 721 32 477 38 301 32 477 Loans owing by subsidiaries — — 549 166 975 458 Available-for-sale investments 43 920 27 483 18 655 2 219

Financial liabilitiesAmortised cost (long and short-term borrowings, bank overdrafts, trade and other payables) 4 103 414 3 759 185 169 228 127 428 Loans owing to subsidiaries — — 695 478 837 551

45.4 Financial risk management objectivesA committee consisting of executives of the holding company and of the Group’s subsidiaries monitors and manages the Group’s financial risks relating to the operations of the Group. These risks include market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The recommendations of this committee are presented to the Audit and Risk Committee and, if necessary, the board of directors for approval. The Group does not enter into or trade in financial instruments, including derivative instruments, for speculative purposes.

45.5 Market riskThe Group’s activities expose it primarily to the financial risks of changes in foreign exchange (see 45.6 below), interest rates (see 45.7 below) and equity price risk (see 45.11 below). There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk.



GROUPR’000 2017 2016

45. Financial instruments (continued)45.6 Foreign currency risk management

The Group undertakes certain transactions denominated in foreign currencies which give rise to exchange rate fluctuations. The carrying amount of the Group’s uncovered foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows:

LiabilitiesUnited States $ 130 301 Rand equivalent of liabilities 1 617 4 213 Exchange rate used for conversion of foreign item 12.44 14.00

European Union € 67 104 Rand equivalent of liabilities 1 012 1 537 Exchange rate used for conversion of foreign item 15.10 14.78

United Kingdom £ 100 — Rand equivalent of liabilities 1 715 — Exchange rate used for conversion of foreign item 17.15 —

Swedish Krone SEK 287 — Rand equivalent of liabilities 432 — Exchange rate used for conversion of foreign item 1.51 —



GROUPR’000 2017 2016

Current assetsCash (United States $) 3 493 47 602 Rand equivalent of current assets 43 207 649 290 Exchange rate used for conversion of foreign item 12.37 13.64

Cash (European Union €) 2 353 2 659 Rand equivalent of current assets 35 034 38 427 Exchange rate used for conversion of foreign item 14.89 14.45

Cash (Australian $) 570 2 034 Rand equivalent of current assets 5 502 20 161 Exchange rate used for conversion of foreign item 9.65 9.91

Assets (European Union €) 4 806 — Rand equivalent of current assets 71 356 — Exchange rate used for conversion of foreign item 14.85 —

Assets (United Kingdom £) 181 —

Rand equivalent of current assets 3 025 —Exchange rate used for conversion of foreign item 16.72 —

Assets (United States $) 548 — Rand equivalent of current assets 6 784 — Exchange rate used for conversion of foreign item 12.37 —



GROUPR’000 2017 2016

45. Financial instruments (continued)45.6 Foreign currency risk management (continued)

Foreign currency sensitivity analysisThe following table details the Group’s sensitivity to a 10% increase and decrease in the Rand against the respective foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 10% change in foreign currency rates. A negative number indicates a decrease in profit where the Rand strengthens by 10% against the relevant currency. For a 10% weakening in the Rand against the relevant currency, there would be an equal and opposite effect on the loss.

United States $Loss (670) (64 172)Other equity 9 —

European Union €(Loss)/profit (5 812) 965 Other equity 2 842 332 766

Australian $(Loss)/profit (508) 2 745 Other equity 1 082 3 290

Swedish Krone (SEK)Profit 50 —

United Kingdom £Profit 296 320

All profits or losses are attributable to the exposure on outstanding receivables and payables at year end in the Group.



Foreign currency R’000

Average contract

exchange rate Contractual expiry dates

AUD 100.627 11.1398 02 January 2018 – 28 February 2019EUR 540.976 16.4753 03 January 2018 – 28 February 2019USD 6.427 12.9891 05 January 2018 – 06 February 2018GBP 3.096 17.1126 02 January 2018 – 09 February 2018

At 31 December 2016, the Group had contracted to buy the following amounts under forward exchange contracts in respect of future receivables:


Average contract


AUD 73.944 11.7258 04 January 2017 – 29 March 2018 EUR 446.963 16.4239 04 January 2017 – 28 February 2018NZD 677 10.1626 02 May 2017USD 5.646 14.1625 11 January 2017 – 09 February 2017GBP 3.961 17.5478 04 January 2017 – 09 February 2017

Forward exchange contractsThe Group enters into forward exchange contracts to buy and sell specified amounts of various foreign currencies in the future at a predetermined exchange rate. The contracts are entered into to manage the Group’s exposure to fluctuations in foreign currency exchange rates on specific transactions. The contracts are matched by anticipated future cash flows in foreign currencies, primarily from sales. It is the Group’s policy to enter into forward exchange contracts for all net foreign currency trade or capital items. Where a relatively short settlement period is involved and risk is minimal, no forward exchange contract is entered into. There were open forward exchange contracts to the value of R610 million (2016: R517 million) at year end.

The following table details the forward foreign currency contracts outstanding at the reporting date:

At 31 December 2017, the Group had contracted to sell the following amounts under forward exchange contracts in respect of future receivables:



NOTES (CONTINUED)

45. Financial instruments (continued)45.6 Foreign currency risk management (continued)

Forward exchange contractsAt 31 December 2016, the Group had contracted to buy the following amounts under forward exchange contracts in respect of future receivables:

Foreign currency

Average contract


EUR 1 874 153 0.685383 06 January 2017 – 5 November 2017

At 31 December 2017, the Group had not contracted to sell amounts under zero collar (options) contracts in respect of future receivables.

At 31 December 2017, the Group had contracted to buy the following amounts under forward exchange contracts in respect of future payables:

R’000

Average contract


EUR 14.344 16.9800 02 January 2018 – 05 October 2018EUR 11 802 15.11 05 January 2018 – 06 November 2018USD 14.347 13.6497 05 January 2018 – 30 May 2018DKK 545 2.3026 12 January 2018SEK 137 1.5480 12 January 2018

At 31 December 2016, the Group had contracted to buy the following amounts under forward exchange contracts in respect of future payables:


Average contract


EUR 1 800 14.9590 05 January 2017 – 15 March 2017SEK 4 093 1.7070 17 January 2016 – 14 December 2017USD 2 942 13.9141 12 January 2017 – 20 January 2017DKK 942 2.0687 13 January 2017 – 24 February 2017AUD 3 083 10.1420 03 January 2017GBP 638 17.1596 11 January 2017 – 11 April 2017

R’000 2017 2016

Hedge accounting applied in respect of foreign currency risk cash flow hedges – Fair value of asset – foreign currency forward

on exchange contracts 41 765 46 629

The foreign currency contracts have been acquired to hedge the underlying currency risk arising from firm commitments received from customers for the purchase of goods as well as forecast sales. The majority of cash flows are expected to occur and affect profit or loss within the next twelve months.



45.7 Interest rate risk managementThe Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates.The Group’s exposure to interest rate risk on financial liabilities are detailed in the liquidity risk management section.

Interest rate sensitivityThe sensitivity analysis below has been determined based on the exposure to interest rates for non-derivative instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the reporting date was outstanding for the whole year.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s profit (2016: profit) for the year would decrease/increase by R12 861 694 (2016: decrease/increase by R12 329 497) in the Group and increase/decrease by R95 938 (2016: increase/decrease by R244 495) in the Company as a result of their exposure to interest rates on their variable rate borrowings.

45.8 Credit risk managementCredit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Financial assets which potentially subject the Group to concentrations of credit risk consist of cash and receivables. The Group’s cash is placed with recognised financial institutions. Trade receivables comprise a large, widely spread customer base, avoiding an excessive concentration of risk with a small number of customers. The Company, prior to advancing funds to subsidiaries, associates and investments, reviews through its Investment Committee the entity’s ability to repay the funds.

45.9 Liquidity risk managementUltimate responsibility for liquidity risk management rests with the board of directors, which has developed an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included below is a listing of additional undrawn facilities to further reduce liquidity risk.

GROUP COMPANYR’000 2017 2016 2017 2016

Unutilised banking facilitiesTotal banking and loan facilities 3 697 023 3 405 619 160 000 160 000 Facilities utilised (3 518 375) (3 219 181) (146 384) (101 307)Interest-bearing borrowings (3 550 537) (3 259 687) (146 384) (101 307)Less participating preference share not part of facilities 32 162 40 506 — —

Cash and cash equivalents 780 217 495 082 1 382 2 855

Unutilised banking facilities and cash and cash equivalents 958 865 681 520 14 997 61 548

Cash and cash equivalents include R382.6 million (2016: R336.1 million) held by Lion of Africa which may only be utilised in insurance activities and R48.0 million (2016: Rnil) is held in escrow in Mareterram Ltd.

Liquidity and interest rate risk tablesThe following tables detail the Group’s remaining contractual maturity for non-derivative financial liabilities and assets. The liability tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the liabilities can be repaid and includes both interest and principal cash flows. The asset tables have been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where it is anticipated that the cash flow will occur in a different period.



NOTES (CONTINUED)

45. Financial instruments (continued)45.9 Liquidity risk management (continued)

Liquidity and interest rate risk tables (continued)The Group’s exposure to liquidity and interest rate risk and the effective rates of interest at reporting date are as follows:

Weighted average

effective interest rate

Less than 1 year 1 – 5 years Over 5 years Total

2017 % R’000 R’000 R’000 R’000

AssetsParticipating preference shares held in associate 3.6 — — 28 553 28 553Loans to associate companies Interest free — — 37 168 37 168Loans and receivables Interest free — 6 110 — 6 110Trade receivables Interest free 465 640 — — 465 640 Other receivables Interest free 149 524 — — 149 524 Loans to supplier partners Interest free — 1 959 — 1 959 Other financial assets 8.187 41 896 — 24 825 66 721 Insurance assets Interest free 355 833 47 455 — 403 288

Cash and cash equivalentsBank deposit

rates 514 100 232 764 33 353 780 217 1 526 993 288 288 123 899 1 939 180

LiabilitiesLong-term interest bearing borrowings 8.99 — 3 292 978 — 3 292 978Short-term borrowings 8.62 870 132 — — 870 132Trade payables Interest free 470 521 — — 470 521 Other payables Interest free 82 356 — — 82 356 Other financial liabilities 8.187 69 165 61 223 — 130 388Insurance liabilities Interest free 579 190 82 406 — 661 596 Bank overdrafts Prime 104 731 — — 104 731

2 176 095 3 436 607 — 5 612 702

2016

AssetsLoan to associate company 25.00 — — 1 909 1 909 Participating preference shares held in associate 3.6 — — 20 819 20 819 Loan to asscociate companies Interest free — — 9 748 9 748Trade receivables Interest free 402 964 — — 402 964 Other receivables Interest free 158 974 — — 158 974 Other financial assets 8.187 170 — — 170 Insurance assets Interest free 396 753 55 581 — 452 334


rates 495 082 — — 495 082 1 453 943 55 581 32 476 1 542 000

LiabilitiesLong-term interest bearing borrowings 9.03 — 3 558 343 112 772 3 671 115 Long-term interest free borrowings Interest free — — — —Short-term interest bearing borrowings 8.65 583 318 — — 583 318 Trade payables Interest free 409 482 — — 409 482 Other payables Interest free 90 013 — — 90 013 Insurance liabilities Interest free 529 784 75 377 — 605 161 Bank overdraft Prime 24 390 — — 24 390

1 636 987 3 633 720 112 772 5 383 479



The Company’s exposure to liquidity and interest rate risk and the effective rates of interest at reporting date are as follows:

Weighted average Less than

effective interest rate 1 year 1 – 5 years Over 5 years Total

2017 % R’000 R’000 R’000 R’000

AssetsLoan to subsidiary 16.5 — — 9 031 9 031Participating preference shares held in associate 3.6 — — 28 553 28 553Loans to associate companies Interest free — — 9 748 9 748Loans to subsidiary Prime — — 62 245 62 245Loans to subsidiaries Interest free — — 234 405 234 405Loan to subsidiary 8.725 — — 52 904 52 904Loan to subsidiary 13.158 13 230 152 091 — 165 321Loans and receivables Interest free — 6 110 — 6 110Other receivables Interest free 6 772 — — 6 772


rates 1 382 — — 1 38221 384 158 201 396 886 576 471

LiabilitiesLong-term interest bearing borrowings 13.158 13 230 152 091 — 165 321Long-term interest-free borrowings Interest free — — 146 312 146 312 Loans from subsidiaries 8.725 — — 52 904 52 904Loans from subsidiaries Interest free — — 642 574 642 574Trade payables Interest free 2 413 — — 2 413Other payables Interest free 20 429 — — 20 429Bank overdraft Prime 46 384 — — 46 384

82 456 152 091 695 478 930 025

2016

AssetsLoan to associate company 25.00 — — 1 909 1 909 Participating preference shares held in associate 3.6 — — 20 819 20 819 Loans to associate companies Interest free — — 9 748 9 748 Loans to subsidiaries Prime — — 56 129 56 129 Loans to subsidiaries 16.5 — — 9 860 9 860 Loans to subsidiaries 12.88 13 321 53 542 112 772 179 635 Loans to subsidiaries Interest free — — 796 697 796 697Other financial assets 8.187 — — 170 170 Other receivables Interest free 9 812 — — 9 812


rates 2 855 — — 2 855 25 988 53 542 1 007 934 1 087 634

LiabilitiesLong-term interest bearing borrowings 12.879 13 321 53 542 112 772 179 635 Loans from subsidiaries Interest free — — 837 551 837 551 Trade payables Interest free 2 105 — — 2 105 Other payables Interest free 24 016 — — 24 016 Bank overdraft Prime 1 307 — — 1 307

40 749 53 542 950 323 1 044 614



45. Financial instruments (continued)45.10 Interest rate management

The factors which would be considered in the decision on fixed versus floating interest rates in respect of the Group’s borrowings are:– the perceived stage in the interest rate cycle– the nature and characteristics of the borrowings concerned– the nature of the assets financed by the borrowings in question. Interest rate swap contracts are entered into should conditions

be such that it would be advantageous to switch from a fixed to a variable rate or vice versa. Such contracts would not be entered into for speculative reasons.

45.11 Equity Price RiskThe portfolio of listed equities and equities held through the subsidiaries which are carried in the statement of financial position at fair value, has exposure to significant equity price risk, being the potential loss in market value resulting from an adverse change in prices. The Group’s holdings are diversified across more than one company. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the investment committee. The primary goal of the Group’s investment strategy is to maximise investment returns without incurring undue market risk.

At 31 December, the exposure to equity price risk resulted from the financial assets listed below:

GROUP COMPANYR’000 2017 2016 2017 2016

InvestmentsDirectly held equities 3 515 619 2 949 489 67 939 65 820 Indirectly held equities 515 021 440 053 444 457 373 257

4 030 640 3 389 542 512 396 439 077

Equity price risk sensitivityThe sensitivity analysis below has been determined based on the exposure to equity price movements from listed and unlisted equities. If equities had been 1% higher/lower, profit for the year (2016: profit) would increase/decrease by R36 184 000 (2016: increase/decrease by R31 137 000) in the Group and increase/decrease by R3 976 000 (2016: increase/decrease by R3 407 000) in the Company as a result of their exposure to movements in equity prices.

45.12 Fair value of financial instrumentsThe estimated net fair values at 31 December 2017 have been determined using available market information and appropriate valuation methodologies and are not necessarily indicative of the amounts that the Group could realise in the ordinary courseof business. The fair values of some financial instruments in both the Group and the Company approximate the amounts reported in the statements of financial position.

The following methods and assumptions were used by the Company in establishing fair values:

InvestmentsThese investments are valued each 6 months on the basis considered most appropriate to the investment concerned.

Cash and cash equivalents The carrying amounts reported in the statements of financial position approximate fair values.

Trade receivablesThe carrying value of trade receivables reported in the statements of financial position approximate fair values.

Other receivablesThe carrying amounts reported in the statements of financial position approximate fair values.



45.13 Fair value measurementsThis note provides information about how the Group determines fair values of various financial assets, non-financial assets and financial liabilities.

Fair value of the Group’s financial assets, non-financial assets and financial liabilities that are measured on a fair value basis on a recurring basis. Some of the Group’s financial assets, non-financial assest 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, non-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.

GROUP (R’000)2017 Level 1 Level 2 Level 3 Total

Financial assets at FVTPL*Derivative financial assets — 581 742³ — 581 742 Listed shares 3 045 465 — — 3 045 465 Unlisted shares and loan 470 149 — 5¹ 470 154 Non-financial assets at fair valueInvestment properties — — 80 884² 80 884 Available-for-sale financial assetsUnlisted shares — — 25 265² 25 265 Unlisted shares — — 18 6544 18 654 Total 3 515 614 581 742 124 808 4 222 164

Financial liabilities at FVTPL*Derivative financial liabilities — 130 3883 — 130 388

2016 Level 1 Level 2 Level 3 Total

Financial assets at FVTPL*Derivative financial assets — 488 086³ — 488 086 Listed shares 2 329 599 — — 2 329 599 Unlisted shares and loan 619 885 — 5¹ 619 890 Available-for-sale financial assetsUnlisted shares — — 25 265² 25 265 Unlisted shares — — 2 218¹ 2 218 Total 2 949 484 488 086 27 488 3 465 058

Financial liabilities at FVTPL*Derivative financial liabilities — 103 5693 — 103 569

Long-term interest bearing borrowingsThe carrying amounts reported in the statements of financial position approximate fair values.

Short-term interest bearing borrowingsThe carrying amounts reported in the statements of financial position approximate fair values.

Trade and other payablesThe carrying amounts reported in the statements of financial position approximate fair values.



NOTES (CONTINUED)

45. Financial instruments (continued)45.13 Fair value measurements (continued)

COMPANY (R’000)2017 Level 1 Level 2 Level 3 Total

Financial assets at FVTPLDerivative financial assets — 444 457³ — 444 457 Listed shares 67 934 — — 67 934 Unlisted shares and loan — — 5¹ 5 Available-for-sale financial assetsUnlisted shares — — 18 6544 18 654 Total 67 934 444 457 18 659 531 050

2016 Level 1 Level 2 Level 3 Total

Financial assets at FVTPL*Derivative financial assets — 373 427³ — 373 427 Listed shares 65 815 — — 65 815 Unlisted shares and loan — — 5¹ 5 Available-for-sale financial assetsUnlisted shares — — 2 218¹ 2 218 Total 65 815 373 427 2 223 441 465

*FVTPL = Fair value through profit or loss

The table provided analyses financial assets, non-financial assets and financial liabilities 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 year.

Notes

1. At cost or historical valuation.2. Value determined by an independent valuer: – The fair value of investment property was determined by external, independent property valuers, having appropriate recognised professional qualifica-

tions and recent experience in the location and category of the property being valued. The independent valuation of erf 27379, Salt River, Cape Town was performed by Talani Quantity Surveyors (Pty) Ltd on the highest and best use basis, assuming the redevelopment of the property, using the residual land method of valuation. The property, valued at R30.0 million is encumbered as stated in note 32. The remaining investment property, acquired at a cost of R51.3 million (including transaction costs) is encumbered as stated in note 32.

– financial assets represented by unlisted shares in a vessel owning company are valued based on the cash flows related to the vessel. 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.

– The fair value of forward share sale contracts is calculated by an independent valuer, taking into account the number of shares, the forward price per the contract, the spot price, a discount factor and any expected dividends.

4. Value is based on the effective interest held in the net assets of the underlying entity.

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 and non-financial assets and liabilities.



Reconciliation of level 3 fair value measurementsGROUP COMPANY

Unlisted shares and investment properties

Unlisted shares

and loan2017 2016 2017 2016

Opening balance 27 488 27 488 2 223 2 223 Total gains or losses– in profit or loss 20 000 — — — – in other comprehensive income 16 436 — 16 436 — Acquisition and transfer in 60 884 — — — Closing balance 124 808 27 488 18 659 2 223

45.14 Risks that arise from insurance contracts

Insurance risksThe group issues contracts that transfer insurance risk.

Underwriting is the term used to describe the process of transfer of risk from the insured to the insurer in return for payment of an appropriate consideration, termed premium. This process carries the risk of incorrect or inappropriate assumptions leading to drafting of incorrect insurance contracts.

The risk under any one insurance contract is the possibility that the insured event occurs and the uncertainty of the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and therefore unpredictable. Changing risk parameters and unforeseen factors, such as patterns of crime, economical and geographical circumstances, may result in unexpectedly large claims. These risks are controlled through a system of underwriting mandates and guidelines more thoroughly described below.

For a portfolio of insurance contracts where the theory of probability is applied to pricing and provisioning, the principal risk that the group faces under its insurance contracts is that the actual claims and benefit payments exceed the carrying amount of the insurance liabilities. This could occur because the frequency or severity of claims and benefits are greater than estimated. Insurance events are random and the actual number and amount of claims and benefits will vary from year to year.

Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability about the expected outcome will be. In addition, a more diversified portfolio is less likely to be affected across the board by a change in any subset of the portfolio.



45. Financial instruments (continued)45.14 Risks that arise from insurance contracts (continued)

Insurance risks (continued)The various types of insurance contracts, which can be grouped into a number of segments, that have a material effect on the amount, timing and uncertainty of future cash flows arising from insurance contracts in the group are described below:– Property: Property insurance contracts compensate the group’s customers for damage suffered to their immovable or movable

properties or for the value of property lost. Customers who undertake commercial activities on their premises could also receive compensation for the loss of earnings caused by the inability to use the insured properties in their business activities (business interruption cover).

– Motor: Motor insurance contracts provide indemnity for loss or damage to the insured motor vehicle. This cover is normally on an all risks basis providing a wide scope of cover following an accident or a theft of the vehicle but the insured can select restricted forms of cover such as cover for fire and theft only. Legal liabilities arising out of the use or ownership of the motor vehicle following an accident for damage to third party property or death or injury to a third party are also covered by this class of business.

– Engineering: Engineering insurance contracts provide indemnity for loss suffered through the use of machinery and equipment or the erection of buildings or structures. This type of contract includes contract works, removal of support, project delay, construction plant, machinery breakdown, loss of profits, deterioration of stock, dismantling, transit and erection, works damage and electronic equipment.

– Marine: Marine insurance contracts provide indemnity for both cargo and hull classes of business. Cargo covers physical loss of or damage to cargo, with a project delay option. Hull covers loss or damage to pleasure craft or commercial vessels as a result of accidents and also includes legal liability as a result of the accident.

– Liability: Liability insurance contracts provide indemnity for actual or alleged breach of professional duty arising out of the insured’s activities, indemnify directors and officers of a company against court compensation and legal defence costs, provide indemnity for the insured against damages consequent to a personal injury or property damage.

– Miscellaneous: These insurance contracts provide indemnity for any loss or damage in respect of insurance contracts that do not fall into any of the above classes.

Management of insurance riskThis section summarises these risks and the way the group manages them. An advanced internal model is applied to ensure appropriate and accurate implementation of acceptable risk levels with regard to underwriting, reserving, credit risk and concentration of risk within the group. This model has not changed since the previous year.

Underwriting StrategyThe underwriting strategy seeks diversity to ensure a balanced portfolio in terms of type and amount of risk, industry and geography. The underwriting strategy is managed through exercising strict underwriting controls to ensure that the acceptance criteria for which risks are accepted meet both its underwriting guidelines and fall within its reinsurance acceptance limits.

Underwriting limits are in place to enforce appropriate risk selection criteria. For example, the group has the right not to renew individual policies, it can impose deductibles or it can impose special conditions that may require the insured to enforce certain risk reduction measures (for example a burglar alarm) before it will accept the risk.



The Insurance Services Division issues underwriting guides for the use of both internal staff (when policies are issued) and sales staff to utilise as guides when accepting risks or processing changes to policies already renewed with the group. The underwriting guidelines cover all lines of business underwritten by the group and include such matters as:– Rating tables;– Reinsurance risk categories and limits;– Standard endorsements;– Acceptance criteria; and– Details of undesirable risks or risks for which the group has no reinsurance facilities.

Underwriters and sales staff are given various levels of mandates that specify which risks they may accept, the degree to which the standard rates may be varied and the levels to which they may commit the group’s reinsurance facilities. These mandates are set after taking into account the staff member’s qualifications, seniority and experience in dealing with various insurance risks.

In the development of the group’s IT platform for underwriting, many of these controls have been automated in the system. This allows the group even tighter control over the business underwritten and will be closely managed through the automatic production of exception reports generated by the system. These exception reports will be subjected to audit by the group’s Quality Assurance department.

Reinsurance strategyTo manage the underwriting result and protect capital, the group has adopted a multifaceted reinsurance strategy consisting of a proportional and non-proportional treaty programme as well as tailored facultative solutions.

Reinsurance is not a substitute for the group’s liability to its policyholders and if, for any reason, a reinsurer fails to honour its obligations, the group remains liable in terms of the original policy.

The group therefore monitors closely and continuously the financial conditions of its reinsurers using public information, the evaluations of local and international ratings agencies and the services of our specialist consultants. All reinsurers have at least an A- Standard and Poor’s rating or are subsidiaries of international reinsurers that are so rated and who have provided letters of comfort. The group’s senior management also meets regularly with its reinsurance partners to consider and respond to developments in the global reinsurance markets.

The group’s reinsurance strategy is also monitored continuously and reviewed and adjusted annually to align with the group’s risk management and underwriting strategies.

Concentration of insurance risk and policies mitigating the concentrationsThe group’s portfolio comprises commercial insurances, ranging from small enterprises to large corporations, parastatals and local authorities, and personal insurances which are insurances of individuals in their personal capacity.

The commercial portfolio has exposure to the major lines of business such as property, liability and motor and a limited exposure to the specialist classes of engineering and marine.

The group’s acceptance in terms of any one risk is restricted in accordance with the relevant underwriting and reinsurance strate-gies to the prescribed limits. Furthermore, the portfolio is diversified both geographically and in terms of type and class of risk which limits the exposure to any accumulation of losses arising out of a concentration of aggregation of risks.



45. Financial instruments (continued)45.14 Risks that arise from insurance contracts (continued)

Exposure relating to catastrophe eventsThe treaty reinsurance programme purchased by the group includes protection against the aggregation of losses emanating from a single event such as a natural catastrophe.

The amount of protection which is purchased is determined using a number of internal and proprietary modelling tools to simulate a range of catastrophic events and to measure the aggregate, net, exposure based on the group’s overall reinsurance strategy.

Based on this analysis, the group considers that its greatest exposure would result from the occurrence of an earthquake affecting Johannesburg and its surroundings.

The risk management strategy also identifies the maximum net loss that the group is prepared to retain in respect of any one event and, in this regard, the reinsurance strategy is designed around maximum net retention of R2 500 000 (2016: R2 500 000) on any one risk and R5 000 000 (2016: R5 000 000) on any one insurance event. Additional excess of loss was acquired in the current year for the run-off of the corporate book with a maximum net retention of R2 500 000.

The group is managing its exposure to concentration risk by tracking the exposure in accordance with the group risk appetite and ensuring the group remains within acceptable credit ratings. The credit worthiness of reinsurers is considered quarterly by reviewing their financial strength via several rating agencies prior to the finalisation of any contracts and during the year of coverage so as not to invoke the downgrade clauses per treaty. The group’s largest reinsurance counterparties are Munich Re with 30.0% (2016: 30.0%), Hannover Re with 11.3% (2016 : 10.3%) and Partner Re with 10.0% (2016: 0.0%) exposure which represents 51.3% (2016: 52.3%) of the group’s reinsurance counterparty risk. The first 2 are part of the top 5 global reinsurers based on AM Best global ratings on gross written premiums. The remaining percentage is diversified across 16 most reputable reinsurers, with the overall exposure weighted credit rating for the entire panel of reinsurers ranging between A to A- (Standard & Poor). This exposure is monitored on a regular basis and reviewed quarterly by the risk and capital management committee.

Credit riskThe company determines counterparty credit quality by reference to ratings from independent ratings agencies, and where such ratings are not available, by internal analysis. The company structures the level of credit risk it accepts by monitoring limits on its exposure to a single counterparty, or counterparties and industry segments. Such risks are subject to an annual or more frequent review. Limits on the level of credit risk by category are approved by the board of directors.

Exposures to individual policyholders, groups of policyholders and third parties are monitored as part of the credit control process. More than 50% of customers have been transacting with the group over the last five years, and losses have occurred infrequently.

Other risks and policies for mitigation of these risksInsurance companies are exposed to the risk of false, invalid and exaggerated claims.

The group has the right to reject the payment of a claim where the insured has not complied with any of the conditions specified in the policy contract or where the claim is fraudulent in some aspect. Insurance contracts also entitle the group to pursue third parties for payment of some or all costs (i.e. subrogation). All claims are subject to reasonable investigation to establish that the loss is capable of being indemnified and that the quantum of the claim is reasonable and is commensurate with the damage suffered or awarded.

The group employs its own legal team to investigate claims involving third parties and has an internal procurement team to procure replacement goods on terms that are fair and reasonable to both the group and the insured. In addition the group makes use of external loss adjusters and attorneys for specialist or complex claims.



Claims developmentThe group is liable for all insured events that occur during the term of the contract, even if the loss is discovered after the end of the contract term, subject to pre-determined time scales dependent on the nature of the insurance contract. The group is therefore exposed to the risk that claims reserves will not be adequate to fund historic claims (run-off risk). To manage run-off risk the group takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures and adopts sound reserving practices. Consequently, the group has a history of positive claims development, i.e. the reserves created over time proved to be sufficient to fund the actual claims paid.

Claims paid in respect of accident year Total 2017 2016 2015 2014 2013

Gross R % % % % %

Reporting year2017 653 778 527 100.0% 51.4% 3.0% 3.9% 0.0%2016 658 146 677 0.0% 48.6% 27.2% 28.0% 0.0%2015 581 931 635 0.0% 0.0% 69.8% 31.4% 0.0%2014 580 838 635 0.0% 0.0% 0.0% 36.7% 0.0%2013 457 006 142 0.0% 0.0% 0.0% 0.0% 0.0%

2 931 701 616 100.0% 100.0% 100.0% 100.0% 0.0%

Net

Reporting year2017 238 281 147 100.0% 42.7% 3.4% 0.1% 0.0%2016 179 166 630 0.0% 57.3% 38.3% 19.8% 0.0%2015 207 130 253 0.0% 0.0% 58.3% 23.2% 0.0%2014 274 360 968 0.0% 0.0% 0.0% 56.9% 0.0%2013 269 435 745 0.0% 0.0% 0.0% 0.0% 0.0%

1 168 374 743 100.0% 100.0% 100.0% 100.0% 0.0%



COMPANYR’000 2017 2016

46. Related party transactions and directors’ interestsOn I January 2017 Brimstone’s subsidiary, Vuna Fishing Group (Pty) Ltd, acquired Sea Harvest’s 49.81% interest in joint venture, Vuna Fishing Company (Pty) Ltd for R45 million resulting in a profit on disposal for Sea Harvest of R23.1 million, which has been eliminated on consolidation.

Compensation of key management personnelThe remuneration of executive directors and other key members of management during the year was as follows:Short-term benefits 35 898 34 623 Post-employment benefits 1 721 1 793 Share-based payments 7 790 (2 104)

45 409 34 312

Details of directors’ emoluments are disclosed in note 7.

F Robertson, an executive director of the Company, is a beneficiary of a trust which is the ultimate controlling shareholder of an insurance broker that provides services to the Company and certain of its subsidiaries. The services are performed on a strictly market related arm’s length basis and total fees paid for the services during the year amounted to R732 670 (2016: R1 637 935).

Brimsure (Pty) Ltd holds a 30% stake in Aon Re Africa (Pty) Ltd, which is jointly controlled by Brimstone (60%) and Commlife Holdings (Pty) Ltd (40%), a company controlled by a trust of which F Robertson is a beneficiary.

The balances owing to/by subsidiaries are disclosed in Appendix 1 on page 149.

The balances owing by associate companies are disclosed in Appendix 2 on page 151.

The balances with subsidiaries and associates will be settled by the transfer of funds.

Fees paid to BTKM Incorporated, of which non-executive director N Khan is a director, for the design and project management of alterations done to Brimstone’s Cape Town premises amounted to R357 720.

Related party transactions are concluded on an arm’s length basis.



GROUP COMPANYR’000 2017 2016 2017 2016

Transactions between the company, its subsidiaries and associates:

Subsidiaries Dividends received — — 71 840 30 171 Dividends paid (treasury shares) – subsidiaries — — 3 815 1 575 – share trust — — 50 42 Interest received — — 23 669 6 643 Interest paid — — (2 904) — Management fees received — — 3 049 2 853

Associates and Joint Ventures Dividends received 32 577 123 067 6 322 — Interest received 191 270 191 270

47. Group borrowing powersIn terms of the memorandum of incorporation of the Company, borrowings of the Company and its subsidiaries are unlimited, subject to authorisation by the Board of Directors of the holding company.

48. Subsequent events Subsequent to year-end, Brimstone sold 13.5 million Life Healthcare shares at an average price of R26.78 per share. Brimstone also disposed of its residual stake in Tiger Brands for an aggregate of R387.3 million. Brimstone reduced its debt by R633 million as a result of these disposals.

On 28 February 2018, Brimstone, through its wholly-owned subsidiary, Newshelf 1416 (Pty) Ltd, acquired a 10% interest in FPG Property Fund Ltd, a Cape-based black-owned and managed unlisted property fund with a portfolio of properties operating in the retail, industrial and office sectors, for a consideration of R131 681 380.



49. Business combination and restatement of the financial results for the year ended 31 December 2016The audited financial results for the year ended 31 December 2016 have been restated for the finalisation of the purchase price allocation of the Mareterram business combination.

In the prior year the Group’s subsidiary, Sea Harvest, acquired a 55.89% interest in Mareterram Ltd, a fishing and fish processing business situated on the Australian West Coast and listed on the Australian Stock Exchange. The initial accounting for the business combination in the prior year was prepared using provisional values as permitted in terms of paragraph 45 of IFRS 3 Business Combinations (IFRS 3). Subsequent to the end of the prior reporting period the purchase price allocation was finalised within the measurement period, being a period not exceeding 12 months from the acquisition date in July 2016 and the provisional values adjusted in terms of paragraph 49 of IFRS 3.

The adjustments to the prior period statement of financial position and statement of comprehensive income are summarised as follows:

R’000

Assets acquired and liabilities recognised

Estimated fair value at time of

acquisition

Measurement period

adjustmentsExchange rate

differences

31 Dec 2016 Adjusted

closing balance

Property, plant and equipment 105 723 — — 105 723 Intangible assets 310 918 157 648 (15 660) 452 906 Deferred tax assets 30 181 (121 512) 12 071 (79 260)Financial derivative assets 230 — — 230 Inventory 111 854 — — 111 854 Trade and other receivables 85 240 — — 85 240 Short-term financial derivative assets 1 566 — — 1 566 Cash and bank balances 131 — — 131 Long-term interest bearing borrowings (131 812) — — (131 812)Employee related liabilities (3 043) — — (3 043)Fishing licence liability (89 542) — — (89 542)Trade and other payables (60 684) — — (60 684)Short-term interest bearing borrowings (25 027) — — (25 027)Short-term fishing licence liability (23 308) — — (23 308)Short-term financial derivative liabilities (602) — — (602)

311 825 36 136 (3 589) 344 372 Goodwill 115 722 (20 196) 2 006 97 532 Non-controlling interests (137 546) (15 940) 1 583 (151 903)Fair value of previously held interest (94 011) — — (94 011)Consideration paid in cash 195 990 — — 195 990



SUPPLEMENTARY REPORTS ON INVESTMENTSas at 31 December 2017

Appendix 1

Interest in subsidiaries

Issued share capital

Effective percentage

holding Shares at cost/

valuation Net indebtedness2017 2016 2017 2016 2017 2016 2017 2016

Held directly R R % % R’000 R’000 R’000 R’000

COMPANYBrimco (Pty) Ltd 1 1 100 100 — — (21 446) 552 453

Holds investments in Sea Harvest Group Ltd and Vuna Fishing Group (Pty) Ltd

House of Monatic (Pty) Ltd 30 572 408 30 572 408 100 100 32 427 32 427 38 862 39 933 Manufacturer and distributor of clothing

Septen Investments (Pty) Ltd 1 1 100 100 — — (238 127) (173 287)Holds investment in Life Healthcare Group Holdings Limited

Brimstone Properties (Pty) Ltd 100 100 100 100 — — — — Dormant

Brimstone Commodities Trading (Pty) Ltd 100 100 100 100 — — — — Dormant

Brimstone Securities Trading (Pty) Ltd 100 100 100 100 — — — — Dormant

Brimbrands (Pty) Ltd 1 1 100 100 — — — — Dormant

Brimsure (Pty) Ltd 100 100 60 60 — — (24) — Holds investment in Aon Re Africa (Pty) Ltd

Newshelf 831 (RF) (Pty) Ltd 15 335 15 335 97.8 97.8 258 283 258 283 18 387 (357 521) Holds investment in Life Healthcare Group Holdings Limited

Oceana SPV (Pty) Ltd 100 100 100 100 39 000 39 000 168 406 180 376 Holds investment in Oceana Group Limited

H Investments No 219 (Pty) Ltd 100 100 100 100 18 646 18 646 6 296 3 119 Property owning

Lion of Africa Holdings Company (Pty) Ltd 1 111 1 100 100 100 — — — 42 919Holds investment in short-term insurer Lion of Africa Insurance Company Ltd and under-writing management agency Lion of Africa Underwriting Management Company (Pty) Ltd

Newshelf 1063 (RF) (Pty) Ltd 167 163 234 167 163 234 100 100 167 163 167 163 59 458 (201 453) Holds investment in Newshelf 1064 (RF) (Pty) Ltd, Friedshelf 1535 (RF) (Pty) Ltd, Newshelf 1168 (Pty) Ltd, Newshelf 1169 (Pty) Ltd, Friedshelf 1534 (Pty) Ltd and Newshelf 1269 (RF) (Pty) Ltd

Newshelf 1331 (Pty) Ltd 1 1 100 100 — — 62 850 56 706 Holds investment in Equites Property Fund Limited

Newshelf 1354 (Pty) Ltd 1 — 100 — — — (340 662) — Holds loan from bank for financing asset acquisitions by fellow subsidiaries

Newshelf 1404 (Pty) Ltd 1 — 100 — — — 100 000 — Holds investment in Stadio Holdings Limited

Business Venture Investments 933 (Pty) Ltd 67 67 100 100 — — — — Dormant

515 519 515 519 (146 000) 143 245Less: Amounts written off (2 426) (2 426) (48) (48)

513 093 513 093 (146 048) 143 197



SUPPLEMENTARY REPORTS ON INVESTMENTS (CONTINUED)as at 31 December 2017

Appendix 1 (continued)

Interest in subsidiaries (continued)

Issued share capital



valuation Net indebtedness2017 2016 2017 2016 2017 2016 2017 2016

Held indirectly R R % % R’000 R’000 R’000 R’000

Newshelf 1055 (Pty) Ltd 100 100 100 100 — — — — Dormant

Newshelf 831 (RF) (Pty) Ltd 15 335 15 335 2.2 2.2 — — — — Holds investment in Life Healthcare Group Holdings Limited

Newshelf 1064 (RF) (Pty) Ltd 17 000 17 000 100 100 — — — — Holds investment in Oceana Group Limited

Sea Harvest Group Ltd 251 362 907 5 180 719 57.5 97.5 — — — — Investment holding

Sea Harvest Corporation (Pty) Ltd 100 100 100 100 — — — — Deep sea fishing

Cape Harvest Foods (Pty) Ltd 100 100 100 100 — — — — FMCG agency and retail business

Sea Harvest International (Pty) Ltd 100 100 100 100 — — — — Holds investment in Mareterram Limited

Friedshelf 1747 (Pty) Ltd 100 — 100 100 — — — — Dormant

Cape Haddie Ltd 100 100 100 100 — — — — Dormant

Mareterram Limited 246 964 101 216 443 226 56.3 55.9 — — — — Fishing and fish processing based in Australia

Newshelf 1062 (RF) (Pty) Ltd 1 1 100 100 — — — — Holds investment in MTN Zakhele

Newshelf 1168 (Pty) Ltd 1 1 100 100 — — — — Property owning

Newshelf 1169 (Pty) Ltd 1 1 100 100 — — — — Holds investment in Long4Life Limited

Newshelf 1269 (RF) (Pty) LtdHolds investment in Phuthuma Nathi Investments Limited 167 143 233 167 143 233 100 100 — — — —

Friedshelf 1535 (RF) (Pty) Ltd 1 1 100 100 — — (25 000) (25 000) Holds investment in Newshelf 1062 (RF) (Pty) Ltd

Vuna Fishing Group (Pty) Ltd 92.5 — — — — — Holds investment in Vuna Fishing Company (Pty) Ltd

Lion of Africa Insurance Limited 95 000 001 95 000 000 100 100 — — 90 581 100 000Short-term insurer

Lion of Africa Underwriting Management Company (Pty) Ltd 1 1 100 100 — — — — Underwriting management agency

Consolidated special purpose entitiesBrimstone Investment Corporation Limited Share Trust — — — — — — (65 845) (79 913)* The Brimstone Black Executives Investment Trust — — — — 6 571 — 4 071 4 972 The Brimstone General Staff Investment Trust — — — — 161 — — — The Brimstone Broad-Based BEE Trust — — — — — — — — The Sea Harvest Management Investment Trust No. 2 — — — — — — — — The Sea Harvest Employee Share Trust — — — — — — — —

The Company’s interest in the aggregate profits and losses after taxation of consolidated subsidiaries was as follows:2017 2016

R’000 R’000Profits 466 688 407 377 Losses (467 562) (287 496)

All subsidiaries are incorporated in the Republic of South Africa with the exception of: – Mareterram Ltd which is incorporated in Australia– Cape Haddie Ltd which is incorporated in Australia

* Included in this net balance is a loan liability of R80 290 802 which is included in the loans balances disclosed in note 17.


Appendix 2

Investments in associate and joint venture companies

Reporting date



valuation

Share of retained income/(losses) since acquisition

Share of non- distributable

reserves since acquisition

Share of distributions since

acquisition Indebtedness2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

Unlisted % % R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Held directly– by Company:Obsidian Health (Pty) Ltd 30 Sept. 25.07 25.07 1 254 1 254 3 308 327 8 646 8 646 — — — 1 909 (Medical equipment distributors)South African Enterprise Development (Pty) Ltd 31 Mar. 25.00 25.00 — — 2 548 820 — — — — 35 301 27 568 (Entrepreneurial investments)Hot Platinum (Pty) Ltd 28 Feb. 20.66 20.66 288 288 (288) (288) — — — — 3 000 3 000 (Manufacturer of machinery for jewellery industry)Total held by company 1 542 1 542 5 568 859 8 646 8 646 — — 38 301 32 477

Held indirectly– by subsidiaries:Aon Re Africa (Pty) Ltd 31 Dec. 18.0 18.0 13 359 13 359 16 027 12 327 565 908 — — — — (Insurance industry)Oceana Group Limited* 30 Sept. 19.7 19.7 789 040 789 040 284 967 219 274 78 419 109 878 (58 945) (58 945) — — (Food industry )Vuna Fishing Company (Pty) Ltd 31 Dec. 49.8 49.8 36 432 36 432 (9 823) (14 587) — — (23 322) — 27 420 — (Fishing and fish processing)Friedshelf 1534 (Pty) Ltd 31 Dec. 72.4 72.4 466 000 466 000 (466 000) (445 250) — — — — — — (Holds investment in Grindrod Shipping Limited)

Total associates and joint ventures held via subsidiaries 1 304 831 1 304 831 (174 829) (228 236) 78 984 110 786 (82 267) (58 945) 27 420 — TOTAL GROUP 1 306 373 1 306 373 (169 261) (227 377) 87 630 119 432 (82 267) (58 945) 65 721 32 477

Valuations are carried out every six months using bases considered appropriate to the underlying investment.

All associate and joint venture companies are incorporated in the Republic of South Africa.

* At 31 December 2017 the fair value of the investment in Oceana Group Ltd. was R1 955.6 million (2016: R2 760.8 million). 9.7 million shares held in Newshelf 1064 (RF) (Pty) Ltd have been pledged as stated in note 32.



SUPPLEMENTARY REPORTS ON INVESTMENTS (CONTINUED)as at 31 December 2017

Appendix 3

InvestmentsNumber of shares/units Valuation of shares 2017 2016 2017 2016

R’000 R’000

Available-for-Sale AssetsHeld by CompanyUnlistedAfrican Legend (Pty) Ltd 3 075 844 3 075 844 18 654 2 218 Held by SubsidiaryDesert Diamond Fishing (Pty) Ltd 12 12 25 265 25 265 Total Group 43 919 27 483

Valuations are carried out every six months using bases considered appropriate to the underlying investment.

Investments at fair value through profit or lossHeld by CompanyListedGrindrod Shipping Limited 4 222 300 4 222 300 57 634 56 790 Santam Limited 38 569 38 569 10 300 9 025

UnlistedWelkom Yizani Investments Limited 430 430 5 5

Rights to acquire sharesTiger Brands — — 444 457 373 257 Total Company 512 396 439 077

Held by SubsidiariesListedUnit trust equity securities — — — 5 346 Life Healthcare Group Holdings Limited 64 821 413 50 158 112 1 798 794 1 635 155 Equites Property Fund Limited 34 896 552 34 896 552 732 828 551 365 MTN Group Limited — 570 000 — 71 917 Stadio Holdings Limited 33 783 784 — 271 959 — Long4Life Limited 35 500 000 — 173 950 —

Rights to acquire sharesMTN Zakhele Futhi — — 70 564 66 796

UnlistedPhuthuma Nathi Investments Limited 4 738 561 4 738 561 470 149 619 886 Total Group 4 030 640 3 389 542 Total Investments 4 074 559 3 417 025

A register of investments is available for inspection at the registered office of the Company.


Appendix 4

Valuation of options

Brimstone acquired rights to shares that have been valued as options. The results of the calculations and inputs into the models are set out below:

Tiger Brands LimitedMethod Monte CarloNumber of option shares 1 813 613 Fair value R444 457 062Spot price per share R460.00Risk free rate 6.83%Dividend yield 2.35%Volatility 19.21%Exercise date 31 December 2017Debt at reporting date R356 956 566Interest rate on debt 93.5% of prime n.a.c.m.

Approximate value– 14.21% volatility R444 457 062– 19.21% volatility R444 457 062– 24.21% volatility R444 457 062Repayment termsVendor financing at date of transaction of R255 109 837 bearing interest at a rate of 85% of prime compounded monthly (and increasing to 93.5% of prime compounded monthly from 1 April 2012) and repayable from dividends which are split between servicing the debt and a trickle dividend in the ratio of 85%:15%.

MTN Zakhele FuthiMethod Monte CarloNumber of option shares 1 818 795 Fair value R70 564 071Spot price per MTN share R136.60Risk free rate 7.60%Dividend yield 4.43%Volatility 25.08%Exercise date 23 November 2024Debt at reporting date– Preference shares R1 789 789 823– Vendor financing R3 624 659 195Interest rate on debt – Preference shares 75% of prime n.a.c.m.Interest rate on debt – Vendor financing 80% of prime n.a.c.m.

Approximate value– 32.26% volatility R69 083 002– 37.26% volatility R70 564 071– 42.26% volatility R73 206 917

Repayment termsBank preference shares at date of transaction of R38 476 227 bearing interest at a rate of 75% of prime (nacm) from 23 November 2016. The preference shares are redeemable by 23 November 2021. Vendor financing at date of transaction of R48 764 768 bearing interest at a rate of 80% of prime (nacm) from 23 November 2016. The loan is repayable in full by 23 November 2024. All dividends received by MTN Zakhele Futhi will be used to repay bank preference share funding. Once the preference shares have been redeemed, dividends received will be utilised to purchase further MTN shares in the open market, enabling MTN to exercise their call on the same shares to partially settle vendor financing.



DIRECTORS’ INTERESTS IN SHARES

Appendix 5

as at 31 December 2017

Direct IndirectDirectors Beneficial Non-Beneficial Beneficial Non-Beneficial Total

Ordinary sharesMA Brey 1 299 039 — 4 641 255 100 164 6 040 458 F Robertson 495 414 — 5 753 050 — 6 248 464 MI Khan — — — 9 700 9 700 M Hewu 103 000 — — — 103 000 N Khan 128 136 — 226 712 — 354 848 LA Parker — — 653 000 — 653 000

2 025 589 — 11 274 017 109 864 13 409 470

“N” ordinary sharesMA Brey 414 308 — 17 018 672 123 186 17 556 166 F Robertson 73 742 — 15 534 970 — 15 608 712 MI Khan 66 441 — — 248 66 689 GG Fortuin 36 935 — — — 36 935 M Hewu 212 650 — — 5 000 217 650 N Khan 123 227 — 1 062 039 — 1 185 266 MK Ndebele 102 554 — — — 102 554 LA Parker — — 2 103 366 — 2 103 366

1 029 857 — 35 719 047 128 434 36 877 338

As at 31 December 2016

Direct IndirectDirectors Beneficial Non-Beneficial Beneficial Non-Beneficial Total

Ordinary sharesMA Brey 1 299 039 — 4 567 893 100 164 5 967 096 F Robertson 495 414 — 5 728 713 — 6 224 127 MI Khan — — — 9 700 9 700 M Hewu 103 000 — — — 103 000 N Khan 128 136 — 226 712 — 354 848 LA Parker — — 653 000 — 653 000

2 025 589 — 11 176 318 109 864 13 311 771

“N” ordinary sharesMA Brey 414 308 — 16 353 598 123 186 16 891 092 F Robertson 73 742 — 14 927 995 — 15 001 737 MI Khan 2 600 — — 248 2 848 M Hewu 212 650 — — 5 000 217 650 N Khan 123 227 — 1 062 039 — 1 185 266 MK Ndebele 102 554 — — — 102 554 LA Parker — — 2 103 366 — 2 103 366

929 081 — 34 446 998 128 434 35 504 513

There has been no change to the beneficial holdings of directors between the end of the financial year and the date of approval of the annual financial statements.



SHAREHOLDING INFORMATION

Shareholder spread

Ordinary shares No. of shareholders in S.A.No. of shareholders other than in S.A. Total shareholders

No. % No. % No. %

Public 1 255 99.44% 18 100.00% 1 273 99.45%Directors 6 0.48% — 0.00% 6 0.47%Other 1 0.08% — 0.00% 1 0.08%Total 1 262 100% 18 100% 1 280 100%

“N” ordinary shares No. of shareholders in S.A.No. of shareholders other than in S.A. Total shareholders

No. % No. % No. %

Public 2 253 99.47% 19 100.00% 2 272 99.47%Directors 8 0.35% — 0.00% 8 0.35%Other 4 0,.18% — 0.00% 4 0.18%Total 2 265 100% 19 100% 2 284 100%

Share trading statistics

Ordinary “N” ordinaryShares Shares

Market price per share (cents) High 1 600 1 750 Low 1 100 1 051 Year-end 1 300 1 125 Volume of shares traded (number) 3 539 149 25 364 880 Volume of shares traded as a % of issued shares 8.71% 11.13%Value of shares traded (R) 48 512 352 321 958 248 Number of transactions 616 2 929




SHAREHOLDING INFORMATION (CONTINUED)

Combined ordinary and “N” ordinary shareholdings at 31 December 2017

Major shareholders Ordinary “N” ordinary Total% of issued

share capital

MA Brey (direct and indirect, beneficial and non-beneficial) 6 040 458 17 556 166 23 596 624 8.79%F Robertson (direct and indirect, beneficial and non-beneficial) 6 248 464 15 608 712 21 857 176 8.14%The Brimstone Black Executive Investment Trust (treasury shares) — 19 327 000 19 327 000 7.20%Government Employees Pension Fund — 13 519 082 13 519 082 5.04%Friedshelf 1799 (Pty) Ltd 2 745 547 14 039 351 16 784 898 6.25%Friedshelf 1801 (Pty) Ltd 2 745 547 14 039 351 16 784 898 6.25%SBSA PSG Flexible Fund — 8 362 025 8 362 025 3.11%

17 780 016 102 451 687 120 231 703 44.78%

Public vs Non-Public ShareholdingNumber of % of issued

Ordinary Shares shares share capital

Public shareholders 25 050 060 61.73 Non-public shareholders Directors and associates 13 409 470 33.01 Treasury shares Septen Investments (Pty) Ltd 2 136 074 5.26 Total 40 620 604 100

Number of % of issued“N” Ordinary Shares shares share capital

Public shareholders 168 602 768 73.98 Non-public shareholders Directors and associates 36 877 338 16.18 Treasury shares Septen Investments (Pty) Ltd 2 029 848 0.89 The Brimstone Black Executives Investment Trust 19 327 000 8.48 The Brimstone General Staff Investment Trust 825 000 0.36 The Brimstone Broad-Based BEE Trust 250 000 0.11 Total 227 911 954 100


Number of shareholders

Number of % of total Number of % of shares Ordinary shares shareholders shareholders shares issued

Size of Holding1 – 5 000 919 71.80 1 561 459 3.855 001 – 10 000 144 11.25 1 179 519 2.9010 001 – 100 000 162 12.66 5 058 403 12.45100 001 – 1 000 000 46 3.59 12 535 814 30.86over 1 000 000 9 0.70 20 285 409 49.94

1 280 100 40 620 604 100

Major shareholdersMax Brozin Investment Corp. 1 0.08 2 800 304 6.89Friedshelf 1798 (Pty) Ltd 1 0.08 2 745 547 6.76Friedshelf 1799 (Pty) Ltd 1 0.08 2 745 547 6.76Friedshelf 1800 (Pty) Ltd 1 0.08 2 745 547 6.76Friedshelf 1801 (Pty) Ltd 1 0.08 2 745 547 6.76Septen Investments (Pty) Ltd 1 0.08 2 136 074 5.26

6 0.48 15 918 566 39.19

Analysis of shareholdersIndividuals 1 098 85.78 8 426 712 20.74Nominee companies or trusts 112 8.75 7 695 357 18.95Public companies — — — —Close corporations and private companies 70 5.47 24 498 535 60.31

1 280 100 40 620 604 100

Number of % of total Number of % of shares “N” ordinary shares shareholders shareholders shares issued

Size of Holding1 – 5 000 1 637 71.67 2 393 243 1.055 001 – 10 000 193 8.45 1 475 999 0.6510 001 – 100 000 300 13.14 10 531 168 4.62100 001 – 1 000 000 114 4.99 40 275 398 17.67over 1 000 000 40 1.75 173 236 146 76.01

2 284 100 227 911 954 100

Major shareholdersThe Brimstone Black Executive Investment Trust 1 0.04 19 327 000 8.48Friedshelf 1798 (Pty) Ltd 1 0.04 14 039 351 6.16Friedshelf 1799 (Pty) Ltd 1 0.04 14 039 351 6.16Friedshelf 1800 (Pty) Ltd 1 0.04 14 039 351 6.16Friedshelf 1801 (Pty) Ltd 1 0.04 14 039 351 6.16

5 0.20 75 484 404 33.12

Analysis of shareholdersIndividuals 1 872 81.96 20 736 417 9.10Nominee companies or trusts 288 12.61 107 936 539 47.36Public companies 7 0.31 4 815 352 2.11Close corporations and private companies 117 5.12 94 423 646 41.43

2 284 100 227 911 954 100



NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 22nd annual general meeting of shareholders of Brimstone will be held at Presentation Room, Ground Floor, West Campus Building, Old Mutual, Jan Smuts Drive, Pinelands, Cape Town at 19h00, on Wednesday, 9 May 2018 to conduct the business set out below: 1. To receive, consider and adopt the consolidated and separate

annual financial statements, the directors’ report, Audit and Risk Committee Report and social and ethics committee report for the year ended 31 December 2017.

2. To confirm annual dividend number 17, in the amount recommended by the directors of 42 (forty two) cents per share (“Cash Dividend”) incorporating the election to receive the Cash Dividend or a scrip dividend as an alternative (“Scrip Dividend Alternative”), with the default election being the Scrip Dividend Alternative. The Cash Dividend and Scrip Dividend Alternative is payable to those shareholders recorded in the register of the Company on Friday, 20 April 2018. The Cash Dividend and Scrip Dividend Alternative will be paid on Monday, 23 April 2018.

3. Ordinary resolution number 1: Re-election of directors In terms of the Company’s memorandum of incorporation

(“MOI”), the following directors retire by rotation and, being eligible, offer themselves for re-election.

3.1 MA Brey 3.2 PL Campher 3.3 MJT Hewu 3.4 MK Ndebele Each re-election will be put to shareholders in a separate

resolution. A brief CV of each director to be re-elected appears on page 165 of the Integrated Report.

The Nominations committee of the Board has recommended

the re-election of the directors above.

4. Ordinary resolution number 2: Appointment of members of the audit and

risk committee To approve the appointment of the following members of the

audit and risk committee, each by way of a separate resolution:

4.1 N Khan (Chairman) 4.2 PL Campher (subject to his re-election as a director) 4.3 KR Moloko 4.4 LA Parker 4.5 FD Roman Each election will be put to shareholders in a separate

resolution. A brief CV of each director to be elected as a member of the audit and risk committee appears on page 165 of the Integrated Report.

Under the Companies Act, No. 71 of 2008 (as amended) (“the Act”), the audit committee is elected by shareholders at each annual general meeting. The Board has reviewed the composition of the audit and risk committee against the requirements of the Act and has confirmed that the audit and risk committee has the necessary knowledge, skills and experience to perform its duties in terms of the Act.

5. Ordinary resolution number 3: Re-appointment of auditors To re-appoint Deloitte & Touche (with the designated auditor

being Mr Brian Botes) as auditors for the ensuing year.

6. Ordinary resolution number 4: To place the unissued shares under the directors’

control “RESOLVED THAT the entire authorised but unissued ordinary

and “N” Ordinary share capital of the Company from time to time be placed under the control of the directors of the Company until the next annual general meeting, provided it shall not extend beyond 15 (fifteen) months from the date of passing of this ordinary resolution; with the authority to allot and issue all or part thereof in their discretion, subject to the Act and the JSE Limited (“JSE”) Listings Requirements.”

7. Ordinary resolution number 5: Approval to issue shares for cash “RESOLVED THAT the directors of the Company be and are

hereby authorised by way of a general authority, to issue all or any of the authorised but unissued Ordinary and “N” Ordinary shares (“securities”) in the capital of the Company for cash, as and when they in their discretion deem fit, subject to the Act, the MOI of the Company, the JSE Listings Requirements, when applicable and the following limitations, namely that:

– the securities which are the subject of the issue for cash must be of a class already in issue, or where this is not the case, must be limited to such securities or rights that are convertible into a class already in issue;

– any such issue will be made only to “public shareholders” as defined in the JSE Listings Requirements and not related parties, unless the JSE otherwise agrees;

– the number of securities issued for cash shall not in the aggregate in any one financial year exceed 15% (fifteen percent) of the Company’s issued share capital of Ordinary and “N” Ordinary shares respectively, being 5 772 679 Ordinary shares (excluding 2 136 074 treasury shares) and 30 192 400 “N” Ordinary shares (excluding 26 629 290 treasury shares) as at the date of this notice;

– any securities issued in terms of this general authority must be deducted from the initial number of securities available under this general authority;

– in the event of a sub-division or consolidation of issued securities during the period of this general authority, the general authority must be adjusted accordingly to represent the same allocation ratio;

Brimstone Investment Corporation Limited(Incorporated in the Republic of South Africa)

(Registration number 1995/010442/06)(“Brimstone” or “the Company”)

(ISIN Number: ZAE000015277 Share Code: BRT)

(ISIN Number: ZAE000015285 Share Code: BRN)



– this authority be valid until the Company’s next annual general meeting, provided that it shall not extend beyond 15 (fifteen) months from the date that this authority is given;

– a paid press announcement giving full details, including the number of securities issued, the average discount to the weighted average traded price of the securities over the 30 business days prior to the date that the issue is agreed in writing and the financial impact will be published at the time of any issue representing, on a cumulative basis within 1 (one) financial year, 5% (five percent) or more of the number of Ordinary or “N” Ordinary shares in issue prior to the issue; and

– in determining the price at which an issue of securities may be made in terms of this authority, the maximum discount permitted will be 10% (ten percent) of the weighted average traded price on the JSE of the relevant class of shares over the 30 (thirty) business days prior to the date that the price of the issue is determined or agreed to by the directors of the Company.

Ordinary resolution number 5 is required, under the JSE

Listings Requirements, to be passed by achieving a 75% majority of the votes cast in favour of such resolution by all members present or represented by proxy and entitled to vote, at the annual general meeting.

8. Ordinary resolution number 6: Specific authority to increase powers of directors to

offer different dividend alternatives ‘’RESOLVED THAT in terms of clause 14 of the MOI the

directors be and are hereby authorised and empowered, in the form of a standing and continuous authority, until revoked by shareholders of the Company:

– to approve the issuing of any authorised shares of the Company, irrespective of the class thereof, as capitalisation shares;

– to issue shares of the Company of one class as capitalisation shares of another class;

– subject to solvency and liquidity requirements as con-templated In clause 14.2 of the MOI, to resolve to permit shareholders of the Company to elect to receive a cash payment or distribution in lieu of a capitalisation share.

9. Non-binding advisory resolution 1: Remuneration policy To approve, as a non-binding advisory vote in terms of the

recommendations of the King Report on Governance for South Africa (“King IV”), the remuneration policy of the Company as set out in the Remuneration Report on pages 46 to 52 of this Integrated Report.

10. Non-binding advisory resolution 2: Implementation report

To approve, as a non-binding advisory vote in terms of the recommendations of King IV, the implementation report on the remuneration policy of the Company as set out in the Remuneration Report on pages 46 to 52 of this Integrated Report.

Should more than 25% of the total votes cast be against either non-binding advisory resolution 1 or non-binding advisory resolution 2, Brimstone will issue an invitation to shareholders who voted against these resolutions to engage with the Company.

11. Special resolution number 1: Non-executive directors’ fees To approve the revised non-executive directors’ fees for the

year ending 31 December 2018 as set out below. The fees are exclusive of VAT, which may be payable depending on the VAT status of the non-executive director.

Non-Executive Directors remuneration 2018

R

1/1/2017 to 31/12/2017

(Approved)

1/1/2018 to 31/12/2018

(For approval)

Board (Annual fee)Chairman — —Lead independent director 371 295 393 573Member 192 270 213 806

Committees (Per meeting)Audit CommitteeChairman 34 608 48 351Member 19 227 25 381

Investment CommitteeChairman 28 841 35 571Member 19 227 20 381

Nominations CommitteeChairman 28 841 N/AMember 19 227 N/A

Remuneration CommitteeChairman 28 841 N/AMember 19 227 N/A

Social and Ethics CommitteeChairman 28 841 35 571Member 19 227 20 381

Remunerations and Nominations CommitteeChairman N/A 35 571Member N/A 20 381



12. Special resolution number 2: General authority to repurchase Ordinary and

“N” Ordinary shares “RESOLVED THAT, as a general authority contemplated in

Section 48 of the Act, the acquisition by the Company and/or any subsidiary of the Company, from time to time of the issued Ordinary and “N” Ordinary shares (“securities”) of the Company, upon such terms and conditions and in such amounts as the directors of the Company may from time to time determine, but subject to the MOI of the Company, the provisions of the Act and the JSE Listings Requirements, where applicable and provided that:

a) the repurchase of securities will be effected through the main order book operated by the JSE trading system and done without any prior understanding or arrangement between the Company and the counter party;

b) this general authority shall only be valid until the Company’s next annual general meeting, provided that it shall not extend beyond 15 (fifteen) months from the date of passing of this special resolution;

c) in determining the price at which the Company’s securities are to be acquired by the Company in terms of this general authority, the maximum premium at which such securities may be acquired will be 10% (ten percent) of the weighted average of the market price at which such securities are traded on the JSE, as determined over the 5 (five) trading days immediately preceding the date of the repurchase of such securities by the Company;

d) the acquisitions of securities in the aggregate in any one financial year do not exceed 20% (twenty percent) of the Company’s issued share capital of each class during the period of this general authority;

e) the Company and the Group are in a position to repay their debts in the ordinary course of business for a period of 12 months after the date of the notice of annual general meeting;

f) the assets of the Company and the Group, being fairly valued in accordance with International Financial Reporting Standards, are in excess of the liabilities of the Company and the Group for a period of 12 months after the date of the notice of annual general meeting;

g) the ordinary capital and reserves of the Company and the Group are adequate for a period of 12 months after the date of the notice of annual general meeting;

h) the available working capital is adequate to continue the operations of the Company and the Group for a period of 12 months after the date of the notice of annual general meeting;

i) the Company or its subsidiaries will not repurchase securities during a prohibited period as defined in paragraph 3.67 of the JSE Listings Requirements unless they have in place a repurchase programme where the dates and quantities of securities to be traded during the relevant period are fixed (not subject to any variation)

and full details of the programme have been disclosed to the JSE prior to the commencement of the prohibited period;

j) when the Company has cumulatively repurchased 3% of the initial number of the relevant class of securities and for each 3% in aggregate of the initial number of that class acquired thereafter, an announcement will be made;

k) the Company only appoints one agent to effect any repurchase(s) on its behalf; and

l) prior to entering the market to repurchase the Company’s shares, a company resolution will have been passed, stating that the Board has authorised the repurchase of securities under this general authority, that Brimstone and its subsidiaries have passed the solvency and liquidity test and that, since the test was performed, there have been no material changes to the financial position of the Company.”

The JSE Listings Requirements require the following additional disclosure for purposes of this general authority, some of which is disclosed in this report of which this notice forms part as set out below:

– Major shareholders of Brimstone – page 157 of the Integrated Report

– Share capital of Brimstone – page 104 of the Integrated Report

Material change There have been no material changes in the financial or

trading position of Brimstone and its subsidiaries between 31 December 2017 and the date of the Integrated Report of which this notice of annual general meeting forms part.

Directors’ responsibility statement The directors, whose names appear on pages 14 to 15 of this

Integrated Report, collectively and individually accept full responsibility for the accuracy of the information pertaining to Special resolution number 2 and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading and that all reasonable enquiries to ascertain such facts have been made and that this resolution contains all such information.

Reason for and effect of Special resolution number 2 The reason for and effect of the Special resolution number 2 is

to authorise the Company and/or its subsidiaries and trusts by way of a general authority to acquire its own issued securities on such terms, conditions and such amounts determined from time to time by the directors of the Company, subject to the limitations set out above.

The directors of the Company have no specific intention to

effect the provisions of the Special resolution number 2 but will, however, continually review the Company’s position, having regard to prevailing circumstances and market

NOTICE OF ANNUAL GENERAL MEETINGfor the year ended 31 December 2017


conditions, in considering whether to effect the provisions of Special resolution number 2.

13. Special resolution number 3: Specific authority to repurchase Ordinary and

“N” Ordinary shares (“the Specific Repurchase”) “RESOLVED THAT, as a specific authority, the repurchase by

the Company of the following Ordinary and “N” Ordinary shares from Septen Investments Proprietary Limited:

– 2 031 030 Ordinary shares at a price of R10.50, being the closing price of Brimstone Ordinary shares on 19 March 2018 with a total value of R21 325 815; and

– 2 029 848 “N” Ordinary shares at a price of R11.00, being the closing price of Brimstone “N” Ordinary shares on 19 March 2018, with a total value of R22 328 328 be and is hereby approved.”

Full details of the Specific Repurchase are set out in Annexure 1 to this notice of annual general meeting.

14. Special resolution number 4: General authority for financial assistance in terms of

Section 44 of the Act “RESOLVED THAT the Company is hereby authorised, subject

to compliance with the requirements of its MOI and the applicable provisions of the Act, including, but not limited to, the Board of the Company being satisfied that (i) immediately after providing the financial assistance, the Company would satisfy the solvency and liquidity test (as contemplated in section 4 of the Act); and (ii) the terms under which the financial assistance is proposed to be given are fair and reasonable to the Company, to provide direct or indirect financial assistance by way of loans, guarantees, the provision of security or otherwise, to any person for the purpose of, or in connection with, the subscription of any option, or any securities, issued or to be issued by the Company or a related or inter-related (as contemplated in section 2 of the Act) company, or for the purchase of any securities of the Company or a related or inter-related company, such authority to endure for a period of 2 (two) years from the date of this resolution.”

Reason for and effect of Special resolution number 4 The reason for and effect of Special resolution number 4 is to

permit the Company to provide direct or indirect financial assistance in terms of Section 44 of the Act.

15. Special resolution number 5: General authority for financial assistance in terms of

Section 45 of the Act “RESOLVED THAT the Company is hereby authorised, subject

to compliance with the requirements of its MOI, the applicable provisions of the Act, including, but not limited to, the Board of the Company being satisfied that (i) immediately after providing the financial assistance, the Company would satisfy the solvency and liquidity test (as contemplated in section 4

of the Act); and (ii) the terms under which the financial assis-tance is proposed to be given are fair and reasonable to the Company and the JSE Listings Requirements, each as presently constituted and as amended from time to time, to provide direct or indirect financial assistance by way of loans, guarantees, the provision of security or otherwise to:

– any of its present or future related or inter-related (as contemplated in section 2 of the Act) companies or corporations, or to any person related to any such company or corporation, for any purpose;

– any of its present or future directors or prescribed officers, or the present or future directors or prescribed officers of any related or inter-related company, or to a member of a related or inter-related corporation, or to any person related to any such director, prescribed officer or member, for any purpose; and

– any other person who is a participant in any of the Company’s or Group’s share or other employee incentive schemes, for the purpose of, or in connection with, the subscription of any option, or any securities, issued or to be issued by the Company or a related or inter-related company, or for the purchase of any securities of the Company or a related or inter-related company, where such financial assistance is provided in terms of any such scheme that satisfies the requirements of section 97 of the Act,

– in as much as this Section 45 Board resolution contem-plates that such financial assistance will in the aggregate exceed one-tenth of one percent of the Company’s net worth at the date of adoption of such resolution, the Company hereby provides notice of the Section 45 Board resolution to shareholders of the Company. Notice will also be provided to any trade union representing any employees of the Company, to the extent applicable,

– such authority to endure for a period of 2 (two) years from the date of this resolution.”

Reason for and effect of Special resolution number 5 The reason for and effect of Special resolution number 5 is

to permit the Company to provide direct or indirect financial assistance in terms of Section 45 of the Act.

17. Special resolution number 6: Authority to issue shares to persons falling within the

ambit of Section 41(1) of the Act for the purpose of distribution reinvestment alternatives

“ RESOLVED THAT, in relation to any dividend declared by the board of directors of the Company which entitles a share-holder of the Company to receive any shares of the Company pursuant to the terms of such dividend, including, but not limited, pursuant to that shareholder’s election to receive such shares as an alternative to a cash dividend, the directors of the Company be and are hereby authorised by way of a standing and continuous authority until revoked by share-holders to issue such shares to a shareholder who is a person as contemplated in Section 41(1) of the Act in accordance



with the terms stipulated by the directors for that dividend distribution, for which purpose such securities are placed under the control of the directors, subject to the Act, the MOI of the Company and the JSE Listings Requirements.’’

Reason for and effect of Special resolution number 6 The reason for and effect of Special resolution number 6 is to

authorise the directors of the Company to issue shares to a shareholder who is a person as contemplated in Section 41(1) of the Act for purposes of a dividend where a shareholder may elect to receive such shares as an alternative to a cash dividend.

18. To transact such other business as may be transacted at an annual general meeting:

Voting and proxies The record date in terms of Section 59 of the Act for share-

holders to be recorded on the securities register of the Company in order to be able to attend, participate and vote at the annual general meeting is Friday, 4 May 2018 and the last day to trade in the Company’s shares in order to be recorded on the securities register of the Company in order to be able to attend, participate and vote at the annual general meeting is Monday, 30 April 2018.

A member entitled to attend and vote at the annual general

meeting is entitled to appoint a proxy or proxies to attend, speak and vote in his/her stead. A proxy need not be a member of the Company. For the convenience of certifi-cated members and dematerialised members with “own name” registration of the Company, a form of proxy is enclosed herewith. On a show of hands, every member of the Company present in person or represented by proxy shall have one vote only. On a poll, every member of the Company present in person or represented by proxy shall have 100 votes for every Ordinary share and 1 vote for every “N” Ordinary share held in Brimstone by such member.

The attached form of proxy is only to be completed by those shareholders who are:

– holding shares in certificated form; or – dematerialised with “own name” registration. All other beneficial owners who have dematerialised their

shares through a Central Securities Depository Participant (“CSDP”) or broker other than “own name” and who wish to attend the annual general meeting, must instruct their CSDP or broker to provide them with a Letter of Representation or they must provide the CSDP or broker with their voting instructions in terms of the relevant custody agreement entered into between them and the CSDP or broker.

Forms of proxy should be lodged with or mailed to

Computershare Investor Services (Pty) Ltd:

Hand deliveries to: Postal deliveries to: Rosebank Towers PO Box 61051 15 Biermann Avenue Marshalltown 2107 Rosebank, 2196

to be received no later than 17h00 on Monday, 7 May 2018 or be delivered to the Chairman of the annual general meeting at any time prior to the vote .

By order of the Board

T Moodley Company Secretary



ANNEXURE 1

The Specific RepurchaseIn this Annexure unless the contrary appears from the context, words and phrases used will have the defined meanings given thereto in the notice of annual general meeting of which this Annexure forms part.

1. Introduction Brimstone shareholders are advised that the Board proposes

the Specific Repurchase of Brimstone Ordinary and “N” Ordinary shares. Shareholders are provided with the relevant information relating to the Specific Repurchase in this Annexure in order to enable shareholders to make an informed decision as to whether or not they should vote in favour of Special resolution number 3 set out in the notice of annual general meeting.

2. Details of the Specific Repurchase 2.1 The Specific Repurchase will be effected through the

repurchase of Ordinary and “N” Ordinary shares by the Company from Septen Investments Proprietary Limited (“Septen”), a wholly-owned subsidiary of Brimstone, as follows:

2.1.1 2 031 030 Brimstone Ordinary shares at a price of R10.50 per Ordinary share, being the closing price of Brimstone Ordinary shares on 19 March 2018, with a total value of R21 325 815; and

2.1.2 2 029 848 Brimstone “N” Ordinary shares at a price of R11.00 per “N” Ordinary shares, being the closing price of Brimstone “N” Ordinary shares on 19 March 2018, with a total value of R22 328 328.

2.2 The Specific Repurchase represents 4.999% of Brimstone Ordinary shares in issue and 0.891% of Brimstone “N” Ordinary shares in issue, respectively, as at the date of the notice of annual general meeting.

2.3 The Brimstone Ordinary shares and “N” Ordinary shares to be repurchased in terms of the Specific Repurchase are reflected as treasury shares in the consolidated annual financial statements of Brimstone. Subsequent to the Specific Repurchase, application will be made to the JSE for the cancellation and delisting of the 2 031 030 Ordinary shares and 2 029 848 “N” Ordinary shares.

2.4 Brimstone will not undertake the Specific Repurchase during a prohibited period as defined in paragraph 3.67 of the JSE Listings Requirements unless it has in place a repurchase programme where the dates and quantities of securities to be traded during the relevant period are fixed (not subject to any variation) and full details of the programme have been disclosed to the JSE prior to the commencement of the prohibited period.

2.5 The subsidiaries of Brimstone (and their associates) including Septen (and its associates) will be excluded from voting on Special resolution number 3 required to authorise the Specific Repurchase.

3. Rationale The Specific Repurchase will reduce administration and

financial expenses associated with financial year-end reporting and taxation submissions. The Specific Repurchase will be done with no cash flow implications other than those to cover the expenses as outlined in paragraph 12 below.

4. Source of funds Given that the Share Repurchase proceeds will be paid by the

Company by means of an inter-company loan account in the Company’s books of account, no external borrowings will be utilised.

5. Impact of the Specific Repurchase on financial information

The impact of the Specific Repurchase has been investigated and as the Specific Repurchase involves existing treasury shares, the Board of directors can confirm that the implementation of the Specific Repurchase has no impact on the financial information of Brimstone, other than reducing the share capital of the Company as set out in paragraph 6 below.

6. Share capital of Brimstone The share capital before and after the Specific Repurchase is

as follows:

Before the Specific RepurchaseR’000

Authorised share capitalOrdinary shares500 000 000 shares of 0.1 cent each 500“N” Ordinary shares1 000 000 000 shares of 0.001 cent each 10

Issued share capitalOrdinary shares40 620 604 ordinary shares of 0.1 cent each 41“N” Ordinary shares227 911 954 shares of 0.001 cent each 2

After the Specific RepurchaseR’000

Authorised share capitalOrdinary shares500 000 000 shares of 0.1 cent each 500“N” Ordinary shares1 000 000 000 shares of 0.001 cent each 10

Issued share capitalOrdinary shares38 589 574 ordinary shares of 0.1 cent each 39“N” Ordinary shares225 882 106 shares of 0.001 cent each 2



After the Specific Repurchase, 105 044 Brimstone Ordinary shares and 24 599 442 Brimstone “N” Ordinary shares will be held as treasury shares respectively.

7. Major shareholders of Brimstone The major shareholders of Brimstone who beneficially hold in

excess of 5% of the issued Brimstone Ordinary shares and issued Brimstone “N” Ordinary shares are set out on page 157 of the Integrated Report of which this notice of annual general meeting forms part. The Integrated Report is available on Brimstone’s website, www.brimstone.co.za.

8. Directors’ interests in Brimstone Ordinary and “N” Ordinary shares

The directors’ interests in Brimstone Ordinary shares and Brimstone “N” Ordinary shares are set out on page 154 of the Integrated Report of which this notice of annual general meeting forms part. The Integrated Report is available on Brimstone’s website, www.brimstone.co.za.

There have been no changes to the directors’ interests between 31 December 2017 and the date of this notice of annual general meeting.

9. Material changes There have been no material changes in the financial or

trading position of Brimstone and its subsidiaries between 31 December 2017 and the date of this notice of annual general meeting.

10. Working capital statement The Specific Repurchase is subject to the provisions of the

MOI of Brimstone, the Act and the JSE Listings Requirements, where applicable. The directors of the Company are of the opinion that, after considering the effect of the Specific Repurchase:

a) the Company and the Group are in a position to repay their debts In the ordinary course of business for a period of 12 months after the date of approval of the notice of annual general meeting;

b) the assets of the Company and the Group, being fairly valued in accordance with International Financial Reporting Standards, are in excess of the liabilities of the Company and the Group for a period of 12 months after the date of approval of the notice of annual general meeting;

c) the Ordinary and “N” Ordinary share capital and reserves of the Company and the Group are adequate for a period of 12 months from the date of approval of the notice of annual general meeting; and

d) the available working capital is adequate to continue the operations of the Company and the Group for a period of 12 months from the date of approval of the notice of annual general meeting;

In addition, a resolution by the Board of directors has been passed, stating that the Board has authorised the Specific Repurchase, that Brimstone and its subsidiaries have passed the solvency and liquidity test and that, since the test was performed, there have been no material changes to the financial position of the Company and the Group.

11. Directors’ responsibility statement The directors of Brimstone, whose names are given on pages

14 to 15 of the Integrated Report: 11.1 collectively and individually, accept full responsibility for

the accuracy of the information given; 11.2 certify that, to the best of their knowledge and belief,

there are no other facts that have been omitted which would make any statement false or misleading;

11.3 have made all reasonable enquiries to ascertain such facts; and

11.4 that the notice of annual general meeting contains all information required by law and the JSE Listings Requirements.

12. Expenses relating to the Specific Repurchase The expenses relating to the Specific Repurchase are

estimated at approximately R48 484 (including VAT) and comprise:

R

Nedbank Corporate and Investment Banking (Investment Bank, Corporate Advisor and Sponsor) 25 000JSE documentation fees 23 484Total 48 484

13. Documents available for inspection Copies of the following documents will be available for

inspection by Brimstone shareholders at the registered office of Brimstone from 9 April 2018 up to and including the date of the annual general meeting, during normal business hours:

13.1 the 2017 Integrated Report; 13.2 historical annual financial statements of Brimstone for

the years ended 31 December 2017, 31 December 2016 and 31 December 2015; and

13.3 the MOI of Brimstone.



Re-election as director

Mustaq BreyMustaq Brey serves as Chief Executive Officer of Brimstone Investment Corporation Ltd, a company which he co-founded in 1995. A qualified Chartered Accountant by profession, Mustaq currently serves as the chairman of the Oceana Group Ltd, Life Healthcare Ltd and International Frontier Technologies SOC Ltd. He also serves on the boards of Equites Property Fund Ltd, AON Re SA (Pty) Ltd, Lion of Africa Insurance Company Ltd, MyDomain (Pty) Ltd and House of Monatic (Pty) Ltd. He serves on and chairs various board committees including the finance, audit and risk committee of The Mandela Rhodes Foundation. Mustaq is an independent director and chairman of the finance committee of Western Province Cricket Association. He is also a trustee of the Jakes Gerwel Foundation. He has an unwavering passion for uplifting communities and this is the golden thread that connects his business and personal life. He is the founder of the Saabri & Ashrafi Relief Fund.

Philip Leon Campher*After graduating from the University of Stellenbosch Leon joined Old Mutual in the Investment division in 1973. In 1985 he left Old Mutual to form Syfrets Managed Assets where he was Portfolio Manager and CEO. In 1993 Leon Campher left Syfrets and was one of the founding members of Coronation where he was CEO of Coronation Fund Managers and Executive Director of Coronation Holdings which was listed on the JSE. During his time with Coronation he was one of the founders of African Harvest and served as a Director of African Harvest.

In 2003 Leon Campher was instrumental in the formation of the Investment Management Association South Africa (IMASA) where he served as CEO until 2008. In 2008 he was instrumental in the formation of the Association for Savings and Investment South Africa (ASISA) and was appointed CEO on 1 October 2008. Leon serves on the boards of Equites Property Fund Limited, Sun International Limited and Business Unity South Africa.

Mzwandile John Terrold HewuMzwandile Hewu holds a B Com degree from the University of the Western Cape, B Com (Hons) from the University of South Africa and a B Phil from the University of Stellenbosch. He is employed as the Chief Director for Community and Partnership Development in the Western Cape Department of Social Development. Within the Department of Social Development, he is the senior manager responsible for service delivery co-ordination in all six regions of the Western Cape. He previously worked as the Head of Ministry in the same Department for five years.

Having worked as a Head Master in two different schools he has expertise in people and broader strategic management. He served as the Provincial Head of the biggest Teacher’s Union in the country, South African Democratic Teachers Union (SADTU), where he managed to build a number of value adding networks. His directorships and trusteeships include: Elevated 154 Property Investments (Pty) Limited, The Lokoza Dywanisi Family Trust and Lokoza Property Investment Family Trust.

Mpho Kathleen NdebeleMpho Ndebele attained a BA (Economics) from the University of Botswana, Lesotho & Swaziland and an MSW (Social Planning) from the University of Denver (USA). She is a past director of the Trans Caledon Tunnel Authority, Siphumelele Investment Corporation, Impumelelo Social Innovations Centre, the Black Sash Trust and the Social Change Assistance Trust. She is currently a trustee of the Imam Abdullah Haron Education Trust and the Desmond Tutu HIV/AIDS Foundation.

CURRICULUM VITAEfor the year ended 31 December 2017

* Appointment as member of Audit and Risk Committee subject to re-election as a director.


Appointment to Audit and Risk Committee

Nazeem KhanNazeem Khan has been in the quantity surveying profession for the past 32 years and has varied experience in all aspects of property development. His directorships include Stonefountain Properties (Pty) Ltd, Perthpark Properties (Pty) Ltd, BTKM Inc, Proman Project Management Services (Pty) Ltd, Business Park Development Company (Pty) Ltd, MyDomain (Pty) Limited and Equites Property Fund Ltd. His current memberships include the Association of Arbitrators and the Royal Institution of Chartered Surveyors. He is a Council Member of the South African Council for Quantity Surveyors and chairs the disciplinary committee.

Keneilwe Rachel MolokoKeneilwe is a Chartered Accountant and a Quantity Surveyor. She has expertise in the construction industry, auditing and investment management. Keneilwe started her career as a Quantity Surveyor with Grinaker Building, Dawson & Frazer and CP De Leeuw Quantity Surveyors. After a period of six years in the construction industry, she went back to study to become a Chartered Accountant. On completion of her articles at KPMG working in the financial services and tax divisions, she took up the position of development executive at Spearhead Properties. Thereafter, she joined Coronation Fund Managers as a fixed interest credit analyst and a member of the Coronation Credit Committee.

Keneilwe currently serves on the boards of Attacq Ltd, Fairvest Property Holdings Ltd and Long4Life Ltd as an independent non-executive director.

Liyaqat Allie ParkerLiyaqat is a founder member and former Chief Executive Officer of the Foodworld Stores Group, a FMCG retail chain in the Western Cape which was sold to Shoprite in 2005. He has extensive expertise in the retail sector and has more than 26 years’ experience in the commercial property sector. He currently serves as Chairman of FPG Group (Pty) Ltd, one of the larger privately owned commercial property funds in the country with a portfolio of prime retail real estate. He is also a director of various companies including Al Amien Foods (Pty) Ltd, FPG Investments (Pty) Ltd, FPG Foods (Pty) Ltd, FPG Property Fund (Pty) Ltd and a Board Member of The Friends of the Children’s Hospital Association.

Felicia Dawn Roman Filecia’s employment record includes being the head of the regional office of the Friedrich Ebert Foundation, the co-ordinator of the Provincial Development Council, the provincial director of the National Business Initiative and the deputy CEO of WESGRO. She joined Kfm Radio (Pty) Ltd in May 2001 as managing director. In July 2006, Felicia joined Sun International Ltd as the general manager of The Golden Valley Casino in Worcester and was promoted to senior management responsible for Enterprise Development across the group. Since leaving Sun International, Felicia acquired Umlingo (Pty) Ltd, a supplier to the casino industry. Her directorships include, Direng Investment Holdings (Pty) Ltd, Signature Gaming (Pty) Ltd, Omega Gaming SA (Pty) Ltd and she is a shareholder and director of Zweep (Pty) Ltd and Distinct Few (Pty) Ltd – a boutique executive search firm.

CURRICULUM VITAE (CONTINUED)for the year ended 31 December 2017


For use only by Brimstone Ordinary and “N” Ordinary certificated shareholders or Ordinary and “N” Ordinary dematerialised shareholders with “own name” registration, at the annual general meeting of the Company, to be held at Presentation Room, Ground Floor, West Campus Building, Old Mutual, Jan Smuts Drive, Pinelands, Cape Town at 19h00 on Wednesday, 9 May 2018 and at any adjournment thereof.

The record date in terms of Section 59 of the Act for shareholders to be recorded on the securities register of the Company in order to be able to attend, participate and vote at the annual general meeting is Friday, 4 May 2018 and the last day to trade in the Company’s shares in order to be recorded on the securities register of the Company in order to be able to attend, participate and vote at the annual general meeting is Monday, 30 April 2018.

Dematerialised Ordinary and “N” Ordinary shareholders holding shares other than with “own name” registration, must inform their CSDP or broker of their intention to attend the annual general meeting and request their CSDP or broker to issue them with the necessary Letter of Representation to attend the annual general meeting in person and vote or provide their CSDP or broker with their voting instructions should they not wish to attend the annual general meeting in person, but who wish to be represented thereat. These shareholders must not use this form of proxy.

I/We . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (name/s in block letters)

of (address) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Telephone (work) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cellphone number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Email address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

being a shareholder/shareholders of Brimstone and holding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ordinary shares in the Company,

being a shareholder/shareholders of Brimstone and holding . . . . . . . . . . . . . . . . . . . . . . . . . “N” Ordinary shares in the Company, do hereby appoint

1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . or failing him/her

2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . or failing him/her3. the chairman of the annual general meeting,as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held for the purpose of considering and, if deemed fit, passing, with or without modification, the special and ordinary resolutions to be proposed thereat and at any adjournment thereof; and to vote for and/or against the special and ordinary resolutions and/or abstain from voting in respect of the Brimstone Ordinary shares and “N” Ordinary shares registered in my/our name(s), in accordance with the following instructions:

Number of Ordinary shares*

Number of “N” Ordinary shares*

For Against Abstain For Against Abstain

1. To receive, consider and adopt the consolidated and separate annual financial statements, the directors’ report, Audit and Risk Committee Report and social and ethics committee report for the year ended 31 December 2017

2. To confirm annual dividend number 17

3. Ordinary resolution number 1: Re-election of directors

3.1 MA Brey

3.2 PL Campher

3.3 MJT Hewu

3.4 MK Ndebele

4. Ordinary resolution number 2: Appointment of members of the audit and risk committee

4.1 N Khan (Chairman)

4.2 PL Campher (subject to his re-election as a director)

4.3 KR Moloko

4.4 LA Parker

4.5 FD Roman

5. Ordinary resolution number 3: Re-appointment of auditors

6. Ordinary resolution number 4: To place the unissued shares under the directors’ control

7. Ordinary resolution number 5: Approval to issue shares for cash

8. Ordinary resolution number 6: Specific authority to directors to offer different dividend alternatives

9. Non-binding advisory resolution 1: Remuneration policy

10. Non-binding advisory resolution 2: Implementation report

11. Special resolution number 1: Non-executive directors fees

12. Special resolution number 2: General authority to repurchase Ordinary and “N” Ordinary shares

13. Special resolution number 3: Specific authority to repurchase Ordinary and “N” Ordinary shares

14. Special resolution number 4: General authority for financial assistance in terms of Section 44 of the Act

15. Special resolution number 5: General authority for financial assistance in terms of Section 45 of the Act

16. Special resolution number 6: Authority to issue shares to persons falling within the ambit of Section 41(1) of the Act for the purpose of distribution reinvestment alternatives

* Please indicate with an “X” in the appropriate spaces above how you wish your votes to be cast. Unless otherwise instructed, my/our proxy may vote as he/she thinks fit.

Note: All references to “the Act” refers to the Companies Act, No. 71 of 2008 (as amended).

PROXY FORM

Brimstone Investment Corporation Limited(Incorporated in the Republic of South Africa)

(Registration number 1995/010442/06)(“Brimstone” or “the Company”)

(ISIN Number: ZAE000015277 Share Code: BRT)

(ISIN Number: ZAE000015285 Share Code: BRN)



Signed at (place) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (on date) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2018

Assisted by (if applicable) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholder’s signature

Important notes about the annual general meeting:1. The annual general meeting will start promptly at 19h00. Shareholders wishing to attend are advised to be in the Presentation Room no

later than 18h45. The campus courtyard area will be open from 17h45, from which time refreshments will be served. 2. Shareholders and others attending the annual general meeting are asked to register at the registration desk at the entrance of the

campus courtyard area from 17h20 onwards. 3. This form of proxy must only be used by certificated Ordinary and “N” Ordinary shareholders or dematerialised Ordinary and “N” Ordinary

shareholders who hold dematerialised Ordinary and “N” Ordinary shares with “own name” registration.4. Dematerialised Ordinary and “N” Ordinary shareholders are reminded that the onus is on them to communicate with their CSDP or broker.5. Each shareholder is entitled to appoint one or more proxies (who need not be a shareholder(s) of the Company) to attend, speak and, on

a poll, vote in place of that shareholder at the annual general meeting.6. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space provided,

with or without deleting “the chairman of the annual general meeting”. The person whose name stands first on the form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow.

7. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by that shareholder in the appropriate box(es) provided. Failure to comply with the above will be deemed to authorise the chairman of the annual general meeting, if the chairman is the authorised proxy, to vote in favour of the ordinary and special resolutions at the annual general meeting, or any other proxy to vote or to abstain from voting at the annual general meeting as he/she deems fit, in respect of all the shareholder’s votes exercisable thereat.

8. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy, unless previously recorded by the Company’s transfer office or waived by the chairman of the annual general meeting.

9. The chairman of the annual general meeting may reject or accept any form of proxy which is completed and/or received other than in accordance with these instructions, provided that he is satisfied as to the manner in which a shareholder wishes to vote.

10. Any alterations or corrections to this form of proxy must be initialled by the signatory(ies).11. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the annual general meeting and

speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such shareholder wish to do so.12. A minor must be assisted by his/her parent guardian unless the relevant documents establishing his/her legal capacity are produced or

have been registered by the Company.13. Where there are joint holders of any shares: – any one holder may sign this form of proxy; – the vote(s) of the senior shareholders (for that purpose seniority will be determined by the order in which the names of shareholders

appear in the Company’s register of shareholders) who tenders a vote (whether in person or by proxy) will be accepted to the exclusion of the vote(s) of the other joint shareholder(s).

14. Section 63 (1) of the Act requires that a person wishing to participate in the annual general meeting (including any representative or proxy) must provide reasonably satisfactory identification before they may attend or participate at such annual general meeting.

Forms of proxy should be lodged with or mailed to Computershare Investor Services (Pty) Ltd:

Hand deliveries to: Postal deliveries to:Rosebank Towers PO Box 6105115 Biermann Avenue Marshalltown 2107Rosebank, 2196

to be received no later than 17h00 on Monday, 7 May 2018 or be delivered to the Chairman of the annual general meeting at any time prior to the vote.

PROXY FORM

Company registration number1995/010442/06

Registered office and business address 1st Floor, Slade HouseBoundary Terraces1 Mariendahl Lane Newlands 7700

Postal AddressPO Box 44580Claremont 7735

JSE share codes and ISIN numbersShare code: BRT ISIN number: ZAE000015277Share code: BRN ISIN number: ZAE000015285

Company secretaryTiloshani Moodley BA (Law) LLB

Telephone number021 683 1444

[email protected]

Websitewww.brimstone.co.za

Facebook www.facebook.com/BrimstoneInvestment

Twitter@BrimstoneLtd

AttorneysCliffe Dekker Hofmeyr Inc.ENSafrica

AuditorsDeloitte & Touche

BankersNedbank Ltd

SponsorNedbank CIB

Transfer secretariesComputershare Investor Services (Pty) LtdRosebank Towers15 Biermann AvenueRosebank, Johannesburg 2196PO Box 61051, Marshalltown 2107Tel: 011 370 5000

CORPORATE INFORMATION

freshIdentity.co.za

Boundary Terraces, 1 Mariendahl Lane, Newlands 7700, South Africa

PO Box 44580, Claremont 7735, South Africa

www.brimstone.co.za

BrimstoneInvestment BrimstoneLTD