Wrap Text
Reviewed Condensed Consolidated Provisional Financial Results for the Year Ended 28 February 2017
BRIKOR LIMITED
(“Brikor”) or (“the Company”) or ("the Group")
(Incorporated in the Republic of South Africa)
Registration number: 1998/013247/06
JSE code: BIK
ISIN: ZAE000101945
REVIEWED CONDENSED CONSOLIDATED PROVISIONAL FINANCIAL RESULTS FOR THE YEAR ENDED
28 FEBRUARY 2017
Prepared by:
The condensed consolidated provisional financial results ("provisional financial results" or " results") for the year
ended 28 February 2017 were prepared by Laura Craig CA(SA), group financial manager, under the supervision of
Andre Hanekom CA(SA), chief financial officer.
Review Conclusion of the Independent Auditor
The condensed consolidated provisional financial statements for the year ended 28 February 2017 have been
reviewed by KPMG Inc., who expressed an unmodified review conclusion. The auditor's review conclusion
contained the following paragraph with respect to reportable irregularities:
"In accordance with our responsibilities in terms of sections 44(2) and 44(3) of the Auditing Profession Act, we
report that we have identified reportable irregularities in terms of the Auditing Profession Act. We have reported
such matters to the Independent Regulatory Board for Auditors. The matters pertaining to the reportable
irregularities have been described in note 11 to the condensed consolidated provisional financial statements."
The auditor’s report does not necessarily report on all of the information contained in these financial results.
Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor's
engagement they should obtain a copy of the auditor's report together with the accompanying financial information
from the issuer's registered office.
FINANCIAL INDICATORS
- REVENUE decreased by 5,2 % to R300,5 million
- EBITDA decreased by 86,7 % to R8,9 million (refer to note 8)
- TOTAL DEBT decreased by 3,7% to R177,4 million
- NET ASSET VALUE increased by 9,5 % to 8,1 cents per share
- NET TANGIBLE ASSET VALUE increased by 18,4 % to 6,5 cents per share
- CASH AND CASH EQUIVALENTS decreased by 33,0 % to R14,2 million
- EARNINGS PER SHARE decreased by 86,5 % to 0,7 cents per share
- HEADLINE EARNINGS PER SHARE decreased by 17,9 % to 4,6 cents per share
OVERVIEW
Brikor is a diverse manufacturer and supplier of building and construction materials across a broad spectrum of the
market from low-cost housing, residential to commercial, industrial, civil engineering and infrastructure projects. The
group operates through three segments, namely bricks, aggregates and coal (the latter being through its subsidiary,
Ilangabi Investments 12 (Pty) Ltd).
The directors of Brikor are pleased to present the condensed consolidated provisional financial results for the year
ended 28 February 2017, which reflect the final chapter in a number of consecutive years of realignment,
consolidation, cleansing and establishment of a sustainable foundation on which to grow the future business of the
Brikor group. It is, once again important that the performance indicators are considered in conjunction with the
commentary in the financial results section below as the 2017 financial year is the final year where a number of
cost items ("Catch-up opex") have been incurred in order to catch-up on reporting which fell behind when the
company was still under provisional liquidation.
The group’s overall financial indicators evidenced the continued endeavors by management to cement a
sustainable operating platform for the group by reducing debt and ongoing accruing for liabilities pertaining to past
compliance matters which management is diligently and consistently working on to resolve. Detail on the reduced
turnover and EBITDA indicators can be found in the financial results section below. Stakeholders are encouraged
to specifically consider the impact of Catch-up opex, impairments, deferred tax recognition of the calculated tax
losses and the financial effect of the operational challenges faced due to foul weather in particularly November
2016 to January 2017.
FINANCIAL RESULTS
Revenue decreased to R300,5 million (2016: R317,0 million) with the gross profit percentage decreasing to 23,1%
(2016: 27,4%).
The competitive operating environment continues to drive selling prices downward which places pressure on
turnover however the major driving factor for the reduction in turnover for 2017 was a combination of limited
capacity in the production of bricks, brought upon by the limited power supply available to the brick plants, and the
foul weather experienced during the months of November 2016 to January 2017 of the financial year. Significant
rainfall hampered the group's ability to mine and screen aggregates, coal and clay for sales and the production of
bricks. It also hampered the group's ability to build stockpiles, which in turn caused difficulty and inconsistency in
the production processes. This is not a frequently repeated occurrence and management has planned and
executed procedures to ensure the group continues production smoothly despite unforeseen future weather
conditions. The segment most affected was the coal segment, showing a decline in revenue of R22,1 million with
bricks showing a decline of R1,1 million. The overall gross profit percentage declined largely as a result of
adjustments to rehabilitation provisions and the increased buy in of low margin stock bricks to supplement the
shortfall in supply experienced during the foul weather periods mentioned above. Further to this, the foul weather
conditions altered the production basket to the less profitable range of bricks available for sale thereby also driving
the gross profit percentage of the bricks segment and the overall group downward. This decline in overall gross
profit was offset by a smaller improvement of the overall gross profit percentage resulting from adjustments in the
coal segment pertaining to the royalties’ tax provision and the recognition of mining assets. These factors are not
expected to repeat themselves in subsequent years.
Operating expenses increased to R81,9 million (2016: R43,7 million) as a result of impairments made to the fixed
assets of the Donkerhoek operation amounting to R23,9 million.
Catch-up opex which had to be caught up in the 2017 financial year amounted to R3,6 million. Operating
expenditure (or income also affecting the operating expenditure line) relating to once-off expenses ("Once-off
opex") amounted to R6,9 million. When taking the Catch-up opex and once-off opex into account, a reduction on
expenditure is evident when compared to the 2016 financial year.
Interest earned during the period under review amounted to R1,7 million (2016: R3,1 million).
The reduction in interest earned resulted from the reduction in funds invested as these funds were used in
continuing to settle the debts of the company during the 2017 financial period in order to become fully compliant
with regards to previously unpaid liabilities.
Interest paid increased during the period to R13,8 million (2016: R13,5 million) as result of the ongoing accrual of
interest worth R1,6 million on historical debt, which will also not be repeated in future periods.
The group ended the financial period with an attributable profit of R4,2 million (2016: R32,8 million), resulting in
basic earnings per share of 0,7 cents (2016: 5,2 cents) and basic headline earnings per share of 4,6 cents (2016:
5,6 cents).
With the group's shares still being suspended pending application by the Brikor Board for upliftment of the
suspension, the number of shares in issue in the earnings per share equation remains static. The 2017 financial
year was, as expected to be the last year in which past inefficiencies were rectified and necessary historical
expenditure was brought up to date. The sustainable management practices, time pertinent and consistent
reporting in the subsequent financial periods promise to provide more valuable investor information.
Property, plant and equipment decreased to R89,8 million (2016: R109,2 million) as a result of:
- the additions to buildings of R1,1 million (2016: Rnil)
- the additions of plant and equipment of R18,7 million (2016: R16,7 million)
- the additions of furniture and fittings of R1,2 million (2016: R0,3 million)
- the additions of motor vehicles of R0,9 million (2016: R1,7 million)
- the disposal of plant of R1,5 million (2016: R5,6 million);
- the disposal of motor vehicles of R0,7 million (2016: R1,7 million)
- impairments of reserves by R23,0 million (2016: Rnil)
- depreciation of R14,4 million (2016: R16,7 million)
- impairments of assets prior to reclassification as held-for-sale by R1,3 million (2016: Rnil)
- transfer of assets to assets held-for-sale of R3,5 million (2016: Rnil)
- increase in decommissioning assets of R3,1 million (2016: decrease R0,4 million)
CHANGES IN THE BOARD OF DIRECTORS AND COMPANY SECRETARY
Effective 30 June 2016, Hanleu Botha resigned as financial director;
On 18 July 2016, Andre` Hanekom was appointed as executive and financial director;
Effective 23 January 2017, Limpho Hani resigned as independent non-executive director;
Effective 31 March 2017, Computershare Company Secretaries resigned as company secretary;
On 1 April 2017, Fusion Corporate Secretarial Services were appointed as company secretary; and
On 12 April 2017, Mamsey A Mokate was appointed as independent non-executive director.
Since Andre Hanekom has already been welcomed and he has been with us for the past few reporting
opportunities, the board is pleased to welcome Mrs. Mokate and Fusion Corporate Secretarial Services (Pty) Ltd
and look forward to their future contribution to the company.
CORPORATE GOVERNANCE
The directors endorse and accept full responsibility for the application of the principles necessary to ensure that
effective corporate governance is practiced consistently throughout the group. Brikor is committed to the principles
of openness, integrity and accountability to all stakeholders and the board of directors accepts its duty to ensure
that the principles as set out in the King Report of Corporate Governance for South Africa – 2009 (King lll) are
implemented on an apply or explain basis.
With the board changes indicated above, the Brikor board now comprises seven directors of whom two are
executive, two are non-executive and three are independent non-executive.
PROSPECTS
Brikor management has placed extensive effort and resources throughout the 2017 financial year to streamline the
operations of the group, improve reporting quality, finalise prior year outstanding issues, reduce risks within
management control, improve internal controls and establish a healthy foundation to support future business
development. The Brikor Board is very positive and excited about the potential which can be unlocked from the
group given the fact that the balance sheet is improving consistently with the last major debts being the debts
outstanding to related parties and the South African Revenue Services. With the 2018 financial year being free of
challenges other than normal operational and industry challenges and considering the aforementioned together
with the results from the past periods, the Brikor Board now acknowledges and welcomes the need to re-formulate
the dynamic group strategy to maximise all stakeholder benefit. The focus on strengthening the group's black
empowerment status is high on the agenda.
DIVIDEND
No dividend has been declared for the year.
Condensed consolidated provisional statement of financial position
as at 28 February 2017
Reviewed Audited
2017 2016
Notes R’000 R’000
ASSETS
Non-current assets 144 363 134 445
Property, plant and equipment 4 89 757 109 202
Intangible assets 4 10 198 12 320
Other financial assets 16 326 12 714
Deferred tax asset 5 28 082 209
Current assets 80 540 96 617
Inventories 44 432 45 499
Trade and other receivables 21 883 29 871
Cash and cash equivalents 14 225 21 247
Non-current assets held-for-sale 3 3 571 -
Total assets 228 474 231 062
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the company 51 073 46 854
Stated capital 228 242 228 242
Accumulated loss (177 169) (181 388)
Non-current liabilities 103 454 95 616
Borrowings 2 624 5 582
Shareholders’ loans 45 228 43 115
Provisions 54 281 46 919
Deferred tax liability 5 1 321
Current liabilities 72 041 88 592
Borrowings 7 280 9 984
Trade and other payables 57 679 58 661
Taxation 7 082 19 947
Non-current liabilities held-for-sale 3 1 906 -
Total equity and liabilities 228 474 231 062
Condensed consolidated provisional statement of profit or loss and other comprehensive income
for the year ended 28 February 2017
Reviewed Audited
Notes 2017 2016
R’000 R’000
Revenue 300 486 317 002
Cost of sales (231 210) (230 126)
Gross profit 69 276 86 876
Other income 5 965 5 376
Administrative expenses (42 228) (32 570)
Distribution expenses (5 070) (4 374)
Other expenses (34 633) (6 725)
Expenses (9 348) (6 725)
Impairments 4 (25 285) -
Operating (loss)/profit before interest and taxation (6 690) 48 583
Finance income 1 670 3 083
Finance costs (13 798) (13 505)
(Loss)/profit before taxation (18 818) 38 161
Taxation 6 23 037 (5 314)
Total comprehensive income for
the year attributable to owners of the company 4 219 32 847
Earnings per share CENTS CENTS
Basic 0,7 5,2
Diluted 0,7 5,2
Headline earnings per share 4,6 5,6
Diluted headline earnings per share 4,6 5,6
Condensed consolidated provisional statement of changes in equity
for the year ended 28 February 2017
Stated Treasury Accumulated
Total equity
capital shares loss
R’000 R’000 R’000 R’000
Balance at 28 February 2015 Audited 244 142 (15 900) (214 235) 14 007
Total comprehensive income for the year - - 32 847 32 847
Balance at 29 February 2016 Audited 244 142 (15 900) (181 388) 46 854
Total comprehensive income for the year - - 4 219 4 219
Balance at 28 February 2017 Reviewed 244 142 (15 900) (177 169) 51 073
Condensed consolidated provisional statement of cash flows
for the year ended 28 February 2017
Reviewed Audited
2017 2016
R’000 R’000
Cash flows from operating activities 22 229 37 086
Cash generated from operations 41 393 48 010
Finance income 1 620 3 083
Finance costs (3 593) (8 623)
Tax paid (17 191) (5 384)
Cash flows to investing activities (22 349) (15 989)
Additions to property, plant and equipment (21 956) (18 450)
Proceeds on disposal of property, plant and equipment 2 506 4 340
Increase in investments to other financial assets (2 899) (1 879)
Cash flows to financing activities (6 902) (94 341)
Borrowings raised 6 305 18 600
Borrowings repaid (13 207) (112 941)
Net decrease in cash and cash equivalents (7 022) (73 244)
Cash and equivalents at beginning of year 21 247 94 491
Cash and cash equivalents at end of year 14 225 21 247
.
SEGMENTAL REVENUE AND RESULTS
The following is an analysis of the group’s revenue and results from operations by reportable segments.
Segmental profit reconciliation
2017 - Reviewed Bricks Coal Aggregates Other* Total
R’000 R’000 R’000 R’000 R’000
Total revenue 171 517 96 643 44 638 - 312 798
Intersegmental revenue - (12 312) - - (12 312)
Reportable segment revenue 171 517 84 331 44 638 - 300 486
Gross profit 32 843 33 168 3 265 - 69 276
Other income 2 286 2 755 924 5 965
Operating profit/(loss) before interest
and taxation 4 223 14 174 (25 087) - (6 690)
Segment assets and liabilities
Segment assets 60 341 67 644 54 610 45 879 228 474
Segment liabilities (42 697) (71 604) (7 562) (55 538) (177 401)
Other segment information
Depreciation and amortisation included in
cost of sales and operating expenditure (5 691) (5 692) (4 191) - (15 574)
Additions to non-current assets 3 295 11 214 7 447 - 21 956
2016 - Audited Bricks Coal Aggregates Other* Total
R’000 R’000 R’000 R’000 R’000
Total revenue 172 612 114 283 37 935 - 324 830
Intersegmental revenue - (7 828) - - (7 828)
Reportable segment revenue 172 612 106 455 37 935 - 317 002
Gross profit 51 801 29 351 5 724 - 86 876
Other income 3 388 922 1 066 5 376
Operating profit before interest and
taxation 33 811 12 334 2 438 - 48 583
Segment assets and liabilities
Segment assets 68 272 69 446 71 888 21 456 231 062
Segment liabilities (37 720) (74 265) (9 161) (63 062) (184 208)
Other segment information
Depreciation and amortisation included in
cost of sales and operating expenditure (8 546) (6 963) (2 578) - (18 087)
Additions to non-current assets 2 164 12 494 3 792 - 18 450
*Other segment relates to non-segment specific cash and liabilities
Factors used to identify segments are based on geographical location and divisional structuring; this is also how the
group reports financial results to the chief operating decision-maker on a monthly basis.
The accounting policies of the reportable segments are the same as the group’s accounting policies described in
note 1. Segment profit represents the profit earned by each segment without allocation of finance costs and
income tax expense. This is the measure reported to the chief operating decision-maker for the purposes of
assessment of segment performance.
Reportable segment revenue relates to external customers only. No single customer exists upon which the group
is significantly dependent on for revenue and revenue is derived solely from South African customers.
Other assets and liabilities
For the purposes of monitoring segment performance and allocating resources between segments:
• all assets are allocated to reportable segments other than non-current assets held-for-sale, goodwill, tax
assets, deferred tax assets and cash and cash equivalents.
• all liabilities are allocated to reportable segments other than general borrowings, shareholders’ loans,
deferred taxation, taxation, bank overdraft and non-current liabilities held-for-sale.
Notes to the condensed consolidated provisional financial statements
for the year ended 28 February 2017
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated provisional financial statements are prepared in accordance with the requirements of
the JSE Limited Listings Requirements for provisional reports and the requirements of the Companies Act of South
Africa. The Listings Requirements require provisional reports to be prepared in accordance with the framework
concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS)
and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the
information required by IAS 34 Interim Financial Reporting.
The accounting policies applied in preparation of the condensed consolidated provisional financial statements are in
terms of IFRS and are consistent with those applied for the previous consolidated annual financial statements.
The results are presented in Rand rounded to the nearest thousand (R'000).
2. RECONCILIATION OF EARNINGS
The calculations for earnings per share attributable to the ordinary equity holders are based on the following:
Reconciliation between basic earnings and headline earnings as well as diluted earnings
2017 - Reviewed
Total
R’000
Profit
Basic and diluted profit 4 219
Impairments of assets (refer to note 4) 25 285
Profit on the sale of property, plant and equipment (289)
Headline and diluted profit 29 215
2016 - Audited
Total
R’000
Profit
Basic and diluted profit 32 847
Loss on the sale of property, plant and equipment 669
Loss on the scrapping of property, plant and equipment 1 449
Headline and diluted profit 34 965
Number of shares
Reviewed Audited
2017 2016
’000 ’000
Weighted average number of shares 629 342 629 342
Diluted weighted average number of shares 629 342 629 342
3. NON-CURRENT ASSETS AND LIABILITIES CLASSIFIED AS HELD-FOR-SALE
On 20 September 2016 and 17 November 2016 the company committed to sell two of its properties, namely the
Rayton property situated at Portion 31 of Witfontein NO.510 - JR District Bronkhorstspruit "Rayton" and the Nigel
Schist property situated at Portion 58 of the Farm Vrisgewaag 510IR "Schist".
Rayton property:
The offer received for Rayton amounting to R2,2 million, which is inclusive of the transfer of the Mining Right No
GP30/5/1/2/2(237)MRC and the related environmental restoration obligation, has been accepted and signed by the
company on 17 April 2017. The company is currently waiting for funds to flow.
Conditions precedent to the sale:
- The sale is subject to written consent in terms of section (11)1 of the Mineral and Petroleum Resources
Development Act No. 28 of 2002(“the act”) is granted by the minister in respect of the proposed cession and
transfer of the mining right to the purchaser.
- The purchaser shall be responsible for making the application as required in terms of Section 11 of the act
with the assistance of the company in terms of documentation required and general co-operation.
- Should the Section 11 transfer not be granted within 18(eighteen) months from date of signature (11 April
2017) either party may be entitled in writing to cancel the agreement unless the application is imminent, in
which case extension may be applied for by either party for a period of up to 60 days or longer as agreed
upon.
- Costs incurred in terms of this agreement shall be borne by the purchaser.
Schist property:
The company has received several offers in terms of Schist of which the latest offer of R0,2 million is inclusive of
the transfer of the environmental obligation. The company is in the process of finalising terms of agreement with
the potential buyer.
Conditions precedent to the sale:
- The agreement is subject to the approval for closure from the Department of Mineral Resources (DMR).
Impairment loss relating to the non-current assets held-for-sale:
Impairment loss of R1,3 million for write down of the non-current assets held-for-sale to the lower of its carrying
value and fair value less cost to sell have been included in other expenses (note 4.2). The impairment loss has
been applied to reduce the carrying value of the Rayton property.
Measurement of fair values
The fair value of the non-current assets held-for-sale was obtained with reference to purchase offers received from
third parties for the respective properties.
Fair value hierarchy:
The non-recurring fair value of the non-current assets held-for-sale of R2,2 million and R0,2 million respectively,
have been classified as a level 2 fair value.
Cumulative income or (expenses) included in profit/ (loss) and other comprehensive income:
2017 - Reviewed Rayton Schist
property property Total
R’000 R’000 R’000
Change in estimate for environmental rehabilitation provision (83) (547) (630)
Depreciation of decommissioning asset (9) - (9)
Net financing costs (114) - (114)
Loss from non-current assets and liabilities held-for-sale (206) (547) (753)
Assets and liabilities held-for-sale
At 28 February 2017, the non-current assets held-for-sale was stated at fair value less cost to sell and
comprised the following;
2017 - Reviewed Rayton Schist
property property Total
R’000 R’000 R’000
Non-current assets held-for-sale
Property, plant and equipment 3 558 13 3 571
Non-current assets held-for-sale 3 558 13 3 571
Non-current liabilities held-for-sale
Environmental rehabilitation
1 359 547 1 906
provision
Non-current liabilities held-for-sale 1 359 547 1 906
4. IMPAIRMENTS
The following table summarises the impairments:
Reviewed Audited
2017 2016
’000 ’000
Impairments of property, plant and equipment 4.1 23 012 -
Impairments of intangible assets 4.1 929 -
Impairment of non-current assets held-for-sale 4.2 1 344 -
Total 25 285 -
4.1 Donkerhoek is a division of Brikor Limited (Company) and produces aggregates of a wide variety of sizes and
technical specifications with products including stone, gravel and sand for large and small-scale civil
engineering and infrastructure projects. As per management’s assessment the Donkerhoek division is a
separate cash-generating unit. A cash generating unit is the smallest group of assets that generates cash
inflows and that are largely independent of the cash inflows from other assets or groups of assets.
The Donkerhoek division has been incurring significant losses in the current financial period and based on the
losses an impairment trigger was identified. The recoverable amount of the Donkerhoek division was
determined and an impairment of R 23.9 million was consequently recognised.
The impairment was calculated by comparing the carrying value of the cash generating unit to the recoverable
amount. The recoverable amount of a cash-generating unit is the higher of its fair value less costs to sell and
its value in use. The recoverable amount of the Donkerhoek division was determined based on the fair value
less cost to sell as the fair value less cost to sell is higher than the calculated value in use of the division.
The fair value of the Donkerhoek division was obtained from a purchase offer made by a third party. The fair
value measurement was categorised as a Level 2 fair value based on the inputs such as market prices other
than quoted prices.
The impairment losses were allocated to reduce the carrying value of the reserves and mining rights.
4.2 Refer to note 3 for the detail of the mpairment loss recognised on reclassification to non-current assets held-
for-sale.
5. DEFERRED TAX ASSET / (LIABILITY)
Deferred tax assets and liabilities are offset if they relate to income tax levied by the same taxation authority on
either the same taxable entity or on different taxable entities within the same taxable group with the intent to settle
current tax liabilities and assets on a net basis. The deferred tax asset and liability relates to different taxable
entities and therefore the deferred tax asset and liability are disclosed separately.
Reviewed Audited
2017 2016
R’000 R’000
Reconciliation of deferred tax asset
At beginning of year - -
Current year originating temporary differences 8 673 -
Calculated tax losses recognised (prior year) 19 409 -
28 082 -
Deferred tax asset
Compromising:
Property, plant and equipment ( 3 423) (10 953)
Provisions 5 770 4 648
Payments received in advance 491 467
Finance leases - 3
Contributions to rehabilitation trust funds (1 335) (1 335)
Calculated tax losses recognised 26 579 7 170
28 082 -
The utilisation of a deferred tax asset that is recognised is dependent on future taxable profits in excess of the
profits arising from the reversal of existing taxable temporary differences. The directors have approved the
Company's short term budget confirming profitable operations in the short term. This budget confirms the directors'
reasonable expectation that the company's profits, over the next five years, should at least equal the amount of the
recognised calculated tax losses in excess of the current existing taxable timing differences. Management based
their assessment on the latest approved budget as well as historical taxable profits that was generated by the
company during the past four years.
The calculated tax losses originated from loss making operations which were disposed of in the 2012, 2013 and
2014 financial years. At the end of the 2013 financial year the calculated tax loss amounted to R169,9 million
resulting in an unrecognised deferred tax asset to the value of R35,7million. The company has utilised R75,0 million
(44,1 %) of the calculated tax loss in the past four years from its’ continued operations which have all resulted in
taxable profits.
Due to the utilisation of the calculated tax loss from the past four years and the reasonable expectation of continued
future taxable profits, it has become more probable than not that the calculated tax loss of R94,9 million (resulting in
a deferred tax asset of R26,6 million) will be utilised, therefore management has raised the balance of the deferred
tax asset in the current year.
Reviewed Audited
2017 2016
R’000 R’000
Reconciliation of deferred tax (liability)/asset
At beginning of year (asset)/liability 209 (245)
Originating and reversing temporary differences (1 530) 454
(1 321) 209
Deferred tax (liability)/asset
Compromising:
Property, plant and equipment ( 7 548) ( 5 689)
Provisions 9 168 8 122
Finance leases 103 9
Contributions to rehabilitation trust fund (3 044) (2 233)
(1 321) 209
The deferred tax liability is attributable to the company’s subsidiary, Ilangabi Investments 12 (Pty) Ltd.
6. TAXATION
Reviewed Audited
2017 2016
R’000 R’000
Major components of the tax (income)/expense
Current taxation 3 515 5 768
Deferred taxation
Current year originating and reversing temporary differences: (26 552) (454)
Property, plant and equipment ( 5 671) 762
Provisions (2 168) (1 043)
Payments received in advance (24) (84)
Finance leases (91) (783)
Borrowings – on interest unwinding - (122)
Contributions to rehabilitation trust funds 811 680
Recognition of prior year calculated tax losses (19 409) 136
(23 037) 5 314
Reviewed Audited
2017 2016
R’000 R’000
Reconciliation of tax (income) / expense
Reconciliation between applicable tax rate and
% %
average tax rate:
Applicable tax rate (28,0) 28,0
Non-deductible expenses: 20,6 7,1
Legal fees 2,9 0,7
South African Revenue Services interest and
14,6 3,9
penalties
Amortisation of mining rights 1,8 1,0
Impairment of mining right 1,4 -
Other non-deductible expenses 0,9 0,4
Restricted term investments (1,0) 1,1
Capital gains (0,2) -
Recognition of prior year calculated tax losses (114,8) (21,2)
(122,4) 13,9
The applicable tax rate is equal to the South African statutory company tax rate of 28%.
7. RELATED PARTIES
Relationships Related Director
Entities controlled / significantly influenced by director
• Cyndara 113 (Pty) Ltd PM McDonald & G Parkin
• Scarlett Sun 33 (Pty) Ltd PM McDonald & G Parkin
• Galiya (Pty) Ltd PM McDonald & G Parkin
• Nigel Brick and Clay (Pty) Ltd PM McDonald & G Parkin
• Kuvula Trade 40 (Pty) Ltd G Parkin
• Elgar Share Trust PM McDonald & G Parkin
Nature of goods Reviewed Audited
and services 2017 2016
purchased or sold R’000 R’000
Related party balances
Loan accounts - owing (to)/by related
parties
Estate late: GvN Parkin
Shareholder loan – loan 1 Unsecured, interest 7,59% p.a, no
fixed repayment terms (32 450) (29 803)
Shareholder loan – loan 2 Unsecured, interest 12% p.a, no
fixed repayment terms (8 963) (7 954)
Shareholder loan – loan 3 Unsecured, interest free, no fixed
repayment terms (2 224) (2 726)
G Parkin
Shareholder loan Unsecured, interest free (1 591) (2 632)
Nature of goods Reviewed Audited
and services 2017 2016
purchased or sold R’000 R’000
Amounts included in trade receivables
and trade payables
Scarlett Sun 33 (Pty) Ltd Machinery parts and consumables (17) (616)
Nigel Brick and Clay (Pty) Ltd Bricks 11 1 482
Nigel Brick and Clay (Pty) Ltd Bricks (1 720) (1 796)
Scarlett Sun 33 (Pty) Ltd Diesel and maintenance - 145
Scarlett Sun 33 (Pty) Ltd Surface rights (5 084) (3 344)
Galiya (Pty) Ltd Transport 49 -
Galiya (Pty) Ltd Transport (102) -
Kuvula Trade 40 (Pty) Ltd Transport 383 1 024
Kuvula Trade 40 (Pty) Ltd Rental 17 39
Kuvula Trade 40 (Pty) Ltd Transport (1 641) (1 820)
AP van der Merwe Consultancy fees (49) (60)
Cyndara Engineering (97) -
Amounts included in borrowings
regarding related parties
Scarlett Sun 33 (Pty) Ltd Interest @prime plus 1% (4 322) (6 658)
Related party transactions
Interest paid
G v N Parkin (loan 1) (2 342) (2 184)
G v N Parkin (loan 2) (1 009) (895)
Legal fees
PM McDonald Attorneys (249) (473)
Consultancy fees
AP van der Merwe (588) (170)
Equipment purchased
Scarlett Sun 33 (Pty) Ltd - (7 441)
Equipment sold
Scarlett Sun 33 (Pty) Ltd - 100
Purchases from related parties
Scarlett Sun 33 (Pty) Ltd Machinery Rental - (2 649)
Scarlett Sun 33 (Pty) Ltd Surface rights (3 282) (4 860)
Scarlett Sun 33 (Pty) Ltd Machinery Parts - (2 972)
Scarlett Sun 33 (Pty) Ltd Equipment purchased (37) (8 991)
Galiya (Pty) Ltd Transport (1 005) -
Nigel Brick and Clay (Pty) Ltd Bricks (16 856) (7 421)
Kuvula Trade 40 (Pty) Ltd Transport (15 470) (16 003)
Sales to related parties
Nigel Brick and Clay (Pty) Ltd Bricks and clay 9 605 2 270
Scarlett Sun 33 (Pty) Ltd Bricks and aggregates - 77
Scarlett Sun 33 (Pty) Ltd Diesel and maintenance 61 134
Galiya (Pty) Ltd Transport 423 -
Kuvula Trade 40 (Pty) Ltd Transport 2 864 30
8. SALIENT FEATURES
2017 2016
’000 ’000
Number of shares in issue (excluding treasury shares)('000) 629 342 629 342
Net asset value per share (cents) 8,1 7,4
Net tangible asset value per share (cents) 6,5 5,5
Impairments 25 285 -
Employee cost (R'000) 93 707 82 344
Net asset value per share is determined by dividing the total equity by the actual number of shares in issue at
reporting date.
Net tangible asset value per share is determined by dividing the total equity less intangible assets by the actual
number of shares in issue at reporting date.
Reconciliation of EBITDA - continued operations
2017 2016
’000 ’000
Operating (loss) / profit before interest and taxation (6 690) 48 583
Depreciation - cost of sales 12 972 15 644
Depreciation - other expenses 1 409 1 107
Amortisation - cost of sales 1 192 1 336
8 883 66 670
9. DIRECTORS’ EMOLUMENTS
Reviewed Audited
2017 2016
’000 ’000
Executive
Short-term benefits 4 924 3 966
Post-employment benefits 173 151
5 097 4 117
Non-executive
Short-term benefits 984 253
10. OTHER LEGAL AND REGULATORY REQUIREMENTS
On 5 July 2017 the auditors reported reportable irregularities to the Independent Regulatory Board of Auditors
in respect on non-compliance with the Income Tax Act, No 58 of 1962, Mineral and Petroleum Resources
Royalties Act, No 29 of 2008 and the Companies Act of South Africa. The particulars of the reportable
irregularities relate to the following instances, which resulted in penalties and interest being charged to the
group:
• Non-submission of annual tax returns and non-timeous payment of provisional tax on due dates, as required
by the Income Tax Act, No 58 of 1962;
• Non-submission of returns and/or payment of Royalty Tax due to SARS, as required by the Mineral and
Petroleum Resources Royalties Act, No 29 of 2008; and
• Non-compliance with Section 30 of the Companies Act of South Africa in terms of preparing and approving of
annual financial statements within six months after the end of its financial year.
The directors are aware of the above and are in the process of taking corrective steps, particularly since the
provisional liquidation of Brikor has been lifted to ensure that the relevant non-compliances are adequately
ddressed. Full provision has been made in the reviewed condensed consolidated provisional financial
statements for any related amounts due.
11. SUBSEQUENT EVENTS
The directors are not aware of any material events, which occurred subsequent to the year ended 28
February 2017 and which need adjustment or disclosure.
12. GOING CONCERN
The directors have prepared their budgets and cash flow forecasts for the year ahead based on reasonable
and supportable assumptions.
The cash flow forecasts and current management results indicate that the company and its subsidiaries will
operate as going concerns for the foreseeable future.
13. FAIR VALUE
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as
possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used
in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in 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: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
Measurement of fair values
Non-current assets held for sale (Level 2):
The market comparison technique was used for determining the fair value of the non-current assets held for
sale. The fair value is determined based on the estimated selling price in the ordinary course of business less
the estimated cost to sell (refer note 2 for detail).
DATE OF PUBLICATION OF THIS REPORT
4 August 2017
G Parkin
Chief Executive Officer
Nigel
4 August 2017
A Hanekom
Chief Financial Officer
Nigel
4 August 2017
CORPORATE INFORMATION
Directors: PM McDonald (Chairman)*; PS Moyanga (Lead independent director)^; G Parkin (CEO); A Hanekom
(FD); CB Madolo*; AP van der Merwe*; M Mokate^
* Non-executive ^ Independent non-executive
Registered address: 1 Marievale Road, Vorsterskroon, Nigel 1490
Postal address: PO Box 884, Nigel 1490
Telephone: (011) 739 9000
Facsimile: (011) 739 9021
Company secretary: Fusion Corporate Secretarial Services (Pty) Ltd
Transfer secretaries: Computershare Investor Services (Pty) Ltd
Auditors: KPMG Inc.
Designated Adviser: Exchange Sponsors (2008) (Pty) Ltd
These results and an overview of Brikor are available at www.brikor.co.za
Date: 04/08/2017 04:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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