Wrap Text
Unaudited condensed consolidated interim results for the six months ended 31 August 2012
BRIKOR LIMITED
Registration number: 1998/013247/06
JSE code: BIK
ISIN: ZAE000101945
("Brikor" or "the Company" or "the Group")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS
ENDED 31 AUGUST 2012
The interim results, as approved at a meeting of the Board of
Directors held on 5 December 2012, are disclosed below:
HIGHLIGHTS:
- Revenue increased by 40% to R104,7 million
- Gross Profit increased by 100% to R37,5 million
- Operating Expenses decreased by 17,2% to R14,9 million
- Net increase in cash and cash equivalents of R8,3 million
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Reviewed Audited
6 months 6 months year
ended ended ended
31 Aug 31 Aug 29 Feb
2012 2011 2012
R'000 R'000 R'000
Continuing operations
Revenue 104 652 74 925 134 807
Cost of sales (67 308) (56 270) (93 388)
Gross profit 37 344 18 655 41 419
Other income 603 2 972 4 251
Operating expenses (14 931) (18 013) (32 137)
Operating profit before impairment
reversals 23 016 3 614 13 533
Reversal of impairments 1 269 - 8 549
Operating profit before interest
and taxation 24 285 3 614 22 082
Interest received 1 207 8 1 178
Finance costs (12 642) (13 530) (29 654)
Profit/(loss) before taxation 12 850 (9 908) (6 394)
Taxation - - -
Profit/(loss) after taxation from
continuing operations 12 850 (9 908) (6 394)
Loss from discontinued operation (42) (16 274) (30 033)
(Loss)/profit from disposal of
discontinued operation (10 740) - 3 675
Total profit/(loss) for the period
attributable to equity holders of
the Company 2 068 (26 182) (32 752)
Total comprehensive profit/(loss)
for the year attributable to equity
holders of the Company 2 068 (26 182) (32 752)
Unaudited Reviewed Audited
6 months 6 months year
ended ended ended
31 Aug 31 Aug 29 Feb
2012 2011 2012
R'000 R'000 R'000
Reconciliation of EBITDA
Operating profit before interest
and taxation ("EBIT") 24 285 3 614 22 082
Depreciation cost of sales 2 852 2 591 4 954
Depreciation operating expenses 371 694 1 204
Impairment reversals (1 269) - (8 549)
Earnings before interest, taxation,
depreciation, amortisation and
impairment reversals ("EBITDA") 26 239 6 899 19 691
Unaudited Reviewed Audited
6 months 6 months year
ended ended ended
31 Aug 31 Aug 29 Feb
2012 2011 2012
R'000 R'000 cents
Profit/(loss) per share
Basic
Continuing operations 2,0 (1,6) (1,0)
Discontinued operations (1,7) (2,6) (4,2)
Total 0,3 (4,2) (5,2)
Diluted
Continuing operations 2,0 (1,5) (1,0)
Discontinued operations (1,7) (2,5) (4,1)
Total 0,3 (4,0) (5,1)
Headline profit/(loss)
Continuing operations 1,9 (1,6) (2,3)
Discontinued operations (0,6) (0,3) (1,0)
Total 1,3 (1,9) (3,3)
Diluted headline profit/(loss)
Continuing operations 1,9 (1,5) (2,3)
Discontinued operations (0,6) (0,3) (1,0)
Total 1,3 (1,8) (3,3)
Unaudited Reviewed Audited
6 months 6 months year
ended ended ended
31 Aug 31 Aug 29 Feb
2012 2011 2012
R'000 R'000 R'000
Reconciliation of headline profit/
(loss):
Profit/(loss) attributable to
ordinary shareholders 2 068 (26 182) (32 752)
Adjusted for impairment of assets (5 184) 14 509 15 277
Adjusted for (profit)/loss on
disposal of non-current assets 11 600 (548) (3 509)
Headline profit/(loss) attributable
to ordinary shareholders of the
Company 8 484 (12 221) (20 984)
Weighted average shares in issue on
which earnings are based ('000) 629 342 629 342 629 342
Treasury shares issued to the
Brikor Share Incentive Scheme
('000) 15 900 15 900 15 900
Fully diluted weighted average
shares in issue ('000) 645 242 645 242 645 242
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Reviewed Audited
31 Aug 31 Aug 29 Feb
2012 2011 2012
R'000 R'000 R'000
ASSETS
Non-current assets 132 371 150 941 116 446
Property, plant and equipment 95 185 140 892 80 718
Intangible assets 8 350 6 639 8 350
Other financial assets 28 836 3 410 27 378
Current assets 79 406 56 666 59 115
Inventories 41 016 33 397 38 380
Trade and other receivables 33 032 16 574 18 317
Cash and cash equivalents 5 358 6 695 2 418
Non-current assets held for sale 34 580 58 050 60 159
Total assets 246 357 265 657 235 720
EQUITY AND LIABILITIES
Equity attributable to equity
holders of the Company 2 364 6 866 296
Share capital 63 63 63
Share premium 228 180 228 180 228 179
Retained loss (225 879) (221 377) (227 946)
Non-current liabilities 48 204 49 553 47 706
Borrowings 9 838 12 807 9 946
Shareholder loans 30 311 26 557 27 574
Provisions 8 055 10 189 10 186
Current liabilities 195 789 198 588 187 718
Borrowings 114 474 135 192 114 081
Trade and other payables 42 680 24 267 29 546
Taxation 14 923 12 899 15 040
Bank overdraft 23 712 26 230 29 051
Liabilities associated with non-
current assets held for sale - 10 650 -
Total equity and liabilities 246 357 265 657 235 720
Number of shares in issue (excluding 629 342 629 342 629 342
treasury shares)(000)
Net asset value per share (cents) 0,4 1,1 0,05
Net tangible asset value per share
(cents) (0,9) 0,04 (1,3)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Reviewed Audited
6 months 6 months year
ended ended ended
31 Aug 31 Aug 29 Feb
2012 2011 2012
R'000 R'000 R'000
Cash flows from operating
activities 5 242 (5 696) (10 724)
Cash flows from investing
activities 16 6 362 27 484
Cash flows from financing
activities 3 021 (44) (23 236)
Net increase/(decrease) in cash and
cash equivalents 8 279 622 (6 476)
Cash and cash equivalents at the
beginning of the period (26 633) (20 157) (20 157)
Cash and cash equivalents at the
end of the period (18 354) (19 535) (26 633)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Reviewed Audited
6 months 6 months year
ended ended ended
31 Aug 31 Aug 29 Feb
2012 2011 2012
R'000 R'000 R'000
Balance at beginning of period 296 33 048 33 048
Total comprehensive profit/(loss)
for the period 2 068 (26 182) (32 752)
Balance at end of period 2 364 6 866 296
SEGMENTAL REPORTING
Segmental revenue and results
The following is an analysis of the Group's revenue and results from
operations by reportable segments:
Brikor
Brikor Donker-
Main hoek Total
R'000 R'000 R'000
UNAUDITED 6 MONTHS ENDED 31 Aug 2012
Revenue from external customers 82 815 21 837 104 652
Operating profit before impairments 19 603 3 413 23 016
Reversal of impairments 1 014 255 1 269
Operating profit before interest
and taxation 20 617 3 668 24 285
Interest received 1 207
Finance costs (12 642)
Profit before taxation 12 850
Taxation -
Profit after taxation from
continuing operations 12 850
Segment assets and liabilities
Segment assets 167 354 44 423 211 777
Segment current liabilities (187 874) (7 915) (195 789)
Other segment information
Depreciation and amortisation
included in cost of sales and
operating expenses (2 653) (570) (3 223)
Additions to non-current assets 14 652 2 204 16 856
REVIEWED 6 MONTHS ENDED 31 Aug 2011
Revenue from external customers 64 533 10 392 74 925
Operating loss before impairments 3 679 (65) 3 614
Impairments - - -
Operating loss before interest and
taxation 3 679 (65) 3 614
Interest received 8
Finance costs (13 530)
Loss before taxation (9 908)
Taxation -
Loss after taxation from continuing
operations (9 908)
Segment assets and liabilities
Segment assets 173 498 34 109 207 607
Segment current liabilities (192 493) (6 095) (198 588)
Other segment information
Depreciation and amortisation
included in cost of sales and
operating expenses (2 653) (452) (3 015)
Additions to non-current assets 2 850 77 2 927
AUDITED YEAR ENDED 29 Feb 2012
Revenue from external customers 112 818 21 989 134 807
Operating profit before impairments 8 015 5 518 13 533
Reversal of impairments 8 549 - 8 549
Operating profit before interest
and taxation 16 564 5 518 22 082
Interest received 1 178
Finance costs (29 654)
Loss before taxation (6 394)
Taxation -
Loss after taxation from continuing
operations (6 394)
Segment assets and liabilities
Segment assets 135 777 39 784 175 561
Segment current liabilities (181 429) (6 289) (187 718)
Other segment information
Depreciation and amortisation
included in cost of sales and
operating expenses (5 278) (880) (6 158)
Additions to non-current assets 4 693 991 5 684
Unaudited Reviewed Audited
31 Aug 31 Aug 29 Feb
2012 2011 2012
R'000 R'000 R'000
Reconciliation of assets
Total assets for reportable
Segments 211 777 207 607 175 561
Non-current assets held for sale 34 580 58 050 60 159
246 357 265 657 235 720
Reconciliation of liabilities
Total liabilities for reportable
Segments (195 789) (198 588) (187 718)
Non-current liabilities (48 204) (49 553) (47 706)
Liabilities associated with non-
current assets held for sale - (10 650) -
(243 993) (258 791) (235 424)
The major changes in segment assets during the year relate to the
sale of the Stanger division, Vereeniging plant and equipment and the
addition of plant and equipment.
COMMENTARY
OVERVIEW
The directors of Brikor are pleased to present the unaudited
condensed consolidated interim financial results for the six months
ended 31 August 2012, which reflect a return to profitability.
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 and industrial projects
and has clay, aggregate and coal mining operations.
The successful restructuring of the Group led to improved results for
the interim period. Margins improved substantially in a competitive
trading environment. The Group's focus returned to core operations
thereby successfully achieving improved yields through effective cost
management initiatives and a concerted effort on sustainable working
capital management.
The increase in turnover has been largely attributable to increased
sales in the coal and aggregate divisions. Gross profit percentage
increase improved visibly as a result of cost savings in the coal
division, increased volumes in the aggregate division and an
improvement in yields in the brick division.
The Donkerhoek operation is strategically situated to supply
aggregates for infrastructure development. The improvements of the
Donkerhoek production process resulted in better yields and volumes
achieved and consequentially the securing of tenders, which were
previously unattainable. The commencement of supply on these projects
contributed substantially to the interim profits achieved.
Brikor took advantage of the mining license granted in September 2011
for its mining operations at Vlakfontein, giving it access to clay
and coal deposits. The mining of coal has shown considerable returns
and assisted with the increase in margins during the reporting
period.
FINANCIAL RESULTS
In a challenging operating environment revenue increased by 39,8% to
R104,7 million (2011: R74,9 million) and gross profit increased by
100% to R37,3 million (2011: R18,7 million). The improvement in gross
profit is mainly due to improved yields and sales margins as a result
of the successful implementation of the restructuring plan giving
renewed focus on the Group's core business.
Competitive pressure remained throughout the period, inhibiting the
Group's ability to fully pass input cost increases on to customers.
The coal mine contributed significantly to the Group's results for
the period.
Operating expenses decreased by 17,2% to R14,9 million (2011: R18,0
million) as a result of cost-saving initiatives through the
implementation of the restructuring plan.
The above measures resulted in the Group generating an operating
profit before impairment reversals of R23,0 million (2011: R3,6
million).
After taking finance costs and impairment reversals into
consideration, the profit for the period amounted to R12,9 million
(2011: R9,9 million loss)from continuing operations, and a
comprehensive profit of R2,1 million (2011: R26,2 million
comprehensive loss), which resulted in earnings per share of 0,3
cents (2011: 4,2 cents loss per share) and fully diluted earnings per
share of 0,3 cents (2011: 4,0 cents loss per share) for the period.
Continuing operations delivered earnings per share of 2,0 cents
(2011: 1,6 cents loss per share) and fully diluted headline earnings
per share of 1,9 cents (2011: 1,5 cents loss per share).
Property, plant and equipment decreased to R95,2 million (2011:
R140,9 million) as a net result of:
- the disposal of assets of R1,8 million (2011: R9,6 million);
- additions of R16,9 million (2011: R2,9 million);
- depreciation and amortisation of R3,2 million (2011: R3,0
million);
- reversals of impairments to plant and equipment of R1,3 million on
assets that were transferred back into continuing operations from
discontinued operation; and
- reclassification of the Olifantsfontein, Bronkhorstpruit and
Vereeniging divisions as held for sale.
Assets reclassified as held for sale amounted to R34,6 million (2011:
R58,1 million).
Net impairment reversals amounting to R3,9 million (2011: R14,5
million impairment losses) were recognised in respect of these assets
held for sale to adjust these assets to their fair value of their
recoverable amounts.
Brikor is currently in breach of the financing covenants of its RMB
facilities. The current carrying value of the loans are R112,6
million (2011: R132,1 million). As a result of the breach of the
covenants, the portion of the loans relating to continuing operations
is reflected under current liabilities. The Group's financiers are in
negotiations on restructuring the loan facilities to resolve the
breach to the Group financiers' satisfaction.
DISCONTINUED OPERATIONS
On 18 August 2011 Brikor entered into an agreement for the sale of
the Stanger operations for R50 million; to be settled through the
payment of R30 million in cash and R20 million in 72 monthly
instalments. The agreement became unconditional on 30 November 2011.
On 10 October 2011 a decision was taken by the Board to dispose of
the operations in Olifantsfontein, Vereeniging and Bronkhorstspruit.
On 8 July 2012 Brikor held an auction for the sale of plant and
equipment of which R8,6 million was received for the Vereeniging
division and R0,5 million for the Olifantsfontein division. On 12
July 2012 Brikor disposed of R8,3 million of the Olifantsfontein
division's plant and equipment. On 14 August 2012 Brikor entered into
an agreement for the sale of the Olifantsfontein properties for R15,0
million. As at 31 August 2012 not all sale conditions had been met
and accordingly this sale has not yet been recorded. On 17 August
2012 Brikor auctioned the Vereeniging division's property for R11,0
million. As at 31 August 2012 not all sale conditions had been met
and accordingly this sale has not yet been recorded. On 24 August
2012 Brikor auctioned the Bronkhorstspruit division for R10,0
million. As at 31 August 2012 not all sale conditions had been met
and accordingly this sale has not yet been recorded. The assets
relating to the unrecorded sales have been re-valued at their new
fair value less cost to sell recoverable amounts, resulting in a net
impairment reversal of R3,9 million. The table below analyses key
amounts relating to the discontinued operations:
Olifants- Ver- Bronk-
fontein eeniging horstpruit Stanger Total
R'000 R'000 R'000 R'000 R'000
August 2012
Revenue 28 1 384 - - 1 412
Expenses (1 356) (3 469) (543) - (5 368)
Impairments 7 517 1 256 (4 859) - 3 914
Profit/(Loss)
before taxation 6 189 (829) (5 402) - (42)
Taxation - - - - -
Profit/(loss) from
discontinued
operations 6 189 (829) (5 402) - (42)
Loss on disposal
of discontinued
operations (3 010) (7 730) - - (10 740)
Loss on disposal (3 010) (7 730) - - (10 740)
Taxation - - - - -
Total
profit/(loss) from
discontinued
operations 3 179 (8 559) (5 402) - (10 782)
August 2011
Revenue 36 5 665 4 036 33 761 43 498
Expenses (2 475) (5 921) (5 797) (31 086) (45 279)
Impairments (14 004) - - (509) (14 513)
Net financing
costs - - - 20 20
(Loss)/profit
before taxation (16 443) (256) (1 761) 2 186 (16 274)
Taxation - - - - -
Total
(loss)/profit from
discontinued
operations (16 443) (256) (1 761) 2 186 (16 274)
February 2012
Revenue 36 8 657 4 038 52 667 65 398
Expenses (4 121) (9 827) (6 213) (51 369) (71 530)
Impairments (14 004) (7 878) - (1 944) (23 826)
Net financing
costs - - - (75) (75)
Loss before
taxation (18 089) (9 048) (2 175) (721) (30 033)
Taxation - - - - -
Total loss from
discontinued
operations (18 089) (9 048) (2 175) (721) (30 033)
Profit on disposal
of discontinued
operations - - - 3 675 3 675
Profit on disposal - - - 3 675 3 675
Taxation - - - - -
Total
(loss)/profit from
discontinued (18 089) (9 048) (2 175) 2 954 (26 358)
operations
The following tables summarise the carrying values of the assets and
liabilities held for sale, and of the assets and liabilities of the
Stanger division that were sold on 30 November 2011:
Olifants- Ver- Bronk-
fontein eeniging horstpruit Stanger Total
R'000 R'000 R'000 R'000 R'000
August 2012
Property, plant
and equipment 20 219 25 066 14 874 - 60 159
Impairments 7 517 1 256 (4 859) - 3 914
Transferred back
into continued
operations (962) (379) - - (1 341)
Assets sold (11 815) (16 337) - - (28 152)
14 959 9 606 10 015 - 34 580
Sold (11 815) (16 337) - - (28 152)
Proceeds 8 805 8 607 - - 17 412
Loss on disposal (3 010) (7 730) - - (10 740)
Stanger Total
R'000 R'000
August 2011
Property, plant
and equipment 43 290 43 290
Inventories 6 163 6 163
Trade and other
receivables 7 776 7 776
Cash and cash
equivalents 821 821
Provisions (821) (821)
Borrowings (1 850) (1 850)
Trade and other
payables (7 979) (7 979)
47 400 47 400
Olifants- Ver- Bronk-
fontein eeniging horstpruit Total Stanger
R'000 R'000 R'000 R'000 R'000
February 2012
Property, plant
and equipment 20 219 25 066 14 874 60 159 41 856
Inventories 5 080
Trade and other
receivables 7 168
Cash and cash
equivalents 1 440
Provisions (1 440)
Borrowings (1 615)
Trade and other
payables (6 164)
20 219 25 066 14 874 60 159 46 325
Profit on disposal 3 675
Proceeds on
disposal 50 000
Less cash and cash
equivalents (1 440)
Cash proceeds 48 560
RELATED PARTIES
Ultimate controlling party
The Group's ultimate controlling party is G v N Parkin.
Related party transactions
Transaction value for
the period ended Balance outstanding
31 Aug 31 Aug 29 Feb 31 Aug 31 Aug 29 Feb
2012 2011 2012 2012 2011 2012
R'000 R'000 R'000 R'000 R'000 R'000
Sales to related
parties
Cyndara 113 (Pty) Ltd 74 531 707 130 329 49
Kuvula Trade 40 (Pty)
Ltd 1 889 1 047 2 837 335 318 328
Vecto Trade 449 (Pty)
Ltd - - - 218 218 218
Scarlet Sun 33 (Pty)
Ltd - 1 276 1 609 22 (17) 147
Purchases from related
parties
Cyndara 113 (Pty) Ltd 340 726 939 (10) 450 246
Kuvula Trade 40 (Pty)
Ltd 4 224 2 676 7 818 840 1 314 68
Leomega (Pty) Ltd - 45 64 12 10 22
Vecto Trade 449 (Pty)
Ltd - 281 295 - - -
Scarlet Sun 33 (Pty)
Ltd 34 - - - - -
Interest paid to
related parties
G v N Parkin 1 159 1 270 2 288 30 311 21 909 27 574
The above transactions occurred at arm's length on market-related
terms.
BASIS OF PREPARATION
The unaudited condensed consolidated interim financial results for
the six months ended 31 August 2012 have been prepared in accordance
with the measurement and recognition requirements of International
Financial Reporting Standards ("IFRS") and the presentation and
disclosure requirements of IAS 34: Interim Financial Reporting, the
AC500 standards as issued by the Accounting Standards Board, the
Companies Act of South Africa and the JSE Limited Listings
Requirements. These unaudited condensed consolidated interim
financial results do therefore not include all of the information
required for full annual financial statements. The accounting
policies used to prepare these unaudited condensed consolidated
interim financial results, which are in terms of IFRS, are consistent
with those applied in the preparation of the annual financial
statements for the year ended 29 February 2012. The unaudited
condensed consolidated interim financial results have been prepared
by the Chief Financial Officer, Mrs H Botha.
EVENTS AFTER THE REPORTING DATE
Shareholders are referred to the announcement released on SENS on 21
September 2012 pertaining to the Bronkhorstspruit disposal,
Olifantsfontein disposal and the Vereeniging disposal (collectively
"the Transactions"). The JSE has ruled that the Transactions relate
to the same type of business, namely clay brick factories, therefore
the Transactions must be aggregated. Consequently, the
Bronkhorstspruit disposal and the Olifantsfontein disposal are
classified as Category 1 transactions and require shareholder
approval. The Vereeniging disposal is classified as a Category 2
transactions and shareholder approval is not required. A circular
containing full details of the Bronkhorstspruit disposal and the
Olifantsfontein disposal will be distributed to shareholders in due
course.
As announced on SENS on 1 November 2012, Dr BS Ngubane and Mr CB
Madolo have been appointed as independent non-executive directors of
the Board with effect from 1 November 2012.
GOING CONCERN
In 2011 the Board formulated a restructuring plan to improve Brikor's
financial position. Core focus areas included a reduction in costs,
closure of non-profitable operations, the commissioning of coal
operations and the sale of non-core assets and businesses. The
successful implementation of these steps positively influenced the
results for the six months ended 31 August 2012, resulting in the
Group realising a profit of R2,1 million.
The directors regard Brikor as a going concern based on:
- the continued support of its financiers and creditors. Brikor is
currently negotiating the terms of the finance restructuring
agreement. Should the restructuring plan not be accepted by RMB,
there exists a material uncertainty which may cast significant
doubt about the Company and its subsidiaries' ability to continue
as going concerns and, therefore, that it may be unable to realise
its assets and discharge its liabilities in the normal course of
business;
- no material adverse changes in current economic and market
conditions;
- no adverse changes in the regulatory environment; and
- the continuance of profitable results.
The unaudited condensed consolidated interim financial results are
prepared on the basis of accounting policies applicable to a going
concern. This basis presumes that funds will be available to finance
future operations and that the realisation of assets and settlement
of liabilities will occur in the ordinary course of business.
PROSPECTS
The Group is benefiting from a gradual improvement in market
conditions and has positioned itself accordingly to extrapolate
maximum benefits from such improvements.
Based on the support of its financiers and assuming that current
market and economic conditions will not deteriorate, Brikor is
expecting continuing improved results in the next financial period.
The market and prospect information contained in the unaudited
condensed consolidated interim financial results for the six months
ended 31 August 2012 have been neither reviewed nor reported on by
the Group's external auditors.
DIVIDEND
No dividend has been declared for the period.
By order of the Board
G v N Parkin H Botha
Chief Executive Officer Chief Financial Officer
Nigel
6 December 2012
CORPORATE INFORMATION
Non-executive directors: Dr B Ngubane; C Madolo; RJ Magoele
Executive directors: G v N Parkin (CEO); H Botha (CFO); G Parkin
(Jnr) (Alternate director to the CEO)
Registered address: 1 Marievale Road, Vorsterskroon, Nigel
Postal address: PO Box 884, Nigel 1490
Telephone: (011) 739 9000
Facsimile: (011) 739 9021
Company secretary: CIS Company Secretaries (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: 06/12/2012 04:30:00 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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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