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Unaudited Condensed Consolidated Interim Results for the six Months ended 31 August 2013
BRIKOR LIMITED (In provisional liquidation)
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 2013
HIGHLIGHTS
Revenue increased by 48% to R155,4 million
Gross profit increased by 41% to R52,7 million
Operating expenses increased by 13% to R16,9 million
Net increase in cash and cash equivalents of R30,4 million
Profit after tax improved to R24,9 million
PREPARED BY:
The condensed consolidated interim financial results (“interim
financial results” or “results”) for the six months ended 31
August 2013 were prepared by Laura Craig CA(SA) under the
supervision of Hanleu Botha, Financial Director. The interim
results report for the six months ended 31 August 2013 was
published on 2 December 2013 and is presented below:
OVERVIEW
The directors of Brikor are pleased to present the unaudited
condensed consolidated interim financial results for the six
months ended 31 August 2013, which reflect the profitable
turnaround of the Group.
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 and has an Aggregates
division, Bricks division and a Coal division through its
subsidiary, Ilangabi.
During the 2013 financial year, the Board decided to focus on its
core operations to improve Brikor’s financial position. Core
focus areas included a reduction in costs, the commissioning of
coal operations through its subsidiary and the sale of non-core
assets. The successful implementation of these steps positively
influenced the results for the six months ended 31 August 2013,
resulting in the Group realising a commendable operating profit
before impairment reversals of R36,6 million (31 August 2012:
R23,0 million) compared to R34,5 million for the full 2013
financial year.
The increase in turnover has been largely attributable to the
addition of coal sales and increased sales in the Bricks
division. Gross profit value improved visibly as a result of cost
management and high margins achieved in the Coal division,
increased volumes and an improvement in yields in the Bricks
division.
As a result of the completion of certain contracts in the
Aggregates division during the early part of the reporting period
there has been a decrease in the profits achieved. However, new
contracts have been entered into and will reflect in the latter
part of the 2014 financial year.
The continued focus on working capital management and improved
profit growth have resulted in the Group’s cash and cash
equivalents now reflecting a positive balance of R12,0 million
(31 August 2012: R18,4 million negative balance).
FINANCIAL RESULTS
In a competitive operating environment revenue increased by 48%
to R155,4 million (31 August 2012: R104,7 million) and gross
profit increased by 41% to R52,7 million (31 August 2012: R37,3
million). The improvement in gross profit is mainly due to the
addition of the Coal division.
Operating expenses increased marginally by 13% to R16,9 million
(31 August 2012: R14,9 million) as a result of continued cost
management.
The above measures resulted in the Group generating an operating
profit before impairment reversals of R36,6 million (31 August
2012: R23,0 million).
After taking finance income, finance costs and impairment
reversals into consideration, the profit for the six months
amounted to R30,2 million (31 August 2012: R12,9 million), and a
total profit and other comprehensive income of R24,1 million (31
August 2012: R2,1 million), which resulted in earnings per share
of 3,9 cents (31 August 2012: 0,3 cents per share) and fully
diluted headline earnings per share of 3,8 cents (31 August 2012:
1,3 cents per share) for the six months.
Continuing operations delivered earnings per share of 4,0 cents
(2012: 2,0 cents per share) and fully diluted headline earnings
per share of 3,9 cents (2012: 1,9 cents per share).
Property, plant and equipment increased to R116,9 million (31
August 2012: R95,2 million) as a net result of:
- additions of R13,6 million;
- depreciation of R8,0 million;
- transfers of assets to Investment Property of R14,3 million;
- capitalisation of decommissioning assets of R6,7 million
relating to the environmental provision;
- disposals of R0,8 million; and
- a reversal of impairment of R24,5 million on the Donkerhoek
plant, which is no longer impaired as the business has
returned to profitability.
Due to a historical breach of covenants, Brikor’s loan facilities
of R93,8 million (31 August 2012: R112,6 million) were
reclassified as a current liability from 2011, in accordance with
IAS 1, Presentation of Financial Statements.
PROSPECTS
The Group is benefiting from an improvement in market conditions
and has positioned itself accordingly to extrapolate maximum
benefits from such improvements.
Assuming that current market and economic conditions will not
deteriorate, Brikor is expecting continuing improved results for
the next reporting period.
The market and prospect information contained in the reviewed
condensed consolidated provisional financial results for the six
months ended 31 August 2013 have been neither reviewed nor
reported on by the Group’s external auditors.
DIVIDEND
No dividend has been declared for the period.
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX
MONTHS ENDED 31 AUGUST 2013
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Reviewed
6 months 6 months year
ended ended ended
31 Aug 31 Aug 28 Feb
2013 2012 2013
R'000 R'000 R'000
Continuing operations
Revenue 155 392 104 652 223 755
Cost of sales (102 681) (67 308) (155 861)
Gross profit 52 711 37 344 67 894
Other income 830 603 1 100
Administration expenses (14 617) (12 598) (29 815)
Distribution expenses (1 892) (1 841) (3 943)
Operating expenses (405) (492) (777)
Operating profit before
impairment reversals 36 627 23 016 34 459
Reversal of impairments - 1 269 32 299
Operating profit before interest
and taxation 36 627 24 285 66 758
Interest received 830 1 207 2 516
Finance costs (7 276) (12 642) (23 449)
Profit before taxation 30 181 12 850 45 825
Taxation (5 262) - (1 797)
Profit after taxation from
continuing operations 24 919 12 850 44 028
Loss from discontinued operation (878) (42) (530)
Profit/(loss) from disposal of
discontinued operation 41 (10 740) (10 569)
Total profit for the period
attributable to equity holders
of the Company 24 082 2 068 32 929
Total comprehensive profit for
the year attributable to equity
holders of the Company 24 082 2 068 32 929
Unaudited Unaudited Reviewed
6 months 6 months year
ended ended ended
31 Aug 31 Aug 28 Feb
2013 2012 2013
R'000 R'000 R'000
Reconciliation of EBITDA
Operating profit before interest
and taxation (“EBIT”) 36 627 24 285 66 758
Depreciation cost of sales 4 246 2 852 6 388
Depreciation operating expenses 342 371 648
Impairment reversals - (1 269) (32 299)
Earnings before interest, taxation,
depreciation, amortisation and
impairment reversals (“EBITDA”) 41 215 26 239 41 495
Unaudited Unaudited Reviewed
6 months 6 months year
ended ended ended
31 Aug 31 Aug 28 Feb
2013 2012 2013
R'000 R'000 R’000
Profit/(loss) per share
Basic
Continuing operations 4,0 2,0 7,0
Discontinued operations (0,1) (1,7) (1,8)
Total 3,9 0,3 5,2
Diluted profit/(loss)
Continuing operations 4,0 2,0 7,0
Discontinued operations (0,1) (1,7) (1,8)
Total 3,9 0,3 5,2
Headline profit/(loss)
Continuing operations 3,9 1,9 2,0
Discontinued operations (0,1) (0,6) (0,7)
Total 3,8 1,3 1,3
Diluted headline profit/(loss)
Continuing operations 3,9 1,9 2,0
Discontinued operations (0,1) (0,6) (0,7)
Total 3,8 1,3 1,3
Unaudited Unaudited Reviewed
6 months 6 months year
ended ended ended
31 Aug 31 Aug 28 Feb
2013 2012 2013
R'000 R'000 R’000
Reconciliation of headline profit:
Profit attributable to ordinary
Shareholders 24 082 2 068 32 929
Adjusted for impairment of assets - (5 184) (36 213)
Adjusted for (profit)/loss on
disposal of non-current assets (480) 11 600 11 419
Headline profit attributable to
ordinary shareholders of
the Company 23 602 8 484 8 135
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 -
Fully diluted weighted average
shares in issue ('000) 629 342 645 242 629 342
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Reviewed
31 Aug 31 Aug 28 Feb
2013 2012 2013
R'000 R'000 R'000
ASSETS
Non-current assets 174 521 132 371 164 825
Property, plant and equipment 116 948 95 185 110 034
Investment property 14 342 - 14 342
Intangible assets 14 791 8 350 15 169
Other financial assets 28 440 28 836 25 280
Current assets 122 228 79 406 90 220
Inventories 48 607 41 016 47 195
Trade and other receivables 55 313 33 032 33 157
Cash and cash equivalents 18 308 5 358 9 868
Non-current assets held for sale - 34 580 14 959
Total assets 296 749 246 357 270 004
EQUITY AND LIABILITIES
Equity attributable to equity
holders of the Company 57 307 2 364 33 225
Share capital 63 63 63
Share premium 228 179 228 179 228 179
Accumulated loss (170 935) (225 878) (195 017)
Non-current liabilities 62 537 48 204 52 222
Borrowings 8 045 9 838 5 037
Shareholder loans 31 408 30 311 29 430
Provisions 18 889 8 055 17 010
Deferred taxation 4 195 - 745
Current liabilities 176 905 195 789 184 557
Borrowings 94 423 114 474 102 794
Trade and other payables 64 883 42 680 49 008
Taxation 11 303 14 923 11 528
Bank overdraft 6 296 23 712 21 227
Total equity and liabilities 296 749 246 357 270 004
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Reviewed
6 months 6 months year
ended ended ended
31 Aug 31 Aug 28 Feb
2013 2012 2013
R'000 R'000 R'000
Cash flows from operating
activities 26 539 5 242 15 034
Cash flows from investing
Activities 270 16 14 580
Cash flows (to)/from financing
activities (3 438) 3 021 (14 340)
Net increase in cash and cash
equivalents 23 371 8 279 15 274
Cash and cash equivalents at
the beginning of the period (11 359) (26 633) (26 633)
Cash and cash equivalents at
the end of the period 12 012 (18 354) (11 359)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Reviewed
6 months 6 months year
ended ended ended
31 Aug 31 Aug 28 Feb
2013 2012 2013
R'000 R'000 R'000
Balance at beginning of period 33 225 296 296
Total comprehensive profit for
the period 24 082 2 068 32 929
Balance at end of period 57 307 2 364 33 225
SEGMENT ANALYSIS
There are three reportable segments offering different products
which are managed separately as they require different technology
and marketing strategies, which are:
- Coal - the mining and sales of coal through Brikor’s
subsidiary;
- Bricks - the manufacturing and sales of bricks; and
- Aggregates - the quarrying and sales of aggregates.
For each of these segments, the Group’s CEO (the chief operating
decision-maker) reviews internal management reports on at least a
quarterly basis.
The following is an analysis of the Group’s revenue and results
from operations by reportable segments:
Coal Bricks Aggregates Total
R’000 R’000 R’000 R’000
UNAUDITED
6 MONTHS ENDED
31 Aug 2013
Revenue from
external customers 45 027 89 056 21 309 155 392
Operating profit
before impairments 18 364 16 473 1 790 36 627
Reversal of impairments - - - -
Operating profit
before interest
and taxation 18 364 16 473 1 790 36 627
Segment assets and
liabilities
Segment assets 60 923 161 283 74 543 296 749
Segment current
Liabilities (22 655) (53 526) (6 301) (82 482)
Other segment
information
Depreciation and
amortisation included
in cost of sales and
operating expenses (1 177) (1 971) (1 440) (4 588)
Additions to non-current
assets 5 188 5 493 811 11 492
UNAUDITED
6 MONTHS ENDED
31 Aug 2012
Revenue from
external customers - 82 815 21 837 104 652
Operating profit before
impairment reversals - 19 603 3 413 23 016
Impairment reversals - 1 014 255 1 269
Operating profit before
interest and taxation - 20 617 3 668 24 285
Segment assets and
liabilities
Segment assets - 167 354 44 423 211 777
Segment current liabilities - (73 400) (7 915) (81 315)
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
YEAR ENDED
28 Feb 2013
Revenue from external
Customers 60 483 114 720 48 552 223 755
Operating profit
before impairment
reversals 17 411 6 078 10 970 34 459
Impairments reversals - 1 014 31 285 32 299
Operating profit
before interest
and taxation 17 411 7 092 42 255 66 758
Segment assets and
liabilities
Segment assets 29 167 143 563 82 315 255 045
Segment current
liabilities (6 071) (66 645) (9 047) (81 763)
Other segment
information
Depreciation and
amortisation included
in cost of sales and
operating expenses (1 317) (4 453) (1 266) (7 036)
Additions to non-current
assets 13 715 9 356 2 579 25 650
Unaudited Unaudited Reviewed
31 Aug 31 Aug 28 Feb
2013 2012 2013
R'000 R'000 R'000
Reconciliation of assets
Total assets for reportable
segments 296 749 211 777 255 045
Non-current assets held for sale - 34 580 14 959
296 749 246 357 270 004
Reconciliation of liabilities
Corporate liabilities (94 423) (114 474) (102 794)
Total liabilities for
reportable segments (82 482) (81 315) (81 763)
Other liabilities (62 537) (48 204) (52 222)
(239 442) (243 993) (236 779)
NOTES TO THE CONDENSED FINANCIAL RESULTS
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated interim financial results for the six
months ended 31 August 2013 have been prepared in accordance with
the recognition and measurement requirements of International
Financial Reporting Standards (IFRS) and the presentation and
disclosure requirements of IAS 34 Interim Financial Reporting,
the Listings Requirements of the JSE Limited, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee
and Financial Reporting Pronouncements as issued by the Financial
Reporting Standards Council, and the Companies Act.
The accounting policies applied are consistent with those applied
for the year ended 28 February 2013 and are in terms of IFRS as
issued by the International Accounting Standards Board. New
standards and interpretations that became effective on 1 March
2013 had no material effect on the results for the period.
The condensed consolidated interim financial results have been
prepared on the historic cost convention, except for certain
financial instruments, which are stated at fair value and are
presented in Rand rounded to the nearest thousand (R'000).
2. 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 28 Feb 31 Aug 31 Aug 28 Feb
2013 2012 2013 2013 2012 2013
R’000 R’000 R’000 R’000 R’000 R’000
Sales to related
parties
Cyndara 113
(Pty)Ltd 89 74 1 636 69 130 69
Vecto Trade
(Pty) Ltd - - - 164 218 218
Scarlet Sun 33
(Pty) Ltd 87 - 252 12 22 203
Purchases from
related parties
Cyndara 113
(Pty)Ltd 853 340 2 552 447 (10) 159
Leomega (Pty) Ltd - - 12 12 918
Scarlet Sun 33
(Pty) Ltd - 34 1 715 - -
Interest paid to
related parties
GvN Parkin 1 960 1 159 2 486 31 408 30 311 29 430
Interest received from
related parties
Huntrex (Pty) Ltd 804 965 1 835 16 452 19 246 17 884
The above transactions occurred at arm’s length on market-related
terms.
3. SALIENT FEATURES
Unaudited Unaudited Reviewed
31 Aug 31 Aug 28 Feb
2013 2012 2013
Number of shares in issue
(excluding treasury
shares)(‘000) 629 342 629 342 629 342
Net asset value per share (cents) 9,1 0,4 5,3
Net tangible asset value per
share (cents) 6,8 (0,9) 2,9
Significant items in profit
before taxation(‘000)
- Impairment reversals - 1 269 32 299
- Directors’ emoluments 1 884 1 411 3 577
- Employee cost 24 484 22 539 50 492
Net asset value per share is determined by dividing the total
equity by the actual number of shares in issue at the 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 the reporting date.
4. SUBSEQUENT EVENTS AND GOING CONCERN
The directors have prepared their budgets and cash flow forecast
for the 2014 financial year based on reasonable and supportable
assumptions.
The cash flow forecast indicates that Brikor will have sufficient
cash to enable Brikor to settle its liabilities (excluding the
financing under dispute, which is discussed further below) in the
ordinary course of business. During the first half of the 2014
financial year, Brikor has improved the growth that is reflected
for the 2013 financial year and the 2014 cash flow forecast.
However, due to a historical breach of financial covenants,
Brikor’s loan facilities of R93,8 million (2012: R112,6 million)
were reclassified as a current liability from 2011, in accordance
with the requirements of IAS 1: Presentation of Financial
Statements. As a result of this reclassification, the Company’s
current liabilities are reflecting as exceeding its current
assets on the condensed consolidated statement of financial
position at 31 August 2013 by R54,7 million (31 August 2012:
R116,4 million).
LEGAL DISPUTE WITH FINANCIER
The Company announced on SENS on 22 February 2013 that Brikor was
in breach of the financing covenants of its financier. This SENS
announcement was renewed on 10 April 2013, 24 May 2013 and 2 July
2013 until it was withdrawn on 13 September 2013. On 31 July 2013
it was announced that Brikor’s shares had been suspended as it
has been placed into provisional liquidation whilst the outcome
remained pending, a further announcement was released on SENS on
10 October 2013 that the setting of the court date will be given
by the court on 22 November 2013. The date was set for the 16 May
2014 as announced on SENS on 25 November 2013.
DATE OF PUBLICATION OF THIS REPORT
2 December 2013
G v N Parkin H Botha
Chief Executive Officer Financial Director
Durban
2 December 2013
CORPORATE INFORMATION
Non-executive directors: Dr BS Ngubane; CB Madolo
Executive directors: G v N Parkin (CEO); H Botha (FD); G Parkin
(Jnr) (Alternate director to the CEO)
Registered address: Maharaj Attorneys, 3 Rydall Vale Crescent, La
Lucia Office Park, Durban
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: 02/12/2013 11:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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