Wrap Text
Reviewed Condensed Consolidated Provisional Financial Results for the year ended 28 February 2015
BRIKOR LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013247/06
JSE code: BIK
ISIN: ZAE000101945
(“Brikor” or “the group” or “the company”)
REVIEWED CONDENSED CONSOLIDATED PROVISIONAL FINANCIAL RESULTS
for the year ended 28 February 2015
PREPARED BY
The condensed consolidated provisional financial results
(“provisional financial results” or “results”) for the year ended
28 February 2015 were prepared by Laura Craig CA(SA), group
financial manager, under the supervision of Hanleu Botha,
financial director.
AUDITOR’S REPORT
The condensed consolidated provisional financial statements for
the years ended 28 February 2015, 2014 and 2013 as set out on
pages 3 to 19 have been reviewed by KPMG Inc., who expressed an
unmodified review conclusion. The auditor’s report 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 9 to
the condensed consolidated provisional financial statements.”
The auditor’s report does not necessarily report on all of the
information contained in these 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.
The results for the year ended 28 February 2015, as approved by a
round robin of the board of directors on 22 April 2016, are
presented below:
HIGHLIGHTS
Revenue increased by 12,1% to R318,2 million
Gross profit increased by 6,8% to R76,5 million
Net cash flows from operating activities of R73,5 million
Net increase in cash and cash equivalents of R73,4 million for
the year
Profit after tax improved to a R9,5 million profit
EBITDA increased by 10,0% to R44,9 million
RECONCILIATION OF EBITDA FOR THE YEAR ENDED 28 FEBRUARY 2015
Restated
Reviewed Reviewed Reviewed Audited
2015 2014 2013 2012
R’000 R’000 R’000 R’000
Operating profit/(loss)
before interest and
taxation 25 332 (4 866) 62 635 22 082
Depreciation and
amortisation
cost of sales 10 952 9 375 6 388 4 954
Depreciation
administrative and
other expenses 1 507 1 096 648 1 204
Impairments/
(impairment reversals) 7 113 35 187 (32 299) (8 549)
Total EBITDA 44 904 40 792 37 372 19 691
COMMENTARY
The directors of Brikor are pleased to present the reviewed
condensed consolidated provisional financial results for the year
ended 28 February 2015, which reflect a return to profitability.
Brikor was placed under provisional liquidation on 30 July 2013
and did not prepare or publish any results since then. Brikor’s
last published integrated report was for the financial year ended
28 February 2012. The condensed consolidated provisional results
are therefore presented for the three years ended 28 February
2013, 2014 and 2015 with comparative information for 2012.
On instruction of FirstRand Bank Limited (“FirstRand”), Brikor
instituted a restructuring plan in cooperation with FirstRand,
which resulted in the sale of certain assets. This process
started in 2011, with the final assets sold in 2014. All monies
received were utilised to repay the amounts owed to FirstRand.
A dispute with FirstRand, relating to the immediate demand by the
bank of Brikor’s overdraft and subsequent foreclosure on two term
loans under cross default clauses of the FirstRand finance
agreements concluded with Brikor, led to a legal dispute between
Brikor and FirstRand. On 12 July 2013, FirstRand brought an
application for the liquidation of Brikor. The application was
heard on 30 July 2013 and the KwaZulu-Natal High Court granted an
order for the provisional liquidation of Brikor.
Brikor’s listing on the AltX was suspended on the same date.
A settlement was subsequently reached with FirstRand and Brikor
was able to meet the terms and conditions thereof.
On 2 October 2015, the Kwa-Zulu Natal High Court discharged the
provisional liquidation order, as well as the order for the
perfection of the notarial bond.
For details on subsequent events please refer to the notes to the
condensed consolidated provisional financial statements.
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 in
three segments, namely bricks, aggregates and coal (through its
subsidiary, Ilangabi Investments 12 (Pty) Ltd).
The group’s overall financial indicators improved substantially
in a competitive trading environment through effective cost
management initiatives and a concerted effort on sustainable
working capital management. The continued focus on the group’s
core operations was maintained.
The increase in revenue has largely been attributable to
increased sales in the coal and brick divisions. The gross profit
percentage reduced slightly as a result of a differentiation of
the sales mix across the different product lines, due to
management’s decision to increase the quantitative value of the
gross profit rather than the percentage. Furthermore, certain
contracts were still in place from the prior year at the
historical sales price, which resulted in inflation not being
transferred across to those customers.
The Donkerhoek operation 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. The improvements of the Donkerhoek
production process resulted in better yields and volumes achieved
and, consequently, the securing of tenders. The continued supply
on these projects and the commencement of new projects
contributed substantially to the profits achieved for the year.
The brick division’s sales improved considerably due to a higher
demand from the market as well as an increase in production
volumes, coupled with improved product yields.
The group successfully commissioned the coal operations at
Vlakfontein during the 2013 financial year, fully utilising its
access to clay and coal deposits. The mining of coal operations
have shown significant returns and assisted with the increase in
revenue and margins during the last three reporting years.
FINANCIAL RESULTS
In a competitive operating environment, revenue increased by
12,1% to R318,2 million (2014: R283,9 million) and gross profit
increased by 6,8% to R76,5 million (2014: R71,6 million). The
improvement in gross profit was mainly due to increased market
demand as well as higher production volumes with improved yields
and the continuance of focussing on the group’s core business.
Competitive pressure remained throughout the year, inhibiting the
group’s ability to fully pass input cost increases on to
customers. The coal and brick operations contributed
significantly to the group’s results for the year.
Operating expenses increased by 10,2% to R47,6 million (2014:
R43,2 million) as a result of continued cost pressures.
The above resulted in the group generating an operating profit
before impairments of R32,4 million (2014: R30,3 million).
After taking finance income, finance costs, impairments and
taxation into consideration, the profit for the year amounted to
R9,5 million (2014: R22,7 million loss) from continuing
operations, and a total profit and comprehensive income of R9,5
million (2014: R23,2 million total loss and comprehensive loss),
resulting in earnings per share of 1,5 cents (2014: 3,7 cents
loss per share) and diluted earnings per share of 1,5 cents
(2014: 3,7 cents loss per share) for the year. Continuing
operations delivered earnings per share of 1,5 cents (2014: 3,6
cents loss per share) and diluted earnings per share of 1,5 cents
(2014: 3,6 cents loss per share).
Property, plant and equipment decreased to R114,4 million (2014:
R117,1 million) as a net result of:
– the disposal of plant of R0,8 million (2014: Rnil);
– the disposal of furniture and fittings of R0,2 million (2014:
Rnil);
– additions of plant of R16,8 million (2014: R12,0 million);
– additions of motor vehicles of R0,3 million (2014: R0,5
million);
– depreciation of R11,7 million (2014: R9,7 million);
– impairment of assets of R7,1 million (2014: R11,0 million);
and
– additions of decommissioning assets of Rnil (2014: R0,9
million) relating to the environmental provision.
CHANGES IN BOARD OF DIRECTORS
Effective 5 May 2015, Ben Ngubane resigned as independent non-
executive director, following his appointment to the Eskom board
of directors.
On 11 November 2015 Garnett Parkin was appointed as chief
executive officer of Brikor.
New appointments to the board, subsequent to the year-end are:
– Peter Moyanga as lead independent non–executive director with
effect from 2 November 2015;
– Limpho Hani as independent non-executive director with effect
from 2 November 2015;
– Ina McDonald as non-executive chairman with effect from 11
November 2015; and
– AP van der Merwe as non-executive director with effect from 11
November 2015.
The board is pleased to welcome these directors and looks 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 practised 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 III) 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.
As announced on SENS on 13 November 2015, the board committees
have been re–constituted as follows:
– Audit and risk committee: Peter Moyanga as the chairman of the
committee, with Limpho Hani, AP van der Merwe and Colin Madolo
as members.
– Remuneration committee: Colin Madolo as chairman and Limpho
Hani as member.
– Social and ethics committee: Limpho Hani as chairman and Peter
Moyanga as member.
MINERAL RESOURCE AND MINERAL RESERVE STATEMENT (MRMRS)
On 16 February 2016 the JSE issued a ruling that Brikor’s
financial information can be released without the MRMRS, on the
basis that the MRMRS will be released by the end of June 2016.
Although the financial information for Brikor will be released,
the JSE will only consider lifting the suspension of Brikor once
the MRMRS statement has been announced on SENS and uploaded onto
Brikor’s website.
PROSPECTS
The group is benefiting from a diverse product range and
continuous loyal customer base. Although no improvements in
market conditions are foreseen for the next financial period, the
group has positioned itself accordingly to extrapolate maximum
benefits from portfolio management of its product ranges.
Continued focus on cost saving, working capital management,
improved quality, yields and superior customer service will
ensure that the group remains highly competitive under the
current circumstances.
Assuming that current market and economic conditions will not
materially deteriorate, Brikor is expecting continuing improved
results in the future.
The market and prospect information contained in the reviewed
condensed consolidated provisional financial results for the year
ended 28 February 2015 have been neither reviewed nor reported on
by the group’s external auditors.
DIVIDEND
No dividend has been declared for the year.
CONDENSED CONSOLIDATED PROVISIONAL STATEMENT OF FINANCIAL
POSITION
as at 28 February 2015
Restated
Reviewed Reviewed Reviewed Audited
2015 2014 2013 2012
Notes R’000 R’000 R’000 R’000
ASSETS
Non–current assets 140 332 141 000 164 825 116 446
Property, plant
and equipment 114 393 117 079 124 376 80 718
Intangible assets 13 656 14 413 15 169 8 350
Other financial
assets 12 283 9 508 25 280 27 378
Current assets 169 770 106 878 90 220 59 115
Inventories 38 305 42 761 47 195 38 380
Trade and other
receivables 36 974 43 072 33 157 18 317
Cash and cash
equivalents 94 491 21 045 9 868 2 418
Non-current assets
held-for-sale 3 – – 14 959 60 159
Total assets 310 102 247 878 270 004 235 720
EQUITY AND LIABILITIES
Equity attributable
to equity holders
of the group 14 007 4 531 27 691 296
Share capital 63 63 63 63
Share premium 228 179 228 179 228 179 228 179
Accumulated loss (214 235) (223 711) (200 551) (227 946)
Non–current
liabilities 85 860 65 604 47 185 47 706
Borrowings 8 884 1 933 – 9 946
Shareholder loans 35 134 32 592 29 430 27 574
Provisions 41 597 28 480 17 010 10 186
Deferred taxation 245 2 599 745 –
Current liabilities 210 235 177 743 195 128 187 718
Borrowings 109 004 99 448 107 831 114 081
Trade and other
payables 83 475 66 314 54 904 29 546
Taxation 17 756 11 981 11 166 15 040
Bank overdraft – – 21 227 29 051
Total equity and
liabilities 310 102 247 878 270 004 235 720
CONDENSED CONSOLIDATED PROVISIONAL STATEMENT OF COMPREHENSIVE
INCOME
for the year ended 28 February 2015
Restated
Reviewed Reviewed Reviewed Audited
2015 2014 2013 2012
Notes R’000 R’000 R’000 R’000
Revenue 318 229 283 936 223 755 134 807
Cost of sales (241 695) (212 375) (159 984) (93 388)
Gross profit 76 534 71 561 63 771 41 419
Other income 3 479 1 912 1 100 4 251
Administrative
expenses (30 714) (29 699) (26 495) (27 821)
Distribution
expenses (3 603) (3 532) (3 943) (4 092)
Other expenses (13 251) (9 921) (4 097) (224)
Operating profit
before impairments 32 445 30 321 30 336 13 533
(Impairments)/
impairment
reversals 4 (7 113) (35 187) 32 299 8 549
Operating profit/
(loss) before
interest
and taxation 25 332 (4 866) 62 635 22 082
Finance income 1 657 2 353 2 516 1 178
Finance costs (15 384) (16 168) (25 222) (29 654)
Profit/(loss)
before taxation 11 605 (18 681) 39 929 (6 394)
Taxation (2 129) (3 984) (1 435) –
Profit/(loss)
after taxation 9 476 (22 665) 38 494 (6 394)
Loss from
discontinued
operations 3 – (536) (530) (30 033)
Profit/(loss) on
disposal of
discontinued
operations 3 – 41 (10 569) 3 675
Total comprehensive
income/(loss)
for the year
attributable to
equity holders 9 476 (23 160) 27 395 (32 752)
EARNINGS PER SHARE cents cents cents cents
Earnings/(loss)
per share
Basic
Continuing operations 1,5 (3,6) 6,1 (1,0)
Discontinued operations – (0,1) (1,8) (4,2)
Total 1,5 (3,7) 4,3 (5,2)
Diluted
Continuing operations 1,5 (3,6) 6,1 (1,0)
Discontinued operations – (0,1) (1,8) (4,1)
Total 1,5 (3,7) 4,3 (5,1)
Headline earnings/(loss)
per share
Continuing operations 2,7 2,0 1,1 (2,4)
Discontinued operations – (0,1) (0,7) (1,0)
Total 2,7 1,9 0,4 (3,4)
Diluted headline
earnings/(loss)
per share
Continuing operations 2,7 2,0 1,1 (2,3)
Discontinued operations – (0,1) (0,7) (1,0)
Total 2,7 1,9 0,4 (3,3)
CONDENSED CONSOLIDATED PROVISIONAL STATEMENT OF CHANGES IN EQUITY
for the year ended 28 February 2015
Retained
earnings/
(accumu-
Share Share lated
capital premium loss) Total
R’000 R’000 R’000 R’000
Balance at
28 February 2011
Audited 63 228 179 (195 194) 33 048
Total comprehensive
loss for the year – – (32 752) (32 752)
Balance at
28 February 2012
Audited 63 228 179 (227 946) 296
Total comprehensive
income for the year – – 27 395 27 395
Balance at
28 February 2013
Restated Reviewed 63 228 179 (200 551) 27 691
Total comprehensive
loss for the year – – (23 160) (23 160)
Balance at
28 February 2014
Reviewed 63 228 179 (223 711) 4 531
Total comprehensive
income for the year – – 9 476 9 476
Balance at
28 February 2015
Reviewed 63 228 179 (214 235) 14 007
CONDENSED CONSOLIDATED PROVISIONAL STATEMENT OF CASH FLOWS
for the year ended 28 February 2015
Restated
Reviewed Reviewed Reviewed Audited
2015 2014 2013 2012
Notes R’000 R’000 R’000 R’000
Cash flows from
operating
activities 73 527 34 357 8 209 (10 724)
Cash generated
from operations 83 534 48 225 35 479 17 775
Interest income 1 658 2 353 2 516 1 178
Finance costs (11 665) (13 821) (25 633) (26 096)
Tax paid – (2 400) (4 153) (3 581)
Cash flows from
investing
activities (19 128) 1 333 21 405 27 484
Acquisition of
property, plant
and equipment (17 054) (12 515) (18 826) (5 713)
Proceeds on
disposal of
property, plant
and equipment 699 – 1 535 10 200
Proceeds on assets
held-for-sale 3 – 15 000 37 204 –
Proceeds on
disposal of
business 3 – – – 48 560
Acquisition of
intangible assets – – (606) (1 711)
(Increase)/decrease
in other financial
assets (2 773) (1 152) 2 098 (23 852)
Cash flows from
financing
activities 19 047 (3 286) (14 340) (23 236)
Borrowings raised 21 324 14 093 1 856 2 288
Borrowings repaid (2 277) (17 379) (16 196) (25 524)
Net increase/
(decrease) in
cash and cash
equivalents 73 446 32 404 15 274 (6 476)
Cash and cash
equivalents at
beginning of year 21 045 (11 359) (26 633) (20 157)
Cash and cash
equivalents at
end of year 94 491 21 045 (11 359) (26 633)
SEGMENTAL REVENUE AND RESULTS
for the year ended 28 February 2015
The following is an analysis of the group’s revenue and results
from operations by reportable segments.
Segment profit reconciliation
Aggre–
Coal Bricks gates Total
R’000 R’000 R’000 R’000
2015
Revenue
External 107 844 151 468 58 917 318 229
Reportable segment
revenue 107 844 151 468 58 917 318 229
Operating profit before
impairments 7 283 20 348 4 814 32 445
Impairments – (3 379) (3 734) (7 113)
Operating profit before
interest and taxation 7 283 16 969 1 080 25 332
Segment assets and
liabilities
Segment assets 74 672 68 791 72 148 215 611
Segment liabilities (57 808) (56 016) (11 248) (125 072)
Other segment information
Depreciation and
amortisation included
in cost of sales and
operating expenditure (6 073) (3 401) (2 985) (12 459)
Additions to non-current
assets 16 000 34 1 020 17 054
2014
Revenue
External 93 082 150 030 40 824 283 936
Reportable segment
revenue 93 082 150 030 40 824 283 936
Operating profit/(loss)
before impairments 14 132 16 472 (283) 30 321
Impairments – (10 978) (1 154) (12 132)
Impairments not allocated
to segments – – – (23 055)
Operating profit/(loss)
before interest and
taxation 14 132 5 494 (1 437) (4 866)
Segment assets and
liabilities
Segment assets 58 573 88 832 79 428 226 833
Segment liabilities (37 845) (46 497) (10 452) (94 794)
Other segment information
Depreciation and
amortisation included in
cost of sales and
operating expenditure (3 154) (4 573) (2 744) (10 471)
Additions to non-current
assets 5 757 5 531 1 227 12 515
2013
Revenue
External 60 483 114 720 48 552 223 755
Reportable segment
revenue 60 483 114 720 48 552 223 755
Operating profit before
impairments 14 424 5 120 10 792 30 336
Impairment reversals – 1 014 31 285 32 299
Operating profit before
interest and taxation 14 424 6 134 42 077 62 635
Segment assets and
liabilities
Segment assets 28 919 136 060 80 197 245 176
Segment liabilities (13 266) (49 371) (9 277) (71 914)
Other segment information
Depreciation and
amortisation included
in cost of sales and
operating expenditure (1 317) (4 453) (1 266) (7 036)
Additions to non-current
assets 9 826 6 421 2 579 18 826
2012
Revenue
External – 112 818 21 989 134 807
Reportable segment revenue – 112 818 21 989 134 807
Operating profit before
impairments – 8 015 5 518 13 533
Impairment reversals – 8 549 – 8 549
Operating profit before
interest and taxation – 16 564 5 518 22 082
Segment assets and
liabilities
Segment assets – 135 777 39 784 175 561
Segment liabilities – (70 900) (6 289) (77 189)
Other segment information
Depreciation and
amortisation included
in cost of sales and
operating expenditure – (5 278) (880) (6 158)
Additions to non-current
assets – 4 693 991 5 684
Reconciliation of assets and liabilities
2015 2014 2013 2012
R’000 R’000 R’000 R’000
Reconciliation of
assets
Total assets for
reportable segments 215 611 226 833 245 176 175 561
Other assets 94 491 21 045 24 828 60 159
310 102 247 878 270 004 235 720
Reconciliation of
liabilities
Total liabilities for
reportable segments (125 072) (94 794) (71 914) (77 189)
Other liabilities (171 023) (148 553) (170 399) (158 235)
(296 095) (243 347) (242 313) (235 424)
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.
Revenue reported already relates to external customers only and
no inter-segment sales take place. 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
goodwill, intangibles, tax assets and cash and cash
equivalents.
– all liabilities are allocated to reportable segments other
than borrowings, shareholder loans, deferred taxation,
taxation and bank overdraft.
NOTES TO THE CONDENSED CONSOLIDATED PROVISIONAL FINANCIAL
STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015
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 Financial
Reporting Standards Council and to also, as a minimum,
contain the information required by IAS 34 Interim Financial
Reporting.
The auditor’s review report does not necessarily report on
all of the information contained in this announcement.
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 review report
together with the accompanying financial information from the
issuer’s registered office.
The accounting policies applied are consistent with those
applied for the previous years and are in terms of IFRS as
issued by the International Accounting Standards Board. New
standards and interpretations that became effective on 1
March 2012 had no material effect on the results for the
year.
The provisional financial results have been prepared on the
historic cost convention, except for certain financial
instruments, which are stated at fair value. The results are
presented in Rand rounded to the nearest thousand (R'000).
Brikor was placed under provisional liquidation on 30 July
2013 and did not prepare or publish any results since then.
Brikor’s last published integrated report was for the
financial year ended 28 February 2012. The condensed
consolidated provisional results are therefore presented for
the three years ended 28 February 2013, 2014 and 2015 with
comparative information for 2012.
2. RECONCILIATION OF EARNINGS
The calculations for earnings/(loss) per share attributable
to the ordinary equity holders are based on the following:
Reconciliation between basic earnings/(loss) and headline
earnings/(loss) as well as diluted earnings/(loss)
Conti– Discon–
nuing tinued
opera– opera–
tions tions Total
R’000 R’000 R’000
2015
Profit
Basic and diluted profit 9 476 – 9 476
Impairments of assets 7 113 – 7 113
Loss on the sale of
fixed assets 268 – 268
Headline and diluted headline
profit 16 857 – 16 857
2014
Profit/(loss)
Basic and diluted loss (22 665) (495) (23 160)
Impairments of assets 35 187 – 35 187
Loss on the sale of
fixed assets – (41) (41)
Headline and diluted headline
profit/(loss) 12 522 (536) 11 986
2013
Profit/(loss)
Basic and diluted profit/(loss) 38 494 (11 099) 27 395
Impairments of assets (32 299) (3 914) (36 213)
Loss on the sale of
fixed assets 850 10 569 11 419
Headline and diluted
profit/(loss) 7 045 (4 444) 2 601
2012
Loss
Basic and diluted loss (6 394) (26 358) (32 752)
Impairments of assets (8 549) 23 826 15 277
(Profit)/loss on the sale
of fixed assets 16 (3 525) (3 509)
Headline and diluted loss (14 927) (6 057) (20 984)
Number of shares
2015 2014 2013 2012
’000 ’000 ’000 ’000
The weighted average
number of ordinary
shares outstanding
during the year 629 342 629 342 629 342 629 342
Brikor Limited Share
Purchase Trust – – – 15 900
Diluted weighted
average number of
shares 629 342 629 342 629 342 645 242
Weighted average
number of shares 629 342 629 342 629 342 629 342
Diluted weighted
average number of
shares 629 342 629 342 629 342 645 242
3. NON-CURRENT ASSETS CLASSIFIED AS HELD-FOR-SALE AND
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 the balance of
R20 million in 72 equal 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 fixed property for R15,0 million. As at
28 February 2013 the transfer of the fixed property was still
at the deeds office and accordingly this sale had not yet
been recorded, however, in July 2013 transfer took place and
the sale was consequently accounted for in the 2014 financial
year. On 17 August 2012 Brikor auctioned the Vereeniging
division’s fixed property for R11,0 million. On 24 August
2012 Brikor auctioned the Bronkhorstspruit division for R10,0
million.
The tables below reflect the results relating to the
discontinued operations:
Olifants–
fontein Total
2014 R’000 R’000
Revenue – –
Expenses (536) (536)
Net financing costs – –
Loss before taxation (536) (536)
Taxation – –
Loss from discontinued operations (536) (536)
Bronk-
Olifants- Vereen- horst-
fontein iging spruit Total
2013 R’000 R’000 R’000 R’000
Revenue 1 574 1 385 - 2 959
Expenses (3 469) (3 336) (598) (7 403)
Impairments 7 517 1 256 (4 859) 3 914
Net financing costs – – – –
Profit/(loss) before
taxation 5 622 (695) (5 457) (530)
Taxation – – – –
Profit/(loss) from
discontinued
operations 5 622 (695) (5 457) (530)
Bronk-
Olifants- Vereen- horst-
fontein iging spruit Stanger
2012 R’000 R’000 R’000 R’000
Revenue 36 8 657 4 038 52 667
Expenses (4 121) (9 827) (6 213) (51 369)
Impairments (14 004) (7 878) – (1 944)
Net financing costs – – – (75)
Loss before taxation (18 089) (9 048) (2 175) (721)
Taxation – – – –
Loss from
discontinued
operations (18 089) (9 048) (2 175) (721)
Total
2012 (continued) R’000
Revenue 65 398
Expenses (71 530)
Impairments (23 826)
Net financing costs (75)
Loss before taxation (30 033)
Taxation –
Loss from discontinued operations (30 033)
The following tables summarise the carrying values of the
assets and liabilities that have been held-for-sale and the
profit/(loss) on disposal of discontinued operations:
Olifants–
fontein Total
2014 R’000 R’000
Sold (14 959) (14 959)
Proceeds on disposal 15 000 15 000
Profit on disposal of discontinued
operations (no tax effect) 41 41
Bronk-
Olifants- Vereen- horst-
fontein iging spruit Total
2013 R’000 R’000 R’000 R’000
Property, plant
and equipment 20 219 25 066 14 874 60 159
Impairments 7 517 1 256 (4 859) 3 914
Transferred back
into continuing
operations (962) (379) – (1 341)
Assets sold (11 815) (25 943) (10 015) (47 773)
Non-current assets
held-for-sale 14 959 – – 14 959
Assets sold (11 815) (25 943) (10 015) (47 773)
Proceeds on disposal 8 805 18 384 10 015 37 204
Loss on disposal of
discontinued
operations (no tax
effect) (3 010) (7 559) – (10 569)
Bronk-
Olifants- Vereen- horst-
fontein iging spruit Total
2012 R’000 R’000 R’000 R’000
Property, plant and
equipment 20 219 25 066 14 874 60 159
Inventories – – – –
Trade and other
receivables – – – –
Cash and cash
equivalents – – – –
Provisions – – – –
Borrowings – – – –
Trade and other
payables – – – –
Non-current assets
held-for-sale 20 219 25 066 14 874 60 159
Stanger
R’000
2012 (continued)
Property, plant and equipment 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)
Non-current assets held-for-sale 46 325
Profit on disposal of discontinued
operations (no tax effect) 3 675
Proceeds on disposal 50 000
Less: Cash and cash equivalents (1 440)
Cash proceeds 48 560
The following tables summarise the cash flow effects of the
discontinued operations:
Olifants–
fontein Total
2014 R’000 R’000
Cash flow
Net cash from operating activities (536) (536)
Net cash from investing activities 15 000 15 000
Net cash from financing activities – –
Net increase in cash and cash
equivalents 14 464 14 464
Bronk-
Olifants- Vereen- horst-
fontein iging spruit Total
2013 R’000 R’000 R’000 R’000
Cash flow
Net cash from
operating
activities (1 895) (1 951) (598) (4 444)
Net cash from
investing activities 8 805 18 384 10 015 37 204
Net cash from financing
activities – – – –
Net increase in cash
and cash equivalents 6 910 16 433 9 417 32 760
Bronk-
Olifants- Vereen- horst-
fontein iging spruit Stanger
2012 R’000 R’000 R’000 R’000
Cash flow
Net cash from
operating
activities (4 085) (1 170) (2 175) 5 877
Net cash from investing
activities 5 200 – – 48 682
Net cash from financing
activities – – – (56 830)
Net increase/(decrease)
in cash and cash
equivalents 1 115 (1 170) (2 175) (2 271)
Total
2012 (continued) R’000
Cash flow
Net cash from operating activities (1 553)
Net cash from investing activities 53 882
Net cash from financing activities (56 830)
Net increase/(decrease) in cash and
cash equivalents (4 501)
4. IMPAIRMENTS
The following table summarises the (impairments)/impairment
reversals relating to the continuing operations:
2015 2014 2013 2012
R’000 R’000 R’000 R’000
(Impairments)/
impairment reversals
of property, plant
and equipment (7 113) (11 001) 25 858 8 549
Impairment of other
financial assets – (21 768) – –
Impairment of other
receivables – (1 287) – –
Impairment reversal of
intangible assets – – 6 441 –
Write-down of raw
material inventory – (1 131) – –
Total (7 113) (35 187) 32 299 8 549
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
In 2015 property, plant and equipment were impaired with R7,1
million as follows:
– Aggregates segment – plant and equipment with a carrying
value of R4,4 million were impaired with R3,7 million to
R0,7 million.
– Bricks segment – plant, equipment and furniture with a
carrying value of R3,7 million were impaired with R3,4
million to a carrying value of R0,3 million.
In 2014 property, plant and equipment were impaired with
R11,0 million as follows:
– Aggregates segment – plant, equipment and capital projects
with a carrying value of R1,2 million were fully impaired.
– Bricks segment – capital projects with a carrying value of
R9,8 million were fully impaired.
IMPAIRMENT OF OTHER FINANCIAL ASSETS
Impairment of other financial assets in 2014 relates to the
deed of sale debtor, Huntrex 305 (Pty) Ltd, which resulted
from the sale of the Stanger Division in November 2011. The
last payment in respect of the loan was received in October
2012, however, Huntrex 305 (Pty) Ltd has subsequently been
placed under liquidation and management is of the opinion
that the full amount of R21,8 million will not be
recoverable.
IMPAIRMENT REVERSALS
Impairments made during the 2010 financial year were reversed
during the 2013 financial year based on valuations performed
by an appointed appraiser on property, plant and equipment
and intangible assets. The market values as at 31 January
2013 indicated that the impairments were no longer
applicable.
In 2012 capital projects with a carrying value of R8,6
million in the Bricks segment, which were impaired during the
2011 financial year, were reversed.
5. RELATED PARTIES
Relationships Related director
Entities controlled by directors
Cyndara 113 (Pty) Ltd G v N Parkin
Ilangabi Investments 12 (Pty) Ltd G v N Parkin
Scarlett Sun 33 (Pty) Ltd G v N Parkin
Amibex (Pty) Ltd CB Madolo
E-Fuel (Pty) Ltd G v N Parkin
Huntrex 305 (Pty) Ltd BS Ngubane
Vecto Trade 449 (Pty) Ltd G v N Parkin
Nigel Brick and Clay (Pty) Ltd G v N Parkin
Kuvula Trade 40 (Pty) Ltd G Parkin
Leomega (Pty) Ltd G v N Parkin
Nature of
goods and
services
purchased 2015 2014
or sold R’000 R’000
Related party balances
Loan accounts
– owing (to)/by related
parties
Shareholder loans
– loan 1 Unsecured,
interest
7,59% p.a. (27 849) (25 736)
Shareholder loans
– loan 2 Unsecured,
imputed
interest
12% p.a. (7 059) (6 265)
Shareholder loans
– loan 3 Unsecured,
interest free (226) (591)
Deed of sale debtor
– Huntrex 305 (Pty) Ltd – –
Amounts included in
trade receivables/
(trade payables)
regarding related
parties
Scarlett Sun 33
(Pty) Ltd Machinery
rental (8 910) (6 145)
Scarlett Sun 33
(Pty) Ltd Deposit
for bricks
and
aggregates 1 110
Nigel Brick and Clay
(Pty) Ltd Bricks 787 3 107
Nigel Brick and Clay
(Pty) Ltd Bricks – –
Cyndara 113 (Pty) Ltd Engineering (830) (1 067)
Cyndara 113 (Pty) Ltd Engineering 27 40
Amibex (Pty) Ltd Engineering – 66
Vecto Trade 449 (Pty) Ltd Transport – –
Kuvula Trade 40 (Pty) Ltd Transport – –
Kuvula Trade 40 (Pty) Ltd Transport – –
Leomega Pty) Ltd Aggregates
screens – –
Related party transactions
Interest paid
G v N Parkin (loan 1) On loan
account (2 026) (1 877)
G v N Parkin (loan 2) Imputed
interest (795) (705)
Deed of sale debtor
– Huntrex 305 (Pty) Ltd
Interest received Amortised – 1 974
Loan impaired – expensed – (21 768)
Other receivables impaired (126) (1 287)
Purchases from related
parties
Scarlett Sun 33
(Pty) Ltd Machinery
rental (9 552) (9 416)
Scarlett Sun 33 (Pty) Ltd Surface
rights (4 584) (4 902)
Scarlett Sun 33 (Pty) Ltd Machinery
parts (244) –
Scarlett Sun 33 (Pty) Ltd Construction
outsourced – –
Cyndara 113 (Pty) Ltd Engineering (275) (1 092)
Nigel Brick and Clay
(Pty) Ltd Bricks (3 494) (2 258)
Vecto Trade 449 (Pty) Ltd Transport – –
Leomega (Pty) Ltd Aggregates
screens – –
Kuvula Trade 40 (Pty) Ltd Transport (12 579) (10 271)
Sales to related parties
Cyndara 113 (Pty) Ltd Engineering 149 170
Nigel Brick and Clay
(Pty) Ltd Bricks 1 341 2 797
Scarlett Sun 33 (Pty) Ltd Bricks
and
aggregates 12 51
Scarlett Sun 33 (Pty) Ltd Diesel 117 –
Amibex (Pty) Ltd Engineering – 66
Kuvula Trade 40 (Pty) Ltd Transport 10 2 086
5. RELATED PARTIES (continued)
Nature of
goods and
services
purchased 2013 2012
or sold R’000 R’000
Related party balances
Loan accounts – owing
(to)/by related parties
Shareholder loans
– loan 1 Unsecured,
interest
7,59% p.a. (23 870) (22 640)
Shareholder loans
– loan 2 Unsecured,
imputed
interest
12% p.a. (5 560) (4 934)
Shareholder loans
– loan 3 Unsecured,
interest free – –
Deed of sale debtor
– Huntrex 305 (Pty) Ltd 17 885 20 504
Amounts included in trade
receivables/
(trade payables)
regarding related
parties
Scarlett Sun 33
(Pty) Ltd Machinery
rental – –
Scarlett Sun 33
(Pty) Ltd Deposit
for bricks
and
aggregates 203 147
Nigel Brick and Clay
(Pty) Ltd Bricks 1 704 –
Nigel Brick and Clay
(Pty) Ltd Bricks (335) –
Cyndara 113 (Pty) Ltd Engineering (159) (246)
Cyndara 113 (Pty) Ltd Engineering 69 49
Amibex (Pty) Ltd Engineering – –
Vecto Trade 449
(Pty) Ltd Transport 218 218
Kuvula Trade 40 (Pty) Ltd Transport 354 328
Kuvula Trade 40 (Pty) Ltd Transport (918) (68)
Leomega (Pty) Ltd Aggregates
screens – (22)
Related party transactions
Interest paid
G v N Parkin (loan 1) On loan
account (1 843) (1 732)
G v N Parkin (loan 2) Imputed
interest (625) (556)
Deed of sale debtor
– Huntrex 305 (Pty) Ltd
Interest received Amortised 1 835 869
Loan impaired – expensed – –
Other receivables impaired – –
Purchases from related parties
Scarlett Sun 33 (Pty) Ltd Machinery
rental – –
Scarlett Sun 33 (Pty) Ltd Surface
rights (1 681) –
Scarlett Sun 33 (Pty) Ltd Machinery
parts – –
Scarlett Sun 33 (Pty) Ltd Construction
outsourced (34) –
Cyndara 113 (Pty) Ltd Engineering (2 552) (939)
Nigel Brick and Clay
(Pty) Ltd Bricks (2 193) –
Vecto Trade 449 (Pty) Ltd Transport – (295)
Leomega (Pty) Ltd Aggregates
screens – (64)
Kuvula Trade 40 (Pty) Ltd Transport (8 874) (7 818)
Sales to related parties
Cyndara 113 (Pty) Ltd Engineering 1 636 707
Nigel Brick and Clay
(Pty) Ltd Bricks 1 023 –
Scarlett Sun 33 (Pty) Ltd Bricks
and
aggregates 252 1 609
Scarlett Sun 33 (Pty) Ltd Diesel – –
Amibex (Pty) Ltd Engineering – –
Kuvula Trade 40 (Pty) Ltd Transport 3 883 2 837
6. SALIENT FEATURES
2015 2014 2013 2012
Number of shares in
issue (excluding
treasury shares)
(‘000) 629 342 629 342 629 342 629 342
Net asset value per
share (cents) 2,2 0,7 4,4 0,05
Net tangible asset
value per share
(cents) 0,1 (1,6) 2,0 (1,3)
(Impairments)/
impairment
reversals (R’000) (7 113) (35 187) 32 299 8 549
Employee cost (R’000) 71 562 61 072 53 373 46 902
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.
7. DIRECTORS’ EMOLUMENTS
2015 2014 2013 2012
R’000 R’000 R’000 R’000
Executive
Short-term employee
benefits 4 039 3 827 3 493 4 304
Non-executive
Short-term employee
benefits 81 313 515 506
8. RESTATEMENT OF PROVISIONAL RESULTS FOR THE YEAR ENDED
28 FEBRUARY 2013
The reviewed provisional results for the year ended
28 February 2013 that were released on SENS on 26 June 2013
have been restated due to:
– the provisions for royalty tax;
– income tax adjustments;
– correction in allocation of expenses by function;
– reclassification of investment property to property, plant
and equipment; and
– reclassification of segment assets and liabilities.
During 2013, Brikor incorrectly reclassified a portion of
property, plant and equipment to investment property and
understated the royalty taxation provision and interest on
late payment. Legal fees previously recognised in the
administrative expense line item was re-allocated to the
other expense line item. The effect of these errors have been
corrected.
The effect of the restatement when applied consistently in
the 28 February 2013 financial year had the following impact:
Previously Adjust- Re–
reported ment stated
R’000 R’000 R’000
INVESTMENT PROPERTY
Statement of financial
position
Investment property 14 342 (14 342) –
Property, plant and
equipment 110 034 14 342 124 376
ROYALTY TAXATION
Statement of financial
position
Accumulated loss (195 017) (5 534) (200 551)
Trade and other payables 49 008 5 896 54 904
Taxation 11 528 (362) 11 166
Statement of comprehensive
income
Cost of sales (155 861) (4 123) (159 984)
Finance cost (23 449) (1 773) (25 222)
Taxation (1 797) 362 (1 435)
LEGAL FEES
Statement of comprehensive
income
Administrative expenses 29 815 (3 320) 26 495
Other expenses 777 3 320 4 097
9. OTHER LEGAL AND REGULATORY REQUIREMENTS
On 13 April 2016 the auditors reported reportable
irregularities to the Independent Regulatory Board for
Auditors in respect of non-compliance with the Income Tax
Act, No 58 of 1962, Value Added Tax Act, No 89 of 1991 and
the Mineral and Petroleum Resources Royalties Act, No 29 of
2008. The particulars of the reportable irregularities relate
to the following instances, which resulted in penalties and
interest being charged to the group:
– Non-submission and/or non-timeous submission of
provisional tax returns, nor annual tax returns and/or the
payment thereof due to SARS, as required by the Income Tax
Act, No 58 of 1962;
– Non-timeous submission of VAT returns and/or the payment
thereof due to SARS, as required by the Value Added Tax
Act, No 89 of 1991;
– Non-registration for Royalty Tax and/or 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.
These non-compliances were due to the provisional liquidation
of Brikor and cash flow constraints on the group.
Management is aware of the above and is 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 addressed. Full
provision has been made in the annual financial statements
for any related amounts due.
10. SUBSEQUENT EVENTS
PROVISIONAL LIQUIDATION
A dispute with FirstRand Bank Limited (“FirstRand”), relating
to the immediate demand by FirstRand of Brikor’s overdraft
and subsequent foreclosure on two term loans under cross
default clauses of the FirstRand finance agreements, led to a
legal dispute between Brikor and FirstRand. On 12 July 2013,
FirstRand brought an application for the liquidation of
Brikor. The application was heard on 30 July 2013 and the
KwaZulu-Natal High Court granted an order for the provisional
liquidation of Brikor.
Brikor’s listing on the AltX was suspended on the same day.
On 5 June 2015, a memorandum of agreement concluded between
FirstRand, Brikor, Garnett Parkin and Ina McDonald (the
executrix of the estate of the late Garnett van Niekerk
Parkin), was made an order of court. In terms of the
agreement, Brikor agreed to settle its indebtedness to
FirstRand and to make payment to FirstRand in the sum of
R105 million. The agreement further made provision for
payment of an amount of R10,5 million (exclusive of VAT) to
the joint liquidators of Brikor in respect of their fees in
six instalments, the last of which was payable on
30 September 2015. All remaining legal proceedings between
FirstRand, Brikor and Ina McDonald (in her capacity as
executrix), as previously instituted by Brikor, were also
withdrawn.
By virtue of the granting of the court order, a return date
in respect of the provisional liquidation order was set for
2 October 2015. As Brikor had fulfilled the terms and
conditions of the court order, Brikor’s indebtedness was
regarded as having been settled in full. On 2 October 2015,
the Kwa-Zulu Natal High Court discharged the provisional
liquidation order, and granted an order for the cancellation
of the perfection of the general notarial bond and the
cancellation of all other securities provided to FirstRand.
Consequently, the group’s current liabilities as well as cash
and cash equivalents reduced significantly since the
financial year-end.
ILANGABI INVESTMENTS 12 (PTY) LTD
As announced on SENS on 30 November 2015, Brikor has entered
into a sale of shares agreement to acquire the remaining 69%
of Ilangabi Investments 12 (Pty) Ltd from the estate of the
late Garnett van Niekerk Parkin (“the seller”), thereby
increasing Brikor’s shareholding to 100%.
The purchase price of R20 million will be payable in cash as
follows:
– R1 million to be paid to the seller on the effective date;
and
– the balance of the purchase price to be paid to the seller
in monthly instalments of R600 000 with the outstanding
balance bearing interest at 9% per annum.
The transaction is subject to the fulfilment of the following
conditions precedent:
– compliance with the JSE Listings Requirements, including
shareholders’ approval, if required;
– approval of the transaction by all regulatory authorities;
– fair and reasonable valuation; and
– ministerial consent being obtained in terms of section
11 of the Mineral and Petroleum Resources Development Act,
No 28 of 2002.
The purchase price will be settled from existing cash
resources and the effective date is the date of fulfilment of
all the conditions precedent.
OTHER
Management is not aware of any material events, other than as
outlined above, which occurred subsequent to the year ended
28 February 2015 and which need adjustment or disclosure.
11. GOING CONCERN
The directors have prepared their budgets and cash flow
forecast for the 2017 financial year based on reasonable and
supportable assumptions.
The cash flow forecast and current management results
indicate that the group will operate as a going concern for
the foreseeable future.
DATE OF PUBLICATION OF THIS REPORT
22 April 2016
G Parkin H Botha
Chief executive officer Financial director
Nigel
22 April 2016
BRIKOR LIMITED
DIRECTORS:
PM McDonald (Chairman) *
PS Moyanga (Lead independent director) #
G Parkin (Chief executive officer)
H Botha (Financial director)
L Hani #
CB Madolo #
AP van der Merwe *
* 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:
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: 22/04/2016 04:45:00 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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