Wrap Text
Unaudited results for the six months ended 31 August 2016
BRIKOR LIMITED
("the Group")
(Incorporated in the Republic of South Africa)
Registration number 1998/013247/06
JSE code: BIK
ISIN: ZAE000101945
Unaudited results for the six months ended 31 August 2016
PREPARED BY:
The unaudited interim financial results (“interim financial results” or “results”) for the six months ended 31 August 2016 were prepared by
Laura Craig CA(SA) (group financial manager) under the supervision of Andre Hanekom (chief financial officer)(authorised director).
HIGHLIGHTS
- REVENUE decreased by 1.5 % to R169 million
- EBIDTA decreased by 41.2 % to R24 million
- HEADLINE EARNINGS PER SHARE decreased by 64.4 % to 1.6 cents per share
- CASH AND CASH EQUIVALENTS increased by 0.5% to R29 million
- TOTAL DEBT decreased by 3,2 % to R191 million
- NET ASSET VALUE PER SHARE increased by 37,9 % to 9,1 cents per share
- NET TANGIBLE ASSET VALUE PER SHARE increased by 56,5 % to 7,2 cents per share
OVERVIEW
The directors of Brikor are pleased to present the unaudited/unreviewed interim financial results for the six months ended 31 August
2016, which reflect continued growth and improvement from a sustainability point of view. It is important that the performance indicators
are considered in conjuntion with the commentary in the financial results section below as the 2017 financial year has been a landmark
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.
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 divisions,
namely bricks, aggregates and coal (through its subsidiary, Ilangabi Investments 12 (Pty) Ltd).
The group’s overall financial indicators continued to be healthy in a competitive trading environment when performance relating only to
the 2017 financial year is viewed in isolation from the impact of Catch-up opex. Effective cost management initiatives, sustainable
working capital management techniques and particular focus on the group’s core operations were maintained.
FINANCIAL RESULTS
In a competitive operating environment, revenue decreased to R168,9 million (2015: R171,4 million) and the gross profit percentage
decreased to 23,3% (2015: 28,7%). The decrease in revenue is largely contributed to the decline in the coal segment revenue of R10,3 m
which was inevitable given the efforts which had to be made to rectify inefficient mining methods utilised in the previous years. It must be
said however that decrease in coal revenue was partially offset by a reduction in exposure on rehabilitation expenditure which effectively
increases the gross profit percentage. The overall gross profit percentage declined partially as a result of cost increases in the bricks
segment which could not all be passed through to the customers and also due to the sales mix resulting from the sale of more stock
bricks versus semi-face bricks as availability of semi-faced bricks were limited.
Operating expenses increased to R26,1 million (2015: R21,3 million) as a result of the Catch-up opex which had to be incurred in the
2017 financial year and which relates to a number of statutory and compliance expenditures. The expenses of this nature, included in the
2017 financial period amounted to R6,5 million for the 6 months to 31 August 2016. By excluding the Catch-up opex, no growth on
expenditure is evident when compared to the same period for the 2015 financial year.
Interest earned during the period under review amounted to R0,7 million (2015: R2,6 million). The reduction in interest earned resulted
from the reduction in funds invested as these funds were used in settling the debts of the company during the 2015 financial period in
order to lift the provisional liquidation order. The comparative period therefore still had funds invested for a portion of that financial period.
The group ended the interim period with an attributable profit of R10,2 million (2015: R27,7 million), resulting in earnings per share of 1,6
cents (2015: 4,4 cents) and headline earnings per share of 1,6 cents (2015: 4,5 cents) for the period. With the group's shares still being
suspended, the number of shares in issue in the earnings per share equation remains static. The 2017 financial year is anticipated to be
the last year in which past inefficiences are rectified and neccessary historical expenditure is brought up to date. The sustainable
management practises, time pertinent and consistent reporting in the subsequent financial periods promise to provide more valuable
investor information.
Capital expenditure
For the six months under review capital expenditure amounted to R8,6 million. The material items invested in are as follows:
Plant and equipment of R7,5 million made up as follows:
– Aggregates segment – R5,3 million on mobile plant and R0,9 million on fixed plant;
– Bricks segment – R0,1 million on mobile plant; and
– Coal segment – R1,2 million on mobile plant.
Motor vehicles of R0,5 million made up as follows:
– Aggregates segment – R0,1 million on a truck; and
– Bricks segment – R0,4 million on two motor vehicles.
Furniture and fittings of R0,4 million made up as follows:
– Bricks segment – R0,2 million on the refurbishment of the boardroom, R0,1 million on 8 computers and R0,1 million on new clocking
systems.
Buildings of R0,2 million made up as follows:
– Bricks segment – R0,2 million on electrical upgrades.
Consolidated property, plant and equipment increased to R110,2 million from the February 2016 year end amount of R109,2 million as a
net result of:
- additions to property, plant and equipment of R8,6 million
- disposals of property, plant and equipment of R0,5 million; and
- depreciation of R7,1 million.
UNAUDITED CONSOLIDATED INTERIM STATEMENT OF PROFIT AND OTHER COMPREHENSIVE INCOME
For the six months ended 31 August 2016
12 months
6 months 6 months ended 29
ended 31 ended 31 February
August 2016 August 2015 2016
Notes Unaudited Unaudited Audited
R'000 R'000 R'000
Revenue 168 923 171 480 317 002
Cost of sales (129 576) (122 339) (230 126)
Gross profit 39 347 49 141 86 876
Other income 3 235 4 819 5 376
Administrative expenses (22 102) (14 421) (32 570)
Distribution expenses (2 427) (2 100) (4 374)
Other expenses (1 583) (4 792) (6 725)
Operating profit before interest and taxation 16 470 32 647 48 583
Finance income 691 2 628 3 083
Finance costs (4 941) (4 321) (13 505)
Profit before taxation 12 220 30 954 38 161
Taxation (1 972) (3 204) (5 314)
Total profit for the year attributable to equity holders of the company 10 248 27 750 32 847
EARNINGS PER SHARE
12 months
6 months 6 months ended 29
ended 31 ended 31 February
August 2016 August 2015 2016
Unaudited Unaudited Audited
cents cents cents
Basic
Continued operations (cents) 1.6 4.4 5.2
Total 1.6 4.4 5.2
Diluted
Continued operations (cents) 1.6 4.4 5.2
Total 1.6 4.4 5.2
Headline earnings
Continued operations (cents) 1.6 4.5 5.6
Total 1.6 4.5 5.6
Diluted headline earnings
Continued operations (cents) 1.6 4.5 5.6
Total 1.6 4.5 5.6
Reconciliation between basic earnings and headline earnings as well as diluted earnings
12 months
6 months 6 months ended 29
ended 31 ended 31 February
August 2016 August 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Six months ended 31 August 2016
Basic and diluted profit 10 248 27 750 32 847
(Profit)/loss on disposal of property, plant and equipment (42) 806 669
Loss on scrapping of property, plant and equipment - - 1 449
Headline and diluted headline profit 10 206 28 556 34 965
Number of shares '000 '000 '000
Weighed average number of shares 629 342 629 342 629 342
Diluted weighed average number of shares 629 342 629 342 629 342
UNAUDITED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
As at 31 August 2016
31 August 31 August 29 February
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Non-current assets 137 257 140 918 134 445
Property, plant and equipment 110 243 113 447 109 202
Intangible assets 11 651 12 989 12 320
Other financial assets 14 242 13 585 12 714
Deferred tax asset 1 121 897 209
Current assets 110 402 97 671 96 617
Inventories 45 219 40 516 45 499
Trade and other receivables 35 689 27 798 29 871
Cash and cash equivalents 29 494 29 357 21 247
Total assets 247 659 238 589 231 062
EQUITY AND LIABILITIES
Equity attributable to equity holders of the company 57 102 41 757 46 854
Stated capital 228 242 228 242 228 242
Accumulated loss (171 140) (186 485) (181 388)
Non-current liabilities 106 829 99 308 95 616
Borrowings 6 342 11 150 5 582
Shareholder loans 50 230 42 651 43 115
Provisions 50 257 45 507 46 919
Current liabilities 83 728 97 524 88 592
Borrowings 6 384 8 455 9 984
Trade and other payables 61 784 67 763 58 661
Taxation 15 560 21 306 19 947
Total equity and liabilities 247 659 238 589 231 062
Asset value per share
Net asset value per share (cents) 9.1 6.6 7.4
Net tangible asset value per share (cents) 7.2 4.6 5.5
UNAUDITED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 August 2016
12 months
6 months 6 months ended 29
ended 31 ended 31 February
August 2016 August 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Stated capital 244 142 244 142 244 142
Treasury shares (15 900) (15 900) (15 900)
Accumulated loss beginning of year (181 388) (214 235) (214 235)
Profit for the period 10 248 27 750 32 847
Total equity 57 102 41 757 46 854
UNAUDITED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
For the six months ended 31 August 2016
6 months 6 months 12 months
ended 31 ended 31 ended 29
August 2016 August 2015 February
Unaudited Unaudited 2016 Audited
Cash flows from operating activities 13 605 34 736 37 086
Cash generated from operations 25 126 37 225 48 010
Finance income 691 2 628 3 083
Finance costs (4 827) (3 958) (8 623)
Tax paid (7 385) (1 159) (5 384)
Cash flows to investing activities (9 632) (9 106) (15 989)
Purchase of property, plant and equipment (8 644) (11 017) (18 450)
Proceeds on disposal of plant and equipment 540 3 214 4 340
Increases in investments into other financial assets (1 528) (1 303) (1 879)
Cash flows from/(to) financing activities 4 274 (90 764) (94 341)
Borrowings raised 8 244 16 860 18 600
Borrowings repaid (3 970) (107 624) (112 941)
Net increase/(decrease) in cash and cash equivalents 8 247 (65 134) (73 244)
Cash and cash equivalents at beginning of period 21 247 94 491 94 491
Cash and cash equivalents at end of period 29 494 29 357 21 247
UNAUDITED SEGMENTAL REPORT
For the six months ended 31 August 2016
Brick
Manufacturing Coal Aggregates *Other Total
Six months ended 31 August 2016 unaudited R'000 R'000 R'000 R'000 R'000
Total revenue 94 604 56 839 24 056 - 175 499
Intersegmental revenue - (6 576) - - (6 576)
Reportable segment revenue 94 604 50 263 24 056 - 168 923
Gross profit 24 229 14 540 578 - 39 347
Other income 802 2 032 401 - 3 235
Operating profit/(loss) before interest and taxation 9 295 8 964 (1 789) - 16 470
Segment assets and liabilities
Segment assets 67 581 68 380 81 082 30 616 247 659
Segment liabilities (38 677) (77 740) (8 349) (65 791) (190 557)
Other segment information
Depreciation and amortisation included in cost of
sales and operating expenditure (3 219) (2 911) (1 645) - (7 775)
Additions to non-current assets 1 107 1 264 6 273 - 8 644
Brick
Manufacturing Coal Aggregates *Other Total
Six months ended 31 August 2015 unaudited R'000 R'000 R'000 R'000 R'000
Total revenue 89 638 63 939 21 267 - 174 844
Intersegmental revenue - (3 364) - - (3 364)
Reportable segment revenue 89 638 60 575 21 267 - 171 480
Gross profit 31 929 15 498 1 714 - 49 141
Other income 2 455 1 605 759 - 4 819
Operating profit before interest and taxation 22 680 9 527 440 - 32 647
Segment assets and liabilities
Segment assets 68 515 67 483 72 338 30 253 238 589
Segment liabilities (48 582) (73 068) (11 225) (63 957) (196 832)
Other segment information
Depreciation and amortisation included in cost of
sales and operating expenditure (1 820) (5 474) (1 313) - (8 607)
Additions to non-current assets 325 7 943 2 749 - 11 017
Brick
Manufacturing Coal Aggregates *Other Total
12 months ended 29 February 2016 audited 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 management on a monthly basis.
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.
No single customer exists upon which the group is significantly dependent on for revenue and revenue is derived solely from the 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, tax assets, deferred tax assets and cash
and cash equivalents.
• all liabilities are allocated to reportable segments other than general borrowings, shareholders loans, deferred tax liability, taxation and
bank overdraft.
NOTES TO THE UNAUDITED/UNREVIEWED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended 31 August 2016
1 BASIS OF PREPARATION AND ACCOUNTING POLICIES
The interim results are prepared in accordance with the requirements of the JSE Listings Requirements for interim reports and the
requirements of the Companies Act 71 of 2008 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 are consistent with those applied in the annual financial statements for the year ended 29 February 2016
and are in terms of IFRS as issued by the International Accounting Standards Board.
The interim 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).
2 OTHER LEGAL AND REGULATORY REQUIREMENTS
On 24 November 2016 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 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 penanlties 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; and
• 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, particularl 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 unaudited
interim financial statements for any related amounts due.
12 months
6 months 6 months ended 29
ended 31 ended 31 February
August 2016 August 2015 2016
Unaudited Unaudited Audited
3 SALIENT FEATURES
Number of shares in issue (excluding treasury shares)('000) 629 342 629 342 629 342
Net asset value 57 102 41 757 46 854
Adjusted with:
- Intangible assets 11 651 12 989 12 320
Net tangible asset value 45 451 28 768 34 534
Net asset value per share (cents) 9.1 6.6 7.4
Net tangible asset value per share (cents) 7.2 4.6 5.5
Reconciliation of EBITDA
Operating profit before interest and taxation ("EBIT") 16 470 32 647 48 583
Adjusted with:
- Depreciation and ammortisation 7 775 8 607 18 087
Earnings before interest, taxation, depreciation, ammortisation
and impairment adjustments ("EBITDA") 24 245 41 254 66 670
4 SUBSEQUENT EVENTS
Management is not aware of any material events, other than as outlined below, which occurred subsequent to the six month period ended
31 August 2016 and which need adjustment or disclosure.
Subsequent to the end of the interim period the group has received offers for the sale of two of its properties, namely the Rayton property
situated at Portion 31 of Witfontein NO.510 - JR District Bronkhorstspruit and the Nigel Schist property situated at Portion 58 of the Farm
Vrisfewaag 510IR.
No intention existed at 31 August 2016 to dispose of these properties and at the date of the publication of this unaudited consolidated
interim financial statements no formal heads of agreement have been drafted or agreed to by any parties. The group has indicated its
interest in the offers and is in the process of negotiating the terms to be agreed upon. Both properties will be disposed of inclusive of the
rehabilitation provisions pertaining to each property respectively.
5 GOING CONCERN
The directors have prepared their budgets and cash flow forecast for the year ahead based on reasonable and supportable assumptions.
The cash flow forecast and current management results indicates that the group will operate as a going concern for the foreseeable future.
DATE OF PUBLICATION OF THIS REPORT
30 January 2017
G Parkin
Chief Executive Officer
Nigel
1 February 2017
A Hanekom
Chief Financial Officer
Nigel
1 February 2017
CORPORATE INFORMATION
Directors: PM McDonald (Chairman)*; PS Moyanga (Lead independent director)^; G Parkin (CEO); A Hanekom (FD); 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: 01/02/2017 03:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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