Wrap Text
Unaudited Condensed Consolidated Interim Financial Results for the Six-Month Period ended 31 August 2017
BRIKOR LIMITED
(“Brikor”) or (“the company”) or ("the group")
(Incorporated in the Republic of South Africa)
Registration number: 1998/013247/06
JSE code: BIK
ISIN: ZAE000101945
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE SIX-MONTH
PERIOD ENDED 31 AUGUST 2017
Prepared by:
The condensed consolidated interim financial results ("interim financial results" or " results") for the six-month
period ended 31 August 2017 were prepared by Laura Craig CA(SA), group financial manager.
FINANCIAL INDICATORS – continuing operations
- REVENUE increased by 7,4 % to R155,7 million
- EBITDA increased by 28,6 % to R31,4 million (refer to note 8)
- NET ASSET VALUE increased by 13,2 % to 10,3 cents per share
- NET TANGIBLE ASSET VALUE decreased by 29,0 % to 4,4 cents per share
- CASH AND CASH EQUIVALENTS decreased by 45,3 % to R16,1 million
- EARNINGS PER SHARE from continuing operations increased by 37,5 % to 2,2 cents per share
- HEADLINE EARNINGS PER SHARE from continuing operations increased by 18,8 % to 1,9 cents
per share
OVERVIEW
Brikor is a diverse manufacturer and supplier of building and construction materials across a broad spectrum of
the market from low-cost housing, residential to commercial, industrial, civil engineering and infrastructure
projects. The group operates through three segments, namely bricks, aggregates and coal (the latter being
through its subsidiary, Ilangabi Investments 12 (Pty) Ltd).
The directors of Brikor are pleased to present the condensed consolidated interim financial results for the period
ended 31 August 2017, which reflect the Brikor group’s committed core focus on growth coupled with cost and risk
management.
The group’s overall financial indicators continued to grow positively as management moved forward with resolving
compliance matters consistently and efficiently as possible. The lifting of the suspension on the Johannesburg
Stock Exchange has remained management’s focus.
FINANCIAL RESULTS – continued operations
Revenue increased to R155,7 million (August 2016: R144,9 million) with the gross profit percentage increasing
slightly to 27,1% (August 2016: 26,8%).
The competitive South African economic environment continues to drive selling prices downward, resulting in the
brick segment’s revenue remaining relatively static. This, coupled with extreme wet weather conditions
experienced from March to May, which hindered production capacity, resulted in a mere 0,8% (R0,7 million)
growth. The coal segment has obtained a substantial increase of 20,0% (R10,1 million), mainly due to new mining
techniques implemented in the prior year now fully coming into effect. The slight increase in the gross profit
percentage of the group was attributable to the coal segment’s increase in revenue, which had a roll-on effect of
reducing the fixed cost per tonne of production due to the increased quantities of tonnes sold. The bricks segment
experienced a decline in gross profit percentage due to the lack of sales price increases, whilst still experiencing
inflationary increases in the cost of production. The bricks segment also experienced a sales mix variance with the
less profitable products being more in demand, which further reduced the gross profit percentage year on year.
Other income increased to R4,1 million (August 2016: R2,8 million) due to diesel rebates now being claimed
timely.
Operating expenses decreased to R21,9 million (August 2016: R23,3 million), mainly due to the catch-up
operating expenditure experience in the prior period not being repeated in the current financial period.
Interest paid increased during the period to R5,8 million (2016: R4,5 million) as a result of the interest unwinding of
the higher provision for environmental rehabilitation as well as with the interest accrual on historical borrowings
and liabilities.
The group ended the financial period with an attributable profit from continuing operations of R13,2 million (August
2016: R12,4 million), resulting in basic earnings per share of 2,1 cents (August 2016: 2,0 cents) and basic
headline earnings per share of 2,1 cents (August 2016: 2,0 cents).
Property, plant and equipment decreased to R62,5 million from the February 2017 year-end amount of R89,8
million due to the following:
- the additions to buildings of R0,1 million;
- the additions of plant and equipment of R10,0 million;
- the additions of furniture and fittings of R0,3 million;
- the disposal of plant of R1,8 million;
- the disposal of motor vehicles of R0,1 million;
- depreciation of R7,7 million; and
- transfer of assets to assets held-for-sale and discontinued operations of R28,1 million (2016: Rnil)
CHANGES TO THE BOARD OF DIRECTORS AND COMPANY SECRETARY
On 1 April 2017, Fusion Corporate Secretarial Services (Pty) Ltd was appointed as company secretary;
On 12 April 2017, Mamsey A Mokate was appointed as independent non-executive director;
On 1 December 2017, Mrs Ina McDonald, non-executive director and chairman of the board, announced her
retirement, effective at the next annual general meeting scheduled for 12 January 2018; and
On 12 December 2017, Mr A Hanekom, Chief Financial Officer, resigned with effect from 31 January 2018.
CORPORATE GOVERNANCE
The directors endorse and accept full responsibility for the application of the principles necessary to ensure that
effective corporate governance is practiced consistently throughout the group. Brikor is committed to the principles
of openness, integrity and accountability to all stakeholders and the board of directors accepts its duty to ensure
that the principles as set out in the King Report of Corporate Governance for South Africa – 2009 (King lll) are
implemented on an apply or explain basis.
With the board changes indicated above, the Brikor board now comprises seven directors of whom two are
executive, two are non-executive and three are independent non-executive.
PROSPECTS
As the group continuously and consistently drives the statement of financial position into a healthy solvent, liquid
position and reduces its debt with the South African Revenue Services and related parties, the Brikor board now
looks onwards into the future of the group. High on the agenda is to focus on the strengthening of the group’s
broad-based black economic empowerment and increasing the group’s foothold in the relevant markets it trades
in.
DIVIDEND
No dividend has been declared for the six months ended 31 August 2017.
Condensed consolidated interim statement of financial position
as at 31 August 2017
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
31 August 31 August 28 February
2017 2016 2017
Notes R’000 R’000 R’000
ASSETS
Non-current assets 112 405 137 257 144 363
Property, plant and equipment 62 525 110 243 89 757
Intangible assets 5 546 11 651 10 198
Other financial assets 18 304 14 242 16 326
Deferred tax asset 26 030 1 121 28 082
Current assets 91 957 110 402 80 540
Inventories 34 754 45 219 44 432
Trade and other receivables 41 063 35 689 21 883
Cash and cash equivalents 16 140 29 494 14 225
Assets held-for-sale 2 51 515 - 3 571
Total assets 255 877 247 659 228 474
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the company 64 650 57 102 51 073
Stated capital 228 242 228 242 228 242
Accumulated loss (163 592) (171 140) (177 169)
Non-current liabilities 100 831 106 829 103 454
Borrowings 2 624 6 342 2 624
Shareholders’ loans 43 583 50 230 45 228
Provisions 54 084 50 257 54 281
Deferred tax liability 540 - 1 321
Current liabilities 82 754 83 728 72 041
Borrowings 6 946 6 384 7 280
Trade and other payables 67 747 61 784 57 679
Taxation 8 061 15 560 7 082
Liabilities held-for-sale 2 7 642 - 1 906
Total equity and liabilities 255 877 247 659 228 474
Condensed consolidated interim statement of profit or loss and other comprehensive income
for the six months ended 31 August 2017
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
31 August 31 August 28 February
Notes 2017 2016 2017
R’000 R’000 R’000
Revenue 155 655 144 868 255 848
Cost of sales (113 550) (106 099) (189 837)
Gross profit 42 105 38 769 66 011
Other income 4 101 2 834 5 041
Administrative expenses (18 417) (19 358) (37 198)
Distribution expenses (2 988) (2 403) (5 018)
Other expenses (511) (1 583) (10 438)
Expenses (570) (1 583) (9 094)
Impairments 59 - (1 344)
Operating profit before interest and
24 290 18 259 18 398
taxation
Finance income 383 691 1 606
Finance costs (5 793) (4 533) (13 357)
Profit before taxation 18 880 14 417 6 647
Taxation (5 707) (1 972) 25 262
Profit after taxation 13 173 12 445 31 909
Profit/(loss) from discontinued operations 2 404 (2 197) (27 690)
Total comprehensive income for
the period attributable to owners of the
13 577 10 248 4 219
company
CENTS CENTS CENTS
Earnings per share 3
Continuing operations 2,1 2,0 5,1
Discontinued operations 0,1 (0,4) (4,4)
Basic 2,2 1,6 0,7
Continuing operations 2,1 2,0 5,1
Discontinued operations 0,1 (0,4) (4,4)
Diluted 2,2 1,6 0,7
Continuing operations 2,0 2,0 5,3
Discontinued operations (0,1) (0,4) (0,6)
Headline earnings per share 1,9 1,6 4,7
Continuing operations 2,0 2,0 5,3
Discontinued operations (0,1) (0,4) (0,6)
Diluted headline earnings per share 1,9 1,6 4,7
Condensed consolidated interim statement of changes in equity
for the six months ended 31 August 2017
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
31 August 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Stated capital 244 142 244 142 244 142
Treasury shares (15 900) (15 900) (15 900)
Accumulated loss at the beginning of the period (177 169) (181 388) (181 388)
Profit for the period 13 577 10 248 4 219
Total 64 650 57 102 51 073
Condensed consolidated interim statement of cash flows
for the six months ended 31 August 2017
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
31 August 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Cash flows from operating activities 16 033 13 605 22 229
Cash generated from operations 19 092 25 126 41 393
Finance income 381 691 1 620
Finance costs (3) (4 827) (3 593)
Tax paid (3 437) (7 385) (17 191)
Cash flows to investing activities (9 898) (9 632) (22 349)
Additions to property, plant and equipment (10 392) (8 644) (21 956)
Proceeds on disposal of property, plant and
1 950 540 2 506
equipment
Increase in other financial assets (1 456) (1 528) (2 899)
Cash flows (to)/from financing activities (4 220) 4 273 (6 902)
Borrowings raised 3 893 8 243 6 305
Borrowings repaid (8 113) (3 970) (13 207)
Net increase/(decrease) in cash and cash
equivalents 1 915 8 246 (7 022)
Cash and equivalents at beginning of period 14 225 21 247 21 247
Cash and cash equivalents at end of period 16 140 29 493 14 225
SEGMENTAL REVENUE AND RESULTS
The following is an analysis of the group’s revenue and results from operations by reportable segments.
Segmental profit reconciliation
Six months ended 31 August 2017 - Unaudited
Bricks Coal Other* Total
R’000 R’000 R’000 R’000
Total revenue 95 346 68 114 - 163 460
Intersegmental revenue - (7 805) - (7 805)
Reportable segment revenue 95 346 60 309 - 155 655
Gross profit 22 782 19 323 - 42 105
Other income 936 3 165 - 4 101
Operating profit before interest and taxation 11 679 12 611 - 24 290
Segment assets and liabilities
Segment assets 78 798 75 426 101 653 255 877
Segment liabilities (51 588) (77 316) (62 323) (191 227)
Other segment information
Depreciation and amortisation included in cost of
sales and operating expenditure (2 553) (4 526) (1 076) (8 155)
Additions to non-current assets 4 579 5 764 49 10 392
Six months ended 31 August 2016 – Unaudited
Bricks Coal Other* Total
R’000 R’000 R’000 R’000
Total revenue 94 605 56 839 - 151 444
Intersegmental revenue - (6 576) - (6 576)
Reportable segment revenue 94 605 50 263 - 144 868
Gross profit 24 229 14 540 - 38 769
Other income 802 2 032 2 834
Operating profit before interest and taxation 9 295 8 964 - 18 259
Segment assets and liabilities
Segment assets 67 581 68 380 111 697 247 658
Segment liabilities (38 677) (77 740) (74 139) (190 556)
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 - 2 371
Year ended 28 February 2017 - Audited Bricks Coal Other* Total
R’000 R’000 R’000 R’000
Total revenue 171 517 96 643 - 268 160
Intersegmental revenue - (12 312) - (12 312)
Reportable segment revenue 171 517 84 331 - 255 848
Gross profit 32 843 33 168 - 66 011
Other income 2 286 2 755 5 041
Impairments (1 344) - - (1 344)
Operating profit before interest and taxation 4 224 14 174 - 18 398
Segment assets and liabilities
Segment assets 60 341 67 644 100 489 228 474
Segment liabilities (42 697) (71 604) (63 100) (177 401)
Other segment information
Depreciation and amortisation included in cost of
sales and operating expenditure (5 691) (5 692) (4 191) (15 574)
Additions to non-current assets 3 295 11 214 7 447 21 956
*Other segment relates to non-segment-specific cash and liabilities as detailed below.
Factors used to identify segments are based on geographical location and divisional structuring; this is also how the
group reports financial results to the chief operating decision-maker on a monthly basis.
The accounting policies of the reportable segments are the same as the group’s accounting policies described in
note 1. Segment profit represents the profit earned by each segment without allocation of finance costs and income
tax expense. This is the measure reported to the chief operating decision-maker for the purposes of assessment of
segment performance.
Reportable segment revenue relates to external customers only. 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 assets held-for-sale, goodwill, tax assets,
deferred tax assets and cash and cash equivalents.
- all liabilities are allocated to reportable segments other than general borrowings, shareholders’ loans,
deferred taxation, taxation, bank overdraft and liabilities held-for-sale.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX
MONTHS ENDED 31 AUGUST 2017
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated interim financial statements are prepared in accordance with the requirements of the
JSE Limited Listings Requirements for interim reports and the requirements of the Companies Act of South Africa.
The Listings Requirements require interim 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 Financial Reporting.
The accounting policies applied in the preparation of the condensed consolidated interim financial statements are
in terms of IFRS and are consistent with those applied for the previous consolidated annual financial statements.
The results are presented in Rand rounded to the nearest thousand (R'000), unless otherwise indicated.
2. ASSETS AND LIABILITIES CLASSIFIED AS HELD-FOR-SALE AND DISCONTINUED OPERATION
Assets and liabilities classified as held-for-sale:
On 20 September 2016 and 17 November 2016 respectively, Brikor committed to sell two of its properties, namely
the Rayton property situated at Portion 31 of Witfontein NO.510 - JR District Bronkhorstspruit "Rayton" and the
Nigel Schist property situated at Portion 58 of the Farm Vrisgewaag 510IR "Schist".
Rayton property:
The offer received for Rayton amounting to R2,2 million, which is inclusive of the transfer of the Mining Right No
GP30/5/1/2/2(237)MRC and the related environmental restoration obligation, has been accepted and signed by the
company’s directors on 17 April 2017.
Conditions precedent to the sale:
- The sale is subject to written consent in terms of section (11)1 of the Mineral and Petroleum Resources
Development Act No. 28 of 2002 (“the act”) is granted by the minister in respect of the proposed cession and
transfer of the mining right to the purchaser.
- The purchaser shall be responsible for making the application as required in terms of Section 11 of the Act
with the assistance of the company in terms of documentation required and general co-operation.
- Should the Section 11 transfer not be granted within 18 (eighteen) months from date of signature (11 April
2017) either party may be entitled, in writing, to cancel the agreement, unless the application is imminent, in
which case extension may be applied for by either party for a period of up to 60 (sixty) days or longer as
agreed upon.
- Costs incurred in terms of this agreement shall be borne by the purchaser.
Schist property:
The company has received several offers in terms of the Schist property of which the latest offer of R0,2 million is
inclusive of the transfer of the environmental obligation. The company is in the process of finalising the terms of
agreement with the potential buyer.
Impairment reversal/impairment relating to the assets held-for-sale:
The impairment reversal/impairment was recognised in order to adjust the carrying value of the Rayton Property at
the relevant reporting dates to its fair value less cost to sell (August 2017: R0,06 million impairment reversal,
February 2017: R1,3 million impairment).
Measurement of fair values
The fair value of the non-current assets held-for-sale was obtained with reference to purchase offers received from
third parties for the respective properties.
Fair value hierarchy:
The non-recurring fair value of the assets and liabilities held-for-sale of R2,2 million and R0,2 million respectively,
have been classified as a level 2 fair value (refer to note 10).
Cumulative income or (expenses) included in profit/(loss) and other comprehensive income:
Six months ended 31 August 2017 –Unaudited
Rayton Schist
property property Total
R’000 R’000 R’000
Change inestimate for environmental
rehabilitation provision (30) (13) (43)
Impairment reversal 59 - 59
Net finance costs (29) - (29)
Loss from non-current assets and liabilities
held-for-sale - (13) (13)
Year ended 28 February 2017 - Audited Rayton Schist
property property Total
R’000 R’000 R’000
Change in estimate for environmental
rehabilitation provision (83) (547) (630)
Depreciation of decommissioning asset (9) - (9)
Net finance costs (114) - (114)
Loss from non-current assets and liabilities
held-for-sale (206) (547) (753)
Discontinued operation classified as held-for-sale:
Donkerhoek Quarries:
Background
Donkerhoek Quarries and its operations (“DH”) is a division of Brikor and produces aggregates of a wide variety of
sizes and technical specifications with products including stone, gravel and sand for large and small-scale civil
engineering and infrastructure projects. As per management’s assessment, the DH division is a separate cash-
generating unit, being the smallest group of assets that generate cash inflows largely independent of the cash
inflows from other assets or groups of assets.
DH is capable of functioning independently of Brikor from a staffing, cash flow, profitability and funding perspective
and constitutes a going concern with separately identifiable and assignable assets and liabilities, distinguishable by
geographic location, VAT registration and accounting records. It, however, is not separately registered for income
tax and therefore tax disclosed as part of the discontinued operation is attributable to the deferred tax asset of
Brikor. It constitutes the aggregates segment in its entirety (as previously reported in the segment results by the
group). No other considerations are included into or excluded from the DH operations in order to derive the values
disclosed in previous reporting periods as the aggregates segment.
Decision
DH has been performing at close to breakeven for the last two years as a result of a lack of contract revenue which
drives volume and yields profits in excess of largely fixed overheads. During the 2017 financial year the Brikor
board focused on strengthening the sales force and emphasising more informative decision-making processes,
such as developing accurate product-costing tools, driving more profitable sales and reducing overheads.
With the marginal profitability in mind, no certainty of the effectiveness of implemented changes and knowing that
aggregates do not form part of Brikor's core business, the board has always been open to offers for DH, despite no
specific marketing drive being embarked upon at the commencement of the 2017 financial reporting period.
The board however formally negotiated and approved a mandate in July 2017, with Exchange Sponsors, the
current designated advisors of Brikor to broker the sale of DH, thereby initiating an active program to find a
potential buyer and demonstrating management’s commitment to sell DH.
Subsequently, a number of offers were presented between unrelated arm’s length potential buyers and, in the
interest of transparency and equality a final opportunity was given to competing parties to submit a full and final
offer, the terms of which were considered at face value. Final offers, which were reasonable considering DH’s
current fair value, were received on 15 August 2017, of which the most favourable in terms of the cash
considerations, amounted to R50,3 million.
Conclusion
The final agreement for the sale of DH was signed on 27 October 2017, with conditions precedent including
shareholder approval subsequent to the release of the required Category 1 circular currently being drafted.
Management is of the opinion that all conditions relevant to the transaction will be met by all relevant parties to the
agreement without undue delay or unforeseen complications.
No significant changes to the terms or conditions pertaining to the transaction are anticipated by management and
it is expected to be completed within one year from the agreement date.
Impairment reversal/impairment relating to the discontinued operation:
The Donkerhoek division had been reporting losses in the 2017 financial year and based on this an impairment
trigger was identified. The recoverable amount of the Donkerhoek division was determined and an impairment of
R23,9 million was consequently recognized (included in the 28 February 2017 results).
This impairment was calculated by comparing the carrying value of the cash-generating unit to the recoverable
amount. The recoverable amount of a cash-generating unit is the higher of its fair value less costs to sell and its
value-in-use. The recoverable amount of the Donkerhoek division was determined based on the fair value less cost
to sell. The fair value of the Donkerhoek division was obtained from a purchase offer made by a third party. The
fair value measurement was categorised as a Level 2 fair value based on the inputs such as market prices other
than quoted prices.
Based on the terms of the final agreement, signed on 27 October 2017, there was an indication of an impairment
reversal of only the mineral rights component of the discontinued operation. The impairment reversal was
calculated up to the value of what the carrying amount of the asset would have been if no impairment had existed
at the effective reclassification transfer date, which was in 27 July 2017. The impairment reversal was determined
to be R0,9 million.
Measurement of fair values
The fair value of the discontinued operation was obtained with reference to purchase offers received from third
parties for the DH operations.
Fair value hierarchy:
The fair value of the discontinued operation of R50,3 million has been classified as a level 2 fair value.
Disclosure of discontinued operations
For disclosure purpose of discontinued operations in the consolidated statement of profit or loss and other
comprehensive income the approach followed was to include the amounts related to discontinued operations only
has the single amount of profit or loss with detail thereof as part of this note.
The tables below analyse the results relating to the discontinued operation:
Donkerhoek Quarries Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
31 August 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Revenue 20 653 24 457 45 563
Expenses (21 111) (26 246) (46 709)
Net finance costs (195) (408) (377)
Impairment reversal 905 - (23 941)
Profit/(loss) before taxation 252 (2 197) (25 464)
Taxation 152 - (2 225)
Profit/(loss) from discontinued operations 404 (2 197) (27 689)
Assets and liabilities held-for-sale
At 31 August 2017, the assets held-for-sale was stated at fair value less cost to sell and comprised the
following:
Six months ended 31 August 2017 – Unaudited Rayton Schist Donkerhoek
property property quarries Total
R’000 R’000 R’000 R’000
Assets held-for-sale
Property, plant and equipment 3 618 13 28 115 31 746
Intangible assets - - 5 074 5 074
Inventory - - 14 695 14 695
Non-current assets held-for-sale 3 618 13 47 884 51 515
Liabilities held-for-sale
Environmental rehabilitation provision 1 418 560 4 837 6 815
Payroll accruals - - 827 827
Non-current liabilities held-for-sale 1 418 560 5 664 7 642
Year ended 28 February 2017 - Audited Rayton Schist
property property Total
R’000 R’000 R’000
Non-current assets held-for-sale
Property, plant and equipment 3 558 13 3 571
Non-current assets held-for-sale 3 558 13 3 571
Non-current liabilities held-for-sale
Environmental rehabilitation provision 1 359 547 1 906
Non-current liabilities held-for-sale 1 359 547 1 906
The tables below summaries the cash flow effects relating to the discontinued operations:
Donkerhoek Quarries Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
31 August 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Cash flows from operating activities (844) (6 203) (3 015)
Cash flows from investing activities 451 (5 636) (6 206)
Cash flows from financing activities - (364) (564)
Net cash flows (393) (12 203) (9 785)
3. EARNINGS PER SHARE
The calculations for earnings per share attributable to the ordinary equity holders are based on the following:
Reconciliation between basic earnings and headline earnings as well as diluted earnings:
Six months ended 31 August 2017 - Unaudited
Continuing Discontinued
operations operations Total
R’000 R’000 R’000
Basic and diluted profit 13 173 404 13 577
(Profit)/loss on disposal of property, plant and
equipment (271) 153 (118)
Impairment reversal of assets (59) (905) (964)
Loss on scrapping of property, plant and
equipment 5 - 5
Headline and diluted profit/(loss) 12 848 (348) 12 500
Six months ended 31 August 2016 – Unaudited
Continuing Discontinued
operations operations Total
R’000 R’000 R’000
Basic and diluted profit 12 445 ( 2 197) 10 248
(Profit)/loss on disposal of property, plant and
equipment 5 ( 47) (42)
Headline and diluted profit/(loss) 12 450 ( 2 244) 10 206
Year ended 28 February 2017 - Audited Continuing Discontinued
operations operations Total
R’000 R’000 R’000
Basic and diluted profit 31 909 (27 690) 4 219
Impairment of assets 1 344 23 941 25 285
Profit on disposal of property, plant and
equipment (261) ( 28) (289)
Headline and diluted profit/(loss) 32 992 ( 3 777) 29 215
Number of shares
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
31 August 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Weighted average number of shares 629 342 629 342 629 342
Diluted weighted average number of shares 629 342 629 342 629 342
4. RELATED PARTIES
Relationships Related Director
Entities controlled / significantly influenced by director
- Cyndara 113 (Pty) Ltd PM McDonald & G Parkin
- Scarlett Sun 33 (Pty) Ltd PM McDonald & G Parkin
- Galiya (Pty) Ltd G Parkin
- Nigel Brick and Clay (Pty) Ltd PM McDonald & G Parkin
- Kuvula Trade 40 (Pty) Ltd G Parkin
- Elgar Share Trust PM McDonald & G Parkin
Unaudited Unaudited
Nature 6 months 6 months Audited
of goods ended ended year ended
and services 31 August 31 August 28 February
purchased or 2017 2016 2017
sold R’000 R’000 R’000
Related party balances
Loan accounts - owing (to)/by related parties
Estate late: GvN Parkin
Shareholder loan – loan 1 Unsecured,
interest 7,59%
p.a, no fixed
repayment
terms (31 158) (30 965) (32 450)
Shareholder loan – loan 2 Unsecured,
interest 12%
p.a, no fixed
repayment
terms (8 578) (8 448) (8 963)
Shareholder loan – loan 3 Unsecured,
interest free,
no fixed
repayment
terms (2 256) (8 726) (2 224)
G Parkin
Shareholder loan Unsecured,
interest free (1 591) (2 091) (1 591)
Unaudited Unaudited
Nature 6 months 6 months Audited
of goods ended ended year ended
and services 31 August 31 August 28 February
purchased or 2017 2016 2017
sold R’000 R’000 R’000
Amounts included in trade receivables and
(trade payables)
Scarlett Sun 33 (Pty) Ltd Machinery
parts and
consumables 47 - (17)
Scarlett Sun 33 (Pty) Ltd Surface rights (5 219) (4 270) (5 084)
Nigel Brick and Clay (Pty) Ltd Bricks 1 732 2 648 11
Nigel Brick and Clay (Pty) Ltd Bricks (5 368) (3 996) (1 720)
Galiya (Pty) Ltd Transport 39 78 49
Galiya (Pty) Ltd Transport (118) (170) (102)
Kuvula Trade 40 (Pty) Ltd Transport 18 421 383
Kuvula Trade 40 (Pty) Ltd Rental - 376 17
Kuvula Trade 40 (Pty) Ltd Transport (1 653) (1 988) (1 641)
AP van der Merwe Consultancy
fees (44) - (49)
Cyndara Engineering (97) (97) (97)
Amounts included in borrowings regarding
related parties
Scarlett Sun 33 (Pty) Ltd Interest at
prime plus 1% (3 210) (5 738) (4 322)
Related party transactions
Interest paid
G v N Parkin (loan 1) (1 191) (1 159) (2 342)
G v N Parkin (loan 2) (510) (493) (1 009)
Legal fees
PM McDonald Attorneys - - (249)
Consultancy fees
AP van der Merwe (265) (253) (588)
Purchases from related parties
Scarlett Sun 33 (Pty) Ltd Surface (2 223) (3 282) (3 282)
rights
Scarlett Sun 33 (Pty) Ltd Machinery (129) (171) -
Parts
Scarlett Sun 33 (Pty) Ltd Equipment - (37) (37)
purchased
Galiya (Pty) Ltd Transport (567) (485) (1 005)
Nigel Brick and Clay (Pty) Ltd Bricks (9 738) (7 881) (16 856)
Kuvula Trade 40 (Pty) Ltd Transport (7 043) (8 372) (15 470)
Sales to related parties
Nigel Brick and Clay (Pty) Ltd Bricks and 5 193 5 201 9 605
clay
Scarlett Sun 33 (Pty) Ltd Diesel and - 61 61
maintenance
Galiya (Pty) Ltd Transport 255 390 423
Kuvula Trade 40 (Pty) Ltd Transport 2 252 2 864 2 864
5. SUBSEQUENT EVENTS
The directors are not aware of any material events other than the approval of the final agreement to sell
Donkerhoek Quarries as detailed in note 2, which occurred subsequent to the period ended 31 August 2017
and which need adjustment or disclosure.
6. GOING CONCERN
The directors have prepared their budgets and cash flow forecasts for the year ahead based on reasonable
and supportable assumptions.
The cash flow forecasts and current management results indicate that the company and its subsidiaries will
operate as going concerns for the foreseeable future.
7. OTHER LEGAL AND REGULATORY REQUIREMENTS
On 5 July 2017 the auditors reported reportable irregularities to the Independent Regulatory Board of Auditors in
respect on non-compliance with the Income Tax Act, No 58 of 1962, Mineral and Petroleum Resources Royalties
Act, No 29 of 2008 and the Companies Act of South Africa. The particulars of the reportable irregularities relate
to the following instances, which resulted in penalties and interest being charged to the group:
? Non-submission of annual tax returns and non-timeous payment of provisional tax on due dates, as
required by the Income Tax Act, No 58 of 1962;
? Non-submission of returns and/or payment of Royalty Tax due to South African Revenue Services, as
required by the Mineral and Petroleum Resources Royalties Act, No 29 of 2008; and
? Non-compliance with Section 30 of the Companies Act of South Africa in terms of preparing and approving
of annual financial statements within six months after the end of its financial year.
The directors are aware of the above and are in the process of taking corrective steps, particularly since the
provisional liquidation of Brikor has been lifted to ensure that the relevant non-compliances are adequately
addressed. Full provision has been made in the unaudited condensed consolidated interim financial statements
for any related amounts due.
8. SALIENT FEATURES
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
31 August 31 August 28 February
2017 2016 2017
Number of shares in issue (excluding treasury
shares) ('000) 629 342 629 342 629 342
Net asset value per share (cents) 10,3 9,1 8,1
Net tangible asset value per share (cents) 4,4 6,2 2,0
Impairment reversals/(impairments) (R’000) 964 - (25 285)
Employee cost (R'000) (51 559) (44 410) (93 707)
Net asset value per share is determined by dividing the total equity by the actual number of shares in issue at
reporting date.
Net tangible asset value per share is determined by dividing the total equity less intangible assets by the actual
number of shares in issue at reporting date.
Reconciliation of EBITDA - continued operations
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
31 August 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Operating profit before interest and taxation 24 290 18 259 18 398
Depreciation - cost of sales 6 378 4 723 9 282
Depreciation - other expenses 330 951 1 255
Amortisation - cost of sales 372 454 845
31 370 24 387 29 780
9. DIRECTORS’ EMOLUMENTS
Unaudited Unaudited
6 months 6 months Audited
ended ended year ended
31 August 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Executive
Short-term benefits 2 465 2 766 4 924
Post-employment benefits 95 88 173
2 560 2 854 5 097
Non-executive
Short-term benefits 849 496 984
10. FAIR VALUE
When measuring the fair value of an asset or a liability, the group uses observable market data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Measurement of fair values
Assets-held-for sale (Level 2):
The market comparison technique was used for determining the fair value of the assets held-for-sale. The fair
value is determined based on the estimated selling price in the ordinary course of business less the estimated cost
to sell (refer note 2 for detail).
By order of the board
PM McDonald G Parkin
Chairman Chief Executive Officer
14 December 2017
CORPORATE INFORMATION
Directors: PM McDonald (Chairman)*; PS Moyanga (Lead independent director)^; G Parkin (CEO); A Hanekom
(FD); CB Madolo^; AP van der Merwe*; M Mokate*
* Non-executive ^ Independent non-executive
Registered address: 1 Marievale Road, Vorsterskroon, Nigel 1490
Postal address: PO Box 884, Nigel 1490
Telephone: (011) 739 9000
Facsimile: (011) 739 9021
Company secretary: Fusion Corporate Secretarial Services (Pty) Ltd
Transfer secretaries: Computershare Investor Services (Pty) Ltd
Auditors: KPMG Inc.
Designated Adviser: Exchange Sponsors (2008) (Pty) Ltd
These results and an overview of Brikor are available at www.brikor.co.za
Date: 14/12/2017 02:30:00 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
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