| Tue 31 Jul 2007, 12:14 | | BIK - Brikor Limited - Abridged Prospectus |
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BIK - Brikor Limited - Abridged Prospectus
This abridged prospectus is not an invitation to the public to subscribe
for shares in Brikor Limited ("Brikor"), but is issued in compliance with
the Listings Requirements ("Listings Requirements") of the JSE Limited
("JSE") for information purposes only. The information in this abridged
prospectus has been extracted from a full prospectus issued by Brikor on 27
July 2007 ("the detailed prospectus"), which is available as set out in
paragraph 8. At the date of listing the authorised share capital of Brikor
comprises 1 000 000 000 ordinary shares with a par value of 0.01 cent each,
of which, after a private placement of Brikor ordinary shares by way of an
offer by the company for the subscription of 140 000 000 ordinary shares at
an issue price of 100 cents per ordinary share in the share capital of
Brikor thereby raising R140 million before expenses and an offer for sale
of 100 000 000 ordinary shares by the selling shareholders at a price of
100 cents per ordinary share (together, "the private placement"), 588 380
676 ordinary shares will be in issue and the balance of 47 619 324 ordinary
shares will become effective upon the issue of such shares.
Brikor Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/013247/06)
(JSE code: BIK & ISIN: ZAE000101945)
("Brikor" or "the company")
ABRIDGED PROSPECTUS
Listing of Brikor ordinary shares ("shares") on the JSE.
1 INCORPORATION AND HISTORY
1.1 In August 1994 Garnett Parkin senior, an entrepreneur, formed
Marievale Brickworks (Pty) Limited ("Marievale Brickworks") which
acquired certain immovable properties in Nigel from Marievale Gold
Mine Limited. He and his son Garnett van Niekerk Parkin through
Marievale Brickworks built a brick factory for the manufacture of semi-
face bricks. This factory initially produced 15 million bricks per
annum.
1.2 Parkin Mine Enterprises (Pty) Limited ("PME") was formed by Garnett
Parkin senior at the same time. It acquired a fleet of 2 trucks and 3
trailers, which were primarily responsible for farming operations, the
transport of clay and coal, as well as the distribution of bricks.
1.3 In 1996 Garnett van Niekerk Parkin acquired 100% of the entire issued
share capital of Marievale Brickworks and PME when Garnett Parkin
senior passed away.
1.4 Basfour (Pty) Limited was incorporated as a private company on 10 July
1998, with Garnett van Niekerk Parkin as its only shareholder, and
acquired factory land in Nigel. A second brick plant was commissioned
by the company with a production capacity of 14 million bricks per
annum.
1.5 Marievale Bamford (Pty) Limited ("Marievale Bamford") was formed in
November 1999 and it purchased land and plant in Olifantsfontein where
the group`s third face brick plant, with a gas firing tunnel kiln with
a production capacity of 16.7 million bricks per annum, was
commissioned in March 2000.
1.6 In 2000 PME acquired further land in Rayton to supply clay to the
brick plant in Olifantsfontein.
1.7 Basfour (Pty) Limited changed its name to Brikor (Pty) Limited on 19
November 2001 and the brick manufacturing and sales operations of the
group, including those conducted by Marievale Brickworks, were
consolidated into Brikor. Since 2001 coal underlying the clay
deposits was commissioned to service the needs in the group`s
industry, which ensured that the group became self sufficient from the
supply of coal.
1.8 During 2002 the production capacities of the brick plants in Nigel
were increased to 116 million bricks per year by expanding the
crushing and extruding facilities at these plants. In April 2002
Garnett van Niekerk Parkin formed Clay Concepts (Pty) Limited, which
acquired the Vitro clay pipe factory in Vereeniging, which has been in
operation since 1967. On 11 March 2004, Clay Concepts (Pty) Limited
changed its name to Brikor Vitro (Pty) Limited. This plant was then
converted to the group`s fourth brick plant with a production capacity
of 24 million bricks per annum.
1.9 In 2002 Brikor built and commissioned a roof tile plant at
Olifantsfontein with a production capacity of 20 million tiles per
year.
1.10 Due to demands from the market, the clay pipe plant in Vereeniging was
re-commissioned in May 2003 and is currently producing and supplying 5
400 tons of clay pipes to City Councils, plumbers and Government
departments. It is presently the only clay pipe factory in South
Africa and one of two in Africa.
1.11 In November 2003 Brikor acquired its fifth brick plant in
Bronkhorstspruit which, after its upgrade, was commissioned in 2005.
1.12 With effect from 28 February 2007, the group was rationalised and
restructured with Brikor acquiring the businesses of PME and Brikor
Vitro as going concerns and the immovable properties owned by
Marievale Bamford and Garnett van Niekerk Parkin, in terms of the PME
Sale of Business Agreement, the Brikor Vitro Sale of Business
Agreement, and Marievale Sale Agreement and the Varkensfontein Sale
Agreement, the particulars of which agreements are detailed in
paragraphs 28.1, 28.2, 28.3 and 28.4 of the detailed prospectus.
1.13 On 18 May 2007 Brikor was converted to a public company.
Brikor has various manufacturing plants, mainly in Gauteng with
production capacities in excess of 270 million bricks per annum, 18
million roof tiles per annum and 5 400 tons of clay pipes per annum.
The new roof tile and paver plants will be commissioned at
Olifantsfontein in July 2007 and will increase capacities of roof
tiles to 40 million and pavers to 70 million per annum.
2. NATURE OF THE COMPANY`S BUSINESS AND INDUSTRY
2.1 Manufacture of bricks
2.1.1 Clay brick production is a capital-intensive ceramic process,
which requires long-term planning.
2.1.2 Clay mixed with water produce a plastic mass that can be shaped
by pressure to form a brick. Iron compounds in clay materials,
usually the oxides, account for most of the wide range of colours
found in the finished product. Clays containing up to 3% iron
oxide give white to cream colours, which change to pinks and reds
as the iron oxide content rises to between 8 and 10%.
2.1.3 It takes on average two to nine weeks to manufacture bricks,
depending on the drying and firing process. Different clays are
mixed according to a recipe for brick colour and are crushed,
milled and screened to the required texture. The clay mix has
17% water added in a mixer is then extruded into a column, which
is pushed through a brick cutter. The unfired bricks are stacked
by hand onto wooden pallets or a kiln car and transported to the
drying process. The outdoor hackline drying process takes three
to six weeks to dry the bricks and the tunnel drying process
takes 33 to 48 hours.
2.1.4 Dry bricks are then fired in a kiln (coal or gas fired) at
temperatures between 1000 and 1200C to produce a weather
resistant product. The "clamp" Coal Fired Kiln takes two to
three weeks to fire the bricks and the Gas Fired Tunnel Kiln
takes 48 hours to fire the bricks. The fired bricks are sorted
according to grade and quality and then classified into classes
such as Face Brick Aesthetic, Face Brick Standard, Non-Facing
Plastered and Non-Facing Extra in accordance with the standards
set out by the South African Bureau of Standards ("SABS").
2.1.5 The complete manufacturing process is monitored by the plants`
quality control personnel.
2.2 Manufacture of roof tiles (SABS compliant)
2.2.1 Roof tiles are manufactured with rapid set cement, sand,
aggregate, water and colour pigment. The water is added to the
dry components to initiate the chemical changes leading to
hardening. This mixture is conveyed through an extruder onto a
profiled pallet mould and cut into roof tiles, which are then
dried in a dryer. After 12 hours the roof tiles are sorted for
quality, stripped and packed onto wooden pallets and retained in
the yard for three days to cure as required by the SABS quality
specifications.
2.2.2 The complete manufacturing process is monitored by the plant`s
quality control department and audited by the SABS every 3
months.
2.3 Manufacture of clay pipes
The manufacturing process of clay pipes is similar to the
manufacturing of bricks, but specialised extrusion methods are used.
2.4 Manufacture of pavers
The ingredients of concrete pavers are rapid set cement, sand,
aggregate, water and colour pigment. The mixture is conveyed onto a
vibrating press with the required pavers` profiled mould. These
pavers pass through a dryer and are then automatically palletised and
strapped. The manufacturing process is 24 hours.
3. PROSPECTS
In the opinion of the directors of the group, based on experience and
market information available:
3.1 Increase in capacity of brick manufacturing
3.1.1 Brikor is continuously expanding its existing capacity and
improving its margins and yields. The raising of capital through
the private placement will allow the company to expand its
capacity and to diversify such capacity. In this regard Brikor
will commission a new roof tile and paver plant in
Olifantsfontein during July 2007, the capital commitments in
respect of which are set out in paragraph 17 of the detailed
prospectus.
3.1.2 It will also allow the company to acquire manufacturers of other
related building supply products.
3.2 Geographical expansion
Brikor intends to expand its operations geographically. The
geographical expansion will include manufacturing plants as well as
the expansion of factory outlets or retail distribution centres.
3.3 Product expansion
The company will expand its current product offering into other
"building material products" such as cement bricks, cladding, cement
tiles, lateral support products and aggregates.
3.4 BEE
Various BEE companies have been identified as empowerment partners
that can contribute to the company`s objectives. Once empowered the
company will aggressively tender for new projects for which it could
previously not tender, relying also on South Africa`s expected
economic growth in anticipation of the 2010 FIFA World Cup.
3.5 Industry opportunities
Brikor will continue to supply the current residential and commercial
construction markets. It is however one of the business strategies to
enter the lower end of the market with more appropriate products.
4. SUMMARY OF HISTORICAL AND FORECAST INCOME STATEMENTS
The summarised historical and forecast financial information of Brikor
for the financial year ended 28 February 2007, the financial years
ending 29 February 2008 and 28 February 2009, the preparation of which
is the responsibility of the directors, are set out below. This
financial information must be read in conjunction with the independent
reporting accountants` report thereon reproduced in Annexures 3, 4 and
6 of the detailed prospectus.
4.1 Extracts from the historical and forecast income statements
Pro forma Forecast Forecast
28 29 28
February February February
2007(2) 2008 2009
R`000 R`000 R`000
Revenue 305 531 421 600 512 155
Gross profit 106 943 134 363 164 066
Other income 733 - -
Operating costs (29 703) (34 993) (43 231)
EBITDA 77 973 99 370 120 835
Depreciation (13 779) (13 747) (16 974)
Profit before 64 194 85 623 103 861
interest and taxation
Loss on disposal of (132) - -
non-current assets
Net interest (3 094) 6 290 10 441
(paid)/received
Profit before 60 968 91 913 114 302
taxation
Taxation (18 900) (26 632) (33 121)
Earnings attributable 42 068 65 281 81 181
to ordinary
shareholders
Reconciliation of
headline earnings:
Profit attributable 42 068 65 281 81 181
to ordinary
shareholders
Loss on disposal of 94 - -
non-current assets
Headline earnings 42 162 65 281 81 181
attributable to
ordinary shareholders
Pro forma weighted 489 000 577 602 636 000
average shares in 000 740 000
issue on which
earnings are based
(1)
Pro forma earnings 8.6 11.3 12.8
per share (cents)
Pro forma headline 8.6 11.3 12.8
earnings per share
(cents)
Notes:
(1) The pro forma weighted average number of shares in issue for 28
February 2007 is based on the sub-division and increase of the
ordinary shares in issue into 489 000 000 ordinary shares in
issue on the last practicable date as set out in paragraph 24.3
of the detailed prospectus.
(2) The historical pro forma financial information for 28 February
2007 is an extract from the unaudited pro forma financial
information after the consolidation column as set out in Annexure
5 of the detailed prospectus.
(3) The assumptions upon which the forecast income statements are
based are set out in paragraph 12.2 of the detailed prospectus.
5. DIRECTORS, COMPANY SECRETARY AND REGISTERED OFFICE
Full names, ages, business addresses and functions of the board of
directors of Brikor
Director Age Function Business address
Garnett van 46 Managing 1 Premier Road,
Niekerk Parkin Director and Olifantsfontein,
Chairperson Midrand, 1685
Hanleu Botha 48 Financial Marievale Road,
Director Vorsterkroon,
Nigel, 1491
Khalamazu Elias 56 Human Marievale Road,
Mathebula Resources Vorsterkroon,
("Elias") Director Nigel, 1491
Garnett Parkin 24 Alternate Marievale Road,
(Junior) Director Vorsterkroon,
Nigel, 1491
Ethan Gilbert 47 Non-executive Vunani House
Dube* Director Freestone Park,
135 Patricia Road,
Sandown, Sandton,
2196
* Non-executive
All directors are South African citizens.
5.2 Company secretary and registered office are:
H Botha
68 Eighth Street
Springs, 1559
(PO Box 410, Springs, 1559)
6. THE PLACEMENT
6.1 Salient features
6.1.1 The salient features of the private placement are as follows:
Offer price per ordinary share 100
(cents)
Par value per ordinary share (cents) 0.01
Premium per ordinary share (cents) 99.99
Number of ordinary shares offered by 140 000 000
the company for subscription in
terms of the private placement
Issue consideration to be received R140 million
by the company before expenses
Number of ordinary shares offered 100 000 000
for sale by the selling shareholders
in terms of the private placement
Total consideration to be received R100 million
by the selling shareholders
The opening and closing dates of the private placement are
as follows:
Opening date of the private Tuesday, 31 July 2007
placement (09:00)
Closing date of private placement Tuesday, 31 July 2007
(12:00)
Proposed listing date on ALTx Tuesday, 7 August
(09:00) 2007
Note:
These dates are subject to change at the discretion of the company.
Any changes will be released on SENS.
6.2 Brikor holds irrevocable undertakings from various selected investors
to subscribe for 240 000 000 shares in terms of the private placement,
amounting to 100% of the private placement shares.
6.3 The private placement of 240 000 000 ordinary shares have been fully
allocated to the investors who have given irrevocable undertakings as
set out in paragraph 6.2 above.
6.4 The placement has not been underwritten and is not subject to a
minimum subscription, being achieved.
7. LISTING ON THE JSE
Subject to the required spread of public shareholders in terms of the
Listings Requirements being obtained pursuant to the private
placement, the JSE has approved the listing of 636 000 000 shares on
ALTx. The listing of 588 380 676 ordinary shares on the JSE will
become effective from the commencement of business on Tuesday, 7
August 2007 and the listing of the balance of 47 619 324 ordinary
shares will become effective upon the issue of such shares. The
shares will trade under the abbreviated name "Brikor" and the JSE code
"BIK" and ISIN ZAE000101945.
8. COPIES OF THE PROSPECTUS
Copies of the prospectus, in English, may be obtained, during business
hours, from Tuesday, 31 July 2007, from the registered offices of
Brikor, Exchange Sponsors (Pty) Limited and the transfer secretaries,
details of which are set out below:
- the registered office of the company - 68 Eight Street, Springs.
1559;
- the offices of Exchange Sponsors (Pty) Limited - 39 First Road,
Hyde Park, 2196;
- the offices of Computershare Investor Services 2004 (Pty) Limited
- Ground Floor, 70 Marshall Street, Johannesburg, 2001.
Johannesburg
31 July 2007
Designated Adviser
Exchange Sponsors (Pty) Limited
Auditors and reporting accountants
RSM Betty & Dickson (Tshwane)
Attorneys
Fluxmans Inc.
Date: 31/07/2007 12:14:01 Produced by the JSE SENS Department.
