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ABK
ABK
ABK - African Brick Centre Limited - Abridged audited results for the year ended
29 February 2008
AFRICAN BRICK CENTRE LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 1999/006214/06)
Share Code: ABK ISIN: ZAE000105169
("African Brick Centre" or "the Group")
ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2008
INTRODUCTION
The Directors of African Brick Centre are pleased to announce the Groups` maiden
results as a listed entity for the twelve months ended 29 February 2008.
African Brick Centre listed on 8 October 2007 on the Alternative Exchange of the
JSE Limited. On 1 March 2007, African Brick Centre obtained effective control
and the power to govern the financial and operating policies of African Brick
(Proprietary) Limited, African Brick Lenasia (Proprietary) Limited and Landton
Properties (Proprietary) Limited ("the subsidiaries"). As a result, the
aforementioned subsidiaries` results have been consolidated with effect from 1
March 2007 with the results of African Brick Centre Limited. No comparative
consolidated Group figures are therefore presented. Instead, the audited results
of African Brick Centre (Proprietary) Limited for the 2007 financial year, prior
to listing, has been presented as comparative figures.
ABRIDGED INCOME STATEMENT
Group Company
Notes Audited Audited
12 Months 12 Months
ended 29 ended 28
February February
2008 2007
R000`s R000`s
Revenue 116 014 95 514
Earnings before interest, taxes,
depreciation and
amortisation ("EBITDA") 30 779 11 208
Investment revenue 2 164 190
Finance costs (439) (182)
Depreciation and amortisation (2 139) (481)
Profit before taxation 30 365 10 735
Taxation (9 233) (3 150)
Profit after taxation 21 132 7 585
Earnings per share (cents) 5 10.9
("EPS")
Headline earnings per share 5 10.9
(cents) ("HEPS")
Shares in issue (000`s) 6 312 238
Shares in issue - weighted 6 193 397
average (000`s)
ABRIDGED BALANCE SHEET
Notes Group Company
Audited Audited
at 29 at 28
February February
2008 2007
R000`s R000`s
ASSETS
Non-current assets 96 848 9 159
Investment property 625 -
Property, plant and equipment 60 232 9 148
Goodwill 35 392 -
Intangible assets 162 -
Other financial assets 5 -
Deferred tax 184 11
Prepayments 248 -
Current assets 89 169 17 968
Cash resources 36 593 4 220
Inventories 34 768 5 196
Other current assets 17 808 8 552
TOTAL ASSETS 186 017 27 127
EQUITY AND LIABILITIES
Equity 145 593 11 119
Share capital and premium 113 342 -
Revaluation reserves 3 452 3 452
Retained income 28 799 7 667
Non-current liabilities 14 694 1 090
Borrowings 3 133 505
Deferred taxation 11 502 585
Other financial liabilities 59 -
Current liabilities 25 730 14 918
Taxation payable 11 476 4 282
Provisions 910 50
Other current liabilities 13 344 10 586
TOTAL EQUITY AND LIABILITIES 186 017 27 127
Net asset value per share (cents) 7 46.6
ABRIDGED CASH FLOW STATEMENT
Group Company
12 months 12 months
ended 29 ended 28
February February
2008 2007
R000`s R000`s
Cash generated from operations 3 949 5 308
Net interest received 1 933 145
Income tax paid (5 476) (1 198)
Net cash flow from operating 406 4 255
activities
Net cash flow from investing (8 968) (1 025)
activities
Net cash flow from financing 36 363 (1 025)
activities
Net movement in cash balance 27 801 2 205
Cash balances at beginning of period 8 792 2 015
Cash balances at end of period 36 593 4 220
ABRIDGED GROUP STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
Share Share Reval Retained Total
Capital Premium Reserve Income
R000`s R000`s R000`s R000`s R000`s
Balance at 1 - - 3 452 7 667 11 119
March 07
Issue of share 320 116 940 - - 117 260
capital
Shares (7) (3 911) - - (3 918)
repurchased
Profit after - - - 21 132 21 132
taxation
Balance at 29 313 113 029 3 452 28 799 145 593
February 2008
ABRIDGED COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
Share Share Reval Retained Total
Capital Premium Reserve Income
R000`s R000`s R000`s R000`s R000`s
Balance at 1 - - - 264 264
March 05
Profit after - - - 3 194 3 194
taxation
Dividends - - - (3 194) (3 194)
Balance at 1 - - - 264 264
March 06
Revaluation of
land
and buildings - - 3 452 - 3 452
Profit after - - - 7 585 7 585
taxation
Dividends - - - (182) (182)
Balance at 28 - - 3 452 7 667 11 119
Feb 07
MANAGEMENT COMMENTARY
African Brick Centre`s wholly owned subsidiaries at year end were:
- African Brick (Proprietary) Limited and African Brick Lenasia (Proprietary)
Limited, which are both involved in the manufacturing of clay bricks.
These two factories currently have a combined production yield in excess of
ninety million clay bricks per annum. The vast majority of outputs from
the manufacturing operations are sold to the retailing arm of African Brick
Centre, at market related wholesale prices.
- Landton Properties (Proprietary) Limited, which operates as a property
investment company. The entity also owns the premises at which African
Brick (Proprietary) Limited`s production facilities are based.
FINANCIAL REVIEW
Revenue for the period under review increased by R20,1 Million (21%) compared
with the pro-forma aggregated revenue for the period ended 28 February 2007, as
reported in the Prospectus of African Brick Centre dated 2 October 2007 (`the
Prospectus"). EBITDA amounted to R30,8 Million, an increase of R5,9 Million
(23.7%) compared to the pro-forma aggregated results for the period ended 28
February 2007.
It should be noted that the Group did not achieve its forecast profit per the
Prospectus as a result of adverse market conditions. This can be attributed to
the influence of the interest rate hikes as well as the uncertainty of
electricity supply which had a negative effect on the market. Due to the
oversupply of bricks in the market a price increase was decided against, despite
rising overheads and manufacturing costs.
Cash of R33,1 Million was generated by operations of which R29,1 Million was
utilized to fund growth in working capital. Capital expenditure of R9,3 Million
was incurred during the 12 months under review, indicative of the Group`s
investment in infrastructure to position itself as a market leader in the brick
manufacturing industry.
OPERATIONAL REVIEW
During the period under review the group acquired a manufacturing facility
situated in the Eastern Cape. This acquisition was considered a strategic move
due a shortage in plaster clay brick in that geographical region. Continuing
capital expenditure is being incurred to update and modernize the newly acquired
facilities in order to increase production capacity.
The Group has decided not to pursue the Syferfontein project as stated in the
Prospectus due to an inability to secure electricity supply to this facility.
The acquisition of the abovementioned manufacturing facility in the Eastern Cape
is considered to be more advantageous at this stage, with the full benefit of
the acquisition being reflected in the 2009 financial year.
The existing manufacturing facilities experienced underproduction during January
and February 2008, as a result of adverse weather conditions and interruptions
in electricity supply.
OUTLOOK
In light of the prevailing high interest rate environment, activity in the
building industry has slowed down significantly. This has put a lot of pressure
on all suppliers of building materials. The Group finds itself in the fortunate
position in that it primarily deals with the smaller builders, the do-it-
yourself and general home improvement markets. As a result of the
aforementioned, the Group`s revenue and profit projections, although under
pressure, still remain stable.
Growth is expected to flow from the existing retail infrastructure and
improvements made in the efficiencies of the manufacturing operations.
Given the Group`s strong balance sheet and current cash resources, selective
acquisition opportunities may also present themselves.
The capital expenditure program in place will extend capacity, resulting in
economies of scale and reduced production costs per unit, enabling the Group to
retain its competitive pricing structure.
Due to the decades of experience vested in Management, the Group is confident
that the current adverse market conditions will be managed appropriately.
NOTES TO THE ABRIDGED CONSOLIDATED AUDITED FINANCIAL STATEMENTS
1. Significant accounting policies
The abridged consolidated audited financial statements of African Brick
Centre for the 12 months ended 29 February 2008 comprise the Company and
its subsidiaries.
1.1 Statement of compliance
The abridged consolidated audited financial statements have been prepared
in accordance with the International Financial Reporting Standards ("IFRS")
and the presentation and disclosure requirements of IAS 34 (Interim
Financial Reporting) and the Companies Act of South Africa. The abridged
consolidated financial statements do not include all of the information
required for full Annual Financial Statements and should be read in
conjunction with the Consolidated Annual Financial Statements for the year
ended 29 February 2008.
The accounting policies have been applied consistently by individual Group
companies and have been applied consistently to all periods presented in
these abridged consolidated audited financial statements.
1.2 Basis of preparation
These abridged consolidated financial statements have been prepared in
accordance with IFRS. The accounting policies of the Group are supported
by reasonable, prudent judgments and estimates.
2 Increase in authorized share capital
During the current reporting period, African Brick Centre increased its
authorized ordinary share capital of R1 000 to R1 000 000 by the creation
of 999 000 ordinary shares with a par value of 100 cents per share. The
Company then altered its authorized ordinary share capital by sub-dividing
the 1 000 000 ordinary shares with a par value of 100 cents per share into
1 000 000 000 ordinary shares with a par value of 0.1 cent per share on 6
September 2007. The Company also increased its authorized share capital by
the creation of 250 000 000 preference shares with a par value of 0.1 cent
per share on 6 September 2007.
3 Alterations to issued share capital
On incorporation (25 March 1999), African Brick Centre issued and allotted
100 ordinary shares with a par value of 100 cents per share. On 6
September 2007 resolutions were passed whereby the 100 issued ordinary
shares with a par value of 100 cents per share were sub-divided into 100
000 ordinary shares with a par value of 0.1 cent per share.
The Company issued:
- a total of 75 500 000 ordinary shares at an issue price of 100 cents per
share to acquire 100% of the issued share capital of African Brick
(Proprietary) Limited, African Brick Lenasia (Proprietary) Limited and
Landton Properties (Proprietary) Limited:
- a total of 199 400 000 ordinary shares at a par value of 0.1 cent per share
on 1 September 2007 to existing shareholders of the company and certain
other parties in terms of the restructuring of the company prior to
listing:
- a total of 45 000 000 ordinary shares at an issue price of 100 cents per
share by means of private placing on 2 October 2007 prior to listing.
Investment in Subsidiaries
African African Landton Total
Brick Brick Properties
Lenasia
Date of 1 March 07 1 March 07 1 March 07
effective
control
Voting equity 100% 100% 100%
R000`s R000`s R000`s R000`s
Net asset 4 074 7 447 28 837 40 358
value at date
of acquisition
Consideration 23 000 12 500 40 000 75 500
paid
Resultant 18 926 5 053 11 163 35 142**
goodwill
Profit/(Loss) 7 893 8 338 (18) 16 203
before tax
since
acquisition
The consideration paid to acquire these three subsidiaries was raised by the
issue of 75 500 000 ordinary shares at an issue price of 100 cents per share, as
reflected in Note 3. The Group financial statements include those of the holding
company and its subsidiaries. The results of the subsidiaries are included from
date on which control is acquired until the date that control ceases. On
acquisition the Group recognizes the subsidiary`s identifiable assets,
liabilities and contingent liabilities at fair value, except for assets
classified as held-for-sale, which are recognized at fair value less costs to
sell. All inter-group transactions, balances and unrealized gains and losses on
transactions are eliminated on consolidation. In the company`s separate
financial statements, investments in subsidiaries are carried at cost less any
accumulated impairment. The cost of an investment in a subsidiary is the
aggregate of:
The fair value, at the date of exchange, of assets given, liabilities incurred
or assumed, and equity instruments issued by the company; plus
Any costs directly attributable to the purchase of the subsidiary.
An adjustment to the cost of a business combination contingent on future events
is included in the cost of the combination if the adjustment is probable and
can be measured reliably.
** The goodwill figure per Group balance sheet of R35 392 000 consists of the
above goodwill figure resulting from the acquisition of the three subsidiaries,
as well as goodwill amounting to R250 000 resulting from the acquisition of a
manufacturing facility by one of the subsidiaries.
5. Earnings per share ("EPS")
EPS is calculated on the Group`s profit after tax, divided by the
weighted average number of shares in issue during the 12 month period.
Profit after tax (R000`s) 21 132
Weighted average number of (000`s) 193 397 - see note
shares in issue
EPS 10.9 cents
Headline earnings per
share ("HEPS")
Reconciliation of headline
earnings:
Earning attributable to (R000`s) 21 132
ordinary shareholders
Less: profit on disposal (R000`s) (14)
of non-current assets
Headline earnings
attributable to
ordinary shareholders (R000`s) 21 118
Weighted average number of (000`s) 193 397 - see note
shares in issue
HEPS 10.9 cents
There are no factors existing at this reporting period which require the
disclosure or calculation of diluted earnings per share.
6. Weighted average number of shares in issue
The weighted average number of shares in issue of the Group is calculated
in accordance with the guidelines of IAS 33 (Earnings per Share) and is
appropriately weighted from the date of the share issue. If shares are
issued during a financial year, it would be incorrect to assume that they
had been in issue throughout the year when calculating EPS. The returns
generated as a result of the new issue of share capital, will only accrue
to the Company after the capital injection, therefore it is logical to
weight the number of shares issued over the time period of the increased
capital.
7. Net asset value per share (`NAV")
Ordinary share capital and reserves (R000`s) 145 593
Total number of shares in issue (000`s) 312 238
NAV per share 46.6 cents
8. Segmental reporting
The Group did not apply segmental reporting. This is in accordance with the
guidelines of IFRS 8 (Operating Segments).
No segment reports based on geographical spread of operations was prepared
due to the fact that more than 90% of Group revenue was generated from one
geographical region.
No segment report based on product diversification was prepared due to the
fact that the vast majority of Group revenue is derived from the sale of
bricks.
9. Related party transactions
All related party transactions which constitute intergroup transactions
were eliminated on consolidation.
There were no significant related party transactions other than intergroup
transactions.
10. Post balance sheet events
Subsequent to year end, the Group acquired a 51% shareholding in Dash Brick
and Building Supplies - Strubensvalley (Proprietary) Limited. The relevant
agreements were signed prior to year end, but final approval from the
Competition Commission of South Africa was only obtained on 1 April 2008.
11. Dividend policy
In light of the current prevailing business environment as well as the fact
that the current period under review has been the first year of operating
as a Group, the Board of Directors have decided not to declare a final
dividend. Should the building industry recover to expected levels, the
Group might consider declaring an interim dividend.
12. Directors
The following directors served on the Board as at 29 February 2008:
Non-Executive Directors Dr O van Graan (Chairman
DB Mostert
MJ Jack
Executive Directors B van Graan (Chief Executive Officer)
B Reyneke (Managing Director)
TC Meyer (Financial Director)
Mr Jan de Wet was appointed as an executive director of the company with
effect from 15 May 2008.
13. Audit Opinion
The annual financial statements have been audited by PKF (Pta) Inc. The
auditors` unqualified audit opinion is available for inspection at the
company`s registered office
BY ORDER OF THE BOARD
B VAN GRAAN B REYNEKE
CHIEF EXECUTIVE OFFICER MANAGING DIRECTOR
23 May 2008
CORPORATE INFORMATION
Designated and Corporate Advisor PSG Capital (Proprietary) Limited
Registration Number 1999/006214/06
Registered Address 31 Biccard Street
Krugersdorp
1739
Postal Address P O Box 315
Krugersdorp
1740
Company Secretary D Arvanitis & Company
Tel: (011)953-1305
Fax: (011)660-7322
Transfer Secretaries Link Market Services
South Africa (Pty) Ltd
Date: 23/05/2008 15:52:01 Produced by the JSE SENS Department.
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