| Thu 29 May 2008, 15:24 | | BIK - Brikor - Reviewed Condensed Financial Results For The Year Ended 29 |
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BIK
BIK
BIK - Brikor - Reviewed Condensed Financial Results For The Year Ended 29
February 2008 and dividend declaration
Brikor Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1998/013247/06)
(JSE code: BIK & ISIN: ZAE000101945)
("Brikor" or "the company")
Highlights
Attributable profit up 74% to R73 million
Headline earnings up 58% to R67 million
Earnings per share up 51% to 13.0 cents
Headline earnings per share up 38% to 11.9 cents
Net tangible asset value per share up 52% to 60.4 cents
Maiden dividend declared of 1.5 cents
REVIEWED CONDENSED FINANCIAL RESULTS
FOR THE YEAR ENDED 29 FEBRUARY 2008
Condensed Income Statements
Reviewed Unaudited Audited
February Pro forma (2) February
2008 February 2007
R`000 2007 R`000
R`000
Revenue 311 908 305 531 305 531
Cost of sales (174 066) (198 588) (216 465)
Cost of sales depreciation (13 719) (12 500) (6 639)
Gross profit 124 123 94 443 82 427
Other income (3) 7 197 733 657
Administration expenses (36 930) (29 703) (29 559)
Depreciation (1 701) (1 279) (681)
Profit before interest and 92 689 64 194 52 844
taxation
Investment revenue 13 005 - 2 178
Loss on disposal of non- - (132) 318
current assets
Finance costs (6 780) (3 094) (5 167)
Profit before taxation 98 914 60 968 50 173
Taxation (25 869) (18 900) (14 806)
Profit attributable to 73 045 42 068 35 367
ordinary shareholders
Earnings before interest, 108 109 77 973 60 164
taxation, depreciation and
amortisation ("EBITDA")
Reconciliation of headline
earnings:
Profit attributable to 73 045 42 068 35 367
ordinary shareholders
Adjusted for: - 94 (318)
IAS 16 loss / (profit) on
disposal of property,
plant and equipment
Grant received (6 303) - -
Headline earnings 66 742 42 162 35 049
attributable to ordinary
shareholders
Weighted average shares in 560 227 730 489 000 000 10
issue on which earnings
are based (1)
Treasury shares (issued to 9 017 260 -
the Brikor Share Incentive
Scheme)
Fully diluted weighted 569 244 990 489 000 000 10
average shares in issue
(000)
Earnings per share (cents) 13.0 8.6 353 673 770
Headline earnings per 11.9 8.6 350 489 590
share (cents)
Fully diluted earnings per 12.8 8.6 353 673 770
share (cents)
Fully diluted headline 11.7 8.6 350 489 590
earnings per share (cents)
Dividend per share (cents) 1.5 - -
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 as set out in
Brikor`s prospectus dated 27 July 2007 ("the prospectus").
(2) Brikor was restructured with effect from 28 February 2007 in terms of
the Restructure Agreements ("Restructure Agreements") as set out in the
prospectus. In terms of the Restructure Agreements, Brikor acquired the
businesses conducted by Parkin Mine Enterprises (Pty) Limited ("PME")
and Brikor Vitro (Pty) Limited ("Brikor Vitro") including immovable
properties and the immovable properties of Marievale Bamford (Pty)
Limited and the property situated at Portion 27 of the farm
Varkensfontein 169 and the historical unaudited pro forma financial
information for the year ended 28 February 2007 is based on the
restructure of the company.
(3)Other income for the year ended 29 February 2008 of R6.3 million relates
to
a grant received from the Department of Trade and Industry.
Condensed Balance Sheets
Reviewed Unaudited Audited
February Pro forma February
2008 February 2007
R`000 2007 R`000
R`000
ASSETS
Non-current assets 327 276 263 539 263 539
Property, plant and 299 833 241 458 241 458
equipment
Goodwill and 27 237 22 081 22 081
intangible assets
Other financial 206 - -
assets
Current assets 198 691 52 852 52 814
Inventories 65 223 19 031 19 031
Trade and other 37 768 30 899 30 899
receivables
Cash and cash 95 700 2 922 2 884
equivalents
Total assets 525 967 316 391 316 353
EQUITY AND
LIABILITIES
Equity 412 038 216 015 112 951
Issued capital 62 49 -
Share premium 225 980 103 015 -
Retained earnings 185 996 112 951 112 951
Non-current 57 442 39 288 39 288
liabilities
Mortgage bonds and 14 198 5 595 5 595
instalment sale
creditors
Deferred taxation 37 442 28 146 28 146
Environmental 5 802 5 547 5 547
obligation
Current liabilities 56 487 61 088 164 114
Current portion of 8 977 3 705 3 705
non-current
liabilities
Other financial 4 002 - 103 026
liabilities
Taxation 16 110 34 963 34 963
Trade and other 27 398 22 420 22 420
payables
Total equity and 525 967 315 391 316 353
liabilities
Number of shares in 637 094 853 489 000 10
issue at year end 000(1)
Net asset value per 64.7 44.2 1 129 511 000
share (cents) (1)
Net tangible asset 60.4 39.7 908 704 550
value per share
(cents) (1)
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 as
set out in the prospectus dated 27 July 2007 ("the prospectus") as
consideration for the financial liability amounting to R103 026 million.
(2) In terms of the Restructure Agreements and the prospectus, 47 619 324
Brikor ordinary shares were issued to PME and Brikor Vitro upon the
registration of transfer of certain immovable properties into the name
of Brikor. These shares have been included in the number of shares
issued at year end.
(3) The 15 900 000 ordinary shares issued to the Brikor Incentive Scheme
have been treated as "treasury" shares.
Condensed Statements of Changes in Equity
Share Share Retained Total
capital premium earnings equity
R`000 R`000 R`000 R`000
Balance 1 March 2006 - - 77 584 77 584
Share capital issued - - - -
Premium on share - - - -
capital issued
Share-based payment - - - -
reserve
Profit for the year - - 35 367 35 367
Balance 28 February - - 112 951 112 951
2007
Share capital issued 64 - - 64
Premium on share - 251 095 - 251 095
capital issued
Share issue expenses - (9 217) - (9 217)
Less treasury shares (2) (15 898) - (15 900)
Profit for the year - - 73 045 73 045
Balance 29 February 62 225 980 185 996 412 038
2008
Condensed Cash Flow Statements
Reviewed Audited
February February
2008 2007
R`000 R`000
Cash flows from operating activities 25 923 51 406
Cash generated from operating 60 279 56 251
activities
Investment revenue 11 533 2 178
Finance costs (6 780) (4 297)
Taxation paid (39 109) (2 726)
Cash flow from investing activities (74 001) (147 414)
Property, plant and equipment acquired (74 456) (205 009)
Proceeds on disposals of property, 661 23 302
plant and equipment
Loans (granted) / repaid (206 ) 34 293
Cash flow from financing activities 140 894 100 371
Share capital 62 -
Share premium 225 980 -
Deed of sale creditor paid (99 023) -
Borrowings raised 13 875 100 371
Net increase in cash and cash 92 816 4 363
equivalents
Cash and cash equivalents at beginning 2 884 (1 479)
of year
Cash and cash equivalents at end of 95 700 2 884
year
Segmental Reporting
Ancillary
products
Concrete and services Consolidated
Clay Products products
R`000 R`000 R000 R`000
2008
Revenue 168 139 58 232 85 537 311 908
Gross profit
before
depreciation 66 919 19 251 51 672 137 842
2007
Revenue 162 461 63 998 79 072 305 531
Gross Profit
before
depreciation 64 169 24 582 18 192 106 943
OVERVIEW
The directors of Brikor present the reviewed annual financial statements for
the year ended 29 February 2008 ("2008 year"). The company again showed
excellent growth despite the fact that trading conditions were more
challenging in the second part of the year due to high rainfalls, unscheduled
load shedding by Eskom in January and the rising interest rate environment.
Brikor has various clay brick, clay pipes, roof tiles and paver manufacturing
plants, in and around the Gauteng area. These manufacturing plants are
situated at Nigel, Olifantsfontein, Vereeniging and Bronkhorstspruit with
production capacities in excess of 270 million clay 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 were commissioned at Olifantsfontein in
February 2008 and will increase capacities of roof tiles to 40 million and
pavers to 30 million per annum.
The focus areas during the 2008 year were cost management, efficiency gains
and yield improvements. This directly resulted in bricks being produced at
lower costs, which had a significant impact on the gross profit and EBITDA
margins achieved by Brikor.
When Brikor listed in August 2007, 26% of its private placement was to Black
Economic Empowerment ("BEE") investors, making Brikor the leading BEE clay
brick, pavers and roof tiles manufacturer and supplier to the construction
industry.
To increase its geographical footprint and to participate in the envisaged
infrastructural spend, Brikor has successfully concluded its acquisition of
the Zululand Quarries Group for a purchase consideration of R102 million in
April 2008, when the acquisition became unconditional. In addition Brikor
has entered into an agreement to acquire Donkerhoek Quartzite (Pty) Limited,
for a purchase consideration of R70 million and a further payment to a
maximum of R70 million, if certain profit warranties are achieved. Both
acquisitions are described in further detail under the headings "prospects"
and "subsequent events".
FINANCIAL RESULTS
Company revenue increased by 2% to R311.9 million (2007: R305.5 million).
Gross profit increased by 31% to R124.1 million (2007: R94.4 million).
EBITDA increased significantly, by 39%, to R108.1 million (2007: R77.9
million). EBITDA margins improved to 35% (2007: 26%) for the 2008 financial
year.
The investment revenue for the 2008 year amounted to R13.0 million as a
result of the funds received in respect of the private placement of R140
million in August 2007. These funds have been utilised subsequent to the
2008 year end to pay for the Zululand Quarries Group acquisition as detailed
below, capital projects and to increase the group`s inventory levels.
Profit attributable to ordinary shareholders increased by 74% to R73.0
million (2007: R42.1 million). Fully diluted headline earnings per share
increased by 34% to 11.7 cents (2007: 8.7 cents).
SEGMENTAL REPORTING
The clay division has again performed very well due to higher productivity,
better yields achieved and effective cost controls. The concrete division
has performed well and although the gross profit margins are slightly down
from the previous year it is expected to exceed expectations due to
managerial changes in this division. The commissioning of the plants will
increase production capacity and the challenge for the concrete division
will be to align the products produced by the division to market demand,
thereby increasing market share in the specific sectors which they service.
The company`s performance was further improved by providing ancillary
products and services such as waste recycling, coal and transport.
BASIS OF PREPARATION OF THE REVIEWED RESULTS
Statement of compliance
The condensed financial statements comprise a consolidated balance sheet at
29 February 2008, a consolidated income statement, consolidated statement of
changes in equity and summarised consolidated cash flow statement for the
year ended 29 February 2008. The condensed financial statements have been
prepared in accordance with International Financial Reporting Standards
("IFRS") IAS 34, JSE Listings Requirements and South African Companies Act,
1973.
The accounting policies applied for the year are consistent with those of the
prior year with the exception of the adoption of IFRS 7.
Basis of measurement
The condensed financial statements have been prepared on the historical cost
basis except for certain financial instruments measured at fair value.
REVIEWED RESULTS
The auditors, RSM Betty & Dickson (Tshwane), have reviewed these results and
their unmodified review opinion is available for inspection at the company`s
registered office.
PROSPECTS
Even though there has been a significant downturn in the residential building
market, Brikor is confident that it will realise its growth prospects for the
short to medium term. The concrete division has moved its focus to the
affordable housing markets to increase its exposure to that side of the
market which is still growing. The clay division is aggressively focusing
its marketing on the commercial and infrastructural markets and will maintain
and improve its current volumes by servicing the lower end of the housing
market. Brikor will follow an aggressive growth strategy to realise economies
of scale and lower cost efficiencies in 2009.
Brikor has, during the 2008 year, improved capacities and is able to produce
high quality affordable products. Brikor has historically utilised a
downturn in the economy to its benefit by expanding and improving
manufacturing capacities to take advantage when the economy improves, in
order to have the capacity and ability to service the market.
The Zululand Quarries Group acquisition is in line with Brikor`s growth
strategy, as well as its geographical expansion plan, to have a national
footprint and is Brikor`s first entry into the coastal regions. The product
range offered by the Zululand Quarries Group falls within the diversification
strategy of Brikor and also strengthens the current Brikor product offering.
The location offers Brikor a strategic entrance and opportunity to offer clay
bricks to the KwaZulu-Natal market.
The Donkerhoek Quartzite (Pty) Limited and Leopont 365 Properties (Pty)
Limited transaction (collectively "Donkerhoek") is in line with Brikor`s
growth and vertical integration strategy, as well as its geographical
expansion plan. The transaction will expand Brikor`s product and service
offering in the market, diversify revenue streams and add critical mass to
Brikor. The products offered by Donkerhoek will increase Brikor`s
participation in infrastructural projects. Brikor also intends to take part
in the supply of silica-based stone into the iron and steel industry, to
produce road stone and ready mix. The Donkerhoek quarry is strategically
located in Pretoria East and is a quartzite quarry producing sand and stone.
Both acquisitions are in a growth phase and are expected to grow
significantly in the first year. This growth will support Brikor`s growth
strategy even in a market where a downturn in the residential market is being
experienced.
SHARE CAPITAL
Prior to the date of listing on AltX, an offer was made to the company`s
employees to acquire shares in the company through the Share Incentive Trust.
The 15 900 000 shares issued have been treated as "treasury" shares in the
share capital of the company and deducted from equity.
In terms of the Restructure Agreements and the prospectus, 47 619 324
ordinary Brikor shares were issued to PME and Brikor Vitro upon the
registration of transfer of certain immovable properties into the name of
Brikor. A correction was made on 29 February 2008 to the number of shares
issued in terms of the Restructure Agreements which were decreased by 14 805
147 Brikor ordinary shares issued to PME.
SUBSEQUENT EVENTS
Shareholders are referred to the announcements dated 18 February 2008 and 4
April 2008 advising that Brikor had successfully acquired the Zululand
Quarries Group for a total purchase consideration of R102 million.
Shareholders are further referred to the announcement dated 20 May 2008 and
are advised that Brikor has, subject to certain conditions precedent,
acquired all the shares and claims in Donkerhoek for a purchase
consideration of R70 million from GJ Niemand ("the vendor"). An additional
amount which shall not exceed R70 million will also be paid to the vendor if
Donkerhoek`s profit after tax is more than R5 million for the period from 1
June 2008 to 30 November 2008, then the amount above R5 million will be
multiplied by 7.08 (multiplied by two to annualise the profit). The
Donkerhoek purchase consideration will be settled from borrowings.
DIVIDEND POLICY
Having regard to the profits attained for the year ended 29 February 2008,
the board has reconsidered the company`s dividend policy and has resolved to
declare the company`s maiden dividend to shareholders of 1.5 cents per share
for the year ended 29 February 2008. The salient dates applicable to the
dividend are set out below:
Last day to trade cum dividend Friday, 15 August 2008
Trading commences ex dividend on Monday, 18 August 2008
Record date Friday, 22 August 2008
Payment on Monday, 25 August 2008
Share certificates may not be dematerialised or rematerialised between
Monday, 18 August 2008 and Friday, 22 August 2008, both days inclusive.
STATEMENT ON GOING CONCERN
The condensed financial statements have been prepared on the going-concern
basis since the directors have every reason to believe that the company has
adequate resources in place to continue in operation for the foreseeable
future.
By order of the Board
29 May 2008
G v N Parkin H Botha
Chief Executive Officer Chief Financial Officer
CORPORATE INFORMATION
Non executive directors: E G Dube M M Patel *appointed 28 May 2008
Executive directors: G V N Parkin (Chairman and CEO); H Botha (CFO); K E
Mathebula, G Parkin (Jnr), A Cronje *appointed 28 May 2008
Registration number: 1998/013247/06
Registered address: 1 Marievale Road, Vorsterskroon, Nigel
Postal address: PO Box 884, Nigel, 1490
Company secretary: Hanleu Botha
Telephone: (011) 739 9000
Facsimile: (011) 739 9021
Transfer secretaries: Computershare Investor Services (Pty) Limited
Designated Adviser: Vunani Corporate Finance
These results and an overview of Brikor are available at www.Brikor.co.za.
Date: 29/05/2008 15:24:01 Produced by the JSE SENS Department.
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