| Fri 27 Nov 2009, 13:09 | | BIK - Brikor Limited - Unaudited condensed interim financial results for the |
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BIK
BIK
BIK - Brikor Limited - Unaudited condensed interim financial results for the
six months ended 31 August 2009
BRIKOR LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1998/013247/06)
(JSE code: BIK ISIN: ZAE000101945)
("Brikor" or "the company" or "the group")
UNAUDITED CONDENSED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31
AUGUST 2009
Condensed Group Income Statements
Unaudited Reviewed Audited
6 months 6 months 12 months
August 2009 August 2008 February
R`000 R`000 2009
R`000
Revenue 155 451 190 269 339 335
Cost of sales (107 534) (133 925) (276 076)
Cost of sales depreciation (10 776) (10 209) (19 741)
Gross profit 37 141 46 135 43 518
Other income 422 396 645
Depreciation and amortisation (2 680) - (5 229)
Administration expenses (22 565) (26 487) (56 593)
Profit / (loss) before 12 318 20 044 (17 659)
interest, and taxation
Impairment of goodwill (7 553) - (4 912)
Interest received 1 377 3 273 4 647
Profit on disposal of non- 3 698 - -
current assets
Finance costs (13 153) (4 764) (18 124)
(Loss) / profit before (3 313) 18 553 (36 048)
taxation
Taxation (1 022) (6 107) 7 748
(Loss) / profit attributable (4 335) 12 446 (28 300)
to ordinary shareholders
Reconciliation of headline
earnings:
(Loss) / profit attributable (4 335) 12 446 (28 300)
to ordinary shareholders
Impairment of goodwill 7 553 - 4 912
Adjusted for profit on disposal (2 662) - (7)
of property, plant and
equipment
Headline earnings / (loss) 556 12 446 (23 395)
attributable to ordinary
shareholders
Weighted average shares in 623 912 911 621 194 853 622 673 309
issue on which earnings are
based
Treasury shares (issued to the 15 900 000 15 900 000 15 900 000
Brikor Share Incentive Scheme)
Fully diluted weighted average 639 812 911 637 094 853 638 573 309
shares in issue
(Loss) / earnings per share (0.7) 2.0 (4.5)
(cents)
Headline earnings / (loss) per 0.1 2.0 (3.8)
share (cents)
Fully diluted (loss) / earnings (0.7) 2.0 (4.5)
per share (cents)
Fully diluted headline earnings 0.1 2.0 (3.7)
/ (loss) per share (cents)
Dividend per share (cents) - 1.5 1.5
Condensed Group Balance Sheets
Unaudited Reviewed Audited
August 2009 August 2008 February
R`000 R`000 2009
R`000
ASSETS
Non-current assets 540 581 532 536 555 976
Property, plant and equipment 449 659 398 003 458 119
Goodwill 69 484 115 297 77 037
Intangible assets 18 840 18 911 19 448
Other financial assets 2 598 325 1 372
Current assets 151 019 171 469 131 362
Inventories 86 238 87 169 77 337
Trade and other receivables 59 304 60 897 49 110
Cash and cash equivalents 5 477 23 403 4 915
Total assets 691 600 704 005 687 338
EQUITY AND LIABILITIES
Equity 371 544 414 924 375 579
Issued capital 62 62 62
Share premium 227 680 225 980 227 380
Retained earnings 143 802 188 882 148 137
Non-current liabilities 199 585 191 821 200 054
Provisions 9 355 7 893 12 480
Borrowings 132 900 129 041 131 274
Deferred taxation 57 330 54 887 56 300
Current liabilities 120 471 97 260 111 705
Trade and other payables 43 350 41 781 39 466
Borrowings 38 413 31 918 39 957
Taxation 16 543 18 583 14 595
Bank overdraft 22 165 4 978 17 687
Total equity and liabilities 691 600 704 005 687 338
Capital commitments 5 000 11 020 10 000
Number of shares in issue at 625 240 308 621 194 853 623 740 308
period-end (excluding treasury
shares)
Net asset value per share 59.4 66.8 60.2
(cents)
Net tangible asset value per 45.6 45.2 45.6
share (cents)
Condensed Group Statements of Changes in Equity
Unaudited Reviewed Audited
6 months 6 months 12 months
August 2009 August 2008 February
R`000 R`000 2009
R`000
Balance at beginning of period 375 579 412 035 412 035
Issue of share capital 300 - 1 400
Net (loss) / profit for the (4 335) 12 446 (28 300)
period
Dividend declared - (9 557) (9 556)
Balance at end of period 371 544 414 924 375 579
Condensed Group Cash Flow Statements
Unaudited Reviewed Audited
6 months 6 months 12 months
August 2009 August 2008 February
R`000 R`000 2009
R`000
Cash flows from operating (4 432) 3 270 (11 761)
activities
Cash flows from investing 434 (209 182) (235 690)
activities
Cash flows from financing 82 128 638 138 980
activities
Net increase in cash and cash (3 916) (77 274) (108 471)
equivalents
Cash and cash equivalents at (12 772) 95 699 95 699
beginning of period
Cash and cash equivalents at end (16 688) 18 425 (12 772)
of period
Segmental Reporting
Brikor Inland Brikor Coastal Total
R`000 R`000 R`000
Six months ended 31 August 2009
- Unaudited
Revenue external 100 301 55 150 155 451
Operating profit 4 360 7 958 12 318
Total assets 550 950 140 650 691 600
Six months ended 31 August 2008
- Reviewed
Revenue external 190 269 - 190 269
Operating profit 20 044 - 20 044
Total assets 704 005 - 704 005
Year ended 28 February 2009
- Audited
Revenue external 243 332 96 003 339 335
Operating (loss) / profit (28 935) 11 276 (17 659)
Total assets 555 650 131 688 687 338
OVERVIEW
The directors of Brikor present the unaudited interim financial results for
the six months ended 31 August 2009 ("the interim period").
Brikor is a manufacturer and supplier of building and construction materials
to the building industry, servicing all segments of the market from low-cost
housing, residential, commercial and construction projects. The position of
suppliers to the residential construction market is the worst in 15 years and
not unique to the performance of Brikor`s brick-making operations.
The interim period has been characterised by persisting economic pressures
resulting from the global recession`s halting recovery. Extensive job losses,
increased food and fuel costs, the dramatic increases in the cost of power and
political uncertainty evidenced by ongoing service delivery protests and
concern over high crime rates have exerted a negative influence on both the
local and international investment sectors.
This in turn has affected consumer and business sentiment. Market conditions
in the building industry remained subdued during the interim period, with few
new residential developments and a virtual stagnation in speculative
investment. The group`s results were affected by reduced consumer spending,
tightening of available bank funding as well as increased input costs. Delays
and cancellations in building and construction projects further hampered
performance.
Although the shrinking residential building market negatively affected the
company`s sales, the newly acquired companies have strengthened the company`s
traditional business of brick manufacturing. Zululand Quarries Group
("Zululand Quarries") and Donkerhoek Quartzite (Pty) Limited ("Donkerhoek")
have started to contribute to the critical mass required for the group to
remain sustainable and profitable going forward. The performance of Zululand
Quarries has been satisfactory to date and its growth prospects indicate that
the investment complement the group`s activities and diversification strategy.
A delay was, however, experienced in the take-off of new projects from the
Donkerhoek operations, hence the current losses experienced in this division.
Given the uncertainty pertaining to the timing of economic recovery, the
directors have made provision of impairment for goodwill on the Donkerhoek
operations of R7.5 million.
In addition to lower volume demand, the continued increased input costs, such
as energy, fuel and raw material, diluted the net earnings versus volume
output during the interim period. The company was unable to pass these cost
increases onto its customers as a result of price pressure and competition for
volume.
Brikor has implemented a strategy to right-size its business for the current
climate by re-aligning the lower production volumes with reduced operational
cost structures and expanding its focus on the commercial building sector and
construction segment.
FINANCIAL RESULTS
The group`s consolidated revenue decreased by 18% to R155.5 million (2008:
R190.3 million), mainly as a result of lower demand and lower selling prices.
Gross profit decreased by 19% to R37.1 million (2008: R46.1 million) and gross
profit margins decreased to 24% as a result of the continued increased input
costs, such as energy, fuel, gas and raw material. The reduction in the
group`s gross profit, combined with higher operating expenses, increased
depreciation charges for the larger asset base, finance costs and goodwill
impairment resulted in a headline loss per share of 0.7 cents for the period
(earnings per share 2008: 2.0 cents).
PROSPECTS
Whilst no meaningful recovery is expected from building-related activities
before the start of the new calendar year, the lower interest rate environment
should contribute to an improvement in consumer confidence and the general
trading environment. With the successful conclusion of the election and
settling down and positioning of central and local government decision-making
powers, it is anticipated that government spend on infrastructure and housing
projects will support increased demand in the building and construction sector
over the next financial period.
The board expects market conditions to remain under pressure over the short-
to medium-term, but is confident that underlying fundamentals will continue to
improve as a result of:
- more accessible funding for customers due to the relaxing of lending
criteria by financial institutions;
- an improvement in investor confidence from significantly reduced interest
rates; and
- increased pressure on government to deliver on infrastructure and housing
requirements.
The group therefore continues to be well positioned to benefit from gradual
improvement in market conditions.
BASIS OF PREPARATION
The unaudited interim results have been prepared in accordance with
International Financial Reporting Standards ("IFRS"), the Companies Act (Act
61 of 1973), as amended, International Accounting Standards (IAS 34 : Interim
Financial Reporting) and the JSE Limited Listings Requirements. The
accounting policies used to prepare these interim financial statements are
consistent with those applied in the prior interim period and at previous year-
end.
These consolidated interim financial statements incorporate the financial
statements of the company and its subsidiaries. Results of subsidiaries are
included from the effective date of acquisition or up to the effective date of
disposal. All significant transactions and balances between group enterprises
are eliminated on consolidation.
POST BALANCE SHEET EVENTS
Brikor and Rand Merchant Bank have entered into an agreement to restructure
Brikor`s existing debt in order to meet certain debt covenant ratios. It is
expected that the terms of the debt restructuring will be finalised in
December 2009. Once the terms have been finalised and approved by the board a
detailed announcement will be made to shareholders. It is expected that the
debt restructuring will result in a circular being sent to shareholders.
STATEMENT ON GOING CONCERN
The 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.
DIVIDEND POLICY
No dividend has been declared for the interim period.
BOARD OF DIRECTORS
Due to various board commitments, Mr Ethan Dube, who also represents Anchor
Park Inv 42 (Pty) Limited`s strategic holding in Brikor, resigned as a non-
executive director with effect from 29 October 2009. Ms Evelyn Chimombe-
Munyoro was appointed as a non-executive director on 29 October 2009 and now
represents Anchor Park Inv 42 (Pty) Limited`s strategic holding in Brikor. Mr
Werner Kruger had been appointed as Chief Operations Officer and was appointed
to the board on 20 November 2009. Mr Kruger has in excess of 15 years`
experience in quarry management, cement manufacturing, concrete
infrastructural products and clay brick manufacturing.
By order of the Board
27 November 2009
GVN Parkin H Botha
Chief Executive Officer Chief Financial Officer
CORPORATE INFORMATION
Non executive directors: E Chimombe-Munyoro; E Grobbelaar
Executive directors: G V N Parkin (Chairman and CEO); W Kruger (COO); H Botha
(CFO); G Parkin (Jnr)
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: 27/11/2009 13:09:02 Produced by the JSE SENS Department.
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