| Mon 30 Nov 2009, 15:36 | | ABK - African Brick Centre Limited - Interim Results For The Six Months |
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ABK
ABK
ABK - African Brick Centre Limited - Interim Results For The Six Months
Ended 31 August 2009
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 Company" or "the Group")
UNAUDITED INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2009
MATERIAL FEATURES
Reduction in revenue 59%
Operating loss decreased by 56%
Headline loss per share increased by 246%
Cash used in operations decreased by 94%
Consolidated statement of financial position
Unaudited Unaudited Audited
31 August 31 August 28 February
2009 2008 2009
(R`000) (R`000) (R`000)
ASSETS
Non-current assets 63 434 103 697 64 554
Property, plant and equipment 60 783 64 367 62 904
Investment property 625 625 625
Goodwill - 36 997 -
Other financial assets 2 026 1 708 1 025
Current assets 37 960 91 326 48 351
Inventories 21 422 47 512 24 314
Trade and other receivables 15 782 33 599 22 470
Cash resources 756 10 215 1 567
TOTAL ASSETS 101 394 195 023 112 905
EQUITY AND LIABILITIES
Total Equity 58 465 142 349 60 380
Share capital and premium 113 315 113 315 113 315
Revaluation reserves 2 662 3 452 2 662
(Accumulated loss)/Retained income (57 512) 23 266 (55 597)
Minority interest - 2 316 -
Non-current liabilities 26 886 17 787 28 022
Non-current interest bearing loans 10 830 5 263 11 966
Deferred taxation 11 356 11 184 11 356
Other financial liabilities 4 700 1 340 4 700
Current liabilities 16 043 34 887 24 503
Taxation payable - 6 160 -
Other financial liability 500 910 500
Other current liabilities 15 543 27 817 24 003
TOTAL EQUITY AND LIABILITIES 101 394 195 023 112 905
Consolidated statement of comprehensive income for the six months ended 31
August 2009
Unaudited Unaudited Audited
31 August 31 August 28 February
2009 2008 2009
(R`000) (R`000) (R`000)
Revenue 45 900 113 423 191 868
Profit / (Losses) before interest,
taxation, depreciation and
impairments (5 124) 2 086 (32 365)
Depreciation and impairment (1 195) (6 475) (50 538)
Bad debt recovered 4 370 - -
Operating loss (1 949) (4 389) (82 903)
Investment revenue - 851 1 075
Finance costs (894) (814) (1 538)
Other income 928 - 1 141
Loss before tax (1 915) (4 352) (82 225)
Income tax expense - (196) (521)
Loss after tax (1 915) (4 548) (82 746)
Other comprehensive income/ (loss):
Reversal of revaluation reserve
net of tax - - (790)
Total comprehensive loss (1 915) (4 548) (83,536)
Loss attributable to:
Owners of the parent (1 915) (5 533) (84 396)
Non-controlling interest - 985 1 650
Total comprehensive loss
attributable to:
Owners of the parent (1 915) (5 533) (85,213)
Non-controlling interest - 985 1 650
Headline loss
Loss attributable to
owners of the parent (1 915) (5 533) (84 396)
Profit on disposal of non-
current assets 289 14 23
Impairment losses - 5 053 43 115
Headline loss attributable to
owners of the parent (1 626) (466) (39 238)
Loss per share cents (0.61) (1.8) (27.0)
Headline loss per share cents (0.52) (0.15) (12.6)
Shares in issue 312 238 312 238 312 238
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
31 August 31 August 28 February
2009 2008 2009
(R`000) (R`000) (R`000)
Opening balance 60 380 145 593 145 593
Total comprehensive (loss)/income
- Owners of the parent (1 915) (5 533) (84 396)
- Non-controlling interest - 985 1 650
Acquisition of additional shares - - (2 982)
Preliminary expenses incurred - (28) (27)
Reversal of reserves - - (790)
Net income recognised directly
in equity - 1 332 1 332
Balance at end of the period 58 465 142 349 60 380
CONSOLIDATED SEGMENT REPORT
Unaudited Unaudited Audited
31 August 31 August 28 February
2009 2008 2009
(R`000) (R`000) (R`000)
Consolidated revenue
External customers
Retail 42 918 113 423 190 819
Manufacturing 2 982 - 1 052
Inter-segment revenue
Manufacturing 11 610 45 290 60 123
Eliminations (11 610) (45 290) (60 123)
Total 45 900 113 423 191 868
Segment result before disclosed
items
Retail 311 (4 514) (24 788)
Manufacturing (3 372) 3 684 (7 800)
Depreciation and impairment
Retail (142) (1 072) (2 330)
Manufacturing (213) (588) (5 343)
Bad debt recovered
Retail 4 370 - -
Manufacturing - - -
Reportable segment profit / (loss)
Retail 4 539 (1 551) (27 119)
Manufacturing (3 585) 3 096 (13 144)
Eliminations (88) (881) -
Other profit or loss (2,815) (5 053) (42 640)
Operating (loss) (1 949) (4 389) (82 903)
Investment revenue - 851 1 075
Finance costs (894) (814) (1 538)
Other income 928 - 1 141
(Loss) before tax (1,915) (4 352) (82 225)
Income tax expense - (196) (521)
(Loss) after tax (1,915) (4 548) (82 746)
Reportable segment assets
Retail 32 752 67 310 55 820
Manufacturing 70 286 80 125 70 269
Reconciling items at consolidation
and unallocated amounts (1 644) 47 588 (13 184)
Group Assets 101 394 195 023 112 905
Reportable segment liabilities
Retail 27 105 20 477 31 283
Manufacturing 20 277 25 178 21 679
Reconciling items at consolidation
and unallocated amounts (4 453) 7 019 (437)
Group Liabilities 42 929 52 674 52 525
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
31 August 31 August 28 February
2009 2008 2009
(R`000) (R`000) (R`000)
Cash (used in)
operations (567) (9 209) (15 637)
Net interest received - 37 1 075
Interest paid (894) - (1 538)
Income tax paid - (5 894) (12 564)
Net cash (from)
operating activities (1,461) (15 066) (28 664)
Net cash flow from/ (utilised) in
investing activities 235 (12 847) (19 261)
Net cash flow from financing
activities 415 1 535 12 899
Net movement in cash balance (811) (26 378) (35 026)
Cash balances at beginning of
period 1 567 36 593 36 593
Cash balances at end of period 756 10 215 1 567
NOTES FOR THE SIX MONTHS ENDED 31 AUGUST 2009
1. Basis of preparation
The interim results have been prepared in terms of International
Financial Reporting Standards ("IFRS"), IAS 34: Interim Financial
Reporting, the Listings Requirements of the JSE Limited and the
Companies Act 61, 1973 as amended. The accounting policies used to
prepare these interim financial statements are consistent with those
applied in the most recent annual financial statements.
The following new standards and amendments to standards have become
mandatory for the financial year beginning 1 January 2009:
- IAS 1 (revised) - Presentation of Financial Statements:
The Group has elected to present one performance statement, namely a
statement of comprehensive income and to rename the balance sheet to
the statement of financial position. The interim financial statements
have been prepared under the revised disclosure requirements.
- IFRS 8 - Operating segments:
This standard requires a `management approach` under which segment
information is presented on the same basis as that used for internal
reporting purposes.
These results have not been reviewed or audited by the Company`s
auditors.
These pro-forma interim statements incorporate the financial
statements of the Company and its subsidiaries. All inter-company
transactions were eliminated on consolidation.
2. Related Party Transactions
Yakani Brickveld (Pty) Ltd (100% Subsidiary of controlling
shareholder)
The Company received management fees for financial and
administration services rendered, to the amount of R500 000 during
the period under review.
Clay bricks to the amount of R4 243 534 were purchased during the
period under review. Balance outstanding as at 31 August 2009,
included in trade debtors and trade creditors, are R500 000 and R557
424 respectively.
African Brick Eastern Cape (Pty) Ltd (Indirectly controlled by
minority shareholder)
The Company acquired clay for its Eastern Cape operations to the
amount of R391 161. Balance outstanding as at 31 August 2009 amount
to R96 575.
3. Going Concern
The financial statements have been prepared on the going concern
basis. Subsequent to the interim reporting period, the
controlling shareholder approved a R5 million loan against
collateral security to be registered over the assets of the Eastern
Cape operation, to fund budgeted losses and working capital
requirements. The Board through Management is pursuing measures to
achieve operational and financial sustainability in the medium to
long term.
GROUP PROFILE
African Brick Centre operates mainly in Gauteng and the Eastern Cape, with
expertise in the manufacturing of face and clay brick through African Brick
(Pty) Ltd and African Brick Lenasia (Pty) Ltd trading as Coega. The Group
also trades as a retailer of building material in Honeydew, Gauteng through
Dash Brick and Building Supplies Strubensvalley(Pty) Ltd trading as African
Brick. The Group also supplies face brick to seven independent agents who
trade under the African Brick Centre trading name.
The current revenue contribution of the Group activities is as follows:-
Manufactured product 35%
Building material retailer - Other products 65%
Manufacturing activities contribute 48% of gross profit at a reduced
production capacity of 60%. Production capacity was reduced due to weak
market demand and excessive stock levels of competitors.
TRADING CONDITIONS
Trading conditions were difficult during the interim period due to economic
conditions. Limited availability of credit to individuals continued during
the period under review which directly influenced product demand.
The directors of African Brick Centre hereby present the unaudited group
financial results for the six months ended 31 August 2009.
Group revenue reduced by R67,5 million from R113,4 to R45,9 million and
operating loss reduced from R4.4 million to a loss of R1,9 million, mainly
due to the reduction in fixed overhead expenditure and enhanced credit
control. Restructuring of business activities reduced fixed operating costs
from R45.6 million to R22.8 million on an annualised basis. Impairment of
goodwill to the amount of R5 million is included in the 31 August 2008
interim report due to the closure of the Lenasia plant.
Headline loss per share increased from 0.15 cents to 0.52 cents mainly due
to pressure on revenue.
Cash invested in operations reduced from R9, 209 million to R0, 567
million, mainly due to a reduction in stock levels and improved debtor
collections.
At the end of the period the Group made extensive use of its overdraft
facilities, which led to an increase in interest bearing non-current
liabilities from R5.2 million to R10.8 million. Subsequent to the reporting
period, the Group further increased borrowing facilities with a R5 million
shareholders loan advanced by the controlling shareholder.
The audited year end results for the 12 months ended 28 February 2009 are
supplied as additional supporting information due to closure of branches
between November 2008 and February 2009 and the impairment of goodwill
during February 2009 which had a material impact on the Group`s capital
structure.
OPERATIONAL OVERVIEW
African Brick Centre`s performance for the period under review was below
expectations, mainly as a result of the economic downturn and the
continuing adverse impact on the housing sector in particular. Operational
efficiencies are continuously being improved and will support manufacturing
deliverables in the medium term.
Improvements to the African Brick Centre Honeydew branch and upgrading of
information technology will improve efficiencies within the Company.
OUTLOOK
Trading conditions in the building industry are expected to remain tough in
the second half of the financial year, with only a moderate increase in
demand evident. Stock levels of brick manufacturers remain high and
therefore margins on brick products are under pressure. However, the retail
operation assists the Group to alleviate pressure on the sales margin.
The strategic intent to participate in the affordable housing sector by
expanding the Krugersdorp factory is pursued actively by management. This
expansion is dependant on securing funding which remains challenging in the
current economic climate.
CONTINGENCIES AND SUBSEQUENT EVENTS
There is no contingent obligation, current or pending, which is considered
likely have an adverse effect on the Group. No events material to the
understanding of this report have occurred in the period between the period-
end date and the date of this report.
BY ORDER OF THE BOARD
JM DE WET B BLOM
MANAGING DIRECTOR FINANCIAL DIRECTOR
CORPORATE INFORMATION
Designated Advisor: PSG Capital (Proprietary) Limited
Registration Number: 1999/006214/06
Registered Address: Waterford Office Park, Unit 28, Cnr Witkoppen and
Waterford Drive Fourways, 2188
Postal Address: P O Box 99 Rand en Dal, Krugersdorp 1751
Directors: SA Tati(Chairman), JM De Wet (Managing Director) B Blom
(Financial Director)
Non-Executive Director: WAF Strydom
Independent Non-Executive Directors: MM Patel, L Yanta, DTV Msibi
Company Secretary: Premium Corporate Consulting Services (Proprietary)
Limited
Transfer Secretaries: Link Market Services South Africa (Proprietary)
Limited
30 November 2009
Date: 30/11/2009 15:36:01 Produced by the JSE SENS Department.
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