| Mon 31 May 2010, 16:49 | | ABK - African Brick Centre - Audited condensed financial results for the year |
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ABK
ABK
ABK - African Brick Centre - Audited condensed financial results for the year
ended 28 February 2010
AFRICAN BRICK CENTRE LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 1999/006214/06)
Share Code: ABK
ISIN Code: ZAE000105169
("African Brick Centre" or "the Company" or "the Group")
AUDITED CONDENSED FINANCIAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2010
INTRODUCTION
The Board of Directors of African Brick Centre announces the Group`s results for
the twelve months ended 28 February 2010. The consolidated Group results
include Dash Brick and Building Supplies Strubensvalley (Proprietary) Limited
("Dash Brick"), African Brick (Proprietary) Limited ("African Brick"), African
Brick Lenasia (Proprietary) Limited ("African Brick Lenasia") and Landton
Properties (Proprietary) Limited ("Landton Properties") ("the subsidiaries").
The majority shareholder of African Brick Centre is Yakani Infraco (Proprietary)
Limited ("Yakani Infraco") who acquired a 51% shareholding on 30 January 2009,
and took effective control on 1 February 2009.
Condensed consolidated statement of financial position
Figures in Rand Audited Restated Restated
28 February Audited Audited
2010 28 February 28 February
2009 2008
Assets
Non-current assets 64,471,892 69,772,569 95,346,653
Current assets 32,175,796 48,351,500 89,168,493
Total assets 96,647,688 118,124,069 184,515,146
Equity and liabilities
Capital and reserves 50,239,904 65,599,467 144,091,186
Non-current liabilities 25,731,543 28,021,248 14,693,529
Current liabilities 20,676,241 24,503,354 25,730,431
Total equity and liabilities 96,647,688 118,124,069 184,515,146
Net asset value per share (cents) 16.1 21.0 46.1
Total interest bearing debt 22,192,489 17,180,258 4,941,684
Condensed consolidated statement of comprehensive income
Figures in Rand Audited Restated
28 February Audited
2010 28 February
2009
Gross revenue 89,779,903 191,867,895
Operating costs (102,097,334) (224,634,648)
Earnings before disclosable items (12,317,431) (36,649,426)
Impairment of assets (5,017,250) (35,054,140)
Fair Value Adjustment - 159,278
Profit on sale of assets 219,113 32,343
Depreciation and amortisation (4,148,617) (4,510,495)
Other Income 5,274,441 982,384
Operating profit (16,001,152) (75,040,056)
Finance costs (1,966,008) (1,538,360)
Interest received 203,108 1,074,693
Profit/ (loss) before taxation (17,764,052) (75,503,723)
Taxation 2,384,302 (521,155)
Profit/(loss) after tax (15,379,750) (76,024,878)
Profit/ (loss) attributable to:
Non-controlling interest - 1,650,711
Owners of the parent (15,379,750) (77,675,589)
(15,379,750) (76,024,878)
Headline Earnings
Profit attributable to ordinary shareholders (15,379,750) (76,024,878)
Impairment of assets 3,677,184 35,054,140
Profit on sale of assets (net of tax) (157,761) (23,287)
Headline earnings attributable to ordinary (11,860,327) (40,994,025)
shareholders
Earnings per share
Profit attributable to ordinary shareholders (15,379,750) (76,024,878)
Earnings attributable to ordinary shareholders (15,379,750) (76,024,878)
HEPS (Cents) / (HLPS) (3.8) (13.1)
EPS (Cents) / (LPS) (4.9) (24.4)
Shares in issue 312,238,960 312,238,960
Shares in Issue - weighted average 312,238,960 312,238,960
There is no factors existing during this
reporting period which require the disclosure
or calculation of diluted EPS
Comprehensive Income
Change in tax rate on revaluation of property 20,187 -
Plant and equipment
- (789,997)
Reversal of revaluation of property, plant and
equipment, net of tax at 28%
Profit/(loss) after tax (15,379,750) (76,024,878)
Total comprehensive income (15,359,750) (76,814,875)
Total comprehensive income attributable to:
Non-controlling interest - 1,650,711
Owners of the parent (15,379,750) (78,465,586)
(15,359,750) (76,814,875)
Condensed consolidated statement of changes in equity
Figures in Rand Audited Restated
28 February Audited
2010 28 February
2009
Opening balance 60,380,383 145,593,009
Restatement of opening balance, prior period 5,219,084 (1,501,823)
error
Opening balance restated 65,599,467
144,091,186
Total comprehensive income
- Total restated comprehensive loss for the (15,359,563) (76,814,875)
year
- Acquisition of additional shares - (2,982,214)
- Preliminary expenses incurred - (26,133)
- Acquisition of subsidiary - 1,331,503
Opening balance as previously reported - 60,380,383
Prior period error, current year - 5,219,084
Total 50,239,904 65,599,467
Condensed consolidated statement of cash flows
Figures in Rand Audited Restated
28 February Audited
2010 28 February
2009
Cash and equivalents at beginning of year (1,651,857) 36,592,946
Cash flows from operating activities (4,099,384) (28,199,185)
Cash generated from operations (2,378,948) (15,636,971)
Interest received 203,108 1,074,693
Interest paid (1,634,627) (1,073,121)
Taxation received/ (paid) (288,917) (12,563,786)
Cash flows from investing activities (1,050,725) (19,261,940)
Cash flows from financing activities 874,896 9,216,322
Cash and equivalents at end of year (5,927,070) (1,651,857)
Condensed consolidated segment report
Figures in Rand Audited Audited
28 February 28 February
2010 2009
External Customers 82,282,138 191,867,895
Retail 82,283,138 191,867,895
Manufacturing 6,580,303 -
Corporate 916,462 -
Inter-segment revenue
Retail - 9,585,223
Manufacturing 24,997,011 50,538,215
Eliminations (24,997,011) (60,123,438)
Consolidated Revenue 89,779,903 191,867,895
Segment result before disclosed items
Retail (3,510,778) (25,518,021)
Manufacturing (6,439,645) (12,516,207)
Corporate (Head Office) (1,252,592)
(2,145,600)
Profit / (loss) with sale of assets
Retail 29,496 9,377
Manufacturing 189,617 22,966
Impairment
Retail - (7,722,686)
Manufacturing (5,017,250) (27,331,454)
Corporate - 159,278
Reportable segment profit / (loss) (16,001,152) (75,040,056)
Retail (3,481,282) (33,231,330)
Manufacturing (11,267,278) (39,824,695)
Corporate (Head Office) (1,252,592) (1,986,322)
Eliminations - -
Operating profit / (loss) (16,001,152) (75,040,056)
Finance costs (1,966,008) (1,538,360)
Interest received 203,108 1,074,693
Profit/ (loss) before taxation (17,764,052) (75,503,723)
Taxation 2,384,302 (521,155)
Profit/(loss) after tax (15,379,750) (76,024,878)
Condensed consolidated segment report
Figures in Rand Audited Audited
28 February 28 February
2010 2009
Reportable Segment Assets
Retail 24,168,890 39,437,694
Manufacturing 70,526,935 75,113,147
Corporate 22,743,901 13,521,840
Eliminations (20,792,038) (9,948,612)
Total 96,647,688 118,124,069
Reportable Segment Liabilities
Retail (13,519,001) (17,739,187)
Manufacturing (39,530,044) (31,190,579)
Corporate (14,150,777) (13,543,446)
Eliminations 20,792,038 9,948,610
Total (46,407,784) (52,524,602)
Net asset value 50,239,904 65,599,467
PERFORMANCE REVIEW
The year under review saw a slow recovery of the clay industry as anticipated.
Approximately 60% of factories are operating between 40% to 50% capacity.
The industry also observed major downsizing of Human Resources through
retrenchments and cutting from 5 days a week to three days in some operations.
Whilst the market price of clay bricks remains under pressure, restructuring
initiatives were successful, limiting operational losses.
On the back of moderate increase in product demand and market price, expansion
to the Krugersdorp factory was tailored and approved, which will enable the
Group to regain production capacity lost during the recession. Final
implementation is dependent on the Company`s ability to recapitalise the Group.
Funding in the amount of R1.6 million was successfully secured for increasing
drying capacity with an additional working capital requirement of R3.3 million
under review.
The Board of Directors is comfortable that management will secure additional
capital to strengthen the Balance Sheet, support working capital and facilitate
a growth strategy.
Significant impairments relating to the clay reserves and impairment to the
Krugersdorp factory hostel saw substantial losses during the prior financial
year which contributed to a drop in net asset value.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The audited consolidated financial statements for the year ended 28 February
2010 have been prepared in accordance with the framework concepts and the
measurement requirements of International Financial Reporting Standards (IFRS)
the disclosure requirements of IAS 34: Interim Financial Reporting, the AC500
standards as issued by the Accounting Practices Board and its successor, the JSE
Listings Requirements and in the manner required by the Companies Act 61, 1973,
as amended. The accounting policies and method of measurement and recognition
applied in preparation of the audited consolidated annual financial statements
are consistent with those applied in the Group`s annual financial statements for
the year ended 28 February 2009, which comply with IFRS.
The following new standards and amendments to standards have become mandatory
for the financial year beginning 1 March 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.
* 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.
* IAS 36 - Impairment of assets.
The standard requires disclosures of estimates used to determine the
recoverable amount of cash-generating units containing goodwill or
intangible assets with indefinite useful lives. When discounted cash flows
are used to estimate fair value less costs to sell, disclosure of the
period over which the cash flows are projected, the growth rate used and
the discount rate is required.
Going Concern
The financial statements have been prepared on the going concern basis. The
Group is comfortable that funding will be available to support working
capital needed through the rights issue, as underwritten by the major
shareholder representing 51% of the issued shares.
Related Party Transactions
Yakani Brickveld (Pty) Ltd (100% subsidiary of Yakani Infraco)
The Company received management fees for financial and administration
services rendered, in the amount of R916,462 during the period under
review.
Clay bricks in the amount of R4 243 534 were purchased during the period
under review. All related party transactions were fully settled at year
end.
Prior period error - Restatement of intangible clay reserve
With the listing of African Brick Centre towards the end of 2007, the Company
acquired a 100% shareholding in the manufacturing company, African Brick, which
also mines clay (owns the rights to mine the clay) as well as a property
company, Landton Properties, which owns the land and clay reserves (and the
mining rights) on which premises African Brick currently mines the clay.
The clay reserves were never fair valued at date of acquisition resulting in
only goodwill being raised.
The correction of the error(s) resulted in adjustments as follows:
Statement of Financial Position
2010 2009 2008
Intangible assets - 5,219,082 28,696,906
Accumulated loss - 5,219,082 (1,501,824)
Profit or Loss
Impairment of goodwill - 5,219,082 -
Amortisation
of clay reserve - (1,501,824) (1,501,824)
The recoverable amount of clay mineral reserves has been determined on the basis
of value-in-use calculations. The value-in use calculations use the cash flow
projection method based on 2010 cash flow projections, discounted back at the
weighted average cost of capital of 19%. Key assumptions used in the value-in-
use calculations include budgeted revenue streams, production capacity and
production volumes. Such assumptions are based on historical results and
adjusted for anticipated future growth. The directors believe that any
reasonable possible changes in the key assumptions on which the recoverable
amount is based, would not cause the clay mineral reserves` carrying amount to
further exceed its recoverable amount.
The useful life of clay mineral reserves is considered to be 20 years or 1.485
billion production units. Amortisation is calculated using the unit of
production method. This method used is selected on the basis of the expected
pattern of consumption of the expected future economic benefits. These
assumptions are based on current market conditions.
DIVIDEND
In line with its policy, the Group will not pay a dividend for the 2010 year.
AUDIT OPINION
The auditors of African Brick Centre, SAB&T Inc. have issued an unmodified audit
opinion on the Group`s financial statements for the year ended 28 February 2010
in terms of rule 3.18 of the Listings Requirements of the JSE Limited. The audit
was conducted in accordance with International Standards on Auditing. A copy of
their audit report is available for inspection at the registered offices of
African Brick Centre. These audited condensed annual financial statements have
been derived from the Group audited annual financial statements and are
consistent in all material respects.
POST BALANCE SHEET EVENT
The Company announced a R20 million rights issue at 3 cents per share to
strengthen its balance sheet, support working capital and facilitate its growth
strategy. Yakani Infraco, representing 51% of the issued shares, has irrevocably
undertaken to follow its rights.
APPRECIATION
We thank our loyal staff for their commitment and also thank our business
partners, advisors, clients, and most importantly our shareholders, for their
ongoing support and faith in the group.
PROSPECTS
With the economy recovering slowly and positive signs in the retail building
industry, banks reducing interest rates and reviewing credit granting criteria,
the Group has a positive medium term outlook.
The Department of Human Settlement has invited alternative building material
suppliers to show case their products, with claybricks as a viable alternative
to other products. The Group has lined up marketing programmes to attract and
comply with the environmental requirements of green building through the
Claybrick Association.
A relatively new Executive and Sales team is surefooted to prepare for the new
challenges. We believe that the worst in the building industry has passed and
are positive that the year ahead will bear a moderate increase in sales and
sales margins.
Expansion to the Krugersdorp factory was tailored and approved, which will
enable the Group to regain production capacity towards the end of the 2011
financial year, lost during the recession.
By order of the Board
31 May 2010
MP Shangase B Blom
Managing Director Financial Director
SA Tati
Chairman
CORPORATE INFORMATION
Non-Executive Chairman: SA Tati
Independent Non-Executive Directors: MM Patel, L Yanta, DTV Msibi
Non-Executive Director: WAF Strydom
Executive Directors: MP Shangase (Managing Director); B Blom (Financial
Director)
Business address: Farm 246, Luipaardsvlei, Krugersdorp, 1739
Business postal address: PO Box 99, Rant en Dal, Krugersdorp, 1751
Registered address: Waterford Office Park, Unit 28, First Floor, Cnr Witkoppen
and Waterford Drive, Fourways, 2188
Postal address: PO Box 1078, Jukskei Park, 2153
Company Secretary: Premium Corporate Consulting Services (Pty) Limited
Transfer Secretaries: Link Market Services South Africa (Pty) Limited
Designated Adviser: Grindrod Bank Limited
These results and an overview of African Brick Centre are available at
www.africanbrick.co.za.
Date: 31/05/2010 16:49:01 Produced by the JSE SENS Department.
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