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ABK
ABK
ABK - African Brick Centre - Reviewed interim results for the six months ended
31 August 2011
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")
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2011
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HIGHLIGHTS
Revenue 41.6 million
Revenue growth -4.2%
Headline loss 5.9million
Headline LPS 0.8 cents
Dividend -
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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed at Unaudited at Audited at
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Assets
Non-current assets 52,988 62,644 60,063
Current assets 27,389 30,173 26,940
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Total assets 80,377 92,817 87,003
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Equity and liabilities
Capital and reserves 42,450 45,828 48,385
Non-current liabilities 15,690 25,441 21,123
Current liabilities 22,237 21,548 17,495
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Total equity and 80,377 92,817 87,003
liabilities
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Net asset value per 6.02 14.67 6.9
share (cents)
Net tangible asset value 5.66 13.01 6.5
per share (cents)
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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
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Reviewed for Unaudited Audited for
the six for the six the year
months ended months ended ended
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
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Gross revenue 41,606 43,434 83,597
Operating costs (45,581) (44,505) (93,575)
Other income 34 23 1,366
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Loss before disclosable (3,941) (1,048) (8,612)
income
Impairment of assets - - (2,610)
(Loss)/profit on sale of (20) - 40
assets
Depreciation and (1,316) (2,023) (3,007)
amortisation
Fair value gain - - 35
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Operating loss (5,277) (3,071) (14,154)
Finance costs (658) (1,341) (2,172)
Interest received - - 32
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(Loss)/profit before (5,935) (4,412) (16,294)
taxation
Taxation - - 4,351
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(Loss)/profit after tax (5,935) (4,412) (11,943)
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(Loss)/profit
attributable to:
Owners of the parent (5,935) (4,412) (11,943)
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(5,935) (4,412) (11,943)
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Reconciliation of
headline loss
Loss attributable to (5,935) (4,412) (11,943)
ordinary shareholders
Impairment of assets - - 2,610
(Loss)/profit on sale of (20) - 40
assets
Fair value gain - - (35)
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Headline loss (5,915) (4,412) (9,408)
attributable to ordinary
shareholders
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Loss per share
Loss attributable to (5,935) (4,412) (11,943)
ordinary shareholders
---------------------------------------
Loss attributable to (5,935) (4,412) (11,943)
ordinary shareholders
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HEPS (Cents)/(HLPS) (0.84) (1.41) (1.67)
EPS (Cents)/(LPS) (0.84) (1.41) (2.12)
Shares in issue 705,517 312,239 705,517
Shares in issue - 705,517 312,239 563,417
weighted average
There are no factors existing during this reporting period which
require the disclosure or calculation of diluted EPS
Comprehensive loss
Loss after tax (5,935) (4,412) (11,943)
Loss on property - - (1,025)
revaluation
Taxation related to loss - - 148
on property revaluation
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Total comprehensive loss (5,935) (4,412) (12,820)
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Total comprehensive loss
attributable to:
Owners of the parent (5,935) (4,412) (12,820)
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(5,935) (4,412) (12,820)
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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
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Reviewed for Unaudited Audited for
the six for the six the year
months ended months ended ended
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
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Opening balance 48,385 50,240 50,239
- Total comprehensive (5,935) (4,412) (12,820)
loss for the year
- Issue of shares - 11,085
- Issue of treasury - (120)
shares
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Total 42,450 45,828 48,385
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
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Reviewed for Unaudited Audited for
the six for the six the year
months ended months ended ended
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
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Cash generated/(used) in 655 (713) (3,538)
operations
Interest received - - 32
Finance cost (658) (1,002) (1,858)
Taxation received/(paid) - 781 668
Cash applied in (3) (934) (4,696)
operating activities
Cash received/(applied) 4,848 (1,003) (2,247)
in investing activities
Cash flows (4,525) 1,481 6,947
from/(repayment) of
financing activities
Total cash movement for 320 (456) 4
the year
Cash at the beginning of (5,923) (5,923) (5,927)
the year
Cash and equivalents at (5,603) (6,379) (5,923)
end of year
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CONDENSED CONSOLIDATED SEGMENT REPORT
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Reviewed for Unaudited Audited for
the six for the six the year
months ended months ended ended
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
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External Customers 41,606 43,434 83,596
Retail 35,362 38,461 76,812
Manufacturing 6,244 4,973 6,784
Corporate - - -
Inter-segment revenue
Retail - - -
Manufacturing 20,038 16,088 33,574
Eliminations (20,038) (16,088) (33,574)
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Consolidated Revenue 41,606 43,434 83,596
Segment result before (3,941) (1,048) (8,612)
disclosed items
Retail (645) 72 (856)
Manufacturing (2,720) 281 (6,168)
Corporate (Head Office) (576) (1,401) (1,588)
Profit/(loss) with sale (20) - 40
of assets
Retail - - 44
Manufacturing (20) - (1)
Corporate - - (3)
Impairment of assets - - (2,610)
Manufacturing - - (2,610)
Depreciation and (1,316) (2,023) (3,007)
amortisation
Retail (356) (454) (784)
Manufacturing (960) (1,569) (2,223)
Reportable segment (5,277) (3,071) (14,189)
profit/(loss)
Retail (1,001) (382) (1,120)
Manufacturing (3,700) (1,288) (11,478)
Corporate (Head Office) (576) (1,401) (1,591)
Operating profit/(loss) (5,277) (3,071) (14,189)
Finance costs (658) (1,341) (2,172)
Fair value adjustment - - 35
Investment revenue - - 32
Profit/(loss) before (5,935) (4,412) (16,294)
taxation
Taxation - - 4,351
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Profit/(loss) after tax (5,935) (4,412) (11,943)
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CONDENSED CONSOLIDATED SEGMENT REPORT
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Reviewed for Unaudited Audited for
the six for the six the year
months ended months ended ended
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
------------------------------------------------------------------
Reportable Segment
Assets
Retail 16,582 18,056 17,763
Manufacturing 62,098 71,010 65,286
Corporate 25,224 17,393 34,531
Eliminations (23,527) (13,642) (30,577)
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Total 80,377 92,817 87,003
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Reportable Segment
Liabilities
Retail (13,904) (8,785) (9,656)
Manufacturing (40,658) (36,803) (41,743)
Corporate (6,892) (15,043) (17,796)
Eliminations 23,527 13,642 30,577
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Total (37,927) (46,989) (38,618)
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Net asset value 42,450 45,828 48,385
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INTRODUCTION
African Brick`s business consists of clay mining, manufacturing of clay semi-
face and -, stock bricks and a "wet trade" retail section. The growth of the
business up to February 2008 was as a result of the strong growth in the
building industry. Since the recession, the group closed its Lenasia Plant and
only retained one retail branch in Honeydew Johannesburg. During the period
under review the Directors further reduced operating cost in an effort to return
to profitability.
REVIEW OF RESULTS
For the six months under review revenue decreased by 4.2%. Margins came under
pressure due to an increase in production cost as a result of increased
commodity prices, an increase in compliance costs and an abnormal waste factor
incurred during the production process at the Coega operation. An area of
concern is the lack of financial means to provide for the replacement of certain
yellow equipment, badly required to normalise efficiencies at the Krugersdorp
operation and to decrease the occurrence of breakages associated with product
handling.
Finance costs decreased from R1.3 million to R658,000 as result of the rights
offer completed during the second half of the previous financial year and the
reduction of long-term debt.
Net loss for the period increased by 35% from R4.4 million to R5.3 million as
result of abnormal waste, increase compliance cost and the write down of mined
clay not currently used in production as well as a provision for bad debt
relating to an RDP project which is currently on hold.
Funding to support working capital was obtained from the controlling
shareholder, Yakani Infraco (Proprietary) Limited ("Yakani Infraco") which
granted a R5 million term loan during August 2011.
The Company also announced on 3 November 2011 that Yakani Infraco has made an
offer to acquire the remaining issued share capital of African Brick not held by
African Brick`s subsidiary and Yakani Infraco by way of a scheme of arrangement.
The meeting to consider the scheme will be held on 6 December 2011, an, if
successfully implemented, the Company`s listing on the JSE Limited ("JSE") will
be terminated.
PROSPECTS
The directors are of the view that African Brick can return to profitability but
that it requires a further investment in operating activities and the
replacement of yellow equipment to reduce waste.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The accounting policies applied in the preparation of these condensed
consolidated financial statements, which are based on reasonable judgments and
estimates, are in accordance with IFRS, the disclosure requirements of IAS 34 -
Interim Financial Reporting and are consistent with those applied in the annual
financial statements for the year ended 28 February 2011. These reviewed
consolidated condensed financial statements as set out in this report comply
with the Companies Act, 71 of 2008, as amended, and the Listings Requirements of
the JSE.
GOING CONCERN
The financial statements have been prepared on the going concern basis. The
Company acknowledges the challenges that lie ahead to raise further capital but
also highlights the strengths of the group and low long-term debt levels and is
confident that it can raise further capital in the near future. Restructuring
initiatives to reduce operating costs announced after the year end were
successfully implemented which included:
* a further reduction in headcount and payroll costs;
* further right sizing of the retail operations to only focus on core
product;
* restructuring of the Standard Bank term loan; and
* a reduction in executive and non-executive director`s salaries.
REVIEW OPINION
The auditors, SAB&T have reviewed the condensed consolidated interim financial
statements for the six month ended 31 August 2011. The auditors modified review
report is available for inspection at the Company`s registered offices.
The review report contains the following qualified review opinion paragraph:
"Going concern
The Group is actively attempting to obtain the financing and to realise non-core
assets in order to support its current working capital requirements. This
situation indicates the existence of a material uncertainty which may cast
significant doubt on the company`s ability to continue as a going concern and
therefore it may be unable to realise its assets and discharge its liabilities
in the normal course of business."
The auditors have reviewed the financial information in terms of section 3.18 of
the Listings Requirements of the JSE.
APPRECIATION
We thank our loyal staff for their continued commitment during this trying
period and also thank our business partners, financiers, advisors, clients, and
most importantly our shareholders, for their ongoing support.
By order of the Board
20 November 2011
MP Shangase SA Tati B Blom
Managing Director Chairman Financial Director
CORPORATE INFORMATION
Directors:
Non-Executive
SA Tati (Chairman), MM Patel*, DTV Msibi*, WAF Strydom
*Independent
Executive
MP Shangase (Managing Director), B Blom (Financial Director)
Company Secretary
B Blom
Registered office
Farm 246, Luipaardsvlei
Krugersdorp
1739
Business address
Farm 246, Luipaardsvlei
Krugersdorp
1739
Postal address
PO Box 99
Rant en Dal
Krugersdorp
1751
Holding company
Yakani Infraco (Proprietary) Limited
(Incorporated in South Africa)
Transfer secretaries
Linked 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: 30/11/2011 16:50:02 Produced by the JSE SENS Department.
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