| Wed 27 Jun 2012, 17:00 | | BIK - BRIKOR LIMITED - Reviewed condensed consolidated provisional financial |
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BIK
BIK
BIK - BRIKOR LIMITED - Reviewed condensed consolidated provisional financial
results for the year ended 29 February 2012
BRIKOR LIMITED
Registration number: 1998/013247/06
JSE code: BIK
ISIN: ZAE000101945
("Brikor" or "the Company" or "the Group")
CONDENSED CONSOLIDATED PROVISIONAL STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
year year
ended ended
29 Feb 28 Feb
2012 2011
R`000 R`000
Revenue 134 807 125 888
Cost of sales (88 434) (76 765)
Cost of sales - depreciation (4 954) (10 734)
Gross profit 41 419 38 389
Other income 4 251 2 022
Depreciation and amortisation (1 204) (3 505)
Operating expenses (30 933) (43 723)
Operating profit/(loss) before impairment 13 533 (6 817)
losses
Reversal of impairments 8 549 (15 395)
Operating profit/(loss) before interest 22 082 (22 212)
and taxation
Interest received 1 178 312
Finance costs (29 654) (28 841)
Loss before taxation (6 394) (50 741)
Taxation - 10 373
Loss after taxation (6 394) (40 368)
Loss from discontinued operation (30 033) (178 586)
Profit from disposal of discontinued 3 675 -
operation
Total loss for the year attributable to (32 752) (218 954)
equity holders of the Company
Total comprehensive loss for the year (32 752) (218 954)
attributable to equity holders of the
Company
Reviewed Audited
year year
ended ended
29 Feb 28 Feb
2012 2011
cents cents
Loss per share
Basic
Continued operations (1,0) (6,4)
Discontinued operations (4,2) (28,5)
Total (5,2) (34,9)
Diluted
Continued operations (1,0) (6,2)
Discontinued operations (4,1) (27,8)
Total (5,1) (34,0)
Headline loss
Continued operations (2,4) (4,6)
Discontinued operations (1,0) (2,0)
Total (3,4) (6,6)
Diluted headline loss
Continued operations (2,3) (4,7)
Discontinued operations (1,0) (1,9)
Total (3,3) (6,6)
Reviewed Audited
year year
ended ended
29 Feb 28 Feb
2012 2011
R`000 R`000
Reconciliation of headline loss:
Loss attributable to ordinary (32 752) (218 954)
shareholders
Adjusted for impairment of goodwill - 10 825
Adjusted for impairment of assets 15 277 166 187
Adjusted for (profit)/loss on disposal (3 509) 284
of non-current assets
Headline loss attributable to ordinary (20 984) (41 658)
shareholders of the Company
Weighted average shares in issue on 629 342 627 274
which earnings are based (`000)
Treasury shares issued to the Brikor 15 900 15 900
Share Incentive Scheme (`000)
Fully diluted weighted average shares 645 242 643 174
in issue (`000)
CONDENSED CONSOLIDATED PROVISIONAL STATEMENT OF FINANCIAL POSITION
Reviewed Audited
29 Feb 28 Feb
2012 2011
R`000 R`000
ASSETS
Non-current assets 116 446 218 837
Property, plant and equipment 80 718 208 672
Intangible assets 8 350 6 639
Other financial assets 27 378 3 526
Current assets 59 115 86 044
Inventories 38 380 50 554
Trade and other receivables 18 317 28 978
Cash and cash equivalents 2 418 6 512
Non-current assets held for sale 60 159 -
Total assets 235 720 304 881
EQUITY AND LIABILITIES
Equity attributable to equity holders 296 33 048
of the Company
Share capital 63 63
Share premium 228 179 228 179
Retained earnings (227 946) (195 194)
Non-current liabilities 53 393 50 456
Borrowings 15 633 15 042
Shareholders` loan 27 574 25 286
Provisions 10 186 10 128
Current liabilities 182 031 221 377
Borrowings 108 394 136 123
Trade and other payables 29 546 43 522
Taxation 15 040 15 063
Bank overdraft 29 051 26 669
Total equity and liabilities 235 720 304 881
Number of shares in issue (excluding 629 342
treasury shares)(`000) 627 274
Net asset value per share (cents) 0,05 5,3
Net tangible asset value per share (1,3) 4,2
(cents)
CONDENSED CONSOLIDATED PROVISIONAL STATEMENT OF CASH FLOWS
Reviewed Audited
year year
ended ended
29 Feb 28 Feb
2012 2011
R`000 R`000
Cash flows from operating activities (8 290) (2 822)
Cash flows from investing activities 25 049 (7 895)
Cash flows from financing activities (23 235) 7 133
Net decrease in cash and cash (6 476) (3 584)
equivalents
Cash and cash equivalents at (20 157) (16 573)
beginning of year
Cash and cash equivalents at end of (26 633) (20 157)
year
CONDENSED CONSOLIDATED PROVISIONAL STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
year year
ended ended
29 Feb 28 Feb
2012 2011
R`000 R`000
Balance at beginning of year 33 048 251 502
Issue of share capital - 500
Total comprehensive loss for the (32 752) (218 954)
year
Balance at end of year 296 33 048
SEGMENTAL REPORTING
Provisional Segmental revenue and results
The following is an analysis of the Group`s revenue and results from operations
by reportable segments:
Brikor
Brikor Donker- Total
Main hoek
R`000 R`000 R`000
February 2012
Revenue from external customers 112 818 21 989 134 807
Operating profit before impairments 8 015 5 518 13 533
Reversal of impairments 8 549 - 8 549
Operating profit before interest 16 564 5 518 22 082
and taxation
Interest received 1 178
Finance costs (29 654)
Loss before taxation (6 394)
Taxation -
Loss after taxation (6 394)
Segment assets and liabilities
Segment assets 135 777 39 784 175 561
Segment current liabilities (175 742) (6 289) (182 031)
Other segment information
Depreciation and amortisation (5 278) (880) (6 158)
included in cost of sales and
operating expenses
Additions to non-current assets 4 693 991 5 684
February 2011
Revenue from external 100 293 25 595 125 888
customers
Operating (loss)/profit (8 630) 1 813 (6 817)
before impairments
Impairments (15 395) - (15 395)
Operating (loss)/profit (24 025) 1 813 (22 212)
before interest and taxation
Interest received 312
Finance costs (28 841)
Loss before taxation (50 741)
Taxation 10 373
Loss after taxation (40 368)
Segment assets and
liabilities
Segment assets 206 951 36 102 243 053
Segment current liabilities (201 074) (7 454) (208 528)
Stanger assets 61 828
Stanger current liabilities (12 849)
Other segment information
Depreciation and
amortisation included in
cost of sales and operating
Expenses (13 457) (783) (14 240)
Additions to non-current 4 047 161 4 208
assets
The major changes in segment assets during the year relate to the sale of the
Stanger segment on 30 November 2011.
As a result of the sale, total segment assets of the Stanger segment as at 29
February 2012 are nil (28 February 2011: R61,8 million).
COMMENTARY
OVERVIEW
The directors of Brikor present the reviewed condensed consolidated provisional
financial results for the year ended 29 February 2012.
Brikor is a manufacturer and supplier of building and construction materials
across a broad spectrum of the market from low-cost housing, residential to
commercial and industrial projects and has clay, aggregate and coal mining
operations.
The continuing difficult economic conditions affected the building and
construction sectors. Notwithstanding relatively low housing mortgage rates,
financial institutions maintained their rigid credit approach to mortgage bonds,
which continued to subdue Brikor`s markets throughout the year. The residential
market was sustained by ongoing orders from the additions and alterations
sector, accounting for the majority of construction activity on which Brikor
focussed.
Margins remained under pressure in a competitive environment, as evidenced in
the Group`s results. The focus of the Company was management of cash flows
through ardent cost-cutting and working capital management measures. The Company
has successfully implemented corrective measures resulting in reduced costs and
right-sizing the Group. The scaled-down operations are focussed on clay brick
production and coal operations in Nigel and the aggregates business at
Donkerhoek. Improvements in production processes have also impacted positively
on availability and yields. In addition the constructive relationship with the
union impacted positively on workers, which led to improved productivity levels.
These measures have only impacted towards the end of the financial year and the
financial benefits are only expected in the next financial year.
Brikor is strategically situated to supply aggregates from Donkerhoek operations
for infrastructure development and has successfully commenced supply on several
of these projects. The improvements of the Donkerhoek production process have
resulted in better yields and volumes achieved and resulted in the securing of
tenders, which were previously unattainable.
Marked improvement in the demand for clay bricks and demand for maxi-blocks for
low-cost housing have increased significantly during the second half of the year
under review. As a result of corrective measures taken the clay brick division
is geared to meet the higher demand.
During the year under review Brikor was granted a mining license which allowed
for the opening of its mining operations at Vlakfontein, giving it access to
additional clay and coal deposits.
The mining of coal is a new division which is anticipated to show substantial
returns in the 2013 financial year. Significant costs have been incurred in the
latter part of the financial year to open the coal mine.
FINANCIAL RESULTS
Despite continuing difficult market conditions the Company`s revenue increased
by 7,1% to R134,8 million (2011: R125,9 million) and gross profit increased by
7,9% to R41,4 million (2011: R38,4 million). The improvement is mainly due to
improved yields and sales margins as a result of the successful implementation
of the restructuring plan giving renewed focus on the Company`s core business.
Competitive pressure remained throughout the year, inhibiting the Group`s
ability to fully pass input cost increases on to customers. The coal mine
development costs were also incurred in this year, the benefits of which will
only be realised in the next financial year.
Operating expenses decreased by 29,3% to R30,9 million (2011: R43,7 million) as
a result of cost-saving initiatives due to the implementation of the
restructuring plan. Directors` remuneration decreased by 18% due to a reduced
number of executive directors and the Chief Executive Officer sacrificing
compensation for twelve months.
The above measures led to the Group generating an operating profit before
impairment losses of R13,5 million (2011: operating loss before impairment
losses of R6,8 million).
After taking finance costs and impairment losses into consideration, the loss
for the year amounted to R6,4 million (2011: R50,7 million), which resulted in a
loss per share of 5,2 cents (2011: 34,9 cents) for the year and a fully diluted
loss per share of 3,3 cents (2011: 6,5 cents). Continuing operations delivered a
loss per share of 1,0 cents (2011: 6,4 cents) and a fully diluted headline loss
per share of 2,3 cents (2011: 4,6 cents).
Property, plant and equipment reduced to R80,7 million (2011: R208,7 million) as
a net result of:
- the disposal of operations of R52,1 million (2011:
R5,9 million);
- additions of R5,7 million (2011: R4,2 million);
- depreciation and amortisation of R6,2 million (2011:
R14,2 million); and
- a reversal of impairment of R8,5 million on capital projects
that will be commissioned in the ensuing financial year.
Assets reclassified as held for sale amounted to R60,2 million.
Impairments amounting to R23,8 million (2011: R196,6 million) were recognised in
respect of these assets held for sale to reduce the assets to their recoverable
amounts.
Brikor is currently in breach of the financing covenants of its RMB facilities.
The current carrying value of the loans are R110,5 million (2011: R124,7
million). As a result of the breach of the covenants, the portion of the loans
relating to continuing operations is reflected under current liabilities. The
Company and the Group`s financiers are in negotiations on restructuring the loan
facilities to resolve the breach to the Company and the Group financiers`
satisfaction.
DISCONTINUED OPERATIONS
On 18 August 2011 the Company entered into an agreement for the sale of the
Stanger operations for R50 million; to be settled through the payment of R30
million in cash and R20 million in 72 monthly instalments. The agreement became
unconditional on 30 November 2011.
On 10 October 2011 a decision was taken by the Board to dispose of the
operations in Olifantsfontein, Vereeniging and Bronkhorstspruit. The table below
analyses key amounts relating to the discontinued operations:
Olifants- Ver- Bronk-
fontein eeniging horstpruit Stanger Total
R`000 R`000 R`000 R`000 R`000
February 2012
Revenue 36 8 657 4 038 52 667 65 398
Expenses (4 121) (9 827) (6 213) (51 369) (71 530)
Impairments (21 882) - - (1 944) (23 826)
Net financing - - - (75) (75)
costs
Loss before (25 967) (1 170) (2 175) (721) (30 033)
taxation
Taxation - - - - -
Loss from (25 967) (1 170) (2 175) (721) (30 033)
discontinued
operations
Profit on disposal - - - 3 675 3 675
of discontinued
operations
Total loss from (25 967) (1 170) (2 175) 2 954 (26 358)
discontinued
operations
February 2011
Revenue 23 628 22 983 28 783 72 356 147 750
Expenses (26 635) (29 084) (38 071) (75 302) (169 092)
Impairments (72 142) (71 868) - (37 163) (181 173)
Net financing - - - (194) (194)
costs
Loss before (75 149) (77 969) (9 288) (40 303) (202 709)
taxation
Taxation 6 457 6 432 - 11 235 24 124
Total loss from (68 692) (71 537) (9 288) (29 068) (178 585)
discontinued
operations
The following table summarise the carrying values on 29 February 2012 of the
assets and liabilities held for sale, and of the assets and liabilities of the
Stanger division that were sold on 30 November 2011:
Olifants- Ver- Bronk-
fontein eeniging horstpruit Total Stanger
R`000 R`000 R`000 R`000 R`000
Property, plant 20 219 25 066 14 874 60 159 41 856
and equipment
Inventories 5 080
Trade and other 7 168
receivables
Cash and cash 1 440
equivalents
Provisions (1 440)
Borrowings (1 615)
Trade and other (6 164)
payables
20 219 25 066 14 874 60 159 46 325
Profit on disposal 3 675
Proceeds on 50 000
disposal
Less cash and cash (1 440)
equivalents
Cash proceeds 48 560
RELATED PARTIES
Ultimate controlling party
The Group`s ultimate controlling party is G v N Parkin.
Related party transactions
Transaction value Balance outstanding
for the year ended
29 Feb 28 Feb 29 Feb 28 Feb
2012 2011 2012 2011
R`000 R`000 R`000 R`000
Sales to related parties
Cavaletto 45 (Pty) Limited - 224 - -
Cyndara 113 (Pty) Limited 707 258 49 -
Kuvula Trade 40 (Pty) Limited 2 837 420 328 35
Leomega (Pty) Limited - - - -
Vecto Trade 449 (Pty) Limited - 2 362 218 -
Scarlet Sun 33 (Pty) Limited 1 609 688 147 -
E-Fuel (Pty) Limited - 3 - -
Purchases from related
parties
Ilangabi Investments 12 (Pty) - 6 639 6 639 6 639
Limited
Cavaletto 45 (Pty) Limited - 855 - 35
Cyndara 113 (Pty) Limited 939 191 246 58
Kuvula Trade 40 (Pty) Limited 7 818 2 074 68 144
Leomega (Pty) Limited 64 13 22 2
Vecto Trade 449 (Pty) Limited 295 13 036 - 51
Scarlet Sun 33 (Pty) Limited - 54 - 3 765
Interest paid to related parties
G v N Parkin 2 288 2 819 27 573 25 286
The above transactions occurred at arm`s length on market-related terms.
BASIS OF PREPARATION
The reviewed condensed consolidated provisional financial results for the year
ended 29 February 2012 have been prepared in accordance with the measurement and
recognition requirements of International Financial Reporting Standards ("IFRS")
and the presentation and disclosure requirements of IAS 34: Interim Financial
Reporting, the AC500 standards as issued by the Accounting Standards Board, the
Companies Act of South Africa and the JSE Limited Listings Requirements. These
reviewed condensed consolidated provisional financial results do therefore not
include all of the information required for full annual financial statements.
The accounting policies used to prepare these reviewed condensed consolidated
provisional financial results, which are in terms of IFRS, are consistent with
those applied in the preparation of the annual financial statements for the year
ended 28 February 2011, except for the standard noted that became effective on 1
January 2011: IAS 24 (Related Party Disclosures). The reviewed condensed
consolidated provisional financial results have been prepared by the Chief
Financial Officer, Mrs H Botha.
REVIEW REPORT AND EMPHASIS OF MATTER
The condensed consolidated provisional financial results for the year ended 29
February 2012 have been reviewed by the Company`s auditor, KPMG Inc. In their
review report dated 27 June 2012, which is available for inspection at the
Company`s registered office, KPMG Inc. stated that their review was conducted in
accordance with the International Standard on Review Engagements 2410, Review of
Interim Information Performed by the Independent Auditor of the Entity, and have
expressed an unmodified opinion on the reviewed condensed consolidated
provisional financial results for the year ended 29 February 2012. The
auditor`s review report includes the following emphasis of matter paragraph:
"Without qualifying our review report, we draw attention to the going concern
note in the financial information, which indicates that Brikor Limited incurred
a loss for the year ended 29 February 2012. This condition, along with other
matters as set forth in the commentary, indicates the existence of a material
uncertainty that may cast significant doubt on the ability of the Company and
its subsidiaries to continue as going concern."
EVENTS AFTER THE REPORTING DATE
As announced on SENS on 4 June 2012, the option to acquire 10% of the Group`s
shares, granted to the Group`s restructuring officer, Matuson and Associates,
has lapsed.
The conditions precedent pertaining to the disposal of the Olifantsfontein
operation were not met and therefore, as announced on SENS on 15 March 2012, the
agreement has lapsed.
GOING CONCERN
The Group incurred a loss of R32,8 million for the year ended 29 February 2012.
The Group`s directors have put the following plans in place to turn Brikor, as
soon as possible, into a profitable organisation again:
- a restructuring plan which included the closure of current non-profitable
operations, sale of non-core businesses, reduced overheads and cost-cutting,
improved efficiencies and the successful commissioning of the coal operations;
- the sale of certain non-core assets. Asset disposals effected during the
year are disclosed under the heading `Discontinued Operations`.
The directors regard Brikor as a going concern based on:
- the continued support of its financiers and creditors. The Company is
currently negotiating the terms of the finance restructuring agreement. Should
the restructuring plan not be accepted by RMB, there exists a material
uncertainty which may cast significant doubt about the Company and its
subsidiaries` ability to continue as going concerns and, therefore, that it may
be unable to realise its assets and discharge its liabilities in the normal
course of business;
- no material adverse changes in current economic and market
conditions;
- no adverse changes in the regulatory environment; and
- the continuance of profitable results.
The reviewed condensed consolidated provisional financial results are prepared
on the basis of accounting policies applicable to a going concern. This basis
presumes that funds will be available to finance future operations and that the
realisation of assets and settlement of liabilities will occur in the ordinary
course of business.
PROSPECTS
The Group should benefit from a gradual improvement in market conditions and has
positioned itself accordingly to extrapolate maximum benefits from such
improvements. Positioning strategies include the restructuring and repositioning
of the Company and the opening of the coal division.
Based on the repositioning and restructuring of the Company, support of its
financiers and assuming that current market and economic conditions will not
deteriorate, Brikor is expecting improved results in the next financial year.
The market and prospect information contained in the condensed consolidated
provisional financial results for the year ended 29 February 2012 have been
neither reviewed nor reported on by the Group`s external auditors.
DIVIDEND
No dividend has been declared for the period.
By order of the Board
G v N Parkin H Botha
Chief Executive Officer Chief Financial Officer
Nigel
27 June 2012
CORPORATE INFORMATION
Non-executive directors: R van Rooyen (Chairman); NM Anderson;
RJ Magoele; JH Wood
Executive directors: G v N Parkin (CEO); H Botha (CFO); G Parkin (Jnr)
(Alternate director to the CEO)
Registered address: 1 Marievale Road, Vorsterskroon, Nigel
Postal address: PO Box 884, Nigel 1490
Telephone: (011) 739 9000
Facsimile: (011) 739 9021
Company secretary: CIS Company Secretaries (Pty) Limited
Transfer secretaries: Computershare Investor Services (Pty) Limited
Auditors: KPMG Inc.
Designated Adviser: Exchange Sponsors (2008) (Pty) Limited
These results and an overview of Brikor are available at www.brikor.co.za
Date: 27/06/2012 17:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
