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BRIKOR LIMITED - Abridged audited consolidated financial results for the year ended 28 February 2019

Release Date: 14/06/2019 16:03
Code(s): BIK     PDF:  
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Abridged audited consolidated financial results for the year ended 28 February 2019

BRIKOR LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013247/06
JSE code: BIK
ISIN: ZAE000101945
(“Brikor” or “the Group” or “the Company”)

ABRIDGED AUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED
28 FEBRUARY 2019

PREPARED BY
The summarised abridged audited consolidated financial results
(“abridged financial results” or “results”) for the year ended 28
February 2019 were prepared by Laura Craig CA(SA), Group Financial
Director.

FINANCIAL HIGHLIGHTS*
Revenue increased by 4,3% to R285 million
Total equity increased by 14,2% to R67 million
Total debt decreased by 25,7% to R143 million
Net asset value per share increased by 12,8% to 10,6 cents per
share
Net tangible asset value per share increased by 90,0% to 5,7 cents
per share
*continuing operations

AUDITOR’S REPORT
for the year ended 28 February 2019

The abridged financial results are extracted from audited
information but is not itself audited. The directors take full
responsibility for the preparation of the abridged financial
results and the correct extraction of the financial information
included herein from the underlying annual financial statements.

The financial statements were audited by KPMG Inc., and the audit
report thereon is available for inspection at the company’s
registered office. The auditor’s report contained the following
paragraph with respect to reportable irregularities:

“In accordance with our responsibilities in terms of section 44(2)
and 44(3) of the Auditing Profession Act, we report that we have
identified reportable irregularities in terms of the Auditing
Profession Act. We have reported these matters to the Independent
Regulatory Board for Auditors.” The matters pertaining to the
reportable irregularities have been described in note 6 to the
abridged financial results.

ABRIDGED CONSOLIDATED RESULTS COMMENTARY
1. OVERVIEW
   The Group’s overall financial indicators mirror the constraints
   experienced in the current economic climate. Challenging market
   conditions in the building and construction sector continued to
   put strain on selling prices in the Bricks segment, with the
   segment also experiencing a change in demand of product range,
   mixed with lower gross profit yielding product prevailing. The
   combination of limited capacity in the production of bricks,
   brought about by the limited power supply available to the
   brick plants during power outages, led to operational
   challenges with the concomitant financial implications. The
   increased supply of the Coal segment’s product range yielded
   higher prices, resulting in improved revenue for the Group. The
   Coal segment showed an increase in revenue of 30,4%, with the
   Bricks segment decreasing revenue by 9,5%, partly attributable
   to the Group terminating the buying-in of bricks to focus on
   its own product range.

   The competitive operating environment continued to drive
   selling prices downward, placing pressure on gross profit
   margins. Gross profit reduced as a result of the mobile
   equipment rentals, necessitated by the need to improve
   production efficiencies, which was commissioned for the Group
   and took several weeks to be fully operational, resulting in
   increased cost of production per tonne due to the lack of
   volumes in March 2018 and April 2018, with fixed costs
   remaining unchanged.

   Spend on Broad-Based Black Economic Empowerment targets set by
   the Group amounted to R5,4 million (F2018: R1,8 million), an
   increase of 190,4%, further impacting the bottom line. The
   spend related primarily to supplier and enterprise development
   and socio-economic development initiatives. The Group’s overall
   financial indicators evidenced the continued endeavours by
   management to cement a sustainable operating platform for the
   Group through ongoing settlement of liabilities pertaining to
   Past compliance matters, which management is diligently and
   consistently working to resolve.

2. FINANCIAL OVERVIEW
   The Group reports positive financial performance in a year
   challenged by a stressed economic environment. Revenue
   increased by 4,3% to R284,9 million (F2018: R273,1 million),
   driven by revenue increases in coal extraction. Gross profit
   decreased by 21,9% to R58,0 million (F2018: R74,3 million),
   driven primarily by the Bricks segment sales mix changes and
   the increase in rentals of mobile equipment in the Coal
   segment. Operating profit before interest and taxation
   decreased by 62,5% to R12,5 million (F2018: R33,5 million).
   This decrease is a result of change of sales mixes with low
   profit margin products prevailing and the increase of rentals
   of mobile equipment which reduced the gross profit overall. The
   increase in operating expenses was primarily due to the
   increased BBBEE spend to increase the Group’s empowerment
   credentials.

Revenue
   Revenue decreased by 9,5% in the Bricks segment to R161,8
   million (F2018: R178,7 million) and increased by 30,4% in the
   Coal segment to R123,1 million (F2018: R94,4 million). Early
   heavy rains in the first quarter of the 2019 year resulted in a
   change in the brick manufacturing production cycle, which in
   turn hindered the Group’s ability to translate revenue from
   early tender processes. Sales mix changes were experienced due
   to a change in market demand with lower revenue yielding
   products prevailing. The Group also ceased buying in bricks
   from third parties in the second half of the reporting period
   and took the decision to focus on its own core operations. The
   Coal segment also experienced drawbacks in the first quarter
   due to the rains, however, the commissioning of fixed plant at
   the end of the first quarter and the decision to rent
   productive mobile equipment in lieu of replacing existing
   capital equipment, resulted in improved efficiencies as well as
   an overall increase in revenue.

Gross Profit
   Gross profit decreased by 21,9% to R58,0 million (F2018: R74,3
   million). The decrease was due to the reduction of sales
   experienced in the Bricks segment, combined with limited power
   supply available to the brick plants due to power outages, and
   the rental of mobile equipment in the Coal segment, which was
   necessary due to the loss of productive capacity as a result of
   ageing mobile equipment. The prior reporting period had a
   change of estimate on environmental restoration provision for
   Vlakfontein, which positively affected the gross profit by R8,9
   million due to the change of methodology to the pit void
   approach. This change in methodology was a once-off.

Operating profit before interest and taxation
   Operating profit before interest and taxation decreased by
   62,5% to R12,5 million (F2018: R33,5 million). This change is a
   result of the decreased gross profit mentioned earlier and an
   increase of R3,6 million in BBBEE spend in order to increase
   the Group’s empowerment credentials.

Earnings per share and headline earnings per share
   Earnings per share increased by 8,3% to 1,3 cents per share
   (2018: 1,2 cents per share), mainly due to the disposal of the
   discontinued operation (refer to note 4). Headline earnings per
   share decreased by 41,7% to 0,7 cents per share (2018: 1,2
   cents per share), mainly due to the decreases in revenue and
   gross profit and the positive change in estimate experienced in
   the prior year of R8,9 million, which was a once-off adjustment
   not experienced again.

Net asset per share and tangible asset per share values
   The Group continued to generate profits and invest in property,
   plant and equipment. This has resulted in an increase in net
   asset value per share of 12,8% to 10,6 cents per share (F2018:
   9,4 cents per share), and net tangible asset value per share of
   90,0% to 5,7 cents per share (F2018: 3,0 cents per share).

Capital expenditure
   Major capital investments made by the Group during the year
   under review comprise R1,6 million on major repairs for mobile
   plant in the Coal segment due to expiration of their useful
   lives; R0,9 million on mobile equipment in the Bricks segment
   to improve efficiencies; R0,8 million on new motor vehicles in
   the Bricks segment due to motor vehicles reaching the end of
   their useful lives; and R0,8 million on major repairs and
   replacements on fixed plant for the Bricks segment.

Disposal of the discontinued operation
   The Group successfully disposed of the aggregates segment in
   the current reporting period. The final purchase consideration
   amounted to R44,8 million, of which R20,4 million was received
   for the disposal of plant and equipment, R10,0 million in terms
   of the disposal of property, R 7,2 million in terms of the
   disposal of inventory and R7,2 million in terms of the disposal
   of the shares. Disposal costs amounted to R1,2 million.
   Shareholders are referred to note 4 of the annual financial
   statements in terms of the discontinued operation.

3. GOING CONCERN
   The directors have prepared their budgets and cash flow
   forecast for the 2020 financial year based on reasonable and
   supportable assumptions.

   The cash flow forecast and current management results indicate
   that the Group will operate as a going concern for the
   foreseeable future.

4. SUBSEQUENT EVENTS
   As announced on SENS on 6 June 2019, two separate transactions
   occurred on 4 June 2019 relating to the off-market transfer
   of 107 084 630 and 20 265 024 shares, respectively, to Garnett
   Parkin, CEO of Brikor, at a price of 9 cents per share.

   The above transactions were a transfer of shares from the
   Estate of Late G v N Parkin to Garnett Parkin and a family
   trust as part of the settlement of the Estate of Late G v N
   Parkin. There was no option to settle these shares in cash.

   Other than as disclosed above and in the notes to the financial
   statements, management is not aware of any material events
   which occurred subsequent to the year ended 28 February 2019
   and which need adjustment or disclosure.

5. DIVIDEND
   No dividend has been declared or paid during the year under
   review.

6. CHANGES TO THE BOARD OF DIRECTORS
   Laura Craig was appointed as Financial Director on 14 September
   2018. Laura has been a key part of the finance team for the
   last several years. The Board wishes her well in this new
   chapter and the team will continue to support her in her new
   role.

7. PROSPECTS AND OPPORTUNITIES
   The Board of Directors remains positive about the potential
   which can be unlocked from the Group, given the consistent
   improvement of the statement of financial position, with the
   last major debts outstanding being those amounts owing to
   related parties and the South African Revenue Service.

   A priority during the year ahead will be the strengthening of
   Brikor’s broad-based black economic empowerment status. The
   Board will be exploring opportunities to expand its black
   ownership base.

   With a lower risk profile going forward, the Group is well
   positioned to explore growth opportunities.

   Any forward-looking statements have neither been reviewed nor
   reported on by the Group’s auditors, KPMG Inc.

8. OTHER MATTERS
   During the current and prior year(s) reportable irregularities
   had been identified and reported by the independent external
   auditors under the Auditing Profession Act to the Independent
   Regulatory Board of Auditors with regard to transactions
   relating to:
   - Non-compliance with the Income Tax Act, no 58 of 1962, in
      that:
      - annual income tax returns had not all been submitted.

   -   Non-compliance with the Companies Act, no 71 of 2008, in
       that:
       - Statutory individual company annual financial statements
         had not been audited, signed and approved within six
         months of the respective financial year-ends.

9. MINERAL RESOURCES AND RESERVES
   The Competent Person’s Report was approved by the Johannesburg
   Stock Exchange on 12 June 2019. The full report is available on
   the Company’s website www.brikor.co.za.

NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting of
shareholder of Brikor will be held at Brikor, 1 Marievale Road,
Vorsterskroon, Nigel at 10:00 on Wednesday, 9 October 2019 to deal
with the business as set out in the notice of annual general
meeting in the integrated annual report 2019.

Record date for the purpose of determining
which shareholders are entitled to receive
the notice of annual general meeting          Friday, 14 June 2019

Mailing of integrated annual report         Thursday, 20 June 2019

Last day to trade for the purposes of
being entitled to attend, participate in
and vote at the annual general meeting       Tuesday, 1 October 2019

Record date on which members must be
recorded as such in the register
maintained by the transfer secretaries
of the Company for the purpose of being
entitled to attend, participate in and
vote at the annual general meeting            Friday, 4 October 2019

Proxy forms to be lodged with transfer
secretaries by 10:00 on                   Monday, 7 October 2019*

*Any form of proxy not delivered to the transfer secretaries by
this time may be handed to the chairman of the annual general
meeting prior to the commencement of the annual general meeting.


For and on behalf of the Board of Directors

Allan Pellow
Independent Non-Executive Chairperson

Garnett Parkin
Chief Executive Officer

Laura Craig CA(SA)
Financial Director

Nigel
14 June 2019

ABRIDGED AUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 28 February
                                                2019          2018
                                     Note      R’000        R’000
ASSETS
Non-current assets                           123 357      128 610
Property, plant and equipment                 70 402       73 591
Intangible assets                              4 176        4 784
Restricted financial assets                   21 942       20 316
Deferred tax asset                            26 837       29 919
Current assets                                82 382       77 732
Inventories                                   44 098       36 607
Trade and other receivables                   27 176       29 877
Cash and cash equivalents                      7 306       11 248
Taxation                                       3 802             –
Assets held-for-sale                      4     4 222      44 711
Total assets                                  209 961     251 053
EQUITY AND LIABILITIES
Equity attributable to equity
holders of the Company                          66998      58 659
Stated capital                                 228242     228 242
Accumulated loss                              (161244)   (169 583)
Total liabilities                              142963     192 394
Non-current liabilities                         77711     100 796
Shareholders' loans                             16296      43 544
Provision for environmental restoration   3     55382      52 262
Deferred tax liability                           6033       4 990
Current liabilities                             61786      83 181
Borrowings                                          –       6 565
Shareholders’ loans                             6 372           –
Trade and other payables                       49 758      70 561
Taxation                                        5 656       6 055
Liabilities directly associated with
the assets held-for-sale                  4      3 466       8 417
Total equity and liabilities                  209 961     251 053

ABRIDGED AUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
for the year ended 28 February
                                                2019         2018
                                      Note     R’000        R’000
Continuing operations
Revenue                                      284 894      273 128
Cost of sales                               (226 858)    (198 846)
Gross profit                                  58 036       74 282
Other income                                   6 076        7 805
Administrative expenses                      (37 215)     (39 524)
Distribution expenses                         (6 751)      (6 197)
Other expenses                                (7 601)      (2 878)
– Expenses                                    (7 789)      (2 068)
– Impairment reversals/(impairments)             188         (809)
Operating profit before interest
and taxation                                  12 545       33 488
Finance income                                   777          901
Finance costs                                 (6 955)     (12 133)
Profit before taxation                         6 367       22 256
Taxation                                      (2 735)      (7 724)
Profit after taxation from
continuing operations                          3 632       14 532
Discontinued operations
Profit/(loss) from discontinued
operations net of tax                     4      450       (6 946)
Profit from disposal of discontinued
operations net of tax                     4    4 257             –
Profit for the year                            8 339        7 586
Other comprehensive income for the year
net of taxation                                    –             –
Total comprehensive income for the year
attributable to owners of the Company          8 339        7 586

                                                2019         2018
Earnings per share                         2   cents        cents
Basic
Continuing operations                            0,6          2,3
Discontinued operations                          0,7         (1,1)
Total                                            1,3          1,2
Diluted
Continuing operations                            0,6          2,3
Discontinued operations                          0,7         (1,1)
Total                                            1,3          1,2

ABRIDGED AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 28 February
                                                   Accu-
                               Stated Treasury   mulated     Total
                             capital    shares      loss   equity
                                R’000    R’000     R’000     R’000
Balance at 28 February 2017 244 142    (15 900) (177 169) 51 073
Total comprehensive income
for the year                        –        –     7 586     7 586
Balance at 28 February 2018 244 142    (15 900) (169 583) 58 659
Total comprehensive income
for the year                        –        –     8 339     8 339
Balance at 28 February 2019 244 142    (15 900) (161 244) 66 998

ABRIDGED AUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 28 February
                                                2019         2018
                                      Note     R’000        R’000
Cash flows (to)/from operating
activities                                   (15 408)      22 960
Cash (utilised by)/generated from
operations                                    (5 951)      30 170
Finance income                                 1 226          867
Finance costs                                 (2 891)      (4 239)
Tax paid                                      (7 792)      (3 838)
Cash flows from/(to) investing
activities                                    16 931      (16 916)
Additions to property, plant and
equipment                                     (5 229)     (15 940)
Proceeds on disposal of plant and
equipment                                      1 299        1 966
Proceeds on disposal of
discontinued operation                    4   23 640            –
Payments/contributions to
rehabilitation trust funds                    (2 779)      (2 942)
Cash flows to financing activities            (5 465)      (9 021)
Borrowings raised                                  –           33
Shareholders’ loans and borrowings
repaid                                        (5 465)      (9 054)
Net decrease in cash and cash
equivalents                                   (3 942)        (2 977)
Cash and cash equivalents at
beginning of year                             11 248        14 225
Cash and cash equivalents at end of year       7 306        11 248

ABRIDGED AUDITED CONSOLIDATED SEGMENTAL ANALYSIS
for the year ended 28 February
Segment revenues and results
Factors used to identify segments are based on geographical
location and divisional structuring, this is also how the Group
reports financial results to management on a monthly basis.

Reportable segment revenue relates to external customers only.
Revenue is derived solely from the South African customers.

Other matters
For the purposes of monitoring segment performance and allocating
resources between segments:
- all assets are allocated to reportable segments other than
   assets held-for-sale, tax assets and cash and cash equivalents.
- all liabilities are allocated to reportable segments other than
   general borrowings, shareholders’ loans, deferred taxations,
   taxation, bank overdraft and liabilities held-for-sale.

The following is an analysis of the Group’s revenue and results
from operations by reportable segments.

                              Bricks         Coal       Other*    Total
                               R’000        R’000        R’000    R’000
Segment profit
reconciliation
2019
Total revenue                 161 785      141 249         –     303 034
Intersegment revenue                –      (18 140)        –     (18 140)
Reportable segment revenue    161 785      123 109         –     284 894
– Clay products               140 997        2 684         –     143 681
– Coal                              –      116 232         –     116 232
– Transportation services
  and ancillary products       20 788        4 193         –      24 981
Gross profit                   23 168       34 868         –      58 036
Other income                    1 980        4 096         –       6 076
Operating profit before
interest and taxation            (365)      12 910         –      12 545
Segment assets and
liabilities
Segment assets                 90 718       75 552      43 691    209 961
Segment liabilities           (52 285)     (52 500)    (38 178) (142 963)
Other segment information
Depreciation and amortisation
included in cost of sales and
operating expenditure          (4 936)     (8 379)         –      (13 315)
Additions to non-current
assets                          2 760       2 469          –        5 229
* Other segment relates to non-segment-specific assets and
liabilities which include the Aggregates segment classified as
held-for-sale.

                              Bricks       Coal          Other*     Total
                               R’000      R’000           R’000     R’000
Segment profit
reconciliation
2018
Total revenue                 178 685   111 971             –      290 656
Intersegment revenue                –   (17 528)            –      (17 528)
Reportable segment revenue    178 685    94 443             –      273 128
– Clay products               152 212     1 266             –      153 478
– Coal                              –    87 310             –       87 310
– Transportation services
  and ancillary products       26 473     5 867             –       32 340
Gross profit                   38 680    35 602             –       74 282
Other income                    1 913     5 892             –        7 805
Impairments                       809         –             –          809
Operating profit before
interest and taxation          11 556    21 932             –       33 488
Segment assets and
liabilities
Segment assets                 77 561    81 862         91 630     251 053
Segment liabilities           (50 795)  (74 451)       (67 148)   (192 394)
Other segment information
Depreciation and amortisation
included in cost of sales and
operating expenditure          (4 784)   (9 165)        (1 076)    (15 025)
Additions to non-current
assets                          4 647    14 968            185      19 800
* Other segment relates to non-segment-specific assets and
liabilities.

NOTES TO THE ABRIDGED AUDITED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 28 February 2019

1. STATEMENT OF COMPLIANCE, BASIS OF PREPARATION AND AUDIT REPORT
   The abridged consolidated financial statements are prepared in
   accordance with the requirements of the JSE Listings Requirements
   for abridged reports, and the requirements of the Companies Act
   applicable to summary financial statements. The Listings
   Requirements require abridged reports to be prepared in
   accordance with the framework concepts and the measurement and
   recognition requirements of International Financial Reporting
   Standards (IFRS) and the SAICA Financial Reporting Guides as
   issued by the Accounting Practices Committee and Financial
   Pronouncements as issued by the Financial Reporting Standards
   Council and to also, as a minimum, contain the information
   required by IAS 34: Interim Financial Reporting. The accounting
   policies applied in the preparation of the consolidated financial
   statements from which the summary consolidated financial
   statements were derived are in terms of International Financial
   Reporting Standards and are consistent with those accounting
   policies applied in the preparation of the previous consolidated
   annual financial statements, except for the adoption of new and
   revised standards and interpretations.

   The abridged financial results are presented in South African
   rand and all financial information has been rounded to the
   nearest Rand thousands, except when otherwise indicated.

   These abridged financial results were extracted from audited
   information but is not itself audited. The directors take full
   responsibility for the preparation of the abridged financial
   results and that the financial information has been correctly
   extracted from the underlying audited consolidated financial
   statements.

2. EARNINGS PER SHARE
                                                2019         2018
                                               cents        cents
   Basic
   Continuing operations                         0,6          2,3
   Discontinued operations                       0,7         (1,1)
   Total                                         1,3          1,2
   Diluted
   Continuing operations                         0,6          2,3
   Discontinued operations                       0,7         (1,1)
   Total                                         1,3          1,2
   Headline earnings
   Continuing operations                         0,6          2,4
   Discontinued operations                       0,1         (1,2)
   Total                                         0,7          1,2
   Diluted headline earnings
   Continuing operations                         0,6          2,4
   Discontinued operations                       0,1         (1,2)
   Total                                         0,7          1,2

   Reconciliation between basic earnings and headline earnings as
   well as diluted earnings
                              Continuing Discontinued
                              operations    operations      Total
                                   R’000         R’000      R’000
   2019
   Basic and diluted profit        3 632         4 707      8 339
   Profit on disposal of
   discontinued operation              –        (4 257)    (4 257)
   Loss on disposal of property,
   plant and equipment               171             –        171
   Loss on scrapping of property,
   plant and equipment               401             –        401
   Impairment reversal of assets    (188)            –       (188)
   Headline and diluted headline
   profit                          4 016           450      4 466
   2018
   Basic and diluted profit        14 532       (6 946)     7 586
   Profit on disposal of property,
   plant and equipment               (290)           –       (290)
   Loss on disposal of property,
   plant and equipment                  2          153        155
   Loss on scrapping of property,
   plant and equipment                  5            –          5
   Impairment of assets               810         (906)       (96)
   Headline and diluted headline
   profit                          15 059       (7 699)      7 360

   Number of shares
                                                2019            2018
                                                ‘000            ‘000
   Weighted average number of shares         629 342         629 342
   Diluted weighted average number of shares 629 342         629 342

3. PROVISIONS
                                                2019           2018
                                               R’000          R’000
   Environmental rehabilitation provision     55 382         52 262
   Total                                      55 382         52 262
   Provision: Environmental rehabilitation
   Opening balance                           52   262        54 281
   Unwinding of interest                      3   318         4 718
   Rehabilitation performed                  (7   052)         (659)
   Change in estimate                         6   854          (416)
    Recognised in profit or loss                  694        (8 890)
    Recognised in property, plant and
    equipment                                 6 160           8 474
   Transfer to liabilities held-for-sale          –          (5 662)
   Closing balance                           55 382          52 262

   The rehabilitation provision relates to the estimated costs of
   correcting any disturbance relating to mining and other
   operating activities and those incidental thereto. The level of
   provision is commensurate with work completed to date. The
   current gross closure cost of rehabilitation was estimated at
   R69,4 million (2018: R66,5 million). The future expected cost
   of the provision was calculated by escalating current gross
   closure cost at 6% (2018: 6%) per annum over the life of the
   operations ranging between 7 to 13,25 years (2018: 2 to 15
   years). This future cost is discounted at the South African
   Government Bond Rate ranging between 8,79% and 9,15% (2018:
   6,72% and 8,78%) to arrive at a carrying value of R55,4 million
   (2018: R52,3 million).

   The Group has invested funds into various environmental trusts
   to be utilised by the Group as and when restoration activities
   are incurred. Investments made during the year into these funds
   amounted to R2,8 million (2018: R2,9 million). The total amount
   held in these trusts amounted to R21,9 million (2018: R20,3
   million) at year-end.
   The Department of Minerals and Energy hold guarantees in their
   favour for the mining rehabilitation cost to the amount of
   R25,2 million (2018: R17,5 million).

   Material changes in estimates
   Farm Vlakfontein 281IR (Ilangabi mine)
   Management took the decision to perform concurrent
   rehabilitation on the Farm Vlakfontein 281IR (Ilangabi mine)
   during the 2019 year, which included the shaping and levelling
   to obtain the desired drainage per the submitted closure plan.

   This resulted in a decrease in the provision to the amount of
   R3,9 million.

   Portion 27, Varkensfontein no 169
   Due to the closure of Portion 27 Farm Varkensfontein no.169
   nearing completion, management performed the following
   concurrent rehabilitation:
   - Load and haul
   - Shaping and levelling
   - Establishment of wetlands

   This resulted in a decrease in the provision to the amount of
   R3,2 million.

   Portion 70, Varkensfontein no 169
   The gross closure cost for Plant 3 increased with R10,9 million
   in comparison to the prior financial year due to a change of
   approach.

   Management performed further analysis of the rehabilitation
   requirements of the site and based on the most recent available
   information, and with the use of an external expert, developed
   an updated rehabilitation plan to align with best practices,
   allowing for the most recently submitted closure plan. The most
   significant change related to infrastructure.

4. ASSETS AND LIABILITIES HELD-FOR-SALE AND DISCONTINUED
   OPERATIONS
   On the 20 September 2016 and 17 November 2016, the Group
   committed to sell two of its properties, namely the Rayton
   property situated at Portion 31 of Witfontein NO.510 – JR
   District Bronkhorstspruit “Rayton” and the Nigel Schist
   property situated at Portion 58 of the Farm Vrisgewaag 510IR
   “Schist”, respectively.

   Rayton property
   The offer amounting to R2,2 million, which is inclusive of the
   transfer of the environmental restoration obligation, has been
   accepted and signed by the Company on 17 April 2017. In 2019,
   the environmental provision of this property continued to
   unwind and had a change of estimate to the value of R0,4
   million (2018: R0,4 million). Accordingly, in order to realign
   the property to its recoverable amount, R0,2 million (2018:
   R0,4 million) of the previous impairment was reversed.

   The non-recurring fair value determination of the non-current
   assets held-for-sale of R2,2 million has been classified as a
   level 2 fair value. Valuation was determined by the contractual
   amount of the offer received in the open market.

   The sale is subject to the approval in terms of section 11(1)
   of the Mineral and Petroleum Resources Development Act, no 28
   of 2008, being granted by the minister in respect of the
   cession and transfer of the mining right to the purchaser.

   A further arrangement has been entered into with the purchaser
   to extend the original agreement up to 28 February 2020, in
   order to allow for the section 11(1) transfer to be finalised
   by the Department of Mineral Resources.

Schist property
Management is actively looking to dispose of this property and
is of the opinion that it will be sold within the next year.

Conditions precedent for the disposal thereof is that a Section
41 closure certificate is received from the Department of
Mineral Resources and that the property is fenced off.
Discussions are being held with the Department of Mineral
Resources to reduce the fencing only to the mined area, this
will save costs and expedite the turnaround of a sale.

The non-recurring fair value of the non-current assets held-
for-sale has been classified as a level 2 fair value.

Cumulative income or expenses included in profit/(loss) and
other comprehensive income for assets held-for-sale:
                               Rayton      Schist
                             property    property     Total
                                R’000       R’000     R’000
2019
Change in estimate for
environmental rehabilitation
provision                         (39)       (897)     (936)
Impairment reversal               188           –       188
Net financing cost               (149)          –      (149)
Loss from operating activities
(no tax effect)                     –        (897)     (897)
2018
Change in estimate for
environmental rehabilitation
provision                         (328)       (12)     (340)
Impairment reversal                452          –       452
Net financing cost                (125)         –      (125)
Loss from operating activities
(no tax effect)                     (1)        (12)       (13)

Discontinued operations
The final agreement for the sale of Donkerhoek business was
signed on 27 October 2017 with conditions precedent, including
shareholder approval subsequent to the release of the required
category 1 circular. The category 1 circular was posted and
notice on the general meeting was issued on SENS on 14 March
2018. The general meeting in terms of the disposal was held at
1 Marievale Road, Vorsterskroon, Nigel, 1490 on 17 April 2018,
and the disposal of the Donkerhoek business was approved by
a quorum of shareholders present.

The final purchase consideration amounted to R44,8 million, of
which R20,4 million was in lieu of plant and equipment; R10,0
million in lieu of property; R7,2 million in lieu of inventory
and R7,2 million in terms of the disposal of the shares. R1,2
million disposal costs were incurred leaving the amount of
R43,6 million net proceeds.

Recognition dates in terms of the sale were as follows:
- 17 April 2018 – sale of plant and equipment and inventory
  upon general meeting approval;
- May 2018 – sale of shares upon transfer of secretarial
  documents and share certificates; and
- 10 August 2018 – sale of property upon transfer of the
  properties at the deeds office.

The fair value of the Donkerhoek business has been classified
as a level 2 fair value. The market comparison technique was
used for the fair value of the Donkerhoek business.

The tables below analyse the results relating to the
discontinued operations:
                                             2019         2018
Donkerhoek business                         R’000        R’000
Revenue and other income                      401       37 828
Expenses                                     (579)     (48 637)
Net financing costs                           578         (393)
Finance income                                578            18
Finance expense                                 –         (411)
Impairment reversal                             –          906
Profit/(loss) from operating activities       400      (10 296)
Taxation                                       50        3 350
Profit/(loss) after taxation                  450       (6 946)
No income or expenses were recognised in other comprehensive
income relating to the disposal group.

Assets and liabilities held-for-sale
At 28 February 2019, the assets held-for-sale was stated at
fair value less cost to sell.

The following table summarises the carrying value of assets and
liabilities that have been classified as held-for-sale:
                                Rayton     Schist
                              property   property     Total
                                 R’000      R’000     R’000
2019
Non-current assets
held-for-sale
                                 R’000      R’000     R’000
Property, plant and equipment    4 209         13     4 222
                                 4 209         13     4 222
Non-current liabilities
held-for-sale
Environmental rehabilitation
provision                        2 009      1 457     3 466
                                 2 009      1 457     3 466

At 28 February 2018, the non-current assets held-for-sale was
stated at fair value less cost to sell and comprised the
following:
                                              Donker-
                        Rayton      Schist       hoek
                      property    property   business     Total
                         R’000       R’000      R’000     R’000
2018
Assets held-for-sale
Property, plant and
equipment                4 021          13     28 370    32 404
Intangible assets            –           –      5 074     5 074
Inventory*                   –           –      7 233     7 233
                         4 021          13     40 677    44 711
Liabilities
held-for-sale
Environmental
rehabilitation
provision                1 821         560      5 662     8 043
Salary accruals              –           –         374      374
                         1 821         560      6 036     8 417
* Inventory includes consumables to the value of R0,3 million,
which were recovered through a normal trade basis.

The table below summarises the profit on the sale relating to
the discontinued operations:
                                                    Donkerhoek
                                                      business
                                                         R’000
Gross proceeds                                          44 855
Less: disposal costs                                    (1 215)
Net proceeds                                            43 640
ASSETS
Non-current assets                                      33 444
– Property, plant and equipment                         28 370
– Intangible assets                                      5 074
Current assets                                           7 207
– Inventory                                              7 207
Total assets                                            40 651
LIABILITIES
Non-current liabilities                                 (5 662)
– Provisions                                            (5 662)
Current liabilities                                       (374)
– Trade and other payables                                (374)
Total liabilities                                       (6 036)
Less: net asset value of the Donkerhoek business        34 615
Profit on disposal of discontinued operation before
taxation                                                 9 025
Less: taxation                                          (4 768)
Profit on disposal of discontinued operation             4 257

The table below summarises the cash flow effects relating to
the discontinued operations:
                                             2019         2018
Donkerhoek business                         R’000        R’000
Cash flow
Net cash flows from operating activities      465          158
Net cash flows from investing activities* 23 640           315
Net increase in cash flow                  24 105          473

*Reconciliation of net cash flow from investing activities
                                             2019          2018
                                            R’000         R’000
Net proceeds                               43 640             –
Direct transfer to shareholders’
Loan                                      (20 000)            –
Net cash flow from investing activities    23 640             –

5. CONTINGENCIES
   Contingent liabilities
   The Group’s operations are located in Nigel and is in close
   proximity to the Blesbokspruit watercourse (the Blesbokspruit
   watercourse is classified as a RAMSAR site in terms of the
   RAMSAR convention on Wetlands of International Importance). The
   precise particulars of the operation’s proximity to the
   watercourse still needs to be formally delineated by a wetland
   specialist.

   However, considering the current location of the Group’s
   operations and the potential movement of groundwater and
   drainage towards the Blesbokspruit watercourse, and allowing
   for the current rehabilitation approach that was consistently
   applied for Vlakfontein, Plant 1 and 3 as well as Portion 27,
   further analysis and monitoring would be required in assessing
   the potential future impact on water quality that might occur,
   after the closure.

   The proximity assessment and results from the water monitoring
   are required to assess and confirm a justifiable approach (as
   required by the National Water Act) that does not pose a long-
   term water quality-related risk at eventual quarry closure. In
   addition, the nature and extent for the redirection of surface
   run-off still need to be fully understood. The cost
   determination of water quality-related effects and water use
   requirements (in terms of the National Water Act) remain
   uncertain at this stage and are not currently reasonable
   quantifiable.

   Additional information that is obtained from further studies
   and monitoring could result in future obligations that would
   require the Group to recognise additional cost provisions for
   environmental rehabilitation.

6. OTHER LEGAL AND REGULATORY REQUIREMENTS
   On 16 May 2019, the auditors reported reportable irregularities
   to the Independent Regulatory Board of Auditors in respect of
   non-compliance with the Income Tax Act, No 58 of 1962, and the
   Companies Act, No 71 of 2008. The particulars of the reportable
   irregularities relate to the following instances:
   - non-submission of annual tax returns, as required by the
     Income Tax Act, No 58 of 1962;
   - non-compliance with section 30 of the Companies Act in terms
     of preparing and approving of the statutory annual financial
     statements within six months after the end of its financial
     year.

   These non-compliances originated in the time of the provisional
   liquidation of Brikor and resultant cash flow constraints on
   the Group.

   The directors are aware of the above and are in the process of
   taking corrective steps, particularly since the provisional
   liquidation of Brikor has been lifted to ensure that the
   relevant non-compliances are adequately addressed. Full
   provision has been made in the consolidated financial
   statements for any related amounts due. All provisional income
   tax returns have been submitted and paid as at the date of
   signature of the report.

   Since 2018, the Group has finalised the following statutory
   individual annual financial statements and submitted the
   following tax returns:
   Ilangabi Investments 12 (Pty) Ltd: 2013, 2014, 2015, 2016 and
   2017
   Holding company: 2013, 2014 and 2015

   The remaining outstanding individual statutory annual financial
   statements and tax returns are as follows:
   Ilangabi Investments 12 (Pty) Ltd: 2018
   Holding company: 2016, 2017 and 2018.

7. DIRECTORS’ EMOLUMENTS
                                                2019       2018
                                               R’000      R’000
   EXECUTIVE
   Directors
   Short-term employee benefits                4 895      4 292
   Post-employment benefits                      236        194

   Prescribed officers
   Short-term employee benefits                 1 043     2 553
   Post-employment benefits                        27       107

   NON-EXECUTIVE
   Directors
   Short-term employee benefits                 2 288     2 499

BRIKOR LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013247/06
JSE code: BIK
ISIN: ZAE000101945
(“Brikor” or “the Group” or “the Company”)

DIRECTORS:
Allan Pellow (Chairperson)#
Peter Moyanga (Lead Independent Director)#
Garnett Parkin (Chief Executive Officer)
Laura Craig (Financial Director)
Mamsy Mokate#
Collen Madolo#
AP van der Merwe*
* Non-executive
# Independent non-executive

REGISTERED ADDRESS:
1 Marievale Road, Vorsterskroon, Nigel 1490

Postal address:
PO Box 884, Nigel 1490

Telephone: (011) 739 9000
Facsimile: (011) 739 9021

COMPANY SECRETARY:
Fusion Corporate Secretarial Services (Pty) Ltd

TRANSFER SECRETARIES:
Computershare Investor Services (Pty) Ltd

AUDITORS:
KPMG Inc.

DESIGNATED ADVISER:
Exchange Sponsors (2008) (Pty) Ltd
These results and an overview of Brikor are available at
www.brikor.co.za

Date: 14/06/2019 04:03:00 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.

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