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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').
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