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Financial results for the six months ended 31 August 2024 -
Short-form announcement
BRIKOR LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013247/06)
JSE Share code: BIK ISIN: ZAE000101945
("Brikor" or the "Company" or the "Group")
FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2024 -
Short-form announcement
FINANCIAL HIGHLIGHTS
31 August 31 August
2024 2023 Change
R'm R'm %
Revenue 224,5 190,1 18,1
EBITDA 25,2 40,4 (37,6)
EPS (cps) 0,9 2,5 (64,0)
HPS (cps) 1,1 2,7 (59,3)
NAV (cps) 14,9 15,4 (3,2)
NTAV (cps) 12,8 12,6 1,6
Note: No dividends have been declared for the six months ended 31
August 2024 or 31 August 2023.
Revenue increased to R224,5 million (H1 F2024: R190,1 million) for
the reporting period, with the Group realising a profit before
earnings from its associate of R5,6 million (H1 F2024: R13,1
million). The investment in associate contributed positive returns
of R2,2 million (H1 F2024: R7,2 million) to the profit for the
reporting period. Profit for the reporting period decreased to
R7,8 million (H1 F2024: R20,2 million). The decrease in profit is
attributable to a decrease in profit realised by the Coal segment
as well as a decrease in return from the investment in associate.
Overall, gross profit decreased by 26,6% to R38,3 million (H1
F2024: R52,1 million) with the gross profit percentage decreasing
to 17,0% (H1 F2024: 27,4%). Gross profit decreased as a result of
the decrease in gross profit by the Coal segment as noted below.
The Group realised an operating profit before interest, taxation
and earnings from associate of R16,4 million (H1 F2024: R26,8
million).
The Bricks segment realised an operating profit before interest
and taxation of R16,5 million (H1 F2024: R17,1 million), whilst
the Coal segment realised an operating loss before interest and
taxation of R0,1 million (H1 F2024: operating profit before
interest and taxation of R9,8 million).
Other income, administrative expenses, distribution and other
expenses decreased by 13,5% in comparison to the previous
corresponding reporting period.
During the previous reporting period, administrative expenses
included professional, legal and secretarial fees incurred in
respect of the acquisition of securities by Nikkel Trading 392
(Pty) Ltd, the offer to minorities as well as the Contract Mining
and Coal Purchase Agreement. Current administrative expenses do
not include these additional costs.
Distribution expenses decreased in comparison to the previous
reporting period as a result of the Contract Mining and Coal
Purchase Agreement, whereby the costs previously incurred by the
Coal segment have been transferred to the service provider.
Major capital investments made by the Group during the reporting
period amounted to R3,9 million, which related to right-of-use
assets acquired through lease agreements with Manitou.
During the reporting period, the Group disposed of right-of-use
assets amounting to R15,6 million held under lease agreement with
Boutique Leasing Company (Pty) Ltd.
BRICKS SEGMENT
Revenue in the Bricks segment decreased by 13% to R115,2 million
(H1 F2024: R132,4 million). The decrease in revenue was as a
direct result of a decline in market conditions. Projects in the
construction sector only started with significant off-take during
June/July 2024 in comparison to the previous reporting period
where projects started from March 2023.
Gross profit in the Bricks segment decreased by 11,7% to R36,0
million (H1 F2024: R40,8 million) with the gross profit percentage
increasing to 31,2% (H1 F2024: 30,8%). Gross profit decreased as a
result of the decrease in revenue. As a result of the decline in
market conditions, management implemented various cost-saving
initiatives as well as production efficiencies to combat the
decline in revenue. Even though the gross profit decreased, these
cost-saving initiatives contributed to an increase in the gross
profit percentage.
COAL SEGMENT
Revenue in the Coal segment increased by 89,9% to R109,3 million
(H1 F2024: R57,6 million). The increase in revenue was as a result
of the implementation of the Contract Mining and Coal Purchase
Agreement, effective 1 November 2023. In terms of the agreement
all coal mined by the service provider is also sold to the service
provider and, hence, the resultant increase in revenue.
Gross profit in the Coal segment decreased to R2,3 million (H1
F2024: R11,4 million) with the gross profit percentage decreasing
to 2,1% (H1 F2024: 19,7%). During the six months ended 31 August
2023 significant stripping activities were performed, which
resulted in an increase in coal work-in progress. The increased
work-in-progress resulted in a credit to cost of sales, which
resulted in higher gross profits for the Coal segment during the
previous reporting period. Since the implementation of the
Contract Mining and Coal Purchase Agreement, effective 1 November
2023, gross profit is limited to the R20/tonne received by the
Coal segment on tonnes mined.
CORPORATE ACTIVITY
Corporate activity during and subsequent to the reporting period
comprised:
UPDATE ON THE CONTRACT MINING AND COAL PURCHASE AGREEMENT
The Contract Mining and Coal Purchase Agreement ("the Agreement")
was approved by shareholders on 18 October 2023, effective 1
November 2023.
Salient clauses of the Agreement are as follows:
- The Service Provider (Ilangabi Colliery (Pty) Ltd, previously
known as TCQ Mining (Pty) Ltd), shall, subject to the Ramp-Up
Period (a period commencing on the Effective Date and for a
period of 6 (six) consecutive months), produce the Tonnage
Target of not less than 150 000 (one hundred and fifty
thousand) tonnes of clean run-of-mine coal in each month (the
"Underpin Tonnage Target");
- The Service Provider shall mine no less than a total of 400 000
(four hundred thousand) tonnes of coal during the Ramp-Up
Period;
- The Service Provider will be obliged to ensure that the
services are rendered in such a manner that (at least) the
Underpin Tonnage Target is met at all times; and
- If the Service Provider fails to meet the Underpin Tonnage
Target due to circumstances or events that the Service Provider
believes are out of its control (excluding an Event of Force
Majeure), the Service Provider shall notify the Company as soon
as reasonably possible.
During the six-month reporting period, the Service Provider failed
to meet the tonnage requirements for the Ramp-Up Period as well as
the Underpin Tonnage Target, as a result of delays in obtaining
secured off-take agreements for coal mined. The representatives of
the Service Provider indicated that it is not commercially viable
to mine the required tonnages without having confirmed off-take
agreements in place.
The main reason for not having confirmed off-take agreements in
place was as a result of the delay in obtaining a water use
licence for the Group's mining rights, being Vlakfontein and
Grootfontein. The Brikor Board of Directors agreed that it made
commercial sense to defer penalties as a result of not meeting the
Underpin Tonnage Target as the delay in obtaining a water use
licence was an event which was not under the control of the
Service Provider. It was agreed that the Group will, therefore,
only invoice for actual coal mined.
The Service Provider experienced significant cash flow constraints
as a result of not having confirmed off-take agreements in place.
This had a knock-on effect on the ability of the Service Provider
to repay its debt to the Brikor Group in terms of the Agreement.
The Brikor Board of Directors has put the Service Provider on
notice regarding the outstanding balances.
Subsequent to the reporting period, the Service Provider repaid a
substantial portion of the outstanding amounts owing to the Brikor
Group and confirmed that they will endeavour to ensure that any
current amounts due are repaid as per the terms of the Agreement.
The water use licence has also been awarded subsequent to the
reporting period. It is anticipated that the Service Provider will
be in a better position to negotiate formal off-take agreements,
which will enable the Service Provider to comply with the Underpin
Tonnage Target as well as the payment terms as per the Agreement.
The Board of Directors will continue to ensure that the Service
Provider complies with the terms of the Agreement and that the
Agreement is managed in the best interest of all the Group's
stakeholders.
PROPOSED SCHEME OF ARRANGEMENT AND DELISTING FROM THE JSE
As announced on SENS on 3 July 2024, shareholders were advised
that the Board of Directors of Brikor was considering proposing a
scheme of arrangement in terms of section 114(1)(e), read with
section 115, of the Companies Act, No 71 of 2008, as amended,
between Brikor and its shareholders (other than Nikkel Trading 392
Proprietary Limited and the Brikor Share Incentive Scheme), in
terms of which the shares of the remaining shareholders in Brikor
will be repurchased by Brikor. Subsequent to the scheme becoming
operative, Brikor shares were to be delisted from the JSE in terms
of paragraph 1.17(b) of the JSE Listings Requirements.
On 15 August 2024, shareholders were advised that in accordance
with Companies Regulation 111(4) of the Takeover Regulation Panel,
Brikor is mandated to furnish an unconditional and irrevocable
bank guarantee from a South African registered bank, assuring the
full settlement of the cash consideration as per the offer. The
Company is currently in the process of terminating the Brikor
Share Incentive Scheme Trust, causing a delay in obtaining bank
funding for the bank guarantee. Acknowledging this delay, the
Brikor Board has decided to defer the proposed scheme of
arrangement until the issues related to the Brikor Share Incentive
Scheme Trust are resolved. At present, there is no specific
timeline for achieving these outcomes. Should the circumstances
change, shareholders will be duly notified. However, for the time
being, the decision by the Brikor Board is to indefinitely defer
the matter.
SHORT-FORM STATEMENT
This short-form announcement is the responsibility of the
directors. It is only a summary of the information contained in
the full announcement and does not contain full or complete
details.
Any investment decision should be based on the full announcement
accessible from 28 November 2024 via the JSE link and also
available on the Company's website at
https://brikor.net/wp-content/uploads/2024/11/INT24.pdf.
Copies of the full announcement may also be requested by
contacting Joaret Botha by email at joaret@brikor.net and are
available for inspection at the Company's registered office at no
charge, weekdays during office hours.
The JSE link is as follows:
https://senspdf.jse.co.za/documents/2024/jse/isse/bik/INT24.pdf.
28 November 2024
Nigel
Designated adviser
Exchange Sponsors
Date: 28-11-2024 02:00:00
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