Brikor lifts profit to R11m despite liquidation threat four years ago

SUSPENDED construction material supplier Brikor lifted attributable profit from continuing operations to R11 million in the six months to August 31 from R2.1m, in spite of being in provisional liquidation four years ago and the depressed state of the construction industry.

In a trading statement for the period to August, Brikor said it increased revenue by 8.1 percent to R166.1m in the six-month period. Net asset value rose 19 percent to 12.5 cents per share and net tangible asset value grew 32.2 percent to 7.8c per share. The share price was suspended at 9c a share.

Headline earnings per share increased by 275 percent to 1.5c per share. There were hopes to get the suspension lifted in the near future, a spokesperson said. Chief executive Garnett Parkin said the interim figures were a result of “stringent operational streamlining of our internal processes.”

“We decided to develop the group’s capacity to produce our own bricks and stopped buying-in bricks from third parties. We did this by increasing labour shifts. This resulted in a net saving of R1m, despite inflationary increases and increased costs associated with expanding internal capacity,” said Parkin. The crisis in construction has resulted in a number of listed companies applying for business rescue, including Group Five, Basil Read and Esor, while Aveng has experienced serious difficulties. The low infrastructure spend has also led to large scale retrenchments.

The competitive environment put strain on selling prices in the bricks segment. But the coal segment experienced the opposite effect, with the increasing demand yielding higher prices. Gross profit for the coal segment increased by 63.2 percent to R27.9m, as a result of the streamlining of the environmental rehabilitation via rental of bulldozers.

The changes to business operations had yielded substantial growth for Brikor, he said. It had built the confidence of the workforce, not only because of the extra shifts, but there had also been considerable investment in staff training. “The serious setbacks we experienced in 2013 meant we needed to re-evaluate the business and to become more innovative, which is now paying off,” said Parkin.

Brikor yesterday also announced the appointment of four new non-executive directors to its board following the end of term of office of previous incumbents.

The group announced the appointment of Norman Hornby, Dries Ferreira, Steve Naude and Tanya Greeff.