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Summarised Results of the Audited Consolidated Annual Financial Statements for the year ended 28 February 2018
Mazor Group Limited
("Mazor" or "the company" or "the group")
(Incorporated in the Republic of South Africa)
(Registration number: 2007/017221/06)
JSE share code: MZR
ISIN: ZAE000109823
SUMMARISED RESULTS OF THE AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2018
GROUP PERFORMANCE IN LINE WITH NATIONAL ECONOMY
ALUMINIUM BUSINESS HBS CONTINUED REVENUE GAINS IN TOUGH MARKET
EMBATTLED CONSTRUCTION INDUSTRY FACING ONGOING MARGIN PRESSURE
WATER CRISIS IN WESTERN CAPE IMPACTING RESIDENTIAL SECTOR
MAZOR MAINTAINING COST CONTROL AND MANAGING STOCK LEVELS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2018 2017
R R
Assets
Non-current assets
Property, plant and equipment 85 498 308 79 856 462
Intangible asset 16 000 000 17 000 000
Deferred tax 4 105 236 3 743 963
105 603 544 100 600 425
Current assets
Inventories 108 262 086 77 840 847
Construction contracts and receivables 19 413 913 23 022 833
Other financial assets 274 653 -
Current tax receivable 525 229 426 553
Trade and other receivables 34 427 062 35 992 984
Cash and cash equivalents 56 350 699 106 458 363
219 253 642 243 741 580
Total assets 324 857 186 344 342 005
Equity and liabilities
Equity
Stated capital 44 365 231 63 473 194
Retained income 213 920 556 214 843 423
Equity attributable to shareholders of Mazor Group Limited 258 285 787 278 316 617
Non-controlling interests (3 494) -
258 282 293 278 316 617
Liabilities
Non-current liabilities
Other financial liabilities 12 695 652 3 949 921
Deferred tax 2 215 337 2 612 738
14 910 989 6 562 659
Current liabilities
Other financial liabilities 6 736 907 11 230 399
Current tax payable 269 481 510 875
Trade and other payables 37 106 518 46 458 636
Amounts due to customers 6 692 428 1 262 819
Bank overdraft 858 570 -
51 663 904 59 462 729
Total liabilities 66 574 893 66 025 388
Total equity and liabilities 324 857 186 344 342 005
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
2018 2017
R R
Revenue 426 481 905 582 845 340
Cost of sales (312 510 420) (413 992 751)
Gross profit 113 971 485 168 852 589
Other income 1 015 715 2 429 372
Operating expenses (116 942 305) (115 687 920)
Operating (loss)/profit (1 955 105) 55 594 041
Investment revenue 5 263 106 5 789 611
Finance costs (1 794 413) (2 327 784)
Profit before taxation 1 513 588 59 055 868
Taxation (2 439 949) (12 014 927)
Total comprehensive (loss)/income for the period (926 361) 47 040 941
Total comprehensive (loss)/income for the period attributable to:
Shareholders of Mazor Group Limited (922 867) 47 040 941
Non-controlling interests (3 494) -
(926 361) 47 040 941
Basic and diluted earnings per share (cents) (0.9) 43.2
NOTES TO THE SUMMARISED RESULTS
Reconciliation between earnings and headline earnings:
2018 2017
R R
(Loss)/Earnings attributable to ordinary shareholders (922 867) 47 040 941
Adjusted for:
Reversal of impairment of property, plant and equipment - (875 000)
Loss on disposal of property, plant and equipment 144 277 1 897 903
Tax effect thereof (32 318) (531 413)
Headline earnings (810 908) 47 532 431
Basic and diluted headline earnings per share (cents) (0.8) 43.6
CONSOLIDATED STATEMENT OF CASH FLOWS
2018 2017
R R
Cash flows from operating activities
Cash (utilised in)/generated from operations (20 459 433) 67 649 116
Interest income 5 181 320 5 718 058
Finance costs (1 794 413) (2 327 784)
Tax paid (3 538 692) (9 869 995)
Dividends paid - (9 266 876)
Net cash flow from operating activities (20 611 218) 51 902 517
Cash flows from investing activities
Purchase of property, plant and equipment (6 987 028) (6 270 653)
Proceeds from disposal of plant and equipment 840 023 1 373 128
Loan advanced (274 653) -
Net cash flow from investing activities (6 421 658) (4 897 525)
Cash flows from financing activities
Repayment of other financial liabilities (4 825 395) (8 030 560)
Purchase of treasury shares (3 431 771) (159 050)
Capital reduction distribution (15 676 192) -
Net cash flow from financing activities (23 933 358) (8 189 610)
(Decrease)/Increase in cash and cash equivalents for the period (50 966 234) 38 815 382
Cash and cash equivalents at the beginning of the year 106 458 363 67 642 981
Cash and cash equivalents at the end of the period 55 492 129 106 458 363
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-
Stated Retained controlling
capital income Total interests Total equity
R R R R R
Balance at 1 March 2016 63 632 244 177 069 358 240 701 602 - 240 701 602
Changes in equity
Profit for the period - 47 040 941 47 040 941 - 47 040 941
Treasury shares acquired (159 050) - (159 050) - (159 050)
Dividends paid - (9 266 876)* (9 266 876) - (9 266 876)
Balance at 28 February 2017 63 473 194 214 843 423 278 316 617 - 278 316 617
Changes in equity
Loss for the period - (922 867) (922 867) (3 494) (926 361)
Treasury shares acquired (3 431 771) - (3 431 771) - (3 431 771)
Capital reduction distribution (15 676 192)* - (15 676 192) - (15 676 192)
Balance at 28 February 2018 44 365 231 213 920 556 258 285 787 (3 494) 258 282 293
* A capital reduction distribution of 14.4 cents per share was paid on 9 June 2017 (2017: A gross dividend of 8.5 cents
per share was paid on 20 June 2016).
CONDENSED SEGMENT REPORT
2018 2017
R R
Segment revenue - external
- Aluminium 216 039 548 293 373 314
- Steel 69 524 355 133 800 550
- Glass 140 918 002 155 671 476
- Corporate - -
426 481 905 582 845 340
Segment revenue - internal
- Aluminium 312 432 787 520
- Steel - 3 918 884
- Glass 26 135 736 40 776 438
- Corporate 3 742 546 3 612 546
30 190 714 49 095 388
Segment result - operating profit
- Aluminium 1 366 431 26 758 533
- Steel (1 770 216) 10 772 254
- Glass (2 899 137) 16 357 354
- Corporate 1 347 817 1 705 900
(1 955 105) 55 594 041
Segment assets
- Aluminium 158 271 643 161 529 896
- Steel 30 954 440 58 533 220
- Glass 105 809 193 110 515 495
- Corporate 29 821 910 13 763 394
324 857 186 344 342 005
Segment liabilities
- Aluminium 23 047 071 20 389 707
- Steel 9 389 487 15 673 987
- Glass 22 311 770 24 126 422
- Corporate 11 826 565 5 835 272
66 574 893 66 025 388
COMMENTARY
INTRODUCTION
The group's performance for the year is in line with the national economy trend of negative growth in successive quarters.
Mazor's hard-won turnover and operating profit gains at the previous year-end have been eradicated by reduced business
activity due to waning business confidence and the lack of clear policy from government. All three business segments were
severely impacted in the year by the oppressive trading conditions industry-wide.
Only HBS Aluminium Systems (Pty) Ltd ("HBS"), in our Aluminium segment, continued to buck the trend and achieved
top-line growth.
While we did enjoy improved activity in the Western Cape residential sector, the temporary reprieve has since been cut
short by the ongoing water crisis in the region. The construction industry has become a very tough industry in which to do
business and we have seen an alarming increase in the number of business closures and liquidations as a result.
In order to sustain operations in this environment, Mazor has continued to streamline company costs and capacity in line
with foreseeable reduced activity over the next 24 months. All costs associated with the retrenchment exercise have been
included in the results for the year. All levels of employment were impacted, from ground staff to mid-management, in an
effort to successfully counter the macro environment and trade through to an industry uptick in the mid- to long-term.
BASIS OF PREPARATION
The summarised results of the audited consolidated annual financial statements for the group for the year ("the summarised
results") contain the information required by IAS 34 Interim Financial Reporting, and have been prepared in accordance
with the framework concepts and the measurement and recognition requirements of International Financial Reporting
Standards ("IFRS"), the SAICA financial reporting guides as issued by the Accounting Practices Committee, the Companies
Act, No 71 of 2008, and the JSE Listings Requirements.
The accounting policies and methods of computation applied in the preparation of these summarised consolidated annual
financial results are in terms of IFRS and are consistent with those applied in the most recently issued audited annual
financial statements.
The summarised results have been prepared under the supervision of the financial director, Ms L Mazor CA(SA). This
summarised report is extracted from audited information, but is not itself audited. The directors take full responsibility
for the preparation of the summarised results and that the financial information has been correctly extracted from the
underlying annual financial statements.
The consolidated annual financial statements, from which the summarised results have been derived, were audited by
the group's external auditors, Mazars, who expressed an unqualified audit opinion. This is available for inspection at the
company's registered office. That report does not necessarily cover all the information contained in this announcement.
Shareholders are therefore advised that, in order to obtain a full understanding of the nature of the auditor's work, they
should refer to the report together with the annual consolidated financial statements contained in the integrated annual
report. A copy of the full consolidated annual financial statements is available for inspection from the company secretary
at the registered office of the group. In order to request a copy, please contact Mr I Bloom on 021 981 4300 or e-mail the
request to ivor@altotrust.com.
GROUP PROFILE
The Steel division comprises Mazor Steel which designs, supplies and erects structural steel frames. The Aluminium
division comprises Mazor Aluminium which designs, manufactures and installs aluminium structures such as doors,
windows, shop fronts, facades and balustrades and includes HBS' range of fenestration systems and accessories.
The Glass division comprises the Compass Glass businesses, which manufacture and distribute laminated and toughened
safety glass and double-glazed units.
The group has a strong national presence across Gauteng and KwaZulu-Natal in addition to its historical base in the
Western Cape.
FINANCIAL RESULTS AND REVIEW OF OPERATIONS
Revenue declined 26.8% to R426.5 million (February 2017: R582.9 million). The group recorded an operating loss of
R1.9 million (February 2017: operating profit R55.6 million). A headline loss of R0.8 million resulted in a headline loss per
share of 0.8 cents compared to headline earnings of R47.5 million and HEPS of 43.6 cents at February 2017.
Segmentally, revenue declined in all three business segments, with HBS the only individual business to report year-on-year
revenue growth. The Aluminium division remained profitable, albeit 94.7% down on the previous year. Glass was unable
to hold onto its prior-year resumption of profitability and posted an operating loss and Steel reported a small operating
loss for the year.
Amounts due to customers represent income received in advance for work to be performed under construction contracts.
During the year the group, via a subsidiary, purchased two properties which it intends to develop and sell. These properties
have been classified as inventory at the reporting date. Development will commence in the 2019 financial year.
The group entered into additional instalment sale agreements mainly to finance the purchase of a new vehicle fleet and for
the financing of some plant and equipment.
At 28 February 2018, the group had issued guarantees amounting to R24.0 million compared to R35.7 million at the
previous year-end. These guarantees have arisen in the ordinary course of business and it is not expected that any loss
will arise therefrom.
SHARE TRANSACTIONS
During the year Mazor repurchased 2 153 213 of its issued ordinary shares for a total consideration of R3 431 771. The
shares were repurchased by a subsidiary of the company and are held as treasury shares.
DIRECTORATE
There were no changes to the directorate of the group during the year in review.
DIVIDEND DECLARATION
No dividend was declared for the year in light of the losses incurred by the group.
EVENTS AFTER THE REPORTING PERIOD
No material reportable events occurred between the reporting date and the date of this announcement.
PROSPECTS
Looking ahead to the next two years we remain cautious. The economy is not expected to experience any significant
relief as a clear direction for government policy has not yet materialised, even post the ANC leadership change. The
stronger Rand is further putting pressure on the economy and challenging government's ability to execute a more balanced
economic approach. The prevailing uncertainty is alienating investors and constraining business activity in the industry.
As a result, margins will remain strained until real business confidence, not newspaper headlines, reignites. In the interim
we are taking care of our house against a chaotic backdrop by reacting timeously and adapting. We are controlling costs,
proactively maintaining critical stock levels in an industry-wide stock crisis and will continue to invest in R&D both for
improved efficiencies and new product development. The success of the latter has been reflected in the popular new
products which continue to be launched in HBS.
We will continue to pursue our long-term objective of sustainable profitability irrespective of the immediate- to mid-term
economic landscape. We will ensure that we manage risk in the challenging period ahead and will continue expending all
efforts to maintain a strong operating position.
APPRECIATION
We thank our teams for their tenacity and balanced morale at a very tough time. We also thank our fellow directors for
their valuable advice in the downcycle and our business partners, suppliers, advisors, valued clients and shareholders for
their continued support.
Forward-looking statements
This announcement contains certain forward-looking statements with respect to the economy, financial condition
and results of the operations of Mazor that, by their nature, involve risk and uncertainty because they relate to events
and depend on circumstances that may or may not occur in the future. These may relate to future prospects, opportunities
and strategies. If one or more of these risks materialise, or should underlying assumptions prove incorrect, actual results
may differ from those anticipated. By consequence, none of the forward-looking statements have been reviewed or
reported on by the group's auditors.
On behalf of the board
M Kaplan R Mazor
Chairperson Chief executive officer
14 May 2018
Cape Town
Directors: M Kaplan (chairperson)*^, R Mazor (CEO), L Mazor (financial director), S Mazor, RS Schur*^,
A Groll *^, F Boner*^, A Varachhia* *Non-executive director ^Independent
Company secretary: Ivor Mark Bloom
Registered office: 8 Monza Road, Killarney Gardens, 7441 (PO Box 60635, Table View, 7439)
Sponsor: Bridge Capital Advisors (Pty) Limited, 50 Smits Road, Dunkeld, 2196
(PO Box 651010, Benmore, 2010)
Transfer Secretaries: Computershare Investor Services (Pty) Limited, Rosebank Towers,
15 Biermann Avenue, Rosebank, 2196 (PO Box 61051, Marshalltown, 2107)
Date: 15/05/2018 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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