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Unaudited condensed consolidated interim results
Mazor Group Limited
('Mazor' or 'the company' or 'the group')
(Incorporated in the Republic of South Africa)
Registration number: 2007/017221/06
Share code: MZR ISIN: ZAE000109823
UNAUDITED CONDENSED
CONSOLIDATED INTERIM RESULTS
for the six months ended 31 August 2012
OPERATIONAL HIGHLIGHTS
Revenue up 83%
Headline earnings per share up 121.5%
Acquisition of the remaining 50% of HBS
Significant contracts secured in all divisions
Increased margins
Consolidated Condensed Statement of
Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 2012 31 August 2011 29 February 2012
R R R
Revenue 210 756 512 115 433 299 233 413 418
Cost of sales (162 525 063) (94 851 252) (188 994 539)
Gross profit 48 231 449 20 582 047 44 418 879
Other income 15 011 764 79 165 281 403
Operating expenses (45 940 626) (20 143 593) (42 189 799)
Operating profit 17 302 587 517 619 2 510 483
Investment revenue 1 320 601 1 870 488 3 665 767
Income from equity-accounted
investments 498 311 1 103 127 2 632 923
Finance costs (912 940) (515 599) (1 047 900)
Profit before taxation 18 208 558 2 975 635 7 761 273
Taxation (987 167) (862 966) (1 960 484)
Total comprehensive income
for the period 17 221 391 2 112 669 5 800 789
Number of shares in issue 121 501 553 121 501 553 121 501 553
Weighted average number of shares 118 658 716 120 803 852 120 122 874
Basic and diluted earnings
per share (cents) 14.5 1.75 4.8
Consolidated Condensed Statement of Cash Flows
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 2012 31 August 2011 29 February 2012
R R R
Cash flows from operating activities
Cash utilised for operations 4 147 049 3 764 917 (12 854 380)
Interest income 1 209 846 1 870 488 3 619 655
Finance costs (912 940) (515 599) (1 047 900)
Tax paid (2 134 756) (1 989 616) (3 329 944)
Dividends paid (1 899 389) (3 391 193) (3 374 297)
Net cash flow from operating activities 409 810 (261 003) (16 986 866)
Cash flows from investing activities
Purchase of property, plant
and equipment (9 324 633) (3 689 049) (9 362 653)
Proceeds from disposal of plant
and equipment 628 236 415 785 720 664
Acquisition of treasury shares (1 152 804) (3 334 161)
Investment in joint venture acquired (1 350 973)
Cash inflow on acquisition of subsidiary 4 213 400
Proceeds from disposal of listed shares 866 779 867 788
Increase in other financial assets (2 507 077)
Increase in loan to equity-
accounted investments (2 104 258) (1 500 000)
Net cash flow from investing activities (7 071 449) (6 933 145) (12 608 362)
Cash flows from financing activities
Proceeds from other financial liabilities 4 482 883 504 652 2 872 743
Net cash flow from
financing activities 4 482 883 504 652 2 872 743
Decrease in cash and cash
equivalents for the year (2 178 757) (6 689 496) (26 722 485)
Cash and cash equivalents at the
beginning of the year 41 662 809 68 385 294 68 385 294
Cash and cash equivalents at
the end of the year 39 484 052 61 695 798 41 662 809
Consolidated Condensed Statement of
Changes in Equity
Share Share Retained Total
capital premium income equity
R R R R
Balance at 1 March 2011 1 211 80 278 737 142 215 681 222 495 629
Changes in equity
Total comprehensive
income for the period 5 800 789 5 800 789
Treasury shares acquired (25) (3 334 136) (3 334 161)
Dividends paid (3 374 297) (3 374 297)
Balance at
29 February 2012 1 186 76 944 601 144 642 173 221 587 960
Changes in equity
Total comprehensive
income for the period 17 221 391 17 221 391
Dividends paid (1 899 389)* (1 899 389)
Balance at 31 August 2012 1 186 76 944 601 159 964 175 236 909 962
* A net dividend of 1.381 cents per share was paid on 11 June 2012 (2.8 cents per share
on 20 June 2011)
Consolidated Condensed Statement of
Financial Position
Unaudited Unaudited Audited
as at as at as at
31 August 2012 31 August 2011 29 February 2012
R R R
Assets
Non-current assets
Property, plant and equipment 71 099 081 61 118 718 63 376 590
Intangible assets 28 396 200 8 396 200 8 396 200
Other financial assets 72 980 4 142 564 1 357 458
Equity-accounted investments 1 860 469 25 055 877 26 585 674
Deferred tax 10 427 416 8 964 510 9 752 266
111 856 146 107 677 869 109 468 188
Current assets
Inventories 98 598 172 37 142 532 49 367 512
Loans to equity-accounted investments 2 114 257 2 517 076 1 556 111
Construction contracts and receivables 34 360 000 20 639 424 19 084 969
Current tax receivable 1 223 499 837 879 438 506
Trade and other receivables 56 809 180 24 113 990 29 834 610
Cash and cash equivalents 41 699 272 66 364 512 47 836 581
234 804 380 151 615 413 148 118 289
Total assets 346 660 526 259 293 282 257 586 477
Equity and liabilities
Equity
Share capital 1 186 1 202 1 186
Share premium 76 944 601 79 125 942 76 944 601
Retained income 159 964 175 140 937 157 144 642 173
236 909 962 220 064 301 221 587 960
Liabilities
Non-current liabilities
Other financial liabilities 32 936 226 3 702 826 5 241 092
Deferred tax 64 350 388 174 474 337
33 000 576 4 091 000 5 715 429
Current liabilities
Other financial liabilities 17 643 901 2 568 378 3 398 203
Current tax payable 59 409
Trade and other payables 56 890 867 27 900 889 20 651 704
Bank overdraft 2 215 220 4 668 714 6 173 772
76 749 988 35 137 981 30 283 088
Total liabilities 109 750 564 39 228 981 35 998 517
Total equity and liabilities 346 660 526 259 293 282 257 586 477
Consolidated Condensed Segment Report
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 2012 31 August 2011 29 February 2012
R R R
Segment revenue external
Aluminium 85 177 883 21 937 001 29 528 757
Steel 46 540 619 40 781 454 80 272 601
Glass 79 038 010 52 714 844 123 612 060
Corporate
210 756 512 115 433 299 233 413 418
Segment revenue internal
Aluminium 600 877 1 701 300
Steel
Glass 17 882 292 16 713 130 33 530 486
Corporate 1 770 000 1 460 000 2 930 000
20 253 169 18 173 130 38 161 786
Segment result operating profit
Aluminium 15 812 885 (590 941) (5 121 477)
Steel 328 217 3 272 946 10 037 004
Glass 1 293 955 (2 756 319) (1 780 207)
Corporate (132 470) 591 933 (624 837)
17 302 587 517 619 2 510 483
Segment assets
Aluminium 113 763 743 57 865 614 48 222 964
Steel 62 729 336 71 154 337 60 383 848
Glass 157 764 557 116 837 110 137 595 200
Corporate 12 402 890 13 436 221 11 384 465
346 660 526 259 293 282 257 586 477
COMMENTARY
Introduction
The unaudited condensed consolidated interim results for the six months to 31 August 2012 ('the period') reflect improvements in
the group's market conditions. Contracts secured across all divisions herald the anticipated market turnaround. The macroeconomic
environment proved more favourable with the market finding equilibrium after rationalisation in the sector.
In line with Mazor's expansion and diversification strategy the group acquired the remaining 50% of HBS Aluminium Systems (Proprietary)
Limited ('HBS') (see 'Acquisitions' below).
Basis of preparation
The unaudited condensed consolidated interim results have been prepared in compliance with the disclosure requirements of IAS 34:
Interim Financial Reporting, the recognition and measurement requirements of the International Financial Reporting Standards ('IFRS'),
the AC 500 Standards and the South African Companies Act, No. 71 of 2008 and comply with the JSE Listings Requirements. The
accounting policies and methods of computation applied in the preparation of these unaudited condensed consolidated interim financial
statements are consistent with those applied in the audited annual financial statements for the year ended 29 February 2012.
These unaudited condensed consolidated interim results were authorised for issue by the board of directors on 5 November 2012.
The unaudited condensed consolidated financial statements for the six months ended 31 August 2012 have been prepared under the
supervision of the Financial Director, Ms L Mazor CA(SA) and have not been reviewed or audited by the company's auditors.
These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited annual financial
statements for the year ended 29 February 2012.
Group profile
Mazor Steel designs, supplies and erects structural steel frames.
Mazor Aluminium designs, manufactures and installs aluminium doors, windows, shopfronts, facades and balustrades for major blue-
chip construction groups. Newly-acquired HBS augments the division's offering with a wide range of fenestration systems and accessories.
The Glass division comprises Compass Glass and Compass Glass SA, which manufacture and distribute laminated and toughened
safety glass and double-glazed units.
The group has a strong national presence across Gauteng, KwaZulu-Natal and the Eastern Cape in addition to its historical base in the
Western Cape.
Review of operations
Delays experienced by developers in securing project finance hampered expected performance at Mazor Steel in the six months under
review but new contracts gained are expected to more than compensate by year-end.
Mazor Aluminium continued to build on the improving market sentiment and was further bolstered by securing significant contracts
during the period.
Glass recorded increases in volumes, remaining on track to meet the anticipated growth rate per annum. During the period the division
benefited from expansion of its premises, including the purchase of new premises in Gauteng post period-end, and the augmentation of
its capacity with new equipment. This underpins Glass' position in the market and ensures the capacity to capitalise on increased demand
spurred by the new building legislation. Glass is increasingly considered a high-value product as an energy-efficient building solution.
Further to the SENS announcement on 4 April 2012 relating to the purchase of the property in Gauteng for the glass operations, transfer
of the property was effected on 28 September 2012. The purchase consideration of R12.9 million including VAT was settled through a
combination of cash reserves and a bond over the property.
Financial results
Revenue was up by 82.7% to R210.8 million from R115.4 million, supported by increases in all divisions. Mazor Steel was up 14.1%
to R46.6 million, Mazor Aluminium was up 288.3% to R85.2 million, and Glass was up 49.9% to R79 million. On a like-for-like basis
compared to the comparative period, and excluding the fair value adjustment and gain on bargain purchase that arose on the HBS
acquisition, operating profit increased to R4.7 million from R0.5 million.
As a result of the acquisition of the remaining 50% of HBS, Mazor accounted for 100% of the revenue and earnings from HBS, whereas
in the comparative period the group equity accounted the investment in HBS.
Earnings per share increased from 1.75 cents per share in the comparative period to 14.5 cents per share. Headline earnings adjusted
for the fair value adjustment and gain on bargain purchase that arose on the acquisition of the remaining 50% of HBS increased on the
comparative period from 1.72 cents per share to 3.81 cents per share.
Reconciliation between earnings and headline earnings:
Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended
31 August 2012 31 August 2011 29 February 2012
R R R
Earnings attributable to ordinary shareholders 17 221 391 2 112 669 5 800 789
Adjusted for:
IFRS 3 fair value adjustment (included in other income) (9 845 054) - -
Gain on bargain purchase (included in other income) (2 768 542) - -
Gain on disposal of property, plant and equipment (119 340) (51 929) (61 925)
Tax effect thereof 33 415 14 540 17 339
Headline earnings 4 521 870 2 075 280 5 756 203
Basic and diluted headline earnings per share (cents) 3.81 1.72 4.79
Acquisitions
As announced on 3 September 2012, Mazor acquired the remaining 50% interest in HBS with effect from 1 March 2012 for a total
purchase price of R33.7 million which includes a contingent liability of R0.9 million. The contingent liability depends on the recoverability
of long outstanding short term assets and is expected to range between R0.2million and R1.5 million.
The gain on bargain purchase is due to the difference between the negotiated consideration and the fair value of the assets and liabilities
concerned.
HBS was previously recognised as a joint venture. The business markets and supplies a wide range of fenestration systems to the
South African residential, commercial and industrial markets through branches in Johannesburg, Cape Town, Durban and Port Elizabeth.
HBS contributed revenue of R62.4 million and attrituble net profit of R2.49 million for the period ended 31 August 2012.
The fair value of the assets and liabilities at the acquisition date were as follows:
Property, plant and equipment 2 443 813
Intangible asset 20 000 000
Inventories 32 681 580
Fair value of trade receivables 31 222 031
Gross contractual amounts receivable 31 746 710
Provision for doubtful debts (524 679)
Current financial liabilities (5 353 061)
Trade and other payables (13 150 627)
Current tax receivable 222 840
Deferred taxation 559 108
Cash and cash equivalents 4 213 400
72 839 084
Gain on bargain purchase (2 768 542)
Total consideration 70 070 542
Total Consideration
Cash 0
Equity 0
Liability 33 651 000
Fair value of investment previously held 36 419 542
70 070 542
Cashflow on acquisitions
Cash consideration paid 0
Cash acquired 4 213 400
4 213 400
Dividend declaration
In line with group policy, no interim dividend has been declared for the period.
Subsequent events
Save as disclosed herein, no material events have occured between 31 August 2012 and the date of this report.
Prospects
Mazor is confident that macro-economic conditions will continue to improve, with big improvements in volumes and margins. Going
forward the group intends to build on market gains driving margin expansion and capturing more substantial market share. Demand is
healthy and is expected to remain positive.
The group is well-positioned with a broad presence across South Africa, fast expanding product range and established capability to
benefit from the current and future market uptick. Mazor will target the higher margin work as it becomes available.
Acquisitions in line with current offerings will be considered.
Appreciation
We thank all directors, managers and staff for their tenacity and drive which contributed to the group's performance. We further extend
our appreciation to all our shareholders, business associates and loyal customers for their unwavering support.
Forward-looking statements
This announcement contains certain forward-looking statements with respect to the financial condition and results of the operations
of Mazor Group Limited 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
Chairman CEO
6 November 2012
Mazor Group Limited
('Mazor' or 'the company' or 'the group') (Incorporated in the Republic of South Africa)
Registration number: 2007/017221/06
Share code: MZR ISIN: ZAE000109823
Directors: M Kaplan (Chairman)*^, R Mazor (CEO), L Mazor (Financial Director), S Mazor, A Groll*^, F Boner*^, A Varachhia*, A Darko*^
* Non-executive director ^ Independent
Company secretary: Liat Mazor
Registered office: 8 Monza Road, Killarney Gardens, 7441, (PO Box 60635, Table View, 7439)
Sponsor: Bridge Capital Advisors (Pty) Limited, 2nd Floor, 27 Fricker Road, Illovo Boulevard, Illovo 2196 (PO Box 651010, Benmore, 2010)
Transfer Secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051,
Marshalltown, 2107)
www.mazorgroup.co.za
Date: 06/11/2012 04:00:00 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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