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MZR - Mazor Group Limited - Audited condensed consolidated financial results

Release Date: 14/05/2008 07:01
Code(s): MZR
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MZR - Mazor Group Limited - Audited condensed consolidated financial results for the year ended 29 February 2008 Mazor Group Limited (Formerly Main Street 590 (Pty) Limited) ("Mazor" or "the company") (Incorporated in the Republic of South Africa) Registration number: 2007/017221/06 Share code: MZR ISIN: ZAE00109823 HIGHLIGHTS - Successful listing on AltX - Prelisting forecasts exceeded - Turnover up y-o-y 24.6% to R177.1 million - Operating margin up y-o-y to 35.8% - Core HEPS of 47.2 cents - Enhanced productivity and capacity - Geographical expansion into growth markets AUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS for the year ended 29 February 2008 Commentary The directors are pleased to present the audited condensed consolidated financial results for the year ended 29 February 2008 ("the year"), the maiden results of the company since successfully listing on the Alternative Exchange (AltX) of the JSE Limited in November 2007. The private placement preceding the listing was significantly oversubscribed, reflecting market confidence in Mazor`s prospects. Mazor`s maiden annual financial results have exceeded forecasts set out in the company`s prelisting prospectus in all material respects, and in addition reflect strong growth year-on-year. Operational and geographic expansion initiatives were realised during the year, positioning the group for further growth. Group profile Mazor currently comprises two key divisions - Mazor Steel which designs, supplies and erects structural steel frames and Mazor Aluminium which designs, manufactures and installs aluminium structures such as doors, windows, shop fronts, facades and balustrades for major blue-chip construction groups. Notably Mazor Aluminium is South Africa`s leading specialist in glass facade cladding. With the acquisition of Independent Glass CC and Independent Glass George CC (see "Acquisitions" below) the group has expanded its offering to include glass. The group has contributed to many of the Western Cape`s most prestigious construction projects including the Arabella Sheraton Grand Hotel, which utilised Mazor`s specialist capability for glass facade cladding, GrandWest Casino, Canal Walk Shopping Centre, V&A Waterfront, the South African Large Telescope (SALT) and Mandela Rhodes Place. Financial results The 24.6% growth in turnover to R177.1 million from R142.1 million for the previous year (which exceeded the prelisting forecast of R161.8 million by 9.5 %), outstripped the 17.9% increase in operating costs from R96.7 million to R114.1 million. Increased efficiencies as a result of the investment in sophisticated plant together with strict cost control contributed to improved operating margins, which increased to 35.8% from 32%. Operating profit of R63.5 million was 39.2% up on R45.6 million at February 2007 and 24.7% higher than the pre-listing forecast of R50.9 million. A share-based payment charge of R13.9 million as a result of the BEE transaction was made during the year (see "BEE" below). Core headline earnings amounted to R50.1 million, translating into core headline earnings per share (HEPS) of 47.2 cents. This equates to a 38.8% increase on the previous year and is 19.8% higher than the prelisting forecast of 39.4 cents per share. The share-based payment charge is purely an accounting entry as required in terms of IFRS 2 and has no effect on the cash flows or net asset value of the company. The effective tax rate of 49.51% is due to the share-based payment charge, which is non-deductible for taxation purposes, and a R6 million charge for dividend tax paid in November 2007 in respect of a dividend declared as a result of a group restructure prior to listing. This is higher than the effective tax rate in the prospectus of 29% as the prospectus excluded both the dividend charge and the share-based payment. The balance sheet remains strong, supported by healthy cash flows. Cash on hand at year-end amounted to R130.2 million compared with R29.4 million at February 2007. Operational review Both divisions performed exceptionally well during the year as a result of continued buoyant trading conditions and escalating demand for the group`s products. Automation at Mazor`s manufacturing facilities was significantly advanced, which enhanced productivity in the manufacture of components and sub- assemblies. The improved technology has positioned the group to continue expanding and optimising the range of products and product mix, and to increase levels of output to accelerate growth and increase market share. Major projects completed in the Western Cape during the year included the Convention Towers, Massmart Warehouse, Northgate Island, Spar Distribution Centre, V&A Link Mall and Zevenwacht Mall. During the year Mazor embarked on a programme of geographical expansion in line with the group`s prelisting strategy. The base of operations was extended from the Western Cape to growth markets in Durban and Port Elizabeth. Initial indications of trading in these regions are promising. Acquisitions On 3 March 2008, Mazor acquired the businesses of Independent Glass CC and Independent Glass George CC for an aggregate purchase consideration of R1.4 million. The businesses have operations in Cape Town and George and are poised to enter the market in Gauteng. While they are exclusively a distributor at this stage, some manufacturing activities are being contemplated. The businesses are being integrated into the group`s operations and Mazor is currently considering further larger acquisitions in this niche market. BEE As announced on 22 November 2007, black-owned Cloudberry Investments 18 (Pty) Limited ("Cloudberry Investments") acquired 18 million shares from the two founder shareholders of the company, which amounted to 14.7% of the company`s shareholding. Mazor has established the Mazor Group Limited BEE Share Incentive Scheme to benefit black employees. The company has recently been independently assessed as BBBEE Level 6. People On listing the board of directors comprised two independent non - executive directors - A Groll and S Ozinsky - and three executive directors, all of whom are members of the Mazor family: S Mazor (Chairman and co-founder); R Mazor (CEO) and L Mazor (Financial Director). Since listing A Varachhia has been appointed as a non - executive director with effect from 22 November 2007. In addition S Mazor has stepped down from the Chairmanship in favour of independent non - executive director M Kaplan, appointed with effect from 5 February 2008. S Mazor remains an executive director of the company. On 1 April 2008 A Winkler was appointed as company secretary after the resignation of L Moller. The success of the group to date is largely attributable to the effort and commitment of a solid team. We thank our fellow directors for their insight and counsel and our management and employees for their invaluable contribution. Prospects The local construction sector continues to experience significant growth, particularly in Mazor`s target markets of high-rise commercial buildings, leisure and retail developments and similar large projects. Improved efficiencies and geographical expansion during the year have positioned Mazor to extend its recognised product range and increase market share nationally. The directors are positive about Mazor`s prospects for the year ahead and are confident of exceeding the forecasts set out in the prelisting prospectus for the year ending 28 February 2009 in the absence of any unforeseen circumstances. While organic growth is a primary objective, Mazor will continue to consider acquisition opportunities, particularly in glass. A portion of capital raised on listing will be allocated to these acquisition opportunities, a number of which are currently being assessed. In light of the energy crisis in South Africa and rising energy and commodity prices worldwide, the field of energy- optimising construction presents interesting expansion opportunities. Dividend Prior to listing as part of the restructure of the Mazor group, Mazor acquired the issued share capital of Mazor Steel and of Mazor Aluminium and a total dividend of R60 million was distributed to the shareholders of Mazor Steel and Mazor Aluminium. In line with company policy no dividend has been declared for the period since listing. A dividend is planned to be paid for the 2009 financial year. Appreciation We thank our customers for their loyal support and our associates, advisers and suppliers for their excellent service. Finally, a warm welcome to our new shareholders. Basis of preparation The audited condensed consolidated financial statements for the year ended 29 February 2008 have been prepared in compliance with International Financial Reporting Standards (IFRS), IAS 34 and the Companies Act of South Africa, 1973. The accounting policies and methods of measurement and recognition applied in preparation of these audited consolidated annual financial statements are consistent with those applied in the group`s most recent audited annual financial statements for the previous year ended 28 February 2007. Auditor`s opinion The condensed consolidated annual financial statements for the year ended 29 February 2008 have been audited by the company`s auditors, Mazars Moores Rowland. Their unqualified audit opinion is available for inspection at the company`s registered office. On behalf of the board M Kaplan R Mazor Independent Chairman CEO 14 May 2008 Directors: M Kaplan (Chairman)*, R Mazor (CEO), L Mazor (Financial Director), S Mazor, A Groll *, SM Ozinsky*, A Varachia* *Non-executive Independent 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 Transfer secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61763, Marshalltown, 2107) Company secretary: Arthur Leon Winkler, 1st Floor The Spearhead, 42 Hans Strijdom Avenue, Foreshore, Cape Town, 8001 (PO Box 7677, Roggebaai, 8012) Investor relations: Envisage Investor & Corporate Relations Group Income Statement Audited year to Audited year to 29 February 28 February Forecast 2008 2007 2008* R R R
Revenue 177 145 317 142 167 222 161 852 938 Cost of sales (106 180 890) (90 613 216) (103 323 880) Gross profit 70 964 427 51 554 006 58 529 058 Other income 437 739 183 444 6 493 Operating expenses (7 943 845) (6 15 3 146) (7 595 000) Operating profit 63 458 321 45 584 304 50 940 551 Loss on non-current assets held-for-sale (244 797) - - Share-based payment: BEE credentials (13 860 000) - - Profit before investment revenue and finance costs 49 353 524 45 584 304 50 940 551 Investment revenue 6 472 469 3 046 037 7 630 000 Finance costs (376 062) (399 172) (268 000) Profit before taxation 55 449 931 48 231 169 58 302 551 Taxation (25 457 357) (14 255 853) (16 439 000) Net profit 29 992 574 33 975 316 41 863 551 Earnings per share (cents) 28.5 34.0 39.4 Headline earnings per share (cents) 28.3 34.0 39.4 Core headline earnings per share (cents) 47.2 34.0 39.4 Calculation of headline earnings and core headline earnings Earnings attributable to ordinary shareholders 29 992 574 33 975 316 41 863 551 Adjusted for: (Profit)/Loss on disposal of property, plant and equipment (28 078) 65 152 - Loss on non-current assets held-for-sale 252 801 - - Fair value adjustment of investment property - (50 000) - Headline earnings 30 217 297 33 990 468 41 863 551 Adjusted for: Share-based payments: BEE credentials 13 860 000 - - Non-recurring item** 6 000 000 - - Core headline earnings 50 077 297 33 990 468 33 990 468 Weighted average number of shares 106 164 384 100 000 000 106 164 384 * Forecast as per prospectus dated 8 November 2007. ** Dividend tax in respect of restructure prior to listing. Group Cash Flow Statement Audited year to Audited year to
29 February 28 February 2008 2007 R R Cash flows from operating activities Cash generated from operations 50 350 918 44 259 976 Interest income 6 472 469 3 046 037 Finance costs (376 062) (399 172) Tax paid (25 051 002) (11 125 427) Dividends paid (60 000 000) (3 500 000) Net cash flow from operating activities (28 603 677) 32 281 414 Cash flows from investing activities Purchase of property, plant and equipment (3 896 691) (3 201 226) Sale of property, plant and equipment 145 486 380 314 Sale of financial assets 48 812 059 (26 244 352) Sale of non-current asset held-for-sale 5 155 203 - Net cash flow from investing activities 50 216 057 (29 065 264) Cash flows from financing activities Proceeds on share issue 81 787 121 - Repayment of other financial liabilities (2 600 841) 982 188 Net cash flow from financing activities 79 186 280 982 188 Increase in cash and cash equivalents for the year 100 798 660 4 198 338 Cash and cash equivalents at beginning of year 29 483 017 25 284 679 Cash and cash equivalents at end of year 130 281 677 29 483 017 Group Balance Sheet Audited as at Audited as at
29 February 28 February 2008 2007 R R ASSETS Non-current assets Property, plant and equipment 10 359 399 8 050 881 10 359 399 8 050 881 Current assets Inventories 5 656 627 1 626 529 Other financial assets - 48 812 059 Construction contracts and receivables 23 547 784 14 329 967 Short-term receivables 1 788 666 589 594 Cash and cash equivalents 130 281 677 29 483 017 161 274 754 94 841 166 Non-current assets held-for-sale - 5 400 000 Total assets 171 634 153 108 292 047 Equity and Liabilities Equity Share capital 1 221 200 Share premium 81 786 100 - Retained income 64 373 269 80 520 695 146 160 590 80 520 895 Liabilities Non-current liabilities Other financial liabilities 829 199 1 703 975 Deferred tax 775 515 1 571 595 1 604 714 3 275 570 Current liabilities Other financial liabilities 1 496 066 3 222 131 Current tax payable 10 430 377 9 227 942 Trade and other payables 11 942 406 12 045 509 23 868 849 24 495 582
Total liabilities 25 473 563 27 771 152 Total equity and liabilities 171 634 153 108 292 047 Group Statement of Changes in Equity Share Share Retained Total
capital premium income equity R R R R Balance at 1 March 2006 200 - 50 045 379 50 045 579 Changes in equity - Profit for the year 33 975 316 33 975 316 Dividend paid (3 500 000) (3 500 000) Balance at 1 March 2007 200 - 80 520 695 80 520 895 Changes in equity - Profit for the year 29 992 574 29 992 574 Issue of shares 1 221 88 448 779 88 450 000 Listing expenses (6 662 679) (6 662 679) Return of members` contributions (200) (200) Dividend paid (60 000 000) (60 000 000) Share-based payment: BEE credentials 13 860 000 13 860 000 Balance at 29 February 2008 1 221 81 786 100 64 373 269 146 160 590 Date: 14/05/2008 07:01:01 Supplied by www.sharenet.co.za 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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