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MZR - Mazor Group Limited - Audited condensed consolidated results for the year
ended 29 February 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: ZAE00109823
AUDITED CONDENSED CONSOLIDATED RESULTS
for the year ended 29 February 2012
OPERATIONAL HIGHLIGHTS
- Revenue up 25%
- Continued growth in Glass division
- New projects secured in
Aluminium division
- Construction sector upturn ahead
Consolidated Statement of Comprehensive Income
2012 2011
R R
Revenue 233 413 418 186 769 379
Cost of sales (188 994 539) (156 856 198)
Gross profit 44 418 879 29 913 181
Other income 281 403 10 052 165
Operating expenses (42 189 799) (38 278 159)
Operating profit 2 510 483 1 687 187
Investment revenue 3 665 767 8 312 772
Income from equity-accounted investments 2 632 923 1 335 810
Finance costs (1 047 900) (343 753)
Profit before taxation 7 761 273 10 992 016
Taxation (1 960 484) (1 116 196)
Total comprehensive income for the year 5 800 789 9 875 820
Number of shares in issue 121 501 553 121 501 553
Number of shares in issue (after treasury
shares) 118 658 716 121 114 053
Weighted average number of shares 120 122 874 121 100 080
Basic and diluted earnings per share (cents) 4.8 8.2
Headline Earnings
Reconciliation between earnings and headline
earnings:
Earnings attributable to ordinary shareholders 5 800 789 9 875 820
Adjusted for:
Gain on disposal of property, plant and equipment (61 925) (9 363)
Tax effect thereof 17 339 2 622
Headline earnings 5 756 203 9 869 079
Basic and diluted headline earnings per share (cents) 4.8 8.2
Consolidated Statement of Cash Flows
2012 2011
R R
Cash flows from operating activities
Cash utilised for operations (12 854 380) (5 987 289)
Interest income 3 619 655 5 312 772
Dividend income - 3 000 000
Finance costs (1 047 900) (343 753)
Tax paid (3 329 944) (14 511 434)
Dividends paid (3 374 297) (21 921 644)
Net cash flow from operating activities (16 986 866) (34 451 348)
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from (9 362 653) (12 408 574)
disposal of plant and equipment Acquisition of 720 664 211 873
treasury shares (3 334 161) -
Investment in joint ventures - (12 615 996)
Increase in listed investments - (4 142 016)
Proceeds from disposal of listed shares 867 788 -
Increase in loan to equity-accounted
investments (1 500 000) -
Net cash flow from investing activities (12 608 362) (28 954 713)
Cash flows from financing activities
Proceeds from other financial liabilities 2 872 743 2 250 104
Net cash flow from financing activities 2 872 743 2 250 104
Decrease in cash and cash equivalents for the
year (26 722 485) (61 155 957)
Cash and cash equivalents at the beginning of
the year 68 385 294 129 541 251
Cash and cash equivalents at the end of the year 41 662 809 68 385 294
Consolidated Statement of Changes in Equity
Share Share Retained Total
capital premium income equity
R R R R
Balance at
1 March 2010 1 210 80 023 738 154 261 505 234 286 453
Changes in equity
Total comprehensive
income for the year 9 875 820 9 875 820
Shares issued 1 254 999 255 000
Dividends paid (21 921 644) (21 921 644)
Balance at
28 February 2011 1 211 80 278 737 142 215 681 222 495 629
Changes in equity
Total comprehensive
income for the year 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
* A dividend of 2.8 cents per share was paid on 20 June 2011
Consolidated Statement of Financial Position
2012 2011
R R
Assets
Non-current assets
Property, plant and equipment 63 376 590 60 915 473
Goodwill 8 396 200 8 396 200
Other financial assets 1 357 458 4 142 564
Equity-accounted investments 26 585 674 23 952 750
Deferred tax 9 752 266 8 344 920
109 468 188 105 751 907
Current assets
Inventories 49 367 512 28 218 584
Loans to equity-accounted investments 1 556 111 9 999
Construction contracts and receivables 19 084 969 30 334 581
Current tax receivable 438 506 438 770
Trade and other receivables 29 834 610 24 261 090
Cash and cash equivalents 47 836 581 72 297 846
148 118 289 155 560 870
Total assets 257 586 477 261 312 777
Equity and liabilities
Equity
Share capital 1 186 1 211
Share premium 76 944 601 80 278 737
Retained income 144 642 173 142 215 681
221 587 960 222 495 629
Liabilities
Non-current liabilities
Other financial liabilities 5 241 092 3 145 262
Deferred tax 474 337 465 513
5 715 429 3 610 775
Current liabilities
Other financial liabilities 3 398 203 2 621 290
Current tax payable 59 409 30 611
Trade and other payables 20 651 704 28 641 920
Bank overdraft 6 173 772 3 912 552
30 283 088 35 206 373
Total liabilities 35 998 517 38 817 148
Total equity and liabilities 257 586 477 261 312 777
Condensed Segment Report
2012 2011
R R
Segment revenue - external
- Aluminium 29 528 757 27 602 161
- Steel 80 272 601 66 254 218
- Glass 123 612 060 92 913 000
- Corporate - -
233 413 418 186 769 379
Segment revenue - internal
- Aluminium 1 701 300 19 573
- Steel - -
- Glass 33 530 486 29 442 603
- Corporate 2 930 000 2 065 000
38 161 786 31 527 176
Segment result - operating profit/(loss)
- Aluminium (5 121 477) 5 908 044
- Steel 10 037 004 5 897 406
- Glass (1 780 207) (7 560 737)
- Corporate (624 837) (2 557 526)
2 510 483 1 687 187
Segment assets
- Aluminium 48 222 964 68 182 827
- Steel 60 383 848 73 074 046
- Glass 137 595 200 106 198 306
- Corporate 11 384 465 13 857 598
257 586 477 261 312 777
Commentary
Introduction
The audited condensed consolidated financial results for the year to 29 February
2012 ("the year") reflect the continued resilience of the group in the face of
ongoing challenges in the construction industry over the past two years. Mazor
pleasingly sustained positive earnings and the Glass division, in particular,
delivered an improved performance. The group further secured significant new
projects towards the end of the year, boding well for the 2013 financial year.
Basis of preparation
The audited condensed consolidated results for the group have been prepared in
accordance with the framework concepts, the measurement and recognition
requirements of IFRS and the AC 500 Standards as issued by the Accounting
Practices Board and its successor, the Companies Act 2008 and the JSE Listings
Requirements and contain the information required by IAS 34: Interim Financial
Reporting. The accounting policies and methods of computation followed in the
preparation of these condensed consolidated results are in terms of IFRS and are
consistent with those of the audited annual financial statements for the
previous year ended 28 February 2011.
The audited condensed consolidated annual financial results have been prepared
under the supervision of the Financial Director, L Mazor CA (SA).
The condensed consolidated annual financial results have been audited by the
group`s auditors, Mazars. Their unqualified audit opinion is available for
inspection at the company`s registered office.
Group profile
Mazor Steel designs, supplies and erects structural steel frames.
Mazor Aluminium designs, manufactures and installs aluminium structures such as
doors, windows, shop fronts, facades and balustrades for major blue-chip
construction groups. The division also has a 50% stake in HBS, supplier of a
wide range of fenestration systems to the residential, commercial and industrial
markets.
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
While trading conditions generally remained difficult throughout the year, signs
of improvement are now becoming evident. Nonetheless during the year project
delays due to developer`s funding constraints continued and weak demand
persisted. In addition, the number of public holidays in April as well as
industrial action in July led to a number of businesses within the construction
industry closing for longer periods than anticipated, impacting negatively on
Mazor`s sales volumes.
Mazor`s traditional market, the Western Cape, experienced a particularly tough
year. However, the Steel division successfully capitalised on more buoyant
demand in the greater South African regions to offset the negative impact of a
diminished Western Cape market. Revenue increased 21% to R80.3 million (2011:
R66.3 million) with operating profit up 70% to R10.0 million (2011:5.9 million).
The division`s performance is expected to remain consistent in the short term,
with an increase in volumes and margins in the latter half of the 2013 financial
year-end.
The Aluminium division secured a number of major projects in the second half of
the year, which is expected to result in a significant turnaround in the coming
year. Revenue was up 7% to R29.5 million (2011: R27.6 million). The division
posted an operating loss of R5.1 million. The group`s 50% interest in HBS
continued to yield significant benefit for the division. HBS anticipates good
top and bottom line growth going forward, buoyed by the introduction of new
products and intensified focus on marketing and sales.
Product diversification in the Glass division and expansion in Compass Glass
despite the general slowdown in the sector, drove higher volumes year-on- year.
Revenue of R123.6 million was up 33% (2011: R92.9 million). The operating loss
improved from a loss of R7.6 million in 2011 to a loss of R1.8 million.
The rationalisation of the division in the prior year formed a solid foundation
for the success in the year. Compass Glass in Johannesburg, historically a loss
centre, successfully repositioned and delivered consistent profit month-on-month
throughout the second half of the year.
Financial results
On a like-for-like basis compared to the prior year, excluding the non-recurring
profit on the sale item of R10 million reflected in other income attributable to
the HBS transaction, operating profit increased to R2.5 million (2011: R8.3
million loss). Revenue was up 25% to R233.4 million (2011: R186.8 million).
Cash and cash equivalents decreased by R26.7 million. This was mainly due to
increased investment in inventories and the acquisition of plant in the amount
of R9.4 million mainly to expand the glass division. Reference should be made to
the statement of cash flows for more detail.
Inventories increased by 75% to R49.4 million compared to R28.2 million in the
prior year. This was due to increased operations in the glass division.
At 29 February 2012, the group had issued guarantees amounting to R4.5 million
compared to R9.1 million at 28 February 2011. These guarantees have arisen in
the ordinary course of business and it is not expected that any loss will arise.
Share transactions
During the period, Mazor repurchased 2 455 337 of its own shares (2% of the
issued share capital) for a total consideration of R3.34 million. The shares
were repurchased by a subsidiary of the company and are being held as treasury
stock.
Prospects
Mazor has noted concrete signs of improvement in the construction sector within
the context of increasing stabilisation of the South African economy. Project
finance is becoming more readily available with banks relaxing lending
restrictions, bringing more new projects to market. This is particularly evident
in large-scale projects, Mazor`s target market, as reflected in a substantial
escalation in demand and new projects secured.
The group is optimistic that performance will normalise. Extensive
rationalisation of the sector over the past couple of years is further expected
to drive well-improved demand. Mazor therefore anticipates a meaningful increase
in volumes with corresponding margin improvement in the second half of the year.
Compass Glass, particularly, has ma de good headway, expanding its footprint and
product range. This should translate to improved performance in the 2013
financial year. Expansion in the Glass division as a whole will continue over
the next 12 months.
Mazor anticipates that the group`s focus will gradually shift from securing
volume of work, to selecting and securing more exciting projects and ensuring
timeous completion. To achieve maximum efficiency Mazor will sharpen emphasis on
human capital and the challenge of tight timelines.
The group has successfully used the past two years to hone its market offering
and streamline operations, positioning Mazor to capitalise fully on
opportunities arising on an upturn in the sector.
Directorate
Mr A Darko was appointed as a non-executive director of Mazor and Chairman of
the Audit Committee wit h effect from 20 May 2011. Mr Darko brings substantial
experience to the board. He was previously the group CIO of AngloGold Ashanti
and currently serves as a non-executive director of the Consolidated
Infrastructure Group (formerly known as Buildworks) where he chairs the
Transformation and Sustainability Committees of the board and serves on the
Audit Committee.
Subsequent events
As announced on SENS on 4 April 2012, a subsidiary of the group purchased
property in Alrode, Alberton for R12.9 million including VAT.
Compass Glass SA has been operating from the property for 4 years. The property
measures 13,156 square metres and includes two separate, freestanding
warehouses, each of which has an office component. The property will continue to
be utilised by Compass Glass SA operations in Johannesburg.
Dividend declaration
Notice is hereby given that the board has declared a final gross dividend
for the year ended 29 February 2012 of 1.6 cents per share (2011: 2.8 cents
per share) on Tuesday, 15 May 2012.
Salient dates are:
Declaration date Tuesday, 15 May 2012
Last date to trade Friday, 1 June 2012
Shares commence trade ex dividend Monday, 4 June 2012
Record date Friday, 8 June 2012
Payment date Monday, 11 June 2012
Mazor shareholders may not dematerialise or rematerialise their shares between
Monday, 4 June 2012 and Friday, 8 June 2012, both days inclusive.
Additional information
The board have confirmed by resolution that the solvency and liquidity test as
contemplated by the Companies Act 71 of 2008 has been duly considered, applied
and satisfied. The dividend has been declared from income reserves. This is a
dividend as defined in the Income Tax Act, 1962, and is payable from income
reserves. The South African dividend withholding tax ("DWT") rate is 15% and the
company will utilise credits in terms of secondary tax on companies ("ST C").The
STC credits utilised as part of this declaration amount to R174 778, being 0.14
cents per share, and consequently DWT payable of 0.219 cents per share, which
results in a net dividend of 1.381 cents per share, is payable by shareholders
who are not exempt from DWT. There are 121 501 553 ordinary shares in issue
(inclusive of treasury shares); the total dividend amount payable is R1 944 025.
Mazor Group Limited`s tax reference number is 9495/976/15/2.
Appreciation
We thank our management and staff for their steadfast commitment during another
trying year. We also thank our board for their continued invaluable guidance and
extend our appreciation to our business associates, customers and shareholders
for their ongoing 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, all
forward looking statements have not been reviewed or reported on by the group`s
auditors.
On behalf of the board
M Kaplan R Mazor
Chairman CEO
15 May 2012
Directors: M Kaplan (Chairman)*, R Mazor (CEO), L Mazor (Financial Director),
S Mazor, A Darko*, A Groll *, F Boner*, A Varachhia*
*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)
Date: 15/05/2012 14:15:02 Supplied by www.sharenet.co.za
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