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Acquisition by Mazor of the remaining 50 % of HBS and withdrawal of cautionary
Mazor Group Limited
Incorporated in the Republic of South Africa
Registration number: 2007/017221/06
Share Code: MZR ISIN: ZAE000109823
("Mazor" or "the Company" or “the Group”)
ACQUISITION BY MAZOR OF THE REMAINING 50% OF HBS ALUMINIUM (PROPRIETARY)
LIMITED (“HBS”) AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
On 31 August 2012, Mazor Aluminium (Proprietary) Limited, a wholly owned subsidiary of Mazor,
entered into an agreement with Hulamin Operations (Proprietary) Limited (“Hulamin”) to acquire the
remaining 50% of HBS not held my Mazor, for a total purchase price of R32 751 000 (“the Purchase
Price”) and the loan account between HBS and Hulamin at a face value of R1 500 000 (“the
Acquisition”).
2. DESCRIPTION OF HBS
HBS markets and supplies a wide range of fenestration systems including architectural, engineering
and composite panel architectural cladding into the South African residential, commercial and
industrial markets. HBS markets fenestration accessories such as locks, handles, friction stays and
silicon to complement the product range. HBS prides itself in offering superior levels of technical
service and design expertise, and offers its customers technical training and support including
software systems. HBS has branches in Johannesburg, Cape Town, Durban and Port Elizabeth.
HBS have and will continue launching the Mazor brand aluminium systems which are recognised for
their superiority in both functionality and manufacturing technology.
3. EFFECTIVE DATE
The effective date of the Acquisition is 1 March 2012.
4. SETTLEMENT OF THE ACQUISITION
The purchase price is payable in cash and will be sourced from current cash resources within the
Group. Payment of the Purchase Price shall be effected as follows:
- Mazor shall pay, within five days, Hulamin 50% of the Purchase Price and R1 500 000
in respect of the Purchase Price relating to the Hulamin Loan Account; and
- the balance of the Purchase Price shall be paid in four equal payments on or before the
following dates: 30 November 2012, 31 March 2013, 30 June 2013 and 30 September
2013.
5. FINANCIAL EFFECTS OF THE ACQUISITION ON MAZOR FOR THE YEAR ENDED 29
FEBRUARY 2012
The unaudited pro forma financial effects of Mazor before and after the Acquisition are based on the
final published results of Mazor for the year ended 29 February 2012 and the audited results for HBS
for the year ended 29 February 2012. The financial effects are presented for illustrative purposes
only, to provide information on how the Acquisition may have impacted on the results and the
financial position of Mazor. The unaudited pro forma effects are the responsibility of Mazor’s
directors. Due to the nature of the unaudited pro forma financial effects, they may not fairly present
Mazor’s financial position and the results of its operations after the Acquisition. It has been assumed
for the purpose of the financial effects that the agreement took place with effect from 1 March 2011.
The financial effects do not purport to be indicative of what the financial results would have been,
had the Acquisition been implemented on a different date. The unaudited pro forma financial
information has been presented in a manner consistent in all respects with International Financial
Reporting Standards and Mazor’s accounting policies applied consistently throughout the period.
Before the After the Percentage
Acquisition Acquisition change
Basic earnings per share (“EPS”) (cents) 4.8 15.0 209.9
Diluted earnings per share (“DEPS”) (cents) 4.8 15.0 209.9
Headline earnings per share (“HEPS”) (cents) 4.8 5.9 22.5
Diluted headline earnings per share (“DHEPS”)
4.8 5.9 22.5
(cents)
Net asset value per share (“NAV”) (cents) 1.8 1.9 6.1
Tangible net asset value (“TNAV”) (cents) 1.8 1.7 -3.0
Shares in issue (million) 121.5 121.5
Weighted average number of shares in issue
120.1 120.1
(million)
Diluted weighted average number of shares in issue 120.1 120.1
(million)
Notes:
1. The EPS, DEPS, HEPS and DHEPS in the “Before the Acquisition” column of the table are
based on the audited statement of comprehensive income of Mazor for the period ended 29
February 2012; and 120 122 874 shares in issue (being the weighted number of ordinary shares
in issue for the period ended 29 February 2012.
2. The EPS, DEPS, HEPS and DHEPS in the “After the Acquisition” column of the table are based
on 120 122 874 shares in issue (being the weighted number of ordinary shares in issue for the
period ended 29 February 2012) issue and the assumptions are:
- the Acquisition became effective on 1 March 2012 and the Purchase Price was settled
on that date;
- the Purchase Price was settled in cash;
- the cash would have been invested on the Money Market at an after-tax rate of 3.6%,
yielding an annual after-tax interest of 839 755;
- an amount of R1 036 299 negative goodwill arose from the Acquisition where control
was obtained, and is determined as the purchase consideration paid, plus the fair value
of any shareholding held prior to obtaining control, plus non-controlling interest and less
the fair value of the identifiable assets and liabilities of the Acquisition; and
- transaction costs relating to the Acquisition are estimated to be R500 000 and are
expensed at a Group level.
3. The NAV per share and TNAV per share in the “Before the Acquisition” column of the table are
based on the audited statement of financial position of Mazor at 29 February 2012 and 121 501
553 shares in issue.
4. The NAV per share and TNAV per share in the “After the Acquisition” column of the table are
based on the assumptions that the Acquisition was completed on 29 February 2012 and the
assumptions that:
- the Acquisition became effective on 29 February 2012 and the purchase consideration
was settled on that date;
- goodwill is measured as the excess of the sum of the consideration transferred, the
amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's
previously held equity interest in the acquiree (if any) over the net of the Acquisition date
amounts of the identifiable assets acquired and the liabilities assumed.
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5. The pro forma financial effects have not been reviewed by Mazor’s auditors.
6. RATIONALE FOR THE ACQUISITION
Mazor acquired the initial 50% investment in HBS in April 2010. HBS enjoys a significant market
share within the aluminium industry. The transaction has enabled Mazor to gain access for its
systems to an enlarged client base which would have been difficult to obtain organically. Mazor's
expertise, specifically its intellectual property and highly developed skill-set, coupled with the market
presence of HBS has enabled the joint venture to evolve into a highly profitable business. The
Acquisition of the entire business will further improve the financial performance of Mazor and enable
enhanced integration within the Group.
7. CONDITIONS PRECEDENT
Save for the terms in this announcement, there are no outstanding conditions precedent, and no
other significant terms of the Acquisition agreement.
8. TRANSACTION CLASSIFICATION
The Acquisition is classified as a Category 2 transaction in terms of the Listings Requirements of the
JSE.
9. MEMORANDUM OF INCORPORATION
Mazor undertakes that the Memorandum of Incorporation of HBS will conform to Schedule 10 of the
Listings Requirements of the JSE, as required in terms thereof.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcements dated 5 June 2012 and 17 July 2012
and are advised that the discussions referred to therein are related to the Acquisition. Accordingly,
shareholders are no longer advised to exercise caution when dealing in the Company`s securities.
Cape Town
3 September 2012
Sponsor: Bridge Capital Advisors (Pty) Limited
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