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Audited condensed consolidated financial results for the year ended 28 February 2013
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')
AUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2013
Revenue up 95.9%
HEPS up 199%
Acquisition of remaining 50% of HBS
Significant new contracts secured in all divisions
Increased margins
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2013 2012
R R
Assets
Non-current assets
Property, plant and equipment 86 514 822 63 376 590
Goodwill 8 396 200 8 396 200
Intangible asset 20 000 000 -
Other financial assets - 1 357 458
Equity-accounted investments 1 374 547 26 585 674
Loans to equity-accounted investments 2 115 123 -
Deferred tax 11 480 066 9 752 266
129 880 758 109 468 188
Current assets
Inventories 96 813 413 49 367 512
Loans to equity-accounted investments - 1 556 111
Construction contracts and receivables 42 167 592 19 084 969
Current tax receivable 702 438 506
Trade and other receivables 43 917 132 29 834 610
Cash and cash equivalents 50 694 173 47 836 581
233 593 012 148 118 289
Non-current assets held for sale and assets of
disposal groups 751 364 -
Total assets 364 225 134 257 586 477
Equity and liabilities
Equity
Stated capital 76 945 787 -
Share capital - 1 186
Share premium - 76 944 601
Retained income 172 724 567 144 642 173
249 670 354 221 587 960
Liabilities
Non-current liabilities
Other financial liabilities 27 327 867 5 241 092
Deferred tax 1 301 556 474 337
28 629 423 5 715 429
Current liabilities
Other financial liabilities 23 174 959 3 398 203
Current tax payable 404 253 59 409
Trade and other payables 57 167 591 20 651 704
Bank overdraft 5 178 554 6 173 772
85 925 357 30 283 088
Total liabilities 114 554 780 35 998 517
Total equity and liabilities 364 225 134 257 586 477
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2013 2012
R R
Continuing operations
Revenue 438 514 894 223 889 398
Cost of sales (332 401 357) (181 278 541)
Gross profit 106 113 537 42 610 857
Other income 19 663 903 265 276
Operating expenses (88 425 298) (40 172 683)
Operating profit 37 352 142 2 703 450
Investment revenue 2 639 674 3 660 716
Income from equity-accounted investments 12 390 2 632 923
Finance costs (2 897 264) (985 041)
Profit before taxation 37 106 942 8 012 048
Taxation (6 496 414) (2 029 915)
Profit from continuing operations 30 610 528 5 982 133
Discontinued operations
Loss from discontinued operations (628 744) (181 344)
Total comprehensive income for the year 29 981 784 5 800 789
Number of shares in issue 121 501 553 121 501 553
Number of shares in issue (after treasury shares) 118 658 716 118 658 716
Weighted average number of shares 118 658 716 120 122 874
Basic and diluted earnings per share (cents) 25.3 4.8
HEADLINE EARNINGS
2013 2012
R R
Reconciliation between earnings and headline earnings:
Earnings attributable to ordinary shareholders 29 981 784 5 800 789
Adjusted for:
IFRS 3 fair value adjustment (included in other income) (9 845 053) -
Gain on bargain purchase (included in other income) (3 025 384) -
(Gain)/Loss on disposal of property, plant and equipment (130 818) (61 925)
Tax effect thereof 36 629 17 339
Headline earnings 17 017 158 5 756 203
Basic and diluted headline earnings per share (cents) 14.34 4.79
CONSOLIDATED STATEMENT OF CASH FLOWS
2013 2012
R R
Cash flows from operating activities
Cash generated from/(utilised for) operations 34 599 978 (12 784 136)
Interest income 2 639 674 3 614 604
Finance costs (2 745 931) (985 041)
Tax paid (5 593 694) (3 329 944)
Dividends paid (1 899 389) (3 374 297)
Cash flows of held-for-sale/discontinued operations (708 233) (128 052)
Net cash flow from operating activities 26 292 405 (16 986 866)
Cash flows from investing activities#
Purchase of property, plant and equipment (18 969 006) (9 362 653)
Proceeds from disposal of plant and equipment 810 323 720 664
Acquisition of treasury shares - (3 334 161)
Investment in joint venture acquired (1 350 972) -
Cash outflow on acquisition of subsidiary (16 255 975) -
Proceeds from disposal of listed shares 925 495 867 788
Repayment of loan by equity-accounted investments 9 999 -
Increase in loan to equity-accounted investments (2 115 123) (1 500 000)
Net cash flow from investing activities (36 945 259) (12 608 362)
Cash flows from financing activities#
Increase in other financial liabilities 14 505 664 2 872 743
Net cash flow from financing activities 14 505 664 2 872 743
Decrease in cash and cash equivalents for the year 3 852 810 (26 722 485)
Cash and cash equivalents at the beginning of the year 41 662 809 68 385 294
Cash and cash equivalents at the end of the year 45 515 619 41 662 809
# There were no cash flows from discontinued operations included in investing or
financing activities.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Stated Retained Total
capital premium capital income equity
R 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 29 981 783 29 981 783
Dividends paid (1 899 389)* (1 899 389)
Conversion to no par
value shares (1 186) (76 944 601) 76 945 787 -
Balance at 28 February 2013 - - 76 945 787 172 724 567 249 670 354
* A gross dividend of 1.6 cents per share was paid on 11 June 2012 (2.8 cents per
share on 20 June 2011).
CONDENSED SEGMENT REPORT
2013 2012
R R
Segment revenue - external
- Aluminium* 184 843 543 29 528 757
- Steel 106 522 084 80 272 601
- Glass 147 149 267 114 088 040
- Corporate and investments - -
438 514 894 223 889 398
Segment revenue - internal
- Aluminium* 1 936 480 1 701 300
- Steel - -
- Glass 35 735 388 33 530 486
- Corporate and investments 4 381 148 2 930 000
42 053 016 38 161 786
Segment result - operating profit
- Aluminium* 18 733 555 (5 121 477)
- Steel 7 139 027 10 037 004
- Glass (2 829 393) (1 587 240)
- Corporate and investments 14 308 953 (624 837)
37 352 142 2 703 450
Segment assets
- Aluminium* 115 774 307 48 222 964
- Steel 69 137 397 60 383 848
- Glass^ 156 255 409 137 595 200
- Corporate and investments 23 058 021 11 384 465
364 225 134 257 586 477
* Including HBS for 2013.
^ Includes non-current assets held for sale.
COMMENTARY
INTRODUCTION
The audited condensed consolidated financial results for the year to 28 February 2013
('the year') reflect continued growth and improvement in the group's performance on
the back of a recovering construction sector.
In line with strategy the group acquired the remaining 50% of HBS Aluminium Systems
(Pty) Limited ('HBS') in order to cement the expansion of strong performer Mazor
Aluminium (see 'Acquisitions' below).
BASIS OF PREPARATION
The audited condensed consolidated annual financial results for the group have been
prepared in accordance with the framework concepts and the measurement and recognition
requirements of IFRS, the SAICA financial reporting guides as issued by the APC, the
Companies Act 71 of 2008 and the JSE Listings Requirements. The accounting policies
and methods of computation applied in the preparation of these audited condensed
consolidated annual financial results are consistent with those applied in the audited
annual financial statements for the previous year ended 29 February 2012.
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 statements have been audited by the
group's external auditors, Mazars. Their unqualified audit opinion is available for
inspection at the company's registered office.
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, shopfronts, facades and
balustrades for major blue-chip construction groups. HBS (now wholly owned) 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
The macroeconomic environment continued to improve with the anticipated market turn-
around becoming evident. By year-end demand and supply had reached better equilibrium
than at any other time in the past three years, supporting higher margins. Substantial
rationalisation in the industry further made for more favourable conditions.
While demand from the private sector increased significantly, the lagging residential
sector continued to prevent growth from reaching pre-recession levels. Demand from
the commercial sector - shopping centres and industrial - remained ongoing albeit
with pricing pressure as a result of tight client budgets.
Mazor Aluminium capitalised well on the more robust demand, and as a result is
expected to return to pre-2010 profitability levels.
Mazor Steel experienced a smoother second half of the year with work flowing to take
the division to almost full capacity, following a challenging first six months fraught
with project delays.
The trading conditions in the Glass division remained challenging, but demand has
remained stable. The division benefited from a process of rationalisation, which
is in the final stages, aimed at driving higher gross profits. In addition to expanding
its premises and bolstering capacity with new equipment, the group focused on
optimising the division's raw material purchase and improving cost structures.
Having taken complete control of HBS, the group continued to improve
competitiveness with the successful overhaul of the supply chain. In addition, new
architectural and engineering products were introduced to expand the product range
and accommodate demand.
FINANCIAL RESULTS
Revenue from continuing operations increased substantially by 95.9% to R438.5 million
(2012: R223.9 million), underpinned by growth in all divisions. Revenue in Mazor Steel
grew by 32.7% to R106.5 million, in Mazor Aluminium by 132.9% to R68.8 million and
in the Glass division by 28.9% to R147.1 million. HBS, which was previously
equity accounted, reported revenue of R116.1 million.
Operating profit includes a fair value adjustment on acquisition of HBS of
R9.8 million as well as a gain on bargain purchase which arose on the acquisition
of HBS of R3 million. After removing the effects of these two items, operating profit
increased by 805.6% over the prior year. Headline earnings per share increased by 199%
to 14.34 cents per share from 4.79 cents per share in 2012.
At 28 February 2013 the group had issued guarantees amounting to R31.7 million
compared to R4.5 million at 29 February 2012. These guarantees have arisen in the
ordinary course of business and it is not expected that any loss will arise.
ACQUISITIONS
As previously 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
R33.4 million (including a contingent liability of R0.6 million).
The gain on bargain purchase arose as a result of 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 R116.1 million and attributable net profit of R3.5 million
for the year.
The fair value of the assets and liabilities at the acquisition date were as follows:
R
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
Negative goodwill (3 025 384)
Total consideration paid 69 813 700
Consideration paid
Cash 20 469 375
Equity -
Liability 12 924 785
Fair value of investment previously held 36 419 540
69 813 700
Cash flow on acquisitions
Cash consideration paid (20 469 375)
Cash acquired 4 213 400
(16 255 975)
SUBSEQUENT EVENTS
The group sold its East London division of Compass Glass SA with effect from
1 March 2013 for a consideration of R4.8 million in line with its rationalisation
strategy. The division has been disclosed as a non-current asset held for sale/
discontinued operation.
PROSPECTS
With the construction industry having found firmer footing, Mazor expects steady
growth in the first half of the next financial year and a kick-up to the bottom line in
the second six months. In light of interest rates being expected to remain favourable
in the short to medium term, demand is expected to normalise even further and create a
more conducive environment to strategic planning.
The group is well positioned to benefit from a market up-tick with a broad presence
across South Africa, fast expanding product range and established capability.
The group intends to build on favourable market conditions to capture a more
substantial market share and drive margin growth. Mazor will target higher margin
projects as they are released to market.
Further acquisitions in line with the group's current offering will continue to be
considered.
DIVIDEND DECLARATION
Notice is hereby given that in line with strategy the board has declared a final
gross dividend for the year of 4.8 cents per share (2012: 1.6 cents) on 7 May 2013.
Salient dates are:
Last day to trade cum dividend Friday, 24 May 2013
Shares trade ex dividend Monday, 27 May 2013
Record date Friday, 31 May 2013
Payment date Monday, 3 June 2013
Shareholders may not dematerialise or rematerialise their shares between Monday,
27 May 2013 and Friday, 31 May 2013, both days inclusive.
ADDITIONAL INFORMATION
The board has 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 58 of 1962, and is payable from income reserves.
The South African dividend withholding tax ('DWT') rate is 15% and the company
does not have any credits in respect of secondary tax on companies to utilise.
Consequently DWT payable of 0.72 cent per share is payable by shareholders who are
not exempt from DWT, resulting in a net dividend of 4.08 cents per share.
There are 121 501 553 ordinary shares in issue (inclusive of 2 842 837 treasury
shares). The total dividend amount payable is R5 832 075.
Mazor Group Limited's tax reference number is 9495/976/15/2.
APPRECIATION
We thank our management and staff for keeping their heads down and their spirits
up during the year. We also thank our board for their continued invaluable guidance
and 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, none of the forward-looking
statements have been audited or reported on by the group's auditors.
On behalf of the board
M Kaplan R Mazor
Chairman CEO
7 May 2013
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: Ivor Mark Bloom (appointed 1 February 2013 - replacing L 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: 08/05/2013 03:37:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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