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Condensed Results of the Audited Consolidated Annual Financial Statements for the year ended 28 February 2014
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')
CONDENSED RESULTS OF THE AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
for the year ended 28 February 2014
Revenue up 9.7%
HEPS up 69.2%
Cash reserves up 36.6%
Gross margin increased to 26.7%
External debt reduced by 27.7%
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2014 2013
R R
ASSETS
Non-current assets
Property, plant and equipment 83 867 768 86 514 822
Goodwill 8 141 200 8 396 200
Intangible asset 20 000 000 20 000 000
Equity-accounted investments - 1 374 547
Loan to equity-accounted investment - 2 115 123
Deferred tax 14 368 729 11 480 066
126 377 697 129 880 758
Current assets
Inventories 90 563 824 96 813 413
Construction contracts and receivables 30 505 015 42 167 592
Current tax receivable 702 702
Trade and other receivables 44 514 083 43 917 132
Cash and cash equivalents 66 666 590 50 694 173
232 250 214 233 593 012
Non-current assets held for sale and assets
of disposal groups - 751 364
Total assets 358 627 911 364 225 134
EQUITY AND LIABILITIES
Equity
Stated capital 76 945 787 76 945 787
Retained income 198 382 254 172 724 567
275 328 041 249 670 354
Liabilities
Non-current liabilities
Other financial liabilities 20 980 196 27 327 867
Deferred tax 1 462 036 1 301 556
22 442 232 28 629 423
Current liabilities
Other financial liabilities 9 457 459 23 174 959
Current tax payable 2 637 356 404 253
Trade and other payables 44 284 542 57 167 591
Bank overdraft 4 478 281 5 178 554
60 857 638 85 925 357
Total liabilities 83 299 870 114 554 780
Total equity and liabilities 358 627 911 364 225 134
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2014 2013
R R
Continuing operations
Revenue 470 385 630 428 679 423
Cost of sales (344 957 957) (324 286 542)
Gross profit 125 427 673 104 392 881
Other income 3 026 190 19 663 624
Operating expenses (88 627 821) (86 755 072)
Operating profit 39 826 042 37 301 433
Investment revenue 3 044 096 2 639 624
Income from equity-accounted investments 101 247 12 390
Finance costs (3 625 693) (2 823 198)
Profit before taxation 39 345 692 37 130 249
Taxation (10 932 926) (6 690 540)
Profit from continuing operations 28 412 766 30 439 709
Discontinued operations
Profit/(Loss) from discontinued operations 2 943 330 (457 925)
Total comprehensive income for the year 31 356 096 29 981 784
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 118 658 716 118 658 716
Basic and diluted earnings per share (cents) 26.4 25.3
HEADLINE EARNINGS
2014 2013
R R
Reconciliation between earnings and headline earnings:
Earnings attributable to ordinary shareholders 31 356 096 29 981 784
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 on disposal of discontinued operation (3 380 620) -
Tax effect thereof 634 334 -
Loss/(Gain) on disposal of property, plant and equipment 85 443 (130 818)
Tax effect thereof (23 924) 36 629
Headline earnings 28 671 329 17 017 158
Basic and diluted headline earnings per share (cents) 24.2 14.3
CONSOLIDATED STATEMENT OF CASH FLOWS
2014 2013
R R
Cash flows from operating activities
Cash generated from operations 51 778 138 34 423 789
Interest income 2 972 378 2 639 624
Finance costs (3 625 693) (2 671 865)
Tax paid (12 115 633) (5 593 694)
Dividends paid (5 698 409) (1 899 389)
Cash flows of held-for-sale/discontinued operations 332 625 (606 060)
Net cash flow from operating activities 33 643 406 26 292 405
Cash flows from investing activities
Purchase of property, plant and equipment (6 434 732) (18 969 006)
Proceeds from disposal of plant and equipment 936 744 810 323
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
Proceeds on disposal of discontinued operations 8 553 883 -
Repayment of loan by equity-accounted investments - 9 999
Increase in loan to equity-accounted investments - (2 115 123)
Net cash flow from investing activities 3 055 895 (36 945 259)
Cash flows from financing activities
Repayment of other financial liabilities (20 026 611) -
Increase in other financial liabilities - 14 505 664
Net cash flow from financing activities (20 026 611) 14 505 664
Decrease in cash and cash equivalents for the year 16 672 690 3 852 810
Cash and cash equivalents at the beginning of the year 45 515 619 41 662 809
Cash and cash equivalents at the end of the year 62 188 309 45 515 619
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 2012 1 186 76 944 601 - 144 642 173 221 587 960
Changes in equity
Profit 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
Changes in equity
Profit for the period 31 356 096 31 356 096
Dividends paid (5 698 409)* (5 698 409)
Balance at 28 February 2014 - - 76 945 787 198 382 254 275 328 041
* A gross dividend of 4.8 cents per share was paid on 3 June 2013 (1.6 cents per share
on 11 June 2012).
CONDENSED SEGMENT REPORT
2014 2013
R R
Segment revenue - external
- Aluminium 250 363 638 184 843 543
- Steel 90 479 773 106 522 084
- Glass 129 542 219 137 313 796
- Corporate - -
470 385 630 428 679 423
Segment revenue - internal
- Aluminium 1 807 775 1 936 480
- Steel 2 926 500 -
- Glass 32 377 958 35 735 388
- Corporate 6 304 755 4 381 148
43 416 988 42 053 016
Segment result - operating profit
- Aluminium 32 500 046 18 733 555
- Steel 14 116 668 7 139 027
- Glass (10 877 204) (2 210 103)
- Corporate 4 086 532 13 638 954
39 826 042 37 301 433
Segment assets
- Aluminium 124 187 509 115 774 307
- Steel 70 770 093 69 137 397
- Glass 141 235 381 156 255 409
- Corporate 22 434 928 23 058 021
358 627 911 364 225 134
Segment liabilities
- Aluminium 18 967 917 31 745 494
- Steel 10 104 826 13 696 382
- Glass 44 316 766 57 896 546
- Corporate 9 910 361 11 216 358
83 299 870 114 554 780
COMMENTARY
INTRODUCTION
Mazor's audited consolidated financial results for the year to 28 February 2014
('the year') are evidence of the group's continued growth and improvement on the
back of a recovering construction sector, and reflect a credible performance with
strengthened key indicators.
BASIS OF PREPARATION
The condensed consolidated annual financial results for the group have been prepared
in accordance with and containing the information required by IAS 34: Interim
Financial Reporting, the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards ('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
condensed consolidated annual financial results are consistent with those applied in
the audited annual financial statements for the previous year ended 28 February 2013,
except for necessary changes to accounting policies related to the adoption of IFRS 10,
which sets out the requirements for the preparation of consolidated financial statements
and revises the definition of control; as well as IFRS 13, which replaced the guidance
on fair value measurement as previously set out by IFRS. There has been no material
financial effect on the results of the group as a result of the adoption of new
standards and amendments.
The condensed consolidated annual financial results have been prepared under the
supervision of the financial director, L Mazor CA(SA).
Whilst this announcement is itself not audited, the consolidated annual financial
statements from which the condensed consolidated financial statements have been derived
were audited by the group's external auditors, Mazars Inc., who expressed an unqualified
audit opinion. This is available for inspection at the company's registered office.
That report does not necessarily cover all the information contained in this
announcement. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditors' work, they should refer to the report
together with the annual financial statements contained in the integrated annual report.
A copy of the full set of consolidated financial statements is available for inspection
from the company secretary at the registered office of the group. In order to request
a copy, please contact Mr I Bloom on 021 981 4300 or e-mail the request to:
ivor@altotrust.com
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 and HBS which supplies 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's historical base is the Western Cape, with a significant and growing
presence in Gauteng.
REVIEW OF OPERATIONS
The macro-improvement in the global and local economies, and the domestic construction
market specifically, has driven increased volumes. The recovery, which was initially
most evident in Gauteng, is starting to materialise in the Western Cape. The group is
favourably positioned to realise its potential by capitalising on opportunities in the
market, especially following an extensive rationalisation programme aimed at driving
higher gross profits (particularly in the Glass division). With the rationalisation
exercise completed, all the group's businesses are well poised for growth.
Affirming the ability of the group to anticipate and adapt to emerging market conditions,
Mazor rationalised the Glass division and disposed of Compass Glass SA's Port Elizabeth
and East London branches, effective 1 March and 1 July 2013, respectively, for a
consideration of R8.6 million in aggregate.
The aluminium division also disposed of its equity-accounted investment for a
consideration of R3.5 million with effect from 31 December 2013. Payment was received
post year-end.
Demand from the private sector has increased significantly and alongside a slowly
stirring residential sector, the group has seen rising demand for related commercial
and retail developments (shopping centres). The residential market is experiencing a
resurgence following a severe decline in demand after the 2008 global economic crisis
and the stricter regulation of credit in terms of the National Credit Act. The
combination of this higher demand and reduced supply (following economy-related
rationalisation in the industry) has made for advantageous conditions.
In addition, demand for the group's specific products is increasing, driven to a large
extent by the move to 'green construction'.
Both the steel and aluminium divisions posted higher profits. Mazor Steel doubled
operating profit to R14.1 million from R7.1 million in the previous year while the
aluminium division recorded operating profit of R32.5 million compared to R18.7 million
in 2013.
While Glass continued to make losses, its position is set to improve as the group's
efficiency drive continues. The division's remaining branches in Johannesburg,
Cape Town and George are benefiting from new management and equipment, reduced labour
costs and improved systems and controls.
HBS's product has increased considerably in value over the past two years as demand
increases. The successful overhaul of the supply chain and introduction of new
architectural and engineering products has ensured HBS's competitive advantage in its
niche market.
FINANCIAL RESULTS
Revenue from continuing operations increased by 9.7% to R470.4 million (2013:
R428.7 million), underpinned by growth in the aluminium division which grew revenue
by 35.5% to R250.4 million. Both Mazor Steel and the Glass division recorded lower
revenue (in Steel to R90.5 million from R106.5 million and in Glass R129.5 million
from R137.3 million). Nonetheless, the group reported an increase in gross profit of
20.1% to R125.4 million, reflecting the group's strategy to focus on return on
investment rather than sales volume.
Operating profit from continuing operations in the prior year included a fair value
adjustment of R9.8 million as well as a gain on bargain purchase of R3 million which
arose on the acquisition of the remaining 50% of HBS. After removing the effects of
these two items, operating profit for the year increased by 63% over the prior year.
Headline earnings increased to R28.7 million, generating a basic and diluted headline
earnings per share of 24.2 cents, up 69.2% on 14.3 cents.
The group reduced external debt by R31.4 million during the year while simultaneously
increasing cash and cash equivalents by R16.7 million mainly due to operating
activities.
At 28 February 2014 the group had issued guarantees amounting to R45.5 million
compared to R31.7 million at 28 February 2013. These guarantees have arisen in the
ordinary course of business and it is not expected that any loss will arise therefrom.
PROSPECTS
With a more robust operating environment, Mazor intends to capture greater market share
and drive margin growth. All businesses are expected to deliver increased earnings in
the year ahead, particularly Compass and HBS.
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 8.8 cents per share (2013: 4.8 cents) on 12 May 2014.
Salient dates are:
Last day to trade cum distribution Friday, 30 May 2014
Shares trade ex distribution Monday, 2 June 2014
Record date Friday, 6 June 2014
Payment date Monday, 9 June 2014
Shareholders may not dematerialise or rematerialise their shares between Monday,
2 June 2014 and Friday, 6 June 2014, 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 of 1.32 cents per share is payable by shareholders who are not exempt from DWT,
resulting in a net dividend of 7.48 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 R10 692 137.
Mazor Group Limited's tax reference number is 9495/976/15/2.
APPRECIATION
The loyalty and hard work of our management and staff have helped us weather the
previous tough few years and we are now ready to climb to new heights. Without you
this would not have been possible and we thank you for your contribution. We also
thank our fellow directors 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 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
13 May 2014
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
Registered office: 8 Monza Road, Killarney Gardens, 7441 (PO Box 60635,
Table View, 7439)
Sponsor: Bridge Capital Advisors (Pty) Ltd, 2nd Floor, 27 Fricker Road,
Illovo Boulevard, Illovo, 2196 (PO Box 651010, Benmore, 2010)
Transfer secretaries: Computershare Investor Services (Pty) Ltd,
70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Date: 13/05/2014 03:06:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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