Wrap Text
Unaudited Condensed Consolidated Interim Results
Mazor Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 2007/017221/06
Share code: MZR
ISIN: ZAE00109823
('Mazor' or 'the company' or 'the group')
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS
for the six months ended 31 August 2014
Revenue down 20.8%
HEPS down to -7.7 cents per share
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
6 months 6 months 12 months
as at as at as at
31 August 31 August 28 February
2014 2013 2014
R R R
ASSETS
Non-current assets
Property, plant and equipment 80 235 925 85 145 361 83 867 768
Goodwill 8 141 200 8 141 200 8 141 200
Intangible asset 19 500 000 20 000 000 20 000 000
Equity-accounted investments - 1 067 240 -
Loan to equity-accounted investment - 2 115 661 -
Deferred tax 18 824 615 11 295 411 14 368 729
126 701 740 127 764 873 126 377 697
Current assets
Inventories 79 107 676 103 698 485 90 563 824
Construction contracts and receivables 13 880 095 18 162 009 30 505 015
Other financial assets - 990 341 -
Current tax receivable 547 031 4 675 702
Trade and other receivables 45 021 424 47 467 081 44 514 083
Cash and cash equivalents 69 149 497 74 279 770 66 666 590
207 705 723 244 602 361 232 250 214
Total assets 334 407 463 372 367 234 358 627 911
EQUITY AND LIABILITIES
Equity
Stated capital 76 945 787 76 945 787 76 945 787
Retained income 178 785 208 187 368 013 198 382 254
255 730 995 264 313 800 275 328 041
Liabilities
Non-current liabilities
Other financial liabilities 16 917 660 24 544 514 20 980 196
Deferred tax 1 044 697 652 561 1 462 036
17 962 357 25 197 075 22 442 232
Current liabilities
Other financial liabilities 8 644 336 14 311 012 9 457 459
Current tax payable 1 190 962 2 961 192 2 637 356
Trade and other payables 46 858 202 60 785 495 44 284 542
Bank overdraft 4 020 611 4 798 660 4 478 281
60 714 111 82 856 359 60 857 638
Total liabilities 78 676 468 108 053 434 83 299 870
Total equity and liabilities 334 407 463 372 367 234 358 627 911
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2014 2013 2014
R R R
Continuing operations
Revenue 200 306 981 252 828 922 470 385 630
Cost of sales (167 788 147) (182 167 160) (344 957 957)
Gross profit 32 518 834 70 661 762 125 427 673
Other income 591 210 1 563 351 3 026 190
Operating expenses (46 497 382) (46 848 413) (88 627 821)
Operating (loss)/profit (13 387 338) 25 376 700 39 826 042
Investment revenue 1 915 418 1 218 723 3 044 096
Income from equity-accounted investments - (307 307) 101 247
Finance costs (1 554 546) (1 979 845) (3 625 693)
(Loss)/Profit before taxation (13 026 466) 24 308 271 39 345 692
Taxation 3 876 502 (6 655 544) (10 932 926)
(Loss)/Profit from continuing operations (9 149 964) 17 652 727 28 412 766
Discontinued operations
Profit from discontinued operations - 2 689 128 2 943 330
Total comprehensive (loss)/income for the year (9 149 964) 20 341 855 31 356 096
Number of shares in issue 121 501 553 121 501 553 121 501 553
Number of shares in issue (after
treasury shares) 118 658 716 118 658 716 118 658 716
Weighted average number of shares 118 658 716 118 658 716 118 658 716
Basic and diluted earnings per share (cents) (7.7) 17.1 26.4
RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS:
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2014 2013 2014
R R R
(Loss)/Earnings attributable to ordinary
shareholders (9 149 964) 20 341 855 31 356 096
Adjusted for:
Gain on disposal of discontinued operation - (3 380 620) (3 380 620)
Tax effect thereof - 634 334 634 334
Loss on disposal of property, plant and equipment 79 678 38 058 85 443
Tax effect thereof (22 310) (10 656) (23 924)
Headline earnings (9 092 596) 17 622 971 28 671 329
Basic and diluted headline earnings per
share (cents) (7.7) 14.9 24.2
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2014 2013 2014
R R R
Cash flows from operating activities
Cash generated from operations 21 207 294 42 609 206 51 778 138
Interest income 1 803 133 1 218 723 2 972 378
Finance costs (1 554 531) (1 944 701) (3 625 693)
Tax paid (2 989 447) (5 507 904) (12 115 633)
Dividends paid (10 447 082) (5 698 409) (5 698 409)
Cash flows of held-for-sale/discontinued
operations - 305 158 332 625
Net cash flow from operating activities 8 019 367 30 982 073 33 643 406
Cash flows from investing activities
Purchase of property, plant and equipment (484 486) (3 231 764) (6 434 732)
Proceeds from disposal of plant and equipment 281 355 223 624 936 744
Proceeds on disposal of discontinued operations - 7 635 980 8 553 883
Increase in loan to equity-accounted investments - (538) -
Net cash flow from investing activities (203 131) 4 627 302 3 055 895
Cash flows from financing activities
Repayment of other financial liabilities (4 875 659) (11 643 884) (20 026 611)
Net cash flow from financing activities (4 875 659) (11 643 884) (20 026 611)
Increase in cash and cash equivalents
for the year 2 940 577 23 965 491 16 672 690
Cash and cash equivalents at the beginning
of the year 62 188 309 45 515 619 45 515 619
Cash and cash equivalents at the end
of the year 65 128 886 69 481 110 62 188 309
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Stated Retained
capital premium capital income Total
R R R R R
Balance at 1 March 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
Changes in equity
Profit for the period (9 149 964) (9 149 964)
Dividends paid (10 447 082)* (10 447 082)
Balance at 31 August 2014 - - 76 945 787 178 785 208 255 730 995
* A gross dividend of 8.8 cents per share was paid on 9 June 2014 (4.8 cents per share
on 3 June 2013).
CONDENSED SEGMENT REPORT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2014 2013 2014
R R R
Segment revenue - external
- Aluminium 103 324 855 135 256 538 250 363 638
- Steel 36 866 014 51 434 566 90 479 773
- Glass 60 116 112 66 137 818 129 542 219
- Corporate -
200 306 981 252 828 922 470 385 630
Segment revenue - internal
- Aluminium 38 095 1 658 723 1 807 775
- Steel - 1 426 500 2 926 500
- Glass 12 602 698 21 360 602 32 377 958
- Corporate 3 019 378 3 007 378 6 304 755
15 660 171 27 453 203 43 416 988
Segment result - operating profit
- Aluminium 824 981 19 449 420 32 500 046
- Steel (1 061 372) 5 731 136 14 116 668
- Glass (14 858 505) (1 550 605) (10 877 204)
- Corporate 1 707 558 1 746 749 4 086 532
(13 387 338) 25 376 700 39 826 042
Segment assets
- Aluminium 122 322 279 132 749 525 124 187 509
- Steel 56 754 946 65 498 946 70 770 093
- Glass 133 131 142 151 519 566 141 235 381
- Corporate 22 199 096 22 599 197 22 434 928
334 407 463 372 367 234 358 627 911
Segment liabilities
- Aluminium 17 655 604 33 820 392 18 967 917
- Steel 6 916 515 9 057 352 10 104 826
- Glass 44 733 253 54 882 812 44 316 766
- Corporate 9 371 096 10 292 879 9 910 361
78 676 468 108 053 434 83 299 870
COMMENTARY
Introduction
The unaudited condensed consolidated interim results for the six months to
31 August 2014 ('the period') reflect the prevailing challenging environment in the
first half of the year.
Basis of preparation
The unaudited condensed consolidated interim results have been prepared in accordance
with and containing the information required by International Accounting Standard 34:
Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the
Accounting Policies Committee, the JSE Listings Requirements and the South African
Companies Act No. 71 of 2008. The accounting policies and methods of computation
applied in the preparation of these unaudited condensed consolidated interim financial
statements are in terms of International Financial Reporting Standards and are
consistent with those applied in the audited annual financial statements for the year
ended 28 February 2014.
These unaudited condensed consolidated interim results were authorised for issue by
the board of directors on 3 November 2014.
The unaudited condensed consolidated financial statements for the period ended
31 August 2014 have been prepared under the supervision of the financial director,
Ms L Mazor CA(SA) and have not been reviewed or audited by the company's auditors,
Mazars Inc.
These unaudited condensed consolidated interim financial statements should be read
in conjunction with the audited annual financial statements for the year ended
28 February 2014.
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 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 and KwaZulu-Natal in addition
to its historical base in the Western Cape.
Review of operations
A decline in the group's revenue is attributed primarily to a slow-down in the economy.
A considerable drop in revenue impacted operating profits, driving earnings into negative
territory.
Steel and Aluminium, the group's manufacturing segments, were both operating in an
extremely tough environment. Labour unrest during the first six months of the year
resulted in a slow-down in activity as well as shortages in materials.
Glass, the group's distribution segment, was also impacted by labour unrest throughout
the industry. Due to the change in management, it was decided to discontinue certain
lines of stock resulting in a write-off of R4.8 million.
Financial results
Revenue declined by 20.8% to R200.3 million from R252.8 million in the same period in
the previous year. This was mainly driven by a decrease in construction activity with
external revenue in the aluminium division decreasing by 23.6% to R103.3 million and
by 28.32% in the steel division to R36.9 million. Coupled with the revenue reduction,
the stock adjustment arising on the reorganisation of the Glass division resulted in
a group operating loss of R13.4 million (August 2013: profit of R25.3 million). Gross
profit reduced by 54% from R70.6 million to R32.5 million. This was due to the
reduction in revenue and tighter margins brought about by the tough trading environment
as well as the stock losses in the Glass division.
Headline earnings decreased from R17.6 million to a loss of R9.1 million, resulting in
a drop in headline earnings per share from 14.9 cents to a loss of 7.7 cents, respectively.
Dividend declaration
In line with group policy, no interim dividend has been declared for the period.
Prospects
Although the second half of the year got off to a slow start, there is a marked up-tick
in construction and definite signs of recovery are evident for Steel and Aluminium.
Glass is set to improve following the introduction of new management at both the Gauteng
and Cape Town branches. Further, the division's performance should start realising the
benefits of new processes and product focus in procurement and sales. The Port Elizabeth
branch of HBS has been closed since the period-end in light of continued underperformance.
The group is well positioned to benefit from an improvement in market conditions, with a
broad presence across South Africa, fast expanding product range and established capability.
Appreciation
We thank our management and staff for their commitment and hard work during this
challenging period. We also thank our board for their continued 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
3 November 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: 04/11/2014 04:07:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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