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Audited Results for the year ended 28 February 2015
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')
CONDENSED RESULTS OF THE AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2015 2014
R R
ASSETS
Non-current assets
Property, plant and equipment 77 793 737 83 867 768
Goodwill - 8 141 200
Intangible asset 19 000 000 20 000 000
Deferred tax 5 477 045 14 368 729
102 270 782 126 377 697
Current assets
Inventories 95 404 710 90 563 824
Construction contracts and receivables 19 869 093 30 505 015
Current tax receivable 58 550 702
Trade and other receivables 37 173 539 44 514 083
Cash and cash equivalents 46 094 321 66 666 590
198 600 213 232 250 214
Total assets 300 870 995 358 627 911
EQUITY AND LIABILITIES
Equity
Stated capital 71 864 018 76 945 787
Retained income 148 722 620 198 382 254
220 586 638 275 328 041
Liabilities
Non-current liabilities
Other financial liabilities 14 271 961 20 980 196
Deferred tax 794 753 1 462 036
15 066 714 22 442 232
Current liabilities
Other financial liabilities 7 466 254 9 457 459
Current tax payable 305 322 2 637 356
Trade and other payables 51 485 667 44 284 542
Bank overdraft 5 960 400 4 478 281
65 217 643 60 857 638
Total liabilities 80 284 358 83 299 870
Total equity and liabilities 300 870 995 358 627 911
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2015 2014
R R
Continuing operations
Revenue 376 077 950 470 385 630
Cost of sales (308 209 565) (344 957 957)
Gross profit 67 868 385 125 427 673
Other income 1 750 457 3 026 190
Operating expenses (97 628 842) (88 627 821)
Operating (loss)/profit (28 010 000) 39 826 042
Investment revenue 3 687 508 3 044 096
Income from equity-accounted investments - 101 247
Finance costs (2 936 629) (3 625 693)
Profit before taxation (27 259 121) 39 345 692
Taxation (11 953 431 (10 932 926)
(Loss)/Profit from continuing operations (39 212 552) 28 412 766
Discontinued operations
Profit from discontinued operations - 2 943 330
Total comprehensive (loss)/income for the year (39 212 552) 31 356 096
Number of shares in issue 121 501 553 121 501 553
Number of shares in issue (after treasury shares) 114 754 798 118 658 716
Weighted average number of shares 118 409 637 118 658 716
Basic and diluted earnings per share (cents) (33.1) 26.4
Basic and diluted earnings per share from continuing
operations (cents) (33.1) 23.9
Basic and diluted earnings per share from discontinued
operations (cents) - 2.5
NOTES TO THE CONDENSED RESULTS:
RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS:
2015 2014
R R
(Loss)/Earnings attributable to ordinary shareholders (39 212 552) 31 356 096
Adjusted for:
Impairment of goodwill 8 141 200 -
Gain on disposal of discontinued operation - (3 380 620)
Tax effect thereof - 634 334
Loss on disposal of property, plant and equipment 276 185 85 443
Tax effect thereof (77 332) (23 924)
Headline earnings (30 872 499) 28 671 330
Basic and diluted headline earnings per share (cents) (26.1) 24.2
Basic and diluted headline earnings per share from
continuing operations (cents) (26.1) 24.0
Basic and diluted headline earnings per share from
discontinued operations (cents) - 0.2
CONSOLIDATED STATEMENT OF CASH FLOWS
2015 2014
R R
Cash flows from operating activities
Cash generated from operations 9 503 993 51 778 138
Interest income 3 620 847 2 972 378
Finance costs (2 936 629) (3 625 693)
Tax paid (6 118 912) (12 115 633)
Dividends paid (10 447 082) (5 698 409)
Cash flows of held-for-sale/discontinued operations - 332 625
Net cash flow from operating activities (6 377 783) 33 643 406
Cash flows from investing activities
Purchase of property, plant and equipment (2 853 050) (6 434 732)
Proceeds from disposal of plant and equipment 957 654 936 744
Proceeds on disposal of discontinued operations - 8 553 883
Net cash flow from investing activities (1 895 396) 3 055 895
Cash flows from financing activities
Repayment of other financial liabilities (8 699 440) (20 026 611)
Purchase of treasury shares (5 081 769) -
Net cash flow from financing activities (13 781 209) (20 026 611)
(Decrease)/Increase in cash and cash equivalents
for the year (22 054 388) 16 672 690
Cash and cash equivalents at the beginning of the year 62 188 309 45 515 619
Cash and cash equivalents at the end of the year 40 133 921 62 188 309
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated Retained Total
capital income equity
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
Loss for the period (39 212 552) (39 212 552)
Treasury shares acquired (5 081 769) (5 081 769)
Dividends paid (10 447 082)* (10 447 082)
Balance at 28 February 2015 71 864 018 148 722 620 220 586 638
* 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
2015 2014
R R
Segment revenue - external
- Aluminium 174 397 439 250 363 638
- Steel 77 868 920 90 479 773
- Glass 123 811 591 129 542 219
- Corporate - -
376 077 950 470 385 630
Segment revenue - internal
- Aluminium 120 240 1 807 775
- Steel - 2 926 500
- Glass 18 659 017 32 377 958
- Corporate 5 678 755 6 304 755
24 458 012 43 416 988
Segment result - operating profit
- Aluminium (5 982 628) 32 500 046
- Steel 2 478 201 14 116 668
- Glass (19 415 518) (10 877 204)
- Corporate (5 090 055) 4 086 532
(28 010 000) 39 826 042
Segment assets
- Aluminium 120 354 689 124 187 509
- Steel 54 632 381 70 770 093
- Glass 111 962 367 141 235 381
- Corporate 13 921 559 22 434 928
300 870 995 358 627 911
Segment liabilities
- Aluminium 20 674 488 18 967 917
- Steel 13 018 959 10 104 826
- Glass 37 687 667 44 316 766
- Corporate 8 903 244 9 910 361
80 284 358 83 299 870
COMMENTARY
INTRODUCTION
Mazor's audited consolidated financial results for the year to 28 February 2015
('the year') reflect the ongoing tough business environment. Mazor continued to focus
on cost management and its ongoing efficiency drive to position the group to capitalise
on the expected up-tick in the market.
BASIS OF PREPARATION
The condensed results of the audited consolidated annual financial statements 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 Accounting Practices Committee, the
Companies Act No. 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 in terms of IFRS and consistent with
those applied in the audited annual financial statements for the previous year ended
28 February 2014, except for the following amendments to standards that were effective
for the first time in the 2015 financial year and relevant to the group's operations:
- IFRS 13: Fair Value Measurement - Clarification - Entities are still able to measure
short-term receivables and payables with no stated interest rate at invoice amounts
without discounting when the effect of discounting is immaterial;
- IAS 32: Financial Instruments - Presentation (Amendment) - Explanation of 'currently
has a legally enforceable right to set off' and requirement to disclose gross amounts
subject to set off rights and the related net credit exposure; and
- IAS 36: Impairment of Assets (Amendment) - Clarifies the disclosures required for the
recoverable amount of impaired assets when the amount is based on fair value less
costs of disposal.
The impact of these amendments is not material.
The condensed results have been prepared under the supervision of the financial director,
Ms L Mazor CA(SA).
This summarised report is extracted from audited information, but is not itself audited.
The directors take full responsibility for the preparation of the condensed results and
the financial information has been correctly extracted from the underlying annual
financial statements.
The consolidated annual financial statements from which the condensed results have been
derived were audited by the group's external auditors, Mazars, 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 consolidated financial statements contained in the integrated
annual report.
A copy of the full set of consolidated annual 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. 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
Both macro and micro economic factors impacted negatively on group performance. Labour
unrest resulted in inconsistent business flow and general uncertainty, which in turn
caused a shortage of supply in materials. The knock-on effects included project delays
and reduced volumes, while competition tightened leading to pricing pressure that
squeezed margins.
These effects were evident in the group's manufacturing segments, Steel and Aluminium.
The Port Elizabeth branch of HBS was closed during the year due to continued
underperformance.
In Glass the rationalisation programme was completed. While this included a critical
review of inventory levels, it also depressed revenue. The new management team has
now implemented new systems which are expected to deliver improved margins and increased
production capacity.
FINANCIAL RESULTS
Revenue declined by 20.1% to R376 million from R470.4 million in the previous year.
The decline was group-wide, with Aluminium recording the most significant year-on-year
reduction of 30.3%. This contributed to a group operating loss of R28 million compared
to a profit of R39.8 million in the previous year.
In the light of the poor performance of the Glass division, the directors have reassessed
the recoverability of the goodwill and assessed losses attributable to this division.
This has led to an impairment of goodwill to the amount of R8.1 million and a reversal
of a portion of the entity's deferred tax asset relating to assessed losses attributed
to this division in order to account only for the losses to be utilised in the
foreseeable future. The assessed loss on which deferred tax has not been provided for
amounts to R60.9 million and results in deferred tax assets amounting to R17.0 million
not being raised.
During the year management reviewed the useful life of the intangible asset to be
20 years. This is a change in estimate from the prior year where the useful life was
estimated as indefinite. This change in estimate has resulted in an increase in
amortisation of R1 million during the current year and will lead to an increase in
amortisation by R1 million annually in future periods.
Headline earnings decreased from R28.7 million to a loss of R30.9 million, resulting
in a negative headline earnings per share of 26.1 cents from a positive headline
earnings per share of 24.2 cents in the prior year.
DIVIDEND DECLARATION
No dividend was declared for the year as the group incurred losses.
EVENTS AFTER THE REPORTING PERIOD
No material reportable events occurred between the reporting date and the date of
this announcement.
PROSPECTS
Looking ahead the group is confident of delivering a substantially stronger performance
in the next financial year. The security of power supply and the uncertainty this
creates does remain a concern. We are taking appropriate steps where possible to
mitigate this.
However, the construction market - affecting Steel and Aluminium - is more buoyant,
with prices increasing. Mazor therefore expects an up-tick in volumes as well as margins.
Major projects have already been secured on the back of the market turnaround, reflecting
in a healthy order book for Aluminium and Steel.
The distribution businesses of HBS (Aluminium) and Compass (Glass) are also expected
to benefit from better market conditions. In particular, increased activity in the
residential sector bodes well for material distribution as higher demand will alleviate
pricing pressure and drive up margins.
As the construction momentum gains traction, Mazor expects volumes to increase
substantially in the latter part of the year.
APPRECIATION
We thank our management and all staff for their hard work and tenacity in the face of
another challenging year. We also thank our business partners, suppliers, advisers,
our valued clients 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
11 May 2015
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: 12/05/2015 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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