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Unaudited Interim Results for the Six Months Ended 31 August 2015
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')
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2015
Revenue up 22.2%
HEPS up to 14.4 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
2015 2014 2015
R R R
ASSETS
Non-current assets
Property, plant and equipment 86 904 342 80 235 925 77 793 737
Goodwill - 8 141 200 -
Intangible asset 18 500 000 19 500 000 19 000 000
Deferred tax 5 016 401 18 824 615 5 477 045
110 420 743 126 701 740 102 270 782
Current assets
Inventories 88 000 053 79 107 676 95 404 710
Construction contracts and receivables 8 779 860 13 880 095 19 869 093
Current tax receivable 1 039 421 547 031 58 550
Trade and other receivables 54 049 572 45 021 424 37 173 539
Cash and cash equivalents 77 096 341 69 149 497 46 094 321
228 965 247 207 705 723 198 600 213
Total assets 339 385 990 334 407 463 300 870 995
EQUITY AND LIABILITIES
Equity
Stated capital 68 180 401 76 945 787 71 864 018
Retained income 164 378 171 178 785 208 148 722 620
232 558 572 255 730 995 220 586 638
Liabilities
Non-current liabilities
Other financial liabilities 16 467 544 16 917 660 14 271 961
Deferred tax 517 032 1 044 697 794 753
16 984 576 17 962 357 15 066 714
Current liabilities
Other financial liabilities 11 907 319 8 644 336 7 466 254
Current tax payable 3 007 692 1 190 962 305 322
Trade and other payables 72 017 882 46 858 202 51 485 667
Bank overdraft 2 909 949 4 020 611 5 960 400
89 842 842 60 714 111 65 217 643
Total liabilities 106 827 418 78 676 468 80 284 357
Total equity and liabilities 339 385 990 334 407 463 300 870 995
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2015 2014 2015
R R R
Revenue 244 722 979 200 306 981 376 077 950
Cost of sales (172 902 627) (167 788 147) (308 209 565)
Gross profit 71 820 352 32 518 834 67 868 385
Other income 368 707 591 210 1 750 457
Operating expenses (50 768 973) (46 497 382) (97 628 842)
Operating profit/(loss) 21 420 086 (13 387 338) (28 010 000)
Investment revenue 1 808 647 1 915 418 3 687 508
Finance costs (1 401 719) (1 554 546) (2 936 629)
Profit/(loss) before taxation 21 827 014 (13 026 466) (27 259 121)
Taxation (6 171 463) 3 876 502 (11 953 431)
Total comprehensive income/(loss) for
the period 15 655 551 (9 149 964) (39 212 552)
Number of shares in issue 121 501 553 121 501 553 121 501 553
Number of shares in issue (after
treasury shares) 111 932 883 118 658 716 114 754 798
Weighted average number of shares 112 906 065 118 658 716 118 409 637
Basic and diluted earnings per share (cents) 13.9 (7.7) (33.1)
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2015 2014 2015
R R R
Cash flows from operating activities
Cash generated from operations 48 997 451 21 207 294 9 503 993
Interest income 1 716 479 1 803 133 3 620 847
Finance costs (1 401 719) (1 554 531) (2 936 629)
Tax paid (4 267 042) (2 989 447) (6 118 912)
Dividends paid - (10 447 082) (10 447 082)
Net cash flow from operating activities 45 045 169 8 019 367 (6 377 783)
Cash flows from investing activities
Purchase of property, plant and equipment (15 877 180) (484 486) (2 853 050)
Proceeds from disposal of plant and equipment 1 931 451 281 355 957 654
Net cash flow from investing activities (13 945 729) (203 131) (1 895 396)
Cash flows from financing activities
Increase/(repayment) of other financial
liabilities 6 636 648 (4 875 659) (8 699 440)
Purchase of treasury shares (3 683 617) - (5 081 769)
Net cash flow from financing activities 2 953 031 (4 875 659) (13 781 209)
Increase/(decrease) in cash and cash
equivalents for the period 34 052 471 2 940 577 (22 054 388)
Cash and cash equivalents at the beginning
of the period 40 133 921 62 188 309 62 188 309
Cash and cash equivalents at the end of
the period 74 186 392 65 128 886 40 133 921
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated Retained Total
capital income equity
R R R
Balance at 1 March 2014 76 945 787 198 382 254 275 328 041
Changes in equity
Profit 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
Changes in equity
Profit for the period - 15 655 551 15 655 551
Treasury shares acquired (3 683 617) - (3 683 617)
Dividends paid - - -
Balance at 31 August 2015 68 180 401 164 378 171 232 558 572
RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS:
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2015 2014 2015
R R R
(Loss)/Earnings attributable to ordinary
shareholders 15 655 551 (9 149 964) (39 212 552)
Adjusted for:
Impairment of goodwill - - 8 141 200
Loss on disposal of property, plant
and equipment 882 223 79 678 276 185
Tax effect thereof (247 022) (22 310) (77 332)
Headline earnings 16 290 752 (9 092 596) (30 872 499)
Basic and diluted headline earnings
per share (cents) 14.4 (7.7) (26.1)
CONDENSED SEGMENT REPORT
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2015 2014 2015
R R R
Segment revenue - external
- Aluminium 133 414 915 103 324 855 174 397 439
- Steel 40 677 851 36 866 014 77 868 920
- Glass 70 630 213 60 116 112 123 811 591
- Corporate - - -
244 722 979 200 306 981 376 077 950
Segment revenue - internal
- Aluminium 810 261 38 095 120 240
- Steel 2 000 000 - -
- Glass 13 958 406 12 602 698 18 659 017
- Corporate 3 007 825 3 019 378 5 678 755
19 776 492 15 660 171 24 458 012
Segment result - operating profit
- Aluminium 17 082 405 824 981 (5 982 628)
- Steel 3 178 961 (1 061 372) 2 478 201
- Glass (393 654) (14 858 505) (19 415 518)
- Corporate 1 552 374 1 707 558 (5 090 055)
21 420 086 (13 387 338) (28 010 000)
Segment assets
- Aluminium 144 370 701 122 322 279 120 354 689
- Steel 60 054 569 56 754 946 54 632 381
- Glass 121 561 940 133 131 142 111 962 367
- Corporate 13 398 780 22 199 096 13 921 558
339 385 990 334 407 463 300 870 995
Segment liabilities
- Aluminium 40 705 079 17 655 604 20 674 488
- Steel 11 926 426 6 916 515 13 018 959
- Glass 45 815 680 44 733 253 37 687 665
- Corporate 8 380 233 9 371 096 8 903 246
106 827 418 78 676 468 80 284 358
COMMENTARY
INTRODUCTION
The unaudited condensed consolidated interim results for the six months to August 2015
('the period') reflect the group's improved performance following an upturn in the
construction and general industries. Specifically, increased activity in the residential
and retail sectors positively impacted Mazor.
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 Practices Committee and the Financial Reporting Pronouncements as issued
by the Financial Reporting Standards Council, 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
results 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 2015.
These unaudited condensed consolidated interim results were authorised for issue by
the board of directors on 10 November 2015.
The unaudited condensed consolidated financial results for the period ended 31 August 2015
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.
These unaudited condensed consolidated interim financial results should be read in
conjunction with the audited annual financial statements for the year ended
28 February 2015.
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 Aluminium Systems ('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
The Steel division sustained its activities despite the negative impacts of the slow-down
in the mining sector and industrial construction as well as delays in the construction
of planned distribution centres. The division continued to invest in technology to
increase capacity and position for future growth on the anticipated market upturn.
The Aluminium division has secured a good order book with a solid pipeline for the
next 36 months, driven mainly by high-end construction projects for offices and hotels.
HBS is enjoying the benefits of its brand-building strategy with both top and bottom
line reflecting growth. The client base has been broadened, which presents further
potential for growth. Additional product lines are also being introduced to further
expand in South Africa and the wider SADC region.
In the Glass division the rationalisation of Compass Glass in Cape Town has been
successfully concluded to deliver improved efficiencies and returns. Our key focus on
growth resulted in improved gross profits in the glass plants and the Cape Town and
George operations coming back on track. However, operations in Johannesburg were
impacted by industrial action in the period. Labour and personnel in this region will
be a focus area going forward. The division also plans to expand the Johannesburg
customer base with a sectoral bias.
FINANCIAL RESULTS
Revenue increased by 22.2% to R244.7 million from R200.3 million in the comparative
period. All three divisions reflected increased revenue with the Aluminium division
being the stellar performer with revenue up by 29.1% to R133.4 million. The Steel
division had increased revenue by 10.3% to R40.7 million and in the Glass division
revenue was up by 17.5% to R70.6 million.
Gross profit increased across all three divisions over the corresponding period in the
prior year. This increase is mainly attributable to the increased activity and expanded
customer base in the Aluminium division coupled with completion of the rationalisation
programme in the Glass division which has begun to reap the benefits of the improved
efficiencies and cost-cutting initiatives implemented.
This increase in gross profit translated into an increase in bottom-line growth with
headline earnings increasing to R16.3 million from a loss of R9.1 million, resulting
in an increase in headline earnings per share to 14.4 cents compared to a loss of
7.7 cents in the comparative period.
DIRECTORATE
Mr A Darko resigned as a non-executive director of Mazor and chairman of the audit and
risk and social and ethics committees with effect from 11 May 2015. We thank Mr Darko
for his years of service.
Mr RS Schur was appointed as an independent non-executive director of Mazor with effect
from 27 August 2015. He is a member of the remuneration and nomination and social and
ethics committees as well as the audit and risk committee. Mr Schur brings substantial
experience to the board. He was a former CFO of Protea Hospitality Group (Pty) Ltd
and is currently a non-executive director of Ingenuity Property Investments Ltd.
DIVIDEND DECLARATION
In line with group policy no interim dividend has been declared for the period.
PROSPECTS
We believe the recent improvement in residential, retail and hotel construction
should continue and we expect the industrial property sector to follow this upswing.
We are, however, mindful of the volatility in the exchange rate which may have an effect
on margins.
Labour constraints, and in particular skills shortages, remain a challenge to growth.
However, our focus at Mazor on upskilling and advancing internal staff and our intense
training and development programmes position the group competitively in this regard.
We are confident that our market offering and continued investment in new technologies
positions Mazor to capitalise on growth opportunities going forward.
APPRECIATION
We thank our staff and management for their commitment and hard work, which helped
drive the improvement in our performance. We also extend our appreciation to our fellow
directors for their input and our business partners, suppliers, advisers, valued clients
and shareholders for their continued 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 November 2015
Directors: M Kaplan (Chairman)*^, R Mazor (CEO), L Mazor (Financial Director), S Mazor,
RS Schur*^, 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: 11/11/2015 03:17:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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