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MAZOR GROUP LIMITED - Audited Results for the year ended 29 February 2016

Release Date: 17/05/2016 15:37
Code(s): MZR     PDF:  
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Audited Results for the year ended 29 February 2016

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')



SUMMARISED RESULTS OF THE AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 

FOR THE YEAR ENDED 29 FEBRUARY 2016



Revenue up 30.8%

Operating profit up 246.2%

HEPS up to 26.9 cents per share



SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION         

                                                              2016            2015

                                                                 R               R

ASSETS         

Non-current assets         

Property, plant and equipment                           84 832 242      77 793 737

Goodwill                                                         -               -   

Intangible asset                                        18 000 000      19 000 000

Deferred tax                                             4 342 457       5 477 045

                                                       107 174 699     102 270 782

         

Current assets         

Inventories                                            101 758 943      95 404 710

Construction contracts and receivables                  19 894 834      19 869 093

Current tax receivable                                     439 838          58 550

Trade and other receivables                             41 359 974      37 173 539

Cash and cash equivalents                               73 265 974      46 094 321

                                                       236 719 563     198 600 213

Total assets                                           343 894 262     300 870 995

EQUITY AND LIABILITIES         

Equity         

Stated capital                                          63 632 244      71 864 018

Retained income                                        177 069 358     148 722 620

                                                       240 701 602     220 586 638

Liabilities         

Non-current liabilities         

Other financial liabilities                             13 035 156      14 271 961

Deferred tax                                             1 190 023         794 753

                                                        14 225 179      15 066 714

Current liabilities         

Other financial liabilities                             10 175 724       7 466 254

Current tax payable                                        400 438         305 322

Trade and other payables and amounts due to customers   72 768 326      51 485 667

Bank overdraft                                           5 622 993       5 960 400

                                                        88 967 481      65 217 643

Total liabilities                                      103 192 660      80 284 357

Total equity and liabilities                           343 894 262     300 870 995



SUMMARISED CONSOLIDATED STATEMENT OF PROFIT OR LOSS 

AND OTHER COMPREHENSIVE INCOME

                                                              2016            2015

                                                                 R               R

Revenue                                                491 710 681     376 077 950

Cost of sales                                         (347 414 290)   (308 209 565)

Gross profit                                           144 296 391      67 868 385

Other income                                             1 321 605       1 750 457

Operating expenses                                    (104 673 401)    (97 628 842)

Operating profit/(loss)                                 40 944 595     (28 010 000)

Investment revenue                                       3 967 933       3 687 508

Finance costs                                           (2 932 442)     (2 936 629)

Profit/(loss) before taxation                           41 980 086     (27 259 121)

Taxation                                               (13 633 348)    (11 953 431)

Total comprehensive income/(loss) for the period        28 346 738     (39 212 552)

Basic and diluted earnings per share (cents)                  25.4           (33.1)



SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS

                                                              2016            2015

                                                                 R               R

Cash flows from operating activities          

Cash generated from operations                          62 976 234       9 503 993

Interest income                                          3 923 538       3 620 847

Finance costs                                           (2 932 442)     (2 936 629)

Tax paid                                               (12 389 663)     (6 118 912)

Dividends paid                                                   -     (10 447 082)

Net cash flow from operating activities                 51 577 667      (6 377 783)

Cash flows from investing activities          

Purchase of property, plant and equipment              (19 352 628)     (2 853 050)

Proceeds from disposal of plant and equipment            2 043 130         957 654

Net cash flow from investing activities                (17 309 498)     (1 895 396)

Cash flows from financing activities         

Proceeds/(repayment) of other financial liabilities      1 472 665      (8 699 440)

Purchase of treasury shares                             (8 231 774)     (5 081 769)

Net cash flow from financing activities                 (6 759 109)    (13 781 209)

Increase/(decrease) in cash and cash 

equivalents for the year                                27 509 060     (22 054 388)

Cash and cash equivalents at the beginning of the year  40 133 921      62 188 309

Cash and cash equivalents at the end of the year        67 642 981      40 133 921



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY                      

                                 Stated capital    Retained income    Total equity

                                              R                  R               R

Balance at 1 March 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

Changes in equity                      

Profit for the period                                   28 346 738      28 346 738

Treasury shares acquired             (8 231 774)                        (8 231 774)

Balance at 29 February 2016          63 632 244        177 069 358     240 701 602

                      

* No dividend was paid in the current year (a gross dividend of 8.8 cents per 

share on was paid 9 June 2014).                      



NOTES TO THE SUMMARISED RESULTS                      

RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS:                      

                                                              2016            2015

                                                                 R               R

Earnings/(Loss) attributable to ordinary shareholders   28 346 738     (39 212 552)

Adjusted for:         

Impairment of goodwill                                           -       8 141 200

Impairment of PPE                                          875 000    

Loss on disposal of property, plant and equipment        1 130 184         276 185

Tax effect thereof                                        (316 451)        (77 332)

Headline earnings                                       30 035 470     (30 872 499)

Number of shares in issue                              109 351 442     121 501 553

Number of shares in issue (after treasury shares)      108 963 942     114 754 798

Weighted average number of shares                      111 454 912     118 409 637 

Basic and diluted headline earnings per share (cents)         26.9           (26.1)



SUMMARISED SEGMENT REPORT         

                                                              2016            2015

                                                                 R               R

Segment revenue - external         

- Aluminium                                            280 831 877     174 397 439

- Steel                                                 71 341 218      77 868 920

- Glass                                                139 537 586     123 811 591

- Corporate                                                      -               -

                                                       491 710 681     376 077 950

         

Segment revenue - internal         

- Aluminium                                              1 335 491         120 240

- Steel                                                  4 100 000               -

- Glass                                                 27 514 234      18 659 017

- Corporate                                              5 724 098       5 678 755

                                                        38 673 823      24 458 012

         

Segment result - operating profit         

- Aluminium                                             37 407 001      (5 982 628)

- Steel                                                  4 561 812       2 478 201

- Glass                                                 (4 625 904)    (19 415 518)

- Corporate                                              3 601 686      (5 090 055)

                                                        40 944 595     (28 010 000)

         

Segment assets         

- Aluminium                                            155 338 437     120 354 689

- Steel                                                 59 725 240      54 632 381

- Glass                                                115 522 936     111 962 367

- Corporate                                             13 307 649      13 921 558

                                                       343 894 262     300 870 995

         

Segment liabilities         

- Aluminium                                             36 739 159      20 674 488

- Steel                                                 16 076 358      13 018 959

- Glass                                                 42 706 707      37 687 665

- Corporate                                              7 670 436       8 903 246

                                                       103 192 660      80 284 358



COMMENTARY

INTRODUCTION

The summarised results of the audited consolidated financial results ('summarized

Results') for the year ended 29  February 2016 ('the year') reflect a return to 

profitability for the full year notwithstanding continued challenging market 

conditions. Cost efficiencies and streamlined operations have helped to improve 

the bottom line while increased activity in the construction sector, particularly

in the residential sub-sector, positively impacted our order book and revenue 

growth.  



BASIS OF PREPARATION

The summarised results of the audited consolidated annual financial statements 

contain the information required by IAS  34: Interim Financial Reporting, and 

have been prepared in accordance with 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 summarised consolidated annual financial results are in terms of IFRS 

and consistent with those applied in the most recently issued audited annual 

financial statements.



The summarised 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 summarised results and the 

financial information has been correctly extracted from the underlying annual

financial statements.



The consolidated annual financial statements from which the summarised 

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, 

shop fronts, 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 Aluminium division enjoyed a good year with an improved performance 

from our manufacturing operations and solid results from HBS. We expect 

both top and bottom line as well as margins to continue improving and are 

well-positioned to weather increased input costs.



The Steel division saw increased activity in the year. However, rising 

material costs will remain a challenge.



Although the Glass division still incurred an operating loss, its 

performance has improved year-on-year. All three plants have been 

streamlined and the product-focused strategy and optimised efficiencies 

are beginning to bear fruit.  



No material reportable events occurred between the reporting date and the

date of this announcement.



FINANCIAL RESULTS

Revenue was up by 30.8% to R491.7 million from R376.1 million in the prior

year. The Aluminium division posted strong revenue growth, up 61% to 

R280.8 million. The Glass division also posted double digit growth with

revenue increasing 12.7% to R139.5 million. Revenue in the Steel 

division was down 8.4% year-on-year to R71.3 million.   



Operating profit rose 246.2% to R40.9 million compared to a loss of 

R28.0 million in the prior year.



Headline earnings increased to R30 million from a loss of R30.9 million 

in the prior year, resulting in an increase in headline earnings per 

share to 26.9 cents compared to a loss of 26.1 cents. 



The group invested R19.4 million in new plant predominantly to automate 

and improve efficiencies in the Steel and Glass divisions.



The group increased cash and cash equivalents by R27.5 million due to 

operating activities.



At 29 February 2016, the group had issued guarantees amounting to 

R66.1 million compared to R24.3 million at 28 February 2015. These 

guarantees have arisen in the ordinary course of business and it is not

expected that any loss will arise therefrom.



SHARE TRANSACTIONS

During the year, Mazor repurchased 5 790 856 of its own shares for a 

total consideration of R8.2 million. The shares were repurchased by a 

subsidiary of the company and held as treasury shares. 



On 29 February 2016, Mazor cancelled 12 150 111 shares which were 

previously held as treasury shares resulting in a reduction of issued 

share capital to 109 351 442 shares.



DIRECTORATE

Mr A Darko resigned as an independent 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 Audit and

Risk Committee, the Remuneration and Nomination and Social and Ethics 

Committees. Mr Schur brings substantial experience to the board as a 

former CFO of Protea Hotels and currently a non-executive director of 

Ingenuity Property Investments.



DIVIDEND DECLARATION

Notice is hereby given that in line with strategy the board has declared

a final gross dividend for the year of 8.5 cents per share (2015: 

No dividend declared after the reporting date) on 16 May 2016.



Salient dates are:

Last day to trade cum distribution   Thursday, 9 June 2016

Shares trade ex distribution         Friday, 10 June 2016

Record date                          Friday, 17 June 2016

Payment date                         Monday, 20 June 2016



Shareholders may not dematerialise or rematerialise their shares 

between Friday, 10 June 2016 and Friday, 17 June 2016, both 

days inclusive.



ADDITIONAL INFORMATION

The board has confirmed by resolution that the solvency and liquidity

test as contemplated by the Companies Act, No. 71 of 2008, has been 

duly considered, applied and satisfied. The dividend has been declared 

from reserves. This is a dividend as defined in the Income Tax Act, 

No. 58 of 1962, and is payable from reserves.



The South African dividend withholding tax ('DWT') rate is 15%. Consequently

DWT of 1.275 cents per share is payable by shareholders who are not exempt

from DWT, resulting in a net dividend of 7.225 cents per share.



There are 109 351 442 ordinary shares in issue (inclusive of 387 500 

treasury shares). The total dividend amount payable is R9 294 873.



Mazor Group Limited's tax reference number is 9495/976/15/2.



PROSPECTS

We anticipate some economic challenges in South Africa in the year ahead

but are confident that we are on a sound footing. Being predominantly 

Cape-based and given that the Cape economy is growing faster than the rest 

of the country we believe that we are all well positioned to take advantage 

of future growth. 



We will continue to focus on our cost per unit of revenue through our cost 

and efficiency programmes including skills development and investment in 

capital goods to streamline processes. 



We expect to benefit from the uptick in the residential market, which will in

turn drive demand for retail, as well as tourism especially in Cape Town. In 

addition we are seeing increased demand for big box warehouses for the 

logistics industry. 



We believe our focus on cost efficiency and product offering positions us 

to benefit from growth opportunities going forward. 



APPRECIATION

We extend our appreciation to our staff and management for their continued 

commitment, which helped achieve our strong performance. We also thank our 

fellow directors for their guidance and our business partners, suppliers, 

advisors, valued clients and shareholders for their continued support.



The annual general meeting will be held on 18 July 2016 at 10:00 at Mazars 

House, Rialto Road, Grand Moorings Precinct, Century City, Cape Town.



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



16 May 2016

Cape Town



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) 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)


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