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Summarised Results of the Audited Consolidated Annual Financial Statements for the year ended 28 February 2017
MAZOR GROUP LIMITED
('MAZOR' OR 'THE COMPANY' OR 'THE GROUP')
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
REGISTRATION NUMBER: 2007/017221/06
SHARE CODE: MZR
ISIN: ZAE000109823
REVENUE UP 18.5%
OPERATING PROFIT UP 35.8%
HEPS UP 62.1% TO 43.6 CENTS PER SHARE
SUMMARISED RESULTS OF THE AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2017 2016
R R
ASSETS
Non-current assets
Property, plant and equipment 79 856 462 84 832 242
Intangible asset 17 000 000 18 000 000
Deferred tax 3 743 963 4 342 457
100 600 425 107 174 699
Current assets
Inventories 77 840 847 101 758 943
Construction contracts and receivables 23 022 833 19 894 834
Current tax receivable 426 553 439 838
Trade and other receivables 35 992 984 41 359 974
Cash and cash equivalents 106 458 363 73 265 974
243 741 580 236 719 563
Total assets 344 342 005 343 894 262
EQUITY AND LIABILITIES
Equity
Stated capital 63 473 194 63 632 244
Retained income 214 843 423 177 069 358
278 316 617 240 701 602
Liabilities
Non-current liabilities
Other financial liabilities 3 949 921 13 035 156
Deferred tax 2 612 738 1 190 023
6 562 659 14 225 179
Current liabilities
Other financial liabilities 11 230 399 10 175 724
Current tax payable 510 875 400 438
Trade and other payables 46 458 636 58 022 355
Amounts due to customers 1 262 819 14 745 970
Bank overdraft - 5 622 993
59 462 729 88 967 481
Total liabilities 66 025 388 103 192 660
Total equity and liabilities 344 342 005 343 894 262
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
2017 2016
R R
Revenue 582 845 340 491 710 681
Cost of sales (413 992 751) (347 414 290)
Gross profit 168 852 589 144 296 391
Other income 2 429 372 1 321 605
Operating expenses (115 687 920) (104 673 401)
Operating profit 55 594 041 40 944 595
Investment revenue 5 789 611 3 967 933
Finance costs (2 327 784) (2 932 442)
Profit before taxation 59 055 868 41 980 086
Taxation (12 014 927) (13 633 348)
Total comprehensive income for the period 47 040 941 28 346 738
Basic and diluted earnings per share (cents) 43.2 25.4
CONSOLIDATED STATEMENT OF CASH FLOWS
2017 2016
R R
Cash flows from operating activities
Cash generated from operations 67 649 116 62 976 234
Interest income 5 718 058 3 923 538
Finance costs (2 327 784) (2 932 442)
Tax paid (9 869 995) (12 389 663)
Dividends paid (9 266 876) -
Net cash flow from operating activities 51 902 517 51 577 667
Cash flows from investing activities
Purchase of property, plant and equipment (6 270 653) (19 352 628)
Proceeds from disposal of plant and equipment 1 373 128 2 043 130
Net cash flow from investing activities (4 897 525) (17 309 498)
Cash flows from financing activities
Proceeds from other financial liabilities - 6 873 285
Repayment of other financial liabilities (8 030 560) (5 400 620)
Purchase of treasury shares (159 050) (8 231 774)
Net cash flow from financing activities (8 189 610) (6 759 109)
Increase in cash and cash equivalents for the year 38 815 382 27 509 060
Cash and cash equivalents at the beginning of the year 67 642 981 40 133 921
Cash and cash equivalents at the end of the year 106 458 363 67 642 981
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated capital Retained income Total equity
R R R
Balance at 1 March 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
Changes in equity
Profit for the period 47 040 941 47 040 941
Treasury shares acquired (159 050) (159 050)
Dividends paid (9 266 876)* (9 266 876)
Balance at 28 February 2017 63 473 194 214 843 423 278 316 617
* A gross dividend of 8.5 cents per share was paid on 20 June 2016
(no dividend was paid in the prior year)
NOTES TO THE SUMMARISED RESULTS
Reconciliation between earnings and headline earnings:
2017 2016
R R
Earnings attributable to ordinary shareholders 47 040 941 28 346 738
Adjusted for:
(Reversal)/Impairment of PPE (875 000) 875 000
Loss on disposal of property, plant and equipment 1 897 903 1 130 184
Tax effect thereof (531 413) (316 451)
Headline earnings 47 532 431 30 035 471
Basic and diluted headline earnings per share (cents) 43.6 26.9
SUMMARISED SEGMENT REPORT
2017 2016
R R
Segment revenue - external
- Aluminium 293 373 314 280 831 877
- Steel 133 800 550 71 341 218
- Glass 155 671 476 139 537 586
- Corporate - -
582 845 340 491 710 681
Segment revenue - internal
- Aluminium 787 520 1 335 491
- Steel 3 918 884 4 100 000
- Glass 40 776 438 27 514 234
- Corporate 3 612 546 5 724 098
49 095 388 38 673 823
Segment result - operating profit
- Aluminium 26 758 533 37 407 001
- Steel 10 772 254 4 561 812
- Glass 16 357 354 (4 625 904)
- Corporate 1 705 900 3 601 686
55 594 041 40 944 595
Segment assets
- Aluminium 161 529 896 155 338 437
- Steel 58 533 220 59 725 240
- Glass 110 515 495 115 522 936
- Corporate 13 763 394 13 307 649
344 342 005 343 894 262
Segment liabilities
- Aluminium 20 389 707 36 739 159
- Steel 15 673 987 16 076 358
- Glass 24 126 422 42 706 707
- Corporate 5 835 272 7 670 436
66 025 388 103 192 660
COMMENTARY
INTRODUCTION
The summarised results of the audited consolidated financial statements ('summarised
results') for the year ended 28 February 2017 ('the year') reflect increased revenue
across all of the group's divisions - a very pleasing result. In particular, the
turnaround in the Glass division has repaid the focus and investment dedicated to it.
Cost containment and a consistently high level of service have helped retain customers
in a margin-pressured environment. Group revenue and profit have improved alongside
growth in the construction sector, particularly in the residential and retail sub-sectors
in Cape Town, which continue to bolster our 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 consolidated
annual 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') adds to 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, as well as 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
All divisions of the group performed well this year, returning increased revenue,
which is further reflected in overall group revenue and profit figures.
The Aluminium division enjoyed a good year with improved revenue from manufacturing
operations. However, operating profit was down. This was due to lower top-line revenue
in HBS (aluminium distribution) as a result of increased competition.
The Steel division saw significantly increased revenue this year. Rising material costs
remain a persistent challenge.
The Glass division also returned strongly to profitability, the result of a successful
product-focused strategy and optimised efficiencies. This turnaround was particularly pleasing.
No material reportable events occurred between the reporting date and the date of
this announcement.
FINANCIAL RESULTS
Revenue was up by 18.5% to R582.8 million from R491.7 million in the prior year.
The Aluminium division posted revenue growth up 4.5% to R293.4 million, although
operating profit dropped by 28.5% to a still healthy R26.8 million. The Glass division
also not only increased its revenue by 11.6% to R155.7 million, but returned to
a pleasing profit of R16.4 million after a prior-year loss. Revenue in the Steel
division rose 87.6% year-on-year to R133.8 million, with profit also increasing
from R4.6 million to R10.8 million compared to the prior year - an increase of 136.1%.
Operating profit for the group overall rose 35.8% to R55.6 million compared to R40.9 million
in the prior year, while headline earnings increased to R47.5 million from R30 million
in the prior-year, resulting in an increase in headline earnings per share to 43.6 cents
compared to 26.9 cents - a 62.1% rise.
The group increased cash and cash equivalents by R33.2 million due to operating activities.
At 28 February 2017, the group had issued guarantees amounting to R35.7 million
compared to R66.1 million at 29 February 2016. 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 101 505 of its own shares for a total consideration of
R159 050. The shares were repurchased by a subsidiary of the company and held as
treasury shares.
DIRECTORATE
There were no changes to the directorate of the business in the year under review.
CAPITAL REDUCTION DISTRIBUTION
Notice is hereby given that on 15 May 2017, the board declared a capital reduction
distribution of 14.4 cents per share as a return of contributed tax capital to
shareholders recorded in the share register of the company at the close of business on
Friday, 9 June 2017.
The following salient dates apply to the dividends:
Last day to trade cum distribution 6 June 2017
Shares trade ex distribution 7 June 2017
Record date 9 June 2017
Payment date 12 June 2017
Shareholders may not dematerialise or rematerialise their shares between Wednesday,
7 June 2017 and Friday, 9 June 2017, both days inclusive.
Additional information
The directors have determined that this capital reduction distribution will be paid
out of qualifying contributed tax capital as contemplated in the definition of 'contributed
tax capital' in section 1 of the Income Tax Act, 1962. As the distribution will be regarded
as a return of capital and may have potential capital gains tax consequences, Mazor
shareholders are advised to consult their tax advisors regarding the impact of the
distribution.
The directors have reasonably concluded that the company will satisfy the solvency
and liquidity requirements of sections 4 and 46 of the Companies Act, 2008, immediately
after the capital distribution.
The net amount payable to shareholders is R15 746 608, being 14.4 cents per share,
based on the current number of 109 351 442 shares in issue.
The income tax reference number of Mazor Group Limited is 9495/976/15/2.
PROSPECTS
Although the year in review has been comparatively stable economically and politically,
we anticipate some political and economic uncertainty in South Africa in the year ahead,
particularly in terms of fiscal policy and rising finance costs.
We believe that the Western Cape will continue to be a desirable residential destination
and a consequent source of business.
We also note the ongoing focus on logistics and warehousing nationally, which offers
opportunity for the Steel division.
In both these regards, we continue to be well positioned to take advantage of any
future growth.
There is no doubt that oversupply and continuing competition in our sector means
pressure will remain on margins for some time. Rationalisation is not occurring at
the pace required to ensure sustained price increases, so demand-side inflation
will remain low.
In addition, skills shortages at all levels of the business are an ongoing challenge.
Our solution remains to invest in in-house training to create the required skills.
We will continue to control costs rigorously, invest in in-house training and keep a
keen eye on input costs in particular. Margins will come from efficiencies and product focus.
The annual general meeting will be held on 31 July 2017 at 10:00 at Mazars House,
Rialto Road, Grand Moorings Precinct, Century City, Cape Town.
APPRECIATION
We would like to take this opportunity to thank our management and staff who work
side by side with us, often in challenging conditions. Their support and commitment
are key contributors to our strong performance this year. We are also grateful to our
fellow directors 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
Chairperson CEO
15 May 2017
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, 2196
(PO Box 651010, Benmore, 2010)
Transfer secretaries: Computershare Investor Services (Pty) Limited,
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196 (PO Box 61051,
Marshalltown, 2107)
Date: 16/05/2017 04:08:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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