| Wed 14 May 2008, 7:01 | | MZR - Mazor Group Limited - Audited condensed cons |
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MZR
MZR
MZR - Mazor Group Limited - Audited condensed consolidated financial results
for the year ended 29 February 2008
Mazor Group Limited
(Formerly Main Street 590 (Pty) Limited)
("Mazor" or "the company")
(Incorporated in the Republic of South Africa)
Registration number: 2007/017221/06
Share code: MZR ISIN: ZAE00109823
HIGHLIGHTS
- Successful listing on AltX
- Prelisting forecasts exceeded
- Turnover up y-o-y 24.6% to R177.1 million
- Operating margin up y-o-y to 35.8%
- Core HEPS of 47.2 cents
- Enhanced productivity and capacity
- Geographical expansion into growth markets
AUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS
for the year ended 29 February 2008
Commentary
The directors are pleased to present the audited condensed consolidated
financial results for the year ended 29 February 2008 ("the year"), the maiden
results of the company since successfully listing on the Alternative Exchange
(AltX) of the JSE Limited in November 2007. The private placement preceding
the listing was significantly oversubscribed, reflecting market confidence in
Mazor`s prospects.
Mazor`s maiden annual financial results have exceeded forecasts set out in the
company`s prelisting prospectus in all material respects, and in addition
reflect strong growth year-on-year. Operational and geographic expansion
initiatives were realised during the year, positioning the group for further
growth.
Group profile
Mazor currently comprises two key divisions - Mazor Steel which designs,
supplies and erects structural steel frames and Mazor Aluminium which designs,
manufactures and installs aluminium structures such as doors, windows, shop
fronts, facades and balustrades for major blue-chip construction groups.
Notably Mazor Aluminium is South Africa`s leading specialist in glass facade
cladding.
With the acquisition of Independent Glass CC and Independent Glass George CC
(see "Acquisitions" below) the group has expanded its offering to include
glass.
The group has contributed to many of the Western Cape`s most prestigious
construction projects including the Arabella Sheraton Grand Hotel, which
utilised Mazor`s specialist capability for glass facade cladding, GrandWest
Casino, Canal Walk Shopping Centre, V&A Waterfront, the South African Large
Telescope (SALT) and Mandela Rhodes Place.
Financial results
The 24.6% growth in turnover to R177.1 million from R142.1 million for the
previous year (which exceeded the prelisting forecast of R161.8 million by
9.5 %), outstripped the 17.9% increase in operating costs from R96.7 million to
R114.1 million. Increased efficiencies as a result of the investment in
sophisticated plant together with strict cost control contributed to improved
operating margins, which increased to 35.8% from 32%. Operating profit of
R63.5 million was 39.2% up on R45.6 million at February 2007 and 24.7% higher
than the pre-listing forecast of R50.9 million.
A share-based payment charge of R13.9 million as a result of the BEE
transaction was made during the year (see "BEE" below). Core headline earnings
amounted to R50.1 million, translating into core headline earnings per share
(HEPS) of 47.2 cents. This equates to a 38.8% increase on the previous year and
is 19.8% higher than the prelisting forecast of 39.4 cents per share.
The share-based payment charge is purely an accounting entry as required in
terms of IFRS 2 and has no effect on the cash flows or net asset value of the
company.
The effective tax rate of 49.51% is due to the share-based payment charge,
which is non-deductible for taxation purposes, and a R6 million charge for
dividend tax paid in November 2007 in respect of a dividend declared as a result
of a group restructure prior to listing. This is higher than the effective tax
rate in the prospectus of 29%
as the prospectus excluded both the dividend charge and the share-based payment.
The balance sheet remains strong, supported by healthy cash flows. Cash on hand
at year-end amounted to R130.2 million compared with R29.4 million at February
2007.
Operational review
Both divisions performed exceptionally well during the year as a result of
continued buoyant trading conditions and escalating demand for the group`s
products. Automation at Mazor`s manufacturing facilities was significantly
advanced, which enhanced productivity in the manufacture of components and sub-
assemblies. The improved technology has positioned the group to continue
expanding and optimising the range of products and product mix, and to increase
levels of output to accelerate growth and increase market share.
Major projects completed in the Western Cape during the year included the
Convention Towers, Massmart Warehouse, Northgate Island, Spar Distribution
Centre, V&A Link Mall and Zevenwacht Mall.
During the year Mazor embarked on a programme of geographical expansion in line
with the group`s prelisting strategy. The base of operations was extended from
the Western Cape to growth markets in Durban and Port Elizabeth. Initial
indications of trading in these regions are promising.
Acquisitions
On 3 March 2008, Mazor acquired the businesses of Independent Glass CC and
Independent Glass George CC for an aggregate purchase consideration of
R1.4 million. The businesses have operations in Cape Town and George and are
poised to enter the market in Gauteng. While they are exclusively a distributor
at this stage, some manufacturing activities are being contemplated. The
businesses are being integrated into the group`s operations and Mazor is
currently considering further larger acquisitions in this niche market.
BEE
As announced on 22 November 2007, black-owned Cloudberry Investments 18 (Pty)
Limited ("Cloudberry Investments") acquired 18 million shares from the two
founder shareholders of the company, which amounted to 14.7% of the company`s
shareholding.
Mazor has established the Mazor Group Limited BEE Share Incentive Scheme to
benefit black employees. The company has recently been independently assessed as
BBBEE Level 6.
People
On listing the board of directors comprised two independent non - executive
directors - A Groll and S Ozinsky - and three executive directors, all of whom
are members of the Mazor family: S Mazor (Chairman and co-founder);
R Mazor (CEO) and L Mazor (Financial Director). Since listing A Varachhia has
been appointed as a non - executive director with effect from 22 November 2007.
In addition S Mazor has stepped down from the Chairmanship in favour of
independent non - executive director M Kaplan, appointed with effect from 5
February 2008. S Mazor remains an executive director of the company. On 1 April
2008 A Winkler was appointed as company secretary after the resignation of L
Moller.
The success of the group to date is largely attributable to the effort and
commitment of a solid team. We thank our fellow directors for their insight and
counsel and our management and employees for their invaluable contribution.
Prospects
The local construction sector continues to experience significant growth,
particularly in Mazor`s target markets of high-rise commercial
buildings, leisure and retail developments and similar large projects.
Improved efficiencies and geographical expansion during the year have
positioned Mazor to extend its recognised product range and increase market
share nationally.
The directors are positive about Mazor`s prospects for the year ahead and are
confident of exceeding the forecasts set out in the prelisting prospectus for
the year ending 28 February 2009 in the absence of any unforeseen circumstances.
While organic growth is a primary objective, Mazor will continue to consider
acquisition opportunities, particularly in glass. A portion of capital raised
on listing will be allocated to these acquisition opportunities, a number of
which are currently being assessed. In light of the energy crisis in South
Africa and rising energy and commodity prices worldwide, the field of energy-
optimising construction presents interesting expansion opportunities.
Dividend
Prior to listing as part of the restructure of the Mazor group, Mazor acquired
the issued share capital of Mazor Steel and of Mazor Aluminium and a total
dividend of R60 million was distributed to the shareholders of Mazor Steel and
Mazor Aluminium. In line with company policy no dividend has been declared for
the period since listing. A dividend is planned to be paid for the 2009
financial year.
Appreciation
We thank our customers for their loyal support and our associates, advisers and
suppliers for their excellent service. Finally, a warm welcome to our new
shareholders.
Basis of preparation
The audited condensed consolidated financial statements for the year ended 29
February 2008 have been prepared in compliance with International Financial
Reporting Standards (IFRS), IAS 34 and the Companies Act of South Africa, 1973.
The accounting policies and methods of measurement and recognition applied in
preparation of these audited consolidated annual financial statements are
consistent with those applied in the group`s most recent audited annual
financial statements for the previous year ended 28 February 2007.
Auditor`s opinion
The condensed consolidated annual financial statements for the year ended 29
February 2008 have been audited by the company`s auditors, Mazars Moores
Rowland. Their unqualified audit opinion is available for inspection at the
company`s registered office.
On behalf of the board
M Kaplan R Mazor
Independent Chairman CEO
14 May 2008
Directors: M Kaplan (Chairman)*, R Mazor (CEO), L Mazor (Financial Director),
S Mazor, A Groll *, SM Ozinsky*, A Varachia* *Non-executive Independent
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
Transfer secretaries: Computershare Investor Services (Pty) Limited, 70
Marshall Street, Johannesburg, 2001 (PO Box 61763, Marshalltown, 2107)
Company secretary: Arthur Leon Winkler, 1st Floor The Spearhead, 42 Hans
Strijdom Avenue, Foreshore, Cape Town, 8001 (PO Box 7677, Roggebaai, 8012)
Investor relations: Envisage Investor & Corporate Relations
Group Income Statement
Audited year to Audited year to
29 February 28 February Forecast
2008 2007 2008*
R R R
Revenue 177 145 317 142 167 222 161 852 938
Cost of sales (106 180 890) (90 613 216) (103 323 880)
Gross profit 70 964 427 51 554 006 58 529 058
Other income 437 739 183 444 6 493
Operating expenses (7 943 845) (6 15 3 146) (7 595 000)
Operating profit 63 458 321 45 584 304 50 940 551
Loss on non-current
assets held-for-sale (244 797) - -
Share-based payment: BEE
credentials (13 860 000) - -
Profit before investment
revenue
and finance costs 49 353 524 45 584 304 50 940 551
Investment revenue 6 472 469 3 046 037 7 630 000
Finance costs (376 062) (399 172) (268 000)
Profit before taxation 55 449 931 48 231 169 58 302 551
Taxation (25 457 357) (14 255 853) (16 439 000)
Net profit 29 992 574 33 975 316 41 863 551
Earnings per share (cents) 28.5 34.0 39.4
Headline earnings per
share (cents) 28.3 34.0 39.4
Core headline earnings per
share (cents) 47.2 34.0 39.4
Calculation of headline
earnings and core
headline earnings
Earnings attributable to
ordinary shareholders 29 992 574 33 975 316 41 863 551
Adjusted for:
(Profit)/Loss on disposal
of property, plant
and equipment (28 078) 65 152 -
Loss on non-current assets
held-for-sale 252 801 - -
Fair value adjustment of
investment property - (50 000) -
Headline earnings 30 217 297 33 990 468 41 863 551
Adjusted for:
Share-based payments: BEE
credentials 13 860 000 - -
Non-recurring item** 6 000 000 - -
Core headline earnings 50 077 297 33 990 468 33 990 468
Weighted average number of
shares 106 164 384 100 000 000 106 164 384
* Forecast as per prospectus dated 8 November 2007.
** Dividend tax in respect of restructure prior to listing.
Group Cash Flow Statement
Audited year to Audited year to
29 February 28 February
2008 2007
R R
Cash flows from operating activities
Cash generated from operations 50 350 918 44 259 976
Interest income 6 472 469 3 046 037
Finance costs (376 062) (399 172)
Tax paid (25 051 002) (11 125 427)
Dividends paid (60 000 000) (3 500 000)
Net cash flow from operating activities (28 603 677) 32 281 414
Cash flows from investing activities
Purchase of property, plant and
equipment (3 896 691) (3 201 226)
Sale of property, plant and equipment 145 486 380 314
Sale of financial assets 48 812 059 (26 244 352)
Sale of non-current asset held-for-sale 5 155 203 -
Net cash flow from investing activities 50 216 057 (29 065 264)
Cash flows from financing activities
Proceeds on share issue 81 787 121 -
Repayment of other financial liabilities (2 600 841) 982 188
Net cash flow from financing activities 79 186 280 982 188
Increase in cash and cash equivalents
for the year 100 798 660 4 198 338
Cash and cash equivalents at beginning
of year 29 483 017 25 284 679
Cash and cash equivalents at end of year 130 281 677 29 483 017
Group Balance Sheet
Audited as at Audited as at
29 February 28 February
2008 2007
R R
ASSETS
Non-current assets
Property, plant and equipment 10 359 399 8 050 881
10 359 399 8 050 881
Current assets
Inventories 5 656 627 1 626 529
Other financial assets - 48 812 059
Construction contracts and receivables 23 547 784 14 329 967
Short-term receivables 1 788 666 589 594
Cash and cash equivalents 130 281 677 29 483 017
161 274 754 94 841 166
Non-current assets held-for-sale - 5 400 000
Total assets 171 634 153 108 292 047
Equity and Liabilities
Equity
Share capital 1 221 200
Share premium 81 786 100 -
Retained income 64 373 269 80 520 695
146 160 590 80 520 895
Liabilities
Non-current liabilities
Other financial liabilities 829 199 1 703 975
Deferred tax 775 515 1 571 595
1 604 714 3 275 570
Current liabilities
Other financial liabilities 1 496 066 3 222 131
Current tax payable 10 430 377 9 227 942
Trade and other payables 11 942 406 12 045 509
23 868 849 24 495 582
Total liabilities 25 473 563 27 771 152
Total equity and liabilities 171 634 153 108 292 047
Group Statement of Changes in Equity
Share Share Retained Total
capital premium income equity
R R R R
Balance at 1
March 2006 200 - 50 045 379 50 045 579
Changes in equity -
Profit for the year 33 975 316 33 975 316
Dividend paid (3 500 000) (3 500 000)
Balance at
1 March 2007 200 - 80 520 695 80 520 895
Changes in equity -
Profit for the year 29 992 574 29 992 574
Issue of shares 1 221 88 448 779 88 450 000
Listing expenses (6 662 679) (6 662 679)
Return of members`
contributions (200) (200)
Dividend paid (60 000 000) (60 000 000)
Share-based
payment: BEE
credentials 13 860 000 13 860 000
Balance at 29
February 2008 1 221 81 786 100 64 373 269 146 160 590
Date: 14/05/2008 07:01:01 Produced by the JSE SENS Department.
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