| Wed 20 May 2009, 7:05 | | MZR - Mazor Group Limited - Audited condensed consolidated financial statements |
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MZR
MZR
MZR - Mazor Group Limited - Audited condensed consolidated financial statements
for the year ended 28 February 2009
Mazor Group Limited
(`Mazor` or `the company`)
(Incorporated in the Republic of South Africa)
Registration number: 2007/017221/06
Share code: MZR
ISIN: ZAE00109823
AUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the year ended
28 February 2009
HIGHLIGHTS
- Revenue up 67%
- Operating profit up 17.9%
- NAV per share up to 158.6 cents
- Acquisitions successfully bedded down
- Broadened geographical footprint
Group Income Statement
2009 2008
R R
Revenue 295 631 803 177 145 317
Cost of sales (198 790 823) (106 180 890)
Gross profit 96 840 980 70 964 427
Other income 481 898 437 739
Operating expenses (22 484 933) (7 943 845)
Operating profit 74 837 945 63 458 321
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 74 837 945 49 353 524
Investment revenue 14 164 901 6 472 469
Finance costs (634 384) (376 062)
Profit before taxation 88 368 462 55 449 931
Taxation (24 765 090) (25 457 357)
Net profit 63 603 372 29 992 574
Number of shares in issue 122 847 222 122 500 000
Weighted average number of shares 122 144 601 106 164 384
Earnings per share (cents) 52.1 28.3
Headline earnings per share (cents) 52.1 28.5
Diluted earnings per share (cents) 52.1 28.3
Reconciliation between earnings and headline earnings:
Earnings attributable to
ordinary shareholders 63 603 372 29 992 574
Adjusted for:
(Profit)/Loss on disposal of property,
plant and equipment 56 647 (39 547)
Tax effect thereof (15 861) 11 469
Loss on non-current assets held-for-sale - 244 797
Tax effect thereof - 8 004
Fair value adjustment of investment property - -
Headline earnings 63 644 158 30 217 297
Group Balance Sheet
2009 2008
R R
ASSETS
Non-current assets
Property, plant and equipment 53 976 358 10 359 399
Goodwill 8 141 200
Deferred tax 2 295 585
64 413 143 10 359 399
Current assets
Inventories 18 638 757 5 656 627
Construction contracts and receivables 39 684 115 23 547 784
Trade and other receivables 17 704 001 1 788 666
Cash and cash equivalents 110 707 407 130 281 677
186 734 280 161 274 754
Total assets 251 147 423 171 634 153
EQUITY AND LIABILITIES
Equity
Share capital 1 108 1 221
Share premium 65 724 599 81 786 100
Retained income 127 976 641 64 373 269
193 702 348 146 160 590
Liabilities
Non-current liabilities
Other financial liabilities 3 341 129 829 199
Deferred tax 945 075 775 515
4 286 204 1 604 714
Current liabilities
Other financial liabilities 2 513 985 1 496 066
Current tax payable 18 484 453 10 430 377
Trade and other payables 32 160 433 11 942 406
53 158 871 23 868 849
Total liabilities 57 445 075 25 473 563
Total equity and liabilities 251 147 423 171 634 153
Group Cash Flow Statement
2009 2008
R R
Cash flows from operating activities
Cash generated from operations 54 669 871 50 350 918
Interest income 14 164 901 6 472 469
Finance costs (634 384) (376 062)
Tax paid (17 681 253) (25 051 002)
Dividends paid (60 000 000)
Net cash flow from operating activities 50 519 135 (28 603 677)
Cash flows from investing activities
Purchase of property, plant and equipment (23 901 442) (3 896 691)
Proceeds on disposal of plant and equipment 834 538 145 486
Acquisition of subsidiaries
net of cash acquired (32 690 806)
Acquisition of treasury shares (16 924 030)
Decrease in other financial assets 48 812 059
Sale of non-current asset held-for-sale 5 155 203
Net cash flow from investing activities (72 681 740) 50 216 057
Cash flows from financing activities
Proceeds on share issue 862 416 81 787 121
Increase/(Repayment) of other financial
liabilities 1 725 919 (2 600 841)
Net cash flow from financing activities 2 588 335 79 186 280
(Decrease)/Increase in cash and cash
equivalents for the year (19 574 270) 100 798 660
Cash and cash equivalents at the beginning
of the year 130 281 677 29 483 017
Cash and cash equivalents at the end of the
year 110 707 407 130 281 677
Group Statement of Changes in Equity
Share Share Retained Total
capital premium income equity
R R R R
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
1 March 2008 1 221 81 786 100 64 373 269 146 160 590
Changes in equity
Profit for the year 63 603 372 63 603 372
Issue of shares 4 999 995 999 999
Listing expenses (137 583) (137 583)
Treasury shares
acquired (117) (16 923 913) (16 924 030)
Balance at 28
February 2009 1 108 65 724 599 127 976 641 193 702 348
Condensed Consolidated Segmental Information
2009 2008
R R
Segment revenue external
Aluminium 102 769 364 82 508 289
Steel 151 491 429 94 637 028
Glass 41 371 010
Corporate
295 631 803 177 145 317
Segment result operating profit
Aluminium 31 104 006 30 619 146
Steel 49 171 564 33 004 586
Glass (3 865 480)
Corporate (1 572 145) (165 411)
74 837 945 63 458 321
Segment assets
- Aluminium 61 567 062 44 566 751
- Steel 88 987 610 42 526 180
- Glass 80 107 740 -
- Corporate 20 485 011 84 541 222
251 147 423 171 634 153
Acquisitions
Compass Glass (Pty) Ltd
On 1 July 2008, the group acquired 100% of the issued share capital of and
claims against Compass Glass (Pty) Ltd for a total purchase price consideration
of R35.6 million.
As part of the purchase consideration, 347 222 shares in the group were issued.
The shares had a fair value of R1 million based on the 30-day volume weighted
average price on 1 June 2008.
The fair value of the assets and liabilities at the acquisition date were as
follows:
Property, plant and equipment 24 341 782
Inventory 5 695 011
Trade and other receivables 7 100 460
Long-term financial liabilities (31 858 086)
Trade and other payables (11 939 503)
Taxation and deferred taxation 1 155 785
Cash and cash equivalents 2 989 336
(2 515 215)
Goodwill 8 072 651
Purchase price 5 557 436
Claims acquired 30 054 157
Total purchase consideration 35 611 593
The directors have considered the impact of IFRS 3: Business Combinations in
relation to the purchase price allocation. The impact of intangible assets
included in goodwill was insignificant.
Commentary
Introduction
Mazor continued its positive trend of strong year-on-year growth for the year
ended 28 February 2009 (`the year`), successfully overcoming challenges posed
by a weakening economy as a result of the global financial crisis. The year was
further marked by the achievement of a number of strategic objectives.
In July 2008 Mazor moved from AltX to the Main Board JSE to position the group
alongside comparable competitors and facilitate the appropriate platform for
future growth.
Giving effect to Mazor`s diversification strategy, the acquisitions of Compass
Glass (Pty) Limited (`Compass Glass`) and Independent Glass CC and Independent
Glass George CC (`Independent Glass`) were concluded during the year. The
acquisitions have been successfully integrated, ensuring greater market share
for the group in the high growth glass sector especially in the Cape peninsula.
Basis of preparation
The audited condensed consolidated financial statements for the year ended
28 February 2009 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 29 February 2008.
The condensed consolidated annual financial statements have been audited by the
group`s auditors, Mazars Moores Rowland. Their unqualified audit opinion is
available for inspection at the company`s registered office.
Group profile
Mazor comprises three key divisions Mazor Steel which designs, supplies and
erects structural steel frames; Mazor Aluminium which designs, manufactures and
installs aluminium structures such as doors, windows, shopfronts, facades and
balustrades for major blue-chip construction groups; and the Glass division
(comprising Compass Glass and Independent Glass) which manufactures and
distributes laminated and toughened safety glass and double-glazed units.
Through its successful geographical expansion programme the group now has
operations in Gauteng, George and the Eastern Cape in addition to its
historical base in the Western Cape.
The market
Private sector investment in infrastructure has been adversely affected by the
global financial crisis, with a number of major projects delayed or postponed.
However, the impact of the worldwide credit crunch on stock markets has seen a
resurgence in investment in property as an asset class, which is expected to
boost development in the private commercial and industrial sectors.
Review of operations
During the year Mazor continued to secure more stable large-scale private
sector projects such as high-rise buildings, hotels and similar major works,
translating into good operating margins and profitability. The increasing use
of steel and glass in construction in line with a move to more `green` and
efficient buildings, further benefited the group.
Mazor Steel and Mazor Aluminium
The two divisions account for the majority of group revenue and profitability
and again delivered a robust performance. Mazor Steel benefited from geographic
expansion into growth regions with high levels of infrastructure and general
development, while growth in Mazor Aluminium was driven by the group`s prudent
selection of larger-scale, higher margin projects.
Glass Division
The division`s performance was supported by a general trend towards more
facade-oriented construction using greater amounts of glass and glass cladding.
Expansion by Compass Glass across the Cape peninsula in line with strategy
enabled Mazor to boost market share in the region, while Independent Glass
expanded into Gauteng. Following initial challenges in set-up the outlook for
the Gauteng operation has improved substantially. This is bolstered by
promising prospects in Gauteng as the province is relatively less affected than
other regions by the soft economy and has higher projected growth rates.
Acquisitions
Effective 1 July 2008 Mazor acquired Compass Glass, strategically boosting the
newly-established glass division. The acquisition has been fully integrated and
contributed to the group`s bottom line growth through high margin product
diversification. The purchase consideration of R35.6 million was paid in a
combination of cash and shares.
Effective 3 March 2008 Mazor acquired the businesses of Independent Glass for
an aggregate purchase consideration of R1.4 million. The operations have been
successfully integrated into the group.
Financial results
Revenue increased by 66.9% to R295.6 million from R177.1 million for the
previous year. Net profit grew 112% to R63.6 million from R30 million,
generating headline earnings per share of 52.1 cents compared to the previous
year`s 28.5 cents. Operating profit grew 17.9% to R74.8 million from
R63.5 million.
Earnings per share increased 84% to 52.1 cents compared to 28.3 cents in the
previous year. Net asset value increased 15.2% from 137.7 cents per share in
the previous year to 158.6 cents per share.
Cash on hand at year-end amounted to R110.7 million.
Mazor Steel and Mazor Aluminium both boosted their contribution to group
revenue and profitability, by 60.1% and 72.5%, and 24.6% and 25.7%
respectively. As a start-up with no comparative operations in the previous
year, the Glass division performed admirably to post revenue of R41.4 million.
Prospects
Based on the order book in hand, the first six months of the current financial
year are expected to be healthy. Outlook for the remainder of the year is
clouded by global economic uncertainty. However, successive interest rate cuts
in early 2009 are expected to boost private sector spending towards the end of
the calendar year with new and delayed projects set to roll out around
June 2010. The board is therefore positive of a continued solid performance in
the year ahead to February 2010.
Glass is anticipated to contribute positively to the group with significant
growth forecast over the next 36 months. In light of this Mazor is currently
assessing previously untapped markets for distribution, including the
industrial, furniture and motor sectors. While the motor industry has recently
experienced a decline off an exceptionally high base, this should plateau and
then regain momentum, making entry into the market at the bottom of the cycle
an attractive opportunity. Overall Mazor will continue targeting high
return-yielding projects.
Backed by a strong cash position the group will consider further acquisitions
in the year ahead either for geographic expansion or additional product
diversification. Mazor will also look cross-border, specifically to those
African countries that represent a favourable risk:return scenario.
Share buy-back
During the year, Mazor repurchased a total of 11 760 226 ordinary shares, or
9.6% of the issued share capital, for a total consideration of R16.9 million.
The shares were repurchased by a subsidiary of the company and are being held
as treasury stock. The decision in this regard was based on a simple
feasibility:returns calculation in light of the current interest rate
environment, and was considered a strategic investment for the company.
Proposed dividend
Notice is hereby given that in line with strategy the board has proposed a final
dividend for the year of 17.5 cents per share (2008: Nil). In terms of the
articles of association the dividend is subject to shareholder
approval at the upcoming Annual General Meeting, the date of which will be
announced in due course.
Relevant dates concerning the dividend will be released once it has been
approved by shareholders.
Appreciation
We welcome to the group our new employees following the acquisitions and
expansion, and thank management and all staff for their hard work which has
contributed to the group`s success. We also thank our fellow directors for
their counsel and our business partners, advisers and suppliers for their
ongoing support. Finally, thank you to our clients and shareholders for their
faith in the group.
On behalf of the board
M Kaplan R Mazor
Chairman CEO
20 May 2009
Directors: M Kaplan (Chairman)*, R Mazor (CEO), L Mazor (Financial Director),
S Mazor, A Groll *, SM Ozinsky*, A Varachhia* * 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 (PO Box 651010, Benmore, 2010)
Transfer secretaries: Computershare Investor Services (Pty) Limited,
70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Date: 20/05/2009 07:05:07 Produced by the JSE SENS Department.
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