| Tue 10 Nov 2009, 7:05 | | MZR - Mazor - Unaudited Consolidated Interim Results For The Six Months Ended 31 |
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MZR
MZR
MZR - Mazor - Unaudited Consolidated Interim Results For The Six Months Ended 31
August 2009
Mazor Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 2007/017221/06
Share Code: MZR & ISIN: ZAE000109823
("Mazor" or "the group")
UNAUDITED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2009
HIGHLIGHTS
* Revenue up 45.8%
* Operating profit up 69.6%
* Core HEPS up 54.4%
* Introduction of strategic equity partner
* Expanded national and cross-border footprint
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2009 August 2008 February 2009
R R R
Revenue 180 238 891 123 624 788 295 631 803
Cost of sales (119 080 658) (86 151 369) (198 790 823)
Gross profit 61 158 233 37 473 419 96 840 980
Other income 606 804 30 574 481 898
Operating expenses (13 451 201) (9 023 237) (22 484 933)
Operating profit 48 313 836 28 480 756 74 837 945
Share-based payment expense (3 132 604) - -
Profit before investment
revenue and finance costs 45 181 232 28 480 756 74 837 945
Investment revenue 3 953 348 7 312 809 14 164 901
Finance costs (282 522) (241 754) (634 384)
Profit before taxation 48 852 058 35 551 811 88 368 462
Taxation (16 633 935) (10 153 626) (24 765 090)
Total comprehensive income 32 218 123 25 398 185 63 603 372
Ordinary shares in issue 121 045 817 122 459 722 110 699 496
Weighted average number of
shares 110 473 097 122 575 483 122 144 601
Basic earnings per share
(cents) 29.16 20.72 52.07
Diluted earnings per share
(cents) 29.16 20.72 52.07
Headline earnings per
share (cents) 29.19 20.75 52.11
Diluted headline earnings
per share (cents) 29.19 20.75 52.11
Core headline earnings per
share (cents) 32.03 20.75 52.11
Reconciliation of headline
earnings and core
headline earnings
Earnings attributable to
ordinary shareholders 32 218 123 25 398 185 63 603 372
Adjusted for:
Loss on disposal of PPE 47 664 42 993 56 647
Tax effect thereof (13 346) (12 038) (15 861)
Headline earnings 32 252 441 25 429 140 63 644 158
Share-based payment expense 3 132 604
Core headline earnings 35 385 045 25 429 140 63 644 158
Consolidated Statement of Financial Position
Unaudited Unaudited Audited
August 2009 August 2008 February 2009
R R R
ASSETS
Non-current assets
Property, plant and equipment 56 887 664 45 298 683 53 976 358
Goodwill 8 141 200 22 784 979 8 141 200
Deferred tax 3 339 156 965 486 2 295 585
68 368 020 69 049 148 64 413 143
Current assets
Inventories 17 084 772 17 082 774 18 638 757
Other financial assets 27 333 506 - -
Construction contracts and
receivables 44 026 641 25 974 058 39 684 115
Short-term receivables 23 044 521 13 946 343 17 704 001
Cash and cash equivalents 115 390 139 111 650 475 110 707 407
226 879 579 168 653 650 186 734 280
Total assets 295 247 599 237 702 798 251 147 423
EQUITY AND LIABILITIES
Equity
Share capital 1 088 1 224 1 108
Share premium 80 106 248 82 786 097 65 724 599
Retained income 151 135 709 89 771 454 127 976 641
231 243 045 172 558 775 193 702 348
Liabilities
Non-current liabilities
Other financial liabilities 3 156 787 3 288 040 3 341 129
Deferred tax 514 477 509 826 945 075
3 671 264 3 797 866 4 286 204
Current liabilities
Other financial liabilities 1 541 345 17 234 046 2 513 985
Current tax payable 30 160 939 13 892 040 18 484 453
Trade and other payables 28 631 006 30 220 071 32 160 433
60 333 290 61 346 157 53 158 871
Total liabilities 64 004 554 65 144 023 57 445 075
Total equity and liabilities 295 247 599 237 702 798 251 147 423
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2009 August 2008 February 2009
R R R
Cash flows from operating
activities
Cash generated from
operations 39 321 797 23 495 560 54 669 871
Interest income 3 953 348 7 312 809 14 164 901
Finance costs (282 522) (241 754) (634 384)
Tax paid (9 092 213) (7 065 271) (17 681 253)
Dividends paid (19 033 192) - -
Net cash flow from
operating activities 14 867 218 23 501 344 50 519 135
Cash flows from investing
activities
Purchase of property, plant
and equipment (6 477 074) (12 122 225) (23 901 442)
Proceeds on disposal of
plant and equipment 634 875 250 000 834 538
Acquisition of subsidiaries - (31 707 370) (32 690 806)
Acquisition of treasury
shares (3 185 305) - (16 924 030)
Net cash flow from
investing activities (9 027 504) (43 579 595) (72 681 740)
Cash flows from financing
activities
Proceeds on share issue - - 862 416
(Repayment)/Increase of
other financial liabilities (1 156 982) 1 447 049 1 725 919
Net cash flow from
financing activities (1 156 982) 1 447 049 2 588 335
Increase in cash and cash
equivalents for the period 4 682 732 (18 631 202) (19 574 270)
Cash and cash equivalents
at beginning of period 110 707 407 130 281 677 130 281 677
Cash and cash equivalents
at the end of the period 115 390 139 111 650 475 110 707 407
Condensed Consolidated Statement of Changes in Equity
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2009 August 2008 February 2009
R R R
Total equity at the
beginning of the period 193 702 348 146 160 590 146 160 590
Total comprehensive income
for the period 32 218 123 25 398 185 63 603 372
Issue of shares - 1 000 000 999 999
Listing expenses - - (137 583)
Share-based payment expense 3 132 604 - -
Treasury shares acquired (807 823) - (16 924 030)
Treasury shares cancelled (2 377 482) - -
Treasury shares sold 24 408 467 - -
Dividends paid (19 033 192) - -
Total equity at the end of
the period 231 243 045 172 558 775 193 702 348
Condensed Segment Report
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2009 August 2008 February 2009
R R R
Segment revenue - external
- Aluminium 68 457 731 40 123 616 102 769 364
- Steel 82 522 088 70 349 499 151 491 429
- Glass 29 259 072 13 151 673 41 371 010
- Corporate - - -
180 238 891 123 624 788 295 631 803
Segment result (operating
profit)
- Aluminium 21 806 188 11 231 226 31 104 006
- Steel 29 972 241 18 543 822 49 171 564
- Glass (2 641 161) (306 545) (3 865 480)
- Corporate (823 432) (987 747) (1 572 145)
48 313 836 28 480 756 74 837 945
Commentary
Introduction
The directors are pleased to present the unaudited consolidated results for the
six months ended 31 August 2009 ("the period"), which continue to reflect robust
top and bottom line growth. Being a scalable business with an established and
flexible infrastructure, Mazor successfully weathered the challenging economic
environment to maintain its record of consistent growth.
During the period the group concluded a R27.3 million share buy-in agreement
with boutique investment banking and private equity specialist, Global Capital
(Pty) Limited ("Global Capital"). The investment introduced a strategic
shareholder with a proven track record of partnering growth companies, adding
impetus to Mazor`s diversification and acquisition strategy (see "Introduction
of strategic partner" below).
Basis of preparation
The unaudited consolidated interim financial statements have been prepared in
accordance with IAS 34: Interim Financial Reporting, International Financial
Reporting Standards ("IFRS") and Schedule 4 of the South African Companies Act,
1973. The accounting policies applied in the preparation of these unaudited
consolidated interim financial statements are consistent with those applied in
the audited annual financial statements for the previous year ended 28 February
2009.
Group profile
Founded in the Western Cape nearly 30 years ago, the group now also operates in
Gauteng, KwaZulu-Natal and the Eastern Cape following a successful geographical
expansion programme.
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. Mazor Aluminium is South Africa`s leading specialist in the
technique of glass facade cladding, capitalising on vertical integration
opportunities within the group; and
* Glass which manufactures and distributes laminated and toughened safety glass
and double-glazed units.
Introduction of strategic partner
As previously announced on 6 August 2009 Mazor concluded an agreement with
Global Capital to acquire 12 284 722 Mazor shares ("the shares"), at a price of
R2.225 per share, amounting to an aggregate consideration of R27 333 506 ("the
Global Capital transaction"). The Global Capital transaction was approved by
shareholders in a general meeting on 18 September 2009. The sale of shares to
Global Capital generated net after-tax profit (included in equity) of R6.8
million.
The shares, constituting 10% of the entire issued share capital of Mazor, were
previously held as treasury shares in terms of section 89 of the South African
Companies Act, 1973.
Global Capital`s skill and expertise is expected to support Mazor`s strategy of
identifying acquisitions that diversify its revenue stream. The group is
currently pursuing a number of opportunities in this regard while being
cognisant of the relevant risk profile. Global Capital`s proven track record
highlights its ability to add value through strategic input.
Directorate
Following the Global Capital transaction, Global Capital CEO Frank Boner was
appointed as a non-executive director to the board of Mazor. We welcome him to
the board and look forward to his contribution.
Review of operations
Mazor Steel and Mazor Aluminium continue to account for the majority of group
revenue and profitability and again performed well despite tough market
conditions. The divisions expanded further into high-growth regions such as Port
Elizabeth and KwaZulu-Natal to counter the impact of a flailing economy in
Mazor`s traditional base of operation, the Western Cape. Following the
downscaling of projects in traditional markets the group is seeking larger-
scale, higher margin projects outside of South Africa and is currently making
inroads into Namibia and Angola. No major capital expenditure was incurred by
either division during the period.
Notwithstanding the industry downturn the performance of the Glass Division was
encouraging with a steady increase in revenue. The wider product range and
geographic expansion are expected to help boost performance going forward. The
weak economy has enabled the division to secure a number of strong new personnel
to drive future growth. Mazor continued its investment in plant and equipment to
further bolster the division`s capacity, with capital expenditure for the period
totalling R6 million.
Financial results
Revenue for the period increased by 45.8% on the comparative period to R180.2
million from R123.6 million. Net profit grew 26.9% to R32.2 million from R25.4
million, generating headline earnings per share of 29.19 cents compared to 20.75
cents in the comparative period. Operating profit grew 69.6% to R48.3 million
from R28.5 million. Earnings per share increased 40.75% to 29.16 cents from
20.72 cents.
Core headline earnings per share increased 54.4% from 20.75 cents per share to
32.03 cents per share. (Core headline earnings is calculated after adjusting for
the share-based payment that arose as a result of the Global Capital transaction
- see "Introduction of strategic partner" above.)
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
group.
Mazor remains cash flush with cash on hand of R115.4 million. The cash inflow
from the Global Capital transaction only occurred post the end of the period
during September 2009.
At 31 August 2009, the group had issued guarantees amounting to R44.4 million
compared with R33.9 million at 31 August 2008. These guarantees have arisen in
the ordinary course of business and it is not expected that any loss will arise
therefrom.
Net asset value increased 35.6% from 140.9 cents per share (31 August 2008) to
191 cents per share.
Share transactions
During the period 1 938 401 shares were repurchased at an average price of
R1.64 per share, bringing the number of Mazor shares held as treasury shares to
13 698 627. The group sold 12 284 722 shares (see "Introduction of strategic
partner") and cancelled 1 345 669 shares. At 31 August 2009, 68 236 Mazor shares
were held as treasury shares.
Ordinary shares in issue at 31 August 2008 and 28 February 2009 have been
restated to take into account treasury shares. This has no effect on published
results.
Prospects
Notwithstanding prevailing market conditions the board maintains a positive
outlook for the full year to February 2010. Mazor will continue to expand
geographically in all three divisions, particularly targeting new opportunities
in high-growth areas such as Gauteng and Africa. The expanded and upgraded
product range in the Glass Division should further contribute to a continually
improving performance.
Backed by positive cash holdings, Mazor continues to identify acquisition
opportunities within the construction industry either for geographic expansion
or additional product differentiation. The group will continue to assess
diversification into untapped markets such as the industrial and motor sectors.
Dividends
A dividend of 17.5 cents per share in respect of the year ending
28 February 2009, totalling R21.3 million, was paid on 13 July 2009 and is
reflected in these results net of treasury share dividends received. In line
with company policy no interim dividend has been declared for the period. It is
the intention of the board to declare a dividend for the full year ending
28 February 2010.
Appreciation
We thank our management and staff for their hard work and dedication which have
contributed to these strong results. We further extend our appreciation to our
directors for their wise guidance. Finally thank you to our clients, advisers,
suppliers and stakeholders for their ongoing support.
On behalf of the board
M Kaplan R Mazor
Chairman CEO
Cape Town
9 November 2009
Directors: M Kaplan (Chairman)*^, R Mazor (CEO), L Mazor (Financial Director),
S Mazor, A Groll*^, S Ozinsky*^, A Varachhia*, F Boner*
* Non-executive director ^ 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)
www.mazorgroup.co.za
Date: 10/11/2009 07:05:10 Produced by the JSE SENS Department.
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