| Wed 19 May 2010, 7:05 | | MZR - Mazor Group Limited - Audited summarised consolidated results for the year |
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MZR
MZR
MZR - Mazor Group Limited - Audited summarised consolidated results for the year
ended 28 February 2010
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
AUDITED SUMMARISED CONSOLIDATED RESULTS for the year ended 28 February 2010
HIGHLIGHTS
* NAV up 10.6%
* Cash holdings up 17.0%
* Revenue down 7.5%
* Cash HEPS down 23.4%
* Focus on greater efficiency
* Dividend of 18.1 cents per share declared
Consolidated Statement of Comprehensive Income
2010 2009
R R
Revenue 273 514 257 295 631 803
Cost of sales (196 040 703) (198 790 823)
Gross profit 77 473 554 96 840 980
Other income 816 481 481 898
Operating expenses (32 300 113) (22 484 933)
Operating profit 45 989 922 74 837 945
Share-based payment (3 378 299) -
Profit before investment revenue and
finance costs 42 611 623 74 837 945
Investment revenue 8 742 701 14 164 901
Income from equity-accounted investments 944 -
Finance costs (464 707) (634 384)
Profit before taxation 50 890 561 88 368 462
Taxation (17 122 634) (24 765 090)
Total comprehensive income for the period 33 767 927 63 603 372
Number of shares in issue 121 014 053 110 699 496
Weighted average number of shares 113 652 302 122 144 601
Basic and diluted earnings per
share (cents) 29.7 52.1
Basic and diluted headline earnings per
share (cents) 29.8 52.1
Core headline earnings per share (cents) 32.7 52.1
Cash headline earnings per share (cents) 39.9 52.1
Reconciliation between earnings and
headline earnings:
Earnings attributable to ordinary
shareholders 33 767 927 63 603 372
Adjusted for:
Loss on disposal of property, plant and
equipment 91 372 56 647
Tax effect thereof (25 584) (15 861)
Headline earnings 33 833 715 63 644 158
Reconciliation between headline earnings
and core headline earnings:
Headline earnings 33 833 715 63 644 158
Adjusted for:
Share-based payment 3 378 299 -
Core headline earnings 37 212 014 63 644 158
Reconciliation between core headline
earnings and cash headline earnings:
Core headline earnings 37 212 014 63 644 158
Adjusted for:
After-tax profit on sale of shares to
Global Capital 8 171 836 -
Cash headline earnings 45 383 850 63 644 158
Consolidated Statement of Financial Position
2010 2009
R R
Assets
Non-current assets
Property, plant and equipment 54 612 261 53 976 358
Goodwill 8 141 200 8 141 200
Investment in joint ventures 944 -
Deferred tax 5 216 068 2 295 585
67 970 473 64 413 143
Current assets
Inventories 21 946 757 18 638 757
Other financial assets 10 547 -
Construction contracts and receivables 28 357 180 39 684 115
Trade and other receivables 21 357 763 17 704 001
Cash and cash equivalents 129 541 251 110 707 407
201 213 498 186 734 280
Total assets 269 183 971 251 147 423
Equity and liabilities
Equity
Share capital 1 210 1 108
Share premium 80 023 738 65 724 599
Retained income 154 261 505 127 976 641
234 286 453 193 702 348
Liabilities
Non-current liabilities
Other financial liabilities 1 452 081 3 341 129
Deferred tax 1 180 299 945 075
2 632 380 4 286 204
Current liabilities
Other financial liabilities 2 064 367 2 513 985
Current tax payable 9 143 440 18 484 453
Trade and other payables 21 057 331 32 160 433
32 265 138 53 158 871
Total liabilities 34 897 518 57 445 075
Total equity and liabilities 269 183 971 251 147 423
Consolidated Cash Flow Statement
2010 2009
R R
Cash flows from operating activities
Cash generated from operations 45 170 989 54 669 871
Interest income 8 742 701 14 164 901
Finance costs (464 707) (634 384)
Tax paid (29 148 906) (17 681 253)
Dividends paid (19 033 192) -
Net cash flow from operating activities 5 266 885 50 519 135
Cash flows from investing activities
Purchase of property, plant and equipment (7 204 387) (23 901 442)
Proceeds on disposal of plant and equipment 650 432 834 538
Acquisition of subsidiaries - (32 690 806)
Acquisition of treasury shares (3 267 693) (16 924 030)
Proceeds on disposal of treasury shares 25 738 764 -
Investment in joint ventures (944) -
Increase in other financial assets (10 547) -
Net cash flow from investing activities 15 905 625 (72 681 740)
Cash flows from financing activities
Proceeds on share issue - 862 416
(Repayment)/Increase of other financial
liabilities (2 338 666) 1 725 919
Net cash flow from financing activities (2 338 666) 2 588 335
Increase/(Decrease) in cash and cash
equivalents for the year 18 833 844 (19 574 270)
Cash and cash equivalents at beginning
of year 110 707 407 130 281 677
Cash and cash equivalents at the end
of the year 129 541 251 110 707 407
Summarised Consolidated Statement of
Changes in Equity
2010 2009
R R
Total equity at the beginning of the period 193 702 348 146 160 590
Total comprehensive income for the period 33 767 927 63 603 372
Issue of shares - 999 999
Listing expenses - (137 583)
Treasury shares acquired (890 211) (16 924 030)
Treasury shares cancelled (2 377 482) -
Treasury shares sold 25 738 764 -
Dividends paid (19 033 192)* -
Share-based payment 3 378 299 -
Total equity at the end of the period 234 286 453 193 702 348
* A dividend of 17.5 cents per share was paid on 13 July 2009.
Summarised Consolidated Segmental Information
2010 2009
R R
Segment revenue - external
- Aluminium 85 579 605 102 769 364
- Steel 124 910 599 151 491 429
- Glass 63 024 053 41 371 010
- Corporate - -
273 514 257 295 631 803
Segment result - operating profit
- Aluminium 22 524 721 31 104 006
- Steel 34 096 112 49 171 564
- Glass (9 523 199) (3 865 480)
- Corporate (1 107 712) (1 572 145)
45 989 922 74 837 945
Segment assets
- Aluminium 76 478 070 61 567 062
- Steel 96 256 619 88 987 610
- Glass 87 886 977 80 107 740
- Corporate 8 562 305 20 485 011
269 183 971 251 147 423
Commentary
Introduction
The directors present the audited summarised consolidated financial results for
the group for the year ended 28 February 2010 (`the year`). Mazor faced a number
of challenges during the year as a result of the economic downturn, with core
divisions Mazor Aluminium and Mazor Steel worst affected by the widespread
delays in and cancellation of private sector construction projects especially in
the Western Cape. Operating margins were pressured by intensified competition in
a contracting market and profitability was impacted.
The more recently established Glass division is coping with the tough trading
conditions by refocusing on alternative sectors for materials supply including
motor, furniture and industrial, in which it is successfully increasing market
share.
Basis of preparation
The audited summarised consolidated annual financial statements have been
prepared in compliance with International Financial Reporting Standards
(`IFRS`), IAS 34 and the Companies Act of South Africa, 1973 and comply with the
JSE Listings Requirements. The accounting policies and methods of measurement
and recognition applied in the preparation of these audited summarised
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 2009.
The summarised consolidated annual financial statements have been audited by the
group`s auditors, Mazars. Their unqualified audit opinion is available for
inspection at the company`s registered office.
Group profile
Mazor comprises: 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 established in 2008
(comprising Compass Glass and Independent Glass) which manufactures and
distributes laminated and toughened safety glass and double-glazed units.
Through strategic expansion and acquisitions, the group has a strong national
presence across Gauteng and the Eastern Cape in addition to its historical base
in the Western Cape.
The market
The second half of the year saw a worsening decline in the construction sector,
with public and private sector projects anticipated in the first half of the
year cancelled due to the lack of available funding and credit concerns in the
wake of the global financial crisis. This was felt particularly in slower
regional economies such as the Western Cape.
Review of operations
Mazor Steel and Mazor Aluminium
The two divisions continue to account for the majority of group revenue and
profitability but delivered sub-par performances for the year in light of the
prevailing macroeconomic environment. A rationalisation process has been
undertaken to establish appropriate resources levels, cost structures and
pricing policies for long-term efficiency.
To further facilitate a recovery the divisions are actively pursuing expansion
into other regions.
Glass division
Compass Glass and Independent Glass maintained growth and vindicated Mazor`s
prior-year investment in geographic expansion with a substantial increase in
market share and improved utilisation of capacity and resources. Procurement of
raw materials sources remains a priority. Post year-end in April 2010
Independent Glass has further expanded its footprint into Port Elizabeth.
Financial results
Revenue declined 7.48% to R273.5 million from R295.6 million in the previous
year, with net profit down 46.9% to R33.8 million from R63.6 million.
Accordingly earnings per share reduced year on year to 29.7 cents from
52.1 cents.
The Global Capital transaction (see `Corporate transaction below`) resulted in
an after-tax profit of R8.17 million not reflected in the statement of
comprehensive income. This translates into cash earnings of 7.2 cents per share.
In accordance with IFRS, a R3.38 million share-based payment expense was
incurred from the transaction and is reflected on the statement of comprehensive
income. The share-based payment arose due to the difference between the share
price on the effective date of 250 cents per share and the sale price of
222.5 cents per share. This 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.
Cash headline earnings per share decreased year on year from 52.1 cents to
39.9 cents. (Cash headline earnings is calculated after adjusting for the share-
based payment that arose as a result of the Global Capital transaction and after
including the after-tax profit generated from the sale.)
Net asset value increased by 10.6% to 193.6 cents from 174.98 cents in the
previous year. Cash on hand at year-end increased to R129.5 million from
R110.7 million. Interest received decreased by R5.4 million to R8.7 million in
light of lower interest rates during the year.
The revenue and operating profit of Mazor Steel and Mazor Aluminium declined by
17.6% and 30.7%, and 16.7% and 27.6% respectively.
Mazor Steel and Mazor Aluminium were streamlined during the year to counter the
drastically reduced construction project load, which necessitated contained
retrenchment of personnel. Once-off severance costs were therefore incurred.
The Glass division increased external revenues by 52.3% to R63.0 million. Loss
for the year grew to R6.9 million due to initial teething problems, the costs of
expansion and tighter market conditions.
During the year, the company purchased 1 445 669 of its shares through a share
buy-back at an average price of R1.81 per share. 1 345 669 shares were cancelled
on 23 June 2009.
Corporate transaction
As previously announced on 6 August 2009 Global Capital purchased 12 284 722
Mazor shares, constituting 10% of the entire issued share capital of the company
then held as treasury shares, for 222.5 cents per share, amounting to an
aggregate consideration of R27.3 million.
The investment by Global Capital has given and will continue to give impetus to
Mazor`s diversification and acquisition strategy through its expertise and
proven track record of partnering growth companies. Established in 1998, Global
Capital is a boutique investment banking and private equity firm operating in
South Africa and Australia. Global Capital plays an active role in each of its
investments by providing the experience and network of contacts to help assist
in reaching the next stage of growth.
Directorate
With effect from 27 October 2009, Frank Boner (CEO of Global Capital) was
appointed to the board of Mazor as a non-executive director.
Prospects
The construction market is anticipated to remain subdued notwithstanding the
beginnings of economic recovery in the country. It is expected to rebound only
in the medium term once projects become viable on a loosening of credit
restrictions and the increased availability of funding. This looks more likely
from 2011 when the economic recovery is anticipated to become cemented.
The short-term outlook for Mazor Aluminium and Mazor Steel therefore remains
weakened. In respect of the former, the Hulamin Building Systems (`HBS`)
acquisition (see `Post- balance sheet event` below) should assist to an extent
in offsetting the adverse trading conditions in 2011. The Glass division is
anticipated to continue growing and securing further market share.
Mazor intends to continue the listing strategy of pursuing materials supply and
will look to other commodity-linked markets, subject to acquisition
opportunities being fairly priced and offering an acceptably reduced risk
profile.
Focus on overheads will be intensified in the year ahead to identify and
implement possible further improvements. Working capital and collections
management will remain an imperative.
Post-balance sheet event
As previously announced, effective 1 April 2010 Mazor acquired a 50% stake in
the business of HBS (operated by Hulamin Extrusions (Pty) Limited) through Mazor
Aluminium for a consideration of R32.6 million.
The HBS acquisition will expose Mazor Aluminium to cross-selling opportunities
which would have been difficult to access organically and which are expected to
substantially bolster future growth prospects. Mazor`s expertise and operational
history in the aluminium market should assist in effecting a successful
turnaround of the business. The combination of Mazor`s intellectual capital and
processes and HBS` national footprint and broad, established client base, is
expected to yield benefits for the group from the 2011 financial year.
The acquisition remains subject to Competition Commission approval.
Dividend declaration
Notice is hereby given that in line with strategy the board has declared a final
dividend for the year of 18.1 cents per share (2009: 17.5 cents) on 17 May 2010.
The dividend comprises two parts. 10.9 cents per share is declared in terms of
the company`s dividend policy. The remaining 7.2 cents per share is a special
dividend in respect of the after-tax profit earned on the sale of shares to
Global Capital. Salient dates are:
Last day to trade cum distribution Friday, 4 June 2010
Shares trade ex distribution Monday, 7 June 2010
Record date Friday, 11 June 2010
Payment date Monday, 14 June 2010
Shareholders may not dematerialise or rematerialise their shares between
Monday, 7 June 2010 and Friday, 11 June 2010, both days inclusive.
Appreciation
We thank our entire team for their tenacity and dedication. We also thank our
board for their valuable guidance through a harsh market and finally our
customers and shareholders for their loyal support that drives us to deliver
returns.
On behalf of the board
M Kaplan R Mazor
Chairman CEO
Cape Town
19 May 2010
Directors: M Kaplan (Chairman)*, R Mazor (CEO), L Mazor (Financial Director), S
Mazor, A Groll*, F Boner*, S Ozinsky*, A Varachhia*
* 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: 19/05/2010 07:05:23 Produced by the JSE SENS Department.
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