| Tue 17 May 2011, 15:00 | | MZR - Mazor Group Limited - Audited condensed consolidated results for the |
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MZR
MZR
MZR - Mazor Group Limited - Audited condensed consolidated results for the
year ended 28 February 2011
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 CONDENSED CONSOLIDATED RESULTS for the year ended 28 February 2011
OPERATIONAL HIGHLIGHTS
- Growth in Glass division
- Acquisition of Hulamin Building Systems
- Further expansion into Eastern Cape through the Glass division
Consolidated Statement of Comprehensive Income
2011 2010
R R
Revenue 186 769 379 273 514 257
Cost of sales (156 856 198) (196 040 703)
Gross profit 29 913 181 77 473 554
Other income 10 052 165 816 481
Operating expenses (38 278 159) (32 300 113)
Operating profit 1 687 187 45 989 922
Share-based payment - (3 378 299)
Profit before investment revenue and finance costs 1 687 187 42 611 623
Investment revenue 8 312 772 8 742 701
Income from equity-accounted investments 1 335 810 944
Finance costs (343 753) (464 707)
Profit before taxation 10 992 016 50 890 561
Taxation (1 116 196) (17 122 634)
Total comprehensive income for the period 9 875 820 33 767 927
Number of shares in issue 121 114 053 121 014 053
Weighted average number of shares 121 100 080 113 652 302
Basic and diluted earnings per share (cents) 8.2 29.7
Basic and diluted headline earnings per share (cents) 8.2 29.8
Reconciliation between earnings and headline
earnings:
Earnings attributable to ordinary shareholders 9 875 820 33 767 927
Adjusted for:
(Gain)/Loss on disposal of property, plant and equipment (9 363)
91 372
Tax effect thereof 2 622 (25 584)
Headline earnings 9 869 079 33 833 715
Consolidated Cash Flow Statement
2011 2010
R R
Cash flows from operating activities
Cash (utilised for)/generated from operations (5 987 289) 45 170 989
Interest income 5 312 772 8 742 701
Dividend income 3 000 000 -
Finance costs (343 753) (464 707)
Tax paid (14 511 434) (29 148 906)
Dividends paid (21 921 644) (19 033 192)
Net cash flow from operating activities (34 451 348) 5 266 885
Cash flows from investing activities
Purchase of property, plant and equipment (12 408 574) (7 204 387)
Proceeds on disposal of plant and equipment 211 873 650 432
Acquisition of treasury shares - (3 267 693)
Proceeds on disposal of treasury shares - 25 738 764
Investment in joint ventures (12 615 996) (944)
Increase in other financial assets (4 142 016) (10 547)
Net cash flow from investing activities (28 954 713) 15 905 625
Cash flows from financing activities
Increase/(Repayment) of other financial
liabilities 2 250 104 (2 338 666)
Net cash flow from financing activities 2 250 104 (2 338 666)
(Decrease)/Increase in cash and cash
equivalents for the year (61 155 957) 18 833 844
Cash and cash equivalents at the beginning
of the year 129 541 251 110 707 407
Cash and cash equivalents at the end of the
year 68 385 294 129 541 251
Consolidated Statement of Changes in Equity
Share Share Retained Total
capital premium income equity
R R R R
Balance at 1 March 2009 1 108 65 724 599 127 976 641 193 702 348
Changes in equity
Total comprehensive
income for the period 33 767 927 33 767 927
Treasury shares acquired (8) (890 203) (890 211)
Treasury shares cancelled (13) (2 377 469) (2 377 482)
Treasury shares sold 123 17 566 811 8 171 830 25 738 764
Dividends paid (19 033 192) (19 033 192)
Share-based payment 3 378 299 3 378 299
Balance at 1 March 2010 1 210 80 023 738 154 261 505 234 286 453
Changes in equity
Total comprehensive
income for the period 9 875 8209 875 820
Shares issued 1 254 999 255 000
Dividends paid (21 921 644) (21 921 644)
Balance at 28
February 2011 1 211 80 278 737 142 215 681 222 495 629
Consolidated Statement of Financial Position
2011 2010
R R
Assets
Non-current assets
Property, plant and equipment 60 915 473 54 612 261
Goodwill 8 396 200 8 141 200
Other financial assets 4 142 564 -
Equity-accounted investments 23 952 750 944
Deferred tax 8 344 920 5 216 068
105 751 907 67 970 473
Current assets
Inventories 28 218 584 21 946 757
Other financial assets 9 999 10 547
Construction contracts and receivables 30 334 581 28 357 180
Current tax receivable 438 770 -
Trade and other receivables 24 261 090 21 357 763
Cash and cash equivalents 72 297 846 129 541 251
155 560 870 201 213 498
Total assets 261 312 777 269 183 971
Equity and liabilities
Equity
Share capital 1 211 1 210
Share premium 80 278 737 80 023 738
Retained income 142 215 681 154 261 505
222 495 629 234 286 453
Liabilities
Non-current liabilities
Other financial liabilities 3 145 262 1 452 081
Deferred tax 465 513 1 180 299
3 610 775 2 632 380
Current liabilities
Other financial liabilities 2 621 290 2 064 367
Current tax payable 30 611 9 143 440
Trade and other payables 28 641 920 21 057 331
Bank overdraft 3 912 552 -
35 206 373 32 265 138
Total liabilities 38 817 148 34 897 518
Total equity and liabilities 261 312 777 269 183 971
Condensed Consolidated Segmental Information
2011 2010
R R
Segment revenue - external
- Aluminium 27 602 161 85 579 605
- Steel 66 254 218 124 910 599
- Glass 92 913 000 63 024 053
- Corporate - -
186 769 379 273 514 257
Segment revenue - internal
- Aluminium 19 573 9 388 536
- Steel - -
- Glass 29 442 603 31 204 073
- Corporate 2 065 000 780 000
31 527 176 41 372 609
Segment result - operating profit
- Aluminium 5 908 044 22 524 721
- Steel 5 897 406 34 096 112
- Glass (7 560 737) (9 523 199)
- Corporate (2 557 523) (1 107 712)
1 687 187 45 989 922
Segment assets
- Aluminium 68 182 827 76 478 070
- Steel 73 074 046 96 256 619
- Glass 106 198 307 87 886 977
- Corporate 13 557 598 8 562 305
261 012 778 269 183 971
Commentary
Introduction
The audited condensed consolidated financial results for the group for the
year ended 28 February 2011 (`the year`) were impacted by tough trading
conditions in line with expectations. Slowing demand, particularly from the
construction industry, continued to pressure pricing and in turn, operating
margins.
Mazor`s expansion and diversification strategy continued with the group
acquiring 50% of Hulamin Building Systems (`HBS`) and 100% of Glass Unlimited
(through Compass Glass SA in Port Elizabeth) (see `Acquisitions` below).
Basis of preparation
The audited condensed consolidated annual financial results have been prepared
in accordance with the recognition and measurement principles of International
Financial Reporting Standards ("IFRS"), IAS 34 and the Companies Act of South
Africa, 1973 and comply with the JSE Listings Requirements and the AC 500
standards. The accounting policies and methods of measurement and recognition
applied in the preparation of these audited condensed consolidated annual
financial results are consistent with those applied in the group`s most recent
audited annual financial statements for the previous year ended 28 February
2010.
The condensed 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 Steel designs, supplies and erects structural steel frames.
Mazor Aluminium designs, manufactures and installs aluminium doors, windows,
shop fronts, facades and balustrades for major blue-chip construction groups.
Newly acquired HBS augments the division`s offering with a wide range of
fenestration systems and accessories.
The Glass division comprises Compass Glass and Compass Glass SA (incorporating
Glass Unlimited through the recent acquisition), which manufacture and
distribute laminated and toughened safety glass and double-glazed units.
The group has a strong national presence across Gauteng and the Eastern Cape
in addition to its historical base in the Western Cape.
Review of operations
Market conditions remained challenging. However, notwithstanding inflationary
and other increases in overheads, Mazor maintained capacity at substantially
lower costs than in the previous year. The slow-down in the construction
sector, and in particular in the leisure and retail construction industries,
contributed to a muted performance by the group`s contracting divisions. In
addition, prevailing trading conditions were not conducive to accessing and
penetrating new markets.
Mazor Steel managed to deliver a profit through its geographical presence
while Mazor Aluminium was more severely impacted by the downturn in the
construction industry and performed poorly. However, the newly acquired HBS
boosted Mazor Aluminium`s performance to an extent, having been successfully
turned around into a profit driver. The new products brought on stream by the
acquisition are improving volumes and proving profitable.
The Glass division continued to strengthen further, reducing operational
losses and posting commendable revenue growth. With increased investment in
new equipment and technology, and expansion in the Eastern Cape through a new
branch in East London, the division is well positioned to capitalise on future
growth opportunities. It is currently operating below capacity and is expected
to continue growing revenue going forward.
Financial results
Revenue declined 31.7% year on year to R186.8 million from R273.5 million due
mainly to reduced demand in the construction sector. Operating profit was down
96.3% to R1.7 million from R46.0 million, resulting in a 72.4% drop in
earnings per share to 8.2 cents per share compared to 29.7 cents for the
previous year.
Revenue in Mazor Aluminium and Mazor Steel declined 67.7% and 47%,
respectively. With margins squeezed, operating profit in these operations was
down 73.8% and 82.7%, respectively. The Glass division increased external
revenues by 47.4% to R92.9 million, and reduced operating losses by 20.6% to
R7.6 million.
Net asset value decreased from 193.6 cents per share in the previous year to
183.7 cents per share.
Acquisitions
As announced at the interim results, Mazor concluded two acquisitions during
the year. In April 2010 Mazor acquired the business of Glass Unlimited in Port
Elizabeth as a going concern. The purchase consideration comprised a cash
payment of R315 000 in respect of stock and fixed assets and the issue of 100
000 shares in the group. The acquisition enabled the group to further expand
its geographical footprint, particularly in the high growth region of the
Eastern Cape.
A 50% interest in HBS was acquired in April 2010 for a total consideration of
R32.6 million before elimination of an intra-group profit of R10 million. This
acquisition resulted in a joint venture. HBS markets and supplies a wide range
of fenestration systems to the South African residential, commercial and
industrial markets through branches in Johannesburg, Cape Town, Durban and
Port Elizabeth.
Prospects
Conditions are expected to remain challenging in the short-term. There are
positive indications of an improvement in 2012 with a more solid upswing
expected in 2013. Initial signs of slow recovery are becoming evident. In this
light, and with the group`s prior investment in plant, stable capacity,
established capability and geographic spread, Mazor is well placed to benefit
from a recovery in the construction sector.
The group will continue to steer its overall product offering from manufacture
to materials supply where greater growth opportunities are anticipated.
The contracting arms have successfully exported a number of projects through
to Angola, Namibia and the Seychelles. The group continues to venture
cautiously into the African continent.
Directorate
Sheryl Ozinsky resigned as an independent non-executive director with effect
from 9 February 2011. The board thanks her for her valued contribution.
Dividend declaration
Notice is hereby given that in line with strategy the board has declared a
final dividend for the year of 2.8 cents per share (2010: 18.1 cents) on 16
May 2011.
Salient dates are:
Last day to trade cum distribution Thursday, 9 June 2011
Shares trade ex distribution Friday, 10 June 2011
Record date Friday, 17 June 2011
Payment date Monday, 20 June 2011
Shareholders may not dematerialise or rematerialise their combined units
between Friday, 10 June 2011 and Friday, 17 June 2011, both days inclusive.
No other material subsequent events have taken place since year end.
Appreciation
Our appreciation to management and staff for their continued hard work and
loyalty in difficult times. We also thank our board for their wise counsel and
extend our thanks to our business associates, customers and shareholders for
their ongoing support.
On behalf of the board
M Kaplan R Mazor
Chairman CEO
17 May 2011
Directors: M Kaplan (Chairman)*, R Mazor (CEO), L Mazor (Financial Director),
S Mazor, A Groll*, F Boner*, A Varachhia*
*Non-executive director Independent
Company secretary: Liat Mazor
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: 17/05/2011 15:00:04 Produced by the JSE SENS Department.
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