| Mon 14 Nov 2011, 16:00 | | MZR - Mazor Group Limited - Unaudited condensed consolidated interim results for |
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MZR
MZR
MZR - Mazor Group Limited - Unaudited condensed consolidated interim results for
the six months ended 31 August 2011
Mazor Group Limited
(Incorporated in the Republic of South Africa)
Registration number 2007/017221/06
Share code: MZR | ISIN: ZAE000109823
("Mazor" or "the Company" or "the group")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS
for the six months ended 31 August 2011
OPERATIONAL HIGHLIGHTS
- Volumes and margins up
- Successful product line expansion in Glass
- Growth in building and construction materials distribution
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 2011 31 August 2010 28 February 2011
R R R
Revenue 115 433 299 83 404 055 186 769 379
Cost of sales (94 851 252) (70 456 459) (156 856 198)
Gross profit 20 582 047 12 947 596 29 913 181
Other income 79 165 10 031 111 10 052 165
Operating expenses (20 143 593) (17 431 930) (38 278 159)
Operating profit 517 619 5 546 777 1 687 187
Investment revenue 1 870 488 3 390 149 8 312 772
Income from equity accounted
investments 1 103 127 603 000 1 335 810
Finance costs (515 599) (227 139) (343 753)
Profit before taxation 2 975 635 9 312 787 10 992 016
Taxation (862 966) (2 194 720) (1 116 196)
Total comprehensive income
for the period 2 112 669 7 118 067 9 875 820
Number of shares in issue 120 231 891 121 114 053 121 114 053
Weighted average number
of shares 120 803 852 121 085 792 121 100 080
Basic and diluted earnings
per share (cents) 1.75 5.88 8.16
Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 2011 31 August 2010 28 February 2011
R R R
Cash flows from operating
activities
Cash generated from/(utilised
for) operations 3 764 917 (10 208 707) (5 987 289)
Interest income 1 870 488 3 390 149 5 312 772
Dividend income - - 3 000 000
Finance costs (515 599) (227 139) (343 753)
Tax paid (1 989 616) (12 956 676) (14 511 434)
Dividends paid (3 391 193) (21 921 643) (21 921 644)
Net cash flow from operating
activities (261 003) (41 924 016) (34 451 348)
Cash flows from investing
activities
Purchase of property, plant and
equipment (3 689 049) (5 365 905) (12 408 574)
Proceeds on disposal of plant
and equipment 415 785 163 743 211 873
Investment in joint ventures - (12 615 995) (12 615 996)
Increase in other financial
assets (2 507 077) (3 937 111) (4 142 016)
Net cash flow from investing
activities (5 780 341) (21 755 268) (28 954 713)
Cash flows from financing
activities
Acquisition of treasury shares (1 152 804) - -
Increase/(Repayment) of other
financial liabilities 504 652 (1 238 149) 2 250 104
Net cash flow from financing
activities (648 152) (1 238 149) 2 250 104
(Decrease) in cash and cash
equivalents for the period (6 689 496) (64 917 433) (61 155 957)
Cash and cash equivalents at
beginning of period 68 385 294 129 541 251 129 541 251
Cash and cash equivalents at
the end of the period 61 695 798 64 623 818 68 385 294
Consolidated Statement of Changes in Equity
Share Share
capital premium
R R
Balance at 1 March 2010 1 210 80 023 738
Changes in equity
Total comprehensive income for the period
Shares issued 1 254 999
Dividends paid
Balance at 1 March 2011 1 211 80 278 737
Changes in equity
Total comprehensive income for the period
Treasury shares acquired (9) (1 152 795)
Dividends paid
Balance at 31 August 2011 1 202 79 125 942
Retained Total
income equity
R R
Balance at 1 March 2010 154 261 505 234 286 453
Changes in equity
Total comprehensive income for the period 9 875 820 9 875 820
Shares issued 255 000
Dividends paid (21 921 644) (21 921 644)
Balance at 1 March 2011 142 215 681 222 495 629
Changes in equity
Total comprehensive income for the period 2 112 669 2 112 669
Treasury shares acquired (1 152 804)
Dividends paid (3 391 193)* (3 391 193)
Balance at 31 August 2011 140 937 157 220 064 301
* A dividend of 2.8 cents per share was paid on 20 June 2011
Consolidated Statement of Financial Position
Unaudited Unaudited Audited
as at as at as at
31 August 2011 31 August 2010 28 February 2011
R R R
Assets
Non-current assets
Property, plant and equipment 61 118 718 56 945 684 60 915 473
Goodwill 8 396 200 8 396 200 8 396 200
Other financial assets 4 142 564 3 937 658 4 142 564
Equity-accounted investments 25 055 877 23 219 939 23 952 750
Deferred tax 8 964 510 5 989 539 8 344 920
107 677 869 98 489 020 105 751 907
Current assets
Inventories 37 142 532 23 224 525 28 218 584
Other financial assets 2 517 076 10 000 9 999
Construction contracts and
receivables 20 639 424 34 524 249 30 334 581
Current tax receivable 837 879 235 163 438 770
Trade and other receivables 24 113 990 26 833 825 24 261 090
Cash and cash equivalents 66 364 512 66 070 164 72 297 846
151 615 413 150 897 926 155 560 870
Total assets 259 293 282 249 386 946 261 312 777
Equity and liabilities
Equity
Share capital 1 202 1 210 1 211
Share premium 79 125 942 80 278 738 80 278 737
Retained income 140 937 157 139 457 929 142 215 681
220 064 301 219 737 877 222 495 629
Liabilities
Non-current liabilities
Other financial liabilities 3 702 826 476 574 3 145 262
Deferred tax 388 174 428 191 465 513
4 091 000 904 765 3 610 775
Current liabilities
Other financial liabilities 2 568 378 1 801 725 2 621 290
Current tax payable - 142 226 30 611
Trade and other payables 27 900 889 25 354 007 28 641 920
Bank overdraft 4 668 714 1 446 346 3 912 552
35 137 981 28 744 304 35 206 373
Total liabilities 39 228 981 29 649 069 38 817 148
Total equity and liabilities 259 293 282 249 386 946 261 312 777
Condensed Segment Report
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 August 2011 31 August 2010 28 February 2011
R R R
Segment revenue - external
- Aluminium 21 937 001 11 220 539 27 602 161
- Steel 40 781 454 28 601 280 66 254 218
- Glass 52 714 844 43 582 236 92 913 000
- Corporate - - -
115 433 299 83 404 055 186 769 379
Segment revenue - internal
- Aluminium - 14 322 19 573
- Steel - - -
- Glass 16 713 130 12 119 202 29 442 603
- Corporate 1 460 000 1 000 000 2 065 000
18 173 130 13 133 524 31 527 176
Segment result - operating profit
- Aluminium (590 941) 6 222 355 5 908 044
- Steel 3 272 946 2 124 143 5 897 406
- Glass (2 756 319) (2 759 079) (7 560 737)
- Corporate 591 933 (40 642) (2 557 526)
517 619 5 546 777 1 687 187
Segment assets
- Aluminium 57 865 614 64 431 595 68 182 827
- Steel 71 154 337 72 559 855 73 074 046
- Glass 116 837 110 99 864 522 106 198 306
- Corporate 13 436 221 12 530 974 13 857 598
259 293 282 249 386 946 261 312 777
Commentary
Introduction
The unaudited condensed consolidated interim results for the six months to 31
August 2011 (`the period`) reflect the ongoing difficult conditions in the
construction and building sector which resulted in an overall subdued
performance. However, Mazor`s strategy of growth through diversification and
expansion into new sectors continued to drive volume and margin growth.
Basis of preparation
The unaudited condensed consolidated interim financial statements have been
prepared in compliance with IAS 34: Interim Financial Reporting, the AC 500
Standards and the South African Companies Act, 2008 and comply with the JSE
Listings Requirements. The accounting policies and methods of computation
applied in the preparation of these unaudited condensed consolidated interim
financial statements are consistent with those applied in the audited annual
financial statements for the year ended 28 February 2011. All related party
transactions were conducted at arm`s-length.
These condensed consolidated interim results were authorised for issue by the
board of directors on 11 November 2011. The unaudited condensed consolidated
financial statements for the six months ended 30 August 2011 have been prepared
under the supervision of the Financial Director, Ms L Mazor CA(SA), and have not
been reviewed or audited by the Company`s auditors.
These financial statements should be read in conjunction with the audited annual
financial statements for the year ended 28 February 2011.
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.
The more recent incorporation of Hulamin Building Systems (`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, 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
Trading conditions generally remained extremely challenging. In addition, the
number of public holidays in April 2011 as well as industrial action in July
2011 led to a number of businesses within the construction industry closing for
longer periods than anticipated, impacting negatively on sales volumes. This saw
the group`s results for the period fall below expected levels.
Despite these challenges Mazor continued to grow within the sector of building
and construction materials distribution, helping to cement a solid platform for
growth.
Mazor Aluminium continued to diversify and grow its client base through HBS with
its value-added system, and improved margins. The division also launched a
number of new products in line with the group`s growth strategy.
The Glass division benefited from rationalisation within the industry and
continued to diversify its exposure to different sectors, expanding from a focus
on the architectural industry to include the industrial and motor industries,
amongst others. This boosted both volumes and margins.
Financial results
Revenue increased 38.4% to R115.4 million from R83.4 million in the comparative
period. All three divisions contributed with Mazor Aluminium up 95.5% to R21.9
million, Mazor Steel up 42.6% to R40.8 million and Glass up 20.9% to R52.7
million.
Operating profit declined 90.7% to R517 619 from R5.5 million and earnings per
share (eps) dropped 70.25% to 1.75 cents from 5.88 cents in the comparative
period.
However, on a like-for-like basis compared to the prior year, excluding the non-
recurring profit on sale item reflected in other income attributable to the HBS
transaction, operating profit is up by 111.6%, with earnings per share
increasing by 173.5%.
Investment revenue decreased by 44.8% to R1.9 million due to a decrease in cash
balances invested. For the six months ended 31 August 2011, cash and cash
equivalents decreased by R6.69 million. Reference should be made to the
Statement of Cash flows for more detail.
Inventories increased by 60% to R37.1 million compared to the comparable period.
This is attributable to increased activity in the glass division. The increase
in other financial liabilities of R4 million is a result of additional bank
financing raised for the acquisition of plant in the glass division.
Reconciliation between earnings and headline earnings:
Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended
31 August 2011 31 August 2010 28 February 2011
R R R
Earnings attributable to
ordinary shareholders 2 112 669 7 118 067 9 875 820
Adjusted for:
(Gain)/Loss on disposal
of property, plant and
equipment (51 929) (13 445) (9 363)
Tax effect thereof 14 540 3 765 2 622
Headline earnings 2 075 280 7 108 387 9 869 079
Basic and diluted
headline earnings per
share (cents) 1.72 5.87 8.15
Share repurchases
During the period, Mazor repurchased 882 162 shares, or 0.73% of the issued
share capital, for a total consideration of R1,15 million. The shares were
repurchased by a subsidiary of the Company and are being held as treasury stock.
Subsequent events
No material events have occurred between 31 August 2011 and the date of this
report.
Prospects
There are positive signs of improvement in the construction sector in certain
regions of the country, with an increased number of projects coming to market in
the residential, commercial and industrial sectors. Development finance is
becoming more accessible than previously, translating into new construction
projects.
In particular, construction projects in the Cape have increased substantially. A
healthy number of these are large-scale projects. Mazor is well-positioned to
benefit from this growth.
Notwithstanding the increase in project volumes, in the medium-term margins are
expected to remain under strain while excess capacity persists.
Mazor will continue to focus on growth through potential acquisitions with a
particular emphasis on distribution and manufacture of construction materials.
Directorate
A Darko was appointed to the board as an independent non-executive director and
as chairman of the audit committee with effect from 20 May 2011.
Dividend declaration
In line with Company policy, no interim dividend has been declared for the
period.
Appreciation
We thank our management and staff for their tenacious efforts in a challenging
market. Our appreciation also extends to our board for their ongoing guidance as
well as our business associates, customers and shareholders for their loyal
support.
On behalf of the board
M Kaplan R Mazor
Chairman CEO
14 November 2011
Directors: M Kaplan (Chairman)*, R Mazor (CEO), L Mazor (Financial Director),
S Mazor, A Darko*, A Groll *, F Boner*, A Varachhia*
*Non-executive director Independent
Company secretary: L 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: 14/11/2011 16:00:02 Produced by the JSE SENS Department.
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