Revenue up
25.8%
Gross profit
up 50.9%
HEPS up
289.8%
Unaudited Condensed
Consolidated Interim
Results for the
six months ...
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Mazor Group Limited HY 2014 results

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Mazor Group Limited HY 2014 results

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Mazor Group Limited HY 2014 results

  1. 1. Revenue up 25.8% Gross profit up 50.9% HEPS up 289.8% Unaudited Condensed Consolidated Interim Results for the six months ended 31 August 2013 COMMENTARY Introduction The unaudited condensed consolidated interim results for the six months to 31 August 2013 (‘the period’) reflect continued improvement in the group’s performance as market conditions in the construction sector stabilise. Basis of preparation The unaudited condensed consolidated interim results have been prepared in accordance with and containing the information required by IAS 34: Interim Financial Reporting, the recognition and measurement requirements of the International Financial Reporting Standards (“IFRS”), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the South African Companies Act, No. 71 of 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 comply with IFRS and are consistent with those applied in the audited annual financial statements for the year ended 28 February 2013. These unaudited condensed consolidated interim results were authorised for issue by the board of directors on 4 November 2013. The unaudited condensed consolidated financial statements for the period ended 31  August  2013 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, Mazars. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited annual financial statements for the year ended 28 February 2013. Group profile The Steel division comprises Mazor Steel which designs, supplies and erects structural steel frames. The Aluminium division comprises Mazor Aluminium which designs, manufactures and installs aluminium structures such as doors, windows, shopfronts, façades and balustrades for major blue-chip construction groups. 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, KwaZulu-Natal and the Eastern Cape in addition to its historical base in the Western Cape. Review of operations The group continued to deliver solid growth driven by favourable market conditions spurred by the recovery of the construction sector. Demand has stabilised, supporting higher margins. The first six months of the year saw operations performing better than in the past three years.The group is in a strong cash position and remains focused on improving cash generation. Steel delivered an improved performance over the comparable period. Aluminium continued to perform well, buoyed by a substantial increase in margins.The division was awarded numerous new contracts in the previous year which have continued in the current period. HBS performed beyond expectations reflecting the success of aggressive marketing and the expansion of the product range. Glass performance remained stable at the Cape Town, Johannesburg and George branches.To improve return on equity the group disposed of Compass Glass SA’s Port Elizabeth and East London branches. The group continues to focus on rationalisation aimed at driving higher gross profit in the division. Financial results Revenue from continuing operations was up by 25.8% to R252.8 million compared to R200.9 million in the same period in the previous year. Revenue for the Steel division was up 10.5% to R51.4 million and in the Aluminium division revenue was up 58.8% to R135.3 million. Glass saw a slight decrease in revenue from continuing operations of 4.5% to R66.1 million due to rationalisations and a focus on more profitable accounts. Operating profit from continuing operations in the prior year included a fair value adjustment as well as a gain on bargain purchase which arose on the acquisition of the remaining 50% of HBS. After removing the effects of these two items, operating profit for the period increased by 392.2% over the comparative period. Headline earnings per share increased by 289.8% on the comparative period to 14.85 cents per share from 3.81 cents per share. Cash and cash equivalents increased by R24.0  million during the period due predominantly to cash generated from operations. Disposals In line with its rationalisation strategy, the group sold its East London and Port Elizabeth divisions of Compass Glass SA with effect from 1 March 2013 and 1 July 2013 respectively for a consideration of R8.6 million.The divisions have been disclosed as discontinued operations and the comparative periods restated accordingly. Dividend declaration In line with group policy, no interim dividend has been declared for the period. Prospects Mazor is confident that the construction sector has turned a corner and is well on the way to recovery. Demand is stronger and is expected to improve further. The group is poised to return to meaningful profit increases. Aluminium has a healthy pipeline for the short to medium term. Glass is expected to increase profits in the year ahead; the primary focus for the second half of the year is cost cutting at the Compass Glass Cape Town branch. Steel construction in Cape Town has been subdued. However, substantial projects are expected to start within the next 12 months. Going forward the group intends to build on market gains driving margin expansion and capturing more substantial market share. The group is well positioned with a broad presence across South Africa, fast expanding product range and established capability to benefit from the current and future market up-tick. Mazor will target the higher margin work as it becomes available. Acquisitions in line with current offering will be considered. Appreciation We thank our management and staff for their commitment and hard work during the period. We also thank our board for their continued invaluable guidance and our business associates, customers and shareholders for their unwavering support. Forward-looking statements This announcement contains certain forward-looking statements with respect to the financial condition and results of the operations of Mazor that, by their nature, involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. These may relate to future prospects, opportunities and strategies. If one or more of these risks materialise, or should underlying assumptions prove incorrect, actual results may differ from those anticipated. By consequence, none of the forward-looking statements have been reviewed or reported on by the group’s auditors. On behalf of the board M Kaplan R Mazor Chairman CEO 5 November 2013 Consolidated Statement of Comprehensive Income Unaudited 6 months ended 31 August 2013 R Unaudited 6 months ended 31 August 2012 R Audited 12 months ended 28 February 2013 R Continuing operations Revenue 252 828 922 200 956 801 428 679 423 Cost of sales (182 167 160) (154 125 212) (324 286 542) Gross profit 70 661 762 46 831 589 104 392 881 Other income 1 563 351 15 008 810 19 663 624 Operating expenses (46 848 413) (44 070 975) (86 755 072) Operating profit 25 376 700 17 769 424 37 301 433 Investment revenue 1 218 723 1 317 941 2 639 624 Income from equity-accounted investments (307 307) 498 311 12 390 Finance costs (1 979 845) (847 905) (2 823 198) Profit before taxation 24 308 271 18 737 771 37 130 249 Taxation (6 655 544) (1 236 146) (6 690 540) Profit from continuing operations 17 652 727 17 501 625 30 439 709 Discontinued operations Profit/(Loss) from discontinued operations 2 689 128 (280 234) (457 925) Total comprehensive income for the year 20 341 855 17 221 391 29 981 784 Number of shares in issue 121 501 553 121 501 553 121 501 553 Number of shares in issue (after treasury shares) 118 658 716 118 658 716 118 658 716 Weighted average number of shares 118 658 716 118 658 716 118 658 716 Basic and diluted earnings per share (cents) 17.14 14.51 25.27 Reconciliation between earnings and headline earnings: Unaudited 6 months ended 31 August 2013 R Unaudited 6 months ended 31 August 2012 R Audited 12 months ended 28 February 2013 R Earnings attributable to ordinary shareholders 20 341 855 17 221 391 29 981 784 Adjusted for: IFRS 3 fair value adjustment (included in other income) – (9 845 054) (9 845 053) Gain on bargain purchase (included in other income) – (2 768 542) (3 025 384) Gain on disposal of discontinued operation (3 380 620) – – Tax effect thereof 634 334 – – (Gain)/Loss on disposal of property, plant and equipment 38 058 (119 340) (130 818) Tax effect thereof (10 656) 33 415 36 629 Headline earnings 17 622 971 4 521 870 17 017 158 Basic and diluted headline earnings per share (cents) 14.85 3.81 14.34 Consolidated Statement of Cash Flows Unaudited 6 months ended 31 August 2013 R Unaudited 6 months ended 31 August 2012 R Audited 12 months ended 28 February 2013 R Cash flows from operating activities Cash generated from operations 42 609 206 4 483 524 34 423 789 Interest income 1 218 723 1 209 846 2 639 624 Finance costs (1 944 701) (847 905) (2 671 865) Tax paid (5 507 904) (2 134 756) (5 593 694) Dividends paid (5 698 409) (1 899 389) (1 899 389) Cash flows of held-for-sale/discontinued operations 305 158 (401 511) (606 060) Net cash flow from operating activities 30 982 073 409 809 26 292 405 Cash flows from investing activities Purchase of property, plant and equipment (3 231 764) (9 324 633) (18 969 006) Proceeds from disposal of plant and equipment 223 624 628 236 810 323 Investment in joint venture acquired – (1 350 973) (1 350 972) Cash inflow/(outflow) on acquisition of subsidiary – 4 213 400 (16 255 975) Proceeds from disposal of listed shares – 866 779 925 495 Proceeds on disposal of discontinued operations 7 635 980 – – Repayment of loan by equity-accounted investments – – 9 999 Increase in loan to equity-accounted investments (538) (2 104 258) (2 115 123) Net cash flow from investing activities 4 627 302 (7 071 449) (36 945 259) Cash flows from financing activities (Repayment)/Increase in other financial liabilities (11 643 884) 4 482 883 14 505 664 Net cash flow from financing activities (11 643 884) 4 482 883 14 505 664 Decrease in cash and cash equivalents for the year 23 965 491 (2 178 757) 3 852 810 Cash and cash equivalents at the beginning of the year 45 515 619 41 662 809 41 662 809 Cash and cash equivalents at the end of the year 69 481 110 39 484 052 45 515 619 Consolidated Statement of Financial Position Unaudited as at 31 August 2013 R Unaudited as at 31 August 2012 R Audited as at 28 February 2013 R Assets Non-current assets Property, plant and equipment 85 145 361 71 099 081 86 514 822 Goodwill 8 141 200 8 396 200 8 396 200 Intangible asset 20 000 000 20 000 000 20 000 000 Other financial assets – 72 980 – Equity-accounted investments 1 067 240 1 860 469 1 374 547 Loans to equity-accounted investments 2 115 661 – 2 115 123 Deferred tax 11 295 411 10 427 416 11 480 066 127 764 873 111 856 146 129 880 758 Current assets Inventories 103 698 485 98 598 172 96 813 413 Loans to equity-accounted investments – 2 114 257 – Construction contracts and receivables 18 162 009 34 360 000 42 167 592 Other financial assets 990 341 – – Current tax receivable 4 675 1 223 499 702 Trade and other receivables 47 467 081 56 809 180 43 917 132 Cash and cash equivalents 74 279 770 41 699 272 50 694 173 244 602 361 234 804 380 233 593 012 Non-current assets held-for-sale and assets of disposal groups – – 751 364 Total assets 372 367 234 346 660 526 364 225 134 Equity and liabilities Equity Stated capital 76 945 787 – 76 945 787 Share capital – 1 186 – Share premium – 76 944 601 – Retained income 187 368 013 159 964 175 172 724 567 264 313 800 236 909 962 249 670 354 Liabilities Non-current liabilities Other financial liabilities 24 544 514 32 936 226 27 327 867 Deferred tax 652 561 64 350 1 301 556 25 197 075 33 000 576 28 629 423 Current liabilities Other financial liabilities 14 311 012 17 643 901 23 174 959 Current tax payable 2 961 192 – 404 253 Trade and other payables 60 785 495 56 890 867 57 167 591 Bank overdraft 4 798 660 2 215 220 5 178 554 82 856 359 76 749 988 85 925 357 Total liabilities 108 053 434 109 750 564 114 554 780 Total equity and liabilities 372 367 234 346 660 526 364 225 134 Condensed Segment Report Unaudited 6 months ended 31 August 2013 R Unaudited 6 months ended 31 August 2012 R Audited 12 months ended 28 February 2013 R Segment revenue – external – Aluminium 135 256 538 85 177 883 184 843 543 – Steel 51 434 566 46 540 619 106 522 084 – Glass# 66 137 818 69 238 299 137 313 796 – Corporate – – – 252 828 922 200 956 801 428 679 423 Segment revenue – internal – Aluminium 1 658 723 600 877 1 936 480 – Steel 1 426 500 – – – Glass# 21 360 602 17 882 292 35 735 388 – Corporate 3 007 378 1 770 000 4 381 148 27 453 203 20 253 169 42 053 016 Segment result – operating profit – Aluminium 19 449 420 3 199 289* 18 733 555 – Steel 5 731 136 328 217 7 139 027 – Glass# (1 550 605) 2 120 793 (2 210 103) – Corporate 1 746 749 12 121 124* 13 638 954 25 376 700 17 769 424 37 301 433 Segment assets – Aluminium 132 749 525 113 763 743 115 774 307 – Steel 65 498 946 62 729 336 69 137 397 – Glass 151 519 566 157 764 557 156 255 409 – Corporate 22 599 197 12 402 890 23 058 021 372 367 234 346 660 526 364 225 134 Segment liabilities – Aluminium 33 820 392 53 693 051 31 745 494 – Steel 9 057 352 11 174 152 13 696 382 – Glass 54 882 812 44 736 880 57 896 546 – Corporate 10 292 879 146 481 11 216 358 108 053 434 109 750 564 114 554 780 * The fair value adjustment and gain on bargain purchase on the step-acquisition of HBS was reclassified from the Aluminium segment to the Corporate segment in August 2012 in order to achieve consistency with the February 2013 annual report # Excludes discontinued operations Consolidated Statement of Changes in Equity Share capital R Share premium R Stated capital R Retained income R Total equity R Balance at 1 March 2012 1 186 76 944 601 – 144 642 173 221 587 960 Changes in equity Total comprehensive income for the period 29 981 783 29 981 783 Dividends paid (1 899 389)* (1 899 389) Convert to no par value shares (1 186) (76 944 601) 76 945 787 Balance at 28 February 2013 – – 76 945 787 172 724 567 249 670 354 Changes in equity Total comprehensive income for the period 20 341 855 20 341 855 Dividends paid (5 698 409)* (5 698 409) Balance at 31 August 2013 – – 76 945 787 187 368 013 264 313 800 * A net dividend of 4.08 cents per share was paid on 3 June 2013 (1.381 cents per share on 11 June 2012) 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 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: Ivor Mark Bloom 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)

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