integrated annual report 2015 - mazor …...mazor integrated annual report 2015 5 2015 r 2014 r 2013...

INTEGRATED ANNUAL REPORT 2015

risks, uncertainties and assumptions,

including, without limitation, risks related

to the timing or ultimate completion of any

proposed transactions and the possibility that

benefits may not materialise as expected.

If such risks or uncertainties materialise or

such assumptions prove incorrect, actual

results could differ materially from those

expressed or implied by such forward-looking

statements and assumptions. The forward-

looking statements in this report are made as

of the date of this report, and Mazor Group Ltd

expressly disclaims any obligation to update

or correct these statements due to events

occurring after issuing this report.

The financial information on which the

forward-looking statements are based have not

been audited nor reported on by the group’s

independent internal or external auditors.

The table below sets out the disclosures:

Disclosure Section Page number

REPORT PARAMETER About this Report IFCORGANISATIONAL PROFILE Group Profile 2STRATEGY AND ANALYSIS Joint Chairman’s and CEO’s

Report 6GOVERNANCE COMMITMENTS AND ENGAGEMENT

Corporate Governance Report 10CORE PERFORMANCE INDICATORS

Sustainability Report 17

AbOuT ThIS REPORT

This report was compiled for Mazor Group Ltd

(‘the group’) and its subsidiaries and covers

the year ended 28 February 2015.

The report was produced for our stakeholders,

including shareholders, employees,

customers, suppliers, government and the

communities in which we operate. It aims to

present the risks and opportunities the group

faces. We also disclose information regarding

the group’s business strategy, its governance

and its performance.

In considering the report content we have

considered issues which drive business

strategy, are of concern to stakeholders and

which can significantly impact the long-term

sustainability of the group. These issues have

accordingly been prioritised for inclusion in

this report.

We have not placed any limitations on the

scope or boundaries of this report.

The financial statements on pages 25 to 73 of

this report have been audited in accordance

with the International Standards on Auditing

and the requirements of the Companies Act

No. 71 of 2008 and have been prepared

under the supervision of the financial director,

Liat Mazor CA(SA).

FORWARD-LOOKING STATEMENTSThis report contains forward-looking

statements which are not historical facts.

Any statement that expresses or implies the

Group’s intentions, expectations, predictions

or beliefs (and the assumptions underlying

them) is a forward-looking statement.

Forward-looking statements involve inherent

1MAZOR INTEGRATED ANNUAL REPORT 2015

CONTENTS

Group profile ............................................................... 2

Five-year financial review ............................................ 5

Joint chairman’s and CEO’s report ................................ 6

Directorate .................................................................. 8

Corporate governance report ...................................... 10

Remuneration and nomination committee report ......... 15

Social and ethics committee report ............................ 16

Sustainability report ................................................... 17

ANNuAL FINANCIAL STATEMENTS ................ 24

Shareholders’ diary ................................................... 74

Corporate information ............................................... IBCThe Boulevard, Cape Town

2

Mazor Group Ltd comprises three main

divisions:

• Steel which designs, supplies and erects

structural steel frames;

• Aluminium which designs, manufactures

and installs aluminium structures such

as doors, windows, shopfronts, façades

and balustrades for major blue-chip

construction groups and also supplies

aluminium fenestration systems; and

• Glass which manufactures and distributes

laminated, toughened safety glass and

processed glass.

Mazor is based predominantly in the

Western Cape but has expanded its operations

through its Glass division and HBS Aluminium

Systems (Pty) Ltd and also has operations in

Gauteng, Durban and George.

Mazor has to date contributed to many

of the Western Cape’s most prestigious

construction projects including Portside,

the 2010 Green Point Stadium, the

Cape Town International Airport expansion,

Convention Towers, the Westin Grand

Hotel, V&A Waterfront shopping centre and

Canal Walk shopping centre.

The following are 100%-held subsidiaries of

Mazor Group Ltd:

• MazorSteel(Pty)Ltd

• MazorAluminium(Pty)Ltd

• CompassGlass(Pty)Ltd

• CompassGlassSA(Pty)Ltd

• HBSAluminiumSystems(Pty)Ltd

• MazorProperties(Pty)Ltd

MAzOR’S VISION IS SIMPLY, TO bE SuRE WE hAVE REASON TO bE PROuD.

We are proud of our 34-year heritage that

has seen the group transition from a family-

owned business to a company successfully

listed, first on AltX in 2007, and on the

Main Board of the JSE in 2008. We are proud

of our client base which is stable, loyal and

enduring. We are proud to service our clients

because we are confident of the quality of

our service and product and we are proud of

our reputation that affirms this. We are proud

of our team, because their commitment and

adherence to the highest standards of quality

and strictest standards of ethics mirrors the

values that are the bedrock of our culture

since inception. We are proud that so many

stakeholders choose to continue participating

in the group.

‘Mazor’s ambition is to be an integrated, specialised, high-integrity materials solutions company that delivers to customers and ensures sustainable growth for stakeholders.’

GROuP PROFILE


Portside, Cape Town

4

Crystal Towers, Century City


2015R

2014R

2013R

2012R

2011R

Financial positionProperty, plant and equipment 77 793 737 83 867 768 86 514 822 63 376 590 60 915 473 Equity-accounted investments – – 1 374 547 26 585 674 23 952 750 Goodwill – 8 141 200 8 396 200 8 396 200 8 396 200Intangible assets 19 000 000 20 000 000 20 000 000 – – Current assets 198 600 213 232 250 214 233 593 012 148 118 289 155 560 870 Total assets 300 870 995 358 627 911 364 225 134 257 586 477 261 312 777 Current liabilities 65 217 642 60 857 638 85 925 357 30 283 088 35 206 373 Non-current liabilities (including deferred tax) 15 066 716 22 442 232 28 629 423 5 715 429 3 610 775 Capital and reserves 220 586 638 275 328 041 249 670 354 221 587 960 222 495 629

Interest-bearing debt 27 698 615 34 915 936 55 681 380 14 813 067 9 679 104Instalment sales – short term 3 443 331 4 612 119 5 740 425 3 398 203 2 621 290Instalment sales – long term 3 662 271 6 368 422 7 867 464 5 241 092 3 145 262Mortgage bond – short term – 1 146 685 930 155 – – Mortgage bond – long term 8 095 196 8 079 606 9 228 477 – – Loans – short term 4 022 923 3 698 656 16 504 379 – – Loans – long term 2 514 494 6 532 167 10 231 926 – – Bank overdraft 5 960 400 4 478 281 5 178 554 6 173 772 3 912 552

Financial resultsSales 376 077 950 470 385 630 428 679 423** 223 839 398 186 769 379 Operating profit (28 010 000) 39 826 042 37 301 433** 2 703 450 1 687 187 Income from equity-accounted investments – 101 247 12 390 2 632 923 1 335 810 Total comprehensive (loss)/income (39 212 552) 31 356 096 29 981 784 5 800 789 9 875 820 Earnings per share (cents) (33.1) 26.4 25.3 4.8 8.2Headline earnings per share (cents) (26.1) 24.2 14.3 4.8 8.2Dividends per share (cents) 8.8 8.8 4.8 1.6 2.8

Shares in issueNumber of shares in issue at year-end# 121 501 553 121 501 553 121 501 553 121 501 553 121 501 553 Weighted average number of shares 118 409 637 118 658 716 118 658 716 120 122 874 121 100 080

Key ratiosDebt to equity (%) 12.56 12.68 22.30 6.68 4.35Current ratio (times) 3.1 3.8 2.7 4.9 4.4Return on total assets (%) (8.08) 11.98 10.98 3.42 4.34Net tangible asset value per ordinary share (cents) 170.2 208.3 186.5 177.5 176.8

Scale of operationsNumber of businesses* 5 5 5 4 4Number of employees at year-end 469 585 675 429 397

* Prior to 2013 this excluded HBS Aluminium Systems (Pty) Ltd as this was equity accounted.** Restated to exclude discontinued operations.# This is shares in issue before excluding treasury shares.

DEFINITIONSDebt to equityInterest-bearing debt/Capital and reserves

Current ratioCurrent assets/Current liabilities

Return on total assetsProfit before interest paid and taxation as a percentage of total assets

Net tangible asset value per ordinary shareOrdinary shareholders’ interest less goodwill and intangible assets divided by the weighted average number of shares in issue

FIVE-YEAR FINANCIAL REVIEW

6

INTRODuCTIONThe year proved challenging for the group on

both macro and micro fronts. In the big picture

the local economy was not business-friendly

in light of the major incidence of labour unrest,

which resulted in an inconsistent business flow

and caused severe uncertainty, manifested by

a shortage in material supply. This further led to

another slow-down in the construction sector

with many projects delayed and some even

shelved indefinitely.

Naturally as volumes decreased, competition

increased, resulting in reduced pricing

dominating the market and squeezing margins.

During this tough business environment we

remained focused on cost management

and our ongoing efficiency drive. We are

implementing innovative cost-saving initiatives,

which will position us well to capitalise on the

anticipated future market up-tick. A particular

focus was improving efficiency and profitability

in our Glass division to ensure its long-term

sustainability.

OPERATIONAL REVIEWSteel and Aluminium, the group’s manufacturing

segments, are both battling ever-intensifying

competition and extreme client price sensitivity,

meaning unabated margin pressure.

At Glass the rationalisation programme,

which included reviewing inventory

levels, contributed to depressed revenue.

However, the new management team has

now implemented systems and production

management procedures which are expected

to deliver improved margins and a greater

production capacity.

The Port Elizabeth branch of HBS was closed

during the year in light of its continued

underperformance.

FINANCIAL RESuLTSRevenue declined by 20.1% to R376 million

from R470.4 million in the previous year.

Revenue at all divisions was down, with

Aluminium recording the most significant

year-on-year drop of 30.3%. This contributed

to a group operating loss of R27.9 million,

compared to a profit of R39.8 million in the

previous year.

Headline earnings decreased from

R28.7 million to a loss of R30.7 million,

resulting in a negative headline earnings per

share of 26.1 cents from a positive headline

earnings per share of 24.2 in the prior year.

SuSTAINAbILITYWe recognise that our sustainability as a

group is dependent on more than our financial

performance, and is heavily impacted by the

manner in which we pursue value creation.

JOINT ChAIRMAN’S AND CEO’S REPORT

Chevron Building, Century City


Our social and ethics committee is charged

with monitoring the wider sustainable

development at the group. During the year the

committee reviewed such practices as ethics

and compliance, corporate social investment,

stakeholder relations, BBBEE, health and public

safety, labour relations and working conditions,

training, and development and management of

the group’s environmental impacts.

OuTLOOKWe believe things are looking up and we

are confident of delivering a substantially

stronger performance in the next financial

year. Currently in the construction business –

affecting Steel and Aluminium – the market as

a whole is more buoyant, with prices on the up.

With improved pricing we expect an increase

in volumes as well as a margin up-tick. On the

back of the market turnaround we have

secured major projects. Our order books for

Aluminium and Steel are both healthy.

Our distribution businesses – HBS and

Compass – are also expected to benefit from

better market conditions. In particular, we see

increased activity in the residential sector,

which historically heralds a sustainable upturn

in construction. The increased activity bodes

well for material distribution as increased

demand will alleviate pricing pressure and drive

up margins. As the construction momentum

gains traction, we expect volumes to increase

substantially in the latter part of the year.

The one thorn in our side, and in everyone

else’s, remains security of power supply and

the uncertainty this creates. Power outages

interfere with planning and disrupt production.

While we endeavour to adapt to ‘planned

outages,’ we are still impacted by those many

outages that are sporadic and unplanned.

DIVIDENDSNo dividend was declared for the year as the

group incurred losses.

OuR ThANKS We would like to thank our management

team and all our staff for their hard work and

tenacity in the face of a difficult year of ongoing

challenges.

We also thank our business partners, suppliers,

advisers and our valued clients and shareholders

for their continued confidence in the group.

Monty Kaplan Ronnie MazorChairman CEO

11 May 2015

8

DIRECTORATE

CA(SA)Independent non-executive chairman

Monty is a director of companies with many years’ experience and is currently serving as a non-executive chairman of Trematon Capital Investments Ltd. He was previously the CEO of Cape of Good Hope Bank Ltd.

BSc Econ – UCTChief executive officer

Ronnie worked in the banking and finance industry as a technical analyst for Bank Leumi in Israel analysing currencies, stocks and bonds. He joined Mazor Steel and Mazor Aluminium in 1995 and has been instrumental in the Mazor Group’s growth.

BBSc (Finance) – UCT, CA(SA), CFAFinancial director

Liat qualified as a chartered accountant having graduated from the University of Cape Town in 1998. She joined Arthur Andersen in 1999 where she completed her articles. In 2002 she joined Credit Suisse First Boston in London where she was a risk analyst covering emerging markets’ fixed income derivatives. She joined the Mazor Group in 2004.

Executive director

Shlomo co-founded Mazor Steel and Mazor Aluminium together with his wife Judy. Shlomo brought to the business his technical expertise which were acquired over 23 years working as a boilermaker, welder and rigger in Israel. Shlomo has an in-depth knowledge of the product and continues to ensure that quality is achieved throughout the Mazor Group.

Monty Kaplan (86) Ronnie Mazor (46) Liat Mazor (39) Shlomo Mazor (73)


Independent non-executive

Allan is a Cape Town-based investor with a wide range of local property and business interests. He is one of the founders and a director of Ingenuity Property Holdings Ltd. Allan currently serves as an executive director of Trematon Capital Investments Ltd.

BSc Quantity Surveying – UCTNon-executive

Abu qualified as a quantity surveyor at the University of Cape Town in 1986. He was a founding member of LDB Quantity Surveyors when it was established in 1990. Abu has been involved in some major and complex developments in South Africa.

He is currently a director of LDM quantity surveyors, chairperson of Spear Properties and sits on the board of the Cape Town Central City Improvement District.

Abu also served as chairperson of the Built Environment Advisory Committee for the 2004 Olympic Bid and non-executive director of Spearhead Properties and Ingenuity Property Investments Ltd.

FCCA, MSc (MIS)Independent non-executive

Alex is an independent management consultant and executive coach.

He has a number of years of international experience including 14 years at the Dun and Bradstreet (DandB) Corporation.

Positions held at D&B included that of director of finance at D&B Europe Ltd and head of European accounting re-engineering.

He also previously served as the CIO at AngloGold Ashanti.

Alex is also a non-executive director at Consolidated Infrastructure Group and Business Connexion Group Ltd, Barclays Africa Group and Safintra (Pty) Ltd.

CA(SA)Independent non-executive

Frank qualified as a chartered accountant and served as managing partner of an accounting firm, now Horwarth Leveton Boner. He was joint managing director of Reichmans Ltd prior to its sale to Investec Bank where Frank subsequently served as manager of Investec’s corporate asset-based finance division. In 1998 Frank joined Global Capital (Pty) Ltd, a boutique investment banking and private equity firm and has been responsible for negotiating and concluding many investment transactions. Frank is the current CEO of Global Capital and sits on the board of all investee companies where he focuses predominantly on financial and strategic issues. Frank is chairman of Consolidated Infrastructure Group Ltd.

Allan Groll (60) Abubaker Varachhia (56) Alex Darko (62) Frank boner (69)

10

CORPORATE GOVERNANCE REPORT

The group is committed to the principles of

accountability, integrity and transparency as

set out in the King III Report on Corporate

Governance in South Africa (‘King III’).

In doing so the directors seek to identify

and mitigate significant risks, ensuring

sustainable business practices underpinned

by transparent communication with all

stakeholders. The board monitors compliance

with the Code of Corporate Practices

and Conduct contained within the King III

Report. The board adheres to the ‘apply or

explain’ principle as contained in this report

and required in terms of the JSE Listings

Requirements. The board is of the opinion that

the group is mostly in compliance with the

recommendations of the King III Report.

ThE bOARDThe board comprises eight directors with a

majority of non-executive directors (five), four

of whom are independent. The board is chaired

by independent non-executive chairman,

Mr M Kaplan. The board is committed to the

sustainability and growth of the company.

The responsibilities of the chairman and

CEO are strictly separated, echoed in

the separation of duties of the remaining

executive directors and non-executive

directors, to ensure that no director can

exercise unfettered powers of decision-

making. The chairman provides leadership

and guidance to the board and encourages

proper deliberation on all matters requiring

the board’s attention while obtaining

input from other directors. The CEO and

other executive directors are responsible

for devising and overseeing strategy and

operational decisions in respect of the day-

to-day operations which are implemented

by management. Non-executive directors

contribute their independent and objective

knowledge and experience to board

deliberations. All non-executive directors are

sufficiently qualified to contribute significant

industry skill and expertise.

Board members are required to act with due

diligence and care in all company dealings

and to uphold the values and ethics of

the company and are accountable to the

shareholders for the company’s performance.

Non-executive directors have unrestricted

access to management at any time. Directors

further have access to the external auditors.

All directors are entitled, at the group’s

expense, to seek independent professional

advice on any matters pertaining to the group

where they deem this to be necessary.

In accordance with the memorandum of

incorporation one-third of directors retire

each year by rotation. Their reappointment

will be subject to shareholders’ approval at

the annual general meeting. At the upcoming

annual general meeting Messrs A Varachhia

and A Groll will retire and, being eligible, will

stand for re-election. None of the non-executive

directors have service contracts with the group.

The board is governed by a Board Charter

detailing its composition, appointment,

responsibilities and processes, as well as

the fiduciary duties and role of each director.

The Charter tasks the board with:

• settingstrategy;

• overseeingthatthestrategyresultsin

sustainable outcomes;

• monitoringsuccessionplanning;

• determininginvestmentpolicy;

• reviewingperformanceagainst

preapproved budgets;

• developingacorporatecodeofconduct;

• identifyingkeyriskareas;

• reviewingprocessesandprocedures

to ensure the effectiveness of internal

systems of control; and

• approvingtheannualfinancialstatements

and interim results.

Further duties set out in the Charter include:

• ensuringinternalcontrolprocedures

protecting the company’s assets and

reputation are in place;

• ensuringthatadequatetechnologyand

systems are applied to run the business

effectively;

• theapplicationofgoodcorporate

governance principles; and

• assessingthegroup’scontinuationasa

going concern.

In terms of the Charter the board is required

to regularly assess its own performance

and effectiveness and that of the chairman

and individual directors. The board has

evaluated the performance of the chairman,

the individual members of the board and the

board as a whole. A consolidated summary of

the evaluation was reported to and discussed

by the board, including any actions and

suggestions for improvements.

The Charter is reviewed annually and is

currently in the process of being reviewed in

conjunction with the internal auditors of the

group, as part of their focus on corporate

governance during the coming year.

The board meets at least four times a year

and ad-hoc meetings are convened when

required.


Details of directors’ attendance at board

meetings during the year are set out below.

The number in brackets represents the total

number of meetings:

Directors board

meetings

M Kaplan** (Chairman) 4(4)

R Mazor (CEO) 4(4)

L Mazor (Financial Director) 4(4)

A Groll** 4(4)

S Mazor 3(4)

A Darko** 3(4)

A Varachhia* 4(4)

F Boner** 4(4)

* Non-executive.

** Independent non-executive.

bOARD PROCESSESCompany secretaryThe company secretary is responsible for

updating the board on legislative and/or

regulatory developments on an ongoing basis.

All directors have unrestricted access to the

advice and services of the company secretary

and to company records, information,

documents and property.

In terms of the JSE Listings Requirements

regulations 3.84(i) and 7.F.6(j), the board of

directors must satisfy itself, on an annual

basis, on the competence, qualifications

and experience of the company secretary.

The board has satisfied itself on these criteria

by confirming the company secretary’s

qualifications (ACIS) and experience through

verification with third parties. In terms

of regulation 4.8(c) of the JSE Listings

Requirements, the company secretary should

maintain an arm’s length relationship with

the board of directors and should ideally

not be a director. The board is satisfied

that an arm’s length relationship does

exist between the company secretary and

itself in that the company secretary has no

separate relationship of any nature with any

of the directors which could lead to conflicts

of interest and dilution of the company

secretary’s independence.

Regulatory and legislative complianceThe company secretary liaises closely with the

group’s sponsor to ensure the group complies

with all applicable regulations and legislation.

Conflicts of interestsDirectors are required to disclose their

shareholdings, additional directorships and

any potential conflicts of interest to the

chairman or the company secretary. Directors

are required to recuse themselves from

discussion and voting upon any matter in

which they may have an interest.

Dealing in securitiesDirectors are prohibited from dealing in the

group’s shares during closed periods which

in any year extend from 1 March to the day

the annual results are announced and from

1 September to the day the interim results are

announced. In addition, all directors cannot

trade during any period where they have

access to any price-sensitive information.

Before dealing in the shares of the group

directors are obliged to inform the chairman

or company secretary who, together with

the sponsor, ensures that such dealings are

published on SENS.

New appointmentsThe board, together with the remuneration

and nomination committee, is responsible

for identifying and nominating new directors.

The appointment process is conducted in a

formal and transparent manner. In making

new appointments the committee and the

board take into account the blend of skills and

experience, as well as social and business

concerns such as broad-based BEE.

Succession planningMazor continually seeks to identify suitable

candidates within the group to train and

mentor for succession to senior management

and the board.

bOARD COMMITTEESThe board has established and mandated a

number of committees to perform work on

its behalf in various key areas affecting the

business of the group. Each committee’s role

and responsibilities are spelt out in its charter,

which is approved by the board and reviewed

with sufficient regularity to ensure that it

remains in line with the group’s changing

needs and business climate. As and when

required, the board may establish ad-hoc

committees to address specific issues. Details

of each board committee are provided below.

All committees have satisfied their

responsibilities during the year in compliance

with their charters.

A review of applicable charters is conducted

to take into account good corporate

governance in terms of King III and the

Companies Act No. 71 of 2008.

Audit and risk committeeThe audit and risk committee is chaired

by Mr A Darko and further comprises

Messrs M Kaplan and F Boner. All members of

the committee are independent non-executive

directors and have the requisite financial

12

knowledge, skills and experience to contribute

effectively to the carrying out of the functions

of the committee.

The committee met four times during the year.

(Attendance at meetings is set out on page 26.)

Management and the external and internal

auditors attend meetings by invitation.

The committee is responsible for reviewing

and amending the group’s internal controls

and risk management systems and controls,

oversight of financial reporting, and for

reviewing and ensuring implementation

of audit recommendations. Further, the

committee is tasked with appointing and

recommending the external auditor.

A formal audit committee charter is reviewed

annually and includes further duties such as:

• evaluatingmanagement’saccountability

regarding the security of computer systems

and contingency plans in the event of a

systems breakdown;

• reviewingsignificantaccountingand

reporting issues;

• reviewingtheexternalauditor’s

performance and audit scope;

• determiningtheindependenceofthe

external auditor;

• developingaformalriskmanagement

policy;

• reviewingsystemsinplacetomonitorthe

group’s regulatory compliance;

• reviewingtheadequacyofinternalcontrols

and internal financial control; and

• reviewingtheexpertise,resourcesand

experience of the group’s financial function.

The report of the audit and risk committee is

set out on page 26.

Remuneration and nomination committeeThe committee is chaired by independent

non-executive director, Mr F Boner, and

further comprises independent non-executive

chairman, Mr M Kaplan. (Attendance at

meetings is set out on page 15.)

The formal remuneration and nomination

committee charter sets out the committee’s

composition, duties and responsibilities.

In terms of the charter the committee

is responsible for determining and

recommending the remuneration packages of

executive directors and any criteria necessary

to measure their performance, reviewing

annual bonuses as well as recommending

allocations to executive directors and senior

employees in terms of the company’s share

scheme. In addition, the committee is

responsible for reviewing and recommending

compensation policies for non-executive

directors. The committee is also responsible

for the assessment and approval of the

remuneration strategy for the group, for

assisting the board in determining and

administering remuneration policies, and for

recommendations on any nominations made

to fill any board vacancies.

The report of the remuneration committee is

set out on page 15.

Social and ethics committeeThe committee is chaired by independent

non-executive director, Mr A Darko, and

further comprises executive director,

Ms L Mazor, and Mr D Reardon, a

senior manager.

The committee’s charter sets out its

composition and includes duties such as

monitoring the group’s activities relating

to social and economic development,

good corporate citizenship, community

upliftment, the environment, health and public

safety, consumer relationships, labour and

employment in terms of compliance with the

ten United Nations global compact principles.

The report of the social and ethics committee

is set out on page 16.

ACCOuNTING AND AuDITINGExternal auditThe external auditors are responsible

for reporting on whether the annual

financial statements are fairly presented

in compliance with International Financial

Reporting Standards and the requirements

of the Companies Act. The preparation of

the annual financial statements remains the

responsibility of the directors.

The audit and risk committee evaluates

the independence and effectiveness of the

external auditors and considers whether any

non-audit services rendered by such auditors

substantively impair their independence.

If this is found to be the case, appropriate

corrective action will be taken in respect of

those services.

Internal auditThe internal audit function of the group is

performed by Grant Thornton.

INTERNAL CONTROL AND RISK MANAGEMENTInternal controlThe board is responsible for the group’s

systems of internal control and risk

management and is assisted in this regard by

the audit and risk committee. These systems

of internal control are designed to provide

reasonable but not absolute assurance as

CORPORATE GOVERNANCE REPORT (continued)


to the integrity and reliability of the annual

financial statements, to safeguard and

maintain accountability of the group’s assets

and to identify and minimise significant

fraud, potential liability, loss and material

misstatement while complying with applicable

statutory laws and regulations.

There are inherent limitations to the

effectiveness of any system of internal control,

including the possibility of human error and

the circumvention or override of controls.

The system is therefore designed to manage

rather than eliminate risk of failure and

opportunity risk.

Risk managementThe board, together with the audit and risk

committee, is responsible for overseeing risk

management activities and ensuring that the

requisite risk management culture, policies,

practices and systems are implemented and

functioning effectively.

STAKEhOLDER COMMuNICATIONThe group is committed to timely, consistent

and transparent communication with all

stakeholders. In doing so Mazor strives to

provide a balanced and understandable

assessment of the group’s position.

In all manners of communication including

financial reporting, formal announcements,

media releases, annual meetings,

presentation and dialogue with investors and

analysts, the group seeks to be clear, open,

prompt and balanced, communicating in

substance rather than form.

Company announcements are published on

SENS and posted on the company’s website.

Financial results announcements are also

posted to shareholders. Further, the chairman,

CEO and financial director are available to

answer queries from stakeholders, including

industry analysts, at all times and wherever

possible engage with the financial media to

ensure accurate reporting.

The annual general meeting provides an

opportunity to communicate directly with

shareholders and the group encourages

shareholders to attend and voice their opinions.

CORPORATE SOCIAL INVESTMENT (‘CSI’)The group aims to contribute to the economic

well-being and social development of the

communities in which it operates through job

creation and donations and educational and

cultural contributions. The social and ethics

committee is responsible for this programme.

bbbEEDirect black shareholding in the group

totals 15%, held by Cloudberry Investments

18 (Pty) Ltd, Clusten 54 (Pty) Ltd and Nabaz

Properties (Pty) Ltd. The group is constantly

striving to broaden BEE participation at group

level on identification of viable opportunities in

this regard.

PREFERENTIAL PROCuREMENTIn terms of discretionary spend the group

seeks to secure products and services from

black-owned and managed enterprises as far

as is commercially viable.

GOING CONCERNThe annual financial statements contained

in this annual report have been prepared on

a going concern basis as the directors have

every reason to believe that the company

and the group have adequate resources to

continue in operation for the year ahead.

NON-COMPLIANCE WITh ThE CODEIn some instances the Group has not complied

with the King III Code on good corporate

governance. In accordance with the ‘comply

or explain’ principle of the Code, the table

below sets out instances of non-compliance

together with explanations for the relevant

non-compliance.

14

CORPORATE GOVERNANCE REPORT (continued)

KING III recommendation Explanation for non-compliance

Constitution of the audit and risk committee

The chairman of the board, Monty Kaplan, was a member of this committee

during the 2015 financial year. Monty is a chartered accountant with years

of experience and the board wished to draw on this expertise. He will remain

as a member of this committee, which does not comply with the code which

determines that the chairman of the board may not be a member of the audit

committee. Having regard to the group’s size and the effectiveness of the current

audit and risk committee, the board does not view the appointment of another

independent non-executive director to the board to replace Monty Kaplan on this

committee as an effective use of the group’s resources.

Chairman of the nomination committee The group has combined the nomination and remuneration committee and this

committee is chaired by Mr F Boner. The chairman of the board, Mr M Kaplan, will

however chair all meetings dealing with nominations.

Compliance framework for the group In terms of principle 6.4 of King III the board should delegate the responsibility

for the implementation of an effective compliance framework to management.

Responsibility for compliance has been assigned to the company secretary to

identify legislative impacts on the group whilst heads of divisions are responsible

for compliance with relevant legislation.


REMuNERATION AND NOMINATIONCOMMITTEE REPORT

The committee assists the board in ensuring that the group’s remuneration and recruitment policy is aligned with overall business strategy, with the aim

of attracting and retaining personnel who will create long-term value for all its stakeholders.

The group’s policy is to remunerate its directors, executives and staff by paying them competitively structured packages, thereby aligning the corporate

objectives with the commitment and performance of individuals.

Remuneration is benchmarked against industry norms and is performance-related. The employee’s level of experience and qualifications are also taken

into consideration when determining remuneration.

Non-executive directors are paid a monthly retainer as well as a fee per meeting. The monthly retainers are paid on a quarterly basis. Non-executive

directors’ fees were increased on 1 July 2014 as follows:

2015 2014

Monthly retainer

R

Fees per meeting

R

Monthly retainer

R

Fees per meeting

R

Chairperson of the board 9 900 13 200 9 000 12 000

Board member 7 700 11 000 7 000 10 000

Chairperson – audit and risk committee 12 100 11 000

Chairperson – remuneration and nomination committee 11 000 10 000

Member of audit and risk committee 9 900 9 000

Member of remuneration and nomination committee 8 800 8 000

Chairperson – social and ethics committee 8 800 8 000

Member of social and ethics committee 5 500 5 000

The fees were authorised by special resolution

at the annual general meeting convened on

30 June 2014.

The committee reviews the remuneration policy

and makes recommendations to the board. It is

primarily responsible for overseeing the policies

over remuneration and incentives of executive

directors. In addition, the committee approves

incentive bonus schemes for senior employees.

The committee also recommends remuneration

levels for non-executive directors to the board

to be presented to shareholders for approval.

Directors’ emoluments are disclosed in note 27

of the consolidated annual financial statements.

The CEO and financial director attend

meetings of the remuneration and nomination

committee by invitation, but are excluded

during deliberations in respect of their own

remuneration.

The committee meets once a year unless

circumstances necessitate additional meetings.

The attendance at the meeting held is set out

below:

Directors

Remuneration and nomination

committee meetings

F Boner (Chairman) 1(1)

M Kaplan 1(1)

16

The committee assists the board in monitoring

the group’s activities in terms of legislation,

regulation and codes of best practices

relating to:

• ethics;

• stakeholderengagement,including

employees, customers, communities and

the environment; and

• strategicempowermentandcompliance

with transformation codes.

RESPONSIbILITIES OF ThE COMMITTEEThe responsibilities of the committee are to:

• monitorthecompany’sactivitiesrelating

to social and economic development, good

corporate citizenship, the environment, and

health and public safety;

• monitorprogressonstrategic

empowerment and performance against

targets;

• monitorchangesintheapplicationand

interpretation of empowerment charters

and codes; and

• monitorfunctionsrequiredintermsofthe

Companies Act No. 71 of 2008 and its

regulations.

COMPOSITION AND FuNCTIONINGThe committee comprises one independent

non-executive director, Mr A Darko, one

executive director, Ms L Mazor, and a member

of management, Mr D Reardon.

The members of the committee believe

that the group is substantively addressing

the issues that required to be monitored

by the committee in terms of the

Companies Act No. 71 of 2008.

SOCIAL AND EThICSCOMMITTEE REPORT

ATTENDANCE AT MEETINGS Details of members’ attendance of committee meetings during the year are set out below:

The number in brackets represents the total number of meetings the committee member could

have attended:

MembersSocial and ethics

committee meetings

A Darko (Chairman) 1(1)

L Mazor 1(1)

D Reardon 1(1)

MONITORING OF SuSTAINAbLE DEVELOPMENT PRACTICESIn the execution of its duties the committee has reviewed the sustainable development practices of

the group relating to:

• ethicsandcompliance;

• corporatesocialinvestment;

• broad-basedblackeconomicempowerment;

• healthandpublicsafety;

• labourrelationsandworkingconditions;

• trainingskillsanddevelopment;and

• managementofthegroup’senvironmentalimpacts.

A DarkoSocial and Ethics Committee Chairman


The group affects its stakeholders in a number

of ways and has an economic, environmental

and social impact which it is committed to

manage responsibly. This report aims to inform

stakeholders about significant impact areas

identified, the group’s approach to addressing

these challenges and taking advantage of

opportunities presented. The report further

addresses our process and progress in

these areas.

The group acquires the products it uses in its

manufacturing process from market-leading

suppliers. When these materials are acquired

by the group they have already undergone

processing subsequent to their harvesting from

the natural environment. Mazor Group has no

influence over these processes.

The group’s direct impact on the environment

mainly has to do with energy consumption (fuel

and electricity) and CO2 emissions, primarily as

a result of vehicles distributing products to end

customers or construction sites.

We therefore consider that the group can

influence economic sustainability and social

sustainability to a larger extent than its impact

on the environment.

The report therefore has a strong focus

on economic and social impacts, with a

considerable focus on employment.

ECONOMICThe value added statement shows the value

that the group has created through its trading

and investing operations. Mazor Group

generates value for many stakeholders

as follows:

• Mazor’sbiggestasset,employees,receivesalaries/wagesandbonuses.

• TheSouthAfricanGovernmentreceivestaxes.

• Communitiesinwhichweoperatebenefitthroughemploymentopportunities.

• Suppliersandcontractorsaresupportedbyprocuringconsumables,servicesandcapitalgoods.

• Shareholdersreceiveareturnontheirinvestmentthroughdividendsandcapitalgrowthof

their investments.

• Toensuresustainabilityandexpansion,continuousandsubstantialreinvestmentintothegroup

is necessary.

This statement summarises total value generated and how it was disbursed among the

group’s stakeholders, leaving a retained amount to be reinvested in replacing assets and

developing operations.

Economic value generated and distributed for the year ended 28 February 2015

2015R

2014R

Revenue 376 077 950 470 385 630

Cost of materials and services (304 547 168) (323 141 284)

Value added by operations 71 530 782 147 244 346

Income from investments and interest received 3 687 508 3 044 096

Value generated# 75 218 290 150 288 442

Distributed as follows:

Employees

Payroll costs 92 005 281 101 797 849

Providers of equity

Dividend paid to shareholders 10 447 082 5 698 409

Providers of finance

Interest and finance charges 2 936 629 3 625 693

Government

Company taxation 3 729 030 14 348 736

Community investments 15 570 37 360

Reinvested within the group (33 915 302) 24 780 395

Value distributed# 75 218 290 150 288 442

# 2014 excludes value generated and distributed from the discontinued operations in East London and Port Elizabeth.

SuSTAINAbILITY REPORT

18

SuSTAINAbILITY REPORT (continued)

LAbOuR PRACTICESThe group’s most significant social impact is through the effect it has on its employees as an employer.

Workforce profileThe following tables give some insight into the group’s employee profile. The group’s total workforce is 81.9% male (2014: 85%) which is to be

expected due to the physical nature of the group’s activities.

Workforce by employment contract

TOTAL: PERMANENT 402Male 319 Female 83

Male 65 Female 2TOTAL: FIXED TERM 67

TOTAL: 469MALE 384 FEMALE 85

Workforce by region

WESTERN CAPE 329275 54

9

26

5

GAUTENG 126

KWAZULU-NATAL 14

TOTAL: 469MALE 384 FEMALE 85

100

(The Western Cape region includes operations in George.)

Western Cape 64% Western Cape 68%

Gauteng 28% Gauteng 25%

Eastern Cape 1% Eastern Cape 2%

KwaZulu-Natal 7% KwaZulu-Natal 5%

2015 2014

Revenue generation by region


All employees work full time. The group does not have any employees on part-time employment contracts.

The above comprise all staff employed as at year-end. The group made use of no labour broker staff (2014: 6).

The majority of the group’s employees are in the Western Cape (70.15%) (2014: 71.97%). This is correlated to the fact that 64% (2014: 64%) of group’s revenue is derived in the Western Cape.

Employee turnover Mazor employs 469 people (2014: 586).

Male Female Total(Age in years) <25 25 – 50 >50 Total <25 25 – 50 >50 Total <25 25 – 50 >50 TotalNew employee hiresWestern Cape 16 63 12 91 0 11 4 15 16 74 16 106Gauteng 0 17 2 19 2 8 3 13 2 25 5 32Eastern Cape 0 1 2 3 0 0 0 0 0 1 2 3KwaZulu-Natal 0 1 0 1 0 0 0 0 0 1 0 1All locations 16 82 16 114 2 19 7 28 18 101 23 142Employees leaving employmentWestern Cape 23 136 24 183 1 13 1 15 24 149 25 198Gauteng 1 26 5 32 2 7 5 14 3 33 10 46Eastern Cape 1 7 2 10 0 2 1 3 1 9 3 13KwaZulu-Natal 0 2 0 2 0 0 0 0 0 2 0 2All locations 25 171 31 227 3 22 7 32 28 193 38 259Total employee numbersWestern Cape 17 188 70 275 0 44 10 54 17 232 80 329Gauteng 3 71 26 100 2 21 3 26 5 92 29 126Eastern Cape 0 0 0 0 0 0 0 0 0 0 0 0KwaZulu-Natal 1 8 0 9 0 4 1 5 1 12 1 14All locations 21 267 96 384 2 69 14 85 23 336 110 469New employee hire ratesWestern Cape 3% 13% 3% 19% 0% 2% 1% 3% 3% 16% 3% 22%Gauteng 0% 4% 0% 4% 0% 2% 1% 3% 0% 5% 1% 6%Eastern Cape 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%KwaZulu-Natal 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%All locations 3% 17% 3% 23% 0% 4% 2% 6% 3% 21% 4% 28%Employees leaving employment ratesWestern Cape 5% 29% 5% 39% 0% 3% 0% 3% 5% 32% 5% 42%Gauteng 0% 6% 1% 7% 0% 1% 1% 2% 0% 7% 2% 9%Eastern Cape 0% 1% 0% 1% 0% 0% 0% 0% 0% 1% 0% 1%KwaZulu-Natal 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%All locations 5% 36% 6% 47% 0% 4% 1% 5% 5% 40% 7% 52%

The group has a significant employee turnover rate of 52%.

A total of 259 employees left during the year. These are split in the table below by reason and region:

Dismissal Resignation Contract expiry Abscondment Other TotalWestern Cape 19 36 122 17 4 198Gauteng 2 25 10 3 6 46Eastern Cape 0 2 1 0 10 13KwaZulu-Natal 0 0 1 0 1 2

21 63 134 20 21 259

20

SuSTAINAbILITY REPORT (continued)

51.74% of total employee turnover was due to

non-renewal of contracts. Due to the cyclical

nature of the group’s construction divisions, the

group hires additional employees on fixed-term

contracts as and when required.

21 employees were dismissed during the

year. The group follows proper disciplinary

procedures throughout all the operating

units which are both procedurally and

substantively fair.

All of the employees who absconded are

engaged in direct labour where traditionally

the employee turnover is high.

The group provides fair working conditions

and remunerates at market-related rates.

‘Other’ includes termination due to retirement,

death and restructuring and as such included

the employees no longer employed by the

group due to the closure of the Port Elizabeth

division of HBS Aluminium Systems.

The group hired 142 new employees during

the year. When the number of employees

leaving is set off against the number of

employees hired the net number of employees

leaving is 117. A large number of employees

hired are on fixed-term contracts as needed

to match the volume of work. The overall

reduction in staff numbers is therefore in line

with the reduction in construction volumes.

Furthermore, the group closed down the

Port Elizabeth division of HBS Aluminium

Systems. Both of these had the effect of

reducing the group’s workforce.

The group is constantly striving to increase

efficiencies in a very competitive environment

thereby impacting employment rates.

DiversityAs would be expected, the majority of the

group’s employees (71.64%) (2014: 75.6%)

are between the ages of 25 and 50 years

old and, having regard to the industry, it is

predominantly male.

Mazor has a policy of equal opportunity and

non-discrimination in employment, ensuring

no discrimination on the base of race, gender

or creed.

Employees by age group and gender

Male Female Total% of total

employees<25 years 21 2 23 4.9025 – 50 years 267 69 336 71.65>50 years 96 14 110 23.45

384 85 469

Employment equityMale Female Foreign

A C I W A C I W Male Female TotalTop management* 0 1 0 5 0 0 0 2 1 0 9Senior management 0 2 0 7 0 0 0 2 0 0 11Professionals, specialists and middle management 0 2 2 5 0 0 0 6 0 0 15Skilled technical, academically qualified and junior management 21 50 17 21 1 9 1 16 1 0 137Semi-skilled and discretionary decision-making 105 54 2 9 5 15 2 18 0 0 210Unskilled and defined decision-making 11 8 0 0 5 1 0 0 0 0 25Total permanent 137 117 21 47 11 25 3 44 2 0 407Temporary employees 39 25 0 0 1 0 0 1 1 0 67Total employees 176 142 21 47 12 25 3 45 3 0 474% of total employees 37 30 4 10 3 5 1 9 1 0 100

* Includes five non-executive directors.

A = African, C = Coloured, I = Indian, W = White.


Collective bargainingThe group endorses the employees’ rights

enshrined in the Constitution of the Republic

of South Africa Act No.108 of 1996, including

the right to collective bargaining and other

labour rights under constitutional laws.

We acknowledge the right of our employees

to freedom of association.

Approximately 32% of the group’s employees

are represented by trade unions and some

additional 36% of the total workforce is

covered by collective bargaining agreements.

Occupational health and safetyThe group regards the health and safety of its

employees and that of persons affected by its

operations to be fundamental to sustainability.

The group’s primary objective is to achieve

and maintain a safe and healthy working

environment by ensuring strict compliance

with the South African Occupational Health

and Safety Act No. 85 of 1993 (‘the Act’) and

regulations.

To this end the group ensures that matters

affecting health and safety are accorded the

highest priority; adequate precautions are

taken to prevent injuries, incidents, accidents

and ill health; and the provisions of all relevant

legislation are fully complied with.

To achieve these goals Mazor provides

training to employees on occupational health

and safety issues so as to ensure competence

in the workplace, awareness of the potential

hazards implicit in their work activities and

awareness of their scope of authority in terms

of occupational health and safety control.

Furthermore the group endeavours to manage

occupational health and safety to acceptable

standards, enforce health and safety

measures through discipline in the workplace

and protect the public and people other than

company employees from health and safety

hazards associated with the group’s activities.

The group strives to eliminate fatalities

and serious injuries. Zero fatalities were

experienced in the current and prior year.

Lost time injury frequency rates (‘LTIFR’)The LTIFR is calculated as the number of

workman compensation claims involving one

shift or more time lost per 100 000 hours

worked. The group achieved an improved

LTIFR of 3.32 (2014: 4.51). We will strive to

continually decrease this number and improve

our safety record.

Skills development and trainingThe group is committed to assisting

employees at all levels to develop relevant

skills and competencies. Mazor aims to assist

employees in achieving their full potential and

in doing so endeavours to provide training for

all staff.

hIV/AIDS Mazor is concerned about HIV/AIDS in

South Africa. The group would like to develop

a formal policy in this regard and is assessing

possible awareness programmes to be

implemented in due course.

PRODuCT RESPONSIbILITYThe Group complies with laws and regulations

and no significant fines were incurred for non-

compliance with laws and regulations.

SOCIETYThe group complies with laws and regulations

and no significant fines or non-monetary

sanctions were incurred for non-compliance

with laws and regulations.

ENVIRONMENTALThe group’s impact on the environment

via CO2 emissions through its distribution

activities and its consumption of fuel and

electricity is a focus area for the future.

Environmental awareness has not traditionally

been an area of focus for the group.

Management will therefore work to embed

environmental consciousness into the culture

of the operations.

The group will investigate the benefit

of CO2 emission measurement and the

practical implementation of measurement

methodologies.

The group complies with environmental

legislation and incurred no significant fines or

non-monetary sanctions from the authorities

in this regard.

22

Chevron Building, Century City


GROuP ANNuAL FINANCIAL STATEMENTS

Independent auditor’s report ............. 24

Directors’ responsibility ................... 25

Company secretary’s report ............. 25

Audit and risk committee report ....... 26

Directors’ report .............................. 28

Consolidated statement of financial position ............................. 30

Consolidated statement of comprehensive income .................... 31

Consolidated statement of cash flows ...................................... 32

Consolidated statement of changes in equity ............................ 33

Notes to the group annual financial statements ........................ 34

Shareholder analysis ....................... 73

24

INDEPENDENT AuDITOR’S REPORT

TO ThE ShAREhOLDERS OF MAzOR GROuP LTD AND ITS SubSIDIARIESWe have audited the consolidated and

separate annual financial statements

and annual financial statements of

Mazor Group Ltd, which comprise the

consolidated and separate statements of

financial position as at 28 February 2015,

and the consolidated and separate statements

of comprehensive income, changes in equity

and cash flows for the year then ended, and

a summary of significant accounting policies

and other explanatory notes, as set out on

pages 30 to 73.

DIRECTORS’ RESPONSIbILITY FOR ThE FINANCIAL STATEMENTSThe company’s directors are responsible for

the preparation and fair presentation of these

annual financial statements in accordance with

International Financial Reporting Standards,

and requirements of the Companies Act of

South Africa, and for such internal control as

the directors determine is necessary to enable

the preparation of annual financial statements

that are free from material misstatements,

whether due to fraud or error.

AuDITOR’S RESPONSIbILITYOur responsibility is to express an opinion

on these financial statements based on our

audit. We conducted our audit in accordance

with International Standards on Auditing.

Those standards require that we comply with

ethical requirements and plan and perform

the audit to obtain reasonable assurance

whether the financial statements are free from

material misstatement.

An audit involves performing procedures to

obtain audit evidence about the amounts

and disclosures in the financial statements.

The procedures selected depend on the

auditor’s judgement, including the assessment

of the risks of material misstatement of the

financial statements, whether due to fraud or

error. In making those risk assessments, the

auditor considers internal control relevant to

the entity’s preparation and fair presentation

of the financial statements in order to design

audit procedures that are appropriate in the

circumstances, but not for the purpose of

expressing an opinion on the effectiveness

of the entity’s internal control. An audit also

includes evaluating the appropriateness

of accounting policies used and the

reasonableness of accounting estimates made

by management, as well as evaluating the

overall presentation of the financial statements.

We believe that the audit evidence we have

obtained is sufficient and appropriate to

provide a basis for our audit opinion.

OPINIONIn our opinion, the financial statements

present fairly, in all material respects, the

consolidated and separate financial position

of Mazor Group Ltd as at 28 February 2015,

and its consolidated and separate

financial performance and consolidated

and separate cash flows for the year then

ended in accordance with International

Financial Reporting Standards, and in the

manner required by the Companies Act of

South Africa.

OThER REPORTS REquIRED bY ThE COMPANIES ACTAs part of our audit of the financial statements

for the year ended 28 February 2015,

we have read the Directors’ Report, the

Audit and Risk Committee Report and the

Company Secretary’s Report for the purpose

of identifying whether there are material

inconsistencies between these reports and the

audited financial statements. The reports are

the responsibility of the respective preparers.

Based on our reading of these reports we

have not identified material inconsistencies

between these reports and the audited

financial statements. However, we have not

audited these reports and accordingly do not

express an opinion thereon.

Mazars Registered Auditor

Partner: Duncan Dollman

Registered Auditor

Cape Town

11 May 2015


DIRECTORS’ RESPONSIbILITY for the annual financial statements

The directors are responsible for the

preparation, integrity and fair presentation

of the financial statements of the group

and the company. The group and company

financial statements, presented on pages 25

to 73, have been prepared in accordance

with International Financial Reporting

Standards (‘IFRS’) and the Companies

Act of South Africa, and include amounts

based on judgements and estimates made

by management. The directors have also

prepared the other information included in the

annual report and are responsible for both its

accuracy and its consistency with the financial

statements. The annual financial statements

have been prepared under the supervision of

the financial director, Liat Mazor CA(SA).

The directors acknowledge that they are

ultimately responsible for the system of

internal financial control established by the

group and place considerable importance on

maintaining a strong control environment.

To enable directors to meet these

responsibilities, the board sets standards for

internal control aimed at reducing the risk

of error or loss in a cost-effective manner.

The standards include effective accounting

procedures and adequate segregation of

duties to ensure an acceptable level of risk.

These controls are monitored throughout

the group and all employees are required

to maintain the highest ethical standards in

ensuring the group’s business is conducted in

a manner that in all reasonable circumstances

is beyond reproach. Whilst operating risk

cannot be fully eliminated, the group

endeavours to minimise it by ensuring that

appropriate infrastructure, controls, systems

and ethical behaviour are applied and

managed within predetermined procedures

and constraints.

The directors are of the opinion that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

APPROVAL OF ThE GROuP AND COMPANY ANNuAL FINANCIAL STATEMENTSThe annual financial statements of the group and the company for the year ended 28 February 2015 were approved by the board of directors on 11 May 2015 and signed on its behalf by:

M Kaplan R MazorChairman Chief Executive Officer

COMPANY SECRETARY’S REPORTIn terms of section 88(2)(e) of the Companies Act 71 of 2008, as amended, I, Ivor Mark Bloom,

certify that to the best of my knowledge and belief, all returns required of a public company have,

in respect of the year ended 28 February 2015, been lodged with the Companies and Intellectual

Property Commission and that all such returns are true, correct and up to date.

IM bloomCompany Secretary

Cape Town

11 May 2015

26

AuDIT AND RISK COMMITTEE REPORT

The Audit and Risk Committee Report has been prepared in terms of section 94(7)(f) of the

Companies Act No. 71 of 2008, as amended.

The audit and risk committee has conducted its work in accordance with its charter which has

been approved by the board and is recorded in the Corporate Governance Report for the financial

year ended 28 February 2015.

Details of directors’ attendance at committee meetings during the year are set out below.

The number in brackets represents the total number of meetings:

DirectorsAudit and risk

committee meetings

A Darko (Chairman) 3(4)*

F Boner 4(4)

M Kaplan 4(4)

L Mazor^ 4(4)

^ Attended by invitation.

* F Boner served as Chairman in place of A Darko for the one meeting where he was absent.

The CEO, financial director, the partner in charge of external audit and the partner in charge of

internal audit attend the audit committee meetings by invitation.

INTERNAL FINANCIAL CONTROL AND RISK MANAGEMENTThe various systems of internal control are designed to provide reasonable assurance that

assets are safeguarded, proper accounting records are maintained, the integrity and accuracy

of financial information is protected and the incidence of fraud is minimised. The committee

has oversight of the group’s financial statements and reporting process, including the system of

internal financial control. It is responsible for ensuring that the group’s internal audit function is

independent and has the necessary resources to discharge its duties. The committee oversees

co-operation between internal and external auditors and serves as a link between the board and

these functions.

Nothing has come to the attention of the directors that indicate a material breakdown or material

weakness in the internal control of the group during the year. The committee is satisfied that the

accounting practices of the group are sound, that the financial statements fairly represent the

financial affairs of the group and that the system of internal financial control is appropriate.

Grant Thornton currently performs the internal audit function responsible for testing and reviewing

the adherence to internal control at the group’s various locations.

The committee has performed an analysis of the strategic risks to which the group is exposed and

recorded those risks in a risks register. The risks register is amended when appropriate. Strategies

for mitigating the identified risks are developed and implemented on an ongoing basis.

STATuTORY DuTIESThe audit committee reviewed the performance and independence of the external auditor,

Mazars, and the respective audit partner and has confirmed that it is satisfied with their

independence. The committee has nominated their appointment for further approval at the

annual general meeting.

The nature and extent of non-audit services

provided by the external auditors have been

reviewed to ensure that the fees for such

services do not become so significant as to

call into question their independence.

The committee had ensured that in agreeing

the audit fee for the year, that the audit

environment would not be curtailed in any

way and the appropriate level of scope be

adopted.

The committee ensured that both the internal

and external audit functions were conducted

independently.

The committee was satisfied and reported

to the board that the group was operating as

a going concern. It had also been satisfied

that the group has reported in terms of

International Financial Reporting Standards

and that the group had complied with the

JSE Listings Requirements.

In compliance with the JSE Listings

Requirements, the committee has considered

and satisfied itself that the group financial

director, Ms L Mazor, adequately performed

her duties and that she possesses the

required expertise and experience to

adequately perform her duties.

The audit committee is therefore satisfied that

the group has adhered to and complied with

all the statutory requirements for the year

ended 28 February 2015.

A DarkoAudit and Risk Committee Chairman

MAzOR INTEGRATED ANNuAL REPORT 2015

Santam, Tyger Valley

28

DIRECTORS’ REPORT

The directors have pleasure in submitting their

report and the annual financial statements

of the company and the group for the year

ended 28 February 2015.

NATuRE OF buSINESSThe company is listed on the ‘Construction

and Materials’ sector of the Main Board of the

JSE Ltd. The company is the holding company

of a number of subsidiary companies

principally engaged in construction activities,

supply of aluminium fenestration systems

and glass beneficiation in the Republic of

South Africa.

GROuP RESuLTSGross revenue decreased by R94.4 million

to R376 million (2014: R470.4 million)

predominantly due to the slow-down in the

construction sector. This considerable drop

in revenue contributed to the reduction of

operating profit from a profit of R39.8 million

in the prior year to an operating loss of

R28.0 million in the current year. Operating

loss in the current year includes a goodwill

impairment of R8.1 million (refer below).

The Glass division incurred operating losses

of R19.4 million during the current year

(2014: R10.9 million). In the light of the

poor performance of the Glass division, the

directors have reassessed the recoverability of

the goodwill and assessed losses attributable

to this division. This has led to an impairment

of goodwill to the amount of R8.1 million

(refer to note 3 for details) and a reversal of

a portion of the assessed losses attributed to

this division in order to account only for the

losses to be utilised in the foreseeable future.

The assessed loss not provided for amounts

to R60.9 million (2014: RNil).

Negative headline earnings for the

year amounted to R30.7 million

(2014: positive R28.7 million), a decrease

of R59.4 million.

The consolidated statement of comprehensive

income is set out on page 31.

INTEREST IN SubSIDIARIESDetails of interests in subsidiary companies

are reflected on page 66.

bORROWING POWERSThe memorandum of incorporation places no

restriction on the directors’ borrowing powers.

STATED CAPITALFull details of the authorised, issued and

unissued stated capital of the holding

company at 28 February 2015 are set out

in note 26 to these consolidated financial

statements.

ShARE INCENTIVE SChEMESMazor Group Ltd has two share incentive

schemes, namely the Mazor Group Ltd Share

Incentive Scheme and the Mazor Group Ltd

BEE Share Incentive Scheme. Employees

are eligible to participate in the schemes

only if and to the extent that offers are made

to them or options are granted to them.

The schemes hold 387 500 shares in the

group, purchased for a consideration of

R1 550 000. The shares, comprising 0.3% of

the issued share capital of the group, are held

as treasury stock.

No share options have been issued to

date but offers have been accepted for

367 125 shares. These shares can be

released from the scheme with immediate

effect once settled in full. Settlement would be

made in cash at a price of R3.48 per share.

Share incentive schemes are consolidated

and eliminated for the purposes of the group

annual financial statements.

ShARE TRANSACTIONSDuring the year, Mazor Aluminium (Pty) Ltd

purchased 3 903 918 shares in the

group for a purchase consideration of

R5.1 million. Total shares owned by Mazor

Aluminium (Pty) Ltd at 28 February 2015 are

6 359 255. The shares, comprising 5.23% of

the issued share capital of the group, are held

as treasury stock.

Currently there are 121 501 553 shares in

issue, including treasury shares.

DIRECTORATE AND SECRETARYDetails concerning the company’s directors,

secretary, business and postal addresses are

set out on pages 8 and 9 and the IBC.

Directors retiring by rotation at the annual

general meeting in accordance with the

memorandum of incorporation of the company

are Messrs A Varachhia and A Groll. Both are

eligible and offer themselves for re-election.


DIRECTORS’ ShAREhOLDINGAt 28 February 2015 the present directors held a total of 69 036 515 (2014: 69 501 011) ordinary shares.

2015 2014

Ordinary shares Direct Indirect Direct Indirect

M Kaplan* 25 000 50 218

A Groll* 3 191 452 3 599 722

A Varachhia* 9 398 992 9 430 000

S Mazor* 7 469 231 7 469 231

R Mazor* 5 337 604 19 000 000 5 337 604 19 000 000

L Mazor* 5 000 000 19 000 000 5 000 000 19 000 000

F Boner# 614 236 614 236

17 806 835 51 229 680 17 806 835 51 694 176

* Shares are held beneficially.# Shares are held non-beneficially.

There has been no change in the interests of directors in share capital since the year-end.

DIRECTORS’ REMuNERATIONDetails of directors’ remuneration are set out

on page 50.

PROPERTY, PLANT AND EquIPMENTFull details of the property, plant and

equipment are reflected on page 40.

R2.9 million (2013: R6.4 million) was

spent on the acquisition of new plant and

equipment during the year. This was mainly in

respect of maintaining the operations of the

various divisions.

SPECIAL RESOLuTIONSDuring the year under review the following

special resolutions were passed:

1 Authorisation given to directors to

approve and implement the acquisition

by the company (or by a subsidiary of the

company) of shares issued by the company

by way of a general authority.

2 Authorisation given to the company to pay

remuneration to directors for their services

as directors.

3 Authorisation given to the company

to provide direct or indirect financial

assistance to a director or prescribed

officer of the company or of a related or

interrelated company, or to a related or

interrelated company or corporation.

DIVIDENDSA final gross dividend of 8.8 cents per

share in respect of the year ended

28 February 2014 was paid on 9 June 2014.

The South African dividend withholding tax

(‘DWT’) rate is 15%. DWT of 1.32 cents per

share was payable by shareholders who

are not exempt from DWT. This resulted

in a net dividend of 7.48 cents per share.

There are 121 501 553 ordinary shares in

issue (inclusive of treasury shares). The total

dividend amount paid was R10 692 137.

LITIGATIONWe are not aware of any legal or arbitration

proceedings, pending or threatened, that may

have or have had in the previous 12 months, a

material effect on the group’s financial position.

EVENTS AFTER ThE REPORTING PERIODDividendIn line with group policy, no dividend was

declared for the year as the group incurred

losses.

The directors are not aware of any other

material matter or circumstance arising since

the end of the financial year to the date of the

approval of the annual financial statements.

30

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONat 28 February 2015

Notes2015

R2014

R

ASSETSNon-current assets

Property, plant and equipment 2 77 793 737 83 867 768

Goodwill 3 – 8 141 200

Intangible asset 4 19 000 000 20 000 000

Deferred tax 12 5 477 045 14 368 729

102 270 782 126 377 697

Current assets

Inventories 6 95 404 710 90 563 824

Construction contracts and receivables 7 19 869 093 30 505 015

Current tax receivable 58 550 702

Trade and other receivables 8 37 173 539 44 514 083

Cash and cash equivalents 9 46 094 321 66 666 590

198 600 213 232 250 214

Total assets 300 870 995 358 627 911

EquITY AND LIAbILITIESEquity

Stated capital 26 71 864 018 76 945 787

Retained income 148 722 620 198 382 254

220 586 638 275 328 041

Liabilities

Non-current liabilities

Other financial liabilities 10 14 271 961 20 980 196

Deferred tax 12 794 753 1 462 036

15 066 714 22 442 232

Current liabilities

Other financial liabilities 10 7 466 254 9 457 459

Current tax payable 305 322 2 637 356

Trade and other payables 11 51 485 667 44 284 542

Bank overdraft 9 5 960 400 4 478 281

65 217 643 60 857 638

Total liabilities 80 284 357 83 299 870

Total equity and liabilities 300 870 995 358 627 911


CONSOLIDATED STATEMENT OF COMPREhENSIVE INCOME for the year ended 28 February 2015

Notes2015

R2014

R

Continuing operations

Revenue 13 376 077 950 470 385 630

Cost of sales 14 (308 209 565) (344 957 957)

Gross profit 67 868 385 125 427 673

Other income 1 750 457 3 026 190

Operating expenses (97 628 842) (88 627 821)

Operating (loss)/profit 15 (28 010 000) 39 826 042

Investment revenue 17 3 687 508 3 044 096

Income from equity-accounted investments – 101 247

Finance costs 18 (2 936 629) (3 625 693)

(Loss)/Profit before taxation (27 259 121) 39 345 692

Taxation 19 (11 953 431) (10 932 926)

(Loss)/Profit from continuing operations (39 212 552) 28 412 766

Discontinued operations

Profit from discontinued operations 20 – 2 943 330

Total comprehensive (loss)/income for the year (39 212 552) 31 356 096

Number of shares in issue 121 501 553 121 501 553

Number of shares in issue (after treasury shares) 114 754 798 118 658 716

Weighted average number of shares 118 409 637 118 658 716

basic and diluted earnings per share (cents) 30 (33.1) 26.4

32

CONSOLIDATED STATEMENT OF CASh FLOWSfor the year ended 28 February 2015

Notes2015

R2014

R

Cash flows from operating activities

Cash generated from operations 21 9 503 993 51 778 138

Interest income 17 3 620 847 2 972 378

Finance costs 18 (2 936 629) (3 625 693)

Tax paid 22 (6 118 912) (12 115 633)

Dividends paid (10 447 082) (5 698 409)

Cash flows of held-for-sale/discontinued operations 23 – 332 625

Net cash flow from operating activities (6 377 783) 33 643 406

Cash flows from investing activities

Purchase of property, plant and equipment 24 (2 853 050) (6 434 732)

Proceeds from disposal of plant and equipment 957 654 936 744

Proceeds on disposal of discontinued operations 25 – 8 553 883

Net cash flow from investing activities (1 895 396) 3 055 895

Cash flows from financing activities

Repayment of other financial liabilities (8 699 440) (20 026 611)

Purchase of treasury shares (5 081 769) –

Net cash flow from financing activities (13 781 209) (20 026 611)

(Decrease)/Increase in cash and cash equivalents for the year (22 054 388) 16 672 690

Cash and cash equivalents at the beginning of the year 62 188 309 45 515 619

Cash and cash equivalents at the end of the year 9 40 133 921 62 188 309


CONSOLIDATED STATEMENT OF ChANGES IN EquITYfor the year ended 28 February 2015

Stated capitalR

Retained incomeR

Total equity R

balance at 1 March 2013 76 945 787 172 724 567 249 670 354

Changes in equity

Profit for the period – 31 356 096 31 356 096

Dividends paid – (5 698 409)* (5 698 409)

balance at 28 February 2014 76 945 787 198 382 254 275 328 041

Changes in equity

Loss for the period – (39 212 552) (39 212 552)

Treasury shares acquired (5 081 769)# – (5 081 769)

Dividends paid – (10 447 082)* (10 447 082)


* A gross dividend of 8.8 cents per share was paid on 9 June 2014 (4.8 cents per share on 3 June 2013).# Refer to the Directors’ Report for further details.

34

GROuP NOTES TO ThE ANNuAL FINANCIAL STATEMENTSfor the year ended 28 February 2015

1 ACCOuNTING POLICIESPresentation of annual financial statementsThe consolidated and company financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’), the interpretations adopted by the International Accounting Standards Board (‘IASB’) and the International Financial Reporting Interpretations Committee (‘IFRIC’), the AC 500 Standards as issued by the Accounting Practices Board, and the Companies Act of South Africa.

The financial statements have been prepared on the historical cost basis.

The financial statements have been prepared on the going concern basis and these accounting policies set out below have been consistently applied throughout the group to all the periods presented, unless otherwise stated.

basis for consolidationThe consolidated financial statements incorporate the financial statements of the holding company and its subsidiaries. All financial results are consolidated with similar items on a line-by-line basis.

Intra-group transactions and balances are eliminated on consolidation.

Investments in subsidiariesConsolidated annual financial statementsSubsidiaries are entities (including structured entities) in which the group has control. The group controls an entity when it has exposure to, or has rights to, variable returns from the group’s involvement with the entity and the ability to affect those returns through exercising power over the entity. Subsidiaries are consolidated from the effective acquisition date until the effective disposal date or any date where there is a change in shareholding or control such that the entity becomes or ceases to be classified as a subsidiary.

Company annual financial statementsInvestments in subsidiaries are carried at cost less any accumulated impairment.

The cost of an investment in a subsidiary is the aggregate of:

• thefairvalue,atthedateofexchange,of assets given, liabilities incurred or assumed, and equity instruments issued by the company; plus

• anycostsdirectlyattributabletothepurchase of the subsidiary.

New standards and interpretationsStandards and interpretations effective and adopted in the current yearIn the current year the group has adopted the following standards and interpretations that are effective and relevant to its operations:

IFRS 13: Fair Value MeasurementClarification: Entities are still able to measure short-term receivables and payables with no stated interest rate at invoice amounts without discounting when the effect of discounting is immaterial.

The standard is immediately effective.

The impact of the clarification is not material.

IAS 32: Financial Instruments – PresentationAmendment: Explanation of ‘currently has a legally enforceable right to set off’ and requirement to disclose gross amounts subject to set off rights and the related net credit exposure.

The effective date of the standard is for years beginning on or after 1 January 2014.

The impact of the amendment is not material.

IAS 36: Impairment of AssetsAmendment: Clarifies the disclosures required for the recoverable amount of impaired assets when the amount is based on fair value less costs of disposal.


The impact of the amendment is not material.

Standards, amendments and interpretations not yet effective for the current financial year, but effective for ensuing financial yearsThe group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the group’s accounting periods beginning on or after 1 March 2015 or later periods:

IFRS 9: Financial Instruments – Classification and MeasurementA finalised version of IFRS 9 has been issued which replaces IAS 39: Financial Instruments – Recognition and Measurement. The completed standard comprises guidance on classification and measurement, impairment, hedge accounting and derecognition:

• IFRS9introducesanewapproachtotheclassification of financial assets, which is driven by the business model in which the asset is held and their cash flow characteristics. A new business model was introduced which does allow certain financial assets to be categorised as

‘fair value through other comprehensive income’ in certain circumstances. The requirements for financial liabilities are mostly carried forward unchanged from IAS 39. However, some changes were made to the fair value option for financial liabilities to address the issue of own credit risk.

• Thenewmodelintroducesasingleimpairment model being applied to all financial instruments, as well an ‘expected credit loss’ model for the measurement of financial assets.

• IFRS9containsanewmodelforhedgeaccounting that aligns the accounting treatment with the risk management activities of an entity in addition enhanced disclosures will provide better information about risk management and the effect of hedge accounting on financial statements.

• IFRS9carriesforwardthederecognitionrequirements of financial assets and liabilities from IAS 39.


The impact of the new standard is currently being assessed by management.

IAS 38: Intangible AssetsAmendment: Includes a rebuttable presumption that an amortisation method that is based on revenue is inappropriate.


The impact of the amendment is currently being assessed by management.

IFRS 15: Revenue from Contracts with CustomersA new standard that establishes a single, comprehensive and robust framework for the recognition, measurement and disclosure of revenue.


The impact of the new standard is currently being assessed by management.

IFRS 13: Fair Value MeasurementClarification: The portfolio exemption applies to all contracts within the scope of and accounted for in accordance with IAS 39 or IFRS 9, regardless of whether they meet the definitions per IAS 32.

The effective date of the standard is for years beginning on or after 1 July 2014.


The impact of the clarification is currently being assessed by management.

IFRS 8: Operating SegmentsDisclosure amendments:

• Abriefdescriptionoftheoperatingsegments that have been aggregated and the economic indicators assessed in determining that the segments share similar economic characteristics.

• Areconciliationofthereportablesegments’assets to the entity’s is only required if the segment assets are reported in accordance with paragraph 23.

The effective date of the standard is for years beginning on or after 1 July 2014.

The impact of the amendment is currently being assessed by management.

IAS 24: Related Party DisclosuresAmendments:• Thedefinitionofrelatedpartiesincludes

the entity, or any member of a group of which it is a part, that provides key management personnel services to the reporting entity or its parent.

• Detailsoftheindividualemployeebenefitsdo not need to be disclosed for an entity that provides key management personnel services.

• Theamountsincurredforkeymanagementpersonnel services from an entity must be disclosed.


The adoption of this standard is not expected to impact on the results of the company, but may result in more disclosure than is currently provided in the consolidated annual financial statements.

IFRS 7: Financial Instruments – Disclosures• Amendment:Guidanceisnowgiven

regarding continuing involvement extended to include servicing equipment.

• Amendment:Disclosurerequirementsfortransferred assets:

– that are not derecognised in their entirety; or

– that are derecognised but have continuing managerial involvement at year-end.

• Clarity:Offsettingdisclosuresarenotspecifically required for all interim periods, when its inclusion would be required in accordance with the general requirements of IAS 34.


The impact of the amendments is currently being assessed by management.

Significant judgements and estimatesIn preparing the annual financial statements management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgements is inherent in the formation of estimates. Actual results in the future could differ from these estimates, which may be material to the annual financial statements.

Significant judgements include:

• Accounting for construction contracts The group makes estimates and

assumptions concerning the future, particularly as regards the calculation of the profitability of construction contracts. The resulting accounting estimates can, by definition, only approximate the actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

• Impairmentoftradereceivables Estimates based on management’s

assessment of the likelihood of collecting receivables outstanding for longer than 120 days.

• Property,plantandequipment Property, plant and equipment are

depreciated on a straight-line basis over its estimated useful life to residual value. Residual values and useful lives are based on management’s best estimates and actual future outcomes may differ from these estimates.

• Loansandreceivables The group assesses its loans and

receivables for impairment at each end of the reporting period. In determining whether an impairment loss should be recorded in the statement of comprehensive income, the group makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from the financial asset.

• Operatingleasecommitments The group has entered into commercial

property leases on its occupied properties.

The directors have determined, based on all available information, that the lessor retains the significant risks and rewards of ownership of these properties and, consequently, the property leases have been accounted for as operating leases.

• Goodwill The group continually assesses the

recoverability of any goodwill carried on the statement of financial position as part of acquisitions. This requires an estimation of the value in use of the cash-generating unit to which the goodwill is allocated. Expected cash flows used to determine the value of goodwill are inherently uncertain and could change over time. They are affected by a number of factors including estimates of costs to produce inventory, future capital expenditure and product markets.

• Intangibleassets Predicting the useful life of an intangible

asset requires significant judgement. The useful life associated with an asset that has no patent protection but that retains, and is expected to retain, a distinct identity is considered to be 20 years and is amortised on a straight-line basis over that period.

Property, plant and equipmentAn item of property, plant and equipment is recognised as an asset when:

• itisprobablethatfutureeconomicbenefitsassociated with the item will flow to the group; and

• thecostoftheitemcanbemeasuredreliably.

Property, plant and equipment is initially recognised at cost. The cost of property, plant and equipment includes amounts incurred initially to acquire or construct an item of property, plant and equipment and amounts incurred subsequently to add to or replace part of the asset. Replacement costs include the cost of major inspections. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. Day-to-day servicing costs, such as labour and consumables, are expensed in the statement of comprehensive income.

Property, plant and equipment are subsequently measured at cost less accumulated depreciation and any impairment losses.

36

GROuP NOTES TO ThE ANNuAL FINANCIAL STATEMENTSfor the year ended 28 February 2015 (continued)

Depreciation is provided on all property, plant and equipment to write down the cost amount, less residual value, on a straight-line basis over their useful lives as follows:

Item useful life

Land Indefinite

Buildings 50 years

Plant and equipment 2 to 20 years

Furniture and fittings 3 to 6 years

Motor vehicles 3 to 8 years

Office and computer equipment 1 to 7 years

Computer software 1 to 5 years

Tools 2 to 4 years

Leasehold improvements 1 to 5 years

Where part of an item of property, plant and equipment is significant in relation to the cost of the item, that part is depreciated separately. The depreciation charge is recognised as an expense in the statement of comprehensive income. The residual values, useful lives and depreciation methods applied to property, plant and equipment are reviewed, and adjusted if necessary, on an annual basis. These changes are accounted for as a change in estimate.

An item of property, plant and equipment is derecognised upon disposal or when no economic benefit is expected from its use or disposal. The gain or loss arising from the derecognition of an item of property, plant and equipment is included in the statement of comprehensive income and is calculated as the difference between the net proceeds, if any, and the carrying amount of the item at the date of derecognition.

Intangible assetAn intangible asset is recognised when:

• itisprobablethattheexpectedfutureeconomic benefits that are attributable to the asset will flow to the entity; and

• thecostoftheassetcanbemeasuredreliably.

Intangible assets are initially recognised at cost.

Intangible assets are carried at cost less any accumulated amortisation and impairment losses.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows.

Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight-line basis over their useful life.

The amortisation period and the amortisation method for intangible assets are reviewed every period-end.

The useful lives of intangible assets have been assessed as follows:

Item useful life

Unpatented technology 20 years

During the current year the useful life was reassessed as being 20 years. Previously, intangible assets had an assessed indefinite useful life based on all relevant factors available at that time.

Amortisation of intangible assets is recognised in profit and loss as incurred.

business combinations The initial accounting of a business combination on the date of acquisition follows the purchase method of accounting. The purchase method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired and liabilities and contingent liabilities assumed.

The cost of the business combination is the total of the fair values of all assets given, liabilities incurred and equity instruments’ shares issued to acquire the business.

The excess of the cost of the acquisition (i.e. the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the holding company) over the fair value of the group’s share of net identifiable assets is recorded as goodwill.

Any costs directly attributable to the purchase of the subsidiary are expensed in the statement of comprehensive income in accordance with IFRS 3 in the period in which the acquisition occurs.

Contingent consideration is included in the cost of the combination at fair value as at the date of acquisition. Subsequent changes to the assets, liability or equity which arise as a result of the contingent consideration are not affected against goodwill, unless they are valid measurement period adjustments.

In cases where the group held a non-controlling shareholding in the acquiree prior to obtaining control, that interest is measured to fair value as at acquisition date. The measurement to fair value is included in profit or loss for the year.

GoodwillGoodwill is initially measured at cost, being the excess of the business combination over the group’s interest of the net fair value of the identifiable assets, liabilities and contingent liabilities. Subsequently, goodwill is measured at cost less any accumulated impairment losses.

The excess of the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of the business combination is immediately recognised in profit or loss.

Goodwill is reviewed for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired.

Equity-accounted investmentsEquity-accounted investments are those entities in which the group has joint control or significant influence (associates). Investments in joint ventures and associates are equity accounted.

Unrealised gains on transactions between the group and its joint ventures and associates are eliminated on consolidation. Unrealised losses are eliminated and are also considered an impairment indicator of the asset transferred. Accounting policies of joint ventures and associates have been changed where necessary to ensure consistency with policies adopted by the group.

Financial instrumentsClassificationThe group classifies financial assets and financial liabilities into the following categories:

• Loansandreceivables

• Financialliabilitiesatamortisedcost

Classification depends on the purpose for which the financial instruments were obtained/incurred and takes place at initial recognition. Classification is reassessed on an annual basis, except for derivatives and financial assets designated as at fair value through profit or loss, which shall not be classified out of the fair value through profit or loss category.


Initial recognition and measurementThe group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial assets and financial liabilities are recognised on the group’s statement of financial position when the group becomes party to the contractual provisions of the instrument.

Financial instruments are measured initially at fair value.

Subsequent measurementLoans and receivables are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses.

Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective interest method.

Trade receivablesTrade receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in profit or loss within operating expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against operating expenses in profit or loss.

Trade and other receivables are classified as loans and receivables.

Trade payablesTrade payables are classified as financial liabilities at amortised cost.

Cash and cash equivalentsCash and cash equivalents comprise cash at bank and cash on hand and other short-term deposits with an original maturity of three months or less. Cash and cash equivalents are short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

For purposes of the cash flow statement, cash and cash equivalents comprise cash and cash equivalents defined above, net of outstanding bank overdrafts.

Cash and cash equivalents are classified under loans and receivables.

Other financial liabilitiesOther financial liabilities are initially measured at fair value, which is the cash consideration received less transaction costs. These financial liabilities are classified under financial liabilities at amortised cost.

The amortised cost method results in the accrual of interest in each year by applying the effective interest rate implicit to the outstanding balance on the borrowings. Borrowings are reduced when repayment is made.

Loans to (from) group companiesThese include loans to and from subsidiaries.

Loans to group companies are classified as loans and receivables.

Loans from group companies are classified as financial liabilities at amortised cost.

An impairment loss in respect of a loan receivable is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the loan’s original effective interest rate. Impairment losses are recognised in profit or loss and reflected in an allowance account.

Disposal groups (discontinued operations)Disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. These disposal groups are measured at the lower of their carrying amount or fair value less costs to sell.

The group classifies a component as a discontinued operation when that component has been disposed of, or is classified as held for sale and:

• itrepresentsaseparatemajorlineof business or geographical area of operations; or

• itispartofasingleco-ordinatedplanto dispose of a separate major line of business or geographical area of operations; or

• itisasubsidiaryacquiredexclusivelywithaview to resale.

A component of the group comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the group.

Impairment lossesThe group assesses at each end of the reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the group estimates the recoverable amount of the asset.

The recoverable amount of an asset is the higher of its fair value less cost to sell and value in use. In assessing value in use the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is less than its carrying amount the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

In general, an impairment loss of assets carried at cost less any accumulated depreciation is recognised immediately in the statement of comprehensive income.

An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less than the carrying amount of the units. The impairment loss is allocated to reduce the carrying amount of the assets of the unit in the following order:

• first,toreducethecarryingamountofanygoodwill allocated to the cash-generating unit; and

• then,totheotherassetsoftheunit,prorata on the basis of the carrying amount of each asset in the unit.

The group assesses at each end of the reporting period whether there is any indication that an impairment loss recognised in prior periods for assets may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated. The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed

38


the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years.

In general, a reversal of an impairment loss of assets carried at cost less accumulated depreciation, other than goodwill, is recognised immediately in the statement of comprehensive income.

Leases Leases of assets where the group assumes substantially all the benefits and risks of ownership are classified as finance leases. Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases.

Operating leases – lesseeOperating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease liability. This liability is not discounted.

Any contingent rents are expensed in the period they are incurred.

TaxCurrent tax assets and liabilitiesCurrent tax for current and prior years is, to the extent unpaid, recognised as a tax payable in the statement of financial position. If the amount already paid in respect of current and prior years exceeds the amount due for those years, the excess is recognised as a tax receivable in the statement of financial position.

Current tax liabilities and current tax assets are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilitiesA deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from the initial recognition of goodwill or the initial recognition of an asset or liability in a transaction that at the time of the transaction, affects neither accounting profit (accounting loss) nor taxable profit (tax loss).

A deferred tax asset is recognised for all unused tax losses and deductible temporary differences to the extent that it is probable that taxable profit will be available against which the unused tax losses and deductible temporary differences can be utilised. A deferred tax asset is not recognised when it arises from the initial recognition of an asset or liability in a transaction that, at the time of the transaction,

affects neither accounting profit (accounting loss) nor taxable profit (tax loss).

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax assets and liabilities reflect the tax consequences that would follow from the manner in which the group expects to recover or settle the carrying amounts of its assets and liabilities at the end of the reporting period.

The carrying amount of deferred tax assets in the statement of financial position are reviewed annually and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are off-set for presentation in the statement of financial position where the group has a legally enforceable right to do so and the income taxes relate to the same tax authority.

Tax expensesCurrent and deferred taxes are recognised as income or an expense and included in the statement of comprehensive income except to the extent that the tax arises from:

• atransactionoreventwhichisrecognised,in the same or a different period, to other comprehensive income; or

• abusinesscombination.

The current tax payable is based on taxable income. Taxable income differs from profit reported in the statement of comprehensive income when there are items of income or expense that are taxable or deductible in other years and it also excludes items that are never taxable or deductible under existing tax legislation.

InventoriesInventories are stated at the lower of cost and net realisable value. Cost is determined on a first-in, first-out basis and comprises all the costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completing and the estimated cost necessary to make the sale.

When inventories are sold the carrying amounts of these inventories are recognised as an expense in the year in which the related revenue is recognised.

The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

Construction contracts and receivablesWhere the outcome of a construction contract can be estimated reliably contract revenue is recognised by reference to the stage of completion at the end of the reporting period as determined by surveys of work performed.

Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer.

When the outcome of a construction contract cannot be estimated reliably contract revenue is recognised to the extent that contract costs incurred are recoverable. Contract costs are recognised as an expense in the year in which they are incurred.

When it is probable that the total contract costs will exceed total contract revenue the expected loss is recognised as an expense immediately in the statement of comprehensive income.

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.

Contract costs comprise the costs that relate directly to the specific contract, costs that are attributable to contract activity in general and can be allocated to the contract, and such other costs as are specifically chargeable to the customer under the terms of the contract.

Construction contracts and receivables are financial instruments classified as loans and receivables.

Employee benefitsShort-term employee benefitsThe cost of short-term employee benefits (those that are expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service, such as wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits such as medical aid, cars and housing) are recognised


in the year in which the service is rendered and are not discounted.

The expected cost of accrued leave is recognised as an expense as the employees render service that increase their entitlement or, in the case of non-accumulating leave, when the absence occurs. Accrued leave is measured as the amount that the group expects to pay as a result of unused entitlement that has accumulated to the employee at the end of the reporting period.

The expected cost of bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.

Defined contribution plansPayments to defined contribution retirement benefit plans are charged as an expense as they fall due.

RevenueRevenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts, and value added tax.

Sale of goodsRevenue from the sale of goods is recognised when all the following conditions have been satisfied:

• thegrouphastransferredtothebuyerthesignificant risks and rewards of ownership of the goods;

• thegroupretainsneithercontinuingmanagerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• theamountofrevenuecanbemeasuredreliably;

• itisprobablethattheeconomicbenefitsassociated with the transaction will flow to the group; and

• thecostsincurredortobeincurredinrespect of the transaction can be measured reliably.

Contract revenueRevenue from construction contracts is recognised in accordance with the accounting policy for construction contracts and receivables and comprises:

• theinitialamountofrevenueagreedinthecontract; and

• variationsincontractwork,claimsandincentive payments:

– to the extent that it is probable that they will result in revenue; and

– they are capable of being reliably measured.

The stage of completion of construction contracts is determined by surveys of work performed.

Other incomeOther income earned by the group which is not included in revenue is recognised on the following basis:

• Interestincomeisrecognisedinthestatement of comprehensive income, using the effective interest rate method.

• Dividendsarerecognised,inprofitorloss,when an entity’s right to receive payment has been established.

Cost of salesWhen inventories are sold the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

Contract costs comprise:

• coststhatrelatedirectlytothespecificcontract;

• coststhatareattributabletocontractactivity in general and can be allocated to the contract; and

• suchothercostsasarespecificallychargeable to the customer under the terms of the contract.

borrowing costsBorrowing costs arise on the borrowing of funds and are recognised as an expense in the statement of comprehensive income, in the finance costs line item, in the year in which they are incurred as the group does not own any qualifying assets.

Translation of foreign currenciesThe functional currency of the group is South African Rands.

Foreign currency transactions are recorded, on initial recognition in Rands, by applying to the foreign currency amount the spot exchange rate between the Rand and the foreign currency at the date of the transaction. At each end of the reporting period foreign currency monetary assets and liabilities are

translated using the spot exchange rate at the end of the reporting period (closing rate).

Foreign exchange gains and losses arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the year or in previous financial statements are recognised in the statement of comprehensive income in the year in which they arise.

Cash flows arising from transactions in a foreign currency are recorded in Rands by applying to the foreign currency amount the exchange rate between the Rand and the foreign currency at the date of the cash flow.

Share capital and equityAn equity instrument is any contract that evidences a residual interest in the assets of any entity after deducting all of its liabilities.

If the group reacquires its own equity instruments (i.e. treasury shares) the consideration paid, including any directly attributable incremental costs (net of income taxes) on those instruments are deducted from equity until the shares are cancelled or reissued. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the holding company’s own equity instruments. Consideration paid or received shall be recognised directly in equity.

DistributionsDistributions declared by the group to holders of the group’s interests are recognised in the statement of changes in equity. Distributions that have not been declared at the end of the reporting period are not accounted for in the current year. Such distributions are disclosed where the declaration occurred after the end of the reporting period, but before these financial statements are approved for issue.

Segment reporting A reportable segment is a distinguishable business of the group that provides products or services that are different from those of other segments. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Business segments are defined according to the operational activities undertaken by each segment.

Inter-segment transfersSegment revenue, segment expenses and segment results include transfers between business segments. Such transfers are accounted for at arm’s length prices. These transfers are eliminated on consolidation.

40


2 PROPERTY, PLANT AND EquIPMENT2015 2014

CostR

Accumulateddepreciation

R

Carrying value

RCost

R

Accumulateddepreciation

R

Carrying value

R

Land and buildings 13 159 160 152 283 13 006 877 13 159 160 23 212 13 135 948

Plant and equipment 80 875 497 28 542 554 52 332 943 80 483 393 23 719 031 56 764 362

Furniture and fittings 1 816 736 1 343 797 472 939 1 851 347 1 173 471 677 876

Motor vehicles 16 161 870 7 096 483 9 065 387 17 329 175 6 904 511 10 424 664

Office and computer equipment 6 489 057 4 034 009 2 455 048 5 526 116 3 163 269 2 362 847

Computer software 907 347 830 774 76 573 909 620 792 752 116 868

Tools 1 638 268 1 338 617 299 651 1 479 102 1 191 802 287 300

Leasehold improvements 172 434 88 115 84 319 172 434 74 531 97 903

Total 121 220 369 43 426 632 77 793 737 120 910 347 37 042 579 83 867 768

Opening balance

R

Disposal of division

RAdditions

RDisposals

RDepreciation

RTotal

RReconciliation of property,Plant and equipment2015Land and buildings 13 135 948 – – – (129 071) 13 006 877 Plant and equipment 56 764 362 – 944 523 (422 313) (4 953 629) 52 332 943 Furniture and fittings 677 876 – 44 937 (55 017) (194 857) 472 939 Motor vehicles 10 424 664 – 522 815 (660 048) (1 222 044) 9 065 387 Office and computer equipment 2 362 847 – 1 108 943 (57 837) (958 905) 2 455 048 Computer software 116 868 – 47 411 (29 811) (57 895) 76 573 Tools 287 300 – 184 421 (8 810) (163 260) 299 651 Leasehold improvements 97 903 – – – (13 584) 84 319 Total 83 867 768 – 2 853 050 (1 233 836) (7 693 245) 77 793 737

2014Land and buildings 13 159 160 – – – (23 212) 13 135 948 Plant and equipment 59 035 991 (287 312) 3 047 242 (139 461) (4 892 098) 56 764 362 Furniture and fittings 782 809 (12 085) 152 637 (9 991) (235 494) 677 876 Motor vehicles 11 199 612 (306 442) 1 699 076 (881 619) (1 285 963) 10 424 664 Office and computer equipment 1 889 639 (1 113) 1 238 013 – (763 692) 2 362 847 Computer software 168 055 (2) 69 869 – (121 054) 116 868 Tools 168 069 (3 249) 227 895 (15 676) (89 739) 287 300 Leasehold improvements 111 487 – – – (13 584) 97 903 Total 86 514 822 (610 203) 6 434 732 (1 046 747) (7 424 836) 83 867 768

Pledged as securityCarrying value for assets pledged as security for the financial liabilities described in note 10:

2015R

2014R

Land and buildings 13 006 877 13 135 948Motor vehicles 3 059 863 6 421 410Plant and equipment 8 270 761 8 822 029Office and computer equipment 79 980 110 896


2015R

2014R

3 GOODWILLCost 8 141 200 8 141 200 Accumulated impairment (8 141 200) – Carrying value – 8 141 200

The carrying value of goodwill is reconciled as follows:Carrying value at the beginning of the year 8 141 200 8 396 200 Goodwill sold – (255 000)Goodwill impaired (8 141 200) –Carrying value at the end of the year – 8 141 200

Impairment tests are conducted annually on goodwill based on calculations of the cash-generating unit (‘CGU’) to which the goodwill belongs. The goodwill is fully attributable to the Glass division and the reason therefore was disclosed under the Group Results heading in the Directors’ Report.

Management has determined the recoverable amount for the Glass division to be less than the net asset value thereof and have impaired the goodwill by R8 141 200.

The recoverable amount for the CGU is determined using value-in-use calculations which is based on assumptions reflecting past experience.

Value in use is determined by discounting the future cash flows generated from continuing use of the CGU using a discount rate. The key assumptions for the value-in-use calculations are as follows:

• Discountrate:Thediscountrateisbasedonthecompany’sweightedaveragecostofcapitalof between 12% and 15%.

• Discountperiod:10years

• Revenuegrowthrate:Between6%and9%overthenext10years.

4 INTANGIbLE ASSETSunpatented technologyCost 20 000 000 20 000 000 Accumulated amortisation (1 000 000) – Carrying value 19 000 000 20 000 000

The carrying value of unpatented technology is reconciled as follows:Carrying value at the beginning of the year 20 000 000 20 000 000 Impairment during the year (1 000 000) – Carrying value at the end of the year 19 000 000 20 000 000

The intangible asset arose as a result of the acquisition of HBS. Its remaining useful life is estimated at 19 years.

Change in estimateThe directors have reviewed the useful life of intangible assets during the current financial year. Refer to note 35 – Change in accounting estimate.

Assessment of useful life The directors have reviewed the useful life of the intangible asset during the current financial year and the useful life has been assessed as 20 years.

In the prior year the useful life of the intangible asset was estimated as indefinite based on all relevant information available at that time. The assessment of the intangible asset’s useful life in the current and the prior year is supported by the following factors:

• Normalproductlifecyclesforsimilartechnologyacquiredagainstpublicinformationonestimatesofusefullivesofsuchtechnologyindicatethat products of the aluminium industry typically experience very infrequent design changes due to the previous progression and nature of implemented systems, which is expected to continue for the determinable future.

• 20yearsiscurrentlymanagement’sbestestimate,basedontheirin-depthindustryknowledge,oftheusefullifeoftheintangibleasset.

42


4 INTANGIbLE ASSETS (continued)Impairment test for intangible assetsImpairment tests are conducted annually on intangible assets with indefinite useful lives based on value-in-use calculations. Value in use is determined by discounting the future cash flows generated from continuing use of the unpatented technology using a discount rate adjusted for the specific risks applicable to the operations associated with the technology. These cash flows are based on performance projections of operations making use of technology of similar nature. The key assumptions for the value-in-use calculations are as follows:

Growth in revenue: Determined from financial budgets and forecasts covering a three-year period. The growth rate used was 8%. This growth rate has been applied in perpetuity.

Discount rate: Based on the previous year’s margins as well as past valuation assumptions and approved management budgets. The discount rate used was 14.5%.

5 EquITY-ACCOuNTED INVESTMENTS

Name of company2015

% holding2014

% holding2015

R2014

R

Technal Systems South Africa (Pty) Ltd – – – –

Summary of the group’s interests in the associate

Revenue (5 881 512)

Cost of sales 3 493 915

Interest received (15 424)

Expenses 2 301 774

Net profit (101 247)

The group’s interest in Technal Systems South Africa was sold with effect 31 December 2013.

Equity-accounted investments – –

The carrying amounts of equity-accounted investments are shown net of impairment losses.

6 INVENTORIESRaw materials 42 098 568 43 054 820

Work in progress 1 997 613 4 474 280

Finished goods 46 924 769 38 557 808

Goods in transit 4 383 760 4 476 916

95 404 710 90 563 824


2015R

2014R

7 CONSTRuCTION CONTRACTS AND RECEIVAbLESContract debtors 9 684 236 8 771 753

Contract retentions 1 222 616 1 869 376

Uncompleted contracts: amounts due by customers 8 962 241 19 863 886

19 869 093 30 505 015

uncompleted contracts

Costs incurred to date 57 876 077 189 664 829

Profit recognised to date 18 386 597 74 671 981

76 262 674 264 336 810

Work certified to date (67 300 432) (244 472 924)

Amounts due from customers 8 962 241 19 863 886

The carrying values of these receivables approximate their fair values due to the short-term nature of the instruments.

The group’s maximum exposure to credit risk through construction contract receivables is R19 869 093 (2014: R30 505 015).

Credit quality of construction contracts and receivablesThe credit quality of construction contracts and receivables is evaluated by management on an ongoing basis. If customers are independently rated then these ratings are used. In the absence of an independent rating management assesses the credit quality of the customer, taking into account its payment history.

8 TRADE AND OThER RECEIVAbLESTrade receivables 34 800 289 40 786 814

Impairment of trade receivables (2 059 782) (2 618 007)

Prepayments and deposits 3 937 198 1 819 837

Value added taxation 125 947 49 637

Staff debtors 4 103 12 701

Other receivables 365 784 4 463 101

37 173 539 44 514 083

The carrying values of these receivables approximate their fair values due to the short-term nature of the instruments.

Trade and other receivables past due but not impairedTrade and other receivables which are less than 60 days past due are not considered to be impaired. At 28 February 2015, R6 766 204 (2014: R10 074 177) were past due but not impaired.

The ageing of amounts past due but not impaired is as follows:

60 – 90 days 1 800 001 2 304 355

90 – 120 days 628 905 3 445 686

+120 days 4 337 298 4 324 136

44


2015R

2014R

8 TRADE AND OThER RECEIVAbLES (continued)

Trade and other receivables impairedAs at 28 February 2015 trade and other receivables of R2 753 955 (2014: R4 382 234) were partially impaired and provided for.

The amount of the provision was R2 059 782 as at 28 February 2015 (2014: R2 618 007).

The ageing of these receivables is as follows:

60 – 90 days 280 415 505 836

+120 days 2 473 540 3 876 398

2 753 955 4 382 234

Reconciliation of provision for impairment of trade and other receivables

Opening balance 2 618 007 2 477 441

Amounts written off as uncollectible (1 104 251) (490 194)

Movement in provision 546 026 630 760

2 059 782 2 618 007

The creation and release of provision for impaired receivables have been included in operating expenses in profit or loss. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

The group’s maximum exposure to credit risk through trade and other receivables is R33 110 394 (2014: R42 644 609).

Credit quality of trade and other receivablesThe credit quality of trade and other receivables is evaluated by management on an ongoing basis. If customers are independently rated then these ratings are used. In the absence of an independent rating management assesses the credit quality of the customer taking into account its financial position, payment history and other factors.

9 CASh AND CASh EquIVALENTSCash and cash equivalents consist of:

Cash on hand 26 500 30 826

Bank balances 9 911 650 13 161 236

Short-term deposits 36 156 171 53 474 528

46 094 321 66 666 590

Bank overdraft (5 960 400) (4 478 281)

40 133 921 62 188 309

Current assets 46 094 321 66 666 590

Current liabilities (5 960 400) (4 478 281)

40 133 921 62 188 309

The group’s maximum exposure to credit risk through cash and cash equivalents is R46 067 821 (2014: R66 635 764).

Credit quality of cash and cash equivalentsThe group only deposits cash with major banks of high-quality credit standing and limits exposure to any one counterparty.


2015R

2014R

10 OThER FINANCIAL LIAbILITIESheld at amortised cost

Wesbank, a division of FirstRand Bank Ltd 7 105 602 10 980 541

Instalment sale agreements bearing interest at varying rates between 0.5% and 1.5% below the prime bank overdraft rate per annum are repayable in monthly instalments of R370 529 (2014: R487 478). These liabilities are secured by motor vehicles and plant and equipment as disclosed in note 2.

First National Bank, a division of FirstRand Bank Ltd 6 537 417 10 230 823

The term loan bears interest at 0.5% below the prime overdraft rate per annum and is repayable in monthly instalments of R369 559 (2014: R368 747) over a period of 48 months. The liability is secured by a general deed of suretyship offered by Mazor Group Ltd.

Investec Bank Ltd 8 095 196 9 226 291

Mortgage bond secured over industrial property acquired as disclosed in note 2. The bond is repayable in monthly instalments of R165 701 (2014: R152 941) over 60 months and bears interest at 0.25% below the prime overdraft rate per annum.

Non-current liabilities

At amortised cost 14 271 961 20 980 196

Current liabilities

At amortised cost 7 466 254 9 457 459

21 738 215 30 437 655

Fair value of other financial liabilitiesThe loans bear interest at market-related rates. The carrying values of these loans are therefore deemed to approximate their fair values.

11 TRADE AND OThER PAYAbLESTrade payables 34 887 952 31 350 423

Amounts received in advance 6 138 028 –

Value added taxation 452 922 754 644

Sundry payables 151 268 742 949

Accrued leave pay 1 781 705 2 015 285

Accrued bonus 955 031 953 825

Other accruals 3 393 986 5 099 094

Operating lease payables 3 724 775 3 368 322

51 485 667 44 284 542

Fair value of trade and other payablesTrade and other payables are carried at amortised cost, with the fair value being approximated by such carrying value.

46


2015R

2014R

12 DEFERRED TAxDeferred taxation assets

Asset at the beginning of the year 14 368 729 11 480 066

Current year charge to the statement of comprehensive income (8 891 684) 2 888 663

Asset at the end of the year 5 477 045 14 368 729

Arising from the following temporary differences:

Capital allowances (13 130 272) (11 874 377)

Accruals and other allowances 1 779 255 1 441 947

Income received in advance 676 475 432 972

Rental accruals 829 838 520 654

Tax losses 32 362 039 23 847 533

Deferred tax asset not raised (17 040 290) –

5 477 045 14 368 729

Deferred taxation liabilities

Liability at the beginning of the year (1 462 036) (1 301 556)

Current year charge to the statement of comprehensive income 667 283 (160 480)

Liability at the end of the year (794 753) (1 462 036)


Capital allowances (1 138 892) (2 170 982)

Provisions and other accruals 140 610 323 156

Rental accruals 203 529 385 790

(794 753) (1 462 036)

The deferred tax liabilities were set off against the deferred tax asset balances on an individual entity level. The entities with net deferred tax assets, as well as these with net deferred tax liabilities, were then aggregated on consolidation.

The directors have assessed that it is appropriate to recognise the deferred tax asset for tax losses to the extent that it will be realised through future profits generated by the individual subsidiaries of the group.

13 REVENuEContract revenue 119 350 078 212 934 403

Sale of goods 252 489 690 253 105 419

Trading interest income 4 238 182 4 345 808

376 077 950 470 385 630

14 COST OF SALESContract costs 104 009 111 133 391 216

Costs of goods sold 195 565 162 208 858 107

Inventory write-downs 4 822 017 –

Trading interest paid 3 813 275 2 708 634

308 209 565 344 957 957


2015R

2014R

15 OPERATING PROFITOperating profit is arrived at after taking into account the following expenses and (income):

Loss on disposal of plant and equipment 276 185 85 443

Foreign exchange gain (746 206) (177 776)

Impairment of goodwill 8 141 200 –

Depreciation

– Plant and equipment 5 116 888 4 953 849

– Motor vehicles 1 222 044 1 263 411

– Other 1 354 313 1 149 848

Motor vehicle expenses 11 761 184 12 592 789

Staff costs 92 005 281 101 797 849

Operating lease rentals

– Property 20 410 650 20 686 446

– Equipment 148 676 188 392

16 PENSION/PROVIDENT FuND COMMITMENTThe group provides post-retirement benefits by way of defined contribution plans. The group’s contribution for the year, which was expended in the statement of comprehensive income, amounts to R4 095 646 (2014: R4 370 345).

17 INVESTMENT REVENuEInterest revenue

Bank 3 642 773 2 841 447

Loans 405 197 264

Other 44 330 5 385

3 687 508 3 044 096

18 FINANCE COSTSBank 2 915 266 3 405 278

Loans – 207 908

Other 21 363 12 507

2 936 629 3 625 693

48


2015R

2014R

19 TAxATIONMajor components of the tax expense

CurrentLocal income tax – current year 3 876 766 14 348 573

Local income tax – prior year (147 736) 163

3 729 030 14 348 736

DeferredOriginating and reversing temporary differences (301 383) 1 032 266

Tax losses 8 525 784 (4 448 076)

8 224 401 (3 415 810)

11 953 431 10 932 926

Reconciliation of the tax expenseReconciliation between applicable tax rate and average effective tax rate:

Applicable tax rate (%) 28.00 28.00

Disallowable charges (%) (8.64) 0.08

Non-taxable income (%) – (0.04)

Prior period overprovision/(underprovision) (%) (0.54) 0.05

Equity accounting at capital gains tax rates (%) – (0.03)

Deferred tax asset not raised (%) (62.51) –

Other (%) (0.15) (0.27)

Effective tax rate (%) (43.85) 27.79

Estimated tax losses available for set-off against future taxable income 115 578 712 85 169 762

Potential tax relief at current taxation rates 32 362 039 23 847 533

Relief depends on sufficient taxable income being earned in future by subsidiaries concerned. In the current year deferred tax was not provided for assessed losses of R60.9 million (2014: RNil).

20 DISCONTINuED OPERATIONSIn the prior year the group decided to discontinue and sell its operations in the East London and Port Elizabeth divisions of Compass Glass SA (Pty) Ltd. The divisions were sold with effect from 1 March 2013 and 1 July 2013 respectively for a consideration of R6.6 million.

The decision was made by the board to discontinue these operations due to the beneficial sale of the investment.

Profit and loss

Revenue – 4 628 980

Expenses – (4 378 640)

Profit on disposal – 3 380 620

Net profit before tax – 3 630 960

Tax – (687 630)

Net profit after tax – 2 943 330

Net profit before tax is disclosed after taking into account the profit on disposal of the divisions of RNil (2014: R3 380 620).


2015R

2014R

21 CASh GENERATED FROM OPERATIONSProfit before taxation (27 259 121) 39 345 692

Adjustments for:

Depreciation and amortisation 8 693 245 7 367 108

Loss on sale of assets 276 185 85 443

Loss from equity-accounted investments – (101 247)


Interest received (3 687 508) (3 044 096)

Finance costs 2 936 629 3 625 693

Changes in working capital:

(Increase)/Decrease in inventories (4 840 886) 2 581 894

Decrease in trade and other receivables 7 407 205 3 138 123

Decrease in construction contracts and receivables 10 635 922 11 662 577

Increase/(Decrease) in trade and other payables 7 201 122 (12 883 049)

9 503 993 51 778 138

22 TAx PAIDBalance at the beginning of the year (2 636 654) (403 551)

Current tax for the year recognised in the SOCI (3 729 030) (14 348 736)

Balance at the end of the year 246 772 2 636 654

(6 118 912) (12 115 633)

23 CASh FLOWS OF hELD-FOR-SALE/DISCONTINuED OPERATIONSProfit before tax – 3 630 960

Depreciation – 57 728

Profit on sale of division – (3 380 620)

Loss on sale of assets – 24 557

– 332 625

24 INVESTMENT IN PROPERTY, PLANT AND EquIPMENTTo maintain operations 2 040 413 2 992 374

To expand operations 812 637 3 442 358

2 853 050 6 434 732

50


2015R

2014R

25 SALE OF DIVISIONSCompass Glass SA (Pty) LtdThe group sold the East London and Port Elizabeth branches of Compass Glass SA on 1 March 2013 and 1 July 2013 respectively.

The fair value of the assets and liabilities at the sale date were as follows:Property, plant and equipment (610 203)Non-current assets held for sale (751 364)Inventories (3 667 695)Goodwill (255 000)Other financial liabilities 38 560 Profit on disposal (3 380 620)Total consideration received (8 626 322)

Consideration receivedCash 8 553 883 Loan receivable 72 439

8 626 322

Cash inflow on disposalCash consideration received 8 553 883 Cash sold –

8 553 883

26 STATED CAPITAL Authorised500 000 000 ordinary shares with no par value

Issued121 501 553 (2014: 121 501 553) fully paid up ordinary shares with no par value 81 829 948 81 829 948 Treasury shares (9 965 930) (4 884 161)

71 864 018 76 945 787

Less than 1% of the issued stated capital of the group has been issued to employees in terms of the share incentive schemes.

367 125 ordinary shares may be taken up by the employees in the next year at R3.48 per share in terms of the Mazor Group Ltd Share Incentive Scheme and the Mazor Group Ltd BEE Share Incentive Scheme.

During the year Mazor Aluminium (Pty) Ltd acquired 3 903 918 shares at an average price of R1.30. Stated capital is stated after eliminating 6 746 755 treasury shares (2014: 2 842 837). This had the effect of reducing stated capital by R9 965 930 (2014: R4 884 161).

27 DIRECTORS’ EMOLuMENTSNon-executive directorsPaid by the holding company– Directors’ fees 783 000 712 300

Executive directorsPaid by subsidiaries– Salaries 4 702 017 4 357 511 – Bonus 349 866 374 963 – Medical 175 356 156 832 – Other benefits 783 078 802 211

6 793 317 6 403 817


27 DIRECTORS’ EMOLuMENTS (continued)

SalariesR

BonusR

MedicalR

Other fees/benefits^

R

Total emoluments

R2015DirectorExecutiveR Mazor 2 511 704 214 576 107 074 289 733 3 123 087 L Mazor 1 582 313 135 290 68 282 240 457 2 026 342 S Mazor 608 000 – – 252 888 860 888

4 702 017 349 866 175 356 783 078 6 010 317 Non-executiveM Kaplan 208 000 208 000 A Darko 155 000 155 000 A Groll 114 000 114 000 A Varachhia 124 000 124 000 F Boner 182 000 182 000

– – – 783 000 783 000 Total 4 702 017 349 866 175 356 1 566 078 6 793 317

2014DirectorExecutiveR Mazor 2 341 430 199 500 98 064 279 611 2 918 605 L Mazor 1 436 081 125 463 58 768 269 712 1 890 024 S Mazor 580 000 50 000 – 252 888 882 888

4 357 511 374 963 156 832 802 211 5 691 517 Non-executiveM Kaplan 177 350 177 350 A Darko 171 300 171 300 A Groll 104 150 104 150 A Varachhia 104 150 104 150 F Boner 155 350 155 350

– – – 712 300 712 300 Total 4 357 511 374 963 156 832 1 514 511 6 403 817

^ This amount does not include any retirement fund contributions.

Executive directors’ do not receive directors’ fees for services as directors.

Non-executive directors do not have service contracts with group companies.

Prescribed officers’ remunerationPrescribed officers’ remuneration is disclosed below in accordance with the requirements of the Companies Act, except that the board has decided not to disclose the names of the individuals as this disclosure may compromise the confidentiality of remuneration which is required for internal and competitive reasons.

SalariesR

BonusR

Retirementcontributions

ROther

RTotal

RPrescribed officer20151 1 139 720 145 205 113 972 48 380 1 447 277 2 1 095 216 20 000 – 236 491 1 351 707 3 934 579 85 000 45 421 – 1 065 000

3 169 515 250 205 159 393 284 871 3 863 984

20141 1 073 590 182 648 107 359 28 176 1 391 773 2 974 571 – 137 214 30 514 1 142 299 3 956 952 71 213 113 451 49 197 1 190 813

3 005 113 253 861 358 024 107 887 3 724 885

52


2015R

2014R

28 CAPITAL COMMITMENTSCapital commitments include expenditure relating to plant and equipment for which board approval has been obtained.

Authorised and contracted for 7 262 572 –

29 COMMITMENTS uNDER OPERATING LEASESCommitments

The minimum lease rentals to be paid under non-cancellable leases at 28 February 2015 are:

Buildings:– Payable within one year 19 177 408 20 234 528

– Payable in two to five years 27 094 685 43 711 342

– Payable thereafter – –

Lease terms are between three to five years with three to five-year renewal options and escalation rates of 8% – 10% per annum. No contingent rent is payable.

30 EARNINGS PER ShAREEarnings per share is calculated by dividing earnings by the weighted average number of shares in issue.

Appropriate adjustments are made in calculating headline earnings per share.

Shares in issue 121 501 553 121 501 553

Shares in issue (after treasury shares) 114 754 798 118 658 716


Weighted average number of shares

Shares in issue at the beginning of the period 121 501 553 121 501 553

Less: Treasury shares under the control of the board (3 091 916) (2 842 837)


Reconciliation between earnings and headline earnings:

Earnings attributable to ordinary shareholders (39 212 552) 31 356 096

Adjusted for:


Gain on disposal of discontinued operation – (3 380 620)

Tax effect thereof – 634 334

Loss on disposal of property, plant and equipment 276 185 85 443

Tax effect thereof (77 332) (23 924)

Headline earnings (30 872 499) 28 671 329

Earnings per share (cents) (33.1) 26.4

Diluted earnings per share (cents) (33.1) 26.4

Headline earnings per share (cents) (26.1) 24.2

Diluted headline earnings per share (cents) (26.1) 24.2

Earnings from discontinued operations per share (cents) – 2.5


31 RELATED PARTIESThe group is controlled by Mazor Group Ltd, the ultimate holding company. The group has the following interests in subsidiaries.

• Mazor Steel (Pty) Ltd (100%)

• Mazor Aluminium (Pty) Ltd (100%)

• Mazor Properties (Pty) Ltd (100%)

• Compass Glass (Pty) Ltd (100%)

• Compass Glass SA (Pty) Ltd (100%)

• HBS Aluminium Systems (Pty) Ltd (100%)

During the year group companies, in the ordinary course of business, entered into various intra-group purchase and sale transactions.

These transactions are no more or less favourable than those arranged with third parties.

Transactions and balances between the group companies have been eliminated on consolidation and are not disclosed.

Details of transactions and balances with other related parties are as set out below:

Nature of relationship Nature of transaction2015

R2014

R

Entities with common directors/shareholders/beneficiaries

The Li-Ron Trust Rent paid 5 044 145 4 670 505

Ron-li (Pty) Ltd Rent paid 1 556 198 1 440 924

Details of directors’ emoluments are disclosed under note 27.

32 FINANCIAL RISK MANAGEMENTThe group has exposure to the following risks from its use of financial instruments:

• liquidity risk;

• credit risk;

• market risk; and

• capital risk.

The group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the company’s financial performance. This note presents information about the group’s exposure to each of the above risks, the group’s objectives, policies and processes for measuring and managing risk, and the group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

The board of directors has overall responsibility for the establishment and oversight of the group’s risk management framework. The board has established the audit and risk committee, which assists the board in developing and monitoring the group’s risk management policies. The committee reports regularly to the board of directors on its activities.

Liquidity riskPrudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions.

The group’s risk to liquidity is a result of the funds available to cover future commitments. The group manages liquidity risk through an ongoing review of future commitments and credit facilities. The group has maintained a positive cash position for many years.

The following table analyses the group’s financial liabilities into relevant maturity groupings. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

54


32 FINANCIAL RISK MANAGEMENT (continued)

<1 yearR

2 – 5 yearsR

>5 yearsR

TotalR

At 28 February 2015

Trade and other payables 38 433 204 – – 38 433 204

Other financial liabilities 10 320 328 14 037 429 – 24 357 757

Bank overdraft 5 960 400 – – 5 960 400

Guarantees 24 313 593 – – 24 313 593

79 027 525 14 037 429 – 93 064 954

At 28 February 2014

Trade and other payables 37 192 466 – – 37 192 466

Other financial liabilities 11 666 104 23 134 238 720 790 35 521 132

Bank overdraft 4 478 281 – – 4 478 281

Guarantees 45 515 152 – – 45 515 152

98 852 003 23 134 238 720 790 122 707 031

The maturity profile of the recognised financial instruments represent the undiscounted cash flows that are expected to occur in the future.

Credit riskCredit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the group’s receivables from customers.

Potential credit risk comprises construction contracts, trade and other receivables and cash deposits.

Contract and trade receivables comprise a spread customer base. Management evaluates credit risk relating to customers on an ongoing basis.

When undertaking a new contract the group evaluates both the contractor and the ultimate client. Most of the group’s customer base consists of contractors with whom the group has been transacting for over five years. The group only transacts with contractors who are well established in the market place and with ultimate clients whom the group has confirmed, through comprehensive credit checks, have the financial means to meet their financial obligations.

The credit quality of construction receivables neither past due nor impaired has been assessed as high. Sales are mostly made to local counterparties. Historical information about counterparty default rates indicates that there are no defaults. This is due to the group only taking on construction contracts for reputable counterparties with a high credit standing.

All trade debtors are subjected to stringent credit and background checks before opening an account in order to determine the potential customer’s credit quality and credit limits. Insurance cover is obtained for all new accounts opened above a predetermined limit set by management.

The credit quality of trade receivables neither past due nor impaired has been assessed as high. Sales are mostly made to local counterparties. Historical information about counterparty default rates indicate that, as a percentage of bad debts written off and provided for over total credit sales, the group’s default rate is 0.19% (2014: 0.24%).

Market riskMarket risk is the risk that changes in market prices such as interest rates, supply ability and prices will affect the group’s income. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

The group is exposed to market risk through its purchasing of goods in order to complete contracts in line with specifications. The group’s risk comprises price fluctuations and supply shortages. The group manages this risk by maintaining a good relationship with its suppliers and constantly monitoring the changing environment and adjusting procurement levels accordingly.

The group is exposed to interest rate risk though its commitment to instalment sale agreements, other financial liabilities and cash and cash equivalents. The group manages its exposure by maintaining favourable bank and short-term deposit balances which serve to hedge against future exposure.


32 FINANCIAL RISK MANAGEMENT (continued)Sensitivity analysisPotential interest rate risk is presented by way of a sensitivity analysis demonstrating the effects of movements in market interest rates. A movement of 150 basis points in the prime lending rate would have had the following effects on profitability for the year:

Interest rate riskProfit/(Loss) should the interest rate change by 1.5%

Amount exposed to risk

R

Rate increase

R

Rate decrease

R2015Financial assetsCash and cash equivalents 46 067 821 691 017 (691 017)

Impact of financial assets on:– profit before taxation 691 017 (691 017)– profit after taxation 497 532 (497 532)

Financial liabilitiesInstalment sale agreements 7 105 602 (106 584) 106 584 Mortgage bonds 8 095 196 (121 428) 121 428 Loans 6 537 417 (98 061) 98 061 Bank overdraft 5 960 400 (89 406) 89 406

Impact of financial liabilities on:– profit before taxation (415 479) 415 479 – profit after taxation (299 145) 299 145 Overall impact on profit after tax 198 387 (198 387)

2014Financial assetsCash and cash equivalents 66 635 764 999 536 (999 536)

Impact of financial assets on:– profit before taxation 999 536 (999 536)– profit after taxation 719 666 (719 666)

Financial liabilitiesInstalment sale agreements 10 980 541 (164 708) 164 708 Mortgage bonds 9 226 291 (138 394) 138 394 Loans 10 230 823 (153 462) 153 462 Bank overdraft 4 478 281 (67 174) 67 174

Impact of financial liabilities on:– profit before taxation (523 738) 523 738 – profit after taxation (377 091) 377 091 Overall impact on profit after tax 342 575 (342 575)

Capital risk managementThe group manages its capital to ensure that it will be able to continue as a going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balances.The group considers its capital to consist of stated capital of R71 864 018 (2014: R76 945 787) and retained income of R148 722 620 (2014: R198 382 254).The board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.The level of dividends paid by the group is determined with reference to the liquidity and solvency of the group, as well as consideration of budgets and forecasts.The group’s overall strategy remains unchanged from the previous year. The group is not subject to any externally imposed capital requirements.

56


33 CATEGORIES OF FINANCIAL INSTRuMENTSThe following accounting policies for financial instruments have been applied to the line items below:

Loans and receivables

RTotal

R

Assets as per the statement of financial position

2015

Construction contract receivables 19 869 093 19 869 093

Trade and other receivables 33 110 394 33 110 394

Cash and cash equivalents 46 094 321 46 094 321

99 073 808 99 073 808

2014

Construction contract receivables 30 505 015 30 505 015


Cash and cash equivalents 66 666 590 66 666 590

139 816 214 139 816 214

Financial liabilities at amortised cost

RTotal

R

Liabilities as per the statement of financial position

2015

Other financial liabilities 21 738 215 21 738 215

Trade and other payables 38 433 204 38 433 204

Bank overdraft 5 960 400 5 960 400

66 131 819 66 131 819

2014

Other financial liabilities 30 437 655 30 437 655

Trade and other payables 37 192 466 37 192 466

Bank overdraft 4 478 281 4 478 281

72 108 402 72 108 402


2015R

2014R

34 GuARANTEESGuarantees issued by subsidiaries for the due fulfilment of construction contracts 24 313 593 45 515 152

It is the opinion of the directors that the possibility of any loss is improbable and it is not anticipated that any material liabilities will arise.

35 ChANGE IN ACCOuNTING ESTIMATEDuring the year management revisited its accounting estimate with respect to the estimated useful life of intangible assets.

Management now estimates the useful life of the unpatented technology to be 20 years, while the useful life was previously, based on all relevant factors at that time, estimated as being indefinite.

The aggregate effect of the change in accounting estimate on the annual financial statements for the year ended 28 February 2015 is as follows:

Statement of financial position

Intangible asset

Previously stated 20 000 000

Adjustment (1 000 000)

19 000 000

Profit or loss

Amortisation of Intangible asset

Previously stated –

Adjustment 1 000 000

1 000 000

The change in accounting estimate is applied prospectively as that is the proposed treatment in line with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors, and will lead to an increase in amortisation by R1 million annually in future periods.

58


36 SEGMENTAL ANALYSIS

AluminiumR

SteelR

GlassR

Corporate andinvestments

RConsolidated

R

Operating segments

At 28 February 2015

Segment revenue – external 174 397 439 77 868 920 123 811 591 – 376 077 950

Segment revenue – internal 120 240 – 18 659 017 5 678 755 24 458 012

Segment result (operating profit) (5 982 628) 2 478 201 (19 415 518) (5 090 055) (28 010 000)

Segment result (profit/(loss) before tax) (4 891 292) 4 662 640 (21 187 664) (5 842 805) (27 259 121)

Interest revenue 1 220 874 2 247 521 192 828 26 285 3 687 508

Finance costs (129 538) (63 082) (1 964 978) (779 031) (2 936 629)

Motor vehicle expenses (4 184 697) (1 367 303) (6 209 184) – (11 761 184)

Staff costs (43 561 723) (22 207 505) (26 236 053) – (92 005 281)

Operating lease (9 479 360) (3 264 265) (7 815 701) – (20 559 326)

Non-cash income and expenses

– Depreciation (1 960 674) (585 890) (5 017 610) (129 071) (7 693 245)

– Impairments – – – (8 141 200) (8 141 200)

Equity-accounted investment

Segment assets 120 354 689 54 632 381 111 962 367 13 921 558 300 870 995

Segment liabilities 20 674 488 13 018 959 37 687 665 8 903 246 80 284 358

Capital expenditure 1 619 267 497 451 736 332 – 2 853 050


36 SEGMENTAL ANALYSIS (continued)

AluminiumR

SteelR

GlassR

Corporate andinvestments

RConsolidated

R

Operating segments

At 28 February 2014

Segment revenue – external 250 363 638 90 479 773 129 542 219 – 470 385 630

Segment revenue – internal 1 807 775 2 926 500 32 377 958 6 304 755 43 416 988

Segment result (operating profit) 32 500 046 14 116 668 (10 877 204) 4 086 532 39 826 042

Segment result (profit/(loss) before tax) 33 117 419 16 013 264 (13 089 223) 3 304 232 39 345 692

Interest revenue 923 105 1 960 912 139 818 20 261 3 044 096

Segment result – equity-accounted investment 101 247 – – – 101 247

Finance costs (406 995) (64 315) (2 351 822) (802 561) (3 625 693)

Motor vehicle expenses (5 182 861) (1 274 882) (6 135 046) – (12 592 789)

Staff costs (48 372 828) (22 919 443) (30 505 578) – (101 797 849)

Operating lease (9 623 693) (3 264 265) (7 986 880) – (20 874 838)

Non-cash income and expenses

– Depreciation (1 746 683) (568 814) (5 027 690) (23 921) (7 367 108)

– Impairments – – – – –

Segment assets 124 187 509 70 770 093 141 235 381 22 434 928 358 627 911

Segment liabilities 18 967 917 10 104 826 44 316 766 9 910 361 83 299 870

Capital expenditure 3 205 443 577 778 2 651 510 – 6 434 731

60

BMW, Century City


COMPANY ANNuAL FINANCIAL STATEMENTS

Statement of financial position ......... 62

Statement of comprehensive income ........................................... 63

Statement of cash flows .................. 64

Statement of changes in equity ........ 65

Notes to the company annual financial statements ........................ 66

62

COMPANY STATEMENT OF FINANCIAL POSITIONat 28 February 2015

Notes2015

R2014

R

ASSETS

Non-current assets

Property, plant and equipment 1 – –

Investments in subsidiaries 2 38 555 138 44 182 121

Long-term receivables 3 78 849 524 93 799 271

Deferred tax 12 – 236 345

117 404 662 138 217 737

Current assets

Trade and other receivables 4 4 445 532 3 589 876

Cash and cash equivalents 5 426 737 353 054

4 872 269 3 942 930

Total assets 122 276 931 142 160 667

EquITY AND LIAbILITIES

Equity

Stated capital 13 120 385 583 120 385 583

Retained income (17 593 856) 2 257 670

102 791 727 122 643 253

Current liabilities

Loans from subsidiaries 6 19 205 000 19 282 100

Current tax payable 19 551

Trade and other payables 7 260 653 235 314

19 485 204 19 517 414

Total equity and liabilities 122 276 931 142 160 667


COMPANY STATEMENT OF COMPREhENSIVE INCOME for the year ended 28 February 2015

Notes2015

R2014

R

Revenue 8 3 660 000 4 286 000

Operating expenses (23 133 694) (2 029 790)

Operating (loss)/profit 9 (19 473 694) 2 256 210

Investment revenue 10 10 714 446 5 847 932

Finance costs – –

(Loss)/Profit before taxation (8 759 248) 8 104 142

Taxation 11 (400 141) (640 953)

Total comprehensive (loss)/income for the period (9 159 389) 7 463 189

64

COMPANY STATEMENT OF CASh FLOWSfor the year ended 28 February 2015

Notes2015

R2014

R

Cash flows from operating activities

Cash generated from operations 14 525 734 603 769

Interest income 22 309 15 857

Dividend income 10 692 137 5 832 075

Tax paid 15 (144 245) –

Dividends paid (10 692 137) (5 832 075)

Net cash flow from operating activities 403 798 619 626

Cash flows from investing activities

Loans repaid by subsidiaries 218 000 4 097 500

Loans advanced to subsidiaries (500 000) (1 550 000)

Proceeds from long-term receivables 28 985 15 810

Net cash flow from investing activities (253 015) 2 563 310

Cash flows from financing activities

Repayment of loans from subsidiaries (77 100) (3 174 152)

Net cash flow from financing activities (77 100) (3 174 152)

Increase in cash and cash equivalents for the year 73 683 8 784

Cash and cash equivalents at the beginning of the year 353 054 344 270

Cash and cash equivalents at the end of the year 426 737 353 054


COMPANY STATEMENT OF ChANGES IN EquITYfor the year ended 28 February 2015

Stated capitalR

Retained incomeR

Total equityR

balance at 1 March 2013 120 385 583 626 556 121 012 139

Total comprehensive income for the period – 7 463 189 7 463 189

Dividends paid – (5 832 075)* (5 832 075)


Total comprehensive loss for the period – (9 159 389) (9 159 389)

Dividends paid – (10 692 137)* (10 692 137)

balance at 28 February 2015 120 385 583 (17 593 856) 102 791 727

* A gross dividend of 8.8 cents per share was paid on 9 June 2014 (4.8 cents per share on 3 June 2013).

66

COMPANY NOTES TO ThE ANNuAL FINANCIAL STATEMENTSfor the year ended 28 February 2015

2015R

2014R

1 PROPERTY, PLANT AND EquIPMENTFurniture and fittings:Opening balance – 709 Additions – – Depreciation – (709)Carrying value – –

2 INVESTMENTS IN SubSIDIARIESShares at cost: Issued share capitalMazor Aluminium (Pty) Ltd R200 21 012 660 21 012 660 Mazor Steel (Pty) Ltd R200 17 542 376 17 542 376 Compass Glass SA (Pty) Ltd R1 000 1 69 549 Compass Glass (Pty) Ltd R100 1 5 557 436 Mazor Properties (Pty) Ltd R100 100 100

38 555 138 44 182 121

All the subsidiaries are incorporated in South Africa and are 100% held by Mazor Group Ltd.

The carrying value of subsidiaries are shown at cost net of impairment losses.

The company’s investments in Compass Glass SA and Compass Glass were impaired by R5 626 983 during the current year.

The reason therefore was disclosed under the ‘Group results’ heading in the Directors’ Report.

The recoverable amount for the investments is determined using value-in-use calculations which is based on assumptions reflecting past experience. Value in use is determined by discounting the future cash flows generated from continuing use of the CGU using a discount rate. The key assumptions from the value-in-use calculations are as follows:

Discount rate: The discount rate is based on the company’s weighted average cost of capital between 12% and 15%

Discount period: 10 years

Revenue growth: Between 6% and 9% over the next 10 years

3 LONG-TERM RECEIVAbLESShare trustsMazor Group Ltd Share Incentive Trust 920 840 940 475 Mazor Group Ltd BEE Share Incentive Trust 430 214 439 564

1 351 054 1 380 039

SubsidiariesCompass Glass (Pty) Ltd 54 568 657 54 068 657 Compass Glass SA (Pty) Ltd 38 132 575 38 350 575 Provision for impairment (15 202 762) –

77 498 470 92 419 232 Total long-term receivables 78 849 524 93 799 271

The loans are unsecured and interest free and will not be repaid within the next 12 months.

Fair value of long-term receivablesThe loans have no fixed terms of repayment. Accordingly the fair value of the loans cannot be ascertained as the future cash flows cannot be reliably determined.

Credit quality of long-term receivables not impairedThe loans from the share trusts are assessed by management as recoverable and they will be reduced by dividends paid by the group in forthcoming years.


2015R

2014R

4 TRADE AND OThER RECEIVAbLESPrepayments 257 684 238 826

SARS tax receivable – 702

Other receivables 4 187 848 3 350 348

4 445 532 3 589 876

Credit quality of trade and other receivablesOther receivables comprise administration fees due by the subsidiaries of the company. The directors have assessed the receivables as fully recoverable, based on a review of the counterparties’ financial positions and future cash flow projections.

Fair value of trade and other receivablesThe trade and other receivables are carried at amortised cost which approximates their fair values due to the short-term nature of the instruments.

5 CASh AND CASh EquIVALENTSBank balances 426 737 353 054

Credit quality of cash and cash equivalentsThe group only deposits cash with major banks of high-quality credit standing and limits exposure to any one counterparty.

6 LOANS FROM SubSIDIARIESMazor Steel (Pty) Ltd 19 205 000 19 282 000

Mazor Properties (Pty) Ltd – 100

19 205 000 19 282 100

The loans are unsecured and interest free. There are no fixed terms of repayment.

The loans are recorded at cost as there is uncertainty as to the timing of future cash flows.

Fair value of loans from subsidiariesThe fair value of loans from subsidiaries cannot be reliably determined as there are no fixed terms of repayment.

7 TRADE AND OThER PAYAbLESAccounts payable 237 048 125 216

Accruals 23 333 23 333

Value added taxation 272 86 765

260 653 235 314

Fair value of trade and other payablesTrade and other payables are carried at amortised cost, with the fair value being approximated by such carrying value.

8 REVENuE Administration and management fees 3 660 000 4 286 000

68

COMPANY NOTES TO ThE ANNuAL FINANCIAL STATEMENTSfor the year ended 28 February 2015 (continued)

2015R

2014R

9 OPERATING LOSSOperating profit is arrived at after taking into account the following:

Depreciation

– Furniture and fittings – 709

Non-executive directors’ emoluments (refer to note 27 of the group AFS) 783 000 712 300

Impairment of loans 15 202 762 –

Impairment of investment in subsidiaries 5 626 983 –

10 INVESTMENT REVENuEInterest revenue

Bank 18 697 14 943

Other 3 612 914

22 309 15 857

Dividends

Dividends received from subsidiaries 10 692 137 5 832 075

10 714 446 5 847 932

11 TAxATIONMajor components of the tax expense

Current

Local income tax – current year 163 796 –

Deferred

Originating and reversing temporary differences 236 345 (640 953)

400 141 (640 953)

Reconciliation of the tax expenseReconciliation between the applicable tax rate and average effective tax rate.

Applicable tax rate (%) 28.00 28.00

Disallowable charges (%) (0.17) 0.06

Non-taxable income (%) 34.18 (20.15)

Deferred tax asset not raised (%) (66.58) –

Effective tax rate (%) (4.57) 7.91

12 DEFERRED TAxATIONDeferred taxation assets

Asset at the beginning of the year 236 345 877 296

Current year charge to the statement of comprehensive income (236 345) (640 951)

Asset at the end of the year – 236 345


Prepayments – (436)

Tax losses – 236 781

– 236 345


2015R

2014R

13 STATED CAPITAL Authorised

500 000 000 ordinary shares with no par value

Issued

121 501 553 (2014: 121 501 553) fully paid up ordinary shares with no par value 120 385 583 120 385 583

14 CASh GENERATED FROM OPERATIONSProfit before taxation (8 759 248) 8 104 142

Adjustments for:

Depreciation – 709

Interest received (22 309) (15 857)

Dividends received (10 692 137) (5 832 075)

Impairment of investment in subsidiary 5 626 983

Impairment of loan 15 202 762 –

Changes in working capital:

Increase in trade and other receivables (855 656) (1 092 370)

Increase/(Decrease) in trade and other payables 25 339 (560 780)

525 734 603 769

15 TAx PAIDBalance at the beginning of the year – –

Current tax for the year recognised in the SOCI (163 796) –

Balance at the end of the year 19 551 –

(144 245) –

16 CONTINGENCIES AND COMMITMENTSThe company has signed suretyships in favour of First National Bank for facilities granted to:• CompassGlass(Pty)LtdintheamountofR4million;and• CompassGlassSA(Pty)LtdintheamountofR1.75million.

Mazor Group Ltd provided unlimited, irrevocable, unconditional guarantee to Investec Ltd for the obligations of Compass Glass SA (Pty) Ltd in respect of forward cover.

The loan given by First National Bank to Compass Glass (Pty) Ltd has been secured by a general deed of suretyship to the value of R15 million by Mazor Group Ltd.

Mazor Group Ltd provided continuing suretyship to the extent of R11 million plus interest and costs over the mortgage bond provided to Mazor Properties (Pty) Ltd by Investec Ltd.

The above contingent liabilities have not been recognised as the directors consider the possibility that they will materialise into obligations of the company as being very remote.

70


2015R

2014R

17 RELATED PARTIESThe company has the following interests in subsidiaries:

– Mazor Steel (Pty) Ltd (100%)

– Mazor Aluminium (Pty) Ltd (100%)

– Compass Glass (Pty) Ltd (100%)

– Compass Glass SA (Pty) Ltd (100%)

– HBS Aluminium Systems (Pty) Ltd (100%)

– Mazor Properties (Pty) Ltd (100%)

The following entities are controlled structured entities, which are not material to the group:

– Mazor Group Ltd Share Incentive Trust

– Mazor Group Ltd BEE Share Incentive Trust

Related party balances

Loan accounts – owing (to) by related parties

– Mazor Steel (Pty) Ltd (19 205 000) (19 282 000)

– Mazor Properties (Pty) Ltd – (100)

– Compass Glass (Pty) Ltd 54 568 657 54 068 657

– Compass Glass SA (Pty) Ltd 38 132 575 38 350 575

– Mazor Group Ltd Share Incentive Trust 920 840 940 475

– Mazor Group Ltd BEE Share Incentive Trust 430 214 439 564

Amounts included in short-term receivables

– Compass Glass (Pty) Ltd 1 747 750 1 268 950

– Compass Glass SA (Pty) Ltd 2 440 100 2 081 400

Related party transactions

Administration fees received from related parties

– Mazor Steel (Pty) Ltd 720 000 645 000

– Mazor Aluminium (Pty) Ltd 840 000 885 000

– Compass Glass (Pty) Ltd 840 000 840 000

– Compass Glass SA (Pty) Ltd 600 000 1 256 000

– HBS Aluminium Systems (Pty) Ltd 660 000 660 000

Dividends received from related parties

– Mazor Steel (Pty) Ltd 10 692 137 5 832 075

Dividends paid to related parties

– Mazor Aluminium (Pty) Ltd 216 070 117 856

– Mazor Group Ltd Share Incentive Trust 19 635 6 999

– Mazor Group Ltd BEE Share Incentive Trust 9 350 8 811

Details of directors’ remuneration are disclosed under note 27 of the consolidated annual financial statements.


18 FINANCIAL RISK MANAGEMENTThe company has exposure to the following risks from its use of financial instruments:• liquidityrisk;and• creditrisk.The company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the company’s financial performance. This note presents information about the company’s exposure to each of the above risks, the company’s objectives, policies and processes for measuring and managing risk, and the company’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

The board of directors has overall responsibility for the establishment and oversight of the company’s risk management framework. The board has established the audit and risk committee, which assists the board in developing and monitoring the company’s risk management policies. The committee reports regularly to the board of directors on its activities.

Liquidity riskPrudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions.

The company’s risk to liquidity is a result of the funds available to cover future commitments. The company manages liquidity risk through an ongoing review of future commitments and credit facilities. The company has maintained a cash-positive position for many years.

The following table analyses the company’s financial liabilities into relevant maturity groupings. The amounts disclosed in the table are the contractual undiscounted cash flows.

The maturity profile of the recognised financial instruments represent the undiscounted cash flows that are expected to occur in the future.

<1 yearR

2 – 5 yearsR

>5 yearsR

TotalR

At 28 February 2015

Loans from subsidiaries 19 205 000 – – 19 205 000

Trade and other payables 260 381 – – 260 381

Bank sureties 20 382 613 20 382 613

39 847 994 – – 39 847 994

At 28 February 2014

Loans from subsidiaries 19 282 100 – – 19 282 100

Trade and other payables 148 549 – – 148 549

Bank sureties 25 207 114 25 207 114

44 637 763 – – 44 637 763

Credit risk Credit risk is the risk of financial loss to the company if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the company’s loans to subsidiaries.

72


19 CATEGORIES OF FINANCIAL INSTRuMENTSThe following accounting policies for financial instruments have been applied to the line items below:

Loans and receivables

RTotal

R

Assets as per the statement of financial position

2015

Long-term receivables 78 849 524 78 849 524


Cash and cash equivalents 426 737 426 737

83 464 109 83 464 109

2014

Long-term receivables 93 799 271 93 799 271


Cash and cash equivalents 353 054 353 054

97 502 673 97 502 673

Financial liabilities at amortised cost

RTotal

R

Liabilities as per the statement of financial position

2015

Loans from subsidiaries 19 205 000 19 205 000

Trade and other payables 260 381 260 381

19 465 381 19 465 381

2014

Loans from subsidiaries 19 282 100 19 282 100

Trade and other payables 148 549 148 549

19 430 649 19 430 649


ShAREhOLDER ANALYSIS

Register date: 27 February 2015Issued share capital: 121 501 553

Number of shareholders %

Number of shares %

Shareholder spread1 – 1 000 shares 93 25.13 50 472 0.051 001 – 10 000 shares 139 37.57 587 152 0.4810 001 – 100 000 shares 94 25.41 3 466 231 2.85100 001 – 1 000 000 shares 29 7.84 7 911 123 6.511 000 001 shares and over 15 4.05 109 486 575 90.11Total 370 100 121 501 553 100

Distribution of shareholdersBEE employee share trusts 1 0.27 125 000 0.10Brokers 5 1.35 2 232 643 1.84Close corporations 12 3.24 277 586 0.23Employee share trusts 1 0.27 262 500 0.22Endowment funds 1 0.27 182 364 0.15Individuals 279 75.41 28 192 828 23.20Insurance companies 2 0.54 49 208 0.04Mutual funds 9 2.43 11 224 594 9.24Nominees and trusts 27 7.30 38 974 048 32.08Other corporations 4 1.08 60 500 0.05Pension funds 12 3.24 2 281 982 1.88Private companies 16 4.32 31 484 874 25.91Treasury shares 1 0.27 6 153 426 5.06Total 370 100 121 501 553 100

Number of shareholdings %

Number of shares %

Public/Non-public shareholdersNon-public shareholders 15 4.05 82 574 447 67.96Directors’ holdings 11 2.97 69 036 515 56.82Associate holdings 1 0.27 6 997 006 5.76Treasury shares 1 0.27 6 153 426 5.06Employee share trust 1 0.27 262 500 0.22BEE employee share trust 1 0.27 125 000 0.10Public shareholders 355 95.95 38 927 106 32.04Total 370 100 121 501 553 100

Note: Associate holdings comprise the remaining shareholding of Cloudberry Investments 18 (Pty) Ltd which is not included in directors’ holdings.

Number of

shares %beneficial shareholders holding 5% or more The Elma Trust 19 000 000 15.64The Ati Trust 19 000 000 15.64Cloudberry Investments 18 (Pty) Ltd* 17 939 200 14.76Yonbor Nominees (Pty) Ltd 12 512 132 10.30S Mazor 7 469 231 6.15DJ Mazor 6 530 769 5.38Mazor Aluminium (Pty) Ltd 6 153 426 5.06

* With Clusten 54 (Pty) Ltd holding.

74

ShAREhOLDERS’ DIARY

Annual general meeting...................... Monday, 29 June 2015Interim reporting period .................................31 August 2015Interim report ................................................November 2015Financial year-end ......................................29 February 2016Annual report .........................................................May 2016

Santam, Tyger Valley


NOTICE OF ANNuAL GENERAL MEETING

This document is important and requires your immediate attention.

If you are in any doubt about what action you should take, consult your broker, Central Securities Depository Participant (‘CSDP’), legal adviser, banker, financial adviser, accountant or other professional adviser immediately.

If you have disposed of all your shares in Mazor Group Ltd, please forward this document, together with the enclosed form of proxy, to the purchaser of such shares or the broker, banker or other agent through whom you disposed of such shares.

Included in this document are:

• Thenoticeofmeeting,settingouttheresolutions to be proposed thereat, together with explanatory notes.

• Aproxyformforusebyshareholdersholding ordinary shares in the company in certificated form or recorded in sub-registered electronic form in ‘own name’ (which form must be lodged with the company’s transfer secretary, being Computershare Investor Services (Pty) Ltd), 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) to be received by no later than 10:00 on Thursday, 25 June 2015.

• Shareholderswhohavedematerialisedtheir shares and are not registered as ‘own name’ dematerialised shareholders who wish to attend the annual general meeting (‘AGM’), must instruct their Central Securities Depository Participant (‘CSDP’) or broker to provide them with the relevant letter of representation to enable them to attend such meeting or, alternatively, should they wish to vote but not to attend the AGM, they must provide their CSDP or broker with their voting instructions in terms of the relevant custody agreement entered into between them and the CSDP or broker. Such shareholders must not complete this form of proxy.

A shareholder (including certificated shareholders and dematerialised shareholders who hold their shares with ‘own name’

registration) entitled to attend and vote at the meeting may appoint one or more proxies to attend, participate and vote in his/her/its stead. A proxy does not have to be a shareholder of the company. The appointment of a proxy will not preclude the shareholder who appointed that proxy from attending the AGM and participating and voting in person thereat to the exclusion of any such proxy. A form of proxy for use at the meeting is attached.

Notice is hereby given to all shareholders of Mazor Group Ltd as at the record date set out below that the AGM of shareholders will be held at 10:00 on Monday, 29 June 2015 at the offices of Mazars at Mazars House, Rialto Road, Grand Moorings Precinct, Century City, 7441 to transact the following business:

To consider and, if thought fit, pass with or without modification, the following special and ordinary resolutions, as well as any matters raised by shareholders at this AGM, with or without advance notice, which may be transacted at an AGM as determined by the Companies Act No. 71 of 2008, as amended (the ‘Companies Act’), and as read with the Listings Requirements of the JSE Ltd (‘Listings Requirements’), which meeting is to be participated in and voted at by shareholders reflected in the share register as at the record date of Friday, 19 June 2015.

Identification of meeting participants: Kindly note that meeting participants (including proxies) are required to provide reasonably satisfactory identification before being entitled to attend or participate in a shareholders’ meeting. Forms of identification include valid identity documents, driver’s licences and passports.

When reading the resolutions below, please refer to the explanatory notes for AGM resolutions on page 15.

Presentation of financial statementsThe audited annual financial statements of the company for the year ended 28 February 2015 (as approved by the board of directors) and including the Directors’ Report, the Audit and Risk Committee Report and the external Auditor’s Report have been distributed as required and will be presented to shareholders.

The complete financial statements are set out on pages 25 to 73 of the integrated annual report.

ORDINARY RESOLuTIONSEach of the below ordinary resolutions requires the support of a simple majority (that is, 50% + 1) of the votes exercised in respect of each resolution in order to be adopted.

1 Ordinary resolution number one Receive and adopt annual financial

statements To receive and adopt the annual

financial statements for the year ended 28 February 2015 including the Directors’ Report and the report of the auditors thereon.

2 Ordinary resolution number two The appointment of the auditor of

the company The appointment of the auditor of the

company for the ensuing year ending 29 February 2016. To consider and, if deemed fit, to pass, without modification, the following ordinary resolution:

‘To reappoint, on recommendation of the audit committee,

2.1 Mazars as the auditors of the company, and

2.2 Mr Duncan Dollman is hereby appointed as the designated auditor to hold office for the ensuing year in compliance with the requirements of section 90(2) of the Companies Act No. 71 of 2008.’

3 Ordinary resolution number three The reappointment of Mr A Varachhia

as an independent non-executive director

‘To resolve that the reappointment of Mr A Varachhia as an independent non-executive director, who retires by rotation, but, being eligible, offers himself for re-election in accordance with the company’s memorandum of incorporation for a further term of office, be authorised and confirmed.’

(Mr A Varachhia was first appointed to the board in November 2007. A brief CV appears on page 9 of the integrated annual report.)

4 Ordinary resolution number four The reappointment of Mr A Groll as an

independent non-executive director ‘To resolve that the reappointment of

Mr A Groll as an independent non-executive director, who retires by rotation, but, being eligible, offers himself for re-election in accordance with the company’s memorandum of incorporation for a further term of office, be authorised and confirmed.’

(Mr A Groll was first appointed to the board in October 2007. A brief CV appears on page 9 of the integrated annual report.)

(Incorporated in the Republic of South Africa)Registration number: 2007/017221/06Share code: MZR ISIN: ZAE000109823

76

NOTICE OF ANNuAL GENERAL MEETING(continued)

5 Ordinary resolution number five The appointment of Mr A Groll as an

audit and risk committee member ‘To resolve that the appointment of

Mr A Groll as an audit and risk committee member, in the place of Mr A Darko who has resigned as independent non-executive director and member of the audit and risk committee, be authorised and confirmed.’

Mr A Groll is an independent non-executive director and has previously served on the audit and risk committee.

Information in respect of Mr A Groll is set out in page 9 of the integrated annual report 2015.

6 Ordinary resolution number six The reappointment of Mr M Kaplan as

an audit and risk committee member ‘To resolve that the reappointment

of Mr M Kaplan as an audit and risk committee member be authorised and confirmed.’

Information in respect of Mr M Kaplan is set out on page 8 of the integrated annual report 2015.

Shareholders are advised of the dual role performed by Mr M Kaplan as chairman of the board and member of the audit and risk committee and which fact is disclosed in the section ‘Non-compliance with the Code’ in the group’s integrated annual report.

7 Ordinary resolution number seven The reappointment of Mr F boner as

an audit and risk committee member ‘To resolve that the reappointment

of Mr F Boner as an audit and risk committee member, be authorised and confirmed.’

Information in respect of Mr F Boner is set out on page 9 of the integrated annual report 2015.

8 Ordinary resolution number eight Fees paid to directors ‘To resolve that the fees paid to the

directors of the company in respect of the year ended 28 February 2015, as set out in the annual financial statements on page 50, be approved.’

9 Ordinary resolution number nine The adoption of this ordinary resolution is

subject to the support of at least 75% of the votes cast in favour by shareholders present or represented by proxy at this meeting in order to be adopted.

General authority to issue shares for cash

‘Resolved that the directors be given the general authority to issue unissued shares of a class already in issue, for cash, when the directors consider it appropriate in the circumstances, subject to the provisions of the company’s memorandum of incorporation, the companies Act No. 71 of 2008 and the JSE Listings Requirements.’

10 Ordinary resolution number ten General payments ‘To resolve that, in terms of the

memorandum of incorporation and subject to the provisions of the Companies Act No. 71 of 2008 and the JSE Listings Requirements, the directors of the company shall be entitled, from time to time, to pay by way of a reduction of share premium, capital distributions to shareholders of the company in lieu of a dividend. Such distributions shall be made pro rata to all shareholders and be amounts equal to the amounts which the directors would have declared and paid out of profits of the company as interim and final dividends in respect of the financial year ending 28 February 2015. This authority shall not extend beyond the date of the annual general meeting following the date of the annual general meeting at which this resolution is being proposed or 15 months from the date of the resolution, whichever is shorter.’

It is the intention of the company and/or any of its subsidiaries to utilise the general authority to make a general payment to shareholders, if at some future date the cash resources of the company are in excess of its requirements. In this regard the directors will take account of, inter alia, appropriate capitalisation structures for the company, the long-term cash needs of the company and will ensure that any such payments are in the interests of shareholders.

The method by which the company intends to make general payments to shareholders in terms of a general authority and the date on which such payments will take place has not yet been determined.

11 Ordinary resolution number eleven Control of authorised but unissued

shares ‘To resolve that all the unissued shares

in the authorised share capital of the company be and are hereby placed

under the control of the directors of the company, who are authorised to allot and issue the same to such persons and on such terms and conditions as they may determine in their sole and absolute discretion, subject to the provisions of the Companies Act No. 71 of 2008 and the JSE Listings Requirements.’

12 Ordinary resolution number twelve Directors’ or company secretary’s

authority to implement special and ordinary resolutions

To consider and, if deemed fit, to pass, without modification, the following ordinary resolution:

‘Resolved as an ordinary resolution that each and every director of the company or the company secretary be and is hereby authorised to do all such things and sign all such documents as may be necessary for or incidental to the implementation of the resolutions passed at this meeting.’

SPECIAL RESOLuTIONS Each of the special resolutions below

require the support of at least 75% of the votes cast by shareholders or represented by proxy at this meeting, in respect of each resolution in order to be adopted.

13 Special resolution number one Repurchase of shares The board of directors of the

company has considered the impact of a repurchase of up to 20% of the company’s shares, which falls within the amount permissible under a general authority in terms of the JSE Listings Requirements, the company’s memorandum of incorporation and in compliance with the Companies Act No. 71 of 2008.

Should the opportunity arise and should the directors deem it to be advantageous to the company to repurchase such shares, it is considered appropriate that the directors (and relevant subsidiaries) be authorised to repurchase the company’s shares.

‘Resolved that the company is authorised to repurchase or purchase, as the case may be, shares issued by the company, upon such terms and conditions and in such number as the directors of the company may from time to time determine, including that such securities be purchased or repurchased from share premium, but subject to the applicable requirements of the company’s


memorandum of incorporation, the Companies Act No. 71 of 2008 and the JSE Listings Requirements, each as presently constituted and as amended from time to time; and subject further to the restriction that the repurchase or purchase, as the case may be, by the company, of shares in the company of any class under this authority shall not, in aggregate in any one financial year, exceed 20% of the shares in issue in such class as at the commencement of such financial year.’

For the purpose of considering the special resolution, and in compliance with paragraph 11.26 of the JSE Listings Requirements, the information listed below has been included in the annual report, in which this notice of AGM is included, at the places indicated:

• directorsandmanagement–refertopages 8 and 9 of the integrated report;

• majorshareholders–refertopage 73of the integrated report;

• directors’interestsinsecurities–referto page 29 of the integrated report;

• sharecapitalofthecompany–refertopage 50 of the integrated report; and

• thedirectors,whosenamesaresetout on pages 8 and 9 of this report, collectively and individually accept full responsibility for the accuracy of the information contained in this special

resolution and certify that, to the best of their knowledge and belief, there are no other facts of which the omission would make any statement false or misleading and that they have made all reasonable enquiries in this regard.

There are no legal arbitration proceedings (including any such proceedings that are pending or threatened of which the company is aware), which may have or have had a material effect on the company’s financial position over the last 12 months.

At the date of completing this notice there have been no material changes in the financial or trading position of the company and its subsidiaries that have occurred since 28 February 2015.

At the present time the directors have no specific intention with regard to the utilisation of this authority, which will be used only if the circumstances are appropriate.

A general repurchase of the company’s shares shall only take place after the JSE has received written confirmation from the company’s sponsor in respect of the directors’ working capital statement.

To the extent any repurchase is effected in terms of this authorisation, the company will only do so if:

• thecompanyandthegroupwillbeablein the ordinary course of business to pay its debts for a period of 12 months after the date of the notice of the annual general/general meeting;

• theassetsofthecompanyandthe group will be in excess of the liabilities of the company and the group for a period of 12 months after the date of the notice of the annual general/general meeting. For this purpose the assets and liabilities should be recognised and measured in accordance with the accounting policies used in the latest audited annual group financial statements;

• sharecapitalandreservesofthecompany and the group will be adequate for ordinary business purposes for a period of 12 months after the date of the notice of the annual general/general meeting;

• workingcapitalofthecompanyandthe group will be adequate for ordinary business purposes for a period of 12 months after the date of the notice of the annual general/general meeting; and

• aresolutionbytheboardofdirectorsthat they authorised the repurchase, that the company passed the solvency and liquidity test and that, since the test was done, there have been no material changes to the financial position of the group.

14 Special resolution number two Directors’ fees ‘Resolved that the company be and is hereby authorised, in terms of the Companies Act No. 71 of 2008, to pay remuneration to its directors for

their services as directors:

For a period of two years from the passing of this resolution (unless such remuneration is proposed to be amended at next year’s AGM), on the terms set out below.

From 1 July 2015:

Monthly feeR

Board meeting

Fee per meetingR

Audit and risk committee

Fee per meetingR

Remuneration and nomination committee

Fee per meetingR

Social and ethics committee

Fee per meetingR

Chairman 13 000 13 000 13 000 12 000 10 000

Member 10 000 10 000 10 000 9 000 7 500’

78

NOTICE OF ANNuAL GENERAL MEETING(continued)

the memorandum of incorporation provides otherwise, the election of directors is to be conducted as a series of votes, each of which is on the candidacy of a single individual to fill a single vacancy.

Explanatory note on special resolution number three

The reason for and the effect of special resolution number three is to approve the authority of the company’s directors to provide financial assistance to directors and to all subsidiary, related and interrelated companies within the Mazor Group of companies.

Election of the audit and risk committee members – ordinary resolutions numbers five, six and seven

In terms of the Companies Act No. 71 of 2008 the audit committee is no longer a committee of the board, but a committee elected by the shareholders at each AGM.

The audit committee, acting as a collective, should be adequately skilled to perform its role having regard to the size and circumstances of the company. In accordance with regulation 42 of the Companies Regulations, 2011, at least one-third of the shareholders of the company’s audit and risk committee at any particular time must have academic qualifications or experience, in economics, law, corporate governance, finance, accounting, commerce, industry, public affairs or human resource management.

The directors, whose names are given on pages 8 and 9 of the integrated annual report in which this notice was included, collectively and individually accept full responsibility for the accuracy of the information given in this notice and

certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the annual report and notice contains all information required by law and the Listings Requirements.

There has been no material change in the financial or trading position of the company and its subsidiaries that has occurred since 28 February 2015.

PARTICIPATION IN MEETING ELECTRONICALLY

Shareholders may participate (but not vote) in the AGM via teleconference, details of which are available from Mr I Bloom. Access to the meeting by way of electronic participation will be at the shareholder’s expense. However, only persons physically present at the AGM or represented by a valid proxy will be entitled to cast a vote on any matter put to a vote of shareholders.

By order of the board

IM bloom Company Secretary

Registered office: 8 Monza Road Killarney Gardens, 7441 (PO Box 60635, Table View, 7439)

Sponsor: Bridge Capital Advisors (Pty) Ltd

15 Special resolution number three Financial assistance To consider and, if deemed fit, to pass,

without modification, the following special resolution:

‘Resolved as a special resolution, in accordance with section 45(2) and 45(3) of the Companies Act No. 71 of 2008, it is hereby resolved that the directors of the company be and they are hereby authorised to provide direct or indirect financial assistance to a director or prescribed officer of the company or of a related or interrelated company, or to a related or interrelated company or corporation, or to a member of a related or interrelated corporation, or to a person related to any such company, corporation, director, prescribed officer or member, subject to subsections (3) and (4) of the Companies Act No. 71 of 2008 and the Listings Requirements of the JSE Ltd (“JSE Listings Requirements”); and resolved further, in accordance with section 44(2) and 44(3) of the Companies Act No. 71 of 2008, the company’s board of directors be and they are hereby authorised to provide financial assistance by way of a loan, guarantee, the provision of security or otherwise to any person for the purpose of, or in connection with, the subscription of any option, or any shares, issued or to be issued by the company or a related or interrelated company, or for the purchase of any shares of the company or a related or interrelated company, subject to subsection (3) of the Companies Act No. 71 of 2008 and the JSE Listings Requirements.’

ExPLANATORY NOTESAppointment of directors – ordinary resolutions numbers three and four

In terms of section 68(2) of the Companies Act No. 71 of 2008, unless

FORM OF PROxY

FOR uSE AT ThE ANNuAL GENERAL MEETING OF ThE COMPANY TO bE hELD AT 10:00 ON MONDAY, 29 JuNE 2015 AT ThE OFFICES OF MAzARS,

MAzARS hOuSE, RIALTO ROAD, GRAND MOORINGS PRECINCT, CENTuRY CITY, 7441 AND AT ANY ADJOuRNMENT ThEREOF.

For use by the holders of the company’s certificated ordinary shares (‘certificated shareholder’) and/or dematerialised ordinary shares held through a

Central Securities Depository Participant (‘CSDP’) who have selected own name registration (‘own name’ dematerialised shareholders).

Not for the use by holders of the company’s dematerialised ordinary shares who are not own name dematerialised shareholders. Such shareholders must

contact their CSDP or broker timeously if they wish to attend and vote at the annual general meeting and request that they be issued with the necessary

authorisation to do so, or provide the CSDP or broker timeously with their voting instructions should they not wish to attend the annual general meeting in

order for the CSDP or broker to vote thereat in accordance with their instructions.

I/We ______________________________________________________________________________________ (full name in block letters)

Of ___________________________________________________________________________________________ please print address)

being a shareholder of Mazor Group Ltd and holding _____________________________________ ordinary shares in the company, hereby appoint

1 ____________________________________________________________________________________________ of or failing him/her

2 ____________________________________________________________________________________________ of or failing him/her

3 the chairman of the annual general meeting,

as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held for the purpose of considering and, if deemed

fit, passing, with or without modification, the ordinary resolutions to be proposed thereat and at any adjournment thereof; and to vote for and/or against

the ordinary resolutions and/or abstain from voting in respect of the Mazor Group ordinary shares registered in my/our name(s), in accordance with the

following instructions:

For Against Abstain

Ordinary resolution number one – Receive and adopt the annual financial statements

Ordinary resolution number two – Reappointment of the auditor of the company

Ordinary resolution number three – Reappointment of Mr A Varachhia as an independent non-executive director

Ordinary resolution number four – Reappointment of Mr A Groll as an independent non-executive director

Ordinary resolution number five – Appointment of Mr A Groll as an audit and risk committee member

Ordinary resolution number six – Reappointment of Mr M Kaplan as an audit and risk committee member

Ordinary resolution number seven – Reappointment of Mr F Boner as an audit and risk committee member

Ordinary resolution number eight – The fees paid to directors

Ordinary resolution number nine – General authority to issue shares for cash

Ordinary resolution number ten – General payments

Ordinary resolution number eleven – Control of authorised but unissued shares

Ordinary resolution number twelve – Directors’ or company secretary’s authority to implement special and ordinary resolutions

Special resolution number one – Repurchase of shares

Special resolution number two – Directors’ fees

Special resolution number three – Financial assistance

Please indicate with an ‘X’ in the appropriate spaces above how you wish your votes to be cast.

Unless otherwise instructed, my/our proxy may vote as he/she thinks fit.

Signed at ___________________________________________________ on ___________________________________________ 2015.

Member’s signature ______________________________________________________________________________________________

Assisted by (if applicable) __________________________________________________________________________________________

Please read the notes on the reverse side.

(Incorporated in the Republic of South Africa)Registration number: 2007/017221/06

Share code: MZR ISIN: ZAE000109823

NOTES

relevant number of votes exercisable by

that member in the appropriate box(es)

provided. Failure to comply with the

above will be deemed to authorise the

chairman of the annual general meeting,

if the chairman is the authorised proxy, to

vote in favour of the ordinary resolutions

at the annual general meeting, or any

other proxy to vote or to abstain from

voting at the annual general meeting as

he/she deems fit, in respect of all the

member’s votes exercisable thereat.

6 A member or his/her proxy is not

obliged to vote in respect of all the

ordinary shares held by such member

or represented by such proxy, but the

total number of votes for or against the

ordinary resolutions and in respect of

which any abstention is recorded may not

exceed the total number of votes to which

the member or his/her proxy is entitled.

7 Documentary evidence establishing the

authority of a person signing this form of

proxy in a representative capacity must

be attached to this form of proxy, unless

previously recorded by the company’s

transfer office or waived by the chairman

of the annual general meeting.

8 The chairman of the annual general

meeting may reject or accept any form of

proxy which is completed and/or received

other than in accordance with these

instructions, provided that he is satisfied

as to the manner in which a member

wishes to vote.

9 Any alterations or corrections to this

form of proxy must be initialled by the

signatory(ies).

10 The completion and lodging of this form

of proxy will not preclude the relevant

member from attending the annual

general meeting and speaking and voting

in person thereat to the exclusion of any

proxy appointed in terms hereof, should

such member wish to do so.

11 A minor must be assisted by his/her

parent or guardian unless the relevant

documents establishing his/her legal

capacity are produced or have been

registered by the company’s transfer

secretaries.

12 Where there are joint holders of any

shares only that holder whose name

appears first in the register in respect of

such shares need sign this form of proxy.

13 Forms of proxy must be lodged with

the transfer secretaries at the address

given below by no later than 10:00 on

Thursday, 25 June 2015:

TRANSFER SECRETARIESComputershare Investor Services (Pty) Ltd

Ground Floor, 70 Marshall Street

Johannesburg, 2001

PO Box 61051, Marshalltown, 2107

Telefax: 011 688 5200

1 This form proxy is to be completed only

by those members who are:

(a) holding shares in a certificated form; or

(b) recorded in the sub-register in

electronic form in their ‘own name’.

2 Members who have dematerialised

their shares, other than own name

dematerialised shareholders, and who

wish to attend the annual general meeting

must contact their Central Securities

Depository Participant (‘CSDP’) or broker

who will furnish them with the necessary

authority to attend the annual general

meeting, or they must instruct their CSDP

or broker as to how they wish to vote in

this regard. This must be done in terms of

the agreement entered into between the

members and their CSDP or broker.

3 Each member is entitled to appoint one

or more proxies (who need not be a

member(s) of the company) to attend,

speak and, on a poll, vote in place of that

member at the annual general meeting.

4 A member may insert the name of a

proxy or the names of two alternative

proxies of the member’s choice in the

space provided, with or without deleting

‘the chairman of the annual general

meeting’. The person whose name stands

first on the form of proxy and who is

present at the annual general meeting

will be entitled to act as proxy to the

exclusion of those whose names follow.

5 A member’s instructions to the proxy

must be indicated by the insertion of the

CORPORATE INFORMATION

MAzOR GROuP LTD(Incorporated in the Republic of South Africa)

Registration number: 2007/017221/06

Share code: MZR

ISIN: ZAE000109823

REGISTERED OFFICE8 Monza Road

Killarney Gardens, 7441

PO Box 60635, Table View, 7439

Telephone: +27 21 556 1555

Date of incorporation: 26 June 2007

REPORTING ACCOuNTANTS AND AuDITORSMazars

Mazars House

Rialto Road, Grand Moorings Precinct

Century City, 7441

PO Box 134, Century City, 7446

Telephone: +27 21 818 5000

COMMERCIAL bANKERFirst National Bank Ltd

Registration number: 1929/001225/06

Corner Cumberland and Industry Roads

Paarden Eiland, 7405

PO Box 14, Paarden Eiland, 7420

Telephone: +27 21 511 7063

COMPANY SECRETARYIvor Mark Bloom (ACIS)

12B Quarry Close, Kruis Road

Brackenfell, 7560

PO Box 605, Parow, 7499

Telephone: +27 21 981 4300

SPONSORBridge Capital Advisors (Pty) Ltd

2nd Floor, 27 Fricker Road

Illovo Boulevard

Illovo, 2196

PO Box 651010, Benmore, 2010

Telephone: +27 11 268 6231

ATTORNEYSWebber Wentzel Bowens

10 Fricker Road

Illovo Boulevard

Illovo, 2196


Telephone: +27 11 530 5000

TRANSFER SECRETARIESComputershare Investor Services (Pty) Ltd

Ground Floor, 70 Marshall Street

Johannesburg, 2001


Telephone: +27 11 370 5000

8 Monza Road

Killarney Gardens, 7441

PO Box 60635, Table View, 7439

Telephone: +27 21 556 1555

www.mazorgroup.co.za

integrated annual report 2015 - mazor …...mazor integrated annual report 2015 5 2015 r 2014 r 2013...

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