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MAS
MAS
MAS - Masonite (Africa) Limited - Audited results for the 12 months ended 31
December 2007
MASONITE (AFRICA) LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1942/015502/06)
Share code: MAS ISIN: ZAE000004289
("Masonite" or "the company")
AUDITED RESULTS FOR THE 12 MONTHS ENDED 31 DECEMBER 2007
Revenue up 16.3%. Net asset value per share: 3548 cents (2006: 3540 cents).
Condensed income statement
12 months to
December 31 2007 December 31 2006
(Restated)
Group and company Notes (R000`s) (R000`s)
Revenue 502212 431962
Cost of sales (370070) (316852)
Gross profit 132142 115110
Other operating income 3593 1231
Distribution expenses (59477) (56286)
Selling and marketing
expenses (12231) (11895)
Administrative expenses (10978) (10868)
Other operating expenses (10880) (12137)
Trading income 42169 25155
Fair value adjustment of
biological assets 15238 6487
Operating profit before
financing income/(expense) 57407 31642
Finance income 3408 1069
Finance expense (1673) (1583)
Profit before tax 59142 31128
Income tax expense 5 (20368) (9562)
Net profit for the year
attributable to ordinary
shareholders 38774 21566
Earnings per share (cents)
Basic 548 308
Diluted 545 304
Headline earnings
Reconciliation of headline
earnings
Profit for the year 38774 21566
Adjusted for:
Loss/(profit) on disposal
of assets 140 (64)
Tax effect of loss/
(profit)on disposal of
assets (41) 19
Headline earnings 38873 21521
Headline earnings per share (cents)
Basic 549 307
Diluted 546 303
Dividends per share (cents) 504 63
Weighted average number of shares 7078000 6969000
Condensed balance sheet
December 31 December 31
2007 2006
(Restated)
Group and company Notes (R000`s) (R000`s)
Assets
Non-current assets
Property, plant and equipment 97663 98130
Intangible assets 493 728
Biological assets 2 133808 118570
Deferred tax assets 8500 8038
Investments 30 30
Total non-current assets 240494 225496
Current assets
Inventories 48277 41429
Trade and other receivables 63365 59594
Amounts due from fellow subsidiaries 509 1031
Cash and cash equivalents 57412 40150
Tax receivable - 3017
Total current assets 169563 145221
Total assets 410057 370717
Equity
Capital and reserves
Share capital 3 3556 3518
Share premium 3 3113 2837
Non-distributable reserves 3 700 700
Retained earnings 244964 242005
Total equity 252333 249060
Liabilities
Non-current liabilities
Deferred tax liabilities 55259 50517
Post retirement benefit obligation 4 19537 18347
Straight lining lease accrual 98 55
Total non-current liabilities 74894 68919
Current liabilities
Trade and other payables 49071 47802
Shareholders for dividends 25035 -
Provisions 4751 4186
Amounts payable to fellow subsidiaries 1766 701
Tax payable 2187 -
Straight lining lease accrual 20 49
Total current liabilities 82830 52738
Total equity and liabilities 410057 370717
Condensed cash flow statement
12 months to
Group and company December 31 December 31
2007 2006
(R000`s) (R000`s)
Cash flow from operating activities
Cash generated from operations 48440 47207
Finance income 3024 990
Finance expense (1673) (1583)
Taxation paid (10884) (7689)
Net cash generated from operating activities 38907 38925
Cash flow from investing activities
Additions to property, plant and equipment - (58)
Replacement of property, plant and equipment (11683) (9491)
Proceeds from disposal of property, plant and
equipment 19 184
Loan repayments received from related parties - 42
Net cash outflow from investing activities (11664) (9323)
Cash flow from financing activities
Issue of share capital 314 548
Dividends paid (10780) (4428)
Net cash outflow from financing activities (10466) (3880)
Net increase in cash and cash equivalents 16777 25722
Effects of exchange rates on the balance of
cash held in foreign currencies 485 (397)
Net cash and cash equivalents at the beginning
of the year 40150 14825
Cash and cash equivalents at the end of the year 57412 40150
Statement of changes in equity
Non-
Share Share distributable
capital premium reserves
Group and company Notes (R000`s) (R000`s) (R000`s)
Balance at 1 January 2006
As previously reported 3450 2357 700
Effect of prior year
restatement 7(iv)
Effect of restatement in 7(iv)
fair value of biological
assets
Related deferred tax
Restated balance at 1
January 2006 3450 2357 700
Issue of share capital 68 480
Net profit for the year
attributable to ordinary
shareholders
As previously reported
Effect of restatement in 7(ii)
fair value of biological 7(ii)
assets
Related deferred tax
Dividends paid
Restated balance at 31
December 2006 3518 2837 700
Issue of share capital 38 276
Net profit for the year
attributable to ordinary
shareholders
Dividends declared and paid
Final
Interim
Dividends declared
Special
Balance at 31 December 2007 3556 3113 700
Total
attributable
Retained to ordinary
earnings shareholders
Group and company (R000`s) (R000`s)
Balance at 1 January 2006
As previously reported 213687 220194
Effect of prior year restatement
Effect of restatement in fair value of
biological assets 15747 15747
Related deferred tax (4567) (4567)
Restated balance at 1 January 2006 224867 231374
Issue of share capital - 548
Net profit for the year attributable to ordinary
shareholders 21566 21566
As previously reported 20505 20505
Effect of restatement in fair value of
biological assets 1494 1494
Related deferred tax (433) (433)
Dividends paid (4428) (4428)
Restated balance at 31 December 2006 242005 249060
Issue of share capital - 314
Net profit for the year attributable to ordinary
shareholders 38774 38774
Dividends declared and paid
Final (6939) (6939)
Interim (3841) (3841)
Dividends declared
Special (25035) (25035)
Balance at 31 December 2007 244964 252333
Segmental analysis
Primary reporting - business segments
Mill Forestry Other Total
Group and company - 2007 (R000`s) (R000`s) (R000`s) (R000`s)
Segment income statement
Total gross revenue 439479 79384 1401 520264
Inter - segment revenue - (18052) - (18052)
Revenue 439479 61332 1401 502212
Segment trading income 50638 8395 1401 60434
Other operating income - - 3593 3593
Fair value adjustment
of biological assets - 15238 - 15238
Segment results 50638 23633 4994 79265
Administration expenses (10978)
Other operating expenses (10880)
Operating profit before
financing
income/(expense) 57407
Finance income 3408
Finance expense (1673)
Profit before tax 59142
Income tax expense (20368)
Net profit attributable
to ordinary
shareholders 38774
Mill Forestry Other Total
(Restated) (Restated)
Group and company - 2006 (R000`s) (R000`s) (R000`s) (R000`s)
Total gross revenue 367078 75689 1345 444112
Inter - segment revenue - (12150) - (12150)
Revenue 367078 63539 1345 431962
Segment trading income 42537 3047 1345 46929
Other operating income 507 - 724 1231
Fair value adjustment
of biological assets - 6487 - 6487
As previously reported - 4993 - 4993
Effect of restatement
in fair value of
biological assets - 1494 - 1494
Segment results 43044 9534 2069 54647
Administration expenses (10868)
Other operating expenses (12137)
Operating profit before
financing
income/(expense) 31642
Finance income 1069
Finance expense (1583)
Profit before tax 31128
Income tax expense (9562)
Net profit attributable
to ordinary
shareholders 21566
Secondary reporting - geographical segments
Domestic Exports Total
2007 2006 2007 2006 2007 2006
Group and company (R000`s) (R000`s) (R000`s) (R000`s) (R000`s) (R000`s)
Revenue 448610 362118 53602 69844 502212 431962
Abbreviated notes to audited consolidated results for the year ended 31 December
2007
1. Basis of preparation
The audited annual financial statements of the Group for the year ended
December 31, 2007 have been prepared in accordance with the Group`s accounting
policies, which are consistent with those of the prior year, except for the
following changes:
Adoption of IFRS 7: Financial Instruments Disclosure
Adoption of IAS 1: Presentation of Financial Statements - Amendments to add
disclosures amount an entity`s capital.
Those financial statements comply with International Financial Reporting
Standards (IFRS). The condensed financial statements are in accordance with IAS
34: Interim Financial Reporting; Schedule 4 of the South African Companies Act
and the disclosure requirements of the JSE Limited listing requirements.
2. Biological assets
Land, logging roads and related facilities are accounted for under property,
plant and equipment. Trees and sugar cane are generally felled at the optimum
age when ready for their intended use. After harvest, timber to be utilised at
the Mill is accounted for under inventories.
Timber and sugar cane are accounted for as biological assets. Biological assets
are stated at fair value with any resultant gain or loss recognised in the
income statement.
Timber plantations
The Group owns timber plantations which it operates in order to supply the mill
at Estcourt with its primary raw material.
The fair value of plantations incorporates:
Newly planted or re-grown areas, which are valued on initial recognition.
Fair value represents the establishment cost of new plantations or the costs
associated with allowing recently felled plantations to re-grow.
Immature timber (aged zero to seven years), which is valued at fair value, using
the higher of the fair value on initial recognition of newly planted or re-grown
areas or the market price of the estimated wood volumes, net of harvesting and
transport costs and discounted at an appropriate factor to account for its
unsuitability for board production.
Mature timber (aged seven years and older), which is reflected at fair value,
based on the market price of the estimated wood volumes, net of harvesting and
transport costs.
Sugar cane
Sugar cane has been planted in areas unsuitable for timber, in order to use the
land productively.
The fair value of sugar cane comprises two elements:
Cane roots, which are valued at fair value based on current replacement cost of
planting and establishment reduced to reflect the remaining estimated productive
harvests (which can vary between six to eight cuttings depending on yields).
Standing cane, which is valued at fair value based on estimated sucrose content,
age and market price, less estimated harvesting and transport costs. The value
of immature cane (generally less than 18 months old) is discounted at an
appropriate factor to account for any non-marketable volume.
Biological assets at 31 December:
2007 2006
(Restated)
(R 000`s) (R 000`s)
Timber and sugar cane establishment costs 22148 20039
Timber and sugar cane - immature 26033 23870
Timber and sugar cane - mature 85627 74661
133808 118570
The increase in fair value of biological assets of R15.3 million (2006: R6.5
million) is largely attributable to higher timber prices.
3. Capital and reserves
Number Ordinary Share
of shares shares premium Total
Issued: (R000`s) (R000`s) (R000`s)
At 1 January 2006 6900224 3450 2357 5807
Employee share option scheme:
Issue of share capital 135334 68 480 548
At 31 December 2006 7035558 3518 2837 6355
Employee share option scheme:
Issue of share capital 76667 38 276 314
At 31 December 2007 7112225 3556 3113 6669
4. Retirement benefit obligation
The Group provides post-retirement medical benefits to retired employees. The
liability in respect of post-retirement medical benefit is actuarially valued
at R19.5 million (2006: R18.3 million). Actuarial gains or losses in respect of
post-retirement medical benefits are recognised as income or expense if the net
cumulative unrecognised actuarial gains or losses at the end of the previous
reporting period exceed 10% of the present value of the post-retirement medical
benefit obligation at that date.
5. Income tax expense
Recognised in the income statement 12 months to
December 31 December 31
2007 2006
Current tax expense 12333 3988
Deferred tax expense 4280 5004
Secondary tax expense 3755 553
Capitals gains tax - 17
Total 20368 9562
6. Capital commitments
at December 31 at December 31
2007 2006
Commitments in respect of capital
expenditure:
Contracted for - 190
Authorised but not contracted for 472 4205
4395
7. Restatement in fair value of biological assets
The Group now accounts for newly planted or re-grown plantations at fair value
on initial recognition and for cane roots at fair value based on current
replacement cost of planting and establishment reduced to reflect the remaining
estimated productive harvests.
The effect of these changes has been adjusted in prior year figures as follows:
i) Restatement in fair value of biological assets
Group and company Establishment Immature Mature Total
costs
(R000`s) (R000`s) (R000`s) (R000`s)
Timber
Previously reported
value of biological assets:
As at 1 January 2006 - 24561 69793 94354
Effect of restatement
in fair value of
timber 15137 (2201) - 12936
Restated value of
timber at 1 January 2006 15137 22360 69793 107290
Timber
Previously reported
value of biological assets:
As at 31 December 2006 - 24949 73620 98569
Effect of restatement
in fair value of timber 18125 (2798) - 15327
Restated value of
timber at 31 December 2006 18125 22151 73620 113896
Sugar cane
Previously reported
value of biological assets:
As at 1 January 2006 - 1398 584 1982
Effect of restatement
in fair value of sugar cane 2111 700 - 2811
Restated value of
sugar cane at 1
January 2006 2111 2098 584 4793
Sugar cane
Previously reported
value of biological assets:
As at 31 December 2006 - 1719 1041 2760
Effect of restatement
in fair value of sugar cane 1914 - - 1914
Restated value of
sugar cane at 31
December 2006 1914 1719 1041 4674
Timber and sugar cane
Previously reported
value of biological assets:
As at 1 January 2006 - 25959 70377 96336
Effect of restatement
in fair value of
timber and sugar cane 17248 (1501) - 15747
Restated value of
timber and sugar cane
at 1 January 2006 17248 24458 70377 112083
Timber and sugar cane
Previously reported
value of biological assets:
As at 31 December 2006 - 26668 74661 101329
Effect of restatement
in fair value of
timber and sugar cane 20039 (2798) - 17241
Restated value of
timber and sugar cane
at 31 December 2006 20039 23870 74661 118570
2006
Group and company (R000`s)
ii) Restatement of previously reported results
Previously reported net profit for the year attributable to
ordinary shareholders 20505
Effect of restatement in fair value of biological assets 1494
Related deferred tax (433)
Restated net profit for the year attributable to ordinary
shareholders 21566
iii) Effect on earnings per share
Group and company 2006
cents
per chare
Basic earnings
Previously reported earnings per share 294
Effect of restatement in fair value of biological assets 19
Related deferred tax (5)
Restated basic earnings per share 308
Diluted earnings
Previously reported earnings per share 289
Effect of restatement in fair value of biological assets 21
Related deferred tax (6)
Restated diluted earnings per share 304
Basic headline earnings
Previously reported earnings per share 294
Effect of restatement in fair value of biological assets 18
Related deferred tax (5)
Restated basic headline earnings per share 307
Diluted headline earnings
Previously reported earnings per share 288
Effect of restatement in fair value of biological assets 22
Related deferred tax (7)
Restated diluted headline earnings per share 303
iv) Restatement of retained earnings at the beginning of the year
1 January 2006
Group and company (R000`s)
Previously reported 213687
Effect of restatement in fair value of biological assets 15747
Related deferred tax (4567)
Restated retained earnings at the beginning of the year 224867
8. Subsequent events
In his budget speech on 20 February 2008, the Minister of Finance announced that
the corporate tax rate will be reduced from 29% to 28%. The impact of the tax
rate reduction on the deferred tax balance will be R1.6 million.
No other material fact or circumstance has occurred between the year end and the
date of this report.
9. Related party transactions
Details of transactions and balances between the Group and other related parties
are disclosed in the annual report.
10. Audited annual financial statements
The auditors, Deloitte & Touche, have issued their opinion on the Group`s
financial statements for the year ended December 31, 2007. The audit was
conducted in accordance with International Standards on Auditing. They have
issued an unmodified audit opinion. A copy of their audit report is available
for inspection at the company`s registered office. These summarised financial
statements have been derived from the Group financial statements and are
consistent in all material respects, with the Group financial statements.
Commentary
Revenue increased by 16.3% to R502.2 million (2006: R431.9 million), while
trading income was 67.6% higher at R42.2 million (2006: R 25.2 million).
Headline earnings increased by 80.6% to R38.9 million after adjustment for
increase in fair value of biological assets.
This improvement was mainly attributable to higher domestic sales volumes and a
more favourable domestic product mix. The favourable timber valuation adjustment
(IAS 41 - Agriculture) was largely attributable to an increase in timber prices.
The Estcourt mill and the forestry division turned in excellent operational
performances, and continued to reach the highest standards in the area of
safety, health and environmental practices. Cash management was sound throughout
the year resulting in the Group ending the year R57.4 mill cash positive (2006:
R40.2 million).
Growth forecasts for the economy for 2008 have been moderated by the interest
rate hikes and the negative electrical power issues. In spite of this, the
company`s order book is healthy, and the continued Government expenditure on
infrastructure and housing should have a positive effect on earnings.
Annual General Meeting
Notice is hereby given that the sixty-fifth Annual General Meeting of
shareholders of the company will be held at Masonite`s offices at 13th Floor,
Nedbank Centre, Durban Club Place, Durban on 22 May 2008, at 12H00.
For and behalf of the Board
A H Wilson M J Slater
Chairman Managing Director
19-Mar-08
DIRECTORS
A H Wilson (Chairman), M J Slater* (Managing), W P Coetzee, M M Clarke**,
J U Morrison**, K M P Spencer, A G Venton, CA Virostek***
* British ** USA *** Canadian
COMPANY SECRETARY
E R Roberts
SPONSOR
Nedbank Capital
TRANSFER SECRETARIES
Computershare Investor Services (Proprietary) Limited
PO Box 61051, Marshalltown, 2107
70 Marshall Street, Johannesburg, 2001, Republic of South Africa
Telephone (011) 370 5000
Date: 20/03/2008 15:59:48 Produced by the JSE SENS Department.
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