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MAS
MAS
MAS - Masonite (Africa) - Unaudited interim results for the six months
ending 30 June 2008
MASONITE (AFRICA) LIMITED
Incorporated in the Republic of South Africa
Registration number: 1942/015502/06
Share code: MAS ISIN: ZAE000004289
("Masonite" or "the company")
UNAUDITED INTERIM RESULTS
for the six months ending 30 June 2008
Condensed income statement
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 June 30 June 31 December
2008 2007 2007
Group Notes (R000s) (R000s) (R000s)
Revenue 268 575 227 948 502 212
Cost of sales (192 621) (166 573) (370 070)
Gross profit 75 954 61 375 132 142
Other operating income 1 642 1 523 3 593
Distribution expenses (32 463) (26 247) (59 477)
Selling and
marketing expenses (6 417) (5 985) (12 231)
Administrative expenses (5 640) (5 405) (10 978)
Other operating expenses (6 834) (5 425) (10 880)
Trading income 26 242 19 836 42 169
Fair value adjustment of
biological assets 39 046 4 689 15 238
Operating profit
before financing
income/(expense) 65 288 24 525 57 407
Finance income 1 762 985 3 408
Finance expense (760) (799) (1 673)
Profit before tax 66 290 24 711 59 142
Income tax expense 6 (16 660) (9 444) (20 368)
Net profit for the
period attributable
to ordinary shareholders 49 630 15 267 38 774
Number of shares in issue 7 118 225 7 080 225 7 112 225
Earnings per share (cents)
Basic 697 217 548
Diluted 697 215 545
Dividends per share (cents)
Interim - 152 -
Final - special - - 352
Condensed balance sheet
Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 December
2008 2007 2007
Group Notes (R000s) (R000s) (R000s)
ASSETS
Non-current assets
Property, plant and equipment 95 458 96 120 97 663
Intangible assets 443 678 493
Biological assets 3 172 854 123 260 133 808
Deferred tax assets 8 207 9 102 8 500
Investments 30 30 30
Total non-current assets 276 992 229 190 240 494
Current assets
Inventories 54 139 54 900 48 277
Trade and other receivables 66 013 83 184 63 365
Amounts due from fellow
subsidiaries 929 608 509
Cash and cash equivalents 47 420 25 011 57 412
Tax receivable 409 3 017 -
Total current assets 168 910 166 720 169 563
Total assets 445 902 395 910 410 057
EQUITY
Capital and reserves
Share capital 3 559 3 540 3 556
Share premium 3 134 2 998 3 113
Non-distributable reserves 700 700 700
Retained earnings 294 594 250 333 244 964
Total equity 301 987 257 571 252 333
LIABILITIES
Non-current liabilities
Deferred tax liabilities 64 384 53 654 55 259
Post-retirement benefit
obligation 4 20 089 18 846 19 537
Straight-lining
lease accrual 119 99 98
Total non-current liabilities 84 592 72 599 74 894
Current liabilities
Trade and other payables 53 264 53 394 49 071
Shareholders for dividends - - 25 035
Provisions 5 5 544 5 170 4 751
Amounts payable to fellow
subsidiaries 483 660 1 766
Tax payable - 6 507 2 187
Straight-lining lease accrual 32 9 20
Total current liabilities 59 323 65 740 82 830
Total equity and liabilities 445 902 395 910 410 057
Net asset value per share (cents) 4 242 3 638 3 548
Condensed cash flow statement
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 June 30 June 31 December
2008 2007 2007
Group (R000s) (R000s) (R000s)
Cash flow from operating activities
Operating cash flows before
movement in working capital 32 385 24 131 49 574
Increase in working capital (4 781) (27 725) (1 134)
Cash generated from/(utilised
in) operations 27 604 (3 594) 48 440
Finance income 1 994 1 013 3 024
Finance expense (760) (799) (1 673)
Taxation paid (9 839) (868) (10 884)
Net cash generated
from/(utilised in) operating
activities 18 999 (4 248) 38 907
Cash flow from investing activities
Additions to property, plant
and equipment (3 833) (4 453) (11 683)
Proceeds from disposal of
property, plant and equipment 80 17 19
Net cash outflow from
investing activities (3 753) (4 436) (11 664)
Cash flow from financing activities
Issue of share capital 24 183 314
Dividends paid (25 035) (6 939) (10 780)
Net cash outflow from
financing activities (25 011) (6 756) (10 466)
Net (decrease)/increase in
cash and cash equivalents (9 765) (15 440) 16 777
Effects of exchange rates on
the balance of cash held in
foreign currencies (227) 301 485
Net cash and cash equivalents
at the beginning of the year 57 412 40 150 40 150
Cash and cash equivalents at
the end of the period 47 420 25 011 57 412
Condensed statement of changes in equity
Non-
Share Share distributable
capital premium reserves
Group (R000s) (R000s) (R000s)
Balance as at 1 January 2007 - audited 3 518 2 837 700
Issue of share capital 22 161 -
Net profit for the year attributable
to ordinary shareholders - - -
Dividends declared and paid
Final - - -
Balance as at 30 June 2007 - unaudited 3 540 2 998 700
Issue of share capital 16 115 -
Net profit for the year attributable
to ordinary shareholders - - -
Dividends declared and paid
Interim - - -
Dividends declared
Special - - -
Balance as at 31 December 2007 -
audited 3 556 3 113 700
Issue of share capital 3 21 -
Net profit for the year attributable
to ordinary shareholders - - -
Balance as at 30 June 2008 - unaudited 3 559 3 134 700
Total
attributable
Retained to ordinary
earnings shareholders
Group (R000s) (R000s)
Balance as at 1 January 2007 - audited 242 005 249 060
Issue of share capital - 183
Net profit for the year attributable
to ordinary shareholders 15 267 15 267
Dividends declared and paid
Final (6 939) (6 939)
Balance as at 30 June 2007 - unaudited 250 333 257 571
Issue of share capital - 131
Net profit for the year attributable
to ordinary shareholders 23 507 23 507
Dividends declared and paid
Interim (3 841) (3 841)
Dividends declared
Special (25 035) (25 035)
Balance as at 31 December 2007 - audited 244 964 252 333
Issue of share capital - 24
Net profit for the year attributable
to ordinary shareholders 49 630 49 630
Balance as at 30 June 2008 - unaudited 294 594 301 987
Condensed segment information
Mill Forestry
Group (R000s) (R000s)
Primary reporting - business segments
For the period ended 30 June 2007
- unaudited
Segment revenue - external only 188 845 38 321
Segment results 24 733 8 317
For the year ended 31 December 2007
- audited
Segment revenue - external only 439 479 61 332
Segment results 50 638 23 633
For the period ended 30 June 2008
- unaudited
Segment revenue - external only 232 384 36 056
Segment results 29 085 46 899
Unallocated/
Other Total
Group (R000s) (R000s)
Primary reporting - business segments
For the period ended 30 June 2007
- unaudited
Segment revenue - external only 782 227 948
Segment results (8 525) 24 525
For the year ended 31 December 2007
- audited
Segment revenue - external only 1 401 502 212
Segment results (16 864) 57 407
For the period ended 30 June 2008
- unaudited
Segment revenue - external only 135 268 575
Segment results (10 696) 65 288
Secondary reporting - geographical segments
Revenue Domestic
For the period ended 30 June 2007 - unaudited 203 524
For the year ended 31 December 2007 - audited 448 610
For the period ended 30 June 2008 - unaudited 239 393
Revenue Exports Total
For the period ended 30 June 2007 - unaudited 24 424 227 948
For the year ended 31 December 2007 - audited 53 602 502 212
For the period ended 30 June 2008 - unaudited 29 182 268 575
Notes
1. Basis of preparation
The condensed consolidated financial statements have been prepared in
accordance with IAS 34: Interim Financial Reporting and International Financial
Reporting Standards.
2. Significant accounting policies
The same methods of computation and accounting policies are followed in these
condensed financial statements as were applied in the preparation of the
Group`s interim results for the six months ended 30 June 2007 and the Group`s
financial statements for the year ended 31 December 2007. Those
financial statements were presented in accordance with International Financial
Reporting Standards, and in the manner required by the Companies Act of South
Africa and the JSE Limited Listings Requirements.
3. 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.
3.1 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 at fair value on initial
recognition. Fair value represents the establishment cost of new plantations or
the cost 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.
3.2 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 the 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.
As at As at As at
30 June 30 June 31 December
2008 2007 2007
Timber plantations
Establishment costs 19 556 19 931 21 230
Immature timber 36 415 27 322 24 389
Mature timber 112 523 71 475 84 305
Total 168 494 118 728 129 924
Sugar cane
Establishment costs 982 1 072 918
Immature sugar cane 1 075 1 248 1 644
Mature sugar cane 2 303 2 212 1 322
Total 4 360 4 532 3 884
Total biological assets 172 854 123 260 133 808
4. Retirement benefit obligation
The Group provides post-retirement medical benefits to retired employees who
were employed before January 1997. The liability in respect of this post
retirement medical benefit is actuarially valued on an annual basis using the
Projected Unit Credit Method. Actuarial gains or losses in respect of post-
retirement medical benefits are recognised as income or expenses if the net
cumulative unrecognised actuarial gains or losses at the end of the previous
period exceed 10% of the present value of the post-retirement obligation at
that date. There are no plan assets held.
The amount recognised is the excess determined above, divided by the average
remaining working lives of the employees participating in the plan.
Past service costs are recognised as an expense on a straight-line basis over
the average period until the benefits vest. To the extent that benefits have
already vested, past service costs are recognised immediately.
5. Provisions
The amounts at the balance sheet date comprise provisions for leave pay.
6. Income tax expense
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 June 30 June 31 December
2008 2007 2007
(R000s) (R000s) (R000s)
Current tax 7 242 6 507 12 333
Deferred tax 11 030 2 070 4 280
Secondary tax - 867 3 755
Reduction in corporate tax rate (1 612) - -
Total 16 660 9 444 20 368
On 20 February 2008, the Minister of Finance announced that the corporate tax
rate will be reduced from 29% to 28%. The effect of the reduction in tax rate,
on the deferred tax balance at 31 December 2007, has been accounted for in the
income tax expense for the six-month period ended 30 June 2008.
7. Headline earnings
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30 June 30 June 31 December
2008 2007 2007
(R000s) (R000s) (R000s)
Reconciliation of headline earnings
Profit for the year 49 630 15 267 38 774
Adjusted for:
(Profit)/loss on disposal of assets (80) 35 140
Tax effect of (profit)/loss on
disposal of assets 22 (10) (41)
Headline earnings 49 572 15 292 38 873
Headline earnings per share
(cents) 697 217 549
8. Subsequent events
No material fact or circumstance has occurred between the end of the period and
the date of this report.
COMMENTARY
Trading income, which excludes the effect of IAS 41: Agriculture, Interest and
Taxation, was R26,2 million (2007: R19,8 million).
This improvement was mainly attributable to a better product mix in the
domestic market, and an effective cost containment programme.
In addition, an increase in timber prices has resulted in a favourable timber
valuation adjustment. Timber prices now appear to have stabilised.
For and behalf of the board
M J Slater E R Roberts
Managing Director Company Secretary
25 September 2008
DIRECTORS
A H Wilson (Chairman), M J Slater (British) (Managing), W P Coetzee,
J U Morrison (USA), K M P Spencer, A G Venton, C A Virostek (Canadian),
M M Clark (USA).
COMPANY SECRETARY
E R Roberts
SPONSOR
Nedbank Capital
135 Rivonia Road, Sandton, 2196
TRANSFER SECRETARIES
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
MASONITE (AFRICA) LIMITED
Incorporated in the Republic of South Africa
Registration number: 1942/015502/06
Share code: MAS ISIN: ZAE000004289
("Masonite" or "the company")
Date: 25/09/2008 17:00:01 Produced by the JSE SENS Department.
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