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MAS
MAS
MAS - Masonite - Audited Results For The 12 Months Ended 31 December 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")
AUDITED RESULTS FOR THE 12 MONTHS ENDED 31 DECEMBER 2008
Condensed income statement
12 months to
December 31 2008 December 31 2007
Notes (R000`s) (R000`s)
Revenue 617360 502212
Cost of sales (438528) (370070)
Gross profit 178832 132142
Other operating income 3639 3593
Distribution expenses (72832) (59477)
Selling and marketing
expenses (13962) (12231)
Administrative expenses (12507) (10978)
Other operating expenses (18478) (10880)
Trading income 64692 42169
Fair value adjustment of
biological assets 41603 15238
Operating profit before
financing income/(expense) 106295 57407
Finance income 4936 3408
Finance expense (1585) (1673)
Profit before taxation 109646 59142
Income tax expense 5 (28214) (20368)
Net profit for the year
attributable to ordinary
shareholders 81432 38774
Earnings per share (cents)
Basic 1144 548
Diluted 1143 545
Headline earnings
Reconciliation of headline
earnings
Profit for the year 81432 38774
Adjusted for:
Loss on disposal
of assets 133 140
Tax effect of loss on
disposal of assets (37) (41)
Headline earnings 81528 38873
Headline earnings per share (cents)
Basic 1145 549
Diluted 1144 546
Condensed balance sheet
December 31 December 31
2008 2007
Notes (R000`s) (R000`s)
Assets
Non-current assets
Property, plant and equipment 99657 97663
Intangible assets 347 493
Biological assets 2 175411 133808
Investments 30 30
Total non-current assets 275445 231994
Current assets
Inventories 59823 48277
Trade and other receivables 85322 63365
Amounts due from fellow subsidiaries 562 509
Cash and cash equivalents 71005 57412
Total current assets 216712 169563
Total assets 492157 401557
Equity
Capital and reserves
Share capital 3 3562 3556
Share premium 3 3156 3113
Non-distributable reserves 3 700 700
Retained earnings 326396 244964
Total equity 333814 252333
Liabilities
Non-current liabilities
Deferred tax liabilities 55761 46759
Post retirement benefit obligation 4 20715 19537
Straight-lining lease accrual 46 98
Total non-current liabilities 76522 66394
Current liabilities
Trade and other payables 63212 49071
Shareholders for dividends - 25035
Provisions 5517 4751
Amounts payable to fellow subsidiaries 1453 1766
Tax payable 11561 2187
Straight-lining lease accrual 78 20
Total current liabilities 81821 82830
Total equity and liabilities 492157 401557
Condensed cash flow statement
12 months to
December 31 December 31
2008 2007
(R000`s) (R000`s)
Cash flow from operating activities
Profit from operations 106295 57407
Adjusted for:
Depreciation and amortisation 12915 12226
Fair value adjustment of biological assets (41603) (15238)
Loss on disposal of assets 133 140
Provisions utilised (4230) (3957)
Increase in liability for retirement benefit
obligation 1178 1190
Foreign exchange loss/(gains)- unrealised 4221 (2208)
Straight-lining lease accrual 6 14
Working capital changes (18361) (1134)
Finance income 4889 3024
Finance expense (1585) (1673)
Taxation paid (9838) (10884)
Net cash generated from operating activities 54020 38907
Cash flow from investing activities
Replacement of property, plant and equipment (14991) (11683)
Proceeds from disposal of property, plant and
equipment 95 19
Net cash outflow from investing activities (14896) (11664)
Cash flow from financing activities
Issue of share capital 49 314
Dividends paid (25035) (10780)
Net cash outflow from financing activities (24986) (10466)
Net increase in cash and cash equivalents 14138 16777
Effects of exchange rates on the balance of
cash held in foreign currencies (545) 485
Net cash and cash equivalents at the beginning
of the year 57412 40150
Cash and cash equivalents at the end of the year 71005 57412
Statement of changes in equity
Non-
Share Share distributable
capital premium reserves
Notes (R000`s) (R000`s) (R000`s)
Balance at 1 January 2007 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
Issue of share capital 6 43 -
Net profit for the year
attributable to ordinary
shareholders - - -
Balance at 31 December 2008 3562 3156 700
Total
attributable
Retained to ordinary
earnings shareholders
(R000`s) (R000`s)
Balance at 1 January 2007 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
Issue of share capital - 49
Net profit for the year attributable to ordinary
shareholders 81432 81432
Balance at 31 December 2008 326396 333814
Segmental analysis
Primary reporting - business segments
Unallocated/
Mill Forestry Other Total
2008 (R000`s) (R000`s) (R000`s) (R000`s)
Segment income statement
Total gross revenue 540388 104868 1508 646764
Inter - segment revenue - (29404) - (29404)
Revenue 540388 75464 1508 617360
Segment trading income 73658 16872 1508 92038
Other operating income - - 3639 3639
Fair value adjustment
of biological assets - 41603 - 41603
Segment results 73658 58475 5147 137280
Administration expenses (12507)
Other operating expenses (18478)
Operating profit before
financing
income/(expense) 106295
Finance income 4936
Finance expense (1585)
Profit before taxation 106946
Income tax expense (28214)
Net profit attributable
to ordinary
shareholders 81432
Unallocated/
Mill Forestry Other Total
(Restated) (Restated)
2007 (R000`s) (R000`s) (R000`s) (R000`s)
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 taxation 59142
Income tax expense (20368)
Net profit attributable
to ordinary
shareholders 38774
Secondary reporting - geographical segments
Domestic Exports Total
2008 2007 2008 2007 2008 2007
(R000`s) (R000`s) (R000`s) (R000`s) (R000`s) (R000`s)
Revenue 543702 448610 73658 53602 617360 502212
Notes
1. Basis of preparation
The audited annual financial statements of the company for the year ended
December 31, 2008 have been prepared in accordance with the company`s
accounting policies, which are consistent with those of the prior year.
Those financial statements comply with International Financial Reporting
Standards (IFRS). The condensed financial statements are in accordance with
IAS 34: Interim Financial Reporting.
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
income statement.
2.1 Timber plantations
The company 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 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.
2.2 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 of 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.
Biological assets at 31 December:
2008 2007
(R 000`s) (R 000`s)
Timber and sugar cane establishment costs 21944 22148
Timber and sugar cane - immature 41144 26033
Timber and sugar cane - mature 112323 85627
175411 133808
The increase in fair value of biological assets of R41.6 million
(2007: R15.3 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 2007 7035558 3518 2837 6355
Employee share option scheme:
Issue of share capital 76667 38 276 314
At 31 December 2007 7112225 3556 3113 6669
Employee share option scheme:
Issue of share capital 12000 6 43 49
At 31 December 2008 7124225 3562 3156 6718
4. Retirement benefit obligation
The company provides post-retirement medical benefits to retired employees. The
liability in respect of post-retirement medical benefit is actuarially valued
at R20.7 million (2007:actuarially valued at R19.5 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 at that date.
5. Income tax expense
Recognised in the income statement 12 months to
December 31 December 31
2008 2007
Current tax expense 19212 12333
Deferred tax expense 9002 4280
Secondary tax expense - 3755
Total 28214 20368
6. Dividends
A dividend of 352 cents per share, which was declared on 20 December 2007, was
paid on 21 January 2008.
7. Commitments and contingencies
at December 31 at December 31
2008 2007
Capital expenditure:
Contracted for 965 -
Authorised but not contracted for - 472
Total capital expenditure commitments 965 472
Operating leases:
Less than one year 1301 1805
Between one and five years 528 2611
Total operating lease commitments 1829 4416
Guarantees and contingent liabilities - -
8. Directors
Mr J U Morrison resigned from the board on 30 September 2008. Messers
F J Lynch, A D DiLucente, G E Coulter and L P Repar were appointed to the
board on 1 October 2008.
9. Subsequent events
No other material fact or circumstance has occurred between the year end and
the date of this report.
10. Audited annual financial statements
The auditors, Deloitte & Touche, have issued their opinion on the company`s
financial statements for the year ended December 31, 2008. 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 company financial statements and are
consistent in all material respects, with the company financial statements.
Commentary
Revenue increased by 22.9% to R617.4 million (2007: R502.2 million) and
trading income was 53.3 % higher at R64.7 million (2007: R42.2 million).
Headline earnings (which include the effect of IAS 41 - Agriculture, interest
and taxation) increased by 109.8% to R81.6 million (2007: R38.9 million).
This improvement was due to improved volumes in the domestic door and
packaging markets, and a favourable domestic product mix. In addition, a
large timber valuation adjustment (IAS 41 - Agriculture) occurred, mainly due
to an increase in timber prices.
The Manufacturing and Forestry operations turned in excellent operational
performances in 2008, 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 company ending
the year R71.0 million cash positive (2007: R57.4 million).
Growth prospects for 2009 will be moderated by the general economic slowdown,
and because of the uncertainty of the extent of this slowdown, your directors
have decided not to pay a dividend at this stage.
Corporate Governance
The directors subscribe to the principles incorporated in the Code of
Corporate Practices and Conduct as set out in the King Report on Corporate
Governance (King ll) and comply therewith.
Sustainability
The Company recognises the impact of its operations on society and the
environment, and constantly strives to improve the well being of all
stakeholders.
Annual General Meeting
Notice is hereby given that the sixty-sixth 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 5 May 2009, at 12H00.
For and behalf of the Board
A H Wilson M J Slater
Chairman Managing Director
6 March 2009
DIRECTORS
A H Wilson (Chairman), M J Slater* (Managing), W P Coetzee, M M Clarke**,
K M P Spencer, A G Venton, C Virostek***, F J Lynch**, A D DiLucente**,
G E Coulter**, L P Repar***
* 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: 06/03/2009 17:00:01 Produced by the JSE SENS Department.
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