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MAS
MAS
MAS - Masonite (Africa) Limited - Audited Results For The Twelve Months Ended
31 December 2009
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 twelve months ended 31 December 2009
Statement of comprehensive income
12 months to
December 31 2009 December 31 2008
Notes R`000 R`000
Revenue 628746 617360
Cost of sales (460500) (438528)
Gross profit 168246 178832
Fair value adjustment of
biological assets 3 (8097) 41603
Other operating income 3836 3639
Distribution expenses (71931) (72832)
Selling and marketing expenses (13451) (13962)
Administrative expenses (11836) (12507)
Other operating expenses (19611) (18478)
Results from operations 47156 106295
Finance income 4120 4936
Finance expense (2042) (1585)
Profit before tax 49234 109646
Income tax expense 7 (14671) (28214)
Net profit for the year 34563 81432
Other comprehensive income - -
Total comprehensive income for
the year attributable 34563 81432
Number of shares in issue 7 124 225 7 124 225
Earnings per share (cents)
Basic 485 1 144
Diluted 485 1 143
Statement of financial position
December 31 December 31
2009 2008
Notes R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 107007 99657
Intangible assets 622 347
Biological assets 3 167314 175411
Investments 30 30
Total non-current assets 274973 275445
Current assets
Inventories 70229 59823
Trade and other
receivables 76059 85322
Amounts due from fellow
subsidiaries 388 562
Cash and cash equivalents 61270 71005
Total current assets 207946 216712
Total assets 482919 492157
EQUITY AND LIABILITIES
Capital and reserves 3562 3562
Share capital
Share premium 3156 3156
Non-distributable reserves - 700
Retained income 347411 326396
Total equity 354129 333814
Non-current liabilities
Deferred tax 52481 55761
Post-retirement benefit
obligation 4 22245 20715
Straight-lining lease
accrual 44 46
Total non-current
liabilities 74770 76522
Current liabilities
Trade and other payables 47517 63212
Provisions 6 5782 5517
Amounts payable to fellow
subsidiaries - 1453
Tax payable 705 11561
Straight-lining lease accrual 16 78
Total current liabilities 54020 81821
Total equity and
liabilities 482919 492157
Statement of changes in equity
Non-
Share Share distributable Retained Total
Capital premium reserves income equity
R`000 R`000 R`000 R`000 R`000
Balance at 1 January 2008 3556 3113 700 244964 252333
Issue of share capital 6 43 - - 49
Total comprehensive income
attributable to ordinary
shareholders - - - 81432 81432
Balance at 31 December 2008 3562 3156 700 326396 333814
Capital redemption reserve
transferred to retained
income* - - (700) 700 -
Total comprehensive income
attributable to ordinary
shareholders - - - 34563 34563
Dividends declared and paid - - - (14248) (14248)
Balance at 31 December 2009 3562 3156 - 347411 354129
*The capital redemption reserve fund was created to provide for the redemption
of preference shares prior to 1967 in terms of the company`s Articles of
Association and Section 297 of the Companies Act of 1973, as amended. This
amount has been transferred to retained income.
Statement of cash flows
12 months to
December 31 2009 December 31 2008
R`000 R`000
Cash flow from operating activities
Profit from operations 47156 106 295
Adjusted for:
Fair value adjustment of
biological assets 8097 (41 603)
Depreciation and amortisation 13136 12 915
Foreign exchange (gain)/loss -
unrealised (2948) 4221
Provisions utilised (5150) (4230)
Increase in liability for
retirement benefit obligation 1530 1178
Loss on disposal of property,
plant and equipment 79 133
Straight-lining lease accrual (64) 6
Tax payments (28807) (9 838)
Change in working capital (10666) (18 361)
Cash flow from operations 22363 50 716
Finance income 4484 4889
Finance expense (2042) (1585)
Net cash flow from
operating activities 24805 54 020
Cash flow from investing activities
Replacement of property, plant and
equipment and intangible assets (20840) (14 991)
Proceeds on disposal of property,
plant and equipment - 95
Net cash outflow from
investing activities (20840) (14 896)
Cash flow from financing activities
Shares issued - 49
Dividends paid (14248) (25 035)
Net cash outflow from
financing activities (14248) (24 986)
Net (decrease)/increase in cash and
cash equivalents (10283) 14 138
Effects of exchange rates on the
balance of cash
held in foreign currencies 548 (545)
Net cash and cash equivalents at
the beginning of the year 71005 57 412
Net cash and cash equivalents at
the end of the year 61270 71 005
Notes
`
1. Basis of preparation
The company financial results from which these condensed financial statements
were derived have been prepared on the historical cost basis excluding
financial instruments and biological assets which are fair valued and conform
to International Financial reporting Standards (IFRS). These condensed financial
statements have been prepared in terms of IAS34-Interim Financial Reporting.
2. Significant accounting policies
The same accounting policies, presentation and methods of computation have been
followed in these annual financial statements as were applied in the
preparation of the company`s financial statements for the year ended 31
December 2008, except for the impact of the adoption of the Standards and
Interpretations described below.
IAS 1: Presentation of Financial statements (as revised in 2007)
IFRS 7: Financial Instruments: disclosures
These revised standards have introduced a number of changes in presentation
and disclosure. The revised standards have had no impact on the reported
results or financial position of the company
IFRS 8: Operating Segments
IFRS 8: Operating Segments defines the requirements for the disclosure of
financial information of an entity`s operating segments. The standard
requires operating segments to be identified on the basis of internal
reports about components of the company that are regularly reviewed by
the chief operating decision maker in order to allocate resources to the
segments and to assess their performance.
The company has adopted IFRS 8 Operating Segments with effect from
1 January 2009. The adoption of IFRS 8 did not have any impact on the
financial results of the company as it is a disclosure standard which has
resulted in a change to the company`s reportable segments. The mill segment
has been expanded into hardboard and other products. The company is organised
into the following operating segments:
Hardboard
Other products
Forestry
Comparative information has been re-presented so that it also is in conformity
with the above Standards and Interpretations.
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. The company owns timber plantations which it operates in
order to supply the Mill at Estcourt with its primary raw material. Sugar cane
has been planted in areas unsuitable for timber, in order to use the land
productively.
2009 2008
R`000 R`000
Fair value adjustment to biological
assets recognised in the statement
Of comprehensive income (8097) 41603
Fair value of biological assets
at December 31 2009 2008
R`000 R`000
Timber plantations
Establishment costs 25065 18 724
Immature timber 45212 40 017
Mature timber 89038 109 563
Total 159315 168 304
Sugar cane
Establishment costs 2733 3 220
Immature sugar cane 4863 1 127
Mature sugar cane 403 2 760
Total 7999 7 107
Total biological assets 167314 175 411
4. Retirement benefit obligation
The company 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. Segment revenue and results
Segment revenue Segment profit
Year ended Year ended Year ended Year ended
R`000 R`000 R`000 R`000
Hardboard 447565 421741 38113 33945
Other products 95364 119056 14415 25264
Forestry 106320 105404 5842 59030
Intersegment (21125) (29404) - -
Unallocated 622 563 622 563
Total 628746 617360 58992 118802
Administrative expenses (11836) (12507)
Results from operations 47156 106295
Finance income 4120 4936
Finance expense (2042) (1585)
Profit before tax 49234 109646
Income tax expense (14671) (28214)
Profit for the period 34563 81432
6. Provisions
The amounts at the balance sheet date comprise provisions for leave pay.
7. Income tax expense
2009 2008
R`000 R`000
Current tax 16527 19212
Deferred tax (3280) 9002
Secondary tax 1424 -
Total 14671 28214
8. Headline earnings
2009 2008
R`000 R`000
Reconciliation of headline earnings
Profit for the year 34563 81 432
Adjusted for:
Loss on disposal of assets 79 133
Tax effect of loss on disposal
of assets (22) (37)
Headline earnings 34620 81 528
Headline earnings per share (cents) 486 1145
9. Subsequent events
No material fact or circumstance has occurred between the end of the period and
the date of this report.
COMMENTARY
Revenue increased by 2% to R628.7 million (2008: R617.4) and earnings from
operating activities (excluding the effect of the adjustment of biological
assets - IAS 41: Agriculture) were down by 15% to R55.3 million (2008: R64.7
million).
The impact of the strong Rand and the global recession affected sales and
gross margins negatively. While it was possible to maintain domestic volumes,
the availability of cheaper substitute products, and the currency, placed
pressure on domestic pricing.
Headline earnings (including IAS 41: Agriculture) decreased by 58% to R34.6
million (2008: R81.6 million). This was mainly due to a change in the value
of the biological assets. Economic conditions during the year led to the
domestic timber price falling, which impacted on the value of standing timber
at the end of the period.
All operating areas of the company produced excellent performances, and the
effective control of costs helped to reduce the impact of the lower prices in
the market place.
The company ended the year with R61.3 million cash reserve (2008: R71.0
million).
Conditions in the domestic market will remain tight in 2010. While some
turnaround has been forecast, the relative strength of the Rand will have
an effect on earnings.
Your directors approved a dividend of R2.00 per share, which was paid in
December 2009.
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.
Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the company`s
financial statements for the year ended 31 December 2009. The audit was
conducted in accordance 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.
Annual General Meeting
Notice is hereby given that the sixty-seventh Annual General Meeting of
shareholders of the company will be held at Masonite`s offices at Block
2, Island Office Park, 35 - 37 Island Circle, Riverhorse Valley, Durban on
11 May 2010, at 12H00.
AH Wilson MJ Slater
Chairman Managing Director
17 March 2010
DIRECTORS
AH Wilson (Chairman), MJ Slater (British) (Managing), WP Coetzee,
MM Clark (USA), CA Virostek (Canadian), KMP Spencer, AG Venton,
GE Coulter (USA), AD DiLucente (USA), FJ Lynch (USA), LP Repar (Canadian)
COMPANY SECRETARY
MP Govender
SPONSOR
Nedbank Capital
135 Rivonia Road, Sandton, 2196
TRANSFER SECRETARIES
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
Date: 17/03/2010 17:00:02 Produced by the JSE SENS Department.
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