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MAS
MAS
MAS - Masonite (Africa) Limited - Unaudited interim results for the six months
ended 30 June 2010
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 ended 30 June 2010
Condensed income statement
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2010 2009 2009
R`000 R`000 R`000
Notes
Revenue 257 659 314 073 628 746
Cost of sales (188 026) (218 689) (460 500)
Gross profit 69 633 95 384 168 246
Fair value adjustment
of biological assets 6 951 9 480 (8 097)
Other income 1 424 2 748 3 836
Distribution expenses (35 470) (32 590) (71 931)
Administrative expenses (5 189) (6 471) (11 836)
Selling and marketing
expenses (6 602) (6 892) (13 451)
Other expenses (9 225) (12 437) (19 611)
Results from
operating activities 21 522 49 222 47 156
Finance income 1 075 2 373 4 120
Finance cost (1 026) (800) (2 042)
Profit before income tax 21 571 50 795 49 234
Income tax expense 7 (5 885) (13 826) (14 671)
Profit for the period 15 686 36 969 34 563
Other comprehensive
Income - - -
Total comprehensive
income for the period
attributable to ordinary
shareholders 15 686 36 969 34 563
Earnings per share (cents)
Basic 220 519 485
Diluted 220 519 485
Statement of financial position
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2010 2009 2009
Notes R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and
Equipment 108 922 101 284 107 007
Intangible assets 528 291 622
Biological assets 3 174 265 184 891 167 314
Investments 30 30 30
Total non-current assets 283 745 286 496 274 973
Current assets
Inventories 90 988 87 561 70 229
Trade and other
receivables 77 008 95 107 76 059
Amounts due from fellow
subsidiaries 939 701 388
Cash and cash equivalents 53 147 71 607 61 270
Tax receivable 2 497 - -
Total current assets 224 579 254 976 207 946
Total assets 508 324 541 472 482 919
EQUITY AND LIABILITIES
Capital and reserves
Share capital 3 562 3 562 3 562
Share premium 3 156 3 156 3 156
Retained income 363 097 364 065 347 411
Total equity 369 815 370 783 354 129
Non-current liabilities
Deferred tax 54 480 58 565 52 481
Post-retirement benefit
obligation 4 22 976 21 322 22 245
Straight-lining lease
accrual 44 46 44
Total non-current
liabilities 77 500 79 933 74 770
Current liabilities
Trade and other payables 53 926 72 188 47 517
Provisions 5 6 574 6 630 5 782
Amounts payable to fellow
subsidiaries 487 972 -
Tax payable - 10 931 705
Straight-lining lease accrual 22 35 16
Total current liabilities 61 009 90 756 54 020
Total equity and
liabilities 508 324 541 472 482 919
Net asset value per share 5 191 5 205 4 971
Condensed statement of cash flows
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2010 2009 2009
R`000 R`000 R`000
Cash flow from operating
activities
Operating profit 21 522 49 222 47 156
Adjusted for:
Fair value adjustment of
biological assets (6 951) (9 480) 8 097
Depreciation and amortisation 6 808 6 288 13 136
Foreign exchange gain - unrealised (1 277) (2 366) (2 948)
Provisions utilised (2 267) (1 915) (5 150)
Increase in liability for
retirement benefit obligation 731 607 1 530
Loss on disposal of
property, plant and equipment 36 19 79
Other non-cash items 6 (43) (64)
Tax payments (7 088) (11 652) (28 807)
Change in working capital (11 239) (24 843) (10 666)
Cash flow from operations 281 5 837 22 363
Net financing income 306 1 749 2 442
Net cash flow from
operating activities 587 7 586 24 805
Cash flow from investing activities
Expenditure on property,
plant and equipment
Replacement (8 810) (7 878) (20 840)
Proceeds on disposal of property,
plant and equipment 145 - -
Net cash outflow from
investing activities (8 665) (7 878) (20 840)
Cash flow from financing activities
Dividends paid - - (14 248)
Net cash outflow from
financing activities - - (14 248)
Net decrease in cash and cash
equivalents (8 078) (292) (10 283)
Effects of exchange rates on the
balance of cash
held in foreign currencies (45) 894 548
Net cash and cash equivalents at
the beginning of the year 61 270 71 005 71 005
Net cash and cash equivalents at
the end of the period 53 147 71 607 61 270
Condensed statement of changes in equity
Share Share Non-distributable
capital premium reserve
R`000 R`000 R`000
Balance at 1 January 2009:
unaudited 3 562 3 156 700
Capital redemption reserve
Transferred to retained
Income - - (700)
Net profit for the period - - -
Balance at 30 June 2009:
unaudited 3 562 3 156 -
Net profit for the period - - -
Dividends declared and paid - - -
Balance at 31 December 2009:
audited 3 562 3 156 -
Net profit for the period - - -
Balance at 30 June 2010:
unaudited 3 562 3 156 -
Retained Total
income Equity
R`000 R`000
Balance at 1 January 2009:
audited 326 396 333 814
Capital redemption reserve
Transferred to retained
Income 700 -
Net profit for the period 36 969 36 969
Balance at 30 June 2009:
unaudited 364 065 370 783
Net loss for the period (2 406) (2 406)
Dividends declared and paid (14 248) (14 248)
Balance at 31 December 2009:
audited 347 411 354 129
Net profit for the period 15 686 15 686
Balance at 30 June 2010:
unaudited 363 097 369815
Segment revenues and results
Segment revenue
Unaudited Unaudited Audited
Half-year half-year Year ended
30 June 30 June 31 December
2010 2009 2009
R`000 R`000 R`000
Hardboard 199 722 221 420 447 565
Other products 17 075 47 445 95 364
Forestry 54 107 56 163 106 320
Intersegment (14 223) (11 312) (21 125)
Unallocated 978 357 622
Total 257 659 314 073 628 746
Segment PBIT
Unaudited Unaudited Audited
Half-year half-year Year ended
30 June 30 June 31 December
2010 2009 2009
R`000 R`000 R`000
Hardboard 12 469 29 781 38 113
Other products 189 7 353 14 415
Forestry 13 075 18 202 5 842
Intersegment - - -
Unallocated 978 357 622
Total 26 711 55 693 58 992
Reconciliation
Administrative expenses (5 189) (6 471) (11 836)
Finance income 1 075 2 373 4 120
Finance cost (1 026) (800) (2 042)
Profit before tax per
Condensed income statement 21 571 50 795 49 234
Notes
1. Basis of preparation
The condensed financial statements have been prepared in accordance with
International Accounting Standard 34 Interim Financial Reporting.
2. Significant accounting policies
The same accounting policies, presentation and methods of computation have been
followed in these condensed financial statements as were applied in the
preparation of the company`s financial statements for the year ended 31
December 2009.
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.
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2010 2009 2009
R`000 R`000 R`000
Timber plantations
Establishment costs 19 698 10 495 25 065
Immature timber 57 795 72 304 45 212
Mature timber 91 308 92 913 89 038
Total timber 168 801 175 712 159 315
Sugar cane
Establishment costs 3 188 3 395 2 733
Immature sugar cane 1 406 3 853 4 863
Mature sugar cane 870 1 931 403
Total sugar cane 5 464 9 179 7 999
Total biological assets 174 265 184 891 167 314
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. Provisions
The amounts at the balance sheet date comprise provisions for leave pay.
6. Income tax expense
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2010 2009 2009
R`000 R`000 R`000
Current tax 3 886 11 022 16 527
Deferred tax 1 999 2 804 (3 280)
Secondary tax - - 1 424
Total 5 885 13 826 14 671
7. Headline earnings
Reconciliation of headline earnings
Profit for the year 15 686 36 969 34 563
Adjusted for:
Loss on disposal of assets 37 19 79
Tax effect of loss on disposal
of assets (10) (5) (22)
Headline earnings 15 713 36 983 34 620
Headline earnings per share (cents) 221 519 486
8. Subsequent events
No material fact or circumstance has occurred between the end of the period and
the date of this report.
COMMENTARY
Despite the hype surrounding the Soccer World Cup in June and July, there was a
sharp deterioration in most of the company`s served markets. Added to this, the
strengthening Rand put severe pressure on domestic pricing and export margins.
As a result of the above, revenue for the first six months of 2010 was down 18%
to R257,6 million (2009: R314,0 million). Results from operations (excluding
the effect of biological assets - IAS 41 Agriculture) were R14,6 million (2009:
R39,7). Headline earnings were down 57,5 % to R15,7 million (2009: R36,9
million) and earnings per share was 221 cents (2009: 519 cents).
The deterioration in served markets has continued in the second half of the
year, and if the value of the Rand continues at its current level, the outlook
is not optimistic.
AH Wilson MJ Slater
Chairman Managing Director
22 September 2010
DIRECTORS
AH Wilson (Chairman), MJ Slater (British) (Managing), WP Coetzee,
MM Clark (USA), CA Virostek (Canadian), KMP Spencer, AG Venton,
GE Coulter (USA), FJ Lynch (USA), LP Repar (Canadian)
SPONSOR
Nedbank Capital
135 Rivonia Road, Sandton, 2196
TRANSFER SECRETARIES
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
Date: 22/09/2010 16:00:01 Produced by the JSE SENS Department.
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