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YRK
YRK
YRK - York Timber Holdings - Abridged Audited Group Annual Financial Results,
Notice of Annual General Meeting and Posting of Annual Report
York Timber Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1916/004890/06)
JSE Share code: YRK
ISIN: ZAE000133450
("York" or "the Group")
ABRIDGED AUDITED GROUP ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2010,
NOTICE OF ANNUAL GENERAL MEETING AND POSTING OF ANNUAL REPORT
Salient features
Successful capital raising and business restructuring
Gross profit up 5%
Earnings per share up 110%
Headline earnings per share up 116%
Net asset value per share up 45%*
(* using the number of shares currently in issue)
GROUP STATEMENT OF FINANCIAL POSITION
At At
30 June 30 June
2010 2009
R`000 R`000
ASSETS
NON-CURRENT ASSETS
Biological assets (note 5) 1 562 936 1 492 002
Investment property 24 740 5 020
Property, plant and 420 184 429 456
equipment
Goodwill (note 6) 565 442 610 352
Intangible assets 2 691 2 984
Other financial assets 1 345 3 911
TOTAL NON-CURRENT ASSETS 2 577 338 2 543 725
CURRENT ASSETS
Biological assets (note 5) 358 738 246 369
Instalment sale receivables 606 1 854
Inventories 138 040 226 467
Trade and other receivables 104 334 117 999
Cash and cash equivalents 84 493 124 422
Current tax receivable 3 503 -
TOTAL CURRENT ASSETS 689 714 717 111
TOTAL ASSETS 3 267 052 3 260 836
EQUITY AND LIABILITIES
EQUITY
Share capital (note 7) 16 562 3 919
Share premium (note 7) 1 505 352 1 026 888
Reserves (26 236) (88 438)
Retained income 471 863 407 237
TOTAL EQUITY 1 967 541 1 349 606
LIABILITIES
NON-CURRENT LIABILITIES
Cash settled share based 2 104 50
payments
Deferred tax 409 510 414 974
Retirement benefit 22 463 20 200
obligation
Other financial liabilities 612 317 1 061 543
Finance lease obligations 13 245 23 252
Provisions 55 496 54 643
Instalment sale liabilities 917 2 907
TOTAL NON-CURRENT 1 116 052 1 577 569
LIABILITIES
CURRENT LIABILITIES
Other financial liabilities 51 698 97 819
Finance lease obligations 2 278 3 438
Instalment sale liabilities 1 515 1 781
Current tax payable 369 5 424
Provisions 285 -
Trade and other payables 127 314 225 199
TOTAL CURRENT LIABILITIES 183 459 333 661
TOTAL LIABILITIES 1 299 511 1 911 230
TOTAL EQUITY AND LIABILITIES 3 267 052 3 260 836
GROUP STATEMENT OF COMPREHENSIVE INCOME
Year Year
ended ended
30 June 30 June
2010 2009
R`000 R`000
Revenue 909 361 1 095 290
Cost of sales (559 244) (762 223)
GROSS PROFIT 350 117 333 067
Other operating income 19 962 9 566
Selling, general and (300 815) (322 134)
administration expenses
OPERATING PROFIT BEFORE
SEPARATELY DISCLOSED ITEMS 69 264 20 499
Insurance proceeds 8 519 158 731
Impairment of assets (42 598) (43 390)
OPERATING PROFIT 35 185 135 840
Restructuring costs (333) (18 735)
Fair value adjustments 200 269 (244 598)
Loss on non-current assets - (373)
held for sale
PROFIT/(LOSS) BEFORE FINANCE 235 121 (127 866)
COSTS
Investment income 2 810 13 133
Finance costs excl hedge (107 978) (173 312)
interest expense
Hedge interest expense (16 791) (18 266)
(paid)
Hedge interest expense (23 015) (6 316)
(ineffective portion)
Hedge interest expense (due
to early settlement) (29 577) -
PROFIT/(LOSS) BEFORE 60 570 (312 627)
TAXATION
Taxation 4 056 80 707
PROFIT/(LOSS) FOR THE YEAR 64 626 (231 920)
Other comprehensive
income/(loss):
Available-for-sale financial
assets adjustments 716 40
Effects of cash flow hedges 52 499 (89 545)
Taxation related to
components of other 10 273 -
comprehensive income
Other comprehensive income/
(loss) for the year net of 63 488 (89 505)
taxation (subtotal)
TOTAL COMPREHENSIVE 128 114 (321 425)
INCOME/(LOSS)
PROFIT/(LOSS) ATTRIBUTABLE
TO:
Owners of the parent 64 626 (231 920)
TOTAL COMPREHENSIVE
INCOME/(LOSS) ATTRIBUTABLE
TO:
Owners of the parent 128 114 (321 425)
Basic earnings/(loss) per 30 (296)
share (cents)
Diluted earnings/(loss) per 30 (296)
share (cents)
Headline earnings/(loss) per 40 (254)
share (cents)
GROUP STATEMENT OF CHANGES IN EQUITY
Fair value
adjustment
assets- Share
available- based
Share Share Hedging for- sale payment Retained TOTAL
capital premium reserve reserve reserve income EQUITY
BALANCE AS AT 1 JULY 2008
3 919 1 002 - (219) 10 446 638 900 1 655
622 668
Total comprehensive loss for the year
Loss for the year
- - - - - (231 (231
920) 920)
Other comprehensive (loss)/income
Change in fair value of cash flow, net of tax
- - (89 - - - (89
545) 545)
Change in fair value of available-for-sale financial assets,
net of tax
- - - 40 - - 40
Total other comprehensive (loss)/income
- - (89 40 - - (89
545) 505)
Total comprehensive (loss)/income for the year
- - (89 40 - (231 (321
545) 920) 425)
Transactions with owners recorded directly in equity
Contributions by and distributions to owners
Share premium raised due to consolidation of treasury shares
- 24 266 - - - - 24 266
Reversal of share based payment reserve
- - - - (9 160) - (9
160)
Dividends declared and not claimed
- - - - - 257 257
Total transactions with owners
- 24 266 (89 40 (9 160) (231 (306
545) 663) 062)
BALANCE AS AT 1 JULY 2009
3 919 1 026 (89 (179) 1 286 407 237 1 349
888 545) 606
Total comprehensive income for the year
Profit for the year
- - - - - 64 626 64 626
Other comprehensive income
Change in fair value of cash flow, net of tax
- - 62 872 - - - 62 872
Change in fair value of available-for-sale financial assets,
net of tax
- - - 616 - - 616
Total other comprehensive income
- - 62 872 616 - - 63 488
Total comprehensive income for the year
- - 62 872 616 - 64 626 128
114
Transactions with owners recorded directly in equity
Contributions by and distributions to owners
Issue of shares through rights issue
12 500 487 500 - - - - 500
000
Share issue costs written off against share premium
- (12 - - - - (12
844) 844)
Increase in share based payment reserve
- - - - 9 160 - 9 160
Reversal of share premium due to disposal of treasury shares
- (24 - - - - (24
266) 266)
Conversion of preference shares in to ordinary shares
143 28 074 - - (10 - 17 771
446)
Total transactions with owners
12 643 478 464 62 872 616 (1 286) 64 626 489
821
BALANCE AS AT 30 JUNE 2010
16 562 1 505 (26 437 - 471 863 1 967
352 673) 541
GROUP STATEMENT OF CASH FLOWS
Year Year
ended ended
30 June 30 June
2010 2009
R`000 R`000
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash receipts from customers 1 050 337 1 160 930
Cash paid to suppliers and (948 469) (939 983)
employees
Cash generated from 101 868 220 947
operations
Investment income 2 111 13 133
Finance costs (129 665) (168 549)
Tax received/(paid) 1 594 (2 999)
NET CASH FROM OPERATING (24 092) 62 532
ACTIVITIES
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property, plant (17 095) (130 604)
and equipment
Sale of property, plant and 933 989
equipment
Purchase of other intangible (457) (3 662)
assets
Withdrawal
from/(contribution to) self- 3 282 (2 108)
insurance fund
Proceeds from sale of non-
current assets held for sale - 650
Decrease in loans and - 98
receivables
NET CASH FROM INVESTING (13 337) (134 637)
ACTIVITIES
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds on share issue 12 643 -
Increase in share premium 491 308 24 266
Share issue cost deducted
from share premium (12 844) -
Redemption of redeemable
preference shares - (16 537)
Net movement on other (481 432) (30 279)
financial liabilities
Movement in instalment sale (2 256) (1 631)
liabilities
Movement in finance (11 167) (2 829)
obligations
Movement in instalment sale 1 248 999
receivables
NET CASH FROM FINANCING (2 500) (26 011)
ACTIVITIES
TOTAL CASH MOVEMENT FOR THE (39 929) (98 116)
YEAR
Cash at beginning of year 124 422 222 538
CASH AT END OF YEAR 84 493 124 422
ADDITIONAL INFORMATION
30 June 30 June
2010 2009
R`000 R`000
Capital expenditure (17 095) (130 604)
Authorised capital
commitments contracted, but (2 900) (136)
not provided for
Authorised capital
commitments not yet (5 894) (3 164)
contracted for
Depreciation of property,
plant and equipment (25 931) (18 711)
Amortisation of intangible (750) (678)
assets
Reversal of
impairment/(impairment) of 3 184 (43 390)
property, plant and
equipment
Impairment of trade (872) (6 183)
receivables
Restructuring costs (333) (18 735)
NOTES TO THE GROUP ANNUAL FINANCIAL INFORMATION
1. STATEMENT OF COMPLIANCE
The consolidated financial results announcement is based on the audited annual
financial statements of the group for the year ended 30 June 2010. These have
been prepared in accordance with International Financial Reporting Standards
("IFRS"), the AC 500 standards as issued by the Accounting Practices Board
("APB"), the Listing Requirements of the JSE Limited and the Companies Act of
South Africa, 1973.
The consolidated financial results do not include all the information required
for full annual financial statements and have been prepared in accordance with
IAS 34 - Interim Financial Reporting.
The consolidated annual financial statements, which have been prepared on the
going concern basis, were approved by the Board of Directors on 13 September
2010.
2. INDEPENDENT AUDIT BY THE AUDITORS
The consolidated annual financial statements for the year ended 30 June 2010
have been audited by the Group`s auditors, KPMG Incorporated, who performed
their audit in accordance with the International Standards on Auditing. A copy
of their unqualified audit report is available for inspection at the registered
office of the Company.
3. BASIS OF PREPARATION
The preparation of the annual financial statements requires management to make
judgements, estimates and assumptions that affect the application of accounting
policies, and the reported amounts of assets and liabilities, income and
expenses. Actual results may differ from these estimates.
The accounting policies are consistent with those used for the year ended 30
June 2009, other than the following:
- Presentation of financial statements due to the adoption of the revised IAS 1,
- Additional disclosure for financial instruments due to the amendments to IFRS
7,
- Determination & presentation of operating segments due to the adoption of IFRS
8,
- Accounting for borrowing costs due to the adoption of the revised IAS 23,
- Accounting for business combinations due to the adoption of the revised IAS 27
and IFRS 3, and
- Accounting for acquisitions of non-controlling interests due to the adoption
of the revised IAS 27.
The presentation of the financial statements and the disclosure requirements for
financial instruments as well as operating segments have been changed in
accordance with IAS 1, IFRS 7 and IFRS 8. The Group changed the accounting for
borrowing costs due to the amendments of IAS23 and as the Group did not incur
any borrowing costs on qualifying assets during the year ended 30 June 2010 this
adoption had no impact on the financial results. The Group adopted IFRS3 and
IAS27 for periods commencing 1 July 2009 and as the Group had no business
combinations or acquisitions of non-controlling interests during the year ended
30 June 2010, this adoption had no impact on the financial results.
4. OPERATING SEGMENTS
The business is considered from an operating perspective based on the products
cultivated or produced and sold. The Group operates in one main geographic
segment, the Republic of South Africa. The operating segments comprise timber
products (aggregating the sawmilling, plywood and warehousing segments) as well
as forestry.
Timber Timber
R`000 products products Forestry Forestry Total Total
2010 2009 2010 2009 2010 2009
Reportable items in the Statement of Comprehensive Income
Revenue: external sales
872 741 1 025 34 747 67 299 907 1 093
747 488 046
Revenue: inter-segment sales
55 683 25 467 375 104 445 227 430 470
787 694
Total revenue
928 424 1 051 409 851 512 526 1 338 1 563
214 275 740
Depreciation and amortisation
(22 307) (15 053) (4 374) (4 336) (26 (19
681) 389)
Reportable segment profit (being the earnings before
interest, taxation, depreciation and amortisation "EBITDA")
1 550 123 962 103 255 76 791 104 200
805 753
Material non-cash items:
Fair value adjustment to biological assets
- - 183 302 (244 183 (244
698) 302 698)
Reportable items in the Statement of Financial Position
Reportable segment assets
236 697 308 482 1 942 1 780 2 179 2 088
707 031 404 513
Capital expenditure
10 364 125 970 5 360 4 634 15 724 130
604
Reportable segment liabilities
- - - - - -
Reconciliation of reportable segment revenues, profit or loss, assets and
liabilities
2010 2009
R`000 R`000
Revenue
Total revenue for reportable 1 338 1 563
segments 275 740
Other revenue 1 873 2 244
Elimination of inter-segment (430 (470
revenue 787) 694)
Consolidated revenue 909 361 1 095
290
Profit or loss
Total EBITDA for reportable 104 805 200 753
segments
Depreciation, amortisation and (66 093) (62 779)
impairment
Unallocated amounts: corporate (3 527) (2 134)
office
Operating profit 35 185 135 840
Assets
Total assets for reportable 2 179 2 088
segments 404 513
Non-current assets not allocated 1 014 1 051
to segments 402 723
Current assets not allocated to 73 246 120 600
segments
Consolidated total assets 3 267 3 260
052 836
Liabilities
Total liabilities for reportable - -
segments
Non-current liabilities not 1 116 1 577
allocated to segments 052 569
Current liabilities not allocated 183 459 333 661
to segments
Consolidated total liabilities 1 299 1 911
511 230
5. BIOLOGICAL ASSETS
2010 2009
R`000 R`000
Reconciliation of biological assets
Opening balance 1 738 1 983
371 070
Fair value adjustment:
- Increase due to growth 326 179 491
846
- Decrease due to harvesting (308 (244
633) 492)
- Adjustment to standing timber
values to reflect fair value less 165 (179
point of sale cost at year end 090 698)
Closing balance 1 921 1 738
674 371
Classified as non-current assets 1 562 1 492
936 002
Classified as current assets * 358 246 369
738
1 921 1 738
674 371
* Being the biological assets to be
harvested and sold in the 12 months
after year end.
Change in valuation method
The fair value model as well as the methodology and assumptions used therein
have been revised to obtain a more accurate valuation. The Group adopted the
discounted cash flow valuation model to calculate the fair value of its
biological assets during this year. Previously the Group used the net standing
valuation model, which would have resulted in a value of R1,636 million.
The main changes in the methodology and assumptions:
- Timber prices: The market price per cubic metre is based on current and future
expected market prices per log class.
- Operating costs: The costs are based on unit cost of the forest management
activities required to enable the trees to reach the age of felling. The costs
includes the current and future expected costs of harvesting, maintenance and
risk management, as well as an appropriate amount of fixed overhead costs. The
costs exclude the costs necessary to get the asset to the market. The net
standing valuation method only incorporated the cost of felling all the standing
timber.
- Discount rate: The Group used its after-tax weighted average cost of capital
("WACC") applied to the after taxation net cash flow. No discount rate was used
previously, as the Group applied the net standing valuation method which does
not take into consideration the time value of money.
6. GOODWILL
2010 2009
R`000 R`000
Reconciliation of goodwill
Opening balance 610 610 352
352
Impairment of goodwill (44 -
910)
Closing balance 565 610 352
442
Goodwill arose from the business combination of Global Forest Products that took
place on 13 July 2007.
For the purpose of impairment testing, goodwill is allocated to the Group`s
operating divisions which represent the lowest level within the Group at which
the goodwill is monitored for internal management purposes, which is not higher
than the Group`s operating segments before aggregation. Goodwill has been
allocated to the forestry segment.
The Group`s assets are compared to the present value of the future cash flows
that are expected to flow from group sales.
The key assumptions used in estimating the future cash flows are as follows:
- The plantations are managed in rotation based on a clear fell age of between
21 years and 25 years.
- The plantations are managed on a sustainable basis so that all harvested areas
are replanted. The temporarily unplanted areas at any point constitute
approximately 2,500 hectares.
- Long term CPIX of 6.0% (2009: 5.5%)
- Weighted average cost of capital 11.28% (2009: 14.0%)
- Target debt equity ratio of 30:70 (2009: 30:70)
- Pre-tax cost of debt of 10.0% (2009: 11.5%)
7. SHARE CAPITAL
2010 2009
Reconciliation of the number of `000 `000
shares issued
Opening balance 78 370 78 370
Issue of shares through rights offer 250 -
000
Conversion of preference shares into 2 871 -
ordinary shares
Closing balance 331 78 370
241
2010 2009
Issued share capital R`000 R`000
Ordinary shares of R0.05 each 16 562 3 919
Share premium 1 540 1 048
051 743
Share issue costs written off (34 (21
against share premium 699) 855)
Total 1 521 1 030
914 807
During the financial year, York issued and converted the following shares:
- 250 million ordinary shares were issued through a rights offer at an issue
price of R2 per share. The rights offer was announced on 20 November 2009 in the
ratio of 307.72792 rights offer shares for every 100 York shares held at the
close of business on 20 November 2009. The rights offer closed at 12h00 on
Friday, 11 December 2009. The cost of the rights issue was deducted from share
premium during the reporting period.
- 2,871 million convertible, non-redeemable cumulative preference shares were
converted into ordinary shares at 24 June 2010 on a one to one basis.
8. SHARE BASED PAYMENTS
Cash settled share based payments scheme
The cash settled share options allocated on 1 March 2008 were cancelled. The
number of options outstanding as at 30 June 2009 was 399,000, with a weighted
average exercise price of R22.70.
During the year ended 30 June 2010 the Group issued the following share-based
options in terms of the share appreciation rights scheme:
Weighted
Number exercise
`000 price
Granted on 17 November 2009, and
outstanding at the end of the year 8 428 R2.74
The Group offers its key employees an incentive plan in the form of an employee
share appreciation rights scheme which provides a right to receive a cash
payment over the vesting period. The cash payment is based on the appreciation
in the price of the shares over the five year period.
The appreciation rights are call options granted by the Company to employees.
During the first portion of its life the option cannot be exercised and is
forfeited should the employee leave the employment of the entity. This period of
the option`s life is referred to as the vesting period. After the vesting date,
a lock in period follows, at which time the option is exercised. The employees
have the option to exercise their rights in trenches of 33.3% at the end of year
3, year 4 and year 5 respectively. The option expires at the end of year 6.
The payoff that a beneficiary of the share appreciation right scheme will
receive, at the end of the lock in period, is the difference between the spot
price on the exercise date and the 30 day volume weighted average price on grant
date.
The scheme is treated as a cash settled scheme. Cash settled schemes are valued
at the reporting date in terms of IFRS 2 Share Based Payment.
Fair value was determined using the Black-Scholes model. The following inputs
were used:
- The volume weighted average strike price of R2.74 per share.
- Closing share price at 30 June 2010 of R3.07 per share.
- Grant date is 17 November 2009.
- Vesting portions are in 3 equal trenches annually commencing on 17 November
2012.
- Option life is six years with a maturity/expiry date of 17 November 2015.
- It was assumed that no forfeiture of the granted share appreciation rights
will occur.
- A dividend yield of 0% was applied in the calculation.
- The risk-free interest rate was sourced from the Bond Exchange of South
Africa. The bootstrapped zero coupon perfect fit swap curve as at 30 June 2010
was used. The risk-free interest rates applied range from 6.89% (minimum value)
to 7.81% (maximum value).
- Expected volatility was calculated using the equally weighted standard
approach, by making use of the available historical share price data, for a
period equal to the term to maturity of the scheme. Smoothing of the share price
volatility was done at the end of July 2007 and June 2010, in order to exclude
the effects of the rights issues made by the company on the volatility.
2010 2009
Liability arising from share based R`000 R`000
payments:
Carrying amount of cash settled 2 104 50
liability
9. EARNINGS PER SHARE
The calculation of basic earnings per share at 30 June 2010 is based
on the profit/(loss) attributable to ordinary shareholders of R 64,626
million (2009: R (231,920) million) and a weighted average number of ordinary
shares of 216,781 million (2009: 78,370 million).
The calculation of diluted earnings per share at 30 June 2010 is
based on the profit/(loss) attributable to ordinary shareholders, after
the effect on basic earnings for the convertible preference shares of R 64,626
million (2009: R (231,920) million) and a weighted average number of ordinary
shares after the effect of the convertible preference shares of 216,781 million
(2009: 78,370 million). In the year ended 30 June 2010 there were no instruments
that had a dilutive effect.
2010 2009
Reconciliation of weighted average
number of ordinary shares `000 `000
Issued ordinary shares 78 370 78 370
Effect of shares issued in December 138 -
2009 356
Effect of conversion of shares 55 -
Weighted average ordinary shares for 216 78 370
the year 781
10. HEADLINE EARNINGS PER SHARE
The calculation of headline earnings per share at 30 June 2010 is based on the
profit/(loss) attributable to ordinary shareholders, adjusted by items non
headline earnings items of R 87,156 million (2009: R (199,352)) and the weighted
average number of ordinary shares of 216,781 million (2009: 78,370).
2010 2009
Headline earnings per share 40 (254)
(cents)
Reconciliation of basic earnings to headline earnings
Gross Taxation Total
2010 R`000 R`000 R`000
Basic earnings attributable
to ordinary shareholders 60 570 4 056 64 626
Profit on sale of assets (10 3 061 (7
and liabilities 933) 872)
Fair value adjustment on (16 4 751 (12
investment property 967) 216)
Impairment of plant, (3 892 (2
equipment and vehicles 184) 292)
Impairment of goodwill 44 910 - 44 910
Headline earnings for the 74 396 12 760 87 156
year
2009 R`000 R`000 R`000
Basic earnings attributable
to ordinary shareholders (312 80 707 (231
627) 920)
Loss on sale of assets and 1 569 (439) 1 130
liabilities
Fair value adjustment on (100) 28 (72)
investment property
Loss on sale of non-current
assets held for sale 373 (104) 269
Impairment of plant, 43 390 (12 149) 31 241
equipment and vehicles
Headline earnings for the (267 68 043 (199
year 395) 352)
NOTICE OF ANNUAL GENERAL MEETING AND POSTING OF ANNUAL REPORT
Notice is hereby given that the 94th Annual General Meeting of the Company will
be held at the Sabie Country Club, Main Street, Sabie, 1260 at 10:00 on Tuesday,
16th November 2010.
Accordingly, shareholders are advised that the Annual Report containing the
audited financial statements for the year ended 30 June 2010 will be posted to
shareholders today. The audited financial statements for the year ended 30 June
2010, together with the Auditors` Report, is available on the Company`s website:
www.york.co.za as from today.
On behalf of the Board of Directors
JP MYERS PP VAN ZYL
Chairman Chief Executive
=================
NATURE OF BUSINESS
York has the largest market share of the South African lumber and plywood market
resulting from its sustainable biological asset integrated with primary and
value adding processes through the entire value chain. York operates in various
trade sectors and markets, both domestic and overseas.
FINANCIAL HIGHLIGHTS
Major highlights for the year under review included:
- Recapitalised balance sheet;
- Negotiated debt repayment and revised debt terms;
- The closure of three operating units;
- Right sizing, restructured business management and cost structures;
- Business refocused on optimising the use of own raw material sources and
supply chain management;
- Improved financial profit and cash flow generation for the second six months
of the 2010 financial year; and
- The discounted cash flow method has been adopted to calculate the fair value
of the biological asset.
The rights issue concluded in December 2009 was oversubscribed by 166%, an
endorsement of York`s strategic direction announced during the period as part of
the Group`s restructuring plans. This raised R500 million of equity.
R450 million of the rights issue was utilised to pay off debt. This debt
reduction was largely achieved on a pro-rata basis when compared to the existing
debt structure. Therefore, the average cost of debt has not been significantly
impacted; however the reduction in balance has reduced the interest obligation
significantly. The remaining R50 million was earmarked for strategic capital
expenditure.
The goal to reduce fixed and overhead costs of over R72 million, on an
annualised basis, has been exceeded by R7 million. This was achieved through a
comprehensive right sizing exercise that involved the complete top down re-
structuring of all salaried staff.
Improved operating efficiencies, a renewed focus to optimise the raw material
base and integration with comprehensive supply chain management, provided York
with the basis to significantly improve financial performance during the second
six months of the financial year. This is despite economic conditions
deteriorating further than anticipated at the outset of this financial period.
The discounted cash flow method is widely used in the Forestry, Paper and Pulp
industry to calculate the fair value of biological assets. Following careful
consideration and full consultation through the Audit and Risk Committee, the
Board of Directors endorsed the recommendation that this method should be
adopted, as it is most likely to provide an accurate and consistent fair value
of the asset. This has resulted in an increase of approximately 10.5% when
compared to the asset`s value in the comparative period.
Aligned with the adoption of this method, and as required by International
Financial Reporting Standards, the goodwill associated with the plantations has
been tested through a detailed valuation process. The goodwill, which arose as a
result of the acquisition of Global Forest Products, remains largely intact as a
result of this test. An impairment amounting to approximately R45 million was
required. York`s management and board believes that future economic benefit is
expected to flow to the Group as York`s sustainable forestry management and
silviculture plans will result in a significant increase in the sustainable
volume off-take from the plantations.
Sustainability of the plantation asset is being enhanced through continued
accelerated re-planting of the fire damaged areas of the recent past. During the
period under review, in excess of double the number of hectares were re-planted
when compared to those hectares harvested. This situation will continue for the
next further financial period, by when, all affected areas will be re-planted.
PROSPECTS
Management believe that the performance during the second six months of the 2010
financial year can be sustained. Revenue has improved during the three months
of the new period when compared to the comparable three month period a year
ago. The cost and raw material optimisation strategies and supply chain
improvements continue to positively impact performance and results.
The above prospects is not a forecast and has not been reviewed or reported on
by the Group`s auditors.
COMPANY INFORMATION
Directors: JP Myers*# (Chairman), PC Botha*, DJ Erskine (CFO), SAU Meer*, GR
Tipper*#, PP van Zyl (CEO) (*non-executive) (# independent)
Registered office: York Corporate Office, 3 Main Street, Sabie, 1260
Postal address: PO Box 1191, Sabie, 1260
Company secretary: Fusion Corporate Secretarial Services (Pty) Ltd
Transfer secretaries: Computershare Investor Services (Pty) Ltd
Sponsor: Barnard Jacobs Mellet Corporate Finance (Pty) Ltd
Auditors: KPMG Incorporated
www.york.co.za
Sabie, Mpumalanga
30 September 2010
Date: 30/09/2010 16:53:01 Produced by the JSE SENS Department.
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