| Fri 18 Mar 2011, 16:00 | | MAS - Masonite (Africa) Limited - Audited results for the twelve months ended 31 |
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MAS
MAS
MAS - Masonite (Africa) Limited - Audited results for the twelve months ended 31
December 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")
AUDITED RESULTS for the twelve months ended 31 December 2010
Statement of comprehensive income
12 months to
December 31 2010 December 31 2009
Notes R`000 R`000
Revenue 548521 628746
Cost of sales (423667) (460500)
Gross profit 124854 168246
Fair value adjustment of
biological assets 3 (3909) (8097)
Other operating income 3621 3836
Distribution expenses (76300) (71931)
Selling and marketing expenses (12540) (13451)
Administrative expenses (15155) (11836)
Other operating expenses (16630) (19611)
Results from operations 3941 47156
Finance income 1750 4120
Finance expense (2083) (2042)
Profit before tax 3608 49234
Income tax expense 7 (567) (14671)
Net profit for the year 3041 34563
Other comprehensive income - -
Total comprehensive income for
the year attributable 3041 34563
Number of shares in issue 7 124 225 7 124 225
Earnings per share (cents)
Basic 43 485
Diluted 43 485
Statement of financial position
December 31 December 31
2010 2009
Notes R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 109010 107007
Intangible assets 556 622
Biological assets 3 163405 167314
Investments 30 30
Total non-current assets 273001 274973
Current assets
Inventories 69137 70229
Trade and other
receivables 80669 76059
Amounts due from fellow
subsidiaries 139 388
Tax receivable 2714 -
Cash and cash equivalents 69790 61270
Total current assets 222449 207946
Total assets 495450 482919
EQUITY AND LIABILITIES
Capital and reserves 3562 3562
Share capital
Share premium 3156 3156
Retained income 350452 347411
Total equity 357170 354129
Non-current liabilities
Deferred tax 49381 52481
Post-retirement benefit obligation 4 23707 22245
Straight-lining lease
accrual 71 44
Total non-current
liabilities 73159 74770
Current liabilities
Trade and other payables 58864 47517
Provisions 6 4812 5782
Amounts payable to fellow
subsidiaries 1439 -
Tax payable - 705
Straight-lining lease accrual 6 16
Total current liabilities 65121 54020
Total equity and
liabilities 495450 482919
Net asset value per share 5013 4971
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 2009 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
Total comprehensive income
attributable to ordinary
shareholders - - - 3041 3041
Balance at 31 December 2010 3562 3156 - 350452 357170
*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 2010 December 31 2009
R`000 R`000
Cash flow from operating activities
Profit from operations 3941 47156
Adjusted for:
Fair value adjustment of
biological assets 3909 8097
Depreciation and amortisation 14807 13136
Foreign exchange gain unrealised (459) (2948)
Provisions utilised (5828) (5150)
Increase in liability for
retirement benefit obligation 1462 1530
Loss on disposal of property,
plant and equipment 49 79
Straight-lining lease accrual 17 (64)
Tax payments (7086) (28 807)
Change in working capital 13691 (10666)
Cash flow from operations 24503 22363
Finance income 1819 4484
Finance expense (2083) (2042)
Net cash flow from
operating activities 24239 24805
Cash flow from investing activities
Replacement of property, plant and
equipment and intangible assets (16936) (20840)
Proceeds on disposal of property,
plant and equipment 145 -
Net cash outflow from
investing activities (16791) (20840)
Cash flow from financing activities
Dividends paid - (14248)
Net cash outflow from
financing activities - (14248)
Net increase/(decrease) in cash and
cash equivalents 7448 (10283)
Effects of exchange rates on the
balance of cash
held in foreign currencies 1072 548
Net cash and cash equivalents at
the beginning of the year 61270 71005
Net cash and cash equivalents at
the end of the year 69790 61270
Notes
`
1. Basis of preparation
The financial information has been prepared in accordance with the framework
concepts and the measurement and recognition requirements of International
Financial Reporting Standards (IFRS), the AC 500 standards as issued by the
Accounting Practices Board and the information as required by IAS 34: Interim
Financial Reporting.
2. Significant accounting policies
The report has been prepared using accounting policies that comply with IFRS
which are consistent with those applied in the financial statements for the year
ended 31 December 2009, except for the impact of the adoption of the Standards
and Interpretations described below.
IAS 1: Presentation of Financial Statements (effective for accounting periods
beginning on or after 1 January 2010);
IAS 7: Statement of Cash Flows (effective for accounting periods beginning on
or after 1 January 2010);
IAS 17: Leases (effective for accounting periods beginning on or after 1
January 2010);
IAS 27: Consolidated and Separate Financial Statements (effective for
accounting periods beginning on or after 1 July 2009);
IAS 28: Investments in Associates (effective for accounting periods beginning
on or after 1 July 2009);
IAS 31: Interest in Joint Ventures (effective for accounting periods beginning
on or after 1 July 2009);
IAS 36: Impairment of Assets (effective for accounting periods beginning on or
after 1 January 2010);
IAS 38: Intangible Assets (effective for accounting periods beginning on or
after 1 July 2009);
IAS 39: Financial Instruments: Recognition and Measurement: Amendments for
eligible hedged items (effective for accounting periods beginning on or after 1
July 2009);
IAS 39: Financial Instruments: Recognition and Measurement: Amendments
resulting from April 2009 annual improvements to IFRSs (effective for accounting
periods beginning on or after 1 January 2010);
IFRIC 13: Customer Loyalty Programmes (effective for accounting periods
beginning on or after 1 July 2009);
IFRIC 16: Hedges of a Net Investment in a Foreign Operation (effective for
accounting periods beginning on or after 1 October 2009);
IFRIC 17: Distribution of Non-cash Assets to Owners (effective for accounting
periods beginning on or after 1 July 2009);
IFRIC 18: Transfer of Assets from Customers (effective for accounting periods
beginning on or after 1 July 2009);
IFRS 2: Share-based Payments (effective for accounting periods beginning on or
after 1 January 2010);
IFRS 3: Business Combinations (effective for accounting periods beginning on or
after 1 July 2009);
IFRS 5: Non-current Assets Held for Sale and Discontinued Operations:
Amendments resulting from May 2008 Annual Improvements to IFRSs (effective for
accounting periods beginning on or after 1 July 2009);
IFRS 5: Non-current Assets Held for Sale and Discontinued Operations:
Amendments resulting from April 2009 Annual Improvements to IFRSs (effective for
accounting periods beginning on or after 1 January 2010);
IFRS 8: Operating Segments (effective for accounting periods beginning on or
after 1 January 2010);
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
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
statement of comprehensive income. 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.
2010 2009
R`000 R`000
Fair value adjustment to biological
assets recognised in the statement
Of comprehensive income (3909) (8097)
Fair value of biological assets
at December 31 2010 2009
R`000 R`000
Timber plantations
Establishment costs 28778 25065
Immature timber 43003 45212
Mature timber 80611 89038
Total 152392 159315
Sugar cane
Establishment costs 3085 2733
Immature sugar cane 6609 4863
Mature sugar cane 1319 403
Total 11013 7999
Total biological assets 163405 167314
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
December 31 December 31 December 31 December 31
2010 2009 2010 2009
R`000 R`000 R`000 R`000
Hardboard 399336 447565 14258 38113
Other products 67465 95364 (9512) 14415
Forestry 110012 106320 13120 5842
Intersegment (29571) (21125) - -
Unallocated 1279 622 1230 622
Total 548521 628746 19096 58992
Administrative expenses (15155) (11836)
Results from operations 3941 47156
Finance income 1750 4120
Finance expense (2083) (2042)
Profit before tax 3608 49234
Income tax expense (567) (14671)
Profit for the period 3041 34563
6. Provisions
The amounts at the statement of financial position date comprise provisions for
leave pay.
7. Income tax expense
2010 2009
R`000 R`000
Current tax 3667 16527
Deferred tax (3100) (3280)
Secondary tax - 1424
Total 567 14671
8. Headline earnings
2010 2009
R`000 R`000
Reconciliation of headline earnings
Profit for the year 3041 34563
Adjusted for:
Loss on disposal of assets 49 79
Tax effect of loss on disposal
of assets (14) (22)
Headline earnings 3076 34620
Headline earnings per share (cents) 43 486
9. Subsequent events
No material fact or circumstance has occurred between the end of the period and
the date of this report.
COMMENTARY
The company experienced a reduction in revenue of R80,2 million in the period
under review. (2010: R548,5 million, 2009: R628,7 million). Earnings for the
period (excluding the effect of the adjustment of biological assets - IAS 41:
Agriculture) were R7,9 million (2009: R55,3 million).
The financial performance of the Company was influenced by two dominant factors.
The first was the slowdown in the building and construction sector of the
domestic economy, while the second was the strengthening of the local currency
against major currencies. In January 2010 the Rand / US Dollar exchange rate
was 7,52 and by December 2010 this rate had strengthened by 12,2% to 6,60,
leading to price reductions in the local market. These two factors resulted in
margins coming under pressure. Exports, being dollar denominated, also yielded
lower Rand returns.
Despite these temporary setbacks, operations at the mill and in forestry were of
the highest standard. The focus on working capital management resulted in the
company ending the year with a cash reserve of R69,7 million (2009 : R61,3
million).
Increased cost reduction efforts were largely successful and will benefit the
company in the future.
Prospects
The company had a favourable start to the new financial year with results for
the first two months exceeding expectations.
In addition to cost saving efforts initiated in 2010, improved pricing and entry
into new export markets provides for a positive outlook for the 2011 financial
year.
The above information has not been reported on by the auditors of the company.
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 2010. 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.
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
2011, at 14H00.
AH Wilson MJ Slater
Chairman Managing Director
18 March 2011
DIRECTORS
AH Wilson (Chairman), MJ Slater (British) (Managing), NCK Vinay (Financial)
WP Coetzee, MM Clark (USA), CA Virostek (Canadian), KMP Spencer, AG Venton,
GE Coulter (USA), MJ Erceg (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: 18/03/2011 16:00:01 Produced by the JSE SENS Department.
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