| Wed 7 Sep 2011, 17:16 | | YRK - York Timber Holdings Limited - Reviewed preliminary condensed consolidated |
|
YRK
YRK
YRK - York Timber Holdings Limited - Reviewed preliminary condensed consolidated
financial results for the year ended 30 June 2011
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 Company" or "the Group")
REVIEWED PRELIMINARY CONDENSED CONSOLIDATED FINANCIAL RESULTS
for the year ended 30 June 2011
SALIENT FEATURES
------------------------------------
- Revenue growth of 5.5%
- Operating profit increased by 460%
- Cash generated by operations up by R85 million
- Net asset value per share up from 594c to 612c
- Earnings per share down from 30c to 12c
- Headline earnings per share down from 40c to 16c
-----------------------------------------------------------------
OPERATING REVIEW
-----------------------------------------------------------------
York is an integrated timber company with operations in Mpumalanga,
South Africa. York processes its own timber, grown on 67 000 hectares
of plantations, through its five processing plants.
The key goals for the 2011 financial year were cost and resource
optimisation; to maximise cash flow; and to improve the quality of
the biological asset. York successfully achieved these goals.
York continued to plant more hectares than harvested and has
substantially improved forestry management practices. This has
resulted in a sustainable increase in the value of the plantation
asset.
Production output has increased by 18% when compared to the prior
year. Unit cost reduced by 9% resulting in margin improvement.
Results
In the period under review York produced a much improved operating
profit (460% increase). Cash generated increased by R85 million.
York`s restructuring plans are now fully implemented and through
cost optimisation and supply chain management margins were improved
despite soft product prices.
Highlights for the period under review are:
- York achieved an operating profit of R162 million compared to
R35 million a year ago.
- Cash generated from operations of R187 million versus R102 million
in the comparative period.
- Revenue has grown by 5.5% as a consequence of York`s marketing
strategy. York`s sales volume increased by 11% while prices
remained under pressure.
- Gross profit margin increased from 39% to 44%. Cost of sales were
reduced with the lower unit cost of production and improved
forestry tending activities.
- Selling, general and administration expenses were reduced throughout
the business by 12%.
- Net asset value per share increased from 594 cents to 612 cents.
Plantation asset
Shareholders are reminded of the change from the net standing
value method to the discounted cashflow method (DCF) of plantation
valuation in the year ended 30 June 2010, which resulted in an
increase of R183 million in the value of the plantations. The
DCF method incorporates forward looking assumptions to determine
the underlying plantation value on a normalised basis.
The biological asset value has increased by an amount of
R14.7 million in the current year, representing the change
in the DCF value over this period.
York subscribes to the best forestry operating practice, and
manages its biological assets in a sustainable and environmentally
responsible manner. All of York`s plantations are Forest Stewardship
Council (FSC) certified.
Prospects
Business sentiment towards the building industry remains weak.
Despite this, the Group is well placed to drive production
efficiencies and to grow profits and cash flows. There are a
number of capital projects in progress which should contribute
to future results.
The interest rate swap hedging arrangement has matured and this
should positively affect earnings going forward. This statement
is not a forecast and has not been reviewed or reported on by
York`s auditors.
The cost associated with York`s debt continues to increase and
as a result York is considering restructuring or replacing its
current debt package.
Board of directors
Dr Azar Jammine was appointed to the Board as an independent
non-executive director on 5 October 2010. Mr Paul Botha and
Mr Shakeel Meer were reappointed to the Board at the
Shareholders meeting on 16 November 2010.
On behalf of the Board of Directors
PIETER VAN ZYL (Chief Executive Officer)
DUNCAN ERSKINE (Chief Financial Officer)
Sabie, Mpumalanga
07 September 2011
-------------------------------------------------------------------
REVIEWED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2011
-------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
-------------------------------------------------------------------
2011 2010
Reviewed Audited
R`000 R`000
ASSETS
NON-CURRENT ASSETS
Biological assets (note 4) 1 616 363 1 562 936
Investment property 24 940 24 740
Property, plant and equipment 404 665 420 184
Goodwill 565 442 565 442
Intangible assets 3 275 2 691
Other financial assets 1 004 1 345
TOTAL NON-CURRENT ASSETS 2 615 689 2 577 338
CURRENT ASSETS
Biological assets (note 4) 320 035 358 738
Instalment sale receivables - 606
Inventories 148 807 138 040
Trade and other receivables 124 595 104 334
Cash and cash equivalents 103 484 84 493
Current tax receivable 3 524 3 503
TOTAL CURRENT ASSETS 700 445 689 714
TOTAL ASSETS 3 316 134 3 267 052
EQUITY AND LIABILITIES
EQUITY
Share capital (note 5) 16 562 16 562
Share premium 1 505 352 1 505 352
Reserves (5 826) (26 236)
Retained income 510 180 471 863
TOTAL EQUITY 2 026 268 1 967 541
LIABILITIES
NON-CURRENT LIABILITIES
Cash settled share based payments 6 497 2 104
Deferred tax 432 451 409 510
Loans and borrowings 539 657 626 479
Provisions 54 643 55 496
Retirement benefit obligation 21 454 22 463
TOTAL NON-CURRENT LIABILITIES 1 054 702 1 116 052
CURRENT LIABILITIES
Current tax payable 369 369
Loans and borrowings 74 568 55 491
Provisions 285 285
Trade and other payables 159 942 127 314
TOTAL CURRENT LIABILITIES 235 164 183 459
TOTAL LIABILITIES 1 289 866 1 299 511
TOTAL EQUITY AND LIABILITIES 3 316 134 3 267 052
-------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
-------------------------------------------------------------------
2011 2010
Reviewed Audited
R`000 R`000
Revenue 959 143 909 361
Cost of sales (538 231) (559 244)
Gross profit 420 912 350 117
Other operating income 5 802 19 962
Selling, general and administration expenses (264 817) (300 815)
Operating profit before
separately disclosed items 161 897 69 264
Insurance proceeds - 8 519
Impairment of operating assets - (42 598)
OPERATING PROFIT 161 897 35 185
Restructuring costs - (333)
Loss on non-current assets held for sale (13 362) -
Fair value adjustments 14 924 200 269
Profit before finance costs 163 459 235 121
Investment income 2 217 2 810
Finance costs excl. hedge interest expense (78 866) (107 978)
Hedge interest expense
- paid (21 504) (16 791)
- ineffective portion (11 992) (23 015)
- due to early settlement - (29 577)
Profit before taxation 53 314 60 570
Taxation (14 997) 4 056
PROFIT FOR THE PERIOD 38 317 64 626
Other comprehensive income/(loss):
Available-for-sale
financial assets adjustments (341) 716
Effects of cash flow hedges 28 756 52 499
Taxation related to components of
other comprehensive income (8 005) 10 273
Other comprehensive income for the
period net of taxation (subtotal) 20 410 63 488
TOTAL COMPREHENSIVE INCOME 58 727 128 114
EARNINGS PER SHARE
Basic and diluted earnings per share
(cents) (note 8) 12 30
Basic and diluted headline earnings
per share (cents) (note 9) 16 40
------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
------------------------------------------------------------------
Share Share Retained
capital premium income
R`000 R`000 R`000
BALANCE AT 1 JULY 2009
(Audited) 3 919 1 026 888 407 237
Profit for the year - - 64 626
Total comprehensive
income for the year - - 64 626
Transactions with owners
recorded directly in equity
Contributions by and
distributions to owners
Issue of shares through
rights issue 12 500 487 500 -
Share issue costs written
off against share premium - (12 844) -
Reversal of share premium
due to disposal of
treasury shares - (24 266) -
Conversion of preference
shares into ordinary shares 143 28 074 -
Total transactions
with owners 12 643 478 464 64 626
BALANCE AT 30 JUNE 2010
(Audited) 16 562 1 505 352 471 863
Profit for the year - - 38 317
Total comprehensive income
for the year and total
transactions with owners - - 38 317
BALANCE AT 30 JUNE 2011
(Reviewed) 16 562 1 505 352 510 180
Fair value
adjustment
assets- Share
available based
Hedging -for-sale payment TOTAL
Reserve reserve reserve EQUITY
R`000 R`000 R`000 R`000
BALANCE AT 1 JULY 2009
(Audited) (89 545) (179) 1 286 1 349 606
Profit for the year - - - 64 626
Other comprehensive income
Change in fair value of
cash flow hedge,
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 - 128 114
Transactions with owners
recorded directly in equity
Contributions by and
distributions to owners
Issue of shares through
rights issue - - - 500 000
Share issue costs written
off against share premium - - - (12 844)
Increase in share based
payment reserve - - 9 160 9 160
Reversal of share premium
due to disposal of
treasury shares - - - (24 266)
Conversion of preference
shares into ordinary shares - - (10 446) 17 771
Total transactions
with owners 62 872 616 (1 286) 489 821
BALANCE AT 30 JUNE 2010
(Audited) (26 673) 437 - 1 967 541
Profit for the year - - - 38 317
Other comprehensive income
Change in fair value of
cash flow hedge,
net of tax 20 704 - - 20 704
Change in fair value
of available-for-sale
financial assets,
net of tax - (294) - (294)
Total other comprehensive
income 20 704 (294) - 20 410
Total comprehensive income
for the year and total
transactions with owners 20 704 (294) - 58 727
BALANCE AT 30 JUNE 2011
(Reviewed) (5 969) 143 - 2 026 268
---------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
---------------------------------------------------------
2011 2010
Reviewed Audited
R`000 R`000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers 1 166 643 1 050 337
Cash paid to suppliers & employees (979 404) (948 469)
Cash generated from operations 187 239 101 868
Investment income 2 217 2 111
Finance costs (91 750) (129 665)
Tax (paid)/received (82) 1 594
NET CASH FLOWS FROM OPERATING ACTIVITIES 97 624 (24 092)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (18 887) (17 095)
Proceeds from disposal of property, plant
and equipment 601 933
Purchase of intangible assets (1 352) (457)
Withdrawal from self-insurance fund - 3 282
NET CASH FLOWS FROM INVESTING ACTIVITIES (19 638) (13 337)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on share issue - 12 643
Increase in share premium - 491 308
Share issue cost deducted from share premium - (12 844)
Loans and borrowings paid (59 601) (494 855)
Instalment sale receivables receipts 606 1 248
NET CASH FLOWS FROM FINANCING ACTIVITIES (58 995) (2 500)
TOTAL CASH MOVEMENT FOR THE YEAR 18 991 (39 929)
Cash at the beginning of the year 84 493 124 422
CASH AT THE END OF THE YEAR 103 484 84 493
--------------------------------------------------------------------
NOTES TO THE PRELIMINARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------
1. BASIS OF PREPARATION
------------------------------------
These preliminary condensed consolidated annual financial statements
have been prepared in accordance with the Listings Requirements of
the JSE Limited and the Companies Act of South Africa, 2008 (as
amended) and the Companies Regulations, 2011. The Group has applied
the recognition and measurement requirements of the International
Financial Reporting Standards (IFRS) and the AC 500 standards as
issued by the Accounting Practices Board (APB) and the presentation
and disclosure requirements of International Accounting Standard
(IAS) 34 Interim Financial Reporting.
These preliminary results do not include all the information
required for full annual financial statements. The full annual
financial statements as at and for the year ended 30 June 2011
will be available on the Company`s website www.york.co.za prior
to 30 September 2011.
The condensed Group financial statements have been reviewed by
the Company`s auditor, KPMG Inc. In their review report dated
7 September 2011, which is available for inspection at the Company`s
registered office, KPMG Inc state that their review was conducted in
accordance with International Standard on Review Engagements (ISRE)
2410, Review Financial Statements of Interim Financial Information
Performed by the Independent Auditor of the Entity; which applies
to a review of Group preliminary financial information, and have
expressed an unmodified conclusion on the preliminary condensed
Group financial statements.
There have been no material changes in judgements or estimates of
amounts reported in prior reporting periods.
The Group financial results are presented in Rand, which is the
Company`s functional currency. All financial information presented
has been rounded to the nearest thousand.
The significant accounting policies and methods of computation are
consistent in all material respects with those applied in the
previous period, except as detailed below. The significant
accounting policies are available for inspection at the Group`s
registered office.
An amendment to IAS 12 Deferred tax introduced an exception to the
general measurement requirements of IAS 12 in respect of investment
properties measured at fair value. The Group previously determined
the deferred taxation arising from investment property to be
recovered through use and not through sale. The amendment was
applied prospectively as the financial impact thereof was immaterial.
Full details of changes in accounting policies, none of which had
a material effect on the results or financial position, will be
disclosed in the Group`s annual report for the year ended
30 June 2011.
------------------------------------
2. ADDITIONAL DISCLOSURE ITEMS
------------------------------------
2011 2010
Reviewed Audited
R`000 R`000
Authorised capital commitments:
- Contracted, but not provided 2 651 2 900
- Not contracted 5 459 5 894
Depreciation of property, plant & equipment 32 305 25 931
Amortisation of intangible assets 768 750
Impairment/(reversal of impairment) of
property, plant & equipment 90 (3 184)
Impairment of trade receivables 99 872
Provision for restructuring costs - 333
- The Group did not have any litigation settlements during the
reporting period.
- The Group participates in a pooled banking facility granted by First
Rand Bank Limited. As such, the Group has provided an unlimited
suretyship in favour of First Rand Bank Limited in respect of its
obligations to the bank. The Group did not have any other contingent
liabilities at year end.
- The Group did not have any covenant defaults or breaches of its loan
agreements at the reporting date.
- No events occurred between the reporting date and the release of
these results which require adjustment of or disclosure in
these results.
------------------------------------
3. OPERATING SEGMENTS
------------------------------------
The Group has two reportable segments which are the Group`s strategic
divisions. The Group operates in one geographic segment, namely
countries within the Southern Africa Development Community (SADC).
The segment analysis is as follows: 2011 2010
Reviewed Audited
R`000 R`000
* Timber products *
Revenue: external sales 897 556 872 741
Revenue: inter-segment sales - 55 683
Total revenue 897 556 928 424
Depreciation and amortisation (27 818) (22 307)
Reportable segment profit# 30 086 1 550
Capital expenditure 10 236 10 364
* Forestry *
Revenue: external sales 60 897 34 747
Revenue: inter-segment sales 429 894 375 104
Total revenue 490 791 409 851
Depreciation and amortisation (5 255) (4 374)
Reportable segment profit# 165 103 103 255
Capital expenditure 7 440 5 360
* Total for reportable segments *
Revenue: external sales 958 453 907 488
Revenue: inter-segment sales 429 894 430 787
Total revenue 1 388 347 1 338 275
Depreciation and amortisation (33 073) (26 681)
Reportable segment profit# 195 189 104 805
Capital expenditure 17 676 15 724
# being earnings before interest, taxation,
depreciation & amortisation (EBITDA)
* Reconciliation of reportable segment profit *
Total EBITDA for reportable segments 195 189 104 805
Depreciation, amortisation and impairments (33 163) (66 093)
Unallocated amounts (129) (3 527)
Operating profit 161 897 35 185
------------------------------------
4. BIOLOGICAL ASSETS
------------------------------------
2011 2010
Reviewed Audited
* Reconciliation of biological assets * R`000 R`000
Opening balance 1 921 674 1 738 371
Fair value adjustment comprises of:
- Increase due to growth and enumerations 312 530 326 846
- Decrease due to harvesting (358 167) (308 633)
- Adjustment to standing timber values
to reflect fair value less cost to sell
at year end 60 361 165 090
Closing balance 1 936 398 1 921 674
Classified as non-current assets 1 616 363 1 562 936
Classified as current assets# 320 035 358 738
1 936 398 1 921 674
# Being the biological assets to be harvested
and sold in the 12 months after the reporting date.
* Key assumptions used: *
Risk free rate (R157 bond) 7.5% 8.0%
Cost of equity 13.0% 13.0%
Pre-tax cost of debt 10.0% 10.0%
Target debt:equity ratio 30:70 30:70
After-tax weighted average cost of capital 11.3% 11.3%
The other key assumptions have been updated as follows:
- Volumes: Forecast volumes were updated at the reporting date using
a merchandising model.
- Log prices: The price per cubic metre is based on current and future
expected market prices per log class. It was assumed that prices
will increase marginally over the short term and at 6% * (2010: 6%)
over the long term.
- Operating costs: The costs are based on the unit costs of the forest
management activities required to enable the trees to reach the age
of felling. The costs include 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. A long term
inflation rate of 5.5% * (2010: 6%) was used.
(* The Group believes that as a result of the anticipated shortage
in local log supply and forecast long term demand, long term
revenue inflation will be greater than cost inflation.)
------------------------------------
5. SHARE CAPITAL
------------------------------------
2011 2010
Reviewed Audited
* Reconciliation of the number of shares issued * `000 `000
Opening balance 331 241 78 370
Issue of shares through rights offer - 250 000
Conversion of preference shares into ordinary shares - 2 871
Closing balance 331 241 331 241
------------------------------------
6. RELATED PARTIES
------------------------------------
The Group`s related parties are its subsidiaries and key management,
including directors. No change in control occurred in the Company`s
subsidiaries from the prior period. No businesses were acquired or
disposed during the year. The compensation paid to the Group`s key
management will be disclosed in the Group`s annual report for the
year ended 30 June 2011.
------------------------------------
7. COMPARATIVE FIGURES
------------------------------------
The Group previously disclosed other financial liabilities,
finance lease obligations and installment sale liabilities
separately on the face of the statement of financial position.
During the current reporting period these categories have been
consolidated and presented as loans and borrowings.
The effects of the reclassification of line
items are as follows:
Non-current Current
liabilities liabilities
R`000 R`000
Other financial liabilities 612 317 51 698
Finance lease obligation 13 245 2 278
Installment sale liability 917 1 515
Total disclosed as loans and borrowings 626 479 55 491
------------------------------------
8. EARNINGS PER SHARE
------------------------------------
The calculation of basic earnings per share
is based on:
2011 2010
R`000 R`000
Reviewed Audited
Basic earnings attributable to
ordinary shareholders 38 317 64 626
* Reconciliation of weighted average
number of ordinary shares * `000 `000
Issued number of shares 331 241 78 370
Effect of shares issued in Dec 2009 - 138 356
Effect of conversion of preference shares - 55
Weighted average number of ordinary shares 331 241 216 781
Earnings per share (cents) 12 30
There were no instruments that had a dilutive effect.
------------------------------------
9. HEADLINE EARNINGS PER SHARE
------------------------------------
The calculation of headline earnings per share
is based on:
2011 2010
R`000 R`000
Reviewed Audited
* Reconciliation of basic earnings
to headline earnings *
Basic earnings attributable
to ordinary shareholders 38 317 64 626
Profit on sale of assets and
liabilities (net of tax) (217) (7 872)
Loss on non-current assets held for sale 13 362 -
Fair value adjustment on
investment property (net of tax) (172) (12 216)
Impairment of plant, equipment
and vehicles (net of tax) 65 (2 292)
Impairment of goodwill - 44 910
Headline earnings for the period 51 355 87 156
Weighted average number of ordinary shares
(`000) 331 241 216 781
Headline earnings per share (cents) 16 40
--------------------------------------------------------------------
COMPANY INFORMATION:
--------------------------------------------------------------------
Executive directors: Pieter van Zyl (CEO) and Duncan Erskine (CFO)
Non-executive directors: Jim Myers* (Chairman, USA), Paul Botha,
Dr Azar Jammine*, Shakeel Meer,
Gavin Tipper* (* 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: One Capital
Auditors: KPMG Inc.
info@york.co.za
www.york.co.za
Date: 07/09/2011 17:16:30 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
