| Thu 29 Mar 2012, 16:00 | | MAS - Masonite - Reviewed Provisional Results for the year ended 31 December |
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MAS
MAS
MAS - Masonite - Reviewed Provisional Results for the year ended 31 December
2011
MASONITE (AFRICA) LIMITED
Incorporated in the Republic of South Africa
Registration number: 1942/015502/06
Share code: MAS ISIN: ZAE000004289
("Masonite" or "the company")
REVIEWED PROVISIONAL RESULTS
for the year ended 31 December 2011
Statement of comprehensive income
Reviewed Restated
Rand thousands Notes 2011 2010
Revenue 654 373 548 521
Cost of sales (495 231) (423 667)
Gross profit 159 142 124 854
Fair value adjustment of biological assets (2 059) (3 909)
Other income 2 361 4 355
Distribution expenses (91 521) (76 300)
Administrative expenses (17 418) (15 155)
Selling and marketing expenses (13 198) (12 540)
Other expenses (26 021) (17 364)
Results from operations 11 286 3 941
Finance income 3 145 1 750
Finance cost (2 162) (2 083)
Profit before tax 12 269 3 608
Income tax expense 7 (2 441) (567)
Profit for the year attributable to ordinary
shareholders 9 828 3 041
Other comprehensive income - -
Total comprehensive income for the period
attributable to ordinary shareholders 9 828 3 041
Earnings per share (cents)
Basic 8.1 138 43
Diluted 8.2 138 43
Statement of financial position
Reviewed Restated Restated
31 December 31 December 1 January
Rand thousands Notes 2011 2010 2010
ASSETS
Non-current assets
Property, plant and equipment 107 700 109 010 107 007
Intangible assets 494 556 622
Biological assets 3 161 346 163 405 167 314
Investments 30 30 30
Total non-current assets 269 570 273 001 274 973
Current assets
Inventories 81 774 69 137 70 229
Trade and other receivables 88 309 80 370 75 997
Amounts due from fellow subsidiaries - 139 388
Tax receivable 5 330 2 714 -
Derivative financial instruments 82 1 033 498
Cash and cash equivalents 95 265 69 790 61 270
Total current assets 270 760 223 183 208 382
Total assets 540 330 496 184 483 355
EQUITY AND LIABILITIES
Capital and reserves
Share capital 3 562 3 562 3 562
Share premium 3 156 3 156 3 156
Share-based payment reserve 5 2 980 - -
Retained income 360 280 350 452 347 411
Total equity 369 978 357 170 354 129
Non-current liabilities
Deferred tax 45 757 49 381 52 481
Post-retirement benefit
obligation 4 24 967 23 707 22 245
Straight-lining lease accrual 103 71 44
Total non-current liabilities 70 827 73 159 74 770
Current liabilities
Trade and other payables 93 886 63 676 53 299
Amounts payable to fellow subsidiaries 2 069 1 439 -
Tax payable - - 705
Derivative financial instruments 3 563 734 436
Straight-lining lease accrual 7 6 16
Total current liabilities 99 525 65 855 54 456
Total equity and liabilities 540 330 496 184 483 355
Net asset value per share (cents) 5 193 5 013 4 971
Condensed statement of cash flows
Reviewed Restated
Rand thousands 2011 2010
Cash flow from operating activities
Operating profit 11 286 3 941
Adjusted for:
Fair value adjustment of biological assets 2 059 3 909
Depreciation and amortisation 17 462 14 807
IFRS 2 Share-based Payment Charge 2 980 -
Foreign exchange loss/(gain) - unrealised 4 935 (459)
Increase in liability for retirement benefit obligation 1 260 1 462
Loss on disposal of property, plant and equipment 38 49
Other non-cash items 33 17
Change in working capital 11 719 7 863
Cash generated from operations 51 772 31 589
Tax payments (8 680) (7 086)
Net financing income 1 028 (264)
Net cash flow from operating activities 44 120 24 239
Cash flow from investing activities
Expenditure on property, plant and equipment replacement (16 190) (16 936)
Proceeds on disposal of property, plant and equipment 61 145
Net cash outflow from investing activities (16 129) (16 791)
Net increase in cash and cash equivalents 27 991 7 448
Effects of exchange rates on the balance of cash held in
foreign currencies (2 516) 1 072
Net cash and cash equivalents at the beginning of
the year 69 790 61 270
Net cash and cash equivalents at the end of the year 95 265 69 790
Segment revenues and results
Segment revenue Segment PBIT
Reviewed Audited Reviewed Audited
Rand thousands 2011 2010 2011 2010
Hardboard 494 309 399 336 22 965 14 258
Other products 75 589 67 465 (11 071) (9 512)
Forestry 112 453 110 012 16 415 13 120
Intersegment (28 413) (29 571) - -
Unallocated 435 1 279 395 1 230
Total 654 373 548 521 28 704 19 096
Administrative expenses (17 418) (15 155)
Results from operations 11 286 3 941
Finance income 3 145 1 750
Finance expense (2 162) (2 083)
Profit before tax 12 269 3 608
Income tax expense (2 441) (567)
Total per statement of
comprehensive income 9 828 3 041
Condensed statement of changes in equity
Share-
based
Share Share payment
Rand thousands capital premium reserve
Balance at 1 January 2010 -
Audited 3 562 3 156 -
Total comprehensive income
attributable to ordinary shareholders - - -
Balance at 31 December 2010 -
Audited 3 562 3 156 -
Share-based payment charge - - 2 980
Total comprehensive expense
attributable to ordinary shareholders - - -
Balance at 31 December 2011 -
Reviewed 3 562 3 156 2 980
Retained Total
Rand thousands income equity
Balance at 1 January 2010 -
Audited 347 411 354 129
Total comprehensive income
attributable to ordinary shareholders 3 041 3 041
Balance at 31 December 2010 -
Audited 350 452 357 170
Share-based payment charge - 2 980
Total comprehensive expense
attributable to ordinary shareholders 9 828 9 828
Balance at 31 December 2011 -
Reviewed 360 280 369 978
Notes
1. Basis of preparation
The condensed 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 and the requirements of the Companies Act of
South Africa. 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 2010, except for separate disclosure of
derivative financial instruments and the reclassification of unrealised foreign
exchange losses from other income to other expenses on the statement of
comprehensive income. The condensed financial statements have been prepared by
the Company Secretary, MP Govender.
2. Auditor`s review
The condensed provisional financial information for the year ended 31 December
2011 has been independently reviewed by the company`s auditors, Deloitte &
Touche. The review was conducted in accordance with ISRE 2410 `Review of Interim
Financial Information performed by the Independent Auditor of the Entity`. A
copy of their unmodified review report is available for inspection at the
company`s registered office. Any reference to future financial performance
included in this announcement, has not been reviewed or reported on by the
company`s auditors.
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.
Rand thousands 2011 2010
Timber plantations
Establishment costs 31 315 28 778
Immature timber 46 325 43 003
Mature timber 77 459 80 611
Total 155 099 152 392
Sugar cane
Establishment costs 2 321 3 085
Immature sugar cane 2 780 6 609
Mature sugar cane 1 146 1 319
Total 6 247 11 013
Total biological assets 161 346 163 405
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. Employee Share Incentive Scheme
The adoption of IFRS 2 Share-based Payment (IFRS 2) in 2005 required that all
awards made after 7 November 2002 be accounted for in the financial statements
of the company. IFRS 2 requires a "fair value" to be placed on employee share
options. Fair value is measured as the market price of the entity`s options
adjusted for the terms and conditions applicable to the option. Since employee
share options are not traded there is no market price available, hence the use
of an option-pricing model in determining its fair value. The fair value of the
share option is measured using a stochastic model, based on the standard
binomial options pricing model (which is mathematically consistent with the
Black-Scholes Model) but allows for the particular features of employee share
options to be modelled realistically. IFRS 2 has therefore been applied to the
Masonite Share Incentive Scheme in respect of the awards made to executive
directors and senior management on 4 January 2011.
6. Segmental reporting
A segment is a distinguishable component of the company that is engaged in
providing products or services which are subject to risks and rewards that are
different from those of other segments. The basis of segment reporting is
representative of the internal structure used for management reporting, as well
as the structure in which the chief operating decision maker reviews the
information.
The basis of segmental allocation is determined as follows:
- revenue that can be directly attributed to a segment and the relevant portion
of the profit that can be allocated on a reasonable basis to a segment, whether
from sales to external customers or from transaction with other segments of the
company;
- operating profit that can be directly attributed to a segment and a relevant
portion of the operating profit that can be allocated on a reasonable basis to a
segment, including profit relating to external customers and the expenses
relating to transactions with other segments of the company; and
- total assets are those that are employed by a segment in its operating
activities and that are directly attributable to the segment or can be allocated
to the segment on a reasonable basis.
The company`s reportable segments are as follows:
- Hardboard;
- Other products; and
- Forestry.
Rand thousands 2011 2010
7. Income tax expense
Current tax 6 065 3 667
Deferred tax (3 624) (3 100)
Total 2 441 567
8. Earnings per share
8.1 Basic
Basic earnings per share is calculated by dividing the
profit attributable to ordinary shareholders by the
weighted average number of shares in issue during the year.
Profit attributable to ordinary shareholders 9 828 3 041
Weighted average number of ordinary shares in issue 7 124 225 7 124 225
Basic earnings per share (cents) 138 43
8.2 Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The dilution of earnings per share is the result of
options granted to executive directors and senior management, on 4 January 2011,
to acquire 210 000 (2010: nil) shares at a weighted average price of R29,69 per
share on or before December 2020. The calculation of diluted earnings per share
at 31 December 2011 was based on profit attributable to ordinary shareholders
and the number of shares that could have been acquired at fair value (determined
as the average annual market share price of the company`s shares) based on the
monetary value of the subscription rights attached to the outstanding share
options. The number of shares calculated is compared with the number of shares
that would have been issued assuming the exercise of the share options.
Rand thousands 2011 2010
Profit attributable to ordinary shareholders 9 828 3 041
Weighted average number of ordinary shares in issue 7 124 225 7 124 225
Adjusted for weighted average share options outstanding 10 315 -
Weighted average number of ordinary shares (diluted)
at 30 June 7 134 540 7 124 225
Diluted earnings per share 138 43
8.3 Headline earnings
Reconciliation of headline earnings
Profit for the year 9 828 3 041
Adjusted for:
Loss on disposal of assets 38 49
Tax effect of loss on disposal of assets (11) (14)
Headline earnings 9 855 3 076
Headline earnings per share (cents) 138 43
Diluted headline earnings per share (cents) 138 43
9. Comparative figures
The statement of financial position as at 1 January 2010 and 31 December 2010
have been reclassified to separately disclose derivative instruments which were
previously included in receivables. The reclassification, as at 31 December
2010, resulted in a R299 000 decrease in receivables (1 January 2010: R62 000
decrease); increase in derivative financial assets by R1 033 000 (1 January
2010: R498 000 increase) and an increase in derivative financial liabilities by
R734 000 (1 January 2010: R436 000 increase). In addition, the leave pay
liability of R4 812 000 (1 January 2010: R5 782 000), previously disclosed as
provisions, has been included in trade and other payables. Unrealised foreign
exchange losses of R734 000, arising from re-measurement of derivative financial
instruments as at 31 December 2010, has been reclassified from other income to
other expenses in the statement of comprehensive income. No share options were
exercised as at 31 December 2011. These changes had no impact on the reported
profit or earnings per share. The cash flow statement was also reclassified. As
at 31 December 2010, provisions utilised of R5 828 000 (1 January 2010: R5 150
000), previously disclosed separately in the cash flow statement, has now been
included in the change in working capital.
10. Change in directorate
Resignations
Mr MJ Slater (Managing Director) Wednesday 7 December 2011
Mr GE Coulter (Non-executive Director) Tuesday 6 December 2011
Mr NCK Vinay (Financial Director) Wednesday 18 January 2012
Appointments
Mr HJ Loring (Chief Executive Officer) Wednesday 7 December 2011
Mr N Maharajh (Independent Non-executive Director)* Wednesday 7 December 2011
*Mr Maharajh was also appointed to the Audit Committee and Nominations Committee
11. Annual general meeting
Shareholders are advised that the sixty-ninth 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 27 June
2012 at 12:00.
12. 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 19,3% to R654,3 million (2010: R548,5 million) in the
period under review. Growth was achieved through new export sales, while
domestic market demand continued to be suppressed due to weakness in the
building and construction sector. An industry wide strike in July affected
output from the factory in Estcourt; however, the company was able to replace
the loss of production with imported product.
Profit from operations (excluding the effect of adjustments to the value of
biological assets - IAS 41 Agriculture), improved by 70% to R13,3 million (2010:
R7,8 million) due to a combination of higher export returns and the
effectiveness of cost reduction programmes leading to enhanced margins.
Headline earnings, including the effect of adjustment to the fair value of
biological assets, improved to R9,9 million (R3,0 million) and earnings per
share improved by 220% (138 cents versus 43 cents).
Cash and cash equivalents increased from R69.8 million to R95.3 million in line
with the increase in trade and other payables.
The strengthening export business combined with continuous cost improvement
programmes will continue to benefit the company in the future.
Expected government infrastructure and low cost housing projects should provide
improved trading conditions in the second half of 2012.
During the latter part of 2011, cautionary notices were issued in response to
the company receiving unsolicited offers for its shares. After due consideration
of the offers, the board decided not to pursue with further negotiations.
AH Wilson HJ Loring
Chairman Chief Executive Officer
29 March 2012
DIRECTORS AH Wilson (Chairman), HJ Loring (CEO), WP Coetzee, N Maharajh,
MM Clark (USA), CA Virostek (Canadian), KMP Spencer, AG Venton,
MJ Erceg (USA), LP Repar (Canadian)
COMPANY SECRETARY
MP Govender
TRANSFER SECRETARIES
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
SPONSOR
Nedbank Capital
135 Rivonia Road, Sandton, 2196
Date: 29/03/2012 16:00:01 Produced by the JSE SENS Department.
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