| Thu 27 Sep 2001, 0:00 | | Yorkcor - Interim Report For The Six Months To 30 |
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THE YORK TIMBER ORGANISATION LIMITED
(Incorporated in the Republic of South Africa)
(Reg. No. 1916/004890/06 )
Share code:YRK ISIN: ZAE000008108
("Yorkcor")
Interim report for the six months to 30 June 2001
Group income statements
Unaudited Audited
30 June 31 December
2001 2000 2000
R000 R000 R000
Revenue 33 607 33 565 67 683
Cost of sales (14 145) (11 500) (27 854)
Gross profit 19 462 22 065 39 829
Staff costs (9 978) (9 909) (20 889)
Depreciation (1 009) (1 003) (2 283)
Other operating expenses (6 888) (6 797) (9 522)
Profit from operations 1 587 4 356 7 135
Legal costs (237) (1 494) (1 882)
Increase in net policy value
of sinking fund - - (110)
Profit before finance costs 1 350 2 862 5 143
Finance costs (810) (1 076) (992)
Profit before taxation 540 1 786 4 151
Taxation (24) (59) (300)
Profit after taxation 516 1 727 3 851
Minority shareholders' interest (191) (206) (403)
Net profit for the year 325 1 521 3 448
Group balance sheets
Unaudited Audited
30 June 31 December
2001 2000 2000
R000 R000 R000
ASSETS
Non-current assets
Property, plant, equipment and
vehicles 30 009 32 427 30 906
Long-term rights to sawlogs - 931 -
Investments 25 25 25
Long-term receivables 5 631 5 631 5 631
Sinking fund 2 761 2 871 2 761
38 426 41 885 39 323
Current assets 30 928 29 814 29 372
Inventories 9 388 5 906 8 030
Accounts receivable 21 257 22 554 20 531
Bank balances and cash 283 1 354 811
Total assets 69 354 71 699 68 695
EQUITY AND LIABILITIES
Capital and reserves
Share capital 3 612 3 612 3 612
Non-distributable reserves 15 515 16 747 15 935
Accumulated profits 13 818 11 265 13 073
Ordinary shareholders' funds 32 945 31 624 32 620
Minority shareholders' interest
in subsidiary 4 000 4 000 4 000
Total shareholders' funds 36 945 35 624 36 620
Non-current liabilities
Interest bearing borrowings 12 749 10 028 11 625
Current liabilities 19 660 26 047 20 450
Accounts payable 17 018 20 860 17 538
Taxation 2 53 239
Short-term borrowings 2 640 5 134 2 673
Total equity and liabilities 69 354 71 699 68 695
Notes to the financial statements
Unaudited Audited
30 June 31 December
2001 2000 2000
1. Earnings per share (cents) 2,9 13,8 31,2
2. Headline earnings
per share (cents) 2,9 13,8 30,5
3. Dividends per share (cents) - - -
4. Capital expenditure
for the period (R000) 226 13 101
5. Capital expenditure
committed (R000) - - -
6. Capital expenditure
authorised (R000) - - -
7. Shares in issue (000) 11 040 11 040 11 040
8. Net asset value
per share (cents) 335 323 332
9. Gearing (%) 29 28 29
10. Current ratio (ratio) 1,57 1,14 1,44
Abridged group cash flow statements
Unaudited Audited
30 June 31 December
2001 2000 2000
R000 R000 R000
Cash generated by
operating activities (243) 1 001 1 171
Finance costs (1 001) (1 282) (1 395)
Dividends and tax paid (261) (90) (144)
Net cash outflow from
operating activities (1 505) (371) (368)
Net cash (outflow)/inflow from
investing activities (114) 91 482
Net cash inflow from
financing activities 1 091 1 583 646
Net (decrease)/increase in
bank balances and cash (528) 1 303 760
Bank balances and cash at
beginning of year 811 51 51
Bank balances and cash at
end of period 283 1 354 811
Statements of changes in equity
Unaudited - at 30 June
Share Non-dis Accumu
Share Share election tributable lated
capital premium reserve reserve profit Total
Balance at
31 December 1999 552 3 060 - 17 167 9 324 30 103
Write off long-term
rights to sawlogs (931) (931)
Revised balance at
1 January 2000 552 3 060 - 17 167 8 393 29 172
Depreciation on asset
revaluations reversed (417) 417 -
Expenses of non-revenue
producing subsidiaries (3) 3 -
Net profit for
the period 1 521 1 521
Balance at
30 June 2000 552 3 060 - 16 747 10 334 30 693
Balance at
31 December 2000 552 3 060 - 15 935 13 073 32 620
Depreciation on asset
revaluations reversed (417) 417 -
Expenses of non-revenue
producing subsidiaries (3) 3 -
Net profit for
the period 325 325
Balance at
30 June 2001 552 3 060 - 15 515 13 818 32 945
Commentary
Yorkcor has posted an attributable profit of R325,000 for the half year to
30 June 2001. Although this was down on the comparative of R1,5 mil-lion for
last year, Yorkcor did well to post a black figure in an industry that, on
the whole, has been in the red for some time. Earnings per share amounted to
2,9 cps, compared with 13,8 cps for the previous year. Turno-ver at R33,6
million was on a par with last year's figure. Gearing at 29% (2000: 28%)
remained sound, whilst liquidity, significantly improved from a ratio of
1,14 to 1,57. Net asset value at the end of the half year stood at 335 cps.
State of the industry
South African sawmillers again had to tackle tough times. Sales volumes for
the industry in the first half of 2001 were marginally better by about 4,6%,
but prices hardly moved at all from the low base of the same pe-riod in the
previous year. The industry should have been out of the woods by now.
Instead, more than 60% of the sawmillers in the formal sector ran a loss.
Several have cut back to a four day week. Others have closed down
altogether.
Nothing has depressed confidence and activity in the lumbermilling in-
dustry more than the pall of uncertainty of the past five years. To be com-
petitive, South African sawmillers need to invest in new technologies. They
also need to know from whom their log supplies will come and on what terms.
Defending our entitlements
Yorkcor is in a special position in regard to its resource entitlements.
About five years ago, sawmillers were induced to relinquish their long term
sawlog rights to facilitate privatisation of state commercial forests. They
find themselves in a situation now where their security of tenure is prac-
tically non-existent. Yorkcor, along with one or two other sawmillers in the
Cape, declined to give up their security of tenure without just and equita-
ble compensation. Over the same period sawmillers reeled under the impact of
staggering sawlog price increases. We resolved to make a stand in the face
of a monopolist threat. A series of litigation followed, most of which was
successful.
In March 2001 Safcol, gave us notice that it would reduce the monthly
volume of its log supply to us, ostensibly because their supplying planta-
tions could now not sustain the long standing quota. We were not suc-cessful
in our application and our appeal, for interim relief to restrain Safcol
from implementing its reduction of log supply. The abuse of dominance, our
main complaint in these proceedings, is still pending in the Competi-tion
Tribunal. Yorkcor will have the right to pursue final relief, should the
Competition Commission decide not to itself refer the complaint to the
Tribunal. The Competition Tribunal and the Competition Appeal Court
indicated that Yorkcor would be entitled to compete for logs on the same
basis as Safcol's other customers.
Yorkcor has been obtaining its logs on that basis from Safcol. That is
not the end of the matter. Litigation in the High Court has been set down
next year to test, inter alia, whether or not Safcol's purported termination
of its two long term sawlog contracts with Yorkcor is valid. It is not clear
what the impact of these developments might have upon the privatisation
process.
Claim against Government
Regrettably, there have also been disputes concerning Yorkcor's 'evergreen'
contract with the Government. As long ago as 1997, the Government launched
three unsuccessful Supreme Court actions to strike down our evergreen con-
tract. In October 1997, a consent order of court expressly spelt out
specific forestry performance obligations regarding proper forestry
practices to be im-plemented by the Government. After judgments of the High
Court in January 1998 and of the Supreme Court of Appeal in December 2000,
the Government paid Yorkcor over R6,0 million in damages, interest and
costs. In another judg-ment of the Supreme Court of Appeal, upholding a
decision of the High Court, the Government was ordered to make Yorkcor a
firm offer of sawlogs in five year cycles. The Government has not yet made
the offer it is obliged to make, nor has it implemented the outstanding
specific forestry performance obliga-tions. Steps have now been taken to
enforce Yorkcor's rights. This is where matters stand at present.
We have much regretted our being driven into this litigating terrain. The
posi-tive support and encouragement we have received from so many of our con-
nections have been reassuring. Especially heartening has been the backing
from our stakeholders, particularly staff and workers across the board,
custom-ers, suppliers, providers of capital, etc.
Yorkcor's niche
Yorkcor is a business of relationships. Not for years has Yorkcor's order
book been as full as it is now. Prices achieved are at the top end of the
market, although too low for a reasonable return for the risk and effort.
The early results in our concerted export effort are encouraging. We expect
to be shipping to certain markets where South Africans have not been before.
Against the above background, Yorkcor has done well to show a small
profit in the half year. This is a positive result in these challenging
times. It beats industry averages. We have not had to cut back as many other
sawmillers have. But in our book, outperforming the industry is not enough -
we aim to flourish.
Solly Tucker
Chairman
Pretoria
28 September 2001
Directors: S Tucker (Chairman), ISD Tucker (Managing Director), LS Cooper,
AC de Villiers, Dr J Kopp, NT Motlana, S Motlana
