| Fri 28 Mar 2003, 16:28 | | AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 200 |
|
The York Timber Organisation Limited
Registration number: 1916/004890/06
Share code: YRK ISIN: ZAE000008108
ABRIDGED GROUP INCOME STATEMENT
31 December
2002 2001
R000 R000
Revenue 94 378 72 003
Operating profit before finance costs, depreciation
and taxation 8 876 5 759
Finance costs (678) (1 410)
Depreciation (2 106) (2 181)
Taxation (2 397) (224)
Profit after taxation 3 695 1 944
Minority interests (397) (387)
Profit attributable to ordinary shareholders 3 298 1 557
Headline earnings per ordinary
share (cents) 29,2 13,7
Surplus on disposal of equipment and vehicles 0,7 0,4
Earnings per ordinary share (cents) 29,9 14,1
Number of ordinary shares in issue (000"s) 11 040 11 040
ABRIDGED CASH FLOW STATEMENT
31 December
2002 2001
R000 R000
Net cash inflow from operating activities 18 026 4 030
Net cash (outflow)/inflow from investing activities (5 114) 136
Net cash outflow from financing activities (9 435) (1 297)
Net increase in bank balances and cash 3 477 2 868
Bank balances and cash at beginning of period 3 679 811
Bank balances and cash at end of period 7 156 3 679
ABRIDGED GROUP BALANCE SHEET
31 December
2002 2001
R000 R000
ASSETS
Non-current assets
Property, plant, equipment and vehicles 56 180 28 857
Long-term receivables and investments 10 746 10 777
66 926 39 634
Current assets 26 886 26 407
Total assets 93 812 66 041
Equity and liabilities
Issued capital 3 612 3 612
Non-distributable reserves 21 579 15 079
Distributable reserves 26 660 15 486
Ordinary shareholders" funds 51 851 34 177
Outside shareholders" interest in subsidiary 4 000 4 000
Total shareholders" funds 55 851 38 177
Non-current liabilities
Interest bearing borrowings 2 791 10 918
Deferred taxation 11 273 69
Current liabilities 23 897 16 877
Total equity and liabilities 93 812 66 041
Net asset value per share (cents) 505,9 345,8
STATEMENT OF CHANGES IN SHAREHOLDERS" FUNDS
31 December
2002 2001
R000 R000
Shareholders" funds at beginning of period 34 177 32 620
Profit for the period 3 298 1 557
Disposal of subsidiary (95) -
Revaluation of fixed assets 14 471 -
Shareholders" funds at 31 December 2002 51 851 34 177
CHAIRMAN"S COMMENT
Not for a decade have sawmillers known better times. In 2002, softwood lumber
sales nationally soared to over 2,3 million cubic metres - a 22% improvement
over 2001. Average selling prices improved by about 23%. South African pine
lumber is now selling at better prices than its American rival product, Southern
Yellow Pine. Exports were up as much as 106% on 2001 figures. However, the
hardening of the Rand, together with the subdued pace of manufacture in the
East, has begun to soften the export performance of South African pine products.
We look forward to post-Baghdad business as usual.
Whilst average national figures were good, Yorkcor"s were better. Turnover
was boosted from R72,0 million in 2001 to R94,4 million in 2002. Cash-flow from
operating activities amounted to R18,03 million (2001: R4,03 million) and net
profit more than doubled, from R1,56 million in 2001 to R3,3 million in 2002.
We ended the year with sound balance sheet figures. Shareholders" funds
strengthened from R34,2 million in 2001 to R51,9 million at the last year end.
Net asset value per share was 505,9 cents at the end of 2002 compared with 345,8
cents in 2001. Gearing was reduced from 30,7% to 12,5%. We retired interest-
bearing debt, in fact, by as much as 70,5% from R13,2 million to R3,9 million.
It was a good year operationally. We also made good gains strategically. We
maintained our stance in regard to our entitlements to sawlog supplies. More
than half the sawmillers who were our competitors a decade ago are no longer in
business. The state forests have been under the hammer in the so-called
restructuring process of privatisation. Sawmillers were expected to give up
their long-term sawlog supply contracts without compensation. They did - to a
man. We said, "no", and we say the Constitution and the law support us.
The resulting litigation has been long and costly, but well worth the
investment. Two watershed judgments of the High Court will have an enduring
impact on Yorkcor"s financial strength. In September 2002, the High Court
delivered judgment in litigation in which the parastatal, Safcol, sought to
cancel two of our "evergreen" log contracts concluded in 1968 and 1970. The
cancellation claim was dismissed with costs, but Safcol has appealed the
decision.
Contemporaneously, Yorkcor had found it necessary to launch legal proceedings
against the government to enforce compliance with several Orders of Court. In
February 2003, the High Court declared the Minister of Water Affairs and
Forestry and his Director General to be in contempt of Court and directed the
government, inter alia, to pay the costs of the litigation on a punitive scale.
The substantial amount of the special costs order has not been credited to the
accompanying accounts for 2002; nor have the costs of pending matters in which
no judgment has yet been given. Litigation costs are written-off as and when
they are expensed.
Apart from the appeal by Safcol, mentioned earlier, another action is pending
in which cancellation of our evergreen contracts is sought on different grounds.
Your directors and the company"s legal advisors are cautiously optimistic. Also
pending are substantial money claims and counter claims by both sides. The
claims are mainly about log prices - we say we have been overcharged, Safcol
contends the other way. Yorkcor currently does not deal with Safcol but with its
new subsidiary Komatiland. The major portion of its sawlog requirements is
procured elsewhere. Pending before the Competition Tribunal is a complaint
brought by Mondi against Safcol about charges under the Competition Act, to
which Safcol has already admitted guilt for reasons of its own. The complaint
concerns an allegation that the arbitration clause in the evergreen contracts
between Yorkcor and Safcol have the effect of "substantially preventing or
lessening competition". Mondi itself is no longer in the sawmilling business in
the relevant markets.
The long-awaited arbitration between Yorkcor and the government begins today,
31 March 2003. The arbitrator, a retired judge, is required to determine the
amount of compensation, payable on 31 December 2004, for the termination of its
evergreen contract in terms of which our York Lumber sawmilling operations
receive the bulk of their log supply. The government has already admitted
liability. What has to be decided is the quantum, to be determined "on the basis
of the value of York Lumber"s business as a going concern basis, enjoying the
benefits of this contract without interruption. The intention is to place (the
business) in at least the same financial position as if the contract had not
been terminated". The quantum of Yorkcor"s claim is substantial, as is the gap
separating the parties at this stage.
Positive initiatives were taken to counter the threats to our business
(however well we were acquitting ourselves in the fray) and to turn Yorkcor"s
goodwill and know-how to good account for the future. The assets of the
liquidated Bluechip companies were acquired at a cost of R6,5 million in October
2002. Stemming from the acquisition, the new Yorkcor sawmills, renamed, Golden
Rhino Lumber and Roburnia Forest Products, have been refurbished and are
currently in production. We expect both operations to be profitable in their
first year in the group. They do not rely on state forests for their log intake,
but on a diverse number of independent growers.
To conserve liquidity, your directors have decided not to declare a dividend
until the trend established with this year"s results is consolidated.
By order of the board
Solly Tucker
(Chairman)
28 March 2003
Report of the independent auditors
The financial information set out in this announcement has been audited by
the group"s auditors, KPMG Inc. The auditors report is available for inspection
at the company"s registered office.
Basis of accounting
These consolidated, abridged annual financial statements were drawn up in
compliance with South African Statements of Generally Accepted Accounting
Practice and the company has complied with the requirements of the Companies
Act, 1973.
Accounting policies
The accounting policies as set out in the 2001 Annual Report have been
consistently applied in producing these results.
DIRECTORS
S Tucker*, ISD Tucker*, AC de Villiers*, LS Cooper*, Dr J Kopp, S Motlana
*Executive directors
Company Secretary: HDA du Toit
Registered Office Transfer Secretaries
5th Floor, Yorkcor Park Computershare Investor Services Ltd
86 Watermeyer Street 70 Marshall Street
Val de Grace, Pretoria 0184 Johannesburg 2001
PO Box 380 PO Box 61051
Pretoria 0001 Marshalltown 2107
Sponsor
Sasfin Bank Limited
(Registration number: 1951/002280/06)
