| Wed 16 Mar 2005, 17:52 | | RESULTS FOR THE YEAR TO 31 DECEMBER 2004 |
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MASONITE (AFRICA) LIMITED - PROVISIONAL RESULTS FOR THE YEAR TO 31 DECEMBER 2004
MASONITE (AFRICA) LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1942/015502/06)
Share code: MAS ISIN: ZAE000004289
(`Masonite` or `the company`)
PROVISIONAL RESULTS FOR THE YEAR TO 31 DECEMBER 2004
GROUP INCOME STATEMENT
Year to 31 December
2004 2003
Note R`000 R`000
Revenue 346 828 331 564
Cost of sales (255 229) (235 903)
Gross profit 91 599 95 661
Other operating income 7 790 6 684
Distribution expenses and allowances (75 033) (73 032)
Selling and general administrative expenses (20 295) (20 990)
Other operating expenses (1 427) (7 087)
Net plantation income 9 189 5 967
Trading income 11 823 7 203
Movement in fair value of standing timber
and sugar cane as a result of AC 137 (2 523) 13 270
Profit from operations 9 300 20 473
Net financing cost (423) (1 931)
Profit before taxation 8 877 18 542
Income tax expense (2 976) (5 506)
Net profit after tax 5 901 13 036
HEADLINE EARNINGS RECONCILIATION
Total net profit 5 901 13 036
Adjusted for:
Profit on sale of assets (102) (159)
Tax effect of adjustments 31 48
Headline earnings 5 830 12 925
Number of shares in issue 6 854 054 6 832 556
Earnings per share
Attributable basis (cents) 86 191
Headline basis (cents) 85 189
Fully diluted basis (cents) 84 185
GROUP BALANCE SHEET
As at 31 December
2004 2003
Note R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 81 837 79 008
Biological assets 2 95 906 98 429
Investments 985 948
Loans receivable 78 114
Total non-current assets 178 806 178 499
Current assets
Inventories 36 650 40 367
Trade accounts receivables 36 506 48 757
Other receivables 8 500 6 835
Amounts due from group companies 4 835 7 209
Cash and cash equivalents 13 295 2 148
Total current assets 99 786 105 316
Total assets 278 592 283 815
EQUITY AND LIABILITIES
Capital and reserves
Share capital 3 427 3 416
Share premium 2 194 2 116
Non-distributable reserves 700 700
Distributable reserves 186 259 180 358
Total shareholders` investment 192 580 186 590
Non-current liabilities
Deferred taxation 27 347 27 944
Deferred investment allowances 9 38
Retirement benefit obligation 3 16 691 15 507
Total non-current liabilities 44 047 43 489
Current liabilities
Trade accounts and other payables 31 389 47 113
Provisions 4 3 924 3 700
Short-term borrowings 4 140 2 330
Taxation 975 81
Amounts due to group companies 1 537 512
Total current liabilities 41 965 53 736
Total equity and liabilities 278 592 283 815
GROUP CASH FLOW STATEMENT
Year to 31 December
2004 2003
R`000 R`000
Cash flows from operating activities
Operating profit before working capital changes 24 140 19 630
Working capital changes 2 201 (22 666)
Cash generated/(utilised) by operations 26 341 (3 036)
Interest received 361 414
Interest paid (784) (2 345)
Taxation paid (2 707) (4 926)
Net cash inflow/(outflow) from operating activities 23 211 (9 893)
Cash flows from investing activities
Purchase of property, plant and equipment
Expansion (416) (3 712)
Replacement (13 656) (12 885)
Proceeds from disposal of property,
plant and equipment 110 302
Increase in investments (37) (2)
Decrease in loans receivable 36 31
Net cash outflow from investing activities (13 963) (16 266)
Cash flows from financing activities
Proceeds from issue of ordinary shares 89 61
Decrease in long-term borrowings - (92)
Net cash inflow/(outflow) from financing activities 89 (31)
Net increase/(decrease) in cash
and cash equivalents 9 337 (26 190)
Net cash and cash equivalents at beginning of year (182) 26 008
Net cash and cash and cash equivalents
at end of year 9 155 (182)
GROUP STATEMENT OF CHANGES IN EQUITY
Non-
Distri- Accumu-
Share Share butable lated
capital premium reserve profit Total
R`000 R`000 R`000 R`000 R`000
Balance at 31 December 2002 3 409 2 062 700 167 322 173 493
Net profit for the period - - - 13 036 13 036
Issue of share capital 7 54 - - 61
Balance at 31 December 2003 3 416 2 116 700 180 358 186 590
Net profit for the period - - - 5 901 5 901
Issue of share capital 11 78 - - 89
Balance at 31 December 2004 3 427 2 194 700 186 259 192 580
NOTES
1. Accounting policies
The financial information provided above has been prepared on the historical
cost basis and in accordance with South African Statements of Generally Accepted
Accounting Practice. The accounting policies applied are consistent with those
of the previous financial year.
2. Biological assets
Biological assets are stated at fair value (market price less harvesting and
transport costs), with any resultant gain or loss recognised in the income
statement. The after tax effect on profits resulting from the change in value of
biological assets was R1.8 million loss (2003: R9.3 million profit). The
valuation has been impacted, in the current year, by forestry fires causing
extensive damage to approximately 1 100 hectares of timber plantations.
2004 2003
R`000 R`000
Timber and sugar cane plantations - immature 29 729 29 526
Timber and sugar cane plantations - mature 66 177 68 903
Total 95 906 98 429
3. Retirement benefit obligation
The group provides post-retirement medical benefits to retired employees.
The actuarial valuation of the liability in respect of post-retirement medical
benefit is R16.7 million (2003: R15.5 million). Actuarial gains or losses in
respect of post-retirement medical benefits are recognised as income or expense
if the net cumulative unrecognised actuarial gains or losses at the end of the
previous reporting period exceed 10% of the present value of the post-retirement
medical benefit at that date.
4. Retirement benefits
The group enjoyed a contribution holiday approved by the Financial Services
Board as a result of the surplus residing in Provident Fund No. 2. In terms of
the Pension Fund Second Amendment Act, 2001 promulgated in December 2001, any
surplus residing in this fund may need to be renegotiated. In order to be
prudent, the company has a provision of R3.9 million including interest of which
R3.7 million was provided in 2003. The application to the Financial Services
Board for the continued use, by the company, of their portion as a contribution
holiday was rejected mainly on the grounds that the individual members did not
vote on the distribution of the surplus.
COMMENTARY
Revenue increased by 4.6% to R346.8 million and trading income, before accrual
of an insurance claim of R2.5 million, was 29% higher than the previous year
(R9.3 million vs R7.2 million). After adjustment for AC 137 - Agriculture,
headline earnings were R5.8 million (2003: R12.9 million).AC 137 - Agriculture
requires a company to value its biological assets at the end of each reporting
period. Due to severe climatic conditions in September, the forestry industry
was plagued with serious fires in the KwaZulu-Natal Midlands area. Masonite lost
1 100 hectares of standing timber during the period. This loss would
historically have been averaged over a 10 year growing cycle. The loss will have
no detrimental effect on the availability of fibre to the Estcourt factory, and
recent good rains have resulted in excellent re-growth in the burned areas.
While local volumes improved due to increased activity in all served markets,
margins came under pressure from competitively priced imports. This was a result
of the steady appreciation of the Rand during the year.
The stronger Rand altered the pattern of export sales, leading to the
elimination of commodity board products, and even value-added products became
unprofitable (but still contributed to fixed overhead).
Management of the mix between local and export sales is critical for the
performance of the company in the immediate future. While the Rand remains at
current levels, opportunities in export markets are limited, although complete
withdrawal from these markets may be detrimental in the long term. The earnings
pattern for 2005 is likely to be similar to that of 2004, with improved
performance in the second half of the year.
In view of the continuing uncertainty of the value of the Rand, the directors
have not declared a dividend for the year.
KPMG Inc., Registered Accountants and Auditors have issued an unmodified review
report on the financial information contained in this provisional report. The
review report is available for inspection at the company`s registered office.
For and on behalf of the board
M J Slater D S Cooper
Managing Director Financial Director
16 March 2005
DIRECTORS
A H Wilson (Chairman), M J Slater **(Managing), P A Bernards***, W P Coetzee
D S Cooper, D G Ellis*, J U Morrison*, K M P Spencer, R V Tubbesing*, A G Venton
*USA **British ***Canadian
COMPANY SECRETARY
E R Roberts
INVESTMENT BANK AND SPONSOR
Nedbank Capital
TRANSFER SECRETARIES
Computershare Investor Services 2004 (Pty) Limited
PO Box 61051, Marshalltown, 2107
70 Marshall Street, Johannesburg, 2001, Republic of South Africa
Telephone 011 370 5000
