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Masonite (Africa) Limited - Unaudited Interim Results
MASONITE (AFRICA) LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1942/015502/06)
Share code: MAS ISIN: ZAE000004289
(`Masonite` or `the company`)
UNAUDITED INTERIM RESULTS
Group income statement
6 months to 12 months to
June 30, June 30, December 31,
2005 2004 2004
Note (R`000) (R`000) (R`000)
Revenue 200 634 188 770 413 392
Cost of sales (151 486) (148 781) (312 729)
Gross profit 49 148 39 989 100 663
Other operating
income 4 160 4 719 7 790
Distribution
expenses and
allowances (34 305) (33 368) (75 033)
Selling and
marketing
expenses (6 069) (5 964) (11 816)
Administrative
expenses (5 733) (4 939) (8 479)
Other operating
expenses (2 892) (1 100) (1 427)
Trading
income/(loss) 4 309 (663) 11 698
Movement in
fair value of
standing timber
and sugar
cane as a
result of AC 137 2 (1 877) 2 504 (2 523)
Operating profit 2 432 1 841 9 175
Net financing costs (211) (561) (423)
Profit before tax 2 221 1 280 8 752
Taxation 5 456 (449) (2 938)
Net profit 2 677 831 5 814
HEADLINE EARNINGS
RECONCILIATION
Net profit 2 677 831 5 814
Adjusted for:
Loss/(profit) on sale
of assets 61 (59) (101)
Tax effect of adjustments (18) 18 30
Headline earnings 2 720 790 5 743
Number of shares in
issue 6 880 890 6 849 388 6 854 054
Earnings per share
(cents)
Attributable basis 39c 12c 85c
Headline basis 40c 12c 84c
Fully diluted basis 38c 12c 82c
Group balance sheet
6 months 12 months
June 30, June 30, December 31,
2005 2004 2004
Note (R`000) (R`000) (R`000)
ASSETS
Non-current
assets Property,
plant and
equipment 100 697 102 037 103 414
Biological assets 2 94 029 100 932 95 906
Investments 985 948 985
Loans receivable 60 96 78
Total non-current
assets 195 771 204 013 200 383
Current assets
Inventories 47 154 41 440 36 059
Trade receivables 36 638 48 702 36 506
Other receivables 12 152 10 407 8 500
Amounts due from group
companies 10 181 4 634 4 835
Cash and cash
equivalents 15 053 30 13 295
Total current assets 121 178 105 213 99 195
Total assets 316 949 309 226 299 578
EQUITY AND LIABILITIES
Capital and reserves
Share capital 3 440 3 425 3 427
Share premium 2 290 2 177 2 194
Non-distributable reserves 700 700 700
Distributable reserve 203 518 195 858 200 841
Total shareholders`
investment 209 948 202 160 207 162
Non-current liabilities
Deferred taxation 32 293 34 618 33 597
Deferred investment
allowances - 24 9
Retirement benefit
obligation 3 17 363 16 101 16 691
Total non-current
liabilities 49 656 50 743 50 297
Current liabilities
Trade and other
payables 44 891 46 790 31 543
Provisions 4 4 342 3 905 3 924
Bank overdrafts 7 023 5 645 4 140
Taxation (199) (30) 975
Amounts due to group
companies 1 288 13 1 537
Total current liabilities 57 345 56 323 42 119
Total equity and
liabilities 316 949 309 226 299 578
Group cash flow statement
6 months 12 months
June 30, June 30, December 31,
2005 2004 2004
(R`000) (R`000) (R`000)
Cash flows from operating
activities
Operating profit 2 432 1 841 9 175
Net financing costs (211) (561) (423)
Non-cash items:
Depreciation 5 801 5 568 11 219
Movement in fair value
of timber and
sugar cane 1 877 (2 504) 2 523
Other non-cash items 672 536 1 082
Taxation paid (2 044) (187) (2 707)
Working capital changes (6 707) (4 290) 2 933
Net cash inflow from
operating activities 1 820 403 23 802
Cash flows from investing
activities
Purchase of property, plant
and equipment
Expansion (104) (531) (416)
Replacement (3 153) (5 453) (14 247)
Proceeds on disposal of
property,
plant and equipment 184 60 110
Increase in investments - - (37)
Decrease in loans
receivable 19 18 36
Net cash outflow from
investing
activities (3 054) (5 906) (14 554)
Cash flows from financing
activities
Proceeds from issue
of ordinary
shares 109 70 89
Net cash inflow from financing
activities 109 70 89
Net (decrease)/increase
in cash and
cash equivalents (1 125) (5 433) 9 337
Net cash and cash
equivalents at beginning
of year 9 155 (182) (182)
Net cash and cash
equivalents at end
of year 8 030 (5 615) 9 155
Group statement of
changes in equity
Balance at beginning
of period 207 162 186 590 186 590
Effect of transition
to IFRS - 14 669 14 669
Restated balance 207 162 201 259 201 259
Net profit 2 677 831 5 814
Share capital issued 109 70 89
Balance at end of period 209 948 202 160 207 162
Reconciliation of previous SA GAAP to IFRS
IFRS transition
date
December 31, June 30, January 1,
2004 2004 2004
(R`000) (R`000) (R`000)
Balance sheet
Equity
As previously
reported - SA GAAP 192 580 187 529 186 590
Restatement of accumulated
depreciation
to reflect PP&E`s useful
lives 20 986 20 986 20 970
Restatement of operating lease
expenses (154) (84) (14)
Deferred tax adjustments
on the above restatements (6 250) (6 271) (6 287)
Equity restated - IFRS 207 162 202 160 201 259
Non-current assets
Property, plant and
equipment 81 837 79 407 79 008
As previously reported - SA GAAP
Restatement of accumulated
depreciation
to reflect PP&E`s useful
lives 20 986 20 986 20 970
Plant critical spares
reclassified
from inventories to PP&E 591 1 644 -
Property, plant and equipment
restated - IFRS 103 414 102 037 99 978
Inventories
As previously
reported - SA GAAP 36 650 43 084 40 367
Plant critical spares
reclassified
to PP&E (591) (1 644) -
Inventories restated - IFRS 36 059 41 440 40 367
Trade and other payables 31 389 46 706 47 113
Restatement of operating lease
expenses 154 84 14
Trade and other payables restated
- IFRS 31 543 46 790 47 127
Income statement
Net profit as previously
reported 5 901 869
After tax effect of restatement of
accumulated
depreciation to reflect PP&E`s
useful lives 11 11
After tax effect of restatement of
operating leases (98) (49)
Net profit restated - IFRS 5 814 831
Segmental analysis
6 months 12 months
June 30, June 30, December 31,
2005 2004 2004
(R`000) (R`000) (R`000)
REVENUE
Mill 170 452 157 248 346 827
Other 30 182 31 522 66 565
Group total 200 634 188 770 413 392
Trading income/(loss)
Mill 3 155 (7 636) (2 620)
Other 1 154 6 973 14 318
Group total 4 309 (663) 11 698
Notes
1. Basis of preparation
The unaudited results of the Group for the half-year ended June
30, 2005 have been prepared in accordance with the Group`s
accounting policies which fully comply with International
Reporting Standards (IFRS). The Group is reporting
under IFRS for the first time for the year ending 31 December
2005.
Comparative figures have accordingly been restated. The
disclosures required by IFRS 1 (First-time Adoption of
International Financial Reporting Standards) concerning the
transition from South African Statements of Generally Accepted
Practice (SA GAAP) to IFRS and the requisite changes in
accounting policies are set out in the reconciliation of previous
SA GAAP to IFRS.
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 a loss of R1.3 million (2004: R1.7 million profit)
This was the result of the forest fires in September 2004.
June 30, June 30, December 31,
2005 2004 2004
(R`000) (R`000) (R`000)
Timber and sugar cane
plantations -
immature 69 265 31 994 66 177
Timber and sugar cane
plantations -
mature 24 764 68 938 29 729
Total 94 029 100 932 95 906
3. Retirement benefit obligation
The group provides post-retirement medical benefits to retired
employees. The liability in respect of post-retirement medical
benefit is R17.4 million (2004:
actuarially valued at R16.7 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, until June 2003, a contribution holiday in
respect of Provident Fund No. 2. However, in terms of the Pension
Fund Second Amendment Act, 2001, the application by the company
was rejected. An amount of R4.3 million including interest (2004:
R3.9 million) has been provided for a surplus redistribution
exercise.
5. Taxation June 30, June 30, December 31,
2005 2004 2004
(R`000) (R`000) (R`000)
Normal (871) (75) (3 600)
Deferred 197 (388) 634
Deferred investment
allowances 9 14 28
Rate change adjustment
(deferred) 1 121 - -
Total 456 (449) (2 938)
Commentary
Net profit for the six months to June improved from R0.8 million
in 2004 to R2.7 million in 2005. However trading income, which
excludes the application of AC 137 - Agriculture, improved from a
loss of R0.7 million in 2004 to a profit of R4.3 million in 2005.
This improvement was mainly attributable to higher volumes in the
domestic market and excellent manufacturing performance.
The value of standing timber has been negatively impacted by the
fires that devastated the Natal Midlands in September 2004.
Seasonal demand during the second half of the year should enhance
earnings during this period.
For and on behalf of the Board
M J Slater D S Cooper
Managing Director Financial Director
27 September 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
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
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