| Thu 31 Aug 2006, 12:12 | | Yorkcor posts 13% improvement in headline earnings |
|
YRK
YRK
Yorkcor posts 13% improvement in headline earnings per share
The York Timber Organisation Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1916/004890/06)
Share code: YRK ISIN code: ZAE000008108
("Yorkcor" or "the company")
Yorkcor posts 13% improvement in headline earnings per share
HIGHLIGHTS
- Revenue up 29% to R162,1 million
- Headline earnings per share up 13% to 87,1c (2005: 76,9c)
- Operating profit up 9% to R15,9 million (2005: R 14,6 million)
- Settlement of all outstanding litigation against Safcol
- Market conditions show signs of levelling off
Forestry products group Yorkcor posted a 13% improvement in headline
earnings per share for the six months ended 30 June 2006 on a 29% rise in
revenue to R162,1 million.
Headline earnings per share for the period was 87,1 cents, up from 76,9
cents for the comparable period in 2005. Profits from operations was up 9%
to R15,9 million (2005: R 14,6 million) from the previous period.
The group"s balance sheet remains solid, with stock levels up by 91% over
the corresponding previous period and 41% since year end due to higher
revenue volumes and organic growth and the expansion of our merchandising
activities. Gearing increased to 49% from 9% in June 2005 to facilitate
acquisitions and after the conversion of certain provisions to long-term
debt.
Cash flows improved by R16,6 million to R25,4 million at the end of June
2006. Other notable features of the financial results include a sharp drop
in investment income, and increases in both creditors and short-term
borrowings. Cash on hand was a robust R25,4 million at the end of the
reporting period, a nearly three-fold increase over the past year.
"Yorkcor is in a solid position for making acquisitions and further organic
growth," says CEO Ivor Tucker.
These results were achieved despite softer conditions in the forestry
products market. The levelling off in demand for lumber comes after several
years of above inflation increases for and lumber. Yorkcor"s succeeded in
gaining market share throughout the reporting period, and despite the
rand"s volatility, continues to grow its foreign trade
"This marks a new beginning for the group," says Tucker. "Subsequent to the
end of the reporting period, Yorkcor has settled all outstanding litigation
against state forestry group Safcol."
The dispute with Safcol has its roots in government"s privatisation
initiatives which were intended to terminate private sawmillers" access to
state plantations. These so-called "evergreen" contracts provided security
of tenure for private sawmillers in respect of state plantations and formed
the basis of the country"s sawmilling industry for decades. Yorkcor and
Safcol have settled the last outstanding item in a long-standing
arbitration between the companies. Adequate provision was made in our 2005
year-end balance sheet for the amounts settled.
"Safcol have expressed their satisfaction that the arbitration proceedings
have been settled and look forward to building a successful relationship
with Yorkcor in the future," adds Tucker. "We are happy to put this matter
behind us and concentrate our energies on continuing to grow the company."
Another development was the recent readjustment to the pricing structure of
one of its suppliers, Safcol-owned Komatiland Forests, which narrows the
pricing gap charged to long-term contractors and open market buyers.
Tucker says this improves the competitive playing field in the forestry
sector. "While this does not mean better pricing for Yorkcor, the result
will be that those of our competitors on long-term contracts, who enjoy
preferential pricing from Komatiland Forests, are now paying closer to the
open market price."
This should allow Yorkcor to make further market share gains.
Tucker also welcomed the decision of government to halt its proposed
privatisation of Safcol, having made three aborted attempts over the last
decade. "Our view is that the South African government, in keeping with
trends elsewhere in the world, should not be in the forestry business and
should pursue the privatisation of Safcol."
The group is considering a variety of options to address the lack of
liquidity in Yorkcor shares listed on the JSE Limited.
Yorkcor is pursuing a multi-pronged strategy to secure future log supplies
through the acquisition forestry resources, by introducing a broad-based
black economic empowerment partner at the shareholder level, and forging
alliances with saw millers, who will benefit from Yorkcor"s marketing
strengths. A number of potential forestry acquisitions have been identified
and are being considered, and the group is securing new log supplies from
Komatiland Forests and independent growers on competitive terms.
"We are exploring broad-based black economic empowerment in the
geographical environment in which we operate. A further cautionary has been
issued in this regard and we expect to make an announcement in the coming
weeks," adds Tucker.
Looking forward, Tucker says the prospects for the second half of the year
are positive, and the group expects to maintain its current growth path.
Ends
ISSUED FOR : YORK TIMBER ORGANISATION LIMITED
CONTACT : Ivor Tucker, CEO: 012 804 9730
FAX NO : 012 804 8611
E-MAIL : Ivor@yorkcor.co.za
WEBSITE : www.yorkcor.co.za
ISSUED BY : Letsema Communications
CONTACT : Tish Stewart 011 325 4195 / 082 443 6399
FAX NO : 011 325 4199
E-MAIL : tish@letsemacom.co.za
DATE : 31 August 2006
Date: 31/08/2006 12:12:17 PM Produced by the JSE SENS Department
