| Tue 27 Feb 2007, 15:17 | | YRK - York Timber Organisation Limited - Press Rel |
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YRK
YRK
YRK - York Timber Organisation Limited - Press Release
The York Timber Organisation Limited
(Incorporated in the Republic of South Africa)
(Registration number 1916/004890/06)
Share code YRK & ISIN ZAE000008108
("Yorkcor" or "the company")
Yorkcor posts best ever annual results in near 100-year history
HIGHLIGHTS
* Headline earnings per share up sixfold to 263c from (2005: 45c)
* Gross profit up by 17% to R153 million (2005: 129 million)
* Operating profit up by 50% to R42,2 million (2005: R28,2 million)
* Revenue up 39%, R394 million (2005: R284 million)
* BEE transaction finalised
* Second forest acquisition concluded
* Tender process participation to acquire controlling interest in
Global Forest Products
Forestry products group Yorkcor has delivered an excellent set of results
for the year to December 2006, posting a 484% increase in headline
earnings per share, from 45 cents in 2005 to 263 cents in 2006. Gross
profit improved by 17% to R129 million (2005: 153 million) on a 39% rise
in revenue to R394 million (2005:284 million). Profit from operations
climbed 50% to R42,2 million (2005: R28,2 million).
The year also marks a new era for Yorkcor, which was formed in 1916 and
listed on the JSE in 1946. Control of the company is to pass to
Luxembourg-based Blackstar Investors plc, with a further 26% earmarked
for BEE shareholders and the board of directors has been restructured.
On the board, CEO Ivor Tucker becomes non-executive chairman, replacing
Dr Tienie van Vuuren. Two non-executive directors, Dr Jurgen Kopp and
Poenkie de Villiers, stand down and Blackstar`s Jim Myers, Andrew
Bonamour and William Marshall-Smith join the board. Earlier in the year
Nthato Motlana resigned from the board, with his place filled by Gay
Mokoena. Sally Motlana remains a non-executive director. The executive
directors are Chief Operating Officer Lance Cooper, who takes over as CEO
from Ivor Tucker, and Financial Director John Lehman.
Putting the results in context in terms of the market, Cooper says the
exceptional demand for timber in 2005 changed into a softer market in
2006 and softwood lumber sales for formal sawmills decreased by
approximately 8%. "This was mainly due to two substantial log price
increases and higher interest rates," says Cooper. "The industry was
flooded with timber and prices were under pressure throughout the year.
The flexibility of our sawmilling operations, however, ensured that our
full production was sold, with stock turn-over improved."
Against this backdrop, Cooper says the leap in Yorkcor`s operational
performance was due to organic growth in all divisions. "Although timber
markets were generally softer, the company`s performance was a good deal
stronger, with gains in margins throughout the group," he says.
Commenting on the operations, Cooper says, "All five sawmilling
operations again contributed a profit, with an 18,3% growth in income
achieved over the previous year`s performance. Sawn lumber prices
escalated by 23% during the year, with roadside log price escalations
soaring by some 54%.Despite this, the Sawmilling division managed to
boost income generated."
On forestry, Yorkcor reported the Taurus forest, acquired in 2005, to be
on track. In addition, the company reached agreement with Crocodile
Valley Estates (Pty) Limited for the acquisition of its business,
Goedgeloof Plantation, as a going concern for a consideration of R32,3
million. The effective date of the acquisition was 22 February 2007.
"The acquisition is viewed as strategically important by the board as it
makes Yorkcor less reliant on third-party sources of sawlog supply,"
Cooper points out.
On the Merchandising Division, Cooper says the Group has expanded into
the KwaZulu-Natal market.
In the year under review, Yorkcor commenced value adding operations,
having identified the need to diversify its sawmilling product range. It
now out-sources matching products for trade. Yorkcor`s Madiba Forest
Products plant manufactures value added timber products supplied to the
company`s existing customer base.
The objective of this operation is to organically expand Yorkcor`s
product range, utilising its own timber resources and those of other
suppliers to produce products further down the value chain. The strategy
is to add value to rough sawn lumber to meet the growing needs of
Yorkcor`s broad customer base and identify further value added timber
products to boost profitability.
During 2006 Yorkcor expanded and strengthened its alliance with various
sawmillers, in one instance entering into an alliance agreement with The
Wattle Company of Zimbabwe in terms of which the company was appointed
the sole distributor of its entire production.
On the Environment, Cooper says, "Yorkcor maintains, as a minimum, those
standards required by the Department of Environmental Affairs. Treatment
plants comply with the latest SANS specifications and Yorkcor
participates in a number of recycling projects. Our sawmills have
internationally accredited Forestry Stewardship Council (FSC)
certification which forms part of the chain of custody between
environmentally well managed plantations, processors and conscientious
consumers."
Dividend
Taking into consideration the acquisition of forests and the company`s
overall growth strategy, no dividend has been declared for the year under
review.
Looking ahead
Except for North America, where the decline is expected to correct around
mid 2007, offshore markets are again buoyant and increased consumption
and an expansion in the production of timber products of approximately 5%
is projected for 2007. "For Yorkcor, the challenge is to identify the
key drivers of softwood consumption in global markets - although the
feasibility of exports is restricted by prevailing exchange rates, global
supply and demand dynamics could have a material impact on lumber
prices," says Cooper.
He says the company intends to follow a growth strategy, both generically
and looking to local and international acquisitions and Yorkcor is
currently in a tender process to acquire 70% of Global Forest Products
(GFP). GFP consists of a valuable forestry asset of some 57 000 ha of
plantations, as well as three sawmills and one plywood mill. The
successful bidder is expected to be announced during March.
As regards its JSE listing Cooper says Yorkcor is committed to remaining
listed. "A listing is the ideal vehicle for growth and it is expected
that with the change in shareholding control, the free float on the JSE
will increase significantly to the benefit of shareholders."
Cooper concludes by saying, "Overhanging market sentiment is rampant
consumer spending, the rising tide of interest rates, and consequent
leveling off in new housing. Yorkcor nevertheless expects to remain ahead
of the pack. This will be achieved despite the rising spiral of sawlog
costs, by continuing to keep a tight rein on expenses and fine-tuning
margins and efficiencies. The business is running on well-oiled wheels
and our outlook is upbeat for the year ahead."
Ends
ISSUED FOR: YORK TIMBER ORGANISATION LIMITED: 012 804 9730
CONTACT: Lance Cooper, Chief Operating Officer: 083 227 4700 or
John Lehman, Financial Director: 082 388 8998
FAX NO: 012 804 8611
E-MAIL: Lance@yorkcor.co.za; john@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: 27 February 2007
Date: 27/02/2007 15:17:03 Produced by the JSE SENS Department.
