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THE YORK TIMBER ORGANISATION LIMITED
REG. NO. 01/04890/06
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 1999
GROUP INCOME STATEMENT
UNAUDITED AUDITED
6 MONTHS YEAR
ENDED ENDED
30 JUNE 31 DEC.
1999 1998 1998
R000 R000 R000
TURNOVER 31 200 28 122 57 252
NET OPERATING INCOME 2 765 1 855 3 750
INTEREST (1 370) (1 086) (2 140)
NET INCOME BEFORE TAXATION 1 395 769 1 610
TAXATION (27) (21) (65)
- NORMAL - - (65)
- SECONDARY TAX ON COMPANIES (27) (21) (47)
NET INCOME AFTER TAXATION 1 368 748 1 545
ATTRIBUTABLE TO OUTSIDE SHAREHOLDERS (211) (175) (373)
NET INCOME 1 157 573 1 172
TRANSFER FROM NON-DISTRIBUTABLE
RESERVES 420 420 945
AMOUNT AVAILABLE FOR DISTRIBUTION 1 577 993 2 117
RETAINED INCOME FROM PRIOR YEARS 11 951 9 834 9 834
13 528 10 827 11 951
RETAINED INCOME AT END OF PERIOD 13 528 10 827 11 951
EARNINGS PER SHARE - CENTS 10,5 5,2 10,6
GROUP BALANCE SHEET
UNAUDITED AUDITED
30 JUNE 31 DEC.
1999 1998 1998
R000 R000 R000
SOURCE OF CAPITAL
SHARE CAPITAL 3 612 3 612 3 612
NON-DISTRIBUTABLE RESERVES 17 660 18 604 18 078
DISTRIBUTABLE RESERVE
- RETAINED INCOME 13 528 10 827 11 951
SHAREHOLDERS' FUNDS 34 800 33 043 33 641
OUTSIDE SHAREHOLDER'S INTEREST IN
SUBSIDIARY 3 000 3 000 3 000
TOTAL SHAREHOLDERS' FUNDS 37 800 36 043 36 641
LONG-TERM BORROWINGS 15 914 19 932 14 311
53 714 55 975 50 952
EMPLOYMENT OF CAPITAL
FIXED ASSETS 34 798 36 346 35 309
LONG-TERM RIGHTS TO SAWLOGS 931 931 931
OTHER INVESTMENTS 25 1 132 25
LONG-TERM RECEIVABLE 5 631 3 771 5 631
SINKING FUND - 2 061 -
41 385 44 241 41 896
CURRENT ASSETS 33 638 31 591 25 952
- STOCK 8 455 8 385 8 718
- SINKING FUND 2 061 - 2 061
- DEBTORS 23 049 18 183 13 649
- CASH 73 5 023 1 524
CURRENT LIABILITIES 21 309 19 857 16 896
- CREDITORS 16 915 17 818 14 818
- TAXATION 45 103 101
- SHORT-TERM BORROWINGS 4 349 1 936 1 977
NET CURRENT ASSETS 12 329 11 734 9 056
53 714 55 975 50 952
ABRIDGED GROUP CASH FLOW STATEMENT
6 MONTHS ENDED 30 JUNE
1999 1998
R000 R000
GROSS FUNDS FROM OPERATIONS 2 391 2 062
DIVIDENDS AND TAXATION PAID (27) (628)
INTERNAL CASH FLOW 2 364 1 434
WORKING CAPITAL OUTFLOW (7 097) (3 606)
OPERATING CASH FLOW (4 733) (2 172)
INVESTMENT IN OPERATING PLANT (693) (621)
NET INCREASE IN BORROWINGS (5 426) (2 793)
NOTES:
1. SHARES IN ISSUE: 11 040 497 (1998: 11 040 497).
2. CAPITAL COMMITMENTS: - AUTHORISED: R57 (1998: NIL) COMMITTED: NIL (1998:
NIL).
3. NET ASSET VALUE PER SHARE: 342 CENTS (1998: 326 CENTS).
4. GEARING: 35% (1998: 32%).
5. CURRENT RATIO: 1,28 (1998: 1,59).
ABRIDGED CHAIRMAN'S LETTER
THINGS WILL NEVER BE THE SAME AGAIN IN OUR INDUSTRY. A REVOLUTION LOOMS OVER
OUR ARENA. WE SAW IT COMING. IN ESSENCE, IT IS PART OF THE AFRICAN RENAISSANCE.
IT REFLECTS THE UNSTOPPABLE MARCH OF CHANGE AND TRANSFORMATION IN OUR COUNTRY.
WE ARE IN A RACE TO GET TO THE FUTURE. FEW ARE READY FOR IT.
INDUSTRY AVERAGES OUTPERFORMED
OUR COMPANY HAS BEEN IN BUSINESS FOR NEARLY 100 YEARS. STARTUP BUSINESSES IN
OTHER INDUSTRIES OFFERING PRODUCTS AND SERVICES THAT DID NOT EXIST FIVE YEARS
AGO, ARE GENERATING SKY-HIGH VALUES. THESE COMPANIES ARE HARBINGERS OF THE NEXT
COMPETITIVE ADVANTAGE - INNOVATION.
THE ACCOMPANYING FINANCIAL STATEMENTS FOR THE FIRST HALF OF 1999, SHOW THAT WE
HAVE OUTPERFORMED INDUSTRY AVERAGES. TO BE EMPHASISED AT THE OUTSET, HOWEVER,
IS THAT IT IS ALL TOO EASY TO MISTAKE THE SCOREBOARD FOR THE GAME. NEW
RESERVOIRS OF RESOURCE, NEW MARKET SPACE, NEW RULES, NEW WEALTH ARE NOT WON
THROUGH BALANCE SHEETS AND INCOME STATEMENTS. IN THE RACE FOR THE FUTURE THERE
IS NO TIME FOR SMALL STEPS OR SYMBOLIC GESTURES.
PRIVATISATION OF STATE FORESTS
OUR BOLD LEAP INTO THE FUTURE IS CHARACTERISED, FOR INSTANCE, BY POSITIVE AND
EFFECTIVE INITIATIVES TO PARTICIPATE IN THE PRIVATISATION PROCESS OF THE
STATE'S FORESTS. ON OFFER ARE THE COMMERCIAL FORESTRY ASSETS OF THE SOUTH
AFRICAN FORESTRY COMPANY LIMITED ("SAFCOL") AND THE DEPARTMENT OF WATER AFFAIRS
AND FORESTRY ("DWAF"). OUR CONSORTIUM, THE MADIBA FORESTRY CONSORTIUM, PUT IN
ITS BID TIMEOUSLY AT THE END OF LAST MONTH.
THE GOVERNMENT IS MAKING OVER THE MASSIVE FORESTRY INTERESTS OF THE NATION TO
THE PRIVATE SECTOR. CLEARLY IT IS CONCERNED TO ENSURE THAT AFFIRMATIVE AND
ENDURING BENEFIT ENURES TO ALL THE PEOPLE OF SOUTH AFRICA. OUR BID ADDRESSES
THESE SOCIO-ECONOMIC CONCERNS POSITIVELY.
LITIGATION
OUR LEGAL ADVISERS ARE CAUTIOUSLY CONFIDENT IN ALL THREE ACTIONS THAT ARE
PENDING. YORKCOR'S UNIQUE LEGAL POSITION IN REGARD TO ITS LONG-TERM SAWLOG
CONTRACTS CLEARLY PLACE US IN AN ADVANTAGEOUS POSITION. THE ACCOMPANYING
ACCOUNTS ADEQUATELY PROVIDED FOR REALISTIC EVENTUALITIES.
TARGETS BEATEN
THE YEAR TO 30 JUNE 1998 WAS REGARDED AS A NADIR FOR THE SOUTH AFRICAN SAW
MILLING INDUSTRY. SOFTWOOD LUMBER SALES IN THE ENSUING YEAR, AT ABOUT 1,14
MILLION CUBIC METRES WERE HARDLY 0,75 PER CENT BETTER. IN JULY 1999, THE
INDUSTRY POSTED DOMESTIC SALES THAT WERE 5 PER CENT LOWER THAN A YEAR AGO.
DESPITE THE TORRID MARKET CONDITIONS, YORKCOR DID WELL TO BEAT ITS BUDGETS FOR
THE FIRST HALF OF THE CURRENT FINANCIAL YEAR. COMPARED WITH THE SAME PERIOD
LAST YEAR, TURNOVER WAS UP BY 11 PER CENT FROM R28,2 MILLION TO R31,2 MILLION.
MARGINS WERE BOOSTED THROUGH THE PRODUCTION AND SALES OF HIGHER VALUE PRODUCTS,
RESULTING IN A 47 PER CENT ENHANCEMENT IN NET OPERATING INCOME FROM R1,9 TO
R2,8 MILLION. ATTRIBUTABLE INCOME ROSE FROM R0,573 MILLION LAST YEAR TO R1,157
MILLION IN THE SIX MONTH PERIOD UNDER REVIEW. EARNINGS PER SHARE HAVE, IN FACT,
MORE THAN DOUBLED, FROM 5,2 TO 10,5. CERTAIN BALANCE SHEET RATIOS AT 30 JUNE
1999 REFLECTED A DECLINE, ALTHOUGH THESE HAVE MUCH IMPROVED IN THE THIRD
QUARTER. THERE WAS AN INCREASE IN BORROWINGS OF SOME R5,4 MILLION (1998: R2,8
MILLION), RESULTING IN OUR GEARING MOVING SLIGHTLY FROM 32 PER CENT TO 35 PER
CENT. INCREASED SUPPORT FOR DEBTORS AND HIGHER INVENTORIES RESULTED IN A DROP
IN OUR CURRENT RATIO FROM 1,59 TO 1,28. THESE BALANCE SHEET FIGURES ARE
EXPECTED TO IMPROVE DECISIVELY BY THE END OF THE THIRD QUARTER, ESPECIALLY ONCE
SHIPPING OF SUBSTANTIAL EXPORT ORDERS CLINCHED RECENTLY COMMENCES.
OUTLOOK
WE HAVE TARGETED HEADLINE EARNINGS OF 32 CENTS PER SHARE FOR 1999. YORKCOR,
TRADITIONALLY, DECLARES DIVIDENDS ANNUALLY WITH THE PUBLICATION OF OUR ANNUAL
REPORT. THE SECOND HALF OF THE YEAR IS USUALLY BETTER, BUT THE KEY INDICATORS
OF INDUSTRY'S PROSPECT ARE NOT YET MUCH IMPROVED. THE NEXT SIX MONTHS' RESULTS
WILL TURN ON THE EXTENT OF OUR SUCCESSES IN EXPORT MARKETS. YORKCOR IS A
SURVIVOR - EVERYBODY IN THE BUSINESS KNOWS THAT. OF COURSE, IT IS NOT ENOUGH -
WE AIM TO PROSPER FOR OUR STAKEHOLDERS. WE WILL ACQUIT OURSELVES WELL WHATEVER
THE SEASON AND WILL ACT RESPONSIBLY WHATEVER THE SCENARIO.
THE DETAILED 1999 REPORT IS BEING MAILED TO SHAREHOLDERS TODAY,
14 SEPTEMBER 1999.
SOLLY TUCKER
CHAIRMAN
PRETORIA
15 SEPTEMBER 1999
REGISTERED OFFICE: TRANSFER SECRETARIES:
5TH FLOOR YORKCOR PARK COMPUTERSHARE SERVICES LIMITED
86 WATERMEYER STREET 41 FOX STREET
VAL DE GRACE, PRETORIA 0184 JOHANNESBURG 2001
PO BOX 380, PRETORIA 0001 PO BOX 61051, MARSHALLTOWN 2107
YORKCOR BEATS BUDGETS IN TOUGH CONDITIONS: INTERIM RESULTS
DESPITE ADVERSE MARKET CONDITIONS, THE YORK TIMBER ORGANISATION (YORKCOR)
EXCEEDED ITS FINANCIAL FORECASTS FOR THE HALF-YEAR TO 30 JUNE 1999.
COMPARED WITH THE SAME PERIOD FOR 1998, TURNOVER WAS UP BY 11%, FROM R28,2
MILLION TO R31,2 MILLION. THE PRODUCTION AND SALE OF HIGHER VALUE PRODUCTS
RESULTED IN A 47% INCREASE IN NET OPERATING INCOME, FROM R1,9 MILLION TO R2,8
MILLION, WHILE ATTRIBUTABLE INCOME ROSE FROM R0,573 MILLION TO R1,157 MILLION.
EARNINGS PER SHARE MORE THAN DOUBLED, FROM 5,2 CENTS TO 10,5 CENTS.
THERE WAS AN INCREASE IN BORROWINGS OF SOME R5,4 MILLION (1998: R2,8 MILLION)
RESULTING IN A SLIGHT INCREASE IN GEARING, FROM 33% TO 36%. INCREASED SUPPORT
FOR DEBTORS AND HIGHER INVENTORIES RESULTED IN A DROP IN THE CURRENT RATIO,
FROM 1,59 TO 1,28.
YORKCOR CHAIRMAN SOLLY TUCKER SAYS THAT, WHILE CERTAIN BALANCE SHEET RATIOS
REFLECTED A DECLINE AT THE END OF THE PERIOD, THEY HAVE MUCH IMPROVED IN THE
THIRD QUARTER. "OUR BALANCE SHEET FIGURES ARE EXPECTED TO IMPROVE DECISIVELY BY
THE END OF THE THIRD QUARTER, ESPECIALLY ONCE SHIPPING OF RECENT SUBSTANTIAL
EXPORT ORDERS COMMENCES," HE SAYS.
WHILE YORKCOR HAS OUTPERFORMED INDUSTRY AVERAGES, TUCKER SAYS, GIVEN THE STATE
OF THE INDUSTRY, THIS IS NO MEASURE OF SUCCESS AND PREPAREDNESS FOR THE FUTURE.
HE BELIEVES INNOVATION WILL BE THE DETERMINING FACTOR. "OUR BOLD LEAP INTO THE
FUTURE IS CHARACTERISED BY OUR INITIATIVES, TO PARTICIPATE IN THE PRIVATISATION
OF THE STATE'S FORESTS. OUR MADIBA FORESTRY CONSORTIUM HAS PUT IN ITS BID
TIMEOUSLY FOR CERTAIN OF THE COMMERCIAL FORESTRY ASSETS OF THE SOUTH AFRICAN
FORESTRY COMPANY LIMITED (SAFCOL) AND THE DEPARTMENT OF WATER AFFAIRS AND
FORESTRY (DWAF)."
TUCKER PRAISES THE STATE FOR ITS "BOLD AND IMAGINATIVE INITIATIVE" IN MAKING
OVER THE MASSIVE FORESTRY INTERESTS OF THE NATION TO THE PRIVATE SECTOR.
"CLEARLY, THE STATE IS CONCERNED TO ENSURE THAT THERE IS AFFIRMATIVE AND
ENDURING BENEFIT TO ALL THE PEOPLE OF SOUTH AFRICA - NOT LEAST THE PREVIOUSLY
DISADVANTAGED, AND ESPECIALLY THE COMMUNITIES NEIGHBOURING THE FORESTS," HE
SAYS.
"OUR BID ADDRESSES THESE SOCIO-ECONOMIC CONCERNS POSITIVELY. IF IT IS,
SUCCESSFUL, AN IMPORTANT OBJECTIVE IS THE ENCOURAGEMENT AND SUPPORT OF SMALL
AND MEDIUM-SIZED BLACK ENTERPRISES. REALISTIC MODELS ARE ALREADY PROVIDED BY
THE SAWMILL MADIBA MILLS AND MADIBA FOREST PRODUCTS, A FURNITURE FACTORY NEAR
WHITE RIVER WHICH IS TO BE REOPENED SHORTLY.
"IF SUCCESSFUL, WE ALSO EXPECT TO PLAY A KEY ROLE IN SUPPORTING AND PROMOTING
'BUSH MILLS'. THESE ARE SMALL AND MICRO MILLS (OFTEN ON WHEELS), SERIOUSLY
HAMPERED BY A LACK OF SECURE LOG SUPPLIES. YET THEY REPRESENT SUBSTANTIAL JOB
CREATION WHERE MOST NEEDED IN THE RURAL AREAS, AND THEY CONSTITUTE A
SIGNIFICANT BASE FOR FURTHER BLACK EMPOWERMENT."
TURNING TO THE COMPANY'S PROSPECTS, TUCKER SAYS THAT YORKCOR HAS TARGETED
HEADLINE EARNINGS OF 32 CENTS PER SHARE FOR 1999. WHILE THE SECOND HALF OF THE
YEAR IS USUALLY BETTER, HE SAYS KEY INDICATORS OF THE INDUSTRY'S PROSPECTS ARE
NOT YET MUCH IMPROVED. "THE NEXT SIX MONTHS' RESULTS WILL TURN ON THE EXTENT OF
OUR SUCCESSES IN EXPORT MARKETS," HE CONCLUDES.
ENDS
ISSUED FOR : YORKCOR LIMITED
CONTACT : SOLLY TUCKER TEL : (012) 804 9730 / 083 456 9900
FAX NO. : (012) 804 8611
E-MAIL : SOL@YORKCOR.CO.ZA
ISSUED BY : TISH STEWART PR ASSOCIATES
CONTACT : TISH STEWART TEL : (011) 325 4195 / 082 443 6399
FAX NO : (011) 325-4199
E-MAIL : TISH@TSPR.CO.ZA
DATE : 14 SEPTEMBER 1999
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