Wrap Text
THE YORK TIMBER ORGANISATION LIMITED
REG. NO. 01/04890/06
INTERIM REPORT FOR THE SIX MONTHS TO 30 JUNE 2000
GROUP INCOME STATEMENTS
UNAUDITED AUDITED
30 JUNE 31 DECEMBER
2000 1999 1999
R000 R000 R000
REVENUE 33 565 31 200 62 440
COST OF SALES (11 500) (11 693) (27 532)
GROSS PROFIT 22 065 19 507 34 908
STAFF COSTS (9 909) (10 082) (19 880)
DEPRECIATION (1 003) (1 204) (2 551)
OTHER OPERATING EXPENSES (6 797) (5 232) (12 791)
PROFIT/(LOSS) FROM OPERATIONS 4 356 2 989 (314)
LEGAL COSTS (1 494) (224) (1 595)
INCREASE IN NET POLICY VALUE
OF SINKING FUND - - 810
(LOSS)/PROFIT BEFORE
FINANCE COSTS 2 862 2 765 (1 099)
FINANCE COSTS (1 076) (1 370) (1 966)
(LOSS)/PROFIT BEFORE TAXATION 1 786 1 395 (3 065)
TAXATION (59) (27) (101)
(LOSS)/PROFIT AFTER TAXATION 1 727 1 368 (3 166)
MINORITY SHAREHOLDERS' INTEREST (206) (211) (372)
NET (LOSS)/PROFIT FOR THE YEAR 1 521 1 157 (3 538)
NOTES TO THE FINANCIAL STATEMENTS
UNAUDITED AUDITED
30 JUNE 31 DECEMBER
2000 1999 1999
1. EARNINGS PER SHARE (CENTS) 13,8 10,9 (32,0)
2. HEADLINE EARNINGS
PER SHARE (CENTS) 13,8 10,9 (32,0)
3. DIVIDENDS PER SHARE (CENTS) - - -
4. CAPITAL EXPENDITURE
FOR THE PERIOD (R000) 13 693 950
5. CAPITAL EXPENDITURE
COMMITTED (R000) - - -
6. CAPITAL EXPENDITURE
AUTHORISED (R000) - - -
7. SHARES IN ISSUE (000) 11 040 11 040 11 040
8. NET ASSET VALUE
PER SHARE (CENTS) 323 342 309
9. GEARING (%) 28 35 28
10. CURRENT RATIO (RATIO) 1,14 1,28 1,07
GROUP BALANCE SHEETS
UNAUDITED AUDITED
30 JUNE 31 DECEMBER
2000 1999 1999
R000 R000 R000
ASSETS
NON-CURRENT ASSETS
PROPERTY, PLANT, EQUIPMENT AND VEHICLES 32 427 34 798 33 521
LONG-TERM RIGHTS TO SAWLOGS 931 931 931
INVESTMENTS 25 25 25
LONG-TERM RECEIVABLES 5 631 5 631 5 631
SINKING FUND 2 871 2 061 2 871
41 885 43 446 42 979
CURRENT ASSETS 29 814 31 577 27 077
INVENTORIES 5 906 8 455 7 374
ACCOUNTS RECEIVABLE 22 554 23 049 19 652
BANK BALANCES AND CASH 1 354 73 51
TOTAL ASSETS 71 699 75 023 70 056
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
SHARE CAPITAL 3 612 3 612 3 612
NON-DISTRIBUTABLE RESERVES 16 747 17 660 17 167
ACCUMULATED PROFITS 11 265 13 528 9 324
ORDINARY SHAREHOLDERS' FUNDS 31 624 34 800 30 103
MINORITY SHAREHOLDERS' INTEREST
IN SUBSIDIARY 4 000 3 000 4 000
TOTAL SHAREHOLDERS' FUNDS 35 624 37 800 34 103
NON-CURRENT LIABILITIES
INTEREST BEARING BORROWINGS 10 028 15 914 10 683
CURRENT LIABILITIES 26 047 21 309 25 270
ACCOUNTS PAYABLE 20 860 16 915 22 291
TAXATION 53 45 83
SHORT-TERM BORROWINGS 5 134 4 349 2 896
TOTAL EQUITY AND LIABILITIES 71 699 75 023 70 056
ABRIDGED GROUP CASH FLOW STATEMENTS
UNAUDITED AUDITED
30 JUNE 31 DECEMBER
2000 1999 1999
R000 R000 R000
CASH GENERATED BY OPERATING ACTIVITIES 1 001 (3 125) 3 456
FINANCE COSTS (1 282) (1 581) (2 338)
DIVIDENDS AND TAX PAID (90) (27) (119)
NET CASH INFLOW FROM
OPERATING ACTIVITIES (371) (4 733) 999
NET CASH (OUTFLOW)/INFLOW FROM
INVESTING ACTIVITIES 91 (693) 4
NET CASH (OUTFLOW)/INFLOW FROM
FINANCING ACTIVITIES 1 583 3 975 (2 476)
NET (DECREASE)/INCREASE IN
BANK BALANCES AND CASH 1 303 (1 451) (1 473)
BANK BALANCES AND CASH AT
BEGINNING OF YEAR 51 1 524 1 524
BANK BALANCES AND CASH AT END OF PERIOD 1 354 73 51
STATEMENTS OF CHANGES IN EQUITY
UNAUDITED - AT 30 JUNE
SHARE NON-
SHARE SHARE ELECTION DISTRIBUTABLE ACCUMULATED
CAPITAL PREMIUM RESERVE RESERVE PROFIT TOTAL
BALANCE AT
31 DECEMBER 1998 552 3 060 - 18 078 11 951 33 641
DEPRECIATION ON
ASSET REVALUATIONS
REVERSED (415) 417 2
EXPENSES OF
NON-REVENUE
PRODUCING
SUBSIDIARIES (3) 3 -
NET PROFIT FOR
THE PERIOD 1 157 1 157
BALANCE AT
30 JUNE 1999 552 3 060 - 17 660 13 528 34 800
BALANCE AT
31 DECEMBER 1999 552 3 060 - 17 167 9 324 30 103
DEPRECIATION ON
ASSET REVALUATIONS
REVERSED (417) 417 -
EXPENSES OF
NON-REVENUE
PRODUCING
SUBSIDIARIES (3) 3 -
NET PROFIT FOR
THE PERIOD 1 521 1 521
BALANCE AT
30 JUNE 2000 552 3 060 - 16 747 11 265 31 624
COMMENTARY
YORKCOR DID WELL IN THE FIRST HALF OF THE FINANCIAL YEAR, 2000. THE GROUP
ACCOMPLISHED A TURNAROUND FROM A LOSS OF R3,54 MILLION LAST YEAR TO A NET
PROFIT OF R1, 52 MILLION FOR THE SIX MONTHS TO 30 JUNE 2000. THE COMPARATIVE
FIGURE FOR THE SAME PERIOD LAST YEAR WAS A NET PROFIT OF R1,16 MILLION - AN
IMPROVEMENT OF MORE THAN 30%. OTHER KEY FIGURES ALSO SHOWED PROGRESS. COMPARED
WITH THE SAME PERIOD LAST YEAR, THE HALF-YEAR UNDER REVIEW POSTED A 7,6%
INCREASE IN REVENUE, FROM R31,20 MILLION TO R33,57 MILLION. HEADLINE EARNINGS
AT 13,8 CENTS PER SHARE IMPROVED BY 26,6% FROM 10,9 CENTS. THE LEVEL OF THE
GROUP'S GEARING, AT 28, IS SIGNIFICANTLY BETTER THAN THE 35 OF A YEAR AGO.
EARLY IN THE YEAR, OUR PROGRESS WAS STRUCK A SERIOUS BLOW BY INCLEMENT WEATHER
OF UNPRECEDENTED PROPORTIONS. OUR YORK LUMBER MILL NEAR ACORNHOEK WAS MAROONED
FOR SEVERAL WEEKS FOLLOWING THE HEAVIEST RAINS AND FLOODS IN LIVING MEMORY.
OUR RESULTS SHOULD BE WEIGHED IN THE CONTEXT OF INHOSPITABLE CONDITIONS FOR THE
INDUSTRY AS A WHOLE. ONE IN EVERY FOUR SAWMILLERS IN THE FORMAL SECTOR OPERATED
AT A LOSS IN THIS PERIOD. HOME BUILDING WAS IN THE DOLDRUMS AND THE PRICE OF
STRUCTURAL TIMBER DROPPED TO A LEVEL LAST SEEN TWO YEARS AGO. A REDEEMING
FEATURE HAS BEEN WHOLESOME GROWTH IN THE FURNITURE INDUSTRY FOR BOTH DOMESTIC
AND EXPORT MARKETS. OUR MILLS HAVE DONE WELL TO DEVELOP PRODUCTS OF HIGH
QUALITY, ESPECIALLY "SHOW-WOOD", TO TAKE ADVANTAGE OF THE NEW TREND.
PRIVATISATION
ALL EYES ARE ON DEVELOPMENTS REGARDING PRIVATISATION. THE INDUSTRY HAS BEEN
IMMOBILISED FOR YEARS FOR WANT OF DIRECTION. TARGETING TOO MANY OBJECTIVES HAS
BLURRED FOCUS. AS A RESULT, THE CAPACITY OF THE INDUSTRY TO CONTRIBUTE TO RURAL
ECONOMIES, AND ESPECIALLY PROVIDE JOBS, HAS CONTRACTED. SAWMILLERS,
APPROPRIATELY SUPPORTED, COULD DO MUCH TO LIFT HARD LIVING CONDITIONS IN THE
COUNTRY.
SHAREHOLDERS SHOULD UNDERSTAND YORKCOR'S SPECIAL POSITION REGARDING ITS SAWLOG
RIGHTS. OUR RESOURCE ENTITLEMENTS WERE ESTABLISHED BY LONG STANDING CONTRACTS
WITH THE STATE. THEY HAVE BEEN CALLED "EVERGREEN" CONTRACTS BECAUSE THEY
PROVIDE SECURITY OF TENURE. IN THE RUN UP TO PRIVATISATION, MOST SAWMILLERS
WERE INDUCED TO GIVE UP THEIR LONG-TERM RIGHTS AND ACCEPT THREE YEARS' NOTICE
OF TERMINATION. THEY NOW FACE AN UNCERTAIN FUTURE.
FOR YORKCOR, THE STRATEGIC ENTITLEMENTS IN OUR EVERGREEN CONTRACTS REPRESENT
CONSIDERABLE SHAREHOLDER VALUE. WHAT MAKES THESE CONTRACTS CONTROVERSIAL TODAY
IS THAT THEY COMPLICATE THE PRIVATISATION PROCESS. A BIDDER WOULD PAY LESS FOR
A FOREST SUBJECT TO AN "EVERGREEN" CONTRACT THAN FOR ONE NOT SO BURDENED. THE
BILL OF RIGHTS AFFORDS PROTECTION AGAINST DEPRIVATION OR EXPROPRIATION WITHOUT
COMPENSATION. AN EXPRESS STIPULATION IN OUR LOG SUPPLY CONTRACT WITH THE STATE
PROVIDES THAT WE SHOULD BE PLACED IN THE SAME FINANCIAL POSITION AS WE WOULD
HAVE BEEN IN IF THE CONTRACT WERE TO CONTINUE INDEFINITELY WITHOUT
INTERRUPTION. IF THE CONTRACT IS TO BE HONOURED, SUCH COMPENSATION WOULD BE
SUBSTANTIAL. OUR WISH IS TO SETTLE THE MATTER REASONABLY.
LITIGATION
THE DEFENCE OF OUR LOG SUPPLY CONTRACTS HAS BEEN LONG AND HARD - AND MOSTLY
SUCCESSFUL. THERE IS COMFORT IN THE RULE OF LAW.
THE DEPARTMENT OF WATER AFFAIRS & FORESTRY, HOWEVER, IS INVOKING A PROVISION IN
THE NATIONAL FORESTRY ACT OF 1998 WHICH, IT CONTENDS, GIVES THE MINISTER A
QUALIFIED DISCRETION TO TERMINATE OUR LONG-TERM SAWLOG CONTRACT AT FIVE YEARS'
NOTICE. OUR LOG SUPPLY CONTRACT EXPRESSLY PROMISES SECURITY OF TENURE
INDEFINITELY. MOST SAWMILLERS HAVE THREE YEARS. IN 1994, THE STATE INSTITUTED
ACTION IN THE HIGH COURT FOR AN ORDER DECLARING OUR LONG-TERM SAWLOG CONTRACT
VOID. THE COURT DISMISSED THE ACTION AND AWARDED YORKCOR DAMAGES FOR
UNDER-DELIVERY OF SAWLOGS, COSTS AND INTEREST. THE AMOUNT TODAY EXCEEDS R5,0
MILLION. AN APPEAL BY THE STATE AGAINST THIS JUDGMENT IS TO BE HEARD BY THE
SUPREME COURT OF APPEAL IN NOVEMBER 2000.
THERE HAVE BEEN, AND WILL BE, OTHER HEARINGS. SHAREHOLDERS WERE EARLIER ADVISED
OF THE OUTCOME OF A LOG PRICE ARBITRATION WHICH FAVOURED SAFCOL. SHORTLY
THEREAFTER, YORKCOR FILED PAPERS IN THE COMPETITION TRIBUNAL SEEKING RELIEF FOR
ANTI-COMPETITIVE CONDUCT BY SAFCOL INVOLVING, WE SAY, AN ABUSE OF ITS DOMINANT
POSITION IN THE MARKET FOR SAWLOGS.
MADIBA MILLS
YORKCOR LAUNCHED THE MADIBA MILLS PROJECT FIVE YEARS AGO TO PROMOTE A BLACK
ENTERPRISE IN THE FOREST PRODUCTS INDUSTRY. TODAY IT IS A PROMINENT PLAYER IN
THE INDUSTRY. ITS MANAGEMENT AND STAFF ARE ALMOST ENTIRELY MADE UP FROM THE
PREVIOUSLY DISADVANTAGED GROUPS. MADIBA MILLS HAS DONE WELL IN THE PERIOD UNDER
REVIEW AND PLANS ARE UNDERWAY TO PROVIDE STABLE FUNDING. ULTIMATELY MORE THAN
80% OF ITS SHARE CAPITAL WILL BE OWNED BY ITS EMPLOYEES AND OTHERS PREVIOUSLY
DISADVANTAGED.
OUTLOOK
THE DOMESTIC TIMBER MARKET SHOWED SIGNS OF WEAKENING IN THE SECOND AND THIRD
QUARTERS. OUR EXPORT EFFORT, HOWEVER, SHOWS PROMISE. MUCH DEPENDS ON A RETURN
OF CONFIDENCE AND THE STATE'S HANDLING OF PRIVATISATION. IT WOULD NOT BE
HELPFUL IN SUCH A CLIMATE OF UNCERTAINTY TO OFFER A QUANTIFIED FORECAST.
HOWEVER, OUR BUSINESS IS IN PLACE TO ENSURE THAT WE ARE AMONGST THE BETTER
PERFORMERS IN THE ARENA.
SOLLY TUCKER
CHAIRMAN
PRETORIA
25 AUGUST 2000.
DIRECTORS: SOLLY TUCKER (CHAIRMAN), IVOR TUCKER (MANAGING DIRECTOR),
AC DE VILLIERS, DR WALLY KOPP, SALLY MOTLANA
YORKCOR POSTS TURNAROUND INTERIM RESULTS IN TOUGH CONDITIONS
THE YORK TIMBER ORGANISATION (YORKCOR) HAS REPORTED ITS INTERIM RESULTS FOR
FINANCIAL 2000, ACHIEVING A TURNAROUND FROM A LOSS OF R3,54 MILLION AT YEAR-END
DECEMBER 1999 TO A NET PROFIT OF R1,52 MILLION FOR THE SIX MONTHS TO 30 JUNE
2000. THIS IS AN IMPROVEMENT OF MORE THAN 30% OVER THE SAME PERIOD LAST YEAR,
FOR WHICH THE COMPARATIVE FIGURE WAS A NET PROFIT OF R1,16 MILLION.
OTHER KEY FIGURES ALSO SHOWED PROGRESS. COMPARED WITH THE 1999 INTERIM RESULTS,
THE PERIOD UNDER REVIEW POSTED A 7,6% INCREASE IN REVENUE, FROM R31,20 MILLION
TO R33,57 MILLION. HEADLINE EARNINGS AT 13,8 CENTS PER SHARE IMPROVED BY 26,6%
FROM 10,9 CENTS. THE LEVEL OF THE GROUP'S GEARING, AT 28, IS SIGNIFICANTLY
BETTER THAN THE 35 OF A YEAR AGO.
YORKCOR CHAIRMAN SOLLY TUCKER SAYS THAT THE RESULTS SHOULD BE VIEWED IN THE
CONTEXT OF INHOSPITABLE CONDITIONS FOR THE INDUSTRY AS A WHOLE. "ONE IN EVERY
FOUR SAWMILLERS IN THE FORMAL SECTOR OPERATED AT A LOSS IN THIS PERIOD," HE
SAYS.
"A NUMBER OF FACTORS DEPRESSED INDUSTRY ACTIVITY," SAYS TUCKER. "HOME BUILDING
WAS IN THE DOLDRUMS AND THE PRICE OF STRUCTURAL TIMBER DROPPED TO A LEVEL LAST
SEEN TWO YEARS AGO. A REDEEMING FEATURE HAS BEEN WHOLESOME GROWTH IN THE
FURNITURE INDUSTRY FOR BOTH THE DOMESTIC AND EXPORT MARKETS. OUR MILLS HAVE
DONE WELL TO DEVELOP PRODUCTS OF HIGH QUALITY, ESPECIALLY 'SHOW WOOD', TO TAKE
ADVANTAGE OF THE NEW TREND.
TUCKER SAYS THAT UNCERTAINTY ABOUT PRIVATISATION OF THE STATE'S FORESTRY ASSETS
HAS IMMOBILISED THE INDUSTRY. ON THE ONE HAND THERE HAS BEEN LACK OF
DIRECTION, ON THE OTHER TOO MANY OBJECTIVES HAVE BEEN TARGETED. A WORRYING
OUTCOME HAS BEEN THAT THE CAPACITY OF THE INDUSTRY TO CONTRIBUTE TO RURAL
ECONOMIES, AND ESPECIALLY PROVIDE JOBS, HAS CONTRACTED. "SAWMILLERS,
APPROPRIATELY SUPPORTED, COULD DO MUCH TO LIFT HARD LIVING CONDITIONS IN THE
COUNTRY," HE SAYS.
ON THE SUBJECT OF YORKCOR'S SO-CALLED 'EVERGREEN' SAWLOG CONTRACTS, TUCKER
REAFFIRMS THAT THESE PROVIDE FOR THE PAYMENT OF COMPENSATION FOR PREMATURE
TERMINATION. "FOR EXAMPLE, THERE IS AN EXPRESS STIPULATION THAT, IN THE EVENT
OF TERMINATION BY THE MINISTER, YORKCOR SHOULD BE PLACED IN THE SAME FINANCIAL
POSITION AS IT WOULD HAVE BEEN IN HAD THE CONTRACT CONTINUED INDEFINITELY
WITHOUT INTERRUPTION. SUCH COMPENSATION WOULD, NO DOUBT, BE SUBSTANTIAL. OUR
WISH IS TO SETTLE THE MATTER," HE SAYS.
YORKCOR IS STILL IN LITIGATION WITH THE STATE AND SAFCOL OVER LOG SUPPLY
CONTRACTS. "THE DEFENCE OF OUR LOG SUPPLY CONTRACTS HAS BEEN LONG AND HARD -
AND MOSTLY SUCCESSFUL. THERE IS COMFORT IN THE RULE OF LAW," HE SAYS.
IN ONE MATTER, IN WHICH THE HIGH COURT DISMISSED THE STATE'S ACTION AND AWARDED
YORKCOR DAMAGES FOR UNDER-DELIVERY, COSTS AND INTEREST, THE AMOUNT TODAY
EXCEEDS R5,0 MILLION. "THE STATE HAS APPEALED AGAINST THIS JUDGMENT AND THE
MATTER IS TO BE HEARD BY THE SUPREME COURT OF APPEAL IN NOVEMBER 2000," SAYS
TUCKER.
IN ANOTHER MATTER, IN WHICH THE OUTCOME OF A LOG PRICE ARBITRATION FAVOURED
SAFCOL, YORKCOR IS PURSUING ITS APPLICATION TO THE COMPETITION TRIBUNAL AGAINST
SAFCOL FOR WHAT THE COMPANY BELIEVES IS ANTI-COMPETITIVE CONDUCT INVOLVING
ABUSE OF ITS DOMINANT POSITION IN THE MARKET FOR SAWLOGS.
TURNING TO EMPOWERMENT INITIATIVES, TUCKER SAYS THAT YORKCOR LAUNCHED THE
MADIBA MILLS PROJECT FIVE YEARS AGO TO PROMOTE BLACK ENTERPRISE IN THE FOREST
PRODUCTS INDUSTRY. "TODAY MADIBA MILLS IS A SIGNIFICANT PLAYER, A GOING CONCERN
WITH A MEDIUM SIZED LUMBERMILL AND WITH MANAGEMENT AND STAFF ALMOST ENTIRELY
MADE UP FROM THE PREVIOUSLY DISADVANTAGED GROUPS," HE SAYS. "PLANS ARE UNDERWAY
TO PROVIDE STABLE FUNDING FOR THE PROJECT. ULTIMATELY MORE THAN 80% OF ITS
SHARE CAPITAL WILL BE OWNED BY ITS EMPLOYEES AND OTHERS PREVIOUSLY
DISADVANTAGED."
ON THE OUTLOOK FOR YORKCOR TUCKER SAYS, "THE DOMESTIC TIMBER MARKET HAS
DEVELOPED SIGNS OF WEAKENING IN THE SECOND QUARTER AND THIRD QUARTERS OF 2000.
FORTUNATELY, OUR EXPORT EFFORT, HOWEVER, SHOWS PROMISE. MUCH DEPENDS ON A
RETURN OF CONFIDENCE AND THE STATE'S HANDLING OF THE PRIVATISATION OF IS
FORESTRY ASSETS. IT WOULD NOT BE HELPFUL IN SUCH A CLIMATE OF UNCERTAINTY TO
OFFER A QUANTIFIED FORECAST. HOWEVER, OUR BUSINESS IS IN PLACE TO ENSURE THAT
WE ARE AMONGST THE BEST PERFORMERS IN THE ARENA," HE CONCLUDES.
ENDS
ISSUED FOR: YORK TIMBER ORGANISATION (YORKCOR)
CONTACT: SOLLY TUCKER (012) 804 9730 083 456 9900
FAX NO:: (012) 804 8611
ISSUED BY: TISH STEWART PR ASSOCIATES
CONTACT: TISH STEWART (011) 325 4195
FAX NO: (011) 325-4199
E-MAIL: TISH@TSPR.CO.ZA
DATE: 24 AUGUST 2000