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YORKCOR: 88TH ANNUAL GENERAL MEETING: CHAIRMAN"S ADDRESS 25 JULY 2003 York Timber Organisation Limited Share code:YRK ISIN:ZAE000008108 It takes about 30 years to grow a tree for a sawmiller. All the trees I am going to saw have, alas, already been planted. It is different for the many bright and ambitious young people in the company. We salute them and wish them luck in their long term future with us. In the light of Yorkcor"s long and successful 88-year history, however, with hindsight we could say that we ought to have made a start with planting trees for our business many decades ago. By now we would have had the benefit of at least three or more rotations. Apart from the state and the giants in the industry, tree growing did not attract many diverse private investors. The country and the industry would have been much better off today if commercial silvicultural had taken on the scale achieved in the USA, or Australia or New Zealand. The secret of success in forestry includes dedication, diligence, know how and almost inexhaustible patience. No one can blame us for trying so hard and doing so much to make up for lost time. From where we stand today we can say that Yorkcor has come a long way although, heaven knows, we have yet a long way to go. I believe that the way forward for Yorkcor will be more brisk, although it will call for steadfast commitment in the face of new challenges. Had generally accepted standards of good governance and competent organisation been observed in managing the process, there would have been a wholesome outcome and the industry would have prospered. Many of those who were passive about their resource entitlements are no longer in business. Yorkcor was amongst the very few who made a stand to protect its rights to log supply lines. Yorkcor had no wish to be in conflict with the authorities over this central issue, but it was a case of `yield or your life" - an untenable choice were it not for the rule of law and our Constitution. Details of Yorkcor"s engagements in the court are given in our latest annual report, which is on the table at our annual general meeting today. Only a brief update is in order at this time. In March of this year, and quite out of the blue, we were advised by the Department of Public Enterprises that any party engaged in litigation or arbitration with the government or Safcol, would not be eligible to participate in the privatisation process. We were outraged. This administrative action clearly smacks of discrimination and it was plainly wrongful. The Constitution guarantees every one just and fair administrative action. We were recently invited by the government for talks, but unfortunately this lost us time in our quest for an appropriate solution. The matter is in the hands of our legal advisors. Three examples (there are more) will graphically illustrate why Yorkcor could not brook the interference with our constitutional right of access to the Courts. On 27 February 2003, the High Court delivered its judgment, declaring the Minister of Water Affairs and Forestry and his Director-General to be in contempt of Court and directing, inter alia, the government to pay the costs of the litigation on a punitive scale. In his judgment, the learned judge said that the government "seems to have been content to wage this pointless war of attrition in the courts. This is not how the State should conduct business." The punitive costs award was to mark the High Court"s disapproval "of the way in which the State has attempted to avoid its responsibilities in terms of the agreement." A second important example has been the judgment of the High Court dismissing Safcol"s claims that Yorkcor"s long-term sawlog contract (`evergreen contract") is invalid. Safcol has appealed this decision, but the judgment placed Yorkcor on a higher moral ground that before. In other High Court proceedings, Safcol has sought to strike down two of our evergreen contracts. We are confident of a positive outcome, but where would Yorkcor be if we heeded the directive to give up if we wish to go for Komatiland' Finally there is the pending arbitration to be resumed in September 2003. The government has already admitted liability. At issue is the amount of compensation that the government must pay for terminating our long term contract in our York Lumber sawmill near Bushbuckridge. Should we have relinquished our right to arbitrate the quantum of compensation to stay in the Komatiland bidding process' Of course not. In my chairman"s statement for 2002, I said that contrary to superficial appearances, Yorkcor does not, and does not have to, rely on the Courts and litigation to make good its business. We have ventured into litigation to dispel uncertainty, not compound it. We do our shopping for quality sawlogs where the supply is competitive and where long-standing and fruitful business relationships are valued. Your directors are examining attractive options where the experience and standing of Yorkcor would underpin success in ventures outside the forest products industry. Nevertheless, we perceive that the effective diversification of sawlog supply should be pursued as it is a key element of Yorkcor"s strategy. Yorkcor has in recent times assembled the backing and resources necessary to mount a bid for the Komatiland opportunity. In the light of the uncertainties surrounding the Komatiland/Safcol privatisation process, our consortium has decided to direct our capacities to go for all or part of the other major pools of softwood resource and processing capacity. We have made direct overtures at top level and have also had talks with some of the minorities in this regard, but it is early days yet. We expect that our approach will be seriously received when we have enough information to formulate a firm bid. In the meantime I can report that your directors are delighted with the two acquisitions made late last year - Roburnia Forest Products and Golden Rhino Lumber. High on the list of benefits for the group is that these operations do not rely on supplies from Safcol (Komatiland) or the State, but on diverse tree growers with pride and independence in their way of life. Finally talks are taking place to strengthen the composition of Yorkcor"s Board. The changes contemplated will reflect a strong empowerment element and access to significant financial muscle. At this stage, no more should be said than watch this space. Solly Tucker Yorkcor Park, 86 Watermeyer Street, Val de Grace, Pretoria Ends ISSUED Yorkcor Limited FOR : CONTACT Solly Tucker 012 804 9730/083 456 9900i : FAX NO 012 804 8611 : E-MAIL sol@yorkcor.co.za : WEBSITE www.yorkcor.co.za : ISSUED TISH STEWART PR ASSOCIATES BY : CONTACT Tish Stewart 011 325 4195 Cell: 082 443 6399 : FAX NO 011 325 4199 : E-MAIL tish@tspr.co.za : DATE : 25 July 2003 Date: 25/07/2003 02:41:58 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
