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YRK - York Timber Holdings - Abridged Audited Group Annual Financial Results,

Release Date: 30/09/2010 16:53
Code(s): YRK
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YRK - York Timber Holdings - Abridged Audited Group Annual Financial Results, Notice of Annual General Meeting and Posting of Annual Report York Timber Holdings Limited (Incorporated in the Republic of South Africa) (Registration number: 1916/004890/06) JSE Share code: YRK ISIN: ZAE000133450 ("York" or "the Group") ABRIDGED AUDITED GROUP ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2010, NOTICE OF ANNUAL GENERAL MEETING AND POSTING OF ANNUAL REPORT Salient features Successful capital raising and business restructuring Gross profit up 5% Earnings per share up 110% Headline earnings per share up 116% Net asset value per share up 45%* (* using the number of shares currently in issue) GROUP STATEMENT OF FINANCIAL POSITION At At 30 June 30 June
2010 2009 R`000 R`000 ASSETS NON-CURRENT ASSETS Biological assets (note 5) 1 562 936 1 492 002 Investment property 24 740 5 020 Property, plant and 420 184 429 456 equipment Goodwill (note 6) 565 442 610 352 Intangible assets 2 691 2 984 Other financial assets 1 345 3 911 TOTAL NON-CURRENT ASSETS 2 577 338 2 543 725 CURRENT ASSETS Biological assets (note 5) 358 738 246 369 Instalment sale receivables 606 1 854 Inventories 138 040 226 467 Trade and other receivables 104 334 117 999 Cash and cash equivalents 84 493 124 422 Current tax receivable 3 503 - TOTAL CURRENT ASSETS 689 714 717 111 TOTAL ASSETS 3 267 052 3 260 836 EQUITY AND LIABILITIES EQUITY Share capital (note 7) 16 562 3 919 Share premium (note 7) 1 505 352 1 026 888 Reserves (26 236) (88 438) Retained income 471 863 407 237 TOTAL EQUITY 1 967 541 1 349 606 LIABILITIES NON-CURRENT LIABILITIES Cash settled share based 2 104 50 payments Deferred tax 409 510 414 974 Retirement benefit 22 463 20 200 obligation Other financial liabilities 612 317 1 061 543 Finance lease obligations 13 245 23 252 Provisions 55 496 54 643 Instalment sale liabilities 917 2 907 TOTAL NON-CURRENT 1 116 052 1 577 569 LIABILITIES CURRENT LIABILITIES Other financial liabilities 51 698 97 819 Finance lease obligations 2 278 3 438 Instalment sale liabilities 1 515 1 781 Current tax payable 369 5 424 Provisions 285 - Trade and other payables 127 314 225 199 TOTAL CURRENT LIABILITIES 183 459 333 661 TOTAL LIABILITIES 1 299 511 1 911 230 TOTAL EQUITY AND LIABILITIES 3 267 052 3 260 836 GROUP STATEMENT OF COMPREHENSIVE INCOME Year Year ended ended 30 June 30 June 2010 2009
R`000 R`000 Revenue 909 361 1 095 290 Cost of sales (559 244) (762 223) GROSS PROFIT 350 117 333 067 Other operating income 19 962 9 566 Selling, general and (300 815) (322 134) administration expenses OPERATING PROFIT BEFORE SEPARATELY DISCLOSED ITEMS 69 264 20 499 Insurance proceeds 8 519 158 731 Impairment of assets (42 598) (43 390) OPERATING PROFIT 35 185 135 840 Restructuring costs (333) (18 735) Fair value adjustments 200 269 (244 598) Loss on non-current assets - (373) held for sale PROFIT/(LOSS) BEFORE FINANCE 235 121 (127 866) COSTS Investment income 2 810 13 133 Finance costs excl hedge (107 978) (173 312) interest expense Hedge interest expense (16 791) (18 266) (paid) Hedge interest expense (23 015) (6 316) (ineffective portion) Hedge interest expense (due to early settlement) (29 577) - PROFIT/(LOSS) BEFORE 60 570 (312 627) TAXATION Taxation 4 056 80 707 PROFIT/(LOSS) FOR THE YEAR 64 626 (231 920) Other comprehensive income/(loss): Available-for-sale financial assets adjustments 716 40 Effects of cash flow hedges 52 499 (89 545) Taxation related to components of other 10 273 - comprehensive income Other comprehensive income/ (loss) for the year net of 63 488 (89 505) taxation (subtotal) TOTAL COMPREHENSIVE 128 114 (321 425) INCOME/(LOSS) PROFIT/(LOSS) ATTRIBUTABLE TO: Owners of the parent 64 626 (231 920) TOTAL COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO: Owners of the parent 128 114 (321 425) Basic earnings/(loss) per 30 (296) share (cents) Diluted earnings/(loss) per 30 (296) share (cents) Headline earnings/(loss) per 40 (254) share (cents) GROUP STATEMENT OF CHANGES IN EQUITY Fair value adjustment assets- Share
available- based Share Share Hedging for- sale payment Retained TOTAL capital premium reserve reserve reserve income EQUITY BALANCE AS AT 1 JULY 2008 3 919 1 002 - (219) 10 446 638 900 1 655 622 668 Total comprehensive loss for the year Loss for the year - - - - - (231 (231 920) 920) Other comprehensive (loss)/income Change in fair value of cash flow, net of tax - - (89 - - - (89 545) 545) Change in fair value of available-for-sale financial assets, net of tax - - - 40 - - 40 Total other comprehensive (loss)/income - - (89 40 - - (89 545) 505)
Total comprehensive (loss)/income for the year - - (89 40 - (231 (321 545) 920) 425) Transactions with owners recorded directly in equity Contributions by and distributions to owners Share premium raised due to consolidation of treasury shares - 24 266 - - - - 24 266 Reversal of share based payment reserve - - - - (9 160) - (9 160) Dividends declared and not claimed - - - - - 257 257 Total transactions with owners - 24 266 (89 40 (9 160) (231 (306 545) 663) 062) BALANCE AS AT 1 JULY 2009 3 919 1 026 (89 (179) 1 286 407 237 1 349 888 545) 606 Total comprehensive income for the year Profit for the year - - - - - 64 626 64 626 Other comprehensive income Change in fair value of cash flow, net of tax - - 62 872 - - - 62 872 Change in fair value of available-for-sale financial assets, net of tax - - - 616 - - 616 Total other comprehensive income - - 62 872 616 - - 63 488 Total comprehensive income for the year - - 62 872 616 - 64 626 128 114
Transactions with owners recorded directly in equity Contributions by and distributions to owners Issue of shares through rights issue 12 500 487 500 - - - - 500 000 Share issue costs written off against share premium - (12 - - - - (12 844) 844) Increase in share based payment reserve - - - - 9 160 - 9 160 Reversal of share premium due to disposal of treasury shares - (24 - - - - (24 266) 266) Conversion of preference shares in to ordinary shares 143 28 074 - - (10 - 17 771 446)
Total transactions with owners 12 643 478 464 62 872 616 (1 286) 64 626 489 821 BALANCE AS AT 30 JUNE 2010 16 562 1 505 (26 437 - 471 863 1 967 352 673) 541 GROUP STATEMENT OF CASH FLOWS Year Year
ended ended 30 June 30 June 2010 2009 R`000 R`000
CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers 1 050 337 1 160 930 Cash paid to suppliers and (948 469) (939 983) employees Cash generated from 101 868 220 947 operations Investment income 2 111 13 133 Finance costs (129 665) (168 549) Tax received/(paid) 1 594 (2 999) NET CASH FROM OPERATING (24 092) 62 532 ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant (17 095) (130 604) and equipment Sale of property, plant and 933 989 equipment Purchase of other intangible (457) (3 662) assets Withdrawal from/(contribution to) self- 3 282 (2 108) insurance fund Proceeds from sale of non- current assets held for sale - 650 Decrease in loans and - 98 receivables NET CASH FROM INVESTING (13 337) (134 637) ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds on share issue 12 643 - Increase in share premium 491 308 24 266 Share issue cost deducted from share premium (12 844) - Redemption of redeemable preference shares - (16 537) Net movement on other (481 432) (30 279) financial liabilities Movement in instalment sale (2 256) (1 631) liabilities Movement in finance (11 167) (2 829) obligations Movement in instalment sale 1 248 999 receivables NET CASH FROM FINANCING (2 500) (26 011) ACTIVITIES TOTAL CASH MOVEMENT FOR THE (39 929) (98 116) YEAR Cash at beginning of year 124 422 222 538 CASH AT END OF YEAR 84 493 124 422 ADDITIONAL INFORMATION 30 June 30 June
2010 2009 R`000 R`000 Capital expenditure (17 095) (130 604) Authorised capital commitments contracted, but (2 900) (136) not provided for Authorised capital commitments not yet (5 894) (3 164) contracted for Depreciation of property, plant and equipment (25 931) (18 711) Amortisation of intangible (750) (678) assets Reversal of impairment/(impairment) of 3 184 (43 390) property, plant and equipment Impairment of trade (872) (6 183) receivables Restructuring costs (333) (18 735) NOTES TO THE GROUP ANNUAL FINANCIAL INFORMATION 1. STATEMENT OF COMPLIANCE The consolidated financial results announcement is based on the audited annual financial statements of the group for the year ended 30 June 2010. These have been prepared in accordance with International Financial Reporting Standards ("IFRS"), the AC 500 standards as issued by the Accounting Practices Board ("APB"), the Listing Requirements of the JSE Limited and the Companies Act of South Africa, 1973. The consolidated financial results do not include all the information required for full annual financial statements and have been prepared in accordance with IAS 34 - Interim Financial Reporting. The consolidated annual financial statements, which have been prepared on the going concern basis, were approved by the Board of Directors on 13 September 2010. 2. INDEPENDENT AUDIT BY THE AUDITORS The consolidated annual financial statements for the year ended 30 June 2010 have been audited by the Group`s auditors, KPMG Incorporated, who performed their audit in accordance with the International Standards on Auditing. A copy of their unqualified audit report is available for inspection at the registered office of the Company. 3. BASIS OF PREPARATION The preparation of the annual financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies, and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The accounting policies are consistent with those used for the year ended 30 June 2009, other than the following: - Presentation of financial statements due to the adoption of the revised IAS 1, - Additional disclosure for financial instruments due to the amendments to IFRS 7, - Determination & presentation of operating segments due to the adoption of IFRS 8, - Accounting for borrowing costs due to the adoption of the revised IAS 23, - Accounting for business combinations due to the adoption of the revised IAS 27 and IFRS 3, and - Accounting for acquisitions of non-controlling interests due to the adoption of the revised IAS 27. The presentation of the financial statements and the disclosure requirements for financial instruments as well as operating segments have been changed in accordance with IAS 1, IFRS 7 and IFRS 8. The Group changed the accounting for borrowing costs due to the amendments of IAS23 and as the Group did not incur any borrowing costs on qualifying assets during the year ended 30 June 2010 this adoption had no impact on the financial results. The Group adopted IFRS3 and IAS27 for periods commencing 1 July 2009 and as the Group had no business combinations or acquisitions of non-controlling interests during the year ended 30 June 2010, this adoption had no impact on the financial results. 4. OPERATING SEGMENTS The business is considered from an operating perspective based on the products cultivated or produced and sold. The Group operates in one main geographic segment, the Republic of South Africa. The operating segments comprise timber products (aggregating the sawmilling, plywood and warehousing segments) as well as forestry. Timber Timber R`000 products products Forestry Forestry Total Total 2010 2009 2010 2009 2010 2009 Reportable items in the Statement of Comprehensive Income Revenue: external sales 872 741 1 025 34 747 67 299 907 1 093 747 488 046 Revenue: inter-segment sales 55 683 25 467 375 104 445 227 430 470 787 694
Total revenue 928 424 1 051 409 851 512 526 1 338 1 563 214 275 740 Depreciation and amortisation (22 307) (15 053) (4 374) (4 336) (26 (19 681) 389) Reportable segment profit (being the earnings before interest, taxation, depreciation and amortisation "EBITDA") 1 550 123 962 103 255 76 791 104 200 805 753 Material non-cash items: Fair value adjustment to biological assets - - 183 302 (244 183 (244 698) 302 698) Reportable items in the Statement of Financial Position Reportable segment assets 236 697 308 482 1 942 1 780 2 179 2 088 707 031 404 513 Capital expenditure 10 364 125 970 5 360 4 634 15 724 130 604 Reportable segment liabilities - - - - - - Reconciliation of reportable segment revenues, profit or loss, assets and liabilities 2010 2009 R`000 R`000 Revenue Total revenue for reportable 1 338 1 563 segments 275 740 Other revenue 1 873 2 244 Elimination of inter-segment (430 (470 revenue 787) 694) Consolidated revenue 909 361 1 095 290
Profit or loss Total EBITDA for reportable 104 805 200 753 segments Depreciation, amortisation and (66 093) (62 779) impairment Unallocated amounts: corporate (3 527) (2 134) office Operating profit 35 185 135 840 Assets Total assets for reportable 2 179 2 088 segments 404 513 Non-current assets not allocated 1 014 1 051 to segments 402 723 Current assets not allocated to 73 246 120 600 segments Consolidated total assets 3 267 3 260 052 836 Liabilities Total liabilities for reportable - - segments Non-current liabilities not 1 116 1 577 allocated to segments 052 569 Current liabilities not allocated 183 459 333 661 to segments Consolidated total liabilities 1 299 1 911 511 230
5. BIOLOGICAL ASSETS 2010 2009 R`000 R`000 Reconciliation of biological assets Opening balance 1 738 1 983 371 070 Fair value adjustment: - Increase due to growth 326 179 491 846 - Decrease due to harvesting (308 (244 633) 492) - Adjustment to standing timber values to reflect fair value less 165 (179 point of sale cost at year end 090 698) Closing balance 1 921 1 738 674 371
Classified as non-current assets 1 562 1 492 936 002 Classified as current assets * 358 246 369 738 1 921 1 738 674 371 * Being the biological assets to be harvested and sold in the 12 months after year end. Change in valuation method The fair value model as well as the methodology and assumptions used therein have been revised to obtain a more accurate valuation. The Group adopted the discounted cash flow valuation model to calculate the fair value of its biological assets during this year. Previously the Group used the net standing valuation model, which would have resulted in a value of R1,636 million. The main changes in the methodology and assumptions: - Timber prices: The market price per cubic metre is based on current and future expected market prices per log class. - Operating costs: The costs are based on unit cost of the forest management activities required to enable the trees to reach the age of felling. The costs includes the current and future expected costs of harvesting, maintenance and risk management, as well as an appropriate amount of fixed overhead costs. The costs exclude the costs necessary to get the asset to the market. The net standing valuation method only incorporated the cost of felling all the standing timber. - Discount rate: The Group used its after-tax weighted average cost of capital ("WACC") applied to the after taxation net cash flow. No discount rate was used previously, as the Group applied the net standing valuation method which does not take into consideration the time value of money. 6. GOODWILL 2010 2009
R`000 R`000 Reconciliation of goodwill Opening balance 610 610 352 352
Impairment of goodwill (44 - 910) Closing balance 565 610 352 442
Goodwill arose from the business combination of Global Forest Products that took place on 13 July 2007. For the purpose of impairment testing, goodwill is allocated to the Group`s operating divisions which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes, which is not higher than the Group`s operating segments before aggregation. Goodwill has been allocated to the forestry segment. The Group`s assets are compared to the present value of the future cash flows that are expected to flow from group sales. The key assumptions used in estimating the future cash flows are as follows: - The plantations are managed in rotation based on a clear fell age of between 21 years and 25 years. - The plantations are managed on a sustainable basis so that all harvested areas are replanted. The temporarily unplanted areas at any point constitute approximately 2,500 hectares. - Long term CPIX of 6.0% (2009: 5.5%) - Weighted average cost of capital 11.28% (2009: 14.0%) - Target debt equity ratio of 30:70 (2009: 30:70) - Pre-tax cost of debt of 10.0% (2009: 11.5%) 7. SHARE CAPITAL 2010 2009 Reconciliation of the number of `000 `000 shares issued Opening balance 78 370 78 370 Issue of shares through rights offer 250 - 000 Conversion of preference shares into 2 871 - ordinary shares Closing balance 331 78 370 241 2010 2009
Issued share capital R`000 R`000 Ordinary shares of R0.05 each 16 562 3 919 Share premium 1 540 1 048 051 743
Share issue costs written off (34 (21 against share premium 699) 855) Total 1 521 1 030 914 807
During the financial year, York issued and converted the following shares: - 250 million ordinary shares were issued through a rights offer at an issue price of R2 per share. The rights offer was announced on 20 November 2009 in the ratio of 307.72792 rights offer shares for every 100 York shares held at the close of business on 20 November 2009. The rights offer closed at 12h00 on Friday, 11 December 2009. The cost of the rights issue was deducted from share premium during the reporting period. - 2,871 million convertible, non-redeemable cumulative preference shares were converted into ordinary shares at 24 June 2010 on a one to one basis. 8. SHARE BASED PAYMENTS Cash settled share based payments scheme The cash settled share options allocated on 1 March 2008 were cancelled. The number of options outstanding as at 30 June 2009 was 399,000, with a weighted average exercise price of R22.70. During the year ended 30 June 2010 the Group issued the following share-based options in terms of the share appreciation rights scheme: Weighted Number exercise `000 price Granted on 17 November 2009, and outstanding at the end of the year 8 428 R2.74 The Group offers its key employees an incentive plan in the form of an employee share appreciation rights scheme which provides a right to receive a cash payment over the vesting period. The cash payment is based on the appreciation in the price of the shares over the five year period. The appreciation rights are call options granted by the Company to employees. During the first portion of its life the option cannot be exercised and is forfeited should the employee leave the employment of the entity. This period of the option`s life is referred to as the vesting period. After the vesting date, a lock in period follows, at which time the option is exercised. The employees have the option to exercise their rights in trenches of 33.3% at the end of year 3, year 4 and year 5 respectively. The option expires at the end of year 6. The payoff that a beneficiary of the share appreciation right scheme will receive, at the end of the lock in period, is the difference between the spot price on the exercise date and the 30 day volume weighted average price on grant date. The scheme is treated as a cash settled scheme. Cash settled schemes are valued at the reporting date in terms of IFRS 2 Share Based Payment. Fair value was determined using the Black-Scholes model. The following inputs were used: - The volume weighted average strike price of R2.74 per share. - Closing share price at 30 June 2010 of R3.07 per share. - Grant date is 17 November 2009. - Vesting portions are in 3 equal trenches annually commencing on 17 November 2012. - Option life is six years with a maturity/expiry date of 17 November 2015. - It was assumed that no forfeiture of the granted share appreciation rights will occur. - A dividend yield of 0% was applied in the calculation. - The risk-free interest rate was sourced from the Bond Exchange of South Africa. The bootstrapped zero coupon perfect fit swap curve as at 30 June 2010 was used. The risk-free interest rates applied range from 6.89% (minimum value) to 7.81% (maximum value). - Expected volatility was calculated using the equally weighted standard approach, by making use of the available historical share price data, for a period equal to the term to maturity of the scheme. Smoothing of the share price volatility was done at the end of July 2007 and June 2010, in order to exclude the effects of the rights issues made by the company on the volatility. 2010 2009 Liability arising from share based R`000 R`000 payments: Carrying amount of cash settled 2 104 50 liability 9. EARNINGS PER SHARE The calculation of basic earnings per share at 30 June 2010 is based on the profit/(loss) attributable to ordinary shareholders of R 64,626 million (2009: R (231,920) million) and a weighted average number of ordinary shares of 216,781 million (2009: 78,370 million). The calculation of diluted earnings per share at 30 June 2010 is based on the profit/(loss) attributable to ordinary shareholders, after the effect on basic earnings for the convertible preference shares of R 64,626 million (2009: R (231,920) million) and a weighted average number of ordinary shares after the effect of the convertible preference shares of 216,781 million (2009: 78,370 million). In the year ended 30 June 2010 there were no instruments that had a dilutive effect. 2010 2009
Reconciliation of weighted average number of ordinary shares `000 `000 Issued ordinary shares 78 370 78 370 Effect of shares issued in December 138 - 2009 356 Effect of conversion of shares 55 - Weighted average ordinary shares for 216 78 370 the year 781 10. HEADLINE EARNINGS PER SHARE The calculation of headline earnings per share at 30 June 2010 is based on the profit/(loss) attributable to ordinary shareholders, adjusted by items non headline earnings items of R 87,156 million (2009: R (199,352)) and the weighted average number of ordinary shares of 216,781 million (2009: 78,370). 2010 2009 Headline earnings per share 40 (254) (cents) Reconciliation of basic earnings to headline earnings Gross Taxation Total 2010 R`000 R`000 R`000 Basic earnings attributable to ordinary shareholders 60 570 4 056 64 626 Profit on sale of assets (10 3 061 (7 and liabilities 933) 872) Fair value adjustment on (16 4 751 (12 investment property 967) 216) Impairment of plant, (3 892 (2 equipment and vehicles 184) 292) Impairment of goodwill 44 910 - 44 910 Headline earnings for the 74 396 12 760 87 156 year 2009 R`000 R`000 R`000 Basic earnings attributable to ordinary shareholders (312 80 707 (231 627) 920) Loss on sale of assets and 1 569 (439) 1 130 liabilities Fair value adjustment on (100) 28 (72) investment property Loss on sale of non-current assets held for sale 373 (104) 269 Impairment of plant, 43 390 (12 149) 31 241 equipment and vehicles Headline earnings for the (267 68 043 (199 year 395) 352) NOTICE OF ANNUAL GENERAL MEETING AND POSTING OF ANNUAL REPORT Notice is hereby given that the 94th Annual General Meeting of the Company will be held at the Sabie Country Club, Main Street, Sabie, 1260 at 10:00 on Tuesday, 16th November 2010. Accordingly, shareholders are advised that the Annual Report containing the audited financial statements for the year ended 30 June 2010 will be posted to shareholders today. The audited financial statements for the year ended 30 June 2010, together with the Auditors` Report, is available on the Company`s website: www.york.co.za as from today. On behalf of the Board of Directors JP MYERS PP VAN ZYL Chairman Chief Executive ================= NATURE OF BUSINESS York has the largest market share of the South African lumber and plywood market resulting from its sustainable biological asset integrated with primary and value adding processes through the entire value chain. York operates in various trade sectors and markets, both domestic and overseas. FINANCIAL HIGHLIGHTS Major highlights for the year under review included: - Recapitalised balance sheet; - Negotiated debt repayment and revised debt terms; - The closure of three operating units; - Right sizing, restructured business management and cost structures; - Business refocused on optimising the use of own raw material sources and supply chain management; - Improved financial profit and cash flow generation for the second six months of the 2010 financial year; and - The discounted cash flow method has been adopted to calculate the fair value of the biological asset. The rights issue concluded in December 2009 was oversubscribed by 166%, an endorsement of York`s strategic direction announced during the period as part of the Group`s restructuring plans. This raised R500 million of equity. R450 million of the rights issue was utilised to pay off debt. This debt reduction was largely achieved on a pro-rata basis when compared to the existing debt structure. Therefore, the average cost of debt has not been significantly impacted; however the reduction in balance has reduced the interest obligation significantly. The remaining R50 million was earmarked for strategic capital expenditure. The goal to reduce fixed and overhead costs of over R72 million, on an annualised basis, has been exceeded by R7 million. This was achieved through a comprehensive right sizing exercise that involved the complete top down re- structuring of all salaried staff. Improved operating efficiencies, a renewed focus to optimise the raw material base and integration with comprehensive supply chain management, provided York with the basis to significantly improve financial performance during the second six months of the financial year. This is despite economic conditions deteriorating further than anticipated at the outset of this financial period. The discounted cash flow method is widely used in the Forestry, Paper and Pulp industry to calculate the fair value of biological assets. Following careful consideration and full consultation through the Audit and Risk Committee, the Board of Directors endorsed the recommendation that this method should be adopted, as it is most likely to provide an accurate and consistent fair value of the asset. This has resulted in an increase of approximately 10.5% when compared to the asset`s value in the comparative period. Aligned with the adoption of this method, and as required by International Financial Reporting Standards, the goodwill associated with the plantations has been tested through a detailed valuation process. The goodwill, which arose as a result of the acquisition of Global Forest Products, remains largely intact as a result of this test. An impairment amounting to approximately R45 million was required. York`s management and board believes that future economic benefit is expected to flow to the Group as York`s sustainable forestry management and silviculture plans will result in a significant increase in the sustainable volume off-take from the plantations. Sustainability of the plantation asset is being enhanced through continued accelerated re-planting of the fire damaged areas of the recent past. During the period under review, in excess of double the number of hectares were re-planted when compared to those hectares harvested. This situation will continue for the next further financial period, by when, all affected areas will be re-planted. PROSPECTS Management believe that the performance during the second six months of the 2010 financial year can be sustained. Revenue has improved during the three months of the new period when compared to the comparable three month period a year ago. The cost and raw material optimisation strategies and supply chain improvements continue to positively impact performance and results. The above prospects is not a forecast and has not been reviewed or reported on by the Group`s auditors. COMPANY INFORMATION Directors: JP Myers*# (Chairman), PC Botha*, DJ Erskine (CFO), SAU Meer*, GR Tipper*#, PP van Zyl (CEO) (*non-executive) (# independent) Registered office: York Corporate Office, 3 Main Street, Sabie, 1260 Postal address: PO Box 1191, Sabie, 1260 Company secretary: Fusion Corporate Secretarial Services (Pty) Ltd Transfer secretaries: Computershare Investor Services (Pty) Ltd Sponsor: Barnard Jacobs Mellet Corporate Finance (Pty) Ltd Auditors: KPMG Incorporated www.york.co.za Sabie, Mpumalanga 30 September 2010 Date: 30/09/2010 16:53:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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