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YORKCOR POSTS STRONG TURN-AROUND RESULTS FOR 1997
ANNUAL REPORT RELEASED TODAY
YORK TIMBER ORGANISATION LIMITED (YORKCOR) HAS POSTED A BOTTOM LINE PROFIT OF
R4,7 MILLION A TURN-AROUND OF NEARLY R12 MILLION FROM THE 1996 LOSS OF R7,2
MILLION. HEADLINE EARNINGS ARE 28,2 CENTS PER SHARE, AGAINST THE NEGATIVE
FIGURE OF 47,2 CENTS IN 1996. DIVIDENDS OF 15 CENTS PER SHARE ARE THREE TIMES
COVERED BY THE YEAR'S NET TAXED PROFIT. NO DIVIDEND WAS DECLARED IN 1996.
COMMENTS YORKCOR CHAIRMAN SOLLY TUCKER: "WE BELIEVE WE HAVE FOUND THE WAY TO
GO. WE SAID WE WOULD BE BACK IN THE BLACK BEFORE THE JACARANDAS WERE OUT. THE
RAINS WERE PROMPT. WE BEAT OUR ADVERTISED TARGETS AHEAD OF TIME, AND WE ARE
GOING FOR ENCORES. OUR ROUTE TO SUCCESS IN 1997 EMBRACED TWO PRIME LANDMARKS: A
ROBUST RETURN TO PROFITABILITY AND STRENGTHENED RESOURCE SECURITY FOR OUR
FUTURE."
YORKCOR'S 1997 ANNUAL REPORT REFLECTS A 3O% GROWTH IN GROUP TURNOVER FROM R44,1
MILLION IN 1996 TO R57,3 MILLION IN THE YEAR UNDER REVIEW. CASH GENERATED FROM
OPERATIONS TOTALLED R8,4 MILLION, COMPARED TO A NEGATIVE FIGURE OF R2,7 MILLION
IN THE PREVIOUS YEAR. THE TOTAL WEALTH CREATED IN OPERATIONS EXPANDED FROM 35%
OF TURNOVER IN 1996 TO 52% IN 1997.
BALANCE SHEET STRENGTHS
SHAREHOLDERS' FUNDS ARE ABOUT TWO THIRDS OF THE TOTAL CAPITAL EMPLOYED BY THE
GROUP. LAST YEAR THEIR PORTION OF THE FUNDING WAS ABOUT HALF THE TOTAL OF
CAPITAL EMPLOYED. GEARING HAS IMPROVED FROM 43,3% TO 28,4%. NOT ASSET VALUE
ROSE 53%, FROM 218 CENTS TO 333 CENTS PER SHARE. "IN ALL, THIS IS A STURDY
PICTURE COMPARED TO A YEAR AGO," TUCKER DECLARES.
THE WINNING WAY
"THE FOREST PRODUCTS INDUSTRY IN SOUTH AFRICA IS UNDERGOING CONVULSIVE CHANGE,"
SAYS TUCKER. : "IN THE FACE OF SEISMIC TREMORS THAT SHOOK OUR INDUSTRY, WE MADE
SURE THAT WE DID NOT LOSE SIGHT OUR DAY-TO-DAY BUSINESS. SALES AND MARGINS
IMPROVED STEADILY - THE LATTER BY A MULTIPLE.
"SHARPENING OUR COMPETITIVE EDGE," HE ADDS, "WAS OUR MASTERY OF THE NEW GERMAN
TECHNOLOGY INSTALLED IN THE PREVIOUS YEAR. OUR BOLD INVESTMENT IN UPDATED
PRODUCTION FACILITIES IN THE TEETH OF TOUGH TIMES HAS BEGUN TO PAY OFF."
THE CHANGING TIDE
"MUCH OF OUR ACTION IN 1997," REPORTS TUCKER, "TOOK PLACE IN THE COURTS AND IN
THE CORRIDORS OF THE POWERS THAT BE. THERE WE SOUGHT TO PROTECT OUR BUSINESS
AND TO CLAIM OUR LEGITIMATE PLACE FOR THE FUTURE. MANY OF OUR SAWMILLING
BRETHREN, UNEQUAL TO THE SHOCK OF CHANGE, ARE NOW OUT OF THE ARENA. FOR THOSE
OF US WHO REMAIN, THE FUTURE HAS BEGUN IN EARNEST."
SECURITY OF TENURE
"A LONG-TERM SAWLOG SUPPLY THAT IS UNDERWRITTEN BY THE GOVERNMENT IS AS GOOD AS
IT EVER NEED BE: THE RULE OF LAW UNDERPINS THAT," SAYS TUCKER. "WE WERE DRAWN
INTO LITIGATION TO PROTECT OUR BUSINESS AND REMOVE UNCERTAINTY IN OUR FUTURE."
THE SUCCESSFUL OUTCOME OF THESE COURT ACTIONS HAS ATTRACTED WIDE INTEREST. THE
HIGH COURT HAS IN VARIOUS JUDGEMENTS UPHELD YORKCOR'S "EVERGREEN" ENTITLEMENT
TO ALL SAWLOGS AVAILABLE FROM, NORMAL SILVICULTURAL OPERATIONS ON THE
PLANTATIONS CONTRACTED TO YORKCOR.
"OUR LONG-TERM CONTRACTS ARE EXPLICIT IN DECLARING THE UNDERLYING INTENTION;
THEY UNAMBIGUOUSLY SPELL OUT THE INTENTION TO PROVIDE SECURITY OF TENURE AND
A SECURE SUPPLY OF LOGS INDEFINITELY. ADEQUATE COMPENSATION IS EXPRESSLY
PROMISED FOR TERMINATING THE CONTRACT, IF THAT EVER BE IN THE PUBLIC INTEREST.
THE WORTH OF OUR COMPANY IS THUS EFFECTIVELY GUARANTEED BY GOVERNMENT IF WE ARE
ASKED TO GIVE UP OUR CONTRACT.
"OUR SAWMILLING ESTABLISHMENT - LIKE THE TREES - IS NET ON WHEELS. WE ARE THERE
TO STAY."
IN OCTOBER 1997, YORKCOR WAS AWARDED A COURT ORDER FOR SPECIFIC PERFORMANCE
AND, IN JANUARY 1998, A HIGH COURT JUDGEMENT FOR DAMAGES TOTALLING R2,55
MILLION, PLUS INTEREST AND COSTS, WAS HANDED DOWN. AN APPLICATION BY THE
GOVERNMENT FOR THE HIGH COURT'S LEAVE TO APPEAL HAS BEEN FILED.
SPECIFIC PERFORMANCE
THERE IS NO APPEAL AGAINST THE ORDER OF COURT WHICH DECREED SPECIFIC
PERFORMANCE BY THE GOVERNMENT OF VARIOUS KEY OBLIGATIONS THE GOVERNMENT
CONSENTED TO THAT ORDER AND THE POSITIVE IMPLICATIONS FOR YORKCOR ARE
FAR-REACHING. THE GOVERNMENT IS, FOR INSTANCE, OBLIGED IN TERMS OF THE ORDER OF
THE HIGH COURT, TO CONFIRM ON AN ANNUAL BASIS THAT THE PLANTATIONS ARE BEING
MANAGED FOR THE OPTIMUM YIELD OF RAW MATERIAL RESOURCES FOR OUR YORK LUMBER
MILL AND TO GIVE DETAILS ANNUALLY OF ITS PROGRESS IN ITS SILVICULTURAL WORK IN,
AND PLANS FOR, THE SUPPLY PLANTATIONS.
THERE ARE, HOWEVER, STILL PROBLEMS CONCERNING THE PROPER PERFORMANCE OF THE
CONTRACT AND COURT ORDER. "WE HAVE BEEN CONSTRAINED TO SEEK COMPLIANCE AGAIN
THROUGH THE COURTS," SAYS TUCKER, "WITH THE HEARING EXPECTED NEXT MONTH."
PRIVATISATION OF SAFCOL AND STATE FORESTS
AFTER AN EXTENSIVE INVESTIGATION LAUNCHED TWO YEARS AGO INTO SAFCOL'S MONOPOLY
SITUATION, THE COMPETITION BOARD IS EXPECTED TO RELEASE ITS REPORT SHORTLY.
TUCKER SAYS THAT THE SAWMILLING INDUSTRY WOULD LIKE TO SEE THIS PARASTATAL
UNBUNDLED TO CREATE MORE COMPETITION IN THE TIMBER ARENA. THE GOVERNMENT HAS
ALSO ANNOUNCED ITS INTENTION TO DIVEST COMMERCIAL FORESTS TAKEN OVER FROM THE
FORMER HOMELANDS. "THESE DEVELOPMENTS UNLOCK OPENINGS FOR THE YORKCOR GROUP.
GREAT OPPORTUNITIES WILL BE PRESENTED TO THOSE WHO MAKE LARGE CHANGES THAT
UPHEAVAL PROVIDES," SAYS TUCKER.
MADIBA EMPOWERMENT VENTURE
"MADIBA MILLS IS WELL POSITIONED TO BENEFIT FROM ANY UNBUNDLING OF SAFCOL.
NTHATO MOTLANA (THE YOUNGER) AND HIS COLLEAGUES HAVE DONE VERY MUCH BETTER FN
THEIR SECOND YEAR OF OPERATION AS MADIBA MILLS. THERE ARE FEWER SCEPTICS NOW
ABOUT THE SIGNIFICANCE OF LAUNCHING THIS FIRST BLACK CONTROLLED AND MANAGED
SAWMILLING ENTERPRISE," SAYS TUCKER.
YORKCOR HAS FUNDED A SUBSTANTIAL INCREASE OF THE SHARE CAPITAL OF MADIBA MILLS.
THE MAJORITY CONTROL OF ITS EQUITY IS WAREHOUSED BY BOE INVESTMENT BANK LTD AND
EARMARKED FOR PARTNERS TO BE DRAWN FROM THE HISTORICALLY DISADVANTAGED.
WHERE TO FROM HERE'
HEADLINE EARNINGS OF 42 CENTS PER SHARE ARE PROJECTED FOR 1998 (1997: 28,2
CENTS) AND DIVIDENDS OF 2O CENTS PER SHARE (15 CENTS PER SHARE). "IN ADDITION,
PLANS TO IMPROVE THE LIQUIDITY OF YORKCOR SHARES LISTED ON THE JOHANNESBURG
STOCK EXCHANGE AND UNDER CONSIDERATION," CONCLUDES TUCKER.
ENDS
ISSUED BY: TISH STEWART PR ASSOCIATES
CONTACT: TISH STEWART (011)325-4195
ON BEHALF: YORKCOR
CONTACT: SOLLY TUCKER (012)804-9730
27 FEBRUARY 1998