Wrap Text
York Timber Organisation Limited
(Registration number 1916/004890/06)
ISIN : ZAE000008108
Share code : YRK
EXCELLENT YEAR FOR YORKCOR
In what chairman Solly Tucker describes as the best year in a decade for
sawmillers, Yorkcor produced a scintillating set of results for 2002, with
revenue up 31%, attributable profit up 112% and headline profit per share up
113%.
Turnover grew to R94,4 million from R72 million in 2001, while cash flow from
operating activities more than trebled to R18,03 million (2001: R4,03 million).
Net profit more than doubled to R3,3 million from R1,56 million in 2001.
National softwood lumber sales improved by 22% to more than 2,3 million cubic
metres in 2002, while average selling prices improved by about 23%. SA pine
lumber is now selling at better prices than its American rival product, Southern
Yellow Pine. SA exports were up as much as 106% on 2001 figures, though the
recent hardening of the rand, coupled with the subdued pace of manufacture in
the East, has started to take the sizzle off this export performance. "We look
forward to post-Baghdad business as usual," says Tucker.
Yorkcor"s balance sheet is also stronger: shareholders" funds strengthened from
R34,2 million in 2001 to R51,9 million at the last year end. Net asset value per
share was 505,9c at the end of 2002 (2001: 345,8c), while gearing was reduced
from 30,7% to 12,5% after reducing interest-bearing debt to R3,9 million from
R13,2 million.
Yorkcor is reaping the benefits of substantial operational improvements and its
success in defending its long-term sawlog supply contracts against attempts to
have these scrapped without compensation.
"More than half the sawmillers who were our competitors a decade ago are no
longer in business," says Tucker. "The state forests have been under the hammer
in the so-called restructuring process of privatisation. Sawmillers were
expected to give up their long-term sawlog supply contracts without
compensation. They did - to a man. We said, "no", and we say the Constitution
and the law support us."
Yorkcor had to resort to the courts to defend its commercial interests, but it
was well worth the investment, adds Tucker. Two recent watershed judgments of
the High Court will have an enduring impact on Yorkcor"s financial strength:
- In September 2002, the High Court delivered judgment in litigation in which
the parastatal, Safcol, sought to cancel two of Yorkcor"s "evergreen" log
contracts concluded in 1968 and 1970. The cancellation claim was dismissed with
costs, though Safcol has appealed the decision.
- Yorkcor had found it necessary to launch legal proceedings against the
government to enforce compliance with several orders of court. In February 2003,
the High Court declared the Minister of Water Affairs and Forestry and his
Director General to be in contempt of Court and directed the government, inter
alia, to pay the costs of the litigation on a punitive scale. This amount has
not yet been brought to account in the accompanying financial statements.
Litigation costs are written off as and when they are expensed.
Another action seeking the cancellation of Yorkcor"s evergreen contracts on
different grounds is pending, and the company"s directors and legal advisors are
cautiously optimistic about the outcome. Also pending are substantial money
claims and counter claims by both sides. The claims are mainly about log prices
- Yorkcor says it has have been overcharged, Safcol contends the other way.
Yorkcor currently does not deal with Safcol but with its new subsidiary
Komatiland.
Also pending is an arbitration between Yorkcor and the government, which
commences on 31 March 2003, to determine the amount of compensation payable on
31 December 2004 for the termination of its evergreen contract. Though
government has already admitted liability, at issue is the amount to be paid on
the basis of the value of York Lumber"s business as a going concern.
"Positive initiatives were taken to counter the threats to our business, however
well we were acquitting ourselves in the legal fray, and to turn Yorkcor"s
goodwill and know-how to good account for the future," says Tucker.
The assets of the liquidated Bluechip companies were acquired at a cost of R6,5
million in October 2002. These operations are expected to be profitable in their
first year in the group. They do not rely on state forests for their log intake,
but on a diverse number of independent growers.
"Yorkcor has indeed done well against the wind", concludes Tucker.
Ends
ISSUED FOR : Yorkcor Limited
CONTACT : Solly Tucker (012) 804 9730/083 456 9900
FAX NO : (012) 804 8611
E-MAIL : sol@yorkcor.co.za
WEBSITE : www.yorkcor.co.za
ISSUED BY : TISH STEWART PR ASSOCIATES
CONTACT : Tish Stewart (011) 325 4195 Cell: 082 443 6399
FAX NO : (011) 325 4199
E-MAIL : tish@tspr.co.za
DATE : 28 March, 2003
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