Wrap Text
Yorkcor Announces 720% Increase In Headline Earnings Per Share
The York Timber Organisation Limited
(Incorporated in the Republic of South Africa)
(Registration number 1916/004890/06)
Share code YRK ISIN ZAE000008108
("Yorkcor" or "the company")
YORKCOR ANNOUNCES 720% INCREASE IN HEADLINE EARNINGS PER SHARE
Highlights
- Headline earnings per share increase eight-fold to 72,71 cps
- Revenue up 66% to R125m
- Profit after tax up 17-fold to R8,5m
- Cost of finance covered 24,9 times
- Cash in the bank - R24,6m
- Special dividend of 125c declared in May 2005
- Ordinary dividend of 25c
The York Timber Organisation (Yorkcor) has announced a 17-fold increase in after
tax profit to R8,5 million (2004: R0,5 million) and an eight-fold increase in
headline earnings per share to 72,71 cents (2004: 8,87 cents) for the interim
period to 30 June 2005.
Chairman Solly Tucker says a combination of factors - including improved
operational efficiencies and firm markets - contributed to the sharply improved
result. "Yorkcor outperformed its competitors in virtually all key performance
areas, and we believe we still have more efficiencies to extract from our
businesses."
Revenue improved 66% to R125,9 million (2004: R76 million), and gross profit
increased by a similar percentage to R64 million (2004: R39 million).
Net asset value increased marginally to 807 cents after paying a special
dividend of 125 cents.
Yorkcor has issued a cautionary announcement advising shareholders that
discussions over potential black economic empowerment initiatives are underway.
Softwood sales registered a 5,93% volume increase over the previous year, though
the demand for round logs may have peaked and a correction in the trend is
anticipated, which should facilitate Yorkcor"s competitive quest for timber
resources.
Lumber prices, on the other hand, remain "unprecedently and enduringly firm,"
says Tucker. Softwood lumber sales by volume recorded a 14% year-on-year
increase. The average market price for sawlogs at the roadside has increased by
about 10%.
Tucker says Yorkcor outperforms its rivals in almost all respects, except for
the delivered cost of its log intake. "It is in this key input cost that there
is the earliest scope for material improvement in our bottom line performance,"
he says.
Yorkcor"s list of outstanding cases of litigation diminished over the reporting
period, though the group continues to defend its rights through a variety of
legal mechanisms, including the Competition Commission and arbitration.
"The underlying driver in our resort to law is our concern about resource
security. This is also troubling other sawmillers who have hardly anywhere else
to go for sawlogs. Yorkcor"s response has to date accomplished mixed but, on
the whole, good results. We are much reassured by the fact that Yorkcor has
managed to secure strategically advantageous supply positions relative to most
of its competitors," says Tucker.
Yorkcor"s relationship with the government has improved, and in September 2005
Yorkcor and the Department of Water Affairs and Forestry (DWAF) agreed to call a
halt to pending legal hostilities related to the group"s ongoing quest to secure
sawlog supplies - which DWAF had attempted to frustrate. This follows the
payment of R37,4 million in compensation by DWAF resulting from discontinuing of
its forestry operations which, since the 1970s, were a major source of sawlog
intake by the group"s York Lumber sawmill near Bushbuckridge
Tucker welcomed the decision by the Competition Commission to prohibit a
proposed merger between the Bonheur consortium and Komatiland Forests on the
grounds that it will reduce competition in the market. However, this case will
be heard by the Competition Tribunal in November.
Tucker welcomed the recent outcome of arbitration in which Yorkcor has
successfully claimed R21,8 million in damages from Safcol for repudiating a log
supply contract in 2004, following the arbitrator"s finding that the contract
was not validly cancelled.
Another leg of the arbitration involved the charging of VAT by Safcol and a
determination as to whether Safcol supplied all the logs it had invoiced. In
this matter, the arbitrator awarded Safcol an amount of R3,6 million, plus some
interest and costs. The arbitrator"s findings may be appealed by both parties.
The group is spending close to R2 million to upgrade sawmilling technologies,
while three new manufacturing facilities have already been successfully
installed and commissioned in the half year under review. These improved
production facilities played a significant part in the improved profitability of
the sawmills.
Tucker says the group"s four-pronged strategy is proceeding smoothly: good
progress has been made in securing log supply lines, selected acquisitions and
trading opportunities are being sought, and the group"s black economic
empowerment initiative will soon be announced.
The group"s new trading business reported a 6,5-fold increase in operating
profit before interest and tax to R2,8 million (2004: R432,000), and plans for
further expansion of the business is underway.
Tucker says this augurs well for the second half of the year, which should show
a continuation of the strong performance recorded at the interim stage.
Ends
ISSUED FOR : YORK TIMBER ORGANISATION LIMITED
CONTACT : Solly Tucker, Chairman: 012 804 9730 / 083 456
9900
FAX NO : 012 804 8611
E-MAIL : solly@yorkcor.co.za
WEBSITE : www.yorkcor.co.za
ISSUED BY : TISH STEWART PR ASSOCIATES
CONTACT : Tish Stewart 011 325 4195 / 082 443 6399
FAX NO : 011 325 4199
E-MAIL : tish@tspr.co.za
DATE : 22 September 2005
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