Wrap Text
Unaudited condensed consolidated interim financial results for the six months ended 31 December 2018
York Timber Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number: 1916/004890/06
JSE share code: YRK
ISIN: ZAE000133450
(York, the Company or the Group)
Unaudited condensed consolidated interim financial results
for the six months ended 31 December 2018
Salient features
- Production interrupted by industrial action
- Revenue down 11%
- Debt reduced by R70 million
- Cash generated from operations decreased by 52% to R36 million
- Cash in bank at reporting date of R124,5 million
- Biological asset value down 1%
Commentary
Review of the six months
- Over the reporting period, York lost a combined 192 production days of the
available 655 days across all its processing operations due to strikes.
- The strike was resolved on 11 January 2019 and all operations are fully
functional.
- During this challenging period, the focus was on managing the business'
cash flow and honouring the Company's obligations.
- All debt covenants were met during the reporting period and, over the
comparable period, debt reduced by R70 million.
- The Company ended the reporting period with R124,5 million cash.
- Revenue that was not generated during this reporting period will be
recovered as postponed sales because York's customer base remained intact.
Strike
During the period under review, the National Union of Metalworkers of South
Africa (NUMSA) was recognised as the majority union at the Company and a
recognition agreement will be concluded between NUMSA and the Company. All
other unions' and interested and affected parties' rights and representation
will be respected and accommodated and bargaining will effectively take
place at plant level going forward.
Operational results
Sales and production volumes decreased by 11% compared to the comparative period
of the previous year. Plywood was imported to service local customers during the
strike while the Wholesale Division continued trading. Harvesting activity in
the Escarpment was stalled when the processing plants were experiencing strikes.
Harvesting operations at other regions were scaled back during the reporting
period. These operations are scheduled to normalise over the remainder of the
financial year.
During the 2018 calendar year, York experienced the highest incidence of fires
in recent times, despite this it suffered the least amount of hectares damaged.
This is due to our improved fire prevention measures and investment in
firefighting equipment and technologies.
Over the reporting period, an increase in the minimum wage rate was implemented
for forestry contractors to ensure compliance with legislation and this
contributed to the higher administrative expenses. Security costs increased
abnormally due to additional strike response units being employed to safeguard
the Company's assets. Increases in short term insurance and escalations in
diesel costs also contributed to the increase in administrative expenses.
Other operating gains received were from South African Special Risk Insurance
Association (SASRIA) insurance payment towards Jessievale's finished goods
warehouse that was burnt in May 2018. The new Jessievale finished goods
warehouse will be completed during the remainder of the financial year.
This will improve the Company's storage capacity and enhance the drymill
throughput of the Jessievale sawmill. In preparation for the coming fire
season, York took delivery of two firefighting units fitted with the latest
compressed air foam system.
Restructuring will be undertaken to align the Company structure with the
current scale of operations. The Remanufacturing Division did not meet the
required expectations and therefore the best options going forward are being
considered.
A new enterprise resource planning system has been selected and will be
implemented during the remainder of the calendar year. The costs for the
hardware of the system amounted to R4,1 million under financial assets.
Fair value adjustments for the year reflect a 1% decrease in the biological
asset value, mostly due to the delayed start in the planting season following
the late rains, which resulted in a higher number of temporary unplanted
areas as at 31 December 2018. Subsequent to the reporting period, good rains
have fallen and planting targets will be met for the 2019 financial year.
Balance sheet and cash flows
Capital expenditure was applied towards the enhancement of cost efficiencies.
Log transport vehicles were purchased to unlock synergies within the supply
chain. Changes in working capital resulted from a decrease in debtors due
to lower sales. Creditors reduced as the standing timber purchased from the
South African Forestry Company Limited was harvested and paid. Even with the
arrival of the imported plywood in December 2018, stock decreased during the
reporting period. Cash was applied to service debt repayments and contribute
towards the Company's self-insurance fund. Cash at the end of the period
of R124,5 million was up 20% from the comparative point in time in the previous
period. Investments in property, plant and equipment are the result of the
construction of the Jessievale finished goods warehouse following its
destruction by fire during the April/May 2018 strike. The new building is
partly financed from insurance receipts and working capital.
Net asset value per share decreased slightly to R9,70 per share from the
comparative period.
Changes to the directorate
During the period under review Messrs Thabo Mokgatlha and Gavin Tipper and
Ms Maserame Mouyeme resigned as independent non-executive directors and
Mr Paul Botha resigned as non-executive director. Messrs Andries Brink
and Maxwell Nyanteh and Ms Hetisani Mbanyele-Ntshinga were appointed as
independent non-executive directors, with effect from 14 February 2019.
Outlook
York continues to focus on cash generation through cost-efficiencies
and optimisation of its supply chain. York is in the process of selling
an outlier plantation and is furthermore awaiting final payment from
SASRIA in respect of Jessievale's burnt warehouse. York has commenced
with the following:
- Restructuring of poor performing divisions; and
- Aligning the Human Resources Division with the operations to effectively
and speedily address employees' matters.
In the absence of a significant improvement in economic growth, the South
African market will most likely remain subdued. The lumber demand for the
major product category that York produces remains firm and the export of
plywood will continue contributing towards earnings.
Consolidated statement of financial position
as at 31 December 2018
31 Dec 2017 30 Jun 2018
31 Dec 2018 Unaudited Audited
Unaudited Restated Restated
R'000 R'000 R'000
Assets
Non-current assets
Biological assets (note 5) 2 443 572 2 618 711 2 498 082
Investment property 26 481 26 731 26 731
Property, plant and equipment 917 988 936 930 920 265
Goodwill 565 442 565 442 565 442
Intangible assets 305 673 463
Deferred tax 4 591 8 612 3 780
Other financial assets 46 610 32 020 39 707
Total non-current assets 4 004 989 4 189 119 4 054 470
Current assets
Biological assets (note 5) 400 357 239 587 420 468
Inventories 276 113 347 645 300 356
Current tax receivable 1 309 12 885 3 363
Trade and other receivables 144 870 210 708 258 731
Cash and cash equivalents 125 506 104 005 152 039
Total current assets 948 155 914 830 1 134 957
Total assets 4 953 144 5 103 949 5 189 427
Equity and liabilities
Equity
Share capital 15 802 15 802 15 802
Share premium 1 464 430 1 464 430 1 464 430
Reserves 959 (489) (353)
Retained income 1 585 575 1 595 880 1 650 404
Total equity 3 066 766 3 075 623 3 130 283
Liabilities
Non-current liabilities
Deferred tax 836 070 860 297 862 141
Lease liability 11 145 17 522 14 984
Loans from related parties - 1 527 -
Loans and borrowings 554 915 650 105 636 836
Provisions 15 040 13 900 14 623
Retirement benefit obligations 26 847 25 755 26 430
Total non-current liabilities 1 444 017 1 569 106 1 555 014
Current liabilities
Current tax payable 86 920 15
Cash-settled share-based payments - 17 073 -
Loans and borrowings 209 609 184 660 167 759
Lease liability 7 654 6 457 7 415
Trade and other payables 224 001 250 110 328 932
Bank overdraft 1 011 - 9
Total current liabilities 442 361 459 220 504 130
Total liabilities 1 886 378 2 028 326 2 059 144
Total equity and liabilities 4 953 144 5 103 949 5 189 427
Consolidated statement of profit or loss and other comprehensive income
for the six months ended 31 December 2018
Six months Year
Six months ended ended
ended 31 Dec 2017 30 Jun 2018
31 Dec 2018 Unaudited Audited
Unaudited Restated Restated
R'000 R'000 R'000
Revenue 800 227 899 396 1 812 350
Cost of sales (608 699) (595 982) (1 259 719)
Gross profit 191 528 303 414 552 631
Other operating income 16 158 5 718 23 097
Other operating gains 2 733 - 5 009
Administration expenses (253 972) (224 251) (384 693)
Operating (loss)/profit (43 553) 84 881 196 044
Fair value adjustment (11 831) 74 046 71 327
(Loss)/profit before finance
costs (55 384) 158 927 267 371
Investment income 2 851 2 230 4 899
Finance costs (39 106) (43 477) (84 325)
(Loss)/profit before taxation (91 639) 117 680 187 945
Taxation 26 810 (33 927) (49 659)
(Loss)/profit for the period (64 829) 83 753 138 286
Other comprehensive loss:
Remeasurement of defined benefit
liability - - (663)
Taxation related to remeasurement
of defined benefit liability - - 185
Other comprehensive loss for the
period net of taxation - - (478)
Total comprehensive (loss)/income (64 829) 83 753 137 808
Earnings per share (cents) (note 8) (20) 27 44
Diluted earnings per share (cents)
(note 8) (20) 27 44
Headline earnings per share (cents)
(note 9) (20) 27 45
Diluted headline earnings per share (20) 27 45
(cents) (note 9)
Consolidated statement of changes in equity
for the six months ended 31 December 2018
Share-
based
Share Share payment
capital premium reserve
R'000 R'000 R'000
Opening balance as previously
reported 15 802 1 464 430 -
Adjustment:
Change in accounting policy - - -
Balance as at 1 July 2017
restated 15 802 1 464 430 -
Profit for the year - - -
Other comprehensive loss
Change in defined benefit plan,
net of tax - - -
Total other comprehensive loss - - -
Total comprehensive income for
the year and total transactions
with owners - - -
Employees' share option scheme - - 614
Opening balance as previously reported 15 802 1 464 430 614
Adjustment:
Change in accounting policy - - -
Balance as at 30 June 2018 restated 15 802 1 464 430 614
Loss for the period - - -
Other comprehensive income
Change in defined benefit plan,
net of tax - - -
Total other comprehensive income - - -
Total comprehensive loss for the
period and total transactions
with owners - - -
Employees' share option scheme - - 1 312
Balance as at 31 December 2018
(unaudited) 15 802 1 464 430 1 926
Defined
benefit
plan Retained Total
reserve income equity
R'000 R'000 R'000
Opening balance as previously reported (489) 1 512 822 2 992 565
Adjustment:
Change in accounting policy - (704) (704)
Balance as at 1 July 2017 restated (489) 1 512 118 2 991 861
Profit for the year - 138 286 138 286
Other comprehensive loss
Change in defined benefit plan,
net of tax (478) - (478)
Total other comprehensive loss (478) - (478)
Total comprehensive income for
the year and total transactions
with owners (478) 138 286 137 808
Employees' share option scheme - - 614
Opening balance as previously reported (967) 1 652 556 3 132 435
Adjustment:
Change in accounting policy - (2 152) (2 152)
Balance as at 30 June 2018 restated (967) 1 650 404 3 130 283
Loss for the period - (64 829) (64 829)
Other comprehensive income
Change in defined benefit plan, net of tax - - -
Total other comprehensive income - - -
Total comprehensive loss for the
period and total transactions with owners - (64 829) (64 829)
Employees' share option scheme - - 1 312
Balance as at 31 December 2018
(unaudited) (967) 1 585 575 3 066 766
Consolidated statement of cash flows
for the six months ended 31 December 2018
Six months Year
Six months ended ended
ended 31 Dec 2017 30 Jun 2018
31 Dec 2018 Unaudited Audited
Unaudited Restated Restated
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations
(note 6) 36 317 75 470 295 902
Investment income 2 851 2 230 4 899
Finance costs (38 034) (42 201) (78 155)
Taxation refunded/(paid) 2 054 (9 265) (11 950)
Net cash from operating activities 3 188 26 234 210 696
Cash flows applied to investing
activities
Purchase of property, plant and
equipment (44 868) (43 117) (64 680)
Purchase of intangible assets - - (24)
Proceeds from disposal of
property, plant and equipment 1 101 103
Proceeds from disposal of
investment property 250 - -
Repayment of loans from related parties - - (4 580)
Purchase of financial assets (6 903) (55) (14 563)
Proceeds on sale of financial assets - - 6 821
Purchase of biological assets - - (71 811)
Harvesting of purchased
biological assets 62 790 44 266 59 081
Acquisition of subsidiaries net
of cash acquired - - (6 087)
Net cash generated from/(applied
to) investing activities 11 270 1 195 (95 740)
Cash flows from financing activities
Net repayment of loans and
borrowings (40 071) (77 537) (107 707)
Movement in cash settled
share-based payment - - (6 971)
Repayment of lease liability (4 673) (3 924) (12 034)
Net cash applied to financing
activities (44 744) (81 461) (126 712)
Total cash movement for the period (30 286) (54 032) (11 756)
Cash at beginning of the period 152 030 159 347 159 347
Effect of exchange rate movement
on cash balances 2 751 (1 310) 4 439
Cash at end of the period 124 495 104 005 152 030
Notes to the consolidated interim financial statements
for the six months ended 31 December 2018
1. Basis of preparation
These unaudited condensed consolidated interim financial statements have been
prepared in accordance with the JSE Listings Requirements, the Companies Act
of South Africa, No. 71 of 2008 (as amended) and the Companies Regulations,
2011. These unaudited condensed consolidated interim financial statements have
been prepared in accordance with and containing the information required by
IAS 34 Interim Financial Reporting, as well as the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by Financial Reporting Standards Council. The
financial results have been compiled under the supervision of Gerald Stoltz
CA(SA), the Chief Financial Officer.
These unaudited condensed consolidated interim financial results do not
include all the information required for full annual financial statements,
and should be read in conjunction with the audited consolidated financial
statements as at and for the year ended 30 June 2018 which are available on
the Company's website, www.york.co.za or at the Company's registered office.
The condensed consolidated interim financial results have not been reviewed
or audited by the Company's external auditor. The interim financial results,
which have been prepared on the going concern basis, were approved by the
Board of Directors on 20 March 2019.
There have been no material changes to judgements or estimates of amounts
reported in prior reporting periods except for the impact of new standards
adopted. Refer note 12.
The Group financial results are presented in South African Rand, which is
the Company's functional currency. All financial information presented has
been rounded to the nearest R'000.
2. Principal accounting policies
The Group has adopted all the new, revised or amended accounting pronouncements
as issued by the International Accounting Standards Board (IASB) which were
effective for the Group from 1 January 2018. The Group early adopted
International Financial Reporting Standards (IFRS) 16. The following standards
had an impact on the Group:
- IFRS 9 Financial Instruments (IFRS 9);
- IFRS 15 Revenue from Contracts with Customers (IFRS 15); and
- IFRS 16 Leases (IFRS 16).
The accounting policies applied in the preparation of the condensed consolidated
interim financial statements are in terms of IFRS and are consistent with those
accounting policies applied in the preparation of the 30 June 2018 consolidated
annual financial statements except as previously stated above. Refer to
note 12 for details.
3. Additional disclosure items
31 Dec 2017 30 Jun 2018
31 Dec 2018 Unaudited Audited
Unaudited Restated Restated
R'000 R'000 R'000
Authorised capital commitments
- Contracted, but not provided 11 406 9 498 11 139
- Not contracted 47 909 13 298 10 149
Capital expenditure 44 868 43 117 64 680
Depreciation of property, plant
and equipment 47 126 41 847 87 899
Amortisation of intangible assets 158 235 469
- The Group did not have any litigation settlements during the reporting period.
- The banking facility granted by Absa Bank was secured by a cession of trade
receivables and Credit Insurance Solutions (CIS) insurance and cross-suretyships
of R154 million with Absa, and R5 million with FirstRand. The general banking
facility of R60 million with Absa and asset and vehicle finance facility of
R120 million with Absa are available to all companies across the Group. The
Group did not have any covenant defaults or breaches of its loan agreements
during the period under review or at the reporting date.
- No movement occurred in the number of shares issued during the period
under review.
4. Operating segments
The Group has three reportable segments which are the Group's strategic
divisions. The Group operates in three geographic segments, namely South
Africa, countries within the Southern Africa Development Community (SADC)
and international (Non-SADC).
The segment analysis is as follows:
Processing plants
31 Dec 2018 31 Dec 2017 30 Jun 2018
Unaudited Unaudited Audited
Restated Restated
R'000 R'000 R'000
Revenue: External sales 430 923 574 420 1 165 551
Revenue: Inter-segment sales 136 485 184 009 344 862
Total revenue 567 408 758 429 1 510 413
Depreciation and amortisation (29 872) (26 658) (54 832)
Reportable segment profit* (17 287) 40 211 80 409
Fair value adjustment - - -
Capital expenditure 20 157 31 537 38 294
Wholesale
31 Dec 2018 31 Dec 2017 30 Jun 2018
Unaudited Unaudited Audited
Restated Restated
R'000 R'000 R'000
Revenue: External sales 324 804 298 105 594 667
Revenue: Inter-segment sales - - -
Total revenue 324 804 298 105 594 667
Depreciation and amortisation (3 903) (4 034) (7 182)
Reportable segment profit* 4 703 11 285 13 697
Fair value adjustment - - -
Capital expenditure 180 3 994 6 469
Forestry and fleet
31 Dec 2018 31 Dec 2017 30 Jun 2018
Unaudited Unaudited Audited
Restated Restated
R'000 R'000 R'000
Revenue: External sales 40 791 24 518 54 809
Revenue: Inter-segment sales 283 462 371 271 739 547
Total revenue 324 253 395 789 794 356
Depreciation and amortisation (10 899) (9 317) (20 593)
Reportable segment profit* 17 305 97 156 162 892
Fair value adjustment (11 831) 74 046 77 303
Capital expenditure 18 771 6 130 17 621
Total before unallocated and
inter-segment elimination
31 Dec 2018 31 Dec 2017 30 Jun 2018
Unaudited Unaudited Audited
Restated Restated
R'000 R'000 R'000
Revenue: External sales 796 518 897 043 1 815 027
Revenue: Inter-segment sales 419 947 555 280 1 084 409
Total revenue 1 216 465 1 452 323 2 899 436
Depreciation and amortisation (44 674) (40 009) (82 607)
Reportable segment profit* 4 721 148 652 256 998
Fair value adjustment (11 831) 74 046 77 303
Capital expenditure 39 108 41 661 62 384
*Being earnings before interest, taxation, depreciation, amortisation,
impairment and fair value adjustments (EBITDA).
31 Dec 2017 30 Jun 2018
31 Dec 2018 Unaudited Audited
Unaudited Restated Restated
R'000 R'000 R'000
Reconciliation of reportable
segment profit or loss
Total EBITDA for reportable segments 4 721 148 652 256 998
Depreciation, amortisation and
impairment (47 284) (42 082) (88 368)
Unallocated amounts (990) (21 689) 27 414
Operating (loss)/profit (43 553) 84 881 196 044
31 Dec 2017 30 Jun 2018
31 Dec 2018 Unaudited Audited
Unaudited Restated Restated
R'000 R'000 R'000
Revenue per geographical area
of customer
South Africa (SA) 690 007 767 561 1 499 236
Southern Africa Development
Community (SADC) excluding SA 68 858 99 883 179 166
International (Non-SADC)* 41 362 31 952 133 948
Total 800 227 899 396 1 812 350
*International sales refer to plywood to the United Kingdom, Belgium,
Italy and the United States of America.
5. Biological assets
31 Dec 2018 31 Dec 2017 30 Jun 2018
Unaudited Unaudited Audited
R'000 R'000 R'000
Change in discounted cash flows
(DCF) value attributable to:
Opening balance 2 918 550 2 828 518 2 828 518
Growth (121 823) (44 045) 85 450
Revenue and price (11 581) 128 572 83 351
Operating cost 41 566 (21 927) (33 968)
Discount rate 80 007 11 445 (57 530)
Purchased plantations - - 71 811
Standing timber harvested (62 790) (44 265) (59 082)
Closing balance 2 843 929 2 858 298 2 918 550
Classified as non-current assets 2 443 572 2 618 711 2 498 082
Classified as current assets** 400 357 239 587 420 468
**Being the biological assets to be harvested and sold in the 12 months
after the reporting date.
31 Dec 2018 31 Dec 2017 30 Jun 2018
Unaudited Unaudited Audited
m3 m3 m3
Reconciliation of standing volume
(excluding purchased plantations)
Opening balance 5 946 639 6 001 889 6 001 889
Increase due to growth and
enumeration 490 840 390 220 704 236
Decrease due to harvesting (310 106) (417 817) (759 486)
Closing balance 6 127 373 5 974 292 5 946 639
The additional key assumptions underlying the discounted cash flow valuation
have been updated as follows:
- Volumes: The expected yields per log class are calculated with reference
to growth models relevant to the planted area. The growth models are derived
from actual trial data that has been measured annually since 1976. A
merchandising model, using the modelled tree shapes at various ages, is
used to divide the trees into predefined products as basis for calculating
log yields.
- Volume adjustment factor: Due to the susceptibility of the plantations to
the environment, an adjustment factor is used to reduce the volumes obtained
from the merchandising model. This percentage is based mainly on factors such
as animal damage and damage due to natural elements, such as wind, rain, hail,
droughts and fires. An adjustment factor of 10% (2017: 10%) has been used.
- Log prices: The price per cubic metre per log class is based on current and
future expected market prices per log class. It was assumed that prices will
increase at 5,50% over the next year at 5,30% over the following year, and at
5,50% over the long term (2017: 6% p.a. over the next year, 6% over the
following year, and at 6% p.a. over the long term). Log prices are computed as
a weighted average of external market prices and internal prices charged to
the Company's processing operations. Internal prices are generally lower than
external prices and are limited to levels that result in the profitability of
the processing operations.
- Operating costs: The costs are based on the unit cost of the forest management
activities required for the trees to reach the age of felling. The costs
include the current and expected future 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. An inflation
rate of 5,50% over the next year, 5,30% over the following year, and 5,50% over
the long term (2017: 6% p.a. over the next year, 6% over the following year,
and 6% p.a. over the long term) was used.
- Costs to sell: Costs to sell are the incremental costs directly attributable
to the disposal of an asset, excluding finance costs and income taxes. The
only costs to sell applied are harvesting costs, which are included under
operating costs. No other selling costs are included.
- Discount rate: The directors used a comparable forestry group of companies'
Beta to calculate the after-tax weighted average cost of capital (WACC),
which was applied to the after-taxation net cash flows.
6. Cash generated from operations
31 Dec 2017 30 Jun 2018
31 Dec 2018 Unaudited Audited
Unaudited Restated Restated
R'000 R'000 R'000
(Loss)/profit before taxation (91 639) 117 680 187 945
Adjustments for:
Depreciation, amortisation and
impairments 47 284 42 082 88 368
Loss/(profit) on disposal of assets
and bargain gain purchase 18 37 (570)
(Profit)/loss on foreign exchange (2 751) 1 310 (4 439)
Investment income (2 851) (2 230) (4 899)
Finance costs 39 106 43 477 84 325
Fair value adjustments 11 831 (74 046) (71 327)
Movement in retirement benefit
liabilities 417 421 433
Movement in provisions 417 - 723
Share-based payment expense: Cash - 8 993 (1 109)
Share-based payment expense: Equity 1 312 - 614
Changes in working capital
Inventories 24 243 (7 952) 39 336
Trade and other receivables 113 861 (3 725) (51 739)
Trade and other payables (104 931) (50 577) 28 241
Cash generated from operations 36 317 75 470 295 902
7. Related parties
The Group's related parties are its subsidiaries and key management, including
directors. No businesses were acquired or disposed of during the six month
period.
8. Earnings per share
31 Dec 2017 30 Jun 2018
31 Dec 2018 Unaudited Audited
Unaudited Restated Restated
Basic earnings attributable to
ordinary shareholders (R'000)
(refer to note 12 for restatement
of earnings on adoption of
new standards) (64 829) 83 753 138 286
Reconciliation of weighted
average number of ordinary shares
Issued number of shares 316 048 316 048 316 048
Bonus element of share-based payment 841 - 826
Weighted average number of
ordinary shares ('000) 316 889 316 048 316 874
Earnings per share (cents) (20) 27 44
Diluted earnings per share (cents) (20) 27 44
The bonus element of the share-based payment had a dilutive effect on the
shares (2017: none).
9. Headline earnings per share
31 Dec 2017 30 Jun 2018
31 Dec 2018 Unaudited Audited
Unaudited Restated Restated
R'000 R'000 R'000
Reconciliation of headline earnings
Basic earnings attributable to
ordinary shareholders (64 829) 83 753 138 286
Loss on sale of assets (net of tax) 13 27 128
Bargain purchase - - (747)
Fair value adjustment on deemed
disposal of joint arrangement - - 5 976
Headline earnings for the period (64 816) 83 780 143 643
Weighted average number of
ordinary shares ('000) 316 889 316 048 316 874
Headline earnings per share (cents) (20) 27 45
Diluted earnings per share (cents) (20) 27 45
The bonus element of the share-based payment had a dilutive effect on the
shares (2017: none).
10. Core earnings per share
31 Dec 2017 30 Jun 2018
31 Dec 2018 Unaudited Audited
Unaudited Restated Restated
R'000 R'000 R'000
Reconciliation of core earnings
Basic earnings attributable to
ordinary shareholders (64 829) 83 753 138 286
Fair value adjustment on
biological assets (net of tax) 8 518 (53 313) (55 658)
Core earnings for the period (56 311) 30 440 82 628
Weighted average number of
ordinary shares ('000) 316 889 316 048 316 874
Core earnings per share (cents) (18) 10 26
Diluted earnings per share (cents) (18) 10 26
11. Subsequent events
There were no subsequent events.
12. Changes in accounting policies
The Group adopted the following new accounting standards as issued by the
IASB, which came into effect for financial years beginning on or after
1 January 2018:
- IFRS 15 Revenue from Contracts with Customers; and
- IFRS 9 Financial Instruments.
The Group early adopted the following new accounting standard as issued by
the IASB, which came into effect for financial years beginning on or
after 1 January 2019:
- IFRS 16 Leases.
Adoption of IFRS 15
The Group principally generates revenue from the sale of timber and plywood
products in the South African, SADC and International markets. IFRS 15
establishes a comprehensive framework for determining whether revenue should
be recognised and how much and when revenue should be recognised. It replaces
IAS 18 where revenue was recognised around an analysis of the transfer of
risks and rewards.
The core principle of IFRS 15 is that an entity should recognise revenue to
depict the transfer of promised goods or services to customers for an amount
that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. The Group now recognises revenue when
it transfers control over a product or service to a customer at the standalone
selling price allocated to the performance obligation in the contract.
For local timber sales, revenue is recognised when the goods leave the premises
at the standalone selling prices. When the customer collects the goods at the
premises, York no longer directs the use of the goods and the client accepts
responsibility. When York arranges the transport of goods on behalf of the
customer, York acts as an agent. The transport provider insures the freight
and York can no longer direct the use of the goods and the customer has the
present obligation to pay for the goods. For International plywood sales the
Group recognises the revenue for goods when the original shipping documents,
for clearance at destination port, is released.
Changes in accounting policies from the adoption of IFRS 15 have been
applied retrospectively.
Adoption of IFRS 9
The adoption of IFRS 9 had the following impact on the Group:
- Change from the IAS 39 incurred loss model to the expected credit loss
model; and
- Change in classification of the measurement categories for financial
instruments.
Before adopting IFRS 9, the Group calculated the allowance for credit losses
using the incurred loss model. Under the incurred loss model, the Group assessed
whether there was any objective evidence of impairment at the end of each
reporting period. Under IFRS 9 the Group calculated the expected credit loss
under the simplified approach using a provision matrix.
The expected credit loss is calculated by applying an expected loss ratio to
each age receivable group. The loss ratio is calculated as the historical
payment profile and adjusted for macro-economic forecasts. A default expected
credit loss ratio is applied to ageing periods of 90 days and older.
Changes in accounting policies from the adoption of IFRS 9 have been applied
retrospectively.
IFRS 9 introduced new measurement categories for financial assets. From
1 January 2018 the Group classifies financial assets in the IFRS 9
measurement categories.
Financial asset IAS 39 category IFRS 9 category
Self-insurance fund Loans and receivables Financial asset at
amortised cost
Trade and other receivables Loans and receivables Financial asset at
amortised cost
Adoption of IFRS 16
The adoption of IFRS 16 had the following impact on the Group:
- Recognition of right of use assets and depreciation; and
- Recognition of lease liabilities and finance cost.
Effective 1 January 2019, the Group early adopted IFRS 16, which specifies
how to recognise, measure, present and disclose leases using the full
retrospective approach. The standard provides a single lessee accounting model,
requiring lessees to recognise assets and liabilities for all significant
leases.
The Company recognises a right-of-use asset and a lease liability at the
commencement date of the lease. The right of use asset is initially measured
based on the initial amount of the lease liability. The assets are depreciated
over the lease term using the straight-line method. Lease terms range from
two to five years.
The lease liability is measured at the present value of the lease payments,
discounted using the Group's incremental borrowing rate adjusted for asset
specific risks and the lease term. The lease liability is measured at amortised
cost using the effective interest method.
The Group has elected to apply the practical expedient not to recognise right
of use assets and liabilities for short term leases that have lease terms of
12 months or less and leases for which the underlying asset is of low value.
The lease payments associated with these leases are recognised as an expense
in the statement of profit or loss and other comprehensive income on a
straight-line basis over the lease term.
On adoption of the new accounting standards, the Group restated its financial
statements as at 31 December 2017 and 30 June 2018 as follows:
31 Dec 2017
as previously Effect of Effect of
reported IFRS 16 IFRS 15
R'000 R'000 R'000
Property, plant and equipment 915 919 21 011 -
Deferred tax (853 243) 391 819
Inventories 328 181 - 19 464
Trade and other receivables 212 363 - -
Retained income (1 600 223) 929 2 106
Lease liability (1 647) (22 332) -
Trade and other payables (227 721) - (22 389)
Revenue (921 785) - 22 389
Cost of sales 615 446 - (19 464)
Administration expense 223 499 (903) -
Finance cost 42 201 1 276 -
Taxation 35 232 (138) (819)
Effect of 31 Dec 2017
IFRS 9 Restated
R'000 R'000
Property, plant and equipment - 936 930
Deferred tax 348 (851 685)
Inventories - 347 645
Trade and other receivables (1 655) 210 708
Retained income 1 308 (1 595 880)
Lease liability - (23 979)
Trade and other payables - (250 110)
Revenue - (899 396)
Cost of sales - 595 982
Administration expense 1 655 224 251
Finance cost - 43 477
Taxation (348) 33 927
30 Jun 2018
as previously Effect of Effect of
reported IFRS 16 IFRS 15
R'000 R'000 R'000
Property, plant and equipment 901 202 19 063 -
Deferred tax (859 214) 447 427
Inventories 296 619 - 3 737
Trade and other receivables 258 619 - -
Retained income (1 652 556) 1 149 1 098
Lease liability (1 741) (20 658) -
Trade and other payables (323 673) - (5 259)
Revenue (1 817 609) - 5 259
Cost of sales 1 263 458 - (3 739)
Administration expense 386 691 (1 886) -
Finance cost 81 800 2 525 -
Taxation 50 258 (193) (427)
Effect of 30 Jun 2018
IFRS 9 Restated
R'000 R'000
Property, plant and equipment - 920 265
Deferred tax (21) (858 361)
Inventories - 300 356
Trade and other receivables 112 258 731
Retained income (95) (1 650 404)
Lease liability - (22 399)
Trade and other payables - (328 932)
Revenue - (1 812 350)
Cost of sales - 1 259 719
Administration expense (112) 384 693
Finance cost - 84 325
Taxation 21 49 659
The impact of IFRS 15 on the December 2018 condensed consolidated interim
financial results is the deferral of revenue until control passes to the
customer and the realisation of the amounts deferred at June 2018, and for
IFRS 16 and IFRS 9 the impact is similar to that disclosed for December 2017.
Company information
Registered office and business address
York Corporate Office
3 Main Road, Sabie 1260
Tel: +27 13 764 9200
Fax: +27 13 764 3245
Postal address
PO Box 1191, Sabie 1260
Nature of business and principal activities
Operation of plantations, sawmills, a plywood plant and wholesale lumber sales
Auditor
PricewaterhouseCoopers
Transfer secretaries
Computershare Investor Services Proprietary Limited
Sponsor
One Capital
Directors
Executive directors
Pieter van Zyl
Chief Executive Officer
Gerald Stoltz
Chief Financial Officer
Non-executive directors
Dr Jim Myers* (Chairman, USA)
Paul Botha (resigned: 27 November 2018)
Dr Azar Jammine*
Shakeel Meer
Dinga Mncube*
Thabo Mokgatlha* (resigned: 30 November 2018)
Maserame Mouyeme* (resigned: 30 November 2018)
Gavin Tipper* (resigned: 3 December 2018)
Andries Brink* (appointed: 14 February 2019)
Maxwell Nyanteh* (appointed: 14 February 2019)
Hetisani Mbanyele-Ntshinga* (appointed: 14 February 2019)
* Independent
Company Secretary
Sue Hsieh
Email: shsieh@york.co.za
www.york.co.za
Date: 25/03/2019 07:05:00 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.