WHILE ????? FOREST PRODUCTS company York Timbers produced a nice and glossy annual report for the 18 months to June 2008, minority shareholders were probably left feeling that a better regard for good governance should have been produced instead. Of York’s 11 directors, a sufficient majority of eight are non-executives – as recommended by the King II code on corporate governance. However, the report fails to differentiate independent from those non-executive directors aligned to major shareholders. Other than recommending that non-executives should dominate company boards, King II also points out that “sufficient should be independent” and prefers they be marked as independent. BTS TITLE Of York’s eight non-execs, shareholders
can speculate on the status of only two: BTS head BTS head Pieter Odendaal and Dick Claunch. All the others – the chairman included – have clear relationships with the major shareholders. But York says it aims to achieve the “highest standard of compliance” with King II.
Governance issues aside, York achieved a brilliant performance over the period. A carefully executed acquisition of Global Forest Products in July last year saw its market share of integrated forestry and saw-milling more than doubling to 19% from 8%. However, reading the report it becomes clear that wasn’t enough, York is still hungry for acquisitions. “York’s short-term strategy is to procure further plantations in close proximity to its existing operations and several small plantations are currently under consideration,” writes Lance Cooper in his CE’s report. It says over the medium term it’s “likely to target” bigger forestry and processing companies.
Notwithstanding the veld fires that destroyed 11 000 ha of York’s plantations, its biological assets have a net standing value of R1,98bn. Those are the 4,8m cubic metres of pine and eucalyptus trees planted on 55 133 ha. It still has another 5 626 ha of land for planting.
Investors would do well to notice York’s net asset value more than doubled to 2113c and HEPS increased from 268,5c to 1019c/share. Compare that with its price of 1596c at the time of writing and talk about value.
…FROM THE ANNUAL REPORT