Grow­ing value

Finweek English Edition - - Portfolio Punts - YORK TIM­BERS SIKONATHI MANTSHANTSHA

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

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