Forestry in South Africa
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August : SAFCOL reports positive results for the 2012 financial year

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23 August, 2012


The SAFCOL Group reported improved results in the 2012 financial year as compared to the previous two financial years. In spite of the difficult trading conditions and operating environment, the Group's financial performance for the 2012 financial year improved from a loss-making to a profit position, resulting in an operating profit of R51 million (excluding the effect of the adjustment of plantation valuation), compared to a loss of R32 million in the previous financial year. The profit to date has been attributed to the Group's efforts to implement the turnaround strategy. The improved performance is mainly due to the new initiatives introduced during the year to enhance sales performance, cost saving initiatives, increases in dividend income and the introduction of revenue-generating initiatives.

The key focus area for the SAFCOL Group in the 2012 financial year has been on restoring the Group's profitability and the preservation of cash. "I am extremely pleased with the financial performance of the Group in such a depressed market. It reflects the resilience and hard work of our employees, who have ventured on - despite the challenging environment", said the Acting Chief Executive Officer of the SAFCOL Group, Mrs Maureen Manyama-Matome.

The implementation of the business-turnaround strategy on the resources (i.e. people and technology) was the highlights for the Group with the ultimate goal of improving the financial and commercial sustainability of SAFCOL Group:

  • The Restructuring and Reorganisation project, aimed at aligning organisational structures with the new direction of the business to ensure improved efficiency, productivity, consolidation of responsibilities and a lean company structure; and
  • The Enterprise Resource Planning (ERP) project, which focussed on the alignment of systems being used within the Group. These systems needed to be updated to ensure that relevant and reliable information is available at all times.

The Group's share in the lumber market increased from 4% to 12%, following the introduction of the new marketing and sales approach. The performance on the total revenue, of R862 million, has significantly improved by 22% compared to the previous financial year. A change in the trend relating to the point of sale of timber was experienced, with an increase in mill-delivery customers, which implied a reduction in roadside customers/requests. The total volume of 1 381 542 m3 logs (including internal consumption) was sold, as compared to 1 384 482m3 during the 2011 financial year. Komatiland Forests (KLF) managed to achieve its best lumber sales volume in its history, during 2012. A total volume of 161 514 m3 (2011: 134 375 m3) was sold.

"We have kept our position on being the leader in transformation within the Forestry Industry in 2012 with specific focus on developing rural impoverished communities adjacent to our operations", said the Chairperson of the SAFCOL Board Mrs Nomfanelo Magwentshu. SAFCOL maintained a B-BBEE rating of Level-2 as measured in terms of the Forestry Sector Charter with an overall score of 89.21 compared to 86.10 in 2011. SAFCOL continued to excel in the socio-economic development category. The structured approach of community partnerships was strengthened in 2012, with the focus on implementing needs-driven development and making a positive impact in our community members' lives. In the areas where the Group have signed social compacts, an amount of R8.1 million was spent on socio-economic development projects. SAFCOL received an award at the South African Enterprise Development Awards for the ‘Most Innovative' Enterprise Development projects, as per the B-BBEE Codes. We are proud of our initiatives towards green building by implementing timber frame structures within our socio-economic and enterprise development projects which also received huge support from our communities.

Other areas where the Group performed well are on sustainable forest management. Komatiland Forests retained its FSC certification where it underwent a Surveillance Audit, conducted by the external auditing firm, SGS. In support of the drive on skills development and making forestry a career of choice, the Group's bursary committee awarded 22 new internal bursaries for the 2012/2013 financial year. The in-house training centre, outside Sabie, offered training courses to 1 144 people and outsourced training courses to 244 persons. Of special notice is the launch of the SAFCOL sponsored Forestry Chair at the University of Pretoria which is an opportunity for students who wish to further their studies in forestry related fields.

The year ahead

The markets for residential construction and lumber products are expected to remain subdued for the next year. The focus in the current financial year will be on ensuring that SAFCOL becomes financially viable and remains a commercially sustainable and competitive business going forward. Some of the key initiatives identified for implementation which are strategically important for the future sustainability and growth of the business are: (i) the exploration of vertical integration; (ii) investment in green-energy production; (iii) promotion of timber-frame housing; and (iv) forestry expansion. Mrs Magwentshu said that as the Board they will continue to engage the shareholder in an effort to craft the future role of SAFCOL, following the decision by government in 2009, of placing the privatisation of SAFCOL on hold.

Issued by: SAFCOL (South African Forestry Company Limited)
For Further information, please contact:
Mr. Leslie Mudimeli (Spokesperson)
Mobile: 082 804 9311
Tel.: (012) 481 3584