SAFCOL ACTIVITIES AND TRANSFORMATION INITIATIVES As at 31 March 2012

Transcription

1 SAFCOL ACTIVITIES AND TRANSFORMATION INITIATIVES As at 31 March 2012 Parliamentary Portfolio Committee for Agriculture, Forestry and Fisheries - 19 June Presented by : SAFCOL Group CEO MS NOMKHITA MONA

2 Strategic Objectives Safcol Group Operating structure Safcol Management Structure Transformation Interventions Minority Shareholding (Privatised Entities) Land Lease Rentals Land Claims Enterprise Development Socio-Economic Development Community Development Training and Skills Development Risks and Challenges 2

3 Strategic Objectives Financial and commercial sustainability To achieve returns which are acceptable to the shareholder; To manage the business and engage in projects that preserve the gearing and liquidity ratios. Sustainable forestry management Enhanced developmental contribution To manage South African forests in a sustainable manner consistent with the requirements of the South African law and international independent certification; The retention and expansion of the amount of land used for forestry plantations. To play a leading role in contributing to the transformation of the economy as envisaged in the forestry charter; To implement marketing policies that improve access to supply SMMEs, B-BBEE firms and new entrants; To continue with current and new community development and investment projects in rural communities close to our operations. 3

4 Group Structure 4

5 SAFCOL Operating Entities Komatiland Forests Operations In South Africa the Group has forestry assets in Mpumalanga, Limpopo and KwaZulu-Natal provinces. The South African operations are called Komatiland Forests (KLF) and consist of 18 plantations, managed as 15 operational units. KLF is spread over hectors of land. 5

6 Komatiland Forests Processing Facilities Komatiland Forests owns 1 processing sawmill called Timbadola sawmill situated in Limpopo province. The sawmill is designed for an intake volume of m 3 per annum (2013). We are currently upgrading the mill to increase capacity to m 3 Per annum. KOMATILAND Forests has 2 custom cut processing operations in Mpumalanga. Combined intake volumes for the two operations is about m 3 per annum (2012). 6

7 IFLOMA is a subsidiary company of SAFCOL (KLF owns 80% of IFLOMA), operating in Mozambique in partnership with the Mozambican government (20% ownership). The operations are located in Manica province, near Messica. IFLOMA also consists of processing facilities at Messica, three plantations at Penhalonga, Bandula and Rotanda, as well as a warehouse in Maputo. IFLOMA OPERATIONS The current IFLOMA plantations cover ha 7

8 IFLOMA SAWMILL- MOZAMBIQUE Sawmill 8

9 Financial and Commercial Sustainability GROWTH THROUGH PARTNERSHIP SAFCOL reported an Operating Profit of R177 million 9

10 GROUP CEO NOMKHITA MONA CFO (ACTING) CAROLINE REDDY COO FRANCOIS DE VILLIERS HCM EXEC JULIA MPHAFUDI GM: FORESTRY GOODMAN GCABA FEMALE PLANTATION MANGER THEMBI NKWANA 10

11 SAFCOL s Transformation Interventions SAFCOL IS A SIGNATORY TO THE FORESTRY TRANSFORMATION CHARTER SAFCOL MAINTAINED A LEVEL 2 B-BBEE RATING - YEAR-ON-YEAR IMPROVEMENT: POINTS (2011) TO 89.2 (2012) AND RECENTLY (2013). Element Weighting Management control Employment equity Skills development Preferential procurement Enterprise development Socio-economic development Total Score

12 The SAFCOL minority shareholding was allocated in the following manner: An allocated portion to be disposed of to the Employee Share Ownership Plan (ESOP) An allocated portion to be disposed of to the National Empowerment Fund (NEF) on behalf of communities A residual portion which can be allocated to an acquiring entity or retained by Government 12

13 Package KwaZulu-Natal Eastern North Eastern South Southern and Western Cape Cape Cape Current Status Implemented the transaction with the SiyaQhubeka Consortium on 1 October To date have sold 75% of the shares in SiyaQhubeka Forests (Pty) Ltd. The remaining 25% is earmarked for disposal. Implemented the transaction with Singisi Forest Products (Pty) Ltd on 1 August 2001 and to date have sold 84% of the shares. The remaining 16% is earmarked for disposal. To date have sold 84% of the shares in Amathole Forestry Company (Pty) Ltd. The remaining 16% is earmarked for disposal. To date have sold 84% of the shares in MTO Forestry (Pty) Ltd. The remaining 16% is earmarked for disposal. 9% of the shares at Singisi, Amathole and MTO has been utilized in the creation of ESOP s (Employee Share Ownership). 16 % is currently retained by SAFCOL as minority share, earmarked for disposal as non-core assets. 13

14 Minority Shareholding Privatized Entities Minority Shareholdings % Shareholding Fair value of the minority shareholdings Singisi Forest Products (Proprietary) Limited 16.4% R Siyaqhbeka Forests (Proprietary) Limited 25.0% R Mountains to Oceans Forestry (Proprietary) Limited 16.0% R Amathole Forestry Company (Proprietary) Limited 16.0% R R The fair value of the above investments measured as a percentage of the net asset value of the individual companies and amounts to R338 million. 14

15 The transfer or sale of the minority shareholdings is awaiting government s decision The Shareholder Department (DPE) in discussion with the Department of Rural Development Exploring a special-purpose vehicle to house shares Process taking longer than anticipated Costing the State more money to keep the integrity of the shareholding DPE does not wish to dilute value Governance Issues SAFCOL represented on the Board of a competitor 15

16 SAFCOL already started paying LEASE RENTALS Paid up to/and including the period 31 December 2012 Provision made to pay MARKET-RELATED RENTALS Approximately R46 million per annum hope to negotiate Huge impact on the SAFCOL business going forward DAFF handles the rentals issue (Trust set up for Community Benefit) Department of Rural Development to Identify Beneficiaries 16

17 Land Claims Unresolved land claims: a key strategic risk of the business It is SAFCOL s vision to be the preferred partner of choice for successful land claimants - hence their inclusion in the social compacts signed with communities Only 18 of the 29 claims were gazetted by March 2012 Slow progress with regards to the settlement of land claims affecting 61% of the state land managed by KLF Only one claim settled - Shannon plantation, SAFCOL-owned Slow progress in settling land claims attributed to overlapping land rights - due to conflicting legislation and the lack of an approved settlement model with respect to state forest land operated by SAFCOL 17

18 Forestry Contracts : Depending on the nature of the work and the capital requirements of the new enterprise, an SMME contract is established from rural communities for a period of three to five years, wherein the development contractor does not need to tender for new work. At the end of March 2012, the Group created and sustained 290 jobs through the establishment of forestry contractors. Bee Keeping Cooperative: SAFCOL has established a Bee Keeping cooperative which has created permanent employment to about 25 people from adjacent communities The cooperatives have fully expanded into providing pollination services to neighbouring farmers. This project is going from strength to strength, and harvesting has taken place SAFCOL EXPLORING HIGH-IMPACT/HIGH LEVEL ENTERPRISE DEVELOPMENT 18

19 Socio-Economic Development Initiatives R8.1 million spent on SED projects (31% year-on-year increase); 73% of the R8.1 million was spent on infrastructural projects; Timber-frame structures launched by SAFCOL (school classrooms and accommodation dormitories); 11 projects completed during the 2012 financial year (41 infrastructural projects since 2006); Enhanced partnerships/cultivated relationships (DBSA; MMI foundation; Penreach; I-Consult engineers; FIETA etc.); 19

20 Community projects SAFCOL had signed 11 Social Compacts with communities in the following areas: 1. Redhill Cluster in the Albert Luthuli Municipal District surrounding Jessievale plantation. 2. Blairmore Cluster in the Albert Luthuli District surrounding Blairmore plantation; 3. Roburnia Cluster in the Mkhondo District surrounding Roburnia plantation; 4. Mphephu Entabeni Cluster in Makhado and Thulamela Districts surrounding the Entabeni, Hangklip and Roodewal plantations; 5. Tshivhase Cluster in Thulamela District, including all communities surrounding ThatheVondo; 6. Mantjolo Cluster in the Albert Luthuli District near Nelshoogte plantation; 20

21 Community projects 7. Ngome Cluster covering all communities and claimants adjacent to and involved with Ngome plantation 8. Palm Ridge Cluster covering two communities adjacent to the seed orchard; 9. Berlin Cluster covering the communities and claimants involved with and adjacent to Berlin plantation; 10. Hebron Cluster covering the communities and claimants adjacent to the Wilgeboom and Bergvliet plantations; and 11. Mapulana Cluster covering the communities and claimants adjacent to the Tweefontein, Blyde and Morgenzon plantations. Two more clusters were added in the 2013 financial year (Greater Tzaneen and Belfast). 21

22 One of the Group s objectives is to promote Forestry as a career of choice Invest in education and skills development of employees, communities adjacent to our plantations, and women and youth from previously disadvantaged communities In-house training Centre, Platorand, close to Sabie in Mpumalanga. The training centre offers Forestry-based functional and technical courses and other as identified by management to employees and the public. 22 new internal bursaries were awarded SAFCOL forestry chair was launched at the University of Pretoria 18 students enrolled (4 from SAFCOL Group) for masters programme in forestry learners were trained at Platorand 759 learners attended external training 240 employees enrolled for ABET 22

23 Skills Development and Training GROWTH THROUGH PARTNERSHIP First Female Plantation Manager Establishment of forestry programme 23

24 SAFCOL has been driving this initiative as a sustainable green form of housing To date, SAFCOL has already built various structures with its timber resources These include health care facilities (i.e. clinics), school classrooms, dormitories and community halls and houses Benefits Speed, Quality, Insulation and Cost effectiveness 24

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27 Unresolved land claims Risks and Challenges Loss of productive land and competition for land use Not being the preferred partner of choice for successful land claimants Failure to expand the existing land area Market demand for product (reduced sales) 27

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