1. SAFCOL Presentation to the Portfolio Committee on Public Enterprises on the Annual Report and Financial Statements for 2015/16

2. About SAFCOL Our Mandate Our Vision Our Mission Our Core Values
The mandate for SAFCOL is determined by the Management of State Forests Act, the Founding Documents, other prevailing legislation and the Shareholder’s Compact, which indicates that SAFCOL’s mandate is: ‘To conduct forestry business, which includes timber harvesting, timber processing and related activities, both domestically and internationally’.
Our Vision
A world leader in the integrated forestry products business, powering sustainable growth and creating wealth through partnerships with communities.
Our Mission
Dedicated to growing our business in the forestry value chain and maximising stakeholder value.
Driven by an unwavering commitment to facilitate sustainable economic empowerment of communities and wealth creation.
Our Core Values
We respect and value our stakeholders
We are passionate about our business and communities
We conduct ourselves with honesty and integrity
We strive for excellence and innovation

3. Company Structure

4. Overview of SAFCOL Business
SAFCOL conducts its primary business within the plantation forestry industry through the management of 18 prime softwood saw-log plantation assets in Mpumalanga, Limpopo and KwaZulu-Natal, covering a land area of hectares. Revenue is generated from the sale of forest products, sawn timber and value added products.
KLF owns and operates the Timbadola Sawmill, a softwood processing sawmill located in Limpopo, and manages a custom-cut arrangement.
IFLOMA is a Mozambique-based public limited liability Company, which was established in the 1980s as a government initiative, of which 80 percent of the share capital was sold to KLF in 2004, with the remaining 20 percent of shares being held by IGEPE, Mozambique’s State Shareholding Management Institute. The total landholding is ha, of which ha is plantable.
SAFCOL operates mainly in rural areas and provides opportunities for economic development and participation for local communities. Approximately 61% of the land area is under land claim, in which SAFCOL is actively involved, while also supporting land claimants and other community members in other initiatives.

5. Land Claims distribution in SAFCOL

6. PERFORMANCE AGAINST SHAREHOLDER’S COMPACT

7. PERFORMANCE AGAINST SHAREHOLDER’S COMPACT

8. Financial Highlights Audit: FINANCIAL HIGHLIGHTS Group equity value
R 3.2 billion
Biological asset value up 0,6% to
R 3.8 billion
Revenue up 0,6% to
R 903 million
Average log selling price up 8% to
R 561 (per m³)
Average lumber selling price up 5,6% to
R (per m³)
Sawmill record intake volumes of
(per m³)
Group asset value of
R 4.6 billion
Audit:
Achieved an unqualified audit opinion

9. Financial Performance Summary
Revenue
R 903.3m
Cost of Sales
(R 718.6m)
Gross profit
R 184.7m
Other income
R 6.5m
Operating expenses
(R 316.6m)
Operating loss
(R 125.4m)
Investment revenue
R 12.6m
Fair value adjustments
R 21.8m
Finance costs
(R 6.4m)
Loss before tax
R 97.4m
Tax
R 47.8m
Loss for the year
(R 49.7m)

10. Achievements for the Year
Update on recruitment process
Successfully filled the CFO position. Currently in process of targeting other executive positions.
Expect to have all the executive positions filled by end of December 2016.
Rebranding
A new SAFCOL brand has been approved by the Board bringing together all SAFCOL businesses under one brand.
Timber Frame Structures
A business case has been approved by the Board in terms of the rolling out of timber frame structures, initially mainly in the public sector.

11. Achievements for the Year
Redefining cost centres for more transparent reporting
Taking control of expenditure & contract management
Processes & controls have been put in place to curb fruitless & wasteful expenditure.
A contract management system is currently being implemented to efficiently manage all expenditure related contracts.
Assessment of Enterprise Resource Planning System
Assessment of business processes and requirements for an ERP (through Oracle) was completed and proposal presented to Board
Investigation Reports
A detailed audit plan was done to address and rectify all audit findings. Information related to implicated individuals was handed over to law enforcement for prosecution where criminal activities were identified.

12. Our future focus: Strategic Drivers
Financial sustainability
Revenue growth
Cost control
Profitability
World class operations & processes
Modernisation and optimisation
Efficiency
Broadened R&D capability
Quality, standards, health and safety
Effective contract management
Risk management
Human capital & transformation
High performance culture
Appropriately skilled and diversified work force
Skills retention and reward
Skills development-pipeline
Succession planning
Employer of choice
Satisfied customers and stakeholders
Stakeholders engagement
Supplier and service provider of choice
Preferred partner

13. Financial sustainability
Strategic Objectives
Growth and new markets
Business development and growth
Grow current market share
Diversified products and services
Diversification into new markets
Horizontal integration
Vertical integration
Financial sustainability
Revenue growth
Financial management
Increase operating profit by at least 5% per annum
Operations
Establish cutting-edge processing facilities
Continuous improvement of silviculture and harvesting practices
Support all business processes with R&D
Develop forestry management services
Rural development
Be a catalyst in rural economic development

14. Key Strategic Direction
Revenue Diversification
Eco-Tourism
Forestry Management Services
Vertical Integration
Timbadola Upgrade
Timbadola Co-Generation
Sabie Complex
Timber-Frame Structures
Pole treatment
Horizontal Integration
DAFF Plantations
IFLOMA Expansion

15. Feedback?
Thank you!