63 INTEGRATED ANNUAL REPORT 2023 costs and higher salary and wage costs in NCT, although one can see that the overall Group salary and wage costs have only escalated by the normal salary increases. This has resulted in improved efficiencies at the mill. During the year, we also took the first steps of moving farm operations into NCT with the sale of Lenjane farm from Forest Resources (Pty) Ltd to NCT. This has resulted in both operational and administrative efficiencies in the Tree Farming operations. Late in the year, one of the ShinCel (Pty) Ltd farms was sold to a third party with the older timber on that land being sold standing to NCT. We are hoping to complete this exercise over the next year or two. Profits have been affected favourably by the plantation valuation adjustments which are largely because of the price increases over the past year. These profits are not available for distribution to members but are indicative of the growth of our asset values and should be mirrored in the results of individual farm owners. Although we try to manage costs as well as possible, the impact of the exchange rate on raw materials for operations and maintenance, fuel costs and the impact of poorly managed State-Owned Enterprises including a large demurrage bill, take their toll and burn a hole in the bottom line. In addition, governance requirements are becoming increasingly onerous, and these also carry a cost. Despite this, the impact of a greater sales volume at a higher exchange rate and cost savings made wherever possible have resulted in very pleasing results for the year and we have been able to declare a member bonus of R38 million. The Group and Co-operative balance sheets continue to remain strong, with the Group showing a net worth of R2 billion and current assets exceeding current liabilities by R678.6 million. Receivables have increased over last year with the higher exchange rate applied to export receivables. Payables are reflecting higher mill delivered prices on outstanding timber payments as well as the bonus accrual. High cash holdings reflect the cash position on any given day and must be distinguished from cash flows throughout the month. The last few days of the 2023 financial year yielded a number of export receipts of approximately R200 million to reach the balance reflected on the last day of the year. Considering the quantum of our monthly payment to members on the 15th of each month, we need to be sure that we always have sufficient cash reserves available for this particularly important payment. We have started off the new year on a strong exchange rate and supply footing, but we cannot be complacent as there are still many risks that face us. One thing that is sure is that NCT will continue to look after its members best interests and work towards similar excellent results for the year ahead. KERRY MOFFETT | CHIEF FINANCIAL OFFICER
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