67 INTEGRATED ANNUAL REPORT 2025 amounting to R397 million contributed significantly to both the Co-op and Group profits for the year. Operating expenses reduced slightly compared to the prior year but until the impact of the fire has worked out of the system, it would be difficult to accurately compare year on year costs. In addition, with the high stock levels at year end, a portion of the manufacturing costs for the year were allocated to cost of stock in terms of the IFRS for SMEs® Accounting Standard, reducing current year operating costs. The biggest increase in our operating costs over the last year was on the cost of insurance cover taken over the three mills. A long-term loan from the bank along with the sale of the remaining ShinCel farms contributed to the cash reserves we required to continue with the rebuilding of our Richards Bay complex. Cash reserves at year end are lower than the prior year but still adequate to support the final rebuild expenditure required in the new year. The sale of the ShinCel farms will assist with the restructuring process we have been working on over the last few years to bring as much of the profit of the group as possible into the Co-op to maximise benefits to members. The property, plant and equipment on the balance sheet shows a large increase mainly due to the rebuild of the Richards Bay Mills. All biological assets have reduced due to reasonably static MDPs alongside increasing costs. We are very aware that this is impacting our members as well. The high levels of farm depot stock were reduced towards year end as the farms were able to feed timber into the mills. These lower levels were offset by the higher levels of mill stock due to the two ships that were loaded soon after year end. Deferred tax, which is a provision for future taxes, has reduced overall due to unfavourable plantation adjustments with an offset from utilising tax losses from the prior financial year. Trade payables reflect timber payments which have returned to pre-fire levels as well as trade creditors for rebuild costs, contractors and retentions. Despite all the challenges of the last two years, the Co-op and Group are in a strong financial position with current ratios remaining at 2:1 and 3:1 respectively. We have begun the new financial year facing more external than internal challenges which are not as easy to control or plan for. I have the utmost confidence in our team to tackle these head on and to deliver strong and positive results for the year ahead. We have some interesting days ahead and will continue to work towards doing the best for our members. KERRY MOFFETT | CHIEF FINANCIAL OFFICER
RkJQdWJsaXNoZXIy MjgyNjA0