Border Timbers in bid to restructure balance sheet

Published: 02 April 2014

BORDER Timbers, a forestry and timber processing company is looking at ways to restructure its balance sheet to further reduce finance costs and obtain improved tenures aligned to the cycle of its business.

In the full year to December 2013, Border Timbers accessed long-term debt of $4,5 million from the German Development Bank, thus raising total borrowings to $5,1 million. Costs of borrowings declined 20 percent.

During the period, Border Timbers reported a 19 percent decline in revenue to $10,1 million from $12,4 million in the comparable period a year ago due to lower harvesting volumes and delay in the awarding of pole tenders.

The company posted an operating loss of $2,4 million, as a result of reduced turnover and an increase in administration costs.

Total round wood production was 9 percent or 94 755 cubic metres lower as a result of unreliable winch systems.

Timber extraction at Sheba Estate was adversely affected by an engine failure on the skidder.

Heavy rains experienced made it difficult to catch up and subsequently to supply the mills with anticipated volumes.

Sawmill performance at 32 656 cubic metres was 2 percent below budget mainly due to lower harvesting volumes. The third party sales volume at 26 566 cubic metres for timber was 13 percent up in line with lower saw mill production volumes and the discontinuation of some value addition product lines. Border Timber International sales volumes were 29 percent down due to a reduced supply of timber as a result of reduced production from the mills.

Poles production was 17 percent below prior year attributable to timing differences.

Total assets declined by 3 percent as a result of assets written off due to veld fires. Current liabilities increased 7 percent due to an increase in trade and other payables. Cash generated from operations went up by 25 percent as a result of the $900 000 decline in inventories as well as a $900 000 fall in trade receivables.

The recurrence of veld fires, however, remains a challenge for the company as a total of 670 hectares were lost to fire in the first half of the financial year, resulting in a biological asset write off amounting to $675,350.
- The herald