All 80’s fans will remember the 1989 song by Billy Joel – ‘We didn’t start the fire’, in which he recalls all the major events of his lifetime with high tempo lyrics and a catchy tune. I’m tempted to emulating this piece by signing this year’s report in rapid staccato phrases in an effort to adequately capture everything that has happened during a whirlwind year under review. I’ll settle for this written summary for now.
If you didn’t get all of that, do not be concerned. In almost every case we have found a way to manage the problem or reach our goal and that is the point of this report.
Despite a turbulent year, plagued with distractions and unpleasant surprises, the overall outcome was satisfactory. Four of the five main divisions turned a profit, as did the company overall. Sales goals were reached and most production targets were achieved. We proudly attained our level 4 BBBEE certification and look forward to improving on this milestone in the coming years. We have also seamlessly integrated new personnel into our decision making bodies and completed all scheduled restructuring. The 2019/20 CAPEX plan was implemented without cut-backs whilst operational cost cutting measures were successfully and sustainably realised. Particularly noteworthy, however, are the achievements in terms of production throughput as highlighted by various authors throughout this Annual Report. Let us not underestimate the importance of these numbers as they underpin our future prospects of success and risk management. My sincere acknowledgement goes to those who made it
We remain ever subject to the whims of external and uncontrollable forces and none more so than the onset of COVID-19 at the end of March 2020. This unprecedented health and economic avalanche will have major implications for UCL and South Africa in general. At the same time we are fortunate that our Sugar operations were permitted to continue uninterrupted, albeit subject to a wide range of health and safety interventions aimed at protecting employees and the broader public. Extract manufacturing was halted for ten days but was subsequently included in the amended regulations. We have already experienced a significant decline in orders from April to July due to the closure of international tanneries. Nevertheless, the favourable exchange rate, strong customer relations and advances in product offering are expected to still yield good value. The Glenside Sawmill has been hardest hit. Already struggling prior to the lockdown, sawmilling operations were closed at the end of March and by the end of May remained shut as few of our markets were open for business. We expect major financial losses for the sawmill due to the lack of production and are implementing all available options to limit the damage. These include higher output following two years of heavy investment, the temporary transfer of employees and a revitalised and expanded marketing approach.
Plans are also in place to realise our longer term tactical goals. In order to counter the negative effects of the lockdown on our economy, the Reserve Bank has significantly reduced the cost of capital. The low interest rate and continued success of other operations create more room to finalise a number of projects already eluded to by the Chairman. Growth and diversification remain central to our forward strategy. From the current vantage point the future seems as chaotic as our recent past and so we prepare to respond in step with each change.
In the age of Fake News and faced with a multitude of current and future stress points, surrounding not only UCL but our broader stakeholder group, we must be conscientious of not being caught up in the commotion. It is vital that we do not allow sentiment alone to filter the information available to us and guide our words and deeds. Instead, we must permit common sense and proven principles to rationally guide our actions. This is necessary in order to avoid missing opportunities and making errors in judgement. Things have not all gone our way and difficult times seem to be the order of the
day. Yet we are doing better than we may have expected and there is no need for despair. We certainly don’t want to add to the noise and should calmly focus on getting the job done.