TWK Investments (TWK), a diversified agriculture and forestry company, was in negotiations to buy an 11,000ha forest in Mpumalanga and KwaZulu-Natal, CEO Andre Myburgh said on Friday.

The mooted purchase affirms the company’s strategy to invest in the value chain of timber-related product production and to expand own plantations to secure supply.  

TWK’s timber business sells about 1.45-million tons of round timber a year,  about 10% of SA's total round-timber market.

TWK, which is listed on ZAR X, operates through its timber, retail and mechanisation, financial services, grain and vehicles and tyres businesses.

Myburgh singled out the acquisition of the forest and increasing the interest in subsidiary BedRock Mining Support to 55% as some of TWK’s priorities in the new financial year. BedRock provides underground mine support to the SA’s gold and platinum mines.

“Through our strong cash flow generation and financial position we are well-positioned to capitalise on new opportunities,” he said. Myburgh, however, declined to name the seller of the forest asset. 

At 119%, TWK’s debt to equity ratio is below the targeted range of 150%-200%.

Myburgh was speaking after the company released results for the year to end-August, which showed TWK brushing aside grain-price fluctuations, uncertain economic and financial conditions and drought in parts of the country.

The company – with clients including grain, timber, milk and vegetable producers – pushed up revenue almost 10% to R7.7bn with operating profit creeping up 1.7% to R332m. Basic earnings jumped 18% to 434c per share.

TWK’s net asset value (NAV) shifted up almost 9% to R35.98 per share. 

“We are trading at an NAV of more than R35 but the share price is at around R18. There is a lot of value in the company,” Myburgh said.

The dividend was hiked 25% to 75c per share. TWK CFO Eddie Fivaz said the company strove for a healthy balance between borrowed and own capital.