Harmful Rebalance of the Business Plan for the 2020
Reduced Biological Reforestation
In early April 2020, the Ministry of State Property issued guidelines for business rationalization of state-owned legal entities due to the COVID-19 epidemic.
These guidelines provide recommendations / instructions to state-owned legal entities for dealing with the economic crisis during the COVID-19 epidemic. The purpose of the guidelines is to mitigate the socio-economic consequences of the epidemic, preserve business, and reduce the impact on the entire economy and the state budget, as well as preserve existing jobs and evenly redistribute the burden of the economic crisis.
On December 2, 2020, with the consent of the Supervisory Board, the Management of Croatian Forests Ltd makes a decision on the Business Plan Rebalance of Croatian Forests Ltd for 2020.
Decision on making the Rebalance, Class: DIR-19-01 / 3151, Reg. Number: 00-05 / 01-20-117 dated 2 December 2020, is signed by the President of the Management Board of Croatian Forests Ltd Krunoslav Jakupčić.
Prior consent of the Supervisory Board, Class: DIR-19-01 / 3151, Reg. Number: 00-05 / 01-20-115 dated November 30, 2020, is signed by the President of the Supervisory Board Davor Filipović.
The previous assessment of the situation and business operations of Croatian Forests Ltd was presented in the Crisis Plan, which stated the expected very drastic decline in production and sales of wood assortments, and thus a decline in revenue.
In accordance with the allegations from the introduction of the Business Plan Rebalance of Croatian Forests Ltd , the Production Plan and the Sale Plan of wood assortments will be realized in accordance with the original Plan, and as stated in the Rebalance, there was a decrease in other operating revenues by about HRK 100 million and expenditures in the part related to materials and external services have been adjusted accordingly.
The measures taken can be divided into several basic groups, where it stands out in particular measures for sustainable forest management in times of crisis. Comparing the Forest and Forest Land Management Work Plan with its Rebalance, a serious disparity between them is noticeable.
The following parts of the Rebalance are especially interesting:
1.
In the group of works for the forest care (code 107) there is a decrease in the sapling area by 5,366.5 ha, and a decrease in the volume of care under the canopies of the old stands by 1,880.6 hectares.
2.
In the group of works for the forest protection from harmful organisms and fires (code 108), the forest pests control area was reduced by 3,244.5 hectares
3.
In the group of works for the forest protection from harmful organisms and fires (code 108), the forest pests control area was reduced by 3,244.5 hectares
The above data clearly indicate that the remittance of the main income was intentionally increased, because the most valuable assortments with the highest average prices are part of the main income.
Also, judging by the remittance of random income during previous years, we find the increase in random income by 242% scandalous!
According to the Business Plans remittance of random income was 291,000 m3 in 2018, 282,000 m3 in 2019, and 210,000 m3 in 2021.
4.
In the group of works for the forest protection (code 110), the area of forest protection was reduced by 1,364,695.72 hectares, and also, it can be seen that the expenditure postings are basically a manipulation, because
the costs of forest protection works are drastically reduced for 75% in order to show these funds as part of other items of forest management works.
The average cost of forest protection during the period 2018-2021 was approximately 100,000,000 HRK, which means that 75,000,000 HRK was spent on some other works, and one of the obligations from the biological regeneration of forests is forest protection. In addition, by reducing the forest protection fund, Hrvatske šume d.o.o. is opening the door to perpetrators of forest theft.
According to the Plan of Sources of Funds for Forest Management Works, the plan for 2020 provided for a total of HRK 583,606,583, and the rebalance determined funds for the forest management works in the amount of HRK 475,557,092, which is a difference from the originally planned funds in the amount of of HRK 108,000,000.
According to the Plan of Sources of Funds for Forest Management Works, the plan for 2020 provided for a total of HRK 583,606,583, and the rebalance determined funds for the forest management works in the amount of HRK 475,557,092, which is a difference from the originally planned funds in the amount of of HRK 108,000,000.
Funding from EU funds were planned in the amount of HRK 97,307,946 and were reduced to HRK 59,603,493 by the Rebalance. We do not have data available, and we do not know what types of forest and forest land management works were planned, to what extent and with what execution.
With the Business Plan Rebalance for 2020, the profit before tax amounted to HRK 63,000,000, and with the originally determined Business Plan for the same year, the profit before tax was planned in the amount of HRK 64,000,000. Due to the above-mentioned difference of HRK 108,000,000 in the Business Plan Rebalance, it is undeniable that the activities on forest management works were reduced.
It is evident that Croatian Forests Ltd “was cutting expenses” on basic activities such as silviculture and forest conservation, and revenues will be increased excessively by higher remittances of main income and remittances of random income.
To show almost the same profit before and after the Rebalance, and at the same time to reduce the expenditures on forest management works and basic works such as forest care – growing forest saplings, as well as forest protection, only shows that the Management does not respect the principle of sustainable management, but to the detriment of forest funds forces the realization of business results in the short term, which is shameful and inadmissible.
Remark:
Remittance of regular income is a professional forestry work performed by a forestry graduate, and consists of selecting trees for felling according to appropriate regulations and management guidelines of the management plan, marking selected trees with color, marking axe cut, marking axe stamp, and calculating the amount of wood remittance.
The remittance of accidental income is the remittance of trees that is not prescribed by the management plan, but arose as a result of unforeseen circumstances such as windbreaks, icebreakers, diseased and damaged trees, fallen trees, etc. Such trees are measured, marked and also calculated as a part of wood volume remittances.
Regular remittance is prescribed by the basis and guidelines of management, and remittance of random income is felling outside the regulations because it is conditioned by the chance.
According to the rules of sustainable management, the felling that goes into the regular income should be reduced by the amount of felling that goes into the accidental income.
