57 INTEGRATED ANNUAL REPORT 2025 NCT Forestry Agricultural Co-operative Limited and its subsidiaries (Registration number: 1949/000002/24) Annual Financial Statements for the year ended 28 February 2025 Directors' Report 1 1. Nature of business NCT Forestry Agricultural Co-operative Limited (NCT) assists members to achieve their full forestry potential and thereby optimise financial results on a sustainable basis. With the strength inherent in co-operative principles, and using motivated staff and appropriate technology, the NCT mission will be achieved through: • Marketing of plantation timber, including: - Sustaining existing timber markets for members - Develop and source new pulpwood and round wood timber markets for members - Supply wood chips to international markets through NCT’s wood chipping facilities - Negotiate competitive prices on behalf of our members, domestically and abroad - Continually explore alternative markets and timber beneficiation opportunities - Buying, selling and other logistics activities - Financial administration of trading activities - Servicing customers and maintaining high levels of quality and reliability • If necessary, securing additional supplies of timber through the management, harvesting and/or purchasing of plantations • Facilitating the harvesting, storage and transportation of timber where possible • Managing the assets of NCT to the benefit of members • Distributing available surpluses to members in proportion to their patronage on an equitable basis • Encouraging sustainable forestry practices and managing related certification schemes • Promoting value-adding activities including extension and planning services • Management and administration services for farms on behalf of members There have been no material changes to the nature of the group's business from the prior year. Operations and profitability continued to be significantly curtailed compared to previous years due to the catastrophic fire in September 2023. During the year, the rebuilding of the Richards Bay mill complex was substantially completed and chipping resumed in September 2024, a year after the fire. While chipping for biomass using a mobile chipper had commenced late in the prior financial year and allowed limited shipping to commence from May 2024, the first chips from the rebuilt plant were loaded in October 2024. By year end the fire reticulation upgrades on both the NCT and BayFibre (Pty) Ltd (BayFibre) chipping facilities were in progress. The Richards Bay Wood Chips (RBWC) eastern stockpile, gantries, reclaimer and export conveyor are planned to be completed by mid-August 2025, and the western columns and gantries are planned to be completed by the end of December 2025. Following the fire, the group farms were placed in a reservoir status. The decision was taken to allow members priority access to available markets. In addition, the NCT Board requested that harvesting of black wattle continue, but that the timber be stored on farm depots. This decision was taken to ensure that the wattle bark mills received sufficient bark to produce the required product. These decisions have continued to have a significant impact on the profitability of the farms. During the year, advantage was taken of opportunities that arose that members were not able to utilise fully and as a result, the losses made by the farms were less than initially anticipated. The insurance claim for BayFibre was accepted and approved early in March 2024 and the claim for NCT was accepted and approved during May 2024. All but the last insurance payment tranches were received by each entity by the end of the financial year. In May 2024, while loading a vessel at Durban Wood Chips (DWC), a passing vessel under Port authority pilot exceeded the Port exit speed limit while passing too close, causing a bow wave. This led to the hatch covers colliding with the loading boom, resulting in the loader twisting, de-railing and rendering it unable to disengage from the vessel being loaded. Whilst stabilising was underway on the Port loader in preparation for the disengagement of the boom from the vessel, another passing vessel, under Port authority pilot, exceeded the speed limit, causing our distressed vessel to again move into the loader, resulting in extensive damage to the loader. The vessel being loaded was eventually disengaged with approximately 80% capacity loaded. Despite offers of assistance to repair the damaged loader, engineers were engaged, and repairs were carried out by the Port contractors. The loader was out of operation until late October 2024 during which time DWC was forced to close the mill due to reaching storage capacity. Although NCT attempted to engage with customers to make alternative loading arrangements, due to the proximity of coal being stored at the Port the customers declined and planned shipments were cancelled. A successful insurance claim was made by the new insurer (Price Forbes) for business interruption.
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