1 INTEGRATED ANNUAL REPORT 2025
2 INTEGRATED ANNUAL REPORT 2025
1 INTEGRATED ANNUAL REPORT 2025
2 INTEGRATED ANNUAL REPORT 2025 NCT is a timber marketing co-operative catering to the needs of private and independent timber growers. Established in 1949, NCT is recognised as an international supplier of quality hardwood pulp wood chips, round-wood timber, and is the largest forestry marketing organisation in southern Africa. OUR MISSION To assist members to achieve their full forestry potential and thereby optimise financial results on a sustainable basis. OUR STRATEGY With the strength inherent in co-operative principles, employing motivated staff and appropriate technology, our mission is achieved by: • Marketing round-wood timber • Research and development • Extension and planning services • Securing additional timber supplies • Facilitating the harvesting and transportation of timber • Managing the assets of NCT • Distributing available surpluses to members in proportion to patronage • Interacting with appropriate forestry-related stakeholders • Encouraging social responsibility and sustainable forestry stewardship • Promoting value adding activities OUR VISION To win and maintain the unreserved confidence and support of all our members, customers and employees.
3 INTEGRATED ANNUAL REPORT 2025 About this Report 4 Business Model 6 ESG Highlights 8 Chairman’s Report 10 General Manager’s Report 14 Wood Chipping Operations and Exports 16 Supplies, Logistics and Transportation 19 Tree Farming 22 Member Services 24 ESG Report 27 • Environmental 27 • Social 31 • Governance 38 Finance 65 Contents
4 INTEGRATED ANNUAL REPORT 2025 ABOUT THIS REPORT This integrated report aims to provide an accurate and concise overview of all material matters and describe how the NCT group achieved its business goals and created value for the financial year ended 28 February 2025. The NCT group includes NCT Forestry Agricultural Co-operative Limited and its subsidiaries (please refer to our governance section). This report contains both financial and non-financial information and has been compiled by management. Materiality was determined by the impact a reporting item might have on our stakeholders. This Report was prepared in accordance with International Financial Reporting Standards (IFRS) for Small and Mediumsized Enterprises (SME), the requirements of the Companies Act (where applicable), the Co-operatives Act, the principles of King IV and the International Integrated Reporting Framework. Co-operative Reports The Board is not required to complete a social report, or a management decision report as stipulated in regulations 33 and 34 of the Co-operative Act 14 of 2005 respectively as NCT is a category C co-operative and the annual financial statements are independently audited. The Board certifies that to the best of their knowledge and belief the social and ethical performance of NCT is in relation with its vision, mission, and goals and within the scope of the NCT Constitution as monitored by the Social and Ethics Committee. The Board further certifies that to the best of their knowledge and belief NCT has complied with all legal requirements and the NCT Constitution. This integrated report sets out much of the details ordinarily required by the social report, and the management decision report.
5 INTEGRATED ANNUAL REPORT 2025 Approval The Board can assure NCT membership that NCT is a strong organisation and with the joint effort from the Board, Management and the NCT staff, will continue to achieve its business goals. The Board acknowledges its responsibility in ensuring the integrity of this Integrated Report. The Board has applied its mind to the Integrated Report and in its opinion this report addresses the material issues and represents fairly the performance of the NCT Group. AV Schefermann | CHAIRMAN Assurance The Board and NCT Management obtained both internal and external assurance to test the reliability of the information reported on. The non-financial information has not been audited, but it has been presented to the Audit and Risk Committee as well as the Social and Ethics Committee. The Board is satisfied that the information contained in this report is a fair reflection of NCT’s non-financial performance. Any projections made in this report are made on subjective criteria and cannot be verified nor relied upon for any decision making. The Internal Audit function tests the internal control measures put in place by management to ensure that processes conform to NCT’s quality management systems. The internal audit report can be found on page 52. NCT is endorsed by two forestry certification standards, Forestry Stewardship Council®(FSC®) and the Programme for Endorsement of Forest Certification (PEFC) which ensures that timber is sourced from operations that comply with both schemes controlled-wood requirements. All financial information was externally audited by Colenbrander Inc. The external audit report can be found on page 60.
6 INTEGRATED ANNUAL REPORT 2025 Growing a sustainable resource with access to over 200 000ha of members’ and NCT-owned commercial plantations. NCT-owned plantations act as a reserve Improving efficiencies and investing in equipment and technologies. Three woodchipping plants, four timber depots and six member-services’ offices Sound investment Strategic Financial Management Stable working capital Hedging mechanisms Research and development Effective supply-chain management Robust information Industry response system Employing and investing in 694 diverse and professional people to reach operational goals Community support and engagement Social projects Stakeholder relationships STAKEHOLDERS – Members | Customers | Employees | Communities | Service providers | Industry bodies | B U S I N E S S INPUTS SOCIAL HUMAN INTELLECTUAL FINANCIAL MANUFACTURING NATURAL SUPPORT SERVICES CORE ACTIVITIES THE BUSINESS Logistics Tree Farming Finance Forest Technology Human Resources Wood Chipping Information and Communication technology Markets Members GOVERNANCE NCT’s CAPITALS ACTIVITIES
7 INTEGRATED ANNUAL REPORT 2025 TURNOVER Group R1.87 billion Co-operative R1.86 billion TOTAL ASSETS Group R2.89 billion Co-operative R2.35 billion LOGISTICS Road: 405 881 tonnes Rail: 29 513 tonnes Loading operations 239 403 tonnes R&D INVESTMENT R6 657 906 TRANSPORT CARBON FOOTPRINT A saving of 8 434.03 Tonnes CO2 BIODIVERSITY FOOTPRINT 17 497ha Group 11 040ha NCT only KEY OUTCOMES OUTPUTS WOOD CHIP EXPORTS 669 942GMT DOMESTIC MARKET Pulpwood 355 710 tonnes Non-pulpwood 94 830 tonnes CERTIFICATION FSC 68 972 ha PEFC 9 645 ha SKILLED AND MOTIVATED EMPLOYEES Completed: 349 Planned: 997 Acacia 850 530 21 189 Eucalyptus 516 381 14 860 TOTAL 1 366 912 36 049 MEMBERS Genus GST Actual supply Payment Sliding scale amendment (Tonnes ‘000) (R’000) TRAINING SPEND R998 028 CSR & BBBEE SPEND R4.5 million Government departments | Competitors | Media | Environmental/conservation lobby groups | General public MODEL Using the sliding scale amendment described in the Members’ section of this report.
8 INTEGRATED ANNUAL REPORT 2025 Category SDG Alignment Markets (Local) SDG 8 Decent Work and Economic Growth Markets (International) SDG 13 Climate Action Processing SDG 12 Responsible Consumption and Production Commercial SDG 9 Industry, Innovation, and Infrastructure Member Services & CSR SDG 1 No Poverty Tree Farming SDG 15 Life on Land
9 INTEGRATED ANNUAL REPORT 2025 Key Focus Areas Performance Highlight Job creation, stable economic activity, and support for local industries Richards Bay and Durban supported 16 export vessels, boosting local jobs and economic stability. Oversight from the Social & Ethics Committee supports employment and development. Contributing to a greener economy through biomass exports Exported 80 000 tonnes of biomass, promoting renewable energy and circular economy goals. Sustainable forestry certification and compliance with international standards. All NCT-owned farms are fully certified. GPS and satellite imagery play a key role in insuring compliance with EUDR and Chain-of-Custody (CoC) standards. Smarter transport systems to reduce carbon footprint PBS vehicles cut 4,491 road trips and 8,400 tonnes of CO2. Reduced road wear by 45,000 tonnes and saved R17.9 million on transport costs. Active RTMS participant. Supporting members and communities through a cooperative model Optimised financial results 1 611 voting members, 50% Black and 14% women. Support through bonuses, GST contracts, and FSC certification. Over 10 community upliftment projects were conducted. Promoting biodiversity and responsible land use Approximately 25% of NCT’s owned land is preserved as a natural environment. Long-term soil monitoring research in place.
10 INTEGRATED ANNUAL REPORT 2025 halting Durban exports for four months, reducing even further NCT’s annual export volumes. Production resumed in full at BayFibre in September 2024, and at DWC in October, just in time for the Acacia harvesting season. RBWC Eucalyptus chipping resumed in November 2024, albeit without the overhead storage conveyors and using a limited area on the western stockpile facility. A significant amount of effort was spent analysing what challenges may lie ahead from a cashflow perspective and how to mitigate these. A key objective was to not compromise the Mill Delivered Prices (MDP) and place further pressure on members. Our Finance Department was key in keeping the Board and Senior Management well informed of NCT cashflows as these were impacted by reduced sales, an international woodchip market under pressure, and a stock rebuilding phase at Richards Bay. In addition, NCT had to consider various depot initiatives to assist members, the reduced throughput from Tree Farming, and the management of insurance payouts — all while striving Chairman’s Report 2025 The year under review can be described as one where NCT set our focus on rebuilding our facilities in Richards Bay. However, with two-thirds of the chipping capacity unavailable for production, and an international pulp and paper market in decline, several plans had to be made to ensure that we could continue to achieve our strategic objective in marketing our members timber and optimising the financial results. During the period, various operational plans were made to accommodate our members’ timber while our Richards Bay facility was down for repairs. These included maximising stockholding and throughput in our operational facilities at DWC, our depots as well as additional depots on loan from NTE. One of the objectives was to ensure the Acacia bark industry did not suffer from the lack of production at NCT facilities. A mobile chipping operation was also set up at the Richards Bay facility to reopen limited Eucalyptus access for northern members and meet biomass obligations. DWC also experienced challenges when a passing vessel damaged the port woodchip loader in May 2024, VERN SCHEFERMANN
11 INTEGRATED ANNUAL REPORT 2025 to complete the rebuild as efficiently as possible. Most of the insurance monies were only realised in the 2025 financial year, which is reflective in the profits for the Group of R133 million. The combined insurance payouts of around R400 million, together with a R 100 million loan from our financiers FNB, were used to fund the rebuild activities and targeted improvements, with our cash reserves used to serve the operational requirements of our business. The resultant effect though, is that with the reduced throughput of timber, our turnover for the year has decreased to R1 866 billion, down from R2.9 billion, and it is a key NCT objective to boost throughput to above the two million tonnes in the next year. We understand that our members have been facing challenging financial times as the delayed access for Acacia growers and lack of access to markets for our Eucalyptus growers, accompanied by reducing margins, have added considerable financial pressure on our members. The reduction in margins in our industry is evident from the downward plantation revaluation of our own tree farms, which are not only a result of the decreased MDPs but also of the increasing cost pressures faced by our industry. We however continuously look at ways in which we can optimise our production to minimise the costs of operations. Being a global player in the woodchip industry we are at the mercy of the markets, and this is where our approach to create and sustain strategic customer relationships continues to bear fruit. We continue to strive to be reliable and stable business partners to all our customers and to ensure that as preferred suppliers, we get the best possible prices whilst not compromising our volumes in our markets. Although it hasn’t been easy, we believe that we have come through this challenging year in a relatively strong position, again emphasising the necessity of having strong cash reserves in the background to assist in such challenging times. It has become evident from our interactions with our customers that FSC certification is becoming more important in the global space. It is for this reason that we have focussed a good amount of energy in driving this forward and increasing the proportion of our certified timber. When having faced a disaster such as the fire of 2023, one tends to look for positives in the whole event, and it is certain that, once completed within the current period, NCT will have two brand-new chipping facilities in Richards Bay, which will undoubtedly stand us in good stead as we continue to add value to our members’ operations for many years to come. Within all these challenges we were not allowed to lose sight of our other strategic objectives and had to remain focussed to manage our business operations in an environmentally friendly manner to ensure the longterm sustainability of our industry. The management and staff of NCT have stood up to the challenges in these adverse times, and led by our General Manager, Danny Knoesen, each new obstacle has been faced with great tenacity and ingenuity in solving the complex problems that have been faced. The Board has also seen some changes during the year, with Juanita Mason stepping down and Ben Seele taking up the reins as a Board Member. Philip Day and Ant Gibbs will reach their retirement age by the next AGM and as such will have to pass on the baton.
12 INTEGRATED ANNUAL REPORT 2025 Philip served on the board for 23 years, as Chairman for eight years and as Vice-Chairman for two terms. With his patient demeanour he took on the role of mentoring me and assisting us in navigating the ship through the stormy waters that we faced these last two years. We would like to thank them both for their time and effort that they have dedicated to NCT. Their expertise is however not lost to the industry as they continue to serve in other leadership roles within Acacia bark industry. We trust that the future is as bright for our organisation as the new glistening silver and green cladding at our Richards Bay facilities. We as the Board and management will continue to endeavour to provide our members with access to markets at the best possible prices whilst conducting our business activities in a sustainable and environmentally friendly manner. We aim to be back amongst the leaders in the global woodchip industry and continue to strive for greater heights. AV SCHEFERMANN | CHAIRMAN
13 INTEGRATED ANNUAL REPORT 2025
14 INTEGRATED ANNUAL REPORT 2025 We must go back ten years to 2015 to find the last time when NCT recorded revenue below R2 billion. That gives some indication just how challenging it was in the year under review. For more than a third of the year, NCT had neither Richards Bay nor Durban mills available to export chips on behalf of members. All these challenges meant that we as an organisation processed only around 1.3 million tonnes of timber through export and local markets. This is well below what we believe to be the sweet spot for our organisation of two million tonnes. Other than having this period during which NCT was constrained in taking members’ timber, members also had to deal with a price reduction for both Eucalyptus and Acacia, which was difficult in the face of rising forestry and transport costs. While NCT was focused on rebuilding the mills and looking for ways to mitigate the fallout for members, the export markets themselves posed additional challenges to our industry. The global woodchip market was, and still is, under pressure. China, the biggest global woodchip buyer, has a large influence on this market, and its pulp market showed no signs of recovery during the period. During the period, the pulp hardwood General Manager’s Report DANNY KNOESEN pricing declined by 23%. With the Japanese pulp and paper market in a structural decline, these conditions unfortunately resulted in a further weakening in the dollar prices of woodchips. NCT had to contend with a double-digit decline in dollar prices for South African woodchips. At the same time, the rand strengthened — frequently falling below R18 to the dollar — in response to the new Government of National Unity. These conditions placed significant pressure on NCT as we navigated multiple simultaneous challenges. With these parameters working against exporters such as NCT, it was thus inevitable that we had to reduce the Mill Delivered Prices. Again, it is important to understand that this adjustment was market-related and not leveraged to fund the fire rebuild. As we move into our new financial year the dollar pricing pressure continues, and the industry took a second year of dollar decreases in a row for our products. The outlook remains challenging, although we are buoyed by our anchor customers returning to full contract volumes this year, and affirmation that this will continue for the foreseeable future. Reductions in imports by our customers are being channelled to other suppliers as NCT remains a preferred trading partner.
15 INTEGRATED ANNUAL REPORT 2025 It’s the kind of perfect storm that tests the resilience and tenacity of any entity, and one which NCT has been able to weather, and as we look forward, actively to recover from. Once again, our NCT staff demonstrated exceptional resilience, dedication and innovation to allow NCT to add value as a Co-operative for our members, even when markets were not available. I wholeheartedly commend each of them and take immense pride in the way they have navigated and contributed to what has been another extraordinarily challenging year. I also wish to express my sincere gratitude to our outgoing Vice Chairman, Mr Philip Day, for his outstanding leadership and contributions over the years. At the same time, a special thank you is reserved for our Chairman Mr Vern Schefermann, as well to our Board members for their steadfast support of both the management team, members and the Co-operative as a whole. JAPAN Hardwood Chip Imports by Source (000 BDTs) CHINA Hardwood Chip Imports by Source (000 BDTs)
16 INTEGRATED ANNUAL REPORT 2025 Wood Chip Operations – Richards Bay Turning our attention to our wood chipping operations, it is worth mentioning again the devastating fire of 2023 which led to an exceptionally demanding year at the Richards Bay Mill complex for the year under review. With both chipping lines down for a significant portion of the year, export volumes were understandably lower than previous years. 210 400 tonnes of Acacia, 45 500 tonnes of Eucalyptus and 80 000 tonnes of biomass were exported during the period. The site undertook a wide range of critical engineering activities — from the complex removal of two gantries at Richards Bay Wood Chips, each towering over 30m, to extensive yet painstaking clean-up operations involving burnt woodchips scattered across the premises. In addition, a significant portion of the year involved rebuilding and renewing the equipment and infrastructure damaged by the fire. These efforts ran in parallel with initiatives aimed at supporting growers. A key focus of the biomass project was to help members access urgently needed Eucalyptus markets. In February 2024, a mobile chipper was brought on site to support NCT in meeting its annual biomass contract obligations. This mobile chipping operation continued throughout the year, ensuring all contractual biomass volumes were fulfilled, and members’ timber was still able to be processed. At the same time, structural repairs to the concrete flooring and support columns of the western stockpile at Richards Bay Wood Chips progressed, with particular attention given to the biofuel stock area. Export reclaimers and conveyor repairs on the western stockpile were completed in April 2024. The first biofuel vessel was successfully loaded on 5 May 2024. For Acacia producers, a trans-shipment solution was introduced, enabling temporary storage at the Richards Bay mills and onward movement of Acacia to Durban. New Dabmar screens and an enhanced fines conveyor system were installed at BayFibre, significantly improving operational efficiency. The BayFibre rebuild was completed by early September, and production resumed on 11 September 2024. A temporary chute was installed at Richards Bay Wood Chips to handle Acacia and Eucalyptus stock, enabling chip production from 16 November 2024. From this moment on, both chipping lines ran simultaneously. In the aftermath of the devastating fire, the critical question will always be related to what measures have been implemented to prevent a recurrence of such a disaster? In response, a comprehensive redesign and enhancement of the entire fire reticulation system has been undertaken. This included NCT’s mobile response capability, increasing hydrant pressures, expanding water storage capacity, and upgrading the ring-feed infrastructure to support our newly commissioned, state-of-the-art rapid response unit. Additionally, the BayFibre ablution facilities have been repurposed into a fully operational, permanent fire station. To further strengthen our fire prevention and response capabilities, we have introduced a range of advanced early warning and detection systems. Wood Chip Operations – Durban Export volumes for the period saw a decline compared to the strong performance the previous year. 315 200 tonnes of Acacia and 15 800 tonnes of E.Smithii were exported for the period. The drop was primarily due to the significant Wood Chipping Operations and Exports
17 INTEGRATED ANNUAL REPORT 2025 damage sustained by the Transnet ship loader and the resulting four-month outage. On 31 May 2024, while loading the M/V Opera White for a Japanese customer, a vessel passing at high speed caused a surge at the MW8 berth. The resulting movement pushed Opera White toward the MW7 berth, where its open hatch covers collided with the ship loader boom, causing severe structural damage. The damage was such that the loader could not be operated safely requiring extensive repairs. With the ship loader out of commission and the storage shed reaching capacity, all production activities were halted from 20 June 2024. During this period, mill management seized the opportunity to complete deferred maintenance work. In this time, NCT pushed hard to persuade both our customers and the port to permit a manual loading regime, whereby wood chips could be loaded by crane from the grounds in front of the shed. Unfortunately, our customers, being concerned about the threat of contamination from the surrounds, which included coal being stored close by, were not prepared to accept the risks. Following comprehensive repairs by Transnet and their contractors, the loader was fully restored and returned to service on 3 October 2024. The loader has since performed reliably, requiring only minor maintenance. Transnet has also implemented enhanced safety protocols to prevent similar incidents in the future. Sustainable Mill Operations and Waste Management The mills receive timber that is pre-treated and debarked at source, reducing the need for further processing and resulting in high-quality wood chips suitable for pulp production. Material is transferred efficiently from mill to vessel using a conveyor system. Any remaining production loss is managed and redirected for sustainable agricultural or renewable energy use. DWC maintained a zero-emission chipping operation throughout the year, contributing to a minimal environmental footprint. This is achieved through electric-based operations and efficient, clean systems that eliminate fossil-fuel emissions during the chipping process. In terms of waste management, wood waste at DWC is generally not utilised and is disposed of via Durban Solid Waste (DSW) to a registered landfill site. However, when occasional requests are received for gasifier feedstock, these are accommodated. At the Richards Bay Mill Complex, waste is managed more sustainably. A partnership with local farmers facilitates the regular removal and recording of fines and bark residues, which are then used as organic mulch for agricultural crops. Additionally, all production residue is stored for either agricultural reuse or repurposed for lower-grade woody biomass in renewable energy applications. In summary, 2024/2025 was a landmark year for DWC and the Richards Bay Mill Complex. Strategic planning, infrastructure upgrades, sustainable practices, and strong leadership allowed the operations to overcome adversity and exceed performance expectations across the board.
18 INTEGRATED ANNUAL REPORT 2025 Export sales by product
19 INTEGRATED ANNUAL REPORT 2025 Supplies, Logistics and Transportation Domestic Sales The Domestic pulp, board and special market sales segment closed the year at 450 540 tonnes, 9% lower than the previous year. The local Eucalyptus pulp market remained oversubscribed, with growers receiving lower monthly allocations than they had requested. Further pushbacks were experienced with frequent maintenance shutdowns at our major pulp mills. That said, the lower than anticipated but consistent orders from domestic markets, and the commencement of supply to a new market helped us to achieve fair overall sales volumes for the year. Sizable E. Smithii volumes were also sold to another chipping mill in Richards Bay during the year while we could not process at our northern mills due to the rebuild. The demand for Pinus pulpwood at Mondi declined dramatically during the year, and we expect it to decline further due to poor market demand. Special Markets (non-pulpwood) sales volumes for the year were 31% higher than the previous year, ending on 94 830 tonnes. The export peeler market maintained strong demand despite the influence of lower pulp orders on supply volumes. Local peeler processing mills continue to pose operational and administrative challenges due to limitations around trade credit and Chain-of-Custody (CoC) compliance. Nevertheless, these mills remain important in alleviating some of the difficulties currently affecting the Eucalyptus pulp segment. Similarly, the Eucalyptus pole market has remained robust, offering a limited but valuable outlet for members growing suitable species. Pine sales have been relatively stable at 18% of the total non-pulpwood segment, although the market has been impacted by declining prices and conservative purchasing behaviour from sawmills managing tighter cash flows. NCT Sales – per market segment Road Transport and Loading Operations In total, 405 881 tonnes per annum were transported and processed through NCT’s Job Code deduction system. The grower uptake was strong with a total of 411 growers using the service, 317 of whom were from the KZN Midlands and 94 from Northern KZN. Road transport has seen increased demand due to the decline in rail-service reliability. To reduce costs, suppliers are increasingly favouring Performance-Based Standards (PBS) vehicles due to their enhanced payload capacity and reduced costs. NCT secured PBS contracts in both the Southern and Northern KZN corridors. PBS Volume 11-year period Tonnes Rand value The PBS contracts aim to enhance service quality while providing members access to top-tier technology at competitive rates. We expect volumes to grow further in the coming years. Market Segments: 2024 2025
20 INTEGRATED ANNUAL REPORT 2025 NCT Loading Operations remained resilient despite reduced overall sales volumes, sourcing and loading 239,403 tonnes for the year. User uptake and distribution was evenly split between the KZN Midlands and Northern KZN, with 101 users overall. NCT Scheduling System and Slot Booking System The NCT scheduling system has continued to demonstrate its value by offering visibility, monitoring and control of an average of 6 000 tonnes per day or the equivalent of 200 truckloads per day. This system is considered industryleading in promoting flexibility and responsiveness across the supply chain. Trucks are now scanned on arrival and monitored through to departure, with real-time data shared among stakeholders to optimise flow and efficiency. Notable developments include the implementation of CoC categorisation for transporters and ongoing efforts to develop a dedicated logistics’ App and database. Rail Transport Tonnage moved by rail declined significantly from 82 785 tonnes in the previous year to only 29 513 tonnes for the year in review with 21 growers making use of the service. This was a reduction of 64% from the previous year. Rail transport services continue to be impacted negatively by financial constraints and structural issues. The lack of investment in rolling stock and maintenance remains concerning, particularly the ongoing “run to park” of timber wagons. Poor service levels have been escalated to various government and industry bodies, such as Department of Transport and Forestry South Africa, for urgent and ongoing attention. Rail: Tonnes’ movement Holding Depots Holding depots serve as a “buffer” in our supply-chain strategy between the grower and the mill. In the KZN Midlands area, it also allows small-scale timber growers with less than truckload volumes access to the supply chain. The Vryheid East Depot had a slight throughput increase to 57 975 tonnes, supplied by 130 members, despite ongoing rail issues on the coal line. The Glenside and Ahrens Holding Depots handled 11 702 tonnes, offering improved safety and turn-around time through the support of a dedicated logger on site. The Midlands depots were used by 143 members during the year. Depot Volumes and Utilisation Temporary depots were established at NTE Paulpietersburg and Stillwater, which allowed growers to move Acacia stock off the farm for cashflow purposes and for NCT to retain this stock for when the Richards
21 INTEGRATED ANNUAL REPORT 2025 Bay mills called for it later in the season. In total 12 603 tonnes from 91 members were received and dispatched through these two facilities. The Umlaas Road Holding Depot has made significant progress, receiving all necessary environmental approvals and is on track for commissioning in the third quarter of 2025. NCT continue to monitor the risk caused by the failing road infrastructure with a view to how best to utilise depot sites to mitigate these risks. Stutterheim The continued Acacia supply from this region supports both the DWC and Richards Bay mills, especially in the offseason, with a total of 35 740 tonnes of Acacia pulpwood from 54 suppliers during the year. The transportation and backhaul services offered by NCT in the community underscores the significance of our presence in the region and our contribution to the local rural economy.
22 INTEGRATED ANNUAL REPORT 2025 TREE FARMING The NCT Group owns approximately 18,000 hectares of plantations. These farms play a crucial role in ensuring the Cooperative remains a reliable supplier of timber to various markets. NCT-owned farms serve as a strategic timber reserve. Production can be increased during periods of undersupply or scaled back during times of oversupply. This flexibility was demonstrated during the past supply season following the Richards Bay fire and subsequent rebuild, when E. smithii was harvested at short notice to meet demand and generate income for the Co-operative. Timber Supply Over the past year, NCT-owned farms also stockpiled approximately 60 000 tonnes of Acacia timber to support members and the bark industry. This timber was delivered over five months to the Richards Bay mill during its rebuild and start-up, ensuring a consistent and reliable supply, and yet allowing members to take priority. During the year in question, NCT harvested and sold 85 800 Acacia, 41 500 Eucalyptus and 44 300 E. Smithii to mills and other markets. Sales The farms unfortunately have a large volume of over-age mixed Eucalyptus that is a major problem and will take several years to clear once suitable markets return or new ones are developed. The majority of this being in the Northern area. We are actively looking for alternative markets. Farm sales At the end of 2024, NCT sold the Shincel Farms in Mooi River due to the unsuitability of species that could be cultivated there and to raise much-needed funds for the Co-operative. NCT farms and leases: Sales tonnes Sales: Bark Sales: Eucalyptus Sales: Acacia Sales: Pinus
23 INTEGRATED ANNUAL REPORT 2025 FSC Tree Farming significantly contributes to the Co-operative’s FSC certification potential, with more than one-third of the total FSC-certified supply coming from NCT-owned and managed farms. All NCT-owned farms are certified, and about 80% of managed farms also hold certification. Legal Matters Land claims, labour tenant disputes, and mining and prospecting applications remain an ongoing challenge that affect all landowners. Tree Farming continues to oppose these applications on and around NCT properties where it is in our best interests, and in doing so is cost-effective. The number of matters that we are currently addressing are: • Land Claims, Labour Tenant and Land occupiers related items: twelve matters, • Mining application: five matters and • Prospecting applications: twenty matters All these issues are a major risk and expense for us.
24 INTEGRATED ANNUAL REPORT 2025 The year under review saw Member Services, in conjunction with other departments, primarily focused on activities aimed at easing the burden on members, not the least by securing an essence of cash flow during this time of financial stress as the Richards Bay mill rebuild continued. The Port loader accident at DWC in May 2024, inevitably caused a bottleneck all along the north to south supply chain. At one stage Richards Bay was the only access point for Acacia given the literal log jam across the chain. A challenging year for members. In order to alleviate the pressure on both members and the bark industry, several key activities were undertaken: • All Acacia supply from NCT own farms was suspended to give members preferential access. • The Richards Bay complex was used as a Acacia depot and trans-shipment yard, holding 20 000 tonnes of Acacia at any given time. This was moved to DWC as needed. • In the north two NTE depots were activated as a sales point, able to store around 8 000 tonnes each in total. • The Vryheid East depot served more as a transition and holding depot, holding key volumes for the mill, passing on as required. • Maximising Acacia to DWC, up to 60 000 tonnes per month, with limited Acacia direct access to DWC for northern members and a careful balance between north and south supply into DWC while DWC was able to accommodate this before the loader incident. • Richards Bay open as a biomass market for Eucalyptus growers via mobile chipping operations. • Strategic log swap and E.Smithii sales to a domestic market from time to time. • Careful management of all domestic sales points, both north and south, to maintain and where possible maximise the Eucalyptus flows. • Glenside and Ahrens NCT depots taking in peripheral tonnages of both Eucalyptus and Acacia. Acacia-bark supplying members were given preferential allocations to sustain our sister bark industry. This led to prolonged Acacia timber storage on member farm depots in some cases, with NCT committing to detailed plans to consume such stored material within as short a period as allowed by prevailing circumstances. A detailed storage and offtake plan was compiled by Member Services and the Acacia depot stock monitored critically. The value of signed Guaranteed Supply Tonnages (GST) was proven time and again given that supply per member, under constrained market conditions, could be tempered / controlled to the post-fire revised and signed GST limit. This provided a very fair and accessible means of managing timber flow. NCT members were hosted at the mill complex regularly to view the post-fire repair progress and to discuss the allocation processes and any concerns or suggestions. Regular briefs were sent out to the member base outlining developments on the market and mill repair front. Specific and regular guidance was given to assist members with the extent and timing of timber harvesting. MEMBERS
25 INTEGRATED ANNUAL REPORT 2025 Chipping of both Acacia and Eucalyptus resumed at both Richards Bay and DWC within a month or so of each other, during September through to November. Member Services were careful to ensure allocations catered for the oldest stored Acacia, with the intentions to have all that consumed before new-season Acacia was given access, all the while sharing with members the rolling intake plans at both complexes. The GST for the new supply season was also being rolled out around this time. This roll out was a watershed event given that it was the first time that an almost entire electronic roll out had occurred. This was done via the NCT app and the member website. This innovation made for a much quicker GST signing and immediate availability of tonnage data. We were therefore able to assess the collective GST against the forecast market demand and provide members with their revised GST in record time. The NCT App, whilst still in process of extensive development, began to play an increasingly critical role during the course of the year. The high EUDR focus of a key domestic market drove the increased use by NCT of the source verification functionality of the app. NCT further developed the processes required to verify timber sources via geo references, map polygons, satellite and GIS imagery and implement and enhance monitoring of CoC protocols all along the supply chain. EUDR-related training and information briefs were accordingly rolled out to members and staff. On board vehicle tracking, contributing towards the traceability of timber processes along the supply chain, became compulsory during the year and NCT was able to source tracking service providers on behalf of members who still needed to install the equipment. As NCT’s EUDR and CoC remote sensing ability improved, it was necessary to keep members appraised of the correct protocols to follow and the methodologies to employ. Workshops and briefs were designed and rolled out for this purpose. FSC remained an important factor during the year despite the circumstances, with NCT maintaining its minimum rating of 30% FSC intake throughout. Engagements with key clients towards the end of the year indicated that they were considering much higher percentages of FSC material. This was not entirely unexpected, and NCT has reacted both by informing members of this dynamic and engaging with external FSC accreditation service providers, with a view towards ultimately increasing the overall NCT FSC offering. With huge pressure being placed on members, by the markets, to supply only ethically sourced timber and to ensure a breach-free chain of custody all along the supply chain, it was necessary to repeat, regularly to both members and staff, the commitment that we all have to the NCT Code of Conduct. FSC Workshops and information sessions commenced towards the year end. FSC certified suppliers were also given preferential allocations in oversupplied markets or months (higher than previous) to start to bolster the FSC intake and encourage attainment of FSC accreditation. To provide some relief to members who had come through a traumatic year, NCT announced, in December the following Guaranteed Supply Premium (GSP): - • All C500 contract holders, Eucalyptus and Acacia received R40 against all Eucalyptus and Acacia tonnes supplied up to 500 tonnes maximum.
26 INTEGRATED ANNUAL REPORT 2025 • Suppliers of Acacia into all NCT and other Acacia GST approved pulpwood markets received R40/tonne on all Acacia tonnes supplied between 1% and 110% of GST. • Suppliers of Eucalyptus into Northern NCT and other Northern Eucalyptus GST approved pulpwood markets received R40/tonne on all Eucalyptus tonnes supplied between 1% and 110% of GST. • Suppliers of Eucalyptus into Southern NCT and other Southern Eucalyptus GST approved pulpwood markets (Sappi) received R30/tonne for every Eucalyptus tonne supplied between 50% and 80% of GST and R40/tonne for every Eucalyptus tonne supplied between 81% and 110% of GST. • Tonnes supplied below 49% of Southern Eucalyptus GST did not accrue a premium. It was deemed that the Southern Eucalyptus market was not as stressed as the other market sectors given that access to a domestic market did prevail through the supply year (albeit sometimes erratic) hence the “stepped” GSP. The above GSP concession provided fair and welcome financial relief to members. It should be seen as an NCT “membercentric” contribution to co-operative members that are held in high esteem. By February 2025, the NCT mills were back at a collective 90% operational level (post-fire) – a huge achievement, all things considered. Unfortunately, the reality of a depressed Eucalyptus market and increasing prevalence of oldage Eucalyptus on member and NCT farms started to become increasingly apparent. NCT continues to investigate all manner of Eucalyptus alternative markets, ranging from biomass through to energy generation, peeler markets and other end uses such as board. This impetus continues and will continue until a resolution to the Eucalyptus crisis is found. NCT remains committed to finding a solution.
27 INTEGRATED ANNUAL REPORT 2025 ENVIRONMENTAL NCT remains steadfast in its commitment to sustainable forestry, environmental stewardship, and responsible resource management. During the 2024/25 financial year, NCT continued to advance its sustainability objectives through robust certification practices, ethical procurement, regulatory compliance, innovative research, and conservation initiatives. From promoting Forest Stewardship Council® (FSC®) and Programme for the Endorsement of Forest Certification (PEFC) standards, to enhancing traceability and risk management systems, NCT has taken meaningful steps to support a sustainable forestry value chain. This report outlines the key achievements and initiatives that reflect NCT’s integrated approach to sustainable forest management, including certification performance, supply chain governance, research and development, biodiversity conservation, and carbon footprint reduction. Certification NCT holds both PEFC and FSC® (FSC-C117221) Chain-of-Custody (CoC) certifications, which include Controlled Wood and Source Components. Timber certification plays a vital role in balancing social, environmental, and economic sustainability. Through certification, NCT ensures responsible forestry practices across its value chain. NCT continues to promote responsible forestry practices through its commitment to certification and sustainable resource use. NCT is also actively expanding its pool of certified suppliers through partnerships with third-party Group Schemes and growth in its internal FSC Group Scheme. In the 2024/25 financial year, 38.1% of timber traded by NCT was FSC-certified, and an additional 2.1% was PEFCcertified. Of this certified timber, 33.5% originated from NCT Tree Farming-managed farms, which are fully FSC-certified. Non-certified: 60% NCT Group Scheme (not Tree Farming): 20% PEFC: 2% Other FSC: 5% NCT Tree Farming FSC certified: 13% NCT Timber Supply by Certification
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29 INTEGRATED ANNUAL REPORT 2025 Traceability These certifications support robust traceability and help mitigate the risk of illegal logging through a Due Diligence System. As part of its ongoing compliance efforts, NCT is aligning its practices with the EUDR. This includes verifying timber sources using a geospatial database and capturing GPS coordinates in the field through the NCT App. Enhancements to the NCT Plantation Viewer and Oracle systems support this traceability. Satellite imagery and mapping tools further aid in verifying timber origins and biodiversity compliance. Pesticides To ensure environmentally responsible use of agrochemicals, NCT adheres to the FSC Pesticide Policy. This policy promotes the use of Integrated Pesticide Management (IPM), which prioritises non-chemical alternatives, such as pestresistant plant material and improved cultivation methods. Where pesticide use is necessary, Environmental and Social Risk Assessments (ESRA) are conducted to ensure safe and minimal-impact application. Research and Development In 2024, NCT funded several research initiatives to advance forestry science and operational excellence. Key projects included: • Near-Infrared Reflectance Spectroscopy (NIRS): Applied in nurseries to assess seedling and clonal propagation quality, rooting potential, and nutritional health. • Pest and Disease Research: Studied soil-insect pest complexes and the effectiveness of biological control agents against Acacia rust and Acacia mirid. • Long-Term Soil Monitoring: Continued support for industry-wide soil and litter monitoring to inform carbon accounting and sustainable land management. NCT also sustained investments in tree breeding through the Institute for Commercial Forestry Research (ICFR), focusing on both Acacia and Eucalyptus species. In 2024, trials included frost- and rust-tolerant Acacia clones, and high-potential Eucalyptus hybrids across various climatic zones. Tree Improvement and Clonal Trials NCT’s Hybrid Clone Consortium (HCC) achieved a record output of over 140,000 cuttings for trials across diverse regions. Fourteen clonal trials were planted, including Eucalyptus hybrids for pole production and a frost-tolerant Acacia trial. A new E. urophylla × E. grandis clone (UG 022) suited to both pulp and solid wood markets was introduced and will be available to members by 2026. Wood Property Testing Projects: • Pole suitability of E. grandis × E. grandis clones (GN 311, GN 350) • Pole suitability of E. grandis × E. longirostrata (GL 222) • Wood density ranking of E. grandis × E. smithii clones via resistograph testing
30 INTEGRATED ANNUAL REPORT 2025 Pest and Pathogen Tolerance Testing: Eight genotypes were submitted to the Tree Protection Co-operative Programme (TPCP) for screening against key pathogens and pests, including Teratosphaeria destructans, Uromycladium acaciae, and Phytophthora spp. Testing is in progress, and we are awaiting the results. Biodiversity Conservation Approximately 25% of NCT’s owned land is managed as unplanted natural environment, including forests, wetlands, grasslands, and riparian zones. Key conservation areas under consideration for formal nature reserve status include: • Enon Natural Forest (200 ha) • Enyathi Estate’s protected Natal cycad colony • Tevreden Farm grasslands (400 ha), part of the threatened Northern Midlands Moist Mist-belt Grasslands These protected areas harbour numerous threatened species and provide legal and tax-related benefits, while guarding against mining or development threats. Carbon Footprint and Emissions Reduction NCT monitors and reports its carbon emissions, particularly from road and rail logistics. In 2024, a total carbon saving of 8 434.03kg was recorded, largely due to strategic decisions around transport modes, technological upgrades, and market selection. Mode/Market Tonnes Average KMs Carbon Factor Total Emissions Carbon Factor Savings Comments (g) (kg) (kg) Road 211 165 490 62 6 415 Rail failure Rail 29 514 600 22 390 All Road 240 679 545 62 8 133 1 717.35 Savings using rail as an alternative mode PBS 221 089 490 50 5 417 20% less fuel and improved technology PBS to Standard Road 432 254 490 62 13 132 6 716.68 Savings using PBS vehicles Total Savings 8 434.03 To calculate the carbon emissions, the activity-based approach will be followed shown below as: CO2 = tonnes transported x average distance travelled x CO2 emissions factor per tonne – km / 1 000 000 Carbon Footprint Scorecard: Brokered Volumes from March 2023 – February 2024
31 INTEGRATED ANNUAL REPORT 2025 In examining the social aspects of NCT, it becomes clear that the Human Resources (HR) department plays a pivotal role in fostering a positive, inclusive workplace culture. By implementing policies that prioritise diversity, equity, and inclusion, HR ensures employees feel valued and respected resulting in improved morale, engagement, and productivity. NCT’s community initiatives further reflect its commitment to social responsibility. Through volunteering, charitable donations, and partnerships with local organisations, these efforts strengthen community ties and demonstrate a meaningful impact beyond NCT’s core operations. Timber growers, an integral part of NCT’s structure, also contribute significantly to social and environmental well-being. Operating largely in rural areas, they provide employment, stimulate local economies, and support sustainable land management—reinforcing their importance in both community development and conservation. Overall, examining these interconnected social dimensions, highlights NCT’s dedication to building a socially responsible organisation that values its people, supports communities, and advances long-term sustainability. Human Resources Instrumental to NCT’s growth and success are its people. While our focus has been on linking members to markets, it is important to pause and acknowledge that none of this would have been possible without the dedication, passion, and hard work of our staff. Their unwavering commitment to our members and to the forestry sector continues to drive our progress. Employee Numbers by Operational Area At the end of the 2025 financial year NCT had 694 (702:2024) employees across all operations. The staff turnover remained relatively stable which is indicative of NCT’s ability to attract and retain talent. SOCIAL Head Office District Offices Depots & Loading Ops NCT Richards Bay Wood Chips NCT Durban Wood Chips Northern Farms Southern Farms 77 19 24 159 91 170 154 2.1% 6.3% 9.3% 82.4% African Coloured Indian White
32 INTEGRATED ANNUAL REPORT 2025 Employee Demographics by Race The employee demographics has remained static during the years. This is mainly due to the low employee turnover of 0.13%. This low turnover makes transformation initiatives challenging as very few opportunities arise. Notwithstanding, NCT remains committed to responsible transformation opportunities and reports such efforts to the Employment Equity Committee. Staff training and capacity-building In 2024, training and development activities were largely paused following the Richards Bay fire, as NCT redirected its efforts toward recovery and operational continuity. During the initial stages of the Richards Bay Mill rebuild, the focus was limited to essential compliance training to ensure safety and regulatory adherence. This resulted in only 370 training opportunities during the year. As progress was made and preparations for the Mill’s reopening advanced, training priorities shifted towards the recertification of all machine and equipment operators, ensuring readiness and competency across operational roles. Compliance training for Tree Farming and DWC is conducted on a two-yearly basis, with 2025 identified as the next cycle. A significant portion of the 2025 training budget has been allocated to support this initiative. Looking ahead, the focus will return to developmental training aimed at supporting employees in furthering their qualifications and expanding their skill sets. Greater emphasis will also be placed on career-related seminars and knowledge-sharing sessions to foster continuous professional growth and support long-term career development across the organisation. Group: SETA Refund Group: Training Spend Voluntary Employee Turnover NCT Group 2022 2023 2024 Employee Demographics by Gender
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