61 INTEGRATED ANNUAL REPORT 2026 NCT Forestry Agricultural Co-operative Limited and its subsidiaries (Registration number: 1949/000002/24) Consolidated & Separate Annual Financial Statements for the year ended 28 February 2026 Directors' Report 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 essentially returned to normal after the catastrophic fire in September 2023. The final fire insurance claims for both BayFibre (Pty) Ltd (BayFibre) and NCT were received early in the financial year. By year end the fire reticulation upgrades were almost complete, only awaiting final checking and sign off by the contractors. Both mills operated at normal capacity during the year under review. 2. Review of financial results and activities The consolidated financial statements have been prepared in accordance with the IFRS for SMEs® Accounting Standard and the requirements of the Co-Operatives Act no. 14 of 2005. The accounting policies have been applied consistently compared to the prior year. The group recorded a loss after tax for the year ended 28 February 2026 of R32,594 million. This represented a decrease from the profit after tax of the prior year of R132,532 million which included substantial insurance proceeds. Group revenue increased from R1,865,539,000 in the prior year to R3,366,159,000 for the year ended 28 February 2026. The group faces a number of risks and uncertainties. The two largest identified by the directors are the underperformance of state owned entities and the exchange rate risk, while additional legal compliance requirements are also major risk items. The underperformance of state owned entities, particularly Transnet operating the ports and rail, has had a significant impact on business over the last few financial years and the management of NCT have invested significant time and energy in working alongside the authorities, trying to find workable solutions. This continues to be the highest risk that the group faces. During the year, management has had an opportunity to engage with authorities responsible for the Durban port in an attempt to secure the future of the lease at NCT Durban Wood Chips (Pty) Ltd (DWC PL). Their discussions have been positive and the options available are being explored. Demurrage costs for the year, mostly as a direct result of port issues, were in excess of R10 million. Rail transportation has seen a small improvement during the year under review, resulting in improved performance at the Vryheid East depot, but road continues to be the major form of transportation due to the state of the rail infrastructure. As the group operates in the international arena, it is subject to currency risk with respect to the Rand : USD exchange rate. Revenue is recorded at closing spot rate on the date of invoice and averaged R17.45 during the year. The exchange rate on export receipts ranged between R15.67 and R19.86 with an achieved average rate of R17.64 : USD. This contributed to the significant increase in foreign exchange gains for the year. If this exchange rate had instead averaged the low or high rates achieved during the year, the revenue and profit before tax would have been lower or higher by R327 million or R369 million respectively.
RkJQdWJsaXNoZXIy MjgyNjA0