Quarterly Report For The Financial Period Ended 31 December 2024

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Condensed Consolidated Statements Of Profit Or Loss For The Current Quarter And Year-To-Date
Ended 31 December 2024

Condensed Consolidated Statements of Financial Position
As at 31 December 2024

Group's Financial Performance Review

For Q4 2024, revenue surged more than double from RM3.0 million in Q4 2023 to RM16.8 million, primarily due increased in revenue from Pulp & Paper Product as well as Printing services. New revenue stream from sale of liquid fertiliser drive to the significant growth in group revenue. A breakdown of revenue aggregation is provided in Note 15 of Part A of this report. Cost of Sales also saw a significant increased are aligning with the increased in revenue which consequently the Gross Profit (GP) surged significantly from -RM42k to RM9.0 million, primarily driven by lower raw material costs in liquid fertilizer production. The production of liquid fertilizer benefited from the utilization of by-products (black liquor) from pulp and paper production which was also a waste as its main raw material, effectively reducing costs and enhancing profitability.

Other income declined sharply by 93%, from RM17.1 million to RM1.2 million, primarily due to the absence of black liquor sales to external customers, as the Group shifted its focus to in-house liquid fertilizer production. Additionally, the absence of gains from the disposal of a subsidiary, which had contributed RM3.2 million to other income in Q4 2023, further contributed to this reduction. The breakdown of the Group's other income is provided in Note 16 of Part A of this report.

Other operating expenses decreased by 9%, from RM6.9 million to RM6.3 million, primarily due to lower costs associated with black liquor, in line with the absence of related income during the quarter compared to Q3 2023. Additionally, the decrease was also driven by some reduction in administrative expenses and professional service fee.

Profit from operations declined significantly by 63%, primarily due to lower other income. However, the impact was mitigated by a higher gross profit margin, which helped sustain operational profitability. Profit from operation margin declining only marginally from 31% to 25% as reported for Q4 2024.

Profit Before Tax (PBT) declined by 84%, from RM8.0 million to RM1.3 million, primarily due to lower revenue, reduced in other income, and increased in losses from associate company. However, the Q4 2024 result benefited from a tax credit of RM1.1 million, bringing it to RM2.4 million profit for the quarter, though still lower than the profit reported in Q4 2023. The tax credit arose from the reversal of prior year tax overprovision and the recognition of deferred tax assets (DTA) due to timing differences in intragroup profit elimination. Consequently, Profit After Tax and Minority Interest (PATAMI) stood at RM2.4 million while Basic and Diluted EPS dropped by 59% and 54%, respectively.

The Group delivered a solid financial performance for the year, with revenue increasing by 87% from RM36.4 million in FY 2023 to RM68.0 million in FY 2024, reflecting steady growth. Cost of Sales (COS) increase by 35% to RM31.4 million which in line with the increase in revenue. Notably, the fertilizer segment capitalized on lower raw material costs, significantly boosting Gross Profit, which more than doubled from RM14.6 million to RM36.6 million. Consequently, the Gross Profit Margin expanded from 36% to 54%, underpinned by higher-margin liquid fertilizer sales and increased in other product and services as table in note 15, Part A of this report.

Other Income fell by 45%, from RM21.8 million to RM11.9 million, primarily due to the lower black liquor sale to external customer, absence of one-off gains from disposal of a subsidiary, reduced rental income after a major tenancy contract expiration. Other Operating Expenses increased by 11%, from RM16.8 million to RM18.5 million, largely due to increase in net impairment on receivables and due to new operating activities in relation to fertiliser segment.

The Group's Profit from Operations rose by 66%, from RM17.2 million to RM30.0 million which largely supported by the new revenue stream from the sale of liquid fertiliser. Despite of absence of the revenue form semi-finished fertiliser and significantly dropped in revenue from construction contract, slight growth in printing services and pulp & paper segment contributed to this performance.

However, Net Finance Cost increased by 13%, mainly due to 12 months interest incurred for bank loan for new corporate office tower and others financing incurred by parent company. The share of associates' losses surged by 38%, from RM963k to RM1.3 million in the current financial year, primarily attributable to lower revenue and higher marketing expenses reported by Nextgreen Crown Package Pulp Molding Sdn Bhd where, the company ramped up efforts to establish its presence in the local pulp molding market.

The Group recorded a tax credit of RM1.1 million in FY 2024, compared to a tax expense of RM3.4 million in FY 2023, primarily due to the reversal of prior-year overprovision and deferred tax adjustments. Despite strong profitability in the fertilizer segment, no tax provision was recorded as Nextgreen Fertilizer Sdn Bhd, a 100% owned subsidiary, has been granted a 10- year tax incentive by MIDA for income derived from both solid and liquid fertilizer.

Net Profit surged more than doubled from RM9.4 million to RM24.8 million, demonstrating robust profitability which largely driven by the manufacturing division, particularly fertilizer segment. Consequently, PATAMI increased in line with net profit growth, while Basic and Diluted Earnings per Share rose significantly to 2.45 sen and 2.44 sen, respectively.

In conclusion, despite a challenging Q4 2024 marked by lower revenue and net profit due to weaker sales and reduced other income, the substantial improvement in gross profit margin helped mitigate the impact. On a full-year basis, the Group demonstrated strong profitability growth. Looking ahead, the Group remains on a positive growth trajectory, with optimism surrounding the completion of the solid fertilizer manufacturing plant

Commentary on Prospects and Targets

The Group has outlined several ongoing and upcoming developments within the Green Technology Park (GTP) to enhance its manufacturing business. A newly established subsidiary, Nextgreen IOI Pulp Sdn Bhd, is in the final stages of completing a feasibility study and negotiating a Shareholder Agreement (SHA) with a China-based pulp producer. The agreement is anticipated to be finalized and signed by the end of March 2025. The new SPV will be form to operate one (1) pulp mill with annual production capacities of 150,000 metric tons of bleached chemical EFB pulp in GTP under Phase 2A. Meanwhile, a potential site has been identified within GTP, and site preparation works have commenced under the purview of Ultimate Ivory Sdn Bhd, the GTP Park Developer

Within the lush expanse of the Green Technology Park (GTP), the Group is advancing innovative solutions to redefine sustainability in manufacturing. A key pillar of this initiative is the Fertilizer segment, operated by our wholly owned subsidiary Nextgreen Fertilizer Sdn Bhd (NGF).

NGF is currently constructing a solid fertilizer manufacturing plant with an annual capacity of 30,000 metric tons (MT), slated for completion by April 2025. As the construction progresses, we eagerly anticipate the testing and commissioning phases to mark the plant's readiness.

Complementing this, NGF is also producing liquid fertilizer by converting black liquor, a by-product from the Phase 1A pulp and paper manufacturing plant, into a cutting-edge liquid fertilizer product. This innovative process, spearheaded by our R&D team, is projected to yield approximately 30,000 metric tons of liquid fertilizer annually.

Since its successful development, we've conducted rigorous trial plots to evaluate the efficacy of this new fertilizer across various crops, soil types, and environmental conditions. These trials have yielded promising results, demonstrating the product's potential to enhance agricultural productivity. Building on this success, we have already received purchase orders from customers, reflecting growing market confidence in our product.

Looking ahead, we are optimistic that our engagement with major organizations will culminate in securing long-term off-take agreements. These achievements will further solidify our role in sustainable agriculture and reinforce our commitment to driving innovation in the sector.

Our commitment to sustainability goes beyond pulp and paper and fertilizer production. The Animal Feed segment, operated by our wholly owned subsidiary Nextgreen Agrofeed Sdn Bhd (NGA), has commenced preliminary work on a facility with an anticipated annual production capacity of 10,000 metric tons (MT) of animal feed which expected to be completed by mid2025. The Group anticipates that this new venture will generate additional revenue and contribute positively to our overall financial performance.

GTC Biomass Berhad, a special-purpose vehicle in which we hold a 65% stake, is leading efforts to establish 20 collection and processing centers (CPCs) for oil palm biomass waste across Malaysia. The first CPC will be located within the GTP in Paloh Hinai, with additional centers planned for Gua Musang and Sandakan, Sabah.

Simultaneously, we are conducting a detailed evaluation of GTP's land to identify subdivided plots for future joint venture development, ensuring optimal utilization of the park's resources.

In summary, our journey—from black liquor to liquid fertilizer and biomass processing—exemplifies our commitment to research-driven innovation and ecosystem growth. Aligned with the promising outlook of Malaysia's palm oil biomass and pulp and paper industries, our strategic focus remains steadfast: to bring the GTP project to fruition and drive meaningful contributions to sustainable development.