CHAIRMAN’S STATEMENT

Dear Shareholders,

On behalf of the board (the “Board”) of directors (the “Directors”) of Greenheart Group Limited (the “Company”) and its subsidiaries (collectively, the “Group”), I am pleased to present to the shareholders of the Company the annual results of the Group for the year ended 31 December 2024.

The Group continued to navigate a challenging market environment in 2024, facing persistent headwinds across both our New Zealand and Suriname operations. The Group recorded a total revenue of HK$51,872,000 for the year, representing a decreased of 43.0% compared to last year. The net loss of the Group increased to HK$173,249,000, primarily due to a fair value loss on our plantation forest assets in New Zealand, along with an impairment of the timber concessions and cutting rights, and associated processing facilities in Suriname. These impairments were driven by weakened demand, declining prices, rising cost and the cessation of our West Suriname operations in mid-2024.

NEW ZEALAND DIVISION

The New Zealand division experienced ongoing challenges throughout 2024, with a revenue decline primarily due to a significant reduction in sales volume. This was due to the completion of harvesting activities at one of our largest plantation forest assets, which has now entered a regrowth phase, resulting in a temporary reduction in harvestable volumes. The next crop of trees is expected to mature beginning from 2028 and reaching the peak at 2032.

Market conditions fluctuated throughout the year. While the cost and freight price for benchmark A-grade logs in the China softwood log market initially recovered to US$128 per JAS m³ to US$133 per JAS m³ in early 2024, prices dropped sharply between April and June, and stabilizing at US$120 per JAS m³ to US$122 per JAS m³ for the remainder of the year. Meanwhile, shipping costs peaked at US$39.0 per JAS m³ in mid-2024 before easing to US$31.8 per JAS m³ by year-end. These market dynamics contributed to a decline in our free-on-board (“FOB”) selling price from US$102 per JAS m³ to US$90 per JAS m³, leading to a fair value loss of HK$65,847,000 on our plantation forest assets for the year.

SURINAME DIVISION

Following the cessation of operations in West Suriname in June 2024, the Group focused on optimizing its Central and East Suriname operations. However, despite these efforts, market conditions remained difficult. Demand for logs and timber products continued to decline, selling prices weakened further, and rising production costs added to the financial strain.

As a result, the Group recorded an impairment of timber concessions and cutting rights, right-of-use assets and associated processing facilities of HK$48,275,000 at year-end, reflecting the deterioration in market conditions and increasing operational costs across the Suriname division.

PROSPECTS

The Group acknowledges the ongoing challenges in the global wood sector, and the financial pressures affecting our operations.

In New Zealand, with one of our largest plantation forest assets now in a regrowth phase, there will be a temporary woodflow gap over the next few years. During this period, the Group will continue to incur high holdings costs, including expenses for planting, thinning, and silviculture, while generating no immediate revenue. This financial burden is further compounded by the substantial losses incurred in Suriname over the past few years.

To address this challenge, the Group will actively explore opportunities to raise funds, including but not limited to converting certain non-current assets into working capital. The primary focus will be on acquisition of short-term cutting rights that provide access to mature trees in the near term, and ensuring a more stable revenue stream over time.

In Suriname, given the significant reduction in the carrying value of our timber concessions and cutting rights, and associated processing facilities, the Group will continue to explore options to stop the drain on the Group’s financial resources. This may include, but is not limited to, the disposal of assets or a potential divestment of operations in Suriname.

The Group remains committed to enhancing financial flexibility and optimizing resource allocation to ensure long-term sustainability and value creation for our shareholders.

APPRECIATION

On behalf of the Board, I would like to express my sincere appreciation to our shareholders, business partners, and stakeholders for their ongoing support. I would also like to extend my gratitude to our management team and employees for their commitment and perseverance during this challenging period. Despite the current market difficulties, the Group remains dedicated to maintaining operational efficiency and financial discipline while exploring strategic opportunities to enhance long-term value for the shareholders.

Cheng Chi-Him, Conrad
Non-executive Chairman
Hong Kong, 25 March 2025