Namoi Cotton : 2024 Annual Report

aq

1 | Namoi Cotton

LETTER FROM THE EXECUTIVE CHAIR

Dear shareholders,

In FY2024 your company delivered an improved financial performance with an of EBITDA of $22.9m (FY2023 - $18.0 million) and NPAT of $6.9m (FY2023 - $4.0 million). Despite the almost identical ginning volumes of 1.16m bales (FY2023: 1.17m bales), this better performance was driven by improved gin operating conditions, record warehousing volumes, complementary cotton seed & grain packing and greater discipline applied to cotton seed trading. Our focus remains on demonstrating the value of our services to growers. We continue to build our capabilities with a focus on safety management and improved operational execution. The last two years of above average seasons have allowed us to strengthen our balance sheet to tolerate future seasonal variability. Our gearing and term debt levels are the lowest they have been in the last 10 years. More detailed analysis of the FY2024 operating performance is contained below and in the Directors' Report.

SAFETY FOCUS

We are committed to a safe workplace and engaged culture for all employees, contractors and customers and are pleased to report further improvement in our safety metrics. We continue to build on the strength of our safety management system and have invested in setting up a focused and accountable framework where safety is a priority topic from our Board right through to the front line. We incurred 3 lost time injuries in FY2024 down from 5 in FY2023. This resulted in a reduction in our LTIFR to 4.15 in FY2024 from 7.48 in FY2023. We benchmark ourselves on total reportable incidents not just lost time. This attention on forward looking measures such as hazard and incident reporting, focuses our attention in the priority areas with the goal of preventing incidents from becoming injuries.

EXCELLENCE IN EXECUTION - 2023 SEASON

In the 2023 season (FY2024) we ginned 1.16m bales, nearly the same as the 1.17m bales in the 2022 season (FY2023). Despite this similarity the two seasons could not have been more different. At the conclusion of FY2023 we reflected on the weather challenges that the 2022 season had presented to both the ginning operation and to our supply chain and marketing activities. We are happy to report that the 2023 season presented no such difficulties.

Ginning operations were positively impacted by better quality cotton and lower moisture levels, both leading to more efficient ginning. This, together with an earlier start to ginning, lead to a significant improvement in our ginning performance, demonstrated by the ginning progress reported at the half year. Ginning was 86% completed at the end of August 2023 compared to 81% at the end of August 2022.

Supply chain and marketing benefited from larger crop volumes generally and more efficient supply chain execution allowing for higher throughput. In FY2024 over 1 million cotton bales were shipped, up by 30% compared to FY2023 although cottonseed shipments were down by 16% to 302,000 MTs (FY2023 - 360,000MTs). The Goondiwindi and Wee Waa sites broke long standing throughput records. Significant grain volumes, specifically pulses in Wee Waa, kept rail utilisation high in the October to February period.

Financial Statement FY2024 |2

FINANCIAL PERFORMANCE

The combination of much improved ginning conditions and higher than average grain volumes, resulted in an EBITDA1 of $22.9 million (FY2023 - $18.0 million) and NPAT of $6.9 million (FY2023 - $4.0 million). The contribution from the Ginning segment in FY2024 was $28.8 million (FY2023 - $21.0 million) has been positive on similar volumes. Supply Chain and Marketing earnings contributed $6.6 million (FY2023 - $4.5 million) to Group earnings.

CAPITAL ALLOCATION

After a prolonged drought affected period (FY2020 - FY2022), it was important to rebuild our core strengths. Accordingly, our capital allocation over the last two years has focused on reducing our term debt and catching up on deferred maintenance and capital expenditure.

The $8.0 million reduction in Term Debt during FY2024 (FY2023 - $9.9 million) leaves us with Term Debt of $24.5 million as at FY2024 (FY2023 - $32.6 million). Our FY2024 gearing ratio2 of 14% (FY2023 - 26%), which is at the lowest level in the last 10 years.

On 24 October 2023 Namoi renewed and extended its banking facilities with the Commonwealth Bank of Australia until 30 October 2026. The debt facilities provide headroom and flexibility to cost effectively manage variable seasons and to fund our 4PP initiatives. This includes locking in a reduced interest margin, funding year-round cottonseed inventory and, if required, ability to make and reborrow voluntary repayments.

On 1 December 2023 Namoi Cotton paid a $0.005 dividend. This was the first dividend paid since FY2019.

On 16 April 2024, the directors declared a dividend of $0.01 per ordinary share to be paid on 10 May 2024. This is in line with our dividend policy which aims to pay dividends in average and above average seasons.

OUR INVESTMENT IN KIMBERLEY COTTON COMPANY ("KCC")

Throughout the year our investment in KCC has continued. During the year Namoi has invested a further $2.6m in KCC to support the construction of the gin at Kununurra. Construction of the new cotton gin at Kununurra commenced in August 2023. Namoi Cotton is supporting the project by providing project management resources, some ancillary equipment and, later in 2024, skilled ginning staff to install the ginning equipment. Commissioning is planned for mid 2025.

NAMOI IS A GREAT PLACE TO WORK

The labour market remains extremely competitive across Australia, but particularly so in the rural and regional areas in which we operate. The tight talent market has required us to be innovative in the way we make Namoi Cotton "the employer of choice" to support retention rates across our sites. A key retention strategy has been to establish our ginning mechanical program with TAFE NSW to deliver formal training and a recognised qualification for Cotton Ginners. This year will see 11 current employees enter the 3-year Engineering - Mechanical program. We are proud to be able to offer future generations formally recognised and transferable qualifications, aimed at attracting regional talent into the industry.

Due to a shortage of experienced ginning staff in Australia, we continued to secure supplementary labour through our International Ginner pipeline. Namoi currently engages 13 international staff, many of whom have completed their second season with us. These employees have integrated well

3| Namoi Cotton

and provide a diverse high-quality workforce to complement our local team. On top of our full-time workforce, we employ between 300 - 500 casual employees during a season.

Managing variability in volume has involved simplifying and de-risking the business. This included finalising the development of our variable cost base. The work we have undertaken to re-build our execution capacity through the 2022 and 2023 seasons has enhanced our preparedness for the 2024 season. We have developed a smarter, more agile workforce with skills to improve work systems. Across the Group, 26% of our full-time positions comprised of contract roles helping us to manage volume variability in the future.

THE NAMOI COTTON BRAND IS STRONG

The focus of the Board and Executive's has been on simplifying and strengthening our business whilst pursuing a strategy to create valued services for growers and returns to shareholders through the cycle. The Namoi Cotton brand is strong and reflects the years of experience and a culture that is unique to Namoi Cotton. But we will never forget that our business is built on the strong relationship that we have with our growers and the expectation of delivering a premium service in good times and bad.

On behalf of our Board and the Executive Team, thank you to the entire Namoi Cotton team who continue to demonstrate our values despite the challenges. Also, thank you to my fellow Namoi Cotton Directors who continue to guide and support the business. Importantly, we thank you, our shareholders, for your continued support and investment in Namoi Cotton.

Tim Watson

Executive Chair

1. EBITDA is a non-IFRS and unaudited measure defined as earnings before interest, tax, depreciation and amortization (including share of EBITDA from NCA and share of profit from NCMA and NCPS excluding impairments and revaluation decrements on property, plant and equipment held at fair value).
2. Gearing ratio is a non-IFRS and unaudited measure defined as Net Debt/ (Net Debt plus Equity) where Net debt refers to total interest bearing liabilities less cash and cash equivalents.

Financial Statement FY2024 |4

DIRECTORS' REPORT

Your directors present their report on the consolidated entity consisting of Namoi Cotton Limited ('the Company' or 'Namoi Cotton') and the entities it controlled (collectively 'the Group') at the end of or during the year ended 29 February 2024 ('FY2024').

1. Directors

The directors that held office throughout the financial year and up to the date of this report, unless otherwise indicated, are as follows:

Name, qualifications and	Experience, special responsibilities and other directorships
independence status
Mr Tim Watson GAICD	Mr Watson was appointed to the Board on 18 December 2014 and appointed as Chair
Executive Chair	for Namoi Cotton Limited from 29 August 2018. Mr Watson was appointed Executive
	Chair on 1 July 2023.
	Mr Watson is a member of the People, Culture and Nominations Committee. Until early
	2022, Mr Watson grew cotton in the Hillston Region and has been involved in the cotton
	industry since 2000 and as a member of the Hillston District Irrigators Association, the
	Lachlan River Customer Service Committee and the Lachlan Valley Water Users
	Association. Mr Watson was re-elected as a Non-Executive Director at the 2022 annual
	general meeting. He brings with him extensive industry and commercial expertise in the
	cotton and general agricultural industry. He was also recognised by the cotton industry
	by being the recipient of the 2014 Australian Cotton Grower of the Year Award.
Robert L Green B.Bus. (QAC)	Mr Green joined the Namoi Cotton Board in May 2013. He is Chair of the Safety, Health
MAICD	and Environment Committee, a member of the Trading Risk Committee. Mr Green has
Independent Non-executive	considerable board relevant experience working as a Senior Executive and General
Manager in the Australian and International agricultural industry over many years. Key
Director
areas of experience include Business Management, Operations Management and
	Business Development. Mr Green is also a Non-Executive Director of Lindsay Australia
	Limited and Chair of the Board of Boomaroo Nurseries Pty Ltd.
Juanita Hamparsum B.Bus.	Mrs Hamparsum was appointed to the Board on 7 June 2018 to fill a casual vacancy and
(UTS), CA, FPCT, FAICD	was elected at the 2018 general meeting. She is Chair of the Audit, Risk and Compliance
Independent Non-executive	Committee, Chair of the Due Diligence Committee, a member of the Safety Committee
and the Trading Risk Committee. Mrs Hamparsum grows cotton and grains in the Upper
Director
Namoi region and has been involved in the cotton industry since 1998. Mrs Hamparsum
	has extensive accounting, financial, agricultural and natural resource management
	experience. Mrs Hamparsum is a chartered accountant and currently a Director and
	Chair of the audit committee of Cotton Seed Distributors Ltd and End Food Waste
	Australia Limited.
Ian Wilton MSc, FCCA, FCPA,	Mr Wilton was appointed to the Board on 17 June 2020 to fill a casual vacancy and was
FAICD, CA	elected at the 2020 annual general meeting. On 1 July 2023 following the appointment of
	Mr Watson as Executive Chair, Mr Wilton was appointed as Deputy Chair. He is also Chair

5| Namoi Cotton

Independent Non-executive	of the People, Culture and Nomination Committee, a member of the Audit, Risk and
Director	Compliance Committee and a member of the Due Diligence Committee. Mr Wilton is an
	experienced Non-Executive Director, having served on the boards of both listed and
	unlisted companies. He also has significant executive experience in the agribusiness
	sector. Mr Wilton is currently Chair of the Board of Elders Limited.
James Davies BCompSC, MBA,	Mr Davies was appointed to the Board on 28 November 2022. Mr Davies has over 35
GAICD	years' experience in investment management across timberland, economic
Independent Non-executive	infrastructure, real estate, and private equity. Mr Davies is a member of the People,
Culture, Nomination Committee and the Safety, Health and Environment Committee. He
Director
holds a Bachelor of Computer Science from the University of New England, a Master of
	Business Administration from the London Business School and is a Graduate of the
	Australian Institute of Company Directors. Mr Davies is also Chair of the boards of Kiland
	Limited, Eildon Capital Limited and Nobrac Limited.
Sarah Scales B. BSc (Ag,),	Ms Scales joined the Namoi Cotton Board on 22 May 2023. She is Chair of the Trading
GAICD	Risk Committee and is a member of the of the Audit, Risk, and Compliance Committee.
Non-Executive Director	Ms Scales has extensive Non-Executive and Executive experience in the international and
Australian agribusiness sectors. Her experience spans across the broad-acre cropping,
	horticulture, sugar, plant technology, meat production, food processing and water
	industries. Ms Scales is currently Non-Executive Director for Agracom Pty Ltd, AustOn
	Corporation and related entities, Tarac Australia Limited, Mitolo Family Farms Pty Ltd
	and Chair of Pace Farms Pty Ltd.
	Ms Scales is considered not to be Independent due to her association with LDC.

2. Company Secretary

Mr Andrew Baldwin was appointed joint Company Secretary on 25 October 2023. Mr Baldwin (BEng. Hons, CA, GAICD) is the current Chief Financial Officer of the Company.

Mr Andrew Metcalfe was appointed joint Company Secretary on 31 July 2023. Mr Metcalfe (CPA, FGIS, GAICD) is an experienced company secretary to ASX listed companies and was previously Company Secretary for Namoi from November 2019 to December 2021. Mr Metcalfe is engaged under contract through a service provider and is not part of the Key Management Personnel.

Ms Sonya Ryan and Mr John Stevenson previously held the roles of joint Company Secretaries. Both Ms Ryan and Mr Stevenson ceased to act in the role of joint Company Secretaries upon their respective resignations that occurred during the year.

3. Directors' Meetings

The number of Directors' meetings (including meetings of Committees of Directors) held and attended by each of the directors (as a 'Member' of the Committee) of the Company during the financial year are listed below:

Financial Statement FY2024 |6

Director	Board
Meetings	Audit,		People, Culture &	Safety, Health &
				Risk & Compliance	Nomination	Environment
Current	Attended		Held 1	Attended	Held	Attended		Held	Attended	Held
Tim Watson	12		12	-	-	4	4	-	-
Robert L	12		12	3	4	-	-	2	2
Green
Juanita	12		12	6	6	-	-	2	2
Hamparsum
Ian Wilton	12		12	6	6	4	4	-	-
James Davies	12		12	-	-	4	4	2	2
Sarah Scales	8		8	2	2	-	-	-	-

Director
Trading Risk Committee	Strategic Review	Due Diligence
	Committee	Committee
Current	Attended	Held	Attended	Held	Attended	Held
Tim Watson	-	-	13	13	2	2
Robert L	3	4	11	112	-	-
Green
Juanita	4	4	12	13	2	2
Hamparsum
Ian Wilton	-	-	13	13	2	2
James Davies	-	-	5	72	-	-
Sarah Scales	4	4	-	-	-	-

1. 'Held' is noted as the number of meetings that were held at the time the Director was a Member of the Committee.
2. Mr Green and Mr Davies joined the Strategic review committee subsequent to its formation and therefore did not attend the meetings before joining the committee.

All board members are invited to attend Directors' meetings and committee meetings. The Chief Executive Officer (CEO) and Chief Financial Officer (CFO) are invited to attend all meetings.

4. Directors' interests in share capital

The relevant interest of each Director in the share capital of the Company is disclosed in the Remuneration Report.

5. About Namoi Cotton and Principal activities

Namoi Cotton is an Australian domiciled public Company listed on the Australian Securities Exchange. The principal activities of the entities in the Namoi Cotton consolidated group in FY2024

7| Namoi Cotton

were the ginning and marketing of cotton including its by products such as cottonseed and moss/mote.

Namoi Cotton Limited, a pioneer in Australian cotton since 1962, started as a cooperative of visionary cotton growers who aimed to gain more control over how their cotton was processed and marketed. Over the years, the Company has grown into one of Australia's leading cotton processing and supply chain businesses, with a ginning capacity of 1.6 million bales annually and an extensive network of origination and logistics operations across major cotton growing regions.

6. Operations and Financial Review

Financial performance

The following table summarises EBITDA3 financial indicators used by Management to monitor and manage the Company.

	2024	2023	Movement
Ginning services	$28.8m	$21.0m	$7.8m	
Supply chain and marketing	$6.6m	$4.5m	$2.1m	
Corporate (net costs)	$(12.5)m	$(7.5)m	$(5.0)m 
Group EBITDA3	$22.9m	$18.0m	$4.9m	

3 EBITDA is a non-IFRS and unaudited measure defined as earnings before interest, tax, depreciation and amortization (including share of EBITDA from NCA and share of profit from NCMA and NCPS excluding impairments and revaluation decrements on property, plant and equipment held at fair value).

Operating financial review

Namoi Cotton experienced another above average ginning volume year of 1.16m bales (FY2023 1.17m bales). However, none of the climatic and supply chain challenges that were experienced in FY2023 occurred and therefore, from comparable volumes the financial performance was improved.

EBITDA from Ginning Services was $28.8m (FY2023 $21.0m). Although the volume of bales ginned was comparable with FY2023, this performance reflects the higher margins generated by increased throughput and higher efficiency achieved at the gins.

EBITDA from Supply Chain and Marketing was $6.6m (FY2023 $4.5m). This result reflects the higher volumes of cotton and grain handled and packed through our warehouses. This was a result of the large cotton and grain crop and was possible because of better supply chain conditions and additional storage income.

Unallocated corporate and support costs were $12.5m (FY2023 $7.5m). The increase is explained by the additional costs associated with the Strategic Review process (announced on 29 June 2023) and transaction costs related to the scheme of arrangement ("SIA")4 (entered into on 18 January 2024).

4 On 19 January 2024, Namoi Cotton Limited ('Namoi') announced it had entered into a Scheme Implementation Agreement ('SIA') with Louis Dreyfus Company Asia Pte. Ltd. ('LDC') to acquire the remaining 83% of issued shares in Namoi that it does not currently own, by way of a scheme of arrangement ('Scheme').

Financial Statement FY2024 |8

Operating Review

During FY2024, the Group capitalised on better weather conditions and cotton quality to deliver strong ginning volumes whilst optimising the Group's production efficiency and supply chain.

Ginning services

Namoi ginned 1.16 million bales of cotton in the 2023 season, similar to the 1.17m bales of cotton ginned in the 2022 season representing a market share of 36% of the cotton production in our catchment valleys.

We operated 9 of our 10 gins this year. Our North Bourke site did not operate this season, with most of the cotton relocated to our Trangie and Moomin Gins.

The completed 4PP gin upgrades at Merah North and Trangie delivered increased operational efficiency and contribution. Our overall gin productivity increased by approximately 10% at both gins, reducing operating costs and reducing ginning time for growers.

• Merah North ginned a record volume, exceeding its past record by more than 10%.
• Trangie ginned its second highest volume, enabling cotton from our North Bourke gin to be consolidated.

We executed the sale of 302,000 tonnes of cottonseed in FY2024 (FY2023: 360,000 tonnes) representing a decrease of approximately 16% from the prior year. Drier weather conditions drove increased demand in the domestic market for cottonseed throughout the year on which we were able to capitalise on and enhance our cottonseed margins. However, the overall performance of cottonseed marketing for the year was reduced by the impact of FY2023 inventory that was carried into the current financial year.

We shipped 13,000 moss cotton bales in FY2024 (FY2023: 6,000 bales) whilst also improving our overall moss production efficiency at our Yarraman site.

Supply Chain and Marketing

In FY2024, NCA shipped 1.04m bales of cotton lint representing an increase of approximately 30% from the prior year (FY2023: 0.8m).

Domestic and export supply chains returned to normal in the 2023 season with little disruption in transportation and good container availability allowing the packing and logistics operations to be streamlined.

NCA warehouses received a record volume 1.01m bales of cotton lint driven by strong demand by merchants for strategically located up-country storage with a more reliable supply chain with few rail and road disruptions. This record volume led to record earnings in the NCA joint venture.

Corporate

The Group's corporate cost base increased by $5.0m in FY2024 because of additional costs related to the strategic review and the SIA. Adjusted for these one-off costs, the corporate cost remained reasonably in line with the prior year. The Group remains committed to improving the efficiency of the businesses corporate cost structure.

9| Namoi Cotton

Investments for future performance

During the year Namoi Cotton has continued to invest in the Kimberley Cotton Company("KCC"). The investment in KCC, which is building a cotton gin in Kununurra, is a strategy to diversify Namoi Cotton's geographic exposure to variable growing conditions. More information about the investment in KCC is included in Note 4.3 to the financial statements.

Some capital investment projects under the 4PP program was paused in FY2024 as a result of the Strategic Review.

Review of financial condition

After a prolonged drought affected period (FY2020 - FY2022) it has been our focus to rebuild our core strength and hence our capital allocation has been heavily weighted to reducing our debt levels. At 29 February 2024 our term debt is $24.5m (FY2023 $32.6m).

Namoi Cotton renewed its banking facilities with Commonwealth Bank of Australia until 30 October 2026. The debt facilities provide headroom and flexibility to cost effectively manage variable seasons and to fund our 4PP initiatives.

Our FY2024 gearing ratio5 of 14% (FY2023 26%) is at the lowest level in the last 10 years.

7. Business strategies and prospects for future financial years

The short term outlook for cotton production remains positive as a result of favourable weather conditions and good water availability. Forecast cotton production of 4.5m6 to 4.9m7 bales for the 2024 season (FY2025), with above average production in our central and southern valleys and average to above average production expected in our northern valleys.

Based on forecast cotton production and using our historic market share of 33% (last five year average), we are expecting another above average ginning volume of 0.9 to 1.1 million bales in the 2024 season.

Business Strategies - 4PP Update

Benefits have started accruing from Namoi's 4PP Strategy in FY2024. The 4PP Strategy is targeting to increase through the cycle EBITDA by $6m from $26m investment, including our expansion into northern Australia.

Completed 4PP initiatives are estimated to have contributed an incremental EBITDA of $1.5m in FY2024 from:

• Over 10% increase in gin productivity at the upgraded Merah North and Trangie gins, reducing operating costs and ginning time for growers.
• New cottonseed shed at Boggabri increased cottonseed earnings by avoiding external storage cost and reducing transport costs with 90% of cottonseed sold to nearby consumers and packers.

4PP related capital expenditure was paused after the announcement of the Strategic Review on 29 June 2023 other than our investment in Kimberley Cotton Company (KCC).

1. Gearing Ratio is a non IFRS & unaudited measure defined as net debt divided by net debt plus total equity
2. Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) 5 March 2024.
3. Cotton Compass 4 March 2024

Financial Statement FY2024 |10