To our shareholders

Markus Brütsch

Chairman of the BoD

Dear Shareholders

The 2024 fiscal year was challenging, particularly in implementing further restructuring measures and achieving the associated cost savings. As expected, the order situation remained stable at a lower level. This made it all the more important to adjust both production volumes and costs accordingly while maintaining the flexibility to restore capacity in the event of an upturn. Debt restructuring was also a key focus during the past fiscal year. Our existing net debt prevented us from pursuing new projects, as we were unable to secure additional loans or generate free funds from operations.

Positive operating result (EBITDA) with lower sales

Net revenues amounted to EUR 47.7 million, representing a decline of 15.3%. Thanks to the measures implemented, we achieved a positive operating result (EBITDA) of EUR 2.1 million despite this decrease in sales. Some cost savings only became effective in the second half of the year. The economic situation has yet to improve, with a slight recovery expected in the second half of 2025. The European construction sector experienced an overall decline in 2024, with construction volume shrinking by 2.7%. Residential construction was particularly affected, with a drop of 5.4%. As our cost base has now been adjusted to this lower level of sales, we are more profitable, assuming economic conditions remain unchanged. More details can be found in the Group result and segment reporting sections.

Sustainability as a value driver

The non-profit organization Global Canopy has recognized Precious Woods as one of the five most influential companies worldwide in the fight against tropical deforestation. With over 30 years of experience in sustainable forestry in the tropics, we make a significant contribution to preserving tropical forests. We aim to expand these efforts further, as too few are following our example. The price of our timber products is determined by the world market. However, our certified sustainable practices (FSC and PEFC certification) provide us with a slight price advantage. More importantly, they grant us access to markets where customers must or wish to ensure traceability and sustainability. This will become increasingly crucial, as the World Bank estimates that global timber demand will quadruple by 2050, leading to greater pressure from both customers and governments to use sustainably sourced products.

Contracting new concession areas with intact tropical forests, and in that way contributing to the protection of larger areas, remains a top priority for us. We have also begun reforesting degraded or deforested areas previously managed by other operators, starting in Gabon. We have the necessary expertise to implement this in practice. Equally important is increasing the vertical integration of our products. By enhancing processing depth, we can improve yield and achieve higher margins.

Debt reduction and financing options

At our Extraordinary General Meeting on 2 December 2024, 84.4% of the shares were represented. An overwhelming 99.6% of shareholders approved a capital increase and the associated creation of registered preferred shares. This capital increase was implemented through the conversion of loans granted exclusively by existing shareholders. As part of this process, there was a waiver of interest amounting to approximately EUR 2 million, which had been due in the 2024 fiscal year. I would like to take this opportunity to express my sincere gratitude to our former lenders, who are now not only ordinary shareholders but also preferred shareholders. Without this capital increase, the future of Precious Woods would have been more than uncertain.

Liquidity remains a major concern. This capital increase did not bring fresh capital into the company. Although small loans have helped support liquidity, additional external financing is required to fund projects and replacement investments. We are confident that our new capital base will provide access to further financing opportunities. Equally important, however, is delivering strong business results that demonstrate our ability to generate profits even in challenging times. The restructuring measures and debt reduction have laid the foundation for this.

Outlook and thanks

We do not anticipate a significant upturn yet in the 2025 fiscal year. The market remains subdued, and the political environment is challenging. It will be crucial to closely monitor and assess the measures taken by individual governments and their economic impact. Against this backdrop, thanks to the restructuring measures we have implemented, we are well positioned to achieve a positive business result based on the current conditions.

On behalf of the entire Board of Directors, I would like to take this opportunity to thank our management teams in Switzerland, Brazil and Gabon for their dedication, professionalism and outstanding performance. The challenges remain demanding and require both flexibility and strong execution. I would also like to thank our approximately 1 000 employees for their daily commitment to our company and our mission.

Moreover, I would like to thank my colleagues on the Board of Directors for their unwavering support and consistently constructive collaboration.

On behalf of the entire Board of Directors and our employees, we sincerely thank you, our shareholders, for your loyalty and commitment to our company, as well as for your continued support and encouragement of our activities and dedication.

Yours faithfully

Markus Brütsch

Chairman of the Board of Directors