Newsletter Q2 2024

Dear members of the WelMac Circle,

Another harvest season has come to an end, its been a steep learning curve for our whole team getting into a different way of doing things. As mentioned in our previous newsletters, the season started with a historically low price for macadamias, which fortunately seems to be recovering. This pushed us to move a bit faster into the direction we always planned to go, namely becoming more active further up in the value chain. To avoid some processing costs and in an effort to obtain a better bottom line result for the sale of our nuts, we traded most of our volume as nut in shell. This was different from years past, but it seems the final price is better than it should have been if we processed through the conventional channels in South Africa.

This quarter was also our shareholders meeting, which is always a great time to connect with our investors and receive new ideas and advice on the challenges we have faced and the opportunities for the future.
We hope you enjoy the read as always!

2024 Macadamia market

The 2024 season kicked off with a lot of uncertainty after a historic low macadamia price market in 2023. During the first four months of 2024 everyone was waiting for prices and contacts to become available for both NIS (Nut In Shell) and kernel. As the season gained momentum the industry became active with orders with the largest portion of macadamia being sold into the NIS market.

Both NIS and kernel prices have improved and below are the average prices on 5 week intervals.

The general view is that prices are on a recovery from the previous season. Supply can possibly become a challenge as both the Australian Macadamia Society (AMS) and the South African Macadamia Growers Society (SAMAC) have adjusted their 2024 crop estimates downward due to climate factors.  This can have a positive impact on price recovery.

One of the biggest challenges that macadamia farmers had was access to transparent and reliable data about market prices and by making use of the data from the MSM platform we now have access to realtime data.

Welmac Production

Welmac is still in the process of delivering nuts as we closed contracts with a party that is buying our macadamia on an Ex-Works basis resulting in a significant saving on logistics and commisions.

Processing is done at Zetmac which is our direct neighbour. To date the bulk of our product have gone into the NIS line. At the end of the season we will give a detailed season overview.

Climate

The autumn and winter months of 2024 are significantly different from the same period of 2023 as the current season has very low monring temperatures followed by temparatures well above 30 degrees celcuis in the afternoon resulting a much ealier flower development.

Rainfall in 2023 was also spread out in the winter months than currently.  Below are two graphs for 2023 and 2024 indicating the variances.

It is however too eatly to indicate what impact these variences will have on the 2025 season.

Pruning

Part of preparation for the new season is an intensive pruning program, we prune our trees for the following reasons:

• Maintaining optimal tree size.
• Allowing sunlight penetration into the trees for photosynthesis.
• Removal of unwanted material.
• Production stimulation.

All the pruning material is mulched back iunderneath the tree line which breaks down into compost which is a key component of our regenrative production practises. Welmac is currently in it’s fourth year of expanding the regenrative practises and it remains a constant learning curve along with the transition to biological pest and disease control.

The results have been postive year on year and the new soil samples that we need to take in the fourth quarter will give a good indication of the soil condition.

Working on water

We are very excited to share that Welmac qualified for a “working on water “ grant which is a project funded by the department of agriculture that helps the farmer remove invasive plant species from his farm. The team have started to clear a 4ha area of invasive species in which we will no establsih natiral grass and indigenous trees. The removal of the invasive plants allows for natural water flow to recover and also benefits the underground water sources since invasive plants use high volumes of water.

The natural habitat returns which has a direct impact on animal life.

The area to the left is now clean with the removed material on the right.

Albasini nursery

To prepare trees better for our own planting we are moving trees from 5,5liter bags to larger bags and encouraging more root growth before the trees leave the nursery. we have also spaced them further apart to ensure more sunlight reaches each tree, this also promotes more branching in the nursery. when this tree eventually gets planted out it will already be half a year ahead of the usual trees we plant.

With the macadamia price improvement we expect farmers to start replacing older cultivars with new genetics that delivers a higher yield and a larger size nut.

Social

The vegetable garden is an ongoing project which we have expanded over time to supply our staff with fresh, seasonal  vegetables through the year.

Luc van Dijkman is a student from the HAS Green Acadamy in Den Bosch was part of our team for the first half of 2024 to complete an internship as part of his studies writing a research script on the marketing and value adding of macadamia. The findings of his script will be very helpful for our future plans.

Annual Accounts 2023

We are pleased to share important updates regarding our company’s financial health and governance. During the recent Annual General Meeting on June 27th 2024, the shareholders approved the financial statements for the fiscal year ending December 31st 2023. This endorsement reflects our commitment to transparency, accuracy, and fiscal responsibility.

Our financial statements have, once again, successfully passed a rigorous audit conducted by Vallei Accountants Audit BV. The audit confirmed that our financial records are accurate and in compliance with all regulatory standards.

All other items on the agenda were voted for unanimously in favour.

The complete annual financial statements can be accessed in the “Downloads” section of our website (https://www.welmac.nl/downloads-terms-conditions).

Funding Round extension

Due to heightened interest and to provide ample opportunity for all interested parties to participate, we have decided to extend the deadline for our current funding round. The new deadline is September 30th 2024. This extension will allow potential investors more time to conduct due diligence and finalise their investment decisions.

We encourage all current and potential investors to take advantage of this extended period to engage with our team, review our business plans, and understand our strategic vision. Our investor relations team is available to provide any additional information and answer any questions you may have. For more information please visit https://www.welmac.nl//duurzaam-investeren

After September 30, 2024, the offer will be closed, and the listing on Nxchange for the certificates from the previous and current financing round will be prepared. If you have purchased share certificates within these offers, you will receive further information about this later.