TIDMWBI
RNS Number : 9162G
Woodbois Limited
01 April 2022
1 April 2022
Woodbois Limited
("Woodbois", the "Group" or the "Company")
Audited results for FY 2021
Woodbois, the African focused sustainable forestry,
reforestation, carbon sequestration and timber trading company,
announces its audited results for the full year ended 31 December
2021.
Highlights
-- Turnover increased by 14% to $17.5m (2020: $15.3m) despite
continued disruption to shipping
-- Gross profit increased by 186% to $3.5m vs $1.2m in FY 2020
-- Significant gross profit margin increase to 20%, up from 8% in FY 2020
-- First year of positive EBITDAS* of $1.0m (2020: loss $1.7m)
-- Sawmill capacity in Gabon increased to 30,000m3 output per annum
-- Acquisition of additional 71,000 hectares of forestry concession land in Gabon
-- Q1 2022 ahead of Q1 2021 despite continued shipping
challenges: confident of meeting planned growth
Commenting on today's announcement Executive Chair Paul Dolan
said:
"These results clearly demonstrate the progress achieved by the
Group during 2021. Turning EBITDAS positive was another milestone
on our growth pathway. Increases in factory capacity and total
forestry concession hectarage delivered during 2021 and into 2022
have positioned the Group for continued growth in revenues and
profitability. Further capital investment is planned to continue
our expansion in 2023.
The Company is now better positioned than ever to deliver faster
growth and higher levels of profitability once outside factors,
most notably shipping, allow."
*Non-IFRS measure, please see financial review for EBITDAS
reconciliation
Enquiries:
Woodbois Limited
Paul Dolan - Executive Chair
Federico Tonetti - CEO
Carnel Geddes - Chief Financial Officer + 44 (0)20 7099 1940
Canaccord Genuity (Nominated Advisor and Broker)
Henry Fitzgerald-O'Connor
James Asensio
Thomas Diehl + 44 (0)20 7523 8000
Celicourt Communications (IR/PR) +44 (0)20 8434 2643
Mark Antelme woodbois@celicourt.uk
Jimmy Lea
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 which forms part of UK
law by virtue of the European Union (Withdrawal) Act 2018
("MAR").
Non-IFRS measures
The Company uses certain measures to assess the financial
performance of the company. These terms may be defined as "non-IFRS
measures" as they exclude amounts that are included in, or include
amounts that are excluded from, the most directly comparable
measure calculated and presented in accordance with IFRS. They also
may not be calculated using financial measures that are in
accordance with IFRS. These non-IFRS measures include the Company's
EBITDAS.
The Company uses such measures to measure and monitor
performance and liquidity, in presentations to the Board and as a
basis for strategic planning and forecasting. The directors believe
that these and similar measures are used widely by market
participants, stakeholders, and other interested parties as
supplemental measures of performance and liquidity.
The non-IFRS measures may not be directly comparable to other
similarly titled measures used by other companies and may have
limited use as an analytical tool. This should not be considered in
isolation or as a substitute for analysis of the Company's
operating results as reported under IFRS.
The Company does not regard these non-IFRS measures as a
substitute for, or superior to, the equivalent measures calculated
and presented in accordance with IFRS or those calculated using
financial measures that are calculated in accordance with IFRS.
STRATEGIC REPORT
Executive Chair and CEO Statement
Dear Shareholder,
Following another year of solid, demonstrable progress for the
Group, and particularly given the Covid-dominated macro-economic
backdrop of the last two years, we are delighted to present
Woodbois' 2021 annual report. Investors and other stakeholders will
be aware that our Company is driven by both purpose and profit and
while we have consistently delivered on our social and
environmental purpose, achieving our first year of positive
EBITDAS[1] in 2021 was a watershed moment and one in which all of
our employees can take pride. Assuming that shipping patterns
normalise we are very optimistic for further progress in 2022.
2021 Business performance
The Company improved on all measures of financial performance in
2021, increasing turnover by 14% and making significant progress
with a more than doubling of gross profit margins, a near trebling
of gross profit and a first-ever positive EBITDAS. As the report
below from our CFO, Carnel Geddes, spells out, 2021 also saw
material improvement in the Company's balance sheet as well as
enhanced capacity, efficiency and margins throughout its
operations. In common with most export companies, volumes shipped
during 2021 were constrained by world-wide port congestion and
difficulties in accessing empty containers which impacted our cash
generation and working capital, particularly in Q4.
The Group continued the roll-out of its strategic plan during
2021 with capacity at the sawmill in Mouila, Gabon almost doubling
to 30,000m3 of annual sawn timber output. Value-adding capital
projects have continued into 2022 with capacity at our veneer
factory in Mouila, Gabon expected to more than double to an
annualised output of 15,000m3. Significant challenges, most notably
the ability to receive machine parts by sea freight, have delayed
completion of this installation: full commissioning is expected to
be completed by June 2022. The acquisition of an additional 71,000
hectares (of which 56,000 hectares has an existing approved
management plan in place for harvesting) of valuable forestry
concession land in Gabon during 2021 will more than satisfy the
additional raw material input requirements of these expanded
production facilities.
This focused investment has added significant value to the
Company's portfolio, providing protection against the elevated
input costs being experienced by industry players who don't have
access to their own supply of raw material and positioning us to
benefit from a very strong timber market.
Our fourth annual sustainability report expanded its scope to
align with the Integrated Reporting (IR) model: this aims to offer
further transparency and connects different parts of the business
to provide a broader view of how Woodbois creates and preserves
value. We aim to regenerate our forests, provide employment
opportunities, enhance our communities and be a model organisation.
The benefits of creating a culture in which all employees are
actively encouraged to contribute to enhancing workplace safety and
production efficiency are borne out in the Company's results. Also,
we are grateful to those investors and stakeholders who offered
their views and feedback with regards to content and framework of
the report. We have continued on the path to full FSC certification
and are more than 50% completed and also are committing to be
carbon neutral in our operations no later than 2035.
Impact of War in Ukraine
Our thoughts are of course with all of those suffering as a
result of the war and we hope for a speedy, peaceful resolution.
Apart from currency volatility and an increase in fuel prices, the
Group has not experienced any impact as a result of Russia's
invasion of Ukraine.
As a result of sanctions instituted against Russia, some
shipping companies are reducing their level of service to Russian
routes and will re-allocate services to alternative routes,
potentially benefiting African exporters. Sanctions on exports from
Russia include forestry products, further reducing supply of timber
to some markets and possibly impacting pricing accordingly.
Strategic initiatives
Delivery of the Company's comprehensive growth and
sustainability agenda will clearly require enhanced organisational
capability, which remains a key area of focus for both our
Executive Chair and CEO as the Group evolves. Since joining
Woodbois in November 2021, in line with his background, Federico
Tonetti (CEO) has taken responsibility for operations and cash
generation, allowing Paul Dolan (Executive Chair) to shift his
attention towards a strategic focus on the many and varied
requirements for building-out a purpose driven, market-leader in
the sustainable timber products space.
As we scale the business, increasing industry awareness of the
Woodbois brand globally becomes an increasingly important
objective. Our sales team has recently experienced its highest ever
levels of interest on our stand at the Dubai WoodShow, and within
the next two months the team will be well represented in the US at
the World of Wood convention in Orlando in April), and in Europe
(at the Eurobois convention in Lyon, France in June). While Asia in
general and China in particular, could easily absorb all of our
production, the logistical challenges experienced over the last two
years have served to underscore the importance of building a
geographically diversified customer base to ensure maximum
flexibility at both ends of our value chain.
Higher value-added product mix remains a key strategic objective
with our next major capital project being the installation of a
third, larger veneer line during 2023 to take veneer capacity to
30,000m3. We have also targeted smaller margin-enhancing projects
designed to maximise utilisation of raw material and minimise
waste. Economies of scale and continuous process improvement will
be important components of our transition to becoming a
consistently cash generative business.
We see value in further expanding the total concession area
under management in the Congo basin and in other attractive African
locations. This remains a longer-term strategic priority as we look
to add further profitable capacity and to geographically diversify
our source of supply and export routes. A strategic review of our
Mozambique assets is underway, given the continuing challenges
there.
The Board
In line with the Company's commitment to enhance its corporate
governance framework, in November 2021 the role of Chair and CEO
was split, with the arrival of Federico Tonetti as CEO, Paul Dolan
moving to the role of Executive Chair and with the appointment,
also in November, of David Rothschild as an Independent
Non-Executive Director and member of the Audit, Remuneration and
Nominations Committees.
Federico Tonetti is a highly experienced senior executive, with
a track record of delivering business model transformation and
operational optimisation for multinational enterprises. Most
recently, Federico was the Group Safety & Sustainability
Director of Compass Group PLC, the largest contract food-service
company in the world and a constituent of the FTSE100. Prior to
this, he was the Country CEO for LafargeHolcim, a global leader in
building materials and solutions, in Poland, and before this held
other senior positions within Lafarge. Federico also worked as a
Strategy Consultant for Bain and Company.
Prior to formally joining, Federico completed a three-month
strategic review of the business, with his resulting growth agenda
being formally approved by the Board. Having advised international
corporations on their sustainability strategies and given our
ability to help organisations achieve their carbon reduction
objectives, Federico's ESG credentials as well as his strong
operational background made him an ideal steward to deliver on
ambitious growth targets and long-term value creation for all
stakeholders.
David Rothschild has a wide range of experience in growing
businesses and improving their performance as a senior manager and
adviser. He has been active in the African resource and
agricultural sectors over the past 20 years, including as
co-developer of a Liberian green-field sustainable palm oil
operation, and as advisor on environmental and social action
planning. He has also been actively involved in governmental and
NGO relations and was an early Steering Committee Member of the
High Carbon Stock Approach Group, which ensures responsible
development. A French speaker with over 40 years experience in
international business, including six years at the consultancy,
McKinsey & Co, he is a dual national of the USA and South
Africa and holds both B.Com and MBA degrees.
The strengthening of the Board, as well as new executive hires,
will help the Group achieve its growth and other ambitions.
Carbon
A ccreditation by the Government of Gabon for Woodbois to attend
COP26 was an honour. It provided an opportunity for Board members
and our senior leadership team to take part in high level
discussions on climate change with key stakeholders while promoting
the role that Woodbois can play in supporting host countries and
international businesses in achieving their pledges via our
nature-based solutions offering.
We have subsequently submitted a formal application, together
with a comprehensive independent feasibility study, to the Gabonese
Government, detailing a plan for a large-scale afforestation
project in the country with an associated pilot-planting project
which, if successful, is intended would start during 2022.
Following the many net-zero commitments made at COP26 and
subsequently, the Company foresees expansion and growth in global
carbon trading markets, increasing carbon-related costs for carbon
emitters and significant growth in demand for offsetting
nature-based carbon sequestration projects as being inevitable.
Securing our own supply of carbon credits via the implementation of
large-scale nature-based projects remains a fundamental strategic
objective.
Looking forward
The Board sees significant value in Woodbois' proposition of
both growing a cash-generative, purpose-driven sustainable forestry
business with highly favourable demand/supply dynamics, and leading
large-scale nature-based carbon sequestration initiatives. We will
continue to position the Company accordingly.
We are reluctant to predict the timing of any normalisation in
the global shipping sector given our experience over the last two
years. Our plans for 2022 therefore factor in on-going supply-chain
disruption, with growth, although substantial, being at a slower
rate than the Company's full potential might otherwise indicate.
Whilst our first quarter 2022 was affected by continuing shipping
challenges it was nonetheless ahead of 2021 so we are confident of
meeting our planned growth.
We trust that all stakeholders will draw comfort however from
the improvement in performance during 2021. Your management team is
highly incentivised to deliver more, in particular the consistent
generation of positive cash-flow to help drive our growth and, when
expedient, to permit payment of dividends. With a talented,
diverse, motivated team, enhanced manufacturing facilities and
strengthened board and balance sheet, the Company is better
positioned than ever to deliver faster growth and higher levels of
profitability once outside factors, most notably shipping,
allow.
Paul Dolan and Federico Tonetti
Executive Chair and CEO
1 April 2022
CHIEF FINANCIAL OFFICER'S REPORT
Summary reflections on 2021
The outturn for 2021 was characterised by strong operational
progress but constrained by sustained worldwide shipping
dislocation, limited container availability and Covid-related
disruption. Despite the difficulties, the Company is proud to
deliver its first positive EBITDAS 2 of $1.0m (2020: loss $1.7m) as
set out in the table below, as well as to have increased revenues
by 14% and gross profit by 186% year on year. 2021 saw a gross
profit margin rise to 20%, more than double the margin of 8%
realised in 2020. In terms of segment contribution, our own
production sales generated a margin of 30% in 2021 v 24% in 2020
and Trading of 3(rd) party products generated a margin of 11% in
2021 v 2% in 2020.
Year ended 31 December 2021 Year ended 31 December 2020
$000 $000
---------------------------------------------------- ---------------------------- ----------------------------
Profit/(loss) before taxation from continuing
operations 90,702 (4,199)
Add back fair value gain on biological assets (4,253) (9,515)
Add back finance costs 591 2,820
Add back gain on bargain purchase (88,292) -
Add back share based payment expense 233 200
Add back loss owing to theft - 3,403
Add back loss on financial restructure - 1,487
Add back contingent acquisition expense - 2,171
Add back depreciation and amortisation 326 778
Add back depreciation in Cost of Sales 1,737 1,165
------------------------------------------------------ ---------------------------- ----------------------------
EBITDAS 1,044 (1,690)
------------------------------------------------------ ---------------------------- ----------------------------
In 2021 the Group also secured 71,000 hectares of additional
high quality, virgin forest in Gabon, giving rise to an accounting
Gain on Bargain Purchase of $88 million. Through this acquisition,
the Company now has access to sufficient raw material to deliver on
its near-term growth aspirations for its Forestry Division. The
funding of this purchase, the investment to increase our production
capacity (to keep up with the increased availability of raw
materials) and the launch of our Carbon Solutions division in 2021
was made possible as a result of a fundraise of gross $8.5m
completed in May 2021. We would like to thank the existing and new
shareholders for their support in making this fundraise a
success.
2021 Financial performance review
The prolonged impact of COVID-19 related disruptions, especially
in the logistics chain, made 2021 another challenging year, but I
am pleased to report that we achieved, following a necessary
revision halfway through the year, our revenue and EBITDAS targets.
Our first year of positive EBITDAS was achieved despite the
widespread challenges.
In terms of the hard numbers, Revenue increased by 14% to $17.5
million in 2021 (2020: $15.3 million). Gross Profit was up 186% to
$3.5 million compared to $1.2 million in 2020 reflecting the
benefits of the investments made in recent periods, improved
productivity, as well as economies of scale. Gross profit margin
rose to 20%, more than double the 8% realised for the full year
2020. As expected, finance charges reduced by 79% to $0.6 million
compared to $2.8 million in 2020 reflecting lower debt and we
booked a Foreign exchange gain of $0.8 million (2020: gain $1.3
million).
We recorded a gross fair value gain of $4.3 million (2020: gain
$9.5 million) on biological assets in 2021. The stable political
conditions in Gabon, coupled with consistently achieving better
prices than in 2019 and 2020 for the species in our concessions
have prompted us to revalue upwards, the biological assets in that
geography by $26.9 million (net of deferred tax). However, although
the continued unrest in the Northern part of Mozambique has not
affected the business, we have written down the value of the
biological assets in that geography by $23.2 million as a result of
lower forecast maximum permitted harvest rates. We continue to plan
for improving our overall activity levels in that geography in
2022. Our Gabonese concessions now account for 88% of our total
biological assets of $336.8 million (see note 11 for more
details).
Revenues from own production increased by 83% from $4.4 million
in 2020 to $8.0 million in 2021 and generated a gross margin of 24%
in 2020 vs 30% in 2021. Third party Trading revenues decreased by
13% from $10.9 million in 2020 to $9.5 million in 2021, however
gross margin increased from 2% in 2020 to 11% in 2021. Own
production sales represented 29% of total sales in 2020 vs 46% in
2021. The higher margins achieved in each division in 2021,
together with the change in divisional sales mix, resulted in an
increase of overall margin from 8% in 2020 to 20% in 2021. See note
2 for further information.
The non-cash gain from bargain purchase arises due to the
difference in accounting frameworks applied by the Company and
LGFIB, the Gabonese company it acquired. Specifically, the
difference relates to the measurement of Biological Assets. The
Company applies IFRS which stipulates that acquired assets and
liabilities be recognised, at the date of acquisition, at its fair
value. LGFIB, who applied Gabonese accounting standards, does not
carry Biological Assets on its Balance Sheet, but instead expensed
the cost of acquiring it over time and no fair value assessment is
made for accounting purposes. The Company applied IAS 41 when
determining the Fair Value of the Biological Assets acquired.
Further information on the inputs to the valuation is set out in
Note 11. In addition to the effect of the different accounting
standards applied, the previous owner's financial position, their
inability to acquire finance to operate the asset and the threat of
potentially losing it due to non-operation together with the quick
exit and certainty of being paid offered by WoodBois contributed to
the gain realised (see note 5).
Cash and working capital
In 2021 the Company's continuous cost improvement project
focussed primarily on our operating cost structure and making it as
flexible as possible given the expected impact of disruption due to
COVID-19, specifically the impact on our ability to harvest, run
more than one production shift per day and on shipping and
logistics. Our contingency plans and quick reaction when needed
resulted in a cost reduction of 16% in operating costs while
increasing sawn timber production by 84% year on year and veneer
production by 78% year on year. Our administration expenses
increased by $0.3 million in 2021 compared to 2020 owing to the
increased cost base related to our new Carbon Solutions Division
and the senior hires made during the year.
Although not yet cash flow positive, we managed to reduce our
cash outflow from operating activities to $2.5 million from
outflows of $5.5 million in 2020 and $10.6 million in 2019. Our
largest items of investment were the acquisition of the additional
forest ($1.5 million of which $1.1 million had been paid by year
end) and the additional investment in harvesting and production
plant and machinery ($4.3 million). Our year end 2021 cash of $0.9
million compared with $2.6 million at the end of 2020.
At the end of 2021 the Group's receivables and inventory were
$10.8 million (2020: $8.7 million), whilst payables and similar
were $4.5 million (2020: $4.5 million). Total borrowings (excluding
the convertible bond) reduced from $8.7 million in 2020 to $8.3
million at the end of 2021. Of this $5.4 million (2020: $6.2
million) was classified as current. As explained in note 16, $3.2
million of this is a revolving facility with a Danish bank with no
specified maturity date and which, although there is no expectation
it will need to be repaid in 2022, has nonetheless been classified
as a current liability, consistent with the prior year. Net working
capital was $2.0 million, up from $0.7 million in 2020.
Net Assets
The Company significantly increased net assets year-on-year,
from $156.8 million in 2020 to $258.4 million, largely due to the
revaluation of our properties in Gabon and the purchase of
LGFIB.
During the first half of 2021 a total of 326 million Non-Voting
Ordinary Shares have been converted into Voting Ordinary
Shares.
On 17 May 2021, the Company completed a fundraise. As a result,
100 million Voting Ordinary shares were admitted for trading on AIM
at a price of 6 pence per ordinary share (the "Placing Price"). At
31 December 2021 the Group's share capital of 2,482 million
ordinary shares, was comprised of 1,857 million Voting Shares and
625 million Non-Voting Shares.
As set out more fully in the Directors' report, the Independent
Auditor's Report and in Note 1 of the financial statements, the
Company continues to adopt the going concern basis in the
preparation of this Annual Report and at the date of this
report.
Looking ahead to 2022
The Company is primed to deliver on its growth aspirations and
remains confident of materially increasing revenues and
profitability during 2022, subject to shipping and container
availability. The frustration, specifically with regards to
uncertainty of cash generation and timing that these shipping and
logistics constraints had put on the business in 2021 is expected
to continue, at least in the first half of 2022. To weather near
term cash needs caused by these disruptions, in January 2022 the
Company put in place short- and medium-term loan facilities of an
aggregate $4 million with its two largest shareholders. One of
these facilities, a two-year general-purpose facility of $2 million
(at 8.5% interest) was fully-drawn in February 2022, the other is
currently undrawn and is conditional on approval by the lender at
the time of drawing. These facilities are intended to ensure a
stronger working capital position as the Company works through the
logistical challenges it faces to deliver inventory to customers,
and to ensure the effects of shipping delays and Covid-related
disruption can be more easily dealt with until that industry
normalises. In March 2022 a further liquidity boost was secured for
our trading division through our Danish banking partners who
increased our working capital facility by $2.3 million and adjusted
the interest on that facility down from 2.5% per annum to 2.0% per
annum.
Demand for our products remains high and the resulting price
increases experienced in 2021 largely compensated for the higher
logistics costs experienced. We expect to maintain and modestly
improve on this margin expansion in 2022. Our Capital expenditure
projects are expected to complete during 2022 and we continue
towards FSC certification of both of our production facilities and
our forest.
On the 28th of March 2022 our cash balance was $2.7 million,
with estimated net working capital of $10.6 million and
interest-bearing bank and other borrowings of $12.1 million .
As we navigate our way through these challenging times, our
focus is strongly on ensuring that the business becomes cash flow
positive.
Carnel Geddes
Chief Financial Officer
1 April 2022
SOCIAL IMPACT AND SUSTAINABILITY
With ESG investments increasing and sustainable forestry
management an increasingly important focal point in the mitigation
of deforestation and climate change, Woodbois remains fully
committed to being a leader in terms of transparency and best
practices. Despite the challenges brought on by the coronavirus
pandemic, we were able to keep our team safe in 2021. Woodbois
forest management strategy is designed to ensure the long-term
protection of the forests in which we operate while social and
economic benefits as well as value creation for all
stakeholders.
Health and Safety
Though coronavirus lockdowns again reduced shifts and the number
of employees allowed at Woodbois manufacturing sites during 2021,
we took this opportunity to invest in up-skilling and training,
with a heavy focus on Health & Safety. We also implemented
continuous improvement initiatives and lean manufacturing processes
with the idea of building a culture where everyone is encouraged to
contribute to enhancing workplace safety and production efficiency.
The impact has been considerable - we have since set consecutive
production records and consider our approach to continuous
improvement to be of a world-class standard.
In 2021, Woodbois was again recognised for its sustainable
approach in the Sustainability Policy Transparency Toolkit
('SPOTT") ESG policy transparency assessments for the worldwide
timber and pulp industries. In the annual assessment of operations
and approaches to ESG in 2021, Woodbois was ranked sixth out of
more than 100 companies by SPOTT, and highest amongst the public
companies. This was our second year of assessment, and saw the
Company move further up the rankings, reflecting our efforts to
improve the standards of our ESG policies, providing transparency
and good governance along with our sustainability focussed
operating model.
Reforestation and Carbon Credits
The opportunity to deliver reforestation projects in Africa,
generating carbon credits for corporates in the Voluntary Carbon
Markets adds an additional and important strand to Woodbois'
credentials as a sustainability-focused company. Photosynthetic
carbon capture is amongst the most effective ways available of
limiting and reducing atmospheric CO2 concentrations and our entry
into The Voluntary Carbon Markets will see Woodbois providing a
mechanism for companies to offset their emissions by acquiring
credits provided by our reforestation based carbon sequestration
solutions. As well as making a positive contribution to the global
effort to tackle climate change, we anticipate our entry into
reforestation and the provision of carbon credits through
high-quality projects in the Voluntary Carbon Market to make a
positive contribution to biodiversity, local skilling and
employment. Woodbois anticipates that its pilot project will begin
during 2022 following approval by the Gabonese government
FSC Certification
The Company initiated its journey towards FSC Certification in
2021, with the Programme for the Endorsement of Forest
Certification ("PEFC"), the leading global alliance of national
forest certification systems. PEFC is a programme sponsored by The
Central African Forest Commission and KfW, the German state-owned
development bank, who have been providing us with third party
certification support. The Company has completed more than half of
the certification process.
Our Communities
During the pandemic we have continued to support the communities
where we operate through the provision of essential food items. We
consider assisting in the wellbeing of our employees and others in
our communities to be of paramount importance and intend to
continue to be a well-regarded corporate citizen.
Ambitions
Through our various operations we aim to be recognised as one of
the best-in-class ESG companies in the worldwide timber industry.
The directors submit their report on the affairs of the Group,
together with the financial statements and auditor's report for the
year ended 31 December 2021.
DIRECTORS' REPORT
PRINCIPAL ACTIVITIES AND CORPORATE DEVELOPMENT
The principal activities of Woodbois Limited ("Woodbois") during
2021, together with its subsidiaries (the "Group") were forestry
and timber trading. These activities were undertaken through both
the Company and its subsidiaries. The Company is quoted on AIM and
is incorporated and domiciled in Guernsey.
BUSINESS REVIEW
A review of the Group's performance and prospects is included in
the Executive Chair's review.
RESULTS AND DIVIDS
The consolidated profit for the year after taxation from
continuing operations attributable to shareholders was $90.1
million (2020: consolidated loss $6.4 million), of which $88.3
million was attributable to the gain on bargain purchase and $4.3m
to the gain on biological assets.
The directors do not recommend payment of an ordinary dividend
(2020: $Nil).
SHARE CAPITAL AND FUNDING
Full details of the authorised and issued share capital,
together with details of the movements in the Company's issued
share capital during the year are shown in note 18. The Company has
two classes of ordinary shares, which carry no right to fixed
income. One class of ordinary shares carries a right to one vote at
the general meetings of the Company ("Voting"). The other class
does not carry any right to vote at the general meetings of the
Company ("Non-Voting").
During the year the Company issued 100m new Ordinary Shares and
326m Non-Voting shares were converted into Voting Shares. The
Company has unlimited authorised share capital divided into
ordinary shares of 1p each, of which 2,482,117,053 had been issued
as at 31 December 2021 and at 31 March 2022, comprised of
1,857,117,053 Voting shares and 625,000,000 Non-Voting shares
POST BALANCE SHEET EVENTS
Please refer to note 23 of the financial statements, in addition
to the Executive Chair and CEO Statement and the CFO's Report for
details.
DIRECTORS
The directors, who served during the year and to the date of
this report were as follows:
P Dolan (Executive Chair)
H Ghossein (Deputy Chair)
F Tonetti (Appointed 8 November 2021) (Chief Executive Officer)
C Geddes (Chief Financial Officer)
G Thomson (Senior Independent Non-Executive Director)
D Rothschild (Appointed 1 November 2021) (Independent Non-Executive Director)
H Turcan (Non-Executive Director)
Directors' indemnity insurance
The Group's policy is to maintain directors and officers
insurance and to indemnify directors against the consequences of
actions brought against them in relation to their duties for the
Group.
Directors' interests
Directors' interests in the Voting shares of the Company,
including family interests at 31 December 2021 and at the date of
this report were:
Percentage of Voting Percentage of Voting Voting Ordinary Voting Ordinary
Shares held Shares held shares of 1p each shares of 1p each
Shareholding 2021 2020 2021 2020
----------------- ---------------------- ---------------------- --------------------- ----------------------
P Dolan 4.06% 5.27% 75,400,032 75,400,032
H Ghossein 1.13% 1.47% 21,075,736 21,075,736
G Thomson 0.07% 0.09% 1,250,000 1,250,000
F Tonetti - - - -
C Geddes - - - -
D Rothschild - - - -
H Turcan - - - -
----------------- ---------------------- ---------------------- --------------------- ----------------------
P Dolan, Executive Chair of Woodbois Limited, held 75,400,032
Voting Shares (4.06%): 72,517,461 of his Voting Shares in the
Company are held through HSBC Client Holdings Nominee (UK) Limited,
with the remainder being held as paper certificates.
H Turcan is a representative of Lombard Odier which holds
395,540,230 Voting Shares (21.30%)
Share Options
At the start of 2021 a total of 144.5 million share options were
in issue. During the year a total of 32.5m lapsed. On 8 November
2021 it was announced that 30.0m Long Term Incentive Plan shares
(LTIP's) were intended to be allocated to F Tonetti, the new CEO
and on 1 March 2022 the Company announced it had issued these and a
further 38.0m LTIP's to other Executive Directors and staff. The
vesting of all of the awards is substantially geared towards
material improvement in both operating results and share price
appreciation: these are further described in the Post Balance Sheet
note and in the Remuneration Committee Report.
At the date of this report the share options of the directors
were:
Director Total number Number of Total number Share Options
of Share LTIP's granted of Shares as a % of
Options held on 1 March under option Issued Share
as at 31 2022 at an Capital[2]
December exercise
2020 (2p price of
exercise 1p per Share
price)
P Dolan (Executive
Chair) 50,000,000 4,000,000 54,000,000 2.18%
-------------- ---------------- -------------- --------------
F Tonetti (CEO) - 30,000,000 30,000,000 1.21%
-------------- ---------------- -------------- --------------
C Geddes (CFO) 22,500,000 4,000,000 26,500,000 1.07%
-------------- ---------------- -------------- --------------
H Ghossein (Deputy
Chair) 22,500,000 4,000,000 26,500,000 1.07%
-------------- ---------------- -------------- --------------
G Thomson (Senior
NED) 10,000,000 - 10,000,000 0.40%
-------------- ---------------- -------------- --------------
The total number of Options in issue at any time under all
Company option schemes will not exceed 10% of the total issued
Voting and Non-Voting share capital.
Directors' remuneration
The audited remuneration of the individual directors who served
in the year to 31 December 2021 was:
Total Total
Salary or fees Benefits 2021 2020
$000 $000 $000 $000
------------------------------------------ --------------- --------- ------ ------
P Dolan 200 - 200 200
H Ghossein 220 42 262 259
F Tonetti (appointed 8 November 2021) 69 1 70 -
C Geddes[3] 200 - 200 200
G Thomson 69 - 69 42
D Rothschild (Appointed 1 November 2021) 9 - 9 -
H Turcan[4] - - - 6
J Hansen (Resigned - 11 April 2020) - - - 92
Z Abbas (Resigned - 11 April 2020) - - - 89
K Milne (Resigned - 29 April 2020) - - - 10
Total 767 43 810 898
------------------------------------------ --------------- --------- ------ ------
All of the above directors' remunerations are considered short
term in nature and exclude national insurance contributed by the
employer.
The above table excludes deferred consideration payments made
directly to or to companies owned and controlled by H Ghossein of
$0.5 million in 2021 (2020: $0.168 million) and J Hansen of $nil in
2021 (2020: $0.091 million). These payments arose on the purchase
of WoodBois International ApS in 2017 and as amended under the Deed
of Variation completed on 5 August 2020.
It is the Company's policy that Executive Directors should have
contracts with an indefinite term providing for a maximum of 3-6
months' notice. In the event of a take-over, the directors'
contracts relating to P Dolan, H Ghossein and C Geddes provide for
compensation of one year's salary on the take-over in the event
that the Executive loses his or her position.
Non-Executive Directors are employed on letters of appointment
which may be terminated on not less than 3 months' notice. The
basic fees payable at the end of the year to Graeme Thomson as
Senior Independent Non-Executive Director are GBP50,000 pa and
GBP40,000 pa to David Rothschild as Independent Non-Executive
Director. Since April 2020 Lombard Odier has temporarily waived the
fee of $25,000 pa for the provision of the services of Henry
Turcan.
ProfileS of the CURRENT Directors
P DOLAN, AGED 57, EXECUTIVE CHAIR
Based in the UK, Mr Dolan held senior management positions
within banking and hedge funds prior to joining Woodbois. He has
consistently built award winning, world-class teams employing
custom-built technology to manage substantial pools of human and
financial capital across a diversified group of asset classes
ranging from fixed income and equity derivatives to soft
commodities and forestry.
FEDERICO TONETTI, AGED 49, CHIEF EXECUTIVE OFFICER
Federico spent more than 20 years in General Management, Global
Functional and Sales & Marketing positions for a variety of
multinational organisations across eight different countries, as
well as four years in Strategy Consulting at Bain & Company. He
has a bachelor degree in Economics at Bocconi University (Milan)
and a post-graduate international MBA at Instituto de Empresa
(Madrid). Federico lives in London with his wife and their two
young children. He is a CTI coach and extremely passionate about
mountain sports, rock music, leadership and sustainability.
C GEDDES, AGED 43, CHIEF FINANCIAL OFFICER
Based in South Africa, Mrs Geddes is a Fellow of the Institute
of Chartered Accountants in England and Wales, a member of the
South African Institute of Chartered Accountants and a Certified
Fraud Examiner. During a 15-year career at BDO, the global audit,
tax and advisory group, she served as director, forensic services,
of BDO London and partner of BDO Cape Town. She has been a director
and Board member of the largest South African pomegranate farming
and export company, Pomona, since 2008. She is also the Chair of
POMASA, the Pomegranate Growers Association of South Africa.
H GHOSSEIN, AGED 60, DEPUTY CHAIR
Based in Gabon, Mr Ghossein has 25 years of experience managing
forestry operations, including full ownership of a forestry
business. He previously served as a diplomat, travelling
extensively across Africa, as well as owning various trading and
real estate companies. Hadi is fluent in Arabic, French, Portuguese
and English and holds Gabonese citizenship.
G THOMSON, AGED 64, NON-EXECUTIVE DIRECTOR (SENIOR INDEPENT)
Mr Thomson is a Fellow of the Institute of Chartered Accountants
in England and Wales and has been a public company director in a
variety of sectors for many decades, as a CEO, CFO/Company
Secretary and as a Non-Executive. He has varied commercial UK and
international experience, including of Audit and Remuneration
Committees.
DAVID ROTHSCHILD, AGED 62, NON-EXECUTIVE DIRECTOR (INDEPENT)
David has a wide range of experience in growing businesses and
improving their performance as a senior manager and adviser. He has
been active in the African resource and agricultural sectors over
the past 20 years, including as co-developer of a Liberian
greenfield sustainable palm oil operation, and as advisor on
environmental and social action planning. He has also been actively
involved in governmental and NGO relations and was an early
Steering Committee Member of the High Carbon Stock Approach Group,
which ensures responsible development. A French speaker with over
40 years experience in international business, including six years
at the consultancy, McKinsey & Co, he is a dual national of the
USA and South Africa and holds both B.Com and MBA degrees.
H TURCAN, AGED 47, NON-EXECUTIVE DIRECTOR
Mr Turcan has worked in financial services since 1996, with a
focus on equity capital markets. Having spent the majority of his
career advising growth companies within investment banking he
joined the Volantis team at Henderson Global Investors in 2015,
which subsequently transferred to Lombard Odier Investment
Management in 2017 becoming known as 1798 Volantis. He graduated
with an MA (Hons) in Modern Languages from Edinburgh University and
is a Member of the Securities Institute. He is a representative of
the funds managed or sub-advised by Lombard Odier Investments
Manager group entities, collectively the Company's largest
shareholder.
SUBSTANTIAL SHAREHOLDERS
The Company has been notified that the following have, at the
date of this report, an interest in three percent or more of the
issued Voting Ordinary share capital of the Company:
Percentage
Number of 1p of the issued
Voting ordinary Voting share
Name shares capital
----------------------------------------- ----------------- ---------------
Rhino Ventures Limited * 414,500,000 22.32%
Lombard Odier Asset Management (Europe)
Limited 395,540,230 21.30%
Premier Miton Group Plc 174,950,389 9.42%
MCM Investment Partners SPC - MCM
Sustainable Resource SP 113,825,000 6.13%
Sparta Premier S.A. 100,000,000 5.38%
P Dolan (Executive Chair) 75,400,032 4.06%
----------------------------------------- ----------------- ---------------
* M Pelham, former Chair, is the beneficial owner of Rhino
Ventures Limited, which is the owner of 100% of the 625,000,000
Non-Voting shares in the Company.
CORPORATE GOVERNANCE
The Board is committed to achieving the highest standards of
corporate governance, integrity and business ethics and is
responsible for oversight of this. The Board has adopted the
Corporate Governance Code produced by the Quoted Companies Alliance
and has taken steps to apply the principles of the QCA Code in so
far as they can be applied practically and with the exception set
out below, given the size of the Group and the nature of its
operations. We set out below how the Group complies with the QCA
Code.
1. Establish a strategy and business model which promotes
long-term value for shareholders The strategy and business
operations of the Group are set out in this Annual Report and in
the Group's annual Sustainability Report.
The Group had two divisions during the year Trading and
Forestry, and on 8 March 2021 announced that it had established an
Aforestation and Carbon Credit division (Carbon Solutions): a clear
strategy has been devised for each. The Board continually impresses
upon the leadership teams of each division that capital allocation
must be both performance and potential driven. Investment, either
opex or capex, will only be forthcoming for strategies that can
demonstrate significant return to shareholders over time. Running
loss-making business lines is not a sustainable business strategy.
We will prioritise support and fund businesses where our
combination of skills and experience give us an edge. Conversely,
if we cannot source the requisite expertise to participate
profitably in particular business lines or geographies, we will
look to cease these activities.
2. Seek to understand and meet shareholder needs and
expectations
Shareholders play a key role in corporate governance, with our
Annual General Meeting for shareholders offering an opportunity to
exercise their decision-making power in the Company. Shareholders
are encouraged to attend and vote at the AGM and any other General
Meeting's which are convened throughout the year, either online or
in person, and for which our Company Secretaries are the point of
contact for shareholders. Our Executive Directors and our Investor
relations officer are the contact points for shareholder updates
and wider liaison. The contact details are set out in these
financial statements.
3. Take into account wider stakeholder and social
responsibilities and their implications for long-term success
The Board recognises that the long-term success of the Group is
reliant upon the efforts of the employees of the Group and its
contractors and suppliers. We continuously engage with our
stakeholders ranging from employees, customers, investors,
international development banks, governments, not-for-profit
organisations and academia, to identify and address issues of
materiality and to gather feedback from each of them. The Board
ensures that all key relationships are the responsibility of, or
are closely supervised by, one of the directors.
Woodbois is in a unique position to bring vital positive impact
to Africa's economic transformation, social development and
environmental management through our operations. In this regard we
have set out to align our sustainability strategy with the United
Nations Sustainable Development Goals (SDGs), which provide a
vision for ending poverty, hunger, inequality and protecting the
earth's natural resources.
4. Embed effective risk management, considering both
opportunities and threats, throughout the organisation
The business of forestry and timber trading involves a high
degree of risk, in addition to technical, political and regulatory
risk, the Group is exposed to weather, nutrient and pest risks.
Furthermore, the Group is exposed to a number of financial risks,
which the Board seeks to minimise by adopting a prudent approach
consistent with the corporate objectives of the Group. Our approach
to these risk factors is set out in the Financial Statements for
the year ended 31 December 2021.
A comprehensive budgeting process is completed once a year and
is reviewed and approved by the Board. Budgets are subsequently
updated when there is a significant change in any of the key
assumptions to the budget. The Group's actual results, compared
with the budget, are reported to the Executive Directors on a
weekly basis and any material deviations from budget are followed
up by a member of the Executive Board. Variances are reviewed at
least monthly by the Board.
The Group maintains appropriate directors' and officers
insurance cover in respect of actions taken against the directors
because of their roles, as well as insurance against material loss
or claims against the Group, where it is considered cost-effective.
The insured values and type of cover are comprehensively reviewed
on a yearly-basis or where new assets or risks arise.
5. Maintain the Board as a well-functioning, balanced team led
by the Executive Chair.
The Board is responsible for establishing the strategic
direction of the Group, monitoring the Group's trading performance
and appraising and executing development and acquisition
opportunities. The Company holds a minimum of nine Board meetings
per year at which financial and other reports are considered and,
where appropriate, voted on. It also holds ad hoc meetings as
required to deal with specific issues. During 2021 the Board met 20
times. Board and Committee meetings are convened at times
convenient to eligible members to ensure 100% attendance. Details
of the directors' beneficial interests in Ordinary Shares are
available on our website and are set out in the Directors'
Report.
The directors comply with Rule 21 of the AIM Rules and the
Market Abuse Regulations 2014 relating to directors' dealings and
will take all reasonable steps to ensure compliance by any
employees of the Company to whom regulations apply. The Company
has, in addition, adopted the Share Dealing Code for dealings in
its Ordinary Shares by directors and senior employees.
As of the date of this report the Board comprised of four
Executive Directors, two Independent Non-Executive Directors and
one Non-Independent Non-Executive Director. During 2021 the number
of Executive Directors was increased by one in order to comply with
the Code by separating the roles of Chair and Chief Executive
Officer. An additional Independent Non-Executive Director was
appointed during 2021. Executive Board members are considered full
time employees, while Non-Executives are required to commit between
20 and 40 days per annum to their roles.
The Board is supported by the Audit and the Remuneration
Committees, which are comprised of Non-Executive Directors only,
and the Nominations Committee which also includes the Executive
Chair.
6. Ensure that between them, the directors have the necessary
up-to-date experience, skills and capabilities
The directors' biographies can be found in this Directors'
Report and on the Company's website. The Board believes that their
mix of significant senior financial and commercial experience gives
a strong and appropriate background to formulate and deliver long
term shareholder value.
The Nominations Committee oversees the requirements for and
recommendations of any new Board appointments to ensure that it has
the necessary mix of skills and experience to support the on-going
development of the Company. Any appointments made will be on merit,
against objective criteria and with due regard for the benefits of
diversity and inclusivity on the Board. The Nomination Committee
will also be responsible for succession planning.
7. Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement
Internal evaluation of the Board, the Committees and individual
directors is seen as an important next step in the development of
the Board and one that is addressed. An annual operational review
of all members of the Board is undertaken, in which their
performance is evaluated, and development needs identified and
actions to be taken agreed. Executive and Non-Executive Directors
are subject to re-election intervals as prescribed in the Company's
Articles of Incorporation. At each Annual General Meeting one-third
of the directors who are subject to retirement by rotation shall
retire from office. They can then offer themselves for
re-election.
8. Promote a corporate culture that is based on ethical values
and behaviours
The Company is committed to complying with all applicable laws
and best corporate governance practices, wherever we operate. It is
a core aspect of our mission to act with integrity in all of our
operations. The Board expects all employees and contractors to
comply with both the letter and spirit of the law and governance
codes.
The Company fosters a culture where our businesses directly and
indirectly promote a range of benefits for the host community and
host country on social and environmental levels. One of the most
fundamental and positive social impacts associated with our
Company's strategic growth objective is the skills development and
employment opportunity we bring to the region. The Group also
commits to providing a safe environment for its staff and all other
parties for which the Company has responsibility. The Company is
committed to protecting the environment, contributing to
sustainable management of natural resources by strictly following
guidelines set out by host Governments and actively engaging with
local communities. The Company clearly articulates objectives and
has put in place an internal accountability mechanism to
effectively implement commitments, as well as ensuring that
outcomes are measured and communicated transparently.
9. Maintain governance structures and processes that are fit for
purpose and support good decision-making by the Board.
The following Group matters are reserved for the Board:
-- Overall strategy
-- Approval of major capital expenditure projects
-- Approval of the annual and interim results
-- Annual budgets, KPI's and revisions thereto
-- ESG matters, including climate change initiatives and actions
The Company is committed to high standards of corporate
governance. Both Management and the Board are dedicated to
implementing best practice as the Company grows.
A clear organisation structure exists detailing lines of
authority and control responsibilities.
The Board monitors the exposure to key business risks and
reviews the strategic direction of all trading subsidiaries, their
annual budgets, their performance in relation to those budgets and
their capital expenditure.
The agenda of the overall business is determined by a Management
Committee, setting out agreed targets that include financial
return, sustainability and actions on climate change. Opportunities
and improvements are identified and prioritised depending on
analysis carried out by Management. These projects are supported by
detailed financial planning. Comprehensive internal controls and
systems enable the Board to manage business objectives. As well as
Board discussions, regular meetings are held by Management to
discuss performance. Detailed information packs are prepared
bi-weekly to cover each major area of the business. Variances from
the budget and previous forecasts are analysed, explained and acted
on.
Important capital investments are regularly discussed both at a
Board and at a Management level where analysis of budget versus
actual spend is carried out.
Effective corporate governance remains key to the business as it
grows rapidly. The Company has a structure and process in place to
help identify areas in which corporate governance can be improved.
The Company is currently implementing technology that will allow
both the Board and Management to oversee key performance indicators
across the business in real time.
Within the Trading division, the Company has developed a
custom-built tool to allow for real-time tracking of all trades,
which has been progressively implemented in 2021.
The Company is in discussion with several organisations to
implement innovative blockchain based technology to manage both the
traceability of the timber that the Company produces as well as
providing real-time oversight of the business's supply chain.
The Audit Committee, Remuneration Committee and Nominations
Committee have formally delegated duties and responsibilities.
Audit Committee:
The Board has established an Audit Committee with formally
delegated duties and responsibilities. During the year, the Audit
Committee comprised of the Non-Executive Directors with Graeme
Thomson as Chair. It formally meets at least three times in the
financial year. In addition, the Chair has a regular dialogue with
our auditors.
The terms of reference for the Audit Committee include
requirements:
-- To monitor the integrity of the financial statements of the
Group and any formal announcements relating to the Group's
financial performance, reviewing significant financial reporting
judgements contained in them;
-- To review the Group's internal financial controls together
with the Group's internal control and risk management systems.
-- To monitor and review the external auditor's independence and
objectivity and to make recommendations in relation to the
appointment, re-appointment and removal of the external
auditor.
Remuneration Committee:
The Remuneration Committee meets as and when required. During
the year the Remuneration Committee comprised of Non-Executive
Directors with Graeme Thomson as the Chair. It meets at least three
times per year.
The policy of the committee is to reward Executive Directors in
line with the current remuneration of directors in comparable
businesses in order to recruit, motivate and retain high quality
executives within a competitive market place.
There were three main elements of the remuneration packages for
Executive Directors and senior management in 2021:
- Basic annual salary (including directors' fees) and benefits;
- Discretionary annual bonus; and
- Equity Option incentive scheme,
- All of these elements take into account the need to motivate and retain key individuals.
Nominations Committee:
The Nomination Committee which comprises of the Non-Executive
Directors and the Executive Chair meets at least twice a year and
is responsible for the process of reviewing replacement or
additional directors, the monitoring of compliance with applicable
laws, regulations and corporate governance guidance and making
appropriate recommendations to the Board.
10. Communicate how the Company is governed and is performing,
by maintaining a dialogue with shareholders and other relevant
stakeholders
The Company encourages regular communications with its various
stakeholder groups and aims to ensure that all communications
concerning the Group's activities are clear, fair and accurate.
Quarterly updates are announced via RNS and are available on our
website and users can register to be alerted when announcements or
details of presentations and events are posted onto the
website.
We aim to release our half and full year results to the market
well in advance of reporting deadlines and offer visibility for
shareholders by including segmental reporting. The Company's
financial statements and Notices of General Meetings of the Company
can be found on its website.
The results of voting on all resolutions are announced via RNS
immediately following completion of General Meetings and are
available on its website. Any actions that are required to be taken
as a result of resolutions for which votes against have been
received from at least 20 per cent of independent shareholders will
be detailed on the RNS.
RISK MANAGEMENT
The business of forestry and timber trading involves a high
degree of risk, in addition to technical, political and regulatory
risk, the Group is exposed to weather, nutrient and pest risks.
Furthermore, the Group is exposed to a number of financial risks,
which the Board seeks to minimise by adopting a prudent approach
which is consistent with the corporate objectives of the Group.
Technical Risk
The Company operates large-scale machinery in the forms of
harvesting, sawmill and veneer equipment. All three are key revenue
contributors and as such, any significant interruption to these
assets could have an adverse effect on our financial performance. A
number of procedures and programmes have been implemented to
mitigate these technical risks. Capital investment programmes have
replaced older equipment to improve both reliability and overall
efficiency of our machinery, also reducing overall breakdown risk.
The Group has actively sought best-in-class hires that have
significant experience with the machinery that is currently being
utilised, this has also allowed the Group to adopt best practice.
Additionally, performance metrics for operating assets are
monitored by Management on a weekly basis to quickly identify and
resolve any issues.
PANDEMIC RISK
Public health risks may add to instability in world economies
and markets generally. The extent of the impact of a pandemic will
be correlated with the magnitude and duration thereof, both aspects
of which will be uncertain (impact of coronavirus ("COVID-19")
considered separately below) . Entities may experience conditions
often associated with a general economic downturn. This includes,
but is not limited to, financial market volatility and erosion,
deteriorating credit and increased borrowing rates, volatility in
exchange rates, liquidity concerns, supply chain disruptions,
further increases in government intervention, increasing
unemployment, broad declines in consumer discretionary spending,
increasing inventory levels, reductions in production because of
decreased demand, layoffs and furloughs, and other restructuring
activities.
The continuation of these circumstances could result in an even
broader economic downturn which could have a prolonged negative
impact on an entity's financial results. What recovery/emergence
may look like will also be speculation.
The Board observes any pandemic developments across the world
and continuously considers the potential impact on the Company's
operations, the safety of its employees and the potential need for
disclosures to be made to the market and as the situation unfolds.
Specifically, the Board will consider:
-- Impact on liquidity and cash flow estimates;
-- Valuation, recoverability and impairment of assets;
-- Contract modifications;
-- Events after the end of the reporting period;
-- Revision of material judgements and estimates;
-- Whether the Company remains a going concern;
-- Whether any restructuring is required;
-- Whether onerous contracts provisions are necessary;
-- The extent to which insurance recoveries may be available;
-- Availability of government assistance;
-- Potential breach of any covenants.
Impact of coronavirus ("COVID-19")
Given the on-going and dynamic nature of the COVID-19 outbreak,
it is challenging to predict the impact on our Company. The extent
of such impact will depend on future developments, which are highly
uncertain, including the resurgence of COVID-19 as restrictions are
eased or lifted, new information that may emerge concerning the
spread and severity of COVID-19, and actions taken to address its
impact, among others. It is difficult to predict how this virus may
affect our business in the future, including its effect (positive
or negative; long or short term) on the demand and price for our
products. It is possible that COVID-19, particularly if it has a
prolonged duration, could have a further material adverse effect on
our supply chain, market pricing, customer demand, and distribution
networks. These factors may further impact our operating plans,
business, financial condition, liquidity, and operating results,
which would, in turn, affect our estimates, including the valuation
of inventories, allowance for expected credit losses, fair value
measurements, the valuation of long-lived assets, and cash flow
projections used for impairment testing. Actual results may
materially differ from these estimates.
Political and Regulatory Risk
The Board observes any political developments across the
geographies that Woodbois operates in closely, notably in Gabon and
Mozambique. The political environment across all the countries that
Woodbois operates in will remain an evolving discussion point for
the Board, however the risk of political unrest disruptive to the
Group's areas of operations remains low. It is noted that since
2017 the insurgency in Cabo Delgado Province, Mozambique has been
ongoing. Although currently unaffected by the conflict, the Board
continues to closely monitoring any wider implications.
The regulatory frameworks in place across the countries that
Woodbois operates in support the development of forestry. However,
the forestry sector in Mozambique has been subject to frequent
policy changes with regard to exports and delays in issuing of
annual licenses, which has created uncertainty. Furthermore, there
is no assurance that future political and economic conditions in
these countries will not result in the Governments changing their
political attitude towards forestry. Any changes in policy may
result in changes in laws affecting ownership of assets, land
tenure, ability to export, taxation, environmental protection and
repatriation of income and capital, which may adversely impact the
Group's ability to carry out its activities.
OTHER RISKS
The UK departed from the European Union at the end of 2020.
Whilst there have been many regulatory and operational changes in
trade between the parties this has had a very limited effect on the
Group's operations. The Board will maintain close dialogue with its
advisors to ensure that any proposed regulatory changes are
identified and actioned accordingly.
ENVIRONMENTAL RISK
The Group is exposed to climate, weather and the risk of pests
affecting its forestry operations. The availability of water for
its irrigation as well as the abundance of too much water also pose
a risk to the biological assets.
These risks are managed by ongoing assessment of local pests and
the adoption of irrigation methods. Adverse weather conditions may
impact transport routes both within the Group's countries of
operation and when exporting finished product.
Financial Risk
This comprises of a number of risks explained below.
Market PRICE risk
The Group is exposed to market risk in respect of any equity
investments as well as any potential market price fluctuations that
may affect the revenues of the forestry and timber trading
operations. The Group mitigates this risk by having established
investment appraisal processes and asset monitoring procedures,
which are subject to overall review by the Board.
Liquidity risk
The Group seeks to manage liquidity by regularly reviewing cash
levels and expenditure budgets to ensure that sufficient liquidity
is available to meet foreseeable needs and to invest cash assets
safely and profitably. The Group had net cash balances of $0.9
million as at 31 December 2021 (2020: $2.6m).
INTEREST RATE RISK
The Group has limited its exposure to the risk of being
negatively affected by variable interest rates by predominantly
borrowing using fixed interest instruments. Refer to note 14 for a
detailed assessment
Credit risk
The Group's principal financial asset is cash. The credit risk
associated with cash is considered to be limited. The Group
receives payment immediately upon delivery of its forestry
products. The credit risk is considered to be minimal as no credit
terms are offered and funds are received prior to the risk of
ownership being transferred to the purchaser. From time to time
cash is placed with certain institutions in support of trading
positions. The credit risk is considered minimal as the Group only
undertakes this with large reputable institutions.
DONATIONS
No political or charitable donations were made during the year
(2020: nil).
POLICY ON PAYMENT OF SUPPLIERS
It is Group and Company policy to agree and clearly communicate
the terms of payment as part of the commercial arrangements
negotiated with suppliers and then to pay according to those terms
based on the timely receipt of an accurate invoice.
EMPLOYMENT POLICIES
The Group is an equal opportunities employer: it promotes
inclusion and diversity in the organisation wherever possible
through recruitment, training, career development and
promotion.
The Group is committed to keeping employees as fully-informed as
possible with regard to the Group's performance and prospects and
seeks their views, wherever possible, on matters which affect them
as employees.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulation. Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group financial statements in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the United Kingdom (UK). Under company law the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group
and Company and of the profit or loss of the Group and Company for
that period.
In preparing the financial statements, the directors are
required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and prudent;
c. state whether they have been prepared in accordance with UK
adopted International Accounting Standards; and
d. prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company
will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable
them to ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies (Guernsey) Law 2008.
The directors are also responsible for safeguarding the assets of
the Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Woodbois
Limited website. The Company is compliant with AIM Rule 26
regarding the Woodbois Limited website. Legislation in Guernsey
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Going concern
An assessment of going concern is made by the directors at the
date the directors approve the annual financial statements, taking
into account the relevant facts and circumstances at that date
including:
-- Review of profit and cash flow forecasts for a period of not
less than 12 months from the date hereof;
-- Review of actual results against forecast;
-- Timing of cash flows and working capital resources; and
-- Financial or operational risks.
Having made reasonable enquiries, and based on the budget for
2022 and onwards, the directors are satisfied that the cash balance
and resources and facilities available and expected to be made
available to the Group is sufficient to cover all known financial
liabilities for the next 12 months from the date of approval of the
financial statements and as such consider it appropriate to prepare
the financial statements on a going concern basis.
Further details on the assumptions and their conclusion thereon
are included in the statement on going concern included in note 1
to the Financial Statements.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO THE AUDITOR
The Directors who were in office on the date of approval of
these financial statements have confirmed that, as far as they are
aware, there is no relevant audit information of which the auditor
is unaware. Each of the directors have confirmed that they have
taken all the steps that they ought to have taken as directors in
order to make themselves aware of any relevant audit information
and to establish that it has been communicated to the auditor.
AUDITOR
PKF Littlejohn LLP were reappointed as auditors for 2021 and a
resolution to reappoint then will be proposed at the 2022 AGM.
On behalf of the Board
Carnel Geddes
Chief Financial Officer
1 April 2022
INDEPENT AUDITOR'S REPORT
Opinion
We have audited the group financial statements of Woodbois
Limited (the 'group') for the year ended 31 December 2021 which
comprise the Consolidated Statement of Profit or Loss and other
Comprehensive Income, the Consolidated Statement of Financial
Position, the Consolidated Statement of Changes in Equity, the
Consolidated Statement of Cash Flows and notes to the consolidated
financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their
preparation is Companies (Guernsey) Law, 2008 and UK-adopted
international accounting standards.
In our opinion, the group financial statements:
-- give a true and fair view of the state of the group's affairs
as at 31 December 2021 and of its profit for the year then
ended;
-- have been properly prepared in accordance with UK-adopted
international accounting standards; and
-- have been prepared in accordance with the requirements of
Section 262(2)(c) of the Companies (Guernsey) Law, 2008
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the group's ability to
continue to adopt the going concern basis of accounting
included:
-- Obtaining management's forecast cash flows covering the
period from the date of signing to April 2023. We assessed the
assumptions within the forecast with regards to revenue generation,
capital funding and cash flows.
-- Review and challenge of the Board's controllable mitigation
plans and their forecast impact on the ability of the business to
continue to operate. We obtained supporting documentation to
evaluate the plausibility and achievability of management's
mitigation plans, including sensitised scenario forecasts.
-- Performing sensitivity analysis on management's forecast cash flows.
-- A comparison of actual results for the year to past budgets
to assess the forecasting ability/accuracy of management.
-- Agreeing available borrowing facilities to underlying
agreements and the extent to which additional facilities could be
utilised and funds raised from other sources.
-- Assessing the adequacy of going concern disclosures within the Annual Report and Accounts
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of misstatement.
At the planning stage, materiality is used to determine the
financial statement areas that are including within the scope of
our audit and the extent of sample sizes during the audit.
We determined our overall financial statements materiality to be
US$448,000 (2020: US$420,000). This was based on an average of
three year's adjusted profit or loss before tax, calculated by
removing all items deemed reasonably to be outside the normal
course of business, such as the contingent asset acquisition
expense in the prior year and the gain on bargain purchase in the
current year, as these are outside the normal underlying trading
activities of the group. We consider adjusted profit or loss before
tax to be the performance measure used by the shareholders as
Woodbois Limited is a trading entity and its profit-making ability
is a significant point of interest for investors.
We set performance materiality at 70% (2020:70%) of overall
financial statements materiality to reflect the risk associated
with the judgemental and key areas of management estimation within
the financial statements.
No significant changes have come to light through the fieldwork
which has caused us to revise our materiality figure.
We report to the Directors all corrected and uncorrected
misstatements we identified through our audit with a value in
excess of $15,680 (2020: $17,866) for the Group, in addition to
other audit misstatements below that threshold that we believe
warranted reporting on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed
the risks of material misstatement in the financial statements. In
particular we looked at areas involving significant accounting
estimates and judgements (such as the valuation of biological
assets) by the Directors and considered future events that are
inherently uncertain. We also address the risk of management
override of controls, including among other matters consideration
of whether there was evidence of bias that represented a risk of
material misstatement due to fraud.
Our audit scope focused on the principal area of operation,
being Africa. The head office in South Africa oversees the
accounting function of the group and its subsidiaries, however,
regional offices maintain the accounting records for many of the
components. The components are based in Mauritius, Gabon,
Mozambique, Denmark and London therefore given the nature of the
accounting function, our audit was conducted by local component
auditors within Gabon, Mozambique, Denmark and Mauritius.
Each component was assessed as to whether they were significant
or not significant to the group by either their size or risk. The
parent Company and six components were considered to be significant
due to their identified size and risk. These components have been
subject to full scope audits by component auditors and reviewed by
us.
The audit was overseen and concluded in London where we acted as
group auditor. As group auditors we maintained regular contact with
the component auditors throughout all stages of the audit and we
were responsible for the scope and direction of their work. We
ensured that we challenge their findings in order to form an
opinion on the group.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matter How our scope addressed this
matter
Valuation of biological assets
(note 11)
=============================================================
The group's principal non-current Our work included:
assets relate to standing timber
within the forestry concessions. * Reviewing the biological asset valuation models
These biological assets represent prepared by management for accuracy and challenging
the most material balance in the estimates/assumptions made in the inputs;
the financial statements at US$336.7m
as at 31 December 2021. Management
assess at each reporting date * Reviewing the discount rate used and challenging the
the fair value of the standing key inputs involved in arriving at the rate applied;
timber on a discounted cash flow
basis which involves significant
Management judgement and estimates. * Reviewing the sensitivity of the key inputs, together
with a combination of sensitivities of such inputs.
There is a risk that the biological
assets are misstated due to complex
accounting treatment required * Considering if there are any indications of
by IAS 41 Biological assets and impairment; and
a high degree of estimation and
judgement by management in their
valuation. * Reviewing disclosures in the financial statements to
ensure they are in accordance with IAS 41,
We therefore consider the valuation particularly the disclosures of key estimates and
of biological assets and the assumptions which impact fair values and the
related disclosures to be a key sensitivity analysis.
audit matter.
=============================================================
Valuation of Gain on Bargain
Purchase (note 5d)
=============================================================
During the year, Woodbois Gabon Our work included:
acquired LGFIB Gabon. Upon acquisition * Reviewing the identifiable assets and liabilities
a gain on bargain purchase of acquired at the acquisition date.
$88.3m was realised. The gain
on bargain purchase has arisen
as a result of the valuation * Challenging the underlying assumptions used in
of the forestry concession held identifying the fair value of the assets and
by the entity. liabilities
Management has assessed the fair
value of the forestry concession
upon acquisition and at the reporting * Assessing the consideration transferred and the
date the fair value of the standing accounting of any acquisition related costs.
timber on a discounted cash flow
basis which involves significant
Management judgement and estimate.
There is a risk that, due to
the high level management judgement
and estimation involved that
the value attributed to the bargain
purchase is inaccurate.
=============================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the group financial statements does not cover the other
information and we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the
directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies (Guernsey) Law, 2008 requires us to
report to you if, in our opinion:
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
group financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the group financial statements, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- We obtained an understanding of the group and the sector in
which it operates to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through
[management, industry research, review of component auditor work
papers, application of cumulative audit knowledge and experience of
the sector
-- We determined the principal laws and regulations relevant to
the group in this regard to be those arising from: Aim Rules, local
regulations and employment laws applicable to the subsidiaries.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the group with those laws and regulations. These procedures
included, but were not limited to:
o Enquiries of management
o Review of board minutes
o Review of RNS announcements
-- We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to
the non-rebuttable presumption of a risk of fraud arising from
management override of controls, that the potential for management
bias identified in relation to the valuation of biological assets
and as noted above, we addressed this by challenging the
assumptions and judgements made by management when auditing that
significant accounting estimate.
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias; and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
-- As part of group reporting instructions issued, component
auditors were required to report areas of non-compliance with laws
and regulations, including fraud. As part of our review of
component auditors work, we held regular update meetings during all
stages of the audit and included within the discussions matters
relating to country laws and regulations as well as how the risk of
fraud at component level was being addressed.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with our engagement letter. Our audit work has been
undertaken so that we might state to the company's members those
matters we are required to state to them in an auditor's report and
for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone, other than the
company and the company's members as a body, for our audit work,
for this report, or for the opinions we have formed.
Joseph Archer (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
1 April 2022
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND TOTAL COMPREHENSIVE
INCOME
Notes 2021 2020
Continuing operations $000 $000
Turnover 2 17,465 15,260
Cost of sales 2 (13,970) (14,038)
------------------------------------------------------------------------- ----- -------- --------------------------
Gross profit 3,495 1,222
------------------------------------------------------------------------- ----- -------- --------------------------
Gain on fair value of biological assets 11 4,253 9,515
Operating costs (3,620) (4,287)
Administrative expenses (1,324) (1,017)
Depreciation (326) (778)
Share based payment expense 21 (233) (200)
Operating profit 3 2,245 4,455
Contingent acquisition expense 22 - (2,171)
Loss on financial restructure - (1,487)
Loss owing to theft - (3,403)
Gain on bargain purchase 5 88,292 -
Foreign exchange gain 756 1,227
Finance costs 6 (591) (2,820)
------------------------------------------------------------------------- ----- -------- --------------------------
Profit/(loss) before taxation 90,702 (4,199)
------------------------------------------------------------------------- ----- -------- --------------------------
Taxation 7 (591) (2,192)
------------------------------------------------------------------------- ----- -------- --------------------------
Profit/(loss) for the year from continuing operations 90,111 (6,391)
------------------------------------------------------------------------- ----- -------- --------------------------
Discontinued operations
Loss from discontinued operations, net of tax - (146)
------------------------------------------------------------------------- ----- -------- --------------------------
Profit/(loss) for the year 8 90,111 (6,537)
Other comprehensive income
Items that may subsequently be recognised in profit or loss
Currency translation differences, net of tax (3,032) (420)
Items that may not subsequently be recognised in profit or loss
Revaluation of land and buildings 10 6,254 -
Total comprehensive income for the year 93,333 (6,957)
------------------------------------------------------------------------- ----- -------- --------------------------
Total comprehensive income attributable to equity shareholders arises
from:
- Continuing operations 93,333 (6,811)
- Discontinued operations - (146)
------------------------------------------------------------------------- ----- -------- --------------------------
Total comprehensive income for the year 93,333 (6,957)
------------------------------------------------------------------------- ----- -------- --------------------------
Basic earnings/(loss) per share 8
From continuing operations (cents) 3.69 (0.51)
From discontinued operations (cents) - (0.01)
------------------------------------------------------------------------- ----- -------- --------------------------
Diluted earnings per share 8
From continuing operations (cents) 3.65 -
------------------------------------------------------------------------- ----- -------- --------------------------
The notes form an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Share Revaluation
Convertible Foreign based Reserve
bonds exchange payment (note 10)
Share Share reserve reserve Retained Total
capital premium * (note 21) earnings equity
$000 $000 $000 $000 $000 $000 $000 $000
--------------- ---------- ------------- ------------- --------- ---------- ------------ ---------- ----------
At 1 JANUARY
2020 6,757 35,130 1,495 (4,871) 968 - 77,708 117,187
Loss for the
year - - - - - - (6,537) (6,537)
Other
comprehensive
income for
the year - - - (420) - - - (420)
Total
comprehensive
income for
the year - - - (420) - - (6,537) (6,957)
Transactions
with owners:
Issue of
ordinary
shares 24,362 23,479 - - - - - 47,841
Redemption of
convertible
bonds - - (1,443) - - - - (1,443)
Share based
payment
expense - - - - 200 - - 200
Share options
forfeited - - - - (942) - 942 -
At 31 December
2020 31,119 58,609 52 (5,291) 226 - 72,113 156,828
--------------- ---------- ------------- ------------- --------- ---------- ------------ ---------- ----------
Profit for the
year - - - - - - 90,111 90,111
Other
comprehensive
income for
the year - - - (3,032) - 6,254 - 3,222
Total
comprehensive
income for
the year - - - (3,032) - 6,254 90,111 93,333
Transactions
with owners:
Issue of
ordinary
shares 1,409 6,645 - - - - - 8,054
Share based
payment
expense - - - - 233 - - 233
Share options
forfeited - - - - (24) - 24 -
---------------
At 31 December
2021 32,528 65,254 52 (8,323) 435 6,254 162,248 258,448
--------------- ---------- ------------- ------------- --------- ---------- ------------ ---------- ----------
* Exchange differences arising on translation of the foreign
controlled entities are recognised in other comprehensive income
and accumulated in a separate reserve within equity.
The notes form an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2021 2020
Notes $000 $000
--------------------------------------------- ----- ------------- ------------
ASSETS
Non-current assets
Biological assets 11 336,798 204,223
Property, plant and equipment 9 30,119 20,203
--------------------------------------------- ----- ------------- ------------
Total non-current assets 366,917 224,426
Current assets
Trade and other receivables 12 4,616 3,761
Inventory 13 6,159 4,893
Cash and cash equivalents 14 887 2,560
--------------------------------------------- ----- ------------- ------------
Total current assets 11,662 11,214
--------------------------------------------- ----- ------------- ------------
TOTAL ASSETS 378,579 235,640
--------------------------------------------- ----- ------------- ------------
LIABILITIES
Current liabilities
Trade and other payables 15 (4,078) (3,590)
Borrowings 16 (5,369) (6,223)
Provision 20 (130) (132)
Contingent acquisition liability 22 (250) (750)
TOTAL CURRENT LIABILITIES (9,827) (10,695)
NON-CURRENT LIABILITIES
Borrowings 16 (2,898) (2,487)
Deferred tax 7 (106,475) (64,788)
Convertible bonds - host liability 17 (931) (842)
Total non-current liabilities (110,304) (68,117)
TOTAL LIABILITIES (120,131) (78,812)
--------------------------------------------- ----- ------------- ------------
NET ASSETS 258,448 156,828
--------------------------------------------- ----- ------------- ------------
EQUITY
Share capital 18 32,528 31,119
Share premium 19 65,254 58,609
Convertible bonds - equity component 17 52 52
Foreign exchange reserve (8,323) (5,291)
Share based payment reserve 21 435 226
Revaluation reserve 6,254 -
Retained earnings 162,248 72,113
--------------------------------------------- ----- ------------- ------------
TOTAL EQUITY 258,448 156,828
--------------------------------------------- ----- ------------- ------------
The notes form an integral part of the consolidated financial
statements. The consolidated financial statements were authorised
for issue by the board of directors on 1 April 2022 and were signed
on its behalf.
Carnel Geddes
Chief Financial Officer
CONSOLIDATED STATEMENT OF CASH FLOWS
2021 2020
Notes $000 $000
---------------------------------------------------------------- ----- ------------------- -------
CASH USED IN OPERATIONS
Loss before taxation - continuing operations 90,702 (4,199)
Loss before taxation - discontinued operations - (146)
---------------------------------------------------------------- ----- ------------------- -------
Loss before taxation 90,702 (4,345)
Adjustment for:
Depreciation of property, plant and equipment 9 2,063 1,942
Fair value adjustment of biological asset 11 (4,253) (9,515)
Transaction costs deducted from equity (42) (323)
Foreign exchange (756) (1,227)
Loss owing to theft - 3,403
Provision expense - 111
Loss on financial restructure - 1,487
Contingent acquisition expense - 2,171
Accrued expense 15 391 671
Doubtful debts expense 14 - 184
Share based payments 21 233 200
Finance costs 6 591 2,820
Gain on bargain purchase 5 (88,292) -
(Increase)/decrease in trade and other receivables (838) 1,166
Decrease in trade and other payables (460) (2,705)
Increase in inventory (1,267) (512)
CASH FLOWS FROM OPERATIONS (1,928) (4,472)
Finance costs paid (495) (913)
Income taxes paid (57) (68)
---------------------------------------------------------------- ----- ------------------- -------
cash FLOWS from operatiNG ACTIVITIES (2,480) (5,453)
---------------------------------------------------------------- ----- ------------------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditure on property, plant and equipment 9 (4,310) (1,587)
Settlement of deferred consideration 22 (500) -
Investment in acquired subsidiary 5 (1,107) -
cash FLOWS from investing activities (5,917) (1,587)
---------------------------------------------------------------- ----- ------------------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
(Payments)/receipts from loans and borrowings (1,387) 1,133
Proceeds from internal trade finance - 500
Settlement of trade finance - (3,390)
Proceeds from the issue of ordinary shares (net of issue costs) 8,111 9,867
cash fLOWS from financing activities 6,724 8,110
---------------------------------------------------------------- ----- ------------------- -------
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1,673) 1,070
Cash and cash equivalents at beginning of year 2,560 1,490
---------------------------------------------------------------- ----- ------------------- -------
CASH AND CASH EQUIVALENTS AT end of YEAR 887 2,560
---------------------------------------------------------------- ----- ------------------- -------
Net debt reconciliation
2020 Cash flow Non-cash 2021
changes
$000 $000 $000 $000
------------ ------ ---------- --------- ------
Borrowings 8,710 (1,387) 945 8,268
------------ ------ ---------- --------- ------
The notes form an integral part of the consolidated financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
GENERAL INFORMATION
Woodbois Limited ("the Company" or "Woodbois") is an AIM-quoted
forestry and timber trading company limited by shares. The Company
is incorporated and domiciled in Guernsey, the Channel Islands,
with registered number 52184. Its registered office is Dixcart
House, Sir William Place, St Peter Port, Guernsey, GY1 1GX.
The nature of the Group's operations and its principal
activities are set out in the Directors' Report.
The accounting policies set out herein have been consistently
applied.
The principal activities and nature of the business are detailed
above.
BASIs OF ACCOUNTING
The consolidated financial statements have been prepared in
accordance with UK adopted international accounting standards
adopted by the United Kingdom applied in accordance with the
provisions of the Companies (Guernsey) Law 2008. The consolidated
financial statements have been prepared under the historical cost
convention except for biological assets and certain financial
assets and liabilities, which have been measured at fair value.
FUNCTIONAL AND PRESENTATION CURRENCY
These consolidated financial statements are presented in United
States Dollar (USD), which is the Group's functional currency. All
amounts have been rounded to the nearest thousand, unless otherwise
indicated.
BASIS OF CONSOLIDATION
Subsidiaries are entities controlled by the Group. Control is
achieved when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
Specifically, the Group controls an investee if, and only if, the
Group has:
-- Power over the investee (i.e. existing rights that give it
the current ability to direct the relevant activities of the
investee).
-- Exposure, or rights, to variable returns from its involvement with the investee
-- The ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting
rights result in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of
an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
-- The contractual arrangement with the other vote holders of the investee.
-- Rights arising from other contractual arrangements.
-- The Group's voting rights and potential voting rights.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated financial statements from the date the Group gains
control until the date the Group ceases to control the subsidiary.
The acquisition method is used to account for the acquisition of
subsidiaries.
Any contingent consideration is recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the
contingent consideration that is deemed to be an asset or a
liability is recognised in accordance with IFRS 9 either in profit
or loss or as a change in other comprehensive income. The unwinding
of the discount on contingent consideration liabilities is
recognised as a finance charge within profit or loss.
Acquisition related costs are expensed as incurred.
The Group measures goodwill at the acquisition date as the
excess of the fair value of the consideration transferred, plus the
recognised amount of any non-controlling interests, less the
recognised amount of the identifiable assets acquired, and
liabilities assumed. If this consideration is lower than the fair
value of the net assets of the subsidiary acquired, the difference
is recognised in profit or loss as a bargain purchase.
Before recognising a gain on a bargain purchase, an assessment
is made as to whether all assets acquired, and liabilities assumed
have been correctly identified. The fair value measurement of the
identifiable net assets and cost of acquisition is also reviewed to
evaluate whether all available information at the acquisition date
has been considered. An adjustment made to the fair value of the
net assets acquired will impact the amount of goodwill or bargain
purchased recognised at acquisition.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by other members of the Group. All
significant intercompany transactions and balances between group
entities are eliminated on consolidation.
When the Group ceases to consolidate a subsidiary as a result of
losing control and the Group retains an interest in the subsidiary
and the retained interest is an associate, the Group measures the
retained interest at fair value at that date and the fair value is
regarded as its cost on initial recognition. The difference between
the net assets de-consolidated and the fair value of any retained
interest and any proceeds from disposing of a part interest in the
subsidiary is included in the determination of the gain or loss on
disposal. In addition, the Group accounts for all amounts
previously recognised in other comprehensive income in relation to
that associate on the same basis as would be required if that
subsidiary had directly disposed of the related assets or
liabilities.
Investments in associates and jointly controlled entities are
accounted for using the equity method of accounting and are
initially recognised at cost. The Group's share of its associates'
post-acquisition profits or losses is recognised in profit or loss,
and its share of post-acquisition movements in reserves is
recognised in other comprehensive income. The cumulative
post-acquisition movements are adjusted against the carrying amount
of the investment.
Transactions with non-controlling interests that do not result
in loss of control are accounted for as equity transactions. Gains
or losses on disposals to non-controlling interests are recorded in
equity.
As at 31 December 2021, the Group held equity interests in the
following undertakings:
Proportion held of voting
Subsidiary undertakings rights Country of incorporation Nature of business
----------------------------- ----------------------------- ------------------------- -----------------------------
Direct investments
----------------------------- ----------------------------- ------------------------- -----------------------------
Woodbois Services Limited 100% United Kingdom Shared services
----------------------------- ----------------------------- ------------------------- -----------------------------
Woodbois Trading Limited 100% Hong Kong Financier
----------------------------- ----------------------------- ------------------------- -----------------------------
Argento Limited 100% Mauritius Holding / treasury company -
Forestry and Trading
----------------------------- ----------------------------- ------------------------- -----------------------------
Woodbois Liberia Inc. 100% Liberia Dormant
----------------------------- ----------------------------- ------------------------- -----------------------------
Indirect investments of Argento Limited
--------------------------------------------------------------------------------------- -----------------------------
Argento Mozambique Limitada 100% Mozambique Holding company & Forestry
----------------------------- ----------------------------- ------------------------- -----------------------------
Madeiras SL Limitada 100% Mozambique Forestry
----------------------------- ----------------------------- ------------------------- -----------------------------
Jardim Zambezia Limitada 100% Mozambique Forestry
----------------------------- ----------------------------- ------------------------- -----------------------------
Baia Branca Limitada 100% Mozambique Forestry
----------------------------- ----------------------------- ------------------------- -----------------------------
Ligohna Timber Products Mozambique Forestry
Limitada 100%
----------------------------- ----------------------------- ------------------------- -----------------------------
Ligohna Timber Products (2) Mozambique Forestry
Limitada 100%
----------------------------- ----------------------------- ------------------------- -----------------------------
Montara Forest Lda 100% Mozambique Forestry
----------------------------- ----------------------------- ------------------------- -----------------------------
Petroforge Mozambique Lda 100% Mozambique Forestry
----------------------------- ----------------------------- ------------------------- -----------------------------
WoodBois International ApS 100% Denmark Timber Trading
----------------------------- ----------------------------- ------------------------- -----------------------------
WoodGroup ApS 100% Denmark Timber Trading
----------------------------- ----------------------------- ------------------------- -----------------------------
Woodbois Gabon 100% Gabon Forestry
----------------------------- ----------------------------- ------------------------- -----------------------------
SCI Yarim 100% Gabon Property holding
----------------------------- ----------------------------- ------------------------- -----------------------------
La Gabonaise des Forêts
et de l'Industrie du Bois
(LGFIB) 100% Gabon Forestry
----------------------------- ----------------------------- ------------------------- -----------------------------
The registered offices of the Group's subsidiaries are as
follows:
Subsidiary undertakings Registered office
--------------------------------------------------------- -----------------------------------------------------------
Direct investments
--------------------------------------------------------- -----------------------------------------------------------
Woodbois Services Limited 118 Piccadilly, London, England, W1JNW
--------------------------------------------------------- -----------------------------------------------------------
Woodbois Trading Limited New Mandarin Plaza Tower B, 14 Science Museum Rd, Hong
Kong
--------------------------------------------------------- -----------------------------------------------------------
Argento Limited Dias Pier Building, Le Caudan Waterfront, Port Louis,
Mauritius
--------------------------------------------------------- -----------------------------------------------------------
Woodbois Liberia Inc. Daviers Compound, Williams Road, Monrovia, Libreville
--------------------------------------------------------- -----------------------------------------------------------
Indirect investments of Argento Limited
----------------------------------------------------------- ---------------------------------------------------------
Argento Mozambique Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito
Kampfumo, Cidade de Maputo, Mozambique
--------------------------------------------------------- -----------------------------------------------------------
Madeiras SL Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito
Kampfumo, Cidade de Maputo, Mozambique
--------------------------------------------------------- -----------------------------------------------------------
Jardim Zambezia Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito
Kampfumo, Cidade de Maputo, Mozambique
--------------------------------------------------------- -----------------------------------------------------------
Baia Branca Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito
Kampfumo, Cidade de Maputo, Mozambique
--------------------------------------------------------- -----------------------------------------------------------
Ligohna Timber Products Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito
Kampfumo, Cidade de Maputo, Mozambique
--------------------------------------------------------- -----------------------------------------------------------
Ligohna Timber Products (2) Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito
Kampfumo, Cidade de Maputo, Mozambique
--------------------------------------------------------- -----------------------------------------------------------
Montara Forest Lda Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito
Kampfumo, Cidade de Maputo, Mozambique
--------------------------------------------------------- -----------------------------------------------------------
Petroforge Mozambique Lda Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito
Kampfumo, Cidade de Maputo, Mozambique
--------------------------------------------------------- -----------------------------------------------------------
WoodBois International ApS Hoeffdingsvej 34, 2500 Valby, Denmark
--------------------------------------------------------- -----------------------------------------------------------
WoodGroup ApS Hoeffdingsvej 34, 2500 Valby, Denmark
--------------------------------------------------------- -----------------------------------------------------------
Woodbois Gabon Boite Postale 5333, Montée de Louis vers L'Ex
Maringa, Libreville, Gabon
--------------------------------------------------------- -----------------------------------------------------------
SCI Yarim 3568, Centre Ville Vers La Renovation, Libreville, Gabon
--------------------------------------------------------- -----------------------------------------------------------
La Gabonaise des Forêts et de l'Industrie du Bois Louis (a cote de l'ex Marin a) 5333, Libreville, Gabon
(LGFIB)
--------------------------------------------------------- -----------------------------------------------------------
Intra-group transactions
All intra-group transactions, balances, and unrealised gains and
losses on transactions between Group companies are eliminated on
consolidation. Subsidiaries' accounting policies are amended where
necessary to ensure consistency with the policies adopted by the
Group. All financial statements are made up to 31 December each
year.
Business combination
The Group accounts for business combinations using the
acquisition method when the acquired set of activities and assets
meets the definition of a business and control is transferred to
the Group. In determining whether a particular set of activities
and assets is a business, the Group assesses whether the set of
assets and activities acquired includes, at a minimum, an input and
substantive process and whether the acquired set has the ability to
produce outputs.
The Group has an option to apply a 'concentration test' that
permits a simplified assessment of whether an acquired set of
activities and assets is not a business. The optional concentration
test is met if substantially all of the fair value of the gross
assets acquired is concentrated in a single identifiable asset or
group of similar identifiable assets.
The consideration transferred in the acquisition is generally
measured at fair value, as are the identifiable net assets
acquired. Any goodwill that arises is tested annually for
impairment. Any gain on a bargain purchase is recognised in profit
or loss immediately. Transaction costs are expensed as incurred,
except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related
to the settlement of pre-existing relationships. Such amounts are
generally recognised in profit or loss.
Changes in Accounting policies
a) New and amended standards adopted by the Group
The following IFRS or IFRIC interpretations were effective for
the first time for the financial year beginning 1 January 2021.
Their adoption has not had any material impact on the disclosures
or on the amounts reported in these consolidated financial
statements:
Standards /interpretations Application
--------------------------- ---------------------------------------
IFRS 16 Covid-19-Related Rent Concessions
IFRS 9, 7, 4, 16 Interest Rate Benchmark Reform - Phase
2
b) Accounting standards and interpretations not yet
effective
The following new or amended standards are not expected to have
a significant impact on the group's financial statements
Standards /interpretations Application
--------------------------- -----------------------------------------------
IAS 37 Onerous Contracts - Cost of Fulfilling
a Contract
IAS 16 Property, Plant and Equipment: Proceeds
before Intended Use
IFRS 1, 9, 16 and Annual Improvements to IFRS Standards
IAS 41 2018-2020 Cycle
IAS 1 Classification of Liabilities as Current
or Non-current
IFRS 17 Amendments to IFRS 17 Insurance Contracts
IAS 8 Definition of Accounting Estimates
IAS 12 Deferred Tax related to Assets and Liabilities
arising
from a Single Transaction
SEGMENTAL REPORTING
The reportable segments are identified by the Executive Board
(which is considered to be the Chief Operating Decision Maker) by
the way management has organised the Group. The Group operates
within three separate operational divisions comprising forestry,
trading and carbon solutions (2020: forestry, trading and head
office). Carbon solutions was formally established during 2021
while the head office segment was reallocated and absorbed by the
three remaining divisions.
The directors review the performance of the Group based on total
revenues and costs, for these three divisions and not by any other
segmental reporting.
FOREIGN CURRENCIES
The presentation currency of the Group is US Dollars (US$).
Items included in the Group's financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional
currency"). The functional currency of the majority of the Group's
subsidiaries is USD as this is the currency in which they trade on
a local basis. The consolidated financial statements are presented
in USD ("the presentation currency") because this is the currency
better understood by the principal users of the financial
statements.
Foreign currency translation rates (against US$) for the
significant currencies used by the Group were:
At 31 December Annual average At 31 December Annual average
2021 for 2021 2020 for 2020
------------------------ --------------- --------------- --------------- ---------------
UK Pound 1.35 1.38 1.36 1.29
Mozambique Metical 63.83 65.33 74.89 70.02
Danish Krone 6.57 6.29 6.06 6.51
West African CFA franc 579.26 556.02 533.99 572.81
------------------------ --------------- --------------- --------------- ---------------
Transactions in foreign currencies are initially recorded at the
rates of exchange prevailing on the dates of the transaction. At
each reporting date, monetary assets and liabilities that are
denominated in foreign currency are translated into the functional
currency at the rate prevailing on that date. Non-monetary assets
and liabilities are measured at fair value and are translated into
the functional currency at the rate prevailing on the reporting
date. Gains and losses arising on retranslation are included in
profit or loss for the year, except for exchange differences on
non-monetary assets and liabilities, which are recognised directly
in other comprehensive income when the changes in fair value are
recognised directly in other comprehensive income.
On consolidation, the assets and liabilities of the Group's
overseas operations are translated into the Group's presentational
currency at exchange rates prevailing at the reporting date. Income
and expense items are translated at the average exchange rates for
the year unless exchange rates have fluctuated significantly during
the year, in which case the exchange rate at the date of the
transaction is used. Exchange differences arising, if any, are
taken to other comprehensive income and the Group's translation
reserve. Such translation differences are recognised as income or
as expenses in the year in which the operation is disposed of.
CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT
The preparation of the consolidated financial statements
requires management to make estimates and judgements and form
assumptions that affect the reported amounts of the assets,
liabilities, revenue and costs during the periods presented
therein, and the disclosure of contingent liabilities at the date
of the consolidated financial statements.
Estimates and judgements are continually evaluated and based on
management's historical experience and other factors, including
future expectations and events that are believed to be reasonable.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the financial results of the Group
in future reporting periods are discussed below.
Information about assumptions and estimation uncertainties at 31
December that have a significant risk of resulting in a material
adjustment to the carrying amounts of assets and liabilities in the
next financial year is included in the following notes:
-- Residual values and useful lives of property, plant and equipment: refer to note 1
-- Fair value of biological assets: refer to note 11
-- Provision for doubtful debts: refer to note 1
-- Share Based Payments: refer to note 21
Revenue recognition
Under IFRS 15, Revenue from Contracts with Customers, five key
points to recognise revenue have been assessed:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the
contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance
obligations in the contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a
performance obligation.
The Group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits
will flow to the entity, and specific criteria have been met for
each of the Group's activities, as described below.
The Group bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and the
specifics of each arrangement. Where the Group makes sales relating
to a future financial period, these are deferred and recognised
under 'deferred revenue' on the Statement of Financial
Position.
The Group currently has the following revenue streams:
-- Sale of goods: Revenue is recognised following the five-step
approach outlined above. The performance obligation set out in step
two is when the risk and reward of the goods is transferred to the
customer (revenue recognised at a point in time), and is
transferred at the earlier of:
o when goods are sold subject to a letter of credit, on the date
that the bill of lading is dispatched to the buyer's bank; or
o when goods are prepaid in full by the buyer, based on the
incoterm specified in the contract/invoice; or
o when the bill of lading is exchanged.
-- Service revenue: Revenue is recognised following the
five-step approach outlined above. The performance obligation set
out in step two is when the work has been certified by the customer
(revenue recognised at a point in time).
-- Interest income is accrued on a time basis, by reference to
the principal outstanding and at the effective interest rate
applicable.
-- Dividend income from investments is recognised when the
shareholders' rights to receive payment have been established
(provided that it is probable that the economic benefits will flow
to the Group and the amount of revenue can be measured
reliably).
LEASES
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration.
Short--term leases and leases of low--value assets
The Group applies the short--term lease recognition exemption to
its short--term leases (i.e., those leases that have a lease term
of 12 months or less from commencement date and do not contain a
purchase option). It also applies the lease of low--value assets
recognition exemption to leases of equipment that are considered of
low value (i.e., below $5,000). Lease payments on short--term
leases and leases of low--value assets are recognized as occupancy
expense on a straight--line basis over the lease term.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the Group uses its incremental
borrowing rate.
The right of use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement day and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and
impairment losses.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right of use asset)
whenever:
-- The lease term has changed or there is a change in the
assessment of exercise of a purchase option, in which case the
lease liability is remeasured by discounting the revised lease
payments using a revised discount rate;
-- The lease payments change due to changes in an index or rate
or a change in expected payment under a guaranteed residual value,
in which cases the lease liability is remeasured by discounting the
revised lease payments using the initial discount rate (unless the
lease payments change is due to a change in a floating interest
rate, in which case a revised discount rate is used); or
-- A lease contract is modified and the lease modification is
not accounted for as a separate lease, in which case the lease
liability is remeasured by discounting the revised lease payments
using a revised discount rate.
Right of use assets are depreciated over the shorter period of
lease term and useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the
right of use asset reflects that the Group expects to exercise a
purchase option, the related right of use asset is depreciated over
the useful life of the underlying asset. The depreciation starts at
the commencement date of the lease.
The Group applies IAS 36 Impairment of Assets to determine
whether a right of use asset is impaired.
Variable rents that do not depend on an index or rate are not
included in the measurement of the lease liability and the right of
use asset. The related payments are recognised as an expense in the
period in which the event or condition that triggers those payments
occurs.
DISCONTINUED OPERATIONS
A discontinued operation is a component of the Group's business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
-- represents a separate major line of business or geographic area of operations;
-- is part of a single co-ordinated plan to dispose of a
separate major line of business or geographic area of operations;
or
-- is a subsidiary acquired exclusively with a view to re-sale.
Classification as a discontinued operation occurs at the earlier
of disposal or when the operation meets the criteria to be
classified as held-for-sale.
When an operation is classified as a discontinued operation, the
comparative statement of profit or loss and OCI is re-presented as
if the operation had been discontinued from the start of the
comparative year.
Property, PLANT AND EQUIPMENT
Land and Buildings are recognised at fair value based on
periodic, but at least triennial, valuations by external
independent valuers. Any revaluation gains are recognised in other
comprehensive income. Revaluation losses are recognised with other
comprehensive income, against any pre-existing gains, with anything
over and above pre-existing gains being recognised as an expense in
profit and loss.
All other Property, plant and equipment is stated at historical
cost less subsequent accumulated depreciation and any accumulated
impairment losses. If significant parts of property, plant and
equipment have different useful lives, then they are accounted for
as separate items (major components) of property, plant and
equipment.
Any gain or loss on disposal of an item of property, plant and
equipment is recognised in profit or loss.
Subsequent expenditure is capitalised only if it is probable
that the future economic benefits associated with the expenditure
will flow to the Group.
Leased assets are depreciated over the shorter of the lease term
and their useful lives unless it is reasonably certain that the
group will obtain ownership by the end of the lease term.
Land has an indefinite useful life and therefore is not
depreciated.
Depreciation is calculated on a straight-line basis at rates
calculated to write each asset down to its estimated residual
value, which in most cases is assumed to be zero, evenly over its
expected useful life, as follows:
Motor vehicles over 3 years
Fixtures and IT equipment over 3 years
Plant and equipment over 2 - 5 years
Management judgement and assumptions are necessary in estimating
the methods of depreciation, useful lives and residual values.
Depreciation methods, useful lives and residual values are reviewed
at each reporting date and adjusted if appropriate.
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
At each statement of financial position date, the Group reviews
the carrying amounts of its tangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Where there has been a change in economic conditions that
indicate a possible impairment in a cash-generating unit, the
recoverability of the net book value relating to that field is
assessed by comparison with the estimated discounted future cash
flows based on management's expectations of future costs.
The recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately.
Where conditions giving rise to impairment subsequently reverse,
the effect of the impairment charge is also reversed as a credit to
the income statement, net of any depreciation that would have been
charged since the impairment.
biological assets
A biological asset is defined as a living animal or plant. The
Group's biological assets comprise standing timber. The fair value
of the standing timber is determined using models based on expected
yields, market prices for the saleable produce, over 5 years, after
allowing for harvesting costs and other costs yet to be incurred in
getting the produce to maturity. Any changes in fair value are
recognised in the income statement in the year in which they
arise.
Forestry
IAS 41 requires biological assets to be measured at fair value
less costs to sell. The fair value of standing timber is estimated
based on the present value of the net future cash flows from the
asset, discounted at a current market-based rate. In determining
the present value of expected net cash flows, the Group includes
the net cash flows that market participants would expect the asset
to generate in its most relevant market. Increases or decreases in
value are recognised in profit or loss. When the fair value
estimates are determined to be clearly unreliable due to
insufficient information being available to the directors, the
biological asset is held at cost less any accumulated depreciation
and any accumulated losses.
All expenses incurred in maintaining and protecting the assets
are recognised in profit or loss. All costs incurred in acquiring
additional planted areas are capitalised.
Where fair value of a biological asset cannot be measured
reliably, the biological asset shall be measured at its cost less
any accumulated depreciation and any accumulated impairment
losses.
Costs incurred prior to the demonstration of commercial
feasibility of forestry and agriculture in a particular area are
written-off to profit and loss as incurred.
CONVERTIBLE BONDS
The net proceeds received from the issue of convertible bonds
are split between a liability element and an equity component at
the date of issue. The fair value of the liability component is
estimated using the prevailing market interest rate for similar
nonconvertible debt. The portion which represents the embedded
option to convert the liability into equity of the Company is
included in equity and its fair value at initial recognition was
estimated using the Monte Carlo method of valuing such instruments.
The equity portion is not remeasured subsequent to initial
recognition and the liability component is carried at amortised
cost. Issue costs are apportioned between the liability and equity
components of the convertible bonds based on their relative
carrying amounts at the date of issue. The portion relating to the
equity component is charged directly against equity. The interest
expense on the liability component is calculated by applying the
prevailing market interest rate, at the time of issue, for similar
non-convertible debt to the liability component of the instrument.
The difference between this amount and the interest paid is added
to the carrying amount of the convertible bonds.
FINANCIAL INSTRUMENTS
(a) Classification
The Group classifies its financial assets in the following
measurement categories:
-- those to be measured subsequently at fair value (either
through OCI or through profit or loss); and
-- those to be measured at amortised cost.
The classification depends on the Group's business model for
managing the financial assets and the contractual terms of the cash
flows.
For assets measured at fair value, gains and losses will be
recorded either in profit or loss or in OCI. For investments in
equity instruments that are not held for trading, this will depend
on whether the Group has made an irrevocable election at the time
of initial recognition to account for the equity investment at fair
value through other comprehensive income (FVOCI).
(b) Recognition
Purchases and sales of financial assets are recognised on trade
date (that is, the date on which the Group commits to purchase or
sell the asset). Financial assets are derecognised when the rights
to receive cash flows from the financial assets have expired or
have been transferred and the Group has transferred substantially
all the risks and rewards of ownership.
(c) Measurement
At initial recognition, the Group measures a financial asset at
its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed
in profit or loss.
Debt instruments
Amortised cost; Assets that are held for collection of
contractual cash flows, where those cash flows represent solely
payments of principal and interest, are measured at amortised cost.
Interest income from these financial assets is included in finance
income using the effective interest rate method.
Any gain or loss arising on derecognition is recognised directly
in profit or loss and presented in other gains/(losses) together
with foreign exchange gains and losses. Impairment losses are
presented as a separate line item in the statement of profit or
loss.
(d) Impairment
The Group assesses, on a forward-looking basis, the expected
credit losses associated with its debt instruments carried at
amortised cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach
permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
INVENTORIES
Inventories are measured at the lower of cost-of-production or
estimated net realisable value. Cost of production includes direct
labour, all costs of purchase, conversion and other costs incurred
in bringing the inventories to their present location and
condition. Net realisable value is the estimated selling price in
the ordinary course of business, less the estimated selling
expenses. The cost of inventories is based on the weighted average
cost method.
Product that has been containerised and shipped or remains in
storage at the port of departure, and where ownership has not yet
passed to the customer, is accounted for as stock in transit and
stated at the lower of cost of production or estimated net
realisable value.
eMPLOYEE benefits
short-term employee benefits
The costs of all short-term employee benefits are recognised in
the period in which the employee renders the related service.
The accrual/liability for employee entitlements to wages,
salaries and annual leave represent the amount which the Group has
a present obligation to pay as a result of an employees' services
provided up to the reporting date. The accruals have been
calculated at undiscounted amounts based on expected wage and
salary rates.
SHARE-BASED PAYMENT ARRANGEMENTS
The grant-date fair value of equity-settled share-based payment
arrangements granted to employees is generally recognised as an
expense, with a corresponding increase in equity. The amount
recognised as an expense is adjusted to reflect the number of
awards for which the related service and non-market performance
conditions are expected to be met, such that the amount ultimately
recognised is based on the number of awards that meet the related
service and non-market performance conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the
grant-date fair value of the share-based payment is measured to
reflect such conditions and there is no true-up for differences
between expected and actual outcomes.
The fair value of the options granted is measured using a
Monte-Carlo valuation model for market performance criteria and
Black-Scholes valuation model for non-market performance criteria,
considering the terms and conditions under which the options were
granted. The amount recognised as an expense is adjusted to reflect
the actual number of share options that vest.
PROVISIONS
A provision is recognised if, as a result of a past event, the
Group has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability. The
unwinding of discount is recognised as a finance cost.
A provision for onerous contracts is recognised when the
expected benefits to be derived by the Group from a contract are
lower than the unavoidable cost of meeting its obligations under
the contract. The provision is measured at the present value of the
lower of the expected cost of terminating the contract and the
expected net cost of continuing with that contract.
In accordance with the Group's environment policy and applicable
legal requirements, a provision for site restoration in respect of
contaminated land, and the related expense, is recognised when the
land is contaminated.
TAXATION
Income tax expense comprises current and deferred tax. It is
recognised in profit or loss except to the extent that it relates
to a business combination, or items recognised directly in equity
or in OCI.
CURRENT TAX
Current tax comprises the expected tax payable or receivable on
the taxable income or loss for the year and any adjustment to the
tax payable or receivable in respect of previous years.
The amount of current tax payable or receivable is the best
estimate of the tax amount expected to be paid or received that
reflects uncertainty related to income taxes, if any. It is
measured using tax rates enacted or substantively enacted at the
reporting date. Current tax also includes any tax arising from
dividends.
Current tax assets and liabilities are offset only if certain
criteria are met.
DEFERRED TAX
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes.
Deferred tax is not recognised for:
-- temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
-- temporary differences related to investments in subsidiaries,
associates and joint arrangements to the extent that the Group is
able to control the timing of the reversal of the temporary
differences and it is probable that they will not reverse in the
foreseeable future; and
-- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused
tax credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available
against which they can be used. Future taxable profits are
determined based on the reversal of relevant taxable temporary
differences. If the amount of taxable temporary differences is
insufficient to recognise a deferred tax asset in full, then future
taxable profits, adjusted for reversals of existing temporary
differences, are considered, based on the business plans for
individual subsidiaries in the Group. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be
realised; such reductions are reversed when the probability of
future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each
reporting date and recognised to the extent that it has become
probable that future taxable profits will be available against
which they can be used.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences
that would follow from the manner in which the Group expects, at
the reporting date, to recover or settle the carrying amount of its
assets and liabilities. For this purpose, the carrying amount of
investment property measured at fair value is presumed to be
recovered through sale, and the Group has not rebutted this
presumption.
Deferred tax assets and liabilities are offset only if certain
criteria are met.
BORROWINGS
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is
capitalised as a prepayment for liquidity services and amortised
over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the
group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period.
EARNINGS PER SHARE
(i) Basic earnings per share is calculated by dividing the
profit attributable to the owners of the Company by the weighted
average number of ordinary shares outstanding during the financial
year.
(ii) Diluted earnings per share adjusts the figures used in
determining basic earnings per share to take into account the after
tax effects of interest and other financing costs associated with
dilutive potential ordinary shares and the weighted average number
of ordinary shares that would have been outstanding assuming the
conversion of all diluted potential ordinary shares.
Where there is a loss attributable to the owners of the company,
it is not necessary to disclose the diluted earnings per share.
GOING CONCERN
The consolidated financial statements have been prepared
assuming that the Group will continue as a going concern. Under
this assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future with neither the intention nor
necessity of liquidation, ceasing trading or seeking protection
from creditors for at least 12 months from the date of the signing
of the consolidated financial statements.
Management have performed their consideration on various
scenarios including a base case which includes financing being
raised but only trade financing, the terms of which have been
signed at the date of these consolidated financial statements. In
their scenario planning management have considered inter alia:
-- the current stage of the Group's life cycle;
-- its performance and cashflow;
-- the expected timing of revenues;
-- financing both committed and those that management consider is available;
-- operational risks; and
-- COVID-19 related impacts.
The forecasts, including the base case, show that the Company
has adequate resources to continue in operational existence for the
foreseeable future and it can meet its liabilities as they fall due
in the next 12 months. The directors therefore consider it
appropriate to adopt the going concern basis of preparation in the
consolidated financial statements.
2. SEGMENTAL REPORTING
Segmental information is presented on the basis of the
information provided to the Chief Operating Decision Maker
("CODM"), which is the Executive Board.
The Group is currently focused on forestry, timber trading and
carbon solutions. Carbon solutions was formally established during
2021 while the head office segment was reallocated and absorbed by
the three remaining divisions. These are the Group's primary
reporting segments, operating in Gabon, Mozambique, Denmark,
Guernsey and head operating offices in Mauritius. Certain support
services are performed in the UK.
As on 31 December 2021 sales made to one customer during the
year accounted for 10% (2020 9%) of the total turnover.
The Group's directors review the internal management reports of
each division at least monthly.
There are varying levels of integration between the Forestry and
Trading segments. This integration includes transfers of sawn
timber and veneer, respectively. Inter-segment pricing is
determined on an arm's length basis.
Information relating to each reportable segment is set out
below. Segment profit/(loss) before tax is used to measure
performance because management believes that this information is
the most relevant in evaluating the results of the respective
segments relative to other entities that operate in the same
industry.
The following table shows the segment analysis of the Group's
profit before tax for the year and net assets at 31 December 2021.
All amounts are disclosed after taking into account any
intra-segment and intra-group eliminations:
2021 Forestry Trading Carbon Solutions Total
$000 $000 $000 $000
------------------------------------------------------- ---------- -------- ----------------- ----------
Income statement
Turnover 7,988 9,477 - 17,465
Cost of Sales (5,569) (8,401) - (13,970)
------------------------------------------------------- ---------- -------- ----------------- ----------
Gross profit 2,419 1,076 - 3,495
------------------------------------------------------- ---------- -------- ----------------- ----------
Operating costs (1,511) (1,531) (578) (3,620)
Administrative expenses (330) (334) (660) (1,324)
Depreciation (321) (5) - (326)
Share based payment expense (59) (58) (116) (233)
Gain on fair value of biological assets 4,253 - - 4,253
Segment operating profit/(loss) 4,451 (852) (1,354) 2,245
------------------------------------------------------- ---------- -------- ----------------- ----------
Finance costs (241) (350) - (591)
Foreign exchange (loss)/gain (78) 834 - 756
Bargain purchase 88,292 - - 88,292
------------------------------------------------------- ---------- -------- ----------------- ----------
Profit/(loss) before taxation 92,424 (368) (1,354) 90,702
------------------------------------------------------- ---------- -------- ----------------- ----------
Taxation (591) - - (591)
------------------------------------------------------- ---------- -------- ----------------- ----------
Profit/(loss) for the year from Continuing Operations 91,833 (368) (1,354) 90,111
------------------------------------------------------- ---------- -------- ----------------- ----------
NET ASSETS
Assets: 370,433 8,146 - 378,579
Liabilities: (3,901) (9,755) - (13,656)
Deferred tax liability (106,475) - - (106,475)
Net assets 260,057 (1,609) - 258,448
------------------------------------------------------- ---------- -------- ----------------- ----------
The following table shows the segment analysis of the Group's
loss before tax for the year and net assets at 31 December 2020.
All amounts are disclosed after taking into account any
intra-segment and intra-group eliminations:
2020 (restated[5]) Forestry Trading Total
$000 $000 $000
------------------------------------------------------- --------- --------- ---------
Income statement
Turnover 4,357 10,903 15,260
Cost of Sales (3,308) (10,730) (14,038)
-------------------------------------------------------- --------- --------- ---------
Gross profit 1,049 173 1,222
-------------------------------------------------------- --------- --------- ---------
Operating costs (2,609) (1,678) (4,287)
Administrative expenses (503) (514) (1,017)
Depreciation (763) (15) (778)
Share based payment expense (83) (117) (200)
Gain on fair value of biological assets 9,515 - 9,515
Segment operating profit/(loss) 6,606 (2,151) 4,455
-------------------------------------------------------- --------- --------- ---------
Finance costs (1,499) (1,321) (2,820)
Loss on restructure 498 (1,985) (1,487)
Contingent acquisition expense (1,086) (1,085) (2,171)
Loss owing to theft - (3,403) (3,403)
Foreign exchange gain 414 813 1,227
-------------------------------------------------------- --------- --------- ---------
Profit/(loss) before taxation 4,933 (9,132) (4,199)
-------------------------------------------------------- --------- --------- ---------
Taxation (2,192) - (2,192)
-------------------------------------------------------- --------- --------- ---------
Profit/(loss) for the year from Continuing Operations 2,741 (9,132) (6,391)
-------------------------------------------------------- --------- --------- ---------
NET ASSETS ( restated 5 )
Assets: 226,587 9,053 235,640
Liabilities: (2,729) (11,295) (14,024)
Deferred tax liability (64,788) - (64,788)
Net assets 159,070 (2,242) 156,828
-------------------------------------------------------- --------- --------- ---------
Geographical information
In presenting the below geographical information, segment
revenue and non-current assets are based on the entity's country of
domicile.
Denmark Gabon Mozambique Total
2021 $000 $000 $000 $000
-------------------- -------- -------- ----------- --------
External sales 9,477 7,710 278 17,465
Non-Current Assets 273 326,884 39,760 366,917
-------------------- -------- -------- ----------- --------
2020 $000 $000 $000 $000
-------------------- ------- -------- ------- --------
External sales 10,903 4,057 300 15,260
Non-Current Assets 90 150,445 73,892 224,427
-------------------- ------- -------- ------- --------
The below segment revenue has been based on the geographic
location of the customer. Only material amounts were included.
2021 2020
Location: $000 $000
-------------------- ------- ------
Pakistan 4,418 3,343
Libya 2,790 1,252
Bangladesh 1,535 908
Dominican Republic 1,220 417
Turkey 901 531
Morocco 732 627
Iraq 690 563
Vietnam 649 551
USA 569 122
13,504 8,314
-------------------- ------- ------
3. OPERATING profit
2021 2020
$000 $000
----------------------------------------------------------------------------------- -------- --------
Operating profit is stated after charging/(crediting):
Depreciation of property, plant and equipment 2,063 1,942
Staff costs (see note 4) 3,936 2,985
Share based payment reserve expense (see note 21) 233 200
Operating lease costs 81 51
Gain on fair value of Biological assets (see note 11) (4,253) (9,515)
Auditor's remuneration:
Audit services
- fees payable to the Company's auditor for the audit of the consolidated accounts 75 71
Fees payable to associates of the Company's auditor
- auditing the accounts of subsidiaries pursuant to legislation 70 84
----------------------------------------------------------------------------------- -------- --------
4. EMPLOYEE INFORMATION
2021 2020
Number Number
---------------------------------------------------------------------------- ------------------------ --------------
The average monthly number of persons (including directors) employed by the
Group during the
year was:
Administration and management 5 4
Carbon solutions 2 -
Agriculture - 1
Forestry 342 245
Trading 9 10
358 260
---------------------------------------------------------------------------- ------------------------ --------------
2021 2020
$000 $000
The aggregate remuneration comprised:
Wages and salaries 3,834 2,942
Social security costs 102 43
3,936 2,985
---------------------------------------------------------------------------- ------------------------ --------------
2021 2020
$000 $000
Directors' remuneration included in the aggregate remuneration above
comprised
---------------------------------------------------------------------------- ------------------------ --------------
Emoluments for qualifying services 810 898
---------------------------------------------------------------------------- ------------------------ --------------
Included above are emoluments of $262,000 (2020: $259,000) in
respect of the highest paid director. Deferred final acquisition
payments arising from the acquisition of WoodBois International ApS
are excluded in both periods. Full details of directors'
remuneration are included in the Directors' Report.
Pension contributions of $13,750 (2020: $15,701) were made on
behalf of the directors and other staff members.
5. acquisition OF SUBSIDIARY
On 6 August 2021, the Group acquired 100% of the shares and
voting interests in Forêts et de l'Industrie du Bois ("LGFIB") for
a cash consideration of $1.5 million.
Through the acquisition of LGFIB, the Group acquired 71,000
hectares of forest concessions in Gabon. This additional hectarage,
which is located within 100km of our manufacturing base in Mouila,
will provide the increased levels of sustainably harvested timber
required as additional production capacity comes online at our
sawmill and veneer factory.
No harvesting has taken place during the 2021 financial year in
the newly acquired concession and therefore the acquisition of
LGFIB has not materially contributed to the consolidated revenue
and profit for the period.
A. Consideration transferred
A cash consideration of $1.534m represents the acquisition-date
fair value of the total consideration transferred.
B. Acquisition related costs
Acquisition related costs spent on legal and due diligence were
expensed and have been included in operating costs.
C. Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets
acquired and liabilities assumed at the date of acquisition.
Note $000
--------------------------------------- ---- --------
Biological assets 11 128,322
Deferred tax 7 (38,496)
Total identifiable net assets acquired 89,826
--------------------------------------- ---- --------
D. Gain on bargain purchase
A gain from bargain purchase arising from the acquisition has
been recognised as follows.
Note $000
-------------------------------------------- -------
Consideration transferred a (1,534)
Fair value of identifiable net assets c 89,826
Gain on bargain purchase 88,292
--------------------------------------------- -------
Occasionally, an acquirer will make a bargain purchase. This is
usually in a business combination that is a forced sale in which
the seller is acting under compulsion. In this case, the sellers
were not distressed and not acting under compulsion.
The gain on bargain purchase arises due to the difference in
accounting frameworks applied by the Company and LGFIB, the
Gabonese company it acquired. Specifically, the difference relates
to the measurement of Biological Assets. The Company applies IFRS
which stipulates that acquired assets and liabilities be
recognised, at the date of acquisition, at its fair value. LGFIB,
who applies Gabonese accounting standards, does not carry
Biological Assets on its Balance Sheet, but instead expensed the
cost of acquiring the rights over time and no fair value assessment
is made for accounting purposes. The Company applied IAS 41 when
determining the Fair Value of the Biological Assets acquired.
Further information on the inputs to the valuation is set out in
Note 11. In addition to the effect of the different accounting
standards applied, the previous owner's financial position, his
inability to acquire finance to operate the asset and the threat of
potentially losing it due to non-operation together with the quick
exit and certainty of being paid offered by WoodBois contributed to
the gain realised.
6. FINANCE COSTS
2021 2020
$000 $000
------------------------------------- ------------------- ------
Bank interest 503 431
Internal Trade Finance Fund interest - 903
Convertible bond interest 88 1,486
------------------------------------- ------------------- ------
591 2,820
------------------------------------- ------------------- ------
7. TAXATION
2021 2020
$000 $000
--------------------------------------------------------------------------- ------------------- --------------------
Current tax:
Corporation tax on profit for the year (81) (59)
Deferred tax:
Origination and reversal of temporary differences (510) (2,133)
--------------------------------------------------------------------------- ------------------- --------------------
Tax on profit/(loss) on ordinary activities (591) (2,192)
--------------------------------------------------------------------------- ------------------- --------------------
2021 2020
Group $000 $000
--------------------------------------------------------------------------- ------------------- --------------------
Profit/(loss) on ordinary activities before tax 90,701 (4,345)
Profit/(loss) on ordinary activities multiplied by the average rate of
corporation tax of
19% (2020: 19%) 17,233 (826)
Effects of:
Losses carried forward/(utilised) (123) 1,196
Non-taxable gain on bargain purchase (16,775) -
Non-taxable foreign exchange gain (111) -
Non-taxable movement in fair value of biological assets (905) (3,941)
Non-deductible Loss allowance - 30
Non-deductible share-based payment expense 44 38
Non-deductible other expenditure 525 1,311
Group tax credit for the year (112) (2,192)
--------------------------------------------------------------------------- ------------------- --------------------
The prevailing tax rates of the operations of the Group range
between 3% and 32%. Therefore, a rate of 19% has been used as it
best represents the weighted average tax rate experienced by the
Group. The Group has estimated losses of $28 million (2020: $29
million) available to carry forward against future taxable profits.
Tax losses utilized during the year related principally to profits
realised by subsidiaries in certain jurisdictions and tax gains
realised on liquidation of various subsidiaries. No deferred tax
assets have been recognised in respect of losses due to the
unpredictability of future taxable profit. All unused tax losses
may be carried forward indefinitely for most entities. Unused tax
losses arising from Mozambique may be carried forward for a
five-year period.
The movement in the year in the Group's recognised net deferred
tax position was as follows:
2021 2020
Deferred tax liabilities $000 $000
------------------------------------------------------------------------------------------- -------- -------
At 1 January 64,788 62,655
Increase in deferred tax liability: fair value adjustment of Biological Assets 39,006 2,133
Increase in deferred tax liability: fair value adjustment on property, plant and equipment 2,681 -
At 31 December 106,475 64,788
------------------------------------------------------------------------------------------- -------- -------
Deferred tax reconciliation
2021 2020
Deferred tax assets / (liabilities) $000 $000
------------------------------------------------------------------------------------- ---------- ----------
Deferred tax liability on the fair value adjustment of Biological Assets (101,740) (62,734)
Deferred tax liability on the fair value adjustment on property, plant and equipment (4,735) (2,054)
At 31 December (106,475) (64,788)
------------------------------------------------------------------------------------- ---------- ----------
8. EARNINGS PER SHARE
Summary: 2021 2020
cents cents
------------------------------------------------------ -------------------- --------------------
Basic earnings per share from continuing operations 3.69 (0.51)
Basic earnings per share from discontinued operations - (0.01)
Diluted earnings per share 3.65 -
------------------------------------------------------ -------------------- --------------------
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average aggregate number of Voting and Non-Voting Ordinary Shares
in issue during the year.
The calculation of diluted EPS has been based on dividing the
profit attributable to ordinary shareholders and weighted-average
number of ordinary shares outstanding after adjustment for the
effects of all dilutive potential ordinary shares.
2021 2020
$000 $000
Profit/(loss) from continuing operations 90,111 (6,391)
Profit/(loss) from discontinued operations - (146)
------------------------------------------- ------- --------
Total profit/(loss) for the year 90,111 (6,537)
------------------------------------------- ------- --------
The earnings used for diluted earnings per share are the same as
the earnings used for basic earnings per share, which equates to
profit attributable to the owners of the company of $90.1 million
for the Company.
Reconciliation of shares in issue to weighted average and dilutive weighted
average number
of ordinary shares 2021 2020
'000 '000
----------------------------------------------------------------------------- ------------------- ------------------
Shares in issue at beginning of year 2,382,216 465,452
Treasury shares (99) (99)
Shares issued during the year weighted for period in issue (note 18) 62,466 779,563
----------------------------------------------------------------------------- ------------------- ------------------
Weighted average number of ordinary shares in issue for the year 2,444,583 1,244,916
----------------------------------------------------------------------------- ------------------- ------------------
Conversion of convertible bonds 21,612 21,612
----------------------------------------------------------------------------- ------------------- ------------------
Dilutive weighted average number of ordinary shares in issue for the year 2,466,195 1,266,528
----------------------------------------------------------------------------- ------------------- ------------------
9. PROPERTY, plant and equipment
Fixtures & IT
Land & buildings Motor vehicles Plant & equipment equipment Total
$000 $000 $000 $000 $000
Cost
At 1 JANUARY 2020 8,281 4,274 10,386 140 23,081
Additions - 233 1,276 78 1,587
Disposals (1,046) (97) (113) (1) (1,257)
Effects of foreign
exchange 540 284 652 (26) 1,450
---------------------- ----------------- --------------- ------------------ ---------------------- --------
At 31 December 2020 7,775 4,694 12,201 191 24,861
---------------------- ----------------- --------------- ------------------ ---------------------- --------
Additions - 1,779 3,072 218 5,069
Revaluation of land
and buildings (note
10) 8,934 - - - 8,934
Disposals - - (20) - (20)
Effects of foreign
exchange (1,278) (279) (679) 22 (2,214)
---------------------- ----------------- --------------- ------------------ ---------------------- --------
At 31 December 2021 15,431 6,194 14,574 431 36,630
---------------------- ----------------- --------------- ------------------ ---------------------- --------
Depreciation
At 1 JANUARY 2020 71 1,123 1,513 51 2,758
Charge for the year 24 596 1,303 19 1,942
Disposals (87) (50) (37) - (174)
Effects of foreign
exchange (8) 56 100 (16) 132
---------------------- ----------------- --------------- ------------------ ---------------------- --------
At 31 December 2020 - 1,725 2,879 54 4,658
---------------------- ----------------- --------------- ------------------ ---------------------- --------
Charge for the year - 626 1,419 18 2,063
Disposals - - (20) - (20)
Effects of foreign
exchange - (79) (126) 15 (190)
---------------------- ----------------- --------------- ------------------ ---------------------- --------
At 31 December 2021 - 2,272 4,152 87 6,511
---------------------- ----------------- --------------- ------------------ ---------------------- --------
Net book value
At 31 December 2020 7,775 2,969 9,322 137 20,203
---------------------- ----------------- --------------- ------------------ ---------------------- --------
At 31 December 2021 15,431 3,922 10,422 344 30,119
---------------------- ----------------- --------------- ------------------ ---------------------- --------
On acquisition of an asset, the estimated useful life is
determined. The residual values for the majority of assets, except
for Land and Buildings, are assumed to be zero.
10. Revaluation of land and buildings
It is the Company's policy to revalue Owner Occupied Land and
Buildings every 4 to 6 years based on the understanding of the
property market and budgeted capex spend.
The date of the previous revaluation was in the first half of
2017 so the Company engaged an external, independent property
valuer, having the appropriate recognised professional
qualifications and experience, to determine the fair value of the
Group's Owner Occupied Land and Buildings located in Gabon. The
valuation was completed in May 2021. A revaluation net gain of $6.3
million (comprised of a gross gain of $8.9m net of deferred tax of
$2.6m) was recognised in Other Comprehensive Income.
The carrying amount for those assets, if the cost model had been
applied, would have been $326,000 (2020: $368,000).
The replacement cost approach was used to determine the fair
value. The replacement cost method involves arriving at an asset's
value by reference to the present-day cost, in an arms-length
transaction, of replacing that asset with a similar asset in a
similar condition. Average construction prices in the area were
used to determine the fair value. A deterioration percentage
estimate was then applied against the fair value to represent the
asset's current condition.
Significant unobservable inputs used to calculate the fair value
include:
- Estimated construction prices per m(2) . The estimated fair
value would increase (decrease) if the construction prices would be
lower (higher).
- Deterioration percentage estimate. The estimated fair value
would increase (decrease) if the deterioration percentage estimate
would be lower (higher).
The fair value measurement for the land and buildings has been
categorised as a level 3 fair value based on the inputs used in the
valuation technique.
Please refer to note 9 for a reconciliation of the carrying
amount of land and buildings.
11. biological assets
2021 2020
Standing timber $000 $000
------------------------------------- -------- --------
Carrying value at beginning of year 204,223 194,708
Additions (Note 5) 128,322 -
Fair value movements 4,253 9,515
------------------------------------- -------- --------
Carrying value at end of year 336,798 204,223
------------------------------------- -------- --------
The methods and assumptions used in determining the fair value
of standing timber within the forestry concessions held has been
based on IAS 41 Agriculture which uses discounted cash flow models
and which require a number of significant judgements to be made by
the directors in respect of sales price, operational cost, discount
rates, growth rates, legislative rulings and operating
effectiveness. Following the fair value assessment in 2021, a net
fair value gain of $3.7 million (loss of $23.2 million for
Mozambique and a gain of $26.9 million for Gabon) was
recognised.
The discounted cash flow models cover the concession areas in
Mozambique and Gabon to which the group has secured the rights.
Management prepares separate models for each country.
Harvesting levels are regulated by the Annual Permitted Cut
("APC") (total m3 per species) set in each management plan and
approved at federal and provincial government level and can be
reviewed and increased periodically, while continued sustainability
is ensured. The level of assumed APC varies between 55,780m3 and
237,983m3 (2020: 62,822m3 and 200,000m3). This is based on the
current APC which may be subject to change depending on legislative
changes both with regards to the size of the area and species. Such
changes may impact the carrying value of the biological assets
held.
The valuation models assume pre-tax discount rates of 11% (2020:
10%) for Gabon and 13% (2020: 12%) for Mozambique. The discount
rates have been calculated using a weighted average cost of capital
("WACC") methodology. Our comparable company base is made up of
Africa-focused and global forestry companies which management
consider would be categorized in the same sector as Woodbois.
Relevant country and equity risk premiums have been used for Gabon
and Mozambique. When considering the discount rate applicable to
the Mozambique model, management has specifically ensured that the
discount rate adequately incorporates the risk associated with the
current unrest being experienced in the northern parts of the
country. Management have further determined that the discount rates
are in line with the overall industry consensus for timberland
assets within Africa. The increase in pre-tax discount rates from
the prior year is due to the increase in the risk-free rate and the
cost of debt which is used in calculating the WACC.
The Group's main class of biological assets comprise of standing
timber held through forestry concessions of between 20 and 50
years. Biological assets are carried at fair value less estimated
costs to sell.
The brought forward biological assets are located in Gabon in
Mouila and Northern Mozambique in the states of Cabo Delgado,
Nyassa, Nampula and Zambezia and are managed from a central point
in Mouila and Nampula. The newly acquired concession is located in
Mimongo, Gabon.
Fair value has been determined internally by discounting a
5-year pre-tax cash flow projection (Level 3 of the fair value
hierarchy) based on a mix of wood species within the concession
areas. Real cost of production has been factored in going
forward.
The following sensitivity analysis shows the effect of an
increase or decrease in significant assumptions used:
Impact on fair value of biological assets
2021 2020
$000 $000
Effect of 1% increase in the discount rate (33,285) (16,715)
Effect of 1% decrease in the discount rate 41,919 20,215
Effect of 10% increase in volume of APC 34,547 21,330
Effect of 10% decrease in volume of APC (34,547) (21,330)
Effect of 10% increase in sales price 42,409 32,878
Effect of 10% decrease in sales price (42,409) (32,878)
12. TRADE AND OTHER RECEIVABLES
2021 2020
$000 $000
----------------------- ------ ------
Trade receivables 2,093 1,371
Other receivables 12 9
Deposits 127 147
Current tax receivable 14 11
VAT receivable 589 292
Prepayments 1,781 1,931
4,616 3,761
----------------------- ------ ------
The directors consider that the carrying amount of trade and
other receivables approximates their fair value. Refer to Note 14
for details of the trade debt aging profile and for the Group's
impairment policy.
13. INVENTORY
2021 2020
$000 $000
----------------- ------ ------
Finished goods 2,747 1,858
Stock in transit 2,129 3,035
Work in progress 1,283 -
----------------- ------ ------
6,159 4,893
----------------- ------ ------
Write-down for net realisable value amounted to $nil (2020:
$nil).
14. financial INSTRUMENTS
Capital risk management
The Company manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to stakeholders. The overall strategy of the Company and
Group is to minimise costs and liquidity risk.
The capital structure of the Group consists of equity
attributable to equity holders of the parent, comprising issued
share capital, share premium, reserves (merger reserve, foreign
exchange reserve and share based payment reserve) and retained
earnings as disclosed in the Consolidated Statement of Changes in
Equity.
The Group is exposed to a number of risks through its normal
operations, the most significant of which are interest, credit,
foreign exchange and liquidity risks. The management of these risks
is vested in the board of directors.
The sensitivity has been prepared assuming the liability
outstanding at the balance sheet date was outstanding for the whole
period. In all cases presented, a negative number in profit and
loss represents an increase in finance expense / decrease in
interest income.
Categorisation of financial instruments
Financial Financial Financial Financial
2021 assets at assets liabilities liabilities
amortised at fair at amortised at fair
Financial assets/(liabilities) cost value cost value Total
$000 $000 $000 $000 $000
--------------------------------- ----------- ------------ -------------- -------------- --------
Trade and other
receivables 4,616 - - - 4,616
Cash and cash equivalents 887 - - - 887
Trade and other
payables - - (4,078) - (4,078)
Borrowings - - (8,268) - (8,268)
Convertible bond
liability - - (931) - (931)
Contingent acquisition
liability - - (250) - (250)
5,503 - (13,527) - (8,024)
--------------------------------- ----------- ------------ -------------- -------------- --------
Financial Financial Financial Financial
2020 assets at assets liabilities liabilities
amortised at fair at amortised at fair
Financial assets/(liabilities) cost value cost value Total
$000 $000 $000 $000 $000
--------------------------------- ----------- ------------ -------------- -------------- --------
Trade and other
receivables 3,761 - - - 3,761
Cash and cash equivalents 2,560 - - - 2,560
Trade and other
payables - - (3,590) - (3,590)
Borrowings - - (8,710) - (8,710)
Convertible bond
liability - - (842) - (842)
Contingent acquisition
liability - - (750) - (750)
6,321 - (13,892) - (7,571)
--------------------------------- ----------- ------------ -------------- -------------- --------
Fair value measurements recognised in the statement of financial
position
The following provides an analysis of the Group's financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 & 2 based on the degree to
which the fair value is observable.
-- Level 1 fair value measurements are those derived from inputs
other than quoted prices that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
-- Level 2 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
-- Level 3 assets are assets whose fair value cannot be
determined by using observable inputs or measures, such as market
prices or models. Level 3 assets are typically very illiquid, and
fair values can only be calculated using estimates or risk-adjusted
value ranges
At the year end, included in property, plant and equipment,
there is land and buildings held at fair value of $15.4m (2020:
$7.8m) measured in accordance with level 3 and Biological Assets of
$336.8m (2020: $204.2m) measured in accordance with level 3 of the
fair value hierarchy.
Equity price Risk
The Group is exposed to equity price risks arising from equity
investments. Equity investments are held for both strategic and
trading purposes.
Management of market risk
The most significant area of market risk to which the Group is
exposed is interest rate risk.
The risk is limited to the reduction of interest received on
cash surpluses held and the increase in the interest on
borrowings.
Majority of the Company's debt was based on fixed interest rates
with no link or exposure to movements in LIBOR.
The following table details the group's exposure to interest
rate changes, all of which affect profit and loss only with a
corresponding effect on accumulated losses.
2021 2020
$000 $000
------------------------------------- ----- -----
+ 20 bp increase in interest rates (19) (16)
+ 50 bp increase in interest rates (47) (40)
+ 100 bp increase in interest rates (93) (80)
The table above is prepared on the basis of an increase in
rates. A decrease in rates would have the opposite effect.
2021 2020 2021 2020 2021 2020
Fixed Fixed Floating Floating
rate rate rate rate Total Total
Group $000 $000 $000 $000 $000 $000
---------------------------- -------- -------- --------- --------- -------- --------
Borrowings (1,513) (1,366) (6,755) (7,344) (8,268) (8,710)
Cash and cash equivalents - - 887 2,560 887 2,560
Convertible bond liability (931) (842) - - (931) (842)
Total (2,444) (2,208) (5,868) (4,784) (8,312) (6,992)
---------------------------- -------- -------- --------- --------- -------- --------
Management of credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Group's
receivables from customers and investments in debt securities.
The carrying amount of financial assets represents the maximum
credit exposure.
The principal financial assets of the Company and Group are bank
balances and receivables. The Group deposits surplus liquid funds
with counterparty banks that have high credit ratings. Cash is
sometimes placed with certain institutions in support of trading
positions. The Group deposits such funds with large well-known
institutions and the directors consider the credit risk to be
minimal.
The Group's maximum exposure to credit by class of individual
financial instrument is shown in the table below:
2020
2021 2021 2020 Maximum
Carrying Value Maximum Exposure Carrying Value Exposure
$000 $000 $000 $000
----------------------------- ---------------- ------------------ ---------------- ----------
Cash and cash equivalents 887 887 2,560 2,560
Trade and other receivables 4,616 4,616 3,761 3,761
-------------------------------- ---------------- ------------------ ---------------- ----------
Total 5,503 5,503 6,321 6,321
-------------------------------- ---------------- ------------------ ---------------- ----------
TRADE RECEIVABLES
Trade receivables are recognised initially at the amount of
consideration that is unconditional, unless they contain
significant financing components when they are recognised at fair
value. They are subsequently measured at amortised cost using the
effective interest method, less loss allowance.
The only impact on the Group is in relation to the impairment of
trade receivables as detailed below.
The expected loss rates are based on the payment profiles of
sales over a period of 36 month before 31 December 2021 or 1
January 2022 respectively and the corresponding historical credit
losses experienced within this period. The historical loss rates
are adjusted to reflect current and forward-looking information on
macroeconomic factors affecting the ability of the customers to
settle the receivables.
The group has identified the GDP, COVID-19, and the unemployment
rate of the countries in which it sells its goods to be the most
relevant factors, and accordingly adjusts the historical loss rates
based on expected changes in these factors.
On that basis, the loss allowance as at 31 December 2021 and 31
December 2020 were determined as follows for both trade receivables
and contract assets:
More than More More than More Current Total
120 days than 60 days than
past due 90 days past due 30 days
past past
due due
2021
----------------------- ---------- --------- ---------- --------- -------- -------
Expected loss rate 23.70% 0% 0% 0% 0% 6.90%
----------------------- ---------- --------- ---------- --------- -------- -------
Gross carrying amount
- trade receivables 654 143 454 449 547 2,247
----------------------- ---------- --------- ---------- --------- -------- -------
Loss allowance (155) - - - - (155)
----------------------- ---------- --------- ---------- --------- -------- -------
2020
----------------------- ---------- --------- ---------- --------- -------- -------
Expected loss rate 30.63% 0% 0% 12% 0% 13.61%
----------------------- ---------- --------- ---------- --------- -------- -------
Gross carrying amount
- trade receivables 542 89 163 406 387 1,587
----------------------- ---------- --------- ---------- --------- -------- -------
Loss allowance (166) - - (50) - (216)
----------------------- ---------- --------- ---------- --------- -------- -------
The closing loss allowances for trade receivables and contract
assets as at 31 December reconcile to the opening loss allowances
as follows:
2021 2020
$000 $000
Opening loss allowance at 1 January 216 60
Increase in loss allowance recognised
in profit and loss during the year - 184
Receivables written off during the year
as uncollectible (61) (28)
----------------------------------------- ----- -----
Closing loss allowance at 31 December 155 216
----------------------------------------- ----- -----
Management of foreign exchange risk
The Group operates internationally and is exposed to foreign
exchange risk arising from commercial transactions, translation of
assets and liabilities and net investments in foreign operations.
Exposure to commercial transactions arises from sales or purchases
by operating companies in currencies other than the companies'
functional currency. Currency exposures are reviewed regularly.
The Group has a limited level of exposure to foreign exchange
rate risk through their foreign currency denominated cash
balances:
2021 2020
$000 $000
--------------------------- ----- ------
Cash and cash equivalents
GBP 4 1,079
EUR 67 64
DKK 17 67
CFA 72 52
MUR - 1
MZN 2 7
USD 725 1,290
Total 887 2,560
----------------------------- ----- ------
The table below summarises the impact of a 10% increase/decrease
in the relevant foreign exchange rates versus the US Dollar rate,
on the Group's pre-tax profit for the year and on equity:
2021 2020 2021 2020
Income Statement Income Statement Equity Equity
--------------------------- ----------------- ----------------- ------- --------
Impact of 10% rate change $000 $000 $000 $000
--------------------------- ----------------- ----------------- ------- --------
Cash and cash equivalents (1) 103 (1) 103
--------------------------- ----------------- ----------------- ------- --------
The table above is prepared on the basis of an increase in
rates. A decrease in rates would have the opposite effect.
Management of liquidity risk
Liquidity risk is the risk that the group will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will have sufficient liquidity
to meet its liabilities when they are due, under both normal and
stressed conditions, without incurring unacceptable losses or
risking damage to the group's reputation.
The Group seeks to manage liquidity risk by regularly reviewing
cash flow budgets and forecasts to ensure that sufficient liquidity
is available to meet foreseeable needs and to invest cash assets
safely and profitably. The Group deems there is sufficient
liquidity for the foreseeable future.
The Group had cash and cash equivalents at 31 December as set
out below.
2021 2020
$000 $000
-------------- ----- ------
Cash at bank 887 2,560
--------------- ----- ------
ContracTual maturity analysis
The Group has assessed the contractual maturity analysis as
follows:
2021 0-3 months 3-12 months 1 - 5 years Total
$000 $000 $000 $000
------------------------------ ------------- -------------- -------------- ---------
Assets by contractual
maturity
t rade and other receivables 1,246 3,370 - 4,616
C ash and cash equivalents 887 - - 887
------------------------------ ------------- -------------- -------------- ---------
2,133 3,370 - 5,503
Liabilities by contractual maturity
Trade and other payables (3,449) (629) - (4,078)
Borrowings - (5,369) (2,898) (8,267)
Convertible bond liability - - (931) (931)
Contingent acquisition
liability (250) - - (250)
(3,699) (5,998) (3,829) (13,526)
Net liabilities by
contractual maturity (1,566) (2,628) (3,829) (8,023)
------------------------------ ------------- -------------- -------------- ---------
2020 0-3 months 3-12 months 1 - 5 years Total
$000 $000 $000 $000
------------------------------ ------------- -------------- -------------- ---------
Assets by contractual
maturity
t rade and other receivables 770 2,991 - 3,761
C ash and cash equivalents 2,560 - - 2,560
------------------------------ ------------- -------------- -------------- ---------
3,330 2,991 - 6,321
Liabilities by contractual maturity
Trade and other payables (3,470) (120) - (3,590)
Borrowings - (6,223) (2,487) (8,710)
Convertible bond liability - - (842) (842)
Contingent acquisition
liability (250) (500) - (750)
(3,720) (6,843) (3,329) (13,892)
Net liabilities by
contractual maturity (390) (3,852) (3,329) (7,571)
------------------------------ ------------- -------------- -------------- ---------
15. TRADE AND OTHER PAYABLES
2021 2020
$000 $000
--------------------------------------------- ------ ------
Trade payables 1,275 1,333
Accruals 680 671
Contract liabilities (prepayments received) 1,643 1,359
Current tax payable 69 45
Other payables 340 62
Debt due to concession holders 71 120
---------------------------------------------- ------ ------
4,078 3,590
--------------------------------------------- ------ ------
The directors consider that the carrying amount of trade and
other payables approximates to their fair value.
16. BORROWINGS
2021 2020
$000 $000
-------------------------- ------ ------
Non-Current liabilities
Business loans 1,282 1,111
Working capital facility 1,616 1,376
2,898 2,487
Current liabilities
Business loans 1,250 1,382
Bank overdraft 128 110
Working capital facility 3,991 4,731
5,369 6,223
-------------------------- ------ ------
Total borrowings 8,267 8,710
--------------------------- ------ ------
As at 31 December 2021 the trading division had the following
outstanding borrowings:
Business loan with a Danish bank that amounted to $1.1 million
(2020: $1.2 million). The business loan carries an interest rate of
2%. The purpose of the loan is for financing timber trades.
Working capital facilities with Danish banks that amounted to
$5.6 million (2020: $6.1 million). These facilities carry interest
at rates 2.5% and 5.8%. One of the facilities, for $3 million, has
been included in current liabilities: this is a revolving facility
with no maturity date. At the year end and as at the date of this
report, there is no indication from the credit provider that the
facility will be revoked, but as there is no maturity date, the
Company has classified and disclosed it as being a current
liability. See note 23 Increase in working capital facility.
As on 31 December 2021 the forestry division had the following
outstanding borrowings:
Business loans with a Gabonese bank that amounted to $1.4
million (2020: $1.2 million). These loans carry an interest rate of
between 10% and 14%. A bank overdraft with a Gabonese bank amounted
to $0.1 million (2020: $0.110 million) and carries an interest rate
of 15%. The purpose of the loans is for operational asset
financing.
The Group signed a combined security to the value of $2 million,
which includes securities over the property, plant and equipment,
the total inventories and total trade receivables.
The Group has also signed a security in favour of a Danish bank
to the value of $4.3 million.
The contractual maturity of borrowings has been assessed in Note
14.
The Group had undrawn facilities available at 31 December 2021
amount to $0.1million (2020: $0.1million).
17. CONVERTIBLE BONDS
2021 2020
$000 $000
------------------------------------- ----- -----
Convertible bonds: Liability
component 931 842
Convertible bonds: Equity component 52 52
-------------------------------------- ----- -----
Total 983 894
-------------------------------------- ----- -----
Convertible bond liability 741 741
Interest accrued 190 101
-------------------------------------- ----- -----
Total 931 842
-------------------------------------- ----- -----
The terms of the convertible bonds are as follows:
1. Final Redemption Date of 30 June 2023
2. Convertible at a price of 4p per ordinary share
3. Interest rate at zero percent
18. SHARE CAPITAL
Number $000
---------------------------------- -------------- ----------
Authorised:
Ordinary shares of 1p each Unlimited Unlimited
Allotted, issued and fully paid:
Ordinary shares of 1p each
----------------------------------- -------------- ----------
AT 1 JANUARY 2020 465,451,931 6,757
Shares issued 1,916,764,500 24,362
----------------------------------- -------------- ----------
AT 31 DECEMBER 2020 2,382,216,431 31,119
Shares issued 99,900,622 1,409
AT 31 DECEMBER 2021 2,482,117,053 32,528
----------------------------------- -------------- ----------
Voting 1,857,117,053
----------------------------------- -------------- ----------
Non-Voting 625,000,000
----------------------------------- -------------- ----------
Balances classified as share capital include the nominal value
on issue of the Company's equity share capital, comprising ordinary
shares of 1p each.
During 2021 a total of 326,365,095 Non-Voting Ordinary Shares
have been converted into Voting Ordinary Shares.
On 17 May 2021, the Company completed a fundraise. As a result,
100,000,000 Voting Ordinary shares were admitted for trading on AIM
at a price of 6 pence per ordinary share (the "Placing Price"). The
Admission Shares were comprised of 99,900,622 new ordinary shares
and 99,378 treasury shares. At 31 December 2021, the Group's share
capital of 2,482,117,053 ordinary shares, was comprised of
1,857,117,053 Voting Shares and 625,000,000 Non-Voting Shares.
19. SHARE PREMIUM ACCOUNT
2021 2020
$000 $000
---------------- ------- -------
AT 1 JANUARY 58,609 35,130
Shares issued 6,645 23,479
AT 31 DECEMBER 65,254 58,609
---------------- ------- -------
Balances classified as share premium include the net proceeds in
excess of the nominal share capital on issue of the Company's
equity share capital.
20. Provisions
2021 2020
$000 $000
---------------- ----- -----
AT 1 JANUARY 132 -
Movement (2) 132
AT 31 DECEMBER 130 132
---------------- ----- -----
The balance comprises of one provision, to the amount of $0.1
million, which relates to a tax dispute with the Mozambique tax
authorities. The provision is classified as a current liability as
at 31 December 2021.
21. SHARE BASED PAYMENT
The Group operates a share option plan, under which certain
directors and key employees have been granted options to subscribe
for ordinary shares. All options are equity settled. The Group has
no legal or constructive obligation to repurchase or settle the
options in cash. The share option awards in issue as at 1 January
2021 totalled 144.5m share options, which became effective as of 6
August 2020 and exercisable at 2p per share. During 2021 30.5m
share options were forfeited. The vesting of the awards is
substantially geared towards material improvement in both operating
results and share price appreciation. All share options under the
previous share options plan were co-terminously forfeited in
2020.
The key terms and conditions related to the grants were as
follow:
A. Market Performance Condition
-- Grant Date: 6 August 2020
-- Contractual life of options: 4 years
-- Vesting conditions: Total Shareholder Return - 50% of the
share options are subject to the Market Performance Condition
whereby none will vest at a share price of 2p; one third of these
options will vest on a straight-line basis between a share price of
2-4p; two thirds will vest on a straight-line basis between a share
price of 4-6p per share, and full vesting will occur when the share
price exceeds 6p, each vesting being based on the volume weighted
average share price over a period of 30 days. All of these options
had vested by the end of 2021.
B. Non-Market Performance Condition
-- Grant Date: 6 August 2020
-- Contractual life of options: 4 years
-- Vesting Conditions: Target EBITDA - 50% of the share options
are subject to Non-Market Performance Conditions, whereby 12.5% of
these options can vest per annum based on achieving internal EBITDA
targets for each of the financial years 2020-2023. There is also a
cumulative provision whereby a shortfall (or excess) in one or more
years can be offset against other years for the purposes of
vesting. As of the date hereof a quarter of these share options
have vested.
C. Non-Subject to Performance Criteria
-- Grant Date: 6 August 2020
-- Contractual life of options: 4 years
-- A one-off award of 10m share options was made to Mr G Thomson
(Senior Independent Non-Executive). In accordance with corporate
governance advice, his options are not subject to performance
criteria but may not vest for 4 years from the time of grant.
The awards outstanding to directors in the year are:
Number of options
(2p exercise price )
P Dolan Executive Chair 50,000,000
C Geddes CFO 22,500,000
H Ghossein Deputy Chair 22,500,000
G Thomson Senior Independent NED 10,000,000
MEASUREMENT OF FAIR VALUE:
For the 'Market Performance Conditions' (Total Shareholder
Return) , the fair value of the 67.25m share options were valued
using a Monte Carlo simulation.
For the 'Non-Market Performance Conditions' (Target EBITDA) ,
the fair value of the of 67.25m share options were valued using a
Black Scholes Option Pricing Model.
For the 'Non-Subject to Performance Criteria', the fair value of
the 10m Share Options were valued using a Black Scholes Option
Pricing Model.
Only Market Conditions have been considered in estimating the
fair value of the share options.
The table below shows the input ranges for the assumptions used
in the valuation models:
Fair value at grant date 0.97p - 1,04p
Exercise price 2p
Share price at grant date 2.15p
Annual share price volatility (weighted
average) 62%
Risk free rate 0.1%
Expected life 4 years
The annualised volatility in the share price was determined
using the historical volatility of Woodbois Limited and other
listed companies in similar businesses over a time period in line
with the simulation period. A monthly volatility of 18.0% was used
in the simulation (annual volatility of 62%).
Reconciliation of the share options in issue:
Weighted
average strike
Total options price
------------------------------------ ------------- ---------------
As on 1 January 2020 14,500,000 15.23p
Forfeited during the financial year (14,500,000) (15.23p)
Issued during the financial year 144,500,000 2p
As on 31 December 2020 144,500,000 2p
Forfeited during the financial year (30,500,000) (2p)
As on 31 December 2021 114,000,000 2p
------------------------------------ ------------- ---------------
The following charge has been recognised in the current
financial year:
2021 2020
$000 $000
--------------------------------- ----- -----
AT 1 JANUARY 968 968
Reserve transfer for forfeitures (766) (942)
Share based payment expense 233 200
--------------------------------- ----- -----
AT 31 DECEMBER 435 226
--------------------------------- ----- -----
There were no options exercisable at the reporting date.
22. RELATED PARTY TRANSACTIONS AND Related party balances
related party balances
2021 2020
$000 $000
------------------------------------------------- ----- -----
Amount due to H. Ghossein, a director (340) -
Contingent acquisition liability due to director
vendors re purchase of WoodBois International
ApS in 2017 (250) (750)
AT 31 DECEMBER (590) (750)
------------------------------------------------- ----- -----
Deferred consideration:
During the 2021 financial year, deferred acquisition payments
were made directly to H Ghossein ($0.5 million) and the final
payment of $0.25m was made in 2022.
The 40,000,000 warrants issued to Volantis in January 2019,
exercisable at 8p before 1 April 2023, remain
outstanding.
Trading transactions
During the year the Group companies entered into the following
transactions with related parties:
2021 2021 2020 2020
Transactions Transactions
in year Balance at 31 December in year Balance at 31 December
$000 $000 $000 $000
--------------------------------- -------------------------- ------------- ------------------------
Loans to subsidiary undertakings 11,985 2,940 16,042 14,835
Contingent acquisition expense - - 2,171 -
---------------------------------- ------------- ----------- ------------- ------------------------
Transactions with key management personnel
The Group's key management personnel comprised the
following:
2021 Short-term employment benefits
Salaries, fees & national insurance contributions Benefits Total
$000 $000 $000
-------------- -------------------------------------------------- --------- ------
Directors
P Dolan 200 - 200
H Ghossein 220 42 262
F Tonetti 69 1 70
C Geddes * 200 - 200
G Thomson 69 - 69
D Rothschild 9 - 9
H Turcan ** - - -
Other key management personnel
A Rafael 29 - 29
796 43 839
-------------- -------------------------------------------------- --------- ------
The table above excludes deferred acquisition payments made
during the year directly to H Ghossein ($0.5 million). All of the
above directors' remunerations exclude national insurance
contributed by the employer.
* Paid through a service company
** H Turcan is a representative of Lombard Odier. No fees are
paid directly to H Turcan, however an annual fee is payable to
Lombard Odier for his services.
2020 Short-term employment benefits
Salaries, fees & national insurance contributions Benefits Total
$000 $000 $000
----------------- --------------------------------------------------------------- ----------- -------
Directors
P Dolan 200 - 200
C Geddes * 200 - 200
H Ghossein 217 42 259
G Thomson 42 - 42
H Turcan ** 6 - 6
J Hansen 201 9 210
Z Abbas * 203 6 209
K Milne 10 - 10
Other key management personnel
S Bouchebel 96 16 112
C Wellov 40 4 44
A Rahmati 123 2 125
A Rafael 24 - 24
I Hardy * 91 - 91
----------------- --------------------------------------------------------------- ----------- -------
1,453 79 1,532
----------------- --------------------------------------------------------------- ----------- -------
The table above excludes deferred acquisition payments made during the year directly to or
to companies owned and controlled by H Ghossein ($0.618 million) and J Hansen ($1.756 million).
* Paid through service companies
** H Turcan is a representative of Lombard Odier. No fees are paid directly to H Turcan, however
an annual fee is payable to Lombard Odier for his services.
23. Events occurring after the reporting date
-- Issue of LTIP's
On 1 March 2022 it was announced that a total of 68.0m share
options under the Company's Long Term Incentive Plan ("LTIP's")
were issued to executive directors and to other key personnel,
being 2.74% of the total issued share capital (voting and
non-voting). Of these, 30.0m LTIP's had previously been announced
as to be allocated to Federico Tonetti, when he joined the Company
as its CEO on 8 November 2021.
Taken together with existing options, there will be a total of
182m shares outstanding under option representing 7.33% of the
current issued share capital (voting and non-voting). The Company
has undertaken that it will not have more than 10% of the issued
share capital under option at any time.
The key terms of the LTIP's were set out in the RNS dated 1
March 2022.
-- Increase in working capital facility
During 2022, the Company arranged a $2m general-purpose two-year
facility with Rhino Ventures Limited, the Company largest
shareholder, and a further conditional facility of $2m if
additional short-term working capital finance is required with
Lombard Odier, the Company's second largest shareholder.
In March 2022, the trading division increased the cash
facilities available to it through its Danish banking partners who
increased the working capital facility by $2.3 million and adjusted
the interest on that facility down from 2.5% per annum to 2% per
annum.
24. ULTIMATE PARENT COMPANY
At 31 December 2021, the directors do not believe that there was
an ultimate controlling party.
[1] Earnings before interest, tax, depreciation, amortization,
share based payments and other non-cash items
2 Earnings before interest, tax, depreciation, amortization,
share based payments and other non-cash items
[2] Issued Share Capital of 2,482.1m shares comprises of
1,857.1m Voting Shares and 625.0m Non-Voting Shares.
[3] C Geddes services are provided through a service company,
Pomona Trust
[4] No fees are paid directly to Henry Turcan, however, fees of
$25,000 per annum, are payable to Lombard Odier, for his services.
Since April 2020 Lombard Odier has temporarily waived these
fees.
[5] During 2021 the Group has changed its operating segments by
reallocating and absorbing the head office segment between the
three remaining divisions. This resulted in a change to the
reportable segments. Accordingly, the Group has restated the
previously reported segment information for the year ended 31
December 2020.
This information is provided by RNS, the news service of the
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END
FR SSFSIFEESEDL
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April 01, 2022 02:01 ET (06:01 GMT)
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