TIDMWBI
RNS Number : 8518U
Woodbois Limited
04 August 2022
04 August 2022
Woodbois Limited
("Woodbois", the "Group" or the "Company")
Half Year Results
Woodbois Limited (AIM: WBI), the African focused forestry,
timber trading, reforestation and voluntary carbon credit company,
is pleased to announce its half year results for the six months to
30 June 2022.
Financial Highlights
-- H1 2022 revenue up 38% to $11.3m vs H1 2021 $8.2m
-- H1 2022 Group gross profit up 59% to $2.7m vs H1 2021 $1.7m: margin improved to 23% from 20%
-- H1 2022 EBITDAS [1] $1.1m vs H1 2021 $0.46m, up 141%
-- First ever operating profit in H1 2022 of $15k vs $0.7m operating loss in H1 2021
-- H1 2022 positive operating cash inflow (before income taxes
and finance costs) of $0.2m vs outflow in H1 2021 of $2.2m
-- Cash balance $2.1m as at 30 June 2022
-- Period end working capital of $9.8m of which inventory was
$6.4m and excluding short and longer-term bank and other loans of
$12.4m
-- 2022 on track to deliver strong revenue and profitability growth
Operational Highlights
-- Total sawn timber production 9,565m3 in H1 2022, a 37% increase over H1 2021.
-- Total veneer production 2,740m3 in H1 2022, a 50% increase on H1 2021.
-- Best quarter and half-year for volume of product shipped
since before the pandemic. Total number of containers shipped in Q2
2022 increased by 24% over Q1 2022
-- The second veneer line installed at the factory in Mouila is
currently undergoing final testing and will commence production in
August. This will generate additional higher value product and will
represent another significant milestone of achievement.
-- Work on FSC certification has continued and is now over 60%
complete and we aim for completion during 2023.
Commenting on the results, Paul Dolan, CEO said:
"In the first half of 2022 we have achieved record levels of
production, strong revenue growth, further improvement in both
margin and EBITDAS, as well as a first maiden operating profit with
a positive operating cash inflow. Whilst there are challenges our
highly motivated team are on-track to deliver further strong growth
in our metrics, including revenue and profitability. "
The Report is available on the Company's website at:
www.woodbois.com
Enquiries:
Woodbois Limited
Paul Dolan - CEO + 44 (0)20 7099 1940
Canaccord Genuity, Nominated
Advisor
Henry Fitzgerald-O'Connor
Gordon Hamilton + 44 (0)20 7523 8000
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.
CEO's Statement
H1 Financial performance
The Company generated a 38% increase in YOY revenues in H1 2022,
with EBITDAS improving by 141% to $1,104k vs $459k in H1 2021,
achieved through a further increase in levels of sawn-timber
production and correspondingly higher sales volumes, underpinned by
strict cost-efficiencies.
The Group delivered a 59% increase in gross profit compared to
the same period for 2021 with margins improving to 23% for H1 2022
from 20% at H1 2021 reflecting robust demand and pricing. Having
delivered positive EBITDAS consistently for the last 18 months, the
Group also booked its first ever operating profit in H1 2022 of
$15k compared to a $0.7m operating loss in H1 2021: this is
especially significant given it includes the costs related to our
Carbon Solutions division. Significantly, in H1 2022 the Company
generated positive operating cash inflows (before tax and finance
costs) of $0.2m for the first time compared to a loss of $2.2m for
H1 2021.
Six months Six months
to June 2022 to June 2021
EBITDAS $'000 $'000
----------------------------- ------------------- -----------------
Loss before tax (489) (980)
Depreciation 977 1,002
Share based payment expense 175 167
Finance cost 441 270
------------------------------ ------------------- -----------------
EBITDAS 1,104 459
H1 gross margin within our own production division held stable
at 32% while the margin from third party trading increased to 14.8%
in H1 2022 compared to 11.3% for H1 2021. Operating and
Administration expenses increased by 18% when compared to the same
period for 2021, as we continued to recruit additional high-quality
personnel to drive and scale the business, including those related
to the Carbon Solutions division. The management team continued to
exert a strong influence over the items within their control,
providing confidence that the Company is on track to drive revenues
to a level substantially in excess of fixed and variable operating
costs.
Finance costs increased by $0.2m (63%) from the same period in
2021 reflecting the increase in the Group's borrowings from a very
low level in 2021, but for context, finance costs remain 79% lower
than in H1 2020. The $2m unsecured facility agreed with Rhino
Ventures, was fully drawn down in February 2022 to fund the
increase in working capital required due to higher volumes of
production. The working capital facility available to the trading
division through its Danish banking partners was increased by $2.3m
and has also been drawn down, helping to accelerate trading growth.
$1m of the $2m conditional facility agreed with Lombard Odier was
also utilised in June 2022 as a short-term measure.
The funds provided by the new borrowings also enabled the
Company to keep pace with the uptick in demand and business
activity towards the latter part of H1 2022 over H2 2021, resulting
in additional investment in working capital, particularly Trade
receivables and Inventory. Total period end working capital is
$9.8m (Dec 2021: $7.7m), including cash of $2.1m (Dec 2021: $0.9m),
excluding loans of $12.4m (Dec 2021: $8.3m).
The primary goal for the Group is to consistently increase
levels of positive cash flow via the delivery of greater volumes of
high-quality product, improve the ratio of high-value hardwoods and
veneers within our product mix, and through incrementally improving
margins in all areas of the business to provide the strongest
possible foundations upon which to drive scale.
Production and trading
Total output at the sawmill and veneer factory in Gabon
increased by 37% and 50% respectively on a year over year basis for
the period, with both facilities consistently achieving their
highest levels of production to date thanks to implementation of
enhanced best practices, improved programmes for maintenance of
equipment and full involvement, motivation and training of staff.
Particular credit must go to the team at the veneer factory for
achieving this result despite the ongoing heavy engineering work
that has been required to install the second veneer line within the
existing factory, which is now undergoing final testing and is
expected to be fully functioning this month. A total of $1.2m in
capex has been allocated to the veneer factory to date during 2022
for this and other improvements and the expanded factory will
signal another major milestone in the growth of the Company once
the second veneer line is fully operational, further boosting
output capacity, revenue and bottom-line potential.
Our continued investment in proprietary trading technology was
rewarded during H12 2022 as gross profit margins within the trading
division of 14.8%, were almost a threefold increase on FY 2020,
while gross profit margins on the higher levels of our own
production remained consistent at 32%. It should be noted that
these have been delivered against a backdrop of continued
disruption being experienced at many ports around the world,
including Libreville, and that the cost of shipping goods has
remained at elevated levels during the period.
Woodbois' profile has continued to grow in Gabon, and more
widely in Africa and beyond, as our sales team has sought to
broaden our customer base and prospect in new geographies to sell
our products into. As output of higher-value product from our
factories increases, markets where premium pricing can be achieved
will increasingly be focused on, with bulk shipment of standard
product directed towards high consumption markets. It is with this
strategy in mind that sales team was well represented at both the
Dubai and Nantes wood shows during H1 2022, and will also be
prominent at Algeria Woodtech in September 2022 as we seek to
expand in the rapidly growing North-African market and to our
existing client base in Asia and the Middle East.
Mozambique
The Group continues to fund a limited level of operations on a
largely care and maintenance basis in Mozambique while retaining
the optionality to increase the scale of operations there, subject
to the level of investment required and demand and pricing of
product in the future. Management intends to dedicate time to
exploring the potential for generating revenues from the carbon
market for preserving forests in the country directly with the
government of Mozambique.
Carbon Division
We are fortunate to have our core operations based in Gabon, one
of the last countries in the world with high forest cover and low
levels of deforestation (HFLD) of between 0 and 0.05%. In 2019
Gabon signed up to an independently audited, results-based
agreement with the UN worth $150m, making it the first HFLD country
in Africa to enter into such a payment agreement for emission
reductions and removals through forest preservation. On 9(th) July
2022 the UN signed the 3(rd) phase of the CAFI (Central African
Forest Initiative) program, congratulating Gabon on its
contribution towards a 'transformation to a green and blue
economy'. It is within this context that Woodbois submitted a
comprehensive feasibility study and proposal to the Government of
Gabon to develop a large-scale afforestation project in the
country. Woodbois aims to be a standard bearer for best practice
within Gabon as the country continues to show leadership on forest
preservation on the world stage. It has been encouraging to see
Gabon receive widespread recognition during H1 2022 for its work
with the United Nations Framework Convention on Climate Change's
REDD+ mechanism to create carbon credits and with the Central
African Forestry Initiative backed by European governments, as well
as becoming the 55(th) member of The Commonwealth in June 2022.
While we wait for government approval for our proposed initial
large-scale afforestation project for carbon sequestration in
Gabon, we continue to work to align our operations with the
interests of the country through increasing employment, continued
investment and commitment to achieving full FSC certification. We
also continue to invest in this important division which we expect
to be a key driver of medium to long-term revenues . We have high
confidence in the future of carbon markets to continue to evolve
positively and in line with shifting public and corporate attitudes
as well as policy changes. We hope to receive the green light to
commence our maiden project in H2 2022 which will be followed by a
comprehensive four-year trial phase. The implementation of our
initial project is intended to position the Company as a pioneer in
this area, distinguishing Woodbois from the rapidly expanding group
of consultants becoming active in the space. Few, if any, other
listed companies have the combination of in-house financial
structuring skills and on-the-ground implementation experience
required to deliver on projects of such scale
ESG
Woodbois has a clear social purpose ingrained within its DNA and
our solid, verifiable ESG credentials are articulated clearly in
the Company's recently published Integrated Report for the year
ending December 2021. The report details our strategy, performance,
opportunities and future outlook in relation to material financial,
economic, social and governance issues and explains how we strive
to achieve balance in all facets of our operations while also
addressing value-creation considerations for investors and all key
stakeholders. From providing truly equal-opportunity-based
employment (our veneer factory has 75% female staff), to our
commitment to best environmental practice within our forest
concessions, multiple community projects including linking villages
through repairing roads and the donation of tools, to sponsoring
UNICEF managed events for local children and forming a partnership
with a cutting-edge, science-based forestry monitoring
organisation, the Company strives to deliver positive social
impact, something our staff are quite rightly proud of. The full
report is available on the Company's website at:
www.woodbois.com
FSC Certification
Woodbois ESG Team, Management team and outside consultant
Silvafrica continued the process of creating the culture needed to
demonstrate changes and dedication to the principles of the
certification throughout the business in order to be fully prepared
for audit by both Legal Source and FSC. In this regard, the focus
during H1 2022 was on continuing to enhance our relationship with
local communities, improve the quality of life of our employees,
provide more health support to our staff, improve our employees'
transportation to and from work and empowering several employees to
be members of our Health and Safety committee. Training was also
provided to our harvesting team on best practices, Health and
Safety and respect for the environment.
At the end of H1 2022, following the guidelines of the FSC
auditing system, our operations in Gabon are now over 60%
compliant. We are aiming to become 100% compliant during 2023.
Outlook
Having previously expressed confidence in the Group's ability to
further increase output, continue to increase margins and grow the
top line very significantly over time, I am understandably happy to
provide confirmation and evidence thereof within this set of half
year results. As noted previously however when the impact of the
pandemic created such huge levels of uncertainty, immediate growth
projections must of course carry a health warning, particularly
given Covid's lingering disruptive effects on international trade,
rising interest rates and the inflationary effects of the war in
Ukraine on the global macro-economic environment. Ultimately,
global demographics and the supply demand imbalance for sawn timber
is in our favour, and operators like ourselves are protected from
inflationary pressures on our raw material input through ownership
of the whole supply chain from forest to buyer. In common with most
other manufacturing companies however, we are not immune to higher
energy costs and fuel shortages and it is clear that due to these
and other inflationary pressures, economies in some parts of the
world may experience a period of lower levels of growth or indeed
slip into recession. We will therefore continue to carefully
monitor risk exposure at both a country and customer level and will
use the levers at our disposal such as switching geographic sales
direction in line with prevailing economic conditions in order to
minimise any potential margin erosion. The challenges of the last
two years have forced the Company to become nimble, resilient,
efficient and adaptable, all qualities that are likely to be
required in order to maintain progress and continue to deliver
growth in the months ahead
Our emphasis on efficiency, sustainability, transparency and
best practice will continue as they are key to our corporate
identity, and we expect will only offer increasing appeal to
customers and investors as the transition to a net zero carbon
economy gathers momentum.
As ever, your board express their sincere gratitude to our
colleagues and to all of our staff for their contribution towards
such significant improvements to key performance metrics, and for
delivering on more key milestones as we seek to build an
industry-leading business.
Paul Dolan
CEO
3 August 2022
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the six months ended 30 June 2022
Six months
to 30
June
Six months Year to
to 30 31 December
2022 June 2021
Notes 2021
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
------------------------------------- -------- -------------- -------------- -------------
Turnover 11,318 8,220 17,465
Cost of sales (8,665) (6,553) (13,970)
------------------------------------- -------- -------------- -------------- -------------
Gross profit 2,653 1,667 3,495
------------------------------------- -------- -------------- -------------- -------------
Operating costs (1,576) (1,454) (3,620)
Administrative expenses (750) (521) (1,324)
Depreciation (137) (179) (326)
Share based payment expense 13 (175) (167) (233)
Gain on fair value of biological
assets - - 4,253
------------------------------------- -------- -------------- -------------- -------------
Operating profit/(loss) 15 (654) 2,245
Gain on bargain purchase - - 88,292
Foreign exchange loss (63) (56) 756
Finance costs 4 (441) (270) (591)
------------------------------------- -------- -------------- -------------- -------------
(Loss)/profit before tax (489) (980) 90,702
Taxation 5 (44) 46 (591)
------------------------------------- -------- -------------- -------------- -------------
(Loss)/profit for the period (533) (934) 90,111
------------------------------------- -------- -------------- -------------- -------------
Other comprehensive income:
Items that will not be reclassified
to profit or loss
Revaluation of land and buildings,
net of tax - 6,254 6,254
Items that may be reclassified
subsequently to profit or loss
Currency translation differences (2,053) (690) (3,032)
Total comprehensive (loss)/income
for the period (2,586) 4,630 93,333
------------------------------------- -------- -------------- -------------- -------------
Basic (loss)/earnings per share
(cents) 6 (0.02) (0.04) 3.69
------------------------------------- -------- -------------- -------------- -------------
Diluted (loss)/earnings per share
(cents) 6 (0.02) (0.04) 3.65
------------------------------------- -------- -------------- -------------- -------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
Notes 30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
------------------------------- -------------- -------------- -------------- -------------
ASSETS
Non-current assets
Biological assets 336,798 204,223 336,798
Property, plant and equipment 29,293 29,944 30,119
------------------------------- -------------- -------------- -------------- -------------
Total non-current assets 366,091 234,167 366,917
------------------------------- -------------- -------------- -------------- -------------
Current assets
Trade and other receivables 7 4,777 5,179 4,616
Inventory 6,382 5,134 6,159
Cash and cash equivalents 2,091 6,321 887
------------------------------- -------------- -------------- -------------- -------------
Total current assets 13,250 16,634 11,662
TOTAL ASSETS 379,341 250,801 378,579
------------------------------- -------------- -------------- -------------- -------------
LIABILITIES
Non-current liabilities
Borrowings 9 (5,208) (4,139) (2,898)
Deferred tax 5 (106,475) (67,383) (106,475)
Convertible bonds - host
liability 10 - (885) (931)
------------------------------- -------------- -------------- -------------- -------------
Total non-current liabilities (111,683) (72,407) (110,304)
------------------------------- -------------- -------------- -------------- -------------
Current liabilities
Trade and other payables 8 (3,351) (2,677) (4,078)
Borrowings 9 (7,162) (5,397) (5,369)
Provisions (130) (140) (130)
Contingent acquisition
liability - (500) (250)
Convertible bonds - host
liability 10 (712) - -
------------------------------- -------------- -------------- -------------- -------------
Total current liabilities (11,355) (8,714) (9,827)
------------------------------- -------------- -------------- -------------- -------------
TOTAL LIABILITIES (123,038) (81,121) (120,131)
------------------------------- ----- ----------------------- -------------- -------------
NET ASSETS 256,303 169,680 258,448
------------------------------- ----- ----------------------- -------------- -------------
EQUITY
Share capital 11 32,601 32,528 32,528
Share premium 12 65,475 65,254 65,254
Convertible bonds - equity
component 10 24 52 52
Foreign exchange reserve (10,376) (5,981) (8,323)
Share based payment reserve 13 610 393 435
Revaluation reserve 6,254 6,254 6,254
Retained earnings 161,715 71,180 162,248
------------------------------- ----- ----------------------- -------------- -------------
TOTAL EQUITY 256,303 169,680 258,448
------------------------------- ----- ----------------------- -------------- -------------
Approved by the board and authorised for issue on 3 August
2022.
P Dolan
Chief Executive Officer
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2022
Share
Foreign based
Share Share Convertible exchange payment Revaluation Retained Total
capital premium bonds reserve reserve reserve Earnings equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- ---------- ----------- ------------- ---------- ---------- ------------- ---------- ----------
Balance at 1
January 2021 31,119 58,609 52 (5,291) 226 - 72,113 156,828
Loss for the
period - - - - - - (933) (933)
Other
comprehensive
income - - - (690) - 6,254 - 5,564
Total
comprehensive
loss for the
period - - - (690) - 6,254 (933) 4,631
Transactions
with owners:
Issue of
ordinary
shares 1,409 6,645 - - - - - 8,054
Share based
payment
expense - - - - 167 - - 167
Balance at 30
June 2021 32,528 65,254 52 (5,981) 393 6,254 71,180 169,680
Profit for the
period - - - - - - 91,044 91,044
Other
comprehensive
income - - - (2,342) - - - (2,342)
Total
comprehensive
loss for the
period - - - (2,342) - - 91,044 88,702
Transactions
with owners:
Share options
forfeited - - - - (24) - 24 -
Share based
payment
expense - - - - 66 - - 66
Balance at 31
December 2021 32,528 65,254 52 (8,323) 435 6,254 162,248 258,448
Loss for the
period - - - - - - (533) (533)
Other
comprehensive
income - - - (2,053) - - - (2,053)
Total
comprehensive
loss for the
period - - - (2,053) - - (533) (2,586)
Transactions
with owners:
Redemption of
convertible
bonds (note
10) 73 221 (28) - - - - 266
Share based
payment
expense (note
13) - - - - 175 - - 175
Balance at 30
June 2022 32,601 65,475 24 (10,376) 610 6,254 161,715 256,303
--------------- ---------- ----------- ------------- ---------- ---------- ------------- ---------- ----------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2022
Six months
to 30 June
Six months Year to
to 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
Cash flows from operating activities $'000 $'000 $'000
------------------------------------------ ---- -------------- -------------- -------------
(Loss)/profit before taxation (489) (980) 90,702
Adjustment for:
Foreign exchange 63 56 (756)
Depreciation of property, plant
and equipment 977 1,002 2,063
Fair value adjustment of biological
asset - - (4,253)
Transaction costs deducted from
equity - (42) (42)
Share based payment expense 175 167 233
Finance costs 441 270 591
Accrued expense 222 460 391
Gain on bargain purchase - - (88,292)
Increase in trade and other receivables (161) (1,285) (838)
Decrease in trade and other payables (769) (1,609) (460)
Increase in inventory (223) (242) (1,267)
Cash inflow/(outflow) from operations 236 (2,203) (1,928)
------------------------------------------ ---- -------------- -------------- -------------
Income taxes paid (8) (44) (57)
Finance cost paid (306) (206) (495)
Net cash outflow from operating
activities (78) (2,453) (2480)
Cash flows from investing activities
Expenditure on property, plant
and equipment (2,267) (1,451) (4,310)
Settlement of deferred consideration (250) - (500)
Investment in acquired subsidiary (214) - (1,107)
Net cash outflow from investing
activities (2,731) (1,451) (5,917)
------------------------------------------ ---- -------------- -------------- -------------
Cash flows from financing activities
Inflows/(payments) from loans and
borrowings 4,013 (446) (1,387)
Proceeds from the issue of ordinary
shares - 8,111 8,111
Net cash inflow from financing
activities 4,013 7,665 6,724
------------------------------------------ ---- -------------- -------------- -------------
Net increase/(decrease) in cash
and cash equivalents 1,204 3,761 (1,673)
Cash and cash equivalents at the
start of period 887 2,560 2,560
------------------------------------------ ---- -------------- -------------- -------------
Cash and cash equivalents at the
end of the period 2,091 6,321 887
------------------------------------------ ---- -------------- -------------- -------------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June 2022
1. BASIS OF PREPARATION
The condensed consolidated interim financial statements
('interim financial statements') for the six months ended 30 June
2022 have been prepared in accordance with the requirements of the
AIM Rules for Companies. As permitted, the Group has chosen not to
adopt IAS 34 "Interim Financial Statements" in preparing this
interim financial information. The interim financial statements
should be read in conjunction with the annual financial statements
for the year ended 31 December 2021, which have been prepared in
accordance with international accounting standards in accordance
with the requirements of the Companies (Guernsey) Law 2008
applicable to Companies reporting under IFRS as adopted by the
United Kingdom (UK). The interim 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.
The interim financial statements of Woodbois Limited are
unaudited financial statements for the six months ended 30 June
2022. These include unaudited comparatives for the six-month ended
30 June 2021 together with audited comparatives for the year to 31
December 2021. The condensed financial statements do not constitute
statutory accounts, as defined under section 244 of the Companies
(Guernsey) Law 2008. The statutory accounts for the period to 31
December 2021, which were approved by the Board of Directors on 1
April 2022, have been reported on by the Group's auditors and have
been delivered to the Guernsey Registrar of Companies. The report
of the auditors on those financial statements was unqualified.
The accounting policies applied in preparing these financial
statements are in terms of IFRS and are consistent with those
applied in the previous annual financial statements for the year
ended 31 December 2021.
The interim financial statements for the six months ended 30
June 2022 were approved by the Board of Directors on 3 August
2022.
Going Concern:
The interim financial statements have been prepared assuming
that the Group will continue as a going concern in accordance with
the recognition and measurement criteria of IFRS.
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 financial statements.
An assessment of going concern is made by the Directors at the
date the Directors approve the interim financial statements, taking
into account the relevant facts and circumstances at that date
including:
-- The current state of the Group's life cycle;
-- Review of profit and cash flow forecasts;
-- Review of actual results against forecast;
-- Timing of cash flows;
-- Financial or operational risks; and
-- The impact of COVID-19
The Directors have a reasonable expectation that the Group has
or will have adequate resources to continue in operational
existence for the foreseeable future, being 12 months from the date
of approval of these interim financial statements and have
therefore adopted the going concern basis of preparation in the
interim financial statements.
2. CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT
The preparation of financial statements in conformity with IFRS
requires management to make estimates and assumptions concerning
the future. It also requires management to exercise judgment in
applying the Company's accounting policies and the reported amounts
of assets and liabilities, revenue and expenses, and related
disclosures.
Estimates and judgments are continually evaluated and are based
on current facts, historical experience and other factors,
including expectations of future events that are believed are
reasonable under the circumstances. Accounting estimates will, by
definition, seldom equal the actual results.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those described in the last annual
report.
3. SEGMENT 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. These are the Group's primary reporting segments,
operating in Gabon, Mozambique, Denmark, London, Guernsey and head
operating offices in Mauritius. Certain support services are
performed in the UK.
The Group's CEO and CFO review the internal management reports
of each division at least weekly, and the Board 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. All amounts are disclosed after taking into account any
intra-segment and intra-group eliminations
The following table shows the segment analysis of the Group's
loss before tax for the six months period and net assets as at 30
June 2022:
Forestry Trading Carbon Solutions Total
$000 $000 $000 $000
--------------------------------- ---------- --------- ----------------- ----------
INCOME STATEMENT
Turnover 5,553 5,765 - 11,318
Cost of Sales (3,757) (4,908) - (8,665)
--------------------------------- ---------- --------- ----------------- ----------
Gross profit 1,796 857 - 2,653
--------------------------------- ---------- --------- ----------------- ----------
Operating costs (614) (585) (377) (1,576)
Administrative expenses (211) (182) (357) (750)
Depreciation (137) - - (137)
Share based payment expense (44) (44) (87) (175)
Segment operating profit/(loss) 790 46 (821) 15
Foreign exchange (218) 155 - (63)
Finance costs (148) (293) - (441)
--------------------------------- ---------- --------- ----------------- ----------
Profit/(loss) before taxation 424 (92) (821) (489)
Taxation (44) - - (44)
--------------------------------- ---------- --------- ----------------- ----------
Profit/(loss) for the period 380 (92) (821) (533)
--------------------------------- ---------- --------- ----------------- ----------
NET ASSETS
Assets: 369,694 9,647 - 379,341
Liabilities: (4,920) (11,643) - (16,563)
Deferred tax liability (106,475) - - (106,475)
Net assets 258,299 (1,996) - 256,303
--------------------------------- ---------- --------- ----------------- ----------
The following table shows the segment analysis of the Group's
loss before tax for the six months to and net assets at 30 June
2021:
Forestry Trading Carbon Solutions Total
$000 $000 $000 $000
--------------------------------- --------- -------- ----------------- ---------
INCOME STATEMENT
Turnover 3,422 4,798 - 8,220
Cost of Sales (2,311) (4,242) - (6,553)
--------------------------------- --------- -------- ----------------- ---------
Gross profit 1,111 556 - 1,667
--------------------------------- --------- -------- ----------------- ---------
Operating costs (692) (510) (252) (1,454)
Administrative expenses (130) (132) (259) (521)
Depreciation (177) (2) - (179)
Share based payment expense (42) (42) (83) (167)
Segment operating profit/(loss) 70 (130) (594) (654)
--------------------------------- --------- -------- ----------------- ---------
Foreign exchange 65 (121) - (56)
Finance costs (101) (169) - (270)
--------------------------------- --------- -------- ----------------- ---------
Profit/(loss) before taxation 34 (420) (594) (980)
Taxation 46 - - 46
--------------------------------- --------- -------- ----------------- ---------
Profit/(loss) for the period 80 (420) (594) (934)
--------------------------------- --------- -------- ----------------- ---------
NET ASSETS
Assets: 239,144 11,657 - 250,801
Liabilities: (3,834) (9,904) - (13,738)
Deferred tax liability (67,383) - - (67,383)
--------------------------------- --------- -------- ----------------- ---------
Net assets 167,927 1,753 - 169,680
--------------------------------- --------- -------- ----------------- ---------
4. FINANCE COST
Year to
31 December
6 months to 30 June 2022 6 months to 30 June 2021 2021
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
-------------------------------------- ------------------------- ------------------------- --------------
Interest on bank facilities 306 227 503
Interest on trade finance facilities 71 - -
Interest on convertible bonds 48 43 88
Other finance costs 16 - -
-------------------------------------- ------------------------- ------------------------- --------------
Total 441 270 591
-------------------------------------- ------------------------- ------------------------- --------------
Finance costs increased due to an increase in working capital
facilities provided by the Group's Danish banking partners ($2.3m)
and Rhino Ventures ($2m). See note 9 for more information.
5. TAXATION
The prevailing tax rates in the geographies here the Group
operates range between 3% and 32%. A rate of 19% best represents
the weighted average tax rate experienced by the Group. As at 31
December 2021, the Group had estimated losses of $28 million (2020:
$29 million) available to carry forward against future taxable
profits. No deferred tax asset has been raised on these estimated
losses.
The Group has recognised a net deferred tax liability of $106.5
million at 30 June 2022 (30 June 2021: $67.4 million, 31 December
2021: $106.5 million) and which mainly arose on the revaluation of
biological assets and owner occupied land and buildings. This would
only be payable on the sale of these assets at their book
value.
6. EARNINGS PER SHARE
6 months to 30 June 2022 6 months to 30 June 2021
(Unaudited) (Unaudited)
$'000 $'000
Loss attributable to equity shareholders (533) (934)
Weighted average number of ordinary shares in issue
('000) 2,482,464 2,406,426
Basic and diluted loss per share (cents) (0.02) (0.04)
-------------------------------------------------------- ------------------------- -------------------------
The Company has incurred a loss in the six-month period to 30
June 2022, and therefore the diluted earnings per share is the same
as the basic loss per share as the loss has an anti-dilutive
effect.
Reconciliation of shares in issue to weighted average number of
ordinary shares:
6 months 30 June 2022 6 months 30 June 2021
(Unaudited) (Unaudited)
$'000 $'000
----------------------------------------------------------------- --- ---------------------- ----------------------
Shares in issue at beginning of year 2,482,117 2,382,216
Treasury shares - (99)
Shares issued during the period weighted for period in issue (note
11) 347 24,309
Weighted average number of ordinary shares in issue for the period 2,482,464 2,406,426
---------------------------------------------------------------------- ---------------------- ----------------------
7. TRADE AND OTHER RECEIVABLES
30 June 31 December
2022 30 June 2021 2021
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
------------------------ ------------- ------------- ------------
Trade receivables 2,632 1,740 2,093
Other receivables 12 9 12
Deposits 127 130 127
Current tax receivable 15 13 14
VAT receivable 666 725 589
Prepayments 1,325 2,562 1,781
------------------------ ------------- ------------- ------------
Total 4,777 5,179 4,616
------------------------ ------------- ------------- ------------
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
8. TRADE AND OTHER PAYABLES
30 June 31 December
2022 30 June 2021 2021
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
--------------------------------------------- ------------- ------------- ------------
Trade payables 1,106 781 1,275
Contract liabilities (prepayments received) 872 1,191 1,643
Accruals 766 509 680
Current tax payable 105 40 69
Other payables 459 59 340
Debt due to concession holders 43 97 71
--------------------------------------------- ------------- ------------- ------------
Total 3,351 2,677 4,078
--------------------------------------------- ------------- ------------- ------------
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
9. BORROWINGS
30 June 31 December
2021 2021
30 June 2022 (Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
-------------------------- -------------------------- ------------- ------------
Non-current liabilities
-------------------------- -------------------------- ------------- ------------
Business loans 1,269 2,099 1,282
Working capital facility 3,939 2,040 1,616
-------------------------- -------------------------- ------------- ------------
5,208 4,139 2,898
-------------------------- -------------------------- ------------- ------------
Current liabilities
-------------------------- -------------------------- ------------- ------------
Business loans 545 1,246 1,250
Bank overdraft 233 174 128
Working capital facility 6,384 3,977 3,991
-------------------------- -------------------------- ------------- ------------
7,162 5,397 5,369
-------------------------- -------------------------- ------------- ------------
Total borrowings 12,370 9,536 8,267
-------------------------- -------------------------- ------------- ------------
The increase in borrowings in the six months to 30 June 2022 is
owing to the following:
-- A new two year, $2m unsecured facility with Rhino Ventures,
the Company's largest shareholder, advanced during February 2022.
Full details of this and the Lombard Odier facility noted below
were disclosed on 13 January 2022.
-- An increase of $2.3m in the working capital facility from the
Company's Danish banking partners.
-- An advance of $1m of the $2m Lombard Odier short-term
facility during June 2022. The $1m is repayable in 90 days from
drawdown and is secured against certain receivables.
The Group paid-down approximately $0.7m of bank loans and
equipment lease obligations during the period ended 30 June
2022.
10. CONVERTIBLE BONDS
31 December
30 June 2022 30 June 2021 2021
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
---------------------------------------- ------------- ------------- ------------
Convertible bonds: Liability component 712 885 931
Convertible bonds: Equity component 24 52 52
---------------------------------------- ------------- ------------- ------------
Total 736 937 983
---------------------------------------- ------------- ------------- ------------
Convertible bond liability 539 741 741
Interest accrued 173 144 190
---------------------------------------- ------------- ------------- ------------
Total 712 885 931
---------------------------------------- ------------- ------------- ------------
During the first half of 2022, $293,591 of the 2023 0%
Convertible Bonds were converted into 5,871,820 Voting Ordinary
Shares. The Convertible Bond terms specify conversion is at an
exchange rate of GBP:$1.25 and 4p per Ordinary Share. The Bonds are
repayable on 30 June 2023.
11. SHARE CAPITAL
Number $'000
---------------------------------- -------------- ----------
Authorised:
Ordinary shares of 1 pence each Unlimited Unlimited
---------------------------------- -------------- ----------
Allotted, issued and fully paid:
Ordinary shares of 1p each
At 1 January 2021 2,382,216,431 31,119
Issued in the period 99,900,622 1,409
---------------------------------- -------------- ----------
At 31 December 2021 2,482,117,053 32,528
Issued in the period (note 10) 5,871,820 73
---------------------------------- -------------- ----------
At 30 June 2022 2,487,988,873 32,601
---------------------------------- -------------- ----------
Balances classified as share capital represent the nominal value
on issue of the Company's equity share capital, comprising ordinary
shares of 1p each.
The total number of Ordinary Shares in issue as at the date of
this report is 2,487,988,873, which consists of 2,077,988,873
Voting Ordinary Shares and 410,000,000 Non-Voting Ordinary
Shares.
12. SHARE PREMIUM
$'000
-------------------------------- -------
At 1 January 2021 58,609
Issued in the period 6,645
--------------------------------- -------
At 31 December 2021 65,254
Issued in the period (note 11) 221
--------------------------------- -------
At 30 June 2022 65,475
--------------------------------- -------
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.
13. SHARE BASED PAYMENT/LONG-TERM INCENTIVES
On the 1(st) of March 2022, the Company issued LTIP's (long-term
incentive plan) to its directors and key employees of which 35.5m
were in issue at 30 June 2022. The fair value of these LTIP's as at
the grant date was determined by an independent specialist in
financial valuations.
17.75m of the granted LTIP's are subject to TSR (Total
Shareholder Return) linked criteria and were valued using a Monte
Carlo simulation. 17.75m share options are subject to EBITDA-linked
criteria and were valued using a Monte Carlo Simulation on the
basis that they include a market-based exercise condition. Only
market conditions have been considered in estimating the fair value
of the LTIP's.
The key terms and conditions related to the LTIP's are as
follow:
A. Market Performance Condition
-- Grant Date: 1 March 2022
-- Contractual life of LTIP's: 4.6 years
-- Vesting conditions: Total Shareholder Return - The
performance criteria sets out that of the total 35.5m LTIP's
granted, up to 50% can vest in increments of 10% if the VWAP
(Weighted Average Price) remains above each of the following
thresholds for a period of 30 consecutive days: GBP0.06, GBP0.07,
GBP0.08, GBP0.09 and GBP0.10. Full vesting of this 50% tranche will
be achieved if the share price increases to over GBP0.10.
B. Non-Market Performance Condition
-- Grant Date: 1 March 2022
-- Contractual life of LTIP's: 4.6 years
-- Vesting conditions: Target EBITDA - Of the total 35.5m LTIP's
granted, 50% can vest
at an incremental rate of 16.6% per annum by the Company
achieving internal EBITDA targets for each of the financial years
2022-2024. Any vesting shall arise equally for the achieving of
each target, which is subject to a cumulative "catch-up" being
permitted.
C. Service Condition
-- Recipients must be employed by Woodbois at the time of
vesting and the share price must be above 6p at the exercise date.
This condition applies to all of the granted share options.
The table below shows the input ranges for the assumptions used
in the valuation models:
Fair value at grant date GBP0.02 - GBP0.03
Exercise price GBP0.01
Share price at grant date GBP0.0405
Annual share price volatility (weighted average) 65%
Risk free rate 0.83%
Expected life 4.6 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 19.0% was used
in the simulation (annual volatility of 65%).
Reconciliation of the share options in issue:
Weighted
average strike
Total options price (Pence)
------------------------------------ ------------- ---------------
As at 31 December 2020 144,500,000 2p
Forfeited during the financial year (30,500,000) (2p)
As at 31 December 2021 114,000,000 2p
------------------------------------ ------------- ---------------
Issue of LTIP's 35,500,000 1p
------------------------------------ ------------- ---------------
As at 30 June 2022 149,500,000 1.76p
------------------------------------ ------------- ---------------
The following charge has been recognised in the current
financial period:
$000
--------------------------------- -----
As at 31 December 2020 968
--------------------------------- -----
Reserve transfer for forfeitures (766)
Share based payment expense 233
As at 31 December 2021 435
--------------------------------- -----
Share based payment expense 175
--------------------------------- -----
As at 30 June 2022 610
--------------------------------- -----
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 (1p Capital
December exercise
2021 (2p price)
exercise
price)
-------------------------- -------------- ---------------- -------------- --------------
P Dolan (CEO) 50,000,000 4,000,000 54,000,000 2.17%
-------------------------- -------------- ---------------- -------------- --------------
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 (Chair
& Senior Non-Executive) 10,000,000 - 10,000,000 0.40%
-------------------------- -------------- ---------------- -------------- --------------
14. RELATED PARTY TRANSACTIONS
The final instalment of $0.25m was paid in cash to Mr Ghossein,
Deputy Chair, relating to the contingent acquisition
liability/deferred consideration for the acquisition of Woodbois
ApS, more fully set out in note 22 in the Annual Report for the
year ended 31 December 2021.
During the first half of 2022 Rhino Ventures Limited, the
Company's largest shareholder, disposed of 325,000,000 of its
Non-Voting Ordinary Shares to an unconnected third party. In the
period, Rhino Ventures Limited also converted a total of 65,000,000
Non-Voting Ordinary Shares into Voting Ordinary Shares. Upon
Conversion, Rhino Ventures Limited transferred the 65,000,000
shares to its beneficial owner, Mr Miles Pelham. Following
Admission, Rhino and Mr Miles Pelham together held 442,500,000
Voting Ordinary Shares in the Company, which represents 21.30% of
the enlarged Voting Ordinary Shares. Rhino's holding of 235,000,000
Non-Voting Ordinary Shares post Conversion represent 57.32% of the
410,000,000 Non-Voting Ordinary Shares in the Company at 30 June
2022.
As set out in note 9, during H1 2022 the Company drew down $1m
of the $2m Lombard Odier short-term facility and the $2m unsecured
facility agreed with Rhino Ventures was fully drawn down.
15. EVENTS OCCURING AFTER THE REPORTING DATE
None noted as at the date of this report.
16. INTERIM FINANCIAL STATEMENTS
A copy of this interim report as well as the full Annual Report
for the year ended 31 December 2021 can be found on the Company's
website at www.woodbois.com
[1] Earnings before interest, tax, depreciation, amortization,
share based payments and other non-cash items
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END
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