TIDMWBI
RNS Number : 1778C
Woodbois Limited
09 June 2023
9 June 2023
Woodbois Limited
("Woodbois", the "Group" or the "Company")
Audited results for FY 2022
Woodbois, the African focused sustainable forestry,
reforestation, carbon sequestration and timber trading company,
announces its audited results for the full year ended 31 December
2022.
Highlights
-- Turnover increased by 32% to $23.1m (2021: $17.5m)
-- Forestry division generated 66% of turnover and third-party trading was 34%.
-- Gross profit increased by 69% to $5.9m vs $3.5m in FY 2021
-- Gross profit margin increased to 25%, up from 20% in FY 2021
-- Significant increase in EBITDAS ([1]) to $3.3m (2021: $1.0m)
-- Net loss for the year of $111m principally driven by net
non-cash revaluation downwards ([2]) of $108.7m of the Company's
biological assets
-- Cash balance of $2.3m as at 31st December 2022
-- 2022 sawn timber production of approximately 18,600m(3) , a 42% increase year-on-year
-- 2022 veneer production of approximately 5,200m(3) , a 38% increase year-on-year
-- Installation of second veneer line completed during H2 2022
-- Post year end fund raise in March 2023 of $3.4m
-- Post year end termination in April 2023 of $6m credit line by
Danish bank and cash of $3.1m offset. Repayment plan agreed in June
2023.
-- Post year end grant of 50,000 hectares of low carbon stock
land in Gabon for initial large-scale afforestation project
Commenting on today's announcement Chief Executive Paul Dolan
said:
"Our financial and operational results for 2022 clearly point to
the growth potential of the Group, with an EBITDAS for the year of
$3.3m. The business has been greatly interrupted in 2023 by
unforeseen events announced previously. We are confident that,
subject to a successful refinancing, of which we remain confident
but which cannot be guaranteed, our previously established growth
trajectory and improvement in profitability can resume."
Enquiries:
Woodbois Limited
Paul Dolan - Chief Executive Officer
Carnel Geddes - Chief Financial Officer + 44 (0)20 7099 1940
Canaccord Genuity (Nominated Advisor and
Broker)
Henry Fitzgerald-O'Connor
Harry Pardoe
Gordon Hamilton + 44 (0)20 7523 8000
Novum Securities (Joint Broker) + 44(0)20 7399 9427
Colin Rowbury
Jon Belliss
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.
CHAIR AND CHIEF EXECUTIVE OFFICER'S STATEMENT
Dear Shareholder,
Following a year of rapid growth and continued progress across
the Group's operations we are delighted to present Woodbois' 2022
annual report. The Group continued to demonstrate that conventional
metrics of business success can be achieved in tandem with
meaningful action for a sustainable future by delivering material
improvements in production volumes, along with increases in both
sales and profit margins. Our ambition is to build scale as and
when opportunities present themselves and external conditions
allow, on the back of an asset-rich, cash generative engine. The
headwind of elevated inflation and higher interest rates during the
second half of the year however led to the pragmatic decision for
our trading business to temporarily take a defensive stance as the
economic backdrop became more uncertain. As announced in April
2023, the termination of a bank line of credit has led to the
Company seeking alternative financing arrangements. A repayment
plan was agreed and announced on 6 June 2023, as set out in note
24. There is currently no certainty as to the outcome of these
efforts, but assuming these arrangements are able to be put in
place (and given that a repayment plan has now been announced) we
are confident that when we are able to restore our activity levels,
that our constantly evolving and improving platform can provide a
strong foundation for further profitability growth into the future
in balance with benefits to the environment and society.
2022 Business performance
The Company maintained its record of improvement on measures of
production and financial performance in 2022, achieving a 32%
increase in revenue, 69% increase in gross profit and more-than
trebling EBITDAS [1] to $3.3m. As a result of the increased
activity, operating costs increased by 15% year-on-year ("YOY")
while administration expenses were strictly controlled and
decreased by 3% YOY.
The Company operates three divisions: Forestry, Trading,
Carbon
Forestry (including timber production):
Sawmill output increased by 42% to 18,600m(3) and veneer output
increased by 38% to 5,200m(3) . The total volume of goods shipped
from Gabon increased by 79% YOY as the Covid-induced strain on the
global freight shipping industry began to dissipate and the
reversion to mean of shipping rates contributed to the improvement
in margins. These significantly higher levels of output required
correspondingly increased levels of working capital to fund an
approximately five-month cycle.
The forest area that was purchased in 2021 is in the process of
being amalgamated under a new 25-year Forest Management Plan which
will minimise impact on the forest while maximising supply of raw
material for our enlarged processing facilities where capacity
enhancements over the last two years leave plenty of room for a
higher volume of output.
The amalgamated Forest Management Plan is also a critical step
towards achieving full certification of our forests and factories,
aimed for in 2024. Limited progress was made during 2022 owing to
budget constraints, with many of the remaining outstanding items
requiring a level of Capex to complete. Gabon's forest management
plans, which are strictly enforced, are designed to provide
economic services and goods in the long term while maintaining and
preserving the forest's ecological functions and contributing to
the economic development and improvement of living conditions of
local communities. We expect the new amalgamated management plan to
be completed around September 2023 and are authorised to harvest
under the existing individual plans during the interim period.
While there were clearly many highlights in 2022, we experienced
an over-run in both cost and time on the installation of the second
veneer line, and at the time of writing, are still look forward to
benefitting from running the line at a level close to its capacity,
which is targeted for H2 2023, subject to sufficient working
capital being in place.
Once the anticipated refinancing has taken place, our 2023
priority is to return to the high production levels achieved in the
past year, further consolidate the gains made in recent years, and
ensure ongoing growth and productivity improvements by working
existing assets and advancing our certification process, before
investing in any major new capital expenditures.
Trading:
As output at our factories increased during 2022, higher levels
of working capital were required to support activities resulting in
limited availability of funding for third party trading. Despite
this constraint, revenues of $7.8m were generated during 2022 vs
$9.5m the previous year with margins improving from 11% to 13%. In
alignment with our internal objectives of gaining FSC certification
for our forests and factories, the trading team focused on
developing relationships with FSC-certified third-party suppliers
and on those with similar certification aspirations.
The proprietary software technology that we have developed
in-house over more than four years to optimise sales of our own
production and to provide a strong competitive edge for our trading
division was fully rolled out across all business lines and
functions during 2022 and now connects our staff in six separate
locations. Having stepped back from taking trading positions
towards the end of 2022, our visibility into the marketplace
suggests that low-risk opportunities to re-enter the market will
once again emerge, and we will actively seek dedicated capital to
deploy in order to scale up trading operations during the second
half of 2023 subject to financing being in place.
Carbon:
While geopolitical events, in particular the war in Ukraine have
dominated headlines over the last twelve months, the existential
threat of climate change has escalated to near crisis levels. As
the world heats up due to the accumulation of carbon dioxide, the
urgent deployment of renewable energy and sequestration of carbon,
through programs such as restoration of nature, are vital to
mitigate these effects. Woodbois has had a stated objective since
2021 to acquire a land lease that would allow the company to
develop a large-scale indigenous species afforestation project to
sequester carbon, contribute to addressing climate change and at
the same time, generate value through carbon credit sales and
provide additional local employment opportunities. We are delighted
to announce that Woodbois has recently (in 2023) been awarded a
conditional grant of 50,000 hectares of land in Gabon for this
project, an area equivalent to the New Forest in England. Woodbois
now has the opportunity to play its part in restoring nature at
scale, sequestering carbon and to be well rewarded for doing so in
the OECD's highest ranked country for cost-efficiency in carbon
sequestration.
During 2022, we worked to lay the groundwork for this project
and to develop relationships. Highlights include (1) When Gabon
hosted the African Climate Week in August 2022, senior Woodbois
management and members of our carbon team who were in attendance
enjoyed opportunities to meet and connect with delegates from
national governments, UN experts and private sector companies to
introduce our proposed solutions to tackling climate change and to
learn about alternative approaches being taken. (2) Similarly, we
attended the African-hosted COP27 where Gabon was rewarded for
played a major role in negotiations in recognition of its exemplary
model of environmental conservation. Having become the first
country to receive results-based payments for reduced forest
emissions in 2021, Gabon followed up in 2022 by announcing its
intention to sell up to 200 million certified carbon credits.
Post year-end event: banking facility terminated,
recapitalisation in train
The Company announced on 19 April 2023 that one of its
wholly-owned subsidiaries had received a notice from its Danish
bank that it was terminating a $6 million debt facility. The
subsidiary company, Woodgroup ApS, was fully utilising its $6m
facility at that time but held a cash balance of $3.1 million in an
ancillary account which the bank used as an offset in partial
repayment of the facility.
Following this unexpected termination, the Company took all
necessary steps to preserve the business, revising internal
cash-flow forecasts, engaging in contingency planning and
consulting external professionals. T he Company continues to assess
alternative funding sources and will update the market in due
course once any such agreement has been reached. The Company is
also working on the potential deferment of c.$1.5m of debts, which
fall due at the end of June. Whilst the Directors are confident
that the Company will obtain alternative funding in the coming
weeks, should they fail to do so, the Company may be reliant on the
deferment of these near-term creditors in order to continue to
trade. Assuming this recapitalisation is effected and whilst
expecting a difficult trading period in the short term, management
believe that the fundamentals of the business are sound and that it
can then continue to operate as a going concern.
At the time of writing, multiple different funding offers have
been received including debt, equity and hybrid structures and a
decision on which avenue to take is expected in the coming weeks.
While management intend at this time to continue building out the
three divisions of forestry, trading and carbon, the quantum of
refinancing funding received, and the expectations of its providers
may influence internal allocation of capital in the near term and
the future direction of the Group.
The Board
After almost four years as a Non-Independent Non-Executive
Director and owing to his growing other work commitments at Lombard
Odier, Henry Turcan stood down from the Board in October 2022.
Henry's energy and guidance helped to transform the financial
health of the Company, its performance and its governance.
After approximately a year, initially in a consultancy capacity
and latterly as CEO, Federico Tonetti stood down from the board in
May 2022 with Paul Dolan moving back from Executive Chair to CEO
and Non-Executive Director Graeme Thomson moving to Non-Executive
Chair and Senior Independent Director. The Board express their
grateful thanks to both Henry and Federico on behalf of all
stakeholders for their efforts.
The Board is actively looking to extend its expertise by adding
at least one non-executive director.
Looking forward and strategic priorities
Despite near-term headwinds, the overarching strategic aim of
the group remains to build three distinct but synergistic divisions
outlined below, each with its own dedicated management, leveraging
proprietary technology and minimising central costs.
The Forestry division will return to and prioritise
consolidation of the production gains made during 2022 while
ensuring the delivery of consistently high-quality products to our
customers. We see clear opportunities to improve efficiencies and
further improve profit margins through process improvement and some
re-configuration of production lines. Our ambition to grow the
business however extends beyond purely organic growth. We will
actively seek aligned Joint Venture or M&A opportunities in
Gabon and elsewhere in the Congo Basin as we look to build scale.
The highest priority of all however within the Forestry division is
the completion of the FSC certification process for our forests and
factories to ensure that the highest levels of compliance are
observed at every level within our value chain.
Although margins will always lower than those in the Forestry
division, the Trading division can deliver substantial revenue
growth from the $40 billion per annum global hardwood market,
whilst also generating healthy profitability if a dedicated
financing facility is found. As well as providing wider market
intelligence regarding pricing and availability, which helps to
maximise value within our Forestry division, the Trading division
also creates relationships and touchpoints throughout the industry
which is invaluable for a Group that intends to pursue an
expansionary M&A strategy. A key priority for the Trading
division during 2023 will be to align with Group strategy by
offering support to suppliers who demonstrate high levels of
industry compliance or who are also following the path to
certification.
With the Gabonese government announcing that Woodbois has been
granted 50,000 hectares for our initial large-scale afforestation
project, the immediate priorities for the Carbon division are to
agree and sign legal documentation with the government. Once in
place, commercial and legal documentation must be agreed with the
funder of the initial 4-year trial phase: planning will continue in
order to ensure that work can then commence with immediate effect.
Re-creating a natural forest of up to 50 million indigenous and
principally Okoume species trees will require the participation and
harnessing of skills of the local population as well as overseas
tropical forestry experts. We hope that bringing this team together
and executing on the plan will generate widespread support and
serve as a blueprint for other large-scale carbon-sequestering
project in Africa and beyond.
Competition for African resources
Since the beginning of 2023, China's Foreign Minister Qin Gang,
US Treasury Secretary Janet Yellen and Russian Foreign Minister
Sergei Lavrov and have all visited Africa. French President
Emmanuel Macron visited Gabon and three other African countries in
March and US President Joe Biden has pledged to travel to the
continent this year. Following the US-Africa Leaders' Summit in
December, and ahead of the second Russia-Africa Summit in July,
these high-level visits highlight growing competition between major
powers, placing resource-rich African countries in a strong
position as they choose their geopolitical and private sector
partners. These clear statements of intent from the world's biggest
superpowers reinforce our conviction that Africa will become an
increasingly important strategic investment destination for the
major investor nations in the years ahead.
Within the context of the emerging African continent, Gabon's
leadership on climate action through forest preservation and its
position as one of the most carbon positive (i.e., absorbing)
countries in the world makes it an obvious anchor country to
continue to grow the business, organically or through Joint
Ventures or full-blown mergers. From our government level
conversations with several Central and West African countries, we
expect that companies with large, successful operations in Gabon
will increasingly be welcomed and incentivised as the
implementation of sustainable forestry practices and payment for
the protection of forests increasingly becomes a reality across the
Congo Basin.
Outlook
Assuming we can resolve the funding issues resulting from the
Danish bank's actions noted earlier and elsewhere in this Report,
as the business enters its next stage of development: we expect
each of the three divisions (production, trading and carbon) to
scale and become self-sufficient, and in each case to be led and
driven by dedicated, expert management which will be responsible
for all aspects of their division's business development and
P&L. Allocating responsibility to each divisional head will
sharpen focus and force clear accountability which we expect will
enable accelerated growth within each division and across the
Company. Capital allocation to each division will become
increasingly based on performance and on demonstrable risk-adjusted
IRR earnings potential which will be transparent to the Board and
to all stakeholders. Although the divisions are strategically
complementary to each other within the Group's broad 'sustainable
forestry' umbrella, the differentiated pools of capital that could
be attracted in support of each division lies behind our thinking
as we consider the organic, Joint Venture and M&A strategies
that each division has the potential to pursue.
After a difficult Q1 in 2023, as described in our quarterly
update and following the withdrawal of banking facilities noted
above and efforts for the required recapitalisation, revenue in the
first half of 2023 will be lower than had previously been expected.
However, if successful in our efforts to obtain alternative
finance, we remain optimistic for the second half.
We do not expect head office or administrative costs to increase
while these changes are implemented. Indeed we believe that we can
deliver further cost savings in these areas, particularly through
the further development of our industry-unique, cutting-edge
proprietary process management technology. We thank all of our
employees, so many of whom go above and beyond in their service to
the Company, for their industry in 2022, and our advisers and other
stakeholders for their continued support for our development.
Paul Dolan Graeme Thomson
Chief Executive Officer Non-Executive Chair and Senior
Independent Director
9 June 2023
CHIEF FINANCIAL OFFICER'S REPORT
Summary reflections on 2022
The year marked another solid year of progress for the Group
with operating activities turning cash flow positive (2022: inflow
of $1.1m: 2021: outflow of $2.5m). Increased levels of production
at both factories in Gabon resulted in a revenue increase of 32% to
$23.1m and a 69% rise in Gross Profit to $5.9m. EBITDAS [3]
increased more than three-fold. Our focus on higher value-add
products and markets, in combination with the gradual decline in
shipping costs throughout the year, allowed an improvement in gross
profit margins to 25%, up from 20% in 2021 (and 8% in 2020). In
terms of segment contribution, our own production sales generated a
margin of 32% in 2022 v 30% in 2021 and Trading of 3rd party
products generated a margin of 13% in 2022 v 11% in 2021.
Year ended 31 December 2022 Year ended 31 December 2021
$000 $000
---------------------------------------------------- ---------------------------- ----------------------------
(Loss)/profit before taxation (158,867) 90,702
Add back fair value loss/(gain) on biological assets 156,983 (4,253)
Add back finance costs 1,029 591
Add back gain on bargain purchase - (88,292)
Add back share based payment expense 418 233
Add back reclassification of FCTR [4] on
deregistered entities 1,529 -
Add back depreciation and amortisation 222 326
Add back depreciation in Cost of Sales 1,959 1,737
------------------------------------------------------ ---------------------------- ----------------------------
EBITDAS 3,273 1,044
------------------------------------------------------ ---------------------------- ----------------------------
2022 Financial performance review
We dealt with a number of challenges during 2022, including an
increase in the cost and, at times, limited supply of diesel, as
well as a later and heavier than usual rainy season severely
affecting forestry operations and transportation of raw material.
Sawn timber provided the largest contribution to the growth of
revenues with the investment made in plant and machinery in our
sawmill over the last three years reflected in consistently higher
levels of production. The contribution from sales of veneer was
more muted owing to logistical delays in the commissioning of the
second production line, completed in H2 2022. The shortfall in
expected veneer revenue was partially made up by log sales to other
veneer producers in Gabon. Despite these challenges, I am pleased
to report that we achieved, following a necessary revision in
October 2022, our revenue and EBITDAS targets. This marks our
second consecutive year of positive EBITDAS.
In terms of the hard numbers, Revenue increased by 32% to $23.1
million in 2022 (2021: $17.5 million). Gross Profit was up 69% to
$5.9 million compared to $3.5 million in 2021 reflecting the focus
on higher value-add products and markets in combination with the
gradual decline in shipping costs throughout the year. Gross profit
margin rose to 25% in 2022 compared to 20% in 2021 and 8% realised
for the full year 2020. As expected, operating costs increased
marginally (15%) in 2022 principally owing to inflation of diesel
prices, much less than production of sawn timber and veneer which
increased by 42% and 38% respectively YOY. Our administration
expenses decreased by 3% in 2022 compared to 2021 owing to the
Group's policy of continuous cost review and minimisation; it
includes costs of $0.8m in connection with our application for the
afforestation project which under accounting standards have to be
written-off until the licence is awarded when they can thereafter
be capitalised. In line with having taken on more debt to fund
capex, finance charges increased to $1.0 million in 2022 compared
to $0.6 million in 2021 and significantly lower than the levels of
2020 ($2.8 million). We booked a Foreign Exchange gain of $0.9
million (2021: gain $0.8 million).
We recorded a non-cash gross fair value loss of $157.0 million
(2021: gain $4.3 million) following the annual review of biological
asset values in 2022. This reflected dramatically increasing
interest rates worldwide, together with higher country discount
rates being applied. A non-cash downwards revaluation of $82
million (net of deferred tax) of the biological assets in Gabon
resulted. The $26.7m (net of deferred tax) downwards revaluation of
the biological assets in Mozambique also reflected the Group's
decision to minimise its forward looking harvesting activities and
hence its effect thereof on maximum permitted harvest rates whilst
reviewing its strategic options there. Our Gabonese concessions now
account for 100% of our total biological assets of $179.8 million
(see note 11 for more details).
During the year, the Group received notification of the final
deregistration of certain dormant companies that formed part of the
Group's historical business operations in Tanzania. This allowed us
to further simplify the group structure. IFRS, the accounting
framework that the Group applies, stipulates that historical
foreign currency translation differences that arose on
consolidation of those entities, be reclassified from equity to
profit and loss upon that final deregistration - this is what the
$1.5 million reclassification in the profit and loss represents.
Previously these differences were shown as part of Equity and
included in the Foreign Currency Translation Reserve ("FCTR"). The
FCTR (Equity) has increased by the same amount (i.e. is included as
part of the $83 thousand net movement - also see note 22).
Revenues from own production increased by 91% from $8.0 million
in 2021 to $15.3 million in 2022 and generated a gross margin of
32% vs 24% in 2021. Third party Trading revenues decreased by 17%
from $9.5 million in 2021 to $7.8 million in 2022, however gross
margin increased from 11% in 2021 to 13% in 2022. Own production
sales represented 66% of total sales in 2022 vs 46% in 2021. The
higher margins achieved in each division in 2022, together with the
change in divisional sales mix, resulted in an increase of overall
margin from 20% in 2021 to 25% in 2022. See note 2 for further
information.
Cash and working capital
The year 2022 saw the Group's operating activities turning cash
flow positive (2022: $1.0 million, 2021: outflow of $2.5 million).
Our largest items of investment were to add harvesting and
production plant and machinery ($3.9 million), paying the final
instalment ($0.3 million) for the 2021 acquisition of the
additional forest in Gabon and settling the final deferred
consideration payment ($0.3 million) for the 2017 purchase of
Woodbois International Aps. Our year end 2022 cash of $2.3 million
compared with $0.9 million at the end of 2021.
At the end of 2022 the Group's receivables and inventory were
$10.9 million (2021: $10.8 million), whilst payables and were
reduced to $3.7 million (2021: $4.5 million). Total borrowings
(excluding the convertible bond) increased from $8.3 million in
2021 to $14.3 million at the end of 2022. Of this $8.6 million
(2021: $5.4 million) was classified as current. As further
explained in note 16 and 24, $6 million of this is a revolving
facility with a Danish bank that had no specified maturity date and
which, although there was no expectation that it would need to be
repaid in 2023, had nonetheless been classified as a current
liability, consistent with the prior year. As announced by the
Company on 19 April 2023, the bank notified the Company of the
termination of this facility and as such the classification as a
current liability is unchanged. Net working capital[5] was $9.6
million, up from $7.5 million in 2021.
Net Assets
The decrease in the Company's net assets year-on-year, from
$258.5 million in 2021 to $147.9 million, is largely due to the
annual non-cash revaluation, this year downwards, of our biological
assets in Gabon and Mozambique set out above and in Note 11.
In June 2022, $0.2 million of 2023 0% Convertible Bonds
converted into 5.9 million Voting Ordinary Shares and in August
2022, 2.0 million share options, issued under the Company's Share
Option Plan, were exercised and converted into Voting Ordinary
Shares.
Between May 2022 and November 2022, a total of 390 million
Non-Voting Ordinary Shares have been converted into Voting Ordinary
Shares.
At 31 December 2022 the Group's share capital of 2,490 million
ordinary shares, was comprised of 2,255 million Voting Shares and
235 million Non-Voting Shares.
As set out more fully in the Directors' report, the Independent
Auditor's Report and in Notes 1 and 24 of the financial statements,
although there is a material uncertainty, 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 2023
Assuming the Company is able to resolve the funding issues
caused by the Danish bank's withdrawal of our line of credit and
the offsetting of a substantially all its cash (announced on 19
April 2023), our overriding priority will be to generate
consistent, positive cash flows from our substantial Gabonese
forestry assets to ensure that we continue to grow the business and
also meet any debt repayments. The scale at which we are able to
grow and generate net cash in the immediate future will be subject
mainly to how quickly we can recapitalise the business, but also
subject to external economic conditions, which we continue to
monitor closely and respond to.
We will continue to invest in delivering further operational
productivity improvements, development of our in-house systems to
optimise sales of our own products and working towards
certification of our forests and factories, which will be a high
priority. The investment and work that have been undertaken in
recent periods provide grounds for optimism that the Company will
deliver further improvements in profitability.
In March 2023 a liquidity boost of $3.6 million to working
capital was secured by way of a fundraise in which 250 million new
Ordinary Voting shares at a price of 1.2p per share to existing and
new institutions. As noted in this report, $3.1 million of this
raise was offset by the Danish bank in April 2023.
The Company has mandated a real estate broker in Gabon to
explore the potential for a sale and lease-back of its unencumbered
14 hectares of real-estate production sites in Mouila, Gabon. These
were independently valued at $15m in May 2021. This would help the
working capital situation, could enable the Company to reduce some
of its more expensive debt, to allocate additional capital to
business lines with the highest anticipated IRRs and fund initial
work on its afforestation project.
On 11 April 2023, the Company announced that it had been
conditionally awarded the first 40-year land lease by the Gabonese
government for a voluntary carbon credit afforestation project of
up to 50,000 hectares. On completion, expected in the coming
months, the Company will commence a 4-year, 2,000 hectare pilot
programme to demonstrate the afforestation potential of the land.
The project will be designed to deliver high quality carbon and
biodiversity credits. The Company estimates that the project has
the potential to generate more than 30 million carbon credits over
its 40-year life cycle with the expectation that the first credits
are to be issued in 2028. The Gabonese government will be entitled
to 20% of the carbon credits generated over the lifetime of the
project. External funding will be needed for the pilot programme
which is estimated to cost total of approximately $5 million in the
period. The Company is currently examining a number of possible
funding possibilities at the project level and the optimum funding
structure thereof.
On 19 April 2023, the Company announced that Woodgroup Aps, a
wholly owned subsidiary of the Company, had unexpectedly received a
notice from a Danish bank, terminating the fully-drawn $6 million
debt facility. The Group had an ancillary account with a cash
balance of $3.1 million. The bank had a floating charge against the
assets of Woodgroup ApS and offset this $3.1 million in partial
repayment of the facility. The reason cited by the bank for
terminating the facility was that Woodgroup ApS generated a loss in
Q1 2023. The bank believe that, as a consequence, the circumstances
of Woodgroup ApS have changed significantly to their detriment.
Management do not agree with the bank's conclusion and, whilst
acknowledging the poor performance in Q1, believed the Company had
been well placed to deliver a very positive performance for the
remainder of the year. As part of the notice the bank also
requested that Woodgroup ApS present a plan for the repayment of
the outstanding $2.9 million of the Facility. As reported by the
Company on 6 June 2023, the Company has reached an agreement with
Sydbank under which the outstanding balance will be repaid by no
later than 29 December 2023. The Company has undertaken to repay
approximately $145k on each of 15 June and 30 June 2023. Thereafter
a further $145k is to be paid in the middle of each subsequent
month with any additional lump sums being paid to ensure repayment
of the total outstanding balance and interest by the final
repayment date. There are also financial incentives in place if the
Group settles the outstanding balance earlier in the year .
Existing security arrangements, per the original loan facility
agreement, will remain in place until the line of credit is fully
settled.
The unexpected liquidity event necessitates the securing of
replacement working capital. The Company continues to assess
alternative funding sources, including raising funds through the
issuance of shares and the deferment of $1.5m of debts due at the
end of June . T he Directors are convening a General Meeting on 16
June 2023 so that the Company has the flexibility to issue ordinary
shares quickly if agreement is reached on the terms of an equity
issue. The Company does not currently have the authority to issue
shares.
Demand for our products remains high. Planned capital
expenditure in 2023 includes commencement of the afforestation
pilot programme and work required to (almost) complete
certification of both our production facilities and our forest.
Apart from efficiency improvements, no further material investment
is planned on our production facilities.
Since the termination, the Company has had to operate with an
emphasis on cash realisation and limiting new liabilities. On the 6
June 2023 our cash balance was $0.4 million, with estimated net
working capital of $5.5 million and interest-bearing bank and other
borrowings of $11.4 million.
Carnel Geddes
Chief Financial Officer
9 June 2023
SOCIAL IMPACT AND SUSTAINABILITY
As we move into 2023, the importance of ESG investments and
sustainable forestry management continues to grow. At Woodbois, we
remain fully committed to advance and strengthen our leadership
position in these areas by prioritizing transparency and best
practices. The sustainable forestry model we practice is designed
with the long-term protection of our forest concessions in mind,
while also creating social and economic benefits for all
stakeholders and generating value.
Health and Safety
The health and safety at work of all of our employees is a key
priority. In 2022, our dedicated Quality Health, Safety and
Environment team in Gabon focused on the Health and Safety of
workers, and aimed to create a workplace culture where everyone is
encouraged to contribute to enhancing workplace safety. As part of
our continuous improvements process, in line with seeking to
improve production efficiency we worked to improve the
implementation of our HSE plan and the HSE awareness campaigns
within our various working sites. We remain committed to these
initiatives as we move forward in line with industry best
practice.
Sustainability
Looking back at 2022, Woodbois once again received recognition
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, we continue to be
ranked in the top 10.
By prioritising transparency and adopting a
sustainability-focused operating model, we are setting the stage
for continued growth and evolution in the years ahead. Our
dedication to these values not only benefits our company, but also
our stakeholders and the wider community, as we strive to create a
more sustainable future for all.
FSC
Woodbois is dedicated to promoting sustainable forestry
practices in Gabon and has made significant progress towards
achieving full forest certification. The Ngounié and Nyanga Forests
Programme exemplifies the company's commitment to balancing
economic growth with social and environmental responsibility. While
faced with challenges in 2022 we remain determined to continue
integrating the new forest and allocate the necessary resources to
ensure a successful certification process. As part of this effort,
the company has decided to combine its concessions into one, which
will not only improve environmental, social, and economic
performance but also build upon existing management practices and
allow management full oversight of forest activities.
Additionally, Woodbois has taken further steps to ensure
responsible forestry practices by signing contracts committing to
High Conservation Value (HCV) and Biodiversity reports. These
reports will provide a comprehensive assessment of the forest's
ecological, social, and cultural values, and inform our management
practices. We are confident that the results of these reports will
contribute significantly to our 2023/4 forest certification and
that many of the positive outcomes highlighted in our 2023
Integrated Report will be a direct result of the implementation of
these reports.
Carbon
We are incredible excited that we have been awarded in principle
our first Afforestation/Carbon Sequestration project from the
Government of Gabon. The project aims to regenerate natural forest
in savannah areas, which are contiguous to forests, by introducing
local pioneer species and preventing fires. This approach will
create a forest rich in Okoumé, an important tree species in the
economy of Gabon and the daily life of rural populations.
The afforestation project will also have significant positive
impacts on biodiversity and water resources services. The new
forest will increase the diversity of ecosystems in southern Gabon
and have a root network that improves soil structure, increases
water absorption, storage, and filtration, and reduces surface
runoff. Forests also stabilize soils, reduce erosion, and
infiltration into groundwater, thereby benefiting downstream users
who depend on the water. Moreover, forests "consume" more water
than most other types of vegetation, thereby reducing runoff and
promoting better water infiltration to rivers and/or aquifers.
Forests have a positive impact on water quality, and variability in
water flow by reducing surface runoff, incidence, and effects of
flooding, and landslides.
The afforestation project is expected to create at least 1,000
permanent jobs on average over the first ten years of planting and
250 over the 40 years of the project, not including the jobs that
will be created for the later possible exploitation and processing
of wood. This project will benefit small businesses in Ndende and
Tchibanga and service providers, and supply contracts will be
concluded with farmers for the supply of bananas, cassava, and
other staple foods. The transfer of technical skills to the local
communities is also a major positive effect of the establishment of
plantations. Initial and continuing training in planting and
maintenance techniques is one aspect of this. Training in nursery
techniques, and eventually the creation of village nurseries, will
generate local skills.
We are excited to be at the forefront of afforestation and hope
to work with other African governments to replicate projects of
this kind across the region. As a company, we believe in the
importance of sustainable forestry and environmental protection,
and we are committed to playing our part in building a more
sustainable future for all.
Community
In 2022, we made a conscious effort to support the communities
in which we operate by providing essential food items. We believe
in promoting the well-being of both our employees and those in our
communities and are committed to upholding our reputation as a
responsible corporate citizen. Our dedicated community engagement
team has played a key role in this effort by prioritizing the
establishment of regular and sustainable partnerships with local
organizations. By striking a balance between our business goals and
our social responsibility, we are proud to contribute to the
positive development of our communities while achieving our
organizational objectives.
The Company recognises its impact on the communities in which it
operates. We are committed to engaging with stakeholders in those
communities to ensure that we are listening to, learning from and
taking into account their views as we conduct our business. We are
also committed to creating economic opportunity in the local
communities in which we operate.
Ambitions
We strive to establish ourselves as a leading ESG-sensitive
company in the global timber industry through our diverse
operations. The directors present their report on the Group's
activities, along with the financial statements and auditor's
report for the fiscal year ended December 31, 2022.
DIRECTORS' REPORT
The principal activities of Woodbois Limited ("Woodbois") during
2022, 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 Chair and Chief Executive Officer's statement.
RESULTS AND DIVIDS
The total comprehensive loss for the year attributable to
shareholders was $111.2 million (2021: total comprehensive income
$93.3 million), of which $157.0 million (less $47.8 million in
non-cash movement in deferred taxes) was attributable to the annual
non-cash revaluation of biological assets, principally owing to
reduced harvesting estimates in Mozambique and the impact of higher
worldwide interest and discount rates.
The directors do not recommend payment of an ordinary dividend
(2021: $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 7.9 million new Ordinary
Shares and 390 million Non-Voting shares were converted into new
Voting Shares. The Company has unlimited authorised share capital
divided into ordinary shares of 1p each, of which 2,489,988,873 had
been issued as at 31 December 2022 comprising 2,254,988,873 Voting
shares and 235,000,000 Non-Voting shares.
POST BALANCE SHEET EVENTS
Please refer to note 23 of the financial statements, in addition
to the Chair and Chief Executive Officer's 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 (Chief Executive Officer)
H Ghossein (Deputy Chair & Head of Gabon Operations)
C Geddes (Chief Financial Officer)
G Thomson (Non-Executive Chair and Senior Independent)
D Rothschild (Independent Non-Executive Director)
F Tonetti (Resigned 16 April 2022) (Executive Director)
H Turcan (Resigned 17 October 2022) (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 2022 and at the date of
approval of this report were:
Percentage of Voting Percentage of Voting Voting Ordinary shares Voting Ordinary shares
Shares held Shares held of 1p each of 1p each
Shareholding 2022 2021 2022 2021
-------------- ------------------------ ------------------------ ------------------------ ------------------------
P Dolan 3.34% 4.06% 75,400,032 75,400,032
H Ghossein 0.94% 1.13% 21,075,736 21,075,736
G Thomson 0.06% 0.07% 1,250,000 1,250,000
P Dolan, Chief Executive Officer 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.
Share Options
At the start of 2022 a total of 114 million share options were
in issue and at 31 December 2022 there were 150.0 million.
On the 1st of March 2022, the Company issued LTIP's (long-term
incentive plan) to its executive directors and key employees of
which 38.0 million were in issue at 31 December 2022. The fair
value of these LTIP's as at the grant date was determined by an
independent specialist in financial valuations. 19.0 million of the
granted LTIP's are subject to TSR (Total Shareholder Return) linked
criteria and were valued using a Monte Carlo simulation. 19.0
million 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.
Please see note 21 for more information.
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 held of Shares as a % of
Options held as at 31 under option Issued Share
as at 31 December Capital[6]
December 2022 (exercise
2022 (exercise price of
price of 1p per Share)
2p per Share)
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 1.06%
---------------- ---------------- -------------- --------------
H Ghossein (Deputy
Chair) 22,500,000 4,000,000 26,500,000 1.06%
---------------- ---------------- -------------- --------------
G Thomson (NED
Chair & 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 2022 was:
Total Total
Salary or fees Benefits 2022 2021
$000 $000 $000 $000
---------------------------------------- --------------- --------- ------ ------
P Dolan[7] 200 - 200 200
H Ghossein 190 38 228 262
F Tonetti (Resigned 16 April 2022) 100 1 101 70
C Geddes[8] 200 - 200 200
G Thomson 62 - 62 69
D Rothschild 50 - 50 9
H Turcan[9] (Resigned 17 October 2022) - - - -
Total 802 39 841 810
---------------------------------------- --------------- --------- ------ ------
All of the above directors' remunerations are considered short
term in nature and exclude national insurance contributed by the
employer.
The above table excludes final deferred consideration payments
made directly to or to companies owned and controlled by H Ghossein
of $0.25 million in 2022 (2021: $0.5 million). These payments arose
on the purchase of WoodBois International ApS in 2017, as amended
under the Deed of Variation effected 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 their position.
Non-Executive Directors are employed on letters of appointment
which may be terminated on not less than 1-3 months' notice. The
basic fees payable at the end of the year to Graeme Thomson as
Non-Executive Chair and Senior Independent Director are GBP50,000
pa and GBP40,000 pa to David Rothschild as Independent
Non-Executive Director.
ProfileS of the CURRENT Directors
P DOLAN, AGED 59, CHIEF EXECUITIVE OFFICER
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.
C GEDDES, AGED 44, 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 one of the largest South African pomegranate
farming and export companies, Pomona, since 2008. She was also the
Chair of POMASA (2018 to 2023), the Pomegranate Growers Association
of South Africa.
H GHOSSEIN, AGED 62, DEPUTY CHAIR & HEAD OF GABON
OPERATIONS
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 66, NON-EXECUTIVE CHAIR & SENIOR INDEPENT
DIRECTOR
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 63, INDEPENT NON-EXECUTIVE DIRECTOR
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.
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
----------------------------------- ----------------- ---------------
MCM Investment Partners SPC - MCM
Sustainable Resource SP 133,625,000 5.38%
Sparta Premier S.A. 100,000,000 4.00%
P Dolan (CE O ) 75,400,032 3.03%
----------------------------------- ----------------- ---------------
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 separate annual Sustainability Report.
The Group had three divisions during the year: Forestry,
Trading, and 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 primary 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 2022.
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 2022 the Board met 12
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 three
Executive Directors and two Independent Non-Executive Directors.
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 will recommence its recruitment of
a further Non-Executive Director once recapitalised.
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 Chief
Executive Officer.
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 Nominations 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 business overall is determined by a Management
Committee, which sets out agreed targets that including 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 2022. Substantially all
of the cost associated with its development has been expensed as
incurred due to the strict accounting rules governing the
capitalisation of internally generated intangible assets.
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 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 marketplace.
There were three main elements of the remuneration packages for
Executive Directors and senior management in 2022:
- Basic annual salary (including directors' fees) and benefits;
- Discretionary annual bonus; and
- Equity share 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 Chief Executive Officer 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 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. 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.
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 to-date 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 $2.3
million as at 31 December 2022 (2021: $0.9 million). To ensure
sufficient access to liquidity, the Group has been actively seeking
alternative sources of funding following the termination of the $6m
credit line from Sydbank in April 2023, including equity, debt and
hybrid solutions.
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
(2021: 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.
To ensure sufficient access to liquidity, the Group has been
actively seeking alternative sources of funding following the
termination of the $6m credit line from Sydbank and its offset of
$3.1m of cash balances in April 2023, including equity, debt and
hybrid solutions. As announced on 6 June 2023, it has reached an
agreement with Sydbank under which the outstanding balance of
c$2.8m (as at 31 May 2023) will be repaid by the 2023 year end, d
iscussions with a number of parties are progressing which may
include raising funds through the issuance of shares and/or
reducing or rescheduling other debts of the Group. Whilst there is
currently no indication that the additional financing required will
not be obtained, it cannot be certain. Although the audit report is
not modified in respect of this matter, t hese events or
conditions, along with the other matters as set forth in the notes,
indicate that a material uncertainty exists that may cast
significant doubt on the Company's ability to continue as a going
concern. Your attention is drawn to the corporate update issued on
6 June 2023, summarised in Note 24.
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 2022 and a
resolution to reappoint then will be proposed at the 2023 AGM.
On behalf of the Board
Paul Dolan
Chief Executive Officer
9 June 2023
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF WOODBOIS LIMITED
For the year ended 31 December 2022
Opinion
We have audited the financial statements of Woodbois Limited
(the 'group') for the year ended 31 December 2022 which comprise:
the Consolidated Statement of Profit or Loss and Other
Comprehensive Income, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Financial Position, the
Consolidated Statement of Cash Flows and notes to the financial
statements, including significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and UK-adopted international
accounting standards.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 31 December 2022 and of its loss 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 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 company
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.
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements, which
indicates that the group incurred a net loss of $111,191,000 during
the year ended 31 December 2022, principally as a result of a
non-cash impairment to the valuation of the biological assets held,
and that one of the group's banking facilities, held by a Danish
bank, was withdrawn post year end which created critical cashflow
pressures. The group is in discussions with parties to replace the
withdrawn banking facility and whilst there is no indication at the
date of this report that these discussions will not be successful,
there is no guarantee that the required level of financing will be
made available to the group. As stated in note 1, these events or
conditions, along with the other matters as set forth in the notes,
indicate that a material uncertainty exists that may cast
significant doubt on the group's and company's ability to continue
as a going concern. Our opinion is not modified in respect of this
matter.
In auditing the financial statements, we have concluded that the
directors' 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 and
company's ability to continue to adopt the going concern basis of
accounting included testing the cashflow forecasts to assess their
ability to meet their commitments and a qualitative assessment of
the facts and circumstances. Procedures included:
-- Obtaining management's forecast cash flows covering the
period from the date of signing to June 2024. We assessed the
assumptions within the forecast with regards to revenue generation,
capital funding and cash flows;
-- Reviewing and challenging 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;
-- Assessing the status of the discussions that management have
entered into regarding replacement financing facilities;
-- 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; and
-- Assessing the adequacy of going concern disclosures within the Annual Report and Accounts
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$303,000 (2021: US$448,000). This was based on an average of
three year's adjusted profit or loss before tax which is calculated
by removing all items reasonably deemed to be outside the normal
course of business, such as the contingent asset acquisition
expense, fair value gain or loss on biological assets and gain on
bargain purchase in the prior year, as these are areas which
involve management estimation. 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% (2021:70%) 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 set group
triviality at $15,150 (2021: $15,680), and the range of component
materiality was from Group Materiality of $303,000 to $55,484
(2021: $205,708 to $62,260).
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 challenged 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. In addition to
the matter described in the Material uncertainty related to going
concern section we have determined the matters described below to
be the key audit matters to be communicated in our report.
Key Audit Matter How our scope addressed this
matter
Valuation of biological assets
(note 11)
-------------------------------------------------------------
Biological assets represent Our work included:
the most material balance in
the financial statements (US$180m * Reviewing the biological asset valuation models
as at 31 December 2022). prepared by management for accuracy and challenging
the estimates/assumptions made in the inputs;
The valuation of these assets
is the key assertion considered
here, as there is a risk that * Reviewing the model estimates such as discount rates
the biological assets are incorrectly used and challenging the key inputs involved in
valued and therefore misstated arriving at the rate applied;
due to the high degree of estimation
and judgement required by management.
* Reviewing the sensitivity of the key inputs, together
Management have reassessed with a combination of sensitivities of such inputs;
their inputs used within the
value in use calculations due
to changes in the country specific * Considering if there are any indications of
discount rates and risk free impairment and ensuring that those identified by
rates applied. These inputs management are reasonable; and
are judgemental and have the
greatest impact upon valuation.
* Reviewing disclosures in the financial statements to
ensure they are in accordance with IAS 41,
particularly the disclosures of key estimates and
assumptions which impact fair values and the
sensitivity analysis.
-------------------------------------------------------------
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 financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, 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 company
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
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 financial statements, the directors are
responsible for assessing the company'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 company 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
enquires with management, industry research, review of component
auditor work papers, and our 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, Companies (Guernsey) Law 2008, health and safety
regulations and relevant tax legislation in the jurisdictions in
which the group operates.
-- 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; review of revenue recognition, 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 letter of engagement. 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.
15 Westferry Circus
PKF Littlejohn LLP
Canary Wharf
Registered Auditor
London E14 4HD
9 June 2023
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
For the year ended 31 December 2022
Notes 2022 2021
$000 $000
Turnover 2 23,108 17,465
Cost of sales 2 (17,244) (13,970)
--------------------------------------------------------- ----- --------- --------
Gross profit 5 ,864 3,495
--------------------------------------------------------- ----- --------- --------
Operating costs (4,166) (3,620)
Administrative expenses (1,288) (1,324)
Depreciation (222) (326)
Share based payment expense 21 (418) (233)
(Loss)/gain on fair value of biological assets 11 (156,983) 4,253
Operating (loss)/profit 3 (157,213) 2,245
Gain on bargain purchase 5 - 88,292
Reclassification of Foreign Currency Translation Reserve
on deregistered entities 22 (1,529) -
Foreign exchange gain 904 756
Finance costs 6 (1,029) (591)
--------------------------------------------------------- ----- --------- --------
(Loss)/profit before tax (158,867) 90,702
--------------------------------------------------------- ----- --------- --------
Taxation 7 47,676 (591)
--------------------------------------------------------- ----- --------- --------
(Loss)/profit for the year (111,191) 90,111
--------------------------------------------------------- ----- --------- --------
Other comprehensive income:
Items that may be reclassified subsequently to
profit or loss
Currency translation differences (1,612) (3,032)
Reclassification of FCTR on deregistered entities 22 1,529 -
Items that will not be reclassified to profit or loss
Revaluation of land and buildings, net of tax 10 - 6,254
Total comprehensive (loss)/income for the year (111,274) 93,333
--------------------------------------------------------- ----- --------- --------
Basic (loss)/earnings per share (cents) 8 (4.47) 3.69
Diluted earnings per share (cents) 8 (4.47) 3.65
--------------------------------------------------------- ----- --------- --------
The notes form an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Share Revaluation
Convertible based Reserve
bonds Foreign payment (note 10)
Share Share exchange reserve Retained Total
capital premium reserve * (note 21) earnings equity
$000 $000 $000 $000 $000 $000 $000 $000
--------------- ---------- ----------- ------------- ---------- ---------- ------------ ---------- -----------
At 1 JANUARY
2021 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
--------------- ---------- ----------- ------------- ---------- ---------- ------------ ---------- -----------
Loss for the
year - - - - - - (111,191) (111,191)
Other
comprehensive
income for
the year - - - (83) - - - (83)
Total
comprehensive
loss for the
year - - - (83) - - (111,191) (111,274)
Transactions
with owners:
Issue of
ordinary
shares 24 75 - - (51) - - 48
Redemption of
convertible
bonds 73 220 (28) - - - - 265
Share based
payment
expense - - - - 418 - - 418
At 31 December
2022 32,625 65,549 24 (8,406) 802 6,254 51,057 147,905
--------------- ---------- ----------- ------------- ---------- ---------- ------------ ---------- -----------
* 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
As at 31 December 2022
-----------------------------------------------------------------------------------------
2022 2021
Notes $000 $000
------------------------------------- ----- -------------------- ---------------------
ASSETS
Non-current assets
Biological assets 11 179,815 336,798
Property, plant and equipment 9 32,226 30,119
------------------------------------- ----- -------------------- ---------------------
Total non-current assets 212,041 366,917
Current assets
Trade and other receivables 12 6,330 4,616
Inventory 13 4,606 6,159
Cash and cash equivalents 14 2,296 887
------------------------------------- ----- -------------------- ---------------------
Total current assets 13,232 11,662
------------------------------------- ----- -------------------- ---------------------
TOTAL ASSETS 225,273 378,579
------------------------------------- ----- -------------------- ---------------------
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings 16 (5,665) (2,898)
Deferred tax 7 (58,675) (106,475)
Convertible bonds - host liability 17 - (931)
------------------------------------- ----- -------------------- ---------------------
Total non-current liabilities (64,340) (110,304)
Current liabilities
Trade and other payables 15 (3,547) (4,078)
Borrowings 16 (8,603) (5,369)
Provisions 20 (130) (130)
Convertible bonds - host liability 17 (748) -
Contingent acquisition liability 22 - (250)
TOTAL CURRENT LIABILITIES (13,028) (9,827)
TOTAL LIABILITIES (77,368) (120,131)
------------------------------------- ----- -------------------- ---------------------
NET ASSETS 147,905 258,448
------------------------------------- ----- -------------------- ---------------------
EQUITY
Share capital 18 32,625 32,528
Share premium 19 65,549 65,254
Convertible bonds - equity component 17 24 52
Foreign exchange reserve (8,406) (8,323)
Share based payment reserve 21 802 435
Revaluation reserve 10 6,254 6,254
Retained earnings 51,057 162,248
------------------------------------- ----- -------------------- ---------------------
TOTAL EQUITY 147,905 258,448
------------------------------------- ----- -------------------- ---------------------
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 9 June 2023 and were signed
on its behalf.
Paul Dolan
Chief Executive Officer
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
----------------------------------------------------------------------------------------------------
2022 2021
Notes $000 $000
---------------------------------------------------------------- ----- ----------------- --------
CASH USED IN OPERATIONS
(Loss)/profit before taxation (158,867) 90,702
Adjustment for:
Depreciation of property, plant and equipment 9 2,181 2,063
Fair value adjustment of biological asset 11 156,983 (4,253)
Transaction costs deducted from equity - (42)
Foreign exchange (904) (756)
Reclassification of FCTR on deregistered entities 1,529 -
Accrued expense 15 322 391
Share based payments 21 418 233
Finance costs 6 1,029 591
Gain on bargain purchase 5 - (88,292)
Increase in trade and other receivables (1,714) (838)
Decrease in trade and other payables (632) (460)
Decrease/(increase) in inventory 1,553 (1,267)
CASH FLOWS FROM OPERATIONS 1,898 (1,928)
Finance costs paid (759) (495)
Income taxes paid (2) (57)
---------------------------------------------------------------- ----- ----------------- --------
cash FLOWS from operatiNG ACTIVITIES 1,137 (2,480)
---------------------------------------------------------------- ----- ----------------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditure on property, plant and equipment (3,907) (4,310)
Settlement of deferred consideration 22 (250) (500)
Settlement of purchase price for acquired subsidiary 5 (341) (1,107)
cash FLOWS from investing activities (4,498) (5,917)
---------------------------------------------------------------- ----- ----------------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans and borrowings 6,193 -
Repayment of loans and borrowings (1,470) (1,387)
Proceeds from the issue of ordinary shares (net of issue costs) 47 8,111
cash fLOWS from financing activities 4,770 6,724
---------------------------------------------------------------- ----- ----------------- --------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,409 (1,673)
Cash and cash equivalents at beginning of year 887 2,560
---------------------------------------------------------------- ----- ----------------- --------
CASH AND CASH EQUIVALENTS AT end of YEAR 2,296 887
---------------------------------------------------------------- ----- ----------------- --------
Net debt reconciliation
2021 Cash flow Non-cash 2022
changes
$000 $000 $000 $000
------------ ------ ---------- --------- -------
Borrowings 8,267 4,723 1,278 14,268
------------ ------ ---------- --------- -------
The notes form an integral part of the consolidated financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2022
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 have been consistently applied.
The principal activities and nature of the business are included
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 presentation 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 2022, 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% England 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
----------------------------- ----------------------------- ------------------------- -----------------------------
Carbonarbor Limited 100% England Carbon solutions
----------------------------- ----------------------------- ------------------------- -----------------------------
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 Gabon Forestry
(LGFIB) 100%
----------------------------- ----------------------------- ------------------------- -----------------------------
The registered offices of the Group's subsidiaries are as
follows:
Subsidiary undertakings Registered office
--------------------------------------------------------- -----------------------------------------------------------
Direct investments
--------------------------------------------------------- -----------------------------------------------------------
Woodbois Services Limited 118 Piccadilly, London, England, W1J 7NW
--------------------------------------------------------- -----------------------------------------------------------
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
--------------------------------------------------------- -----------------------------------------------------------
Carbonarbor Limited Canterbury Court, 1-3 Brixton Road, London, England, SW9
6DE
--------------------------------------------------------- -----------------------------------------------------------
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 2022.
Their adoption has not had any material impact on the disclosures
or on the amounts reported in these consolidated financial
statements:
Standards /interpretations Application
--------------------------- ----------------------------------------
IAS 37 Onerous Contracts - Cost of Fulfilling
a Contract
IFRS 1, 9, 16 and Annual Improvements to IFRS Standards
IAS 41 2018-2020 Cycle
IAS 16 Property, Plant and Equipment: Proceeds
before Intended Use
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 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
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
2022 for 2022 2021 for 2021
------------------------ --------------- --------------- --------------- ---------------
UK Pound 1.21 1.23 1.35 1.38
Mozambique Metical 63.88 63.85 63.83 65.33
Danish Krone 6.97 7.07 6.57 6.29
West African CFA franc 614.48 623.52 579.26 556.02
------------------------ --------------- --------------- --------------- ---------------
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.
Long--term leases
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.
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 - 7 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 other comprehensive income.
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. The base case includes the rescheduling of debts and/or
financing being raised whether as equity, debt or a hybrid thereof.
In their scenario planning management have considered inter
alia:
-- the timing of and the ability of the Company to raise sufficient working capital;
-- the timing of and the ability of the Company to raise the
finance required to settle the balance of the Danish bank facility
that was terminated on 19 April 2023;
-- the likely outcome(s) of the Company's negotiations with its creditors;
-- 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 and;
-- operational risks.
The forecasts, show that the Company will have to reschedule or
raise funds in connection with $1.5m of its near-term debt due at
the end of June 2023, in addition to raising sufficient working
capital in order to have adequate resources to continue in
operational existence for the foreseeable future and to meet its
liabilities as they fall due in the next 12 months. Your attention
is drawn to the RNS dated 6 June 2023, summarised in note 24. At
the date of these consolidated financial statements, financing
proposals were still subject to due diligence and shareholder
approval to issue new ordinary shares at the General Meeting
(scheduled for 16 June 2023), set out in the circular to
shareholders dated 26 May 2023. Whilst the directors currently
believe that the additional financing required will be obtained,
there can be no certainty. Although the audit report is not
modified in respect of this matter, t hese events or conditions,
along with the other matters as set forth in the notes, indicate
that a material uncertainty exists that may cast significant doubt
on the company's ability to continue as a going concern. As of the
date hereof the directors 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. 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.
As on 31 December 2022 sales made to one customer during the
year accounted for 14% (2021 10%) 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 2022.
All amounts are disclosed after taking into account any
intra-segment and intra-group eliminations:
2022 Forestry Trading Carbon Solutions Total
$000 $000 $000 $000
----------------------------------------- ---------- --------- ----------------- ----------
Income statement
Turnover 15,262 7,846 - 23,108
Cost of Sales (10,450) (6,794) - (17,244)
----------------------------------------- ---------- --------- ----------------- ----------
Gross profit 4,812 1,052 - 5,864
----------------------------------------- ---------- --------- ----------------- ----------
Operating costs (2,360) (1,467) (339) (4,166)
Administrative expenses (429) (429) (430) (1,288)
Depreciation (206) (16) - (222)
Share based payment expense (171) (121) (126) (418)
Loss on fair value of biological assets (156,983) - - (156,983)
Segment operating loss (155,337) (981) (895) (157,213)
Foreign exchange (loss)/gain (135) 1,039 - 904
Finance costs (614) (415) - (1,029)
Loss before tax (156,086) (357) (895) (157,338)
----------------------------------------- ---------- --------- ----------------- ----------
Taxation 47,681 (5) - 47,676
----------------------------------------- ---------- --------- ----------------- ----------
Loss for the year (108,405) (362) (895) (109,662)
----------------------------------------- ---------- --------- ----------------- ----------
NET ASSETS
Assets: 215,486 9,787 - 225,273
Liabilities: (5,881) (12,812) - (18,693)
Deferred tax liability (58,680) 5 - (58,675)
Net assets 150,925 (3,020) - 147,905
----------------------------------------- ---------- --------- ----------------- ----------
Reconciliation of information on reportable segments to the
amounts reported in the consolidated financial statements:
2022 2021
(Loss)/profit before tax $000 $000
----------------------------------------------------------------------- ---------- -------
Total (loss)/profit before tax for reportable segments (109,662) 90,702
Unallocated amount: reclassification of FCTR on deregistered entities (1,529) -
----------------------------------------------------------------------- ---------- -------
Consolidated (loss)/profit before tax (111,191) 90,702
----------------------------------------------------------------------- ---------- -------
The following table shows the segment analysis of the Group's
loss 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 tax 92,424 (368) (1,354) 90,702
------------------------------------------ ---------- -------- ----------------- ----------
Taxation (591) - - (591)
------------------------------------------ ---------- -------- ----------------- ----------
Profit/(loss) for the year 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
------------------------------------------ ---------- -------- ----------------- ----------
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
2022 $000 $000 $000 $000
-------------------- -------- -------- ----------- --------
External sales 7,846 15,130 132 23,108
Non-Current Assets 1,524 210,182 335 212,041
-------------------- -------- -------- ----------- --------
2021 $000 $000 $000 $000
-------------------- ------ -------- ------- --------
External sales 9,477 7,710 278 17,465
Non-Current Assets 273 326,884 39,760 366,917
-------------------- ------ -------- ------- --------
The below segment revenue has been based on the geographic
location of the customer. Only material amounts were included.
2022 2021
Location: $000 $000
-------------------- -------- -------
Libya 4,401 2,790
Gabon 3,922 1,274
Dominican Republic 2,350 1,220
Pakistan 2,275 4,418
Italy 1,800 -
Bangladesh 1,621 1,535
Turkey 1,591 901
Iraq 1,283 690
Morocco 805 732
USA 574 569
Belgium 534 129
21,156 14,258
-------------------- -------- -------
3. OPERATING LOSS/profit
2022 2021
$000 $000
----------------------------------------------------------------------------------- -------- --------
Operating loss/profit is stated after charging/(crediting):
Depreciation of property, plant and equipment 2,181 2,063
Staff costs (see note 4) 4,276 3,936
Share based payment reserve expense (see note 21) 418 233
Lease expense 89 81
Loss/(gain) on fair value of Biological assets (see note 11) 156,983 (4,253)
Auditor's remuneration:
Audit services
- fees payable to the Company's auditor for the audit of the consolidated accounts 78 75
Fees payable to associates of the Company's auditor
- auditing the accounts of subsidiaries pursuant to legislation 76 70
----------------------------------------------------------------------------------- -------- --------
4. EMPLOYEE INFORMATION
2022 2021
Number Number
--------------------------------------------------------------------------------------------- ------ ------
The average monthly number of persons (including directors) employed by the Group during the
year was:
Administration and management 5 5
Carbon solutions 2 2
Forestry 393 342
Trading 9 9
409 358
--------------------------------------------------------------------------------------------- ------ ------
2022 2021
$000 $000
The aggregate remuneration comprised:
Wages and salaries 4,138 3,834
Social security costs 138 102
4,276 3,936
--------------------------------------------------------------------------------------------- ------ ------
2022 2021
$000 $000
Directors' remuneration included in the aggregate remuneration above comprised
--------------------------------------------------------------------------------------------- ------ ------
Emoluments for qualifying services 841 810
--------------------------------------------------------------------------------------------- ------ ------
Included above are emoluments of $247,000 (2021: $262,000) 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 $6,936 (2021: $13,750) 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 (56,000 of which is
currently covered by a management plan). This additional hectarage,
which is located within 100km of our manufacturing base in Mouila,
provides increased levels of sustainably harvested timber required
as additional production capacity comes online at our sawmill and
veneer factory.
No harvesting had taken place during the 2021 financial year in
the newly acquired concession and therefore the acquisition of
LGFIB did not materially contribute to the consolidated revenue and
profit for that 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.
2021
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 was
recognised as follows:
2021
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
2022 2021
$000 $000
------------------------------------ ------ ------
Bank interest 741 503
Working capital facility interest 206 -
Convertible bond amortised interest 82 88
------------------------------------ ------ ------
1,029 591
------------------------------------ ------ ------
7. TAXATION
2022 2021
$000 $000
---------------------------------------------------------------------------------------------- ---------- ---------
Current tax:
Corporation tax on profit for the year 125 (81)
Deferred tax:
Origination and reversal of temporary differences (47,801) (510)
---------------------------------------------------------------------------------------------- ---------- ---------
Tax on profit/(loss) on ordinary activities (47,676) (591)
---------------------------------------------------------------------------------------------- ---------- ---------
2022 2021
Group $000 $000
---------------------------------------------------------------------------------------------- ---------- ---------
(Loss)/profit before tax (158,867) 90,701
(Loss)/profit before tax multiplied by the average rate of corporation tax of 15% (2021: 19%) (23,830) 17,233
Effects of:
Losses carried forward/(utilised) (199) (189)
Non-taxable gain on bargain purchase - (16,775)
Non-taxable foreign exchange gain (147) (111)
Non-taxable movement in fair value of biological assets (24,249) (1,318)
Non-deductible share-based payment expense 63 44
Non-deductible other expenditure 457 525
Reclassification of FCTR [10] on deregistered entities 229 -
Group tax credit for the year (47,676) (591)
---------------------------------------------------------------------------------------------- ---------- ---------
The prevailing tax rates of the operations of the Group range
between 3% and 32%. Therefore, a rate of 15% (2021:19%) has been
used as it best represents the weighted average tax rate
experienced by the Group. The Group has estimated losses of $26
million (2021: $28 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:
2022 2021
Deferred tax liabilities $000 $000
------------------------------------------------------------------------------------------- --------- --------
At 1 January 106,475 64,788
Decrease in deferred tax liability: fair value adjustment of Biological Assets (47,795) 39,006
Decrease in deferred tax liability: property, plant and equipment (5) -
Increase in deferred tax liability: fair value adjustment on property, plant and equipment - 2,681
At 31 December 58,675 106,475
------------------------------------------------------------------------------------------- --------- --------
Deferred tax reconciliation
2022 2021
Deferred tax assets / (liabilities) $000 $000
------------------------------------------------------------------------------------- ---------- ----------
Deferred tax liability on the fair value adjustment of Biological Assets (53,945) (101,740)
Deferred tax liability on property, plant and equipment 5 -
Deferred tax liability on the fair value adjustment on property, plant and equipment (4,735) (4,735)
At 31 December (58,675) (106,475)
------------------------------------------------------------------------------------- ---------- ----------
8. EARNINGS PER SHARE
Summary: 2022 2021
cents cents
-------------------------------- ------- -------
Basic (loss)/earnings per share (4.47) 3.69
Diluted earnings per share (4.47) 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.
The Company has incurred a loss in the year ended 31 December
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.
2022 2021
$000 $000
Total (loss)/profit for the year (110,191) 90,111
--------------------------------- ---------- -------
The earnings used for diluted earnings per share are the same as
the earnings used for basic earnings per share, which equates to
loss attributable to the owners of the Company of $111 million.
Reconciliation of shares in issue to weighted average and dilutive weighted average number
of ordinary shares 2022 2021
'000 '000
------------------------------------------------------------------------------------------- ---------- ----------
Shares in issue at beginning of year 2,482,117 2,382,216
Treasury shares - (99)
Shares issued during the year weighted for period in issue (note 18) 3,894 62,466
------------------------------------------------------------------------------------------- ---------- ----------
Weighted average number of ordinary shares in issue for the year 2,486,011 2,444,583
------------------------------------------------------------------------------------------- ---------- ----------
Conversion of convertible bonds 15,740 21,612
------------------------------------------------------------------------------------------- ---------- ----------
Dilutive weighted average number of ordinary shares in issue for the year 2,501,751 2,466,195
------------------------------------------------------------------------------------------- ---------- ----------
9. PROPERTY, plant and equipment
Fixtures & IT
Land & buildings Motor vehicles Plant & equipment equipment Total
$000 $000 $000 $000 $000
Cost
At 1 JANUARY 2021 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
---------------------- ----------------- --------------- ------------------ ---------------------- --------
Additions - 1,715 2,929 1,478 6,122
Disposals - (26) - (280) (306)
Effects of foreign
exchange (884) (305) (1,374) 90 (2,473)
---------------------- ----------------- --------------- ------------------ ---------------------- --------
At 31 December 2022 14,547 7,578 16,129 1,719 39,973
---------------------- ----------------- --------------- ------------------ ---------------------- --------
Depreciation
At 1 JANUARY 2021 - 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
---------------------- ----------------- --------------- ------------------ ---------------------- --------
Charge for the year - 742 1,390 49 2,181
Disposals - (26) - - (26)
Effects of foreign
exchange - (95) (826) 2 (919)
---------------------- ----------------- --------------- ------------------ ---------------------- --------
At 31 December 2022 - 2,893 4,716 138 7,747
---------------------- ----------------- --------------- ------------------ ---------------------- --------
Net book value
At 31 December 2021 15,431 3,922 10,422 344 30,119
---------------------- ----------------- --------------- ------------------ ---------------------- --------
At 31 December 2022 14,547 4,685 11,413 1,581 32,226
---------------------- ----------------- --------------- ------------------ ---------------------- --------
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 in 2021.
The Company acquired the Land and Buildings in June 2017 and at
that time, the fair value, at initial recognition was $7.2m.
Therefore, the carrying amount for those assets, if the cost model
had been applied by the Company, would have been 2022: $7.2m (2021:
$7.2m).
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.
Management is not aware of any factors that impacted property
valuations in Gabon and therefore noted that during 2022 the fair
value of the revalued asset, when stated in its local currency, did
not differ materially from its carrying amount and therefore no
revaluation was performed in 2022.
11. biological assets
2022 2021
Standing timber $000 $000
------------------------------------- ---------- --------
Carrying value at beginning of year 336,798 204,223
Additions (Note 5) - 128,322
Fair value movement (156,983) 4,253
------------------------------------- ---------- --------
Carrying value at end of year 179,815 336,798
------------------------------------- ---------- --------
2022 2021
Carrying value per location $000 $000
------------------------------- -------- --------
Gabon 179,815 297,506
Mozambique - 39,292
------------------------------- -------- --------
Carrying value at end of year 179,815 336,798
------------------------------- -------- --------
The methods and assumptions used in determining the fair value
of standing timber within the forestry concessions held is based on
IAS 41 Agriculture, applicable to companies that hold biological
assets, 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. As with all
discounted cash flow valuations on long-term assets, small changes
to input variables can create significant changes to the resultant
valuation.
Following the fair value assessment in 2022, a net fair value
loss (after deferred tax) of $109 million (loss of $26.7 million
for Mozambique and a loss of $82.3 million for Gabon) was
recognised.
The fair value loss was due to a number of factors:
-- WACC discount rates increased significantly from the prior
year. The risk-free rate and the equity and country risk premiums
increased due to a rise in inflation, poor economic performance,
rise in interest rates and a pessimistic outlook on the stock
market. Woodbois' cost of debt increased in 2022 due to an increase
in the Danish banking facilities interest rates as well as taking
on two shareholder loans from Lombard Odier and Rhino Ventures at
8.5%.
-- Specifically relating to the biological assets in Mozambique,
the revaluation downwards was mainly prompted by Group's decision
to minimise its forward looking harvesting activities (and the
expected effect thereof on maximum permitted harvest rates) while
reviewing its strategic options in that geography .
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 m(3) 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 2,537m(3) (for
Mozambique) and 237,983m(3) (for Gabon) (2021: 55,780m(3) (for
Mozambique) and 237,983m(3) (for Gabon)). This is based on the
current expected harvesting activities for Mozambique and the
approved APC for Gabon 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 18%
(2021:11%) for Gabon and 20% (2021:13%) 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, country risk premium 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 in 2021 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 year end fair value of biological assets
2022 2021
$000 $000
Effect of 1% increase in the discount rate (10,694) (33,285)
Effect of 1% decrease in the discount rate 12,197 41,919
Effect of 10% increase in volume of APC 18,374 34,547
Effect of 10% decrease in volume of APC (18,374) (34,547)
Effect of 10% increase in sales price 21,158 42,409
Effect of 10% decrease in sales price (21,158) (42,409)
12. TRADE AND OTHER RECEIVABLES
2022 2021
$000 $000
----------------------- ------ ------
Trade receivables 4,561 2,093
Other receivables 12 12
Deposits 128 127
Current tax receivable 16 14
VAT receivable 174 589
Prepayments 1,439 1,781
6,330 4,616
----------------------- ------ ------
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
2022 2021
$000 $000
----------------- ------ ------
Finished goods 2,377 2,747
Stock in transit 2,229 2,129
Work in progress - 1,283
----------------- ------ ------
4,606 6,159
----------------- ------ ------
Provision for net realisable value amounted to $nil (2021:
$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 (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
2022 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 4,701 - - - 4,701
Cash and cash equivalents 2,296 - - - 2,296
Trade and other
payables - - (2,465) - (2,465)
Borrowings - - (14,268) - (14,268)
Convertible bond
liability - - (748) - (748)
6,997 - (17,481) - (10,484)
--------------------------------- ----------- ------------ -------------- -------------- ---------
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 2,232 - - - 2,232
Cash and cash equivalents 887 - - - 887
Trade and other
payables - - (2,366) - (2,366)
Borrowings - - (8,268) - (8,268)
Convertible bond
liability - - (931) - (931)
Contingent acquisition
liability - - (250) - (250)
3,119 - (11,815) - (8,696)
--------------------------------- ----------- ------------ -------------- -------------- --------
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 $14.5m (2021:
$15.4m) measured in accordance with level 3 and Biological Assets
of $179.8m (2021: $336.8m) 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.
2022 2021
$000 $000
------------------------------------- ------ -----
+ 20 bp increase in interest rates (26) (19)
+ 50 bp increase in interest rates (65) (47)
+ 100 bp increase in interest rates (130) (93)
The table above is prepared on the basis of an increase in
rates. A decrease in rates would have the opposite effect.
2022 2021 2022 2021 2022 2021
Fixed Fixed Floating Floating
rate rate rate Rate Total Total
Group $000 $000 $000 $000 $000 $000
---------------------------- -------- -------- --------- --------- --------- --------
Borrowings (5,028) (1,513) (9,240) (6,755) (14,268) (8,268)
Cash and cash equivalents - - 2,296 887 2,296 887
Convertible bond liability (748) (931) - - (748) (931)
Total (5,776) (2,444) (6,944) (5,868) (12,720) (8,312)
---------------------------- -------- -------- --------- --------- --------- --------
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:
2021
2022 2022 2021 Maximum
Carrying Value Maximum Exposure Carrying Value Exposure
$000 $000 $000 $000
----------------------------- ---------------- ------------------ ---------------- ----------
Cash and cash equivalents 2,296 2,296 887 887
Trade and other receivables 4,701 4,701 2,232 2,232
-------------------------------- ---------------- ------------------ ---------------- ----------
Total 6,997 6,997 3,119 3,119
-------------------------------- ---------------- ------------------ ---------------- ----------
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 2022 or 1
January 2023 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 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 2022 and 31
December 2021 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
2022
---------------------- ---------- --------- ---------- --------- -------- -------
Expected loss rate 67.40% 0% 0% 0% 0% 12,84%
---------------------- ---------- --------- ---------- --------- -------- -------
Gross carrying amount
- trade receivables 997 425 1,531 1,151 1,159 5,233
---------------------- ---------- --------- ---------- --------- -------- -------
Loss allowance (672) - - - - (672)
---------------------- ---------- --------- ---------- --------- -------- -------
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)
---------------------- ---------- --------- ---------- --------- -------- -------
The closing loss allowances for trade receivables and contract
assets as at 31 December reconcile to the opening loss allowances
as follows:
2022 2021
$000 $000
Opening loss allowance at 1 January 155 216
Increase in loss allowance recognised 558 -
in profit and loss during the year
Receivables written off during the year
as uncollectible (43) (61)
----------------------------------------- ----- -----
Closing loss allowance at 31 December 670 155
----------------------------------------- ----- -----
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:
2022 2021
$000 $000
--------------------------- ------ -----
Cash and cash equivalents
GBP 16 4
EUR 572 67
DKK 1 17
CFA 271 72
MZN 14 2
USD 1,422 725
Total 2,296 887
----------------------------- ------ -----
The table below summarises the impact of a 10% increase in the
relevant foreign exchange rates versus the US Dollar rate, on the
Group's pre-tax profit for the year and on equity:
2022 2021 2022 2021
Income Statement Income Statement Equity Equity
--------------------------- ----------------- ----------------- ------- --------
Impact of 10% rate change $000 $000 $000 $000
--------------------------- ----------------- ----------------- ------- --------
Cash and cash equivalents (33) (1) (33) (1)
--------------------------- ----------------- ----------------- ------- --------
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.
2022 2021
$000 $000
-------------- ------ -----
Cash at bank 2,296 887
--------------- ------ -----
ContracTual maturity analysis
The Group has assessed the contractual maturity analysis as
follows:
2022 0-3 months 3-12 months 1 - 5 years Total
$000 $000 $000 $000
------------------------------ ------------- -------------- -------------- ---------
Assets by contractual
maturity
t rade and other receivables 1,263 5,067 - 6,330
C ash and cash equivalents 2,296 - - 2,296
------------------------------ ------------- -------------- -------------- ---------
3,559 5,067 - 8,626
Liabilities by contractual maturity
Trade and other payables (2,884) (664) - (3,548)
Borrowings - (8,603) (5,665) (14,268)
Convertible bond liability - (748) - (748)
(2,884) (10,015) (5,665) (18,564)
Net liabilities by
contractual maturity 675 (4,595) (5,665) (9,585)
------------------------------ ------------- -------------- -------------- ---------
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)
------------------------------ ------------- -------------- -------------- ---------
15. TRADE AND OTHER PAYABLES
2022 2021
$000 $000
--------------------------------------------- ------ ------
Trade payables 1,213 1,275
Accruals 309 680
Contract liabilities (prepayments received) 892 1,643
Current tax payable 190 69
Other payables 920 340
Debt due to concession holders 23 71
---------------------------------------------- ------ ------
3,547 4,078
--------------------------------------------- ------ ------
The directors consider that the carrying amount of trade and
other payables approximates to their fair value.
16. BORROWINGS
2022 2021
$000 $000
-------------------------- ------- ------
Non-Current liabilities
Business loans 1,757 1,282
Working capital facility 3,908 1,616
5,665 2,898
Current liabilities
Business loans 888 1,250
Bank overdraft 196 128
Working capital facility 7,519 3,991
8,603 5,369
-------------------------- ------- ------
Total borrowings 14,268 8,267
--------------------------- ------- ------
As at 31 December 2022 the trading division had the following
outstanding borrowings:
Business loan with a Danish bank that amounted to $1 million
(2021: $1.1 million). The business loan carries an interest rate of
4%. The purpose of the loan is for financing timber trades.
Working capital facilities with Danish banks amounted to $8.2
million (2021: $5.6 million). These facilities carry interest at
rates 4.65% and 8.45%. One of the facilities, for $6 million, has
been included in current liabilities: this is a revolving facility
with no maturity date. At the year end there was no indication from
the credit provider that the facility would be terminated, but on
19 April 2023, notice was received and as such, the Company has
classified and disclosed it as being a current liability (see Note
24).
As at 31 December 2022 the forestry division had the following
outstanding borrowings:
Business loans with a Gabonese bank that amounted to $1.6
million (2021: $1.4 million). These loans carry an interest rate of
between 13% and 14%. A bank overdraft with a Gabonese bank amounted
to $0.2 million (2021: $0.1 million) and carries an interest rate
of 10%. The purpose of the loans is for operational asset
financing.
During the year the Group drew down $2 million from a general
purpose two-year working capital facility with Rhino Ventures
Limited, a shareholder. The facility amounted to $2.2 million as at
31 December 2022 and carried interest at 8.5%. The Group also drew
down $1 million from an additional short-term working capital
facility with Lombard Odier, a shareholder. The facility amounted
to $1 million as at 31 December 2022 and carried interest at
8.5%.
Woodbois Limited signed a parent guarantee to a maximum of $2
million to a Gabonese bank.
The Group has also signed security in favour of Danish banks to
the value of $5.5 million.
The contractual maturity of borrowings has been assessed in Note
14.
The Group had undrawn facilities available at 31 December 2022
that amounted to $0.1 million (2021: $0.1million).
17. CONVERTIBLE BONDS
2022 2021
$000 $000
------------------------------------- ----- -----
Convertible bonds: Liability
component 748 931
Convertible bonds: Equity component 24 52
-------------------------------------- ----- -----
Total 772 983
-------------------------------------- ----- -----
Convertible bond liability 477 741
Amortised interest 271 190
-------------------------------------- ----- -----
Total 748 931
-------------------------------------- ----- -----
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 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
Shares issued 7,871,820 97
AT 31 DECEMBER 2022 2,489,988,873 32,625
----------------------------------- -------------- ----------
Voting 2,254,988,873
----------------------------------- -------------- ----------
Non-Voting 235,000,000
----------------------------------- -------------- ----------
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 2022 a total of 390,000,000 Non-Voting Ordinary Shares
have been converted into Voting Ordinary Shares.
During June 2022 the Company converted $293,591 of 2023 0%
Convertible Bonds 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.
During August 2022 the Company issued 2,000,000 New-Voting
Ordinary Shares following the exercise of options under the
Company's Share Option Plan
19. SHARE PREMIUM ACCOUNT
2022 2021
$000 $000
------------------------- ------- -------
AT 1 JANUARY 65,254 58,609
Shares issued (note 18) 295 6,645
AT 31 DECEMBER 65,549 65,254
------------------------- ------- -------
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
2022 2021
$000 $000
---------------- ----- -----
AT 1 JANUARY 130 132
Movement - (2)
AT 31 DECEMBER 130 130
---------------- ----- -----
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 2022.
21. SHARE BASED PAYMENT/LONG-TERM INCENTIVES
The Group operates two share option plans, under which certain
directors, key employees and consultants 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 2022 totalled
112.0m shares under the Share Option Scheme: these were issued as
of 6 August 2020 and are exercisable at 2p per share. The vesting
of the awards is substantially geared towards material improvement
in both operating results and share price appreciation.
On the 1(st) of March 2022, the Company issued LTIP's (long-term
incentive plan) to its directors and key employees of which 38m
were in issue at 31 December 2022. The fair value of these LTIP's
as at the grant date was determined by an independent specialist in
financial valuations.
19m of the granted LTIP's are subject to TSR (Total Shareholder
Return) linked criteria and were valued using a Monte Carlo
simulation. 19m 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.
1. The key terms and conditions related to the LTIP's are as
follows:
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 38m 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 38m 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%).
Each of Paul Dolan, Carnel Geddes and Hadi Ghossein, Executive
Directors, were awarded 4,000,000 LTIP's and these were outstanding
as of 31 December 2022.
2. The key terms and conditions related to the Share Options are
as follows:
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
57.25 million of the granted share options are subject to TSR
(Total Shareholder Return) linked criteria and were valued using a
Monte Carlo simulation. 57.25 million share options are subject to
EBITDA-linked criteria and were valued using a Black Scholes Option
Pricing Model. The fair value of the 10m Share Options which are
not subject to performance criteria were valued using a Black
Scholes Option Pricing Model. Only market conditions have been
considered in estimating the fair value of the LTIP's.
The table below shows the input ranges for the assumptions used
in the valuation models:
Fair value at grant date GBP0.0097 - GBP0,0104
Exercise price GBP0.02
Share price at grant date GBP0.0215
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 total Share Options and LTIP's 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 38,000,000 1p
------------------------------------------ ------------- ---------------
Exercised during the financial year (Note
18) (2,000,000) 2p
------------------------------------------ ------------- ---------------
As at 31 December 2022 150,000,000 1.75p
------------------------------------------ ------------- ---------------
The following charge has been recognised in the current
financial year:
2022 2021
$000 $000
--------------------------------- ---- -----
AT 1 JANUARY 435 968
Reserve transfer for forfeitures - (766)
Share options exercised (51) -
Share based payment expense 418 233
--------------------------------- ---- -----
AT 31 DECEMBER 802 435
--------------------------------- ---- -----
22. Reclassification of foreign currency translation differences
on deregistered entities
The Group formally completed the deregistration of three dormant
entities located in Tanzania. These three entities include Wami
Agriculture Co. Limited, Magole Agriculture Limited and Milama
processing Company Limited. As required by IFRS, the Group
reclassified the foreign currency translation differences that
arose on historical consolidation of those entities ($1.5 million)
from the FCTR (equity) to profit or loss.
23. RELATED PARTY TRANSACTIONS AND Related party balances
related party balances
2022 2021
$000 $000
---------------------------------------------- ------- -----
Loan from Rhino Ventures (2,162) -
Loan from Lombard Odier (1,022) -
Amount due to H. Ghossein, a director - (340)
Contingent acquisition liability due to H.
Ghossein, a director re purchase of WoodBois
International ApS in 2017 - (250)
AT 31 DECEMBER (3,184) (590)
---------------------------------------------- ------- -----
40,000,000 warrants were issued to Lombard Odier in January
2019, exercisable at 8p before 1 April 2023.
Trading transactions
During the year the Group companies entered into the following
transactions with related parties:
2022 2022 2021 2021
Transactions Transactions
in year Balance at 31 December in year Balance at 31 December
$000 $000 $000 $000
--------------------------------- -------------------------- ------------- ------------------------
Loans to subsidiary undertakings 14,364 17,304 11,985 2,940
---------------------------------- ------------ ------------ ------------- ------------------------
Transactions with key management personnel
The Group's key management personnel comprised the
following:
2022 Short-term employment benefits
Salaries, fees & national insurance contributions Benefits Total
$000 $000 $000
----------------------------------------- -------------------------------------------------- --------- ------
Directors
P Dolan 200 - 200
H Ghossein * 190 38 228
F Tonetti (Resigned 16 April 2022) 100 1 100
C Geddes ** 200 - 200
G Thomson 62 - 62
D Rothschild 50 - 50
H Turcan *** (Resigned 17 October 2022) - - -
802 39 841
----------------------------------------- -------------------------------------------------- --------- ------
*Excludes deferred acquisition payments made during the year
(NOTE 23)
** Paid through a service company
*** H Turcan was a representative of Lombard Odier and received
no fee.
All of the above directors' remunerations exclude national
insurance contributed by the employer.
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 *** - - -
767 43 810
------------------ ---------------------------------------------------------------- ----------- -------
*Excludes deferred acquisition payments made during the year directly to or to companies owned
and controlled by H Ghossein ($0.25m).
** Paid through service companies
*** H Turcan was a representative of Lombard Odier and received no fees.
All of the above directors' remunerations exclude national insurance contributed by the employer.
24. Events occurring after the reporting date
-- Treasury shares
In January 2023 following a final adjustment in relation to the
2017 purchase of Woodbois International Aps, the Company has
received approximately 19 million ordinary voting shares which have
been taken into Treasury.
-- GBP3 million placing and appointment of Joint Broker
On 13 March 2023 the Company announced a placing of 250 million
Ordinary Voting Shares, of 1p each, generating net proceeds of
GBP2.85 million (approximately $3.4 million). The placing price was
1.2p per New Ordinary Share.
Novum Securities Limited acted as broker and placing agent in
respect of the fundraise which was to new institutional and other
investors. The placing shares represent 10 per cent of the existing
issued Ordinary Share Capital of the Company prior to the
fundraise. Proceeds of the Placing will be used for general working
capital purposes.
Following admission, the Company's total number of Ordinary
Shares in issue will become 2,739,988,873 and this will consisted
of 2,485,850,726 Voting Ordinary Shares, 19,138,147 Treasury Shares
and 235,000,000 Non-Voting Ordinary Shares.
On 11 April 2023, the Company announced that it had been
conditionally awarded the first 40-year land lease for a voluntary
carbon credit afforestation project of up to 50,000 hectares by the
Gabonese government. On completion, expected in the coming months,
the Company will commence a 4-year, 2,000 hectare pilot programme
to demonstrate the reforestation potential of the land. The project
will be designed to deliver high quality carbon and biodiversity
credits. The Company estimates that the project has the potential
to generate more than 30 million carbon credits over its 40-year
life cycle with the expectation that the first credits are to be
issued in 2028. The Gabonese government will be entitled to 20% of
the carbon credits generated over the lifetime of the project.
External funding will be needed for the pilot programme which is
estimated to cost $5m. The Company is currently examining a number
of possible funding possibilities for this project and the optimum
funding structure thereof.
-- Repayment of Lombard Odier loan
On 11 April 2023, the Company repaid $0.3m capital plus interest
of the loan owing to Lombard Odier (see note 16). The balance
($0.7m capital plus interest) is due to be paid in full during June
2023.
-- Termination of $6m working capital facility
On 19 April 2023, the Company announced that Woodgroup Aps, a
wholly owned subsidiary of the Company, had received a notice from
a Danish bank, that it was terminating a $6 million debt facility.
The $6m facility was fully utilised and had an ancillary account
with a cash balance of $3.1 million. The bank had a floating charge
against the assets of Woodgroup ApS and have offset this $3.1
million in partial repayment of the facility. The reason cited by
the bank for terminating the facility was that Woodgroup ApS
generated a loss in Q1 2023. The bank believed that, as a
consequence, the circumstances of Woodgroup ApS have changed
significantly to their detriment. Management did not agree with the
bank's conclusion and, whilst acknowledging the poor performance in
Q1, believed the Company had been well placed to deliver a very
positive performance for the remainder of the year. As part of the
notice the bank also requested that Woodgroup ApS present a plan
for the repayment of the outstanding $2.9 million of the Facility.
As reported by the Company on 6 June 2023, the Company has reached
an agreement with Sydbank under which the outstanding balance of
c.$2.8m will be repaid by no later than 29 December 2023. The
Company has undertaken to repay approximately $145k on each of 15
June and 30 June 2023. Thereafter a further $145k is to be paid in
the middle of each subsequent month with any additional lump sums
being paid to ensure repayment of the total outstanding balance and
interest by the final repayment date. There are also financial
incentives in place if the Group settles the outstanding balance
earlier in the year. Existing security arrangements, per the
original loan facility agreement, will remain in place until the
line of credit is fully settled.
-- Refinancing
Since the termination of the above line of credit by the bank,
the Company has had to operate with an emphasis on cash realisation
and limiting new liabilities.
The Company continues to assess alternative funding sources and
will update the market in due course once any such agreement has
been reached. The Company is also working on the potential
deferment of c.$1.5m of debts, which fall due at the end of June.
Whilst the Directors are confident that the Company will obtain
alternative funding in the coming weeks, should they fail to do so,
the Company may be reliant on the deferment of these near-term
creditors in order to continue to trade. The Company has convened a
General Meeting to be held on 16 June 2023 for shareholders to vote
on resolutions that will provide the Company with important
flexibility to issue ordinary shares quickly, if it is considered
to be in the best interests of stakeholders.
The circular convening the General Meeting set out that a
further result of the termination, the Company's share price has
fallen below its nominal value of 1p. As the Company's Articles of
Association prohibit the issuance of shares at a discount to
nominal value, there is a need to re-designate the nominal value.
The directors have proposed a resolution to reduce the nominal
value of the ordinary shares of the Company, but with no change to
the number of ordinary shares in issue, as well as resolutions for
the renewal and widening of the waiver of pre-emptive rights to
enable the company to meet the exceptional circumstances set out
above.
The Company has u rged shareholders to vote in favour of all
resolutions.
25. ULTIMATE PARENT COMPANY
At 31 December 2022, the directors do not believe that there was
an ultimate controlling party.
[1] Non-IFRS measure. Earnings before interest, tax,
depreciation, amortization, share based payments & other
non-cash items. Please see financial review for EBITDAS
reconciliation
[2] According to valuation principles as required by
International Accounting Standards 41 ("IAS41"), see note 11
[3] Earnings before interest, tax, depreciation, amortization,
share based payments and other non-cash items
[4] Foreign currency translation differences
[5] Cash, plus Inventory, plus Receivables, less Trade
Payables.
[6] Issued Share Capital of 2,490m shares comprises of 2,255m
Voting Shares and 235m Non-Voting Shares.
[7] Paid in GBP at a fixed rate of GBP150,000 pa
[8] C Geddes services are provided through a service company,
Pomona
[9] No fees are paid directly to Henry Turcan or Lombard Odier
for his services
[10] Foreign currency translation reserve
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END
FR SSMFUAEDSEFM
(END) Dow Jones Newswires
June 09, 2023 02:00 ET (06:00 GMT)
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