REG - Woodbois Limited - Audited results for FY 2021
01/04/2022 07:00
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RNS Number : 9162G Woodbois Limited 01 April 2022
1 April 2022
Woodbois Limited
("Woodbois", the "Group" or the "Company")
Audited results for FY 2021
Woodbois, the African focused sustainable forestry, reforestation, carbon
sequestration and timber trading company, announces its audited results for
the full year ended 31 December 2021.
Highlights
· Turnover increased by 14% to $17.5m (2020: $15.3m) despite
continued disruption to shipping
· Gross profit increased by 186% to $3.5m vs $1.2m in FY 2020
· Significant gross profit margin increase to 20%, up from 8% in FY
2020
· First year of positive EBITDAS* of $1.0m (2020: loss $1.7m)
· Sawmill capacity in Gabon increased to 30,000m3 output per annum
· Acquisition of additional 71,000 hectares of forestry concession
land in Gabon
· Q1 2022 ahead of Q1 2021 despite continued shipping challenges:
confident of meeting planned growth
Commenting on today's announcement Executive Chair Paul Dolan said:
"These results clearly demonstrate the progress achieved by the Group during
2021. Turning EBITDAS positive was another milestone on our growth pathway.
Increases in factory capacity and total forestry concession hectarage
delivered during 2021 and into 2022 have positioned the Group for continued
growth in revenues and profitability. Further capital investment is planned to
continue our expansion in 2023.
The Company is now better positioned than ever to deliver faster growth and
higher levels of profitability once outside factors, most notably shipping,
allow."
*Non-IFRS measure, please see financial review for EBITDAS reconciliation
Enquiries:
Woodbois Limited
Paul Dolan - Executive Chair + 44 (0)20 7099 1940
Federico Tonetti - CEO
Carnel Geddes - Chief Financial Officer
Canaccord Genuity (Nominated Advisor and Broker) + 44 (0)20 7523 8000
Henry Fitzgerald-O'Connor
James Asensio
Thomas Diehl
Celicourt Communications (IR/PR) +44 (0)20 8434 2643
Mark Antelme woodbois@celicourt.uk (mailto:woodbois@celicourt.uk)
Jimmy Lea
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 which forms part of UK law by virtue of the
European Union (Withdrawal) Act 2018 ("MAR").
Non-IFRS measures
The Company uses certain measures to assess the financial performance of the
company. These terms may be defined as "non-IFRS measures" as they exclude
amounts that are included in, or include amounts that are excluded from, the
most directly comparable measure calculated and presented in accordance with
IFRS. They also may not be calculated using financial measures that are in
accordance with IFRS. These non-IFRS measures include the Company's EBITDAS.
The Company uses such measures to measure and monitor performance and
liquidity, in presentations to the Board and as a basis for strategic planning
and forecasting. The directors believe that these and similar measures are
used widely by market participants, stakeholders, and other interested parties
as supplemental measures of performance and liquidity.
The non-IFRS measures may not be directly comparable to other similarly titled
measures used by other companies and may have limited use as an analytical
tool. This should not be considered in isolation or as a substitute for
analysis of the Company's operating results as reported under IFRS.
The Company does not regard these non-IFRS measures as a substitute for, or
superior to, the equivalent measures calculated and presented in accordance
with IFRS or those calculated using financial measures that are calculated in
accordance with IFRS.
STRATEGIC REPORT
Executive Chair and CEO Statement
Dear Shareholder,
Following another year of solid, demonstrable progress for the Group, and
particularly given the Covid-dominated macro-economic backdrop of the last two
years, we are delighted to present Woodbois' 2021 annual report. Investors and
other stakeholders will be aware that our Company is driven by both purpose
and profit and while we have consistently delivered on our social and
environmental purpose, achieving our first year of positive EBITDAS 1 in 2021
was a watershed moment and one in which all of our employees can take pride.
Assuming that shipping patterns normalise we are very optimistic for further
progress in 2022.
2021 Business performance
The Company improved on all measures of financial performance in 2021,
increasing turnover by 14% and making significant progress with a more than
doubling of gross profit margins, a near trebling of gross profit and a
first-ever positive EBITDAS. As the report below from our CFO, Carnel Geddes,
spells out, 2021 also saw material improvement in the Company's balance sheet
as well as enhanced capacity, efficiency and margins throughout its
operations. In common with most export companies, volumes shipped during 2021
were constrained by world-wide port congestion and difficulties in accessing
empty containers which impacted our cash generation and working capital,
particularly in Q4.
The Group continued the roll-out of its strategic plan during 2021 with
capacity at the sawmill in Mouila, Gabon almost doubling to 30,000m3 of annual
sawn timber output. Value-adding capital projects have continued into 2022
with capacity at our veneer factory in Mouila, Gabon expected to more than
double to an annualised output of 15,000m3. Significant challenges, most
notably the ability to receive machine parts by sea freight, have delayed
completion of this installation: full commissioning is expected to be
completed by June 2022. The acquisition of an additional 71,000 hectares (of
which 56,000 hectares has an existing approved management plan in place for
harvesting) of valuable forestry concession land in Gabon during 2021 will
more than satisfy the additional raw material input requirements of these
expanded production facilities.
This focused investment has added significant value to the Company's
portfolio, providing protection against the elevated input costs being
experienced by industry players who don't have access to their own supply of
raw material and positioning us to benefit from a very strong timber market.
Our fourth annual sustainability report expanded its scope to align with the
Integrated Reporting (IR) model: this aims to offer further transparency and
connects different parts of the business to provide a broader view of how
Woodbois creates and preserves value. We aim to regenerate our forests,
provide employment opportunities, enhance our communities and be a model
organisation. The benefits of creating a culture in which all employees are
actively encouraged to contribute to enhancing workplace safety and production
efficiency are borne out in the Company's results. Also, we are grateful to
those investors and stakeholders who offered their views and feedback with
regards to content and framework of the report. We have continued on the path
to full FSC certification and are more than 50% completed and also are
committing to be carbon neutral in our operations no later than 2035.
Impact of War in Ukraine
Our thoughts are of course with all of those suffering as a result of the war
and we hope for a speedy, peaceful resolution. Apart from currency
volatility and an increase in fuel prices, the Group has not experienced any
impact as a result of Russia's invasion of Ukraine.
As a result of sanctions instituted against Russia, some shipping companies
are reducing their level of service to Russian routes and will re-allocate
services to alternative routes, potentially benefiting African exporters.
Sanctions on exports from Russia include forestry products, further reducing
supply of timber to some markets and possibly impacting pricing accordingly.
Strategic initiatives
Delivery of the Company's comprehensive growth and sustainability agenda will
clearly require enhanced organisational capability, which remains a key area
of focus for both our Executive Chair and CEO as the Group evolves. Since
joining Woodbois in November 2021, in line with his background, Federico
Tonetti (CEO) has taken responsibility for operations and cash generation,
allowing Paul Dolan (Executive Chair) to shift his attention towards a
strategic focus on the many and varied requirements for building-out a purpose
driven, market-leader in the sustainable timber products space.
As we scale the business, increasing industry awareness of the Woodbois brand
globally becomes an increasingly important objective. Our sales team has
recently experienced its highest ever levels of interest on our stand at the
Dubai WoodShow, and within the next two months the team will be well
represented in the US at the World of Wood convention in Orlando in April),
and in Europe (at the Eurobois convention in Lyon, France in June). While Asia
in general and China in particular, could easily absorb all of our production,
the logistical challenges experienced over the last two years have served to
underscore the importance of building a geographically diversified customer
base to ensure maximum flexibility at both ends of our value chain.
Higher value-added product mix remains a key strategic objective with our next
major capital project being the installation of a third, larger veneer line
during 2023 to take veneer capacity to 30,000m3. We have also targeted smaller
margin-enhancing projects designed to maximise utilisation of raw material and
minimise waste. Economies of scale and continuous process improvement will be
important components of our transition to becoming a consistently cash
generative business.
We see value in further expanding the total concession area under management
in the Congo basin and in other attractive African locations. This remains a
longer-term strategic priority as we look to add further profitable capacity
and to geographically diversify our source of supply and export routes. A
strategic review of our Mozambique assets is underway, given the continuing
challenges there.
The Board
In line with the Company's commitment to enhance its corporate governance
framework, in November 2021 the role of Chair and CEO was split, with the
arrival of Federico Tonetti as CEO, Paul Dolan moving to the role of Executive
Chair and with the appointment, also in November, of David Rothschild as an
Independent Non-Executive Director and member of the Audit, Remuneration and
Nominations Committees.
Federico Tonetti is a highly experienced senior executive, with a track record
of delivering business model transformation and operational optimisation for
multinational enterprises. Most recently, Federico was the Group Safety &
Sustainability Director of Compass Group PLC, the largest contract
food-service company in the world and a constituent of the FTSE100. Prior to
this, he was the Country CEO for LafargeHolcim, a global leader in building
materials and solutions, in Poland, and before this held other senior
positions within Lafarge. Federico also worked as a Strategy Consultant for
Bain and Company.
Prior to formally joining, Federico completed a three-month strategic review
of the business, with his resulting growth agenda being formally approved by
the Board. Having advised international corporations on their sustainability
strategies and given our ability to help organisations achieve their carbon
reduction objectives, Federico's ESG credentials as well as his strong
operational background made him an ideal steward to deliver on ambitious
growth targets and long-term value creation for all stakeholders.
David Rothschild has a wide range of experience in growing businesses and
improving their performance as a senior manager and adviser. He has been
active in the African resource and agricultural sectors over the past 20
years, including as co-developer of a Liberian green-field sustainable palm
oil operation, and as advisor on environmental and social action planning. He
has also been actively involved in governmental and NGO relations and was an
early Steering Committee Member of the High Carbon Stock Approach Group, which
ensures responsible development. A French speaker with over 40 years
experience in international business, including six years at the consultancy,
McKinsey & Co, he is a dual national of the USA and South Africa and holds
both B.Com and MBA degrees.
The strengthening of the Board, as well as new executive hires, will help the
Group achieve its growth and other ambitions.
Carbon
Accreditation by the Government of Gabon for Woodbois to attend COP26 was an
honour. It provided an opportunity for Board members and our senior leadership
team to take part in high level discussions on climate change with key
stakeholders while promoting the role that Woodbois can play in supporting
host countries and international businesses in achieving their pledges via our
nature-based solutions offering.
We have subsequently submitted a formal application, together with a
comprehensive independent feasibility study, to the Gabonese Government,
detailing a plan for a large-scale afforestation project in the country with
an associated pilot-planting project which, if successful, is intended would
start during 2022.
Following the many net-zero commitments made at COP26 and subsequently, the
Company foresees expansion and growth in global carbon trading markets,
increasing carbon-related costs for carbon emitters and significant growth in
demand for offsetting nature-based carbon sequestration projects as being
inevitable. Securing our own supply of carbon credits via the implementation
of large-scale nature-based projects remains a fundamental strategic
objective.
Looking forward
The Board sees significant value in Woodbois' proposition of both growing a
cash-generative, purpose-driven sustainable forestry business with highly
favourable demand/supply dynamics, and leading large-scale nature-based carbon
sequestration initiatives. We will continue to position the Company
accordingly.
We are reluctant to predict the timing of any normalisation in the global
shipping sector given our experience over the last two years. Our plans for
2022 therefore factor in on-going supply-chain disruption, with growth,
although substantial, being at a slower rate than the Company's full potential
might otherwise indicate. Whilst our first quarter 2022 was affected by
continuing shipping challenges it was nonetheless ahead of 2021 so we are
confident of meeting our planned growth.
We trust that all stakeholders will draw comfort however from the improvement
in performance during 2021. Your management team is highly incentivised to
deliver more, in particular the consistent generation of positive cash-flow to
help drive our growth and, when expedient, to permit payment of dividends.
With a talented, diverse, motivated team, enhanced manufacturing facilities
and strengthened board and balance sheet, the Company is better positioned
than ever to deliver faster growth and higher levels of profitability once
outside factors, most notably shipping, allow.
Paul Dolan and Federico Tonetti
Executive Chair and CEO
1 April 2022
CHIEF FINANCIAL OFFICER'S REPORT
Summary reflections on 2021
The outturn for 2021 was characterised by strong operational progress but
constrained by sustained worldwide shipping dislocation, limited container
availability and Covid-related disruption. Despite the difficulties, the
Company is proud to deliver its first positive EBITDAS2 (#_ftn2) of $1.0m
(2020: loss $1.7m) as set out in the table below, as well as to have
increased revenues by 14% and gross profit by 186% year on year. 2021 saw a
gross profit margin rise to 20%, more than double the margin of 8% realised in
2020. In terms of segment contribution, our own production sales generated a
margin of 30% in 2021 v 24% in 2020 and Trading of 3(rd) party products
generated a margin of 11% in 2021 v 2% in 2020.
Year ended 31 December 2021 Year ended 31 December 2020
$000 $000
Profit/(loss) before taxation from continuing operations 90,702 (4,199)
Add back fair value gain on biological assets (4,253) (9,515)
Add back finance costs 591 2,820
Add back gain on bargain purchase (88,292) -
Add back share based payment expense 233 200
Add back loss owing to theft - 3,403
Add back loss on financial restructure - 1,487
Add back contingent acquisition expense - 2,171
Add back depreciation and amortisation 326 778
Add back depreciation in Cost of Sales 1,737 1,165
EBITDAS 1,044 (1,690)
In 2021 the Group also secured 71,000 hectares of additional high quality,
virgin forest in Gabon, giving rise to an accounting Gain on Bargain Purchase
of $88 million. Through this acquisition, the Company now has access to
sufficient raw material to deliver on its near-term growth aspirations for its
Forestry Division. The funding of this purchase, the investment to increase
our production capacity (to keep up with the increased availability of raw
materials) and the launch of our Carbon Solutions division in 2021 was made
possible as a result of a fundraise of gross $8.5m completed in May 2021. We
would like to thank the existing and new shareholders for their support in
making this fundraise a success.
2021 Financial performance review
The prolonged impact of COVID-19 related disruptions, especially in the
logistics chain, made 2021 another challenging year, but I am pleased to
report that we achieved, following a necessary revision halfway through the
year, our revenue and EBITDAS targets. Our first year of positive EBITDAS was
achieved despite the widespread challenges.
In terms of the hard numbers, Revenue increased by 14% to $17.5 million in
2021 (2020: $15.3 million). Gross Profit was up 186% to $3.5 million
compared to $1.2 million in 2020 reflecting the benefits of the investments
made in recent periods, improved productivity, as well as economies of
scale. Gross profit margin rose to 20%, more than double the 8% realised for
the full year 2020. As expected, finance charges reduced by 79% to $0.6
million compared to $2.8 million in 2020 reflecting lower debt and we booked a
Foreign exchange gain of $0.8 million (2020: gain $1.3 million).
We recorded a gross fair value gain of $4.3 million (2020: gain $9.5 million)
on biological assets in 2021. The stable political conditions in Gabon,
coupled with consistently achieving better prices than in 2019 and 2020 for
the species in our concessions have prompted us to revalue upwards, the
biological assets in that geography by $26.9 million (net of deferred tax).
However, although the continued unrest in the Northern part of Mozambique has
not affected the business, we have written down the value of the biological
assets in that geography by $23.2 million as a result of lower forecast
maximum permitted harvest rates. We continue to plan for improving our overall
activity levels in that geography in 2022. Our Gabonese concessions now
account for 88% of our total biological assets of $336.8 million (see note 11
for more details).
Revenues from own production increased by 83% from $4.4 million in 2020 to
$8.0 million in 2021 and generated a gross margin of 24% in 2020 vs 30% in
2021. Third party Trading revenues decreased by 13% from $10.9 million in 2020
to $9.5 million in 2021, however gross margin increased from 2% in 2020 to 11%
in 2021. Own production sales represented 29% of total sales in 2020 vs 46%
in 2021. The higher margins achieved in each division in 2021, together with
the change in divisional sales mix, resulted in an increase of overall margin
from 8% in 2020 to 20% in 2021. See note 2 for further information.
The non-cash gain from bargain purchase arises due to the difference in
accounting frameworks applied by the Company and LGFIB, the Gabonese company
it acquired. Specifically, the difference relates to the measurement of
Biological Assets. The Company applies IFRS which stipulates that acquired
assets and liabilities be recognised, at the date of acquisition, at its fair
value. LGFIB, who applied Gabonese accounting standards, does not carry
Biological Assets on its Balance Sheet, but instead expensed the cost of
acquiring it over time and no fair value assessment is made for accounting
purposes. The Company applied IAS 41 when determining the Fair Value of the
Biological Assets acquired. Further information on the inputs to the
valuation is set out in Note 11. In addition to the effect of the different
accounting standards applied, the previous owner's financial position, their
inability to acquire finance to operate the asset and the threat of
potentially losing it due to non-operation together with the quick exit and
certainty of being paid offered by WoodBois contributed to the gain realised
(see note 5).
Cash and working capital
In 2021 the Company's continuous cost improvement project focussed primarily
on our operating cost structure and making it as flexible as possible given
the expected impact of disruption due to COVID-19, specifically the impact on
our ability to harvest, run more than one production shift per day and on
shipping and logistics. Our contingency plans and quick reaction when needed
resulted in a cost reduction of 16% in operating costs while increasing sawn
timber production by 84% year on year and veneer production by 78% year on
year. Our administration expenses increased by $0.3 million in 2021 compared
to 2020 owing to the increased cost base related to our new Carbon Solutions
Division and the senior hires made during the year.
Although not yet cash flow positive, we managed to reduce our cash outflow
from operating activities to $2.5 million from outflows of $5.5 million in
2020 and $10.6 million in 2019. Our largest items of investment were the
acquisition of the additional forest ($1.5 million of which $1.1 million had
been paid by year end) and the additional investment in harvesting and
production plant and machinery ($4.3 million). Our year end 2021 cash of $0.9
million compared with $2.6 million at the end of 2020.
At the end of 2021 the Group's receivables and inventory were $10.8 million
(2020: $8.7 million), whilst payables and similar were $4.5 million (2020:
$4.5 million). Total borrowings (excluding the convertible bond) reduced from
$8.7 million in 2020 to $8.3 million at the end of 2021. Of this $5.4 million
(2020: $6.2 million) was classified as current. As explained in note 16,
$3.2 million of this is a revolving facility with a Danish bank with no
specified maturity date and which, although there is no expectation it will
need to be repaid in 2022, has nonetheless been classified as a current
liability, consistent with the prior year. Net working capital was $2.0
million, up from $0.7 million in 2020.
Net Assets
The Company significantly increased net assets year-on-year, from $156.8
million in 2020 to $258.4 million, largely due to the revaluation of our
properties in Gabon and the purchase of LGFIB.
During the first half of 2021 a total of 326 million Non-Voting Ordinary
Shares have been converted into Voting Ordinary Shares.
On 17 May 2021, the Company completed a fundraise. As a result, 100 million
Voting Ordinary shares were admitted for trading on AIM at a price of 6 pence
per ordinary share (the "Placing Price"). At 31 December 2021 the Group's
share capital of 2,482 million ordinary shares, was comprised of 1,857 million
Voting Shares and 625 million Non-Voting Shares.
As set out more fully in the Directors' report, the Independent Auditor's
Report and in Note 1 of the financial statements, the Company continues to
adopt the going concern basis in the preparation of this Annual Report and at
the date of this report.
Looking ahead to 2022
The Company is primed to deliver on its growth aspirations and remains
confident of materially increasing revenues and profitability during 2022,
subject to shipping and container availability. The frustration,
specifically with regards to uncertainty of cash generation and timing that
these shipping and logistics constraints had put on the business in 2021 is
expected to continue, at least in the first half of 2022. To weather near term
cash needs caused by these disruptions, in January 2022 the Company put in
place short- and medium-term loan facilities of an aggregate $4 million with
its two largest shareholders. One of these facilities, a two-year
general-purpose facility of $2 million (at 8.5% interest) was fully-drawn in
February 2022, the other is currently undrawn and is conditional on approval
by the lender at the time of drawing. These facilities are intended to
ensure a stronger working capital position as the Company works through the
logistical challenges it faces to deliver inventory to customers, and to
ensure the effects of shipping delays and Covid-related disruption can be more
easily dealt with until that industry normalises. In March 2022 a further
liquidity boost was secured for our trading division through our Danish
banking partners who increased our working capital facility by $2.3 million
and adjusted the interest on that facility down from 2.5% per annum to 2.0%
per annum.
Demand for our products remains high and the resulting price increases
experienced in 2021 largely compensated for the higher logistics costs
experienced. We expect to maintain and modestly improve on this margin
expansion in 2022. Our Capital expenditure projects are expected to complete
during 2022 and we continue towards FSC certification of both of our
production facilities and our forest.
On the 28th of March 2022 our cash balance was $2.7 million, with estimated
net working capital of $10.6 million and interest-bearing bank and other
borrowings of $12.1 million.
As we navigate our way through these challenging times, our focus is strongly
on ensuring that the business becomes cash flow positive.
Carnel Geddes
Chief Financial Officer
1 April 2022
SOCIAL IMPACT AND SUSTAINABILITY
With ESG investments increasing and sustainable forestry management an
increasingly important focal point in the mitigation of deforestation and
climate change, Woodbois remains fully committed to being a leader in terms of
transparency and best practices. Despite the challenges brought on by the
coronavirus pandemic, we were able to keep our team safe in 2021. Woodbois
forest management strategy is designed to ensure the long-term protection of
the forests in which we operate while social and economic benefits as well as
value creation for all stakeholders.
Health and Safety
Though coronavirus lockdowns again reduced shifts and the number of employees
allowed at Woodbois manufacturing sites during 2021, we took this opportunity
to invest in up-skilling and training, with a heavy focus on Health &
Safety. We also implemented continuous improvement initiatives and lean
manufacturing processes with the idea of building a culture where everyone is
encouraged to contribute to enhancing workplace safety and production
efficiency. The impact has been considerable - we have since set consecutive
production records and consider our approach to continuous improvement to be
of a world-class standard.
In 2021, Woodbois was again recognised for its sustainable approach in the
Sustainability Policy Transparency Toolkit ('SPOTT'') ESG policy transparency
assessments for the worldwide timber and pulp industries. In the annual
assessment of operations and approaches to ESG in 2021, Woodbois was ranked
sixth out of more than 100 companies by SPOTT, and highest amongst the public
companies. This was our second year of assessment, and saw the Company move
further up the rankings, reflecting our efforts to improve the standards of
our ESG policies, providing transparency and good governance along with our
sustainability focussed operating model.
Reforestation and Carbon Credits
The opportunity to deliver reforestation projects in Africa, generating carbon
credits for corporates in the Voluntary Carbon Markets adds an additional and
important strand to Woodbois' credentials as a sustainability-focused
company. Photosynthetic carbon capture is amongst the most effective ways
available of limiting and reducing atmospheric CO2 concentrations and our
entry into The Voluntary Carbon Markets will see Woodbois providing a
mechanism for companies to offset their emissions by acquiring credits
provided by our reforestation based carbon sequestration solutions. As well
as making a positive contribution to the global effort to tackle climate
change, we anticipate our entry into reforestation and the provision of carbon
credits through high-quality projects in the Voluntary Carbon Market to make a
positive contribution to biodiversity, local skilling and employment. Woodbois
anticipates that its pilot project will begin during 2022 following approval
by the Gabonese government
FSC Certification
The Company initiated its journey towards FSC Certification in 2021, with the
Programme for the Endorsement of Forest Certification ("PEFC"), the leading
global alliance of national forest certification systems. PEFC is a programme
sponsored by The Central African Forest Commission and KfW, the German
state-owned development bank, who have been providing us with third party
certification support. The Company has completed more than half of the
certification process.
Our Communities
During the pandemic we have continued to support the communities where we
operate through the provision of essential food items. We consider assisting
in the wellbeing of our employees and others in our communities to be of
paramount importance and intend to continue to be a well-regarded corporate
citizen.
Ambitions
Through our various operations we aim to be recognised as one of the
best-in-class ESG companies in the worldwide timber industry. The directors
submit their report on the affairs of the Group, together with the financial
statements and auditor's report for the year ended 31 December 2021.
DIRECTORS' REPORT
PRINCIPAL ACTIVITIES AND CORPORATE DEVELOPMENT
The principal activities of Woodbois Limited ("Woodbois") during 2021,
together with its subsidiaries (the "Group") were forestry and timber trading.
These activities were undertaken through both the Company and its
subsidiaries. The Company is quoted on AIM and is incorporated and domiciled
in Guernsey.
BUSINESS REVIEW
A review of the Group's performance and prospects is included in the Executive
Chair's review.
RESULTS AND DIVIDENDS
The consolidated profit for the year after taxation from continuing operations
attributable to shareholders was $90.1 million (2020: consolidated loss $6.4
million), of which $88.3 million was attributable to the gain on bargain
purchase and $4.3m to the gain on biological assets.
The directors do not recommend payment of an ordinary dividend (2020: $Nil).
SHARE CAPITAL AND FUNDING
Full details of the authorised and issued share capital, together with details
of the movements in the Company's issued share capital during the year are
shown in note 18. The Company has two classes of ordinary shares, which carry
no right to fixed income. One class of ordinary shares carries a right to one
vote at the general meetings of the Company ("Voting"). The other class does
not carry any right to vote at the general meetings of the Company
("Non-Voting").
During the year the Company issued 100m new Ordinary Shares and 326m
Non-Voting shares were converted into Voting Shares. The Company has unlimited
authorised share capital divided into ordinary shares of 1p each, of which
2,482,117,053 had been issued as at 31 December 2021 and at 31 March 2022,
comprised of 1,857,117,053 Voting shares and 625,000,000 Non-Voting shares
POST BALANCE SHEET EVENTS
Please refer to note 23 of the financial statements, in addition to the
Executive Chair and CEO Statement and the CFO's Report for details.
DIRECTORS
The directors, who served during the year and to the date of this report were
as follows:
P Dolan (Executive Chair)
H Ghossein (Deputy Chair)
F (Appointed 8 November 2021) (Chief Executive Officer)
Tonetti
C Geddes (Chief Financial Officer)
G Thomson (Senior Independent Non-Executive Director)
D Rothschild (Appointed 1 November 2021) (Independent Non-Executive Director)
H Turcan (Non-Executive Director)
Directors' indemnity insurance
The Group's policy is to maintain directors and officers insurance and to
indemnify directors against the consequences of actions brought against them
in relation to their duties for the Group.
Directors' interests
Directors' interests in the Voting shares of the Company, including family
interests at 31 December 2021 and at the date of this report were:
Percentage of Voting Shares held Percentage of Voting Shares held Voting Ordinary shares of 1p each Voting Ordinary shares of 1p each
Shareholding 2021 2020 2021 2020
P Dolan 4.06% 5.27% 75,400,032 75,400,032
H Ghossein 1.13% 1.47% 21,075,736 21,075,736
G Thomson 0.07% 0.09% 1,250,000 1,250,000
F Tonetti - - - -
C Geddes - - - -
D Rothschild - - - -
H Turcan - - - -
P Dolan, Executive Chair of Woodbois Limited, held 75,400,032 Voting Shares
(4.06%): 72,517,461 of his Voting Shares in the Company are held through HSBC
Client Holdings Nominee (UK) Limited, with the remainder being held as paper
certificates.
H Turcan is a representative of Lombard Odier which holds 395,540,230 Voting
Shares (21.30%)
Share Options
At the start of 2021 a total of 144.5 million share options were in issue.
During the year a total of 32.5m lapsed. On 8 November 2021 it was announced
that 30.0m Long Term Incentive Plan shares (LTIP's) were intended to be
allocated to F Tonetti, the new CEO and on 1 March 2022 the Company announced
it had issued these and a further 38.0m LTIP's to other Executive Directors
and staff. The vesting of all of the awards is substantially geared towards
material improvement in both operating results and share price appreciation:
these are further described in the Post Balance Sheet note and in the
Remuneration Committee Report.
At the date of this report the share options of the directors were:
Director Total number of Share Options held as at 31 December 2020 (2p exercise price) Number of LTIP's granted on 1 March 2022 at an exercise price of 1p per Share Total number of Shares under option Share Options as a % of Issued Share Capital 2
P Dolan (Executive Chair) 50,000,000 4,000,000 54,000,000 2.18%
F Tonetti (CEO) - 30,000,000 30,000,000 1.21%
C Geddes (CFO) 22,500,000 4,000,000 26,500,000 1.07%
H Ghossein (Deputy Chair) 22,500,000 4,000,000 26,500,000 1.07%
G Thomson (Senior NED) 10,000,000 - 10,000,000 0.40%
The total number of Options in issue at any time under all Company option
schemes will not exceed 10% of the total issued Voting and Non-Voting share
capital.
Directors' remuneration
The audited remuneration of the individual directors who served in the year to
31 December 2021 was:
Salary or fees Benefits Total Total
2021
2020
$000 $000 $000 $000
P Dolan 200 - 200 200
H Ghossein 220 42 262 259
F Tonetti (appointed 8 November 2021) 69 1 70 -
C Geddes 3 200 - 200 200
G Thomson 69 - 69 42
D Rothschild (Appointed 1 November 2021) 9 - 9 -
H Turcan 4 - - - 6
J Hansen (Resigned - 11 April 2020) - - - 92
Z Abbas (Resigned - 11 April 2020) - - - 89
K Milne (Resigned - 29 April 2020) - - - 10
Total 767 43 810 898
All of the above directors' remunerations are considered short term in nature
and exclude national insurance contributed by the employer.
The above table excludes deferred consideration payments made directly to or
to companies owned and controlled by H Ghossein of $0.5 million in 2021 (2020:
$0.168 million) and J Hansen of $nil in 2021 (2020: $0.091 million). These
payments arose on the purchase of WoodBois International ApS in 2017 and as
amended under the Deed of Variation completed on 5 August 2020.
It is the Company's policy that Executive Directors should have contracts with
an indefinite term providing for a maximum of 3-6 months' notice. In the event
of a take-over, the directors' contracts relating to P Dolan, H Ghossein and C
Geddes provide for compensation of one year's salary on the take-over in the
event that the Executive loses his or her position.
Non-Executive Directors are employed on letters of appointment which may be
terminated on not less than 3 months' notice. The basic fees payable at the
end of the year to Graeme Thomson as Senior Independent Non-Executive Director
are £50,000 pa and £40,000 pa to David Rothschild as Independent
Non-Executive Director. Since April 2020 Lombard Odier has temporarily waived
the fee of $25,000 pa for the provision of the services of Henry Turcan.
ProfileS of the CURRENT Directors
P DOLAN, AGED 57, EXECUTIVE CHAIR
Based in the UK, Mr Dolan held senior management positions within banking and
hedge funds prior to joining Woodbois. He has consistently built award
winning, world-class teams employing custom-built technology to manage
substantial pools of human and financial capital across a diversified group of
asset classes ranging from fixed income and equity derivatives to soft
commodities and forestry.
FEDERICO TONETTI, AGED 49, CHIEF EXECUTIVE OFFICER
Federico spent more than 20 years in General Management, Global Functional and
Sales & Marketing positions for a variety of multinational organisations
across eight different countries, as well as four years in Strategy Consulting
at Bain & Company. He has a bachelor degree in Economics at Bocconi
University (Milan) and a post-graduate international MBA at Instituto de
Empresa (Madrid). Federico lives in London with his wife and their two young
children. He is a CTI coach and extremely passionate about mountain sports,
rock music, leadership and sustainability.
C GEDDES, AGED 43, CHIEF FINANCIAL OFFICER
Based in South Africa, Mrs Geddes is a Fellow of the Institute of Chartered
Accountants in England and Wales, a member of the South African Institute of
Chartered Accountants and a Certified Fraud Examiner. During a 15-year career
at BDO, the global audit, tax and advisory group, she served as director,
forensic services, of BDO London and partner of BDO Cape Town. She has been a
director and Board member of the largest South African pomegranate farming and
export company, Pomona, since 2008. She is also the Chair of POMASA, the
Pomegranate Growers Association of South Africa.
H GHOSSEIN, AGED 60, DEPUTY CHAIR
Based in Gabon, Mr Ghossein has 25 years of experience managing forestry
operations, including full ownership of a forestry business. He previously
served as a diplomat, travelling extensively across Africa, as well as owning
various trading and real estate companies. Hadi is fluent in Arabic, French,
Portuguese and English and holds Gabonese citizenship.
G THOMSON, AGED 64, NON-EXECUTIVE DIRECTOR (SENIOR INDEPENDENT)
Mr Thomson is a Fellow of the Institute of Chartered Accountants in England
and Wales and has been a public company director in a variety of sectors for
many decades, as a CEO, CFO/Company Secretary and as a Non-Executive. He has
varied commercial UK and international experience, including of Audit and
Remuneration Committees.
DAVID ROTHSCHILD, AGED 62, NON-EXECUTIVE DIRECTOR (INDEPENDENT)
David has a wide range of experience in growing businesses and improving their
performance as a senior manager and adviser. He has been active in the African
resource and agricultural sectors over the past 20 years, including as
co-developer of a Liberian greenfield sustainable palm oil operation, and as
advisor on environmental and social action planning. He has also been actively
involved in governmental and NGO relations and was an early Steering Committee
Member of the High Carbon Stock Approach Group, which ensures responsible
development. A French speaker with over 40 years experience in international
business, including six years at the consultancy, McKinsey & Co, he is a
dual national of the USA and South Africa and holds both B.Com and MBA
degrees.
H TURCAN, AGED 47, NON-EXECUTIVE DIRECTOR
Mr Turcan has worked in financial services since 1996, with a focus on equity
capital markets. Having spent the majority of his career advising growth
companies within investment banking he joined the Volantis team at Henderson
Global Investors in 2015, which subsequently transferred to Lombard Odier
Investment Management in 2017 becoming known as 1798 Volantis. He graduated
with an MA (Hons) in Modern Languages from Edinburgh University and is a
Member of the Securities Institute. He is a representative of the funds
managed or sub-advised by Lombard Odier Investments Manager group entities,
collectively the Company's largest shareholder.
SUBSTANTIAL SHAREHOLDERS
The Company has been notified that the following have, at the date of this
report, an interest in three percent or more of the issued Voting Ordinary
share capital of the Company:
Name Number of 1p Voting ordinary shares Percentage of the issued Voting share capital
Rhino Ventures Limited * 414,500,000 22.32%
Lombard Odier Asset Management (Europe) Limited 395,540,230 21.30%
Premier Miton Group Plc 174,950,389 9.42%
MCM Investment Partners SPC - MCM Sustainable Resource SP 113,825,000 6.13%
Sparta Premier S.A. 100,000,000 5.38%
P Dolan (Executive Chair) 75,400,032 4.06%
* M Pelham, former Chair, is the beneficial owner of Rhino Ventures Limited,
which is the owner of 100% of the 625,000,000 Non-Voting shares in the
Company.
CORPORATE GOVERNANCE
The Board is committed to achieving the highest standards of corporate
governance, integrity and business ethics and is responsible for oversight of
this. The Board has adopted the Corporate Governance Code produced by the
Quoted Companies Alliance and has taken steps to apply the principles of the
QCA Code in so far as they can be applied practically and with the exception
set out below, given the size of the Group and the nature of its operations.
We set out below how the Group complies with the QCA Code.
1. Establish a strategy and business model which promotes long-term value for
shareholders The strategy and business operations of the Group are set out in
this Annual Report and in the Group's annual Sustainability Report.
The Group had two divisions during the year Trading and Forestry, and on 8
March 2021 announced that it had established an Aforestation and Carbon Credit
division (Carbon Solutions): a clear strategy has been devised for each. The
Board continually impresses upon the leadership teams of each division that
capital allocation must be both performance and potential driven. Investment,
either opex or capex, will only be forthcoming for strategies that can
demonstrate significant return to shareholders over time. Running loss-making
business lines is not a sustainable business strategy. We will prioritise
support and fund businesses where our combination of skills and experience
give us an edge. Conversely, if we cannot source the requisite expertise to
participate profitably in particular business lines or geographies, we will
look to cease these activities.
2. Seek to understand and meet shareholder needs and expectations
Shareholders play a key role in corporate governance, with our Annual General
Meeting for shareholders offering an opportunity to exercise their
decision-making power in the Company. Shareholders are encouraged to attend
and vote at the AGM and any other General Meeting's which are convened
throughout the year, either online or in person, and for which our Company
Secretaries are the point of contact for shareholders. Our Executive
Directors and our Investor relations officer are the contact points for
shareholder updates and wider liaison. The contact details are set out in
these financial statements.
3. Take into account wider stakeholder and social responsibilities and their
implications for long-term success
The Board recognises that the long-term success of the Group is reliant upon
the efforts of the employees of the Group and its contractors and suppliers.
We continuously engage with our stakeholders ranging from employees,
customers, investors, international development banks, governments,
not-for-profit organisations and academia, to identify and address issues of
materiality and to gather feedback from each of them. The Board ensures that
all key relationships are the responsibility of, or are closely supervised by,
one of the directors.
Woodbois is in a unique position to bring vital positive impact to Africa's
economic transformation, social development and environmental management
through our operations. In this regard we have set out to align our
sustainability strategy with the United Nations Sustainable Development Goals
(SDGs), which provide a vision for ending poverty, hunger, inequality and
protecting the earth's natural resources.
4. Embed effective risk management, considering both opportunities and
threats, throughout the organisation
The business of forestry and timber trading involves a high degree of risk, in
addition to technical, political and regulatory risk, the Group is exposed to
weather, nutrient and pest risks. Furthermore, the Group is exposed to a
number of financial risks, which the Board seeks to minimise by adopting a
prudent approach consistent with the corporate objectives of the Group. Our
approach to these risk factors is set out in the Financial Statements for the
year ended 31 December 2021.
A comprehensive budgeting process is completed once a year and is reviewed and
approved by the Board. Budgets are subsequently updated when there is a
significant change in any of the key assumptions to the budget. The Group's
actual results, compared with the budget, are reported to the Executive
Directors on a weekly basis and any material deviations from budget are
followed up by a member of the Executive Board. Variances are reviewed at
least monthly by the Board.
The Group maintains appropriate directors' and officers insurance cover in
respect of actions taken against the directors because of their roles, as well
as insurance against material loss or claims against the Group, where it is
considered cost-effective. The insured values and type of cover are
comprehensively reviewed on a yearly-basis or where new assets or risks
arise.
5. Maintain the Board as a well-functioning, balanced team led by the
Executive Chair.
The Board is responsible for establishing the strategic direction of the
Group, monitoring the Group's trading performance and appraising and executing
development and acquisition opportunities. The Company holds a minimum of nine
Board meetings per year at which financial and other reports are considered
and, where appropriate, voted on. It also holds ad hoc meetings as required to
deal with specific issues. During 2021 the Board met 20 times. Board and
Committee meetings are convened at times convenient to eligible members to
ensure 100% attendance. Details of the directors' beneficial interests in
Ordinary Shares are available on our website and are set out in the Directors'
Report.
The directors comply with Rule 21 of the AIM Rules and the Market Abuse
Regulations 2014 relating to directors' dealings and will take all reasonable
steps to ensure compliance by any employees of the Company to whom regulations
apply. The Company has, in addition, adopted the Share Dealing Code for
dealings in its Ordinary Shares by directors and senior employees.
As of the date of this report the Board comprised of four Executive Directors,
two Independent Non-Executive Directors and one Non-Independent Non-Executive
Director. During 2021 the number of Executive Directors was increased by one
in order to comply with the Code by separating the roles of Chair and Chief
Executive Officer. An additional Independent Non-Executive Director was
appointed during 2021. Executive Board members are considered full time
employees, while Non-Executives are required to commit between 20 and 40 days
per annum to their roles.
The Board is supported by the Audit and the Remuneration Committees, which are
comprised of Non-Executive Directors only, and the Nominations Committee which
also includes the Executive Chair.
6. Ensure that between them, the directors have the necessary up-to-date
experience, skills and capabilities
The directors' biographies can be found in this Directors' Report and on the
Company's website. The Board believes that their mix of significant senior
financial and commercial experience gives a strong and appropriate background
to formulate and deliver long term shareholder value.
The Nominations Committee oversees the requirements for and recommendations of
any new Board appointments to ensure that it has the necessary mix of skills
and experience to support the on-going development of the Company. Any
appointments made will be on merit, against objective criteria and with due
regard for the benefits of diversity and inclusivity on the Board. The
Nomination Committee will also be responsible for succession planning.
7. Evaluate Board performance based on clear and relevant objectives, seeking
continuous improvement
Internal evaluation of the Board, the Committees and individual directors is
seen as an important next step in the development of the Board and one that is
addressed. An annual operational review of all members of the Board is
undertaken, in which their performance is evaluated, and development needs
identified and actions to be taken agreed. Executive and Non-Executive
Directors are subject to re-election intervals as prescribed in the Company's
Articles of Incorporation. At each Annual General Meeting one-third of the
directors who are subject to retirement by rotation shall retire from office.
They can then offer themselves for re-election.
8. Promote a corporate culture that is based on ethical values and
behaviours
The Company is committed to complying with all applicable laws and best
corporate governance practices, wherever we operate. It is a core aspect of
our mission to act with integrity in all of our operations. The Board expects
all employees and contractors to comply with both the letter and spirit of the
law and governance codes.
The Company fosters a culture where our businesses directly and indirectly
promote a range of benefits for the host community and host country on social
and environmental levels. One of the most fundamental and positive social
impacts associated with our Company's strategic growth objective is the skills
development and employment opportunity we bring to the region. The Group also
commits to providing a safe environment for its staff and all other parties
for which the Company has responsibility. The Company is committed to
protecting the environment, contributing to sustainable management of natural
resources by strictly following guidelines set out by host Governments and
actively engaging with local communities. The Company clearly articulates
objectives and has put in place an internal accountability mechanism to
effectively implement commitments, as well as ensuring that outcomes are
measured and communicated transparently.
9. Maintain governance structures and processes that are fit for purpose and
support good decision-making by the Board.
The following Group matters are reserved for the Board:
· Overall strategy
· Approval of major capital expenditure projects
· Approval of the annual and interim results
· Annual budgets, KPI's and revisions thereto
· ESG matters, including climate change initiatives and actions
The Company is committed to high standards of corporate governance. Both
Management and the Board are dedicated to implementing best practice as the
Company grows.
A clear organisation structure exists detailing lines of authority and control
responsibilities.
The Board monitors the exposure to key business risks and reviews the
strategic direction of all trading subsidiaries, their annual budgets, their
performance in relation to those budgets and their capital expenditure.
The agenda of the overall business is determined by a Management Committee,
setting out agreed targets that include financial return, sustainability and
actions on climate change. Opportunities and improvements are identified and
prioritised depending on analysis carried out by Management. These projects
are supported by detailed financial planning. Comprehensive internal controls
and systems enable the Board to manage business objectives. As well as Board
discussions, regular meetings are held by Management to discuss performance.
Detailed information packs are prepared bi-weekly to cover each major area of
the business. Variances from the budget and previous forecasts are analysed,
explained and acted on.
Important capital investments are regularly discussed both at a Board and at a
Management level where analysis of budget versus actual spend is carried out.
Effective corporate governance remains key to the business as it grows
rapidly. The Company has a structure and process in place to help identify
areas in which corporate governance can be improved. The Company is currently
implementing technology that will allow both the Board and Management to
oversee key performance indicators across the business in real time.
Within the Trading division, the Company has developed a custom-built tool to
allow for real-time tracking of all trades, which has been progressively
implemented in 2021.
The Company is in discussion with several organisations to implement
innovative blockchain based technology to manage both the traceability of the
timber that the Company produces as well as providing real-time oversight of
the business's supply chain.
The Audit Committee, Remuneration Committee and Nominations Committee have
formally delegated duties and responsibilities.
Audit Committee:
The Board has established an Audit Committee with formally delegated duties
and responsibilities. During the year, the Audit Committee comprised of the
Non-Executive Directors with Graeme Thomson as Chair. It formally meets at
least three times in the financial year. In addition, the Chair has a regular
dialogue with our auditors.
The terms of reference for the Audit Committee include requirements:
· To monitor the integrity of the financial statements of the Group
and any formal announcements relating to the Group's financial performance,
reviewing significant financial reporting judgements contained in them;
· To review the Group's internal financial controls together with
the Group's internal control and risk management systems.
· To monitor and review the external auditor's independence and
objectivity and to make recommendations in relation to the appointment,
re-appointment and removal of the external auditor.
Remuneration Committee:
The Remuneration Committee meets as and when required. During the year the
Remuneration Committee comprised of Non-Executive Directors with Graeme
Thomson as the Chair. It meets at least three times per year.
The policy of the committee is to reward Executive Directors in line with the
current remuneration of directors in comparable businesses in order to
recruit, motivate and retain high quality executives within a competitive
market place.
There were three main elements of the remuneration packages for Executive
Directors and senior management in 2021:
- Basic annual salary (including directors' fees) and benefits;
- Discretionary annual bonus; and
- Equity Option incentive scheme,
- All of these elements take into account the need to motivate and
retain key individuals.
Nominations Committee:
The Nomination Committee which comprises of the Non-Executive Directors and
the Executive Chair meets at least twice a year and is responsible for the
process of reviewing replacement or additional directors, the monitoring of
compliance with applicable laws, regulations and corporate governance guidance
and making appropriate recommendations to the Board.
10. Communicate how the Company is governed and is performing, by maintaining
a dialogue with shareholders and other relevant stakeholders
The Company encourages regular communications with its various stakeholder
groups and aims to ensure that all communications concerning the Group's
activities are clear, fair and accurate. Quarterly updates are announced via
RNS and are available on our website and users can register to be alerted when
announcements or details of presentations and events are posted onto the
website.
We aim to release our half and full year results to the market well in advance
of reporting deadlines and offer visibility for shareholders by including
segmental reporting. The Company's financial statements and Notices of General
Meetings of the Company can be found on its website.
The results of voting on all resolutions are announced via RNS immediately
following completion of General Meetings and are available on its website.
Any actions that are required to be taken as a result of resolutions for which
votes against have been received from at least 20 per cent of independent
shareholders will be detailed on the RNS.
RISK MANAGEMENT
The business of forestry and timber trading involves a high degree of risk, in
addition to technical, political and regulatory risk, the Group is exposed to
weather, nutrient and pest risks. Furthermore, the Group is exposed to a
number of financial risks, which the Board seeks to minimise by adopting a
prudent approach which is consistent with the corporate objectives of the
Group.
Technical Risk
The Company operates large-scale machinery in the forms of harvesting, sawmill
and veneer equipment. All three are key revenue contributors and as such, any
significant interruption to these assets could have an adverse effect on our
financial performance. A number of procedures and programmes have been
implemented to mitigate these technical risks. Capital investment programmes
have replaced older equipment to improve both reliability and overall
efficiency of our machinery, also reducing overall breakdown risk. The Group
has actively sought best-in-class hires that have significant experience with
the machinery that is currently being utilised, this has also allowed the
Group to adopt best practice. Additionally, performance metrics for operating
assets are monitored by Management on a weekly basis to quickly identify and
resolve any issues.
PANDEMIC RISK
Public health risks may add to instability in world economies and markets
generally. The extent of the impact of a pandemic will be correlated with the
magnitude and duration thereof, both aspects of which will be uncertain
(impact of coronavirus ("COVID-19") considered separately below). Entities
may experience conditions often associated with a general economic downturn.
This includes, but is not limited to, financial market volatility and erosion,
deteriorating credit and increased borrowing rates, volatility in exchange
rates, liquidity concerns, supply chain disruptions, further increases in
government intervention, increasing unemployment, broad declines in consumer
discretionary spending, increasing inventory levels, reductions in production
because of decreased demand, layoffs and furloughs, and other restructuring
activities.
The continuation of these circumstances could result in an even broader
economic downturn which could have a prolonged negative impact on an entity's
financial results. What recovery/emergence may look like will also be
speculation.
The Board observes any pandemic developments across the world and continuously
considers the potential impact on the Company's operations, the safety of its
employees and the potential need for disclosures to be made to the market and
as the situation unfolds. Specifically, the Board will consider:
· Impact on liquidity and cash flow estimates;
· Valuation, recoverability and impairment of assets;
· Contract modifications;
· Events after the end of the reporting period;
· Revision of material judgements and estimates;
· Whether the Company remains a going concern;
· Whether any restructuring is required;
· Whether onerous contracts provisions are necessary;
· The extent to which insurance recoveries may be available;
· Availability of government assistance;
· Potential breach of any covenants.
Impact of coronavirus ("COVID-19")
Given the on-going and dynamic nature of the COVID-19 outbreak, it is
challenging to predict the impact on our Company. The extent of such impact
will depend on future developments, which are highly uncertain, including the
resurgence of COVID-19 as restrictions are eased or lifted, new information
that may emerge concerning the spread and severity of COVID-19, and actions
taken to address its impact, among others. It is difficult to predict how this
virus may affect our business in the future, including its effect (positive or
negative; long or short term) on the demand and price for our products. It is
possible that COVID-19, particularly if it has a prolonged duration, could
have a further material adverse effect on our supply chain, market pricing,
customer demand, and distribution networks. These factors may further impact
our operating plans, business, financial condition, liquidity, and operating
results, which would, in turn, affect our estimates, including the valuation
of inventories, allowance for expected credit losses, fair value measurements,
the valuation of long-lived assets, and cash flow projections used for
impairment testing. Actual results may materially differ from these estimates.
Political and Regulatory Risk
The Board observes any political developments across the geographies that
Woodbois operates in closely, notably in Gabon and Mozambique. The political
environment across all the countries that Woodbois operates in will remain an
evolving discussion point for the Board, however the risk of political unrest
disruptive to the Group's areas of operations remains low. It is noted that
since 2017 the insurgency in Cabo Delgado Province, Mozambique has been
ongoing. Although currently unaffected by the conflict, the Board continues to
closely monitoring any wider implications.
The regulatory frameworks in place across the countries that Woodbois operates
in support the development of forestry. However, the forestry sector in
Mozambique has been subject to frequent policy changes with regard to exports
and delays in issuing of annual licenses, which has created uncertainty.
Furthermore, there is no assurance that future political and economic
conditions in these countries will not result in the Governments changing
their political attitude towards forestry. Any changes in policy may result in
changes in laws affecting ownership of assets, land tenure, ability to export,
taxation, environmental protection and repatriation of income and capital,
which may adversely impact the Group's ability to carry out its activities.
OTHER RISKS
The UK departed from the European Union at the end of 2020. Whilst there have
been many regulatory and operational changes in trade between the parties this
has had a very limited effect on the Group's operations. The Board will
maintain close dialogue with its advisors to ensure that any proposed
regulatory changes are identified and actioned accordingly.
ENVIRONMENTAL RISK
The Group is exposed to climate, weather and the risk of pests affecting its
forestry operations. The availability of water for its irrigation as well as
the abundance of too much water also pose a risk to the biological assets.
These risks are managed by ongoing assessment of local pests and the adoption
of irrigation methods. Adverse weather conditions may impact transport routes
both within the Group's countries of operation and when exporting finished
product.
Financial Risk
This comprises of a number of risks explained below.
Market PRICE risk
The Group is exposed to market risk in respect of any equity investments as
well as any potential market price fluctuations that may affect the revenues
of the forestry and timber trading operations. The Group mitigates this risk
by having established investment appraisal processes and asset monitoring
procedures, which are subject to overall review by the Board.
Liquidity risk
The Group seeks to manage liquidity by regularly reviewing cash levels and
expenditure budgets to ensure that sufficient liquidity is available to meet
foreseeable needs and to invest cash assets safely and profitably. The Group
had net cash balances of $0.9 million as at 31 December 2021 (2020: $2.6m).
INTEREST RATE RISK
The Group has limited its exposure to the risk of being negatively affected by
variable interest rates by predominantly borrowing using fixed interest
instruments. Refer to note 14 for a detailed assessment
Credit risk
The Group's principal financial asset is cash. The credit risk associated with
cash is considered to be limited. The Group receives payment immediately upon
delivery of its forestry products. The credit risk is considered to be minimal
as no credit terms are offered and funds are received prior to the risk of
ownership being transferred to the purchaser. From time to time cash is placed
with certain institutions in support of trading positions. The credit risk is
considered minimal as the Group only undertakes this with large reputable
institutions.
DONATIONS
No political or charitable donations were made during the year (2020: nil).
POLICY ON PAYMENT OF SUPPLIERS
It is Group and Company policy to agree and clearly communicate the terms of
payment as part of the commercial arrangements negotiated with suppliers and
then to pay according to those terms based on the timely receipt of an
accurate invoice.
EMPLOYMENT POLICIES
The Group is an equal opportunities employer: it promotes inclusion and
diversity in the organisation wherever possible through recruitment, training,
career development and promotion.
The Group is committed to keeping employees as fully-informed as possible with
regard to the Group's performance and prospects and seeks their views,
wherever possible, on matters which affect them as employees.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the Group financial
statements in accordance with International Financial Reporting Standards
(IFRS) as adopted by the United Kingdom (UK). Under company law the Directors
must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group and Company and
of the profit or loss of the Group and Company for that period.
In preparing the financial statements, the directors are required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and
prudent;
c. state whether they have been prepared in accordance with UK adopted
International Accounting Standards; and
d. prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group and Company will continue in
business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group and Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the financial statements and
the Directors' Remuneration Report comply with the Companies (Guernsey) Law
2008. The directors are also responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Woodbois Limited website.
The Company is compliant with AIM Rule 26 regarding the Woodbois Limited
website. Legislation in Guernsey governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Going concern
An assessment of going concern is made by the directors at the date the
directors approve the annual financial statements, taking into account the
relevant facts and circumstances at that date including:
· Review of profit and cash flow forecasts for a period of not less
than 12 months from the date hereof;
· Review of actual results against forecast;
· Timing of cash flows and working capital resources; and
· Financial or operational risks.
Having made reasonable enquiries, and based on the budget for 2022 and
onwards, the directors are satisfied that the cash balance and resources and
facilities available and expected to be made available to the Group is
sufficient to cover all known financial liabilities for the next 12 months
from the date of approval of the financial statements and as such consider it
appropriate to prepare the financial statements on a going concern basis.
Further details on the assumptions and their conclusion thereon are included
in the statement on going concern included in note 1 to the Financial
Statements.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO THE AUDITOR
The Directors who were in office on the date of approval of these financial
statements have confirmed that, as far as they are aware, there is no relevant
audit information of which the auditor is unaware. Each of the directors have
confirmed that they have taken all the steps that they ought to have taken as
directors in order to make themselves aware of any relevant audit information
and to establish that it has been communicated to the auditor.
AUDITOR
PKF Littlejohn LLP were reappointed as auditors for 2021 and a resolution to
reappoint then will be proposed at the 2022 AGM.
On behalf of the Board
Carnel Geddes
Chief Financial Officer
1 April 2022
INDEPENDENT AUDITOR'S REPORT
Opinion
We have audited the group financial statements of Woodbois Limited (the
'group') for the year ended 31 December 2021 which comprise the Consolidated
Statement of Profit or Loss and other Comprehensive Income, the Consolidated
Statement of Financial Position, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Cash Flows and notes to the consolidated
financial statements, including significant accounting policies. The financial
reporting framework that has been applied in their preparation is Companies
(Guernsey) Law, 2008 and UK-adopted international accounting standards.
In our opinion, the group financial statements:
· give a true and fair view of the state of the group's affairs as
at 31 December 2021 and of its profit for the year then ended;
· have been properly prepared in accordance with UK-adopted
international accounting standards; and
· have been prepared in accordance with the requirements of Section
262(2)(c) of the Companies (Guernsey) Law, 2008
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the group in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the group's ability to continue to adopt the going concern basis
of accounting included:
· Obtaining management's forecast cash flows covering the period
from the date of signing to April 2023. We assessed the assumptions within the
forecast with regards to revenue generation, capital funding and cash flows.
· Review and challenge of the Board's controllable mitigation plans
and their forecast impact on the ability of the business to continue to
operate. We obtained supporting documentation to evaluate the plausibility and
achievability of management's mitigation plans, including sensitised scenario
forecasts.
· Performing sensitivity analysis on management's forecast cash
flows.
· A comparison of actual results for the year to past budgets to
assess the forecasting ability/accuracy of management.
· Agreeing available borrowing facilities to underlying agreements
and the extent to which additional facilities could be utilised and funds
raised from other sources.
· Assessing the adequacy of going concern disclosures within the
Annual Report and Accounts
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group's ability to continue as
a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatement. At the planning stage,
materiality is used to determine the financial statement areas that are
including within the scope of our audit and the extent of sample sizes during
the audit.
We determined our overall financial statements materiality to be US$448,000
(2020: US$420,000). This was based on an average of three year's adjusted
profit or loss before tax, calculated by removing all items deemed reasonably
to be outside the normal course of business, such as the contingent asset
acquisition expense in the prior year and the gain on bargain purchase in the
current year, as these are outside the normal underlying trading activities of
the group. We consider adjusted profit or loss before tax to be the
performance measure used by the shareholders as Woodbois Limited is a trading
entity and its profit-making ability is a significant point of interest for
investors.
We set performance materiality at 70% (2020:70%) of overall financial
statements materiality to reflect the risk associated with the judgemental and
key areas of management estimation within the financial statements.
No significant changes have come to light through the fieldwork which has
caused us to revise our materiality figure.
We report to the Directors all corrected and uncorrected misstatements we
identified through our audit with a value in excess of $15,680 (2020: $17,866)
for the Group, in addition to other audit misstatements below that threshold
that we believe warranted reporting on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of
material misstatement in the financial statements. In particular we looked at
areas involving significant accounting estimates and judgements (such as the
valuation of biological assets) by the Directors and considered future events
that are inherently uncertain. We also address the risk of management override
of controls, including among other matters consideration of whether there was
evidence of bias that represented a risk of material misstatement due to
fraud.
Our audit scope focused on the principal area of operation, being Africa. The
head office in South Africa oversees the accounting function of the group and
its subsidiaries, however, regional offices maintain the accounting records
for many of the components. The components are based in Mauritius, Gabon,
Mozambique, Denmark and London therefore given the nature of the accounting
function, our audit was conducted by local component auditors within Gabon,
Mozambique, Denmark and Mauritius.
Each component was assessed as to whether they were significant or not
significant to the group by either their size or risk. The parent Company and
six components were considered to be significant due to their identified size
and risk. These components have been subject to full scope audits by component
auditors and reviewed by us.
The audit was overseen and concluded in London where we acted as group
auditor. As group auditors we maintained regular contact with the component
auditors throughout all stages of the audit and we were responsible for the
scope and direction of their work. We ensured that we challenge their findings
in order to form an opinion on the group.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter How our scope addressed this matter
Valuation of biological assets (note 11)
The group's principal non-current assets relate to standing timber within the Our work included:
forestry concessions. These biological assets represent the most material
balance in the financial statements at US$336.7m as at 31 December 2021.
Management assess at each reporting date the fair value of the standing timber
on a discounted cash flow basis which involves significant Management · Reviewing the biological asset valuation models prepared by
judgement and estimates. management for accuracy and challenging the estimates/assumptions made in the
inputs;
· Reviewing the discount rate used and challenging the key inputs
There is a risk that the biological assets are misstated due to complex involved in arriving at the rate applied;
accounting treatment required by IAS 41 Biological assets and a high degree of
estimation and judgement by management in their valuation. · Reviewing the sensitivity of the key inputs, together with a
combination of sensitivities of such inputs.
· Considering if there are any indications of impairment; and
We therefore consider the valuation of biological assets and the related
disclosures to be a key audit matter. · 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.
Valuation of Gain on Bargain Purchase (note 5d)
During the year, Woodbois Gabon acquired LGFIB Gabon. Upon acquisition a gain Our work included:
on bargain purchase of $88.3m was realised. The gain on bargain purchase has
arisen as a result of the valuation of the forestry concession held by the · Reviewing the identifiable assets and liabilities acquired at the
entity. acquisition date.
Management has assessed the fair value of the forestry concession upon · Challenging the underlying assumptions used in identifying the
acquisition and at the reporting date the fair value of the standing timber on fair value of the assets and liabilities
a discounted cash flow basis which involves significant Management judgement
and estimate. · Assessing the consideration transferred and the accounting of any
acquisition related costs.
There is a risk that, due to the high level management judgement and
estimation involved that the value attributed to the bargain purchase is
inaccurate.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the group financial statements does not cover
the other information and we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and its
environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to
which the Companies (Guernsey) Law, 2008 requires us to report to you if, in
our opinion:
· certain disclosures of directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the group financial
statements and for being satisfied that they give a true and fair view, and
for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the group and the sector in which
it operates to identify laws and regulations that could reasonably be expected
to have a direct effect on the financial statements. We obtained our
understanding in this regard through [management, industry research, review of
component auditor work papers, application of cumulative audit knowledge and
experience of the sector
· We determined the principal laws and regulations relevant to the
group in this regard to be those arising from: Aim Rules, local regulations
and employment laws applicable to the subsidiaries.
· We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by the group
with those laws and regulations. These procedures included, but were not
limited to:
o Enquiries of management
o Review of board minutes
o Review of RNS announcements
· We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls, that the potential for management bias identified in relation to
the valuation of biological assets and as noted above, we addressed this by
challenging the assumptions and judgements made by management when auditing
that significant accounting estimate.
· As in all of our audits, we addressed the risk of fraud arising
from management override of controls by performing audit procedures which
included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the
normal course of business.
· As part of group reporting instructions issued, component
auditors were required to report areas of non-compliance with laws and
regulations, including fraud. As part of our review of component auditors
work, we held regular update meetings during all stages of the audit and
included within the discussions matters relating to country laws and
regulations as well as how the risk of fraud at component level was being
addressed.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with our engagement letter. Our audit work has been undertaken so that we
might state to the company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone, other
than the company and the company's members as a body, for our audit work, for
this report, or for the opinions we have formed.
Joseph Archer (Senior Statutory Auditor)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Statutory
Auditor
London E14 4HD
1 April 2022
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND TOTAL COMPREHENSIVE INCOME
Notes 2021 2020
Continuing operations $000 $000
Turnover 2 17,465 15,260
Cost of sales 2 (13,970) (14,038)
Gross profit 3,495 1,222
Gain on fair value of biological assets 11 4,253 9,515
Operating costs (3,620) (4,287)
Administrative expenses (1,324) (1,017)
Depreciation (326) (778)
Share based payment expense 21 (233) (200)
Operating profit 3 2,245 4,455
Contingent acquisition expense 22 - (2,171)
Loss on financial restructure - (1,487)
Loss owing to theft - (3,403)
Gain on bargain purchase 5 88,292 -
Foreign exchange gain 756 1,227
Finance costs 6 (591) (2,820)
Profit/(loss) before taxation 90,702 (4,199)
Taxation 7 (591) (2,192)
Profit/(loss) for the year from continuing operations 90,111 (6,391)
Discontinued operations
Loss from discontinued operations, net of tax - (146)
Profit/(loss) for the year 8 90,111 (6,537)
Other comprehensive income
Items that may subsequently be recognised in profit or loss
Currency translation differences, net of tax (3,032) (420)
Items that may not subsequently be recognised in profit or loss
Revaluation of land and buildings 10 6,254 -
Total comprehensive income for the year 93,333 (6,957)
Total comprehensive income attributable to equity shareholders arises from:
- Continuing operations 93,333 (6,811)
- Discontinued operations - (146)
Total comprehensive income for the year 93,333 (6,957)
Basic earnings/(loss) per share 8
From continuing operations (cents) 3.69 (0.51)
From discontinued operations (cents) - (0.01)
Diluted earnings per share 8
From continuing operations (cents) 3.65 -
The notes form an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share premium Foreign exchange reserve * Share based payment reserve (note 21) Revaluation Retained earnings Total equity
Convertible bonds Reserve
(note 10)
$000 $000 $000 $000 $000 $000 $000 $000
At 1 JANUARY 2020 6,757 35,130 1,495 (4,871) 968 - 77,708 117,187
Loss for the year - - - - - - (6,537) (6,537)
Other comprehensive income for the year - - - (420) - - - (420)
Total comprehensive income for the year - - - (420) - - (6,537) (6,957)
Transactions with owners:
Issue of ordinary shares 24,362 23,479 - - - - - 47,841
Redemption of convertible bonds - - (1,443) - - - - (1,443)
Share based payment expense - - - - 200 - - 200
Share options forfeited - - - - (942) - 942 -
At 31 December 2020 31,119 58,609 52 (5,291) 226 - 72,113 156,828
Profit for the year - - - - - - 90,111 90,111
Other comprehensive income for the year - - - (3,032) - 6,254 - 3,222
Total comprehensive income for the year - - - (3,032) - 6,254 90,111 93,333
Transactions with owners:
Issue of ordinary shares 1,409 6,645 - - - - - 8,054
Share based payment expense - - - - 233 - - 233
Share options forfeited - - - - (24) - 24 -
At 31 December 2021 32,528 65,254 52 (8,323) 435 6,254 162,248 258,448
* Exchange differences arising on translation of the foreign controlled
entities are recognised in other comprehensive income and accumulated in a
separate reserve within equity.
The notes form an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2021 2020
Notes $000 $000
ASSETS
Non-current assets
Biological assets 11 336,798 204,223
Property, plant and equipment 9 30,119 20,203
Total non-current assets 366,917 224,426
Current assets
Trade and other receivables 12 4,616 3,761
Inventory 13 6,159 4,893
Cash and cash equivalents 14 887 2,560
Total current assets 11,662 11,214
TOTAL ASSETS 378,579 235,640
LIABILITIES
Current liabilities
Trade and other payables 15 (4,078) (3,590)
Borrowings 16 (5,369) (6,223)
Provision 20 (130) (132)
Contingent acquisition liability 22 (250) (750)
TOTAL CURRENT LIABILITIES (9,827) (10,695)
NON-CURRENT LIABILITIES
Borrowings 16 (2,898) (2,487)
Deferred tax 7 (106,475) (64,788)
Convertible bonds - host liability 17 (931) (842)
Total non-current liabilities (110,304) (68,117)
TOTAL LIABILITIES (120,131) (78,812)
NET ASSETS 258,448 156,828
EQUITY
Share capital 18 32,528 31,119
Share premium 19 65,254 58,609
Convertible bonds - equity component 17 52 52
Foreign exchange reserve (8,323) (5,291)
Share based payment reserve 21 435 226
Revaluation reserve 6,254 -
Retained earnings 162,248 72,113
TOTAL EQUITY 258,448 156,828
The notes form an integral part of the consolidated financial statements. The
consolidated financial statements were authorised for issue by the board of
directors on 1 April 2022 and were signed on its behalf.
Carnel Geddes
Chief Financial Officer
CONSOLIDATED STATEMENT OF CASH FLOWS
2021 2020
Notes $000 $000
CASH USED IN OPERATIONS
Loss before taxation - continuing operations 90,702 (4,199)
Loss before taxation - discontinued operations - (146)
Loss before taxation 90,702 (4,345)
Adjustment for:
Depreciation of property, plant and equipment 9 2,063 1,942
Fair value adjustment of biological asset 11 (4,253) (9,515)
Transaction costs deducted from equity (42) (323)
Foreign exchange (756) (1,227)
Loss owing to theft - 3,403
Provision expense - 111
Loss on financial restructure - 1,487
Contingent acquisition expense - 2,171
Accrued expense 15 391 671
Doubtful debts expense 14 - 184
Share based payments 21 233 200
Finance costs 6 591 2,820
Gain on bargain purchase 5 (88,292) -
(Increase)/decrease in trade and other receivables (838) 1,166
Decrease in trade and other payables (460) (2,705)
Increase in inventory (1,267) (512)
CASH FLOWS FROM OPERATIONS (1,928) (4,472)
Finance costs paid (495) (913)
Income taxes paid (57) (68)
cash FLOWS from operatiNG ACTIVITIES (2,480) (5,453)
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditure on property, plant and equipment 9 (4,310) (1,587)
Settlement of deferred consideration 22 (500) -
Investment in acquired subsidiary 5 (1,107) -
cash FLOWS from investing activities (5,917) (1,587)
CASH FLOWS FROM FINANCING ACTIVITIES
(Payments)/receipts from loans and borrowings (1,387) 1,133
Proceeds from internal trade finance - 500
Settlement of trade finance - (3,390)
Proceeds from the issue of ordinary shares (net of issue costs) 8,111 9,867
cash fLOWS from financing activities 6,724 8,110
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1,673) 1,070
Cash and cash equivalents at beginning of year 2,560 1,490
CASH AND CASH EQUIVALENTS AT end of YEAR 887 2,560
Net debt reconciliation
2020 Cash flow Non-cash changes 2021
$000 $000 $000 $000
Borrowings 8,710 (1,387) 945 8,268
The notes form an integral part of the consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
GENERAL INFORMATION
Woodbois Limited ("the Company" or "Woodbois") is an AIM-quoted forestry and
timber trading company limited by shares. The Company is incorporated and
domiciled in Guernsey, the Channel Islands, with registered number 52184. Its
registered office is Dixcart House, Sir William Place, St Peter Port,
Guernsey, GY1 1GX.
The nature of the Group's operations and its principal activities are set out
in the Directors' Report.
The accounting policies set out herein have been consistently applied.
The principal activities and nature of the business are detailed above.
BASIs OF ACCOUNTING
The consolidated financial statements have been prepared in accordance with UK
adopted international accounting standards adopted by the United Kingdom
applied in accordance with the provisions of the Companies (Guernsey) Law
2008. The consolidated financial statements have been prepared under the
historical cost convention except for biological assets and certain financial
assets and liabilities, which have been measured at fair value.
FUNCTIONAL AND PRESENTATION CURRENCY
These consolidated financial statements are presented in United States Dollar
(USD), which is the Group's functional currency. All amounts have been rounded
to the nearest thousand, unless otherwise indicated.
BASIS OF CONSOLIDATION
Subsidiaries are entities controlled by the Group. Control is achieved when
the Group is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its
power over the investee. Specifically, the Group controls an investee if, and
only if, the Group has:
· Power over the investee (i.e. existing rights that give it the
current ability to direct the relevant activities of the investee).
· Exposure, or rights, to variable returns from its involvement
with the investee
· The ability to use its power over the investee to affect its
returns.
Generally, there is a presumption that a majority of voting rights result in
control. To support this presumption and when the Group has less than a
majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an
investee, including:
· The contractual arrangement with the other vote holders of the
investee.
· Rights arising from other contractual arrangements.
· The Group's voting rights and potential voting rights.
Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated financial statements from the
date the Group gains control until the date the Group ceases to control the
subsidiary. The acquisition method is used to account for the acquisition of
subsidiaries.
Any contingent consideration is recognised at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent consideration
that is deemed to be an asset or a liability is recognised in accordance with
IFRS 9 either in profit or loss or as a change in other comprehensive income.
The unwinding of the discount on contingent consideration liabilities is
recognised as a finance charge within profit or loss.
Acquisition related costs are expensed as incurred.
The Group measures goodwill at the acquisition date as the excess of the fair
value of the consideration transferred, plus the recognised amount of any
non-controlling interests, less the recognised amount of the identifiable
assets acquired, and liabilities assumed. If this consideration is lower than
the fair value of the net assets of the subsidiary acquired, the difference is
recognised in profit or loss as a bargain purchase.
Before recognising a gain on a bargain purchase, an assessment is made as to
whether all assets acquired, and liabilities assumed have been correctly
identified. The fair value measurement of the identifiable net assets and cost
of acquisition is also reviewed to evaluate whether all available information
at the acquisition date has been considered. An adjustment made to the fair
value of the net assets acquired will impact the amount of goodwill or bargain
purchased recognised at acquisition.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used
by other members of the Group. All significant intercompany transactions and
balances between group entities are eliminated on consolidation.
When the Group ceases to consolidate a subsidiary as a result of losing
control and the Group retains an interest in the subsidiary and the retained
interest is an associate, the Group measures the retained interest at fair
value at that date and the fair value is regarded as its cost on initial
recognition. The difference between the net assets de-consolidated and the
fair value of any retained interest and any proceeds from disposing of a part
interest in the subsidiary is included in the determination of the gain or
loss on disposal. In addition, the Group accounts for all amounts previously
recognised in other comprehensive income in relation to that associate on the
same basis as would be required if that subsidiary had directly disposed of
the related assets or liabilities.
Investments in associates and jointly controlled entities are accounted for
using the equity method of accounting and are initially recognised at cost.
The Group's share of its associates' post-acquisition profits or losses is
recognised in profit or loss, and its share of post-acquisition movements in
reserves is recognised in other comprehensive income. The cumulative
post-acquisition movements are adjusted against the carrying amount of the
investment.
Transactions with non-controlling interests that do not result in loss of
control are accounted for as equity transactions. Gains or losses on disposals
to non-controlling interests are recorded in equity.
As at 31 December 2021, the Group held equity interests in the following
undertakings:
Subsidiary undertakings Proportion held of voting rights Country of incorporation Nature of business
Direct investments
Woodbois Services Limited 100% United Kingdom Shared services
Woodbois Trading Limited 100% Hong Kong Financier
Argento Limited 100% Mauritius Holding / treasury company - Forestry and Trading
Woodbois Liberia Inc. 100% Liberia Dormant
Indirect investments of Argento Limited
Argento Mozambique Limitada 100% Mozambique Holding company & Forestry
Madeiras SL Limitada 100% Mozambique Forestry
Jardim Zambezia Limitada 100% Mozambique Forestry
Baia Branca Limitada 100% Mozambique Forestry
Ligohna Timber Products Limitada 100% Mozambique Forestry
Ligohna Timber Products (2) Limitada 100% Mozambique Forestry
Montara Forest Lda 100% Mozambique Forestry
Petroforge Mozambique Lda 100% Mozambique Forestry
WoodBois International ApS 100% Denmark Timber Trading
WoodGroup ApS 100% Denmark Timber Trading
Woodbois Gabon 100% Gabon Forestry
SCI Yarim 100% Gabon Property holding
La Gabonaise des Forêts et de l'Industrie du Bois (LGFIB) 100%
Gabon Forestry
The registered offices of the Group's subsidiaries are as follows:
Subsidiary undertakings Registered office
Direct investments
Woodbois Services Limited 118 Piccadilly, London, England, W1JNW
Woodbois Trading Limited New Mandarin Plaza Tower B, 14 Science Museum Rd, Hong Kong
Argento Limited Dias Pier Building, Le Caudan Waterfront, Port Louis, Mauritius
Woodbois Liberia Inc. Daviers Compound, Williams Road, Monrovia, Libreville
Indirect investments of Argento Limited
Argento Mozambique Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Madeiras SL Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Jardim Zambezia Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Baia Branca Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Ligohna Timber Products Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Ligohna Timber Products (2) Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Montara Forest Lda Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Petroforge Mozambique Lda Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
WoodBois International ApS Hoeffdingsvej 34, 2500 Valby, Denmark
WoodGroup ApS Hoeffdingsvej 34, 2500 Valby, Denmark
Woodbois Gabon Boite Postale 5333, Montée de Louis vers L'Ex Maringa, Libreville, Gabon
SCI Yarim 3568, Centre Ville Vers La Renovation, Libreville, Gabon
La Gabonaise des Forêts et de l'Industrie du Bois (LGFIB) Louis (a cote de l'ex Marin a) 5333, Libreville, Gabon
Intra-group transactions
All intra-group transactions, balances, and unrealised gains and losses on
transactions between Group companies are eliminated on consolidation.
Subsidiaries' accounting policies are amended where necessary to ensure
consistency with the policies adopted by the Group. All financial statements
are made up to 31 December each year.
Business combination
The Group accounts for business combinations using the acquisition method when
the acquired set of activities and assets meets the definition of a business
and control is transferred to the Group. In determining whether a particular
set of activities and assets is a business, the Group assesses whether the set
of assets and activities acquired includes, at a minimum, an input and
substantive process and whether the acquired set has the ability to produce
outputs.
The Group has an option to apply a 'concentration test' that permits a
simplified assessment of whether an acquired set of activities and assets is
not a business. The optional concentration test is met if substantially all of
the fair value of the gross assets acquired is concentrated in a single
identifiable asset or group of similar identifiable assets.
The consideration transferred in the acquisition is generally measured at fair
value, as are the identifiable net assets acquired. Any goodwill that arises
is tested annually for impairment. Any gain on a bargain purchase is
recognised in profit or loss immediately. Transaction costs are expensed as
incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the
settlement of pre-existing relationships. Such amounts are generally
recognised in profit or loss.
Changes in Accounting policies
a) New and amended standards adopted by the Group
The following IFRS or IFRIC interpretations were effective for the first time
for the financial year beginning 1 January 2021. Their adoption has not had
any material impact on the disclosures or on the amounts reported in these
consolidated financial statements:
Standards /interpretations Application
IFRS 16 Covid-19-Related Rent Concessions
IFRS 9, 7, 4, 16 Interest Rate Benchmark Reform - Phase 2
b) Accounting standards and interpretations not yet effective
The following new or amended standards are not expected to have a significant
impact on the group's financial statements
Standards /interpretations Application
IAS 37 Onerous Contracts - Cost of Fulfilling a Contract
IAS 16 Property, Plant and Equipment: Proceeds before Intended Use
IFRS 1, 9, 16 and IAS 41 Annual Improvements to IFRS Standards 2018-2020 Cycle
IAS Classification of Liabilities as Current or Non-current
1
IFRS 17 Amendments to IFRS 17 Insurance Contracts
IAS Definition of Accounting Estimates
8
IAS Deferred Tax related to Assets and Liabilities arising
12
from a Single Transaction
SEGMENTAL REPORTING
The reportable segments are identified by the Executive Board (which is
considered to be the Chief Operating Decision Maker) by the way management has
organised the Group. The Group operates within three separate operational
divisions comprising forestry, trading and carbon solutions (2020: forestry,
trading and head office). Carbon solutions was formally established during
2021 while the head office segment was reallocated and absorbed by the three
remaining divisions.
The directors review the performance of the Group based on total revenues and
costs, for these three divisions and not by any other segmental reporting.
FOREIGN CURRENCIES
The presentation currency of the Group is US Dollars (US$). Items included
in the Group's financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ("the functional currency"). The functional currency of the
majority of the Group's subsidiaries is USD as this is the currency in which
they trade on a local basis. The consolidated financial statements are
presented in USD ("the presentation currency") because this is the currency
better understood by the principal users of the financial statements.
Foreign currency translation rates (against US$) for the significant
currencies used by the Group were:
At 31 December Annual average At 31 December Annual average
for 2021
for 2020
2021 2020
UK Pound 1.35 1.38 1.36 1.29
Mozambique Metical 63.83 65.33 74.89 70.02
Danish Krone 6.57 6.29 6.06 6.51
West African CFA franc 579.26 556.02 533.99 572.81
Transactions in foreign currencies are initially recorded at the rates of
exchange prevailing on the dates of the transaction. At each reporting date,
monetary assets and liabilities that are denominated in foreign currency are
translated into the functional currency at the rate prevailing on that date.
Non-monetary assets and liabilities are measured at fair value and are
translated into the functional currency at the rate prevailing on the
reporting date. Gains and losses arising on retranslation are included in
profit or loss for the year, except for exchange differences on non-monetary
assets and liabilities, which are recognised directly in other comprehensive
income when the changes in fair value are recognised directly in other
comprehensive income.
On consolidation, the assets and liabilities of the Group's overseas
operations are translated into the Group's presentational currency at exchange
rates prevailing at the reporting date. Income and expense items are
translated at the average exchange rates for the year unless exchange rates
have fluctuated significantly during the year, in which case the exchange rate
at the date of the transaction is used. Exchange differences arising, if any,
are taken to other comprehensive income and the Group's translation reserve.
Such translation differences are recognised as income or as expenses in the
year in which the operation is disposed of.
CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT
The preparation of the consolidated financial statements requires management
to make estimates and judgements and form assumptions that affect the reported
amounts of the assets, liabilities, revenue and costs during the periods
presented therein, and the disclosure of contingent liabilities at the date of
the consolidated financial statements.
Estimates and judgements are continually evaluated and based on management's
historical experience and other factors, including future expectations and
events that are believed to be reasonable. The estimates and assumptions that
have a significant risk of causing a material adjustment to the financial
results of the Group in future reporting periods are discussed below.
Information about assumptions and estimation uncertainties at 31 December that
have a significant risk of resulting in a material adjustment to the carrying
amounts of assets and liabilities in the next financial year is included in
the following notes:
· Residual values and useful lives of property, plant and
equipment: refer to note 1
· Fair value of biological assets: refer to note 11
· Provision for doubtful debts: refer to note 1
· Share Based Payments: refer to note 21
Revenue recognition
Under IFRS 15, Revenue from Contracts with Customers, five key points to
recognise revenue have been assessed:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the
contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a performance
obligation.
The Group recognises revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to the
entity, and specific criteria have been met for each of the Group's
activities, as described below.
The Group bases its estimates on historical results, taking into consideration
the type of customer, the type of transaction and the specifics of each
arrangement. Where the Group makes sales relating to a future financial
period, these are deferred and recognised under 'deferred revenue' on the
Statement of Financial Position.
The Group currently has the following revenue streams:
· Sale of goods: Revenue is recognised following the five-step
approach outlined above. The performance obligation set out in step two is
when the risk and reward of the goods is transferred to the customer (revenue
recognised at a point in time), and is transferred at the earlier of:
o when goods are sold subject to a letter of credit, on the date that the
bill of lading is dispatched to the buyer's bank; or
o when goods are prepaid in full by the buyer, based on the incoterm
specified in the contract/invoice; or
o when the bill of lading is exchanged.
· Service revenue: Revenue is recognised following the five-step
approach outlined above. The performance obligation set out in step two is
when the work has been certified by the customer (revenue recognised at a
point in time).
· Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable.
· Dividend income from investments is recognised when the
shareholders' rights to receive payment have been established (provided that
it is probable that the economic benefits will flow to the Group and the
amount of revenue can be measured reliably).
LEASES
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration.
Short‐term leases and leases of low‐value assets
The Group applies the short‐term lease recognition exemption to its
short‐term leases (i.e., those leases that have a lease term of 12 months or
less from commencement date and do not contain a purchase option). It also
applies the lease of low‐value assets recognition exemption to leases of
equipment that are considered of low value (i.e., below $5,000). Lease
payments on short‐term leases and leases of low‐value assets are
recognized as occupancy expense on a straight‐line basis over the lease
term.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the
rate implicit in the lease. If this rate cannot be readily determined, the
Group uses its incremental borrowing rate.
The right of use assets comprise the initial measurement of the corresponding
lease liability, lease payments made at or before the commencement day and any
initial direct costs. They are subsequently measured at cost less accumulated
depreciation and impairment losses.
The Group remeasures the lease liability (and makes a corresponding adjustment
to the related right of use asset) whenever:
· The lease term has changed or there is a change in the assessment
of exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a revised discount
rate;
· The lease payments change due to changes in an index or rate or a
change in expected payment under a guaranteed residual value, in which cases
the lease liability is remeasured by discounting the revised lease payments
using the initial discount rate (unless the lease payments change is due to a
change in a floating interest rate, in which case a revised discount rate is
used); or
· A lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease liability is
remeasured by discounting the revised lease payments using a revised discount
rate.
Right of use assets are depreciated over the shorter period of lease term and
useful life of the underlying asset. If a lease transfers ownership of the
underlying asset or the cost of the right of use asset reflects that the Group
expects to exercise a purchase option, the related right of use asset is
depreciated over the useful life of the underlying asset. The depreciation
starts at the commencement date of the lease.
The Group applies IAS 36 Impairment of Assets to determine whether a right of
use asset is impaired.
Variable rents that do not depend on an index or rate are not included in the
measurement of the lease liability and the right of use asset. The related
payments are recognised as an expense in the period in which the event or
condition that triggers those payments occurs.
DISCONTINUED OPERATIONS
A discontinued operation is a component of the Group's business, the
operations and cash flows of which can be clearly distinguished from the rest
of the Group and which:
· represents a separate major line of business or geographic area
of operations;
· is part of a single co-ordinated plan to dispose of a separate
major line of business or geographic area of operations; or
· is a subsidiary acquired exclusively with a view to re-sale.
Classification as a discontinued operation occurs at the earlier of disposal
or when the operation meets the criteria to be classified as held-for-sale.
When an operation is classified as a discontinued operation, the comparative
statement of profit or loss and OCI is re-presented as if the operation had
been discontinued from the start of the comparative year.
Property, PLANT AND EQUIPMENT
Land and Buildings are recognised at fair value based on periodic, but at
least triennial, valuations by external independent valuers. Any revaluation
gains are recognised in other comprehensive income. Revaluation losses are
recognised with other comprehensive income, against any pre-existing gains,
with anything over and above pre-existing gains being recognised as an expense
in profit and loss.
All other Property, plant and equipment is stated at historical cost less
subsequent accumulated depreciation and any accumulated impairment losses. If
significant parts of property, plant and equipment have different useful
lives, then they are accounted for as separate items (major components) of
property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is
recognised in profit or loss.
Subsequent expenditure is capitalised only if it is probable that the future
economic benefits associated with the expenditure will flow to the Group.
Leased assets are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the group will obtain
ownership by the end of the lease term.
Land has an indefinite useful life and therefore is not depreciated.
Depreciation is calculated on a straight-line basis at rates calculated to
write each asset down to its estimated residual value, which in most cases is
assumed to be zero, evenly over its expected useful life, as follows:
Motor
vehicles
over 3 years
Fixtures and IT
equipment
over 3 years
Plant and equipment
over 2 - 5 years
Management judgement and assumptions are necessary in estimating the methods
of depreciation, useful lives and residual values. Depreciation methods,
useful lives and residual values are reviewed at each reporting date and
adjusted if appropriate.
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
At each statement of financial position date, the Group reviews the carrying
amounts of its tangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Where there has been a change in economic conditions that indicate a possible
impairment in a cash-generating unit, the recoverability of the net book value
relating to that field is assessed by comparison with the estimated discounted
future cash flows based on management's expectations of future costs.
The recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised as an expense immediately.
Where conditions giving rise to impairment subsequently reverse, the effect of
the impairment charge is also reversed as a credit to the income statement,
net of any depreciation that would have been charged since the impairment.
biological assets
A biological asset is defined as a living animal or plant. The Group's
biological assets comprise standing timber. The fair value of the standing
timber is determined using models based on expected yields, market prices for
the saleable produce, over 5 years, after allowing for harvesting costs and
other costs yet to be incurred in getting the produce to maturity. Any changes
in fair value are recognised in the income statement in the year in which they
arise.
Forestry
IAS 41 requires biological assets to be measured at fair value less costs to
sell. The fair value of standing timber is estimated based on the present
value of the net future cash flows from the asset, discounted at a current
market-based rate. In determining the present value of expected net cash
flows, the Group includes the net cash flows that market participants would
expect the asset to generate in its most relevant market. Increases or
decreases in value are recognised in profit or loss. When the fair value
estimates are determined to be clearly unreliable due to insufficient
information being available to the directors, the biological asset is held at
cost less any accumulated depreciation and any accumulated losses.
All expenses incurred in maintaining and protecting the assets are recognised
in profit or loss. All costs incurred in acquiring additional planted areas
are capitalised.
Where fair value of a biological asset cannot be measured reliably, the
biological asset shall be measured at its cost less any accumulated
depreciation and any accumulated impairment losses.
Costs incurred prior to the demonstration of commercial feasibility of
forestry and agriculture in a particular area are written-off to profit and
loss as incurred.
CONVERTIBLE BONDS
The net proceeds received from the issue of convertible bonds are split
between a liability element and an equity component at the date of issue. The
fair value of the liability component is estimated using the prevailing market
interest rate for similar nonconvertible debt. The portion which represents
the embedded option to convert the liability into equity of the Company is
included in equity and its fair value at initial recognition was estimated
using the Monte Carlo method of valuing such instruments. The equity portion
is not remeasured subsequent to initial recognition and the liability
component is carried at amortised cost. Issue costs are apportioned between
the liability and equity components of the convertible bonds based on their
relative carrying amounts at the date of issue. The portion relating to the
equity component is charged directly against equity. The interest expense on
the liability component is calculated by applying the prevailing market
interest rate, at the time of issue, for similar non-convertible debt to the
liability component of the instrument. The difference between this amount and
the interest paid is added to the carrying amount of the convertible bonds.
FINANCIAL INSTRUMENTS
(a) Classification
The Group classifies its financial assets in the following measurement
categories:
· those to be measured subsequently at fair value (either through
OCI or through profit or loss); and
· those to be measured at amortised cost.
The classification depends on the Group's business model for managing the
financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will be recorded either in
profit or loss or in OCI. For investments in equity instruments that are not
held for trading, this will depend on whether the Group has made an
irrevocable election at the time of initial recognition to account for the
equity investment at fair value through other comprehensive income (FVOCI).
(b) Recognition
Purchases and sales of financial assets are recognised on trade date (that is,
the date on which the Group commits to purchase or sell the asset). Financial
assets are derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
(c) Measurement
At initial recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through profit or
loss (FVPL), transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets
carried at FVPL are expensed in profit or loss.
Debt instruments
Amortised cost; Assets that are held for collection of contractual cash flows,
where those cash flows represent solely payments of principal and interest,
are measured at amortised cost. Interest income from these financial assets is
included in finance income using the effective interest rate method.
Any gain or loss arising on derecognition is recognised directly in profit or
loss and presented in other gains/(losses) together with foreign exchange
gains and losses. Impairment losses are presented as a separate line item in
the statement of profit or loss.
(d) Impairment
The Group assesses, on a forward-looking basis, the expected credit losses
associated with its debt instruments carried at amortised cost. The impairment
methodology applied depends on whether there has been a significant increase
in credit risk.
For trade receivables, the Group applies the simplified approach permitted by
IFRS 9, which requires expected lifetime losses to be recognised from initial
recognition of the receivables.
INVENTORIES
Inventories are measured at the lower of cost-of-production or estimated net
realisable value. Cost of production includes direct labour, all costs of
purchase, conversion and other costs incurred in bringing the inventories to
their present location and condition. Net realisable value is the estimated
selling price in the ordinary course of business, less the estimated selling
expenses. The cost of inventories is based on the weighted average cost
method.
Product that has been containerised and shipped or remains in storage at the
port of departure, and where ownership has not yet passed to the customer, is
accounted for as stock in transit and stated at the lower of cost of
production or estimated net realisable value.
eMPLOYEE benefits
short-term employee benefits
The costs of all short-term employee benefits are recognised in the period in
which the employee renders the related service.
The accrual/liability for employee entitlements to wages, salaries and annual
leave represent the amount which the Group has a present obligation to pay as
a result of an employees' services provided up to the reporting date. The
accruals have been calculated at undiscounted amounts based on expected wage
and salary rates.
SHARE-BASED PAYMENT ARRANGEMENTS
The grant-date fair value of equity-settled share-based payment arrangements
granted to employees is generally recognised as an expense, with a
corresponding increase in equity. The amount recognised as an expense is
adjusted to reflect the number of awards for which the related service and
non-market performance conditions are expected to be met, such that the amount
ultimately recognised is based on the number of awards that meet the related
service and non-market performance conditions at the vesting date. For
share-based payment awards with non-vesting conditions, the grant-date fair
value of the share-based payment is measured to reflect such conditions and
there is no true-up for differences between expected and actual outcomes.
The fair value of the options granted is measured using a Monte-Carlo
valuation model for market performance criteria and Black-Scholes valuation
model for non-market performance criteria, considering the terms and
conditions under which the options were granted. The amount recognised as an
expense is adjusted to reflect the actual number of share options that vest.
PROVISIONS
A provision is recognised if, as a result of a past event, the Group has a
present legal or constructive obligation that can be estimated reliably, and
it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the liability. The unwinding of
discount is recognised as a finance cost.
A provision for onerous contracts is recognised when the expected benefits to
be derived by the Group from a contract are lower than the unavoidable cost of
meeting its obligations under the contract. The provision is measured at the
present value of the lower of the expected cost of terminating the contract
and the expected net cost of continuing with that contract.
In accordance with the Group's environment policy and applicable legal
requirements, a provision for site restoration in respect of contaminated
land, and the related expense, is recognised when the land is contaminated.
TAXATION
Income tax expense comprises current and deferred tax. It is recognised in
profit or loss except to the extent that it relates to a business combination,
or items recognised directly in equity or in OCI.
CURRENT TAX
Current tax comprises the expected tax payable or receivable on the taxable
income or loss for the year and any adjustment to the tax payable or
receivable in respect of previous years.
The amount of current tax payable or receivable is the best estimate of the
tax amount expected to be paid or received that reflects uncertainty related
to income taxes, if any. It is measured using tax rates enacted or
substantively enacted at the reporting date. Current tax also includes any tax
arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are
met.
DEFERRED TAX
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes.
Deferred tax is not recognised for:
· temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss;
· temporary differences related to investments in subsidiaries,
associates and joint arrangements to the extent that the Group is able to
control the timing of the reversal of the temporary differences and it is
probable that they will not reverse in the foreseeable future; and
· taxable temporary differences arising on the initial recognition
of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits
and deductible temporary differences to the extent that it is probable that
future taxable profits will be available against which they can be used.
Future taxable profits are determined based on the reversal of relevant
taxable temporary differences. If the amount of taxable temporary differences
is insufficient to recognise a deferred tax asset in full, then future taxable
profits, adjusted for reversals of existing temporary differences, are
considered, based on the business plans for individual subsidiaries in the
Group. Deferred tax assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax benefit will
be realised; such reductions are reversed when the probability of future
taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and
recognised to the extent that it has become probable that future taxable
profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, using tax rates enacted or
substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would
follow from the manner in which the Group expects, at the reporting date, to
recover or settle the carrying amount of its assets and liabilities. For this
purpose, the carrying amount of investment property measured at fair value is
presumed to be recovered through sale, and the Group has not rebutted this
presumption.
Deferred tax assets and liabilities are offset only if certain criteria are
met.
BORROWINGS
Borrowings are initially recognised at fair value, net of transaction costs
incurred. Borrowings are subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using
the effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the extent that
it is probable that some or all of the facility will be drawn down. In this
case, the fee is deferred until the draw down occurs. To the extent there is
no evidence that it is probable that some or all of the facility will be drawn
down, the fee is capitalised as a prepayment for liquidity services and
amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the group has an
unconditional right to defer settlement of the liability for at least 12
months after the reporting period.
EARNINGS PER SHARE
(i) Basic earnings per share is calculated by dividing the profit
attributable to the owners of the Company by the weighted average number of
ordinary shares outstanding during the financial year.
(ii) Diluted earnings per share adjusts the figures used in determining
basic earnings per share to take into account the after tax effects of
interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of ordinary shares that would have been
outstanding assuming the conversion of all diluted potential ordinary shares.
Where there is a loss attributable to the owners of the company, it is not
necessary to disclose the diluted earnings per share.
GOING CONCERN
The consolidated financial statements have been prepared assuming that the
Group will continue as a going concern. Under this assumption, an entity is
ordinarily viewed as continuing in business for the foreseeable future with
neither the intention nor necessity of liquidation, ceasing trading or seeking
protection from creditors for at least 12 months from the date of the signing
of the consolidated financial statements.
Management have performed their consideration on various scenarios including a
base case which includes financing being raised but only trade financing, the
terms of which have been signed at the date of these consolidated financial
statements. In their scenario planning management have considered inter alia:
· the current stage of the Group's life cycle;
· its performance and cashflow;
· the expected timing of revenues;
· financing both committed and those that management consider is
available;
· operational risks; and
· COVID-19 related impacts.
The forecasts, including the base case, show that the Company has adequate
resources to continue in operational existence for the foreseeable future and
it can meet its liabilities as they fall due in the next 12 months. The
directors therefore consider it appropriate to adopt the going concern basis
of preparation in the consolidated financial statements.
2. SEGMENTAL REPORTING
Segmental information is presented on the basis of the information provided to
the Chief Operating Decision Maker ("CODM"), which is the Executive Board.
The Group is currently focused on forestry, timber trading and carbon
solutions. Carbon solutions was formally established during 2021 while the
head office segment was reallocated and absorbed by the three remaining
divisions. These are the Group's primary reporting segments, operating in
Gabon, Mozambique, Denmark, Guernsey and head operating offices in
Mauritius. Certain support services are performed in the UK.
As on 31 December 2021 sales made to one customer during the year accounted
for 10% (2020 9%) of the total turnover.
The Group's directors review the internal management reports of each division
at least monthly.
There are varying levels of integration between the Forestry and Trading
segments. This integration includes transfers of sawn timber and veneer,
respectively. Inter-segment pricing is determined on an arm's length basis.
Information relating to each reportable segment is set out below. Segment
profit/(loss) before tax is used to measure performance because management
believes that this information is the most relevant in evaluating the results
of the respective segments relative to other entities that operate in the same
industry.
The following table shows the segment analysis of the Group's profit before
tax for the year and net assets at 31 December 2021. All amounts are disclosed
after taking into account any intra-segment and intra-group eliminations:
2021 Forestry Trading Carbon Solutions Total
$000 $000 $000 $000
Income statement
Turnover 7,988 9,477 - 17,465
Cost of Sales (5,569) (8,401) - (13,970)
Gross profit 2,419 1,076 - 3,495
Operating costs (1,511) (1,531) (578) (3,620)
Administrative expenses (330) (334) (660) (1,324)
Depreciation (321) (5) - (326)
Share based payment expense (59) (58) (116) (233)
Gain on fair value of biological assets 4,253 - - 4,253
Segment operating profit/(loss) 4,451 (852) (1,354) 2,245
Finance costs (241) (350) - (591)
Foreign exchange (loss)/gain (78) 834 - 756
Bargain purchase 88,292 - - 88,292
Profit/(loss) before taxation 92,424 (368) (1,354) 90,702
Taxation (591) - - (591)
Profit/(loss) for the year from Continuing Operations 91,833 (368) (1,354) 90,111
NET ASSETS
Assets: 370,433 8,146 - 378,579
Liabilities: (3,901) (9,755) - (13,656)
Deferred tax liability (106,475) - - (106,475)
Net assets 260,057 (1,609) - 258,448
The following table shows the segment analysis of the Group's loss before tax
for the year and net assets at 31 December 2020. All amounts are disclosed
after taking into account any intra-segment and intra-group eliminations:
Forestry Trading Total
2020 (restated 5 )
$000 $000 $000
Income statement
Turnover 4,357 10,903 15,260
Cost of Sales (3,308) (10,730) (14,038)
Gross profit 1,049 173 1,222
Operating costs (2,609) (1,678) (4,287)
Administrative expenses (503) (514) (1,017)
Depreciation (763) (15) (778)
Share based payment expense (83) (117) (200)
Gain on fair value of biological assets 9,515 - 9,515
Segment operating profit/(loss) 6,606 (2,151) 4,455
Finance costs (1,499) (1,321) (2,820)
Loss on restructure 498 (1,985) (1,487)
Contingent acquisition expense (1,086) (1,085) (2,171)
Loss owing to theft - (3,403) (3,403)
Foreign exchange gain 414 813 1,227
Profit/(loss) before taxation 4,933 (9,132) (4,199)
Taxation (2,192) - (2,192)
Profit/(loss) for the year from Continuing Operations 2,741 (9,132) (6,391)
NET ASSETS (restated5)
Assets: 226,587 9,053 235,640
Liabilities: (2,729) (11,295) (14,024)
Deferred tax liability (64,788) - (64,788)
Net assets 159,070 (2,242) 156,828
Geographical information
In presenting the below geographical information, segment revenue and
non-current assets are based on the entity's country of domicile.
Denmark Gabon Mozambique Total
2021 $000 $000 $000 $000
External sales 9,477 7,710 278 17,465
Non-Current Assets 273 326,884 39,760 366,917
2020 $000 $000 $000 $000
External sales 10,903 4,057 300 15,260
Non-Current Assets 90 150,445 73,892 224,427
The below segment revenue has been based on the geographic location of the
customer. Only material amounts were included.
2021 2020
Location: $000 $000
Pakistan 4,418 3,343
Libya 2,790 1,252
Bangladesh 1,535 908
Dominican Republic 1,220 417
Turkey 901 531
Morocco 732 627
Iraq 690 563
Vietnam 649 551
USA 569 122
13,504 8,314
3. OPERATING profit
2021 2020
$000 $000
Operating profit is stated after charging/(crediting):
Depreciation of property, plant and equipment 2,063 1,942
Staff costs (see note 4) 3,936 2,985
Share based payment reserve expense (see note 21) 233 200
Operating lease costs 81 51
Gain on fair value of Biological assets (see note 11) (4,253) (9,515)
Auditor's remuneration:
Audit services
- fees payable to the Company's auditor for the audit of the consolidated 75 71
accounts
Fees payable to associates of the Company's auditor
- auditing the accounts of subsidiaries pursuant to legislation 70 84
4. EMPLOYEE INFORMATION
2021 2020
Number Number
The average monthly number of persons (including directors) employed by the
Group during the year was:
Administration and management 5 4
Carbon solutions 2 -
Agriculture - 1
Forestry 342 245
Trading 9 10
358 260
2021 2020
$000 $000
The aggregate remuneration comprised:
Wages and salaries 3,834 2,942
Social security costs 102 43
3,936 2,985
2021 2020
$000 $000
Directors' remuneration included in the aggregate remuneration above
comprised
Emoluments for qualifying services 810 898
Included above are emoluments of $262,000 (2020: $259,000) in respect of the
highest paid director. Deferred final acquisition payments arising from the
acquisition of WoodBois International ApS are excluded in both periods. Full
details of directors' remuneration are included in the Directors' Report.
Pension contributions of $13,750 (2020: $15,701) were made on behalf of the
directors and other staff members.
5. acquisition OF SUBSIDIARY
On 6 August 2021, the Group acquired 100% of the shares and voting interests
in Forêts et de l'Industrie du Bois ("LGFIB") for a cash consideration of
$1.5 million.
Through the acquisition of LGFIB, the Group acquired 71,000 hectares of forest
concessions in Gabon. This additional hectarage, which is located within 100km
of our manufacturing base in Mouila, will provide the increased levels of
sustainably harvested timber required as additional production capacity comes
online at our sawmill and veneer factory.
No harvesting has taken place during the 2021 financial year in the newly
acquired concession and therefore the acquisition of LGFIB has not materially
contributed to the consolidated revenue and profit for the period.
A. Consideration transferred
A cash consideration of $1.534m represents the acquisition-date fair value of
the total consideration transferred.
B. Acquisition related costs
Acquisition related costs spent on legal and due diligence were expensed and
have been included in operating costs.
C. Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets acquired and
liabilities assumed at the date of acquisition.
Note $000
Biological assets 11 128,322
Deferred tax 7 (38,496)
Total identifiable net assets acquired 89,826
D. Gain on bargain purchase
A gain from bargain purchase arising from the acquisition has been recognised
as follows.
Note $000
Consideration transferred a (1,534)
Fair value of identifiable net assets c 89,826
Gain on bargain purchase 88,292
Occasionally, an acquirer will make a bargain purchase. This is usually in a
business combination that is a forced sale in which the seller is acting under
compulsion. In this case, the sellers were not distressed and not acting under
compulsion.
The gain on bargain purchase arises due to the difference in accounting
frameworks applied by the Company and LGFIB, the Gabonese company it
acquired. Specifically, the difference relates to the measurement of
Biological Assets. The Company applies IFRS which stipulates that acquired
assets and liabilities be recognised, at the date of acquisition, at its fair
value. LGFIB, who applies Gabonese accounting standards, does not carry
Biological Assets on its Balance Sheet, but instead expensed the cost of
acquiring the rights over time and no fair value assessment is made for
accounting purposes. The Company applied IAS 41 when determining the Fair
Value of the Biological Assets acquired. Further information on the inputs
to the valuation is set out in Note 11. In addition to the effect of the
different accounting standards applied, the previous owner's financial
position, his inability to acquire finance to operate the asset and the threat
of potentially losing it due to non-operation together with the quick exit and
certainty of being paid offered by WoodBois contributed to the gain realised.
6. FINANCE COSTS
2021 2020
$000 $000
Bank interest 503 431
Internal Trade Finance Fund interest - 903
Convertible bond interest 88 1,486
591 2,820
7. TAXATION
2021 2020
$000 $000
Current tax:
Corporation tax on profit for the year (81) (59)
Deferred tax:
Origination and reversal of temporary differences (510) (2,133)
Tax on profit/(loss) on ordinary activities (591) (2,192)
2021 2020
$000 $000
Group
Profit/(loss) on ordinary activities before tax 90,701 (4,345)
Profit/(loss) on ordinary activities multiplied by the average rate of 17,233 (826)
corporation tax of 19% (2020: 19%)
Effects of:
Losses carried forward/(utilised) (123) 1,196
Non-taxable gain on bargain purchase (16,775) -
Non-taxable foreign exchange gain (111) -
Non-taxable movement in fair value of biological assets (905) (3,941)
Non-deductible Loss allowance - 30
Non-deductible share-based payment expense 44 38
Non-deductible other expenditure 525 1,311
Group tax credit for the year (112) (2,192)
The prevailing tax rates of the operations of the Group range between 3% and
32%. Therefore, a rate of 19% has been used as it best represents the weighted
average tax rate experienced by the Group. The Group has estimated losses of
$28 million (2020: $29 million) available to carry forward against future
taxable profits. Tax losses utilized during the year related principally to
profits realised by subsidiaries in certain jurisdictions and tax gains
realised on liquidation of various subsidiaries. No deferred tax assets have
been recognised in respect of losses due to the unpredictability of future
taxable profit. All unused tax losses may be carried forward indefinitely for
most entities. Unused tax losses arising from Mozambique may be carried
forward for a five-year period.
The movement in the year in the Group's recognised net deferred tax position
was as follows:
2021 2020
Deferred tax liabilities $000 $000
At 1 January 64,788 62,655
Increase in deferred tax liability: fair value adjustment of Biological Assets 39,006 2,133
Increase in deferred tax liability: fair value adjustment on property, plant 2,681 -
and equipment
At 31 December 106,475 64,788
Deferred tax reconciliation
2021 2020
Deferred tax assets / (liabilities) $000 $000
Deferred tax liability on the fair value adjustment of Biological Assets (101,740) (62,734)
Deferred tax liability on the fair value adjustment on property, plant and
equipment
(4,735) (2,054)
At 31 December (106,475) (64,788)
8. EARNINGS PER SHARE
Summary:
2021 2020
cents cents
Basic earnings per share from continuing operations 3.69 (0.51)
Basic earnings per share from discontinued operations - (0.01)
Diluted earnings per share 3.65 -
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by the weighted average aggregate number of
Voting and Non-Voting Ordinary Shares in issue during the year.
The calculation of diluted EPS has been based on dividing the profit
attributable to ordinary shareholders and weighted-average number of ordinary
shares outstanding after adjustment for the effects of all dilutive potential
ordinary shares.
2021 2020
$000 $000
Profit/(loss) from continuing operations 90,111 (6,391)
Profit/(loss) from discontinued operations - (146)
Total profit/(loss) for the year 90,111 (6,537)
The earnings used for diluted earnings per share are the same as the earnings
used for basic earnings per share, which equates to profit attributable to the
owners of the company of $90.1 million for the Company.
Reconciliation of shares in issue to weighted average and dilutive weighted
average number of ordinary shares
2021 2020
'000 '000
Shares in issue at beginning of year 2,382,216 465,452
Treasury shares (99) (99)
Shares issued during the year weighted for period in issue (note 18) 62,466 779,563
Weighted average number of ordinary shares in issue for the year 2,444,583 1,244,916
Conversion of convertible bonds 21,612 21,612
Dilutive weighted average number of ordinary shares in issue for the year 2,466,195 1,266,528
9. PROPERTY, plant and equipment
Land & buildings Motor vehicles Plant & equipment Fixtures & IT equipment Total
$000 $000 $000 $000 $000
Cost
At 1 JANUARY 2020 8,281 4,274 10,386 140 23,081
Additions - 233 1,276 78 1,587
Disposals (1,046) (97) (113) (1) (1,257)
Effects of foreign exchange 540 284 652 (26) 1,450
At 31 December 2020 7,775 4,694 12,201 191 24,861
Additions - 1,779 3,072 218 5,069
Revaluation of land and buildings (note 10) 8,934 - - - 8,934
Disposals - - (20) - (20)
Effects of foreign exchange (1,278) (279) (679) 22 (2,214)
At 31 December 2021 15,431 6,194 14,574 431 36,630
Depreciation
At 1 JANUARY 2020 71 1,123 1,513 51 2,758
Charge for the year 24 596 1,303 19 1,942
Disposals (87) (50) (37) - (174)
Effects of foreign exchange (8) 56 100 (16) 132
At 31 December 2020 - 1,725 2,879 54 4,658
Charge for the year - 626 1,419 18 2,063
Disposals - - (20) - (20)
Effects of foreign exchange - (79) (126) 15 (190)
At 31 December 2021 - 2,272 4,152 87 6,511
Net book value
At 31 December 2020 7,775 2,969 9,322 137 20,203
At 31 December 2021 15,431 3,922 10,422 344 30,119
On acquisition of an asset, the estimated useful life is determined. The
residual values for the majority of assets, except for Land and Buildings, are
assumed to be zero.
10. Revaluation of land and buildings
It is the Company's policy to revalue Owner Occupied Land and Buildings every
4 to 6 years based on the understanding of the property market and budgeted
capex spend.
The date of the previous revaluation was in the first half of 2017 so the
Company engaged an external, independent property valuer, having the
appropriate recognised professional qualifications and experience, to
determine the fair value of the Group's Owner Occupied Land and Buildings
located in Gabon. The valuation was completed in May 2021. A revaluation net
gain of $6.3 million (comprised of a gross gain of $8.9m net of deferred tax
of $2.6m) was recognised in Other Comprehensive Income.
The carrying amount for those assets, if the cost model had been applied,
would have been $326,000 (2020: $368,000).
The replacement cost approach was used to determine the fair value. The
replacement cost method involves arriving at an asset's value by reference to
the present-day cost, in an arms-length transaction, of replacing that asset
with a similar asset in a similar condition. Average construction prices in
the area were used to determine the fair value. A deterioration percentage
estimate was then applied against the fair value to represent the asset's
current condition.
Significant unobservable inputs used to calculate the fair value include:
- Estimated construction prices per m(2). The estimated fair value
would increase (decrease) if the construction prices would be lower (higher).
- Deterioration percentage estimate. The estimated fair value would
increase (decrease) if the deterioration percentage estimate would be lower
(higher).
The fair value measurement for the land and buildings has been categorised as
a level 3 fair value based on the inputs used in the valuation technique.
Please refer to note 9 for a reconciliation of the carrying amount of land and
buildings.
11. biological assets
2021 2020
Standing timber $000 $000
Carrying value at beginning of year 204,223 194,708
Additions (Note 5) 128,322 -
Fair value movements 4,253 9,515
Carrying value at end of year 336,798 204,223
The methods and assumptions used in determining the fair value of standing
timber within the forestry concessions held has been based on IAS 41
Agriculture which uses discounted cash flow models and which require a number
of significant judgements to be made by the directors in respect of sales
price, operational cost, discount rates, growth rates, legislative rulings and
operating effectiveness. Following the fair value assessment in 2021, a net
fair value gain of $3.7 million (loss of $23.2 million for Mozambique and a
gain of $26.9 million for Gabon) was recognised.
The discounted cash flow models cover the concession areas in Mozambique and
Gabon to which the group has secured the rights. Management prepares separate
models for each country.
Harvesting levels are regulated by the Annual Permitted Cut ("APC") (total m3
per species) set in each management plan and approved at federal and
provincial government level and can be reviewed and increased periodically,
while continued sustainability is ensured. The level of assumed APC varies
between 55,780m3 and 237,983m3 (2020: 62,822m3 and 200,000m3). This is based
on the current APC which may be subject to change depending on legislative
changes both with regards to the size of the area and species. Such changes
may impact the carrying value of the biological assets held.
The valuation models assume pre-tax discount rates of 11% (2020: 10%) for
Gabon and 13% (2020: 12%) for Mozambique. The discount rates have been
calculated using a weighted average cost of capital ("WACC") methodology. Our
comparable company base is made up of Africa-focused and global forestry
companies which management consider would be categorized in the same sector as
Woodbois. Relevant country and equity risk premiums have been used for Gabon
and Mozambique. When considering the discount rate applicable to the
Mozambique model, management has specifically ensured that the discount rate
adequately incorporates the risk associated with the current unrest being
experienced in the northern parts of the country. Management have further
determined that the discount rates are in line with the overall industry
consensus for timberland assets within Africa. The increase in pre-tax
discount rates from the prior year is due to the increase in the risk-free
rate and the cost of debt which is used in calculating the WACC.
The Group's main class of biological assets comprise of standing timber held
through forestry concessions of between 20 and 50 years. Biological assets are
carried at fair value less estimated costs to sell.
The brought forward biological assets are located in Gabon in Mouila and
Northern Mozambique in the states of Cabo Delgado, Nyassa, Nampula and
Zambezia and are managed from a central point in Mouila and Nampula. The newly
acquired concession is located in Mimongo, Gabon.
Fair value has been determined internally by discounting a 5-year pre-tax cash
flow projection (Level 3 of the fair value hierarchy) based on a mix of wood
species within the concession areas. Real cost of production has been factored
in going forward.
The following sensitivity analysis shows the effect of an increase or decrease
in significant assumptions used:
Impact on fair value of biological assets
2021 2020
$000 $000
Effect of 1% increase in the discount rate (33,285) (16,715)
Effect of 1% decrease in the discount rate 41,919 20,215
Effect of 10% increase in volume of APC 34,547 21,330
Effect of 10% decrease in volume of APC (34,547) (21,330)
Effect of 10% increase in sales price 42,409 32,878
Effect of 10% decrease in sales price (42,409) (32,878)
12. TRADE AND OTHER RECEIVABLES
2021 2020
$000 $000
Trade receivables 2,093 1,371
Other receivables 12 9
Deposits 127 147
Current tax receivable 14 11
VAT receivable 589 292
Prepayments 1,781 1,931
4,616 3,761
The directors consider that the carrying amount of trade and other receivables
approximates their fair value. Refer to Note 14 for details of the trade
debt aging profile and for the Group's impairment policy.
13. INVENTORY
2021 2020
$000 $000
Finished goods 2,747 1,858
Stock in transit 2,129 3,035
Work in progress 1,283 -
6,159 4,893
Write-down for net realisable value amounted to $nil (2020: $nil).
14. financial INSTRUMENTS
Capital risk management
The Company manages its capital to ensure that entities in the Group will be
able to continue as a going concern while maximising the return to
stakeholders. The overall strategy of the Company and Group is to minimise
costs and liquidity risk.
The capital structure of the Group consists of equity attributable to equity
holders of the parent, comprising issued share capital, share premium,
reserves (merger reserve, foreign exchange reserve and share based payment
reserve) and retained earnings as disclosed in the Consolidated Statement of
Changes in Equity.
The Group is exposed to a number of risks through its normal operations, the
most significant of which are interest, credit, foreign exchange and liquidity
risks. The management of these risks is vested in the board of directors.
The sensitivity has been prepared assuming the liability outstanding at the
balance sheet date was outstanding for the whole period. In all cases
presented, a negative number in profit and loss represents an increase in
finance expense / decrease in interest income.
Categorisation of financial instruments
2021 Financial assets at amortised cost Financial liabilities at amortised cost Total
Financial assets/(liabilities) Financial assets at fair value Financial liabilities at fair value
$000 $000 $000 $000 $000
Trade and other receivables 4,616 - - - 4,616
Cash and cash equivalents 887 - - - 887
Trade and other payables - - (4,078) - (4,078)
Borrowings - - (8,268) - (8,268)
Convertible bond liability - - (931) - (931)
Contingent acquisition liability - - (250) - (250)
5,503 - (13,527) - (8,024)
2020 Financial assets at amortised cost Financial liabilities at amortised cost Total
Financial assets/(liabilities) Financial assets at fair value Financial liabilities at fair value
$000 $000 $000 $000 $000
Trade and other receivables 3,761 - - - 3,761
Cash and cash equivalents 2,560 - - - 2,560
Trade and other payables - - (3,590) - (3,590)
Borrowings - - (8,710) - (8,710)
Convertible bond liability - - (842) - (842)
Contingent acquisition liability - - (750) - (750)
6,321 - (13,892) - (7,571)
Fair value measurements recognised in the statement of financial position
The following provides an analysis of the Group's financial instruments that
are measured subsequent to initial recognition at fair value, grouped into
Levels 1 & 2 based on the degree to which the fair value is observable.
· Level 1 fair value measurements are those derived from inputs
other than quoted prices that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
· Level 2 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
· Level 3 assets are assets whose fair value cannot be
determined by using observable inputs or measures, such as market prices or
models. Level 3 assets are typically very illiquid, and fair values can
only be calculated using estimates or risk-adjusted value ranges
At the year end, included in property, plant and equipment, there is land and
buildings held at fair value of $15.4m (2020: $7.8m) measured in accordance
with level 3 and Biological Assets of $336.8m (2020: $204.2m) measured in
accordance with level 3 of the fair value hierarchy.
Equity price Risk
The Group is exposed to equity price risks arising from equity investments.
Equity investments are held for both strategic and trading purposes.
Management of market risk
The most significant area of market risk to which the Group is exposed is
interest rate risk.
The risk is limited to the reduction of interest received on cash surpluses
held and the increase in the interest on borrowings.
Majority of the Company's debt was based on fixed interest rates with no link
or exposure to movements in LIBOR.
The following table details the group's exposure to interest rate changes, all
of which affect profit and loss only with a corresponding effect on
accumulated losses.
2021 2020
$000 $000
+ 20 bp increase in interest rates (19) (16)
+ 50 bp increase in interest rates (47) (40)
+ 100 bp increase in interest rates (93) (80)
The table above is prepared on the basis of an increase in rates. A decrease
in rates would have the opposite effect.
2021 2020 2021 2020 2021 2020
Fixed Fixed Floating Floating Total Total
rate rate rate rate
Group $000 $000 $000 $000 $000 $000
Borrowings (1,513) (1,366) (6,755) (7,344) (8,268) (8,710)
Cash and cash equivalents - - 887 2,560 887 2,560
Convertible bond liability (931) (842) - - (931) (842)
Total (2,444) (2,208) (5,868) (4,784) (8,312) (6,992)
Management of credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group's receivables from customers
and investments in debt securities.
The carrying amount of financial assets represents the maximum credit
exposure.
The principal financial assets of the Company and Group are bank balances and
receivables. The Group deposits surplus liquid funds with counterparty banks
that have high credit ratings. Cash is sometimes placed with certain
institutions in support of trading positions. The Group deposits such funds
with large well-known institutions and the directors consider the credit risk
to be minimal.
The Group's maximum exposure to credit by class of individual financial
instrument is shown in the table below:
2021 2021 2020 2020
Carrying Value Maximum Exposure Carrying Value Maximum
Exposure
$000 $000 $000 $000
Cash and cash equivalents 887 887 2,560 2,560
Trade and other receivables 4,616 4,616 3,761 3,761
Total 5,503 5,503 6,321 6,321
TRADE RECEIVABLES
Trade receivables are recognised initially at the amount of consideration that
is unconditional, unless they contain significant financing components when
they are recognised at fair value. They are subsequently measured at amortised
cost using the effective interest method, less loss allowance.
The only impact on the Group is in relation to the impairment of trade
receivables as detailed below.
The expected loss rates are based on the payment profiles of sales over a
period of 36 month before 31 December 2021 or 1 January 2022 respectively and
the corresponding historical credit losses experienced within this period. The
historical loss rates are adjusted to reflect current and forward-looking
information on macroeconomic factors affecting the ability of the customers to
settle the receivables.
The group has identified the GDP, COVID-19, and the unemployment rate of the
countries in which it sells its goods to be the most relevant factors, and
accordingly adjusts the historical loss rates based on expected changes in
these factors.
On that basis, the loss allowance as at 31 December 2021 and 31 December 2020
were determined as follows for both trade receivables and contract assets:
More than 120 days past due More than 90 days past due More than 60 days past due More than 30 days past due Current Total
2021
Expected loss rate 23.70% 0% 0% 0% 0% 6.90%
Gross carrying amount - trade receivables 654 143 454 449 547 2,247
Loss allowance (155) - - - - (155)
2020
Expected loss rate 30.63% 0% 0% 12% 0% 13.61%
Gross carrying amount - trade receivables 542 89 163 406 387 1,587
Loss allowance (166) - - (50) - (216)
The closing loss allowances for trade receivables and contract assets as at 31
December reconcile to the opening loss allowances as follows:
2021 2020
$000 $000
Opening loss allowance at 1 January 216 60
Increase in loss allowance recognised in profit and loss during the year - 184
Receivables written off during the year as uncollectible (61) (28)
Closing loss allowance at 31 December 155 216
Management of foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk
arising from commercial transactions, translation of assets and liabilities
and net investments in foreign operations. Exposure to commercial transactions
arises from sales or purchases by operating companies in currencies other than
the companies' functional currency. Currency exposures are reviewed regularly.
The Group has a limited level of exposure to foreign exchange rate risk
through their foreign currency denominated cash balances:
2021 2020
$000 $000
Cash and cash equivalents
GBP 4 1,079
EUR 67 64
DKK 17 67
CFA 72 52
MUR - 1
MZN 2 7
USD 725 1,290
Total 887 2,560
The table below summarises the impact of a 10% increase/decrease in the
relevant foreign exchange rates versus the US Dollar rate, on the Group's
pre-tax profit for the year and on equity:
2021 2020 2021 2020
Income Statement Income Statement Equity Equity
Impact of 10% rate change $000 $000 $000 $000
Cash and cash equivalents (1) 103 (1) 103
The table above is prepared on the basis of an increase in rates. A decrease
in rates would have the opposite effect.
Management of liquidity risk
Liquidity risk is the risk that the group will encounter difficulty in meeting
the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset. The Group's approach to managing
liquidity is to ensure, as far as possible, that it will have sufficient
liquidity to meet its liabilities when they are due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage
to the group's reputation.
The Group seeks to manage liquidity risk by regularly reviewing cash flow
budgets and forecasts to ensure that sufficient liquidity is available to meet
foreseeable needs and to invest cash assets safely and profitably. The Group
deems there is sufficient liquidity for the foreseeable future.
The Group had cash and cash equivalents at 31 December as set out below.
2021 2020
$000 $000
Cash at bank 887 2,560
ContracTual maturity analysis
The Group has assessed the contractual maturity analysis as follows:
2021 0-3 months 3-12 months 1 - 5 years Total
$000 $000 $000 $000
Assets by contractual maturity
trade and other receivables 1,246 3,370 - 4,616
Cash and cash equivalents 887 - - 887
2,133 3,370 - 5,503
Liabilities by contractual maturity
Trade and other payables (3,449) (629) - (4,078)
Borrowings - (5,369) (2,898) (8,267)
Convertible bond liability - - (931) (931)
Contingent acquisition liability (250) - - (250)
(3,699) (5,998) (3,829) (13,526)
Net liabilities by contractual maturity (1,566) (2,628) (3,829) (8,023)
2020 0-3 months 3-12 months 1 - 5 years Total
$000 $000 $000 $000
Assets by contractual maturity
trade and other receivables 770 2,991 - 3,761
Cash and cash equivalents 2,560 - - 2,560
3,330 2,991 - 6,321
Liabilities by contractual maturity
Trade and other payables (3,470) (120) - (3,590)
Borrowings - (6,223) (2,487) (8,710)
Convertible bond liability - - (842) (842)
Contingent acquisition liability (250) (500) - (750)
(3,720) (6,843) (3,329) (13,892)
Net liabilities by contractual maturity (390) (3,852) (3,329) (7,571)
15. TRADE AND OTHER PAYABLES
2021 2020
$000 $000
Trade payables 1,275 1,333
Accruals 680 671
Contract liabilities (prepayments received) 1,643 1,359
Current tax payable 69 45
Other payables 340 62
Debt due to concession holders 71 120
4,078 3,590
The directors consider that the carrying amount of trade and other payables
approximates to their fair value.
16. BORROWINGS
2021 2020
$000 $000
Non-Current liabilities
Business loans 1,282 1,111
Working capital facility 1,616 1,376
2,898 2,487
Current liabilities
Business loans 1,250 1,382
Bank overdraft 128 110
Working capital facility 3,991 4,731
5,369 6,223
Total borrowings 8,267 8,710
As at 31 December 2021 the trading division had the following outstanding
borrowings:
Business loan with a Danish bank that amounted to $1.1 million (2020: $1.2
million). The business loan carries an interest rate of 2%. The purpose of the
loan is for financing timber trades.
Working capital facilities with Danish banks that amounted to $5.6 million
(2020: $6.1 million). These facilities carry interest at rates 2.5% and
5.8%. One of the facilities, for $3 million, has been included in current
liabilities: this is a revolving facility with no maturity date. At the year
end and as at the date of this report, there is no indication from the credit
provider that the facility will be revoked, but as there is no maturity date,
the Company has classified and disclosed it as being a current liability. See
note 23 Increase in working capital facility.
As on 31 December 2021 the forestry division had the following outstanding
borrowings:
Business loans with a Gabonese bank that amounted to $1.4 million (2020: $1.2
million). These loans carry an interest rate of between 10% and 14%. A bank
overdraft with a Gabonese bank amounted to $0.1 million (2020: $0.110 million)
and carries an interest rate of 15%. The purpose of the loans is for
operational asset financing.
The Group signed a combined security to the value of $2 million, which
includes securities over the property, plant and equipment, the total
inventories and total trade receivables.
The Group has also signed a security in favour of a Danish bank to the value
of $4.3 million.
The contractual maturity of borrowings has been assessed in Note 14.
The Group had undrawn facilities available at 31 December 2021 amount to
$0.1million (2020: $0.1million).
17. CONVERTIBLE BONDS
2021 2020
$000 $000
Convertible bonds: Liability component 931 842
Convertible bonds: Equity component 52 52
Total 983 894
Convertible bond liability 741 741
Interest accrued 190 101
Total 931 842
The terms of the convertible bonds are as follows:
1. Final Redemption Date of 30 June 2023
2. Convertible at a price of 4p per ordinary share
3. Interest rate at zero percent
18. SHARE CAPITAL
Number $000
Authorised:
Ordinary shares of 1p each Unlimited Unlimited
Allotted, issued and fully paid:
Ordinary shares of 1p each
AT 1 JANUARY 2020 465,451,931 6,757
Shares issued 1,916,764,500 24,362
AT 31 DECEMBER 2020 2,382,216,431 31,119
Shares issued 99,900,622 1,409
AT 31 DECEMBER 2021 2,482,117,053 32,528
Voting 1,857,117,053
Non-Voting 625,000,000
Balances classified as share capital include the nominal value on issue of the
Company's equity share capital, comprising ordinary shares of 1p each.
During 2021 a total of 326,365,095 Non-Voting Ordinary Shares have been
converted into Voting Ordinary Shares.
On 17 May 2021, the Company completed a fundraise. As a result, 100,000,000
Voting Ordinary shares were admitted for trading on AIM at a price of 6 pence
per ordinary share (the "Placing Price"). The Admission Shares were comprised
of 99,900,622 new ordinary shares and 99,378 treasury shares. At 31 December
2021, the Group's share capital of 2,482,117,053 ordinary shares, was
comprised of 1,857,117,053 Voting Shares and 625,000,000 Non-Voting Shares.
19. SHARE PREMIUM ACCOUNT
2021 2020
$000 $000
AT 1 JANUARY 58,609 35,130
Shares issued 6,645 23,479
AT 31 DECEMBER 65,254 58,609
Balances classified as share premium include the net proceeds in excess of the
nominal share capital on issue of the Company's equity share capital.
20. Provisions
2021 2020
$000 $000
AT 1 JANUARY 132 -
Movement (2) 132
AT 31 DECEMBER 130 132
The balance comprises of one provision, to the amount of $0.1 million, which
relates to a tax dispute with the Mozambique tax authorities. The provision is
classified as a current liability as at 31 December 2021.
21. SHARE BASED PAYMENT
The Group operates a share option plan, under which certain directors and key
employees have been granted options to subscribe for ordinary shares. All
options are equity settled. The Group has no legal or constructive obligation
to repurchase or settle the options in cash. The share option awards in issue
as at 1 January 2021 totalled 144.5m share options, which became effective as
of 6 August 2020 and exercisable at 2p per share. During 2021 30.5m share
options were forfeited. The vesting of the awards is substantially geared
towards material improvement in both operating results and share price
appreciation. All share options under the previous share options plan were
co-terminously forfeited in 2020.
The key terms and conditions related to the grants were as follow:
A. Market Performance Condition
• Grant Date: 6 August 2020
• Contractual life of options: 4 years
• Vesting conditions: Total Shareholder Return - 50% of
the share options are subject to the Market Performance Condition whereby none
will vest at a share price of 2p; one third of these options will vest on a
straight-line basis between a share price of 2-4p; two thirds will vest on a
straight-line basis between a share price of 4-6p per share, and full vesting
will occur when the share price exceeds 6p, each vesting being based on the
volume weighted average share price over a period of 30 days. All of these
options had vested by the end of 2021.
B. Non-Market Performance Condition
• Grant Date: 6 August 2020
• Contractual life of options: 4 years
• Vesting Conditions: Target EBITDA - 50% of the share
options are subject to Non-Market Performance Conditions, whereby 12.5% of
these options can vest per annum based on achieving internal EBITDA targets
for each of the financial years 2020-2023. There is also a cumulative
provision whereby a shortfall (or excess) in one or more years can be offset
against other years for the purposes of vesting. As of the date hereof a
quarter of these share options have vested.
C. Non-Subject to Performance Criteria
• Grant Date: 6 August 2020
• Contractual life of options: 4 years
• A one-off award of 10m share options was made to Mr G
Thomson (Senior Independent Non-Executive). In accordance with corporate
governance advice, his options are not subject to performance criteria but may
not vest for 4 years from the time of grant.
The awards outstanding to directors in the year are:
Number of options
(2p
exercise price)
P Dolan Executive Chair 50,000,000
C Geddes CFO 22,500,000
H Ghossein Deputy Chair 22,500,000
G Thomson Senior Independent NED 10,000,000
MEASUREMENT OF FAIR VALUE:
For the 'Market Performance Conditions' (Total Shareholder Return), the fair
value of the 67.25m share options were valued using a Monte Carlo simulation.
For the 'Non-Market Performance Conditions' (Target EBITDA), the fair value of
the of 67.25m share options were valued using a Black Scholes Option Pricing
Model.
For the 'Non-Subject to Performance Criteria', the fair value of the 10m Share
Options were valued using a Black Scholes Option Pricing Model.
Only Market Conditions have been considered in estimating the fair value of
the share options.
The table below shows the input ranges for the assumptions used in the
valuation models:
Fair value at grant date 0.97p - 1,04p
Exercise price 2p
Share price at grant date 2.15p
Annual share price volatility (weighted average) 62%
Risk free rate 0.1%
Expected life 4 years
The annualised volatility in the share price was determined using the
historical volatility of Woodbois Limited and other listed companies in
similar businesses over a time period in line with the simulation period. A
monthly volatility of 18.0% was used in the simulation (annual volatility of
62%).
Reconciliation of the share options in issue:
Total options Weighted average strike price
As on 1 January 2020 14,500,000 15.23p
Forfeited during the financial year (14,500,000) (15.23p)
Issued during the financial year 144,500,000 2p
As on 31 December 2020 144,500,000 2p
Forfeited during the financial year (30,500,000) (2p)
As on 31 December 2021 114,000,000 2p
The following charge has been recognised in the current financial year:
2021 2020
$000 $000
AT 1 JANUARY 968 968
Reserve transfer for forfeitures (766) (942)
Share based payment expense 233 200
AT 31 DECEMBER 435 226
There were no options exercisable at the reporting date.
22. RELATED PARTY TRANSACTIONS AND Related party balances
related party balances
2021 2020
$000 $000
Amount due to H. Ghossein, a director (340) -
Contingent acquisition liability due to director vendors re purchase of (250) (750)
WoodBois International ApS in 2017
AT 31 DECEMBER (590) (750)
Deferred consideration:
During the 2021 financial year, deferred acquisition payments were made
directly to H Ghossein ($0.5 million) and the final payment of $0.25m was made
in 2022.
The 40,000,000 warrants issued to Volantis in January 2019, exercisable at 8p
before 1 April 2023, remain
outstanding.
Trading transactions
During the year the Group companies entered into the following transactions
with related parties:
2021 2021 2020 2020
Transactions Balance at 31 December Transactions Balance at 31 December
in year
in year
$000 $000 $000 $000
Loans to subsidiary undertakings 11,985 2,940 16,042 14,835
Contingent acquisition expense - - 2,171 -
Transactions with key management personnel
The Group's key management personnel comprised the following:
2021 Short-term employment benefits
Salaries, fees & national insurance contributions Benefits Total
$000 $000 $000
Directors
P Dolan 200 - 200
H Ghossein 220 42 262
F Tonetti 69 1 70
C Geddes * 200 - 200
G Thomson 69 - 69
D Rothschild 9 - 9
H Turcan ** - - -
Other key management personnel
A Rafael 29 - 29
796 43 839
The table above excludes deferred acquisition payments made during the year
directly to H Ghossein ($0.5 million). All of the above directors'
remunerations exclude national insurance contributed by the employer.
* Paid through a service company
** H Turcan is a representative of Lombard Odier. No fees are paid directly to
H Turcan, however an annual fee is payable to Lombard Odier for his services.
2020 Short-term employment benefits
Salaries, fees & national insurance contributions Benefits Total
$000 $000 $000
Directors
P Dolan 200 - 200
C Geddes * 200 - 200
H Ghossein 217 42 259
G Thomson 42 - 42
H Turcan ** 6 - 6
J Hansen 201 9 210
Z Abbas * 203 6 209
K Milne 10 - 10
Other key management personnel
S Bouchebel 96 16 112
C Wellov 40 4 44
A Rahmati 123 2 125
A Rafael 24 - 24
I Hardy * 91 - 91
1,453 79 1,532
The table above excludes deferred acquisition payments made during the year
directly to or to companies owned and controlled by H Ghossein ($0.618
million) and J Hansen ($1.756 million).
* Paid through service companies
** H Turcan is a representative of Lombard Odier. No fees are paid directly to
H Turcan, however an annual fee is payable to Lombard Odier for his services.
23. Events occurring after the reporting date
· Issue of LTIP's
On 1 March 2022 it was announced that a total of 68.0m share options under the
Company's Long Term Incentive Plan ("LTIP's") were issued to executive
directors and to other key personnel, being 2.74% of the total issued share
capital (voting and non-voting). Of these, 30.0m LTIP's had previously been
announced as to be allocated to Federico Tonetti, when he joined the Company
as its CEO on 8 November 2021.
Taken together with existing options, there will be a total of 182m shares
outstanding under option representing 7.33% of the current issued share
capital (voting and non-voting). The Company has undertaken that it will not
have more than 10% of the issued share capital under option at any time.
The key terms of the LTIP's were set out in the RNS dated 1 March 2022.
· Increase in working capital facility
During 2022, the Company arranged a $2m general-purpose two-year facility with
Rhino Ventures Limited, the Company largest shareholder, and a further
conditional facility of $2m if additional short-term working capital finance
is required with Lombard Odier, the Company's second largest shareholder.
In March 2022, the trading division increased the cash facilities available to
it through its Danish banking partners who increased the working capital
facility by $2.3 million and adjusted the interest on that facility down from
2.5% per annum to 2% per annum.
24. ULTIMATE PARENT COMPANY
At 31 December 2021, the directors do not believe that there was an ultimate
controlling party.
1 Earnings before interest, tax, depreciation, amortization, share based
payments and other non-cash items
2 Earnings before interest, tax, depreciation, amortization, share based
payments and other non-cash items
2 Issued Share Capital of 2,482.1m shares comprises of 1,857.1m Voting
Shares and 625.0m Non-Voting Shares.
3 C Geddes services are provided through a service company, Pomona Trust
4 No fees are paid directly to Henry Turcan, however, fees of $25,000 per
annum, are payable to Lombard Odier, for his services. Since April 2020
Lombard Odier has temporarily waived these fees.
5 During 2021 the Group has changed its operating segments by reallocating
and absorbing the head office segment between the three remaining divisions.
This resulted in a change to the reportable segments. Accordingly, the Group
has restated the previously reported segment information for the year ended 31
December 2020.
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