REG - Woodbois Limited - Audited results for FY 2023
28/06/2024 07:00
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RNS Number : 2471U Woodbois Limited 28 June 2024
28 June 2024
Woodbois Limited
("Woodbois", the "Group" or the "Company")
Audited results for FY 2023
Woodbois Ltd (AIM:WBI), a leading Company in the international timber
industry, announces its audited results for the full year ended 31 December
2023.
Commenting on today's announcement Executive Chair & CEO, Guido Theuns
said:
"This past year has been one of the most challenging periods in Woodbois'
history. We were confronted by a combination of unforeseen circumstances that
deeply affected our operations and financial performance. Nevertheless, we
have emerged with a more streamlined focus and a solidified strategy to build
a stronger future for Woodbois. Our dedication to sustainable forestry and
resilience, paired with strategic partnerships, have been pivotal in
maintaining the Company's potential. We remain optimistic as we move forward,
armed with lessons learned and a renewed determination to realise our
long-term vision."
Highlights
· Revenue decreased by 66% to $7.9m (2022: $23.1m) as a result of
adverse market conditions and reduced trading activities
· EBITDA showed a loss of $4.6m (2022: Profit of $3.3m) due to the
decline in trading volumes and the temporary shutdown of production
· Reduced borrowings by over two-thirds to $3.9 million as at 31
December 2023
Post year events
· Exercise of warrants at 1.0p per share, generated £2.0 million
for the Company to be used to scale up production
· Company entered into a $5m trade finance facility with a Dubai
family office in June 2024
· Graeme Thomson (Independent Non-Executive Director) and Carnel
Geddes (CFO) stepping down from the board by the 2024 AGM and Adrianus
Roecoert appointed yesterday as an Independent Non-Executive Director
· Strategic and operational measures implemented, which the Board
believe will catalyse a meaningful financial rebound
Enquiries:
Woodbois Limited
Guido Theuns, Executive Chair & CEO + 44 (0)20 7099 1940
Carnel Geddes, CFO
Canaccord Genuity (Nominated Advisor and Broker) + 44 (0)20 7523 8000
Bobbie Hilliam
Harry Pardoe
Novum Securities (Joint Broker) +44 (0) 20 7399 9427
Colin Rowbury, Jon Bellis
Axis Capital Markets Limited (Joint Broker) +44 (0) 203 026 0449
Ben Tadd, Lewis Jones
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 which forms part of UK law by virtue of the
European Union (Withdrawal) Act 2018 ("MAR").
Non-IFRS measures
The Company uses certain measures to assess the financial performance of the
company. These terms may be defined as "non-IFRS measures" as they exclude
amounts that are included in, or include amounts that are excluded from, the
most directly comparable measure calculated and presented in accordance with
IFRS. They also may not be calculated using financial measures that are in
accordance with IFRS. These non-IFRS measures include the Company's EBITDAS.
The Company uses such measures to measure and monitor performance and
liquidity, in presentations to the Board and as a basis for strategic planning
and forecasting. The directors believe that these and similar measures are
used widely by market participants, stakeholders, and other interested parties
as supplemental measures of performance and liquidity.
The non-IFRS measures may not be directly comparable to other similarly titled
measures used by other companies and may have limited use as an analytical
tool. This should not be considered in isolation or as a substitute for
analysis of the Company's operating results as reported under IFRS.
The Company does not regard these non-IFRS measures as a substitute for, or
superior to, the equivalent measures calculated and presented in accordance
with IFRS or those calculated using financial measures that are calculated in
accordance with IFRS.
CHAIR AND CHIEF EXECUTIVE OFFICER'S STATEMENT
Dear Shareholders,
Overview of 2023
This past year has been one of the most challenging periods in Woodbois'
history. We were confronted by a combination of unforeseen circumstances that
deeply affected our operations and financial performance. Nevertheless, we
have emerged with a more streamlined focus and a solidified strategy to build
a stronger future for Woodbois. Our dedication to sustainable forestry and
resilience, paired with strategic partnerships, have been pivotal in
maintaining the Company's potential. We remain optimistic as we move forward,
armed with lessons learned and a renewed determination to realise our
long-term vision.
Key 2023 Financial Metrics
Revenue fell by 66% to $7.9 million, reflecting the adverse market conditions
and reduced trading activities as further discussed in the section below.
Gross profit reduced by 76% to $1.4 million, attributed to the sharp decline
in trading volumes and the temporary shutdown of production.
EBITDAS(( 1 (#_ftn1) )) showed a loss of $4.6 million compared with a
profit of $3.3m in 2022. We managed to reduce borrowings by over two-thirds to
$3.9m by December 2023, through strategic equity raises and debt-equity swaps,
bolstering our balance sheet.
We are confident that the strategic and operational measures that have been
and are to be implemented will catalyse a meaningful financial rebound as we
proceed through 2024.
Operational Challenges and Strategic Response
We encountered several important challenges in 2023, which necessitated
action:
The withdrawal of a critical $6m credit line in April 2023 led to a temporary
liquidity crisis, which we overcame through new equity raises.
Margins were squeezed due to subdued trading activity. We responded by
reviewing our trading strategy and implementing a more selective approach.
Production was impacted by shutdowns aimed at optimizing workflows and
addressing inefficiencies.
Change of government: We were significantly affected by the Gabon military
coup in August 2023. The coup overthrew President Ali Bongo after disputed
election results, causing immediate instability in the country. This upheaval
included border closures and curfews, impacting business operations and
logistics across various sectors, including the timber industry. The
uncertainty disrupted supply chains and created an environment where ongoing
business operations were challenging. Furthermore, the political transition
and government reshuffling caused delays and interruptions in regulatory
processes essential to Woodbois' annual performance.
These disruptions significantly affected the Company's ability to maintain its
usual level of exports, impacting our overall annual financial results. The
economic instability brought about by the coup required time for businesses
like Woodbois to adapt to the new political landscape while managing
operational risks, compliance and relationships with stakeholders.
Since January 2024 Woodbois has worked diligently to foster a strong
relationship with Gabon's new government following the recent political
transition. Understanding the importance of stable government partnerships,
the Company engaged proactively with key officials, building trust and
aligning its operations with the new administration's economic priorities. As
a result, Woodbois now enjoys excellent relationships up to the highest levels
of government in Gabon. This collaboration ensures the Company can continue
its business effectively while contributing to the nation's economic goals,
reinforcing the positive impact of its sustainable timber production.
Board changes: as set out in the Directors' Report, considerable changes to
the executive team took place in 2023 and I assumed my roles around the end of
the year. We are structuring a senior team with the requisite skills to
implement our strategic objectives.
As announced yesterday, Woodbois heartily welcomed Adrianus Roecoert to the
Board as an Independent Non-Executive Director and look forward to his
independent perspectives, as well as his support. He has an impressive cv: he
is greatly experienced in financial matters, from running his own successful
accountancy practice to advising over many years on large M&A,
reorganisations, debt and share transactions.
As part of the Group reorganisation which commenced in January 2024, Carnel
Geddes (CFO) and Graeme Thomson (INED) have decided that after 7- and 5-years'
service respectively and for personal reasons, they do not wish to offer
themselves for re-election at the 2024 AGM and will accordingly step-down as
Directors by then. Woodbois is fortunate that they have agreed to remain
involved and available for a short period to help with handover matters.
Woodbois is also recruiting a further independent NED and will appoint a new
CFO; it intends to announce these as soon as possible. The Group has a
current non-Board Interim Head of Finance, who has been with the Group since
January 2024.
International structure dismantling in full process: Company will be run from
only 3 entities/offices: Guernsey/UK / Gabon / Dubai. The rest will be (or is
already) dissolved/sold: South Africa, Mauritius, Hong Kong, Liberia, Denmark,
Mozambique) Result : minus 12 companies and their respective operational
costs.
Sustainability and Certification
We are committed to sustainable forestry. We are fully focused on enhancing
our certification processes to align with global standards. By strengthening
our relationships with environmental organisations and adhering to rigorous
sustainability practices, we aim to distinguish ourselves as leaders in
responsible forestry.
Future Outlook and Strategic Initiatives
As we run further into 2024, it's essential to reflect on the significant
steps taken to position Woodbois for a robust transition. This January, we
implemented a comprehensive overhaul of our Gabon operations following
critical failures within local management. To ensure a successful turnaround,
we have replaced the complete management team in Gabon and introduced new
real-time procedures and controls that bolster operational efficiency and
oversight. These and many operational changes have necessitated a low level of
activity in Q1 with turnover of $1.0m. Q1 production from the sawmill was
2700m3 while the Veneer factory restarted in February 2024 and produced
1100m3. The inventory build is being unwound with product being shipped in
late Q2. The forward results will progressively show the wisdom of these
enhancements and cost reductions.
We have secured a Trade Finance credit line up to USD 5m with a strategic
partner in the Middle East. Funding will be released on a trade-by-trade
basis.
We have also completed the disposal of non-core assets in Mozambique for a
staged consideration of $1.0m and a share of any upside. As mentioned
earlier this year our focus is on our core business in Gabon.
In addition to these local changes, we are finalising the restructuring and
centralizing of our international administration, which had become outdated
and cumbersome. These changes will streamline decision-making, reduce
operating costs significantly, and optimise our production processes.
Woodbois also has plans to open an office in Dubai in Q2 for strengthening our
regional relationships and to boost trading activity and volumes.
As discussed at our last AGM, we're actively pursuing new strategic
partnerships that will accelerate Woodbois' growth and enhance its position as
a leader in the combined transformation of wood in processing raw timber
into finished products:
- First stage transformation: this stage processes raw logs at
sawmills into basic lumber products like planks, beams, and veneer, producing
rough timber forms.
- Second stage transformation: further refines rough lumber into
products like wood panels, flooring, doors and other construction materials
through planing, moulding, and joining.
- Third stage transformation: the final processing stage,
turning refined wood products into consumer goods such as furniture, cabinetry
and engineered wood items.
Each transformation stage adds value to the product, progressively enhancing
its usability and marketability. Companies involved in all three stages are
fully integrated across the value chain, offering a comprehensive range of
products.
Looking deeper into 2024, our strategic initiatives will focus on maximising
production, streamlining operations, becoming cash-flow positive and expanding
the value of our forest resources, both organically and, where advantageous,
through consolidating M&A activity.
Optimised Production and Operational Efficiency: We are targeting optimal
production levels across our facilities in Gabon to maximise output and
improve operational efficiency. At this moment we are enhancing operational
workflows and investing in new machinery to guarantee better productivity
yields and profitability, maximising productivity of each production shift.
Investments will prioritise expanding the certification processes and
improving capacity, ensuring we are well-placed to meet growing market demand.
By adhering to responsible forestry principles, we aim to deliver strong
returns while safeguarding the environment and creating positive social
impacts.
Cash Flow Enhancement: Improved production and sales are designed to bolster
cash flows, allowing us to meet debt obligations while investing in strategic
growth opportunities.
Carbon Credits and Forestry Value: Our forest concessions present significant
opportunities to generate value through carbon credits and sustainable
forestry activities. Woodbois has launched a significant carbon credit
initiative and is in the final stages of securing a 40-year lease for a
50,000-hectare afforestation project in Gabon. We aim to reforest the area
with up to 50 million trees, primarily of the indigenous okoumé species. The
project is expected to absorb more than 30 million tonnes of CO2 over its
lifespan, supporting Gabon's pledge to remain carbon-neutral beyond 2050.
The initial phase of the project involves a 2,000-hectare pilot that will
demonstrate its potential, with the first carbon credits anticipated by 2028
after the necessary accreditation period. The project will deliver
biodiversity benefits, create roughly 1,000 jobs locally and provide 20% of
these carbon credits to Gabon, aligning with national laws. The Company is
confident in finding partners to support both the pilot and full-scale
implementation.
Optimistic about the future
In conclusion, while 2023 was a challenging year, we have used this period to
refine our strategy and strengthen our resilience and resolve. Our renewed
strategic focus, combined with the remarkable dedication of our team, will
help us seize opportunities in 2024 and beyond.
I would like to express my gratitude to our shareholders, partners and
employees for their unwavering support and confidence in Woodbois. Together, I
am confident that we will usher in a prosperous new chapter for the Company.
1 (#_ftnref1) Non-IFRS measure. Earnings before interest, tax,
depreciation, amortization, share based payments & other non-cash items.
Please see financial review for EBITDAS reconciliation
Sincerely,
Guido Theuns
Executive Chair and Chief Executive Officer
28 June 2024
CHIEF FINANCIAL OFFICER'S STATEMENT
Summary reflections on 2023
The year was very challenging, possibly the most challenging in the Company's
history and amplified against the previous two consecutive years of positive
EBITDAS. We have encountered events that could not have been easily
foreseen, but we emerge from these challenging times with our balance-sheet
considerably stronger having reduced debt by around two-third's to
approximately $3.9m at the end of 2023, with strategic focus and drive
embedded in our ethos, a streamlined, refreshed and energetic executive team,
new shareholders and partners with whom to deliver on the outstanding promise
which this business and our sectors hold.
In 2023, Group operating activities generated negative cash flows of $4.7m
(2022: inflow of $1.1m). Low levels of Trading of third-party products,
initially as a result of potential sub optimal margins and later owing to a
lack of working capital, coupled with decreased levels of production at both
factories in Gabon, resulted in a Revenue decrease of 66% to $7.9m and a 76%
decrease in Gross Profit to $1.4m. EBITDAS 1 (#_ftn2) decreased to a loss of
$4.6m (2022: profit of $3.3m). In terms of segment contribution, our own
production sales generated turnover of $6.9m v $15.3m in 2022 at a margin of
19% v 32% in 2022 and Trading of 3rd party products generated turnover of
$1.0m (v $7.8m in 2022) at a margin of 11% in 2023 v 13% in 2022.
Year ended 31 December 2023 Year ended 31 December 2022
$000 $000
(Loss)/profit before taxation (7,882) (158,867)
Add back fair value loss/(gain) on biological assets - 156,983
Add back finance costs 809 1,029
Add back share-based payment expense (165) 418
Add back reclassification of FCTR 2 (#_ftn3) on deregistered entities - 1,529
Add back depreciation and amortisation 2,076 222
Add back depreciation in Cost of Sales 566 1,959
EBITDAS (4,596) 3,273
1 (#_ftnref1) Non-IFRS measure. Earnings before interest, tax,
depreciation, amortization, share based payments & other non-cash items.
2 (#_ftnref3) Foreign currency translation differences
2023 Financial performance review
We dealt with a number of challenges during 2023: Sub-optimal margins in
Trading of third party product, the shut-down of operations to allow for
implementation of re-ordering of work-flows and processes required by the
increased production output in 2022, untimely/abnormal weather conditions
causing supply chain disruption between forest and sawmill, the unexpected
withdrawal of the $6m credit line by a Danish bank in April requiring the
raising of new equity and entering a debt for equity swap and disputed
elections at the end of June 2023, followed by a popular military-led coup in
Gabon in late August, which has severely delayed putting a replacement trading
line of credit in place. The knock-on effect of these events was a working
capital shortfall which led to much lower production outputs, profit and loss
and effects on other performance measures. Cash conservation was paramount
whilst a solution was found to the Company's financing issue, with debts being
settled and operations adversely affected. Cash conservation measures have
naturally been prioritised due to these various disruptions, including
minimising operational activities and expense, both of which are reflected in
the financial results for the year ended December 2023.
In terms of the hard numbers, Revenue decreased by 66% to $7.9m (2022:
increased by 32% to $23.1m) and Gross Profit was down 76% to $1.4m (2022: up
69% to $5.9 m), reflecting the lower Trading of third party and production
activities throughout the year. Gross profit margin decreased to 18%
compared to 25% in 2022 due to the loss of economies of scale. Operating
costs increased relative to 2022 due to increased diesel costs, the increased
fixed cost of the capacity built in 2022 in anticipation of the ramp up in
activity then envisaged as well as the lack of production which meant that
costs incurred in the production nodes were expensed rather than absorbed in
inventory as part of the production process. Our administration expenses
decreased by 32% in 2023 compared to 2022 because of certain afforestation
project related application costs that did not recur in 2023 and cost-cutting
actions owing to the Group's working capital shortfall. In line with having
reduced its debts the finance charges for the year decreased to $0.8m compared
to $1.0m in 2022. We booked a Foreign Exchange gain of $0.1m (2022: gain
$0.9m).
Other income represents settlement gains realised on termination of banking
and other facilities, see note 3.
Following the annual review of biological asset values in 2023, no fair value
gain or loss was recorded (2022: non-cash gross fair value loss of $157.0m).
Although the Group experienced an increase in its average actual borrowing
rates in 2023, the risk-free rate, equity and country specific risk rates
which also impacts on the valuation decreased, resulting in an overall reduced
discount rate. The effect of this rate change was set off against the effect
of the Group's decision to revise downwards its anticipated permitted forward
looking harvesting rates based on the current expected harvesting activities,
the potentially more economic option to buy in third party logs in the wet
seasons and given that the Company it is in the process of combining its two
concession management plans in Gabon into a single management plan where the
Annual Permitted Cut may be subject to change depending on the government's
view of sustainable harvesting in the combined plan, 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 2022 loss reflected
the dramatically increasing interest rates experienced worldwide at that time,
together with higher country discount rates being applied. These economic
conditions, together with the Group's decision to minimise its forward-looking
harvesting activities in Mozambique and its effect thereof on permitted
harvest rates resulted in the loss then booked. As in the prior year, our
Gabonese concessions now account for 100% of our total biological assets of
$179.8m (see note 11 for more details). Agreement for the disposal of the
non-core Mozambique assets was announced in early March 2024 and this was
completed on 12 June 2024.
During 2022, the Group formally completed the deregistration of three dormant
entities located in Tanzania, allowing it to further simplify its group
structure. As required by IFRS, the Group reclassified the foreign currency
translation differences that arose on historical consolidation of those
entities ($1.5m) from the FCTR (equity) to profit or loss. No Group
companies were deregistered in 2023.
Revenues from own production decreased by 55% from $15.3m in 2022 to $6.9m in
2023 and generated a gross margin of 19% vs 32% in 2022. Third party Trading
revenues decreased by 87% from $7.8m in 2022 to $1.0m in 2023 at a margin of
11% vs 13% in 2022. Own production sales represented 87% of total sales in
2023 vs 66% in 2022. Overall margin decreased from 25% in 2022 to 18% in
2023. See note 2 for further information.
Cash and working capital
The Group's operating activities generated a 2023 cash loss of $4.7m (2022:
positive $1.0m). No large investment was made to add further harvesting or
production capacity (2022: $3.9m) as cash was instead used to settle debt.
Borrowings and convertible bonds at the start of the year of $15.0m had fallen
to $3.9m at the year end, this settlement being possible as a result of the
issuing of $11.0m (net) in fresh equity, as well as conversion of some debt
into shares. Our year end 2023 cash of $0.5m compared with $2.3m at the end
of 2022.
At the end of 2023 the Group's receivables and inventory were $7.2m (2022:
$10.9m), whilst payables reduced to $3.2m (2022: $3.7m). Total borrowings,
including the convertible bond, decreased from $15.0m in 2022 to $3.9m at the
end of 2023. Of this, $3.6m (2022: $9.4m) was classified as current. Net
working capital 1 (#_ftn4) at the end of 2023 was $4.5m, down from $9.6m in
2022.
1 (#_ftnref4) Non-IFRS measure: Trade and other receivables plus Inventory
plus Cash and cash equivalents minus Trade and other payables.
Net Assets
The increase in the Company's net assets year-on-year, from $147.9m in 2022 to
$152m, is largely due to the net effect of the two equity raises carried out
during the year (see note 18) and the loss realised for the year.
At 31 December 2023 the Group's share capital of c4,290m ordinary shares, was
comprised of 3,705m Voting and treasury Shares and 585m 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 2024
On 8 February 2024, the Company announced having received notice of conversion
of 200m warrants at 1p per share, a premium of 41% to the closing share price
of the day before, showing great support for and belief in the future
prospects of the Company. With debt now reduced by approximately two-thirds
since the start of 2023, the Company is fully focussed on rebooting operations
and identifying and delivering on the optimum strategy to maximise value from
its carbon-credit, trading and forestry activities. Our overriding priority
will be to generate consistent, positive cash flows from our substantial
Gabonese forestry assets to ensure that we continue to grow the business and
also meet any debt repayments. The scale at which we are able to grow and
generate net cash in the immediate future will be subject mainly to how
quickly we can return to optimal production levels in our factories as well as
the timing of the inflow and deployment of growth finance.
As further detailed in note 24, the Company announced on 24 June 2024 that it
had entered into a $5m trade finance facility to enhance its trading
activities and to expedite its growth trajectory. This facility will enhance
its ability to capitalise on market opportunities more swiftly and efficiently
than currently.
The Group intends to consolidate its Group finance, trading and other central
functions as it reduces its disparate offices outside of Gabon and eliminating
superfluous subsidiaries in Hong Kong and Liberia, and with the sale of the
Mozambique subsidiaries completed in June 2024.
A significant amount of time and resources have been dedicated to
restructuring the Gabon Operations in a positive way. In addition to new
local management, the Company has:
- withdrawn from uneconomic and burdensome business activities;
- materially reduced its local headcount (particularly of
non-nationals) and hence costs;
- ceased sub-standard operational practices, with a focus on
health and safety, transparency and on controls;
- focused on carrying-out repairs/upgrades of machinery and hiring
specific skills to permit double shifts and maximise output;
- re-modelled its integrated activities from the forest to final
customer, ahead of planned increases in its own-production in the latter part
of the year;
- devoted much senior management time to ensuring we have good
relations at all levels of governmental authorities.
So far in 2024 whilst implementing new management, procedures, procurement,
replacing equipment and maintenance the Group was still able to maintain daily
production around H1 2023 levels. Unaudited turnover to 30 May 2024 is
c$2.2m (v $4.9m for H1 2023) with an operating loss of c$3.5m (v c$3.7m loss
at 30 May 2023). The operations are being readied for a planned major and
sustainable increase to record levels in the second half of 2024.
We will continue to invest in delivering further operational productivity
improvements, development of our in-house systems to optimise sales of our own
products and focussing again on certification of our forests and factories,
which continues to be a high priority.
Demand for our products remains high. Planned capital expenditure in 2024
includes work towards certification of both our production facilities and our
forest. In addition to efficiency improvements, $1.3m of investment is
planned to improve harvesting, transport and production capacity.
On 30 June 2024 our cash balance is projected to be $0.7m, with estimated net
working capital at 31 May 2024 of $4.2m and interest-bearing bank and other
borrowings of $3.9m. This is not expected to change materially by 30 June
2024.
Carnel Geddes
Chief Financial Officer
28 June 2024
SOCIAL IMPACT AND SUSTAINABILITY
As we move into 2024, the importance of ESG investments and sustainable
forestry management continues to grow. At Woodbois, we are dedicated to
enhancing our leadership in these areas by prioritizing transparency and best
practices. Our sustainable forestry model is designed for the long-term
protection of our forest concessions while providing social and economic
benefits for all stakeholders.
Health and Safety
The well-being and safety of our employees are top priorities. In 2023, our
Quality Health, Safety, and Environment (QHSE) team in Gabon worked on
improving workplace safety and health initiatives. This included specialized
screenings for employees in high-risk roles and educational sessions on health
awareness. We upgraded safety protocols and provided 1,775 pieces of Personal
Protective Equipment (PPE) to our staff and contractors, leading to a
significant improvement in our safety standards.
Sustainability
In 2023, Woodbois remained one of the top companies in the ZSL SPOTT
transparency assessment, ranking 8th out of 100 timber and pulp firms. Our
commitment to responsible forestry practices and ethical sourcing contributed
to Sustainable Development Goal 15. This supports our mission to preserve
forest ecosystems while ensuring a sustainable supply of wood and wood
products.
FSC and Certification Efforts
We continue to promote sustainable forestry practices in Gabon and made
significant progress towards achieving full forest certification. Our Ngounié
and Nyanga Forests Programme highlights our commitment to balancing economic
growth with social and environmental responsibility. Throughout 2023, we
focused on integrating our forest concessions and improving our management
practices to ensure we are on track for successful certification.
Carbon Projects
Our commitment to carbon sequestration and afforestation projects remains
strong. In 2023, we continued our work on the Afforestation/Carbon
Sequestration project awarded by the Government of Gabon. This project aims to
regenerate natural forests in savannah areas by introducing local pioneer
species and preventing fires. It will enhance biodiversity and water
resources, creating at least 1,000 permanent jobs over the first ten years of
planting. We work in close co-operation with the Gabonese government to
further develop additional carbon credit project.
Community Engagement
In 2023, we made significant efforts to support the communities where we
operate. We allocated over 60,000,000 FCFA for community-selected projects,
including electrification initiatives, healthcare, and educational
infrastructure upgrades. Our community engagement team focused on building
sustainable partnerships with local organizations to promote the well-being of
both our employees and the wider community.
Ambitions
Our goal is to establish Woodbois as a leading ESG-sensitive company in the
global timber industry through diverse operations. In 2023, we improved our
corporate governance, risk management, and stakeholder communication efforts
to ensure sustained value creation and alignment with sustainable development
goals. The directors present their report on the Group's activities, along
with the financial statements and auditor's report for the fiscal year ended
December 31, 2023.
DIRECTORS' REPORT
The principal activities of Woodbois Limited ("Woodbois") during 2023,
together with its subsidiaries (the "Group") were forestry, trading, and
furthering the Company's carbon solutions initiatives. 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 and Chief Executive Officer's statement, as well as in the Chief
Financial Officer's review.
RESULTS AND DIVIDENDS
The total comprehensive loss for the year attributable to shareholders was
$8.1m (2022: total comprehensive loss $111.2m).
The directors do not recommend payment of an ordinary dividend (2022: $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 1,800m new Ordinary Shares. As at the date
of this report, being 28 June 2024, the Company has unlimited authorised share
capital divided into ordinary shares of 0.011p each, of which 4,549,988,873
had been issued as at 31 December 2023 comprising 3,945,850,726 Voting shares,
19,138,147 treasury shares and 585,000,000 Non-Voting shares.
POST BALANCE SHEET EVENTS
Please refer to note 24 of the financial statements, in addition to the
Executive Chair and Chief Executive Officer's Statement and the CFO's Report
for details.
DIRECTORS
The directors, who served during the year and to the date of this report were
as follows:
Guido Theuns (Appointed 4 December 2023) (Executive Chair and Chief Executive Officer)
G Thomson (Senior Independent Non-Executive)
A Roecoert (Appointed 27 June 2024) (Senior Independent Non-Executive)
C Geddes (Chief Financial Officer)
D Rothschild (Resigned 5 January 2024) (Chief Executive Officer)
P Dolan (Resigned 28 September 2023) (Chief Executive Officer)
H Ghossein (Resigned 1 November 2023) (Deputy Chair & Head of Gabon Operations)
Directors' indemnity insurance
The Group's policy is to maintain directors' and officers' insurance and it
also indemnifies 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 2023 and 2022 and at the date of approval 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 2023 2022 2023 2022
G Thomson 0.03% 0.06% 1,250,000 1,250,000
Share Options
At the date of this report the share options of the directors were:
Director Total number of Share Options held as at 31 December 2023 (exercise price of Number of LTIP's held as at 31 December 2023 (exercise price of 0.01p per Total number of Shares under option Share Options as a % of Issued Share Capital 1 (#_ftn5)
2p per Share) Share)
C Geddes (CFO) 22,500,000 4,000,000 26,500,000 0.58%
G Thomson (Senior NED) 10,000,000 - 10,000,000 0.22%
1 (#_ftnref5) Issued Share Capital of approximately 4,549 m shares comprises
of 3,927m Voting Shares, 19m treasury shares and 585m Non-Voting Shares.
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.
Please see note 21 for more information.
Directors' remuneration
The audited remuneration of the individual directors for the period for which
they served in the year to 31 December 2023 was:
Salary or fees Benefits Total Total
2023
2022
$000 $000 $000 $000
P Dolan 2 (#_ftn6) 183 - 183 200
H Ghossein 201 - 201 228
C Geddes 3 (#_ftn7) 238 - 238 200
G Thomson 93 - 93 62
D Rothschild 155 - 155 50
F Tonetti (Resigned 16 April 2022) - - 101
G Theuns2 4 - 4 -
Total 874 - 874 841
2 (#_ftnref6) Paid in GBP at a fixed rate of £150,000 pa
3 (#_ftnref7) C Geddes and G Theuns' services are provided through service
companies
All of the above directors' remunerations are considered short term in nature
and exclude national insurance contributed by the employer.
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.
Non-Executive Directors are employed on letters of appointment which may be
terminated on 1-3 months' notice. The basic fees payable to Graeme Thomson at
the date of this report as Senior Independent Director are £50,000 pa.
ProfileS of the CURRENT Directors
G THEUNS, AGED 63 EXECUTIVE CHAIR AND CHIEF EXECUTIVE OFFICER
Mr Theuns has a wide range of international business experience gained over 40
years, in particular in investor communications, governmental and commercial
negotiations, risk management, IT and investment fund and family office
structuring. He is a Dutch national living in France and holds both
a B.Sc and B.Ed degrees.
C GEDDES, AGED 45, CHIEF FINANCIAL OFFICER
Based in South Africa, Mrs Geddes is a Fellow of the Institute of Chartered
Accountants in England and Wales, a member of the South African Institute of
Chartered Accountants and a Certified Fraud Examiner. During a 15-year career
at BDO, the global audit, tax and advisory group, she served as director,
forensic services, of BDO London and partner of BDO Cape Town. She has been a
director and Board member of one of the largest South African pomegranate
farming and export companies, Pomona, since 2008. She was also the Chair of
POMASA (2018 to 2023), the Pomegranate Growers Association of South Africa.
G THOMSON, AGED 67, SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR
Mr Thomson is a Fellow of the Institute of Chartered Accountants in England
and Wales and has been a public company director in a variety of sectors for
many decades, as a CEO, CFO/Company Secretary and as a Non-Executive. He has
varied commercial UK and international experience, including of Audit and
Remuneration Committees.
A ROECOERT, AGED 76, SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR
Mr Roecoert is greatly experienced in financial matters, from running his own
successful accountancy practice to advising over many years on large M&A,
reorganisations, debt and share transactions. Adrianus will be a member of
the Audit, Remuneration & Nominations Committees.
SUBSTANTIAL SHAREHOLDERS
The Company has been notified or is aware 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
Morgan Stanley (CHCH Ventures FZ - LLC) 1 (#_ftn8) 590,000,000 14.9%
Securities Services Nominees (John Scott) 392.500,000 9.9%
1 (#_ftnref8) The Company was notified on 28.6.23 that CHCH Ventures FZ -
LLC held 800,000,000 Voting ordinary shares, which represents 20.3% of the
current issued Voting share capital of the Company. These were registered at
Tavira Financial Limited. The Company believes that CHCH Ventures FZ - LLC has
since this date reduced its shareholding to approximately 590,166,700 Voting
ordinary shares which represents 14.96% of the current issued voting share
capital. The Company has sought to engage with CHCH Ventures FZ - LLC and
Tavira Financial Limited in order to obtain an accurate shareholding but to
date has received no formal confirmation. The Company expects to provide
further updates once it receives notification or is able to gather further
information.
CORPORATE GOVERNANCE
The Board is committed to achieving the highest standards of corporate
governance, integrity and business ethics and is responsible for oversight of
this. The Board has adopted the Corporate Governance Code produced by the
Quoted Companies Alliance and has taken steps to apply the principles of the
QCA Code in so far as they can be applied practically and with the exception
set out below, given the size of the Group and the nature of its operations.
We set out below how the Group complies with the QCA Code.
1. Establish a strategy and business model which promotes long-term value for
shareholders. The strategy and business operations of the Group are set out
in this Annual Report and in the Group's separate annual Integrated Report.
The Group had three divisions during the year: Forestry, Trading, and Carbon
Solutions. A clear strategy has been devised for each. The Board continually
impresses upon the leadership teams of each division that capital allocation
must be both performance and potential driven. Investment, either opex or
capex, will only be forthcoming for strategies that can demonstrate
significant return to shareholders over time. Running loss-making business
lines is not a sustainable business strategy. We will prioritise support and
fund businesses where our combination of skills and experience give us an
edge. Conversely, if we cannot source the requisite expertise to participate
profitably in particular business lines or geographies, we will look to cease
these activities.
2. Seek to understand and meet shareholder needs and expectations
Shareholders play a key role in corporate governance, with our Annual General
Meeting for shareholders offering an opportunity to exercise their
decision-making power in the Company. Shareholders are encouraged to vote at
the AGM and any other General Meeting's which are convened throughout the
year, and attending either online or in person, and for which our Company
Secretaries are the point of contact for shareholders. Our Executive
Directors and our Investor relations officer are the primary contact points
for shareholder updates and wider liaison. The contact details are set out in
these financial statements.
3. Take into account wider stakeholder and social responsibilities and their
implications for long-term success
The Board recognises that the long-term success of the Group is reliant upon
the efforts of the employees of the Group and its contractors and suppliers.
We continuously engage with our stakeholders ranging from employees,
customers, investors, international development banks, governments,
not-for-profit organisations and academia, to identify and address issues of
materiality and to gather feedback from each of them. The Board ensures that
all key relationships are the responsibility of, or are closely supervised by,
one of the directors.
Woodbois is in a unique position to bring vital positive impact to Africa's
economic transformation, social development and environmental management
through our operations. In this regard we have set out to align our
sustainability strategy with the United Nations Sustainable Development Goals
(SDGs), which provide a vision for ending poverty, hunger, inequality and
protecting the earth's natural resources.
4. Embed effective risk management, considering both opportunities and
threats, throughout the organisation
The business of carbon off-set projects, 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 2023.
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 & Chief Executive Officer.
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 2023 the Board formally met 12 times. Board
and Committee meetings are convened at times convenient to eligible members to
ensure 100% attendance. Details of the directors' beneficial interests in
Ordinary Shares are available on our website and are set out in the Directors'
Report.
The directors comply with Rule 21 of the AIM Rules and the Market Abuse
Regulations 2014 relating to directors' dealings and will take all reasonable
steps to ensure compliance by any employees of the Company to whom regulations
apply. The Company has, in addition, adopted the Share Dealing Code for
dealings in its Ordinary Shares by directors and senior employees.
As of the date of this report the Board comprised of two Executive Directors
and two Independent Non-Executive Directors. Executive Board members are
considered full time employees, while Non-Executives are required to commit
between 20 and 40 days per annum to their roles. The Board is committed to
recruit a further Non-Executive Director as soon as practicable.
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 & Chief Executive Officer.
6. Ensure that between them, the directors have the necessary up-to-date
experience, skills and capabilities
The directors' biographies can be found in this Directors' Report and on the
Company's website. The Board believes that their mix of significant senior
financial and commercial experience gives a strong and appropriate background
to formulate and deliver long term shareholder value.
The Nominations Committee oversees the requirements for and recommendations of
any new Board appointments to ensure that it has the necessary mix of skills
and experience to support the on-going development of the Company. Any
appointments made will be on merit, against objective criteria and with due
regard for the benefits of diversity and inclusivity on the Board. The
Nominations Committee will also be responsible for succession planning.
7. Evaluate Board performance based on clear and relevant objectives, seeking
continuous improvement
Internal evaluation of the Board, the Committees and individual directors is
seen as an important next step in the development of the Board and one that is
addressed. An annual operational review of all members of the Board is
undertaken, in which their performance is evaluated, and development needs
identified and actions to be taken agreed. Executive and Non-Executive
Directors are subject to re-election intervals as prescribed in the Company's
Articles of Incorporation. At each Annual General Meeting one-third of the
directors who are subject to retirement by rotation shall retire from office.
They can then offer themselves for re-election. Directors who have been
appointed since the prior AGM have to stand for election at the next AGM.
8. Promote a corporate culture that is based on ethical values and
behaviours
The Company is committed to complying with all applicable laws and best
corporate governance practices, wherever we operate. It is a core aspect of
our mission to act with integrity in all of our operations. The Board expects
all employees and contractors to comply with both the letter and spirit of the
law and governance codes.
The Company fosters a culture where our businesses directly and indirectly
promote a range of benefits for the host community and host country on social
and environmental levels. One of the most fundamental and positive social
impacts associated with our Company's strategic growth objective is the skills
development and employment opportunity we bring to the region. The Group also
commits to providing a safe environment for its staff and all other parties
for which the Company has responsibility. The Company is committed to
protecting the environment, contributing to sustainable management of natural
resources by strictly following guidelines set out by host Governments and
actively engaging with local communities. The Company clearly articulates
objectives and has put in place an internal accountability mechanism to
effectively implement commitments, as well as ensuring that outcomes are
measured and communicated transparently.
9. Maintain governance structures and processes that are fit for purpose and
support good decision-making by the Board.
The following Group matters are reserved for the Board:
· Overall strategy
· Approval of major capital expenditure projects
· Approval of the annual and interim results
· Annual budgets, KPI's and revisions thereto
· ESG matters, including climate change initiatives and actions.
The Company is committed to high standards of corporate governance. Both
Management and the Board are dedicated to implementing best practice as the
Company grows.
A clear organisation structure exists detailing lines of authority and control
responsibilities.
The Board monitors the exposure to key business risks and reviews the
strategic direction of all trading subsidiaries, their annual budgets, their
performance in relation to those budgets and their capital expenditure.
The agenda of the business overall is determined by a Management Committee,
which sets out agreed targets that 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. 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
continuously improving, investing in and 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. Substantially all of the cost associated with its development
has been expensed as incurred due to the strict accounting rules governing the
capitalisation of internally generated intangible assets.
The Company is in discussion with several organisations to implement
innovative blockchain based technology to manage both the traceability of the
timber that the Company produces as well as providing real-time oversight of
the business's supply chain.
The Audit Committee, Remuneration Committee and Nominations Committee have
formally delegated duties and responsibilities.
Audit Committee:
The Board has established an Audit Committee with formally delegated duties
and responsibilities. During the year, the Audit Committee comprised of the
Non-Executive Directors with Graeme Thomson as Chair. It meets at least
three times in the financial year. In addition, the Chair has a regular
dialogue with our auditors.
The terms of reference for the Audit Committee include requirements:
· To monitor the integrity of the financial statements of the Group
and any formal announcements relating to the Group's financial performance,
reviewing significant financial reporting judgements contained in them.
· To review the Group's internal financial controls together with
the Group's internal control and risk management systems.
· To monitor and review the external auditor's independence and
objectivity and to make recommendations in relation to the appointment,
re-appointment and removal of the external auditor.
Remuneration Committee:
The Remuneration Committee meets as and when required. During the year the
Remuneration Committee comprised of Non-Executive Directors with Graeme
Thomson as the Chair. It meets at least three times per year.
The policy of the committee is to reward Executive Directors in line with the
current remuneration of directors in comparable businesses in order to
recruit, motivate and retain high quality executives within a competitive
marketplace.
There were three main elements of the remuneration packages for Executive
Directors and senior management in 2023:
- Basic annual salary (including directors' fees) and benefits;
- Discretionary annual bonus; and
- Equity share option incentive schemes,
- 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 & Chief Executive Officer meets at least twice a year
and is responsible for the process of reviewing replacement or additional
directors, the monitoring of compliance with applicable laws, regulations and
corporate governance guidance and making appropriate recommendations to the
Board.
10. Communicate how the Company is governed and is performing, by maintaining
a dialogue with shareholders and other relevant stakeholders
The Company encourages regular communications with its various stakeholder
groups and aims to ensure that all communications concerning the Group's
activities are clear, fair and accurate. Quarterly updates are announced via
RNS and are available on our website and users can register to be alerted when
announcements or details of presentations and events are posted onto the
website.
We aim to release our half and full year results to the market well in advance
of reporting deadlines and offer visibility for shareholders by including
segmental reporting. The Company's financial statements and Notices of General
Meetings of the Company can be found on its website.
The results of voting on all resolutions are announced via RNS immediately
following completion of General Meetings and are available on its website.
Any actions required to be taken as a result of resolutions for which votes
against have been received from at least 20 per cent of independent
shareholders will be detailed on the RNS and votes cast are set out in full.
RISK MANAGEMENT
The business of carbon initiatives, 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, as was the case with the COVID pandemic. The extent of the impact
of a pandemic will be correlated with the magnitude and duration thereof, both
aspects of which will be uncertain. Entities may experience conditions often
associated with a general economic downturn. This includes, but is not
limited to, financial market volatility and erosion, deteriorating credit and
increased borrowing rates, volatility in exchange rates, liquidity concerns,
supply chain disruptions, further increases in government intervention,
increasing unemployment, broad declines in consumer discretionary spending,
increasing inventory levels, reductions in production because of decreased
demand, layoffs and furloughs, and other restructuring activities.
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, as illustrated by the 2023 change
of government in Gabon. It is noted that since 2017 the insurgency in Cabo
Delgado Province, Mozambique has been ongoing. Although currently unaffected
by the conflict, the Board continued to closely monitor any wider implications
ahead of the sale of Mozambique interests announced in early 2024.
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 RISK
The UK formally departed from the European Union at the end of 2020. Whilst
there have been many regulatory and operational changes in trade between the
parties this has to-date had a very limited effect on the Group's operations.
The Board will maintain close dialogue with its advisors to ensure that any
proposed regulatory changes are identified and actioned accordingly.
ENVIRONMENTAL RISK
The Group is exposed to climate, weather and the risk of pests affecting its
forestry operations. The availability of water 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 weather patterns and
pests. 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 or similar
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.
INTEREST RATE RISK
The Group is exposed to interest rate risk on its debt as well as its cash
reserves as the majority of its debt attracts interest at a floating rate and
cash reserves are held in accounts that attract variable interest. Interest
rate risk has significantly reduced by the end of 2023 as a result of the
considerable debt reduction by year end.
Refer to note 14 for a detailed borrowings assessment.
Credit risk
The Group's principal financial asset is cash and accounts receivable. The
credit risk associated with cash is considered to be limited. Except for
exceptional circumstances, or where sales are made on Letter of Credit, the
Group generally 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 generally received prior to the risk of ownership being
transferred to the purchaser. When credit is offered it is only for strategic
purposes. 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 and governmental
or quasi- governmental exposure is managed as closely as feasible.
DONATIONS
No political or charitable donations were made during the year (2022: 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 2024 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 2023 and a resolution to
reappoint then will be proposed at the 2024 AGM.
On behalf of the Board
Guido Theuns
Executive Chair and Chief Executive Officer
28 June 2024
INDEPENDENT AUDITOR'S REPORT
Opinion
We have audited the financial statements of Woodbois Limited (the 'group') for
the year ended 31 December 2023 which comprise the Consolidated Statement of
Profit or Loss and Other Comprehensive Income, the Consolidated Statement of
Changes in Equity, the Consolidated Statement of Financial Position, the
Consolidated Statements of Cash Flows and notes to the financial statements,
including significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and UK-adopted
international accounting standards.
In our opinion:
· the financial statements give a true and fair view of the state
of the group's affairs as at 31 December 2023 and of the group's loss for the
year then ended;
· the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
· the financial statements have been prepared in accordance with
the requirements of the Companies (Guernsey Law) 2008.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the group company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the group's 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 December 2025. We assessed the key assumptions
within the forecast with regards to revenue generation, capital funding and
cash flows;
· Reviewing and challenging the Board's controllable mitigation
plans and their forecast impact on the ability of the business to continue to
operate. We obtained supporting documentation to evaluate the plausibility and
achievability of management's mitigation plans, including sensitised scenario
forecasts;
· Agreeing available borrowing facilities to underlying agreements
and the extent to which additional facilities could be utilised and funds
raised from other sources; and
· Assessing the adequacy of going concern disclosure 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
included within the scope of or audit and the extent of samples sizes during
the audit.
We determined our overall financial statements materiality to be US$312,000
(2022: US$303,000). This was based on an average of three year's adjusted
profit or loss before tax which is calculated by removing all items deemed to
be outside the normal course of business, such as the fair gain or loss on
biological assets and gain on bargain purchase in previous years, as these are
areas which involve management estimation. We consider the adjusted profit or
loss before tax to be the performance measure used by the shareholders as
Woodbois Limited is a trading entity and it's profit-making ability is a
significant point of interest for investors.
We set performance materiality at 70% (2022: 70%) of overall financial
statement materiality to reflect the risk associated with the judgemental and
key areas of management estimation within the financial statements.
No significant changes have come to light through the fieldwork which has
caused us to revise our materiality figure. We set group triviality at
US$15,600 (2022: US$15,150), and the range of component materiality was
downwards from an upper threshold of Group materiality of US$312,000 to
US$32,000 (2022: US$303,000 to US$55,484), to lower company specific
materiality levels.
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 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 Gabon, Denmark, Mauritius
and London therefore given the nature of the accounting function, our audit
was conducted by local component auditors within Gabon and Denmark.
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
four components were considered to be significant due to their identified size
and risk. These components have been subject to full scope audits by component
auditors and reviewed by us.
The audit was overseen and concluded in London where we acted as group
auditor. As group auditors we maintained regular contact with the component
auditors throughout all stages of the audit and we were responsible for the
scope and direction of their work. We ensured that we challenged their
findings in order to form an opinion on the group.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter How our scope addressed this matter
Valuation of biological assets (Note 11 and critical accounting estimates)
Biological assets represent the most material balance in the financial Our work included:
statements US$180m (US$180m as at 31 December 2022).
· Reviewing the biological asset valuation models prepared by
The valuation of these assets is the key assertion considered here, as there management for accuracy and challenging the estimates/assumptions made in the
is a risk that the biological assets are incorrectly valued and therefore inputs;
misstated due to the high degree of estimation and judgement required by
management. · Reviewing the model estimates such as discount rates used and
challenging the key inputs involved in arriving at the rate applied;
· Reviewing the sensitivity of the key inputs, together with a
Management have reassessed their inputs used within the value in use combination of sensitivities, of such inputs;
calculations due to changes in the country specific discount rates and risk
free rates applied. These inputs are judgemental and have the greatest impact · Considering if there are any indications of impairment and
upon valuation. ensuring that those identified by management are reasonable; and
· Reviewing disclosures in the financial statements to ensure they
are in accordance with IAS 41, particularly the disclosures of key estimates
and assumptions which impact fair values and the sensitivity analysis.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the group financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and their
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 enquires with management, industry
research, review of component auditor work papers, and our application of
cumulative audit knowledge and experience of the sector.
· We determined the principal laws and regulations relevant to the
group in this regard to be those arising from:
Aim Rules, Companies (Guernsey) Law 2008, health and safety regulations and
relevant tax legislation in the jurisdictions in which the group operates.
· We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by the group
with those laws and regulations. These procedures included, but were not
limited to:
o Enquiries of management
o Review of board minutes
o Review of RNS announcements
· We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls and revenue recognition, 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 letter of engagement. Our audit work has been undertaken so that we
might state to the company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone, other
than the company and the company's members as a body, for our audit work, for
this report, or for the opinions we have formed.
Timothy Harris (Engagement Partner)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Registered
Auditor
London E14 4HD
28 June 2024
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2023
Notes 2023 2022
$000 $000
Turnover 2 7,940 23,108
Cost of sales 2 (6,528) (17,244)
Gross profit 1,412 5,864
Other income 3 1,434 -
Operating costs (7,267) (4,166)
Administrative expenses (878) (1,288)
Depreciation (2,076) (222)
Share based payment expense 21 165 (418)
Loss on fair value of biological assets 11 - (156,983)
Operating (loss)/profit 4 (7,210) (157,213)
Reclassification of Foreign Currency Translation Reserve 22
on deregistered entities - (1,529)
Foreign exchange gain 137 904
Finance costs 6 (809) (1,029)
(Loss)/profit before tax (7,882) (158,867)
Taxation 7 (243) 47,676
(Loss)/profit for the year (8,125) (111,191)
Other comprehensive income:
Items that may be reclassified subsequently to
profit or loss
Currency translation differences (311) (1,612)
Reclassification of FCTR on deregistered entities - 1,529
Total comprehensive loss for the year (8,436) (111,274)
Basic loss per share (cents) 8 (0.24) (4.47)
Diluted earnings per share (cents) 8 (0.24) (4.47)
Other comprehensive income:
Items that may be reclassified subsequently to
profit or loss
Currency translation differences
(311)
(1,612)
Reclassification of FCTR on deregistered entities
-
1,529
Total comprehensive loss for the year
(8,436)
(111,274)
Basic loss per share (cents)
8
(0.24)
(4.47)
Diluted earnings per share (cents)
8
(0.24)
(4.47)
The notes on pages 27 to 60 form an integral part of the consolidated
financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2023
Share capital Share premium Foreign exchange reserve * Share based payment reserve (note 21) Retained earnings Total equity
(note 18) (note 19) Convertible bonds Revaluation
(note 17) Reserve
(note 10)
$000 $000 $000 $000 $000 $000 $000 $000
At 1 JANUARY 2022 32,528 65,254 52 (8,323) 435 6,254 162,248 258,448
Loss for the year - - - - - - (111,191) (111,191)
Other comprehensive income for the year - - - (83) - - - (83)
Total comprehensive loss for the year - - - (83) - - (111,191) (111,274)
Transactions with owners:
Issue of ordinary shares 24 75 - - (51) - - 48
Redemption of convertible bonds 73 220 (28) - - - - 265
Share based payment expense - - - - 418 - - 418
At 31 December 2022 32,625 65,549 24 (8,406) 802 6,254 51,057 147,905
Loss for the year - - - - - - (8,125) (8,125)
Other comprehensive income for the year - - - (311) - - -
(311)
Total comprehensive loss for the year - - - (311) - - (8,125) (8,436)
Transactions with owners: - - - - -
Issue of ordinary shares 3,217 9,471 - - - - - 12,688
Redemption of convertible bonds - - (24) - - - - (24)
Share based payment (credit)/expense - - - - (165) - - (165)
At 31 December 2023 35,842 75,020 - (8,717) 637 6,254 42,932 151,968
(311)
Total comprehensive loss for the year
-
-
-
(311)
-
-
(8,125)
(8,436)
Transactions with owners:
-
-
-
-
-
Issue of ordinary shares
3,217
9,471
-
-
-
-
-
12,688
Redemption of convertible bonds
-
-
(24)
-
-
-
-
(24)
Share based payment (credit)/expense
-
-
-
-
(165)
-
-
(165)
At 31 December 2023
35,842
75,020
-
(8,717)
637
6,254
42,932
151,968
* 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 on pages 27 to 60 form an integral part of the consolidated
financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
As at 31 December 2023
2023 2022
Notes $000 $000
ASSETS
Non-current assets
Biological assets 11 179,815 179,815
Property, plant and equipment 9 30,194 32,226
Total non-current assets 210,009 212,041
Current assets
Trade and other receivables 12 5,400 6,330
Inventory 13 1,771 4,606
Cash and cash equivalents 14 527 2,296
Total current assets 7,698 13,232
TOTAL ASSETS 217,707 225,273
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings 16 (292) (5,665)
Deferred tax 7 (58,680) (58,675)
Total non-current liabilities (58,972) (64,340)
Current liabilities
Trade and other payables 15 (3,074) (3,547)
Borrowings 16 (3,563) (8,603)
Provisions 20 (130) (130)
Convertible bonds - host liability 17 - (748)
TOTAL CURRENT LIABILITIES (6,767) (13,028)
TOTAL LIABILITIES (65,739) (77,368)
NET ASSETS 151,968 147,905
EQUITY
Share capital 18 35,842 32,625
Share premium 19 75,020 65,549
Convertible bonds - equity component 17 - 24
Foreign exchange reserve (8,717) (8,406)
Share based payment reserve 21 637 802
Revaluation reserve 10 6,254 6,254
Retained earnings 42,932 51,057
TOTAL EQUITY 151,968 147,905
The notes on pages 27 to 60 form an integral part of the consolidated
financial statements. The consolidated financial statements on pages 23 to 60
were authorised for issue by the board of directors on 28 June 2024 and were
signed on its behalf.
Guido Theuns
Executive Chair and Chief Executive
Officer
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2023
2023 2022
Notes $000 $000
CASH USED IN OPERATIONS
(Loss)/profit before taxation (7,882) (158,867)
Adjustment for:
Depreciation of property, plant and equipment 9 2,641 2,181
Fair value adjustment of biological asset 11 - 156,983
Foreign exchange (137) (904)
Reclassification of FCTR on deregistered entities 22 - 1,529
Share based payments 21 (165) 418
Finance costs 6 809 1,029
Provision for bad debts 452 -
Other income 3 (1,434) -
Decrease/(increase) in trade and other receivables 558 (1,714)
Decrease in trade and other payables (1,177) (310)
Decrease in inventory 2,345 1,553
CASH FLOWS FROM OPERATIONS (3,990) 1,898
Finance costs paid (592) (759)
Income taxes paid (152) (2)
cash FLOWS from operatiNG ACTIVITIES (4,734) 1,137
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditure on property, plant and equipment (319) (3,907)
Settlement of deferred consideration - (250)
Settlement of purchase price for acquired subsidiary - (341)
cash FLOWS from investing activities (319) (4,498)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans and borrowings - 6,193
Repayment of loans and borrowings (6,929) (1,470)
Proceeds from the issue of ordinary shares (net of issue costs) 10,976 47
Repayment of convertible bonds (763) -
cash fLOWS from financing activities 3,284 4,770
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (1,769) 1,409
Cash and cash equivalents at beginning of year 2,296 887
CASH AND CASH EQUIVALENTS AT end of YEAR 527 2,296
Net debt reconciliation
At 31 December 2022 Cash flow Non-cash changes in year At 31 December 2023
In year
$000 $000 $000 $000
Borrowings 14,268 (6,929) (3,483)* 3,855
*Gain on early settlement of debt (see note 3) and debt conversion (see note
16).
The notes on pages 27 to 60 form an integral part of the consolidated
financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2023
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 in pages 27 to 37, have been consistently
applied.
The principal activities and nature of the business are included on pages 1 to
17.
BASIs OF ACCOUNTING
The consolidated financial statements have been prepared in accordance with UK
adopted international accounting standards adopted by the United Kingdom
applied in accordance with the provisions of the Companies (Guernsey) Law
2008. The consolidated financial statements have been prepared under the
historical cost convention except for biological assets and certain financial
assets and liabilities, which have been measured at fair value.
FUNCTIONAL AND PRESENTATION CURRENCY
These consolidated financial statements are presented in United States Dollar
(USD), which is the Group's presentation currency. All amounts have been
rounded to the nearest thousand, unless otherwise indicated.
BASIS OF CONSOLIDATION
Subsidiaries are entities controlled by the Group. Control is achieved when
the Group is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its
power over the investee. Specifically, the Group controls an investee if, and
only if, the Group has:
· Power over the investee (i.e. existing rights that give it the
current ability to direct the relevant activities of the investee).
· Exposure, or rights, to variable returns from its involvement
with the investee
· The ability to use its power over the investee to affect its
returns.
Generally, there is a presumption that a majority of voting rights result in
control. To support this presumption and when the Group has less than a
majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an
investee, including:
· The contractual arrangement with the other vote holders of the
investee.
· Rights arising from other contractual arrangements.
· The Group's voting rights and potential voting rights.
Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated financial statements from the
date the Group gains control until the date the Group ceases to control the
subsidiary. The acquisition method is used to account for the acquisition of
subsidiaries.
Any contingent consideration is recognised at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent consideration
that is deemed to be an asset or a liability is recognised in accordance with
IFRS 9 either in profit or loss or as a change in other comprehensive income.
The unwinding of the discount on contingent consideration liabilities is
recognised as a finance charge within profit or loss.
Acquisition related costs are expensed as incurred.
The Group measures goodwill at the acquisition date as the excess of the fair
value of the consideration transferred, plus the recognised amount of any
non-controlling interests, less the recognised amount of the identifiable
assets acquired, and liabilities assumed. If this consideration is lower than
the fair value of the net assets of the subsidiary acquired, the difference is
recognised in profit or loss as a bargain purchase.
Before recognising a gain on a bargain purchase, an assessment is made as to
whether all assets acquired, and liabilities assumed have been correctly
identified. The fair value measurement of the identifiable net assets and cost
of acquisition is also reviewed to evaluate whether all available information
at the acquisition date has been considered. An adjustment made to the fair
value of the net assets acquired will impact the amount of goodwill or bargain
purchased recognised at acquisition.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used
by other members of the Group. All significant intercompany transactions and
balances between group entities are eliminated on consolidation.
When the Group ceases to consolidate a subsidiary as a result of losing
control and the Group retains an interest in the subsidiary and the retained
interest is an associate, the Group measures the retained interest at fair
value at that date and the fair value is regarded as its cost on initial
recognition. The difference between the net assets de-consolidated and the
fair value of any retained interest and any proceeds from disposing of a part
interest in the subsidiary is included in the determination of the gain or
loss on disposal. In addition, the Group accounts for all amounts previously
recognised in other comprehensive income in relation to that associate on the
same basis as would be required if that subsidiary had directly disposed of
the related assets or liabilities.
Investments in associates and jointly controlled entities are accounted for
using the equity method of accounting and are initially recognised at cost.
The Group's share of its associates' post-acquisition profits or losses is
recognised in profit or loss, and its share of post-acquisition movements in
reserves is recognised in other comprehensive income. The cumulative
post-acquisition movements are adjusted against the carrying amount of the
investment.
Transactions with non-controlling interests that do not result in loss of
control are accounted for as equity transactions. Gains or losses on disposals
to non-controlling interests are recorded in equity.
As at 31 December 2023, 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% England Shared services, Timber Trading
Woodbois Trading Limited 100% Hong Kong Dormant
Argento Limited 100% Mauritius Holding / treasury company - Forestry and Trading
Woodbois Liberia Inc. 100% Liberia Dormant
Carbonarbor Limited 100% England Carbon solutions, 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 S.A. 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, W1J 7NW
Woodbois Trading Limited New Mandarin Plaza Tower B, 14 Science Museum Rd, Hong Kong
Argento Limited Dias Pier Building, Le Caudan Waterfront, Port Louis, Mauritius
Woodbois Liberia Inc. Daviers Compound, Williams Road, Monrovia, Libreville
Carbonarbor Limited Canterbury Court, 1-3 Brixton Road, London, England, SW9 6DE
Indirect investments of Argento Limited
Argento Mozambique Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Madeiras SL Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Jardim Zambezia Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Baia Branca Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Ligohna Timber Products Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Ligohna Timber Products (2) Limitada Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Montara Forest Lda Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
Petroforge Mozambique Lda Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito Kampfumo, Cidade de
Maputo, Mozambique
WoodBois International ApS Hoeffdingsvej 34, 2500 Valby, Denmark
WoodGroup ApS Hoeffdingsvej 34, 2500 Valby, Denmark
Woodbois Gabon 12 Rue de Georgelin, Derrière l'hôpital BP720 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 2023. 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 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
IAS Disclosure of Accounting policies
1
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 Classification of Liabilities as Current or Non-current
1
IAS 1 Non- Current Liabilities with Covenants
IFRS16 Lease liability in a Sale and Leaseback
IAS7, IFRS17 Supplier Finance arrangements
IAS 12 International Tax Reform - Pillar Two Models Rules
SEGMENTAL REPORTING
The reportable segments are identified by the Executive Board (which is
considered to be the Chief Operating Decision Maker) by the way management has
organised the Group. The Group operates within three separate operational
divisions comprising forestry, trading and carbon solutions.
The directors review the performance of the Group based on total revenues and
costs, for these three divisions and not by any other segmental reporting.
FOREIGN CURRENCIES
The presentation currency of the Group is US Dollars (US$). Items included
in the Group's financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ("the functional currency"). The functional currency of the
majority of the Group's subsidiaries is USD as this is the currency in which
they trade on a local basis. The consolidated financial statements are
presented in USD ("the presentation currency") because this is the currency
better understood by the principal users of the financial statements.
Foreign currency translation rates (against US$) for the significant
currencies used by the Group were:
At 31 December Annual average At 31 December Annual average
for 2023
for 2022
2023 2022
UK Pound 1.27 1.25 1.21 1.23
Mozambique Metical 63.20 63.65 63.88 63.85
Danish Krone 6.75 6.88 6.97 7.07
West African CFA franc 594.27 605.33 614.48 623.52
Transactions in foreign currencies are initially recorded at the rates of
exchange prevailing on the dates of the transaction. At each reporting date,
monetary assets and liabilities that are denominated in foreign currency are
translated into the functional currency at the rate prevailing on that date.
Non-monetary assets and liabilities are measured at fair value and are
translated into the functional currency at the rate prevailing on the
reporting date. Gains and losses arising on retranslation are included in
profit or loss for the year, except for exchange differences on non-monetary
assets and liabilities, which are recognised directly in other comprehensive
income when the changes in fair value are recognised directly in other
comprehensive income.
On consolidation, the assets and liabilities of the Group's overseas
operations are translated into the Group's presentational currency at exchange
rates prevailing at the reporting date. Income and expense items are
translated at the average exchange rates for the year unless exchange rates
have fluctuated significantly during the year, in which case the exchange rate
at the date of the transaction is used. Exchange differences arising, if any,
are taken to other comprehensive income and the Group's translation reserve.
Such translation differences are recognised as income or as expenses in the
year in which the operation is disposed of.
CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT
The preparation of the consolidated financial statements requires management
to make estimates and judgements and form assumptions that affect the reported
amounts of the assets, liabilities, revenue and costs during the periods
presented therein, and the disclosure of contingent liabilities at the date of
the consolidated financial statements.
Estimates and judgements are continually evaluated and based on management's
historical experience and other factors, including future expectations and
events that are believed to be reasonable. The estimates and assumptions that
have a significant risk of causing a material adjustment to the financial
results of the Group in future reporting periods are discussed below.
Information about assumptions and estimation uncertainties at 31 December that
have a significant risk of resulting in a material adjustment to the carrying
amounts of assets and liabilities in the next financial year is included in
the following notes:
· Residual values and useful lives of property, plant and
equipment: refer to note 1
· Fair value of biological assets: refer to note 11
· Provision for doubtful debts: refer to note 1
· Share Based Payments: refer to note 21
Revenue recognition
Under IFRS 15, Revenue from Contracts with Customers, five key points to
recognise revenue have been assessed:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the
contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a performance
obligation.
The Group recognises revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to the
entity, and specific criteria have been met for each of the Group's
activities, as described below.
The Group bases its estimates on historical results, taking into consideration
the type of customer, the type of transaction and the specifics of each
arrangement. Where the Group makes sales relating to a future financial
period, these are deferred and recognised under 'deferred revenue' on the
Statement of Financial Position.
The Group currently has the following revenue streams:
· Sale of goods: Revenue is recognised following the five-step
approach outlined above. The performance obligation set out in step two is
when the risk and reward of the goods is transferred to the customer (revenue
recognised at a point in time), and is transferred at the earlier of:
o when goods are sold subject to a letter of credit, on the date that the
bill of lading is dispatched to the buyer's bank; or
o when goods are prepaid in full by the buyer, based on the incoterm
specified in the contract/invoice; or
o when the bill of lading is exchanged.
· Service revenue: Revenue is recognised following the five-step
approach outlined above. The performance obligation set out in step two is
when the work has been certified by the customer (revenue recognised at a
point in time).
· Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable.
· Dividend income from investments is recognised when the
shareholders' rights to receive payment have been established (provided that
it is probable that the economic benefits will flow to the Group and the
amount of revenue can be measured reliably).
LEASES
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration.
Short‐term leases and leases of low‐value assets
The Group applies the short‐term lease recognition exemption to its
short‐term leases (i.e., those leases that have a lease term of 12 months or
less from commencement date and do not contain a purchase option). It also
applies the lease of low‐value assets recognition exemption to leases of
equipment that are considered of low value (i.e., below $5,000). Lease
payments on short‐term leases and leases of low‐value assets are
recognized as occupancy expense on a straight‐line basis over the lease
term.
Long‐term leases
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the
rate implicit in the lease. If this rate cannot be readily determined, the
Group uses its incremental borrowing rate.
The right of use assets comprises the initial measurement of the corresponding
lease liability, lease payments made at or before the commencement day and any
initial direct costs. They are subsequently measured at cost less accumulated
depreciation and impairment losses.
The Group remeasures the lease liability (and makes a corresponding adjustment
to the related right of use asset) whenever:
· The lease term has changed or there is a change in the assessment
of exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a revised discount
rate;
· The lease payments change due to changes in an index or rate or a
change in expected payment under a guaranteed residual value, in which cases
the lease liability is remeasured by discounting the revised lease payments
using the initial discount rate (unless the lease payments change is due to a
change in a floating interest rate, in which case a revised discount rate is
used); or
· A lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease liability is
remeasured by discounting the revised lease payments using a revised discount
rate.
Right of use assets are depreciated over the shorter period of lease term and
useful life of the underlying asset. If a lease transfers ownership of the
underlying asset or the cost of the right of use asset reflects that the Group
expects to exercise a purchase option, the related right of use asset is
depreciated over the useful life of the underlying asset. The depreciation
starts at the commencement date of the lease.
The Group applies IAS 36 Impairment of Assets to determine whether a right of
use asset is impaired.
Variable rents that do not depend on an index or rate are not included in the
measurement of the lease liability and the right of use asset. The related
payments are recognised as an expense in the period in which the event or
condition that triggers those payments occurs.
Property, PLANT AND EQUIPMENT
Land and Buildings are recognised at fair value based on periodic valuations
by external independent valuers. Any revaluation gains are recognised in other
comprehensive income. Revaluation losses are recognised with other
comprehensive income, against any pre-existing gains, with anything over and
above pre-existing gains being recognised as an expense in profit and loss.
All other Property, plant and equipment is stated at historical cost less
subsequent accumulated depreciation and any accumulated impairment losses. If
significant parts of property, plant and equipment have different useful
lives, then they are accounted for as separate items (major components) of
property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is
recognised in profit or loss.
Subsequent expenditure is capitalised only if it is probable that the future
economic benefits associated with the expenditure will flow to the Group.
Leased assets are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the group will obtain
ownership by the end of the lease term.
Land has an indefinite useful life and therefore is not depreciated.
Depreciation is calculated on a straight-line basis at rates calculated to
write each asset down to its estimated residual value, which in most cases is
assumed to be zero, evenly over its expected useful life, as follows:
Motor
vehicles
over 3 years
Fixtures and IT
equipment
over 3 - 7 years
Plant and equipment
over 2 - 5 years
Management judgement and assumptions are necessary in estimating the methods
of depreciation, useful lives and residual values. Depreciation methods,
useful lives and residual values are reviewed at each reporting date and
adjusted if appropriate.
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
At each statement of financial position date, the Group reviews the carrying
amounts of its tangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Where there has been a change in economic conditions that indicate a possible
impairment in a cash-generating unit, the recoverability of the net book value
relating to that field is assessed by comparison with the estimated discounted
future cash flows based on management's expectations of future costs.
The recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised as an expense immediately.
Where conditions giving rise to impairment subsequently reverse, the effect of
the impairment charge is also reversed as a credit to the income statement,
net of any depreciation that would have been charged since the impairment.
biological assets
A biological asset is defined as a living animal or plant. The Group's
biological assets comprise standing timber. The fair value of the standing
timber is determined using models based on expected yields, market prices for
the saleable produce, over 5 years, after allowing for harvesting costs and
other costs yet to be incurred in getting the produce to maturity. Any changes
in fair value are recognised in the income statement in the year in which they
arise.
Forestry
IAS 41 requires biological assets to be measured at fair value less costs to
sell. The fair value of standing timber is estimated based on the present
value of the net future cash flows from the asset, discounted at a current
market-based rate. In determining the present value of expected net cash
flows, the Group includes the net cash flows that market participants would
expect the asset to generate in its most relevant market. Increases or
decreases in value are recognised in profit or loss. When the fair value
estimates are determined to be clearly unreliable due to insufficient
information being available to the directors, the biological asset is held at
cost less any accumulated depreciation and any accumulated losses.
All expenses incurred in maintaining and protecting the assets are recognised
in profit or loss. All costs incurred in acquiring additional planted areas
are capitalised.
Where fair value of a biological asset cannot be measured reliably, the
biological asset shall be measured at its cost less any accumulated
depreciation and any accumulated impairment losses.
Costs incurred prior to the demonstration of commercial feasibility of
forestry and agriculture in a particular area are written-off to profit and
loss as incurred.
CONVERTIBLE BONDS
The net proceeds received from the issue of convertible bonds are split
between a liability element and an equity component at the date of issue. The
fair value of the liability component is estimated using the prevailing market
interest rate for similar nonconvertible debt. The portion which represents
the embedded option to convert the liability into equity of the Company is
included in equity and its fair value at initial recognition was estimated
using the Monte Carlo method of valuing such instruments. The equity portion
is not remeasured subsequent to initial recognition and the liability
component is carried at amortised cost. Issue costs are apportioned between
the liability and equity components of the convertible bonds based on their
relative carrying amounts at the date of issue. The portion relating to the
equity component is charged directly against equity. The interest expense on
the liability component is calculated by applying the prevailing market
interest rate, at the time of issue, for similar non-convertible debt to the
liability component of the instrument. The difference between this amount and
the interest paid is added to the carrying amount of the convertible bonds.
FINANCIAL INSTRUMENTS
(a) Classification
The Group classifies its financial assets in the following measurement
categories:
· those to be measured subsequently at fair value (either through
OCI or through profit or loss); and
· those to be measured at amortised cost.
The classification depends on the Group's business model for managing the
financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will be recorded either in
profit or loss or in OCI. For investments in equity instruments that are not
held for trading, this will depend on whether the Group has made an
irrevocable election at the time of initial recognition to account for the
equity investment at fair value through other comprehensive income (FVOCI).
(b) Recognition
Purchases and sales of financial assets are recognised on trade date (that is,
the date on which the Group commits to purchase or sell the asset). Financial
assets are derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
(c) Measurement
At initial recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through profit or
loss (FVPL), transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets
carried at FVPL are expensed in profit or loss.
Debt instruments
Amortised cost; Assets that are held for collection of contractual cash flows,
where those cash flows represent solely payments of principal and interest,
are measured at amortised cost. Interest income from these financial assets is
included in finance income using the effective interest rate method.
Any gain or loss arising on derecognition is recognised directly in profit or
loss and presented in other gains/(losses) together with foreign exchange
gains and losses. Impairment losses are presented as a separate line item in
the statement of profit or loss.
(d) Impairment
The Group assesses, on a forward-looking basis, the expected credit losses
associated with its debt instruments carried at amortised cost. The impairment
methodology applied depends on whether there has been a significant increase
in credit risk.
For trade receivables, the Group applies the simplified approach permitted by
IFRS 9, which requires expected lifetime losses to be recognised from initial
recognition of the receivables.
INVENTORIES
Inventories are measured at the lower of cost-of-production or estimated net
realisable value. Cost of production includes direct labour, all costs of
purchase, conversion and other costs incurred in bringing the inventories to
their present location and condition. Net realisable value is the estimated
selling price in the ordinary course of business, less the estimated selling
expenses. The cost of inventories is based on the weighted average cost
method.
Product that has been containerised and shipped or remains in storage at the
port of departure, and where ownership has not yet passed to the customer, is
accounted for as stock in transit and stated at the lower of cost of
production or estimated net realisable value.
eMPLOYEE benefits
short-term employee benefits
The costs of all short-term employee benefits are recognised in the period in
which the employee renders the related service.
The accrual/liability for employee entitlements to wages, salaries and annual
leave represent the amount which the Group has a present obligation to pay as
a result of an employees' services provided up to the reporting date. The
accruals have been calculated at undiscounted amounts based on expected wage
and salary rates.
SHARE-BASED PAYMENT ARRANGEMENTS
The grant-date fair value of equity-settled share-based payment arrangements
granted to employees is generally recognised as an expense, with a
corresponding increase in equity. The amount recognised as an expense is
adjusted to reflect the number of awards for which the related service and
non-market performance conditions are expected to be met, such that the amount
ultimately recognised is based on the number of awards that meet the related
service and non-market performance conditions at the vesting date. For
share-based payment awards with non-vesting conditions, the grant-date fair
value of the share-based payment is measured to reflect such conditions and
there is no true-up for differences between expected and actual outcomes.
The fair value of the options granted is measured using a Monte-Carlo
valuation model for market performance criteria and Black-Scholes valuation
model for non-market performance criteria, considering the terms and
conditions under which the options were granted. The amount recognised as an
expense is adjusted to reflect the actual number of share options that vest.
PROVISIONS
A provision is recognised if, as a result of a past event, the Group has a
present legal or constructive obligation that can be estimated reliably, and
it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the liability. The unwinding of
discount is recognised as a finance cost.
A provision for onerous contracts is recognised when the expected benefits to
be derived by the Group from a contract are lower than the unavoidable cost of
meeting its obligations under the contract. The provision is measured at the
present value of the lower of the expected cost of terminating the contract
and the expected net cost of continuing with that contract.
In accordance with the Group's environment policy and applicable legal
requirements, a provision for site restoration in respect of contaminated
land, and the related expense, is recognised when the land is contaminated.
TAXATION
Income tax expense comprises current and deferred tax. It is recognised in
profit or loss except to the extent that it relates to a business combination,
or items recognised directly in equity or in other comprehensive income.
CURRENT TAX
Current tax comprises the expected tax payable or receivable on the taxable
income or loss for the year and any adjustment to the tax payable or
receivable in respect of previous years.
The amount of current tax payable or receivable is the best estimate of the
tax amount expected to be paid or received that reflects uncertainty related
to income taxes, if any. It is measured using tax rates enacted or
substantively enacted at the reporting date. Current tax also includes any tax
arising from dividends and surface tax.
Current tax assets and liabilities are offset only if certain criteria are
met.
DEFERRED TAX
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes.
Deferred tax is not recognised for:
· temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss;
· temporary differences related to investments in subsidiaries,
associates and joint arrangements to the extent that the Group is able to
control the timing of the reversal of the temporary differences and it is
probable that they will not reverse in the foreseeable future; and
· taxable temporary differences arising on the initial recognition
of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits
and deductible temporary differences to the extent that it is probable that
future taxable profits will be available against which they can be used.
Future taxable profits are determined based on the reversal of relevant
taxable temporary differences. If the amount of taxable temporary differences
is insufficient to recognise a deferred tax asset in full, then future taxable
profits, adjusted for reversals of existing temporary differences, are
considered, based on the business plans for individual subsidiaries in the
Group. Deferred tax assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax benefit will
be realised; such reductions are reversed when the probability of future
taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and
recognised to the extent that it has become probable that future taxable
profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, using tax rates enacted or
substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would
follow from the manner in which the Group expects, at the reporting date, to
recover or settle the carrying amount of its assets and liabilities. For this
purpose, the carrying amount of investment property measured at fair value is
presumed to be recovered through sale, and the Group has not rebutted this
presumption.
Deferred tax assets and liabilities are offset only if certain criteria are
met.
BORROWINGS
Borrowings are initially recognised at fair value, net of transaction costs
incurred. Borrowings are subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using
the effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the extent that
it is probable that some or all of the facility will be drawn down. In this
case, the fee is deferred until the draw down occurs. To the extent there is
no evidence that it is probable that some or all of the facility will be drawn
down, the fee is capitalised as a prepayment for liquidity services and
amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the group has an
unconditional right to defer settlement of the liability for at least 12
months after the reporting period.
EARNINGS PER SHARE
(i) Basic earnings per share is calculated by dividing the profit
attributable to the owners of the Company by the weighted average number of
ordinary shares outstanding during the financial year.
(ii) Diluted earnings per share adjusts the figures used in determining
basic earnings per share to take into account the after tax effects of
interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of ordinary shares that would have been
outstanding assuming the conversion of all diluted potential ordinary shares.
Where there is a loss attributable to the owners of the company, it is not
necessary to disclose the diluted earnings per share.
GOING CONCERN
The consolidated financial statements have been prepared assuming that the
Group will continue as a going concern. Under this assumption, an entity is
ordinarily viewed as continuing in business for the foreseeable future with
neither the intention nor necessity of liquidation, ceasing trading or seeking
protection from creditors for at least 12 months from the date of the signing
of the consolidated financial statements.
Management have performed their consideration on various scenarios. The base
case includes the rescheduling of debts and/or financing being raised whether
as equity, debt or a hybrid thereof. In their scenario planning
management have considered inter alia:
· the timing of and the ability of the Company to raise sufficient
working capital;
· the timing of and the ability of the Company to raise the finance
required to settle the balance of the Danish bank facility that was terminated
on 19 April 2023;
· the likely outcome(s) of the Company's negotiations with its
creditors;
· the current stage of the Group's life cycle;
· its performance and cashflow;
· the expected timing of revenues;
· financing both committed and those that management consider is
available and;
· operational risks.
The forecasts, show that the Company will have to reschedule or raise funds in
connection with $1.5m of its near-term debt due at the end of June 2023, in
addition to raising sufficient working capital in order to have adequate
resources to continue in operational existence for the foreseeable future and
to meet its liabilities as they fall due in the next 12 months. Your attention
is drawn to the RNS dated 6 June 2023, summarised in note 24. At the date of
these consolidated financial statements, financing proposals were still
subject to due diligence and shareholder approval to issue new ordinary shares
at the General Meeting (scheduled for 16 June 2023), set out in the circular
to shareholders dated 26 May 2023. Whilst the directors currently believe
that the additional financing required will be obtained, there can be no
certainty. Although the audit report is not modified in respect of this
matter, these events or conditions, along with the other matters as set forth
in the notes, indicate that a material uncertainty exists that may cast
significant doubt on the company's ability to continue as a going concern. As
of the date hereof the directors consider it appropriate to adopt the going
concern basis of preparation in the consolidated financial statements.
2. SEGMENTAL REPORTING
Segmental information is presented on the basis of the information provided to
the Chief Operating Decision Maker ("CODM"), which is the Executive Board.
The Group is currently focused on forestry, timber trading and carbon
solutions. These are the Group's primary reporting segments, operating in
Gabon, Mozambique, Denmark, London, Guernsey and head operating offices in
Mauritius. Certain support services are performed in the UK.
As on 31 December 2023 sales made to four (2022: one) customers during the
year accounted for 14%, 11%, 11% and 10% (2022: 14%) 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 2023. All amounts are disclosed
after taking into account any intra-segment and intra-group eliminations:
2023 Forestry Trading Carbon Solutions Total
$000 $000 $000 $000
Income statement
Turnover 6,918 1,022 - 7,940
Cost of Sales (5,617) (911) - (6,528)
Gross profit 1,301 111 - 1,412
Other income - 1,434 - 1,434
Operating costs (5,129) (1,553) (585) (7,267)
Administrative expenses (293) (293) (292) (878)
Depreciation (1,982) (94) - (2,076)
Share based payment expense 68 48 49 165
Segment operating loss (6,035) (347) (828) (7,210)
Foreign exchange (loss)/gain 946 (740) (69) 137
Finance costs (510) (299) - (809)
Loss before tax (5,599) (1,386) (897) (7,882)
Taxation (243) - - (243)
Loss for the year (5,842) (1,386) (897) (8,125)
NET ASSETS
Assets: 214,577 3,546 - 218,123
Liabilities: (4,074) (3,401) - (7,475)
Deferred tax liability (58,680) - - (58,680)
Net assets 151,823 145 - 151,968
Reconciliation of information on reportable segments to the amounts reported
in the consolidated financial statements:
2023 2022
(Loss)/profit before tax $000 $000
Total (loss)/profit before tax for reportable segments (8,125) (109,662)
Unallocated amount: reclassification of FCTR on deregistered entities - (1,529)
Consolidated (loss)/profit before tax (8,125) (111,191)
The following table shows the segment analysis of the Group's loss before tax
for the year and net assets at 31 December 2022. All amounts are disclosed
after taking into account any intra-segment and intra-group eliminations:
Forestry Trading Carbon Solutions Total
2022
$000 $000 $000 $000
Income statement
Turnover 15,262 7,846 - 23,108
Cost of Sales (10,450) (6,794) - (17,244)
Gross profit 4,812 1,052 - 5,864
Operating costs (2,360) (1,467) (339) (4,166)
Administrative expenses (429) (429) (430) (1,288)
Depreciation (206) (16) - (222)
Share based payment expense (171) (121) (126) (418)
Gain on fair value of biological assets (156,983) - - (156,983)
Segment operating profit/(loss) (155,337) (981) (895) (157,213)
Foreign exchange (loss)/gain (135) 1,039 - 904
Finance costs (614) (415) - (1,029)
Profit/(loss) before tax (156,086) (357) (895) (157,338)
Taxation 47,681 (5) - 47,676
Profit/(loss) for the year (108,405) (362) (895) (109,662)
NET ASSETS
Assets: 215,486 9,787 - 225,273
Liabilities: (5,881) (12,812) - (18,693)
Deferred tax liability (58,680) 5 - (58,675)
Net assets 150,925 (3,020) - 147,905
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 United Kingdom Total
2023 $000 $000 $000 $000 $000
External sales 1,021 6,745 47 127 7,940
Non-Current Assets - 209,863 146 210,009
-
2022 $000 $000 $000 $000 $000
External sales 7,846 15,130 132 23,108
-
Non-Current Assets - 211,706 335 212,041
-
The below segment revenue has been based on the geographic location of the
customer. Only material amounts were included.
2023 2022
Location: $000 $000
Libya 1,575 4,401
Gabon 1,100 3,922
Turkey 921 1,591
China 847 -
Dominican Republic 841 2,350
Italy 716 1,800
Iraq 536 1,283
Republic of Korea 396 -
USA 174 574
Morocco 105 805
Pakistan 28 2,275
Bangladesh - 1,621
Belgium - 534
7,239 21,156
3. oTHER INCOME
Other income represents settlement gains realised on termination of banking
and other facilities.
On 19 April 2023, the Company announced that Woodgroup Aps, a wholly owned
subsidiary of the Company, had received a notice from a Danish bank, that it
was terminating a $6m debt facility. The $6m facility was fully utilised and
had an ancillary account with a cash balance of $3.1m. The bank had a floating
charge against the assets of Woodgroup ApS and have offset this $3.1m in
partial repayment of the facility. The reason cited by the bank for
terminating the facility was that Woodgroup ApS generated a loss in Q1 2023.
The bank believed that, as a consequence, the circumstances of Woodgroup ApS
had changed significantly to their detriment. Management did not agree with
the bank's conclusion and, whilst acknowledging the poor performance in Q1,
believed the Company had been well placed to deliver a very positive
performance for the remainder of the year. As reported by the Company on 6
June 2023, the Company had reached an agreement with the bank to settle the
balance by no later than 29 December 2023. The Company settled the outstanding
balance on 28 June 2023, thereby taking advantage of an early settlement
incentive which gave rise to c$1.4m of other income. All security arrangements
were cancelled upon settlement.
As noted at note 16 the Lombard Odier loan was also settled in the period.
4. OPERATING LOSS/profit
2023 2022
$000 $000
Operating loss/profit is stated after charging/(crediting):
Depreciation of property, plant and equipment (note 9) 2,641 2,181
Staff costs (see note 5) 4,228 4,276
Share based payment reserve expense (see note 21) (165) 418
Lease expense 84 89
Loss on fair value of Biological assets (see note 11) - 156,983
Auditor's remuneration:
Audit services
- fees payable to the Company's auditor for the audit of the consolidated 78 78
accounts
Fees payable to associates of the Company's auditor
- auditing the accounts of subsidiaries pursuant to legislation 99 76
5. EMPLOYEE INFORMATION
2023 2022
Number Number
The average monthly number of persons (including directors) employed by the
Group during the year was:
Carbon solutions 4 7
Forestry 408 393
Trading 8 9
420 409
2023 2022
$000 $000
The aggregate remuneration comprised:
Wages and salaries 3,670 4,138
Social security costs 558 138
4,228 4,276
2023 2022
$000 $000
Directors' remuneration included in the aggregate remuneration above
comprised
Emoluments for qualifying services 874 841
Included above are emoluments of $238,000 (2022: $247,000) in respect of the
highest paid director. Full details of directors' remuneration are included
in the Directors' Report.
Pension contributions of $7,511 (2022: $6,936) were made on behalf of the
directors and other staff members.
6. FINANCE COSTS
2023 2022
$000 $000
Bank interest 516 741
Working capital facility interest 278 206
Convertible bond amortised interest 15 82
809 1,029
7. TAXATION
2023 2022
$000 $000
Current tax:
Corporation and surface tax for the year 243 125
Deferred tax:
Origination and reversal of temporary differences - (47,801)
Tax on profit/(loss) on ordinary activities 243 (47,676)
2023 2022
$000 $000
Group
(Loss)/profit before tax (7,882) (158,867)
(Loss)/profit before tax multiplied by the average rate of corporation tax of (1,261) (23,830)
16% (2022: 15%)
Effects of:
Losses carried forward/(utilised) 1,270 (199)
Non-taxable foreign exchange gain (30) (147)
Non-taxable movement in fair value of biological assets - (24,249)
Non-deductible share-based payment expense - 63
Non-deductible other expenditure 264 457
Reclassification of FCTR 9 (#_ftn9) on deregistered entities - 229
Group tax charge/(credit) for the year 243 (47,676)
9 (#_ftnref9) Foreign currency translation reserve
The prevailing tax rates of the operations of the Group range between 3% and
32%. Therefore, a rate of 16% (2022:15%) has been used as it best represents
the average tax rate experienced by the Group. The Group has estimated losses
of $34m (2022: $26m) available to carry forward against future taxable
profits. $5.7m of these losses relate to the Mozambiquan operations that were
divested of post year end (see note 24) and which may fall away upon the
sale. Tax losses utilized during the year related principally to profits
realised by subsidiaries in certain jurisdictions. 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:
2023 2022
Deferred tax liabilities $000 $000
At 1 January 58,675 106,475
Decrease in deferred tax liability: fair value adjustment of Biological Assets - (47,795)
Decrease in deferred tax liability: property, plant and equipment - (5)
Increase in deferred tax liability: fair value adjustment on property, plant
and equipment
5 -
At 31 December 58,680 58,675
Deferred tax reconciliation
2023 2022
Deferred tax assets / (liabilities) $000 $000
Deferred tax liability on the fair value adjustment of Biological Assets (53,945) (53,945)
Deferred tax liability on property, plant and equipment - 5
Deferred tax liability on the fair value adjustment on property, plant and
equipment
(4,735) (4,735)
At 31 December (58,680) (58,675)
8. EARNINGS PER SHARE
Summary:
2023 2022
cents cents
Basic (loss)/earnings per share (0.24) (4.47)
Diluted earnings per share (0.24) (4.47)
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by the weighted average aggregate number of
Voting and Non-Voting Ordinary Shares in issue during the year.
The calculation of diluted EPS has been based on dividing the profit
attributable to ordinary shareholders and weighted-average number of ordinary
shares outstanding after adjustment for the effects of all dilutive potential
ordinary shares.
The Company has incurred a loss in the year ended 31 December 2023, and
therefore the diluted earnings per share is the same as the basic loss per
share as the loss has an anti-dilutive effect.
2023 2022
$000 $000
Total (loss)/profit for the year (8,125) (110,191)
The earnings used for diluted earnings per share are the same as the earnings
used for basic earnings per share, which equates to loss attributable to the
owners of the Company of $8.1m.
Reconciliation of shares in issue to weighted average and dilutive weighted
average number of ordinary shares
2023 2022
'000 '000
Shares in issue at beginning of year 2,489,988 2,482,117
Treasury shares (19,138) -
Shares issued during the year weighted for period in issue (note 18) 983,562 3,894
Weighted average number of ordinary shares in issue for the year 3,454,412 2,486,011
Conversion of convertible bonds - 15,740
Dilutive weighted average number of ordinary shares in issue for the year 3,454,412 2,501,751
9. PROPERTY, plant and equipment
Land & buildings Motor vehicles Plant & equipment Fixtures & IT equipment Total
$000 $000 $000 $000 $000
Cost
At 1 JANUARY 2022 15,431 6,194 14,574 431 36,630
Additions - 1,715 2,929 1,478 6,122
Disposals - (26) - (280) (306)
Effects of foreign exchange (884) (306) (484) (799) (2,473)
At 31 December 2022 14,547 7,577 17,019 830 39,973
Additions - 429 945 73 1,447
Disposals - (98) (425) - (523)
Effects of foreign exchange 523 (239) (602) (355) (673)
At 31 December 2023 15,070 7,669 16,937 548 40,224
Depreciation
At 1 JANUARY 2022 - 2,272 4,152 87 6,511
Charge for the year - 742 1,390 49 2,181
Disposals - (26) - - (26)
Effects of foreign exchange - (95) (826) 2 (919)
At 31 December 2022 - 2,893 4,716 138 7,747
Charge for the year - 956 1,572 113 2,641
Disposals - (53) (282) - (335)
Effects of foreign exchange - (5) (16) (2) (23)
At 31 December 2023 - 3,791 5,990 249 10,030
Net book value
At 31 December 2022 14,547 4,684 12,303 692 32,226
At 31 December 2023 15,070 3,878 10,947 299 30,194
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 May 2021. 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. A revaluation net
gain of $6.3m (comprised of a gross gain of $8.9m net of deferred tax of
$2.6m) was recognised in Other Comprehensive Income in 2021.
The Company acquired the Land and Buildings in June 2017 and at that time, the
fair value, at initial recognition was $7.2m. Therefore, the carrying amount
for those assets, if the cost model had been applied by the Company, would
have been 2023: $7.2m (2022: $7.2m).
The replacement cost approach was used to determine the fair value. The
replacement cost method involves arriving at an asset's value by reference to
the present-day cost, in an arms-length transaction, of replacing that asset
with a similar asset in a similar condition. Average construction prices in
the area were used to determine the fair value. A deterioration percentage
estimate was then applied against the fair value to represent the asset's
current condition.
Significant unobservable inputs used to calculate the fair value include:
- Estimated construction prices per m(2). The estimated fair value
would increase (decrease) if the construction prices would be lower (higher).
- Deterioration percentage estimate. The estimated fair value would
increase (decrease) if the deterioration percentage estimate would be lower
(higher).
The fair value measurement for the land and buildings has been categorised as
a level 3 fair value based on the inputs used in the valuation technique.
Please refer to note 9 for a reconciliation of the carrying amount of land and
buildings.
Management is not aware of any factors that impacted property valuations in
Gabon and therefore noted that during 2023 the fair value of the revalued
asset, when stated in its local currency, did not differ materially from its
carrying amount and therefore no revaluation was performed in 2023.
11. biological assets
2023 2022
Standing timber $000 $000
Carrying value at beginning of year 179,815 336,798
Fair value movement - (156,983)
Carrying value at end of year 179,815 179,815
2023 2022
Carrying value per location $000 $000
Gabon 179,815 179,815
Mozambique - -
Carrying value at end of year 179,815 179,815
The Group's main class of biological assets comprise of standing timber held
through forestry concessions of 20 years to which the Group as secured
harvesting rights. The biological assets are located in Gabon in Mouila and
Mimongo. Biological assets are carried at fair value less estimated costs to
sell.
The methods and assumptions used in determining the fair value of standing
timber within the forestry concessions held is based on IAS 41 Agriculture,
applicable to companies that hold biological assets, which uses discounted
cash flow models and which require a number of significant judgements to be
made by the directors in respect of sales price, operational cost, discount
rates, growth rates, legislative rulings and operating effectiveness. As
with all discounted cash flow valuations on long-term assets, small changes to
input variables can create significant changes to the resultant valuation.
Following the fair value assessment in 2023, no movement of biological asset
was recognised. Fair value of the biological asset was $179.8m for the year
ending 2023.
Although the Group experienced an increase in its average actual borrowing
rates in 2023, the risk-free rate, equity and country specific risk rates
which also impacts on the valuation decreased, resulting in an overall
reduced discount rate. The effect of this rate change was set off against
the effect of the Group's decision to revise downwards its anticipated forward
looking harvesting rates based on the current expected harvesting activities,
the potentially more economic option to buy in third party logs in the wet
seasons and given that the Company is in the process of combining its two
concession management plans into a single management plan where the Annual
Permitted Cut may be subject to change depending on the government's view of
sustainable harvesting in the combined plan and 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.
Harvesting levels are regulated by the Annual Permitted Cut ("APC") (total
m(3) per species) set in each management plan and approved at government level
and can be reviewed and increased periodically, while continued sustainability
is ensured. The level of assumed harvesting volume is 221,983m(3) (2022:
237,983m(3)). This is based on the current expected forward looking harvesting
activities and falls within the historically approved APC.
The valuation model assumes a discount rate of 16% (2022: 18%). The discount
rate has 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 equity and country risk premiums have
been used for Gabon. The decrease in the discount rate from the prior year
is due mainly to the decrease in the risk-free rate, and the country risk
premium which is used in calculating the WACC.
Fair value has been determined internally by discounting a 5-year pre-tax cash
flow projection (Level 3 of the fair value hierarchy) based on a mix of wood
species within the concession areas. Real cost of production has been factored
in going forward.
The following sensitivity analysis shows the effect of an increase or decrease
in significant assumptions used:
Impact on year end fair value of biological assets
2023 2022
$000 $000
(14,014) (10,694)
Effect of 1% increase in the discount rate
Effect of 1% decrease in the discount rate 12,079 12,197
Effect of 10% increase in assumed harvesting volume 13,645 18,374
Effect of 10% decrease in assumed harvesting volume (13,645) (18,374)
Effect of 10% increase in sales price 21,318 21,158
Effect of 10% decrease in sales price (21,318) (21,158)
12. TRADE AND OTHER RECEIVABLES
2023 2022
$000 $000
Trade receivables 3,794 4,561
Other receivables 337 12
Deposits 372 128
Current tax receivable 16 16
VAT receivable 379 174
Prepayments 502 1,439
5,400 6,330
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
2023 2022
$000 $000
Finished goods 1,275 2,377
Stock in transit 496 2,229
1,771 4,606
Provision for net realisable value amounted to $nil (2022: $nil).
14. financial INSTRUMENTS
Capital risk management
The Company manages its capital to ensure that entities in the Group will be
able to continue as a going concern while maximising the return to
stakeholders. The overall strategy of the Company and Group is to minimise
costs and liquidity risk.
The capital structure of the Group consists of equity attributable to equity
holders of the parent, comprising issued share capital, share premium,
reserves (foreign exchange reserve and share based payment reserve) and
retained earnings as disclosed in the Consolidated Statement of Changes in
Equity.
The Group is exposed to a number of risks through its normal operations, the
most significant of which are interest, credit, foreign exchange and liquidity
risks. The management of these risks is vested in the board of directors.
The sensitivity has been prepared assuming the liability outstanding at the
balance sheet date was outstanding for the whole period. In all cases
presented, a negative number in profit and loss represents an increase in
finance expense / decrease in interest income.
Categorisation of financial instruments
2023 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 4,501 - - - 4,501
Cash and cash equivalents 527 - - - 527
Trade and other payables - - (2,190) - (2,190)
Borrowings - - (3,855) - (3,855)
5,028 - (6,045) - (1,017)
2022 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 4,701 - - - 4,701
Cash and cash equivalents 2,296 - - - 2,296
Trade and other payables - - (2,465) - (2,465)
Borrowings - - (14,268) - (14,268)
Convertible bond liability - - (748) - (748)
6,997 - (17,481) - (10,484)
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 $15m (2022: $14.5m) measured in accordance
with level 3 and Biological Assets of $179.8m (2022: $179.8m) measured in
accordance with level 3 of the fair value hierarchy.
Equity price Risk
The Group is exposed to equity price risks arising from equity investments.
Equity investments are held for both strategic and trading purposes.
Management of market risk
The most significant area of market risk to which the Group is exposed is
interest rate risk.
The risk is limited to the reduction of interest received on cash surpluses
held and the increase in the interest on borrowings.
Majority of the Company's debt was based on floating interest rates with links
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.
2023 2022
$000 $000
+ 20 bp increase in interest rates (11) (26)
+ 50 bp increase in interest rates (26) (65)
+ 100 bp increase in interest rates (53) (130)
The table above is prepared on the basis of an increase in rates. A decrease
in rates would have the opposite effect.
2023 2022 2023 2022 2023 2022
Fixed Fixed Floating Floating Total Total
rate rate rate Rate
Group $000 $000 $000 $000 $000 $000
Borrowings - (5,028) (3,855) (9,240) (3,855) (14,268)
Cash and cash equivalents - - 527 2,296 527 2,296
Convertible bond liability - (748) - - - (748)
Total - (5,776) (3,328) (6,944) (3,328) (12,720)
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. Credit is only rarely granted and for
strategic purposes.
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:
2023 2023 2022 2022
Carrying Value Maximum Exposure Carrying Value Maximum
Exposure
$000 $000 $000 $000
Cash and cash equivalents 527 527 2,296 2,296
Trade and other receivables 4,501 4,501 4,701 4,701
Total 5,028 5,028 6,997 6,997
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 2023 or 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 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.
Trade receivables are written off when there is no reasonable expectation of
recovery. Indicators that there is no reasonable expectation of recovery
include, among others, the failure of a debtor to engage in a repayment plan
with the group and a failure to make contractual payments. Impairment losses
on accounts receivable are presented within operating profit. Subsequent
recoveries of amounts previously written off are credited against the same
line item.
On that basis, the loss allowance as at 31 December 2023 and 31 December 2022
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
2023
Expected loss rate 14.46% 0% 0% 0% 0% 12.67%
Gross carrying amount - trade receivables 3,807 39 37 36 427 4,346
Loss allowance (550) - - - - (550)
2022
Expected loss rate 67.40% 0% 0% 0% 0% 12,84%
Gross carrying amount - trade receivables 997 425 1,531 1,151 1,159 5,233
Loss allowance (672) - - - - (672)
The closing loss allowances for trade receivables and contract assets as at 31
December reconcile to the opening loss allowances as follows:
2023 2022
$000 $000
Opening loss allowance at 1 January 670 155
Increase in loss allowance recognised in profit and loss during the year 129 560
Receivables written off during the year as uncollectible (249) (43)
Closing loss allowance at 31 December 550 672
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:
2023 2022
$000 $000
Cash and cash equivalents
GBP 9 16
EUR 3 572
DKK 1 1
MUR 9 -
CFA 24 271
MZN 16 14
USD 465 1,422
Total 527 2,296
The table below summarises the impact of a 10% increase in the relevant
foreign exchange rates versus the US Dollar rate, on the Group's pre-tax
profit for the year and on equity:
2023 2022 2023 2022
Income Statement Income Statement Equity Equity
Impact of 10% rate change $000 $000 $000 $000
Cash and cash equivalents (3) (33) (3) (33)
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.
2023 2022
$000 $000
Cash at bank 527 2,296
ContracTual maturity analysis
The Group has assessed the contractual maturity analysis as follows:
2023 0-3 months 3-12 months 1 - 5 years Total
$000 $000 $000 $000
Assets by contractual maturity
trade and other receivables 896 4,504 - 5,400
Cash and cash equivalents 527 - - 527
1,423 4,504 - 5.927
Liabilities by contractual maturity
Trade and other payables (2,555) (519) - (3,074)
Borrowings (399) (3,224) (292) (3,915)
(2,954) (3,743) (292) (6,989)
Net liabilities by contractual maturity (1,531) 761 (292) (1,062)
2022 0-3 months 3-12 months 1 - 5 years Total
$000 $000 $000 $000
Assets by contractual maturity
trade and other receivables 1,263 5,067 - 6,330
Cash and cash equivalents 2,296 - - 2,296
3,559 5,067 - 8,626
Liabilities by contractual maturity
Trade and other payables (2,884) (664) - (3,548)
Borrowings - (8,603) (5,665) (14,268)
Convertible bond liability - (748) - (748)
(2,884) (10,015) (5,665) (18,564)
Net liabilities by contractual maturity 675 (4,595) (5,665) (9,585)
15. TRADE AND OTHER PAYABLES
2023 2022
$000 $000
Trade payables 1,145 1,213
Accruals 1,039 309
Contract liabilities (prepayments received) 750 892
Current tax payable 132 190
Other payables 7 920
Debt due to concession holders 1 23
3,074 3,547
The directors consider that the carrying amount of trade and other payables
approximates to their fair value.
16. BORROWINGS
2023 2022
$000 $000
Non-Current liabilities
Business loans 292 1,757
Working capital facility - 3,908
292 5,665
Current liabilities
Business loans 1,529 888
Bank overdraft 80 196
Working capital facility 1,954 7,519
3,563 8,603
Total borrowings 3,855 14,268
The decrease in borrowings is mainly due to the following:
· Settlement of $6m revolving working capital facility at a discount (see
note 3).
· Conversion of $2.25m working capital loan, with interest at 8.25% per
annum, owing to Rhino Ventures to non-voting equity (see note 18).
· Settlement of short term, $1m working capital facility, with interest at
8.25% per annum, owed to Lombard Odier.
As at 31 December 2023 the trading division had the following outstanding
borrowings:
Business loan with the Danish export credit fund, administered by a Danish
bank that amounted to $0.9m (2022: $1.0m), carrying interest at 5.7%. A
working capital facility of $1.95m with a Danish bank, carrying interest at
10.23%. The Danish Bank has registered a mortgage to the value of $2.7m over
the inventory, receivables and cash of Woodbois International ApS. The
Company has also provided a parent guarantee.
As at 31 December 2023 the forestry division had the following outstanding
borrowings:
Business loans with a Gabonese bank that amounted to $0.9m. These loans carry
an interest rate of between 13% and 14%. The purpose of the loans is for
operational asset financing. A bank overdraft with a Gabonese bank amounted
to $0.08m (2022: $0.2m) and carries an interest rate of 10%.
Woodbois Limited signed a parent guarantee to a maximum of $2m to a Gabonese
bank.
The contractual maturity of borrowings has been assessed in Note 14.
The Group had undrawn facilities available at 31 December 2023 that amounted
to $0.1m (2022:
$0.1m).
17. CONVERTIBLE BONDS
2023 2022
$000 $000
Convertible bonds: Liability component - 748
Convertible bonds: Equity component - 24
Total - 772
Convertible bond liability - 477
Amortised interest - 271
Total - 748
The terms of the convertible bonds were 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
During 2022, $293,591 of the 2023 0% Convertible Bonds were converted into
5,871,820 Voting Ordinary Shares. The Convertible Bond terms specify
conversion is at an exchange rate of £:$1.25 and 4p per Ordinary Share. The
balance of the Bonds of c$0.75m was repaid on 5 July 2023.
18. SHARE CAPITAL
Number $000
Authorised:
Ordinary shares of 0.01p* each Unlimited Unlimited
Allotted, issued and fully paid:
Ordinary shares of 0.01p each
AT 31 DECEMBER 2021 2,482,117,053 32,528
Shares issued 7,871,820 97
AT 31 DECEMBER 2022 2,489,988,873 32,625
Shares issued 1,800,000,000 3,217
AT 31 DECEMBER 2023 4,289,988,873 35,842
Voting 3,704,988,873
Non-Voting 585,000,000
* See note below: nominal value of ordinary shares reduced from 1.0p in June
2023 to 0.01p and a deferred share of 0.99p. The deferred shares were redeemed
at no cost by the Company.
Balances classified as share capital include the nominal value on issue of the
Company's equity share capital, comprising ordinary shares of 0.01p each.
TREASURY SHARES
In January 2023 following a final adjustment in relation to the 2017 purchase
of Woodbois International Aps, the Company received 19,138,147 ordinary voting
shares which have been taken into Treasury.
ORDINARY SHARES
On 13 March 2023 the Company announced that gross proceeds of c$3.6m had been
raised by way of a conditional placing of 250,000,000 new ordinary shares of
1p each in the Company at a price of 1.2 pence per New Ordinary Share.
On 30 May 2023, the Company announced that, as a result of the unexpected
termination of a fully drawn c$6.0m bank facility with a Danish bank (see note
3), who had also unilaterally offset c$3.1m of the Company's cash in part
repayment of the facility, the Company's share price had fallen below its then
nominal value of 1p. As the Company's Articles of Association prohibit the
issuance of shares at a discount to nominal value, there was a need to
re-designate the nominal value. The directors convened a General Meeting for
the purpose of proposing and voting on resolutions to reduce the nominal value
of the ordinary shares to 0.01p and deferred share of 0.99p, but which did not
change the number of ordinary shares in issue, as well as for the renewal and
widening of the waiver of pre-emption rights to enable the Company to meet
these exceptional circumstances.
On 16 June 2023 at the General Meeting, shareholders voted and all resolutions
passed with >97% of votes in favour. The deferred shares were subsequently
redeemed at nil cost by the Company.
On 28 June 2023, the Company announced that it has raised £6.0m by way of a
subscription for new ordinary shares at a price of 0.5 pence (the
"Subscription"). This satisfied the cash shortfall created when the $6m
working capital facility was withdrawn, allowing the Company the flexibility
to discharge its remaining obligations to the bank, whilst also benefiting
from an agreed financial incentive for such repayment.
The Subscription formed part of a wider financing package, including a
debt-for-equity swap of £1.75m and including the issuance of warrants:
· Subscription for £6.0m:
A Subscription for 1,200,000,000 new ordinary shares of 0.01 pence each in the
Company ("Ordinary Shares") (the "Subscription Shares"), raising £6.0m, at an
issue price of 0.5 pence per Ordinary Share.
800,000,000 Subscription Shares were subscribed for by CHCH Ventures FZ-LLP
and 400,000,000 Subscription Shares were purchased by John Scott (together the
"Subscribers").
· Conversion of existing debt to non-voting ordinary shares and
issuance of a convertible loan
The Company had a loan outstanding with Rhino Ventures Limited ("RVL") (see
note 16), with a balance outstanding of $2.25m (inclusive of all accrued
interest). Under the terms of a Deed of Capitalisation, the loan was
capitalised, at the price of 0.5 pence per share, into 350,000,000 Non-Voting
Ordinary Shares (the "Non-Voting Conversion Shares") and a redemption payment
of £25,590 is due.
The Company has also entered into a Commission Agreement with RVL, in respect
of Miles Pelham's assistance in procuring the Subscription, under which RVL
can elect to receive 60,000,000 new Voting Ordinary Shares (the "Commission
Shares") and, subject to the passing of resolutions at a Company General
Meeting, to grant Directors further authority to allot new shares on a
non-pre-emptive basis (the "Commission Fee"). The Commission Fee equates to a
5% commission on the funds raised through the Subscription. As set out in
note 24, the required resolutions were passed and RVL elected to receive the
Commission Shares.
· Issuance of Warrants
The Company issued 1,200,000,000 share warrants to the Subscribers on a 1 for
1 basis, in respect of the Subscription Shares. Each Warrant gives the holder
the right to subscribe for one new Voting Ordinary Share at a price of 1 pence
per Voting Ordinary Share, at any time until 29 June 2025 (the "Warrants").
Under the terms of the Deed of Capitalisation and conditional on the passing
of certain resolutions at a Company General Meetings as described above, RVL
would also be issued with 350,000,000 Warrants on a 1 for 1 basis, in respect
of the 350,000,000 Non-Voting Conversion Shares. These Warrants are over
Non-Voting Ordinary Shares in Woodbois. Subject to the passing of those same
resolutions, RVL could also elect under the Commission Agreement to receive
60,000,000 Warrants over Voting Ordinary Shares in the Company. As set out
in note 24, the required resolutions were passed on 29 December 2023 and the
Warrants were issued on 12 January 2024.
19. SHARE PREMIUM
2023 2022
$000 $000
AT 1 JANUARY 65,549 65,254
Shares issued (note 18) 9,471 295
AT 31 DECEMBER 75,020 65,549
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
2023 2022
$000 $000
AT 1 JANUARY 130 130
Movement - -
AT 31 DECEMBER 130 130
The balance comprises of one provision, to the amount of $0.1m, which relates
to a tax dispute with the Mozambique tax authorities. The provision is
classified as a current liability as at 31 December 2023.
21. SHARE BASED PAYMENT/LONG-TERM INCENTIVES
The Group operates two share option plans, under which certain directors, key
employees and consultants have been granted options to subscribe for ordinary
shares. All options are equity settled. The Group has no legal or constructive
obligation to repurchase or settle the options in cash.
The share option awards in issue as at 1 January 2023 totalled 112.0m shares
under the Share Option Scheme: these were issued as of 6 August 2020 and are
exercisable at 2p per share. The vesting of the awards is substantially geared
towards material improvement in both operating results and share price
appreciation.
On 1 March 2022, the Company issued LTIP's (long-term incentive plan) to its
directors and key employees of which 15m were in issue at 31 December 2023
(38m in issue at 31 December 2022). The fair value of these LTIP's as at the
grant date was determined by an independent specialist in financial
valuations.
19m of the granted LTIP's are subject to TSR (Total Shareholder Return) linked
criteria and were valued using a Monte Carlo simulation. 19m share options are
subject to EBITDA-linked criteria and were valued using a Monte Carlo
Simulation on the basis that they include a market-based exercise condition.
Only market conditions have been considered in estimating the fair value of
the LTIP's.
1. The key terms and conditions related to the LTIP's are as follows:
A. Market Performance Condition
• Grant Date: 1 March 2022
• Contractual life of LTIP's: 4.6 years
• Vesting conditions: Total Shareholder Return - The performance criteria
sets out that of the total 38m LTIP's granted, up to 50% can vest in
increments of 10% if the VWAP (Weighted Average Price) remains above each of
the following thresholds for a period of 30 consecutive days: £0.06, £0.07,
£0.08, £0.09 and £0.10. Full vesting of this 50% tranche will be achieved
if the share price increases to over £0.10.
B. Non-Market Performance Condition
• Grant Date: 1 March 2022
• Contractual life of LTIP's: 4.6 years
• Vesting conditions: Target EBITDA - Of the total 38m LTIP's granted, 50%
can vest
at an incremental rate of 16.6% per annum by the Company achieving internal
EBITDA targets for each of the financial years 2022-2024. Any vesting shall
arise equally for the achieving of each target, which is subject to a
cumulative "catch-up" being permitted.
C. Service Condition
• Recipients must be employed by Woodbois at the time of vesting and the
share price must be above 6p at the exercise date. This condition applies to
all of the granted share options.
The table below shows the input ranges for the assumptions used in the
valuation models:
Fair value at grant date £0.02 - £0.03
Exercise price £0.01
Share price at grant date £0.0405
Annual share price volatility (weighted average) 65%
Risk free rate 0.83%
Expected life 4.6 years
The annualised volatility in the share price was determined using the
historical volatility of Woodbois Limited and other listed companies in
similar businesses over a time period in line with the simulation period. A
monthly volatility of 19.0% was used in the simulation (annual volatility of
65%).
2. The key terms and conditions related to the Share Options are as follows:
A. Market Performance Condition
• Grant Date: 6 August 2020
• Contractual life of options: 4 years
• Vesting conditions: Total Shareholder Return - 50% of
the share options are subject to the Market Performance Condition whereby none
will vest at a share price of 2p; one third of these options will vest on a
straight-line basis between a share price of 2-4p; two thirds will vest on a
straight-line basis between a share price of 4-6p per share, and full vesting
will occur when the share price exceeds 6p, each vesting being based on the
volume weighted average share price over a period of 30 days. All of these
options had vested by the end of 2021.
B. Non-Market Performance Condition
• Grant Date : 6 August 2020
• Contractual life of options: 4 years
• Vesting Conditions: Target EBITDA - 50% of the share
options are subject to Non-Market Performance Conditions, whereby 12.5% of
these options can vest per annum based on achieving internal EBITDA targets
for each of the financial years 2020-2023. There is also a cumulative
provision whereby a shortfall (or excess) in one or more years can be offset
against other years for the purposes of vesting. As of the date hereof a
quarter of these share options have vested.
C. Non-Subject to Performance Criteria
• Grant Date: 6 August 2020
• Contractual life of options: 4 years
• A one-off award of 10m share options was made to Mr G
Thomson (Senior Independent Non-Executive). In accordance with corporate
governance advice, his options are not subject to performance criteria but may
not vest for 4 years from the time of grant.
57.25m of the granted share options are subject to TSR (Total Shareholder
Return) linked criteria and were
valued using a Monte Carlo simulation. 57.25m share options are subject to
EBITDA-linked criteria and were valued using a Black Scholes Option Pricing
Model. The fair value of the 10m Share Options which are not subject to
performance criteria were valued using a Black Scholes Option Pricing Model.
Only market conditions have been considered in estimating the fair value of
the LTIP's.
The table below shows the input ranges for the assumptions used in the
valuation models:
Fair value at grant date £0.0097 - £0.0104
Exercise price £0.02
Share price at grant date £0.0215
Annual share price volatility (weighted average) 62%
Risk free rate 0.1%
Expected life 4 years
The annualised volatility in the share price was determined using the
historical volatility of Woodbois Limited and other listed companies in
similar businesses over a time period in line with the simulation period. A
monthly volatility of 18.0% was used in the simulation (annual volatility of
62%).
Reconciliation of the total Share Options and LTIP's in issue:
Total options Weighted average strike price (Pence)
As at 31 December 2021 114,000,000 2p
Issue of LTIP's 38,000,000 1p
Exercised (2,000,000) (2p)
As at 31 December 2022 150,000,000 (1.75p)
Cancelled during the year (75,312,500)
As at 31 December 2023 74,687,500
The following (credit)/charge has been recognised in the current financial
year:
2023 2022
$000 $000
AT 1 JANUARY 802 435
Share options exercised - (51)
Share based payment (credit)/expense (165) 418
AT 31 DECEMBER 637 802
The credit in the current year arises as a result of the directors having
re-assessed the probability of the vesting of the options.
The awards outstanding to directors who served throughout the year are:
Director Total number of Share Options held as at 31 December 2023 (exercise price of Number of LTIP's held as at 31 December 2023 (exercise price of 0.01p per Total number of Shares under option
2p per Share) Share)
C Geddes (CFO) 22,500,000 4,000,000 26,500,000
G Thomson (Senior NED) 10,000,000 - 10,000,000
22. Reclassification of foreign currency translation differences on
deregistered entities
During 2022, the Group formally completed the deregistration of three dormant
entities located in Tanzania. These three entities include Wami Agriculture
Co. Limited, Magole Agriculture Limited and Milama processing Company
Limited. As required by IFRS, the Group reclassified the foreign currency
translation differences that arose on historical consolidation of those
entities ($1.5m) from the FCTR (equity) to profit or loss in 2022.
23. RELATED PARTY TRANSACTIONS AND Related party balances
related party balances
2023 2022
$000 $000
Loan from Rhino Ventures - (2,162)
Loan from Lombard Odier - (1,022)
AT 31 DECEMBER - (3,184)
Related party transactions
2023
$000
Interest paid to Rhino Ventures (Note 16) 93
Interest paid to Lombard Odier (Note 16) 35
AT 31 DECEMBER 128
As set out in note 16, the short-term facility owned to Lombard Odier was
settled in June 2023 and the unsecured facility from Rhino Ventures was
converted to equity (see note 18).
In June 2023 a commission agreement was entered into between the Company and
Rhino Ventures (Note 18 and note 24).
Trading transactions
During the year the Group companies entered into the following transactions
with related parties:
2023 2023 2022 2022
Transactions Balance at 31 December Transactions Balance at 31 December
in year
in year
$000 $000 $000 $000
Loans to subsidiary undertakings 7,905 25,209 14,364 17,304
Transactions with key management personnel
The Group's key management personnel comprised the following:
2023 Short-term employment benefits
Salaries, fees & national insurance contributions Benefits Total
$000 $000 $000
Directors
P Dolan (resigned 28 September 2023) 183 - 183
H Ghossein (resigned 1 November 2023) 201 - 201
C Geddes ** 238 - 238
G Thomson 93 - 93
D Rothschild *** 155 - 155
G Theuns **(appointed 4 December 2023) 4 - 4
Total 874 - 874
** Paid through a service company
***Paid partly through a service company
2022 Short-term employment benefits
Salaries, fees & national insurance contributions Benefits Total
$000 $000 $000
Directors
P Dolan 200 - 200
H Ghossein * 190 38 228
F Tonetti (resigned 16 April 2022) 100 1 101
C Geddes ** 200 - 200
G Thomson 62 - 62
D Rothschild 50 - 50
H Turcan *** (resigned 17 October 2022) - - -
802 39 841
*Excludes deferred acquisition payments made during the year directly to or to
companies owned and controlled by H Ghossein ($0.25m).
** Paid through service companies
***H Turcan was a representative of Lombard Odier and received no fees.
All of the above directors' remunerations exclude national insurance
contributed by the employer.
24. Events occurring after the reporting date
· On 12 January 2024, the Company announced that under authorities
granted at its AGM on 29 December 2023, and elections subsequently received
from the beneficiary, it was issuing deferred consideration as set out in
the Financing Package detailed in the RNS dated 28 June 2023.
Under the Commission Agreement, the Company had received an election to issue
60,000,000 new Voting Ordinary Shares to the beneficiary. Admission of the
shares become effective on 17 January 2024.
The Company had also received an election to issue 60,000,000 warrants
convertible into Voting Ordinary Shares, and 350,000,000 warrants convertible
into Non-Voting Ordinary Shares, each exercisable at 1p per share until 29
June 2025.
· On 8 February 2024, the Company announced the conditional
entering into of a term sheet for a trading $5m facility. The facility is to
allow the Company to rapidly expand its third-party and own production
trading.
· On 8 February 2024, the Company announced the exercise of 200m
warrants at 1p per share, generating £2.0m for the Company. The Company also
issued 200m 2-year warrants, exercisable at 1.5p per Company voting ordinary
share.
Following Admission, the Company's total share issued capital is 4,549,988,873
ordinary shares, which consist of 3,945,850,726 voting ordinary shares,
19,138,147 treasury shares and 585,000,000 non-voting ordinary shares. The
aforementioned figure of voting ordinary shares may be used by shareholders in
the Company as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a change to,
their interest in the Company under the Financial Conduct Authority's
Disclosure Guidance and Transparency Rules.
· Following the conversion, there is a total of 1,060,000,000
warrants for voting ordinary shares and 350,000,000 warrants for non-voting
ordinary shares in issue, all exercisable at 1p per ordinary share until 29
June 2025, and 200,000,000 warrants over voting ordinary shares exercisable at
1.5p per ordinary share until 13 February 2026.
· On 9 June 2024, the Company announced that it had completed a
Sale Agreement ("SA") for all the legal entities associated with its
Mozambique operations to a local purchaser. These operations accounted for
less than 1 per cent of Group turnover and net assets for the year ended 31
December 2023. The consideration of $1.0m is payable in instalments, through
to mid-2030. There is also a sliding scale share of any follow-on sales
proceeds of up to 80% of the uplift in value if on-sold by the buyer within
two years of the SA date.
· On 12 June 2024, the Company announced that it has completed a
Sale Agreement ("SA") for all the legal entities associated with its
Mozambique operations to a local purchaser. These operations accounted for
less than 1 per cent. of Group turnover and net assets for the year ended 31
December 2022. The consideration of $1.0m is payable in instalments, through
to mid-2030. There is also a sliding scale share of any follow-on sales
proceeds of up to 80% of the uplift in value if on-sold by the buyer within
two years of the SA date.
· On 24 June 2024, the Company announced that it has completed the
legal documentation and entered into a $5m trade finance facility. The new
facility will provide the Company with the capital necessary to help it to:
o expand its trading volumes
o allow it to leverage new opportunities in the hardwood sector
o enable it to commit to larger and more frequent transactions
o enhance its supply chain efficiencies and logistics
o further strengthen its position in the global hardwood market.
Key terms
o repayment of principal by 30.5.27
o interest at 9.5% pa, payable monthly
o the lender to approve each request for trade finance
o secured by a Company guarantee, as well as a fixed and floating charge if
requested.
25. ULTIMATE PARENT COMPANY
At 31 December 2023, the directors do not believe that there was an ultimate
controlling party.
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