REG - Woodbois Limited - Half Year Results
04/08/2022 07:00
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RNS Number : 8518U Woodbois Limited 04 August 2022
04 August 2022
Woodbois Limited
("Woodbois", the "Group" or the "Company")
Half Year Results
Woodbois Limited (AIM: WBI), the African focused forestry, timber trading,
reforestation and voluntary carbon credit company, is pleased to announce its
half year results for the six months to 30 June 2022.
Financial Highlights
· H1 2022 revenue up 38% to $11.3m vs H1 2021 $8.2m
· H1 2022 Group gross profit up 59% to $2.7m vs H1 2021 $1.7m: margin
improved to 23% from 20%
· H1 2022 EBITDAS 1 (#_ftn1) $1.1m vs H1 2021 $0.46m, up 141%
· First ever operating profit in H1 2022 of $15k vs $0.7m operating
loss in H1 2021
· H1 2022 positive operating cash inflow (before income taxes and
finance costs) of $0.2m vs outflow in H1 2021 of $2.2m
· Cash balance $2.1m as at 30 June 2022
· Period end working capital of $9.8m of which inventory was $6.4m and
excluding short and longer-term bank and other loans of $12.4m
· 2022 on track to deliver strong revenue and profitability growth
Operational Highlights
· Total sawn timber production 9,565m3 in H1 2022, a 37% increase over
H1 2021.
· Total veneer production 2,740m3 in H1 2022, a 50% increase on H1
2021.
· Best quarter and half-year for volume of product shipped since before
the pandemic. Total number of containers shipped in Q2 2022 increased by 24%
over Q1 2022
· The second veneer line installed at the factory in Mouila is
currently undergoing final testing and will commence production in August.
This will generate additional higher value product and will represent another
significant milestone of achievement.
· Work on FSC certification has continued and is now over 60% complete
and we aim for completion during 2023.
Commenting on the results, Paul Dolan, CEO said:
"In the first half of 2022 we have achieved record levels of production,
strong revenue growth, further improvement in both margin and EBITDAS, as well
as a first maiden operating profit with a positive operating cash inflow.
Whilst there are challenges our highly motivated team are on-track to deliver
further strong growth in our metrics, including revenue and profitability. "
The Report is available on the Company's website at: www.woodbois.com
(http://www.woodbois.com)
Enquiries:
Woodbois Limited
Paul Dolan - CEO + 44 (0)20 7099 1940
Canaccord Genuity, Nominated Advisor + 44 (0)20 7523 8000
Henry Fitzgerald-O'Connor
Gordon Hamilton
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 which forms part of UK law by virtue of the
European Union (Withdrawal) Act 2018 ("MAR").
Non-IFRS measures
The Company uses certain measures to assess the financial performance of the
company. These terms may be defined as "non-IFRS measures" as they exclude
amounts that are included in, or include amounts that are excluded from, the
most directly comparable measure calculated and presented in accordance with
IFRS. They also may not be calculated using financial measures that are in
accordance with IFRS. These non-IFRS measures include the Company's EBITDAS.
The Company uses such measures to measure and monitor performance and
liquidity, in presentations to the Board and as a basis for strategic planning
and forecasting. The directors believe that these and similar measures are
used widely by market participants, stakeholders, and other interested parties
as supplemental measures of performance and liquidity.
The non-IFRS measures may not be directly comparable to other similarly titled
measures used by other companies and may have limited use as an analytical
tool. This should not be considered in isolation or as a substitute for
analysis of the Company's operating results as reported under IFRS.
The Company does not regard these non-IFRS measures as a substitute for, or
superior to, the equivalent measures calculated and presented in accordance
with IFRS or those calculated using financial measures that are calculated in
accordance with IFRS.
CEO's Statement
H1 Financial performance
The Company generated a 38% increase in YOY revenues in H1 2022, with EBITDAS
improving by 141% to $1,104k vs $459k in H1 2021, achieved through a further
increase in levels of sawn-timber production and correspondingly higher sales
volumes, underpinned by strict cost-efficiencies.
The Group delivered a 59% increase in gross profit compared to the same period
for 2021 with margins improving to 23% for H1 2022 from 20% at H1 2021
reflecting robust demand and pricing. Having delivered positive EBITDAS
consistently for the last 18 months, the Group also booked its first ever
operating profit in H1 2022 of $15k compared to a $0.7m operating loss in H1
2021: this is especially significant given it includes the costs related to
our Carbon Solutions division. Significantly, in H1 2022 the Company generated
positive operating cash inflows (before tax and finance costs) of $0.2m for
the first time compared to a loss of $2.2m for H1 2021.
Six months Six months
to June 2022 to June 2021
EBITDAS $'000 $'000
Loss before tax (489) (980)
Depreciation 977 1,002
Share based payment expense 175 167
Finance cost 441 270
EBITDAS 1,104 459
H1 gross margin within our own production division held stable at 32% while
the margin from third party trading increased to 14.8% in H1 2022 compared to
11.3% for H1 2021. Operating and Administration expenses increased by 18% when
compared to the same period for 2021, as we continued to recruit additional
high-quality personnel to drive and scale the business, including those
related to the Carbon Solutions division. The management team continued to
exert a strong influence over the items within their control, providing
confidence that the Company is on track to drive revenues to a level
substantially in excess of fixed and variable operating costs.
Finance costs increased by $0.2m (63%) from the same period in 2021 reflecting
the increase in the Group's borrowings from a very low level in 2021, but for
context, finance costs remain 79% lower than in H1 2020. The $2m unsecured
facility agreed with Rhino Ventures, was fully drawn down in February 2022 to
fund the increase in working capital required due to higher volumes of
production. The working capital facility available to the trading division
through its Danish banking partners was increased by $2.3m and has also been
drawn down, helping to accelerate trading growth. $1m of the $2m conditional
facility agreed with Lombard Odier was also utilised in June 2022 as a
short-term measure.
The funds provided by the new borrowings also enabled the Company to keep pace
with the uptick in demand and business activity towards the latter part of H1
2022 over H2 2021, resulting in additional investment in working capital,
particularly Trade receivables and Inventory. Total period end working capital
is $9.8m (Dec 2021: $7.7m), including cash of $2.1m (Dec 2021: $0.9m),
excluding loans of $12.4m (Dec 2021: $8.3m).
The primary goal for the Group is to consistently increase levels of positive
cash flow via the delivery of greater volumes of high-quality product, improve
the ratio of high-value hardwoods and veneers within our product mix, and
through incrementally improving margins in all areas of the business to
provide the strongest possible foundations upon which to drive scale.
Production and trading
Total output at the sawmill and veneer factory in Gabon increased by 37% and
50% respectively on a year over year basis for the period, with both
facilities consistently achieving their highest levels of production to date
thanks to implementation of enhanced best practices, improved programmes for
maintenance of equipment and full involvement, motivation and training of
staff. Particular credit must go to the team at the veneer factory for
achieving this result despite the ongoing heavy engineering work that has been
required to install the second veneer line within the existing factory, which
is now undergoing final testing and is expected to be fully functioning this
month. A total of $1.2m in capex has been allocated to the veneer factory to
date during 2022 for this and other improvements and the expanded factory will
signal another major milestone in the growth of the Company once the second
veneer line is fully operational, further boosting output capacity, revenue
and bottom-line potential.
Our continued investment in proprietary trading technology was rewarded during
H12 2022 as gross profit margins within the trading division of 14.8%, were
almost a threefold increase on FY 2020, while gross profit margins on the
higher levels of our own production remained consistent at 32%. It should be
noted that these have been delivered against a backdrop of continued
disruption being experienced at many ports around the world, including
Libreville, and that the cost of shipping goods has remained at elevated
levels during the period.
Woodbois' profile has continued to grow in Gabon, and more widely in Africa
and beyond, as our sales team has sought to broaden our customer base and
prospect in new geographies to sell our products into. As output of
higher-value product from our factories increases, markets where premium
pricing can be achieved will increasingly be focused on, with bulk shipment of
standard product directed towards high consumption markets. It is with this
strategy in mind that sales team was well represented at both the Dubai and
Nantes wood shows during H1 2022, and will also be prominent at Algeria
Woodtech in September 2022 as we seek to expand in the rapidly growing
North-African market and to our existing client base in Asia and the Middle
East.
Mozambique
The Group continues to fund a limited level of operations on a largely care
and maintenance basis in Mozambique while retaining the optionality to
increase the scale of operations there, subject to the level of investment
required and demand and pricing of product in the future. Management intends
to dedicate time to exploring the potential for generating revenues from the
carbon market for preserving forests in the country directly with the
government of Mozambique.
Carbon Division
We are fortunate to have our core operations based in Gabon, one of the last
countries in the world with high forest cover and low levels of deforestation
(HFLD) of between 0 and 0.05%. In 2019 Gabon signed up to an independently
audited, results-based agreement with the UN worth $150m, making it the first
HFLD country in Africa to enter into such a payment agreement for emission
reductions and removals through forest preservation. On 9(th) July 2022 the UN
signed the 3(rd) phase of the CAFI (Central African Forest Initiative)
program, congratulating Gabon on its contribution towards a 'transformation to
a green and blue economy'. It is within this context that Woodbois submitted a
comprehensive feasibility study and proposal to the Government of Gabon to
develop a large-scale afforestation project in the country. Woodbois aims to
be a standard bearer for best practice within Gabon as the country continues
to show leadership on forest preservation on the world stage. It has been
encouraging to see Gabon receive widespread recognition during H1 2022 for its
work with the United Nations Framework Convention on Climate Change's REDD+
(https://unfccc.int/topics/land-use/workstreams/reddplus#:~:text=Reducing%20emissions%20from%20deforestation%20and,Climate%20Change%20to%20facilitate%20intergovernmental)
mechanism to create carbon credits and with the Central African Forestry
Initiative backed by European governments, as well as becoming the 55(th)
member of The Commonwealth in June 2022.
While we wait for government approval for our proposed initial large-scale
afforestation project for carbon sequestration in Gabon, we continue to work
to align our operations with the interests of the country through increasing
employment, continued investment and commitment to achieving full FSC
certification. We also continue to invest in this important division which we
expect to be a key driver of medium to long-term revenues. We have high
confidence in the future of carbon markets to continue to evolve positively
and in line with shifting public and corporate attitudes as well as policy
changes. We hope to receive the green light to commence our maiden project
in H2 2022 which will be followed by a comprehensive four-year trial phase.
The implementation of our initial project is intended to position the Company
as a pioneer in this area, distinguishing Woodbois from the rapidly expanding
group of consultants becoming active in the space. Few, if any, other listed
companies have the combination of in-house financial structuring skills and
on-the-ground implementation experience required to deliver on projects of
such scale
ESG
Woodbois has a clear social purpose ingrained within its DNA and our solid,
verifiable ESG credentials are articulated clearly in the Company's recently
published Integrated Report for the year ending December 2021. The report
details our strategy, performance, opportunities and future outlook in
relation to material financial, economic, social and governance issues and
explains how we strive to achieve balance in all facets of our operations
while also addressing value-creation considerations for investors and all key
stakeholders. From providing truly equal-opportunity-based employment (our
veneer factory has 75% female staff), to our commitment to best environmental
practice within our forest concessions, multiple community projects including
linking villages through repairing roads and the donation of tools, to
sponsoring UNICEF managed events for local children and forming a partnership
with a cutting-edge, science-based forestry monitoring organisation, the
Company strives to deliver positive social impact, something our staff are
quite rightly proud of. The full report is available on the Company's website
at: www.woodbois.com (http://www.woodbois.com)
FSC Certification
Woodbois ESG Team, Management team and outside consultant Silvafrica continued
the process of creating the culture needed to demonstrate changes and
dedication to the principles of the certification throughout the business in
order to be fully prepared for audit by both Legal Source and FSC. In this
regard, the focus during H1 2022 was on continuing to enhance our relationship
with local communities, improve the quality of life of our employees, provide
more health support to our staff, improve our employees' transportation to and
from work and empowering several employees to be members of our Health and
Safety committee. Training was also provided to our harvesting team on best
practices, Health and Safety and respect for the environment.
At the end of H1 2022, following the guidelines of the FSC auditing system,
our operations in Gabon are now over 60% compliant. We are aiming to become
100% compliant during 2023.
Outlook
Having previously expressed confidence in the Group's ability to further
increase output, continue to increase margins and grow the top line very
significantly over time, I am understandably happy to provide confirmation and
evidence thereof within this set of half year results. As noted previously
however when the impact of the pandemic created such huge levels of
uncertainty, immediate growth projections must of course carry a health
warning, particularly given Covid's lingering disruptive effects on
international trade, rising interest rates and the inflationary effects of the
war in Ukraine on the global macro-economic environment. Ultimately, global
demographics and the supply demand imbalance for sawn timber is in our favour,
and operators like ourselves are protected from inflationary pressures on our
raw material input through ownership of the whole supply chain from forest to
buyer. In common with most other manufacturing companies however, we are not
immune to higher energy costs and fuel shortages and it is clear that due to
these and other inflationary pressures, economies in some parts of the world
may experience a period of lower levels of growth or indeed slip into
recession. We will therefore continue to carefully monitor risk exposure at
both a country and customer level and will use the levers at our disposal such
as switching geographic sales direction in line with prevailing economic
conditions in order to minimise any potential margin erosion. The challenges
of the last two years have forced the Company to become nimble, resilient,
efficient and adaptable, all qualities that are likely to be required in order
to maintain progress and continue to deliver growth in the months ahead
Our emphasis on efficiency, sustainability, transparency and best practice
will continue as they are key to our corporate identity, and we expect will
only offer increasing appeal to customers and investors as the transition to a
net zero carbon economy gathers momentum.
As ever, your board express their sincere gratitude to our colleagues and to
all of our staff for their contribution towards such significant improvements
to key performance metrics, and for delivering on more key milestones as we
seek to build an industry-leading business.
Paul Dolan
CEO
3 August 2022
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
For the six months ended 30 June 2022
Six months to 30 June Six months to 30 June Year to 31 December 2021
2022 2021 (Unaudited) (Audited)
Notes (Unaudited) $'000 $'000
$'000
Turnover 11,318 8,220 17,465
Cost of sales (8,665) (6,553) (13,970)
Gross profit 2,653 1,667 3,495
Operating costs (1,576) (1,454) (3,620)
Administrative expenses (750) (521) (1,324)
Depreciation (137) (179) (326)
Share based payment expense 13 (175) (167) (233)
Gain on fair value of biological assets - - 4,253
Operating 15 (654) 2,245
profit/(loss)
Gain on bargain purchase - - 88,292
Foreign exchange loss (63) (56) 756
Finance costs 4 (441) (270) (591)
(Loss)/profit before tax (489) (980) 90,702
Taxation 5 (44) 46 (591)
(Loss)/profit for the period (533) (934) 90,111
Other comprehensive income:
Items that will not be reclassified to profit or loss
Revaluation of land and buildings, net of tax - 6,254 6,254
Items that may be reclassified subsequently to profit or loss
Currency translation differences (2,053) (690) (3,032)
Total comprehensive (loss)/income for the period (2,586) 4,630 93,333
Basic (loss)/earnings per share (cents) 6 (0.02) (0.04) 3.69
Diluted (loss)/earnings per share (cents) 6 (0.02) (0.04) 3.65
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
Notes 30 June 2022 30 June 2021 31 December 2021
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
ASSETS
Non-current assets
Biological assets 336,798 204,223 336,798
Property, plant and equipment 29,293 29,944 30,119
Total non-current assets 366,091 234,167 366,917
Current assets
Trade and other receivables 7 4,777 5,179 4,616
Inventory 6,382 5,134 6,159
Cash and cash equivalents 2,091 6,321 887
Total current assets 13,250 16,634 11,662
TOTAL ASSETS 379,341 250,801 378,579
LIABILITIES
Non-current liabilities
Borrowings 9 (5,208) (4,139) (2,898)
Deferred tax 5 (106,475) (67,383) (106,475)
Convertible bonds - host liability 10 - (885) (931)
Total non-current liabilities (111,683) (72,407) (110,304)
Current liabilities
Trade and other payables 8 (3,351) (2,677) (4,078)
Borrowings 9 (7,162) (5,397) (5,369)
Provisions (130) (140) (130)
Contingent acquisition liability - (500) (250)
Convertible bonds - host liability 10 (712) - -
Total current liabilities (11,355) (8,714) (9,827)
TOTAL LIABILITIES (123,038) (81,121) (120,131)
NET ASSETS 256,303 169,680 258,448
EQUITY
Share capital 11 32,601 32,528 32,528
Share premium 12 65,475 65,254 65,254
Convertible bonds - equity component 10 24 52 52
Foreign exchange reserve (10,376) (5,981) (8,323)
Share based payment reserve 13 610 393 435
Revaluation reserve 6,254 6,254 6,254
Retained earnings 161,715 71,180 162,248
TOTAL EQUITY 256,303 169,680 258,448
Approved by the board and authorised for issue on 3 August 2022.
P Dolan
Chief Executive
Officer
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2022
Share capital Share premium Foreign exchange reserve Share based payment reserve Retained
Earnings Total equity
Convertible bonds Revaluation reserve
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 2021 31,119 58,609 52 (5,291) 226 - 72,113 156,828
Loss for the period - - - - - - (933) (933)
Other comprehensive income - - - (690) - 6,254 - 5,564
Total comprehensive loss for the period - - - (690) - 6,254 (933) 4,631
Transactions with owners:
Issue of ordinary shares 1,409 6,645 - - - - - 8,054
Share based payment expense - - - - 167 - - 167
Balance at 30 June 2021 32,528 65,254 52 (5,981) 393 6,254 71,180 169,680
Profit for the period - - - - - - 91,044 91,044
Other comprehensive income - - - (2,342) - - - (2,342)
Total comprehensive loss for the period - - - (2,342) - - 91,044 88,702
Transactions with owners:
Share options forfeited - - - - (24) - 24 -
Share based payment expense - - - - 66 - - 66
Balance at 31 December 2021 32,528 65,254 52 (8,323) 435 6,254 162,248 258,448
Loss for the period - - - - - - (533) (533)
Other comprehensive income - - - (2,053) - - - (2,053)
Total comprehensive loss for the period - - - (2,053) - - (533) (2,586)
Transactions with owners:
Redemption of convertible bonds (note 10) 73 221 (28) - - - - 266
Share based payment expense (note 13) - - - - 175 - - 175
Balance at 30 June 2022 32,601 65,475 24 (10,376) 610 6,254 161,715 256,303
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2022
Six months to 30 June 2022 Six months to 30 June Year to 31 December 2021
(Unaudited) 2021 (Audited)
(Unaudited)
Cash flows from operating activities $'000 $'000 $'000
(Loss)/profit before taxation (489) (980) 90,702
Adjustment for:
Foreign exchange 63 56 (756)
Depreciation of property, plant and equipment 977 1,002 2,063
Fair value adjustment of biological asset - - (4,253)
Transaction costs deducted from equity - (42) (42)
Share based payment expense 175 167 233
Finance costs 441 270 591
Accrued expense 222 460 391
Gain on bargain purchase - - (88,292)
Increase in trade and other receivables (161) (1,285) (838)
Decrease in trade and other payables (769) (1,609) (460)
Increase in inventory (223) (242) (1,267)
Cash inflow/(outflow) from operations 236 (2,203) (1,928)
Income taxes paid (8) (44) (57)
Finance cost paid (306) (206) (495)
Net cash outflow from operating activities (78) (2,453) (2480)
Cash flows from investing activities
Expenditure on property, plant and equipment (2,267) (1,451) (4,310)
Settlement of deferred consideration (250) - (500)
Investment in acquired subsidiary (214) - (1,107)
Net cash outflow from investing activities (2,731) (1,451) (5,917)
Cash flows from financing activities
Inflows/(payments) from loans and borrowings 4,013 (446) (1,387)
Proceeds from the issue of ordinary shares - 8,111 8,111
Net cash inflow from financing activities 4,013 7,665 6,724
Net increase/(decrease) in cash and cash equivalents 1,204 3,761 (1,673)
Cash and cash equivalents at the start of period 887 2,560 2,560
Cash and cash equivalents at the end of the period 2,091 6,321 887
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2022
1. BASIS OF PREPARATION
The condensed consolidated interim financial statements ('interim financial
statements') for the six months ended 30 June 2022 have been prepared in
accordance with the requirements of the AIM Rules for Companies. As permitted,
the Group has chosen not to adopt IAS 34 "Interim Financial Statements" in
preparing this interim financial information. The interim financial statements
should be read in conjunction with the annual financial statements for the
year ended 31 December 2021, which have been prepared in accordance with
international accounting standards in accordance with the requirements of the
Companies (Guernsey) Law 2008 applicable to Companies reporting under IFRS as
adopted by the United Kingdom (UK). The interim financial statements have been
prepared under the historical cost convention except for biological assets and
certain financial assets and liabilities, which have been measured at fair
value.
The interim financial statements of Woodbois Limited are unaudited financial
statements for the six months ended 30 June 2022. These include unaudited
comparatives for the six-month ended 30 June 2021 together with audited
comparatives for the year to 31 December 2021. The condensed financial
statements do not constitute statutory accounts, as defined under section 244
of the Companies (Guernsey) Law 2008. The statutory accounts for the period to
31 December 2021, which were approved by the Board of Directors on 1 April
2022, have been reported on by the Group's auditors and have been delivered to
the Guernsey Registrar of Companies. The report of the auditors on those
financial statements was unqualified.
The accounting policies applied in preparing these financial statements are in
terms of IFRS and are consistent with those applied in the previous annual
financial statements for the year ended 31 December 2021.
The interim financial statements for the six months ended 30 June 2022 were
approved by the Board of Directors on 3 August 2022.
Going Concern:
The interim financial statements have been prepared assuming that the Group
will continue as a going concern in accordance with the recognition and
measurement criteria of IFRS.
Under this assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future with neither the intention nor necessity
of liquidation, ceasing trading or seeking protection from creditors for at
least 12 months from the date of the signing of the financial statements.
An assessment of going concern is made by the Directors at the date the
Directors approve the interim financial statements, taking into account the
relevant facts and circumstances at that date including:
• The current state of the Group's life cycle;
• Review of profit and cash flow forecasts;
• Review of actual results against forecast;
• Timing of cash flows;
• Financial or operational risks; and
• The impact of COVID-19
The Directors have a reasonable expectation that the Group has or will have
adequate resources to continue in operational existence for the foreseeable
future, being 12 months from the date of approval of these interim financial
statements and have therefore adopted the going concern basis of preparation
in the interim financial statements.
2. CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT
The preparation of financial statements in conformity with IFRS requires
management to make estimates and assumptions concerning the future. It also
requires management to exercise judgment in applying the Company's accounting
policies and the reported amounts of assets and liabilities, revenue and
expenses, and related disclosures.
Estimates and judgments are continually evaluated and are based on current
facts, historical experience and other factors, including expectations of
future events that are believed are reasonable under the circumstances.
Accounting estimates will, by definition, seldom equal the actual results.
The significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those described in the last annual report.
3. SEGMENT REPORTING
Segmental information is presented on the basis of the information provided to
the Chief Operating Decision Maker ("CODM"), which is the Executive Board.
The Group is currently focused on Forestry, Timber Trading and Carbon
Solutions. These are the Group's primary reporting segments, operating in
Gabon, Mozambique, Denmark, London, Guernsey and head operating offices in
Mauritius. Certain support services are performed in the UK.
The Group's CEO and CFO review the internal management reports of each
division at least weekly, and the Board monthly.
There are varying levels of integration between the Forestry and Trading
segments. This integration includes transfers of sawn timber and veneer,
respectively. Inter-segment pricing is determined on an arm's length basis.
Information relating to each reportable segment is set out below. Segment
profit/(loss) before tax is used to measure performance, because management
believes that this information is the most relevant in evaluating the results
of the respective segments relative to other entities that operate in the same
industry. All amounts are disclosed after taking into account any
intra-segment and intra-group eliminations
The following table shows the segment analysis of the Group's loss before tax
for the six months period and net assets as at 30 June 2022:
Forestry Trading Carbon Solutions Total
$000 $000 $000 $000
INCOME STATEMENT
Turnover 5,553 5,765 - 11,318
Cost of Sales (3,757) (4,908) - (8,665)
Gross profit 1,796 857 - 2,653
Operating costs (614) (585) (377) (1,576)
Administrative expenses (211) (182) (357) (750)
Depreciation (137) - - (137)
Share based payment expense (44) (44) (87) (175)
Segment operating profit/(loss) 790 46 (821) 15
Foreign exchange (218) 155 - (63)
Finance costs (148) (293) - (441)
Profit/(loss) before taxation 424 (92) (821) (489)
Taxation (44) - - (44)
Profit/(loss) for the period 380 (92) (821) (533)
NET ASSETS
Assets: 369,694 9,647 - 379,341
Liabilities: (4,920) (11,643) - (16,563)
Deferred tax liability (106,475) - - (106,475)
Net assets 258,299 (1,996) - 256,303
The following table shows the segment analysis of the Group's loss before tax
for the six months to and net assets at 30 June 2021:
Forestry Trading Carbon Solutions Total
$000 $000 $000 $000
INCOME STATEMENT
Turnover 3,422 4,798 - 8,220
Cost of Sales (2,311) (4,242) - (6,553)
Gross profit 1,111 556 - 1,667
Operating costs (692) (510) (252) (1,454)
Administrative expenses (130) (132) (259) (521)
Depreciation (177) (2) - (179)
Share based payment expense (42) (42) (83) (167)
Segment operating profit/(loss) 70 (130) (594) (654)
Foreign exchange 65 (121) - (56)
Finance costs (101) (169) - (270)
Profit/(loss) before taxation 34 (420) (594) (980)
Taxation 46 - - 46
Profit/(loss) for the period 80 (420) (594) (934)
NET ASSETS
Assets: 239,144 11,657 - 250,801
Liabilities: (3,834) (9,904) - (13,738)
Deferred tax liability (67,383) - - (67,383)
Net assets 167,927 1,753 - 169,680
4. FINANCE COST
6 months to 30 June 2022 6 months to 30 June 2021 Year to
(Unaudited) (Unaudited) 31 December
2021
(Audited)
$'000 $'000 $'000
Interest on bank facilities 306 227 503
Interest on trade finance facilities 71 - -
Interest on convertible bonds 48 43 88
Other finance costs 16 - -
Total 441 270 591
Finance costs increased due to an increase in working capital facilities
provided by the Group's Danish banking partners ($2.3m) and Rhino Ventures
($2m). See note 9 for more information.
5. TAXATION
The prevailing tax rates in the geographies here the Group operates range
between 3% and 32%. A rate of 19% best represents the weighted average tax
rate experienced by the Group. As at 31 December 2021, the Group had estimated
losses of $28 million (2020: $29 million) available to carry forward against
future taxable profits. No deferred tax asset has been raised on these
estimated losses.
The Group has recognised a net deferred tax liability of $106.5 million at 30
June 2022 (30 June 2021: $67.4 million, 31 December 2021: $106.5 million) and
which mainly arose on the revaluation of biological assets and owner occupied
land and buildings. This would only be payable on the sale of these assets at
their book value.
6. EARNINGS PER SHARE
6 months to 30 June 2022 6 months to 30 June 2021
(Unaudited) (Unaudited)
$'000 $'000
Loss attributable to equity shareholders (533) (934)
Weighted average number of ordinary shares in issue ('000) 2,482,464 2,406,426
Basic and diluted loss per share (cents) (0.02) (0.04)
The Company has incurred a loss in the six-month period to 30 June 2022, and
therefore the diluted earnings per share is the same as the basic loss per
share as the loss has an anti-dilutive effect.
Reconciliation of shares in issue to weighted average number of ordinary
shares:
6 months 30 June 2022 6 months 30 June 2021
(Unaudited) (Unaudited)
$'000 $'000
Shares in issue at beginning of year 2,482,117 2,382,216
Treasury shares - (99)
Shares issued during the period weighted for period in issue (note 11) 347 24,309
Weighted average number of ordinary shares in issue for the period 2,482,464 2,406,426
7. TRADE AND OTHER RECEIVABLES
30 June 30 June 2021 31 December
2022
2021
(Unaudited)
(Unaudited) (Audited)
$'000 $'000 $'000
Trade receivables 2,632 1,740 2,093
Other receivables 12 9 12
Deposits 127 130 127
Current tax receivable 15 13 14
VAT receivable 666 725 589
Prepayments 1,325 2,562 1,781
Total 4,777 5,179 4,616
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
8. TRADE AND OTHER PAYABLES
30 June 30 June 2021 31 December
2022
2021
(Unaudited)
(Unaudited) (Audited)
$'000 $'000 $'000
Trade payables 1,106 781 1,275
Contract liabilities (prepayments received) 872 1,191 1,643
Accruals 766 509 680
Current tax payable 105 40 69
Other payables 459 59 340
Debt due to concession holders 43 97 71
Total 3,351 2,677 4,078
The Directors consider that the carrying amount of trade and other payables
approximates to their fair value.
9. BORROWINGS
30 June 2022 (Unaudited) 30 June 31 December
2021
2021
(Unaudited) (Audited)
$'000 $'000 $'000
Non-current liabilities
Business loans 1,269 2,099 1,282
Working capital facility 3,939 2,040 1,616
5,208 4,139 2,898
Current liabilities
Business loans 545 1,246 1,250
Bank overdraft 233 174 128
Working capital facility 6,384 3,977 3,991
7,162 5,397 5,369
Total borrowings 12,370 9,536 8,267
The increase in borrowings in the six months to 30 June 2022 is owing to the
following:
· A new two year, $2m unsecured facility with Rhino Ventures, the Company's
largest shareholder, advanced during February 2022. Full details of this and
the Lombard Odier facility noted below were disclosed on 13 January 2022.
· An increase of $2.3m in the working capital facility from the Company's
Danish banking partners.
· An advance of $1m of the $2m Lombard Odier short-term facility during June
2022. The $1m is repayable in 90 days from drawdown and is secured against
certain receivables.
The Group paid-down approximately $0.7m of bank loans and equipment lease
obligations during the period ended 30 June 2022.
10. CONVERTIBLE BONDS
30 June 2022 30 June 2021 31 December
2021
(Unaudited) (Unaudited)
(Audited)
$'000 $'000 $'000
Convertible bonds: Liability component 712 885 931
Convertible bonds: Equity component 24 52 52
Total 736 937 983
Convertible bond liability 539 741 741
Interest accrued 173 144 190
Total 712 885 931
During the first half of 2022, $293,591 of the 2023 0% Convertible Bonds were
converted into 5,871,820 Voting Ordinary Shares. The Convertible Bond terms
specify conversion is at an exchange rate of £:$1.25 and 4p per Ordinary
Share. The Bonds are repayable on 30 June 2023.
11. SHARE CAPITAL
Number $'000
Authorised:
Ordinary shares of 1 pence each Unlimited Unlimited
Allotted, issued and fully paid:
Ordinary shares of 1p each
At 1 January 2021 2,382,216,431 31,119
Issued in the period 99,900,622 1,409
At 31 December 2021 2,482,117,053 32,528
Issued in the period (note 10) 5,871,820 73
At 30 June 2022 2,487,988,873 32,601
Balances classified as share capital represent the nominal value on issue of
the Company's equity share capital, comprising ordinary shares of 1p each.
The total number of Ordinary Shares in issue as at the date of this report is
2,487,988,873, which consists of 2,077,988,873 Voting Ordinary Shares and
410,000,000 Non-Voting Ordinary Shares.
12. SHARE
PREMIUM
$'000
At 1 January 2021 58,609
Issued in the period 6,645
At 31 December 2021 65,254
Issued in the period (note 11) 221
At 30 June 2022 65,475
Balances classified as share premium include the net proceeds in excess of the
nominal share capital on issue of the Company's equity share capital.
13. SHARE BASED PAYMENT/LONG-TERM INCENTIVES
On the 1(st) of March 2022, the Company issued LTIP's (long-term incentive
plan) to its directors and key employees of which 35.5m were in issue at 30
June 2022. The fair value of these LTIP's as at the grant date was determined
by an independent specialist in financial valuations.
17.75m of the granted LTIP's are subject to TSR (Total Shareholder Return)
linked criteria and were valued using a Monte Carlo simulation. 17.75m share
options are subject to EBITDA-linked criteria and were valued using a Monte
Carlo Simulation on the basis that they include a market-based exercise
condition. Only market conditions have been considered in estimating the fair
value of the LTIP's.
The key terms and conditions related to the LTIP's are as follow:
A. Market Performance Condition
• Grant Date: 1 March 2022
• Contractual life of LTIP's: 4.6 years
• Vesting conditions: Total Shareholder Return - The performance criteria
sets out that of the total 35.5m LTIP's granted, up to 50% can vest in
increments of 10% if the VWAP (Weighted Average Price) remains above each of
the following thresholds for a period of 30 consecutive days: £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 35.5m LTIP's granted, 50%
can vest
at an incremental rate of 16.6% per annum by the Company achieving internal
EBITDA targets for each of the financial years 2022-2024. Any vesting shall
arise equally for the achieving of each target, which is subject to a
cumulative "catch-up" being permitted.
C. Service Condition
• Recipients must be employed by Woodbois at the time of vesting and the
share price must be above 6p at the exercise date. This condition applies to
all of the granted share options.
The table below shows the input ranges for the assumptions used in the
valuation models:
Fair value at grant date £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%).
Reconciliation of the share options in issue:
Total options Weighted average strike price (Pence)
As at 31 December 2020 144,500,000 2p
Forfeited during the financial year (30,500,000) (2p)
As at 31 December 2021 114,000,000 2p
Issue of LTIP's 35,500,000 1p
As at 30 June 2022 149,500,000 1.76p
The following charge has been recognised in the current financial period:
$000
As at 31 December 2020 968
Reserve transfer for forfeitures (766)
Share based payment expense 233
As at 31 December 2021 435
Share based payment expense 175
As at 30 June 2022 610
At the date of this report the share options of the directors were:
Director Total number of Share Options held as at 31 December 2021 (2p exercise price) Number of LTIP's granted on 1 March 2022 (1p exercise price) Total number of Shares under option Share Options as a % of Issued Share Capital
P Dolan (CEO) 50,000,000 4,000,000 54,000,000 2.17%
C Geddes (CFO) 22,500,000 4,000,000 26,500,000 1.07%
H Ghossein (Deputy Chair) 22,500,000 4,000,000 26,500,000 1.07%
G Thomson (Chair & Senior Non-Executive) 10,000,000 - 10,000,000 0.40%
14. RELATED PARTY TRANSACTIONS
The final instalment of $0.25m was paid in cash to Mr Ghossein, Deputy Chair,
relating to the contingent acquisition liability/deferred consideration for
the acquisition of Woodbois ApS, more fully set out in note 22 in the Annual
Report for the year ended 31 December 2021.
During the first half of 2022 Rhino Ventures Limited, the Company's largest
shareholder, disposed of 325,000,000 of its Non-Voting Ordinary Shares to an
unconnected third party. In the period, Rhino Ventures Limited also converted
a total of 65,000,000 Non-Voting Ordinary Shares into Voting Ordinary Shares.
Upon Conversion, Rhino Ventures Limited transferred the 65,000,000 shares to
its beneficial owner, Mr Miles Pelham. Following Admission, Rhino and Mr Miles
Pelham together held 442,500,000 Voting Ordinary Shares in the Company, which
represents 21.30% of the enlarged Voting Ordinary Shares. Rhino's holding of
235,000,000 Non-Voting Ordinary Shares post Conversion represent 57.32% of the
410,000,000 Non-Voting Ordinary Shares in the Company at 30 June 2022.
As set out in note 9, during H1 2022 the Company drew down $1m of the $2m
Lombard Odier short-term facility and the $2m unsecured facility agreed with
Rhino Ventures was fully drawn down.
15. EVENTS OCCURING AFTER THE REPORTING DATE
None noted as at the date of this report.
16. INTERIM FINANCIAL STATEMENTS
A copy of this interim report as well as the full Annual Report for the year
ended 31 December 2021 can be found on the Company's website at
www.woodbois.com (http://www.woodbois.com)
1 (#_ftnref1) Earnings before interest, tax, depreciation, amortization,
share based payments and other non-cash items
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