Woodbois Limited
Financial
Statements
Company number: 52184
for the year ended
31 December
2019
WOODBOIS LIMITED | Financial Statements 2019 WOODBOIS LIMITED | Finan cial statem ents 2019
DIRECTORS
(Chairman (appointed 29 April 2020) and Chief Executive Officer)
Paul Dolan
(Chief Financial Officer)
Carnel Geddes
(Chief Operating Officer)
Jacob Hansen
(Deputy Chairman)
Hadi Ghossein
(Head of Trading)
Zahid Abbas
Henry Turcan
(Non-executive Director) – appointed 13 May 2019
Graeme Thomson (Non-executive Director) – appointed 11 July 2019
(Non-executive Director) – resigned 29 April 2020
Kevin Milne
COMPANY SECRETARY
William Place Secretaries Limited
Dixcart House,
Sir William Place,
St Peter Port,
Guernsey, GY1 4EZ
COMPANY NUMBER
52184 (Guernsey)
COMPANY WEBSITE
www.woodbois.com
REGISTERED OFFICE
P.O. Box 161, Dixcart House
Sir William Place
St Peter Port
Guernsey, GY1 1GX
NOMINATED ADVISER AND BROKER
Arden Partners Plc
125 Broad Street
London, EC2N 1AR
REGISTRAR
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen, B62 8HD
INDEPENDENT AUDITOR
PKF Littlejohn LLP
1 Westferry Circus
Canary Wharf
London, E14 4HD
LAWYERS TO THE COMPANY (UK)
DWF LLP
Bridgewater Place
Water Lane
Leeds, LS11 5DY
LAWYERS TO THE COMPANY (Guernsey)
Carey Olsen
Carey House
Les Banques
St Peter Port
Guernsey, GY1 4B2
Contents
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Strategic Report
Directors’ Report
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Statement of Profit or Loss and Total Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Notes to the Financial Statements
WOODBOIS LIMITED | Financial Statements 2019 Strategic Report
Strategic Report
CHAIRMAN AND CHIEF EXECUTIVE
OFFICERS’ REVIEW
I am pleased to present the Annual Report and consolidated
financial statements for Woodbois Limited (the “Company”
and its subsidiaries (the “Group”)) for the year ended 31
December 2019.
Since joining the Company as CEO in 2016, much time
and energy has been spent devising and implementing
a strategy to capitalise on the Group’s substantial asset
base via a sustainable operating model while reforming the
corporate structure and improving the capital structure to
align the interest of all stakeholders. At the dawn of a new
decade, investments made during 2019 in our personnel,
facilities and infrastructure positioned the Company with
a stronger brand and the ability to consistently deliver
high quality products at competitive prices, the capacity to
increase profit margins and to position the Group in sight of
positive operating cash flow.
Our strategic goal of achieving sector leadership is clear
and I look forward to playing an active part in making that
ambition a reality in my new role as Executive Chairman and
CEO. It is comforting to do so in the knowledge that such a
substantial body of work was completed in 2019, and that
the settled management team now has a solid corporate
platform from which to ultimately drive improvement to the
bottom line.
COVID-19
However, at the time of writing, the world is in the grip
of coronavirus, COVID-19. Global supply chains are
experiencing severe disruption and it would be foolish to
hazard-a-guess as to when the pandemic will come under
control and when life and business will return to normal.
The Board is monitoring the global health crisis and its
effects on an on-going basis and is enhancing the Group’s
resilience against the associated risks and impact on the
position of the Group from both an operational and financial
perspective in various scenarios. Our priority is the health
and wellbeing of our employees and their families, and we
will take all available steps to protect them.
Production at the Mouila veneer factory and sawmill in
Gabon was tapered down from the beginning of April
due to government measures restricting the numbers
of people in working environments, intended to limit the
spread of COVID-19. On 10 April 2020, the Government
of Gabon announced, amongst other measures, that
the country would enter lockdown for a minimum of two
weeks commencing on 13 April 2020, meaning that our
veneer factory and sawmill in Mouila had to close. On 27
April 2020, a partial lifting of the lockdown was announced,
but as part of cash-flow management measures and due
to global economic uncertainty, it is our current intention to
delay the re-commencement of production until evidence
of an upswing in demand is present.
With restrictions on movement and limits to the number
of workers in factories in force as a result of COVID-19,
there can be no assurance that the Group will be able to
perform its intended workflows. Given similar restrictions
in many of the countries to which we export, there can also
be no guarantee that we will continue to receive timely
payments from customers. While our credit policies ensure
that we retain ownership of goods, such situations would
put a strain on our cash position. Given the high levels of
uncertainty created by the COVID-19 pandemic, the Group
will need to raise funds or defer liabilities during 2020-21,
the quantum of which will be dictated by the potential
impact of COVID-19 on our budget and cash flows for the
current year. While there is no guarantee that the Group
will be able to raise such equity or loans, the track record
of management lends assurance to the possibility of
successfully doing so should the need arise and hence the
going concern basis has been adopted in these financial
statements.
At this time, a global recession appears inevitable, but
whether it will be short lived or more protracted is unclear.
Your Board is putting in place the necessary measures for
Woodbois to weather either scenario. Whether economies
emerge from this pandemic with a slow recovery or with
stimulus-driven strong rebounds, demand for sustainably
sourced tropical timber as a construction material across
| 1
the globe is expected and Woodbois will be positioned
to deliver. Resilience and flexibility are integral within
the Woodbois psyche and culture, and at challenging
times like these, organisations and individuals with such
characteristics differentiate themselves.
The auditors make reference to the existence of a material
uncertainty in relation to going concern within the audit
report, to which we draw your attention. While paying close
attention to our working capital requirements in the months
ahead, we will do everything in our power to support our
staff, our suppliers and our customers to ensure that we
emerge from this difficult period stronger and more united.
Business Performance and Strategy
The Group continued its rapid and consistent growth path
throughout 2019 with revenues once again rebased year-
on-year. Revenues increased by 45% year-on-year from
$13.4m to $19.5m with gross profit for the 2019 year
increasing to $2.8m from $2.1m in 2018, and loss for the
2019 year from continuing operations of $1.9m, down from
a loss of $6.5m in 2018.
Management executed effectively on the Group’s capital
expenditure led strategic plans, building Woodbois’ brand
value and positioning the Group to achieve significant
levels of growth and profitability in the decade ahead. While
aiming to continue the delivery of top-line growth, the Group
has also implemented measures to strengthen its cash
balance and improve margins, while further leveraging the
fixed cost base to improve overall profitability, subject to the
COVID-19 effects.
The high-level objective for 2019 was to maintain the rapid
growth of the business while upgrading facilities in order
to drive growth and improve margins. Further objectives
included sourcing additional
funding,
reducing administration costs and generating improved
performance at an operating level.
trade finance
As announced on 16 April 2020, the first full quarter of
production at the newly re-tooled sawmill in Gabon saw
production increase by more than 100% over the previous
quarter, with recovery levels of 40%, up from an average
of 33% for 2019. Revenues from production are typically
captured upon shipment in the following quarter while
higher levels of recovery are a direct driver of margin
increase. Volume and recovery levels are carefully tracked
and scope remains to improve both measures as staff
become more familiar with operating the new equipment.
At the end of March, a new Mebor sawmill line arrived from
Slovenia. This new line will be assembled and tested as soon
as travel restrictions into Gabon are relaxed. The additional
capacity from this new line, in combination with the new
equipment that recently became operational will enable us
to provide higher volumes of premium quality sawn timber
to our customers as soon as demand recovers.
2019 financial performance overview
Year-on-year revenue grew by 45% in 2019, driven by
23% growth in Forestry division revenues from our own
production assets, and 60% growth in trading revenues.
2019 gross profit margin declined marginally to 14.3%,
from 15.8% in 2018 due to costs associated with attracting
new suppliers while expanding the trading division and
some production dislocation whilst the capital expenditure
Quarter on quarter revenue growth in 2018 – 2019
US$m
3.5
3.2
3.1
3.6
4.4
4.6
5.6
4.9
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
2 |
WOODBOIS LIMITED | Financial Statements 2019
works were carried out in Gabon. EBITDA from continuing
operations improved to negative US$1.9m in 2019 from
negative US$3.9m in 2018. Aggressive cost management
allowed the increase in revenues to be achieved with an
accompanying year-on-year decrease of 12% in operating
expenses and 32% reduction in administration expenses.
total
Current assets remained in line with the previous year
at US$14.3m while current liabilities declined by 32%
to US$11.6m in 2019 from US$17m the previous year.
Net assets were US$117.2m at the end of 2019 (2018:
US$129.6m) after deducting
liabilities which
increased by 13% from US$98.7m to US$112.2m largely
influenced by the additional US$8m ITF inflows and
accounting difference between the treatment of the now
retired preference shares which were previously included
in equity and which were swapped into the newly issued
convertible bond which is split between a non-current
liability and equity. A deferred tax liability of US$62.5m at
both year-ends is largely provided against the value of our
biological assets (i.e. forest concessions) of US$194.7m at
31 December 2018 and 2019.
Trade and other receivables grew by 3% to US$6.1m while
trade and other payables fell by 17% to US$4.8m. Inventory
levels remained broadly in line with the previous year
at $6.4m but inventory as a percentage of turnover fell
encouragingly from 50% to 33%, a ratio management will
continue to focus on decreasing further.
In driving the Group’s growth agenda, the Group’s working
capital requirement increased in 2019 when compared to
the 2018 financial year. The growth in working capital of
$0.82m (12%) is however modest when compared to the
45% increase in turnover achieved over the period. This was
achieved through careful monitoring of trade completion
dates, logistics and minimising delivery time to customers.
Forestry division
• 2019 Revenue of $6.9m v $5.6m in 2018
• Gross profit of $1.6m v $1.2m in 2018
• Gross profit of 24% v 21% in 2018
• Operating cost of $3.4m v $3.4m in 2018
• Segment operating loss of $2.5m v $3.1m in 2018
(excluding gain on fair value of Biological assets in
2018)
• Segment loss after tax of $3.5m v $3.7m in 2018
(excluding gain on fair value of Biological assets in
2018)
• 2019 capex benefits expected in profit margins and
recovery rates in 2020 onwards
Perhaps the most exciting development for the Group
during 2019 was the metamorphosis of our sawmill
plant in Mouila, Gabon. The ten-hectare site experienced
a comprehensive upgrade with the
installation and
commissioning of industrial standard kilns with 2000m3
monthly capacity, and the installation and commissioning
Strategic Report
of high quality sawmilling equipment from China and
Slovenia.
often
conditions
challenging
Despite
including
unprecedented levels of rainfall, the full civil works required
to house and connect this additional equipment was
completed on time and within budget. A surface area of
almost 7000m2 of concrete was mixed on site and laid by
hand. I truly appreciate the hard work done by our in-house
construction team to lay these foundations.
Gross profit margin from our own production increased to
24% from 21% in 2018 driven largely by veneer production
entering our product mix. Yield from raw material to finished
product of veneer or sawn lumber is a critical KPI since
improved yields imply higher levels of output, and therefore
revenue, for the same unit cost of input. In 2019, veneer
yield averaged 60% while sawn timber yield averaged 34%.
The target for veneer yield in 2020 is 62-65% and having
re-tooled the sawmill we are aiming for a step change in
recovery to 42-45% for sawn timber. At both facilities this
will involve a process of continually up-skilling staff on
processing techniques and maintenance of machinery as
well as evolving and implementing management driven
efficiencies.
Data gathered during the testing of the new production
lines, whilst our staff were trained during November and
December, showed an improvement in yield from 33% to
41%. As the team becomes more familiar with operating
the new equipment, further improvement will arise.
The transformation of our sawmill in Mouila during the
course of 2019 enables Woodbois to produce superior,
premium-grade product, enhancing the Woodbois brand
while extracting improved levels of recovery from our
raw material. Taken in combination with the kiln drying
of our sawn timber being brought in-house, once normal
operations resume post-COVID-19 we expect the division to
deliver both an increase in revenues and an improvement in
margins, providing a solid and fundamental pillar to future
Group profitability.
The strategy for the forestry division is to achieve 100%
utilisation of our assets in Gabon while increasing gross
profit margins to a minimum of 30% from 24% in 2019.
Trading
• Revenue of $12.6m v $7.9m in 2018
• Gross profit of $1.2m v $0.9m in 2018
• Gross profit of 9% v 12% in 2018
• Operating cost of $1.3m v $1.3m in 2018
• Segment operating loss of $2.0m v $2.2m in 2018
• Segment loss after tax of $2.0m v $2.7m in 2018
As anticipated, the increased utilization of the Internal
Trading Fund facility helped drive 60% year over year growth
in trading revenues. With a proven record of attracting and
| 3
utilising trade finance, the trading team has continued to
focus on expanding the supplier network to meet the global
demand for traceable, sustainable hardwood products
generated by our sales team. Gross profit margin of 9%
reflected the investment cost of securing new long-term
suppliers, and while lower than the previous year, was within
the range of management expectations. 2019 total trading
revenues of $12.6m are equivalent to approximately 0.3%
of the total African timber export market, leaving significant
room for the Group to increase market share as we strive
for a position of market leadership.
The strategy for the trading division is to deliver exponential
growth while maintaining high single digit to low double-
digit margins and minimising the average duration of each
trade.
Financing, corporate restructuring and
improving capital structure
2019 was notable for the significant levels of corporate
restructuring achieved and the level of new financing
attracted. At the start 2019, the Company announced the
purchase of the minority 25% stake of Montara Continental
Limited that
it did not own (from Africa Resource
Investment Limited (“ARI”)) for the consideration of US$5m.
ARI committed to the provision of a loan of the full $5m
proceeds, for the purposes of trade finance through the ITF.
At that time, the directors expressed their belief that
simplifying the corporate structure and narrowing the
Group’s focus to timber trading and production, would
make the Group more attractive to potential investors and
trade finance providers.
During the first quarter, the 1798 Volantis Fund (“Volantis”),
a fund managed on a discretionary basis by Lombard
Odier Asset Management group, invested approximately
US$5m in new ordinary shares as well as committing to
the provision of a loan of $5m for the purposes of trade
finance through the ITF. The ITF amounted to $12.1m at
the year-end, up from $3.8m at the 2018 year end. This
increase was instrumental in increasing trade volumes,
but comes at an interest cost of 11.5%pa. The ITF interest
charge included in the group’s results for 2019 is $1.2m
versus $0.2m in 2018.
Having rationalised the corporate structure, eliminating 27
subsidiary companies over the previous 18 months in the
process, one of the Board’s aims in 2019 was to simplify
the Group’s capital structure with the intention of aligning
the interest of all investors.
The 5% perpetual preference share class in Woodbois’
subsidiary Argento was repurchased and its holders issued
instead with a convertible bond issued by Woodbois. The
Woodbois convertible bond has a tenure to 30 June 2024,
a 4% coupon and conversion price of 8p (a maximum of
300 million ordinary shares on full conversion). 100% of
4 |
the preference shareholders accepted the switch from a
preference share with variable conversion terms linked to
a subsidiary company, to a bond convertible into Woodbois
common stock at a fixed rate. As well as simplifying the
capital structure, the switch to convertible bond served
to more closely align management, bondholders and
shareholders’ interest, as well as making the Group more
investible and easier to value for institutional investors. The
restructure resulted in the group realising a gain of $4.6m,
which is included in the 2019 loss before tax. The liability
portion of the convertible bond is carried at amortised cost
and as such it adds a significant interest charge to the
Group’s bottom line while the preference dividends were
recognised through the Statement of Changes in Equity.
Interest recognised on the convertible bonds in 2019
amounts to $0.5m, but the charge will increase to $2.9m
for the 2020 financial year, of which $1.7m is a non-cash
component.
Cash conservation measures
range of
In January 2020 the Company announced it had instigated
a
important cash-management measures
designed to allow the Company to enter the new decade
in a strong position while moving towards generating
sustainable positive cash flow. The deferral by a year of the
2020 acquisition purchase payments totalling $1.25m by
our senior management team was a very clear statement
of support for, and confidence in, the fundamental strength
of our business.
Volantis agreed to provide an additional $1.0m through
investment into the Group’s ITF (“Additional Loan”) by way
of an additional loan agreement with Woodbois Trading
Limited, a wholly owned subsidiary of the Group. $0.5m of
the Additional Loan has been drawn down to date. Further
drawdowns are by mutual agreement.
In addition, Volantis indicated their intention to receive
Woodbois ordinary shares in lieu of interest for the period
from 1 July 2019 to 31 December 2020 in respect of their
ITF loans, a gesture that I was happy to match for my ITF
loan of $0.3m. Africa Resource Investment Limited agreed
that, in respect of its existing $5.0m ITF loan, it would not
request any withdrawal prior to 31 December 2020.
In connection with the Company’s 4% convertible bonds
2024, issued on 21 October 2019, Pelham Limited (a
company controlled by Miles Pelham, former Chairman)
agreed to roll-up interest payments due for the period from
issue until 31 December 2020 on an aggregate $20m of
Bonds. Again, I was happy to match this significant gesture
by Mr Pelham for the $0.4m of bonds that I own.
I am grateful to the team, and to our largest stakeholders for
agreeing to the measures detailed above for demonstrating
their commitment to strengthening the Company’s working
capital position.
WOODBOIS LIMITED | Financial Statements 2019 Mozambique
Our business in Mozambique has largely been on a
care and maintenance basis for two years, partly due
to an industry export ban in 2018 but also due to the
quantum of investment required to restart and to enlarge
the operations to be able to earn an acceptable return
on capital comparable to the Group’s other business
segments. Management had been seeking the optimum
way to recommence operations and on 19 March 2020
announced the signing of a management agreement
with Future Earth II LLC (“Future Earth”), a US company
with substantial forestry concessions in Mozambique,
creating a relationship under which Future Earth will fund,
manage and operate Woodbois’ Mozambique concessions,
employees and equipment, in order to produce sawn
lumber and veneers to be sold by Future Earth on a profit
share basis. We believe the agreement with Future Earth
provides material benefits to both parties, not least from the
economies of scale arising from Woodbois’ approximately
300,000 hectares and Future Earth’s approximately 620,000
hectares of concessions.
into
Since 2006, Future Earth has built sustainable industry
programmes in Mozambique. EAFP, its local subsidiary,
processes timber
lumber and finished products
through its sawmill and veneer manufacturing facilities in
Mozambique. By operating these facilities in-country rather
than shipping semi-finished timbers, the business captures
a greater portion of the value chain locally, creating more
employment and reducing the carbon footprint of finished
goods. The business has multiple times received the
Presidential Award for “Best Exporter of Value-added
Timber Products” as well as the award for “Best Rural
Industrialization Project in Mozambique”.
The Agreement is for 3 years, with optional breaks after 12
and 24 months at Future Earth’s discretion. All costs during
the term of the Agreement will be funded by Future Earth,
with a 50:50 post-cost profit share from products sold from
Woodbois’ concessions. Should Future Earth proceed with
years 2 and 3 they will pre-pay Woodbois US$1 million each
year, to be deducted from the Woodbois share of profits for
each respective year. Profits will be distributed quarterly.
The agreement will allow Woodbois to start realising value
from our substantial assets in Mozambique without diluting
management focus or financial resources, which can now
be fully concentrated on bringing our operations in Gabon
to optimal capacity, and on our international timber trading
business.
Tanzania
Envision, the Tanzanian entity which purchased the
Tanzanian agriculture business from us, has so far failed
to pay the initial proceeds in accordance with the payment
schedule agreed in the Sale and Purchase Agreement
Strategic Report
(“SPA”) announced at the end of 2018. Under the SPA
the consideration is payable by Envision in 12 quarterly
instalments. The first instalment of $0.25m was payable
on 30 April 2019, with 11 subsequent payments of $0.16m
each and the assumption of a debt of $0.5m.
The Group is in discussion with Envision to recover the
amounts due and reserves it’s right to use legal recourse
to recover such amounts: however, given the material
uncertainty as to recoverability of the amounts due, a full
provision has been made in the accounts. This provision
($2.5m) is included in the 2019 loss from discontinued
operations.
Apart from minimal administrative expenses the Group has
no on-going cost commitment in Tanzania.
Social impact and sustainability
Conservation Goals and Transparency
A significant contributor to deforestation in Africa is the
industry’s largely informal nature. Much of the deforestation
caused by logging is the result of unsanctioned clearing
of forests outside of regulated concession areas. Even
within the formal market, logging in Africa is dominated by
small-scale producers that are largely isolated from global
end markets. The supply side of the market consists of
thousands of companies, the majority of which are micro
or small operators employing fewer than 50 workers. By
and large, these are local actors that view the forest as a
short-term means to support their immediate needs rather
than as a long-term economic asset. And as a result of
their isolation, they often face little economic incentive to
preserve the forests in which they operate or adhere to
best-practice sustainability and conservation efforts.
The lack of economic incentive to develop sustainable
practices is compounded by the challenge of securing
financing in Africa, which limits operators’ ability to invest
in the types of reporting and management systems that
would enable them to comply with global standards,
such as certification from the Forestry Sustainability
Council (“FSC”). For
local timber suppliers, the high
cost of certification – both financially and in terms of
management capacity, poses a challenge in complying
with sustainability-related requirements from regulators
in markets like Gabon, where the President has mandated
FSC certification for all forestry concessions by 2022. For
investors and end users alike, the African natural timber
market’s opacity and the scarcity of certified suppliers
creates an obstacle to identifying companies that meet
their sustainability requirements.
The fragmented nature of the market compounds further
down the supply chain. As timber changes hands, it
can become increasingly difficult to identify whether
the timber was sourced sustainably. This traceability
problem can ultimately result in the manufacturing of end
| 5
products sourced from forestry operations contributing
to deforestation. While deforestation ultimately results
from land use practices, actors across the supply chain –
including investors and end customers – play important
roles in influencing and monitoring environmental impact.
Leadership in Sustainable Production and
Trade of African Natural Hardwoods
We seek to solve these challenges by leveraging on-the-
ground experience as a producer in West Africa and our
global timber trading expertise to expand sustainable
forestry practices across the region.
We have first-hand experience as a hardwood timber
producer in Gabon, controlling almost 100,000 hectares
of concessions on 20-year renewable leases, and in
Mozambique, where we control more than 300,000
hectares of concessions on 25-50 year leases. Across
our concessions, we have
implemented best-practice
sustainable forestry practices, such as carefully planning
and spacing-out harvests to avoid disrupting natural
canopies and groundcover, thereby protecting biodiversity
and natural habitats. Our commitment to sustainable and
transparent forestry practices is borne out by our ranking
in the London Zoological Society’s SPOTT survey, which
ranked the Company 7th among 97 companies globally
with a score of 69% compared to the 20.4% average.
SPOTT, Sustainability Policy Transparency Toolkit, is an
online platform created by the Zoological Society of London
to assess commodity producers and traders on the public
disclosure of each company’s policies and operations, as
well as their commitments to environmental, social and
governance (ESG) best practice.
While we are also planning to pursue formal FSC certification
in the coming year, involving a meaningful investment of
time and resources, we already operate our concessions
and timber sourcing practices in a manner consistent with
FSC guidelines.
Through our trading arm in Copenhagen, Woodbois has
considerable experience identifying buyers and negotiating
purchase terms for African hardwood timber products
globally. The Company’s trading network is considerable,
comprising almost 300 customers across more than 60
countries, anchored by our team’s deep global relationships
with buyers and fuelled by investments in technology,
including plans to develop timber pricing software and
a blockchain-based traceability tool. Our investment in
technology, combined with deep relationships with a
diverse customer mix of buyers across the globe, allow us
to not only locate the optimal trade partners to maximise
the price received for products, but also to trace third-
party supply from the forest through manufacturing and
to the final exported product. Through these investments,
the Company ensures that 100% of our third-party timber
supply is traceable to sustainable operators in the country
of origin.
6 |
through
to scale our model
We are well positioned to leverage our global trading
platform and on-the-ground experience as a sustainable
producer
long-term
partnerships with local producers across the African
region. We believe that our deep access to markets makes
us an attractive partner for local operators who lack the
scale, experience and technology to navigate the complex
global marketplace. Through such partnerships, we plan
to extend our sustainability and transparency practices to
local partners across the timber-producing African region.
Board changes
Miles Pelham stepped down as Non-Executive Chairman
in July 2019 in the expectation of listing Diginex Limited,
a blockchain company that he founded, on NASDAQ. He
remains fully committed to Woodbois’ future success but
acknowledged that he could not adequately service the
needs of the Group with another Chairmanship of a listed
entity. We offer sincere thanks to Miles for his leadership,
energy and direction throughout his three-year tenure. The
Group is unrecognisable from the organization that he took
Chairmanship of in 2016, and the changes in that time have
been overwhelmingly positive. As the largest individual
stakeholder, we anticipate that Miles will continue to
monitor the Group with keen interest while remaining a
strong supporter of its management team.
Kevin Milne, has been our longest-standing non-executive
Board member since August 2015 and was appointed
interim-Chairman upon Miles Pelham’s departure. He has
been Chairman of the Remuneration Committee and a
member of the Audit Committee. As part of our COVID-19
cost savings Kevin has agreed to step down as interim-
Chairman and from the Board with immediate effect. We
are very grateful to Kevin for his dedication to the Company
over the last five years. As a result of this change, I am
taking on the role of Executive Chairman and CEO.
In May 2019, Henry Turcan joined the Board as Non-
Executive Director. Henry has worked in financial services
since 1996, with a focus on equity capital markets. Having
spent the majority of his career advising growth companies
within investment banking, he joined the Volantis team at
Henderson Global Investors in 2015, which subsequently
transferred to Lombard Odier Investment Management
in 2017 becoming known as 1798 Volantis. Henry is
a representative of the funds managed or sub-advised
by Lombard Odier Investments Manager group entities,
collectively the Company’s largest shareholder. He is a
member of the Audit and Remuneration Committees.
Also in May 2019, Graeme Thomson became Senior
Independent Non-Executive Director and Chairman of
the Audit Committee and will become Chairman of the
Remuneration Committee forthwith. Graeme is a Fellow of
the Institute of Chartered Accountants in England and Wales
and has been a public company director for many decades,
as a CEO, CFO/Company Secretary and as a Non-Executive.
WOODBOIS LIMITED | Financial Statements 2019 Graeme and Henry’s varied commercial experience,
including of Audit and Remuneration Committees, as well
as internationally and of financial matters has already
proved to be of considerable benefit to the Group.
Looking forward
The capex committed during 2019 has ensured that the
Group is well positioned to deliver higher levels of revenue
and margins when global economic activity resumes
post-coronavirus. We have a strong, committed team and
innovative technology in place to leverage the Woodbois
trading business via the trade finance raised to date. The
$19.5m in revenues achieved in 2019 constitutes less
than half of one percent of the $4bln African export timber
market. The immediate target is 2% market share but I see
no reason to believe that 5% is an unrealistic ambition.
The dislocation caused by COVID-19 will likely lead to
growth opportunities for organised, well-financed market
participants. With our geographically diversified customer
base we intend to be among this group.
Woodbois has an increasingly important role to play in the
sustainable timber space as an example of a sustainable,
commercially successful African forest manager. We
are well positioned to partner with large corporates (e.g.
oil and gas majors) to provide climate change mitigation
opportunities such as large-scale tree planting schemes.
We are also committed to providing support and advice to
small-scale suppliers across the Congo basin to help them
comply with the sustainability standards required to access
global markets.
I take this opportunity to thank all of our staff for their care
and commitment to the Company and to each other, and
for all of their hard work dedication in 2019. I sincerely
hope that they and their families, and you, our shareholders,
emerge from this distressing period safe and well. I believe
we are ready to embrace the challenges and benefit from
the opportunities that lie ahead.
For and on behalf of the Board
Paul Dolan
Chairman and Chief Executive Officer
29 April 2020
Strategic Report
| 7
Directors’ Report
The Directors submit their report on the affairs of the Group, together with the financial statements and auditor’s report for the
year ended 31 December 2019.
PRINCIPAL ACTIVITIES AND
CORPORATE DEVELOPMENT
SHARE CAPITAL AND
FUNDING
The principal activities of Woodbois Limited (“Woodbois”)
during 2019, together with its subsidiaries (the “Group”)
were forestry and timber trading. These activities were
undertaken through both the Company and its subsidiaries.
The Company is quoted on AIM and is incorporated and
domiciled in Guernsey.
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
19. The Company has one class of ordinary shares, which
carry no right to fixed income. Each share carries the right
to one vote at general meetings of the Company.
The Company has unlimited authorised share capital divided
into ordinary shares of 1p each, of which 465,451,931 had
been issued as at 31 December 2019. The Company also
holds 99,378 Shares in Treasury.
POST BALANCE SHEET EVENTS
Please refer to Note 27 of the financial statements and the
Strategic Report for details.
BUSINESS REVIEW
A review of the Group’s performance and prospects is
included in the Strategic Report.
RESULTS AND DIVIDENDS
The consolidated loss for the year after taxation from
continuing operations attributable to shareholders was
$1.951m (2018: $6.525m).
The Directors do not recommend payment of an ordinary
dividend (2018: $Nil).
DIRECTORS
The Directors, who served during the year and to the date of this report were as follows:
Paul Dolan
Carnel Geddes
Jacob Hansen
Hadi Ghossein
Zahid Abbas
Henry Turcan
(Chairman & Chief Executive Officer)
(Chief Financial Officer)
(appointed 11 January 2019)
(Executive Director)
(appointed 11 January 2019)
(Executive Director)
(appointed 11 January 2019)
(Executive Director)
(appointed 13 May 2019)
(Non-executive Director)
Graeme Thompson
(appointed 11 July 2019)
(Non-executive Director)
Jessica Camus-Demarche
(resigned 11 January 2019)
(Non-executive Director)
Miles Pelham
Kevin Milne
8 |
(resigned 11 July 2019)
(Non-executive Director)
(resigned 29 April 2020)
(Non-executive Director)
WOODBOIS LIMITED | Financial Statements 2019
Directors’ Report
DIRECTORS’ INDEMNITY INSURANCE
The Group has maintained insurance throughout the year for its Directors and Officers against the
consequences of actions brought against them in relation to their duties for the Group.
DIRECTORS’ INTERESTS
Directors’ interests in the shares of the Company, including family interests at 31 December 2019 were:
Shareholdings
Shareholdings
Paul Dolan1
Kevin Milne2
Hadi Ghossein3
Jacob Hansen3
Zahid Abbas3
Ordinary shares of 1p each
Ordinary shares of 1p each
2019
2018
46,128,571
16,128,571
199,793
5,213,883
5,213,883
5,213,883
199,793
5,213,883
5,123,883
5,123,883
1 Paul Dolan, Chairman and Chief Executive Officer of Woodbois
Limited, held 46,373,275 shares (9.87%) as at 29 April 2020. At
31 December 2019 and 29 April 2020, 13,300,000 of his shares
in the Company are held through HSBC Client Holdings Nominee
(UK) Limited with the remainder being held through other nominee
companies as of 31 December 2019. At 31 December 2018 he held
1,001 Argento 5% Preference shares and at 31 December 2019 and
29 April 2020 he held 400,400 $1 Convertible Bonds.
2 Kevin Milne, Non-executive Director of Woodbois Limited, together
with his wife held 199,793 shares in the Company.
3 Hadi Ghossein, Jacob Hansen and Zahid Abbas, or companies
controlled by them were issued 5,213,883 shares each on 4
July 2017 as part of the Woodbois International ApS purchase
agreement.
Options
On 5 July and 3 October 2017, the Board proposed and
approved the issue of long-dated, highly out-of-the-money
share option awards to current and proposed management.
Share option awards were made on the following structure
within the Company’s existing share scheme, the terms of
which are detailed in Note 24:
Vesting
Date
June 2018
June 2019
June 2020
June 2021
Award Amounts Outstanding at
31 December 2019
3.125m options
3.125m options
3.125m options
3.125m options
The awards will be distributed to the Board as follows and the awardee must accept the option granted for it to be valid:
Paul Dolan
Chairman and CEO
1m per tranche (4m total)
Carnel Geddes
CFO
250k per tranche (1m total)
Jacob Hansen
Chief Operating Officer
625k per tranche (2.5m total)
Hadi Ghossein
Deputy Chairman
625k per tranche (2.5m total)
Zahid Abbas
Head of Trading
625k per tranche (2.5m total)
Miles Pelham forfeited his 4m share options upon resignation on 11 July 2019. Jessica Camus-Demarche forfeited her
1m share options upon resignation as a director on 11 January 2019.
| 9
DIRECTORS’ REMUNERATION
The audited remuneration of the individual Directors who served in the year to 31 December 2019 was:
Paul Dolan
Carnel Geddes **
Jacob Hansen *
Hadi Ghossein
Zahid Abbas
Henry Turcan
Graeme Thomson
Jessica Camus-Demarche
Miles Pelham
Kevin Milne
Total
Salary & fees
Benefits
$000
$000
Deferred acquisition
payment***
$000
200
183
236
188
234
16
11
3
107
30
-
-
7
6
8
-
-
-
-
-
-
-
478
-
478
-
-
-
-
-
Total
2019
$000
2018
$000
721
194
720
16
11
3
107
30
Total
2018
$000
200
150
682
215
672
-
-
50
200
30
1,208
21
956
2,185
2,199
All of the above Directors’ remunerations are considered short term in nature.
It is the Company’s policy that executive Directors should have contracts with an indefinite term providing
for a maximum of 3-6 months’ notice. In the event of a take-over, the Directors’ contracts provide for
compensation of 2 years salary as a bonus on the take-over in the event that the Executive loses his position.
*Jacob Hansen and Zahid Abbas were paid $17,495 of fees each through service companies, Barsik Holdings
ApS and AKA Holding ApS.
**Carnel Geddes is paid in full through a service company, Pomona Trust.
***Conditional payments arising on the purchase of Woodbois International ApS in 2017.
Non-executive Directors are employed on letters of appointment which may be terminated on not less than 3
months’ notice. The basic fees payable to Kevin Milne and Graeme Thomson were $30,000 and $25,500 per
annum, respectively. No fees are paid directly to Henry Turcan, however, fees of $25,000 per annum, are paid
to Lombard Odier, for his services.
10 |
WOODBOIS LIMITED | Financial Statements 2019 Salary & fees
Benefits
Deferred acquisition
$000
$000
payment***
$000
Paul Dolan
Carnel Geddes **
Jacob Hansen *
Hadi Ghossein
Zahid Abbas
Henry Turcan
Graeme Thomson
Miles Pelham
Kevin Milne
Total
Jessica Camus-Demarche
200
183
236
188
234
16
11
3
107
30
-
-
7
6
8
-
-
-
-
-
Total
2019
$000
2018
$000
721
194
720
16
11
3
107
30
Total
2018
$000
200
150
682
215
672
-
-
50
200
30
478
478
-
-
-
-
-
-
-
-
1,208
21
956
2,185
2,199
Directors’ Report
PROFILES OF THE CURRENT DIRECTORS
PAUL DOLAN, AGED 55, CHAIRMAN AND CHIEF
EXECUTIVE OFFICER
ZAHID ABBAS, AGED 46, HEAD OF TRADING
Based in the UK, Paul held senior management positions
within banking and hedge funds prior to joining Woodbois.
Paul has consistently built award winning, world-class
teams employing custom-built technology to manage
substantial pools of human and financial capital across
a diversified group of asset classes ranging from fixed
income and equity derivatives to soft commodities and
forestry.
CARNEL GEDDES, AGED 41, CHIEF FINANCIAL
OFFICER
Based in South Africa, Carnel 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, Carnel served
as director, forensic services, of BDO London and partner
of BDO Cape Town. She has been a director and Board
member of the largest South African pomegranate farming
and export company, Pomona, since 2008. She is also the
Chair of POMASA, the Pomegranate Growers Association
of South Africa.
Based between Demark and Africa, Zahid co-founded
Woodbois in 2005. He started his career at DLH Group and
his roles have included procurement in Africa and Brazil
for European manufacturers as well as implementing the
Group’s environmental policy. Fluent in seven languages,
Zahid is well known and highly respected within the timber
industry globally.
HENRY TURCAN, AGED 46, NON-EXECUTIVE
DIRECTOR
Henry has worked in financial services since 1996, with a
focus on equity capital markets. Having spent the majority
of his career advising growth companies within investment
banking he joined the Volantis team at Henderson Global
Investors
in 2015 which subsequently transferred to
Lombard Odier Investment Management in 2017 becoming
known as 1798 Volantis. Henry graduated with an MA
(Hons) in Modern Languages from Edinburgh University
and is a Member of the Securities Institute. Henry is a
representative of the funds managed or sub-advised
by Lombard Odier Investments Manager group entities,
collectively the Company’s largest shareholder.
JACOB HANSEN, AGED 52, CHIEF OPERATING
OFFICER
GRAEME THOMSON, AGED 63, NON-EXECUTIVE
DIRECTOR (INDEPENDENT)
is a Fellow of the
Graeme
Institute of Chartered
Accountants in England and Wales and has been a public
company director 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.
Based between Denmark and Africa, Jacob co-founded
Woodbois in 2005 and has spent more than 30 years in the
timber business. Jacob’s early career involved managing
sawmills in Sweden, Canada, and the UK before moving to
hardwood procurement in the Philippines. Subsequently,
Jacob held various international sales and procurement
roles for DLH Group based in France, the Middle East and
the Congo basin.
HADI GHOSSEIN, AGED 59, DEPUTY CHARIMAN
Based in Gabon, Hadi has 25 years of experience managing
forestry operations, including full ownership of a forestry
business. Hadi previously served as a diplomat, travelling
extensively across Africa, as well as owning various trading
and real estate companies. Hadi is fluent in Arabic, French,
Portuguese and English and holds Gabonese citizenship.
| 11
SUBSTANTIAL SHAREHOLDERS
The Company has been notified that the following have, at 29 April 2020, an interest
in three percent or more of the issued ordinary share capital of the Company:
Name
Lombard Odier Asset Mgmt
Grandinex International Corp
Pelham Limited
Paul Dolan (Chairman and CEO)
Spreadex Limited
HSBC Client Holdings Nominee (UK) Limited**
Number of 1p
ordinary shares
Percentage of the
issued share capital
120,540,230
70,000,000
54,500,000
46,373,275
32,362,000
15,295,657
25.66%
14.90%
11.60%
9.87%
6.89%
3.28%
Miles Pelham, former Chairman, has a non-beneficial
interest in 30,000,000 of the shares in which Paul Dolan has
a beneficial interest, as Miles Pelham holds these shares
in trust for Paul Dolan under the terms of the Long-Term
Incentive Plan as announced on the 21 January 2019.
CORPORATE GOVERNANCE
The Board is committed to achieving the highest standards
of corporate governance, integrity and business ethics
and as Chairman and CEO, I am 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.
12 |
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 the Strategic Report.
The Group has two divisions, Trading and Forestry, and
a clear strategy had 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 and simply not an option. We will leave no stone
unturned in our quest to support and fund businesses
WOODBOIS LIMITED | Financial Statements 2019 Directors’ Report
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 not waste shareholder money
by trying.
change in any of the key assumptions to the budget. The
Group’s actual results, compared with the budget, are
reported to the Executive Board on a weekly basis. Any
material deviations from budget are followed up by a
member of the Executive Board.
2. Seek to understand and meet shareholder needs and
expectations
Shareholders play a key role in corporate governance, with
our Annual General Meeting for shareholders offering an
opportunity to exercise their decision-making power in
the Company. Shareholders are encouraged to attend the
AGM and any other General Meetings which are convened
throughout the year. Our Company Secretary, William Place
Secretaries Limited, is the contact point for shareholder
liaison and their 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 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.
to Africa’s economic
Woodbois is in a unique position to bring vital positive
impact
transformation, social
development and environmental management through
our operations. In this regard we have set out to align our
sustainability strategy with the United Nations Sustainable
Development Goals (SDGs) which provide a vision for
ending poverty, hunger, inequality and protecting the earth’s
natural resources.
4. Embed effective risk management, considering both
opportunities and threats, throughout the organisation
The business of forestry and timber trading involves a
high degree of risk, in addition to technical, political and
regulatory risk; the Group is exposed to weather, nutrient
and pest risks. Furthermore, the Group is exposed to a
number of financial risks which the Board seeks to minimise
by adopting a prudent approach which is 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 2019.
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
The Group maintains appropriate
in
respect of actions taken against the Directors because
of their roles, as well as against material loss or claims
against the Group. The insured values and type of cover are
comprehensively reviewed on a periodic basis.
insurance cover
5. Maintain the Board as a well-functioning, balanced
team led by the Chair
The Board is responsible for establishing the strategic
direction of the Group, monitoring the Group’s trading
performance and appraising and executing development
and acquisition opportunities. The Company holds a
minimum of six 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. 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 29 April 2020, the Board comprised of five Executive
Directors, one Non-Independent Non-Executive Director and
one Independent Non-Executive Director. The Chairman
and Chief Executive Officer roles were combined on 29
April 2020 and one Independent Non-Executive Director
left as part of the cost cutting in response to the effects
of COVID-19. It is intended in due course to comply with
the Code by separating the roles of Chairman and Chief
Executive Officer and to appoint a further Independent
Non-Executive Director. Executive Board members are
considered full time employees, while Non-Executives are
required to commit between 20 and 40 days per annum to
their roles.
The Board is supported by the Audit and the Remuneration
Committees which comprised of Non-Executive Directors
only, and the Nominations Committee which includes the
Chairman and CEO.
| 13
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 ongoing development of the Company. Any
appointments made will be on merit, against objective
criteria and with due regard for the benefits of diversity on
the Board, including gender. The Nomination Committee
will also be responsible for succession planning.
In addition to bringing considerable skills to the table,
appointments to the Board aim to provide a healthy balance
of both experience and gender.
7. Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement
Internal evaluation of the Board, the Committees and
individual Directors is seen as an important next step in
the development of the Board and one that is addressed.
An annual operational review of all members of the Board
is undertaken, in which their performance is evaluated,
and development needs identified and actions to be taken
agreed. Executive and Non-executive Directors are subject
to re-election intervals as prescribed in the Company’s
Articles of Incorporation. At each Annual General Meeting
one-third of the Directors who are subject to retirement
by rotation shall retire from office. They can then offer
themselves for re-election.
8. Promote a corporate culture that is based on ethical
values and behaviours
The Company is committed to complying with all applicable
laws and best corporate governance practices, wherever
we operate. It is a core aspect of our mission to act with
integrity in all of our operations. The Board expects all
employees 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
14 |
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 matters are reserved for the Board:
• Overall Group strategy
• Approval of major capital expenditure projects
• Approval of the annual and interim results
• Annual budgets and revisions thereto.
The Company is committed to high standards of corporate
governance. Both Management and the Board are
dedicated to implementing best practice as the Company
grows.
A clear organisation structure exists detailing lines of
authority and control responsibilities.
The Board monitors the exposure to key business risks and
reviews the strategic direction of all trading subsidiaries,
their annual budgets, their performance in relation to those
budgets and their capital expenditure.
The agenda of the overall business is determined by
a Management Committee setting out agreed targets
that will maximise financial return. Opportunities and
improvements are identified and prioritised depending on
analysis carried out by Management. These projects are
supported by detailed financial planning.
Internal controls and systems have been introduced to
manage business objectives. As well as Board discussions,
regular meetings are held by Management to discuss
performance. Detailed information packs are prepared bi-
weekly to cover each major area of the business. Variances
from the budget and previous forecasts are analysed,
explained and acted on. Important capital investments are
regularly discussed both at a Board and at a Management
level where analysis of budget versus actual spend is
carried out.
Effective corporate governance remains key to the business
as it grows rapidly. The Company has a structure and
process in place to help identify areas in which corporate
governance can be improved. The Company is currently
implementing technology that will allow both the Board
and Management to oversee key performance indicators
across the business in real time.
WOODBOIS LIMITED | Financial Statements 2019 Within the Trading division, the Company has mandated a
technology firm to create a custom-built tool to allow for
real-time tracking of all trades, which has been implemented
in 2020.
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 Non-executive
Directors with Graeme Thomson as Chairman from his
appointment in July 2019, together with Henry Turcan and
Kevin Milne. It meets at least three times in the financial
year.
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 Kevin Milne as the Chairman,
together with Henry Turcan and Graeme Thomson. It meets
at least twice a year. Graeme Thomson became Chairman
on 29 April 2020.
The policy of the committee is to reward executive
Directors in line with the current remuneration of Directors
in comparable businesses in order to recruit, motivate and
retain high quality executives within a competitive market
place.
There are three main elements of the remuneration
packages for executive Directors and senior management:
Directors’ Report
• Basic annual salary (including directors’ fees) and
benefits;
• Discretionary annual bonus to be paid in accordance
with a bonus scheme developed by the Remuneration
individual
Committee. This takes
contribution, business performance and commercial
progress; and
• Equity Option
takes
into account the need to motivate and retain key
individuals.
incentive scheme which
into account
The Committee intends to issue Options in due course
following the publication of the 2019 Annual Report and
to cancel existing options. The total number of Options in
issue at any time will not exceed 10% of the issued share
capital.
Nominations Committee:
The Nomination Committee which comprises of the Non-
executive Directors and the Chairman & CEO meets at least
once a year and is responsible for the process of reviewing
the monitoring
replacement or additional Directors,
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 the website.
The results of voting on all resolutions are announced
via RNS immediately following completion of General
Meetings and are available on the website. Any actions
that are required to be taken as a result of resolutions for
which votes against have been received from at least 20
per cent of independent shareholders will be detailed on the
RNS.
| 15
RISK MANAGEMENT
The business of forestry and timber trading involves a
high degree of risk, in addition to technical, political and
regulatory risk; the Group is exposed to weather, nutrient
and pest risks. Furthermore, the Group is exposed to a
number of financial risks which the Board seeks to minimise
by adopting a prudent approach which is consistent with
the corporate objectives of the Group.
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.
TECHNICAL RISK
OTHER RISKS
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.
COVID-19
The Board is monitoring the global health crisis and
is considering the associated risks and impact on the
position of the Group from both an operational and financial
perspective. With the extreme travel restrictions in force as
a result of COVID-19 and the implications mean that there
can be no assurance that the Group will be able to perform
its intended workflows or generate cash from fund raising
activities. The Board continues to monitor the effect of
COVID-19 on an on-going basis.
POLITICAL AND REGULATORY RISK
The Board observes any political developments across the
geographies that Woodbois operates in closely. Gabon,
Ivory Coast and Mozambique had local and regional election
programs in 2018 that were successfully completed with
minor instances of unrest. The political environment across
all the countries that Woodbois operates in will remain an
evolving discussion point for the Board, however the risk of
political unrest disruptive to the Group’s operations remains
low.
The regulatory frameworks in place across the countries
that Woodbois operates in support the development of
16 |
The Company carefully monitors the UK government’s
progress in respect of its Brexit discussions with the
European Union. Given the location of the Company’s
trading operations and key assets it considers the key
areas of Brexit risk to focus on any potential changes to the
Company’s UK listing requirements and its ability to raise
funds on a UK listed market. The Board maintains close
dialogue with its advisors to ensure that any proposed
regulatory changes are identified and actioned accordingly.
The Board is in discussion with its investors to identify any
known issues with regards to the raising of finance.
As outlined elsewhere in this Report, the effects of
COVID-19 are not yet clear and resilience plans are being
enacted.
ENVIRONMENTAL RISK
The Group is exposed to climate, weather and the risk of
pests affecting its forestry operations. The availability of
water for its irrigation as well as the abundance of too
much water also pose a risk to the biological assets. These
risks are managed by ongoing assessment of local pests
and the adoption of irrigation methods. Adverse weather
conditions may impact transport routes both within the
Group’s countries of operation and when exporting finished
product.
FINANCIAL RISK
This comprises of a number of risks explained below.
MARKET RISK
Price risk
The Group is exposed to market risk in respect of its
equity investments as well as any potential market price
fluctuations that may affect the revenues of the agriculture,
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.
WOODBOIS LIMITED | Financial Statements 2019 LIQUIDITY RISK
The Group seeks to manage liquidity by regularly reviewing
cash levels and expenditure budgets to ensure that
sufficient liquidity is available to meet foreseeable needs
and to invest cash assets safely and profitably. The Group
had net cash balances of $1.490 million as at 31 December
2019 (2018: $1.910m).
INTEREST RATE RISK
limited
its exposure to the risk of
The Group has
being negatively affected by variable interest rates by
predominantly borrowing using fixed interest instruments.
Refer to note 16 for a detailed assessment
CREDIT RISK
The Group’s principal financial asset is cash. The credit
risk associated with cash is considered to be limited.
The Group receives payment immediately upon delivery
of its agriculture and forestry products. The credit risk is
considered to be minimal as no credit terms are offered
and funds are received prior to the risk of ownership being
transferred to the purchaser. From time to time cash
is placed with certain institutions in support of trading
positions. The credit risk is considered minimal as the
Group only undertakes this with large reputable institutions.
DONATIONS
No political donations were made during the year (2018:
nil). No charitable donations were made during the year
(2018: $2,400).
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 supports employment of disabled people
wherever possible through recruitment, by retention of
Directors’ Report
those who become disabled and generally through 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
European Union (EU). 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
accordance with IFRS adopted by the EU; and
d. prepare the financial statements on the going
concern basis unless
inappropriate to
presume that the Group and Company will
continue in business.
in
is
it
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.
| 17
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 2019
and a resolution to reappoint then will be proposed at the
2020 AGM.
On behalf of the Board
Paul Dolan
Chairman and Chief Executive Officer
29 April 2020
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;
Review of actual results against forecast;
Timing of cash flows; and
Financial or operational risks.
As at 31 December 2019 the Group had a cash balance of
circa $1.49 million (GBP1.14 million). In January 2020, the
Group’s forecast for the financial year showed a movement
towards positive operational cash flow around mid-year,
having taken account of the cash flow enhancement
measures announced by it then. However, on 27 March
2020 the Company announced that the rapid pace of
developments in connection with COVID-19 had caused
such fundamental levels of uncertainty that, in common with
many other companies, the Board withdrew any guidance
on the financial outcome for 2020 until its implications can
be reliably assessed. Further developments since then are
outlined in the Chairman and CEO’s Statement.
Current internal forecasts based on information available
at the date of approval of these financial statements and
using a variety of scenarios, indicate that the Company
will need to secure further funds, including from issues of
equity, debt or asset sales, or the deferral of liabilities, in
order to meet its liabilities as they fall due in the next 12
months. The timing and amounts will be highly dependent
on the market conditions and in particular on the impact of
COVID-19. In the light of enquiries made, as well as bearing
in mind the proven ability of the Company to raise funds
previously, the Directors’ have a reasonable expectation that
the Group has or will have access to adequate resources
to continue in operational existence for the foreseeable
future, being 12 months to the end of April 2021, and have
therefore adopted the going concern basis of preparation in
the financial statements.
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. The auditors
have made reference to a material uncertainty in relation to
going concern in their audit report.
18 |
WOODBOIS LIMITED | Financial Statements 2019
Independent Auditor’s Report
Independent Auditor’s Report
Opinion
We have audited the group financial statements of
Woodbois Limited for the year ended 31 December 2019
which comprise the Consolidated Company Statement of
Financial Position, the Consolidated Company Statement
of Changes in Equity, the Consolidated Company Statement
of Cash Flows and notes to the financial statements,
including a summary of significant accounting policies.
The financial reporting framework that has been applied
in their preparation is Companies (Guernsey) Law, 2008
and International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
In our opinion, the group financial statements:
• give a true and fair view of the state of the Group’s
affairs as at 31 December 2019 and of its loss for the
year then ended;
• have been properly prepared in accordance with
IFRSs as adopted by the European Union; and
• have been properly 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 in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty relating to going concern
In forming our opinion on the financial statements, which
is not modified, we have considered the adequacy of the
disclosure made in notes to the financial statements
concerning the Group’s ability to continue as a going
concern. With the current global outbreak of COVID-19 there
continues to be far reaching uncertainty over the effect this
may have on the timber industries and other industries
which requires the supply of timber, and therefore on the
revenues and cash flows of the Group. The Group will also
be required to raise funds during period the outcome of
which is uncertain. As noted in the Group’s going concern
policy within the Annual Report, these events or conditions
indicate that a material uncertainty exists that casts doubt
on the Group’s ability to continue as a going concern.
In response to this, the scope of our audit work on going
concern was increased. We carried out the following
additional audit procedures:
• We obtained management’s forecast cash flows
covering the period from the date of signing to 31
December 2021. We assessed the assumptions
within
revenue
forecast with
generation, capital funding and cash flows.
regards
the
to
• We challenged the Board of Directors in respect
of the assumptions used in their going concern
assessment and stress tested the potential impact
of COVID-19 to determine the magnitude of decline
in revenue and cash flow that would give rise to
the elimination of the cash headroom, use of the
additional borrowing facilities available and the
possible breach of financial covenants.
• We reviewed and challenged 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.
• We performed sensitivity analysis on management’s
forecast cash flows.
• We agreed available borrowing facilities to underlying
agreements and the extent to which additional
facilities could be utilised and funds raised from
other sources.
• We have assessed the adequacy of COVID-19
disclosures within the Annual Report and Accounts.
We draw attention to the going concern policy which lays
out the Group’s plans to both prepare for and mitigate the
effect of the current outbreak. Our opinion is not modified
in respect of this matter.
Our application of materiality
Materiality is a key concept in the context of an audit. In
providing an opinion on whether the financial statements
provide a ‘true and fair’ view, we are providing an opinion on
whether the financial statements as a whole are free from
material misstatement whether due to fraud or error.
Materiality is an expression of the relative significance of a
particular matter in the context of the financial statements
| 19
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 ten components
were considered to be significant due to identified risk and
size. These components have been subject to full scope
audits by component auditors and reviewed by us. Two
components were not subject to full scope audits and
we performed specific audit procedures due to the risk
identified with the sale of these entities in the year.
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
stage 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.
as a whole. An item, either individually or in aggregate,
is considered material if omitting it or misstating it could
reasonably be expected to influence decisions that users
make on the basis of an entity’s financial statements.
Materiality has both quantitative and qualitative
characteristics. It depends on the size or nature of the
item or error judged in the particular circumstances of its
omission or misstatement.
We used 7.5% adjusted loss before tax as a basis for
determining planning materiality. We have determined our
Overall Financial Statement Materiality to be US$460,000.
The adjusted loss before tax is calculated by removing all
items deemed to be outside the normal course of business,
such as the contingent acquisition expense as this is an
area which involves management estimation.
We consider adjusted loss before tax to be the performance
measure used by shareholders as Woodbois Limited is a
trading entity and its profit-making ability is a significant
point of interest for investors.
We set performance materiality at 60% of Overall Financial
Statement Materiality to reflect the risk associated with
the judgemental and key areas of management estimation
within the financial statements. We apply the concept of
materiality both in planning and performing our audit, and
in evaluating the effect of misstatements. At the planning
stage, materiality
is used to determine the financial
statement areas that are included within the scope of our
audit and the extent of sample sizes during the audit. No
significant changes have come to light through the audit
fieldwork which has caused us to revise our materiality
figure.
An overview of the scope of our 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 by the
Directors and considered future events that are inherently
uncertain. We also addressed the risk of management
override of internal controls, including among other matters
consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
regional offices maintain
Our Group audit scope focused on the principal area of
operation, being Africa. The head office in South Africa
oversees the accounting function of the Group and its
the
subsidiaries, however,
accounting records for many of the components. The
components are based in Mauritius, Gabon, Mozambique,
Denmark and London therefore, given the nature of the
accounting function, our audit was conducted by local
component auditors within Gabon, Mozambique, Denmark
and Mauritius.
20 |
WOODBOIS LIMITED | Financial Statements 2019 Independent Auditor’s Report
Key Audit Matter
How the scope of our audit responded
to the key audit matter
Valuation of Biological assets
The Group’s principal non-current assets relate to standing
timber within the forestry concessions. These biological
assets represent the most material balance in financial
statements at US$194.7m as at 31 December 2019.
Management assess at each reporting date the fair value of
the standing timber on a discounted cash flow basis which
involves significant Management judgement and estimates.
There is a risk that the biological assets are misstated due to
complex accounting treatment required by IAS 41 Biological
assets and a high degree of estimation and judgement
required by management in their valuation.
We therefore considered the valuation of biological assets
and the related disclosures to be a key audit matter.
Our work included:
• Reviewing the biological asset valuation models
prepared by management for accuracy and
challenging the estimates/assumptions made in the
inputs;
• Reviewing the discount rate used and challenging the
key inputs involved in arriving at the rate applied;
• Obtaining third party valuations and assessing their
competence and independence in order to place
reliance on management’s expert as well as ensuring
accuracy and reasonableness of the inputs used;
• Reviewing the sensitivity analysis of the key inputs,
together with a combination of sensitivities of such
inputs.
• Considering if there are any indications of
impairment; and
• Reviewing the disclosures in the financial statements
to ensure they are in accordance with IAS 41,
particularly the disclosures of key estimates and
assumptions which impact the fair values, and the
sensitivity analysis.
Revenue recognition
Revenue is a material figure within the financial statements at
US$19.459m and the Group has seen an increase in revenues
within the timber market since the acquisition of WoodBois
International ApS
Given the increase in revenues since the prior year and the
expected growth year on year, revenue is considered to be a
key balance within the financial statements and a key focus
of the shareholders.
We therefore consider revenue recognition a key audit matter.
Our work included:
• Gaining an understanding of the internal control
environment in operation for the significant revenue
streams and undertaking a walk-through to ensure
that the key controls within those systems have been
operating effectively;
• Substantive transactional testing of revenue
recognised in the financial statements across the
different streams to ensure accuracy of revenue;
• Reviewing the key contractual terms and terms of
business with customers to identify the material
performance obligations;
• Reviewing post-year end invoices, credit notes and
cash receipts to ensure completeness of income
recorded in the accounting period; and
• Consideration and assessment of the Group’s
application of IFRS 15.
| 21
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. 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. In connection with our audit
of the financial statements, 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
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there
is a material misstatement in the financial statements or a
material misstatement of the other information. 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.
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,
influence the
they could reasonably be expected to
economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the
audit of the financial statements
located on the
Financial Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
is
Matters on which we are required to report by
exception
Use of our report
This report is made solely to the Group’s members, as a
body, in accordance with our engagement letter dated 30
October 2019. Our audit work has been undertaken so that
we might state to the Group’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 Group and the Group’s members as a body, for
our audit work, for this report, or for the opinions we have
formed.
Joseph Archer (Engagement Partner)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
In the light of the knowledge and understanding of the
parent company and its environment obtained in the course
of the audit, we have not identified material misstatements
in the strategic report or the directors’ report.
• We have nothing to report in respect of the following
matters where the Companies (Guernsey) Law, 2008
requires us to report to you if, in our opinion: proper
accounting records have not been kept by the parent
company; or
the financial statements are not in agreement with
the accounting records; or
•
• we have failed to obtain all the information and
explanations which, to the best of our knowledge
and belief, are necessary for the purposes of our
audit.
Responsibilities of Directors
As explained more fully in the statement of directors’
responsibilities, the directors are responsible for the
preparation of the parent company 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
22 |
WOODBOIS LIMITED | Financial Statements 2019
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND TOTAL
COMPREHENSIVE INCOME For the year ended 31 December 2019
WOODBOIS LIMITED | Finan cial Statem ents 2019
Continuing operations
Turnover
Cost of sales
Gross profit
Other income
Gain on fair value of Biological assets
Operating costs
Administrative expenses
Depreciation
Share based payment expense
Operating loss
Contingent acquisition expense
Fair value gain
Gain on disposal of Tanzanian business
Foreign exchange gain
Finance costs
Loss before taxation
Taxation
Loss for the year from continuing operations
Discontinued operations
Loss from discontinued operations, net of tax:
- Owners of the parent
- Non-controlling interests
Loss for the year
Loss attributable to:
- Owners of the parent
- Non-controlling interests
Other comprehensive income:
Gain on buy-out of minorities
Currency translation differences, net of tax
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive loss for the year
Total comprehensive (loss) / income attributable to equity shareholders arises
from:
- Continuing operations
- Discontinued operations
Earnings per share from continuing and discontinued operations attributable to
the owners of the parent during the year (cents per share)
Basic earnings per share
From continuing operations (cents)
From discontinued operations (cents)
From (loss) / profit for the year
Notes
2
2
5
11
24
3
26
23
9
6
7
9
8
22
25
25
9
8
The notes on pages 27 to 60 form an integral part of the consolidated financial statements.
2019
$000
19,459
2018
$000
13,448
(16,696)
(11,334)
2,763
110
-
(4,726)
(1,415)
(306)
(231)
(3,805)
(956)
4,602
-
271
(2,009)
(1,897)
(54)
(1,951)
(2,893)
-
(4,844)
(4,844)
-
(4,844)
-
(155)
(4,999)
(4,999)
-
(4,999)
(2,106)
(2,893)
(4,999)
(0.67)
(0.64)
(1.31)
2,114
160
1,611
(5,356)
(2,106)
(474)
(658)
(4,709)
(860)
-
176
263
(444)
(5,574)
(951)
(6,525)
(1,446)
-
(7,971)
(6,736)
(1,235)
(7,971)
14,373
(798)
5,604
6,839
(1,235)
5,604
8,285
(1,446)
6,839
(2.03)
(0.44)
(2.47)
| 23
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WOODBOIS LIMITED | Financial Statements 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2019
WOODBOIS LIMITED | Finan cial Statem ents 2019
ASSETS
NON-CURRENT ASSETS
Consideration receivable
Biological assets
Property, plant and equipment
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Trade and other receivables
Inventory
Cash and cash equivalents
TOTAL CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Consideration payable
Contingent acquisition liability
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Deferred tax
Preference share liability
Convertible bonds – host liability
Contingent acquisition liability
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Share premium
Merger reserve
Preference share capital
Convertible bonds – equity component
Foreign exchange reserve
Share based payment reserve
Retained earnings
EQUITY ATTRIBUTABLE TO THE OWNERS OF THE
PARENT
Non-controlling interests
TOTAL EQUITY
Notes
9
11
10
12
13
14
15
16
22
26
16
7
18
17
26
18
19
20
18
17
24
25
2019
$000
-
194,708
20,323
215,031
6,123
6,409
1,490
14,022
229,053
(4,801)
(6,343)
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(11,144)
(13,545)
(62,655)
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(23,547)
(975)
(100,722)
(111,866)
117,187
6,757
35,130
-
-
1,495
(4,871)
968
77,708
117,187
-
117,187
2018
$000
1,841
194,708
17,081
213,630
5,924
6,738
1,910
14,572
228,202
(5,751)
(5,024)
(5,000)
(1,269)
(17,044)
(5,086)
(62,655)
(13,901)
-
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(81,642)
(98,686)
129,516
5,617
29,954
44,487
14,318
-
(4,716)
1,012
38,844
129,516
-
129,516
The notes on pages 27 to 60 form an integral part of the consolidated financial statements. The financial statements on
pages 23 to 60 were authorised for issue by the Board of Directors on 29 April 2020 and were signed on its behalf.
Paul Dolan
Chairman & Chief Executive Officer
| 25
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CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2019
CASH USED IN OPERATIONS
Loss before taxation – continuing operations
Loss before taxation – discontinued operations
Loss before taxation
Adjustment for:
Depreciation of property, plant and equipment
Fair value adjustment of biological asset
Discount received from supplier
Transaction costs deducted from Convertible bond host liability
Inventory losses
Shares issued in lieu of ITF Interest
Foreign exchange
Non-cash items in discontinued operations
Contingent acquisition expense
Impairment of amounts due on sale of discontinued operations
Fair Value gain
Share based payments
Finance costs
Gain on disposal of Tanzanian assets
Increase in trade and other receivables
(Decrease) / increase in trade and other payables
Decrease / (increase) in inventory
CASH FLOWS FROM OPERATIONS
Finance costs paid
Income taxes paid
CASH FLOWS FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditure on property, plant and equipment
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from receipts / (repayments of) loans and borrowings
Proceeds from ITF
Proceeds from the issue of ordinary shares
CASH FLOWS FROM FINANCING ACTIVITIES
NET (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of year
CASH AND CASH EQUIVALENTS AT END OF YEAR
Net debt reconciliation
Notes
9
10
11
9
26
23
24
6
9
7
10
2019
$000
(1,897)
(2,893)
(4,790)
1,393
-
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(94)
(244)
(335)
(271)
221
956
2,502
(4,602)
231
2,009
-
(838)
(7,247)
817
(10,218)
(331)
(47)
(10,596)
(5,016)
(5,016)
1,271
7,605
6,316
15,192
(420)
1,910
1,490
Borrowings
ITF
Ordinary shares
Preference shares
Convertible Bonds
2018
$000
6,306
3,804
35,571
14,318
-
59,999
Cash flow
Non-cash changes
$000
1,271
7,605
6,316
-
15,192
$000
-
902
-
(14,318)
23,547
10,131
The notes on pages 27 to 60 form an integral part of the consolidated financial statements.
26 |
2018
$000
(5,574)
(1,446)
(7,020)
1,625
(1,611)
-
-
295
-
(263)
-
695
-
-
658
444
(176)
(1,852)
1,708
(1,764)
(7,261)
(257)
(52)
(7,570)
(3,245)
(3,245)
(1,771)
3,676
8,731
10,636
(179)
2,089
1,910
2019
$000
7,577
12,311
41,887
-
23,547
85,322
WOODBOIS LIMITED | Financial Statements 2019 Notes to the Financial Statements
Notes to the Financial
Statements
For the year ended 31 December 2019
1. ACCOUNTING POLICIES
GENERAL INFORMATION
Woodbois Limited (“the Company” or “Woodbois”) is an
AIM-quoted forestry and timber trading company limited
by shares. The Company is incorporated and domiciled
in Guernsey, the Channel Islands, with registered number
52184. Its registered office is Dixcart House, Sir William
Place, St Peter Port, Guernsey, GY1 1GX.
The nature of the Group’s operations and its principal
activities are set out in the Directors’ Report.
The accounting policies set out herein, in pages 27 to 36,
have been consistently applied.
The principal activities and nature of the business are
included on pages 1 to 18.
BASIS OF ACCOUNTING
The consolidated financial statements have been prepared
International Financial Reporting
in accordance with
Standards as adopted by the European Union (“IFRS”),
IFRIC interpretations and those parts of the Companies
(Guernsey) Law 2008 applicable to Companies reporting
under IFRS. The financial statements have been prepared
under the historical cost convention except for biological
assets and certain financial assets and liabilities, which
have been measured at fair value.
FUNCTIONAL AND PRESENTATION
CURRENCY
These consolidated financial statements are presented in
United States Dollar (USD), which is the Group’s functional
currency. All amounts have been rounded to the nearest
thousand, unless otherwise indicated.
BASIS OF CONSOLIDATION
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.
Subsidiaries are entities controlled by the Group. Control
is achieved when the Group is exposed, or has rights, to
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
| 27
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 recognizing 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.
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 2019, the Group held equity interests in
the following undertakings:
Subsidiary
undertakings
Direct investments
Woodbois Services Limited
Woodbois Trading Limited
Argento Limited
Woodbois International Limited
Montara Limited
Woodbois Liberia Inc.
Indirect investments of Argento Limited
Argento Mozambique Limitada
Madeiras SL Limitada
Jardim Zambezia Limitada
Baia Branca Limitada
Ligohna Timber Products Limitada
Montara Forest Lda
Petroforge Mozambique Lda
WoodBois International ApS
WoodGroup ApS
Woodbois Gabon
SCI Yarim
28 |
Proportion held of
Country of
voting rights
incorporation
Nature of
business
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
United Kingdom Shared services
Hong Kong
Financier
Mauritius
Mauritius
Mauritius
Liberia
Holding / treasury company – Forestry
and Trading
Dormant
Dormant
Forestry
Mozambique
Holding company & Forestry
Mozambique
Forestry
Mozambique
Forestry
Mozambique
Forestry
Mozambique
Forestry
Mozambique
Forestry
Mozambique
Forestry
Denmark
Denmark
Gabon
Gabon
Timber Trading
Timber Trading
Forestry
Property holding
WOODBOIS LIMITED | Financial Statements 2019 Notes to the Financial Statements
INTRA-GROUP TRANSACTIONS
All intra-group transactions, balances, and unrealised gains
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.
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
2019. Their adoption has not had any material impact
on the disclosures or on the amounts reported in these
financial statements:
Standards /interpretations
Application
IFRS 16
Leases
Annual Improvements
2015 – 2017 Cycle
Subsidiary
undertakings
Direct investments
Woodbois Services Limited
Woodbois Trading Limited
Argento Limited
Woodbois International Limited
Montara Limited
Woodbois Liberia Inc.
Indirect investments of Argento Limited
Madeiras SL Limitada
Jardim Zambezia Limitada
Baia Branca Limitada
Ligohna Timber Products Limitada
Montara Forest Lda
Petroforge Mozambique Lda
WoodBois International ApS
WoodGroup ApS
Woodbois Gabon
SCI Yarim
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
United Kingdom Shared services
Hong Kong
Financier
Mauritius
Mauritius
Liberia
and Trading
Dormant
Dormant
Forestry
Mozambique
Forestry
Mozambique
Forestry
Mozambique
Forestry
Mozambique
Forestry
Mozambique
Forestry
Mozambique
Forestry
Denmark
Denmark
Gabon
Gabon
Timber Trading
Timber Trading
Forestry
Property holding
Argento Mozambique Limitada
Mozambique
Holding company & Forestry
Proportion held of
Country of
voting rights
incorporation
Nature of
business
IFRIC 23 – interpretation 23
Uncertainty over Income Tax Treatments
IFRS 9 amendments
Prepayment Features with Negative Compensation
IFRS 19 amendments
Plan Amendment, Curtailment or Settlement
IFRS 28 amendments
Long-term Interests in Associates and Joint Ventures
Mauritius
Holding / treasury company – Forestry
The effects of the first year adoption of IFRS 16 has been assessed by management and summarised within the
Leases accounting policy.
The Group has also elected to adopt the following amendment early:
IAS 1 and IAS 8 Amendments
Definition of Material
b) New and amended standards not yet adopted by the Group
Standards /interpretations
Application
Standards /interpretations
Application
IFRS 3 amendments
Business Combinations: Effective 1 January 2020*
*Subject to EU endorsement
There are no IFRS’s or IFRIC interpretations that are not yet effective that would be expected to have a material
impact on the Company or Group.
| 29
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 four separate operational
divisions comprising forestry, trading and head office.
The Directors review the performance of the Group based
on total revenues and costs, for these four divisions and not
by any other segmental reporting.
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:
• Timber and veneer sales are 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,
and is transferred at the earlier of:
» when goods are sold subject to a letter of credit,
on the date that the buyer’s bank approves the
transfer; or
» when goods are prepaid in full by the buyer, based
on the incoterm specified in the contract/invoice;
or
» when the bill of lading is exchanged with the buyer.
•
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).
FOREIGN CURRENCIES
(“the
functional currency”). The
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
functional
operates
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:
UK Pound
Mozambique Metical
Danish Krone
West African CFA franc
At 31 December
Annual average
At 31 December
Annual average
2019
1.31
61.46
6.67
585.68
for 2019
1.28
62.49
6.68
586.78
2018
1.27
60.67
6.52
573.02
for 2018
1.33
59.87
6.232
556.55
30 |
WOODBOIS LIMITED | Financial Statements 2019
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
into the Group’s
overseas operations are translated
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.
LEASES
The Group adopted IFRS 16 using the modified retrospective
method of adoption with the date of initial application
of 1 January 2019. Under this method, the standard
is applied retrospectively with the cumulative effect of
initially applying the standard recognized at the date of
initial application. The Group elected to use the transition
practical expedient allowing the standard to be applied
only to contracts that were previously identified as leases
applying IAS 17 and IFRIC 4 at the date of initial application.
The Group also elected to use the recognition exemptions
for lease contracts that, at the commencement date, have
a remaining lease term of 12 months or less and do not
contain a purchase option (“short‐term leases”), and lease
contracts for which the underlying asset is of low value
(“low‐value assets”).
a)
Nature of the effect of adoption of IFRS 16
Under the adoption of IFRS 16, the Group applied a single
recognition and measurement approach for all leases,
except for short-term leases and leases of low-value assets.
The standard provides specific transition requirements and
practical expedients, which have been applied by the Group.
Lease previously classified as finance leases
The Group did not change the initial carrying amounts
of recognised assets and liabilities as the date of initial
Notes to the Financial Statements
application for leases previously classified as finance
leases (i.e., the right-of-use assets and lease liabilities equal
the leased assets and liabilities recognized under IAS 17).
The requirements of IFRS 16 were applied to these leases
from 1 January 2019.
Leases previously classified as operating leases
The Group leases various offices. Rental contracts are
typically for fixed periods of one month to six months with
no right to purchase. Based on the nature of such leases
and the qualitive impact on the Group, these leases have
not been recognised as right-of-use assets.
The Board has evaluated the effect of adopting IFRS 16 on
the Group’s consolidated balance sheet and consolidated
statement of comprehensive income (loss) as at 1 January
2019 and has concluded that the impact is not material.
b)
Summary of new accounting policies
Set out below are the new accounting policies of the Group
upon adoption of IFRS 16:
Short‐term leases and leases of low‐value assets
lease recognition
The Group applies the short‐term
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.
DISCONTINUED OPERATIONS
A discontinued operation is a component of the Group’s
business, the operations and cash flows of which can be
clearly distinguished from the rest of the Group and which:
• represents a separate major line of business or
•
•
geographic area of operations;
is part of a single co-ordinated plan to dispose of a
separate major line of business or geographic area of
operations; or
is a subsidiary acquired exclusively with a view to re-
sale.
Classification as a discontinued operation occurs at the
earlier of disposal or when the operation meets the criteria
to be classified as held-for-sale.
When an operation is classified as a discontinued operation,
the comparative statement of profit or loss and OCI is re-
presented as if the operation had been discontinued from
the start of the comparative year.
| 31
PROPERTY, PLANT AND EQUIPMENT
Land and Buildings are recognised at fair value based
on periodic, but at least triennial, valuations by external
independent valuers. Any revaluation gains are recognised
in other comprehensive income. Revaluation losses are
recognised with other comprehensive income, against
any pre-existing gains, with anything over and above pre-
existing gains being recognised as an expense in profit and
loss.
All other Property, plant and equipment is stated at
historical cost less subsequent accumulated depreciation
and any accumulated impairment losses. If significant
parts of property, plant and equipment have different useful
lives, then they are accounted for as separate items (major
components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant
and equipment is recognised in profit or loss.
Subsequent expenditure is capitalised only if it is probable
that the future economic benefits associated with the
expenditure will flow to the Group.
Leased assets are depreciated over the shorter of the lease
term and their useful lives unless it is reasonably certain
that the group will obtain ownership by the end of the lease
term.
Land has an indefinite useful life and therefore is not
depreciated.
Depreciation is calculated on a straight-line basis at rates
calculated to write each asset down to its estimated
residual value, which in most cases is assumed to be zero,
evenly over its expected useful life, as follows that the
group will obtain ownership by the end of the lease term.
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.
Land has an indefinite useful life and therefore is not
depreciated.
BIOLOGICAL ASSETS
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
Fixtures and IT equipment
Plant and equipment
over 3 years
over 3 years
over 2-5 years
Depreciation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
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 20 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
32 |
WOODBOIS LIMITED | Financial Statements 2019 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.
Notes to the Financial Statements
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). See Note 16 for further details.
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.
(b) Recognition
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
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
From 1 January 2018, the Group assesses, on a forward-
losses associated
looking basis, the expected credit
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.
| 33
INVENTORIES
PROVISIONS
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
employees’ services provided up to the reporting date. The
accruals have been calculated at undiscounted amounts
based on expected wage and salary rates.
A provision is recognised if, as a result of a past event,
the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an
outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money
and the risks specific to the liability. The unwinding of
discount is recognised as a finance cost.
A provision for onerous contracts is recognised when
the expected benefits to be derived by the Group from a
contract are lower than the unavoidable cost of meeting its
obligations under the contract. The provision is measured
at the present value of the lower of the expected cost of
terminating the contract and the expected net cost of
continuing with that contract.
In accordance with the Group’s environment policy
and applicable legal requirements, a provision for site
restoration in respect of contaminated land, and the related
expense, is recognised when the land is contaminated.
TAXATION
Income tax expense comprises current and deferred tax.
It is recognised in profit or loss except to the extent that
it relates to a business combination, or items recognised
directly in equity or in OCI.
SHARE-BASED PAYMENT ARRANGEMENTS
CURRENT TAX
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 modified Black Scholes valuation model for options,
taking into account 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.
Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year and
any adjustment to the tax payable or receivable in respect
of previous years. The amount of current tax payable or
receivable is the best estimate of the tax amount expected
to be paid or received that reflects uncertainty related to
income taxes, if any. It is measured using tax rates enacted
or substantively enacted at the reporting date. Current tax
also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain
criteria are met.
DEFERRED TAX
is recognised
Deferred tax
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
34 |
WOODBOIS LIMITED | Financial Statements 2019
• 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
Notes to the Financial Statements
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.
Diluted earnings per share adjusts the figures
(ii)
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 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 financial statements.
The assessment has been made of the Group’s prospects,
which have been included in the financial budget, and from
managing working capital. Consideration has been given
inter alia, to the current stage of the Group’s life cycle, its
losses and cash outflows, the expected timing of revenues
and the ability of the Directors to raise further funds either
through debt, equity, or asset sales, or deferral of liabilities,
their current assessment of financial and operational risk
and their best estimate of the impact of COVID-19 on
operations and the material uncertainties arising therefrom.
In January 2020 the Group’s forecast for the financial
year showed a movement into positive operational cash
flow around mid-year, having taken account of the effects
of the cash flow enhancement measures announced.
However, on 27 March 2020 it announced that the rapid
pace of developments in connection with COVID-19 had
caused such fundamental levels of uncertainty that, in
common with many other companies, the Board withdrew
any guidance on the financial outcome for 2020 until its
implications could be assessed reliably.
| 35
2. SEGMENTAL REPORTING
Segmental information is presented on the basis of the
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 and timber
trading. These are the Group’s primary reporting segments,
operating in Gabon, Mozambique, Denmark and head office
operating from Mauritius and UK.
As on 31 December 2019 sales made to one customer
during the year accounted for 12% (2018:12%) of the total
turnover. Sales made to a second customer during the year
accounted for 11% (2018:11%) of the total turnover.
The Group’s Chairman and Chief Executive Officer reviews
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.
Current internal forecasts based on information available
at the date of the approval of these financial statements
and using a variety of scenarios indicate that the Company
will need to secure further funds, including from issuing
equity, debt or asset sales, or the deferral of liabilities, in
order to meet its liabilities as they fall due in the next 12
months. In the light of enquiries made, as well as bearing
in mind the proven ability of the Company to raise funds
previously, the Directors have a reasonable expectation that
the Group has or will have access to adequate resources to
continue in operational existence for the foreseeable future
and therefore have adopted the going concern basis of
preparation in the financial statements.
The auditors make reference to a material uncertainty in
relation to going concern within the audit report.
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 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.
about
assumptions
Information
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:
and
• Residual values and useful lives of property, plant
and equipment: refer to note 10
• Fair value of biological assets: refer to note 11
• Provision for doubtful debts: Refer to note 14
• Convertible bond liability: refer to note 17
• Fair value of assets on business combination: refer
•
to note 23
Impairment– consideration receivable: refer to note
24
• Share Based Payments: refer to note 25
• The impact of COVID-19; refer to note 28 and Going
Concern above.
36 |
WOODBOIS LIMITED | Financial Statements 2019 Notes to the Financial Statements
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:
INCOME STATEMENT
Turnover
Cost of Sales
Gross profit
Other income
Operating costs
Administrative expenses
Depreciation
Share based payment expense
Foreign exchange (loss) / gain
Contingent acquisition expense
Fair value gain
Segment operating profit / (loss)
Finance costs
Loss before taxation
Taxation
Loss for the year from Continuing Operations
NET ASSETS
Assets:
Liabilities:
Deferred tax liability
Net assets
OTHER SEGMENT ITEMS
Capital expenditure:
Biological assets
Property, plant and equipment
Forestry
$000
Trading
head office costs
$000
$000
Unallocated
6,850
(5,237)
1,613
75
(3,396)
(22)
(230)
(98)
6
(478)
-
(2,530)
(913)
(3,443)
(58)
(3,501)
216,360
(3,048)
(62,655)
150,657
194,708
20,253
12,609
(11,459)
1,150
21
(1,330)
(391)
(63)
(124)
267
(478)
-
(948)
(1,088)
(2,036)
4
(2,032)
12,380
(22,557)
-
(10,177)
-
48
-
-
-
14
-
(1,002)
(13)
(9)
(2)
-
4,602
3,590
(8)
3,582
-
3,582
313
(23,606)
-
(23,293)
-
22
Total
$000
19,459
(16,696)
2,763
110
(4,726)
(1,415)
(306)
(231)
271
(956)
4,602
112
(2,009)
(1,897)
(54)
(1,951)
229,053
(49,211)
(62,655)
117,187
194,708
20,323
| 37
The following table shows the segment analysis of the Group’s loss before tax for the year and net assets at 31
December 2018. All amounts are disclosed after taking into account any intra-segment and intra-group eliminations:
Forestry
$000
5,579
(4,397)
1,182
5
(3,443)
-
(408)
(422)
(38)
-
-
1,611
(1,513)
-
(1,513)
(585)
(2,098)
159,944
(16,606)
(62,655)
80,683
194,708
16,958
Trading
head office costs
Unallocated
$000
7,869
(6,937)
932
-
(1,330)
(290)
(66)
(151)
(411)
(860)
-
-
(2,176)
(201)
(2,377)
(366)
(2,743)
56,572
(28,532)
-
28,040
-
113
$000
-
-
-
155
(583)
(1,816)
-
(85)
712
-
176
-
(1,441)
(243)
(1,684)
-
(1,684)
11,686
9,107
-
20,793
-
10
2019
$000
1,393
3,508
231
69
-
(244)
53
76
Total
$000
13,448
(11,334)
2,114
160
(5,356)
(2,106)
(474)
(658)
263
(860)
176
1,611
(5,130)
(444)
(5,574)
(951)
(6,525)
228,202
(36,031)
(62,655)
129,516
194,708
17,081
2018
$000
1,625
4,987
712
73
(1,611)
295
50
65
INCOME STATEMENT
Turnover
Cost of Sales
Gross profit
Other income
Operating costs
Administrative expenses
Depreciation
Share based payment expense
Foreign exchange loss / (gain)
Contingent acquisition expense
Gain on disposal of Tanzanian business
Gain on fair value of Biological assets
Segment operating loss
Finance costs
Loss before taxation
Taxation
Loss for the year from Continuing Operations
NET ASSETS
Assets:
Liabilities:
Deferred tax liability
Net assets
OTHER SEGMENT ITEMS
Capital expenditure
Biological assets
Property, plant and equipment
3. OPERATING LOSS
Operating loss is stated after charging/(crediting):
Depreciation of property, plant and equipment
Staff costs (see note 4)
Share based payment reserve expense (see note 26)
Operating lease costs
Gain on fair value of Biological assets (see note 13)
Inventory provisions
Auditor’s remuneration:
Audit services
– fees payable to the Company auditor for the audit of the consolidated accounts
Fees payable to associates of the Company auditor
– auditing the accounts of subsidiaries pursuant to legislation
38 |
WOODBOIS LIMITED | Financial Statements 2019 Notes to the Financial Statements
4. EMPLOYEE INFORMATION
The average monthly number of persons (including Directors) employed by the Group
during the year was:
Administration and management
Agriculture
Forestry
Trading
The aggregate remuneration comprised:
Wages and salaries
Social security costs
Share based payments
Directors’ remuneration included in the aggregate remuneration above comprised:
Emoluments for qualifying services
2019
Number
4
1
257
10
272
2019
$000
3,239
38
231
3,508
2019
$000
1,229
2018
Number
4
247
192
6
449
2018
$000
4,236
39
712
4,987
2018
$000
1,513
Included above are emoluments of $243,000 (2018: $252,000) in respect of the highest paid Director. Deferred acquisition
payments arising from the acquisition of Woodbois International ApS are excluded in both periods. Full details of directors’
remuneration are included in the Directors’ Report.
Pension contributions of $17,894 (2018: $17,769) were made on behalf of the Directors and other staff members.
5. OTHER INCOME
Bad debt recovered
Discount received
Administrative fees
Other
2019
$000
3
74
22
11
110
2018
$000
154
-
-
6
160
| 39
6. FINANCE COSTS
Bank interest
ITF interest
Interest accrued on convertible bonds
7. TAXATION
CURRENT TAX:
Corporation tax on profit for the year
DEFERRED TAX:
Origination and reversal of temporary differences
TAX ON PROFIT / (LOSS) ON ORDINARY ACTIVITIES
Group
Loss on ordinary activities before tax
Loss on ordinary activities multiplied by the average rate of corporation tax of 20% (2018: 22%)
Effects of:
Losses not recognised for deferred tax
Losses recognised for deferred tax
Fair value gain
Differences in overseas tax rates
Loss allowance
Gain on disposal of Tanzanian business
Share based payment expense
Unutilised losses from prior years
Non-deductible expenses
Effect of movement in fair value of biological assets
GROUP TAX CREDIT FOR THE YEAR
2019
$000
335
1,197
477
2,009
2019
$000
(79)
(872)
(951)
$000
(4,790)
(958)
955
-
(920)
156
(4)
-
46
671
-
(54)
2018
$000
202
242
-
444
2018
$000
-
12,173
12,173
$000
(6,872)
(1,512)
853
99
-
-
18
(39)
157
-
-
(527)
(951)
The prevailing tax rates of the operations of the Group range between 3% and 32%. Therefore, a rate of 20% has been used as it
best represents the weighted average tax rate experienced by the Group. The Group has estimated losses of $17.6 million (2018:
$11.2 million) available for carry forward against future taxable profits. Tax losses utilized during the year related principally to
profits realised by subsidiaries in certain jurisdictions and tax gains realised on liquidation of various subsidiaries. No deferred
tax assets have been recognised in respect of losses due to the unpredictability of future taxable profit. All unused tax losses
may be carried forward indefinitely.
40 |
WOODBOIS LIMITED | Financial Statements 2019
The movement in the year in the Group’s recognised net deferred tax position was as follows:
Notes to the Financial Statements
Deferred tax liabilities
At 1 January
Increase in deferred tax liability
Decrease in deferred tax asset
At 31 December
Deferred tax reconciliation
Deferred tax assets / liabilities
Deferred tax liability on the fair value adjustment of Biological Assets
Deferred tax liability on the fair value adjustment on property, plant and equipment
At 31 December
8. EARNINGS PER SHARE
2019
$000
62,655
-
-
62,655
2019
$000
(60,601)
(2,054)
(62,655)
2018
$000
61,728
527
400
62,655
2018
$000
(60,601)
(2,054)
(62,655)
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average
number of ordinary shares in issue during the year excluding own shares held jointly by the Woodbois Employee Share Trust,
“The Trust”, and certain employees.
There is no diluted earnings per share due to the Group being in a loss-making position in the period and the prior period.
Loss from continuing operations attributable to owners of the parent
Loss from discontinued operations attributable to owners of the parent
Total loss attributable to owners of the parent
Weighted average number of ordinary shares
Weighted average number of ordinary shares in issue
Weighted average number of ordinary shares used in calculating earnings per share
Earnings per share from continuing operations
Basic (cents)
Earnings per share from discontinued operations
Basic (cents)
2019
$000
(3,005)
(2,893)
(5,898)
450,019,220
450,019,220
(0.67)
(0.64)
2018
$000
(6,603)
(1,446)
(8,049)
326,021,863
326,021,863
(2.03)
(0.44)
| 41
9. DISCONTINUED OPERATIONS
During the previous financial year, the Group announced its intention to dispose of its Tanzanian assets. The agricultural
operation has been accounted for as a discontinued operation from 31 October 2018.
At 31 December 2018 the Group disposed of the agricultural business and assets in Tanzania, namely Magole Agriculture
Limited, Milama Processing Company Limited, Magole Land Limited and Wami Agriculture Co. Limited. Mama Jo’s Fresh
Limited was deregistered on 21 July 2018.
Results of disposal Group:
Turnover
Cost of sales
Gross profit / (loss)
Other income
Operating costs
Administrative expenses
Share based payments
Impairment of amounts due on sale of Discontinued Operations
Foreign exchange gain / (loss)
Loss before tax
Taxation
Loss after tax
Net cash inflows from operating activities
Net cash inflows from investing activities
Net cash outflows from financing activities
Net decrease in cash used in Discontinued Operations
2019
$000
-
79
79
-
(167)
(82)
-
(2,502)
(221)
(2,893)
-
(2,893)
2019
$000
87
-
(90)
(3)
2018
$000
109
(931)
(822)
116
(533)
(146)
(54)
-
(7)
(1,446)
-
(1,446)
2018
$000
575
2
(760)
(183)
The Group continued to account for non-cancellable leases amounting to $12,945 relating to African Home Stores business,
which was discontinued in 2016. This lease expired as at 30 November 2019.
The following table summarises the recognised amounts of assets disposed measured at fair value:
Fixed Assets
Inventory
Total identifiable assets disposed
Cash flows on disposal
Consideration – cash
Consideration – buyer assumed loan
Total consideration
Gain on disposal
2019
$000
-
-
-
-
-
-
-
2018
$000
2,109
215
2,324
(2,015)
(485)
(2,500)
176
The cash consideration was payable by the buyer in 12 quarterly instalments. The first instalment of $250,000 was payable on
30 April 2019. The 11 subsequent instalments shall be equal amounts of $160,455.
As at 31 December 2019, the cash consideration has not been received and whilst the Group remains in discussions with the
purchaser and reserves all its legal rights it has been deemed prudent to fully impair this amount.
The non-cash consideration relates to a loan amounting to $484,902 which was assumed by the buyer.
Total assets and liabilities held by the Group at the year-end in relation to the discontinued operations amounted to $49,000
(2018 - $195,000) and $9,000 (2018 - $306,000) respectively.
42 |
WOODBOIS LIMITED | Financial Statements 2019 Notes to the Financial Statements
10. PROPERTY, PLANT AND EQUIPMENT
Land & buildings
Motor
Plant & equipment
Fixtures & IT
COST
AT 1 JANUARY 2018
Additions
Disposal of subsidiary
Disposals (other)
EFFECTS OF FOREIGN EXCHANGE
AT 31 DECEMBER 2018
Additions
Reclassification
Disposals
EFFECTS OF FOREIGN EXCHANGE
AT 31 DECEMBER 2019
DEPRECIATION
AT 1 JANUARY 2018
Charge for the year
DISPOSAL OF SUBSIDIARY
Disposals (other)
Effects of foreign exchange
AT 31 DECEMBER 2018
Charge for the year
DISPOSALS
Effects of foreign exchange
AT 31 DECEMBER 2019
NET BOOK VALUE
AT 31 DECEMBER 2019
AT 31 DECEMBER 2018
$000
9,405
1,066
(1,180)
-
(502)
8,789
-
(337)
-
(171)
8,281
208
144
(78)
-
87
361
47
-
(337)
71
8,210
8,428
vehicles
$000
2,505
1,116
(65)
(63)
(260)
3,233
1,097
-
(13)
(43)
4,274
205
524
(22)
(20)
(167)
520
555
(7)
55
1,123
3,151
2,713
$000
7,488
1,619
(1,081)
(116)
(1,926)
5,984
3,897
337
(47)
215
10,386
1,502
935
(124)
-
(2,165)
148
763
(18)
620
1,513
8,873
5,836
equipment
$000
272
6
(10)
(131)
(2)
135
22
-
(16)
(1)
140
14
22
(3)
-
(2)
31
28
(8)
-
51
89
104
Total
$000
19,670
3,807
(2,336)
(310)
(2,690)
18,141
5,016
-
(76)
-
23,081
1,929
1,625
(227)
(20)
(2,247)
1,060
1,393
(33)
338
2,758
20,323
17,081
Motor vehicles having a net book value of USD 262,732 (2018: USD 397,583) are pledged as security on car loans (see also note 16).
On acquisition of an asset, the estimated useful life is determined. The residual values for the majority of assets are assumed to be
zero.
| 43
11. BIOLOGICAL ASSETS
Standing timber
Carrying value at beginning of year
Increases due to purchases
Gains / (losses) arising from changes in fair value
Carrying value at end of year
2019
$000
194,708
-
-
194,708
2018
$000
192,501
596
1,611
194,708
The methods and assumptions used in determining the fair
value of standing timber within the forestry concessions
held has been based on IAS 41 Agriculture which uses
discounted cash flow models and which require a number
of significant judgements to be made by the Directors in
respect of sales price, operational cost, discount rates,
legislative rulings and operating effectiveness. Following
the fair value assessment in 2019 the value has not
materially changed.
The discounted cash flow models cover the concession
areas in Mozambique and Gabon to which the group has
secured the rights. Management prepare separate models
for each country.
Harvesting levels are regulated by the Annual Permitted
Cut (“APC”) (total m3 per species) set in each management
plan and approved at federal and provincial government
level and can be reviewed and increased periodically, while
continued sustainability is ensured. The level of assumed
APC varies between 89,525m3 and 200,000m3 and at a
maximum represents 100% of the APC. This is based on
the current APC which may be subject to change depending
on legislative changes both with regards to the size of the
area and species. Such changes may impact the carrying
value of the biological assets held.
discount rates have been calculated using a weighted
average cost of capital (“WACC”) methodology. Our
comparable company base is made up of Africa-focused
and global forestry companies which management
consider would be categorized in the same sector as
Woodbois. Relevant country and equity risk premiums
have been used for Gabon and Mozambique. Management
have determined that, the discount rates are in line with the
overall industry consensus for timberland assets within
Africa.
The Group’s main class of biological assets comprise of
standing timber held through forestry concessions of
between 20 and 50 years. Biological assets are carried at
fair value less estimated costs to sell.
The brought forward biological assets are located in Gabon
in Mouila and Northern Mozambique in the states of Cabo
Delgado, Nyassa and Zambezia and are managed from a
central point in Mouila and Nampula.
Fair value has been determined internally by discounting
a 20-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 valuation models assume pre-tax discount rates
between 10% and 12% depending on geography. The
The following sensitivity analysis shows the effect of an
increase or decrease in significant assumptions used:
Impact on fair value of biological asset
Effect of increase in discount rate by 1%
Effect of decrease in discount rate by 1%
Effect of 10% increase in volume of APC
Effect of 10% decrease in volume of APC
Effect of 10% increase in sales price
Effect of 10% decrease in sales price
44 |
2019
$000
(15,501)
18,636
18,423
(18,423)
38,219
(38,219)
2018
$000
(15,501)
18,636
18,730
(18,730)
38,979
(38,979)
WOODBOIS LIMITED | Financial Statements 2019 12. TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Deposits
Consideration due – sale of Tanzanian business – current portion (note 10)
Current tax receivable
VAT receivable
Prepayments
Notes to the Financial Statements
2019
$000
2,229
213
40
-
20
445
3,176
6,123
2018
$000
2,874
824
35
659
-
242
1,290
5,924
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 Note 16 for the Group’s impairment policy.
13. INVENTORY
Timber and veneer
Stock in transit
2019
$000
3,879
2,530
6,409
2018
$000
5,216
1,522
6,738
Write-back of provisions for net realisable value amounted to $244,000 (2018 – write downs of $295,000). These were
recognised as income during the year ended 31 December 2019 and included in ‘cost of sales’ in profit or loss.
14. FINANCIAL INSTRUMENTS
CAPITAL RISK MANAGEMENT
The Company manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders. The overall strategy of the Company and Group is to minimise costs and liquidity risk.
The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued share capital,
share premium, reserves (merger reserve, foreign exchange reserve and share based payment reserve) and retained earnings as
disclosed in the Consolidated Statement of Changes in Equity.
The Group is exposed to a number of risks through its normal operations, the most significant of which are interest, credit,
foreign exchange and liquidity risks. The management of these risks is vested in the Board of Directors.
The sensitivity has been prepared assuming the liability outstanding at the balance sheet date was outstanding for the whole
period. In all cases presented, a negative number in profit and loss represents an increase in finance expense / decrease in
interest income.
| 45
CATEGORISATION OF FINANCIAL INSTRUMENTS
2019
Financial assets/(liabilities)
Financial assets at
Financial assets at
Financial liabilities at
Financial liabilities
Total
amortised cost
fair value
amortised cost
at fair value
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Borrowings
Convertible bond liability
Contingent acquisition liability
2018
$000
6,123
1,490
-
-
-
-
7,613
$000
-
-
-
-
-
-
-
-
-
(4,801)
(19,888)
(23,547)
(975)
(49,211)
$000
6,123
1,490
(4,801)
(19,888)
(23,547)
(975)
(41,598)
-
-
-
-
-
-
-
Financial assets/(liabilities)
Financial assets at
Financial assets at
Financial liabilities at
Financial liabilities
Total
amortised cost
fair value
amortised cost
at fair value
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Borrowings
Convertible bond liability
Contingent acquisition liability
$000
5,924
1,910
-
-
-
-
7,834
$000
-
-
-
-
-
-
-
-
-
(5,571)
(10,110)
(13,901)
(1,269)
(30,851)
$000
5,924
1,910
(5,751)
(10,110)
(13,901)
(1,269)
(23,017)
-
-
-
-
-
-
-
At the year end, included in property, plant and equipment,
there is land and buildings held at fair value of $7.2m
(2018: $7.2m) measured in accordance with level 1 and
Biological Assets of $194.7m (2018: $194.7m) measured
in accordance with level 2 of the fair value hierarchy.
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
46 |
WOODBOIS LIMITED | Financial Statements 2019 Notes to the Financial Statements
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 majority of the Company’s debt is based on fixed
interest rates with no link or exposure to movements in
LIBOR. The trade finance facility that the Company raised
over the course of 2018 and 2019 is priced below all of the
quotes received for a trade finance facility from institutions
active in Africa.
Woodbois also has the option to wind up the trade finance
facility within a 4-month timeframe, after an initial 12-month
period should more attractive financing rates be secured.
The risk is limited to the reduction of interest received on
cash surpluses held and the increase in the interest on
borrowings.
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.
+ 20 bp increase in interest rates
+ 50 bp increase in interest rates
+ 100 bp increase in interest rates
2019
$000
(48)
(123)
(248)
The table above is prepared on the basis of an increase in rates. A decrease in rates would have the opposite effect.
GROUP
Cash and cash equivalents
Borrowings
Preference share liability
Convertible bond liability
Total
2019
Fixed
rate
$000
-
(19,888)
-
(23,547)
(43,435)
2018
Fixed
rate
$000
-
(10,110)
(13,901)
-
(24,011)
2019
Floating
rate
$000
1,490
-
-
2018
Floating
rate
$000
1,910
-
-
1,490
1,910
2019
Total
$000
1,490
(19,888)
-
(23,547)
(41,945)
2018
$000
(20)
(51)
(101)
2018
Total
$000
1,910
(10,110)
(13,901)
-
(22,101)
The impact of a 10% increase/decrease in the average base rates would be $1 million (2017: $0.7 million) on total cash and cash
equivalents balances, borrowings and on equity.
MANAGEMENT OF CREDIT RISK
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to
meet its contractual obligations and arises principally from
the Group’s receivables from customers and investments in
debt securities.
The carrying amount of financial assets represents the
maximum credit exposure.
The principal financial assets of the Company and Group are
bank balances and receivables. The Group deposits surplus
liquid funds with counterparty banks that have high credit
ratings. Cash is sometimes placed with certain institutions
in support of trading positions. The Group deposits such
funds with large well-known institutions and the Directors
consider the credit risk to be minimal.
| 47
The Group’s maximum exposure to credit by class of individual financial instrument
is shown in the table below
2019
Carrying Value
2019
Maximum Exposure
2018
Carrying Value
2018
Maximum Exposure
$000
1,490
6,407
7,897
$000
1,490
6,407
7,897
$000
1,910
3,975
5,885
$000
1,910
3,975
5,885
Cash and cash equivalents
Trade and other receivables
Total
Trade receivables
that
is unconditional, unless
Trade receivables are recognised initially at the amount
of consideration
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
2019 or 1 January 2020 respectively and the corresponding
historical credit losses experienced within this period.
forward-looking
The historical loss rates are adjusted to reflect current
and
information on macroeconomic
factors affecting the ability of the customers to settle the
receivables. The group has identified the GDP, COVID-19
and the unemployment rate of the countries in which it sells
its goods to be the most relevant factors, and accordingly
adjusts the historical loss rates based on expected changes
in these factors.
On that basis, the loss allowance as at 31 December 2019
and 31 December 2018 were determined as follows for
both trade receivables and contract assets:
31 December 2019
Expected loss rate
Gross carrying amount – trade receivables
Loss allowance
31 December 2018
Expected loss rate
Gross carrying amount – trade receivables
Loss allowance
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
12.28%
490
(60)
1.96%
2,197
(43)
0%
74
-
4.86%
803
(39)
0%
118
-
0%
89
-
0%
582
-
0%
(43)
-
0%
203
-
0%
203
-
2.70%
3,249
(60)
2.5%
3,249
(82)
The closing loss allowances for trade receivables and contract assets as at 31 December reconcile to the opening loss
allowances as follows:
Opening loss allowance at 1 January
Increase in loss allowance recognised in profit / (loss) during the year
Receivables written off during the year as uncollectible
Closing loss allowance at 31 December
48 |
2019
$000
82
1
(23)
60
2018
$000
-
82
-
82
WOODBOIS LIMITED | Financial Statements 2019 Notes to the Financial Statements
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:
Cash and cash equivalents
GBP
EUR
DKK
CFA
MUR
MZN
HKD
USD
Total
2019
$000
5
1,340
4
104
1
33
-
3
1,490
2018
$000
55
27
-
59
-
16
-
1,753
1,910
The table below summarises the impact of a 10% increase/decrease in the relevant foreign exchange rates versus the US Dollar
rate, on the Group’s pre-tax profit for the year and on equity:
2019
Income Statement
2018
Income Statement
IMPACT OF 10% RATE CHANGE
Cash and cash equivalents
$000
104
$000
9
2019
Equity
$000
104
2018
Equity
$000
9
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.
Cash at bank
2019
$000
1,490
1,490
2018
$000
1,910
1,910
| 49
CONTRACTUAL MATURITY ANALYSIS
The Group has assessed the contractual maturity analysis as follows:
The Group has assessed the contractual maturity analysis as follows:
2019
0-3 months
3-12 months
Assets by contractual maturity
Trade and other receivables
Cash and cash equivalents
Liabilities by contractual maturity
Trade and other payables
Borrowings
Convertible bond liability
Contingent acquisition liability
Net liabilities by contractual maturity
$000
1,739
1,490
3,229
$000
4,384
-
4,384
(4,894)
(185)
-
-
-
(4,894)
(1,665)
-
-
-
(185)
4,199
1 – 5 years
$000
-
-
-
-
(19,888)
(23,301)
(975)
(44,164)
(44,164)
2018
0-3 months
3-12 months
1 – 5 years
Assets by contractual maturity
Trade and other receivables
Cash and cash equivalents
Liabilities by contractual maturity
Trade and other payables
Borrowings
Preference share liability
Contingent acquisition liability
Other related party payables
Net assets by contractual maturity
15. TRADE AND OTHER PAYABLES
Trade payables
Accruals
Contract liabilities
Current tax payable
Other payables
Related party loan (Note 27)
Debt due to concession holders
$000
2,290
1,910
4,200
$000
3,634
-
3,634
(5,390)
(361)
-
-
-
-
(5,390)
(1,190)
$000
-
-
-
-
(10,110)
(13,901)
(1,269)
-
(25,280)
-
-
-
-
(361)
3,273
(25,280)
2019
$000
1,256
1,498
1,139
55
383
285
185
4,801
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
50 |
Total
$000
6,123
1,490
7,613
(5,079)
(19,888)
(23,301)
(975)
(49,243)
(41,630)
Total
$000
5,924
1,910
7,834
(5,751)
(10,110)
(13,901)
(1,269)
-
(31,031)
(23,197)
2018
$000
2,621
588
1,249
27
905
-
361
5,751
WOODBOIS LIMITED | Financial Statements 2019 16. BORROWINGS
Non-Current liabilities
Business loan
Internal Trade Finance Fund (“ITF”)
Car loans
Current liabilities
Business loans
Bank overdraft
Working capital facility
Car loans
Total
Notes to the Financial Statements
2019
$000
1,227
12,311
7
13,545
1,391
2,988
1,944
20
6,343
19,888
2018
$000
1,256
3,804
26
5,086
613
4,394
-
17
5,024
10,110
As at 31 December the Trading division had the following outstanding borrowings:
Business loan with a Danish bank that amounted to $1.2 million (2018: $1.2 million). The business loan carries an interest rate
of 2.64%. The purpose of the loan is for financing timber trades.
Car Loans with a Danish bank that amounted to $27k (2018: $44k). The car loans carry an interest rate of 2.25% and 2.5%.
Bank overdraft facilities with a Danish bank that amounted to $3.0 million (2018: $3.8 million). The Bank overdraft facilities carry
interest rates of 2.205% and 5.859%.
Working capital facilities with a Danish bank that amount to $1.9 million (2018: nil). This facility carries interest rates of 2% (Euro
and DKK) and 3.75% (USD).
As on 31 December the Forestry division had the following outstanding borrowings:
Business loans with a Gabonese bank that amounted to $1.4 million (2018: nil). These loans carry an interest rate of 10%. The
purpose of the loans is for financing capital expansion.
The Group signed a combined security to the value of $2.7 million, which includes securities over the property, plant and
equipment, the total inventories and total trade receivables.
The Group has also signed a security in favour of a Danish bank to the value of $0.7 million.
As at 31 December 2019 the Group had raised $12.3 million (2018: $3.8 million) in the form of an Internal Trade Finance Fund.
The ITF is covered by selected stock, debtors and group loans and it bears interest at 11.5%, calculated daily, compounded semi-
annually. A notice period of 3 months applies to all fund withdrawals.
The contractual maturity of borrowings has been assessed in Note 14.
The Group had undrawn facilities available at 31 December 2019 amount to $0.6m (2018: $5k).
| 51
17. CONVERTIBLE BONDS
Convertible bonds: Liability component
Convertible bonds: Equity component
Total
Convertible bond liability
Interest accrued
Total
During the year the Company restructured the 5% perpetual
preference shares
in Woodbois subsidiary, Argento
Limited, by buying it back and issuing the holders instead
with Convertible Bonds in Woodbois Limited (“Bonds”).
The Woodbois Convertible Bond has a maturity of not
later than 30 June 2024, 4% coupon and conversion price
of 8p per share, being a maximum total of all the Bonds
on conversion of 300 million ordinary shares. 100% of
preference shareholders accepted the switch terms. The
switch is from a preference share with variable conversion
terms linked to a subsidiary company, to a bond convertible
into Woodbois Limited Ordinary Shares at a fixed rate.
On 21 October 2019, the Company completed the purchase
of the full 75,000 preference shares in issue and Neville
Registrars Limited, who were appointed by the Company
to act as transfer agent, issued 4% convertible bonds,
convertible no later than 30 June 2024. The Bonds have
been issued in registered form with a nominal value of
USD 1 each. The Bonds are freely transferable and rank as
senior debt of the Company but are not secured.
The Company may redeem all but not some only of the
Bonds at their principal amount, together with accrued
but unpaid interest in the following circumstances: (i) if
after 30 January 2020, the volume weighted average price
of an ordinary share on 10 dealing days in any period of
30 consecutive days is greater than GBP0.12; or (ii) not
less than 90% by principal amount of Bonds have been
redeemed or converted.
2019
$000
23,547
1,495
25,042
23,070
477
23,547
2018
$000
-
-
-
-
-
-
The Takeover Panel deems that the holders of the
Preference Shares/Bonds to be a ‘concert party’ for the
purposes of the Takeover Code. Upon conversion of all the
Bonds, the new ordinary shares so issued would account
for 39.2% of then enlarged issued Ordinary Share Capital at
31 December 2019.
Under Rule 9 of the Takeover Code, where any person
acquires interests in securities which carry 30 per cent, or
more of the voting fights of the Company, that person is
normally required by the Takeover Panel to make a general
offer to the shareholders of the Company to acquire their
shares.
In order to avoid an inadvertent breach of Rule 9 of the
Takeover Code, Pelham Limited (a company controlled by
Miles Pelham, the former chairman of the Company), the
owner of approximately $20.0m of the face value of the
Bonds, has undertaken to the Company that its interest
when aggregated with shares issued to and retained by all
other bondholders or owned by any of the parties, will not
at any time exceed 28.0% of the enlarged issued Ordinary
Share capital of the Company. Paul Dolan, Chairman and
CEO, owns $0.4m of the Bonds and is a member of the
Concert Party.
52 |
WOODBOIS LIMITED | Financial Statements 2019 18. PREFERENCE SHARES
Preference shares: Liability component
Preference shares: Equity component
Total
Preference share liability
Interest accrued
Total
Notes to the Financial Statements
2019
$000
-
-
-
-
-
-
2018
$000
13,901
14,318
28,219
11,932
1,969
13,901
As explained in note 17, during the year the Company restructured the 5% perpetual preference shares in Woodbois subsidiary,
Argento Limited, by buying it back and issuing the holders instead with a convertible bond issued in Woodbois Limited.
19. SHARE CAPITAL
Authorised:
Ordinary shares of 1p each
Allotted, issued and fully paid:
Ordinary shares of 1p each
AT 1 JANUARY 2018
Shares issued
AT 31 DECEMBER 2018
Shares issued
AT 31 DECEMBER 2019
Number
Unlimited
293,279,267
84,172,664
377,451,931
88,000,000
465,451,931
$000
Unlimited
4,500
1,117
5,617
1,140
6,757
Balances classified as share capital include the nominal value on issue of the Company’s equity share capital, comprising
ordinary shares of 1p each.
During the year, 888,000,000 (2018: 84,172,664) ordinary shares with a nominal value of $1,140,379 (2018: $1,117,000) were
issued for a cash consideration of $6,432,506 (2018: $9,598,431).
On 15 January 2019 40,000,000 ordinary shares with a nominal value of $514,216 (£0.01) were issued for a cash consideration
of $2,571,080.
On 12 March 2019 32,000,000 ordinary shares with a nominal value of $417,789 (£0.01) were issued for a cash consideration
of $2,611,180.
On 1 April 2019 16,000,000 ordinary shares with a nominal value of $208,374 (£0.01) were issued for a cash consideration of
$1,250,246.
In January 2019 the Company accepted subscription to 40,000,000 new Woodbois Limited warrants at 10p, from Volantis,
acting through its discretionary investment manager Lombard Odier Asset Management (USA) Corp. In July 2019, a deed of
variation amended the subscription price to 8p.
Volantis will be entitled to exercise 50% of the warrants at any time during the period commencing on the first anniversary of
the drawdown date of the trade finance loan being 1 April 2020 and expiring on the third anniversary of the drawdown date of
the Loan Agreement. Up to 50% of the warrants will also be exercisable at any time following the initial drawdown date provided
that Volantis has owned 10% or more of the issued share capital of Woodbois prior to exercise.
| 53
20. SHARE PREMIUM ACCOUNT
AT 1 JANUARY
Shares issued
AT 31 DECEMBER
2019
$000
29,954
5,176
35,130
2018
$000
22,340
7,614
29,954
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.
21. MERGER RESERVE
AT 31 DECEMBER
2019
$000
-
2018
$000
44,487
The merger reserve arose on shares issued by Woodbois Limited (formerly known as Obtala Limited) to the previous owners of
Woodbois Services Limited (formerly known as Obtala Services Limited) under a scheme of arrangement concluded in August
2010. At the AGM of the Company held on 19 June 2019, in accordance with Guernsey Company Law, shareholders approved
the transfer of the Merger reserve to retained earnings.
22. ACQUISITIONS
On 31 December 2018, the Group acquired the remaining 25% minority shares and voting interests in Montara Continental
Limited. Since 1 January 2019, the Group has owned 100% of the issued share capital. Montara Continental Limited was
liquidated as at 22 January 2020 and its assets transferred to other Group Companies.
The purchase price for the sale of shares was made up of the following:
Initial consideration in cash of $2,500,000
•
• Deferred consideration of $2,500,000 or the issue of 40,000,000 ordinary shares of par value 1p each in the capital of
Woodbois Limited
The consideration of $5,000,000 outstanding at 31 December 2018 was paid during 2019.
Gain from buy-out of minorities
Gain from buy-out of minorities arising from the acquisition has been recognised as follows.
Consideration
Value of non-controlling interests
Gain from buy-out of minorities
2019
$000
-
-
-
2018
$000
5,000
(19,508)
14,508
The minority interest was held by a single entity. There was no obligation for Woodbois to acquire the outstanding shares
and therefore the ability for the individual shareholder to liquidate its shares was restricted. As a result, Woodbois was able to
acquire the shares at a discount to the net asset value resulting in the gain noted.
The value of non-controlling interests was valued at the non-controlling interest’s proportionate share of the net assets of
Montara Continental Limited and its subsidiaries, in accordance with IFRS 10.
54 |
WOODBOIS LIMITED | Financial Statements 2019
23. FAIR VALUE GAIN
Fair value gain on conversion of preference shares
The fair value of the preference shares and the convertible
bonds was determined by an independent valuer as at 30
June 2019 and adjusted for the effective completion date
of 21 October 2019. The host debt and conversion option
were valued separately. The host debt was valued using
the discounted cashflow method. The conversion option
was valued using the Black-Scholes option pricing method
(preference shares) and the Monte Carlo simulation
(convertible bonds).
The fair value of the host
liability component was
determined first by discounting the host debt component
at the market rate that would apply to an identical financial
instrument without the conversion option. The conversion
option provides an upside for the investors and hence
they would require a higher rate of return in the absence
of the conversion option. The discount rate for calculating
the present value of the host liability was determined with
comparison to yields on corporate bonds with similar
maturity issued by companies operating in the Paper and
Forest Product Industry in developed markets adjusted
by adding a risk premium for Africa (source: Aswath
Damodaran).
24. SHARE BASED PAYMENTS
The share-based payments reserve is used to recognise
the grant date fair value of options issued to employees
but not exercised, the grant date fair value of shares issued
to employees and the fair value of share options forfeited
by employees.
The Group operates a share option plan, under which certain
Directors and employees have been granted options to
subscribe for ordinary shares. All options are equity settled.
Notes to the Financial Statements
2019
$000
(4,602)
2018
$000
-
Number of Convertible bonds
Price per Convertible bond
Face Value
Coupon per annum %
75,000
$400
$30,000,000
4%
The fair value of the host liability was concluded to be
$22,663,600.
The fair value of the conversion option was concluded to
be $1,478,839; this was calculated as the present value of
the average gain from conversion over 5,000 simulations
of the Company’s share price using the following assump-
tions:
Market rate
Volatility
Share price
Risk-free rate
Time period
10.0%
50.0%
£0.0625
0.61%
5 years
The options have an exercise price, that ranges from 8.75p
to 18p, which was based upon the average value of the
Group’s ordinary shares for the ten days prior to the date
of grant and trigger prices of between 15p and 35p per
share. The Group has no legal or constructive obligation to
repurchase or settle the options in cash. The number and
weighted average exercise prices of share options are as
follows:
Vesting Date
June 2018
June 2019
June 2020
June 2021
Award Amounts
3.625m options
3.625m options
3.625m options
3.625m options
| 55
The awards were distributed to the Board as follows and the awardee must accept the option granted for it to be valid:
Paul Dolan
Carnel Geddes
Jacob Hansen
Hadi Ghossein
Zahid Abbas
Chairman and CEO
CFO
COO
Deputy Chairman
Head of Trading
Number of options
1m per tranche (4m total)
250k per tranche (1m total)
625k per tranche (2.5m total)
625k per tranche (2.5m total)
625k per tranche (2.5m total)
In respect of each tranche, the options are exercisable if
at the first possible vesting date for that tranche or any
subsequent date, the Woodbois Limited monthly volume
weighted for the three consecutive months to such date is
greater than the trigger price for that tranche, the first such
date being the vesting date in respect of that tranche. The
Option holder may acquire the Option Shares in respect
of a tranche following the vesting date in respect of that
tranche if they remain an employee of the Group at that
vesting date. If the awardee is not in the employ at the time
of vesting, then the awards are forfeit.
The options belong to a class of exotic options called
partial time knock-in options and the valuations are based
on Black and Scholes model modified to account for the
properties of the exotic option. The model uses the grant
date, exercise price, vesting date, share price volatility and
risk-free rate to calculate the option fair value. The options
are accounted for over the vesting period. The fair value of
the options is not subsequently adjusted for changes in the
market conditions.
The table below shows the input ranges for the assumptions
used in the valuation model:
Exercise price
Share price volatility
Risk free rate
8.75p – 18.00p
37.47% - 57.58%
0.25% - 0.50%
Reconciliation of the share options in issue:
Total options
Weighted average strike
As on 1 January 2018
Issued during the financial year
Forfeited during the financial year
As on 31 December 2018
Issued during the financial year
Forfeited during the financial year
As on 31 December 2019
The following charge has been recognised in the current financial year:
AT 1 JANUARY
Reserve transfer for forfeitures
Share based payment expense
AT 31 DECEMBER
There were no options exercisable at the reporting date.
56 |
28,500,000
1,000,000
(9,000,000)
20,500,000
-
(6,000,000)
14,500,000
2019
$000
1,012
(275)
231
968
price
13.85p
17.62p
(15.82p)
13.78p
-
(10.29p)
15.23p
2018
$000
979
(679)
712
1,012
WOODBOIS LIMITED | Financial Statements 2019 25. NON-CONTROLLING INTERESTS
AT 1 JANUARY 2018
Non-controlling interests share of losses in the year
Buy-out of minorities
AT 31 DECEMBER 2018 and 2019
Notes to the Financial Statements
$000
20,608
(1,235)
19,373
-
The share of losses in the year represents the losses attributable to non-controlling interests for the year. As at 31 December
2018, the Group bought out the non-controlling interests in full.
26. RELATED PARTY TRANSACTIONS
RELATED PARTY BALANCES
Amount due from shareholder of discontinued operations
Amount due to H. Ghossein, a Director
Funding raised for internal trade finance (see below)
Contingent acquisition liability due to Director vendors re purchase of Woodbois International ApS in 2017 (see
note 27)
AT 31 DECEMBER
2019
$000
49
(285)
(7,290)
(975)
(8,501)
2018
$000
-
(6)
(3,731)
(1,269)
(5,000)
As at 31 December 2019, the Group had raised $12.3 million (2018: $3.8 million) into the ITF. The amount due to related parties
in respect of the ITF is as follows:
Name
1798 Volantis Fund Limited
Richard Byworth Consultancy
Paul Dolan
Jessica Camus-Demarche
Relationship
Shareholder
Shareholder
Shareholder and Director
Former Director
Moghle Ltd (representing Martin Collins, former Director)
Other key management personnel
Adam Barker
Other key management personnel
Interest expense during the year on the ITF was $1.2 million (2018: $0.1 million).
Three of the Directors are paid salaries through service companies as follows:
Director
Carnel Geddes
Jacob Hansen
Zahid Abbas
Service Company name
Pomona Trust
Barsik Holding
Aka Holding
2019
$000
(5,000)
-
(250)
-
(296)
-
(5,546)
2019
$000
183
17
17
Management fees of $16k were paid during 2019 to Lombard Odier Investment Managers in respect of Henry Turcan.
2018
$000
-
(417)
(250)
(211)
(264)
(1,000)
(2,142)
2018
$000
150
233
246
| 57
TRADING TRANSACTIONS
During the year the Group companies entered into the following transactions with related parties:
Loans to subsidiary undertakings
Amount owing to African Resource Investment Limited (refer Note 22)
Contingent acquisition expense
2019
2019
2018
2018
Transactions
in year
Balance at 31
December
Transactions
in year
Balance at 31
December
$000
(4,356)
-
956
$000
30,877
-
-
$000
(7,209)
(5,000)
860
$000
26,521
(5,000)
-
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
The Group’s key management personnel comprised the following:
2019
Short-term employment benefits
Salaries, fees &
national insurance
contributions
Benefits
Deferred acquisition
payments
Share based payments
Total
$000
$000
$000
$000
$000
30
200
236
188
234
183
11
16
107
3
23
19
94
36
64
75
12
76
18
91
91
-
-
7
6
8
-
-
-
-
-
-
-
19
-
-
4
4
-
-
-
-
-
-
-
478
-
478
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,807
48
956
-
33
48
48
48
21
-
-
-
-
-
-
-
-
-
-
-
-
21
12
-
231
30
233
769
242
768
204
11
16
107
3
23
19
113
36
68
79
12
76
39
103
91
3,042
Directors
Kevin Milne
Paul Dolan
Jacob Hansen
Hadi Ghossein
Zahid Abbas
Carnel Geddes
Graeme Thomson
Henry Turcan
Miles Pelham
Jessica Camus-Demarche
Other key management personnel
Graham Impey
Sophie Hunter
Sassine Bouchebel
Martin Collins
Claus Wellov
Ivan Muir
Henning Visser
Tim Costin
Ulrica Marshall
Ashkan Rahmati
Ilene Hardy
58 |
WOODBOIS LIMITED | Financial Statements 2019
Notes to the Financial Statements
2018
Short-term employment benefits
Salaries, fees &
national insurance
contributions
Benefits
Deferred acquisition
payments
Share based payments
Total
$000
$000
$000
$000
$000
Directors
Kevin Milne
Paul Dolan
Jacob Hansen
Hadi Ghossein
Zahid Abbas
Carnel Geddes
Miles Pelham
Martin Collins
Jessica Camus
Other key management personnel
Graham Impey
Sophie Hunter
Warren Deats
Sassine Bouchebel
Patrick Greene
Claus Wellov
Ivan Muir
Henning Visser
Tim Costin
Adam Barker
Tom Holroyd
Ben Salter
Ulrica Marshall
Ashkan Rahmati
Ilene Hardy
Maria Stoica
30
200
246
215
233
150
200
173
50
98
161
32
99
78
72
136
95
178
38
50
58
20
59
90
15
-
-
-
7
-
9
-
-
-
-
-
-
-
20
-
-
-
-
-
-
-
-
-
-
-
-
-
-
430
-
430
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,776
36
860
-
57
103
103
103
40
57
111
40
9
15
-
-
9
-
-
-
-
-
-
-
40
25
-
-
712
30
257
786
318
775
190
257
284
90
107
176
32
119
87
72
136
95
178
38
50
58
60
84
90
15
4,384
| 59
27. EVENTS OCCURRING AFTER
THE REPORTING DATE
a. On 16 January 2020, the Group announced a number of
cash flow enhancement measures and additional funding:
1) Deferred Consideration re Acquisition of Woodbois in
2017
(and subsequently changed
On 24 May 2017, the Company (previously known as
Obtala Limited) announced the acquisition of Woodbois
International ApS
the
Company name to Woodbois Limited). The terms of the
acquisition provided for deferred cash consideration of
US$5.0m, payable in equal quarterly payments over 5
years, commencing 30 September 2017. The Company
agreed with the vendors, Zahid Abbas, Jacob Hansen and
Hadi Ghossein or companies wholly owned and controlled
by them, each a Director of the Company, to defer revised
payments totaling $1.25m by a year, being the quarterly
payments for the period from 1 January 2020 to 31
December 2020, following which quarterly payments will
resume on 31 March 2021.
2) Internal Trading Fund (“ITF”)
The Company announced that 1798 Volantis Fund Limited
(“Volantis”), a fund managed on a discretionary basis by
Lombard Odier Asset Management group (“Lombard”),
agreed to provide up to an additional US$1.0m through
investment into the Group’s ITF (“Additional Loan”) by way
of an additional conditional loan agreement with Woodbois
Trading Limited, a wholly owned subsidiary of the Group.
Of this loan, US$0.5m was received on 22 January 2020.
Further drawings are by mutual agreement.
3) Convertible Bond interest
In connection with the Company’s 4% convertible bonds
2024 (“Bonds”), issued on 21 October 2019, Pelham Limited
(a company controlled by Miles Pelham) and Paul Dolan
agreed to roll-up interest payments due for the period from
issue until 31 December 2020 on an aggregate $20.4m of
Bonds. These agreements (the “Bond Interest Agreements”)
are for $20.0m of Bonds held by Miles Pelham and $0.40m
of Bonds held by Paul Dolan. In the event such Bonds
remain unconverted as at 31 December 2020, the rolled-up
interest would result in the issue of approximately $0.98m
of additional Bonds at that time. See Note 17.
Furthermore, Africa Resource Investment Limited (“ARI”)
agreed that, in respect of its existing $5.0m ITF loan, it
would not request any withdrawal prior to 31 December
2020.
60 |
Further to the above matters, each of 1798 Volantis Fund
Limited (“Volantis”), a fund managed on a discretionary
basis by Lombard Odier Asset Management group
(“Lombard”), and Paul Dolan, Chairman and Chief Executive
of the Company, agreed to receive Woodbois ordinary
shares (“Shares”) in lieu of interest (at 11.5%) for the period
from 1 July 2019 to 31 December 2020 on their Internal
Trading Fund (“ITF”) loans, in respect of $5.0m for Volantis
(which excludes the $1.0m Additional Loan mentioned
above) and $295,520 for Paul Dolan. On 21 January 2020,
4,140,230 new Shares have been issued to Volantis and
244,704 new Shares have been issued to Paul Dolan. The
Company now has 469,737,487 Shares in issue, each with
voting rights.
b. Recommencement of operations in Mozambique
On 19 March 2020, Woodbois Limited announced the
signing of a management agreement with Future Earth
II LLC, a US Company with substantial concessions
in Mozambique, creating a relationship under which
Future Earth will fund, manage and operate Woodbois’s
Mozambique concessions, employees and equipment, in
order to produce sawn lumber and veneers to be sold by
Future Earth on a profit share basis.
The Agreement is for 3 years, with optional breaks after 12
and 24 months at Future Earth’s discretion. All costs during
the term of the Agreement will be funded by Future Earth
with a 50:50 post-cost profit share from products sold from
Woodbois’ concessions. Should Future Earth proceed with
years 2 and 3 they will pre-pay Woodbois $1 million each
year, to be deducted from the Woodbois share of profits
for each respective year. Profits will be distributed quarterly.
c. First Quarter Performance and COVID-19 Update
On 27 March 2020, the Company issued an update re the
impact of COVID-19 and included further information in
its Quarterly Update on 16 April 2020. The Government of
Gabon had introduced a lockdown on 13 April 2020 and
operations there had been paused. There had been limited
impact on performance in the first quarter of 2020, when
revenues of $4.9 million had been up 10% over the prior
period in 2019. The Group noted that the rapid pace of
developments in connection with COVID-19 had caused
a fundamental level of uncertainty and it withdrew any
guidance on its financial outcome for 2020 until the
implications for the business could be assessed reliably.
Resilience plans are being enacted.
28. ULTIMATE PARENT COMPANY
At 31 December 2019, the Directors do not believe
controlling party.
that
there was
ultimate
an
WOODBOIS LIMITED | Financial Statements 2019 Woodbois Ltd
Registered Address - P.O. Box 161,
Dixcart House, Sir William Place,
St Peter Port Guernsey GY1 1GX
Tel: +44 (0)20 7099 1940
WOODBOIS LIMITED | 2020
CBP00019082504183028
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