Woodbois
Annual Report 2021

Plain-text annual report

I N T E G R A T E D R E P O R T Working on the sustainable blueprint for forests to flourish 2 0 2 1 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES 63 Appendix & References 3 4 6 Message from the CEO About this report A B O U T W O O D B O I S Company overview Vision, mission and values Origins of Woodbois 2021 in brief Substantial shareholders Organisational structure Governance The Board as of May 2022 Our commitment Our stakeholders Materiality Analysis 30 T H E C A P I T A L S Financial capital Human capital Aligning to international best practices Inclusion Health and safety Grievances Whistleblowing procedure Our people Contributing to the community Manufacturing capital Assets overview Operations in Gabon Trading Intellectual capital Code of Conduct Forest management in Gabon Management plan: how it works Relational and social capital Responsible trading & sourcing Due diligence process Traceability and transparency Engaging with local communities 19 O U R B U S I N E S S M O D E L Vertically integrated value chain Value Creation Forestry: the bigger picture Forestry in Africa Forests and climate change Woodbois’ balanced approach Risks and opportunities Creating value Strategic priorities Natural capital Transparency Forest management and climate change Waste management Use of chemicals Firefighting Minimising the impact of logging roads The forest products value chain as an example of a circular economy Enhancing our impact FSC Certification Reforestation and carbon credit division Our reforestation efforts in Mozambique C O N T E N T 2 WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES M E S S A G E F R O M T H E C E O In the last few years, Woodbois has found a very particular and unique positioning within the timber industry. We have demonstrated that traditional metrics of business success, such as financial performance and positive numbers, are entirely achievable alongside meaningful action for a more In 2022, we intend to build on our growing success with a continued focus on environmentally-sound practices, active partnerships with governments and industry, and the generation of meaningful benefits for all of our stakeholders, from our investors to the people and communities where we sustainable future for people and planet. operate. Indeed, we anticipate 2022 to be another record year with a positive cash flow, further double-digit growth, and significant planned headway in our carbon division. We have reviewed our commercial and operational strategy, focusing on increasing sales into European and North American markets, and we have an ambitious plan for additional veneer capacity which will lead to production increases from Q3 onwards. The entry into the carbon credit market will also play a major role in our future growth. With more than 5,200 of the world’s leading companies committed to achieving net-zero by 2050 as part of the Race to Zero campaign, the outlook for Woodbois has never looked more positive. All stakeholders can be proud of the positive impact we have on the communities in which we work. Yours sincerely, Paul Dolan It is no secret that the forestry sector is rife with challenges, and yet, proper and responsible forest management is essential to the future of humanity. We have always aspired to be an active player in finding solutions that promote balance, and invest a great deal of talent, energy and money into developing our own sustainable blueprint for forests to flourish. The establishment of our Carbon Division and its tireless efforts to launch its first reforestation project in Gabon is just one example of this. I am very proud, then, that this year marked Woodbois’ first positive EBITDA. This achievement is all the more notable given the challenges of COVID-19 and the ongoing constraints imposed by the global shipping situation. It is a testament to our ability to adapt and reorganise. Much of our success has been driven by our collaborative relationship with the Gabonese government. Open, constructive conversation is the norm here, which has enabled important progress in all areas of forest management. Indeed, Gabon is one of very few countries to have set clear guidelines for carbon project development and carbon rights. The climate ordinance released last year is evidence of the country’s strong will to work with responsible private sector partners to protect and restore valuable natural capital. Leveraging this strength, Woodbois intends to replicate its strategy in other West African countries. At COP26 I was able to speak to government representatives from many of these countries, and I’m excited about the potential for additional afforestation projects. We have always aspired to be an active player in finding solutions that promote balance, and invest a great deal of talent, energy and money into developing our own sustainable blueprint for forests to flourish. 3 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES A B O U T T H I S R E P O R T I N T E G R A T E D R E P O R T I N G < I R > This Woodbois Integrated Report aims to provide an overview of our strategy, performance and future outlook in relation to material financial, economic, social and governance issues. The report also addresses value creation considerations for investors and all key stakeholders. - The time frame considered is the 2021 fiscal year (ending 31 December 2021) for information relating to the reporting aspects, while the prospective framework The Integrated Reporting approach: • Explains how an organisation creates, preserves or erodes value over time to all stakeholders. • Aims to provide insight about the resources and relationships used and affected by an organisation – these are collectively referred to as the capitals (financial, manufactured, intellectual, human, relational and social, and natural capital). • Reinforces the importance of integrated thinking within an organisation. This consists of analysing the relationships between the operating units and functions of an organisation, as well as the capital it uses or influences. • Facilitates an integrated decision-making process and actions aimed at creating value in the short, medium and long-term. refers to the upcoming three-year period (2022-2024). This report is referring to the UN SDGs and the GRI standards. - This report is based on the principles proposed by All disclosures made in this report are governed by the AIM the International Integrated Reporting Framework regulation on reporting. Information on Economic Indicators () and published by the International Integrated provided in this report is therefore restricted and we advise Reporting Council (IIRC). As such, the report contains investors and other stakeholders to consult the financial statements information that is both financial and non-financial in available on our website: https://www.woodbois.com/investors. nature. Some of the information in the report refers to the standards set by the Global Reporting Initiative (GRI) and the Sustainable Developments Goals (SDGs) of the United Nations. 4 We hope you find this report informative and we encourage you to share your feedback, thoughts and views with us via email at info@woodbois.com WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES “ The world’s forests sequestered about twice as much carbon dioxide as they emitted between 2001 and 2019. In other words, forests provide a “carbon sink” that absorbs a net 7.6 billion metric tonnes of CO2 per year, 1.5 times more carbon than the United States emits annually." Research published in Nature Climate Change 5 WOODBOIS LTD | Integrated Report 2021 5 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES A B O U T W O O D B O I S 6 WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES C O M P A N Y O V E R V I E W Woodbois manufactures and distributes sustainable African Woodbois has developed a sustainability strategy to define hardwoods and hardwood products to customers around its core priorities and commitments which are used to align the world. Founded in 2004, Woodbois is listed on the AIM company actions with the UN Sustainable Development section of the London Stock Exchange, one of the world’s Goals (SDGs) and with the London Zoological Society’s leading growth markets for small and mid-cap companies. Sustainability Policy Transparency Toolkit (SPOTT). SPOTT Woodbois sustainably manages over 156,000 hectares has ranked the company sixth among more than 100 global of natural forest concessions in Gabon and over 328,000 timber and pulp producers and traders with a score of 71.6% hectares in Mozambique. compared to a 23.6% average. On 6 August 2021, the Group acquired 100% of the shares and The company’s established network of African hardwood voting interests in La Gabonaise des Forêts et de l'Industrie suppliers and global buyers comprises over 50 different du Bois (LGFIB). Through the acquisition of LGFIB, the Group suppliers in Western Africa – 90% of which are concentrated acquired 71,000 hectares of forest concessions in Gabon. in the Congo Basin – and almost 300 customers across 60+ This additional hectarage, which is located within 100km of countries. our manufacturing base in Mouila, will provide the increased levels of sustainably harvested timber required as additional In 2021, Woodbois established its carbon division with the production capacity comes online at our sawmill and veneer aim of developing a project implementation model that can factory. No harvesting has taken place during the 2021 simultaneously deliver environmental, social and economic financial year in the newly acquired concession and therefore value. Within a 12-month period, the team has made significant the acquisition of LGFIB has not materially contributed to the progress towards initiating a maiden project, which will entail consolidated revenue and profit for the period. a large-scale assisted natural regeneration scheme in the south of Gabon, designed to introduce indigenous forest to In Gabon, Woodbois operates a 13-hectare sawmill and a five- an area currently occupied by low-value grasslands. hectare veneer factory in Mouila, capital of the Ngounié region in the south of the country. Both sites are located within 70km of the forest concessions, which are issued for 20-year terms. In Mozambique, Woodbois’ five-hectare bushmill is located in Uape, in the Zambezia Province in the North of the country. 7 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES E M P L O Y E E S T A T I S T I C S TOTAL 415 M E N 325 (78%) W O M E N 90 (22%) P R O D U C T S P R E D O M I N A N T S P E C I E S Sustainable hardwood products (Lumber, Veneer, Plywood) manufactured at our own facilities or sourced from vetted and sustainably compliant third-party suppliers - Okoume - Padouk - Okan 485,373 ha of forestry concessions Mozambique - 328,898 ha Gabon - 156,475 ha 337,460 ha (83%) are operational forests 16,233 ha (4%) are conservation area I N T E R N A T I O N A L P R E S E N C E & countries of operations UK: Office Denmark: Global trading headquarters Gabon: Natural forest concessions on 20-year renewable licences located within 70km of sawmill and veneer factory Mozambique: Natural forest concessions on 25- to 50-year renewable licences Mauritius: Operational headquarters for Treasury, Forestry and Trading South Africa: Office (finance function) 100% of our third party timber supply is traceable 8 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES V I S I O N M I S S I O N & V A L U E S W H O W E A R E Our approach to sustainability lies in the constant search for balance. Starting with ourselves, we question things that are out of balance and propose solutions to help counterbalance the current state of things. This constant ‘balance-seeking’ mode is part of our culture and our vision of the world. O U R V I S I O N By taking meaningful action and seeking solutions internally and externally, we strive to achieve a balanced forest management system that serves as best practice for the whole forestry industry. We intend to do this by thoroughly and consistently implementing the ‘Woodbois Balance Blueprint’. O U R M I S S I O N The world is out of balance, forests are out of balance, carbon emissions are out of balance. Our mission is to become a role model in forest management by redressing the balance. O U R V A L U E S F L O U R I S H I N G F O R E S T S Woodbois approach Sustainable approach D E V A S T A T E D F O R E S T S O U R A P P R O A C H T O F O R E S T R Y : T H E B A L A N C E D F O R E S T B L U E P R I N T We know that real balance is difficult to achieve and maintain, and must be continually searched for. It’s our way of thinking and doing things, looking at all aspects of forest management and wood P E O P L E R E S P O N S I B I L I T Y towards our stakeholders, people and planet production. It’s the reason why Woodbois has been E C O N O M I C S W O O D B O I S N A T U R E P A S S I O N for positive impact I N T E G R I T Y in our choices T R A N S P A R E N C Y throughout our operations 9 so successful in Gabon. It’s our blueprint, and can be applied anywhere in the world. We ask ourselves every day, what is out of balance? Are our operations efficient? Are we doing enough for nature? Are we making money? Are we taking care of our people? We constantly search for balance. I N S T I T U T I O N S WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES O R I G I N S O F W O O D B O I S Obtala listed on the London Stock Exchange (AIM market) A P R I L 2008 Business refocused on forestry, timber transformation and timber trading 2016 Company name changed from Obtala Ltd to Woodbois Ltd M A R C H 2019 2007 A U G U S T Obtala incorporated in the United Kingdom 2008-2012 Development of agricultural sector in Tanzania and forestry in Mozambique 2017 M AY Acquisition of WoodBois International (WBI) 2021 M A R C H Establishment of new Carbon Division, focused on implementing large scale afforestation and reforestation projects to generate carbon credits for the voluntary carbon market. 10 10 WOODBOIS LTD | Integrated Report 2021 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES 2021 Y E A R I N B R I E F Turnover increased by 14% to $17.5m (2020: $15.3m) First year of positive EBITDAS of $1.0m (2020: loss $1.7m) Gross profit increased by 186% to $3.5m (2020: $1.2m) Sawmill capacity in Gabon increased to 30,000m3 output per annum Significant gross profit margin increase to 20% (2020: 8%) Acquisition of additional 71,000 hectares of forestry concession land in Gabon 28,000m3 Volume of logs harvested 16,965m3 Volume of timber produced 14,227m3 Volume of Woodbois' timber traded (logs, veneer, sawn timber) (52.05% growth vs 2020) 20,200m3 Volume of third- party timber traded (logs, veneer, sawn timber) 17% % of women part of the board 67 clients served #6 Ranked number six in SPOTT’s ESG policy transparency assessments for timber and pulp 34,427m3 Volume of timber traded including third-party and Woodbois (logs, veneer, sawn timber) (3.42% growth vs 2020) 2 forest management units S A L E S B Y R E G I O N 48.89% South/South East Asia TOTAL ($) 17,570,457 15.26% North Africa 5.04% East Asia 9.75 % Europe 8.81% Middle East 11.25% North & Central America 2021 11 WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES S U B S T A N T I A L S H A R E H O L D E R S O R G A N I S A T I O N A L S T R U C T U R E The Company has been notified that the following have, at the date Woodbois Limited’s organisational structure reflects our history and operational of this report, an interest in 3% or more of the issued voting ordinary footprint. Our production, processing and manufacturing operations are based in share capital of the Company: Gabon (Woodbois Gabon) and Mozambique (Argento Mozambique). Woodbois International and WoodGroup are the group’s trading companies. N A M E Number of 1p ordinary shares Percentage of the issued share capital Rhino Ventures Limited * 401,000,000 19.98% Lombard Odier Asset Management (Europe) Limited 329,199,065 16.40% Premier Miton Group Plc 174,950,389 8.72% MCM Investment Partners SPC - MCM Sustainable Resource SP 75,625,000 3.77% Sparta Premier S.A. 100,000,000 4.98% P Dolan (CEO) 75,400,032 3.76% * M Pelham, former Chair, is the beneficial owner of Rhino Ventures Limited, which is the owner of 63.16% of the non-voting shares in the Company. 12 C O M P A N Y S T R U C T U R E W O O D B O I S L I M I T E D (Listed PLC) A R G E N T O LT D Mauritius W O O D B O I S S E R V I C E S London Timber trading WoodGroup Copenhagen Timber trading Argento Mozambique Timber production WoodBois International (WBI) Copenhagen Timber trading Woodbois Gabon Timber production WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES G O V E R N A N C E In line with the Company’s commitment to enhance its corporate governance framework, the role of Chair and CEO has been split, with Paul Dolan serving as full time Chief Executive Officer and Graeme Thomson as Non-Executive 3. Take into account wider stakeholder and social responsibilities, and their implications for long-term success. Woodbois is in a unique position to bring a positive impact to Africa’s economic transformation, social development and environmental management through our operations and the responsibility for our Chair. In addition, David Rothschild was appointed to the role sustainability strategy lies with our Board. of Independent Non-Executive Director in November 2021. David serves as a member of the Audit, Remuneration and 4. Embed effective risk management, considering both Nominations Committees. The Board has adopted the Corporate Governance Code produced by the Quoted Companies Alliance (QCA). We set out how the Group complies with the QCA Code below. 1. Establish a strategy and business model that promotes long-term value for shareholders. Capital allocation must be both performance and potential driven, and investment will only be forthcoming for strategies that can demonstrate significant return to shareholders over time. opportunities and threats, throughout the organisation. The forestry and timber trading business involves a high degree of risk. Our approach to risk management is set out in the Annual Report for the year ending 31 December 2020. 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. for the benefits of diversity on the Board, including gender. The Nomination Committee is also responsible for succession planning. 7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement. The internal evaluation of the Board, the Committees and individual Directors is seen as an important next step in the development of the Board. 8. Promote a corporate culture based on ethical values and a laser sharp focus on 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. 9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board. The Company is committed to high standards of corporate governance. Both Management and the Board are dedicated to implementing best practices as 6. Ensure that between them, the Directors have the Company grows. 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. Our Executive Directors and our Investor relations officer act as contact points for shareholder updates and wider liaison. the necessary up-to-date experience, skills and capabilities. 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 Company’s ongoing development. Any appointments made will be on merit, against objective criteria and with due regard 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. 13 WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES T H E B O A R D A S O F M A Y 2 0 2 2 PAUL DOL AN CEO HEN RY TURC AN Non-Executive Director Paul held senior management positions at Barclays, DE Henry is a representative of the funds managed by Lombard Shaw and Nomura prior to joining Woodbois in 2016. Paul Odier. Henry has worked in financial services since 1996, has consistently built award-winning, world-class teams with a focus on equity capital markets. He has spent the employing technology to manage substantial pools of majority of his career advising growth companies within The following matters are reserved for the Board: • Overall Group strategy human and financial capital across a diversified group investment banking. of asset classes, ranging from fixed income and equity • Approval of major capital expenditure projects derivatives to forestry. • Approval of the annual and interim results • Annual budgets and revisions thereto • Approval of extraordinary activities (M&A) C ARN E L GE DD ES CFO G RAEM E THOM SON Senior Independent Non-Executive Chair Graeme is a Fellow of the Institute of Chartered Accountants Carnel is a dual-qualified chartered accountant in the UK and in England and Wales, and has been a public company South Africa, and is also a certified fraud examiner. During director for many decades, as a CEO, CFO/Company a 15-year career at the global audit, tax and advisory group Secretary, and as a Non-Executive. He has a wide variety of BDO, Carnel served as Director of Forensic Services at BDO commercial UK and international experience. London and Partner of BDO Cape Town. She has been a Director and Board Member of Pomona, the largest South African pomegranate farm company, since 2008. H AD I GH OSS EIN Deputy Chair DAVI D ROTHSCHI LD Independent Non-Executive Director As a senior manager and adviser, David has a wide range of experience in growing businesses and improving their Based in Gabon, Hadi has 25 years of experience managing performance. He has been active in the African resource forestry operations, including full ownership of a forestry and agricultural sectors over the past 20 years, including as business. He previously served as a diplomat, travelling co-developer of a Liberian green-field sustainable palm oil extensively across Africa, as well as owning various trading operation, and as advisor on environmental and social action and real estate companies. Hadi is fluent in Arabic, French, planning. He has also been actively involved in governmental Portuguese and English and holds Gabonese citizenship. and NGO relations and was an early steering committee member of the High Carbon Stock Approach Group, which ensures responsible development. A French speaker with over 40 years’ experience in international business – including six years at consultancy McKinsey & Co – he is a dual national of the USA and South Africa, and holds both B.Com and MBA degrees. 14 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES O U R C O M M I T M E N T Woodbois strives to bring an increasing range of social and environmental benefits to our communities on both a local and national level. At the heart of our strategic growth objective is a particular focus on regional employment opportunities and skills development. We are committed to providing a safe environment for Sustainability sits at the core of everything we do. all staff and parties for which we have responsibility. Our company believes that protecting whistleblowers As well as strictly adhering to responsible forestry guidelines set out by relevant governments, and by is integral to safeguarding public interest, promotes a actively engaging with local communities, we strive to culture of accountability and integrity in both private demonstrate sustainable leadership within our industry and public institutions, and encourages individuals to with bold targets designed to protect our natural report corruption, misconduct and fraud. We believe that a person raising concerns should be supported and protected against reprisals, and Woodbois will not environment. Woodbois is committed to creating net zero CO2 emissions from its combined activities and aims to achieve a balance between the greenhouse tolerate the victimisation or adverse treatment of any gases it produces and the amount it is able to employee who has raised a concern. sequester from the atmosphere by 2035. Woodbois is committed to ethical and fair conduct, as Woodbois is committed to transparency and the clear well as the prohibition of corruption, including bribery articulation of all of its objectives. Our strong internal and fraud. We work to uphold these commitments by accountability mechanisms have been designed to implementing the corporate best practices outlined effectively implement commitments as well as ensure in SPOTT, and adhering to definitions and guidelines that outcomes are measured and communicated published by leading international organisations. efficiently. We ensure that this ethos is integrated throughout the entirety of our operations by conducting due diligence before establishing new business relationships with any suppliers (this process is described in this report’s ‘Responsible production and trading’ section). We systematically inform third parties of our policies so they are aware of our standards and expectations, and we will terminate partnerships or avoid them altogether if third-party companies cannot guarantee acceptable standards for wood procurement, which are verified by our legality audits. 15 WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES O U R S T A K E H O L D E R S 16 WOODBOIS LTD | Integrated Report 2021 Holistic approaches to achieving more sustainable States, which conducts research and provides production and consumption practices are emerging. policy support on forest-related issues, connecting These approaches incorporate systems-thinking, knowledge to action. business model innovation and the circular economy. Tackling sustainability issues will therefore involve taking different stakeholder perspectives into Also in 2021, Woodbois joined ATIBT6, the trade association representing and defending the interests account and collaborating across the value chain. of those in the private tropical forest sector, and These perspectives include those from investors, applied to become member of UFIGA (Union of local communities, high-level representatives from Foresters and Industrialists of Gabon), a professional international organisations, local governments, union created in 2003 with the sole purpose of industry experts, suppliers, customers, end-consumers studying and defending the economic, material and and NGOs. moral interests of its members exercising forestry activities. Our ongoing pursuit of sustainable accreditations led to our engagement with PPECF1, the Programme for the Promotion of Certified Exploitation of Forests Our shareholder commitment translates to direct on-the-ground action. We regularly engage with our (Programme de Promotion de l'Exploitation Certifiée suppliers to align policies and commitments towards des Forêts). The objective of the PPECF is twofold: increased transparency and sustainability. We also one, to prevent the loss of certification in companies already certified, and two, to support the third-party regularly engage with our employees to collect their feedback to help us create a positive, safe and healthy certification process. Through this programme COMIFAC2 (Commision des forêts d’Afrique Centrales) and German state-owned development work environment that provides development and growth opportunities. The remote communities in which we operate are deeply dependent on forests bank KfW offer forestry companies support until – understanding their needs, supporting their their initial certification audit. Once this is completed development and helping local causes is core to our they are better positioned to more easily meet the requirements of the European Timber Regulation3 (EUTR). We've also continued our partnership with Congo Basin Forest Partnership (CBFP)4, and in 2021 we joined forces with the European Forest Institute (EFI)5 an international organisation established by European business. One of Woodbois’ largest shareholders, Lombard Odier, recently announced a new Natural Capital Strategy7, developed in partnership with the Circular Bioeconomy Alliance8, to invest in companies that utilise the renewable aspect of nature with a core focus on the timber sector. This Natural Capital Strategy is in line MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES O U R S T A K E H O L D E R S I N V E S T O R S L O C A L C O M M U N I T I E S L O C A L G O V E R N M E N T S S U P P L I E R S C U S T O M E R S I N T E R N A T I O N A L O R G A N I Z A T I O N S E N D - C O N S U M E R S I N D U S T R Y E X P E R T S N G O ' S with Woodbois’ plans. The company has developed a five-layer approach to making sure our business objectives are aligned with the Circular Bioeconomy Alliance’s proposal: 1. Certification for natural forest through Legal Source (LS) and Forest Stewardship Council (FSC) 2. Expand production capacity and forest under management 3. Reforestation in the form of plantation or natural forest alongside partners 4. Reduce timber waste by utilising as much raw material as possible, by upcycling or recycling our waste through energy generation or new markets 5. Capital expenditure to move further down the timber value chain We have also recently partnered with World Forest ID9 to build a science-based identity and origin catalogue for our Gabonese concessions, which will enhance the traceability of our timber products. The collaboration is in its early stages, but is set to include a range of technologies including mass spectrometry, digital imaging and stable isotope ratio analysis that will provide irrefutable confirmation of species identity and origin. 17 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES M A T E R I A L I T Y A N A L Y S I S In Integrated Reporting, a matter is material if it can substantively affect the organisation's ability to create value in the short, medium and long term. The process of determining materiality is entity-specific and based on industry, multi-stakeholder perspectives and other factors. A materiality analysis is an exercise that identifies a company’s critical Environmental, Social and Governance (ESG) issues. It engages with internal and external stakeholders to build a full and accurate picture of all organisation issues and then uses these insights to define core business priorities, guiding both strategy and communication. Woodbois followed this approach as part of our last annual Sustainability Report, where we worked on defining the organisation’s material matrix. This year, we submitted our materiality survey to a wider range of stakeholders to have them validate our results from the previous year. The relevant issues for Woodbois were identified using the SASB Materiality Map10, which analyses the operational performance of companies in various industries, including the construction material and forestry sectors. 18 Environment Social capital Human capital Business model and innovation Leadership and governance Legal harvesting Transparent supply chain Responsible sales & marketing Protection of land Developing local economies Health & safety at work S R E D L O H E K A T S Climate change mitigation through sustainable forest management Training & education Wages & benefits Biodiversity Economic value generated & distributed Equal rights & conflict resolution Sustainable & high quality products Efficient use of resources Financial assistance Soil & water safety Energy usage Greenhouse gas emissions W O O D B O I S Our analysis followed these steps: 1. 2. Identify and prioritise the relevant issues Identify internal and external stakeholders 3. Design a materiality survey 4. Launch the survey and start collecting insights 5. Identify the critical issues and develop a materiality matrix 6. Define a sustainability strategy based on material priorities 7. Set long- and short-term KPIs and improvement goals As a result of this process, the most important issues have been identified and are represented in the Woodbois 2021 materiality matrix. WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES O U R B U S I N E S S M O D E L 19 WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES V E R T I C A L L Y I N T E G R A T E D V A L U E C H A I N 100% of the wood harvested is P R O C E S S E D L O C A L L Y T R A N S P A R E N C Y Every single tree has an identification number and can be tracked through a GPS code 100% C A R I N G F O R P R O T E C T E D S P E C I E S 0% of the trees harvested are listed as protected or endangered 20 WOODBOIS LTD | Integrated Report 2021 T N E M E G A N A M E T S A W F O R E S T O P E R A T I O N S - Inbound logistics - Management plan - Inventory - Log harvesting - Distribution - Log tracking S A W M I L L Mozambique | Gabon - Planks production - Quality controls - Packaging INTERNALLY PRODUCED PRODUCTS - Veneer sheets - Quality controls - Packaging V E N E E R F A C T O R Y Gabon S T C A R T N O C S T C A R T N O C Woodbois caters to customer specifications, including the last steps of the value chain, by delivering high quality, internally and externally produced timber and timber products. EXTERNALLY PRODUCED PRODUCTS T R A D I N G B U S I N E S S N O I T U B I R T S I D - Quality control - Legal documentation - Transport to the port - Shipping and transport documentation - Invoicing - Delivery - After-sales customer service MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES “ For today’s value-minded executives, creating value cannot be limited to simply maximising share prices. Rather, the evidence points to a better objective: maximising a V A L U E C R E A T I O N As investors and end customers become progressively concerned about social impact, climate change and corporate responsibility, companies are facing increasing scrutiny and are expected to be held accountable for their business practices. It is therefore vital that a business strives to create value – social and environmental, as well as financial – across its operations, both now and in the long-term. As McKinsey notes in its report, The Value of Value Creation, company’s value to its shareholders, “Investing for sustainable growth now and in the future. The Value of Value Creation. McKinsey11 should and often does result in stronger economies, higher living standards, and more opportunities for individuals.” 21 WOODBOIS LTD | Integrated Report 2021 T H I S I S T H E V A L U E W E W A N T T O D E L I V E R . According to the Integrated Reporting framework, the value a company creates, preserves or erodes has an impact on two levels: on the company itself, which affects capital return for investors; and on society at large. Given this, investors evaluate companies based on these two value streams (i.e. identifying whether a company can create value for a broader range of societal stakeholders while also creating value for itself). A wide range of activities, interactions and relationships can have an impact on the interrelation between these two value streams. When these interactions, activities, and relationships are material to a company’s ability to create value for itself, they are included in the Integrated Report. MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES F O R E S T R Y : T H E B I G G E R P I C T U R E Deforestation is increasing, with last year seeing a particularly steep rise: at least 42,000km2 of tree cover was lost in key tropical regions. According to data from the University of Maryland and the online monitoring platform Global Forest Watch, this loss was well above the average for the last 20 years. In total, 12.2 million hectares of tree cover were lost in the tropics in 2020, an increase of 12% on 2019.12 Forests are of critical local and global importance. They are home to some 70% of the world’s plant and animal species, including the pollinators essential to the sustainability of our food systems. Forests play a central role in the equilibrium of delicate ecosystems that supply water to communities and plants for medicines, and – crucially – they are the planet’s largest carbon sinks, absorbing and sequestering CO2 from the atmosphere and helping to mitigate the worst effects of climate change. B U T F O R E S T S A R E U N D E R T H R E A T C L I M A T E C H A N G E While forests help to mitigate the impact of climate change, they are themselves at risk of its consequences. These include destruction by wildfires and storms, as well as devastation by invasive species encouraged into the area due to temperature and precipitation changes. I L L E G A L L O G G I N G Illegal logging is responsible for the destruction of swathes of forest, leaving behind areas of land so badly affected that natural regeneration is no longer possible. This practice also contributes to biodiversity loss, conflicts with indigenous and local populations, corruption and both human and animal rights abuses. P O P U L A T I O N G R O W T H It is projected that the world’s population will reach nearly 10 billion by 2050. This will put extreme strain on resources provided by forests, including natural materials for manufacturing and land mass for increasing urbanisation. “ The functioning and management of forests are critical efforts to reduce climate change, and reduce the net GHG emissions into the atmosphere. 22 WOODBOIS LTD | Integrated Report 2021 Forest Research MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES F O R E S T R Y I N A F R I C A The forestry sector in Africa is fragmented. Much of the deforestation caused by logging is the result of unsanctioned forest clearing outside of regulated concession areas. Combined with the formal market, logging in Africa is therefore dominated by thousands of small-scale producers that are largely isolated from global end markets. This isolation means producers often view the forest and its resources as a short-term means to an economic end (often driven by poverty), rather than a long-term asset requiring best practice sustainability and conservation efforts. G A B O N B E L I E V E S I N I T S F O R E S T S Despite Africa’s wider challenges, Gabon has emerged as a leader in sustainable forestry. In June 2021, Gabon became the first African country to receive payment for protecting its rainforest by reducing carbon emissions. The UN-backed Central African Forest Initiative (Cafi) is a $150 million programme first negotiated in 2019.14 The first payment of $17 million represents just 0.1% of Gabon’s annual GDP, however the initiative has been widely praised as an important first step in strengthening rainforest protections and maintaining Gabon’s efforts in this area. The rest of the $150 million will follow in the coming decade. The Gabon Government believes that careful, managed logging is a vital component of these protections. In G A B O N 1 3 is home to some 23.5 million hectares of forest partnership with The Nature Conservancy, Gabon has tested Local timber suppliers also face challenges in the form area, which represents 87% of the country’s total area. All of RIL-C (reduced impact logging for climate), which permits of high costs related to certification and management the Gabonese forest areas are owned by the state, though the cutting of just one or two trees per hectare, with 25-year capacity, creating an obstacle to identifying companies some are managed by private concessionaires or rural breaks to allow areas to recover. Forecasts suggest this will that meet their sustainability requirements. This is only communities exercising their customary rights, while some help reduce logging emissions 50% by 2030 and maintain compounded as timber changes hands. This traceability remain protected as national parks. low deforestation and forest degradation, even as timber problem can ultimately result in the manufacturing of end products sourced from forestry operations contributing to deforestation. Gabon faces a relatively low rate of forest loss at 0.12% per year, with an average degradation rate of 0.09%. Deforestation is a result of small-scale agriculture and urban development, while the main causes of forest degradation are industrial mining and illegal logging in opened-up areas. production grows.15 This is the balance that Woodbois strives for. As Gabon's Forests Minister Lee White said in November, “There has to be a fair deal for Gabon. And we believe the fair deal does involve sustainable forestry. If you do it right, you keep the forest. If you do it wrong, you lose the forest.” 16 23 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES W O O D B O I S ' B A L A N C E D A P P R O A C H Achieving the UN Sustainable Development Goals (SDGs)17 by 2030 will require the implementation of a circular econo- my, better use of renewable resources, and the regeneration and sustainable management of natural systems. F O R E S T S & C L I M A T E C H A N G E This ‘wedding cake’ model of the SDGs highlights the connectivity of a functioning biosphere and a healthy society. Without one it’s hard to have the other. And without either of these we can’t create an economy • Forests help stabilise the climate. They regulate that can be truly sustainable. At the centre of all of these interrelationships and systems is the need for partnerships. ecosystems, protect biodiversity, play an integral part in the carbon cycle, support livelihoods, and can help drive sustainable growth. • To maximise the climate benefits of forests, we must keep more forest landscapes intact, manage them more sustainably, and restore more of those landscapes which we have lost. • Halting the loss and degradation of natural systems and promoting their restoration have the potential to contribute over one-third of the total climate change mitigation scientists say is required by 2030. International Union for Conservation of Nature (IUCN)] 24 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES Woodbois recognises the role it must play in advocating for sustainable forest management if we’re to ensure the longevity of these important natural environments. We are committed to demonstrating positive leadership in this area, and doing so brings about a wealth of social, environmental and business opportunities, both for us as a company, and for the wider population. In engaging with the SDGs, our aim is to drive the sustainable development of Africa while embracing the continent’s move towards higher- value-adding activities. This includes creating new and better job opportunities in secure work environments where skills development and equal opportunities are encouraged. Leading the way in aligning our sustainability strategy with the SDGs is Hadi Ghossein, who oversees Woodbois’ sustainability practices on a day-to-day basis, and our Reforestation and Sustainability Manager in Mozambique, Eng. Macedo Uachuacho, who graduated from Eduardo Mondlane University in Forestry Engineering and has 12 years’ experience in the field working with different government entities and NGOs. In 2021, we also welcomed Richard Feteke, who oversees forest management in Gabon and is managing E N V I R O N M E N T A L P R E S E R V A T I O N ( S D G 1 3 , 1 5 ) Managing forests sustainably not only mitigates the direct climate impact of wood procurement, but can be conducted in such a manner as to facilitate additional carbon sequestration, to the benefit of the global community. L E A D E R S H I P A N D C U L T U R E ( S D G 8 , 1 0 ) Sustainable forestry depends on the ample provision of training and development opportunities. This investment in employees helps to promote loyalty and motivation, while creating a culture of ethical practice that will contribute to a wider respect – and therefore protection – of forests. S O C I A L I M P A C T ( S D G 8 , 1 0 ) Sustainable forest management means respecting the rights of local communities, and positively contributing to their development and wellbeing. E C O N O M I C G R O W T H ( S D G 8 , 9 , 1 2 ) Suppliers, consumers and stakeholders are increasingly demanding sustainable credentials in the companies they do business with. Those that choose to conduct business in a manner that overlooks environmental factors will ultimately be G L O B A L P A R T N E R S H I P S A N D K N O W L E D G E S H A R I N G ( S D G 1 7 ) Woodbois’ inherent relationship with the environments inextricably linked to the climate crisis (forests) means that through partnerships with government and other institutions we have a significant role to play in bolstering other industries’ sustainability initiatives. Woodbois’ LegalSource and FSC certification process. at a significant competitive disadvantage. The more people that advocate for sustainable forestry, the fewer opportunities there will be for those engaged in unethical practices. 25 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES R I S K S & O P P O R T U N I T I E S Forestry and timber trading involves a high degree of technical, political, regulatory and environmental risks, as well as financial risk. Woodbois takes a prudent approach to manage these risks in line with its corporate objectives. R I S K S O P P O R T U N I T I E S • Rise in forest maintenance and harvesting costs • Process optimisation and implementation of circular • Price pressure and increased demand for low cost products not necessarily sustainable • Increased transportation costs solutions to reduce cost and dependency on production inputs • Making sustainability part of the company's DNA and narrative, creating an opportunity to be recognised as • Operational disruption due to environmental, political and an ethical supplier, partner and employer social events • Satisfy the demand of Africa’s growing population with • Operational disruption due to technical production issues affordable and sustainable building material solutions or health and safety incidents • Reputational damage due to unsustainable or unethical practices related to its own activities or those of its suppliers • Competitive advantage through state of the art equipment and advanced risk management • Launch new forest conservation and reforestation projects by leveraging the company’s unique position in • Degraded soil or land due to deforestation, erosion or forestry to diversify into the carbon offset market climate change • Financial risks related to market pricing, liquidity, interest rates and credit 26 WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT THIS REPORT ABOUT WOODBOIS ABOUT WOODBOIS OUR BUSINESS MODEL OUR BUSINESS MODEL THE CAPITALS THE CAPITALS APPENDIX & REFERENCES APPENDIX & REFERENCES I N P U T Cash generated by operations, divestments, debts and equity finance 2 sawmills, 7 kilns, 1 veneer factory, 100 suppliers, Trading network Relationship with a broad range of stakeholders: institutions, local communities, regulators, shareholders, investors and suppliers Diverse team Experienced and highly motivated leadership and local teams Property and licenced technologies Skills and experience 156,000 hectares of concessions on 20-year renewable leases in Gabon 328,000 hectares of concessions in Mozambique on 25-50 year leases Third party timber Water and energy used in production and transportation C R E A T I N G V A L U E O U R V A L U ES R I T U B INTE G Y N I S PA E S S A C T IVITIE S S S I O N Trading of responsibly sourced hardwood and hardwood products Forest protection and conservation Harvesting, logging, production of hardwood and hardwood products through our vertically integrated value chain M A T E R I A L I S S U E S • Economic value generated and distributed • Training and education • Financial assistance • Health and safety at work • Wages and benefits • Efficient use of resources • Equal rights and conflict resolution • Sustainable and high quality products • Legal harvesting • Responsible sales and marketing • Climate change Y C N E R A P S N A R T R E S I L I E N C E • Developing local economies • Biodiversity • Protection of land (soil and water safety) • Greenhouse gas emissions • Energy usage RESP O N S I B I T I L Y O U T C O M E S Revenues Paid taxes Investments on facilities and training Investment in facilities and training Wood harvested Logs produced Logs traded SPOTT ranking Traceability project No. of employees Fatalities New hirings O U T P U T Products Hardwood and hardwood products produced and traded Areas of concessions harvested Resources used to power our operations and for our trading business Emissions Total CO2 emissions Trainings Code of conduct Ha of protected forests Reduction in GHG emissions CO2 stored in our concessions Waste to energy Resources used to power our operations and for our trading business C A P I T A L S S D Gs Financial Manufactured Relational Human Intellectual Natural 27 WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES S T R A T E G I C P R I O R I T I E S Fulfilling the potential of sustainable forestry in Africa18 Our strategic priorities define how Woodbois intends to depends on a number of factors, including regulation, mitigate and manage risks and maximise opportunities, management, a focus on local production and the promotion and demonstrate our commitment to environmental, social of intra-African trade. As an operator in a very fragile and governance (ESG) best practice. Our impact on each industry, environment and region, Woodbois is committed to capital will be monitored and presented annually through the running its business in a way that takes these considerations company’s integrated report. into account. The Forest Sector SDG roadmap19 , as well as the SPOTT framework, have been used as references to define our strategy and commitment to sustainable forestry. 28 WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES C A P I T A L S M A T E R I A L I S S U E S S T R A T E G I C P R I O R I T I E S S D G - - - - - - Financial Manufacturing Relational Economic value generated and distributed. Financial assistance. 1. Maximise value of raw material input through a programme of continuous improvement of efficiency. 2. Better assess and pursue M&A opportunities. Economic value generated and distributed. Financial assistance. 1. New machinery and equipment investment to drive down manufacturing costs and optimise the use of resources. 2. Minimise dependency on fossil fuels by using renewable energy and implementing circular solutions. Responsible sales and marketing. Developing local economies. 1. Invest in long-term partnerships with selected timber suppliers embracing the same ethical and sustainability principles. 2. Invest in services and facilities for local communities. 3. Develop strong relationships with local administration and Government. 4. Strengthen sales efforts with local clients to drive core business development. - Wages and benefits. - - Training and education. Health and safety at work. Human 1. Make the health and safety of all employees a key priority. Invest in continuous professional and personal development. 2. 3. Ensure fair compensation, diversity and inclusion, and proactively fight any kind of discrimination. 4. Further empower women in employment within local communities. - - - - - - - Intellectual Natural 29 Equal rights and conflict resolution. Legal harvesting. 1. Leverage leadership role-modelling to live up to the value of integrity and transparency. 2. Ensure ethical conduct and anti-corruption best practices are in place. 3. Ensure labour rights are fully met. Climate change. Biodiversity. Protection of land (soil and water safety). Greenhouse gas emissions. Energy usage. 1. Protect forests from illegal harvesting. 2. Preserve animal habitats and biodiversity. 3. Employ soil and peat management best practices. 4. 5. Align forest management practices with FSC standards and achieve Integrate activities to enable transition to net zero emissions. full certification in Gabon. More information on our approach to sustainability is available in our Sustainable Forestry Policy, available on our website. WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES F I N A N C I A L C A P I T A L M A N U F A C T U R I N G C A P I T A L INTEL LECTUAL CA PITAL SOCIAL & RELATIONSHIP CAPITAL HUMAN CAPITAL N A T U R A L C A P I T A L T H E C A P I T A L S 30 WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES F I N A N C I A L C A P I T A L M A T E R I A L I S S U E S S T R A T E G I C P R I O R I T I E S - - Economic value generated and distributed. Financial assistance. 1. Maximise value of raw material input through a programme of continuous improvement of efficiency. 2. Better assess and pursue M&A opportunities. We cannot drive a responsible business without healthy economic growth, and this cannot happen without the personal and professional development of our employees, as well as adequate salaries to support their families and subsequently drive the growth of their local communities. On a wider scale, our work must also drive the growth of African countries, which represent a large potential market for many businesses operating in different industries. Woodbois’ operations generate and distribute economic value to the countries in which we operate. The communities we work in are typically quite remote and many are subsistence economies. As such, our continued presence and work in these communities are determining factors in their ability to evolve and grow economically. Our vertically integrated value chain ensures that 100% of Woodbois’ products are processed in Africa, elevating productivity, creating new opportunities for skills development, advancing local processes, and ultimately bringing these countries international exposure through the export of locally-produced products, and not just raw materials. The Company improved on all measures of financial performance in 2021, increasing turnover by 14% and making significant progress by more than doubling gross profit margins, near trebling gross profit and a first-ever positive EBITDAS. Volumes shipped during 2021 were constrained by worldwide port congestion and difficulties in accessing empty containers which impacted our cash generation and working capital, particularly in Q4. $1,000,000 invested in new infrastructure and equipment such as bulldozers, loaders and a second line veneer $100,000 invested in management plans $75,000 invested in environmental licences $ 40,000 invested in HSE equipment for PPE Gross profit $3.5m (+86% vs 2020) 31 Gross profit margin increase 20% First year of positive EBITDA of $1.0m (2020: loss $1.7m) Zero financial assistance from governments WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES H U M A N C A P I T A L M A T E R I A L I S S U E S S T R A T E G I C P R I O R I T I E S - Wages and benefits. Training and education. - - Health and safety at work. 1. Make the health and safety of all employees a key priority. 2. 3. Ensure fair compensation, diversity and inclusion, and Invest in continuous professional and personal development. proactively fight any kind of discrimination. We recognise the value of our people. We are Woodbois is committed to: committed to their development, and their health and • Respecting human rights including the rights of indigenous and local communities safety is our top priority. We invest in the continued • Gender inclusion i.e. supporting the inclusion of women across forestry operations professional and personal development of all of our • Providing essential community services and facilities staff, we ensure fair compensation, diversity and inclusion throughout the organisation, and we are • Respecting worker and labour rights for both fulltime and contract employees, including the right to decent work and freedom of association proud to proactively fight any kind of discrimination. • Preventing employment and occupation-related discrimination based on gender • Paying at least the minimum wage • Ensuring ethical and fair conduct, and fighting corruption Woodbois' commitment to human rights and occupational health and safety applies to all suppliers. 415 Total number of employees 17% of women in board positions 325 Men 78% 90 Women 22% 32 29% of women in senior management positions 42 permanent employees working in the production facilities 356 fixed-term and seasonal employees working in the production facilities WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES E M P L O Y E E W A G E S I N G A B O N A N D M O Z A M B I Q U E Before April 2021, the minimum legal monthly wage in Mozambique was 4,600mt (73.6$) and Woodbois paid its workers 6, 700mt (107.2$) a month at this time. In April 2021, the minimum legal monthly wage in Mozambique increased to 7,450mt (116$) and Woodbois increased its wage to this level. From July 2022, the government in Mozambique will increase its monthly wage to 9,485 mt. Woodbois will then increase its wage to comply with the country law. In Gabon, the minimum monthly wage (before bonus and premiums) imposed by the government is 87,000fcfa (140$)and Woodbois pays its employees 110,000fcfa (177$) per month. A L I G N I N G T O I N T E R N A T I O N A L B E S T P R A C T I C E S Woodbois aligns to international best practices such as the Fundamental ILO Core Con- ventions, ILO Code of Practice Safety and Health in Forestry Work, the UN Declaration on the Rights of Indigenous Peoples, and the United Nations Declaration on Human Rights. We are committed to extending these international best practices to all of our sourcing and suppliers. In the second half of 2020, the company began providing educational training around issues such as: • human and workers rights • ethical conduct • eliminating gender inequality within our workforce In 2021, the company further formalised this process by hiring a dedicated ESG manager (Richard Feteke) in Gabon, who will supervise this initiative. Olivier Normand is Chief Operating Officer in Gabon. Olivier has a Master's degree in aerospace engineering, is a Master in continuous improvement and Lean 6 sigma, and has over 30 years' experience managing, optimising and coaching performance improvement through the application of standardisation and lean manufacturing techniques. Olivier reports directly to the CEO and to the Gabon Country Head. 33 I N C L U S I O N Woodbois pays female employees the equivalent of 100% of a male employee’s salary in Gabon and Mozambique, which is above the national average (source: Gender Gap Africa). Woodbois continues to be committed to reducing the wider industry gender pay gap and to supporting the inclusion of women across all our forestry operations. Our company is an equal opportunity employer, committed to driving inclusion and diversity in the organisation wherever possible through recruitment, training, career development and promotion. Eliminating discrimination starts with dismantling barriers and ensuring equality of access to training. We are committed to preventing employment- and occupation-related discrimination based on gender, and believe this is an essential prerequisite for building resilient and socially- minded economies. We are also committed to keeping employees as fully-informed as possible with regard to the Group’s performance and prospects, and seek their views, wherever possible, on matters which affect them as employees. Woodbois' commitments apply to all suppliers. WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES H E A L T H & S A F E T Y At Woodbois safety comes first. We are committed to ensur- ing the safety of all of our employees, contractors and the • Walk the talk’ leadership • Consequence management communities within which we operate. • Engineering controls to eliminate risk • Administrative controls to mitigate risk Though coronavirus lockdowns again reduced shifts and the • Post-incident root cause analysis and corrective actions number of employees allowed at Woodbois manufacturing • High quality, regularly-renewed PPE for all workers, adapted sites during 2021, we took this opportunity to invest in up- to individual roles skilling and training, with a heavy focus on health and safety. • First aid training and onsite nurses • Regular medical check-ups We also implemented continuous improvement initiatives • Comprehensive safety information displayed in all areas, and lean manufacturing processes with the idea of building vehicles and on all machinery used a culture where everyone is encouraged to contribute to • The provision of a first aid kit to each work team enhancing workplace safety and production efficiency. • First aid training and fire safety sessions for all workers • Systematic reminders of safety rules before entry to the site The impact has been considerable – we have since set con- secutive production records and consider our approach to continuous improvement to be of a world-class standard. We work hard to foster a culture of safety championed by - 800 HOURS OF TRAIN IN G IN 202 1 all employees through a dedicated action plan and rigorous - ZERO WORK- RELATED FATALITIES WE RE RECORDED monitoring, including: - 102 TO TAL LOST TIME INJU RIES IN THE WORKP LAC E - 2 .67% TOTAL REC ORDABLE INJURY FRE QU ENC Y RATE (TRIF R) 34 Harvester team with their Personal Protective Equipment / PPE Reforestation team member in Mozambique wearing PPE WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES G R I E V A N C E S Woodbois has an established company-wide grievance framework that is accessible to both internal and external stakeholders. It is our policy to ensure that all employees have access to procedures to help deal with any workplace grievances fairly and without unreasonable delay. This policy applies to all employees. The process comprises: Local community formulates grievance Official letter from legally elected community leader T H E S E G R I E V A N C E S C O U L D R A N G E F R O M P O T E N T I A L L A N D I S S U E S T O C O M M U N I T Y C O N F L I C T S . A grievance hearing takes place between all representative leaders of the community at a special sitting attended by a senior management representative of our company Community service project created to address grievance and best help the whole community The grievance is settled and agreed upon, taking stakeholder perspectives into account The company conducts a thoughtful follow-up of issues addressed and projects implemented with the community W H I S T L E B L O W I N G P R O C E D U R E S • Employee becomes aware of any malpractice, and immediately reports it to their Line Manager • The Line Manager notifies the Group Compliance Office (the Chief Financial Officer will act as Woodbois’ Group Compliance Officer) • The Line Manager is responsible for initially investigating all matters reported to them, in a prompt, confidential and sensitive manner • The Line Manager provides formal feedback to the employee and Group Compliance Officer of any investigation conducted and the resulting actions taken • If the employee feels the matter has not been resolved to their satisfaction, they can raise their concerns directly with the Group Compliance Officer • In instances where the employee does not feel comfortable reporting a potential malpractice to their Line Manager, they are encouraged to raise any concerns directly with the Group Compliance Officer, the Chairperson of the Audit Committee, or the Company Secretary, any of which will investigate the matter promptly, confidentially and sensitively • The whistleblower will usually be invited to attend an investigation meeting to discuss their concerns • The Group Compliance Officer will provide formal feedback to the employee and Audit Committee of the investigation, and resulting action will be taken 35 WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES O U R P E O P L E 36 WOODBOIS LTD | Integrated Report 2021 J A C O B H A N S E N : Copenhagen Office Director Copenhagen-based Jacob has been with Woodbois since the very beginning. “When we first started the company, we applied to many banks for a loan and got a lot of rejection,” he says. “One bank agreed to see us, and offered us a VIP parking space in front of the premises for the meeting, but since we were driving such an old car we decided to walk on foot instead!” But, he adds, “we did get the loan”. His best business advice? “Be patient and avoid ‘panic solutions’. You can’t solve problems in a rush.” Jacob is proud of the success Woodbois has seen since its beginnings in 2005: “Being named the fastest-growing company by the Danish Stock Exchange and being all over the papers was a big achievement.” M E T T E B I R C H H O L D T : Payments Controller Copenhagen-based Mette has been with Woodbois for 14 years, initially joining the company because she wanted to do something that made a difference. This ethos is reflected in her commitment to cycling. Since 2008 she’s been cycling six kilometres to the office and six kilometres back again. “This should be more common,” she says. “Cycling is a great alternative to petrol use.” Her goal for this year? “Try to keep up with the inbox!” MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES A L I N B O M A : Veneer Sheet Sizing Technician Gabon born-and-bred Alin has been with Woodbois since 2009. “My greatest achievement is staying focused in this role – I was so happy to celebrate 10 years with the company back in 2019,” she says. Her advice? “Always try to work on something you enjoy.” Her goal for this year is to build a house for her family. A N J U L O C H E E : Group Finance Manager Mauritius-based Anju has been with Woodbois since 2018 and is a big believer in teamwork. “We must always work as a team to achieve the best results,” she says, adding that her goal for this year is to work together as a team to bring higher profits to the company. She says that her best achievement so far is consistently meeting tight auditing deadlines with zero audit adjustments. A D R I A N O R A F A E L : Company Administrator Adriano is from Chokwe in the south of Mozambique, and currently lives in Maputo City. He joined Woodbois in October 2016 as a logistics assistant. Now serving as company administrator at Argento Mozambique, he says he’s proud to have built such a strong 40-person team which performs even more efficiently than previously larger teams. He’s also very happy that Argento Mozambique is among the five best-ranked concessions in terms of operational strategies and compliance. His best advice? “Always listen before replying and spend less to invest more – always keep sustainability in mind.” 37 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES C O N T R I B U T I N G T O T H E C O M M U N I T Y Woodbois is committed to supporting local businesses in order to make a valuable contribution to the communities of Gabon. One such example is Woodbois’ very own Picasso, real name Guy Christian Mabikais. Originally from Congo, Guy moved to Gabon in 2001, and was made redundant from his job in 2016. Struggling financially, he decided to embrace his passion and talent for art, and in 2017 began offering his services as a road sign maker to local companies. A friend introduced him to Woodbois, and by the end of 2021 Guy – subsequently baptised ‘Picasso’ by the Woodbois team – was working full time for Woodbois as a contractor. He’s since created > 400 signs for the company, and has enough work to maintain a regular income all year long. 38 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES M A N U F A C T U R I N G C A P I T A L M A T E R I A L I S S U E S S T R A T E G I C P R I O R I T I E S - - Efficient use of resources. Sustainable and high quality products. 1. New machinery and equipment investment to drive down manufacturing costs and optimise the use of resources. 2. Minimise dependency on fossil fuels by using renewable energy and implementing We take a proactive approach • 0 chemicals and pesticides The Group continued the roll-out of its strategic plan during 2021 with capacity at the to investment in energy efficient • 100% of the logs processed in Woodbois sawmills sawmill in Mouila, Gabon, almost doubling to 30,000m3 of annual sawn timber output. equipment in order to drive down both come from company-owned operations Value-adding capital projects have continued into 2022 with capacity at our veneer costs and emissions, and we make • Our productivity in 2021 increased by 88% in terms factory in Mouila expected to more than double to an annualised output of 15,000m3. the most of the plentiful renewable of sawmill output, 86% in terms of veneer output Significant challenges, most notably the ability to receive machine parts by sea freight, resources available to us. We use and 31% in terms of the volume of logs harvested, have delayed completion of this installation: full commissioning is expected to be wood, for example, to create circular compared to 2020 completed by June 2022. The acquisition of an additional 71,000 hectares (of which solutions that further meet our energy • Acquisition of additional 71,000 hectares of forest 56,000 hectares has an existing approved management plan in place for harvesting) requirements. concession land in Gabon in the area of Yeno, of valuable forest concession land in Gabon during 2021 will more than satisfy the Mimongo. additional raw material input requirements of these expanded production facilities. Construction of new manufacturing plants Primultini bandsaw at sawmill commissioned at the end of 2021. Second line veneer project to be commissioned mid-2022 at the veneer factory. Use of current manufacturing plants 2 (the sawmill in Mozambique was sold) Introduction of non-native or invasive species 0 Volume of logs harvested 28,000m3 Harvesting intensity ratio per hectare 3.74m3/ha Volume of Woodbois' produced timber (logs, veneer, sawn timber) Volume of third-party timber traded (logs, veneer, sawn timber) Volume of Woodbois' timber traded (logs, veneer, sawn timber) Volume of timber traded including third-party & Woodbois (logs, veneer, sawn timber) 16,965m3 20,200m3 14,227m3 34,427m3 39 Sawmills providing third-party timber supplies 42 Habitats protected or restored (Mozambique) 30ha WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES O U R F A C I L I T I E S A S S E T O V E R V I E W Woodbois’ Gabon facilities are located in Mouila, a small rural community 400km from the capital city. We are the largest formal employer and offer local people skilled jobs with valuable development opportunities. P R O D U C T I O N A S S E T S C A P A C I T Y S A W M I L L & K I L N Sawmill - 2,500 m3 per month Kilns - 2,000 m3 per month V E N E E R FA C T O R Y 625 m3 per month M I L L Felling - 1000 m3 per month Input - 1200 m3 per month Output - 430 m3 per month Coordinates: 1°52’19.0”S 11°01’22.4”E Woodbois’ operations in Mozambique are located in Gile/Uape. Coordinates: 16°09'36’’S 038°05’05’’E N O B A G E U Q I B M A Z O M 40 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES O P E R A T I O N S I N G A B O N With more than 156,000 hectares of forest under management, Woodbois has been a significant player in the Gabonese forestry sector for the last two decades. Woodbois has invested significantly into its leading sawmill in Mouila, equipping it with the latest European machinery suitable for African hardwoods, and establishing solid training and development programmes to broaden the skillset of the local workforce. For example, a Primultini bandsaw was added to increase our processing capacity, enabling us to cut long timbers of multiple sizes at the same time. We have also hired industry-leading forestry professionals to advance this site, and to move the company’s offerings further along the timber value chain into products such as blockboard. Our veneer factory was completed in 2019 as part of our expansion plan and is also located in Mouila, just 50km away from our forest concessions. A second line is planned for 2022 which will enable us to triple our daily production and offer a wider range of products to our customers. This will also bring at least 50 new employment roles to the Mouila’s community. Production from the factory – which employs a significant proportion of women – is exported mainly to the Mediterranean region, with key buyers in Italy, Morocco and Turkey. Ms. Inssaf Aliazzi is the manager in charge of logistics and shipping in Gabon. 41 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES T R A D I N G Woodbois responsibly sources and trades 20,200 m3 of timber sourced from products from several international – third-party supplying mills and traded, mainly African – countries. The chart below representing 59% of the total timber shows the list of countries we source from. traded (34,427 m3). 0.32% Spain $30,763 0.34% Romania $33,224 Suriname $137,626 1.42% T O T A L $9,702,510 25.69% Republic of Congo $2,492,249 6.69% Liberia $649,317 11.41% Ivory Coast $1,107,144 3.15% Ghana $305,416 42 Cameroon $1,636,407 16.87 % Colombia $203,729 2.10% Equatorial Guinea $825,516 8.51% Gabon $2,281,119 23.51% WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES I N T E L L E C T U A L C A P I T A L Our material issues – equal rights, conflict resolution and legal harvesting – can be addressed through the consistent application of our three key priorities: leveraging leadership role-modelling to live up to the value of integrity and transparency; ensuring ethical conduct and anti-corruption best practices are in place; and ensuring labour rights are met fully. 43 WOODBOIS LTD | Integrated Report 2021 M A T E R I A L I S S U E S S T R A T E G I C P R I O R I T I E S - - Equal rights and conflict resolution. Legal harvesting. 1. Leverage leadership role-modelling to live up to the value of integrity and transparency. 2. Ensure ethical conduct and anti-corruption best practices are in place. 3. Ensure labour rights are fully met. C O D E O F C O N D U C T 1 . S A F E A N D H E A L T H Y W O R K I N G C O N D I T I O N S We commit to promoting and protecting the safety and occupational health of our entire workforce above all other priorities. At Woodbois we are focused on providing a safe and healthy workplace by ensuring that tools and equipment are maintained in good order, and by supplying appropriate personal protective equipment in accordance with international standards and national laws. All employees receive training to ensure they are competent and fit to carry out allocated duties. This includes information about risks and relevant control measures, procedures for safe evacuations of buildings and workplaces, and correct use of tools and machinery. We recognise that all staff have the authority to halt work if they consider the action unsafe. We strive to reduce the environmental impact of our global operations and to help conserve natural resources by planning and managing operations with a sustainability focus. We monitor and report our environmental impacts, and ensure that all operations comply with environmental laws. Our production team strives for continuous improvement through waste minimisation, efficient resource use and other measures that reduce our environmental footprint. 3 . L A B O U R A N D H U M A N R I G H T S We support the United Nations’ Universal Declaration of Human Rights. We respect each individual's human rights and follow all employment laws and regulations. We do not tolerate any form of workplace discrimination, harassment or physical assault, or any form of child, forced, or compulsory labour. Employees are paid regular and competitive wages, and Woodbois regularly invests in resources and training to assist staff who want to develop their full potential. 2 . E N V I R O N M E N T We commit to protecting and respecting the natural environments in which we operate. 4 . H O S T C O M M U N I T I E S We recognise the importance of community engagement and shared prosperity. MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES We engage with communities at all stages of project planning and development to ensure that local opinions, feedback, and concerns are properly recorded and addressed. We believe it is possible to deliver real socio-economic impact through our regional activities by developing infrastructure, building local skills, and developing people. 5 . S U P P L I E R S , C U S T O M E R S A N D O T H E R B U S I N E S S P A R T N E R S We commit to fair and ethical relationships with suppliers, customers and other business partners. We endeavour to build long-lasting relationships based on fair selection, clear terms of business, and adherence to shared principles set out in our Code. We follow established due-diligence procedures that enable us to select business partners who meet legal requirements and internal expectations in regards to product provenance, supply chain safety and environmental impact. Woodbois is committed to purchasing third-party timber only where it is possible to ensure legal compliance of suppliers. The company unreservedly condemns illegal logging and irresponsible trade of endangered species. 6 . E Q U A L I T Y We commit to creating an inclusive environment where every colleague is valued. At Woodbois, all employees are expected to treat each other with care and respect. We strive to provide employees with an environment where they can bring their whole self to work regardless of gender, race, sexual orientation, age, religion or disability. and respect the rights of employees including the freedom of association and collective bargaining. and regulatory obligations for taxation arising from its operations. 7 . B R I B E R Y We stand against bribery and corruption. It is not permitted for any Woodbois employee or representative to give, offer or receive a bribe either directly, indirectly, or through a third-party business in any dealings. 8 . T R A D E C O N T R O L S A N D S A N C T I O N S We comply with all applicable trade controls and sanctions in the regions where we operate and trade. The export of timber goods is subject to a range of regulatory requirements in different regions. Woodbois maintains constant dialogue with relevant government and trade bodies to ensure it satisfies registration requirements, export licence needs, and all additional legal obligations. Woodbois is conscious that governments and international organisations may impose international trade sanctions on countries where the company operates. We are committed to complying with all trade sanction conditions. 9 . A C C U R A T E R E C O R D S , R E P O R T I N G A N D F I N A N C I A L R E C O R D K E E P I N G We commit to publishing accurate and transparent company reports. We endeavour to release regular operational, financial and integrated reports for the benefit of company stakeholders. Financial statements are produced in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). We are committed to full compliance with external and company reporting requirements, including those concerning disclosure to tax authorities and reporting on the tax payments that we make. 1 1 . P R O T E C T I N G A N D M A I N T A I N I N G A S S E T S We recognise the importance of looking after our assets. Employees are responsible for looking after company assets including business opportunities, funds, property, proprietary information, and personal equipment. Employees must take steps to read and understand the rules regarding unacceptable use of company IT resources and comply with the relevant set of rules. Woodbois only collects and holds personal information as permitted by law and as is reasonably necessary to meet business requirements. 1 2 . I N S I D E R D E A L I N G We stand against insider dealing. It is illegal to deal in Woodbois shares on the basis of inside information or to encourage others to do so. During the course of their work some employees will have access to information which could influence someone contemplating investing in Woodbois shares. Employees are forbidden from using confidential company information for personal gain, or from sharing inside information for the same purpose. We seek to reflect the diversity of the regions and communities in which we operate within our own workforce, 1 0 . T A X We commit to paying the right taxes. Woodbois strives to understand and comply with the legal 44 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES F O R E S T M A N A G E M E N T I N G A B O N • Woodbois holds eight forest permits in central Gabon • The inventory is recorded by systematic sampling bracteosa), Dabema (Piptadeniastrum africanum), in the province of Ngounié, north-east and south-east of the community of Mouila • The counting operation consists of: identifying the species of trees; measuring diameter; numbering trees • The management plans, approved by the via the placing of a plate; geolocating each tree via Mahogany (Khaya ivorensis), Ovang-Kol (Guibourtia ehie) and Okoumé (Aucoumea klaineana). We are also permitted to harvest from the 2019 management plan administration in charge of waters and forests, define GPS; and assessing the quality of all applicable trees • All of Woodbois’ forest management plans have been the harvesting plan for the areas that have reached the minimum diameter size for approved by local governments following preliminary • The inventory plan determines: the stocks of harvesting harvestable timber and their location; how to track and • The harvesting plan for 2021 covers a total area of mark trees to be harvested or protected; and how to 3,762 hectares. The most common tree species are establish the route of potential roads Ilomba (Pycnanthus angolensis), Ebiara (Berlinia community consultations and approval processes, and are strictly followed. This map shows Woodbois’ management plan in Gabon for 2021. 45 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES Ma n a ge ment pl an: H O W I T W O R K S All of Woodbois’ forest management plans have been approved by local governments following preliminary community consultations and approval processes, and are strictly followed. H A R V E S T I N G P L A N S : Following a 23-year rotation cycle, Woodbois is permitted to harvest a section of its total concession area for three years. After these three years, the same area cannot be touched for 20 years to ensure forest regrowth. F O R E S T I N V E N T O R Y : To ensure selective cutting of commercial species, we carefully quantify and locate appropriate forest resources, with particular emphasis on social aspects as well as protecting natural biodiversity. Each of our trees is tagged and geo-monitored so we can actively track tree species, volume and the quality of what we cut. L O G G I N G A C T I V I T I E S P L A N : Vital to minimise the impact of roads. W A T E R U S A G E F O R E S T C O N S E R V A T I O N : Areas not in production are protected by Woodbois from illegal logging activities or other uses, such as agriculture. 46 Forest management plans allow us to track how many cubic metres of timber have been extracted while monitoring the impact our operations have on the environment, ensuring we operate responsibly. M A N A G E M E N T P L A N – 3 , 5 0 0 H A E A C H T R E E is individually identified and its location recorded by GPS within the concession area In a single hectare plot, the Company is typically only allowed to cut 6 T R E E S A F T E R 2 0 Y E A R S you can re-enter the forest and the exact same exercise is carried out 1 H A This method of forest management is called Continuous Cover Forestry – when taking out an individual tree in an area, you open canopy to allow smaller trees to grow. WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES R E L A T I O N A L & S O C I A L C A P I T A L Woodbois’ trading network comprises some 300 customers across more than 60 countries. We place a high value on these connections, and we aim to foster a relationship of trust and security with our customers and suppliers. M A T E R I A L I S S U E S Responsible sales and marketing. - - Developing local economies. S T R A T E G I C P R I O R I T I E S 1. Invest in long term partnership with selected timber suppliers embracing the same ethical and sustainability principles. 2. Invest in services and facilities for local communities. 3. Develop strong relationships with local administration and Government. 4. Strengthen sales efforts with African clients. R E S P O N S I B L E T R A D I N G & S O U R C I N G 1 H A 34,427 m3 Volume of timber traded including third-party and Woodbois (logs, veneer, sawn timber) 100% of our third-party supply is traceable (documents regarding country of origin and FMU are provided) 42 sawmills providing third-party timber supplies 14,227 m3 Volume of Woodbois timber traded (logs, veneer, sawn timber) 20,200 m3 Volume of third-party timber traded (logs, veneer, sawn timber) 29% of our suppliers are third party certified By 2030, Woodbois' suppliers will have to be in compliance with timber and pulp sourcing commitments. 47 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES A Woodbois controller in the field verifies that suppliers comply with the due diligence process and wood quality standards on a regular basis, and then drafts a monthly report. If third-party suppliers do not meet Woodbois’ selection criteria, they are placed on an exclusion list which forbids our traders from conducting business with them. This exclusion list is updated on a bi-annual basis. D U E D I L I G E N C E P R O C E S S Woodbois only sources forest products from partners who have succeeded in passing a due diligence process for legal and responsible forest product sourcing. To work with any supplier of timber, Woodbois requires information and documentation regarding the source of the timber including tree species, wood origin and compliance with national laws and regulations. 1 - S U P P L I E R S 2 - S H I P M E N T 3 - B U Y E R S Buyers sometimes provide their own supply chain mapping to ensure responsible timber purchases. Since 2013, Woodbois has Documents required: run a due diligence process • Bill of Lading (BL) from the shipping inspired by EUTR/ FLEGT, which includes a checklist of documents required for company • CITES certificate if necessary (created by Woodbois using supplier export screening. This process is done codes) at the beginning of each year • Movement certificate (EUR1 for EU for existing suppliers and at the trade; Certificate of Origin if shipment start of any collaboration with is anywhere else in the world) new suppliers. • Act of Merchandise Transit (Circulation de Merchandise) • Phytosanitary certificate 48 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES To confirm that none of the wood traded by Woodbois is on the CITES species list, our traceability process allows us to track products across their entire journey, from forest to manufacturing to final export. We trace both our raw material and processed timber back to the country of harvest. Any timber handled by Woodbois in any form requires a certificate of origin – neither ourselves nor our logistics providers or customers will handle timber that does not have a certificate of origin identifying its country of harvest. In collaboration with South Africa-based WorkPool, we have developed software allowing our trading and operations teams to collect all trading-related data, from inputting a simple sales or supplier enquiry all the way through to issuing invoices. This software allows us to quickly identify any supplier with out-of-date documentation, so we can remove them from our supply chain until their paperwork has been renewed. We're also continuing our collaboration with DiginexESG20, a financial services and blockchain technology company, to build a blockchain-based solution to help companies and investors manage ESG company risks, and make sustainability reporting more transparent, secure and immediate. The DiginexESG platform has been used since 2019 by the Woodbois executive team for monitoring and validation of the company’s ESG disclosures in line with the Global Reporting Initiative (GRI) Standards. T R A C E A B I L I T Y & T R A N S P A R E N C Y 49 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES E N G A G I N G W I T H L O C A L C O M M U N I T I E S O U R C O M M I T M E N T We are committed to: In 2021, Woodbois donated 500m3 of lumber to the villages of Mboukou and Saint-Martin. We also provided 5,000 litres of diesel to the villages in our harvesting area. F U T U R E P R O J E C T S Since October 2021 Woodbois has been constructing a 126km road in the south-west of Gabon: Route Mouila Mimongo. The new road will give villagers much easier access to the outside world, as the poor condition of the existing abandoned road made visiting family, shopping and business a considerable challenge – a 50km journey would previously take three days to complete. The two-phase project also includes the renovation of bridges, plantation • Enabling sustainable use of non-timber forest We count on our neighbouring communities for our grounds and a local community court. products (NTFPs) by local communities dedicated workforce, local business partnerships, and • Free prior and informed consent (FPIC), and the stewardship of the natural resources entrusted to us. Other projects planned for 2022 include the restoration of inclusion of indigenous peoples Woodbois is committed to conducting business with integrity land around the dispensary of Kembele to provide better • Respecting legal and customary land tenure rights and in a way that promotes shared prosperity. In accordance access for the villagers, as well as restoration of Kembele’s • Providing business and work opportunities for local with the Gabonese Forestry Code, Woodbois makes regular local football pitch, which is used by the football team of communities financial contributions to a fund co-managed by community Kembele and village school children. We will also be making Our commitments apply to all suppliers. and Forests. This fund supports critical community-led areas to help communities more efficiently collect and representatives, local government, and the Ministry of Water donations of tools and equipment to villages in our local development initiatives. manage wood. Our teams are actively engaged in community consultations to ensure we respect local customs and our contributions have meaningful value (our FPIC procedure is reported in the report annex). This commitment extends to respecting legal and traditional land rights. For example, our forest concessions are a direct result of community consultations. Local stakeholders help designate and map agricultural land for local use, dedicate areas for specific crops and provide education and information related to the hunting seasons. In some cases, we have established contractual agreements with communities to ensure we respect and align with local needs and customs. Woodbois is also financially contributing to the development of villages Saint-Martin and Mboukou. 50 WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES N A T U R A L C A P I T A L M A T E R I A L I S S U E S S T R A T E G I C P R I O R I T I E S - Climate change. Biodiversity. - - Protection of land (soil and water safety). - Greenhouse gas emissions. - Energy usage. 1. Protect forests from illegal harvesting. 2. Preserve animal habitats and biodiversity. 3. Employ soil and peat management best practice. Integrate activities to enable transition to net zero 4. emissions. The natural capital is a central focus of our business, therefore we face significant material issues including climate change, protection of biodiversity, protection of land (and ensuring soil and water safety), greenhouse gas emissions and overall energy usage. As such, responsible and ethical forestry sits at the heart of our operations, driving our key priorities of protecting forests from illegal harvesting, preserving animal habitats and biodiversity, employing soil management best practice, and integrating activities to enable a transition to net zero emissions. In 2019, Woodbois began using Global Forest Watch, an online platform that provides data and tools for monitoring forests. By taking data from various satellites, Global Forest Watch can give real-time information on forest fires and other potential deforestation situations. 51 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES E N E R G Y C O N S U M P T I O N 2019 2020 2021 Energy consumption within the organisation. Diesel consumption on the ground and in processing facilities. Energy consumption within the organisation. Diesel consumption on the ground and in processing facilities. Energy consumption within the organisation. Petrol consumption on the ground and in processing facilities. Energy consumption within the organisation. Total energy consumption from fuels (diesel, petrol) lts GJ GJ GJ 839,835.93 682,631.00 991,496.00 30,150.11 24,506.00 35,594.71 280.77 201.00 52.43 m3 of logs harvested 34,361.00 18,810.00 28,000.00 Energy intensity. Total energy (fuels and electricity) intensity ratio per final production (logs). GJ/m3 0.89 1.31 1.27 E M I S S I O N A N A LY S I S 2019 2020 2021 Delta (%) Direct (Scope 1) GHG emissions for use of fuels. tCO2e 2,277 1,849 2,664.93 44.14% Biomass converted into energy. t 1573 1250 1,840.00 47.20% Our carbon analysis from 2021 shows that emissions have increased compared to 2020, although this is to be expected given reduced output in 2020 due to COVID. However, we have also seen reduced emissions intensity, compared even to pre-pan- demic levels, which indicates that our energy efficiency measures are having a positive effect on our total carbon impact. To reduce our carbon footprint, we monitor our energy consumption on a weekly basis and take relevant action when it increases (such as equipment maintenance and repair). We endeavour to increase production without increasing our footprint. In partnership with the commercial team, we monitor our wood recovery rate on a quality and waste reduction by organising training workshops with saw operators. We also found new markets for undersized boards, upcycle and recycle small pieces of wood for the hobby market, and use our waste wood to generate energy for our kiln and boilers. Additionally, we have improved the maintenance and operational time of our equip- ment, and have conducted an awareness training session on diesel consumption for all of our drivers. We are committed to: • Protecting forest areas against deforestation, degradation and conversion for unauthorised or illegal resource use, settlement 30,430.88 24,708.00 35,647.14 daily basis, and have seen a 5% improvement in 2021. We have improved our sawing Other indirect (Scope 1) GHG emissions: on-site biomass incineration. Volume of logs harvested. tCO2e m³ 92.84 72.94 88.30 21.06% and other prohibited activities. 34,361 18,810 28,000.00 48.86% • Restoring non-compliant deforestation and conversion. • Implementing a landscape-level approach to preserving animal habitats and biodiversity. Total GHG emissions intensity. tCO2e/m³ logs 0.07 0.10 0.095 -3.17% • Permitting no hunting, or permitting sustainable hunting and Volume of Woodbois' produced timber (logs, veneer, sawn timber). m³ 12,717 9,357 16,964.00 81.30% • Ensuring present and future potential plantation timber fishing only. Total GHG emissions intensity. tCO2e/m³ timber 0.18 0.20 0.16 -20.50% suppliers do not plant on peat land. • Adopting the High Carbon Stock approach to any future potential plantation timber suppliers. Diesel assumed to be 100% mineral diesel Petrol assumed to be 100% mineral petrol Biomass assumed to be wood chips GHG Protocol Website: "NCASI Spreadsheets for Calculating GHG Emissions from Wood Products Manufacturing Facilities Workbook Version 1.0" OUR COMMITMENTS APPLY TO ALL SUPPLI ERS. 52 As of 2020, the Company does not have any peat land area in its landbank. WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES T R A N S P A R E N C Y In 2021, Woodbois was again recognised for its sustainable activities in the SPOTT ESG policy transparency assessments for the worldwide timber and pulp industries. In the annual assessment, Woodbois was ranked sixth out of more than 100 companies. F O R E S T S M A N A G E M E N T & C L I M A T E C H A N G E Woodbois is committed to responsible and ethical forestry. Our forest management and responsible sourcing practices have a direct impact on SDG 15 and on our ability to preserve the forest environment while supplying wood and wood products in the long term. Inadequate and aggressive management practices could affect the potential of the lands where we operate, reducing the positive impact on local O U R C O N T R I B U T I O N • We protect our forests to reduce deforestation and degradation. • We take firm action against deforestation, harvesting fewer trees than management plans permit, and working on a 23-year rotation plan that ensures the regrowth of harvested forest and maximises carbon absorption. • We work closely with governments and local communities to address illegal activities, helping to ensure that forests are protected and that their productive capacity is optimised communities in terms of resources and job opportunities. in the long term. We aim to while recognising the subsistence needs and customary rights of local communities and indigenous peoples. O U R C O N T R I B U T I O N degradation, by 2030 we aim to eliminate it altogether. By pursuing sustainable forest management, Woodbois aims to • We protect our forests to reduce deforestation and enhance the benefits healthy forests bring to our ecosystems and help reduce the negative effects of climate change on forests and forest- dependent people. • We strictly follow both national and international regulations and standards for flora and fauna protection (CITES, IUCN), and commit to zero conversion of natural forests. • To avoid unsustainable and non-compliant use of forest resources, Woodbois donates a significant volume of logs to local communities. • By sourcing and manufacturing wood and wood products we offer an alternative to less sustainable products. WOODBOI S' CO MMIT ME NT T O ZERO DEF ORE STATI ON OR ZERO CON VERS ION O F NATU RAL EC OS YS T EMS APPLI ES T O ALL S U PPL IERS . 53 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES O U R C O M M I T M E N T • Best management practices for soils and peat to minimise the use of chemicals, including pesticides and chemical fertilisers, and no use of World Health Organisation (WHO) Class 1A and 1B pesticides and chemicals listed under the Stockholm Convention and Rotterdam Convention. • Reduced-impact logging. • Zero burning in the forest. • Protecting natural waterways with buffer zones. • Developing a complete climate change risk assessment. This includes identifying climate-related risks that are relevant to the company, and proposing measures that should be made at the forest management unit in Gabon. • Developing a Natural Capital Assessment based on the protocol provided by the Natural Capital Coalition. We are engaging with consultants who can help us perform more detailed High Conservation Value (HCV) and Social and Environmental Impact (SEIAs) assessments. OU R C OM MIT MENT S AP PLY TO A L L SU PP L IE RS . OU R FO R ESTS IN GABON SEQU ESTER O VE R 160 00 0t CO 2e PER YEA R, ASSUM IN G 1.6 9t CO 2e SEQU ESTERED 21 PER HA PER YEAR AND CONS I DERI N G 8-1 0 HECTARES OF FO RE ST S HARVESTED . OU R FO R EST IN MO ZAM BIQ UE SEQUE ST ER S 186,00 0 tCO 2e PER YEAR , ASSUMING T HAT INTACT NATURAL AFR ICA N F OR ESTS SEQ UE STER 0.6t CO 2e PER YEA R. 22 In 2021, zero illegal and non-compliant deforestation was reported. If non-compliant deforestation or conversion occurs in the future, Woodbois is committed to the restoration of the areas involved. The company is working with the Gabonese government and by 2025 will not accept any form of deforestation. Woodbois is constantly monitoring climate change and has identified a list of specific parameters to measure over time, including: Woodbois is constantly monitoring climate change and has identified a list of specific parameters to measure over time, including: • Temperature increases which could impact the dynamics of local flora and fauna • Rainfall changes which could lead to flooding and soil saturation 54 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES Protecting natural waterways through buffer zones W A T E R & W A T E R W A S T E M A N A G E M E N T In October 2021, Woodbois commissioned SEEG, the state-run water and electricity utilities company in Gabon, to carry out a study of the well at its sawmill in Gabon. Woodbois wanted to verify it was not polluting the well with waste, oil or biohazards. The result, provided by an independent third party lab following the WHO guidelines for drinkable water, found the water to be drinkable, with a PH equivalent to Perrier water (ie,5.5). View the report (En) View the report (Fr) As Gabon is renowned for its two heavy rain seasons, our facilities are equipped with drainage and gutters adapted to large amounts of water. The water collected is directed as far as possible from the operation and process area using gravity to evacuate it. In 2022 we intend to add more decanters close to our garage area to capture even more waste and to use part of this water as “grey water” for our commodities. Woodbois applies strict environmental rules and has written procedures to mitigate the risks of pollution in every area of process, and in the forest, to avoid water and soil contamination. Details of these procedures are available on demand. 55 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES W A S T E M A N A G E M E N T Woodbois does not use chemicals or pesticides to manage waste. Wood waste is shared with all neighbouring villages (1,200m3 in 2021) and the remaining wood waste is used as biofuel for the veneer factory and kilning operations (1,840 tonnes in 2021). W O O D W A S T E R E C Y C L I N G : J E A N D E D I E U ’ S S T O R Y Born in Gabon in 1985 and with 12 years’ international professional experience across a range of sectors, Jean Dedieu was inspired to start his wood waste recycling company after watching Marvel movie Black Panther. Living in Belgium at the time, he returned to Africa in 2020. Jean originally started a training school in wood and forestry, but with the encouragement of industry figures decided to pursue wood waste recycling, supported by Woodbois which provided Jean’s company with wood waste free of charge. EFAW transforms and recycles wood, sawdust and shavings, In 2021, Jean launched Exploitation Forestière Agrèage Wakanda (with Wakanda a nod towards Black Panther), building his workshop with wood waste retrieved from Woodbois factories. processing 300m3 of wood waste every month – equivalent to 150m3 of finished product. The company – professionally accredited within the forestry sector – employs four people directly and 15 people indirectly, and has a capital of five million Central African CFA Francs. As well as building and selling a range of wood-based products, EFAW plays a significant role in the local community, helping to build houses and training young people, preparing them for careers in forestry. Next on the agenda for EFAW is investment in a pellet-making machine to further reduce wood waste, and the launch of internships for apprentices within Woodbois’ factories. “The wood and forest sector represents a great opportunity for our youth and their perspective of employment. Without the support of Woodbois I would not have been able to realise this project,” says Jean. “I consider Woodbois like a godfather to the project!” WoodBois is closely following the development of EFAW and plans to come back with an exciting update in 2022. 56 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES U S E O F C H E M I C A L S M I N I M I S I N G T H E I M P A C T O F L O G G I N G R O A D S Woodbois minimises the impact of logging roads by Crucially, harvesting only takes place along carefully basing main tracks, wherever possible, on existing roads laid out skid trails. After harvesting, skid trails are and elephant paths, and avoiding secondary roads unless rehabilitated to avoid permanent soil compaction absolutely necessary. Our forest management plan creates and roads are closed to prevent poaching and illegal new roads efficiently and carefully, with infrastructure settlements. In just a few months, skid trails and dimensions minimised as much as possible while adhering harvesting gaps are covered by tree regeneration, while to safety and sunlight rules. Watercourse crossings are roads disappear after a few years due to the natural constructed without raising the water level, which could regeneration of pioneer tree species. potentially lead to flooding upstream and the destruction of forest. Bridges and other structures are planned and constructed according to varying seasonal flows. WOODBOIS IS COMMITTED TO USING BEST-IN-CLASS PRACTICES TO MINIMISE THE IMPACT OF LOGGING ON TH E SURROUNDING ENVIRONMENT. 0% Woodbois does not use chemicals in any forestry, sawmill or veneer operations, including chlorine or chlorine compounds, pesticides and chemical fertilisers (such as World Health Organisation Class 1A and 1B pesticides or chemicals listed under the Stockholm Convention and Rotterdam Convention). To capture and dispose of pests, we use an integrated management approach with non- chemical devices. F I R E F I G H T I N G At Woodbois, we believe the best approach to reducing the risk of wildfires is preventative firefighting. Our proactive three-pronged approach – effective weed control, firebreak construction and ring-hoed trees – drastically reduces fuel loads prior to the dry season. By engaging local communities to identify potential hot spots, we ensure fires are kept to a minimum. Our preventative approach is extremely effective; Woodbois has never lost a single tree to fire in any of its project areas. 57 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES T H E F O R E S T P R O D U C T S V A L U E C H A I N A S A N E X A M P L E O F A C I R C U L A R E C O N O M Y • Approach To Enhancing Economic and Nature-Capital Impact • The forest product value chain. Presented by WBCSD Forest Sector SDG Roadmap , pair 58 Source diagram: European Commission • Substituting conventional building materials for mass timber reduces construction phase emissions by 69%.23 • Substituting conventional building materials with wood in half of new urban construction could provide 9% of the global emissions reduction needed to meet 2030 targets for keeping global warming below 1.5 °C.23 • 80% less CO2e is emitted when manufacturing a wooden table compared to a plastic table.23 • As an added benefit, wooden furniture also stores carbon at a rate of 1t per 1m3 for its lifetime. Weight of the table Emissions due to the production of the table Hardwood Wooden 32 kg 10.0 kg CO2e Table Plastic Table 16 kg 49.7 kg CO2e A V O I D E D E M I S S I O N 3 9 . 7 k g C O 2e WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES E N H A N C I N G O U R I M P A C T F S C C E R T I F I C A T I O N 1 . C E R T I F I C A T I O N O F N A T U R A L F O R E S T S The Company is currently working with PPEFC and has started the process of consultation. 5 . E X P A N D P R O D U C T I O N C A P A C I T Y A N D H E C T A R E S O F F O R E S T U N D E R M A N A G E M E N T Woodbois wishes to increase its hectares under management to further enhance the benefits to all stakeholders. 1 5 2 4 3 2 . R E F O R E S T A T I O N I N T H E F O R M O F P L A N T A T I O N O R N A T U R A L F O R E S T A L O N G S I D E P A R T N E R S Woodbois is exploring reforestation solutions for available degraded land to identify carbon credit / offsetting opportunities. 4 . R E D U C E T I M B E R W A S T E In moving along the value chain, Woodbois seeks to reduce its waste. 3 . C A P I T A L E X P E N D I T U R E T O M O V E F U R T H E R A L O N G T I M B E R V A L U E C H A I N Woodbois has extensively expanded its sawmill and has built a veneer factory in Mouila. The Company has committed to investing more capital to move along the value chain providing more skilled work for the local community. Woodbois has FSC chain of custody certification in Denmark and began its journey towards FSC Certification in Gabon in 2020, as well as engaging with the Programme de Promotion de l’Exploitation Certifiée des Forêts24 (PPECF). Our certification is now more than 60% completed. Within the next ten years Woodbois is committed to: • Gaining FSC certification for 100% of our FMUs. • Sourcing only wood/wood fibre that meets FSC Controlled Wood requirements. • 100% third-party verification for FMUs. • Sourcing only wood/wood fibre that is in legal compliance, as verified by a third party. Woodbois is committed to FSC certification: Forest Management and Chain of Custody. Woodbois will apply for FSC Chain of Custody in 2022 and Forest Management in 2023. For both types of certification, independent FSC-accredited Certification Bodies verify that all FSC-certified forests conform to the requirements contained within the FSC forest management standard. FSC certification is an international standard focusing on: • Wood traceability and sourcing • Respect for the environment • Social behaviour within the community • Social behaviour within the company • Compliance with labour laws Certification is a natural fit for Woodbois, which already abides by these principles. Weight of the Emissions due to table the production of the table Hardwood Wooden 32 kg 10.0 kg CO2e Table Plastic Table 16 kg 49.7 kg CO2e A V O I D E D E M I S S I O N 3 9 . 7 k g C O 2e 59 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES R E F O R E S T A T I O N & C A R B O N C R E D I T D I V I S I O N In 2021, for the first time, the Voluntary Carbon Markets introduce indigenous forest to an area currently occupied (VCM) surpassed $1 billion in notional value traded,25 by low-value grasslands. The project involves collaborative demonstrating growing confidence in the market’s ability to fire management and enrichment planting strategies that facilitate near-term climate solutions. will create significant local employment, enhance carbon stocks, increase biodiversity, and improve livelihoods The agenda at COP26 gave significant attention to the role through upskilling and alternative income generation. The of nature in climate mitigation and adaptation. In many project is made feasible by the attractive carbon revenue cases, the private sector responded with updated twin potential. Woodbois expects to register the project with commitments, proposing dual strategies for managing the Verified Carbon Standard for credit issuance as well as risks associated with both climate change and biodiversity Climate, Community and Biodiversity accreditation. Based loss. As a result, the VCM saw a surge in preference for on conservative estimates, the project could generate credits originating from nature-based solutions (NbS), with 25,000,000 carbon credits over a 45-year period. prices climbing to new highs. Research indicates that NbS have the practical potential to deliver emission reductions Extensive due-diligence carried out as part of the project of 7GtCO2e per year, equivalent to one-third of the global target set in Paris. Beyond the climate benefits, NbS can feasibility process confirmed the attractiveness of Gabon as a project jurisdiction. Woodbois has a long history deliver significant environmental and social co-benefits, all of operating in the country and continues to strengthen at lower cost than ready-to-deploy technological solutions.26 relationships with the local community and Government. Capitalising on this potential will require a coherent effort Joining the Gabonese delegation at COP26 provided an between governments, the financial sector, and business opportunity to discuss the country’s vision for global carbon actors in order to deliver projects at a new pace and scale. markets and the expectations for project developers in Gabon. Well-aligned development objectives, supportive Woodbois established its carbon division in 2021 with policy, and prime environmental conditions all contribute Woodbois is working closely with the Government to the aim of developing a project implementation model to a unique project development setting. The economic demonstrate the feasibility and value of the proposed project, that can simultaneously deliver environmental, social advantages were recognised in a recent OECD paper that and remains confident in obtaining the necessary permission and economic value. In a 12-month period, the team has compared 166 countries based on the cost efficiency of to start development phase trials in the near term. In made significant progress towards initiating a proposed forest carbon sequestration; Gabon ranked first in the parallel, the team continues to field conversations with other maiden project, comprising a large-scale assisted natural afforestation category.27 Governments and potential project partners, adding to a regeneration scheme in the south of Gabon, designed to pipeline of future opportunities. 60 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES R E F O R E S T A T I O N P R O J E C T P R O C E S S • Identify project sites previously exploited for illegal logging / extractive industries, where lack of investment and expertise has previously prevented reforestation • Project developer coordinates with the Government to secure long term concession • Native species used to restore efficient ecological system C O - B E N E F I T • Positive environmental impact on biodiversity, soil and water quality, and CO2 sequestration • Poverty alleviation, skilling and stable employment for local communities • Capability building and educating in sustainable practices • Reduced social mobility in project geographies Gabon is ideally located and structured for African reforestation as it is one of the world’s most densely forested countries, with a unique bioclimate suited to rapid tree growth and optimal CO2 sequestration. O U R R E F O R E S T A T I O N E F F O R T S I N M O Z A M B I Q U E Woodbois manages and operates approximately one million acres of natural forest concessions in Gabon and Mozambique, with the latter our main focus of reforestation activities. We began reforestation in Mozambique in 2017, with 35 hectares in Madeiras, expanding with a further 30 hectares in 2019. The project is managed by Eng. Macedo Uachuacho, and supported by Woodbois’ head office in Maputo, Mozambique’s capital. There are currently 10 employees working on the project – a number we expect to grow as we expand the area of reforestation. In 2022, we plan on planting The Gabonese Government has demonstrated a keen appreciation for the 5,000 more trees. environment, addressing deforestation, investing in green industries, and engaging with international sustainability programmes. • Reforestation is the most cost effective solution • Photosynthetic carbon capture is the most reliable and cost- effective method available today for restricting the rise of atmospheric CO2 concentrations. • The Intergovernmental Panel on Climate Change (IPCC) suggests new forest projects could sequester 25% of the CO2 required to maintain the 2°C temperature goal. 61 61 WOODBOIS LTD | Integrated Report 2021 Eng. Macedo Uachuacho, Reforestation and Sustainability Man- ager in Mozambique We have installed a permanent nursery to support seedling irrigation, and only plant species that are native to each concession and their surrounding communities. Since the project began in 2017, more than 10,700 trees of different species have been planted, with the first seedlings now standing between four and five metres tall. At the end of every month, a comprehensive report on our activities and progress is sent to Ministry of Forestry authorities. The project is also an important part of our community collaboration engagement. We aim to make a valued contribution to social progress and the regional economy by creating jobs, providing training and empowering employees to lead initiatives for local action. WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES N U R S E R Y M O N T H 1 M O N T H 2 M O N T H 3 P L A N T A T I O N M O N T H 4 M O N T H 5 M O N T H 6 62 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES A P P E N D I X F P I C P R O C E D U R E When Woodbois opens up a new area of forest to be harvested, the company follows an internal FPIC (Free Prior and Informed Consent) procedure to ensure that locals are properly informed and that their concerns and needs are taken into account in the context of the prospective operation. Identifying concerned locals and their representatives Inform the local community of the company’s plans, document any concerns or needs that the indigenous people have Implementation of local community needs within our projects. Regularly monitoring and evaluating agreements that are in place • Having been present in Gabon for over 20 years, the company is well known among the local communities in which we operate, allowing us to easily identify local communities that may be present in our area of operation. • The company has strong relationships • Our Operations Manager actively with local communities, typically meeting local leaders every two months to update them on our activities as well as address concerns or questions surrounding our operations. These are documented and followed up. meets local community leaders and representatives. • She also makes sure that any agreements or concerns that may have been highlighted are actively followed up on by specific members of the operations teams on the ground. 63 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES F O R E S T R Y T R A C E A B I L I T Y A S S E S S M E N T The Traceability Assessment Guide (TAG) created by Smurfit Business School in collaboration with Woodbois is reported below. Phase 1: Internal Support Phase 2: Capability Assessment Category Task Description Method/Source Examples/Explanation Check Project Management support Internal Consultation Management project sponsorship, transparency, consultation, communication of benefits Input from staff on the ground Resource allocation Internal consultation Internal consultation Select relevant individuals and method of information collection (e.g. interview, questionnaire) Determine the budget and personnel available for the project Stakeholders Identify all internal and external stakeholders Stakeholder Identification Table Workers, NGOs, Shareholders etc. Evaluate the stakeholders Ascertain stakeholder interests Identify conflicting stakeholder interests Analyse combined data to develop a communication plan for each stakeholder Mandatory/Legal Requirements Voluntary Requirements Compliance Risk Management Identify risks Stakeholder Salience Model Urgency, Power and Legitimacy Research Research Power/Interest Grid Documentation Documentation Priorities, personalities, desired level of involvement Environmental, legal, economic Country of Origin, Country of Destination, (e.g. GDPR, VPA, The Lacey Act, Due Diligence) FSC, PEFC, Others (if applicable) Research & internal consultation Financial, Country, Cross - Cultural and Commercial Knowledge Management Knowledge Transfer Design Considerations Evaluate & assess the risks Codification or Personalisation Likeliness and impact of risk Develop a plan of mitigation or elimination Internal consultation Process adjustments, backup plans, operational redundancies Execute the plan Monitor the results Review and adjust Internal consultation Internal consultation Internal consultation Implementation Reports, interviews, questionnaires Amend plan if required Identify the traceability data to be recorded Internal consultation Timber species, movement through the process, volumetric data Determine Transparency Strategy The Transparency Matrix Secret, Transparent, Withheld, Distracting Decide Knowledge Management Strategy Codification / Personalisation Digital/paper recording, verbal communication Identify information to be transferred The Disclosure Matrix Strategic, Critical, Non-Critical, Optional Identify Knowledge Transfer Strategy Codification / Personalisation Digital/paper transfer, verbal, direct access Data verification method Internal consultation Biometric, encryption, signature, barcode Identify feedback and control method Internal consultation Manual review. digital record, communication plan, relationship management Operating parameters, tolerances and alerts Technical review Target outputs with minimum and maximum deviation tolerances, and live-alerts Universal file formats User experience Training Integration with other systems Reporting Cost of adjustment Ease of adjustment Data integrity Data security Localisation Technical review Technical review Technical review Technical review Technical review Technical review Technical review Technical review Technical review Technical review Ability of other software or users to view outputs (e.g. MS Office vs iWork) Ease of use, speed of use, compatibility with work processes Complexity, user interface, simplicity to communicate, intuitiveness Compatibility with other systems (e.g. API, desktop vs mobile), and ease of deployment Ability to create customisable reports in a usable and presentable format Ability to adapt to new requirements without incurring prohibitive cost Level of adjustment to the system possible without developer input User activity logging and method by which data is protected from retroactive manipulation Method by which data is stored and transferred (e.g., cloud, blockchain, internal server) Language, currency, units of measurement, date format 64 ◆ Data created by UCD Michael Smurfit Graduate Business School WOODBOIS LTD | Integrated Report 2021 MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES E S G I N D I C A T O R S GRI indicators Description GRI 102-1 Name of the organization. GRI 102-2 Activities, brands, products and services. a. A description of the organization’s activities. b. Primary brands, products and services, including an explanation of any products or services that are banned in certain markets. GRI 102-3 Location of the organization’s headquarters. Location of operations. a. Number of countries where the organization operates, and the names of countries where it has significant operations and/or that are relevant to the topics covered in the report. Ownership and legal form. a. Nature of ownership and legal form. Scale of the organization. i. Total number of employees. Information on employees and other workers. a. Total number of men. Information on employees and other workers. a. Total number of women. Information on employees and other workers. a. % of women. Information on employees and other workers. a. % of men. Information on employees and other workers. a. Total number of people in senior manager positions. Information on employees and other workers. a. Total number of women in senior manager positions. Information on employees and other workers. a. Board members. Information on employees and other workers. a. Women in board positions. Information on employees and other workers. a. % of women in board positions. Information on employees and other workers. a. % of women in senior management positions. Information on employees and other workers. a. Total number of permanent employees working in the production facilities in Gabon and Mozambique. Information on employees and other workers. a. Total number of fixed-term and seasonal employees working in the production facilities in Gabon and Mozambique. Information on employees and other workers. a. Total number of fixed-term and seasonal employees working in the production facilities in Gabon and Mozambique. Statement from senior decision-maker. a. A statement from the most senior decision-maker of the organization (such as CEO, chair or equivalent senior position) about the relevance of sustainability to the organization and its strategy for addressing sustainability. Executive-level responsibility for economic, environmental and social topics. a. Whether the organization has appointed an executive-level position or positions with responsibility for economic, environmental and social topics. b. Whether post holders report directly to the highest governance body. List of material topics. a. A list of the material topics identified in the process for defining report content. Reporting period. Direct economic value generated and distributed. i. Direct economic value generated: revenues. Economic growth. Direct economic value generated and distributed. Investment in management plans. Investment in environmental licences. Investment in HSE equipment. Ratios of standard entry level wage by gender compared to local minimum wage (average % above minimum wage). Infrastructure investments and services supported. Investments per capita (per number of employees). Gabon GRI 102-4 GRI 102-5 GRI 102-7 GRI 102-8 GRI 102-8 GRI 102-8 GRI 102-8 GRI 102-8 GRI 102-8 GRI 102-8 GRI 102-8 GRI 102-8 GRI 102-8 GRI 102-8 GRI 102-8 GRI 102-8 GRI 102-14 GRI 102-20 GRI 102-47 GRI 102-50 GRI 201-1 GRI 201-1 GRI 201-2 GRI 201-3 GRI 201-4 GRI 202-1 GRI 203-1 65 Unit NA NA NA NA NA Number Number Number % % Number Number Number Number % % Number Number % Page Page Page NA US$ % US$ US$ US$ % US$ US$ 2021 Woodbois LTD Woodbois Limited is a leading producer, processor and manufacturer of sustainable African hardwoods and hardwood products supplied to a global customer base. Woodbois also supplies industrial timber and timber products into Africa, and is a trusted supplier of diverse, internationally sourced sustainable timber and timber products to customers around the world. London, UK; Port Louis, Mauritius; Copenhagen, Denmark. Woodbois manages and operates natural forest concessions in Gabon and Mozambique and has production facilities in both countries. Our trading team is based in Copenhagen with African operations in Gabon and Mozambique, including a network of over 100 suppliers. Woodbois Limited is a holding company listed on the AIM section of the London Stock Exchange. 415 325 90 21.69% 78.31% 14 4 5 1 17% 28.57% 42 356 89.45% Letter from Paul Dolan. Governance. Materiality analysis. The current report refers to the financial year from January to December 2021. 17,500,000.00 14.68% 100,000.00 75,000.00 40,000.00 Woodbois pays 50% above the local minimum wage. 1,000,000.00 4,854.37 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES GRI indicators Description Energy consumption within the organization. Diesel consumption on the ground and in processing facilities. Energy consumption within the organization. Diesel consumption on the ground and in processing facilities. Energy consumption within the organization. Petrol consumption on the ground and in processing facilities. Energy consumption within the organization. Total energy consumption from fuels (diesel, petrol). Energy consumption within the organization. Total energy consumption from fuels (diesel, petrol). Energy intensity. Total energy (fuels and electricity) intensity ratio per final production (logs). Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas Total forest land. Operational forest land (forest management plans). Area with actual harvesting. Area dedicated to conservation. Shared community, conservation and multi-use. Construction of new manufacturing plants. Use of current manufacturing plants. Introduction of non-native or invasive species. Volume of logs harvested. Harvesting intensity ratio per hectare. Volume of Woodbois' produced timber. (logs, veneer, sawn timber) Volume of third party timber traded. (logs, veneer, sawn timber) Volume of timber traded including third party and Woodbois. (logs, veneer, sawn timber) Sawmills providing third-party timber supplies Habitats protected or restored (Mozambique). IUCN Red List species and national conservation list species with habitats in areas affected by operations. Flora. IUCN Red List species and national conservation list species with habitats in areas affected by operations. Fauna. National conservation list species on the concession in Gabon. Flora. National conservation list species on the concession in Gabon. Fauna. Direct (Scope 1) GHG emissions for use of fuels. Other indirect (Scope 1) GHG emissions: on-site biomass incineration. Total GHG emissions intensity. Total GHG emissions intensity. Lumber donated to the community. Biomass converted into energy. Minimum notice periods regarding operational changes. Work-related injuries (Gabon and Mozambique). Loss time due to injuries. Work-related fatalities (Gabon and Mozambique). Total hours of training per year (Gabon). Average hours of training per year per employee (Gabon). GRI 302-1 GRI 302-1 GRI 302-1 GRI 302-1 GRI 302-1 GRI 302-1 GRI 304-1 GRI 304-1 GRI 304-1 GRI 304-1 GRI 304-1 GRI 304-1 GRI 304-2 GRI 304-2 GRI 304-2 GRI 304-2 GRI 304-2 GRI 304-2 GRI 304-2 GRI 304-2 GRI 304-2 GRI 304-3 GRI 304-4 GRI 304-4 GRI 304-4 GRI 304-4 GRI 305-1 GRI 305-1 GRI 305-4 GRI 305-4 GRI 306-2 GRI 402-1 GRI 403-10 GRI 403-9 GRI 404-1 GRI 404-1 66 Unit LTS GJ LTS LTS GJ GJ/m3 page ha ha ha ha ha NA Number Number m3 m3/ha m3 m3 m3 Number ha Number Number Number Number tCO2e tCO2e tCO2/m3 logs tCO2/m3 timber m3 Tonnes Number in weeks Hours Number Hours Hours 2021 991,496.00 142,034.00 1,460.50 996,350.37 35,647.14 1.27 Our facilities. 485,373.00 337,459.50 7,483.00 16,232.60 44,639.80 Manufacturing capital. 2 0 28,000.00 3.74 16,964.00 20,200.00 34,427.00 42 30 12 11 5 10 2,607.00 88.30 0.09 0.15 500 1,840.00 Mozambique: 4 weeks for permanent and fixed-term employees. Gabon: 8.6 weeks for permanent and 2 weeks for fixed-term employees. 102 0 800 2.13 WOODBOIS LTD | Integrated Report 2021MESSAGE FROM THE CEO ABOUT THIS REPORT ABOUT WOODBOIS OUR BUSINESS MODEL THE CAPITALS APPENDIX & REFERENCES R E F E R E N C E S 1. PPECF COMIFAC. 2021. PPECF. [ONLINE] Available at: http://www.ppecf-comifac.com/Qui-sommes-nous.html. [Accessed 7 June 2021] 2. COMIFAC: Commission des Forêts d’Afrique Centrale. 2021. COMIFAC: Commission des Forêts d’Afrique Centrale. [ONLINE] Available At: https://www.comifac.org. [Accessed 07 June 2021]. 3. Timber Regulation - Forests - Environment - European Commission. 2021. Timber Regulation - Forests - Environment - European Commission. [ONLINE] Available at: https://ec.europa.eu/environment/forests/timber_regu- lation.htm. [Accessed 07 June 2021]. 4. Home - CBFP - Congo Basin Forest Partnership. 2021. Home - CBFP - Congo Basin Forest Partnership. [ONLINE] Available at: https://pfbc-cbfp.org/home.html. [Accessed 07 June 2021]. 5. 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[ONLINE] Available at: https://materiality.sasb.org. [Accessed 07 June 2021]. 11. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-value-of-value-creation 12. “Primary Rainforest Destruction Increased 12% from 2019 to 2020”. Global Forest Watch. 2021. [ONLINE]. Available at https://www.globalforestwatch.org/blog/data-and-research/global-tree-cover-loss-data-2020/ [Ac- cessed 29 April 2022]. 13. Country profile Gabon. 2021. Country profile Gabon. [ONLINE] Available at: https://www.timbertradeportal.com/countries/gabon/. [Accessed 07 June 2021]. 14. https://www.cafi.org/countries/gabon/gabon-receives-first-payment-reducing-co2-emissions-under-historic-cafi-agreement 15. https://www.reuters.com/business/environment/logging-help-climate-gabon-turns-its-rainforests-2021-11-02/ 16. “Gabon gambles on sustainable logging to prevent deforestation.” Reuters. 2021. [ONLINE]. 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A global analysis of the cost-efficiency of forest carbon sequestration. 67 WOODBOIS LTD | Integrated Report 2021CBP00019082504183028 The paper used in the report is Forest Stewardship Council® (FSC®) certified paper from sustainably managed forest and other controlled sources. This ensures that there is an audited chain of custody from the tree in the well-managed forest through to the finished document in the printing factory. Printed in the UK by Pureprint a CarbonNeutral® company. Both the manufacturing mill and printer are registered to the Environmental Management System ISO 14001 and are Forest Stewardship Council® (FSC®) chain-of-custody certified. 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 https://twitter.com/WoodboisLtd https://www.linkedin.com/company/woodbois-ltd www.woodbois.com 

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