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WBI Woodbois Limited

0.66
0.00 (0.00%)
Last Updated: 08:00:00
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Woodbois Limited LSE:WBI London Ordinary Share GG00B4WJSD17 ORD 0.01P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 0.66 0.64 0.68 0.66 0.66 0.66 8,314,460 08:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Chem,fertlizer Minrl Mng,nec 23.11M -111.19M -0.0302 -0.22 24.33M

Woodbois Limited Audited results for FY 2022 (1778C)

09/06/2023 7:00am

UK Regulatory


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TIDMWBI

RNS Number : 1778C

Woodbois Limited

09 June 2023

9 June 2023

Woodbois Limited

("Woodbois", the "Group" or the "Company")

Audited results for FY 2022

Woodbois, the African focused sustainable forestry, reforestation, carbon sequestration and timber trading company, announces its audited results for the full year ended 31 December 2022.

Highlights

   --      Turnover increased by 32% to $23.1m (2021:  $17.5m) 
   --      Forestry division generated 66% of turnover and third-party trading was 34%. 
   --      Gross profit increased by 69% to $5.9m vs $3.5m in FY 2021 
   --      Gross profit margin increased to 25%, up from 20% in FY 2021 
   --      Significant increase in EBITDAS ([1]) to $3.3m (2021: $1.0m) 

-- Net loss for the year of $111m principally driven by net non-cash revaluation downwards ([2]) of $108.7m of the Company's biological assets

   --      Cash balance of $2.3m as at 31st December 2022 
   --      2022 sawn timber production of approximately 18,600m(3) , a 42% increase year-on-year 
   --      2022 veneer production of approximately 5,200m(3) , a 38% increase year-on-year 
   --      Installation of second veneer line completed during H2 2022 
   --      Post year end fund raise in March 2023 of $3.4m 

-- Post year end termination in April 2023 of $6m credit line by Danish bank and cash of $3.1m offset. Repayment plan agreed in June 2023.

-- Post year end grant of 50,000 hectares of low carbon stock land in Gabon for initial large-scale afforestation project

Commenting on today's announcement Chief Executive Paul Dolan said:

"Our financial and operational results for 2022 clearly point to the growth potential of the Group, with an EBITDAS for the year of $3.3m. The business has been greatly interrupted in 2023 by unforeseen events announced previously. We are confident that, subject to a successful refinancing, of which we remain confident but which cannot be guaranteed, our previously established growth trajectory and improvement in profitability can resume."

Enquiries:

 
Woodbois Limited 
 Paul Dolan - Chief Executive Officer 
 Carnel Geddes - Chief Financial Officer     + 44 (0)20 7099 1940 
Canaccord Genuity (Nominated Advisor and 
 Broker) 
 Henry Fitzgerald-O'Connor 
 Harry Pardoe 
 Gordon Hamilton                           + 44 (0)20 7523 8000 
Novum Securities (Joint Broker)            + 44(0)20 7399 9427 
 

Colin Rowbury

Jon Belliss

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 which forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").

Non-IFRS measures

The Company uses certain measures to assess the financial performance of the company. These terms may be defined as "non-IFRS measures" as they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with IFRS. They also may not be calculated using financial measures that are in accordance with IFRS. These non-IFRS measures include the Company's EBITDAS.

The Company uses such measures to measure and monitor performance and liquidity, in presentations to the Board and as a basis for strategic planning and forecasting. The directors believe that these and similar measures are used widely by market participants, stakeholders, and other interested parties as supplemental measures of performance and liquidity.

The non-IFRS measures may not be directly comparable to other similarly titled measures used by other companies and may have limited use as an analytical tool. This should not be considered in isolation or as a substitute for analysis of the Company's operating results as reported under IFRS.

The Company does not regard these non-IFRS measures as a substitute for, or superior to, the equivalent measures calculated and presented in accordance with IFRS or those calculated using financial measures that are calculated in accordance with IFRS.

CHAIR AND CHIEF EXECUTIVE OFFICER'S STATEMENT

Dear Shareholder,

Following a year of rapid growth and continued progress across the Group's operations we are delighted to present Woodbois' 2022 annual report. The Group continued to demonstrate that conventional metrics of business success can be achieved in tandem with meaningful action for a sustainable future by delivering material improvements in production volumes, along with increases in both sales and profit margins. Our ambition is to build scale as and when opportunities present themselves and external conditions allow, on the back of an asset-rich, cash generative engine. The headwind of elevated inflation and higher interest rates during the second half of the year however led to the pragmatic decision for our trading business to temporarily take a defensive stance as the economic backdrop became more uncertain. As announced in April 2023, the termination of a bank line of credit has led to the Company seeking alternative financing arrangements. A repayment plan was agreed and announced on 6 June 2023, as set out in note 24. There is currently no certainty as to the outcome of these efforts, but assuming these arrangements are able to be put in place (and given that a repayment plan has now been announced) we are confident that when we are able to restore our activity levels, that our constantly evolving and improving platform can provide a strong foundation for further profitability growth into the future in balance with benefits to the environment and society.

2022 Business performance

The Company maintained its record of improvement on measures of production and financial performance in 2022, achieving a 32% increase in revenue, 69% increase in gross profit and more-than trebling EBITDAS [1] to $3.3m. As a result of the increased activity, operating costs increased by 15% year-on-year ("YOY") while administration expenses were strictly controlled and decreased by 3% YOY.

The Company operates three divisions: Forestry, Trading, Carbon

Forestry (including timber production):

Sawmill output increased by 42% to 18,600m(3) and veneer output increased by 38% to 5,200m(3) . The total volume of goods shipped from Gabon increased by 79% YOY as the Covid-induced strain on the global freight shipping industry began to dissipate and the reversion to mean of shipping rates contributed to the improvement in margins. These significantly higher levels of output required correspondingly increased levels of working capital to fund an approximately five-month cycle.

The forest area that was purchased in 2021 is in the process of being amalgamated under a new 25-year Forest Management Plan which will minimise impact on the forest while maximising supply of raw material for our enlarged processing facilities where capacity enhancements over the last two years leave plenty of room for a higher volume of output.

The amalgamated Forest Management Plan is also a critical step towards achieving full certification of our forests and factories, aimed for in 2024. Limited progress was made during 2022 owing to budget constraints, with many of the remaining outstanding items requiring a level of Capex to complete. Gabon's forest management plans, which are strictly enforced, are designed to provide economic services and goods in the long term while maintaining and preserving the forest's ecological functions and contributing to the economic development and improvement of living conditions of local communities. We expect the new amalgamated management plan to be completed around September 2023 and are authorised to harvest under the existing individual plans during the interim period.

While there were clearly many highlights in 2022, we experienced an over-run in both cost and time on the installation of the second veneer line, and at the time of writing, are still look forward to benefitting from running the line at a level close to its capacity, which is targeted for H2 2023, subject to sufficient working capital being in place.

Once the anticipated refinancing has taken place, our 2023 priority is to return to the high production levels achieved in the past year, further consolidate the gains made in recent years, and ensure ongoing growth and productivity improvements by working existing assets and advancing our certification process, before investing in any major new capital expenditures.

Trading:

As output at our factories increased during 2022, higher levels of working capital were required to support activities resulting in limited availability of funding for third party trading. Despite this constraint, revenues of $7.8m were generated during 2022 vs $9.5m the previous year with margins improving from 11% to 13%. In alignment with our internal objectives of gaining FSC certification for our forests and factories, the trading team focused on developing relationships with FSC-certified third-party suppliers and on those with similar certification aspirations.

The proprietary software technology that we have developed in-house over more than four years to optimise sales of our own production and to provide a strong competitive edge for our trading division was fully rolled out across all business lines and functions during 2022 and now connects our staff in six separate locations. Having stepped back from taking trading positions towards the end of 2022, our visibility into the marketplace suggests that low-risk opportunities to re-enter the market will once again emerge, and we will actively seek dedicated capital to deploy in order to scale up trading operations during the second half of 2023 subject to financing being in place.

Carbon:

While geopolitical events, in particular the war in Ukraine have dominated headlines over the last twelve months, the existential threat of climate change has escalated to near crisis levels. As the world heats up due to the accumulation of carbon dioxide, the urgent deployment of renewable energy and sequestration of carbon, through programs such as restoration of nature, are vital to mitigate these effects. Woodbois has had a stated objective since 2021 to acquire a land lease that would allow the company to develop a large-scale indigenous species afforestation project to sequester carbon, contribute to addressing climate change and at the same time, generate value through carbon credit sales and provide additional local employment opportunities. We are delighted to announce that Woodbois has recently (in 2023) been awarded a conditional grant of 50,000 hectares of land in Gabon for this project, an area equivalent to the New Forest in England. Woodbois now has the opportunity to play its part in restoring nature at scale, sequestering carbon and to be well rewarded for doing so in the OECD's highest ranked country for cost-efficiency in carbon sequestration.

During 2022, we worked to lay the groundwork for this project and to develop relationships. Highlights include (1) When Gabon hosted the African Climate Week in August 2022, senior Woodbois management and members of our carbon team who were in attendance enjoyed opportunities to meet and connect with delegates from national governments, UN experts and private sector companies to introduce our proposed solutions to tackling climate change and to learn about alternative approaches being taken. (2) Similarly, we attended the African-hosted COP27 where Gabon was rewarded for played a major role in negotiations in recognition of its exemplary model of environmental conservation. Having become the first country to receive results-based payments for reduced forest emissions in 2021, Gabon followed up in 2022 by announcing its intention to sell up to 200 million certified carbon credits.

Post year-end event: banking facility terminated, recapitalisation in train

The Company announced on 19 April 2023 that one of its wholly-owned subsidiaries had received a notice from its Danish bank that it was terminating a $6 million debt facility. The subsidiary company, Woodgroup ApS, was fully utilising its $6m facility at that time but held a cash balance of $3.1 million in an ancillary account which the bank used as an offset in partial repayment of the facility.

Following this unexpected termination, the Company took all necessary steps to preserve the business, revising internal cash-flow forecasts, engaging in contingency planning and consulting external professionals. T he Company continues to assess alternative funding sources and will update the market in due course once any such agreement has been reached. The Company is also working on the potential deferment of c.$1.5m of debts, which fall due at the end of June. Whilst the Directors are confident that the Company will obtain alternative funding in the coming weeks, should they fail to do so, the Company may be reliant on the deferment of these near-term creditors in order to continue to trade. Assuming this recapitalisation is effected and whilst expecting a difficult trading period in the short term, management believe that the fundamentals of the business are sound and that it can then continue to operate as a going concern.

At the time of writing, multiple different funding offers have been received including debt, equity and hybrid structures and a decision on which avenue to take is expected in the coming weeks. While management intend at this time to continue building out the three divisions of forestry, trading and carbon, the quantum of refinancing funding received, and the expectations of its providers may influence internal allocation of capital in the near term and the future direction of the Group.

The Board

After almost four years as a Non-Independent Non-Executive Director and owing to his growing other work commitments at Lombard Odier, Henry Turcan stood down from the Board in October 2022. Henry's energy and guidance helped to transform the financial health of the Company, its performance and its governance.

After approximately a year, initially in a consultancy capacity and latterly as CEO, Federico Tonetti stood down from the board in May 2022 with Paul Dolan moving back from Executive Chair to CEO and Non-Executive Director Graeme Thomson moving to Non-Executive Chair and Senior Independent Director. The Board express their grateful thanks to both Henry and Federico on behalf of all stakeholders for their efforts.

The Board is actively looking to extend its expertise by adding at least one non-executive director.

Looking forward and strategic priorities

Despite near-term headwinds, the overarching strategic aim of the group remains to build three distinct but synergistic divisions outlined below, each with its own dedicated management, leveraging proprietary technology and minimising central costs.

The Forestry division will return to and prioritise consolidation of the production gains made during 2022 while ensuring the delivery of consistently high-quality products to our customers. We see clear opportunities to improve efficiencies and further improve profit margins through process improvement and some re-configuration of production lines. Our ambition to grow the business however extends beyond purely organic growth. We will actively seek aligned Joint Venture or M&A opportunities in Gabon and elsewhere in the Congo Basin as we look to build scale. The highest priority of all however within the Forestry division is the completion of the FSC certification process for our forests and factories to ensure that the highest levels of compliance are observed at every level within our value chain.

Although margins will always lower than those in the Forestry division, the Trading division can deliver substantial revenue growth from the $40 billion per annum global hardwood market, whilst also generating healthy profitability if a dedicated financing facility is found. As well as providing wider market intelligence regarding pricing and availability, which helps to maximise value within our Forestry division, the Trading division also creates relationships and touchpoints throughout the industry which is invaluable for a Group that intends to pursue an expansionary M&A strategy. A key priority for the Trading division during 2023 will be to align with Group strategy by offering support to suppliers who demonstrate high levels of industry compliance or who are also following the path to certification.

With the Gabonese government announcing that Woodbois has been granted 50,000 hectares for our initial large-scale afforestation project, the immediate priorities for the Carbon division are to agree and sign legal documentation with the government. Once in place, commercial and legal documentation must be agreed with the funder of the initial 4-year trial phase: planning will continue in order to ensure that work can then commence with immediate effect. Re-creating a natural forest of up to 50 million indigenous and principally Okoume species trees will require the participation and harnessing of skills of the local population as well as overseas tropical forestry experts. We hope that bringing this team together and executing on the plan will generate widespread support and serve as a blueprint for other large-scale carbon-sequestering project in Africa and beyond.

Competition for African resources

Since the beginning of 2023, China's Foreign Minister Qin Gang, US Treasury Secretary Janet Yellen and Russian Foreign Minister Sergei Lavrov and have all visited Africa. French President Emmanuel Macron visited Gabon and three other African countries in March and US President Joe Biden has pledged to travel to the continent this year. Following the US-Africa Leaders' Summit in December, and ahead of the second Russia-Africa Summit in July, these high-level visits highlight growing competition between major powers, placing resource-rich African countries in a strong position as they choose their geopolitical and private sector partners. These clear statements of intent from the world's biggest superpowers reinforce our conviction that Africa will become an increasingly important strategic investment destination for the major investor nations in the years ahead.

Within the context of the emerging African continent, Gabon's leadership on climate action through forest preservation and its position as one of the most carbon positive (i.e., absorbing) countries in the world makes it an obvious anchor country to continue to grow the business, organically or through Joint Ventures or full-blown mergers. From our government level conversations with several Central and West African countries, we expect that companies with large, successful operations in Gabon will increasingly be welcomed and incentivised as the implementation of sustainable forestry practices and payment for the protection of forests increasingly becomes a reality across the Congo Basin.

Outlook

Assuming we can resolve the funding issues resulting from the Danish bank's actions noted earlier and elsewhere in this Report, as the business enters its next stage of development: we expect each of the three divisions (production, trading and carbon) to scale and become self-sufficient, and in each case to be led and driven by dedicated, expert management which will be responsible for all aspects of their division's business development and P&L. Allocating responsibility to each divisional head will sharpen focus and force clear accountability which we expect will enable accelerated growth within each division and across the Company. Capital allocation to each division will become increasingly based on performance and on demonstrable risk-adjusted IRR earnings potential which will be transparent to the Board and to all stakeholders. Although the divisions are strategically complementary to each other within the Group's broad 'sustainable forestry' umbrella, the differentiated pools of capital that could be attracted in support of each division lies behind our thinking as we consider the organic, Joint Venture and M&A strategies that each division has the potential to pursue.

After a difficult Q1 in 2023, as described in our quarterly update and following the withdrawal of banking facilities noted above and efforts for the required recapitalisation, revenue in the first half of 2023 will be lower than had previously been expected. However, if successful in our efforts to obtain alternative finance, we remain optimistic for the second half.

We do not expect head office or administrative costs to increase while these changes are implemented. Indeed we believe that we can deliver further cost savings in these areas, particularly through the further development of our industry-unique, cutting-edge proprietary process management technology. We thank all of our employees, so many of whom go above and beyond in their service to the Company, for their industry in 2022, and our advisers and other stakeholders for their continued support for our development.

   Paul Dolan                                                          Graeme Thomson 

Chief Executive Officer Non-Executive Chair and Senior Independent Director

9 June 2023

CHIEF FINANCIAL OFFICER'S REPORT

Summary reflections on 2022

The year marked another solid year of progress for the Group with operating activities turning cash flow positive (2022: inflow of $1.1m: 2021: outflow of $2.5m). Increased levels of production at both factories in Gabon resulted in a revenue increase of 32% to $23.1m and a 69% rise in Gross Profit to $5.9m. EBITDAS [3] increased more than three-fold. Our focus on higher value-add products and markets, in combination with the gradual decline in shipping costs throughout the year, allowed an improvement in gross profit margins to 25%, up from 20% in 2021 (and 8% in 2020). In terms of segment contribution, our own production sales generated a margin of 32% in 2022 v 30% in 2021 and Trading of 3rd party products generated a margin of 13% in 2022 v 11% in 2021.

 
                                                         Year ended 31 December 2022   Year ended 31 December 2021 
                                                                                $000                          $000 
  ----------------------------------------------------  ----------------------------  ---------------------------- 
 (Loss)/profit before taxation                                             (158,867)                        90,702 
 Add back fair value loss/(gain) on biological assets                        156,983                       (4,253) 
 Add back finance costs                                                        1,029                           591 
 Add back gain on bargain purchase                                                 -                      (88,292) 
 Add back share based payment expense                                            418                           233 
 Add back reclassification of FCTR [4] on 
 deregistered entities                                                         1,529                             - 
 Add back depreciation and amortisation                                          222                           326 
 Add back depreciation in Cost of Sales                                        1,959                         1,737 
------------------------------------------------------  ----------------------------  ---------------------------- 
 EBITDAS                                                                       3,273                         1,044 
------------------------------------------------------  ----------------------------  ---------------------------- 
 

2022 Financial performance review

We dealt with a number of challenges during 2022, including an increase in the cost and, at times, limited supply of diesel, as well as a later and heavier than usual rainy season severely affecting forestry operations and transportation of raw material. Sawn timber provided the largest contribution to the growth of revenues with the investment made in plant and machinery in our sawmill over the last three years reflected in consistently higher levels of production. The contribution from sales of veneer was more muted owing to logistical delays in the commissioning of the second production line, completed in H2 2022. The shortfall in expected veneer revenue was partially made up by log sales to other veneer producers in Gabon. Despite these challenges, I am pleased to report that we achieved, following a necessary revision in October 2022, our revenue and EBITDAS targets. This marks our second consecutive year of positive EBITDAS.

In terms of the hard numbers, Revenue increased by 32% to $23.1 million in 2022 (2021: $17.5 million). Gross Profit was up 69% to $5.9 million compared to $3.5 million in 2021 reflecting the focus on higher value-add products and markets in combination with the gradual decline in shipping costs throughout the year. Gross profit margin rose to 25% in 2022 compared to 20% in 2021 and 8% realised for the full year 2020. As expected, operating costs increased marginally (15%) in 2022 principally owing to inflation of diesel prices, much less than production of sawn timber and veneer which increased by 42% and 38% respectively YOY. Our administration expenses decreased by 3% in 2022 compared to 2021 owing to the Group's policy of continuous cost review and minimisation; it includes costs of $0.8m in connection with our application for the afforestation project which under accounting standards have to be written-off until the licence is awarded when they can thereafter be capitalised. In line with having taken on more debt to fund capex, finance charges increased to $1.0 million in 2022 compared to $0.6 million in 2021 and significantly lower than the levels of 2020 ($2.8 million). We booked a Foreign Exchange gain of $0.9 million (2021: gain $0.8 million).

We recorded a non-cash gross fair value loss of $157.0 million (2021: gain $4.3 million) following the annual review of biological asset values in 2022. This reflected dramatically increasing interest rates worldwide, together with higher country discount rates being applied. A non-cash downwards revaluation of $82 million (net of deferred tax) of the biological assets in Gabon resulted. The $26.7m (net of deferred tax) downwards revaluation of the biological assets in Mozambique also reflected the Group's decision to minimise its forward looking harvesting activities and hence its effect thereof on maximum permitted harvest rates whilst reviewing its strategic options there. Our Gabonese concessions now account for 100% of our total biological assets of $179.8 million (see note 11 for more details).

During the year, the Group received notification of the final deregistration of certain dormant companies that formed part of the Group's historical business operations in Tanzania. This allowed us to further simplify the group structure. IFRS, the accounting framework that the Group applies, stipulates that historical foreign currency translation differences that arose on consolidation of those entities, be reclassified from equity to profit and loss upon that final deregistration - this is what the $1.5 million reclassification in the profit and loss represents. Previously these differences were shown as part of Equity and included in the Foreign Currency Translation Reserve ("FCTR"). The FCTR (Equity) has increased by the same amount (i.e. is included as part of the $83 thousand net movement - also see note 22).

Revenues from own production increased by 91% from $8.0 million in 2021 to $15.3 million in 2022 and generated a gross margin of 32% vs 24% in 2021. Third party Trading revenues decreased by 17% from $9.5 million in 2021 to $7.8 million in 2022, however gross margin increased from 11% in 2021 to 13% in 2022. Own production sales represented 66% of total sales in 2022 vs 46% in 2021. The higher margins achieved in each division in 2022, together with the change in divisional sales mix, resulted in an increase of overall margin from 20% in 2021 to 25% in 2022. See note 2 for further information.

Cash and working capital

The year 2022 saw the Group's operating activities turning cash flow positive (2022: $1.0 million, 2021: outflow of $2.5 million). Our largest items of investment were to add harvesting and production plant and machinery ($3.9 million), paying the final instalment ($0.3 million) for the 2021 acquisition of the additional forest in Gabon and settling the final deferred consideration payment ($0.3 million) for the 2017 purchase of Woodbois International Aps. Our year end 2022 cash of $2.3 million compared with $0.9 million at the end of 2021.

At the end of 2022 the Group's receivables and inventory were $10.9 million (2021: $10.8 million), whilst payables and were reduced to $3.7 million (2021: $4.5 million). Total borrowings (excluding the convertible bond) increased from $8.3 million in 2021 to $14.3 million at the end of 2022. Of this $8.6 million (2021: $5.4 million) was classified as current. As further explained in note 16 and 24, $6 million of this is a revolving facility with a Danish bank that had no specified maturity date and which, although there was no expectation that it would need to be repaid in 2023, had nonetheless been classified as a current liability, consistent with the prior year. As announced by the Company on 19 April 2023, the bank notified the Company of the termination of this facility and as such the classification as a current liability is unchanged. Net working capital[5] was $9.6 million, up from $7.5 million in 2021.

Net Assets

The decrease in the Company's net assets year-on-year, from $258.5 million in 2021 to $147.9 million, is largely due to the annual non-cash revaluation, this year downwards, of our biological assets in Gabon and Mozambique set out above and in Note 11.

In June 2022, $0.2 million of 2023 0% Convertible Bonds converted into 5.9 million Voting Ordinary Shares and in August 2022, 2.0 million share options, issued under the Company's Share Option Plan, were exercised and converted into Voting Ordinary Shares.

Between May 2022 and November 2022, a total of 390 million Non-Voting Ordinary Shares have been converted into Voting Ordinary Shares.

At 31 December 2022 the Group's share capital of 2,490 million ordinary shares, was comprised of 2,255 million Voting Shares and 235 million Non-Voting Shares.

As set out more fully in the Directors' report, the Independent Auditor's Report and in Notes 1 and 24 of the financial statements, although there is a material uncertainty, the Company continues to adopt the going concern basis in the preparation of this Annual Report and at the date of this report.

Looking ahead to 2023

Assuming the Company is able to resolve the funding issues caused by the Danish bank's withdrawal of our line of credit and the offsetting of a substantially all its cash (announced on 19 April 2023), our overriding priority will be to generate consistent, positive cash flows from our substantial Gabonese forestry assets to ensure that we continue to grow the business and also meet any debt repayments. The scale at which we are able to grow and generate net cash in the immediate future will be subject mainly to how quickly we can recapitalise the business, but also subject to external economic conditions, which we continue to monitor closely and respond to.

We will continue to invest in delivering further operational productivity improvements, development of our in-house systems to optimise sales of our own products and working towards certification of our forests and factories, which will be a high priority. The investment and work that have been undertaken in recent periods provide grounds for optimism that the Company will deliver further improvements in profitability.

In March 2023 a liquidity boost of $3.6 million to working capital was secured by way of a fundraise in which 250 million new Ordinary Voting shares at a price of 1.2p per share to existing and new institutions. As noted in this report, $3.1 million of this raise was offset by the Danish bank in April 2023.

The Company has mandated a real estate broker in Gabon to explore the potential for a sale and lease-back of its unencumbered 14 hectares of real-estate production sites in Mouila, Gabon. These were independently valued at $15m in May 2021. This would help the working capital situation, could enable the Company to reduce some of its more expensive debt, to allocate additional capital to business lines with the highest anticipated IRRs and fund initial work on its afforestation project.

On 11 April 2023, the Company announced that it had been conditionally awarded the first 40-year land lease by the Gabonese government for a voluntary carbon credit afforestation project of up to 50,000 hectares. On completion, expected in the coming months, the Company will commence a 4-year, 2,000 hectare pilot programme to demonstrate the afforestation potential of the land. The project will be designed to deliver high quality carbon and biodiversity credits. The Company estimates that the project has the potential to generate more than 30 million carbon credits over its 40-year life cycle with the expectation that the first credits are to be issued in 2028. The Gabonese government will be entitled to 20% of the carbon credits generated over the lifetime of the project. External funding will be needed for the pilot programme which is estimated to cost total of approximately $5 million in the period. The Company is currently examining a number of possible funding possibilities at the project level and the optimum funding structure thereof.

On 19 April 2023, the Company announced that Woodgroup Aps, a wholly owned subsidiary of the Company, had unexpectedly received a notice from a Danish bank, terminating the fully-drawn $6 million debt facility. The Group had an ancillary account with a cash balance of $3.1 million. The bank had a floating charge against the assets of Woodgroup ApS and offset this $3.1 million in partial repayment of the facility. The reason cited by the bank for terminating the facility was that Woodgroup ApS generated a loss in Q1 2023. The bank believe that, as a consequence, the circumstances of Woodgroup ApS have changed significantly to their detriment. Management do not agree with the bank's conclusion and, whilst acknowledging the poor performance in Q1, believed the Company had been well placed to deliver a very positive performance for the remainder of the year. As part of the notice the bank also requested that Woodgroup ApS present a plan for the repayment of the outstanding $2.9 million of the Facility. As reported by the Company on 6 June 2023, the Company has reached an agreement with Sydbank under which the outstanding balance will be repaid by no later than 29 December 2023. The Company has undertaken to repay approximately $145k on each of 15 June and 30 June 2023. Thereafter a further $145k is to be paid in the middle of each subsequent month with any additional lump sums being paid to ensure repayment of the total outstanding balance and interest by the final repayment date. There are also financial incentives in place if the Group settles the outstanding balance earlier in the year . Existing security arrangements, per the original loan facility agreement, will remain in place until the line of credit is fully settled.

The unexpected liquidity event necessitates the securing of replacement working capital. The Company continues to assess alternative funding sources, including raising funds through the issuance of shares and the deferment of $1.5m of debts due at the end of June . T he Directors are convening a General Meeting on 16 June 2023 so that the Company has the flexibility to issue ordinary shares quickly if agreement is reached on the terms of an equity issue. The Company does not currently have the authority to issue shares.

Demand for our products remains high. Planned capital expenditure in 2023 includes commencement of the afforestation pilot programme and work required to (almost) complete certification of both our production facilities and our forest. Apart from efficiency improvements, no further material investment is planned on our production facilities.

Since the termination, the Company has had to operate with an emphasis on cash realisation and limiting new liabilities. On the 6 June 2023 our cash balance was $0.4 million, with estimated net working capital of $5.5 million and interest-bearing bank and other borrowings of $11.4 million.

Carnel Geddes

Chief Financial Officer

9 June 2023

SOCIAL IMPACT AND SUSTAINABILITY

As we move into 2023, the importance of ESG investments and sustainable forestry management continues to grow. At Woodbois, we remain fully committed to advance and strengthen our leadership position in these areas by prioritizing transparency and best practices. The sustainable forestry model we practice is designed with the long-term protection of our forest concessions in mind, while also creating social and economic benefits for all stakeholders and generating value.

Health and Safety

The health and safety at work of all of our employees is a key priority. In 2022, our dedicated Quality Health, Safety and Environment team in Gabon focused on the Health and Safety of workers, and aimed to create a workplace culture where everyone is encouraged to contribute to enhancing workplace safety. As part of our continuous improvements process, in line with seeking to improve production efficiency we worked to improve the implementation of our HSE plan and the HSE awareness campaigns within our various working sites. We remain committed to these initiatives as we move forward in line with industry best practice.

Sustainability

Looking back at 2022, Woodbois once again received recognition for its sustainable approach in the Sustainability Policy Transparency Toolkit ('SPOTT') ESG policy transparency assessments for the worldwide timber and pulp industries. In the annual assessment of operations and approaches to ESG, we continue to be ranked in the top 10.

By prioritising transparency and adopting a sustainability-focused operating model, we are setting the stage for continued growth and evolution in the years ahead. Our dedication to these values not only benefits our company, but also our stakeholders and the wider community, as we strive to create a more sustainable future for all.

FSC

Woodbois is dedicated to promoting sustainable forestry practices in Gabon and has made significant progress towards achieving full forest certification. The Ngounié and Nyanga Forests Programme exemplifies the company's commitment to balancing economic growth with social and environmental responsibility. While faced with challenges in 2022 we remain determined to continue integrating the new forest and allocate the necessary resources to ensure a successful certification process. As part of this effort, the company has decided to combine its concessions into one, which will not only improve environmental, social, and economic performance but also build upon existing management practices and allow management full oversight of forest activities.

Additionally, Woodbois has taken further steps to ensure responsible forestry practices by signing contracts committing to High Conservation Value (HCV) and Biodiversity reports. These reports will provide a comprehensive assessment of the forest's ecological, social, and cultural values, and inform our management practices. We are confident that the results of these reports will contribute significantly to our 2023/4 forest certification and that many of the positive outcomes highlighted in our 2023 Integrated Report will be a direct result of the implementation of these reports.

Carbon

We are incredible excited that we have been awarded in principle our first Afforestation/Carbon Sequestration project from the Government of Gabon. The project aims to regenerate natural forest in savannah areas, which are contiguous to forests, by introducing local pioneer species and preventing fires. This approach will create a forest rich in Okoumé, an important tree species in the economy of Gabon and the daily life of rural populations.

The afforestation project will also have significant positive impacts on biodiversity and water resources services. The new forest will increase the diversity of ecosystems in southern Gabon and have a root network that improves soil structure, increases water absorption, storage, and filtration, and reduces surface runoff. Forests also stabilize soils, reduce erosion, and infiltration into groundwater, thereby benefiting downstream users who depend on the water. Moreover, forests "consume" more water than most other types of vegetation, thereby reducing runoff and promoting better water infiltration to rivers and/or aquifers. Forests have a positive impact on water quality, and variability in water flow by reducing surface runoff, incidence, and effects of flooding, and landslides.

The afforestation project is expected to create at least 1,000 permanent jobs on average over the first ten years of planting and 250 over the 40 years of the project, not including the jobs that will be created for the later possible exploitation and processing of wood. This project will benefit small businesses in Ndende and Tchibanga and service providers, and supply contracts will be concluded with farmers for the supply of bananas, cassava, and other staple foods. The transfer of technical skills to the local communities is also a major positive effect of the establishment of plantations. Initial and continuing training in planting and maintenance techniques is one aspect of this. Training in nursery techniques, and eventually the creation of village nurseries, will generate local skills.

We are excited to be at the forefront of afforestation and hope to work with other African governments to replicate projects of this kind across the region. As a company, we believe in the importance of sustainable forestry and environmental protection, and we are committed to playing our part in building a more sustainable future for all.

Community

In 2022, we made a conscious effort to support the communities in which we operate by providing essential food items. We believe in promoting the well-being of both our employees and those in our communities and are committed to upholding our reputation as a responsible corporate citizen. Our dedicated community engagement team has played a key role in this effort by prioritizing the establishment of regular and sustainable partnerships with local organizations. By striking a balance between our business goals and our social responsibility, we are proud to contribute to the positive development of our communities while achieving our organizational objectives.

The Company recognises its impact on the communities in which it operates. We are committed to engaging with stakeholders in those communities to ensure that we are listening to, learning from and taking into account their views as we conduct our business. We are also committed to creating economic opportunity in the local communities in which we operate.

Ambitions

We strive to establish ourselves as a leading ESG-sensitive company in the global timber industry through our diverse operations. The directors present their report on the Group's activities, along with the financial statements and auditor's report for the fiscal year ended December 31, 2022.

DIRECTORS' REPORT

The principal activities of Woodbois Limited ("Woodbois") during 2022, together with its subsidiaries (the "Group") were forestry and timber trading. These activities were undertaken through both the Company and its subsidiaries. The Company is quoted on AIM and is incorporated and domiciled in Guernsey.

BUSINESS REVIEW

A review of the Group's performance and prospects is included in the Chair and Chief Executive Officer's statement.

RESULTS AND DIVIDS

The total comprehensive loss for the year attributable to shareholders was $111.2 million (2021: total comprehensive income $93.3 million), of which $157.0 million (less $47.8 million in non-cash movement in deferred taxes) was attributable to the annual non-cash revaluation of biological assets, principally owing to reduced harvesting estimates in Mozambique and the impact of higher worldwide interest and discount rates.

The directors do not recommend payment of an ordinary dividend (2021: $Nil).

SHARE CAPITAL AND FUNDING

Full details of the authorised and issued share capital, together with details of the movements in the Company's issued share capital during the year are shown in note 18. The Company has two classes of ordinary shares, which carry no right to fixed income. One class of ordinary shares carries a right to one vote at the general meetings of the Company ("Voting"). The other class does not carry any right to vote at the general meetings of the Company ("Non-Voting").

During the year the Company issued 7.9 million new Ordinary Shares and 390 million Non-Voting shares were converted into new Voting Shares. The Company has unlimited authorised share capital divided into ordinary shares of 1p each, of which 2,489,988,873 had been issued as at 31 December 2022 comprising 2,254,988,873 Voting shares and 235,000,000 Non-Voting shares.

POST BALANCE SHEET EVENTS

Please refer to note 23 of the financial statements, in addition to the Chair and Chief Executive Officer's Statement and the CFO's Report for details.

DIRECTORS

The directors, who served during the year and to the date of this report were as follows:

 
  P Dolan                                 (Chief Executive Officer) 
  H Ghossein                              (Deputy Chair & Head of Gabon Operations) 
  C Geddes                                (Chief Financial Officer) 
  G Thomson                               (Non-Executive Chair and Senior Independent) 
  D Rothschild                            (Independent Non-Executive Director) 
   F Tonetti (Resigned 16 April 2022)      (Executive Director) 
  H Turcan (Resigned 17 October 2022)     (Non-Executive Director) 
 

Directors' indemnity insurance

The Group's policy is to maintain directors' and officers' insurance and to indemnify directors against the consequences of actions brought against them in relation to their duties for the Group.

Directors' interests

Directors' interests in the Voting shares of the Company, including family interests at 31 December 2022 and at the date of approval of this report were:

 
                    Percentage of Voting      Percentage of Voting    Voting Ordinary shares    Voting Ordinary shares 
                             Shares held               Shares held                of 1p each                of 1p each 
 Shareholding                       2022                      2021                      2022                      2021 
--------------  ------------------------  ------------------------  ------------------------  ------------------------ 
 P Dolan                           3.34%                     4.06%                75,400,032                75,400,032 
 H Ghossein                        0.94%                     1.13%                21,075,736                21,075,736 
 G Thomson                         0.06%                     0.07%                 1,250,000                 1,250,000 
 

P Dolan, Chief Executive Officer of Woodbois Limited, held 75,400,032 Voting Shares (4.06%): 72,517,461 of his Voting Shares in the Company are held through HSBC Client Holdings Nominee (UK) Limited, with the remainder being held as paper certificates.

Share Options

At the start of 2022 a total of 114 million share options were in issue and at 31 December 2022 there were 150.0 million.

On the 1st of March 2022, the Company issued LTIP's (long-term incentive plan) to its executive directors and key employees of which 38.0 million were in issue at 31 December 2022. The fair value of these LTIP's as at the grant date was determined by an independent specialist in financial valuations. 19.0 million of the granted LTIP's are subject to TSR (Total Shareholder Return) linked criteria and were valued using a Monte Carlo simulation. 19.0 million share options are subject to EBITDA-linked criteria and were valued using a Monte Carlo Simulation on the basis that they include a market-based exercise condition. Only market conditions have been considered in estimating the fair value of the LTIP's.

Please see note 21 for more information.

At the date of this report the share options of the directors were:

 
 Director              Total number      Number of         Total number    Share Options 
                        of Share          LTIP's held       of Shares       as a % of 
                        Options held      as at 31          under option    Issued Share 
                        as at 31          December                          Capital[6] 
                        December          2022 (exercise 
                        2022 (exercise    price of 
                        price of          1p per Share) 
                        2p per Share) 
 P Dolan (CEO)           50,000,000         4,000,000       54,000,000         2.17% 
                      ----------------  ----------------  --------------  -------------- 
 C Geddes (CFO)          22,500,000         4,000,000       26,500,000         1.06% 
                      ----------------  ----------------  --------------  -------------- 
 H Ghossein (Deputy 
  Chair)                 22,500,000         4,000,000       26,500,000         1.06% 
                      ----------------  ----------------  --------------  -------------- 
 G Thomson (NED 
  Chair & Senior 
  NED)                   10,000,000             -           10,000,000         0.40% 
                      ----------------  ----------------  --------------  -------------- 
 

The total number of Options in issue at any time under all Company option schemes will not exceed 10% of the total issued Voting and Non-Voting share capital.

Directors' remuneration

The audited remuneration of the individual directors who served in the year to 31 December 2022 was:

 
                                                                       Total   Total 
                                           Salary or fees   Benefits    2022    2021 
                                                     $000       $000    $000    $000 
----------------------------------------  ---------------  ---------  ------  ------ 
 P Dolan[7]                                           200          -     200     200 
 H Ghossein                                           190         38     228     262 
 F Tonetti (Resigned 16 April 2022)                   100          1     101      70 
 C Geddes[8]                                          200          -     200     200 
 G Thomson                                             62          -      62      69 
 D Rothschild                                          50          -      50       9 
 H Turcan[9] (Resigned 17 October 2022)                 -          -       -       - 
 Total                                                802         39     841     810 
----------------------------------------  ---------------  ---------  ------  ------ 
 

All of the above directors' remunerations are considered short term in nature and exclude national insurance contributed by the employer.

The above table excludes final deferred consideration payments made directly to or to companies owned and controlled by H Ghossein of $0.25 million in 2022 (2021: $0.5 million). These payments arose on the purchase of WoodBois International ApS in 2017, as amended under the Deed of Variation effected on 5 August 2020.

It is the Company's policy that Executive Directors should have contracts with an indefinite term providing for a maximum of 3-6 months' notice. In the event of a take-over, the directors' contracts relating to P Dolan, H Ghossein and C Geddes provide for compensation of one year's salary on the take-over in the event that the Executive loses their position.

Non-Executive Directors are employed on letters of appointment which may be terminated on not less than 1-3 months' notice. The basic fees payable at the end of the year to Graeme Thomson as Non-Executive Chair and Senior Independent Director are GBP50,000 pa and GBP40,000 pa to David Rothschild as Independent Non-Executive Director.

ProfileS of the CURRENT Directors

P DOLAN, AGED 59, CHIEF EXECUITIVE OFFICER

Based in the UK, Mr Dolan held senior management positions within banking and hedge funds prior to joining Woodbois. He has consistently built award winning, world-class teams employing custom-built technology to manage substantial pools of human and financial capital across a diversified group of asset classes ranging from fixed income and equity derivatives to soft commodities and forestry.

C GEDDES, AGED 44, CHIEF FINANCIAL OFFICER

Based in South Africa, Mrs Geddes is a Fellow of the Institute of Chartered Accountants in England and Wales, a member of the South African Institute of Chartered Accountants and a Certified Fraud Examiner. During a 15-year career at BDO, the global audit, tax and advisory group, she served as director, forensic services, of BDO London and partner of BDO Cape Town. She has been a director and Board member of one of the largest South African pomegranate farming and export companies, Pomona, since 2008. She was also the Chair of POMASA (2018 to 2023), the Pomegranate Growers Association of South Africa.

H GHOSSEIN, AGED 62, DEPUTY CHAIR & HEAD OF GABON OPERATIONS

Based in Gabon, Mr Ghossein has 25 years of experience managing forestry operations, including full ownership of a forestry business. He previously served as a diplomat, travelling extensively across Africa, as well as owning various trading and real estate companies. Hadi is fluent in Arabic, French, Portuguese and English and holds Gabonese citizenship.

G THOMSON, AGED 66, NON-EXECUTIVE CHAIR & SENIOR INDEPENT DIRECTOR

Mr Thomson is a Fellow of the Institute of Chartered Accountants in England and Wales and has been a public company director in a variety of sectors for many decades, as a CEO, CFO/Company Secretary and as a Non-Executive. He has varied commercial UK and international experience, including of Audit and Remuneration Committees.

DAVID ROTHSCHILD, AGED 63, INDEPENT NON-EXECUTIVE DIRECTOR

David has a wide range of experience in growing businesses and improving their performance as a senior manager and adviser. He has been active in the African resource and agricultural sectors over the past 20 years, including as co-developer of a Liberian greenfield sustainable palm oil operation, and as advisor on environmental and social action planning. He has also been actively involved in governmental and NGO relations and was an early Steering Committee Member of the High Carbon Stock Approach Group, which ensures responsible development. A French speaker with over 40 years' experience in international business, including six years at the consultancy, McKinsey & Co, he is a dual national of the USA and South Africa and holds both B.Com and MBA degrees.

SUBSTANTIAL SHAREHOLDERS

The Company has been notified that the following have, at the date of this report, an interest in three percent or more of the issued Voting Ordinary share capital of the Company:

 
                                                             Percentage 
                                          Number of 1p    of the issued 
                                       Voting ordinary     Voting share 
 Name                                           shares          capital 
-----------------------------------  -----------------  --------------- 
 MCM Investment Partners SPC - MCM 
  Sustainable Resource SP                  133,625,000            5.38% 
 Sparta Premier S.A.                       100,000,000            4.00% 
 P Dolan (CE O )                            75,400,032            3.03% 
-----------------------------------  -----------------  --------------- 
 

CORPORATE GOVERNANCE

The Board is committed to achieving the highest standards of corporate governance, integrity and business ethics and is responsible for oversight of this. The Board has adopted the Corporate Governance Code produced by the Quoted Companies Alliance and has taken steps to apply the principles of the QCA Code in so far as they can be applied practically and with the exception set out below, given the size of the Group and the nature of its operations. We set out below how the Group complies with the QCA Code.

1. Establish a strategy and business model which promotes long-term value for shareholders. The strategy and business operations of the Group are set out in this Annual Report and in the Group's separate annual Sustainability Report.

The Group had three divisions during the year: Forestry, Trading, and Carbon Solutions. A clear strategy has been devised for each. The Board continually impresses upon the leadership teams of each division that capital allocation must be both performance and potential driven. Investment, either opex or capex, will only be forthcoming for strategies that can demonstrate significant return to shareholders over time. Running loss-making business lines is not a sustainable business strategy. We will prioritise support and fund businesses where our combination of skills and experience give us an edge. Conversely, if we cannot source the requisite expertise to participate profitably in particular business lines or geographies, we will look to cease these activities.

2. Seek to understand and meet shareholder needs and expectations

Shareholders play a key role in corporate governance, with our Annual General Meeting for shareholders offering an opportunity to exercise their decision-making power in the Company. Shareholders are encouraged to attend and vote at the AGM and any other General Meeting's which are convened throughout the year, either online or in person, and for which our Company Secretaries are the point of contact for shareholders. Our Executive Directors and our Investor relations officer are the primary contact points for shareholder updates and wider liaison. The contact details are set out in these financial statements.

3. Take into account wider stakeholder and social responsibilities and their implications for long-term success

The Board recognises that the long-term success of the Group is reliant upon the efforts of the employees of the Group and its contractors and suppliers. We continuously engage with our stakeholders ranging from employees, customers, investors, international development banks, governments, not-for-profit organisations and academia, to identify and address issues of materiality and to gather feedback from each of them. The Board ensures that all key relationships are the responsibility of, or are closely supervised by, one of the directors.

Woodbois is in a unique position to bring vital positive impact to Africa's economic transformation, social development and environmental management through our operations. In this regard we have set out to align our sustainability strategy with the United Nations Sustainable Development Goals (SDGs), which provide a vision for ending poverty, hunger, inequality and protecting the earth's natural resources.

4. Embed effective risk management, considering both opportunities and threats, throughout the organisation

The business of forestry and timber trading involves a high degree of risk: in addition to technical, political and regulatory risk, the Group is exposed to weather, nutrient and pest risks. Furthermore, the Group is exposed to a number of financial risks, which the Board seeks to minimise by adopting a prudent approach consistent with the corporate objectives of the Group. Our approach to these risk factors is set out in the Financial Statements for the year ended 31 December 2022.

A comprehensive budgeting process is completed once a year and is reviewed and approved by the Board. Budgets are subsequently updated when there is a significant change in any of the key assumptions to the budget. The Group's actual results, compared with the budget, are reported to the Executive Directors on a weekly basis and any material deviations from budget are followed up by a member of the Executive Board. Variances are reviewed at least monthly by the Board.

The Group maintains appropriate directors' and officers' insurance cover in respect of actions taken against the directors because of their roles, as well as insurance against material loss or claims against the Group, where it is considered cost-effective. The insured values and type of cover are comprehensively reviewed on a yearly-basis or where new assets or risks arise.

5. Maintain the Board as a well-functioning, balanced team led by the Executive Chair.

The Board is responsible for establishing the strategic direction of the Group, monitoring the Group's trading performance and appraising and executing development and acquisition opportunities. The Company holds a minimum of nine Board meetings per year at which financial and other reports are considered and, where appropriate, voted on. It also holds ad hoc meetings as required to deal with specific issues. During 2022 the Board met 12 times. Board and Committee meetings are convened at times convenient to eligible members to ensure 100% attendance. Details of the directors' beneficial interests in Ordinary Shares are available on our website and are set out in the Directors' Report.

The directors comply with Rule 21 of the AIM Rules and the Market Abuse Regulations 2014 relating to directors' dealings and will take all reasonable steps to ensure compliance by any employees of the Company to whom regulations apply. The Company has, in addition, adopted the Share Dealing Code for dealings in its Ordinary Shares by directors and senior employees.

As of the date of this report the Board comprised of three Executive Directors and two Independent Non-Executive Directors. Executive Board members are considered full time employees, while Non-Executives are required to commit between 20 and 40 days per annum to their roles. The Board will recommence its recruitment of a further Non-Executive Director once recapitalised.

The Board is supported by the Audit and the Remuneration Committees, which are comprised of Non-Executive Directors only, and the Nominations Committee which also includes the Chief Executive Officer.

6. Ensure that between them, the directors have the necessary up-to-date experience, skills and capabilities

The directors' biographies can be found in this Directors' Report and on the Company's website. The Board believes that their mix of significant senior financial and commercial experience gives a strong and appropriate background to formulate and deliver long term shareholder value.

The Nominations Committee oversees the requirements for and recommendations of any new Board appointments to ensure that it has the necessary mix of skills and experience to support the on-going development of the Company. Any appointments made will be on merit, against objective criteria and with due regard for the benefits of diversity and inclusivity on the Board. The Nominations Committee will also be responsible for succession planning.

7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

Internal evaluation of the Board, the Committees and individual directors is seen as an important next step in the development of the Board and one that is addressed. An annual operational review of all members of the Board is undertaken, in which their performance is evaluated, and development needs identified and actions to be taken agreed. Executive and Non-Executive Directors are subject to re-election intervals as prescribed in the Company's Articles of Incorporation. At each Annual General Meeting one-third of the directors who are subject to retirement by rotation shall retire from office. They can then offer themselves for re-election.

8. Promote a corporate culture that is based on ethical values and behaviours

The Company is committed to complying with all applicable laws and best corporate governance practices, wherever we operate. It is a core aspect of our mission to act with integrity in all of our operations. The Board expects all employees and contractors to comply with both the letter and spirit of the law and governance codes.

The Company fosters a culture where our businesses directly and indirectly promote a range of benefits for the host community and host country on social and environmental levels. One of the most fundamental and positive social impacts associated with our Company's strategic growth objective is the skills development and employment opportunity we bring to the region. The Group also commits to providing a safe environment for its staff and all other parties for which the Company has responsibility. The Company is committed to protecting the environment, contributing to sustainable management of natural resources by strictly following guidelines set out by host Governments and actively engaging with local communities. The Company clearly articulates objectives and has put in place an internal accountability mechanism to effectively implement commitments, as well as ensuring that outcomes are measured and communicated transparently.

9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board.

The following Group matters are reserved for the Board:

   --      Overall strategy 
   --      Approval of major capital expenditure projects 
   --      Approval of the annual and interim results 
   --      Annual budgets, KPI's and revisions thereto 
   --      ESG matters, including climate change initiatives and actions. 

The Company is committed to high standards of corporate governance. Both Management and the Board are dedicated to implementing best practice as the Company grows.

A clear organisation structure exists detailing lines of authority and control responsibilities.

The Board monitors the exposure to key business risks and reviews the strategic direction of all trading subsidiaries, their annual budgets, their performance in relation to those budgets and their capital expenditure.

The agenda of the business overall is determined by a Management Committee, which sets out agreed targets that including financial return, sustainability and actions on climate change. Opportunities and improvements are identified and prioritised depending on analysis carried out by Management. These projects are supported by detailed financial planning. Comprehensive internal controls and systems enable the Board to manage business objectives. As well as Board discussions, regular meetings are held by Management to discuss performance. Detailed information packs are prepared bi-weekly to cover each major area of the business. Variances from the budget and previous forecasts are analysed, explained and acted on.

Important capital investments are regularly discussed both at a Board and at a Management level where analysis of budget versus actual spend is carried out.

Effective corporate governance remains key to the business as it grows rapidly. The Company has a structure and process in place to help identify areas in which corporate governance can be improved. The Company is currently implementing technology that will allow both the Board and Management to oversee key performance indicators across the business in real time.

Within the Trading division, the Company has developed a custom-built tool to allow for real-time tracking of all trades, which has been progressively implemented in 2022. Substantially all of the cost associated with its development has been expensed as incurred due to the strict accounting rules governing the capitalisation of internally generated intangible assets.

The Company is in discussion with several organisations to implement innovative blockchain based technology to manage both the traceability of the timber that the Company produces as well as providing real-time oversight of the business's supply chain.

The Audit Committee, Remuneration Committee and Nominations Committee have formally delegated duties and responsibilities.

Audit Committee:

The Board has established an Audit Committee with formally delegated duties and responsibilities. During the year, the Audit Committee comprised of the Non-Executive Directors with Graeme Thomson as Chair. It meets at least three times in the financial year. In addition, the Chair has a regular dialogue with our auditors.

The terms of reference for the Audit Committee include requirements:

-- To monitor the integrity of the financial statements of the Group and any formal announcements relating to the Group's financial performance, reviewing significant financial reporting judgements contained in them.

-- To review the Group's internal financial controls together with the Group's internal control and risk management systems.

-- To monitor and review the external auditor's independence and objectivity and to make recommendations in relation to the appointment, re-appointment and removal of the external auditor.

Remuneration Committee:

The Remuneration Committee meets as and when required. During the year the Remuneration Committee comprised of Non-Executive Directors with Graeme Thomson as the Chair. It meets at least three times per year.

The policy of the committee is to reward Executive Directors in line with the current remuneration of directors in comparable businesses in order to recruit, motivate and retain high quality executives within a competitive marketplace.

There were three main elements of the remuneration packages for Executive Directors and senior management in 2022:

   -     Basic annual salary (including directors' fees) and benefits; 
   -     Discretionary annual bonus; and 
   -     Equity share option incentive scheme, 
   -     All of these elements take into account the need to motivate and retain key individuals. 

Nominations Committee:

The Nomination Committee which comprises of the Non-Executive Directors and the Chief Executive Officer meets at least twice a year and is responsible for the process of reviewing replacement or additional directors, the monitoring of compliance with applicable laws, regulations and corporate governance guidance and making appropriate recommendations to the Board.

10. Communicate how the Company is governed and is performing, by maintaining a dialogue with shareholders and other relevant stakeholders

The Company encourages regular communications with its various stakeholder groups and aims to ensure that all communications concerning the Group's activities are clear, fair and accurate. Quarterly updates are announced via RNS and are available on our website and users can register to be alerted when announcements or details of presentations and events are posted onto the website.

We aim to release our half and full year results to the market well in advance of reporting deadlines and offer visibility for shareholders by including segmental reporting. The Company's financial statements and Notices of General Meetings of the Company can be found on its website.

The results of voting on all resolutions are announced via RNS immediately following completion of General Meetings and are available on its website. Any actions required to be taken as a result of resolutions for which votes against have been received from at least 20 per cent of independent shareholders will be detailed on the RNS.

RISK MANAGEMENT

The business of forestry and timber trading involves a high degree of risk, in addition to technical, political and regulatory risk, the Group is exposed to weather, nutrient and pest risks. Furthermore, the Group is exposed to a number of financial risks, which the Board seeks to minimise by adopting a prudent approach which is consistent with the corporate objectives of the Group.

Technical Risk

The Company operates large-scale machinery in the forms of harvesting, sawmill and veneer equipment. All three are key revenue contributors and as such, any significant interruption to these assets could have an adverse effect on our financial performance. A number of procedures and programmes have been implemented to mitigate these technical risks. Capital investment programmes have replaced older equipment to improve both reliability and overall efficiency of our machinery, also reducing overall breakdown risk. The Group has actively sought best-in-class hires that have significant experience with the machinery that is currently being utilised, this has also allowed the Group to adopt best practice. Additionally, performance metrics for operating assets are monitored by Management on a weekly basis to quickly identify and resolve any issues.

PANDEMIC RISK

Public health risks may add to instability in world economies and markets generally. The extent of the impact of a pandemic will be correlated with the magnitude and duration thereof, both aspects of which will be uncertain. Entities may experience conditions often associated with a general economic downturn. This includes, but is not limited to, financial market volatility and erosion, deteriorating credit and increased borrowing rates, volatility in exchange rates, liquidity concerns, supply chain disruptions, further increases in government intervention, increasing unemployment, broad declines in consumer discretionary spending, increasing inventory levels, reductions in production because of decreased demand, layoffs and furloughs, and other restructuring activities. The continuation of these circumstances could result in an even broader economic downturn which could have a prolonged negative impact on an entity's financial results. What recovery/emergence may look like will also be speculation.

Political and Regulatory Risk

The Board observes any political developments across the geographies that Woodbois operates in closely, notably in Gabon and Mozambique. The political environment across all the countries that Woodbois operates in will remain an evolving discussion point for the Board, however the risk of political unrest disruptive to the Group's areas of operations remains low. It is noted that since 2017 the insurgency in Cabo Delgado Province, Mozambique has been ongoing. Although currently unaffected by the conflict, the Board continues to closely monitoring any wider implications.

The regulatory frameworks in place across the countries that Woodbois operates in support the development of forestry. However, the forestry sector in Mozambique has been subject to frequent policy changes with regard to exports and delays in issuing of annual licenses, which has created uncertainty. Furthermore, there is no assurance that future political and economic conditions in these countries will not result in the Governments changing their political attitude towards forestry. Any changes in policy may result in changes in laws affecting ownership of assets, land tenure, ability to export, taxation, environmental protection and repatriation of income and capital, which may adversely impact the Group's ability to carry out its activities.

OTHER RISKS

The UK departed from the European Union at the end of 2020. Whilst there have been many regulatory and operational changes in trade between the parties this has to-date had a very limited effect on the Group's operations. The Board will maintain close dialogue with its advisors to ensure that any proposed regulatory changes are identified and actioned accordingly.

ENVIRONMENTAL RISK

The Group is exposed to climate, weather and the risk of pests affecting its forestry operations. The availability of water for its irrigation as well as the abundance of too much water also pose a risk to the biological assets.

These risks are managed by ongoing assessment of local pests and the adoption of irrigation methods. Adverse weather conditions may impact transport routes both within the Group's countries of operation and when exporting finished product.

Financial Risk

This comprises of a number of risks explained below.

Market PRICE risk

The Group is exposed to market risk in respect of any equity investments as well as any potential market price fluctuations that may affect the revenues of the forestry and timber trading operations. The Group mitigates this risk by having established investment appraisal processes and asset monitoring procedures, which are subject to overall review by the Board.

Liquidity risk

The Group seeks to manage liquidity by regularly reviewing cash levels and expenditure budgets to ensure that sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The Group had net cash balances of $2.3 million as at 31 December 2022 (2021: $0.9 million). To ensure sufficient access to liquidity, the Group has been actively seeking alternative sources of funding following the termination of the $6m credit line from Sydbank in April 2023, including equity, debt and hybrid solutions.

INTEREST RATE RISK

The Group has limited its exposure to the risk of being negatively affected by variable interest rates by predominantly borrowing using fixed interest instruments. Refer to note 14 for a detailed assessment.

Credit risk

The Group's principal financial asset is cash. The credit risk associated with cash is considered to be limited. The Group receives payment immediately upon delivery of its forestry products. The credit risk is considered to be minimal as no credit terms are offered and funds are received prior to the risk of ownership being transferred to the purchaser. From time to time cash is placed with certain institutions in support of trading positions. The credit risk is considered minimal as the Group only undertakes this with large reputable institutions.

DONATIONS

No political or charitable donations were made during the year (2021: nil).

POLICY ON PAYMENT OF SUPPLIERS

It is Group and Company policy to agree and clearly communicate the terms of payment as part of the commercial arrangements negotiated with suppliers and then to pay according to those terms based on the timely receipt of an accurate invoice.

EMPLOYMENT POLICIES

The Group is an equal opportunities employer: it promotes inclusion and diversity in the organisation wherever possible through recruitment, training, career development and promotion.

The Group is committed to keeping employees as fully-informed as possible with regard to the Group's performance and prospects and seeks their views, wherever possible, on matters which affect them as employees.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the United Kingdom (UK). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period.

In preparing the financial statements, the directors are required to:

   a.    select suitable accounting policies and then apply them consistently; 
   b.   make judgements and accounting estimates that are reasonable and prudent; 

c. state whether they have been prepared in accordance with UK adopted International Accounting Standards; and

d. prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies (Guernsey) Law 2008. The directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Woodbois Limited website. The Company is compliant with AIM Rule 26 regarding the Woodbois Limited website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Going concern

An assessment of going concern is made by the directors at the date the directors approve the annual financial statements, taking into account the relevant facts and circumstances at that date including:

-- Review of profit and cash flow forecasts for a period of not less than 12 months from the date hereof;

   --      Review of actual results against forecast; 
   --      Timing of cash flows and working capital resources; and 
   --      Financial or operational risks. 

To ensure sufficient access to liquidity, the Group has been actively seeking alternative sources of funding following the termination of the $6m credit line from Sydbank and its offset of $3.1m of cash balances in April 2023, including equity, debt and hybrid solutions. As announced on 6 June 2023, it has reached an agreement with Sydbank under which the outstanding balance of c$2.8m (as at 31 May 2023) will be repaid by the 2023 year end, d iscussions with a number of parties are progressing which may include raising funds through the issuance of shares and/or reducing or rescheduling other debts of the Group. Whilst there is currently no indication that the additional financing required will not be obtained, it cannot be certain. Although the audit report is not modified in respect of this matter, t hese events or conditions, along with the other matters as set forth in the notes, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Your attention is drawn to the corporate update issued on 6 June 2023, summarised in Note 24.

Further details on the assumptions and their conclusion thereon are included in the statement on going concern included in note 1 to the Financial Statements.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO THE AUDITOR

The Directors who were in office on the date of approval of these financial statements have confirmed that, as far as they are aware, there is no relevant audit information of which the auditor is unaware. Each of the directors have confirmed that they have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.

AUDITOR

PKF Littlejohn LLP were reappointed as auditors for 2022 and a resolution to reappoint then will be proposed at the 2023 AGM.

On behalf of the Board

Paul Dolan

Chief Executive Officer

9 June 2023

INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF WOODBOIS LIMITED

For the year ended 31 December 2022

Opinion

We have audited the financial statements of Woodbois Limited (the 'group') for the year ended 31 December 2022 which comprise: the Consolidated Statement of Profit or Loss and Other Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards.

In our opinion, the financial statements:

-- give a true and fair view of the state of the Group's affairs as at 31 December 2022 and of its loss for the year then ended;

-- have been properly prepared in accordance with UK-adopted international accounting standards; and

-- have been prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 1 in the financial statements, which indicates that the group incurred a net loss of $111,191,000 during the year ended 31 December 2022, principally as a result of a non-cash impairment to the valuation of the biological assets held, and that one of the group's banking facilities, held by a Danish bank, was withdrawn post year end which created critical cashflow pressures. The group is in discussions with parties to replace the withdrawn banking facility and whilst there is no indication at the date of this report that these discussions will not be successful, there is no guarantee that the required level of financing will be made available to the group. As stated in note 1, these events or conditions, along with the other matters as set forth in the notes, indicate that a material uncertainty exists that may cast significant doubt on the group's and company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the group's and company's ability to continue to adopt the going concern basis of accounting included testing the cashflow forecasts to assess their ability to meet their commitments and a qualitative assessment of the facts and circumstances. Procedures included:

-- Obtaining management's forecast cash flows covering the period from the date of signing to June 2024. We assessed the assumptions within the forecast with regards to revenue generation, capital funding and cash flows;

-- Reviewing and challenging the Board's controllable mitigation plans and their forecast impact on the ability of the business to continue to operate. We obtained supporting documentation to evaluate the plausibility and achievability of management's mitigation plans, including sensitised scenario forecasts;

-- Assessing the status of the discussions that management have entered into regarding replacement financing facilities;

-- A comparison of actual results for the year to past budgets to assess the forecasting ability/accuracy of management;

-- Agreeing available borrowing facilities to underlying agreements and the extent to which additional facilities could be utilised and funds raised from other sources; and

   --      Assessing the adequacy of going concern disclosures within the Annual Report and Accounts 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatement. At the planning stage, materiality is used to determine the financial statement areas that are including within the scope of our audit and the extent of sample sizes during the audit.

We determined our overall financial statements materiality to be US$303,000 (2021: US$448,000). This was based on an average of three year's adjusted profit or loss before tax which is calculated by removing all items reasonably deemed to be outside the normal course of business, such as the contingent asset acquisition expense, fair value gain or loss on biological assets and gain on bargain purchase in the prior year, as these are areas which involve management estimation. We consider adjusted profit or loss before tax to be the performance measure used by the shareholders as Woodbois Limited is a trading entity and its profit-making ability is a significant point of interest for investors.

We set performance materiality at 70% (2021:70%) of overall financial statements materiality to reflect the risk associated with the judgemental and key areas of management estimation within the financial statements.

No significant changes have come to light through the fieldwork which has caused us to revise our materiality figure. We set group triviality at $15,150 (2021: $15,680), and the range of component materiality was from Group Materiality of $303,000 to $55,484 (2021: $205,708 to $62,260).

Our approach to the audit

In designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular we looked at areas involving significant accounting estimates and judgements (such as the valuation of biological assets) by the Directors and considered future events that are inherently uncertain. We also address the risk of management override of controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

Our audit scope focused on the principal area of operation, being Africa. The head office in South Africa oversees the accounting function of the group and its subsidiaries, however, regional offices maintain the accounting records for many of the components. The components are based in Mauritius, Gabon, Mozambique, Denmark and London therefore given the nature of the accounting function, our audit was conducted by local component auditors within Gabon, Mozambique, Denmark and Mauritius.

Each component was assessed as to whether they were significant or not significant to the group by either their size or risk. The parent company and six components were considered to be significant due to their identified size and risk. These components have been subject to full scope audits by component auditors and reviewed by us.

The audit was overseen and concluded in London where we acted as group auditor. As group auditors we maintained regular contact with the component auditors throughout all stages of the audit and we were responsible for the scope and direction of their work. We ensured that we challenged their findings in order to form an opinion on the group.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section we have determined the matters described below to be the key audit matters to be communicated in our report.

 
 Key Audit Matter                         How our scope addressed this 
                                           matter 
 Valuation of biological assets 
  (note 11) 
                                         ------------------------------------------------------------- 
 Biological assets represent              Our work included: 
  the most material balance in 
  the financial statements (US$180m         *    Reviewing the biological asset valuation models 
  as at 31 December 2022).                       prepared by management for accuracy and challenging 
                                                 the estimates/assumptions made in the inputs; 
  The valuation of these assets 
  is the key assertion considered 
  here, as there is a risk that             *    Reviewing the model estimates such as discount rates 
  the biological assets are incorrectly          used and challenging the key inputs involved in 
  valued and therefore misstated                 arriving at the rate applied; 
  due to the high degree of estimation 
  and judgement required by management. 
                                            *    Reviewing the sensitivity of the key inputs, together 
  Management have reassessed                     with a combination of sensitivities of such inputs; 
  their inputs used within the 
  value in use calculations due 
  to changes in the country specific        *    Considering if there are any indications of 
  discount rates and risk free                   impairment and ensuring that those identified by 
  rates applied. These inputs                    management are reasonable; and 
  are judgemental and have the 
  greatest impact upon valuation. 
                                            *    Reviewing disclosures in the financial statements to 
                                                 ensure they are in accordance with IAS 41, 
                                                 particularly the disclosures of key estimates and 
                                                 assumptions which impact fair values and the 
                                                 sensitivity analysis. 
                                         ------------------------------------------------------------- 
 

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:

   --      certain disclosures of directors' remuneration specified by law are not made; or 
   --      we have not received all the information and explanations we require for our audit. 

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

-- We obtained an understanding of the group and the sector in which it operates to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through enquires with management, industry research, review of component auditor work papers, and our application of cumulative audit knowledge and experience of the sector.

-- We determined the principal laws and regulations relevant to the group in this regard to be those arising from:

Aim Rules, Companies (Guernsey) Law 2008, health and safety regulations and relevant tax legislation in the jurisdictions in which the group operates.

-- We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group with those laws and regulations. These procedures included, but were not limited to:

o Enquiries of management

o Review of board minutes

o Review of RNS announcements

-- We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the potential for management bias identified in relation to the valuation of biological assets and as noted above, we addressed this by challenging the assumptions and judgements made by management when auditing that significant accounting estimate.

-- As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; review of revenue recognition, reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

-- As part of group reporting instructions issued, component auditors were required to report areas of non-compliance with laws and regulations, including fraud. As part of our review of component auditors work, we held regular update meetings during all stages of the audit and included within the discussions matters relating to country laws and regulations as well as how the risk of fraud at component level was being addressed.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with our letter of engagement. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

15 Westferry Circus

PKF Littlejohn LLP

Canary Wharf

Registered Auditor

London E14 4HD

9 June 2023

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 December 2022

 
                                                           Notes       2022      2021 
                                                                       $000      $000 
Turnover                                                     2       23,108    17,465 
Cost of sales                                                2     (17,244)  (13,970) 
---------------------------------------------------------  -----  ---------  -------- 
Gross profit                                                         5 ,864     3,495 
---------------------------------------------------------  -----  ---------  -------- 
Operating costs                                                     (4,166)   (3,620) 
Administrative expenses                                             (1,288)   (1,324) 
Depreciation                                                          (222)     (326) 
Share based payment expense                                 21        (418)     (233) 
(Loss)/gain on fair value of biological assets              11    (156,983)     4,253 
Operating (loss)/profit                                      3    (157,213)     2,245 
Gain on bargain purchase                                     5            -    88,292 
Reclassification of Foreign Currency Translation Reserve 
 on deregistered entities                                   22      (1,529)         - 
Foreign exchange gain                                                   904       756 
Finance costs                                                6      (1,029)     (591) 
---------------------------------------------------------  -----  ---------  -------- 
(Loss)/profit before tax                                          (158,867)   90,702 
---------------------------------------------------------  -----  ---------  -------- 
Taxation                                                     7       47,676     (591) 
---------------------------------------------------------  -----  ---------  -------- 
(Loss)/profit for the year                                        (111,191)    90,111 
---------------------------------------------------------  -----  ---------  -------- 
 
Other comprehensive income: 
 Items that may be reclassified subsequently to 
 profit or loss 
Currency translation differences                                    (1,612)   (3,032) 
Reclassification of FCTR on deregistered entities           22        1,529         - 
Items that will not be reclassified to profit or loss 
Revaluation of land and buildings, net of tax               10            -     6,254 
Total comprehensive (loss)/income for the year                    (111,274)    93,333 
---------------------------------------------------------  -----  ---------  -------- 
 
Basic (loss)/earnings per share (cents)                      8       (4.47)      3.69 
Diluted earnings per share (cents)                           8       (4.47)      3.65 
---------------------------------------------------------  -----  ---------  -------- 
 

The notes form an integral part of the consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2022

 
                                                                          Share   Revaluation 
                                            Convertible                   based       Reserve 
                                                  bonds     Foreign     payment     (note 10) 
                      Share        Share                   exchange     reserve                  Retained        Total 
                    capital      premium                  reserve *   (note 21)                  earnings       equity 
                       $000         $000           $000        $000        $000          $000        $000         $000 
---------------  ----------  -----------  -------------  ----------  ----------  ------------  ----------  ----------- 
 At 1 JANUARY 
  2021               31,119       58,609             52     (5,291)         226             -      72,113      156,828 
 Profit for the 
  year                    -            -              -           -           -             -      90,111       90,111 
 Other 
  comprehensive 
  income for 
  the year                -            -              -     (3,032)           -         6,254           -        3,222 
 Total 
  comprehensive 
  income for 
  the year                -            -              -     (3,032)           -         6,254      90,111       93,333 
 Transactions 
 with owners: 
 Issue of 
  ordinary 
  shares              1,409        6,645              -           -           -             -           -        8,054 
 Share based 
  payment 
  expense                 -            -              -           -         233             -           -          233 
 Share options 
  forfeited               -            -              -           -        (24)             -          24            - 
 At 31 December 
  2021               32,528       65,254             52     (8,323)         435         6,254     162,248      258,448 
---------------  ----------  -----------  -------------  ----------  ----------  ------------  ----------  ----------- 
 Loss for the 
  year                    -            -              -           -           -             -   (111,191)    (111,191) 
 Other 
  comprehensive 
  income for 
  the year                -            -              -        (83)           -             -           -         (83) 
 Total 
  comprehensive 
  loss for the 
  year                    -            -              -        (83)           -             -   (111,191)    (111,274) 
 Transactions 
 with owners: 
 Issue of 
  ordinary 
  shares                 24           75              -           -        (51)             -           -           48 
 Redemption of 
  convertible 
  bonds                  73          220           (28)           -           -             -           -          265 
 Share based 
  payment 
  expense                 -            -              -           -         418             -           -          418 
 At 31 December 
  2022               32,625       65,549             24     (8,406)         802         6,254      51,057      147,905 
---------------  ----------  -----------  -------------  ----------  ----------  ------------  ----------  ----------- 
 

* Exchange differences arising on translation of the foreign controlled entities are recognised in other comprehensive income and accumulated in a separate reserve within equity.

The notes form an integral part of the consolidated financial statements.

 
                                             CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
                                                                   As at 31 December 2022 
----------------------------------------------------------------------------------------- 
                                                              2022                   2021 
                                       Notes                  $000                   $000 
-------------------------------------  -----  --------------------  --------------------- 
ASSETS 
Non-current assets 
Biological assets                         11               179,815                336,798 
Property, plant and equipment              9                32,226                 30,119 
-------------------------------------  -----  --------------------  --------------------- 
Total non-current assets                                   212,041                366,917 
 
Current assets 
Trade and other receivables               12                 6,330                  4,616 
Inventory                                 13                 4,606                  6,159 
Cash and cash equivalents                 14                 2,296                    887 
-------------------------------------  -----  --------------------  --------------------- 
Total current assets                                        13,232                 11,662 
-------------------------------------  -----  --------------------  --------------------- 
TOTAL ASSETS                                               225,273                378,579 
-------------------------------------  -----  --------------------  --------------------- 
 
LIABILITIES 
NON-CURRENT LIABILITIES 
Borrowings                                16               (5,665)                (2,898) 
Deferred tax                               7              (58,675)              (106,475) 
Convertible bonds - host liability        17                     -                  (931) 
-------------------------------------  -----  --------------------  --------------------- 
Total non-current liabilities                             (64,340)              (110,304) 
 
Current liabilities 
Trade and other payables                  15               (3,547)                (4,078) 
Borrowings                                16               (8,603)                (5,369) 
Provisions                                20                 (130)                  (130) 
Convertible bonds - host liability        17                 (748)                      - 
Contingent acquisition liability          22                     -                  (250) 
TOTAL CURRENT LIABILITIES                                 (13,028)                (9,827) 
TOTAL LIABILITIES                                         (77,368)              (120,131) 
-------------------------------------  -----  --------------------  --------------------- 
 
NET ASSETS                                                 147,905                258,448 
-------------------------------------  -----  --------------------  --------------------- 
 
EQUITY 
Share capital                             18                32,625                 32,528 
Share premium                             19                65,549                 65,254 
Convertible bonds - equity component      17                    24                     52 
Foreign exchange reserve                                   (8,406)                (8,323) 
Share based payment reserve               21                   802                    435 
Revaluation reserve                       10                 6,254                  6,254 
Retained earnings                                           51,057                162,248 
-------------------------------------  -----  --------------------  --------------------- 
 
TOTAL EQUITY                                               147,905                258,448 
-------------------------------------  -----  --------------------  --------------------- 
 

The notes form an integral part of the consolidated financial statements. The consolidated financial statements were authorised for issue by the board of directors on 9 June 2023 and were signed on its behalf.

Paul Dolan

Chief Executive Officer

 
                                                                CONSOLIDATED STATEMENT OF CASH FLOWS 
                                                                 For the year ended 31 December 2022 
---------------------------------------------------------------------------------------------------- 
                                                                                      2022      2021 
                                                                  Notes               $000      $000 
----------------------------------------------------------------  -----  -----------------  -------- 
CASH USED IN OPERATIONS 
(Loss)/profit before taxation                                                    (158,867)    90,702 
Adjustment for: 
Depreciation of property, plant and equipment                         9              2,181     2,063 
Fair value adjustment of biological asset                            11            156,983   (4,253) 
Transaction costs deducted from equity                                                   -      (42) 
Foreign exchange                                                                     (904)     (756) 
Reclassification of FCTR on deregistered entities                                    1,529         - 
Accrued expense                                                      15                322    391 
Share based payments                                                 21                418       233 
Finance costs                                                         6              1,029       591 
Gain on bargain purchase                                              5                  -  (88,292) 
Increase in trade and other receivables                                            (1,714)     (838) 
Decrease in trade and other payables                                                 (632)   (460) 
Decrease/(increase) in inventory                                                     1,553   (1,267) 
CASH FLOWS FROM OPERATIONS                                                           1,898   (1,928) 
Finance costs paid                                                                   (759)     (495) 
Income taxes paid                                                                      (2)      (57) 
----------------------------------------------------------------  -----  -----------------  -------- 
cash FLOWS from operatiNG ACTIVITIES                                                 1,137   (2,480) 
----------------------------------------------------------------  -----  -----------------  -------- 
 
CASH FLOWS FROM INVESTING ACTIVITIES 
Expenditure on property, plant and equipment                                       (3,907)   (4,310) 
Settlement of deferred consideration                                 22              (250)     (500) 
Settlement of purchase price for acquired subsidiary                  5              (341)   (1,107) 
cash FLOWS from investing activities                                               (4,498)   (5,917) 
----------------------------------------------------------------  -----  -----------------  -------- 
 
CASH FLOWS FROM FINANCING ACTIVITIES 
Proceeds from loans and borrowings                                                   6,193         - 
Repayment of loans and borrowings                                                  (1,470)   (1,387) 
Proceeds from the issue of ordinary shares (net of issue costs)                         47     8,111 
cash fLOWS from financing activities                                                 4,770     6,724 
----------------------------------------------------------------  -----  -----------------  -------- 
 
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                                 1,409   (1,673) 
Cash and cash equivalents at beginning of year                                         887     2,560 
----------------------------------------------------------------  -----  -----------------  -------- 
CASH AND CASH EQUIVALENTS AT end of YEAR                                             2,296       887 
----------------------------------------------------------------  -----  -----------------  -------- 
 

Net debt reconciliation

 
                2021   Cash flow   Non-cash     2022 
                                    changes 
                $000        $000       $000     $000 
------------  ------  ----------  ---------  ------- 
 Borrowings    8,267       4,723      1,278   14,268 
------------  ------  ----------  ---------  ------- 
 

The notes form an integral part of the consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2022

1. SIGNIFICANT ACCOUNTING POLICIES

GENERAL INFORMATION

Woodbois Limited ("the Company" or "Woodbois") is an AIM-quoted forestry and timber trading company limited by shares. The Company is incorporated and domiciled in Guernsey, the Channel Islands, with registered number 52184. Its registered office is Dixcart House, Sir William Place, St Peter Port, Guernsey, GY1 1GX.

The nature of the Group's operations and its principal activities are set out in the Directors' Report.

The accounting policies have been consistently applied.

The principal activities and nature of the business are included above.

BASIs OF ACCOUNTING

The consolidated financial statements have been prepared in accordance with UK adopted international accounting standards adopted by the United Kingdom applied in accordance with the provisions of the Companies (Guernsey) Law 2008. The consolidated financial statements have been prepared under the historical cost convention except for biological assets and certain financial assets and liabilities, which have been measured at fair value.

FUNCTIONAL AND PRESENTATION CURRENCY

These consolidated financial statements are presented in United States Dollar (USD), which is the Group's presentation currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

BASIS OF CONSOLIDATION

Subsidiaries are entities controlled by the Group. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

-- Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee).

   --      Exposure, or rights, to variable returns from its involvement with the investee 
   --      The ability to use its power over the investee to affect its returns. 

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

   --      The contractual arrangement with the other vote holders of the investee. 
   --      Rights arising from other contractual arrangements. 
   --      The Group's voting rights and potential voting rights. 

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. The acquisition method is used to account for the acquisition of subsidiaries.

Any contingent consideration is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or a liability is recognised in accordance with IFRS 9 either in profit or loss or as a change in other comprehensive income. The unwinding of the discount on contingent consideration liabilities is recognised as a finance charge within profit or loss.

Acquisition related costs are expensed as incurred.

The Group measures goodwill at the acquisition date as the excess of the fair value of the consideration transferred, plus the recognised amount of any non-controlling interests, less the recognised amount of the identifiable assets acquired, and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss as a bargain purchase.

Before recognising a gain on a bargain purchase, an assessment is made as to whether all assets acquired, and liabilities assumed have been correctly identified. The fair value measurement of the identifiable net assets and cost of acquisition is also reviewed to evaluate whether all available information at the acquisition date has been considered. An adjustment made to the fair value of the net assets acquired will impact the amount of goodwill or bargain purchased recognised at acquisition.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group. All significant intercompany transactions and balances between group entities are eliminated on consolidation.

When the Group ceases to consolidate a subsidiary as a result of losing control and the Group retains an interest in the subsidiary and the retained interest is an associate, the Group measures the retained interest at fair value at that date and the fair value is regarded as its cost on initial recognition. The difference between the net assets de-consolidated and the fair value of any retained interest and any proceeds from disposing of a part interest in the subsidiary is included in the determination of the gain or loss on disposal. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that subsidiary had directly disposed of the related assets or liabilities.

Investments in associates and jointly controlled entities are accounted for using the equity method of accounting and are initially recognised at cost. The Group's share of its associates' post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in reserves is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment.

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions. Gains or losses on disposals to non-controlling interests are recorded in equity.

As at 31 December 2022, the Group held equity interests in the following undertakings:

 
                                   Proportion held of voting 
 Subsidiary undertakings                              rights   Country of incorporation   Nature of business 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Direct investments 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Woodbois Services Limited                              100%   England                    Shared services 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Woodbois Trading Limited                               100%   Hong Kong                  Financier 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Argento Limited                                        100%   Mauritius                  Holding / treasury company - 
                                                                                          Forestry and Trading 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Woodbois Liberia Inc.                                  100%   Liberia                    Dormant 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Carbonarbor Limited                                    100%   England                    Carbon solutions 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 
 Indirect investments of Argento Limited 
---------------------------------------------------------------------------------------  ----------------------------- 
 Argento Mozambique Limitada                            100%   Mozambique                 Holding company & Forestry 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Madeiras SL Limitada                                   100%   Mozambique                 Forestry 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Jardim Zambezia Limitada                               100%   Mozambique                 Forestry 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Baia Branca Limitada                                   100%   Mozambique                 Forestry 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Ligohna Timber Products                                       Mozambique                 Forestry 
 Limitada                                               100% 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Ligohna Timber Products (2)                                   Mozambique                 Forestry 
 Limitada                                               100% 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Montara Forest Lda                                     100%   Mozambique                 Forestry 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Petroforge Mozambique Lda                              100%   Mozambique                 Forestry 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 WoodBois International ApS                             100%   Denmark                    Timber Trading 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 WoodGroup ApS                                          100%   Denmark                    Timber Trading 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 Woodbois Gabon                                         100%   Gabon                      Forestry 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 SCI Yarim                                              100%   Gabon                      Property holding 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 La Gabonaise des Forêts 
 et de l'Industrie du Bois                                       Gabon                      Forestry 
 (LGFIB)                                                100% 
-----------------------------  -----------------------------  -------------------------  ----------------------------- 
 

The registered offices of the Group's subsidiaries are as follows:

 
 Subsidiary undertakings                                    Registered office 
---------------------------------------------------------  ----------------------------------------------------------- 
 Direct investments 
---------------------------------------------------------  ----------------------------------------------------------- 
 Woodbois Services Limited                                  118 Piccadilly, London, England, W1J 7NW 
---------------------------------------------------------  ----------------------------------------------------------- 
 Woodbois Trading Limited                                   New Mandarin Plaza Tower B, 14 Science Museum Rd, Hong 
                                                            Kong 
---------------------------------------------------------  ----------------------------------------------------------- 
 Argento Limited                                            Dias Pier Building, Le Caudan Waterfront, Port Louis, 
                                                            Mauritius 
---------------------------------------------------------  ----------------------------------------------------------- 
 Woodbois Liberia Inc.                                      Daviers Compound, Williams Road, Monrovia, Libreville 
---------------------------------------------------------  ----------------------------------------------------------- 
 Carbonarbor Limited                                        Canterbury Court, 1-3 Brixton Road, London, England, SW9 
                                                            6DE 
---------------------------------------------------------  ----------------------------------------------------------- 
 
 Indirect investments of Argento Limited 
-----------------------------------------------------------  --------------------------------------------------------- 
 Argento Mozambique Limitada                                Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito 
                                                            Kampfumo, Cidade de Maputo, Mozambique 
---------------------------------------------------------  ----------------------------------------------------------- 
 Madeiras SL Limitada                                       Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito 
                                                            Kampfumo, Cidade de Maputo, Mozambique 
---------------------------------------------------------  ----------------------------------------------------------- 
 Jardim Zambezia Limitada                                   Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito 
                                                            Kampfumo, Cidade de Maputo, Mozambique 
---------------------------------------------------------  ----------------------------------------------------------- 
 Baia Branca Limitada                                       Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito 
                                                            Kampfumo, Cidade de Maputo, Mozambique 
---------------------------------------------------------  ----------------------------------------------------------- 
 Ligohna Timber Products Limitada                           Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito 
                                                            Kampfumo, Cidade de Maputo, Mozambique 
---------------------------------------------------------  ----------------------------------------------------------- 
 Ligohna Timber Products (2) Limitada                       Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito 
                                                            Kampfumo, Cidade de Maputo, Mozambique 
---------------------------------------------------------  ----------------------------------------------------------- 
 Montara Forest Lda                                         Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito 
                                                            Kampfumo, Cidade de Maputo, Mozambique 
---------------------------------------------------------  ----------------------------------------------------------- 
 Petroforge Mozambique Lda                                  Bairro da Polana, Av. Ahmed Sekou Toure 571 R/C, Distrito 
                                                            Kampfumo, Cidade de Maputo, Mozambique 
---------------------------------------------------------  ----------------------------------------------------------- 
 WoodBois International ApS                                 Hoeffdingsvej 34, 2500 Valby, Denmark 
---------------------------------------------------------  ----------------------------------------------------------- 
 WoodGroup ApS                                              Hoeffdingsvej 34, 2500 Valby, Denmark 
---------------------------------------------------------  ----------------------------------------------------------- 
 Woodbois Gabon                                             Boite Postale 5333, Montée de Louis vers L'Ex 
                                                            Maringa, Libreville, Gabon 
---------------------------------------------------------  ----------------------------------------------------------- 
 SCI Yarim                                                  3568, Centre Ville Vers La Renovation, Libreville, Gabon 
---------------------------------------------------------  ----------------------------------------------------------- 
 La Gabonaise des Forêts et de l'Industrie du Bois     Louis (a cote de l'ex Marin a) 5333, Libreville, Gabon 
 (LGFIB) 
---------------------------------------------------------  ----------------------------------------------------------- 
 
 

Intra-group transactions

All intra-group transactions, balances, and unrealised gains and losses on transactions between Group companies are eliminated on consolidation. Subsidiaries' accounting policies are amended where necessary to ensure consistency with the policies adopted by the Group. All financial statements are made up to 31 December each year.

Business combination

The Group accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Group. In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.

The Group has an option to apply a 'concentration test' that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Changes in Accounting policies

a) New and amended standards adopted by the Group

The following IFRS or IFRIC interpretations were effective for the first time for the financial year beginning 1 January 2022. Their adoption has not had any material impact on the disclosures or on the amounts reported in these consolidated financial statements:

 
 Standards /interpretations   Application 
---------------------------  ---------------------------------------- 
 IAS 37                       Onerous Contracts - Cost of Fulfilling 
                               a Contract 
 IFRS 1, 9, 16 and            Annual Improvements to IFRS Standards 
  IAS 41                       2018-2020 Cycle 
 IAS 16                       Property, Plant and Equipment: Proceeds 
                               before Intended Use 
 

b) Accounting standards and interpretations not yet effective

The following new or amended standards are not expected to have a significant impact on the group's financial statements

 
 Standards /interpretations   Application 
---------------------------  ----------------------------------------------- 
 IAS 1                        Classification of Liabilities as Current 
                               or Non-current 
 IFRS 17                      Amendments to IFRS 17 Insurance Contracts 
 IAS 8                        Definition of Accounting Estimates 
 IAS 12                       Deferred Tax related to Assets and Liabilities 
                               arising 
                               from a Single Transaction 
 

SEGMENTAL REPORTING

The reportable segments are identified by the Executive Board (which is considered to be the Chief Operating Decision Maker) by the way management has organised the Group. The Group operates within three separate operational divisions comprising forestry, trading and carbon solutions

The directors review the performance of the Group based on total revenues and costs, for these three divisions and not by any other segmental reporting.

FOREIGN CURRENCIES

The presentation currency of the Group is US Dollars (US$). Items included in the Group's financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The functional currency of the majority of the Group's subsidiaries is USD as this is the currency in which they trade on a local basis. The consolidated financial statements are presented in USD ("the presentation currency") because this is the currency better understood by the principal users of the financial statements.

Foreign currency translation rates (against US$) for the significant currencies used by the Group were:

 
                           At 31 December   Annual average   At 31 December   Annual average 
                                     2022         for 2022             2021         for 2021 
------------------------  ---------------  ---------------  ---------------  --------------- 
 UK Pound                            1.21             1.23             1.35             1.38 
 Mozambique Metical                 63.88            63.85            63.83            65.33 
 Danish Krone                        6.97             7.07             6.57             6.29 
 West African CFA franc            614.48           623.52           579.26           556.02 
------------------------  ---------------  ---------------  ---------------  --------------- 
 

Transactions in foreign currencies are initially recorded at the rates of exchange prevailing on the dates of the transaction. At each reporting date, monetary assets and liabilities that are denominated in foreign currency are translated into the functional currency at the rate prevailing on that date. Non-monetary assets and liabilities are measured at fair value and are translated into the functional currency at the rate prevailing on the reporting date. Gains and losses arising on retranslation are included in profit or loss for the year, except for exchange differences on non-monetary assets and liabilities, which are recognised directly in other comprehensive income when the changes in fair value are recognised directly in other comprehensive income.

On consolidation, the assets and liabilities of the Group's overseas operations are translated into the Group's presentational currency at exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the year unless exchange rates have fluctuated significantly during the year, in which case the exchange rate at the date of the transaction is used. Exchange differences arising, if any, are taken to other comprehensive income and the Group's translation reserve. Such translation differences are recognised as income or as expenses in the year in which the operation is disposed of.

CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT

The preparation of the consolidated financial statements requires management to make estimates and judgements and form assumptions that affect the reported amounts of the assets, liabilities, revenue and costs during the periods presented therein, and the disclosure of contingent liabilities at the date of the consolidated financial statements.

Estimates and judgements are continually evaluated and based on management's historical experience and other factors, including future expectations and events that are believed to be reasonable. The estimates and assumptions that have a significant risk of causing a material adjustment to the financial results of the Group in future reporting periods are discussed below.

Information about assumptions and estimation uncertainties at 31 December that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the following notes:

   --      Residual values and useful lives of property, plant and equipment: refer to note 1 
   --      Fair value of biological assets: refer to note 11 
   --      Provision for doubtful debts: refer to note 1 
   --      Share Based Payments: refer to note 21 

Revenue recognition

Under IFRS 15, Revenue from Contracts with Customers, five key points to recognise revenue have been assessed:

Step 1: Identify the contract(s) with a customer;

Step 2: Identify the performance obligations in the contract;

Step 3: Determine the transaction price;

Step 4: Allocate the transaction price to the performance obligations in the contract; and

Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity, and specific criteria have been met for each of the Group's activities, as described below.

The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Where the Group makes sales relating to a future financial period, these are deferred and recognised under 'deferred revenue' on the Statement of Financial Position.

The Group currently has the following revenue streams:

-- Sale of goods: Revenue is recognised following the five-step approach outlined above. The performance obligation set out in step two is when the risk and reward of the goods is transferred to the customer (revenue recognised at a point in time), and is transferred at the earlier of:

o when goods are sold subject to a letter of credit, on the date that the bill of lading is dispatched to the buyer's bank; or

o when goods are prepaid in full by the buyer, based on the incoterm specified in the contract/invoice; or

o when the bill of lading is exchanged.

-- Service revenue: Revenue is recognised following the five-step approach outlined above. The performance obligation set out in step two is when the work has been certified by the customer (revenue recognised at a point in time).

-- Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

-- Dividend income from investments is recognised when the shareholders' rights to receive payment have been established (provided that it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably).

LEASES

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Short--term leases and leases of low--value assets

The Group applies the short--term lease recognition exemption to its short--term leases (i.e., those leases that have a lease term of 12 months or less from commencement date and do not contain a purchase option). It also applies the lease of low--value assets recognition exemption to leases of equipment that are considered of low value (i.e., below $5,000). Lease payments on short--term leases and leases of low--value assets are recognized as occupancy expense on a straight--line basis over the lease term.

Long--term leases

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.

The right of use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

The Group remeasures the lease liability (and makes a corresponding adjustment to the related right of use asset) whenever:

-- The lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate;

-- The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used); or

-- A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

Right of use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right of use asset reflects that the Group expects to exercise a purchase option, the related right of use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

The Group applies IAS 36 Impairment of Assets to determine whether a right of use asset is impaired.

Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right of use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs.

Property, PLANT AND EQUIPMENT

Land and Buildings are recognised at fair value based on periodic, but at least triennial, valuations by external independent valuers. Any revaluation gains are recognised in other comprehensive income. Revaluation losses are recognised with other comprehensive income, against any pre-existing gains, with anything over and above pre-existing gains being recognised as an expense in profit and loss.

All other Property, plant and equipment is stated at historical cost less subsequent accumulated depreciation and any accumulated impairment losses. If significant parts of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the group will obtain ownership by the end of the lease term.

Land has an indefinite useful life and therefore is not depreciated.

Depreciation is calculated on a straight-line basis at rates calculated to write each asset down to its estimated residual value, which in most cases is assumed to be zero, evenly over its expected useful life, as follows:

   Motor vehicles                                                    over 3 years 
   Fixtures and IT equipment                                    over 3 - 7 years 
   Plant and equipment                                           over 2 - 5 years 

Management judgement and assumptions are necessary in estimating the methods of depreciation, useful lives and residual values. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT

At each statement of financial position date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Where there has been a change in economic conditions that indicate a possible impairment in a cash-generating unit, the recoverability of the net book value relating to that field is assessed by comparison with the estimated discounted future cash flows based on management's expectations of future costs.

The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where conditions giving rise to impairment subsequently reverse, the effect of the impairment charge is also reversed as a credit to the income statement, net of any depreciation that would have been charged since the impairment.

biological assets

A biological asset is defined as a living animal or plant. The Group's biological assets comprise standing timber. The fair value of the standing timber is determined using models based on expected yields, market prices for the saleable produce, over 5 years, after allowing for harvesting costs and other costs yet to be incurred in getting the produce to maturity. Any changes in fair value are recognised in the income statement in the year in which they arise.

Forestry

IAS 41 requires biological assets to be measured at fair value less costs to sell. The fair value of standing timber is estimated based on the present value of the net future cash flows from the asset, discounted at a current market-based rate. In determining the present value of expected net cash flows, the Group includes the net cash flows that market participants would expect the asset to generate in its most relevant market. Increases or decreases in value are recognised in profit or loss. When the fair value estimates are determined to be clearly unreliable due to insufficient information being available to the directors, the biological asset is held at cost less any accumulated depreciation and any accumulated losses.

All expenses incurred in maintaining and protecting the assets are recognised in profit or loss. All costs incurred in acquiring additional planted areas are capitalised.

Where fair value of a biological asset cannot be measured reliably, the biological asset shall be measured at its cost less any accumulated depreciation and any accumulated impairment losses.

Costs incurred prior to the demonstration of commercial feasibility of forestry and agriculture in a particular area are written-off to profit and loss as incurred.

CONVERTIBLE BONDS

The net proceeds received from the issue of convertible bonds are split between a liability element and an equity component at the date of issue. The fair value of the liability component is estimated using the prevailing market interest rate for similar nonconvertible debt. The portion which represents the embedded option to convert the liability into equity of the Company is included in equity and its fair value at initial recognition was estimated using the Monte Carlo method of valuing such instruments. The equity portion is not remeasured subsequent to initial recognition and the liability component is carried at amortised cost. Issue costs are apportioned between the liability and equity components of the convertible bonds based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity. The interest expense on the liability component is calculated by applying the prevailing market interest rate, at the time of issue, for similar non-convertible debt to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible bonds.

FINANCIAL INSTRUMENTS

(a) Classification

The Group classifies its financial assets in the following measurement categories:

-- those to be measured subsequently at fair value (either through OCI or through profit or loss); and

   --      those to be measured at amortised cost. 

The classification depends on the Group's business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will be recorded either in profit or loss or in OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

(b) Recognition

Purchases and sales of financial assets are recognised on trade date (that is, the date on which the Group commits to purchase or sell the asset). Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

(c) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Debt instruments

Amortised cost; Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method.

Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss.

(d) Impairment

The Group assesses, on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

INVENTORIES

Inventories are measured at the lower of cost-of-production or estimated net realisable value. Cost of production includes direct labour, all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated selling expenses. The cost of inventories is based on the weighted average cost method.

Product that has been containerised and shipped or remains in storage at the port of departure, and where ownership has not yet passed to the customer, is accounted for as stock in transit and stated at the lower of cost of production or estimated net realisable value.

eMPLOYEE benefits

short-term employee benefits

The costs of all short-term employee benefits are recognised in the period in which the employee renders the related service.

The accrual/liability for employee entitlements to wages, salaries and annual leave represent the amount which the Group has a present obligation to pay as a result of an employees' services provided up to the reporting date. The accruals have been calculated at undiscounted amounts based on expected wage and salary rates.

SHARE-BASED PAYMENT ARRANGEMENTS

The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognised as an expense, with a corresponding increase in equity. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

The fair value of the options granted is measured using a Monte-Carlo valuation model for market performance criteria and Black-Scholes valuation model for non-market performance criteria, considering the terms and conditions under which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest.

PROVISIONS

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of discount is recognised as a finance cost.

A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with that contract.

In accordance with the Group's environment policy and applicable legal requirements, a provision for site restoration in respect of contaminated land, and the related expense, is recognised when the land is contaminated.

TAXATION

Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

CURRENT TAX

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years.

The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.

Current tax assets and liabilities are offset only if certain criteria are met.

DEFERRED TAX

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognised for:

-- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

-- temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

   --      taxable temporary differences arising on the initial recognition of goodwill. 

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. For this purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through sale, and the Group has not rebutted this presumption.

Deferred tax assets and liabilities are offset only if certain criteria are met.

BORROWINGS

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

EARNINGS PER SHARE

(i) Basic earnings per share is calculated by dividing the profit attributable to the owners of the Company by the weighted average number of ordinary shares outstanding during the financial year.

(ii) Diluted earnings per share adjusts the figures used in determining basic earnings per share to take into account the after tax effects of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of ordinary shares that would have been outstanding assuming the conversion of all diluted potential ordinary shares.

Where there is a loss attributable to the owners of the company, it is not necessary to disclose the diluted earnings per share.

GOING CONCERN

The consolidated financial statements have been prepared assuming that the Group will continue as a going concern. Under this assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor necessity of liquidation, ceasing trading or seeking protection from creditors for at least 12 months from the date of the signing of the consolidated financial statements.

Management have performed their consideration on various scenarios. The base case includes the rescheduling of debts and/or financing being raised whether as equity, debt or a hybrid thereof. In their scenario planning management have considered inter alia:

   --      the timing of and the ability of the Company to raise sufficient working capital; 

-- the timing of and the ability of the Company to raise the finance required to settle the balance of the Danish bank facility that was terminated on 19 April 2023;

   --      the likely outcome(s) of the Company's negotiations with its creditors; 
   --      the current stage of the Group's life cycle; 
   --      its performance and cashflow; 
   --      the expected timing of revenues; 
   --      financing both committed and those that management consider is available and; 
   --      operational risks. 

The forecasts, show that the Company will have to reschedule or raise funds in connection with $1.5m of its near-term debt due at the end of June 2023, in addition to raising sufficient working capital in order to have adequate resources to continue in operational existence for the foreseeable future and to meet its liabilities as they fall due in the next 12 months. Your attention is drawn to the RNS dated 6 June 2023, summarised in note 24. At the date of these consolidated financial statements, financing proposals were still subject to due diligence and shareholder approval to issue new ordinary shares at the General Meeting (scheduled for 16 June 2023), set out in the circular to shareholders dated 26 May 2023. Whilst the directors currently believe that the additional financing required will be obtained, there can be no certainty. Although the audit report is not modified in respect of this matter, t hese events or conditions, along with the other matters as set forth in the notes, indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. As of the date hereof the directors consider it appropriate to adopt the going concern basis of preparation in the consolidated financial statements.

2. SEGMENTAL REPORTING

Segmental information is presented on the basis of the information provided to the Chief Operating Decision Maker ("CODM"), which is the Executive Board.

The Group is currently focused on forestry, timber trading and carbon solutions. These are the Group's primary reporting segments, operating in Gabon, Mozambique, Denmark, London, Guernsey and head operating offices in Mauritius. Certain support services are performed in the UK.

As on 31 December 2022 sales made to one customer during the year accounted for 14% (2021 10%) of the total turnover.

The Group's directors review the internal management reports of each division at least monthly.

There are varying levels of integration between the Forestry and Trading segments. This integration includes transfers of sawn timber and veneer, respectively. Inter-segment pricing is determined on an arm's length basis.

Information relating to each reportable segment is set out below. Segment profit/(loss) before tax is used to measure performance because management believes that this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industry.

The following table shows the segment analysis of the Group's profit before tax for the year and net assets at 31 December 2022. All amounts are disclosed after taking into account any intra-segment and intra-group eliminations:

 
 2022                                        Forestry    Trading   Carbon Solutions       Total 
                                                 $000       $000               $000        $000 
-----------------------------------------  ----------  ---------  -----------------  ---------- 
 Income statement 
 Turnover                                      15,262      7,846                  -      23,108 
 Cost of Sales                               (10,450)    (6,794)                  -    (17,244) 
-----------------------------------------  ----------  ---------  -----------------  ---------- 
 Gross profit                                   4,812      1,052                  -       5,864 
-----------------------------------------  ----------  ---------  -----------------  ---------- 
 Operating costs                              (2,360)    (1,467)              (339)     (4,166) 
 Administrative expenses                        (429)      (429)              (430)     (1,288) 
 Depreciation                                   (206)       (16)                  -       (222) 
 Share based payment expense                    (171)      (121)              (126)       (418) 
 Loss on fair value of biological assets    (156,983)          -                  -   (156,983) 
 Segment operating loss                     (155,337)      (981)              (895)   (157,213) 
 Foreign exchange (loss)/gain                   (135)      1,039                  -         904 
 Finance costs                                  (614)      (415)                  -     (1,029) 
 Loss before tax                            (156,086)      (357)              (895)   (157,338) 
-----------------------------------------  ----------  ---------  -----------------  ---------- 
 Taxation                                      47,681        (5)                  -      47,676 
-----------------------------------------  ----------  ---------  -----------------  ---------- 
 Loss for the year                          (108,405)      (362)              (895)   (109,662) 
-----------------------------------------  ----------  ---------  -----------------  ---------- 
 
 NET ASSETS 
 Assets:                                      215,486      9,787                  -     225,273 
 Liabilities:                                 (5,881)   (12,812)                  -    (18,693) 
 Deferred tax liability                      (58,680)          5                  -    (58,675) 
 Net assets                                   150,925    (3,020)                  -     147,905 
-----------------------------------------  ----------  ---------  -----------------  ---------- 
 
 

Reconciliation of information on reportable segments to the amounts reported in the consolidated financial statements:

 
                                                                               2022     2021 
 (Loss)/profit before tax                                                      $000     $000 
-----------------------------------------------------------------------  ----------  ------- 
 Total (loss)/profit before tax for reportable segments                   (109,662)   90,702 
 Unallocated amount: reclassification of FCTR on deregistered entities      (1,529)        - 
-----------------------------------------------------------------------  ----------  ------- 
 Consolidated (loss)/profit before tax                                    (111,191)   90,702 
-----------------------------------------------------------------------  ----------  ------- 
 

The following table shows the segment analysis of the Group's loss before tax for the year and net assets at 31 December 2021. All amounts are disclosed after taking into account any intra-segment and intra-group eliminations:

 
 
   2021                                       Forestry   Trading   Carbon Solutions       Total 
                                                  $000      $000               $000        $000 
 -----------------------------------------  ----------  --------  -----------------  ---------- 
 Income statement 
 Turnover                                        7,988     9,477                  -      17,465 
 Cost of Sales                                 (5,569)   (8,401)                  -    (13,970) 
------------------------------------------  ----------  --------  -----------------  ---------- 
 Gross profit                                    2,419     1,076                  -       3,495 
------------------------------------------  ----------  --------  -----------------  ---------- 
 Operating costs                               (1,511)   (1,531)              (578)     (3,620) 
 Administrative expenses                         (330)     (334)              (660)     (1,324) 
 Depreciation                                    (321)       (5)                  -       (326) 
 Share based payment expense                      (59)      (58)              (116)       (233) 
 Gain on fair value of biological assets         4,253         -                  -       4,253 
 Segment operating profit/(loss)                 4,451     (852)            (1,354)       2,245 
------------------------------------------  ----------  --------  -----------------  ---------- 
 Finance costs                                   (241)     (350)                  -       (591) 
 Foreign exchange (loss)/gain                     (78)       834                  -         756 
 Bargain purchase                               88,292         -                  -      88,292 
 Profit/(loss) before tax                       92,424     (368)            (1,354)      90,702 
------------------------------------------  ----------  --------  -----------------  ---------- 
 Taxation                                        (591)         -                  -       (591) 
------------------------------------------  ----------  --------  -----------------  ---------- 
 Profit/(loss) for the year                     91,833     (368)            (1,354)      90,111 
------------------------------------------  ----------  --------  -----------------  ---------- 
 
 NET ASSETS 
 Assets:                                       370,433     8,146                  -     378,579 
 Liabilities:                                  (3,901)   (9,755)                  -    (13,656) 
 Deferred tax liability                      (106,475)         -                  -   (106,475) 
 Net assets                                    260,057   (1,609)                  -     258,448 
------------------------------------------  ----------  --------  -----------------  ---------- 
 
 

Geographical information

In presenting the below geographical information, segment revenue and non-current assets are based on the entity's country of domicile.

 
                       Denmark     Gabon   Mozambique     Total 
 2022                     $000      $000         $000      $000 
--------------------  --------  --------  -----------  -------- 
 External sales          7,846    15,130          132    23,108 
 Non-Current Assets      1,524   210,182          335   212,041 
--------------------  --------  --------  -----------  -------- 
 
 
 2021                   $000      $000     $000      $000 
--------------------  ------  --------  -------  -------- 
 External sales        9,477     7,710      278    17,465 
 Non-Current Assets      273   326,884   39,760   366,917 
--------------------  ------  --------  -------  -------- 
 

The below segment revenue has been based on the geographic location of the customer. Only material amounts were included.

 
                          2022     2021 
 Location:                $000     $000 
--------------------  --------  ------- 
 
 Libya                   4,401    2,790 
 Gabon                   3,922    1,274 
 Dominican Republic      2,350    1,220 
 Pakistan                2,275    4,418 
 Italy                   1,800        - 
 Bangladesh              1,621    1,535 
 Turkey                  1,591      901 
 Iraq                    1,283      690 
 Morocco                   805      732 
 USA                       574      569 
 Belgium                   534      129 
                        21,156   14,258 
--------------------  --------  ------- 
 

3. OPERATING LOSS/profit

 
                                                                                         2022      2021 
                                                                                         $000      $000 
-----------------------------------------------------------------------------------  --------  -------- 
Operating loss/profit is stated after charging/(crediting): 
Depreciation of property, plant and equipment                                           2,181     2,063 
Staff costs (see note 4)                                                                4,276     3,936 
Share based payment reserve expense (see note 21)                                         418       233 
Lease expense                                                                              89        81 
Loss/(gain) on fair value of Biological assets (see note 11)                          156,983   (4,253) 
Auditor's remuneration: 
Audit services 
- fees payable to the Company's auditor for the audit of the consolidated accounts         78        75 
Fees payable to associates of the Company's auditor 
- auditing the accounts of subsidiaries pursuant to legislation                            76        70 
-----------------------------------------------------------------------------------  --------  -------- 
 

4. EMPLOYEE INFORMATION

 
                                                                                                 2022    2021 
                                                                                               Number  Number 
---------------------------------------------------------------------------------------------  ------  ------ 
The average monthly number of persons (including directors) employed by the Group during the 
 year was: 
Administration and management                                                                       5       5 
Carbon solutions                                                                                    2       2 
Forestry                                                                                          393     342 
Trading                                                                                             9       9 
                                                                                                  409     358 
---------------------------------------------------------------------------------------------  ------  ------ 
 
                                                                                                 2022    2021 
                                                                                                 $000    $000 
The aggregate remuneration comprised: 
Wages and salaries                                                                              4,138   3,834 
Social security costs                                                                             138     102 
                                                                                                4,276   3,936 
---------------------------------------------------------------------------------------------  ------  ------ 
 
 
 
 
 
                                                                                                 2022    2021 
                                                                                                 $000    $000 
Directors' remuneration included in the aggregate remuneration above comprised 
---------------------------------------------------------------------------------------------  ------  ------ 
Emoluments for qualifying services                                                                841     810 
---------------------------------------------------------------------------------------------  ------  ------ 
 

Included above are emoluments of $247,000 (2021: $262,000) in respect of the highest paid director. Deferred final acquisition payments arising from the acquisition of WoodBois International ApS are excluded in both periods. Full details of directors' remuneration are included in the Directors' Report.

Pension contributions of $6,936 (2021: $13,750) were made on behalf of the directors and other staff members.

5. acquisition OF SUBSIDIARY

On 6 August 2021, the Group acquired 100% of the shares and voting interests in Forêts et de l'Industrie du Bois ("LGFIB") for a cash consideration of $1.5 million.

Through the acquisition of LGFIB, the Group acquired 71,000 hectares of forest concessions in Gabon (56,000 of which is currently covered by a management plan). This additional hectarage, which is located within 100km of our manufacturing base in Mouila, provides increased levels of sustainably harvested timber required as additional production capacity comes online at our sawmill and veneer factory.

No harvesting had taken place during the 2021 financial year in the newly acquired concession and therefore the acquisition of LGFIB did not materially contribute to the consolidated revenue and profit for that period.

   A.   Consideration transferred 

A cash consideration of $1.534m represents the acquisition-date fair value of the total consideration transferred.

   B.   Acquisition related costs 

Acquisition related costs spent on legal and due diligence were expensed and have been included in operating costs.

   C.   Identifiable assets acquired and liabilities assumed 

The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition.

2021

 
                                         Note      $000 
---------------------------------------  ----  -------- 
Biological assets                          11   128,322 
Deferred tax                                7  (38,496) 
Total identifiable net assets acquired           89,826 
---------------------------------------  ----  -------- 
 
   D.   Gain on bargain purchase 

A gain from bargain purchase arising from the acquisition was recognised as follows:

2021

 
                                         Note     $000 
 --------------------------------------------  ------- 
Consideration transferred                   a  (1,534) 
Fair value of identifiable net assets       c   89,826 
Gain on bargain purchase                        88,292 
---------------------------------------------  ------- 
 

Occasionally, an acquirer will make a bargain purchase. This is usually in a business combination that is a forced sale in which the seller is acting under compulsion. In this case, the sellers were not distressed and not acting under compulsion.

The gain on bargain purchase arises due to the difference in accounting frameworks applied by the Company and LGFIB, the Gabonese company it acquired. Specifically, the difference relates to the measurement of Biological Assets. The Company applies IFRS which stipulates that acquired assets and liabilities be recognised, at the date of acquisition, at its fair value. LGFIB, who applies Gabonese accounting standards, does not carry Biological Assets on its Balance Sheet, but instead expensed the cost of acquiring the rights over time and no fair value assessment is made for accounting purposes. The Company applied IAS 41 when determining the Fair Value of the Biological Assets acquired. Further information on the inputs to the valuation is set out in Note 11. In addition to the effect of the different accounting standards applied, the previous owner's financial position, his inability to acquire finance to operate the asset and the threat of potentially losing it due to non-operation together with the quick exit and certainty of being paid offered by WoodBois contributed to the gain realised.

6. FINANCE COSTS

 
                                        2022    2021 
                                        $000    $000 
------------------------------------  ------  ------ 
Bank interest                            741     503 
Working capital facility interest        206       - 
Convertible bond amortised interest       82      88 
------------------------------------  ------  ------ 
                                       1,029     591 
------------------------------------  ------  ------ 
 
 

7. TAXATION

 
                                                                                                      2022       2021 
                                                                                                      $000       $000 
----------------------------------------------------------------------------------------------  ----------  --------- 
Current tax: 
Corporation tax on profit for the year                                                                 125       (81) 
Deferred tax: 
Origination and reversal of temporary differences                                                 (47,801)      (510) 
----------------------------------------------------------------------------------------------  ----------  --------- 
Tax on profit/(loss) on ordinary activities                                                       (47,676)      (591) 
----------------------------------------------------------------------------------------------  ----------  --------- 
 
                                                                                                      2022       2021 
 
  Group                                                                                               $000       $000 
----------------------------------------------------------------------------------------------  ----------  --------- 
(Loss)/profit before tax                                                                         (158,867)     90,701 
 
(Loss)/profit before tax multiplied by the average rate of corporation tax of 15% (2021: 19%)     (23,830)     17,233 
Effects of: 
Losses carried forward/(utilised)                                                                    (199)      (189) 
Non-taxable gain on bargain purchase                                                                     -   (16,775) 
Non-taxable foreign exchange gain                                                                    (147)      (111) 
Non-taxable movement in fair value of biological assets                                           (24,249)    (1,318) 
Non-deductible share-based payment expense                                                              63         44 
Non-deductible other expenditure                                                                       457        525 
Reclassification of FCTR [10] on deregistered entities                                                 229          - 
Group tax credit for the year                                                                     (47,676)      (591) 
----------------------------------------------------------------------------------------------  ----------  --------- 
 

The prevailing tax rates of the operations of the Group range between 3% and 32%. Therefore, a rate of 15% (2021:19%) has been used as it best represents the weighted average tax rate experienced by the Group. The Group has estimated losses of $26 million (2021: $28 million) available to carry forward against future taxable profits. Tax losses utilized during the year related principally to profits realised by subsidiaries in certain jurisdictions and tax gains realised on liquidation of various subsidiaries. No deferred tax assets have been recognised in respect of losses due to the unpredictability of future taxable profit. All unused tax losses may be carried forward indefinitely for most entities. Unused tax losses arising from Mozambique may be carried forward for a five-year period.

The movement in the year in the Group's recognised net deferred tax position was as follows:

 
 
                                                                                                  2022      2021 
Deferred tax liabilities                                                                          $000      $000 
-------------------------------------------------------------------------------------------  ---------  -------- 
At 1 January                                                                                   106,475    64,788 
Decrease in deferred tax liability: fair value adjustment of Biological Assets                (47,795)    39,006 
Decrease in deferred tax liability: property, plant and equipment                                  (5)         - 
Increase in deferred tax liability: fair value adjustment on property, plant and equipment           -     2,681 
At 31 December                                                                                  58,675   106,475 
-------------------------------------------------------------------------------------------  ---------  -------- 
 

Deferred tax reconciliation

 
 
                                                                                             2022        2021 
Deferred tax assets / (liabilities)                                                          $000        $000 
-------------------------------------------------------------------------------------  ----------  ---------- 
Deferred tax liability on the fair value adjustment of Biological Assets                 (53,945)   (101,740) 
Deferred tax liability on property, plant and equipment                                         5           - 
 
Deferred tax liability on the fair value adjustment on property, plant and equipment      (4,735)     (4,735) 
At 31 December                                                                           (58,675)   (106,475) 
-------------------------------------------------------------------------------------  ----------  ---------- 
 

8. EARNINGS PER SHARE

 
 
Summary:                             2022     2021 
                                    cents    cents 
--------------------------------  -------  ------- 
Basic (loss)/earnings per share    (4.47)     3.69 
Diluted earnings per share         (4.47)     3.65 
--------------------------------  -------  ------- 
 
 

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average aggregate number of Voting and Non-Voting Ordinary Shares in issue during the year.

The calculation of diluted EPS has been based on dividing the profit attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

The Company has incurred a loss in the year ended 31 December 2022, and therefore the diluted earnings per share is the same as the basic loss per share as the loss has an anti-dilutive effect.

 
                                         2022     2021 
                                         $000     $000 
Total (loss)/profit for the year    (110,191)   90,111 
---------------------------------  ----------  ------- 
 

The earnings used for diluted earnings per share are the same as the earnings used for basic earnings per share, which equates to loss attributable to the owners of the Company of $111 million.

 
Reconciliation of shares in issue to weighted average and dilutive weighted average number 
 of ordinary shares                                                                                2022        2021 
                                                                                               '000        '000 
-------------------------------------------------------------------------------------------  ----------  ---------- 
Shares in issue at beginning of year                                                          2,482,117   2,382,216 
Treasury shares                                                                                       -        (99) 
Shares issued during the year weighted for period in issue (note 18)                              3,894      62,466 
-------------------------------------------------------------------------------------------  ----------  ---------- 
Weighted average number of ordinary shares in issue for the year                              2,486,011   2,444,583 
-------------------------------------------------------------------------------------------  ----------  ---------- 
Conversion of convertible bonds                                                                  15,740      21,612 
-------------------------------------------------------------------------------------------  ----------  ---------- 
Dilutive weighted average number of ordinary shares in issue for the year                     2,501,751   2,466,195 
-------------------------------------------------------------------------------------------  ----------  ---------- 
 

9. PROPERTY, plant and equipment

 
                                                                                         Fixtures & IT 
                         Land & buildings   Motor vehicles   Plant & equipment               equipment     Total 
                                     $000             $000                $000                    $000      $000 
 Cost 
 At 1 JANUARY 2021                  7,775            4,694              12,201                     191    24,861 
 Additions                              -            1,779               3,072                     218     5,069 
 Revaluation of land 
  and buildings (note 
  10)                               8,934                -                   -                       -     8,934 
 Disposals                              -                -                (20)                       -      (20) 
 Effects of foreign 
  exchange                        (1,278)            (279)               (679)                      22   (2,214) 
----------------------  -----------------  ---------------  ------------------  ----------------------  -------- 
 At 31 December 2021               15,431            6,194              14,574                     431    36,630 
----------------------  -----------------  ---------------  ------------------  ----------------------  -------- 
 Additions                              -            1,715               2,929                   1,478     6,122 
 
 Disposals                              -             (26)                   -                   (280)     (306) 
 Effects of foreign 
  exchange                          (884)            (305)             (1,374)                      90   (2,473) 
----------------------  -----------------  ---------------  ------------------  ----------------------  -------- 
 At 31 December 2022               14,547            7,578              16,129                   1,719    39,973 
----------------------  -----------------  ---------------  ------------------  ----------------------  -------- 
 
 Depreciation 
 At 1 JANUARY 2021                      -            1,725               2,879                      54     4,658 
 Charge for the year                    -              626               1,419                      18     2,063 
 Disposals                              -                -                (20)                       -      (20) 
 Effects of foreign 
  exchange                              -             (79)               (126)                      15     (190) 
----------------------  -----------------  ---------------  ------------------  ----------------------  -------- 
 At 31 December 2021                    -            2,272               4,152                      87     6,511 
----------------------  -----------------  ---------------  ------------------  ----------------------  -------- 
 Charge for the year                    -              742               1,390                      49     2,181 
 Disposals                              -             (26)                   -                       -      (26) 
 Effects of foreign 
  exchange                              -             (95)               (826)                       2     (919) 
----------------------  -----------------  ---------------  ------------------  ----------------------  -------- 
 At 31 December 2022                    -            2,893               4,716                     138     7,747 
----------------------  -----------------  ---------------  ------------------  ----------------------  -------- 
 
 Net book value 
 At 31 December 2021               15,431            3,922              10,422                     344    30,119 
----------------------  -----------------  ---------------  ------------------  ----------------------  -------- 
 At 31 December 2022               14,547            4,685              11,413                   1,581    32,226 
----------------------  -----------------  ---------------  ------------------  ----------------------  -------- 
 
 

On acquisition of an asset, the estimated useful life is determined. The residual values for the majority of assets, except for Land and Buildings, are assumed to be zero.

10. Revaluation of land and buildings

It is the Company's policy to revalue Owner Occupied Land and Buildings every 4 to 6 years based on the understanding of the property market and budgeted capex spend.

The date of the previous revaluation was in the first half of 2017 so the Company engaged an external, independent property valuer, having the appropriate recognised professional qualifications and experience, to determine the fair value of the Group's Owner Occupied Land and Buildings located in Gabon. The valuation was completed in May 2021. A revaluation net gain of $6.3 million (comprised of a gross gain of $8.9m net of deferred tax of $2.6m) was recognised in Other Comprehensive Income in 2021.

The Company acquired the Land and Buildings in June 2017 and at that time, the fair value, at initial recognition was $7.2m. Therefore, the carrying amount for those assets, if the cost model had been applied by the Company, would have been 2022: $7.2m (2021: $7.2m).

The replacement cost approach was used to determine the fair value. The replacement cost method involves arriving at an asset's value by reference to the present-day cost, in an arms-length transaction, of replacing that asset with a similar asset in a similar condition. Average construction prices in the area were used to determine the fair value. A deterioration percentage estimate was then applied against the fair value to represent the asset's current condition.

Significant unobservable inputs used to calculate the fair value include:

- Estimated construction prices per m(2) . The estimated fair value would increase (decrease) if the construction prices would be lower (higher).

- Deterioration percentage estimate. The estimated fair value would increase (decrease) if the deterioration percentage estimate would be lower (higher).

The fair value measurement for the land and buildings has been categorised as a level 3 fair value based on the inputs used in the valuation technique.

Please refer to note 9 for a reconciliation of the carrying amount of land and buildings.

Management is not aware of any factors that impacted property valuations in Gabon and therefore noted that during 2022 the fair value of the revalued asset, when stated in its local currency, did not differ materially from its carrying amount and therefore no revaluation was performed in 2022.

11. biological assets

 
                                             2022      2021 
Standing timber                              $000      $000 
-------------------------------------  ----------  -------- 
Carrying value at beginning of year       336,798   204,223 
Additions (Note 5)                              -   128,322 
Fair value movement                     (156,983)     4,253 
-------------------------------------  ----------  -------- 
Carrying value at end of year             179,815   336,798 
-------------------------------------  ----------  -------- 
 
 
                                     2022      2021 
Carrying value per location          $000      $000 
-------------------------------  --------  -------- 
Gabon                             179,815   297,506 
Mozambique                              -    39,292 
-------------------------------  --------  -------- 
Carrying value at end of year     179,815   336,798 
-------------------------------  --------  -------- 
 

The methods and assumptions used in determining the fair value of standing timber within the forestry concessions held is based on IAS 41 Agriculture, applicable to companies that hold biological assets, which uses discounted cash flow models and which require a number of significant judgements to be made by the directors in respect of sales price, operational cost, discount rates, growth rates, legislative rulings and operating effectiveness. As with all discounted cash flow valuations on long-term assets, small changes to input variables can create significant changes to the resultant valuation.

Following the fair value assessment in 2022, a net fair value loss (after deferred tax) of $109 million (loss of $26.7 million for Mozambique and a loss of $82.3 million for Gabon) was recognised.

The fair value loss was due to a number of factors:

-- WACC discount rates increased significantly from the prior year. The risk-free rate and the equity and country risk premiums increased due to a rise in inflation, poor economic performance, rise in interest rates and a pessimistic outlook on the stock market. Woodbois' cost of debt increased in 2022 due to an increase in the Danish banking facilities interest rates as well as taking on two shareholder loans from Lombard Odier and Rhino Ventures at 8.5%.

-- Specifically relating to the biological assets in Mozambique, the revaluation downwards was mainly prompted by Group's decision to minimise its forward looking harvesting activities (and the expected effect thereof on maximum permitted harvest rates) while reviewing its strategic options in that geography .

The discounted cash flow models cover the concession areas in Mozambique and Gabon to which the group has secured the rights. Management prepares separate models for each country.

Harvesting levels are regulated by the Annual Permitted Cut ("APC") (total m(3) per species) set in each management plan and approved at federal and provincial government level and can be reviewed and increased periodically, while continued sustainability is ensured. The level of assumed APC varies between 2,537m(3) (for Mozambique) and 237,983m(3) (for Gabon) (2021: 55,780m(3) (for Mozambique) and 237,983m(3) (for Gabon)). This is based on the current expected harvesting activities for Mozambique and the approved APC for Gabon which may be subject to change depending on legislative changes both with regards to the size of the area and species. Such changes may impact the carrying value of the biological assets held.

The valuation models assume pre-tax discount rates of 18% (2021:11%) for Gabon and 20% (2021:13%) for Mozambique. The discount rates have been calculated using a weighted average cost of capital ("WACC") methodology. Our comparable company base is made up of Africa-focused and global forestry companies which management consider would be categorized in the same sector as Woodbois. Relevant country and equity risk premiums have been used for Gabon and Mozambique. When considering the discount rate applicable to the Mozambique model, management has specifically ensured that the discount rate adequately incorporates the risk associated with the current unrest being experienced in the northern parts of the country. Management have further determined that the discount rates are in line with the overall industry consensus for timberland assets within Africa. The increase in pre-tax discount rates from the prior year is due to the increase in the risk-free rate, country risk premium and the cost of debt which is used in calculating the WACC.

The Group's main class of biological assets comprise of standing timber held through forestry concessions of between 20 and 50 years. Biological assets are carried at fair value less estimated costs to sell.

The brought forward biological assets are located in Gabon in Mouila and Northern Mozambique in the states of Cabo Delgado, Nyassa, Nampula and Zambezia and are managed from a central point in Mouila and Nampula. The newly acquired concession in 2021 is located in Mimongo, Gabon.

Fair value has been determined internally by discounting a 5-year pre-tax cash flow projection (Level 3 of the fair value hierarchy) based on a mix of wood species within the concession areas. Real cost of production has been factored in going forward.

The following sensitivity analysis shows the effect of an increase or decrease in significant assumptions used:

 
                                              Impact on year end fair value of biological assets 
                                                                  2022                       2021 
                                                                  $000                       $000 
Effect of 1% increase in the discount rate                    (10,694)                   (33,285) 
Effect of 1% decrease in the discount rate                      12,197                     41,919 
 
Effect of 10% increase in volume of APC                         18,374                     34,547 
Effect of 10% decrease in volume of APC                       (18,374)                   (34,547) 
 
Effect of 10% increase in sales price                           21,158                     42,409 
Effect of 10% decrease in sales price                         (21,158)                   (42,409) 
 

12. TRADE AND OTHER RECEIVABLES

 
                           2022    2021 
                           $000    $000 
-----------------------  ------  ------ 
Trade receivables         4,561   2,093 
Other receivables            12      12 
Deposits                    128     127 
Current tax receivable       16      14 
VAT receivable              174     589 
Prepayments               1,439   1,781 
                          6,330   4,616 
-----------------------  ------  ------ 
 

The directors consider that the carrying amount of trade and other receivables approximates their fair value. Refer to Note 14 for details of the trade debt aging profile and for the Group's impairment policy.

13. INVENTORY

 
                     2022    2021 
                     $000    $000 
-----------------  ------  ------ 
Finished goods      2,377   2,747 
Stock in transit    2,229   2,129 
Work in progress        -   1,283 
-----------------  ------  ------ 
                    4,606   6,159 
-----------------  ------  ------ 
 

Provision for net realisable value amounted to $nil (2021: $nil).

14. financial INSTRUMENTS

Capital risk management

The Company manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders. The overall strategy of the Company and Group is to minimise costs and liquidity risk.

The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued share capital, share premium, reserves (foreign exchange reserve and share based payment reserve) and retained earnings as disclosed in the Consolidated Statement of Changes in Equity.

The Group is exposed to a number of risks through its normal operations, the most significant of which are interest, credit, foreign exchange and liquidity risks. The management of these risks is vested in the board of directors.

The sensitivity has been prepared assuming the liability outstanding at the balance sheet date was outstanding for the whole period. In all cases presented, a negative number in profit and loss represents an increase in finance expense / decrease in interest income.

Categorisation of financial instruments

 
 
 
                                     Financial     Financial       Financial       Financial 
 2022                                assets at        assets     liabilities     liabilities 
                                     amortised       at fair    at amortised         at fair 
  Financial assets/(liabilities)          cost         value            cost           value      Total 
                                          $000          $000            $000            $000       $000 
---------------------------------  -----------  ------------  --------------  --------------  --------- 
 Trade and other 
  receivables                            4,701             -               -               -      4,701 
 Cash and cash equivalents               2,296             -               -               -      2,296 
 Trade and other 
  payables                                   -             -         (2,465)               -    (2,465) 
 Borrowings                                  -             -        (14,268)               -   (14,268) 
 Convertible bond 
  liability                                  -             -           (748)               -      (748) 
                                         6,997             -        (17,481)               -   (10,484) 
---------------------------------  -----------  ------------  --------------  --------------  --------- 
 
 
 
 
                                     Financial     Financial       Financial       Financial 
 2021                                assets at        assets     liabilities     liabilities 
                                     amortised       at fair    at amortised         at fair 
  Financial assets/(liabilities)          cost         value            cost           value     Total 
                                          $000          $000            $000            $000      $000 
---------------------------------  -----------  ------------  --------------  --------------  -------- 
 Trade and other 
  receivables                            2,232             -               -               -     2,232 
 Cash and cash equivalents                 887             -               -               -       887 
 Trade and other 
  payables                                   -             -         (2,366)               -   (2,366) 
 Borrowings                                  -             -         (8,268)               -   (8,268) 
 Convertible bond 
  liability                                  -             -           (931)               -     (931) 
 Contingent acquisition 
  liability                                  -             -           (250)               -     (250) 
                                         3,119             -        (11,815)               -   (8,696) 
---------------------------------  -----------  ------------  --------------  --------------  -------- 
 

Fair value measurements recognised in the statement of financial position

The following provides an analysis of the Group's financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 & 2 based on the degree to which the fair value is observable.

-- Level 1 fair value measurements are those derived from inputs other than quoted prices that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

-- Level 2 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

-- Level 3 assets are assets whose fair value cannot be determined by using observable inputs or measures, such as market prices or models. Level 3 assets are typically very illiquid, and fair values can only be calculated using estimates or risk-adjusted value ranges.

At the year end, included in property, plant and equipment, there is land and buildings held at fair value of $14.5m (2021: $15.4m) measured in accordance with level 3 and Biological Assets of $179.8m (2021: $336.8m) measured in accordance with level 3 of the fair value hierarchy.

Equity price Risk

The Group is exposed to equity price risks arising from equity investments. Equity investments are held for both strategic and trading purposes.

Management of market risk

The most significant area of market risk to which the Group is exposed is interest rate risk.

The risk is limited to the reduction of interest received on cash surpluses held and the increase in the interest on borrowings.

Majority of the Company's debt was based on fixed interest rates with no link or exposure to movements in LIBOR.

The following table details the group's exposure to interest rate changes, all of which affect profit and loss only with a corresponding effect on accumulated losses.

 
                                          2022   2021 
                                          $000   $000 
 -------------------------------------  ------  ----- 
 + 20 bp increase in interest rates       (26)   (19) 
 + 50 bp increase in interest rates       (65)   (47) 
 + 100 bp increase in interest rates     (130)   (93) 
 

The table above is prepared on the basis of an increase in rates. A decrease in rates would have the opposite effect.

 
                                  2022      2021       2022       2021       2022      2021 
                                 Fixed     Fixed   Floating   Floating 
                                  rate      rate       rate       Rate      Total     Total 
 Group                            $000      $000       $000       $000       $000      $000 
----------------------------  --------  --------  ---------  ---------  ---------  -------- 
 Borrowings                    (5,028)   (1,513)    (9,240)    (6,755)   (14,268)   (8,268) 
 Cash and cash equivalents           -         -      2,296        887      2,296       887 
 Convertible bond liability      (748)     (931)          -          -      (748)     (931) 
 Total                         (5,776)   (2,444)    (6,944)    (5,868)   (12,720)   (8,312) 
----------------------------  --------  --------  ---------  ---------  ---------  -------- 
 

Management of credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group's receivables from customers and investments in debt securities.

The carrying amount of financial assets represents the maximum credit exposure.

The principal financial assets of the Company and Group are bank balances and receivables. The Group deposits surplus liquid funds with counterparty banks that have high credit ratings. Cash is sometimes placed with certain institutions in support of trading positions. The Group deposits such funds with large well-known institutions and the directors consider the credit risk to be minimal.

The Group's maximum exposure to credit by class of individual financial instrument is shown in the table below:

 
                                                                                                2021 
                                              2022                2022              2021     Maximum 
                                    Carrying Value    Maximum Exposure    Carrying Value    Exposure 
                                              $000                $000              $000        $000 
   -----------------------------  ----------------  ------------------  ----------------  ---------- 
 Cash and cash equivalents                   2,296               2,296               887         887 
 Trade and other receivables                 4,701               4,701             2,232       2,232 
--------------------------------  ----------------  ------------------  ----------------  ---------- 
 Total                                       6,997               6,997             3,119       3,119 
--------------------------------  ----------------  ------------------  ----------------  ---------- 
 

TRADE RECEIVABLES

Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components when they are recognised at fair value. They are subsequently measured at amortised cost using the effective interest method, less loss allowance.

The only impact on the Group is in relation to the impairment of trade receivables as detailed below.

The expected loss rates are based on the payment profiles of sales over a period of 36 month before 31 December 2022 or 1 January 2023 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

The group has identified the GDP and the unemployment rate of the countries in which it sells its goods to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors.

On that basis, the loss allowance as at 31 December 2022 and 31 December 2021 were determined as follows for both trade receivables and contract assets:

 
                         More than       More   More than       More   Current    Total 
                          120 days       than     60 days       than 
                          past due    90 days    past due    30 days 
                                         past                   past 
                                          due                    due 
 2022 
----------------------  ----------  ---------  ----------  ---------  --------  ------- 
 Expected loss rate         67.40%         0%          0%         0%        0%   12,84% 
----------------------  ----------  ---------  ----------  ---------  --------  ------- 
 Gross carrying amount 
  - trade receivables          997        425       1,531      1,151     1,159    5,233 
----------------------  ----------  ---------  ----------  ---------  --------  ------- 
 Loss allowance              (672)          -           -          -         -    (672) 
----------------------  ----------  ---------  ----------  ---------  --------  ------- 
 
 2021 
----------------------  ----------  ---------  ----------  ---------  --------  ------- 
 Expected loss rate         23.70%         0%          0%         0%        0%    6.90% 
----------------------  ----------  ---------  ----------  ---------  --------  ------- 
 Gross carrying amount 
  - trade receivables          654        143         454        449       547    2,247 
----------------------  ----------  ---------  ----------  ---------  --------  ------- 
 Loss allowance              (155)          -           -       -            -    (155) 
----------------------  ----------  ---------  ----------  ---------  --------  ------- 
 

The closing loss allowances for trade receivables and contract assets as at 31 December reconcile to the opening loss allowances as follows:

 
                                            2022   2021 
                                            $000   $000 
 Opening loss allowance at 1 January         155    216 
 Increase in loss allowance recognised       558      - 
  in profit and loss during the year 
 Receivables written off during the year 
  as uncollectible                          (43)   (61) 
-----------------------------------------  -----  ----- 
 Closing loss allowance at 31 December       670    155 
-----------------------------------------  -----  ----- 
 

Management of foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from commercial transactions, translation of assets and liabilities and net investments in foreign operations. Exposure to commercial transactions arises from sales or purchases by operating companies in currencies other than the companies' functional currency. Currency exposures are reviewed regularly.

The Group has a limited level of exposure to foreign exchange rate risk through their foreign currency denominated cash balances:

 
                                 2022   2021 
                                 $000   $000 
  ---------------------------  ------  ----- 
 Cash and cash equivalents 
 GBP                               16      4 
 EUR                              572     67 
 DKK                                1     17 
 CFA                              271     72 
 MZN                               14      2 
 USD                            1,422    725 
 Total                          2,296    887 
-----------------------------  ------  ----- 
 

The table below summarises the impact of a 10% increase in the relevant foreign exchange rates versus the US Dollar rate, on the Group's pre-tax profit for the year and on equity:

 
                                          2022               2021     2022      2021 
                              Income Statement   Income Statement   Equity    Equity 
---------------------------  -----------------  -----------------  -------  -------- 
 Impact of 10% rate change                $000               $000     $000      $000 
---------------------------  -----------------  -----------------  -------  -------- 
 Cash and cash equivalents                (33)                (1)     (33)       (1) 
---------------------------  -----------------  -----------------  -------  -------- 
 

The table above is prepared on the basis of an increase in rates. A decrease in rates would have the opposite effect.

Management of liquidity risk

Liquidity risk is the risk that the group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group's reputation.

The Group seeks to manage liquidity risk by regularly reviewing cash flow budgets and forecasts to ensure that sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The Group deems there is sufficient liquidity for the foreseeable future.

The Group had cash and cash equivalents at 31 December as set out below.

 
                   2022   2021 
                   $000   $000 
 --------------  ------  ----- 
 Cash at bank     2,296    887 
---------------  ------  ----- 
 

ContracTual maturity analysis

The Group has assessed the contractual maturity analysis as follows:

 
 
   2022                            0-3 months     3-12 months     1 - 5 years      Total 
                                         $000            $000            $000       $000 
------------------------------  -------------  --------------  --------------  --------- 
 Assets by contractual 
  maturity 
 t rade and other receivables           1,263           5,067               -      6,330 
 C ash and cash equivalents             2,296               -               -      2,296 
------------------------------  -------------  --------------  --------------  --------- 
                                        3,559           5,067               -      8,626 
 
 Liabilities by contractual maturity 
 Trade and other payables             (2,884)           (664)               -    (3,548) 
 Borrowings                                 -         (8,603)         (5,665)   (14,268) 
 Convertible bond liability                 -           (748)               -      (748) 
                                      (2,884)        (10,015)         (5,665)   (18,564) 
 
 Net liabilities by 
  contractual maturity                    675         (4,595)         (5,665)    (9,585) 
------------------------------  -------------  --------------  --------------  --------- 
 
 
 
 
   2021                            0-3 months     3-12 months     1 - 5 years      Total 
                                         $000            $000            $000       $000 
------------------------------  -------------  --------------  --------------  --------- 
 Assets by contractual 
  maturity 
 t rade and other receivables           1,246           3,370               -      4,616 
 C ash and cash equivalents               887               -               -        887 
------------------------------  -------------  --------------  --------------  --------- 
                                        2,133           3,370               -      5,503 
 
 Liabilities by contractual maturity 
 Trade and other payables             (3,449)           (629)               -    (4,078) 
 Borrowings                                 -         (5,369)         (2,898)    (8,267) 
 Convertible bond liability                 -               -           (931)      (931) 
 Contingent acquisition 
  liability                             (250)               -               -      (250) 
                                      (3,699)         (5,998)         (3,829)   (13,526) 
 
 Net liabilities by 
  contractual maturity                (1,566)         (2,628)         (3,829)    (8,023) 
------------------------------  -------------  --------------  --------------  --------- 
 
 

15. TRADE AND OTHER PAYABLES

 
                                                  2022    2021 
                                                  $000    $000 
 ---------------------------------------------  ------  ------ 
 Trade payables                                  1,213   1,275 
 Accruals                                          309     680 
 Contract liabilities (prepayments received)       892   1,643 
 Current tax payable                               190      69 
 Other payables                                    920     340 
 Debt due to concession holders                     23      71 
----------------------------------------------  ------  ------ 
                                                 3,547   4,078 
 ---------------------------------------------  ------  ------ 
 

The directors consider that the carrying amount of trade and other payables approximates to their fair value.

16. BORROWINGS

 
                                2022    2021 
                                $000    $000 
 --------------------------  -------  ------ 
 Non-Current liabilities 
 Business loans                1,757   1,282 
 Working capital facility      3,908   1,616 
                               5,665   2,898 
 Current liabilities 
 Business loans                  888   1,250 
 Bank overdraft                  196     128 
 Working capital facility      7,519   3,991 
                               8,603   5,369 
 --------------------------  -------  ------ 
 Total borrowings             14,268   8,267 
---------------------------  -------  ------ 
 

As at 31 December 2022 the trading division had the following outstanding borrowings:

Business loan with a Danish bank that amounted to $1 million (2021: $1.1 million). The business loan carries an interest rate of 4%. The purpose of the loan is for financing timber trades.

Working capital facilities with Danish banks amounted to $8.2 million (2021: $5.6 million). These facilities carry interest at rates 4.65% and 8.45%. One of the facilities, for $6 million, has been included in current liabilities: this is a revolving facility with no maturity date. At the year end there was no indication from the credit provider that the facility would be terminated, but on 19 April 2023, notice was received and as such, the Company has classified and disclosed it as being a current liability (see Note 24).

As at 31 December 2022 the forestry division had the following outstanding borrowings:

Business loans with a Gabonese bank that amounted to $1.6 million (2021: $1.4 million). These loans carry an interest rate of between 13% and 14%. A bank overdraft with a Gabonese bank amounted to $0.2 million (2021: $0.1 million) and carries an interest rate of 10%. The purpose of the loans is for operational asset financing.

During the year the Group drew down $2 million from a general purpose two-year working capital facility with Rhino Ventures Limited, a shareholder. The facility amounted to $2.2 million as at 31 December 2022 and carried interest at 8.5%. The Group also drew down $1 million from an additional short-term working capital facility with Lombard Odier, a shareholder. The facility amounted to $1 million as at 31 December 2022 and carried interest at 8.5%.

Woodbois Limited signed a parent guarantee to a maximum of $2 million to a Gabonese bank.

The Group has also signed security in favour of Danish banks to the value of $5.5 million.

The contractual maturity of borrowings has been assessed in Note 14.

The Group had undrawn facilities available at 31 December 2022 that amounted to $0.1 million (2021: $0.1million).

17. CONVERTIBLE BONDS

 
                                         2022   2021 
                                         $000   $000 
 -------------------------------------  -----  ----- 
 Convertible bonds: Liability 
  component                               748    931 
 Convertible bonds: Equity component       24     52 
--------------------------------------  -----  ----- 
 Total                                    772    983 
--------------------------------------  -----  ----- 
 
 Convertible bond liability               477    741 
 Amortised interest                       271    190 
--------------------------------------  -----  ----- 
 Total                                    748    931 
--------------------------------------  -----  ----- 
 

The terms of the convertible bonds are as follows:

   1.    Final Redemption Date of 30 June 2023 
   2.    Convertible at a price of 4p per ordinary share 
   3.    Interest rate at zero percent 

18. SHARE CAPITAL

 
                                             Number        $000 
 ----------------------------------  --------------  ---------- 
 Authorised: 
 Ordinary shares of 1p each               Unlimited   Unlimited 
 Allotted, issued and fully paid: 
 Ordinary shares of 1p each 
-----------------------------------  --------------  ---------- 
 AT 31 DECEMBER 2020                  2,382,216,431      31,119 
 Shares issued                           99,900,622       1,409 
-----------------------------------  --------------  ---------- 
 AT 31 DECEMBER 2021                  2,482,117,053      32,528 
 Shares issued                            7,871,820          97 
 AT 31 DECEMBER 2022                  2,489,988,873      32,625 
-----------------------------------  --------------  ---------- 
 Voting                               2,254,988,873 
-----------------------------------  --------------  ---------- 
 Non-Voting                             235,000,000 
-----------------------------------  --------------  ---------- 
 

Balances classified as share capital include the nominal value on issue of the Company's equity share capital, comprising ordinary shares of 1p each.

During 2022 a total of 390,000,000 Non-Voting Ordinary Shares have been converted into Voting Ordinary Shares.

During June 2022 the Company converted $293,591 of 2023 0% Convertible Bonds into 5,871,820 Voting Ordinary Shares. The Convertible Bond terms specify conversion is at an exchange rate of GBP:$1.25 and 4p per Ordinary Share.

During August 2022 the Company issued 2,000,000 New-Voting Ordinary Shares following the exercise of options under the Company's Share Option Plan

19. SHARE PREMIUM ACCOUNT

 
                              2022     2021 
                              $000     $000 
-------------------------  -------  ------- 
 AT 1 JANUARY               65,254   58,609 
 Shares issued (note 18)       295    6,645 
 AT 31 DECEMBER             65,549   65,254 
-------------------------  -------  ------- 
 

Balances classified as share premium include the net proceeds in excess of the nominal share capital on issue of the Company's equity share capital.

20. Provisions

 
                   2022   2021 
                   $000   $000 
----------------  -----  ----- 
 AT 1 JANUARY       130    132 
 Movement             -    (2) 
 AT 31 DECEMBER     130    130 
----------------  -----  ----- 
 

The balance comprises of one provision, to the amount of $0.1 million, which relates to a tax dispute with the Mozambique tax authorities. The provision is classified as a current liability as at 31 December 2022.

21. SHARE BASED PAYMENT/LONG-TERM INCENTIVES

The Group operates two share option plans, under which certain directors, key employees and consultants have been granted options to subscribe for ordinary shares. All options are equity settled. The Group has no legal or constructive obligation to repurchase or settle the options in cash.

The share option awards in issue as at 1 January 2022 totalled 112.0m shares under the Share Option Scheme: these were issued as of 6 August 2020 and are exercisable at 2p per share. The vesting of the awards is substantially geared towards material improvement in both operating results and share price appreciation.

On the 1(st) of March 2022, the Company issued LTIP's (long-term incentive plan) to its directors and key employees of which 38m were in issue at 31 December 2022. The fair value of these LTIP's as at the grant date was determined by an independent specialist in financial valuations.

19m of the granted LTIP's are subject to TSR (Total Shareholder Return) linked criteria and were valued using a Monte Carlo simulation. 19m share options are subject to EBITDA-linked criteria and were valued using a Monte Carlo Simulation on the basis that they include a market-based exercise condition. Only market conditions have been considered in estimating the fair value of the LTIP's.

1. The key terms and conditions related to the LTIP's are as follows:

A. Market Performance Condition

-- Grant Date: 1 March 2022

-- Contractual life of LTIP's: 4.6 years

-- Vesting conditions: Total Shareholder Return - The performance criteria sets out that of the total 38m LTIP's granted, up to 50% can vest in increments of 10% if the VWAP (Weighted Average Price) remains above each of the following thresholds for a period of 30 consecutive days: GBP0.06, GBP0.07, GBP0.08, GBP0.09 and GBP0.10. Full vesting of this 50% tranche will be achieved if the share price increases to over GBP0.10.

B. Non-Market Performance Condition

-- Grant Date: 1 March 2022

-- Contractual life of LTIP's: 4.6 years

-- Vesting conditions: Target EBITDA - Of the total 38m LTIP's granted, 50% can vest

at an incremental rate of 16.6% per annum by the Company achieving internal EBITDA targets for each of the financial years 2022-2024. Any vesting shall arise equally for the achieving of each target, which is subject to a cumulative "catch-up" being permitted.

C. Service Condition

-- Recipients must be employed by Woodbois at the time of vesting and the share price must be above 6p at the exercise date. This condition applies to all of the granted share options.

The table below shows the input ranges for the assumptions used in the valuation models:

 
 Fair value at grant date                               GBP0.02 - GBP0.03 
 Exercise price                                                   GBP0.01 
 Share price at grant date                                      GBP0.0405 
 Annual share price volatility (weighted average)                     65% 
 Risk free rate                                                     0.83% 
 Expected life                                                  4.6 years 
-----------------------------------------------------  ------------------ 
 

The annualised volatility in the share price was determined using the historical volatility of Woodbois Limited and other listed companies in similar businesses over a time period in line with the simulation period. A monthly volatility of 19.0% was used in the simulation (annual volatility of 65%).

Each of Paul Dolan, Carnel Geddes and Hadi Ghossein, Executive Directors, were awarded 4,000,000 LTIP's and these were outstanding as of 31 December 2022.

2. The key terms and conditions related to the Share Options are as follows:

A. Market Performance Condition

   --           Grant Date: 6 August 2020 
   --           Contractual life of options: 4 years 

-- Vesting conditions: Total Shareholder Return - 50% of the share options are subject to the Market Performance Condition whereby none will vest at a share price of 2p; one third of these options will vest on a straight-line basis between a share price of 2-4p; two thirds will vest on a straight-line basis between a share price of 4-6p per share, and full vesting will occur when the share price exceeds 6p, each vesting being based on the volume weighted average share price over a period of 30 days. All of these options had vested by the end of 2021.

B. Non-Market Performance Condition

   --           Grant Date: 6 August 2020 
   --           Contractual life of options: 4 years 

-- Vesting Conditions: Target EBITDA - 50% of the share options are subject to Non-Market Performance Conditions, whereby 12.5% of these options can vest per annum based on achieving internal EBITDA targets for each of the financial years 2020-2023. There is also a cumulative provision whereby a shortfall (or excess) in one or more years can be offset against other years for the purposes of vesting. As of the date hereof a quarter of these share options have vested.

C. Non-Subject to Performance Criteria

   --           Grant Date: 6 August 2020 
   --           Contractual life of options: 4 years 

-- A one-off award of 10m share options was made to Mr G Thomson (Senior Independent Non-Executive). In accordance with corporate governance advice, his options are not subject to performance criteria but may not vest for 4 years from the time of grant.

The awards outstanding to directors in the year are:

Number of options

(2p exercise price )

 
 P Dolan       Executive Chair           50,000,000 
 C Geddes      CFO                       22,500,000 
 H Ghossein    Deputy Chair              22,500,000 
 G Thomson     Senior Independent NED    10,000,000 
 

57.25 million of the granted share options are subject to TSR (Total Shareholder Return) linked criteria and were valued using a Monte Carlo simulation. 57.25 million share options are subject to EBITDA-linked criteria and were valued using a Black Scholes Option Pricing Model. The fair value of the 10m Share Options which are not subject to performance criteria were valued using a Black Scholes Option Pricing Model. Only market conditions have been considered in estimating the fair value of the LTIP's.

The table below shows the input ranges for the assumptions used in the valuation models:

 
 Fair value at grant date                               GBP0.0097 - GBP0,0104 
 Exercise price                                                       GBP0.02 
 Share price at grant date                                          GBP0.0215 
 Annual share price volatility (weighted average)                         62% 
 Risk free rate                                                          0.1% 
 Expected life                                                        4 years 
-----------------------------------------------------  ---------------------- 
 
 
 

The annualised volatility in the share price was determined using the historical volatility of Woodbois Limited and other listed companies in similar businesses over a time period in line with the simulation period. A monthly volatility of 18.0% was used in the simulation (annual volatility of 62%).

Reconciliation of the total Share Options and LTIP's in issue:

 
                                                                  Weighted 
                                                            average strike 
                                            Total options    price (Pence) 
------------------------------------------  -------------  --------------- 
As at 31 December 2020                        144,500,000               2p 
Forfeited during the financial year          (30,500,000)             (2p) 
As at 31 December 2021                        114,000,000               2p 
------------------------------------------  -------------  --------------- 
Issue of LTIP's                                38,000,000               1p 
------------------------------------------  -------------  --------------- 
Exercised during the financial year (Note 
 18)                                          (2,000,000)               2p 
------------------------------------------  -------------  --------------- 
As at 31 December 2022                        150,000,000            1.75p 
------------------------------------------  -------------  --------------- 
 

The following charge has been recognised in the current financial year:

 
                                   2022   2021 
                                   $000   $000 
---------------------------------  ----  ----- 
AT 1 JANUARY                        435    968 
Reserve transfer for forfeitures      -  (766) 
Share options exercised            (51)      - 
Share based payment expense         418    233 
---------------------------------  ----  ----- 
AT 31 DECEMBER                      802    435 
---------------------------------  ----  ----- 
 

22. Reclassification of foreign currency translation differences on deregistered entities

The Group formally completed the deregistration of three dormant entities located in Tanzania. These three entities include Wami Agriculture Co. Limited, Magole Agriculture Limited and Milama processing Company Limited. As required by IFRS, the Group reclassified the foreign currency translation differences that arose on historical consolidation of those entities ($1.5 million) from the FCTR (equity) to profit or loss.

23. RELATED PARTY TRANSACTIONS AND Related party balances

related party balances

 
                                                   2022   2021 
                                                   $000   $000 
----------------------------------------------  -------  ----- 
Loan from Rhino Ventures                        (2,162)      - 
Loan from Lombard Odier                         (1,022)      - 
Amount due to H. Ghossein, a director                 -  (340) 
Contingent acquisition liability due to H. 
 Ghossein, a director re purchase of WoodBois 
 International ApS in 2017                            -  (250) 
AT 31 DECEMBER                                  (3,184)  (590) 
----------------------------------------------  -------  ----- 
 

40,000,000 warrants were issued to Lombard Odier in January 2019, exercisable at 8p before 1 April 2023.

Trading transactions

During the year the Group companies entered into the following transactions with related parties:

 
                              2022                        2022           2021                      2021 
                      Transactions                               Transactions 
                           in year      Balance at 31 December        in year    Balance at 31 December 
                              $000                        $000           $000                      $000 
 ---------------------------------  --------------------------  -------------  ------------------------ 
 Loans to subsidiary undertakings         14,364        17,304         11,985                     2,940 
----------------------------------  ------------  ------------  -------------  ------------------------ 
 
 

Transactions with key management personnel

The Group's key management personnel comprised the following:

 
 2022                                                          Short-term employment benefits 
                                            Salaries, fees & national insurance contributions   Benefits   Total 
                                                                                         $000       $000    $000 
-----------------------------------------  --------------------------------------------------  ---------  ------ 
 Directors 
 P Dolan                                                                                  200          -     200 
 H Ghossein *                                                                             190         38     228 
 F Tonetti (Resigned 16 April 2022)                                                       100          1     100 
 C Geddes **                                                                              200          -     200 
 G Thomson                                                                                 62          -      62 
 D Rothschild                                                                              50          -      50 
 H Turcan *** (Resigned 17 October 2022)                                                    -          -       - 
                                                                                          802         39     841 
-----------------------------------------  --------------------------------------------------  ---------  ------ 
 

*Excludes deferred acquisition payments made during the year (NOTE 23)

** Paid through a service company

*** H Turcan was a representative of Lombard Odier and received no fee.

All of the above directors' remunerations exclude national insurance contributed by the employer.

 
 2021                                           Short-term employment benefits 
                                   Salaries, fees & national insurance contributions     Benefits    Total 
                                                                                $000         $000     $000 
------------------  ----------------------------------------------------------------  -----------  ------- 
 Directors 
 P Dolan                                                                         200            -      200 
 H Ghossein*                                                                     220           42      262 
 F Tonetti                                                                        69            1       70 
 C Geddes **                                                                     200            -      200 
 G Thomson                                                                        69            -       69 
 D Rothschild                                                                      9            -        9 
 H Turcan ***                                                                      -            -        - 
                                                                                 767           43      810 
------------------  ----------------------------------------------------------------  -----------  ------- 
 *Excludes deferred acquisition payments made during the year directly to or to companies owned 
  and controlled by H Ghossein ($0.25m). 
  ** Paid through service companies 
 *** H Turcan was a representative of Lombard Odier and received no fees. 
  All of the above directors' remunerations exclude national insurance contributed by the employer. 
 

24. Events occurring after the reporting date

   --    Treasury shares 

In January 2023 following a final adjustment in relation to the 2017 purchase of Woodbois International Aps, the Company has received approximately 19 million ordinary voting shares which have been taken into Treasury.

   --    GBP3 million placing and appointment of Joint Broker 

On 13 March 2023 the Company announced a placing of 250 million Ordinary Voting Shares, of 1p each, generating net proceeds of GBP2.85 million (approximately $3.4 million). The placing price was 1.2p per New Ordinary Share.

Novum Securities Limited acted as broker and placing agent in respect of the fundraise which was to new institutional and other investors. The placing shares represent 10 per cent of the existing issued Ordinary Share Capital of the Company prior to the fundraise. Proceeds of the Placing will be used for general working capital purposes.

Following admission, the Company's total number of Ordinary Shares in issue will become 2,739,988,873 and this will consisted of 2,485,850,726 Voting Ordinary Shares, 19,138,147 Treasury Shares and 235,000,000 Non-Voting Ordinary Shares.

On 11 April 2023, the Company announced that it had been conditionally awarded the first 40-year land lease for a voluntary carbon credit afforestation project of up to 50,000 hectares by the Gabonese government. On completion, expected in the coming months, the Company will commence a 4-year, 2,000 hectare pilot programme to demonstrate the reforestation potential of the land. The project will be designed to deliver high quality carbon and biodiversity credits. The Company estimates that the project has the potential to generate more than 30 million carbon credits over its 40-year life cycle with the expectation that the first credits are to be issued in 2028. The Gabonese government will be entitled to 20% of the carbon credits generated over the lifetime of the project. External funding will be needed for the pilot programme which is estimated to cost $5m. The Company is currently examining a number of possible funding possibilities for this project and the optimum funding structure thereof.

   --    Repayment of Lombard Odier loan 

On 11 April 2023, the Company repaid $0.3m capital plus interest of the loan owing to Lombard Odier (see note 16). The balance ($0.7m capital plus interest) is due to be paid in full during June 2023.

   --    Termination of $6m working capital facility 

On 19 April 2023, the Company announced that Woodgroup Aps, a wholly owned subsidiary of the Company, had received a notice from a Danish bank, that it was terminating a $6 million debt facility. The $6m facility was fully utilised and had an ancillary account with a cash balance of $3.1 million. The bank had a floating charge against the assets of Woodgroup ApS and have offset this $3.1 million in partial repayment of the facility. The reason cited by the bank for terminating the facility was that Woodgroup ApS generated a loss in Q1 2023. The bank believed that, as a consequence, the circumstances of Woodgroup ApS have changed significantly to their detriment. Management did not agree with the bank's conclusion and, whilst acknowledging the poor performance in Q1, believed the Company had been well placed to deliver a very positive performance for the remainder of the year. As part of the notice the bank also requested that Woodgroup ApS present a plan for the repayment of the outstanding $2.9 million of the Facility. As reported by the Company on 6 June 2023, the Company has reached an agreement with Sydbank under which the outstanding balance of c.$2.8m will be repaid by no later than 29 December 2023. The Company has undertaken to repay approximately $145k on each of 15 June and 30 June 2023. Thereafter a further $145k is to be paid in the middle of each subsequent month with any additional lump sums being paid to ensure repayment of the total outstanding balance and interest by the final repayment date. There are also financial incentives in place if the Group settles the outstanding balance earlier in the year. Existing security arrangements, per the original loan facility agreement, will remain in place until the line of credit is fully settled.

   --    Refinancing 

Since the termination of the above line of credit by the bank, the Company has had to operate with an emphasis on cash realisation and limiting new liabilities.

The Company continues to assess alternative funding sources and will update the market in due course once any such agreement has been reached. The Company is also working on the potential deferment of c.$1.5m of debts, which fall due at the end of June. Whilst the Directors are confident that the Company will obtain alternative funding in the coming weeks, should they fail to do so, the Company may be reliant on the deferment of these near-term creditors in order to continue to trade. The Company has convened a General Meeting to be held on 16 June 2023 for shareholders to vote on resolutions that will provide the Company with important flexibility to issue ordinary shares quickly, if it is considered to be in the best interests of stakeholders.

The circular convening the General Meeting set out that a further result of the termination, the Company's share price has fallen below its nominal value of 1p. As the Company's Articles of Association prohibit the issuance of shares at a discount to nominal value, there is a need to re-designate the nominal value. The directors have proposed a resolution to reduce the nominal value of the ordinary shares of the Company, but with no change to the number of ordinary shares in issue, as well as resolutions for the renewal and widening of the waiver of pre-emptive rights to enable the company to meet the exceptional circumstances set out above.

The Company has u rged shareholders to vote in favour of all resolutions.

25. ULTIMATE PARENT COMPANY

At 31 December 2022, the directors do not believe that there was an ultimate controlling party.

[1] Non-IFRS measure. Earnings before interest, tax, depreciation, amortization, share based payments & other non-cash items. Please see financial review for EBITDAS reconciliation

[2] According to valuation principles as required by International Accounting Standards 41 ("IAS41"), see note 11

[3] Earnings before interest, tax, depreciation, amortization, share based payments and other non-cash items

[4] Foreign currency translation differences

[5] Cash, plus Inventory, plus Receivables, less Trade Payables.

[6] Issued Share Capital of 2,490m shares comprises of 2,255m Voting Shares and 235m Non-Voting Shares.

[7] Paid in GBP at a fixed rate of GBP150,000 pa

[8] C Geddes services are provided through a service company, Pomona

[9] No fees are paid directly to Henry Turcan or Lombard Odier for his services

[10] Foreign currency translation reserve

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END

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June 09, 2023 02:00 ET (06:00 GMT)

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