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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 | 0.70 | 0.00 | 07:31:42 |
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 |
TIDMWBI
RNS Number : 8518U
Woodbois Limited
04 August 2022
04 August 2022
Woodbois Limited
("Woodbois", the "Group" or the "Company")
Half Year Results
Woodbois Limited (AIM: WBI), the African focused forestry, timber trading, reforestation and voluntary carbon credit company, is pleased to announce its half year results for the six months to 30 June 2022.
Financial Highlights
-- H1 2022 revenue up 38% to $11.3m vs H1 2021 $8.2m -- H1 2022 Group gross profit up 59% to $2.7m vs H1 2021 $1.7m: margin improved to 23% from 20% -- H1 2022 EBITDAS [1] $1.1m vs H1 2021 $0.46m, up 141% -- First ever operating profit in H1 2022 of $15k vs $0.7m operating loss in H1 2021
-- H1 2022 positive operating cash inflow (before income taxes and finance costs) of $0.2m vs outflow in H1 2021 of $2.2m
-- Cash balance $2.1m as at 30 June 2022
-- Period end working capital of $9.8m of which inventory was $6.4m and excluding short and longer-term bank and other loans of $12.4m
-- 2022 on track to deliver strong revenue and profitability growth
Operational Highlights
-- Total sawn timber production 9,565m3 in H1 2022, a 37% increase over H1 2021. -- Total veneer production 2,740m3 in H1 2022, a 50% increase on H1 2021.
-- Best quarter and half-year for volume of product shipped since before the pandemic. Total number of containers shipped in Q2 2022 increased by 24% over Q1 2022
-- The second veneer line installed at the factory in Mouila is currently undergoing final testing and will commence production in August. This will generate additional higher value product and will represent another significant milestone of achievement.
-- Work on FSC certification has continued and is now over 60% complete and we aim for completion during 2023.
Commenting on the results, Paul Dolan, CEO said:
"In the first half of 2022 we have achieved record levels of production, strong revenue growth, further improvement in both margin and EBITDAS, as well as a first maiden operating profit with a positive operating cash inflow. Whilst there are challenges our highly motivated team are on-track to deliver further strong growth in our metrics, including revenue and profitability. "
The Report is available on the Company's website at: www.woodbois.com
Enquiries:
Woodbois Limited Paul Dolan - CEO + 44 (0)20 7099 1940 Canaccord Genuity, Nominated Advisor Henry Fitzgerald-O'Connor Gordon Hamilton + 44 (0)20 7523 8000
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 which forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").
Non-IFRS measures
The Company uses certain measures to assess the financial performance of the company. These terms may be defined as "non-IFRS measures" as they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with IFRS. They also may not be calculated using financial measures that are in accordance with IFRS. These non-IFRS measures include the Company's EBITDAS.
The Company uses such measures to measure and monitor performance and liquidity, in presentations to the Board and as a basis for strategic planning and forecasting. The directors believe that these and similar measures are used widely by market participants, stakeholders, and other interested parties as supplemental measures of performance and liquidity.
The non-IFRS measures may not be directly comparable to other similarly titled measures used by other companies and may have limited use as an analytical tool. This should not be considered in isolation or as a substitute for analysis of the Company's operating results as reported under IFRS.
The Company does not regard these non-IFRS measures as a substitute for, or superior to, the equivalent measures calculated and presented in accordance with IFRS or those calculated using financial measures that are calculated in accordance with IFRS.
CEO's Statement
H1 Financial performance
The Company generated a 38% increase in YOY revenues in H1 2022, with EBITDAS improving by 141% to $1,104k vs $459k in H1 2021, achieved through a further increase in levels of sawn-timber production and correspondingly higher sales volumes, underpinned by strict cost-efficiencies.
The Group delivered a 59% increase in gross profit compared to the same period for 2021 with margins improving to 23% for H1 2022 from 20% at H1 2021 reflecting robust demand and pricing. Having delivered positive EBITDAS consistently for the last 18 months, the Group also booked its first ever operating profit in H1 2022 of $15k compared to a $0.7m operating loss in H1 2021: this is especially significant given it includes the costs related to our Carbon Solutions division. Significantly, in H1 2022 the Company generated positive operating cash inflows (before tax and finance costs) of $0.2m for the first time compared to a loss of $2.2m for H1 2021.
Six months Six months to June 2022 to June 2021 EBITDAS $'000 $'000 ----------------------------- ------------------- ----------------- Loss before tax (489) (980) Depreciation 977 1,002 Share based payment expense 175 167 Finance cost 441 270 ------------------------------ ------------------- ----------------- EBITDAS 1,104 459
H1 gross margin within our own production division held stable at 32% while the margin from third party trading increased to 14.8% in H1 2022 compared to 11.3% for H1 2021. Operating and Administration expenses increased by 18% when compared to the same period for 2021, as we continued to recruit additional high-quality personnel to drive and scale the business, including those related to the Carbon Solutions division. The management team continued to exert a strong influence over the items within their control, providing confidence that the Company is on track to drive revenues to a level substantially in excess of fixed and variable operating costs.
Finance costs increased by $0.2m (63%) from the same period in 2021 reflecting the increase in the Group's borrowings from a very low level in 2021, but for context, finance costs remain 79% lower than in H1 2020. The $2m unsecured facility agreed with Rhino Ventures, was fully drawn down in February 2022 to fund the increase in working capital required due to higher volumes of production. The working capital facility available to the trading division through its Danish banking partners was increased by $2.3m and has also been drawn down, helping to accelerate trading growth. $1m of the $2m conditional facility agreed with Lombard Odier was also utilised in June 2022 as a short-term measure.
The funds provided by the new borrowings also enabled the Company to keep pace with the uptick in demand and business activity towards the latter part of H1 2022 over H2 2021, resulting in additional investment in working capital, particularly Trade receivables and Inventory. Total period end working capital is $9.8m (Dec 2021: $7.7m), including cash of $2.1m (Dec 2021: $0.9m), excluding loans of $12.4m (Dec 2021: $8.3m).
The primary goal for the Group is to consistently increase levels of positive cash flow via the delivery of greater volumes of high-quality product, improve the ratio of high-value hardwoods and veneers within our product mix, and through incrementally improving margins in all areas of the business to provide the strongest possible foundations upon which to drive scale.
Production and trading
Total output at the sawmill and veneer factory in Gabon increased by 37% and 50% respectively on a year over year basis for the period, with both facilities consistently achieving their highest levels of production to date thanks to implementation of enhanced best practices, improved programmes for maintenance of equipment and full involvement, motivation and training of staff. Particular credit must go to the team at the veneer factory for achieving this result despite the ongoing heavy engineering work that has been required to install the second veneer line within the existing factory, which is now undergoing final testing and is expected to be fully functioning this month. A total of $1.2m in capex has been allocated to the veneer factory to date during 2022 for this and other improvements and the expanded factory will signal another major milestone in the growth of the Company once the second veneer line is fully operational, further boosting output capacity, revenue and bottom-line potential.
Our continued investment in proprietary trading technology was rewarded during H12 2022 as gross profit margins within the trading division of 14.8%, were almost a threefold increase on FY 2020, while gross profit margins on the higher levels of our own production remained consistent at 32%. It should be noted that these have been delivered against a backdrop of continued disruption being experienced at many ports around the world, including Libreville, and that the cost of shipping goods has remained at elevated levels during the period.
Woodbois' profile has continued to grow in Gabon, and more widely in Africa and beyond, as our sales team has sought to broaden our customer base and prospect in new geographies to sell our products into. As output of higher-value product from our factories increases, markets where premium pricing can be achieved will increasingly be focused on, with bulk shipment of standard product directed towards high consumption markets. It is with this strategy in mind that sales team was well represented at both the Dubai and Nantes wood shows during H1 2022, and will also be prominent at Algeria Woodtech in September 2022 as we seek to expand in the rapidly growing North-African market and to our existing client base in Asia and the Middle East.
Mozambique
The Group continues to fund a limited level of operations on a largely care and maintenance basis in Mozambique while retaining the optionality to increase the scale of operations there, subject to the level of investment required and demand and pricing of product in the future. Management intends to dedicate time to exploring the potential for generating revenues from the carbon market for preserving forests in the country directly with the government of Mozambique.
Carbon Division
We are fortunate to have our core operations based in Gabon, one of the last countries in the world with high forest cover and low levels of deforestation (HFLD) of between 0 and 0.05%. In 2019 Gabon signed up to an independently audited, results-based agreement with the UN worth $150m, making it the first HFLD country in Africa to enter into such a payment agreement for emission reductions and removals through forest preservation. On 9(th) July 2022 the UN signed the 3(rd) phase of the CAFI (Central African Forest Initiative) program, congratulating Gabon on its contribution towards a 'transformation to a green and blue economy'. It is within this context that Woodbois submitted a comprehensive feasibility study and proposal to the Government of Gabon to develop a large-scale afforestation project in the country. Woodbois aims to be a standard bearer for best practice within Gabon as the country continues to show leadership on forest preservation on the world stage. It has been encouraging to see Gabon receive widespread recognition during H1 2022 for its work with the United Nations Framework Convention on Climate Change's REDD+ mechanism to create carbon credits and with the Central African Forestry Initiative backed by European governments, as well as becoming the 55(th) member of The Commonwealth in June 2022.
While we wait for government approval for our proposed initial large-scale afforestation project for carbon sequestration in Gabon, we continue to work to align our operations with the interests of the country through increasing employment, continued investment and commitment to achieving full FSC certification. We also continue to invest in this important division which we expect to be a key driver of medium to long-term revenues . We have high confidence in the future of carbon markets to continue to evolve positively and in line with shifting public and corporate attitudes as well as policy changes. We hope to receive the green light to commence our maiden project in H2 2022 which will be followed by a comprehensive four-year trial phase. The implementation of our initial project is intended to position the Company as a pioneer in this area, distinguishing Woodbois from the rapidly expanding group of consultants becoming active in the space. Few, if any, other listed companies have the combination of in-house financial structuring skills and on-the-ground implementation experience required to deliver on projects of such scale
ESG
Woodbois has a clear social purpose ingrained within its DNA and our solid, verifiable ESG credentials are articulated clearly in the Company's recently published Integrated Report for the year ending December 2021. The report details our strategy, performance, opportunities and future outlook in relation to material financial, economic, social and governance issues and explains how we strive to achieve balance in all facets of our operations while also addressing value-creation considerations for investors and all key stakeholders. From providing truly equal-opportunity-based employment (our veneer factory has 75% female staff), to our commitment to best environmental practice within our forest concessions, multiple community projects including linking villages through repairing roads and the donation of tools, to sponsoring UNICEF managed events for local children and forming a partnership with a cutting-edge, science-based forestry monitoring organisation, the Company strives to deliver positive social impact, something our staff are quite rightly proud of. The full report is available on the Company's website at: www.woodbois.com
FSC Certification
Woodbois ESG Team, Management team and outside consultant Silvafrica continued the process of creating the culture needed to demonstrate changes and dedication to the principles of the certification throughout the business in order to be fully prepared for audit by both Legal Source and FSC. In this regard, the focus during H1 2022 was on continuing to enhance our relationship with local communities, improve the quality of life of our employees, provide more health support to our staff, improve our employees' transportation to and from work and empowering several employees to be members of our Health and Safety committee. Training was also provided to our harvesting team on best practices, Health and Safety and respect for the environment.
At the end of H1 2022, following the guidelines of the FSC auditing system, our operations in Gabon are now over 60% compliant. We are aiming to become 100% compliant during 2023.
Outlook
Having previously expressed confidence in the Group's ability to further increase output, continue to increase margins and grow the top line very significantly over time, I am understandably happy to provide confirmation and evidence thereof within this set of half year results. As noted previously however when the impact of the pandemic created such huge levels of uncertainty, immediate growth projections must of course carry a health warning, particularly given Covid's lingering disruptive effects on international trade, rising interest rates and the inflationary effects of the war in Ukraine on the global macro-economic environment. Ultimately, global demographics and the supply demand imbalance for sawn timber is in our favour, and operators like ourselves are protected from inflationary pressures on our raw material input through ownership of the whole supply chain from forest to buyer. In common with most other manufacturing companies however, we are not immune to higher energy costs and fuel shortages and it is clear that due to these and other inflationary pressures, economies in some parts of the world may experience a period of lower levels of growth or indeed slip into recession. We will therefore continue to carefully monitor risk exposure at both a country and customer level and will use the levers at our disposal such as switching geographic sales direction in line with prevailing economic conditions in order to minimise any potential margin erosion. The challenges of the last two years have forced the Company to become nimble, resilient, efficient and adaptable, all qualities that are likely to be required in order to maintain progress and continue to deliver growth in the months ahead
Our emphasis on efficiency, sustainability, transparency and best practice will continue as they are key to our corporate identity, and we expect will only offer increasing appeal to customers and investors as the transition to a net zero carbon economy gathers momentum.
As ever, your board express their sincere gratitude to our colleagues and to all of our staff for their contribution towards such significant improvements to key performance metrics, and for delivering on more key milestones as we seek to build an industry-leading business.
Paul Dolan
CEO
3 August 2022
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the six months ended 30 June 2022
Six months to 30 June Six months Year to to 30 31 December 2022 June 2021 Notes 2021 (Unaudited) (Unaudited) (Audited) $'000 $'000 $'000 ------------------------------------- -------- -------------- -------------- ------------- Turnover 11,318 8,220 17,465 Cost of sales (8,665) (6,553) (13,970) ------------------------------------- -------- -------------- -------------- ------------- Gross profit 2,653 1,667 3,495 ------------------------------------- -------- -------------- -------------- ------------- Operating costs (1,576) (1,454) (3,620) Administrative expenses (750) (521) (1,324) Depreciation (137) (179) (326) Share based payment expense 13 (175) (167) (233) Gain on fair value of biological assets - - 4,253
------------------------------------- -------- -------------- -------------- ------------- Operating profit/(loss) 15 (654) 2,245 Gain on bargain purchase - - 88,292 Foreign exchange loss (63) (56) 756 Finance costs 4 (441) (270) (591) ------------------------------------- -------- -------------- -------------- ------------- (Loss)/profit before tax (489) (980) 90,702 Taxation 5 (44) 46 (591) ------------------------------------- -------- -------------- -------------- ------------- (Loss)/profit for the period (533) (934) 90,111 ------------------------------------- -------- -------------- -------------- ------------- Other comprehensive income: Items that will not be reclassified to profit or loss Revaluation of land and buildings, net of tax - 6,254 6,254 Items that may be reclassified subsequently to profit or loss Currency translation differences (2,053) (690) (3,032) Total comprehensive (loss)/income for the period (2,586) 4,630 93,333 ------------------------------------- -------- -------------- -------------- ------------- Basic (loss)/earnings per share (cents) 6 (0.02) (0.04) 3.69 ------------------------------------- -------- -------------- -------------- ------------- Diluted (loss)/earnings per share (cents) 6 (0.02) (0.04) 3.65 ------------------------------------- -------- -------------- -------------- -------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
Notes 30 June 30 June 31 December 2022 2021 2021 (Unaudited) (Unaudited) (Audited) $'000 $'000 $'000 ------------------------------- -------------- -------------- -------------- ------------- ASSETS Non-current assets Biological assets 336,798 204,223 336,798 Property, plant and equipment 29,293 29,944 30,119 ------------------------------- -------------- -------------- -------------- ------------- Total non-current assets 366,091 234,167 366,917 ------------------------------- -------------- -------------- -------------- ------------- Current assets Trade and other receivables 7 4,777 5,179 4,616 Inventory 6,382 5,134 6,159 Cash and cash equivalents 2,091 6,321 887 ------------------------------- -------------- -------------- -------------- ------------- Total current assets 13,250 16,634 11,662 TOTAL ASSETS 379,341 250,801 378,579 ------------------------------- -------------- -------------- -------------- ------------- LIABILITIES Non-current liabilities Borrowings 9 (5,208) (4,139) (2,898) Deferred tax 5 (106,475) (67,383) (106,475) Convertible bonds - host liability 10 - (885) (931) ------------------------------- -------------- -------------- -------------- ------------- Total non-current liabilities (111,683) (72,407) (110,304) ------------------------------- -------------- -------------- -------------- ------------- Current liabilities Trade and other payables 8 (3,351) (2,677) (4,078) Borrowings 9 (7,162) (5,397) (5,369) Provisions (130) (140) (130) Contingent acquisition liability - (500) (250) Convertible bonds - host liability 10 (712) - - ------------------------------- -------------- -------------- -------------- ------------- Total current liabilities (11,355) (8,714) (9,827) ------------------------------- -------------- -------------- -------------- ------------- TOTAL LIABILITIES (123,038) (81,121) (120,131) ------------------------------- ----- ----------------------- -------------- ------------- NET ASSETS 256,303 169,680 258,448 ------------------------------- ----- ----------------------- -------------- ------------- EQUITY Share capital 11 32,601 32,528 32,528 Share premium 12 65,475 65,254 65,254 Convertible bonds - equity component 10 24 52 52 Foreign exchange reserve (10,376) (5,981) (8,323) Share based payment reserve 13 610 393 435 Revaluation reserve 6,254 6,254 6,254 Retained earnings 161,715 71,180 162,248 ------------------------------- ----- ----------------------- -------------- ------------- TOTAL EQUITY 256,303 169,680 258,448 ------------------------------- ----- ----------------------- -------------- -------------
Approved by the board and authorised for issue on 3 August 2022.
P Dolan
Chief Executive Officer
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2022
Share Foreign based Share Share Convertible exchange payment Revaluation Retained Total capital premium bonds reserve reserve reserve Earnings equity $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 --------------- ---------- ----------- ------------- ---------- ---------- ------------- ---------- ---------- Balance at 1 January 2021 31,119 58,609 52 (5,291) 226 - 72,113 156,828 Loss for the period - - - - - - (933) (933) Other comprehensive income - - - (690) - 6,254 - 5,564 Total comprehensive loss for the period - - - (690) - 6,254 (933) 4,631 Transactions with owners: Issue of ordinary shares 1,409 6,645 - - - - - 8,054 Share based payment expense - - - - 167 - - 167 Balance at 30 June 2021 32,528 65,254 52 (5,981) 393 6,254 71,180 169,680 Profit for the period - - - - - - 91,044 91,044 Other comprehensive income - - - (2,342) - - - (2,342) Total comprehensive loss for the period - - - (2,342) - - 91,044 88,702 Transactions with owners: Share options forfeited - - - - (24) - 24 - Share based payment expense - - - - 66 - - 66 Balance at 31 December 2021 32,528 65,254 52 (8,323) 435 6,254 162,248 258,448 Loss for the period - - - - - - (533) (533) Other comprehensive income - - - (2,053) - - - (2,053) Total comprehensive loss for the period - - - (2,053) - - (533) (2,586) Transactions with owners: Redemption of convertible bonds (note 10) 73 221 (28) - - - - 266 Share based
payment expense (note 13) - - - - 175 - - 175 Balance at 30 June 2022 32,601 65,475 24 (10,376) 610 6,254 161,715 256,303 --------------- ---------- ----------- ------------- ---------- ---------- ------------- ---------- ----------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2022
Six months to 30 June Six months Year to to 30 June 31 December 2022 2021 2021 (Unaudited) (Unaudited) (Audited) Cash flows from operating activities $'000 $'000 $'000 ------------------------------------------ ---- -------------- -------------- ------------- (Loss)/profit before taxation (489) (980) 90,702 Adjustment for: Foreign exchange 63 56 (756) Depreciation of property, plant and equipment 977 1,002 2,063 Fair value adjustment of biological asset - - (4,253) Transaction costs deducted from equity - (42) (42) Share based payment expense 175 167 233 Finance costs 441 270 591 Accrued expense 222 460 391 Gain on bargain purchase - - (88,292) Increase in trade and other receivables (161) (1,285) (838) Decrease in trade and other payables (769) (1,609) (460) Increase in inventory (223) (242) (1,267) Cash inflow/(outflow) from operations 236 (2,203) (1,928) ------------------------------------------ ---- -------------- -------------- ------------- Income taxes paid (8) (44) (57) Finance cost paid (306) (206) (495) Net cash outflow from operating activities (78) (2,453) (2480) Cash flows from investing activities Expenditure on property, plant and equipment (2,267) (1,451) (4,310) Settlement of deferred consideration (250) - (500) Investment in acquired subsidiary (214) - (1,107) Net cash outflow from investing activities (2,731) (1,451) (5,917) ------------------------------------------ ---- -------------- -------------- ------------- Cash flows from financing activities Inflows/(payments) from loans and borrowings 4,013 (446) (1,387) Proceeds from the issue of ordinary shares - 8,111 8,111 Net cash inflow from financing activities 4,013 7,665 6,724 ------------------------------------------ ---- -------------- -------------- ------------- Net increase/(decrease) in cash and cash equivalents 1,204 3,761 (1,673) Cash and cash equivalents at the start of period 887 2,560 2,560 ------------------------------------------ ---- -------------- -------------- ------------- Cash and cash equivalents at the end of the period 2,091 6,321 887 ------------------------------------------ ---- -------------- -------------- -------------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2022
1. BASIS OF PREPARATION
The condensed consolidated interim financial statements ('interim financial statements') for the six months ended 30 June 2022 have been prepared in accordance with the requirements of the AIM Rules for Companies. As permitted, the Group has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing this interim financial information. The interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2021, which have been prepared in accordance with international accounting standards in accordance with the requirements of the Companies (Guernsey) Law 2008 applicable to Companies reporting under IFRS as adopted by the United Kingdom (UK). The interim financial statements have been prepared under the historical cost convention except for biological assets and certain financial assets and liabilities, which have been measured at fair value.
The interim financial statements of Woodbois Limited are unaudited financial statements for the six months ended 30 June 2022. These include unaudited comparatives for the six-month ended 30 June 2021 together with audited comparatives for the year to 31 December 2021. The condensed financial statements do not constitute statutory accounts, as defined under section 244 of the Companies (Guernsey) Law 2008. The statutory accounts for the period to 31 December 2021, which were approved by the Board of Directors on 1 April 2022, have been reported on by the Group's auditors and have been delivered to the Guernsey Registrar of Companies. The report of the auditors on those financial statements was unqualified.
The accounting policies applied in preparing these financial statements are in terms of IFRS and are consistent with those applied in the previous annual financial statements for the year ended 31 December 2021.
The interim financial statements for the six months ended 30 June 2022 were approved by the Board of Directors on 3 August 2022.
Going Concern:
The interim financial statements have been prepared assuming that the Group will continue as a going concern in accordance with the recognition and measurement criteria of IFRS.
Under this assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor necessity of liquidation, ceasing trading or seeking protection from creditors for at least 12 months from the date of the signing of the financial statements.
An assessment of going concern is made by the Directors at the date the Directors approve the interim financial statements, taking into account the relevant facts and circumstances at that date including:
-- The current state of the Group's life cycle;
-- Review of profit and cash flow forecasts;
-- Review of actual results against forecast;
-- Timing of cash flows;
-- Financial or operational risks; and
-- The impact of COVID-19
The Directors have a reasonable expectation that the Group has or will have adequate resources to continue in operational existence for the foreseeable future, being 12 months from the date of approval of these interim financial statements and have therefore adopted the going concern basis of preparation in the interim financial statements.
2. CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions concerning the future. It also requires management to exercise judgment in applying the Company's accounting policies and the reported amounts of assets and liabilities, revenue and expenses, and related disclosures.
Estimates and judgments are continually evaluated and are based on current facts, historical experience and other factors, including expectations of future events that are believed are reasonable under the circumstances. Accounting estimates will, by definition, seldom equal the actual results.
The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual report.
3. SEGMENT REPORTING
Segmental information is presented on the basis of the information provided to the Chief Operating Decision Maker ("CODM"), which is the Executive Board.
The Group is currently focused on Forestry, Timber Trading and Carbon Solutions. These are the Group's primary reporting segments, operating in Gabon, Mozambique, Denmark, London, Guernsey and head operating offices in Mauritius. Certain support services are performed in the UK.
The Group's CEO and CFO review the internal management reports of each division at least weekly, and the Board monthly.
There are varying levels of integration between the Forestry and Trading segments. This integration includes transfers of sawn timber and veneer, respectively. Inter-segment pricing is determined on an arm's length basis.
Information relating to each reportable segment is set out below. Segment profit/(loss) before tax is used to measure performance, because management believes that this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industry. All amounts are disclosed after taking into account any intra-segment and intra-group eliminations
The following table shows the segment analysis of the Group's loss before tax for the six months period and net assets as at 30 June 2022:
Forestry Trading Carbon Solutions Total $000 $000 $000 $000 --------------------------------- ---------- --------- ----------------- ---------- INCOME STATEMENT Turnover 5,553 5,765 - 11,318 Cost of Sales (3,757) (4,908) - (8,665) --------------------------------- ---------- --------- ----------------- ---------- Gross profit 1,796 857 - 2,653 --------------------------------- ---------- --------- ----------------- ---------- Operating costs (614) (585) (377) (1,576) Administrative expenses (211) (182) (357) (750) Depreciation (137) - - (137) Share based payment expense (44) (44) (87) (175) Segment operating profit/(loss) 790 46 (821) 15 Foreign exchange (218) 155 - (63) Finance costs (148) (293) - (441) --------------------------------- ---------- --------- ----------------- ---------- Profit/(loss) before taxation 424 (92) (821) (489) Taxation (44) - - (44) --------------------------------- ---------- --------- ----------------- ---------- Profit/(loss) for the period 380 (92) (821) (533) --------------------------------- ---------- --------- ----------------- ---------- NET ASSETS Assets: 369,694 9,647 - 379,341 Liabilities: (4,920) (11,643) - (16,563) Deferred tax liability (106,475) - - (106,475) Net assets 258,299 (1,996) - 256,303 --------------------------------- ---------- --------- ----------------- ----------
The following table shows the segment analysis of the Group's loss before tax for the six months to and net assets at 30 June 2021:
Forestry Trading Carbon Solutions Total $000 $000 $000 $000 --------------------------------- --------- -------- ----------------- --------- INCOME STATEMENT Turnover 3,422 4,798 - 8,220 Cost of Sales (2,311) (4,242) - (6,553) --------------------------------- --------- -------- ----------------- --------- Gross profit 1,111 556 - 1,667 --------------------------------- --------- -------- ----------------- --------- Operating costs (692) (510) (252) (1,454) Administrative expenses (130) (132) (259) (521) Depreciation (177) (2) - (179) Share based payment expense (42) (42) (83) (167) Segment operating profit/(loss) 70 (130) (594) (654) --------------------------------- --------- -------- ----------------- --------- Foreign exchange 65 (121) - (56) Finance costs (101) (169) - (270) --------------------------------- --------- -------- ----------------- --------- Profit/(loss) before taxation 34 (420) (594) (980) Taxation 46 - - 46 --------------------------------- --------- -------- ----------------- --------- Profit/(loss) for the period 80 (420) (594) (934) --------------------------------- --------- -------- ----------------- --------- NET ASSETS Assets: 239,144 11,657 - 250,801 Liabilities: (3,834) (9,904) - (13,738) Deferred tax liability (67,383) - - (67,383) --------------------------------- --------- -------- ----------------- --------- Net assets 167,927 1,753 - 169,680 --------------------------------- --------- -------- ----------------- ---------
4. FINANCE COST
Year to 31 December 6 months to 30 June 2022 6 months to 30 June 2021 2021 (Unaudited) (Unaudited) (Audited) $'000 $'000 $'000 -------------------------------------- ------------------------- ------------------------- -------------- Interest on bank facilities 306 227 503 Interest on trade finance facilities 71 - - Interest on convertible bonds 48 43 88 Other finance costs 16 - - -------------------------------------- ------------------------- ------------------------- -------------- Total 441 270 591 -------------------------------------- ------------------------- ------------------------- --------------
Finance costs increased due to an increase in working capital facilities provided by the Group's Danish banking partners ($2.3m) and Rhino Ventures ($2m). See note 9 for more information.
5. TAXATION
The prevailing tax rates in the geographies here the Group operates range between 3% and 32%. A rate of 19% best represents the weighted average tax rate experienced by the Group. As at 31 December 2021, the Group had estimated losses of $28 million (2020: $29 million) available to carry forward against future taxable profits. No deferred tax asset has been raised on these estimated losses.
The Group has recognised a net deferred tax liability of $106.5 million at 30 June 2022 (30 June 2021: $67.4 million, 31 December 2021: $106.5 million) and which mainly arose on the revaluation of biological assets and owner occupied land and buildings. This would only be payable on the sale of these assets at their book value.
6. EARNINGS PER SHARE
6 months to 30 June 2022 6 months to 30 June 2021 (Unaudited) (Unaudited) $'000 $'000 Loss attributable to equity shareholders (533) (934) Weighted average number of ordinary shares in issue ('000) 2,482,464 2,406,426 Basic and diluted loss per share (cents) (0.02) (0.04) -------------------------------------------------------- ------------------------- -------------------------
The Company has incurred a loss in the six-month period to 30 June 2022, and therefore the diluted earnings per share is the same as the basic loss per share as the loss has an anti-dilutive effect.
Reconciliation of shares in issue to weighted average number of ordinary shares:
6 months 30 June 2022 6 months 30 June 2021 (Unaudited) (Unaudited) $'000 $'000 ----------------------------------------------------------------- --- ---------------------- ---------------------- Shares in issue at beginning of year 2,482,117 2,382,216 Treasury shares - (99) Shares issued during the period weighted for period in issue (note 11) 347 24,309 Weighted average number of ordinary shares in issue for the period 2,482,464 2,406,426 ---------------------------------------------------------------------- ---------------------- ----------------------
7. TRADE AND OTHER RECEIVABLES
30 June 31 December 2022 30 June 2021 2021 (Unaudited) (Unaudited) (Audited) $'000 $'000 $'000 ------------------------ ------------- ------------- ------------ Trade receivables 2,632 1,740 2,093 Other receivables 12 9 12 Deposits 127 130 127 Current tax receivable 15 13 14 VAT receivable 666 725 589 Prepayments 1,325 2,562 1,781 ------------------------ ------------- ------------- ------------ Total 4,777 5,179 4,616 ------------------------ ------------- ------------- ------------
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
8. TRADE AND OTHER PAYABLES
30 June 31 December 2022 30 June 2021 2021 (Unaudited) (Unaudited) (Audited) $'000 $'000 $'000 --------------------------------------------- ------------- ------------- ------------ Trade payables 1,106 781 1,275 Contract liabilities (prepayments received) 872 1,191 1,643 Accruals 766 509 680 Current tax payable 105 40 69 Other payables 459 59 340 Debt due to concession holders 43 97 71 --------------------------------------------- ------------- ------------- ------------ Total 3,351 2,677 4,078 --------------------------------------------- ------------- ------------- ------------
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
9. BORROWINGS
30 June 31 December 2021 2021 30 June 2022 (Unaudited) (Unaudited) (Audited) $'000 $'000 $'000 -------------------------- -------------------------- ------------- ------------ Non-current liabilities -------------------------- -------------------------- ------------- ------------ Business loans 1,269 2,099 1,282 Working capital facility 3,939 2,040 1,616 -------------------------- -------------------------- ------------- ------------ 5,208 4,139 2,898 -------------------------- -------------------------- ------------- ------------ Current liabilities -------------------------- -------------------------- ------------- ------------ Business loans 545 1,246 1,250 Bank overdraft 233 174 128 Working capital facility 6,384 3,977 3,991 -------------------------- -------------------------- ------------- ------------ 7,162 5,397 5,369 -------------------------- -------------------------- ------------- ------------ Total borrowings 12,370 9,536 8,267 -------------------------- -------------------------- ------------- ------------
The increase in borrowings in the six months to 30 June 2022 is owing to the following:
-- A new two year, $2m unsecured facility with Rhino Ventures, the Company's largest shareholder, advanced during February 2022. Full details of this and the Lombard Odier facility noted below were disclosed on 13 January 2022.
-- An increase of $2.3m in the working capital facility from the Company's Danish banking partners.
-- An advance of $1m of the $2m Lombard Odier short-term facility during June 2022. The $1m is repayable in 90 days from drawdown and is secured against certain receivables.
The Group paid-down approximately $0.7m of bank loans and equipment lease obligations during the period ended 30 June 2022.
10. CONVERTIBLE BONDS
31 December 30 June 2022 30 June 2021 2021 (Unaudited) (Unaudited) (Audited) $'000 $'000 $'000 ---------------------------------------- ------------- ------------- ------------ Convertible bonds: Liability component 712 885 931 Convertible bonds: Equity component 24 52 52 ---------------------------------------- ------------- ------------- ------------ Total 736 937 983 ---------------------------------------- ------------- ------------- ------------ Convertible bond liability 539 741 741 Interest accrued 173 144 190 ---------------------------------------- ------------- ------------- ------------ Total 712 885 931 ---------------------------------------- ------------- ------------- ------------
During the first half of 2022, $293,591 of the 2023 0% Convertible Bonds were converted into 5,871,820 Voting Ordinary Shares. The Convertible Bond terms specify conversion is at an exchange rate of GBP:$1.25 and 4p per Ordinary Share. The Bonds are repayable on 30 June 2023.
11. SHARE CAPITAL
Number $'000 ---------------------------------- -------------- ---------- Authorised: Ordinary shares of 1 pence each Unlimited Unlimited ---------------------------------- -------------- ---------- Allotted, issued and fully paid: Ordinary shares of 1p each At 1 January 2021 2,382,216,431 31,119 Issued in the period 99,900,622 1,409 ---------------------------------- -------------- ---------- At 31 December 2021 2,482,117,053 32,528 Issued in the period (note 10) 5,871,820 73 ---------------------------------- -------------- ---------- At 30 June 2022 2,487,988,873 32,601 ---------------------------------- -------------- ----------
Balances classified as share capital represent the nominal value on issue of the Company's equity share capital, comprising ordinary shares of 1p each.
The total number of Ordinary Shares in issue as at the date of this report is 2,487,988,873, which consists of 2,077,988,873 Voting Ordinary Shares and 410,000,000 Non-Voting Ordinary Shares.
12. SHARE PREMIUM
$'000 -------------------------------- ------- At 1 January 2021 58,609 Issued in the period 6,645 --------------------------------- ------- At 31 December 2021 65,254 Issued in the period (note 11) 221 --------------------------------- ------- At 30 June 2022 65,475 --------------------------------- -------
Balances classified as share premium include the net proceeds in excess of the nominal share capital on issue of the Company's equity share capital.
13. SHARE BASED PAYMENT/LONG-TERM INCENTIVES
On the 1(st) of March 2022, the Company issued LTIP's (long-term incentive plan) to its directors and key employees of which 35.5m were in issue at 30 June 2022. The fair value of these LTIP's as at the grant date was determined by an independent specialist in financial valuations.
17.75m of the granted LTIP's are subject to TSR (Total Shareholder Return) linked criteria and were valued using a Monte Carlo simulation. 17.75m share options are subject to EBITDA-linked criteria and were valued using a Monte Carlo Simulation on the basis that they include a market-based exercise condition. Only market conditions have been considered in estimating the fair value of the LTIP's.
The key terms and conditions related to the LTIP's are as follow:
A. Market Performance Condition
-- Grant Date: 1 March 2022
-- Contractual life of LTIP's: 4.6 years
-- Vesting conditions: Total Shareholder Return - The performance criteria sets out that of the total 35.5m LTIP's granted, up to 50% can vest in increments of 10% if the VWAP (Weighted Average Price) remains above each of the following thresholds for a period of 30 consecutive days: 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 35.5m LTIP's granted, 50% can vest
at an incremental rate of 16.6% per annum by the Company achieving internal EBITDA targets for each of the financial years 2022-2024. Any vesting shall arise equally for the achieving of each target, which is subject to a cumulative "catch-up" being permitted.
C. Service Condition
-- Recipients must be employed by Woodbois at the time of vesting and the share price must be above 6p at the exercise date. This condition applies to all of the granted share options.
The table below shows the input ranges for the assumptions used in the valuation models:
Fair value at grant date 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%).
Reconciliation of the share options 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 35,500,000 1p ------------------------------------ ------------- --------------- As at 30 June 2022 149,500,000 1.76p ------------------------------------ ------------- ---------------
The following charge has been recognised in the current financial period:
$000 --------------------------------- ----- As at 31 December 2020 968 --------------------------------- ----- Reserve transfer for forfeitures (766) Share based payment expense 233 As at 31 December 2021 435 --------------------------------- ----- Share based payment expense 175 --------------------------------- ----- As at 30 June 2022 610 --------------------------------- -----
At the date of this report the share options of the directors were:
Director Total number Number of Total number Share Options of Share LTIP's granted of Shares as a % of Options held on 1 March under option Issued Share as at 31 2022 (1p Capital December exercise 2021 (2p price) exercise price) -------------------------- -------------- ---------------- -------------- -------------- P Dolan (CEO) 50,000,000 4,000,000 54,000,000 2.17% -------------------------- -------------- ---------------- -------------- -------------- C Geddes (CFO) 22,500,000 4,000,000 26,500,000 1.07% -------------------------- -------------- ---------------- -------------- -------------- H Ghossein (Deputy Chair) 22,500,000 4,000,000 26,500,000 1.07% -------------------------- -------------- ---------------- -------------- -------------- G Thomson (Chair & Senior Non-Executive) 10,000,000 - 10,000,000 0.40% -------------------------- -------------- ---------------- -------------- --------------
14. RELATED PARTY TRANSACTIONS
The final instalment of $0.25m was paid in cash to Mr Ghossein, Deputy Chair, relating to the contingent acquisition liability/deferred consideration for the acquisition of Woodbois ApS, more fully set out in note 22 in the Annual Report for the year ended 31 December 2021.
During the first half of 2022 Rhino Ventures Limited, the Company's largest shareholder, disposed of 325,000,000 of its Non-Voting Ordinary Shares to an unconnected third party. In the period, Rhino Ventures Limited also converted a total of 65,000,000 Non-Voting Ordinary Shares into Voting Ordinary Shares. Upon Conversion, Rhino Ventures Limited transferred the 65,000,000 shares to its beneficial owner, Mr Miles Pelham. Following Admission, Rhino and Mr Miles Pelham together held 442,500,000 Voting Ordinary Shares in the Company, which represents 21.30% of the enlarged Voting Ordinary Shares. Rhino's holding of 235,000,000 Non-Voting Ordinary Shares post Conversion represent 57.32% of the 410,000,000 Non-Voting Ordinary Shares in the Company at 30 June 2022.
As set out in note 9, during H1 2022 the Company drew down $1m of the $2m Lombard Odier short-term facility and the $2m unsecured facility agreed with Rhino Ventures was fully drawn down.
15. EVENTS OCCURING AFTER THE REPORTING DATE
None noted as at the date of this report.
16. INTERIM FINANCIAL STATEMENTS
A copy of this interim report as well as the full Annual Report for the year ended 31 December 2021 can be found on the Company's website at www.woodbois.com
[1] Earnings before interest, tax, depreciation, amortization, share based payments and other non-cash items
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