TIDMWBI
RNS Number : 7426X
Woodbois Limited
02 September 2020
2 September 2020
Woodbois Limited
("Woodbois", the "Group" or the "Company")
Half Year Results
Woodbois Limited (AIM: WBI), the African focused forestry and
timber trading company, is pleased to announce its half year
results for the six months to 30 June 2020.
Highlights
-- Revenues of US$8.6m (H1 2019:US$9.3m), impacted by COVID-19 related lockdown measures
-- Net cash outflow from operating activities US$(0.7m) in H1 2020 vs US$(10.1m) for H1 2019
-- EBITDA US$(794k) in H1 2020 vs US$(1.459m) in H1 2019
-- Recommencement of operations in Mozambique after more than 2 years
Post period
-- Transformational Fundraise and Debt Restructuring: net debt
reduced from US$49.9m to US$1.1m
-- Management acquired US$2.3m in new equity
-- Placed third in the Sustainability Policy Transparency
Toolkit ('SPOTT') ESG transparency assessment for worldwide timber
and pulp industries
Commenting on the results, Paul Dolan, Chairman and CEO said :
"The year to date has seen a significant reshaping of Woodbois,
with the transformational GBP13.1 million fundraise enabling us to
meet our objective of restructuring the balance sheet.
"We believe our emphasis on sustainability, transparency and
good practices will differentiate us as customers become
increasingly focused on environmental and other considerations. We
remain ever conscious of the uncertain course and impact of
COVID-19 and continue to ensure we remain flexible and ready to
react promptly, but recent improved conditions both in Gabon and in
the trading arena give cause for optimism as a pronounced uptick in
demand began to filter through as we entered the summer months.
"Management is now focused on ensuring sustainable profitability
and long-term cash generation, with the clear objective to deliver
on our commitment to pay a dividend in 2022."
Enquiries:
Woodbois Limited + 44 (0)20 7099
Paul Dolan - Chairman and CEO 1940
Canaccord Genuity, Nominated Advisor
Henry Fitzgerald-O'Connor
James Asensio + 44 (0)20 7523
Thomas Diehl 8000
Alma PR, Financial PR +44 (0)20 3405
Rebecca Sanders-Hewett 0205
Justine James woodbois@almapr.co.uk
Robyn Fisher
Kieran Breheny
Chairman and CEO's Statement
Executive summary
The Company continued its rapid pace of transformation during
the first six months of 2020, notwithstanding the global impact of
the COVID-19 pandemic.
Overall levels of production and trading were unsurprisingly
curtailed as a result of lockdown measures in Gabon, global supply
chain disruption and the temporary freezing of orders for our
products. Over the summer months however, order-flow from Asia, the
Middle East and Europe has suggested a strong bounce-back in demand
for construction materials, and one that Woodbois is better
equipped than ever to fulfil.
Cash conservation and balance sheet improvement was a primary
objective for 2020, even prior to the arrival of the pandemic and
post period, management completed a wholesale restructuring in
August whereby net debt has been reduced from US$49.9m to just
US$1.1m today.
The potential impact of any second wave of COVID-19 is of course
unclear for all, but with minimal levels of remaining debt to
service, the Company is now positioned to withstand further
macro-economic shocks and to rapidly maximise operational leverage
from investments made to date as global demand recovers.
With the objective of balance sheet restructuring successfully
achieved, the goal of driving consistent, positive free cash-flow
from our sustainable resource base now tops our agenda. As the
Company enters this next phase, our motivated management team is
excited by the prospects of profitability and the many growth
opportunities that lie ahead.
COVID-19 impact
A strong start to 2020 masked the initial impact of COVID-19 on
the business in Q1. As countries around the world entered lockdown
from mid-March, the resulting economic shock heralded a decrease in
new business. With typical trading and production cycles of two to
five months respectively, revenues for Q2 and Q3 reflect a
corresponding dip. However, a pronounced uptick in demand began to
filter through as we entered the summer months, which if maintained
will allow for a strong 2020 exit rate.
Gabon moved relatively early into lockdown and from available
data and local feedback the virus appears to have been quite
successfully controlled there to date. With little in the way of
state aid available for the population, the protection of the
livelihoods as well as the health of our employees is of critical
importance. Through strictly observing government restrictions on
transportation, social distancing in the workplace and hours of
curfew, we have been able to re-start operations in the forest,
sawmill and veneer factory on a single shift basis versus our usual
24/7 operations. With a solid and growing order book now in place,
we look forward to welcoming more staff back to work and increasing
production hours to maximum shift times as soon as it is safe and
permissible to do so.
H1 Financial performance
The Group experienced an 8% decline in revenue and a 36%
reduction in gross profit level for the six months to June 2020
compared to the same period for 2019, due to the impact of
COVID-19. Margins within our own production fell to 20% from 24% in
2019, largely due to our obligation to maintain some fixed costs in
Gabon during the two month government mandated closure of our
production facilities. Prior to the disruption from COVID-19,
improved recovery rates from the new sawmill lines had started to
drive an improvement in profit margins, creating confidence that
current targets for the full year 2020 can be met if COVID-19
restrictions are lifted in the near term.
Margins within the trading business fell to 6% in H1 2020 from
9% in FY 2019. As the impact from COVID-19 began to bite in March
2020, customers looked to cancel orders or negotiate price
reductions. Management took the view that accepting lower margins
was preferable to the risk of building inventory while the outlook
was so uncertain, but that we should execute trades that were
already in the pipeline. This also minimised any potential
reputational damage with key suppliers with whom we have invested
significant time in building relationships over recent years.
The rapid and decisive action to slim down operations as we
waited for more information about the pandemic to become available
resulted in the reduction of US$0.7m (19%) in operating and
administrative expenses when compared to the same period in
2019.
The large finance cost burden carried prior to the August 2020
restructuring is evident in the June 2020 profit and loss numbers.
With the balance sheet restructuring now complete, this cost has
been dramatically reduced through the elimination of a finance cost
to the profit and loss account of US$3.9m per annum.
As stated above, the primary goal now is to get the Group to a
point where it is consistently cash flow positive. While there is
further work to do, I am pleased that in the first six months of
2020 our continuing operations were much closer to cash flow
break-even from operating activities at a negative US$0.5m vs a
negative US$10.1m at the same period in 2019. We now have a well
invested asset base and a clear path to drive revenues to
substantially exceed our fixed and variable operating cost.
Transformational equity raise and wholesale debt
restructuring
During H1 2020, significant management energy was focussed on
restructuring the Company's debt profile through negotiation with
stakeholders including Convertible Bond holders, Internal Trading
Fund (ITF) holders and senior employees to whom deferred 2017
acquisition consideration was due.
Canaccord Genuity Limited was appointed as the Company's
Nominated Adviser and Sole Broker in June working with the Group on
the equity raise, on which the debt restructuring was
conditional.
Despite the headwind from the COVID-19 driven economic backdrop,
the equity raise was completed raising gross proceeds of GBP13.1
million (approximately US$16.4 million).
The Debt Restructuring comprised:
-- Conversion of almost 97% of the US$30m 4% coupon Convertible
Bond into Ordinary Shares, both voting and non-voting. The
remaining US$1.05m Convertible Bond carries no interest and has a
final payment date of mid 2023;
-- The settlement of all of the US$13.9m 11.5% interest-bearing ITF and;
-- The conversion of approximately half of the sum owed for the
acquisition of Woodbois ApS in 2017 into Ordinary Shares and a
revised payment schedule for the other approximately US$1.5m;
-- Management acquired US$2,339,893 in new equity in aggregate
via Subscription agreement, settlement of Deferred acquisition
payments and conversion of Convertible Bond.
In total, the management team invested a further US$2,339,893m
in Ordinary Shares in the restructuring and now holds 10.82% of the
voting share capital. Once we are out of a closed period for share
dealing, we will issue share options to key personnel as we had
previously set out in the circular to shareholders. Full details of
the options will be announced in due course but they will include
demanding performance criteria with full vesting at multiples of
the current share price.
The restructuring has delivered a radical improvement to the
debt profile of the Company, transforming its growth and
profitability prospects, and aligns the interests of all
stakeholders with those of ordinary shareholders. We welcome our
new shareholders and thank all stakeholders for their support in
transforming the Company's outlook.
Mozambique
On 19 March 2020, we announced the signing of a management
agreement with Future Earth II LLC ("Future Earth"), a US company
with substantial concessions in Mozambique, under which Future
Earth will fund, manage and operate Woodbois' Mozambique
concessions, employees and equipment, in order to produce sawn
lumber and veneers to be sold by Future Earth on a profit share
basis.
The Woodbois concessions in Mozambique had been on a care and
maintenance basis for over two years, partly due to an industry
export ban in 2018 and due to the quantum of investment required to
restart and to enlarge the operations to be able to earn an
acceptable return on capital comparable to the Group's other
business segments. Management had been seeking the optimum way to
recommence operations and believe the management agreement with
Future Earth provides material benefits to both parties, not least
from the economies of scale arising from Woodbois' approximately
300,000 hectares and Future Earth's approximately 620,000 hectares
of concessions within Mozambique.
Board changes
Kevin Milne, non-executive Board member since August 2015 and
interim-Chairman from July 2019 stepped down from the Board on 30
April 2020. We are very grateful to Kevin for his dedication to the
Company over the last five years. Paul Dolan assumed the role of
Executive Chairman and CEO and Graeme Thomson, our Senior
Independent Non-Executive, was appointed Chairman of the Audit and
Remuneration Committees
In line with the Company's expansion plans and best practice the
Directors decided to differentiate the operating board from that of
the parent company. Accordingly, on 11 June 2020, Zahid Abbas and
Jacob Hansen stepped down as Directors and continue as Head of
Trading and Chief Operating Officer respectively. This
reorganisation accelerated our commitment towards ensuring that our
Board composition is in line with best practice corporate
governance guidelines whilst not reducing our operational
capabilities. As we look to accelerate the growth trajectory of the
Company, we continue to seek high-calibre talent at both operating
and Group board levels, including but not limited to an additional
Independent Non-Executive Directors with complementary skillsets to
that already to be found on the Board.
Placed 3rd in SPOTT ESG Transparency Assessment
In August 2020, we were very pleased to have been placed third
in the SPOTT ESG policy transparency assessment of worldwide timber
and pulp companies.
The recognition of Woodbois' ESG practices and the transparency
of our disclosures is a welcome endorsement of our practices, and
further enhancing these high standards lies at the centre of
management's goals on behalf of all stakeholders. Woodbois was
recognised as the highest-ranked public company.
As the importance of sustainable forestry management
increasingly becomes a focal point in the mitigation of
deforestation and climate change, Woodbois is dedicated to being at
the forefront of transparency and best practice.
Outlook
We believe our emphasis on sustainability, transparency and good
practices will differentiate us as customers become increasingly
focused on environmental and other considerations.
We remain ever conscious of the uncertain course and impact of
COVID-19 and continue to ensure we remain flexible and ready to
react promptly, but recent improved conditions both in Gabon and in
the trading arena give cause for optimism as a pronounced uptick in
demand began to filter through as we entered the summer months,
which if maintained will allow for a strong 2020 exit rate.
I particularly wish to thank all of my colleagues and our
dedicated staff and advisers for their unstinting work during this
exceptional year.
With the Company relieved of most of its debt, management is now
focused on ensuring sustainable profitability and long-term cash
generation, with the clear objective to deliver on our commitment
to pay a dividend in 2022.
In my four years with the Company I have never felt more
confident in its future prospects.
Paul Dolan
Chairman and CEO
1 September 2020
Condensed Consolidated Statement of Profit or Loss and Total
Comprehensive Income
For the six-month period ended 30 June 2020
Six months
to 30 June
Notes Year to
Six months 31 December
2020 to 30 June 2019
(Unaudited) 2019 (Unaudited) (Audited)
Continuing operations $'000 $'000 $'000
----------------------------------- ------- ------------- ------------------ ----------------
Turnover 8,574 9,331 19,459
Cost of Sales (7,717) (7,988) (16,696)
----------------------------------- ------- ------------- ------------------ ----------------
Gross profit 857 1,343 2,763
Other income 85 60 110
Operating costs (2,288) (2,763) (4,726)
Administrative expenses (552) (759) (1,415)
Depreciation (459) (141) (306)
Share based payment expense (73) (173) (231)
Operating loss (2,430) (2,433) (3,805)
Contingent acquisition expense (331) (478) (956)
Fair value gain - - 4,602
Foreign exchange gain 618 187 271
Finance costs 5 (2,126) (631) (2,009)
----------------------------------- ------- ------------- ------------------ ----------------
Loss before tax (4,269) (3,355) (1,897)
Taxation 6 (18) 24 (54)
----------------------------------- ------- ------------- ------------------ ----------------
Total loss for the period
from continuing operations (4,287) (3,331) (1,951)
----------------------------------- ------- ------------- ------------------ ----------------
Discontinued operations 7 (62) (63) (2,893)
----------------------------------- ------- ------------- ------------------ ----------------
Loss for the period (4,349) (3,394) (4,844)
----------------------------------- ------- ------------- ------------------ ----------------
Other comprehensive income:
Currency translation differences,
net of tax (1,168) 157 (155)
Total comprehensive loss for
the period: (5,517) (3,237) (4,999)
Loss per share from continuing
operations
Basic (cents) 9 (0.91) (0.92) (0.67)
Loss per share from discontinued
operations
Basic (cents) (0.01) (0.01) (0.64)
Total loss per share
Basic (cents) (0.92) (0.93) (1.31)
Condensed Consolidated Statement of Changes in Equity
For the six-month period ended 30 June 2020
Share
Preference Foreign based
Share Share Merger share Convertible exchange payment Retained Total
capital premium reserve capital bonds reserve reserve Earnings equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- -------- -------- --------- ----------- ------------- --------- -------- ----------------- ---------
At 1 January
2019 5,617 29,954 44,487 14,318 - (4,716) 1,012 38,844 129,516
Loss for the
period - - - - - - - (3,394) (3,394)
Other
comprehensive
income:
Currency
translation
differences - - - - - 157 - - 157
--------------- -------- -------- --------- ----------- ------------- --------- -------- ----------------- ---------
Total
comprehensive
loss for the
period - - - - - 157 - (3,394) (3,237)
Issue of
ordinary
shares 1,140 5,176 - - - - - - 6,316
Reserve
transfer
(note 17) - - (44,487) - - - - 44,487 -
Preference
share
dividend - - - - - - - (656) (656)
Share based
payment
expense - - - - - - 173 - 173
Share options
forfeited - - - - - - (109) 109 -
At 30 June
2019 6,757 35,130 - 14,318 - (4,559) 1,076 79,390 132,112
Loss for the
period - - - - - - - (1,450) (1,450)
Other
comprehensive
income:
Currency
translation
differences - - - - - (312) - - (312)
--------------- -------- -------- --------- ----------- ------------- --------- -------- ----------------- ---------
Total
comprehensive
loss for the
period - - - - - (312) - (1,450) (1,762)
Transactions
with owners:
Convertible
bonds issued - - - - 1,495 - - - 1,495
Preference
share
redemption - - - (14,318) - - - - (14,318)
Preference
share
dividend - - - - - - (398) (398)
Share options
forfeited - - - - - - (166) 166 -
Share based
payment
expense - - - - - - 58 - 58
At 31 December
2019 6,757 35,130 - - 1,495 (4,871) 968 77,708 117,187
Loss for the
period - - - - - - - (4,349) (4,349)
Other
comprehensive
income:
Currency
translation
differences - - - - - (1,168) - - (1,168)
--------------- -------- -------- --------- ----------- ------------- --------- -------- ----------------- ---------
Total
comprehensive
loss for the
period - - - - - (1,168) - (4,349) (5,517)
Issue of
ordinary
shares 57 250 - - - - - - 307
Share options
forfeited - - - - - - (128) 128 -
Share based
payment
expense - - - - - - 73 - 73
At 30 June
2020 6,814 35,380 - - 1,495 (6,039) 913 73,487 112,050
--------------- -------- -------- --------- ----------- ------------- --------- -------- ----------------- ---------
Condensed Consolidated Statement of Financial Position
As at 30 June 2020
Notes 30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
------------------------------- ------------- ------------- ------------- ------------
ASSETS
Non-current assets
Consideration receivable 7 - 2,547 -
Biological assets 10 194,708 194,708 194,708
Property, plant and equipment 19,558 17,650 20,323
------------------------------- ------------- ------------- ------------- ------------
Total non-current assets 214,266 214,905 215,031
------------------------------- ------------- ------------- ------------- ------------
Current assets
Trade and other receivables 11 4,882 6,888 6,123
Inventory 5,295 7,124 6,409
Cash and cash equivalents 802 4,269 1,490
------------------------------- ------------- ------------- ------------- ------------
Total current assets 10,979 18,281 14,022
TOTAL ASSETS 225,245 233,186 229,053
------------------------------- ------------- ------------- ------------- ------------
LIABILITIES
Current liabilities
Trade and other payables 12 (4,493) (5,279) (4,801)
Borrowings 13 (6,231) (1,909) (6,343)
Contingent acquisition
liability 18 (824) (1,122) -
------------------------------- ------------- ------------- ------------- ------------
Total current liabilities (11,548) (8,310) (11,144)
------------------------------- ------------- ------------- ------------- ------------
Non-current liabilities
Borrowings 13 (13,889) (15,552) (13,545)
Deferred tax 6 (62,655) (62,655) (62,655)
Convertible bond - host
liability 14 (24,755) - (23,547)
Preference share liability 16 - (14,557) -
Contingent acquisition
liability 18 (348) - (975)
Total non-current liabilities (101,647) (92,764) (100,722)
------------------------------- ------------- ------------- ------------- ------------
TOTAL LIABILITIES (113,195) (101,074) (111,866)
------------------------------- ----- --------------------- ------------- ------------
NET ASSETS 112,050 132,112 117,187
------------------------------- ----- --------------------- ------------- ------------
EQUITY
Share capital 15 6,814 6,757 6,757
Share premium 35,380 35,130 35,130
Convertible bonds - equity
component 14 1,495 - 1,495
Preference shares 16 - 14,318 -
Foreign exchange reserve (6,039) (4,559) (4,871)
Share based payment reserve 913 1,076 968
Retained earnings 73,487 79,390 77,708
------------------------------- ----- --------------------- ------------- ------------
TOTAL EQUITY 112,050 132,112 117,187
------------------------------- ----- --------------------- ------------- ------------
Condensed Consolidated Statement of Cash Flows
For the six-month period ended 30 June 2020
Six months
to 30 June
Six months Year to
to 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
------------------------------------------ ---- ------------- ------------- -------------
OPERATING ACTIVITIES
Loss before taxation - continuing
operations (4,269) (3,355) (1,897)
Loss before taxation - discontinued
operations (62) (63) (2,893)
------------------------------------------ ---- ------------- ------------- -------------
Loss before taxation (4,331) (3,418) (4,790)
Adjustment for non-cash items:
Movement in foreign exchange (766) (187) (271)
Depreciation of property, plant
and equipment 964 614 1,393
Inventory losses - (149) (244)
Non-cash items in discontinued
operations - - 221
Contingent acquisition expense 331 478 956
Transaction costs deducted off
Convertible bond liability - - (94)
Share based payment expense 73 173 231
Shares issued in lieu of ITF Interest - - (335)
Impairment on sale of discontinued
operations - - 2,502
Fair value gain - - (4,602)
Decrease/(increase) in trade and
other receivables 1,231 (1,674) (838)
(Decrease)/increase in trade and
other payables (815) (6,100) (7,173)
Decrease/(increase) in inventory 1,112 (237) 817
Finance costs 2,126 631 2,009
Cash outflow from continuing operations (75) (9,869) (10,218)
------------------------------------------ ---- ------------- ------------- -------------
Income taxes paid (19) (29) (47)
Interest paid (444) (224) (331)
Net cash flow from operating activities (538) (10,122) (10,596)
INVESTING ACTIVITIES
Purchases of property, plant and
equipment (382) (1,359) (5,016)
Net cash outflow from investing
activities (382) (1,359) (5,016)
------------------------------------------ ---- ------------- ------------- -------------
FINANCING ACTIVITIES
Proceeds from (repayment)/receipt
of loans and
borrowings (268) (1,502) 1,271
Proceeds from the issue of ordinary
shares - 6,896 6,316
Proceeds from trade finance facility 500 8,446 7,605
Net cash inflow from financing
activities 232 13,840 15,192
------------------------------------------ ---- ------------- ------------- -------------
Increase/(Decrease) in cash and
cash equivalents (688) 2,359 (420)
Cash and cash equivalents at start
of period 1,490 1,910 1,910
------------------------------------------ ---- ------------- ------------- -------------
Net cash and cash equivalents at
end of period 802 4,269 1,490
------------------------------------------ ---- ------------- ------------- -------------
Notes to the Condensed Consolidated Interim Financial
Statements
1. BASIS OF PREPARATION
The condensed consolidated interim financial statements for the
six-month period ended 30 June 2020 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 condensed consolidated interim financial
statements should be read in conjunction with the annual financial
statements for the year ended 31 December 2019, which have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union, IFRIC
interpretations and those parts of the Companies (Guernsey) Law
2008 applicable to Companies reporting under IFRS. The condensed
annual 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 condensed consolidated interim financial statements of
Woodbois Limited are unaudited, condensed consolidated financial
statements for the six months to 30 June 2020. These include
unaudited comparatives for the six-month period to 30 June 2019
together with audited comparatives for the year to 31 December
2019. The condensed consolidated financial statements do not
constitute statutory accounts, as defined under section 244 of the
Companies (Guernsey) Law 2008.
The condensed consolidated interim financial statements for the
six-month period ended 30 June 2020 were approved by the Board of
Directors on 1 September 2020.
2. SIGNIFICANT ACCOUNTING POLICIES
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 2019.
It has been prepared assuming that the Group will continue as a
going concern in accordance with the recognition and measurement
criteria of IFRS as adopted by the European Union.
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:
-- 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
Taking into account the restructure of the Group as described in
Note 18, Post Balance Sheet Events, current internal forecasts,
based on information available at the date of approval of these
interim financial statements, 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 to the start of September 2021, and have therefore
adopted the going concern basis of preparation in the interim
financial statements.
The statutory accounts for the period to 31 December 2019 were
approved by the Board of Directors on 29 April 2020 have been
reported on by the Group's auditors, which have been delivered to
the Guernsey Registrar of Companies. The report of the auditors on
those financial statements was unqualified.
T he auditors, having issued their report prior to the Group's
restructure and with reference to the potential unknown impact of
COVID-19, made reference to the existence of a material uncertainty
in relation to going concern within that audit report, to which we
draw your attention.
3. ADOPTION OF RECENT ACCOUNTING PRONOUCEMENTS
Amendments to IFRS 3, Business Combinations
In October 2018, the IASB issued amendments to the guidance in
IFRS 3, Business Combinations, which revise the definition of a
business for acquisition accounting purposes. To be considered a
business, an acquisition would have to include an input and a
substantive process that together significantly contribute to the
ability to create outputs. The new guidance provides a framework to
evaluate when an input and a substantive process are present. To be
considered a business without outputs, there will now need to be an
organized workforce present. Under the new standard, the changes to
the definition of a business will likely result in more
acquisitions being accounted for as asset acquisitions.
The amendments to IFRS 3 are effective for business combinations
and asset acquisitions for which the acquisition date is on or
after the first annual reporting periods beginning on or after 1
January 2020. The Company will assess the impact of this standard
on a case--by--case basis upon future acquisitions performed but
does not anticipate a material impact due to the nature and
structure of its historical acquisitions.
Amendments to IAS 1 and IAS 8: Definition of Material
In October 2018, the IASB issued amendments to IAS 1,
Presentation of Financial Statements, and IAS 8, Accounting
Policies, Changes in Accounting Estimates and Errors, to align the
definition of "material" across the standards and to clarify
certain aspects of the definition. The new definition states that,
"Information is material if omitting, misstating or obscuring it
could reasonably be expected to influence decisions that the
primary users of general purpose financial statements make on the
basis of those financial statements, which provide financial
information about a specific reporting entity." These amendments
are effective for annual periods beginning on or after January 1,
2020. The amendments to the definition of material did not have a
significant impact on the interim financial statements nor is there
any expectation of a future impact to the Company.
Future Accounting Pronouncements
Amendment to IAS 1: Classification of Liabilities as Current or
Non--Current
In January 2020, the IASB has issued an amendment to IAS 1,
Presentation of Financial Statements, to provide a more general
approach to the presentation of liabilities as current or
non--current based on contractual arrangements in place at the
reporting date. These amendments:
- specify that the rights and conditions existing at the end of
the reporting period are relevant in determining whether the
Company has a right to defer settlement of a liability by at least
twelve months; - provide that management's expectations are not a
relevant consideration as to whether the Company will exercise its
rights to defer settlement of a liability; and
- clarify when a liability is considered settled.
The new guidance will be effective for annual periods starting
on or after January 1, 2023 and is to be applied retrospectively.
The Company has not yet determined the impact of this standard on
its financial statements.
4. 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 following are management's most significant estimates and
assumptions in determining the value of assets and liabilities and
the most significant judgments in applying its accounting
policies:
- Residual values and useful lives of property, plant and equipment
- Fair value of biological assets
- Provisions for doubtful debts
- Convertible bond liability
- Impairment - consideration receivable
- Share based payments
- The effects of the post balance sheet matters set out in Note 18 and
- Impact of COVID-19.
In March 2020, the World Health Organization declared COVID--19
(coronavirus) a global pandemic. The continued spread of this
contagious disease outbreak and related public health developments
have adversely affected workforces, economies, and financial
markets globally, potentially leading to an economic downturn and
to legislative and regulatory changes that may impact the Company's
business and operations. At this time, the duration and magnitude
of the impact of the outbreak and its potential adverse effects on
the Company's business or results of operations are uncertain and
will depend on future developments. Judgments made in these interim
financial statements reflect management's best estimates as of the
period end, taking into consideration the most significant
judgments that may be directly impacted by COVID--19.
The following are management's significant estimates and
assumptions that could be impacted most by COVID--19:
- revenue recognition and determination;
- impairment of trade receivables; and
- fair value of biological assets.
5. FINANCE COST
6 months 6 months Year to
30 June 30 June 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
--------------------------------------- ------------- ------------- --------------
Interest on bank facilities 160 224 335
Interest on trade finance facility 758 407 1,197
Interest accrued on convertible bonds 1,208 - 477
--------------------------------------- ------------- ------------- --------------
Total 2,126 631 2,009
--------------------------------------- ------------- ------------- --------------
6. TAXATION
The prevailing tax rates of the operations of the Group range
between 3% and 32%. Therefore, a rate of 20% has been used as it
best represents the weighted average tax rate experienced by the
Group. As at 31 December 2019, the Group had estimated losses of
$17.6 million (2018: $11.2 million) available for carry forward
against future taxable profits.
The Group has recognised a net deferred tax liability of $62.655
million at 30 June 2020 (30 June 2019: $62.655 million, 31 December
2019: $62.655 million) which mainly arose on the revaluation of a
biological asset.
7. DISCONTINUED OPERATIONS
At 31 December 2018 the Group disposed of the agricultural
business and assets in Tanzania, which was treated as a
discontinued operation.
As at 30 June 2020, the cash consideration has not been received
and whilst the Group remains in discussions with the purchaser and
reserves all its legal rights it was deemed prudent to fully impair
this amount as at 31 December 2019.
8. 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 and timber trading.
These are the Group's primary reporting segments, operating in
Gabon, Mozambique, Denmark, Hong Kong, Mauritius and UK.
For the six-month period ended 30 June 2020 sales made to one
customer accounted for 20% of the total turnover (H1 2019: 14%).
Sales made to a second customer during the same period accounted
for 6% of the total turnover (H1 2019: 13%).
The Group's Chairman and Chief Executive Officer reviews the
internal management reports of each division at least monthly.
There are varying levels of integration between the Forestry and
Trading segments. This integration includes transfers of sawn
timber and veneer, respectively. Inter-segment pricing is
determined on an arm's length basis.
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 to and net assets at 30 June
2020:
Unallocated head office costs and intra-group
Forestry Trading eliminations Total
$000 $000 $000 $000
--------------------------------- --------- --------- -------------------------------------------------- ---------
Income statement
Turnover 2,311 6,263 - 8,574
Cost of Sales (1,845) (5,872) - (7,717)
--------------------------------- --------- --------- -------------------------------------------------- ---------
Gross profit 466 391 - 857
--------------------------------- --------- --------- -------------------------------------------------- ---------
Other income 75 - 10 85
Operating costs (1,570) (784) - (2,354)
Administrative expenses - (2) (484) (486)
Depreciation (447) (12) - (459)
Share based payment expense (29) (41) (3) (73)
Foreign exchange gain 48 570 - 618
Contingent acquisition expense (165) (166) - (331)
--------------------------------- --------- --------- -------------------------------------------------- ---------
Segment operating (loss)/profit (1,622) (44) (477) (2,143)
Finance costs (1,072) (1,054) - (2,126)
--------------------------------- --------- --------- -------------------------------------------------- ---------
Loss before taxation (2,694) (1,098) (477) (4,269)
Taxation (18) - - (18)
--------------------------------- --------- --------- -------------------------------------------------- ---------
Loss after taxation (2,712) (1,098) (477) (4,287)
NET ASSETS
Assets: 215,404 9,740 101 225,245
Liabilities: (2,471) (23,265) (24,804) (50,540)
Deferred tax liability (62,655) - - (62,655)
Net assets 150,278 (13,525) (24,703) 112,050
--------------------------------- --------- --------- -------------------------------------------------- ---------
The following table shows the segment analysis of the Group's
loss before tax for the year and net assets at 31 December
2019:
Unallocated head office costs and intra-group
Forestry Trading eliminations Total
$000 $000 $000 $000
----------------------------------- --------- --------- ---------------------------------------------- ---------
Income statement
Turnover 6,850 12,609 - 19,459
Cost of Sales (5,237) (11,459) - (16,696)
----------------------------------- --------- --------- ---------------------------------------------- ---------
Gross profit 1,613 1,150 - 2,763
----------------------------------- --------- --------- ---------------------------------------------- ---------
Other income 75 21 14 110
Operating costs (3,396) (1,330) - (4,726)
Administrative expenses (22) (391) (1,002) (1,415)
Depreciation (230) (63) (13) (306)
Share based payment expense (98) (124) (9) (231)
Foreign exchange (losses) / gains 6 267 (2) 271
Contingent acquisition expense (478) (478) - (956)
Fair value gain - - 4,602 4,602
----------------------------------- --------- --------- ---------------------------------------------- ---------
Segment operating loss (2,530) (948) 3,590 112
----------------------------------- --------- --------- ---------------------------------------------- ---------
Finance costs (913) (1,088) (8) (2,009)
----------------------------------- --------- --------- ---------------------------------------------- ---------
Loss before taxation (3,443) (2,036) 3,582 (1,897)
----------------------------------- --------- --------- ---------------------------------------------- ---------
Taxation (58) 4 - (54)
----------------------------------- --------- --------- ---------------------------------------------- ---------
Loss after taxation (3,501) (2,032) 3,582 (1,951)
----------------------------------- --------- --------- ---------------------------------------------- ---------
NET ASSETS
Assets: 216,360 12,380 313 229,053
Liabilities: (3,048) (22,557) (23,606) (49,211)
Deferred tax (liability) / asset (62,655) - - (62,655)
Net assets 150,657 (10,177) (23,293) 117,187
----------------------------------- --------- --------- ---------------------------------------------- ---------
9. EARNINGS PER SHARE
Basic earnings per share is based on a loss for the six months
of $4.349 million, divided by the weighted average number of
ordinary shares in issue during the period of 469,006,665 (which is
exclusive of 99,378 treasury shares). During the period 4,384,934
new shares were issued (see note 15).
10. BIOLOGICAL ASSETS
30 June 30 June 31 December
2020 2019 2020
(Unaudited) (Unaudited) (Audited)
Standing timber $'000 $'000 $'000
------------------------------------------- ------------- ------------- ------------
Carrying value at beginning of the period 194,708 194,708 194,708
Carrying value at end of period 194,708 194,708 194,708
------------------------------------------- ------------- ------------- ------------
The valuation of the biological assets are reviewed by the
Directors once a year however, nothing has come to our attention
since the last review and the date of issue of these accounts, to
indicate that the assets are potentially impaired or have
materially increased in value since the last review.
The methods and assumptions used in determining the fair value
of standing timber within the forestry concessions has been based
on discounted cash flow models which require a number of
significant judgements to be made by the Directors in respect of
sales price, production levels, operational cost and discount
rates. Please refer to note 11 of the financial statements for the
year ended 31 December 2019 for more details.
11. TRADE AND OTHER RECEIVABLES
30 June 31 December
2020 30 June 2019 2019
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
-------------------------- ------------- ------------- ------------
Trade receivables 1,812 3,581 2,229
Other receivables 59 295 213
Deposits 117 33 40
Current tax receivable 10 50 20
Sales tax recoverable 432 408 445
Prepayments to suppliers 2,452 2,521 3,176
-------------------------- ------------- ------------- ------------
Total 4,882 6,888 6,123
-------------------------- ------------- ------------- ------------
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
12. TRADE AND OTHER PAYABLES
30 June 31 December
2020 30 June 2019 2019
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
--------------------------------------------------- ------------- ------------- ------------
Trade payables 1,072 2,271 1,256
Contract liabilities (prepayments from customers) 1,362 1,968 1,139
Accruals 1,662 68 1,498
Current tax payable 44 24 55
Other payables 148 667 383
Other related party loans 42 7 285
Debt due to concession holders 163 274 185
--------------------------------------------------- ------------- ------------- ------------
Total 4,493 5,279 4,801
--------------------------------------------------- ------------- ------------- ------------
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
13. BORROWINGS
30 June 31 December
30 June 2019 2019
2020 (Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
-------------------------- ------------------- ------------- ------------
Non-current liabilities
-------------------------- ------------------- ------------- ------------
Business loans 904 877 1,227
Bank overdraft 2,047 1,998 -
Internal trade fund 10,938 12,657 12,311
Car loans - 20 7
-------------------------- ------------------- ------------- ------------
13,889 15,552 13,545
-------------------------- ------------------- ------------- ------------
Current Liabilities
-------------------------- ------------------- ------------- ------------
Business loans 1,710 - 1,391
Bank overdraft 525 1,252 2,988
Working capital facility 2,036 640 1,944
Internal trade fund 1,960 - -
Car loans - 17 20
-------------------------- ------------------- ------------- ------------
6,231 1,909 6,343
-------------------------- ------------------- ------------- ------------
Total 20,120 17,461 19,888
-------------------------- ------------------- ------------- ------------
The internal trade fund accrues interest at a rate of 11.5% per
annum. Interest accrued (included in 'Accruals" in Trade and other
payables (see note 12)) at 30 June 2020 was $1.073 million (30 June
2019: $0.407 million, 31 December 2019: $0.902 million). Other than
1798 Volantis Fund Limited (who invested $5 million in the fund),
who under the terms of the Deed of Variation, signed in July 2019,
will not request repayments prior to 16 July 2020, investors in the
internal trade fund are required to give 120 days' notice of a
request for repayment. At the time of writing, two investors had
given notice of a request for repayment and as such, $1.96 million
has been classified as current liabilities. As noted in note 18,
Post Balance Sheet Events, and as a part of the Fund raise and debt
restructure, the Group has retired the internal trade fund in
August 2020 and hence all remaining investors were repaid.
Except for a portion of $5.5 million that is unsecured, the
internal trade fund is covered by either the trade debtor or
inventory item that it financed.
Certain bank facilities are repayable on a quarterly basis.
However, due to COVID-19, the counterparty bank has given the
Company a six-month repayment holiday with repayments recommencing
in December 2020.
14. CONVERTIBLE BONDS
31 December
30 June 2020 30 June 2019 2019
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
---------------------------------------- ------------- ------------- ------------
Convertible bonds: Liability component 24,755 - 23,547
Convertible bonds: Equity component 1,495 - 1,495
---------------------------------------- ------------- ------------- ------------
Total 26,250 - 25,042
---------------------------------------- ------------- ------------- ------------
Convertible bond liability 23,070 - 23,070
Interest accrued 1,685 - 477
---------------------------------------- ------------- ------------- ------------
Total 24,755 - 23,547
---------------------------------------- ------------- ------------- ------------
During the previous financial year, the Company restructured the
5% perpetual preference shares in Woodbois subsidiary, Argento
Limited, by buying it back and issuing the holders instead with
Convertible Bonds in Woodbois Limited ("Bonds"). The Woodbois
Convertible Bond has a maturity of not later than 30 June 2024, 4%
coupon and conversion price of 8p per share, being a maximum total
of all the Bonds on conversion of 300 million ordinary shares. 100%
of preference shareholders accepted the switch terms. The switch is
from a preference share with variable conversion terms linked to a
subsidiary company, to a bond convertible into Woodbois Limited
Ordinary Shares at a fixed rate.
On 21 October 2019, the Company completed the re-purchase of the
full 75,000 preference shares in issue and Neville Registrars
Limited, who were appointed by the Company to act as transfer
agent, issued 4% convertible bonds, convertible no later than 30
June 2024.
Save for $1.05 million all of the Bonds were converted to Equity
in August 2020. See note 18, Post Balance Sheet Events, for further
details.
15. SHARE CAPITAL
Number $'000
---------------------------------- ------------ ----------
Authorised:
Ordinary shares of 1 penny each Unlimited Unlimited
---------------------------------- ------------ ----------
Allotted, issued and fully paid:
Ordinary shares of 1 penny each
At 1 January 2019 377,451,931 5,617
Issued in the period 88,000,000 1,140
---------------------------------- ------------ ----------
At 30 June 2019 465,451,931 6,757
Issued in the period - -
---------------------------------- ------------ ----------
At 31 December 2019 465,451,931 6,757
Issued in the period 4,384,934 57
---------------------------------- ------------ ----------
At 30 June 2020 469,836,865 6,814
---------------------------------- ------------ ----------
Balances classified as share capital include the nominal value
on issue of the Company's equity share capital, comprising ordinary
shares of 1p each.
1798 Volantis Fund Limited ("Volantis"), a fund managed on a
discretionary basis by Lombard Odier Asset Management group
("Lombard"), and Paul Dolan, Chairman and Chief Executive of the
Company, agreed to receive Woodbois ordinary shares ("Shares") in
lieu of interest (at 11.5%) for the period from 1 July 2019 to 31
December 2020 on their Internal Trading Fund ("ITF") loans, in
respect of $5.0m for Volantis and $295,520 for Paul Dolan. On 21
January 2020, 4,140,230 new Shares have been issued to Volantis and
244,704 new Shares have been issued to Paul Dolan for a nominal
value of $0.057 million.
As at 31 December 2019 there were existing warrants in issue of
34,436,781 held by third parties, including Miles Pelham
(ex-Chairman) who holds 5,714,286 warrants. The subscription price
for these warrants were 20p and they expired on 28 February
2020.
In January 2019, the Company accepted subscription to 40,000,000
new Woodbois Limited warrants at 10p, from 1798 Volantis Fund
Limited, acting through its discretionary investment manager
Lombard Odier Asset Management (USA) Corp. In July 2019, a deed of
variation amended the subscription price to 8p.
Volantis will be entitled to exercise 50% of the warrants at any
time during the period commencing on the first anniversary of the
drawdown date of the trade finance loan being 1 April 2020 and
expiring on the third anniversary of the drawdown date of the Loan
Agreement. Up to 50% of the warrants will also be exercisable at
any time following the initial drawdown date provided that Volantis
has owned 10% or more of the issued share capital of Woodbois prior
to exercise.
16. PREFERENCE SHARES
31 December
30 June 2020 30 June 2019 2019
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
---------------------------------- ------------- ------------- ------------
Preference share liability - 13,901 -
Preference share capital - 14,318 -
---------------------------------- ------------- ------------- ------------
Total - 28,219 -
---------------------------------- ------------- ------------- ------------
Preference share liability - 13,901 -
Preference share dividend accrued - 656 -
---------------------------------- ------------- ------------- ------------
Total - 14,557 -
---------------------------------- ------------- ------------- ------------
As explained in note 14, Convertible Bonds, during the previous
financial year the Company restructured the 5% perpetual preference
shares in Woodbois subsidiary, Argento Limited, by buying it back
and issuing the holders instead with a Convertible Bond in Woodbois
Limited.
17. MERGER RESERVE
As voted on and approved by the Shareholders at the Annual
General Meeting held on 19 June 2019, the balance on the merger
reserve was transferred to retained earnings.
18. POST BALANCE SHEET EVENTS
On 15 July 2020, Woodbois Limited announced the results of a
Fundraise and Debt Restructure. Gross proceeds of GBP13.1 million
(approximately $16.4 million) were raised by way of a conditional
Placing, Retail Offer and Subscription issuing 655,000,000 new
Ordinary Shares at a price of 2 pence per Ordinary Share (the
"Placing Price").
In addition, 243,413,455 Capitalisation Ordinary Shares relating
to the conversion of $22.5 million Convertible Bonds and 62,500,000
Deferred Consideration Shares were to be issued at the Placing
Price. The Placing Shares, Primary Bid Shares, Subscription Shares,
Capitalisation Ordinary Shares and Deferred Consideration Shares
represented 204.6 per cent of the existing issued Ordinary Share
capital of the Company prior to the Fundraise and Debt
Restructuring. In addition, 685,287,914 Capitalisation Non-Voting
Shares were to be issued.
On 27 July 2020 the Company announced an additional
capitalisation of $6.448 million of Convertible Bonds for a further
266,178,196 Capitalisation Shares. A total of $1,051,200
non-interest bearing Convertible Bonds 2023 remain outstanding.
On 5 August 2020, the Fundraise and the Debt Restructuring was
approved by the shareholders. The New Ordinary Shares issued
pursuant to the Fundraise and Debt Restructuring were admitted to
trading on AIM at 8.00 a.m. on 6 August 2020.
Following Admission of the New Ordinary Shares, the Company's
issued share capital comprises of 2,382,117,052 shares, of which
1,430,751,958 are voting shares and 951,365,094 are non-voting
shares.
Retirement of internal trade fund
As a part of the Fundraise and Debt restructure, the Group had
plans to retire the internal trade fund and as such repayments were
made to all the remaining investors in August 2020.
19. INTERIM FINANCIAL REPORT
A copy of this interim report as well as the full Annual Report
for the year ended 31 December 2019 can be found on the Company's
website at www.woodbois.com .
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