1 April 2022

Woodbois Limited

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

Audited results for FY 2021

Woodbois, the African focused sustainable forestry, reforestation, carbon sequestration and timber trading company, announces its audited results for the full year ended 31 December 2021.

Highlights

·      Turnover increased by 14% to $17.5m (2020:  $15.3m) despite continued disruption to shipping

·      Gross profit increased by 186% to $3.5m vs $1.2m in FY 2020

·      Significant gross profit margin increase to 20%, up from 8% in FY 2020

·      First year of positive EBITDAS* of $1.0m (2020: loss $1.7m)

·      Sawmill capacity in Gabon increased to 30,000m3 output per annum

·      Acquisition of additional 71,000 hectares of forestry concession land in Gabon

·      Q1 2022 ahead of Q1 2021 despite continued shipping challenges: confident of meeting planned growth

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

"These results clearly demonstrate the progress achieved by the Group during 2021. Turning EBITDAS positive was another milestone on our growth pathway. Increases in factory capacity and total forestry concession hectarage delivered during 2021 and into 2022 have positioned the Group for continued growth in revenues and profitability. Further capital investment is planned to continue our expansion in 2023.

The Company is now better positioned than ever to deliver faster growth and higher levels of profitability once outside factors, most notably shipping, allow."

*Non-IFRS measure, please see financial review for EBITDAS reconciliation

Enquiries:

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.

STRATEGIC REPORT

Executive Chair and CEO Statement

Dear Shareholder,

Following another year of solid, demonstrable progress for the Group, and particularly given the Covid-dominated macro-economic backdrop of the last two years, we are delighted to present Woodbois' 2021 annual report. Investors and other stakeholders will be aware that our Company is driven by both purpose and profit and while we have consistently delivered on our social and environmental purpose, achieving our first year of positive EBITDAS[1] in 2021 was a watershed moment and one in which all of our employees can take pride. Assuming that shipping patterns normalise we are very optimistic for further progress in 2022.

2021 Business performance

The Company improved on all measures of financial performance in 2021, increasing turnover by 14% and making significant progress with a more than doubling of gross profit margins, a near trebling of gross profit and a first-ever positive EBITDAS. As the report below from our CFO, Carnel Geddes, spells out, 2021 also saw material improvement in the Company's balance sheet as well as enhanced capacity, efficiency and margins throughout its operations. In common with most export companies, volumes shipped during 2021 were constrained by world-wide port congestion and difficulties in accessing empty containers which impacted our cash generation and working capital, particularly in Q4.

The Group continued the roll-out of its strategic plan during 2021 with capacity at the sawmill in Mouila, Gabon almost doubling to 30,000m3 of annual sawn timber output. Value-adding capital projects have continued into 2022 with capacity at our veneer factory in Mouila, Gabon expected to more than double to an annualised output of 15,000m3. Significant challenges, most notably the ability to receive machine parts by sea freight, have delayed completion of this installation: full commissioning is expected to be completed by June 2022. The acquisition of an additional 71,000 hectares (of which 56,000 hectares has an existing approved management plan in place for harvesting) of valuable forestry concession land in Gabon during 2021 will more than satisfy the additional raw material input requirements of these expanded production facilities.

This focused investment has added significant value to the Company's portfolio, providing protection against the elevated input costs being experienced by industry players who don't have access to their own supply of raw material and positioning us to benefit from a very strong timber market.

Our fourth annual sustainability report expanded its scope to align with the Integrated Reporting (IR) model: this aims to offer further transparency and connects different parts of the business to provide a broader view of how Woodbois creates and preserves value. We aim to regenerate our forests, provide employment opportunities, enhance our communities and be a model organisation. The benefits of creating a culture in which all employees are actively encouraged to contribute to enhancing workplace safety and production efficiency are borne out in the Company's results. Also, we are grateful to those investors and stakeholders who offered their views and feedback with regards to content and framework of the report. We have continued on the path to full FSC certification and are more than 50% completed and also are committing to be carbon neutral in our operations no later than 2035.

Impact of War in Ukraine

Our thoughts are of course with all of those suffering as a result of the war and we hope for a speedy, peaceful resolution.  Apart from currency volatility and an increase in fuel prices, the Group has not experienced any impact as a result of Russia's invasion of Ukraine.

As a result of sanctions instituted against Russia, some shipping companies are reducing their level of service to Russian routes and will re-allocate services to alternative routes, potentially benefiting African exporters. Sanctions on exports from Russia include forestry products, further reducing supply of timber to some markets and possibly impacting pricing accordingly.

Strategic initiatives

Delivery of the Company's comprehensive growth and sustainability agenda will clearly require enhanced organisational capability, which remains a key area of focus for both our Executive Chair and CEO as the Group evolves. Since joining Woodbois in November 2021, in line with his background, Federico Tonetti (CEO) has taken responsibility for operations and cash generation, allowing Paul Dolan (Executive Chair) to shift his attention towards a strategic focus on the many and varied requirements for building-out a purpose driven, market-leader in the sustainable timber products space.

As we scale the business, increasing industry awareness of the Woodbois brand globally becomes an increasingly important objective. Our sales team has recently experienced its highest ever levels of interest on our stand at the Dubai WoodShow, and within the next two months the team will be well represented in the US at the World of Wood convention in Orlando in April), and in Europe (at the Eurobois convention in Lyon, France in June). While Asia in general and China in particular, could easily absorb all of our production, the logistical challenges experienced over the last two years have served to underscore the importance of building a geographically diversified customer base to ensure maximum flexibility at both ends of our value chain.

Higher value-added product mix remains a key strategic objective with our next major capital project being the installation of a third, larger veneer line during 2023 to take veneer capacity to 30,000m3. We have also targeted smaller margin-enhancing projects designed to maximise utilisation of raw material and minimise waste. Economies of scale and continuous process improvement will be important components of our transition to becoming a consistently cash generative business.

We see value in further expanding the total concession area under management in the Congo basin and in other attractive African locations. This remains a longer-term strategic priority as we look to add further profitable capacity and to geographically diversify our source of supply and export routes. A strategic review of our Mozambique assets is underway, given the continuing challenges there.

The Board

In line with the Company's commitment to enhance its corporate governance framework, in November 2021 the role of Chair and CEO was split, with the arrival of Federico Tonetti as CEO, Paul Dolan moving to the role of Executive Chair and with the appointment, also in November, of David Rothschild as an Independent Non-Executive Director and member of the Audit, Remuneration and Nominations Committees.

Federico Tonetti is a highly experienced senior executive, with a track record of delivering business model transformation and operational optimisation for multinational enterprises. Most recently, Federico was the Group Safety & Sustainability Director of Compass Group PLC, the largest contract food-service company in the world and a constituent of the FTSE100. Prior to this, he was the Country CEO for LafargeHolcim, a global leader in building materials and solutions, in Poland, and before this held other senior positions within Lafarge. Federico also worked as a Strategy Consultant for Bain and Company.

Prior to formally joining, Federico completed a three-month strategic review of the business, with his resulting growth agenda being formally approved by the Board. Having advised international corporations on their sustainability strategies and given our ability to help organisations achieve their carbon reduction objectives, Federico's ESG credentials as well as his strong operational background made him an ideal steward to deliver on ambitious growth targets and long-term value creation for all stakeholders. 

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

The strengthening of the Board, as well as new executive hires, will help the Group achieve its growth and other ambitions.

Carbon

Accreditation by the Government of Gabon for Woodbois to attend COP26 was an honour. It provided an opportunity for Board members and our senior leadership team to take part in high level discussions on climate change with key stakeholders while promoting the role that Woodbois can play in supporting host countries and international businesses in achieving their pledges via our nature-based solutions offering.

We have subsequently submitted a formal application, together with a comprehensive independent feasibility study, to the Gabonese Government, detailing a plan for a large-scale afforestation project in the country with an associated pilot-planting project which, if successful, is intended would start during 2022.

Following the many net-zero commitments made at COP26 and subsequently, the Company foresees expansion and growth in global carbon trading markets, increasing carbon-related costs for carbon emitters and significant growth in demand for offsetting nature-based carbon sequestration projects as being inevitable. Securing our own supply of carbon credits via the implementation of large-scale nature-based projects remains a fundamental strategic objective.

Looking forward

The Board sees significant value in Woodbois' proposition of both growing a cash-generative, purpose-driven sustainable forestry business with highly favourable demand/supply dynamics, and leading large-scale nature-based carbon sequestration initiatives. We will continue to position the Company accordingly.

We are reluctant to predict the timing of any normalisation in the global shipping sector given our experience over the last two years. Our plans for 2022 therefore factor in on-going supply-chain disruption, with growth, although substantial, being at a slower rate than the Company's full potential might otherwise indicate. Whilst our first quarter 2022 was affected by continuing shipping challenges it was nonetheless ahead of 2021 so we are confident of meeting our planned growth.

We trust that all stakeholders will draw comfort however from the improvement in performance during 2021. Your management team is highly incentivised to deliver more, in particular the consistent generation of positive cash-flow to help drive our growth and, when expedient, to permit payment of dividends. With a talented, diverse, motivated team, enhanced manufacturing facilities and strengthened board and balance sheet, the Company is better positioned than ever to deliver faster growth and higher levels of profitability once outside factors, most notably shipping, allow.

Paul Dolan and Federico Tonetti

Executive Chair and CEO

1 April 2022

CHIEF FINANCIAL OFFICER'S REPORT

Summary reflections on 2021

The outturn for 2021 was characterised by strong operational progress but constrained by sustained worldwide shipping dislocation, limited container availability and Covid-related disruption.  Despite the difficulties, the Company is proud to deliver its first positive EBITDAS2 of $1.0m (2020:  loss $1.7m) as set out in the table below, as well as to have increased revenues by 14% and gross profit by 186% year on year.  2021 saw a gross profit margin rise to 20%, more than double the margin of 8% realised in 2020.  In terms of segment contribution, our own production sales generated a margin of 30% in 2021 v 24% in 2020 and Trading of 3^rd party products generated a margin of 11% in 2021 v 2% in 2020.

In 2021 the Group also secured 71,000 hectares of additional high quality, virgin forest in Gabon, giving rise to an accounting Gain on Bargain Purchase of $88 million. Through this acquisition, the Company now has access to sufficient raw material to deliver on its near-term growth aspirations for its Forestry Division. The funding of this purchase, the investment to increase our production capacity (to keep up with the increased availability of raw materials) and the launch of our Carbon Solutions division in 2021 was made possible as a result of a fundraise of gross $8.5m completed in May 2021. We would like to thank the existing and new shareholders for their support in making this fundraise a success.

2021 Financial performance review

The prolonged impact of COVID-19 related disruptions, especially in the logistics chain, made 2021 another challenging year, but I am pleased to report that we achieved, following a necessary revision halfway through the year, our revenue and EBITDAS targets. Our first year of positive EBITDAS was achieved despite the widespread challenges.

In terms of the hard numbers, Revenue increased by 14% to $17.5 million in 2021 (2020:  $15.3 million). Gross Profit was up 186% to $3.5 million compared to $1.2 million in 2020 reflecting the benefits of the investments made in recent periods, improved productivity, as well as economies of scale.  Gross profit margin rose to 20%, more than double the 8% realised for the full year 2020.  As expected, finance charges reduced by 79% to $0.6 million compared to $2.8 million in 2020 reflecting lower debt and we booked a Foreign exchange gain of $0.8 million (2020:  gain $1.3 million).

We recorded a gross fair value gain of $4.3 million (2020: gain $9.5 million) on biological assets in 2021. The stable political conditions in Gabon, coupled with consistently achieving better prices than in 2019 and 2020 for the species in our concessions have prompted us to revalue upwards, the biological assets in that geography by $26.9 million (net of deferred tax).  However, although the continued unrest in the Northern part of Mozambique has not affected the business, we have written down the value of the biological assets in that geography by $23.2 million as a result of lower forecast maximum permitted harvest rates. We continue to plan for improving our overall activity levels in that geography in 2022. Our Gabonese concessions now account for 88% of our total biological assets of $336.8 million (see note 11 for more details).

Revenues from own production increased by 83% from $4.4 million in 2020 to $8.0 million in 2021 and generated a gross margin of 24% in 2020 vs 30% in 2021. Third party Trading revenues decreased by 13% from $10.9 million in 2020 to $9.5 million in 2021, however gross margin increased from 2% in 2020 to 11% in 2021.  Own production sales represented 29% of total sales in 2020 vs 46% in 2021.  The higher margins achieved in each division in 2021, together with the change in divisional sales mix, resulted in an increase of overall margin from 8% in 2020 to 20% in 2021.  See note 2 for further information.

The non-cash gain from bargain purchase arises due to the difference in accounting frameworks applied by the Company and LGFIB, the Gabonese company it acquired.  Specifically, the difference relates to the measurement of Biological Assets.   The Company applies IFRS which stipulates that acquired assets and liabilities be recognised, at the date of acquisition, at its fair value.  LGFIB, who applied Gabonese accounting standards, does not carry Biological Assets on its Balance Sheet, but instead expensed the cost of acquiring it over time and no fair value assessment is made for accounting purposes.  The Company applied IAS 41 when determining the Fair Value of the Biological Assets acquired.  Further information on the inputs to the valuation is set out in Note 11. In addition to the effect of the different accounting standards applied, the previous owner's financial position, their inability to acquire finance to operate the asset and the threat of potentially losing it due to non-operation together with the quick exit and certainty of being paid offered by WoodBois contributed to the gain realised (see note 5).

Cash and working capital

In 2021 the Company's continuous cost improvement project focussed primarily on our operating cost structure and making it as flexible as possible given the expected impact of disruption due to COVID-19, specifically the impact on our ability to harvest, run more than one production shift per day and on shipping and logistics. Our contingency plans and quick reaction when needed resulted in a cost reduction of 16% in operating costs while increasing sawn timber production by 84% year on year and veneer production by 78% year on year.  Our administration expenses increased by $0.3 million in 2021 compared to 2020 owing to the increased cost base related to our new Carbon Solutions Division and the senior hires made during the year.

Although not yet cash flow positive, we managed to reduce our cash outflow from operating activities to $2.5 million from outflows of $5.5 million in 2020 and $10.6 million in 2019. Our largest items of investment were the acquisition of the additional forest ($1.5 million of which $1.1 million had been paid by year end) and the additional investment in harvesting and production plant and machinery ($4.3 million). Our year end 2021 cash of $0.9 million compared with $2.6 million at the end of 2020.

At the end of 2021 the Group's receivables and inventory were $10.8 million (2020: $8.7 million), whilst payables and similar were $4.5 million (2020: $4.5 million). Total borrowings (excluding the convertible bond) reduced from $8.7 million in 2020 to $8.3 million at the end of 2021. Of this $5.4 million (2020: $6.2 million) was classified as current.  As explained in note 16, $3.2 million of this is a revolving facility with a Danish bank with no specified maturity date and which, although there is no expectation it will need to be repaid in 2022, has nonetheless been classified as a current liability, consistent with the prior year.  Net working capital was $2.0 million, up from $0.7 million in 2020.

Net Assets

The Company significantly increased net assets year-on-year, from $156.8 million in 2020 to $258.4 million, largely due to the revaluation of our properties in Gabon and the purchase of LGFIB.

During the first half of 2021 a total of 326 million Non-Voting Ordinary Shares have been converted into Voting Ordinary Shares.

On 17 May 2021, the Company completed a fundraise. As a result, 100 million Voting Ordinary shares were admitted for trading on AIM at a price of 6 pence per ordinary share (the "Placing Price"). At 31 December 2021 the Group's share capital of 2,482 million ordinary shares, was comprised of 1,857 million Voting Shares and 625 million Non-Voting Shares.

As set out more fully in the Directors' report, the Independent Auditor's Report and in Note 1 of the financial statements, the Company continues to adopt the going concern basis in the preparation of this Annual Report and at the date of this report.

Looking ahead to 2022

The Company is primed to deliver on its growth aspirations and remains confident of materially increasing revenues and profitability during 2022, subject to shipping and container availability.  The frustration, specifically with regards to uncertainty of cash generation and timing that these shipping and logistics constraints had put on the business in 2021 is expected to continue, at least in the first half of 2022. To weather near term cash needs caused by these disruptions, in January 2022 the Company put in place short- and medium-term loan facilities of an aggregate $4 million with its two largest shareholders.  One of these facilities, a two-year general-purpose facility of $2 million (at 8.5% interest) was fully-drawn in February 2022, the other is currently undrawn and is conditional on approval by the lender at the time of drawing.  These facilities are intended to ensure a stronger working capital position as the Company works through the logistical challenges it faces to deliver inventory to customers, and to ensure the effects of shipping delays and Covid-related disruption can be more easily dealt with until that industry normalises.  In March 2022 a further liquidity boost was secured for our trading division through our Danish banking partners who increased our working capital facility by $2.3 million and adjusted the interest on that facility down from 2.5% per annum to 2.0% per annum.

Demand for our products remains high and the resulting price increases experienced in 2021 largely compensated for the higher logistics costs experienced.  We expect to maintain and modestly improve on this margin expansion in 2022. Our Capital expenditure projects are expected to complete during 2022 and we continue towards FSC certification of both of our production facilities and our forest.

On the 28th of March 2022 our cash balance was $2.7 million, with estimated net working capital of $10.6 million and interest-bearing bank and other borrowings of $12.1 million. 

As we navigate our way through these challenging times, our focus is strongly on ensuring that the business becomes cash flow positive.

Carnel Geddes

Chief Financial Officer

1 April 2022

SOCIAL IMPACT AND SUSTAINABILITY

With ESG investments increasing and sustainable forestry management an increasingly important focal point in the mitigation of deforestation and climate change, Woodbois remains fully committed to being a leader in terms of transparency and best practices. Despite the challenges brought on by the coronavirus pandemic, we were able to keep our team safe in 2021. Woodbois forest management strategy is designed to ensure the long-term protection of the forests in which we operate while social and economic benefits as well as value creation for all stakeholders.

Health and Safety

Though coronavirus lockdowns again reduced shifts and the number of employees allowed at Woodbois manufacturing sites during 2021, we took this opportunity to invest in up-skilling and training, with a heavy focus on Health & Safety. We also implemented continuous improvement initiatives and lean manufacturing processes with the idea of building a culture where everyone is encouraged to contribute to enhancing workplace safety and production efficiency. The impact has been considerable - we have since set consecutive production records and consider our approach to continuous improvement to be of a world-class standard. 

In 2021, Woodbois was again recognised for its sustainable approach in the Sustainability Policy Transparency Toolkit ('SPOTT'') ESG policy transparency assessments for the worldwide timber and pulp industries.  In the annual assessment of operations and approaches to ESG in 2021, Woodbois was ranked sixth out of more than 100 companies by SPOTT, and highest amongst the public companies.  This was our second year of assessment, and saw the Company move further up the rankings, reflecting our efforts to improve the standards of our ESG policies, providing transparency and good governance along with our sustainability focussed operating model.

Reforestation and Carbon Credits

The opportunity to deliver reforestation projects in Africa, generating carbon credits for corporates in the Voluntary Carbon Markets adds an additional and important strand to Woodbois' credentials as a sustainability-focused company.  Photosynthetic carbon capture is amongst the most effective ways available of limiting and reducing atmospheric CO2 concentrations and our entry into The Voluntary Carbon Markets will see Woodbois providing a mechanism for companies to offset their emissions by acquiring credits provided by our reforestation based carbon sequestration solutions.  As well as making a positive contribution to the global effort to tackle climate change, we anticipate our entry into reforestation and the provision of carbon credits through high-quality projects in the Voluntary Carbon Market to make a positive contribution to biodiversity, local skilling and employment. Woodbois anticipates that its pilot project will begin during 2022 following approval by the Gabonese government

FSC Certification

The Company initiated its journey towards FSC Certification in 2021, with the Programme for the Endorsement of Forest Certification ("PEFC"), the leading global alliance of national forest certification systems. PEFC is a programme sponsored by The Central African Forest Commission and KfW, the German state-owned development bank, who have been providing us with third party certification support. The Company has completed more than half of the certification process.

Our Communities

During the pandemic we have continued to support the communities where we operate through the provision of essential food items.  We consider assisting in the wellbeing of our employees and others in our communities to be of paramount importance and intend to continue to be a well-regarded corporate citizen.

Ambitions

Through our various operations we aim to be recognised as one of the best-in-class ESG companies in the worldwide timber industry. The directors submit their report on the affairs of the Group, together with the financial statements and auditor's report for the year ended 31 December 2021.

DIRECTORS' REPORT

PRINCIPAL ACTIVITIES AND CORPORATE DEVELOPMENT

The principal activities of Woodbois Limited ("Woodbois") during 2021, together with its subsidiaries (the "Group") were forestry and timber trading. These activities were undertaken through both the Company and its subsidiaries. The Company is quoted on AIM and is incorporated and domiciled in Guernsey.

BUSINESS REVIEW

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

RESULTS AND DIVIDENDS

The consolidated profit for the year after taxation from continuing operations attributable to shareholders was $90.1 million (2020: consolidated loss $6.4 million), of which $88.3 million was attributable to the gain on bargain purchase and $4.3m to the gain on biological assets.

The directors do not recommend payment of an ordinary dividend (2020: $Nil).

SHARE CAPITAL AND FUNDING

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

During the year the Company issued 100m new Ordinary Shares and 326m Non-Voting shares were converted into Voting Shares. The Company has unlimited authorised share capital divided into ordinary shares of 1p each, of which 2,482,117,053 had been issued as at 31 December 2021 and at 31 March 2022, comprised of 1,857,117,053 Voting shares and 625,000,000 Non-Voting shares

POST BALANCE SHEET EVENTS

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

DIRECTORS

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

Directors' indemnity insurance

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

Directors' interests

Directors' interests in the Voting shares of the Company, including family interests at 31 December 2021 and at the date of this report were:

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

H Turcan is a representative of Lombard Odier which holds 395,540,230 Voting Shares (21.30%)

Share Options

At the start of 2021 a total of 144.5 million share options were in issue. During the year a total of 32.5m lapsed. On 8 November 2021 it was announced that 30.0m Long Term Incentive Plan shares (LTIP's) were intended to be allocated to F Tonetti, the new CEO and on 1 March 2022 the Company announced it had issued these and a further 38.0m LTIP's to other Executive Directors and staff. The vesting of all of the awards is substantially geared towards material improvement in both operating results and share price appreciation: these are further described in the Post Balance Sheet note and in the Remuneration Committee Report.

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

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

Directors' remuneration

The audited remuneration of the individual directors who served in the year to 31 December 2021 was:

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

The above table excludes deferred consideration payments made directly to or to companies owned and controlled by H Ghossein of $0.5 million in 2021 (2020: $0.168 million) and J Hansen of $nil in 2021 (2020: $0.091 million).  These payments arose on the purchase of WoodBois International ApS in 2017 and as amended under the Deed of Variation completed on 5 August 2020.

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

Non-Executive Directors are employed on letters of appointment which may be terminated on not less than 3 months' notice. The basic fees payable at the end of the year to Graeme Thomson as Senior Independent Non-Executive Director are £50,000 pa and £40,000 pa to David Rothschild as Independent Non-Executive Director. Since April 2020 Lombard Odier has temporarily waived the fee of $25,000 pa for the provision of the services of Henry Turcan.

ProfileS of the CURRENT Directors

P DOLAN, AGED 57, EXECUTIVE CHAIR

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

FEDERICO TONETTI, AGED 49, CHIEF EXECUTIVE OFFICER 

Federico spent more than 20 years in General Management, Global Functional and Sales & Marketing positions for a variety of multinational organisations across eight different countries, as well as four years in Strategy Consulting at Bain & Company. He has a bachelor degree in Economics at Bocconi University (Milan) and a post-graduate international MBA at Instituto de Empresa (Madrid). Federico lives in London with his wife and their two young children. He is a CTI coach and extremely passionate about mountain sports, rock music, leadership and sustainability. 

C GEDDES, AGED 43, CHIEF FINANCIAL OFFICER

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

H GHOSSEIN, AGED 60, DEPUTY CHAIR

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

G THOMSON, AGED 64, NON-EXECUTIVE DIRECTOR (SENIOR INDEPENDENT)

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

DAVID ROTHSCHILD, AGED 62, NON-EXECUTIVE DIRECTOR (INDEPENDENT)

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

H TURCAN, AGED 47, NON-EXECUTIVE DIRECTOR

Mr Turcan has worked in financial services since 1996, with a focus on equity capital markets. Having spent the majority of his career advising growth companies within investment banking he joined the Volantis team at Henderson Global Investors in 2015, which subsequently transferred to Lombard Odier Investment Management in 2017 becoming known as 1798 Volantis. He graduated with an MA (Hons) in Modern Languages from Edinburgh University and is a Member of the Securities Institute. He is a representative of the funds managed or sub-advised by Lombard Odier Investments Manager group entities, collectively the Company's largest shareholder.

SUBSTANTIAL SHAREHOLDERS

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

* M Pelham, former Chair, is the beneficial owner of Rhino Ventures Limited, which is the owner of 100% of the 625,000,000 Non-Voting shares in the Company.

CORPORATE GOVERNANCE

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

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

The Group had two divisions during the year Trading and Forestry, and on 8 March 2021 announced that it had established an Aforestation and Carbon Credit division (Carbon Solutions): a clear strategy has been devised for each. The Board continually impresses upon the leadership teams of each division that capital allocation must be both performance and potential driven. Investment, either opex or capex, will only be forthcoming for strategies that can demonstrate significant return to shareholders over time. Running loss-making business lines is not a sustainable business strategy. We will prioritise support and fund businesses where our combination of skills and experience give us an edge. Conversely, if we cannot source the requisite expertise to participate profitably in particular business lines or geographies, we will look to cease these activities. 

2. Seek to understand and meet shareholder needs and expectations 

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

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

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

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

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

The business of forestry and timber trading involves a high degree of risk, in addition to technical, political and regulatory risk, the Group is exposed to weather, nutrient and pest risks. Furthermore, the Group is exposed to a number of financial risks, which the Board seeks to minimise by adopting a prudent approach consistent with the corporate objectives of the Group.  Our approach to these risk factors is set out in the Financial Statements for the year ended 31 December 2021.   

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

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

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

The Board is responsible for establishing the strategic direction of the Group, monitoring the Group's trading performance and appraising and executing development and acquisition opportunities. The Company holds a minimum of nine Board meetings per year at which financial and other reports are considered and, where appropriate, voted on. It also holds ad hoc meetings as required to deal with specific issues. During 2021 the Board met 20 times. Board and Committee meetings are convened at times convenient to eligible members to ensure 100% attendance. Details of the directors' beneficial interests in Ordinary Shares are available on our website and are set out in the Directors' Report.

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

As of the date of this report the Board comprised of four Executive Directors, two Independent Non-Executive Directors and one Non-Independent Non-Executive Director. During 2021 the number of Executive Directors was increased by one in order to comply with the Code by separating the roles of Chair and Chief Executive Officer. An additional Independent Non-Executive Director was appointed during 2021. Executive Board members are considered full time employees, while Non-Executives are required to commit between 20 and 40 days per annum to their roles.  

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

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

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

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

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

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

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

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

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

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

The following Group matters are reserved for the Board: 

·      Overall strategy

·      Approval of major capital expenditure projects

·      Approval of the annual and interim results

·      Annual budgets, KPI's and revisions thereto

·      ESG matters, including climate change initiatives and actions 

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

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

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

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

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

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

Within the Trading division, the Company has developed a custom-built tool to allow for real-time tracking of all trades, which has been progressively implemented in 2021.

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

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

Audit Committee:

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

The terms of reference for the Audit Committee include requirements: 

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

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

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

Remuneration Committee:

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

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

There were three main elements of the remuneration packages for Executive Directors and senior management in 2021: 

-     Basic annual salary (including directors' fees) and benefits;

-     Discretionary annual bonus; and

-     Equity Option incentive scheme,

-     All of these elements take into account the need to motivate and retain key individuals.

Nominations Committee:

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

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

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

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

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

RISK MANAGEMENT

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

Technical Risk

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

PANDEMIC RISK

Public health risks may add to instability in world economies and markets generally. The extent of the impact of a pandemic will be correlated with the magnitude and duration thereof, both aspects of which will be uncertain (impact of coronavirus ("COVID-19") considered separately below).  Entities may experience conditions often associated with a general economic downturn.  This includes, but is not limited to, financial market volatility and erosion, deteriorating credit and increased borrowing rates, volatility in exchange rates, liquidity concerns, supply chain disruptions, further increases in government intervention, increasing unemployment, broad declines in consumer discretionary spending, increasing inventory levels, reductions in production because of decreased demand, layoffs and furloughs, and other restructuring activities.

The continuation of these circumstances could result in an even broader economic downturn which could have a prolonged negative impact on an entity's financial results.  What recovery/emergence may look like will also be speculation. 

The Board observes any pandemic developments across the world and continuously considers the potential impact on the Company's operations, the safety of its employees and the potential need for disclosures to be made to the market and as the situation unfolds.  Specifically, the Board will consider:

·      Impact on liquidity and cash flow estimates;

·      Valuation, recoverability and impairment of assets;

·      Contract modifications;

·      Events after the end of the reporting period;

·      Revision of material judgements and estimates;

·      Whether the Company remains a going concern;

·      Whether any restructuring is required;

·      Whether onerous contracts provisions are necessary;

·      The extent to which insurance recoveries may be available;

·      Availability of government assistance;

·      Potential breach of any covenants.

Impact of coronavirus ("COVID-19")

Given the on-going and dynamic nature of the COVID-19 outbreak, it is challenging to predict the impact on our Company. The extent of such impact will depend on future developments, which are highly uncertain, including the resurgence of COVID-19 as restrictions are eased or lifted, new information that may emerge concerning the spread and severity of COVID-19, and actions taken to address its impact, among others. It is difficult to predict how this virus may affect our business in the future, including its effect (positive or negative; long or short term) on the demand and price for our products. It is possible that COVID-19, particularly if it has a prolonged duration, could have a further material adverse effect on our supply chain, market pricing, customer demand, and distribution networks. These factors may further impact our operating plans, business, financial condition, liquidity, and operating results, which would, in turn, affect our estimates, including the valuation of inventories, allowance for expected credit losses, fair value measurements, the valuation of long-lived assets, and cash flow projections used for impairment testing. Actual results may materially differ from these estimates.

Political and Regulatory Risk

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

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

OTHER RISKS

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

ENVIRONMENTAL RISK

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

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

Financial Risk

This comprises of a number of risks explained below.

Market PRICE risk

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

Liquidity risk

The Group seeks to manage liquidity by regularly reviewing cash levels and expenditure budgets to ensure that sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The Group had net cash balances of $0.9 million as at 31 December 2021 (2020: $2.6m).

INTEREST RATE RISK

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

Credit risk

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

DONATIONS

No political or charitable donations were made during the year (2020: nil).

POLICY ON PAYMENT OF SUPPLIERS

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

EMPLOYMENT POLICIES

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

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

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

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

a.    select suitable accounting policies and then apply them consistently;

b.   make judgements and accounting estimates that are reasonable and prudent;

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

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

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

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

Going concern

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

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

·      Review of actual results against forecast;

·      Timing of cash flows and working capital resources; and

·      Financial or operational risks.

Having made reasonable enquiries, and based on the budget for 2022 and onwards, the directors are satisfied that the cash balance and resources and facilities available and expected to be made available to the Group is sufficient to cover all known financial liabilities for the next 12 months from the date of approval of the financial statements and as such consider it appropriate to prepare the financial statements on a going concern basis. 

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

STATEMENT AS TO DISCLOSURE OF INFORMATION TO THE AUDITOR

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

AUDITOR

PKF Littlejohn LLP were reappointed as auditors for 2021 and a resolution to reappoint then will be proposed at the 2022 AGM.

On behalf of the Board

Carnel Geddes

Chief Financial Officer

1 April 2022

INDEPENDENT AUDITOR'S REPORT

Opinion

We have audited the group financial statements of Woodbois Limited (the 'group') for the year ended 31 December 2021 which comprise the Consolidated Statement of Profit or Loss and other Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the consolidated financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is Companies (Guernsey) Law, 2008 and UK-adopted international accounting standards.

In our opinion, the group financial statements:

·      give a true and fair view of the state of the group's affairs as at 31 December 2021 and of its profit for the year then ended;

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

·      have been prepared in accordance with the requirements of Section 262(2)(c) of the Companies (Guernsey) Law, 2008

Basis for opinion

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

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the group's ability to continue to adopt the going concern basis of accounting included:

·      Obtaining management's forecast cash flows covering the period from the date of signing to April 2023. We assessed the assumptions within the forecast with regards to revenue generation, capital funding and cash flows.

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

·      Performing sensitivity analysis on management's forecast cash flows.

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

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

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

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

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

Our application of materiality

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

We determined our overall financial statements materiality to be US$448,000 (2020: US$420,000). This was based on an average of three year's adjusted profit or loss before tax, calculated by removing all items deemed reasonably to be outside the normal course of business, such as the contingent asset acquisition expense in the prior year and the gain on bargain purchase in the current year, as these are outside the normal underlying trading activities of the group. We consider adjusted profit or loss before tax to be the performance measure used by the shareholders as Woodbois Limited is a trading entity and its profit-making ability is a significant point of interest for investors.

We set performance materiality at 70% (2020:70%) of overall financial statements materiality to reflect the risk associated with the judgemental and key areas of management estimation within the financial statements.

No significant changes have come to light through the fieldwork which has caused us to revise our materiality figure.

We report to the Directors all corrected and uncorrected misstatements we identified through our audit with a value in excess of $15,680 (2020: $17,866) for the Group, in addition to other audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.

Our approach to the audit

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

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

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

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

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Other information

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

We have nothing to report in this regard.

Matters on which we are required to report by exception

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

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

·      certain disclosures of directors' remuneration specified by law are not made; or

·      we have not received all the information and explanations we require for our audit.

Responsibilities of directors

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

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

Auditor's responsibilities for the audit of the financial statements

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

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

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

·      We determined the principal laws and regulations relevant to the group in this regard to be those arising from: Aim Rules, local regulations and employment laws applicable to the subsidiaries.

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

o  Enquiries of management

o  Review of board minutes

o  Review of RNS announcements

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

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

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

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

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

Use of our report

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

Joseph Archer (Senior Statutory Auditor)                                                                      15 Westferry Circus

For and on behalf of PKF Littlejohn LLP                                                                                         Canary Wharf

Statutory Auditor                                                                                                                    London E14 4HD

1 April 2022

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND TOTAL COMPREHENSIVE INCOME

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