NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2023

1. BASIS OF PREPARATION

The condensed consolidated interim financial statements ('interim financial statements') for the six months ended 30 June 2023 have been prepared in accordance with the requirements of the AIM Rules for Companies. As permitted, the Group has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing this interim financial information. The interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2022, which have been prepared in accordance with international accounting standards in accordance with the requirements of the Companies (Guernsey) Law 2008 applicable to Companies reporting under IFRS as adopted by the United Kingdom (UK). The interim financial statements have been prepared under the historical cost convention except for biological assets and certain financial assets and liabilities, which have been measured at fair value.

The interim financial statements of Woodbois Limited are unaudited financial statements for the six months ended 30 June 2023. These include unaudited comparatives for the six-month ended 30 June 2022 together with audited comparatives for the year to 31 December 2022. The condensed financial statements do not constitute statutory accounts, as defined under section 244 of the Companies (Guernsey) Law 2008. The statutory accounts for the period to 31 December 2022, which were approved by the Board of Directors on 9 June 2023, have been reported on by the Group's auditors and have been delivered to the Guernsey Registrar of Companies. The report of the auditors on those financial statements was unqualified, and contained a material uncertainty in relation to going concern owing to the c$6m working capital facility termination event that occurred in April 2023 and the fact that, at the time that the financial statements were issued, the Company had not yet completed its refinancing and restructuring which the Company announced  it had closed on 28 July 2023. See note 11.

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 2022.

The interim financial statements for the six months ended 30 June 2023 were approved by the Board of Directors on 28 September 2023.

Going Concern:

The interim financial statements have been prepared assuming that the Group will continue as a going concern in accordance with the recognition and measurement criteria of IFRS.

Under this assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor necessity of liquidation, ceasing trading or seeking protection from creditors for at least 12 months from the date of the signing of the financial statements.

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

• The current state of the Group's life cycle;

• Review of profit and cash flow forecasts;

• Review of actual results against forecast;

• Timing of cash flows and expected availability of capital including trade finance;

• Financial or operational risks; and

•The current impact of the coup in Gabon in August 2023

The Directors have a reasonable expectation that the Group has or will have adequate resources to continue in operational existence for the foreseeable future, being 12 months from the date of approval of these interim financial statements and have therefore adopted the going concern basis of preparation in the interim financial statements.

2. CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions concerning the future. It also requires management to exercise judgment in applying the Company's accounting policies and the reported amounts of assets and liabilities, revenue and expenses, and related disclosures.

Estimates and judgments are continually evaluated and are based on current facts, historical experience and other factors, including expectations of future events that are believed are reasonable under the circumstances. Accounting estimates will, by definition, seldom equal the actual results.

Except for the additional disclosure as noted above, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual report.

3. SEGMENT REPORTING

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

The Group is currently focused on Forestry, Timber Trading and Carbon Solutions. These are the Group's primary reporting segments, operating in Gabon, Mozambique, Denmark, London, Guernsey and head operating office in Mauritius.  Certain support services are performed in the UK.

The Group's CEO and CFO review the internal management reports of each division at least weekly, and the Board monthly.

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

Information relating to each reportable segment is set out below. Segment profit/(loss) before tax is used to measure performance, because management believes that this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industry. All amounts are disclosed after taking into account any intra-segment and intra-group eliminations.

The following table shows the segment analysis of the Group's loss before tax for the six months period and net assets as at 30 June 2023:

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 2022:

4.  FINANCE COST

5.  TAXATION

The prevailing tax rates in the geographies here the Group operates range between 3% and 32%. A rate of 19% best represents the weighted average tax rate experienced by the Group. As at 31 December 2022, the Group had estimated losses of $26 million (2021: $28 million) available to carry forward against future taxable profits. No deferred tax asset has been raised on these estimated losses.

The Group has recognised a net deferred tax liability of $58.7 million at 30 June 2023 (30 June 2022: $106.5 million, 31 December 2022: $58.7 million) and which mainly arose on the revaluation of biological assets and owner occupied land and buildings. This would only be payable on the sale of these assets at their book value.

6.  EARNINGS PER SHARE

The Company has incurred a loss in the six-month period to 30 June 2023, and therefore the diluted earnings per share is the same as the basic loss per share as the loss has an anti-dilutive effect.

Reconciliation of shares in issue to weighted average number of ordinary shares:

7. TRADE AND OTHER RECEIVABLES

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

8. TRADE AND OTHER PAYABLES

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

9.  BORROWINGS

The decrease in borrowings in the six months to 30 June 2023 is mainly due to the following:

· Settlement of $6m revolving working capital facility at a discount (see note 15).

· Conversion of $2.25m working capital loan owing to Rhino Ventures to non-voting equity (see note 11).

· Settlement of short term, $1m working capital facility owed to Lombard Odier (see note 14).

10. CONVERTIBLE BONDS

During the first half of 2022, $293,591 of the 2023 0% Convertible Bonds were converted into 5,871,820 Voting Ordinary Shares. The Convertible Bond terms specify conversion is at an exchange rate of £:$1.25 and 4p per Ordinary Share. The Bonds were repaid on 5 July 2023.

11. SHARE CAPITAL 

* See note below: nominal value of ordinary shares reduced from 1.0p in June 2023 to 0.01p and a deferred share of 0.99p. The deferred shares were redeemed at no cost by the Company.

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

The total number of Ordinary Shares in issue as at the date of this report is 4,289,988,873, which consists of 3,685,850,726 Voting Ordinary Shares, 19,138,147 Treasury Shares and 585,000,000 Non-Voting Ordinary Shares.

TREASURY SHARES

In January 2023 following a final adjustment in relation to the 2017 purchase of Woodbois International Aps, the Company received 19,138,147 ordinary voting shares which have been taken into Treasury.

ORDINARY SHARES

On 13 March 2023 the Company announced that gross proceeds of c$3.6m had been raised by way of a conditional placing of 250,000,000 new ordinary shares of 1p each in the Company at a price of 1.2 pence per New Ordinary Share. 

On 30 May 2023, the Company announced that, as a result of the unexpected termination of a fully drawn c$6.0m bank facility with Sydbank (see note 15), who had also unilaterally offset c$3.1m of the Company's cash in part repayment of the facility, the Company's share price had fallen below its then nominal value of 1p. As the Company's Articles of Association prohibit the issuance of shares at a discount to nominal value, there was a need to re-designate the nominal value.  The directors convened a General Meeting for the purpose of proposing and voting on resolutions to reduce the nominal value of the ordinary shares to 0.01p and deferred share of 0.99p, but which did not change the number of ordinary shares in issue, as well as for the renewal and widening of the waiver of pre-emption rights to enable the Company to meet these exceptional circumstances.

On 16 June 2023 at the General Meeting, shareholders voted and all resolutions passed with >97% of votes in favour. The deferred shares were subsequently redeemed at nil cost by the Company.

On 28 June 2023, the Company announced that it has raised £6 million by way of a subscription for new ordinary shares at a price of 0.5 pence (the "Subscription"). This satisfied the cash shortfall created when the $6m working capital facility was withdrawn (see note 15), allowing the Company the flexibility to discharge its remaining obligations to the bank, whilst also benefiting from an agreed financial incentive for such repayment.

The Subscription formed part of a wider financing package, including a debt-for-equity swap of £1.75m and including the issuance of warrants:

·      Subscription for £6 million:

A Subscription for 1,200,000,000 new ordinary shares of 0.01 pence each in the Company ("Ordinary Shares") (the "Subscription Shares"), raising £6 million, at an issue price of 0.5 pence per Ordinary Share.

800,000,000 Subscription Shares were subscribed for by CHCH Ventures FZ-LLP and 400,000,000 Subscription Shares were purchased by John Scott (together the "Subscribers").

·      Conversion of existing debt to non-voting ordinary shares  and issuance of a convertible loan

Woodbois had a loan outstanding with Rhino Ventures Limited ("RVL") (see note 9), with a balance outstanding of $2.25 million (inclusive of all accrued interest). Under the terms of a Deed of Capitalisation, the loan was capitalised, at the price of 0.5 pence per share, into 350,000,000 Non-Voting Ordinary Shares (the "Non-Voting Conversion Shares") and a redemption payment will be made of £25,590.

The Company has also entered into a Commission Agreement with RVL, in respect of Miles Pelham's assistance in procuring the Subscription, under which RVL can elect to receive 60,000,000 new Voting Ordinary Shares (the "Commission Shares") and, subject to the passing of resolutions at a Company General Meeting, to grant Directors further authority to allot new shares on a non pre-emptive basis (the "Commission Fee"). The Commission Fee equates to a 5% commission on the funds raised through the Subscription. Should the resolutions allowing the Commissions Shares to be issued not be approved then the Commission Fee will be settled in cash.

·    Issuance of Warrants

The Company issued 1,200,000,000 share warrants to the Subscribers on a 1 for 1 basis, in respect of the Subscription Shares. Each Warrant gives the holder the right to subscribe for one new Voting Ordinary Share at a price of 1 pence per Voting Ordinary Share, at any time until 29 June 2025 (the "Warrants").

Under the terms of the Deed of Capitalisation and conditional on the passing of certain resolutions at a Company General Meetings as described above, RVL will also be issued with 350,000,000 Warrants on a 1 for 1 basis, in respect of the 350,000,000 Non Voting Conversion Shares. These Warrants are over Non-Voting Ordinary Shares in Woodbois.  Subject to the passing of those same resolutions, RVL can also elect under the Commission Agreement to receive 60,000,000 Warrants over Voting Ordinary Shares in the Company.

12. SHARE PREMIUM                                                                                                               

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

13. RELATED PARTY TRANSACTIONS

As set out in note 9 above, the short-term facility owed to Lombard Odier of $1.0m was settled in June 2023.

As noted above, the unsecured facility from RVL was converted to equity (see notes 9 and 11).

In June 2023 a commission agreement (see note 11) was entered into between the Company and RVL.

14.  OTHER INCOME

Other income represents settlement gains realised on termination of banking and other facilities.

On 19 April 2023, the Company announced that Woodgroup Aps, a wholly owned subsidiary of the Company, had received a notice from a Danish bank, that it was terminating a $6 million debt facility.  The $6m facility was fully utilised and had an ancillary account with a cash balance of $3.1 million. The bank had a floating charge against the assets of Woodgroup ApS and have offset this $3.1 million in partial repayment of the facility.  The reason cited by the bank for terminating the facility was that Woodgroup ApS generated a loss in Q1 2023. The bank believed that, as a consequence, the circumstances of Woodgroup ApS had changed significantly to their detriment.  Management did not agree with the bank's conclusion and, whilst acknowledging the poor performance in Q1, believed the Company had been well placed to deliver a very positive performance for the remainder of the year. As reported by the Company on 6 June 2023, the Company had reached an agreement with the bank to settle the balance by no later than 29 December 2023.  The Company settled the outstanding balance on 28 June 2023, thereby taking advantage of an early settlement incentive which gave rise to c$1.4m of other income.  All security arrangements were cancelled upon settlement.

As noted above, the Lombard Odier loan was also settled in the period.

15.  Reclassification of foreign currency translation differences on deregistered entities

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

16. EVENTS OCCURING AFTER THE REPORTING DATE

The convertible bonds (see note 10) were repaid in July 2023.

On 30 August 2023 there was a military coup in Gabon. Operations in-country are increasingly able to revert to normal and a new government has been formed.

17.  INTERIM FINANCIAL STATEMENTS

A copy of this interim report as well as the full Annual Report for the year ended 31 December 2022 can be found on the Company's website at www.woodbois.com.