notes to the financial statements

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1. ACCOUNTING POLICIES

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GENERAL INFORMATION

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

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

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The accounting policies set out herein, in pages 27 to 36, have been consistently applied.

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The principal activities and nature of the business are included on pages 1 to 18.

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BASIs OF ACCOUNTING

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The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"), IFRIC interpretations and those parts of the Companies (Guernsey) Law 2008 applicable to Companies reporting under IFRS. The 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.

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FUNCTIONAL AND PRESENTATION CURRENCY

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

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BASIS OF CONSOLIDATION

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

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

����� Exposure, or rights, to variable returns from its involvement with the investee

����� The ability to use its power over the investee to affect its returns.

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

����� The contractual arrangement with the other vote holders of the investee.

����� Rights arising from other contractual arrangements.

����� The Group's voting rights and potential voting rights.

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

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

Acquisition related costs are expensed as incurred.

The Group measures goodwill at the acquisition date as the excess of the fair value of the consideration transferred, plus the recognised amount of any non-controlling interests, less the recognised amount of the identifiable assets acquired, and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss as a bargain purchase. Before recognizing a gain on a bargain purchase, an assessment is made as to whether all assets acquired, and liabilities assumed have been correctly identified. The fair value measurement of the identifiable net assets and cost of acquisition is also reviewed to evaluate whether all available information at the acquisition date has been considered.

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

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

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

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

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As at 31 December 2019, the Group held equity interests in the following undertakings:

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Subsidiary undertakings	Proportion held of voting rights	Country of incorporation	Nature of business
Direct investments	�	�	�
Woodbois Services Limited	100%	United Kingdom	Shared services
Woodbois Trading Limited	100%	Hong Kong	Financier
Argento Limited	100%	Mauritius	Holding / treasury company - Forestry and Trading
Woodbois International Limited	100%	Mauritius	Dormant
Montara Limited	100%	Mauritius	Dormant
Woodbois Liberia Inc.	100%	Liberia	Forestry
�	�	�	�
Indirect investments of Argento Limited			�
Argento Mozambique Limitada	100%	Mozambique	Holding company & Forestry
Madeiras SL Limitada	100%	Mozambique	Forestry
Jardim Zambezia Limitada	100%	Mozambique	Forestry
Baia Branca Limitada	100%	Mozambique	Forestry
Ligohna Timber Products Limitada	100% �	Mozambique	Forestry
Montara Forest Lda	100%	Mozambique	Forestry
Petroforge Mozambique Lda	100% �	Mozambique	Forestry
WoodBois International ApS	100%	Denmark	Timber Trading
WoodGroup ApS	100%	Denmark	Timber Trading
Woodbois Gabon	100%	Gabon	Forestry
SCI Yarim	100%	Gabon	Property holding
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Intra-group transactions������������

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

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Changes in Accounting policies

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a)����������� New and amended standards adopted by the Group

The following IFRS or IFRIC interpretations were effective for the first time for the financial year beginning 1 January 2019. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements:

Standards /interpretations	Application
IFRS 16	Leases
Annual Improvements	2015 - 2017 Cycle
IFRIC 23 - interpretation 23	Uncertainty over Income Tax Treatments
IFRS 9 amendments	Prepayment Features with Negative Compensation
IFRS 19 amendments	Plan Amendment, Curtailment or Settlement
IFRS 28 amendments	Long-term Interests in Associates and Joint Ventures

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The effects of the first year adoption of IFRS 16 has been assessed by management and summarised within the Leases accounting policy.

The Group has also elected to adopt the following amendment early:

IAS 1 and IAS 8 Amendments

Definition of Material

b)����������� New and amended standards not yet adopted by the Group

Standards /interpretations	Application
IFRS 3 amendments	Business Combinations: Effective 1 January 2020*
�	*Subject to EU endorsement

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There are no IFRS's or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company or Group.

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SEGMENTAL REPORTING������������

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

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

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Revenue recognition

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

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

Step 2: Identify the performance obligations in the contract;

Step 3: Determine the transaction price;

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

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

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

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

The Group currently has the following revenue streams:

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���� Timber and veneer sales are recognised following the five-step approach outlined above. The performance obligation set out in step two is when the risk and reward of the goods is transferred to the customer, and is transferred at the earlier of:

o� when goods are sold subject to a letter of credit, on the date that the buyer's bank approves the transfer; or

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

o� when the bill of lading is exchanged with the buyer.

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

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

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FOREIGN CURRENCIES

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

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

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�	At 31 December �2019	Annual average for 2019	At 31 December �2018	Annual average for 2018
UK Pound	1.31	1.28	1.27	1.33
Mozambique Metical	61.46	62.49	60.67	59.87
Danish Krone	6.67	6.68	6.52	6.232
West African CFA franc	585.68	586.78	573.02	556.55

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

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

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LEASES

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The Group adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application of 1 January 2019. Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application. The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application. The Group also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a remaining lease term of 12 months or less and do not contain a purchase option ("short?term leases"), and lease contracts for which the underlying asset is of low value ("low?value assets").

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a)����������� Nature of the effect of adoption of IFRS 16

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Under the adoption of IFRS 16, the Group applied a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets.� The standard provides specific transition requirements and practical expedients, which have been applied by the Group.

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Lease previously classified as finance leases

The Group did not change the initial carrying amounts of recognised assets and liabilities as the date of initial application for leases previously classified as finance leases (i.e., the right-of-use assets and lease liabilities equal the leased assets and liabilities recognized under IAS 17).� The requirements of IFRS 16 were applied to these leases from 1 January 2019.

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Leases previously classified as operating leases

The Group leases various offices.� Rental contracts are typically for fixed periods of one month to six months with no right to purchase. Based on the nature of such leases and the qualitive impact on the Group, these leases have not been recognised as right-of-use assets.

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The Board has evaluated the effect of adopting IFRS 16 on the Group's consolidated balance sheet and consolidated statement of comprehensive income (loss) as at 1 January 2019 and has concluded that the impact is not material.

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b)��� Summary of new accounting policies

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Set out below are the new accounting policies of the Group upon adoption of IFRS 16:

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Short?term leases and leases of low?value assets

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

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DISCONTINUED OPERATIONS

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A discontinued operation is a component of the Group's business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:

���� represents a separate major line of business or geographic area of operations;

���� is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or

���� is a subsidiary acquired exclusively with a view to re-sale.

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Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale.

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When an operation is classified as a discontinued operation, the comparative statement of profit or loss and OCI is re-presented as if the operation had been discontinued from the start of the comparative year.

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Property, PLANT AND EQUIPMENT

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

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

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

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

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

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

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

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Motor Vehicles���������������������������������������������������������������� over 3 years

Fixtures and IT equipment������������������������������������������ over 3 years

Plant and equipment ��������������������������������������������������� over 2 - 5 years

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Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

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IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT

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

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

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

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

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

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biological assets

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A biological asset is defined as a living animal or plant. The Group's biological assets comprise standing timber. The fair value of the standing timber is determined using models based on expected yields, market prices for the saleable produce, over 20 years, after allowing for harvesting costs and other costs yet to be incurred in getting the produce to maturity. Any changes in fair value are recognised in the income statement in the year in which they arise.

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Forestry

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

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

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

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

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CONVERTIBLE BONDS

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

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FINANCIAL INSTRUMENTS

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(a)� Classification

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

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

���� those to be measured at amortised cost.

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

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For assets measured at fair value, gains and losses will be recorded either in profit or loss or in OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). See Note 16 for further details.

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(b) Recognition

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

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(c) Measurement

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

Debt instruments�

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

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

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(d) Impairment

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From 1 January 2018, the Group assesses, on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

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

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INVENTORIES

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

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

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eMPLOYEE benefits

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short-term employee benefits

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

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

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SHARE-BASED PAYMENT ARRANGEMENTS

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

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The fair value of the options granted is measured using a modified Black Scholes valuation model for options, taking into account the terms and conditions under which the options were granted.� The amount recognised as an expense is adjusted to reflect the actual number of share options that vest.

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PROVISIONS

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

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

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

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TAXATION

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

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CURRENT TAX

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Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.

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

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DEFERRED TAX

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

Deferred tax is not recognised for:

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

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

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

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

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

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

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

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

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BORROWINGS

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

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

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EARNINGS PER SHARE

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

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

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

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GOING CONCERN

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

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The assessment has been made of the Group's prospects, which have been included in the financial budget, and from managing working capital. Consideration has been given inter alia, to the current stage of the Group's life cycle, its losses and cash outflows, the expected timing of revenues and the ability of the Directors to raise further funds either through debt, equity, or asset sales, or deferral of liabilities, their current assessment of financial and operational risk and their best estimate of the impact of COVID-19 on operations and the material uncertainties arising therefrom.

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In January 2020 the Group's forecast for the financial year showed a movement into positive operational cash flow around mid-year, having taken account of the effects of the cash flow enhancement measures announced. However, on 27 March 2020 it announced that the rapid pace of developments in connection with COVID-19 had caused such fundamental levels of uncertainty that, in common with many other companies, the Board withdrew any guidance on the financial outcome for 2020 until its implications could be assessed reliably.

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Current internal forecasts based on information available at the date of the approval of these financial statements and using a variety of scenarios indicate that the Company will need to secure further funds, including from issuing equity, debt or asset sales, or the deferral of liabilities, in order to meet its liabilities as they fall due in the next 12 months. In the light of enquiries made, as well as bearing in mind the proven ability of the Company to raise funds previously, the Directors have a reasonable expectation that the Group has or will have access to adequate resources to continue in operational existence for the foreseeable future and therefore have adopted the going concern basis of preparation in the financial statements.

�

The auditors make reference to a material uncertainty in relation to going concern within the audit report.

�

CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT

�

The preparation of the consolidated financial statements requires management to make estimates and judgements and form assumptions that affect the reported amounts of the assets, liabilities, revenue and costs during the periods presented therein, and the disclosure of contingent liabilities at the date of the financial statements. Estimates and judgements are continually evaluated and based on management's historical experience and other factors, including future expectations and events that are believed to be reasonable. The estimates and assumptions that have a significant risk of causing a material adjustment to the financial results of the Group in future reporting periods are discussed below.

�

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

���� Residual values and useful lives of property, plant and equipment: refer to note 10

���� Fair value of biological assets: refer to note 11

���� Provision for doubtful debts: Refer to note 14

���� Convertible bond liability: refer to note 17

���� Fair value of assets on business combination: refer to note 23

���� Impairment- consideration receivable: refer to note 24

���� Share Based Payments: refer to note 25

���� The impact of COVID-19; refer to note 28 and Going Concern above.

�

2. SEGMENTAL REPORTING

�

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

�

The Group is currently focused on forestry and timber trading. These are the Group's primary reporting segments, operating in Gabon, Mozambique, Denmark and head office operating from Mauritius and UK.

�

As on 31 December 2019 sales made to one customer during the year accounted for 12% (2018:12%) of the total turnover. Sales made to a second customer during the year accounted for 11% (2018:11%) of the total turnover.

�

The Group's Chairman and Chief Executive Officer reviews the internal management reports of each division at least monthly.

�

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

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

�

�

�	Forestry	Trading	Unallocated head office costs	Total
�	$000	$000	$000	$000
Income statement	�	�	�	�
Turnover	6,850	12,609	-	19,459
Cost of Sales	(5,237)	(11,459)	-	(16,696)
Gross profit	1,613	1,150	-	2,763
Other income	75	21	14	110
Operating costs	(3,396)	(1,330)	-	(4,726)
Administrative expenses	(22)	(391)	(1,002)	(1,415)
Depreciation	(230)	(63)	(13)	(306)
Share based payment expense	(98)	(124)	(9)	(231)
Foreign exchange (loss) / gain	6	267	(2)	271
Contingent acquisition expense	(478)	(478)	-	(956)
Fair value gain	-	-	4,602	4,602
Segment operating profit / (loss)	(2,530)	(948)	3,590	112
Finance costs	(913)	(1,088)	(8)	(2,009)
Loss before taxation	(3,443)	(2,036)	3,582	(1,897)
Taxation	(58)	4	-	(54)
Loss for the year from Continuing Operations	(3,501)	(2,032)	3,582	(1,951)
�	�	�	�	�
NET ASSETS	�	�	�	�
Assets:	216,360	12,380	313	229,053
Liabilities:	(3,048)	(22,557)	(23,606)	(49,211)
Deferred tax liability	(62,655)	-	-	(62,655)
Net assets	150,657	(10,177)	(23,293)	117,187
OTHER SEGMENT ITEMS	�	�	�	�
Capital expenditure:	�	�	�	�
Biological assets	194,708	-	-	194,708
Property, plant and equipment	20,253	48	22	20,323

����������������������������������������������� �

�

The following table shows the segment analysis of the Group's loss before tax for the year and net assets at 31 December 2018. All amounts are disclosed after taking into account any intra-segment and intra-group eliminations:

�

�	Forestry	Trading	Unallocated head office costs	Total
�	$000	$000	$000	$000
Income statement	�	�	�	�
Turnover	5,579	7,869	-	13,448
Cost of Sales	(4,397)	(6,937)	-	(11,334)
Gross profit	1,182	932	-	2,114
Other income	5	-	155	160
Operating costs	(3,443)	(1,330)	(583)	(5,356)
Administrative expenses	-	(290)	(1,816)	(2,106)
Depreciation	(408)	(66)	-	(474)
Share based payment expense	(422)	(151)	(85)	(658)
Foreign exchange loss / (gain)	(38)	(411)	712	263
Contingent acquisition expense	-	(860)	-	(860)
Gain on disposal of Tanzanian business	-	-	176	176
Gain on fair value of Biological assets	1,611	-	-	1,611
Segment operating loss	(1,513)	(2,176)	(1,441)	(5,130)
Finance costs	-	(201)	(243)	(444)
Loss before taxation	(1,513)	(2,377)	(1,684)	(5,574)
Taxation	(585)	(366)	-	(951)
Loss for the year from Continuing Operations	(2,098)	(2,743)	(1,684)	(6,525)
�	�	�	�	�
NET ASSETS	�	�	�	�
Assets:	159,944	56,572	11,686	228,202
Liabilities:	(16,606)	(28,532)	9,107	(36,031)
Deferred tax liability	(62,655)	-	-	(62,655)
Net assets	80,683	28,040	20,793	129,516
OTHER SEGMENT ITEMS	�	�	�	�
Capital expenditure	�	�	�	�
Biological assets	194,708	-	-	194,708
�� Property, plant and equipment	16,958	113	10	17,081

�

3.� OPERATING LOSS

�	2019	2018
�	$000	$000
Operating loss is stated after charging/(crediting):	�	�
Depreciation of property, plant and equipment	1,393	1,625
Staff costs (see note 4)	3,508	4,987
Share based payment reserve expense (see note 26)	231	712
Operating lease costs	69	73
Gain on fair value of Biological assets (see note 13)	-	(1,611)
Inventory provisions	(244)	295
Auditor's remuneration:	�	�
Audit services	�	�
- fees payable to the Company auditor for the audit of the consolidated accounts	53	50
Fees payable to associates of the Company auditor	�	�
- auditing the accounts of subsidiaries pursuant to legislation	76	65

�

4.� EMPLOYEE INFORMATION

�	2019	2018
�	Number	Number
The average monthly number of persons (including Directors) employed by the Group during the year was:	�	� �
Administration and management	4	4
Agriculture	1	247
Forestry	257	192
Trading	10	6
�	272	449
�	�	�
�	2019 $000	2018 $000
The aggregate remuneration comprised:	�	�
Wages and salaries	3,239	4,236
Social security costs	38	39
Share based payments	231	712
�	3,508	4,987
� Directors' remuneration included in the aggregate remuneration above comprised:	�������������������������� 2019 $000	� 2018 $000
�	�	�
Emoluments for qualifying services	1,229	1,513

�

Included above are emoluments of $243,000 (2018: $252,000) in respect of the highest paid Director. Deferred acquisition payments arising from the acquisition of Woodbois International ApS are excluded in both periods. Full details of directors' remuneration are included in the Directors' Report.

�

Pension contributions of $17,894 (2018: $17,769) were made on behalf of the Directors and other staff members.

�

5. Other INCOME

�	2019	2018
�	$000	$000
Bad debt recovered	3	154
Discount received	74	-
Administrative fees	22	-
Other	11	6
�	110	160

�

6. FINANCE COSTS

�	2019	2018
�	$000	$000
Bank interest	335	202
ITF interest	1,197	242
Interest accrued on convertible bonds	477	-
�	2,009	444

7. TAXATION

�	2019	2018
�	$000	$000
Current tax:	�	�
Corporation tax on profit for the year	(54)	(79)
Deferred tax:	�	�
Origination and reversal of temporary differences	-	(872)
Tax on PROFIT / (loss) on ordinary activities	(54)	(951)
�	�	�
�	�	�
Group	$000	$000
Loss on ordinary activities before tax	������������ (4,790)	������������ (6,872)
�	�	�
Loss on ordinary activities multiplied by the average rate of corporation tax of 20% (2018: 22%)	(958)	(1,512)
Effects of:	�	�
Losses not recognised for deferred tax	955	853
Losses recognised for deferred tax	-	99
Fair value gain	(920)	-
Differences in overseas tax rates	156	-
Loss allowance	(4)	18
Gain on disposal of Tanzanian business	-	(39)
Share based payment expense	46	157
Unutilised losses from prior years	�	-
Non-deductible expenses	671	-
Effect of movement in fair value of biological assets	-	(527)
GROUP Tax CREDIT for the year	(54)	(951)

�

The prevailing tax rates of the operations of the Group range between 3% and 32%. Therefore, a rate of 20% has been used as it best represents the weighted average tax rate experienced by the Group. The Group has estimated losses of $17.6 million (2018: $11.2 million) available for carry forward against future taxable profits. Tax losses utilized during the year related principally to profits realised by subsidiaries in certain jurisdictions and tax gains realised on liquidation of various subsidiaries. No deferred tax assets have been recognised in respect of losses due to the unpredictability of future taxable profit. All unused tax losses may be carried forward indefinitely.

�

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

�	� 2019	� 2018
Deferred tax liabilities	$000	$000
At 1 January	62,655	61,728
Increase in deferred tax liability	-	527
Decrease in deferred tax asset	-	400
At 31 December	62,655	62,655

�

Deferred tax reconciliation

�	� 2019	� 2018
Deferred tax assets / liabilities	$000	$000
Deferred tax liability on the fair value adjustment of Biological Assets	(60,601)	(60,601)
Deferred tax liability on the fair value adjustment on property, plant and equipment	� (2,054)	� (2,054)
At 31 December	(62,655)	(62,655)

�

�

8.� EARNINGS PER SHARE

�

Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year excluding own shares held jointly by the Woodbois Employee Share Trust, "The Trust", and certain employees.

�

There is no diluted earnings per share due to the Group being in a loss-making position in the period and the prior period.

�	2019	2018
�	$000	$000
Loss from continuing operations attributable to owners of the parent	(3,005)	(6,603)
Loss from discontinued operations attributable to owners of the parent	(2,893)	(1,446)
Total loss attributable to owners of the parent	(5,898)	(8,049)
� Weighted average number of ordinary shares	�	�
Weighted average number of ordinary shares in issue	450,019,220	326,021,863
Weighted average number of ordinary shares used in calculating earnings per share	450,019,220	326,021,863
Earnings per share from continuing operations	�	�
Basic (cents)	(0.67)	(2.03)
Earnings per share from discontinued operations	�	�
Basic (cents)	(0.64)	(0.44)

�

9. Discontinued operations

�

During the previous financial year, the Group announced its intention to dispose of its Tanzanian assets. The agricultural operation has been accounted for as a discontinued operation from 31 October 2018.

�

At 31 December 2018 the Group disposed of the agricultural business and assets in Tanzania, namely Magole Agriculture Limited, Milama Processing Company Limited, Magole Land Limited and Wami Agriculture Co. Limited.� Mama Jo's Fresh Limited was deregistered on 21 July 2018.

�

Results of disposal Group:

�	2019 $000	2018 $000
Turnover	-	109
Cost of sales	79	(931)
Gross profit / (loss)	79	(822)
Other income	-	116
Operating costs	(167)	(533)
Administrative expenses	(82)	(146)
Share based payments	-	(54)
Impairment of amounts due on sale of Discontinued Operations	(2,502)	-
Foreign exchange gain / (loss)	(221)	(7)
Loss before tax	(2,893)	(1,446)
Taxation	-	-
Loss after tax	(2,893)	(1,446)

�

�	2019 $000	2018 $000
Net cash inflows from operating activities	87	575
Net cash inflows from investing activities	-	2
Net cash outflows from financing activities	(90)	(760)
Net decrease in cash used in Discontinued Operations	(3)	(183)

�

The Group continued to account for non-cancellable leases amounting to $12,945 relating to African Home Stores business, which was discontinued in 2016. This lease expired as at 30 November 2019.

�

The following table summarises the recognised amounts of assets disposed measured at fair value:

�

�	2019	2018
�	$000	$000
Fixed Assets	-	2,109
Inventory	-	215
Total identifiable assets disposed	-	2,324
�	�	�
Cash flows on disposal	�	�
Consideration - cash	-	(2,015)
Consideration - buyer assumed loan	-	(485)
Total consideration	-	(2,500)
Gain on disposal	-	176

�

The cash consideration was payable by the buyer in 12 quarterly instalments. The first instalment of $250,000 was payable on 30 April 2019. The 11 subsequent instalments shall be equal amounts of $160,455.

�

As at 31 December 2019, the cash consideration has not been received and whilst the Group remains in discussions with the purchaser and reserves all its legal rights it has been deemed prudent to fully impair this amount.

�

The non-cash consideration relates to a loan amounting to $484,902 which was assumed by the buyer.

�

Total assets and liabilities held by the Group at the year-end in relation to the discontinued operations amounted to $49,000 (2018 - $195,000) and $9,000 (2018 - $306,000) respectively.

�

10. PROPERTY, plant and equipment

�		Land & buildings	Motor vehicles	Plant & equipment	Fixtures & IT equipment		Total
�		$000	$000	$000		$000	$000
Cost		�	�	�	�		�
At 1 JANUARY 2018		9,405	2,505	7,488	272		19,670
Additions		1,066	1,116	1,619	6		3,807
Disposal of subsidiary		(1,180)	(65)	(1,081)	(10)		(2,336)
Disposals (other)		-	(63)	(116)	(131)		(310)
Effects of foreign exchange		(502)	(260)	(1,926)	(2)		(2,690)
At 31 December 2018		8,789	3,233	5,984	135		18,141
Additions		-	1,097	3,897	22		5,016
Reclassification		(337)	-	337	-		-
Disposals		-	(13)	(47)	(16)		(76)
Effects of foreign exchange		(171)	(43)	215	(1)		-
At 31 December 2019		8,281	4,274	10,386	140		23,081
�		�	�	�	�		�
Depreciation		�	�	�	�		�
At 1 JANUARY 2018		208	205	1,502	14		1,929
Charge for the year		144	524	935	22		1,625
Disposal of subsidiary		(78)	(22)	(124)	(3)		(227)
Disposals (other)		-	(20)	-	-		(20)
Effects of foreign exchange		87	(167)	(2,165)	(2)		(2,247)
At 31 December 2018		361	520	148	31		1,060
Charge for the year		47	555	763	28		1,393
Disposals		-	(7)	(18)	(8)		(33)
Effects of foreign exchange		(337)	55	620	-		338
At 31 December 2019		71	1,123	1,513	51		2,758
�	�			�	�		�	�
Net book value	�		�	�	�		�
At 31 December 2019	8,210		3,151	8,873	89		20,323
At 31 December 2018	8,428		2,713	5,836	104		17,081
�	�	�	�	�	�	�	�	�

�

Motor vehicles having a net book value of USD 262,732 (2018: USD 397,583) are pledged as security on car loans (see also note 16).

�

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

�

11.� biological assets

�	�	2019	2018
Standing timber	�	$000	$000
Carrying value at beginning of year	�	194,708	192,501
Increases due to purchases	�	-	596
Gains / (losses) arising from changes in fair value	�	-	1,611
Carrying value at end of year	�	194,708	194,708

�

The methods and assumptions used in determining the fair value of standing timber within the forestry concessions held has been based on IAS 41 Agriculture which uses discounted cash flow models and which require a number of significant judgements to be made by the Directors in respect of sales price, operational cost, discount rates, legislative rulings and operating effectiveness.� Following the fair value assessment in 2019 the value has not materially changed.

�

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

�

Harvesting levels are regulated by the Annual Permitted Cut ("APC") (total m3 per species) set in each management plan and approved at federal and provincial government level and can be reviewed and increased periodically, while continued sustainability is ensured.� The level of assumed APC varies between 89,525m3 and 200,000m3 and at a maximum represents 100% of the APC. This is based on the current APC which may be subject to change depending on legislative changes both with regards to the size of the area and species. Such changes may impact the carrying value of the biological assets held.

�

The valuation models assume pre-tax discount rates between 10% and 12% depending on geography. The discount rates have been calculated using a weighted average cost of capital ("WACC") methodology. Our comparable company base is made up of Africa-focused and global forestry companies which management consider would be categorized in the same sector as Woodbois. Relevant country and equity risk premiums have been used for Gabon and Mozambique. Management have determined that, the discount rates are in line with the overall industry consensus for timberland assets within Africa.

�

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

�

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

�

Fair value has been determined internally by discounting a 20-year pre-tax cash flow projection (Level 3 of the fair value hierarchy) based on a mix of wood species within the concession areas. Real cost of production has been factored in going forward.

�

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

�

�	Impact on fair value of biological asset �
�	2019	2018
�	$ 000	$ 000
Effect of increase in discount rate by 1%	(15,501)	(15,501)
Effect of decrease in discount rate by 1%	18,636	18,636
�	�	�
Effect of 10% increase in volume of APC	18,423	18,730
Effect of 10% decrease in volume of APC	(18,423)	(18,730)
�	�	�
Effect of 10% increase in sales price	38,219	38,979
Effect of 10% decrease in sales price	(38,219)	(38,979)

�

12.� TRADE AND OTHER RECEIVABLES

�	2019	2018
�	$000	$000
Trade receivables	2,229	2,874
Other receivables	213	824
Deposits	40	35
Consideration due - sale of Tanzanian business - current portion (note 10)	-	659
Current tax receivable	20	-
VAT receivable	445	242
Prepayments	3,176	1,290
�	6,123	5,924

�

The Directors consider that the carrying amount of trade and other receivables approximates their fair value.� Refer to Note 14 for details of the trade debt aging profile and Note 16 for the Group's impairment policy.

�

13.� INVENTORY

�	2019	2018
�	$000	$000
Timber and veneer	3,879	5,216
Stock in transit	2,530	1,522
�	6,409	6,738

�

Write-back of provisions for net realisable value amounted to $244,000 (2018 - write downs of $295,000). These were recognised as income during the year ended 31 December 2019 and included in 'cost of sales' in profit or loss.

�

14. financial INSTRUMENTS

�

Capital risk management

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

�

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

�

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

�

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

�

Categorisation of financial instruments

2019 � Financial assets/(liabilities)	Financial assets at amortised cost	Financial assets at fair value	Financial liabilities at amortised cost	Financial liabilities at fair value	Total
�	$000	$000	$000	$000	$000
Trade and other receivables	6,123	-	-	-	6,123
Cash and cash equivalents	1,490	-	-	-	1,490
Trade and other payables	-	-	(4,801)	-	(4,801)
Borrowings	-	-	(19,888)	-	(19,888)
Convertible bond liability	-	-	(23,547)	-	(23,547)
Contingent acquisition liability	-	-	(975)	-	(975)
�	7,613	-	(49,211)	-	(41,598)

�

2018 � Financial assets/(liabilities)	Financial assets at amortised cost	Financial assets at fair value	Financial liabilities at amortised cost	Financial liabilities at fair value	Total
�	$000	$000	$000	$000	$000
Trade and other receivables	5,924	-	-	-	5,924
Cash and cash equivalents	1,910	-	-	-	1,910
Trade and other payables	-	-	(5,571)	-	(5,751)
Borrowings	-	-	(10,110)	-	(10,110)
Preference share liability	-	-	(13,901)	-	(13,901)
Contingent acquisition liability	-	-	(1,269)	-	(1,269)
�	7,834	-	(30,851)	-	(23,017)

�

Fair value measurements recognised in the statement of financial position

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

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

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

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

�

At the year end, included in property, plant and equipment, there is land and buildings held at fair value of $7.2m (2018: $7.2m) measured in accordance with level 1 and Biological Assets of $194.7m (2018: $194.7m) measured in accordance with level 2 of the fair value hierarchy.

�

Equity price Risk

�

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

�

Management of market risk

�

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

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

�

The majority of the Company's debt is based on fixed interest rates with no link or exposure to movements in LIBOR. The trade finance facility that the Company raised over the course of 2018 and 2019 is priced below all of the quotes received for a trade finance facility from institutions active in Africa.

�

Woodbois also has the option to wind up the trade finance facility within a 4-month timeframe, after an initial 12-month period should more attractive financing rates be secured.

�

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

�

�	�	2019	2018
�	�	$000	$000
+ 20 bp increase in interest rates	�	(48)	(20)
+ 50 bp increase in interest rates	�	(123)	(51)
+ 100 bp increase in interest rates	�	(248)	(101)

�

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

�

�	2019	2018	2019	2018	2019	2018
�	Fixed �rate	Fixed �rate	Floating rate	Floating rate	Total	Total
Group	$000	$000	$000	$000	$000	$000
Cash and cash equivalents	-	-	1,490	1,910	1,490	1,910
Borrowings	(19,888)	(10,110)	-	-	(19,888)	(10,110)
Preference share liability	-	(13,901)	-	-	-	(13,901)
Convertible bond liability	(23,547)	-	�	�	(23,547)	-
Total	(43,435)	(24,011)	1,490	1,910	(41,945)	(22,101)

�

�

The impact of a 10% increase/decrease in the average base rates would be $1 million (2017: $0.7 million) on total cash and cash equivalents balances, borrowings and on equity.

�

Management of credit risk

�

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

�

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

�

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

�

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

�

�	�	�	�	2019 Carrying Value	2019 Maximum Exposure	2018 Carrying Value	2018 Maximum Exposure
�	�	�	�	$000	$000	$000	$000
Cash and cash equivalents	�	�	�	1,490	1,490	1,910	1,910
Trade and other receivables	�	�	�	6,407	6,407	3,975	3,975
Total	�	�	�	7,897	7,897	5,885	5,885

�

Trade receivables

�

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

�

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

�

The expected loss rates are based on the payment profiles of sales over a period of 36 month before 31 December 2019 or 1 January 2020 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The group has identified the GDP, COVID-19 and the unemployment rate of the countries in which it sells its goods to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors.

�

On that basis, the loss allowance as at 31 December 2019 and 31 December 2018 were determined as follows for both trade receivables and contract assets:

�

� � � �	More than 120 days past due	More than 90 days past due	More than 60 days past due	More than 30 days past due	Current	Total
31 December 2019	�	�	�	�	�	�
Expected loss rate	12.28%	0%	0%	0%	0%	2.70%
Gross carrying amount - trade receivables	490	74	118	582 �	965	2,229
Loss allowance	(60)	-	-	-	-	(60)
�	�	�	�	�	�	�
31 December 2018	�	�	�	�	�	�
Expected loss rate	1.96%	4.86%	0%	0%	0%	2.5%
Gross carrying amount - trade receivables	2,197	803	89	(43)	203	3,249
Loss allowance	(43)	(39)	-	-	-	(82)

�

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

�	2019	2018
�	$000	$000
Opening loss allowance at 1 January	82	-
Increase in loss allowance recognised in profit / (loss) during the year	1	82
Receivables written off during the year as uncollectible	(23)	-
Closing loss allowance at 31 December	60	82

�

Management of foreign exchange risk

�

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

�

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

�	�	�	2019	2018
�	�	�	$000	$000
Cash and cash equivalents	�	�	�	�
GBP	�	�	5	55
EUR	�	�	1,340	27
DKK	�	�	4	-
CFA	�	�	104	59
MUR	�	�	1	-
MZN	�	�	33	16
HKD	�	�	-	-
USD	�	�	3	1,753
Total	�	�	1,490	1,910

�

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

�

�	2019	2018	2019	2018
�	Income Statement	Income Statement	Equity	Equity
Impact of 10% rate change	$000	$000	$000	$000
Cash and cash equivalents	104	9	104	9

�

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

�

Management of liquidity risk�

�

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

�

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

�

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

�	�	2019	2018
�	�	$000	$000
Cash at bank	�	1,490	1,910
�	�	1,490	1,910

�

�

ContracTual maturity analysis

�

The Group has assessed the contractual maturity analysis as follows:

� 2019	� 0-3 months	� 3-12 months		� 1 - 5 years	� Total
�	$000	$000		$000	$000
Assets by contractual maturity	�		�
trade and other receivables	1,739	4,384		-	6,123
Cash and cash equivalents	1,490	-		-	1,490
�	3,229	4,384		-	7,613
�	�	�		�	�
Liabilities by contractual maturity				�	�
Trade and other payables	(4,894)	(185)		-	(5,079)
Borrowings	-	-		(19,888)	(19,888)
Convertible bond liability	-	-		(23,301)	(23,301)
Contingent acquisition liability	-	-		(975)	(975)
�	(4,894)	(185)		(44,164)	(49,243)
�	�	�		�	�
Net liabilities by contractual maturity	(1,665)	4,199		(44,164)	(41,630)
�	�	�	�	�	�

�

2018		0-3 months	3-12 months		1 - 5 years	Total
�		$000	$000		$000	$000
Assets by contractual maturity	�			�
trade and other receivables		2,290	3,634		-	5,924
Cash and cash equivalents		1,910	-		-	1,910
�		4,200	3,634		-	7,834
�		�	�		�	�
Liabilities by contractual maturity					�	�
Trade and other payables		(5,390)	(361)		-	(5,751)
Borrowings		-	-		(10,110)	(10,110)
Preference share liability		-	-		(13,901)	(13,901)
Contingent acquisition liability		-	-		(1,269)	(1,269)
Other related party payables		-	-		-	-
�		(5,390)	(361)		(25,280)	(31,031)
�		�	�		�	�
Net liabilities by contractual maturity		(1,190)	3,273		(25,280)	(23,197)
�	�	�	�	�	�	�

�

�

15.� TRADE AND OTHER PAYABLES

�	�	2019	2018
�	�	$000	$000
Trade payables	�	1,256	2,621
Accruals	�	1,498	588
Contract liabilities	�	1,139	1,249
Current tax payable	�	55	27
Other payables	�	383	905
Related party loan (Note 27)	�	285	-
Debt due to concession holders	�	185	361
�	�	4,801	5,751

���������������������������������������������������������������������������������������

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

�

16.� BORROWINGS

�	�	2019	2018
�	�	$000	$000
Non-Current liabilities	�	�	�
Business loans	�	1,227	1,256
Internal Trade Finance Fund ("ITF")	�	12,311	3,804
Car loans	�	7	26
�	�	13,545	5,086
�	�	�	�
Current liabilities	�	�	�
Business loans	�	1,391	613
Bank overdraft	�	2,988	4,394
Working capital facility	�	1,944	-
Car loans	�	20	17
�	�	6,343	5,024
Total	�	19,888	10,110

�

�

As at 31 December the Trading division had the following outstanding borrowings:

�

Business loan with a Danish bank that amounted to $1.2 million (2018: $1.2 million). The business loan carries an interest rate of 2.64%. The purpose of the loan is for financing timber trades.

�

Car Loans with a Danish bank that amounted to $27k (2018: $44k). The car loans carry an interest rate of 2.25% and 2.5%.

�

Bank overdraft facilities with a Danish bank that amounted to $3.0 million (2018: $3.8 million). The Bank overdraft facilities carry interest rates of 2.205% and 5.859%.

�

Working capital facilities with a Danish bank that amount to $1.9 million (2018: nil).� This facility carries interest rates of 2% (Euro and DKK) and 3.75% (USD).

�

As on 31 December the Forestry division had the following outstanding borrowings:

�

Business loans with a Gabonese bank that amounted to $1.4 million (2018: nil). These loans carry an interest rate of 10%. The purpose of the loans is for financing capital expansion.

�

The Group signed a combined security to the value of $2.7 million, which includes securities over the property, plant and equipment, the total inventories and total trade receivables.

�

The Group has also signed a security in favour of a Danish bank to the value of $0.7 million.

�������������������������������������������������������������������������������������������������������������������������������������������

As at 31 December 2019 the Group had raised $12.3 million (2018: $3.8 million) in the form of an Internal Trade Finance Fund. The ITF is covered by selected stock, debtors and group loans and it bears interest at 11.5%, calculated daily, compounded semi-annually.� A notice period of 3 months applies to all fund withdrawals.

�

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

�

The Group had undrawn facilities available at 31 December 2019 amount to $0.6m (2018: $5k).

�

17. CONVERTIBLE BONDS

�	�	2019	2018
�	�	$000	$000
Convertible bonds: Liability component	�	23,547	-
Convertible bonds: Equity component	�	1,495	-
Total	�	25,042	-
�	�	�	�
Convertible bond liability	�	23,070	-
Interest accrued	�	477	-
Total	�	23,547	-

�

During the year the Company restructured the 5% perpetual preference shares in Woodbois subsidiary, Argento Limited, by buying it back and issuing the holders instead with Convertible Bonds in Woodbois Limited ("Bonds").� The Woodbois Convertible Bond has a maturity of not later than 30 June 2024, 4% coupon and conversion price of 8p per share, being a maximum total of all the Bonds on conversion of 300 million ordinary shares. 100% of preference shareholders accepted the switch terms. The switch is from a preference share with variable conversion terms linked to a subsidiary company, to a bond convertible into Woodbois Limited Ordinary Shares at a fixed rate.

�

On 21 October 2019, the Company completed the purchase of the full 75,000 preference shares in issue and Neville Registrars Limited, who were appointed by the Company to act as transfer agent, issued 4% convertible bonds, convertible no later than 30 June 2024. The Bonds have been issued in registered form with a nominal value of USD 1 each. The Bonds are freely transferable and rank as senior debt of the Company but are not secured.

�

The Company may redeem all but not some only of the Bonds at their principal amount, together with accrued but unpaid interest in the following circumstances: (i) if after 30 January 2020, the volume weighted average price of an ordinary share on 10 dealing days in any period of 30 consecutive days is greater than GBP0.12; or (ii) not less than 90% by principal amount of Bonds have been redeemed or converted.

�

The Takeover Panel deems that the holders of the Preference Shares/Bonds to be a 'concert party' for the purposes of the Takeover Code. Upon conversion of all the Bonds, the new ordinary shares so issued would account for 39.2% of then enlarged issued Ordinary Share Capital at 31 December 2019.

�

Under Rule 9 of the Takeover Code, where any person acquires interests in securities which carry 30 per cent, or more of the voting fights of the Company, that person is normally required by the Takeover Panel to make a general offer to the shareholders of the Company to acquire their shares.

�

In order to avoid an inadvertent breach of Rule 9 of the Takeover Code, Pelham Limited (a company controlled by Miles Pelham, the former chairman of the Company), the owner of approximately $20.0m of the face value of the Bonds, has undertaken to the Company that its interest when aggregated with shares issued to and retained by all other bondholders or owned by any of the parties, will not at any time exceed 28.0% of the enlarged issued Ordinary Share capital of the Company.� Paul Dolan, Chairman and CEO, owns $0.4m of the Bonds and is a member of the Concert Party.

�

18.� PREFERENCE SHARES

�	�	2019	2018
�	�	$000	$000
Preference shares: Liability component	�	-	13,901
Preference shares: Equity component	�	-	14,318
Total	�	-	28,219
�	�	�	�
Preference share liability	�	-	11,932
Interest accrued	�	-	1,969
Total	�	-	13,901

�

As explained in note 17, during the year the Company restructured the 5% perpetual preference shares in Woodbois subsidiary, Argento Limited, by buying it back and issuing the holders instead with a convertible bond issued in Woodbois Limited.

�

�

19.� SHARE CAPITAL

�	�	Number	$000
Authorised:	�	�	�
Ordinary shares of 1p each�	�	Unlimited	Unlimited
Allotted, issued and fully paid:	�	�	�
Ordinary shares of 1p each	�	�	�
AT 1 JANUARY 2018	�	293,279,267	4,500
Shares issued	�	84,172,664	1,117
AT 31 DECEMBER 2018	�	377,451,931	5,617
Shares issued	�	88,000,000	1,140
AT 31 DECEMBER 2019	�	465,451,931	6,757

�

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

�

During the year, 888,000,000 (2018: 84,172,664) ordinary shares with a nominal value of $1,140,379 (2018: $1,117,000) were issued for a cash consideration of $6,432,506 (2018: $9,598,431).

�

On 15 January 2019 40,000,000 ordinary shares with a nominal value of $514,216 (�0.01) were issued for a cash consideration of $2,571,080.

�

On 12 March 2019 32,000,000 ordinary shares with a nominal value of $417,789 (�0.01) were issued for a cash consideration of $2,611,180.

�

On 1 April 2019 16,000,000 ordinary shares with a nominal value of $208,374 (�0.01) were issued for a cash consideration of $1,250,246.

�

In January 2019 the Company accepted subscription to 40,000,000 new Woodbois Limited warrants at 10p, from Volantis, acting through its discretionary investment manager Lombard Odier Asset Management (USA) Corp. In July 2019, a deed of variation amended the subscription price to 8p.

�

Volantis will be entitled to exercise 50% of the warrants at any time during the period commencing on the first anniversary of the drawdown date of the trade finance loan being 1 April 2020 and expiring on the third anniversary of the drawdown date of the Loan Agreement. Up to 50% of the warrants will also be exercisable at any time following the initial drawdown date provided that Volantis has owned 10% or more of the issued share capital of Woodbois prior to exercise.

�

20.� SHARE PREMIUM ACCOUNT

�	2019	2018
�	$000	$000
AT 1 JANUARY	29,954	22,340
Shares issued	5,176	7,614
AT 31 DECEMBER	35,130	29,954

�

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.

�

21.� MERGER RESERVE

�	2019	2018
�	$000	$000
At 31 December	-	44,487

�

The merger reserve arose on shares issued by Woodbois Limited (formerly known as Obtala Limited) to the previous owners of Woodbois Services Limited (formerly known as Obtala Services Limited) under a scheme of arrangement concluded in August 2010. At the AGM of the Company held on 19 June 2019, in accordance with Guernsey Company Law, shareholders approved the transfer of the Merger reserve to retained earnings.

�

22.� ACQUISITIONS�

�

On 31 December 2018, the Group acquired the remaining 25% minority shares and voting interests in Montara Continental Limited.� Since 1 January 2019, the Group has owned 100% of the issued share capital. Montara Continental Limited was liquidated as at 22 January 2020 and its assets transferred to other Group Companies.

�

The purchase price for the sale of shares was made up of the following:

-���� Initial consideration in cash of $2,500,000

- Deferred consideration of $2,500,000 or the issue of 40,000,000 ordinary shares of par value 1p each in the capital of Woodbois Limited

�

The consideration of $5,000,000 outstanding at 31 December 2018 was paid during 2019.

�

Gain from buy-out of minorities

�

Gain from buy-out of minorities arising from the acquisition has been recognised as follows:

�

�	�	2019	�	2018
�	�	$000	�	$000
Consideration	�	-	�	5,000
Value of non-controlling interests	�	-	�	(19,508)
Gain from buy-out of minorities	�	-	�	14,508

�

�

The minority interest was held by a single entity. There was no obligation for Woodbois to acquire the outstanding shares and therefore the ability for the individual shareholder to liquidate its shares was restricted. As a result, Woodbois was able to acquire the shares at a discount to the net asset value resulting in the gain noted.

The value of non-controlling interests was valued at the non-controlling interest's proportionate share of the net assets of Montara Continental Limited and its subsidiaries, in accordance with IFRS 10.�

�

23. FAIR VALUE GAIN

�	2019	2018
�	$000	$000
Fair value gain on conversion of preference shares	(4,602)	-

�

The fair value of the preference shares and the convertible bonds was determined by an independent valuer as at 30 June 2019 and adjusted for the effective completion date of 21 October 2019.� The host debt and conversion option were valued separately.� The host debt was valued using the discounted cashflow method.� The conversion option was valued using the Black-Scholes option pricing method (preference shares) and the Monte Carlo simulation (convertible bonds).

�

The fair value of the host liability component was determined first by discounting the host debt component at the market rate that would apply to an identical financial instrument without the conversion option.� The conversion option provides an upside for the investors and hence they would require a higher rate of return in the absence of the conversion option.� The discount rate for calculating the present value of the host liability was determined with comparison to yields on corporate bonds with similar maturity issued by companies operating in the Paper and Forest Product Industry in developed markets adjusted by adding a risk premium for Africa (source: Aswath Damodaran).

�

Number of Convertible bonds	75,000
Price per Convertible bond	$400
Face Value	$30,000,000
Coupon per annum %	4%

�

The fair value of the host liability was concluded to be $22,663,600.

�

The fair value of the conversion option was concluded to be $1,478,839; this was calculated as the present value of the average gain from conversion over 5,000 simulations of the Company's share price using the following assumptions:

�

Market rate	10.0%
Volatility	50.0%
Share price	�0.0625
Risk-free rate	0.61%
Time period	5 years

�

24.� SHARE BASED PAYMENTS

�

The share-based payments reserve is used to recognise the grant date fair value of options issued to employees but not exercised, the grant date fair value of shares issued to employees and the fair value of share options forfeited by employees.

�

The Group operates a share option plan, under which certain Directors and employees have been granted options to subscribe for ordinary shares. All options are equity settled. The options have an exercise price, that ranges from 8.75p to 18p, which was based upon the average value of the Group's ordinary shares for the ten days prior to the date of grant and trigger prices of between 15p and 35p per share. The Group has no legal or constructive obligation to repurchase or settle the options in cash. The number and weighted average exercise prices of share options are as follows:

�

Vesting Date	Outstanding Award Amounts at 31 December 2019
�	�
June 2018	3.625m options
June 2019	3.625m options
June 2020	3.625m options
June 2021	3.625m options

�

�

The awards were distributed to the Board as follows and the awardee must accept the option granted for it to be valid:���������������

�

��������������������������������������������������������������������������������������������������������������� ������ �������� �������Number of options

�

Paul Dolan	Chairman and CEO	1m per tranche (4m total)
Carnel Geddes	CFO	250k per tranche (1m total)
Jacob Hansen	COO	625k per tranche (2.5m total)
Hadi Ghossein	Deputy Chairman	625k per tranche (2.5m total)
Zahid Abbas	Head of Trading	625k per tranche (2.5m total)
�	�	�

In respect of each tranche, the options are exercisable if at the first possible vesting date for that tranche or any subsequent date, the Woodbois Limited monthly volume weighted for the three consecutive months to such date is greater than the trigger price for that tranche, the first such date being the vesting date in respect of that tranche. The Option holder may acquire the Option Shares in respect of a tranche following the vesting date in respect of that tranche if they remain an employee of the Group at that vesting date. If the awardee is not in the employ at the time of vesting, then the awards are forfeit.

�

The options belong to a class of exotic options called partial time knock-in options and the valuations are based on Black and Scholes model modified to account for the properties of the exotic option. The model uses the grant date, exercise price, vesting date, share price volatility and risk-free rate to calculate the option fair value. The options are accounted for over the vesting period. The fair value of the options is not subsequently adjusted for changes in the market conditions.

�

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

�

Exercise price	8.75p - 18.00p
Share price volatility	37.47% - 57.58%
Risk free rate	0.25% - 0.50%

�

Reconciliation of the share options in issue:

�	Total options	Weighted average strike price
As on 1 January 2018	28,500,000	13.85p
Issued during the financial year	1,000,000	17.62p
Forfeited during the financial year	(9,000,000)	(15.82p)
As on 31 December 2018	20,500,000	13.78p
Issued during the financial year	-	-
Forfeited during the financial year	(6,000,000)	(10.29p)
As on 31 December 2019	14,500,000	15.23p

�

�

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

�	2019	2018
�	$000	$000
AT 1 JANUARY	1,012	979
Reserve transfer for forfeitures	(275)	(679)
Share based payment expense	231	712
AT 31 DECEMBER	968	1,012

�

There were no options exercisable at the reporting date.

�

25.� NON-CONTROLLING INTERESTS

�

�	�	$000
AT 1 JANUARY 2018	�	20,608
Non-controlling interests share of losses in the year	�	(1,235)
Buy-out of minorities	�	19,373
AT 31 DECEMBER 2018 and 2019	�	-

�

The share of losses in the year represents the losses attributable to non-controlling interests for the year. As at 31 December 2018, the Group bought out the non-controlling interests in full.

�

26.� RELATED PARTY TRANSACTIONS

�

Related party balances

�	2019	2018
�	$000	$000
Amount due from shareholder of discontinued operations	49	-
Amount due to H. Ghossein, a Director��������������	(285)	(6)
Funding raised for internal trade finance (see below)	(7,290)	(3,731)
Contingent acquisition liability due to Director vendors re purchase of Woodbois International ApS in 2017 (see note 27)	(975)	(1,269)
AT 31 DECEMBER	(8,501)	(5,000)

�

As at 31 December 2019, the Group had raised $12.3 million (2018: $3.8 million) into the ITF. The amount due to related parties in respect of the ITF is as follows:

�

Name	Relationship	2019	2018
�	�	$000	$000
1798 Volantis Fund Limited	Shareholder	(5,000)	-
Richard Byworth Consultancy	Shareholder	-	(417)
Paul Dolan	Shareholder and Director	(250)	(250)
Jessica Camus-Demarche	Former Director	-	(211)
Moghle Ltd (representing Martin Collins, former Director)	Other key management personnel	(296)	(264)
Adam Barker	Other key management personnel	-	(1,000)
�	�	(5,546)	(2,142)

�

Interest expense during the year on the ITF was $1.2 million (2018: $0.1 million).

�

The following Directors are paid salaries and fees through service companies as follows:

�

Director �	Service Company name �	2019 $000	2018 $000
Carnel Geddes	Pomona Trust	183	150
Jacob Hansen	Barsik Holding	17	233
Zahid Abbas	Aka Holding	17	246

�

Management fees of $16k were paid during 2019 to Lombard Odier Investment Managers in respect of Henry Turcan.

�

Trading transactions

�

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

�

�	2019		2019		2018		2018
�	Transactions in year		�Balance at 31 December		Transactions in year		�Balance at 31 December
�	$000		$000		$000		$000
Loans to subsidiary undertakings		(4,356)		30,877		(7,209)	26,521
Amount owing to African Resource Investment Limited (refer Note 22)		� -		� -		� (5,000)	� (5,000)
Contingent acquisition expense		956		-		860	-
�	�	�	�	�	�	�	�

�

Transactions with key management personnel

�

The Group's key management personnel comprised the following:

�

2019	Short-term employment benefits
�	Salaries, fees & national insurance contributions	Benefits	Deferred acquisition payments		Share based payments	Total
�	$000	$000	$000		$000	$000
Directors	�	�	�		�	�
Kevin Milne	30	-	-		-	30
Paul Dolan	200	-	-		33	233
Jacob Hansen	236	7	478		48	769
Hadi Ghossein	188	6	-		48	242
Zahid Abbas	234	8	478		48	768
Carnel Geddes	183	-	-		21	����������� 204
Graeme Thomson	11	-	-		-	11
Henry Turcan	16	-	-		-	16
Miles Pelham	107	-	-		-	107
Jessica Camus-Demarche	3	-	-		- �	3
Other key management personnel		�	�		�	�
Graham Impey	23	-	-		-	23
Sophie Hunter	19	-	-		-	19
Sassine Bouchebel	94	19	-		-	113
Martin Collins	36	-	-		-	36
Claus Wellov	64	4	-		-	68
Ivan Muir	75	4	-		-	79
Henning Visser	12	-	-		-	12
Tim Costin	76	-	-		-	76
Ulrica Marshall	18	-	-		21	39
Ashkan Rahmati	91	-	-		12	103
Ilene Hardy	91	���������������������� -	-		-	91
�	1,807	48	956		231	3,042
�	�	�	�	�		�
2018	Short-term employment benefits
�	Salaries, fees & national insurance contributions	Benefits	Deferred acquisition payments	Share based payments		Total
�	$000	$000	$000	$000		$000
Directors	�	�	�	�		�
Kevin Milne	30	-	-	-		30
Paul Dolan	200	-	-	57		257
Jacob Hansen	246	7	430	103		786
Hadi Ghossein	215	-	-	103		318
Zahid Abbas	233	9	430	103		775
Carnel Geddes	150	-	-	40		190
Miles Pelham	200	-	-	57		257
Martin Collins	173	-	-	111		284
Jessica Camus	50	-	-	40		90 �
Other key management personnel		�	�	�		�
Graham Impey	98	-	-	9		107
Sophie Hunter	161	-	-	15		176
Warren Deats	32	-	-	-		32
Sassine Bouchebel	99	20	-	-		119
Patrick Greene	78	-	-	9		87
Claus Wellov	72	-	-	-		72
Ivan Muir	136	-	-	-		136
Henning Visser	95	-	-	-		95
Tim Costin	178	-	-	-		178
Adam Barker	38	-	-	-		38
Tom Holroyd	50	-	-	-		50
Ben Salter	58	-	-	-		58
Ulrica Marshall	20	-	-	40		60
Ashkan Rahmati	59	-	-	25		84
Ilene Hardy	90	-	-	-		90
Maria Stoica	15	-	-	-		15
�	2,776	36	860	712		4,384
�	�	�	�	�	�	�

27. Events occurring after the reporting date

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a.��� On 16 January 2020, the Group announced a number of�cash flow enhancement measures and additional funding:

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1)���� Deferred Consideration re Acquisition of Woodbois in 2017

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On 24 May�2017, the Company (previously known as Obtala Limited) announced the acquisition of Woodbois International ApS (and subsequently changed the Company name to Woodbois Limited). The terms of the acquisition provided for deferred cash consideration of US$5.0m, payable in equal quarterly payments over 5 years, commencing 30 September 2017. The Company agreed with the vendors, Zahid Abbas, Jacob Hansen and Hadi Ghossein or companies wholly owned and controlled by them, each a Director of the Company, to defer revised payments totalling $1.25m by a year, being the quarterly payments for the period from 1 January 2020 to 31 December 2020, following which quarterly payments will resume on 31 March 2021.

2)���� Internal Trading Fund ("ITF")

The Company announced that 1798 Volantis Fund Limited ("Volantis"), a fund managed on a discretionary basis by Lombard Odier Asset Management group ("Lombard"), agreed to provide up to an additional US$1.0m through investment into the Group's ITF ("Additional Loan") by way of an additional conditional loan agreement with Woodbois Trading Limited, a wholly owned subsidiary of the Group. Of this loan, US$0.5m was received on 22 January 2020. Further drawings are by mutual agreement.

3)���� Convertible Bond interest

In connection with the Company's 4% convertible bonds 2024 ("Bonds"), issued on 21 October 2019, Pelham Limited (a company controlled by Miles Pelham) and Paul Dolan agreed to roll-up interest payments due for the period from issue until 31 December 2020 on an aggregate $20.4m of Bonds. These agreements (the "Bond Interest Agreements") are for $20.0m of Bonds held by Miles Pelham and $0.40m of Bonds held by Paul Dolan. In the event such Bonds remain unconverted as at 31 December 2020, the rolled-up interest would result in the issue of approximately $0.98m of additional Bonds at that time. See Note 17.

Furthermore, Africa Resource Investment Limited ("ARI") agreed that, in respect of its existing $5.0m ITF loan, it would not request any withdrawal prior to 31 December 2020.

Further to the above matters, each of 1798 Volantis Fund Limited ("Volantis"), a fund managed on a discretionary basis by Lombard Odier Asset Management group ("Lombard"), and Paul Dolan, Chairman and Chief Executive of the Company, agreed to receive Woodbois ordinary shares ("Shares") in lieu of interest (at 11.5%) for the period from 1 July 2019 to 31 December 2020 on their Internal Trading Fund ("ITF") loans, in respect of $5.0m for Volantis (which excludes the $1.0m Additional Loan mentioned above) and $295,520 for Paul Dolan.� On 21 January 2020, 4,140,230 new Shares have been issued to Volantis and 244,704 new Shares have been issued to Paul Dolan. The Company now has 469,737,487 Shares in issue, each with voting rights.

b.��� Recommencement of operations in Mozambique

On 19 March 2020, Woodbois Limited announced the signing of a management agreement with Future Earth II LLC, a US Company with substantial concessions in Mozambique, creating a relationship under which Future Earth will fund, manage and operate Woodbois's Mozambique concessions, employees and equipment, in order to produce sawn lumber and veneers to be sold by Future Earth on a profit share basis.

The Agreement is for 3 years, with optional breaks after 12 and 24 months at Future Earth's discretion. All costs during the term of the Agreement will be funded by Future Earth with a 50:50 post-cost profit share from products sold from Woodbois' concessions. Should Future Earth proceed with years 2 and 3 they will pre-pay Woodbois $1 million each year, to be deducted from the Woodbois share of profits for each respective year. Profits will be distributed quarterly.

c.���� First Quarter Performance and COVID-19 Update

On 27 March 2020, the Company issued an update re the impact of COVID-19 and included further information in its Quarterly Update on 16 April 2020. The Government of Gabon had introduced a lockdown on 13 April 2020 and operations there had been paused. There had been limited impact on performance in the first quarter of 2020, when revenues of $4.9 million had been up 10% over the prior period in 2019. The Group noted that the rapid pace of developments in connection with COVID-19 had caused a fundamental level of uncertainty and it withdrew any guidance on its financial outcome for 2020 until the implications for the business could be assessed reliably. Resilience plans are being enacted.

28.� ULTIMATE PARENT COMPANY

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At 31 December 2019, the Directors do not believe that there was an ultimate controlling party.

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