1. Healthcare

Cambium Global Timberland Limited
Interim Report and Unaudited Condensed Consolidated Interim Financial
Statements
for the six months ended 31 October 2014
Cambium Global Timberland Limited
Contents
Page
Chairman’s statement
2
Operations Manager’s report
3
Independent review report
4
Unaudited condensed consolidated interim statement of comprehensive income
5
Unaudited condensed consolidated interim statement of financial position
6
Unaudited condensed consolidated interim statement of changes in equity
7
Unaudited condensed consolidated interim statement of cash flows
8
Notes to the unaudited condensed consolidated interim financial statements
Key parties
9-26
27
1
Cambium Global Timberland Limited
Chairman’s statement
The Company’s Net Asset Value (“NAV”) as at 31 October 2014 was 33p per share compared with 40p at 30 April 2014. In
accordance with the active marketing programme of the assets and the negotiations currently underway, the forest assets are
shown on a held for sale basis allowing for 5% sales costs on the value of the plantations. The other reasons for this decline are
detailed in the Operations Manager’s Report.
There have been two significant post balance sheet events since 31 October 2014, both of which need to be highlighted here. In
December 2014 there was a major wind-storm in Hawaii that has severely damaged the Group's Pahala plantation. Since 31
October 2014, the Brazilian Real has continued to depreciate and economic conditions in Brazil remain very difficult. The
combination of these two factors has again reduced the value of the Minas Gerais and Tocantins plantations. The result is that the
Board estimates (based on the advice of the Operations Manager and all factors known to date) that the NAV as at the date of this
statement, taking into account the effect of the tender offer, is around 30p per share.
The distribution of £5 million by way of a tender offer at 25p per share approved by shareholder at the EGM on 27 January 2015 is
the first of what the Board plans as the remaining timberlands are sold in accordance with the approved policy of disposing of the
Group’s assets. However, difficulties in the markets for wood and plantations in both Hawaii and Brazil are creating continued
uncertainty in the amount and timing of value that can be realised and distributed to shareholders.
Within the constraints of good forest management and the requirements of a listed entity, the Company is cutting costs wherever
possible and managing cash prudently to ensure that if plantations cannot be sold in the immediate term, value can be realised
from wood harvesting.
On 16 October 2014, shareholders unanimously approved the appointment of Robert Rickman as Operations Manager of the
Group to replace Cogent Asset Management. On that date Robert Rickman and Martin Richardson stepped down from the Board.
The Board now comprises myself, Roger Lewis (who has become Chairman of the Audit Committee) and Svante Adde, and is
working on finding a new Chairman in Jersey, to enable me to step down before the AGM, as I undertook in 2014.
Donald Adamson
Chairman
29 January 2015
2
Cambium Global Timberland Limited
Operations Manager’s report
For the six months ended 31 October 2014
Total returns during the period covered by these financial statements were -17.6%. Of the total decline, net foreign exchange
losses due to sterling appreciation against the Brazilian Real and depreciation against the US dollar contributed -1.9%. Returns
from the investment portfolio contributed -13.1% to the total return with administrative expenses contributing the remaining -2.6%.
Portfolio returns were impacted by the decision to hold the forest assets on a “for sale basis” and the experience of limited market
demand in Brazil’s current economic environment. The sale of the Australian asset was completed at a modest premium to the
previous valuation. Subsequent to the balance sheet date there has been severe wind damage in the smaller Hawaiian plantation
and continued depressed conditions in Brazil.
Below is a summary of the results by each geographic area.
North America
The sales of the Group’s timberlands in Georgia were completed. Despite the improved economic growth in the USA, wood prices
have not increased, possibly due to increased volumes of timber being marketed. As a result the prices obtained for the properties
were below their previous valuations. US$1.0m held in escrow for the sale of Clinch County has now been received by the Group.
US$2.0m in escrow for environmental warranties for the Stewart County property is due to be released in July 2015.
Hawaii
The Group owns two properties in Hawaii, both leasehold, which represent 14.1% of total net assets. Total returns during the six
month period were -10.7%.
The key to realising the larger property, Pinnacle, is to develop a plan for harvesting and establishing access to the export port.
Progress has been made during the period in defining the costs involved in doing this.
The smaller and less valuable of the plantations is Pahala, which was devastated by serious wind damage after the period end in
December 2014 (see note 27). An early start to harvesting will be necessary if useable wood volumes are to be recovered. Heads
of terms had been agreed for the disposal of Pahala before the serious wind damage and, although discussions remain underway,
the options open to the Group are limited.
Asset values in Hawaii remain very sensitive to the availability of a local market for biomass wood for electricity generation, timber
prices in export markets, harvesting and transport. The 24 megawatt wood-using plant has progressed more slowly than originally
anticipated, but still appears to be progressing with an estimated start date during early 2017. Clarity on this plant is important to
underpin the value of both the Pahala and Pinnacle plantations.
Australia
The Tarrangower property in Australia has been sold. The return during the period was 21.8% in local currency terms, due to the
disposal of the property at a small premium to previous NAV, albeit an NAV which was well below earlier valuations.
Brazil
The Group owns two properties in Brazil, namely Minas Gerais and Tocantins 3R, which together represent 69.4% of total net
assets. Total returns during the period were -17.5%, of which -1.0% related to an increase of BRL 0.9 million in the provision
against Tocantins 3R. Note 21 sets out the position concerning the lien on this property by Banco da Amazonia, which is offset by a
security interest held on another property, Lizarda. The increased provision is the Board's best estimate of the liability following the
retention of legal and business advisers to hold discussions with the bank involved (and an assessment of the Group's ability to
enforce its offsetting lien in a realistic timescale.
Tree growth rates, as determined by recent inventories of both properties, are below expectations, probably due to below average
rainfall over the last two years. Rainfall has improved at 3R but remains below average in Minas Gerais. Small fires at both
properties did not result in economic damage and it is envisaged that fire insurance will offset the modest fire fighting costs
incurred. Small scale fertilisation and weed control programmes have been undertaken.
Although the Group is in discussions with buyers for both its Brazilian forests, as reported previously the market for timberland in
Brazil continues to be illiquid and there can be no certainty on the timing of when sales can be closed. Planning is underway to
commence harvesting as the crops mature from 2016 onwards, should the forests not be sold before this date.
Conclusion
Previously, under Cogent's management regime, valuations were based on the long term expectations for the individual forests, but
it is considered that a "held for sale" basis is more realistic given the Group's realisation strategy.
The portfolio continues to be managed to maximise shareholder return during this realisation process. Necessary investments in
the health and vigour of the forests continue to be made whilst at the same time seeking to minimise operating expenditures at the
properties.
Robert Rickman
Operations Manager
29 January 2015
3
Independent review report to Cambium Global Timberland Limited
We have been engaged by the Cambium Global Timberland Limited (the “Company”) to review the unaudited condensed
consolidated interim financial statements for the six months ended 31 October 2014 of the Company together with its subsidiaries
(together, the “Group”), which comprise the unaudited condensed consolidated interim statement of comprehensive income, the
unaudited condensed consolidated interim statement of financial position, the unaudited condensed consolidated interim statement
of changes in equity, the unaudited condensed consolidated interim statement of cash flows and the related explanatory notes.
We have read the other information contained in the interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the unaudited condensed consolidated interim financial statements.
This report is made solely to the company in accordance with the terms of our engagement as detailed in our letter of 10 December
2014. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report and unaudited condensed consolidated interim financial statements are the responsibility of, and have been
approved by, the directors. The directors are responsible for preparing the interim report and the unaudited condensed
consolidated interim financial statements in accordance with the AIM Rules.
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with International Financial
Reporting Standards (“IFRSs”). The unaudited condensed consolidated interim financial statements included in this interim report
has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting.
Our responsibility
Our responsibility is to express to the Company a conclusion on the unaudited condensed consolidated interim financial statements
in the interim report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than
an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the unaudited condensed consolidated
interim financial statements for the six months ended 31 October 2014 are not prepared, in all material respects, in accordance with
International Accounting Standard 34 and AIM Rules.
Andrew P. Quinn
for and on behalf of KPMG Channel Islands Limited
Chartered Accountants
Jersey
29 January 2015
• The maintenance and integrity of the Cambium Global Timberland Limited website is the responsibility of the Directors; the work
carried out by KPMG Channel Islands Limited does not involve consideration of these matters. Accordingly, KPMG Channel Islands
Limited accept no responsibility for any changes that may have occurred to the financial statements or interim review report since
they were initially published on the website.
• Legislation in Jersey governing the presentation and dissemination of financial statements may differ from legislation in other
jurisdiction
4
Cambium Global Timberland Limited
Unaudited condensed consolidated interim statement of comprehensive income
For the six months ended 31 October 2014
Continuing operations
For the six
months ended
31 October 2014
Restated*
For the six
months ended
31 October 2013
Unaudited
Unaudited
Notes
£
£
Finance income
8
5,329
4,624
Finance costs
9
(3,169)
(1,638)
2,908
5,068
(4,001)
(1,015)
Net foreign exchange gains/(losses)
Net finance income/(costs)
(947,992)
(564,759)
(942,924)
(565,774)
4
23,303
74,002
15
290,609
-
3,15
(5,941,184)
(2,610,030)
Administrative expenses
5
(124,715)
(86,169)
Forestry management expenses
6
(60,644)
(106,261)
(758,182)
Administrative expenses
5
Loss for the period from continuing operations
Discontinued operations
Revenue
Profit on disposal of assets held for sale
Decrease in fair value of disposal groups held for sale, assets held for sale and
investment property and plantations
7
(569,718)
Increase in provision
21
(236,543)
(1,950,948)
Impairment of disposal group held for sale
15
(97,883)
(1,089,503)
(8,610)
(2,910,170)
(6,716,775)
(5,446,198)
Other operating forestry expenses
Operating loss from discontinued operations
Finance income
8
962
427
Finance costs
9
(183,621)
(131,926)
6,673
(175,986)
(5,774)
(137,273)
(6,892,761)
(5,583,471)
1,469,861
(5,422,900)
80,240
(5,503,231)
(6,365,824)
(6,069,005)
(763,910)
(763,910)
(5,343,054)
(5,343,054)
(7,129,734)
(11,412,059)
(6.23) pence
(5.94) pence
(0.92) pence
(0.55) pence
(5.31) pence
(5.39) pence
Net foreign exchange losses
Net finance costs
Loss before taxation from discontinued operations
Taxation credit
Loss for the period from discontinued operations
10
Total loss for the period
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss, net of tax
Foreign exchange losses on translation of discontinued foreign operations
Other comprehensive loss for the period
18
Total comprehensive loss for the period
Basic and diluted loss per share
11
Basic and diluted loss per share from
continuing operations
Basic and diluted loss per share from
discontinued operations
* See note 15
All losses from continuing and discontinued operations are attributable to the equity holders of the parent Company. There are no
minority interests.
The notes on pages 9 to 26 form an integral part of these unaudited condensed consolidated interim financial statements.
5
Cambium Global Timberland Limited
Unaudited condensed consolidated interim statement of financial position
At 31 October 2014
31 October
2014
30 April
2014
Unaudited
Audited
Notes
£
£
13
-
18,749,588
Non-current assets
Investment property
Plantations
13
-
16,678,494
Buildings, plant and equipment
14
-
183,823
35,611,905
15
28,106,145
10,404,052
Current assets
Assets held for sale
Trade and other receivables
16
90,412
215,737
Cash and cash equivalents
19
9,720,758
37,917,315
3,941,356
14,561,145
37,917,315
50,173,050
Total assets
Current liabilities
Liabilities held for sale
15
4,262,058
-
Bank loan
17
-
3,512,508
Trade and other payables
20
239,450
4,501,508
450,877
3,963,385
Non-current liabilities
Other payable
21
-
257,372
Provision
21
-
3,218,085
Deferred tax liabilities
10
-
2,188,667
5,664,124
Total liabilities
4,501,508
9,627,509
33,415,807
40,545,541
22
2,000,000
2,000,000
23
88,589,060
88,589,060
18,23
7,458,442
8,222,352
(64,631,695)
33,415,807
(58,265,871)
40,545,541
0.33
0.40
Net assets
Equity
Stated capital
Distributable reserve
Translation reserve
Retained loss
Total equity
Net asset value per share
12
These unaudited condensed consolidated interim financial statements were approved and authorised for issue on 29 January 2015
by the Board of Directors.
Donald Adamson
Chairman
Roger Lewis
Director
The notes on pages 9 to 26 form an integral part of these unaudited condensed consolidated interim financial statements.
6
Cambium Global Timberland Limited
Unaudited condensed consolidated interim statement of changes in equity
For the six months ended 31 October 2014
Share
Distributable
Translation
Retained
capital
reserve
reserve
loss
Total
£
£
£
£
£
2,000,000
88,589,060
8,222,352
(58,265,871)
40,545,541
Loss for the period
-
-
-
(6,365,824)
(6,365,824)
Other comprehensive loss
Foreign exchange losses on translation of
discontinued foreign operations (note 18)
Total comprehensive loss
-
-
(763,910)
(763,910)
(6,365,824)
(763,910)
(7,129,734)
2,000,000
88,589,060
7,458,442
(64,631,695)
33,415,807
Share
Distributable
Translation
Retained
capital
reserve
reserve
loss
Total
£
£
£
£
£
2,000,000
88,589,060
15,728,366
(45,960,926)
60,356,500
Loss for the period
-
-
-
(6,069,005)
(6,069,005)
Other comprehensive loss
Foreign exchange losses on translation of
discontinued foreign operations (note 18)
Total comprehensive loss
-
-
(5,343,054)
(5,343,054)
(6,069,005)
(867,788)
(11,412,059)
2,000,000
88,589,060
10,385,312
(52,029,931)
48,944,441
Unaudited
For the period 1 May 2014 to
31 October 2014
At 30 April 2014
Total comprehensive loss for the period
At 31 October 2014
Unaudited
For the period 1 May 2013 to
31 October 2013 (restated*)
At 30 April 2013
Total comprehensive loss for the period
At 31 October 2013
* See note 15
The notes on pages 9 to 26 form an integral part of these unaudited condensed consolidated interim financial statements.
7
Cambium Global Timberland Limited
Unaudited condensed consolidated interim statement of cash flows
For the six months ended 31 October 2014
For the six
months ended
31 October 2014
Restated*
For the six months
ended 31 October
2013
Unaudited
£
Unaudited
£
(6,365,824)
(6,069,005)
15
5,941,184
2,610,030
21
236,543
1,950,948
Note
Cash flows from operating activities
Loss for the period
Adjustments for:
Decrease in fair value of assets held for sale and investment property
and plantations
Increase in provision
7
-
623
Profit on disposal of assets held for sale
15
(290,609)
-
Impairment of disposal group held for sale
15
Depreciation
Net finance (income)/costs – continuing operations
Net finance costs – discontinued operations
Taxation credit
97,883
8,610
(5,068)
1,015
175,986
137,273
(1,469,861)
(80,240)
Increase in trade and other receivables
(117,049)
(80,266)
Decrease in trade and other payables
(153,817)
(589,710)
Tax paid
(1,950,632)
(98,211)
(2,110,722)
-
Net cash used in operating activities
(2,048,843)
(2,110,722)
15
11,407,692
-
15
(163,195)
11,244,497
(364,086)
(364,086)
Cash flows from investing activities – discontinued operations
Net proceeds from sale of assets held for sale
Costs capitalised to assets held for sale and investment property and
plantations
Net cash from/(used in) investing activities
Cash flows from financing activities
17
(3,512,508)
-
Finance income
8
6,291
5,051
Finance costs
Net cash used in financing activities
9
(186,790)
(3,693,007)
(133,564)
(128,513)
5,502,647
(2,603,321)
276,755
(86,458)
Repayment of bank loan – discontinued operations
Net increase/(decrease) in cash and cash equivalents
Foreign exchange movements
Balance at the beginning of the period
Balance at the end of the period
19
3,941,356
8,436,599
9,720,758
5,746,820
* See note 15
The notes on pages 9 to 26 form an integral part of these unaudited condensed consolidated interim financial statements.
8
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 31 October 2014
1. General information
The Company and its subsidiaries, including special purpose vehicles ("SPVs") controlled by the Company (together the "Group"),
own a global portfolio of forestry based properties which are managed on an environmentally and socially sustainable basis. Assets
are managed for timber production, with exposure to emerging environmental markets. As at the period end date, the Group owned
forestry assets located in Hawaii and Brazil.
The Company is a closed-ended company with limited liability, incorporated in Jersey, Channel Islands on 19 January 2007. The
address of its registered office is 26 New Street, St Helier, Jersey JE2 3RA.
These unaudited condensed consolidated interim financial statements (the “interim financial statements") were approved and
authorised for issue on 29 January 2015 and signed by Roger Lewis and Donald Adamson on behalf of the Board.
The Company is listed on AIM, a market of the London Stock Exchange. During the period the Company delisted from the Channel
Islands Securities Exchange (“CISE”).
2. Basis of preparation
The interim financial statements for the six months ended 31 October 2014 have been prepared in accordance with International
Accounting Standard (“IAS”) 34 "Interim Financial Reporting" and with applicable regulatory requirements of the AIM Rules. It does
not include all of the information required for full annual financial statements. The interim financial statements should be read in
conjunction with the Group’s annual report and financial statements for the year ended 30 April 2014, which were prepared in
accordance with International Financial Reporting Standards ("IFRS"). The comparative numbers used for the unaudited
condensed consolidated interim statement of comprehensive income, unaudited condensed consolidated interim statement of
changes in equity and unaudited condensed consolidated interim statement of cash flows are that of the period ended 31 October
2013, which is considered a comparable period as per IAS 34. The comparatives used in the unaudited condensed consolidated
statement of financial position are that of the previous financial year, 30 April 2014.
Except for the new accounting policies described below, the accounting policies applied by the Group in these interim financial
statements are the same as those applied by the Group in its financial statements as at and for the year ended 30 April 2014.
The interim financial statements have been prepared in Sterling, which is the presentational currency and functional currency of the
Company, and under the historical cost convention, except for investment property, plantations, buildings and assets and liabilities
held for sale, which are carried either at fair value, fair value less cost to sell or fair value less subsequent accumulated
depreciation and subsequent accumulated impairment loss.
The preparation of the financial statements requires Directors to make estimates and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the interim financial
statements. If in the future such estimates and assumptions, which are based on the Directors’ best judgement at the date of the
interim financial statements, deviate from actual circumstances, the original estimates and assumptions will be modified as
appropriate in the period in which the circumstances change.
In preparing the interim financial statements, the significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements as at, and for
the year ended, 30 April 2014. The main area of the interim financial statements where significant judgements have been made by
the Directors which has resulted in a significant change since the 30 April 2014 Annual Report is to account for the Group’s global
portfolio of forests on a held for sale basis under IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’. Details of
this change and the impact on the interim financial statements are disclosed below and in note 15.
The following exchange rates have been applied in these interim financial statements to convert foreign currency balances to
Sterling:
31 October 2014
31 October 2014
30 April 2014
31 October 2013
31 October 2013
closing rate
average rate
closing rate
closing rate
average rate
Australian Dollar
1.8182
1.8108
1.8167
1.6962
1.6582
Brazilian Real
3.9589
3.8048
3.7600
3.5880
3.4379
United States Dollar
1.5995
1.6657
1.6873
1.6040
1.5561
Going concern and assets and liabilities held for sale
On 30 November 2012, the Independent Directors announced the outcome of the strategic review initiated in June 2012. The
Directors proposed and recommended a change of investment policy with a view to implementing an orderly realisation of the
Group’s investments in a manner which maximises value for shareholders and returning surplus cash to shareholders over time
through ad hoc returns of capital. This proposal was approved by shareholders at an Extraordinary General Meeting (“EGM”) on 22
February 2013. There is no set period for the realisation of the portfolio, but the stated aim of the Directors is to complete the
process within 24 to 48 months of the date of that EGM.
Since the EGM, the portfolio has been reviewed by the Directors with a view to an orderly sale of the assets in such a manner as to
enable their inherent value to be realised. As part of this process, the assets in Georgia and Australia have been sold as at 31
October 2014 and the Directors have advanced plans in place to sell the remaining assets. As a result, as at 31 October 2014, the
portfolio of assets has been classified as held for sale (and its transactions for the period as discontinued operations) under IFRS 5
‘Non-current Assets Held for Sale and Discontinued Operations’, as disclosed in note 15.
9
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
2. Basis of preparation (continued)
Going concern and assets and liabilities held for sale (continued)
As at the date of approval of these interim financial statements, the Directors have no intention to instigate a winding-up of the
Company, a course of action that would require the approval of shareholders. As a result, as at 31 October 2014 the assets and
liabilities of the Company pertaining to the Jersey operations have not been classified as held for sale and its operations continue
to be treated as continuing.
The Directors have reviewed the Group’s cash flow forecasts which cover the period to 31 July 2017 and estimate that the Group
has sufficient cash flow to cover a period of at least 12 months from the date of approval of these interim financial statements. On
this basis the interim financial statements have been prepared on a going concern basis.
New, revised and amended standards
At the date of authorisation of these interim financial statements, the following standards and interpretations, which have not been
applied in these interim financial statements, were in issue but not yet effective:
•
•
•
•
•
•
•
•
•
•
•
•
IAS 16 (amended), "Property, Plant and Equipment" (amendments effective for periods commencing on or after 1 January
2016);
IAS 19 (amended), "Employee Benefits" (amendments effective for periods commencing on or after 1 January 2016);
IAS 27 (amended), “Separate Financial Statements” (amendments effective for periods commencing on or after 1 January
2016);
IAS 28 (amended), “Investments in Associates and Joint Ventures” (amendments effective for periods commencing on or
after 1 January 2016);
IAS 38 (amended), “Intangible Assets” (amendments effective for periods commencing on or after 1 January 2016);
IAS 41 (amended), “Agriculture” (amendments effective for periods commencing on or after 1 January 2016);
IFRS 7 (amended), "Financial Instruments: Disclosures" (amendments effective for periods commencing on or after 1
January 2015);
IFRS 9, "Financial Instruments" (effective for periods commencing on or after 1 January 2018);
IFRS 10 (amended), "Consolidated Financial Statements" (amendments effective for periods commencing on or after 1
January 2016);
IFRS 11 (amended), "Joint Arrangements" (amendments effective for periods commencing on or after 1 January 2016);
IFRS 14, "Regulatory Deferral Accounts" (effective for periods commencing on or after 1 January 2016); and
IFRS 15, “Revenue from Contracts with Customers” (effective for periods commencing on or after 1 January 2017).
In addition, the IASB completed its Annual Improvements 2010-2012 Cycle, Annual improvements 2011-2013 Cycle and
September 2014 Annual Improvements to IFRS projects. These projects have amended a number of existing standards and
interpretations effective for accounting periods commencing on or after 1 July 2014 and 1 January 2016.
The Directors do not anticipate that the adoption of these standards in future periods will have a material impact on the financial
statements of the Group.
New accounting policies effective and adopted
The following new standards have been applied for the first time in these interim financial statements:
•
•
•
•
•
IAS 27 (amended) "Separate Financial Statements" (amendments effective for periods commencing on or after 1 January
2014);
IAS 32 (amended) "Financial Instruments: Presentation" (amendments effective for periods commencing on or after 1
January 2014);
IAS 36 (amended) “Impairment of Assets” (amendments effective for periods commencing on or after 1 January 2014);
IFRS 10, "Consolidated Financial Statements" (amendments effective for periods commencing on or after 1 January
2014); and
IFRS 12, "Disclosure of Interest in Other Entities" (amendments effective for periods commencing on or after 1 January
2014).
The adoption of these standards and amendments has had no material impact on the financial statements of the Group.
3. Operating segments
The Board of Directors is charged with setting the Company’s investment strategy in accordance with the Prospectus. The Board of
Directors, as the Chief Operating Decision Maker (”CODM”), has, until 16 October 2014, delegated the day to day implementation
of this strategy to its Investment Manager and, with effect from 16 October 2014, to its Operations Manager, but retains
responsibility to ensure that adequate resources of the Company are directed in accordance with its decisions. The investment
decisions of the Investment Manager and Operations Manager have been and are reviewed on a regular basis to ensure
compliance with the policies and legal responsibilities of the Board.
Whilst the Operations Manager may make the investment decisions on a day to day basis, any changes to the investment strategy,
major allocation decisions or any asset dispositions or material timber contracts have to be approved by the Board, even though
they may be proposed by the Operations Manager. The Board therefore retains full responsibility as to the major allocations
decisions made on an ongoing basis.
10
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
3. Operating segments (continued)
The Operations Manager will always act under the terms of the Prospectus which cannot be radically changed without the approval
of the Board of Directors and shareholders. Details of the investment restrictions are set out in part 3 of the Admission Document
and the Investment Strategy, available on www.cambiumfunds.com.
As at 31 October 2014, the Group operates in five distinctly separate geographical locations, which the CODM has identified as one
non-operating segment, Jersey, and four operating segments. Timberlands are located in Hawaii and Brazil. Timberlands located in
North America and Australia were disposed of in the period. During the period, all four operating segments are classified as
discontinued operations (see note 15).
The accounting policies of each operating segment are the same as the accounting policies of the Group, therefore no
reconciliation has been performed.
31 October 2014 (unaudited)
Jersey
£
Australia
£
North America
£
Hawaii
£
Brazil
£
Total
£
Assets and disposal groups held for
sale (note 15)
Other assets
-
-
-
4,698,030
23,408,115
28,106,145
6,266,791
1,172,524
1,974,930
106,825
290,100
9,811,170
Total assets
6,266,791
1,172,524
1,974,930
4,804,855
23,698,215
37,917,315
132,117
4,684
30,307
72,342
4,262,058
4,501,508
Jersey
£
Australia
£
North America
£
Hawaii
£
Brazil
£
Total
£
-
748,779
-
4,943,993
29,735,310
35,428,082
Total liabilities
30 April 2014 (audited)
Investment property and plantations
Assets held for sale (note 15)
-
-
10,404,052
-
-
10,404,052
Other assets
2,406,884
241,854
1,024,797
82,443
584,938
4,340,916
Total assets
2,406,884
990,633
11,428,849
5,026,436
30,320,248
50,173,050
Total liabilities
97,865
30,723
3,697,055
137,978
5,663,888
9,627,509
31 October 2014 (unaudited)
Jersey
£
Australia
£
North America
£
Hawaii
£
Brazil
£
Total
£
Segment revenue
-
11,505
7,558
-
4,240
23,303
Segment gross profit
Decrease in fair value of disposal
groups and assets held for sale
Forestry management expenses
-
11,505
7,558
-
4,240
23,303
-
4,970
21,999
(496,788)
6,454
(5,444,396)
27,221
(5,941,184)
60,644
Other operating forestry expenses
-
70,097
17,801
144,307
337,513
569,718
Jersey
£
Australia
£
North America
£
Hawaii
£
Brazil
£
Total
£
Segment revenue
-
15,077
49,517
-
9,408
74,002
Segment gross profit
(Decrease)/increase in fair value of
investment property and plantations
Forestry management expenses
-
15,077
49,517
-
9,408
74,002
-
(2,709,565)
17,428
652,643
58,123
(3,521,624)
3,519
2,968,516
27,191
(2,610,030)
106,261
Other operating forestry expenses
-
56,033
75,053
157,318
469,778
758,182
31 October 2013 (unaudited)
-
As at 31 October 2014, the Group owned six (30 April 2014: nine) distinct parcels of land across two (30 April 2014: four) main
geographical areas.
The majority of the revenues in the period ended 31 October 2014 arose from lease income received in Australia. In the period
ended 31 October 2013, the majority of the revenues arose from lease income received in North America.
11
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
3. Operating segments (continued)
The Company’s investments will be realised in an orderly manner (that is, with a view to achieving a balance between returning
cash to shareholders and maximising value). In light of the realisation strategy, there will be no specific investment restrictions
applicable to the Company’s portfolio going forward.
This policy will involve a continuing evaluation of the portfolio in order to assess the most appropriate realisation strategy to be
pursued in relation to each investment. All assets related to the operating segments are being actively marketed and have been
reclassified in the current period as held-for-sale assets.
The strategy for realising individual investments will be flexible and may need to be altered to reflect changes in the circumstances
of a particular investment or in the prevailing market conditions. The Group will, in relation to each investment, seek to create
competition amongst a range of interested parties.
The net cash proceeds from realisations of assets will be applied to the payments of tax or other liabilities as the Board thinks fit
prior to making payments to shareholders.
4. Revenue
For the 6 months
ended 31 October
2014
Unaudited
£
For the 6 months
ended 31 October
2013
Unaudited
£
-
7,014
Lease income
19,063
63,979
Subsidies received
4,240
23,303
3,009
74,002
Sales - harvested timber and stumpage
The lease income arises mainly from hunting leases, which are for a term of two to three years. The income is recognised in the
period it relates to on an accruals basis.
5. Administrative expenses
For the 6 months
ended 31 October
2014
Unaudited
£
Restated*
For the 6 months
ended 31 October
2013
Unaudited
£
198,811
279,145
Directors' fees (note 26)
97,930
88,298
Auditor's fees
67,021
47,091
584,230
947,992
150,225
564,759
30,833
29,669
93,882
124,715
56,500
86,169
1,072,707
650,928
Continuing operations
Investment Manager's fees (note 26)
Professional & other fees
Discontinued operations
Professional & other fees
Administration of subsidiaries
Total administration expenses
Administration of subsidiaries includes statutory fees, accounting fees and administrative expenses in regard to the asset holding
subsidiaries.
* See note 15
12
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
6. Forestry management expenses
Asset management fees
Appraisal fees
For the 6 months
ended 31 October
2014
Unaudited
£
For the 6 months
ended 31 October
2013
Unaudited
£
35,427
25,217
67,223
60,644
39,038
106,261
For the 6 months
ended 31 October
2014
Unaudited
£
For the 6 months
ended 31 October
2013
Unaudited
£
182,280
319,097
Property taxes
19,585
61,024
Lease payments
67,494
68,874
-
98,128
Repairs and maintenance
15,340
41,668
Trials, inventory and research
17,394
5,270
155,731
139,347
-
623
7. Other operating forestry expenses
Property management fees
Fertilisation
Pest control, forest protection and insurance
Depreciation
Selling and marketing expenses
Consultancy fees
Other
-
929
81,524
19,529
30,370
569,718
3,693
758,182
For the 6 months
ended 31 October
2014
Unaudited
£
For the 6 months
ended 31 October
2013
Unaudited
£
5,329
4,624
8. Finance income
Bank interest – continuing operations
Bank interest – discontinued operations
Total bank interest
962
427
6,291
5,051
For the 6 months
ended 31 October
2014
Unaudited
£
For the 6 months
ended 31 October
2013
Unaudited
£
3,169
1,638
3,169
1,638
21,303
114,426
160,111
14,244
9. Finance costs
Continuing operations
Other finance costs
Discontinued operations
Interest paid on bank loan
Loan fees
Other finance costs
Total finance costs
13
2,207
3,256
183,621
131,926
186,790
133,564
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
10. Taxation
Taxation on profit on ordinary activities
The Group's tax credit for the period, which derives entirely from discontinued operations, comprises:
For the 6 months
ended 31 October
2014
Unaudited
£
For the 6 months
ended 31 October
2013
Unaudited
£
4,776
4,776
-
-
(225,436)
Brazil at 34%
(1,395,107)
1,008,251
United States at 15%-35%**
(79,530)
(1,474,637)
(863,055)
(80,240)
Tax credit
(1,469,861)
(80,240)
Current tax charge
Hungary at 19%
Deferred tax (credit)/charge
Australia at 30%
** Marginal corporate income taxes in the United States vary between 15% and 35% depending on the size of the profits.
For the 6 months
ended 31 October
2014
Unaudited
£
For the 6 months
ended 31 October
2013
Unaudited
£
Tax credit reconciliation
(942,924)
(565,774)
Loss for the period from discontinued operations before taxation
(6,892,761)
(5,583,471)
Total loss for the period before taxation
(7,835,685)
(6,149,245)
Tax credit using the average of the tax rates in the jurisdictions in which the Group operates
(2,351,942)
(1,773,407)
Loss for the period from continuing operations before taxation
Effects of:
Tax exempt income
(19,993)
(287,888)
Operating losses for which no deferred tax asset is recognised
676,019
1,306,257
Capital losses for which no deferred tax asset is recognised
556,819
849,702
Capital losses utilised
(91,702)
-
(239,062)
(1,469,861)
(174,904)
(80,240)
Other temporary differences
Tax credit for the period
The average tax credit rate is a blended rate calculated using the weighted average applicable tax rates of the jurisdictions in which
the Group operates. The average of the tax rates in the jurisdictions in which the Group operates in the period was 30.02% (2013:
28.84%).The effective tax rate in the period was 18.76% (2013: 1.30%).
At the period end date, the Group has unused operational and capital tax losses. No deferred tax asset has been recognised in
respect of these losses due to the unpredictability of future taxable profits and capital gains available against which they can be
utilised.
14
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
10. Taxation (continued)
Operational tax losses for which deferred tax assets have not been recognised in the financial statements
For the 6 months
ended 31 October
2014
Unaudited
£
Balance at beginning of the period/year
Adjustments in respect of prior years
Current period/year operating losses for which no deferred tax asset is recognised
Exchange movements
Balance at the end of the period/year
For the
year ended
30 April 2014
Audited
£
12,805,832
15,789,924
-
(2,999,779)
1,194,812
1,790,968
(38,614)
13,962,030
(1,775,281)
12,805,832
Accumulated operating losses at the period end in the table above relate entirely to discontinued operations (30 April 2014:
£3,830,181). The value of deferred tax assets not recognised in respect of these operational losses amounted to £4,563,013 (30
April 2014: £4,173,144), all of which (30 April 2014: £1,302,261) related to discontinued operations.
Accumulated operating losses from continuing operations at the period end amounted to £29,239,724. No deferred tax assets
arose in respect of these losses.
At the period end the Group had accumulated capital losses of £13,228,938 (30 April 2014: £12,691,097), all of which (30 April
2014: £2,468,546) related to discontinued operations. The value of deferred tax assets not recognised in regard to these capital tax
losses amounted to £4,288,062 (30 April 2014: £4,044,974), all of which (30 April 2014: £839,306) related to discontinued
operations.
Deferred taxation
The following are the significant deferred tax liabilities and assets recognised by the Group and movements thereon:
Assets
Liabilities
Net balance
2014
2014
2014
31 October 2014 (unaudited)
£
£
£
Balance at the beginning of the period
-
(2,188,667)
(2,188,667)
Movement in fair value of disposal groups and assets held for sale
-
1,474,637
1,474,637
Total movements for the period
Exchange differences
-
1,474,637
50,694
1,474,637
50,694
Balance at the end of the period *
-
(663,336)
(663,336)
Assets
Liabilities
Net balance
Movements
2014
2014
2014
30 April 2014 (audited)
£
£
£
Balance at the beginning of the year
-
(2,846,672)
(2,846,672)
Increase in fair value of investment property and plantations
-
297,123
297,123
Total movements for the year
-
297,123
297,123
Exchange differences
Balance at the end of the year
-
360,882
(2,188,667)
360,882
(2,188,667)
Movements
* The deferred tax liability, which forms part of the Brazil disposal group, has, at the period end date, been reclassified in these
financial statements as a liability held for sale (see note 15).
15
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
11. Basic and diluted loss per share
The calculation of the basic and diluted loss per share is based on the following data:
For the 6 months
ended 31 October
2014
Unaudited
£
Restated*
For the 6 months
ended 31October
2013
Unaudited
£
(6,365,824)
(6,069,005)
(942,924)
(565,774)
(5,422,900)
(5,503,231)
31 October
2014
Unaudited
31 October
2013
Unaudited
Issued shares brought forward and carried forward (note 22)
Weighted average number of shares in issue during the period
102,130,000
102,130,000
102,130,000
102,130,000
Basic and diluted loss per share
(6.23) pence
(5.94) pence
Basic and diluted loss per share from continuing operations
(0.92) pence
(0.55) pence
Basic and diluted loss per share from discontinued operations
(5.31) pence
(5.39) pence
Loss for the purposes of basic and diluted earnings per share being net loss for the period
Loss for the purposes of basic and diluted earnings per share being net loss for the period
from continuing operations
Loss for the purposes of basic and diluted earnings per share being net loss for the period
from discontinued operations
Weighted average number of shares
* See note 15
12. Net asset value
Total assets
Total liabilities
Net assets
Number of shares in issue (note 22)
Net asset value per share
31 October
2014
Unaudited
£
30 April
2014
Audited
£
37,917,315
4,501,508
50,173,050
33,415,807
9,627,509
40,545,541
102,130,000
102,130,000
0.33
0.40
13. Investment property and plantations
Total
Investment
timber
Premerchantable
timber
plantations
property
Total
£
£
£
£
£
4,943,992
11,734,502
16,678,494
18,749,588
35,428,082
(4,943,992)
-
(11,734,502)
-
(16,678,494)
-
(18,749,588)
-
(35,428,082)
-
Merchantable
31 October 2014 (unaudited)
Fair value as at 1 May 2014
Reclassification to disposal groups and
assets held for sale (note 15)
Fair value as at 31 October 2014
Total
Investment
timber
Premerchantable
timber
plantations
property
Total
£
£
£
£
£
Fair value as at 1 May 2013
13,600,377
17,224,668
30,825,045
28,494,485
59,319,530
Capitalised costs
13,600,377
364,086
17,588,754
364,086
31,189,131
28,494,485
364,086
59,683,616
(3,409,705)
(1,185,076)
(4,594,781)
1,984,751
(2,610,030)
(328,912)
9,861,760
(2,088,268)
14,315,410
(2,417,180)
24,177,170
(3,201,676)
27,277,560
(5,618,856)
51,454,730
Merchantable
31 October 2013 (unaudited)
Fair value (losses)/gains on land and
plantations
Foreign exchange effect
Fair value as at 31 October 2013
No harvested timber was held at the end of the period (30 April 2014: nil).
16
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
13. Investment property and plantations (continued)
The Group engages external independent professional valuers to determine the fair values of the investment properties and
plantations on a six-monthly basis. The Group’s policy is to change the valuer of each property at least every three years.
The land and plantations are carried at their fair values as at 31 October 2014, as measured by external independent valuers
TerraSource Valuation LLC, Consufor Advisory & Research and Chandler Fraser Keating Limited. Each of the valuers uses similar
methodologies, though this can vary depending on the type of investment and local practices. The fair value measurements of
investment properties and plantations have been categorised as Level 3 fair values based on the inputs to the valuation techniques
used.
A commentary on the factors affecting the fair value of the land and plantations during the period is contained in the Operations
Manager’s Report on page 3.
The following tables show the valuation techniques used in measuring the fair values of investment properties and plantations, now
included in note 15, as well as the significant unobservable inputs used and their effects on the fair value measurements as at 31
October 2014:
Brazil – 3R Tocantins
Valuation technique
The 3R Tocantins property in Brazil was
valued by Consufor Advisory & Research.
Desktop valuations were carried out at 31
October 2014 and at 31 October 2013. A
full valuation was carried out at 30 April
2014. A desktop valuation does not include
a physical inspection of the property by the
valuer, however in the opinion of the
Directors, carrying out a full valuation as at
31 October 2014, as opposed to a desktop
valuation, would not have resulted in a
material difference in valuation. The
valuation method applied for the bare land
appraisal was the sales comparison
approach. The analysis considered the
bare land price from comparable
transactions, soil quality, topography of the
land, access and distance from cities and
the proportion of the property which could
be used for cultivation. Planted forests up
to 1 year old are valued using the
replacement cost method, however as at
31 October 2014 the property contained no
such forests. For the planted forests over 1
year old, the discounted cash flow method
was used to determine value. This method
considers the present value of the net cash
flows expected to be generated by the
plantation at maturity, the expected
additional biological transformation and the
risks associated with the asset; the
expected net cash flows are discounted
using a risk-adjusted discount rate. The
methodology used in the current period is
the same as that used at 30 April 2014 and
31 October 2013. There is a security
interest over this property, the details of
which are disclosed in note 21.
Significant unobservable inputs
• Comparable land sales prices per
hectare (BRL 2,400-BRL 5,500) (30
April 2014: BRL 2,310-BRL 5,074)
3
• Estimated future log prices per m ,
being standing prices with the buyer
absorbing all the costs of harvesting
and haulage (BRL 35.2-BRL 52.0,
national weighted average BRL 45.1)
(30 April 2014: BRL 31.6-BRL 50.0,
national weighted average BRL 46.0)
• Estimated future overhead costs per
planted hectare (BRL 190.0) (30 April
2014: BRL 190.0)
3
• Estimated yields in m per hectare per
year (20.0-30.0) (30 April 2014: 22.535.0)
• Estimated land opportunity costs per
planted hectare (BRL 160.0) (30 April
2014: BRL 160.0)
• Estimated total establishment costs per
hectare (BRL 7,115) (30 April 2014:
BRL 7,115)
• Risk-adjusted discount rate (9.0%) (30
April 2014: 8.69%)
• Estimate of costs to sell plantations
(5%) (30 April 2014: 2%)
17
Inter-relationship between key
unobservable inputs and fair value
measurement
The estimated fair value would
increase/(decrease) if:
• comparable land sales prices
were higher/(lower)
• estimated log prices were
higher/(lower)
• estimated future overhead costs
were lower/(higher)
• estimated yields were
higher/(lower)
• estimated land opportunity costs
were lower/(higher)
• estimated establishment costs
were lower/(higher)
• the risk-adjusted discount rate
were lower/(higher)
• estimated costs to sell
plantations were lower/(higher)
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
13. Investment property and plantations (continued)
Brazil – Minas Gerais
Valuation technique
The three properties in Minas Gerais in
Brazil were valued by TerraSource
Valuation LLC. Desktop valuations were
carried out at 31 October 2014, 30 April
2014 and 31 October 2013, updating a full
valuation carried out at 30 April 2013. A
desktop valuation does not include a
physical inspection of the property by the
valuer, however in the opinion of the
Directors, carrying out a full valuation as at
31 October 2014, as opposed to a desktop
valuation, would not have resulted in a
material difference in valuation. The
valuation method applied at 31 October
2014, 30 April 2014 and at 31 October
2013 was a combination of the cost
approach and the income approach, with a
weighting of 75:25 in favour of the latter.
The cost approach consists of summation
of several elements, usually including bare
land,
pre-merchantable
timber
and
merchantable timber. The bare land
component is valued using the comparable
sales method. Timber is treated as an
improvement, and is valued by comparing
it with open market stumpage sales of
similar timber. The income approach is
based upon a valuation model: current land
value is derived using the comparable
sales method plus timber value derived
using discounted cash flow analysis. The
discounted cash flow analysis considers
the present value of the net cash flows
expected to be generated by the plantation
at maturity, the expected additional
biological transformation and the risks
associated with the asset; the expected net
cash flows are discounted using a riskadjusted discount rate.
Significant unobservable inputs
• Land value per hectare (BRL 1,742BRL 4,269) (30 April 2014: BRL
2,235-BRL 4,752)
3
• Estimated future log prices per m ,
being standing prices with the buyer
absorbing all the costs of harvesting
and haulage (BRL 48.5) (30 April
2014: BRL 53.5-BRL 55.5)
• Estimated future overhead costs per
planted hectare (BRL 117.0) (30
April 2014: BRL 122.1)
3
• Estimated yields in m per hectare
per year (30.0-35.0) (30 April 2014:
35.0-40.0)
• Estimated land opportunity costs per
planted
hectare
per
annum,
assuming no real land appreciation
(BRL 150.0) (30 April 2014: BRL
171.1)
• Risk-adjusted discount rate (9.0%)
(30 April 2014: 9.0%)
• Estimate of costs to sell plantations
(5%) (30 April 2014: 2%)
18
Inter-relationship between key
unobservable inputs and fair value
measurement
The estimated fair value would
increase/(decrease) if:
• land values were higher/(lower)
• estimated
log
prices
were
higher/(lower)
• estimated future overhead costs
were lower/(higher)
• estimated yields were higher/(lower)
• estimated land opportunity costs
were lower/(higher)
• the risk-adjusted discount rate were
lower/(higher)
• estimated costs to sell plantations
were lower/(higher)
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
13. Investment property and plantations (continued)
Hawaii
Valuation technique
The properties in Hawaii, Pahala and
Pinnacle, are leasehold interests without
any ownership of the underlying land.
Valuations have been prepared on the
assumption that these leases will be
renewed on their expiry in 2015, and that
the Group is able to secure access to the
port. These investments were valued by
Chandler Fraser Keating Limited (“CFKL”)
in accordance with IFRS. Desktop
valuations were carried out by CFKL at 31
October 2014, 30 April 2014 and 31
October 2013, augmented by a limited
inspection of the forests at the time of the
31 October 2013 valuation. In the opinion
of the Directors, carrying out a full valuation
as at 31 October 2014, as opposed to a
desktop valuation, would not have resulted
in a material difference in valuation. For
these valuations the discounted cash flow
method was used. This method considers
the present value of the net cash flows
expected to be generated by the plantation.
The cash flow projections include specific
estimates for 8 years. The expected net
cash flows are discounted using a riskadjusted discount rate. The methodology
used in the current period is the same as
that used at 30 April 2014 and 31 October
2013.
Significant unobservable inputs
3
• Estimated future log prices per m ,
being domestic log prices of timber
delivered to mill or ports (US$47.75US$63.71) (30 April 2014:
US$42.41-US$69.29)
• Estimated future indirect costs per
hectare per year (US$33.5US$38.5) (30 April 2014: US$99.0US$101.1)
• Estimated future logging costs per
3
m (US$22.06-US$42.55) (30 April
2014: US$22.06-US$42.55)
3
• Estimated yields in m per hectare
(260-510) (30 April 2014: 55-675)
and estimated mix of grade quality
• Estimated future transportation
3
costs per m (US$11.88-US$27.67)
(30 April 2014: US$11.88US$27.67)
• Estimated road construction and
3
maintenance costs per m
(US$1.50-US$4.94) (30 April 2014:
US$1.50-US$4.94)
• Risk-adjusted discount rate (9.5%)
(30 April 2014: 9.5%)
• Estimate of costs to sell plantations
(5%) (30 April 2014: 3%)
• Development costs per hectare
(US$750) (30 April 2014: US$750))
• Availability of a suitable domestic,
and where applicable, global market
for the logs
Inter-relationship between key
unobservable inputs and fair value
measurement
The estimated fair value would
increase/(decrease) if:
• the estimated log prices were
higher/(lower)
• the estimated indirect costs were
lower/(higher)
• the estimated logging costs were
lower/(higher)
• the estimated yields were
higher/(lower) and the estimated
average grade quality were
higher/(lower)
• the estimated transportation costs
were lower/(higher)
• the estimated road construction
costs were lower/(higher)
• the risk-adjusted discount rate were
lower/(higher)
• estimated costs to sell plantations
were lower/(higher)
• development costs were
lower/(higher)
• domestic and/or global demand for
the logs were higher/(lower)
The Group is exposed to a number of risks related to its plantations:
Regulatory and environmental risks
The Group is subject to laws and regulations in various countries in which it operates. The Group has established environmental
policies and procedures aimed at compliance with local environmental and other laws. Management performs regular reviews to
identify environmental risks and to ensure that the systems in place are adequate to manage those risks.
Supply and demand risk
The Group is exposed to risks arising from fluctuations in the price and sales volume of trees. Management performs regular
industry trend analyses to ensure that the Group’s pricing structure is in line with the market and to ensure that projected harvest
volumes are consistent with the expected demand.
Climate and other risks
The Group’s plantations are exposed to the risk of damage from climatic changes, diseases, forest fires and other natural forces.
The Group has processes in place aimed at monitoring and mitigating those risks, including regular forest health inspections and
industry pest and disease surveys.
19
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
14. Buildings, plant and equipment
31 October 2014 (unaudited)
Cost brought forward
Accumulated depreciation brought forward
Balance as at 1 May 2014
Movements
Reclassification to assets held for sale
(note 15)
Carrying value
Balance as at 31 October 2014
31 October 2013 (unaudited)
Cost brought forward
Accumulated depreciation brought forward
Balance as at 1 May 2013
Movements
Impairment - charged to statement of
comprehensive income
Furniture and
fittings
£
Buildings
£
Improvements
£
Motor vehicles
£
Total
£
1,513
199,680
7,640
14,977
223,810
(1,106)
407
(26,385)
173,295
(3,741)
3,899
(8,755)
6,222
(39,987)
183,823
(407)
(407)
(173,295)
(173,295)
(3,899)
(3,899)
(6,222)
(6,222)
(183,823)
(183,823)
-
-
-
-
-
Furniture
and fittings
£
Buildings
£
Improvements
£
Motor
vehicles
£
Total
£
1,830
217,184
4,730
18,168
241,912
(1,046)
784
217,184
4,730
(9,543)
8,625
(10,589)
231,323
-
(8,610)
-
-
(8,610)
Depreciation for the period
(132)
-
-
(491)
(623)
Foreign exchange effect
(99)
(231)
(27,284)
(35,894)
(554)
(554)
(998)
(1,489)
(28,935)
(38,168)
553
181,290
4,176
7,136
193,155
Carrying value
Balance as at 31 October 2013
15. Disposal groups and assets held for sale and discontinued operations
During the period, the Group sold land and plantations in two tracts in the state of Georgia and land in Tarrangower, Australia,
realising a profit of £290,609. The Group also undertook an active marketing process and implemented a disposal plan to locate
buyers for the remaining assets in Brazil and Hawaii. The assets and liabilities of the Australia, Hawaii and Brazil segments were
not previously classified as held for sale or as discontinued operations. The comparative condensed consolidated statement of
comprehensive income and the condensed consolidated statement of cash flows have been restated to show the discontinued
operations separately from continuing operations.
The assets in Brazil are likely to be sold through a disposal of the entities owning the assets. Accordingly, as at 31 October 2014,
the Group’s Brazil segment is presented as a disposal group held for sale. The Group’s accounting policy for a disposal group held
for sale is the same as the accounting policy for assets held for sale in the Group’s financial statements for the year ended 30 April
2014.
The Brazil disposal group comprises the following assets and liabilities held for sale:
Investment property and plantations
Assets
held for sale
Liabilities
held for sale
£
£
31 October
2014
Unaudited
£
23,165,741
-
23,165,741
242,374
-
242,374
Deferred tax liability
-
663,336
(663,336)
Provisions
-
3,283,740
(3,283,740)
23,408,115
314,982
4,262,058
(314,982)
19,146,057
Trade and other receivables
Trade and other payables
20
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
15. Disposal groups and assets held for sale and discontinued operations (continued)
An impairment loss of £97,883 has been recognised in the unaudited condensed consolidated statement of comprehensive income
writing down the carrying amount of the disposal group to its estimated net realisable value, being fair value less costs to sell. The
impairment loss presented in the statement of comprehensive income has been applied to reduce the carrying amount of buildings,
plant and equipment within the disposal group to zero. A loss of £1,104,175 related to the disposal group, representing foreign
exchange translation of discontinued operations, is included in other comprehensive income (see note 18).
The plantations in Hawaii are likely to be sold as asset sales and are therefore presented as assets held for sale with a combined
carrying value of £4,698,030.
Total assets held for sale in the statement of financial position are as follows:
31 October 2014
Unaudited
£
30 April 2014
Audited
£
Balance brought forward
10,404,052
-
Reclassified from investment property and plantations (note 13)
35,428,082
12,348,580
Reclassified from buildings, plant and equipment (note 14)
183,823
-
Capitalised costs of assets held for sale
163,195
-
Reclassified from trade and other receivables
242,374
-
Proceeds of disposals of assets held for sale
(11,665,842)
-
290,609
Profit on disposal of assets held for sale
Decrease in the fair value of disposal groups and assets held for sale
Impairment of disposal groups
Foreign exchange effect
Assets held for sale by region
(5,941,184)
(1,014,837)
(97,883)
-
(901,081)
28,106,145
(929,691)
10,404,052
31 October 2014
Unaudited
£
30 April 2014
Audited
£
-
10,404,052
Brazil
23,408,115
-
Hawaii
4,698,030
28,106,145
10,404,052
North America
The fair value measurement of £28,106,145 has been categorised as a Level 3 fair value based on the appraised fair values of the
investment property and the appraised fair values of the plantations less costs to sell. These assets were measured using the
comparable sales method (for the investment property) and the discounted cash flow basis (for the plantations). The fair value of
other assets and liabilities within the disposal group is not significantly different from their carrying amounts.
21
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
15. Disposal groups and assets held for sale and discontinued operations (continued)
Net cash flows attributable to the discontinued operations were as follows:
For the period
ended
31 October
2014
Unaudited
£
For the period
ended
31 October
2013
Unaudited
£
(6,892,761)
(5,583,471)
Operating activities
Loss for the year before taxation
Adjustments for:
Profit on disposal of assets held for sale
Decrease in fair value of disposal groups, assets held for sale and
investment property and plantations
(290,609)
-
5,941,184
2,610,030
Impairment of disposal groups and buildings, plant and equipment
97,883
8,610
236,543
1,950,948
-
623
Increase in provisions
Depreciation
Net finance costs
182,659
131,499
Increase in trade and other receivables
(79,534)
(67,963)
(188,069)
(591,533)
Taxation paid
Net cash used in operating activities
Net cash from/(used in) investing activities (sales proceeds of assets held for sale and capitalised
costs)
(98,211)
(1,090,915)
(1,541,257)
11,244,497
(364,086)
Net cash used in financing activities (net finance costs and repayment of bank loan)
(3,693,007)
(131,499)
271,512
6,732,087
(76,879)
(2,113,721)
31 October 2014
Unaudited
30 April 2014
Audited
£
£
Decrease in trade and other payables
Foreign exchange movements
Net cash flow for the period
16. Trade and other receivables
35,465
135,054
Trade receivables
-
23,698
Prepaid expenses
54,947
90,412
56,985
215,737
31 October 2014
Unaudited
30 April 2014
Audited
£
£
-
3,512,508
Goods and services tax receivable
17. Bank borrowings
Metropolitan Life Insurance Company (“Metropolitan Life”)
The loan was secured on approximately 15,100 acres of timber and timberland assets located in two tracts in the state of Georgia.
Following the disposal of these assets during the period, the loan was repaid in full.
22
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
18. Foreign exchange effect
The translation reserve movement in the period, all of which was derived from discontinued operations, has arisen as follows:
Exchange
rate at
31 October
2014
31 October 2014
Exchange
rate at
30 April
2014
Translation
reserve
movement
Unaudited
Australian Dollar
1.8182
1.8167
(7,908)
Brazilian Real
3.9589
3.7600
(1,104,175)
United States Dollar
1.5995
1.6873
348,173
(763,910)
Exchange rate
at 31 October 2013
Exchange rate
at 30 April 2013
Translation
reserve
movement
Unaudited
Australian Dollar
1.6962
1.4976
(540,998)
Brazilian Real
3.5880
3.1082
(4,284,734)
United States Dollar
1.6040
1.5532
(517,322)
(5,343,054)
31 October 2014
Unaudited
£
30 April 2014
Audited
£
Cash held at bank
7,776,689
3,052,251
Cash held in Escrow
1,944,069
9,720,758
889,105
3,941,356
31 October 2013
19. Cash and cash equivalents
The cash held in Escrow is held as a retention of amounts receivable from the sale of investment property and plantations in
Georgia during the period (see note 15). US$1.0m (£0.6m) was released from Escrow in November 2014, with the remaining
balance due to be released in June 2015. In the prior year the cash held in Escrow was held as security against the loan payable to
Metropolitan Life Insurance Company (see note 17).
20. Trade and other payables
Accruals
Trade creditors
Taxation payable
23
31 October 2014
Unaudited
£
30 April 2014
Audited
£
225,846
228,516
13,604
148,091
239,450
74,270
450,877
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
21. Provision
There is a security interest on the property owned by 3R Tocantins Florestais Ltda. (“3R Tocantins”) to cover a liability between the
previous owners and Banco da Amazonia (BASA), a financial institution which lent money to the previous owners who used the
property as collateral. In February 2009, BASA filed a lawsuit against the previous owners of 3R Tocantins aiming to foreclose on
its mortgage and collect BRL 5.8 million (£1.5 million). As at 31 October 2014, the estimated total liability was BRL 14.0 million
(approximately £3.5 million) after considering 1) a monthly interest rate of 1%, 2) the official monetary restatement of the INPC
(Brazilian consumer prices index) of 6.19% per annum and 3) estimated attorney fees of 15% of the value of the claim as of the
filing date of the collection lawsuit on 17 December 2009.
3R Tocantins holds a security interest on Lizarda, another property of the previous owners, to cover for this potential liability in the
event it materialises. A third party valuation completed in December 2013 valued this property at BRL 7.7 million (£1.9 million),
however the security on this property may be limited to BRL 5.0 million (£1.3 million) and may not be enforceable.
3R Tocantins has an outstanding liability due to the previous owners of BRL 1.0 million (£0.3 million) (30 April 2014: BRL 1.0 million
(£0.3 million)), approximately 6% of the purchase price of the 3R Tocantins property, which was retained to support any liability
associated with the previous owners.
The Directors will continue to use their best endeavours to negotiate with BASA to relieve the security interest on 3R Tocantins,
and if necessary attempt to enforce the security interest on Lizarda. However, given the uncertainty in relation to these events, an
amount of BRL 13.0 million (£3.3 million) (30 April 2014: BRL 12.1 million (£3.2 million)) has been provided to cover any potential
claim as a result of the above circumstances, representing a charge in the period of BRL 0.9 million (£0.2 million). In the opinion of
the Directors this provision, together with the existing BRL 1.0 million retention, should cover the estimated mortgage liability if
called upon.
The provision and the outstanding liability to the previous owners form part of the Brazil disposal group and, at the period end date,
have been reclassified in these financial statements as liabilities held for sale (see note 15).
22. Stated capital
Balance brought forward and carried forward
31 October 2014
Unaudited
30 April 2014
Audited
£
£
2,000,000
2,000,000
The total authorised share capital of the Company is 250 million shares of no par value. On initial placement 104,350,000 shares
were issued at 100 pence each. Shares carry no automatic rights to fixed income but the Company may declare dividends from
time to time to which shareholders are entitled. Each share is entitled to one vote at meetings of the Company.
On 22 February 2007, a special resolution was passed by the Company to reduce the stated capital account from £104,350,000 to
£2,000,000. Approval was sought from the Royal Court of Jersey and was granted on 29 June 2007. The balance of £102,350,000
was transferred to a distributable reserve on that date.
The Company was granted authority by shareholders on 15 August 2008 to make market purchases of its own shares, an authority
which was renewed on 4 October 2010, 12 October 2011, 8 October 2012, 16 October 2013 and 16 October 2014.
Movements of shares in issue
In issue at 30 April and 31 October fully paid
For the 6 months
ended 31 October
2014
Unaudited
Number
For the 6 months
ended 31 October
2013
Unaudited
Number
102,130,000
102,130,000
23. Reserves
The movements in the reserves for the Group are shown on page 7.
Translation reserve
The translation reserve contains exchange differences arising on consolidation of the Group’s foreign operations.
Distributable reserve
On 22 February 2007, the Company reduced its stated capital account and a balance of £102,350,000 was transferred to
distributable reserves. This reserve is utilised if the Company wishes to purchase its own shares and for the payment of dividends.
24
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
24. Contingent asset
Under the terms of the agreement relating to the sale of the Tarrangower property in Australia, in the case that the property is sold
on by the purchaser at a profit within 12 months of the disposal date, the Group will be entitled to 25% of any profit arising on the
sale.
25. Net asset value reconciliation
Net asset value brought forward
Translation of foreign exchange differences
Decrease in the fair value of disposal groups, assets held for sale and
investment property and plantations
Gain on disposal of assets held for sale
Provision
Impairment loss on disposal groups held for sale
Impairment loss on buildings, plant and equipment
Net finance costs
Net foreign exchange gain/(loss)
Loss before above items
Net asset value carried forward
For the 6 months
ended 31 October
2014
Unaudited
£
Restated
For the year
ended 30 April
2014
Unaudited
£
Restated*
For the 6 months
ended 31 October
2013
Unaudited
£
40,545,541
60,356,500
60,356,500
(763,910)
(7,506,014)
(5,343,054)
(5,941,184)
(6,260,949)
(2,610,030)
290,609
-
-
(236,543)
(3,218,085)
(1,950,948)
(97,883)
-
-
-
(6,241)
(8,610)
(180,499)
(249,866)
(128,513)
9,581
(15,306)
(9,775)
(209,905)
33,415,807
(2,554,498)
40,545,541
(1,361,129)
48,944,441
* See note 15
26. Related party transactions
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the
other party in making financial or operational decisions. Until the termination of their contract on 16 October 2014, CP Cogent Asset
Management LP was the Investment Manager to the Company under the terms of the Investment Management Agreement and
was thus considered a related party of the Company.
During the period £198,811 (2013: £279,145) was paid to CP Cogent Asset Management LP in respect of management fees.
During the period the Directors received the following remuneration in the form of fees from the Company:
For the 6 months
ended 31 October
2014
Unaudited
£
For the 6 months
ended 31 October
2013
Unaudited
£
Donald Adamson
20,000
20,000
Svante Adde
17,500
14,798
Roger Lewis
12,500
6,798
Martin Richardson
11,481
12,500
Robert Rickman
36,449
28,500
William Spitz
97,930
5,702
88,298
Martin Richardson and Robert Rickman served as Directors of the Company until their resignations on 16 October 2014. On that
date Robert Rickman was appointed as Operations Manager of the Group.
In addition to their contractual Directors’ fees, Svante Adde and Robert Rickman were paid fees of £5,000 and £21,097 respectively
for their work in visiting and reviewing the Group’s portfolio of assets. Robert Rickman was paid a further £3,871 in the period as
remuneration in his role as Operations Manager.
25
Cambium Global Timberland Limited
Notes to the unaudited condensed consolidated interim financial statements (continued)
For the six months ended 31 October 2014
26. Related party transactions (continued)
At the period end, the Directors had the following interests in the shares of the Company:
31 October 2014
Unaudited
Number
30 April 2014
Audited
Number
Donald Adamson
550,000
550,000
Svante Adde
200,000
200,000
Roger Lewis
750,000
750,000
During the part of the period in which they served as Directors of the Company, Martin Richardson and Robert Rickman had
interests in 150,000 and 25,000 shares of the Company respectively.
27. Events after the reporting period
In December 2014 a storm caused significant damage to the Pahala plantation in Hawaii, the smallest and least valuable of the
Group’s plantations.
On 27 January 2015, shareholders approved a resolution to distribute £5,000,000 of cash via a tender offer of 25 pence per share.
Since 31 October 2014, the Brazilian Real has continued to depreciate and economic conditions in Brazil remain very difficult. The
combination of these two factors has again reduced the value of the Minas Gerais and Tocantins plantations. The result is that the
Board estimates (based on the advice of the Operations Manager and all factors known to date) that the NAV as at the date of
signing of these interim financial statements, taking into account the effect of the tender offer, is around 30p per share.
This revised estimated NAV has not been subjected to a review under International Standard on Review Engagement (UK &
Ireland) 2410 Review of Interim Financial Information per formed by the Independent Auditor of the Entity.
For the avoidance of doubt and in accordance with applicable accounting standards, no provision has been included in the NAV for:
certain costs of disposal of assets; on-going overheads to which the Company is subject; or the costs of liquidating the Company
and its subsidiaries in due course.
26
Cambium Global Timberland Limited
Directors
Donald Adamson (Chairman)
Svante Adde
Roger Lewis
Registered Office of the Company
26 New Street
St Helier
Jersey JE2 3RA
Operations Manager
Robert Rickman
Property Valuers
Consufor Advisory & Research
Rua Fagundes Varela
585 - Jardim Social
CEP 82520-040
Curitiba
Brazil
Sub-Administrator
Praxis Fund Services Limited
PO Box 296
Sarnia House
St Peter Port
Guernsey GY1 4NA
Administrator and Company Secretary
Bedell Trust Company Limited
26 New Street
St Helier
Jersey JE2 3RA
Auditor
KPMG Channel Islands Limited
37 Esplanade
St Helier
Jersey JE4 8WQ
TerraSource Valuation LLC
2314 Katie Leigh Lane
Monroe, NC
28110
United States
Chandler Fraser Keating Limited
PO Box 2246
Rotorua 3040
New Zealand
Registrar, Paying Agent and Transfer Agent
Capita Registrars (Jersey) Limited
PO Box 378
Jersey JE4 0FF
Corporate Broker and Nominated Adviser for AIM
Panmure Gordon (UK) Limited
1 New Change
London EC2M 9AF
27