TREE.L Regulatory News (TREE)

1 August 2012

Cambium Global Timberland Limited (the "Company")

Annual Report and Audited Financial Statements for the year ended 30 April 2012

The Company announces that the Annual Report and Audited Financial Statements for the year ended 30 April 2012 (the "Financial Statements") are available and attached hereto.

An electronic copy of the Financial Statements is available on the Company's website at www.cambiumfunds.com.

For further enquires please contact:

Broker and Nominated Adviser

Matrix Corporate Capital LLP

Paul Fincham / Jonathan Becher

+ 44 (0) 20 3206 7000

Chairman's Statement

After a difficult first half of the year the timberland portfolio showed stabilisation and modest appreciation during the second half of the year. Sterling appreciation over the year, particularly against the Brazilian Real, reduced the net asset value. The Company's net asset value as of 30 April 2012 was 67 pence per share compared to 78 pence per share at 30 April 2011. A dividend of 3 pence per share was paid during the period. Returns for the period were -10.9%.

The financial results for the Company reflect the difficult market environment that exists in the global timber markets and of the markets' impact on timberland valuations. The timber portfolio contributed -3.6% of attribution to the return. Sterling appreciation contributed -5.7%, company level expenses -1.8%, and share repurchases were accretive by 0.3%.

During the period the Company took steps to continue to develop the portfolio. In March 2012, the Corrigan land sale completed. In April 2012, the Company announced a sale of the property in Florida. These land sales are the last planned land sales in North America. The Company is currently marketing for sale a portion of the land in Brazil. The land that is being marketed for sale is unplanted. This will be the last significant land sale that the Company needs to accomplish to meet its liquidity needs. After completion of the land sale in Brazil, and the planting of 2,500 acres planned for this year, the planting program will be complete.

The investment portfolio showed some positive momentum in the second half of the year. The timber portfolio contributed 1.0% of return, company level expenses were -0.9%, share repurchases were accretive by 0.1%. The effect of foreign exchange negated the gains by the portfolio as foreign exchange contributed -5.2% of attribution resulting in total returns for the second six months of -5.0%.

During the period covered by these results the Company bought back 2,000,000 shares. The Board and the Investment Manager believe that the repurchase of shares at a discount is beneficial for shareholders.

After the end of the reporting period, the Company received a notice requisitioning an EGM from Stafford Timberland Limited ("Stafford") proposing a number of resolutions seeking to instruct the Board to change manager to Stafford. The EGM was duly convened on 6 July 2012 and a circular containing the recommendation of the independent directors of the Company was sent to shareholders. These recommendations were supported by shareholders and all the resolutions proposed were defeated. The circular announced that the independent directors had retained Matrix Corporate Capital LLP to advise on a strategic review of the future of the Company. The key elements of this review, which is in progress, are:-

In previous years, the Directors have recommended payment of a dividend at 3p per share. This year, the issue of the dividend is being considered as part of the strategic review and, pending the outcome of the strategic review, no recommendation as to dividend is being made at this time. The independent directors and their advisors aim to conclude the strategic reviews as soon as practicable at which time a further announcement will be made.

The strategic review is an important step and will seek to establish from a range of possible alternatives the most appropriate future of the Company.

Donald Adamson

Chairman

Date: 31 July 2012

Investment Manager's Report

Introduction

The first half of the period covered by these accounts proved to be challenging, as the portfolio experienced a fire on one of its properties and declines in land and timber values. The second half of the year saw stable United States land and timber prices and a slight increase in the value of the timberland properties.

The largest impact to Cambium's financials this year was the depreciation of the Brazilian Real. This significantly and negatively impacted the value of the investments in Sterling terms. We will continue to experience short-term volatility from currency movements, particularly with the Brazilian Real. Over the longer term, these impacts will be muted as our customers produce products for a global stage and Brazilian Real depreciation strengthens their ability to pay for inputs.

The timber portfolio contributed -3.6% to the return for the fiscal year. The value decreased in the first half of the year primarily due to fire damage on the Corrigan property and a reduction in the land value of a portion of the Minas Gerais property in Brazil. In the second half of the year, we experienced stable land prices in the United States, increased land values in Brazil, and biological growth of the plantations. The portfolio contributed 1.0% to the return experienced in the second half of the year.

During the year, our most significant activities were two land sales in the United States. The land sales provided liquidity to the Company and served to improve the maturity profile of the timberland portfolio. The sale of the Corrigan property was completed in March 2012. In April 2012, we announced the sale of the Florida property, which was completed in May of 2012. The Florida land sale is the last anticipated land sale in the United States. Marketing continues on the unplanted property in Brazil which is anticipated to be the final large land sale for the Company.

The age class of the timber in the portfolio continues to mature as we reduce the amount of unplanted land and prepare for the harvest of mature trees in Hawaii.

Below is a recap of each of the investments of the Company.

United States South

At year end, approximately 31% of the portfolio value was located in the United States South. During the period covered by these accounts, the properties in the United States South returned -6.9%. The decline in value was due to fire damage at Corrigan in June 2011 and reduced timber prices. The second half of the year showed signs of improvement with an increase in the value of the US South of 0.9%.

After the completion of the two land sales in the United States, the remaining holding is comprised of 15,100 acres located in Georgia. This represents core industrial North American timberland with a maturing forest that will provide for sustainable yield and exposure to improving building product markets.

Brazil

The properties in Brazil represent 43% of net assets. For the year, the assets produced a -0.9% return. The decline in the first half of the year was primarily attributable to a decrease in the land value of a portion of the property in Minas Gerais. In the second six months of the year, the Brazilian properties provided a 4.3% increase in value due primarily to biological growth of the young plantations and land appreciation.

We currently have 18,270 planted acres in Brazil. 69% of the plantable acres owned by the Company have been established. For the year, we planted 3,700 acres with approximately 1.6 million seedlings. To date, we have planted approximately 8.2 million seedlings.

We are currently marketing for sale a portion of the unplanted land in Brazil. This will represent the last anticipated large land sale for Cambium. Upon completion of the land sale the percentage of planted land would be 90%.

This year, Cambium is planting 900,000 seedlings on an additional 2,200 acres. This will complete the planting program for the Company.

Australia

The asset in Australia represents 9% of the net asset value of the Company. For the year, the return was 0.0%. This was due to a decline in the second half of the year of -1.8%. The decline was primarily due to tree mortality on approximately 150 acres. The remaining 5,300 acres of plantation is healthy and has received above average rainfall to sustain growth. Underlying land prices remain unchanged from the last appraisal. Due to the long duration growth cycle of this forest we anticipate modest NAV accretion from the property as the timber continues to mature.

Hawaii

The Hawaii assets represent 11% of the portfolio. For the year, the assets declined in value -5.6% due to lower prices for export logs to China. Due to the mature age class of the timber, this asset will experience greater volatility as export log prices fluctuate. The properties continue to benefit from biological growth.

We are currently preparing for the harvesting of this asset. In June of 2011, we shipped logs from Hawaii to China for testing by various end users. In August 2011, we met with the end users and received favorable outlook for the wood quality. We are now on a timeline to begin harvesting and exporting the logs in 2013. Road construction is commencing on the Pinnacle plantation which will allow harvesters access to the timber. We are also working on developing harvest capabilities as well as working with the port authorities.

Conclusion

We believe Cambium has positive momentum in each of the geographies that it is invested in. The United States South property is located in a region with multiple end users of timber and is well situated to take advantage of building material markets as they improve. The planting program will be completed in Brazil, which provides investors with exposure to some of the best biological growth rates in the world as well as developed end use markets. We will begin harvesting and exporting logs from the Hawaii plantations and we look forward to updating you on the portfolio's progress in next year's reports.

CP Cogent Asset Management

Date: 31 July 2012

Board of Directors

Donald Lindsay Adamson (aged 53), Independent Non-executive Chairman

Donald Adamson has many years' experience in fund management, corporate finance and private equity. He acts as director or chairman of a number of listed and privately held investment companies including The Lindsell Train Investment Trust Plc, Invesco Leveraged High Yield Fund Limited and other companies. He holds an MA (Hons) from University College, Oxford in History and Economics and carried out postgraduate research at Nuffield College, Oxford in private equity investment. He is a member of the Chartered Institute for Securities & Investment and Chairman of the Offshore Committee of the Association of Investment Companies.

Martin Willaume Richardson (aged 64), Independent Non-executive Director

Martin Richardson was a partner of the Jersey practice of Rawlinson & Hunter between 1987 and 2009 and continues as a consultant to the firm, specialising in trust and mutual fund administration services to the financial services sector. He is a director of Real Estate Opportunities Limited and a number of other companies. He has a BA in Science Engineering from the Royal Military College of Science, Shrivenham and served in the Royal Engineers between 1968 and 1977. On leaving the army, he qualified as a Chartered Accountant with Coopers & Lybrand, Jersey for whom he worked from 1976 to 1981.

Colin Sean McGrady (aged 41), Non-executive Director

Colin McGrady is a founding partner of Cogent and is head of its asset management business. Colin is a director of Cogent GP, LLC and Cogent Partners Investment, LLC. Prior to co-founding Cogent, Colin was a member of the eight-person investment team at The Crossroads Group, a US$2 billion private equity fund of funds in Dallas, Texas. Prior to Crossroads, Colin spent three years at Bain & Company in the USA and Japan. Colin earned an MBA from Harvard Business School, received a BA in Economics from Brigham Young University and is a Chartered Financial Analyst.

Robert James Rickman (aged 54), Independent Non-executive Director

Robert Rickman is a director of and adviser to a number of forestry and forest industry companies in the UK and internationally. He is a founding partner of the Rockley Group, making and managing technology-based investments worldwide. From 2001 until 2007 he was a director and latterly chairman of the AIM quoted Highland Timber Plc, with forestry operations in the UK and New Zealand. He is a non-executive director of The Schroder Mid Cap Investment Trust Limited and of Carclo plc, a diversified manufacturing group, both listed on the LSE. Robert was a non-executive director of Bookham Technology Plc from 1994 to 2004, during which time the company was listed on the LSE and NASDAQ. He has held various non-executive and executive positions with a number of forestry companies (including until 1999, FIM Services Limited) and was an economist for the Government of St. Lucia. He is a current member of the UK Institute of Chartered Foresters. Robert has a MA in Agriculture and Forest Science and an MSc in Forestry and its relation to Land Management from the University of Oxford.

William Taylor Spitz (aged 61), Independent Non-executive Director

William Spitz is a principal and director of Diversified Trust Company and is also vice-chancellor for Investments Emeritus for Vanderbilt University. Prior to his retirement after 22 years of service, he was responsible for the management of the University's US$3.5 billion endowment as well as its treasury and technology transfer operations. During that period, he served on a number of advisory committees for timber, private equity and real estate funds and was the recipient of several significant awards given to prominent members of the endowment community. In addition to Cambium Global Timberland Limited, William serves as a director of MassMutual Financial Group and Acadia Realty. Previously, he served as a director of the Bradford Fund and was chair of the board of The Common Fund. Prior to joining Vanderbilt University in 1985, he was an officer of several investment management firms in New York. William is a Chartered Financial Analyst and holds an MBA from the University of Chicago.

Directors' Report

The Directors present their annual report and the audited consolidated financial statements (the "Financial Statements") of the Group, which comprises Cambium Global Timberland Limited (the "Company") and entities under its control (together the "Group"), for the year ended 30 April 2012.

Business of the Company

The Company was incorporated as a closed-ended Jersey registered investment company with limited liability on 19 January 2007. The shares were successfully admitted to the Alternative Investment Market ("AIM"), a market of the London Stock Exchange, with a dual listing on the Channel Islands Stock Exchange ("CISX"). The Company has received a certificate from, and is regulated by, the Jersey Financial Services Commission under the Collective Investment Funds (Jersey) Law 1988, as amended.

The Company operates a portfolio of geographically diverse timberland assets located both in mature and developing markets. The Company's portfolio consists of pine plantations in the Southern United States, fast-grown eucalyptus in Brazil, long-rotation eucalyptus in Australia, and eucalyptus sawlogs in Hawaii. The Company is currently fully invested, but may invest in other regions on an opportunistic basis, as determined by the Investment Manager with the approval of the Board. The Company's strategy is to generate superior total returns to investors by effectively managing an optimised portfolio of timberland properties and timberland-related investments diversified by location, age class and species. Each of the assets is managed on an environmentally and socially sustainable basis. Assets are managed for timber production with exposure to emerging environmental markets.

A review of business during the year and future developments is contained in the Chairman's Statement and Investment Manager's Report.

Results and dividends

The results of the Group are stated on page 15. The Directors proposed a final dividend of 3 pence per share (2011: 3 pence per share) in respect of the financial year ended 30 April 2011 and this was paid to shareholders on 20 October 2011. The Board is considering the question of the payment of dividends as part of its strategic review into the future of the Company, and will report to shareholders on this matter in due course.

The Board

The Board currently consists of five Directors. The Chairman is Donald Adamson who is independent of the Investment Manager. Colin McGrady, as the only non-independent Director, stands for re-election every year. The Board considers that, with the exception of Colin McGrady, the Directors are independent of the Investment Manager.

It is required that Directors shall retire and stand for re-election at regular intervals of no more than three years. Each Director, with the exception of Colin McGrady, is appointed for a three-year term subject to the performance evaluation carried out by the Remuneration Committee each year. The Board will agree whether it is appropriate for a Director to seek an additional term. There is no set notice period and no provision for compensation upon early termination of appointment. During the forthcoming year Donald Adamson will reach the end of his current three-year term and will therefore retire and stand for re-election.

Directors

The Directors of the Company, who held office during the year and at the date of this report, are detailed below:

No Directors resigned during the year.

Directors' interests

The following Directors had interests in the shares of the Company at 30 April 2012:

Colin McGrady is a founding partner of CP Cogent Asset Management LP who acts as the Investment Manager for the Company.

Substantial shareholdings

Shareholders with holdings of more than 3% of the issued shares of the Company as at 3 July 2012 were as follows:

Corporate governance

As a Jersey incorporated Company and under the AIM Rules for companies, it is not a requirement for the Company to comply with the UK Corporate Governance Code published by the Financial Reporting Council (the "FRC Code").

The Company has voluntarily chosen to adopt the principles and recommendations of the Association of Investment Companies ('AIC') Code of Corporate Governance (the 'AIC Code') by reference to the AIC Corporate Governance Guide for Investment Companies (the "AIC Guide"). A framework of best practice for Jersey domiciled Member companies was issued by the AIC in October 2010 and a Statement of Support was given by the Jersey Financial Service Commission ("JFSC") in relation to the adoption of the AIC Code by Jersey domiciled investment companies. The AIC Code, as explained by the AIC Guide, addresses all the principles set out in Section 1 of the FRC Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company.

On 2 April 2012, the Jersey Financial Services Commission issued Codes of Practice for Certified Funds (the "CF Codes") issued pursuant to the Collective Investment Funds (Jersey) Law 1988. The CF Codes have been prepared and issued for the purpose of establishing sound principles and providing practical guidance in respect of any Jersey certified fund or any Regulation or Order made under it. The Company has carefully considered the eight fundamental principles of the CF Codes and has adopted certain policies in order to comply with the new regulation.

The Board considers that it is appropriate to report against the principles and recommendations of the AIC Code by reference to the AIC Guide within this Annual Report and Financial Statements and to report against the principles of the CF Codes. The Directors believe that the Company has complied throughout the accounting period, except where noted below. The Board will continue to consider the Company's corporate governance practices, periodically at Board meetings, so as to remain satisfied with the degree of compliance with the Principles as set out in the AIC and CF Codes. The following describes how the relevant principles of governance are applied to the Company.

Board meetings

The Board meets at least four times a year and between these formal meetings there is regular contact between the Investment Manager, Nominated Advisor, Broker, Administrator, Sub-Administrator, Delegate Company Secretary and Company Secretary. The Directors are kept fully informed of investment and financial controls and other matters that are relevant to the business of the Company. The Directors have access, where necessary in the furtherance of their duties, to independent professional advice at the expense of the Company.

Any matters that should be brought to the Directors' attention are provided in an agenda and all items are considered by the Board and its advisers at the Company's quarterly meetings. Sufficient notice is provided to all the Board members and the Investment Manager prior to any formal meeting. Focus is given to a review of the Company's investment performance, approval of financial statements, approval of borrowings by the Company and its Group, as well as associated matters such as investor relations, industry and market conditions and the overall strategy of the Company. A set of papers containing quarterly reporting is circulated to the Board in advance of the meeting and the Directors may request any agenda items to be added that they consider appropriate for Board discussion. All Directors are able to request relevant financial and regulatory information from its engaged parties and should expect to receive such items within a timely manner. Additionally, each Director is required to inform the Board of any potential or actual conflicts of interest prior to Board discussion.

Contractual agreements are not entered into without full and proper consideration by the Board and their contracts are reviewed on an annual basis by its Remuneration Committee. The remuneration of each appointment is carefully considered in line with the quality and experience of the provider and measured against the work they undertake for the Company.

The Board has agreed investment guidelines with the Investment Manager and the overall strategy and actions of the Company are not without due consideration to these remits. The Board monitors the guidelines in relation to repurchasing of shares and cash management.

The Board considers its share price discount at every Board meeting and will, if thought fit and proper, take action to address any imbalance in the supply and demand for Company shares.

Committees of the Board

Audit Committee

The Board operates an Audit Committee which comprises Donald Adamson, Martin Richardson, Robert Rickman and William Spitz. Martin Richardson serves as Chairman of the Committee. The Audit Committee operates within defined terms of reference as agreed by the Board which are available from the Company Secretary upon request. The Audit Committee function is to ensure the Company's financial performance is properly reported on and monitored. The Committee meets at least twice a year and considers the items below, the list is not exhaustive:

When required the Audit Committee meetings are also attended by the Administrator and the Company's Auditors.

Remuneration Committee

The Board operates a Remuneration Committee which comprises all independent Directors. Either Martin Richardson or Donald Adamson acts as chair. The Committee operates within defined terms of reference agreed by the Board which are available from the Company Secretary upon request. The Committee meets at least once a year. The main duties of the Committee are outlined below, but the list is not exhaustive.

As part of the evaluation process the Committee will evaluate the composition and balance of the Board. The experience, skills and effectiveness of each Director are also considered before recommendation of their individual re-election.

Details of the skills and experience of the Directors are disclosed in the biography section on page 6.

The Chairman leads the performance evaluation of the Board and the Directors lead the evaluation of the Chairman. The Board, as a whole, evaluates its own performance and that of its committees and third party advisers. This evaluation ensures that the Chairman continues to remain independent from the Investment Manager and his integrity and judgement does not conflict with his own interests and those of the shareholders.

Committee of Independent Directors

On 21 May 2012, Stafford Timberland V Investment Nominees Limited, representing 10.91% of the current issued share capital of the Company, served a requisition notice requiring the Board to requisition a general meeting of members of the Company to seek the permission of the Jersey Financial Services Commission to remove the Investment Manager and replace them with Stafford Timberland Limited. On 15 May 2012, the Board resolved to form an Independent Committee, comprising all the independent Directors, to deal with items relating to, and/or actions arising from, the Requisition Notice. The Committee would consider all formal proposals presented to the Company. Following the defeat of the resolutions at the EGM held on 6 July 2012, the Committee is continuing with a strategic review of the Company and its future direction.

Meeting attendance

All members of the Board are expected to attend each Board meeting and to arrange their schedules accordingly, although non-attendance is unavoidable in certain circumstances.

The table below shows the number of meetings held during the year ended 30 April 2012 and the number of Board and committee meetings attended by each Director:

Board responsibilities

The Directors meet at least four times a year to consider, as appropriate, such matters as:

The Board has been continually engaged in a review of the Company's strategy with the Investment Manager and Broker to ensure the employment of appropriate strategies under prevailing market, political and economic conditions at any particular time, within the overall investment restrictions of the Company.

To support the review of the strategy, the Board has focused at Board meetings on a review of individual investments and returns, country exposure, the overall portfolio performance and associated matters such as gearing and pipeline investment opportunities. Additionally a strong focus of attention is given to marketing, investor relations, risk management and compliance, peer group information and industry issues.

These matters are discussed by the Board to clearly demonstrate the seriousness with which the Directors take their fiduciary responsibilities and as an ongoing means of measuring and monitoring the effectiveness of their actions.

The Board has engaged external companies to undertake the investment management, administrative activities of the Company and the production of the Annual Report and Financial Statements, which are independently audited. Clearly documented contractual arrangements are in place between these firms that define the areas where the Board has delegated responsibility to them. Whilst the Board delegates responsibility, it retains accountability for the functions it delegates and is responsible for the systems of internal control.

Relations with shareholders

The Board monitors the trading activity and shareholder profile on a regular basis and places importance on effective communication with shareholders. Both the Broker and Investment Manager maintain dialogue with major shareholders and feedback is reported at least quarterly to the Board. In addition the Company reports formally to shareholders twice a year, by way of the Annual Report and interim report. All shareholders have the opportunity to attend the AGM of the Company where a Director is present to meet shareholders and answer any questions.

The Board has involvement in reviewing the content of communication to shareholders and the Chairman, from time to time, may meet with major shareholders to listen to their views. Current information is provided to shareholders on an on going basis through the Company's website: www.cambiumfunds.com.

Shareholder sentiment can also be gauged by the careful monitoring of the premium or discount that the Company's shares are traded at in the market when compared to those experienced by similar companies. The Board ensures that shareholders have sufficient information for them to understand the risk/reward balance to which they are exposed by holding the shares.

Internal controls

The Board is ultimately responsible for the Company's system of internal control and for reviewing its effectiveness. The Board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. This process has been in place for the year under review and up to the date of approval of this Annual Report and Financial Statements. In line with general market practice for investment companies, the Directors do not conduct a formal annual review of the internal controls. However, the Board does conduct an annual review of the financial reporting procedures and corporate governance controls and feels that the procedures employed by the service providers adequately mitigate the risks to which the Company is exposed.

The key procedures which have been established to provide effective internal controls are as follows:

The internal control systems are designed to meet the Company's particular needs and the risks to which it is exposed. Accordingly, the internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and by their nature can only provide reasonable and not absolute assurance against misstatement and loss.

Bribery Act

The Bribery Act came into force on 1 July 2011. The Company undertakes a review of its asset administrators and reviews the reporting on a quarterly basis. The Company ensures that adequate procedures are in place to prevent acts of bribery by assessing the risks.

Foreign Account Tax Compliance Act ("FATCA")

The objective of FATCA is to identify U.S. persons who may be evading tax through investment into offshore investment vehicles. FATCA will be applicable to offshore funds and investment structures which receive U.S. income and hold U.S. investments. Although there remains, at this time, some uncertainty regarding the detail implantation of the new regime there is sufficient information to begin planning an approach to be FATCA compliant. The Company will ensure that adequate measures are taken to comply prior to the deadline of registration on 30 June 2013.

Directors' responsibilities with regards to financial reporting

The Directors are responsible for preparing the financial statements in accordance with applicable law and International Financial Reporting Standards. Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors confirm that they have complied with the above requirements in preparing the Financial Statements.

Auditor

The auditor of the Company, KPMG Channel Islands Limited, has expressed its willingness to continue in office and a resolution giving authority to reappoint KPMG Channel Islands Limited will be proposed at the forthcoming AGM.

Directors' remuneration report

An ordinary resolution for approval of this report will be put to shareholders at the forthcoming AGM.

Policy on Directors' fees

The Board's policy is that the remuneration of the Directors should reflect the experience of each Board Member and the Board as a whole. It is ensured that the remuneration of each Director, save for Colin McGrady, reflect their duties, responsibilities and time spent to be fair and comparable to that of similar size funds, with similar regulation and structure. The level of remuneration should be sufficient to retain the Directors to oversee the Company properly and to reflect its specific circumstances. It is intended that this policy will continue for the year ending 30 April 2013 and subsequent years.

Furthermore, the fees for the Directors are determined within limits set out in the Company's Articles of Association. The present limit is the aggregate of £200,000 per annum. The Directors are not eligible for bonuses or incentive schemes. Details of the Directors' remuneration during the year are disclosed below.

During the year the Directors received the following remuneration in the form of fees from the Company:

Colin McGrady waived his Director's fees for the year (2011: £nil).

The Chairman and Directors have not increased their remuneration since the Company's launch.

The Board has a breadth of experience relevant to the Company and has access to independent professional advice at the Company's expense where they deem it necessary to discharge their responsibility as Directors. The Board, with assistance of its Committees, can identify the need of any new appointments and consideration will be given as to whether a formal induction process is appropriate and if any relevant training needs to be offered for the role. Directors believe that any changes to the Board's composition can be managed without undue disruption.

Directors' service contracts

It is the Board's policy that Directors do not hold service contracts but each new Director will be provided with a letter of appointment. The terms of the Directors' appointments provide that Directors should retire and be subject to reappointment at the AGM after their appointment. Directors are obliged to offer themselves for re-election by shareholders at least every three years. Colin McGrady, as a non-independent Director, stands for re-election every year. The Board considers that, with the exception of Colin McGrady, the Directors are independent of the Investment Manager.

The Board will agree whether it is appropriate for a Director to seek an additional term. There is no set notice period and no provision for compensation upon early termination of appointment.

Company performance

The Board is responsible for the Company's investment strategy and performance, although the management of the Company's investment portfolio is delegated to the Investment Manager. An ordinary resolution for approval of the investment strategy of the Company will be put to shareholders for approval at the forthcoming AGM.

On behalf of the Board

Independent Auditor's report

to the members of Cambium Global Timberland Limited

We have audited the Group Financial Statements (the "Financial Statements") of Cambium Global Timberland Limited (the "Company") together with its subsidaries (the "Group") for the year ended 30 April 2012 which comprise the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards.

This report is made solely to the Company's members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and auditors

As explained more fully in the Statement of Directors' Responsibilities set out on page 12, the Directors are responsible for the preparation of the Financial Statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the Financial Statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the Financial Statements sufficient to give reasonable assurance that the Financial Statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the Financial Statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited Financial Statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on Financial Statements

In our opinion the Financial Statements:

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:

Dermot A Dempsey

for and on behalf of KPMG Channel Islands Limited

Chartered Accountants

31 July 2012

Consolidated Statement of Comprehensive Income

For the year ended 30 April 2012

All items in the above statement are derived from continuing operations. All income is attributable to the equity holders of the parent company. There are no minority interests.

The notes form an integral part of these Financial Statements.

Consolidated Statement of Financial Position

At 30 April 2012

These Financial Statements were approved and authorised for issue on 31 July 2012 by the Board of Directors.

The notes form an integral part of these Financial Statements.

Consolidated Statement of changes in equity

For the year ended 30 April 2012

The notes form an integral part of these Financial Statements.

Consolidated Statement of Cash Flows

For the year ended 30 April 2012

The notes form an integral part of these Financial Statements.

Notes to the Financial Statements

For the year ended 30 April 2012

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 year end date the Group owned forestry assets located in Australia, Hawaii, Brazil and the Southern United States.

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 consolidated Financial Statements ("the Financial Statements") were approved and authorised for issue on 31 July 2012 and signed by Martin Richardson and Donald Adamson on behalf of the Board.

The Company has a dual listing on the AIM, a market of the London Stock Exchange, and on the CISX.

2 Basis of preparation

The consolidated financial information included in the Financial Statements for the year ended 30 April 2012 has been prepared in accordance with International Financial Reporting Standards ("IFRSs") issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee. They give a true and fair view and are in compliance with applicable legal and regulatory requirements of the Companies (Jersey) Law 1991.

The Financial Statements have been prepared in Sterling, which is the functional currency of the Company and the presentational currency of the Company and Group, and under the historical cost convention, except for investment property, plantations, buildings and certain financial instruments, 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 Financial Statements. If in the future such estimates and assumptions, which are based on the Directors' best judgement at the date of the Financial Statements, deviate from actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change.

New, revised and amended standards

At the date of authorisation of these Financial Statements, the following standards and interpretations, which have not been applied in these Financial Statements, were in issue but not yet effective:

In addition the IASB completed its most recent annual improvements project in May 2012. This project amended a number of existing standards and interpretations effective for accounting periods commencing 1 January 2013.

The Directors anticipate that the adoption of these standards and interpretations in future periods (except for IAS 12 (amended)) will not have a material impact on the Financial Statements of the Group. A formal assessment has not been undertaken by the Directors to assess if the adoption of IAS 12 in future periods will or will not have a material impact on the Financial Statements of the Group.

New accounting policies effective and adopted

The following new standard, which has had no material effect on the Group, has been applied for the first time in these Financial Statements.

3 Significant accounting policies

A summary of the principal accounting policies, all of which have been applied consistently throughout the year, is set out below.

The preparation of financial statements in conformity with IFRS requires the use of critical accounting estimates. It also requires management to exercise its judgement in the process of applying accounting policies. The areas involving high degree of judgement or complexity, or areas where the assumptions and estimates are significant to financial statements are disclosed in note 4.

Basis of consolidation

The Financial Statements incorporate the financial statements of the Company and its subsidiaries, including special purpose entities ("SPEs") controlled by the Company, made up to 30 April 2012. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefit from its activities.

a) Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the Financial Statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.

b) Special purpose entities

The Group has established a number of SPEs for trading and investment purposes. The Group does not have any direct or indirect shareholdings in these entities. An SPE is consolidated if, based on an evaluation of the substance of its relationship with the Group and the SPE's risks and rewards, the Group concludes that it controls the SPE. SPEs controlled by the Group were established under terms that impose strict limitations on the decision-making powers of the SPEs' management and that result in the Group receiving the majority of the benefits related to the SPEs' operations and net assets, being exposed to the majority of risks incident to the SPEs' activities, and retaining the majority of the residual or ownership risks related to the SPEs or their assets.

c) Transactions eliminated on consolidation

When necessary, adjustments are made to the financial statements of subsidiaries and SPEs to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Revenue and other income

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of revenue can be measured reliably. Revenues are accounted for on an accruals basis.

Revenue comprises:

a) Sales - harvested timber or right of way

Where revenue is obtained by the sale of harvested timber or right of way, it is recognised when the significant risks and returns have been transferred to the buyer. In the case of harvested timber, this is generally on unconditional exchange. For conditional exchanges, sales are recognised when the conditions are satisfied.

b) Lease income

Lease income is recognised over the lease term on a straight-line basis, unless another systematic basis is more representative of the time pattern in which benefit use derived from the leased asset is diminished.

c) Grant income

Government grants are recognised on receipt of funds or earlier if there is reasonable assurance that the conditions of the grant will be met. They are accounted for in the Statement of Comprehensive Income at fair value.

Finance income and finance costs

Finance income comprises interest income on funds invested and changes in the fair value of financial assets at fair value through profit or loss.

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

Finance costs comprise changes in the fair value of financial assets at fair value through profit or loss, impairment losses recognised on financial assets and interest on the bank loan.

Foreign currency gains and losses are reported on a net basis.

Foreign currencies

a) Functional and presentational currency

Items included in the financial statements of each of the Group entities are measured in the currency of the primary economic environment in which the entity operates (the "functional currency"). The Financial Statements are presented in Sterling, which is the Company's functional and presentational currency.

b) Transactions and balances

Transactions in currencies other than Sterling are recorded at the rates of exchange prevailing on the dates of transactions. At each period end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the year end date. Non-monetary assets and liabilities that are carried at fair value and denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on retranslation are included in net profit or loss for the period, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised in other comprehensive income.

c) Group companies

The results and financial position of all the Group entities that have a functional currency different from the presentational currency of the Company are translated into the presentational currency of the Company as follows:

On consolidation, the exchange differences arising from the translation of the net investment in foreign entities are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in other comprehensive income as part of the gain or loss on sale.

The following exchange rates have been applied in these Financial Statements to convert foreign currency balances to Sterling:

Operating profit/loss

Operating profit or loss includes net gains and losses on revaluation and disposal of investment property and plantations, as increased by revenue less administrative expenses and operating costs and excludes finance costs and income.

Expenses

All expenses are accounted for on an accruals basis and include fees and other expenses paid to the administrators, the Investment Manager and the Directors. Expenses which are incidental to the acquisition of an investment property or plantation are included within the cost of that property and plantation; for example this will include legal fees, due diligence fees and other expenses associated with acquisitions that are capitalised.

The presentation of forestry management expenses and other operating forestry expenses has been amended in the current financial year, and accordingly the corresponding prior year expenses have been reclassified to conform with this new presentation.

Borrowing costs

All borrowing costs are recognised in the Statement of Comprehensive Income using the effective interest method.

Impairment

The carrying amount of the Group's non-financial assets, other than investment property and plantations, buildings and improvements are reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists the asset's recoverable amount is estimated. Any impairment loss is recognised in the Statement of Comprehensive Income whenever the carrying amount of an asset exceeds its recoverable amount. For the purposes of assessing impairment, assets are grouped together at the lowest levels for which there are separately identifiable cash flows.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount, after the reversal, does not exceed the amount that has been determined, net of applicable depreciation, if no impairment loss had been recognised.

Taxation

The Company is subject to Jersey corporate tax rate of 0%. No charge to Jersey taxation arises on capital gains. The Group is liable to foreign tax arising on activities in the overseas subsidiaries. The Company has subsidiary operations in Australia, Brazil, British Virgin Islands, Hungary and the United States.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit or net loss as reported in the Statement of Comprehensive Income because it excludes items of income and expense that are taxable or deductible in other years or that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted by the reporting date.

Deferred tax is the tax arising on differences on the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the near future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Investment property and plantations

a) Investment property

Land is classified as investment property as it is held for capital appreciation. Investment property is recognised as an asset when it is probable that the future economic benefits that are associated with the property will flow to the enterprise and the cost of the property can be reliably measured. Investment property is initially measured at cost, including transaction costs.

Investment property is remeasured at fair value, which is the amount for which the property could be exchanged between knowledgeable, willing parties in an arm's length transaction. The fair values are determined by professional valuers on a six monthly basis. Gains or losses arising from changes in the fair value of investment property are included in the Statement of Comprehensive Income. The same accounting treatment applies when investment property is derecognised or impaired.

b) Plantations

Plantations are recognised as biological assets when the Group controls the asset as a result of past events, it is probable that future economic benefits will flow to the Group and the fair value or cost of the asset can be measured reliably. Plantations are measured on initial recognition and at each reporting date at fair value less cost to sell. Fair value less cost to sell is determined by professional valuers on a six monthly basis. Any changes in fair values and any gains on disposals are recognised in the Statement of Comprehensive Income. Agricultural produce harvested from plantations are classified as harvested timber. Plantations can be divided in two classifications:

i) Pre-merchantable timber

Agricultural produce that has not matured to an age and class to be sold as harvested product is classified within this asset class. Pre-merchantable timber is carried at fair value less cost to sell. Once the pre-merchantable trees mature they are transferred to merchantable timber at fair value less cost to sell at the time of transfer.

ii) Merchantable timber

Plantations are classified as merchantable timber when they mature to an age that the trees can be traded actively in the markets. This asset class does not include harvested trees. The age at which trees are transferred into this class can differ by type of tree. Currently the majority of trees owned by the Group are transferred at the age of 15 years. Merchantable timber is carried at fair value less cost to sell.

c) Harvested timber

Plantations harvested are measured at fair value less point of sale costs as at the date of harvest and are reclassified to inventory if the harvest has not been sold at date of reporting.

Buildings, plant and equipment

Buildings and improvements are initially recognised at purchase price plus any directly attributable costs and subsequently revalued to fair value. The fair value of property is determined on a six monthly basis by independent external appraisal. Revaluation gain is recognised in the Statement of Comprehensive Income to the extent that it reverses an impairment loss on the same property previously recognised in the Statement of Comprehensive Income, with any remaining gain recognised in equity through the revaluation reserve. Any revaluation loss is recognised directly in equity through revaluation reserve to the extent of any credit balance existing in the revaluation reserve in respect of that property, with any remaining loss recognised immediately in the Statement of Comprehensive Income.

Subsequent costs are included in the carrying amount of buildings, when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Comprehensive Income during the financial period in which they are incurred.

Motor vehicles and furniture and fittings are recognised at purchase cost less accumulated depreciation and any recognised impairment losses. Depreciation is provided at the rate of 12.5% per annum on motor vehicles on a diminishing balance basis. Depreciation is provided at the rate of 10% per annum on furniture and fittings on a straight-line basis.

Financial instruments

Financial assets and financial liabilities are recognised in the Group's Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument. The Group offsets financial assets and financial liabilities if the Group has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis.

Financial assets

The Group's financial assets fall into the categories below, with the allocation depending to an extent on the purpose for which the asset was acquired. The Group has not classified any of its financial assets as held to maturity.

Unless otherwise indicated, the carrying amounts of the Group's financial assets are a reasonable approximation of their fair values.

a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise through deposits on new acquisitions and also incorporate other types of contractual monetary assets. They are included in current assets, except for maturities greater than twelve months after the reporting date which are classified as non-current assets.

Trade and other receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method. The effect of discounting on these financial instruments is not considered to be material.

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, such impairments directly reduce the carrying amount of the impaired asset and are recognised against the relevant income category in the Statement of Comprehensive Income.

b) Cash and cash equivalents

Cash and cash equivalents are carried at cost and comprise cash in hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

c) De-recognition of financial assets

A financial asset (in whole or in part) is de-recognised either when the Group has transferred substantially all the risks and rewards of ownership; or when it no longer has control over the asset or a portion of the asset; or when the contractual right to receive cash flows from the asset has expired.

Financial liabilities

a) Financial liabilities at amortised cost

Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method. The effect of discounting on these financial instruments is not considered to be material.

Borrowings are recognised initially at fair value. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the Statement of Comprehensive Income over the period of the borrowings on an effective interest basis.

b) De-recognition of financial liabilities

A financial liability is de-recognised when the obligation specified in the contract is discharged, cancelled or expired.

c) Stated capital

Financial instruments issued by the Company are treated as equity only to the extent that they do not meet the definition of a financial liability. The Company's shares are classified as equity instruments. For the purposes of the disclosures given in note 31 the Group considers all its stated capital and all other reserves as equity. The Company is not subject to any externally imposed capital requirements.

d) Effective interest method

The effective interest rate method is a method of calculating the amortised cost of a financial asset or liability and of allocating interest income and expense over relevant periods. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset or liability or where appropriate, a shorter period.

Dividends

A dividend is recognised as a liability in the Financial Statements in the period in which it becomes an obligation of the Company.

Determination and presentation of operating segments

The Group determines and presents operating segments based on the information that is provided internally to the Board of Directors by the Investment Manager.

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. An operating segment's operating results are reviewed regularly by the Board of Directors to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

The Board of Directors is the Chief Operating Decision Maker ("CODM"). Segment results that are reported to the CODM include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The Jersey segment comprises mainly corporate assets and corporate expenses to administer and register the ultimate holding company.

Segment capital expenditure is the total cost incurred during the year to acquire property, buildings, plant and equipment and intangible assets.

4 Significant accounting judgements and key sources of estimation uncertainty

The Group makes estimates and assumptions concerning the future. The resulting accounting estimate will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Income and deferred taxes

The Group is subject to income and capital gains taxes in numerous jurisdictions. Significant judgement is required in determining the total provision for income and deferred taxes. There are many transactions and calculations for which the ultimate tax determination and timing of payment are uncertain. The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due and at what rates those taxes will be calculated. Where the final tax outcome of these matters is different from the amounts that were initially recorded such differences will impact the income and deferred tax provisions in the period in which the determination is made.

Valuation of investment property and plantations

The Group normally uses the valuation performed by its independent valuers as the fair value of its property and plantations. The valuation is based on assumptions. The valuers also make reference to market evidence of transaction prices for similar transactions, where available and appropriate (refer to note 16).

Valuation of buildings

The Group normally uses the valuation performed by its independent valuers as the fair value of its buildings. As described in note 18 the valuation is based on assumptions. The valuers also make reference to market evidence of transaction prices for similar transactions, where available and appropriate.

5 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 CODM, has delegated the day to day implementation of this strategy to its Investment Manager but retain responsibility to ensure that adequate resources of the Company are directed in accordance with their decisions. The investment decisions of the Investment Manager are reviewed on a regular basis to ensure compliance with the policies and legal responsibilities of the Board.

The Investment Manager has been given full authority to act on behalf of the Company for transactions of up to 10% of the Group's NAV, including the authority to purchase and sell timberland and other investments on behalf of the Group and to carry out other actions as appropriate to give effect thereto. Whilst the Investment Manager may make the investment decisions on a day to day basis regarding the allocation of funds to different investments, any changes to the investment strategy or major allocation decisions have to be approved by the Board, even though they may be proposed by the Investment Manager.

The Board therefore retains full responsibility as to the major allocation decisions made on an ongoing basis.

The Investment 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.

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 Australia, Southern United States, Hawaii and Brazil. There are not considered to be any major customers within these operating segments.

The accounting policies of each operating segment are the same as the accounting policies of the Group, as stated in note 3. Therefore no reconciliation was performed.

The Group owns eight distinct parcels of land across four main geographical areas.

The Group owns approximately 16,500 acres in Ashford, New South Wales, Australia. This land was previously being used for cattle grazing and is now being planted with high-value commercial and non-commercial species with a view to longer-term revenue from plantations.

The second strategy consists of buying established plantations in the southern United States. Established plantations with a balanced age class distribution are suitable for long and short-term sustainable yield. Marketable products include sawtimber and pulp, which can be sold into healthy forest product markets that exist in this geography. These properties also generate revenue from hunting leases and non-strategic land sales. After a land sale completed during the year, the Group owns 29,000 acres of land spread across Florida and Georgia dedicated to this strategy.

The third investment strategy involves the development of fast-growth eucalyptus plantations to serve either export log markets in Asia or developing markets in Hawaii. The Group has a leasehold interest in two plantations on the Big Island of Hawaii dedicated to this strategy. Pahala consists of 3,350 acres and Pinnacle is approximately 4,725 acres of maturing eucalyptus trees.

The Group has a fourth investment strategy of converting bare land to eucalyptus plantation for conversion to charcoal to serve pig iron markets or for emerging pulp and paper markets in Brazil. The Group owns one property in Tocantins, Brazil of approximately 25,600 acres and three properties in Minas Gerias, Brazil totalling 29,400 acres dedicated to this strategy. It is anticipated that the eucalyptus will be grown on a rotation length of seven years.

6 Revenue

The lease income is 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.

Physical revenue

7 Administrative expenses

Administration of subsidiaries includes statutory fees, accounting fees and administrative expenses in regard to the asset holding subsidiaries.

8 Forestry management expenses

9 Other operating forestry expenses

10 Finance income

11 Finance costs

12 Taxation

Taxation on profit/(loss) on ordinary activities

The Group's tax expense for the year comprises:

* Marginal corporate income taxes in the United States vary between 15% and 35% depending on the size of the profits.

At the year end date the Group has unused tax losses. No deferred tax asset has been recognised in respect these losses due to the unpredictability of future taxable profits available against which they can be utilised. Tax losses arising in the United States can be carried forward for up to 20 years; those arising in Brazil and Australia can be carried forward indefinitely.

Tax losses not recognised in the Financial Statements

The value of deferred tax assets not recognised in regard to the operational losses amounted to £3,847,360 (2011: £3,660,370).

Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon:

13 Dividend

14 Basic and diluted loss per share

The calculation of the basic and diluted loss per share is based on the following data:

15 Net asset value

16 Investment property and plantations

No harvested timber was held at the end of the year (30 April 2011: nil).

The land and plantations are carried at their fair value as at 30 April 2012, as measured by external independent valuers Timberland Appraisal Services LLC, Consufor Advisory & Research, URS Australia Pty Limited, and Indufor Asia Pacific Limited. Each of the valuers uses similar methodologies, though this can vary depending on the type of investment and local practices.

The valuer for the South Atlantic States property in the United States was Timberland Appraisal Services LLC. The appraisal conforms to Uniform Standards of Professional Appraisal Practice in the United States. For this valuation, three valuation approaches were considered: the cost approach; the sales comparison approach; and the income capitalisation approach. Each of the three valuation approaches are used and the final valuation is derived from a reconcilation of the three approaches and is believed to have been applied appropriately.

The properties in Hawaii, Pahala and Pinnacle, are leasehold interests without any ownership of the underlying land. These investments were valued by URS Australia Pty Limited in accordance with IFRS. For these valuations the income capitalisation approach was selected as being applicable and necessary to produce credible results. This approach is believed to have been applied appropriately.

Indufor Asia Pacific Limited valued the Tarrangower investment in Australia consistent with the local equivalent of IFRS. There is little comparable transaction evidence to determine the value of land for forestry purposes in the region. Therefore, Indufor has applied a combination of the cost approach and the income capitalisation approach to value the assets.

The 3R Tocantins property in Brazil was valued by Consufor Advisory & Research. The 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. The method applied for valuing the young tree crop is based on the income capitalisation approach.

The three properties in Minas Gerias were valued by Consufor Advisory & Research by first determining the highest and best use of the subject property. This analysis helps the appraiser identify comparable properties and identify the use that would produce the maximum income to the property. After determining the best use of the subject property, the appraiser analysed the value of the property using the cost approach, the sales comparison approach and the income capitalisation approach. The method applied for valuing the young tree crop is based on the income capitalisation approach. The method applied for the bare land appraisal was the sales comparison approach.

The discount rates used in these appraisals range in value from 6.0% to 9.5% (2011: 6.0% to 10.0%).

The Group is exposed to a number of risks related to its tree 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. When possible the Group manages this risk by aligning its harvest volume to market supply and demand. 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 extensive processes in place aimed at monitoring and mitigating those risks, including regular forest health inspections and industry pest and disease surveys.

17 Sale of land and plantations

18 Buildings, plant and equipment

The buildings and improvements are carried at their fair value as at 30 April 2012, as measured by external independent valuers. The buildings and structural improvements have been valued as part of the land on the sales comparison method. The buildings and structural improvements were physically inspected to verify their condition and valued as an added value to the overall land by reference to direct comparison to sales in the district. The motor vehicles and furniture and fittings are carried at cost less accumulated depreciation.

19 Trade and other receivables

The Group's exposure to credit and currency risks and impairment losses related to trade and other receivables is disclosed in note 29.

20 Bank borrowings

The loan is secured on approximately 29,000 acres of timber and timberland assets located in multiple tracts in the states of Florida and Georgia. The fair value of these assets at the year end was £21.5 million (2011: £28.0 million).

The loan term is ten years, with a termination date of 15 October 2020 and interest rate fixed at 5.75% over the life of the loan. During the year, following the final disposal of the Corrigan property, the Group repaid US$4.4 million of the loan and Metropolitan Life released US$1.4 million previously held as security on the loan.

21 Foreign exchange effect

The translation reserve movement in the year has arisen as follows:

22 Cash and cash equivalents

The cash held in Escrow is held as security against the loan payable to Metropolitan Life Insurance Company (see note 20).

23 Trade and other payables

* The Company's Brazilian subsidiary, 3R Tocantins Florestais Ltda., retained approximately 6% of the purchase price of the 3R Tocantins property for a period of five years from October 2008, to support any liability associated with the previous ownership.

The Group's exposure to currency and liquidity risk related to trade and other payables is disclosed in note 29.

24 Net asset value reconciliation

25 Investment in Subsidiaries

The Financial Statements of the Group consolidate the results, assets and liabilities of the subsidiary companies listed below: