TREE.L Regulatory News (TREE)

18 Jan 2008 17:07

Cambium Global Timberland Limited18 January 2008 Cambium Global Timberland LimitedCondensed Consolidated Interim Financial Statements31 October 2007(Unaudited) Chairman's Statement Dear Shareholders, I am pleased to present the first unaudited interim Report and Accounts for theCambium Global Timberland Ltd ("The Company") for the period ended 31st October2007. Following the successful placing by Landsbanki Securities (UK) Limited andadmission to AIM on 6th March 2007, the Company raised a total of £104,350,000(net of expenses) to pursue its investment objective of acquiring a balanced anddiversified portfolio of global forestry interests. The Company's investment Manager, CP Cogent Asset Management LP ("Cogent") hasbeen working to execute our strategy over the period since March and as at thisdate has closed on three investments described more fully in the InvestmentManager's Report which follows. In addition, a strong pipeline of potentialinvestments has been identified and is being worked through. Cogent continues toexpand its team of timber professionals and to extend its search foropportunities for the Company. I am pleased to report that the final results of the period ended 31st October2007 are in line with the expectations of the Board and reflects the relativelyearly stage of the Company development. The Company is, I believe, well positioned to provide investors with a balancedexposure to the attractive asset class of Global timber and I look forward toreporting further progress in the Annual Report and Accounts for the year ending30th April 2008. Shareholders may wish to visit our website at www.cambiumfunds.com foradditional information on the Company. Donald L Adamson Chairman Investment Manager's report We are pleased with the progress we have made for Cambium so far on thedevelopment of the portfolio. Through 31 October, 2007 Cambium had committedapproximately 23% of its capital to three forestry properties. We continue toexpand our sourcing relationships and to see opportunities for investment thatare compatible with the original investment thesis for the vehicle. We haveinvestments in our pipeline in each geographical region of interest and expectto complete due diligence on some of these opportunities late in 2007 or earlyin 2008. The first investment we completed for Cambium was a "greenfield" opportunity innorthern New South Wales, Australia. The investment highlights theenvironmental optionality that is imbedded in owning timberland. Thereforestation project is designed to capitalize on revenue from timber in thelong term and carbon credits in the shorter term via the NSW Greenhouse GasAbatement Scheme (GGAS). In addition a grant was secured from the LocalCatchment Authority for biodiversity conservation and salinity control servicesthat are provided by the estate. We have begun reforestation and the first treewas planted on the estate in October. The second property consists of approximately 22,000 acres of mature pineplantation that is located in the established wood markets of east Texas. Thetimber on the property has a well balanced age distribution suited forsustainable yield. Income will be derived from the property through sustainabletimber harvests, opportunistic land sales of tracts with higher value uses, andhunting lease income. The third investment is a leasehold interest located on the south east coast ofthe Big Island of Hawaii. The estate consists of 3,700 acres of Eucalyptusgrandis plantation. A wood supply agreement for the timber on the property hasbeen negotiated with the developer of a sliced veneer mill. The investmentallows for Cambium to participate in the further development of the forestproducts industry in Hawaii. We have been expanding our networks of relationships into our targetedgeographic markets. Our pipeline of opportunities has continued to evolve andwe continue to find opportunities that are consistent with the initial Cambiumobjectives. The progress we have made is consistent with the eighteen-monthinitial investment period for the fund. Lastly, we are pleased that we have been able to add to our timber investmentteam. Richard Standeven joined the team from Temple-Inland, a large US timbercompany. Rich brings 23 years of timber experience to us and was most recentlyresponsible for improving overall per acre cash performance of a 1.6 millionacre forest portfolio through acquisitions, trades and divestitures. We are pleased with the progress that we have made to date and look forward toupdating you on the further development of the portfolio at our 30 April, 2008year end. Condensed Consolidated Income Statementfor the period ended 31 October 2007(Unaudited) For the period from 19 January 2007 to 31 October 2007 Notes £ Revenue 15 322,219Cost of sales (283,078) Gross profit 39,141 Gain from fair value adjustments on land and plantations 5 2,719,236 Other income 247Other expenses (434)Administrative expenses (1,327,854)Establishment expenses (3,391,375)Results from operating activities (1,961,039) Finance income 3,359,762Finance expenses (2,567)Net finance income 3,357,195 Net foreign exchange losses (555,033)Loss from fair value adjustments on property, plant and 6 (257,064)equipmentGain from fair value adjustments on forward foreign currency 1,044,719contracts Profit for the period 1,628,778 Earnings per share - basic and diluted 2.67 pence Condensed Company Balance SheetAt 31 October 2007(Unaudited) 31 October 2007 Notes £ Non current assetsInvestments in special purpose entities 4 16,696,925 Current assetsTrade and other receivables 8 467,842Inter-company advances 9 4,505,149Available for sale investments 10 8,908,900Forward foreign currency contracts 11 22,563,863Cash and cash equivalents 12 72,950,616 109,396,370 Total assets 126,093,295 Current liabilitiesBank overdrafts (120)Trade and other payables 13 (88,211)Forward foreign currency contracts 11 (21,519,144) (21,607,475) Total liabilities (21,607,475) Net assets 104,485,820 EquityStated Capital Account 14 2,000,000Distributable reserve 14 102,350,000Revaluation reserve (25,140)Retained earnings 160,960Total equity 104,485,820 Condensed Consolidated Balance SheetAt 31 October 2007(Unaudited) 31 October 2007 Notes £Non current assets Plantations 5 22,078,126Property, plant and equipment 6 402,546Intangible assets 7 115,535 22,596,207 Current assetsTrade and other receivables 8 477,629Available for sale investments 10 8,908,900Forward foreign currency contracts 11 22,563,863Cash and cash equivalents 12 73,348,802 105,299,194 Total assets 127,895,401 Current liabilitiesBank overdrafts (120)Trade and other payables 13 (357,751)Forward foreign currency contracts 11 (21,519,144) (21,877,015) Net assets 106,018,386 EquityStated Capital Account 14 2,000,000Distributable reserve 14 102,350,000Revaluation reserve 45,958Currency translation reserve (6,350)Retained earnings 1,628,778Total equity 106,018,386 Condensed Consolidated Statement of Changes in EquityFor the period ended 31 October 2007(Unaudited) Stated Distributable Translation Revaluation Retained Capital Reserve reserve reserve Earnings Total £ £ £ £ £ £ At 19 January 2007 - - - - - - Net profit for the period - - - - 1,628,778 1,628,778 Issue of ordinary share capital,net of issue costs 104,350,000 - - - - 104,350,000 Reduction of stated capital account (102,350,000) 102,350,000 - - - -(note 14) Currency translation differences - - (6,350) - - (6,350) Revaluation of intangible assets - - - 71,098 - 71,098Revaluation of available for sale - - - (25,140) - (25,140)investments At 31 October 2007 2,000,000 102,350,000 (6,350) 45,958 1,628,778 106,018,386 Condensed Consolidated Cash Flow StatementFor the period ended 31 October 2007(Unaudited) 31 October 2007 £Cash flows from operating activitiesOperating profit for the (1,961,039)period Adjustments for: Gain on revaluation of land and plantations (2,719,236) Depreciation 141 (Increase) in trade receivables (63,040) Increase in payables 357,751 Foreign exchange loss (561,384) (2,985,767) Net cash from operating activities (4,946,807) Cash flows from investing activitiesPurchase of property, plant and equipment (659,751)Purchase of land and plantations (19,274,668)Reforestation costs (84,222)Purchase of intangible assets (44,436)Purchase of available for sale investments (8,934,040)Net cash used in investing activities (28,997,117) Cash flows from financing activitiesNet proceeds from the issue of share capital 104,350,000Interest received 2,945,173Interest paid (2,567)Net cash from financing activities 107,292,606 Net increase in cash and cash equivalents 73,348,682Represented by: Cash balances 73,348,802 Overdraft balances (120) 73,348,682 Notes to the Condensed Consolidated Financial StatementsFor the period ended 31 October 2007(Unaudited) 1 General Information Cambium Global Timberland Limited (the 'Company') and its subsidiaries (the 'Group') was established to invest in a global portfolio of forestry based properties which can be managed on an environmentally and socially sustainable basis. Assets will be managed for timber production, environmental credit production or both. The Group currently owns forestry assets located in Australia and the United States. The Company is a closed-ended property company with limited liability, incorporated in Jersey, Channel Islands on 19 January 2007. The address of its registered office is PO Box 344, 5 Castle Street, St Helier, Jersey, JE4 8UW. The Company has its primary listing on AIM, a market of the London Stock Exchange and a dual listing on the Channel Islands Stock Exchange. These condensed financial statements have been approved by The Board of Directors on 18 January 2007. 2 Basis of accounting Basis of preparation The condensed financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards and in accordance with International Accounting Standard 34 'Interim financial reporting'. The condensed financial statements do not include all of the information and disclosures required in annual financial statements. Significant accounting policies The condensed financial statements have been prepared under the historical cost convention, except for the revaluation of certain assets and financial instruments. The following accounting policies have been applied consistently throughout the Group to items that are considered material in the accounts: Property, plant and equipment Property, plant and equipment (with the exception of motor vehicles) is initially recognised at purchase price plus any directly attributable costs. It is subsequently remeasured to fair value. The fair value of property, plant and equipment is determined on a six monthly basis by independent external appraisal. Revaluation gains are recognised in equity through the revaluation reserve with losses that offset previous gains of the same asset charged against the revaluation reserve directly in equity and all other revaluation losses recognised in the Income Statement. Motor vehicles are recognised at purchase cost less accumulated depreciation. Depreciation is provided at the rate of 12.5% per annum on a diminishing balance basis. Plantations Plantations are measured on initial recognition and at each Balance Sheet date at fair value plus directly attributable costs. Any changes in fair values are recognised in the Income Statement. Plantations are derecognised on transfer of title, with any subsequent gains or losses being recognised in the Income Statement. Intangible assets Intangible assets are initially recognised at cost and subsequently remeasured to fair value. Any resultant gains are recognised in equity through the revaluation reserve. Any resultant losses are recognised directly in the Income Statement unless there has been previous gains on that asset which have been taken through the revaluation reserve, in which case these are cleared before the balance is taken to the Income Statement. Inventories Inventories, comprising of plantation produce processed after harvesting, are measured at net realisable value. Net realisable value is the estimated selling price, less point of sale costs. Changes in net realisable value are recognised in the Income Statement. Available for sale investments All quoted investments have been designated as available for sale. Available for sale investments are initially recognised on the date of purchase at cost being the fair value of purchase consideration paid plus any incremental transaction costs incurred as part of the purchase. They are subsequently adjusted to fair value with any unrealised gains or losses being recognised in equity, through the Statement of Changes in Equity. The fair value is determined by reference to their quoted bid price at the balance sheet date. Investments are derecognised on their sale or maturity date with cumulative gains and losses on derecognition being transferred to the Income Statement. Purchases and sales of available for sale investments are recognised on the trade date, the date on which the Group commits to purchase or sell the asset. The Group assess at each balance sheet date whether there is objective evidence that the available for sale investments are impaired. If any such evidence exists for available for sale investments, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss previously recognised in the Income Statement, is removed from equity and recognised in the Income Statement. Forward foreign currency contracts The Company uses forward foreign currency contracts to hedge it's exposure to foreign exchange risk arising from investing in assets held in foreign countries. Forward currency contracts are recorded as an asset and liability at the forward contract rate. The liability is subsequently remeasured to fair value with the resulting gain / loss being recognised in the Income Statement. Forward foreign currency contracts are derecognised on contract maturity, with any subsequent gains or losses being recognised in the Income Statement. Cash and cash equivalents Cash and cash equivalents comprise cash balances held with banks and brokers. Bank overdrafts that are repayable on demand are included as a component of cash and cash equivalents for the purposes of the Cash Flow Statement. Income and expenses All income and expenses are accounted for on an accruals basis. Government grants 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 Income Statement to the extent that they compensate the Group for expenses incurred and recognised in the Income Statement. Establishment expenses Establishment expenses incurred on the launch of the Company have been accounted for in the Income Statement as incurred. As the Company was established as a Jersey nil par value company it does not have a share premium account against which establishment expenses can be debited. Investments in special purpose entities The Company has established a number of special purpose entities for investment purposes. Investments in special purpose entities are measured in the financial statements at cost. Annual impairment reviews are carried out with any subsequent write down in value of the investment being recognised in the Income Statement. Consolidation The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries (including special purpose entities which meet the requirements of SIC-12 to be treated as subsidiaries). All intra-group balances are eliminated on consolidation. 3 Segmental information GB AUS US Total £ £ £ £ Total assets 104,868,356 6,785,425 16,241,620 127,895,401 Segment revenue - 65,734 256,485 322,219 Segment gross profit - 13,848 25,293 39,141 The Group operates in two distinctly separate geographical locations, with timberlands located in New South Wales, Australia, Texas and Hawaii (US). The Group owns approx 21,163 acres of land known as Tarrangower in Ashford, Sydney, 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 and short term revenue from carbon credits. In addition to this, the Group has managed to secure a grant from the local Catchment Management Authority for biodiversity conservation and salinity control services provided by Tarrangower as a timber and carbon estate. In Texas, the Group owns approximately 21,853 acres of land known as Corrigan of which the majority is established plantation with a balanced age distribution suitable for long and short term sustainable yield. The Hawaiian plantation consists of a leasehold interest in 3,700 acres of mature eucalyptus trees known as the Pahala plantation. The plantation was acquired to provide for the needs of a veneer mill which is coming in to operation. This will generate higher value products such as veneer logs as opposed to commodity wood chips. 4 Investments in special purpose entities Total cost Entity Jurisdiction Activity % held £ Cambium Jersey Trust Jersey Disc. Trust - 58,024 Cambium Corrigan LP Texas Plantations 100 13,816,625 Cambium Hungary Holdings Hungary Holding co 100 12,506 Corrigan Hungary Holdings Hungary Holding co 100 12,506 Cambium Pahala Inc Delaware Plantations 100 2,792,498 Cambium Pahala Hungary Holdings Hungary Holding co 100 4,766 16,696,925 Cambium Jersey Trust is a Jersey discretionary trust of which the Company is sole beneficiary. The Trust is sole investor in Cambium Australia Trust, a Unit Trust established in Australia, which owns the Tarrangower property. 5 Plantations Land and trees £ Group Land and standing timber acquired in the period 19,274,668 Reforestation costs 84,222 Fair value movement 2,719,236 Carrying value as at 31 October 22,078,126 2007 The land and plantations are carried at their fair value as at 31 October 2007, as measured by external independent valuers URS Australia Pty Ltd and Day Forest Management and Appraisal Inc. The valuations have been prepared using techniques approved under International Financial Reporting Standards. 6 Property, plant and equipment Motor Buildings Improvements Vehicles Total £ £ £ £ Group Cost Assets acquired in period 585,450 62,211 12,091 659,751 Balance as at 31 October 2007 585,450 62,211 12,091 659,751 Depreciation and fair value movements Depreciation for the period - - (141) (141) Fair value movement (255,731) (1,333) - (257,064) (255,731) (1,333) (141) (257,205) Carrying value As at 31 October 2007 329,719 60,878 11,950 402,546 The assets are carried at their fair value as at 31 October 2007, as measured by external independent valuers URS Australia Pty Ltd and Day Forest Management and Appraisal Inc (in conjunction with the external valuation of plantations). The valuations have been prepared using techniques approved under International Financial Reporting Standards. 7 Intangible assets Water license £ Group At initial cost 44,437 Fair value movement 71,098 Carrying value as at 31 October 115,535 2007 The Tarrangower property has approximately 4km of frontage to the Severn River and has attached to it a water license administered by the Department of Natural Resources in Australia (DNR). The 105 megalitre surface irrigation license (Number 90SL100620) has rights attached to it allowing an annual allocation of 48 Megalitres A class and 57 Megalitres B class from Pindari Dam which is located 11km further up stream. The license is renewable on a 5 yearly basis and at no further cost to the Group. The license is measured at it's fair value as at 31 October 2007, as measured by external independent valuers URS Australia Pty Ltd. 8 Trade and other receivables £ Company Accrued interest on bonds 257,430 Bank interest receivable 157,159 Prepaid expenses 30,388 Other receivables 22,865 467,842 Group Accrued interest on bonds 257,430 Bank interest receivable 157,159 Trade receivables 24,831 Prepaid expenses 38,209 477,629 9 Inter-company advances AU$ £ Company Cambium Australia Trust 8,978,387 3,989,685 Cambium Jersey Trust 1,030,000 457,696 Cambium Jersey Trust 130,000 57,768 4,505,149 The loan with Cambium Australia Trust is unsecured, bears interest which is compounded at 2% over the Australian Bank Base Rate calculated on the basis of 1 month interest periods and is repayable on demand. The loans with Cambium Jersey Trust are unsecured, interest free and repayable on demand. 10 Available for sale investments £ Company and Group UK Treasury stock 7.25% 07.12.2007 8,908,900 The UK Treasury stock is held as a margin account for the forward foreign currency contracts (see note 11). As the forward contracts have a strike date of 30 April 2008, it is the intention of the Company to purchase more gilts once the Treasury stock has matured. 11 Forward foreign currency contracts £ Company and Group Forward foreign currency At forward rate 22,563,863 contracts: At market rate 21,519,144 As at 31 October 2007 there were 3 forward foreign currency contracts in place. They are used to hedge against foreign exchange exposure arising from investing in assets held in foreign jurisdictions and foreign currencies. All of the contracts have a strike date of 30th April 2008. 12 Cash and cash equivalents £ Company Cash held at bank 72,831,333 Cash held at broker 119,283 72,950,616 Group Cash held at bank 73,229,520 Cash held at broker 119,282 73,348,802 13 Trade and other payables £ Company Accrued liabilities 88,211 Group Accrued liabilities 146,620 Taxes payable 29,107 Trade creditors 48,769 Advances held 133,255 357,751 14 Stated Capital Account £ Net proceeds from issue of shares 104,350,000 Less: reduction in share (102,350,000) capital 2,000,000 The total authorised share capital of the Company is 250 million ordinary shares of no par value with 104,350,000 shares issued at 100p each on initial placement. Ordinary shares carry no automatic rights to fixed income but the Company may declare dividends from time to time to which ordinary 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 permission was granted on 29th June 2007. The balance of £102,350,000 was transferred to a distributable reserve on that date. 15 Revenue £ Group Sales - Timber 132,240 Lease income - Right of way 105,823 Lease income 23,334 Grant income 60,822 322,219 The grant income was received from Border Rivers-Gwydir Catchment Management Authority (an Australian Government Authority) on signature of a Property Vegetation Plan ('PVP') in connection with the Tarrangower property. The PVP covers conservation management, regeneration of the area, natural revegetation and plantation and allows for income receipts of up to a total of AU$960,000 on certification of certain milestones having been achieved by the landholder . The PVP is for a term of 15 years and is governed by the laws of New South Wales. 16 Risk Management Policies The Board of Directors and Investment Manager are responsible for overseeing the measurement and control of all aspects of risk management and hold regular meetings in order to do so. Various risk management models are in place which help to identify and monitor key risks both at individual investment level and at a group level. Credit risk Credit risk is the risk that the counterparty to a financial instrument will fail to meet it's obligations, causing a loss to the Company. Cash and cash equivalents represent the majority of the Company's financial assets. The credit risk associated with the holding of cash and cash equivalents is managed under the Company's Cash Management Policy. The Cash Management Policy states that the Company must have a minimum of 5 bankers with each banker permitted to hold a maximum of £20,000,000 so as to spread the risk of default. The Cash Management Policy will be reviewed on an annual basis by The Board of Directors and the Investment Manager. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet it's financial liability obligations as they fall due. The Company's liquidity risk is managed by the Investment Manager in accordance with policies and procedures established by the Board. The forward foreign currency contracts have been put in place so as to manage the potential foreign exchange exposure arising from investing in assets in foreign jurisdictions. Hedging will only be employed once timber assets are acquired. Therefore all hedging liabilities are matched with an associated asset so as to keep risk to a minimum. The hedging policy is reviewed quarterly by the Board. 3 months Contract maturities of financial < 1 month 1 - 3 months - 1 year liabilities: £ £ £ Forward foreign currency - - 21,519,144 contracts Trade and other payables 357,751 - - Bank overdrafts 120 - - 357,871 - 21,519,144 The forward foreign currency contracts have a strike date of 30 April 2008. Market risk Interest rate risk The majority of the Company's financial assets are interest bearing in the form of cash. Interest rate risk arises in the Company predominantly from the holding of cash and cash equivalents. The Board have established a Cash Management Policy to ensure the best return from the Company's bankers and to mitigate interest rate risk arising from the holding of cash. Cash is predominantly held on short term deposit and the Board review interest rates on a quarterly basis. Currency risk The Company is exposed to currency risk through investing in assets held in currencies other than it's functional currency. As a result, the Company is exposed to the risk that the exchange rate of its currency relative to other foreign currencies may fluctuate and have an adverse affect on the Company performance The Company manages the risk of loss due to fluctuations in exchange rates through the use of forward foreign currency contracts. The forward foreign currency contracts are established and monitored in accordance with the Company's Hedging Policy. 17 Events after the Balance Sheet date There have been no significant events after the balance sheet date. 18 Related party transactions Colin McGrady is a director of CP Cogent Asset Management LP who act as Investment Manager. He is also a director of the Company and has waived his director's fees for the period. During the period £669,073 was paid to CP Cogent Asset Management LP in respect of Management fees. 19 Net Asset Value £ Total assets 127,895,401 Total liabilities (21,877,015) Net Asset Value 106,018,386 Number of shares in issue as at 31 October 2007 104,350,000 Net Asset value per share at 31 October 2007 1.0160 Net Asset value per share at 31 0.9815 July 2007 Key Parties Directors Registered Office of the CompanyDonald Adamson 5 Castle StreetRichard Rickman St HelierWilliam Spitz JerseyMartin Richardson JE2 3RTColin McGrady Telephone +44 (0)1534 512512 Registrar, Paying Agent and Transfer Agent AuditorsCapita Registrars (Jersey) Limited KPMG Channel Islands LimitedPO Box 378 PO Box 453Jersey 5 St Andrews PlaceJE4 0FF Charing Cross St Helier Jersey JE4 8WQ Nominated Adviser for AIM Sponsor to CISX ListingLandsbanki Securities (UK) Ltd Carey Olsen Corporate Finance LimitedBeaufort House 44 Esplanade15 St Botolph Street St HelierLondon JerseyEC3A 7QR JE1 0BD Investment Manager Administrator and Company SecretaryCP Cogent Asset Management, LP Investec Trust (Jersey) Limited100 Crescent Court 5 Castle StreetSuite 500 St HelierDallas JerseyTX 75201 JE2 3RT Property ValuersDay Forest Management & Appraisal IncPO Drawer 11694711 North Wheeler / Highway 96 NorthJasperTexas 75951United States URS Australia Pty LtdLevel 6, 1 Southbank BoulevardSouthbankVictoria 3006Australia This information is provided by RNS The company news service from the London Stock Exchange