Cambium Global
Timberland Limited
Annual report and
financial statements
for the period ended 30 April 2008
about us
Cambium Global Timberland
Limited has been established
to invest in a global portfolio
of forestry‑based products.
Cambium seeks to invest
primarily in forestry assets
which are or can be managed
on an environmentally and
socially sustainable basis.
Cambium raised £104,350,000
in a placing by Landsbanki
Securities (UK) Limited and
joined AIM and the Channel
Islands Stock Exchange
on 6 March 2007.
IFC about us
1highlights
2 chairman’s statement
4 investment manager’s report
5board of directors
6 directors’ report
10 independent auditors’ report
to the members
11 consolidated income statement
12consolidated balance sheet
13consolidated statement of changes
in equity
14consolidated cash flow statement
15company income statement
16company balance sheet
17 company statement of changes
in equity
18company cash flow statement
19 notes to the financial statements
38 notice of annual general meeting
IBCkey parties
Pahala, Hawaii, US
Corrigan, Texas, US
Tarrangower, AUS
highlights
+Current investments in
North America, Asia/Pacific and
Australia/New Zealand regions
+We continue to find investment
opportunities consistent with the
model portfolio
+12% gain in appraised plantation
value since acquisition
+Portfolio adding diversity across
geography, age class and species
+Investments performing according
to plan
1
Cambium Global Timberland Limited
Annual report and financial statements 2008
chairman’s statement
“
The fundamental drivers of
investment returns – biological
growth, product prices and land
values continue to offer investors
an opportunity to realise attractive
risk-adjusted returns.
Dear Shareholders,
Introduction
I am pleased to present our first full-year results since the Company
was admitted to the Alternative Investment Market (‘AIM’) in
March 2007. During what has been a particularly difficult time
in the financial markets, Cambium Global Timberland Limited
continues to find attractive timber investment opportunities.
highlights
+51% of capital committed to
existing projects
+Strong pipeline of new investment
opportunities
+3 pence per share proposed dividend
Credit market turmoil, rising unemployment and persistently
high commodity prices have combined to lower economic
growth. Housing remains a major drag on the United States
economy and has impacted sawtimber prices in many markets
globally. Additionally, increased shipping costs have impacted
many timber investments in predominantly export markets, such
as New Zealand. Conversely, high energy prices have produced
opportunities with interest in timber as a fuel stock for energy
production increasing.
Timberland remains a unique asset class, an appreciating
renewable resource with performance that is largely un‑correlated
to financial market volatility. Moreover, the fundamental drivers
of investment returns – biological growth, product prices and
land values continue to offer investors an opportunity to realise
attractive risk-adjusted returns.
A number of investment opportunities which meet the original
guidelines have been identified and closed. As the remaining
capital is deployed, both originally identified strategies and
opportunities enhanced by the changes in the market conditions
will be utilised to fill out an attractive global portfolio of timber
assets with a superior risk-adjusted return.
Current Status
Our strong financial position and thorough due diligence
carried out by our Investment Managers has afforded us the
opportunity to purchase three attractive investments as of the
fiscal year end accounting for 24 per cent of the assets. Since
the end of the fiscal year, we have purchased two additional
timber properties representing 25 per cent of assets in the
Company. With allowances for working capital reserves and
planting costs, we have committed a total of 51 per cent of
the capital to these existing projects.
2
Cambium Global Timberland Limited
Annual report and financial statements 2008
Since the fiscal year end, Cambium has also entered into
contracts on properties in New Zealand and Brazil. These
properties represent an additional 9 per cent of the Net Asset
Value (‘NAV’) of the Company, bringing Cambium to an
anticipated 60 per cent invested capital upon closing of these
investments. The Investment Manager, CP Cogent Asset
Management LP, continues to work diligently to find attractive
assets for the remaining 40 per cent of the portfolio.
Cambium’s current properties by value are 38 per cent in North
America, 4 per cent in Australia/New Zealand and 7 per cent in
Asia/Pacific. After closing the properties under contract Cambium
will increase its Australia/New Zealand allocation to 10 per cent
and will have 4 per cent invested in South America. The Company
currently has a higher exposure to North America than originally
anticipated (but still within the terms of our prospectus). While
pricing for timberland assets has been very competitive in the United
States we have been able to find two opportunistic transactions that
are within our targeted returns and we believe we have been able
to acquire them at a discount to where United States properties
have been transacting. We anticipate a rebalance of North American
exposure as uninvested capital is committed.
Strategy and Implementation
As described in the accompanying Investment Manager’s
report, the properties we have acquired continue to progress
satisfactorily. We have a solid pipeline of opportunities that
are consistent with our original thesis in each of our targeted
geographies. The primary challenge we have faced has been locating
and securing these transactions in the original timeframe we had
proposed given the increased competition in the timber marketplace.
However, the Board continues to believe that the capital raised
will be committed within our original investment period.
Our primary focus at this time is on the non-North American
marketplace. Our pipeline is particularly strong in Latin and
South America and New Zealand. Given difficult market conditions,
we have reduced our focus on Australia at this point and will
likely substitute a portion of our North American exposure for
some of the Australian exposure in our original investment
model. Non-timber competition within Australia has driven
land prices to such a point that compelling timber returns are
difficult to find. Given the mature nature of the marketplace,
and well established political and economic environment,
we feel the United States exposure provides an adequate
substitute at more attractive discount rates. We continue
to monitor the situation in Australia closely and if we see
a correction in the marketplace our strategy may change.
Financial Results
The Company had earnings this period of 1.22 pence per share.
We had significant cash balances during the period and generated
approximately £5.7 million in earnings from interest on our cash
balances. Additionally we generated £2.8 million from increases in
the revaluations of our forestry investments. Significant expenses
for the period include £3.4 million in establishment expenses
and £2.7 million in administrative expenses. We expect our
administrative expense ratio to fall as the portfolio matures.
Dividend
The Board is proposing an annual dividend of 3 pence per share.
The target quarterly dividend, after the Company is fully invested,
will be at the annual rate of 5 pence per ordinary share and is
expected to grow in due course as the portfolio matures.
Articles of Association
The Chairman noted that at the Annual General Meeting it
was proposed that the Articles of Association of the Company
were to be substituted for and to the exclusion of the existing
Articles of Association.
Outlook
We are looking forward to the upcoming year and the further
development of the portfolio. Our investment pipeline is healthy
and our existing investments continue to generate value. When
our existing funds are fully invested we will consider the case for
raising additional capital to secure operating economies of scale
and the benefits of further diversification for our shareholders.
Our next scheduled update will come when the interim financials
for the period ending 31 October 2008 are available. Current
information about the Company is always available on our
website: www.cambiumfunds.com.
Donald Adamson
Chairman
11 July 2008
3
Cambium Global Timberland Limited
Annual report and financial statements 2008
investment manager’s report
CP Cogent Asset Management LP is pleased with the
performance of the current investments and with the full
pipeline of opportunities. We continue to see opportunities
consistent with the original investment thesis and anticipate
having the capital of the Company substantially committed
over the next several months.
Pahala is a 3,700 acre leasehold interest located on the south
East Coast of the Big Island of Hawaii. This asset was acquired
in July 2007. The project consists of well stocked Eucalyptus
Grandis plantations aged between 6 and 10 years. A wood
supply agreement for the timber has been negotiated with
a developer of a sliced veneer mill.
The current properties held for investment are summarised
as follows:
Pinnacle is a 4,446 acre leasehold interest located on the north
Eastern side of the Big Island of Hawaii. This asset was acquired
in May 2008.The growing stock consists of Eucalyptus Grandis
planted in stands ranging from 2 to 7 years of age. Harvesting
is anticipated to begin in 2014.
Corrigan is a 22,000 acre property consisting of intensively
managed pine plantations located in eastern Texas purchased
in June 2007. A balanced age distribution characterises the
timber on this property, which upon harvest can be sold into
an established end use market for timber products. To date this
property has performed up to expectations and has produced
income from timber harvests, recreational leases and a right
of way easement. Currently United States sawtimber prices
are at cyclical lows though asset values have been increasing
as recent transactions have been made at high price levels.
Tarrangower is a 21,000 acre ‘greenfield’ opportunity in
northern New South Wales, Australia purchased in July 2007.
This project generates returns from a mix of long-rotation timber
crops, carbon credits, water rights and biodiversity conservation
grants. The planting of Eucalyptus seedlings, which commenced
in October 2007, is slightly behind schedule due to out of the
ordinary drought conditions in the area. Reforestation efforts will
be accelerated when an improvement in available soil moisture is
present on the site. Also, Cambium has received grant income for
conservation management practices on this property. A contract
has been signed with a third party that defines a forward delivery
carbon credit-based transaction per the Green House Friendly
Program, with the first payment scheduled for 2009. In Australia
log exports have increased year over year but earnings have been
down due to increased shipping rates. Lumber production
has been down across the country, primarily driven by the
United States and domestic housing slump.
In June 2008 Cambium acquired 29,900 acres of timberland
located in Florida and Georgia. The plantations on this property
consist primarily of intensively managed southern pine including
improved trees, intensive thinning regimes and fertilisation.
The investment strategy includes even age management of
high quality plantations utilising intensive forest management
practices, short rotations of 25 to 27 years to provide cash flow,
final harvest of older and slower growing natural, upland pine
timber and marketing the least productive tracts and HBU tracts
for sale. Numerous area timber mills will serve as delivery points
for the wood products harvested from this asset, providing a
very competitive marketplace.
In addition we have properties under contract in Brazil and
New Zealand that, when added to the current ownership,
will result in the commitment of approximately 60 per cent
of the capital of the Company. The current pipeline includes
properties in each of the targeted geographies and should
provide the path to full investment.
The investments to date continue to perform in line with
expectations and represent a portfolio diversified across
species, geography and age class. We will seek to add further
diversification with the projects identified to fill out the balance
of the Cambium portfolio. We look forward to updating you
on the development of the portfolio with the release of the
interim financials for the period ending 31 October 2008.
CP Cogent Asset Management LP
4
Cambium Global Timberland Limited
Annual report and financial statements 2008
board of directors
Donald Lindsay Adamson (aged 49),
Independent Non-Executive Chairman
Donald Adamson has 27 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, F&C Commercial
Property Trust Limited, JP Morgan Progressive Multi-Strategy
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 Securities & Investment Institute and Chairman of the
Offshore Committee of the Association of Investment Companies.
Martin Willaume Richardson (aged 59),
Independent Non‑Executive Director
Martin Richardson has been a partner of the Jersey practice
of Rawlinson & Hunter, a firm of chartered accountants,
since 1987, specialising in trust and mutual fund administration
services to the financial services sector. He is a Director of
Diversified Portfolios Fund Limited, The Equity Partnership
Investment Company Plc, 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 1977 to 1981.
Colin Sean McGrady (aged 37),
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 United States
and Japan. Colin earned an MBA from the Harvard Business School,
received a BA in Economics from Brigham Young University,
and is a Chartered Financial Analyst.
Robert James Rickman (aged 50),
Independent Non-Executive Director
Robert Rickman is a Director of and adviser to a number of
forestry, forest industry and technology companies in the UK
and internationally. 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. 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 a MSc in Forestry and its
relation to Land Management from the University of Oxford.
William Taylor Spitz (aged 57),
Independent Non-Executive Director
William Spitz is 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 Diversified
Trust Company, 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.
5
Cambium Global Timberland Limited
Annual report and financial statements 2008
directors’ report
The Directors present their annual report and the audited financial statements of Cambium Global Timberland Limited
(the ‘Company’) and entities under its control (the ‘Group’) for the period from 19 January 2007 to 30 April 2008.
Business of the company
The Company was incorporated as a closed-ended Jersey registered investment company with limited liability on 19 January 2007.
The ordinary 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 aims to establish a portfolio comprising geographically diverse assets located both in mature markets and in
developing markets where potentially higher returns may be generated but with commensurately higher risks. The Company
will initially target investments in North and South America and the Asia-Pacific region (including Australia and New Zealand),
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 establishing an optimised portfolio of
timberland properties and timberland-related investments diversified by location, age class and species. The Company will 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.
A review of business during the period 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 11. The Directors proposed a dividend of £3,130,500.
Directors
The Directors of the Company are detailed below:
Colin McGrady
Donald Adamson
Martin Richardson
Robert Rickman
William Spitz
Appointed
13 February 2007
19 January 2007
19 January 2007
13 February 2007
13 February 2007
No Directors resigned during the period.
Directors’ interests
The following Directors had interests in the shares of the Company at 30 April 2008:
Number of ordinary shares
% held
Colin McGrady
Donald Adamson
Martin Richardson
William Spitz
50,000 50,000 50,000 50,000 0.02
0.02
0.02
0.02
Colin McGrady is a founding partner of CP Cogent Asset Management LP, who acts as Investment Manager.
6
Cambium Global Timberland Limited
Annual report and financial statements 2008
Directors’ remuneration
During the period the Directors received the following remuneration in the form of fees from the Company:
2008
£
Donald Adamson
Martin Richardson
Robert Rickman
William Spitz
49,753
31,096
31,096
31,096
143,041
Colin McGrady waived his Director’s fees for the period.
Substantial shareholdings
Shareholders with holdings of more than 3 per cent of the issued shares of the Company as at 30 June 2008 were as follows:
Name of investors
Number of ordinary shares
% held
Baillie Gifford
Rensburg Sheppards Investment Management
British Steel Pensions
AXA Framlington Investment Managers
SVM Asset Management
Tilney Private Wealth Management
Artemis Investment Management
Ashcourt Asset Management
Speirs & Jeffrey, stockbrokers
Rathbones
Midas Capital
JP Morgan Asset Management
West Yorkshire PF
16,450,000 10,712,049 10,000,000 7,085,000 6,050,000 6,002,106 5,000,000 4,746,807 4,632,900 4,403,200 3,800,000 3,626,077 3,150,000 15.76
10.27
9.58
6.79
5.80
5.75
4.79
4.55
4.44
4.22
3.64
3.47
3.02
85,658,139 82.08
Corporate governance
The Company is a closed-ended investment company incorporated in Jersey, listed on AIM and CISX and is not required to comply
with the requirements of the Combined Code issued by the UK’s Financial Reporting Council (the ‘Combined Code’). The Company
has however become a member of the Association of Investment Companies and will endeavour where practical to comply with
the principles and best practice of the AIC Code of Corporate Governance (the ‘Model Code’).
The Chairman is Donald Adamson. The Directors consider that the Chairman is independent for the purposes of the Model Code.
The Board considers that, with the exception of Colin McGrady, the Directors are independent of the Investment Manager and the
Investment Adviser.
The Board have also put in place a framework for corporate governance which takes in to account the best practice and rules
of both AIM and CISX.
The Board has considered the principles and recommendations of the Model Code by reference to the AIC Corporate Governance
Guide for Investment Companies (‘AIC Guide’). The Model Code, as explained by the AIC Guide, addresses all the principles set out
in Section 1 of the Combined Code, as well as setting out additional principles and recommendations on issues that are of specific
relevance to the Company.
The Board considers that by reporting against the principles and recommendations of the Model Code and referring to the
AIC Guide (which incorporates the Combined Code), they will provide better information to shareholders.
7
Cambium Global Timberland Limited
Annual report and financial statements 2008
directors’ report continued
Corporate governance continued
The Combined Code includes provisions relating to:
+ the role of the Chief Executive;
+ Executive Directors’ remuneration; and
+ the need for an internal audit function.
The Company has complied with the recommendations of the Model Code and the relevant provisions of Section 1 of the
Combined Code, except as set out below.
For the reasons set out in the AIC Guide and in the preamble to the Combined Code, the Board considers these provisions are
not relevant to the position of the Company, being an externally managed investment company. The Company has therefore not
reported further in respect of these provisions.
The Board meets quarterly and as appropriate considers the following issues:
+ the overall objectives for the Company;
+ the appropriate risk framework;
+ any shifts in strategy that may be appropriate in light of changes in market conditions;
+the appointment and ongoing monitoring, through regular reports and meetings, of the Investment Manager, administrator
and other service providers;
+ review of the Company’s performance including Net Asset Value and payment of dividends; and
+ the shareholder profile of the Company.
Additional ad-hoc meetings of the Board are convened as and when necessary.
Board meetings
Colin McGrady
Donald Adamson
Martin Richardson
Robert Rickman
William Spitz
Held
Attended
8
8
8
8
8
6
7
8
6
6
Audit committee meetings
Held
N/A 1
1
1
1
Attended
N/A 1
1
1
1
Other meetings
Held
Attended
5
5
5
5
5
5
4
5
2
5
The Board receive compliance reports and reporting from third party service providers enabling the assessment of the effectiveness
of the service providers, their internal controls and to consider any relevant risks and how these can be effectively managed. These
compliance reports are provided by the administrator.
The Investment Manager maintains direct contact with the shareholders of the Company through regular investor meetings
and keeps the Board appraised at the scheduled quarterly meetings. The Chairman also maintains direct communication with the
Nominated Advisor of the Company to ensure that any investor relations issues brought to the attention of the Nominated Advisor
are communicated to the Board.
The Board has the relevant experience required to manage the Company and they have access to professional advice.
The Company does not have a Remuneration Committee or Nomination Committee as the Board do not consider such committees
appropriate as the Company has no employees and all the Directors are Non-Executive.
As no formal Remuneration or Nomination Committee has been established, the performance of each Director will be appraised
by the Audit Committee prior to the holding of the Annual General Meeting (‘AGM’) for future years. In accordance with the
Model Code, each Director is standing for re-election at the AGM in 2008, being the first AGM following his appointment. Pursuant
to the Articles of Association of the Company, following the AGM on 15 August 2008, one third, or the number nearest to but
not exceeding one third, of the Directors will retire and stand for re-election at the AGM each year, provided that each Director
shall retire and stand for re-election at intervals of no more than three years. Colin McGrady as the only Non-Independent Director
will stand for re-election every year. Each Director is appointed subject to the provisions of the Articles of Association in relation
to retirement as described above.
8
Cambium Global Timberland Limited
Annual report and financial statements 2008
Audit committee
The Board operates an Audit Committee which meets twice a year. The Audit Committee is comprised of Martin Richardson (Chairman),
Donald Adamson, Robert Rickman and William Spitz. When required the Audit Committee meetings are also attended by the
administrator and the Company’s auditors.
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 reporting is maintained to the highest standards and
as such is responsible for the following:
+ reviewing the interim and annual audited financial statements;
+ scope of the appointment of the auditors, and their remuneration;
+ reviewing the auditors effectiveness and independence; and
+ the effectiveness of the Company’s internal control systems.
Directors’ responsibilities
The Directors are responsible for preparing the financial statements in accordance with applicable law and International Financial
Reporting Standards (‘IFRS’). 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 Company and of the profit or loss of the Company for that period. In preparing
these financial statements, the Directors are required to:
+ select suitable accounting policies and then apply them consistently;
+ make judgements and estimates that are reasonable and prudent;
+state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained
in the financial statements; and
+prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial
position of the Company 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 Company 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.
Auditors
The auditors of the Company, KPMG Channel Islands Limited, have expressed their willingness to continue in office and
a resolution giving authority to reappoint will be proposed at the forthcoming AGM.
By order of the Board
11 July 2008
9
Cambium Global Timberland Limited
Annual report and financial statements 2008
independent auditors’ report to the members
We have audited the Group and Company financial statements (the ‘financial statements’) of Cambium Global Timberland Limited
for the period ended 30 April 2008 which comprise the Consolidated and Company Income Statement, the Consolidated and
Company Balance Sheets, the Consolidated and Company Cash Flow Statement, the Consolidated and Company Statement
of Changes in Equity and the related notes. These financial statements have been prepared under the accounting policies set
out therein.
This report is made solely to the Company’s members, as a body, in accordance with Article 110 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 auditors’ 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 described in the Statement of Directors’ Responsibilities on page 9, the Company’s Directors are responsible for preparation
of the financial statements in accordance with applicable law and IFRS.
Our responsibility is to audit the financial statements in accordance with the relevant legal and regulatory requirements and
International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in
accordance with the Companies (Jersey) Law 1991. We also report to you if, in our opinion, the Company has not kept proper
accounting records or if we have not received all the information and explanations we require for our audit.
We read the Directors’ Report and other information accompanying the financial statements and consider the implications
for our report if we become aware of any apparent misstatements within it.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices
Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements.
It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial
statements and of whether the accounting policies are appropriate to the Group’s and Company’s circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements:
+give a true and fair view, in accordance with IFRS, of the state of the Group’s and Company’s affairs as at 30 April 2008
and of the Group’s profit for the period then ended; and
+ have been properly prepared in accordance with the Companies (Jersey) Law 1991.
Chartered Accountants
KPMG Channel Islands Limited
5 St Andrews Place
Charing Cross
St Helier
Jersey
JE4 8WQ
11 July 2008
10
Cambium Global Timberland Limited
Annual report and financial statements 2008
consolidated income statement
for the period ended 30 April 2008
Notes
Revenue
6
For the
period from
19 January
2007 to
30 April
2008
£
699,828
Cost of sales
(354,140)
Gross profit
345,688
Increase in fair value of land and plantations
14
2,819,043
Administrative expenses
7
(2,654,022)
Other operating expenses
(118,371)
Establishment expenses
(3,391,375)
(6,163,768)
Operating loss
(2,999,037)
Losses on available-for-sale investments
(30,035)
Finance income
8
5,659,705
Finance costs
9
(70)
Net finance income
5,629,600
Net foreign exchange losses
(62,933)
Profit before taxation
2,567,630
Taxation
10
(1,295,985)
Profit for the period attributable to shareholders
1,271,645
Basic and diluted earnings per share
1.22 pence
11
The notes on pages 19 to 37 form an integral part of these annual financial statements.
11
Cambium Global Timberland Limited
Annual report and financial statements 2008
consolidated balance sheet
at 30 April 2008
Notes
30 April
2008
£
Non-current assets
Plantations
14
23,807,920
Property, plant and equipment
15
461,120
Intangible assets
16
123,164
Deferred tax assets
10
630,005
25,022,209
Current assets
Trade and other receivables
18
774,630
Available-for-sale investments
20
8,964,000
Forward exchange currency contracts
21
43,106
Cash and cash equivalents
22
73,757,639
83,539,375
Total assets
108,561,584
Current liabilities
Trade and other payables
23
471,674
471,674
Non-current liabilities
Deferred tax liabilities
10
1,920,265
1,920,265
Total liabilities
2,391,939
Net assets
106,169,645
Equity
Stated capital 24
2,000,000
Distributable reserve
24
102,350,000
Revaluation reserve
52,292
Translation reserve
495,708
Retained earnings
1,271,645
Total equity
106,169,645
These financial statements were approved and authorised for issue on 11 July 2008 by the Board of Directors.
Donald Adamson
Director
Martin Richardson
Director
The notes on pages 19 to 37 form an integral part of these annual financial statements.
12
Cambium Global Timberland Limited
Annual report and financial statements 2008
consolidated statement of changes in equity
for the period ended 30 April 2008
Stated
capital
£
Distributable
reserve
£
Translation reserve
£
Revaluation
reserve
£
Retained earnings
£
Total
£
At 19 January 2007
—
—
—
—
—
—
Net profit for the period
—
—
—
—
1,271,645 1,271,645
Issue of ordinary share capital
104,350,000 —
—
—
— 104,350,000
Reduction of stated capital
account (note 24)
(102,350,000) 102,350,000 —
—
—
—
Currency translation differences
—
—
495,708 —
—
495,708
Increase in fair value
of intangible assets
—
—
—
69,942 —
69,942
Decrease in fair value of
available-for-sale investments
—
—
—
(17,650)
—
(17,650)
2,000,000 102,350,000 495,708
52,292 At 30 April 2008
1,271,645 106,169,645
The notes on pages 19 to 37 form an integral part of these annual financial statements.
13
Cambium Global Timberland Limited
Annual report and financial statements 2008
consolidated cash flow statement
for the period ended 30 April 2008
30 April
2008
£
Cash flows from operating activities
Operating loss for the period
(2,999,037)
Adjustments for:
Gain on revaluation of land and plantations
(2,819,043)
Depreciation
880
Increase in trade and other receivables
(563,077)
Increase in trade and other payables
464,107
(2,917,133)
Net cash from operating activities
(5,916,170)
Cash flows from investing activities
Purchase of property, plant and equipment
(469,679)
Purchase of land and plantations
(19,688,534)
Cost capitalised to plantations
(559,827)
Purchase of intangible assets
(43,714)
Purchase of available-for-sale investments
(8,981,650)
Net cash used in investing activities
(29,743,404)
Cash flows from financing activities
Net proceeds from the issue of shares
104,350,000
Finance income
5,464,549
Finance costs
Net cash from financing activities
(70)
109,814,479
Foreign exchange movements
(397,266)
Net increase in cash and cash equivalents
73,757,639
The notes on pages 19 to 37 form an integral part of these annual financial statements.
14
Cambium Global Timberland Limited
Annual report and financial statements 2008
company income statement
for the period ended 30 April 2008
Notes
Administrative expenses
For the
period from
19 January
2007 to
30 April
2008
£
7
(2,580,212)
Establishment expenses
(3,391,375)
Operating loss
(5,971,587)
Losses on available-for-sale assets
(30,035)
Finance income
8
5,791,060
Net finance income
5,761,025
Net foreign exchange gain
31,137
Loss for the period
(179,425)
The notes on pages 19 to 37 form an integral part of these annual financial statements.
15
Cambium Global Timberland Limited
Annual report and financial statements 2008
company balance sheet
at 30 April 2008
Notes
30 April
2008
£
Non-current assets
Investment in subsidiary undertakings
13
1,333,169
Loans to subsidiary undertakings
19
20,459,175
21,792,344
Current assets
Trade and other receivables
18
599,517
Available-for-sale investments
20
8,964,000
Forward exchange currency contracts
21
43,106
Cash and cash equivalents
22
72,928,781
82,535,404
Total assets
104,327,748
Current liabilities
Trade and other payables
23
174,823
Total liabilities
174,823
Net assets
104,152,925
Equity
Stated capital 24
2,000,000
Distributable reserve
24
102,350,000
Revaluation reserve
Retained earnings
(17,650)
(179,425)
Total equity
104,152,925
The notes on pages 19 to 37 form an integral part of these annual financial statements.
16
Cambium Global Timberland Limited
Annual report and financial statements 2008
company statement of changes in equity
for the period ended 30 April 2008
Stated
capital
£
Distributable
reserve
£
Revaluation
reserve
£
Retained earnings
£
Total
£
At 19 January 2007
—
—
—
—
—
Net loss for the period
—
—
—
(179,425)
(179,425)
Issue of ordinary share capital
104,350,000 —
—
— 104,350,000
Reduction of stated capital account (note 24) (102,350,000) 102,350,000 —
—
—
—
(17,650)
—
(17,650)
2,000,000 102,350,000 (17,650)
Revaluation of available-for-sale investments
At 30 April 2008
—
(179,425) 104,152,925
The notes on pages 19 to 37 form an integral part of these annual financial statements.
17
Cambium Global Timberland Limited
Annual report and financial statements 2008
company cash flow statement
for the period ended 30 April 2008
Cash flows from operating activities
Operating loss for the period
Adjustments for:
Increase in trade receivables
Increase in trade and other payables
Foreign exchange loss
30 April
2008
£
(5,971,587)
(599,517)
174,823
(11,969)
(436,663)
Net cash from operating activities
(6,408,250)
Cash flows from investing activities
Investments acquired
Available for sale investments acquired
Disposal of available-for-sale investments
Increase in loans to subsidiary undertakings
(1,333,169)
(8,981,650)
(30,035)
(20,459,175)
Net cash used in investing activities
(30,804,029)
Cash flows from financing activities
Net proceeds from the issue of shares
Finance income
104,350,000
5,791,060
Net cash from financing activities
110,141,060
Net increase in cash and cash equivalents
72,928,781
The notes on pages 19 to 37 form an integral part of these annual financial statements.
18
Cambium Global Timberland Limited
Annual report and financial statements 2008
notes to the financial statements
for the period ended 30 April 2008
1 General information
The Company and its subsidiaries, including special purpose vehicles (‘SPVs’) controlled by the Company, were established to
invest in a global portfolio of forestry-based properties which can be managed on an environmentally and socially sustainable
basis. Assets may be managed for timber production, environmental credit production or both. The Group currently owns
forestry assets located in Australia, Hawaii and the 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 5 Castle Street, St Helier, Jersey JE2 3RT.
The Company has its primary listing on AIM, a market of the London Stock Exchange and a dual listing on the CISX.
2 Basis of preparation
The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (‘IFRS’),
which comprise standards and interpretations approved by the International Accounting Standards Board (‘IASB’).
The financial statements have been prepared in pounds sterling, which is the presentational currency of the Group and under
the historical cost convention, except for the revaluation of land, plantations and certain financial instruments.
Standards and interpretations in issue and not yet effective
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:
New standards
Effective for periods beginning on or after
IFRS 8: Operating segments 1 January 2009
Revised and amended standards
IFRS 2: Share based payments 1 January 2009
IFRS 3: Business combinations
1 July 2009
IAS 1: Presentation of Financial Statements 1 January 2009
IAS 23: Borrowing costs 1 January 2009
IAS 29: Financial reporting in associates
1 July 2009
IAS 31: Interest in joint ventures
1 July 2009
IAS 32: Financial Instruments: Presentation
1 January 2009
IAS 36: Impairment of assets 1 January 2009
IAS 38: Intangible assets 1 January 2009
IAS 39: Financial instrument: Recognition and measurement 1 January 2009
IAS 40: Investment property 1 January 2009
Interpretations
Effective for periods beginning on or after
IFRIC 11: IFRS 2 – Group and Treasury Share Transactions 1 March 2007
IFRIC 12: Service Concession Arrangements 1 January 2008
IFRIC 13: Customer Loyalty Programmes
1 July 2008
IFRIC 14: IAS 19 – The limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction 1 January 2008
The Directors anticipate that all of the above standards and interpretations will be adopted in the consolidated financial statements
for the periods commencing 1 May 2008 and 1 May 2009 as appropriate and that the impact of the adoption of these standards
and interpretations on the consolidated financial statements are still being assessed. Some of these standards and interpretations
will require significant additional disclosures in the period of initial application over and above these currently included in the
financial statements.
19
Cambium Global Timberland Limited
Annual report and financial statements 2008
notes to the financial statements continued
for the period ended 30 April 2008
3 Significant accounting policies
A summary of the principal accounting policies, all of which have been applied consistently throughout the period, is set below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries, including SPVs
controlled by the Company, made up to 30 April 2008. 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.
When necessary, adjustments are made to the financial statements of subsidiaries and SPVs 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.
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.
Interest income is accrued on a time basis by reference to the principal outstanding and the effective interest rate applicable.
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 at fair value.
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 consolidated financial statements are presented in
pounds sterling, which is the Company’s functional and presentational currency.
b) Transactions and balances
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of transactions.
At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet 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 directly to equity.
c) Group companies
The results and financial position of all the Group entities that have a functional currency different from the presentational
currency are translated into the presentation currency as follows:
(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet;
(ii) income and expenses for the income statement are translated at the average exchange rate prevailing in the period; and
(iii)all resulting exchange differences are recognised as a separate component of equity.
On consolidation, the exchange differences arising from the translation of the net investment in foreign entities are taken
to shareholders’ equity. When a foreign operation is sold, such exchange differences are recognised in the income statement
as part of the gain or loss on sale.
The period end exchange rate used is £1: US$1.9714 and £1: AU$2.111. The average rate was calculated from the date
the subsidiary was acquired to 30 April 2008. The average exchange rate for the period used on the Hawaiian investment
is £1: US$2.011, the Texan investment £1: US$2.0107 and the Australian investment £1: AU$2.2876.
Operating profit
Operating profit includes net gains and losses on revaluation of land and plantations, as reduced by administrative expenses
and operating costs and excludes finance costs and income.
20
Cambium Global Timberland Limited
Annual report and financial statements 2008
3 Significant accounting policies continued
Expenses
All income and expenses are accounted for on an accruals basis and include those of the administrators, the Investment Manager
and the Directors.
Establishment expenses
Establishment expenses incurred on the launch of the Company have been accounted for in the income statement as incurred.
Impairment
The carrying amount of the Group’s non-financial assets, other than plantations, 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 income statement 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 have been
determined, net of applicable depreciation, if no impairment loss had been recognised.
Taxation
The Company is registered as a Jersey tax exempt company. The Company was exempt from Jersey taxation on income derived
from outside of Jersey and bank interest earned in Jersey under the Income Tax (Jersey) Ordinance, 1961. This law was amended
for assessment periods starting 1 January 2008 under Income Tax (Amendment 28) (Jersey) Law 2007. The Company will no longer
be exempt from tax, it will be taxed at a corporate rate of 0 per cent. A fixed annual fee of £600 was paid to the States of Jersey in
respect of the exemption up to 31 December 2007. 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, Texas and
Hawaii (Delaware).
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 as reported in the income
statement 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 balance sheet 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 balance sheet 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 balance sheet 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 income statement, except when it relates to items charged or credited directly to equity,
in which case the deferred tax is also dealt with in equity.
Plantations
Plantations are measured on initial recognition and at each balance sheet date at fair value. Any changes in fair values are
recognised in the income statement. Agricultural produce harvested from plantations are also measured at fair value less point
of sale costs as at the date of harvest.
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 measured to fair value. The fair value of property is determined on a 6 monthly basis by
independent external appraisal. Revaluation gains are recognised in equity through the revaluation reserve with revaluation
losses recognised in the income statement.
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 income statement during the financial period in which they incurred.
Motor vehicles are recognised at purchase cost less accumulated depreciation and any recognised impairment losses. Depreciation
is provided at the rate of 12.5 per cent per annum on a diminishing balance basis.
21
Cambium Global Timberland Limited
Annual report and financial statements 2008
notes to the financial statements continued
for the period ended 30 April 2008
3 Significant accounting policies continued
Intangible assets
Intangible assets are initially recognised at cost and subsequently measured 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.
Investment in subsidiaries
Investments in subsidiaries are initially recognised and subsequently carried at cost in the Company’s financial statements less,
where appropriate, provisions for impairment.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet 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. Although the Group uses derivative financial instruments in economic hedges of currency, it does not
hedge account for these transactions. 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 12 months after the balance sheet date. These 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 income statement.
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.
b) 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. Realised gains and losses on sale of quoted investments are recognised in the
income statement.
c) Fair value through profit or loss
This category comprises only forward foreign currency contracts. The fair value of forward exchange contracts is based on their
listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference
between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free
interest rate (based on government bonds). Forward currency contracts are recorded as an asset and liability at the forward
contract rate. The liability is subsequently measured to fair value with the resulting gain or loss being recognised in the
income statement.
d) 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 and when it no longer has control over
the asset or a portion of the asset; or
+ when the contractual right to receive cash flow from the asset has expired.
22
Cambium Global Timberland Limited
Annual report and financial statements 2008
3 Significant accounting policies continued
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. The Group has not classified any of its financial liabilities as at fair value through profit or loss.
b) De-recognition of financial liabilities
A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expired.
c) Stated capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a
financial liability. The Company’s ordinary shares are classified as equity instruments. For the purposes of the disclosures given
in note 24 the Group considers all its stated capital and all other reserves as equity. The Company is not subject to any externally
imposed capital requirements.
Effective interest rate 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.
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.
Valuation of plantations
The Group normally uses the valuation performed by its independent valuers as the fair value of its plantations. The valuation
is based on assumptions. The valuers also make reference to market evidence of transaction prices for similar transactions.
Valuation of buildings
The Group normally uses the valuation performed by its independent valuers as the fair value of its buildings. The valuation
is based on assumptions. The valuers also make reference to market evidence of transaction prices for similar transactions.
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. 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.
Fair value of derivative contracts
The Group estimates fair values of derivative contracts by reference to current market conditions compared to the terms of contracts
using the results of an appraisal process carried out by the counterparty.
Valuation of intangible asset
The water licence has initially been recognised at purchase cost and is revalued to a value calculated by URS Australia Pty Ltd,
an external valuer. These calculations are based on assumptions.
23
Cambium Global Timberland Limited
Annual report and financial statements 2008
notes to the financial statements continued
for the period ended 30 April 2008
5 Segmental information
Jersey
£
Australia
£
United States
£
Hawaii
£
Total assets
84,744,721 4,966,789 15,743,240 3,106,834
Segment revenue
—
253,152 446,676 —
Segment gross profit
—
229,810 115,878 —
The Group operates in four distinctly separate geographical locations, with timberlands located in NSW (Australia),
Texas (United States) and Hawaii (Delaware).
The Group owns approximately 21,163 acres of land known as Tarrangower 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 and short term revenue from carbon credits. In addition to this, the Group
has managed to secure a grant from the local Catchments Management Authority for biodiversity conservation and salinity control
services provided by Tarrangower as a timber and carbon estate.
In Texas, the Group are part of a syndicate owning approximately 115,188 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 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.
6 Revenue
Group
2008
£
Sales – timber
Sales – right of way
Lease income
Grant income
291,227
106,012
105,876
196,713
699,828
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 (£419,654) 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.
7 Administrative expenses
Company
2008
£
Group
2008
£
Investment Manager’s fees
Directors’ fees
Auditors’ fees
Other professional fees
Revaluation on property, plant and equipment
Depreciation
1,207,676 143,041 38,000 1,191,495 —
—
1,207,676
143,041
38,000
1,221,148
43,277
880
2,580,212
2,654,022
24
Cambium Global Timberland Limited
Annual report and financial statements 2008
8 Finance income
Company
2008
£
Group
2008
£
Interest from subsidiary undertakings
Bank interest
Bond interest
159,632
5,316,177 315,251 —
5,344,454
315,251
5,791,060 5,659,705
9 Finance costs
Company
2008
£
Group
2008
£
Bank interest
—
70
10Taxation
Taxation on profit on ordinary activities:
Company
The Company was exempt from taxation up to 31 December 2007 under the provisions of the Income Tax (Jersey) Law, 1961.
This law was amended for assessment periods starting 1 January 2008 under Income Tax (Amendment 28) (Jersey) Law 2007.
The Company will no longer be exempt from tax, it will be taxed at a corporate rate of 0 per cent.
Group
The Group’s tax expenses for the period comprises:
Group
2008
£
Deferred taxation
United States
1,791,527
Australia
(495,542)
1,295,985
Tax expense reconciliation
Profit for the period
Less: income non-taxable
Add: expenditure non-taxable
Add: unprovided deferred tax asset movement
2,567,630
(5,791,060)
6,224,027
475,404
Taxable profit for the year
3,476,001
Tax at domestic rates applicable to profits in the country concerned:
Group
2008
£
Australian taxation at 30%
United States – Texan taxation at 35%
United States – Delaware taxation at 34%
(3,087,512)
1,682,550
108,977
(1,295,985)
25
Cambium Global Timberland Limited
Annual report and financial statements 2008
notes to the financial statements continued
for the period ended 30 April 2008
10Taxation continued
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon:
Group
2008
£
Revaluation of biological assets and land
Accelerated tax depreciation
Capitalised assets deducted
Capitalised liabilities taxed
(1,298,560)
(833)
(958)
4,366
(1,295,985)
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset)
for the financial reporting purposes available for the offset against future profits.
Group
2008
£
Deferred tax liabilities Deferred tax assets
Foreign exchange effect
(1,877,454)
581,469
5,725
(1,290,260)
At the balance sheet date the Group has unused tax losses of £475,404. No deferred tax asset has been recognised in respect of
these losses. Due to the unpredictability of future taxable profits, the Directors believe it is not prudent to recognise deferred tax
assets in respect of these losses.
11Basic and diluted earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Group
2008
£
Earnings for the purposes of basic and diluted earnings per share
being net profit for the period as per income statement
1,271,645
Number of ordinary shares
Number of ordinary shares for basic and diluted earnings per share:
Weighted average number of ordinary shares for the purposes
of basic and diluted earnings per share
104,350,000
Basic and diluted earnings per share
1.22 pence
26
Cambium Global Timberland Limited
Annual report and financial statements 2008
12Net Asset Value
Group
2008
£
Total assets
Total liabilities
108,561,584
2,391,939
Net Asset Value 106,169,645
Number of shares in issue Net Asset Value per share 104,350,000
1.02
13Investment in subsidiaries
A list of the significant investments in subsidiaries, including the name, country of incorporation and the proportion of ownership
interest is given below.
% of
Country of
Name of subsidiary undertaking
voting rights
incorporation
Cambium Tarrangower Holdings Limited
Cambium Australia Trust
Cambium Pahala Holdings Limited
Cambium Pahala Hungary Holdings Kft.
Cambium Pahala Inc. (Delaware) Cambium Pinnacle Holdings Limited
Cambium Holdings Limited
Corrigan Holdings Limited
Cambium Hungary Holdings Kft.
Corrigan Hungary Holdings Kft.
Cambium Corrigan Limited Partnership
Cambium Minas Gerias Holdings Limited
Cambium MG Holdings Limited
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Jersey
Australia
British Virgin Islands
Hungary
Delaware, United States
British Virgin Islands
British Virgin Islands
British Virgin Islands
Hungary
Hungary
Texas, United States
British Virgin Islands
British Virgin Islands
Principal activity
Holding company
Forestry
Holding company
Holding company
Forestry
Holding company
Holding company
Holding company
Holding company
Holding company
Forestry
Holding company
Holding company
Investments held by the Company:
Company
2008
£
Cambium Tarrangower Holdings Limited
Cambium Pahala Holdings Limited
Cambium Pinnacle Holdings Limited
Cambium Holdings Limited
Corrigan Holdings Limited
Cambium Minas Gerias Holdings Limited
Cambium MG Holdings Limited
1,191,567
67,455
49
36,999
36,999
51
49
1,333,169
27
Cambium Global Timberland Limited
Annual report and financial statements 2008
notes to the financial statements continued
for the period ended 30 April 2008
14Plantations
Merchantable
timber
Group
£
Pre-merchantable
timber
Group
£
Land and
plantations
Group
£
Land acquired in the period
Plantations acquired in the period
Acquisition costs capitalised
Gains on growth
Harvesting – agriculture produce (felling)
Transfer to merchantable timber
Transfer to pre-merchantable timber
Fair value adjustments on plantations
Fair value adjustments on land
Foreign exchange effect
—
—
—
—
—
6,207,140 —
—
—
123,739 —
—
—
—
—
—
5,660,615 —
—
119,750 6,940,340 12,748,194 559,827 537,978 (437,588)
(6,207,140)
(5,660,615)
1,270,859 1,591,461 353,360 6,940,340
12,748,194
559,827
537,978
(437,588)
—
—
1,270,859
1,591,461
596,849
Carrying value as at 30 April 2008
6,330,879 5,780,365 11,696,676 23,807,920
Total
Group
£
The land and plantations are carried at their fair value as at 30 April 2008, as measured by external independent valuers
URS Australia Pty Ltd (‘URS’) and Day Forest Management and Appraisal Inc.
The appraisal on the Texas forest was undertaken by Day Forest Management and Appraisal Inc. in conformance with
Uniform Standards of Professional Appraisal Practice. For this valuation three valuation approaches were used as considered
applicable. These included the cost approach, the sales comparison approach and the income approach.
The methodology used by URS to determine the land value of the Australian investment is consistent with the Australian equivalent
of IFRS. The preferred approach in the standard is the fair value model. While non-forestry land values can be assessed using
transaction evidence, there is no comparable transaction evidence to determine the value of land for forestry purposes in the
region. Therefore, URS has applied a discounted cash flow analysis to determine the value of the land for forestry purposes.
The small plantation area is valued according to the requirements of Australian Accounting Standards Board 141 Agriculture
which is consistent with IFRS. The property revaluation was performed taking into account the Group’s intention to use land
for plantation purposes.
The Hawaiian plantation was valued by URS at fair value. The market value of the plantations has been assessed using a discounted
cash flow (‘DCF’) in accordance with IFRS. A discount rate of 7.5 per cent real was derived using a Capital Asset Pricing Model
(‘CAPM’)/Weighted Average Cost of Capital (‘WACC’) methodology and applied to real, pre-tax cash flows.
15Property, plant and equipment
Buildings
Improvements
Group
Group
2008
2008
£
£
Motor vehicles
Group
2008
£
Total
Group
2008
£
Cost
Assets acquired in period
365,886 91,899 11,894 469,679
Balance as at 30 April 2008
365,886 91,899 11,894 Depreciation and fair value movements
Revaluation
(41,528)
(1,749)
—
Foreign exchange effect
27,135
7,542
921 Depreciation for the period
—
—
(880)
(14,393)
5,793
41
469,679
(43,277)
35,598
(880)
(8,559)
Carrying value
Balance as at 30 April 2008
351,493 97,692 11,935 461,120
The buildings and improvements are carried at their fair value as at 30 April 2008, 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 IFRS. The motor vehicles are carried at cost less accumulated depreciation.
28
Cambium Global Timberland Limited
Annual report and financial statements 2008
16Intangible assets
Group
2008
£
Cost – water licence
Revaluation
Foreign exchange effect
43,714
69,942
9,508
123,164
The Tarrangower property has approximately 4km of frontage to the Severn River and has attached to it a water licence administered
by the Department of Natural Resources in Australia (‘DNR’). The 105 mega litre surface irrigation license (Number 90SL100620)
has rights attached to it allowing an annual allocation of 48 mega litres A class and 57 mega litres B class from Pindari Dam which
is located 11km further up stream. The licence is renewable on a five yearly basis and at a small administration cost to the Group.
The licence is measured at fair value as at 30 April 2008, as measured by external independent valuers URS Australia Pty Ltd.
The valuations have been prepared using techniques approved under IFRS.
17Categories of financial assets and financial liabilities
Company
2008
£
Group
2008
£
Current financial assets
Financial assets through profit or loss:
Forward exchange currency contracts
43,106 43,106
Loans and receivables:
Trade and other receivables
599,517 774,630
Cash and cash equivalents
72,928,781 73,757,639
Available-for-sale investments:
Available-for-sale investments
8,964,000 8,964,000
Non-current financial assets
Loans and receivables:
Loans to subsidiary undertakings
20,459,175 —
Current financial liabilities Financial liabilities measured at amortised cost:
Trade and other payables
174,823 471,674
18Trade and other receivables
Company
2008
£
Group
2008
£
Accrued interest on bonds
Bank interest receivable
Goods and service tax receivable
Trade receivables
Deposit paid
Deferred costs
Prepaid expenses
53,565 141,591 —
41,696 251,572 87,341 23,752 53,565
141,591
8,985
199,940
251,572
87,341
31,636
599,517 774,630
The deposit was paid on the Pinnacle forest and deferred costs were incurred on prospective investments in forests.
29
Cambium Global Timberland Limited
Annual report and financial statements 2008
notes to the financial statements continued
for the period ended 30 April 2008
19Loans to subsidiary undertakings
Company
2008
US$
Company
2008
£
Cambium Corrigan Holdings Limited
Corrigan Holdings Limited
Cambium Pahala Holdings Limited
13,589,129 13,589,129 5,683,997 6,893,137
6,893,136
2,883,229
32,862,255 16,669,502
AU$
£
Cambium Tarrangower Holdings Limited
8,000,000
3,789,673
Total loans to subsidiary undertakings
20,459,175
All inter-company loans are interest free and have no fixed terms of repayment. The Directors do not anticipate that payment
on these loans will be demanded during the next 12 months.
20Available-for-sale investments
Company
2008
£
UK Treasury stock 4% 3.07.2009
8,964,000 Group
2008
£
8,964,000
The UK Treasury stock is held as a margin account for the forward currency contracts (see note 21). As the forward contracts
have a strike date of 30 April 2009, it is the intention of the Company to sell these gilts at this date.
The fair value of the UK Treasury stock is determined with standard terms and conditions and traded on the London Stock Exchange
determined with reference to quoted market prices.
21Forward exchange currency contracts
Company
2008
£
Forward foreign currency contracts:
At forward rate
At market rate
Difference
Group
2008
£
26,690,135 (26,647,029)
26,690,135
(26,647,029)
43,106 43,106
As at 30 April 2008 there were five forward foreign currency contracts in place. They are used to hedge against foreign exchange
exposure arising from investing in foreign operations and foreign currency transactions.
Forward exchange currency contracts held by the Company and the Group at their forward exchange rates are listed below.
All of the contracts have a strike date of 30 April 2009.
Forward exchange currency contracts for United States dollar
Forward exchange currency contracts for Australian dollar
30
Cambium Global Timberland Limited
Annual report and financial statements 2008
US$
42,250,000 AU$
10,500,000 £
21,870,721
£
4,819,414
22Cash and cash equivalents
Company
2008
£
Group
2008
£
Cash held at bank
Cash held at broker
72,908,716 20,065 73,737,574
20,065
72,928,781 73,757,639
23Trade and other payables
Company
2008
£
Accruals
Trade creditors
Advances held
174,823 —
—
187,068
70,444
214,162
174,823 471,674
24Stated capital
Group
2008
£
Company
2008
£
Group
2008
£
Net proceeds from issue of shares 104,350,000 104,350,000
Less: reduction in share capital (102,350,000) (102,350,000)
2,000,000 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
100 pence 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 was granted on 29 June 2007. The balance of £102,350,000 was
transferred to a distributable reserve on that date.
25Reserves
The movements in the reserves for the Group and the Company are shown on pages 13 and 17 respectively.
Translation reserve
The translation reserve contains exchange differences arising on consolidation of the Group’s foreign operations.
Revaluation reserve
The revaluation reserve arises from the revaluation on available-for-sale investments, intangible assets and property plant
and equipment.
Distributable reserve
The Company reduced its stated capital account and a balance of £102,350,000 was transferred to distributable reserves.
31
Cambium Global Timberland Limited
Annual report and financial statements 2008
notes to the financial statements continued
for the period ended 30 April 2008
26Business combinations
On 18 April 2007 Cambium Jersey Trust was established with initial settled funds of £100 transferred by the Company. The Company
was the sole beneficiary of Cambium Jersey Trust. Cambium Jersey Trust was the sole investor in Cambium Australia Trust which is
a Unit Trust established in Australia which currently holds Australian land for agricultural purposes. On 12 June 2007 the Company
contributed capital of US$27,125,000 to Cambium Corrigan LP, a limited partnership established in the state of Texas, which holds
timberland in the United States.
On 10 August 2007 CP Cogent Asset Management LP advised the Board on a new structure in which to hold the Australian
investment. The benefit the Company will derive from the new structure is that withholding tax will be lowered from 45 per cent
to 30 per cent. The Board decided that the Company should acquire a newly formed Jersey company, Cambium Tarrangower
Holdings Limited. The Cambium Australia Trust would buy their units back from Cambium Jersey Trust and the Cambium Jersey
Trust would be terminated as soon as possible. Cambium Tarrangower Holdings Limited subscribed to the units on Cambium
Australia Trust. Funding for this transaction was provided by the Company.
On 1 August 2007 the Company transferred US$5,491,000 to an escrow account in respect of a capital contribution to
Cambium Pahala Inc., a Company established in Delaware.
27Financial instruments risk exposure and management
In common with other businesses, the Group is exposed to risks that arise from use of financial instruments. The notes below
describe the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented throughout these financial statements.
Principal financial instruments
The principal financial instruments used by the Group and Company, from which financial instrument risk arises, as follows:
+ Amounts receivable from subsidiary and SPV undertakings
+ Trade and receivables
+ Available-for-sale investments
+ Forward exchange currency contracts
+ Cash and cash equivalents
+ Trade and other payables
+ Deposits
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. The risk management policies apply equally to the Group and the Company. Further details regarding these
policies are set out below.
Credit risk
Credit risk is the risk that the counterparty to a financial instrument will fail to meet obligations, causing a loss to the Group.
a) Group
Cash and cash equivalents represent the majority of the Group’s financial assets. The credit risk associated with the holding of cash
and cash equivalents is managed under the Group’s cash management policy. The cash management policy states that the Group
must have a minimum of 5 bankers 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.
32
Cambium Global Timberland Limited
Annual report and financial statements 2008
27Financial instruments risk exposure and management continued
Credit risk continued
b) Company
The Company’s credit risk mainly arises from cash and equivalents and amounts receivable from subsidiaries and SPVs.
The Company follows the same Group policy with regards to diversification of banking arrangements. Amounts receivable
from subsidiaries and SPVs are mainly long term in nature and the loans are monitored on a regular basis.
The table below shows the exposure to risk of the major counterparties at the balance sheet date:
Counterparty
Investec Bank (Channel Islands) Limited
AIB Bank (Channel Islands) Limited
Bank of Scotland International PLC
Royal Bank of Scotland International PLC
UBS AG MF Global (United Kingdom) Limited
New South Wales Treasury Corporation
National Australia Bank Limited
Regions Bank
Credit
rating
symbols
Rating
Fitch
Fitch
Fitch
Fitch
Fitch
Fitch
S & P
S & P
S & P
F2 F1+
F1+
F1+
F1+
F2 A – +1
A – +1
A – +1
Maturities of these financial assets:
< 1 month
1 – 3 months
£
£
Investec Bank (Channel Islands) Limited
AIB Bank (Channel Islands) Limited
Bank of Scotland International PLC
Royal Bank of Scotland International PLC
UBS AG
MF Global (United Kingdom) Limited
New South Wales Treasury Corporation
National Australia Bank Limited
Regions Bank
3,330,464 15,961,174 13,148,126 16,861,451 82,470 20,065 —
388,961 409,153 Carrying
amount
£
8,107,779
20,736,996
17,715,974
21,636,894
4,854,865
20,065
198,357
388,961
409,153
3 months
– 1 year
£
4,777,315 4,775,822 4,567,848 4,775,443 4,772,395 —
198,357 —
—
—
—
—
—
—
—
—
—
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet financial liability obligations as they fall due. The Group’s liquidity
risk is managed by the Investment Manager in accordance with policies and procedures established by the Board.
The derivative financial liabilities have been put in place so as to manage the potential foreign exchange exposure arising from
investing in assets in foreign jurisdictions.
Under the Group’s hedging policy, 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 of Directors.
The table below analyses the Group’s financial liabilities and derivative assets and liabilities, which will be settled on an net basis,
into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances
as the impact of discounting is not significant.
33
Cambium Global Timberland Limited
Annual report and financial statements 2008
notes to the financial statements continued
for the period ended 30 April 2008
27Financial instruments risk exposure and management continued
Contract maturities of financial liabilities
< 1 month
1 – 3 months
£
£
3 months
– 1 year
£
Forward exchange currency contracts
Trade and other payables
—
(471,674)
—
—
26,647,029
—
(471,674)
—
26,647,029
The forward exchange currency contracts have a strike date of 30 April 2009. The Company has a forward exchange currency
facility with UBS AG to the amount of £1,800,000. The review date of this facility is 25 December 2050.
Market risk
Foreign exchange risk
The Group is exposed to currency risk through investing in assets held in currencies other than the functional currency. As a result,
the Group 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 Group’s performance. The Group operates in various parts of the world and is exposed to foreign exchange
risk arising from various currency exposures, primarily with respect to pound sterling, Australian dollar and United States dollar.
Foreign exchange risk arises from future commercial transactions, recognised monetary assets and liabilities and net investments
in foreign operations.
The Group safeguards foreign currency operations against adverse movements between pound sterling, Australian dollar and
United States dollar through the use of forward foreign currency contracts. The forward foreign currency contracts are established
and monitored in accordance with the Group’s hedging policy.
At reporting date the Group had the following exposure:
Australian dollar
United States dollar
Hungarian forint
Company
2008
£
3,789,673 16,669,502 —
Group
2008
£
4,941,376
4,904,164
23,865
The table below summarises the Group’s and Company’s exposure to foreign currency risk at 30 April 2008. The Group’s and
Company’s assets and liabilities at carrying amounts are included in the table, categorised by the currency at their carrying amount
and the underlying principle amount of the forward exchange contracts.
Monetary
Monetary
assets
liabilities
£
£
Australian dollar
United States dollar
Hungarian forint
599,808 422,091 23,868 34,688 271,095 11,762 Forward
exchange
contracts
£
4,863,058 21,783,971 —
Net
exposure
£
—
—
12,106
The exposure analysis in this does not represent the fair view of the exposure as the Group is hedging not only monetary assets
and liabilities but all foreign operations. This includes all foreign assets and liabilities.
The Group’s policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency with cash
generated from their own operations in that currency.
34
Cambium Global Timberland Limited
Annual report and financial statements 2008
27Financial instruments risk exposure and management continued
Market risk continued
Foreign exchange risk continued
At 30 April 2008, had the pound sterling strengthened by 5 per cent in relation to all currencies, with all other variables held
constant, the Net Asset Value would have decreased by the amounts shown below:
Company
2008
£
Australian dollar
United States dollar
Hungarian forint
(180,461)
(793,143)
—
Group
2008
£
(235,349)
(890,295)
(1,136)
A 5 per cent weakening of the pound sterling against the above currencies would have resulted in an equal but opposite effect
on the above financial statement amounts to the amounts shown above, on the basis that all other variables remain constant.
The sensitivity analyses above, both interest and exchange rates, are based on a change in an assumption while holding all other
assumptions constant. In practice this is unlikely to occur and changes in some of the assumptions may be correlated, for example,
change in interest rates and change in market values.
Price risk
Price risk is the risk that value of the instrument will fluctuate as a result of changes in market prices (other than those arising from
interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or all factors affecting all
instruments traded in the market. The majority of the Group’s financial instruments are carried at fair value with fair value changes
recognised in the income statement or the statement of changes in equity, changes in market prices will directly affect these statements.
Price risk is reviewed and managed by the Board on a quarterly basis.
The available-for-sale investments is the only financial assets that expose the Group to price risk. The details are as follows:
UK Treasury stock 4% 03.07.2009
Company
2008
£
8,964,000 Group
2008
£
8,964,000
100 per cent of the Group’s equity investments are listed on the UK London Stock Exchange. A 3 per cent increase in stock prices
at 30 April 2008 would have increased the Net Assets Value of the Group by £268,920 and an equal change in the opposite direction
would have decreased the Net Assets Value of the Group by an equal but opposite amount.
35
Cambium Global Timberland Limited
Annual report and financial statements 2008
notes to the financial statements continued
for the period ended 30 April 2008
27Financial instruments risk exposure and management continued
Market risk continued
Cash flow and fair value interest rate risk
The majority of the Group’s financial assets are interest bearing in the form of cash. Interest rate risk arises in the Group
predominantly from the holding of cash and cash equivalents. The Board have established a cash management policy to ensure
the best return from the Group’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 reviews interest rates on a quarterly basis.
The Group’s and Company’s interest rate profile is shown in the table below:
Interest rate profile as at 30 April 2008
Group
%
Group
£
Company
%
Company
£
Weighted average interest rate
Loans and receivables
Non-interest bearing
774,630 599,517
Cash and cash equivalents
Variable
4.93
73,757,639 5.38
72,928,781
Amounts receivable from subsidiaries
Non-interest bearing
—
20,459,175
Financial assets through profit and loss
Derivative financial liabilities
Fixed – payable (26,647,029) (26,647,029)
Fixed – receivable
26,690,135 26,690,135
Available-for-sale investments
Non-interest bearing
Variable
4.00
8,964,000 4.00
Financial liabilities at amortised cost
– trade and payables
Non-interest bearing
(471,674)
8,964,000
(174,823)
For the Group, an increase in 100 basis points in interest yields would result in a pre-tax profit of £735,693. A decrease
in 100 basis points in interest yields would result in a pre-tax loss for the period of £735,693.
For the Company, an increase in 100 basis points in interest yields would result in a pre-tax profit of £727,404. A decrease
in 100 basis points in interest yields would result in a pre-tax loss for the period of £727,404.
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order
to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost to capital.
In order to maintain or adjust the capital structure the Group may adjust amount of dividends paid to shareholders, return capital
to shareholders, issue new shares or sell net assets to reduce debt.
In order to ensure that the Group will be able to continue as a going concern, management continuously monitor forecast and
actual cash flows and matching the maturity profiles of assets and liabilities. The Group has no external borrowings.
36
Cambium Global Timberland Limited
Annual report and financial statements 2008
28Events after the balance sheet date
The Company has purchased a leasehold interest on Pinnacle, a Hawaiian property. The Pinnacle investment comprises of
approximately 4,500 acres located on the Big Island of Hawaii. The asset consists of existing plantations which will be managed
for timber production. The purchase price was approximately US$7,500,000.
The Company has purchased 29,900 acres of timberland for approximately £22,000,000. The property is located in Northwestern
Florida and Southwestern Georgia. The property consists of professionally managed diverse pine plantations that possess a well
structured array of age classes allowing immediate harvest income. Marketable products include sawtimber and pulp, which can
be sold into healthy forest product markets that exist in this geography. The property also generates revenue from hunting leases.
The Company has made commitments to buy properties in both Brazil and New Zealand. The property in Brazil is in the state of
Minas Gerais and will be a ‘greenfield’ Eucalyptus plantation development. The land purchase will be approximately £1,500,000
and will require a further £2,300,000 in expenditure over the next two years to develop the estate. Two properties are under contract
in New Zealand they will approximately amount to £5,500,000. The Company is awaiting approval of the New Zealand Overseas
Investment Office and then will purchase the assets. The two assets consist of existing radiate pine plantations.
Other than the above, the Company had no significant post balance sheet events.
29Related party transactions
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over
the other party in making financial or operational decisions. CP Cogent Asset Management LP is the Investment Manager to
the Company under the terms of the Investment Manager Agreement and is thus considered a related party of the Company.
During the period £1,207,676 was paid to CP Cogent Asset Management LP in respect of management fees.
Transactions between the Company and its subsidiaries, which are related parties, have been disclosed in notes 13 and 19.
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 Directors’ fees for the period.
The Directors of the Company received fees for their services and further details are provided in the Directors’ Report. The total
charge fees are shown in note 7 and separately disclosed in the Directors’ Report.
37
Cambium Global Timberland Limited
Annual report and financial statements 2008
notice of annual general meeting
NOTICE IS HEREBY GIVEN THAT an Annual General Meeting of shareholders of Cambium Global Timberland Limited (the ‘Company’)
will be held at 5 Castle Street, St. Helier, Jersey JE2 3RT on 15 August 2008 at 10.00 a.m. for the purpose of considering and,
if thought fit, passing the following resolutions:
Ordinary resolutions
1.To receive and adopt the Directors’ Report, Auditors’ Report and the Audited Consolidated Financial Statements for the
period ended 30 April 2008.
2.That Donald Adamson be elected as a Director of the Company in accordance with Article 19.03 of the Company’s Articles
of Association.
3.That Martin Richardson be elected as a Director of the Company in accordance with Article 19.03 of the Company’s Articles
of Association.
4.That Robert Rickman be elected as a Director of the Company in accordance with Article 19.03 of the Company’s Articles
of Association.
5.That William Spitz be elected as a Director of the Company in accordance with Article 19.03 of the Company’s Articles
of Association.
6.That Colin McGrady be elected as a Director of the Company in accordance with Article 19.03 of the Company’s Articles
of Association.
7. The Board of Directors recommend a final dividend of 3 pence per share.
8. To re-appoint KPMG Channel Islands Limited as auditors of the Company.
9. To authorise the Directors to fix the remuneration of the Company’s auditors.
10.That the Company’s investment strategy as set out below is approved and affirmed:
Returns from timberland are influenced by three factors: (i) biological tree growth; (ii) timber price changes; and (iii) changes
in the value of the underlying land asset. The Company aims to establish a portfolio comprising geographically diverse assets
located both in mature markets and in developing markets where potentially higher returns may be generated but with
commensurately higher risk.
The Company will initially target investments in North and South America and the Asia-Pacific region (including Australia and
New Zealand) but may invest in other regions on an opportunistic basis, as determined by CP Cogent Asset Management LP
(‘Cogent’) with the approval of the Board. The Company’s strategy is to achieve a balance between generating income and
producing superior total returns to investors by establishing an optimised portfolio of timberland properties and timberland‑related
investments diversified by location, age class and species. Different age classes of tree will provide harvestable timber over
time and diversification by region and species will provide exposure to different growth rates and different market segments.
Investment strategies related to timber market segments, improved management, new opportunities in emerging environmental
markets such as carbon credits and reduction of project risk may be employed to increase total returns.
Geographic spread of investments
Geographic diversification, which Cogent believes is integral to generating consistent risk-adjusted returns should also assist in
the management of regulatory risk, environmental policy risk and natural disaster risk. It can also provide exposure to different
climate zones with unique growing conditions and regional timber market prices.
Species diversification
The forestry sector includes a set of markets that respond to different demand drivers and with different supply side dynamics.
An analysis of these factors by Cogent indicates that the Company should target allocations to specific timber market segments.
Subject to prevailing market conditions, the Company’s current expectation is to de-emphasise pulpwood plantations, be neutral
on softwood structural lumber and emphasise investments producing hardwood saw logs.
Age class diversification
Mature forests typically generate steady cash flows of up to 10 per cent per annum, but offer limited prospects for capital
appreciation. Alternatively, new plantations will provide no cash flow and will require funding of continued operational costs
during their period of growth but offer better prospects for capital appreciation and usually provide a higher rate of total returns
over time. Forestry investment opportunities can be found in all stages of growth and the Company will seek to create a portfolio
(investing in plantations across all age classes) with a blended portfolio yield sufficient to support the target dividend yield.
This assumes investment in assets at the immature growth stage or with unbalanced age classes which should over time
facilitate potentially higher total returns, particularly in the Asia-Pacific region and South America.
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Cambium Global Timberland Limited
Annual report and financial statements 2008
Ordinary resolutions continued
10.That the Company’s investment strategy as set out below is approved and affirmed continued:
Value enhancement
Traditional timberland investors have an opportunity to add value to forestry investments through a number of strategies
which seek to exploit environmental option values of forests. These include but are not limited to, the sale of carbon credits,
water use rights, endangered species banks, tradable development rights, conservation easements, leasing of ridgelines to
wind farm operators, development of small scale hydro-electric generation facilities, and cooperating on biomass energy
development. New Forests Advisory Pty Limited will seek to use its expertise in this area to exploit option values which may
not be fully reflected in the price of assets acquired by the Company.
In emerging markets such as those in Latin America and the Asia-Pacific region, significant value can be added by rationalising
underperforming management or changing management strategy so as to achieve greater efficiency. Many plantation operations
suffer from inappropriate choice of tree species, poor timber, lack of capital for roads, plant and equipment and a general lack
of management competency. Putting in place effective management can significantly increase returns.
Many emerging market transactions are complex and require negotiation with governments or governmental agencies and
unsophisticated counterparties. There is a general perception of risk associated with such markets so that investors typically
apply high discount rates when assessing the price of a primary transaction. However, once the assets are put under professional
management, their marketability may significantly improve as the risk profile is seen to decline; this can provide substantial
valuation uplift.
Special resolutions
11.To grant standing authority such that the Company be authorised generally and without conditions to make market purchases
of its ordinary shares. That the Company be and is hereby generally and unconditionally authorised to make market purchases
of fully paid shares in the capital of the Company (‘shares’) pursuant to Article 57 of the Companies (Jersey) Law 1991
(the ‘law’) and the Company’s Articles of Association provided that:
(a)the maximum number of shares hereby authorised to be purchased shall be 15,642,065 being 14.99% of the total number
of shares in issue as at 30 June 2008;
(b) the minimum price which may be paid for a Share is one pence;
(c)the maximum price which may be paid for a Share is an amount equal to 105% of the average middle market quotations
of a Share taken from the London Stock Exchange for the five business days immediately preceding the date of the purchase
(or such other amount as may be specified by the London Stock Exchange from time to time);
(d)the minimum and maximum prices specified in sub-paragraphs (b) and (c) of this resolution are in all cases exclusive of any
expenses payable by the Company;
(e) the Company shall fund the payments of the purchases of shares in any manner permitted by the law;
(f)the Directors of the Company reasonably believe that the Company shall be able to meet the solvency tests prescribed by the
law although will require to consider and confirm that the relevant solvency tests are met when any purchase is effected;
(g)the authority hereby conferred shall expire on the earlier of (i) the date of the Annual General Meeting of the Company
to be held in 2008; and (ii) 18 months from the date of the passing of this resolution, unless such authority is varied,
revoked or renewed prior to such time by the Company in general meeting by special resolution; and
(h)the Company may enter into a contract to purchase shares under the authority hereby conferred prior to the expiry of such
authority which will or may be completed or executed wholly or partly after the expiry of such authority.
12.That the Articles of Association contained in the printed document enclosed with this notice of Annual General Meeting be
and are hereby approved and adopted as the Articles of Association of the Company in substitution for and to the exclusion
of the existing Articles of Association of the Company with immediate effect.
By order of the Board
For and on behalf of
Investec Trust (Jersey) Limited
Company secretary
24 July 2008
Registered office:
5 Castle Street
St. Helier
Jersey JE2 3RT
Channel Islands
39
Cambium Global Timberland Limited
Annual report and financial statements 2008
notice of annual general meeting continued
Notes:
1.Any shareholder entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote
instead of him. A proxy need not be a shareholder of the Company.
2.The form of proxy, together, if appropriate, with the power of attorney or other authority (if any) under which it is signed,
must be deposited at the office of the Company’s registered office not later than 48 hours before the time appointed for
holding the meeting.
3. Return of a completed form of proxy will not preclude a shareholder from attending and voting personally at the meeting.
4.The notice sets out the resolutions to be proposed at the meeting. The meeting will be chaired by a person nominated by
the shareholders present in person or by proxy at the meeting. It is anticipated that the Chairman of the meeting will be
Martin Richardson.
5. The quorum for a meeting of shareholders is two or more shareholders present in person or by proxy.
6.If, within half an hour from the appointed time for the meeting, a quorum is not present, then the meeting will be adjourned
to 10.00 a.m. on 18 August 2008 at the same address. At that meeting, those shareholders present in person or by proxy will
form a quorum whatever their number.
7.To appoint more than one proxy you may photocopy this form. Please indicate the proxy holder’s name and the number
of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should not exceed the number
of shares held by you). Please also indicate if the proxy instruction is one of multiple instructions being given. All forms must
be signed and should be returned together in the same envelope.
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Cambium Global Timberland Limited
Annual report and financial statements 2008
key parties
Directors
Donald Adamson
Robert Rickman
William Spitz
Martin Richardson
Colin McGrady
Registrar, Paying Agent and Transfer Agent
Capita Registrars (Jersey) Limited
PO Box 378
Jersey JE4 0FF
Nominated Adviser for AIM
Landsbanki Securities (UK) Ltd
Beaufort House
15 St Botolph Street
London EC3A 7QR
Investment Manager
CP Cogent Asset Management, LP
100 Crescent Court
Suite 500
Dallas TX 75201
Property Valuers
Day Forest Management & Appraisal Inc.
PO Drawer 1169
4711 North Wheeler/Highway 96 North
Jasper
Texas 75951
United States
URS Australia Pty Ltd
Level 6, 1 Southbank Boulevard
Southbank
Victoria 3006
Australia
Registered Office of the Company
5 Castle Street
St Helier
Jersey JE2 3RT
Telephone +44 (0)1534 512512
Auditors
KPMG Channel Islands Limited
PO Box 453
5 St Andrews Place
Charing Cross
St Helier
Jersey JE4 8WQ
Sponsor to CISX Listing
Carey Olsen Corporate Finance Limited
44 Esplanade
St Helier
Jersey JE1 0BD
Administrator and Company Secretary
Investec Trust (Jersey) Limited
5 Castle Street
St Helier
Jersey JE2 3RT
5 Castle Street
St Helier
Jersey JE2 3RT
Telephone +44 (0)1534 512512
Cambium Global Timberland Limited Annual report and financial statements 2008