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Annual Report 2021
Annual Report 2021
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Annual Report 2021
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Table of contents for the Annual Report 2021 report

Operational review
Key FiguresTo our shareholdersAbout Precious Woods / Sustainability
VisionProducts and marketsGoal of sustainable growthManagement organization with strong market orientationSustainable forestry in all dimensionsMarket opportunities thanks to sustainability certificatesContribution to the UN Sustainable Development GoalsPrecious Woods Amazon: Close ties with the local populationPrecious Woods in Gabon – Projects for the protection of flora, fauna, and biodiversitySounding BoardInstitutional framework as opportunity and challengeIllegal logging threatens certified timber trade and sustainable developmentCarbon FootprintThe role of forestry in the current climate change debateMilestones Precious Woods
Group results
Income statementBalance sheet
Brazil
Reduced harvest volume, increased production volumes, higher yieldNew concessions to secure our activitiesSummary of further activitiesSocial and environmental sustainability continues to be at high levelOutlook for 2022
Gabon
Operational successes despite difficultiesIncrease in working capital due to delivery delaysMany projects and activitiesOutlook for 2022
TradingCarbon & Energy
Emission certificates thanks to residual wood in BrazilianEmission trading together with myclimatePrecious Woods Carbon & Energy
Veneer
Veneer production
Corporate Governance
1. Group structure and shareholders2. Capital structure3. Board of Directors4. Group Management5. Compensation, shareholdings, loans6. Shareholders’ rights of participation7. Changes of control and defense measures8. Auditor9. Information policy
Shareholder information
Share capitalEquivalent to 100 sharesStock market listingShare register informationCompany headquartersStock price development
Financial Report
Precious Woods Group financial statements
Consolidated statement of profit or lossConsolidated statement of comprehensive incomeConsolidated statement of financial positionConsolidated statement of changes in equityConsolidated statement of cash flowsNotes to the consolidated financial statements
1. Basis of presentation, consolidation and general accounting policies2. Financial risk management3. Financial information by segment4. Revenue from contracts with customers5. Consumables used and other production costs6. Labour costs7. Other operating income and expenses8. Depreciation, amortization and impairment9. Financial income and expenses10. Property, plant and equipment11. Biological assets12. Intangible assets and goodwill13. Investment in associates14. Non current loans and investments15. Inventories16. Prepayments17. Trade and other receivables18. Trade and other payables19. Financial liabilities, other than trade and other payables20. Financial instruments by category and fair value hierarchy21. Leasing22. Share capital23. Major shareholders24. Earnings per share25. Related party balances and transactions26. Provisions27. Contingencies28. Income taxes29. Employee benefits30. Currency translation rates31. Basis of consolidation32. Increase of investment in MIL Energia Renovável Ltda.33. Subsequent events34. Approval of financial statements and dividends
Report of the statutory auditor on the consolidated financial statements
Precious Woods Holding Ltd financial statements
Balance sheets as of 31 December 2021 and 2020Statements of income 2021 and 2020Notes to the financial statements of Precious Woods Holding Ltd
Essential accounting and valuation principles1. General2. Authorized share capital3. Conditional share capital4. Investments in subsidiaries5. Financial assets to Group6. Other short term interest bearing liabilities7. Long term interest bearing liabilities8. Board and Executive compensation9. Depreciation, amortization and impairment10. Major shareholders11. Pledged assets / other securities12. Other note / Full time employment13. Other note / Lease liabilities14. Other note / Other short term liabilities15. Other note / Significant events after the reporting date
Report of the statutory auditor on the financial statements
Additional information
Contact addresses
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1. Basis of presentation, consolidation and general accounting policies

Basis of presentation

Precious Woods Group (hereinafter referred to as “Precious Woods” or “the Group”) is one of the leading companies in sustainable management of tropical forests globally. The parent company, Precious Woods Holding Ltd., has its registered office in Zug. The Group’s subsidiaries are organized and operate under the laws of Brazil, Gabon, Netherlands, British Virgin Islands and Luxembourg.

The consolidated financial statements for the Precious Woods Group have been prepared on a historical cost basis, except for leasing, biological assets and land, that have been measured at fair value, and in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

The consolidated financial statements are presented in euros, as the Group’s revenues, profits and cash flows are principally denominated in euros. All values are rounded to the nearest thousand (in thousand EUR), except when otherwise indicated. The functional currency of the parent company Precious Woods Holding Ltd. is swiss francs.

Due to rounding, numbers presented throughout this report may not add up precisely to the totals provided. All ratios and variances are calculated using the underlying amount rather than the presented rounded amount.

Change in scope of consolidation in 2021

There was one change in the scope of consolidation, implemented in 2021:

On 31 May 2021, MIL Madeiras Preciosas Ltda., already owning 40 % of BK Energia Itacoatiara Ltda., acquired the remaining 60 % of the ordinary shares outstanding, and with this transaction, obtained 100 % ownership of the renewable power plant. BK Energia Itacoatiara Ltda. was renamed MIL Energia Renovável Ltda. afterwards. The plant generates renewable energy from biomass and meets the requirements of the Kyoto Protocol and the UNFCCC, resulting in tradable certified emission reductions. As a result of the acquisition, the Group expects to improve its own knowledge about renewable power plant and to be prepared for the extension of the energy business in combination with additional forest activities. The details of this acquisition are further explained in Note 32.

Significant accounting judgments, estimates and assumptions

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. The resulting accounting estimates will, by definition, rarely equal the related actual results.

The estimates and assumptions, which may have a significant risk of causing a material impact on the consolidated financial statements, relate primarily to

  • Biological assets (see Note 11),
  • Leasing and right-of-use assets (see Note 21),
  • Deferred income tax assets (see Note 28),
  • Land titles in Brazil (see Note 10),
  • Provisions (see Note 26),
  • Contingencies (see Note 27),
  • Defined benefit obligations (see Note 29) and
  • Goodwill (see Note 12)
Impact of the Covid-19 pandemic

Fortunately, production was only slightly curtailed as a result of the impact of Covid-19. We recorded only few cases of illness. Work under stricter hygiene regulations was well received, and we did not have to order any plant shutdowns. We were also able to resume travel. In 2021, however, it was mainly the lack of resources in certain public offices that affected us and made operations more difficult. For example, in the issuing permits, handling customs formalities or other business.

New or revised IFRS standards, amendments and interpretations

Certain IFRS and interpretations were revised or introduced. The relevant ones for the Group are,

effective on or after 1 January 2021:
    • Interest rate benchmark reform phase 2 – These amendments to IFRS 7, IFRS 4 and IFRS 16 had no impact on the consolidated financial statements.
    effective on or after 1 April 2021:
      • IFRS 16 Covid-19-Related Rent Concessions – This amendment had no impact on the consolidated financial statements.
      effective on or after 1 January 2022:
      • IFRS 3 Business combinations (amendments) – effective on or after 1 January 2022.
      • IAS 16 Property, plant and equipment (amendments) – effective on or after 1 January 2022.
      • IAS 37 Provisions, contingent liabilities and contingent assets (amendments) – effective on or after 1 January 2022.
      • Annual improvements (amendments) – effective on or after 1 January 2022.
      • IFRS 17 Insurance contracts (new standard) – effective on or after 1 January 2023.
      • IAS 1 Presentation of financial statements (narrow-scope amendments) – effective on or after 1 January 2023.
      • IAS 12 Income taxes (amendments) – effective on or after 1 January 2023.
      • IAS 1 Presentation of financial statements (narrow-scope amendments) – effective on or after 1 January 2024.
      The material general accounting policies are as follows:
      a. Currency

      The subsidiaries’ accounting records are maintained in the legal currency of the country in which they operate and which is their functional currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the transaction dates. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized through profit or loss. The currency translations rates are presented in Note 30.

      The financial statements of the subsidiaries have been translated from their functional currencies to the presentation currency (EUR). All assets and liabilities are translated by using the rate of exchange prevailing at the reporting date. Shareholders’ equity accounts are translated at historical exchange rates. Translation differences from changes in share capital of subsidiaries are recognized directly in equity. The statement of profit or loss is translated at the average rate for the year. Translation differences are recognized as currency translation effects in other comprehensive income.

      b. Impairment of non-financial assets

      The Group assesses at each reporting date whether there is an indication that an asset may be impaired. Such assessment occurs on the basis of events or changes in circumstances, which indicate that the value of an asset may be impaired. If such indications exist, the recoverable amount will be determined for the respective asset. If the asset does not generate cash inflows that are largely independent from other assets, the recoverable amount is determined on the lowest group of assets for which cash inflows are separable. An impairment loss is recognized, if the carrying value exceeds the recoverable amount. The recoverable amount is the higher of value in use and fair value less costs of disposal. The impairment is recorded in the statement of profit or loss.

      All specific accounting policies may be found adjacent to the corresponding note on the following pages.