Cambium Annual Report 2008

8/3/2019 Cambium Annual Report 2008

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Cambium Global

Timberland LimitedAnnual report and

fnancial statementsor the period ended 30 April 2008


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about us

Cambium Global TimberlandLimited has been established

to invest in a global portolioo orestrybased products.

Cambium seeks to investprimarily in orestry assetswhich are or can be managedon an environmentally andsocially sustainable basis.

Cambium raised 104,350,000in a placing by LandsbankiSecurities (UK) Limited andjoined AIM and the ChannelIslands Stock Exchangeon 6 March 2007.

IFC about us1 highlights2 chairmans statement4 investment managers report5 board of directors6 directors report

10 independent auditors reportto the members

11 consolidated income statement12 consolidated balance sheet13 consolidated statement of changes

in equity14consolidatedcashowstatement15 company income statement

16 company balance sheet17 company statement of changes

in equity18companycashowstatement19notestothefnancialstatements38 notice of annual general meetingIBC key parties

Pahala, Hawaii, US


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1Cambium Global Timberland Limited

Annual report and nancial statements 2008

+ Current investments inNorth America, Asia/Pacic andAustralia/New Zealand regions

+ 12% gain in appraised plantationvalue since acquisition

+ Investments performing accordingto plan

+ We continue to nd investmentopportunities consistent withthe model portfolio

+ Portfolio adding diversity acrossgeography, age class and species

highlights

Tarrangower, AUS

Corrigan, Texas, US


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Cambium Global Timberland Limited


2

chairmans statement

Dear Shareholders,

IntroductionI am pleased to present our rst full-year results since the Companywas admitted to the Alternative Investment Market (AIM) inMarch 2007. During what has been a particularly difcult time

in the nancial markets, Cambium Global Timberland Limitedcontinues to nd attractive timber investment opportunities.

Credit market turmoil, rising unemployment and persistentlyhigh commodity prices have combined to lower economicgrowth. Housing remains a major drag on the United Stateseconomy and has impacted sawtimber prices in many marketsglobally. Additionally, increased shipping costs have impactedmany timber investments in predominantly export markets, suchas New Zealand. Conversely, high energy prices have producedopportunities with interest in timber as a fuel stock for energyproduction increasing.

Timberland remains a unique asset class, an appreciatingrenewable resource with performance that is largely un-correlatedto nancial market volatility. Moreover, the fundamental driversof investment returns biological growth, product prices and

land values continue to offer investors an opportunity to realiseattractive risk-adjusted returns.

A number of investment opportunities which meet the originalguidelines have been identied and closed. As the remainingcapital is deployed, both originally identied strategies andopportunities enhanced by the changes in the market conditionswill be utilised to ll out an attractive global portfolio of timberassets with a superior risk-adjusted return.

Current StatusOur strong nancial position and thorough due diligencecarried out by our Investment Managers has afforded us theopportunity to purchase three attractive investments as of thescal year end accounting for 24 per cent of the assets. Sincethe end of the scal year, we have purchased two additional

timber properties representing 25 per cent of assets in theCompany. With allowances for working capital reserves andplanting costs, we have committed a total of 51 per cent ofthe capital to these existing projects.

highlights

+ 51% of capital committed toexisting projects

+ Strong pipeline of new investmentopportunities

+ 3 pence per share proposed dividend

The fundamental drivers ofinvestment returns biologicalgrowth, product prices and landvalues continue to offer investorsan opportunity to realise attractiverisk-adjusted returns.


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3

Since the scal year end, Cambium has also entered intocontracts on properties in New Zealand and Brazil. Theseproperties represent an additional 9 per cent of the Net AssetValue (NAV) of the Company, bringing Cambium to an

anticipated 60 per cent invested capital upon closing of theseinvestments. The Investment Manager, CP Cogent AssetManagement LP, continues to work diligently to nd attractiveassets for the remaining 40 per cent of the portfolio.

Cambiums current properties by value are 38 per cent in NorthAmerica, 4 per cent in Australia/New Zealand and 7 per cent inAsia/Pacic. After closing the properties under contract Cambiumwill increase its Australia/New Zealand allocation to 10 per centand will have 4 per cent invested in South America. The Companycurrently has a higher exposure to North America than originallyanticipated (but still within the terms of our prospectus). Whilepricing for timberland assets has been very competitive in the UnitedStates we have been able to nd two opportunistic transactions thatare within our targeted returns and we believe we have been ableto acquire them at a discount to where United States properties

have been transacting. We anticipate a rebalance of North Americanexposure as uninvested capital is committed.

Strategy and ImplementationAs described in the accompanying Investment Managersreport, the properties we have acquired continue to progresssatisfactorily. We have a solid pipeline of opportunities thatare consistent with our original thesis in each of our targetedgeographies. The primary challenge we have faced has been locatingand securing these transactions in the original timeframe we hadproposed given the increased competition in the timber marketplace.However, the Board continues to believe that the capital raisedwill be committed within our original investment period.

Our primary focus at this time is on the non-North Americanmarketplace. Our pipeline is particularly strong in Latin and

South America and New Zealand. Given difcult market conditions,we have reduced our focus on Australia at this point and willlikely substitute a portion of our North American exposure forsome of the Australian exposure in our original investmentmodel. Non-timber competition within Australia has drivenland prices to such a point that compelling timber returns aredifcult to nd. Given the mature nature of the marketplace,and well established political and economic environment,

we feel the United States exposure provides an adequatesubstitute at more attractive discount rates. We continueto monitor the situation in Australia closely and if we seea correction in the marketplace our strategy may change.

Financial ResultsThe Company had earnings this period of 1.22 pence per share.We had signicant cash balances during the period and generatedapproximately 5.7 million in earnings from interest on our cashbalances. Additionally we generated 2.8 million from increases inthe revaluations of our forestry investments. Signicant expensesfor the period include 3.4 million in establishment expensesand 2.7 million in administrative expenses. We expect ouradministrative expense ratio to fall as the portfolio matures.

DividendThe 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 isexpected to grow in due course as the portfolio matures.

Articles of AssociationThe Chairman noted that at the Annual General Meeting itwas proposed that the Articles of Association of the Companywere to be substituted for and to the exclusion of the existingArticles of Association.

OutlookWe are looking forward to the upcoming year and the furtherdevelopment of the portfolio. Our investment pipeline is healthyand our existing investments continue to generate value. Whenour existing funds are fully invested we will consider the case forraising additional capital to secure operating economies of scaleand the benets of further diversication for our shareholders.Our next scheduled update will come when the interim nancials

for the period ending 31 October 2008 are available. Currentinformation about the Company is always available on ourwebsite: www.cambiumfunds.com.

Donald AdamsonChairman11 July 2008


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CP Cogent Asset Management LP is pleased with theperformance of the current investments and with the fullpipeline of opportunities. We continue to see opportunitiesconsistent with the original investment thesis and anticipate

having the capital of the Company substantially committedover the next several months.

The current properties held for investment are summarisedas follows:

Corrigan is a 22,000 acre property consisting of intensivelymanaged pine plantations located in eastern Texas purchasedin June 2007. A balanced age distribution characterises thetimber on this property, which upon harvest can be sold intoan established end use market for timber products. To date thisproperty has performed up to expectations and has producedincome from timber harvests, recreational leases and a rightof way easement. Currently United States sawtimber pricesare at cyclical lows though asset values have been increasingas recent transactions have been made at high price levels.

Tarrangower is a 21,000 acre greeneld opportunity innorthern New South Wales, Australia purchased in July 2007.This project generates returns from a mix of long-rotation timbercrops, carbon credits, water rights and biodiversity conservationgrants. The planting of Eucalyptus seedlings, which commencedin October 2007, is slightly behind schedule due to out of theordinary drought conditions in the area. Reforestation efforts willbe accelerated when an improvement in available soil moisture ispresent on the site. Also, Cambium has received grant income forconservation management practices on this property. A contracthas been signed with a third party that denes a forward deliverycarbon credit-based transaction per the Green House FriendlyProgram, with the rst payment scheduled for 2009. In Australialog exports have increased year over year but earnings have beendown due to increased shipping rates. Lumber productionhas been down across the country, primarily driven by the

United States and domestic housing slump.

Pahala is a 3,700 acre leasehold interest located on the southEast Coast of the Big Island of Hawaii. This asset was acquiredin July 2007. The project consists of well stocked EucalyptusGrandis plantations aged between 6 and 10 years. A wood

supply agreement for the timber has been negotiated witha developer of a sliced veneer mill.

Pinnacle is a 4,446 acre leasehold interest located on the northEastern side of the Big Island of Hawaii. This asset was acquiredin May 2008.The growing stock consists of Eucalyptus Grandisplanted in stands ranging from 2 to 7 years of age. Harvestingis anticipated to begin in 2014.

In June 2008 Cambium acquired 29,900 acres of timberlandlocated in Florida and Georgia. The plantations on this propertyconsist primarily of intensively managed southern pine includingimproved trees, intensive thinning regimes and fertilisation.The investment strategy includes even age management ofhigh quality plantations utilising intensive forest managementpractices, short rotations of 25 to 27 years to provide cash ow,nal harvest of older and slower growing natural, upland pine

timber and marketing the least productive tracts and HBU tractsfor sale. Numerous area timber mills will serve as delivery pointsfor the wood products harvested from this asset, providing avery competitive marketplace.

In addition we have properties under contract in Brazil andNew Zealand that, when added to the current ownership,will result in the commitment of approximately 60 per centof the capital of the Company. The current pipeline includesproperties in each of the targeted geographies and shouldprovide the path to full investment.

The investments to date continue to perform in line withexpectations and represent a portfolio diversied acrossspecies, geography and age class. We will seek to add furtherdiversication with the projects identied to ll out the balance

of the Cambium portfolio. We look forward to updating youon the development of the portfolio with the release of theinterim nancials for the period ending 31 October 2008.

CP Cogent Asset Management LP

investment managers report


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Donald Lindsay Adamson (aged 49),Independent Non-Executive ChairmanDonald Adamson has 27 years experience in fund management,corporate nance and private equity. He acts as Director or

Chairman of a number of listed and privately held investmentcompanies including The Lindsell Train Investment Trust Plc,Invesco Leveraged High Yield Fund Limited, F&C CommercialProperty Trust Limited, JP Morgan Progressive Multi-StrategyFund Limited, and other companies. He holds an MA (Hons)from University College, Oxford in History and Economicsand carried out postgraduate research at Nufeld College,Oxford in private equity investment. He is a member ofthe Securities & Investment Institute and Chairman of theOffshore Committee of the Association of Investment Companies.

Martin Willaume Richardson (aged 59),Independent Non-Executive DirectorMartin Richardson has been a partner of the Jersey practiceof Rawlinson & Hunter, a rm of chartered accountants,since 1987, specialising in trust and mutual fund administration

services to the nancial services sector. He is a Director ofDiversied Portfolios Fund Limited, The Equity PartnershipInvestment Company Plc, Real Estate Opportunities Limited anda number of other companies. He has a BA in Science Engineeringfrom the Royal Military College of Science, Shrivenham and served inthe Royal Engineers between 1968 and 1977. On leaving the army,he qualied as a chartered accountant with Coopers & Lybrand,Jersey for whom he worked from 1977 to 1981.

Colin Sean McGrady (aged 37),Non-Executive DirectorColin McGrady is a founding partner of Cogent and ishead of its asset management business. Colin is a Director ofCogent GP, LLC and Cogent Partners Investment, LLC. Prior toco-founding Cogent, Colin was a member of the eight person

investment team at The Crossroads Group, a US$2 billionprivate equity fund of funds in Dallas, Texas. Prior to Crossroads,Colin spent three years at Bain & Company in the United Statesand 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 DirectorRobert Rickman is a Director of and adviser to a number offorestry, forest industry and technology companies in the UK

and internationally. From 2001 until 2007 he was a Director andlatterly Chairman of the AIM quoted Highland Timber Plc, withforestry operations in the UK and New Zealand. Robert was aNon-Executive Director of Bookham Technology Plc from 1994to 2004 during which time the Company was listed on the LSEand NASDAQ. He has held various Non-Executive and Executivepositions with a number of forestry companies (includinguntil 1999, FIM Services Limited) and was an economist forthe Government of St. Lucia. He is a current member of theUK Institute of Chartered Foresters. Robert has a MA inAgriculture and Forest Science and a MSc in Forestry and itsrelation to Land Management from the University of Oxford.

William Taylor Spitz (aged 57),Independent Non-Executive DirectorWilliam Spitz is Vice-Chancellor for Investments Emeritus

for Vanderbilt University. Prior to his retirement after22 years of service, he was responsible for the managementof the universitys US$3.5 billion endowment as well as itstreasury 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 recipientof several signicant awards given to prominent members ofthe endowment community. In addition to Cambium GlobalTimberland Limited, William serves as a Director of DiversiedTrust Company, MassMutual Financial Group, and Acadia Realty.Previously, he served as a Director of the Bradford Fund andwas Chair of the Board of The Common Fund. Prior to joiningVanderbilt University in 1985, he was an ofcer of severalinvestment management rms in New York. William is aChartered Financial Analyst and holds an MBA from the

University of Chicago.

board of directors


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Cambium Global Timberland LimitedAnnual report and nancial statements 2008

6

directors report

The Directors present their annual report and the audited nancial 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 indeveloping markets where potentially higher returns may be generated but with commensurately higher risks. The Companywill initially target investments in North and South America and the Asia-Pacic 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 ofthe Board. The Companys strategy is to generate superior total returns to investors by establishing an optimised portfolio oftimberland properties and timberland-related investments diversied by location, age class and species. The Company will investin 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 Chairmans Statement and InvestmentManagers Report.

Results and dividendsThe results of the Group are stated on page 11. The Directors proposed a dividend of 3,130,500.

DirectorsThe Directors of the Company are detailed below:

Appointed

Colin McGrady 13 February 2007Donald Adamson 19 January 2007Martin Richardson 19 January 2007Robert Rickman 13 February 2007William Spitz 13 February 2007

No Directors resigned during the period.

Directors interestsThe following Directors had interests in the shares of the Company at 30 April 2008:

Number ofordinary shares % held

Colin McGrady 50,000 0.02

Donald Adamson 50,000 0.02

Martin Richardson 50,000 0.02

William Spitz 50,000 0.02

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


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Directors remunerationDuring the period the Directors received the following remuneration in the form of fees from the Company:

2008

Donald Adamson 49,753

Martin Richardson 31,096

Robert Rickman 31,096

William Spitz 31,096

143,041

Colin McGrady waived his Directors fees for the period.

Substantial shareholdingsShareholders with holdings of more than 3 per cent of the issued shares of the Company as at 30 June 2008 were as follows:

Number ofName of investors ordinary shares % held

Baillie Gifford 16,450,000 15.76

Rensburg Sheppards Investment Management 10,712,049 10.27

British Steel Pensions 10,000,000 9.58

AXA Framlington Investment Managers 7,085,000 6.79

SVM Asset Management 6,050,000 5.80

Tilney Private Wealth Management 6,002,106 5.75

Artemis Investment Management 5,000,000 4.79

Ashcourt Asset Management 4,746,807 4.55

Speirs & Jeffrey, stockbrokers 4,632,900 4.44

Rathbones 4,403,200 4.22

Midas Capital 3,800,000 3.64

JP Morgan Asset Management 3,626,077 3.47West Yorkshire PF 3,150,000 3.02

85,658,139 82.08

Corporate governanceThe Company is a closed-ended investment company incorporated in Jersey, listed on AIM and CISX and is not required to complywith the requirements of the Combined Code issued by the UKs Financial Reporting Council (the Combined Code). The Companyhas however become a member of the Association of Investment Companies and will endeavour where practical to comply withthe 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 theInvestment Adviser.

The Board have also put in place a framework for corporate governance which takes in to account the best practice and rulesof both AIM and CISX.

The Board has considered the principles and recommendations of the Model Code by reference to the AIC Corporate GovernanceGuide for Investment Companies (AIC Guide). The Model Code, as explained by the AIC Guide, addresses all the principles set outin Section 1 of the Combined Code, as well as setting out additional principles and recommendations on issues that are of specicrelevance to the Company.

The Board considers that by reporting against the principles and recommendations of the Model Code and referring to theAIC Guide (which incorporates the Combined Code), they will provide better information to shareholders.


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8Cambium Global Timberland LimitedAnnual report and nancial statements 2008

directors report continued

Corporate governance continuedThe 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 theCombined 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 arenot relevant to the position of the Company, being an externally managed investment company. The Company has therefore notreported 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 Companys performance including Net Asset Value and payment of dividends; and

+ the shareholder prole of the Company.

Additional ad-hoc meetings of the Board are convened as and when necessary.

Board meetings Audit committee meetings Other meetings

Held Attended Held Attended Held Attended

Colin McGrady 8 6 N/A N/A 5 5

Donald Adamson 8 7 1 1 5 4

Martin Richardson 8 8 1 1 5 5Robert Rickman 8 6 1 1 5 2

William Spitz 8 6 1 1 5 5

The Board receive compliance reports and reporting from third party service providers enabling the assessment of the effectivenessof the service providers, their internal controls and to consider any relevant risks and how these can be effectively managed. Thesecompliance reports are provided by the administrator.

The Investment Manager maintains direct contact with the shareholders of the Company through regular investor meetingsand keeps the Board appraised at the scheduled quarterly meetings. The Chairman also maintains direct communication with theNominated Advisor of the Company to ensure that any investor relations issues brought to the attention of the Nominated Advisorare 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 committeesappropriate 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 appraisedby the Audit Committee prior to the holding of the Annual General Meeting (AGM) for future years. In accordance with theModel Code, each Director is standing for re-election at the AGM in 2008, being the rst AGM following his appointment. Pursuantto the Articles of Association of the Company, following the AGM on 15 August 2008, one third, or the number nearest to butnot exceeding one third, of the Directors will retire and stand for re-election at the AGM each year, provided that each Directorshall retire and stand for re-election at intervals of no more than three years. Colin McGrady as the only Non-Independent Directorwill stand for re-election every year. Each Director is appointed subject to the provisions of the Articles of Association in relationto retirement as described above.


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9Cambium Global Timberland Limited


Audit committeeThe 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 theadministrator and the Companys auditors.

The Audit Committee operates within dened terms of reference as agreed by the Board which are available from theCompany Secretary upon request.

The Audit Committee function is to ensure the Companys nancial reporting is maintained to the highest standards andas such is responsible for the following:

+ reviewing the interim and annual audited nancial statements;

+ scope of the appointment of the auditors, and their remuneration;

+ reviewing the auditors effectiveness and independence; and

+ the effectiveness of the Companys internal control systems.

Directors responsibilitiesThe Directors are responsible for preparing the nancial statements in accordance with applicable law and International Financial

Reporting Standards (IFRS). Company law requires the Directors to prepare nancial statements for each nancial year which givea true and fair view of the state of affairs of the Company and of the prot or loss of the Company for that period. In preparingthese nancial 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 explainedin the nancial statements; and

+ prepare the nancial statements on a going concern basis unless it is inappropriate to presume that the Group will continuein business.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the nancialposition of the Company and enable them to ensure that the nancial 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 preventionand detection of fraud and other irregularities. The Directors conrm that they have complied with the above requirements inpreparing the nancial statements.

AuditorsThe auditors of the Company, KPMG Channel Islands Limited, have expressed their willingness to continue in ofce anda resolution giving authority to re-appoint will be proposed at the forthcoming AGM.

By order of the Board11 July 2008


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independent auditors report to the members

We have audited the Group and Company nancial statements (the nancial statements) of Cambium Global Timberland Limitedfor the period ended 30 April 2008 which comprise the Consolidated and Company Income Statement, the Consolidated andCompany Balance Sheets, the Consolidated and Company Cash Flow Statement, the Consolidated and Company Statementof Changes in Equity and the related notes. These nancial statements have been prepared under the accounting policies set

out therein.

This report is made solely to the Companys 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 Companys members those matters we are required to state tothem in an auditors report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibilityto anyone other than the company and the companys members as a body, for our audit work, for this report, or for the opinionswe have formed.

Respective responsibilities of directors and auditorsAs described in the Statement of Directors Responsibilities on page 9, the Companys Directors are responsible for preparationof the nancial statements in accordance with applicable law and IFRS.

Our responsibility is to audit the nancial statements in accordance with the relevant legal and regulatory requirements andInternational Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the nancial statements give a true and fair view and are properly prepared inaccordance with the Companies (Jersey) Law 1991. We also report to you if, in our opinion, the Company has not kept properaccounting 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 nancial statements and consider the implicationsfor our report if we become aware of any apparent misstatements within it.

Basis of audit opinionWe conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing PracticesBoard. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the nancial statements.It also includes an assessment of the signicant estimates and judgements made by the Directors in the preparation of the nancialstatements and of whether the accounting policies are appropriate to the Groups and Companys circumstances, consistentlyapplied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary inorder to provide us with sufcient evidence to give reasonable assurance that the nancial statements are free from material

misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overalladequacy of the presentation of information in the nancial statements.

OpinionIn our opinion the nancial statements:

+ give a true and fair view, in accordance with IFRS, of the state of the Groups and Companys affairs as at 30 April 2008and of the Groups prot for the period then ended; and

+ have been properly prepared in accordance with the Companies (Jersey) Law 1991.

Chartered AccountantsKPMG Channel Islands Limited5 St Andrews Place

Charing CrossSt HelierJerseyJE4 8WQ11 July 2008

a) The maintenance and integrity of the Cambium Global Timberland Limited website is the responsibility of the directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the nancial statements oraudit report since they were initially presented on the website.

b) Legislation in Jersey governing the preparation and dissemination of nancial statements may differ from legislation in other jurisdictions


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11

consolidated income statementfor the period ended 30 April 2008

For theperiod from19 January

2007 to30 April

2008Notes

Revenue 6 699,828

Cost of sales (354,140)

Gross prot 345,688

Increase in fair value of land and plantations 14,15 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 nance income 5,629,600

Net foreign exchange losses (62,933)

Prot before taxation 2,567,630

Taxation 10 (1,295,985)

Prot for the period attributable to shareholders 1,271,645

Basic and diluted earnings per share 11 1.22 pence

The notes on pages 19 to 37 form an integral part of these annual nancial statements.


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12

consolidated balance sheetat 30 April 2008

30 April2008

Notes

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 43,106Cash 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 nancial statements were approved and authorised for issue on 11 July 2008 by the Board of Directors.

Donald Adamson Martin RichardsonDirector Director



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13

consolidated statement o changes in equityfor the period ended 30 April 2008

Stated Distributable Translation Revaluation Retainedcapital reserve reserve reserve earnings Total

At 19 January 2007

Net prot for the period 1,271,645 1,271,645

Issue of ordinary share capital 104,350,000 104,350,000

Reduction of stated capitalaccount (note 24) (102,350,000) 102,350,000

Currency translation differences 495,708 495,708

Increase in fair valueof intangible assets 69,942 69,942

Decrease in fair value ofavailable-for-sale investments (17,650) (17,650)

At 30 April 2008 2,000,000 102,350,000 495,708 52,292 1,271,645 106,169,645



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14

consolidated cash ow statementfor the period ended 30 April 2008

30 April2008

Cash ows 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 ows 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 ows from nancing activities

Net proceeds from the issue of shares 104,350,000

Finance income 5,464,549

Finance costs (70)

Net cash from nancing activities 109,814,479

Foreign exchange movements (397,266)

Net increase in cash and cash equivalents 73,757,639



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15

company income statementfor the period ended 30 April 2008

For theperiod from19 January

2007 to30 April

2008Notes

Administrative expenses 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 nance income 5,761,025

Net foreign exchange gain 31,137

Loss for the period (179,425)



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16

30 April2008

Notes

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


Current liabilities

Trade and other payables 23 174,823

Total liabilities 174,823

Net assets 104,152,925

Equity

Stated capital 24 2,000,000Distributable reserve 24 102,350,000

Revaluation reserve (17,650)

Retained earnings (179,425)

Total equity 104,152,925


company balance sheetat 30 April 2008


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17

company statement o changes in equityfor the period ended 30 April 2008

Stated Distributable Revaluation Retainedcapital reserve reserve 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

Revaluation of available-for-sale investments (17,650) (17,650)

At 30 April 2008 2,000,000 102,350,000 (17,650) (179,425) 104,152,925



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18

30 April2008

Cash ows from operating activities

Operating loss for the period (5,971,587)

Adjustments for:

Increase in trade receivables (599,517)

Increase in trade and other payables 174,823

Foreign exchange loss (11,969)

(436,663)

Net cash from operating activities (6,408,250)

Cash ows from investing activities

Investments acquired (1,333,169)

Available for sale investments acquired (8,981,650)

Disposal of available-for-sale investments (30,035)

Increase in loans to subsidiary undertakings (20,459,175)

Net cash used in investing activities (30,804,029)

Cash ows from nancing activities

Net proceeds from the issue of shares 104,350,000

Finance income 5,791,060

Net cash from nancing activities 110,141,060

Net increase in cash and cash equivalents 72,928,781


company cash ow statementfor the period ended 30 April 2008


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19

notes to the fnancial statementsfor the period ended 30 April 2008

1 General informationThe Company and its subsidiaries, including special purpose vehicles (SPVs) controlled by the Company, were established toinvest in a global portfolio of forestry-based properties which can be managed on an environmentally and socially sustainablebasis. 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 ofce 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 preparationThe nancial 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 nancial statements have been prepared in pounds sterling, which is the presentational currency of the Group and underthe historical cost convention, except for the revaluation of land, plantations and certain nancial instruments.

Standards and interpretations in issue and not yet effectiveAt the date of authorisation of these nancial statements, the following standards and interpretations, which have not been

applied in these nancial 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 2009IAS 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 Dened Benet 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 nancial statementsfor the periods commencing 1 May 2008 and 1 May 2009 as appropriate and that the impact of the adoption of these standardsand interpretations on the consolidated nancial statements are still being assessed. Some of these standards and interpretationswill require signicant additional disclosures in the period of initial application over and above these currently included in thenancial statements.


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20

notes to the fnancial statements continuedfor the period ended 30 April 2008

3 Signicant accounting policiesA summary of the principal accounting policies, all of which have been applied consistently throughout the period, is set below.

Basis of consolidation

The consolidated nancial statements incorporate the nancial statements of the Company and its subsidiaries, including SPVscontrolled by the Company, made up to 30 April 2008. Control is achieved where the Company has the power to govern thenancial and operating policies of an investee entity so as to obtain benet from its activities.

When necessary, adjustments are made to the nancial statements of subsidiaries and SPVs to bring the accounting policiesused into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Revenue and other incomeRevenue is recognised when it is probable that the economic benets associated with the transaction will ow to the Groupand 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 representativeof the time pattern in which benet 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 grantsGovernment grants are recognised on receipt of funds or earlier if there is reasonable assurance that the conditions of the grantwill be met. They are accounted for in the income statement at fair value.

Foreign currenciesa) Functional and presentational currencyItems included in the nancial statements of each of the Group entities are measured in the currency of the primary economicenvironment in which the entity operates (the functional currency). The consolidated nancial statements are presented inpounds sterling, which is the Companys functional and presentational currency.

b) Transactions and balancesTransactions 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 ratesprevailing on the balance sheet date. Non-monetary assets and liabilities that are carried at fair value and denominated in foreigncurrencies 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 prot or loss for the period, except for exchange differences arising on non-monetary assets and liabilitieswhere the changes in fair value are recognised directly to equity.

c) Group companiesThe results and nancial position of all the Group entities that have a functional currency different from the presentationalcurrency 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 takento shareholders equity. When a foreign operation is sold, such exchange differences are recognised in the income statementas 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 datethe subsidiary was acquired to 30 April 2008. The average exchange rate for the period used on the Hawaiian investmentis 1: US$2.011, the Texan investment 1: US$2.0107 and the Australian investment 1: AU$2.2876.

Operating protOperating prot includes net gains and losses on revaluation of land and plantations, as reduced by administrative expensesand operating costs and excludes nance costs and income.


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3 Signicant accounting policies continuedExpensesAll income and expenses are accounted for on an accruals basis and include those of the administrators, the Investment Managerand the Directors.

Establishment expensesEstablishment expenses incurred on the launch of the Company have been accounted for in the income statement as incurred.

ImpairmentThe carrying amount of the Groups non-nancial assets, other than plantations, are reviewed at each reporting date todetermine whether there is any indication of impairment. If such indication exists the assets recoverable amount is estimated.Any impairment loss is recognised in the income statement whenever the carrying amount of an asset exceeds its recoverableamount. For the purposes of assessing impairment, assets are grouped together at the lowest levels for which there are separatelyidentiable cash ows.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairmentloss is reversed only to the extent that the assets carrying amount, after the reversal, does not exceed the amount that have beendetermined, 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 derivedfrom outside of Jersey and bank interest earned in Jersey under the Income Tax (Jersey) Ordinance, 1961. This law was amendedfor assessment periods starting 1 January 2008 under Income Tax (Amendment 28) (Jersey) Law 2007. The Company will no longerbe exempt from tax, it will be taxed at a corporate rate of 0 per cent. A xed annual fee of 600 was paid to the States of Jersey inrespect of the exemption up to 31 December 2007. No charge to Jersey taxation arises on capital gains. The Group is liable toforeign tax arising on activities in the overseas subsidiaries. The Company has subsidiary operations in Australia, Texas andHawaii (Delaware).

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

The tax currently payable is based on taxable prot for the year. Taxable prot differs from net prot as reported in the incomestatement because it excludes items of income and expense that are taxable or deductible in other years or that are never taxableor deductible. The Groups 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 nancial statements and thecorresponding tax bases used in the computation of taxable prot, 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 theextent that it is probable that taxable prots will be available against which deductible temporary differences can be utilised. Suchassets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other thanin a business combination) of other assets and liabilities in a transaction that affects neither the tax prot nor the accounting prot.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where theGroup is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reversein 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 longerprobable that sufcient taxable prots 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.

PlantationsPlantations are measured on initial recognition and at each balance sheet date at fair value. Any changes in fair values arerecognised in the income statement. Agricultural produce harvested from plantations are also measured at fair value less pointof sale costs as at the date of harvest.

Property, plant and equipmentProperty, plant and equipment (with the exception of motor vehicles) is initially recognised at purchase price plus any directlyattributable costs. It is subsequently measured to fair value. The fair value of property is determined on a 6 monthly basis byindependent external appraisal. Revaluation gains are recognised in equity through the revaluation reserve with revaluationlosses recognised in the income statement.

Subsequent costs are included in the carrying amount of buildings, when it is probable that future economic benets associatedwith the item will ow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance arecharged to the income statement during the nancial 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.


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3 Signicant accounting policies continuedIntangible assetsIntangible assets are initially recognised at cost and subsequently measured to fair value. Any resultant gains are recognised inequity 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 thebalance is taken to the income statement.

Investment in subsidiariesInvestments in subsidiaries are initially recognised and subsequently carried at cost in the Companys nancial statements less,where appropriate, provisions for impairment.

Financial instrumentsFinancial assets and nancial liabilities are recognised in the Groups balance sheet when the Group becomes a party to thecontractual provisions of the instrument. The Group offsets nancial assets and nancial liabilities if the Group has a legallyenforceable right to set off the recognised amounts and interests and intends to settle on a net basis.

Financial assetsThe Groups nancial assets fall into the categories below, with the allocation depending to an extent on the purpose for whichthe asset was acquired. Although the Group uses derivative nancial instruments in economic hedges of currency, it does nothedge account for these transactions. The Group has not classied any of its nancial assets as held to maturity.

Unless otherwise indicated, the carrying amounts of the Groups nancial assets are a reasonable approximation of their fair values.

a) Loans and receivablesLoans and receivables are non-derivative nancial assets with xed or determinable payments that are not quoted in an activemarket. They arise through deposits on new acquisitions and also incorporate other types of contractual monetary assets. Theyare included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classiedas non-current assets.

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

Impairment provisions are recognised when there is objective evidence (such as signicant nancial difculties on the part of thecounterparty or default or signicant delay in payment) that the Group will be unable to collect all of the amounts due under theterms receivable, the amount of such a provision being the difference between the net carrying amount and the present value ofthe future expected cash ows 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 liquidinvestments that are readily convertible to a known amount of cash and are subject to an insignicant risk of changes in value.

b) Available-for-sale investmentsAll quoted investments have been designated as available-for-sale. Available-for-sale investments are initially recognised on thedate of purchase at cost being the fair value of purchase consideration paid plus any incremental transaction costs incurred aspart 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 theincome statement.

c) FairvaluethroughprotorlossThis category comprises only forward foreign currency contracts. The fair value of forward exchange contracts is based on theirlisted market price, if available. If a listed market price is not available, then fair value is estimated by discounting the differencebetween 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 forwardcontract rate. The liability is subsequently measured to fair value with the resulting gain or loss being recognised in theincome statement.

d) De-recognitionofnancialassetsA nancial 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 overthe asset or a portion of the asset; or

+ when the contractual right to receive cash ow from the asset has expired.


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3 Signicant accounting policies continuedFinancial liabilitiesa) Financial liabilities at amortised costTrade 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 nancial instruments is not considered to bematerial. The Group has not classied any of its nancial liabilities as at fair value through prot or loss.

b) De-recognitionofnancialliabilitiesA nancial liability is derecognised when the obligation specied in the contract is discharged, cancelled or expired.

c) Stated capitalFinancial instruments issued by the Group are treated as equity only to the extent that they do not meet the denition of anancial liability. The Companys ordinary shares are classied as equity instruments. For the purposes of the disclosures givenin note 24 the Group considers all its stated capital and all other reserves as equity. The Company is not subject to any externallyimposed capital requirements.

Effective interest rate methodThe effective interest rate method is a method of calculating the amortised cost of a nancial asset or liability and of allocatinginterest income and expense over relevant periods. The effective interest rate is the rate that exactly discounts estimated futurecash 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 nancial asset or liability or whereappropriate, a shorter period.

4 Signicant accounting judgements and key sources of estimation uncertaintyThe Group makes estimates and assumptions concerning the future. The resulting accounting estimate will, by denition, seldomequal the related actual results. The estimates and assumptions that have a signicant risk of causing a material adjustment tothe carrying amounts of assets and liabilities within the next nancial year are discussed below.

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

Valuation of plantationsThe Group normally uses the valuation performed by its independent valuers as the fair value of its plantations. The valuationis 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 valuationis based on assumptions. The valuers also make reference to market evidence of transaction prices for similar transactions.

Income and deferred taxesThe Group is subject to income and capital gains taxes in numerous jurisdictions. Signicant judgement is required in determining thetotal provision for income and deferred taxes. There are many transactions and calculations for which the ultimate tax determinationand timing of payment are uncertain. The Group recognises liabilities for anticipated tax issues based on estimates of whetheradditional taxes will be due. Where the nal tax outcome of these matters is different from the amounts that were initially recordedsuch differences will impact the income and deferred tax provisions in the period in which the determination is made.

Fair value of derivative contractsThe Group estimates fair values of derivative contracts by reference to current market conditions compared to the terms of contractsusing the results of an appraisal process carried out by the counterparty.

Valuation of intangible assetThe 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.


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5 Segmental informationJersey 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 prot 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 landwas previously being used for cattle grazing and is now being planted with high value commercial and non-commercial specieswith a view to longer term revenue from plantations and short term revenue from carbon credits. In addition to this, the Grouphas managed to secure a grant from the local Catchments Management Authority for biodiversity conservation and salinity controlservices 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 majorityis 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 wasacquired to provide for the needs of a veneer mill which is coming in to operation. This will generate higher value products suchas veneer logs as opposed to commodity wood chips.

6 Revenue Group

2008

Sales timber 291,227

Sales right of way 106,012

Lease income 105,876

Grant income 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 conservationmanagement, regeneration of the area, natural revegetation and plantation and allows for income receipts of up to a total ofAU$960,000 (419,654) on certication of certain milestones having been achieved by the landholder. The PVP is for a termof 15 years and is governed by the laws of New South Wales.

7 Administrative expenses Company Group

2008 2008

Investment Managers fees 1,207,676 1,207,676Directors fees 143,041 143,041

Auditors fees 38,000 38,000

Other professional fees 1,191,495 1,221,148

Revaluation on property, plant and equipment 43,277

Depreciation 880

2,580,212 2,654,022


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8 Finance income Company Group

2008 2008

Interest from subsidiary undertakings 159,632

Bank interest 5,316,177 5,344,454

Bond interest 315,251 315,251

5,791,060 5,659,705

9 Finance costs Company Group

2008 2008

Bank interest 70

10 TaxationTaxation on prot on ordinary activities:CompanyThe 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.

GroupThe Groups tax expenses for the period comprises:

Group2008

Deferred taxation

United States 1,791,527

Australia (495,542)

1,295,985

Tax expense reconciliation

Prot for the period 2,567,630

Less: income non-taxable (5,791,060)

Add: expenditure non-taxable 6,224,027

Add: unprovided deferred tax asset movement 475,404

Taxable prot for the year 3,476,001

Tax at domestic rates applicable to prots in the country concerned: Group

2008

Australian taxation at 30% (3,087,512)

United States Texan taxation at 35% 1,682,550

United States Delaware taxation at 34% 108,977

(1,295,985)


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10 Taxation continuedDeferred taxationThe following are the major deferred tax liabilities and assets recognised by the Group and movements thereon:

Group

2008

Revaluation of biological assets and land (1,298,560)

Accelerated tax depreciation (833)

Capitalised assets deducted (958)

Capitalised liabilities taxed 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 nancial reporting purposes available for the offset against future prots.

Group2008

Deferred tax liabilities (1,877,454)

Deferred tax assets 581,469

Foreign exchange effect 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 ofthese losses. Due to the unpredictability of future taxable prots, the Directors believe it is not prudent to recognise deferred taxassets in respect of these losses.

11 Basic and diluted earnings per shareThe calculation of the basic and diluted earnings per share is based on the following data:

Group2008

Earnings for the purposes of basic and diluted earnings per sharebeing net prot for the period as per income statement 1,271,645

Number of ordinary sharesNumber of ordinary shares for basic and diluted earnings per share:

Weighted average number of ordinary shares for the purposesof basic and diluted earnings per share 104,350,000

Basic and diluted earnings per share 1.22 pence


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27

12 Net Asset Value Group

2008


Total liabilities 2,391,939

Net Asset Value 106,169,645

Number of shares in issue 104,350,000

Net Asset Value per share 1.02

13 Investment in subsidiariesA list of the signicant investments in subsidiaries, including the name, country of incorporation and the proportion of ownershipinterest is given below.

% of Country of

Name of subsidiary undertaking voting rights incorporation Principal activity

Cambium Tarrangower Holdings Limited 100% Jersey Holding company

Cambium Australia Trust 100% Australia Forestry

Cambium Pahala Holdings Limited 100% British Virgin Islands Holding company

Cambium Pahala Hungary Holdings Kft. 100% Hungary Holding company

Cambium Pahala Inc. (Delaware) 100% Delaware, United States Forestry

Cambium Pinnacle Holdings Limited 100% British Virgin Islands Holding company

Cambium Holdings Limited 100% British Virgin Islands Holding company

Corrigan Holdings Limited 100% British Virgin Islands Holding company

Cambium Hungary Holdings Kft. 100% Hungary Holding company

Corrigan Hungary Holdings Kft. 100% Hungary Holding company

Cambium Corrigan Limited Partnership 100% Texas, United States Forestry

Cambium Minas Gerias Holdings Limited 100% British Virgin Islands Holding company

Cambium MG Holdings Limited 100% British Virgin Islands Holding company

Investments held by the Company: Company

2008

Cambium Tarrangower Holdings Limited 1,191,567

Cambium Pahala Holdings Limited 67,455

Cambium Pinnacle Holdings Limited 49

Cambium Holdings Limited 36,999

Corrigan Holdings Limited 36,999

Cambium Minas Gerias Holdings Limited 51Cambium MG Holdings Limited 49

1,333,169


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28


14 PlantationsMerchantable Pre-merchantable Land and

timber timber plantations TotalGroup Group Group Group

Land acquired in the period 6,940,340 6,940,340

Plantations acquired in the period 12,748,194 12,748,194

Acquisition costs capitalised 559,827 559,827

Gains on growth 537,978 537,978

Harvesting agriculture produce (felling) (437,588) (437,588)

Transfer to merchantable timber 6,207,140 (6,207,140)

Transfer to pre-merchantable timber 5,660,615 (5,660,615)

Fair value adjustments on plantations 1,270,859 1,270,859

Fair value adjustments on land 1,591,461 1,591,461

Foreign exchange effect 123,739 119,750 353,360 596,849

Carrying value as at 30 April 2008 6,330,879 5,780,365 11,696,676 23,807,920

The land and plantations are carried at their fair value as at 30 April 2008, as measured by external independent valuersURS 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 withUniform Standards of Professional Appraisal Practice. For this valuation three valuation approaches were used as consideredapplicable. 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 equivalentof IFRS. The preferred approach in the standard is the fair value model. While non-forestry land values can be assessed usingtransaction evidence, there is no comparable transaction evidence to determine the value of land for forestry purposes in theregion. Therefore, URS has applied a discounted cash ow 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 Agriculturewhich is consistent with IFRS. The property revaluation was performed taking into account the Groups intention to use landfor plantation purposes.

The Hawaiian plantation was valued by URS at fair value. The market value of the plantations has been assessed using a discountedcash ow (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 ows.

15 Property, plant and equipmentMotor

Buildings Improvements vehicles TotalGroup Group Group Group2008 2008 2008 2008

Cost

Assets acquired in period 365,886 91,899 11,894 469,679

Balance as at 30 April 2008 365,886 91,899 11,894 469,679

Depreciation and fair value movements

Revaluation (41,528) (1,749) (43,277)

Foreign exchange effect 27,135 7,542 921 35,598

Depreciation for the period (880) (880)

(14,393) 5,793 41 (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 URSAustralia 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.


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16 Intangible assets Group

2008

Cost water licence 43,714

Revaluation 69,942

Foreign exchange effect 9,508

123,164

The Tarrangower property has approximately 4km of frontage to the Severn River and has attached to it a water licence administeredby 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 whichis located 11km further up stream. The licence is renewable on a ve 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.

17 Categories of nancial assets and nancial liabilities Company Group

2008 2008

Current nancial assets

Financialassetsthroughprotorloss:

Forward exchange currency contracts 43,106 43,106

Loansandreceivables:

Trade and other receivables 599,517 774,630

Cash and cash equivalents 72,928,781 73,757,639

Available-for-saleinvestments:

Available-for-sale investments 8,964,000 8,964,000

Non-current nancial assets

Loansandreceivables:

Loans to subsidiary undertakings 20,459,175

Current nancial liabilities

Financialliabilitiesmeasuredatamortisedcost:

Trade and other payables 174,823 471,674

18 Trade and other receivables Company Group

2008 2008

Accrued interest on bonds 53,565 53,565Bank interest receivable 141,591 141,591

Goods and service tax receivable 8,985

Trade receivables 41,696 199,940

Deposit paid 251,572 251,572

Deferred costs 87,341 87,341

Prepaid expenses 23,752 31,636

599,517 774,630

The deposit was paid on the Pinnacle forest and deferred costs were incurred on prospective investments in forests.


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19 Loans to subsidiary undertakings Company Company

2008 2008US$

Cambium Corrigan Holdings Limited 13,589,129 6,893,137

Corrigan Holdings Limited 13,589,129 6,893,136

Cambium Pahala Holdings Limited 5,683,997 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 xed terms of repayment. The Directors do not anticipate that payment

on these loans will be demanded during the next 12 months.

20 Available-for-sale investments Company Group

2008 2008

UK Treasury stock 4% 3.07.2009 8,964,000 8,964,000

The UK Treasury stock is held as a margin account for the forward currency contracts (see note 21). As the forward contractshave 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 Exchangedetermined with reference to quoted market prices.

21 Forward exchange currency contracts Company Group2008 2008

Forward foreign currency contracts:

At forward rate 26,690,135 26,690,135

At market rate (26,647,029) (26,647,029)

Difference 43,106 43,106

As at 30 April 2008 there were ve forward foreign currency contracts in place. They are used to hedge against foreign exchangeexposure 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.

US$

Forward exchange currency contracts for United States dollar 42,250,000 21,870,721

AU$

Forward exchange currency contracts for Australian dollar 10,500,000 4,819,414


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22 Cash and cash equivalents Company Group

2008 2008

Cash held at bank 72,908,716 73,737,574

Cash held at broker 20,065 20,065

72,928,781 73,757,639

23 Trade and other payables Company Group

2008 2008

Accruals 174,823 187,068

Trade creditors 70,444

Advances held 214,162

174,823 471,674

24 Stated capitalCompany Group

2008 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 xed income but the Company may declare dividendsfrom 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 to2,000,000. Approval was sought from the Royal Court of Jersey and was granted on 29 June 2007. The balance of 102,350,000 wastransferred to a distributable reserve on that date.

25 ReservesThe movements in the reserves for the Group and the Company are shown on pages 13 and 17 respectively.

Translation reserveThe translation reserve contains exchange differences arising on consolidation of the Groups foreign operations.

Revaluation reserveThe revaluation reserve arises from the revaluation on available-for-sale investments, intangible assets and property plantand equipment.

Distributable reserveThe Company reduced its stated capital account and a balance of 102,350,000 was transferred to distributable reserves.


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26 Business combinationsOn 18 April 2007 Cambium Jersey Trust was established with initial settled funds of 100 transferred by the Company. The Companywas the sole beneciary of Cambium Jersey Trust. Cambium Jersey Trust was the sole investor in Cambium Australia Trust which isa 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 holdstimberland 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 Australianinvestment. The benet the Company will derive from the new structure is that withholding tax will be lowered from 45 per centto 30 per cent. The Board decided that the Company should acquire a newly formed Jersey company, Cambium TarrangowerHoldings Limited. The Cambium Australia Trust would buy their units back from Cambium Jersey Trust and the Cambium JerseyTrust would be terminated as soon as possible. Cambium Tarrangower Holdings Limited subscribed to the units on CambiumAustralia 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 toCambium Pahala Inc., a Company established in Delaware.

27 Financial instruments risk exposure and managementIn common with other businesses, the Group is exposed to risks that arise from use of nancial instruments. The notes below

describe the Groups objectives, policies and processes for managing those risks and the methods used to measure them. Furtherquantitative information in respect of these risks is presented throughout these nancial statements.

Principal nancial instrumentsThe principal nancial instruments used by the Group and Company, from which nancial 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

+ DepositsThe Board of Directors and Investment Manager are responsible for overseeing the measurement and control of all aspects of riskmanagement 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 leveland at a Group level. The risk management policies apply equally to the Group and the Company. Further details regarding thesepolicies are set out below.

Credit riskCredit risk is the risk that the counterparty to a nancial instrument will fail to meet obligations, causing a loss to the Group.

a) GroupCash and cash equivalents represent the majority of the Groups nancial assets. The credit risk associated with the holding of cashand cash equivalents is managed under the Groups cash management policy. The cash management policy states that the Groupmust have a minimum of 5 bankers so as to spread the risk of default. The cash management policy will be reviewed on an annualbasis by the Board of Directors and the Investment Manager.



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27 Financial instruments risk exposure and management continuedCredit risk continuedb) CompanyThe Companys 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 diversication of banking arrangements. Amounts receivablefrom 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:

Credit Carryingrating amount

Counterparty symbols Rating

Investec Bank (Channel Islands) Limited Fitch F2 8,107,779

AIB Bank (Channel Islands) Limited Fitch F1+ 20,736,996

Bank of Scotland International PLC Fitch F1+ 17,715,974

Royal Bank of Scotland International PLC Fitch F1+ 21,636,894

UBS AG Fitch F1+ 4,854,865

MF Global (United Kingdom) Limited Fitch F2 20,065

New South Wales Treasury Corporation S & P A +1 198,357National Australia Bank Limited S & P A +1 388,961

Regions Bank S & P A +1 409,153

Maturities of these nancial assets:3 months

< 1 month 1 3 months 1 year

Investec Bank (Channel Islands) Limited 3,330,464 4,777,315

AIB Bank (Channel Islands) Limited 15,961,174 4,775,822

Bank of Scotland International PLC 13,148,126 4,567,848

Royal Bank of Scotland International PLC 16,861,451 4,775,443

UBS AG 82,470 4,772,395

MF Global (United Kingdom) Limited 20,065 New South Wales Treasury Corporation 198,357

National Australia Bank Limited 388,961

Regions Bank 409,153

Liquidity riskLiquidity risk is the risk that the Group will not be able to meet nancial liability obligations as they fall due. The Groups liquidityrisk is managed by the Investment Manager in accordance with policies and procedures established by the Board.

The derivative nancial liabilities have been put in place so as to manage the potential foreign exchange exposure arising frominvesting in assets in foreign jurisdictions.

Under the Groups hedging policy, hedging will only be employed once timber assets are acquired. Therefore all hedging liabilities arematched 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 Groups nancial 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 amountsdisclosed in the table are the contractual undiscounted cash ows. Balances du

Documents

Cambium Annual Report 2008