Annual - Green Resources

Transcription

Annual
Repo20r0t6
Green Resources
2
Green Resources
Table of Content
COMPANY PROFILE
2
MAJOR EVENTS IN 2006
3
MAJOR EVENTS IN 2007 H1
3
GREEN RESOURCES’ HISTORY
4
OBJECTIVES AND GOALS
4
FINANCIAL TARGETS
5
DIRECTOR’S REPORT
6
CONSOLIDATED ACCOUNTS
8
NOTES TO FINANCIAL STATEMENT
AUDITOR’S REPORT
12
21
STRATEGY AND STRENGHT
BIOLOGICAL ASSET VALUATION
BUSINESS STRATEGIES
COMPANY STRENGTHS
22
23
24
OPERATIONAL REVIEW
GREEN RESOURCES AS ORGANISATIONAL OVERVIEW
PLANTATIONS: RECORD LEVEL OF PLANTING
CARBON OFFSETS:
SAWN TIMBER AND MANUFACTURING
ENERGY
25
26
28
30
31
ENVIRONMENT AND ORGANISATION
EMPLOYEES & ORGANISATION
IMPROVING THE ENVIRONMENT
ENVIRONMENTAL AND SOCIAL OBJECTIVES
COMMUNITY AND SOCIAL DEVELOPMENT
CREATING GROWTH, EXPORTS AND TAX REVENUES
EASTERN AFRICA: THE ECONOMIES AND POLITICAL SITUATION
32
34
36
37
39
40
COMPANY INFORMATION
GREEN RESOURCES’ SHARES
CORPORATE GOVERNANCE
GREEN RESOURCES ASA BY LAWS JUNE 29 2007
BOARD OF DIRECTORS
BOARD OF DIRECTORS IN SUBSIDIARY COMPANIES
MEMBER OF THE EXECUTIVE COMMITTEE
ADDRESSES
42
43
44
44
45
45
45
1
Green Resources
COMPANY PROFILE
Green Resources is a plantation, carbon offset, forest products
and renewable energy company. The Company was established in
1995 and is a private, profit oriented Norwegian company with 60
shareholders. It employs 1,500 people and has invested more than
NOK 150 mill in its African operations since the start, of which
more than 90% is equity financed. Green Resources has activities
in Tanzania, Uganda and Mozambique.
Green Resources strategy is based on sustainable development of
the areas where it is operating. It wants to become the favored
African employer within its industry. The company belives that
afforesation is the most efficient way of developing the social and
economic conditions for normal people in rural areas. Green
Resources aims to be the preferred partner for local communities
in these areas.
The Company is Africa's leading afforestation company and has
established 7,800 ha forest, and hold more than 100 000 ha land
for future planting. This is probably more new trees than any other
private company has planted in Africa during the last 10 years.
Green Resources is growing trees to generate carbon offsets, to
manufacture wood products and for the generation of bio-energy.
Green Resources aims to follow the best international environmental
standards. It conserves the natural forest and other valuable habitats. Green Resources only harvests plantation forest and plants
ten new trees for every one tree that it harvests, in addition it only
plants on grassland or degraded forestland. It focuses on a wide
variety of species, including pine, eucalyptus, teak, measopsis and
various indigenous trees.
Green Resources’ carbon offset projects include afforestation,
biofuel and renewable electricity projects. It is a leader in forestry
derived greenhouse gas emission reductions, has generated carbon offsets since 1997 and received the first verified carbon credits in 2000. All Green Resources’ carbon offset revenues will be
reinvested in new carbon offset activities or be used for community development.
Green Resources’ industrial operation, Sao Hill Industries, is East
Africa’s largest sawmill and one of the largest treated pole producers, also has carpentry and joinery plants. It has several sales
branches throughout Tanzania.
2
Tree planting by Green Resources
Year
2007 H1
2006
2005
2004
2003
3.34
1.74
1.89
0.76
0.4
0
0.5
1
1.5
No of trees in million
2
2.5
3
3.5
4
Green Resources
MAJOR EVENTS IN 2006
Planting 1,250 ha New Forests
Green Resources planted 1,250 ha of new forest in 2006, the largest area in the company’s history. The nurseries were prepared
for doubling the planting in 2007.
Agreement with Malonda for Planting in Mozambique
At the end of 2006, Green Resources was selected by Fundacao
Malonda of Mozambique to develop 60,000 ha of land in Niassa,
the Northern Province in Mozambique. At the start of 2007, 80 ha
new forest was planted and the final agreement signed to develop
a commercial forest plantation focusing on sawlogs for the building and furniture industries.
Expanding in Tanga, Tanzania and Katchung, Uganda
Green Resources reached an agreement with the Norwegian Afforestation Group to become the lead investor in the Katchung
Forest Reserve in Northern Uganda.
Expansion of Industrial Operations
Sao Hill Industries, Green Resources’ industrial operations, increased revenues by 79% in 2006 and generated 12% operating margin. There was a major improvement in transmission poles, and
SHI started a small door and pallet production. Green Resources
invested NOK 20 mill in Sao Hill in 2006, with the benefits expected in 2007 and later.
Employment of New Managers
Green Resources strengthened the management during 2006,
both in the plantations, carbon business and industrial operations. Four experienced plantation managers were hired, a carbon
business manager and a sawmill manager were appointed.
MAJOR EVENTS IN 1H 2007
Approval of Carbon Credits
SGS, the international certification company, verified 233,000 tons
voluntary CER (carbon credits) from Green Resources, Tanzania
at the start of 2007. The credits were issued based on forest
growth through 2005.
Establishment of Mapping and Inventory Offices
Green Resources established new GIS and Inventory departments, with separate managers, 15 professionals utilising the
latest technologies.
Planting 2,300 ha New Forests
Green Resources planted a record 2.300 ha of new forest during
the first half of 2007, putting the Company well on track of achieving its goal of 3,000 ha new forest for the year as a whole.
Raising NOK 100 mill (US$ 17 mill) of New Equity
The share capital was increased by NOK 30 mill in 2006 and a
further NOK 70 mill in June 2007, creating the basis for strong
growth of the Company. The Company has US$2mill of loans.
Four Years of Audited IFRS Accounts
After a process that lasted two years, PwC certified Green
Resources accounts based on the International Financial Reporting Standards for 2003-2006.
3
Green Resources
GREEN RESOURCES’ HISTORY
Green Resources was incorporated in 1995 to
become a low cost developer of plantations for
forestry and other uses and a leading producer
of greenhouse gas emission offsets.
The Company decided to focus on East Africa because of land
availability, good rainfall, low cost labour, stable governments
and a long-standing Nordic development aid presence in the
regions. South East Asia and Latin America were considered, but
ownership rights were uncertain in both areas in addition the
land costs were high and local competition strong. The Company
built a strong and stable management structure with the late
John Haule creating the Tanzanian operations and Jossy Byamah
building the Ugandan operations.
Carbon Offsets
Green Resources started pilot planting forests for carbon offsets
in Uganda and in Tanzania. In 1996, there had been no large
scale planting of new forest in East Africa for more than a decade,
neither private nor public, with the exception of a teak project in
Tanzania. Green Resources established contact with SGS, the leading global certification and inspection company, in 1998 as SGS
built a presence in greenhouse gas offset project certification.
In January 1998, the Ugandan operation became a top performer
within a carbon offset project competition financed by AES, but
fell short of obtaining external funding. In November 2000,
Green Resources’ Tanzanian afforestation project was certified by
SGS as one of the three first projects worldwide. In 2000, Green
Resources also sold options on carbon offsets to a Norwegian
gas power plant project, IMN, but the options expired unexercised
in 2003.
The start of this decade saw slower than expected development of
the GHG-offset regulations and markets. Green Resources maintained the organisation, but planted only smaller areas of new forest. Since 2003, however, the carbon offset market has come
alive and Green Resources has once more increased its afforestation operations.
Plantations
During 1996, Green Resources secured a license to plant forest in
the Bukaleba Central Forest Reserve in Uganda and obtained
land from two villages in Tanzania, Mapanda and Uchindele.
Following an early peak in the planting in 1998 and 1999, the
planting slowed during 2000-02. By 2003, the Company was
getting ready to renew the afforestation activity and by 2005,
more than 1,000 ha of new forest was planted annually. In 2007,
Green Resources is expecting to more than double the annual
planting, to at least 3,000.
New Focus on Forest
There was little interest in Southern Hemisphere forestry during
the years immediately after 1995. However, since 1998, all of the
world’s four largest pulp and paper companies have made large
investments in Southern Hemisphere forestry.
The amount of pension investments going into Timber Investment
Management Organisations (TIMOs) has increased approximately
five times to about US$15bn in 2005. During the last five years,
TIMOs investments outside of the US have increased sharply,
focusing on South America and Australasia. The World Bank is
back in full force into forestry after more than ten years absence.
Since 2005, several of the world’s largest forest companies and
forest investors have visited East Africa looking for land to plant
forest, but little serious activity takes place. Still record amounts
of new capital have been raised for dedicated forest investment
funds.
Industrial Operations
The Tanzanian subsidiary acquired the first “mobile” sawmilling
equipment in 1997 and started small scale sawmilling based on
logs from the government owned Sao Hill Forest Plantation.
Green Resources acquired Sao Hill Sawmill in 2003, and already
owned a Norwegian company that had operated Sao Hills
Sawmill on a lease agreement since 1998.
The Sao Hill Sawmill was built in 1974 with the support of
Norwegian Development Aid Funds. At least NOK 200 mn, or
about US$30 mn in development aid is believed to have been
spent on Sao Hill from 1976 to 1998. Sao Hill Sawmill was part
of the Tanzania Wood Industries Company until 1996 when the
economic reform policies of the Tanzanian Government lead to
a part privatization of Sao Hill Sawmill in the form of a ten years
lease, that discouraged investments in the mill.
Privatisation of SHS assets (which Green Resources were leasing)
was announced in 2000 and Green Resources prequalified for the
privatization process. However, it was not until June 2003 that
Green Resources was able to complete the purchase of the Sao
Hill Sawmill assets. At the start of 2004, Green Resources
OBJECTIVES AND GOALS
Green Resources’ goal is to be the world’s lowest cost and Africa’s best plantation company. It aims to be a high tech plantation
company, developing a first class business in
Africa. The Company will convert low yielding
grass and degraded forest land to grow the
highest yielding crops suitable for the different areas under the Company’s ownership.
Green Resources aims to develop a leading
African carbon offset business. The Company
will absorb the maximum amount of CO2
through afforestation projects and by converting plantation crops into biofuel and rene-
4
wable energy. Green Resources aims to be a
leading forest products and building material
company in Eastern Africa and to be a large
exporter of forest products to the Arab Gulf,
Indian Ocean and the Red Sea regions. The
Company’s core products include sawn timber, transmission and building poles, joinery
products and other wood based building materials, as well as energy from renewable resources.
Green Resources will conserve and expand
the natural forest and other valuable vegetation within its areas of operation, and aims to
obtain FSC certification for all its forests. The
Company will reach out to the local communities to establish village forest schemes,
maintaining a strong focus on a sustainable
environment and social development.
The Company shall be guided by high standards of corporate social responsibilities.
Green Resources wants to be the preferred
employer for its staff and attract the best
young employees. The Company will be the
preferred partner for the local communities
where Green Resources operates and for
international business partners and financial
institutions.
Green Resources
embarked on new investments at Sao Hill and strengthened the
management of the company.
The acquisition of SHS took place at the same time as the global
timber market was bottoming out in 2003. The operating environment was very difficult, but the subsequent improvements in
the market, combined with investments and stronger management have paved the way for profitable operations at Sao Hill.
The Sao Hill Area is the center of Eastern African sawmilling
industries, with the largest plantations between South Africa and
Iberia. There are similar sized plantations in land locked Malawi,
Zambia and Zimbabwe. Green Resources is the leading sawmill
operator in the area with wood supply secured through “a long
term contract”.
FINANCIAL TARGETS
Green Resources is a profit oriented private
company. The Company will maximize the
return to Shareholders by maximizing the
share price appreciation and eventually
through payments of dividend.
The company believes investments in the
areas where it operates should yield at least
20-25% return on equity, compared to a return target of 8-12% for traditional forest investment companies, and slightly higher for
carbon funds.
Green Resources believes the interests of
the Stakeholders, including customers, employees, local communities, the environment, host countries, creditors and the
Shareholders are best served by creating a
financially strong and profitable Company.
Green Resources believes that a business
based on sustainability and social responsibility, using renewable, green, resources will
yield the highest long term returns.
5
Green Resources
Green Resources is operating plantations, in particular forest plantations, and wood processing operations in Tanzania, Uganda and
Mozambique. t is a Norwegian company with headquarters in
Oslo.2006 was a good year for Green Resources. The international
certification company SGS verified carbon credits from Green Resources’ afforestation project in Tanzania. More new forest was
planted than ever before and Green Resources established three
new carbon offset/ afforestation projects in Mozambique, Tanzania
and Uganda. Sao Hill Industries generated positive results for the
first time in several years due to higher production and better prices.
Green Resources generated total revenues of NOK 39 mn in 2006,
up 5% compared to 2005. Operating profit fell to NOK 7 mn, from
NOK 12 mn in 2005. There was a net loss of NOK 2 mn, compared to a net loss of NOK 3 mn in 2005.
Sales revenues increased significantly from NOK 17 mn in 2005 to
NOK 27 mn driven by higher prices and volume and new products. Net gain in biological asset values was NOK 12mn, down
from NOK 20 mn in 2005 due to slightly lower wood prices in
Uganda and more conservative growth assumptions. Administrative costs were NOK 13 mn, up from NOK 9 mn in 2005, and finance costs were NOK 8mn, mostly due to foreign exchange
losses, compared to NOK 3 mn in 2005.
Green Resources AS
The Norwegian holding company performs a number of group
functions and covers joint costs. Revenues were NOK 0.8 mn.
Operating costs were NOK 4.0 mn, and net financial costs were
NOK 1.7 mn, leading to a net loss of NOK 4.9 mn, compared to a
loss of NOK 1.7 mn in 2005. Green Resources AS did not charge
interest on the main inter-company loans in 2005 and 2006.
Business Review
Plantations
Green Resources has established 7,800 ha of forest, primarily
pine, eucalyptus and several local species of wood. We believe
the company has planted more new forest in Africa during the
last ten years than any other private company. Green Resources
planted 1,300 ha forest in 2006, a new record for the company.
Two plantation companies, Green Resources (GRL), Tanzania and
Busoga Forestry Company (BFC), Uganda, generated significant
biological growth in 2006 that was included in the consolidated
P&L. GRL generated TSH 3.1bn (NOK 14.2 mn) in gains from
changes in the fair value of biological assets. Offsetting operating expenditures and large financial costs lead to net profit of
TSh 1,551 mn (NOK 7.4). BFC generated income of USh 176m
(NOK 0.6mn) in 2006, down from USh 1,786 mn (NOK 6.2mn) in
2005. Of the income, USh 59m (USh 1,685mn in 2005) was from
gains from changes in the fair value of biological assets. USh
115m (USh 93mn) was a grant from the Saw log Production Grant
as payment for planting under the scheme. USh2mn (USh7 mn)
was income from sale of seedlings, thinnings and firewood.
6
Carbon Offsets
The market for carbon credits improved sharply in 2006, both with
regards to volume and price. Green Resources is a low cost
supplier of carbon credits, at the same time as the Company’s
projects have a strong social profile. Green Resources afforestation projects are improving the living conditions for normal people
in some of the world’s poorest countries. The carbon business did
not generate revenues in 2006 and the costs associated with the
business were expensed within the Company’s other operations.
At the start of 2007, SGS verified 233,000 tons of voluntary carbon
offsets for GRL through 2005. Based on IFRS, Green Resources
will have to book this as an income in 2007.
2006 was a year of change for Sao Hill Industries. The company
strengthened the management and invested close to NOK 20 mn
in working capital and new transport and handling equipment.
Production of doors and pallets were started with the main aim of
increasing the utilization of the harvested wood. These activities
contributed only to small revenues and generated a loss in 2006,
but the outlook is positive.
Demand for most products exceeds production and customers
often pay in advance. SHI received new orders for transmission
poles and has established a position as the quality leader within
the East African pole market. There are new tenders in the region that exceed the local supply by a wide margin. At the same
time, there are signs that the South African and Finnish competitors are reducing their activities in East Africa.
Green Resources’ industrial operations increased revenues by
79% in 2006 to TSh 5,105 bn (NOK 24.4), generated 12% operating
margin and TSh 227 mn (NOK 1.1mn) in net profit.
New Operations
Green Resources established an operation in Mozambique during
2006, and employed a new country manager with long experience
within the forest and forest products industry. At the end of 2006,
a letter of intent was signed with the Malonda foundation to develop 60,000 ha of land in Niassa. The area is located on the Lichinga plateau with high rainfall and good conditions for forestry.
The objective is to establish a forest plantation of at least 30,000
ha. The Malonda foundation is established and operated with the
support of SIDA, the Swedish development organization.
Green Resources was also offered 9,000 ha land from villages in
the Nampula province, located close to the coast, a main river
and Nacala harbour. This is the first step in a larger establishment in the Coastal areas of Northern Mozambique. The first
planting is expected in 2007. In Tanzania, Green Resources established a new plantation in Tanga, the coastal province boardering Kenya. Small trial plots of teak and eucalyptus were planted
in 2006 with good results, and two nurseries were established for
larger scale planting in 2007. Green Resources is offered close to
Green Resources
30,000 ha land in the province, and expect to increase the area as
the positive effect of the company’s operations become known in
the local community.
Green Resources signed an agreement with the Norwegian Afforestation Group AS to take a leading role in developing NAG’s
2,900 ha concession in Katchung, Uganda. An initial planting of 80
ha was completed in 2006.
Employees
During the last 11 years, Green Resources has build a strong and
efficient organisation that has the ability to succeed with complicated certification processes both plant large areas of new forest
and establish new plantation projects. This is a main strength for
the company.
In 2006, Green Resources doubled the number of Plantation Managers to eight, and hired a Country Manager for Mozambique.
Operational managers were also hired at Sao Hill industries.
New healthcare programs and safety equipment was introduced
throughout the organization. There is a constant effort to ensure
proper use of the new equipment, and additional equipment is required in certain functions.
In Tanzania, the Company conducted seminars on general health
and AIDS prevention in all the villages around GRL as a means of
creating awareness on better health for the workers.
During 2006, the company experienced a traffic accident that lead
to the unfortunate death of one employee. There were also two
accidents in the sawmill that lead to three fingers being lost. Two
other accidents lead to shorter hospitalisation, but the employees
recovered.
Green Resources is actively seeking to increase the number of
women among its staff and practice a positive discrimination policy in the graduate trainee program. More than ¼ of the Company’s managers are women.
Environment
Green Resources is aiming to improve the environment by
sequestrating carbon dioxide and protecting natural forest and
habitats.There were no material environmental accidents in 2006.
Financial Risk
The Company is not hedging or insuring financial risks. Despite
the fact that the assets are booked in local currencies, the real
effect of currency fluctuations are limited because the value of
assets is driven by international market prices. The Company is
exposed to changes in market conditions and these might have
direct effect on the Company’s P&L. The Company’s liquidity has
been satisfactory in 2006, , but shareholders have provided loans
to the company when required. The Board believes this situation
will continue.
Outlook for 2007
The carbon offset business is likely to generate its first revenues
in 2007. Green Resources is working to register several projects
during the year. The tree planting has had a very good start in
2007, with 2,300 ha new forest planted during the first half year.
The objective is to plant 3,000 ha, more than doubling the level
from 2006. The outlook for the industrial operations is good. The
first months of the year started better than the same period in
2006, and the sawmill successfully implemented a second shift
from May. From 1 July wood costs increased 4-6 times in Tanzania, but it seems like that the prices can be increased to compensate for the higher costs. SHI aims at doubling the sawn timber
and pole production over the next two years based on modest investments. The Board of Directors believes the enclosed Accounts are a correct representation of the situation in the
Company.
The Board recommends that the loss of NOK 4,883,365 is covered
in the following way: i) NOK 4,170,713 from other equity and ii)
NOK 712,652 from the equity premium account. Following these
transactions, Green Resources AS had NOK 91.6 mn of equity at
the end of 2006, and an equity ration of 84%. Free equity was
NOK 0 at the end of 2006.
Oslo 15. april 2007
Tom Vidar Rygh
Chairman
Mads M. Asprem
CEO
Ambroise Bryant
Chukwueloka Orjiako
Marius Bøhler
Elivn Mutuma Marangu
Odd Ivar Løvhaugen
Kristoffer Olsen
7
Green Resources
CONSOLIDATED PROFIT AND LOSS ACCOUNT
TreeFarms AS
Consolidated profit and loss account
NOKs MN
Notes
2006
2005
2004
2003
2002
2001
Sales
Gains arising from changes in fair value
less estimated point-of-sale costs of biological asset
27
17
18
14
15
9
12
39
20
37
19
37
19
33
6
21
17
26
Cost of Sales
-20
-17
-15
-11
-10
-10
Gross profit
19
20
22
22
11
16
1
1
-13
-9
1
-8
-11
2
-23
1
-6
Other operating income
Distribution costs
Administrative and operating expenses
Operating profit
2
7
12
15
11
-10
11
Finance costs
4
-8
-3
-8
-10
-6
-3
-1
9
7
1
-16
8
-1
-12
-
-
-
-
-2
3
7
1
-16
8
-2
-
-3
-
7
-
1
-
-16
-
8
-
-2
-3
7
1
-16
8
Profit before tax
Tax charge / (credit)
Net profit
5
Attributable to:
Equity shareholders of the parent
Minority interest
8
Green Resources
CONSOLIDATED BALANCE SHEET
TreeFarms AS
Consolidated balance sheet
NOKs mn
Notes
Non-current assets
Property, plant and equipment
Biological assets
Investment in shares
Loans to group companies
6
7
8
Current assets
Inventories
Receivables and prepayments
Cash and cash equivalents
9
10
Total assets
Capital employed
Share capital
Share premium
Advance towards share capital
Translation reserve
Revaluation reserve
Retained earnings
11
Shareholders’ funds
Non current liabilities
Borrowings
Deferred tax
12
13
Current liabilities
Trade and other payables
Bank overdraft
14
16
Total liabilities
Total equity and liabilities
2006
2005
2004
2003
2002
2001
23
89
2
12
83
-
14
61
-
14
45
-
7
30
6
11
31
6
114
95
75
59
43
48
10
7
10
4
2
5
5
3
2
4
3
1
2
2
1
2
8
3
27
11
10
8
5
13
141
106
85
67
48
61
68
14
10
1
10
-8
49
3
9
4
-6
49
3
5
44
2
4
35
11
-7
22
11
1
-3
-10
-19
-6
95
59
54
40
20
28
6
13
11
12
7
-
15
-
15
27
-
19
23
7
15
15
27
25
2
23
1
24
-
6
6
9
4
3
3
27
24
24
12
13
6
46
47
31
27
28
33
141
106
85
67
48
61
-
Oslo 15. april 2007
Tom Vidar Rygh
Chairman
Mads M. Asprem
CEO
Ambroise Bryant
Chukwueloka Orjiako
Marius Bøhler
Odd Ivar Løvhaugen
Kristoffer Olsen
9
Green Resources
CONSOLIDATED CASH FLOW STATEMENT
TreeFarms AS
Consolidated cash flow statement
NOKs mn
2006
2005
2004
2003
-1
9
7
1
2
2
-3
-12
8
3
1
-20
-
2
1
1
-15
-
1
2
-7
11
-13
-
-6
-5
-4
1
1
-1
-1
5
-2
-1
-4
-19
-6
-
-12
-5
1
-2
-2
-1
2
-2
-
-3
-2
-10
14
-13
-2
-
-8
-1
-5
-11
Issue of shares
31
9
6
23
Cash inflow from financing activities
31
9
6
23
4
4
2
2
1
1
1
8
4
2
1
Profit before taxation
Adjustment for non-cash items:
Depreciation
Exchange differences on property, plant and equipment
Gain on fixed asset disposal
Movement on translation reserve
Gains arising on changes in fair value of biological assets
Exchange difference on biological assets
Notes
6
6
7
7
Movement in working capital items:
Change in inventories
Change in receivables and prepayments
Change in payables and accrued expenses
Net cash used by operating activities
Investment activities
Purchase of property, plant and equipment
Proceed from disposal
Loans proceed
Purchase of biological assets
Loan to subsidiaries
6
7
Net cash outflow from investing activities
Financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
10
16
Green Resources
CHANGES IN EQUITY
TreeFarms AS
Changes in Equity
NOKs mn
Share
Capital
Share
Advance Translation Revaluation
Premium owards share
Reserve
Reserve
capital
Retained
Earnings
Total
-16
-18
23
1
23
-18
23
11
1
-10
40
Year ended 31 December 2003
At start of year
Adjustment in respect of inter company loan
Issue of shares
Capital reduction
Translation gain for the year
Net profit for the year
35
21
-12
-
11
2
-11
-
44
2
At start of year
Issue of shares
Net profit for the year
44
5
-
2
1
-
-
4
1
-
-
-10
7
40
6
1
7
At end of year
49
3
-
5
-
-3
54
At start of year
Net profit/ loss for the year
49
-
3
-
9
-
5
-1
-
-
-3
-3
54
9
-1
3
At end of year
49
3
9
4
-
-6
59
At start of year
Issue of shares
Translation loss for the year
Net profit/ loss for the year
Revaluation gain
49
19
-
3
11
-
9
-9
10
-
4
-3
-
10
-6
-2
-
59
21
10
-3
-2
10
At end of year
68
14
10
1
10
-8
95
At end of year
-
-7
11
4
-
11
Green Resources
(a) Basis of preparation
The financial statements are prepared in compliance with International Financial Reporting Standards (IFRS). The financial statements are
presented in the functional currency, Norwegian
Kroners (NOKS), rounded to the nearest million,
and prepared under the historical cost convention, as modified by the revaluation of certain property, plant and equipment.The preparation of
financial statements in conformity with IFRS requires the use of estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses
during the reporting period. Although these estimates are based on the directors’ best knowledge of current events and actions, actual
results ultimately may differ from those estimates.
(b) Translation of foreign currencies
(i) Functional and presentation currency
Items included in the financial statements of
each of the Group’s entities are measured using
the currency of the primary economic environment in which the entity operates (‘the functional
currency’). The consolidated financial statements
are presented in Norwegian Kroners, which is the
Group’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into
Norwegian Kroners using the exchange rate prevailing at the dates of the transactions. Monetary
assets and liabilities at the balance sheet date,
which are expressed in foreign currencies, are
translated into the functional currency at rates
ruling at that date. Foreign exchange gains and
losses resulting from the settlement of such
transactions and from the translation at the year
end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account.
mated point-of-sale costs are recognised in the
profit and loss account in the year in which they
arise.
The fair value of the trees is determined based on
the net present values of expected future cash
flows, discounted at current market-determined
pre-tax rates.
All costs of planting, upkeep and maintenance of
biological assets are recognised in the profit and
loss account.
(d) Property, plant and equipment
All categories of property, plant and equipment
are initially recorded at cost. Buildings and freehold land are subsequently shown at market
value, based on triennial valuations by external
independent valuers, less subsequent depreciation for buildings. All other property, plant and
equipment is stated at historical cost less depreciation.
Depreciation is calculated on the straight line
basis to write down the cost of each asset, or the
revalued amount, to its residual value over its estimated useful life as follows:
Buildings
Machinery
Motor vehicles
Computer equipment
Office furniture and equipment
25 years
15 years
4 years
3 years
3 - 8 years
Property, plant and equipment are periodically
reviewed for impairment. Where the carrying
amount of an asset is greater than its estimated
recoverable amount, it is written down immediately to its recoverable amount.
Gains and losses on disposal of property, plant
and equipment are determined by reference to
their carrying amounts and are taken into account in determining operating profit.
(iii) Group companies
The results and financial position of all the group
entities that have a functional currency different
from the presentation currency are translated
into the presentation currency as follows:
(e) Revenue recognition
Revenue represents the fair value of the consideration receivable for sales of goods and services,
and is stated net of value-added tax (VAT), rebates
and discounts. Revenue is recognised as follows:
- assets and liabilities for each balance sheet are
translated at the closing rate at the date of that
balance sheet;
(i) Sales of goods are recognised in the period in
which the company delivers products to the customer, the customer has accepted the products
and collectibility of the related receivables is reasonably assured.
- Income and expenses for each income statement are translated at average exchange rates;
and
- all resulting exchange differences are recognized as a separate component of equity.
(c) Biological assets
Biological assets are measured on initial recognition and at each balance sheet date at fair value
less estimated point-of-sale costs. Any gains arising on initial recognition of biological assets and
from subsequent changes in fair value less esti-
12
(ii) Interest income is recognised on a time proportion basis using the effective interest method.
Dividends are recognised as income in the period
in which the right to receive payment is established.
(f) Receivables
Receivables are carried at original invoice
amount less provision made for impairment of
these receivables. A provision for impairment of
trade receivables is established when there is objective evidence that the Company will not be able
to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the carrying
amount and the present value of expected cash
flows, discounted at the effective interest rate.
The amount of the provision is recognised in the
profit and loss account.
(g) Income tax
Income tax expense is the aggregate of the
charge to the profit and loss account in respect of
current income tax and deferred income tax.
Current income tax is the amount of income tax
payable on the taxable profit for the year determined in accordance with the tax regimes that the
individual entities in the group operate.
Deferred income tax is provided in full, using the
liability method, on all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial
reporting purposes. However, if the deferred income tax arises from the initial recognition of an
asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable
profit or loss, it is not accounted for. Deferred income tax is determined using tax rates and laws
that have been enacted or substantively enacted
at the balance sheet date and are expected to
apply when the related deferred income tax asset
is realised or the deferred income tax liability is
settled.
Deferred income tax assets are recognised only
to the extent that it is probable that future taxable
profits will be available against which the temporary differences can be utilised.
(h) Inventories
Inventories are stated at the lower of cost and net
realisable value. Cost is determined by the firstin, first-out (FIFO) method. Net realisable value is
the estimate of the selling price in the ordinary
course of business, less the cost of completion
and selling expenses.
(i) Cash and cash equivalents
For the purposes of the cash flow statement,
cash and cash equivalents comprise cash on
hand, deposits held at call with banks, net of
bank overdrafts. In the balance sheet, bank overdrafts are included in borrowings in current liabilities.
(j) Borrowings
Borrowings are recognised initially at fair value,
net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost using the
effective interest method; any differences between proceeds (net of transaction costs) and the
redemption value is recognised in the profit and
loss account over the period of the borrowings.
(k) Consolidation
Subsidiaries are all entities over which the Group
has the power to govern the financial and operating policies generally accompanying a sharehol-
Green Resources
ding of more than one half of the voting
rights. The existence and effect of potential
voting rights that are currently exercisable
or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from
the date on which control is transferred to
the Group.
Inter-company transactions, balances and
unrealised gains on transactions between
group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of an impairment of
the asset transferred.
(l) Financial risk management
The Company’s and the Group’s activities
potentially expose it to a variety of financial
risks, including credit risk and the effects of
the changes in foreign currency exchange
rates. The Company’s and the Group’s ma-
nagement programme takes account of the
unpredictability of foreign exchange rate
trends and seeks to minimise potential adverse effects on its financial performance.
Foreign exchange risk
The Group operates internationally and is
exposed to foreign exchange risk arising
from various currency exposures primarily
with respect to the Tanzania and Uganda
shillings. This risk is not hedged.
Credit risk
The Group has no significant concentrations
of credit risk. The Group has policies in
place to ensure that sales of products and
services are made to customers with an appropriate credit history.
of funding through an adequate amount of
committed credit facilities.
(m) Critical accounting estimates and judgements
Estimates and judgements are continually
evaluated and are based on historical experience and other factors, including experience of future events that are believed to be
reasonable under the circumstances.
Biological assets
Critical assumptions are made by the directors in determining the fair values of biological assets. The key assumptions are set out
in Note 7.
Liquidity risk
Prudent liquidity risk management implies
maintaining sufficient cash, the availability
NOTES TO THE FINANCIAL STATEMENT
Note 1: See Above under Accounting Policies.
Notes to the Accounts
Note 2: Operating profit
The following items have been charged in arriving at the operating profit:
NOKs mn
2006
Depreciation of property, plant and equipment (note 8)
2
Fair value (gain)/loss on biological assets
-11
Impairment of financial assets
Staff costs (note 3)
5
2005
3
-20
2004
2
-19
2003
2
-19
2001
2
-17
3
2002
2
-6
11
3
5
4
2005
4
1
5
2004
3
1
4
2003
3
3
2002
3
3
2001
1
1
2
2002
2001
-1
-5
-6
-2
-1
-3
2
Note 3: Staff costs
The following items are included within staff costs:
NOKs mn
Salaries and wages
Social security
2006
4
1
5
In 2006 the board of directors and representatives in the parent company received remuneration at a total of NOKs 632.500.
No salary was paid to the managing director. The auditor cost for the year was NOKs 41.000, and in addition an accrual
for audit work related to capital increases was made at NOKs 75.000. For subsidiaries fee to auditors related to the
financial statements was agreed at NOKs 300.000.
Note 4: Finance Costs
NOKs mn
Interest income
Interest expense
Foreign exchange differences
2006
2005
4
5
9
-3
-3
2004
5
-6
-7
-8
2003
8
-5
-13
-10
Note 5: Income Tax expense
There is no tax charge for the year in view of the loss incurred and brought forward tax losses in the
of the group.
Note 6. Property, lant and quipment
13
Green Resources
Note 6. Property, Pllant and Eq
quipment
Fixed assets schedule as at 31/12/2006
Buildings
Cost
Motor vehicles
NOKS m
NOKS m
At start of year
Additions
Transfer
Revaluation
Disposal
Exchange differences
5
1
At end of year
7
5
Depreciation
At start of year
Charge for year
1
1
4
At end of year
2
Net book amount
At 31 December 2005
At start of year
Additions
Transfer
Revaluation
Disposal
Exchange differences
At end of year
5
Plant and
equipment
NOKS m
NOKS m
NOKS m
Total
NOKS m
1
1
23
1
10
1
1
24
4
1
1
9
3
4
5
1
12
5
1
5
6
1
1
10
5
2
11
1
1
11
n
Furniture and Capital work in
office equipm
progress
ment
-1
1
1
1
12
1
24
5
-1
10
-1
-2
-1
-2
16
7
11
2
36
Depreciation
At start of year
Charge for year
1
4
1
5
1
1
11
2
At end of year
1
5
6
1
13
15
2
5
1
23
Net book amount
At 31 December 2006
The Company's buildings were revalued at 31 December 2006 by an independent professional qualified valuer, Nyange
and Associates Limited. Valuations were based on current prices in an active market for all properties.
Note 7: Biological Assets
14
Green Resources
Note 7: Biological Assets
NOKs mn
At start of year
Increases due to purchases
Gains arising from changes in fair value
Exchange difference
Carrying amount
2006
83
2
12
-8
2005
61
2
20
2004
45
2
19
-4
2003
30
2
19
-6
2002
31
2
6
-9
2001
13
2
17
-1
89
83
62
45
30
31
2003
2
1
1
4
2002
2
2001
2
2
2
2003
2
1
2002
1
1
2001
The biological assets comprise trees that are being grown for commercial purposes. As at 31 December 2006,
the forest was still under the development stage (immature forest).
The trees are carried at fair value less estimated point-of-sale costs. The fair values of the trees were based on the
discounted net present values of the expected net cash flows from those assets, discounted at a current market
determined pre-tax-rate. In determining the fair values of the forest, the directors have made certain assumptions
about the yields and market prices of the trees in future years, and the costs of running the forestry operations.
The key assumptions are as follows:
Climatic conditions will remain the same.
The average remaining years to maturity of the species grown that include eucalyptus, pine and others
are 11 years, 21 years and 16 years respectively.
Prices of timber, that have been determined with reference to the current local market price and world market prices, are
expected to increase at an average rate of 3 to 4% per annum.
Annual input c ost inflation will be at 4%.
The disc ount rate (in dollar terms) applied to the expected net cash flow was 12%.
hares
Note 8: Investment in Sh
NOKs mn
TreeFarms Mozambique
Florestal de Nampula
Florestal de cabo Delgado
2006
2005
Total
The above mentioned companies are dormant and therefore not consolidated.
Note 9: Inventory
NOKs mn
Finished goods
Consumables
Goods in transit
Total
Note 10: Recievables and Prepayments
NOKs mn
Trade receivables
Prepayments and other receivables
Receivables from related parties (note 15(ii))
VAT / Withholding tax refundable
Total
2006
2
5
3
10
2005
2
2
4
5
2006
3
4
2005
2
2004
3
7
2
2004
4
1
3
3
2
6
2
8
Note 11: Share Capital
15
Note 10: Recievables and Prepayments
Green Resources
Note 11: Share Capital
The movement in share capital was as follows:
NOKs mn
Balance at 1 January
Issue of shares
Capital reduction
Balance at 31 December
2006
49
19
2005
49
2004
44
5
68
49
49
2003
35
21
-12
44
2002
22
13
2001
22
35
22
The authorised number of ordinary shares is 1,040,063 (2005:744,584) with a par value of NOKS 66 per share.
All issued shares are fully paid. Resoluted, not registered share issues at NOKs 10 mn including share including
share premium (2005: NOKs 9 mn) is presented as shareholder equity as at year end. The share issues were
registered with the Company's Registry in March 2007.
The movement in the number of issued shares is as follows;
Number of Shares
Balance at 1 January
Issue of shares
Balance at 31 December
2006
744 584
295 479
2005
744 584
2004
660 481
84 103
2003
347 157
313 324
2002
219 157
128 000
2001
219 157
1 040 063
744 584
744 584
660 481
347 157
219 157
2006
2005
2004
2003
2002
2001
2
6
3
6
13
6
7
15
1
5
15
2
6
27
Note 12: Borrowing
The borrowings are made up of the following:
NOKs mn
Non-current
Mads Asprem
Retiro AS
Macama Investment AS
Loan from Gronnskag/Saether
NorFund Loan – non current portion
Current
NorFund Loan – current portion
Macama Invest AS
Verbena Investment
Retiro AS
Total Borrowing
3
7
1
6
6
11
7
5
2
4
5
16
13
13
7
6
4
3
13
20
6
4
3
22
24
27
21
19
30
One of the loans from Norfund, originally at NOKs 8,5 mn and with remaining balance at NOKs 7,4 mn, was advanced to
one of the subsidiaries, Sao Hill Industuries Limited. The loan is denominated in Norwegian Kroner and is secured
against all the property, plant and equipment of Sao Hill Industries Limited as well as AS TreeFarm's shares in the
Company. The loan carries interest at 7.5% per annum and the company shall make annual repayment of NOKs
500,000 from January 2007. The second loan from Norfund, originally at NOKs 4 mn and with remaining balance at
NOKs 3,7 mn carries interest at 8% per annum. Both Norfund loans expire 30 June 2008.
The loan from Retiro Investment carries an interest of 12% p.a. The balance is payable fully by 31 July 2007.
The loan from Macama Investments carries an interest of 12% p.a. The balance is payable fully by 31 July 2007.
The loan from Verbena Investment carries an interest of 12% p.a. The balance is payable fully by 31 July 2007.
Note 13: Deferred Income Tax
16
Green Resources
Note 13: Deferred Income Tax
Deferred income tax is calculated using the inactced tax rate of 30% (2005:30%)
At start of the year
Charge to profit and loss accounnt
At end of the year
2006
NOKS m
12
1
13
2005
NOKS m
2004
NOKS m
12
12
Deferred income tax assets and liabilities and deferred income tax credit in the profit and loss account are attributable
to the following items:
01-01-06
Charged/
31-12-06
credited
to profit and loss
Deferred income tax liabilities
Fair Value gains
22
4
26
Accelerated tax depreciation
22
4
26
Deferred income tax assets
Unrealised exchange losses
Trading loss
Deferred income tax liability
Note 14: Trade and other payables
NOKs mn
Trade payables
Amounts due to related parties (note 14 (i))
Accrued expenses
Other payables
Current portion - borrowings
Total
-1
-9
-10
-3
-3
-1
-12
-13
12
1
13
2006
4
2005
4
1
5
13
2003
3
1
1
1
2002
3
1
4
16
2004
4
1
1
5
2
4
3
25
23
11
6
9
3
2004
2003
2002
2001
1
1
2001
Note 15: Related Party Transactions
The Company is controlled by Mads Asprem and Verbena Investments Holdings Limited. There were no
transactions with related parties during the year. The following are the balances with related party.
(i) Balances due to related parties
NOKs mn
Retiro AS (Tom Vidar Rygh, Chairman)
Mads Asprem - managing director
Vebena Investment Holdings
(ii) Loans to related parties
TreeFarms Mozambique
TreeFarms UK Ltd
Total
2006
5
1
2005
7
3
1
1
2
Chairman of the board, Tom Vidar Rygh receives NOK 75.000 per year for his services as Chairman.
In addition Northcap AS receives NOK 575.000 for other services performed on behalf of the company. Northcap is owned by T. V. Rygh.
The agreement is valid for three years and both amounts have a right of conversion into shares at a price of NOK 12,50.
Note 16: Cash and Cash Equivalents
For the purpose of cash flow statement, the year-end and cash equivalents comprise the following;
NOKs mn
2006
2005
2004
Bank and cash balances
10
5
2
Bank overdraft
-2
-1
Total
8
4
2
Note 17: Incorporation
Note 18: Investment in Subsidiaries
17
Note 16: Cash and Cash Equivalents
Green Resources
Note 17: Incorporation
The Company is incorporated in Norway as a private Company with limited liability.
Note 18: Investment in Subsidiaries
The Group's interest in its subsidiaries, all of which are unlisted and all of which have the same year end
as the company, were as follows;
Country of
Shareincorporation
holding
Sao Hill Industries Limited
Tanzania
96 %
Green Resources Limited
Tanzania
100 %
Busoga Forestry Company Limited
Uganda
100 %
Nortan AS
Norway
100 %
African Green Power Limited
Tanzania
100 %
Sao Hill Energy Limited
Tanzania
100 %
Sao Hill Transport Limited
Tanzania
100 %
Note 19: Shareholders
The company’s had issued 1.040.063 shares at the balance sheet date, distributed among 58 shareholders including:
Mads Asprem, Managing Director
Verbena Investment Holdings Ltd.
Retiro AS
Macama Invest AS
The Resource Group (TRG) AS
Bank of New York, Brussels
Neville Investment Management Ltd.
NewAfrica AS
Rybø AS
Petter P. Wilhelmsen
Shares
346 898
128 757
122 949
72 519
65 742
53 699
49 651
28 484
25 409
23 000
917 108
% holding
33,4%
12,4%
11,8%
7,0%
6,3%
5,2%
4,8%
2,7%
2,4%
2,2%
88,2%
No other shareholders held more than 2% of the shares.
The chairman of the board Tom Vidar Rygh holds 122.949 shares through the company Retiro AS and owns 50% of Rybø AS,
holding a total of 25.409 shares. The managing director Mads Asprem holds 375.382 shares, including 28.484 shares through
the company New Africa AS. Board member Mutuma Marangu holds 128.757 shares through Verbena Investment Holdings Ltd.
Board member Dr. A. B. C.Orjiako holds 49.651 shares through Neville Investment Management Ltd. Board member Kristoffer
Olsen holds 10.000 shares, including 3.400 shares through the company Jotunfjell Partners AS. Board member Odd Ivar Løvhaugen
holds 10.800 shares. Board Member Marius Bøhler is related to Macama Invest AS (75.519 shares) through a significant shareholding.
18
Green Resources
TreeFarms AS
Holding Company Accounts
HOLDING COMPANY ACCOUNTS
Profit and loss account
Balance sheet
NOKs mn
Notes
2006
2005
1
0
1
0
0
0
1
1
2
4
0
0
1
1
-3
-1
Income from investments in subsidiaries and associates
Interest received from group companies
0
Other financial income
0
Other financial expense
-2
Operating results before tax
-5
0
1
0
-2
-2
Operating results
-5
-2
Total assets
Results for the year
-5
-2
Sales
Other operating income
Total operating Income
Raw materials and consumables used
Staff costs
Other operating expenses
Total operating expenses
2
2
Results of operations
Transfers
Other equity
Total
5
1
-5
-5
-2
-2
NOKs mn
Non-current assets
Financial fixed assets
Loans to group companies
Notes
2006
2005
49
53
30
47
Total Fixed assets
102
77
Current assets
Receivables
Other debtors
Subscribed capital called but not paid
0,4
0,5
0,4
-
Total receivables
1
0
Bank deposits, cash in hand, etc 3
6
2
Total current assets
7
3
1
109
80
Equity and liabilities
Paid in capital
Share capital
Share premium
Other paid-in capital
Other equity
5
5
68
13
10
-
49
3
9
4
Total equity
5
91
65
6
6
11
11
6
0
0
6
0
0
0
4
Total current liabilities
12
4
Total liabilities
18
15
109
80
6
Non current liabilities
Other long-term liabilities
Current liabilities
Convertible loans
Trade creditors
Public duties payable
Other short-term liabilities
Total equity and liabilities
Oslo 15. april 2007
Tom Vidar Rygh
Chairman
Mads M. Asprem
CEO
Ambroise Bryant
Chukwueloka Orjiako
Marius Bøhler
Odd Ivar Løvhaugen
Kristoffer Olsen
19
Green Resources
NOTES TO HOLDING COMPANY ACCOUNTS
TreeFarms AS
Notes to the Holiding Company Accounts
Note 1: Accounting principals
The years annual report is set up in accordance to the laws of accounting and in accordance with good accounting
practises and terms.
Note 2: Employees remuneration etc
The Company has per balance day one part-time employee
NOKs mn
Salary for employees
Salary and other expenses
Other salary related expenses
Employee fees
2006
158 775
8 750
38 451
205 976
There has been paid NOK 632,500 as compesation to the board members. The auditor has been paid the amount
of NOK 41,100, and there is an offset of NOK 75,000 covering audit fee not invoiced. There is no obligation to
have service pension system.
Note 3: Bound assets
Of the companies bank deposits, NOK 189,062 are bound for tax purposes.
Note 4: Shareholders
Please see note 19 in Consolidated Accounts
Note 5: Equity
NOKs mn
Share
equity
Share
premium
Reserve
Other
equity
Paid, not
registered
equity
Sum
equity
Equity 01/01/2006
Equity increase 2006, 2,951,479 new shares
49 142 544
19 501 614
-
2 781 989
10 948 352
712 652
4 170 713
4 170 713
8 698 826
1 226 264
-
64 794 072
31 676 230
4 883 365
Equity 31/12/2006
68 644 158
13 017 689
-
9 925 090
91 586 937
The company has a taxable deficit of NOK 19,986,956 giving a tax credit of NOK 5,596,348 which is not in the
current balance account
Note 6: Subsidiaries
TreeFarms AS has through the accounting year been the major shareholder in the following companies:
Sao Hill Industries Ltd, Tanzania
Busoga Forestry Ltd, Uganda
Green Resources Ltd, Tanzania
Nortan AS, Norge
20
96,30 %
100 %
100 %
100 %
Green Resources
AUDITOR’S REPORT
21
Green Resources
BIOLOGICAL ASSET VALUATION
The Biological asset valuation model (BAVM) estimates the net
present value (NPV) of Green Resources plantations in Tanzania
and Uganda on 31 December 2006, to USD 15.8m. The key assumptions are 5 % annual cost and price inflation (4 % in Uganda)
and 12 % discount rate, implying 7-8 % pa real interest rate. The
price assumptions are based on current East African prices with
a small element of export prices. The value of the plantation is
determined by calculating the net present value of the future
cash-flows. The average net value per ha is USD 2,967 per ha.
Caulfield (Footnote; New) showed that return on timber investments were 61% related to biological growth, 33% to timber prices and 6% to land price appreciation. Looking at international
investments, Poyry (see table XX next page), conclude that the
discount rate (WACC) is the most important driver of forest valuation, followed by prices and biological growth, with cost being the
least important factor.
Species
P. patule
P. patula
P. caribaea
P. caribaea
Euc. hybrids
Euc. grandis
& hybrids
Euc. grandis
Ugandan growth assumtions - Pine
Vol per ha
500
400
300
200
100
2
4
6
8
10
12
14
16
18
20
22
Brazil
Swaziland
7
9
45
18
Changes in BAV from 2005 to 2006
In 2006, an area of 960 ha new forest was established in Tanzania
and 240 ha in Uganda, increasing the NPV of 2.5m and 0.7m respectively. The effect of time, that is being one year closer to harvesting is 0.9m in Tanzania and 0.7m in Uganda. The prices of
wood have been lowered in Uganda reflecting a fall in the NFA bid
price from 2005 to 2006, resulting in a reduction of 0.7m in Tanzania and 0.1m in Uganda. The fire assumptions have been adjusted
to reflect the situation in the forest, resulting in increased NPV in
Tanzania and Uganda of 2.3m and 2.8m, respectively. Other adjustments to the model resulted in a lowered NPV of 2.2m and
3.0m in Tanzania and Uganda, more than offsetting the positive
effect of the changes in the fire assumptions.
600
ADE SI14
S. America
Africa
Rotation
length MAI
15-17
19
16
18
17-20 15-20
16
20
7
20-25
Maintenance Costs
When arriving at the NAV of the forest, projected future costs are
deducted from the projected future revenues. The future costs are
represented by the plantation maintenance costs include field
maintenance, land lease, fire protection and roads and administration costs. Total maintenance costs until harvesting amounts to
USD 238 per ha for pine. Eucalyptus needs far less care and is less
prone to fire, hence this specie comes out at only USD 115 per ha.
These costs will continue to fall as the plantation areas grow.
700
0
Contry
Swaziland
Malawi
Fiji
Brazil
Congo
surprising that the growth here is above the mean for both pines
and eucalypts, and MAI is expected to be 15-25 m3/ha/yr and 2545 m3/ha/yr for Pinus caribaea and Eucalyptus ssp. in Uganda .
Growth Assumptions
The volume growth models used in the BAVM is based on published surveys conducted in East Africa . For Uganda the productivity is 6 and 15 % higher than in Tanzania, for pine and eucalyptus
respectively, to reflect the better conditions in Uganda. The model
is supported by Green Resources’ own field data.
0
Region
Africa
Africa
S. Pacific
S. America
Africa
24
TF
A comparison with the Ugandan growth model of Alder, Drichi
and Elungat (ADE) show similar growth trends as Green Resources model up to harvesting age, while the Green Resources
model decrease more rapidly than the ADE model for ages above
harvesting age. We assume maturity of pine and eucalyptus at 21
and 13 years, respectively . For pine small volumes are harvested
as thinnings after 11 and 15 years.
• The harvesting volumes from the first pine thinning have been
removed as it has been assumed that it will not yield any value
net of harvesting costs. Commercial volume of second pine
thinning has been reduced by 50 %. The performance of the
thinning has been reduced from 200 to 100 stems per manday,
increasing the plantation maintenance costs.
• The timing of final harvest of eucalyptus has been increased
from 11 to 13 years, partly because of a wish for more
continuous labour and revenue levels.
• The timber prices in Uganda have been reduced with 2 % from
an average Ush 43.550 in 2005 to Ush 42.630 in 2006.
• It is assumed that the eucalyptus in Mapanda is growing at a
rate of 60 % of the general Tanzanian model, compared to 85%
previously.
• The leased area in Uganda is adjusted to only include the
planted area, the leasing cost have been adjusted to the new
rate of 9.900 Ush .
Mean Annual Increments
The Green Resources’ growth models have a mean annual increment (MAI) of 21 m3/ha/yr for pine and 23 m3/ha/yr for eucalyptus at a rotation length of 21 and 13 respectively. The pine model
show high productivity compared to other areas, but is on the
other hand lower than the published Ugandan model by ADE.
Furthermore, Green Resources’ MAI is higher because of assumed longer rotations, with higher growth rates in later years. MAI
of both pine and eucalyptus varies a lot with different management schemes and rotation lengths and the mean for southern
hemisphere is 15 – 20 m3/ha/yr (pine 17 and euc 21 m3/ha/yr).
The conditions in Tanzania and Uganda are favorable and it is not
Return Drivers for Forest Investments
Wood Flow (biological growth)
Wood Prices
Other Income
Operational Costs
WACC
Impact on Return
1%
* GR's Position
Potential for improvement
GR's Strategy
+ 1.5-2.5%
Low local prices have depressed BAV. Good location
for supplyingfastest growing markets
Introduce new spieces; focus on highest
paying markets
small
Significant carbon offsets
Constant development
- 0.7-1.2%
Low investment increase IRR
Low overhead, planting focused
- 15-20%
Located in high risk areas resultingin high WACC
* Impact generated from 1% increase of the return drivers according to Poyry
Malimbwi, R.E., Mugasha, A.G. and Zahabu, E. 1998. Yield tables for Pinus patula at Sao
Hill Forest Plantations, Southern Tanzania. FORCONSULT report to the Forestry and
Beekeeping Division, Ministry of Natural Resources and Tourism, United Republic of
Tanzania. 41 pp.
Alder, D; Drichi, P; Elungat, D. 2003. Yields of Eucalyptus and Caribbean Pine in
Uganda. Uganda Forest Resources Management and Conservation Programme, Technical report, 52 pp. http://www.bio-met.co.uk/new/pdf/uymdoc.pdf. (21.02.2007.)
22
Diversify operation, reduce risk
Source: Poyry, Green Resources
Conservation Programme, Technical report, 52 pp. http://www.biomet.co.uk/new/pdf/uymdoc.pdf. (21.02.2007.)
The harvest of eucalyptus is to be done in stages from year 11 to 15, where 13 years will
act as the mean.
NFA & SPGS. Plantation guideline no. 5. Dec. 2005.
National Forestry Authority Forest Management Plan for Bunya Forest Reserves for the
period July 2006 – June 2016. Draft.
Green Resources
BUSINESS STRATEGIES
Carbon Offsets
Global warming may be the largest threat to the world’s civilisation. It
is a main mission of Green Resources to fight climate change through
highly efficient afforestation projects that at the same time benefits
the poorest people in the world. Green Resourses aims to be Africa’s
leading provider of carbon offsets.
Africa is a modest emitter of traditional green-house gasses. However, deforestation in Africa and other areas of the world is responsible
for about 20% of the global green-house gas emission. The need for
firewood and charcoal is the main driver behind the deforestation, followed by timber logging and agricultural clearing. Green Resources
afforestation activities create major carbon sinks, while ensuring that
building materials and fire wood can be supplied from renewable
forests.
Highly Efficient Carbon Offsets
For every m3 of growth in the forest, it is estimated that 1 to 1.5 tons of
carbon dioxide consumed, or removed from the atmosphere. It is GR’s
intention to maintain the forests as carbon sinks forever. The forest
will be operated on a sustainable basis, using the raw material for
bio-energy, building materials, paper pulp or other end products.
Thus, the forests will generate renewable products often replacing
non-renewable carbon emitting products.
Social Carbon Offsets
The investments in GR’s carbon offset projects will benefit the local
economies and employees in the areas where the plantations are established. The social benefits are unparalleled compared to most
other carbon offset projects.
Plantations
Green Resources’ objective is to be Africa’s best plantation company
and one of the world is primary employment education and health for
rural villagers major plantation forest companies. The Company will
convert low yielding grass and degraded forest land to grow the highest yielding crops suitable for the land areas under the company’s
management. The main focus is on forestry, but also other long rotation crops. The lack of long term investors in Africa result in little
competition from other investors for long rotation crops and should
enable Green Resources to reap high returns. At the same time,
Green Resources will conserve and expand the natural forest and
other valuable vegetation within its areas of operation, and aim to obtain FSC certification for all its forests. It will reach out to the local
communities to establish village forest schemes, maintaining a strong
focus on a sustainable environment and social development.
Several Types of Forest Plantations
Green Resources objective is to establish the following type of
plantations:
• Energy and pulpwood plantations
• Sawlog plantations for export of sawn timber and processed
products
• Sawlog and transmission pole plantations for the regional market
• High value hardwood sawlog plantations
• Transmission pole plantations for the global market
Large East African Potential in Forestry
Eastern Africa has some of the best conditions in the world for plantation forestry. Long-term, both Mozambique and Tanzania should each
develop a forest sector similar or larger in size to that of South Africa,
New Zealand or Uruguay, and possibly be challenging Chile. This
could position Mozambique and Tanzania among the world’s largest
exporters of plantation forest products after Brazil and Indonesia.
Uganda can build a prosperous forest industry based on domestic sale
and exports to the Great Lakes markets. In South Africa 1.1% of the
land is used for forestry, covering 1.37mn ha of a total of 122mn ha.
The annual value of the forestry sector in South Africa is about
US$500mn, while the ex mill value of the forest products is more than
US$2bn. Green Resources believes Mozambique and Tanzania can
build a larger forestry sector than the South African over the next two
to four decades, based on plantations covering 1.5%-2% of Mozambique’s land area of 80.2 mn (801,590 km2) and Tanzania’s 94.5mn ha of
land. Green Resources expects to continue to be the driving force behind developing the forest industry in Eastern Africa
Agricultural Crops
Where the growing conditions are suitable, Green Resources will allocate a part of the plantation to grow a range of agricultural crops.
There are several reasons for growing agricultural crops:
• Maximizing the financial return on the overall investment
• Adding bio-diversity to the plantation
• Contribute towards fire and decease protection
• Providing food-stuff and other products of benefits to the Company
and its employees
• Creating continuous employment opportunities for the local
community
Value Creation
The value of long rotation plantations are driven by a number of factors:
• Biological growth: Traditionally accounting for the bulk of the value
creation. Growth rates vary widely depending on rainfall, temperature, soil conditions, and a number of other factors. Green
Resources operates in areas with favourable growing conditions.
Growth assumptions, first harvest/rotation
m3/ha
500
450
400
350
300
250
200
150
100
50
0
0
5
Pine
10
Euc.
15
Other
20
25
Year
• Establishment cost: For plantation forestry, the cost of establishing
new plantations is vital for the return on the investment. The costs
differ sharply across the world, driven most importantly by labour
cost, organisational overheads and land acquisition costs.Green
Resources is a global low cost operator in all parts of the value chain.
• Timber/ end market prices: Rising end market prices has over time
added to the value of forests. Following a flat decade, timber prices
started rising again in 2003/04.
• Higher value end-uses: The value of trees differs based on size or
age class or end uses. Clear saw-logs are, for example, much more
valuable than pulpwood. The progression of timber into higher value
uses opens for an exponential increase in the value of the trees as
they grow older. It is an integral part of Green Resources strategy to
ensure downstream value creation that has normally not taken place
in Africa.
Investment Benefits of Forestland
Return on the US NCREIF Timber Index has exceeded 15% pa since it
was started in 1987, compared to 12% pa for S&P 500. US forest investments have had half the volatility of equity investments. The re-
23
Green Resources
turn on forest investments has low correlation with other asset classes, 0.11 when correlated with MSCI global share index and 0.12 when
correlated with the S&P 500 index of US stocks, according to Cambium. Plantation forestry of the type undertaken by Green Resources
is also first class ethical and social investments.
Diversification
Green Resources is selecting afforestation regimes based on the potential profitability of the projects, within the environmental and social
framework that it a key part of the strategy. In order to diversify the
risk of the investments, Green Resources employ the following investment policy:
• Select a number of species and provenances
• Target different end markets with the same species
• Operate in a number of countries
Green Resources’ industrial subsidiary Sao Hill Industries (SHI), aims
to be the leading forest products, building material and transmission
pole company in Eastern Africa. The Company also aims to develop
into a significant exporter of forest products to the Arab Gulf, Indian
Ocean and the Red Sea regions. East Africa has a unique location
close to some of the world’s largest and fastest growing markets for
wood products. It is located closer to China than most of the world’s
large forest regions.
Rational for Industrial Operations
Green Resources is primarily a carbon offset and afforestation company. It is also involved in industrial processing because it aims to:
• Provide the best possible market for and increase the value of the
company’s own plantations
• Generate superior return by applying improved processing
technologies compared to what is commonly used in East Africa
• Capitalize on domestic building materials market, one of the fastest
growing in the world
Building Materials
The core products include sawn timber, joinery products and other
wood based building materials for the rapidly growing Eastern African
markets. Green Resources does also aim to be a leading regional exporter, being ideally located for supplying the Persian Gulf, Red Sea
and Indian Ocean markets.
Green Resources will convert its entire production of sawn timber
from “green” timber into high quality kiln dried timber. This will lead to
better prices in the export markets while also providing the local market with better timber and the local processing industry with excellent
raw materials. Green Resources will manufacture some of the timber
into products where the company will have a natural advantage, for
example pallets, doors and glue-laminated sheets.
Transmission and Building Poles
Green Resources’ objective is to become Africa’s largest transmission
pole producer, manufacturing high quality poles that follow the highest international specifications. The Company has replaced imports
from Europe and South Africa with poles produced within the East
African region. The Company does also aim to become the leading
producer of building and fencing poles.
Increasing the Wood Utilization
Most sawmillers in East Africa have a recovery rate ranging from ¼ to
1/3, with the remaining raw material being wasted. SHI does also
have a low recovery rate and is determined to increase the wood utilisation rate from approx 30% at the moment up to an international
level of 100% by processing the available “wood waste”.
The wood residule is paid for and logged, and about half of it is already
transported to the sawmill. This represents a unique, low cost source
of raw material ready to be utilised by SHI..
Energy Production
Green Resources want to be self-supplied in energy from renewable
resources while at the same time supplying electricity to the local
community. In the medium-term, Green Resources is attempting to
expand the renewable energy business by increasing the supply to the
local market. In the long term, Green Resources expects to be a
major supplier to the growing biofuel industry.
• Ensure that the Company successfully can process wood in the region
80%
Sawn
4%
Forest
73%
43%
Mill
57%
Timber
16%
Long Timber
Short Timber
Planing
28%
27%
Wood
70%
24
72%
Planed
Timber
COMPANY STRENGTHS
Strong Organisation - Green Resources has 12
years of experience in African forestry and carbon
offset business. The Company has built a strong
organisation of local managers and expats with a
proven record of success in carbon offset, planting
and industrial operations. Green Resources is the
only major forestry company in Eastern Africa with
local plantation management.
Large Land Areas
Green Resources has more than 100,000 ha of land, with additional large areas offered by villages. It has a proven record of land
acquisition, typically holding land on 99 years or 50+50 years leases. The Company has a strong organisation and good infrastructure for obtaining large amount of land suitable for afforestation.
credits by SGS, the leading Swiss certification company. The carbon credit revenues are expected to recover a significant part of
the planting costs.
Strong Industrial Growth
There has been strong
growth in revenues from
the industrial operations
since 2005, expecting to
triple revenues by 2007.
Green Resources has
embarked on a major
expansion of the industrial
operations, and expects
to quadruple revenues
again over the next five years.
Africa’s Largest Afforestation Co.
Green Resources has 7,800 ha of forest, and planted more new
forest than any other private company in Africa during the last ten
years. During the first half year 2007, Green Resources has
planted more than 2,300 ha of new forest, probably the largest
area by any African company. Green Resources expects to double
the planting from 2006 to 2007, and again in 2008.
Secure Log Supply
Green Resources Tanzanian sawmilling operations located in the
Southern Highlands is the largest in East Africa. The company
has secure log supply from East Africa’s largest forest which is
located next to the mill. Green Resources is one of East Africa’s
largest treated pole producers and has a small but fast growing
joinery factory.
Best Location for Forestry
Eastern Africa (in particular Mozambique and Tanzania) is probably the best place in the world to establish new forest plantations.
The rainfall is good, costs are low and land is available. Eastern
Africa is closer to the major growth markets, China and India,
than most of its competitors in Latin America and Australasia,
and reaches the Middle East by a short back-haul shipping route.
Fast Growing Local Economies
Green Resources operates in three of Africa’s fastest growing
economies and most stable countries over the last ten years:
Mozambique, Tanzania and Uganda.
Low Cost Carbon Offsets
Green Resources has a unique position as a low cost supplier of
carbon offsets from its afforestation and bio-energy operations.
Green Resources has received certification for voluntary carbon
Low-cost Planting
Green Resources takes a direct and hands-on approach to business and has small overheads. Green Resources planting costs
are among the lowest in the world, and about 10-20% of the costs
in Australia, the country with the largest new plantations aimed at
the Asian export market. The cost of pruning, which produces
high value clear logs, is the lowest in the world.
Environmental and Social Responsibility
Green Resources aim for high environmental, ethical, financial
and social standards. The company has good corporate infrastructure with strong local management.
Strong Shareholders
Green Resources has a broad and deep shareholder base with
strong industry, finance and local knowledge. The shareholders
have long-term dedication to the Company and provide required
equity to finance the growth.
25
Green Resources
OPERATIONAL REVIEW
Green Resources AS Organisational Overview
Green Resources AS
Plantation
Industrial (Sao Hill)
Carbon Offset
Energy
Timber & Processing
Transmission Poles
PLANTATIONS: RECORD LEVEL OF PLANTING
Green Resources has 7,800 ha of standing forest at the end of the first planting season in 2007. The Company
had 5,500 ha of standing forest at the end of 2006, of which 4,100 ha in Tanzania, mostly in the Southern Highlands, and 1,300 ha in Uganda, close to Lake Victoria.
Record Planting
Green Resources aims to
plant 3,000 ha of new forest
in 2007, up from 1,250 ha in
2006. ¾ of this was accomplished during the first
planting. The Company’s
target is to increase the
afforestation to more than
5,000 ha in 2008.
New Developments
Started Harvesting in Uganda
The first eucalyptus was harvested in Uganda at the end of 2006 and
sold as untreated transmission poles to the local utility company at
the start of 2007. 600 ha of forest, or 12 % of the total at the end of
2006, will reach harvesting age within the next five years, contributing
significantly to the Company’s cash flow.
Lower Gains From Biological Assets
Gains from valuation of biological assets fell from NOK 20 mill in 2005
to NOK 12 mill in 2006, partly due to marginally lower planting, but
also due to more conservative assumptions.
2,300 ha Planted So Far in 2007
Since the close of 2006, Green Resources has planted more than
2,300 ha of new forest, a new record adding 45% to the total planted
area. The performance was particularly strong at our oldest plantations in Tanzania’s Southern Highlands. Green Resources is well on
the way to reach its full year target of 3,000 ha new forest plantations
in 2007. Green Resources (Uchindele, Mapanda and Idete) in the Southern Highlands planted 1,775 ha of new forests in 2007. In Uganda,
300 ha of new forest has been planted, in Tanga, Tanzania more than
200 ha of new plantations, and in Niassa, Mozambique 80 ha. In
Uganda and Tanga, the plantations benefit from a second shorter rain
where additional planting will take place. In Mozambique, the rainy
season starts in November/December.
African Tree Planting Leader
Green Resources has probably planted more new forest than any
other private company in Africa during the last decade. The Company
has built a strong and highly efficient plantation organisation in Tanzania and Uganda. Green Resources is well placed to increase the
annual planting over the coming years.
Two New Projects Started in 2006
In 2006, Green Resources started a new plantation, Tanga Forest
Company, in Tanga, Tanzania, and planted 20 ha during the first season. This will be substantially increased in 2007. During 2006, Green
Resources reached an agreement with the Norwegian Afforestation
Group to take over their concession in the Katchung Central Forest
reserve, Central Uganda.
Entering Mozambique in 2007
At the end of 2006, Green
Resources agreed with Fundacao Malonda to develop a large
forest plantation on 60,000 ha
land in Niassa province in
Mozambique. Malonda is a
for-profit Mozambique development foundation for Niassa,
supported extensively by SIDA,
the Swedish development agency. The first planting took place at the
start of 2007. The agreement was formally signed in 2007.
Type of Woods
GR is growing eucalyptus, pine and teak, in addition to an increasing
number of native spices.
Pine
Pine is used for sawn timber, in particular for building material, but
also furniture and packaging material, for wood panels and for paper
pulp. GR’s pine plantations are aimed at high quality pruned pine logs
for the building and furniture market. 69% of the plantation pine is
growing in the US, with the most of the remaining plantations found in
Brazil, Chile, New Zealand, South Africa, Australia and Uruguay.
26
Green Resources
OPERATIONAL REVIEW
Eucalyptus
Eucalyptus is the main raw material for paper making pulp, and increasingly for furniture manufacturing, transmission poles and building material. The main eucalyptus plantation countries are Brazil,
Australia, Chile, Uruguay, Spain and Portugal.
are becoming important in Uchindele and 150 ha of pine were pruned in
2006. The company implement a new fire protection measures, doubling
the widths of the fire brakes and undertaking other preventive measures.
The plantation also benefited from a building program that completely
renewed the staff accommodation, stores and offices of the Company.
Teak
Teak is a high value hardwood planted in many small plantations
around the tropics. GR successfully started planting teak in 2006, and
expect to sharply increase the teak planting over the coming years.
- Mapanda (6,258 ha)
The plantation, part of GRL, covers 2,300 ha in Mufindi district. In 2006,
552 ha of new forest were planted, mostly pine. An increased number of
seedlings were prepared in the nursery for the 2006/07 planting season
when 674 ha of forest was planted during the first months of 2007. The
forest is aimed at carbon offsets and high quality logs for the sawn timber industry, further processed into value added products in Tanzania.
The Company implemented new fire protection measures, doubling the
widths of the fire brakes and undertaking other preventive measures.
The plantation also benefited from a building program that gave the
plantation new staff accommodation, stores and offices of the Company,
sharply improving operating conditions at the plantation.
Market Demand
The consumption of wood in East Africa has increased sharply. Tanzania
is the only country with significant amount of available forest. The harvesting of pine in the main Sao Hill Forest Plantation was around
600,000 m3 in 2006/07 or at the level of the annual allowable cur for the
first time in many years. The supply of eucalyptus is tight compared to
the demand for transmission poles.
The Chinese and Indian demand for wood continues to grow sharply. In
2005, Chinese demand for industrial wood was 318 mill m3, of which
47% was imported. The growth was 8%, of which almost all came from
increased import The Chinese log import amounted to 34 mill m3 in 2006.
Export Timber Price
110
100
90
80
70
60
- Idete (12,000 ha)
The plantation covers almost 700 ha. The first major planting took place
in 2006, with 201 ha planted, mostly eucalyptus. This was increased to
475 ha at the start of 2007. The plantation is part of GRL and located in
Mufindi district. The forest is aimed at carbon offsets and high quality
softwood and hardwood logs for the sawn timber industry.
Idete is located 8 km from the Kiyowela railway station. Idete is located
at an altitude from 1,100m to a highest point of 1,535m. The annual
rainfall is 1,020 mm per year falling from January – May, and the minimum temperature of 15C. Idete has relative fertile land, which will
enable a diverse use of the land, including the growing of agricultural
products.
1988 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06
There has been a rapid growth in investors’ interest in forestry. Forestry
investments reached USD 1 billion by US Institutional Investors in 1990,
according to Forest Investments Associated. By 2006, the number reached USD 15 billion. European investors have recently also started to
show strong interest in forestry.
GR’s Plantations
Mozambique
- Niassa (60,000 ha)
Following an agreement with Fundacao Malonda, 80 ha of pine was
planted at the start of 2007. The objective is to plant more than 700 ha
during the 2007/08 planting season. The land is a mixture of grassland,
degraded forest and miombo wood lands. The exact plantable area is
yet to be determined. The objective is to establish a plantation exceeding
30,000 ha for carbon offsets and high value saw logs.
- Nampula (9,000 ha)
Five villages have offered Green Resources 9,000 ha of land for establishing a eucalyptus plantation targeted for transmission poles for the domestic and export markets, in addition to carbon offsets. The projected
plantation is located in good proximity to Nacala, the second largest port
in Mozambique, positioning the plantation as a leading future producer
of transmission poles for the Indian Ocean area. The first planting is expected to take place at the end of 2007.
Tanzania
Southern Highlands, Tanzania
GR’s Southern Highland plantation land covers more than 50,000 ha in
various stages of the land acquisition process. The three main plantations are Uchindele, Idete and Mapanda/Chogo.
- Uchindele (12,121 ha)
The plantation, part of GRL, covers 2,900 ha in Kilombero district. In
2006, 200 ha of new forest was planted, a disappointing figure. A second
nursery was prepared for the following planting season and 643 ha of
new forest was planted at the start of 2007. The forest is split between
pine and eucalyptus and aimed at carbon offsets and high quality logs for
the sawn timber and transmission pole markets. Silviculture activities
Coastal Area, Tanzania
- Tanga Forest (30,000 ha)
Initial “trial plantings” of almost 100 ha was completed in 2006 and
another 271 ha was planted during the first season in 2007, bringing the
total to 350 ha. The plantation is located in Pangani district during the
first planting season in 2007, spread over teak, eucalyptus, acacia and
jatropha. The objective is to plant again during the second rains in 2007,
before there is a major increase in the planting from 2008 onwards.
The objective of the plantation is to create a forest of high value hardwoods for the sawmilling and transmission pole industry, with the wood
waste used for energy production or wood chip export. In Pangani,
about 9,000 ha land is currently being surveyed, while more than 20,000
ha land has been offered by villages in Handeni district.
Uganda
- Bukaleba Forest Reserve (5,000 ha)
Busoga Forestry Company (BFC) planted 272 ha in 2006, half of it being
eucalyptus grandis and the other half pinus carribaea, at its Bukaleba
plantation. Total planted area is more than 1,400 ha. The tree species
planted during the recent seasons were Pinus carribaea, Eucalyptus
grandis and Maesopsis emnii. BFC operates under a permit issued by
Forestry department with a validity of 49 years. Therefore, the company
operates in a forest reserve called Bukaleeba Forest Reserve about
120km east of the capital city and 40km from the company head offices.
In 2004, BFC joined a program funded by the EU, the Sawlog Grant Production Scheme (SPGS) which included extensive training and grants
covering 50% of the planting costs. BFC successfully completed planting and maintenance of its allocated 500 ha in 2006. During 2006, BFC
won a tender to supply the Uganda Electricity Distribution Company
seasoned poles of sizes from 30ft to 45ft. By the end of 2006, 2,000 poles
were harvested and the first poles were delivered at the start of 2007.
The Company plans to erect its own treatment plant at a newly acquired
2 ha plot in Jinja where the poles can be processed.
.
- Katchung Forest Reserve (3,000 ha)
Norwegian Afforestation Group (NAG) and Green Resources agreed to
co-operate about the development of NAG’s licence in Katchung Central
Forest Reserve, close to Lira in Northern Uganda. By the end of 2006,
about 56ha had been planted of pines and eucalyptus, with a further 100
ha planted during the first rains of 2007, bringing the total to 150 ha.
27
Green Resources
OPERATIONAL REVIEW
CARBON OFFSETS: STRONG GROWTH
Green Resources is an African leader in climate
change and has been a pioneer in developing greenhouse gas offsets, or carbon credits. Green Resources
focuses on afforestation, biofuel and renewable
energy. Our projects contribute significantly to a
sustainable, socio-economic development and environmental conservation in rural areas of Africa.
Direct Sales: Capturing Full Value
Green Resources will source high quality CERs, and VERs for potential buyers interested in sustainable development projects in Africa.
Often only a small part of the carbon offset revenues from African
projects benefits Africa, with project credits typically bought around
US$5/ton, with much of this going to project developers often living
far away from the projects themselves. These credits may then be
sold in the secondary market for 2-4x the original price.
Green Resources’ Carbon Offsets
Highlights of the business:
• Converting grassland to carbon sinks
• Producing energy from renewable resources
• Certified carbon offsets from Eastern Africa
• Developing carbon offset project by a strong Tanzanian based
team
• Sustainable development of rural areas
• Entire carbon offset revenues will be reinvested in Eastern Africa
• At least 10% of revenues will be contributed to community and
environmental conservation projects
Already 400,000 t CO2e Offsets
Green Resources has offset an estimated 400,000 t of CO2 emissions through its operations up until the end of 2006. This makes
the Company a meaningful contributor to the fight against global
warming. Green Resources will experience a strong growth in the
annual volume of carbon credits sequestrated during the coming
years.
Sustainable Development
Green Resources is proud to develop carbon offset projects that
benefit thousands of people living in some of the poorest communities in Africa. Green Resources’ carbon offset projects provide
unparalleled economic and social benefit as well a environmental
gains with at least 10% at all carbon revennes going to local communities and 100% of all carbon offset revennes reinvested into the
countries where they are generated.
Historic Achievements
Green Resources started focusing on Carbon Offsets in 1997, as
one of the first companies in the world. By the end of 2000, Green
Resources was one of four companies worldwide to achieve certified greenhouse gas (GHG or Carbon) Offset project by SGS, the
Swiss certification company. After years of uncertainty, the methodologies around the inclusion of forestry into the Kyoto-mechanism
was agreed and the treaty came into force in 2005.
Projects and Project Development
Green Resources has a dedicated team of professionals headquartered in Dar es Salam working on identification and development of
carbon offsets and CDM projects in Africa. The focus is on afforestation and land use change, renewable electricity and switching
from non-renewable to renewable energy.
Importance of Afforestation
Green Resources has projects in Tanzania and Uganda and are developing projects in Mozambique.
Fighting Climate Change with Forestry
There are several ways of fighting climate change: i) reducing
emissions of greenhouse gases from existing sources, ii) swit
Estimated CDM/JI Demand
CDM by Sector
UNFCCC Approvals
in % of total
2005
2006 1H
2007
HFC
67
34
N20
0
13
Industrial Gasses
67
47
0
Hydro
3
6
Wind
2
5
Biomass
3
3
Other Renewables
2
2
Renewable Energy
10
16
0
Efficiency and Fuel Switch
1
9
Coal Mine Methane
7
7
Landfill Gas
8
5
Animal Waste
2
2
Methane
17
14
0
Agro-Forestry
0
1
Other
5
13
Total
100
100
0
Source: UNFCCC, World Bank
28
Green Resources is developing its own sales channels in order to
capture the full value of the carbon credits. Green Resources will
maximize the share of revenues going to carbon offset and social
programs in Africa, making a unique commitment that all revenues
will be re-invested in Africa.
World
Bank
58
58
Demand
In ,000 tons
1140
EU ETS
EU Governments
450
350
Japan
Ro Europe NZ 200
Total
0
15
5
7
7
14
5
3
100
2140
2000
1000
Source: World Bank
Estimated CDM/JI Supply
Demand
In ,000 tons
900
CDM Contracted
JI Contracted
CDM Potential
JI Potentioal
Total
30
900
75
1905
0
1000
2000
Green Resources
OPERATIONAL REVIEW
The so-called secondary CDM market, involving funds and private
buyers, are expected to be the strongest growing market in 2007,
estimated to reach ¤1bn in value. Green Resources aims to participate in this market. There was on average 122% premium prices in
the emerging secondary vs primary CDM market. Currently, prices
in the secondary CDM market is about 85% of the EU Allowances.
ching to renewable energy. Iii) sequestering CO2 in carbon sinks,
for example forests.
Afforestation provides a highly efficient way of fighting green-house
gases. Within UNFCC’s CDM system, afforestation creates temporary CERs (tCERs) which are value for 30 or 3x20 years. The first
methodology was approved by UNFCCC in December 2006, and
since then several methodologies have been approved.
Africa Lagging; Afforestation a Must
Afforestation carbon credits have highly attractive social and developmental characteristics. It is the only CDM activity that can provide major benefits for rural areas and poor people. It is also the
only major methodology that can provide large benefits for Africa.
Africa has generated only 2% of the CDM carbon offset projects approved by UNFCCC, generating 5% of the potential offsets. Three
oil industry based projects in Nigerial and Equatorial Guinea represents half of the African offsets.
The World Bank Carbon funds have identified the lack of African
CDM projects as a major problem and prioritise investments in
Africa. 16% of the World Bank’s carbon offset projects are in
Africa, a much higher percentage than the projects approved by the
UNFCCC.
Furthermore, the Word Bank prioritise afforestation, representing
22% of the projects and 5% of the carbon offsets, also a much higher share than projects approved by the UNFCCC. The World Bank
focuses on forestry in developing countries because it is the only
effective way to have CDM projects benefit the poorest people in
the world.
Carbon Offset Markets
The volume in the European Emission Trading System tripled from
2005, and continued strong growth is expected in 2007. Within the
EU ETS, the power and heat sector is a net buyer, while other industrial sectors (paper, cement, metals, etc.) are net sellers.
The success of CDM was also confirmed in 2006, and represented
35% of all carbon volume. The supply of CDM is expected to fall in
2007. There was a significant rise in CDM and other ETS prices in
2006, and this is expected to continue in 2007. Volume weighted
CER prices increased from ¤6.70 in 2005 to ¤8.32 in 2006. The Chinese, the largest suppliers of CDM credits, created a a floor for
CDM credits which increased from ¤7/t at the start of 2006 to ¤9/t
at the start of 2007. CER prices went from ¤6/t in 2005 to ¤8/t in
2006, with recent transactions at ¤8-11/t, according to Point Carbon.
CDM Supply 2006
Other 7%
The Buyers and Sellers
China is the dominating seller of carbon offsets, followed by India,
together accounting for 82% of the supply in 2006. The supply of
the lowest cost Chinese projects are slowing down, but there are
large additional projects in the coal industry. The UK has become
the largest buyer of CERs, driven by investment funds and the broker community.
CDM was dominated by supply of HFC-23 (refrigeration gases) and
N2O (ammonia, fertilizer) from China and India. The low cost supply from large industrial processes (HFCs marginal cost of ¤1/ton)
are mostly exhausted. Many of these projects have been controversial because the emission easily can be legislated against.
New CDM supply is likely to come from energy efficiency, gas flaring reduction, fuel switching and coal mine methane projects.
These are more expensive projects.
EU countries limits import of CDM/JI credits to the EU ETS from 10
to 20% dependent on country, or 260 mt/y in total. This will influence the CDM prices, if, as we expect CDM supply will stay below
this limit. The CDM price should therefore approach the EUA price
2008-12 allowances can be transferred into the post-2012 period,
reducing the volatility in the carbon credit prices and making a
2006-type collapse in the EUA price unlikely. The annual industry
leading PointCarbon survey forecast EUA price at ¤17.40/t in 2010,
with CDM price at 15-20% discount
The Regulated Markets
The Kyoto protocol mandates a reduction in carbon emission, and
created the main regulatory market for carbon offset trading.
Countries and companies have Allowances that can be traded, in
Europe this takes place within the EU Environmental Trading System. In addition, the Kyoto mechanisms allows for project development to reduce carbon emission or increase sequestration: Clean
Development Mechanism (CDM, generating CERs) was established
for for developing countries and Joint Implementations (JI, generating AAUs and ERUs respectively) for projects between developed
(currently working for former CIS and Eastern European) countries.
There are also a number of regulatory schemes outside of the
Kyoto protocol. NSW, Australia operates the largest regulatory
scheme outside of the Kyoto framework, but there are also a number of US states starting trading schemes.
The Voluntary Markets
The voluntary market has seen strong growth. Retail Carbon Offsets are typically sold over the Internet: CarbonNeutral Company,
Carbon Clear, Carbon Counter, are examples of companies in this
market. Corporate Offsets, typically sold directly to “neutralize”
the carbon footprint of companies and organisations is probably
experiencing the fastest growth. Chicago Climate Exchange (CCX)
is the largest voluntary market where member companies have
agreed on reduction in carbon.
Africa 3%
Rest of LatAm 6%
Brazil 4%
Rest of Asia 7%
India 12%
China 61%
World Carbon Markets 2006
EU ETS
CDM
Secondary CDM
New South Wales
Other Compliance
Joint Implementation
Voluntary and Retail
Total
MtCO2e
1100
450
25
20
19
16
10
1640
29
Green Resources
OPERATIONAL REVIEW
INDUSTRIAL OPERATIONS:
TIMBER, POLES AND MANUFACTURING
The industrial operations, consisting of the sawn
timber, transmission poles and manufacturing businesses generated US$4.0 mn in revenues in 2006
and US$200,000 in operating profit.
Regional Leader
Sao Hill Industries (SHI), Green Resources’ industrial subsidiary,
is East Africa’s largest sawmill. It has become Tanzania’s largest
pallet manufacturer since these businesses started in 2005, and has
a growing door production business. It has secure supply of mature
logs from the Tanzanian Government owned 42,000 ha Sao Hill Forest Plantation. Green Resources acquired Sao Hill Sawmill in July
2003 and has found a strong new base for profitable growth after a
new management team has been put in place since May 2004.
Market Development
Green Resources’ export prices for pine timber increased by 50%
between the end of 2003 and the end of 2006. Domestic prices remain strong and SHI raised prices 10-15% in 2006. Customers
continues to pay deposits to secure supply. South Africa has gone
from being the main regional net exporter of solid wood products
in 2000 to become a net importer in 2004, and the trade balance is
likely to continue to deteriorate. South African timber has therefore disappeared from surrounding markets. South African buyers
have confirmed that Sao Hill’s pine timber will qualify as graded
structural timber in the South African market, potentially commanding a high premium to thecurrent export prices. Expansion of
two pulp mills in South Africa will increase the fiber demand with
the equivalent to 10% of annual supply within the next three years.
Export Timber Price
USD/m3
160
150
140
130
120
110
100
90
30
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
New Investment; Major Opportunity
Green Resources invested US$3mn in Sao Hill in 2006, with the
benefits expected in 2007 and later years. The investments focused on new transport and handling equipment and working capital, leading to a de-bottlenecking of the operation, and lower
variable costs. During 2006, SHI completely renewed the handling
equipment used for the transmission pole business. SHI is investing in a new state of the art treatment plant, including automated process technology and modern laboratories, enabling the
Company to further enhance its reputation for quality. Sao Hill Industries has historically only utilised 1/3 of the raw material from
its sawn timber production, with the rest being unused, compared
to 100% utilisation in developed countries. This represents an environmental problem, but also a tremendous opportunity for
Green Resources industrial operations. SHI will embark on an
investment program that eventually will lead to full utilisation of
the raw material, providing an expansion into joinery products,
CHP, etc based on raw materials at no additional cost
Transmission Poles
During the last three years, Sao Hill Industries has become a leading East African producer of transmission poles. During 2005
and the beginning of 2006, the business was hampered by very
late payments of a major customer and by higher wood prices.
A new strategy, combined with new investments during 2006 has
put the business on a new and better footing.
It is SHI’s objective to be the quality leader in the East African
transmission pole industry. The Company is utilising a large
Green Resources
OPERATIONAL REVIEW
international certification company for controlling the poles at departure ex mill and at the delivery point. Green Resources believes this is critical to ensure proper quality. SHI has seen positive
effects of the policy by experiencing a rate of rejections well
below the average among the suppliers to East Africa’s largest
pole buyer.
Good Outlook
The outlook for the transmission pole industry is good. Demand
from the East African regional electricity distribution market is
particularly positive. Local demand for sawn timber products is
also brisk. There was a major increase in costs from 1 July 2007
when the cost of wood from the Government’ s forest increased
several times.
ENERGY
Energy is one of the major end markets for wood,
in particular in Africa where charcoal and firewood is the single biggest use of wood. Wood is
increasingly used for bio energy in the developing
world and is likely to become the lowest cost raw
material for biofuels. Green Resources has a
small bio energy operation, and it is a high priority for the company to expand this activity.
Combined Heat-Power Plant
Sao Hill Industries (SHI) has a boiler producing 13 tons steam at
32 bar. The boiler has the capacity to consume approximately
half of the waste wood created at SHI. The steam from the boiler is used for drying timber. Green Resources has approved an
investment in a large expansion of the kiln drying capacity.
The steam from the boiler was originally also intended for the
use in producing electricity. However, a second hand 0.8MW
steam engine installed prior to Green Resources take over of
Sao Hill never operated properly and has been condemned.
Green Resources has approved an investment of US$1.5 mn to
upgrading the boiler and install a new 1.5MW steam turbine and
generator, pending approval of the project as a CDM carbon offset project.
Charcoal Production
In 2006, SHI started experimenting with production of charcoal
from eucalyptus waste. Production of charcoal from natural forest is probably the main source of de-forestation in East Africa.
There is a large eucalyptus based charcoal industry in Brazil.
Producing charcoal from sustainably managed eucalyptus plantations will have significant positive environmental benefits.
Green Resources aims to develop an experimental industrial
charcoal production, the first of its kind in East Africa.
Biofuel from Wood
The EU targets biofuel to account for 5.75% of total vehicle
energy consumption by 2010 and 10% by 2020. In 2006, diesel
reached for the first time more than half of European fuel consumption. Second and third generation biofuel plants will be
based on a wide range of feedstock, with wood most likely being
the most energy efficient feedstock. Green Resources believes
these plants can be technologically ready by the time Green Resources’ forest matures from 2015 onwards. With strategically
located forest plantations, Green Resources aim to be a leading
supplier of feedstock to the global biofuel industry.
31
Green Resources
EMPLOYEES &
ORGANISATION
Green Resources employed close to 1,500 people at
the end of 2006. About 2/3 of these were working in
the plantation companies and 1/3 in the industrial
operation, Sao Hill Industries. The Company’s headquarter is split between Dar es Salam, Tanzania and
Oslo, Norway.
A Highly Skilled Organisation
Green Resources puts significant emphasis on building the
capacity of its management and workforce. The Company has put
in place a modern, meritocratic corporate structure with a flat
organisation. Green Resources is a “high tech” company, It has
received certification by SGS for its carbon-offset projects, a significant achievement performed by the Company’s Tanzanian management. We believe Green Resources might be the only African
plantation company actively engaged in the carbon offset business.
Green Resources is one of the first companies in the region to
apply IRFS accounting and it has an advanced GIS operation.
Green Resources has become the largest exporter of wood
products from Tanzania.
Working Environment
Green Resources’ subsidiaries made significant efforts to improve
the working environment for our staff. This is a continuous process. GRL, the Company’s Southern Highland plantation company
in Tanzania, replaced and sharply expanded the living quarters,
offices and security installations in 2006 . New fire fighting equipment was successfully introduced throughout the organization and
significant amounts of additional equipment will be introduced
ahead of the dry season in 2007.
New safety equipment was also introduced throughout the industrial organization. It is a constant effort to ensure proper use of
the new equipment, and additional and improved equipment is
required in certain functions.
In Tanzania, the Company conducted seminars on general health
and AIDS prevention in all the villages as a means of creating
awareness on better health for workers. The Company continues
to provide free condoms to employees in all of the villages surrounding GRLs plantations.
During 2006, the company experienced a traffic accident that lead
to the unfortunate death of one employee. There were also two
accidents in the sawmill that lead to three fingers being lost. Two
other accidents lead to shorter hospitalisation, but the employees
recovered.
Equal Opportunities
Green Resources is promoting equality among its employees independent of gender, ethnic and religious background. The industry
in which it operates has traditionally been one dominated by men.
Green Resources is actively seeking to increase the number of
women among its staff and practice a positive discrimination policy
in the graduate trainee program. More than ¼ of the Company’s
management is women.
32
New Staff Benefits
During 2006, Green Resources introduced several new benefits for
its employees in Tanzania. The company put in place a health insurance programs, giving the employees and their families of SHI and
GRL free access to the District Hospital. A new accident insurance
program was also introduced. Green Resources also ensured that
the central Labour Union should provide assistance to form a local
Union at SHI.
Green Resources has also refinanced the local savings and credit
co-operative (Saccos) which had been dormant for several years.
Green Resources provided new equity to the Saccos, paid for the
membership dues and provided management support. Since 2002,
Green Resources’ Tanzanian subsidiaries have increased the minimum wage by 16% pa, or more than twice the rate of inflation.
Hiring New Managers
Leonor Cardoso was hired as country manager for Mozambique,
leading the effort to establish plantations in Mozambique. During
2006, four new Plantation Managers were hired, doubling the
number of plantation managers employed by Green Resources,
including Jacob Mushi at Lindi Forests, Nuhu Swalehe at Tanga
Forests, Gracindo Sayal to manage the new plantation in Niassa
and Alfred Macapili in Katchung, Uganda. The management at Sao
Hill Industries was strengthened with Svein Mathisen as Sawmill
Manager. Jannicke Koch-Hagen was appointed Finance Manager
at the end of 2006 and as Finance Director from 1 August 2007.
Jorgen Skaug is retiring after six years as the Company’s Chief
Accountant and we thank him for his contribution to the Company.
Graduate Training
At the end of 2006, four agricultural graduates from Mozambique
were selected for six months of training in forestry operations at
Green Resources subsidiaries in Tanzania. Green Resources has
expanded the exchange programs in 2007. During 2006, Green
Resources developed a Graduate Training Program which combines on the job training with external training and exams.
New Offices in Dar and Jinja
In 2007, Busoga Forest Companies, Uganda, moved out of its office
for the last 10 years to a much larger office in a separate building.
In Tanzania, Green Resources administrative office in Dar es Salam
moved from the sales yard into new offices. During the start of
2007, Green Resources has upgraded computer hardware and
installed new servers and computer networks at all its offices.
Green Resources Personel
Sao Hill
Green Lindi/
Total
At end of 2006
Industries Resources Tanga Tanzania
Senior Managers
18
15
2
35
Junior Managers
11
11
Permanent Employees
222
46
1
269
Total Employees
240
72
3
315
Casual Workers
312
500
40
852
Total Personnel
552
572
43
1167
Women in Snr. Mgt
1
5
0
6
Busoga
Forestry Other
6
7
5
32
43
7
263
306
7
4
3
Total
48
16
301
365
1,115
1,480
13
Green Resources
33
Green Resources
Offset 400,000 t CO2e
School Plantation Created With GR Seedlings
Green Resources is a leading company in the fight against climate
change. Green Resources produced more than 400,000 t CO2e by
the end of 2006.Equally important, by supplying plantation forests
for building material, firewood and charcoal, the pressure on logging natural forest is reduced and, therefore, the process of deforestation is slowed down. Efficiently operated plantation forests that
increase the local supply of wood are probably the most efficient
way to protect the natural forests.
Sao Hill Industries (SHI) is buying logs from local plantation forests
established by dozens of farmers, schools, missionaries, private
Planting 10x More Trees Than Harvesting
In recent years, Green Resources has planted ten times as many
trees as it has harvested. Green Resources is committed to continue to plant at lest 10 times more trees than the Company is harvesting over the next decade. While logging for charcoal and
clearing for agriculture are the main forces behind deforestation in
Africa, industrial logging is also playing a major role. Green Resources is committed to sustainably managed forest and is seeking
FSC certification.
Village Afforestation
In Tanzania, more than 60 schools, organisations and invididuals
have established their own forests on the basis of seedlings provided by Green Resources. The company provided 250,000 seedlings
to villagers, schools and other organisations. during the last planting season.
34
companies and Government organisations in Iringa, Mufindi and
Njombe districts. Thus, a wide group of people within the community benefits from Green Resources growing industrial operations.
This provides an important impetus for the local community to expand its own forests plantations, and is a policy Green Resources
will follow in all its operations across Africa.
Green Resources
Conserving Natural Habitats
Areas of indigenous trees in GRL’s forests have been mapped and
protected. All river valleys are protected and no tree planting is allowed to take place within 30 meters from the centre of the river
bend. Mapping of the riverine vegetation has been completed and
ecologists have identified all the major species found along the
river bends and in the pockets of indigenous forests found elsewhere in our forests. Permanents sample plots have been established and mapped within the indigenous forests as well as in the
riverine vegetation. These sample plots are monitored yearly for
changes in vegetation composition, growth, diseases, pests and
other parameters.
Restoring Natural Forests
Restoring natural forests increases the bio-diversity of Green Resources plantations. This will also increase the biomass of the forest and make an important contribution to absorbing carbon
dioxide from the atmosphere. Restoring natural forests generates
carbon offsets.
Planting Native Trees
Plantation forestry has until recently exclusively focused on acacia, eucalyptus, pine and a little teak. This includes the Government planting and planting financed by the international donor
community. These species will continue to play an important role
in African forestry.
However, Africa is full of high quality and interesting hardwoods.
Indigenous species can generate highly valuable timber for the
furniture and building markets. The Company will actively pursue
opportunities for establishing plantation forests based on native
species.
In Bukalaba, Uganda, Green Resources has successfully established a plantation with Maesopsis emnii producing good timber for
building materials. Cordia Africana has recently been planted in
Bukaleba and Mapanda, Tanzania. At Bukaleba, there is a small
area planted with Terminalia superba.
35
Green Resources
ENVIRONMENTAL AND
SOCIAL OBJECTIVES
ENVIRONMENTAL AND SOCIAL MISSION
Green Resources ASA is a profit oriented plantation, forest
products, carbon offset and renewable energy company that
aims at bringing development to some of the poorest areas in
the world’s economically least developed countries.
Green Resources ASA is growing trees to generate carbon offsets and to manufacture wood products and it generates renewable energy based on various sources, including biomass and
hydro power. All of Green Resources ASA’s carbon offset revenues will be reinvested in new carbon offset activities in the
countries they were generated and at least 10% of the revenues
will go to community development and environmental protection.
Green Resources ASA is committed to the highest international
environmental and occupational health and safety standards
and seeks independent certification for its compliance with such
standards. It conserves natural forest, cultural heritage and
other valuable assets and habitats. Green Resources ASA only
plants on grassland or land that has been abandoned or is degraded. It only harvests plantation forest and replants all harvested areas. Green Resources ASA employs the latest
technologies in terms of Geographic Information Systems and
works preferably with national professionals to build lasting capacity in the countries where it operates. Green Resources ASA
is an equal opportunity company, aiming to establish a gender
balance throughout its company on all levels and is promoting
diversity amongst its staff in terms of ethnic and
religious background.
CORE ENVIRONMENTAL AND SOCIAL VALUES
1.We are a young, dynamic, carbon offset, plantation, forest
products and renewable energy company that aims for
profitable growth and value added for shareholders;
2.We are committed to become the largest and best carbon
offset, plantation, forest product and renewable energy
company in East Africa;
3.We aspire to be the preferred employer in our industry, as
well as the preferred partner for the local communities and
our customers.
4.We respect and protect the environment and foster the social
improvement and well-being of our people and the rural
communities we work with;
5.We want to bring development to some of the poorest areas
in the world’s least developed countries;
6.We invest in people and our staff because that is the basis for
our success: employees that perform well, show commitment,
loyalty and integrity will be fostered and rewarded;
7.We have zero tolerance towards discrimination, poor working
conditions and work-related accidents within the company
and corruption;
8. We are committed to protecting the natural environment and
creating a socially responsible organisation and therefore, we
are committed to sustainable forest management principles,
including those of the Forest Stewardship Council;
9. We want our operations to contribute to mitigating climate
change and assist industrialised countries to meet their
emission reduction commitments under the United Nation’s
Framework Convention on Climate Change, and,
10. We want to contribute to local, regional and national
sustainable development objectives, in accordance with
national legislation and relevant international treaties and
other requirements to which the organisation subscribes
(e.g. ISO 14001).
36
Green Resources
COMMUNITY AND
SOCIAL DEVELOPMENT
Green Resources supports socio-economic development and poverty alleviation in rural areas by creating
employment, infrastructure development, schools,
health and other community development. Most of our
projects are village based and all take place in close
co-operation with the local community. Often, the
villages are providing are labour input, while Green
Resources is making the material purchases. Many
of our employees spend considerable time on the
community projects, ensuring that the funds are
spent effectively and properly completed.
Community Programs
Primary Schools
Green Resources has assisted in building and improving nine primary
schools in Tanzania. The largest on-going project is a new primary
school in Idete village. Green Resources has previously built six new
classrooms for the Ihufu primary school (picture below), more than
doubling the number of classrooms, and allowing each form to have
its own class room.
Seedling Program
GR is also training villagers in establishing their own plantations with
best forest management practices.
Receiving Awards
Pangani District Award
In May 2007, Tanga Forests Ltd won a price for its contribution to the
economic development in Pangani District. Tanga Regional Authority
had appointed the Business Times Ltd (BTL) to select the top five
companies and organizations in the district.
All major companies and organisations in the District participated,
and Tanga Forest Ltd was one of two private companies to be awarded
a price, and the received the only award in the categories of economic
and environmental development. The award was in recognition of the
size of the project, trees planted, employment and social services to
surrounding communities.
Secondary Schools
Green Resources has assisted in building five secondary schools in
Tanzania. The support ranges from completely financing all materials
required for new schools to assistance for expansion and maintenance of existing schools. The largest on-going project is the construction of a new secondary school in Kilombero where Green
Resources provide for all external financing, including material,
transport and project management.
On 15 March 2007, 80 pupils were able to start education at the new
Kiwalala secondary school, Lindi District, as a result of Green Resources’ first Southern Tanzanian building program. In the picture
below, Jacob Mushi, Forest Manager of Lindi Forest Ltd, is inspecting
the school together with the Divisional Secretary before the investment started. Kiwalala is the only secondary school in the ward, receiving children from six villages.
MUET Environmental Trust Award
Mufindi Environmental Trust, a leading NGO in the Southern Highlands, awarded Green Resources the price for the most important environmental contribution to Mufindi District in at the start of 2007.
Green Resources was praised for planting 3 million new trees in 2007.
This is believed to be an all time record by a private company in Tanzania, or indeed East Africa
Employment
Resources is frequently the only private employer in the villages
where it operates, and the Company provides the only source of cash
income for many subsistence farmers. There has been significant development in the villages where Green Resources is operating, with
roofs covered by corrugated iron sheets, bicycles and radios being the
most visible effects. Increased school attendance is an important
long term effect.
37
Green Resources
Health Care
Green Resources provided building material and labour for the
construction of Lugoda Lutari Dispensary during 2005 and 2006
(see picture above).
In 2005, GRL constructed 25 beehives for an experiment for the
use of the workers and villages. In Uchindele, bees occupied 10
hives and the first honey was harvested in 2006, a small but encouraging start.
Green Resources largest project in 2005 was the provision of
medical equipment to Kilombero and Mufindi Districts. The
equipment included a military hospital donated by the Norwegian
Army which was identified, sorted, packed and transported by
Green Resources, together with additional equipment purchased
by Green Resources. The equipment, which included 120 hospital
beds, an operating theatre and dental surgeries (see below), was
distributed to the two District hospitals and a number of health
stations in co-operation with the District Medical officers of
Kilombero and Mufindi.
The Kilombero beekeeping officer organized a program for the
beekeeping associations in Masagati, handing out 46 new style
bee hives for free to the associations. Another 54 beehives have
been constructed and will be placed out in 2007.
Building Roads and Bridges
In the Southern Highlands, Green Resources has built and/or are
regularly maintaining more than 100 km of village and district
road. In addition, the Company has large amounts of forest roads
that from time to time also are used by the local villages.
In Mapanda, Green Resources constructed bridges over several
small rivers, including Kimbwi and Nosa, close to Mapanda village. The bridges do not cost a lot, but the benefits to the local
community are significant and the bridges are frequently used by
the local villagers.
In response to a request from the Masagati villages, GRL purchased 2,500 kg of their honey in 2006 which will be sold onwards on
a non-profit basis. The Masagati Honey comes from the miombo
woodlands and is a delicious, first class honey.
Mbao Savings Society
The Mbao Savings and Credit Co-operative Society (SACCOS), the
SACCOS for the employees of Sao Hill Industries, was restarted
during the autumn of 2006 on the initiative and capital injection by
Green Resources. A SACCOS is a savings bank and the backbone of Tanzanian micro-finance. Typically, the SACCOS provide
financing for the members to purchase plots, farm implements,
seeds and fertilizer, for home industries and trading operations
and as a lender of last resort.
Beekeeping Project
Beekeeping and forestry go hand in hand. Green Resources encourages the local community to get increased economic benefits
from the forest, both the miombo woodland and the plantation
forests that the Company creates.
In 2006, the district bee-keeping officer in Kilombero district assisted Sao Hill Industries in designing a new top-bar hive. This bee
hive is significantly more productive than the traditional beehives. The beehives represent a new value added product for
Sao Hill Industries, and will primarily be sold in the domestic
market.
38
The history of Mbao Saccos goes back to 1980’s when it was performing well, but became dormant in 2001 after a period of mismanagement. After seminars for employees the members
elected a new Board and the number of members increased from
41 in 2006 to 141 by end of March 2007. The loans to members
was restarted and the oustanding balance increased seven times.
Record Wood Roof for Mufindi Hall
During 2006 and 2007 CCM is building a new social hall for Mufindi District. Sao Hill Industries and GRL were requested to construct the roof for the new building. The 14 m roof span is the
largest wooden roof ever built by SHI, and represents an innovation in the use of local, renewable building materials.
Green Resources
CREATING GROWTH,
EXPORTS AND TAX REVENUES
The forestry industry in Tanzania’s Southern Highlands is a driving force for the high economic
growth in Mufindi district. Forest planted 20-40 years ago is now the basis for a flourishing
sustainable industry based on a renewable resource. The forest is playing an important part of
the development of the region and the country.
When Green Resources arrived to the Southern Highlands 10
years ago, very little planting had been done in the preceding
10 years. Green Resources re-started the afforestation of the
region. Green Resources Tanzanian and Ugandan forests will
play an important part in plugging the gap in supply and
demand of logs in Eastern Africa over the next twenty years.
Buying Wood from Farmers
Missionaries, schools, government organisations and small
private farmers have ensured that there are more than 100s of
smaller or larger wood lots scattered across the Southern
Highlands. Green Resources is buying timber from a large
number of suppliers, ensuring that the benefits of its production and export of high quality products are flowing back into
the local economy.
Wood has become the most important cash crop in the Southern Highlands and private farmers and organisations are
extending their woodlots.
Green Resources is making an important contribution by giving away 250,000 seedlings to village farmers and schools so
far in 2007.
A Major Tax Payer
Green Resources generated TSh 1,234 million (close to
US$1mn) of public revenues in 2006 in the form of tax, VAT,
royalty, log cess, and local charges for its purchase of forest
from the purchase of forests in the Sao Hill Forest Project.
Generating Exports
The export of transmission poles from Tanzania to Kenya in
2007 is likely to generate revenues equal to half of all Tanzanian export to Kenya in 2005.
Strong growth in the local market is discouraging large exports of the sawn timber and related products at the moment.
However, as Green Resources own forest will be harvested,
large amounts of products will be available for export.
Tax and Duty Rates
In Tanzania and Uganda, corporate and marginal personal tax
is 30%. Losses can be brought forward indefinitely. In Tanzania, were most of our operations are located, there is 10%
withholding tax on dividend and interest payment and 15%
withholding tax on foreign consulting services. In Tanzania,
there is no income tax below TSh 80,000 per month. The tax
rate is 18.5%, 20% and 25% in steps up to TSH 540,000 per
month when the top marginal tax rate kicks in.
Employers and employees contribute the equivalent of 10% of
the gross salaries to the National Social Security Fund and the
employer contributes 6% of salaries as a Skills and Development Levy being paid to the Vocational Educational Training
Authority. Stamp duty is 1%.
A 20% VAT was implemented in Tanzania in 1998, which created an immediate problem for SHI as few of the competitors
paid VAT. However, by 2003, VAT was also being charge on
most of our input factors, most importantly on forest. In
Uganda, there is 18% VAT
Certificate of Incentives
In Tanzania, GRL, SHI and SHT have Certificate of Incentives
from the Tanzania Investment Centre, certificates no. 010174,
no. 020086 and no. 070192, respectively. In Uganda, BFC hold
Investment License no. ASD/254/42101.
The Certificate of Incentives in Tanzania include the right to
import a capital equipment without payment of import duty,
which many vary from 0% (agricultural equipment and computer) to 10-20% for trucks and most processing equipment.
There is also no VAT payment on imports. The Certificate of
Incentives does also give the right to a certain number of working permits for expatriate managers, and help with various
other issues facing a foreign company operating in Tanzania.
Tanzanian Taxes Paid by Green Resources
Tshs mill.
1,400
1,200
1,000
800
600
400
200
0
2003
2004
2005
2006
VAT and duty
Wages Taxes
Land Rent
Goverment Fees
Log LMDA
Log Royality
39
Green Resources
EASTERN AFRICA:
THE ECONOMIES AND POLITICAL S
Strong National Economies
Since 2000, GDP growth has averaged 7.4% in Mozambique and
6.7% in Tanzania, 5.8% in Uganda and 4.7% in Kenya, making
them among the most successful African economies, and Eastern
Africa the fastest growing region of Africa. In 2006, GDP growth
fell a little in Tanzania and Uganda, at 5.7% and 5.1%, respectively, but were flat in Kenya and Mozambique at 5.9% and 7.4%,
respectively.
East Africa: Real GDP Growth
% GDP
14
12
% T-bill Rate
8
35
6
30
4
25
2
20
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Kenya
Tanzania
Uganda
Mozambique
Sources: CBS of Kenya, BoU, WDI, IMF-WEO Database, BoT and Tanzania National
Budget Speech
The economic growth in urban areas of East Africa is significantly
higher than the overall growth. Mafinga, the town located close
to Sao Hill and seen on the picture below, is believed to have experienced 10-15% pa economic growth during the last few years.
Stable Monetary Situation
Falling Exchange Rates
The Tanzanian Shilling has steadily depreciated over the last decade, typically at a rate of 5-10% pa against the USD, but experienced a strengthening in 2005. The Ugandan Shilling fell until
2001, but has been more or less stable against the USD since
then, experiencing periods of appreciation as well as depreciation. The Mozambique metical was also stable for five years following 2001, but depreciated by 20% in 2006.
15
10
5
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Kenya
Kenya
Mozambique
Sudan
Tanzania
Uganda
Zambia
Sourcw: IFS, WEO
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Tanzania TSH/USD
Uganda USH/USD
Source: BoT, BOU, Central Bank of Kenya and Econstats
Mozambique M/US$
Mozambique
Mozambique: New Democracy
After 17 years of civil war after independence in 1975, a peace
agreement was signed in 1992 and the first-multiparty elections
in 1994, and the first multi-party presidential election in 1999. The
last presidential and general elections were held in 2004 in which
FRELIMO’s candidate Armando Guebuza won with 64% of the
vote, with the RENAMO receiving 32%. FRELIMO won 160 seats
in Parliament while a coalition of RENAMO and several small
parties won the remaining 90 seats. The next elections will be
conducted in 2009.
Country Data
Kenya KSH/US$
Uganda
Stable Political Situation
26000
24000
22000
20000
18000
16000
14000
12000
10000
80
60
40
20
0
Tanzania
Source: IFS
Annual Exchange Rate
2000
1500
1000
500
40
Interest Rates
Interest rates have shown a general downward trend in East
Africa for a long period. Since 2005, interest rates have been
rising in Tanzania and in 2006 interest rates did also rise in
Mozambique, reflecting some inflationary pressure.
Interest Rates: Eastern Africa
10
0
Inflation
The inflation moved down to single digit figures at the end of the
1990s and fell down to 4-5 % in Tanzania and Uganda in 2004/05.
Since then, Inflation presume increased, with 6% inflation recorded in both countries in 2006. Mozambique had 13% inflation and
Kenya 14% inflation in 2006.
Pop.
(Mn)
34
20
36
38
30
12
GDP/Head
in US$
681
364
1,037
335
316
922
Area
in km2
582,650
801,590
2,505,810
945,087
236,040
752,615
Pop.
per km2
59
25
14
14
126
16
Tanzania: Africa’s Most Stable country?
Tanzania has possibly been the most peaceful African country
since independence in 1961. CCM was initially the only permitted
party, but the first multi-party election was held in 1995, with
elections held every five years. Like all East African countries,
Tanzania has a strong president, who typically sits for 10 years.
Green Resources
ITUATION
The last election was held in December 2005 with Kikwete elected
new President with 80% of the vote. CCM won 206 of 275 seats
in the Parliament. There has at times been uncertainty around
Zanzibar, a small island off the coast that is of minor importance
for the mainland economy.
In the World Bank’s report “Governance Matters IV”, published in
2005, the countries were ranked into four categories based on
changes in government from 1996 to 2004. There are three key
criteria ranking the countries and Tanzania is the only country
that is significantly improved on all three criteria:
Voice and accountability: 5 countries were significantly improved.
Government effectiveness: 4 countries were significantly improved. Control of corruption: 3 countries were significantly improved
Uganda: New Muti-party System
In Uganda, the National Resistance Movement and President
Museveni have governed the country since 1986 under a “noparty” system. A referendum held in July 2005 opened for multiparty elections in 2006. Museweni obtained 59% of the votes,
adhead of FDC’s Besigyne who got 37% of the votes. In the
parliamentary election, NRM got 191 out of 215 seats. The next
election is in 2011.
Uganda has been a model for economic development, generated
the continent’s highest economic growth for a long period, and
been strongly supported by development aid donors. Donor aid
accounts for 40% of the budget.
Kenya: New Government
The political situation in Kenya changed following the December
2002 general elections when presidency of Daniel Arap Moi stepped down. The opposition party, the National Rainbow Coalition
(NARC) led by Mwai Kibaki, ended 24 years of Kenya African
National Union (KANU) rule. This change was seen as start of
economic and institutional reforms. Mwai Kibaki of (DP) (NARC)
received 62.2% of the votes while the Uhuru Kenyata of (KANU)
received 31.3% of the votes. The National Assembly elections
resulted in the coalition, NARC (LDP, DP, NPK and FORD-Kenya)
obtaining more than 50% of the seats. The next general election
is scheduled for December 2007.
41
Green Resources
COMPANY INFORMATION
GREEN RESOURCES’ SHARES
Green Resources is a Norwegian limited company (AS) with Organisation number 976 879 969. It was established: 26 August 1995
and registered: 23 November 1995.
The Board of Directors (BoD) has proposed to the 2007 AGM that
the Company shall become a public limited company (ASA) and
that the name shall be changed to Green Resources ASA.
Shares Capital
The Company’s issued share capital was per 31 December 2006
NOK 68,644,158 divided into 1,040,063 shares with a nominal
value of NOK 66 per share, all of which is fully paid. The shares
have been issued according to Norwegian law.
The shares are equal in all respects. Each share carries one vote
at the Company’s general meeting and all Shares are freely
transferable.
Share Registration
The shares are registered with VPS under the International Securities Identification Number (ISIN) NO 000 3100208. The registrar
for the shares is DnB NOR ASA.
Shares Issued in 2006 and 2007
Green Resources issued 255,016 new shares in 2006, rising NOK
30mn in new equity. The new shares were issued i) through the
conversion of a six year old convertible bond, ii) through the exercise of all outstanding options issued before 2006, and iii) through
a share issue rising NOK 10 mn.
Lock-up Agreements
There is an agreement among the Directors not to sell shares in
the Company outside the group of Directors for a period of one
year from 1 May 2007.
Shareholder Agreements
The Company and the Directors are unaware of any other agreement between the shareholders.
Dividend Policy
Green Resources is not paying a dividend. The company has significant investment opportunities which are believed to generate
high returns and the company does not expect to pay a dividend
for several years.
Major Shareholders
As of 15 August 2007, the Company had 60 shareholders. The
table below shows the ten largest shareholders.
Largest Shareholders
ASPREM MADS*
32.3%
In February 2007, Green Resources issued 14,670 new shares as
part of a management incentive scheme and as whole or part
payment for shares acquired in subsidiary companies. In June
2007, the company issued 116,667 new shares, rising NOK 70 mn
of cash.
VERBENA INVESTMENT HOLDING LTD
10.3%
Outstanding Share Options and Convertible Loans
There is a convertible loan of NOK 1,300,000 that can be converted into shares at price NOK 250 per share.
Authorization to Issue Shares and Options
The 2007 AGM gage the Board the right to issue 4 mn new shares
with a nominal value of NOK 5 per share for a period of two years
following the AGM, up until 29 June 2009.
Authorization to Purchase Shares
The BoD is proposing to the AGM it should be given the right to
purchase 10% of the Company’s shares at a price of minimum
NOK 10 and maximum NOK 50 per share and for a period of 18
months following the AGM, up until 29 December 2008.
42
Shareholder Policy
Tree planting is a long term undertaking and the Company’s
strategy has been to provide maximum long term return for the
share holders. The Company has not encouraged liquidity in its
shares.
RETIRO AS
9.8%
STOREBRAND LIVSFORSIKRING AS
9.6%
MACAMA INVEST AS
7.1%
THE RESOURCE GROUP (TRG) AS
5.3%
RYBØ AS
4.8%
BANK OF NEW YORK
4.3%
NEVILLE INVESTMENT MANAGEMENT LTD 4.0%
WILHELMSEN PETER PREBEN**
2.4%
* Incl. NewAfrica AS ** incl. Preben Invest AS
Mads Asprem is nominee for nine shareholders from eight countries
owning a total of 62,698 shares in Green Resources.
Green Resources
COMPANY INFORMATION
CORPORATE GOVERNANCE
General Meeting of Shareholders
The Annual General Meeting (AGM) is held annually before the end
of June. The general meeting of shareholders is the Company’s
supreme decision making body. The following items, among others,
are decided by the AGM:
• amendments to the Articles of Associations
• elections of the Board of Directors
• issue of new shares and acquisitions of own shares
• adoption of the accounts
• payment of dividend
• election of the company’s auditors and their fees
The right to attend a general meeting of the shareholders shall apply
to any shareholder who is registered as a shareholder of the company at the day of the AGM.
Board of Directors
The Board of Directors is responsible for the governance of the
company and for the proper organization of its activities in accordance with the legislation and the Articles of Association. The Board
of Directors established the principles of the strategy, organization,
accounting and control of the Company, and appoints the Managing
Director and CEO, who acts in accordance with the orders of the
Board of Directors.
Board Committees
Green Resources has three Board Committees. The Executive Committee is meeting in between Board meetings to discuss matters of
importance to the company, and consists of Tom Vidar Rygh, Mutuma Marangu and Mads Asprem. The Audit Committee consists of
Odd Ivar Lovhaugen and Mutuma Marangu and the Compensation
Committee consists of Kristoffer Olsen and Marius Bohler.
Fees to the Board of Directors
The Directors have been paid an annual fee of NOK 25,000 per year
from 2005, with an additional NOK 5,000 per attended meeting.
The Chairman is paid an annual fee of NOK 75,000 Northcap AS receives NOK 550,000 for other services rendered by the Chairman,
both convertible into Green Resources shares.
A company associated with Mutuma Marangu has initiated and executed certain contracts for the sale of transmission poles, and has
been paid a normal commission for this.
Company Signature and Prokura
The Company is signed by the Chairman and one Director. Prokura
is held by the Chairman.
Managing Director and CEO
The Board of Directors elects a Managing Director and CEO for the
Company. The Managing Director and CEO is responsible for the
day-to-day management of the company’s affairs.
Auditors
The Annual General Meeting elects an auditor to scrutinize the company’s accounts. The AGM elected Pricewaterhouse Coopers to act
as the Company’s Auditor. The fees paid to the auditor in the holding
company was NOK 41,000, in addition to work in connection with
share issues, etc of NOK 75,000. The subsidiaries paid the auditors
NOK 300,000 in relation to the audits and the preparations of the
IRFS accounts.
Directors’ Duties in Subsidiary Companies
The Board Directors of Green Resources’ subsidiaries shall perform
the normal functions of a Board.
1) The Directors of the Green Resources’ subsidiary (the Company)
are elected by the Annual General Meeting (AGM) of the Company for
one year at a time, or according to decisions made by any interim
AGMs. The Directors are compensated according to Green Resources’ rates.
2) The Company is a private profit oriented company. It shall aim at
following the best international environmental and social standards.
The Directors shall work to promote the interest of the Company.
3) The Board of Directors is expected to meet approximately four
times per year.
4) The prime functions of the Directors are:
a) Ensuring that the Company is governed by the policies and objectives formulated and agreed upon by the Board of Green Resources
and that of the Company.
b) Contribute to the growth of the company.
c) Ensuring that the interest of the main stakeholders are taken into
account in the daily operations and long term strategy of the Company.
d) Ensuring that the Company follows all national legislation, including the preparation of an annual report.
e) Appointing the Managing Director (MD) of the Company, to whom
responsibility for the administration of the organization is delegated,
following the recommendation of Green Resources’’ Chief Executive
Officer (CEO). There shall be an annual review of the MD’s performance and regular guidance in his/her work.
f) Agreeing on the Company’s long term plan as proposed by the MD
of the Company and the CEO of Green Resources, and reviewing the
plan once a year, typically during Q3.
g) Agreeing on the Company’s annual budget, as proposed by the
MD of the Company and the CEO of Green Resources, the latest by
15 November of the year prior to the budget year.
h) Controlling that the Company adheres to the approved budget and
that the management follows the policies set out in Green Resources Company Handbook.
i) Approve all loans and significant long term contracts agreed by the
Company as proposed by the MD of the company and the CEO of
Green Resources. The AGM, not the Directors, shall deal with all issues related to the shares of the company.
5) The Directors shall assist in building and enhancing the company’s public image, and representing the company externally as
agreed with the MD of the Company.
6) Directors might from time to time undertake consulting work for
the Company, as requested by the MD and approved by Green Resources. This work shall be conducted according to Green Resources’ rates.
43
Green Resources
COMPANY INFORMATION
GREEN RESOURCES ASA BY-LAWS JUNE 29 2007
§1
The name of the company is Green Resources ASA.
§2
The company’s business address is in Oslo.
§3
The purpose of the company is to invest in financial and productive
assets and to carry out production and consulting activities.
§4
The company’s share capital is NOK 125 009 900, divided in 25 001
980 freely transferable shares of NOK 5 each.
§5
The board of directors is to consist of from 5 to 10 members.
The board is elected for one year at time. The board members may
be reelected. In case of a tie during votes among the members of the
board of directors, the chairman is to have a double vote. The board
of directors is to meet at least once per quarter. A board meeting is
to be summoned with a minimum of 5 days written notice.
§6
The chairman of the board and one member of the board jointly will
sign for the company. The board may issue a limited power to sign,
“prokura”.
§7
The company’s shares are to be registered in VPS (Verdipapirsentralen).
§8
The ordinary general meeting is to be held each year within the end
of the month of June. Summons is to be sent in writing with 2 weeks
notice. The summons is to specify the matters which are to be dealt
with. The general meeting is to be chaired by the chairman of the
board unless another leader of the meeting is elected. At the general
meeting each share has one vote. Shareholders may be represented
by written power of attorney.
§9
At the ordinary general meeting the following matters shall be dealt
with:
1. The annual report of the board of directors.
2. Adoption of profit and loss account and balance sheet.
3. Decision concerning fees for members of the board and the auditor.
4. Use of profits or covering of deficits according to the balance sheet
and payment of dividends.
5. Election of board and auditor if applicable.
6. Other matters which according to law or by-laws are to be dealt
with by the generalmeeting.
§ 10
An extraordinary general meeting is to be held when the board finds
this necessary or one shareholder which represents at least 10% of
the share capital demands it. Summons of an extraordinary general
meeting must be done with at least 8 days notice. At an extraordinary
general meeting only the matters specified in the agenda included in
the summons may be dealt with.
BOARD OF DIRECTORS
Tom Vidar Rygh, Chairman
Chairman since 2006. Born 1958, Norwegian. MSc in Business Administration, Norwegian School of Economics and Business Administration.CEO of Enskilda Securities 2002-04. Member of the
Executive Committee/ Responsible for all Investments Orkla ASA
1988-2001. Financial Analyst/Fund Manager Orkla Ind. 1983-1988.
Has acted as Chairman of Telenor, Findexa, Aktiv Kapital, Oslo Stock
Exchange, Helly Hansen etc. and as Board Member of Storebrand,
Eniro AB, Industrikapital Ltd., Carlsberg Breweries etc.
Mads Asprem, Vice Chairman
Member since 1995, Chairman 2004-6, Vice Chairman since 2006
Born 1961, Danish. BSc in Economics Wharton School, USA, 1983,
MBA, Univ. of Chicago, USA, 1987. First VP, equity analyst and head
of the global forest products and paper research team at Merrill
Lynch 2000-05. Managing Director and head of forest products and
paper global research team of Morgan Stanley 1991-2000. Equity
analyst CSFB 1990-1991. Consultant Monitor Company 1987-89.
Portfolio manager Storebrand 1984-85. Established Green Resources in 1995 and took over as Managing Director in 2006.
Odd Ivar Lovhaugen
Member since 1998. Born 1955, Norwegian. MSc in Forestry, Norwegian University of Agriculture Managing Director of Namsos Trafikklag since 2001. Managing Director of Green Resources 1998 - 2000.
Chief Operating Officer of Statskog 1992-98. Senior Forest District
Officer 1985-1992. Junior District Forest Officer 1981-84. Chairman
Statskog Borregaard skogsdrift 1996-98.
44
Mutuma Marangu
Member since 2003. Born 1961, Kenyan. BA in Economics, Vassar
College, USA, 1984; MPh in Econ & Politics, Cambridge, UK, 1987,
MBA, Wharton School, USA, 1989. Market analyst and commodity
trader, Glencore 1991-2003, commodity trader trainee, Phillip Brothers, 1989-1990, financial analyst, Morgan Stanley, 1984-86. Director
of Shebah Exploration, Allenne, and other companies.
Marius Bohler
Member since 2006. Born 1979, Norwegian. BBA Parson School of
Design, Design and Management. The New School University, New
York 2002-04, BBA Parsons School of Design, Design and Management. The New School University, Paris 2000-02. Project Manager,
Scandinavian Development, Norway 2004 - present.
ABC Orjiako
Member since 2003. Born 1960. Nigerian.Orthopaedic Surgeon.
REBS Memorial Hospital. Chermain and Medical Director. Founder
and Excecutive Chariman of Shebah, Nigeria, an oil production company. 2003 - , Chairman of Ordrec/ATCO Group, Nigeria, an oil trading and exploration company 1991- . MB.B.C.CH/MB.BS Lagos
University Teaching Hospital 1985.
Kristoffer Olsen
Member since 1998. Chairman 1999 -2004. Born 1962
BSc in Economics, Wharton School, USA. MBA, INSEAD, France
Chairman of Jotunfjell Parterns, a private equity and advisory
company. Senior Partner Innovation Consulting 2001-03. Managing
Director Scandinavian Retail Group 1996-98, Managing Director/
Finance Director Voice of Europe, 1992-96. Project Manager/
Associate McKinsey & Co, 1985-92.
Green Resources
COMPANY INFORMATION
BOARD OF DIRECTORS IN SUBSIDIARY COMPANIES
Sao Hill Industries Ltd
Mads Asprem, Chairman
Mutuma Marangu
Maj Gen Luhanga
Mwaniki Ngibuini
Kristoffer Olsen
Sao Hill Transport Ltd
Peter P Willhelmsen, Chairman
Mads Asprem
Godlisten Minja
Mwaniki Ngibuini
Green Resources Ltd
Odd Ivar Lovhaugen
Maj Gen Luhanga
Mutuma Marangu
Roselyn Mariki
Mwaniki Ngibuini
Lindi Forests Ltd
Mwaninki Ngibuini
Prof E Luoga
Tanga Forests Ltd
Prof. S Maliondo, Chairman
Mads Asprem
Jaka Mwambi
Roselyn Mariki
Mwaniki Ngibuini
Busoga Forestry Company
Hon. Aggrey Bagiire
Victoria Bakulumpagi
Jossy Byamah
Dr. John R S Kaboggoza
Mwaniki Ngibuini
Gershom Onyango
Norwegian Afforestation
Group (U)
Karl Solberg, Chairman
Mads Asprem
Jossy Byamah
Alfred Machapili
Winnie F Nakato
Knut Odegaard
Malonda TreeFarms
Leonor Cardoso, Chairman
Mads Asprem
Eurico Cruz
MEMBER OF THE EXCECUTIVE COMMITTEE
Mads Asprem
Managing Director and CEO
CEO from October 2006. See under Directors
Jossy Byamah
MD Busoga Forestry Co
Born in 1945. Ugandan. Joined 1996.
BSc in Forestry from the University of Main,
USA. He was employed by the Ungada
Forestry Department from 1971-96, and joined
Busoga Forestry Company as managing
director in 1996.
Jannicke Koch-Hagen
Finance Director
Born 1968. Norwegian. Joined 2006.
MBA, Henley Management College, 1996.
Auditor, Handelshoyskolen BI, 1990. Financial
advisor, Oakfield ANS, 2004-2006. Held a
number of positions in Alpharma AS 19902003, including Director of Business Development, HPI, Director Finance Supply Chain and,
Contoller Supply Chain.
Mwaniki Ngibuini
MD Sao Hill Industries and GRL
Born in 1949. Kenyan. Joined 2003. BSc in
Forestry Mkerere University, Uganda. MSc
Forestry (engineering) from University of Dar es
Salam, Tanzania. Joined 2004. Principal of
Kenya Forestry College 1977-82. Marketing
director for Timsales Ltd 1985 – 1990 and
managing director 1991-98, a company listed
on the Nairobi Stock Exchange and the leading
forest products company in East Africa.
Chairman of Kenya Forest Research Institute.
ADDRESSES
Fridtjof Nansens Plass 5,
0160 OSLO
PO Box 469
1373 Asker, Norway
8/11 St John’s Lane
London, EC1M 4BF
United Kingdom
T: +44 207 250 1416,
F: +44 207 250 1419
www.greenresources.no
www.treefarms.no
KENYA
PO Box 826 00621,
Warwick Centre, AS4,
United Nations Avenue
Block 91/407, Gigiri, Nairobi
T: +254 20 712 6906,
F: +254 20 712 4035
MOZAMBIQUE
Av. Eduardo Mondlane, 326
Piso 3 – Sala 7
Nampula, Mozambique
m: +258 825 530 716,
[email protected]
TANZANIA
Sao Hill
PO Box 108, Mafinga
T: +255 784 492 557
Mwalimu House
PO Box 4730, Dar es Salaam
T: +255 784 492 556
UGANDA
Busoga Forests
9b Kyaggwe Avenue
PO Box 1900, Jinja
+256 4312 1835,
[email protected]
SAO HILL TIMBER MERCHANTS
Dar es Salam
P.O.Box 4730, Dar es Salaam,
+255 754 284 808,
[email protected]
Dodoma
PO Box 2773,Dodoma
+255 784 760 942,
[email protected]
Morogoro
PO Box 1319, Morogoro.
+255 754 023 305;
[email protected]
Sao Hill
PO Box 108, Mafinga
+255 754 034 368;
[email protected]
45

Annual - Green Resources

Transcription

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