Precious Woods Holding Ltd.

EANS-Adhoc: Implementation Of Turnaround Measures As Planned
Half-Year Report of the Precious Woods Group as at 30 June 2011


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  ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide
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Company Information/Sustainable management and use of tropical forests and
plantations

15.09.2011

Zug/Zurich, 15 September 2011 - The Precious Woods Group succeeded in further
improving operating performance in the business segments in the first half of
2011, and is confident of being able to implement the turnaround measures as
planned during the current financial year. In view of the divestment plan the
Precious Woods Central America segment has been treated as a "discontinued
operation" since 2011. Therefore, a direct comparison with the previous year is
only possible if the figures for 2010 are reclassified accordingly. Compared to
the first half of 2010, EBITDA is slightly below the prior-year level, with the
CHF/USD exchange rate effect and exceptional costs at the holding level having
prevented any improvement. Liquidity for the seasonally more difficult first
half of the year was secured by means of convertible loans with a nominal value
of CHF 5.5 million.

New hardwood sawmill commissioned in Gabon 
Precious Woods successfully commissioned a new hardwood sawmill in Gabon on 1
July 2011. Market demand, and hence prices, increased both for local trade in
logs and export trade in sawn wood, helping to almost completely offset the
losses suffered since the introduction of the log export ban in 2010. Earnings
are set to increase further via ongoing improvements in productivity at the
sawmill and the moulding plant. The overall result in Gabon was affected by
logistical problems caused by war conflicts in Côte d´Ivoire, which is why the
financial results for the first half-year were slightly below expectations.
Concrete improvements are anticipated for the second half thanks to management
changes and process optimization in concession areas.

Process optimizations in Central America
Precious Woods Central America carried out various process optimizations in the
first half of 2011, and is confident of meeting expectations for 2011. The sale
of assets in Central America approved by the Annual General Meeting is well
advanced, and the capital released by the sale will be used primarily to reduce
debt, strengthen liquidity and finance operating investment plans.

New customers in Brazil
Unusually heavy rainfall in Brazil made forest management significantly more
difficult in the first half of 2011, in particular the transport of logs out of
the forest. This resulted in inventory and production bottlenecks as well as
higher costs. The acquisition of a major new customer for log deliveries will
positively influence the 2011 annual result. The negotiations with a potential
new customer concerning the sale of biomass from forest management are well
advanced. In addition, Precious Woods is in the process of acquiring a
concession area adjacent to existing estates with a view to securing its
medium-term harvest schedule.

Ongoing trend of rising sales prices in Europe
The weather-related problems in Brazil and the resulting late deliveries
influenced the result of Precious Woods Europe for the first half of 2011.
Pending decisions on the Dutch real estate market represent a further
difficulty, the result for the first half of 2011 is therefore slightly below
expectations. The restructuring process has continued, with administrative
personnel costs being reduced further. The ongoing trend of rising sales prices
is also having a positive effect on income, and Precious Woods Europe is
confident about continuing business performance in 2011.

"myclimate" gained as strategic partner for Carbon & Energy
Energy production in Brazil was around 20% below its normal level in the first
half of 2011, due to unusually heavy rainfall and the related drop in wood waste
volumes. The result was impacted further by routine maintenance work being
brought forward. It is anticipated that electricity generation will reach its
planned level in the second half of 2011, and that both sales and operating
results will meet expectations. 
The sale of the Certified Emission Reductions (CERs) generated by the power
station in 2009 had a positive impact on income in the first half of the year.
Due to changes to the calculation method for CERs, revenue generated from the
2010 and 2011 harvests cannot be expected to be recognized until the second
quarter of 2012 at the earliest. In addition, Precious Woods has gained the
Swiss "myclimate" foundation as a renowned strategic partner for future
management of CERs´.

Improving capital market viability 
At the holding level, in order to help secure liquidity, convertible loans with
a nominal value of CHF 5.5 million were issued, the nominal value was reduced
from CHF 50 to CHF 1 per share and conditional capital was increased, thereby
significantly strengthening the capital market viability of Precious Woods. 

Positive outlook for the second half of 2011 thanks to intensive efforts
In view of the operational progress made in the first half of 2011, the Precious
Woods Group is confident that the turnaround measures can be implemented as
planned over the year 2011. The intensive work of the last two years is bearing
fruit, and the success of the measures introduced and implemented in the first
half of the year with a view to increasing sales and operating income will
become apparent in the second half of the year. Under consideration of the
reclassification of the Precious Woods Central America segment as a
"discontinued operation", the original operating result (EBITDA) target for the
2011 financial year is USD 5.3 million. At the beginning of the second half of
2011, Precious Woods estimates that an operating result (EBITDA, excluding
one-offs) of USD 2 million to USD 4 million can be achieved for the 2011
financial year. In comparison with the prior-year period, measures aimed at
structural optimization generated additional costs of around CHF 2.3 million.
These costs will be significantly lower in the second half of the year. The
increased spending on structural optimization at the holding level as mentioned
above and the CHF/USD exchange rate effect will most likely prevent the
achievement of a better operating result (EBITDA). Nevertheless, this operating
result (EBITDA) - again under consideration of the reclassification of the
Precious Woods Central America segment - would still correspond to an
improvement of over USD 11 million on the previous year. 

The complete Half-Year Report 2011 will be available on our website at
www.preciouswoods.com from 7.00 a.m. on 15 September 2011.

end of ad-hoc-announcement
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Precious Woods is one of the world’s leading companies in the sustainable
management and use of tropical forests and plantations. The company’s core
activities include reforestation and sustainable management of tropical forests,
timber processing and the trading of FSC-certified timber products. The
generation of emission rights and electricity from wood waste represent further
integral elements of the company’s business. Shares of Precious Woods Holding
Ltd. have been listed on the SIX Swiss Exchange since March 2002. Additional
information about Precious Woods can be found at www.preciouswoods.com

Further inquiry note:
Precious Woods Holding AG
Brunhilde Mauthe
Head of Group Communications & Marketing Services
Tel. +41 44 245 81 20
Fax +41 44 245 81 12
media@preciouswoods.com

end of announcement                               euro adhoc 
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issuer:      Precious Woods Holding Ltd.
             Baarerstrasse 135
             CH-6301 Zug
phone:        +41 44 245 80 10
FAX:          +41 44 245 80 12
mail:     office@preciouswoods.com
WWW:      http://www.preciouswoods.com
sector:      Forestry & Timber
ISIN:        CH0013283368
indexes:     SPI
stockmarkets: Main Standard: SIX Swiss Exchange 
language:   English
 

 

 



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