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Explanation:
Requirement 1
The criticism from the environmental campaigns for sale of cheap fuel at the Arrfield airports is not a good sign but the prices of the fuel are not set by the Arrfield. In most of the countries the fuel prince are regulated through Oil and Gas regulatory authorities. As the Arrfield airports are providing the facilities to airlines to refill fuel at the airport which is necessary for the flying of the plane on commission bases, it contribute a significant portion of profit of the Arrfield.
The environmental campaigners criticism is on the usage use of fuel which cause carbon emissions. The Govt, of the Norland may set the price of the fuel in Norland and regulate the prices of the fuel in Norland. After the criticism Govt, of Norland may think to not allowing the fuel companies to pass the cheap fuel import to the airlines. This may be hostile of the Arrfiled business. Many airline may choose the Norland for the flight operation due to gaining advantage of cheaper fuel refill.
As the airlines are buying more fuel which makes the plane heavier and burn more fuel which harm to the environment is a great concern. This could lead to legal and environmental litigation and penalties. The reputation risk is also here if corrective actions are not taken by Arrfield.
Requirement 2
As the Airfield also rely heavily on the non-aeronautical revenues to make profits and the it increase from a substantial percentage in 2020 as to the preceding year. The fuel companies operate in Arrfied airports which is intrinsic in the airport business. It will be difficult for the Arrfield to provide the fuel by itself. It is worthwhile that the Arrfieid earning commission without involving the fuel operations.
As the Norland is being liked by the airlines for refueling its plane is good for the Arrfield to make profit. Arrfield earn commission as much as the airline buy fuel from fuel companies. But by decreasing the price of the fuel it is also worth mentioning that the Arrfield commission is also remains at lower side.
There are three elements in the scenario: 1- Higher sale higher commission. 2- Sale at lower price lower commission. 3-Reputational and environmental risk involved.
Requirement 3
The shareholders are major stakeholders of the company. They are key players have high amount of power and high level of interest. The Arrfield must communicate true affairs of the business to its shareholders. If the commercial logic of decision are not obvious then the poor understanding of the affairs may lead to chaos. The managers are representative of the shareholders and should do everything in the best interest of the shareholders. If they will make the decisions which are not logically understandable then, the shareholders may lose their trust in the management.
The shareholders must not be justified to the shareholder if they are not commercially valuable. Whether or not the decisions are profitable these may be communicated to shareholders which represent true picture of the decisions breach of CIMA ethical principles.

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Topic 1, Wodd
Company Background
You are a Senior Finance Manager employed by Wodd.
Wodd is a forestry company that invests in forestry projects and adds value through participation in associated industries, such as the manufacture of paper. The company was formed in 1983, when a large area of forest was sold to a consortium of wealthy individuals who had established a company to undertake the purchase.
Over time, the company grew and the original founders sold their shares. Wodd has been quoted since 2002.
Wodd is based in Marland, a European country whose currency is the M$. Marland is heavily industrialised in the South, but has large uninhabited areas in the North. Its climate is temperate and is well suited to growing timber.
Wodd
Extracts from integrated report for the year ended 30 September 2015
About our report
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).
Wodd's Board is committed to strong corporate governance and leadership as well as transparency in its disclosures. Over the coming years, Wodd will continue to review its reporting approach and routines, to ensure it meets best practice reporting standards, the expectations of its stakeholders and maintains the visibility of how the Group creates sustainable value for the communities it serves.
Strategic report
Wodd operates in the forestry industry. Wodd's activities include forestry management, harvesting timber and project work, such as helping to create amenity woodlands and forests.
Forestry Management
Wodd manages its own forests and also those of its clients. It is accredited by the Forestry Stewardship Council of Marland (FSCM) for managing sustainable forests.
The client management side of the business consists of forestry-related matters such as harvesting trees and replanting. Wodd can sell harvested timber on behalf of clients. Wodd also advises on taxation and grant applications.
Taxation and Grants
There are grants available for planting and fencing forests. Some grants are awarded by the Forestry Authority of Marland and some come from Government.
There are considerable tax benefits from buying and managing a forest in Marland. No income tax is paid when trees are felled and sold. No capital gains tax is paid if the forest is managed and sold in its entirety in the future. Investing in forestry can be extremely tax efficient for wealthy investors. Wodd has considerable expertise in advising on the tax aspects of forestry ownership.
Harvesting
Wodd fells standing timber in its own forests and on behalf of clients. Cutting down trees and replanting can enhance the health of a forest. Letting light penetrate to the forest floor encourages biodiversity. Removing diseased trees can reduce the risk of problems spreading. Gaps between stands of trees can act as firebreaks.
Wood is also a sustainable crop. The material itself has many uses. Mature trees absorb very little carbon dioxide, whereas freshly planted trees will capture carbon dioxide whilst they are growing.
Wodd has invested in the latest heavy logging machinery that can fell trees and strip their branches. This equipment is suited to clearing areas of trees. Individual trees are still cut down manually with chainsaws.
Forestry work is often carried out in remote areas and can be dangerous.
Projects
Wodd does considerable work with the Forestry Authority of Marland. The Forestry Authority offers substantial grants towards planting and for fencing.
Wodd has undertaken projects on behalf of the Forestry Authority of Marland to create amenity forests. Typically, this involves making picnic areas, footpaths and cycle paths in existing forests in order to encourage the public to use them for leisure and enjoyment.
Chairman's statement
In 2014 the company focused on stabilising its results after a number of difficult years in recession. The company has set its sights on achieving long-term stable returns from its activities with steady improvements in key areas to build a strong future for Wodd.
The company continued to strengthen its position in the markets and regions where it operates. Wodd is gaining an international reputation for excellent forest management which it hopes to enhance in the future.
Volatility in the US Dollar against the $M caused us some problems over the last year. It is hoped that the economic uncertainties that led to this will settle down.
The company has built on its core strengths and has now had the management of all its forests accredited.
Wodd has engaged in some new planting projects over the past year which have all gone well. The more stable weather during the winter meant we did not have much wind-blow and did not have to replant many areas.
The increase in house building and construction has seen an increase in demand for timber and Wodd has benefitted from this and from the increase in timber prices due to this demand. This has helped to sustain the profits that were so welcome last year.
The Forestry Authority in Marland commended our efforts to increase the sustainability of our forests. By replanting areas we have harvested with fast-growing Sitka Spruce, we have improved our carbon storage by 3% in 2014. This was greater than expected.
We entered into two projects last year assisting the Forestry Authority to improve the amenity forests in the north of Marland. These projects were completed during the year and have resulted in a 40% increase in the visitors to the forests; the cycle tracks and picnic areas have been especially popular.
The last few years have been challenging for Wodd. However, we believe the long-term fundamentals are now in place for Wodd to deliver its goal of steady long-term returns on its investments which it can pass on for the benefit of its shareholders.
Sustainability
Wodd's investment objective is to invest in assets which can be established and managed on an environmentally and socially sustainable basis.
We have invested in forests and have emphasised sustainability in all aspects of their management, including ensuring that the responsible harvesting of trees does not exceed the ability of the land to regenerate itself once replanted.

Social responsibility
Sustainability is a key factor in all investment decisions. We aim to manage our forests to the highest standards. Our expectation is that Wodd will be a net planter of trees, with the number of living trees increasing over time in all of our forests.
We aim:
*to obtain all existing accreditation for responsible and sustainable forest management and always aim to exceed all industry and regulatory standards.
*for a clear and constructive dialogue with local communities and other stakeholders. We are proud of our achievements and are keen to communicate these as widely as possible.
*to combine sound economic stewardship with our stewardship of natural resources. We provide shareholders with sustainable dividends and capital growth while ensuring that we do not do so at a significant environmental cost.
Our strategy and objectives
Our mission is to be the world leader in sustainable forestry management.
Our long-term strategy continues to be to:
1. Provide stable, long-term returns to our investors.
2. Be the preferred supplier of raw wood-based materials to a broad customer base.
3. Be the leading player in the forest industry regarding environmental and social conduct.
4. Expand existing and develop new large-scale projects.
5. Seek new ways of working to improve the sustainability of forests in the future.
Code of conduct
Stakeholders - We work with all of our stakeholders, ensuring woodlands and forests meet the needs of present and future society.
Respect - We value our colleagues and our stakeholders, valuing diversity and treating everyone with consideration.
Professional behaviour - We act with integrity and objectivity to achieve high standards of health and safety, quality and sustainability in everything we do.
Learning and development - We are always learning, developing the skills and knowledge to support the company.
Communication - We are open and honest with colleagues and with our stakeholders.
Environment - We seek to protect the environment for the enjoyment of both people and wildlife in the future.
Stakeholder engagement
The communities in Marland trust us. That is the foundation of our business.
We have built up trust by integrating corporate social responsibility and sustainability into the way we run our company.
We have incorporated ten principles (see page 23) into our working practices. These encourage responsible behaviour in the areas of the environment, anti- corruption, our workforce and human rights.
Our sustainable forestry management practices are long-term investments building value for our company and the society of Marland. We have strict targets that we strive to achieve on carbon storage and are now in surplus when we take into account our harvesting and transportation emissions.
We aim to make our forests and woodlands attractive and healthy places that can be visited and enjoyed. We offer basic facilities such as woodland paths, picnic sites and cycle tracks. We locate these away from areas where timber is being harvested so that visitors are safe at all times.
We actively seek to improve the environment by sustainable planting while improving the return to our shareholders.
Employees
Our employees are our greatest asset. They add a huge amount of value to Wodd. They work together as a team to ensure Wodd runs efficiently and effectively.
We have a diverse group of employees. Some of our best lumberjacks have worked with us for over 30 years. The work is hard, but they enjoy the communal spirit and work ethic encouraged by Wodd. Lumberjacks work in small groups in remote areas, sometimes camping for several weeks. They are happy to continue this work even though it can be difficult and dangerous.
Wodd encourages safe working practices and training.
We have been improving our gender balance, although there are still too few women working in the forests. We are pleased that we now have a number of female senior employees and directors.
Customer relevance
Being aware of our customers' needs has played a large part in our steady growth over the last few years. We value our customers and work hard at understanding their needs.
Our customers support sustainable forestry and are proud of our accredited status. We listened to our customers when they said they wanted to protect the environment and they have repaid us with their loyalty. Our customer base has increased over the last few years as they know we work to create value for them. We seek to generate value in all aspects of our business while continuing to offer excellent quality.
Customer care and satisfaction
We opened a customer care department to respond to customer queries and complaints quickly. Its focus is to respond to customer queries and complaints within an agreed time frame which depends on the complexity of the query. We are proud that we responded to 97.5% of queries within the agreed timeframe.
The number of repeat queries has fallen considerably as a result of this initiative.
Risks and uncertainties
Fluctuating demand
Wodd's principal activities rely on demand for timber, which is a basic raw material used in many industries.
Some of our customers operate in volatile or cyclical industries. For example, the building industry buys significant quantities of timber and timber-based products. The building industry can be affected significantly by movements in economic indicators such as interest rates, the availability of credit and the property market.
Selling prices fall in response to declining demand for timber. Wodd can reduce production in response because there is very little point in selling timber when prices are low. However, there are economies of scale associated with operating at higher capacities and so we can suffer increased costs when we manage output in this way.
The company regularly reviews the movement in market prices and seeks to obtain the best value for the company's products from existing and new customers.
International business
Many countries import large quantities of timber and their economies can further affect demand.
Apart from fluctuations in their economies, our ability to export to particular markets can be affected by trade disputes, tariffs, import restrictions and so on.
Exchange rate fluctuations
The company is exposed to foreign exchange risk. Pulpwood is priced in USD which can be volatile against the M$.
Wodd is able to utilise financial instruments to hedge against adverse currency movements; there is no guarantee that it will be possible to hedge against a particular change at an acceptable price, or that any attempt to hedge would be successful.
Employee safety
Forestry workers are highly skilled. Harvesting timber in a safe and efficient manner requires training and experience. Working in forests can be difficult and dangerous and we provide advanced safety training for all our lumberjacks. We make sure we have the most advanced safety equipment available for the workforce.
However, there is the risk that serious accidents can occur in remote areas which could be serious. We are insured fully for accidents.
Labour relations
Our forestry workers are unionised. There is an annual negotiation cycle for determining pay and working conditions. The involvement of the union tends to ensure that all companies in the industry pay broadly similar rates.
Production will be affected in the event that an agreement cannot be reached with union negotiators. It would be difficult to locate suitable temporary staff during a strike and the logistics of timber production would make industrial action, such as picketing vehicle entrances, highly effective.
Physical risks
Wodd may experience the impact of physical risks associated with forest assets such as fire, insect infestation or wind-blow in extreme weather.
Wodd's forests are managed, or insured as appropriate, in a manner to mitigate these. Advice on insect infestation is taken from the Forestry Authority.
Tax
Changes to tax and grant regimes governing forestry would have an adverse effect on the number of customers interested in investing in forestry and planting.
Changes in certain tax and grant regimes may adversely affect Wodd's financial performance.
Board of Directors
Peter Sorchi, Chief Executive Officer
Peter has had a long and successful career in forestry. He started in the industry 30 years ago and worked in the forests in Scotland for several years before starting his own business managing forests for the UK's Forestry Commission. He became involved in the certification of forests in the UK and regularly inspected woodlands for the Forestry Commission. He left Scotland and moved to Marland where he joined Wodd as a senior manager in charge of certification.
He joined the Board as Forestry Director in 2008 and became CEO in 2012.
Ibrahim Bengassa - Forestry Director
Ibrahim has been Forestry Director since 2013, having previously been the forestry manager in a large plantation in Nigeria.
Ibrahim has had a number of prestigious roles in the forestry trade. As Forestry Director, his role is to manage the forests and look after the investors.
Marcus Svenson - Finance Director
Marcus is a professionally qualified accountant. He also holds a Bachelor of Arts degree in Accounting.
He joined Wodd's Board in 2008 after working in a number of senior roles in the timber industry in Sweden.
Sarah Johns - Marketing Director
Sarah has a degree in Marketing and has two prestigious awards for marketing gained when she previously worked for a major US company, rising to a senior managerial position.
She joined the company as Marketing Director in 2014.
Dr Maritza Lenzo - Human Resources Director
Maritza holds a Masters degree in Human Resource Management and she is a Fellow of the Marland Institute of Personnel and Development.
She has served in a variety of different entities. She joined the Wodd Board in 2013.
Dr Anton Carlov- Non-executive Chairman
Anton holds a Doctorate in Forestry Management and he is a Master of Business Administration.
He was a senior manager in a forestry management group in Siberia and became a director of it in 2008. Anton retired in 2014 and Wodd's Board was delighted to welcome such a prestigious person to serve as non-executive Chairman.
Dr Carlov is a highly respected business person in Marland and wider afield.
He chairs both the Audit and Remuneration committees.
Stuart McLellan - Non-executive director
Stuart has been a non-executive director on Wodd's Board since 2012. He worked in the timber industry in Canada for 15 years before joining Wodd. He worked as a lumberjack and safety officer for most of this time.
Stuart sits on the Health and Safety, Audit and Remuneration committees.
Xai Ling - Non-executive director
Xai was appointed a non-executive director in 2013. He also has experience in the timber trade. He worked in one of China's largest building companys as a timber buyer. He is a member of the Health and Safety committee and the Nomination committee.
Lianne Edwards - Non-executive director
Lianne has been a non-executive member of Wodd's Board since 2012. She is also a non-executive director of a major Croatian sawmill. She has had a long and distinguished association with that company, having served as senior purchasing manager for 15 years. Lianne sits on both the Nomination and Remuneration committees.






Regulatory bodies
The Forestry Authority of Marland
The mission of the Forestry Authority of Marland is to provide an ecological framework for the promotion of a healthy and cleaner environment for future generations by expanding forests and improving sustainable forest management.
The Authority offers partnership opportunities for forestry companies to create amenity woodlands for Marland, so that everyone can enjoy the benefits of the outdoors.
The Authority encourages forestry management companies to become accredited by the Forestry Stewardship Council of Marland (FSCM).
The Authority offers grants for planting and fencing forestry plantations and also offers assistance in applying for government forestry grants.
It offers advice on insect infestation in forests and other matters of sound stewardship of forests.
The Forestry Stewardship Council of Marland
The Forest Stewardship Council of Marland (FSCM) exists to support the responsible management of Marland's forests. We are a non-profit making and independent organisation.
FSCM publishes standards that promote environmentally sound and socially responsible development of forest lands. Companies who adhere to our standards are eligible to use our logo on their promotional materials and to display it on their products.
Consumers are increasingly concerned with the safe and responsible sourcing of timber-based products. The FSCM logo reassures customers that they are not contributing to the irresponsible destruction of forest lands, with associated harm to the environment and natural habitats.
The FSCM's has developed ten principles, which form the basis for our standard setting programme. These principles are listed below:
Principle 1 - Compliance with laws and FSCM Principles
Those responsible for forestry management shall respect all applicable laws of the country in which they operate and shall comply with all FSCM Principles and Criteria.
Principle 2 - Rights and responsibilities
The right to exploit land and any associated forestry resources shall be formally documented so that the legal right to conduct operations can be demonstrated.
Principle 3 - Respect for indigenous peoples
Those responsible for forestry management shall recognise and respect the legal and customary rights of indigenous peoples to own, use and manage their lands and other resources.
Principle 4 - Respect for employees and local communities
The social and economic wellbeing of forestry workers and of local communities shall be preserved.
Principle 5 - Good use of available resources
Those responsible for forestry management shall identify the various resources that can be found in the forest, with a view to maximising environmental and social benefits.
Principle 6 - Environmental impact
Those responsible for forestry management shall maintain biological diversity and shall preserve resources such as water, soil and other ecological resources.
Principle 7 - Management plan
Forestry lands shall be managed in accordance with a specific management plan that states the long-term objectives of management and the means by which they will be achieved. The plan will be tailored to the land and the nature and scale of operations.
Principle 8 - Monitoring and assessment
Those responsible for forestry management shall monitor operations so that the economic and environmental effects of operations are kept under review.
Principle 9 - Sensitive locations
Particular care will be taken in the management of activities in forests that have a high conservation value. Those responsible will pay particular attention to maintaining and enhancing the factors that create that high value.
Principle 10 - Plantations
Principles 1 to 9 apply equally to plantations. In addition, those responsible for the creation and management of plantations shall aim to complement the value of natural forests.
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