Woodbois Limited

("Woodbois", the "Group" or the "Company")

Q1 2022 update and Board changes

Highlights

·    Q1 2022 revenue up 22% to $5.6m vs Q1 2021 $4.6m

·    Group gross profit margin improved to 23% from 20% in FY 2021

·    Cash balance $2.6m as at 31^st March 2022

·    Period end working capital¹ of $10.2m of which inventory was $6.5m and excluding bank and other loans of $12.1m

·    Sawmill production 4,200m³ - 24% increase over 2021 quarterly average

·    Veneer production 1,100m³ - 13% increase over 2021 quarterly average

·    Best quarter for volume of product shipped since before the pandemic

·    Management reorganisation

·    2022 on track to deliver strong revenue and profit growth

Overview

Following the substantial increase in output during 2021, the production teams in Mouila, Gabon have delivered further operational progress during Q1 2022, with veneer output increasing by 13% from the 2021 quarterly average, and a corresponding increase of 24% achieved in sawn timber. The logistics team continues to be challenged by the inconsistent availability of containers, but encouragingly shipped almost 50% more containers during Q1 2022 than the quarterly average achieved during 2021, with the improvement in shipments most notable at the end of the period.

Financial

Group profit margins increased to 23% in Q1 2022 from 20% at FY 2021 as efficiencies from processes implemented in our factories during 2021 started to flow through. The acceleration of production levels has been carefully managed and limited to the corresponding volumes of product shipped to customers, in order to maintain a consistent cash conversion cycle and to prevent any outsize build-up of inventory.

As previously announced the $2m unsecured facility agreed with Rhino Ventures, was fully drawn-down during February owing to the effects of shipping delays and covid-effects in Q4 2021. The working capital facility available to the trading division through its Danish banking partners was also increased by $2.3m and this has been fully drawn helping to fund the increase in working capital resulting from the growth achieved. The $2m conditional facility agreed with Lombard Odier has not been utilised.

We continue to see strong demand for our high-quality products from customers in all parts of the world. Our stand at the well-attended Dubai Wood Show in March attracted high levels of attention and demand from new customers. Woodbois intends to grow exports to the United States and Europe during 2022 and will also have a stand at Carrefour International du Bois in Nantes, France, from 1^st - 3^rd of June.

Operational

Following the increase in output in 2021, further gains have been achieved during Q1 2022. Our factories in Gabon have delivered a strong start to the year, registering record monthly output in March 2022 at both the sawmill and veneer factory. While shipping trends in general are starting to show signs of improvement, receipt of containers and allocation of shipping berths remain inconsistent and we continue to monitor inventory-build closely to ensure that the increasing cadence of our production doesn't exceed the pace at which we are able to ship goods to customers. We still have additional output capacity at both factories to capitalise on, which we will start to utilise when feasible.

Work on the installation of a second veneer line at our factory in Mouila was held up while awaiting some delayed critical parts, which are now on the water and are expected to be received during April. Final assembly and testing are now expected to be completed before the end of Q2. The new line will more than double existing capacity to 15,000m³ of veneer per year.

We expect the business to increase both scale and profitability during 2022 as new production capacity comes online and assuming shipping returns to more normal patterns.

Management reorganisation

The Company announces a management reorganisation to better effect its growth objectives. Paul Dolan, currently Executive Chair, steps down from that role and has resumed the role of full-time Chief Executive Officer ("CEO"). Federico Tonetti, former CEO, will shortly be leaving the Company and we would like to thank him for his efforts during his time in the role. Graeme Thomson, who has been a Non-Executive Director since 2020, has been appointed as Non-Executive Chair. 

The Group has also introduced a new senior role, Gabon Country COO, to oversee enhanced processes, oversight and day-to-day functions at its primary operations: Olivier Normand, currently Head of Performance Management, who joined the Group in January 2021, has been appointed to this key role, reporting to Hadi Ghossein, Deputy Chair and Head of Gabon Operations. 

ESG

The Group's high levels of positive social and environmental impact are planned to be further increased as we complete our journey towards FSC certification, and pending government approval, as we move closer to commencing our initial carbon sequestration project. In anticipation of an increased volume of news flow we have developed an in-house communications function in order to reach a wider audience via multiple social media channels. Our communications team will post updates and insights from our own nature-based solutions team to address the increasing inflow of questions and requests received.

Having delivered our first positive EBITDAS in 2021 the next milestones to hit are delivery of higher levels of profitability and generation of an increasingly strong positive operational cashflow, both of which we expect to achieve during 2022.

CEO Paul Dolan commented:

"The business is now beginning to reap the rewards from the significant investment in capital and human resources over recent periods. We needed to amend our senior team in order to ensure enhanced and dedicated focus at our key assets in Gabon so as to better deliver our expansion plans. The operational performance in Q1 continues the growth set out in our 2021 results, which were released on 1^st April 2022. Absent any further material disruption to the shipping routes and container availability we plan to deliver strong quarter-on-quarter growth throughout the remainder of the year."

¹ Working Capital is a non-IFRS measure and consists of Cash, plus Inventory, plus Receivables, less Payables.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 which forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").

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Background on Woodbois

Woodbois Limited (AIM:WBI) is an African-focused forestry company, divided into three distinct, but highly complementary divisions comprising the production and supply of sustainable African hardwood products, the trading of hardwood and hardwood products, and a reforestation and carbon credit division.

 Woodbois' forestry division has production facilities in Gabon and Mozambique, managing a total of c470,000 hectares of natural forest concessions. The trading division comprises a highly experienced team of timber specialists, who source and supply sustainable timber to a global customer base. Its proprietary technology developed in house, captures, stores and presents data, providing a matching engine to build scale and optimise trading opportunities with its global customer base.

The Company's carbon sequestration and trading division was formed in March 2021 and aims to generate voluntary carbon credits for corporate partners through the delivery of large-scale reforestation projects.

The Company's focus on the transparency and sustainability of its timber operations has been recognised by The Zoological Society of London, which ranked Woodbois joint sixth in its Sustainability Policy Transparency Toolkit ('SPOTT'') ESG policy transparency assessments for the worldwide timber and pulp industries for 2021.

Please follow the Company on Twitter: @WoodboisLtd