11 July 2022

Woodbois Limited

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

Q2 2022 update

Highlights

·    H1 2022 revenue up 38% to $11.3m vs H1 2021 $8.2m

·   H1 2022 Group gross profit margin improved to 23% from 20% in H1 2021

·    Cash balance $2.1m as at 30 June 2022

·    Period end working capital¹ of $9.8m of which inventory was $6.4m and excluding short and longer-term bank and other loans of $12.4m

·    Sawmill production:  9,565m3 (+37% versus H1 2021)

·    Veneer production:  2,740m3 (+50% versus H1 2021)

·    Best quarter and half-year for volume of product shipped since before the pandemic 

·    2022 on track to deliver strong revenue and profit growth

Further substantial output increases in H1

The production teams in Mouila, Gabon have delivered further operational progress during Q2 2022, with veneer output increasing by 50% from H1 2021 and a corresponding increase of 37% achieved in sawn timber. The logistics team continued to deliver despite the challenges of regular ship re-scheduling, exporting almost 100% more containers during Q2 2022 than the quarterly average achieved during 2021, albeit this will not be fully reflected in revenues until Q3 under accounting rules.

Financial

Through economies of scale and a focus on higher margins sales the Group increased its gross profit margins to 23% compared with 20% in FY 2021. The management team in Mouila, Gabon, continued to carefully manage the acceleration of production levels, keeping it in line with the volumes of product shipped to customers, in order to prevent large-scale inventory build-ups and to facilitate a consistent cash conversion cycle.

Total borrowings increased marginally from $12.1m at the end of Q1 to $12.4m at the end of Q2 reflecting the Company drawing $1m of the $2m Lombard Odier short-term facility, full details of which were announced on 13 January 2022, and paying down approximately $0.7m of bank loans and equipment lease obligations during the period.

Operational

The update of 19 April 2022 noted that in spite of the strong levels of increased output in Q1 2022 there was still additional capacity at both our sawmill and veneer factory to be capitalised upon. An increasing part this additional capacity started to become utilised in Q2 2022 with production in the quarter increasing by 49% at the veneer factory and by 28% at the sawmill. These increases were carefully calibrated with shipments and were achieved against a backdrop of relatively steady sales prices. The total number of containers shipped in Q2 2022 increased by 24% over Q1 2022 and will only fully convert into Revenue in Q3 given the delay between physical shipping and revenue recognition. In common with some other African countries Gabon has been experiencing both much higher fuel costs and periodic shortages, although to-date the Group's operations have not been materially affected.

The second veneer line being installed at our factory in Mouila is currently undergoing final testing and is expected to be operational this month. This will generate additional higher value product and represents another significant milestone of achievement. We expect the output to deliver a rapid and high level return on investment with the new line set to more than double existing capacity to approximately 15,000m³ of veneer per year.

Work on FSC certification has continued and is now over 60% complete and we aim for completion during 2023.

The Group continuously monitors exposure to customers in countries that are starting to experience an inflation-driven slowdown or import controls. We are pleased to note that pricing and demand for our high-quality products currently remains robust, particularly from the Middle East and growth economies of North Africa. The Group does not have suppliers or customers in Russia or Ukraine.

 CEO Paul Dolan commented:

"All stakeholders should be delighted by the strong momentum generated in the first half. The substantial production gains recorded reflect the capital investment made to date and affirm decisions taken to enhance the Gabon in-country leadership team and to focus on optimising delivery against our expansion plans. Whilst there are many challenges ahead, the next step in our journey to scale the business is the full commissioning of our second veneer line in Mouila, Gabon, which we expect to contribute to a further increase in revenues, margins and profitability."

Enquiries:

Woodbois Limited  +44 (0)20 7099 1940

Paul Dolan - Chief Executive Officer

Carnel Geddes - Chief Financial Officer

Canaccord Genuity, Nominated Advisor  +44 (0)20 7523 8000

Henry Fitzgerald-O'Connor

James Asensio

Gordon Hamilton

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

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