Woodbois Regulatory News (WBI)

12 January 2021

Woodbois Limited

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

Q4 2020 Update

Woodbois, the African focused sustainable forestry and timber trading company, is pleased to announce its Q4 trading update for the period 30 September 2020 to 31 December 2020.

Highlights

Financial (unaudited)

· Revised revenue target of $15.0 million for 2020 achieved (2019:$19.5 million)

· Q4 revenue of $3.2 million, consistent with Q3 (Q4 2019: $5.6 million)

· Funded to achieve near term growth objectives with a cash balance of $2.5 million, as at 31 December 2020

· Working capital at 31 December 2020 of c$9 million; interest bearing debt of c$6.1 million at an average rate of 5%

· Underlying profitability ahead of expectation prior to any write-down of inventory

Operational

· Q4 Sawn timber production 2,030 m3 (19% increase on Q1-Q3 2020 quarterly average)

· Q4 Veneer production 569 m3 (6% increase on Q1-Q3 2020 quarterly average)

· Previously announced worldwide freight container constraints due to COVID-19 limited Q4 shipments

· The Primultini sawmill line has arrived in Gabon and is on track to be operational around the end of Q1 2021 with foundations to support the 13-ton bandsaw nearing completion

· The new sawmill line will enable the Company to significantly increase sawn timber production, and its commencement will be a major step towards the Company becoming cash flow positive

· Achieved first sale of Woodbois sawn product into the USA, the world's second largest importer of hardwood and a key target market for Woodbois in 2021

· The Company's turnaround strategy in Mozambique continues, with business reset to provide contribution in 2021

· Woodbois continues to investigate the best option for the purchase and installation of a second veneer line in Mouila, Gabon. Travel restrictions in place due to the COVID-19 pandemic have hampered the Company's ability to inspect machinery, but further updates will be provided in due course

Inventory Theft in the Ivory Coast (non-core) Under Investigation

· $2m of trading inventory discovered stolen from third party warehouse in Ivory Coast post period end. Company and police investigating; the Company intends to maximise recovery

· Sales from the Ivory Coast accounted for c6% of the Group's unaudited 2020 turnover. No impact on principal operations in key production business in Gabon

Key Hires

· Further strengthening of the operating team during Q4 2020:

o Jake Slocombe (Head of Sales: UK and USA), and Rémy Cazeaux (Production Director) joined in Q4, adding significant strength to the trading and production teams respectively

o Olivier Normand will join as Head of Performance Management in mid-January 2021, having made a positive impact when he spent two weeks at the Company's factories in Mouila in December 2020. Olivier has a Master's degree in aerospace engineering, is a Master in continuous improvement and Lean 6 sigma and has over 30 years' experience managing, optimizing and coaching performance improvement through the application of Standardization and Lean manufacturing techniques. Olivier will report directly to the CEO and to the Gabon Country Head

FSC Certification

· During Q4 2020, the Company engaged with the Programme for the Endorsement of Forest Certification ("PEFC"), a leading global alliance of national forest certification systems, as progress is made towards FSC certification. PEFC is a programme, sponsored by COMIFAC (The Central African Forest Commission) and KfW (the German state-owned development bank) tasked with offering third party certification support to forestry companies in the Congo-basin

· Due to COVID-19 related disruption during Q4, the initial diagnostic mission to Woodbois' operations in Gabon by PEFC has been delayed to Q1 2021. Third party certification is a priority for Woodbois and the Company is seeking to hire an in-country ESG professional to lead this process in 2021

Outlook

· Woodbois expects to turn cashflow positive, deliver profitability and generate significant revenue growth in 2021

· Whilst the business remains firmly on a growth trajectory, some continued impact from the pandemic should clearly be expected. One consequence has been a delay in securing the purchase of a second veneer line, now budgeted to be operational by the end of 2021. Consequently, because of this and current COVID-19 impacts revenues in 2021 are currently expected to be in the range of $25 million to $30 million, with the revenue target for 2022 of more than $60 million remaining unchanged

· Sustainable forest management and reforestation remains a fundamental part of the Company's strategy. Woodbois continues to assess new practices and commercial avenues that will enable it to minimise and utilise any waste and thus take advantage of associated circular economy benefits

· If Ivory Coast stock is not recovered, capital for the trading business in the immediate future will be proportionally reduced

· To assist with the Company's growth strategy, further high-impact hires are expected to be made over the coming months

Shareholder engagement

Woodbois hosted an investor presentation in December 2020 and plans to host other investor events over the course of 2021. Further details of which will be provided in due course.

Commenting on today's announcement, Executive Chairman and CEO Paul Dolan said: 

"Despite the backdrop, I am very pleased with the Company's performance during 2020. Following the transformational balance sheet restructuring completed in August and its subsequent financial benefits, we have given ourselves a strong platform to build on and we intend to deliver significant growth in 2021. We remain well financed and our further strengthening of the operational team during Q4 and in 2021 means that we are well placed to capture the opportunities and build shareholder value.

Whilst recently being victims of a theft in Ivory Coast is highly disconcerting, we believe this to have been an isolated and opportunist incident. It does not directly impact the vast majority of the business, consisting primarily of our own forestry concessions and production in Gabon and other third party trading, and we continue to expect to be increasingly profitable from 2021 onwards.

The demand for sustainably sourced timber continues to grow and we believe that our current footprint in Africa, the investment in equipment, processes and industry leading staff, combine to ensure we are uniquely well placed to increase our market share in global sales and trading.

The Board remains confident of Woodbois' ability to meet its objective of profitably becoming one of the leaders of the sustainable African hardwood sector. We look forward to keeping all of our stakeholders updated on developments over the coming months and to announcing our detailed 2020 Results at the end of April."

Enquiries:

Background on Woodbois

Woodbois Limited (AIM:WBI) is an African focused forestry and timber trading company, which produces, processes, manufactures and distributes sustainable African hardwoods and hardwood products to customers around the world.

Woodbois' forestry division has production facilities in Gabon and Mozambique, managing a total of c400,000 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.

Sustainability is at the heart of the business, with a clear focus on maintaining the transparency and sustainability of its timber operations. This has been recognised by The Zoological Society of London, which ranked Woodbois third in its Sustainability Policy Transparency Toolkit ('SPOTT'') ESG policy transparency assessments for the worldwide timber and pulp industries for 2020.

Please follow the Company on Twitter: @WoodboisLtd