TIDMWBI
RNS Number : 3324Y
Woodbois Limited
13 January 2022
13 January 2022
Woodbois Limited
("Woodbois", the "Group" or the "Company")
Q4 2021 update
Highlights
Financial (preliminary / unaudited)
-- $17.5m total revenue FY 2021 vs $15.2m FY 2020, a 15% increase.
-- FY 2021 gross profit up 180% to $3.3m vs FY 2020 of $1.2m.
-- FY 2021 gross profit margin more than doubled to c20% vs 8% in FY 2020.
-- $1m EBITDAS FY 2021 vs negative $1.7m in FY 2020, marking a
first year of positive EBITDAS.
-- Finance charge of $0.6m for FY 2021 vs $2.8m for FY 2020, a reduction of 79%.
-- Q4 2021 revenue $4.8m, up 50% on the $3.2m in Q4 2020.
-- Cash balance of $0.9m as at 31(st) December 2021.
-- Period end working capital of $7.7m, of which inventory was
$5m, and excluding bank loans of $8.5m.
Post Period End
-- Unutilised loan facilities of an aggregate $4m put in place
with Lombard Odier and Rhino Ventures, our two largest shareholders
to meet near-term needs caused principally by shipping delays and
Covid-related disruption.
-- Further growth planned for 2022, subject to shipping and container availability.
Operational
-- 2021 sawn timber production of 13,100m3, an 84% increase year-on-year ("YOY").
-- 2021 veneer production of 3,800m3, a 78% increase YOY.
-- Installation of second veneer line ongoing, completion
expected by the end of Q1 2022: expected to double capacity in
2022.
-- In Mozambique, conditions remain challenging and the Group is
reviewing its strategic options.
Planned Board strengthening completed in November
-- Paul Dolan remains Executive Chair and relinquishes CEO role.
-- Federico Tonetti appointed as CEO.
-- David Rothschild appointed as Independent NED.
Summary Reflections on 2021 and Outlook for 2022
The outturn for 2021 was characterised by strong operational
progress but constrained by sustained shipping and container
difficulties and Covid-related disruption, not least in Q4, a
pattern that is likely to continue, at least in the first half of
2022.
Severely constrained shipping and logistics due to COVID,
lowered the level of cash generated in 2021 and this put greater
than expected strain on our working capital, particularly in Q4,
causing the potential for a near-term cash bridging as we enter
2022. Accordingly, the Company has recently arranged a $2m general
purpose two year facility with Rhino Ventures Limited, the Company
largest shareholder and a further facility of $2m if additional
short term working capital finance is required with Lombard Odier,
the Company's second largest shareholder. The former is capable of
being drawn with immediate effect whilst the latter requires lender
approval at the time of any drawdown request. Both facilities carry
interest rate at 8.5% on any drawn amounts. The Lombard Odier loan
is repayable within 90 days of any drawdown and secured against
receivables. The Rhino Ventures loan is repayable in January 2024
and is unsecured. These facilities are intended to ensure a
stronger working capital position as the Company works through the
logistical challenges it faces to deliver inventory to customers,
and to ensure the effects of shipping delays and Covid-related
disruption can be more easily dealt with until that industry
normalises.
Looking forward, our operations in Gabon are primed to continue
delivering strong and profitable growth, not least as a result of
the capital projects undertaken in 2021 and continuing into Q1
2022.
The Company remains confident of materially increasing revenues
and profitability during 2022, however due to expected continued
shipping delays this growth is likely to be lower than previous
expectations.
Having recorded an 84% increase in production levels of sawn
timber during 2021, we still have existing capacity to increase
output by a further 50%. At our veneer factory, capacity increases
of more than 100% are expected to come online in Q2. In tandem,
scaling up of production provides confidence that the business
should, when there is a marked improvement in shipping
availability, achieve improvements in margins through economies of
scale.
With the exception of a three-month over-run in the
commissioning of the first of two veneer lines purchased during
2021 due to the delayed arrival of parts into the country, the
production team has delivered on expectations on all fronts.
Looking forward to 2022 we recognise the need to adjust to the 'new
norm' of Covid-related disruption and will plan and continue to
adapt accordingly. The cadence of our transition to higher levels
of production for 2022 is materially dependent on external
logistical factors such as the availability of containers and
re-opening of shipping routes which will influence the timing of
our ability to monetise the anticipated increase in production.
The impact of the pandemic continues to cause delays and
disruption to container availability, port operations and inland
logistics with local restrictions, worker shortages, port strikes
and overflowing storage facilities leading to complicated handling
and congestion. A further resulting impact for companies reliant on
container networks for day-to-day trade has been an increase in
freight costs with average global rates having more than doubled in
2021. High levels of demand for our products and the resulting
increase in prices largely compensated for these additional
logistics costs allowing the group to maintain the significantly
increased YOY margin expansion reported at the half year.
Overall shipments of our own production from Gabon increased 50%
YOY but Q4 sales were restricted particularly in October and
November when very few containers were shipped owing to diversion
of ships, limited container availability, strikes at the Libreville
port and Covid-related constraints to port access. These delays
contributed to a larger than expected inventory build-up and as a
result we took the decision, whilst continuing with veneer
production, to curtail production at the sawmill in November.
Following an improved flow of shipments in December normal
production has resumed in early January 2022. We anticipate
unwinding the excess inventory during H1 2022 most of which was -
at the end of December - either already in containers at the port
or in warehouses close-by. Shipping continues to present great
challenges and port operations remain constrained by strike
activity there, as well as by the recent re-imposition of Covid
testing requirements.
However, during this period we have taken time to ensure that
capital projects have proceeded and maintenance work and layout
changes have been prioritised. To circumvent logistical bottlenecks
we have also secured new storage facilities in Libreville close to
the port, thereby assisting in more rapid extraction when
containers and shipping are available. The timing of the ongoing
capital expenditure coupled with the lower number of containers
shipped has exacerbated the short term pressure on our cashflow. We
are budgeting further cash Capex of c$1.1m for the current year
which we will seek to ensure matches improved cashflow from
operations.
The process for FSC certification for the Group is proceeding on
target and Q4 progress has laid further foundations to achieve this
objective. The Group sees this certification as an important
element in its continued drive and focus on quality and
sustainability, as well as ensuring that its products are sold to a
wider, better-margin market than is currently possible.
Housing shortages and growing urbanisation trends are expected
to drive continued growth in global demand for sustainably sourced
timber construction materials, which already account for 60% of
use. With versatile sawnwood and veneer production capabilities in
Gabon, and an extensive network of trusted third party suppliers,
Woodbois is well positioned to service the growing global timber
market with a diverse range of sustainable African hardwood
products.
Once the Company's 2021 results have been audited and the Board
has considered the results of Q1 2022, the Board will be better
placed to determine the timing and amount of any maiden dividend,
but it is no longer expected to commence this calendar year for the
reasons highlighted above.
Carbon Division
Important policy changes and shifting corporate attitudes have
confirmed the critical role voluntary carbon markets have to play
in the decarbonisation of the global economy. On 13th November 2021
World Leaders adopted the Glasgow Climate Pact, providing new
clarity and confidence around the future of carbon markets.
The result has been a record year for both the Compliance and
Voluntary markets. The EUA price hit an all-time high of
EUR91/tonne in December, whilst voluntary Nature-Based Global
Emission Offset (NGEO) prices reached $15/tonne.
With over 3,000 of the world's leading companies now committed
to achieving net-zero, the demand for high quality verified offsets
is overtaking supply. Available credit inventories, particularly
for nature-based offsets, are falling quickly providing an
attractive market opportunity for developers to implement new
large-scale projects.
Having been accredited by the Government of Gabon to attend
COP26, Woodbois subsequently submitted a formal application to the
Gabonese Government outlining a comprehensive plan for a
large-scale reforestation project in the country. In addition, the
team is continuing positive discussions with representatives of
other African governments after a successful series of introductory
meetings at COP26 in Glasgow.
Commenting on today's announcement, Executive Chair Paul Dolan
said:
"The unaudited 2021 financial metrics detailed above, including
doubling of gross profit margins, a near trebling of YOY gross
profit and our first-ever positive EBITDAS, illustrate the progress
made by the business during 2021 and provide a solid base for
future profitable growth. The substantial additional hectarage
purchased in Gabon in August more than satisfies raw material input
requirements at our growing factories, allowing the Company to
benefit from the elevated levels of inflation now being experienced
in many of our target markets.
Based on the current outlook, we are confident in the ability of
the Company to profitably deliver on increased levels of
production, particularly in higher margin segments such as veneers
and hardwoods.
Whilst 2021 produced a respectable outturn, our growth in Q4 was
impeded by lack of containers, with consequent inventory build. We
have been working hard to secure enhanced and sustained export
capacity for H1 2022 as this will be an important determinant of
our growth rate and cash generation. Whilst this uncertainty exists
we have felt it prudent to ensure we have sufficient liquidity for
our forecast current needs. We are very grateful to our two largest
shareholders for acknowledging the Group's progress and recognising
the effects of the uncertainties created by the unprecedented
disruption to global sea freight in providing the standby
facilities for the Group. We are also looking at ways to fund
accelerating our growth and this includes reviewing our interests
in Mozambique.
As well as aiming to increase production and profitability in
2022, we aim to become recognised as a reference point for
responsible forestry management. Our ongoing investment in
equipment, processes and people are made with the intention of
ensuring that we are uniquely placed to grow shareholder value
while forging a position of leadership in the sustainable African
hardwood sector."
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").
Enquiries:
Woodbois Limited
Paul Dolan - Executive Chair
Federico Tonetti - CEO + 44 (0)20 7099 1940
Canaccord Genuity (Nominated Advisor and Broker)
Henry Fitzgerald-O'Connor
James Asensio
Thomas Diehl + 44 (0)20 7523 8000
Celicourt Communications (IR/PR) +44 (0)20 8434 2643
Mark Antelme woodbois@celicourt.uk
Jimmy Lea
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
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END
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January 13, 2022 02:00 ET (07:00 GMT)
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