Woodbois Limited Quarterly Update
16 Abril 2020 - 01:00AM
UK Regulatory (RNS & others)
TIDMWBI
RNS Number : 8071J
Woodbois Limited
16 April 2020
16 April 2020
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the
publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
Woodbois Limited
("Woodbois", the "Group" or the "Company")
(AIM: WBI)
Quarterly Update Q1 2020
-- Revenues of US$4.9m in Q1, 10% increase on Q1 2019
-- Working capital enhancement measures announced
-- Recommencement of operations in Mozambique after more than two years
-- Resilience plans being enacted in response to COVID-19
-- Gabon activities temporarily halted in April as country enters COVID-19 lockdown
Paul Dolan (CEO) commented, "At this time, a global recession
appears inevitable, but whether it will be short lived or more
protracted is unclear. The Board is putting in place the necessary
measures for Woodbois to weather either scenario. Whether economies
emerge from this pandemic with a slow recovery or with
stimulus-driven strong rebounds, demand for sustainably sourced
tropical timber as a construction material across the globe is
expected and Woodbois will be positioned to deliver. Resilience and
flexibility are integral within the Woodbois psyche and culture,
and at challenging times like these, organisations and individuals
with such characteristics differentiate themselves. While paying
close attention to our working capital requirements in the months
ahead, we will do everything in our power to support our staff, our
suppliers and our customers to ensure that we emerge from this
difficult period stronger and more united."
Revenues in Q1 increased by 10% year-on-year with no discernible
slowdown in demand evident until the end of the quarter when new
enquiries tailed off sharply due to the global impact of COVID-19.
Trading activity to-date in April remains limited, although
enquiries from Asia have been increasing as lockdowns are
relaxed.
The first full quarter of production at the newly re-tooled
sawmill in Gabon saw production increase by more than 100% over the
previous quarter, with recovery levels of 40%, up from an average
of 34% for 2019. Revenues from production are typically captured
upon shipment in the following quarter while higher levels of
recovery are a direct driver of margin increase. Volume and
recovery levels are carefully tracked and scope remains to improve
both measures as staff become more familiar with operating the new
equipment. At the end of March, a new Mebor sawmill line arrived
from Slovenia. This new line will be assembled and tested as soon
as travel restrictions into Gabon are relaxed. The additional
capacity from this new line, in addition to the new equipment that
recently became operational will enable us to provide higher
volumes of premium quality sawn timber to our customers as soon as
demand recovers.
Production at the Gabon veneer factory and sawmill was tapered
down from the beginning of April due to government measures
restricting the numbers of people in working environments, intended
to limit the spread of COVID-19. On 10 April 2020, the Government
of Gabon announced, amongst other measures, that the country would
enter lockdown for a two week period commencing on 13 April 2020
meaning that our veneer factory and sawmill in Mouila has closed
until the lockdown ends.
As per the announcement of 16 January 2020, management and the
Board place significant emphasis on actively managing the Company's
working capital. The measures announced at that time were taken in
order to enable growth opportunities and to maintain the Company's
trajectory of rapid growth. The impact of COVID-19 at that time was
still largely limited to China, but has subsequently spread
worldwide. However, the support of our major stakeholders, and the
process developed in agreeing the capital management measures
announced in January, have helped the Group to respond rapidly and
systematically to the challenges arising from the COVID-19
pandemic.
At that time, we announced that the Company's largest
shareholder, 1798 Volantis Fund Limited, a fund managed on a
discretionary basis by Lombard Odier Asset Management group, had
conditionally agreed to provide an additional US$1.0m through
investment into the Group's ITF by way of an additional loan
agreement with Woodbois Trading Limited, and USD$0.5m has been
drawn down to date. Further drawings are by mutual agreement.
On 19 March 2020, we announced the signing of a management
agreement (the "Agreement") with Future Earth II LLC ("Future
Earth"), a US company with substantial concessions in Mozambique,
creating a relationship under which Future Earth will fund, manage
and operate Woodbois' Mozambique concessions, employees and
equipment, in order to produce sawn lumber and veneers to be sold
by Future Earth on a profit share basis.
The Woodbois concessions in Mozambique have been on a care and
maintenance basis for over two years, partly due to an industry
export ban in 2018 and due to the quantum of investment required to
restart and to enlarge the operations to be able to earn an
acceptable return on capital comparable to the Group's other
business segments. Management have been seeking the optimum way to
recommence operations and believe the Agreement with Future Earth
provides material benefits to both parties, not least from the
economies of scale arising from Woodbois' approximately 300,000
hectares and Future Earth's approximately 620,000 hectares of
concessions.
Enquiries:
Woodbois Limited
Paul Dolan - CEO
www.woodbois.com
+44 (0)20 7099 1940
Arden Partners Plc (Nominated adviser and broker)
Richard Johnson
+44 (0)20 7614 5900
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END
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