TIDMWBI
RNS Number : 7589U
Woodbois Limited
02 April 2019
2 April 2019
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014.
Woodbois Limited
("Woodbois", the "Group" or the "Company")
(AIM: WBI)
Quarterly Update
Woodbois, the African focused forestry and timber trading
company, is pleased to provide a quarterly update on operations for
the three months ended 31 March 2019 (Q1 of the Group's 2019
financial year).
-- $4.5m revenue in Q1 2019. Record quarter
-- 114 containers of own production sawn timber and veneer shipped. Record quarter
-- 100% increase in sales at 2019 Dubai Woodshow
-- GBP5m Equity investment by 1798 Volantis Fund
-- $5m net inflows to Internal Trading Fund (ITF) with commitment of further $5m
-- 25% stake in Montara Continental purchased to complete corporate restructuring
-- Civil works for kilns and enhanced sawmill in progress, footprint of 3,400m2
-- Kilns on schedule to be operational in Q3 2019
-- NSMS purchase option not exercised
-- Name change to Woodbois Limited, refreshed website released
Strong Revenue Growth
Following the 60% Year-on-Year revenue growth achieved in 2018,
revenues increased by a further 33% from 2018's quarterly average
of $3.4mm to $4.5m in Q1 2019. Revenue increases were recorded from
both trading activities and from sales of our own sawn timber and
veneer production. This strong start to 2019 was further enhanced
by high levels of inflows and commitments to our ITF. Having spent
more than twelve months working to attract additional trade finance
funds, rather like London buses, two substantial subscriptions
arrived simultaneously providing significant impetus to the trading
division. $5m was drawn down by the end of Q1 and a further $5m
will be drawn down by the end of April 2019, providing a high level
of confidence that the trading division will deliver further growth
during 2019.
Shipping and Logistics
Working in tandem with the trading and production teams, our
logistics team chalked up an impressive quarter, shipping a record
114 containers of sawn timber and veneers from our production
facilities. This is an increase of more than 100% on Q1 2018 and
more than a 50% increase over the 2018 quarterly average. This
impressive step-up was achieved despite encountering some notable
headwinds that were completely outside their control, such as the
temporary closure of the port in Libreville while a container that
had fallen into the harbour was located, as well as a strike by
customs workers.
Trading and Sales
The trading team has been on the road constantly since the
additional trade finance was secured, visiting existing and
potential new suppliers and building a pipeline of supply to meet
globally driven demand, primarily in African hardwoods. While the
trading team has been busy sourcing in Africa, the sales team has
been equally busy racking up airmiles, visiting customers and
following up leads in Europe, Asia and the Middle East. Three team
members attended the Dubai Woodshow in March. The Woodbois stand
once again proved popular, attracting a significant number of
visitors and enquiries. Sales were completed with several new
clients and total sales exceeded $2m, an increase of more than 100%
over 2018 sales at this trade show. Revenues from these sales will
flow through in Q2 and Q3.
Corporate Consolidation and Institutional Investment
The Company made a dynamic start to 2019, announcing the
disposal of its agricultural assets in Tanzania and the acquisition
of the 25% of Montara Continental Limited that it did not own (from
Africa Resource Investment Limited ("ARI")). At that time, the
directors expressed their belief that simplifying the corporate
structure and narrowing the company's focus to timber trading and
production, would make the group more attractive to potential
investors and trade finance providers.
Although we had not anticipated immediate institutional grade
investment, these changes taken together with Woodbois' rapid
growth and strong sustainability credentials put the company on the
radar of the 1798 Volantis Team, a team within Lombard Odier Asset
Management group dedicated to UK Small Cap Investment. During Q1,
Volantis invested approximately GBP5m in new ordinary shares as
well as committing to the provision of a loan of $5m for the
purposes of trade finance.
We are delighted to have attracted this capital investment, and
with our newly consolidated corporate structure, streamlined
business activities, strengthened balance sheet and continued
growth prospects, we look forward to attracting additional
institutional shareholders to our share register in the future.
Sawmill - Capex
New 'Techdry' kilns arrived in Gabon from China in March, just
ahead of schedule and we expect them to be installed and
operational in Q3 as anticipated. Bringing kiln drying onsite
rather than outsourcing as has been done to date, provides a
perfect example of the potential to enhance margins via investments
with very short-term payoffs. As per the RNS of 14 January 2019,
the installation of our own kilns will directly add $700,000 to the
bottom line annually assuming existing levels of production.
During Q1 2019, management visited numerous sawmills, veneer and
plywood factories and equipment manufacturers in Gabon, Slovenia,
Turkey, Spain and Morocco to conduct research ahead of placing
orders for new equipment. I'm pleased to report that an entire new
line combining Chinese and Slovenian sawmilling equipment has been
placed on order and is expected to be delivered in Q3 2019 and to
become operational before year end. These investments will not only
increase current levels of production but are expected also to
improve margins by enhancing recovery levels by at least 10% from
the 33% currently being achieved. Thorough planning by our on-site
factory managers has ensured that the sawmill has maintained
consistent output despite the mechanics and logistics of relocating
heavy machinery whilst simultaneously undertaking construction and
civil works activity in preparation for the arrival of new kilns
and band-saws. These new facilities will collectively occupy an
area of more than 3,400m2
Veneer Factory - Capex
A debarking machine, two hydraulic lifters and a hydraulic press
have recently arrived in Gabon and will be installed in the coming
weeks. This equipment will serve to reduce some of the hitherto
more manual aspects involved in production and post-production
processes. As is the case with sawn timber, profit margins are
driven by incremental gains to recovery rates from each log
harvested. In order to further boost recovery rates and increase
margins from veneer production, we will add a plywood manufacturing
line to improve the value of 'strips' or offcuts. Comprehensive
research with regard to the optimal equipment to complement current
veneer output is underway with the intention of placing this
equipment on order during Q2 and for it to be operational before
the end of 2019.
Mozambique
After the well documented difficulties experienced in 2018, our
streamlined operation retains the option to scale up production as
and when the operating environment appears more conducive. However,
given the losses sustained in Mozambique in previous years we will
proceed with caution. We are conducting research into what an
optimal future product mix would look like, and we are reviewing
the cost and availability of the additional machinery and skills
which would be required to deliver such a product mix.
I'm relieved to report that thankfully none of our personnel or
facilities found themselves in the path of the catastrophic
flooding and widespread destruction from Cyclone Idai which passed
200km to our south. One can only feel desperately sorry for the
more than 1 million people estimated to have been displaced in
Mozambique as well as in neighbouring Zimbabwe and Malawi. With
roads in and out of Beira badly damaged, our contribution to
helping those affected has been limited to collecting clothing,
shoes and household utensils, which were delivered to the Red Cross
in Nampula for distribution at the closest relief centres.
Option to Purchase NSMS Not Exercised
Further to the RNS announcement of 29 March 2018 regarding the
extension to the period for serving notice to acquire 100% of the
share capital of Nouvelle Scierie Moderne de Sassandra ("NSMS"), we
have taken the decision to allow for the notice period to lapse,
thus not exercising our option to purchase the business. We
maintain a cordial relationship with NSMS however and will seek to
continue to have exclusivity over their production of timber in
Ivory Coast as well as exploring opportunities with them in other
timber ventures across West Africa.
Board Changes
In January 2019, Jessica Camus stepped down as a Non-Executive
Director of the Company. The Company would like to put on record
how grateful we are to Jessica for her dedication and contribution
to culture and corporate DNA during her two years with the Company.
Jessica's extensive experience and guidance helped the Company to
develop and articulate its sustainability strategy, forge new
partnerships and create a meaningful legacy of social impact.
We are Woodbois
This is the first quarterly report to be delivered under the
Woodbois banner and with great strides already made in 2019, it is
one that I've greatly looked forward to issuing. Having bought out
minority interests and restructured and completed the sale of our
agriculture business in Tanzania, your management team now has the
comparative luxury of focussing exclusively on the development of
market-leading timber production and trading businesses. The pace
of progress reported above clearly validates the decision to shed
the agriculture business in order to concentrate our experience,
energy and strengthened balance sheet on competing profitably
within our chosen industry.
With the business now fully functioning, we will seek to drive
profitability through business expansion while constantly seeking
margin improvement. We are obsessive on both counts. Significant
time and a large number of air-miles have been racked up since
January in order to re-establish and expand our supplier network,
meet new and existing customers as well as researching the latest
equipment and optimal production line formats.
Our new website www.woodbois.com was released on 30 March,
please enjoy a browse. Although the website was designed with
customers in mind, it gives a good feel for where we are now as a
group. Any feedback from you our investors is always welcome via
the 'contact us' links.
Paul Dolan
CEO
Woodbois Limited
Miles Pelham - Chairman
Paul Dolan - CEO
www.woodbois.com +44 (0)20 7099 1940
Arden Partners Plc (Nominated adviser and broker)
Tom Price
Maria Gomez de Olea +44 (0)20 7614 5900
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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