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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Obtala | LSE:OBT | London | Ordinary Share | GG00B4WJSD17 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 6.90 | 6.80 | 7.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMOBT
RNS Number : 4537A
Obtala Resources Limited
29 September 2015
29 September 2015
Obtala Resources Limited
Interim Results for the six months to 30 June 2015
Obtala Resources Limited (AIM:OBT), the African-focused, vertically integrated agribusiness, timber and retail company, announces interim results for the six months ended 30 June 2015.
Financial Highlights:
-- Sales revenue increased to GBP2.3m (2014: GBP1.0m)
-- Net profit of GBP3.02m (2014: loss GBP0.2m) including independent valuation of new land assets
-- Net assets stood at GBP95.8m (2014: GBP93.5m) and cash and equivalents broadly the same at GBP1.4m
Operational highlights:
Agribusiness
-- Fresh produce lines developed -- Global GAP certification awarded -- Work continues on gaining BRC Global Standards -- Export Processing Zone Certification awarded for 10 years by the Government of Tanzania
Timber
-- A further 35,000 hectares under application -- Now supplying cut timber -- Development of higher margin product lines
Retail
-- Six branches now open -- Continued focus on operational performance improvement, cost control and sourcing -- Catalogue retail concept developed and being introduced
Corporate
-- Board appointments of Emma Priestly, Kevin Milne and Miles Pelham in 2015 -- Membership of Social Stock Exchange achieved in September 2015
Frank Scolaro, Chairman, commented:
"The Directors are optimistic for the outlook of the group. We are very clear about our vision, keeping our business model simple, focusing on execution, micromanaging our costs whilst increasing our revenues and margins. Cost management is the key business discipline in the current equity and commodity markets. We expect our asset base and sales to continue to grow during the second half of the year as our product range develops and certification is awarded."
Obtala Resources Limited +44 20 7099 1940
Frank Scolaro, Chairman
Simon Rollason - Managing Director
ZAI Corporate Finance Limited (Nomad) +44 20 7060 2220
Richard Morrison
Irina Lomova
Brandon Hill Capital (Broker) +44 (0)20 3463 5000
Jonathan Evans
Square 1 Consulting (Public Relations) +44 20 7929 5599
David Bick
Mark Longson
Chairman's Statement
I am pleased to present the interim report of Obtala Resources Limited ("Obtala" or "Company" and its subsidiaries (the "Group")) for the six months to 30 June 2015.
Obtala during the half year has continued building a debt free, multi-industry African-focused asset base, which has limited potential political risk by operating across three countries. The regions where we are operating all have highly favourable macro trends and the business fundamentals and growth opportunity are very attractive. Currently the three main pillars to the business we are developing are; agriculture and associated processing, timber and retail.
The Morogoro horticultural and food processing project remains the focus for the agribusiness. We were awarded Global G.A.P certification, the internationally recognized standard for farm production in July 2015 and we continue to invest and work towards gaining BRC Global Standards; a leading safety and quality certification programme and now a fundamental requirement of many retailers.
In Mozambique, the timber operations started slowly as a result of the exceptional rainfall experienced in the region over the first 4 months of the year. Additional concessions totalling 35,000 hectares are currently under application. We plan to evaluate and develop other product opportunities to expand the timber goods range for the local and regional markets.
In late 2014 the Group acquired a chain of retail outlets in Lesotho. This provides an additional route to market for our products and presents an ideal opportunity to roll-out an African Home Stores concept in other countries in the Southern and East African region where Obtala has expertise.
We believe that the equity markets have not yet recognised the value of the Company's assets or growth opportunity, which is true of many diversified companies. However, the business we are building is based on medium to long--term investment programmes, which will provide a platform to deliver sustainable future growth, generating stronger revenues with a focus on strong margins. Over the reporting period we have made substantial capital investments into the projects using our own funds without any dilution to shareholders.
Financial results
The Group generated revenues of GBP2.26 million ($3.6 million) (H1 2014: GBP1.16 million) during the six month period, across the group.
The six month period generated a net profit of GBP3.02 million ($4.7 million) (H1 2014: loss GBP0.2 million), which includes the independent valuation of new land assets.
Group net assets remained broadly in line with the prior year end at GBP95.8 million ($149 million) (December 2014 GBP93.5 million) with a net cash and equivalent position of GBP1.41 million ($2.2 million) (December 2014: GBP3.3 million). Proceeds from the sale of shares in Paragon Diamonds generated GBP2.24 million ($3.5 million) in the period.
With the increase of activity in our main agriculture and forestry divisions along with our new divisions coming on line we anticipate revenues will increase for the remainder of 2015.
Montara Continental
Montara continues to make steady progress developing its sustainable agricultural and timber operations in Tanzania and Mozambique, respectively. Our vertically integrated "Farm to Fork" model is focused on food production and processing, supplied by our own farms and contracted farmers. The asset platform which has been built is ready to deliver sustainable revenues from high quality produce with strong margins which will enhance the underlying Group value. The business model facilitates control of the value chain and positions the Group to produce value added commodities, branded under our Mama Jo's label, bringing greater returns with better margins. To complete the final step for the vertical integration, the Group acquired a chain of retail outlets in Lesotho to provide additional routes to market.
Agriculture and Processing
The focus during the first half 2015 has been the continued development of the Morogoro farm and processing facility in Tanzania, with the emphasis acquiring internationally recognised farm and food standards.
Whilst the audit and BRC certification process continues we have developed a fresh fruit and vegetable business opportunity with sales of over 20 varieties of fresh produce commencing locally in Tanzania. The farm is ideally located, being only 180km from the large local market and export port facilities in Dar es Salaam ensuring overnight deliveries of quality goods to the market. The Group is currently supplying three distribution companies, a number of hotels, restaurants and shops in Dar es Salaam. Our target objective for the fresh sales, depending on demand, is to supply c200 tonnes per month into Dar es Salaam.
Global GAP certification, an internationally recognized standard for farm production, was awarded in late July 2015 with efforts and significant capital investment now focused on achieving BRC Global Standards accreditation for the processing unit. BRC is a leading safety and quality certification program, used by over 20,000 certificated suppliers in 90 countries. The Standards guarantee the standardisation of quality, safety and operational criteria and ensure that manufacturers fulfil their legal obligations and provide protection for the end consumer. This approval will significantly increase our revenue potential and elevate the whole company to a stronger platform from which to grow.
The Group continues to seek out the value added opportunities within the agri-sector and to support this objective an Export Processing Zone ("EPZ") Certificate has been granted for a 10 year period by the Government of Tanzania, which provides a range of fiscal incentives which will ultimately improve margins. Under this award, 80% of produce from the processing unit needs to be exported which is linked to gaining BRC certification.
During this period the cannery in Lesotho continued to trial and produce a sample range of canned products which vary from chopped tomato blends, pasta & pesto sauces, and mixed fruit. These products are being marketed whilst the certification upgrade process funded by Lesotho National Development Corporation is being completed.
Timber
The timber portfolio has steadily grown over the past few years with selective concession acquisitions to provide a critical mass of permitted annual quotas of harvestable timber. The quality of timber concessions which have been independently audited indicate our standing stocks can supply high quality hardwood timber for many years to come.
Timber operations experienced a challenging start to the period. Exceptionally heavy rainfall in northern Mozambique at the start of the year resulted in some damage to local infrastructure with a consequential delay in the 2015 field season. The Company has moved away from wooden railway sleeper production and is concentrating on supplying cut timber into the local Mozambican market place targeting the construction industry. A number of discussion have been held with an international timber company with a view to exporting timber to the Middle Eastern market.
The Company is, subject to Government approval, completing the acquisition of 50 year leases for two new timber concessions totaling 35,000 hectares in Mozambique to bring the total forestry area to 314,965 hectares.
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September 29, 2015 02:00 ET (06:00 GMT)
We are currently assessing the opportunity to increase the operational productivity and improve on-site capability to produce value-added end products. The supply of these products will provide additional value uplift to the revenues generated from the concessions and will provide for additional employment and training for the local population.
Our timber business is committed to working with high levels of sustainability within the local legal framework.
Retail - African Home Stores
African Home Stores ("AHS") was acquired to provide an outlet to the retail market for our products. We assumed control of Lifes' Comfort Solutions (Pty) Limited ("LCS"), a private Lesotho registered company, in October 2014 when we acquired a controlling 72.69% shareholding. LCS operated five departmental home solution retail outlets within Lesotho.
We have since opened a new branch in Semonkong with other outlet opportunities being evaluated. A catalogue retailing concept is being introduced to offer the full range of products throughout all the branches and this is supported by better buying out of Asia. A strategic plan for the shops has been developed which will see an improved balance sheet and increased sales densities with improved margins. LCS has strong brand awareness and recognition in Lesotho with the additional outlets providing a country wide footprint to what is already considered a well-known and trusted Basotho retailer. We have invested to reduce the overdraft of LCS to zero and bring the business more in line with our cash flow expectations
During the period sales have been slower than expected. The national parliamentary elections and substantive renovation works and remodelling of the shopping complex hosting the main outlet in Maseru have impacted sales. However the long term forecast remains positive as a number of mines in the highlands continue with development plans and the initiation of the Lesotho Highlands Water Project - Phase 2. The African Growth and Opportunity Act ("AGOA") which provides trade preference for quota and duty-free entry into the United States has been renewed, which is key to the local economy as Lesotho has a strong textile industry which exports to USA under AGOA.
Corporate Social Responsibility
During the reporting period we have continued to support Sentebale, a Lesotho children's charity founded in 2006 by His Royal Highness Prince Harry of Wales and Prince Seeiso Bereng Seeiso.
A post reporting period event was our successful application for membership of the Social Stock Exchange ("SSX"). The SSX was launched in June 2013 by the UK Prime Minster at the first G8 Social Impact Investment Forum in London. In January 2015, the SSX and ICAP Securities & Derivatives Exchange Limited announced their collaboration to launch a new market segment for Social Impact businesses, providing a central venue for impact opportunities in the UK and beyond. Member companies articulate and evidence their social and environmental credentials through the production of an independently assessed Impact Report, which is then ratified by an admissions panel comprised of finance and social sector experts.
Outlook
The Directors are optimistic for the outlook of the group. We are very clear about our vision, keeping our business model simple, focusing on execution, micromanaging our costs whilst increasing our revenues. Cost management is the key business discipline in the current equity and commodity markets. We expect our asset base and sales to continue to grow during the second half of the year as our product range develops and certification is awarded.
The GLOBALG.A.P certification is a key milestone in the development of the agricultural division in Tanzania and once BRC is achieved the market opportunity grows considerably. We have had the BRC site audit and anticipate certification approval within the next month or so. We believe there are strong growth opportunities with our agriculture and food processing business through own branded "Mama Jo's" range and also the own label market. The Mama Jo's branded dried fruit pouches have had strong interest from buyers and we will be working to secure large scale orders once BRC is granted. Fresh product sales provide an additional revenue stream and we are currently evaluating the opportunity to export to the Middle East and Asia in addition to building up the order book in Dar es Salaam and the surrounding region. Longer term, we see a significant export opportunity.
The timber business represents a substantial asset which, we believe, is not reflected in the company's share price. We have previously stated our intention to re-organise and divest the forestry division to recognise its true value and to grow the business in Mozambique more expeditiously. We are currently progressing this option, and given market conditions, will be focussed on maximising value. We have also received a commitment for seed funding from private international investors. The Board has also taken the decision not to bring in a strategic timber partner as previously evaluated to avoid value dilution. On the ground the plan is to diversify the product range with on-site processing to capture additional value and are analysing the feasibility of opening up a timber yard in Maputo.
The group objective for African Home Stores is to manage the cost structure and improve sales volumes by better buying and introducing new product lines. An option being evaluated is to franchise the business in Lesotho. This will reduce the cost base substantially and lead to improved sales volumes through the opening of additional outlets in the smaller towns and rural areas of the country.
We have commenced a realisation of non-core assets within the group and it is the intention of the Board to reinvest the proceeds back into the Company.
During the period, Board level appointments have strengthen the operational and decision making capability of the group. Emma Priestley joined as Executive Director, and in August, Kevin Milne and Miles Pelham were appointed Executive Deputy Chairman and Non-executive director, respectively.
The enlarged senior executive management is focussed on accelerating operational delivery from the investments that have been made in each business activity. This will involve improvement to every aspect of our operations in terms of efficiencies, cost controls, sales growth, margin management and value enhancement.
Our objective is on creating value, working closely with market demand, growing sales whilst maintaining high margins. We shall continue to report on the group's progress with updates to our shareholders. The business fundamentals of the group remain highly attractive in exciting and growing sectors. We live in a challenging world generally and the first six months have been positive, productive and, even with all the hurdles, we remain confident of the success of the company.
I would like to thank our shareholders for their continued support and also all of our employees across the group for their hard work and commitment during the period.
Francesco Scolaro
Executive Chairman
29 September 2015
Hot Features
Premium
Continuing operations Notes Six months Six months
to 30 to 30
June June
Year
to 31
December
2015 2014 2014
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------------- ------- ------------- ------------- -----------
Turnover 2,257 1,157 1,690
Cost of Sales (1,585) (855)
------------------------------- ------- ------------- ------------- -----------
Gross profit 672 835
Operating costs (584) (320) (1,191)
Administrative expenses (1,220) (759) (2,616)
Gain/(loss) on investments 3 (1,601) 235 (-)
Gain/(loss)Loss on derivative
financial instruments 45 - (736)
Depreciation (100) (-) (294)
Operating profit/(loss) (2,788) 253 (4,002)
Revaluation of Biological
asset 8,600 - -
Loss on disposal of
associate - - (20,987)
Gain on Fair Value of
Investment - - 749
Finance income/(costs) (44) 30 109
------------------------------- ------- ------------- ------------- -----------
Profit/(loss) before
tax 5,768 283 (24,131)
Taxation 5 (2,752) - 10,198
------------------------------- ------- ------------- ------------- -----------
Profit/(loss) for the
period/year from continuing
operations 3,016 283 (13,933)
------------------------------- ------- ------------- ------------- -----------
Discontinued operations
Loss for the year from
discontinued operations - (502) -
Total profit/loss for
the period/year 3,016 (219) (13,933)
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September 29, 2015 02:00 ET (06:00 GMT)
Attributable to:
Owners of the parent 1,707 (239) (13,392)
Non-controlling interests 1,309 20 (541)
------------------------------- ------- ------------- ------------- -----------
3,016 (219) (13,933)
Other comprehensive
income:
Exchange differences
of re-translation of
foreign operations (513) (1,807) (752)
Total comprehensive
income for the period: 2,503 (2,026) (14,685)
------------------------------- ------- ------------- ------------- -----------
Attributable to:
Owners of the parent 1,194 (1,630) (14,144)
Non-controlling interests 1,309 (396) (541)
------------------------------- ------- ------------- ------------- -----------
2,503 (2,026) (14,685)
------------------------------- ------- ------------- ------------- -----------
Earnings/(loss) per
share
From continuing and
discontinued operations
Basic and diluted (pence) 6 0.65 (0.09) (5.09)
Share Non-controlling
Foreign based Revenue interests
Share Share Merger exchange payment reserve/ Total
capital premium reserve reserve reserve (deficit) Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- -------- --------- -------- ---------- --------- ---------------- ---------
At 1 January
2014 2,633 11,528 28,543 439 1,898 35,918 80,959 41,436 122,395
--------------- -------- -------- -------- --------- -------- ---------- --------- ---------------- ---------
Profit/(loss)
for the
period - - - - - (239) (239) 19 (219)
Exchange
differences
on
retranslation
of foreign
operations - - - (1,392) - - (1,392) (415) (1,807)
--------------- -------- -------- -------- --------- -------- ---------- --------- ---------------- ---------
Total
comprehensive
income for
the
period - - - (1,392) - (239) (1,631) (396) (2,027)
Issue of - - - - - - - -
shares
Share based
payment - - - 77 - 77 - 77
Purchase of - - - - - - - -
own shares
Dilution of
interest in
subsidiary - - - - (1,172) (1,172) 1,995 822
--------------- -------- -------- -------- --------- -------- ---------- --------- ---------------- ---------
At 30 June
2014 2,633 11,528 28,543 (953) 1,975 34,507 78,233 43,035 121,268
--------------- -------- -------- -------- --------- -------- ---------- --------- ---------------- ---------
Profit/(loss)
for the
period - - - - - (13,153) (13,153) (560) (13,713)
Exchange
differences
on
retranslation
of foreign
operations - - - 640 - - 640 415 (1,055)
--------------- -------- -------- -------- --------- -------- ---------- --------- ---------------- ---------
Total
comprehensive
income for
the
period - - - 640 - (13,153) (12,513) (145) (12,658)
Issue of - - - - - - - - -
shares
Share based
payment - - - - (297) 220 (77) - (77)
Impairment of
foreign
exchange - - - 1,828 - - 1,828 - 1,828
Dilution of
interest in
subsidiary - - - - (664) 9,498 8,834 (25,853) (17,019)
--------------- -------- -------- -------- --------- -------- ---------- --------- ---------------- ---------
At 31 December
2014 2,633 11,528 28,543 1,515 1,014 31,072 76,305 17,037 93,342
--------------- -------- -------- -------- --------- -------- ---------- --------- ---------------- ---------
Profit/(loss)
for the
period - - - - - 1,707 1,707 1,309 3,016
Exchange
differences
on
retranslation
of foreign
operations - - - (544) - - (544) 32 (512)
--------------- -------- -------- -------- --------- -------- ---------- --------- ---------------- ---------
Total
comprehensive
income for
the
period - - - (544) - 1,707 1,163 1,341 2,504
Issue of - - - - - - - - -
shares
Share based - - - - - - - - -
payment
Purchase of - - - - - - - - -
own shares
Dilution of - - - - - - - - -
interest in
subsidiary
--------------- -------- -------- -------- --------- -------- ---------- --------- ---------------- ---------
At 30 June
2015 2,633 11,528 28,543 971 1,014 32,779 77,468 18,378 95,846
--------------- -------- -------- -------- --------- -------- ---------- --------- ---------------- ---------
Notes 30 June 30 June 31 December
2015 2014 2014
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
----------------------------- ------ ------------- ------------- ------------
ASSETS
Non-current assets
Available for sale
investments 53 - 90
Intangible exploration
and evaluation assets 7 16,080 54,329 16,080
Biological asset 8 112,432 107,379 103,832
Derivative financial
asset - 611 -
Plant and equipment 2,447 2,674 2,555
----------------------------- ------ ------------- ------------- ------------
Total non-current
assets 131,012 164,993 122,557
Current assets
Trade and other receivables 1,181 1,049 830
Inventory 1,169 334 1,351
Financial investment
assets - 687 3,938
Cash and cash equivalents 1,409 1,431 3,269
----------------------------- ------ ------------- ------------- ------------
Total current assets 3,759 3,501 9,388
TOTAL ASSETS 134,771 168,494 131,945
----------------------------- ------ ------------- ------------- ------------
LIABILITIES
Current liabilities
Trade and other payables (2,245) (1,442) (2,260)
Financial investment
liabilities (700) (2,578) (2,960)
Current tax liabilities (2) (2) (2)
----------------------------- ------ ------------- ------------- ------------
Total current liabilities (2,947) (4,022) (5,222)
----------------------------- ------ ------------- ------------- ------------
Non-current liabilities
Deferred tax 5 (35,978) (43,018) (33,226)
Loans (-) (73) (155)
Site restoration
provision (-) (113) (-)
----------------------------- ------ ------------- ------------- ------------
Total non-current
liabilities (35,978) (43,204) (33,381)
----------------------------- ------ ------------- ------------- ------------
TOTAL LIABILITIES (38,925) (47,226) (38,603)
----------------------------- ------ ------------- ------------- ------------
NET ASSETS 95,846 121,268 93,342
----------------------------- ------ ------------- ------------- ------------
EQUITY
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