Source - RNS
RNS Number : 2678L
Obtala Limited
30 September 2016
 

 

30 September 2016

Obtala Limited

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

(AIM: OBT)

 

Interim Results for the six months to 30 June 2016

 

 

CHAIRMAN'S STATEMENT

 

I am pleased to present the interim report and consolidated financial statements for Obtala Limited (the "Company" or the "Group") for the half year ended 30 June 2016.

 

The Company continued to make progress in its transition to becoming a highly focussed African agriculture and forestry company through the half year ended 30 June 2016. We continued to develop the asset platform with improvements to production facilities and processes in both Tanzania and Mozambique. Development of, and access to both a local and global customer base has been thoroughly reviewed and analysed with encouraging results.

 

The focus for the agribusiness has been on our farms in the Morogoro district of Tanzania, which over the last three years have created an aspiring horticultural farming enterprise for fresh produce to supply domestic and international markets. This is complemented with an on-site processing facility, to produce a range of high-quality dried fruits, which are packaged and branded under our own "Mama Jo's" label. Having gained Global GAP and BRC certification in late 2015, attention has turned towards development of an export model, with our competitive advantage of close proximity to Middle Eastern markets being of particular focus.

 

Investment in the farms in Tanzania has not to date been rewarded by any substantial increase in output, including in the first half of 2016, although it must be noted that the traditionally rainy season of February to May is not expected to be one of high output. In April 2016 we welcomed a new, highly experienced farm manager, Graham Impey, who has spent the majority of his 28 year farming career in Zimbabwe and Angola.  Graham has exhibited first class planning, communication and execution skills and we are confident that under his stewardship the farms will start to deliver significant returns on previous and future investment. As noted in my statement of June 30th 2016, the investment required to establish the necessary infrastructure for the agri business was executed without the need to secure external investment or dilute shareholders at the holding company level.

 

The focus for our forestry business remains the operations in Mozambique. We continue, as in previous years, to supply timber products for national infrastructure upgrade programmes and for the domestic market. We also continue to develop export market opportunities for our timber.

 

We are aiming to capitalise on the market dynamic of increasing global demand for high quality timber products, whilst supply is becoming more constrained as sustainable harvesting practices cannot meet either current or predicted demand. We now have over 312,000 hectares of forestry concessions all with required management plans either agreed on or in advanced stages of being agreed upon with Mozambican government and local authorities. Our international "cut to order" pipeline continues to grow, with initial orders received from South Africa, Asia and the Middle East. These orders suggest healthy margins, and we are confident that the international market that has been opened via our Joint Venture with Basic Materials of Hong Kong will lead to a significant acceleration in the growth of our forestry business. Global appetite for high quality and high value timber products is buoyant and we are well positioned through our access to significant, environmentally sustainable supplies of desirable timber species.

 

Our conviction remains that the equity market has not recognised the value of the Company's assets, which is true of many companies, particularly on the AIM market. We believe that the Company's strong focus on the two synergistic business platforms of agriculture and forestry will deliver strong growth, high margins and significantly increased, long-term, shareholder value. The businesses we are building are based on long-term investment programmes which, as we move from development to execution phase, will provide a platform to deliver profitability and growth, generating revenues with a focus on strong margins. Over the reporting period to 30th June 2016 we have continued to make capital investment into operations within Mozambique.

 

Financial results

 

The Group generated revenues of £264,000 ($382,000) (June 2015: £2.26m/$3.6m) during the six-month period, across the Group.

 

The six-month period generated a loss of £2.63m ($3.8m) (June 2015: profit £3.0m/$4.7m, which included the independent valuation of forestry assets).

 

Group net assets increased by £1.62m ($2.35m) from December 2015 Year end at £83.2m ($120.7m) with a net cash and equivalent position of £547,000 ($793,000) (December 2015 £660,000/$1.02m) including non-controlling interests of £18.5m (December 2015 £18.9m).

 

With the natural tendency to earn more after the rainy season and an increase of activity in our forestry and agricultural divisions, we anticipate revenues will increase significantly for the remainder of 2016. 

Directorate changes

I joined the Board as a Non-Executive Director in August 2015, becoming Chairman in April this year in place of Francesco Scolaro who relinquished that role but remains on the Board as a Non-Executive Director. In July 2016, Paul Dolan was appointed to the board as Chief Executive Officer and Kevin Milne who joined in August 2015 as Deputy Chairman stepped down to the role of Non-Executive Director.  In June we announced our intention to appoint Warren Deats as Chief Operating Officer and Warren took up this role effective 1st August 2016. Emma Priestley, who was appointed to the Board in March 2015 relinquished her position in April this year due to other commitments. Simon Rollason, Philippe Cohen and Jean du Lac remain on the board in their roles as Managing Director, Finance Director and Non-Executive Director respectively.

 

Corporate social responsibility

The Group's approach to the continued development of its business units directly and indirectly generate a wide range of benefits to the host community and host country as a whole. In addition to the community participation benefits, development of the project areas provides a number of core benefits such as employment generation, training and skills transference, infrastructure improvement, support for localised industries and improved food security. The Group is also committed, where possible, to provide educational and vocational training facilities and programmes in the communities in which we operate.

 

We are proud of our listing on the Social Stock Exchange in London, to which we were accepted after a rigorous application process that included an independent assessment of our social impact activities and commitment, and an independent admissions panel hearing. This gives the Company a high profile within the social impact investment community as well as being a great endorsement of our business practices and commitment to working with local communities. As our businesses expand, we expect the reach of our social impact programmes to grow in tandem to the benefit of our employees and their communities.

 

Outlook

As a long term shareholder in your company, I have a keen appreciation of the deep value embedded within its asset base. I became non-executive Chairman midway through this period with an open mind regarding the correct strategy to begin to release this value. A thorough review of all operations beneath the Obtala umbrella was initiated immediately upon my appointment in April 2016, with detailed analysis conducted within every business line. H2 will see the execution of decisions made as a result of this substantial body of work. There is no question however that there will be relentless focus on delivering sustainable, profitable production from the valuable assets within our core businesses.

 

In the three months since I signed off my last Chairman's statement the pace of change within the company has been frenetic and I look forward to updating you with a quarterly progress report and outlook for the remainder of 2016 shortly.

 

It only remains for me to thank the board of directors and all of our employees for their dedication and diligence during this transitional period.

 

 

Miles Pelham

Chairman

 

 

Obtala Limited

Miles Pelham - Chairman
Paul Dolan - CEO

www.obtala.com

 

+44 (0)20 7099 1940

ZAI Corporate Finance Limited (Nomad)                

Peter Trevelyan-Clark/John Treacy/Jamie Spotswood

 

+44 (0)20 7060 2220

Brandon Hill Capital  (Broker)     

Jonathan Evans

+44 (0)20 3463 5000


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six-month period to 30 June 2016

 

 

 

 

 

Continuing operations

 

 

Notes

Six months to 30 June

2016

(Unaudited)

£'000

Six months to 30 June

2015

(Unaudited)

£'000

Year to 31 December 2015

(Audited)

£'000

Turnover


264

2,257

3,692

Cost of Sales


(231)

(1,585)

(2,614)

Gross profit


33

672

1,078

Operating costs


(387)

(584)

(675)

Administrative expenses


(1,179)

(1,220)

(2,905)

Impairment of Intangible Asset


-

-

(16,080)

Gain/(loss)Loss on derivative financial instruments


-

(1,556)

(1,083)

Depreciation


(205)

(100)

(340)

Operating profit/(loss)


(1,738)

(2,788)

(20,005)

Revaluation of Biological asset


-

8,600

8,600

Gain on Fair Value of Investment


-

-

1,046

Finance income/(costs)


(-)

(44)

(39)

Profit/(loss) before tax


(1,738)

5,768

(10,392)

Taxation

5

(892)

(2,752)

(4,504)

Total profit/loss for the period/year


(2,630)

3,016

(14,896)






Attributable to:





Owners of the parent


(2,196)

1,707

(16,805)

Non-controlling interests


(434)

1,309

1,909



(2,630)

3,016

(14,896)

Other comprehensive income:





Exchange differences of re-translation of foreign operations


2,787

(513)

3,242

Total comprehensive income for the period:


157

2,503

(11,654)

Attributable to:





Owners of the parent


591

1,194

(13,563)

Non-controlling interests


(434)

1,309

1,909



157

2,503

(11,654)






Earnings/(loss) per share





From continuing operations





Basic and diluted (pence)

6

(0,83)

0.65

(6,38)

 

 

 


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period from 1 January 2015 to 30 June 2016

                                                                                                                                   


Share capital

Share premium

Merger reserve

Foreign exchange reserve

Share based payment reserve

Revenue reserve/

(deficit)

 

 

 

Total

Non-controlling interests

Total equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2015

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

Profit/(loss) for the period

-

-

-

-

-

(18,512)

(13,153)

(560)

(13,713)

Exchange differences on retranslation of foreign operations

-

-

-

3786

-

-

640

415

(1,055)

Total comprehensive income for the period

-

-

-

3786

-

(18,512)

(12,513)

(145)

(12,658)

Transactions with owners










Reserve transfer

-

-

-

(2,740)

-

2,740

(77)

-

(77)

At 31 December 2015

2,633

11,528

28,543

2,017

1,014

17,007

62,742

18,946

81,688

Profit/(loss) for the period

-

-

-

-

-

(2,196)

(2,196)

(434)

(2,630)

Exchange differences on retranslation of foreign operations

-

-

-

4,249

-

-

 

4,249

-

4,249

Total comprehensive income for the period

-

-

-

4,249

-

(2,196)

2,053

(434)

 

1,619

Transactions with owners










Reserve transfer

-

-

-

(2,787)

-

2,787

-

-

-

At 30 June 2016

2,633

11,528

28,543

3,479

1,014

17,598

64,795

18,512

83,307

 

 

 

 


CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2016


Notes

30 June 2016

(Unaudited)

30 June 2015

(Unaudited)

31 December 2015

(Audited)



£'000

£'000

£'000

ASSETS





Non-current assets





Available for sale investments


90

53

90

Intangible exploration and evaluation assets


-

16,080

-

Biological asset

7

121,007

112,432

118,220

Plant and equipment


1,697

2,447

1,902

Total non-current assets


122,794

131,012

122,557






Current assets





Trade and other receivables


108

1,181

275

Inventory


378

1,169

579

Cash and cash equivalents


547

1,409

660

Total current assets


1,033

3,759

1,514

TOTAL ASSETS


123,827

134,771

121,726






LIABILITIES





Current liabilities





Trade and other payables


(1,818)

(2,245)

(2,228)

Financial investment  liabilities


-

(700)

(-)

Current tax liabilities


20

(2)

20

Total current liabilities


(1,798)

(2,947)

(2,208)






Non-current liabilities





Deferred tax

5

(38,722)

(35,978)

(37,830)

Loans


(-)

(-)

-

Total non-current liabilities


(38,722)

(35,978)

(37,830)

TOTAL LIABILITIES


(40,520)

(38,925)

(40,038)






NET ASSETS


83,307

95,846

81,688






EQUITY





Share capital

8

2,633

2,633

2,633

Share premium

9

11,528

11,528

11,528

Merger reserve


28,543

28,543

28,543

Foreign exchange reserve


3,479

971

2,017

Share based payment reserve


1,014

1,014

1,014

Revenue reserve/(deficit)

10

17,598

32,779

17,007

Equity attributable to the owners of the parent


64,795

77,468

62,742

Non-controlling interests

11

18,512

18,378

18,946

TOTAL EQUITY


83,307

95,846

81,688

 

Approved by the board and authorised for issue on 30th September 2016

M Pelham                                                                             P Cohen

Chairman                                                                              Finance Director


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the period from 1 January 2015 to 30 June 2016

 


Notes

Six months to 30 June 2016

(Unaudited)

Six months to 30 June

2015

(Unaudited)

Year to 31 December 2015

(Audited)

 



£'000

£'000

£'000

 

OPERATING ACTIVITIES





 

Operating profit/(loss)


(1,738)

5,768

(10,392)

 

Adjustment for non-cash items:





 

(Gains)/loss on fair value of investments


-

(589)

(1,046)

 

Foreign exchange (gains)/losses


1,462

-

(2,500)

 

Valuation of biological asset


-

(8,600)

(8,600)

 

Depreciation of plant and equipment


205

100

340

 

Impairment of Intangible Assets


-

-

16,080

 

Decrease/(increase) in trade and other receivables


167

(351)

555

 

(Decrease)/increase in trade and other payables


(410)

(2,244)

(209)

 

Decrease/(Increase) in inventory


201

182

772

 

Finance expense/(income)


-

44

(39)

 

Losses on investments


-

1,601

1,083

 

Cash outflow from continuing operations


(113)

(4,089)

(3,956)

 

Income taxes paid


-

-

-

 

Net cash flow from operating activities


(113)

(4,089)

(3,956)

 






 

INVESTING ACTIVITIES





 

Purchases of property, plant and equipment


-

(8)

(10)

 

Net cash inflow/(outflow) from investing activities


-

(8)

(10)

 






 

FINANCING ACTIVITIES





 

Proceeds from sale of investments


-

2,237

1,357

 

Finance expense


-

-

-

 

Net cash inflow from financing activities


-

2,237

1,357

 






 

(Decrease)/Increase in cash and cash equivalents


 (113)

(1,860)

(2,609)

 

Cash and cash equivalents at start of period


660

3,269

3,269

 

Effect of foreign exchange rate variation


-

-

-

 

Net cash and cash equivalents at end of period


547

1,409

660

 


NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

1. BASIS OF PREPARATION

 

The interim financial statements of Obtala Limited are unaudited condensed consolidated financial statements for the six months to 30 June 2016. These include unaudited comparatives for the six-month period to 30 June 2015 together with audited comparatives for the year to 31 December 2015.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

The condensed consolidated financial statements have been prepared under the historical cost convention except for the revaluation of certain financial investments, available for sale investments and financial assets and liabilities which are included at fair value.

 

The accounting policies adopted are consistent with those followed in the preparation of the Group's annual financial statements for the period ended 31 December 2015.

 

The financial information contained in this announcement does not constitute statutory accounts as defined under section 244 of the Companies (Guernsey) Law 2008. The auditors have reported on the 2015 financial statements which have been delivered to the Guernsey Registrar of Companies; their report was unqualified but did contain an emphasis of matter paragraph on the fair value of biological assets and in respect of going concern. It contained no statement under sections 263(2) or 263(3) of the Companies (Guernsey) Law 2008.

 

3. GAINs/(Loss) ON INVESTMENTS 


Six months to 30 June 2016

Six months to 30 June 2015

Year to 31 December 2015


£000

£000

£000

Gain/(loss) on disposal of investments

-

(1,601)

(1,083)

(Decrease)/increase in fair value of financial investments

-

-

-

Gain/(loss) from investing activities

-

(1,601)

(1,083)

 

4.  SEGMENTAL REPORTING

 

The Group is currently in agriculture and forestry as well as retail. In addition, the Group undertakes investing activities, which are based in Guernsey. These are the Group's primary reporting segments.

 

5.  TAXATION

 

The accrued tax charge for the six-month interim period is based on an estimated worldwide average effective tax rate of nil per cent, after allowance for utilisation of tax losses brought forward in UK based subsidiaries (six months to 31 June 2015: nil%)

 

The Group has recognised a deferred tax liability of £38,722,000 at 30 June 2016 (30 June 2015: £35,978,000, 31 December 2015: £37,830,000) which arose on the difference between the book value and the fair value of assets acquired on the acquisition of a subsidiary and the revaluation of a biological asset.

 

6.  EARNINGS PER SHARE

 

Basic earnings per share is based on the loss for the six months of £2,196,000 attributable to equity holders of the parent divided by the number of ordinary shares in issue during the period of 263,260,664 exclusive of ordinary shares purchased by the Obtala Resources Employee Share Trust and held jointly by the Trust and certain employees. No shares were issued during the period 


7. BIOLOGICAL ASSET

 


£'000

At 1 January 2015

103,832

Fair Value Adjustment

8,600

At 30 June 2015

112,432

Foreign Exchange Adjustment

5,788

At 31 December 2015

118,220

Foreign Exchange adjustment

2,787

At 30 June 2016

121,007

 

With the work conducted in the 2015 year to ascertain a more accurate measure of timber specie within the concessions and to ensure operational viability to enable extraction of the timber to the local market, 2015 was the second year in which a fair value can be reliably assessed and therefore the standing timber can be fair valued. The Group's main class of biological assets comprise forestry concessions which hold a range of hardwoods. Biological asset are carried at fair value less estimated costs to sell. The biological assets were fair valued by Crispin Golding MICFor of Honour Capital Limited with additional two blocks, totalling 35,000 hectares included in June 2015 fairly valued by Edward Anderson-Bickley MRICS both of Honour Capitol Limited. They are secured on a 50 year concession basis (renewable thereafter for a further 50 years) from the Mozambique government. 

 

8. SHARE CAPITAL

 


Number

£'000

Authorised ordinary shares of £0.01 each:



At 1 January 2014, 31 December 2015 and 30 June 2016

Unlimited

Unlimited

Allotted, issued and fully paid ordinary shares of £0.01 each:



At 1 January 2015

263,260,664

2,633

Issued in the period

-

-

At 30 June 2015

263,260,664

2,633

Issued in the period

-

-

At 31 December 2015

263,260,664

2,633

Issued in the period

-

-

At 30 June 2016

263,260,664

2,633

 

9.  SHARE PREMIUM

 


£'000

At 1 January 2015

11,528

Premium on issue of shares

-

At 30 June 2015

11,528

Premium on issue of shares

-

At 31 December 2015

11,528

Premium on issue of shares

-

At 30 June 2016

11,528

 


10. MOVEMENT IN REVENUE RESERVE AND OWN SHARES

 


Retained earnings/(deficit)

Own shares

Revenue Reserve


£'000

£'000

£'000

At 1 January 2015

33,369

(2,297)

31,072

Profit for the period

1,707

-

1,707

Purchase of own shares

-

-


Part disposal of Subsidiary

-

-

-

At 30 June 2015

35,076

(2,297)

32,779

Profit for the period

(18,512)

-

(18,512)

Transfer from foreign exchange

2,740

-

2,740

Part disposal of Subsidiary

-

-

-

At 31 December 2015

19,304

(2,297)

17,007

Profit for the period

(2,196)

-

(2,196)

Purchase of own shares

-

-


Transfer from Foreign Exchange

2,787

-

2,787

At 30 June 2016

19,895

(2,297)

17,598

 

 

11. NON-CONTROLLING INTEREST

 


£'000

At 1 January 2015

17,037

Non-controlling interests in share of losses post acquisition

1,309

Non-controlling interests in foreign exchange gains

32

At 30 June 2015

18,378

Non-controlling interests in share of losses post acquisition

(560)

Non-controlling interests in foreign exchange gains

415

At 31 December 2015

18,946

Non-controlling interests in share of profits  post acquisition

(434)

Non-controlling interests in foreign exchange gains


At 30 June 2016

18,512



 

 

12.  INTERIM FINANCIAL REPORT

A copy of this interim report will be distributed to shareholders and is also available on the Company's website at www.obtala.com


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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