TIDMOBT
RNS Number : 5814R
Obtala Resources Limited
30 June 2015
30(th) June 2015
Obtala Resources Limited
("Obtala" or the "Company")
(AIM: OBT)
Final Results
Obtala Resources Limited (AIM:OBT), the African focused,
vertically integrated agribusiness, timber and retail company,
announces the publication of the audits final results for the year
ended 31(st) December 2014.
The full version of the Annual Report and the Notice of the AGM
are being posted to shareholders today and are available from the
Company's head office in London and can be downloaded from Obtala's
website www.obtalaresources.com.
Highlights:
Financial
-- Sales revenues increase by 271% to $2.63m/GBP1.69m (2013:$705,000/GBP455,000)
-- Gross margin on sales averaging 49.4% totaling sales of
$1.29m/GBP835,000 (2013: $470,000/GBP304,000)
-- Net Assets $144.7m/GBP93.3m (2013: $189.7m/$122.4m)
-- Cash position $5.06m/GBP3.27m (2013: $3.31m/GBP2.1m)
-- Net (loss)/profit of $(21.6)m /GBP(13.9)m (2013:
+$62.7m/+$40.4m). Paper loss incurred from the disposal of the
Paragon holding)
Operational highlights:
Agribusiness
-- Export Processing Zone award to Tanzania farm
-- GLOBALG.A.P and BRC site audits completed with certification
award expected within next 3 months
-- Secured additional 204 hectares on a neighbouring plot for increase security of supply
-- Establishing Fruit tree orchard for sustainable supply of raw material
Timber
-- Independent report valued the timber concessions on an NPV
10-year cash flow basis at US$161m using a 12% discount rate.
-- Increased portfolio by 35,000 hectares, which now stands at 314,965 hectares
-- Timber plan: reorganise and divest the forestry division,
assess the viability of a stock allocation in part via a dividend
in-Specie to existing Obtala shareholders
Retail
-- New business acquisition for improved route to market
-- Opened a new branch for a total of 6 branches, and opening
additional outlets planned in H2 2015
-- Focus on improving margins and sales: implementing improved
management controls, stock control and ordering, improved buying
power and identified new products and suppliers.
-- Investment to date $500,000 for the reduction of creditors and liabilities on acquisition
"2014 was a year of steady growth for the Group as we continued
to strengthen all business sectors and initiated the African Home
Stores concept with the acquisition of retail stores in Lesotho.
The benefits of this groundwork and further investment will be
realised through 2015 and beyond. To date, we have created a
diversified African focused business which remains debt free,
multi-country and multi-industry with a tangible platform for
sustainable growth. Country risk is offset by operating in three
nations where macro trends remain highly favourable.
The valuation of the timber assets not only underpins the
potential of the business but also demonstrates a great opportunity
to expand our revenue potential with increased sales expected in
Mozambique. The strategy in 2015 is to reorganise and divest the
forestry division to recognise its true value and to grow the
business in Mozambique more expeditiously. This will benefit Obtala
shareholders directly as we assess the viability of a stock
allocation via a dividend in-Specie in part to existing Obtala
shareholders. We will continue to look at new opportunities while
we consolidate and grow the current business. With the required
food and safety certification and working with our strategic
partner we expect that the agribusiness will grow significantly.
The land available to us on the agribusiness and timber operation
will provide security of supply as new products are developed and
sold into the market.
We continue to review and manage costs within the growing
businesses to ensure optimised margins are achieved; furthering our
international relationships by planning synergies for the
individual businesses for future growth. The board continues to
manage Obtala in a diligent and controlled manner seeking partners
to continue the growth at the rate that the Board has
commenced.
I am confident 2015 will prove equally as exciting and look
forward to reporting on the further development of our
agri-processing, farming and timber operations.
Finally, I would like to thank my colleagues and our employees
for all their hard work throughout the year and look forward to a
successful and eventful 2015."
Obtala Resources
Francesco Scolaro - Chairman
Simon Rollason - Managing
Director
www.obtalaresources.com +44 (0)20 7099 1940
ZAI Corporate Finance Limited
(Nomad) +44 (0)20 7060 2220
Ray Zimmerman
Richard Morrison
Brandon Hill Capital (Broker) +44 (0)20 3463 5000
Jonathan Evans
Square 1 Consulting (Public
Relations) +44 (0)20 7929 5599
David Bick
Mark Longson
Chairman's Statement
I am pleased to present the annual report and consolidated
financial statements for Obtala Resources Limited (the "Company" or
the "Group") for the year ended 31 December 2014.
The Company continues to progress in its transition to a
diversified African Company through the year ended 31 December
2014. The business development continues to advance, resulting in a
platform from which significant growth will be established.
The focus for the agribusiness has been the Tanzanian
operations, which over the last two years has created an aspiring
horticultural farming enterprise for fresh produce. This is
complemented with a processing facility at site, to produce a range
of high quality dried fruits which are packaged and branded under
our own label, "Mama Jo's". The process of gaining international
food safety standards and certification on both the farm and the
processing facility is well advanced.
In Mozambique, timber operations continue to supply products for
national infrastructure upgrade programmes. Going forwards we will
explore and develop other processed timber products for the local
market, which is experiencing strong GDP growth. In June 2014 an
independent report valued the timber concessions on an NPV 10-year
cash flow basis at US$161m using a 12% discount rate.
In late 2014 we acquired a chain of retail outlets in Lesotho.
This will provide 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.
Overall the equity market has not recognised the value of the
Company's assets, which is true of many diversified companies.
However, the business we are building is based on long--term
investment programmes particularly whilst advancing the development
phase, which will provide a platform to deliver future
profitability and growth, generating revenues with the 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.
Montara Continental Ltd
During 2014, the Group continued to expand and grow its
agribusiness and timber operations with the objective of being
revenue generating, profitable and sustainable. We believe these
sectors located in regions experiencing positive economic growth to
be highly attractive investments for the future. There is a strong
local market for our products in each of the countries they are
situated, as well as export opportunities. The business model we
have developed creates control of the value chain, positioning the
Company to produce value-added products which are marketed under
our Mama Jo's label and to complete the concept of being a
vertically integrated "Farm to Fork" producer the Group acquired a
chain of retail outlets in Lesotho, which facilitates new routes to
market.
Agriculture and Processing
The focus in 2014 has been the on-going development of the
Morogoro fruit and vegetable farm and processing facility in
Tanzania. The key criteria for any food producer is to achieve
certain levels of international food and safety accreditation and
certification which we are in the process of attaining. The
findings from a recently conducted audit by the certifying body
suggests that this process will be completed within the next three
months. However we will be able to re-commence production of dried
products ready for export sales. Importantly GLOBALG.A.P and BRC
recognition will open up greater access to new markets, both
locally and internationally. To increase the product range and
overcome the risks associated with mono-cropping we have
successfully trialled a range of dried fruit products which we are
marketing in small, re-sealable Mama Jo's branded bags suitable for
the retail and hospitality industry. While the factory undergoes
accreditation we have begun to create a fresh fruit and vegetable
business supplying consumers in Dar es Salaam and neighbouring
towns.
In 2014 we were awarded an Export Processing Zone ("EPZ")
Certificate from the Government of Tanzania. The EPZ provides a
range of fiscal incentives and allows duty free imports of capital
goods for facilitating future growth plans which will ultimately
improve margins. The recent appointment of a strategic partner and
consultant to the agribusiness is significant, bringing a wealth of
experience and expertise from the food industry to the project
which will open up a range of new market and product development
opportunities.
Forestry
The timber business made steady progress building up the
portfolio which now stands at 314,965 hectares. Mozambique's
economy remains one of the most dynamic on the African continent
with a 7% rate of real gross domestic product (GDP) growth, which
is predicted to continue. The outlook looks positive with a number
of contracts and orders in place and the Group believes that this
is the right location and time to start increasing the production
capacity.
In June 2014 an independent valuation report on the Mozambican
timber concessions was undertaken. The valuation is based on a 10
year cash flow with a capital expenditure requirement of $15m over
the period, which after year one is projected to be self-funding
out of profits. This valuation underpins the confidence we have in
our timber business and we will now look to focus on realising the
potential value outlined in the recent report.
Retail
In late 2014 we developed a concept to enter the retail market
under the African Home Stores banner with the intention to open
another route to market for our products. The Company acquired a
72.69% controlling interest in Lifes' Comfort Solutions (Pty)
Limited ("LCS"), a private Lesotho registered company, which
operated five departmental home solution retail outlets within
Lesotho. We have since opened an additional branch with 3 more
potential sites being evaluated. This will create a national
footprint and a company with strong brand recognition for being
"Proudly Basotho" and providing high quality goods and support
services. Since assuming control over the business we have
implemented a number of measures to improve management control,
stock control and ordering, improved buying power and identified
new products and suppliers, which together with an implementation
plan to improve margins through improved cost efficiencies should
make this an attractive business. We have invested $500,000 for the
reduction of creditors and liabilities on acquisition.
Paragon Diamonds
In 2014 we took the decision to divest our mining interest in
Paragon Diamonds Limited ("Paragon") so that we could concentrate
our efforts on building the emerging agribusiness and timber
operations. In August 2014 the Group signed an agreement with
Titanium Capital Investments Limited ("Titanium") for the sale of
the outstanding loan note ("Loan Note") held with Paragon at a 50%
discount to realize GBP998,000. It was further agreed that we would
grant Titanium a call option for 60 million shares held in Paragon
by the Company for a considerations of GBP1,950,000.
Mineral exploration in Tanzania
The group continues to hold several mineral licences in Tanzania
carried at a value of GBP16.1 million. Minimal work has been
undertaken on these licences during the year as the Group has been
focused on its agribusiness and timber operation. We will continue
the refocusing of the Group in 2015 by seeking to identify
potential corporate deals in order extract the underlying value of
these licences without actively pursuing significant exploration
work ourselves. This may take the form of joint ventures, disposals
or other corporate restructuring.
Financial results
The Group remained development focused in the year ended 31
December 2014 and generated GBP1.69 million of sales (2013: GBP0.45
million of sales). The loss after tax for the year amounted to
GBP13.9 million (2013: profit GBP40.4 million) including
revaluation of Forestry assets at GBPnil (2013: GBP107,379
million).
The paper loss incurred from the disposal of the Paragon
holding, GBP20,987 million as reflected in the income statement, is
a direct reflection of the Groups' strategic plan to divest its
mining interests to provide a clear focus on the developing
agri-business and timber operations.
The Group has a strong balance sheet with net equity
attributable to shareholders of Obtala at 31 December 2014
amounting to GBP93.3 million (2013: GBP122.4 million). Total assets
amounted to GBP131.9 million (2013: GBP170.2 million). Intangible
exploration assets are carried at GBP16.1 million (2013: GBP55.9
million).
Directorate changes
There were no changes to the board during the reporting period.
Subsequent to the year end, Messrs Grahame Vetch and Tim Walker
have both stepped down from the Board to assume operational
management roles and Ms Emma Priestley was appointed to the
board.
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, infrastructure improvement,
support for localised industries and food security. The Group is
also committed, where possible, to employment generation and
utilising the human resources of the host community.
In June 2014 the Group announced a partnership with Sentebale, a
children's charity founded in 2006 by HRH Prince Harry and Prince
Seeiso of Lesotho. Sentebale, which means 'Forget me not' in
Sesotho, works in partnership with local grassroots organisations
and government ministers to provide healthcare and education to
some of the most vulnerable children in the world - the victims of
extreme poverty and Lesotho's HIV/AIDS epidemic. In Mozambique the
Group has completed the construction of a school in the Zambezia
Province, close to our operational centre. The school will
accommodate up to 250 children from neighbouring villages and has
two classrooms and one administration office. We have also provided
desks, chairs and blackboards for the children.
Outlook
2014 was a year of steady growth for the Group as we continued
to strengthen all business sectors and initiated the African Home
Stores concept with the acquisition of retail stores in Lesotho.
The benefits of this groundwork and further investment will be
realised through 2015 and beyond. To date, we have created a
diversified African focused business which remains debt free,
multi-country and multi-industry with a tangible platform for
sustainable growth. Country risk is offset by operating in three
nations where macro trends remain highly favourable.
The valuation of the timber assets not only underpins the
potential of the business but also demonstrates a great opportunity
to expand our revenue potential with increased sales expected in
Mozambique. The strategy in 2015 is to reorganise and divest the
forestry division to recognise its true value and to grow the
business in Mozambique more expeditiously. This will benefit Obtala
shareholders directly as we assess the viability of a stock
allocation via a dividend in-Specie in part to existing Obtala
shareholders. We will continue to look at new opportunities while
we consolidate and grow the current business. With the required
food and safety certification and working with our strategic
partner we expect that the agribusiness will grow significantly.
The land available to us on the agribusiness and timber operation
will provide security of supply as new products are developed and
sold into the market.
We continue to review and manage costs within the growing
businesses to ensure optimised margins are achieved; furthering our
international relationships by planning synergies for the
individual businesses for future growth. The board continues to
manage Obtala in a diligent and controlled manner seeking partners
to continue the growth at the rate that the Board has
commenced.
I am confident 2015 will prove equally as exciting and look
forward to reporting on the further development of our
agri-processing, farming and timber operations.
Finally, I would like to thank my colleagues and our employees
for all their hard work throughout the year and look forward to a
successful and eventful 2015.
Francesco Scolaro
Executive Chairman
30 June 2015
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME
2014 2013
Continuing operations GBP000 GBP000
TURNOVER 1,690 455
Cost of sales (855) (155)
------------------------------------- -------- ---------
Gross Profit 835 304
------------------------------------- -------- ---------
Loss on derivative financial
instruments (736) (3,125)
Operating costs (1,191) (1,323)
Administrative expenses (2,616) (2,608)
Depreciation (294) (615)
Share based payments - (751)
Impairment of assets - (2,323)
------------------------------------- -------- ---------
OPERATING LOSS (4,002) (10,441)
Share of losses of associate - (570)
Loss on disposal of associate - (21,170)
Gain on fair value of investment 749 -
Fair value adjustment of biological
asset - 107,379
Loss on disposal of subsidiary (20,987) -
Finance income 109 -
Finance costs (389)
------------------------------------- -------- ---------
(Loss)/PROFIT BEFORE TAXATION (24,131) 74,809
------------------------------------- -------- ---------
Taxation 10,198 (34,361)
------------------------------------- -------- ---------
(LOSS)/PROFIT FOR THE YEAR (13,933) 40,448
------------------------------------- -------- ---------
ATTRIBUTABLE TO:
Owners of the parent (13,392) 22,975
Non-controlling interests (541) 17,473
------------------------------------- -------- ---------
(13,933) 40,448
------------------------------------ -------- ---------
Items that may be subsequently
released to profit or loss:
Exchange differences on translation
of
foreign operations (752) (2,001)
------------------------------------- -------- ---------
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR (14,685) 38,447
------------------------------------- -------- ---------
ATTRIBUTABLE TO:
Owners of the parent (14,144) 21,487
Non-controlling interests (541) 16,960
------------------------------------- -------- ---------
(14,685) 38,447
------------------------------------ -------- ---------
EARNINGS PER SHARE
------------------------------------ -------- ---------
From operations attributable
to the owners of the parent
Basic and diluted (pence) (5.09) 9.44
------------------------------------- -------- ---------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to the owners
of the parent
Share
Foreign based
Share Share Merger exchange payment Revenue Non-controlling Total
capital premium reserve reserve reserve reserve Total interests equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- -------- -------- -------- --------- --------- --------- --------- ---------------- ---------
At 1 JANUARY
2013 2,501 10,441 28,543 3,867 969 15,593 61,914 17,546 79,460
Profit for
the year - - - - - 22,975 22,975 17,473 40,448
Other
comprehensive
income:
Exchange
differences
on
translation
of foreign
operations - - - (1,488) - - (1,488) (513) (2001)
--------------- -------- -------- -------- --------- --------- --------- --------- ---------------- ---------
Total
comprehensive
income for
the year - - - (1,488) - 22,975 21,487 16,960 38,447
Issue of
shares 132 1,087 - - - - 1,219 - 1,219
Share based
payment - - - - 929 - 929 - 929
Purchase of
own shares - - - - - (881) (881) - (881)
Dilution of
interest in
subsidiary - - - - - (3,709) (3,709) 6,930 3,221
Impairment
of foreign
exchange - - - (1,940) - 1,940 - - -
--------------- -------- -------- -------- --------- --------- --------- --------- ---------------- ---------
At 31 December
2013 2,633 11,528 28,543 439 1,898 35,918 80,959 41,436 122,395
--------------- -------- -------- -------- --------- --------- --------- --------- ---------------- ---------
Loss for the
year - - - - - (13,392) (13,392) (541) (13,933)
Other
comprehensive
income:
Exchange
differences
on
translation
of foreign
operations - - - (752) - - (752) - (752)
--------------- -------- -------- -------- --------- --------- --------- --------- ---------------- ---------
Total
comprehensive
income for
the year - - - (752) - (13,392) (14,144) (541) (14,685)
Transactions
with owners:
Share based
payment and
warrants - - - - (220) - (220) - (220)
Disposal of
interest in
subsidiary - - - 1,828 (664) 8,546 9,710 (23,858) (14,148)
At 31 December
2014 2,633 11,528 28,543 1,515 1,014 31,072 76,305 17,037 93,342
--------------- -------- -------- -------- --------- --------- --------- --------- ---------------- ---------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2014 2013
GBP000 GBP000
--------------------------------- -------- --------
ASSETS
Non-current assets
Investments in associates - -
Available for sale investments 90 261
Intangible exploration and
evaluation assets 16,080 55,891
Biological asset 103,832 107,379
Derivative financial instrument - 607
Property, plant and equipment 2,555 2,906
---------------------------------- -------- --------
Total non-current assets 122,557 167,044
Current assets
Trade and other receivables 830 193
Inventory 1,351 77
Short term investments 3,938 -
Derivative financial instrument - 751
Cash and cash equivalents 3,269 2,138
---------------------------------- -------- --------
Total current assets 9,388 3,159
---------------------------------- -------- --------
TOTAL ASSETS 131,945 170,203
---------------------------------- -------- --------
LIABILITIES
Current liabilities
Trade and other payables (2,260) (1,186)
Financial investment liabilities (2,960) (2,578)
Current tax liabilities (2) (2)
TOTAL CURRENT LIABILITIES (5,222) (3,766)
NON-CURRENT LIABILITIES
Site restoration provision - (118)
Borrowings (155) (614)
Deferred tax (33,226) (43,310)
---------------------------------- -------- --------
Total non-current liabilities (33,381) (44,042)
TOTAL LIABILITIES (38,603) (47,808)
---------------------------------- -------- --------
NET ASSETS 93,342 122,395
---------------------------------- -------- --------
EQUITY
Share capital 2,633 2,633
Share premium 11,528 11,528
Merger reserve 28,543 28,543
Foreign exchange reserve 1,515 439
Share based payment reserve 1,014 1,898
Retained earnings 31,072 35,918
---------------------------------- -------- --------
Equity attributable to the
owners of the parent 76,305 80,959
Non-controlling interests 17,037 41,436
TOTAL EQUITY 93,342 122,395
---------------------------------- -------- --------
CONSOLIDATED STATEMENT OF CASH FLOWS
2014 2013
GBP000 GBP000
----------------------------------------------------- -------- ---------
(Loss)/Profit before taxation (24,131) 74,809
Adjustment for:
Depreciation of property, plant and equipment 294 615
Fair value adjustment of biological asset - (107,379)
Loss on disposal of associate - 21,170
Foreign exchange losses/(gains) 2,538 (294)
Share based payments - 751
Losses on investments 736 3,125
Impairment of assets - 2,323
Finance costs (109) 389
Loss on disposal of subsidiary 20,987 -
Share of losses of associate - 570
Gain on fair value of investments (578) -
(Increase)/decrease in trade and other receivables (637) 284
Increase in trade and other payables 615 796
Increase in inventory (1,274) (22)
CASH OUTFLOW FROM OPERATIONS (1,559) (2,863)
Income taxes received - 155
----------------------------------------------------- -------- ---------
Net cash OUTFLOW from CONTINUING operations (1,559) (2,708)
----------------------------------------------------- -------- ---------
INVESTING ACTIVITIES
Expenditure on property, plant and equipment (311) (1,139)
Expenditure on intangible exploration and evaluation
assets - (972)
Proceeds from disposal of financial investment
assets - 2,754
Net cash (OUTFLOW)/INFLOW from investing activities (311) 643
----------------------------------------------------- -------- ---------
FINANCING ACTIVITIES
Proceeds from issue of share capital - 1,215
Proceeds from sale of subsidiary 1,248 -
Funds raised by subsidiary - 1,371
Expenses of issue of subsidiary shares - (66)
Finance costs - (211)
Net cash inflow from financing activities 1,248 2,209
----------------------------------------------------- -------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 1,131 144
Cash and cash equivalents at beginning of year 2,138 1,994
Effect of foreign exchange rate variation - -
----------------------------------------------------- -------- ---------
CASH AND CASH EQUIVALENTS AT end of YEAR 3,269 2,138
----------------------------------------------------- -------- ---------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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