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Obtala Resources PLC focused on growth and controlling costs

"It is very pleasing, after all the hard work of developing our business platforms to see them move into operational production," said MD, Simon Rollason

The company continues to enjoy excellent growing conditions

The sales pipeline is growing, Africa-focused agricultural and timber company Obtala Resources PLC (LON:OBT) told shareholders on Monday.

The first quarter of the year was one largely spent focused on marketing and business development ahead of the harvest season.

On the Agribusiness side of things, the company has been concentrating on cultivating three varieties of sweet melon, namely; cantaloupe-charentais, galia and yellow honeydew.

Domestically, the company has scaled back on the range and volume of vegetables that were being grown and is focused on the sweet melon and butternut markets, at the suggestion of its trading partner.

Obtala expects to see opportunities in these markets grow later in the year as it establishes a sales network in Dar es Salaam. Previous sales targeted the upper middle class consumers but the intention is to tap into the 4.5 million population in Dar es Salaam by providing goods for sale to independent traders, Obtala said.

Meanwhile, work on the previously announced banana plantation continues. Banana cultivation experts are expected on site in April and May to provide technical guidance.

On the Timber side, a sales and marketing agreement for Asia and the Middle East was concluded during the first quarter with Basic Materials Ltd (BML).

BML has been marketing Obtala's timber extensively in Asia and has received orders for two containers of various timber species from China that could lead to further monthly orders.

African Home Stores, Obtala's retail business, continues to integrate Life's Comfort Solutions (LCS) into its estate, having purchased a controlling stake in October 2014.

Four of the outlying branches have been closed, as the retail arm retrenches, concentrating on smaller premises. The retail arm now has just two shops, with a narrower range of products, and is sourcing new goods that offer better margins, as it wrestles with a generally depressed local trading environment in South Africa, as the minerals-based economy takes a hit from slumping commodity prices.

The head-count at the retail business has been reduced by 60% and the sales team has been retrained to focus on selling the new selective range of goods.

The list of creditors inherited from LCS has been reduced by two-thirds, Obtala revealed.

“The platform for consistent growth in sales across the group has now been established and our focus and direction is with our partners to deliver attractive returns immediately, whilst monitoring costs,” said Simon Rollason, managing director of Obtala.

“We are highly encouraged about our first shipment of farm produce to the UAE in April. The company has invested heavily in the farms and the product range, with the launch of the new Mama Jo's packaging and working closely with our partners CMF to achieve prompt sales. Marketing efforts over the last two quarters, following the securing of all required permits and certifications, is showing very positive results and gaining good market traction.

“The sales pipeline is growing and the forthcoming months present themselves as an exciting period for the progress and expansion of our agriculture and timber divisions,” he added.


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