Obtala Limited#: FY 2016 Results
On Friday afternoon, African forestry and agriculture business Obtala Limited (LON:OBT)# released its results for the year ended 31 December 2016.
This morning, OBT has also announced the completion of the recently announced acquisition of WoodBois International (with upside on many of its initial assumptions) as well as the immediate retirement of Frank Scolaro and Philippe Cohen (CFO search now underway) from its Board of Directors.
• Revenue: US$0.6m (FY 2015: US$0.9m); VSA forecast US$0.9m
• Pre-tax loss from continuing operations: US$5.3m (FY 2015: US$14.8m); VSA forecast US$5.9m
• Total assets: US$181.1m (FY 2015: US$179.7m)
• Cash and cash equivalents as of 31 December 2016: US$3.4m (31 December 2015: US$1.0m)
• During 2016, OBT secured US$18.25m through the issuance of preference shares into its forestry subsidiary Argento, with a further US$3.0m secured in March 2017. In addition, OBT announced a US$5m equity subscription in May 2017.
• Given the strong involvement of Asian investors in recent fundraises, OBT is now investigating the potential of a dual-listing in Asia.
• Presentational currency switched to US$ from GBP
VSA Comment
2016 was a transformative year for OBT, with its new Chairman carrying out a comprehensive review of the business that resulted in disposal of certain non-core operations and a renewed focus on the twin sectors of forestry and agriculture in Africa.
To support this new strategy, OBT carried out a number of fundraises, largely involving the issuance of preference shares in its forestry subsidiary, raising more than US$25m in 2016 and H1 2017. We view this as an extremely significant achievement, considering the financing difficulties that many other companies operating in similar sectors and countries have experienced.
OBT continues to advance its new strategy, with key staff now in place across its businesses. Deploying the recently raised funds into its existing operations, as well as through acquisitions, such as the US$14.6m WoodBois International acquisition, should help the new management team quickly build OBT into an African agriculture and forestry business with the required scale to successfully operate on the continent.
We maintain our BUY recommendation and target price of 36p.