LONDON (Alliance News) - Obtala Ltd on Monday said it sank to a loss in the first half of 2018 due to profit from an acquisition the year before.
The agriculture and forestry company recorded a USD5.5 million loss in the six months to June 30, sinking from a USD22.1 million profit the year before. This prior year profit was attributed to a USD34.0 million from "bargain purchase".
Revenue multiplied substantially to USD6.6 million from USD149,000, achieving 80% of its full year 2017 revenue. Nonetheless, Obtala has been held back by its legacy businesses in East Africa, with scant revenue provided from its Tanzanian and Mozambique endeavours.
"While the growth of the group is indisputable and positive, the legacy businesses in East Africa have been responsible for losses during the first 6 months of 2018 and continue to prove a drag on earnings and management time. Minimal revenues from the farms in Tanzania were received during the period. Revenues from Mozambique were minimal due largely to inconsistent signals from the authorities, not least a ban on export the of sawn timber of some internationally popular species, unless in the form of 'finished products'," said Obtala Chairman Miles Pelham.
For this reason, Obtala will be taking a strategic review of its business in Tanzania and Mozambique, aiming to implement changes by year-end of the first quarter of 2019 at the latest.
"The board is unlikely to accept any proposal that involves losses from any business line being sustained in the next financial year. This will allow allocation of capital and management focus within the group to be exclusively dedicated to improving returns from cash generative, profitable business lines as loss making businesses will be eliminated," said Pelham.
Shares in Obtala closed down 1.4% at 6.31 pence on Monday.
