OBT - Proactive investors Cont.29 Jul 2018 15:09
READ: Obtala tops up coffers with additional fund raise
Pelham sees no reason to be pessimistic about its quest for trade finance, citing the board’s experience of financial markets and the group’s track record of meeting payment deadlines in Africa.
“We do feel we can attract capital,” Pelham said, and when the company does, it will be able to put its foot more firmly on the accelerator.
Not that the company has been stuck in neutral since Pelham became chairman of the company some two years ago.
“The business is unrecognisable from the one I inherited,” Pelham maintains.
“If my mandate was to turn the business around, then I guess I am pretty happy. I’m obviously not happy with the recent share price performance … but if you just look at the underlying metrics of the business that we own now, we’ve got revenues that are 14-times the level of 2016 when I took over; tangible assets of US$27mln versus US£3mln when I took over; we’ve obviously raised significant funds to fund expansion and made fantastic progress operationally,” he declared.
The focus has long since switched away from Mozambique
One area where the company has not made the sort of progress it hoped for is Mozambique, where new timber export rules have put the future of the group’s forestry operations in doubt.
“The government has banned the export of our two most common species unless they are processed but are yet to define what ‘processed’ means,” Pelham explained.
It’s frustrating but not a company-shaker; Mozambique was budgeted to be just 4% of Obtala’s sales this year.
“The reality is that we had already started allocating the vast majority of our capital to other parts of our business even before the policy change, simply on a return-on-capital basis,” Pelham said.
So, the ruling by the Ministry of Land, Environment and Rural Development in Mozambique has had a negative impact on Obtala but it is not especially damaging to the group, leaving Pelham optimistic about the group’s future prospects.
“It is taking much longer than we hoped but our foundations and momentum are strong enough we can be pretty confident in achieving our goals,” he concluded.
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