REG - Obtala Limited - Final Results FY2016 <Origin Href="QuoteRef">OBT.L</Origin> - Part 3
30/06/2017 16:40
- Part 3: For the preceding part double click ID:nRSd8062Jb
The amendments clarify and improve information provided to users of financial statements about changes in liabilities arising from financing activities.
Disclosure Initiative*
Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions* 1 January 2018 Amendments to provide requirements on the accounting for the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments, share
-based payment transactions with a net settlement feature for withholding tax obligations, and a modification to the terms and conditions of a share-based payment that
changes the classification of the transaction from cash-settled to equity-settled.
IFRIC 22 Foreign Currency Transactions and Advance Consideration* 1 January 2018 Provides requirements about which exchange rate to use in reporting foreign currency transactions (such as revenue transactions) when payment is made or received in
advance.
IFRS 9 Financial Instruments 1 January 2018 Replacement to IAS 39 and is built on a logical, single classification and measurement approach for financial assets which reflects both the business model in which they
are operated and their cash flow characteristics. Also addresses the so-called 'own credit' issue and includes an improved hedge accounting model to better link the
economics of risk management with its accounting treatment. It is a change from incurred to expected loss model.
IFRS 15 Revenue from Contracts 1 January 2018 Introduces requirements for companies to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the
with Customers (IFRS 15 clarifications not EU-endorsed) company expects to be entitled in exchange for those goods or services. Also results in enhanced disclosure about revenue and provides or improves guidance for
transactions that were not previously addressed comprehensively and for multiple-element arrangements.
IFRS 16 Leases* 1 January 2019 The new standard recognises a leased asset and a lease liability for almost all leases and requires them to be accounted for in a consistent manner. This introduces a
single lessee accounting model and eliminates the previous distinction between an operating lease and a finance lease.
*Not yet endorsed in the EU.
The Directors anticipate that the adoption of these Standards and Interpretations as appropriate in future periods will
have no material impact on the financial statements of the Group, subject to any future business combinations.
2. SEGMENTAL REPORTING
Segmental information is presented on the basis of the information provided to the Chief Operating Decision Maker ("CODM"),
which is the board of directors.
As a result of the sale of LCS, the company has determined that it now has the following reportable segments, being
agriculture and forestry, and has restated its operating segment reporting accordingly. The LCS results were included
within the Retail segment in 2015.
The Group is currently focused on agriculture and forestry. These are the Group's primary reporting segments.
The following table shows the segment analysis of the Group's loss before tax for the year and net assets at 31 December
2016:
Agriculture Forestry Unallocated head office costs Intra-group elimination Total
$000 $000 $000 $000 $000
Income statement
Turnover 127 503 - - 630
Cost of Sales (205) 64 - - (141)
Gross profit (78) 567 - - 489
Operating costs (690) (139) - - (829)
Administrative expenses (15) (499) (2,974) - (3,488)
Depreciation (499) (408) - - (907)
Segment operating (loss)/profit before interest (1,282) (479) (2,974) - (4,735)
Finance income - 5 - - 5
Finance costs - (394) (127) - (521)
(Loss)/Profit before tax (1,282) (868) (3,101) - (5,251)
Taxation - - - - -
(Loss) after tax - - - - (5,251)
NET ASSETS
Assets 2,589 176,382 13,721 (11,573) 181,119
Liabilities:
Deferred tax liability - (55,848) - - (55,848)
Other - (11,573) (9,846) 11,573 (9,846)
Net assets 2,589 108,961 3,875 - 115,425
OTHER SEGMENT ITEMS
Capital expenditure:
Property, plant and equipment - - - - -
Intangible exploration and evaluation assets - - - - -
The following table shows the segment analysis of the Group's loss before tax for the year and net assets at 31 December
2015:
Restated Exploration and development Agriculture Forestry Unallocated head office costs Intra-group elimination Total
$000 $000 $000 $000 $000 $000
Income statement
Turnover - 122 746 - - 868
Cost of Sales - (64) (129) - - (193)
Gross profit - 58 617 - - 675
Loss on Impairment of asset (24,618) - - - (24,618)
Loss on derivative financial instruments - - - (1,658) - (1,658)
Gain on valuation of biological asset - - 13,167 - - 13,167
Gain on fair value of investment - - - 1,601 - 1,601
Operating costs - (537) (378) - - (915)
Administrative expenses - (15) (147) (2,295) - (2,457)
Depreciation - (243) (145) (133) - (521)
Segment operating (loss)/profit before interest (24,618) (737) 13,114 (2,485) - (14,726)
Finance income - - 9 - - 9
Finance costs - - (60) - - (60)
Profit before tax (24,618) (737) (13,063) (2,485) - (14,777)
Taxation - - (6,896) - - (6,896)
Profit after tax (21,673)
NET ASSETS
Assets - 2,934 175,923 21,128 (20,281) 179,704
Liabilities:
Deferred tax liability - - (55,848) - - (55,848)
Other - (219) (21,078) (2,244) 20,281 (3,260)
Net assets - 2,715 98,997 18,884 - 120,596
OTHER SEGMENT ITEMS
Capital expenditure:
Property, plant and equipment - - - - -
Intangible exploration and evaluation assets - - - - -
3. OPERATING LOSS
2016 2015
$000 $000
Operating loss is stated after charging/(crediting):
Depreciation of property, plant and equipment 907 521
Staff costs (see note 4) 1,223 1,848
Agriculture and forestry costs 1,761 1,196
Operating Lease Costs 69 73
Impairment of assets (see notes 10) - 24,618
Inventory expensed 141 193
Auditor's remuneration:
Audit services
- fees payable to the Company auditor for the audit of the consolidated accounts 50 61
Fees payable to associates of the Company auditor for other services
- auditing the accounts of subsidiaries pursuant to legislation 5 9
4. STAFF COSTS
2016 2015
Number Number
The average monthly number of persons (including Directors) employed by the Group during the year was:
Administration and management 11 13
Agriculture and forestry 7 7
Retail 30 140
48 160
2016$000 2015$000
The aggregate remuneration comprised:
Wages and salaries 1,223 1,848
Social security costs - -
1,223 1,848
Directors' remuneration included in the aggregate remuneration above comprised: 2016$000 2015$000
Emoluments for qualifying services 713 568
Included above are emoluments of $190,000 (2015: $189,844) in respect of the highest paid Director.
No pension contributions were made on behalf of the Directors and other staff members.
5. FINANCE INCOME
2016 2015
$000 $000
Bank interest receivable 5 9
6. FINANCE COSTS
2016 2015
$000 $000
Bank interest payable 521 58
7. TAXATION
2016 2015
$000 $000
Current tax:
Corporation tax on loss for the year - -
Deferred tax:
Origination and reversal of temporary differences - (6,896)
Tax on (loss) on ordinary activities - (6,896)
Group $000 $000
Loss on ordinary activities before tax (5,251) (14,777)
Loss on ordinary activities multiplied by the average rate of corporation tax of 24.5% (2014: 24.5%) (1,286) (3,620)
Effects of:
Losses not recognised for deferred tax 1,286 -
Effect of movement in fair value of intangible assets - (3,276)
GROUP Tax (CREDIT) for the year - (6,896)
The prevailing tax rates of the operations of the Group range between 20% and 35%. Therefore a rate of 24.5% has been used
as it best represents the weighted average tax rate experienced by the Group. The Group has estimated losses of $43 million
(2015: $38.6 million) available for carry forward against future profits. No deferred tax assets have been recognised in
respect of losses due to the unpredictability of future profit streams. Unused tax losses may be carried forward
indefinitely.
The movement in the year in the Group's net deferred tax position was as follows:
2016 2015
Deferred tax liabilities $000 $000
At 1 January 55,848 51,786
Increase in deferred tax liability - 4,213
Effects of foreign exchange - (151)
At 31 December 55,848 55,848
8. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year excluding own shares held jointly by the Obtala Employee Share
Trust, "The Trust", and certain employees.
Dilutive earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue during the
year to assume conversion of all dilutive potential ordinary shares, being share options and the shares held by the Trust
and certain employees.
2016 2015
$'000 $'000
Loss from continuing operations attributable to owners of the parent (4,478) (19,694)
Loss from discontinued operations attributable to owners of the parent (382) (1,133)
Total (4,860) (20,827)
Weighted average number of ordinary shares
Weighted average number of ordinary shares in issue 263,761,286 263,161,286
Weighted average number of ordinary shares used in calculating earnings per share 263,761,286 263,161,286
Number of options and own shares with dilutive effects - -
Weighted average number of ordinary shares used in calculating diluted earnings per share 263,761,286 263,161,286
Earnings per share from continuing operations
Basic (cents) (1.70) (7.48)
Diluted (cents) (1.70) (7.48)
Earnings per share from discontinued operations
Basic (cents) (0.14) (0.32)
Diluted (cents) (0.14) (0.32)
There is no dilutive effect of options (note 23) and own shares (note 21) due to the Group's share price during the year.
9. Discontinued operations
The African Homes Stores group of companies ('LCS') have been discontinued during the year as the company decided to sell
its shareholding for $1.The transaction became effective on 24th December 2016.
Discontinued operations are comprised of the following:
2016$'000 2015$'000
Turnover 482 4,787
Cost of sales (435) (3,811)
Gross profit 47 976
Administrative expenses (102) (1,989)
Depreciation (41) (120)
Loss on disposal (286) -
(382) (1,133)
10. INTANGIBLE EXPLORATION AND EVALUATION ASSETS
Mindex licences Paragon Diamonds licences Montara & Altadislicences Total licences
$000 $000 $000 $000
at 1 January 2015 24,965 - 97 (25,062)
Impairment charge for the year (24,965) - (97) (25,062)
at 31 December 2015 AND 2016 - - - -
Impairment
The Directors have considered the following factors when considering whether there have been any indicators for impairment
of the exploration and evaluation assets:
• Geology and lithology on each licence as outlined in the most recent CPRs (independent Competent Person's Reports
from mining and earth
• resources consultants);
• The expected useful lives of the licences and the ability to retain the license interests when they come up for
renewal;
• Comparable information for large mining and exploration companies in the vicinity of each licence;
• History of exploration success in the regions being explored;
• Local infrastructure;
• Climatic and logistical issues; and
• Geopolitical environment.
After considering these factors the Directors have recognised a charge of $25,062,000 in 2015 relating to the impairment of
four licences that have expired and the Directors have decided not to renew.
11.PROPERTY, plant and equipment
Land & buildings Motor vehicles Plant & equipment Fixtures & IT Total
$000 $000 $000 $000 $000
Cost
AT 1 JANUARY 2015 1,690 524 2,877 1,147 6,238
Additions 15 - - - 15
Effects of foreign exchange (263) (28) (335) (180) (806)
At 31 December 2015 1,442 496 2,542 967 5,447
Additions 244 82 160 7 493
Disposal of subsidiary - (27) (711) (281) (1,019)
Effects of foreign exchange (829) (281) 180 (613) (1,543)
At 31 December 2016 856 270 2,171 80 3,378
Depreciation
AT 1 JANUARY 2015 164 522 1,093 477 2,256
Charge for the year 29 - 374 118 521
Effects of foreign exchange (10) (28) (71) (29) (138)
At 31 December 2015 183 494 1,396 565 2,639
Charge for the year 35 29 811 32 907
Disposal of subsidiary - (27) (345) (214) (586)
Effects of foreign exchange (105) (323) (764) (325) (1,517)
At 31 December 2016 113 173 1,098 59 1,443
Net book value
At 31 December 2016 744 97 1,073 21 1,935
At 31 December 2015 1,258 2 1,146 402 2,808
AT 31 December 2014 1,526 2 1,784 670 3,982
12. biological assets
2016 2015 2014
Standing timber $000 $000 $000
Carrying value at beginning of year 174,528 161,833 161,833
Additions - 12,695 -
Carrying value at end of year 174,528 174,528 161,833
The Group's main class of biological assets comprise forestry concessions which hold a range of hardwoods. Biological
assets are carried at fair value less estimated costs to sell. The brought forward biological assets were assessed
internally at fair value and supported by a report on the valuation to a willing buyer dated 1 May 2017 and prepared by
Edward Anderson-Bickley MRICS, formerly of Honour Capital Limited, valuers of the original concessions in 2014 and 2015.
During the year the company consolidated its 12 concessions into 10 concessions on a 50-year concession basis (renewable
thereafter for a further 50 years) with the similar global map and surface. There were no additions to the concessions land
to this date. All are located in Northern Mozambique in the states of Cabo Delgado, Nyassa and Zambezia and are managed
from a central point in Nampula, capital of the middle state of the North.
Fair values have been determined internally by discounting a 20-year cash flow projection (Level 3 of the fair value
hierarchy) for 10 concession areas located in three separate blocks in northern Mozambique after taking into account the
following assumptions:
• NPV based on a 20 years' cash flow on concessions valid for 50 years.
• 20-year operational cumulative sales revenues forecast at $710 million.
• We are now using a discount of 12% for all concessions as this is considered the most appropriate given the
operational and country risk see page 4138 for sensitivity analysis.
• Total area of 314,965 hectares.
• Total actual and estimated annual permitted cut ("APC") has been increased by almost 4,500 m3/year to 75,809
m3/year from 71,348m3/year in 2015 on a 20-year cycle.
• Not all the APC will be harvested in any one year.
• The proportion of the APC to be harvested in any one year will increase over the first three years and then remain
constant at the level of the full current APC. We are confident that we will be able to continue to increase the APC on a
regular basis as we have done in 2016.
• Predicted production levels used in the brought forward valuation report are 8% of the annual permitted cut in
2017 increasing to 61% in 2018 and 80% in 2019.
• Average annual production of sawn timber is expected to be 5,750m3 in 2017 increasing to 46,000m3 in 2018 with the
new sawmill in operations.
• Production costs remain an average of $310/m3 of product sold and FOB costs are at an average $468/m3
• The weighted average sale price of the sawn timber varies in function of the grades with $860/m3 for first grade
and $600/m3, with veneers at $2,900/m3 and $4,500/m3, (from year 3 only), without taking into consideration sales of
blackwood budgeted now at $9,400/m3.
All management plans for the concessions and a community consultation have been formalised or are being reviewed by the
Mozambican Government and their process will be completed during 2017.
The financial risk management strategies relating to the above are included on page 13 and 14.
12. biological assets (continued)
The following sensitivity analysis shows the effect of an increase or decrease in significant assumptions used:
Fair value of biological asset
2016 2015
$ 000 $ 000
Effect of increase in discount rate by 1% (16,664) (6,761)
Effect of decrease in discount rate by 1% 19,761 7,183
Effect of 10% increase in volume of production 19,599 6,483
Effect of 10% decrease in volume of production (19,599) (6,847)
Effect of 10% increase in sales price 42,203 17,149
Effect of 10% decrease in sales price (31,210) (17,149)
There is no value assigned to the agriculture assets in either 2015 or 2016 as the fair value cannot be reliably measured.
13. TRADE AND OTHER RECEIVABLES
2016 2015
$000 $000
Trade receivables 214 81
Other receivables 2 303
Prepayments and accrued income - 22
216 406
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
14. INVENTORIES
2016 2015
$000 $000
Agriculture supplies 1,017 515
Retail merchandise - 340
1,017 855
15. Investments
Short term Investments Available for sale investments Total
$000 $000 $000
COST AND FAIR VALUE AT 1 JANUARY 2015 6,138 140 6,287
Losses (7,739) (7) (7,739)
Disposal 1,601 - 1,601
COST AND FAIR VALUE AT 31 DECEMBER 2015 - 133 140
Impairment - (133) (140)
COST AND FAIR VALUE AT 31 DECEMBER 2016 - - -
16. financial INSTRUMENTS
Capital risk management
The Company manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders. The overall strategy of the Company and Group is to minimise costs and liquidity
risk.
The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued share
capital, share premium, reserves (merger reserve, foreign exchange reserve and share based payment reserve) and retained
earnings as disclosed in the Consolidated Statement of Changes in Equity.
16. FINANCIAL INSTRUMENTS (continued)
The Group is exposed to a number of risks through its normal operations, the most significant of which are exploration,
credit, foreign exchange and liquidity risks. The management of these risks is vested in the Board of Directors.
Categorisation of financial instruments
2016 Financial assets/(liabilities) Held for trading/ Available Loans and receivables Financial liabilities at amortised cost Total
designated for sale investments
as FVTPL
$000 $000 $000 $000 $000
Trade and other receivables - - 216 - 216
Cash and cash equivalents - - 3,398 - 3,398
Trade and other payables - - - (9,846) (9,846)
- - 3,614 (9,846) (6,232)
2015 Financial assets/(liabilities) Held for trading/ Available Loans and receivables Financial liabilities at amortised cost Total
designated for sale investments
as FVTPL
$000 $000 $000 $000 $000
Trade and other receivables - - 406 - 406
Investments - 140 - - 140
Cash and cash equivalents - - 974 - 974
Trade and other payables - - - (3,290) (3,290)
- 140 1,380 (3,290) (1,770)
Fair value measurements recognised in the statement of financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
· Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical
assets or liabilities.
· Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
· Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
Equity price Risk
The Group is exposed to equity price risks arising from equity investments. Equity investments are held for both strategic
and trading purposes.
Management of market risk
The most significant area of market risk to which the Group and Company are exposed is interest rate risk.
As the Group has no significant borrowings its risk is limited to the reduction of interest received on cash surpluses
held.
2016 2015 2016 2015 2016 2015
Fixed rate Fixed rate Floatingrate Floatingrate Total Total
Group $000 $000 $000 $000 $000 $000
Cash and cash equivalents - - 3,398 974 3,398 974
16. FINANCIAL INSTRUMENTS (continued)
The impact of a 10% increase/decrease in the average base rates would be $nil (2015: $nil) on the total cash and cash
equivalents balances and on equity.
Management of credit risk
The principal financial assets of the Company and Group are bank balances. The Group deposits surplus liquid funds with
counterparty banks that have high credit ratings. Cash is sometimes placed with certain institutions in support of trading
positions. The Group deposits such funds with large well known institutions and the Directors consider the credit risk to
be minimal.
The Group's maximum exposure to credit by class of individual financial instrument is shown in the table below:
2016Carrying Value 2016Maximum Exposure 2015Carrying Value 2015MaximumExposure
$000 $000 $000 $000
Cash and cash equivalents 3,398 3,398 974 974
Total 3,398 3,398 974 974
No aged analysis of financial assets is presented as no financial assets are past due at the reporting date.
Management of foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from commercial transactions, recognised
assets and liabilities and net investments in foreign operations. Exposure to commercial transactions arises from sales or
purchases by operating companies in currencies other than the companies' functional currency. Currency exposures are
reviewed regularly.
The Group has a limited level of exposure to foreign exchange rate risk through their foreign currency denominated cash
balances.
2016 2015
$000 $000
Cash and cash equivalents
GBP 3,132 906
ZAR - 32
TZS 266 35
MZN 1 1
USD - -
Total 3,399 974
The table below summarises the impact of a 10% increase/decrease in the relevant foreign exchange rates versus the US
Dollar rate, on the Group's pre tax profit for the year and on equity:
2016 2015
Impact of 10% rate change $000 $000
Cash and cash equivalents - -
16. FINANCIAL INSTRUMENTS (continued)
Management of liquidity risk
The Group seeks to manage liquidity risk by regularly reviewing cash flow budgets and forecasts to ensure that sufficient
liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The Group deems there is
sufficient liquidity for the foreseeable future.
The Group had cash and cash equivalents at 31 December as set out below.
2016 2015
$000 $000
Cash at bank 3,398 974
3,398 974
17. TRADE AND OTHER PAYABLES
2016 2015
$000 $000
Trade and other payables 491 3,290
Accruals 178 -
Other payables 9,177 -
9,846 3,290
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
Included within other payables are amounts received in advance relating to the post year end capital raise $9,177k (2015:
$nil).
18. SHARE CAPITAL
Number $000
Authorised:
Ordinary shares of 1p each Unlimited Unlimited
Allotted, issued and fully paid:
Ordinary shares of 1p each
AT 31 DECEMBER 2014 and 2015 263,260,664 4,104
Shares issued 10,000,000 136
AT 31 DECEMBER 2016 273,260,664 4,240
Balances classified as share capital include the nominal value on issue of the Company's equity share capital, comprising
ordinary shares of 1p each.
In December 2016, Meradell holders opted for conversion into Argento Preference shares with the exception of Global Timber
Investments Limited which exercised its option to convert its holding in Meradell (1) Ltd. into 10,000,000 new ordinary
shares of Obtala. These shares represent approximately 3.80% of Obtala's existing issued ordinary share capital and will
on issue represent approximately 3.66% of its enlarged issued ordinary share capital, being Global Timber's total holding
of Obtala ordinary shares. Miles Pelham's interest in the Meradell structures will be converted into a further 2,500
Argento Preference shares.
19. SHARE PREMIUM ACCOUNT
2016 2015
$000 $000
AT 1 JANUARY AND 31 DECEMBER 17,968 17,968
Balances classified as share premium include the net proceeds in excess of the nominal share capital on issue of the
Company's equity share capital.
20. MERGER RESERVE
2016 2015
$000 $000
At 31 December 44,487 44,487
The merger reserve arose on shares issued by Obtala Services Limited to acquire Obtala Limited and on shares issued by
Obtala Limited to the previous owners of Obtala Services Limited under a scheme of arrangement concluded in August 2010.
21. MOVEMENT IN REVENUE RESERVE AND OWN SHARES
Retained earnings Ownshares Revenue reserve
$000 $000 $000
At 1 JANUARY 2015 54,370 (3,580) 50,790
Loss for the year (25,729) - (25,729)
Foreign exchange (189) 189 -
At 31 December 2015 28,452 (3,391) 25,061
Loss for the year (4,836) - (4,836)
Foreign exchange (570) 570 -
Sale of subsidiary 311 - 311
Reserve transfer 46 - 46
At 31 December 2016 23,403 (2,821) 20,582
Retained earnings represents the cumulative profit attributable to the equity holders of the parent company.
Own shares represents the cost of Obtala Resources Limited shares purchased in the market and held by the Obtala Limited
Employee Share Trust ("the Trust") jointly with a number of the Group's employees. The Trust dissolved in October 2015 at
which time Obtala purchased the shares held in Trust by Marlborough Trust Company limited for zero consideration.
22. CAPITAL AND OPERATING LEASE COMMITMENTS
The Group had total commitments at the reporting date under non-cancellable operating leases falling due as follows:
Land & buildings Land & buildings
and mining and mining
licences licences
2016 2015
$000 $000
Within one year 44 69
Between one and two years - -
44 69
23. SHARE BASED PAYMENTS
Obtala Option Scheme
The Group operates a share option plan, under which certain Directors and employees have been granted options to subscribe
for ordinary shares. All options are equity settled. The options have an exercise price of 8.75p which was based upon the
average value of the Group's ordinary shares for the ten days prior to the date of grant. If the options remain unexercised
after a period of 10 years from the date of grant, the options expire. The Group has no legal or constructive obligation to
repurchase or settle the options in cash. The number and weighted average exercise prices of share options are as
follows:
Vesting Date Trigger Price Award Amounts
June 2018 15p 5.25m options
June 2019 20p 5.25m options
June 2020 25p 5.25m options
June 2021 30p 5.25m options
The awards will be distributed to the board as follows and the awardee must accept the option granted for it to be valid:
Miles Pelham Chairman 1m per tranche (4m total)
Paul Dolan CEO 1m per tranche (4m total)
Simon Rollason Managing Director 1m per tranche (4m total)
Warren Deats COO 1m per tranche (4m total)
Philippe Cohen Finance Director 250k per tranche (1m total)
In respect of each tranche, the options are exercisable if at the first possible vesting date for that tranche or any
subsequent date, the Obtala Limited monthly volume weighted average price (VWAP) for ordinary shares in the capital of
Obtala Limited for the three consecutive months to such date is greater than the trigger price for that tranche, the first
such date being the vesting date in respect of that tranche. The Option holder may acquire the Option Shares in respect of
a tranche following the vesting date in respect of that tranche if they remain an employee of the Group at that vesting
date. If the awardee is not in the employ at the time of vesting then the awards are forfeit.
No charge has been recognised in the income statement relating to the above options as they charge is considered to be
adequately provided for.
Jointly Owned Shares
The Obtala Employee Share Trust ("the Trust") established with Marlborough Trust Company Limited appointed as trustee ("the
Trustee") was dissolved in October 2015 at which time Obtala purchased the shares held in Trust by Marlborough Trust
Company limited for zero consideration.
On 20 February 2013 the Company issued 4,377,104 warrants with an exercise price of 18.56p per share. On 16 February 2017
Weiss Asset Management served notice of their intent to exercise this third and final tranche of warrants issued and on
receipt of payment of £812,390.50 made to the Company, 4,377,104 new Obtala ordinary shares in the capital of the company
were admitted to trading on AIM.
20,000,000 Warrants with an exercise price of 40p were issued to GEM as part of an equity line of credit agreement that was
signed in November 2012. The warrants have an expiry date of November 2017. The warrants have been valued using the Black
Scholes model and will be charged through the profit and loss over the life of the equity line of credit. The assumptions
used in valuing the warrants are a risk free rate of 2.5%, volatility of 50% an expected life of 3 year and a fair value
calculated at 3.27p each.
There were no options exercisable at the reporting date.
24. NON-CONTROLLING INTERESTS
$000
AT 1 JANUARY 2015 26,554
Non-controlling interests share of profits in the year 2,923
AT 31 DECEMBER 2015 29,477
Non-controlling interests share of losses in the year (797)
Sale of subsidiary (311)
AT 31 DECEMBER 2016 28,369
The share of losses in the year represents the losses attributable to non-controlling interests for the year.
25. RELATED PARTY TRANSACTIONS
Trading transactions
During the year the Group companies entered into the following transactions with related parties:
2016 2016 2015 2015
Transactions Balance at 31 December Transactions Balance at 31 December
in year in year
$000 $000 $000 $000
Loans to subsidiary undertakings (5,134) 11,956 (1,488) 6,822
Transactions with key management personnel
The Group's key management personnel comprised the Directors of the Company.
2016 Short-term employment benefits
Salaries & fees Employer's national insurance contributions Benefits Share based payments Total
$000 $000 $000 $000 $000
Miles Pelham 158 - - - 158
Paul Dolan 99 - - - 99
Warren Deats 90 - 23 - 113
Simon Rollason 107 - 6 - 113
Phillippe Cohen 89 - - - 89
Emma Priestley 17 - - - 17
Francesco Scolaro 48 - - - 48
Kevin Milne 77 - - - 77
Jean du Lac 21 - - - 21
706 - 29 - 735
2015 Short-term employment benefits
Salaries & fees Employer's national insurance contributions Benefits Share based payments Total
$000 $000 $000 $000 $000
Francesco Scolaro 188 - 24 - 213
Simon Rollason 217 - - - 217
Grahame Vetch 24 - - - 24
Emma Priestley 100 - - - 100
Philippe Cohen 100 - - - 100
Tim Walker 28 - - - 28
Stephen Murphy 12 - - - 12
Kevin Milne 67 - - - 67
Miles Pelham 0 - - - 0
Jean du Lac 23 - - - 23
759 - 24 - 784
26. POST BALANCE SHEET EVENTS
In February 2016 Obtala entered into three share purchase agreements to raise $3 million through three wholly owned
subsidiaries of Argento Continental Corp, Meradell Inc, Meradell (1) Limited and Meradell (2) Limited. The share purchase
was completed during 2017.
Global Timber Investment Ltd, a company based in Hong Kong, invested a total of $900,000 and received 15% of the issued
share capital of Meradell (1). George Miller, a private investor based in the US, invested CAD$1,610,000 and received
12.5% of the issued share capital of Meradell (2) Limited. Basic Materials Ltd, a company with offices in Hong Kong and
Russia, invested $900,000 and received 17.5% of the issued share capital of Meradell Inc. Furthermore, Basic Materials Ltd
have entered into a sales and marketing agreement to supply timber to Asia (including Russia) and the Middle East.
In June 2016, Miles Pelham entered into a share purchase agreement to invest $250,000 and received 1.43% of the issued
share capital of Meradell (2) Limited and in September 2016, Miles entered into a second share purchase agreement to invest
$500,000 and received a further 2.86% of the issued share capital of Meradell (2) Limited.
The following directors also agreed to invest the following principal amounts in the Argento Preference Share Subscription
with a completion date of 30th June 2017:
Miles Pelham Chairman $1,500,000 4,286 Argento shares
Paul Dolan Chief Executive Officer $250,000 715 Argento shares
Warren Deats Chief Operating Officer $250,000 715 Argento shares
Frank Scolaro Non-Executive Director $150,000 429 Argento shares
Basic Materials Ltd agreed to invest in two further tranches of the Argento Preference Share Subscription, 7,665 shares for
$2,682,500 and 4,143 shares for $1,450,000 with completion dates of 30th June and 30th September 2017 respectively.
In March 2017 the Company issued 8,573 Argento Preference Shares for consideration of US$3m.
In May 2017 the Company accepted subscription to 20m new Obtala shares at 20p from Jiangsu Dolphin International Trading Co
Limited, or their assignee. Payment is due 30th June 2017 and upon receipt of full payment 20m warrants with November 2018
expiry and strike price 20p will be issued to Jiangsu Dolphin International Trading Co Limited, or their assignee.
Obtala is doing due diligence on the potential 100% acquisition through Argento Limited of private Danish Group WoodBois
International ApS ("WBI"), an international trader and producer of sawn timber, for a total consideration of up to US$14.8
million in a combination of cash and Obtala equity ($4 million limit) over 3 tranches and with deferred consideration over
5 years tied to management retention.
Founded in 2004 in Copenhagen, WBI trades as well as a produces sawn timber from its 41,278 hectare concessions in Gabon,
which are renewable annually. Its annual
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