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Atlas Development & Support Services Limited – Preliminary Results
Atlas Development, the AIM listed turnkey support services company focussed on the oil & gas and extractive industries in Africa, has announced its results for the year ended 30 June 2014.
Carl Esprey, Chief Executive Officer of Atlas Development, said: “Following extensive corporate developments, together with the operational restructuring and rationalisation that was implemented in 2014, Atlas Development has all the elements necessary to rapidly expand our service lines across a broad geographic area, and to bring our turn-key support services to clients operating in the booming East African exploration and development industries. We remain highly focussed on increasing revenues and profitability across the business and enhancing shareholder value as we seek to grow Atlas Development into an industry leader.”
CHAIRMAN’S STATEMENT – Unedited and in-full:
The period under review and the months succeeding the year end have been truly transformational for the Company. Not only have we made the transition into an operating company (following the acquisition of Ardan Logistics Kenya Limited (‘ALK’), a revenue generating support services and logistics business focussed on the oil & gas and extractive industries in East Africa), but we have also adopted a new name and brand, “Atlas Development & Support Services”, across our group.
Since the Company’s AIM-listing in June 2013 we have developed at a considerable pace, to the extent that following the period end we completed our acquisition of an established turn-key support services business which provides solutions to multiple sectors including oil & gas, mining, construction, non-governmental organisations (NGOs) and governmental bodies. This process began in August 2013 when the Company identified Ardan Risk & Support Services Limited (‘ARSS’) as a suitable target. The Company initially acquired a 49% interest in ARSS, with an exclusivity period to acquire the remaining 51% interest.
Following its identification as a suitable acquisition target, with input from the Board, ARSS undertook a corporate and contractual restructuring programme, to rationalise operational management and implementation, planning and reporting. In conjunction with this restructuring, the Group was also granted a three year conditional call option (the ‘Call Option’) which provided the right to acquire 100% of Ardan Logistics Kenya (‘ALK’), a separate and new ‘shell’ company from which the restructured business of ARSS would be operated in exchange for the existing shareholding in ARSS.
On 26 September, the Company announced that it had decided to exercise the Call Option, and following receipt of shareholder approval on 22 October, the Company formally acquired the total issued share capital of ALK. At the same time, the Company also adopted its new name, “Atlas Development & Support Services Limited”, marking a new chapter in the development of the Group and its operations across Africa.
As at the time of writing, the Group has executed its initial corporate objectives and has laid the necessary foundations to build a high revenue growth and profitable support services business focussed on the natural resources and extractive industries in East Africa. With recommendations from the Board, ARSS has demonstrated its capacity to generate significant returns. In the first six months ended 30 June 2014, ARSS had unaudited revenues of $20.6m, a significant improvement when compared with the previous full year result to 31 December 2013 of $22.5m.
The Board saw this progress as a tremendous achievement for the Group and demonstrable evidence of the considerable upside that can be achieved through the professionalised and rationalised business restructure by the Board of ARSS following recommendation made by the management.
Now re-branded as “Atlas Development”, the Group’s business operates through three core divisions, delineated as follows:
• Atlas Technical: civil engineering, workforce accommodation and construction
• Atlas Services: medical and facilities management
• Atlas Logistics: fuel solutions, storage and transportation
Through these three core divisions, Atlas Development provides turn-key support for a range of major oil & gas exploration and development companies operating across East Africa. The Board believes that this is an efficient and scalable platform and is now focussed on expanding its service offering and geographic reach to capture additional market share across the fast-growing oil & gas exploration and development industry in East Africa, in addition to providing solutions to NGO groups and governmental bodies in the region and beyond.
Corporate Review:
Central to the Group’s development over the period has been the installation of a highly experienced team of professionals to lead the restructuring process and lay the foundation for growth at Atlas Development and these key appointments include the appointment of Carl Esprey to the Board as Chief Executive Officer in March 2014, and Lachlan Monro as Chief Operating Officer in January 2014 and Barry Lobel as Chief Financial Officer in April 2014, with the latter two being appointed to the Board in September 2014. The Board believes that we now have the best team possible in place to drive growth across all areas, and will continue to add additional key personnel to support expansion, when appropriate.
Outlook:
The key objective during and since the end of the period has been to prepare an appropriate platform for the growth and expansion of a support services business to capitalise on the emerging oil & gas and natural resources destination that is East Africa. With these objectives now secured, our attention is shifting towards optimising the operational structure that we have established, and enhancing our financial performance throughout 2015 and beyond. Leveraging the important structural modifications that were made to the business throughout the year, we are now ideally placed to build on our already strong roster of blue-chip clients, offering more extensive solutions to more companies across new jurisdictions.
With this in mind, we are actively looking to establish new operations across Africa. The logistics hub that we commenced building post year end in the Turkana region of Kenya will provide significant operational efficiencies, as will our planned expansion into Djibouti – a key strategic port which will give Atlas Development a significant competitive advantage when pitching for new contracts.
With our activities expanding to new areas across Africa, our focus will not be diverted away from Kenya – the site of Atlas Development’s head office and bulk of our activities. With this in mind, we were delighted to announce our intention to dual list on the Growth Enterprise Market Segment (‘GEMS’) of the Nairobi Securities Exchange, which was approved by shareholders on 5 November (the ‘Kenyan Listing’). The Kenyan listing, which will be completed by way of an introduction and private placing of up to 10% of the Company’s enlarged share capital and will be offered solely in Kenya, is expected to take place by the end of December 2014.
The Kenyan Listing will be an important milestone for Atlas Development, and is a core pillar in our strategy to build a substantial, sustainable and profitable company based in East Africa. Combining international expertise and accreditation with a strong Kenyan identity is a key differentiator for Atlas Development, and the Board intends to continue leveraging our unique service offering to more major oil & gas companies in the region.
I look forward to providing shareholders with further news regarding the proposed dual listing in Kenya, in addition to other important updates regarding our pipeline of potential new contracts, in the coming weeks and months.
I would also like to take the opportunity to thank shareholders and my fellow Board members for their support during the past year and reiterate my confidence that with a strong structure now in place, the Company is well positioned to deliver shareholder value during 2015 and beyond.
