Atlas African Industries Limited / Ticker: AAI / Index: AIM and NSE / Sector: Support Services

Transcription

1 Atlas African Industries Limited / Ticker: AAI / Index: AIM and NSE / Sector: Support Services 31 August Atlas African Industries Limited ( Atlas or the Company ) Interim Results Atlas Development (AIM, NSE: AAI), the Kenyan headquartered, African focussed support services and logistics company, provides interim results for the six month period ended 30 June. CHAIRMAN S STATEMENT This has been a frustrating period for the Company and its shareholders. During the period, we initially made great strides forward to deliver on our strategy to take advantage of opportunities in the consumer industrial sector: we changed the name of the Company to Atlas African Industries Limited, shifted our operational focus and raised US$5 million from new and existing shareholders to strengthen the balance sheet; through our Ethiopian subsidiary TEAP Glass PLC ( TEAP ) we secured a 100 year land lease for our planned new state-of-the-art glass bottle manufacturing facility (the first 45 years of lease payments have been paid in advance) on a 5.5 acre site located in Chancho, in close proximity to established infrastructure and just 30 kilometres from intended mine sites for the majority of materials needed to produce high quality bottles; we appointed MH Engineering Plc, a leading Ethiopian firm, to conduct a full feasibility study, including architectural, engineering, structural, sanitary, electrical and mechanical design and quantity surveying services; we commenced ground clearing and geotechnical drilling on-site ahead of constructing ancillary buildings, and placed deposits on long lead items. The tangible potential of our Ethiopian project (the Chancho Project ) was further underpinned by the signing of a memorandum of understanding with leading Ethiopian brewer Raya Brewery Share Company ( Raya ), with a view subject to confirmation of quality to entering into an offtake agreement to regularly supply international standard, high quality glass bottles to Raya in substitution of the imported bottles it currently uses. Preliminary economic studies had highlighted the strong potential of the Chancho Project based on a yearly production capacity of 105 million 330ml bottles, with full production targeted for early The Ethiopian Government has designated manufacturing as a top industrial priority with an emphasis on replacement of imports; the high-quality glass bottle market is currently dominated by expensive imports, so we identified our project as having huge benefit to all stakeholders, both the investors and Ethiopia. Success of the Chancho Project has the potential to generate significant revenue in tax to the Ethiopian Government as well as generate employment of 195 people in the area. Furthermore, we perceived significant ancillary benefits would be seen within associated businesses and supply chains.

2 Despite these considerable efforts and the factors which suggested that the Chancho Project would generate positive impacts for the Company, its shareholders, the local community around Chancho and the Ethiopian Government through tax revenues, our progress has been undermined and derailed by the actions of the Ethiopian Revenue and Customs Authority ( ERCA ). As shareholders will be aware from our announcement of 11 May we have been subjected to a complete injustice, through the summary removal of approximately US$2.4 million from TEAP s bank account with the Development Bank of Ethiopia by ERCA. ERCA s actions stem from a tax claim made against Ardan Risk & Support Services ( Ardan ) which categorically relate to periods prior to Atlas involvement with Ardan. Atlas has received legal advice that neither it nor TEAP has any liability for any such taxes under Ethiopian law. The Board continues in its fight to retrieve the expropriated funds and is pursing all legal, diplomatic and political channels in order to seek redress, including direct appeals to the Government of Ethiopia and the Ethiopian Investment Commission and through the UK Foreign Office and the British Business Secretary; our major shareholders have been actively lobbying the Canadian and US Governments. The Company believes that the unilateral removal of these funds was unlawful. I want to again reiterate and assure shareholders that the Board is examining all available options as it seeks to have the Company s funds returned. Concurrently, the Board has been actively considering alternative options available to maximise shareholder value and on 1 August announced that the Company has acquired an interest in BonanzaWin, a Nigerian based gaming company offering a range of online and real-play gaming experiences including sports betting, casino slot games, and lotto. This investment is in line with the Company s active development strategy to identify and support prospective growth opportunities across Africa. Atlas total investment into Equatorial Partners Limited ( EPL, which holds a 60% stake in Saerimner Ltd ( Saerimner ) a Nigerian registered company operating under the trading name BonanzaWin ) at this stage is US$0.3 million, in consideration for which it has acquired a 10% equity stake in EPL. BonanzaWin has established a portfolio of gaming businesses currently focussed on the Nigerian market; the company has a secure online gaming platform, which powers a wide range of games including sports betting, live casino and slot games, has three gaming shops where customers can play and place bets, and is a regulated provider of the Nigerian lottery, for which BonanzaWin sells tickets through a number of local sales agents. BonanzaWin is licenced and regulated by the Lagos State Lottery Board and Atlas believes the company represents a compelling investment opportunity to access Nigeria s growing gaming and entertainment sectors. For the 12- month period ended EPL and Saerimner reported a loss of US$0.3 million. Financial Review For the period under review the Company is reporting turnover of US$63k and comprehensive losses of US$2.1million. At 30 June the Company had cash and cash equivalents of US$1.7 million.

3 Outlook While all the building blocks are in place to develop a valuable project for both shareholders and the people of Ethiopia, the actions taken by ERCA have caused the Company to suspend activities in connection with the Chancho Project. The Chancho Project has intrinsic value and we have received approaches from international brewing companies who see investment into it as a potential entry point into Ethiopia. Despite the disappointments relating to recent events in Ethiopia, the recent investment in BonanzaWin provides us with exposure to Nigeria s large consumer market, specifically the fast-growing gaming and entertainment market. With rising incomes and increasing consumer demand, the African continent continues to develop and unlock new market opportunities and we look forward to keeping shareholders updated with developments across our portfolio. Finally, I would like to thank the executive team, who have been upstanding in their commitment to the Company in the face of severe hardships, and also our shareholders whose support is invaluable as we focus on remedying the current difficult situation. Ian H. Mann Non-Executive Chairman 30 August For further information please visit or contact: Carl Esprey Atlas Development Tel: +44 (0) Callum Stewart Stifel Nicolaus Europe Limited Tel: +44 (0) Ashton Clanfield Stifel Nicolaus Europe Limited Tel: +44 (0) Edward Burbidge Burbidge Capital Tel: +254 (0) Susie Geliher St Brides Partners Ltd Tel: +44 (0)

4 FINANCIAL STATEMENTS CONSOLIDATED INTERIM INCOME STATEMENT 30 June 6 months ended 18 months ended 31 December UNAUDITED UNAUDITED AUDITED Notes CONTINUING OPERATIONS Revenue 63 3,148 3,147 Cost of sales (34) (2,116) (1,924) Gross Profit 29 1,032 1,223 Operating expenses (2,036) (4,075) (13,291) Share option charge (67) (2,376) (2,720) Share of results of associate Operating loss 15 (2,074) (5,237) (14,700) Investment revenues - - Finance cost - (532) - Loss before taxation (2,074) (5,769) (14,700) Taxation (1) (69) (85) Loss for the year from Continuing Operations 4 (2,075) (5,838) (14,785) DISCONTINUED OPERATIONS Loss for the year from Discontinued Operations - - (19,400) Loss for the year (2,075) (5,838) (34,185) Loss for the year attributable to owners of the company (2,065) (5,838) (34,182) Loss for the year attributable to noncontrolling interests (10) - (3) Earnings per Share US cents US cents US cents From continuing operations Basic 5 (0.17) (1.50) (3.58) Diluted (0.17) (1.50) (3.58) From continuing and discontinued operations Basic 5 (0.17) (1.50) (8.21) Diluted (0.17) (1.50) (8.21)

5 CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME 6 months 18 months 6 months ended ended ended 30 June UNAUDITED UNAUDITED AUDITED Loss for the period (2,065) (5,838) (34,182) Exchange differences on translation of foreign (34) operations (3) 27 Total comprehensive loss for the year attributable to owners of the company (2,068) (5,872) (34,155) Total comprehensive loss for the year attributable to non-controlling interests (10) - (3) CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION 30 June Notes UNAUDITED UNAUDITED AUDITED ASSETS Non-current assets Goodwill Property, plant & equipment 6 2,007 5,373 2,045 Intangible Assets Investments in associate - 5,257 - Loans and other receivables - 8,063 - Total non-current assets 3,094 18,693 2,835 Current assets Inventories Trade and other receivables 8 2,471 3, Cash and cash equivalents 9 1,709 12,872 1,450 Total current assets 4,180 16,359 1,644 TOTAL ASSETS 7,274 35,052 4,479 LIABILITIES Non-current liabilities Borrowings Total non-current liabilities Current liabilities Trade and other payables 10 (714) (3,505) (777) Current tax liabilities (101) (68) (126) Borrowings - (60) - Total current liabilities (815) (3,633) (903)

6 TOTAL LIABILITIES (815) (3,633) (903) NET ASSETS 6,459 31,419 3,576 EQUITY Issued capital 11 41,510 36,502 36,616 Foreign exchange reserve 24 (41) 27 Share Option Reserve 2,787-2,720 Retained earnings (37,827) (5,042) (35,762) TOTAL EQUITY ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE PARENT 6,494 31,419 3,600 Non-controlling interests (35) - (25) TOTAL EQUITY 6,459 31,419 3,576 CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY Total Foreign Noncontrolling to equity attributable Share Retained Share Option Exchange capital earnings Reserve Reserve Interests holders of the parent Balance at 30 June 20,508 (1,580) - (7) 18,921 Loss for the period - (5,838) - - (5,838) Other comprehensive income - - (34) - (34) Total comprehensive income for the period - (5,838) - (34) - (5,872) Transactions with owners Share issues - cash received 16,836 16,836 Share issue costs (842) (842) Charge in relation to sharebased payments - 2, ,376 Total transactions with owners 15,994-2, ,370 Balance at 31 December 36,502 (7,418) 2,376 (41) - 31,419 Loss for the period - (28,344) - (28,344)

7 Other comprehensive income (3) 65 Total comprehensive income for the period - (28,344) - 68 (3) (28,279) Transactions with owners Share issues - cash received Charge in relation to sharebased payments Non-controlling Interests (22) (22) Total transactions with owners (22) 436 Balance at 31 December 36,616 (35,762) 2, (25) 3,576 Loss for the period - (2,065) - (2,065) Other comprehensive income - - (3) (3) Total comprehensive income for the period - (2,065) - (3) - (2,068) Transactions with owners Share issues - cash received 5,077 5,077 Share issue costs (183) - - (183) Charge in relation to sharebased payments Noncontrolling Interests (10) (10) Total transactions with owners 4, (10) 4,951 Balance at 30 June 41,510 (37,827) 2, (35) 6,459

8 CONSOLIDATED INTERIM CASH FLOW STATEMENT 30 June 18 months ended UNAUDITED UNAUDITED AUDITED CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax (2,074) (5,769) (14,700) Working Capital Adjustments: - Depreciation of property, plant and equipment Share of Associates profit - (182) (88) - Share option charge 67 2,376 2,720 - Net interest cost / (income) Operating cash flow before movements in working capital (1,781) (2,891) (11,605) Working capital adjustments: - Decrease/(Increase) in inventories Decrease/(Increase) in receivables (2,277) (992) 2,175 - Increase / (decrease) in payables (88) 2, Increase in pre-operational expenses (intangibles) (297) - - Cash used in operations (4,443) (765) (9,031) Net Interest (cost) / received - (9) - Net cash used in operating activities (4,443) (774) (9,031) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (228) (5,351) (2,334) Purchase of subsidiary, net of cash received Disposal of Discontinued Operation - - (6,459) Proceeds from Sale of motor vehicles Decrease /(Increase) in loans to associate Net cash used in investing activities (189) (4,869) (8,793) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of share capital 5,077 16,836 16,950 Share issue costs (183) (842) (842) Repayment of borrowings - (55) - Net cash flow from financing activities 4,894 15,939 16,108 Net increase / (decrease) in cash and cash equivalents ,296 (1,716) Cash and cash equivalents at start of the period 1,450 3,132 3,132

9 Effect of foreign exchange rate changes (3) (556) 34 Cash and cash equivalents at end of the period 1,709 12,872 1,450 NOTES TO THE INTERIM FINANCIAL STATEMENTS

10 1. GENERAL INFORMATION Atlas African Industries Limited, formerly Atlas Development & Support Services Limited ( Atlas or the Company ) is incorporated and domiciled in Guernsey. The nature of the Group s operations and its principal activities are set out in the Chairman s Statement. The presentational currency of the Group is US Dollars as this reflects the Group s business activities in the services sector in sub-saharan Africa and therefore the Group s financial position and financial performance. The interim financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as adopted by the European Union. BASIS OF PREPARATION The interim consolidated financial statements of the Group for the 30 June, which are unaudited and have not been reviewed by the Company s auditor, have been prepared in accordance with the International Financial Reporting Standards ( IFRS ), as adopted by the European Union, accounting policies adopted by the Group and set out in the annual report for the year ended. The Group does not anticipate any significant change in these accounting policies for the year ended. References to 'IFRS' hereafter should be construed as references to IFRSs as adopted by the EU. This interim report has been prepared to comply with the requirements of the AIM Rules of the London Stock Exchange (the AIM Rules ). In preparing this report, the Group has adopted the guidance in the AIM Rules for interim accounts which do not require that the interim consolidated financial statements are prepared in accordance with IAS 34, Interim financial reporting. While the financial figures included in this report have been computed in accordance with IFRSs applicable to interim periods, this report does not contain sufficient information to constitute an interim financial report as that term is defined in IFRSs. The financial information contained in this report also does not constitute statutory accounts under the Companies (Guernsey) Law 2008, as amended. The financial information for the year ended is based on the statutory accounts for the period then ended. The auditors reported on those accounts. Their report was unqualified and did not include any statements of emphasis of matter. The current period financial statements have been prepared in accordance with the IFRS principles applicable to a going concern, which contemplate the realisation of assets and liquidation of liabilities during the normal course of operations. Having carried out a going concern review in preparing these interim financial statements, the Directors have concluded that there is a reasonable basis to adopt the going concern principle.

11 CRITICAL ACCOUNTING ESTIMATES JUDGMENTS The preparation of the interim consolidated financial statements is in conformity with IFRS as adopted in the EU requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group s accounting policies. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below. LOSS FOR THE PERIOD Operating expenses include: 6 months ended 30 June 6 month period to 18 months to $ 000 Foreign exchange losses /(gains) ,288 Consultancy fees ,230 Senior Staff Costs ,130 LOSS PER SHARE The calculation of the basic and diluted loss per share is based on the following data: 30 June Loss for the purposes of basic loss per share from continuing operations Loss for the purposes of basic loss per share from continued and discontinued operations 6 month period to 31 December 18 months to $ 000 (2,075) (5,838) (14,785) (2,075) (5,838) (345,185) Number of shares Weighted average number of ordinary shares for the purposes of basic and diluted loss per share 30 June 6 month period to 31 December 18 months to $ 000 1,228,359, ,565, ,537,392

12 Loss per Share from continuing operations Loss per Share from continuing and discontinued operations (0.17) cents (1.5) cents (3.58) cents (0.17) cents (1.5) cents (8.21) cents PROPERTY, PLANT AND EQUIPMENT Plant & Equipment Motor Vehicles Total COST $ 000 $ 000 $ 000 As at 1 January 2, ,515 Additions Disposals - (53) (53) As at 30 June 2, ,690 DEPRECIATION As at 1 January (445) (25) (470) Charge for the period (220) (6) (226) Disposals As at 30 June (665) (18) (683) NET BOOK VALUE AT 30 June 1, ,007 NET BOOK VALUE AT 1, ,045 INTEREST IN SUBSIDIARIES Investments include: ADSS Holdings Limited (formerly Ardan Risk Holdings) ADSS Trading Limited (formerly Ardan Risk Trading) East Africa Packaging Holdings Limited Country of registration / incorporation Class of Shares held % ownership Mauritius Ordinary 100 Principal Activity Investment Holding Mauritius Ordinary 100 Trading Entity Mauritius Ordinary 100 Investment Holding TEAP Glass plc Ethiopia Ordinary 100 Trading Entity Atlas Development (Engineering) PLC ADSS Extractive Mining Oil and Gas Supportive Services Kalamu Development & Support Services Ardan Servicos Medicos Limitada Ardan Servicos Logisticos Limitada Ethiopia Ordinary 100 Trading Entity Ethiopia Ordinary 50 JV Trading Entity Tanzania Ordinary 100 Trading Entity Mozambique Ordinary 100 Dormant Entity Mozambique Ordinary 100 Dormant Entity

13 Kalamu Management Services Limited Mauritius Ordinary 66 Trading Entity The Directors consider the carrying amount of investment in subsidiaries has not suffered any impairment loss. TRADE AND OTHER RECEIVABLES All non-current receivables are due within five years from the end of the reporting period. 30 June 6 month period to 18 months to $ 000 Trade receivables Other Receivables 2,410 2,393 5 Prepayments Rental Deposits Loans to associate - 8,063 - Less non-current portion: loans to associate - (8,063) - TOTAL CURRENT ASSETS 2,471 3, The effective interest rates on non-current receivables were 2.2%. The directors consider that the carrying amount of trade and other receivables approximates their fair value. There are no significant amounts past due. CASH AND CASH EQUIVALENTS 30 June 6 month period to 18 months to $ 000 Cash and cash equivalents 1,709 12,872 1,450 FINANCIAL LIABILITIES 30 June 6 month period to 31 December 18 months to $ 000

14 Trade Payables 234 2, Other Payables 480 1, Current Tax Liabilities Borrowings TOTAL TRADE AND OTHER PAYABLES 815 3, Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. The increase during the current period in payables relates to ALK which has now been consolidated. The directors consider that the carrying amount of financial liabilities approximates their fair value. SHARE CAPITAL Allotted and fully paid Ordinary shares of no par value Number $ 000 At 433,063,193 36,616 Issue of shares 1,064,307,692 4,894 Total share Capital: At 30 June 1,497,370,885 41,510 The Company has one class of ordinary share which carries no right to fixed income. On 15 August, 77.8 million ordinary shares were issued for cash at a price of 9.0 pence per ordinary share. On 23 October, the Company issued 350,000 ordinary shares in part payment for services rendered by an adviser. On 17 December, the Company issued 39.1 million ordinary shares at a price of 8.13 pence per ordinary share. During December, 350,000 shares were issued to the Company s Kenyan nominated adviser at a price of 0.10/shares in lieu of professional fees of 35,000. On 16 February, the Company issued 1,064 million ordinary shares at a price of pence per ordinary share. MOVEMENT IN RETAINED EARNINGS 30 June 6 month period to 18 months to

15 $ 000 Prior Period Losses (35,762) (1,580) (1,580) Loss for the period (2,065) (5,838) (34,182) Retained Earnings (37,827) (7,418) (35,762) CONTROLLING PARTY The Directors believe that there is no ultimate controlling party. POST BALANCE SHEET EVENTS On 1 August, the Company announces that it has acquired a 10% interest in BonanzaWin, a Nigerian based gaming company offering a range of online and real-play gaming experiences including sports betting, casino slot games, and lotto. On1 August, Barry Lobel stepped down from his role as Chief Financial Officer and Executive Director, effective immediately. The Board is assessing options for a replacement CFO and expect to fill the position with a non-board appointment in due course. INTERIM SEGMENTAL REPORTING Segment information about these businesses is presented below: Ethiopia Mauritius Unallocated Total $'000 Revenue External Sales Inter-segment sales Total revenue Segment results Operating profit/(loss) by segment - (33) (1,974) (2,007) Share option charge - - (67) (67) Share of results of associates Operating profit/(loss) - (33) (2,041) (2,074) Finance costs Loss before taxation - (33) (2,041) (2,074) Tax - - (1) (1) Loss for the year from Continuing Operations - (33) (2,042) (2,075) Loss for the year from - - Discontinued Operations - - Loss for the year - (33) (2,042) (2,075) Consolidated Total Assets 3,069 1,037 3,168 7,274 Consolidated Total Liabilities (64) (741) (10) (815)

16 ** ENDS **