Source - RNS
RNS Number : 4778I
Atlas African Industries Limited
31 August 2016
 

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

31 August 2016

Atlas African Industries Limited

('Atlas' or the 'Company')

Interim Results

 

Atlas (AIM, NSE: AAI), provides interim results for the six month period ended 30 June 2016.

 

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 2019. 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. 

 

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 2016 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 2016 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 31 December 2015 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 2016 the Company had cash and cash equivalents of US$1.7 million.

 

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 2016

 

 

For further information please visit www.atlassupport.com or contact:

Carl Esprey

Atlas

Tel: +44 (0) 20 7408 9200

Callum Stewart

Stifel Nicolaus Europe Limited

Tel: +44 (0) 20 7710 7600

Ashton Clanfield

Stifel Nicolaus Europe Limited

Tel: +44 (0) 20 7710 7600

Edward Burbidge

Burbidge Capital

Tel: +254 (0) 202 100 102

Susie Geliher

St Brides Partners Ltd

Tel: +44 (0) 20 7236 1177

 

 

 

FINANCIAL STATEMENTS

 

 

Consolidated Interim Income Statement

 



2016

2014  

2015             



6 months ended
30 June 2016

6 months ended
31 December 2014

18 months ended
31 December 2015

 


UNAUDITED

UNAUDITED

AUDITED

 

Notes

$ '000

$ '000

$ '000

 





 

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


-

182

88

 

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)

 

 

 

Consolidated Interim Statement of Comprehensive income

 



2016

2014

2015



6 months ended
30 June 2016

6 months ended
31 December 2014

18 months ended
31 December 2015



UNAUDITED

UNAUDITED

AUDITED



$ '000

$ '000

$ '000






Loss for the period


(2,065)

(5,838)

(34,182)






Exchange differences on translation of foreign operations

(3)

(34)

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

 



2015

2014

2015


Notes

30 June 2016

31 December 2014

31 December 2015



UNAUDITED

UNAUDITED

AUDITED

ASSETS


$ '000

$ '000

$ '000

Non-current assets





Goodwill


790

-

790

Property, plant & equipment

6

2,007

5,373

2,045

Intangible Assets


297


-

Investments in associate


-

5,257

-

Loans and other receivables


-

8,063

-

Total non-current assets


3,094

18,693

2,835






Current assets





Inventories


-

126

-

Trade and other receivables

8

2,471

3,361

194

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)






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

 


Share capital

Retained earnings

Share Option Reserve

Foreign Exchange Reserve

Non-controlling Interests

Total attributable to equity holders of the parent



$ '000

$ '000

$ '000

$ '000


$ '000








Balance at 30 June 2014

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 share-based

payments

-


2,376

-

-

2,376

Total transactions with owners

15,994

-

2,376

-

-

18,370








Balance at 31 December 2014

36,502

(7,418)

2,376

(41)

-

31,419








Loss for the period

-

(28,344)



-

(28,344)

Other comprehensive income


-

-

68

(3)

65

Total comprehensive income for the period

-

(28,344)

-

68

(3)

(28,279)








Transactions with owners







Share issues - cash received

114

-

-

-

-

114

Charge in relation to share-based

payments

-

-

344

-


344

Non-controlling Interests

-

-

-

-

(22)

(22)

Total transactions with owners

114

-

344

-

(22)

436








Balance at 31 December 2015

36,616

(35,762)

2,720

27

(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 share-based

payments

-


67.00

-


67

Non-controlling Interests





(10)

(10)

Total transactions with owners

4,894

-

67

-

(10)

4,951








Balance at 30 June 2016

41,510

(37,827)

2,787

24

(35)

6,459

 

 

Consolidated Interim Cash Flow Statement

 


2016

2014

2015


6 months ended
30 June 2016

6 months ended
31 December 2014

18 months ended
31 December 2015


UNAUDITED

UNAUDITED

$ '000

$ '000

$ '000




CASH FLOWS FROM OPERATING ACTIVITIES




Loss before tax

(2,074)

(5,769)

(14,700)





Working Capital Adjustments:




- Depreciation of property, plant and equipment

226

152

463

- Share of Associates profit

-

(182)

(88)

- Share option charge

67

2,376

2,720

- Net interest cost / (income)

-

532

-

Operating cash flow before movements in working capital

(1,781)

(2,891)

(11,605)





Working capital adjustments:




- Decrease/(Increase) in inventories

-

126

-

- Decrease/(Increase) in receivables

(2,277)

(992)

2,175

- Increase / (decrease) in payables

(88)

2,993

400

- 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

39

-

-

Decrease /(Increase) in loans to associate

-

482

-

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

262

10,296

(1,716)





Cash and cash equivalents at start of the period

1,450

3,132

3,132

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  


 

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 6 months ended 30 June 2016, 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 31 December 2015. The Group does not anticipate any significant change in these accounting policies for the year ended 31 December 2016. 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 31 December 2015 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.

 

 

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:


2016

6 months

 ended 30 June

 2016

$ '000

2014

6 month period

 to 31 December

 2014

$ '000

2015

18 months to

31 December

 2015

$ '000

Foreign exchange losses /(gains)

11

521

1,288

Consultancy fees

229

386

1,230

Senior Staff Costs

376

708

2,130

 

 

 

Loss per Share

The calculation of the basic and diluted loss per share is based on the following data:


2016

6 months ended 30 June 2016

$ '000

2014

6 month period to 31 December 2014

$ '000

2015

18 months to

31 December 2015

$ '000

Loss for the purposes of basic loss per share from continuing operations

(2,075)

(5,838)

(14,785)

Loss for the purposes of basic loss per share from continued and discontinued operations

(2,075)

(5,838)

(345,185)

 

Number of shares


2016

6 months ended 30 June 2016

$ '000

2014

6 month period to 31 December 2014

$ '000

2015

18 months to

31 December 2015

$ '000

Weighted average number of ordinary shares for

the purposes of basic and diluted loss per share

1,228,359,974

377,565,443

414,537,392

Loss per Share from continuing operations

(0.17) cents

(1.5) cents

(3.58) cents

Loss per Share from continuing and discontinued operations

(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 2016

2,328

187

2,515

Additions

228

-

228

Disposals

-

(53)

(53)

As at 30 June 2016

2,556

134

2,690





DEPRECIATION




As at 1 January 2016

(445)

(25)

(470)

Charge for the period

(220)

(6)

(226)

Disposals


13

13

As at 30 June 2016

(665)

(18)

(683)





NET BOOK VALUE AT 30 June 2016

1,891

116

2,007

NET BOOK VALUE AT 31 December 2015

1,883

162

2,045

 

 

 

 

Interest in SUBSIDIARIES

 

Investments include:


Country of registration / incorporation

Class of Shares held

% ownership

Principal Activity

ADSS Holdings Limited
(formerly Ardan Risk Holdings)

Mauritius

Ordinary

100

Investment Holding

ADSS Trading Limited
(formerly Ardan Risk Trading)

Mauritius

Ordinary

100

Trading Entity

East Africa Packaging Holdings Limited

Mauritius

Ordinary

100

Investment Holding

TEAP Glass plc

Ethiopia

Ordinary

100

Trading Entity

Atlas Development (Engineering) PLC

Ethiopia

Ordinary

100

Trading Entity

ADSS Extractive Mining Oil and Gas Supportive Services

Ethiopia

Ordinary

50

JV Trading Entity

Kalamu Development & Support Services

Tanzania

Ordinary

100

Trading Entity

Ardan Servicos Medicos Limitada

Mozambique

Ordinary

100

Dormant Entity

Ardan Servicos Logisticos Limitada

Mozambique

Ordinary

100

Dormant Entity

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.

 

 

 

2016

6 months ended 30 June 2016

$ '000

2014

6 month period to 31 December 2014

$ '000

2015

18 months to

31 December 2015

$ '000

Trade receivables

-

863

-

Other Receivables

2,410

2,393

5

Prepayments

45

105

166

Rental Deposits

16

-

23

Loans to associate

-

8,063

-





Less non-current portion: loans to associate

-

(8,063)

-

TOTAL CURRENT ASSETS

2,471

3,361

194

 

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

 

 

 

2016

6 months ended 30 June

2016

$ '000

2014

6 month period to 31 December

2014

$ '000

2015

18 months to

31 December 2015

$ '000

 

Cash and cash equivalents

1,709

12,872

1,450

 

 

 

Financial Liabilities

 

 

 

 

2016

6 months ended 30 June

2016

$ '000

2014

6 month period to 31 December

2014

$ '000

2015             

18 months to             

31 December             
2015             

$ '000             

Trade Payables

234

2,347             

369

Other Payables

480

1,158             

408

Current Tax Liabilities

101

68             

-

Borrowings

-

60             

-

TOTAL TRADE AND OTHER PAYABLES

815

3,633             

777

 

 

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 31 December 2015

433,063,193

36,616

Issue of shares

1,064,307,692

4,894

Total share Capital:



At 30 June 2016

1,497,370,885

41,510

 

The Company has one class of ordinary share which carries no right to fixed income.

 

On 15 August 2014, 77.8 million ordinary shares were issued for cash at a price of 9.0 pence per ordinary share.

 

On 23 October 2014, the Company issued 350,000 ordinary shares in part payment for services rendered by an adviser.

 

On 17 December 2014, the Company issued 39.1 million ordinary shares at a price of 8.13 pence per ordinary share.

 

During December 2014, 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 2016, the Company issued 1,064 million ordinary shares at a price of 0.325 pence per ordinary share.

 

 

Movement in Retained Earnings

 

 

 

2016

6 months ended 30 June 2016

$ '000

2014

6 month period to 31 December 2014

$ '000

2015

18 months to

31 December 2015

$ '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 2016, 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 2016, 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

$'000

$ '000

$ '000

Revenue





External Sales

-

-

63

63

Inter-segment sales

-

-

-

-

Total revenue

-

-

63

63






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)

 

 

 

** ENDS **

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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