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NOMINATED ADVISOR
Burbidge Capital
Table of Contents
Important Notice
Chairmans Statement
iii
Corporate Information
iv
vii
1.
2.
ECONOMIC OVERVIEW
3.
13
4.
14
5.
THE BUSINESS
16
6.
31
7.
38
8.
49
9.
DIRECTORS STATEMENT
59
60
64
65
1.
66
2.
ACCOUNTING POLICIES
68
3.
FINANCIAL INFORMATION
71
(i)
71
(ii)
72
(iii)
73
(iv)
74
(v)
75
(vi)
76
4.
77
Nominated Advisor
Burbidge Capital
4th Floor Nivina Towers
Westlands Road, Museum Hill, Westlands,
P.O. Box 51525 00100
Nairobi, Kenya
Tel: +254 (0) 202 100 102
Legal Advisors
Reporting Accountants
Registrar (Kenya)
Registrar (UK)
Levanter Africa
2nd Floor Bravo Block
Wilson Business Park
P.O. Box 8541, 00200, Nairobi, Kenya
Important Notice
THIS DOCUMENT CONTAINS IMPORTANT INFORMATION FOR CONSIDERATION AND REQUIRES
CAREFUL ATTENTION AS IT INCLUDES WITHIN IT, LEGAL, MARKET AND HISTORIC AND CURRENT
FINANCIAL INFORMATION.
This Listing Statement includes particulars given in compliance with the requirements of the Companies Act
2001 (Cap.486), the requirements of the Capital Markets Act (Cap. 485A), The Capital Markets (Securities)
(Public Offers, Listing and Disclosures) Regulations 2002 and, the rules and regulations made thereunder,
as well as the rules contained in the Nairobi Securities Exchange (NSE) listing rules, in particular, the NSE
Listing Manual.
This Listing Statement is issued by Atlas Development & Support Services Limited (ADSS or the Issuer)
and has been prepared in compliance with The Capital Markets (Securities) (Public Offers, Listing and
Disclosures) Regulations 2002 in connection with the proposed cross listing of the whole of its existing
issued share capital (Shares) on the Official List of the NSE by way of Introduction (Introduction) in the
Growth Enterprise Market Segment (GEMS) of the NSE.
Application is being made to the NSE for the listing of the Shares on the NSE. Subject to compliance with
the NSE Listing Manual, the NSE will admit the Shares for listing under the security code ADSS in the
GEMS. As a matter of policy, the NSE and the Capital Markets Authority assume no responsibility for the
correctness of any statements or opinions made, or reports contained in this Listing Statement, as the case
may be. Approval of the Introduction is not to be taken as an indication of the merits of the Issuer or of the
Shares.
Should any doubt arise as to the meaning of the contents of this Listing Statement or as to what action to
take, please consult your investment bank, financial advisor, stockbroker or other professional advisor, duly
authorized under the Capital Markets Act, who specializes in advisory on the acquisition of shares and other
securities.
The Directors of the Issuer, whose names appear on page 59 of this Listing Statement, accept responsibility
for the information contained in this document. To the best of the knowledge and belief of the Directors
(who have taken all reasonable care to ensure that such is the case), the information contained in this
document is in accordance with facts and does not omit anything likely to affect the import of such
information.
A copy of this Listing Statement together with the documents required by Section 43 of the Companies Act
(Cap.486) to be attached hereto, have been delivered to the Registrar of Companies in Nairobi for
registration.
Shares of the Issuer will be available to the general public through the secondary trading on the NSE. Upon
listing, the sale or transfer of Shares will be subject to the rules of the NSE and the CDSC (as defined below).
The register will be maintained by CDSC (the Registrar). There are currently no other restrictions on the
sale or transfer of Shares under Kenyan law by Kenyan residents.
This Listing Statement does not constitute an offer, invitation or the marketing to any person to subscribe
for or purchase any new shares in the Issuer. Neither this Listing Statement nor any other information supplied
in connection with the Introduction is intended to provide a complete basis of any credit or other evaluation,
nor should it be considered as a recommendation by ADSS or the directors or officers of ADSS, that any
recipient of this Listing Statement (or any other information supplied in connection with the Introduction)
should purchase any shares of the Issuer.
Forward-looking statement
This Listing Statement contains forward-looking statements relating to the Companys business. These
forward-looking statements can be identified by the use of forward-looking terminology such as believes,
expects, may, is expected to, will, will continue, should, would be, seeks or anticipates or
similar expressions, or the negative thereof, or other variations thereof, or comparable terminology or by
discussions of strategy, plans or intentions.
These statements reflect the current views of the Company with respect to future events and are subject to
certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or
achievements of the Company to be materially different from the future results, performance or achievements
that may be expressed or implied by such forward-looking statements. Some of these factors are discussed
in more detail under Key Risk Factors and The Company.
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described in this Listing Statement as anticipated,
believed, estimated or expected.
This Listing Statement is dated: 11th December 2014.
ii
Chairmans Statement
Richmond House
St Julians Avenue
St Peter Port
Guernsey
GY1 1GZ
17 December 2014
Dear Shareholder,
Proposed Listing on the Growth Enterprise Market Segment of the Nairobi Securities Exchange
Atlas Development & Support Services (the Company), the AIM-listed African focussed support services
and logistics company, is pleased to be joining the Growth Enterprise Market Segment (GEMS) of the
Nairobi Securities Exchange (NSE) by way of introduction, making the Company the first AIM listed
company to join the NSE.
This important step represents a natural alignment of the Companys ownership structure with its East African
stakeholders and customers, and demonstrates the Companys commitment to local ownership. The dual
listing is expected to further align the Company with the ongoing strong regional growth and provide a
foundation for further growth and development.
Through our primary investment into Ardan Risk & Support Services, we have already built a strong presence
within the support services and logistics sector, and are currently working for a number of international
companies operating in the East African region.
This dual listing on the NSE will establish the Company as a pioneer, and it represents yet another milestone
for this Company in its quest to achieve its vision of becoming recognised in sub-Saharan Africa as the
specialist service provider of choice in the logistics support industry.
Since our listing on the AIM Market in June 2013 we have made exceptional progress in implementing our
vision and we warmly invite you to participate in our future growth.
Yours sincerely,
Ian Hollis Mann
Non- Executive Chairman
iii
Corporate Information
Issuer Name
Richmond House
St Julians Avenue
St Peter Port
Guernsey GY1 1GZ
iv
Financial Calendar
Legislation
Legal Form
Subsidiaries
Authorised representative in
respect of the Kenya Branch office
Conrad Nyukuri
c/o Axis Kenya
2nd Floor, Apollo Centre,
Ring Road, Parklands, Westlands
P.O. Box 764, Sarit Centre, Nairobi, Kenya 00606
Auditors
Legal Advisors
Company Secretary
Principal Bankers
vi
Definition
ADSS
AIM
AIM Rules
the AIM Rules for Companies and the AIM Rules for Nominated
Advisers each produced by the London Stock Exchange, and each
as amended from time to time
ALK
AOL
Ardan
Articles
Board
CAGR
Means (a) the Capital Markets Act, Chapter 485A of the Laws of
Kenya and all subsidiary legislation and rules and guidelines
promulgated thereunder (b) the rules of the NSE (c) Companies Act
and (d) any law applicable to capital markets in Kenya
CBK
CBR
CCA
CDSC
CEO
CMA
Company or Issuer
Cross Listing
DFI
DPS
EBITDA
EPS
FCFF
FID
F&O
FSMA
GBP
British Pound
GDP
GEMS
Group
KES
Kenya Shilling
L-N Form
Law
Listing
Listing Price
LNG
London Register
Market Cap
Market Capitalisation
MPC
MSCI Index
N-L Form
NASI
NSE
Ordinary Shares
PPP
viii
Removal Form
Subsidiary
UKLA
USD / US Dollar
VAT
WACC
Y/Y
Year on Year
ix
1.
This Listing Statement should be read in full along with other documents available for inspection for full
appreciation of the subject matter.
Issuer
Shares
No of shares to be issued/made
available for trading
Status
Trades
Compliance
Nominated Advisor
Market Segment
GEMS
December 2014
Governing Law
(of the Listing and this Listing
Statement)
Kenyan Law
Nairobi-to-London
The investor will fill in the Removal Form and submit it to their broker in Kenya, who will then verify
the information and deliver the form to CDSC.
CDSC will remove the shares from the investors account and attach the investors statement
confirming the removal of the securities from the account and electronically send the documents to
Capita Registrars.
Capita Registrars will then move the shares from the Nairobi Register to the investors nominated
CREST account, in accordance with the details supplied on the N-L Form.
London-to-Nairobi
CDSC will receive the L-N Form and attachments electronically from Capita Registrars.
CDSC will verify information provided and credit the investors account as per the details on the L-N
Form.
Capita Registrars will move the shares from the London Register to the Kenyan Register and CDSC
Registrars will adjust the register accordingly in accordance with the details supplied on the L-N Form.
The transfer of shares from one market to the other will typically take c.4 business days, following which the
shares will be tradable in the destination market.
ADSS was granted a three year conditional call option (the Call Option) to acquire 100 per cent. of
ALK, a separate and new shell company in Kenya from which the restructured business of Ardan
would be operated.
2
In September 2014, the Board exercised the Call Option. Completion of the Call Option was conditional
upon shareholder approval and receipt of all necessary and applicable 3rd party approvals (in all relevant
jurisdictions). The 3rd party approvals were obtained in July 2014 and on 22 October 2014, where the
shareholders of ADSS approved the completion of the Call Option and the acquisition of ALK on the terms
set out in the F&O.
1.8.
Competent Management
The management of ADSS is highly qualified and has significant experience in the oil and gas, mining and
support services sectors.
High quality clients
ADSS has a high quality clientele having worked, amongst others, with Tullow, Weatherford International,
fertiliser producer Yara and potash developer Allana Potash Corp. Most of ADSS clients are multinational
companies exploring for natural resource opportunities in the region.
Few sophisticated players
The lack of local, sophisticated and experienced support services companies allows ADSS to enjoy less
competition and therefore reap the benefit of winning major contracts offered by the oil and gas exploration
companies. However, more international logistics players are expected to venture into the region as more
discoveries are made.
Local ownership
The Company believes that increasing its local ownership through the Listing will further demonstrate its
commitment to operating in East Africa and give it competitive advantages against international service
providers.
KES 11.5
393,923,366
39,139,827
433,063,193
KES*
4, 385,000
1,500,000
2,600,000
250,000
250,000
870,000
Total
9,855,000
*These figures may be subject to change. The expenses of the Listing amount to 0.2 per cent. of the Companys Market Cap on the
Offer price or KES 11.5 per Share.
**an exchange rate of KES 87.70 / USD has been applied for the nominated advisor fee of USD 50,000.
2.
ECONOMIC OVERVIEW
Set out below is an outline/description of the key jurisdictions in which the Company is likely to operate.
This analysis should not be taken as:
a definitive statement regarding the subject matter but is simply the Boards understanding based on
advice received from Burbidge Capital;
a reasonable commitment to continue operation in any jurisdiction for a specific period of time.
2.1. Kenya
2.1.1. Economic Growth
The Kenyan economy expanded at a rate of 4.7 per cent. in 2013 following a 4.6 per cent. expansion and
a 4.4 per cent. expansion in 2012 and 2011 respectively. The World Bank projects that Kenyas GDP will
grow 4.7 per cent. a year in 2014 and 2015 but indicated that the economy has the potential to achieve a
higher growth rate of 5 per cent. in the next two years. The 2013 performance was supported by:
the stable macroeconomic environment for the better part of the year;
low and stable inflation supported by improved supply of basic foods, lower international oil prices
and lower costs of electricity; and
Weak investor confidence resulted in low private investment and subdued GDP growth; drought in the fourth
quarter of 2013 depressed growth in agriculture and increased electricity prices, driving up production costs
and reducing GDP by an estimated KES 23.8 billion (0.7 per cent.) in 2013.3
The World Bank believe that the projected growth of 4.7 per cent. a year in 2014 and 2015 will be supported
by stronger global economic activity among Kenyas trading partners. This year macroeconomic stability
witnessed in 2013 has continued into the first half of 2014 and is likely to be maintained for the rest of the
year. The projections assume that the impact of inadequate rainfall and the insecurity caused by terrorist
activity will be limited.4
The value of Kenyan goods and services Gross Domestic Product (GDP) for 2013 was estimated at
USD 53.4 billion (4.76 trillion Kenya shillings) in 2013.
The provisional estimates of GDP show that the countrys economy expanded by 5.8 per cent. during the
second quarter of 2014 compared to 7.2 per cent. recorded during a similar quarter of 2013. The growth
was mainly supported by robust growths in: construction (18.9 per cent.); manufacturing (9.1 per cent.);
financial & insurance (8.3 per cent.); information and communication (6.4 per cent.); and wholesale and retail
trade (6.8 per cent.).5
Percent
Kenya Real
GDP Growth
(%)
Year
2.1.2. Macro-Economic Overview
The movements in inflation, interest rates and exchange rates are reviewed further, below:
(i)
Inflation
Inflation expectations were
anchored at a lower level as a result of lower international food and fuel prices
and prudent monetary policy. Inflation averaged 5.7 per cent. (7.3 per cent. for food) in 2013 and has
averaged 7.3 per cent. (9.6 per cent. for food) in the 12 months ending in September 2014.6
Source: World Bank Database
Percent
10
8
6
4
2
0
Kenya Annual
Inflation Rate
(%)
Months
Consumer Price Index (CPI) rose from 150.60 points in July 2014 to 152.02 points in August 2014. The
overall rate of inflation increased from 7.67 per cent. to 8.36 per cent. during the same period. CPI rose
from 152.02 points in August 2014 to 152.24 points in September 2014. However, the overall rate of inflation
decreased from 8.36 per cent. to 6.6 per cent. during the same period due to a decline in the Housing,
Water, Electricity, Gas and Other Fuels Index, which decreased collectively by 0.52 per cent.. This decline
was attributed to notable falls in the cost of kerosene and electricity. Electricity prices were lower in
September 2014 compared with August 2014 due to reduction in fuel cost and forex adjustment charges.7
(ii)
Interest Rates
The average yield rate for the 91-day Treasury bills, which is a benchmark for the general trend of interest
rates, fell to 8.29 per cent. in August 2014 from 9.78 per cent. in July 2014. The inter-bank rates increased
to 11.72 per cent. during the period. The available data shows that the average lending rate has averaged
16.69 per cent. from January to September 2014.8
6 Source: Kenya National Bureau of Statistics
The Central Bank https://www.centralbank.go.ke/index.php/balance-of-payment-statistics/inflationrates
7 Consumer Price Indices and Inflation Rates for September 2014, Kenya Bureau of statistics Publications
T-bill 91-day
Interbank
Average lending
rate
Overdraft rate
Average deposit
rate
Savings
Jan-14
Feb-14
Mar-14
Apr-14 May-14
Jun-14
Jul-14
Aug-14
Sep-14
9.26
10.43
9.16
8.83
8.98
6.47
8.80
7.40
8.82
7.76
9.81
6.60
9.78
8.08
8.29
11.79
8.35
7.43
17.03
16.82
17.06
16.88
16.91
16.44
16.70
16.44
16.97
17.85
16.36
15.88
16.91
17.12
16.26
16.20
16.04
15.79
6.55
1.56
6.57
1.49
6.61
1.56
6.48
1.53
6.42
1.54
6.56
1.50
6.59
1.33
6.51
1.50
6.64
1.51
(iii)
Exchange Rate
Since the beginning of 2014, the Kenya Shilling has been losing value when compared to major world
currencies. The KES, which lost 2.6 per cent. against the dollar up to August 2014, remained under pressure
from importers seeking dollars and was predicted to weaken further in the face of a shortage of hard currency
inflows. This is mainly being fuelled by a drop in the number of tourists visiting the country after major tourism
market countries issued travel advisories against Kenya. However, the situation is expected to start improving
as countries such as Germany recently announced having lifted its travel advisory against Kenya.
In the month of August, the KES appreciated against the GBP, the Euro, the Ugandan and Tanzanian shilling.
In contrast, the KES depreciated against the US Dollar and the South African Rand. In the month of
September the shilling appreciated against GBP, the Euro, and the South African Rand but depreciated
against the US Dollar, and the Ugandan and Tanzanian shillings. 9
Currency
Jan-14
Feb-14
Mar-14
Apr-14 May-14
Jun-14
Jul-14
Aug-14
Sep-14
1 US Dollar
1 Sterling Pound
1 Euro
1 SA Rand
UGS/KES
1 TZS/KES
86.21
141.99
117.50
7.96
29.00
18.68
86.28
142.81
117.81
7.86
28.61
18.82
86.49
143.76
119.58
7.96
29.28
18.88
86.72
145.08
119.78
8.20
29.19
18.86
87.61
148.15
119.16
8.20
29.45
19.18
87.77
150.01
118.93
8.22
30.00
18.97
88.11
147.24
117.40
8.26
29.66
18.89
88.84
144.99
114.74
8.11
29.47
18.78
87.41
147.29
120.09
8.39
28.97
18.92
2.2
Mozambique
10.0
5.0
0.0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014 (p)
2015 (p)
Percent
Mozambique Real
GDP Growth (%)
Year
Sources: AfDB Statistics Department, and INE, AfDB (e) estimates and (p) projections
The extractive sector was the fastest growing in 2013 at 22 per cent., propelled by coal exports. Another
continued growth driver has been increased public expenditure estimated to reach 36.8 per cent. of GDP
in 2014 primarily benefiting the construction, services, and transport and communications sectors. The
steady gains in GDP per capita up 44.7 per cent. since 2010, and now estimated at USD 640 is fuelling
domestic demand, although this is centred mainly on urban areas, where about 20 per cent. of the
population lives. Thefinancial sector follows behind the extractive industry as the most dynamic. It expanded
by 17.7 per cent. in 2013, supported by increased household income and credit expansion.
2.2.2 Macro-Economic
Overview
(i)
Inflation
The inflation rate in Mozambique averaged 6.56 per cent. from 2009 until 2014, reaching an all-time high of
17.44 per cent. in December of 2010 and a record low of 1.05 per cent. in November of 2009. The Bank
to follow a prudent but active monetary policy stance. Despite weather-related
of Mozambique continues
exogenous shocks, inflation
has remained under control at low levels, with the 12-month average ending
2013 at 4.15 per cent., well below the central banks initial 7.5 per cent. target.
Percentage
15
10
5
Inflation
0
2005 2007 2009 2011 2013
Year
Mozambican annual consumer inflation slowed to 2.75 per cent. in June of 2014 from 2.9 per cent. recorded
in the previous month. A year earlier the annual inflation rate was 4.86 per cent.. Upward inflationary
pressures came mostly from higher prices of education (5.85 per cent.) and food. The inflation rate in
Mozambique was recorded at 2.23 per cent. in September of 2014. Inflation has gradually declined over
the last 12 months having recorded 4.42 per cent. in October 2014. The monetary policy committee cited
that the behaviour of inflation is explained by the greater offer on the domestic market of fruit and vegetables,
reflecting the seasonal impact of the cool period of the year, plus the stability of the metical on the exchange
market, supported by a greater availability of foreign currency. 11
11 BNI Development Bank of Mozambique Financial Markets MagazineData sourced from the National Institute of Statistics http://www.ine.gov.mz/
Percentage
4
3
2
Mozambique Annual Inflation Rate
1
0
Oct-13 Dec-13 Feb-14 Apr-14 June 14 Aug-14
Month
(ii)
Interest rates
At its August 9th, 2014 meeting, Mozambican Monetary Policy Committee decided to hold the benchmark
Source: Mozambiques National Statistics Institute (INE)
interest rate at 8.25 per cent., (the same rate applied since October of 2013), citing that the recent moderated
inflation outlook is meeting the macroeconomic targets for the year. Despite the central bank holding its
own interest rates steady for the past year, commercial banks interest rates still remain high. Average interest
rates charged by the banks to their clients in December 2013, for loans maturing in a year, was 19.80 per
cent., only 0.45 per cent. lower than in November 2013. These rates have typically remained quite high
year Available data shows that the average interest rate on bank loans fell slightly from June
throughout this
still high at 20.8 per cent. in July 2014.12
2014, but was
Percent
Month
Source: Bank of Mozambique
(iii)
Exchange rate
The Metical has remained relatively stable against the United States Dollar (USD) since the beginning of
2013, losing just 1 per cent. up to September 2014. This helped control the cost of fuel imports, while the
currencys 15.7 per cent. appreciation against the South African Rand in the same period contained
inflationary pressures deriving from food and other imported consumer goods.13
12 BNI Development Bank of Mozambique Financial Markets Magazine
Data sourced from Bank of Mozambique http://www.bancomoc.mz/PEstudos_en.aspx?id=P&ling=en
13 BNI Development Bank of Mozambique Financial Markets Magazine
Data sourced from Bank of Mozambique
http://www.bancomoc.mz/Mercados.aspx?id=tcmd&ling=pt
Currency
Jan-14
Feb-14
Mar-14
Dollar
SA Rand
29.83
2.75
31.5
2.86
31.53
2.93
Apr-14 May-14
31.04
2.94
31.25
3.00
Jun-14
Jul-14
Aug-14
Sep-14
31.29
2.93
30.76
2.88
30.13
2.82
30.32
2.76
Since the start of 2014 the Metical has depreciated against both the Dollar and the South African Rand.
The Mozambique Metical decreased to 30.32 in September from 30.13 in August of 2014 but recovered
slightly against the South Africa Rand in September.
2.3.
Ethiopia
Percentage
10
8
6
4
Actual
Estimate
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
Source: IMF WEO Database: October 2014/BC Analysis
According
to World Banks report- 3rd Ethiopia Economic Update: June 2014, expansion of the services,
agriculture
and industry sectors contributed
most to GDP growth (4.5 per cent., 3.1 per cent. and 2.1 per
cent., respectively). Construction activity was the major driver of the non-manufacturing industry sector, with
a growth contribution of 1.4 per cent. in 2013, while within services, transport and communications was
the leading sector.14
Ethiopias economic growth has also been supported largely by the substantial public investment spurred
by the governments current five-year development plan (2010/11-2014/15) - known as the Growth and
Transformation Plan (GTP) - and increased domestic demand largely driven by a growing population. The
GTP is geared towards fostering broad-based development in a sustainable manner to achieve the countrys
Millennium Development Goals. Key goals of the GTP include:
Rapid economic growth, targeted for 11 per cent. per year at worst and, at best, to double the size
of the economy by 2015, with GDP per capita expected to reach $698 by 2015;
Agricultural production is to double, to ensure food security in Ethiopia for the first time;
An increased contribution from the industrial sector, particularly focused on increased production in
sugar, textiles, leather products and cement;
14 3RD Ethiopia Economic Update Strengthening Export Performance Through Improved Competitiveness: June 2014 - Real Sector
10
Foreign exchange reserves are projected to increase and the Birr is to depreciate by 5 per cent.
against the dollar each year;
Power generation capacity will increase from the current 2,000 MW to 8,000 MW, and the number
of customers from the current two million to four million by 2015;
Earlier this year, the World Bank approved funding of USD 320 million towards the construction of a 258 km
road that will link the North West Oromia state and the South West Amhara State. The investment is
expected to finance 83 per cent. of the construction with the remaining 17 per cent. being funded by the
Ethiopian state. Investment in road infrastructure is expected to support the countrys sustainable growth
achieved during the past decade.16
In May 2014, Ethiopias rating by Fitch, Moodys and Standard and Poors agencies were B, B1 and B/B
respectively, reflecting a stable outlook for the economy. These ratings were driven by Ethiopias strong
record of economic growth in the last decade and place Ethiopia at a position to tap into the global markets
to mobilize resources towards financing its development projects.17
2.3.2 Macro-Economic Overview
The movements in inflation, interest rates and exchange rates are reviewed further, below:
(i)
Inflation18
Ethiopian inflation has remained in single digits for almost a year. As can be seen from the chart below the
September 2014 general y/y inflation has increased by 5.6 per cent. as compared to September 2013. The
5.6 per cent. rise in general inflation rate was due to an increase in year on year food inflation by 3.6 per
cent. in September 2014 as compared to September 2013 and an increase in the Non Food inflation by
7.8 per cent. in September 2014 as compared to September 2013.
International factors also contributed to reduced inflationary pressure. A decomposition of inflation into
tradable and non-tradable goods revealed that internationally traded goods (imported and exported
commodities) in Addis Ababa exhibited a much faster decline in inflation than goods which are not
internationally traded. In addition, a tightening of monetary policy has also contributed to lower inflation. For
fiscal stance, particularly measures to improve tax administration and enforcement,
instance, a strong
deficit at 2 per cent. of GDP in 2012/13 compared to 1.2 per cent. of GDP in 2011/12.
contained the fiscal
8
6
4
Ethiopia Annual
Inflation Rate
2
0
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Percentatge
10
Month
Source: The Federal Democratic Republic of Ethiopia Central Statistical Agency/ BC Analysis
15 World Bank Ethiopia overview- http://www.worldbank.org/en/country/ethiopia/overview16 World Bank Ethiopia overview- http://www.worldbank.org/en/country/ethiopia/overview17 https://www.moodys.com/research/Moodys-assigns-B1-issuer-ratings-to-the-Government-of-Ethiopia--PR_298848,
http://www.reuters.com/article/2014/05/09/fitch-rates-ethiopia-b-outlook-stable-idUSFit69988020140509,
http://www.standardandpoors.com/ratings/sovereigns/ratings-list/en/ap?sectorName=null&subSectorCode=39
18 The Federal Democratic Republic Of Ethiopia Central Statistical Agency: September 2014-
11
(ii)
Interest Rates
Lower inflation, in turn, contributed to lower real interest rates. The maximum lending rate has been positive
in real terms since 2012 while the real minimum deposit rate has been negative.
Average saving deposit and lending rates remained unchanged from Q4 of 2013 at 5.4 per cent. and
11.88 per cent., respectively, both on quarterly and annual basis. The weighted average time deposit rate,
registered annual increment of 3.0 per cent. in Q1 of 2014, and increased by 5.2 per cent. in Q2 of 2014,
but remained unchanged in Q3 of 2014.19
(iii)
Exchange rates
In the interbank foreign exchange market, the average official exchange rate of the Birr depreciated by
5.6 per cent. compared to last year same period and reached Birr 18.5331/USD. Likewise, the parallel
market average exchange rate was depreciated by 9.2 per cent. relative to the rate a year ago. Consequently,
the premium between the official and parallel market rates in the first quarter widened to 9.0 per cent. from
5.4 per cent. in same quarter last year.20
During Q2 2014, the average official exchange rate of the Birr depreciated by 4.8 per cent. and 1.1 per cent.
compared to last year same quarter and the preceding quarter, respectively, to reach Birr 18.94/USD. 21The
Ethiopian Birr increased to 19.81 in July from 19.59 in June of 2014.
19 National Bank of Ethiopia Quarterly Bulletin Q1, Q2, Q3 2013-1420 National Bank of Ethiopia Quarterly Bulletin Q1 2013-1421 National Bank of Ethiopia Quarterly Bulletin Q2 2013-14-
12
3.
In 2013 the listed equities market, the NSE closed the year as the top performing African bourse according
to the MSCI index (an index created by MSCI that is designed to measure equity market performance), and
the MSCI frontier markets index. Stability in the macro-economic environment, the peaceful outcome of the
2013 general election and significant corporate actions over the year bolstered investors confidence in
Kenyas listed equities market. The Nairobi All Share Index (NASI) rallied 44.1 per cent. during the year
closing at 136.65 points. In 2013, equity turnover climbed 76.7 per cent. to a high of USD 1.8bn as a result
of increased foreign investor participation. Net foreign inflows stood at USD 392.60m (previous year, USD
268.81m. In addition, 2012 saw the introduction of the GEMS on the NSE, targeting mid-size, high growth
companies. The GEMS market attracted its first listing (a real estate developer, Home Afrika), in July 2013.
Of other notable actions in the market, was the delisting of Access Kenya Group following a successful
take-over bid by Dimension Data Holdings (42.0 per cent. premium), and the delisting of CMC holdings
following the takeover by Dubai-based conglomerate Al-Futtaim Group.
In the first half of 2014, (January to June), investor wealth at the NSE grew by KES 186 billion affirming the
bourses position as one of Kenyas most dependable investment options. Market capitalisation, the value
of all listed stocks, rose 10 per cent. to KES 2.01 trillion helped by share price appreciation in key insurance,
banking, and telecommunications sectors. Small and medium-sized counters, however, recorded higher
growth than larger ones. The NSE 20 Share Index listing of top players in each segment of the market
dropped 0.9 per cent. to stand at 4885 points even as the NASI rose 10 per cent. to 150 points during
the six month period.
September 2014 was a bullish month at the NSE with the 20 Share Index crossing the 5,400.00 mark.
Turnover rose to USD 221.16m (previous month USD 178.31m) while NASI advanced 3.5 per cent. to close
at 163.45 points (16.7 per cent. YTD). In the last week of September 2014, the exchange showed signs of
slowing down driven by a buyers market as investors moved to lock in gains made during the bull-run. The
market is expected to remain vibrant especially driven by investor excitement around corporate actions.
13
4.
OVERVIEW OF THE NATURAL RESOURCES SECTOR IN EAST AFRICA AND THE
OPPORTUNITY FOR PROFESSIONAL SUPPORT SERVICES PROVIDERS
Discoveries of oil and gas in East Africa are relatively recent, with the major commercial discoveries coming
in the last five years. Potential hydrocarbon basins across the region are currently the subject of active
interest and the Directors expect the sector to be a key driver of the economic growth of East Africa for
many years once these projects commence.
East Africa has continued to hit the oil and gas industry headlines and it seems likely that this will continue
for the rest of 2014. September 2013 saw Uganda issue its first production licence (for the Kingfisher field)
with the expectation that others will follow in 2014, along with finalisation of plans for a new oil refinery at
Hoima. In Tanzania, continuing exploration has added to the countrys offshore gas reserves and a new
licensing round was launched in October. Mozambique is expecting FID for its huge offshore gas reserves
during 2014 with plans to construct a 4 train LNG plant with a 20 million tonne per year capacity. Kenya has
seen further exploration success with Tullow indicating total oil reserves of approximately 600 million barrels
in its onshore blocks in Northern Kenya and further offshore drilling is planned for Kenyas exclusive economic
zone in 2014. Whilst Ethiopia has so far enjoyed only limited exploration success it does have potentially
commercial gas reserves and promising geology. Interest in this country is expected to increase in the coming
months.22
As exploration gains momentum, investors will rely on local governments to develop basic infrastructure
such as rail, roads, healthcare facilities, housing, real estate and retail space. Kenya is characterised by a
significant road works programme financed by the African Development Bank, China, Brazil and Japan.
These programmes are critical considering the country was losing close to KES 50 million (USD590 000)
daily due to traffic congestion in Nairobi and its environs, primarily due to time wasted on the road.31
Previously, according to Africa Construction Trend report 2013, a report by Deloitte, East Africa was a sleepy
backwater for the upstream Oil and Gas industry, but the discovery of significant quantities of oil in Uganda
in 2006 ushered in a bonanza. In fact, more hydrocarbons have been discovered in East Africa in the past
two years than anywhere else. The onshore oil discoveries in Uganda were followed by discoveries in Kenya.
Offshore we have seen world-class discoveries of gas in Tanzania.
The development of the oil and gas industry will provide a major stimulus to local economies and will require
extensive upgrading of existing infrastructure. Governments across the region are looking at how to harness
the power of the industry to benefit their people. At the same time oil and gas companies are focusing their
efforts on the development of local content and local capacity.
Countries in East Africa differ distinctly from one another, specifically with regard to their level of infrastructure
development. Kenya is further progressed than Uganda, Tanzania and Ethiopia, although Ethiopia is making
some noteworthy developmental inroads. Despite the inherent complexity in developing regional assets,
with big projects being worked on or planned being cross-border by nature, there is a sense of collaboration
and strategic integration in East Africa. There also appears to be significant activity being initiated in South
Sudan to address basic infrastructure needs such as air transport and roads.
According to the survey done by Deloitte, in which 94 East African projects were sourced, transport is
dominating the share of projects after which energy and power feature strongly. The balance of projects in
any one sector, in terms of the number thereof, is minimal, although oil and gas projects are beginning to
feature.
14
According to the survey, government owns a dominant 72 per cent. of projects in East Africa while
Europe/US holds 11 per cent. in project ownership. International DFIs lead the funding charge at 24 per cent.
with China funding 17 per cent. of projects in the region, after which Europe/US funding comes into play for
13 per cent. of projects. Africa DFIs are funding 11 per cent. of projects, followed by foreign institutions,
which fund 9 per cent.. Of the sample, 71 per cent. are publicly funded, 28 per cent. privately funded and
1 per cent. are being funded through PPPs.
European/US construction firms are responsible for the highest number of projects (37 per cent.) while
Chinese firms are building 19 per cent. of projects underway. Interestingly, Indian construction firms are
involved in power plant construction work, particularly aiming to showcase their expertise in the clean energy
arena.
The oil and gas boom in East Africa, particularly oil exploration and development in Uganda and Kenya, oil
exploration in Somalia and world-class discoveries in Mozambique and Tanzania, together with gold mining
operations in Tanzania, and potash developments in Ethiopia represent significant opportunities for the
Enlarged Group to target.
In particular, there is increasing demand from western companies operating in the region for professional
support service providers, experienced in providing services in Africa.
15
5.
THE BUSINESS
5.2.1 Technical
Civil engineering and infrastructure development
Ardan has the ability to deliver engineering solutions and infrastructural development projects across a
number of terrains in Africa. Ardan has experience in managing complex operations from initial planning
stages through to site rehabilitation including road and air strip construction projects, well site and
associated infrastructure construction and the construction of bridges, clinics, schools and water
management installations.
The technical team includes experienced professionals in the fields of civil engineering and surveying, design
and fabrication, project management, logistics and environmental management.
For the purposes of civil engineering and infrastructure development projects, Ardan maintains its own fleet
of transport and construction equipment as well as its own manufacturing yards in Kenya and Ethiopia,
specialising in the construction of well site support and accommodation camps, and industry specific
infrastructure.
Workforce accommodation
Ardan supplies multiple styles of accommodation to its clients, ranging from modular containerized units to
tented fly camps, all of which are tailored to its clients specific requirements. Ardans containerised
accommodation solutions provide fully air conditioned modular workforce accommodation units, plumbed
with en-suite shower and lavatory facilities, with electricity and furnished with communication and television
facilities. Ardan can also provide its clients with executive tent solutions that are fully air-conditioned, as a
cost effective and highly mobile alternative.
In conjunction with accommodation units, Ardan also provides modern industrial kitchens, dining rooms,
recreation rooms, gymnasia, and meeting and conference facilities.
16
5.2.2 Services
Facilities management
Ardan has experience in providing facilities management and catering services to international and Africa
based companies. Ardan employs experienced and qualified camp management, catering and
housekeeping staff to service the complete needs of its clients.
On the catering side, Ardan prepares three meals a day for clients as well as providing on-going refreshments
on demand. Menus are varied and planned with clients to ensure that the appropriate food is prepared to
satisfy the clients tastes and specific requirements. Fresh produce is regularly delivered to ensure high quality
and nutritious meals.
In addition to catering services, a laundry service is provided and a team of cleaning personnel ensure
accommodation and other camp facilities are maintained and serviced to a high standard. All Ardan sites
have a minimum of Level 3 Food Safety personnel in attendance, overseeing food preparation. In addition,
internationally certified health and safety personnel are in attendance at all sites. Camp maintenance
personnel are internationally certified for their positions and are trained in industry specific Safety, Health,
Environment and Quality standards and procedures relevant to their roles.
Medical services
Ardan offers a comprehensive medical package which includes well equipped and stocked on-site clinics
and medical personnel, as well as evacuation planning and execution. In addition, Ardan can arrange country
medical support, hospital, theatre admissions, doctor and dental or medical specialist appointments and
consultations.
The medical division benefits from having worked with a number of clients, predominantly in the oil and gas
industry, where its local understanding, region specific treatment protocols, and insight into medical facilities,
is particularly valued. This division is compliant with the regulatory requirements necessary to operate turnkey
medical solutions within the countries of operation.
Ardan employs numerous full time medical staff including General Practitioners, Intermediate and Advanced
Life Support (ALS) Paramedics, Registered Clinical Officers, Registered General Nurses and Community
Nurses, in addition to a network of consulting Tropical Disease experts and trauma surgeons.
Ardans medics also facilitate training and awareness workshops on relevant topics such as first aid, malaria,
snake bites and many primary health care preventative measures. Furthermore, Ardan retains local
Registered Clinical Officers (RCO) and EMT Nurses who utilise their understanding of local cultural issues
and languages to provide additional medical support. Together with the ALS Paramedics, the RCOs play a
key role in training the local recruits on-site on health and hygiene and preventative health care measures.
To service its field clients, Ardan provides high-tech medical support facilities consisting of mobile or
semi-permanent consultation rooms, offices and trauma and resuscitation theatres. The facilities are manned
by paramedic support personnel, qualified and experienced in Advanced Life Support and Intermediate Life
Support. Ardan also owns a fleet of fully equipped 44 ambulances.
Ardan has formed relationships with local medical providers in order to cater for mass casualty and disaster
situations including the Kenya Red Cross and Amref Health Africa.
Risk management
Ardan provides clients with a range of security services, including risk assessments, security planning,
training of security personnel and the provision of highly experienced security consultants. Ardans
established relations with national security agencies combine with Ardans team of skilled security experts
and permanent on the ground presence to ensure a quality service.
5.2.3 Logistics
Ardans logistics services range from general procurement and warehousing to transportation of high value
and oversized goods, such as large construction machinery and oil rigs.
17
5.3
Regional Presence
The Company currently has a presence
in Kenya, Mozambique, Mauritius, Ethiopia and Djibouti, with
additional field offices in Madagascar
and Liberia.
5.4
Group Structure
* In process of being incorporated
**Dormant company
18
Designation
Business Address
Ian Mann
NonExecutive
Chairman
56
British
Richmond House,
St Julians
Avenue, St Peter
Port, Guernsey
GY1 1GZ
Carl
Esprey
Chief
Executive
Officer
35
Italian
3rd Floor,
Kalamu House
Grevillia Grove
Westlands,
Nairobi
Kenya
Barry
Lobel
Chief
Financial
Officer
35
British
3rd Floor,
Kalamu House
Grevillia Grove
Westlands,
Nairobi
Kenya
Lachlan
Monro
Chief
Operating
Officer
41
British
3rd Floor,
Kalamu House
Grevillia Grove
Westlands,
Nairobi
Kenya
19
Name
Designation
Andrew
Groves
Executive
Director
46
British
Business Address
Richmond House,
St Julians
Avenue, St Peter
Port, Guernsey
GY1 1GZ
Jonathan
Wright
NonExecutive
Director
43
British
Richmond House,
St Julians
Avenue, St Peter
Port, Guernsey
GY1 1GZ
5.6
Senior Management
Name
Designation
Brendan
Scott
Projects
Director
39
South
African
3rd Floor,
Kalamu House
Grevillia Grove
Westlands,
Nairobi
Kenya
Nick
Arnold
Regional
Director
45
British
3rd Floor,
Kalamu House
Grevillia Grove
Westlands,
Nairobi
Kenya
Colin
Atkinson
Quartermaster
49
British
3rd Floor,
Kalamu House
Grevillia Grove
Westlands,
Nairobi
Kenya
Business Address
20
Name
Designation
Business Address
Gary
Jones
Field
Operations
Manager
55
British
3rd Floor,
Kalamu House
Grevillia Grove
Westlands,
Nairobi
Kenya
Paul
Jordan
Head of
Services
Division
45
British
Paul has had a 25 year career with the British Army 3rd Floor,
specialising in expeditionary logistics in harsh Kalamu House
environments worldwide.
Grevillia Grove
Westlands,
Nairobi
Kenya
Ashley
Fuller
Head of
Technical
Services
Division
46
British
3rd Floor,
Kalamu House
Grevillia Grove
Westlands,
Nairobi
Kenya
21
5.7
Organization Structure
Had any petition under bankruptcy laws pending or threatened against the directors (for individuals),
or senior managers, or any winding-up petition pending or threatened against it (for corporate bodies).
Had any criminal proceedings in which the director or senior manager was convicted of fraud or any
criminal offence or action either within or outside Kenya.
Been the subject of any ruling of a court of competent jurisdiction or any governmental body that
permanently or temporarily prohibits such director or senior manager from acting as an investment
adviser or as a director or employee of a stockbroker, dealer or any financial institution or engaging
in any type or business practice or activity.
Any interest in any transactions which are or were unusual in their nature or conditions or significant
to the business of the Company which were effected in the current or immediately preceding financial
year or an earlier financial year and remain in any respect outstanding or unperformed.
5.9
Shareholding
Number of
Ordinary Shares
Percentage share
holding
67,534,983
59,155,171
32,979,355
30,000,000
24,652,000
20,884,388
17,279,537
15,144,893
17.2%
15.0%
8.4%
7.6%
6.3%
5.3%
4.4%
3.9%
Source: Management
22
Number of
Ordinary Shares
Percentage share
holding
Ian Mann
Carl Esprey
Andrew Groves
Barry Lobel
Lachlan Monro
Jonathan Wright
10,132,951
277,778
5,277,778
166,667
166,667
2.50%
0.07%
1.34%
0.04%
0.04%
Source: Management
There are no arrangements, known to the Issuer, the operation of which may at a subsequent date result in
a change in control of the Issuer.
There have been no significant changes in the percentage ownership held by any major security holders
during the past year.
23
v.
Variation of share capital
On a variation in the issued share capital of the Company by way of a capitalization issue, rights issue, subdivision or consolidation, the option price and/or the number of Ordinary Shares subject to an option and/or
the aggregate maximum number and/or nominal value of the Ordinary Shares available under the Share
Option Scheme may be varied or adjusted by the Board (either generally or in relation to a particular
participant) as it may in its absolute discretion determine to be appropriate, subject to:
(a)
the Companys auditors confirming in writing that in their opinion such variation or adjustment
is fair and reasonable; and
(b)
such variation or adjustment not resulting in Ordinary Share being issued on the exercise of an
option which would fall to be issued at a discount.
vi.
Allocation of shares
Ordinary Shares issued following exercise of an option will rank, pari passu, with the Ordinary Shares then
in issue, save as regards dividends payable by reference to a record date prior to the date of issue. The
Company will at all times keep available sufficient authorised and unissued Ordinary Share capital to satisfy
outstanding options. The holder of Ordinary Shares issued pursuant to the Share
Option Scheme shall not be entitled to sell more than 500,000 Ordinary Shares in any 12 month period or
more than 50,000 Ordinary Shares per calendar month. Ordinary Shares issued pursuant to the exercise of
an option granted under the Share Option Scheme shall be issued to a nominee appointed by the Company
for the purposes of ensuring compliance with the foregoing restrictions and ensuring an orderly market in
the Ordinary Shares.
vii.
Limits
The maximum number of Ordinary Shares which may be issued on the exercise of options shall not exceed
in aggregate the number of ordinary shares which represent 10% in number of the Ordinary Shares in issue
from time to time.
viii.
Variation
The Board has power from time to time to vary the regulations for the administration and operation of the
Share Option Scheme provided that such variation is not inconsistent with the provisions of the Share Option
Scheme and, inter alia, does not operate to vary adversely the terms of any options granted prior to such
variation. Further, the Board may at any time terminate the operation of the Share Option Scheme. Variation
of the Share Option Scheme is not subject to prior Inland Revenue approval.
Details of Options granted under the Share Option Scheme are set out below:
24
1.
Directors/Senior Management
Name
(Directors
only)
Total
No. of
Option
Carl Esprey
10,000,000
Lachlan Monro
Barry Lobel
10,000,000
5,000,000
Details
of
Options
Exercise
Price
(Pence)
Offer
Price
(Pence)
Listing
Price
(Pence)
Variance
2,000,000
8.5
20
8.13
11.87
2,000,000
8.5
25
8.13
16.87
2,000,000
8.5
30
8.13
21.87
2,000,000
8.5
35
8.13
26.87
2,000,000
8.5
40
8.13
31.87
2,000,000
8.5
20
8.13
11.87
2,000,000
8.5
25
8.13
16.87
2,000,000
8.5
30
8.13
21.87
2,000,000
8.5
35
8.13
26.87
2,000,000
8.5
40
8.13
31.87
1,000,000
8.5
20
8.13
11.87
1,000,000
8.5
25
8.13
16.87
1,000,000
8.5
30
8.13
21.87
1,000,000
8.5
35
8.13
26.87
1,000,000
8.5
40
8.13
31.87
25
2.
2,500,000
1,000,000
Details
of
Options
Exercise
Price
(Pence)
1,000,000
10p
750,000
15p
750,000
20p
2,500,000
In five
equal
tranches
after
6 months
8.5p
10p
10p
10p
10p
10p
In five
equal
tranches
after
18 months
10p
10p
10p
10p
10p
In five
equal
tranches
after
30 months
10p
10p
10p
10p
10p
26
Offer
Price
(Pence)
Listing
Price
(Pence)
Variance
20
8.13
11.87
25
8.13
16.87
30
8.13
21.87
35
8.13
26.87
40
8.13
31.87
20
8.13
11.87
25
8.13
16.87
30
8.13
21.87
35
8.13
26.87
40
8.13
31.87
20
8.13
11.87
25
8.13
16.87
30
8.13
21.87
35
8.13
26.87
40
8.13
31.87
3.
Consultants
Total
No. of
Option
Details
of
Options
Exercise
Price
(Pence)
3,000,000
3,000,000
8p
5,000,000
5,000,000
8p
Offer
Price
(Pence)
Listing
Price
(Pence)
Variance
Note: Total number of options granted pursuant to the share option scheme as at the date of this Listing Statement is 39,000,000
shares.
27
The Company has adopted a share dealing code for Directors and employees in accordance with the AIM
Rules and will take proper steps to ensure compliance by the Board and relevant employees. The share
dealing code will apply equally to Ordinary Shares listed on GEMS and AIM, following the Listing.
Attaining a desirable ratio of and balance between the number of executive and non-executive
directors.
Ensuring that the Board collectively contains the skills, experience and mix of personalities appropriate
to the strategic direction of the Company and necessary to secure its sound performance.
Experience, knowledge, skills and personal attributes of current and prospective Directors in relation
to the needs of the Board as a whole.
times act in the best interests of the Company in a manner based on transparency, integrity, accountability
and responsibility.
The Board will:
Determine the business strategies and plans that underpin the corporate strategy.
Monitor Managements implementation of the strategic plans and financial objectives as defined by
the Board.
Ensure that a comprehensive system of policies and procedures is in place, and that appropriate
governance structures exist to ensure the smooth, efficient and prudent stewardship of the Company.
Ensure that the business of the Company is managed with a view to ensuring that the Company is
ethical in all its dealings and exercises corporate social responsibility.
Ensure compliance by the Company with all relevant laws and regulations, audit and accounting
principles and such other principles as may be established by the Board from time to time.
Ensure that the Companys organizational structure and capability are appropriate for implementing
the chosen strategies.
Set policies on internal control and obtain regular assurance that the system is functioning effectively
and is effective in managing risks.
Nominate board members who will add value to the board processes and arrange for their induction.
Appoint the management, senior staff, external auditors and other consultants.
Identify all stakeholders and ensure effective communication with Shareholders and stakeholders.
Ian Mann
29
ii.
Remuneration committee
The Remuneration Committee is a standing committee of the Board and its purpose is to assist the Board
of ADSS in determining the framework or broad policy for the remuneration of the Companys directors and
members of the executive management, the design of all share incentive plans and the determination each
year of individual awards to directors and other staff thereunder and the performance targets to be used.
The composition of the committee is as follows:
Ian Mann
iii.
Nomination committee
The Nomination Committee is a standing committee of the Board and its purpose is to assist the Board of
ADSS in respect of matters relating to composition of the Board.
The composition of the committee is as follows:
Ian Mann
In addition to the Audit and Remuneration committees, the Board intends to monitor the development of
the Group and will, subject to relevant advice, consider establishing additional committees (with authority in
respect of topics such as risk management, finance, investments and governance) as are necessary and
commensurate given the size and stage of development of the Company.
It is intended that the Company shall appoint, in due course, a third Non-Executive Director and this
Non-Executive Director will sit on each of the three Board Committees
2014
$000
2013
$000
315
There are no arrangements whereby any of the Directors have or have agreed to waive future emoluments
and there has been no arrangement for the waiver of emoluments during the past financial year.
ii.
Director Service contract arrangements
The Directors service contracts/letter of appointment have been made available for inspection and will be
part of the accompanying documents to this Listing Statement.
Some of the key terms of the service contracts are:
The performance of individual directors and the board and its committees is evaluated annually.
A director and an officer must comply in all respects with any rule of law or code of best practice
applicable to his/her role as a director or officer of the company.
30
6.
This section is to be read in conjunction with this Listing Statement as a whole, including, in particular, the
risk factors discussed in the section Key Risk Factors set out in section 7, audited financial statements for
both Atlas Development & Support Services and Ardan Risk & Support Services in Appendix II of this
document, and the reporting accountants report in Appendix III of this document.
Atlas Development & Support Services Limited Consolidated Statement of Comprehensive Income
(year end 30 June).
CONTINUING OPERATIONS
Revenue
Cost of sales
Gross Profit
Operating expenses
Operating loss
2014
$000
2013
$000
(2,521)
(2,521)
(155)
(155)
28
(7)
1,075
(1,425)
(155)
(1,425)
(155)
(1,425)
(155)
(0.04)
(0.01)
Finance income
Depreciation and Amortisation
31
ii)
Atlas Development & Support Services Limited Consolidated Statement of Financial Position (year end
30 June).
ASSETS
Non-current assets
Property, plant & equipment
Investment in Subsidiaries
Interest in Associate
Loans and other receivables
2014
$000
2013
$000
174
3
5,075
8,545
13,797
Current assets
Trade and other receivables
Cash and cash equivalents
2,369
3,132
871
9,162
5,501
TOTAL ASSETS
19,298
LIABILITIES
Non-current liabilities
Long-term borrowings
Current liabilities
Short-term borrowings
Trade and other payables
(115)
(262)
(377)
TOTAL LIABILITIES
(377)
NET ASSETS
18,921
EQUITY
Issued capital
Foreign Exchange Reserve
Retained earnings
20,508
(7)
(1,580)
18,921
TOTAL EQUITY
18,921
32
10,033
10,033
(28)
(508)
(536)
(536)
9,497
9,652
(155)
9,497
9,497
iii)
Atlas Development & Support Services Limited Consolidated Statement of Cash Flows (year end
30 June).
2014
$000
2013
$000
(1,425)
(155)
7
(1,075)
(28)
(2,521)
(1,498)
(159)
(4,178)
28
(4,150)
(181)
(3)
(8,545)
(8,729)
7,392
(536)
6,856
(155)
(871)
536
(490)
(490)
10,108
(456)
9,652
(6,023)
9,162
9,162
(7)
3,132
9,162
i)
Revenue
Cost of sales
Gross profit
Gross Profit Margin
Other income
Expenditure
Employment costs
Administration expenses
Establishment expenses
Selling and distribution expenses
2014
Audited
$000
2013
Audited
$000
2012
Audited
$000
20,277
(12,079)
22,487
(18,421)
15,511
(11,773)
8,198
4,065
40%
18%
24%
224.01
54.67
47.97
(1,174)
(1,181)
(1,092)
(3,184)
(2,782)
(1,766)
(1,315)
(1,449)
(948)
(0.2)
4,976
25%
Finance costs
(343)
4,633
PBT Margin
23%
(316)
3,738
Operating (loss)/profit
4,317
(3,612)
(16)%
(100)
(3,711)
(17)%
(3,711)
74
0%
(118)
(44)
0%
(129)
(173)
21%
(17)%
(1)%
40%
25%
23%
21%
18%
(16)%
(17)%
(17)%
24%
0%
0%
(1)%
Margins
Gross Profit Margins
Operating Profit Margin
PBT Margin
PAT Margin
Source: Company Records
34
ii)
Ardan Risk & Support Services Limited Consolidated Statement of Financial Position.
Assets
Non-Current Assets
Property, plant and equipment
Intangible assets
Prepaid operating lease rentals
Deferred Tax Asset
Total Non-Current Assets
Current Assets
Inventory
Trade and other receivables
Cash and cash equivalents
Tax recoverable
Total Current Assets
2014
Audited
$000
2013
Audited
$000
2012
Audited
$000
6,765
47
44
276
6,066
53
2,139
59
7,131
6,120
402
11,203
2,055
3
290
7,051
763
4,619
389
13,663
8,104
20,794
49
206
1,271
1,526
49
(3,976)
(3,926)
7,207
49
1,189
(59)
1,180
955
8,744
755
1,274
129
5,888
69
821
129
338
272
10,454
7,360
1,561
7,835
979
9,224
1,318
248
3,717
429
320
8,814
10,790
20,794
35
14,223
5,008
2,198
Total Assets
14,223
4,466
7,207
iii)
Ardan Risk & Support Services Limited Consolidated Statement of Cash Flows.
2014
Audited
$000
2013
Audited
$000
Operating Activities
Reconciliation of operating (loss) /Profit to net cash outflow in operating activities
Operating loss before taxation
4,632.93
(3,711.04)
Add back:
Depreciation of property, plant and equipment
595.51
1,240.63
Amortisation of operating lease
2.925
6.038
5.27
299.38
Non - Controlling interest
58.71
Translation difference
145.52
Net loss on discontinued entity
(912.71)
Prior year adjustments
(541.22)
5,290.1
(112.93)
(4,152.09)
(1,389.20)
(365.14)
Investing Activities
Proceeds from disposal of property, plant and equipment
Purchase of intangible asset
Purchase of operating lease
Purchase of property, plant and equipment
Net cash used in investing activities
(846.52)
336.8
(1,891.75)
18.65
1,990.25
453.93
128.06
(5,467.43)
(66.03)
(1,752.36)
(5,467)
1,254.7
5,549.77
(203.09)
3,175.29
6,601.34
1,375.91
At end of year
(52.65)
(1,382.60)
(2,432.22)
(289.51)
5,507.04
206.0
(574.1)
2,856.07
686.32
530.61
6.603
(109.46)
(46.66)
(3,631.8)
(44.33)
(1,435)
Financing Activities
Branch reserve requirment
Issue of shares
Borrowings
Related party balances
Directors account
2012
Audited
$000
287.39
(1,690)
49.2
1,250.5
311.27
(257.81)
1,353.17
116.77
0.68
1,375.91
389.39
287.39
272.61
116.77
1,376.58
676.77
389.39
36
On the ground developments include the mobilisation of Red Sea containerised accommodation in the
Turkana region, where the Company is currently supporting a number of international companies operating
in the region. Additionally, the development of the Lockichar site has commenced which provides the
Company with a key differentiator to other service providers.
On a broader level, the Company continues to make advancements with regards to increasing its service
offering and general capabilities to support resource development in East Africa. In line with this, strong
progress has been made with regards to new business initiatives, with a number of significant proposals
and tenders currently live.
37
38
The failure of the Company to continue to improve and upgrade its systems, procedures and controls,
develop new and existing disciplines, integrate new operations or otherwise manage growth successfully
may have a material adverse effect on the Companys and the Companys business, financial condition and
results of operations.
To mitigate the risk of managing future growth, the board of directors and senior management carefully
formulate strategic and business plans, in addition to putting in place and thereafter monitoring, improving
and upgrading its systems, procedures and controls over time.
increased expenses due to the requirement in some countries that business be conducted through
local agents;
reversal of existing policies (including favourable tax and lending policies) encouraging foreign
investment or foreign trade by the governments of countries in which the Company operates;
changes in and difficulties in complying with laws and regulations of different countries, including tax
and labour laws; restrictive actions by local governments, including the imposition of tariffs and
limitations on imports or exports; political instability; fraud conducted by the Companys employees,
subcontractors, service providers, clients employees or those of third parties, or any persons
unconnected with any of the foregoing; nullification, modification or renegotiation of contracts; and
expropriation of assets.
The occurrence of any of these events could have a material adverse effect on the financial condition and
results of operations of the Company and the Company. In addition, the geographical spread of the
Companys operations means co-ordination of effort and communications with employees are subject to
certain challenges, which could lead to inefficient allocation of resources or duplication of effort. Furthermore,
distance from the Companys principal locations can make it more difficult to implement and impress upon
local workforces the Companys policies on matters such as health and safety and can present challenges
in the supervision of the Companys sub-contracted employees. Failure to deliver consistently high standards
across all of its fields of operations could create risks for the Company, including reputational risks.
The democratic processes prevailing in the countries that the Company operates, and support from the
international community for the regions political systems reduces the risk of significant political unrest. While
the Group has systems, controls and procedures designed to mitigate political risk, there can be no
assurance that any adverse political events will not have a negative impact on the Groups business.
7.1.5 Potential liability claims due to the hazardous nature of its business
The Company engineers and constructs large industrial facilities in which an accident or a service failure
could cause personal injury, loss of life, damage to property, equipment or the environment, consequential
losses and/or suspension of operations. The Company may also be liable for acts and omissions of
sub-contractors which cause such loss or damage. The Companys insurance and contractual limitations
on liability may not adequately protect it against liability for such events, including events involving pollution,
39
or against losses resulting from business interruption. In addition, indemnities which the Company receives
from sub-contractors may not be easily enforceable. Moreover, the Company may not be able to maintain
insurance at levels that it deems adequate or ensure that every contract contains and has properly
incorporated adequate limitations on liabilities. Any claims made under its insurance policies are likely to
cause the Companys premiums to increase.
Any future damage caused by the Companys services that are not covered by insurance, are in excess of
policy limits, are subject to substantial deductibles or are not limited through adequate contractual limitations
of liability may have a material adverse impact on the Companys cash available for operations, financial
condition and results of operations may be adversely affected. See further information on insurance later
in this section 7.
The Company has insurance policies in place; in addition to these, implementing proper controls and
procedures when performing contracts helps the company avoid accidents personal injury, loss of life,
damage to property, equipment or the environment, consequential losses and/or suspension of operations
that may arise due to the nature of the Company business.
In addition, the Companys clients may have a different interpretation of certain terms included in their
contracts to that of the Company or to that which a court may apply. The Companys clients may also seek
to renegotiate contract terms so as to be more favourable to the client, particularly during economic
downturns or when industry conditions deteriorate. The Company may agree to such alternative
interpretations or renegotiations in order to avoid contract terminations or legal costs or to maintain client
relationships.
Contract terminations, variations, alternative interpretations and renegotiations may result in anticipated
revenue, being realised later than anticipated or not at all, and may also result in unanticipated costs, such
as the costs associated with renegotiating contracts, being borne by the Company. The occurrence of any
of these events may have a material adverse effect on the Companys results of operations, financial condition
and prospects.
The Company may seek to charge for such variations, although such amounts are not provided for in the
initial contract, which partly help the Company cover itself from any early termination, variation, alternative
interpretation or renegotiation of client contracts.
7.1.9 Actions of the Companys own workforce and that of third parties
The Companys performance on projects may be subject to delays or additional cost due to authorised and
unauthorised actions taken by unions or other organised labour forces in terms of both the Companys own
workforces and the workforces of other contractors. The Company has not experienced any recent
prolonged industrial action and is not aware of any such impending action among the Companys employees
or sub-contractors, but recognises that in the regions where the Company operates, industrial action and
associated civil unrest can cause delays and difficulty performing contracts.
The Company often relies on inputs from third-party equipment manufacturers and sub-contractors for the
completion of its projects. To the extent that the Company cannot engage sub-contractors or acquire
equipment or materials according to its plans and budgets, its ability to complete a project in a timely fashion
or at a profit may be impaired. If the amount the Company is required to pay for these goods and services
exceeds the amount estimated in bidding for lump sum work, the Company could experience losses under
the relevant contracts. In addition, if a sub-contractor or a manufacturer is unable to deliver its services,
equipment or materials according to the negotiated terms or on time, the Company may be required to
purchase such services, equipment or materials from another source at a higher price.
There may also be unforeseen and unpredictable delays to services resulting from factors outside the control
of the Companys own workforce, third parties, sub-contractors and manufacturers. The resulting additional
costs may be substantial, and the Company may be required to compensate the project customer for delays.
Further, the Company may not be able to recover any or all of these costs in all circumstances, which may
reduce the profit to be realised or result in a loss on a project for which the services, equipment or materials
were needed.
The Company may bid for a particular contract jointly as part of a consortium or with joint venture partner(s).
In these circumstances, the Companys ability to maximise the profitability of any contract awarded to it may
41
be adversely affected by the performance of its consortium or joint venture partner(s). In addition, the
Company may be dependent on the expertise of partners in assessing certain of the costs of the contract.
To the extent such costs are inaccurately calculated in relation to lump sum contracts, the Company may
be exposed to its share of any cost overruns of the consortium or joint venture, which could have a material
adverse effect on the prospects, financial condition and results of operations of the Company.
In certain circumstances, the Company may be jointly and severally liable for the acts or omissions of its
consortium or joint venture partners. This may arise under the terms of the consortium or joint venture
arrangement or because the Company is exposed to the losses of any consortium or joint venture vehicle.
In addition, the Company may in certain circumstances accept primary liability by way of a separate
guarantee for the overall performance of the contract where it is only providing part of the goods or services
to the client. If a client pursued claims against the Company or against a consortium or joint venture vehicle
as a result of the acts or omissions of the Companys partners, the Companys ability to recover from such
partners may be limited. Recovery under such arrangements may involve delay, management time, costs
and expenses or may not be possible at all, which could adversely affect the Companys prospects, financial
condition and results of operations.
The Company has not experienced any prolonged industrial action and this has mainly been because of
proper mechanisms that address employees grievances whenever they arise.
42
7.1.14 Consolidation among oil and gas companies and increased competition
Consolidation among oil and gas companies, farm-ins and joint operating agreements, may result in fewer
potential clients for the Company. This may lead to increased competition to secure contracts. Furthermore,
mergers and acquisitions may result in the acquisition of a client of the Company by an entity which does
not have a policy of outsourcing services or which has established relations with a competitor of the
Company. A reduction in demand for the Companys services as a result of merger and acquisition activity
may have a material adverse effect on the Companys financial performance and condition.
The Company has strategically built its capacity and reputation to bid for contracts as more competition is
expected in future in addition to diversifying into new untapped markets.
43
The Company has policies in place so that it is aware of environmental regulatory requirements and/or
amendments best industry practices so as to ensure that it does not breach any of the environmental
legislation.
7.1.16 Operational and technical risks
A range of factors may affect the current and future operations of the Company, including appraisal and
possible production activities, start-up risks, limitations on activities due to exceptional weather patterns,
alterations to joint venture programmes and budgets, unanticipated operational and technical difficulties
encountered in production activities, mechanical failure of plant and equipment, adverse weather conditions,
environmental accidents, industrial disputes, unavailability of processing equipment, unexpected shortages
or increases in the costs of consumables, spare parts, plant and equipment, prevention of access by reason
of political unrest, outbreak of hostilities, inability to obtain consents or approvals, contracting risk from third
parties providing essential services, potential problems in locating and securing the services in a timely and
cost effective fashion of appropriately skilled employees, consultants, contractors or processors.
Operational risks will exist as long as the Company is in operation, but management has ensured that an
effective, integrated operational risk management framework is in place. This includes the following:
each department has defined roles and responsibilities with regard to operational risk management.
key risks are identified, assessed, controlled and reported on a continuous basis using appropriate
tools and methodologies.
7.1.17 Insurance
Insurance of all risks associated with operating in the oil and gas (and similar) industries is not always available
and, if available, the cost can be high. The Directors will endeavour to put insurance in place that is
considered appropriate for the Companys needs. The Company may not be insured against all possible
losses, either as a result of the unavailability of adequate cover or because the Directors finding the premiums
excessive relative to the aggregate benefits.
The occurrence of significant events against which the Company is not, or is not fully, insured, or a number
of lesser events against which the Company are fully insured but subject to substantial deductibles, could
materially and adversely affect the business, financial condition and results of operations of the Company.
The Directors will continue to review the insurance cover in place to ensure that it is adequate and
appropriate.
As part of operational risk management policy, the Company aims to ensures that appropriate insurance
policies to cover risks such as fire, theft and burglary are undertaken with reputable insurance companies.
7.1.18 Dependence on key personnel
The Companys business will become dependent on retaining the services of a small number of key
personnel and consultants as the business develops. Furthermore, the success of the Company will be
dependent on the expertise and experience of the Directors. The loss of one or more of those key individuals
could have a material adverse effect on the Company.
The Company ensures continuous training of its employees with the objective of ensuring its work force is
properly skilled and continuously safe.
7.1.19 Protection of business relationships
The Company will rely significantly on good relationships with regulatory, governmental departments and
non-governmental organisations. There can be no assurance that its existing relationships will continue to
be maintained or new ones will be successfully formed and the Company could be adversely affected by
changes to such relationships or difficulties in forming new ones.
The Company has successfully maintained a good relationship with regulatory, governmental departments
and non-governmental organisations.
44
46
Instances of fraud, bribery and corruption, and violations of laws and regulations in the jurisdictions in which
the Company operates, could have a material adverse effect on its business, prospects, financial condition
or results of operations. In addition, as a result of the Companys strict approach to anticorruption
compliance, there is a risk that the Company could be at a commercial disadvantage and may fail to secure
contracts within jurisdictions that have been allocated a low score on Transparency Internationals Corruption
Perceptions Index to the benefit of other companies who may not have or comply with such anti-corruption
safeguards.
The Company uses its best efforts to prevent the occurrence of fraud, bribery and corruption, and has
established a comprehensive system of internal controls is maintained and systems and procedures to
monitor transactions.
7.2 General risks
7.2.1 Acceptability of Ordinary Shares as consideration
Although the Company expects to issue Ordinary Shares to satisfy all or part of any consideration payable
on future acquisitions or investments, vendors of suitable assets or businesses may not be prepared to
accept as consideration, shares traded on AIM or the NSE or may not be prepared to accept Ordinary
Shares at the quoted market price. In such circumstances the Company will consider alternative approaches.
7.2.3 Dividends
There can be no assurance as to the level of future dividends, if any. The declaration, payment and amounts
of any future dividends of the Company are subject to the discretion of the Directors, and will depend, among
other things, upon the Companys earnings, financial position, cash requirements and availability of profits
as well as the provisions of relevant laws or generally accepted accounting policies.
It is the Companys intention to issue dividends following an approval from the Board of Directors and upon
availability of profits in accordance with prudent financial practices.
47
looking statements in this document could cause actual results and developments to differ materially from
those expressed in or implied by such forward-looking statements.
To mitigate against strategic risks, the Board and senior management periodically carefully formulate strategic
business plans (reflective of good corporate governance practices), and are committed to the establishment
of appropriate and proportionate internal infrastructure for implementation of the strategic plans.
7.2.6 Exchange rates
The Company is capitalised in pounds sterling, however it will be operating in sub-Saharan Africa and its
working capital requirements may be denominated in currencies other than pounds sterling. As a result
fluctuations in currency exchange rates could have a material adverse effect on the financial condition,
results, operations or cash flows of the Company.
The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with
respect to the US Dollar and may enter into hedging transactions where appropriate to minimise effects of
potential risks.
7.2.7 Taxation
Any change in the Companys tax status or the tax applicable to holding Ordinary Shares or in taxation
legislation or its interpretation, could affect the value of the assets held by the Company, affect the Companys
ability to provide returns to Shareholders and/or alter the post-tax return of Shareholders. Statements in
this document concerning the taxation of the Company and/or its investors are based upon current law and
practice which are subject to change. An investor should consult his or her own tax adviser about the tax
consequences of an investment in the Ordinary Shares.
The Company constantly monitors tax legislation to ensure the laws are properly followed and that the Board
understands and plans for proposed legislation changes.
7.3 Risk Management Responsibility
The Group has taken measures to manage risk in line with strategy and within risk appetite. The
implementation of a robust and transparent risk management program is necessary to enable the Group to
adapt and meet these challenges in a structured way to continually align its priorities and objectives against
a background of changing risk and uncertainty. The Groups overall risk management programme seeks to
minimise potential adverse effects on foreseen and unforeseen risks on the Groups financial performance.
Risk management is carried out under supervision and direction from the Groups executive management.
Management identifies and evaluates risks and promotes risk management initiatives with a view to:
promoting proactive management with the early identification and treatment of risks.
improving the focus on the Groups key strategic goals leading to:
o
more robust basis for strategic planning as key elements of risk have been identified.
more effective allocation of resources to key services and areas of high risk improving service
delivery.
7.4
Risk Factors Relating to this Listing
The Offer price for the Companys shares has been determined by ADSS in consultation with the transaction
advisors and may not be indicative of prices that will prevail in the open market following this Listing.
Investors should therefore consider carefully whether investment in the Company is suitable for them, in light
of the risk factors outlined above, their personal circumstances and financial resources available to them.
48
8.
8.1.
The Company was incorporated in Guernsey under the Law on 5 December 2012 with number 55964
as a non-cellular company limited by shares with the name Africa Oilfield Logistics Limited.
On 5 November 2014 the shareholders of the Company resolved to change the name of the Company
to Atlas Development & Support Services Limited.
The liability of the shareholders of the Company is limited to the amount paid up or to be paid up on
their shares. The Company has an unlimited share capital of ordinary shares of no par value.
Any general meeting is convened by at least 14 clear days notice, specifying the date, time
and place of the meeting and, in the case of any special business, the general nature of the
business to be transacted. With the consent in writing of all the members entitled to receive
notice of such meeting, a meeting may be convened by shorter or no notice. An annual general
meeting is convened by at least 21 clear days notice.
(c)
The quorum for a general meeting is two members present in person or by proxy.
(i)
(a)
Votes of members
Subject to any rights or restrictions as to voting attached to any class of shares, at any general
meeting, on a show of hands, every member who is present in person or by proxy and entitled
to vote has one vote and, in the case of a poll, every member present in person or by proxy
has one vote for every share of which he is the holder. No member is entitled to attend or vote
at a general meeting either personally or by proxy if he or any person appearing to be interested
in shares held by him has been duly served with a direction notice and is in default for the
prescribed period in supplying to the Company the information required thereby or, if any calls
from him have not been paid.
(b)
Unless a poll has been demanded, a declaration by the chairman that a resolution has been
carried or lost on a show of hands and an entry to that effect in the minute book is conclusive
evidence of the fact without proof of the number or proportion of the votes recorded.
(c)
If a poll is properly demanded, it must be taken in such manner and at such place as the
chairman may direct (including the use of ballot or voting papers or tickets) and the result of a
poll is deemed to be the resolution of the meeting at which the poll was demanded.
49
(d)
In case of an equality of votes the chairman does not have a second or casting vote in addition
to any other vote he may have.
(e)
The instrument appointing a proxy must be in writing under the hand of the appointor or of his
attorney duly authorised in writing or if the appointor is a corporation under its common seal
or under the hand of an officer or attorney duly authorised.
(f)
The instrument appointing a proxy and the power of attorney or other authority (if any) under
which it is signed or a notarially certified copy of that power or authority must be deposited at
the registered office of the Company or such other address nominated by the Board not less
than 48 hours before the time for holding the meeting.
(g)
Subject to the Law, a resolution in writing signed by or on behalf of the requisite majority of
members (including, for the avoidance of doubt, shareholders of a particular class) who, on
the date when the resolution is circulated, would be entitled to vote on the resolution if it were
proposed at a meeting, is as effective as if the same had been duly passed at a general
meeting.
8.3.3 Directors
(a)
A director is not required to hold any qualification shares.
(b)
The number of directors shall be not less than three, and there shall be no maximum number, unless
otherwise determined by the Company by ordinary resolution.
(c)
The amount of any fees payable to Directors (in their capacity as such) shall be determined by the
board. The Directors are also entitled to be repaid all reasonable travelling, hotel and other expenses
properly incurred by them respectively in the performance of their duties. Any director holding an
executive office or otherwise performing any special duties of special services by arrangement of the
board which in the opinion of the Directors are outside the scope of his ordinary duties as a director
may be paid such reasonable additional remuneration as the Directors may determine.
(d)
The board may establish and maintain or procure the establishment and maintenance of any
noncontributory or contributory pension or superannuation funds for the benefit of, and give
donations, gratuities, pensions or other benefits to, any Director or ex-Director.
(e)
The Directors may from time to time appoint one or more of their body to be the holder of any
executive office (including the office of executive director) on such terms as they think fit.
(f)
Subject to the Law and the Articles and provided that he has disclosed to the Directors the nature
and monetary value or, if such value is not quantifiable, the extent of any interest of his, a director
notwithstanding his office:
(g)
i.
may be a party to, or otherwise interested in, any contract or arrangement with the Company or
in which the Company is otherwise interested;
ii.
may be a director or other officer of, or employed by, or a party to, any transaction or arrangement
with a shareholder of, or otherwise directly or indirectly interested in, anybody corporate promoted
by the Company or in which the Company has entered into any transaction, arrangement or
agreement or in which the Company is otherwise interested;
iii.
may act in a professional capacity to the Company (except that of auditor) in conjunction with
the office of director on such terms as to remuneration and otherwise as the Directors may arrange
as if he were not a Director; and
iv.
shall not, by reason of his office, be accountable to the Company for any benefit which he derives
from any such office or employment or from any such transaction or arrangement or from any
interest in any such body corporate, and no such transaction or arrangement shall be liable to be
avoided on the grounds of any such interest or benefit.
Save as specifically provided in the Articles, a director may not vote in respect of any contract or
arrangement in which he is materially interested otherwise than by virtue of his interests in shares or
debentures or other securities of, or otherwise in or through, the Company and/or the counterparty to
the contract or arrangement. A director will not be counted in the quorum at a meeting in relation to
any resolution on which he is debarred from voting.
50
(h)
Subject to the Law, a director is (in the absence of some material interest other than as indicated below)
entitled to vote (and will be counted in the quorum) in respect of any resolution concerning any of the
following matters, namely:
i.
the giving of any guarantee, security or indemnity to him in respect of a debt or obligations;
ii.
incurred by him at the request or for the benefit of the Company or any of its subsidiaries;
iii.
the giving of any guarantee, security or indemnity to a third party in respect of a debt or obligation
of the Company or any of its subsidiaries for which he himself has assumed responsibility in whole
or in part under a guarantee or indemnity or by the giving of security;
iv.
the giving to him of any indemnity where all other Directors are also being offered indemnities on
substantially the same terms;
v.
the funding by the Company of his expenditure on defending proceedings or the doing by the
Company of anything to enable him to avoid incurring such expenditure where all other Directors
are being offered substantially the same arrangement;
vi.
any proposal concerning an offer of shares or debentures or other securities of or by the Company
or any of its subsidiaries for subscription or purchase in which offer he is or is to be interested as
a participant in the underwriting or sub-underwriting thereof;
vii.
any proposal concerning the purchase and/or maintenance of any insurance policy against any
liability of his or under which he may benefit; and
viii. any proposal concerning the adoption, modification or operation of a pension fund or retirement,
death or disability benefits scheme or employees share scheme which relates both to the
directors and employees of the Company or any of its subsidiary undertakings which does not
provide the director any privilege or advantage not awarded to the employees to which the fund
or scheme relates.
resolution of the Company, vest the whole or any part of the assets in trustees upon such trusts for the
benefit of the Shareholders as he determines. However no Shareholder shall be compelled to accept any
assets on which there is any outstanding liability.
suspend the right of such person to vote those Ordinary Shares in person or by proxy at any meeting
of the Company; and
(b)
where such Ordinary Shares represent at least 0.25 per cent. of the issued Ordinary Shares, (i) withhold,
without any obligation to pay interest thereon, any dividend or other amount payable with respect to
such shares; and/or (ii) prohibit the transfer of any Ordinary Shares save in certain circumstances.
Further, pursuant to the Law, if in the opinion of the resident agent of the Company, a Shareholder has failed
without reasonable excuse to disclose beneficial ownership pursuant to a notice served by the resident
agent requesting the same, or where a Shareholder has made a statement in response to such a notice
which is false, deceptive or misleading in a material way, the resident agent shall give notice of this to the
Company, the Company may then place a restriction as it thinks fit, on rights attaching to the Shareholders
interest in the Company, including (a) any right to transfer the interest, (b) any voting rights, (c) any right to
further shares in respect of the shares already held by him and (d) any right to payment due to that
Shareholders interest in the Company, whether in respect of capital or otherwise, or may cancel the
Shareholders interest in the Company.
(i)
(a)
(b)
The Company may by ordinary resolution, consolidate and divide all or any of its shares into
shares of a larger amount, cancel any shares not taken or agreed to be taken by any person,
sub-divide its shares into shares of a smaller amount, convert all or any of its fully paid shares
the nominal amount of which is expressed in a particular currency into fully paid shares of a
nominal amount of a different currency, the conversion being effected at the rate of exchange
(calculated to not less than three significant figures) current on the date of the resolution or on
such other date specified by the resolution, convert the whole or any particular class of its
shares into redeemable shares, or redesignate the whole or any particular class of its shares
into shares of another class.
(c)
Subject to the Law, the Company may purchase its own shares and hold such shares as
treasury shares.
52
(ii)
(a)
the Directors have made an offer by way of written notice to each person who holds Ordinary
Shares of the same class to issue (or sell) to him on the same or more favourable terms in
such proportion of those equity securities that is as nearly as practicable equal to the proportion
that the relevant persons existing holding of Ordinary Shares on a fixed record date; and
(b)
the period during which any offer referred to in sub paragraph (a) above may be accepted has
expired or the Company has received notice of the acceptance or refusal of every offer made.
These preemption rights do not apply to: a particular issue (or sale) of equity securities if they
are to be wholly or partly paid up (or paid for) otherwise than in cash; or to the issue of equity
securities granted in accordance with the Companys employees share plan or the issue of
shares pursuant to the exercise or conversion of any equity securities, any rights attaching to
equity securities, or any rights to acquire shares which in each case were validly issued or
granted; or the issue of shares pursuant to any script dividend scheme implemented by the
Company in accordance with the Articles, or any bonus issue of shares.
Between incorporation of the Company and 25 February 2013, 22 million Ordinary Shares were issued
for cash at a price of 0.1p per Ordinary Share.
Between 9 May 2013 and 6 June 2013, 115,621,596 Ordinary Shares were issued for cash at a price
of 2.0 pence per Ordinary Share.
On 25 June 2013, 85,172,415 Ordinary Shares were issued for cash at a price of 5.0 pence per
Ordinary Share.
On 9 August 2013, the Company issued and allotted 32,979,355 Ordinary Shares at a price of
8.0 pence per Ordinary Share, as consideration for the acquisition of a 49 per cent. interest in Ardan.
On 20 December 2013, 60 million Ordinary Shares were issued for cash at a price of 7.5 pence per
Ordinary Share.
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 shares in part payment for services rendered by
an advisor.
On 11 December 2014, the Company issued 39,139,827 shares for cash at a price of 8.13 pence per
Ordinary Share to Kenyan investors through a private placement.
The issued share capital of the Company at the date of publication of this document comprises
433,063,193 Ordinary Shares.
There have been no debentures issued or proposed or intended to be issued within the two years preceding
the date of this listing statement.
53
Country of
Incorporation
% of interest
Principal activity
Mauritius
100%
Mauritius
Mozambique
Mozambique
Kenya
Kenya
Kenya
Kenya
Kenya
Kenya
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
Intermediate
holding company
Trading company
Dormant company
Dormant company
Trading company
Trading company
Trading company
Trading company
Trading company
Trading company
*Held indirectly
ii.
Lock-in Agreements (2013)
On 19 June 2013, the Company entered into lock-in agreements with each of Mr Mann, Mr Burns, Mr Groves
and Mr Edmonds (2013 Locked-in Shareholders) pursuant to which each of the 2013 Locked-in
Shareholders agreed (subject to certain limitations discussed below) not to dispose of any Ordinary Shares,
and to procure that no persons associated with the 2013 Locked-in Shareholder who are the absolute
beneficial and registered owners of Ordinary Shares will dispose of any Ordinary Shares for a period of
12 months from the date of Original Admission.
iii.
Lock-in Agreements (2014)
On 25 September 2014, the Company entered into lock-in agreements with each of Mr. Esprey, Mr. Groves,
Mr. Lobel, Mr. Monro and Mr. Mann (2014 Locked-in Shareholders) pursuant to which each of the 2014
Locked-in Shareholders agreed (subject to certain limitations discussed below) not to dispose of any Ordinary
Shares, and to procure that no persons associated with the 2014 Locked-in Shareholder who are the
absolute beneficial and registered owners of Ordinary Shares will dispose of any Ordinary Shares for a period
of 12 months from the date of Admission.
Certain disposals are permitted, including:
any disposal pursuant to acceptance of a takeover offer, which is open to all the Shareholders, made
to acquire the whole or a part of the issued share capital of the Company (other than any Shares
already held by the offeror or persons acting in concert with the offeror) whether by means of a
contractual takeover bid or a scheme of arrangement effected under Law (a Takeover Offer);
any disposal to or by such 2014 Locked-in Shareholders personal representatives upon death,
pursuant to will or intestacy.
54
iv.
Administrative and support services agreement
On 19 June 2013 the Company entered into an agreement with African Management Services Limited
(AMSL) pursuant to which AMSL agreed to provide administrative and support services to the Company
on an ad hoc basis.
Such services include, but are not limited to the provision of legal, financial reporting and accounting services.
In consideration for the provision of the services by AMSL, the Company has agreed to pay AMSL an annual
retainer fee US$25,000 (payable quarterly in advance) plus such other fees as may be agreed between the
Company and AMSL for additional services provided by AMSL at the request of the Company.
Mr Groves is also a director of AMSL and accordingly this agreement has been entered into at an arms
length basis.
v.
Acquisition Agreement and Exclusivity Agreement
On 5 August 2013, the Company entered into an agreement to acquire a 49 per cent. interest in Ardan,
pursuant to which consideration of US$4 million was satisfied by the issue and allotment of 32,979,355
Ordinary Shares at a price of 8.0 pence per share (issued on 9 August 2013). In addition to the Acquisition,
the Company was granted exclusivity for a period of 180 days with a view to entering into an agreement to
acquire the remaining 51 per cent. interest in Ardan. The transaction represented the maiden transaction
for the Company following the Original Admission.
vi.
Framework and Option Agreement
On 28 March 2014, the Framework and Option Agreement was entered into to provide a framework under
which the restructuring of Ardan could be carried out and to provide a mechanism whereby the Acquisition
could be effected. On 22 October 2014 the shareholders of the Company approved the Acquisition and
accordingly the Acquisition was thereafter completed.
Under the terms of the Framework and Option Agreement, Ardan and ALK (and their owners) undertook to
take various steps, in consultation with the Company and with the benefit of advice from the Company, to
restructure Ardan and to address related matters, including:
ensuring that all new contracts, all pitches, tenders and similar business development activities will be
undertaken in the name and on behalf of the ALK Group;
ensuring that the operation of and performance of any existing contracts novated to the ALK Group
and any new contracts, shall be sub-contracted to Ardan on and subject to the terms set out in the
Framework and Option Agreement; and
at such time as the Company determines, assigning all debts owed to the Company (or its wholly
owned subsidiary, Ardan Risk Holdings Limited) by Ardan to the ALK Group.
In consideration for the mutual undertakings contained in the Framework and Option Agreement, the
Company was granted the Call Option. Pursuant to the Framework and Option Agreement Ardan and ALK
have begun the process of novating client contracts and negotiating new client contracts within the ALK
Group. This process will continue, pursuant to the Framework and Option Agreement, following completion
of the Acquisition, together with the assignment/reallocation of loan balances.
The Framework and Option Agreement also contains a restated lock-in, to apply for a period of 18 months
from completion of the Acquisition, in respect of the shares issued as consideration pursuant to the terms
of the Acquisition Agreement.
vii.
Intra group financing
Since AOL completed its original acquisition of a 49 per cent. interest in Ardan pursuant to the Acquisition
Agreement, it has provided the necessary working capital funding to Ardan pursuant to the agreements
described below:
55
Facility Name
Revolving US$2m
Credit Facility
Amount (max.)
US$2m
US$5m
US$6m
Date
18 July 2013
5 August 2013
5 March 2014
Borrower
Lender
The Company
The Company
The Company
Repayment
On 30 Business Days
notice from the Company
or on the 5th anniversary
Company
On 30 Business Days
notice from the Company
or on the 5th anniversary
Company
On 30 Business Days
notice from the Company
or on the 5th anniversary
Company
Interest
Security
n/a
Events of default
Standard provisions
Standard provisions
Standard provisions
Other Provisions
Amended pursuant to
amendment dated
5 March 2014
Amendment to Facility
Agreement
Specific purpose
amended to broaden
scope to financing general
working capital of Ardan in
addition to related to
financing Ardan to finance
specified projects*
*Specific purpose amended to broaden scope to financing general working capital of Ardan in addition to finance specified projects
ix.
Warrant Instrument (10p September 2014)
On 15 September 2014 the Company adopted the Warrant Instrument (10p September 2014).
Under the terms of this instrument, the Company has the ability to grant 25 million warrants to subscribe for
new ordinary shares at an exercise price of 10p per new ordinary share for the purposes of consideration
on future transactions/staff & consultant incentivisation. The exercise period for each warrant granted under
this instrument runs until 15 September 2019. As at the date of this document no warrants have been
granted under this instrument.
56
8.4.3 Licenses
All material licenses, permits, approvals and consents required by the Company and its subsidiaries to carry
on the business of the Company have been duly obtained and are in full force and effect.
8.4.5 Litigation/Disputes
Neither the Company, nor the Group, is engaged in any litigation or arbitration nor so far as the Directors
are aware, is litigation or claim pending or threatened against the Company which has, has had or may have
a significant effect on the Companys financial position.
8.5. Taxation
A Shareholder who is resident in Guernsey (which includes Alderney and Herm) for Guernsey tax purposes,
will incur Guernsey income tax at the applicable rate on distributions paid to that Guernsey resident
Shareholder by the Company. The Company is responsible for the deduction of tax from distributions and
the accounting of that tax to the Director of Income Tax in Guernsey in respect of distributions paid by the
Company to such Guernsey resident Shareholder. With effect from 1 January 2013 the deemed distribution
regime, which applied to a companys undistributed income that had not previously been distributed or
deemed to be distributed, was repealed.
The Companys distributions can be paid to a Shareholder who is not resident in Guernsey (which includes
Alderney and Herm) for tax purposes without deduction of Guernsey income tax, provided such distributions
by the Company are not to be taken into account in computing the profits of any permanent establishment
in Guernsey through which such Shareholder carries on business in Guernsey.
Guernsey currently does not levy taxes upon capital inheritances, capital gains gifts, sales or turnover (unless
the varying of investments and the turning of such investments to account is a business or part of a
business), nor are there any estate duties (save for registration fees and ad valorem duty for a Guernsey
Grant of Representation where the deceased dies leaving assets in Guernsey which require presentation of
such a Grant). No stamp duty is chargeable in Guernsey on the issue, transfer or redemption of shares in
the Company.
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
The audited annual reports for the financial years 2012/2013 and half year 2014;
(k)
Copies of service agreements with managers or secretary/ies, underwriting, vendors and promoters
agreements entered into during the last two (2) financial years;
(l)
The legal report from Anjarwalla & Khanna dated 11th December 2014;
(m) All expert reports, letters, and other documents, balance sheets, valuations and statements any part
of which are included or referred to in this Listing Statement; and
(n)
Written statements signed by the auditors or accountants setting out the adjustments made by them
(and giving reasons) in arriving at the figures shown in the Accountants Report.
(o)
Removal Forms.
The Listing Statement will be available on the Companys website indefinitely following the listing.
58
9.
DIRECTORS STATEMENT
We hereby declare that to the best of our knowledge, information and belief (having taken all reasonable
care to ensure that such is the case) all information contained in this Listing Statement and the statements
contained in the reports herein are correct, and there are no other internal documents containing information
which could distort the interpretation of the report or affect the importance of such information.
The Board confirm that in their opinion the working capital available to the Company is sufficient for its
present requirements and for the next 12 months following the listing and that the issued share capital of
the Company is adequate for the purposes of the Company for the foreseeable future.
There have been no audited or interim financial statements of the Issuer that have been published
subsequent to those covering the financial year ended 30 June 2014. The Directors are not aware of any
significant changes in the financial or trading position of the Issuer that has occurred since the financial year
ended 30 June 2014 other than as identified in such financial statements.
Ian Mann
Non-Executive Chairman
Signed:
Carl Esprey
Chief Executive Officer
Signed:
Barry Lobel
Chief Financial Officer
Signed:
Lachlan Monro
Chief Operating Officer
Signed:
Andrew Groves
Executive Director
Signed:
Jonathan Wright
Non-Executive Director
Signed:
59
1
1.1
Documents reviewed
For the purposes of this Opinion, we have examined originals or copies certified to our satisfaction of
the following documents:
1.1.1 The draft Listing Statement;
1.1.2 A legal Opinion of Carey Olsen LLP dated 11 November 2014 (the Carey Olsen Opinion);
1.1.3 A copy of the Certificate of Compliance in relation to the Companys registration in Kenya;
1.1.4 A resolution of the board of directors of the Company dated 7 October 2014;
1.1.5 Letters of confirmation from the company secretary of the Companys Kenyan subsidiaries
dated 24 October 2014; and
1.1.6 Such other records and documents as we have considered necessary or appropriate for the
purposes of this Opinion in respect of the Company.
60
2
2.1
Assumptions
For purposes of this Opinion, we have made the following assumptions:
2.1.1 all information contained the Listing Statement and all information provided to us by the
Company, and its officers and advisers is true, accurate and up to date;
2.1.2 the authenticity and completeness of all documents submitted to us as originals or copies, the
genuineness of all signatures, the conformity to originals of all copies, and the accuracy of any
translations;
2.1.3 all documents have been authorised, executed and delivered by the parties to those
documents;
2.1.4 that representations made to us by officers and agents of the Company are true in all material
respects; and
2.1.5 the confirmations and opinions stated in the Carey Olsen Opinion are true, correct and accurate
in all respects.
3
Opinion
Based on and subject to the Carey Olsen Opinion, the assumptions and other provisions set out above and
the reservations set out below, we are of the opinion that:
3.1
Position
Non-Executive Chairman
Chief Executive Officer
Chief Financial Officer
Chief Operating Officer
Executive Director
Non-Executive Director
61
3.2
3.3
Ownership of assets
3.3.1 As of the date of this Opinion, the Company has commenced only minimal operations in Kenya
and has no material assets or liabilities in Kenya or Guernsey.
3.4
Subsidiaries
3.4.1 The following companies are subsidiaries of the Company duly incorporated in Kenya:
(a) Ardan Logistics Kenya Limited;
(b) Ardan (Risk Management) Limited;
(c) Ardan (Medical Services) Limited;
(d) Ardan (Facilities Management) Limited;
(e) Ardan(Civil Engineering) Limited; and
(f)
3.5
Material litigation
3.5.1 As far as the Company is aware the Company and its subsidiaries are not a party to, and have
not been threatened with, any material litigation or arbitration in Kenya.
3.5.2 A search on the date hereof of the Royal Court records available for inspection at the Greffe
has confirmed that no proceedings have been taken against the Company (including no
proceedings to declare the assets of any of them to be en dsastre) in Guernsey.
3.6
3.7
Material borrowing
3.7.1 The Company does not have any material borrowing in Kenya or Guernsey.
4
Consent
We consent to the inclusion of our legal opinion in the Listing Statement to be issued for the Listing in the
form and context in which it appears. We confirm that we have given and as at the date of issue of the
Listing Statement have not withdrawn our consent to its issue and the inclusion of our legal opinion herein.
5
5.1
Reservations
The opinions expressed herein are subject to the following qualifications:
5.1.1 we have relied solely on the Carey Olsen Opinion in respect of all matters relating the Guernsey
law and have not pursued any further investigations in respect of the Company in Guernsey.
62
5.1.2 we shall not be liable for any inaccuracies in this opinion resulting from the actions and/or
omissions and/or wilful statements or representations on the part of the Company and/or any
of its officers, representatives or agents in the Documents or from the Companys legal advisors
as to Guernsey law which may take place or which may be made in connection with the
preparation and/or rendering of this opinion;
5.1.3 any views which are expressed in respect of, or on the basis of, any law, statute, regulation or
similar rules, are expressed in respect of the relevant law, statute, regulation or similar rules as
it was in force, and on the basis of the provisions thereof, at the date of this opinion;
5.1.4 the opinions expressed herein relate only to Kenyan law as currently applied and interpreted
by the Kenyan courts and are limited to questions arising under the laws of Kenya. We do not
purport to have investigated the laws of any jurisdiction outside of Kenya, nor to express any
opinion on any question arising under the laws of any other jurisdiction;
5.1.5 except as explicitly stated herein, we express no opinion on matters of fact; and
5.1.6 we do not give any opinion on the commerciality of the Listing.
6
Effective Date
This letter and the opinion given in it are governed by the laws of the Republic of Kenya and relate to the
law of the Republic of Kenya as applied by the courts of the Republic of Kenya as at todays date. We
express no opinion in this letter on the laws of any other jurisdiction.
7
7.1
Reliance
This opinion is given to the directors of the Company for their own use in relation to the proposed
Listing and other than in the Listing Statement may not be disclosed in whole or in part by any person
or otherwise quoted, referred to or relied upon for any other purpose. This Opinion is not intended to
act as a recommendation as to whether any person should invest in the Company.
7.2
We have taken instructions solely from the Company. The issuance of this opinion shall not be taken
as an implication that we owe a fiduciary duty of care or a contractual duty of care to any person
who is not our client.
Yours faithfully,
63
Atlas Development And Support Services Limited for the years ended 30 June 2013 and 30 June 2014;
2.
Ardan Risk & Support Services Limited for the years ended 31 December 2012 and 31 December
2013, plus the interim audited statements for the six-months ended 30 June 2014.
As already mentioned, Atlas purchased a 49 per cent. stake in Ardan in August 2013, and exercised the
call option to acquire the remaining 51 per cent. in October 2014. As such, the financial statement for Atlas
for the year ended 30 June 2014 incorporates 49 per cent. of Ardan from August 2013 to June 2014 only.
In addition, it worth mentioning that since January 2014, Atlas implemented a restructuring of Ardan to
improve operational management and implementation, planning and reporting. This included simplifying the
operational structure into 3 separate business divisions, recruiting highly qualified divisional leadership to
run the business, recapitalizing the business by way of loans from Atlas, renegotiating loss making contracts,
and the implementation of new systems and controls which included the identification and elimination of
costs inefficiencies.
The results of this restructuring are clearly evident in the turnaround performance of Ardan during the first
six months of 2014, in which the business has transformed from losses of -US$3.7m in 2013, to profits
after tax of +US$4.3m in the first 6 months of 2014.
Consequently, when viewing the attached financials, the following considerations should be taken into
account:
1.
The values for Ardan, as included in Atlas financials for 2014 include results from Aug-Dec 2013
which were prior to the restructuring of Ardan, and therefore when Ardan was still loss making; and
2.
From October 2014, Atlas owns 100 per cent. of Ardan, so 100 per cent. of the profits will be
consolidated into Atlas from this date.
64
65
13 November 2014
The Board of Directors
Atlas Development & Support Services Limited
Guernsey GY1 1G2
reviewed the audited financial statements of the Company included in the Accountants Report for the
year ended 30 June 2013 for compliance with International Financial Reporting Standards (IFRS) and
consistency of application of accounting policies;
reviewed the audited financial information for period ended 30 June 2014 included in the
Accountants Report for compliance with International Financial Reporting Standards (IFRS) and
consistency of application of accounting policies under the requirements of International Standard on
Review Engagements 2410 Review of Interim Financial Information Performed by the Independent
Auditor of the entity (ISRE 2410);
made enquiries of the Group as required by ISRE 4410 of management about the operations of the
Group, its accounting principles and practices and other significant matters relevant to the Financial
Information and have applied that knowledge in compiling the financial statements. We have also
applied knowledge obtained from carrying out review procedures on the financial statements.
We have reviewed the Directors assumptions with regards to the working capital position of the group for
the next 12 months from the date of the listing. We conducted our review in accordance with International
Standard on Assurance Engagements (ISAE) 3400 The Examination of Prospective Financial Information,
which are future financial forecasts of the group on which this working capital requirements are based on.
The objective of this review is to enable us to obtain sufficient and appropriate evidence as to the Directors
66
opinion on working capital adequacy for the next 12 months after the listing, as stated on page 59 of the
listing statement.
The financial statements of the group companies were audited by the following independent auditors:
Entity Name
Auditors
The financial statements have been prepared on the basis of the accounting policies set out on pages 67-70
of this Listing Statement. For all accounting periods dealt with in this report, the financial statements have,
in all material respects, been prepared in accordance with International Financial Reporting Standards.
Where necessary, the financial statements have been adjusted to reflect the accounting policies of the
Group as will be applied in the financial statements for the year ending 31 December 2014. Such
accounting policy changes include the retrospective effect of adoption of new and revised International
Financial Reporting Standards.
We draw your attention to Note 11 with the post-acquisition financial statements and notes for the
associate Ardan Risk & Support Services Kenya Ltd, for the period 5th August 2013 to 30 June 2014.
Review Opinion
Reviews carried out in accordance with ISRE 2400 and ISRE 2410 as well as a compilation under ISRS
4410 are substantially less in scope than an audit conducted in accordance with International Standards
on Auditing and consequently do not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
However, based on our review, nothing has come to our attention that causes us to believe that the
accompanying financial statements of Atlas Development & Support Services Limited and Ardan Risk &
Support Services Kenya Limited for the periods ended 30 June 2014 and 30 June 2013, do not give a true
and fair view, for the purposes of the Listing Statement, in accordance with International Financial
Reporting Standards (IFRS).
In respect of the adequacy of working capital, based on our review and the enquiries with the Directors,
nothing has come to our attention which causes us to believe that the assumptions made by the Directors
in arriving at their assessment of the adequacy of the working capital for at least the next 12 months after
the date of the listing are unreasonable.
We consent to the inclusion of this report in the Atlas Development & Support Services Limited Listing
Statement to be issued in the form and context in which it appears.
67
2.
ACCOUNTING POLICIES
Basis of accounting
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company (its subsidiaries) made up to 30 June 2014. Control is achieved when the
Company has the power to govern the financial and operating policies of an investee entity so as to obtain
benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income
statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Associates are those entities in which the Group has significant influence, but not control, over the financial
and operating policies. The consolidated financial statements include the Groups share of the total
recognised income and expenses of associates on an equity accounted basis, from the date that
significant influence commences until the date that significant influence ceases. When the Groups share
of losses exceeds its interest in an associate, the Groups carrying amount is reduced to nil and recognition
of further losses is discontinued except to the extent that the Group has a binding obligation to make
payments on behalf of an associate.
Intra-group transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that
there is no evidence of impairment.
On the 5th August 2013 Atlas Development and Support Services entered into a share purchase agreement
with the current shareholders of Ardan Risk and Support Services (K) Limited and Ardan Ethiopia for the
purchase of 49 per cent. of equity. On 28th March 2014 Atlas Development & Support Services Limited
entered into Framework and option agreement which involved novation of existing contracts to a new
company Ardan Logistics Kenya Ltd and was granted a call option to acquire 100 per cent. of the new
Ardan Company i n exchange for the 49 per cent. of Ardan Risk and Support Services (K) Ltd.
It is expected that all future revenues and contracts will be transacted through new Ardan Logistics Kenya Ltd.
Going concern
The board has detailed its considerations relating to Going Concern in note 3 of the financial statements.
The directors have, at the time of approving the financial statements, a reasonable expectation that the
Group has adequate resources to continue in operational existence for the foreseeable future. Thus they
continue to adopt the going concern basis of accounting in preparing the financial statements.
Operating loss
Operating loss consists of operating expenses and excludes interest income net of finance costs.
Interest income
Interest income is accrued on an amortised cost basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to that assets net carrying amount.
68
Taxation
The Company is resident for taxation purposes in Guernsey and its income is subject to income tax,
presently at a rate of zero per cent per annum. The income of overseas subsidiaries is subject to tax at the
prevailing rate in each jurisdiction.
Financial assets
Financial assets are classified into the following specific categories: financial assets at fair value through
profit or loss (FVTPL), held-to-maturity investments, available-for-sale (AFS) financial assets and loans
and receivables. The classification depends upon the nature and purpose of the financial asset and is
determined at the time of initial recognition.
Investment in subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the group has the power to
govern the financial and operating policies generally grouping a shareholding of more than one half of the
voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible
are considered when assessing whether the group controls another entity.
The group also assesses the existence of control where it does not have more than 50 per cent. of the
voting rights but is able to govern the financial and operating policies of a subsidiary. Control may arise in
circumstances where the size of the groups voting rights relative to the size and dispersion of holdings of
other shareholders give the group the power to govern the financial and operating policies, etc.
Investment in Associates
Associates are entities over which the group has significant influence but not control or joint control,
generally accompanying a shareholding of between 20 per cent. and 50 per cent. of the voting rights.
Investments in associates are accounted for by the equity method of accounting. Under this method the
investment is initially recognised at cost and the carrying amount is increased or decreased to recognise
the investors share of the profit or loss of the investee after the date of acquisition.
The groups share of post-acquisition profit or loss is recognised in the income statement, and its share of
post-acquisition movements in other comprehensive income is recognised in other comprehensive income
with a corresponding adjustment to the carrying amount if the investment. When the groups share of
losses in an associate equals or exceeds its interest n the associate, including any other unsecured
receivables, the group does not recognise further losses, unless it has incurred legal or constructive
obligations or made payments on behalf of the associate.
The group determines at each reporting date whether there is any objective evidence that the investment
in the associate is impaired. If this is the case, the group calculates the amount of impairment as the
difference between the recoverable amount of the associate and the its carrying value and recognises the
amount adjacent to share of profit/(loss) of associates in the income statements.
69
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance
sheet date. Gains and losses on disposals are determined by comparing proceeds received with the
carrying amount of the asset immediately prior to disposal and are included in profit and loss.
Financial Liabilities
Trade and other payables
Trade and other payables are initially measured at fair value and are subsequently measured at amortised
cost, using the effective interest rate method.
Provisions
Provisions are recognised when the Group has a legal or constructive obligation as a result of past events,
it is probable that an outflow of the resources will be required to settle the obligation and the amount can
be reliably estimated.
Equity instruments
Equity instruments issued by the Group are recorded at fair value on initial recognition, net of
transaction costs.
Dividend Policy
Proposed dividends are disclosed as a separate component of equity until declared. Dividends are
recognized as liabilities in the period in which they are approved by the companys shareholders. No
dividends have been declared by any of the entities.
70
3. FINANCIAL INFORMATION
Financial information year ended 30 June 2014
i)
CONTINUING OPERATIONS
Revenue
Cost of sales
Gross Profit
2014
$000
2013
$000
Operating expenses
(2,521)
Operating loss
(2,521)
Finance income
Depreciation and Amortisation
Share of results of associate
Loss before taxation
71
(155)
28
(7)
1,075
(1,425)
(1,425)
(155)
(1,425)
(155)
(155)
(155)
(0.04)
(0.01)
ii)
(1,425)
(1,425)
(1,425)
72
2013
$000
(155)
(155)
(155)
iii)
Assets
Non-current assets
Property, plant & equipment
Investment in Subsidiaries
Interest in Associate
Loans and other receivables
Notes
2014
$000
2013
$000
10
11
12
174
3
5,075
8,545
13
14
13,797
2,369
3,132
871
9,162
5,501
Total assets
19,298
Liabilities
Non-current liabilities
Long-term borrowings
Current liabilities
Short-term borrowings
Trade and other payables
Total current liabilities
15
Total liabilities
17
(377)
(536)
(536)
9,497
20,508
(7)
(1,580)
9,652
(155)
18,921
18,921
73
(28)
(508)
Total equity
(115)
(262)
18,921
16
10,033
(377)
Equity
Issued capital
Foreign Exchange Reserve
Retained earnings
10,033
Net assets
9,497
9,497
Assets
Non-current assets
Property, plant & equipment
Investment in Subsidiaries
Interest in Associate
Loans and other receivables
Notes
Pre money
$000
9
10
11
174
3
5,075
8,545
12
13
2,369
3,132
5,001
2,369
8,133
19,298
Current liabilities
Short-term borrowings
Trade and other payables
Total current liabilities
14
Total liabilities
16
(115)
(262)
(377)
(377)
(377)
23,922
20,508
(7)
(1,580)
5,001
20,508
5,001
(7)
(1,580)
18,921
18,921
74
(115)
(262)
Total equity
24,299
18,921
15
10,502
(377)
Equity
Issued capital
Share premium
Foreign Exchange Reserve
Retained earnings
13,797
Net assets
174
3
5,075
8,545
13,797
5,501
Liabilities
Non-current liabilities
Long-term borrowings
Total assets
23,922
23,922
v)
Share
capital
$000
Balance at 5th December 2012
Loss for the period
Total comprehensive income for the period
Transactions with owners
Share issues cash received
Share issue costs
Total transactions with owners
Balance at 1st July 2013
10,108
(456)
9,652
(155)
(155)
Foreign
Exchange
Reserve
$000
(155)
(155)
10,108
(456)
9,652
9,652
(155)
Retained
earnings
$000
Total
attributable
to equity
holders of
the parent
$000
20,508
75
9,497
(1,425)
(1,425)
(7)
(1,425)
(1,425)
(7)
11,392
(536)
10,856
(1,580)
(7)
18,921
vi)
2014
$000
2013
$000
(1,425)
(155)
7
(1,075)
(28)
(2,521)
(155)
(1,498)
(159)
(4,178)
28
(871)
536
(490)
(4,150)
(181)
(3)
(8,545)
(8,729)
76
7,392
(536)
10,108
(456)
6,856
(490)
9,652
(6,023)
9,162
(7)
9,162
3,132
9,162
1. General information
Atlas Development & Support Services, formerly named Africa Oilfield Logistics Limited is incorporated and
domiciled in Guernsey.
The presentational currency of the Group is US Dollars as this reflects the Groups planned business
activities in the logistics sector in sub-Saharan Africa and therefore the Groups financial position and
financial performance.
The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union.
A number of new standards and amendments to standards and interpretations are effective for annual
periods beginning on or after 1 January 2014, and have not been applied in preparing these consolidated
financial statements. None of these new standards and amendments are expected to have a significant
effect on the consolidated financial statements of the Group.
The Group has applied the amendments to lAS 1 Presentation of Items of Other Comprehensive Income.
Under the amendments to lAS 1, the statement of comprehensive income requires separately analysis of
items that will not be subsequently reclassified to profit or loss and hose that will be subsequently
reclassified, including the related income tax effects. These changes have been retrospectively applied.
Other than the above mentioned presentation changes, the application of the amendments to IAS 1 do not
result in any impact on profit or loss, comprehensive income and total comprehensive income.
The Group has applied the amendments to IFRS 7 Disclosures offsetting financial assets and liabilities
Transfers of financial assets in the current year. The amendments improve the disclosure requirements for
transactions involving the transfer of financial assets. As the group did not transfer any financial assets that
were not recognised, this had no material impact on the financial statements.
International Financial Reporting Standard 10 (IFRS 10) on Consolidated Financial Statements builds on
existing principles by identifying the concept of control as the determining factor in whether an entity should
be included within the consolidated financial statements of the parent group. The standard provides
additional guidance to assist in the determination of control where this is difficult to assess. The adoption
of IFRS 10 would not have any material impact on the financial statements.
International Financial Reporting Standard 12 (IFRS 12) on Disclosures of Interests in Other Entities
enhances the disclosure requirements about an entitys interests in subsidiaries, joint arrangements,
associates and unconsolidated structured entities.
International Financial Reporting Standard 13 (IFRS 13) on Fair Value Measurement The standard aims
to improve consistency and reduce complexity by providing a more precise definition and a single source
of measurement of fair valuation of certain assets and liabilities and the related disclosure requirements.
Adoption of IFRS 13 would not have material impact on the financial statements.
At the date of authorisation of these financial statements, the following Standards and Interpretations
relevant to the Groups operations that have not been applied in these financial statements were in issue
but not yet effective:
IFRS 9
IFRS 10
IFRS 11
Joint Arrangements (effective for annual periods beginning on or after 1 January 2014)
IFRS 12
Disclosure of Interests in Other Entities (effective for annual periods beginning on or after
1 January 2014)
IFRS 14
Regulatory deferral accounts (effective for annual periods beginning on or after 1 January 2016)
77
IFRS 15
Revenue from contracts with customers (effective for annual periods beginning on or after
1 January 2017)
IAS 16
Amendments bringing bearer plants into the scope of IAS 16 (effective for annual periods
beginning on or after 1 January 2016)
IAS 27
Separate Financial Statements (as amended 2011) (effective for annual periods beginning on or
after 1 January 2014)
IAS 28
Investments in Associates and Joint Ventures (as amended 2011) (effective for annual periods
beginning on or after 1 January 2014)
IAS 32
IAS 41
Amendments bringing bearer plants into the scope of IAS 16 (effective for annual periods
beginning on or after 1 January 2016)
IFRIC 21 Levies (effective for annual periods beginning on or after 1 January 2014)
September 2014 Annual Improvements to IFRSs (Effective for annual periods beginning on or after
1 January 2016)
The Directors do not anticipate that the adoption of these Standards and Interpretations will have a material
impact on the Groups financial statements in the period of initial application.
Credit risk
Credit risk arises from financial assets, cash and cash equivalents, and deposits with banks and financial
institutions, as well as outstanding receivables. At the period end the Groups principal deposits were held
with banks with a high credit rating. Receivables are regularly monitored and assessed for recoverability.
The fair value of financial assets and liabilities is not materially different to the carrying values presented.
Maximum exposure to credit risk is as follows:
2014
$000
2013
$000
2,369
8,545
3,132
871
9,162
14,046
10,033
No aged analysis of financial assets is presented as no financial assets are past due at the reporting date.
78
Liquidity risk
The Groups policy throughout the period has been to ensure that it has adequate liquidity by careful
management of its working capital. At 30 June 2014 the Group held cash deposits of $3.1m
(2013: $9.2m).
Market risk
The significant market risk exposures to which the Group is exposed are currency risk, and interest rate
risk. These are discussed further below:
Interest rate risk
The Group finances operations through the use of cash deposits at variable rates of interest for a variety
of short term periods, depending on cash requirements. The rates are reviewed regularly and the best rate
obtained in the context of the Groups needs. The weighted average interest rate on deposits was
0.1 per cent.
The exposure of the financial assets to interest rate risk is as follows:
2014
$000
2013
$000
3,132
9,162
Currency risk
The Group holds cash balances and has transactions denominated in currencies other than the reporting
currency and which therefore are subject to fluctuations in exchange rates. These risks are monitored by
the board on a regular basis.
The Group does not hedge against the effects of exchange rates.
The exposure of the Groups financial assets and liabilities to currency risk is as follows:
Sterling
$000
USD
$000
Total
$000
2,772
138
360
2,231
3,132
2,369
2,910
Trade payables
Other payables
Total financial liabilities at 30 June 2014
2,591
5,501
(251)
(115)
(11)
(262)
(115)
(366)
(11)
(377)
Fair values
The Directors have reviewed the financial statements and have concluded that there is no significant
difference between the carrying values and the fair values of the financial assets and liabilities of the Group
as at 30 June 2014.
79
funds which are not required in the short term on deposit at the best interest rates it is able to secure from
its bankers.
The Group is under no obligation to meet any externally imposed capital requirements.
Sensitivity analysis
Financial instruments affected by market risk include cash and cash equivalents, trade and other
receivables and payables. The following analysis, required by IFRS 7 Financial Instruments: Disclosures, is
intended to illustrate the sensitivity of the Groups financial instruments (at period end) to changes in market
variables, being exchange rates and interest rates.
Income
Statement
$000
Equity
$000
127
(127)
127
(127)
translation of foreign subsidiaries and operations into the Groups presentation currency have been
excluded from this sensitivity.
Interest Rates
The following table details the Group and Companys exposure to interest rate changes, all of which affect
profit and loss only with a corresponding effect on accumulated losses. The sensitivity has been prepared
assuming the liability outstanding at the balance sheet date was outstanding for the whole year. In all cases
presented, a positive number in profit and loss represents an increase in interest income I decrease in
finance expense. The sensitivity is presented assuming interest rates increase by either 20bp or 50bp.
Income
Statement
$000
Equity
$000
6
15
(6)
(15)
6
15
(6)
(15)
The above sensitivities are calculated with reference to a single moment in time and will change due to a
number of factors including:
80
Going concern
The board has prepared forecasts for the Group covering the period of 12 months from the date of
approval of these financial statements.
The directors believe that, the Group is well placed to manage its business risks successfully despite the
current uncertain economic outlook. The directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable future. Thus they continue to
adopt the going concern basis of accounting in preparing the annual financial statements.
4. Segment reporting
As set out in the operating review, the directors consider that the Group is an investment company and
operates in one geographical segment, Africa.
2014
$000
2013
$000
(406)
446
315
84
4
Amounts payable to Baker Tilly UK Audit LLP and its associated entities in respect of services are
as follows:
2014
$000
2013
$000
59
95
31
38
6. Staff costs
The average monthly number of employees (including executive directors) employed by the Group during
the period was five (2013: 2)
The aggregate remuneration comprised:
2014
$000
Directors Fees
314.9
314.9
81
2013
$000
4.2
4.2
The remuneration of the Directors, who are the key management personnel of the Group are set out below:
P H Edmonds
A S Groves
A R Burns
J W Wright
I H Mann
Total Directors Fees
2014
$000
2013
$000
78.30
78.30
78.30
40.00
40.00
1.00
1.00
1.00
0.60
0.60
314.90
4.20
No contributions were made to pension schemes for any of the directors or employees (2013: nil).
2014
$m
2013
$m
(1.4)
(0.4)
(0.2)
(0.1)
0.4
0.1
0.7
(0.3)
0.1
0.4
(0.1)
** The associate has reported $0.3m tax charge for the period since acquisition, a 49 per cent. share of which is included in the $1.1m
post-tax profits reported by ARSS.
Although the Company has incurred a loss in the period there is no carried forward tax losses given the
nil rate.
2014
$000
2013
$000
(1,425)
(155)
2014
2013
Number of shares
Weighted average number of ordinary shares for the purposes of
basic and diluted loss per share
Loss per Share
283,720,834 16,913,902
(0.5p)
(0.9p)
No options or instruments which might give rise to dilution were in issue during the year.
82
Cost
As at 1 July 2014
Additions
Furniture
equipment
$000
Motor
Vehicles
$000
Total
$000
174
181
As at 30 June 2014
174
Depreciation
As at 1 July 2014
Charge for the period
(1)
(6)
(7)
As at 30 June 2014
(1)
(6)
168
181
(7)
174
2014
$000
2013
$000
Investment in Subsidiaries
Country of
registration/
incorporation
Ardan Risk Holdings Limited
Ardan Servicos Logisticos Limitada
Ardan Servicos Medicos Limitada
Mauritius
Mozambique
Mozambique
Shares held
Class
Ordinary
Ordinary
Ordinary
%
100
100
100
Principal Activity
Ardan Risk Holdings Limited
Ardan Servicos Logisticos Limitada
Ardan Servicos Medicos Limitada
Investment Holding
Investment Holding
Investment Holding
The Directors consider the carrying amount of investment in subsidiaries has not suffered any
impairment loss.
Investment in Associate
Share of Profit for Period
TOTAL
2014
$000
2013
$000
4,000
1,075
5,075
83
Set out below are the associates of the group as at 30 June 2014, which, in the opinion of the directors,
are material to the group. The associates listed have share capital consisting solely of ordinary shares,
which are held directly by the group.
Country of
registration/
incorporation
Ardan Risk & Support Services Ltd
Kenya
Shares held
Class
Ordinary
%
49
Principal Activity
Ardan Risk & Support Services Ltd
The above companies are private companies and there is no quoted market price available for the shares.
There are no contingent liabilities relating to the groups interest in the associates.
The Board identified the above named associate as an appropriate acquisition target and on 5 August
2013 the Company entered into an acquisition agreement pursuant to which the Company agreed to
acquire a 49 per cent. interest in the associate for a consideration of US$4m, satisfied by the issue of new
Ordinary Shares. In addition, the Company was granted a period of exclusivity with a view to entering into
an agreement to acquire the remaining 51 per cent. interest in Ardan.
On 28 March 2014, the Company entered into a Framework and Option Agreement pursuant to which the
associate, overseen by the Company, undertook a corporate and contractual restructuring programme to
rationalise operational management, and implementation, planning and reporting. The Company was also
granted a three year conditional call option to acquire 100 per cent. of ALK, a separate and new shell
company from which the restructured business of ARSS would be operated.
On 26 September 2014 the Company exercised the call option granted to it pursuant to the framework
and option agreement announced on 28 March 2014, to acquire the entire issued share capital of ALK.
Following receipt of shareholder approval for the Acquisition granted at a general meeting held on
22 October 2014 the Company completed the acquisition of ALK.
Set out below are the summarised financial information for the above named companies which are
accounted for using the equity method.
Summarised statement of Financial position:
Ardan Risk and Support Services Limited
30 Jun 14
$000
CURRENT
Cash and cash equivalents
Trade & other Receivables
Other current assets
2,055
11,203
405
13,663
(979)
(7,835)
(8,814)
NON-CURRENT
Assets
Financial liabilities
Other liabilities
7,131
(955)
(9,499)
(10,454)
NET ASSETS
1,526
84
32,646
(1,121)
(426)
2,508
(315)
2,193
2,193
Impairment of receivables the group reviews their portfolio of receivables at the reporting date.
In determining whether receivables are impaired, the management makes judgment as to whether
there is any evidence indicating that there is a measurable decrease in the estimated future cash flows
expected.
Useful lives of property, plant and equipment Management reviews the useful lives and residual
values of the items of property, plant and equipment at each reporting date. During the financial periods
under review, the directors determined no significant changes in the useful lives and residual values.
Revenue recognition In making their judgement, the directors considered the detailed criteria for
the recognition of revenue as set out in IAS 18 and, in particular, whether the group had transferred to
the buyer the significant risks and rewards of ownership of the services.
Control of entities combined The directors of have assessed whether or not the group has
common control over each of the entities whose financial statements have been combined. In making
their judgment, the directors considered for each entity, the shareholders of each entity and the level
of influence of the directors on the operating and financial policies of each of the entities whose
financial statements have been combined.
85
Borrowings
Non-current
Finance leases
2014
USD
2013
USD
954,707
1,273,829
954,707
976,390
2,836
979,226
1,231,345
86,283
1,317,628
1,933,933
2,591,457
2014
2013
7.25% p.a.
8.25% p.a.
7.25% p.a.
8.25% p.a.
Current
Finance leases
Bank overdraft
Total borrowings
1,273,829
Finance leases
Bank overdraft
The exposure of the companys borrowings to interest expense at the reporting date are as follows:
2014
USD
2013
USD
160,384
1,481
164,246
12,524
161,865
176,770
Month
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
86
Exchange
rate
(US$/Kshs)
Exchange
rate
(US$/GBP)
87.10
87.25
86.00
85.00
86.25
86.05
86.10
86.05
86.00
86.61
87.30
87.25
1.48
1.51
1.55
1.56
1.57
1.60
1.61
1.61
1.62
1.63
1.64
1.63
The financial statements for Ardan Risk and Support Services Limited are set out below
3
4
Gross profit
29,755,314
(20,077,052)
9,678,262
Other income
Expenditure
Employment costs
Administration expenses
Establishment expenses
231,189
Annexe 1
Annexe 1
(2,029,232)
(3,416,861)
(1,927,194)
Operating profit/(loss)
Finance costs
2,536,164
(361,835)
2,174,329
(315,897)
1,858,432
87
1,858,432
3
4
Gross profit
32,645,817
(22,463,435)
10,182,382
Other income
Expenditure
Employment costs
Administration expenses
Establishment expenses
231,189
Annexe 1
Annexe 1
Annexe 1
(2,029,232)
(3,516,523)
(1,933,151)
Operating profit/(loss)
2,934,665
Finance costs
(425,950)
2,508,715
(315,897)
2,192,818
88
2,192,818
Assets
Non current assets
Property, plant and equipment
Intangible assets
Prepaid operating lease rentals
Deferred tax asset
Note
2014
USD
10 (a)
11
12
13
6,764,608
47,382
43,875
275,549
7,131,414
Current assets
Inventory
Trade and other receivables
Cash and cash equivalents
Tax recoverable
14
15
17
402,439
11,203,225
2,054,517
2,638
13,662,819
Total assets
20,794,233
18
49,469
205,973
1,270,799
1,526,241
20
13
21
21
954,707
8,744,235
755,302
10,454,244
Current liabilities
Trade and other payables
Borrowings
Tax payable
19
20
17
7,834,522
979,226
8,813,748
20,794,233
89
Note
USD
9
10
11
12
6,764,608
47,382
43,875
275,549
7,131,414
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Tax recoverable
13
14
15
402,439
10,381,874
1,972,702
2,638
12,759,653
Total assets
19,891,067
17
49,469
(1,128,615)
205,973
(873,173)
19
20
20
954,707
11,117,108
137,948
12,209,763
Current liabilities
Trade and other payables
Borrowings
18
19
7,575,251
979,226
8,554,477
19,891,067
90
Branch
Capital
USD
Retained
Earnings
USD
Total
USD
49,469
(1,851,419)
940,377
(1,801,950)
940,377
As restated
Branch reserve requirement (note 18 b)
Profit for the period
Translation difference
49,469
205,973
(911,042)
2,192,818
(10,978)
(861,573)
205,973
2,192,818
(10,978)
At 30 June 2014
49,469
91
205,973
1,270,798
1,526,240
Share
Capital
USD
Retained
Earnings
USD
Branch
Capital
USD
Total
Capital
USD
At 5 August 2013
Prior year adjustment (note 22)
49,469
(3,075,897)
61,075
(3,026,428)
61,075
As restated
Branch reserve requirement (note 18 b)
Translation difference
Profit for the period
At 30 June 2014
49,469
(3,014,822)
27,775
1,858,432
205,973
(2,965,353)
205,973
27,775
1,858,432
49,469
92
(1,128,615)
205,973
(873,173)
Note
2014
USD
2,508,715
9
11
10
16
1,112,441
2,925
5,265
(92,064)
145,518
3,682,800
(112,930)
(4,152,088)
(1,389,198)
(5,654,216)
(1,971,416)
Investing activities
Proceeds from disposal of property, plant and equipment
Purchase of intangible asset
Purchase of property, plant and equipment
Net cash used in investing activities
(52,647)
9
(4,627,405)
(4,680,052)
Financing activities
Branch reserve requirement (note 18 b)
Borrowings
Related party balances
Directors account
205,973
(574,077)
2,856,069
686,322
3,174,288
(3,477,180)
5,528,861
(3,477,180)
At end of period
2,051,681
93
Note
2014
USD
2,174,329
1,112,441
5,265
2,925
(92,064)
40,385
61,075
3,304,356
(112,930)
(3,840,417)
478,604
(3,474,743)
(170,387)
Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Investment Nature systems Ltd
Proceed from disposal of motor vehicle
(4,627,405)
(52,647)
(4,680,052)
Financing activities
Branch reserve requirement (note 18 b)
Borrowings
Related party balances
Directors account
205,973
(574,077)
1,975,133
68,967
1,675,996
(3,174,443)
5,147,145
(3,174,443)
1,972,702
94
a)
Basis of preparation
The financial statements are prepared on a going concern basis in compliance with International
Financial Reporting Standards (IFRS). The measurement basis used is the historical cost basis except
where otherwise stated in the accounting policies below. The financial statements are presented in
US Dollars (USD).
The financial statements comprise a statement of comprehensive income, statement of financial
position, statement of changes in equity, statement of cash flows, and notes. Income and expenses,
excluding the components of other comprehensive income, are recognised in the statement of
comprehensive income. Other comprehensive income is recognised in the statement of
comprehensive income and comprises items of income and expense (including reclassification
adjustments) that are not recognised in the statement of comprehensive income as required or
permitted by International Financial Reporting Standard (IFRS). Reclassification adjustments are
amounts reclassified to the statement of comprehensive income in the current period that were
recognised in other comprehensive income in the current or previous periods. Transactions with the
owners of the group in their capacity as owners are recognised in the statement of changes in equity.
The preparation of financial statements in conformity with International Financial Reporting Standards
requires the use of estimates and assumptions. It also requires management to exercise its
judgement in the process of applying the accounting policies adopted by the group. Although such
estimates and assumptions are based on the directors best knowledge of the information available,
actual results may differ from those estimates. The judgements and estimates are reviewed at the end
of each reporting period, and any revisions to such estimates are recognised in the year in which the
revision is made.
b)
Basis of Consolidation
The consolidated financial statements reflects the result of the financial statements of Ardan Risk and
Support Services Limited and its subsidiary companies, Ardan Risk and Support Services
Ltd(Ethiopia) and Ardan Risk and Support Services Ltd(Mauritius)respectively, as at
31 December 2013.
Subsidiaries are consolidated from the date on which effective control is transferred to the Group and
consolidation ceases from the date of disposal. All intercompany transactions, balances and
unrealised gains on transaction between group companies are eliminated, Where necessary,
accounting policies for affiliates have been changed to ensure consistency with the policies adopted
by the group.
c)
01-Jan-13
01-Jan-13
01-Jan-13
01-Jul-12
01-Jan-13
01-Jan-13
The adoption of the above has had no material effect on the groups accounting policies
or disclosures.
ii)
New and revised standards and interpretations which have been issued but are not effective
The following revised standards and interpretations have been published but are not yet effective
for the year beginning 1 January 2013. The company has not early adopted any of these
amendments or interpretations.
iii)
New and revised standards and interpretations which have been issued but are not effective
Amendments to IFRS 10, Consolidated financial statements, IFRS 12, Disclosures of interests
in other entities and IAS 27, Consolidated and separate financial statements define an
investment entity and requires the group not to consolidate its subsidiaries but instead to
measure its subsidiaries at fair value through profit or loss in its consolidated and separate
financial statements. These amendments are not effective until annual periods beginning on or
after 1 January 2014, with retrospective application permissible.
Amendments to IAS 36, Disclosure of recoverable amounts of non-financial assets, IAS 39,
Novation of derivatives and IFRIC 21, Levies are not effective until annual periods beginning on
or after 1 January 2014, with retrospective application permissible.
Amendments to IAS 32: The amendments to IAS 32 clarify existing application issues relating to
the offsets of financial assets and financial liabilities requirements. Specifically, the amendments
clarify the meaning of currently has a legally enforceable right of set-off and simultaneous
realization and settlement. The amendments to IAS 32 are not effective until annual periods
beginning on or after 1 January 2014, with retrospective application required.
IFRS 14 Regulatory Deferral Accounts. IFRS 14 permits an entity which is a first-time adopter of
International Financial Reporting Standards to continue to account, with some limited changes,
for regulatory deferral account balances in accordance with its previous GAAP, both on initial
adoption of IFRS and in subsequent financial statements. Applicable to an entitys first annual
IFRS financial statements for a period beginning on or after 1 January 2016
The Directors have assessed the potential impact of the above and expect that they will not have
a significant impact on the groups financial statements for June 2014.
d)
96
e)
Offsetting
Financial assets and liabilities are offset and the net amount reported in the statement of financial
position only when there is a legally enforceable right to set off the recognised amounts and there is
an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
i)
Revenue recognition
Revenue represents the fair value of consideration received or receivable for the sale of goods
and services in the course of the groups activities. It is recognised when it is probable that future
economic benefits will flow to the group and the amount of revenue can be measured reliably. It
is stated net of Value Added Tax, rebates and trade discounts.
ii)
f)
Sale of services are recognised upon performance of the service and customer
acceptance based on rates prescribed in respective customer contracts.
Civil income is recognised on the following basis as set out in customers contract 25 per cent.
on mobilisation of machinery and personnel 65 per cent. on completion of the construction
10 per cent. on issuance of completion certificate.
25.00%
30.00%
12.50%
12.50%
Ethiopia
Computers
Motor vehicles
Furniture and Equipment
Camp equipment
25.00%
20.00%
20.00%
20.00%
As no parts of items of property, plant and equipment have a cost that is significant in relation to the
total cost of the item, the same rate of depreciation is applied to the whole item. The assets residual
97
values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial
position date.
Full years depreciation is provided in the year of acquisition and none in the year of disposal. Gains
and losses on disposal of property, plant and equipment are determined by reference to their carrying
amount and are taken into account in determining operating profit. On disposal of revalued assets,
amounts in the revaluation surplus reserve relating to that asset are transferred to retained earnings.
g)
Intangible assets
Computer software licence costs and computer software that is not an integral part of the related
hardware are initially recognised at cost, and subsequently carried at cost less accumulated
amortisation and accumulated impairment losses. Costs that are directly attributable to the
production of identifiable computer software products controlled by the company are recognised as
intangible assets. Amortisation is calculated using the straight line method to write down the cost of
each licence or item of software to its residual value over its estimated useful life using an annual rate
of 20 per cent.
h)
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the
weighted average method. Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
i)
Borrowing costs
Borrowing costs, net of any temporary investment income on those borrowings, that are attributable
to acquisition, construction or production of a qualifying asset are capitalised as part of the asset. The
net borrowing cost capitalised is either the actual borrowing cost incurred on the amount borrowed
specifically to finance the asset; or in the case of general borrowings, the borrowing cost is
determined using the overall weighted average cost of the borrowings on all outstanding borrowings
during the year less any specific borrowings directly attributable to the asset and applying this rate to
the borrowing attributable to the asset. Capitalisation of borrowing costs ceases when all activities
necessary to prepare the qualifying asset for its intended use or sale are complete. All other borrowing
costs are recognised in the profit or loss in the year in which they are incurred.
j)
Income taxes
Income tax expense is the aggregate amount charged/(credited) in respect of current tax and
deferred tax in determining the profit or loss for the year. Tax is recognised in the statement of
comprehensive income except when it relates to items recognised in other comprehensive income,
in which case it is also recognised in other comprehensive income, or to items recognised directly in
equity, in which case it is also recognised directly in equity.
k)
Current tax
Current income tax is the amount of income tax payable on the taxable profit for the year, and any
adjustment to tax payable in respect of prior years, determined in accordance with the Fiscal Laws
of Kenya.
l)
m)
n)
Investment in subsidiaries/Consolidation
Subsidiaries are all entities (including special purpose entities) over which the group has the power to
govern the financial and operating policies generally grouping a shareholding of more than one half of
the voting rights. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the group controls another entity.
The group also assesses the existence of control where it does not have more than 50 per cent. of
the voting rights power but is able to govern the financial and operating policies of a subsidiary.
Control may arise in circumstances where the size of the groups voting rights relative to the size and
dispersion of holdings of other shareholders give the group the power to govern the financial and
operating policies, etc.
o)
Share capital
Ordinary shares are classified as share capital in equity. Any amounts received over and above the
par value of the shares issued are classified as share premium in equity.
2.
a)
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the
other party by failing to discharge an obligation. Credit risk mainly arises from financial assets,
and is managed on a group-wide basis. The group does not grade the credit quality of financial
assets that are neither past due nor impaired.
Credit risk on financial assets with banking institutions is managed by dealing with institutions
with good credit ratings and placing limits on deposits that can be held with each institution.
Credit risk on trade receivables is managed by ensuring that credit is extended to customers
with an established credit history. The credit history is determined by taking into account the
financial position, past experience and other relevant factors. Credit is managed by setting the
credit limit and the credit period for each customer. The utilisation of the credit limits and the
credit period is monitored by management on a monthly basis.
99
The maximum exposure to credit risk as at the statement of financial position date is as follows:
Group
30-Jun-14
Trade receivables
Other receivables
Cash in bank
6,727,873
4,475,352
2,054,103
1,015,128
13,257,329
7,743,001
4,475,352
2,054,103
14,272,457
Company
Total
USD
30-Jun-14
Trade receivables
Other receivables
Cash in bank
6,055,621
4,326,252
1,972,288
1,015,128
12,354,162
ii)
1,015,128
Total
USD
1,015,128
7,070,750
4,326,252
1,972,288
13,369,290
Liquidity risk
Liquidity risk is the risk that the group will encounter difficulty in meeting obligations associated
with financial liabilities. The board has developed a risk management framework for the
management of the groups short, medium and long-term liquidity requirements thereby
ensuring that all financial liabilities are settled as they fall due. The group manages liquidity risk
by continuously reviewing forecasts and actual cash flows, and maintaining banking facilities to
cover any shortfalls.
The table below summarises the maturity analysis for financial liabilities to their remaining
contractual maturities. The amounts disclosed are the contractual undiscounted cash flows.
Between
Between
1-3 months 3-12 months
USD
USD
30-Jun-14
Trade payables
Other payables
Borrowings Bank
30-Jun-14
Trade payables
Other payables
Borrowings Bank
1,331,151
976,390
954,707
4,876,179
2,958,343
1,933,933
6,506,207
2,307,541
954,707
9,768,455
Between
Between
1-3 months 3-12 months
USD
USD
Over
1 year
USD
Total
USD
3,510,788
2,733,313
2,836
1,331,151
954,707
976,390
4,841,939
2,733,313
1,933,933
6,246,937
2,285,858
976,390
9,509,185
iii)
Total
USD
3,545,028
2,958,343
2,836
Company
Over
1 year
USD
Market risk
Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate
because of changes in market price and comprises three types of risk: Currency risk, interest
rate risk and other price risk.
100
Currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate because of changes in
foreign exchange rates. The group is expensed to currency risk on sales and purchases that are
denominated in currency other than its functional currency, primarily the United States Dollar (USD).
Income taxes
There are many transactions and calculations for which the ultimate tax determination is
uncertain during the ordinary course of business. The company recognizes liabilities for
anticipated tax audit issues based on estimates of whether additional taxes will be due. Where
the final tax outcome of these matters is different from the amounts that were initially recorded,
such differences will impact the income tax and deferred tax provisions in the period in which
such determination is made.
Critical judgments in applying the entitys accounting policies
In the process of applying the groups accounting policies, management has made judgments
in determining:
3.
Revenue
Group
2014
USD
Catering income
Civil income
Vehicle hire
Camp rentals
Medical income
Management fees
Office support and handling fees
Waste management fees
Company
2014
USD
10,855,973 10,855,973
5,782,042
5,743,955
2,677,492
2,677,492
7,322,158
6,228,809
4,791,424
3,084,037
655,212
655,212
312,372
260,692
249,144
249,144
32,645,817 29,755,314
101
4.
Cost of Sales
Group
2014
USD
Opening stock
Direct cost (4.1)
Closing stock
Company
2014
USD
288,073
288,073
22,577,801 20,191,418
(402,439.0) (402,439.0)
22,463,435 20,077,052
Catering cost
Civils cost
Vehicle hire
Camp expenses
Medical cost
Travelling and accomodation
Salaries and wages
Other cost
Group
2014
USD
Company
2014
USD
6,487,280
5,618,673
1,082,218
3,492,098
2,359,006
173,794
2,841,359
523,372
6,487,280
5,618,673
1,082,218
2,710,141
1,104,798
2,841,359
346,949
22,577,801 20,191,418
5.
Other Incomes
Interest income
Creditors written off
Other incomes
Group
2014
USD
Company
2014
USD
(191,747.0)
39,442
383,494
(191,747.0)
39,442
383,494
231,189
231,189
102
6.
Finance Cost
Group
2014
USD
Company
2014
USD
252,386
2,577
170,987
189,287
2,577
169,971
425,950
361,835
Group
2014
USD
Company
2014
USD
94,145
2,029,232
1,112,441
64,782
2,029,232
1,112,441
10,409
10,409
Group
2014
USD
Company
2014
USD
269,975
45,922
269,975
45,922
315,897
315,897
2,508,715
2,174,329
752,615
(436,717.0)
652,299
(336,402.0)
7.
Operating Profit/Loss
Items charged
The following items have been charged in arriving at operating profit:
Director remuneration
Staff costs
Depreciation
Audit fees
8.
Tax Expense
The tax on the companys profit before tax differs from the
theoretical amount that would arise using
Profit/Loss before tax expense
Tax calculated at a tax rate of 30% (2012: 30%) Tax effect of:
Expenses not deductible for tax purposes
Income not subject to tax
Income tax expense/(credit)
315,897
103
315,897
9.
Group
Motor
Vehicles
USD
Furniture &
Fittings
USD
Camp
Equipment
USD
Total
USD
75,752 1,523,698
39,732 1,467,246
(1,871)
(49,352)
2,690,729
2,743,462
(7,691)
335,676
376,966
(43,776)
7,840,024
4,627,405
(102,690)
Computer
USD
Period ended 30 June 2014
As at 5th August 2013
Cost
Additions
Translation difference
As at 30 June 2014
Depreciation
As at 5th August 2013
Charge for the period
Translation difference
As at 30 June 2014
Net Book Value
As at 30 June 2014
113,614
2,941,593
5,426,499
668,866
9,150,571
38,003
18,254
(1,325)
699,777
507,015
(775)
461,898
520,690
2,161
87,701
66,481
(13,916)
1,804,308
1,112,441
(13,855)
54,932
1,206,016
140,266
2,385,964
58,681
1,735,576
4,441,750
528,600
6,764,608
Computer
USD
Motor
Vehicles
USD
Furniture &
Fittings
USD
Camp
Equipment
USD
Total
USD
76,788 1,498,853
39,732 1,467,246
(2,907)
(24,507)
327,502
376,966
(35,602)
2,692,075
2,743,462
(9,037)
7,840,024
4,627,405
(72,053)
984,749
Company
113,614
2,941,593
668,866
5,426,499
9,150,571
38,684
18,254
(2,006)
707,653
507,015
(8,651)
87,280
66,481
(13,495)
462,382
520,690
1,677
1,812,928
1,112,441
(22,475)
54,932
1,206,016
984,749
2,385,964
58,682
1,735,577
528,600
4,441,750
6,764,607
104
140,266
10. Intangible
Cost
At start of year
Additions
Group
2014
USD
Company
2014
USD
52,647
52,647
52,647
52,647
5,265
5,265
5,265
5,265
47,382
47,382
Group
2014
USD
Company
2014
USD
66,029
(7,529)
66,029
(7,529)
58,500
58,500
12,641
2925
(941)
12,641
2925
(941)
14,625
14,625
43,875
43,875
At end of period
Amortisation
At start of period
Charge for the period
At end of period
Cost
As at start of period
Addition
Translation difference
As at end of period
Amortisation
As at start of period
Charge for the year
Translation difference
As at end of period
105
Group
2014
USD
Company
2014
USD
(128,786)
450,257
320,647
824
321,471
(45,922)
As 30 June 2014
275,549
321,471
(45,922)
275,549
Deferred tax asset and (liabilities), deferred tax (charge)/ credit in the statement of comprehensive income
are attributable to the following items
At
5 August
USD
Deferred tax asset
Tax losses carried forward
321,471
321,471
320,647
320,647
320,647
320,647
Credited/
charged
to profit
and loss
USD
(45,922)
(45,922)
At 30th
June
USD
275,549
275,549
(321,472)
(83,021)
304,538
54,032
(83,021)
304,538
54,032
(45,923)
275,549
320,647
320,647
Group
2014
USD
Company
2014
USD
402,439
402,439
13. Inventories
Inventory
Consumables
106
Trade receivables
Less Provision for impairments
Group
2014
USD
Company
2014
USD
7,743,001
(1,015,128)
7,070,750
(1,015,128)
6,727,873
4,475,352
6,055,621
4,326,252
11,203,225 10,381,874
Cash in hand
Cash at bank
Group
2014
USD
Company
2014
USD
414
2,054,103
414
1,972,288
2,054,517
1,972,702
2,054,517
(2,836)
1,972,702
2,051,681
1,972,702
Group
2014
USD
Company
2014
USD
248,496
269,975
(429,045)
(92,064)
(181,877)
1,328
269,975
(92,064)
(2,638)
(2,638)
Ordinary Shares
No. of Issued paid
ordinary
up capital
shares
USD
As at 05 Agust 2013
At 31 December 2013
b)
42,530
42,530
49,469
49,469
42,530
49,469
49,469
107
Trade payables
Other trade payables
Group
2014
USD
Company
2014
USD
4,876,179
2,958,343
4,841,939
2,733,313
7,834,522
Group
2014
USD
Company
2014
USD
7,575,251
19. Borrowings
954,707
954,707
Current
Bank overdraft (note 16)
Bank borrowings
Borrowings by:
Ardan Kenya
Ardan Ethiopia
954,707
2,836
976,390
2,836
976,390
979,226
Total borrowings
954,707
979,226
1,933,933
1,933,933
1,900,483
33,450
1,900,483
33,450
1,933,933
1,933,933
Facility letter dated 27th May 2013 supported by a Board resolution dated 27th May 2013.
b)
A first ranking all assets debenture for USD 1,328,000 created by the borrower in favour of the Bank
c)
A first ranking collateral charge for USD 130,000 and Kshs 28,000,000 created in favour of the Bank.
d)
Joint and several personal guarantee and indemnity for USD 5,100,000 by the directors to cover the
borrowers indebtedness to the bank supported by certified copies of the guarantors national identity
cards and/or passports.
e)
Hire Purchase Agreements executed between Cfc Stanbic Bank Ltd and the company and
lodgement with the bank of all the relevant logbooks to be jointly registered between the bank and
the company together with a duly executed blank transfer forms for the assets financed under the
vehicle and asset financing facility.
108
Outstanding balances arising from transfer and receipt of funds from related parties
a)
77,320
77,320
b)
129,426
129,426
77,320
77,320
761,362
270,016
6,494,099
2,050,991
179,671
96,794
147,386
4,831,000
180,567
97,277
8,866,971
2,050,991
179,671
96,794
8,594,115
180,567
97,277
8,821,555
6,017,592
11,194,427
9,141,975
8,744,235
5,888,166
11,117,107
9,141,975
There are no fixed repayment terms or securities assigned to the above balances There are no
impairment provisions held against any related party balances
ii)
63,572
755,302
64,701
68,980
63,572
137,948
64,701
68,980
The loan from directors has no fixed repayment terms, is unsecured, interest free and the directors
have pledged continued support to meet the Companys liabilities as and when they fall due.
a)
b)
Contingent liabilities
During the period under review, the company was being represented in a legal claim by a former
employee, Ben Nguyo, based on the view that he was unfairly dismissed and he was claiming
Kshs 2,500,000 as damages for the same. Based on professional advice received from the
companys advocates, Anjarwalla and Khanna, the directors estimate that no material liability will
arise on the case and hence no provision made in the financial statements.
c)
Going concern
There exists a novation agreement to novate assets, liabilities and staff of the company, on a
contract basis, to a newly formed associated company, Ardan Logistics Kenya Limited (owned
by Africa Oilfield Logistics Limited, name subsequently changed to Atlas Development and
Support Services Limited) and its subsidiaries. This will inevitably reduce the future operation of
the company. The novation process has yet to be completed at the date of this report. This will
impact the going concern status of the company.
109
d)
Controlling shareholders
The directors are aware of the following interests of the controlling shareholders in regards to the
issued share capital of the company:
Shareholding
2014
Name of Shareholder
Michael Nigel Pelham
Jennifer Violet Pelham
Tracey Ruth Pelham
Mark Jenkins
Africa Oilfield Logistics Ltd
29%
8%
15%
0%
49%
100%
e)
Employment costs
Salaries and wages
Staff welfare
Other cost
Administration expenses
Directors remuneration
Advertising and promotions
Bank charges
Audit fees
Computer expenses
Courier & postage
Generator running expenses
Entertainment expenses
Legal and professional fees
Mobile, telephone and internet costs
Motor vehicle expenses
Office expenses
Printing & stationery
Consultancy fees
Subscriptions
Transport and accomodation
General expenses
Clean up expenses
Office set up cost
VAT written off
Penalties Donations
Loss on disposal
Provision for impairments
Group
USD
Company
USD
1,546,503
147,524
335,205
1,546,503
147,524
335,205
2,029,232
2,029,232
Group
USD
Company
USD
94,145
13,388
79,233
10,409
591
6,498
110,918
2,655
247,115
96,574
140,120
72,025
48,663
461,629
208
357,005
129,345
321,234
110,250
217,192
2,253
995,073
94,145
13,388
51,614
10,409
591
6,498
110,918
2,655
239,575
96,574
140,120
72,025
48,663
461,629
208
350,982
70,865
321,234
110,250
217,192
2,253
995,073
3,516,523
3,416,861
110
Establishment expenses
License
Insurance
Electricity and water
Rent
Repairs & maintenance
Security
Depreciation expenses
Amortisation of intangible assets
Amortisation of prepaid operating lease rentals
Group
USD
Company
USD
549
271,430
35,754
372,987
112,158
19,642
1,112,441
5,265
2,925
549
265,473
35,754
372,987
112,158
19,642
1,112,441
5,265
2,925
1,933,151
1,927,194
Other Receivables
Loans to associate
2014
$000
2013
$000
2,369
8,545
871
10,914
871
(8,545)
2,369
871
The effective interest rates on non-current receivables were 2.2 per cent.
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
There are no significant amounts past due.
2014
$000
2013
$000
3,132
9,162
2014
$000
2013
$000
262
115
28
508
377
536
Other payables principally comprise amounts outstanding for trade purchases and ongoing costs.
The directors consider that the carrying amount of financial liabilities approximates their fair value.
111
222,794,011
92,979,355
9,652
10,856
315,773,366
20,508
The Company has one class of ordinary share which carries no right to fixed income.
Between incorporation of the Company and 25 February 2013, 22 million ordinary shares were issued for
cash at a price of 0.1 pence per ordinary share.
Between 9 May 2013 and 6 June 2013, 115,621,596 ordinary shares were issued for cash at a price of
2 pence per ordinary share.
On 25 June 2013, 85,172,415 ordinary shares were issued for cash at a price of 5 pence per ordinary share.
On 9 August 2013, the Company issued and allotted 32,979,355 ordinary shares at a price of 8 pence per
ordinary share, as consideration for the acquisition of a 49 per cent. interest in Ardan.
On 20 December 2013, 60 million ordinary shares were issued for cash at a price of 7.5 pence per
ordinary share.
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 advisor.
2014
$000
2013
$000
(155)
(1,425)
(155)
(1,580)
(155)
The remuneration of the Directors, who are the key management personnel of the Group, is set out in
note 7.
On 26 September 2014 the Company exercised the call option (Call Option) granted to it pursuant
to the framework and option agreement announced on 28 March 2014 (Framework and Option
Agreement), to acquire the entire issued share capital of Ardan Logistics Kenya Limited (ALK) (the
Acquisition). Following receipt of shareholder approval for the Acquisition granted at a general
meeting held on 22 October 2014 the Company completed the acquisition of ALK. The fair value
exercise will be completed prior to the announcement of interim results, no additional consideration
has been paid for the interest in AKL.
iii)
On 23 October 2014, following shareholder approval for the Acquisition, the Company issued
350,000 new ordinary shares at a deemed price of 10 pence per ordinary share, equating to 35,000
in payment of advisors fees.
iv)
On 28 October 2014, following shareholder approval at the general meeting held on 22 October
2014, the Companys name was formally changed to Atlas Development & Support
Services Limited.
v)
On 5 November 2014 the Companys shareholders passed resolutions which will enable the
Company to effect its proposed cross listing on the Growth Enterprise Market Segment of the Nairobi
Securities Exchange by way of an introduction and private placing of up to 10 per cent. of the
Companys enlarged share capital, such private placing being offered solely in Kenya. The resolutions
passed at the general meeting held on 5 November 2014:
disapplied the pre-emption rights that would otherwise apply in respect of any issue of equity
securities for cash.
Restructure
Simplify the operational structure into 3 separate business divisions, Technical, Services and Logistics;
and Recruit highly qualified divisional leadership.
Recapitalise
AOL raised US$30m since listing on AIM to fund capital expenditure, working capital
requirements and to settle outstanding legacy creditors.
Professionalise
In addition to the recruitment and re-organization of the team and group structure, new systems and
controls have been implemented, including Sage Payroll, Sage Accounting and Resource Planning
and a new online document management system.
113
The implementation of the above will increase efficiencies and productivity whilst also allowing for
improved economies of scale as the business grows and expands. This is evident upon analysis of the
financial performance of Ardan during the first six months of 2014, in which the business has
transformed from losses in 2012 and 2013, to projected profits.
Key Management
A key driver behind this turnaround is the addition of a highly experienced and qualified senior management
team, which includes the following:
Carl Esprey, CEO: 12yrs in the natural resources industry at BHP Billiton and GLG Partners
Lachlan Monro, COO: Co-founder of Blue Hackle Group, 15yrs support services experience & former
British Army Officer
Barry Lobel, CFO: 12yrs experience, previously Director of Finance at Partners Capital, a US$12bn
Investment Office
Brendan Scott, Projects Director: Founder of ESP Sudan, a civil engineering business contracting to
international clients
Nick Arnold, Regional Director: 20yrs military defence and support services, previously MD of Global
Strategies Group
Patrick Ngahu, Finance Manager: 15yrs experience, qualified accountant, previously held senior finance
management positions with DHL Supply Chain East Africa and Bridge International Academies
Ashley Fuller, Head of Technical Division: 28yrs military experience, Civil Engineer, previously
Royal Engineers
Paul Jordan, Head of Services Division: 25yrs British military experience specialising in
communications, logistics and field management
Colin Atkinson, Regional Quartermaster: 30yrs military expeditionary logistics experience
Gary Jones, MBE, Field Operations Manager: 30yrs British Army experience, specializing in
expeditionary logistics and facilities management to support up to 3,000 personnel.
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