Interim Results

Atlas Development & Support Services Limited / Ticker: ADSS / Index: AIM / Sector: Support Services

17 September 2015

Atlas Development & Support Services Limited

('Atlas Development' or the 'Company')

Interim Results

Atlas Development (AIM, NSE: ADSS), the Kenyan headquartered, African focussed support services and logistics company, provides interim results for the 12 month period ended 30 June 2015.

CHAIRMAN'S STATEMENT

Atlas Development was established to take advantage of the lack of international standard oil and gas services companies operating in Africa. With a platform put in place to deliver a full spectrum of services, the Company was able to build a business that was generating both revenue and a significant pipeline of opportunities.

However, as investors will be aware the oil and gas market has been through a tumultuous period; as reported, this directly impacted the Company. In light of this the Board implemented initiatives aimed at further diversifying the Company's offering, identifying new sectors of operation, targeting additional jurisdictions and reducing costs. There has been progress on some of these fronts but the securing of contracts which offer the right margins has been difficult in the short term, particularly in the oil and gas space.

On a positive note, the Company's business in Ethiopia has been improving. Contracts with major potash project developers have been negotiated and renewed as they look to advance their exploration and mining operations. The Ethiopian business pipeline is also improving in the natural resource and infrastructure spaces. With a positive market dynamic and a growth in requirements for international standard support services the Board is hopeful that the Ethiopian operations will generate positive returns.

With the pick-up in activity in Ethiopia and also ongoing operations in Tanzania much of the Company's resources have been diverted from Kenya. The reason for this re-allocation of resources is that in Kenya, and particularly in the Turkana region, activity in the oil and gas space has significantly reduced. The Company has agreements in place to provide support services across the delivery spectrum but these are dependent on each client and impacted when they reduce activities. Accordingly, revenue visibility is not easy to predict at this time. Tenders are being offered by a number of parties throughout the East African region but the Board believes that the terms being demanded from service providers are not sustainable. Indeed in a number of recent cases contracts were agreed but terms then adjusted by the clients, causing the work to be unprofitable and therefore unattractive to the Company.

The Company has been successful in expanding its sectoral coverage and has tendered for a number of substantial and transformational infrastructure projects. Given the large scale of these projects, implementation is dependent on a number of national and regional political variables being resolved. These factors have a knock-on effect as regards timing and therefore although the prospects remain exciting it is hard to assess likely delivery schedules. As a result, the Company has conducted a full review of operations in Kenya and dramatically reduced costs and overheads to preserve the balance sheet whilst maintaining a presence to ensure the capabilities are in place to deliver these potentially transformational projects when the time arises or market sentiment changes.

In Tanzania, although the Company has a number of small contracts, the operations are heavily centred on the oil and gas sector where, as in Kenya, the general environment remains challenging. Again, the Board has initiated heavy cost reduction exercises to preserve capital. Operations continue in Western Sahara. The exploration projects of two London listed companies and the potential for engagement in relation to these, as referred to in previous announcements, have unfortunately been shelved due to reallocation of resources in the oil and gas arena. However, if, as and when strategy changes are seen in the wider industry, the Company retains its prime position.

FINANCIAL REVIEW

The Company is reporting revenues for H1 2015 in line with expectations with turnover of US$11.5 million. As a result of the reduced contract base and restructuring costs incurred during the downscale of operations the Company experienced comprehensive losses during H1 2015 of US$2.6 million, which included exchange rate losses of US$0.7 million (resulting from the 9% fall in the USD:KES exchange rate which heavily impacted the USD equivalent cash balances which were held in KES) and non-recurring restructuring costs of US$1.1 million.

At 30 June 2015 the Company had cash and cash equivalents of US$6.1m.

OUTLOOK

With the general economic and operational environment in East Africa being mixed the Board has focused on the preservation of capital through prudent cost cutting and streamlining initiatives. With capital in the bank and a significant asset inventory there remains opportunity; both within Africa and potentially beyond. In this vein, the Board is in discussion with a number of asset financing banks with regards to potential acquisitions and expansion opportunities. The conclusion of any transaction due to market dynamics and the current valuations is more challenging but the Board, as I said, believes there remains opportunity.

Further afield the Company has been approached by a number of parties about potentially forming joint ventures with regard to the provision of wide ranging support services, particularly in the oil and gas space. Additionally there are a number of businesses which require the expertise that we can offer as regards restructuring and delivering an international standard offering. The Board is assessing a number of opportunities in this context in jurisdictions which are newly opening up for oil and gas, where our ability to operate in challenging environments is recognised and valued. Furthermore, with our primary London listing and dual listing in Kenya the Company is seen as having strong credentials and therefore an attractive operational partner.

The Board understands the frustration of shareholders during this period but is working tirelessly to adapt and improve the situation to generate revenue. The pipeline of opportunities remains in place although conversion timings are hard to predict in the current environment. With cash at bank of US$6.1m, a highly experienced proven operational team, a strategic plan in place and prudent cost management, the Company appreciates continued shareholders support as we look to rebuild value.

Ian H. Mann

Non-Executive Chairman

17 September 2015

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

FINANCIAL STATEMENTS

Consolidated Interim Income Statement

Consolidated Interim Statement

of Comprehensive income

Consolidated Interim Statement of Financial Position

Consolidated Interim Statement of Changes in Equity

Consolidated Interim Cash Flow Statement

Notes to the Interim Financial Statements

Atlas Development & Support Services Limited is incorporated and domiciled in Guernsey. The nature of the Group's operations and its principal activities are set out in the Chairman's Statement.

The presentational currency of the Group is US Dollars as this reflects the Group's business activities in the support services sector in sub-Saharan Africa and therefore the Group's financial position and financial performance.

The interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

2. BASIS OF PREPARATION

The results presented in this announcement are unaudited and they have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards ('IFRS') as adopted by the EU that are expected to be applicable to the financial statements for the period ended 31 December 2015 and on the basis of the accounting policies to be used in those financial statements.

The interim financial information does not include all of the information required for full annual financial statements and accordingly, whilst the interim financial information has been prepared in accordance with the recognition and measurement principles of IFRS, it cannot be construed as being in full compliance with IFRS. The financial information contained in this announcement does not constitute statutory accounts as defined by the Companies (Guernsey) Law 2008.

The audited financial information for the year ended 30 June 2014 is based on the statutory accounts for the financial year ended 30 June 2014. The auditors reported on those accounts: their report was (i) unqualified, and (ii) did not contain statements where the auditor is required to report by exception.

Going concern

The board has prepared forecasts for the Group covering the period of 12 months from the date of approval of these interim 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.

These interim financial statements have been prepared in accordance with the IFRS principles applicable to a going concern, which contemplate the realisation of assets and liquidation of liabilities during the normal course of operations. Having carried out a going concern review in preparing these interim financial statements, the Directors have concluded that there is a reasonable basis to adopt the going concern principle.

Consolidation of Subsidiaries

Subsidiary undertakings are consolidated in accordance with IFRS 10 when the parent entity controls an investee and it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

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% and 50% 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 investor's share of the profit or loss of the investee after the date of acquisition.

The group's 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 of the investment. When the group's share of losses in an associate equals or exceeds its interest in 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 its carrying value and recognises the amount as part of its 'share of profit/ (loss) of associates in the income statement.

3. Critical Accounting Estimates Judgments

The preparation of the interim consolidated financial statements is in conformity with IFRS as adopted in the EU requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below.

Acquisition of Ardan Logistics Kenya

The board has considered whether the exercise of the option in respect of Ardan Logistics Kenya Limited on 22 October 2014 should be accounted for as a business combination under IFRS 3. They have concluded that, since the transaction comprised an acquisition of assets or group assets rather than a business, it was outside the scope of IFRS 3.

Given the existence of the unexercised option prior to 22 October 2014, the board have considered whether the existence of an option constituted control under IAS 24 (in respect of the year to 30 June 2014) or IFRS 10 (subsequent to 1 July 2014) gave rise to a need to consolidate the entity. Since the group has no voting rights prior to 22 October 2014, the board have concluded that it is appropriate to recognise Ardan Logistics Kenya Limited as a subsidiary with effect from 22 October 2014.

4. Loss for the period

Operating expenses include:

5. Loss per Share

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

Number of shares

6. Property, Plant and Equipment

7. Interest in Associate companies

Set out below are the associates of the group as at 30 June 2015, 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.

The above companies (together "ARSS") are private companies and there is no quoted market price available for the shares.

There are no contingent liabilities relating to the group's 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% 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% interest in ARSS.

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% of ALK, a separate and new 'shell' company from which the restructured business 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.

Completion of the transfer of business (including the novation of contracts and the transfer of net assets etc.) into ALK is targeted for completion during the first half of 2015, although certain contracts have transferred in the period to 31 December 2014. Upon completion of the formalities of transfer, and the Company being satisfied that the entire economic value has been transferred into ALK, the Company's 49% interest in ARSS will be returned to the seller.

8. InVESTMENTS IN SUBSIDIARIES

Investments include

The transfer of business from ARSS to ALK (including the novation of contracts and the transfer of net assets etc.) began in October 2014, and as such, from this date, revenue and associated expenses within this subsidiary have been consolidated and recognised during the period.

9. TRade and other receivables

All non-current receivables are due within five years from the end of the reporting period.

The effective interest rates on non-current receivables were 2.2%.

The directors consider that the carrying amount of trade and other receivables approximates their fair value.

There are no significant amounts past due.

10. CaSH AND CASH EQUIVALENTS

11. Financial Liabilities

Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. The increase during the current period in payables relates to ALK which has now been consolidated.

The directors consider that the carrying amount of financial liabilities approximates their fair value.

12. Share Capital

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

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

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

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

During December 2014, 350,000 shares were issued to the Company's Kenyan nominated adviser at a price of £0.10/shares in lieu of professional fees of £35,000.

13. Movement in Retained Earnings

14. Share-based payments

The Group operates a share plan relating to shares in the parent company known as the AOL Share Option Scheme 2013.

The Group recognised a total share based payment of US$82,015related to equity-settled share based payment transactions in the six month period to 30 June 2015, (Dec 2014: US$2,375,829).

The exercise price of the options granted under the share option scheme is determined at every grant date and set for each grant. There is generally no vesting period but in certain instances vesting periods of 6-30 months have been included. Options are forfeited if the employee leaves the Group before the options vest.

The following information relates to the share option scheme:

The fair values of the options were calculated using the Monte Carlo and Black Scholes models. In valuing the options, the following assumptions were used:

Expected volatility was determined by calculating the historical volatility of the Group's share price over the previous three years. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

15. Controlling Party

The Directors believe that there is no ultimate controlling party.

16. Post Balance Sheet Events

There are no post balance sheet events.

17. Interim Segmental reporting

Segment information about these businesses is presented below:

Company Information and Advisers

Directors

Ian Mann, Non-Executive Chairman

Carl Esprey, Chief Executive Officer

Barry Lobel, Chief Financial Officer

Lachlan Monro, Chief Operating Officer

Andrew Groves, Non-Executive Director

Jonathan Wright, Non-Executive Director

Secretary

Philip Enoch MA (Oxon)

Address

3rd Floor, Kalamu House, Grevillia Grove,

Westlands, Nairobi,

Kenya

Registered Office

Richmond House

St Julian's Avenue

St Peter Port

Guernsey GY1 1GZ

UK Nominated Adviser and Sole Broker

Stifel Nicolaus Europe Limited

150 Cheapside

London, EC2V 6ET

Kenyan Nominated Adviser

Kenya:

Burbidge Capital

4th Floor Nivina Towers, Westlands Road

Museum Hill, Westlands

Nairobi, Kenya

Auditor

Baker Tilly UK Audit LLP

Chartered Accountants

25 Farringdon Street, London EC4A 4AB

Solicitors

As to Guernsey Law

Carey Olsen LLP

8-10 Throgmorton Avenue, London EC2N 2DL

Bankers

Metro Bank PLC, London, United Kingdom

CfC Stanbic Centre, Museum Hill/Chiromo Road, Nairobi

Registrars

Capita Registrars (Guernsey) Limited

Mont Crevelt House, Bulwer Avenue, St Sampson

Guernsey GY2 4LH

Financial Public Relations

St Brides Partners

3 St. Michael's Alley, London, EC3V 9DS

** ENDS **

Notes to Editors

Atlas Development is a support services and logistics company with operations spanning Kenya, Mozambique, Tanzania, Ethiopia and Western Sahara.

Its three core divisions are delineated as follows:

· Atlas Technical: civil engineering, workforce accommodation and construction

· Atlas Services: medical and facilities management

· Atlas Logistics: fuel solutions, storage and transportation

Through these three core divisions, Atlas Development provides turn-key support for a range of major energy and natural resource exploration and development companies operating across East Africa. The Board believe there is considerable opportunity to leverage the Company's established position to further expand its operational footprint across sub-Saharan Africa and beyond and diversify its service offering to provide additional long-term visible revenue streams.