Preliminary Results

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

20 November 2014

Atlas Development & Support Services Limited ('Atlas Development' or the 'Company')

Preliminary Results

Atlas Development, the AIM listed turnkey support services company focussed on the oil & gas and extractive industries in Africa, announces its results for the year ended 30 June 2014.

Carl Esprey, Chief Executive Officer of Atlas Development, said: "Following extensive corporate developments, together with the operational restructuring and rationalisation that was implemented in 2014, Atlas Development has all the elements necessary to rapidly expand our service lines across a broad geographic area, and to bring our turn-key support services to clients operating in the booming East African exploration and development industries. We remain highly focussed on increasing revenues and profitability across the business and enhancing shareholder value as we seek to grow Atlas Development into an industry leader."

CHAIRMAN'S STATEMENT

The period under review and the months succeeding the year end have been truly transformational for the Company. Not only have we made the transition into an operating company (following the acquisition of Ardan Logistics Kenya Limited ('ALK'), a revenue generating support services and logistics business focussed on the oil & gas and extractive industries in East Africa), but we have also adopted a new name and brand, "Atlas Development & Support Services", across our group.

Since the Company's AIM-listing in June 2013 we have developed at a considerable pace, to the extent that following the period end we completed our acquisition of an established turn-key support services business which provides solutions to multiple sectors including oil & gas, mining, construction, non-governmental organisations (NGOs) and governmental bodies. This process began in August 2013 when the Company identified Ardan Risk & Support Services Limited ('ARSS') as a suitable target. The Company initially acquired a 49% interest in ARSS, with an exclusivity period to acquire the remaining 51% interest.

Following its identification as a suitable acquisition target, with input from the Board, ARSS undertook a corporate and contractual restructuring programme, to rationalise operational management and implementation, planning and reporting. In conjunction with this restructuring, the Group was also granted a three year conditional call option (the 'Call Option') which provided the right to acquire 100% of Ardan Logistics Kenya ('ALK'), a separate and new 'shell' company from which the restructured business of ARSS would be operated in exchange for the existing shareholding in ARSS.

On 26 September, the Company announced that it had decided to exercise the Call Option, and following receipt of shareholder approval on 22 October, the Company formally acquired the total issued share capital of ALK. At the same time, the Company also adopted its new name, "Atlas Development & Support Services Limited", marking a new chapter in the development of the Group and its operations across Africa.

As at the time of writing, the Group has executed its initial corporate objectives and has laid the necessary foundations to build a high revenue growth and profitable support services business focussed on the natural resources and extractive industries in East Africa. With recommendations from the Board, ARSS has demonstrated its capacity to generate significant returns. In the first six months ended 30 June 2014, ARSS had unaudited revenues of $20.6m, a significant improvement when compared with the previous full year result to 31 December 2013 of $22.5m.

The Board saw this progress as a tremendous achievement for the Group and demonstrable evidence of the considerable upside that can be achieved through the professionalised and rationalised business restructure by the Board of ARSS following recommendation made by the management.

Now re-branded as "Atlas Development", the Group's business operates through three core divisions, delineated as follows:

• Atlas Technical: civil engineering, workforce accommodation and construction

• Atlas Services: medical and facilities management

• Atlas Logistics: fuel solutions, storage and transportation

Through these three core divisions, Atlas Development provides turn-key support for a range of major oil & gas exploration and development companies operating across East Africa. The Board believes that this is an efficient and scalable platform and is now focussed on expanding its service offering and geographic reach to capture additional market share across the fast-growing oil & gas exploration and development industry in East Africa, in addition to providing solutions to NGO groups and governmental bodies in the region and beyond.

Corporate Review

Central to the Group's development over the period has been the installation of a highly experienced team of professionals to lead the restructuring process and lay the foundation for growth at Atlas Development and these key appointments include the appointment of Carl Esprey to the Board as Chief Executive Officer in March 2014, and Lachlan Monro as Chief Operating Officer in January 2014 and Barry Lobel as Chief Financial Officer in April 2014, with the latter two being appointed to the Board in September 2014. The Board believes that we now have the best team possible in place to drive growth across all areas, and will continue to add additional key personnel to support expansion, when appropriate.

Outlook

The key objective during and since the end of the period has been to prepare an appropriate platform for the growth and expansion of a support services business to capitalise on the emerging oil & gas and natural resources destination that is East Africa. With these objectives now secured, our attention is shifting towards optimising the operational structure that we have established, and enhancing our financial performance throughout 2015 and beyond. Leveraging the important structural modifications that were made to the business throughout the year, we are now ideally placed to build on our already strong roster of blue-chip clients, offering more extensive solutions to more companies across new jurisdictions.

With this in mind, we are actively looking to establish new operations across Africa. The logistics hub that we commenced building post year end in the Turkana region of Kenya will provide significant operational efficiencies, as will our planned expansion into Djibouti - a key strategic port which will give Atlas Development a significant competitive advantage when pitching for new contracts.

With our activities expanding to new areas across Africa, our focus will not be diverted away from Kenya - the site of Atlas Development's head office and bulk of our activities. With this in mind, we were delighted to announce our intention to dual list on the Growth Enterprise Market Segment ('GEMS') of the Nairobi Securities Exchange, which was approved by shareholders on 5 November (the 'Kenyan Listing'). The Kenyan listing, which will be completed by way of an introduction and private placing of up to 10% of the Company's enlarged share capital and will be offered solely in Kenya, is expected to take place by the end of December 2014.

The Kenyan Listing will be an important milestone for Atlas Development, and is a core pillar in our strategy to build a substantial, sustainable and profitable company based in East Africa. Combining international expertise and accreditation with a strong Kenyan identity is a key differentiator for Atlas Development, and the Board intends to continue leveraging our unique service offering to more major oil & gas companies in the region.

I look forward to providing shareholders with further news regarding the proposed dual listing in Kenya, in addition to other important updates regarding our pipeline of potential new contracts, in the coming weeks and months.

I would also like to take the opportunity to thank shareholders and my fellow Board members for their support during the past year and reiterate my confidence that with a strong structure now in place, the Company is well positioned to deliver shareholder value during 2015 and beyond.

Ian H. Mann

Non-Executive Chairman

19 November 2014

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

Consolidated Income Statement

Consolidated Statement of Comprehensive income

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Consolidated Statement of Changes in Equity

CONSOLIDATED CASH FLOW STATEMENT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. General Information

Atlas Development & Support Services, formerly named Africa Oilfield Logistics 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 planned business activities in the logistics sector in sub-Saharan Africa and therefore the Group's 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 after 1 January 2014, and have not been applied in preparing these consolidated financial statements. None of these new standards and amendments is expected to have a significant effect on the consolidated financial statements of the Group.

At the date of authorisation of these financial statements, the following Standards and Interpretations relevant to the Group's operations that have not been applied in these financial statements were in issue but not yet effective:

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 Group's financial statements in the period of initial application.

2. Significant 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 Group's 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 Group's share of losses exceeds its interest in an associate, the Group's 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.

Going concern

The board has detailed its considerations relating to Going Concern in note 4 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.

Foreign currency translation

Foreign currency transactions are translated into the functional currency of the entity using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at period end exchange rates are recognised in the income statement.

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 asset's net carrying amount.

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% 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 group's 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% 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 if the investment. When the group's 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

Property, Plant and Equipment

All items of property, plant and equipment are stated at historical cost less accumulated depreciation (see below) and impairment. Historical cost includes expenditure that is directly attributable to the acquisition. Subsequent costs are included in the asset's carrying value when it is considered probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each item, as follows:

- Plant and Equipment, 20%

- Motor Vehicles, 20%

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.

Loans and receivables

Loans and other receivables are not interest bearing and are initially recognised at their fair value and are subsequently stated at amortised cost using the effective interest method as reduced by appropriate allowances for estimated irrecoverable amounts.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less which are subject to an insignificant risk of changes in value.

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.

3. Financial risk factors

The Group's principal financial instruments comprise cash, loans and receivables and short-term deposits. Together with the issue of equity share capital, the main purpose of these is to finance the Group's operations and expansion. The Group has other financial instruments such as trade and other receivables and trade payables.

The Group have not entered into any derivative or other hedging instruments.

The main risks arising from the Group's financial instruments are credit risk, liquidity risk and market risk (including interest rate risk and currency risk). The Board reviews and agrees policies for managing each of these risks and these are summarised below. The interest receivable relates to interest earned on bank deposits.

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 Group's 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:

No aged analysis of financial assets is presented as no financial assets are past due at the reporting date.

Liquidity risk

The Group's 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 Group's needs. The weighted average interest rate on deposits was 0.1%.

The exposure of the financial assets to interest rate risk is as follows:

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 Group's financial assets and liabilities to currency risk is as follows:

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.

Capital risk management

The Group assess capital requirements regularly. The capital structure of the Group comprises its net debt (the borrowings after deducting cash and bank balances) and equity of the Group as shown in the balance sheet. The requirement for capital is satisfied by the issue of shares.

The Group's objectives when managing capital is to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. The Group places 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 Group's financial instruments (at period end) to changes in market variables, being exchange rates and interest rates.

The following assumptions were made in calculating the sensitivity analysis:

- all income statement sensitivities also impact equity

- translation of foreign subsidiaries and operations into the Group's presentation currency have been excluded from this sensitivity.

Interest Rates

The following table details the Group and Company's 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.

The above sensitivities are calculated with reference to a single moment in time and will change due to a number of factors including:

- fluctuating trade receivable and trade payable balances

- fluctuating cash balances

- changes in currency mix

4. Critical accounting estimates and judgments

The preparation of financial statements 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.

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.

5. 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.

6. Loss for the period

Operating expenses include:

Amounts payable to Baker Tilly UK Audit LLP and its associated entities in respect of services are as follows:

7. 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:

The remuneration of the Directors, who are the key management personnel of the Group are set out below:

No contributions were made to pension schemes for any of the directors or employees (2013: nil).

8. Income Tax Expense

The Company is resident for taxation purposes in Guernsey and its income is subject to Guernsey income tax, presently at a rate of zero.

** The associate has reported $0.3m tax charge for the period since acquisition, a 49% 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.

9. Loss per Share

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

Number of shares

No options or instruments which might give rise to dilution were in issue during the year.

10. Property, Plant and Equipment

11. InVESTMENTS IN SUBSIDIARIES

Investments include

The Directors consider the carrying amount of investment in subsidiaries has not suffered any impairment loss.

12. Interest in Associate companies

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.

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 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 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% 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:

Summarised statement of comprehensive position:

13. 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.

14. CASH AND CASH EQUIVALENTS

15. Financial Liabilities

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.

16. Share Capital

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% 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.

17. Movement in Retained Earnings

18. Controlling Party

The Directors believe that there is no ultimate controlling party.

19. Related Parties

PH Edmonds and AS Groves, Directors of the Group during the period, are (or were during the period) also Directors of African Management Services Limited ("AMS"). Related party transactions are entered into on an arm's length basis. No provisions have been made in respect of amounts owed by or to related parties.

During the year AMS provided accounting, treasury and administrative services to the Group for a management fee of $371k (2013: $18k). Amounts owed to AMS at the year end were $115k (2013: nil).

During the year the Group provided various revolving credit facilities to the associate of $8,545k (2013: nil) during the year, at an interest rate of 2% above LIBOR. Amounts owed by the associate at the year end were $8,545k (2013: nil).

After the period end, commission of $70k was paid to Ocelot Investment Group Limited, a company controlled by AS Groves.

The remuneration of the Directors, who are the key management personnel of the Group, is set out in note 7.

20. Post Balance Sheet Events

i) On 15 August 2014, the Company raised approximately £7.0 million (approximately US$12.0 million) before expenses by way of the issue of 77,800,000 new ordinary shares in the Company at a price of 9 pence per share.

ii) 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 advisor's fees.

iv) On 28 October 2014, following shareholder approval at the general meeting held on 22 October 2014, the Company's name was formally changed to "Atlas Development & Support Services Limited".

v) On 5 November 2014 the Company's shareholders passed resolutions which will enable the Company to effect its proposed dual listing on the Growth Enterprise Market Segment of the Nairobi Securities Exchange by way of an introduction and private placing of up to 10% of the Company's enlarged share capital, such private placing being offered solely in Kenya. The resolutions passed at the general meeting held on 5 November 2014:

- authorised the Board to issue up to 80,000,000 equity securities; and

- disapplied the pre-emption rights that would otherwise apply in respect of any issue of equity securities for cash.

**ENDS**