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Trading update, establishment of industrial division and acquisition
Atlas (AIM:ADSS) is creating an industrial division with an initial focus on consumer based industrial projects to broaden its business offering. The industrial division will allow Atlas to take advantage of unique on the ground access to highly prospective industrial projects in exciting growth markets.
As part of the Company’s first project within the industrial division, Atlas has signed an acquisition agreement to acquire East Africa Packaging Holdings Limited, a company established to build a new state-of-the-art glass bottle manufacturing facility 45 kilometres north of Addis Ababa, Ethiopia. The Company is also pleased to provide a trading update.
Overview:
· Following the decline in the oil price, trading conditions for the Company’s core services division remain very challenging, with revenue for the 12 months to 31 December 2015 expected to be approximately $15 million
· Initiatives implemented focussed on diversifying the Company’s business, identifying new sectors of operation, concentrating on profitable jurisdictions and services, and reducing costs overall
o Atlas is now cashflow break even at an operational level and the Company is expected to end the year with a cash balance of approximately US$3 million, ahead of expectations
o Atlas has created an industrial division to broaden sector focus and diversify cyclical services revenue streams
· Industrial division has entered into an agreement to acquire EAPH, a company established to build the Chancho Project, focused on the growing beverage industry, which will provide the Company access to the rapidly growing Ethiopian consumer market
Chief Executive of Atlas, Carl Esprey said, “The creation of a new industrial division will increase the breadth and sustainability of our business and leverage our current position in Ethiopia to drive additional activity and future earnings. These developments will enable us to generate diversified revenue streams whilst offering significant internal synergies and efficiencies. With the acquisition of EAPH we will acquire an attractive cornerstone project for our industrial division in a dynamic jurisdiction, with likely access to significant project finance funding.
“As shareholders are aware, we have recently convened a shareholder’s meeting to seek authority to issue new shares and dis-apply pre-emption rights. The acquisition of EAPH is contingent on gaining approval to raise the headroom, so we encourage shareholders to support these resolutions so that we can move forwards at pace to implement our vision to develop and broaden our business offering. I would, however, like to note that aside from these developments, we continue to hold cash to support the activities of our established support services division.
“Recent months have been highly volatile and difficult for our business, particularly in Kenya. We appreciate our shareholders’ patience as we combat the down-turn in the oil and gas services sector and focus on more profitable sectors. We have established a joint venture with Orchid and are presently working on projects in the Ethiopian resource space and hope to announce further news on these in the near future.”
