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Quote:Atlas African Industries Limited / Ticker: AAI / Index: AIM and NSE / Sector: Support
Services
31 August 2016
Atlas African Industries Limited
(‘Atlas’ or the ‘Company’)
Interim Results
Atlas Development (AIM, NSE: AAI), the Kenyan headquartered, African focussed support services and logistics company, provides interim results for the six month period ended 30 June 2016.
CHAIRMAN’S STATEMENT
This has been a frustrating period for the Company and its shareholders.
During the period, we initially made great strides forward to deliver on our strategy to take advantage of opportunities in the consumer industrial sector: we changed the name of the Company to Atlas African Industries Limited, shifted our operational focus and raised US$5 million from new and existing shareholders to strengthen the balance sheet; through our Ethiopian subsidiary TEAP Glass PLC (‘TEAP’) we secured a 100 year land lease for our planned new state-of-the-art glass bottle manufacturing facility (the first 45 years of lease payments have been paid in advance) on a 5.5 acre site located in Chancho, in close proximity to established infrastructure and just 30 kilometres from intended mine sites for the majority of materials needed to produce high quality bottles; we appointed MH Engineering Plc, a leading Ethiopian firm, to conduct a full feasibility study, including architectural, engineering, structural, sanitary, electrical and mechanical
design and quantity surveying services; we commenced ground clearing and
geotechnical drilling on-site ahead of constructing ancillary buildings, and placed deposits on long lead items. The tangible potential of our Ethiopian project (the ‘Chancho Project’) was further underpinned by the signing of a memorandum of understanding with leading Ethiopian brewer Raya Brewery Share Company (‘Raya’), with a view – subject to confirmation of quality – to entering into an offtake agreement to regularly supply international standard, high quality glass bottles to Raya in substitution of the imported bottles it currently uses.
Preliminary economic studies had highlighted the strong potential of the Chancho Project based on a yearly production capacity of 105 million 330ml bottles, with full production targeted for early 2019. The Ethiopian Government has designated manufacturing as a top industrial priority with an emphasis on replacement of imports; the high-quality glass bottle market is currently dominated by expensive imports, so we identified our project
as having huge benefit to all stakeholders, both the investors and Ethiopia. Success of the Chancho Project has the potential to generate significant revenue in tax to the Ethiopian Government as well as generate employment of 195 people in the area. Furthermore, we perceived significant ancillary benefits would be seen within associated businesses and supply chains.
Despite these considerable efforts and the factors which suggested that the Chancho Project would generate positive impacts for the Company, its shareholders, the local community around Chancho and the Ethiopian Government through tax revenues, our progress has been undermined and derailed by the actions of the Ethiopian Revenue and Customs Authority (‘ERCA’). As shareholders will be aware from our announcement of 11 May 2016 we have been subjected to a complete injustice, through the summary removal of approximately US$2.4 million from TEAP’s bank account with the Development Bank of Ethiopia by ERCA. ERCA’s actions stem from a tax claim made against Ardan Risk & Support Services (‘Ardan’) which categorically relate to periods prior to Atlas’ involvement with Ardan. Atlas has received legal advice that neither it nor TEAP has any liability for any such taxes under Ethiopian law.
The Board continues in its fight to retrieve the expropriated funds and is pursing all legal, diplomatic and political channels in order to seek redress, including direct appeals to the Government of Ethiopia and the Ethiopian Investment Commission and through the UK Foreign Office and the British Business Secretary; our major shareholders have been actively lobbying the Canadian and US Governments.
The Company believes that the unilateral removal of these funds was unlawful. I want to again reiterate and assure shareholders that the Board is examining all available options as it seeks to have the Company’s funds returned. Concurrently, the Board has been actively considering alternative options available to maximise shareholder value and on 1 August 2016 announced that the Company has acquired an interest in BonanzaWin, a
Nigerian based gaming company offering a range of online and real-play gaming experiences including sports betting, casino slot games, and lotto.
This investment is in line with the Company’s active development strategy to identify and support prospective growth opportunities across Africa. Atlas’ total investment into Equatorial Partners Limited (‘EPL’, which holds a 60% stake in Saerimner Ltd (‘Saerimner’) a Nigerian registered company operating under the trading name “BonanzaWin”) at this stage is US$0.3 million, in consideration for which it has acquired a 10% equity stake in EPL. BonanzaWin has established a portfolio of gaming businesses currently focussed on the Nigerian market; the company has a secure online gaming
platform, which powers a wide range of games including sports betting, live casino and slot games, has three gaming shops where customers can play and place bets, and is a regulated provider of the Nigerian lottery, for which BonanzaWin sells tickets through a number of local sales agents. BonanzaWin is licenced and regulated by the Lagos State Lottery Board and Atlas believes the company represents a compelling investment opportunity to access Nigeria’s growing gaming and entertainment sectors. For the 12-
month period ended 31 December 2015 EPL and Saerimner reported a loss of US$0.3 million.
Financial Review
For the period under review the Company is reporting turnover of US$63k and
comprehensive losses of US$2.1million. At 30 June 2016 the Company had cash and cash equivalents of US$1.7 million Pesa Nane plans to be shilingi when he grows up.
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