Atlas Development and Support Services - Listing Statement.pdf

8/10/2019 Atlas Development and Support Services - Listing Statement.pdf

1/134

Atlas Development

& Support Services Limited(Formerly known as Africa Oilfield Logistics Limited)

Incorporated in Guernsey under the Companies (Guernsey) Law 2008 with company number 55964

Registered in Kenya as a foreign company under registration number CF/2014/166829

Listing Statement

November 2014

In respect of:

The Listing by Introduction on the Growth Enterprise Market Segment of the Nairobi Securities Exchange of

393,923,366 ordinary shares of no par value each of Atlas Development & Support Services Limited at alisting price of KES 11.60 per ordinary share

Registered with Companies Registry


2/134


3/134

Nominated Advisor Burbidge Capital4th Floor Nivina TowersWestlands Road, Museum Hill, Westlands,P.O. Box 5152500100

Nairobi, KenyaTel: +254 (0) 202 100 102

Legal Advisors Anjarwalla & KhannaThe Oval, 3rd FloorWestlandsP.O. Box 200-00606, Sarit CentreNairobi, Kenya

Reporting Accountants Baker Tilly Merali's1st Floor, New Rehema House, Rhapta Road, Westlands

P.O. Box 67486, 00200Nairobi, Kenya

Registrar (Kenya) The Central Depository & Settlement Corporation Limited (CDSC)Nation Centre, 10th FloorKimathi StreetP.O. Box 3464-00100 GPO Nairobi

Registrar (UK) Capita Asset Services40 Dukes Place

London EC3A 7NHUnited KingdomTel: +44 (0) 20 7397 6264

Public Relations (Kenya) Levanter Africa2nd Floor Bravo BlockWilson Business ParkP.O. Box 8541, 00200, Nairobi, Kenya

Public Relations (UK) St Brides Media & Finance

3 St Michael's AlleyLondon EC3V 9DSUnited Kingdom


4/134

Important Notice

THIS DOCUMENT CONTAINS IMPORTANT INFORMATION FOR CONSIDERATION AND

REQUIRES CAREFUL ATTENTION AS IT INCLUDES WITHIN IT, LEGAL, MARKET ANDHISTORIC AND CURRENT FINANCIAL INFORMATION.

This Listing Statement includes particulars given in compliance with the requirements of the Companies Act2001 (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, aswell as the rules contained in the Nairobi Securities Exchange (NSE)listing rules, in particular, the NSEListing Manual.

This Listing Statement is issued by Atlas Development & Support Services Limited (ADSS or theIssuer) and has been prepared in compliance with The Capital Markets (Securities) (Public Offers, Listingand Disclosures) Regulations 2002 in connection with the proposed cross listing of the whole of its existingissued share capital (Shares) on the Official List of the NSE by way of Introduction (Introduction) in theGrowth Enterprise Market Segment (GEMS) of theNSE.

Application is being made to the NSE for the listing of the Shares on the NSE. Subject to compliance withthe NSE Listing Manual, the NSE will admit the Shares for listing under the security code ADSS in theGEMS. As a matter of policy, the NSE and the Capital Markets Authority assume no responsibility for thecorrectness of any statements or opinions made, or reports contained in this Listing Statement, as the casemay be. Approval of the Introduction is not to be taken as an indication of the merits of the Issuer or of theShares.

Should any doubt arise as to the meaning of the contents of this Listing Statement or as to what action totake, please consult your investment bank, financial advisor, stockbroker or other professional advisor, dulyauthorized under the Capital Markets Act, who specializes in advisory on the acquisition of shares and othersecurities.

The Directors of the Issuer, whose names appear on page 67 of this Listing Statement, accept responsibilityfor the information contained in this document. To the best of the knowledge and belief of the Directors (whohave taken all reasonable care to ensure that such is the case), the information contained in this document isin 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 forregistration.

Shares of the Issuer will be available to the general public through the secondary trading on the NSE. Uponlisting, 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 thesale 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 foror purchase any new shares in the Issuer. Neither this Listing Statement nor any other information suppliedin 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 anyrecipient of this Listing Statement (or any other information supplied in connection with the Introduction)should purchase any shares of the Issuer.

Legal Advisors Opinion

Anjarwalla & Khanna, the Legal Advisors, have given and not withdrawn their written consent to theinclusion in this Listing Statement of their Legal Opinion (attached as Appendix I), and the references to


5/134


6/134

Chairmans Statement

Richmond HouseSt Julians Avenue

St Peter PortGuernseyGY1 1GZ

November 2014Dear 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 servicesand logistics company, is pleased to be joining the Growth Enterprise Market Segment (GEMS) of theNairobi Securities Exchange (NSE) by way of introduction, making the Company the first AIM listedcompany to join the NSE.

This important step represents a natural alignment of the Companys ownership structure with its EastAfrican stakeholders and customers, and demonstrates the Companys commitment to local ownership. Thedual listing is expected to further align the Company with the ongoing strong regional growth and provide afoundation 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 ofinternational 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 milestonefor this Company in its quest to achieve its vision of becoming recognised in sub-Saharan Africa as thespecialist 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 ourvision and we warmly invite you to participate in our future growth.

Yours sincerely,

Ian Hollis Mann

Non- Executive Chairman


7/134


8/134

Registered Office Richmond HouseSt Julians AvenueSt Peter Port

Guernsey GY1 1GZ

Kenya Branch Office c/o Axis Kenya2ndFloor, Apollo Centre,Ring Road, Parklands, WestlandsP.O. Box 764, Sarit Centre, Nairobi, Kenya 00606

Financial Calendar Financial Year End30 June

Incorporation and Kenyan BranchRegistration

Date of Incorporation: 5thDecember 2012Country of Incorporation: GuernseyDate of Kenyan Branch Registration: 6 thNovember 2014

Legislation The Companies (Guernsey) Law 2008The Companies Act (Cap 486)

Legal Form Non-cellular company limited by shares incorporated in theIsland of Guernsey, Channel Islands with registered number55964, and registered in Kenya as a foreign company underPart X of the Companies Act (Cap 486) registration numberCF/2014/166829.

Subsidiaries As at the date of publication of this Listing Statement, AtlasDevelopment & Support Services Limited had 1 subsidiary

and 9 sub - subsidiaries:

Subsidiary:

Ardan Risk Holdings Limited, incorporated inMauritius on 9th September 2013, Company No.118434 C1/GBL

Sub subsidiaries:o Ardan Logistics Kenya Limited, incorporated in Kenya

on 5th March 2014, No. CPR/2014/134094

o Ardan Servicos Medicos, Lda, incorporated inMozambique on 9thOctober 2013

o

Ardan Servicos, Logisticos, Lda, incorporated inMozambique on 8thOctober 2013o Ardan (Facilities Management) Limited, incorporated

in Kenya on 25thMarch 2014, No CPR/2014/135230;

o Ardan (Medical Services) Limited, incorporated inKenya on 19th March 2014, No CPR/2014/ 135237;

o Ardan (Risk Management) Limited, incorporated in

Kenya on 31stMarch 2014, No CPR/2014/ 135227;

o Ardan (Civil Engineering) Limited, incorporated in

Kenya, on 27th March 2014, No CPR/2014/ 135217;


9/134

and

o

Ardan (Workforce Accomodation) Limited,

incorporated in Kenya, on 24thMarch 2014, No

CPR/2014/ 1352223.

Authorised representative in respectof the Kenya Branch office

Conrad Nyukuric/o Axis Kenya2ndFloor, Apollo Centre,Ring Road, Parklands, WestlandsP.O. Box 764, Sarit Centre, Nairobi, Kenya 00606

Auditors Baker Tilly UK Audit LLP25 Farringdon StreetLondon EC4A 3BFUnited Kingdom

Legal Advisors Anjarwalla & Khanna3rd Floor, The OvalJunction of Ring Road Parklands & Jalaram Road,WestlandsP.O. Box 200-00606, Sarit Centre, Nairobi, Kenya

Company Secretary Phillip Enoch MA (Oxon)

Principal Bankers CFC Stanbic BankCfC Stanbic Bank, CfC Stanbic Centre, Chiromo Road,Nairobi


10/134

Glossary of Definitions and Abbreviations

Subject DefinitionADSS Atlas Development and Support Services Limited

AIM the AIM Market of the London Stock Exchange plc

AIM Rules the AIM Rules for Companies and the AIM Rules for NominatedAdvisers each produced by the London Stock Exchange, and each asamended from time to time

ALK Ardan Logistics Kenya Limited, a company incorporated in Kenyawith registration number CPR/2014/134094

AOL Africa Oilfield Logistics Limited

Ardan the collective group of companies previously operating under theArdan Risk & Support Services brand, including Ardan Risk &Support Services (K) Limited, Ardan Risk Holdings Limited andALK

Articles The Articles of Incorporation of Atlas Development & SupportServices Limited

Board The Board of Directors of the Issuer

CAGR Compounded Annual Growth Rate

Capital Markets Legislation Means (a) the Capital Markets Act, Chapter 485A of the Laws ofKenya and all subsidiary legislation and rules and guidelines

promulgated thereunder (b) the rules of the NSE (c) Companies Actand (d) any law applicable to capital markets in Kenya

CBK Central Bank of Kenya

CBR Central Bank Rate

CCA Comparable Company Analysis

CDSC Central Depository and Settlement Corporation Limited, under whichoperates the Central Depository System, a computer system operatedin accordance with the Central Depositories Act, 2000 that facilitatesholding of securities in electronic accounts thereby facilitating faster

and easier processing of transactions at the NSE

CEO Chief Executive Officer

CMA The Capital Markets Authority in Kenya, a statutory bodyincorporated under the Capital Markets Act and includes anybodyreplacing it or any of its functions

Company or Issuer Atlas Development & Support Services Limited

DFI Development Finance Institution


11/134

Directors or the Board Directors of the Company whose names appear on page XX of thisListing Statement

DPS Dividend Per Share

EBITDA Earnings Before Interest Tax Depreciation and Amortization

EPS Earnings Per Share

FCFF Free Cash Flow to Firm

FID Final Investment Decision

F&O the Framework and Option Agreement entered into between (amongstothers) Ardan and ADSS on 28 March 2014

FSMA the Financial Services and Markets Act 2000, as amended

GBP British Pound

GDP Gross Domestic Product

GEMS Growth Enterprise Market Segment of the NSE

Group the Company and its subsidiaries undertakings, as described on pageviii, operating under the Atlas Development & Support Servicesbrand

KES Kenya Shilling

L-N Form Form to be utilized to facilitate transfer of shares from the London

Register to the Nairobi Register

Law the Companies (Guernsey) Law, 2008 (as amended)

Listing Admission of the Shares to trading on GEMS

Listing Price KES 11.6 per share

LNG Liquefied Natural Gas

London Register the Companys principal share register as maintained by CapitaRegistrars (Guernsey) Limited

Market Cap Market Capitalisation

MPC Monetary Policy Committee

MSCI Index The MSCI World is a stock market index of 1,612 'world' stocks,maintained by MSCI Inc., formerly Morgan Stanley CapitalInternational.

N-L Form Form to be utilized to facilitate transfer of shares from the NairobiRegister to the London Register


12/134

NASI Nairobi All Share Index

NSE Nairobi Securities Exchange

Ordinary Shares ordinary shares of no par value in Atlas Development & Support

Services Limited

PPP Public Private Partnership

Removal Form the form utilized by an investor to request the transfer of shares fromthe Companys share register to its sub-register and/or vice versa

Second Tier Subsidiaries or Sub -subsidiaries

ALK, Ardan Servicos Medicos Lda, Ardan Servicos Logisticos Lda,Atlas Development (Engineering) Plc, Ardan (FacilitiesManagement) Limited, Ardan (Medical Services) Limited, Ardan(Risk Management) Limited, Ardan (Civil Engineering) Limited andArdan (Workforce Accommodation) Limited

Subsidiary Ardan Risk Holdings Limited

UKLA the UKLA department of the Financial Conduct Authority, acting inits capacity as the competent authority for the purposes of Part VI ofFSMA

USD / US Dollar United States Dollar

VAT Value Added Tax

WACC Weighted Average Cost of Capital

Y/Y Year on Year


13/134

1

1.

KEY FEATURES OF THE TRANSACTION

This Listing Statement should be read in full along with other documents available for inspection for fullappreciation of the subject matter.

1.1.

The Listing

Atlas Development & Support Services Limited is pleased to be joining the Nairobi Securities Exchange

(NSE). ADSS has opted to list by way of introduction on the Growth Enterprise Market Segment (GEMS) ofthe NSE in conjunction with the Companys existing listing on AIM.

1.2.

Reasons for the listing

The dual listing on GEMS will create a broader base of shareholders and added liquidity for existingshareholders, provide East African investors with access to the Company and raise the profile of theCompany.

This listing statement will be available for inspection at the offices of Burbidge Capital Limited until and fora minimum of five working days after the date of Listing.

1.3.

Transaction Overview

1The Share Price is subject to ADSS Share Price on date of listing and GBP/KES exchange rate at date of Listing.

Transaction Listing by Introduction on GEMS segment of NSE

Issuer Atlas Development & Support Services Limited

Shares 393,923,366 ordinary shares each of no par value eachcomprising the issued and fully paid up share capital of theIssuer.

No of shares to be issued/ madeavailable for trading

393,923,366 ordinary shares each of no par value

Status Upon Listing, freely transferable Ordinary Shares ranking paripassu with each other.

Trades Ordinary Shares will be fully dematerialized and uploaded intothe CDSC prior to trading. The Ordinary Shares listed on AIMare currently held in certificated form or under the CRESTsystem, (a paperless settlement procedure)

Compliance The Listing is subject to the requirements of the Articles, theLaw, the Capital Markets Act, the Nairobi Securities ExchangeListing Manual and the Central Depositories Act, 2000.

Listing/ Introduction Price KES 11.601per Ordinary Share

Nominated Advisor Burbidge Capital Limited

Market Segment GEMS

Expected Listing Date December 2014


14/134

2

1.4.

Basis for Setting Listing Price

The Listing Price has been determined by the Issuer in consultation with the Nominated Advisor on the basisthe current market price of ADSS on AIM.

1.5.

Trading of shares

All shares will be fully transferrable between AIM and NSE. The transfer of shares from one market to theother will follow the model outlined below:

Nairobi-to-London

The investor will fill in the Removal Form and submit it to their broker in Kenya, who will then verifythe information and deliver the form to CDSC.

CDSC will remove the shares from the investors account and attach the investors statement confirmingthe 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 CDSCRegistrars 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 theshares will be tradable in the destination market.

1.6.

The Company

Atlas Development & Support Services Limited (previously known as African Oilfield Logistics Limited)was formed to acquire and/or invest in businesses which focus on the logistics support industry in respect ofoil and gas exploration and other development projects in sub-Saharan Africa. The Company wasincorporated in Guernsey on 5 December 2012 and its ordinary share capital was admitted to trading on AIMon 25 June 2013 (the Admission).

Subsequent to the Admission, the Board identified Ardan as an appropriate acquisition target and, on 5August 2013, the Company entered into an acquisition agreement pursuant to which the Company agreed toacquire a 49% interest in Ardan for consideration of US$4 million, satisfied by the issue of new ordinaryshares in the capital of the Company.

In addition to this acquisition, the Company was also granted a period of exclusivity with a view to enteringinto an agreement to acquire the remaining 51% interest in Ardan.

Subsequently, on 28 March 2014, the Company entered into a Framework and Option Agreement (theF&O)pursuant to which:

overseen by ADSS, Ardan undertook a corporate and contractual restructuring programme to rationaliseoperational management, and business implementation, planning and reporting; and

Governing Law(of the Listing and this ListingStatement)

Kenyan Law


15/134

3

ADSS was granted a three year conditional call option (the Call Option) to acquire 100% of ALK, aseparate and new shell company in Kenya from which the restructured business of Ardan would beoperated.

In September 2014, the Board exercised the Call Option. Completion of the Call Option was conditionalupon shareholder approval and receipt of all necessary and applicable 3 rd party approvals (in all relevantjurisdictions). 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 termsset out in the F&O.

1.7.

Background on business operations

Founded in 2008, Ardan has developed and recruited a highly experienced operational team and establisheditself as a cost-effective, quality provider of turn-key logistics and support services solutions to internationalcorporate clients operating primarily in the oil & gas and mining sectors in East Africa, achieving consistentgrowth since inception.

Ardans services currently include: Construction and Engineering, Procurement and Logistics, Catering andCamp Management, Safety, Health, Environment and Quality Management, Health and Safety Training,Medical Services, Community Relations, Personnel Placement as detailed in further detail in Part 5 of thisListing Statement.

Ardans focus since incorporation has been on East Africa, with a significant amount of growth leveraged onthe increase in exploration around the Rift Valley area in Kenya. Companies such as Tullow Oil plc andAfrica Oil Corp. have made significant commitments to drilling in this area and have already reportedencountering commercially viable quantities of oil. Against this backdrop of increased exploration activity,the Board believes that there is an urgent and real need for professional, internationally certified and reliablelocal partners who can provide quality oilfield services and logistics to the exploration companies operatingin the region, at a competitive cost.

ADSS continues to maintain an active investment policy and will consider investing in and/or acquiringbusinesses which the Board believes could generate material value for the Company and its shareholders.The Board has well established business contacts and connections in sub-Saharan Africa and intends to usethe experience of working within companies focussed on operating in sub-Saharan Africa to enable them to

identify prospective acquisition and/or investment targets with scope for growth.

1.8.

Key Investment highlights

Competent Management

The management of ADSS is highly qualified and has significant experience in the oil and gas, miningand support services sectors.

High quality clients

ADSS has a high quality clientele having worked, amongst others, with Tullow, WeatherfordInternational, fertiliser producer Yara and potash developer Allana Potash Corp. Most of ADSS clientsare multinational companies exploring for natural resource opportunities in the region.

Few sophisticated playersThe lack of local, sophisticated and experienced support services companies allows ADSS to enjoy lesscompetition and therefore reap the benefit of winning major contracts offered by the oil and gasexploration companies. However, more international logistics players are expected to venture into theregion as more discoveries are made.

Local ownership


16/134

4

The Company believes that increasing its local ownership through the Listing will further demonstrateits commitment to operating in East Africa and give it competitive advantages against internationalservice providers.

1.9.

Key Listing Statistics

Listing price per Ordinary Share KES 11.602

1.10.

Transaction Timetable

Approvals from the NSE November 2014

Deadline for uploading the Ordinary Shares into CDSC December 2014

Dispatch of Listing Statement to shareholders December 2014

Listing and Commencement of Trading at the NSE December 2014

1.11.

Expenses of the Listing

The expenses of the Listing which will fall under the account of the Issuer are estimated at KES 9,855,000.

Professional fees and related costs KES*

Nominated Advisor** 4, 385,000

Reporting Accountants 1,500,000

Legal Advisors 2,600,000

Registrars 250,000

NSE listing fees 250,000

Public Relations 870,000

Total 9,855,000

*These figures may be subject to change. The expenses of the Listing amount to 0.2% of the Company s Market Cap on the Listing Price or KES 11.6 per

Share.

**an exchange rate of KES 87.70 / USD has been applied for the nominated advisor fee of USD 50,000.

1.12.

Lock-In Period for Directors

On 25 September 2014, as a sign of commitment to the growth of the Company, the Company entered intolock-in agreements with each of Mr. Esprey, Mr. Groves, Mr. Lobel, Mr. Monro and Mr. Mann (2014Locked-in Shareholders) pursuant to which each of the 2014 Locked-in Shareholders agreed (subject tocertain limitations discussed below) not to dispose of any Ordinary Shares, and to procure that no personsassociated with the 2014 Locked-in Shareholder who are the absolute beneficial and registered owners ofOrdinary Shares will dispose of any Ordinary Shares for a period of 12 months from the date of Admission.

1.13.

Dividend Policy

ADSS has a policy to pay dividends when permitted by law and subject to the consideration of the results ofits operations, financial position, investment and liquidity requirements, legal reserves and minimum capitalrequirements.

2The Share Price is subject to ADSS Share Price on date of listing and GBP/KES exchange rate at date of Listing.


17/134

5

The declaration, amount and payment of dividends will be recommended, subject to the limitations set forthabove (and any other relevant considerations), by the Board, and approved by majority vote of theShareholders at a general meeting of the Company.

1.14.

Investor Relations Policy

The Company intends to adopt an open policy of full disclosure to investors and has already put measures inplace to facilitate this. It intends to offer semi-annual briefings following the listing (presently anticipated tocoincide with the announcement of annual and interim results).

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 onadvice received from Burbidge Capital;

a limitation of the Companys ability to operate in other jurisdictions; or

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% in 2013 following a 4.6% expansion and a 4.4% expansionin 2012 and 2011 respectively. The World Bank projects that Kenyas GDP will grow 4.7% a year in 2014and 2015 but indicated that the economy has the potential to achieve a higher growth rate of 5% in the nexttwo 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

infrastructural development and the construction sector.

Weak investor confidence resulted in low private investment and subdued GDP growth; drought in the fourthquarter of 2013 depressed growth in agriculture and increased electricity prices, driving up production costsand reducing GDP by an estimated KES 23.8 billion (0.7%) in 2013.3

The World Bank believe that the projected growth of 4.7% a year in 2014 and 2015 will be supported bystronger global economic activity among Kenyas trading partners. This year macroeconomic stabilitywitnessed in 2013 has continued into the first half of 2014 and is likely to be maintained for the rest of theyear. The projections assume that the impact of inadequate rainfall and the insecurity caused by terroristactivity will be limited. 4

The value of Kenyan goods and services Gross Domestic Product (GDP)for 2013 was estimated at USD53.4 billion (4.76 trillion Kenya shillings) in 2013.

The provisional estimates of GDP show that the country's economy expanded by 5.8% during the secondquarter of 2014 compared to 7.2% recorded during a similar quarter of 2013. The growth was mainly

3Reference: Northeasterly bearing Economic Outlook by Deloitte 20144Reference:http://www.worldbank.org/en/country/kenya/publication/kenya-economic-update-economy-facing-headwinds-2014-special-focus-delivering-primary-healthcare-services and World Bank Economic Update 2014
http://www.worldbank.org/en/country/kenya/publication/kenya-economic-update-economy-facing-headwinds-2014-special-focus-delivering-primary-healthcare-serviceshttp://www.worldbank.org/en/country/kenya/publication/kenya-economic-update-economy-facing-headwinds-2014-special-focus-delivering-primary-healthcare-serviceshttp://www.worldbank.org/en/country/kenya/publication/kenya-economic-update-economy-facing-headwinds-2014-special-focus-delivering-primary-healthcare-serviceshttp://www.worldbank.org/en/country/kenya/publication/kenya-economic-update-economy-facing-headwinds-2014-special-focus-delivering-primary-healthcare-services


18/134

6

supported by robust growths in: construction (18.9%); manufacturing (9.1%); financial & insurance (8.3%);information and communication (6.4%); and wholesale and retail trade (6.8%).5

Source: World Bank Database

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 pricesand prudent monetary policy. Inflation averaged 5.7% (7.3% for food) in 2013 and has averaged 7.3% (9.6%for food) in the 12 months ending in September 2014.6

Source: Kenya Bureau of Statistics, Central Bank of Kenya

Consumer Price Index (CPI) rose from 150.60 points in July 2014 to 152.02 points in August 2014. Theoverall rate of inflation increased from 7.67% to 8.36% during the same period. CPI rose from 152.02 pointsin August 2014 to 152.24 points in September 2014. However, the overall rate of inflation decreased from8.36% to 6.6% during the same period due to a decline in the Housing, Water, Electricity, Gas and Other

5Revised Quarterly Gross Domestic Product, October 2014, Kenya Bureau of Statistics6Source: Kenya National Bureau of StatisticsThe Central Bankhttps://www.centralbank.go.ke/index.php/balance-of-payment-statistics/inflationrates

0.0

2.0

4.0

6.08.0

Percent

Year

Kenya Real GDP Growth (%)

Kenya RealGDP Growth(%)

0

2

4

68

10

Percent

Months

Kenya Annual Inflation Rate (%)

Kenya AnnualInflation Rate(%)
https://www.centralbank.go.ke/index.php/balance-of-payment-statistics/inflationrateshttps://www.centralbank.go.ke/index.php/balance-of-payment-statistics/inflationrates


19/134


20/134


21/134

9

Sources: World Bank Database

Mozambican annual consumer inflation slowed to 2.75% in June of 2014 from 2.9% recorded in the previousmonth. A year earlier the annual inflation rate was 4.86%. Upward inflationary pressures came mostly fromhigher prices of education (5.85%) and food. The inflation rate in Mozambique was recorded at 2.23% inSeptember of 2014. Inflation has gradually declined over the last 12 months having recorded 4.42% in

October 2014. The monetary policy committee cited that the behaviour of inflation is explained by thegreater offer on the domestic market of fruit and vegetables, reflecting the seasonal impact of the cool periodof the year, plus the stability of the metical on the exchange market, supported by a greater availability offoreign currency.11

0

1

2

3

4

5

Pe

rcentage

Month

Mozambique Annual Inflation Rate (%)

Mozambique AnnualInflation Rate

Source: Mozambique's National Statistics Institute (INE)

(ii)Interest rates

At its August 9th, 2014 meeting, Mozambican Monetary Policy Committee decided to hold the benchmarkinterest rate at 8.25%, (the same rate applied since October of 2013), citing that the recent moderatedinflation outlook is meeting the macroeconomic targets for the year. Despite the central bank holding its owninterest rates steady for the past year, commercial banks interest rates still remain high. Average interest ratescharged by the banks to their clients in December 2013, for loans maturing in a year, was 19.80%, only

11BNI Development Bank of Mozambique Financial Markets Magazine-Data sourced from the National Institute of Statisticshttp://www.ine.gov.mz/

0

5

10

15

2005 2007 2009 2011 2013

Pe

rcentage

Year

Mozambique Inflation Rate (%)

Inflation
http://www.ine.gov.mz/http://www.ine.gov.mz/http://www.ine.gov.mz/


22/134

10

0.45% lower than in November 2013. These rates have typically remained quite high throughout this yearAvailable data shows that the average interest rate on bank loans fell slightly from June 2014, but was stillhigh at 20.8% in July 2014.12

Source: Bank of Mozambique

(iii)

Exchange rate

The Metical has remained relatively stable against the United States Dollar (USD) since the beginning of2013, losing just 1% up to September 2014. This helped control the cost of fuel imports, while the currencys15.7% appreciation against the South African Rand in the same period contained inflationary pressuresderiving from food and other imported consumer goods. 13

Currency Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14

Dollar 29.83 31.5 31.53 31.04 31.25 31.29 30.76 30.13 30.32

SA Rand 2.75 2.86 2.93 2.94 3.00 2.93 2.88 2.82 2.76

Source: Bank of Mozambique

Since the start of 2014 the Metical has depreciated against both the Dollar and the South African Rand. TheMozambique Metical decreased to 30.32 in September from 30.13 in August of 2014 but recovered slightlyagainst the South Africa Rand in September.

2.3. Ethiopia

2.3.1

Economic Growth

The Ethiopian economy has experienced strong and broad based growth over the last 3 years, averaging 10%per year between 2011 and 2013, compared to the regional average of 6.8%, and is forecasted to grow at anaverage of 8.2% for the next 5 years between 2014 and 2019, according to the IMF World EconomicOutlook Database, October 2014.

12BNI Development Bank of Mozambique Financial Markets MagazineData sourced from Bank of Mozambiquehttp://www.bancomoc.mz/PEstudos_en.aspx?id=P&ling=en

13BNI Development Bank of Mozambique Financial Markets MagazineData sourced from Bank of Mozambiquehttp://www.bancomoc.mz/Mercados.aspx?id=tcmd&ling=pt

19.0019.5020.0020.5021.0021.50

Percent

Month

Average Interest rate for a Loan with 1 yr

Maturity
http://www.bancomoc.mz/PEstudos_en.aspx?id=P&ling=enhttp://www.bancomoc.mz/Mercados.aspx?id=tcmd&ling=pthttp://www.bancomoc.mz/Mercados.aspx?id=tcmd&ling=pthttp://www.bancomoc.mz/PEstudos_en.aspx?id=P&ling=en


23/134

11

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%, 3.1% and 2.1%, respectively).Construction activity was the major driver of the non-manufacturing industry sector, with a growthcontribution of 1.4% 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 bythe governments current five-year development plan (2010/11-2014/15) - known as the Growth andTransformation Plan (GTP) - and increased domestic demand largely driven by a growing population. TheGTP is geared towards fostering broad-based development in a sustainable manner to achieve the countrysMillennium Development Goals. Key goals of the GTP include:

Rapid economic growth, targeted for 11% 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 insugar, textiles, leather products and cement;

Foreign exchange reserves are projected to increase and the Birr is to depreciate by 5% against thedollar each year;

The roads network should increase from 49,000 km to 64,500 km by 2015;

Power generation capacity will increase from the current 2,000 MW to 8,000 MW, and the numberof customers from the current two million to four million by 2015;

Construction of 2,395 km of railway line.15

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 isexpected to finance 83% of the construction with the remaining 17% being funded by the Ethiopian state.

143RD Ethiopia Economic Update Strengthening Export Performance Through Improved Competitiveness: June 2014 -Real Sector15World Bank Ethiopia overview-http://www.worldbank.org/en/country/ethiopia/overview-

0

2

4

6

8

10

12

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Percentage

Year

Ethiopia Annual GDP Growth Rate (%)

Actual

Estimate
http://www.worldbank.org/en/country/ethiopia/overview-http://www.worldbank.org/en/country/ethiopia/overview-


24/134

12

Investment in road infrastructure is expected to support the countrys sustainable growth achieved during thepast decade. 16

In May 2014, Ethiopias rating by Fitch, Moodys and Standard and Poors agencies were B, B1 and B/Brespectively, reflecting a stable outlook for the economy. These ratings were driven by Ethiopias strongrecord of economic growth in the last decade and place Ethiopia at a position to tap into the global markets tomobilize 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 theSeptember 2014 general y/y inflation has increased by 5.6% as compared to September 2013. The 5.6% rise

in general inflation rate was due to an increase in yearonyear food inflation by 3.6% in September 2014 as

compared to September 2013 and an increase in the Non Food inflation by 7.8% in September 2014 ascompared 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 exportedcommodities) in Addis Ababa exhibited a much faster decline in inflation than goods which are notinternationally traded. In addition, a tightening of monetary policy has also contributed to lower inflation.For instance, a strong fiscal stance, particularly measures to improve tax administration and enforcement,contained the fiscal deficit at 2% of GDP in 2012/13 compared to 1.2% of GDP in 2011/12.

0

2

4

6

8

10

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

Month

Ethiopia Annual Inflation Rate (%)

Ethiopia AnnualInflation Rate

Source: The Federal Democratic Republic of Ethiopia Central Statistical Agency/ BC Analysis

(ii)Interest Rates

16Source: Stratlink Global March 2014 Africa Market Report-page 24 Economic Outlook17https://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=3918The Federal Democratic Republic Of Ethiopia Central Statistical Agency: September 2014-
http://www.standardandpoors.com/ratings/sovereigns/ratings-list/en/ap?sectorName=null&subSectorCode=39https://www.moodys.com/research/Moodys-assigns-B1-issuer-ratings-to-the-Government-of-Ethiopia--PR_298848http://www.reuters.com/article/2014/05/09/fitch-rates-ethiopia-b-outlook-stable-idUSFit69988020140509http://www.standardandpoors.com/ratings/sovereigns/ratings-list/en/ap?sectorName=null&subSectorCode=39http://www.standardandpoors.com/ratings/sovereigns/ratings-list/en/ap?sectorName=null&subSectorCode=39http://www.reuters.com/article/2014/05/09/fitch-rates-ethiopia-b-outlook-stable-idUSFit69988020140509https://www.moodys.com/research/Moodys-assigns-B1-issuer-ratings-to-the-Government-of-Ethiopia--PR_298848


25/134

13

Lower inflation, in turn, contributed to lower real interest rates. The maximum lending rate has been positivein 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% and 11.88%,respectively, both on quarterly and annual basis. The weighted average time deposit rate, registered annualincrement of 3.0% in Q1 of 2014, and increased by 5.2% in Q2 of 2014, but remained unchanged in Q3 of2014. 19

(iii)

Exchange rates

In the interbank foreign exchange market, the average official exchange rate of the Birr depreciated by 5.6%compared to last year same period and reached Birr 18.5331/USD. Likewise, the parallel market averageexchange rate was depreciated by 9.2% relative to the rate a year ago. Consequently, the premium betweenthe official and parallel market rates in the first quarter widened to 9.0% from 5.4% in same quarter last year.20

During Q2 2014, the average official exchange rate of the Birr depreciated by 4.8% and 1.1% compared tolast year same quarter and the preceding quarter, respectively, to reach Birr 18.94/USD. 21The Ethiopian Birrincreased to 19.81 in July from 19.59 in June of 2014.

19National Bank of Ethiopia Quarterly Bulletin Q1, Q2, Q3 2013-14-20National Bank of Ethiopia Quarterly Bulletin Q1 2013-14-21National Bank of Ethiopia Quarterly Bulletin Q2 2013-14-


26/134

14

3.

OVERVIEW OF THE KENYA EQUITY MARKET

In 2013 the listed equities market, the NSE closed the year as the top performing African bourse according tothe MSCI index (an index created by MSCI that is designed to measure equity market performance), and theMSCI frontier markets index. Stability in the macro-economic environment, the peaceful outcome of the2013 general election and significant corporate actions over the year bolstered investors confidence inKenyas listed equities market. TheNairobi All Share Index (NASI)rallied 44.1% during the year closingat 136.65 points. In 2013, equity turnover climbed 76.7% to a high of USD 1.8bn as a result of increasedforeign investor participation. Net foreign inflows stood at USD 392.60m (previous year, USD 268.81m. Inaddition, 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 othernotable actions in the market, was the delisting of Access Kenya Group following a successful take-over bidby Dimension Data Holdings (42.0% premium), and the delisting of CMC holdings following the takeoverby 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 thebourses position as one of Kenyas most dependable investment options. Market capitalisation, the value ofall listed stocks, rose 10% 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 dropped0.9% to stand at 4885 points even as the NASI rose 10% 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% to close at163.45 points (16.7% YTD). In the last week of September 2014, the exchange showed signs of slowingdown driven by a buyers market as investors moved to lock in gains made during the bull-run. The market isexpected to remain vibrant especially driven by investor excitement around corporate actions


27/134

15

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 comingin the last five years. Potential hydrocarbon basins across the region are currently the subject of activeinterest and the Directors expect the sector to be a key driver of the economic growth of East Africa for manyyears once these projects commence.

East Africa has continued to hit the oil and gas industry headlines and it seems likely that this will continuefor 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 atHoima. In Tanzania, continuing exploration has added to the countrys offshore gas reserves and a newlicensing round was launched in October. Mozambique is expecting FID for its huge offshore gas reservesduring 2014 with plans to construct a 4 train LNG plant with a 20 million tonne per year capacity. Kenya hasseen further exploration success with Tullow indicating total oil reserves of approximately 600 millionbarrels in its onshore blocks in Northern Kenya and further offshore drilling is planned for Kenyas exclusiveeconomic zone in 2014. Whilst Ethiopia has so far enjoyed only limited exploration success it does havepotentially commercial gas reserves and promising geology. Interest in this country is expected to increase inthe coming months.22

As exploration gains momentum, investors will rely on local governments to develop basic infrastructuresuch as rail, roads, healthcare facilities, housing, real estate and retail space. Kenya is characterised by asignificant 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 asleepy backwater for the upstream Oil and Gas industry, but the discovery of significant quantities of oil inUganda in 2006 ushered in a bonanza. In fact, more hydrocarbons have been discovered in East Africa in thepast two years than anywhere else. The onshore oil discoveries in Uganda were followed by discoveries inKenya. 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 toharness the power of the industry to benefit their people. At the same time oil and gas companies arefocusing 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 ofinfrastructure development. Kenya is further progressed than Uganda, Tanzania and Ethiopia, althoughEthiopia is making some noteworthy developmental inroads. Despite the inherent complexity in developingregional assets, with big projects being worked on or planned being cross-border by nature, there is a senseof collaboration and strategic integration in East Africa. There also appears to be significant activity beinginitiated 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 isdominating the share of projects after which energy and power feature strongly. The balance of projects inany one sector, in terms of the number thereof, is minimal, although oil and gas projects are beginning tofeature.

22The Deloitte Guide to Oil and Gas in East Africa, 201431 Deloitte on Africa African Construction Trends Report 2013


28/134

16

East Africa Capital Expenditure Analysis:

Source: African Construction Trends Report 2013 by Deloitte

According to the survey, government owns a dominant 72% of projects in East Africa while Europe/USholds 11% in project ownership. International DFIs lead the funding charge at 24% with China funding 17%of projects in the region, after which Europe/US funding comes into play for 13% of projects. Africa DFIsare funding 11% of projects, followed by foreign institutions, which fund 9%. Of the sample, 71% arepublicly funded, 28% privately funded and 1% are being funded through PPPs.

European/US construction firms are responsible for the highest number of projects (37%) while Chinesefirms are building 19% of projects underway. Interestingly, Indian construction firms are involved in powerplant 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 miningoperations in Tanzania, and potash developments in Ethiopia represent significant opportunities for theEnlarged Group to target.

In particular, there is increasing demand from western companies operating in the region for professionalsupport service providers, experienced in providing services in Africa.


29/134

17

5.

THE BUSINESS

5.1

Historical Background

Ardan was formed in 2008 by Mike Pelham, initially focusing on providing engineering and constructionservices primarily to companies in the oil and gas sector in sub-Saharan Africa. The business grew bytargeting niche opportunities and is now considered by the Board to be a leading provider of quality turn-keysupport services and logistics solutions to international companies operating on the African continent. Ardanhas established an international client base and currently services its clients at numerous sites across EastAfrica.

5.2

Products and Service Offering

Ardan provides a range of products and services, from the provision of remote workforce accommodation tofacilities management and medical support, as described in more detail below. As indicated above, Ardanservices multiple industry sectors and has been involved with projects ranging from oil and gas explorationand drilling programmes in Sudan, Somalia, Kenya and Ethiopia, to the largest geothermal project in the riftvalley and potash and gold development in the Danakil region of Northern Ethiopia.

ALK was established in 2014 to provide a new divisionalised structure through which Ardan will beoperated. At present certain of Ardans existing contractsare being novated to ALK whilst new business is

being taken on directly through ALK.ALKs tailored turn-key offering is delivered through three main divisions: Ardan Technical; ArdanServices; and Ardan Logistics. The seven key service lines of ALK are described below by division:

5.2.1

Technical

Civil engineering and infrastructure development

Ardan has the ability to deliver engineering solutions and infrastructural development projects across anumber of terrains in Africa. Ardan has experience in managing complex operations from initial planningstages through to site rehabilitation including road and air strip construction projects, well site andassociated infrastructure construction and the construction of bridges, clinics, schools and water managementinstallations.

The technical team includes experienced professionals in the fields of civil engineering and surveying, designand fabrication, project management, logistics and environmental management.

For the purposes of civil engineering and infrastructure development projects, Ardan maintains its own fleetof 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 specificinfrastructure.

Workforce accommodation

Ardan supplies multiple styles of accommodation to its clients, ranging from modular containerized units totented fly camps, all of which are tailored to its clients specific requirements. Ardans containerisedaccommodation solutions provide fully air conditioned modular workforce accommodation units, plumbedwith en-suite shower and lavatory facilities, with electricity and furnished with communication and televisionfacilities. Ardan can also provide its clients with executive tent solutions that are fully air-conditioned, as acost 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.


30/134

18

5.2.2

Services

Facilities management

Ardan has experience in providing facilities management and catering services to international and Africabased companies. Ardan employs experienced and qualified camp management, catering and housekeepingstaff 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 refreshmentson demand. Menus are varied and planned with clients to ensure that the appropriate food is prepared tosatisfy the clients tastes and specific requirements. Fresh produce is regularly delivered to ensure highquality and nutritious meals.

In addition to catering services, a laundry service is provided and a team of cleaning personnel ensureaccommodation and other camp facilities are maintained and serviced to a high standard. All Ardan siteshave 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 maintenancepersonnel 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 andmedical personnel, as well as evacuation planning and execution. In addition, Ardan can arrange countrymedical support, hospital, theatre admissions, doctor and dental or medical specialist appointments andconsultations.

The medical division benefits from having worked with a number of clients, predominantly in the oil and gasindustry, where its local understanding, region specific treatment protocols, and insight into medicalfacilities, is particularly valued. This division is compliant with the regulatory requirements necessary tooperate turnkey medical solutions within the countries of operation.

Ardan employs numerous full time medical staff including General Practitioners, Intermediate and AdvancedLife Support (ALS) Paramedics, Registered Clinical Officers, Registered General Nurses and CommunityNurses, 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 localRegistered Clinical Officers (RCO) and EMT Nurses who utilise their understanding of local culturalissues and languages to provide additional medical support. Together with the ALS Paramedics, the RCOsplay a key role in training the local recruits on-site on health and hygiene and preventative health caremeasures.

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 byparamedic support personnel, qualified and experienced in Advanced Life Support and Intermediate LifeSupport. 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 disastersituations 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. Ardansestablished relations with national security agencies combine with Ardans team of skilled security expertsand permanent on the ground presence to ensure a quality service.


31/134


32/134

20

5.4Group Structure

* In process of being incorporated

**Dormant company


33/134

21

5.5Board of Directors

The Board consists of six Directors, each with significant relevant experience. Brief biographical details of the Directors are set out below.

Name Designation Age Nationality Profile Business Address

Ian Mann Non-ExecutiveChairman

56 British Since 2003, Mr. Mann has been the President of Meridian GlobalEnergy and Resources Fund Ltd, a BVI registered fund manager withtwo alternative investment funds primarily investing in mining andoil and gas companies. Prior to that, Mr. Mann held seniormanagement and partner positions with several Bermuda companies.Since 1997, he has served as a non-executive director of twoCanadian exchange listed mining companies, both now merged intoother entities and was a non-executive Director of PetroMagdalenaEnergy Corp. from 2011 to 2012 when the Group was sold to PacificRubiales Energy. Currently, he serves as a non-executive Director of

Natasa Mining Limited, listed on AIM and Tango Gold Mines Inc.listed on the TSX-V. Mr Mann holds an Honours BusinessAdministration degree from The University of Western Ontario inLondon, Canada.

Richmond House, St JuliansAvenue, St Peter Port,Guernsey GY1 1GZ

Carl Esprey ChiefExecutiveOfficer

35 Italian Mr Esprey, who qualified as a Chartered Accountant and CharteredFinancial Analyst, has built an expansive career in the naturalresource investment and development sector. After beginning hiscareer at Deloitte in Johannesburg in 2001, Mr Esprey joined BHPBilliton in 2004 as an analyst focussed on mergers and acquisitions.

After four years at BHP Billiton, Mr Esprey used his expertise in theresources industry to move into equity investment and joined GLGPartners in London in 2008, where he focussed on natural resourcesinvestments.

3rd Floor, Kalamu HouseGrevillia GroveWestlands, NairobiKenya

Barry Lobel Chief FinancialOfficer

35 British Mr Lobel is a qualified accountant with extensive experience infinance and emerging markets. He joined AOL in April 2014 having

previously been Director of Finance at Partners Capital LLP, a $13billion global private investment office. In addition, he worked inFinance and Private Equity at RP Capital Group, an emergingmarkets hedge fund, and previously founded and sold AvocadoTrading, a retail business across Southern Africa.



34/134

22

Lachlan

Monro

ChiefOperatingOfficer

41 British Mr Monro joined AOL in January 2014 having previously beenPrincipal and COO of Blue Hackle Group LLC, a leadinginternational risk management and support services companyoperating in US, Middle East and East Africa. He was also a directorat Kroll Associates and is a former British army officer.


Andrew

Groves

ExecutiveDirector

46 British Mr Groves has significant experience in operations management inSouthern and Central Africa and is a director of a number of publicand private companies, including companies in Zambia and

Zimbabwe. Mr Groves also has experience of introducing severalAfrican focussed companies to AIM. Mr Groves currentdirectorships include his role as CEO of Agriterra Limited, CEO ofSable Mining Africa Limited and non-executive director of AfricanPotash Limited. He was born in Harare, Zimbabwe and educated inZimbabwe and South Africa.


Jonathan

Wright

Non-ExecutiveDirector

43 British Mr Wright is a corporate finance director at FirstEnergy Capital, aspecialist oil & gas investment bank with offices in Calgary andLondon. Prior to joining FirstEnergy, Mr Wright spent over 13 yearsat Seymour Pierce, latterly as head of corporate finance. During thattime, Jonathan led the advisory teams on dozens of financing, M&Aand other transactions, including numerous IPOs and fundraisings onAIM and the Official List and several hostile and recommendedtakeovers. Prior to Seymour Pierce, Mr Wright spent five years in

private practice as a corporate lawyer where he specialised in

advising small and medium sized public and private companies.



35/134

23

5.6Senior Management

Name Designation Age Nationality Profile Business Address

Brendan Scott Projects Director 39 SouthAfrican

Mr Scott joined AOL in November 2013 and is a highlyexperienced logistics operator having acted as an independentcontractor for international companies operating in Africa forover fifteen years. Mr Scott founded and operated a civilengineering and construction company based in Kenya andSudan and has developed a vital skill set and understandingfor operating in Africa.


Nick Arnold Regional Director 45 British Nick Arnold has more than 20 years experience of providingsupport services. From establishing turnkey solution businessunits to leading and managing operations. He hassuccessfully delivered on large scale, multi-million dollar

projects and programmes within both the commercial andgovernment sectors throughout the Middle East, Central Asiaand Africa.


Colin Atkinson Quartermaster 49 British Colin has over 30 years of experience in providingexpeditionary logistics in the British Army. He has fulfilledroles at every level, and provided logistics support at everystage along the length of the supply chain, from frontlinereceipt and distribution to coordinating international dispatch.He has extensive experience in negotiating contracts and

providing robust logistics networks in numerous jurisdictions

and is very accustomed to supporting operations across awide spectrum of logistics services; from life support tomedical facilities, from international container shipping tocamp construction and training logistics teams.


Gary Jones Field OperationsManager

55 British Gary has previously been employed as Deputy Commanderof Dhekelia Garrison which included responsibility not onlyfor serving soldiers but also families and MoD civilians. Heholds an MCGI City & Guilds (Masters Degree Equiv)Management & Leadership (Membership). City & Guilds

Numeracy Skills level 2 (distinction) and City & GuildsCommunications Skills level 2. He also has a diverse



36/134

24

portfolio of military qualifications including: Army(Advanced) Educational Promotion Certificate, EquipmentCare Management, Facilities Management, Performance forManagement for Line Managers and CountersigningOfficers, Logistic and Budget Fund Manager.

Paul Jordan Head of ServicesDivision

45 British Paul has had a 25 year career with the British Armyspecialising in expeditionary logistics in harsh environmentsworldwide.


Ashley Fuller Head of TechnicalServices Division

46 British Ashley has had a 28 year military career with progressiveexperience up to engineering programme management. Hewas previously involved in producing the designs andspecifications for all infrastructure to support 16,000

personnel at Camp Bastion in Helmand Province, and theadjoining international airport - the UKs fourth busiestairfield, and project managed 100M development ofLaikipia Airbase in Kenya, and 5.5M FCO/ DFiD housingconstruction task in Sierra Leone. He is currently studyingMBA in Strategic Management (at dissertation phase), andholds a degree in BSc (Hons) Engineering Management(Construction), First Class, 2013.


5.6.1 Changes in Senior Management

There are no changes in senior management planned or expected during the twelve (12) months following the proposed listing of shares.


37/134


38/134


39/134


40/134

28

(a) the Companys auditors confirming in writing that in their opinion such variation or adjustment is fairand reasonable; and

(b) such variation or adjustment not resulting in Ordinary Share being issued on the exercise of an optionwhich 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 Sharesthen 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 tosatisfy 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 ormore than 50,000 Ordinary Shares per calendar month. Ordinary Shares issued pursuant to the exercise ofan option granted under the Share Option Scheme shall be issued to a nominee appointed by the Companyfor the purposes of ensuring compliance with the foregoing restrictions and ensuring an orderly market inthe Ordinary Shares.

vii. Limits

The maximum number of Ordinary Shares which may be issued on the exercise of options shall notexceed in aggregate the number of ordinary shares which represent 10% in number of the Ordinary Sharesin 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 theShare Option Scheme provided that such variation is not inconsistent with the provisions of the ShareOption Scheme and, inter alia, does not operate to vary adversely the terms of any options granted priorto 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:


41/134

29

1.

Name (Directors

only)

Total No. of

Option De tails of Options

Exercise

Price (Pence) Option Exercise Period

Offer

Price

(Pence)

Listing

Price

(Pe nce ) Variance

Carl Esprey 10,000,000 2,000,000 8.5

For a period of 5 years from the date on which the

Companys share price first reaches 20p 20 8.13 11.87

2,000,000 8.5



2,000,000 8.5



2,000,000 8.5For a period of 5 years from the date on which theCompanys share price first reaches 35p 35 8.13 26.87

2,000,000 8.5



Lachlan Monro 10,000,000 2,000,000 8.5



2,000,000 8.5



2,000,000 8.5



2,000,000 8.5



2,000,000 8.5



Barry Lobel 5,000,000 1,000,000 8.5



1,000,000 8.5For a period of 5 years from the date on which theCompanys share price first reaches 25p 25 8.13 16.87

1,000,000 8.5



1,000,000 8.5



1,000,000 8.5



Directors / Senior Management


42/134

30

2.

Total No. of

Option De tails of Options

Exercise

Price Option Exercise Period

Offer

Price

(Pence)

Listing

Price

(Pe nce ) Variance

2,500,000 1,000,000 10p

For a period of five years from the first anniversary

of the date of grant

750,000 15p



750,000 20p



2,500,000 2,500,000 8.5p 7 April 2015 7 April 2020

1,000,000

In five equal tranches

after 6 months 10p



10p



10p



10p



10p




after 18 months 10p



10p



10p



10pFor a period of 5 years from the date on which theCompanys share price first reaches 35p 35 8.13 26.87

10p




after 30 months 10p



10p



10p



10p



10p



Senior Operational Management Team


43/134

31

3. Consultants

Total No. of

Option Details of Options

Exercise

Price Option Exercise Period

Offer

Price

(Pence)

Listing

Price

(Pence) Variance

3,000,000 3,000,000 8p



5,000,000 5,000,000 8p For a period of five years from 25 September 2014.

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


44/134

32

5.10

Corporate Governance

5.10.1

Corporate Governance Practices

Governance is the means by which the affairs of an institution are directed and managed therebypromoting corporate accountability and business aptness to achieve an optimal shareholder value, whilstsimultaneously taking into consideration the interests of other stakeholders. It is premised on the

principles of integrity, accountability, prudence and openness.

The Board is at the core of the Groups system of corporate governance and is ultimately accountable andresponsible for the performance and affairs of the Company. Good corporate governance is regarded ascritical to the success of the business of the Group and the board is unreservedly committed to applyingthe fundamental principles of good governancetransparency, integrity, accountability and responsibility- in all dealings by, in respect of and on behalf of the Group.

The Company holds regular board meetings and the Board will be responsible for formulating, reviewingand approving the Groups strategy, budgets and acquisitions.

The Board has an audit committee (the Audit Committee), a remuneration committee (theRemuneration Committee) and a nomination committee (the Nomination Committee) with formallydelegated responsibilities.

The Audit Committee comprises of at least two non-executive members of the Board, at least one ofwhom is independent. The Audit Committees main functions will include, inter alia, monitoring theintegrity of the Groups financial statements(including its annual and half yearly reports and any otherformal announcement relating to its financial performance), making recommendations to the Board inrelation to the appointment of the Companys auditors, overseeing the approval of their remuneration andterms of engagement and assessing annually their independence, objectivity and qualifications and theeffectiveness of the audit process. Initially, a non-executive director (not being the Chairman) will act aschairman for the committee and at least one other non-executive director will also be a member of thecommittee.

The Remuneration Committee comprises of at least two non-executive members of the Board, at least oneof whom is independent. The Remuneration Committees main functions include, inter alia, determining

the framework or broad policy for the remuneration of the Companys Chairman, the Companysexecutive directors and other members of the executive management, the design of all share incentiveplans and the determination each year of individual awards to executive directors and other seniorexecutives thereunder and the performance targets to be used. Initially, a non-executive director (notbeing the Chairman) is acting as chairman of the committee and at least one other non-executive directoris also a member of the committee.

The Nomination Committee comprises of at least two non-executive members of the Board, at least oneof whom is independent. The Nomination Committees main functions include, inter alia, regularlyreviewing the structure, size and composition (including the skills, knowledge, experience and diversity)of the Board and making recommendations with regard to any changes . Initially, a non-executive director(not being the Chairman) is acting as chairman of the committee and at least one other non-executive

director is also a member of the committee.The Company has adopted a share dealing code for Directors and employees in accordance with the AIMRules and will take proper steps to ensure compliance by the Board and relevant employees. The sharedealing code will apply equally to Ordinary Shares listed on GEMS and AIM, following the Listing.

5.10.2

Composition of the Board of Directors

The Board includes a fair balance between executive and non-executive Directors so that no individual orcompany of individuals interests will dominate the Boards decision making process. The followingissues are considered in determining the Boards composition:


45/134

33

Attaining a desirable ratio of and balance between the number of executive and non-executivedirectors.

Ensuring that the Board collectively contains the skills, experience and mix of personalitiesappropriate to the strategic direction of the Company and necessary to secure its soundperformance.

Experience, knowledge, skills and personal attributes of current and prospective Directors in

relation to the needs of the Board as a whole.

Irrespective of a Directors special expertise or knowledge and regardless of whether a Director is anExecutive or Non-Executive Director, all members of the Board recognize that they are collectivelyresponsible to Shareholders for the performance of the Company.

The Board currently comprises of six Directors (four executive and two non-executive), and reflects ablend of different experiences and backgrounds.

5.10.3

Board Effectiveness and Evaluation

Each director prepares sufficiently for meetings by carefully considering board papers and attachmentsthereto, and where necessary seeking clarifications. Where a director is unable to attend a meeting, eachdirector undertakes to communicate through the Chairman or the Chief Executive Officer any concerns or

issues they would wish considered.

At regular intervals, not exceeding twelve months, the Board of Directors shall undertake an evaluation ofits functioning as a collective agency and as individual directors. Where necessary, the Board may obtainthe services of an external facilitator to guide the evaluation.

There are no formed arrangements or understandings with the majority shareholder, customers, suppliersor others, pursuant to which any person was selected as a Director or member of senior management.

5.10.4

Qualification Remuneration of the Directors

A director need not be a member. A Director who is not a member shall nevertheless be entitled to attendand speak at shareholders meetings.

The Directors (other than alternate Directors) shall be entitled to receive by way of fees for their servicesas Directors such sum as the Board may from time to time determine.

Any fees payable may be distinct from or compose part of any salary, remuneration for any office orother amounts payable to a director pursuant to any other provisions

The Directors shall be entitled to be repaid all reasonable travelling, hotel and other expenses properlyincurred by them in or about the performance of their duties as Directors, including expenses incurred inattending meetings of the Board or any committee of the Board or general meetings.

5.10.5

Responsibilities of the Board

The Board specifically exercise leadership, enterprise, integrity and judgment in directing the affairs ofthe Company in order to achieve continuing prosperity for the Company and its Shareholders, and shall at

all 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.

Discuss and approve strategic plans and annual budgets. Monitor Managements implementation of the strategic plans and financial objectives as defined

by the Board.

Continually monitor the exercise of delegated power by Management.


46/134

34

Ensure that a comprehensive system of policies and procedures is in place, and that appropriategovernance structures exist to ensure the smooth, efficient and prudent stewardship of theCompany.

Ensure that the business of the Company is managed with a view to ensuring that the Company isethical 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 fromtime to time.

Identify key risks, opportunities and strengths relating to the Company.

Ensure that the Companys organizational structure and capability are appropriate forimplementing the chosen strategies.

Set policies on internal control and obtain regular assurance that the system is functioningeffectively and is effective in managing risks.

Nominate board members who will add value to the board processes and arrange for theirinduction.

Appoint the management, senior staff, external auditors and other consultants.

Discuss, agree and approve annual accounts and reports. Communicate key policies and strategy issues to senior management.

Identify all stakeholders and ensure effective communication with Shareholders and stakeholders.

5.10.6

Board Committees

The Board has established the following three (3) committees, whose mandates and terms of reference arespelt out as follows:

i. Audit committee

The Audit Committee is a standing committee of the Board and its purpose is to assist the Board inassessing the integrity of financial statements and the effectiveness of financial reporting, and to conductrisk management assessment. The composition of the committee is as follows:

Jonathan Wright (Chairman) Ian Mann

Representative of Burbidge Capital (Nominated Advisor)

ii. Remuneration committee

The Remuneration Committee is a standing committee of the Board and its purpose is to assist the Boardof ADSS in determining the framework or broad policy for the remuneration of the Companys directorsand members of the executive management, the design of all share incentive plans and the determinationeach year of individual awards to directors and other staff thereunder and the performance targets to beused.

The composition of the committee is as follows:

Jonathan Wright (Chairman) Ian Mann

iii. Nomination committee

The Nomination Committee is a standing committee of the Board and its purpose is to assist the Board ofADSS in respect of matters relating to composition of the Board.

The composition of the committee is as follows:

Jonathan Wright (Chairman)

Ian Mann


47/134

35

In addition to the Audit and Remuneration committees, the Board intends to monitor the development ofthe Group and will, subject to relevant advice, consider establishing additional committees (with authorityin respect of topics such as risk management, finance, investments and governance) as are necessary andcommensurate 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

5.10.7

Other Important Information

i.

Director emoluments and benefits

The aggregate directors emolumentsand benefits for Atlas Development & Support Services for the fullyears ended 30 June 2013 and 2014 are as follows:

2014$000

2013$000

Directors Fe

Documents

Atlas Development and Support Services - Listing Statement.pdf