Loss Making Atlas Development focuses more on Ethiopia and Tanzania as activity in Kenya reduces

Nairobi securities exchange listed company Atlas Development has said it is now eyeing the Ethiopian and Tanzanian markets as oil exploration in Kenya and the Turkana region witnesses a significant reduction.

 

According to the company business in Ethiopia has been improving with contracts in the potash project where developers have been negotiating and have renewed as they look to advance their exploration and mining operations. 

“The Ethiopian business pipeline is also improving in the natural resource and infrastructure spaces.  With a positive market dynamic and a growth in requirements for international standard support services the Board is hopeful that the Ethiopian operations will generate positive returns,” the company says in a statement. 

 

The company adds that despite agreements in place to provide support services across the delivery spectrum in Kenya revenue visibility is not easy to predict at this time.

 

Atlas development adds that although tenders are being offered by a number of parties throughout the East African region the Board believes that the terms being demanded from service providers are not sustainable. 

“Indeed in a number of recent cases contracts were agreed but terms then adjusted by the clients, causing the work to be unprofitable and therefore unattractive to the Company,” the statement continues.

 

Atlas also says it has conducted a full review of operations in Kenya and dramatically reduced costs and overheads to preserve the balance sheet whilst maintaining a presence to ensure the capabilities are in place to deliver these potentially transformational projects when the time arises or market sentiment changes. 

 

In Tanzania, although the Company has a number of small contracts, the operations are heavily centred on the oil and gas sector where, as in Kenya, the general environment remains challenging.

 

The company continues operations continue in Western Sahara. 

 

Meanwhile the Company reported comprehensive losses during H1 2015 of US$2.6 million, which included exchange rate losses of US$0.7 million (resulting from the 9% fall in the USD:KES exchange rate which heavily impacted the USD equivalent cash balances which were held in KES) and non-recurring restructuring costs of US$1.1 million.

 

Looking forward Atlas Development adds the Board has focused on the preservation of capital through prudent cost cutting and streamlining initiatives. The board adds that it is in discussion with a number of asset financing banks with regards to potential acquisitions and expansion opportunities. 

“The conclusion of any transaction due to market dynamics and the current valuations is more challenging but the Board, as I said, believes there remains opportunity.”