Atlas Development & Support Services : Update and Establishment of Industrial Division

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

19 November 2015

Atlas Development & Support Services Limited

('Atlas' or the 'Company')

Trading update, establishment of industrial division and acquisition

Atlas (AIM, NSE: ADSS) is pleased to announce that it 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 (the 'Acquisition Agreement') to acquire East Africa Packaging Holdings Limited ('EAPH'), a company established to build a new state-of-the-art glass bottle manufacturing facility 45 kilometres north of Addis Ababa, Ethiopia (the 'Chancho Project'). The Company is also pleased to provide a trading update. A conference call will be hosted by the Company later today at 11.00am UK time to discuss these developments. Further details on the call can be found below.

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.'

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

Trading update and outlook:

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. As a result the board implemented initiatives aimed at diversifying the Company's business, identifying new sectors of operation, concentrating on profitable jurisdictions and services and reducing costs overall. Management has conducted significant cost-cutting, primarily in Kenya and the Company has declined to bid for contracts which do not meet Atlas' return profile. As a result of these initiatives the Company's operating divisions are now cashflow break even and the Company is expected to end the year with a cash balance of approximately US$3 million, ahead of expectations. The outlook for services to the oil & gas sector in Kenya remains poor and the Company's focus for the services division will be in Ethiopia, where conditions are more positive and where the recent establishment of a joint venture with leading Ethiopian industrial company, Orchid, gives unique access to many exciting industrial projects in the fast growing Ethiopian market.

Establishment of industrial division & acquisition:

Background

Atlas is creating an industrial division to allow it to leverage its expertise and position in the regional market and to broaden its business offering, thereby developing diverse revenue streams comprising both cyclical services generated and non-cyclical industrial generated revenues.

The initial focus of the industrial division will be the ownership, via acquisition or construction, of consumer based industrial projects. There will be significant internal synergies and efficiencies as construction of industrial projects will be supported by Atlas' services division.

Acquisition Agreement:

Atlas has today entered into the Acquisition Agreement to acquire EAPH (the 'Acquisition'). EAPH was established by certain Directors to incubate the Chanco Project. Atlas will pay no consideration in relation to the Acquisition. Under the terms of the Acquisition Agreement, the Company has agreed, subject to an increase in the Company's headroom at the General Meeting on 1 December 2015, to take on third party funding liability of approximately US$150,000 in respect of EAPH's working capital investments incurred to date.

The Chancho Project and the Ethiopian market:

EAPH is currently in the feasibility stages of a project which will see it complete the construction and operation of a new state-of-the-art glass bottle manufacturing facility 45 kilometres north of the Ethiopian capital Addis Ababa. EAPH's principal assets comprise a long lease on the land identified for the construction of the facility and the intellectual property relating to the Chancho Project. Commissioning of the facility is scheduled for 2018 and full production will commence in early 2019. The new production facility is expected to have capacity to produce 105 million 330ml bottles per annum. The total capital expenditure is estimated at US$42 million which is expected be funded on a staged basis by a mixture of debt from local development banks, other debt providers, industrial partners and equity, once various milestones have been achieved. The initial cash commitment to complete the full feasibility study is US$3-4 million.

The key raw materials required for glass production (being silica sand, limestone, dolomite, feldspar, soda ash) are readily available in Ethiopia, thereby reducing the project's exposure in this regard. Silica sand and limestone deposits are found in both the Mugher Valley and Blue Nile river valley (60-85 kilometres from Addis Ababa), while dolomite, feldspar and soda ash can also be sourced domestically; preliminary assessments of potential sources and studies of local mining operations carried out by EAPH confirm appropriate grades are available.

The Ethiopian government has designated manufacturing as a top priority, and support via development debt funding is, in principle, available for projects that substitute imports. Ethiopia represents one of the fastest growing economies in the world, as a result of rising income, population growth, well managed infrastructure spending, and stable government policies.

For the last five years, due to increasing consumer demand and a young demographic, Ethiopia has been attracting significant investment from international beverage companies, with over $500 million invested to date. Beer production has been growing at a CAGR of 14.3% over the last 14 years with an additional 47% capacity currently under construction.

The demand for glass bottles is largely unmet by local production and is at present mainly satisfied by expensive imports. There is strong demand for locally produced glass bottles in Ethiopia which Atlas aims to meet, through the development of the Chancho Project.

A full presentation on the Company's new industrial division and the Chancho Project will be available on the Company's websitewww.atlassupport.com

Conference Call

Atlas is pleased to announce the dial in details for the shareholder call to be held today at 11.00am UK time.

To participate in this conference call, please dial 0808 109 0701, or +44 (0) 20 3003 2701 if you are calling from outside of the UK, and type in 1434378# for the access pin. Please note that all lines will be muted with the exception of the host, Carl Esprey, however the Company invites shareholders to submit questions to its public relations advisers, St Brides Partners Ltd, ahead of the call via email toshareholderenquiries@stbridespartners.co.uk . The management team will strive to answer as many questions as possible during the course of the call.

A presentation will also be made available during the call. To view the presentation online, please go to www.meetingzone.com/presenter?partCEC=1434378 and log in as a participant using the access pin 1434378#. On the right hand side of the screen you will find an option to submit questions during the call. The presentation and the Q&A will only be made live once the call has commenced.

Unfortunately the online presenter programme is not compatible with iPads and iPhones but if you are listening to the call and would like to send questions during this time, please email them toshareholderenquiries@stbridespartners.co.uk referencing 'Atlas Conference Call' in the subject line and these will be passed onto the Company for you. A copy of the presentation will also be available to view on the Company's websitewww.atlassupport.com .

If you have any problems accessing the call, please contact St Brides Partners Ltd onshareholderenquiries@stbridespartners.co.uk or on the telephone number +44 (0) 20 7236 1177.

** ENDS **