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Africa Oilfield Logistics, an AIM listed African focused support services and logistics company, has announces its interim results for the six month period ended 31 December 2013.
Highlights:
· Targeted growth strategy to provide comprehensive support services offering to the natural resource industry in sub-Saharan Africa
· Active investment policy strategy – 49% interest in Ardan Risk & Support Services (‘Ardan’), a provider of turn-key support services and logistics solutions to international corporate companies operating on the African continent
· Proven and experienced management team – appointed Carl Esprey as CEO to steward development
· Raised £11.0 million (US$17.5 million) over the last 12 months, with supportive cash and receivable balances of US$9.9million as at 31 December 2013
· Providing assistance in the Ardan restructuring to capitalise on its existing platform and improve operational efficiency to support growth
Africa Oilfield CEO Carl Esprey said, “This is a time of great opportunities for Africa Oilfield as we look to establish ourselves as a dynamic company, providing full turn-key support services and logistics solutions to international oil, gas and mining companies operating on the African continent. The region provides an excellent growth opportunity due to the resource boom currently underway and I believe we have the necessary skill set and experience to capitalise upon this.
“As an active investor we have already made significant progress in assisting Ardan to take steps to improve its service offering, which includes engaging highly experienced operational personnel that can take the existing platform and develop it into one of Africa’s leading and fastest growing multi-divisional natural resource focussed support services companies.”
CHAIRMAN’S STATEMENT:
Africa Oilfield’s strategy remains centred on building a business focussed on providing a comprehensive support services offering to the natural resource industry in sub-Saharan Africa. The resource boom currently underway on the continent, particularly in oil and gas, translates into a heightened demand for companies that have inherent knowledge and experience of operating on the African continent, qualities that Africa Oilfield has in abundance.
The support services and logistics requirements of natural resource companies are crucial to the success of their projects both in terms of asset development and budget. Through its experience, including bringing resource exploration projects into production, the Board understands the key operational components and capital expenditure requirements to ensure the successful development of such projects. It understands the requirements of companies in this regard and the critical importance to them of benefitting from top quality support services and logistics, be it in the context of engineering and infrastructure development, workforce accommodation, facilities management, medical services, procurement or risk management. Accordingly the Company has taken an active investment approach to ensure that it can take full advantage of these insights and develop into a Company with potential to be a leader in this field.
On the basis set out above, the Company made its first investment in August 2013, acquiring a 49% interest in Ardan, a provider of turn-key support services and logistics solutions to international corporate companies operating on the African continent. Head quartered in Nairobi and currently operating in Kenya, Ethiopia and Mauritius, with a roster of significant international clients, Ardan provided Africa Oilfield with a platform from which to utilise its key strengths, balance sheet and access to the international capital markets, in order to achieve both management teams’ objectives of developing into a leading support services and logistics business.
Since this initial investment both management teams have worked together to make significant progress. Having conducted a full strategic review of operations, it was agreed that the Ardan business required, and would benefit from, a corporate and contractual restructuring programme to rationalise operational management and implementation. Indeed both parties believe a successfully restructured Ardan business has the potential to become the premier support services and logistics company in the East African region. Key personnel have already been identified and are joining at regular intervals to develop a structure that can implement the restructuring and support the anticipated growth. Supply chains have been evaluated and equipment upgrades implemented to ensure that its international clients receive a continuous level of service that can supply all their support services requirements. Additional jurisdictions are also being evaluated in order to enhance the reach of the business and its broad base offering.
As part of the review, and as announced on 28 March 2014, the principals of Ardan have established Ardan Logistics Kenya Limited (“ALK”), a separate and new ‘shell’ company in Kenya within which it will implement a new divisional structure through which the Ardan business will be operated going forwards. As part of this process, the management of Ardan will seek to novate certain existing contracts to ALK. In addition, Africa Oilfield has been granted a 3-year conditional call option which provides the right, but not the obligation, to acquire 100% of the issued share capital of ALK (the ‘Option’). The Board do not intend to exercise the Option unless and until the corporate and contractual restructuring has been completed to its satisfaction.
On a corporate level Carl Esprey was recently appointed as CEO to steward the Company’s rapid growth strategy. Carl is a highly qualified and experienced corporate and resource industry professional, and has spent significant time at both BHP Billiton and GLG Partners.
The key to the success of a business is ensuring it is adequately capitalised. Accordingly the Board has raised £11.0 million (US$17.5 million) over the last 12 months. The opportunity in support services in Africa has been recognised by the Company’s broad investor base and with the listing on the London Stock Exchange, further capital is available for on ground investment.
Financials:
Africa Oilfield is reporting for the period ended 31 December 2013 a pre-tax loss on continuing activities of US$0.6million. The Company has an adequate treasury and as at 31 December 2013 cash and receivable balances were US$9.9million.
Outlook:
Africa Oilfield is rapidly developing its business and fulfilling its strategy of becoming the support services and logistics company of choice servicing the sub-Saharan African resource sector. Resource development is critical to Africa’s success and is being actively encouraged politically, creating a huge opportunity to expand the business both in terms of client numbers and geographically. Africa Oilfield with its first mover advantage, high calibre management team, quality projects with international blue chip clients both underway and in the pipeline, and a defined development strategy, is well placed to effect significant growth in the oilfield and resource services sector, in one of the world’s leading resource development regions.
P Edmonds
Chairman
