interim results presentationresources.inktankir.com/ades/ades-1h18-interim-results-final-3.pdf ·...

Interim Results Presentation1H 2018

3 September 2018

2ADES INTERNATIONAL HOLDING | Investor Presentation

To ensure that the Group continues to deliver exemplary safety and health standards, ADES has appointed a top tier HSE consultant to review the Group’s safety procedures and ensure its continued adherence to the highest safety standards.

Health, Safety and Environmental Responsibilities

HSE Overview HSE Incident Statistics

2016 2017 H1 18

Total Working hours (‘000) 2,792 4,343 2,263

Recordable injury rate (200,000 man-hours)

0.4 0.41 0.62

IADC worldwide RECRD incident rate up to date

0.58 0.45 0.65

• As an oil and gas service provider, ADES is committed to complying with

occupational health, safety and environmental care standards as a sign of its

commitment to excellent quality service

• The HSE Management System provides ongoing identification, prioritization

and control of any risk that may arise. This system establishes a continuous

improvement process for the implementation of the HSE policy, leadership

expectations and core values

Improve Plan

Perform

Measure

Act

Incident and Injury Free Workplace (IIF)HSE Management System

The consultants have carried out a preliminary safety culture assessment, which addresses the following topics:

I

2

3

4

A full safety culture assessment through interviews of more than 45 employees from cross section of ADES.

Plan IIF sessions in town, for the crews of three select rig sites as well as Cairo office employees in. To be rolled-out in the KSA at a later stage

Carry out IIF coaches training which shall be provided to ADES nominated IIF coaches

Post-IIF sessions, Offshore unit visits to evaluate IIF measures have been adequately employed


workforce>1,600

RIFR(3)

0.62

H1 2018 Financial Highlights

Operational Highlights

New contract awards and renewals

Recruiting the highest calibers

Secured new financing options

Continued exemplary safety performance

Finalized exclusive marketing agreements with leading shipyards

Finalised two landmark acquisitions which strengthen position in current markets while penetrating new ones

Note (1): Normalised EBITDA means operating profit for the year before depreciation and amortization, foreign exchange (gain)/loss, provision for impairment of accounts receivable, provisions and impairment of assets under construction and excluding a one-off bargain purchase gain of USD 11.7 million booked in 1H2018 Note (2): Adjusted EBITDA includes the one-off bargain purchase gain of USD 11.7 million. Note (3): RIFR refers to Recordable Injury Frequency Rate since inception

Revenue

USD 80MN

▼9% YoY

Normalised EBITDA(1)

USD 38MN

▼ 20% YoY

Net Profit

USD 21MN

▲10% YoY

Backlog

USD 492MN

EBITDA margin

47%NP margin

27%

Adjusted EBITDA(2)

USD 49MN

▲ 5% YoY

1H2018 in Review - Key Highlights


Income Statement Highlights

Net Profit| USD MNNormalised EBITDA(1) | USD MN

Note (1): Normalised EBITDA means operating profit for the year before depreciation and amortization, foreign exchange (gain)/loss, provision for impairment of accounts receivable, provisions and impairment of assets under construction and excluding a one-off bargain purchase gain of USD 11.7 million booked in 1H2018.

Revenue| USD MN

CAGR | 2014-17

YoY Growth | ‘1H17-’1H18

▲ 28.0%

▼ 8.3%

CAGR | 2014-17


▲ 34.2%

▼ 20.3 %

CAGR | 2014-17(2)


▲ 28.8%

▲ 10.5%

101

134

158

88 80

2015 2016 2017 1H17 1H18

42

7180

4738

2015 2016 2017 1H17 1H18

26

38

50

19 21

2015 2016 2017 1H17 1H18

1H2018 in Review - Income Statement Highlights


IS Highlights (USD mn) H1 2018 H2 2017 % change

Revenue 79.7 69.7 14%

EBITDA 37.8 33.3 13%

Rig Utilization 80% 70%

• Revenues saw a 14% increase compared to 2H17.

• Rig utilisation rates increased to 80% in 1H18 from

78% recorded during 2017.

• The Group’s EBITDA saw a 13% increase in the first

six months of 2018 compared to 2H17.

• The Group expects this positive momentum to carry

on into 2H18, driven by:

• The three recently purchased rigs from

Nabors.

• The commencement of rigs that were subject

to projects during 1H2018.

1H2018 vs 1H 2017


Revenue Breakdown Evolution

Backlog Breakdown Evolution (1)

Note (1): As at year-end; Note (2): Calculated as a percentage of revenue before discounts

Geographic Diversification

1H2018

The Group’s current revenue mix has benefitted from entries into

Algeria and the KSA in 2015 and 2016, respectively.

MOPU services, introduced back in 2016, contributed USD 13MN

to 1H 2018 revenue

Backlog by Country

Total backlog reached USD 492 million as of 30 June 2018

compared to USD 427 million as of 31 December 2017, reflecting

the recently finalised acquisitions and the contract renewals and

extensions secured at the start of the year.

56%

7%

37% Egypt

Algeria

KSA

1H201853%

14%

33%

1H2017

54%

6%

41% 42%

3%

55%

Egypt

Algeria

KSA

1H2018FY2017

Revenue & Backlog


Interest Rate per Annum

3.25 %

Plus Saibor

New Standby Credit Facility (Secured in May 2018)

The SAR 525 million (USD 140 million) standby credit facility from Alinma Bank, to be utilized in growing the Group’s footprint in the

KSA through rig acquisitions and refurbishments

Facility Details

Total Amount

USD 140 Million

Tenor

7Years*

*24-month Grace Period

Use of Proceeds

Lender

Acquisition(completed June 2018)

Other KSA Rig Acquisitions

Facility Details

Total Amount

USD 450 Million

Tenor

5Years*

Interest Rate per Annum

5 %

Plus Libor

*18-month Grace Period

Tranche AUSD 200 million

Tranche BUSD 41.5 million

Tranche CUSD 208.5 million

Refinance ADES’ existing

medium-term loans, extending

the life of its current debt

Finance ADES’ anticipated

future working capital needs

Finance ADES’ acquisition

programme & associated

rig refurbishments

Use of Proceeds

Arrangers

New Syndicated Credit Facility (Secured in March 2018)

The USD 450 million medium-term syndicated credit facility to give it greater flexibility to pursue acquisitions, in line with its

previously outlined growth strategy

New Credit Facilities


1H2018 Dec 2017

Overdraft Facilities 4.3 21.4

Current Portion of Long Term Loans - 35.9

Long Term loans 289.2 155.6

Total Outstanding Debt 293.5 212.5

Cash & Equivalents 119.2 137.0

Net Debt 174.3 75.5

Ratios ADES Benchmark

Net Debt / LTM EBITDA 2.1x 4.0x

Backlog / Net Debt 2.8x 2.0x

Net Debt / Equity 0.5x 2.0x

Debt Composition ($M) & Ratios (x) as at H1 2018

Note (1): Cost of funding is calculated as interest expense divided by the year’s average loan balance

Following the finalisation of the Weatherford acquisition, the Group expects net debt to be less than 2.5x annualised EDIBTA.

Debt Profile


Expected Combined Impact on Backlog and Top-line PerformanceThe new acquisitions will allow ADES to strengthen its onshore and offshore assets while adding to its backlog and expanding its revenue

contribution from international markets

The new strategic acquisitions have secured ADES’ position as one of the

major players in the MENA region.

The newly acquired rigs are expected to contribute an additional c.USD 250

million to ADES’ annual revenues, which alone exceeds the total annual revenues

recorded in 2017

312 15

313

34

34

15

49

Onshore Offshore Total

Existing Rigs New Acquisitions

400

750

200 Existing Fleet (Incl. Nabors)

Weatherford

Contract renewals

c. USD 1.35 BN

158

60

150

40

FY17 New Acquisitions

Nabors Weatherford Weatherfor Renewals

Total Fleet Addition(1)

Note (1): Pending the finalization of the Weatherford acquisition which is expected by year-end 2018

Expected Annual Revenue(1)

250

Expected Backlog Distribution (1)

The newly acquired assets’ are expected to almost triple the existing backlog as at 30 June 2018

38%

14%

3%

44%

Egypt KSA Algeria Kuwait

Expected Backlog Geographical Distribution (1)

Post-acquisitions, ADES’ backlog will come from a more

diversified group of territories

(USD mn)(No. Rigs)(USD mn)

80%

20%

Outside Egypt Egypt

Expected RevenueDistribution (1)

The acquisition will gain ADES entry into new markets while

strengthening presence in existing markets

Smart Acquisitions – Potential of Combined Acquisitions


The Group’s extensive integration strategy involves a three-stage process:

Diagnosis and Design (4 weeks)

Mobilization(4 weeks)

Implementation(6-12 months)

• Identify areas for development within the existing operating model (including processes, people and governance)

• Define targets and ‘transition’ initiatives• Identify integration risks and appropriate mitigation strategies• Design Project Management Office

• Establish ‘transition’ offices to assist departments in the integration process

• Define key KPI’s to track performance

• Launch ‘transition’ initiatives• Monitor and track system • Launch and execute new management plans• Where required, redesign policies and operating procedures

1

2

3

Smart Acquisitions – Group Integration Strategy


• Evaluate proposed acquisition opportunities

IPO of ADES

Smart ExecutionEvaluating Acquisitions and Backlog Renewal

Roadmap to Growth

• Signed Definitive Acquisition Agreement31 onshore drilling rigs –Weatherford (KSA, Algeria, Kuwait and Southern Iraq)

• Finalised Nabors Acquisition3 operating offshore jack-up rigs (KSA)

• Extensive integration plan - Restructure the new business for a streamlined integration with the Group’s newly acquired assets

• Incorporate newly acquired assets within governance to safeguard the interests of all our stakeholders

• Working with top-tier consultants for a seamless Integration as well as the enhancement of Group’s HSE and Governance framework

• In the medium-term ADES’ is expected to generate strong cash-flows supporting the distribution of dividends

• ADES will continue to grow organically by participating in accretive tenders and growing its backlog

• Capitalise on increased tendering capacity through strategic agreements with leading shipyards

• Secured Standby Credit Facility SAR 525 million (US$140 million) from Alinma bank

Integration & Governance Organic Growth Dividends

• Secured Syndicated Credit FacilityUS$450 million -arranged by the Bank of America Merrill Lynch and the EBRD

Market Sentiment

• Positive Market Sentiment drives management’s decision to IPO

• Participated in Competitive processesfor promising acquisitions while consistently renewing Group backlog

• Acquisitions resulted in:• USD 1.1bn of

additional backlog• USD 250mn of

additional revenue


Appendix


Fleet List Type Country Date of Acquisition Current Status ChartererPrevious Contract

ExpiryRenewal/Extension

TermPrior Renewals

Renewals/Extensions in 2017

Admarine II Jack-up barge Egypt 2004 Extended GUPCO Mar-18 9 months 4 renewals

Admarine IV Jack-up rig Egypt 2013 Extended GUPCO June-18 6 months 4 renewals

Admarine V Jack-up rig Egypt 2013 Renewed Petrobel June-17 15 months 3 renewals

Admarine VI Jack-up rig Egypt 2015 Renewed GPC Mar-18 4 years 2 renewals

New Contracts/Tendering

Admarine III Jack-up rig Egypt 2016Contract Awarded

GPC Dec-17 4 years 4 renewals(1)

Admarine 88 Jack-up rig Egypt 2016Contract Awarded

Petrobel n/a 6 months New Contract

Admarine VIII Jack-up rig Egypt 2015Contract Awarded

Petrozenima n/a 9 months New Contract

Backlog Build-up

Note (1): Admarine III was contracted again by GPC in November 2017 for two years (with the option to extend for a further two years) after 3 renewals of its original contract in 2012

New Contracts To Date

Backlog Buildup – Backlog Additions Since May 2017 IPO


2014 2015 2016 2017B 2018E 2019E 2020E 2021E 2022E

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

ADMARINE I

ADMARINE II

ADMARINE III

ADMARINE IV

ADMARINE V

ADMARINE VI

ADMARINE VIII

ADMARINE 88

ADES 2- ALG

ADES 3 -ALG

RIG 261 - KSA

RIG 262 - KSA

RIG 266 - KSA

RIG 655 - KSA

RIG 656 - KSA

RIG 657 - KSA

Acquired by ADES in November 2016

Acquired by ADES in June 2018

Public Listing of ADES on the LSE

Contracted Good Chance for Renewal Optional Extension Contracted with Previous Owner 2017+ New Awards and Extensions

Backlog Buildup – Fleet Utilisation Schedule


Income StatementIn USD unless otherwise stated H1 2018 YTD H1 2017 YTD YoY Change

Total Revenues 79,700,571 87,846,400 -9.3%

COGS (Exc. Depreciation) (27,807,827) (31,265,983)

COGS / Sales, % 34.9% 35.6%

Gross Profit 51,892,744 56,580,417 -8.3%

GPM, % 65.1% 64.4%

SG&A (Exc. Depreciation) (12,864,018) (9,207,065) 39.2%

% of Revenue 16.1% 10.5%

Impairment of Accounts Receivable (1,250,607) -

Normalised EBITDA(1) 37,778,118 47,373,352 -20.3%

Normalised EBITDA Margin, % 47.4% 53.9%

Adjusted EBITDA(2) 49,515,275 47,373,352 4.5%

Adjusted EBITDA Margin, % 62.1% 53.9%

Depreciation (12,875,752) (14,325,101)

% of Revenue 16% 16%

Employee benefit Provision (290,320) (312,631)

Bargain Purchase Gain 11,737,157 -

Operating profit 36,349,204 32,735,620 11.0%

EBIT Margin, % 45.6% 37.3%

Interest Expense / Income (14,384,580) (8,144,924)

Interest Income 2,032,444 -

Other expense (1,108,551) (701,536)

IPO expense - (4,562,722)

Other taxes (661,893) (679,481)

EBT 22,226,625 18,646,957 19.2%

EBT Margin, % 27.9% 21.2%

Income Taxes (867,641) 686,979

Tax Rate, % 3.9% -3.7%

Net Profit 21,358,983 19,333,936 10.5%

Net Profit Margin, % 26.8% 22.0% 4.8%

Note (1): Normalised EBITDA means operating profit for the year before depreciation and amortization, foreign exchange (gain)/loss, provision for impairment of accounts receivable, provisions and impairment of assets under construction and excluding a one-off bargain purchase gain of USD 11.7 million booked in 1H2018 Note (2): Adjusted EBITDA includes the one-off bargain purchase gain of USD 11.7 million.


Balance SheetIn USD unless otherwise stated June-2018 Dec-2017

Non Current Assets Net Fixed Assets 429,432,687 322,441,974 Intangible Assets 493,786 544,541 Available for Sale Investments 1,950,000 1,950,000 Total Non Current Assets 431,876,473 324,936,515 Current Assets Cash & Cash Equivalents 119,244,318 136,964,417 Accounts Receivable 82,183,790 65,987,303 Accrued revenue 14,482,919 12,975,535 Advance Payments to Suppliers 5,439,123 6,027,286 Due from Related Parties 2,092,217 305,615 Prepayments and Other Receivables 16,979,475 19,770,254 Inventory 24,363,395 20,919,477 Total Current Assets 264,785,238 262,949,887 Total Assets 696,661,711 587,886,402

Current Liabilities Long-Term Interest-bearing loans and borrowings 35,911,111 Bank overdraft 4,322,602 21,422,509 Trades and Other Payables 24,055,976 31,170,944 Tax liability 776,452 1,118,662 Accrued Expenses 13,045,344 11,869,877 Other Credit Balances 886,170 1,355,726 Due to Related Parties 207,121 2,267,344 Dividends Payable - 7,149,034 Provision 1,807,703 1,836,000 Total Current Liabilities 45,101,369 114,101,207 Non Current Liabilities Interest-bearing loans and borrowings 289,201,616 155,155,414 End of Service provision 877,202 620,083 Total Non Current Liabilities 290,078,818 155,775,497 Total Liabilities 335,180,187 269,876,704

Shareholder Equity Paid-in Capital 43,793,882 42,203,030 Share Premium 178,746,337 158,224,346 Retained Earnings 139,062,113 117,703,129Merger Reserve (6,520,807) (6,520,807)Legal Reserve 6,400,000 6,400,000 Total Shareholder's Equity 361,481,524 318,009,698

Total Liabilities and Shareholder's Equity 696,661,711 587,886,402

interim results presentationresources.inktankir.com/ades/ades-1h18-interim-results-final-3.pdf ·...

Documents