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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
3ADES INTERNATIONAL HOLDING | Investor Presentation
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
4ADES INTERNATIONAL HOLDING | Investor Presentation
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
YoY Growth | ‘1H17-’1H18
▲ 34.2%
▼ 20.3 %
CAGR | 2014-17(2)
YoY Growth | ‘1H17-’1H18
▲ 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
5ADES INTERNATIONAL HOLDING | Investor Presentation
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
6ADES INTERNATIONAL HOLDING | Investor Presentation
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
7ADES INTERNATIONAL HOLDING | Investor Presentation
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
8ADES INTERNATIONAL HOLDING | Investor Presentation
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
9ADES INTERNATIONAL HOLDING | Investor Presentation
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
10ADES INTERNATIONAL HOLDING | Investor Presentation
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
11ADES INTERNATIONAL HOLDING | Investor Presentation
• 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
12ADES INTERNATIONAL HOLDING | Investor Presentation
Appendix
13ADES INTERNATIONAL HOLDING | Investor Presentation
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
14ADES INTERNATIONAL HOLDING | Investor Presentation
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
15ADES INTERNATIONAL HOLDING | Investor Presentation
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.
16ADES INTERNATIONAL HOLDING | Investor Presentation
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