Interim Results Presentation 1H September 2018

Transcription

1 Interim Results Presentation 1H September 2018

2 Health, Safety and Environmental Responsibilities HSE Overview 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 HSE Incident Statistics H1 18 Total Working hours ( 000) 2,792 4,343 2,263 Recordable injury rate (200,000 man-hours) IADC worldwide RECRD incident rate up to date HSE Management System Incident and Injury Free Workplace (IIF) Improve Plan 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. The consultants have carried out a preliminary safety culture assessment, which addresses the following topics: I A full safety culture assessment through interviews of more than 45 employees from cross section of ADES. Act Perform 2 3 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 Measure 4 Post-IIF sessions, Offshore unit visits to evaluate IIF measures have been adequately employed 2

3 1H2018 in Review - Key Highlights H Financial Highlights Revenue Normalised EBITDA (1) Net Profit USD 80 MN USD 38 MN USD 21 MN 9% YoY 20% YoY 10% YoY Backlog USD 492 MN EBITDA margin 47% NP margin 27% Adjusted EBITDA (2) USD 49MN 5% YoY Operational Highlights New contract awards and renewals Secured new financing options Finalized exclusive marketing agreements with leading shipyards workforce >1,600 Recruiting the highest calibers RIFR (3) 0.62 Continued exemplary safety performance 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 3

4 1H2018 Income in Statement Review -Highlights Income Statement Highlights Revenue USD MN Normalised EBITDA (1) USD MN Net Profit USD MN H17 1H H17 1H H17 1H18 CAGR % CAGR % CAGR (2) 28.8% YoY Growth 1H17-1H18 8.3% YoY Growth 1H17-1H % YoY Growth 1H17-1H % 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 1H

5 1H2018 vs 1H 2017 Revenues saw a 14% increase compared to 2H17. Rig utilisation rates increased to 80% in 1H18 from 78% recorded during The Group s EBITDA saw a 13% increase in the first six months of 2018 compared to 2H17. IS Highlights (USD mn) H H % change Revenue % EBITDA % Rig Utilization 80% 70% 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 1H

6 Revenue & Backlog Revenue Breakdown Evolution The Group s current revenue mix has benefitted from entries into Algeria and the KSA in 2015 and 2016, respectively. Geographic Diversification MOPU services, introduced back in 2016, contributed USD 13MN to 1H 2018 revenue 33% 1H % 37% Egypt 1H2018 Algeria 56% KSA 14% 7% Backlog Breakdown Evolution (1) 1H2018 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. Backlog by Country 41% 42% FY % 55% 1H2018 Egypt Algeria KSA 6% 3% Note (1): As at year-end; Note (2): Calculated as a percentage of revenue before discounts 6

7 New Credit Facilities 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 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 Facility Details Total Amount USD 450 Million Interest Rate per Annum 5 % Plus Libor Tenor 5 Years* Total Amount USD 140 Million Interest Rate per Annum 3.25 % Plus Saibor Tenor 7 Years* *18-month Grace Period *24-month Grace Period Use of Proceeds Use of Proceeds Tranche A USD 200 million Refinance ADES existing medium-term loans, extending the life of its current debt Tranche B USD 41.5 million Finance ADES anticipated future working capital needs Tranche C USD million Finance ADES acquisition programme & associated rig refurbishments Acquisition (completed June 2018) Other KSA Rig Acquisitions Arrangers Lender 7

8 Debt Profile Debt Composition ($M) & Ratios (x) as at H H2018 Dec 2017 Overdraft Facilities Current Portion of Long Term Loans Long Term loans Total Outstanding Debt Cash & Equivalents Net Debt 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 Following the finalisation of the Weatherford acquisition, the Group expects net debt to be less than 2.5x annualised EDIBTA. Note (1): Cost of funding is calculated as interest expense divided by the year s average loan balance 8

9 Smart Acquisitions Potential of Combined Acquisitions Expected Combined Impact on Backlog and Top-line Performance The 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 (No. Rigs) Total Fleet Addition (1) Onshore Offshore Total Existing Rigs New Acquisitions The new strategic acquisitions have secured ADES position as one of the major players in the MENA region. Expected Annual Revenue (1) (USD mn) 158 FY New Acquisitions Nabors Weatherford Weatherfor Renewals 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 (USD mn) Expected Backlog Distribution (1) 200 Existing Fleet (Incl. Nabors) 400 c. USD 1.35 Weatherford BN 750 Contract renewals The newly acquired assets are expected to almost triple the existing backlog as at 30 June 2018 Expected Revenue Distribution (1) 20% Outside Egypt 80% Egypt The acquisition will gain ADES entry into new markets while strengthening presence in existing markets Expected Backlog Geographical Distribution (1) 44% 3% 14% 38% Egypt KSA Algeria Kuwait Post-acquisitions, ADES backlog will come from a more diversified group of territories Note (1): Pending the finalization of the Weatherford acquisition which is expected by year-end

10 Smart Acquisitions Group Integration Strategy The Group s extensive integration strategy involves a three-stage process: 1 Diagnosis and Design (4 weeks) 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 2 Mobilization (4 weeks) Establish transition offices to assist departments in the integration process Define key KPI s to track performance 3 Implementation (6-12 months) Launch transition initiatives Monitor and track system Launch and execute new management plans Where required, redesign policies and operating procedures 10

11 Roadmap to Growth Market Sentiment Evaluating Acquisitions and Backlog Renewal Smart Execution Integration & Governance Organic Growth Dividends IPO of ADES Positive Market Sentiment drives management s decision to IPO Evaluate proposed acquisition opportunities Signed Definitive Acquisition Agreement 31 onshore drilling rigs Weatherford (KSA, Algeria, Kuwait and Southern Iraq) Extensive integration plan - Restructure the new business for a streamlined integration with the Group s newly acquired assets In the medium-term ADES is expected to generate strong cashflows supporting the distribution of dividends Secured Standby Credit Facility SAR 525 million (US$140 million) from Alinma bank Participated in Competitive processes for promising acquisitions while consistently renewing Group backlog Finalised Nabors Acquisition 3 operating offshore jack-up rigs (KSA) Incorporate newly acquired assets within governance to safeguard the interests of all our stakeholders ADES will continue to grow organically by participating in accretive tenders and growing its backlog Secured Syndicated Credit Facility US$450 million - arranged by the Bank of America Merrill Lynch and the EBRD Acquisitions resulted in: USD 1.1bn of additional backlog USD 250mn of additional revenue Working with top-tier consultants for a seamless Integration as well as the enhancement of Group s HSE and Governance framework Capitalise on increased tendering capacity through strategic agreements with leading shipyards 11

12 Appendix 12

13 Backlog Buildup Backlog Additions Since Backlog May Build-up 2017 IPO New Contracts To Date Fleet List Type Country Date of Acquisition Current Status Charterer Previous Contract Expiry Renewal/Extension Term Prior 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 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 2016 Admarine 88 Jack-up rig Egypt 2016 Admarine VIII Jack-up rig Egypt 2015 Contract Awarded Contract Awarded Contract Awarded GPC Dec-17 4 years 4 renewals (1) Petrobel n/a 6 months New Contract Petrozenima n/a 9 months New Contract 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

14 Backlog Buildup Fleet Utilisation Schedule ADMARINE I B 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 II ADMARINE III ADMARINE IV ADMARINE V ADMARINE VI ADMARINE VIII ADMARINE 88 ADES 2- ALG ADES 3 -ALG RIG KSA RIG KSA RIG KSA RIG KSA RIG KSA RIG 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 New Awards and Extensions 14

15 Income Statement In USD unless otherwise stated H YTD H YTD YoY Change Total Revenues 79,700,571 87,846, % COGS (Exc. Depreciation) (27,807,827) (31,265,983) COGS / Sales, % 34.9% 35.6% Gross Profit 51,892,744 56,580, % 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, % Normalised EBITDA Margin, % 47.4% 53.9% Adjusted EBITDA (2) 49,515,275 47,373, % 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, % 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, % 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, % 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. 15

16 Balance Sheet In USD unless otherwise stated June-2018 Dec-2017 Non Current Assets Net Fixed Assets 429,432, ,441,974 Intangible Assets 493, ,541 Available for Sale Investments 1,950,000 1,950,000 Total Non Current Assets 431,876, ,936,515 Current Assets Cash & Cash Equivalents 119,244, ,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, ,615 Prepayments and Other Receivables 16,979,475 19,770,254 Inventory 24,363,395 20,919,477 Total Current Assets 264,785, ,949,887 Total Assets 696,661, ,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, ,101,207 Non Current Liabilities Interest-bearing loans and borrowings 289,201, ,155,414 End of Service provision 877, ,083 Total Non Current Liabilities 290,078, ,775,497 Total Liabilities 335,180, ,876,704 Shareholder Equity Paid-in Capital 43,793,882 42,203,030 Share Premium 178,746, ,224,346 Retained Earnings 139,062, ,703,129 Merger Reserve (6,520,807) (6,520,807) Legal Reserve 6,400,000 6,400,000 Total Shareholder's Equity 361,481, ,009,698 Total Liabilities and Shareholder's Equity 696,661, ,886,402 16