Full Year 2018 Results Presentationresources.inktankir.com/ades/ADES-Results-Presentation...ADES...
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Full Year 2018 Results PresentationMarch 2019
2ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
ADES at a Glance
• ADES International Holding (“ADES” or the “Group”) is a leading oil & gas drilling and production services provider in the Middle East and North Africa (“MENA”) focused on creating value for E&P Players in the region
• Portfolio of services focused on offshore and onshore contract drilling, workover and production services
• ADES specializes in acquiring and refurbishing legacy ‘fit for purpose’ offshore assets which (among other cost-saving measures) enable the Group to offer competitive rates to its clients
• Backed by a capable in-house refurbishment and maintenance team, the Group benefits from a highly-skilled and relatively low-cost workforce
• The Group’s business revolves around providing tailored solutions and superior service to its clients
• ADES’s offering is characterized by its commitment to global industry standards
Leading MENA-based O&G Service Provider
Differentiated Low-Cost Business Model
Customer-Centric Approach
WHO WE ARE
3ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
1019
49
75
101
134
158
206
2011 2012 2013 2014 2015 2016 2017 2018
Revenue (USD MN)
Brent Crude (USD/bbl)
109 USD/bbl
105 USD/bbl
91 USD/bbl
100 USD/bbl
48 USD/bbl
46 USD/bbl
51 USD/bbl
78 USD/bbl
Activity remains higher due to lower break-even prices in the MENA region than the global average
Focus on workover drilling and maintenance, mainly constituting OPEX expenditure, which is typically less cyclical than CAPEX expenditure
ADES mainly assesses its potential acquisitions through two methods:
▪ Buy-to-Contract Model – Securing the contract first, then finalising the acquisition of the asset
▪ Contract Acquisition Model –Acquiring chartered assets with on-going contracts
Target backlog of 2x net debt – ensuring maintenance of a minimum level of liquidity to pay its contractual obligations at all times
Focus on Low Cost of Production Areas Such as MENA
Focus on Workover Drilling & Maintenance
Considered Approach to Acquisitions
Backlog Management
▼ 53%Brent Crude
▲ 174%Group Revenue
▲ 212%Group EBITDA(1)
2014-18
Resilient Business Model
1EBITDA - Operating profit for the year before depreciation and amortisation, employee benefit provision and other provisions an d impairment of assets under construction under construction
Backlog (USD)
7 MNBacklog (USD)
67 MNBacklog (USD)
78 MNBacklog (USD)
117 MNBacklog (USD)
225 MNBacklog (USD)
501 MNBacklog (USD)
427 MN
Resilient Business Model Supported by Lean Cost Structure
Backlog (USD)
1.2 BN
4ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
18
14
13
11
10
7
7
4
4
4
4
8%
7%
5%
15%
16%11%
11%
9%
18%
ADES ADC Burgan Drilling
Sinopec Nabors KDC
ZP Arabia Saipem Others
IOCs
NOCs
Independents
ABS
ISO Certification
Company Pre-Qualifications
Memberships
Solid Track RecordRanked #2 Offshore Jack-Up Driller in MENA (1)
High Profile Client BaseComprising a diverse range of leading
oil companies
World Class QualificationsAdhering to Global best practice
ABS Class Certificate
The Group’s operational drilling
offshore fleet is either ABS certified or
currently pending recertification
ISO 9001:2008 Certification
ISO 29001:2012 Certification
Note (1): By number of active rigs in March 2019; Source: Westwood Global Energy Group 21 March 2019Note (2) “The number includes MOPU and Jack up BargeNote (3) “Others” is players with < 20 rigs, Source: Westwood Global Energy Group 21 March 2019
- No. of Rigs
Significant Barriers to Entry
Growing Market Share in KSA and Kuwait Onshore Drilling(2)
(2)
(3)
5ADES INTERNATIONAL HOLDING | Full Year 2018 Results 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.
Robust HSE Policies with Exemplary Track Record
HSE Overview HSE Incident Statistics
2016 2017 2018
Total Working hours (‘000) 2,792 4,343 5,272
Recordable injury rate (200,000 man-hours)
0.40 0.41 0.57
IADC worldwide RECORD incident rate up to date
0.58 0.45 0.68
• 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 A full safety culture assessment through interviews of more than 45 employees from cross section of ADES.
2 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
3 Carry out IIF coaches training which shall be provided to ADES nominated IIF coaches
4 Post-IIF sessions, Offshore unit visits to evaluate IIF measures have been adequately employed
6ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Markets & Asset Base
ADES Operating Markets
▪ The Group has presence in Egypt, Algeria, Kingdom of Saudi Arabia and Kuwait
▪ Most recently the group expanded its offshore and onshore presence in KSA and entered Kuwait via the acquisition of select assets from Weatherford
1 2 4
3
1 Algeria
2 Egypt
3 KSA
4 Kuwait
5 Other
(1) ADES continues to work towards closing the acquisition of two remaining Weatherford rigs in Algeria, and two rigs in Iraq whi ch is closing imminently in Q1 2019.(2) Refers to ADM 260 rig which is planned to work in Egypt once operational.(3) Refers to ADES I which is currently used for tendering activity in Egypt.(4) The figure does not include the two new-build onshore rigs for which contracts were secured in February 2019.
Total 34 Onshore Rigs
13 Offshore Rigs
1MOPU
1 Jack-up Barge
CountryOnshore
RigsOffshore
Jack-Up RigsMOPU
Offshore Jack-up Barge
8(1) -- -- --
-- 6 1 1
11(4) 6 -- --
12 -- -- --
3(1)(3) 1(2) -- --
49 Rigs in 4 Countries
7ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Highly Experienced Management Team
Year Joined ADESYears of Experience
◼ Ph.D. Systems Engineering and Control, Case Western Reserve University, USA
◼ M.Sc. Electrical Engineering and Control, Faculty of Engineering, Cairo University, Egypt
◼ B.Sc. Electrical Engineering, Faculty of Engineering, Cairo University, Egypt
Dr. Mohamed FaroukChief Executive Officer
27 Years
2012
✓ Senior Vice President, Invensys Operations Management (Now Schneider Electric)
✓ Director, Global Engineering Excellence Centers
27 Years
Ayman RagaiChief Information Officer
2016
28 Years
Aly MakhloufInternational Markets Director
2014 24 Years
Ahmed MohyEgyptian Market GM
200910 Years
Hussein BadawyInvestor Relations Officer
2016
12 Years
Omar SalehChief Strategy Officer
2016
14 Years
Morcos WilliamLegal Counsel
2015Project Manager
Country Financial Controller
Country HR Manager
Maintenance Superintendent
HSE Superintendent
Supply Chain Manager
QMS Manager
Country Manager
Project Manager
Country Financial Controller
Country HR Manager
Maintenance Superintendent
HSE Superintendent
Supply Chain Manager
QMS Manager
IT Manager
12 Years
Gamal Mohamed AhmedHR Director
2006
44 Years
Mohamed KhalilVP Operations
2012
18 Years
Mohamed SaadMaintenance Director
2015
18 Years
Mohamed HegawySupply Chain Director
2017
33 Years
Mahmoud HabashiQMS Director
2013
22 Years
Amr WafikHSE Director
2009
21 Years
Ahmed El KhatibChief Financial Officer
2017
38 Years
Shoukry El SayedVP Projects
2013
IT Manager
Country Manager
8ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
2018 FINANCIAL REVIEW
9ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
2018 Key Highlights – A Transformative Year
Successfully Finalised
Two Landmark
Acquisitions
Entered a New
Market and Further
Established Position in
KSA
Increased Total Number
of Rigs by: ▲ 2.9x
(#14 to #41)
Increased Total
Backlog:▲ 3x
(US$ 427m to US$ 1.2bn)
Backlog /Net Debt:
2.9x
vs. min 2.0x
financial policy
Further Invested in
HSE Culture
FY 2018
Revenue: US$ 206m
▲30.4% (vs. FY 2017)
▲57.9% (H218 vs. H1 18)
FY 2018
EBITDA: US$ 101m
▲25.8% (vs. FY 2017)
Robust
EBITDA Margin: 49.2%
Improved Utilisation
Rate: 85% in FY 2018
vs 78% in FY 2017
… And Conservative Capital Structure and Exemplary HSE Track Record…
… Supported by Industry Leading Operating and Financial Performance…
In 2018 ADES Successfully Advanced its Long-term Strategic Ambitions…
… Establishing a Robust Platform for Future Growth
10ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Strong Historical Financial Performance
Revenue (US$ m) EBITDA (US$ m / %)Backlog (US$ m)
Operating Profit (US$ m / %) Group Equity (US$ m)Net Profit (US$ m / %)
42
7180 101
40.4% 53.9% 51.0% 49.2%
2015A 2016A 2017A 2018A
225
501427
1214
2015A 2016A 2017A 2018A
101
134
158
206
2015A 2016A 2017A 2018A
2015-2018 CAGR: 34%2015-2018 CAGR: 74% 2015-2018 CAGR: 27%
84105
318
424
2015A 2016A 2017A 2018A
32
51
59 71
28.5% 37.9% 37.3% 34.7%
2015A 2016A 2017A 2018A
26
3845
75
5045
25.4% 28.3% 28.3% 36.6%
2015A 2016A 2017A 2018A
Normalised Net Profit
LSE IPO
2015-2018ECAGR: 42%2015-2018 CAGR: 31% 2015-2018E CAGR: 72%
11ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
2.6x
3.2x
0.9x
2.4x
2015A 2016A 2017A 2018A
Prudent Financial Policies
Backlog / Net Debt (x) EBITDA / Net Interest Expense (x)Net Debt / EBITDA (x)
Covenant level: 4.0x
Based on Covenant Calculated EBITDA Based on Covenant Calculated EBITDA
2.1 2.2
5.7x
2.9x
2015A 2016A 2017A 2018A
Covenant level: 2.0x
9.5x
7.6x8.4x
6.4x
2015A 2016A 2017A 2018A
✓ The group targets maintaining a minimum Backlog at 2.0x Net Debt
➢ This level has consistently been maintained, supported by the “buy-to-contract” model (i.e. securing contract before finalising the asset acquisition)
✓ In addition, ADES targets Net Leverage at 2.5-3.0x (vs 4.0x covenant) and Gearing (Net Debt / Book Equity) 1.5-2.0x (vs 2.75x covenant)
✓ The group targets to maintain, at all times, a minimum cash on balance sheet at ~10% of annual group turnover for liquidity purposes
Target Financial Policies
Banks Covenant EBITDA – refers to the (Actual EBITDA contributed for the Existing rigs) + (Annualised Revenue for the Newly Acquired Contraced rigs* 35% EBITDA margin *90% utilization factor)
12ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Cash Generation profile
(US$ 000s unless indicated) 2015 2016 2017 2018
Accounts Receivable 16,841 50,789 65,987 100,757
Inventory 7,167 17,777 20,919 52,508
Accrued Revenue 713 17,587 12,976 36,370
Other Receivables: 14,224 14,565 25,798 43,915
Working Assets 38,946 100,718 125,680 233,551
Accounts Payable 14,229 27,916 31,171 37,409
Accrued Expenses & Other Credit Balances 3,370 13,133 13,226 44,405
Working Liabilities 17,598 41,050 44,397 81,814
Net Working Capital 21,347 59,669 81,283 151,737
Change in WC(1)(6,137) (38,321) (21,615) (70,454)
Capital Expenditure(4) & Free Cash Flow(3) (US$ m)Operating Cash Flow(2) pre and post WC (US$ m)
▲ in Working Capital
Net Operating Cash Flow (post WC)
40 3549
27
(4)
(39)(25) (67)
2015A 2016A 2017A 2018A
(98)(134)
(53)
(347)
(58)
(99)
(4)
(320)
2015A 2016A 2017A 2018A
Free Cash Flow Total Capex ’15-’17
(1) Changes in WC Includes changes in accounts receivables, Inventory, Accrued Revenue, other recievables, accounts payable and Accrued Expenses & other credit balances
13ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
INDUSTRY OVERVIEW
14ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
0
20
40
60
80
100
120
Canada TarSands
BarentsSea
AngolaDeepwater
Australia US Tight Oil NigeriaDeepwater
North Sea Brazil Pre-Salt
UAE Egypt Egypt SaudiArabia
UAE Kuwait SaudiArabia
Onshore OffshoreUS$/bbl Range
NB: Breakeven prices can vary widely within areas, countries and even basins
38%
22%
19%
10%
5%4%
2% Middle East
North America
CIS
Africa
Asia Pacific
S. & Cent. America
Europe
The Middle East Continues to be the Region with the Leading Oil Production and Proven Reserves
Key Market Characteristics
The Middle East is the
leading oil-producing
region globally with
almost 40% of the world’s
proven reserves. The
sector constitutes a
significant share of GDP
and is a major source of
FDI
Distribution of Proven Reserves(1)Distribution of Oil Production(1)
(1) Source: Westwood Global Energy Group, 21 Mar-19
Middle East has the Lowest Extraction Cost Globally
27%
19%
23%
9%
8%
8%
5%2%
Middle East
Eastern Europe & FSU
North America
Asia
Africa
Latin America
Western Europe
Australasia
ADES operates in countries characterized by low extraction costs, non harsh environments and the pre-dominance of drilling intensive legacy fields
2018 Average Brent Price: US$ 71.1/bbl
✓
✓
✓ ✓
ADES’ current presence
✓CORE MARKETS
15ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
(80%)
(60%)
(40%)
(20%)
0%
20%
40%
60%
80%
7%
22%
28%36%
49%
50% 55%
(100%)
(80%)
(60%)
(40%)
(20%)
0%
20%
40%
60%
80%
Middle East Drilling Industry Has Exhibited Strong Growth While Keeping Utilizations High
(1): Source: Westwood Global Energy Group, 21 Mar-19
Regional Jack-up Rigs Growth & Utilisation Rates(1)
Size of the bubbleJack-up Utilization (Avg. 2018)
Rig
CA
GR
(’08
-‘18
)
Eastern Europe
North America
Jack-up Rig Utilisation Rate – Yearly Average
Onshore Rigs Growth & Utilization Rates (1)
Size of the bubbleOnshore Utilization (Avg. 2018)
Rig
CA
GR
(’08
-‘18
)
The Middle East is the only region to witness rig growth since 2009 and enjoys the highest Jack-up utilization rate
Onshore Rig Utilisation Rate – Yearly Average
South America
Africa
Western Europe
Middle East
Asia
Africa
Latin America
MENA
Eastern Europe
North AmericaWestern Europe
88%
75%71% 70%
76%81% 80%
71%
59%55%
57%
87%
76%73% 72%
78%82% 84%
81%
72%
64% 65%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Global Middle East
61%
47%
55%57%
59%57%
55%
46%
39%
43%45%
55%
48%
49% 50% 50% 50%
54%
49% 49%
53%
50%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Global Middle East
37%
39%
51%
61%
60%40%
37%66%
Asia-Pacific
Post-IPO Accomplishments
17ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Transaction Highlights
Asset • 3 ultra-shallow offshore drilling jack-up rigs
Location • KSA
Current Charterer
• Saudi Aramco
Purchase Price • US$ 83m (75% Cash - 25% ADES shares)
Additional Details
• Deal closed June 2018
• Three rigs were operational with backlog at closing of $140 million
• Successfully added additional $150 million of backlog through contract renewal post closing
• $60 million expected annual revenue
Transaction Highlights
Asset • 31 onshore drilling rigs
Location • KSA, Algeria, Kuwait and Southern Iraq
Current Charterer
• Kuwait Oil Company and Saudi Aramco
Purchase Price• US$ 287.5m, paid by a combination of cash
and secured debt instruments
Additional Details
• Closed Kuwait, Saudi, & Algeria(1) on November, December, & February respectively
• 20 of the acquired 31 rigs were operational with backlog at closing of c. $700 million
• Successfully added additional $228 million of backlog through contract renewals post closing
• $200 million expected annual revenue
Efficient Execution of Accretive Acquisitions at Attractive Pricing
Nabors Acquisition
(1) ADES continues to work towards closing the acquisition of two remaining Weatherford rigs in Algeria, and two rigs in Iraq which is closing imminently in Q1 2019
Weatherford AcquisitionAdmarine 655
Admarine 656
Admarine 657
18ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Game Changing Acquisitions Associated with Attractive Values
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 more than double ADES’ annual
revenue in 2019
Total Fleet Addition Expected Annual Revenue
(No. Rigs)
56
Attractive Values associated with the Acquisitions
Algeria6
SouthernIraq
2
Kuwait12
KSA
11
3New markets
Existing markets
Geographic Distribution of the Acquired Fleet
ExistingRigs
New Acquisitions
3434
15
312 15
313
34
Onshore Offshore Total
49(1)
158
60
200
FY17 New Acquisitions
Nabors Weatherford260
Acquisition consideration was executed on accretive EV/EBITDA multiple
Diversified backlog with long-term revenue visibility
Entry to the onshore gas drilling market in KSA
Entry to very exclusive market with high barriers to entry (Kuwait)
Very well distributed asset base
Further underpins our position in our existing platforms
19ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Testament to Our Clients’ Confidence in ADES to Consistently Deliver High-Quality Services
February 2019 – New Contracts Secured Through Tendering Activity
Location• KSA (2 newly build onshore
rigs)
Current Charterer
• Aramco
Expected Backlog • USD 150 million
Contract Tenor• 7 years (5 years + 2-year
extension)
February 2019 – Contract Renewals
Location • KSA (6 onshore drilling rigs)
Current Charterer • Aramco
Expected Backlog • USD 228 million
Contract Tenor • 3 years
The Group will order two newly built onshore rigs that meet the contract
specifications for a total cost up to USD 45mn
• Each of the secured contracts has a tenure of seven years versus the KSA average of3 years
• Operations are due to commence in the second half of 2019.
• ADES sees long-term potential for these assets in the Saudi market and ADESexpects to generate a strong return on this investment
• The six onshore operating rigs in the KSA were acquired in December 2018 as part ofthe Weatherford acquisition
• Due to commence in February 2019 upon expiry of existing contracts
• The renewals are further endorsement of clients’ confidence in ADES as it scales upits business across the region
December 2018 – Contract Renewal
Location • KSA (Admarine 657)
Current Charterer • Aramco
Expected Backlog • USD 150 million
Contract Tenor • 7 years (5 years + 2-year extension)
Other recent renewals, extensions and new contracts secured
• The renewal for Admarine 657, which is currently contracted and operatingin Saudi Arabia, is effective after the expiry of its existing contract during Q12019
• The renewed contract has a tenure of seven years versus the KSA average of3 years
• ADES now has a long-term contracted visibility, underlining its ability toconsistently sustain its backlog through a customer-centric approach thatdelivers a tailored service with superior quality and an impeccable safetyrecord
• During the first quarter of 2019, ADES successfully renewed or extended all expiring contracts across its Egyptian assets. The renewals across its Egyptian assets are, onceagain, evidence of ADES’ pristine reputation in its home market that the Group has been able to build over years of excellent service provision
20ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Expansion into Deepwater Drilling
ADVantage – Joint Venture with Vantage Drilling
ADES to provide deepwater drilling services in Egypt’s Mediterranean basin, operating Vantage’s deepwater drilling units
Vantage’s drillships to be leased to ADES on a bareboat charter agreement basis
$
Profit Share
Benefits
Vantage to gain access to the attractive Mediterranean basin, optimise access to local workforces and service providers and increase marketability of its ultra-deepwater fleet
Enables ADES to generate additional revenue without incurring the significant capital expenditure associated with deepwater drilling, maintaining the Group’s asset-light model
Subsidiary of
Secured Dana Gas Contract
In March 2018, ADES secured a short-termexploration contract with Dana Gas for deepwaterdrilling services in the Egyptian Mediterraneanbasin, subcontracted to ADVantage.
Key Contract Highlights:• One firm well estimated to last for 77 days;• Option to extend to a further three wells;• Served using Vantage’s Tungsten Explorer.
The contract capitalises on ADES’ pre-qualificationin the Mediterranean basin and gives ADES accessto the deep drilling market amid significant gasdiscoveries in Egypt.
Offshore drilling contractor which operates and manages a fleet of
modern, high specification drilling rigs on a worldwide basis.
$
Building on its proven track record of offering exceptional value for money in shallow, non-harsh environments, the Group has extended its reach into deepwater drilling while retaining its low-cost model through a strategic joint venture with Vantage Drilling International
21ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
69%
31%
2%10%
38%
50%
61 53 35 3 - - -
197 207 166
54 42 43 42
135 114
87
77 77 78 25
24
417374
288
134 119 12067
14
2019 2020 2021 2022 2023 2024 2025 2026
Egypt KSA Kuwait Algeria Total
PETROBEL
Robust Cashflow and Revenue Visibility underpinned by Strong diversified Backlog
Backlog Breakdown by Client
(1) Excluding Algeria (unrated); (2) Assuming 50/50 weighted rating between the sovereign and JV partner credit rating;
88%
Saudi Aramco Kuwait
Oil Co.
PetroZenimaGPC
SonatrachAGIP
GUPCO
50%
38%
4.5% 5%
1% 0.4% 0.1%
88% of Backlog is derived from KSA and Kuwait
USD 1.5bn
Backlog Breakdown by Country and Currency
By Country By Segment
Sovereign Credit Rating (as a reflection of NOC risk)
JV Partner Credit Rating
% of total Backlog (in blue)
Total Backlog
AA
N/R
A-
N/R
B
N/R
B
N/R
N/R
A-
B
A-
B
A-
➢ Sovereign implied weighted average client rating: A-(1)
➢ Sovereign implied w.a. client rating inc. JV Partner: A-(1) (2)
Backlog Runoff (USD mn, of total backlog over forecast period)
Expected Backlog Runoff: USD 1.5bn
◼ Onshore ◼ Offshore◼ KSA ◼ Kuwait◼ Egypt ◼ Algeria
12%
88%
USD 1.5bn
◼ KSA ◼ Kuwait◼ Egypt ◼ Algeria
22ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
2017A 2018A 2019E 2020E 2021E 2022E 2023E 2024E 2025E
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 Egypt
ADMARINE II Egypt
ADMARINE III Egypt
ADMARINE IV Egypt
ADMARINE V Egypt
ADMARINE VI Egypt
ADMARINE VIII Egypt
ADMARINE 88 Egypt
ADMARINE 261 KSA
ADMARINE 262 KSA
ADMARINE 266 KSA
ADMARINE 655 KSA
ADMARINE 656 KSA
ADMARINE 657 KSA
Offshore Backlog Overview
Contracted Good Chance for Renewal OptionalExtension Contractedwith PreviousOwner
23ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
2017A 2018A 2019E 2020E 2021E 2022E 2023E 2024E 2025E
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
ADES 2 Algeria
ADES 3 Algeria
Rig 155 Kuwait
Rig 776 Kuwait
Rig 870 Kuwait
Rig 871 Kuwait
Rig 180 Kuwait
Rig 878 Kuwait
Rig 808 Kuwait
Rig 809 Kuwait
Rig 144 KSA
Rig 158 KSA
Rig 798 KSA
Rig 157 KSA
Rig 173 KSA
Rig 174 KSA
Rig 040 KSA
Rig 799 KSA
Rig 889 KSA
ADES 13 KSA
ADES 14 KSA
Onshore Backlog Overview
Contracted Good Chance for Renewal OptionalExtension Contractedwith PreviousOwner
Newly Build Assets
Post - Acquisitions Strategy
25ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Hatem SolimanBoard Member
• 37 Years Executive management with Schlumberger
Asset Integration Program
Solid IntegrationBy Tier 1 Consultant Group
Improving Our Value Delivery
Internal assessments and external benchmarking to devise
integration plan for the company as a whole focusing on
Organization & People
Change Management
Integration
Systems & Procedures
Key Objectives
Realize "synergies" & value creation opportunities.
Create a common culture and bind key people.
Design and build the new organization.
Continue day-to-day business.
Assess Design Deliverables Plan Implement
Strengthen ADES Organization
Ihab GueneidCountry Director
• 35 Years Experience• Executive management positions
with Schlumberger & ADC
Mohamed MeradHead of Integration
• 21 Years Experience • Executive Management
experience with SLB in Saudi Market
Norbert HeitmannHead of Operational Excellence
• 35 Years Experience• Extensive Well Construction
Knowledge, leading Industry innovation
Steve WeislHead of Performance Excellence
• 30 Years Experience• Senior Operational Management
with Transocean & Seadrill
Billy MitchellTraining & Competence Manager
• 40 Years Experience• Global training management with
Transocean & WDI
Paul BellissHSE Manager
• 40 Years Experience• Proven HSE & Engineering
experience with BP & BG
26ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Focus on Organic Growth
Post-acquisition, we will focus on organic growth, using our well-distributed asset base to enter into competitive contract bidding
across the region and leveraging the following
Tender Activity
Unutilized RigsExisting Platforms
across footprint
Pre-qualifications across MENA
drilling while retaining its low-cost model through strategic agreements
ADES to provide deepwater drilling services in Egypt’s Mediterranean basin, operating Vantage’s deepwater drilling units with Vantage’s drillships to be leased to the JV
“ADVantage “on a bareboat charter agreement basis
Agreement with a subsidiary of
Asset-Light Model
27ADES INTERNATIONAL HOLDING | Full Year 2018 Results 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 processes for promising tenders, which led to Nabrosand Weatherford acquisition) while consistently renewing Group backlog
• Acquisitions resulted in:• USD 1.2bn of
additional backlog• USD 260mn of
additional revenue
28ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Key Takeaways
Leading Market Position with Significant Barriers to Entry
2
Resilient Business Model Supported by Lean Operating
Cost Structure
1
Track Record ofValue-enhancing Acquisitions at
Attractive Prices
4
Robust HSE Policies with Exemplary Track Record
6
Strong Corporate Governance and Highly Experienced
Management Team
7
High Quality Client Relationships, Robust Contracts
and Predictable Cash Flows Underpinned by Strong Backlog
3
Prudent Financial Policies and Conservative Capital Structure
5
29ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Appendix
30ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Income StatementIn USD unless otherwise stated FY 2018 FY 2017 YoY Change
Total Revenues 205,563,390 157,590,031 30.4%
COGS (Exc. Depreciation) -79,656,871 -57,897,224
COGS / Sales, % 38.8% 36.7%
Gross Profit 125,906,519 99,692,807 26.3%
GPM, % 61.2% 63.3%
SG&A (Exc. Depreciation) -23,585,405 -18,795,499 25.5%
% of Revenue 11.5% 11.9%
Impairment of Accounts Receivable -1,250,607 -579,115
EBITDA 101,070,507 80,318,193 25.8%
EBITDA Margin, % 49.2% 51.0%
Total Depreciation -28,235,346 -20,663,710
Provisions -1,589,053 -898,464
Operating profit 71,246,108 58,756,019 21.3%
EBIT Margin, % 34.7% 37.3%
Interest Expense -31,472,518 -16,550,209
Interest Income 2,738,844 7,015,552
Other (expense)/ income -1,602,982 821,475
Bargain Purchase Gain 44,377,441 -
IPO expense - -5,063,369
Transaction Expenses -5,617,088 -
Other taxes -295,960 -1,573,448
EBT 79,373,844 44,591,818 78.0%
EBT Margin, % 38.6% 28.3%
Income Taxes -3,788,784 -17,881
Tax Rate, % 4.8% 0.0%
Net Profit 75,585,060 44,573,939 69.6%
Net Profit Margin, % 36.8% 28.3%
Minority Interest -254,222
Net Profit attributable to the Equity Parent 75,330,838 44,573,939 69.0%
31ADES INTERNATIONAL HOLDING | Full Year 2018 Results Presentation
Balance SheetIn USD unless otherwise stated Dec-2018 Dec-2017
Non Current Assets Net Fixed Assets 710,704,139 322,441,974
Intangible Assets 456,189 544,541 Available for Sale Investments 2,184,382 1,950,000 Total Non Current Assets 714,547,296 324,936,515 Current Assets Cash & Cash Equivalents 130,875,239 136,964,417
Accounts Receivable 100,757,512 65,987,303
Accrued revenue 36,369,649 12,975,535
Advance Payments to Suppliers 5,437,050 6,027,286 Due from Related Parties 43,915,642 305,615 Prepayments and Other Receivables 377,345 19,770,254 Inventory 52,508,041 20,919,477
Total Current Assets 370,240,478 262,949,887 Total Assets 1,084,787,774 587,886,402
Current Liabilities Long-Term Interest-bearing loans and borrowings 42,258,585 35,911,111 Bank overdraft 2,999,769 21,422,509 Trades and Other Payables 37,409,013 31,170,944 Tax liability 3,040,754 1,118,662
Accrued Expenses 22,807,262 11,869,877
Other Credit Balances 21,598,435 1,355,726 Due to Related Parties 56,106 2,267,344 Dividends Payable - 7,149,034
Provision 1,874,654 1,836,000 Total Current Liabilities 132,612,538 114,101,207 Non Current Liabilities Interest-bearing loans and borrowings 510,010,564 155,155,414 End of Service provision 12,331,933 620,083 Total Non Current Liabilities 527,734,070 155,775,497 Total Liabilities 660,346,608 269,876,704
Shareholder Equity Paid-in Capital 43,793,882 42,203,030 Share Premium 178,746,337 158,224,346 Retained Earnings 193,033,967 117,703,129Merger Reserve (6,520,807) (6,520,807)Legal Reserve 6,400,000 6,400,000
Total Shareholder's Equity 415,453,379 318,009,698
Total Liabilities and Shareholder's Equity 1,084,787,774 587,886,402