Investor PresentationMarch 2018
INTRODUCTION TO ADES
3ADES INTERNATIONAL HOLDING | Investor Presentation
ADES at a Glance
Who We Are
• A leading oil & gas drilling and production services provider in the Middle East and North Africa
• Focused on creating value for E&P players in the region
• Constantly evolving portfolio of services that primarily includes offshore and onshore contract drilling, workover and production services
• ADES specialises 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, low-cost, largely Egyptian workforce
• The Group’s business revolves around providing tailored solutions and superior service to its clients
• ADES offering is characterized by its commitment to global industry standards and ever-expanding services and solutions
Leading MENA-based O&G Service Provider
Differentiated Low-Cost Business Model
Customer-Centric Approach
4ADES INTERNATIONAL HOLDING | Investor Presentation
ADES – Primary Risk Management Strategy
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
5ADES INTERNATIONAL HOLDING | Investor Presentation
Ramped up asset base, expanded geographically
Perfected business model of securing legacy assets and operating with low cost structure
Offshore penetration
Early formation
Corporate Strategy Evolution
1997 - 2003 2004 - 2010 2011 2012 2013 2014 2015 2016 2017+
Scale up operations and expand geographically
1 2 3 4 6 13
USD 10 MN
USD 158 MN16x Revenue Growth
Onshore Drilling & Workover
Jack-up Barge
ROV
Offshore Drilling & Workover
Projects
MOPU
Denotes continuing services Denotes discontinued services
Denotes number of Chartered Rigs
14
6ADES INTERNATIONAL HOLDING | Investor Presentation
Services & Footprint
■ Onshore ■ Offshore ■ Revenue Contribution (2017)
What We Do
12%
64%
16% 6% 3%
Drilling & WorkoverOffshore & onshore drilling & workover services leased at operating day rates
MOPU Mobile offshore platform equipped with production and process facilities and FSO
Jack-up Barge & ProjectsOffshore jack-up barge used to provide
offshore support services to GUPCO
Other ServicesAccommodation, catering and equipment
rental to its offshore rig clients
Where We Operate
Pre-selected markets with natural barriers to entry with a focus on low-risk, non-harsh shallow water environments
KSAEgypt UAEAlgeria
Mexico
Kuwait
India
Iraq
Pre-qualificationsServices
Drilling & Workover | MOPU | Jack-Up Barge & Projects | Other Services
Assets7 Offshore Rigs | 1
MOPU
ServicesDrilling & Workover
Assets2 Onshore Rigs
ServicesDrilling & Workover |
Other Services
Assets6 Offshore Rigs
Algeria Egypt KSA
Egypt52%
Algeria14%
KSA34%
Revenue by Country 2017
Bahrain
Ghana Gulf of New Guinea
MEN
AO
THER
FULL-YEAR RESULTS 2017REVIEW
8ADES INTERNATIONAL HOLDING | Investor Presentation
workforce>1,372
RIFR(1)
0.41
Full-Year Results 2017
Key Highlights
Revenue
USD 158MN
▲18% YoY
Adjusted EBITDA(2)
USD 80MN
51% EBITDA margin
▲11% YoY
Normalised Net Profit(3)
USD 50MN
31% Net Profit Margin
▲31% YoY
Backlog
USD 427MN
5.7x Net Debt
Net Debt
USD 76MN
3.8x Interest Coverage
▼67% YoY
Equity
USD 318MN
▲203% YoY
2017 Financial Highlights
Operational Highlights
New contract awards and renewals
Recruiting the highest calibers
Securing new financing options
Continued exemplary safety performance
Finalized exclusive marketing agreements with leading shipyards
Scaling existing operations and penetrating new markets
Note (1): RIFR refers to Recordable Injury Frequency Rate since inception; Note (2): Adjusted EBITDA - Operating profit for the year before depreciation and amortisation, employee benefit provision and other provisions and impairment of assets under construction under construction; Note (3): Normalised Net Profit – Net Profit for the year before the one-time IPO expense of USD 5.1 million during FY 2017
9ADES INTERNATIONAL HOLDING | Investor Presentation
23 26
38
50
2014 2015 2016 2017
3342
7280
2014 2015 2016 2017
75
101
134158
2014 2015 2016 2017
Income Statement HighlightsFull-Year Results 2017
Income Statement HighlightsNormalised Net Profit(2) | USD MNAdjusted EBITDA(1) | USD MN
Note (1): Adjusted EBITDA - Operating profit for the year before depreciation and amortisation, employee benefit provision and other provisions and impairment of assets under constructionNote (2): Normalised Net Profit – Net Profit for the year before the one-time IPO expense of USD 5.1 million during FY 2017
Revenue| USD MN
CAGR | 2014-17
YoY Growth | FY16-FY17
28.0%
17.5%
CAGR | 2014-17
YoY Growth | FY16-FY17
34.2%
11.2%
CAGR | 2014-17
YoY Growth | FY16-FY17
28.8%
30.6%
10ADES INTERNATIONAL HOLDING | Investor Presentation
52%
14%
34%
FY 2017
Revenue Breakdown Evolution
Backlog Breakdown Evolution (1)
Note (1): As at year-end; Note (2): Calculated as a percentage of revenue before discounts
Increasing Geographic DiversificationRevenue growth was driven by the following:
• The November 2016 deployment of three offshore rigs in
the KSA
• The realization of the full-year impact of our MOPU
operations in Egypt
• The October 2016 launch of operations of ADES 3 in
Algeria
Backlog by CountryTotal backlog as at 31 December 2017 stood at USD 427
million compared to USD 501 million as at 31 December 2016
The PSA between ADES and Nabors Drilling in December 2017
for the acquisition of three operating offshore jack-up rigs in
the KSA (see slide 20) is expected to further strengthen and
diversify our backlog. Once closed, it will add to our revenue
and earnings, with revenues to be marginally weighted
towards 2H 2018
Full-Year Results 2017
Revenue & Backlog
81%
10%
9%
FY 2016 Egypt
Algeria
KSA
Egypt
Algeria
KSA54%
6%
41%
Dec 1744%
8%
48% Dec 16
APPENDIX
12ADES INTERNATIONAL HOLDING | Investor Presentation
USD (‘000) 2016 2017 YoY Growth ('16-'17)
Revenue 134,116 157,590 18%
Cost of Revenue (1) (44,976) (57,897)
Gross Profit 89,140 99,693 12%
Margin 66.5% 63.3%
G&A (2) (14,550) (18,795)
Adjusted EBITDA (3) 74,589 80,897 8%
Margin 55.6% 51.3%
Depreciation (18,460) (20,664)
EBIT 56,130 60,234 7%
Margin 41.9% 38.2%
Interest (9,428) (16,550)
FX Gain / (Loss) - -
Credit Interest - 7,016
Other (4) (5,404) (7,293)
EBT 41,297 43,406 5%
Margin 30.8% 27.5%
Investment Income - -
Taxes (3,284) 1,168
Net Profit 38,013 44,574 17%
Margin 28.3% 28.3%
Normalised Net Profit(5) 38,013 49,637 31%
Margin 28.3% 31.5%
Income Statement
Note (1) & (2) : Does not include depreciation expense; Note (3): Adjusted EBITDA - Operating profit for the year before depreciation and amortisation, employee benefit provision and other provisions and impairment of assets under construction; Note (4): Includes provisions, impairment of trade receivables, impairment of assets under construction, loss on disposal of property and equipment, non recurring income (/expense) and other income; Note (5): Normalised Net Profit – Net Profit for the year before the one-time IPO expense of USD 5.1 million during FY 2017
13ADES INTERNATIONAL HOLDING | Investor Presentation
USD (‘000) Dec-2016 Dec-2017
Cash and Cash Equivalents 5,193 136,964 Accounts Receivable 50,789 65,987 Other Receivables 3,226 6,034 Accrued Revenue 17,587 12,976 Dividend Receivable & Advance Payments 11,339 19,764 Inventory 17,777 20,919 Due from Related Parties 277 306 Total Current Assets 106,188 262,950
Net Fixed Assets 290,677 322,987 Investments & Intangible Assets 1,950 1,950 Total Non-Current Assets 292,627 324,937
Total Assets 398,815 587,886
Bank Overdraft 15,449 21,423 CPLTD 30,356 35,911 Account Payables 27,916 31,171 Accrued Expenses & Other Credit Balances 13,133 13,226 Provisions 2,934 1,836 Due to Related Parties 4,082 2,267 Dividend Payable 7,149 7,149 Tax Liability 2,857 1,119 Total Current Liabilities 103,875 114,101
Long Term Debt 189,930 155,155 End of Service Provision 101 620Total Non-Current Liabilities 190,031 155,775
Paid-up Capital 1,000 42,203 Additional Paid in Capital 30,900 158,224 Merger reserve (1) (6,521) (6,521)Retained Earnings 75,048 119,622 Legal Reserves 4,481 4,481 Total Shareholders Equity 104,908 318,010
Total Shareholders Equity and Liabilities 398,815 587,886
Balance Sheet
Note (1): Represents the difference between consolidation paid under the reorganization plan and nominal value of acquired shares
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