ADES International Holding Ltd Results for the Year Ended 31 December 2017

LONDON & DUBAI, United Arab Emirates–(BUSINESS WIRE)–ADES International Holding (“ADES” or “the Company”), the London-listed
company providing offshore and onshore oil and gas drilling and
production services in the Middle East and Africa through its
subsidiaries, announces today its full-year results for the year ended
31 December 2017.

FY2017 Headline Figures

Summary Income Statement

Financial Highlights

• Revenue grew 17.5% year-on-year, from USD 134.1 million in 2016
  to USD 157.6 million in 2017.
• Gross profit grew 11.9% year-on-year, from USD 70.8 million in
  2016 to USD 79.2 million in 2017.
• Adjusted EBITDA recorded USD 80.3 million in FY2017, up 11.2%
  year-on-year and delivering an adjusted EBITDA margin of 51.0%.
• Net profit rose 17.3% year-on-year to USD 44.6 million in
  FY2017.
• Normalised net profit excluding the one-time IPO expense in
  FY2017 stood at 49.7 million.
• Cash balances including cash equivalents stood at USD 137.0
  million at 31 December 2017, supported by funds raised at IPO.
• Net debt stood at USD 75.5 million as at 31 December 2017.

Operational Highlights

• Maintained an exemplary safety performance, recording over 4.34
  million man hours with a Recordable Injury Frequency Rate (“RIFR”)
  (per 200,000 working hours) at 0.41, below the IADC worldwide standard
  rate of 0.56 as at 31 December 2017.
• FY2017 utilisation rate recorded 78%, which takes into
  account planned recertification and upgrading projects on two offshore
  rigs in Egypt and two offshore rigs in the KSA during the year. ADES
  maintained a six-year average utilisation rate of 90%, above the
  current average Middle East Jack-up utilisation rate of 75%5.
• Total backlog as at 31 December 2017 stood at USD 427 million,
  compared to USD 501 million as at 31 December 2016.
• New contract awards for Admarine III with General Petroleum
  Company (GPC), Admarine 88 with Belayim Petroleum Co. (Petrobel),
  while Admarine VIII was awarded a farm-in agreement with Suez Oil
  Company (SUCO). Revenues from Admarine 88 and Admarine VIII contracts
  are expected to commence in the first half of 2018.
• Contract renewals and extensions, including a three-month
  extension for the Admarine II jack-up barge with the Gulf of Suez
  Petroleum Company (GUPCO) as well as an extension of GUPCO’s existing
  contract for ADES’ jack-up rig, Admarine IV, for a further six months.
  Admarine V was also renewed for a six-month period on a call-out basis
  with an option to extend the contract for a further six months, while
  GPC renewed its existing contract for ADES’ Admarine VI jack-up rig
  for a two-year period.
• Acquisition of three operational jack-up rigs located in the
  KSA for a total purchase price of USD 83 million – payable in a
  combination of cash and ADES shares – from a subsidiary of Nabors
  Industries Ltd (Nabors), subject to the satisfaction of conditions
  precedent including the novation and renewal of the rigs’ existing
  drilling contracts with a current major client. Upon completion, the
  transaction will double ADES’ Arabian Gulf fleet and number of
  contracted rigs.
• Long-term agreement to establish a joint venture (JV) with a
  subsidiary of Vantage Drilling International (Vantage), which will see
  ADES operate Vantage’s deepwater drilling units in Egyptian waters on
  a bareboat charter agreement basis in line with ADES’ asset-light
  model and is a natural development of its strategy.
• Finalised exclusive marketing agreements with leading shipyards enabling
  ADES to market new-build offshore jack-up rigs, including
  high-specification rigs, that will allow it to deploy these assets on
  a revenue-sharing basis once contracted, broadening ADES’ service
  offering and allowing it to penetrate new markets as well as capture a
  larger market share.

Current Trading and Outlook

• We expect 2018 to deliver continued organic growth from existing
  operations with realisation of several of the Company’s strategic
  efforts during 2017, including the commencement of new contracts and
  securing new tenders across the region. The Nabors acquisitions, once
  completed, will add to the Company’s revenue and earnings, and as a
  result of the expected timing of completion, we expect overall Company
  revenues to be weighted materially towards the second half of the year.
• The Company is committed to putting in place the necessary debt
  arrangements to secure and support its current operation and future
  expansion. Further information on debt transactions will be made
  available to the market once concluded.
• Management is actively evaluating acquisition
  opportunities that meet ADES’ criteria of being located in the
  MENA region, within our core line of business and will provide
  accretive value to shareholders.

Commenting on the full-year performance, Dr. Mohamed Farouk, Chief
Executive Officer of ADES International said:

“In our first full-year results following our IPO on the London Stock
Exchange in May 2017, ADES has successfully sustained its growth
trajectory and delivered a strong operational and financial performance.

Our top-line recorded growth of 18% to USD 158 million was on the back
of continued high rig utilisation rates, well above the current average
Middle East jack-up utilisation rate of 75%6. This growth was
supported by our increasingly diversified revenue mix across geographies.

In addition, ADES’ low-cost business model saw us maintain EBITDA
margins in excess of 50% and deliver a net profit growth rate of
approximately 17% year-on-year. Most importantly, we continued to set
the benchmark for service quality and safety performance, with an RIFR
rate of 0.41, well below the IADC worldwide standard rate of 0.56 as at
31 December 2017.

ADES’ continued success is driven by our three-pillar growth strategy of
replenishing our backlog; actively participating in tendering activities
to expand our footprint and increase market share; and targeting smart
and value accretive acquisition opportunities. 2017 saw the Company make
significant progress on all three fronts, having been awarded new
contracts while securing renewals and extensions for existing contracts;
participated in tenders across existing and new markets; and continued
to grow our fleet, with the recent signing of a PSA to acquire three
operating offshore jack-up rigs in the Arabian Gulf.

In line with our post-IPO growth strategy of scaling-up operations in
existing and target markets, ADES will continue to leverage its
demonstrated purchasing power and streamlined decision-making process to
swiftly act on acquisition opportunities that meet our criteria for
delivering long-term sustainable growth. To expand the range of
opportunities we are able to consider, the Company is committed to
putting in place the necessary debt arrangements to bolster our already
strong cash position following the IPO.

We expect 2018 to deliver organic growth from existing operations, with
the realisation of several of our strategic efforts during 2017,
including the commencement of new contracts and securing new tenders
across the region, as well as from the Nabors acquisitions, which once
completed, will add to our revenue and earnings.

Given the timing of completion of the Nabors transaction and the
resulting contribution of the three rigs to revenues, we expect overall
company revenues to be weighted materially towards the second half of
the year.”

Conference Call

ADES’ management team will present the FY2017 Results and will be
available for a Q&A session with analysts and investors today at 14:00
BST. For conference call details, please email [email protected]

The full announcement can be viewed here.

1 Adjusted EBITDA – Operating profit for the year before
depreciation and amortisation, employee benefit provision and other
provisions and impairment of assets under construction
2 Normalised
Net Profit – Net Profit for the year before the one-time IPO expense of
USD 5.1 million during FY2017
3 Utilisation rate
– Extent to which ADES’ assets under contract and available in the
operational area are generating revenue throughout the contract,
calculated by dividing utilisation days by potential utilisation days
4
Based on weighted average number of shares
5Source: Clarksons Research – Offshore Drilling Rig Monthly (February,
2018)
6Source: Clarksons Research – Offshore
Drilling Rig Monthly (February, 2018)

Contacts

Enquiries
ADES International Holding
Hussein
Badawy
Investor Relations Officer
[email protected]
+2
(0)2527 7111
or
Instinctif
David Simonson
Laura
Syrett
George Yeomans
[email protected]
+44
(0)20 7457 2020