ADES International (ADES), a provider of oil & gas drilling and production services in the Middle-East and Africa, was admitted to the main board of the London Stock Exchange in May. Its maiden financial release shows gross profits up by 29 per cent at the half-year stage to $41m (£30m), although the underlying margin came under pressure due to costs associated with the introduction of three offshore rigs in Saudi Arabian waters.
Conversely, administrative expenses – something of a bugbear during any listing process – were held down due to the devaluation of the Egyptian pound. ADES has a dominant market share in the Gulf of Suez, so the vast majority of group revenue is currently generated in Egypt, where the company is also headquartered. Nevertheless, the cost of admission trimmed $4.6m off half-year earnings.
Operations have expanded from a single rig in 2011 to a total of 14 now. However, there’s little point in expanding your fleet if the rigs lay idle, as some sector peers have discovered to their cost since the oil price collapse in 2014. ADES, though, has maintained an average utilisation rate of 90 per cent since 2012. This, along with “multiple contract awards and renewals”, is underpinning strong cash generation: net operating cash flow more than doubled year on year to $7.7m in the reported period.
| ADES INTERNATIONAL (ADES) | ||||
| ORD PRICE: | 1,239¢ | MARKET VALUE: | $523m | |
| TOUCH: | 1,227-1,250¢ | 12-MONTH HIGH: | 1,750¢ | LOW: 1,180¢ |
| DIVIDEND YIELD: | na | PE RATIO: | 11 | |
| NET ASSET VALUE: | 689¢ | NET DEBT: | 23% | |
| Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
| 30 Jun | ($m) | profit ($m) | share (¢) | per share (¢) |
| 2016 | 60.4 | 18.7 | 58.0 | nil |
| 2017 | 87.8 | 16.6 | 50.0 | nil |
| % change | +46 | -11 | -14 | - |
| Ex-div: | - | |||
| Payment: | - | |||
| £1 = $1.35 | ||||
