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ADES profit falls as IPO costs offset revenue rise

ADES profit falls as IPO costs offset revenue rise

 

BAGHDAD: ADES International Holding Ltd. (ADES.LN) on Tuesday reported an 11% fall in pretax profit for the first half of 2017, despite increased revenue due to costs associated with its initial public offering.

The Middle East and Africa-based oil and gas drilling company made a profit of $16.6 million for the six months ended June 30, compared to $18.7 million in the year-before period. Revenue was up 46% to $87.8 million.

The company attributed the fall in profit to the one-time cost of its May IPO totaling $4.6 million. The revenue increase was driven by high utilization of employed rigs, the company said.

ADES said that new contracts won in the first half of the year will not begin until 2018, as a result of which the company expects the second half of the year to be broadly in line with first-half results.

ADES International Holding Ltd. (ADES.LN) on Tuesday reported an 11% fall in pretax profit for the first half of 2017 and lowered its guidance, after contracts it won in 2017 were delayed to the beginning of 2018.

The provider of oil-and-gas drilling and production services for the Middle East and Africa made a profit of $16.6 million for the six months ended June 30, compared to $18.7 million in the year-before period–a fall attributed to the one-time cost of its May IPO totaling $4.6 million. Revenue was up 46% to $87.8 million boosted by higher rig use, the company said.

ADES said that new contracts won in early 2017 of the year won’t begin until 2018 as opposed to the second half of the year as it originally expected. The company now expects the second half to be broadly in line with the first, instead of higher as previously expected. ADES has an order backlog of $430 million. It didn’t specify the value of contracts that were delayed.

As part of its IPO the company raised $170 million, which it said would be used to scale-up its operations in Egypt, Saudi Arabia and Algeria and to fund ventures into new markets.

In an interview with Dow Jones Newswires Tuesday, Chief Executive Officer Mohammed Farouk said that ADES was looking for acquisition opportunities in the Middle East and North Africa region. The company had $163.5 million cash at June 30.

ADES is looking to buy companies with a similar footprint as itself and that won’t dilute earnings, said Dr. Farouk, adding that the company might consider expanding to an adjacent region or market, but wouldn’t going beyond that.

The company also expected to close a number of competitive tenders in new regions like Iraq and the United Arab Emirates, although it would be operating through integrated service companies, said Dr. Farouk.

Shares at 0945 GMT were down 6.66 pence, or 0.7%, at 965.76 pence. They floated on May 9 at 16.50 pence.