Drake & Scull International (p J S C) · DFM:DSI
Drake & Scull International (p J S C) — Q3 2016 Earnings Presentation
50 slides from Drake & Scull International (p J S C)'s earnings presentation, 2016
Slide 1: Investor Presentation Q3 2016
Investor Presentation Q3 2016
Slide 2: Disclaimer
Disclaimer This presentation has been produced by the management of Drake & Scull International PJSC (DSI) (“DSI” or the “Company”), solely for use at various tele- conference arranged for existing/prospective institutional investors and for their clients/potential clients and shall not be reproduce
Slide 3: Contents
Contents 1 Executive Summary 2 Business Summary 3 Business Performance 4 Segmental Performance 5 Business Environment 6 Financial Statements 7 Financial Performance 8 Appendix 3
Slide 4: Executive Summary
01 Executive Summary Drake®Scull
Slide 5: Executive Summary: Q3-16 Results
Executive Summary Q3-16 Results Revenue: AED 869 Million Gross Profit/ (Loss) : AED (10) Million Net Profit/ (Loss): AED (81) Million +100% (10) 869 (81) 434 (985) (683) +99% +92% Q3-16 Q3-15 Q3-16 Q3-15 Q3-16 Q3-15 Debt: AED 2,661 Million Operating Cash Flow: AED (26) Million Backlog: AED 8.9 Billi
Slide 6: Business Summary
02 Business Summary Drake®Scull
Slide 7: Business Outline
Business Outline By capitalizing on our heritage and brand values, we will We will safely deliver world-class projects, providing invest to grow organically and inorganically in order to integrated design and engineering in General Contracting, become global market leaders, providing engineering VIS
Slide 8: Business Transformation
Business Transformation 1 3 Strategy Review and Recalibrating the project Development financing debt Operatinal Review & Harvesting new debt Assessment Review of Exisiting Business Transformation facilities & pricing Plan Sign-off all old & new Cash flow modelling credit lines Business transformatio
Slide 9: Risk Evaluation: Key factors impacting Q3-16 Results
Risk Evaluation Key factors impacting Q3-16 Results Working Capital Revenue Rising Debt Project Cancellation High Deficit Adjustment Finance cost on Q-o-Q basis remained nearly constant, but has increased on a Y-o-Y basis and is expected to rise as result of rising working capital financing to plug
Slide 10: Business Performance
03 Business Performance Drake®Scull
Slide 11: Revenue and Order Book Overview
Revenue and Order Book Overview QoQ Revenues and Order Book Revenues (AED mn) Awards (AED mn) Backlog (AED mn) 1,368 1,424 13,244 12,348 1,285 1,074 11,862 11,300 1,031 869 9,370 8,872 806 434 437 343 227 246 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q2-15 Q3-15 Q4-15 Q
Slide 12: Awards
Awards Awards Business Segment Breakdown (AED bn) Awards Sectorial Breakdown (AED bn) 5.4 7.5 5.3 3.0 0.8 7% 4% 4% 4% 4% 30% 7% 1% Water Treatment 42% 41% 2% 8% 15% 7% Utilities 76% 82% 2% 1% 6% 30% 2% 7% 70% Residential 52% 55% 16% 12% 20% 18% Rail 1% 6% 14% 2012 2013 2014 2015 2016 Power 10% 5% 37
Slide 13: Backlog
Backlog Backlog Business Segment Breakdown (AED bn) Backlog Geographical Breakdown (AED bn) 9 12 15 12 9 9 12 15 12 9 21% 17% 18% 6% 24% 23% 5% 4% 6% 44% 17% 50% 34% 53% 42% 30% 62% 5% 71% 49% 5% 2% 9% 5% 55% 51% 43% 45% 46% 41% 34% 32% 25% 23% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Civil
Slide 14: Q3-16 Backlog Breakdown
Q3-16 Backlog Breakdown Business Stream Breakdown Geographic Breakdown 6% 23% 25% * Engineering 17% 23% AED 8.9 Civil 6% 6% 7% billion 4% 5% Water & Waste 3% 3% Water, Others 1% 71% UAE Kuwait Egypt Iraq Algeria Oman India Qatar KSA Others Jordan * Includes AED 2.2 Billion related to a project which
Slide 15: Q3-16 Sectorial & Geographic Breakdown
Q3-16 Sectorial & Geographic Breakdown Revenue Breakdown Geographic Distribution 5% Engineering AED 35% 869 Civil million 60% Water & Waste Water, Others Geographic Breakdown 45% 33% 22% KSA: UAE: AED 195 AED 387 mn mn KSA UAE Others 15
Slide 16: Y-o-Y Performance
Y-o-Y Performance Revenues (AED mn) Revenues witnessed 100% increase in the quarter mainly as a result of Q3-16 869 the lower revenues recognized in Q3-15 due to reversals for the recognized uncertified variation orders and claims +100% Q3-15 434 Gross Profit/ (Loss) (AED mn) Gross Loss reduced to A
Slide 17: Q-o-Q Performance
Q-o-Q Performance Revenues (AED mn) This quarter witnessed 8% increase in revenues from the previous Q3-16 869 quarter due to revenue reversals recorded in the last quarter. +8% Q2-16 806 Gross Profit/ (Loss) (AED mn) Reduction in gross loss by 50% from the previous quarter due to Q3-16 -10 provisio
Slide 18: 9M-16 Performance
9M-16 Performance Revenues (AED mn) Revenues witnessed 4% decrease for 9 months ended September 2016 9m-16 2,705 as compared to same period in 2015 as a result of project cancellations -4% primarily in KSA. 9m-15 2,830 Gross Profit/ (Loss)(AED mn) As compared to loss on the previous period, the Comp
Slide 19: Cash Flow & Working Capital Bridge
Cash Flow & Working Capital Bridge Cash Flow Bridge (AED mn) Cash reduction was primarily caused by investment in operating activities (190) (246) Operating cash flow reduced over the year due to the increase 134 in working capital. (303) 113 Positive investing cash flow was registered as DSI has so
Slide 20: EBITDA & Net Debt Bridge
EBITDA & Net Debt Bridge EBITDA Bridge (AED mn) The EBITDA loss has reduced (2) (29) by 97% to AED (29) mn. 237 EBITDA same period last year 238 was significantly lower due to the one off provisions recorded in Q3 2015. (936) 434 EBITDA Q3-15 Contract revenue Contract Cost G&A Other Income EBITDA Q3
Slide 21: Receivable Breakdown
Receivable Breakdown Receivable Breakdown (AED mn) Key Metric (AED mn) Q3-16 Q3-15 Total Receivables 5,128 4,663 5,128 9% 4,663 Unbilled Receivables 3,617 3,230 19% 18% Retention Receivables 911 854 3,617 1,511 3,230 1,433 Receivable Turnover 2.77 2.63 81% 82% 911 Current Non Current 854 Current Non
Slide 22: Receivables - Q3-16 vs Q3-15
Receivables - Q3-16 vs Q3-15 Receivables - Q3-16 Receivables- Q3-15 40 3% 21 1% 381 25% 302 21% AED 1,511 AED 1,511 AED 1,433 AED 1,433 mn mn mn mn 1,090 72% 1110 78% Engineering Civil Water & Waste Water, Others Engineering Civil Water & Waste Water, Others 379 25% 286 20% 589 39% AED 1,511 AED 1,5
Slide 23: Unbilled Receivables - Q3-16 vs Q3-15
Unbilled Receivables - Q3-16 vs Q3-15 Unbilled Receivables Q3-16 Unbilled Receivables Q3-15 87 2% 100 3% 1,396 AED 3,617 39% AED 3,617 1103 34% mn AED 3,230 AED 3,230 2,134 mn 59% mn mn 2027 63% Engineering Civil Water & Waste Water, Others Engineering Civil Water & Waste Water, Others 607 651 16% 1
Slide 24: Capital Structure
Capital Structure Key Metrics (AED mn) Capital Structure (AED mn) Metric Q3-16 Q3-15 4,491 4,461 Total Equity 1,830 2,120 41% 48% Total Bank Debt 2,661 2,341 Equity Bank Debt -14% 14% Net Debt 2,217 1,865 59% 52% Tangible Equity 828 1,084 Total Capital 4,491 4,461 Q3-16 Q3-15 % Total Equity Debt / T
Slide 25: Debt Movement
Debt Movement Debt Breakdown (AED mn) Key Metric (AED mn) Q3-16 Q3-15 2,661 14% Total Bank Debt 2,661 2,341 2,341 460 Net Debt 2,217 1,865 11% 377 22% 1,045 EBITDA -29 -936 2,661 1,113 2,341 Net Debt / EBITDA -13.1X -1.75 X 89% 78% 854 337 Current Non Current 514 Current Non Current Debt : Equity 59
Slide 26: Bank Debt and Gearing
Bank Debt and Gearing Gearing Ratio (AED million) 145% 3,076 2,975 2,767 114% 2,661 2,424 2,211 2,130 1,830 72% 1,328 1,117 48% 38% FY12 FY13 FY14 FY15 YTD FY16 Bank Debt Total Equity Gearing Increase in debt is attributable to increase in working capital facilities Equity reduction is a result of t
Slide 27: Segmental Performance
04 Segmental Performance Drake®Scull
Slide 28: Engineering Division
Engineering Division Overview Geographical Footprint Drake & Scull Engineering (“DSE”) addresses MEP, Water, Power, Telecom, and Power and infrastructure requirements across Asia and the MENA region, giving it an unparalleled reach and credibility within the Jordan Qatar industry. Kuwait DSE is also
Slide 29: Engineering Y-o-Y Performance
Y-o-Y Performance Revenues* (AED mn) Revenues witnessed 30% increase in the quarter mainly as a result Q3-16 556 of the lower revenues recognized in Q3 2015 due to reversals for the +30% recognized uncertified variation orders and EOT Claims Q3-15 428 Gross Profit / (Loss) (AED mn) Gross profit has
Slide 30: Civil Division
Civil Division Overview Geographical Footprint Established as the dedicated construction and general Contracting arm of DSI in 2010. Jordan DSC is also a well-established and carries out contracting work such as property construction and associated real estate activities. UAE Algeria KSA Key Highlig
Slide 31: Civil Y-o-Y Performance
Y-o-Y Performance Revenues* (AED mn) Q3-16 306 Revenues witnessed increase in the quarter mainly as a result of the +602% lower revenues recognized in Q3 2015 due to reversals for the Q3-15 -61 recognized uncertified variation orders and EOT Claims Gross Profit/ (Loss) (AED mn) Gross profit has incr
Slide 32: Group Snapshot
Group Snapshot Revenue Awards-YTD 16 Backlog 5% 6% 30% 23% 35% AED 869 AED 815 AED 8.9 million million billion 60% 70% 71% Engineering Engineering Civil Engineering Water & Waste Water, Others Civil Water & Waste Water, Others Water & Waste Water, Others Operating Profit / (Loss) (AED mn) Key Metric
Slide 33: Business Environment
05 Business Environment Drake®Scull
Slide 34: Sector focus and project pipeline
Sector focus and project pipeline Project Value Drake and Scull is well positioned to benefit from large Sector (AED mn) project pipeline in the region Engineering 11,725 The management is optimistic about the potential project pipeline likely to materialize 2016 early 2017 from the Water & Waste Wa
Slide 35: Economy growth expected to slow in 2016
Economy growth is expected to slowdown in 2016 due to the uncertainty in the recovery of oil prices GDP GROWTH FORECASTS Real GDP growth- UAE Real GDP growth- KSA 7.12% 9.96% 5.38% 3.64% 3.49% 2.67% 1.19% 4.89% 4.73% 2011 2012 2013 2014 2015 2016e 3.97% 3.08% Real GDP growth- Qatar 13.4% 2.26% 4.9%
Slide 36: Financial Statements
06 Financial Statements Drake®Scull
Slide 37: YoY Income Statement
YoY Income Statement % of % of Variance Income Statement (AED mn) Q3 16 Revenue Q3 15 Revenue Commentary Amount % Revenue 868.6 433.8 434.8 100% Contract Cost (878.1) (101%) (1,116.6) (257%) 238.5 21% The Gross loss is mainly Gross Profit/ (Loss) (9.6) (1%) (682.8) (157%) 673.2 99% attributed to cos
Slide 38: QoQ Income Statement
QoQ Income Statement % of % of Variance Income Statement (AED mn) Q3 16 Revenue Q2 16 Revenue Commentary Amount % Revenue 868.6 805.5 63.1 8% Contract Cost (878.1) (101%) (825.8) (103%) (52.3) (6%) The Gross loss is mainly Gross Profit/ (Loss) (9.6) (1%) (20.3) (3%) 10.7 53% attributed to cost overr
Slide 39: 9M Income Statement
9M Income Statement % of % of Variance Income Statement (AED mn) 9m 16 Revenue 9m 15 Revenue Commentary Amount % Revenue 2,704.9 2,829.6 (124.7) (4%) Contract Cost (2,660) (98%) (3,310.4) (117%) 650.4 20% The Gross loss is mainly attributed to cost overruns Gross Profit/ (Loss) 44.9 2% (480.8) (17%)
Slide 40: Balance Sheet
Balance Sheet Balance Sheet (AED mn) Q3 16 Q3 15 Variance Commentary Amount % Total Non-Current Assets 1,777 2298 (521) (23%) Current Asset Inventories 51 40 12 29% Development properties 9 19 (11) (55%) The variance is mainly due Trade and other receivables 5,492 4,997 495 10% to increase in trade
Slide 41: Cash flow statement
Cash flow statement Y-o-Y Q3-16 Q3-15 Change Commentary AED Million AED Million % Net (loss)/profit for the period before tax (78) (985) 92% Cash from operations Changes in working capital 10 533 (98%) improved in Q3-16 as the losses recorded last year Adjustments for non operating income/expense 42
Slide 42: 9M Cash flow statement
9M Cash flow statement Y-o-Y 9m 16 9m 15 Change Commentary AED Million AED Million % Net (loss)/profit for the period before tax (289) (946) 69% Cash from operations Changes in working capital (282) 253 (211%) improved in Q3 2016 as the losses recorded last year Adjustments for non operating income/
Slide 43: Financial Performance
07 Financial Performance Drake®-Scull
Slide 44: Income Statement Analysis
Income Statement Analysis Profitability Ratio Rationale -1.1% -7.5% -9.3% -3.5%-11.8% -6.3% Profitability Ratios -14.4% -20.1% Enhanced margins -36.5% Gross Margin ↑ Negative Operating margin reduced comparatively due to Operating Margin ↑ high revenue and lower direct -157.4% costs as compared to l
Slide 45: Balance Sheet Analysis
Balance Sheet Analysis Liquidity Ratio Rationale 1.09 1.10 1.08 1.09 Liquidity Ratios Stable Liquidity Position Current ratio decreased slightly Current Ratio ↓ due to increase in accounts payables and accruals, however, the decline was offset Quick Ratio ↓ by a increase in receivable 0.08 0.09 Curr
Slide 46: Capital Structure Analysis
Capital Structure Analysis Debt Ratio Rationale 1.45 Debt Ratios Weaker Solvency Position 1.10 Debt ratios deteriorated due to Debt Ratio ↑ the increase in debt to meet the working capital obligations across regions and the 0.33 0.29 Capitalization Ratio ↑ reduction in equity due to 0.14 0.20 losses
Slide 47: Cash Conversion Cycle
Cash Conversion Cycle Days Improvement in Cash Conversion Cycle Cash Conversion Days Sales Days WIP Days Inventory Payable Cycle Outstanding Outstanding Outstanding Outstanding DSO in Q3 -16 reduced to 132 days from 139 (CCC) (DSO) (DWIP) (DIO) (DPO) days in Q3 , reduced by 7 days DIO has remained n
Slide 48: Appendix
08 Appendix Drake®Scull
Slide 49: Stock Price
Stock Price Stock Price 0.7 250 200 150 0.35 100 50 0 0 Oct-15 Oct-15 Nov-15 Dec-15 Dec-15 Jan-16 Feb-16 Feb-16 Mar-16 Apr-16 Apr-16 May-16 Jun-16 Jun-16 Jul-16 Aug-16 Sep-16 Sep-16 Volume (in million) Price (in AED) Stock Price of competitors (In AED) 0.9 0.6 0.3 0 Oct-15 Nov-15 Dec-15 Jan-16 Feb-1
Slide 50: Investor Relations Team
Investor Relations Team Rabih Abou Diwan Investor Relations T: +971 (04) 446 3444 M: 971 (0) 52 800 3412 [email protected] For further enquiries, please visit www.drakescull.com
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