Presentation for Investor Conference Call Thursday 26 th March 2015

Transcription

1 Presentation for Investor Conference Call Thursday 26 th March

2 Contents Slide Number Facts & Figures 3 Borets Company Position in ESP Global Market Borets Technologies and Solutions 5 Borets Manufacturing Facilities Worldwide 6 Service Capabilities 7 Borets Service Company Worldwide 8 ESP System Design and Configuration 9 Revenues remain stable 10 Real Revenue keeps on growing while nominal being effected by exchange rate 11 Continuous EBITDA growth and margin improvement 12 Successful business development and growth in existing international operations 13 Leverage ratios are compliant with Leverage Policy 14 Consolidated Net Leverage Ratio calculation 15 Guarantors test 2014 passed successfully 16 Net Capex Breakdown 17 Details of 2014 IFRS Accounts 18 Income Statement EBITDA Balance Sheet Risk Management 30-32

3 Facts & Figures 1897 the year Borets began business in Russia $767MM annual revenue in 2013 #3 ESP global market position in 2014 #1 ESP global market position by number of units sold employees worldwide dedicated field personnel 500+ Clients served internationally 10 Manufacturing Facilities in 5 countries ESP manufactured annually ESPs installed base innovative Permanent Magnet Motors in operation worldwide 24 Service & repair bases in 10 countries serviced wells 3

4 Borets Company Position in ESP Global Market 2013 Borets Company had 15% of the global ESP market in 2014 Borets Company dominates in the Russian ESP market holding share 41% Borets Company has significant share in the Northern American ESP market- 7%, in Egypt- 20%, in Colombia 20% Global ESP Market in 2014 Broken Down by Competitors, % 3% 4% 6% 10% 8% BHI Centrilift 28% SLB Reda Borets (inc. WFT ESP) Wood Group Novomet 15% 26% Al-Khoraef Alnas Others

5 Borets Technologies and Solutions The only vertically integrated ESP provider in the world supplying complete ESP systems 5

6 Borets Manufacturing Facilities Worldwide 10 Manufacturing Facilities: Russia: Lebedyan, Lysva, Kurgan, Yuryev-Polsky, Stary Oskol; China: Shanghai; Slovakia: Dubnica; Canada: Edmonton; USA: Midland (Texas), Tulsa (Oklahoma). 6

7 Service Capabilities Borets is the largest ESP service provider worldwide More than serviced wells 24 Service Centers located globally Capable of servicing and repairing equipment manufactured by all global ESP manufacturers Capable of providing turnkey ESP solutions to clients Maintained stock of equipment & components for repair and equipment maintenance Knowledgeable, fully-trained professionals to meet the needs of our clients 24 hours per day 7

8 Borets Service Company Worldwide 24 Service Centers: Russia: Nizhnevartovsk, Muravlenko, Nefteyugansk, Neftekumsk, Krasnodar, Usinsk, Buzuluk; USA: Midland (Texas), Breckenridge (Texas), Oklahoma City (Oklahoma), Norman (Oklahoma), Kilgore (Texas); Canada: Medicine Hat, Estevan, Nisku; Egypt: Alexandria; Venezuela: Maracaibo; Brazil: Carmopolis, Catu; Colombia: Bogota, Villavicencio, Neiva, Serbia: Zrenjanin; Congo: Pointe-Noire; 8

9 ESP System Design and Configuration VFD Cable Pump Intake MLE Downhole Sensor Motor Seal Motor 9

10 Revenues remain stable Revenues, $mm ,7 766,9 720, ,0 579,1 510,1 Consolidated Russia ,6 187,8 210,0 International Growth Drivers Russia: Maintained strong performance in 2014 with Revenue increasing 4% in Ruble terms International: Business Development Healthy improvement in all established operations 10

11 Real Revenue keeps on growing while nominal being effected by exchange rate Total revenue , $mm * B Actual, actual rate Actual, rate 29,3 RUR/USD Budget (rate 60 RUR/USD*) Budget, rate 29,3 RUR/USD 11

12 Continuous EBITDA growth and margin improvement Consolidated EBITDA ($mm) and EBITDA margin (%) % 20% 21% ,0 17% 107,1 15% 148,3 17% 131,3 144,2 14% EBITDA 60 7% EBITDA margin % 12

13 Successful business development and growth in existing international operations International Revenues breakdown*, $mm 100% 90% 80% 70% 60% 50% 40% % 20% 10% % B USA Colombia Egypt Venezuela Canada Other 13

14 Leverage ratios are compliant with Leverage Policy Net Debt (US$, mm) and Net Debt /EBITDA multiple 600 3, ,6 2,4 2, ,2 341,5 2, ,1 1, ,2 84,8 0,8 0,2 32,8 1,0 0, ,0 Net debt Net debt/ebitda According to the conditions of the Notes the Consolidated Net Leverage Ratio should not exceed 3 to 1 on an incurrence basis For 2014 the Consolidated Net Leverage Ratio equals 2,37 with headroom of 21% to the covenant restriction value 14

15 Consolidated Net Leverage Ratio calculation $ mm Total Debt 426,5 416,9 Cash 87,4 75,5 Net Debt 339,1 341,4 EBITDA 131,3 144,3 Ratio (<3.0x) 2,58 2,37 Strength reserve (%) 13,9 21,1 15

16 Guarantors test 2014 passed successfully Net Assets and EBITDA of the Guarantors, $mm 2014 Guarantors Test NA EBITDA Borets Company 178,0 126,7 Lemaz 17,7 0,8 SK Borets 17,8 4,3 Borets US 76,9-8,8 Borets Canada 13,1-2,1 ZTS-Kabel sro 12,4 1,4 Borets Int. Ltd. including Colombian branch 143,8-3,0 Total Guarantors 459,7 119,3 Total Consolidated 132,7 144,2 % of Consolidated Accounts 346,4% 82,7% According to the bond issuance documentation after the publication of the annual or interim financial statements the Guarantors undergo Guarantors Test, which implies compliance with the following: (i)aggregate consolidated net assets after intragroup eliminations of the Guarantors comprises 80 per cent. or more of the consolidated net assets of the Group (ii)ebitda of the Guarantors comprises 80 per cent. or more of the EBITDA of the Group 16

17 Net Capex Breakdown Capex calculation $ mm Purchase of PPE 21,4 33,5 30,155 Rental Capex 14,1 17,3 10,7 R&D 9,3 8,0 7,513 Net Capex 44,8 58,7 48,4 Divestments -1,1-9,2-3,9 Total Capex 43,7 49,5 44,4 17

18 Details of 2014 IFRS Accounts 18

19 Income Statement (1/4) 1. Sales Revenues $766,9 mm $720,1 mm - 6,1% - Product Sales $mm: 522,3 474,8 Growth (%): 1,9 (9,1) Contribution (%) 68,1 65,9 - Services $mm: 244,6 245,3 Growth (%): 6,3 0,3 Contribution (%) 31,9 34,

20 Income Statement (2/4) 2. Gross Profit Cost of Sales: Gross Profit $mm % $205,1 mm $203,7 mm Materials 317,2 (6,3)% - 0,7% Labour 147,5 (4,9)% D&A 45,8 (7,1)% Prod. overheads 27,8 (8,9)% Transport 16,9 (19,7)% Rental tools sold 4,3 (14,4)% Other (43,1) 13,7% Total COS 516,3 (8,1) Margin: 26,7% Margin: 28,3% 20

21 Income Statement (3/4) 3. Operating Profit Operating Costs: 2014 Sales and Marketing $mm 2013 % 7,5 (10,2)% Operating Profit $61,0 mm $68,7 mm 12,7% Administrative Other expenses 111,1 (0,02)% 16,3 (33,8)% Margin: 8,0% Margin: 9,5% 21

22 Income Statement (4/4) 4. Profit before income tax Profit before income tax is slightly lower Profit before tax $47,1 mm $45,3 mm - 3,8% But PBT Margin even improved from 6,1% to 6,3% Net Profit Net Profit $58,0 mm Net Profit decreased by 22,8%, but 2013 figure contained $11mm tax benefit $11 mm $44,8 mm - 22,8% Net Profit Margin declined from 7,6% to 6,2%

23 EBITDA (1/2) 1.EBITDA 2014 vs EBITDA $144,2mm $144,2 mm Up 9,9% $ 131,3 mm 9,9%

24 EBITDA (2/2) 2. EBITDA Reconciliation 2013 ($mm) 2014 ($mm) Net Profit 58,0 44,8 Adjustments for: Income Tax (11,0) 0,5 Interest Expense (net) 13,8 33,1 Service Agreement 11,3 15,0 D&A 52,5 50,8 Extraordinary item 6,7 - EBITDA 131,3 144,2 24

25 Balance Sheet (1/5) 1. Cash Cash down 13,6% Days Cash on Hand Ratio* $87,4 mm 2013: 221 days 2014: 204 days Δ 2013 % (7,69%) $75,5 mm - 13,6% Cash Balance Ratio** 2013: 57 days 2014: 54 days Δ 2013 % (5,26%) * Cash (operating expenses/365) * * Cash (cost of sales {excluding depreciation}/365) 25

26 Balance Sheet (2/5) 2. Trade & Other Receivables 2013 ($mm) 2014 ($mm) $130,2mm $129,8mm - 0,3% Trade Receivables 124,5 126,5 Impairment (2,2) (4,9) Net 122,3 121,6 Others (net) 7,9 9,4 Total 130,2 129,8 Days Receivable* Δ 2013 Days Receivable (%) 6,45 (%) *Total Receivables (Sales Revenues/365) 26

27 Balance Sheet (3/5) 3. Inventories Inventories: 2013 $mm 2014 $mm $164,6mm $137,2mm - 16,6% Raw Materials 91,9 72,1 W.I.P 20,2 16,0 Goods for Sale 67,2 62,9 179,3 151,0 Impairment 14,7 13,9 Total (net) 164,6 137,2 Days Inventory*: Δ 2013 Days Inventory (%) (10,26)% *Total Inventory (Sales/365) 27

28 Balance Sheet (4/5) 4. Current Ratio 2013 $mm 2014 $mm Current Assets Inventories 164,6 137,2 Receivables 130,2 129,8 Tax 6,1 2,5 Others 20,6 10,8 Cash 88,1 75,5 Total 409,7 355,8 Current Liabilities Loans 14,0 9,5 Payables 87,5 92,1 Tax 0,7 0,7 Others 30,8 23,1 Total 133,0 125,4 Current Ratio* (x): Covenant > 1.20x 3,08 2,84 Δ 2013 Current Ratio* (x): Covenant > 1.20x (%) (7,79)% 28

29 Balance Sheet (5/5) 5. Property, Plant & Equipment ($mm) 245,8 76,9 26,1 17,4 41,2 237,7 95,1 10,7 111,5 36,4 174,2 Additions Disposals Translation Depreciation Additions Disposals Translation Depreciation 31/12/12 & other 31/12/13 & other 31/12/ Non-current Assets 396,9 $mm 316,2 $mm % of Non-current Assets 59,9% 55,1%

30 Risk Management (1/3) Four largest balances of accounts receivable of the major counterparties : 2014 $mm 2014 % of total AR Days Sales Outstanding* Rosneft Group 38,5 29,7 90 ECOPETROL S.A. 10,5 8,2 103 Petrόleos de Venezuela S.A. Group 9,8 7,5 102 Surgutneftegas Group 7,0 5,4 60 Total 65,9 50,8 * Days Sales Outstanding (DSO) = (Accounts Receivable / Revenue) *

31 Risk Management (2/3) 2. Currency Exchange Risk Analysis Contractual currency analysis of monetary assets and liabilities is as follows: Monetary assets (2014 $mm) USD RUR EUR Other Total Trade and other receivables 50,9 74,0 0,05 4,9 129,8 Current tax assets 0,8 0,2 1,4 2,4 Other assets net of prepayments made 0,2 1,7 1,2 3,3 6,3 Cash and cash equivalents 40,2 27,4 1,8 6,1 75,5 Total monetary assets 91,3 103,9 3,25 15,7 214,0 Monetary liabilities (2014 $mm) USD RUR EUR Other Total Loans and borrowings (416,9) - - (0,001) (416,9) Trade and other payables (25,1) (60,8) (1,8) (4,4) (92,1) Current tax liabilities (0,3) (0,17) (0,2) (0,039) (0,6) Other liabilities net of advances from customers and warranty provision (1,2) (13,9) (0,1) (2,1) (17,3) Total monetary liabilities (443,5) (74,9) (2,1) (6,5) (526,9) Net position (352,2) 29,0 1,1 9,2 (313,0) If the USD strengthened against the RUR, Euro and other currencies by 10% then this would have the following impact: Foreign currency 2014 ($mm) RUR (2,9) EUR (0,1) Other (0,9) If the USD weakened against the RUR, Euro and other currencies by 10% then this would have the equal but opposite effect on the amounts shown above being the other variables remain constant. 31

32 Risk Management (3/3) 3. Interest Rate Risk Analysis At the reporting date the interest rate profile of the Group s interest bearing financial instruments was: Fixed rate instruments 2013 ($mm) 2014 ($mm) Term deposits 32,9 24,6 Loans received (426,5) (416,9) Total (393,5) (392,4) Variable rate instruments Loans received - - Total