ELECTRONIC TRANSMISSION DISCLAIMER STRICTLY NOT TO …resources.inktankir.com/...prospectus-9-may-2017.pdf · The Prospectus has been approved by the FCA as a prospectus prepared

ELECTRONIC TRANSMISSION DISCLAIMER

STRICTLY NOT TO BE FORWARDED TO ANY OTHER PERSONS

IMPORTANT: You must read the following disclaimer before continuing. This electronic transmission appliesto the attached document and you are therefore advised to read this disclaimer carefully before reading,accessing or making any other use of the attached prospectus (the “Prospectus”) relating to ADES InternationalHolding Ltd (the “Company”) dated 9 May 2017 accessed from this page or otherwise received as a result ofsuch access and you are therefore advised to read this disclaimer carefully before reading, accessing or makingany other use of the attached document. In accessing the attached document, you agree to be bound by thefollowing terms and conditions, including any modifications to them from time to time, each time you receiveany information from us as a result of such access. You acknowledge that this electronic transmission and thedelivery of the attached document is confidential and intended for you only and you agree you will not forward,reproduce, copy, download or publish this electronic transmission or the attached document whetherelectronically or otherwise to any other person. The Prospectus has been prepared solely in connection withthe proposed offer to certain institutional and professional investors (the “Global Offer”) of ordinary shares(the “Offer Shares”) of the Company. The Prospectus has been published in connection with the admission ofthe Offer Shares to the standard segment of the Official List of the UK Financial Conduct Authority (the“FCA”) and to trading on the London Stock Exchange plc’s main market for listed securities (together,“Admission”). The Prospectus has been approved by the FCA as a prospectus prepared in accordance with theProspectus Rules made under section 73A of the Financial Services and Markets Act 2000 (“FSMA”). TheProspectus has been published and is available from the Company’s registered office and on the Company’swebsite at http://investors.adihgroup.com. Pricing information and other related disclosures have also beenpublished on this website. Prospective investors are advised to access such information prior to making aninvestment decision.

THIS ELECTRONIC TRANSMISSION AND THE ATTACHED DOCUMENT MAY ONLY BEDISTRIBUTED IN “OFFSHORE TRANSACTIONS” AS DEFINED IN, AND IN RELIANCE ON,REGULATION S (“REGULATION S”) UNDER THE U.S. SECURITIES ACT OF 1933 (THE “U.S.SECURITIES ACT”) OR WITHIN THE UNITED STATES TO QUALIFIED INSTITUTIONALBUYERS (“QIBs”) AS DEFINED IN RULE 144A UNDER THE U.S. SECURITIES ACT (“RULE144A”) OR ANOTHER EXEMPTION FROM, OR TRANSACTION NOT SUBJECT TO,REGISTRATION UNDER THE U.S. SECURITIES ACT. ANY FORWARDING, DISTRIBUTION ORREPRODUCTION OF THE ATTACHED DOCUMENT IN WHOLE OR IN PART ISUNAUTHORISED. FAILURE TO COMPLY WITH THIS NOTICE MAY RESULT IN A VIOLATIONOF THE U.S. SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.NOTHING IN THIS ELECTRONIC TRANSMISSION AND THE ATTACHED DOCUMENTCONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT ISUNLAWFUL TO DO SO.

THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S.SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OFTHE UNITED STATES OR OTHER JURISDICTION AND MAY NOT BE OFFERED, SOLD,PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON THAT THE HOLDERAND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVES IS A QIB AS DEFINEDIN, OR IN RELIANCE ON, RULE 144A, OR ANOTHER EXEMPTION FROM, OR TRANSACTIONNOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT, OR(2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OFREGULATION S, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIESLAWS OF ANY STATE OF THE UNITED STATES.

ANY FORWARDING, REDISTRIBUTION OR REPRODUCTION OF THE DOCUMENT INWHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAYRESULT IN A VIOLATION OF THE U.S. SECURITIES ACT OR THE APPLICABLE LAWS OFOTHER JURISDICTIONS

This electronic transmission and the attached document and the Global Offer when made are only addressedto and directed at persons in member states of the European Economic Area who are “qualified investors”within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) (“Qualified

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Investors”). In addition, in the United Kingdom, this electronic transmission and the attached document isbeing distributed only to, and is directed only at, Qualified Investors (i) who have professional experience inmatters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000(Financial Promotion) Order 2005, as amended (the “Order”) and /or (ii) who are high net worth entitiesfalling within Article 49(2)(a) to (d) of the Order, and other persons to whom it may otherwise lawfully becommunicated (all such persons together being referred to as “relevant persons”). This electronic transmissionand the attached document must not be acted on or relied on (i) in the United Kingdom, by persons who arenot relevant persons, and (ii) in any member state of the European Economic Area other than the UnitedKingdom, by persons who are not Qualified Investors. Any investment or investment activity to which thisProspectus relates is available only to (i) in the United Kingdom, relevant persons, and (ii) in any memberstate of the European Economic Area other than the United Kingdom, Qualified Investors, and will beengaged in only with such persons.

If you are in any doubt about the contents of this Prospectus you should consult your stockbroker, bankmanager, solicitor, accountant or other financial adviser. The directors of the Company have taken allreasonable care to ensure that the facts stated in this Prospectus are true and accurate in all material respects,and that there are no other facts the omission of which would make misleading any statement in theProspectus, whether of facts or of opinion. All the directors accept responsibility accordingly. It should beremembered that the price of securities and the income from them can go down as well as up.

Confirmation of Your Representation: This electronic transmission and the attached document is delivered toyou on the basis that you are deemed to have represented to the Company, to EFG Hermes U.A.E. Limited(the “Global Coordinator”) and to EFG Hermes Promoting and Underwriting and Citigroup Global MarketsLimited (together, the “Underwriters”), that (i) you are (a) a QIB acquiring such securities for its own accountor for the account of another QIB or (b) acquiring such securities in “offshore transactions”, as defined in,and in reliance on, Regulation S; (ii) if you are in the UK, you are a relevant person, and/or a relevant personwho is acting on behalf of, relevant persons in the United Kingdom and/or Qualified Investors to the extentyou are acting on behalf of persons or entities in the UK or the European Economic Area (“EEA”); (iii) ifyou are in any member state of the European Economic Area other than the UK, you are a Qualified Investorand/or a Qualified Investor acting on behalf of, Qualified Investors or relevant persons, to the extent you areacting on behalf of persons or entities in the EEA or the UK; and (iv) you are an institutional investor thatis eligible to receive this Prospectus and you consent to delivery by electronic transmission.

Restriction: Nothing in this electronic transmission constitutes, and may not be used in connection with, anoffer of securities for sale to persons other than the specified categories of prospective investors describedabove and to whom it is directed and access has been limited so that it shall not constitute a generalsolicitation. If you have gained access to this transmission contrary to the foregoing restrictions, you will beunable to purchase any of the securities described therein.

You are reminded that you have received this electronic transmission and the attached document on the basisthat you are a person into whose possession this Prospectus may be lawfully delivered in accordance with thelaws of the jurisdiction in which you are located and you may not nor are you authorised to deliver thisProspectus, electronically or otherwise, to any other person. This Prospectus has been made available to youin an electronic form. You are reminded that documents transmitted via this medium may be altered orchanged during the process of electronic transmission and consequently neither the Company, theUnderwriters nor any of their respective affiliates accepts any liability or responsibility whatsoever in respectof any difference between the document distributed to you in electronic format and the hard copy version.By accessing the linked document, you consent to receiving it in electronic form. Neither the Underwritersnor any of their respective affiliates accepts any responsibility whatsoever for the contents of this Prospectusor for any statement made or purported to be made by it, or on its behalf, in connection with the Companyor the Offer Shares. The Underwriters and each of their respective affiliates, each accordingly disclaims alland any liability whether arising in tort, contract or otherwise which they might otherwise have in respect ofsuch document or any such statement. No representation or warranty express or implied, is made by theUnderwriters or any of their respective affiliates as to the accuracy, completeness or sufficiency of theinformation set out in this Prospectus.

The Underwriters are acting exclusively for the Company and no one else in connection with the Global Offer.It will not regard any other person (whether or not a recipient of this Prospectus) as its client in relation tothe Global Offer and will not be responsible to anyone other than the Company for providing the protections

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afforded to its clients nor for giving advice in relation to the Global Offer or any transaction or arrangementreferred to herein.

You are responsible for protecting against viruses and other destructive items. Your receipt of this documentvia electronic transmission is at your own risk and it is your responsibility to take precautions to ensure thatit is free from viruses and other items of a destructive nature.

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This document comprises a prospectus relating to ADES International Holding Ltd (the “Company”) and has beenprepared in accordance with the Prospectus Rules of the Financial Conduct Authority (the “FCA”) made under section73A of the Financial Services and Markets Act 2000, as amended (the “FSMA”) (the “Prospectus”). This Prospectus hasbeen approved by the FCA in accordance with section 85 of the FSMA and will be made available to the public inaccordance with Prospectus Rule 3.2 by the same being made available, free of charge, at www.investors.adihgroup.com.

Application has been made to the FCA for all of the Ordinary Shares issued and to be issued in connection with theGlobal Offer to be admitted to the Official List of the FCA (the “Official List”), by way of a standard listing underChapter 14 of the UK Listing Rules, and to the London Stock Exchange plc (the “London Stock Exchange”) for allOrdinary Shares to be admitted to trading on the London Stock Exchange’s main market for listed securities (together,the “Admission”). Admission to trading on the London Stock Exchange’s main market for listed securities constitutesadmission to trading on a regulated market. Conditional dealings in the Ordinary Shares are expected to commence onthe London Stock Exchange at 8.00 a.m. (London time) on 9 May 2017. It is expected that the Admission will becomeeffective and that unconditional dealings in the Ordinary Shares will commence at 8.00 a.m. (London time) on12 May 2017. All dealings before the commencement of unconditional dealings will be of no effect if the Admission does nottake place and such dealings will be at the sole risk of the parties concerned. No application has been, or is currently intendedto be, made for the Offer Shares to be admitted to listing or dealt with on any other exchange.

The Company and its Directors (whose names appear on page 51 of this Prospectus) accept responsibility for theinformation contained in this Prospectus. To the best of the knowledge of the Company and the Directors (who have alltaken reasonable care to ensure that such is the case), the information contained in this Prospectus is in accordance withthe facts and contains no omission likely to affect the import of such information.

Prospective investors should read the whole of this Prospectus in its entirety. For a discussion of certain risks and other factorswhich should be considered prior to the investment in the Offer Shares of the Company, prospective investors should read thesection entitled “Risk factors” at Part II of this Prospectus. If any prospective investors are in any doubt as to the actionthey should take, they are recommended to seek their own financial advice immediately from their stockbroker, bank manager,solicitor, accountant or other appropriate independent financial adviser authorised under the FSMA if they are resident inthe United Kingdom or, if not, from another appropriately authorised independent financial adviser.

ADES International Holding Ltd(incorporated as a company limited by shares under the Companies Law – DIFC Law No. 2 of 2009 and registered in the

Dubai International Financial Centre, with registered number 2175)

Offer of 14,756,258 Offer Shares of par value U.S.$1.00 each at an Offer Price of U.S.$16.50 per Ordinary Share

and

Admission to the standard listing segment of the Official List and to trading on the London Stock Exchange

Global Co-ordinator and Joint BookrunnerEFG Hermes U.A.E. Limited

Joint BookrunnersEFG Hermes Promoting and Underwriting and Citigroup Global Markets Limited

This document does not constitute an offer to sell, or the solicitation of any offer to buy, securities in the U.S. or any otherjurisdiction where such offer or solicitation would be unlawful. The Offer Shares have not been, and will not be, registeredunder the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), or the securities laws of any state or otherjurisdiction of the U.S., and the securities may not be offered or sold except pursuant to an exemption from, or in a transactionnot subject to, the registration requirements of the U.S. Securities Act and applicable U.S. state or local securities laws.

This Prospectus may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever.Any forwarding, distribution or reproduction of this Prospectus in whole or in part is unauthorised. Failure to comply withthis directive may result in a violation of the U.S. Securities Act or the applicable laws of other jurisdictions. If you havegained access to this transmission contrary to any of the foregoing restrictions, you are not authorised and will not be able topurchase any of the Offer Shares described therein.

This Prospectus and the Global Offer when made are only addressed to and directed at persons in Member States of theEuropean Economic Area who are “qualified investors” within the meaning of Article 2(1)(e) of the Prospectus Directive(Directive 2003/71/EC) (“Qualified Investors”). In addition, in the United Kingdom, this Prospectus is being distributed

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only to, and is directed only at, Qualified Investors: (i) who have professional experience in matters relating to investmentsfalling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended(the “Order”) and Qualified Investors falling within Article 49(2)(a) to (d) of the Order; and (ii) to whom it may otherwiselawfully be communicated (all such persons together being referred to as “relevant persons”). This Prospectus must notbe acted on or relied on: (i) in the United Kingdom, by persons who are not relevant persons; and (ii) in any MemberState of the European Economic Area other than the United Kingdom, by persons who are not Qualified Investors. Anyinvestment or investment activity to which this Prospectus relates is available only to: (i) in the United Kingdom, relevantpersons; and (ii) in any Member State of the European Economic Area other than the United Kingdom, QualifiedInvestors.

Stabilisation: In connection with the Global Offer, Citigroup Global Markets Limited, as stabilising manager (“StabilisingManager”), or any of its agents, may (but will be under no obligation to), to the extent permitted by applicable law andfor stabilisation purposes, over-allot Offer Shares up to a total of 2,213,439 Offer Shares (representing 15 per cent. of thetotal number of Offer Shares comprised in the Global Offer before any utilisation of the Over-allotment Option) or effectother transactions with a view to supporting the market price of the Offer Shares at a higher level than that which mightotherwise prevail in the open market.

The Stabilising Manager is not required to enter into such transaction and such transactions may be effected on anysecurities market, over-the-counter market, stock exchange or otherwise and may be undertaken at any time during theperiod commencing on the date of the conditional dealings of the Offer Shares on the London Stock Exchange andending no later than 30 calendar days thereafter. However, there will be no obligation on the Stabilising Manager or anyof its agents to effect stabilising transactions and there is no assurance that stabilising transactions will be undertaken.Such stabilisation, if commenced, may be discontinued at any time without prior notice. In no event will measures betaken to stabilise the market price of the Offer Shares above the Offer Price. Except as required by law or regulation,neither the Stabilising Manager nor any of its agents intends to disclose the extent of any over-allotments made and/orstabilisation transactions conducted in relation to the Global Offer.

For the purposes of allowing the Stabilising Manager to cover short positions resulting from any such over-allotmentand/or from sales of Offer Shares effected by it during the stabilising period, the Selling Shareholder has granted to theStabilising Manager an over-allotment option (the “Over-allotment Option”) pursuant to which the Stabilising Managermay purchase or procure purchasers for additional Offer Shares up to a total of 2,213,439 Offer Shares (the“Over-allotment Shares”) at the Offer Price, representing 15 per cent. of the Offer Shares comprised in the Global Offerbefore any utilisation of the Over-allotment Option.

The Over-allotment Option may be exercised in whole or in part upon notice by the Stabilising Manager at any time onor before the 30th calendar day after the commencement of conditional dealings of the Offer Shares on the London StockExchange. Any Over-allotment Shares made available pursuant to the Over-allotment Option will be sold on the sameterms and conditions as Offer Shares being offered pursuant to the Global Offer and will rank pari passu in all respectswith, and form a single class with, the other Offer Shares (including for all dividends and other distributions declared,made or paid on the Offer Shares).

No representation, warranty or undertaking (express or implied) is made or given by or on behalf of the Company, theSelling Shareholder, the Directors of the Company or the Joint Bookrunners, or any person who controls the JointBookrunners or any of their respective directors, officers, employees, agents or affiliates, or any other person as to theaccuracy, completeness or reasonableness of the information or opinions contained in this Prospectus and no responsibilityor liability is accepted by any party for that information or those opinions.

In relation to the Global Offer, EFG Hermes U.A.E. Limited has been appointed as global co-ordinator (the “GlobalCo-ordinator”) and the Global Co-ordinator has also been appointed as joint bookrunners with EFG Hermes Promotingand Underwriting and Citigroup Global Markets Limited (together, the “Joint Bookrunners”).

In connection with the Global Offer, each of the Joint Bookrunners and any affiliate acting as an investor for its ownaccount may take up the Offer Shares and in that capacity may retain, purchase or sell for its own account the OfferShares and any of the Company’s other securities or related investments and may offer or sell the Offer Shares or otherinvestments otherwise than in connection with the Global Offer. Accordingly, references in this Prospectus to the OfferShares being offered or placed should be read as including any offering or placement of securities to any of the JointBookrunners and any affiliate acting in such capacity. None of the Joint Bookrunners or their respective affiliates intendsto disclose the extent of any such investment or transaction otherwise than in accordance with any legal or regulatoryobligation to do so.

Each of the Joint Bookrunners is acting exclusively for the Company and no one else in connection with the Global Offerand Admission and will not be responsible to anyone other than the Company for providing the protections afforded totheir clients, for the contents of this Prospectus or for providing any advice in relation to this Prospectus, the Global Offeror Admission. Apart from the responsibilities and liabilities, if any, which may be imposed upon each of the JointBookrunners by the FSMA or the regulatory regime established thereunder, each Joint Bookrunner, or any person(s)affiliated with it, does not accept any responsibility whatsoever and make no representation or warranty, express orimplied, concerning the contents of this document, including its accuracy, completeness or verification, or concerningany other statement made or purported to be made by them, or on behalf of them, in connection with the Company, andnothing in this Prospectus is, or shall be relied upon as, a promise or representation in this respect, whether as to the past

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or future. In addition, each of the Joint Bookrunners accordingly disclaim to the fullest extent permitted by law all andany responsibility and liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above) whichit might otherwise have to any person, other than the Company, in respect of this Prospectus.

No person has been authorised to give any information or make any representations other than those contained in thisProspectus, and, if given or made, such information or representation must not be relied upon as having been authorisedby the Company. Neither the publication of this Prospectus nor any subscription or sale made hereunder shall, underany circumstances, create any implication that there has been no change in the affairs of the Company since the date ofthis Prospectus or that the information in this Prospectus is correct as at any time subsequent to its date. The contents ofthis Prospectus should not be construed as legal, financial or taxation advice. Each prospective investor should consulthis, her or its own legal, financial or taxation adviser for advice.

The Offer Shares are subject to selling and transfer restrictions in certain jurisdictions. Prospective subscribers shouldread the restrictions contained in Part XIII: “Terms and Conditions of the Global Offer” of this Prospectus. Each subscriberfor the Offer Shares will be deemed to have made the relevant representations made therein. This Prospectus does notconstitute an offer to sell or an invitation to subscribe for, or the solicitation of an offer to buy or to subscribe for, OfferShares to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction.

Certain terms used in this Prospectus, including certain technical and other items, are explained and defined in the“Definitions and Interpretation” section of this Prospectus.

Any reproduction or distribution of this document, in whole or in part, and any disclosure of its contents or use of anyinformation contained in this document for any purpose other than in considering an investment in the Offer Shares isprohibited. By accepting delivery of this document, each recipient agrees to the foregoing.

This Prospectus is dated 9 May 2017.

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Notice to overseas investorsThe distribution of this Prospectus and the offer of the Offer Shares in certain jurisdictions may be restrictedby law.

No action has been taken or will be taken by the Company, the Selling Shareholder or the GlobalCo-ordinator to permit a public offering of the Offer Shares or to permit the possession or distribution ofthis Prospectus (or any other offering or publicity materials relating to the Offer Shares) in the UnitedKingdom or any other jurisdiction where action for that purpose may be required. Accordingly, neither thisProspectus nor any advertisement or any other offering material may be distributed or published in anyjurisdiction except under circumstances that will result in compliance with any applicable laws and regulations.Any failure to comply with these restrictions may constitute a violation of the securities laws of any suchjurisdiction.

The Offer Shares have not been, and will not be, registered under the U.S. Securities Act. The Offer Sharesoffered by this Prospectus may not be offered or sold in the United States, except to Qualified InstitutionalBuyers as defined in, and in reliance on, the exemption from the registration requirements of the U.S.Securities Act provided by Rule 144A thereunder (“Rule 144A”) or another exemption from, or in atransaction not subject to, the registration requirements of the U.S. Securities Act. Prospective investors arehereby notified that the sellers of the Offer Shares may be relying on the exemption from the provisions ofSection 5 of the U.S. Securities Act provided by Rule 144A.

THE OFFER SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION, ANY OTHER FEDERAL OR STATESECURITIES COMMISSION IN THE UNITED STATES OR ANY OTHER REGULATORYAUTHORITY IN THE UNITED STATES, NOR HAVE ANY SUCH AUTHORITIES PASSED UPONOR ENDORSED THE MERITS OF THE OFFER OR CONFIRMED THE ACCURACY ORDETERMINED THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THECONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.

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TABLE OF CONTENTS

Part I Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Part II Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Part III Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Part IV Expected Timetable of Principal Events and Global Offer Statistics . . . . . . . . . . . . . . . . . . . . 43

Part V Important Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Part VI Directors, Secretary and Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Part VII Description of the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Part VIII Market Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Part IX Operating and Financial Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

Part X Historical Financial Information of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

Part XI Capitalisation and Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176

Part XII Directors, Senior Management and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . 178

Part XIII Terms and Conditions of the Global Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

Part XIV Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206

Part XV Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212

Definitions and Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233

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PART I

SUMMARY

Summaries are made up of disclosure requirements known as “Elements”. These Elements are numberedin Sections A-E (A.1-E.7).

This summary contains all the Elements required to be included in a summary for this type of securitiesand issuer. Because some Elements are not required to be addressed, there may be gaps in the numberingsequence of the Elements.

Even though an Element may be required to be inserted in the summary because of the type of securitiesand issuer, it is possible that no relevant information can be given regarding the Element. In this case a shortdescription of the Element is included in the summary with the mention of “not applicable”.

Section A—Introduction and warnings

Element

A.1 Introduction . . . . . . . . . . . . . . . . . This summary should be read as an introduction to thisProspectus. Any decision to invest in the Offer Shares should bebased on consideration of the Prospectus as a whole by investors.Where a claim relating to the information contained in thisdocument is brought before a court, the plaintiff investor might,under the national legislation of the Member State, have to bearthe costs of translating the Prospectus before the legalproceedings are initiated. Civil liability attaches only to thosepersons who have tabled the summary including any translationthereof, but only if the summary is misleading, inaccurate orinconsistent when read together with the other parts of theProspectus or it does not provide, when read together with theother parts of the Prospectus, key information in order to aidinvestors when considering whether to invest in such securities.

A.2 Consent for intermediaries . . . . . . Not applicable. The Company is not engaging any financialintermediaries for any resale of securities or final placement ofsecurities in connection with this Prospectus.

Section B—Issuer

Element

B.1 Legal and Commercial Name . . . ADES International Holding Ltd (the “Company”).

B.2 Domicile/Legal Form/Legislation/ The Company was incorporated and registered in the Dubai Country of Incorporation . . . . . . . International Financial Centre on 22 May 2016 with registered

number 2175 under the Companies Law – DIFC Law No. 2 of2009 (and any regulations thereunder) as amended, modified orre-enacted from time to time (the “DIFC Companies Law”) as aprivate company limited by shares. The principal legislationunder which the Company operates, and under which the OfferShares will be created, is the DIFC Companies Law.

B.3 Current operations and The Group is a leading oil and gas drilling and productionprincipal activities . . . . . . . . . . . . services provider in the Middle East and Africa (“MEA”) region,

that focuses on creating value for its clients by offeringcompetitive rates for services while leveraging its low-costbusiness model. The Group’s services primarily include offshore

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and onshore contract drilling and production services. TheGroup currently operates in Egypt, Algeria and the Kingdom ofSaudi Arabia, and has a total workforce of over 1,200 employees.

The Group entered the offshore services market in 2007. In 2012,the Group started significantly growing its offshore rig fleetprimarily through acquisition and refurbishment of existing“legacy” rigs. Onshore, the Group has grown its fleet throughthe purchase of new-build rigs. Today, the Group has a fleet ofnine jack-up offshore drilling rigs, three onshore drilling rigs, ajack-up barge, and a mobile offshore production unit(“MOPU”), which includes a floating storage and offloadingunit (“FSO”). The Group acquired ADES 1, its third onshorerig, in the first quarter of 2017.

The Group’s offshore services include drilling and workoverservices and MOPU production services, as well asaccommodation and catering. The Group’s onshore servicesprimarily encompass drilling and workover services. The Groupalso provides barge based projects services (outsourcing variousoperating projects for clients, such as maintenance and repairservices). As of 31 December 2016, the Group had backlog ofU.S.$501.2 million under its client contracts.

In its home market of Egypt, the Group is a market leader indrilling and related services in the Gulf of Suez, where it was thelargest offshore driller by number of offshore jack-up rigs oncontract as of January 2017 and where it had over 900employees. The Group’s clients include General PetroleumCompany (“GPC”) in Egypt and many of the leadinginternational oil companies, such as BP and ENI, operating inEgypt through joint venture companies with the EgyptianGeneral Petroleum Corporation (“EGPC”). In 2016, the Grouplaunched its MOPU service in Egypt, which, to the Director’sknowledge, was first of its type in Egypt and indicative of theGroup’s innovative and customer-focused strategy.

The Group expanded its operations to Algeria in 2015, where itcurrently has two onshore new-build rigs and around45 employees. Algeria is a natural gas centric market and theGroup provides onshore natural gas drilling and workoverservices to its clients there. The Group’s clients include SH-FCP(an ENI Joint venture with Sonatrach operating in Algeria) andGroupement Sonatrach AGIP (an ENI subsidiary joint venturewith Sonatrach).

In late 2016, the Group began operations in the Kingdom ofSaudi Arabia with the acquisition of three rigs operating undercontract and has approximately 250 employees. Theseacquisitions have introduced the Group into the Saudi oil servicesmarket and into the Gulf Cooperation Council (“GCC”) regionmore generally. The Group’s client in Saudi Arabia is SaudiAramco, the Saudi national oil company, and the Directorsbelieve that the Group’s prequalification with Saudi Aramco mayfacilitate expansion of onshore and offshore operations in theKingdom of Saudi Arabia and other GCC markets.

The Group’s total revenue was U.S.$134.1 million in the twelvemonths ended 31 December 2016, as compared to

7

U.S.$101.0 million in the twelve months ended31 December 2015, and U.S.$75.2 million in the twelve monthsended 31 December 2014. This represented a compound annualgrowth rate (“CAGR”) of 34 per cent. The Group’s EBITDAwas U.S.$72.0 million in the twelve months ended31 December 2016, as compared to U.S.$42.0 million in thetwelve months ended 31 December 2015, and U.S.$32.4 millionin the twelve months ended 31 December 2014. This representeda CAGR of 49 per cent.

The Group’s business has been built on key competitivestrengths, including a business model founded on a lean coststructure and on relatively low-risk maintenance and workoveractivities in shallow water, non-harsh environments in lowextraction cost per barrel markets. The Directors believe theGroup’s in-house maintenance and refurbishment capabilitiesare also a key strength, helping to reduce rig downtime and keepa tighter grip on costs, reducing its dependence on third partiesfor many of these processes. The Group also believes it has astrong employee training regime, which helps ensure itsemployees are well qualified to industry and client standards andwhich it hopes to expand through its planned ADES Academyprogram. The Directors believe that the Group’s agile,customer-centric approach allows it to continuously adapt to theneeds of its clients and markets. It benefits from strong andlongstanding client relationships, a highly capable managementteam, a lean organisational structure and an extended businesstrack record, that together create a significant barrier to entryto its competitors.

The Group plans to expand its operations through the MEAregion and possibly further afield, leveraging its establishedplatform of onshore and offshore drilling and workover, MOPUand barge capabilities to facilitate geographical and marketexpansion. The Group’s growth strategy will continue to focuson (i) scaling up existing services in existing markets, (ii)introducing adjacent services in existing markets and (iii)offering existing services in new markets. The Group plans tocontinue to leverage its lean cost structure of controlled capitalexpenditures and low operating expenses. Over the medium tolong term, the Group plans to grow through anon-capital-intensive approach by leveraging its robustprofessional network, geographic footprint, pre-qualifications invarious markets and professional track record to act as anenabler in the market and bridge the gap between single-rigowners, banks and/or shipyards with idle or underused, oftenforeclosed-upon, rigs on their portfolios and markets withunsatisfied demand.

B.4 Significant recent trends . . . . . . . The main trends affecting the Group’s results of operations forthe years ended 31 December 2014, 2015 and 2016 are: day ratesand utilisation rates; acquisitions and the number of fleet assetsand the Group’s cost base.

The Group’s average operating day rate has decreased over theperiod 2014 to 2016, in line with the rest of the market. This hasoccurred as a result of the introduction of onshore drilling andworkover services in 2016 together with the introduction of clientdiscounts applied to contract term extensions. Whilst the

I 9.1

I 12.1

I 12.2

8

Group’s overall revenue grew between 2014 and 2016, on a perrig basis, those rigs with declining day rates saw a decrease inrevenue attributable to that asset.

The Company has acquired 9 rigs since 2014, each of which hashad or is expected to have a significant impact on the Group’srevenue and finance costs. For example, the acquisition of suchrigs has contributed to an increase in revenues toU.S.$101.0 million in 2015 and to U.S.$134.1 million in 2016.The Group’s finance costs, crew salary and depreciation expenseshave accordingly increased in line with such acquisitions. Intereston bank credit facilities also accordingly increased toU.S.$9.4 million in 2016.

In current market conditions, demand for drillings has decreasedand the Group has taken advantage of available legacy rigs atcheaper acquisition costs (as it operates in markets where legacyrigs are the norm) and thereby kept its capex levels relatively low.Together with the Group’s policy of employing primarilyEgyptian and local workers for rig operations, maintenance andrepairs and conducting the majority of maintenance with its ownteams rather than using third parties, the Group has alsomaintained low opex levels. The Group further intends toexpand its onshore operations in Algeria in 2017. Entry intothese new markets has had and will continue to have asubstantial effect on, among other matters, the Group’s revenue,costs of revenue (particularly crew salary), average day rates forthe rigs, and tax liabilities.

B.5 Group structure . . . . . . . . . . . . . . The Company is a holding company which holds 99.99 per cent.of Advanced Energy Systems ADES S.A.E (“ADES”), anoperating company, which is an Egyptian joint stock companyin the Alexandria Free Zone under Commercial Registry No.159052. ADES conducts its operations directly and through twobranches, ADES Algeria Branch and ADES KSA Branch (theCompany, ADES and its operating branches are together, the“Group”).

B.6 Notifiable interests . . . . . . . . . . . . As at 5 May 2017, being the latest practicable date prior to thedate of this Prospectus (the “Latest Practicable Date”), thefollowing persons held an interest which represents 3 per cent.or more of the voting share capital of the Company:

As at the Latest ImmediatelyPracticable Date following Admission

As a As apercentage percentage

of total of totalNo. of Ordinary No. of Ordinary

Ordinary Shares Ordinary Shares inName Shares in issue Shares in issue––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––ADESInvestmentsHolding Ltd(1)(2) 31,900,000 100% 25,233,333 59.79%

Notes:(1) ADES Investments Holding Ltd is, prior to Admission, the sole holder of

Ordinary Shares in the Company.

(2) ADES Investments Holding Ltd is owned 67 per cent. by Intro InvestmentsHolding Ltd (which is wholly owned by the Abbas family) and 33 per cent.by Sky Investments Holding Ltd (which is wholly owned by theHussein family).

I 7.1

ESMApara 28

III 3.3

ESMApara 36

ESMApara 160

III 5.2.2

1 18.1

9

Save as set out above, the Company is not aware of any otherperson who, as at the Latest Practicable Date, exercises, or couldexercise, directly or indirectly, jointly or severally, control overthe Company.

Immediately following Admission, the Selling Shareholder willnot have different voting rights from any other holder of OfferShares in the capital of the Company in respect of any OrdinaryShare held by it.

B.7 Historical financial information. . The table below sets out the Group’s results for the years ended31 December 2016, 2015 and 2014.

12 months 12 months 12 monthsended 31 ended 31 ended 31

December December December2016 2015 2014

––––––––––– ––––––––––– –––––––––––

U.S.$ millions

Revenue . . . . . . . . . . . . . . . . 134.1 101.0 75.2Cost of sales . . . . . . . . . . . . (63.3) (52.3) (39.0)

––––––––––– ––––––––––– –––––––––––GROSS PROFIT . . . . . . . . 70.8 48.8 36.1

––––––––––– ––––––––––– –––––––––––General and administrative

expenses. . . . . . . . . . . . . . (15.0) (16.8) (10.2)Impairment of trade

receivables . . . . . . . . . . . . (2.3) (1.6) (0.3)Impairment of assets under

construction . . . . . . . . . . (0.8) — —Provision . . . . . . . . . . . . . . . (2.0) (1.5) —

––––––––––– ––––––––––– –––––––––––OPERATING PROFIT . . . 50.6 28.8 25.6

––––––––––– ––––––––––– –––––––––––Finance cost . . . . . . . . . . . . (9.4) (4.4) (2.4)Other income. . . . . . . . . . . . 0.1 — —Loss on disposal of property

and equipment. . . . . . . . . (0.01) — —Dividends income . . . . . . . . — 1.2 —BEFORE INCOME TAX . 41.3 25.7 23.2

––––––––––– ––––––––––– –––––––––––Income tax expense. . . . . . . (3.3) – –

––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– –––––––––––PROFITS FOR THE YEAR 38.0 25.6 23.2

––––––––––– ––––––––––– –––––––––––Earnings Per Share – basic

and diluted (USD) . . . . . 1.19 0.80 1.04––––––––––– ––––––––––– –––––––––––

OTHERCOMPREHENSIVEINCOME . . . . . . . . . . . .

Other comprehensive incometo be reclassified to profitor loss in subsequent periods — — —

––––––––––– ––––––––––– –––––––––––Other comprehensive income

not to be reclassified to profit or loss in subsequent periods . . . . . . . . . . . . . . . — — —

––––––––––– ––––––––––– –––––––––––TOTAL

COMPREHENSIVE INCOME . . . . . . . . . . . . 38.0 25.6 23.2

––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– –––––––––––

There has been no significant change to the Group’s financialcondition and operating results during or subsequent to theperiod covered by the historical financial information containedin this Prospectus.

I 20.1I 3.1

10

B.8 Selected unaudited pro forma Not applicable. There is no pro forma financial informationfinancial information . . . . . . . . . . contained in this Prospectus.

B.9 Profit forecast/estimates . . . . . . . Not applicable. There are no profit forecasts or estimatescontained in this Prospectus.

B.10 Qualifications in the Not applicable. No qualifications are included in any report byaccountant’s report. . . . . . . . . . . . the reporting accountants on the historical financial information

included in this Prospectus.

B.11 Insufficient working capital . . . . . Not applicable. The Company is of the opinion that, taking intoaccount the bank and other facilities available to the Group,together with the net proceeds of the Global Offer to be receivedby the Company, the working capital available to the Group issufficient for its present requirements, that is for at least the next12 months from the date of this Prospectus.

Section C—Securities

Element

C.1 Type and class of securities The Global Offer comprises an offering of (i) 10,303,030 newbeing admitted to trading . . . . . . . ordinary shares which are to be issued by the Company (“New

Shares”), and (ii) 4,453,228 existing ordinary shares which areto be sold by the Selling Shareholder (“Sale Shares”) (the NewShares and Sale Shares are, together, the “Offer Shares”). TheOffer Shares and any remaining shares held by the SellingShareholder (together, the “Ordinary Shares”) are to be admittedto the standard listing segment of the Official List of the FCAand to trading on the London Stock Exchange’s main marketfor listed securities.

On Admission, holders of Ordinary Shares (“Shareholders”) willbe able to hold and transfer interests in the Ordinary Shares withinCREST pursuant to a depositary interest arrangement establishedby the Company. The Ordinary Shares will not themselves beadmitted to CREST, rather Capita IRG Trustees Limited (the“Depositary”) will issue the depositary interests in respect of theunderlying Offer Shares (the “Depositary Interests”).

The Depositary Interests are independent securities constitutedunder English law which are held and transferred directlythrough the CREST system. Depositary Interests have the sameinternational securities identification number (“ISIN”) as theunderlying Ordinary Shares and do not require a separateadmission to trading on the London Stock Exchange. TheDepositary Interests were created and issued pursuant to a deedpoll issued and executed by the Depositary.

When admitted to trading on the London Stock Exchange, theOrdinary Shares will be registered with ISIN numberAEDFXA1EN018 and SEDOL number BZ0XLG6.

C.2 Currency of the Ordinary Shares All Ordinary Shares are denominated in USD.in issue . . . . . . . . . . . . . . . . . . . . .

C.3 Issued share capital and par value As at the Latest Practicable Date, the number of issued Ordinaryper share. . . . . . . . . . . . . . . . . . . . Shares was 31,900,000. On Admission, there will be

42,203,030 Ordinary Shares in issue. All Ordinary Shares in issueon Admission will be fully paid.

III 4.1

III 6.3

III 4.4

I 20.2

I 3.1

II 1

II 2

II 3

II 4

II 5

II 6

11

C.4 Rights attaching to the The Offer Shares being sold pursuant to the Global Offer will,Ordinary Shares. . . . . . . . . . . . . . on Admission, rank pari passu in all respects with the other

Ordinary Shares in the capital of the Company in issue. Holdersof Offer Shares have the following rights:

• right to receive notices of general meetings of theCompany;

• right to attend any general meeting of the Company andvote at such meetings;

• right to receive the Company’s annual financial statements;

• right of at least five shareholders or any shareholder(s) thatrepresent not less than 5 per cent. of the total voting rightsto demand a poll at the Company’s general meeting;

• right to receive dividends if declared; and

• in the case of a shareholder that holds a minimum of 5 per cent. of the Company’s share capital, the right torequisition an extraordinary general meeting in accordancewith the terms of the DIFC Companies Law.

C.5 Restrictions on transfer . . . . . . . . Not applicable. The Ordinary Shares are freely transferable andthere are no restrictions on transfer.

C.6 Admission to trading . . . . . . . . . . An application has been made to the FCA for all of theOrdinary Shares, issued and to be issued in connection with theGlobal Offer, to be admitted to the Official List of the FCA (byway of a standard listing under Chapter 14 of the UK ListingRules) and to trading on the London Stock Exchange’s mainmarket for listed securities.

C.7 Dividend Policy . . . . . . . . . . . . . . The Company does not intend to distribute dividends in theshort term in order to maximise any new investments made bythe Company using the proceeds of the Global Offer. However,the Company intends to develop a dividend policy in accordancewith the Group’s growth and strategic plan, and regularly assessthe Company’s ability to pay dividends in the future.

Section D—Risks

Element

D.1 Key information on the key risks Shareholders should carefully consider the following risks, whichthat are specific to the issuer or could have a material adverse effect on the Group’s business,its industry . . . . . . . . . . . . . . . . . . financial condition, results of operations, cash flows and

prospects:

Risks relating to the Group’s business

• The Group may suffer losses if its clients terminate or seekto renegotiate their contracts or fail to pay amounts due tothe Group. Any failure of a client to pay amounts to theGroup when due, early termination of contracts, contractrenegotiations or the cessation or discount of day ratescould have a negative impact on the Group’s ability togenerate anticipated revenue and could have a materialadverse effect on the Group’s business, financial condition,results of operations, cash flows and prospects.

III 4.8

III 6.2

I 20.7

I 4

I 9.2.3

III 2

III 4.5

12

• The Group’s current backlog of contract drilling revenuemay not be fully realised and may decline significantly inthe future, including, in whole or in part, if clients cancelor renegotiate their contracts or any other of the Group’sassumptions in calculating the backlog estimate prove tobe incorrect. The Group’s inability to realise the fullamount of the Group’s contract backlog may have amaterial adverse effect on its financial position, results ofoperations or cash flows.

• The Group’s strategy involves the purchase andrefurbishment of existing “legacy” rigs. The Group’sexisting rigs also require maintenance and may requireupgrades. There can be no assurance that the Group willcomplete such upgrade and refurbishment works on timeor within budget. Any delays and cost overruns in theGroup’s upgrade and refurbishment projects could reduceutilisation rates, result in the Group not achieving itsexpected returns on its investments and otherwise have amaterial adverse effect on the Group’s business, financialcondition, results of operations, cash flows and prospects.

• The Group has a significant level of debt, and could incuradditional debt in the future. The Group’s debt and thelimitations imposed on the Group by its existing or futuredebt agreements could have significant consequences forthe Group’s business and future prospects. In addition,further indebtedness or equity financing may not beavailable to the Group in the future to fund growth and/orthe refinancing or repayment of existing indebtedness, andthe Group may not be able to complete asset sales in atimely manner sufficient to make such repayments.

• Oil and gas drilling involves numerous health, safety andenvironmental hazards including the risk of pollution, oilspills, worker injury, damage or destruction of operatingassets, and other risks which may not be fully covered bythe Group’s insurance or contractual indemnities. Suchrisks also expose the Group to significant and evolvinghealth and safety and environmental regulation, failure tocomply with which may result in costly penalties or theshutdown of operations. Any such loss or regulatorypenalty could increases costs and reduce utilisation rates.

• The Group relies on forging and maintaining strong clientrelationships for the success of its business, and has arelatively small number of clients. Consequently, should theGroup lose any of its current clients, should any one of theGroup’s contracts prove less profitable than expected, or ifthe Group fails to secure new or repeat contracts, theGroup’s revenues may decline significantly, which could havea material adverse effect on the Group’s business, financialcondition, results of operations, cash flows and prospects.

Risks related to the countries in which the Group operates

• The MEA region, including countries in which the Groupoperates or plans to operate, has experienced variousdegrees of political and economic instability in recenttimes. For example, Egypt has recently experienced seriouspolitical unrest and a change of government and is

13

currently undergoing broad economic reforms. Furtherpolitical unrest or the failure of economic reforms in theMEA region may reduce or limit domestic demand andforeign direct investment, which may reduce the demandfor the Group’s services or restrict its operations, negativelyimpacting the Group’s business and financial position.

• Operating in the MEA region exposes the Group to risksof political unrest, terrorism, the imposition of sanctionson or affecting a country in which the Group operates, andother risks which could restrict the Group’s operations ornegatively impact the economy of the region, which couldreduce demand for the Group’s services, which couldnegatively impact the Group’s business.

• The laws and regulations in many of the jurisdictions inwhich the Group operates or plans to operate, may limitthe Group’s activities in those jurisdictions and create anuncertain environment for investment and business activityin general. Moreover, enforcement of contractual rightsthrough the courts in jurisdictions in which the Groupoperates or plans to operate may also face difficulties anddelays. Such emerging markets are generally subject togreater risks than more developed markets, and investingin securities involving such markets generally involves ahigher degree of risk than investments in securities ofissuers from more developed countries.

• Changes in UAE tax laws or their application couldmaterially adversely affect the Group’s business, financialcondition and results of operations, as the Company is notcurrently subject to corporation tax (or any otheranalogous tax) on its earnings within the UAE. Althoughthe Group has been guaranteed tax exempt status for 40years, there is no guarantee that this will continue to be thecase after the expiry of such period, and any changes maynegatively impact the Group’s business, results ofoperations, cash flows and financial condition.

• The Company is incorporated in the DIFC, which is arelatively newly established jurisdiction, and as a result, thelegal and regulatory regimes applicable to the Companyare still being developed and are largely untested. Theseuncertainties could affect investors’ abilities to enforce theirrights or the Company’s ability to defend itself againstclaims by others, including regulators, judicial authoritiesand third parties who may challenge its compliance withapplicable laws, rules, decrees and regulations.

D.2 Key information on the key risks Shareholders should carefully consider the following risksthat are specific to the related to the Offer Shares:Offer Shares . . . . . . . . . . . . . . . .

• Prior to the Global Offer, the Company’s Ordinary Shareshave not been traded on any securities market.Consequently, no assurance can be given that an activetrading market for the Company’s Offer Shares and/orDepositary Interests will develop, or if developed, could besustained following the close of the Global Offer.Consequently, investors may not be able to resell their OfferShares at or above the Offer Price.

I 9.2.1

III 2

14

• The Company cannot guarantee making dividendpayments in the future. Accordingly, there can be noassurance that holders of Offer Shares will receivedividends in future.

• The Company’s main shareholder, ADES InvestmentsHolding Ltd. (“ADES Investments”), will continue to holda majority of the Company’s shares after Global Offer, andmay take actions that are not in the best interests of theother Shareholders.

• Since the Company has its registered office in the DIFCand its Offer Shares are proposed to be listed on a regulatedmarket in the United Kingdom, neither the UK nor theDIFC takeover protection regimes are applicable to theCompany.

• The Offer Shares are, and any dividends to be paid inrespect of them will be, denominated in USD. Aninvestment in Offer Shares by an investor whose principalcurrency is not USD exposes the investor to foreigncurrency risk.

• The Depositary or its nominated custodian will hold thevoting and other rights conferred by DIFC law and theArticles for the benefit of the relevant Depositary InterestHolder. Consequently, the Depositary Interest Holdersmust rely on the Depositary or its nominated custodian toexercise such rights for the benefit of the DepositaryInterest Holders.

Section E — The Offer

E.1 Total net proceeds and estimate of The Company expects to receive net proceeds of approximatelytotal expenses of the offer . . . . . . U.S.$164,535,714, after the deduction of underwriting

commissions and estimated fees and expenses in the offering ofNew Shares in the Global Offer.

The estimate of total commissions and expenses of the GlobalOffer is U.S.$9,000,000, and will be borne by the Company andthe Selling Shareholder pro rata according to the proportion thatthe number of Offer Shares issued or sold by each bears to thetotal of Offer Shares offered in the Global Offer.

No expenses will be charged by the Company or the SellingShareholder to the purchasers of the Offer Shares.

E.2a Reasons for the offer, use of The Company expects to receive net proceeds of approximatelyproceeds, and estimated net U.S.$164,535,714 from the offering of the New Shares in theamount of expenses . . . . . . . . . . . Global offer, after the deduction of underwriting commissions

and estimated fees and expenses of approximatelyU.S.$5,464,286 in connection with the offering of the NewShares in the Global Offer.

The Company intends to use the net proceeds it receives fromthe New Shares to support growth in the business by purchasingand refurbishing rigs and other assets, as well as for generalcorporate purposes.

III 8.1

III 3.4

15

More specifically, the Company intends to use the net proceedsfrom the offering of New Shares in the Global Offer as follows:

• approximately U.S.$76 million to fund capital expendituresto expand the Group’s operations in Egypt, Algeria andthe Kingdom of Saudi Arabia;

• approximately U.S.$43 million to fund capital expendituresin other new MEA markets;

• approximately U.S.$10 million to fund capital expenditureon enhancement of the Group’s in-house refurbishmentand maintenance capabilities; and

• the balance to fund general corporate purposes andworking capital.

E.3 Terms and conditions of the offer The Company is proposing to raise gross proceeds up toU.S.$170 million (excluding proceeds attributable to the sale ofSale Shares by the Selling Shareholder) by way of theGlobal Offer.

The Global Offer comprises the issue of (i) 10,303,030 NewShares by the Company and (ii) the sale of 4,453,228 Sale Sharesby the Selling Shareholder. The Global Offer will be effected bymeans of an offering of Offer Shares (a) to qualified investorsin certain Member States, including to certain institutionalinvestors in the United Kingdom and elsewhere outside theUnited States and (b) in the United States to QualifiedInstitutional Buyers in reliance on an exemption from, or in atransaction not subject to, the registration requirements of theU.S. Securities Act.

In addition, the Selling Shareholder has granted an Overallotment Option comprising a further 2,213,439 OrdinaryShares, equivalent to 15 per cent. of the Global Offer, to covershort positions arising from over allotments made (if any) inconnection with the Global Offer and sales made during thestabilisation period.

Application will be made for the Ordinary Shares to be admittedto the standard listing segment of the Official List of the FCAand to trading on the London Stock Exchange’s main marketfor listed securities. It is expected that Admission will becomeeffective and unconditional dealings in the Ordinary Shares willcommence on the London Stock Exchange at 8.00 a.m. (Londontime) on 12 May 2017. Prior to Admission, it is expected thatdealings in the Ordinary Shares will commence on a conditionalbasis on the London Stock Exchange at 8.00 a.m. (London time)on 9 May 2017. All Offer Shares sold in connection with theGlobal Offer will be subscribed for, or purchased, at theOffer Price.

The Underwriters have agreed to subscribe or purchase and payfor, or procure subscribers or purchasers for, the Offer Shares atthe Offer Price, and the Company has agreed to issue, and theSelling Shareholder has agreed to sell, the Offer Shares to theUnderwriters, or the subscribers or purchasers procured by it.The Global Offer is subject to satisfaction of the conditions setout in the Underwriting Agreement, including Admissionoccurring and becoming effective by no later than 8.00 a.m.

III 5.4.4

16

(London time) on 12 May 2017 or such later time and/or dateas the Company, the Selling Shareholder and the Underwriters,may agree, and to the Underwriting Agreement not having beenterminated in accordance with its terms.

The Offer Shares to be made available by the Company pursuantto the Global Offer will, on Admission, rank pari passu in allrespects with the Remaining Shares in issue and will rank in fullfor all dividends and other distributions thereafter declared,made or paid on the share capital of the Company.

E.4 Material interests. . . . . . . . . . . . . Not applicable. There are no interests known to the Companythat are material to the Global Offer or which are conflictinginterests.

E.5 Name of person or entity offering 4,453,228 existing Offer Shares will be sold by the Sellingto sell the Offer Shares, including Shareholder as part of the Global Offer (i.e. the Sale Shares).any lock-up agreements . . . . . . . .

Pursuant to the Underwriting Agreement, the Company hasagreed that, subject to certain exceptions, during a periodexpiring 180 days after the date of Admission, neither it nor anyof its subsidiaries or other affiliates, without the prior writtenconsent of the Global Co-ordinator (on behalf of the JointBookrunners), will issue, offer, sell or contract to sell, orotherwise transfer or dispose of (including by entering into swapor other agreements), directly or indirectly, any Ordinary Shares(or any interest therein) or enter into any transaction with thesame economic effect as, or agree to, or publicly announce anyintention to enter into, any of the foregoing.

Pursuant to the Underwriting Agreement, the SellingShareholder has agreed that, subject to certain exceptions,(i) during a period expiring 24 months after the date ofAdmission, it will not effect any sale, contract to sell, grant orsale of options over, purchase of any option or contract to sellor otherwise dispose of any Ordinary Shares or agree to, or makeany announcement or other publication of the intention to doany of the foregoing, and (ii) during a period expiring 12 monthsafter the date of Admission, it will not effect any offer, sale,contract to sell, grant or sale of options over, purchase of anyoption or contract to sell, transfer, charge, pledge, grant any rightor warrant to purchase or otherwise dispose, transfer or lend anyOrdinary Shares or any securities convertible into orexchangeable for or substantially similar to Ordinary Sharesor any security or financial product whose value is determinedby reference to the price of the Ordinary Shares, or the entry intoof any swap or other agreement that transfers, in whole or inpart, any of the economic consequences of ownership ofOrdinary Shares whether any such transaction described aboveis to be settled by the delivery of Ordinary Shares or such othersecurities, in cash or otherwise, or any other disposal or anyagreement to dispose of any Ordinary Shares, or any transactionwith the same economic effect as, or agree to, or make anyannouncement or other publication of the intention to do any ofthe foregoing.

III 3.3

III 7.3

17

Pursuant to the Underwriting Agreement, the Locked-up Partieshave agreed that, subject to certain exceptions, during a periodexpiring 180 days after the date of Admission, they will notdirectly or indirectly, offer, sell, contract to sell, grant or sell anyoptions over, purchase any option or contract to sell, transfer,charge, mortgage, assign, pledge, grant any right or warrant topurchase, lend or otherwise transfer or dispose of any OfferShares or any securities convertible or exchangeable into orexercisable for, or substantially similar to, Offer Shares or anysecurity or financial product whose value is determined directlyor indirectly by reference to the price of the Offer Shares, orenter into any swap or other agreement that transfers, in wholeor in part, directly or indirectly, any of the economicconsequences of ownership of Offer Shares, or any transactionwith the same economic effect as, or agree to, or publiclyannounce any intention to do, any of such things.

E.6 Dilution . . . . . . . . . . . . . . . . . . . . The New Shares issued as part of the Global Offer will representapproximately 24.41 per cent. of the expected issued sharecapital of the Company immediately following Admission.

E.7 Estimated Expenses charged to Not applicable. No expenses will be charged to investors by thethe investors . . . . . . . . . . . . . . . . . Company or the Selling Shareholder in respect of the

Global Offer.

III 9.1

18

PART II

RISK FACTORS

Any investment in the Offer Shares is speculative and subject to a high degree of risk. Prior to investing in the

Offer Shares, prospective investors should consider carefully the factors and risks associated with any investment

in the Offer Shares, the Group’s business and the industry in which it operates, together with all other information

contained in this Prospectus including, in particular, the risk factors described below. Following the occurrence

of any such event, the value of the Offer Shares could decline and investors could lose all or part of their

investment. Prospective investors should note that the risks summarised in Part I of this Prospectus headed

“Summary” are the risks that the Group currently believe to be the most essential to an assessment by a

prospective investor of whether to consider an investment in the Offer Shares. However, as the risks which the

Group faces relate to events and depend on circumstances that may or may not occur in the future, prospective

investors should consider not only the information on the key risks summarised in Part I of this Prospectus headed

“Summary” but also, among other things, the risks and uncertainties described below.

The following is not an exhaustive list or explanation of all risks which investors may face when investing in the

Offer Shares and should be used as guidance only. The factors listed under a single heading may not provide a

comprehensive view of all risks relevant to the subject to which the heading relates. Additional risks and

uncertainties relating to the Group that are not currently known to the Group, or that it currently deems

immaterial, may also have an adverse effect on the Group’s business, prospects, financial condition and results of

operations. In particular, the Group’s performance might be affected by changes in market, social and/or economic

conditions and in legal, regulatory and tax requirements. If such changes were to occur, the price of the Offer

Shares may decline and investors could lose all or part of their investment. Investors should consider carefully

whether an investment in Offer Shares is suitable for them in the light of the information in this Prospectus and

their personal circumstances and, if they are in any doubt, should consult with an independent financial adviser

authorised in their jurisdiction who specialises in advising on the acquisition of shares.

RISKS RELATING TO THE GROUP’S BUSINESS

The success of the Group’s business largely depends on the level of business activity in the oil and gas industry,which may be negatively affected by volatile oil and natural gas prices.Demand for the Group’s services depends on the level of business activity in oil and gas exploration,development and production, particularly for development and production activity in Egypt, the Kingdomof Saudi Arabia, Algeria and, if the Group expands, outside of those markets, particularly in the rest of theMiddle East and Africa (“MEA”) region.

Numerous factors may affect oil and natural gas prices and, in turn, the level of demand for the Group’sservices, including:

• local and international political and economic conditions;

• worldwide demand for oil and local demand for natural gas;

• expectations regarding future energy prices;

• the ability of the Organisation of Petroleum Exporting Countries (“OPEC”) to set and maintainproduction levels and pricing and the level of production by non-OPEC countries;

• laws and government regulations that limit, restrict or prohibit exploration and development of oil andnatural gas in various jurisdictions;

• tax laws, regulations and policies related to the oil and natural gas industries;

• advances in exploration, development and production technology in Egypt, Algeria, Kingdom of SaudiArabia, the MEA region and globally;

• the cost of exploring for, developing, producing and delivering oil and natural gas;

• the rate of discovery of new reserves and the rate of decline of existing oil and gas reserves in Egypt,Algeria, Kingdom of Saudi Arabia, the MEA region and globally;

• laws and regulations related to environmental matters affecting the oil and natural gas industries,including those addressing alternative energy sources and the risks of global climate change;

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• the development and exploitation of alternative fuels;

• available pipeline and other oil and gas transportation capacity;

• oil refining capacity;

• the relative cost of offshore drilling versus onshore oil and gas production;

• accidents, adverse weather conditions, natural disasters and other similar incidents relating to the oiland gas industry in Egypt, Algeria, Kingdom of Saudi Arabia, the MEA region and globally;

• the worldwide military or political environment, including uncertainty or instability resulting from anescalation or additional outbreak of armed hostilities or other crises in oil or natural gas producingareas of the MEA region and globally;

• acts of terrorism; and

• war and revolutions.

According to Bloomberg data, the average daily spot price for Brent crude oil in 2016 was approximatelyU.S.$45.13 per barrel, down from U.S.$53.60 per barrel in 2015 and U.S.$99.45 per barrel in 2014. This lowprice environment has increased competitive pressures on contract drilling companies, forcing a number ofrig operators globally into bankruptcy since 2015.

Demand for the Group’s services and, accordingly, its day rates and utilisation rates, are particularly sensitiveto the level of exploration, development and production activity of, and the corresponding capital andoperational spending by, oil and gas companies, including national oil companies (“NOCs”). Any prolongedreduction in oil and gas prices could result in an immediate decrease in levels of exploration, developmentand to a lesser extent production activity. Perceptions of longer-term lower oil and gas prices, whatever thecause, could similarly reduce or defer large capital expenditure projects given the long-term nature of manylarge-scale development projects in the oil and gas industry. Whilst the Group is currently focused on lowcost oil production markets as well as work-over and maintenance activities, which are generally less sensitiveto volatility in oil and gas prices, there can be no assurance that a resulting reduction in exploration,development and production activity would not necessarily reduce the demand for contract drilling servicesand have a material adverse effect on the Group’s business, financial condition, results of operations, cashflows and prospects. In particular, it depends on oil and natural gas industry activity and production levels,which are directly affected by oil and natural gas prices. In addition, in lower oil price environments wherethere is likely to be reduced demand for contract drilling and other services provided by the Group, clientsare likely to seek lower daily rates under the Group’s and its competitors’ contracts. In such periods of reduceddemand, the Group may negotiate and apply a discount to the daily rate upon the renewal of an expiredclient contract in order to remain competitive in the market, which could have a material adverse effect onthe Group’s business, financial condition, results of operations, cash flows and prospects.

The oil and gas market in the MEA region, and globally, experiences fluctuations in the demand for drillingservices and there have been periods of high demand, short rig supply and high day rates, followed by periodsof low demand, excess rig supply and corresponding low day rates. The Group does not receive revenues whileits rigs are idle or stacked, although it continues to incur costs in respect of such rigs for the rig’s crew (whichis generally reduced to security while the rig is idle or stacked) and berthing and associated items. Anyreduction in demand for the Group’s drilling rigs that results in rigs becoming idle could have a materialadverse effect on the Group’s business, financial condition, results of operations, cash flows and prospects.

The contract drilling industry is highly competitive and cyclical, with periods of low demand and excess rigavailability that could result in adverse effects on the Group.The contract drilling industry is highly competitive, with numerous industry participants, none of which hasa dominant market share globally, and in particular between the start of 2009 and February 2017, the numberof jack-ups deployed in the Middle Eastern Gulf region increased by 23 per cent., according to ClarksonsResearch. Drilling contracts are traditionally awarded on a competitive bid basis. Factors affectingcompetition among contract drillers include pricing, rig availability, location and suitability, experience andskill of the workforce, efficiency, safety performance record, technical capability and condition of equipment,operating integrity, reputation, industry standing, client relations and government preference. Pricecompetition is often the primary factor in determining which pre-qualified contractor is awarded a contract,which may limit revenues from the Group’s existing and future contracts.

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As of the first quarter of 2017, there is an oversupply of more than 250 mobile drilling rigs globally, accordingto Clarksons Research, and more than 80 per cent. of rigs on order (122 units) have not yet been contractedfor work. Furthermore, the refurbishment of cold-stacked rigs by competitors may intensify price competitionand any increase in the construction of new rigs would increase the negative impact of oversupply on theGroup’s day rates and utilisation rates. The increase and oversupply of offshore drilling rigs in recent years,together with the decline in oil prices and lower demand, has produced a decline in utilisation and/or dayrates, a situation which, if it persists for the next few years, could be exacerbated by a prolonged decline indemand for drilling rigs. Lower utilisation and/or day rates, particularly in the MEA region, could adverselyaffect the Group’s revenues and profitability.

In addition, in an over-supplied market, the Group may have limited bargaining power to renegotiate itscontracts. In such a market, the Group’s ability to win or retain contracts depends on its ability to offer morefavourable terms than its competitors, which may not always be the case. For example, the Group competeswith Saudi Aramco in KSA, where Saudi Aramco have entered into a newly created joint-venture with RowanCompanies to undertake further drilling opportunities in KSA. Any requirement for the Group to lower itsday rates as a result of competition and oversupply, or otherwise, could have a material adverse effect on theGroup’s business, financial condition, results of operations, cash flows and prospects.

There is sustained competition to provide the most cost efficient services for oil and gas companies. Inaddition, increased potential competition for drilling budgets in, for example, the Mediterranean Basin,Sub-Saharan Africa, Russia, China, Western Asian countries, the Middle East, the United States andelsewhere could result in lower levels of exploration and production in Egypt, Algeria, Kingdom of SaudiArabia and the MEA region even though production cost in the region is generally lower than in the rest ofthe world.

Additionally, financial operating results in the offshore contract drilling industry historically have been verycyclical and are primarily related to the demand for drilling rigs and the available supply of drilling rigs.Demand for rigs is directly related to the regional and worldwide levels of offshore exploration anddevelopment spending by oil and gas companies, which is beyond the Group’s control. While offshore oilproduction has accounted for over 25 per cent. of global oil production in the last 15 years, offshoreexploration and development spending can fluctuate substantially from year-to-year and fromregion-to-region. The fluctuating demand in the offshore oil production industry may affect demand for theGroup’s assets and services and could result in adverse effects on the Group.

The Group may suffer losses if its clients terminate or seek to renegotiate their contracts or fail to pay amountsdue to the Group.Some of the Group’s drilling contracts are subject to termination by the client for convenience upon notice.In the event of a termination at the client’s convenience, the Group would typically receive all amounts duefor work completed at such time, as well as an agreed upon amount for work still in progress and the cost ofhand-over, as is mutually agreeable between the client and the Group. Some agreements grant the customerthe right to terminate the agreement for cause, such as non-performance of obligations or material breachsubject in certain cases to a cure period or, in the case of defective works, the client’s right to perform thework at the Group’s expense or the right to enforce performance guarantees posted by the Group, which mayadversely affect the Group’s cash flow and revenues. Decreases in oil prices, the perceived risk of a furtherdecline in oil prices, and the resulting downward pressure on utilisation may cause some clients to considerearly termination of select contracts. The Group does not hold any revenue insurance policies and, while thetermination of a Group drilling contract by a client would likely result in an interruption of production untila replacement rig were able to be put in place (which may be a deterrent to a client’s willingness to terminate),there can be no recourse to an insurance claim in respect of immediate recovery of loss of revenue arisingfrom termination of a contract.

Whilst the Group’s operations are focused on activities which have tended to be less affected by poor marketconditions, such as workover and drilling activities in shallow water, non-harsh environments and lowextraction cost per barrel markets, and, to date, has no history of contract termination by a client, there canbe no assurance that termination of a contract may not occur in future as a result of a decline in marketconditions or otherwise. In addition, clients may become unable to fulfil their contractual obligations and insevere circumstances may cease trading, particularly in periods of low oil and gas prices or deterioratingeconomic or financial market conditions. Equally, whilst most of the Group’s clients are, or are connectedwith, established national oil companies and whilst the Company seeks to operate in low break-even markets

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to reduce the likelihood of cancelled drilling contracts, there can be no assurance that such clients are resistantto unfavourable economic and financial market conditions and therefore there can be no assurance that suchclients will not consider and exercise any right it may have to terminate a contract with the Group.

In addition, most of the Group’s clients, are or are connected to large international and national oil companies,which is unavoidable in the markets in which the Group operates, and such clients often have significantbargaining leverage over the Group and may use this leverage to seek to renegotiate contract day rates andterms. Clients may request to renegotiate the terms of existing contracts.

As of 31 December 2016, the average age of invoices, calculated based on the average of opening and closingreceivables balance for the reference period divided by the revenue generated within that period and multipliedby the count of days within that same reference period, was 92 days. In 2016, the Group experienced difficultycollecting payments from several of its Egyptian clients. From 31 December 2015 to 31 December 2016, theGroup’s accounts receivable increased by 202 per cent. to U.S.$51 million (net of provisions for impairment)and the average age of the Group’s accounts receivable increased by nearly a third. The Group understandsthat the delay in payments owed to several factors. One client had difficulty obtaining U.S. dollars to payamounts due in U.S. dollars under its contract; another client experienced certain operating challenges. As aresult, the Group has renegotiated its contractual payment terms, including the currency of payment, withrespect to one client to expedite collections. Should the Group experience continued or increased delays inpayment or should these clients default on payments due, this could have a material adverse effect on theGroup’s business, financial condition, results of operations, cash flows and prospects.

Early termination of contracts, contract renegotiations or discount of day rates, or a failure of a client topay amounts to the Group when due, could have a negative impact on the Group’s ability to generateanticipated revenue and could have a material adverse effect on the Group’s business, financial condition,results of operations, cash flows and prospects.

The Group’s current backlog of contract revenue may not be fully realised and may decline significantly in the future,which may have a material adverse effect on the Group’s financial position, results of operations or cash flows.As of 31 December 2016, the Group’s contract backlog was approximately U.S.$501.2 million, as comparedto U.S.$224.5 million at 31 December 2015. Backlog is based on firm commitments represented by signeddrilling and services contracts, and is the total amount payable to the Group during the remaining term ofan existing contract plus any optional client extension provided for in such contract, assuming the contractedrig will operate (and thus receive an operating day rate) for all calendar days both in the remaining term andin the optional extension period. U.S.$53.8 million of the Group’s backlog is attributable to such optionalextensions. This calculation assumes that the client will exercise its option to extend its existing contract atthe current day rate and under the contracted terms. The Group’s calculation of backlog also includes movefees and lump sum mobilisation and demobilisation payments as applicable under the contract. The Group’smethod of calculation of backlog may differ from peers, who may exclude certain revenue such as mobilisationfees. Industry peers may also not count optional extension periods on existing contracts in their backlogcalculations. Counting such extension periods may cause the amount of backlog calculated by the Group toappear higher than that of its peers in the industry. Since the amount of backlog is calculated on theassumption that the optional extension on client contracts will be exercised, and includes the applicableamount payable under such extension, it should be noted that the exercise by clients of options to extendrespective contracts is not certain and therefore that the backlog amount owing to the Group calculated atany one time may not necessarily represent with certainty the actual revenue amount which the Group canexpect to receive.

Revenues recorded in future periods could differ materially from the Group’s current backlog as a result ofvarious factors, many of which are beyond the Group’s control, including:

• the early termination, repudiation, renegotiation of or failure to extend existing contracts;

• breakdowns of equipment, possibly resulting in rig downtime or repair for which the Group may receivea reduced day rate or no day rate at all;

• work stoppages, including labour strikes;

• shortages of material and skilled labour;

• surveys by government and maritime authorities;

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• periodic classification surveys;

• severe weather, strong ocean currents or harsh operating conditions; and

• force majeure events.

The Group’s contract backlog may fail to be realised in whole or in part if clients cancel or renegotiate theircontracts or any other of the Group’s assumptions in calculating the backlog estimate prove to be incorrect.Faced with continued delays in payments and increases in accounts receivable from clients such as the Groupexperienced in 2016 may lead the Group to negotiate discounts or changes in payment terms which reduce itsability to realise a substantial amount of its estimated backlog. These or other clients may also default onpayments due. The Group’s inability to realise a substantial amount of the Group’s contract backlog couldhave a material adverse effect on its financial position, results of operations or cash flows.

Rig upgrade and refurbishment projects, rig relocations and acquisitions of additional rigs are all subject to risks,including delays and cost overruns, which could have a material adverse effect on the Group’s operating results.A part of the Group’s strategy of creating value includes purchasing legacy drilling rigs, which are generally,when acquired, idle (either cold-stacked or warm-stacked) jack-up rigs that are more than 30 years old, andrefurbishing, maintaining and repairing the rigs using its own workforce in order to reduce costs. The Grouprefurbishes and maintains such rigs to bring them up to international standards (including American Bureauof Shipping (“ABS”) certification), meet client requirements and make them operational. In undertaking therefurbishment or upgrade of a legacy rig, for example as will be the case for a period of two months in 2017in respect of ADM 261 and ADM 266, there can be no assurance that the Group will be able to completesuch upgrade works on time or within budget. Changes in offshore drilling technology or demand for new orupgraded equipment may require the Group to make significant capital expenditures in order to maintain itscompetitiveness. Although the Group has generally not suffered delays or cost overruns in the Group’supgrade and refurbishment projects, any such delays or overruns in the future could reduce utilisation rates,result in the Group not achieving its expected returns on its investments and otherwise have a material adverseeffect on the Group’s business, financial condition, results of operations, cash flows and prospects.

Rig upgrade, refurbishment, life extension and repair projects are subject to the typical project risks of delayor cost overruns inherent in any large construction project, including the following:

• failure of third-party equipment to meet quality or performance standards;

• delays in equipment deliveries;

• shortages of materials or skilled labour;

• damage to construction and work-in-progress, including damage resulting from fire, explosion, flooding,severe weather, terrorism, war or other armed hostilities;

• unforeseen design or engineering problems, including those relating to the commissioning of newlydesigned equipment;

• unanticipated actual or purported change orders;

• strikes, labour disputes or work stoppages;

• financial or operating difficulties of equipment vendors or the shipyard while constructing, enhancing,upgrading, improving or repairing a rig or rigs;

• an inability to obtain the requisite approvals for the project; and

• disputes with shipyards and suppliers.

The Group’s ability to mobilise its drilling rigs to more desirable locations may be impacted by a number offactors, including, for example, governmental regulation and customs practices, the significant costs of movinga drilling rig, weather, political instability, civil unrest, military actions and the technical capability of thedrilling rig to relocate and operate in various environments. As the Group’s rigs are mobilised from onegeographic location to another, labour and other operating and maintenance costs can vary significantly. Ifthe Group relocates a rig to another geographic location without a client contract, the Group will incur coststhat will not be reimbursable by future clients, and even if the Group relocates a rig with a client contract, theGroup may not be fully compensated during the mobilisation period. The impact of rig mobilisation could

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have a material adverse effect on the Group’s business, results of operations and financial condition if theGroup incurs significant unplanned costs or delays.

It is part of the Group’s expansion plans to add a number of additional onshore and offshore rigs and MOPUsto its fleet in 2017 and thereafter. It is the Group’s preferred strategy to acquire legacy assets under runningcontracts and, whilst such rigs tend to require minimal to no refurbishment, there can be no assurance thatthis will be the case with every such rig purchased. Additionally, rigs purchased in an idle state will likely requireupgrade and refurbishment before they become operational. As part of the Group’s expansion plans, the Groupmay acquire higher specification rigs, drillships, or other assets which do not usually require upgrade orrefurbishment but there can be no assurance that such assets will be acquired; that, if acquired, such assetswould not require additional client-specific upgrades; or that the acquisition of such assets would have a positiveeffect on the Group’s business, financial condition, results of operations, cash flows and prospects.

The Group has a significant level of debt, and could incur additional debt in the future. The Group’s debt couldhave significant consequences for its business and future prospects.As of 31 December 2016, the Group had interest bearing loans and borrowings of U.S.$235.7 million andnet debt of U.S.$230.5 million, of which U.S.$189.9 million is long term debt with the remainder payable inthe coming 12 months. The Group’s debt and the limitations imposed on the Group by its existing or futuredebt agreements could have significant consequences for the Group’s business and future prospects, includingthe following:

• the Group may not be able to obtain necessary financing in the future for working capital, capitalexpenditures, acquisitions, refinancing or other purposes;

• the Group will be required to dedicate a substantial portion of its cash flow to payments of interest onits debt;

• the Group may be exposed to risks inherent in interest rate fluctuations on borrowings under its creditfacility, which it does not hedge against, which could result in higher interest expense in the event ofincreases in interest rates; and

• the Group could be more vulnerable during downturns in its business and be less able to take advantageof significant business opportunities and to react to changes in the Group’s business and in market orindustry conditions.

Whilst the Group has historically been in compliance with its debt covenants (see Part XV: “Additional

Information—Material Contracts”), the Group’s ability to service its debt, and to fund planned capitalexpenditures will depend on its ability to generate cash in the future, which is subject to general economic,financial, competitive, legislative, regulatory and other factors that are beyond the Group’s control. Giventhe Group’s level of backlog from current contracts for its assets, the Directors do not expect that the Group’sindebtedness and its obligations to make scheduled interest payments or repay its indebtedness will negativelyaffect its ability to operate with the necessary working capital over at least the next 12 months. The Group’sfuture cash flows may be insufficient to meet all of its debt obligations and other commitments, and anyinsufficiency could negatively impact its business. To the extent the Group is unable to make scheduled interestpayments or repay its indebtedness as such becomes due or at maturity with cash on hand, the Group willneed to refinance its debt, sell assets, reschedule its debt obligations with lenders or (as a matter of practicalnecessity) repay the debt with the proceeds from equity offerings. Additional indebtedness or equity financingmay not be available to the Group in the future for the refinancing or repayment of existing indebtedness,and the Group may not be able to complete asset sales in a timely manner sufficient to make such repayments.

The Group’s business involves operating hazards, and its insurance and indemnities from the Group’s clients maynot be adequate to cover potential losses from its operations.Oil drilling is an inherently dangerous activity and the Group’s operations are subject to the hazards inherentin the drilling of oil and gas wells. These hazards include blowouts, reservoir damage, loss of production, lossof well control, punch-throughs, lost or stuck drill strings, equipment defects, craterings, fires, explosions andpollution. These hazards can cause personal injury or loss of life, severe damage to or destruction of propertyand equipment, pollution or environmental damage, claims by third parties or clients and suspension ofoperations. The Group’s offshore fleet is also subject to hazards inherent in marine operations, either whileon site or during mobilisation, such as capsizing, sinking, grounding, collision, piracy, damage from severeweather and marine life infestations. While the Group maintains insurance policies, deploys detailed HSE

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management systems and runs continuous training and awareness programmes this cannot provide completeassurance against non-compliance by personnel or against the possibility of accidents. The Group cannotensure that it can maintain low recordable incident rates or that worker or third party injuries or fatalitieswill not occur as a result of accident or unforeseen events.

The Group’s drilling contracts customarily specify automatic termination or termination at the option of theclient in the event of a total loss of the drilling rig and often include provisions addressing termination rightsor reduction or cessation of day rates if operations are suspended or interrupted for extended periods due toa breakdown of major rig equipment, unsatisfactory performance, “force majeure” events beyond the controlof either party or other specified conditions. For example, most client contracts apply a repair rate in placeof the day rate for ongoing general maintenance or if the relevant rig becomes unoperational due to need formaintenance or repair. Beyond the prescribed period for such maintenance or repair, generally a few days percalendar month, the Group is entitled to neither the day rate nor the repair rate. Under the barge contract,there are no paid maintenance days and the Group receives no repair or day rate while the barge is undergoingmaintenance or repair. Prolonged downtime for maintenance or the loss or suspension of a contract as aresult of such an event would thus result in a reduction of revenues received by the Group, which, dependingon the damage caused to the rig and the timing and ability of the Group to enter into a new contract orresume work, may be significant. Associated reputational damage in connection with any such incidents mayalso affect the ability of the Group to renew existing contracts or obtain new contracts.

In 2004, the Group acquired an offshore jack-up barge, Admarine II. During the mobilisation of AdmarineII from Abu Dhabi to Egypt, harsh weather conditions resulted in severe damage to the barge. Although100 per cent. of the insured value of the barge was recovered on this occasion, there can be no assurance thatthe Group will achieve full recovery under its insurance policies in the event of any future loss. Althoughstrategic preventative measures have since been applied by the Group to minimalise similar incidents, therecan be no assurance that such steps will completely eliminate the risk of a similar incident re-occuring. TheGroup’s insurance policies and drilling contracts contain rights to indemnities intended to cover certain losses,though there can be no assurance that such insurance and/or indemnities will prove adequate. The Groupdoes not have insurance coverage or rights to indemnities for all possible risks. The Group maintains threemain types of insurance coverage: (i) hull and machinery coverage for physical damage to its property andequipment for the offshore and the onshore units (an ‘all-risk’ insurance policy), (ii) protection and indemnityinsurance (to cover loss of life; injury of Group crew and third parties; damage to onboard cargo; damage topiers; docks and other fixed floating objects; wreck removal costs; and collision liability), and (iii) contractliability insurance in respect of all contracts. The Group’s insurance coverage, however, includes per incidentand aggregate policy limits. As a result, the Group generally retains the risk for any losses in excess of theselimits. In addition, the Group could decide to retain more risk in the future, resulting in higher risk of losses,which could be material. In the event that the Group incurs losses due to lost revenue or other eventualitiesin the future, which are not covered by insurance, such losses could have a material adverse effect on theGroup’s business, financial condition, results of operations, cash flows and prospects. Additionally, the Groupis always required under its client contracts to maintain adequate insurance and there is a risk that the Group,in the future, may have to take out policies at a rate that it does not consider reasonable. Similarly, there is arisk that the Group may not be able to obtain insurance against certain risks.

Damage to the environment could also result from the Group’s operations, particularly through the dischargeof hydrocarbons, fuel, lubricants or other chemicals and substances used in drilling operations or extensiveuncontrolled fires. The Group may also be subject to property damage, environmental indemnity and otherclaims by oil and natural gas companies. Although the Group’s contracts generally require its clients toindemnify it against such risks, there can be no assurance that the clients will do so or that the Group will nototherwise be held liable. In addition, a court or a relevant arbitral tribunal may decide that certain indemnitiesin the Group’s current or future drilling contracts are not enforceable. Contractual indemnities for criminalfines and penalties to be against public policy, and the enforceability of an indemnity as to other matters maybe limited. Likewise, although the Group has protection and indemnity (“P&I”) insurance policies in place,there can be no assurance that such policies will cover the full range of and entirety of any such damageincurred. It should also be noted that the Group’s insurance policies form part of the security package pledgedunder the Group’s bank loans and credit facilities and, in circumstances which constitute a default under anyof the Group’s loans or facilities, there is a risk that any claims and or payments under such insurance policiesbecome subject to the relevant lender’s control and cannot be freely pursued or applied by the Group.

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The Group relies on a relatively small number of clients and the loss of a significant client could have a materialadverse effect on the Group.The Group engages in drilling and workover and maintenance services for third parties. The Group relies onforging and maintaining strong client relationships for the success of its business. In the year ended31 December 2016, the Group had seven clients. Consequently, should contracts with these clients prove lessprofitable for the Group than expected, or should the Group fail to secure new or repeat contracts with theseclients, the Group’s revenues may decline significantly, which could have a material adverse effect on theGroup’s business, financial condition, results of operations, cash flows and prospects.

In certain cases, such as with Saudi Aramco and GPC, a client may have engaged more than one of theGroup’s assets. Loss of, or underperformance under, a client contract may have a knock-on impact oncontracts for the same client on other rigs and may thereby have a corresponding material adverse effect onthe Group’s other contracts, its business, financial condition, results of operations, cash flows and prospects.In addition, concentration in the Group’s contract portfolio increases the Group’s exposure to individualcounterparty credit risk. Whilst, to date, the Group has not lost any significant clients and operates indiversified markets, there can be no assurance that such diversification will necessarily protect the Groupfrom losses arising from the loss of an existing client in a particular business area.

The Group may not be able to realise its strategy.The Group’s strategy includes the expansion of its fleet within its current operational domain (offshoreshallow water and onshore drilling) primarily through the acquisition and refurbishment of legacy offshoredrilling rigs, the purchase of offshore rigs with running contracts, the purchase of new onshore rigs, theexpansion of its operations into additional markets, including in the Gulf Co-operation Council (“GCC”)countries and non-sanctioned African countries and the expansion of its business model into the asset-lightmodel covering higher specification jack-up rigs and drill ships. The Group plans to add a number ofadditional onshore and offshore rigs and MOPUs to its fleet. Outside the Group’s operational domain (forexample, deepwater drilling) the Group may rely on an operational structure that leverages the existingoperational experience of its partners. There can be no assurance, however, that the Group will be able toacquire any or all additional rigs and MOPUs at the budgeted amounts and investment costs and prevailingeconomic conditions will affect both the timing and scale of the Group’s expansion and acquisition strategy.In particular, increasing oil prices may increase competition for rigs, which may result in increased rig prices.Accordingly, there can be no assurance that the Group can acquire rigs or that it will achieve the contemplatedeconomic benefits from such acquisitions. Furthermore, there can be no assurance that there will not be amaterial shift in demand for newer rigs which may undermine the Group’s strategy to focus on acquisition,refurbishment and contracting out of legacy rigs.

In addition, if the Group is unable to fund the capital expenditures necessary to realise its strategy from itsexisting cash resources, the proceeds of the Global Offer and its cash flows from operations, it may be requiredto either incur additional borrowings, raise capital through the sale of additional debt or equity securities orscale back its expansion strategy and fleet acquisitions. The Group’s ability to access the capital markets maybe limited by its financial condition at that time, by changes in laws and regulations or the interpretationthereof and by adverse market conditions resulting from, among other things, general economic, politicaland social conditions prevailing in the countries where the Group operates or is incorporated and elsewhereand contingencies and uncertainties that are beyond its control. Any failure to obtain the funds for necessaryfuture capital expenditures on acceptable terms or at all could prevent the Group from realising its strategy,which could, in turn, have a material adverse effect on the Group’s business, financial condition, results ofoperations, cash flows and prospects.

Steps taken in furtherance of the Group’s strategy to expand into new jurisdictions include seekingpre-approved bidder status with oil and gas clients. There can be no assurance, however, that the Group willobtain pre-qualifications for which it has applied or will apply or that the Group will be able to retain thepre-qualifications it has obtained. In addition, notwithstanding such pre-approved status, there can be noassurance the Group will secure rig contracts in new or existing markets or otherwise successfully enter newmarkets or that its operations in such markets will be profitable.

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The Group and local drilling companies compete for drilling contracts with affiliates of respective National OilCompanies.The Egyptian General Petroleum Corporation (“EGPC”) is the national oil company of Egypt and is100 per cent. owned by the Arab Republic of Egypt. EGPC has a joint venture, Egyptian Drilling Group(“EDC”), with Maersk and another Government joint venture entity. EDC competes with the Group fordrilling contracts. Under Egyptian law, EDC has certain preferential treatment over its competitors, includingthe Group, in bidding processes, such that a bid by the Group must be at least 10 per cent. lower in financialterms in order to be considered equal to an EDC bid. Although the Directors believe that the Group has acost advantage over its competitors, including EDC, such preferential treatment of EDC may result indownward pressure on the prices that the Group and EDC are able to realise. In addition, although there arelegal constraints in place preventing EGPC from otherwise favouring its affiliates, there can be no guaranteethat these constraints will be respected or remain in place. The risk also exists in the KSA and in Algeriawhere the Group competes for drilling contracts with affiliates of NOCs in those countries. The NOCs’ statusunder local laws and their relationships with their respective affiliates could adversely affect the Group’soperations by limiting drilling opportunities or reducing revenues, which could have a material adverse effecton the Group’s business, financial condition, results of operations, cash flows and prospects.

The Group may not be able to renew or obtain new and favourable drilling contracts for rigs whose contracts areexpiring or are terminated, or to obtain drilling contracts for its uncontracted rigs.The Group’s ability to renew expiring drilling contracts or obtain new drilling contracts is dependent uponthe prevailing market conditions at the time and the Group’s pricing, performance record and reputation,among other factors. The Group has historically operated at a higher than 90 per cent. utilisation rate, so ifthe Group is unable to obtain new drilling contracts following the expiration of its current contracts or forits newly-acquired and refurbished rigs or rigs that are currently idle, or if new drilling contracts are enteredinto at day rates substantially below the existing day rates or on terms otherwise less favourable as comparedto current contract terms, the Group’s revenues and profitability could be adversely affected.

In 2014 and 2015, the Group renegotiated or entered into a number of contracts, generally with one to twoyear terms, with the exception of the Admarine I contract for the MOPU which is for a term of five years.Accordingly, the majority of the Group’s current drilling contract extensions are scheduled to expire by late2017 and two each of the remaining drilling contracts will expire in 2018, 2019 and 2021, respectively.Although the Group has historically always extended the term of its contracts and is in negotiations to extendthe current terms of certain of its existing contracts, the Group may be unable to obtain drilling contractsfor its existing and future rigs, and there may be a gap in the operation of the rigs between contracts duringwhich the rigs would not generate revenue.

There can be no assurance that the Group will renew or secure drilling contracts upon rates and terms thatwill provide a reasonable rate of return on the Group’s investments in the rigs it acquires and refurbishes.Any failure to secure profitable drilling contracts for its jack-up barge and all its rigs in the future could havea material adverse effect on the Group’s business, financial condition, results of operations, cash flowsand prospects.

The Group also requires certifications or recognised status in order to retain or enter into contracts. Althoughthe Group has not previously lost, and intends to maintain, the pre-qualification statuses that it currentlyholds, if it lost pre-qualification status in any jurisdiction the Group may face obstacles to entry into newcontracts. Similarly, in the event that any of the Group’s offshore rigs is unable to renew its ABS certification,which clients require to be in place, existing contracts may be suspended or terminated and the Group mayface obstacles in the renegotiation of existing contracts or the entry into new contracts. The Group is currentlyseeking the renewal of the ABS certifications for its Admarine I and Admarine VIII rigs and the ABScertification for Admarine II expires in April 2017. In the case of Admarine II, for example, the rig wouldlikely need to cease operations while the Group pursues the renewal of the ABS certificate for the rig, whichcould result in lost revenue related to the stoppage and/or additional costs. In addition, three further rigs’ABS certifications are due to expire in 2017. While the Group intends and expects to renew all suchcertifications promptly, there can be no assurance that such renewals will be successful and not subject todelays or additional costs.

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The Group’s standard specification rigs are at a relative disadvantage to higher specification rigs.The Group’s standard specification rigs lack certain capabilities and technology that can be found on higherspecification rigs, including the capability to operate at water depth of more than 400 feet and with a hookloadcapacity of over 1,000 tons. Such capabilities may increase the operating parameters and efficiency of higherspecification drilling rigs. Although high specification rigs currently tend to be deployed in harshenvironments, in which the Group does not have its current operations, if the demand for offshore drillingrigs were to continue to decrease for a prolonged period of time, it is possible that higher specification rigswould begin to compete with standard specification rigs for the same contracts. In that case, higherspecification rigs would have an advantage over standard specification rigs in securing those contracts, evenif lower day rate markets do not warrant a profitability for the high investment cost of high specification rigs(which can work as a deterrent), the demand for and utilisation of standard specification rigs may decrease.Similarly, although the Group has historically enjoyed the advantage of lower investment cost units ascompared to high specification jack-up rigs, there can be no assurance that the market will not turn to favourhigh specification rigs in the future.

A decrease in demand for and utilisation of standard specification rigs could have a material adverse effecton the Group’s business, financial condition and results of operations. Many of the Group’s competitors havefleets that include high specification rigs and may be more operationally efficient. The Group’s rigs are notsuitable for operations in harsh environments and so do not compete with high specification rigs insuch markets.

Additionally, lower specification rigs tend to be stacked earlier in the cycle of decreased rig demand thanhigher specification rigs and have been reactivated later in the cycle, which may adversely impact the Group’sbusiness, though this is region-specific. As the current downturn began, many U.S.-based older rigs whichwere on shorter period contracts were redelivered and stacked. While this has not been the case in the MiddleEast where a number of older jack-ups have had their contracts renewed by NOCs. This is partly due to price,partly due to conditions in the region, and partly due to existing relationships. The Group’s rigs are furtherconstrained by the water depths in which they are capable of operating, meaning they can only be reallocatedto similar operating environments. Whilst the majority of rigs currently deployed in the Middle East arestandard jack-up rigs, a trend towards high specification rigs could result in a decline in demand for standardspecification rigs such as the Group’s rigs, which could have a material adverse effect on the Group’s business,financial condition and results of operations.

The Group is subject to the jurisdiction of the Egyptian Competition Authority and could be liable to fines andother penalties if any of the Group’s behaviour is deemed to be an abuse of the Group’s dominant market positionin Egypt.The Group is a market leader in Egypt by number of offshore jack-up rigs. In its home market of Egypt, theGroup is subject to antitrust and competition-related restrictions. The Group could be subject to fines andpenalties if it is found to be in a dominant position in the Egyptian market and exploiting this position toeliminate competition through activities such as: preventing competitors from accessing the market; sale belowproduction cost; or restricting suppliers from dealing with other competitors. The Directors believe that theGroup does not engage in prohibited practices. The Egyptian Competition Authority is the regulator whichinvestigates and assesses whether a company is in a dominant position in a relevant market and determineswhether a company in a dominant position has abused such position. No such determinations have beenmade with regard to the Group to date. Although many factors impact the competitiveness of the drillingmarket, such as oil price, tendering process and strategic activities by competing companies, which serve tolessen the likelihood of any company controlling the market, if the Egyptian Competition Authority were toinvestigate the Group and determine that it does hold a dominant market position in Egypt and does engagein prohibited practices, it could impose fines and other penalties on the Group, which could have a materialadverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group’s operations subject it to environmental regulations, non-compliance with which could result in severefines, increased costs, and suspension or permanent shut down of activities.The Group’s operations are subject to the environmental risks inherent in oil and gas drilling. Offshore drillingin certain areas has been curtailed and, in certain cases, prohibited because of concerns over protection ofthe environment. The Group’s operations are or may become subject to laws and regulations, includingapplicable international conventions, controlling the discharge of materials into the environment, pollution,contamination and hazardous waste disposal or otherwise relating to the protection of the environment.

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Environmental laws and regulations applicable to the Group’s business activities, or which may becomeapplicable, could impose significant liability on the Group for damages, clean-up costs, fines and penalties inthe event of oil spills or similar discharges of pollutants or contaminants into the environment or improperdisposal of hazardous waste generated in the course of operations. To date, such laws and regulations havenot had a material adverse effect on the Group’s operating results, and the Group has not experienced anaccident that has exposed it to material liability arising out of or relating to discharges of pollutants into theenvironment. However, legislative, judicial and regulatory responses to a well incident could substantiallyincrease the Group’s and/or its clients’ liabilities. In addition to potential increased liabilities, such legislative,judicial or regulatory action could impose increased financial, insurance or other requirements that mayadversely impact the entire offshore drilling industry.

The legal frameworks in the MEA region for environmental protection are under continual development and,in time, relevant governments may impose stricter environmental regulations or apply existing regulationsmore strictly, including regulations regarding discharges into air and water, the handling and disposal of solidand hazardous waste, land use and reclamation and remediation of contamination. Compliance withenvironmental laws, regulations and standards, where applicable, may require the Group to make significantcapital expenditures, such as the installation of costly equipment or operational changes, and may affect theresale values or useful lives of the Group’s jack-up barge and rigs. These costs could have a material adverseeffect on the Group’s business, financial position, results of operation and prospects. Any failure to complywith applicable laws and regulations may result in reputational damage to the Group, administrative and civilpenalties, criminal sanctions or the suspension or termination of the Group’s operations.

Failure to comply with these statutes and regulations may subject the Group to civil or criminal enforcementaction, which may not be covered by contractual indemnification or insurance and could have a materialadverse effect on the Group’s financial position, operating results and cash flows.

New laws and government regulations or changes to existing laws and government regulations may add to costs,limit the Group’s drilling activity or reduce demand for its drilling services.The Group’s operations are affected by political developments and by laws and regulations relating to the oiland gas industry. The contract drilling industry is dependent on demand for services from the oil and gasindustry. Accordingly, the Group would be directly affected by the adoption of new laws and regulationslimiting or curtailing exploration and development drilling for oil and natural gas for economic,environmental, health, safety or other policy reasons. The Group may be required to make significant capitalexpenditures or incur substantial additional costs to comply with new laws and regulations. Any of theseevents or similar legislative or regulatory activity could adversely affect the Group’s operations by limitingdrilling opportunities or significantly increasing its operating costs, which could have a material adverse effecton the Group’s business, financial condition, results of operations, cash flows and prospects.

If the Group or its clients are unable to acquire or renew permits and approvals required for drilling or otheroperations, the Group may be forced to suspend or cease operations, and its profitability may be reduced.Crude oil and natural gas drilling and production services require numerous permits and approvals (forexample: customs clearance, military approvals, the Egyptian National Telecommunication RegulatoryAuthority (NTRA) radio license, civil aviation license, navigation warning from the Egyptian authority ofmaritime safety, D-RAT certificate) for the Group and its clients from governmental agencies in the areas inwhich the Group operates. Certain licenses and permits relating to the Group’s rigs are currently being renewedor are due to expire in the coming year. If the Group or its clients are not able to obtain or renew necessarypermits and approvals in a timely manner, the Group’s operations will be adversely affected. Obtaining andrenewing all necessary permits and approvals, as required in each jurisdiction in which the Group operates,may necessitate expenditures to comply with the requirements of such permits and approvals, future changesto such permits or approvals, or any adverse change in the interpretation of existing permits and approvals.In addition, such regulatory requirements and restrictions could also delay or curtail the Group’s operations,require the Group to make additional expenditures to meet compliance requirements, and could have asignificant impact on the Group’s financial condition or results of operations and may create a risk ofexpensive delays or loss of value if a project is unable to function as planned. Although the Group hashistorically renewed and expects to be able to continue to renew its licenses and permits, and its clients tendto have relevant permits and approvals, there can be no assurance in this regard. The renewals may not begranted, or may be granted with certain restrictions. In addition, there may be administrative delays whichmight result in new licenses and permits being issued after existing licenses and permits have expired. Though

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temporary licences are available in such circumstances, there can be no assurance that such licences will beavailable in time.

Failure to duly obtain, hold and renew these licenses may subject the Group to civil or criminal enforcementaction, which may not be covered by contractual indemnification or insurance and could have a materialadverse effect on the Group’s financial position, operating results and cash flows or its ability to continue itsoperations in the countries in which it operates.

The Group’s drilling contracts with national oil companies or their affiliates may expose the Group to greaterrisks than it would assume in drilling contracts with non-governmental clients.The Group currently owns and operates rigs that are contracted with national oil companies or their affiliates.In 2016, 100 per cent. of the Group’s revenue came from such clients. These included Saudi Aramco in theKingdom of Saudi Arabia and Gupco, GPC and Petrobel in Egypt. Apart from pricing and mobilisationfees, the terms of these contracts are often non-negotiable and may expose the Group to greater commercial,political and operational risks than it might assume in other contracts, such as exposure to materially greaterenvironmental liability and other claims for damages (including consequential damages) and personal injuryrelated to the Group’s operations, or the risk that the contract may be terminated by the client without causeon short-term notice, contractually or by governmental action, under certain conditions that may not providethe Group with an early termination payment. While this is the norm for all rig owners in the markets inwhich the Group operates, the Group can provide no assurance that the Group’s exposure to NOCs and theiraffiliates will not have an adverse impact on its future operations or that the Group will not increase thenumber of rigs contracted to national oil companies or their affiliates with commensurate additionalcontractual risks.

Failure to recruit and retain skilled personnel could adversely affect the Group’s operations and financial results.The Group requires skilled personnel to refurbish drilling rigs and to provide technical services and supportfor its business. Competition for skilled and other labour has intensified as additional, more technicallyadvanced, rigs are added to the worldwide fleet. There are reportedly over 122 mobile offshore drilling rigson order and not contracted for work. These rigs will require more workers with specialised training and skillsto operate, and in periods of high utilisation, it is more difficult and costly to recruit and retain qualifiedemployees. Competition for such personnel could increase the Group’s future operating expenses, or impactthe Group’s ability to fully staff and operate its jack-up barge, MOPU and rigs.

The Egyptian market for blue-collar employees is generally characterized by high turnover. As such, theGroup will also incur additional training costs for prospective employees for skilled positions on any rigs thatit acquires. In addition, the Group may be required to maintain or increase existing levels of compensationto retain its skilled workforce, especially if its competitors raise their wage rates. Any increase in the Group’semployment costs or loss of key personnel could have a material adverse effect on the Group’s business,financial condition, results of operations, cash flows and prospects. Likewise, an inability to obtain visas andwork permits for employees on a timely basis could adversely affect operations.

Further, although the Company’s employees are not members of any union and whilst the Company hassuffered no strikes or work stoppages in the past, there can be no assurance that such activity may not happenin the future which could have an adverse effect on the Group’s business, financial condition, results ofoperations, cash flows and prospects.

The Group’s growth and success depends in part upon the knowledge and continuing service of certain of itssenior management.The Group’s future growth and success depends in part upon the knowledge and continuing service of certainof the Group’s senior management, including the Group’s Chief Executive Officer, Dr. Farouk, who possessexperience, relationships and knowledge that are important to the operation of the Group’s business, as wellas its profitability and future growth. Any failure to continue existing or generate new client relationshipscould have a material adverse effect on the Group’s business, financial condition, results of operations, cashflows and prospects. The Group is in the process of obtaining key man insurance to cover losses to the Group’sbusiness which may arise out of loss of key management personnel. Although the Group has experienced alow turnover rate among senior management, there can be no assurance that the Group will always be ableto retain the services of its key managers or attract and retain replacements or additional qualified managers,as and when needed. Its failure to do so could adversely negatively affect the Group’s operations.

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The Group is required to comply with certain financial and other restrictive covenants.ADES is subject to certain financial and other restrictive covenants under the terms of its borrowings thatlimit its ability to borrow and impose other restrictions, including, in certain cases, the payment of dividends.See “—The Company may decide not to pay dividends in the future, and its ability to pay dividends will depend

on its future profits and other factors.” ADES’ ability to meet its financial covenants and tests under the termsof its borrowings are, to an extent, affected by events beyond the Group’s control. While, as at the date ofthis Prospectus, the Group is in compliance with all financial covenants applicable to it, the Group’smanagement cannot give any guarantee that the Group will be able to meet the tests imposed by the financialcovenants under the terms of its borrowings. If the Group is unable to comply with the restrictions andcovenants in its existing or future debt and other agreements, a default under the terms of those agreementsmay result. In the event of a default under these agreements, and once all possible cures have been exhausted,the parties may terminate their commitments to further lend to the Group or accelerate the loans and declareall amounts borrowed due and payable, which would trigger events of default in other finance agreements. Ifany of these events occurs, the Group cannot guarantee that available assets would be sufficient to repay infull all of the affected indebtedness, although the intrinsic market value of these assets, as determined by theGroup’s lenders, covers more than the total indebtedness of the Group. The Group also cannot guaranteethat it would be able to secure alternative financing. Even if the Group could obtain alternative financing,the Group’s management cannot guarantee that such financing would be on terms that are favourable oracceptable to the Group. It should also be noted that the Group’s contract proceeds form part of the securitypackage granted by the Group to lenders under its bank loans and credit facilities. In the event of defaultunder any such loan or facility, there is a risk that the right to contract revenue becomes subject to lendercontrol and is not free for the Group to apply at its discretion.

The Group must incur capital and operating expenditures to maintain its fleet, and may be required to makeadditional capital expenditures to maintain its competitiveness, to comply with laws and the applicable regulationsand standards of governmental authorities and organizations, or to expand the Group’s fleet, each of which couldadversely affect the Group’s financial condition, result of operations and cash flows.The Group must incur capital and operating expenditures on its fleet. In particular, as its rigs have an averageage of 39 years and are, consequently, lower in acquisition cost than newer rigs, the Group may be required tomake more significant capital expenditures over time than competitors with newer rigs. Changes in offshoredrilling technology, client requirements for new or upgraded equipment and competition within the Group’sindustry may require it to make significant capital expenditures in order to maintain its competitiveness. Inaddition, changes in governmental regulations, safety or other equipment standards, as well as compliancewith standards imposed by maritime self-regulatory organisations, may require the Group to make additionalunforeseen capital expenditures. As a result, the Group may be required to take its jack-up barge, MOPU andrigs out of service for extended periods of time, with corresponding losses of revenues, in order to make suchalterations or to add such equipment. In unfavourable market conditions, such expenditures may not bejustifiable or enable the Group to operate its older rigs profitably during the remainder of their economic lives.

In addition, the Group’s operating and maintenance costs will not necessarily fluctuate in proportion tochanges in its operating revenues. Costs for operating a rig are generally fixed or only semi-variable regardlessof the day rate being earned. During times of reduced activity, reductions in costs may not be immediate asportions of the crew may be required to prepare rigs for stacking, after which time the crew members arereassigned to active rigs or dismissed. In general, labour costs increase primarily due to higher salary levelsand inflation. Equipment maintenance expenses fluctuate depending upon the type of activity the barge orrig is performing and the age and condition of the equipment, and these expenses could increase for short orextended periods as a result of regulatory or client requirements that raise maintenance standards abovehistorical levels. Maintenance of the Group’s rigs, the average age of which is 39 years, may over time be moreexpensive than newly-built or newer rigs.

During idle periods, the Group may decide to “warm stack” a rig, which means the rig is kept within anoperational state, in its current location and ready for immediate deployment by deploying a small lay-upcrew to run equipment and carry out preventative maintenance. The Group’s operating expenses during awarm stacking will not be less than those it would incur if the rig remained active. The Group may also decideto “cold stack” the rig, which means the rig is neither operational nor ready for deployment, does not maintaina crew and is stored in a harbour, shipyard or a designated offshore area. However, reductions in costsfollowing the decision to cold stack a rig may not be immediate, as a portion of the crew may be required to

ESMA para37

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prepare the rig for such storage. Cold stacked rigs may require some capital expenditures to return them tooperation, making reactivation of such assets more financially demanding.

The Group may also require additional capital in the future, which the Group may be required to fund fromadditional borrowings or the issuance of debt or equity securities and there can be no assurance that theGroup will be able to raise such funding.

Any failure to obtain the funds for necessary future operational expenses on acceptable terms, in time, or atall, in order to cover the outlined instances where capex and opex is not in proportion to operating revenues,or where unforeseen capital expenditures arise, could have a material adverse effect on the Group’s business,financial condition, results of operations, cash flows and prospects. See “—The Group has a significant level

of debt, and could incur additional debt in the future. The Group’s debt could have significant consequences for

its business and future prospects.”

Significant part or equipment shortages, supplier capacity constraints, supplier production disruptions, supplierquality and sourcing issues or price increases could increase the Group’s operating costs, decrease its revenuesand adversely impact its operations. The Group’s reliance on third-party suppliers, manufacturers and service providers, to secure equipment,parts, components and sub-systems used in its operations exposes it to volatility in the quality, prices andavailability of such items. Certain critical parts and equipment that the Group uses in its operations areavailable only from a small number of suppliers, manufacturers or service providers. Critical equipmentincludes diesel generators and their spare parts; drilling equipment such as drill strings, drill pipes, drill bits,crane; and the ‘blow-out preventer’.

Although the Group has access to a network of different suppliers, the range of which the Directors believeenables the Group to quickly obtain parts and thereby makes it more likely to be able to meet the performancerequirements stipulated within its contracts, there can be no assurance that this will protect the Group fromdelay in deliveries from such third-party suppliers, manufacturers or service providers, production constraints,price increases, quality control issues, recalls or other decreased availability of parts and equipment which couldadversely affect the Group’s ability to meet its commitments to clients, which could, in turn, have a materialadverse effect on the Group’s business, financial condition, results of operations, cash flows and prospects.

Any violation of anti-bribery or anti-corruption laws, including the U.S. Foreign Corrupt Practices Act, theUnited Kingdom Bribery Act or other similar laws and regulations, could result in significant expenses, divertmanagement attention, and otherwise have a negative impact on the Group.The Group operates in countries known to have a reputation for corruption. It is subject to the risk that it,its affiliated entities or their respective officers, directors, employees and agents may take action determinedto be in violation of anti-corruption laws, including the U.S. Foreign Corrupt Practices Act of 1977, or theFCPA, the United Kingdom Bribery Act 2010, or the U.K. Bribery Act, and similar laws in other countries.Any violation of the FCPA, the U.K. Bribery Act or other applicable anti-corruption laws could result insubstantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certainjurisdictions and might adversely affect the Group’s business, results of operations or financial condition.Actual or alleged violations could damage the Group’s reputation and ability to do business. Further,detecting, investigating, and resolving actual or alleged violations is expensive and can consume significanttime and attention of the Group’s senior management.

The Group may be subject to litigation that could have an adverse effect on the Group.The operating hazards inherent in the Group’s business increase its exposure to litigation. Potential mattersfor litigation include, among other things, intellectual property infringement disputes, contract dispute,personal injury, environmental, and other toxic tort, employment, tax and securities litigation, and litigationthat arises in the ordinary course business. The Group currently has three ongoing, minor and immaterialcivil and employment cases involving ADES Egypt and the Company does not expect the outcomes of thesecases to adversely affect the Group’s business, although it can provide no assurances that this will be the case.Likewise, there can be no assurance that the Group may not in the future become subject to material litigationwhich may have an adverse effect on the Group in light of the costs associated with, amongst other things,defending the lawsuits, civil penalties or damage awards, harm to reputation and the diversion of the Groupmanagement’s resources.

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The Group’s information technology systems are subject to cyber-security risks and threats.The Group uses technologies, systems, and networks to conduct the majority of its operations, to collectpayments from clients and to pay vendors and employees. The risks associated with cyber incidents and attacksto the Group’s information technology systems could include disruptions of certain systems on the Group’srigs; other impairments of the Group’s ability to conduct its operations; loss of intellectual property,proprietary information or client data; disruption of the Group’s clients’ operations; and increased costs toprevent, respond to or mitigate cybersecurity events. If the Group were to experience a cyber-attack orincident, it could adversely affect the Group’s financial position, results of operations and cash flows.

Fluctuations in currency exchange rates may significantly affect the Group’s financial results.The Group’s revenue from drilling activities and services is denominated in U.S. dollars, while 67 per cent. ofthe Group’s operating costs are denominated in other currencies. Under its client contracts, the Group collectsa portion of its revenues in U.S. dollars and the remaining portion in Egyptian Pounds or, with respect tooperations in Algeria, in Algerian Dinars, in order to accommodate client preferences. Notwithstanding suchterms, however, the Group may, to facilitate collections or for other reasons, accept payment in local currencyof amounts otherwise payable in U.S. dollars under a contract. In 2017, as a gesture of goodwill, the Groupagreed to modify the currency split of the collection of payments with respect to Admarine VI to facilitatecollections from a client, GPC, that had fallen behind its payments. The Group may have to make similaraccommodation with respect to other rigs. Such changes in currency of payment terms may expose the Groupto greater currency exchange risk, particularly as most of its debt and interest payments are payable inU.S. dollars, which could have a material adverse effect on the Group’s business, financial condition, resultsof operations and prospects.

In addition the proportion of the Group’s costs payable in U.S. dollars may increase in connection withexpansion in certain markets where a larger share of costs are payable in U.S. dollars. For example, in theKSA, certain substantial costs relating to contracted rigs the Group acquired in 2016, including the cost ofexpatriate workers working on the rigs, are payable in U.S. dollars.

Furthermore, payments made by clients pursuant to their contractual obligations may be affected by thedevaluation and floatation of the EGP or other currency changes. The amount payable in Egyptian Poundsby clients under their contracts with the Group has since 3 November 2016, in accordance with the EGPCrules, been based on the U.S. dollar to Egyptian Pound exchange rate of the National Bank of Egypt on thedate of payment. The rate from Algerian Dinar to U.S. dollars for the portion payable in Algerian Dinarunder the Group’s Algerian contracts is the average buying/selling rate in Algiers published by the BanqueExterieure d’Algerie (BEA) on the first working day of the month that the invoice is issued. The Group doesnot maintain currency hedges and does not enter into any foreign exchange hedging contracts. The Groupexperienced foreign exchange gains of U.S.$3.4 million in 2016, and foreign exchange losses of U.S.$27,523in 2015 and U.S.$575,322 in 2014, as a result of these differences. With fluctuations in foreign exchange inthe future, particularly the Egyptian Pound/U.S. dollar exchange rate the Group may not maintain the foreignexchange gains seen in 2016 and this could lead to foreign exchange losses, which could, in turn, affect theGroup’s business, financial condition, results of operations, cash flows and prospects and the comparabilityof financial results.

RISKS RELATING TO THE COUNTRIES IN WHICH THE GROUP OPERATES

Businesses operating in the Middle East and Africa region are exposed to continued political and economicinstability and social disorder.The MEA region, including countries in which the Group operates or plans to operate, has experiencedvarious degrees of political and economic instability in recent times. Egypt, for example, has experiencedpolitical upheavals and multiple changes in government, which resulted in demonstrations, protests and inextreme circumstances, revolution. For example, political unrest in Egypt led to demonstrations and protestsin Egypt’s principal cities, leading to the January 2011 revolution which resulted in the resignation of PresidentHosni Mubarak, the deposition of President Morsi and his government by Egyptian armed forces, and theinstallation of an interim government pending new elections in 2018. Such political unrest was characterisedby widespread civil unrest and violent clashes between civilians and military alike, resulting in uncertaintyand instability in the market and leaving business activity negatively affected. Although the Group’s businesshas previously weathered political unrest, there can be no assurance that the Group’s business will continueto be able to do so.

ESMA para 3I 9.2.119.2.3

I 9.2.3

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In Egypt, the current government is likely to continue to face socio-economic challenges and risks of instabilitythat often accompany political transition, including the upcoming presidential election, which could lead tothe formation of a new government, the political make-up, priorities and policies of which are uncertain.

Such continuing instability and unrest in the MEA region may significantly affect the economies in which theGroup does business, including the financial markets and the real economy generally. Such impacts could occurthrough a decrease in foreign direct investment into the region, capital outflows or increased volatility in theglobal and regional oil and gas markets. It remains unclear what long-term impact any unrest may have on theUAE or any of the countries in which the Group does business or will do business in the future. There can beno assurance that such growth or stability will continue, or that potential clients of the Group will not beaffected by the political environment in or around the MEA region. The Group’s business, financial condition,results of operations and prospects may be materially adversely affected if and to the extent that regionalvolatility has an impact upon the MEA region, and specifically on the Group’s business, and, in particular, thecountries in which the Group operates, such as Egypt, Algeria and the Kingdom of Saudi Arabia.

Any unexpected changes in the political, social, economic or other relevant conditions in such countries, orin neighbouring countries, could also have a material adverse effect on the Group’s business, financialcondition, results of operations and prospects.

The countries in which the Group operates or plans to operate may face significant economic and regulatorychallenges, which could negatively impact the Group’s business.The significant political instability in certain countries in the MEA region, including countries in which theGroup operates, and, to a lesser extent, the recent global economic crisis, have had material negativeconsequences for economies in the MEA region, and in particular, the Egyptian economy. For example,Egypt’s real GDP growth slowed from 5.1 per cent. in 2010 to 1.8 per cent. in 2011, remained relatively flatat around 2.2 per cent. per year for 2012-2014, and accelerated to 4.2 per cent. in 2015 according to WorldBank data. Foreign direct investment net inflows decreased by 107.6 per cent. from 2010 to 2011, althoughthey had returned to 2010 levels by the end of 2015 according to World Bank data. Inflation, as measured bythe Egyptian consumer price index (“CPI”), decreased from 11.8 per cent. in 2009 to 9.4 per cent. in 2013,then accelerating to 10.1 per cent. in 2014 and 10.4 per cent. in 2015 according to World Bank data. HeadlineCPI inflation accelerated in the latter half of 2016, particularly following the announcement of exchange rateliberalisation in November, reaching 23.3 per cent. in December 2016 according to Central Bank of Egypt.

In addition, the Egyptian economy may be subject to the risk of continued high and increasing inflation dueto the devaluation of the Egyptian Pound and recovery in GDP growth rates as economic reforms continueto be implemented. Although the Central Bank of Egypt has said that price stability is its primary monetarypolicy objective, there can be no assurance that the Central Bank of Egypt will be able to achieve or maintainprice stability and thus control inflation. In November 2016, the International Monetary Fund (“IMF”)approved a three-year U.S.$12 billion extended arrangement for Egypt under the Extended Fund Facility tosupport the government’s proposed economic reform program. The program calls for liberalisation of foreignexchange, monetary policy aimed at containing inflation, strong fiscal consolidation to ensure public debtsustainability, social and structural reforms, and fresh external financing. Pursuant to this plan, the CentralBank of Egypt floated its currency in November 2016, which immediately resulted in significant devaluation,and announced an increase in interest rates in an attempt to reduce the foreign currency shortages and supportthe value of the Egyptian Pound. These measures also include a plan to reduce and abolish energy and fuelsubsidies, the announcement of which resulted in price increases of around 35-50 per cent., depending onthe type of fuel. Similarly, in December 2016, the World Bank and Ministry of International Cooperationsigned the loan agreement for U.S.$1 billion for the Second Fiscal Consolidation, Sustainable Energy, andCompetitiveness Programmatic Development Policy Financing for Egypt, designed to support the country’sinclusive growth program across key economic areas. Also in December 2016, The African DevelopmentBank agreed a loan of U.S.$500 million to finance the Egypt Economic Governance and Energy SupportProgram Phase II. The loan is the second tranche of a three year, U.S.$1.5 billion programmatic series,covering the fiscal years of 2015/16 to 2017/18 (July-June) and builds on the first phase of the operation, aU.S.$500 million loan approved in December 2015.

Egypt’s budget deficit has increased from 6.9 per cent. of GDP in 2009 to 11.5 per cent. of GDP in 2015.Egyptian public debt has also increased from 72.5 per cent. of GDP in 2009 to 87.1 per cent. of GDP in 2015according to a Central Bank of Egypt report. The stabilisation and slight decrease in the budget deficit hasresulted in large part due to lower energy subsidies and substantial grants and other budgetary support fromGulf Cooperation Council member states.

I 9.2.1

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Net international reserves of the Central Bank of Egypt were U.S.$28.5 billion at the end of March 2017. Inthe absence of robust tourism revenue, Egypt’s net international reserves have been heavily supported bysupplies of energy on concessionary terms and new deposits with the CBE, in each case, by Gulf CooperationCouncil member states.

Additionally, changes in investment policies or shifts in the prevailing political climate in any of the countriesin the MEA region in which the Group operates or plans to operate, or jurisdictions outside the MEA regionthat the Group may operate in the future, could result in the introduction of increased government regulationswith respect to, among other things:

• price controls;

• export and import controls;

• income and other taxes;

• government intervention, including expropriation or nationalisation of assets, restrictions on foreignownership, increased protectionism and the introduction of tariffs and subsidies;

• more stringent application of foreign ownership restrictions;

• arbitrary and inconsistent government action (including potential loss of land assets, fines or otherpenalty action);

• foreign exchange and currency controls; and

• labour and welfare benefit policies.

There can be no assurance that, for example, Egypt, or any other country in the MEA region, will not continueto experience further economic difficulties or that they will be able to adequately address these difficultiesand stabilise or improve their relevant macroeconomic environments. In particular, any failure to addressEgypt’s fiscal and current account deficits may lead to an unsustainable macroeconomic environment andprecipitate a fiscal or balance of payments crisis, for example, as Egypt is currently experiencing. There canbe no assurance that Egypt will continue to benefit from fiscal or foreign exchange support from the memberstates of the Gulf Cooperation Council, and any reduction or cessation of such support could lead to asignificant deterioration of the macroeconomic environment. While recent IMF-backed reforms may helpaddress foreign currency shortages, limit inflation, and attract increased foreign investment in Egypt, therecan be no assurance that such reforms will be fully implemented or that they will be successful. Anydeterioration of such conditions in the MEA region may have a material adverse effect on the Group’sbusiness, financial condition, results of operations and prospects.

The MEA region has experienced and continues to experience terrorist events and occasional civil disorder whichcould have a negative impact on the Group’s business and operations.The MEA region has experienced and continues to experience terrorist attacks and occasional civil disorder.Previous terrorist attacks have targeted natural gas pipelines. The terrorist campaign in Sinai, Egypt, forexample, by an affiliate of Islamic State has been active since 2011 and has claimed many lives and disruptedexports of natural gas by pipelines. Similarly, Libya has experienced severe political instability, oneconsequence of which has been to enable another affiliate of the Islamic State to establish a base, with seriousimplications for Egypt and the MEA region. More recently, cities in Egypt’s Nile valley and delta (includingCairo) have witnessed a number of violent, terrorist-related incidents which have had and may continue tohave negative effects on Egypt’s trade and tourism, and cause other social and economic disruptions anddiplomatic tensions with some foreign states.

There can be no assurance that extremists or terrorist groups in the region will not escalate or continue theseviolent activities in the MEA region, or expand their operations to include more targets, and that domesticorder and stability will be successfully secured. Any continuation or escalation of such events may discourageor deter investment in the MEA region, which would lead to a deterioration of the macroeconomic climate,a further strain on net international reserves and, in turn, a worsening of the political and social environment.The effects of any such terrorist activities and security concerns could disrupt the Group’s operations ornegatively impact the market for the Group’s services and could have a material adverse effect on the Group’sbusiness, financial condition, results of operations and prospects as well as investor confidence in investingin MEA region.

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The uncertainty of legal systems and new legislative changes within the MEA region can create an uncertainenvironment for investment and business activity.The laws and regulations in many of the jurisdictions in which the Group operates, such as Egypt, or plans tooperate, may limit the Group’s activities in those jurisdictions and create an uncertain environment forinvestment and business activity in general. For example, the Egyptian legal system is still developing theframework to support a market economy. As a result, this creates uncertainties which may not exist in countrieswith more developed market economies, with respect to legal and business decisions. The evolution of Egypt’slegal system, particularly with respect to tax laws during the current transitional period, including theintroduction of the recently adopted VAT law, may adversely affect relevant market developments resulting incertain cases of ambiguities, inconsistencies or anomalies in the law, its implementation and judicial practice.Further, the Egyptian investment law has been subjected to a number of changes and amendments over thepast years, and it is understood that a new investment law is currently under discussion and pending approvalby Parliament. There can be no assurance that such new law (if issued) would not adversely affect the Company.

Moreover, enforcement of contractual rights through the courts in jurisdictions in which the Group operatesor plans to operate may also face difficulties and delays. In many of these jurisdictions, government authoritiesmay have more onerous requirements or a high degree of discretion and, at times, act selectively or arbitrarily,without hearing or prior notice, and sometimes in a manner that is contrary to law or is influenced by politicalor commercial considerations. Such governmental action could include, amongst other things: (i) thewithdrawal of permits; (ii) the expropriation of property without adequate compensation; or (iii) the forcedrecapitalisation, merger or sale of Group companies. Any such action taken in respect of the Group couldhave a material adverse effect on the Group’s business, financial condition, results of operations, cash flowsand prospects. Furthermore, the Company depends on the enforceability of its contracts, particularly withits clients, and so could be adversely affected by any limitations on the enforceability of its contracts in anyof the applicable jurisdictions in which the Group operates or plans to operate. The foregoing may have anadverse effect on the Group’s ability to protect certain contractual rights, or to defend itself against certainclaims by others, including challenges by regulatory and governmental authorities in relation to its compliancewith applicable laws and regulations. For example, the Company is currently classified as a free zone companyand consequently enjoys income tax-free status in the Alexandria Free Zone. A change in the law concerningfree zone companies or such similar applicable laws could have a material adverse effect on its business,financial condition, results of operations and prospects.

Changes in UAE tax laws or their application could materially adversely affect the Group’s business, financialcondition and results of operations.The Company is not currently subject to corporation tax (or any other analogous tax) on its earnings withinthe UAE (it has been guaranteed tax-exempt status for 40 years) and, accordingly, since incorporation, any gainsmade by the Company were not subject to tax in the UAE. There is no guarantee that this will continue to bethe case. If the UAE authorities impose new tax regimes on the Company (whether related to corporation tax,other analogous tax or otherwise (in addition to VAT)), or introduce any other changes in relation to tax lawswhich make doing business in Dubai less attractive, this may negatively impact the Group’s business, results ofoperations, cash flows and financial condition. In addition, any imposition of a tax on earnings would reducethe amount of funds which would ordinarily be distributed to the Shareholders through dividends.

A change in the Company’s residency for the purposes of Egyptian withholding tax liability could materiallyadversely affect the Group’s business, financial condition and results of operations.Under the Egypt-UAE Tax Treaty, dividends paid by ADES to the Company would not be subject towithholding tax in Egypt provided that the Company is the beneficial owner of ADES and it is not deemedto have a permanent establishment in Egypt. To maintain this non-Egyptian tax resident status, the Companymust not be deemed to have its effective place of management in Egypt. ‘Effective place of management’ isdetermined by reference to the following criteria: (i) location of daily management decisions; (ii) location ofmeetings of the board of directors or managers; (iii) residency of the managers or board of directors and;(iv) residency of shareholders owning more than 50 per cent. of the capital/voting rights. If it should ever bethe case that the location or residency in respect of at least two of the aforementioned criteria is Egypt, theCompany could be viewed as an Egyptian-resident entity and may become subject to Egyptian tax laws onits worldwide income, such liability which could have a material adverse effect on the Group’s business,financial condition, results of operations and prospects.

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Companies operating in Egypt may be subject to foreign exchange controls.Prior to 1994, the Egyptian government had at various times imposed foreign exchange controls limiting theability of companies to obtain foreign currency. During these times, Egyptian companies experienceddifficulties and delays in converting Egyptian Pounds to foreign currencies, as well as repatriation of fundsoutside of Egypt. More recently, since the revolution in January 2011, to address shortages in foreign currencyavailability, temporary restrictions and monitoring mechanisms and rules have been imposed by the CentralBank of Egypt in order to limit the outflow and prioritise the utilisation of foreign currency. Such restrictionsimposed in Egypt included limitations on the ability of individuals and companies to transfer foreign currencyabroad without Central Bank of Egypt approval, which is discretionary based on the quantities beingtransferred and the proposed utilisation. In March 2016, Egypt moved to ease restrictions on foreign-currencytransactions and pursuant to an IMF-backed reform program Egypt floated its currency in November 2016,resulting in significant devaluation. While the floatation of the Egyptian Pound, being among the measuresadopted to address the macroeconomic imbalances that affect the Egyptian economy, has somewhateliminated some of these restrictions, there can be no assurance that such measures will eliminate foreignexchange controls. If the Egyptian government pulls back from its liberalisation program or introduces morerestrictive foreign currency exchange controls, the Company may experience difficulty or be unable to serviceits foreign currency-denominated payment obligations, which may have a material adverse effect on itsbusiness, financial condition, results of operations and prospects.

Emerging markets, such the countries in which the Group operates or plans to operate, are generally subject togreater risks than more developed markets. Investing in securities involving emerging market countries generally involves a higher degree of risk thaninvestments in securities of issuers from more developed countries. These higher risks include, but are notlimited to, rapid and significant changes in the political, social and economic environment, changes ingovernment policy, arbitrary actions of governmental authorities adversely affecting business and trade,corruption, changes in the relations between countries, lack of consistent law enforcement, higher volatilityin the financial markets, limited liquidity, high rates of inflation, currency fluctuation and country default.In Egypt, for example, some of these risks have been exacerbated by the events and the challenges that Egypthas faced over the past few years. Moreover, international investors’ reactions to events occurring in oneemerging market country or region may sometimes demonstrate a “contagion” effect, in which an entireregion or class of investment is disfavoured by such investors. If such a “contagion” effect occurs, the countriesin which the Group operates or plans to operate could be adversely affected by negative developments inother countries in the MEA region.

Some countries and regions in the MEA region, including Syria, Iraq, Yemen, Tunisia, Algeria and Libya,have experienced in the recent past, or are currently experiencing, political, social and economic instabilityand, in some cases, extremism and terror attacks. Political, economic and military conditions in the MEAregion could adversely affect the Group, and the countries in which the Group operates or plans to operate.

Any of the above risks, as well as other global events, could have a material adverse effect on the Group’sbusiness, financial condition, results of operations and prospects.

Failure to adequately address actual and perceived risks of corruption may adversely affect economies in theMEA region and their ability to attract foreign direct investment.As in many other emerging market jurisdictions, the incidence and perception of elevated levels of corruptionremains a significant issue in certain countries in the MEA region, including countries in which the Groupoperates or plans to operate. For example, Egypt was ranked 108 out of 176 countries in TransparencyInternational’s 2016 Corruption Perceptions Index. Egypt’s score in the 2016 index was 34 (with one the mostcorrupt score, and 100 being the least corrupt). Egypt’s business climate and competitive indicators are alsonegatively affected by bureaucracy, cumbersome regulations, an unpredictable judicial system and poorenforcement of contracts and protections for minority investors. In the World Bank’s 2016 Doing Business

Survey, Egypt ranked 122 out of 190 countries for ease of doing business, while Egypt ranked 116 out of 140countries in the World Economic Forum 2015-16 Global Competitiveness Index.

Failure to address actual or perceived corruption and related risks, or to implement proposed reforms in thisregard, could potentially have a material adverse effect on the economies of countries in the MEA region,including on its ability to attract foreign direct investment and, accordingly, on the Group’s business, financialcondition, results of operations, cash flows and prospects.

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Political disturbances, war, or terrorist attacks and changes in global trade policies and economic sanctions couldadversely impact the Group’s operations.The Group’s operations are subject to political and economic risks and uncertainties, including instabilityresulting from civil unrest, political demonstrations, mass strikes, or an escalation or additional outbreak ofarmed hostilities or other crises in oil or natural gas producing areas, which may result in extended businessinterruptions, suspended operations and danger to the Group’s employees, or result in claims by clients of aforce majeure situation and payment disputes. Additionally, the Group is subject to risks of terrorism, piracy,political instability, hostilities, expropriation, confiscation or deprivation of its assets or military actionimpacting its operations, assets or financial performance in many of the Group’s areas of operations.

The Company is incorporated in the DIFC, which is a relatively newly established jurisdiction whose legalframework is untested.The DIFC is a relatively newly established jurisdiction and as a result the legal and regulatory regimesapplicable to the Company and other companies domiciled in the DIFC, including the relevant companies’laws, are still being developed and are largely untested. Similarly, the courts of the DIFC have yet to issueany substantive decisions, which may lead to ambiguities, inconsistencies and anomalies in the interpretationand enforcement of the laws and regulations applicable to the Company, including with respect to rights ofholders of the Securities. These uncertainties could affect investors’ abilities to enforce their rights or theCompany’s ability to defend itself against claims by others, including regulators, judicial authorities and thirdparties who may challenge its compliance with applicable laws, rules, decrees and regulations.

Certain disclosure obligations, financial controls and corporate governance requirements and protections forShareholders or investors in publicly-traded companies that are incorporated in the DIFC may be less extensivethan those jurisdictions with major securities markets.The Company’s corporate affairs are governed by the applicable companies laws of the DIFC and the rightsof holders of the Offer Shares and the responsibilities of members of the Board under such laws are differentin certain respects from those applicable to corporations organised in the United States, the United Kingdomand other jurisdictions. In particular, because regulations concerning reporting requirements and auditingstandards for DIFC companies may be less extensive than those applicable to companies incorporated in theUnited States or the United Kingdom, there is generally less information available about the Company andother DIFC companies than is regularly published by or about listed companies in other jurisdictions. Similarly,legal protections against such practices as market manipulation and insider trading are less developed in theDIFC because the DIFC is a relatively newly-established jurisdiction and, consequently, securities laws andregulations in the DIFC generally are not as comprehensive, and have not received as much judicial orregulatory interpretation or review, as those in the United States, the United Kingdom and other countrieswith established securities markets. As a result of these factors, investors may have greater difficulties inprotecting their interests as a holder of Ordinary Shares than as a shareholder of a US or UK corporation.

RISKS RELATING TO THE GLOBAL OFFER, THE OFFER SHARES AND THE DEPOSITARYINTERESTS

The Company’s Ordinary Share price may be subject to major fluctuations and an active or liquid market forthe Offer Shares may not develop.Prior to the Global Offer, the Company’s Offer Shares have not been traded on any securities market.Consequently, no assurance can be given that an active trading market for the Ordinary Shares will develop,or if developed, could be sustained following the close of the Global Offer. In addition, the Ordinary Sharesmay not achieve the expected level of liquidity after they have been admitted to trading on the London StockExchange, or, if this level of liquidity is achieved, that it will continue.

The Offer Price of the Offer Shares may not be indicative of the market price for the Ordinary Shares followinglisting. The Company’s management is not in a position to predict the extent to which the investors’ interestin the Offer Shares may affect the development and level of liquidity of its Ordinary Shares on the market.Consequently, it is possible that investors will be exposed to share price fluctuations and that their buy andsell orders might not be executed at the expected level. When trading in the Company’s Shares on the LondonStock Exchange develops, the trading price of the Ordinary Shares may be lower or higher than the OfferPrice. The failure to develop an active trading market may affect the liquidity of the Ordinary Shares and theCompany cannot assure holders of the Ordinary Shares that the market price of the Ordinary Shares will

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not decline below the Offer Price. Consequently, investors may not be able to resell their Ordinary Shares ator above the Offer Price.

Furthermore, the trading price of the Company’s Ordinary Shares may be affected by a number of factors,including general economic and business trends, changes in the overall situation on the securities markets,regulatory changes in the countries in which the Group operates or plans to operate or in the U.K., conditionsin the oil and gas sector in the MEA region or globally, the potential of actual transactions involving the saleof large blocks of Ordinary Shares on the secondary market, changes in financial forecasts given by capitalmarket analysts and any actual or anticipated changes in the Group’s business, financial standing and resultsof operations. Fluctuations on the securities market in the future may also adversely affect the market priceof the Ordinary Shares, irrespective of the Group’s operations, financial standing and results.

The main shareholder of the Company will continue to hold a majority of the Company’s Ordinary Sharesfollowing the Global Offer and may take certain actions that will not be in the best interests of all the othershareholders.ADES Investments, and, indirectly, members of the Abbas and Hussein families will continue to hold amajority of the Ordinary Shares following completion of the Global Offer and, although there will be aRelationship Agreement in place governing the Company’s relationship with its largest shareholder, they maybe able to block shareholders’ resolutions deemed by them to be unfavourable or undesirable as regards thebusiness, including those that could lead to the dilution of their respective shareholdings in the Company. Inaddition, the current shareholders, who have been heavily invested in the Group’s business from its foundingmay have differing interests from those of the investors. For instance, existing shareholders may take certainsteps which may not be in the Company’s or its other shareholders’ best interest or may induce the Companyto conclude a transaction with related parties whose interests may conflict with the Company’s interests orthe interests of its other shareholders. When considering an investment in the Offer Shares, an investor shouldnot assume that the existing shareholders will be guided by the interests of all of the Company’s shareholders.

Future sales of a significant number of Ordinary Shares on the market by the Company’s shareholders or newshare issuances may have a material adverse effect on their price and the Company’s ability to raise capital inthe future.Any future sales of a substantial number of the Ordinary Shares by its shareholders, including through onmarket transactions or issuances of Ordinary Shares or even the mere expectation of such sale or issuancemay result in a significant decrease of the market price of the Company’s Ordinary Shares. Subject to theCompany obtaining shareholder approval, it may issue additional equity or securities convertible into theOrdinary Shares through directed offerings without pre-emptive rights for existing holders in connection withfuture acquisitions, any share incentive or share option plan or otherwise. Any such additional offering couldreduce the proportionate ownership and voting interests of holders of Ordinary Shares, as well as the earningsper Ordinary Share and the net asset value per Ordinary Share. Any future sales of a substantial number ofthe Company’s Ordinary Shares or the mere expectation of such sales may also adversely affect the Company’sfuture ability to raise capital, at a convenient time and satisfactory prices, and the interest of the Company’sshareholders can be diluted as a result of any future New Share issues.

A standard listing of the Ordinary Shares affords investors a lower level of UK regulatory protection than apremium listing on the Official List of the FCA.Application will be made for the Ordinary Shares to be admitted to the standard listing on the Official Listof the FCA and to trading on the main market of the London Stock Exchange. A standard listing will affordinvestors in the Company a lower level of regulatory protection than that afforded to investors in a companywith a premium listing on the Official List of the FCA, which is subject to additional obligations under theUK Listing Rules. Further details regarding the differences in the protections afforded by a premium listingas against a standard listing are set out in the section called “Consequences of a Standard Listing” in Part XIII:“Terms and Conditions of the Global Offer” of this Prospectus. In addition, a standard listing will not permitthe Company to gain UK FTSE indexation, which may adversely affect the liquidity and trading of theOrdinary Shares.

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The Company is not subject to any takeover protection regime as it is incorporated in the DIFC but not listed onNasdaq Dubai in the DIFC.Since the Company has its registered office in the DIFC and its Ordinary Shares are proposed to be listed ona regulated market in the United Kingdom, neither the UK nor the DIFC takeover protection regimes areapplicable to the Company. The Company’s shares are subject to the compulsory acquisition (“Squeeze Out”)provisions set out in the DIFC Companies Law. Under the Squeeze Out provisions, any offeror making atakeover offer who, within four months of making the offer, has acquired or contracted to acquire not lessthan 90 per cent. in value of the shares to which the offer relates, is entitled to acquire compulsorily fromnon-accepting shareholders those shares which have not been acquired or contracted to be acquired on thesame terms as under the offer. Any investors holding a minority interest, therefore, will not enjoy theprotections otherwise afforded to minority interest holders under the UK and DIFC takeover regimes.

The Company and the Group’s subsidiary companies are primarily incorporated in the DIFC, Egypt, SaudiArabia and Algeria, respectively, and the majority of Group’s assets are located in Egypt, and it may be difficultfor investors in the Offer Shares to enforce judgements against the Company, those subsidiaries or the Directorsand senior management.The Company is incorporated in the DIFC and has its headquarters in Dubai. Its operating assets are heldby companies incorporated in, and governed by, the laws of the Egypt, Algeria and Saudi Arabia, amongothers. The majority of the Group’s assets are located in Egypt. In addition, a majority of the Directors andsenior management of the Group reside in Egypt and a substantial portion of their personal assets may belocated within Egypt. As such, it may be difficult or impossible to effect service of process in jurisdictionsoutside of UAE or Egypt (as applicable), including in the United States or the United Kingdom, upon theGroup’s subsidiaries or the Directors or other such persons, or to recover on judgements of courts outside ofthe UAE or Egypt (as applicable), including in the United States and United Kingdom, or against them,including judgements predicated upon civil liability provisions of US federal securities laws or UK laws, asthe case may be.

Further, no claim may be brought in the courts of the DIFC or the UAE against the Group or the Directorsor senior management in the first instance for violation of US federal securities laws because these laws haveno extraterritorial application and therefore are not enforceable in the DIFC or the UAE. Similarly, investorsshould not expect to have recourse to the courts of the DIFC or the UAE.

The courts of the DIFC and the UAE would not enforce judgements of US or UK courts obtained in actionsagainst the Group, the Directors or senior management, predicated upon the civil liability provisions of USfederal securities laws. Nor will the courts of the DIFC and the UAE entertain original actions brought in theDIFC and the UAE against such persons predicated solely upon US federal securities laws or equivalent UKlaws. Further, there is no treaty in effect between either the United States or the United Kingdom and theDIFC or the UAE providing for the enforcement of judgements of US or UK courts in civil and commercialmatters. Some remedies available under the laws of US jurisdictions or the UK, including some remediesavailable under the US federal securities laws, may not be allowed in the courts of the DIFC and the UAE onpublic policy grounds. Since judgements of US and UK courts are not automatically enforceable in the DIFCand the UAE, it may be difficult for investors to recover against the Group based upon such judgments. Inaddition, notwithstanding that the UAE acceded to the United Nations Convention on the Recognition andEnforcement of Arbitral Awards (New York 1958) in 2006, investors may also have difficulties in enforcingarbitration awards in the UAE against the Group or the Directors or senior management.

The Company may decide not to pay dividends in the future, and its ability to pay dividends will depend on itsfuture profits and other factors.The Company may be unable or elect not to declare dividends in the future. With the current strategic focuson the rapid growth of the business, the Company does not expect to pay dividends in the short term, althoughit will regularly assess its ability to do so, in connection with developing a residual dividend policy.

The Company’s ability to pay a dividend in any given year will, however, depend on many factors, includingthe Company’s earnings, cash requirements and financial condition and macroeconomic conditions,assessment of investment and growth opportunities available to it and of the overall capital marketsenvironment at the time, as well as the Company’s focus on maintaining a strong credit rating and enhancinglong-term shareholder value. Whether the Company will pay dividends and the timing and amount of suchdividends payable for a given year must be approved by the shareholders at an ordinary general meeting.

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Accordingly, there can be no assurance that holders of Offer Shares will receive dividends in future. Shouldthe Company decide against declaring dividends in the future, or should it be limited under its financingagreements in the amount of dividends that may be paid, the trading price of the Offer Shares may bematerially adversely affected.

An investor in the Company whose principal currency is not USD is exposed to foreign currency risk.The Offer Shares are, and any dividends to be paid in respect of them will be, denominated in USD. Aninvestment in Offer Shares by an investor whose principal currency is not USD exposes the investor to foreigncurrency risk. Any depreciation of USD in relation to such foreign currency would reduce the value of theinvestment in Offer Shares or any dividends in foreign currency terms, and any appreciation of USD againstsuch other currency would increase the value in foreign currency terms.

Shareholders in the United States may be unable to participate in future rights offerings.If we were to grant rights to participate in future equity offerings to shareholders, U.S. holders may not beentitled to exercise these rights unless the rights and related securities are registered under the U.S. SecuritiesAct or an exemption from the registration requirements of the U.S. Securities Act is available. We intend toevaluate, at the time of any rights offering, the costs and potential liabilities associated with registering therights and related securities or qualifying for an exemption under the U.S. Securities Act, as well as the indirectbenefits to us of enabling its US holders to exercise such rights, and any other factors that we considerappropriate at the time, prior to making a decision whether to register such rights or qualify for an exemption.No assurance can be given that we will choose to register any such rights and related securities or that anexemption from the registration requirements of the U.S. Securities Act will be available to enable such USholders to exercise such rights or, if available, that we will utilize any such exemption.

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PART III

USE OF PROCEEDS

The Company expects to receive net proceeds of approximately U.S.$164,535,714 from the offering of NewShares in the Global Offer, after deduction of underwriting commission and estimated expenses ofapproximately U.S.$5,464,286 in connection with the offering of the New Shares in the Global Offer.

The Company intends to use the net proceeds it receives from the offer of New Shares to support growth inthe business by purchasing (and, to the extent necessary, refurbishing) rigs and other assets, as well as forgeneral corporate purposes. In line with Group strategy, the use of these proceeds will be complemented withdebt to fund the Group’s expansion plans.

More specifically, the Company intends to use the net proceeds from the offering of New Shares in the GlobalOffer as follows:

• approximately U.S.$76 million to fund capital expenditures to expand the Group’s operations in Egypt,Algeria and the Kingdom of Saudi Arabia;

• approximately U.S.$43 million to fund capital expenditures in other new MEA markets;

• approximately U.S.$10 million to fund capital expenditure on enhancement of the Group’s in-houserefurbishment and maintenance capabilities; and

• the balance to fund general corporate purposes and working capital.

ESMA para 35I 10.5

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PART IV

EXPECTED TIMETABLE OF PRINCIPAL EVENTS AND GLOBAL OFFER STATISTICS

Expected timetable of principal events

Event Time and Date–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––

Announcement of the Offer Price and allocation . . . . . . . . . . . . . . . . . . . . 8 May 2017Publication of Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 May 2017Commencement of conditional dealings in Offer Shares on

the London Stock Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.00 a.m. on 9 May 2017Admission and commencement of unconditional dealings in

Offer Shares on the London Stock Exchange . . . . . . . . . . . . . . . . . . . . . 8.00 a.m. on 12 May 2017CREST accounts credited in respect of Depositary Interests

in uncertificated form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.00 a.m. on 12 May 2017

Each of the times and dates in the above timetable is indicative only and subject to change without further notice.

In the event of any change to the timetable set out above, details of the new times and dates will be announced

through a Regulatory Information Service. References to time are to London time, unless otherwise stated.

It should be noted that if the Admission does not occur, all conditional dealings will be of no effect and anysuch dealings will be at the sole risk of the parties concerned.

Offer statistics

Offer Price per Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . U.S.$16.50Number of Offer Shares being offered in the Global Offer . . . . . . . . . . . . 14,756,258Number of New Shares being offered in the Global Offer . . . . . . . . . . . . . 10,303,030Number of Sale Shares being offered in the Global Offer . . . . . . . . . . . . . 4,453,228Number of Offer Shares subject to the Over-allotment Option . . . . . . . . . 2,213,439Number of Ordinary Shares in issue following the Global Offer . . . . . . . . 42,203,030Estimated net proceeds of the Global Offer receivable by the Company

after underwriting commissions and expenses . . . . . . . . . . . . . . . . . . . . . U.S.$164,535,714

III 8.1

III 4.7

III 5.1.3

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PART V

IMPORTANT INFORMATION

General noticeThis Prospectus comprises a prospectus for the purposes of Article 5 of Directive 2003/71/EC (the “ProspectusDirective”) and is issued in compliance with the Prospectus Rules.

This Prospectus does not constitute an offer of, or an invitation by or on behalf of, the Company, the SellingShareholder, the Directors or the Joint Bookrunners to subscribe for or purchase any Offer Shares in anyjurisdiction where it is unlawful to make such an offer or invitation. The distribution of this Prospectus and theoffering of the Offer Shares in certain jurisdictions may be restricted by law. Persons into whose possession thisProspectus comes are required by the Company, the Selling Shareholder, the Directors and the Joint Bookrunnersto inform themselves about and to observe any such restrictions. For a description of certain further restrictionson offers and sales of the Offer Shares and distribution of this Prospectus, see Part XIII: “Terms and Conditionsof the Global Offer”.

Investors should rely only on the information in this Prospectus. No person has been authorised to give anyinformation or to make any representations other than those contained in this Prospectus in connection with theGlobal Offer and, if given or made, such information or representations must not be relied upon as having beenauthorised by or on behalf of the Company, the Selling Shareholder, the Directors or the Joint Bookrunners. Norepresentation or warranty, express or implied, is made by any Bookrunner or any selling agent as to the accuracyor completeness of such information, and nothing contained in this Prospectus is, or shall be relied upon as, apromise or representation by any Bookrunner or any selling agent as to the past, present or future. Withoutprejudice to any obligation of the Company to publish a supplementary prospectus pursuant to section 87G ofthe FSMA and PR 3.4.1 of the Prospectus Rules, neither the delivery of this Prospectus nor any subscription orsale made under this Prospectus shall, under any circumstances, create any implication that there has been nochange in the business or affairs of the Company since the date hereof or that the information contained hereinis correct as of any time subsequent to its date.

The contents of this Prospectus are not to be construed as legal, business or tax advice. Each prospectiveinvestor should consult his or her own lawyer, financial adviser or tax adviser for legal, financial or tax advicein relation to any subscription, purchase or proposed subscription or purchase of Offer Shares.

In connection with the Global Offer, each of the Joint Bookrunners and any of their affiliates, acting asinvestors for its or their own accounts, may subscribe for and/or purchase Offer Shares, and in that capacitymay retain, purchase, sell, offer to sell or subscribe for or otherwise deal for its or their own accounts in suchOffer Shares and other securities of the Company or related investments in connection with the Global Offeror otherwise. Accordingly, references in this Prospectus to the Offer Shares being issued, offered, subscribed,acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription,acquisition, placing or dealing by, any Joint Bookrunner and any of its affiliates acting as an investor for itsown accounts. The Joint Bookrunners do not intend to disclose the extent of any such investment ortransactions otherwise than in accordance with any legal or regulatory obligations to do so.

Prospective investors must comply with all laws that apply to them in any place in which they buy, offer orsell any Offer Shares or possess this Prospectus. Any consents or approvals that are needed in order to purchaseany Offer Shares must be obtained. The Company, the Directors and the Joint Bookrunners are notresponsible for compliance with these legal requirements. The appropriate characterisation of the Offer Sharesunder various legal investment restrictions, and thus the ability of investors subject to these restrictions topurchase the Offer Shares, is subject to significant interpretative uncertainties.

None of the Company, the Selling Shareholder, the Directors or the Joint Bookrunners is making anyrepresentation or warranty to any offeree or purchaser of the Offer Shares regarding the legality of aninvestment by such offeree or purchaser. Prospective investors whose investment authority is subject to legalrestrictions should consult their legal advisers regarding such matters.

Apart from the responsibilities and liabilities, if any, which may be imposed on the Joint Bookrunners byFSMA or the regulatory regime established thereunder, or any other applicable regulatory regime, none ofthe Joint Bookrunners accepts any responsibility whatsoever for, or makes any representation or warranty,

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express or implied, as to, the contents of this Prospectus or for any other statement made or purported to bemade by it, or on its behalf, in connection with the Company, the Offer Shares or the Global Offer, andnothing in this Prospectus will be relied upon as a promise or representation in this respect, whether or notto the past or the future. Each of the Joint Bookrunners accordingly disclaims all and any responsibility orliability whatsoever, whether arising in tort, contract or otherwise (save as referred to above) which it mightotherwise have in respect of this Prospectus or any such statement.

Each person receiving this Prospectus acknowledges that such person has not relied on the Joint Bookrunnersor any of their affiliates or any person acting on their behalf in connection with its investigation of theaccuracy or completeness of such information or its investment decision. Each person contemplating makingan investment in the Offer Shares from time to time must make its own investigation and analysis of thecreditworthiness of the Company and its own determination of the suitability of any such investment, withparticular reference to its own investment objectives and experience, and any other factors which may berelevant to it in connection with such investment.

Information not contained in this documentNo person has been authorised to give any information or make any representation other than those containedin this document and, if given or made, such information or representation must not be relied upon as havingbeen authorised by the Company or any other person. Subject to the requirements of the Prospectus Rules,neither the delivery of this document nor any subscription or sale made hereunder shall, under anycircumstances, create any implication that there has been no change in the affairs of the Company since thedate of this document or that the information in this document is correct as of any time subsequent to thedate hereof.

Recipients of this document acknowledge that: (i) they have not relied on the Company or any person affiliatedwith it in connection with any investigation of the accuracy of any information contained in this documentor their investment decision; and (ii) they have relied only on the information contained in this document,and that no person has been authorised to give any information or to make any representation concerningthe Company or its subsidiaries, or the Offer Shares (other than as contained in this document) and, if givenor made, any such other information or representation should not be relied upon as having been authorisedby the Company.

No incorporation of website informationThe contents of the Company’s website or any website mentioned in this document or any website directly orindirectly linked to the Company’s website have not been verified and do not form part of this document andinvestors should not rely on it.

Available informationThe Company has agreed that, for so long as any of the Offer Shares are “restricted securities” within themeaning of Rule 144(a)(3) under the U.S. Securities Act, the Company will, during any period in which it isneither subject to Section 13 or 15(d) of the US Securities Exchange Act of 1934, as amended (the “U.S.Exchange Act”), nor exempt from reporting under the U.S. Exchange Act pursuant to Rule 12g3 2(b)thereunder, make available to any holder or beneficial owner of such restricted securities or to any prospectivepurchaser of such restricted securities designated by such holder or beneficial owner, upon the request ofsuch holder, beneficial owner or prospective purchaser, the information required to be delivered pursuant toRule 144A(d)(4) under the U.S. Securities Act.

Forward looking statementsCertain statements contained in this Prospectus, including any information as to the Group’s strategy, plansor future financial or operating performance constitute “forward looking statements”. These forward-lookingstatements can be identified by the use of forward looking terminology, including the terms “believes”,“estimates”, “anticipates”, “projects”, “expects”, “intends”, “aims”, “plans”, “predicts”, “may”, “will”,“seeks” or “should” or, in each case, their negative or other variations or comparable terminology, or bydiscussions of strategy, plans, objectives, goals, future events or intentions. These forward looking statementsinclude all matters that are not historical facts. They appear in a number of places throughout this Prospectusand include statements regarding the intentions, beliefs or current expectations of the Directors of the

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Company concerning, amongst other things, the Group’s results of operations, financial condition andperformance, prospects, growth and strategies and the industry in which the Group operates.

By their nature, forward looking statements address matters that involve risks and uncertainties because theyrelate to events and depend on circumstances that may or may not occur in the future. Forward lookingstatements are not guarantees of future performance and the Group’s actual results of operations andfinancial condition, and the development of the business sector in which the Group operates, may differmaterially from those suggested by the forward looking statements contained in this Prospectus. In addition,even if the Group’s results of operations and financial condition, and the development of the industry inwhich the Group operates, are consistent with the forward looking statements contained in this Prospectus,those results or developments may not be indicative of results or developments in subsequent periods.

Prospective investors are advised to read, in particular, the parts of this Prospectus entitled Part II: “Risk

Factors”, Part VIII: “Market Overview” and Part X: “Historical Financial Information on the Group” for amore complete discussion of the factors that could affect the Group’s future performance and the industryin which the Group operates. In the light of these risks, uncertainties and assumptions, the events describedin the forward looking statements in this Prospectus may not occur. Other important factors that could causeactual results to differ materially from the Company’s expectations include, among others, the following:

• Fluctuations in the prices of crude oil and gas and related fluctuations in demand for drilling services;

• competition for or renegotiation and/or loss of or failure to extend drilling contracts;

• changes in governmental regulation, including regulatory changes affecting the availability of approvalsfor the exploration and development of drilling for oil and gas, and governmental actions that may affectoperations or the Group’s planned expansion;

• unfavourable changes in economic or political conditions in Egypt, Algeria, Kingdom of Saudi Arabiaor any other jurisdiction which the Group has significant operations;

• the Group’s possible inability to realise its strategy as a result of any number of factors, such as decreasedavailability of legacy assets, unforeseen challenges in competing in new geographic markets or serviceareas, or adverse change to its labour supply;

• the continued aging of accounts or any increase in receivables and the possibility of defaults by clientsas a result of operating difficulties, the recent shortage of U.S. dollars in Egypt or other factors; and

• unplanned events or accidents affecting the Group’s operations or facilities.

The forward looking statements contained in this Prospectus speak only as of the date of this Prospectus.The Company, the Directors and the Joint Bookrunners expressly disclaim any obligations or undertakingto update or revise publicly any forward looking statements, whether as a result of new information, futureevents or otherwise, unless required to do so by applicable law, the Prospectus Rules, the UK Listing Rules,or the Disclosure Guidance and Transparency Rules, or as otherwise required by the FCA or the LondonStock Exchange.

Basis of presentation of financial informationThe financial information in this Prospectus comprises information for the Group for the years ended31 December 2016, 31 December 2015 and 31 December 2014, has been derived from Part X: “Historical

Financial Information on the Group” of this Prospectus.

Presentation of non-IFRS measures and certain operational KPIsThis Prospectus contains certain non-IFRS financial measures and operational key performance indicators(KPIs), as listed and defined below. These measures are used by the Group’s management to monitor theunderlying performance of the business and the operations.

The non-IFRS financial measures are not measurements of performance or liquidity under IFRS or anyother generally accepted accounting principles. Investors should not place undue reliance on these non-IFRSfinancial measures and should not consider these measures as: (a) an alternative to operating income or netincome as determined in accordance with IFRS, or as measures of operating performance; (b) an alternativeto cash flows from operating, investing or financing activities, as determined in accordance with IFRS, or ameasure of the Group’s ability to meet cash needs; or (c) an alternative to any other measures of performance

46

under IFRS. These measures are not indicative of the Group’s historical operating results, nor are they meantto be predictive of future results. Since all companies do not calculate these measures in an identical manner,our presentation may not be consistent with similar measures used by other companies.

The Group’s method of calculating KPIs, including but not limited to backlog, utilisation rate, effective dayrate, and operating day rate, may differ from the method used by others in its industry, including those referredto in the industry and market reports relied on in the “Market Overview” section of this Prospectus, and somay not be comparable to such other KPIs.

“Adjusted gross profit margin” means gross profit excluding depreciation in the cost of revenue divided byrevenues.

“Average equity” has been arrived at by adding the total equity at the beginning and end of the relevant periodand dividing by two.

“Average total capital employed” means the average (opening balance plus the ending balance divided by two)of the total equity and total debt (comprising of bank overdraft and current and non-current portion of thelong term debt).

“Backlog” means the total amount payable to the Group during the remaining term of an existing contractplus any optional client extension provided for in such contract, assuming the contracted rig will operate (andthus receive an operating day rate) for all calendar days both in the remaining term and in the optionalextension period. This calculation assumes that the client will exercise its option to extend its existing contractat the current day rate and under the contracted terms regarding currency of payment. Backlog also includesmove fees and lump sum mobilisation and demobilisation payments as applicable under the contract. TheGroup’s method of calculation may differ from that of others in its industry and so not be directly comparablewith such figures. More generally, the assumptions on which the Group’s backlog estimates are based mayprove incorrect and so backlog estimates should not be relied on as an indication of future revenues.

“Backlog to net debt” means the backlog divided by the net debt.

“Capital expenditure” means expenditure relating to acquiring or maintaining of property and equipment,which included expansion capex and maintenance capex.

“EBIT” means earnings before interest and tax.

“EBITDA” means profit before interest, tax, depreciation and amortization, provisions and impairment ofassets under construction.

“EBITDA margin” means EBITDA divided by the revenue.

“Adjusted EBITDA” means operating profit for the year before depreciation and amortization, foreignexchange (gain)/loss, provision for impairment of accounts receivable, provisions and impairment of assetsunder construction.

“Adjusted EBITDA margin” means Adjusted EBITDA divided by the revenue.

“Effective cost of funding” means interest expense divided by the year’s average (opening loan balance plusending loan balance divided by two) loan balance.

“Expansion capex” means money used to purchase, upgrade, improve, or extend the life of long-term assets.

“Gearing ratio” means net debt divided by total capital plus net debt.

“Maintenance capex” means the purchase of essential equipment and the overhaul expense relating toinstalling that equipment; this is capex that is capitalised onto the relevant operating unit.

“Net debt” means, at any time, the aggregate amount of all debt (comprising of bank overdraft and currentand non-current portion of the long term debt) after deducting the aggregate amount of cash and cashequivalents held by the Company at that time and including finance leases obligations (if any) at that time.

47

“Net debt to EBITDA ratio” means net debt divided by EBITDA.

“Net debt to equity” means net debt divided by total equity.

“Operating day rate” means the rate the Group is paid under the terms of a client contract when a rig isoperating as set out in the contract, as opposed to on standby, undergoing maintenance, being moved ormobilised, operating at reduced efficiency, or otherwise as set out in the client contract.

“Opex” means operating expenses consisting of Cost of revenue and Selling and General Administrativeexpenses excluding Depreciation and Amortization.

“Potential utilisation days” are all calendar days (including holidays and weekends) when a rig is both undercontract and available in the operational area. This does not include days when the rig is being refurbishedor initially mobilised or is otherwise idle or stacked.

“Return on average equity (RoAE)” means the net profit for the year divided by the average equity.

“Return on average capital employed (RoACE)” means EBIT divided by the average total capital employed.

“Utilisation days” include all operating days, standby days, paid maintenance days, and moving days for whichthe Group is paid a fee.

“Utilisation rate” The Group’s calculation of its utilisation rate refers to its measure of the extent to whichits assets under contract and available in the operational area are generating revenue under client contracts.The Group calculates its utilisation rate for each rig by dividing Utilisation Days by Potential Utilisation daysunder a contract. Utilisation rates are principally dependent on the Group’s ability to maintain the relevantequipment in working order and its ability to obtain replacement and other spare parts. Because the Group’smeasure of utilisation does not include rigs that are stacked or being refurbished or mobilised, the Group’sreported utilisation rate does not reflect the overall utilisation of the Group’s fleet, only of its operational,contracted rigs. For example, Admarine VIII and 88 were idle for all of 2016, yet the Group reports a highutilisation rate for that year because it does not include these rigs in the denominator of its utilisation ratecalculation.

This definition differs from that given to “utilisation rate” in the discussion of the drilling industry, includingin Part VIII: “Market Overview”, in this Prospectus. There “utilisation” or “utilisation rate” refers to thenumber of rigs actively working (either drilling, or involved in contract preparation or other maintenanceactivities during which they remain on hire) divided by the marketed supply of rigs (the fleet of rigs minusthose which are in cold stacking). The Group’s measure of its utilisation rate is therefore not comparable withthis measure. As others in the Group’s industry may calculate utilisation rate differently, its measure of itsutilisation rate may also differ from that of competitors.

Industry and market dataIn this Prospectus, the Group relies on and refers to information regarding its business and the market inwhich the Group operates and competes. The market data and certain economic and industry data andforecasts used in this Prospectus were obtained from government and other publicly available information,independent industry publications and reports prepared by trade associations and industry consultants(including Clarkson Research Services Limited (“Clarksons Research”)). Certain statistical and graphicalinformation contained in this Prospectus is drawn from the Clarksons Research database and other sources.Clarksons Research has advised that (i) some information in Clarksons Research’s database is derived fromestimates or subjective judgments, (ii) the information in the databases of other shipping data collectionagencies may differ from the information in Clarksons’ database, (iii) whilst Clarksons has taken reasonablecare in the compilation of the statistical and graphical information and believes it to be accurate and correct,data compilation is subject to limited audit and validation procedures and may accordingly contain errors,(iv) Clarksons Research, its agents, officers and employees cannot accept liability for any loss suffered inconsequence of reliance on such information or in any other manner, and (v) the provision of such informationdoes not obviate any need to make appropriate further enquiries. The Group confirms that this informationhas been accurately reproduced and, as far as the Group is aware and able to ascertain from informationpublished by such sources, no facts have been omitted that would render the reproduced informationinaccurate or misleading.

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In addition to the foregoing, certain information regarding markets, market size, market share, marketposition, growth rates and other industry data pertaining to its business contained in this Prospectus wasestimated or derived based on assumptions the Group deem reasonable and from its own research, surveysor studies conducted by third parties, including trade associations, and other industry or general publications.Industry publications and forecasts generally state that the information they contain has been obtained fromsources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed.While the Directors believe that each of these studies and publications is reliable, neither the Group, theGlobal Co-ordinator and Joint Bookrunners nor any of their respective advisors has independently verifiedsuch data and cannot guarantee their accuracy or completeness.

In many cases, there is no readily available external information (whether from trade associations, governmentbodies or other organizations) to validate market related analyses and estimates, requiring us to rely on itsown internally developed estimates regarding the industry in which the Group operate, its position in theindustry, its market share and the market shares of various industry participants based on its experience, itsown investigation of market conditions and its review of industry publications, including information madeavailable to the public by its competitors. Neither the Group, the Global Co-ordinator and the JointBookrunners nor any of their respective advisors, can assure you of the accuracy and completeness of, ortake any responsibility for, such data. Similarly, while the Directors believe the Group’s internal estimates tobe reasonable, these estimates have not been verified by any independent sources and neither the Group, theGlobal Co-ordinator and Joint Bookrunners nor any of their respective advisors can assure you as to theiraccuracy or the accuracy of the underlying assumptions used to estimate such data. The Group’s estimatesinvolve risks and uncertainties and are subject to changes based on various factors. See “Risk Factors”,“Market Overview” and “Description of the Business”.

Rounding adjustmentsPercentages and certain amounts included in this Prospectus have been rounded to the nearest whole numberor single decimal place for ease of presentation. Accordingly, figures shown as totals in certain tables maynot be the precise sum of the figures that precede them. In addition, certain percentages and amountscontained in this Prospectus reflect calculations based on the underlying information prior to rounding, andaccordingly may not conform exactly to the percentages or amounts that would be derived if the relevantcalculations were based upon the rounded numbers.

Currency and exchange rateUnless otherwise indicated, in this Prospectus, all references to:

• “Pounds Sterling”, “£”, “pence” or “p” are to the lawful currency of the United Kingdom;

• “U.S. dollars”, “Dollars”, “U.S.$”, “USD” or “cents” are to the lawful currency of the United States;and

• “Egyptian Pound”, “EGP” or “E£” are to the lawful currency of the Arab Republic of Egypt.

The Offer Price will be stated in USD. On the Latest Practicable Date, U.S.$1.00 = £0.77280, based on theBloomberg Spot Exchange Rate.

The following table sets forth, for the periods indicated, the high, low, average and period end USDEGP SpotExchange Rates from Bloomberg (the “Bloomberg Spot Exchange Rate”), expressed as EGP per U.S.$1.00.The Bloomberg Spot Exchange Rate is a “best market” calculation, in which, at any point in time, the bidrate is equal to the highest bid rate of all contributing bank indications and the ask rate is set to the lowestask rate offered by these banks. The Bloomberg Spot Exchange Rate is a mid-value rate between the appliedhighest bid rate and the lowest ask rate. The average rate for a year means the average of the Bloomberg SpotExchange Rates on the last day of each month during a year. The average rate for a month or for any shorterperiod, means the average of the daily Bloomberg Spot Exchange Rates during that month, or shorter period,as the case may be.

The rates may differ from the actual rates used in the preparation of the Historical Financial Informationand other financial information appearing in this Prospectus. The basis of translation of foreign currencytransactions and amounts in the financial information set out in Part X: “Historical Financial Information on

the Group” of this Prospectus is described in that Part. Information derived from this financial informationset out elsewhere in this Prospectus has been translated on the same basis.

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We have provided this exchange rate information solely for the convenience of the reader. We do not representthat the EGP amounts referred to below could be or could have been converted into U.S. dollars at anyparticular rate indicated or any other rate.

We have provided this exchange rate information solely for the convenience of the reader. We do not representthat the EGP amounts referred to below could be or could have been converted into U.S. dollars at anyparticular rate indicated or any other rate.

The Bloomberg Spot Exchange Rate of the EGP on 5 May 2017 was 18.1309 per U.S.$1.00.

EGP per U.S.$1.00–––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Average High Low Period End–––––––––––– –––––––––––– –––––––––––– ––––––––––––

Year2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0848 7.1645 6.9496 7.15002015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7061 8.0401 7.1415 7.82982016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0546 19.6350 7.7963 18.1270MonthNovember 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1517 18.0040 8.8772 17.8705December 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.4129 19.6350 17.8485 18.1270January 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.6299 19.0065 17.9805 18.7230February 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.9840 18.8410 15.7490 15.8425March 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.6441 18.2450 16.1445 18.0465April 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0970 18.1800 18.0460 18.0535May 2017 (through 5 May) . . . . . . . . . . . . . . . . . . . 18.1127 18.1400 18.0504 18.1309

Profit forecastNo statement in this document is intended as a profit forecast or a profit estimate and no statement in thisdocument should be interpreted to mean that earnings per Ordinary Share for the current or future financialyears would necessarily match or exceed the historical published earnings per Ordinary Share.

References to timeUnless otherwise stated, all references to time in this document are references to the time in London, UnitedKingdom.

Defined termsCertain terms used in this document, including all capitalised terms and certain technical and other items,are defined in the “Definitions and Interpretations” section of this Prospectus.

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PART VI

DIRECTORS, SECRETARY AND ADVISERS

DirectorsAyman Abbas (Chairman)

Dr. Mohamed Farouk Abdelkhalek (Managing Director)

Mohamed Walid Cherif (Independent Board Member)

Nabil Kassem (Independent Board Member)

Yasser Hashem (Independent Board Member)

Ulf Henriksson (Independent Board Member)

Company secretary and registered Morcos Ekladiousoffice Unit 517, Level 5, Index Tower

Dubai International Financial CentreDubai, 507118United Arab Emirates

Investor Relations Officer Hussein Badawy

Global Co-ordinator and Joint EFG Hermes U.A.E. LimitedBookrunner The Gate – West Wing, Level 6

Dubai International Financial CentreDubaiUnited Arab Emirates

Joint Bookrunners EFG Hermes Promoting and UnderwritingBuilding No. B129Phase 3, Smart VillageKm 28 Cairo, Alexandria Desert Road6 October 12577Egypt

Citigroup Global Markets LimitedCitigroup CentreCanada Square, London E14 5LBUnited Kingdom

Independent auditors Ernst & Young Middle East (Dubai Br.)28th Floor, Al Saqr Business TowerSheikh Zayed RoadP.O. Box 9267DubaiUnited Arab Emirates

Reporting accountant Ernst & Young Middle East (Dubai Br.)28th Floor, Al Saqr Business TowerSheikh Zayed RoadP.O. Box 9267DubaiUnited Arab Emirates

Legal advisers to the Company White & Case LLPas to English, UAE, Egyptian 5 Old Broad Streetand U.S. law London EC2N 1DW

United Kingdom

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Legal advisers to the Joint Baker & McKenzie LLPBookrunners as to English, U.A.E., 100 New Bridge StreetEgyptian and U.S. law London EC4V 6JA

United Kingdom

Registrar and Receiving Agent Link Market ServicesOffice No. 35, Level 15, The Gate BuildingDubai International Financial CentrePO Box 506875, Dubai, UAE

Depositary Capita IRG Trustees LimitedThe Registry34 Beckenham RoadBeckenhamKent BR3 4TUUnited Kingdom

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PART VII

DESCRIPTION OF THE BUSINESS

OverviewThe Group together with its subsidiaries, including its primary operating company, ADES, is a leading oiland gas drilling and production services provider in the Middle East and Africa (“MEA”), that focuses oncreating value for its clients by offering competitive rates for services through leveraging its low cost businessmodel. The Group’s evolving portfolio of services primarily includes offshore and onshore contract drillingor workover and production services. The Group currently operates in Egypt, Algeria and the Kingdom ofSaudi Arabia and has its registered office in Dubai, UAE. The Group has a total workforce of over 1,200employees. The Group operates a fleet of nine jack-up offshore drilling rigs, three onshore drilling rigs, ajack-up barge, and a mobile offshore production unit (“MOPU”), which includes a floating storage andoffloading unit (“FSO”).

The Group’s current business model relies largely on legacy offshore assets that the Group has generallypurchased and refurbished and that the Directors believe are suitable for the shallow water, non-harshenvironments in which the Group currently operates and the needs of the clients the Group serves. The Groupalso benefits from leveraging a lean and low cost operating model, relying on a skilled, low cost, primarilyEgyptian workforce, local suppliers and low cost operational headquarters that make administrative expensescompetitive. As a result of these factors, the Group has been able to maintain robust profitability and levelsof financial returns whilst offering competitive rates to its clients.

The Group’s clients include Saudi Aramco in the Kingdom of Saudi Arabia, SH-FCP (an ENI joint venturewith Sonatrach, operating in Algeria) and Groupement Sonatrach AGIP (a Sonatrach joint venture withAGIP, an ENI subsidiary, operating in Algeria), the Egyptian state-owned General Petroleum Company(“GPC”) and BP, ENI and NPC joint venture companies with the Egyptian General Petroleum Corporation(“EGPC”). The Group provides drilling and related services to its clients on a “day rate” contract basis. Undersuch contracts, the Group provides a drilling rig and rig crews and receives a set amount of remuneration foreach day that the rig is operating, on standby, and (in some cases) for certain days when the rig is undergoingmaintenance. In addition, the Group may receive a day rate or fixed sum for days when the rig is being moved.The Group focuses on contracts in the operations and maintenance segment of the oilfield cycle in operationaland developing oil fields, where it believes there is a relatively steady requirement for workover services. TheGroup’s estimated total backlog was U.S.$501.2 million as of 31 December 2016, as compared to U.S.$224.5million as of 31 December 2015, and U.S.$117 million as of 31 December 2014. This represents a compoundannual growth rate (“CAGR”) of 107 per cent.

The Group has significantly grown its offshore rig fleet since 2012 primarily through acquisition andrefurbishment of legacy rigs for offshore services and the purchase of new-build rigs for onshore services.The Group has grown its fleet from one jack-up barge in 2011, to one jack-up barge and three offshore rigsin 2014, to one jack-up barge, one MOPU, nine offshore rigs and three onshore rigs as of the date of thisProspectus. The Group acquired its third onshore rig, ADES 1, from AMAK on 30 March 2017 for whichthe Group is currently awaiting results of ongoing tenders in Algeria. The Group is also currently negotiatinga lease to purchase agreement with a bank under which it would lease an existing high specification onshorerig, ADES 10; the Group expects this rig would operate in Egypt beginning in Q3 2017. In 2016, the Groupsigned a term sheet regarding a joint venture with a deepwater drilling company whereby the Group wouldjointly operate the partner’s drill ship in the Eastern Mediterranean and is in current discussions with thepotential partner. In March 2017, ADES signed term sheets with leading South East Asian parties, by virtueof which ADES will be able to market new build offshore jack-up rigs, including high specification rigs, withthe aim of securing client contracts to be entered by ADES. Subject to the execution of a client contract, theparties shall enter into a lease agreement for the respective rig with the option for ADES to purchase the rigduring the term of the lease contract at a pre-determined price.

The Group’s total revenue was U.S.$134.1 million in the twelve months ended 31 December 2016, as comparedto U.S.$101.0 million in the twelve months ended 31 December 2015, and U.S.$75.2 million in the twelvemonths ended 31 December 2014. This represents a CAGR of 34 per cent. The Group’s EBITDA wasU.S.$72.0 million in the twelve months ended 31 December 2016, as compared to U.S.$42.0 million in thetwelve months ended 31 December 2015, and U.S.$32.4 million in the twelve months ended 31 December2014. This represents a CAGR of 49 per cent.

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The Company is a Dubai International Financial Centre company limited by shares, incorporated in May2016. The primary operating company of the Group is ADES, a joint stock company incorporated in theAlexandria Free Zone, in 2002 under the Investment Incentives and Guarantees Law No 8 of 1997 (the“Investment Law”) and founded by the Abbas family. See “—History and Corporate Structure”. The Groupalso operates in Algeria through ADES Algeria Branch, holding registration number 00047031, and inKingdom of Saudi Arabia through ADES KSA Branch, a branch of a foreign company with commercialregister number 2051062895; both are branches of ADES. The Company’s registered offices are at Unit 517,Level 5, Index Tower, Dubai International Financial Centre, Dubai, 507118, United Arab Emirates. TheGroup has operations in the Alexandria Free Zone in Egypt, and the Group’s main office is located at 66Corniche El Nile St. Zahret El Maadi Tower, 27th floor, Maadi, Cairo, Egypt.

History and Corporate StructureADES, the Group’s principal operating company, was incorporated as an Egyptian Joint Stock Company inthe Alexandria Public Free Zone, located in Amreya, Alexandria, Egypt in 2002. The founders of ADES arethe Abbas family and Wael Mohamed El Mofty, followed later by additional shareholders, including theNational Drilling Company (“NDC”). In 2007, AMAK for Drilling and Petroleum Services S.A.E.(“AMAK”) was incorporated by Intro Storage Company (“Intro Storage”), an Egyptian investment firmowned by the Abbas family and United Group for Touristic, Industrial and Real Estate Investment (whichhas since been renamed Sky Investments), an Egyptian investment firm owned by the El Hussein family (“SkyInvestments”). In 2013, AMAK purchased all NDC’s interest in ADES, representing 50 per cent. of ADES’share capital.

In 2015 and 2016 respectively, ADES set up branches in Algeria and the Kingdom of Saudi Arabia throughwhich it conducts its business operations in those jurisdictions. In March 2015, ADES purchased shares asan investment in the Egyptian Chinese Drilling Company (“ECDC”) in the amount of 48.75 per cent. of thetotal share capital of ECDC from AMAK.

In January 2015, ADES conducted a capital increase, pursuant to which AMAK’s ownership interest in ADESincreased to 65.6 per cent. and the Abbas family’s direct and indirect interest subsequently increased toapproximately 67.2 per cent. of the shares of ADES. The Abbas family held directly 34.4 per cent. of ADESand held 50 per cent. of AMAK, which held 65.6 per cent. of ADES’ shareholding.

In May 2016, the Company was established in the DIFC as a holding company. The Company’s sole asset isa 99.99 per cent. interest in ADES (the remaining nominal .01 per cent. is owned by Ayman MamdouhMohamed Abbas and Mohamed Farouk Abdelkhalek). The Company’s sole shareholder is ADES InvestmentHolding Ltd. and its ultimate shareholders are Intro Investments Holding Ltd. and Sky Investments HoldingLtd., owned by the Abbas and Hussein families respectively.

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The below chart shows the Group’s current corporate organisational structure:

Competitive StrengthsThe Group has the following key competitive strengths:

Business model founded on a lean cost structureThe Group’s business model is founded on a lean cost structure upon which the Group has achieved a trackrecord of profitable growth throughout cyclical market conditions in the oil and gas industry. The Group’slean cost structure currently has three primary components: (i) majority Egyptian staff and lower overheadand administrative costs, primarily paid in Egyptian Pounds, (ii) acquisition of lower-cost legacy offshoreassets, and (iii) in-house technical capabilities.

Majority Egyptian staff and lower overhead and administrative costs, primarily paid in Egyptian Pounds. TheGroup has tapped into the established pool of Egyptian operational and management oil and gas industrytalent that has grown in connection with the country’s exploration and production activities, the talent needsof Gulf Cooperation Council countries and the establishment of petroleum engineering programs atuniversities in Egypt. Egyptian talent is paid in Egyptian pounds and at lower salaries than their expatriatecounterparts who are often paid in U.S. dollars, but offer a comparable level of experience and competence.The Group prides itself on having a team of over 1,200 employees and crew members, out of whichapproximately 75 per cent. are Egyptians. In its Algeria operations, the Group has deployed Egyptianemployees and crew members to replace expats within the limitations of localisation policies; in its Kingdomof Saudi Arabia operations, the Group is planning to deploy Egyptian or local employees and crew membersin the medium to long term. In addition, the Group’s main office and management are based in Cairo andare paid, with few exceptions, in Egyptian pounds.

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Acquisition of lower-cost legacy offshore assets. The Group’s management team has demonstrated its abilityto consistently seek, create, and execute value accretive transactions for low cost and good condition legacyassets within short time frames. The Group has grown its fleet from one jack-up barge in 2011 to one jack-upbarge and three offshore rigs in 2014, to one jack-up barge, nine offshore rigs, a MOPU and three onshorerigs by end of Q1 2017. The offshore rig acquisitions and associated refurbishment and activation have beendone at a substantially lower cost than the price of new rigs with similar characteristics and features. Thismodel has allowed the Group to minimise the upfront capital expenditure outlay and achieve attractivefinancial returns. The Group’s onshore rigs are newly built as these have involved lower investment outlayand the Directors believe no significant cost saving would be realised from seeking legacy rigs and refurbishingthem in the onshore market.

The Group’s ability to obtain legacy assets at attractive prices is underpinned by the Group’s comprehensivemarket intelligence gained from its robust relationships with multiple stakeholders—including rig owners,brokers, regulators and banks—consistently seeking opportunities for assets in good condition often put upfor sale by distressed sellers, which may enhance margins and financial returns. Moreover, its ability to swiftlyact on these opportunities due to its streamlined decision making process and its track record of numerousacquisitions during the last few years has allowed the Group to outpace competition in auction processes andachieve attractive pricing for legacy rigs in good condition.

In-house technical capabilities. Following the acquisition of legacy rigs, the Group conducts a refurbishmentand reactivation program (at a level dependent on the condition of the rig acquired) to ensure they satisfy (i)the requirements of the prospective charterer of the rig and (ii) the standards set by ABS, a renownedclassification society that is used in the global oilfield services industry for certifying the operational capabilityand safe management of offshore drilling rigs. The Group also regularly conducts much of the ongoingmaintenance activities for its fleet. The Group’s highly capable in-house refurbishment and maintenance teammanages most refurbishment and maintenance jobs in-house as opposed to appointing third party serviceproviders to perform a standard turn-key project. The Group has purposely built this in-house technical teamto implement a piecemeal approach to maintenance and refurbishment work that allows the Group to managecosts on a granular basis and avoid unnecessary costs involved in turn-key refurbishment and maintenancejobs. In some cases, it also allows the Group to perform certain maintenance requirements on-site withoutmoving the rigs to specific locations/shipyards which provides the key advantage of minimising rig downtime.The Group’s in-house technical team also plays a role in identifying and screening new rigs to ensure that therigs are in good condition and estimate the cost of the required upfront capital expenditure in order to supportthe Group in determining the price to pay for a particular rig. The Directors believe that this capabilitydifferentiates the Group among its peers, as to their knowledge other competitors generally do not maintainan in-house refurbishment team, and provides the key advantage of reducing rig downtime and loweringupfront and ongoing maintenance and capital cost.

A focused business modelTo help protect the business from the oil price cycle, the Group’s business model is focused on low riskmaintenance and workover activities in shallow water, non-harsh environments and low extraction cost perbarrel markets. The Group has also built an organisation with the relevant experience and competence forthe Group’s area of focus.

Focus on maintenance and workover operations as well as development drilling. The Group’s operations arefocused on ongoing workover and maintenance operations to existing producing wells and, to a lesser extent,drilling services for development wells in existing commercial fields/concessions. A focus on providing servicesto customers in the development and production phases, particularly well maintenance and workover services,has allowed the Group to regularly renew contracts that it believes are to a large extent sustainable in asub-sector that is less susceptible to oil price fluctuations. The Directors believe that its business is more likelyto be funded by the client’s operating expenditure rather than its capital expenditure, leaving the Group lesssusceptible to significant changes in a client’s capital expenditure budget.

Focus on shallow water, non-harsh environments. Focus on shallow water and non-harsh environments in theGroup’s core markets allows the Group to operate its fleet within some of the lowest production cost offshoreoil fields. Historically, this has helped ensure high utilisation of the Group’s assets and continued contracts,and is suitable for the Group’s legacy offshore drilling rigs, which the Directors believe are the norm in themarkets in which it operates.

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Focus on markets with steady production of oil and gas at low extraction cost per barrel. The Group’s marketsof operations—Egypt, the Kingdom of Saudi Arabia and Algeria—are similar in that the cost of producingoil and gas is low relative to certain other markets. Globally, the market price per barrel of oil needed torender an onshore or offshore oil project economically feasible varies significantly from region to region andfrom field to field within regions, from as low as $10 per barrel to more than $100 per barrel. The breakevenprices in Saudi Arabia, Egypt and Algeria tend to be at the lower end of this range. The low extraction costof oil and gas has led to relatively sustained levels of drilling activities in these markets through the oil pricedown cycle.

Furthermore, the oil and gas sector is a significant contributor to the GDP of the markets in which the Groupoperates, and maintaining or increasing existing production levels is a priority for the respective governments.Egypt is a net importer of oil and gas and maintaining or increasing existing domestic production is animportant political and economic priority for the country to decrease the balance of payments deficit (as thealternative to local production and processing or refining would be to import oil, gas or products) and toimprove the budget deficit given that oil and gas products are subsidised and that the government has a stakein most local production. In the case of Saudi Arabia, the oil and gas sector is a major contributor to thecountry’s GDP, fiscal budget and foreign currency generation and despite the recently agreed reduction ofproduction of approximately 5 per cent., the country prioritizes maintaining production levels from shallowwater non-harsh environments as extraction cost is considerably lower than most other shallow water fieldsglobally. The oil and gas sector is also a major contributor to Algeria’s GDP, fiscal budget and foreign currencygeneration and Sonatrach has been investing to stabilize production from existing fields as well as attract newinvestment in new concessions.

Low cost of oil and gas extraction, as well as political and economic support, allows the Group’s clients tocontinue to operate in these markets in low-oil and gas price environments and, therefore, continue to requirethe Group’s services. By establishing and growing the Group’s presence in these markets, the Group hasenjoyed relatively sustained demand for its rig services.

A customer-centric approach and agility allow the Group to continuously adapt to the needs of its clients andmarketsAs a service company, the Group’s business revolves around providing tailored solutions and excellent serviceto its clients characterised by its commitment to global industry standards and operational excellence. TheGroup is able to differentiate itself from its peers by prioritizing client needs and by making decisions in anagile manner. The Directors believe the Group’s “client-care” culture differentiates it from its peers and allowsit to always prioritize its clients’ satisfaction and needs before its own. This approach has been the key driverbehind its continuously growing service offering from one jack-up barge in 2007 to its five service lines in2016, namely offshore drilling and workover, onshore drilling and workover, jack-up barge, projects andMOPU services.

For example, the Group’s agility and focus on providing innovative solutions to complex client issues was akey driver of ADES’ introduction of, to its knowledge, the first MOPU to the Egyptian market. The creativeapproach to solving the challenge of extracting oil from a marginal field through a profitable method, coupledwith management’s versatility and flexibility enabled the Group to pursue this unorthodox solution throughthe conversion of a legacy rig into a production unit and transform the project’s economics, rendering iteconomically feasible. The MOPU solution created interest from other potential clients and the Group isengaged in discussion to provide similar MOPU solutions.

The Group’s agility and customer-centric nature has also led it to pursue Egypt’s deepwater gas potential inthe Mediterranean, an important prospect after the Zohr discovery by ENI in 2015. At the end of 2016, theGroup entered into ongoing discussions with one of the major drill-ship operators about acquiring the rightto market a drill-ship that is owned by the operator through a revenue and cost sharing arrangement. Thissolution would allow the Group to tap into the attractive deepwater activity currently ongoing in Egypt’sMediterranean region, without having to incur the considerable investment of acquiring the drill-ship itself.

The Group continuously considers how it can best meet the needs of customers and leverage both theavailability of idle rigs and the Group’s access to and established track record in its core markets.

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Strong and longstanding client relationshipsThe Group has strong relationships with a number of clients, including GPC and joint ventures betweenEGPC and BP and ENI in Egypt, Saudi Aramco in Kingdom of Saudi Arabia, and Sonatrach joint venturesin Algeria. The Group’s relationships with its diverse clientele base have been built on continuously seekingfeedback and fine-tuning the Group’s services, enabling the Group to establish a reputation as a reliable oilfieldservices provider with an exceptional track record. The Group’s client relationships have been forged throughthe years by seeking pre-qualification status well before a contract is secure. This model of securingpre-qualification status and initiating an open line of communication with its potential clients has provensuccessful in the Group’s attempts to expand into Algeria and Saudi Arabia. For example, the Directorsbelieve that ADES’s prequalification with Saudi Aramco in July 2015 was a key success factor in allowing itto beat competing bids for Hercules’s three offshore rigs and was able to move more quickly than some ofthe competition to close the transaction. Accordingly, the Group’s track record of providing excellent servicesand its long-standing relationships create a significant barrier to entry for new entrants.

Highly capable management team and lean organisational structureThe Group’s senior management team comprises significant industry experience and a deep understandingof the industry’s dynamics and inefficiencies. The management team comprises diverse, high-calibreprofessionals with a broad range of experience gained from global and local corporations, includingTransocean, Shell, Chevron, Dow Chemical, BG Group, ENI, Egyptian Drilling Company and OrascomTelecom among others. Management’s diverse professional backgrounds are a key strength of the Group asthey facilitate its ability to transfer best practices from different industries and introduce innovative solutionsto address complex client needs. The unique composition of the management team coupled with the Group’slean organisational structure distinguish ADES among its more bureaucratic competitors by streamlining itsdecision making process and allowing it to act swiftly. This agility is evidenced in the Group’s deal executiontrack record where it is able to swiftly finalize rig acquisitions and raise the requisite financing.

Extended track record creates a significant barrier to entrySince 2007 and, prior to that, through its origins in ECDC in 1997, the Group has built an extensive trackrecord of operational excellence, fostered long-standing relationships with well-regarded clients, developedits corporate identity, refined its business model of acquiring legacy assets, assembled a highly proficientin-house refurbishment and maintenance team and built a deep understanding of its market dynamics. TheGroup’s development and growth throughout this period has resulted in its becoming the number one offshoredriller in Egypt and the number three jack-up driller in MENA by number of rigs (including its MOPU andjack-up barge) by the end of 2016 and has driven the growth of the Group’s overall revenue to a 2016 levelwhich is 13.4 times greater than in 2011. Moreover, throughout its growth, the Group has built lastingrelationships with a diversified pool of financial backers comprising multi-lateral parties such as the EuropeanBank for Reconstruction and Development (“EBRD”), Arab International Bank, and Federated Project andTrade Finance Core Fund, regional banks such as Al Ahli Bank of Kuwait and Credit Libanais, and localbanks such as Alex Bank and SAIB Bank, as well as investment funds such as Islamic Corporation for theDevelopment of the Private Sector. This diverse range of financial partners provides the Group a clearcompetitive advantage over its peers as it provides access to funds that enhance the Company’s flexibility inmaking value accretive acquisitions. The Group’s operational drilling offshore fleet is either ABS certified orcurrently pending recertification and the Group is a member of the International Marine ContractorsAssociation and the International Association of Drilling Contractors. The Group also has an ISO-certifiedquality management system. The Group also has long standing client relationships and status as a prequalifiedprovider with many clients and potential clients (in some cases, such as Saudi Aramco, with particularlychallenging prequalification processes). The Directors believe that these factors, built over a 15 year operatinghistory, combine to create significant barriers to entry for competitors.

StrategyThe Group’s vision is to become the oil and gas industry’s leading drilling and mobile production serviceprovider focused on creating value for exploration and production company clients by delivering cost-effectiveand client-centric services that meet the industry’s best practices in quality, health, safety and environmentalimpact.

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During the last few years, the Group has built a robust operational platform across its three existing markets,Egypt, Saudi Arabia and Algeria, that will serve as the foundation for the execution of the Group’s corporatestrategy.

The Group’s management team is risk aware and aims to achieve strong levels of profitability with relativelylimited risk during difficult market conditions, while continuing to provide creative solutions to customerneeds and responding to market opportunities. The Group intends to purse to the following key strategies toimplement its business objectives:

Maintain cost control through continued commitment to a lean cost structureThe Group plans to continue to leverage its lean cost structure of controlled capital expenditures and lowoperating expenses. The Group intends to minimize as much as possible up front capital expenditure outlayto lay a foundation for the Group’s profitability. The Group uses a down cycle in oil prices and the oilfieldservices sector to scour the market for rigs that are in good condition and that are in some cases being soldby distressed sellers, and can often be acquired at a relatively low cost. Based on the Group’s experience, theDirectors believe the internal rate of return is generally higher for the same contract using legacy assets asopposed to newbuild assets, given the higher purchase price of newbuild rigs, notwithstanding that newbuildscan typically achieve higher day rates. The Directors believe that the Group’s strong network of brokerssearching the market, its quick decision making nature, its in-house technical team which can be quicklymobilized to assess the condition of these assets and its strong relationship with banks and financialinstitutions that minimizes the time required for putting the required funding in place, will continue to putthe Group ahead of competition when it comes to identifying and acquiring those assets. The Group is alsoexploring lease arrangements on new offshore units and intends to continue to acquire newbuild onshore rigs.During periods of improved oil prices and better performance in the oil and gas industry, the Group willcontinue to search the market for asset acquisitions. The Group will aim to complete rig acquisitions after aprofitable contract has been finalised or where the rig would operate under an existing contract. The Directorsbelieve the Group’s day rates are highly competitive, falling on the lower end of the market in the markets inwhich it operates, and that its cost structure allows it to offer discounts to clients to secure and extendcontracts. The Group aims to remain at a slight discount to average market rates in order to remaincompetitive.

In addition, the Group plans to continue to rely primarily on Egyptian talent in the future, which allows theGroup to maintain a competitive operating cost profile. The Group plans to keep its main office andmanagement based in Egypt and paid mostly in Egyptian Pounds, as well as sourcing the majority of its crewfrom Egypt and paying them in Egyptian pounds. In markets where there are certain restrictions, such as theKingdom of Saudi Arabia, the Group will aim to source senior crew members, such as managers andsupervisors, mostly from Egypt to maximize the number of Egyptian employees and crew members withinthe limitations of localisation policies over the medium to long term. The Directors believe that the plannedintroduction of ADES Academy, through which the Group aims to provide comprehensive training andcertifications to the Group’s employees and possibly third parties, will continue to ensure sufficient supply ofskilled crew to allow the Group to achieve its growth objectives. The Directors believe that the Group’scontinued commitment to a lean cost structure will allow it to compete aggressively and profitably even duringdifficult market conditions. Though margin erosion could occur with expansion in adjacent markets, forexample with higher crew salaries as with its acquisition of rigs in Kingdom of Saudi Arabia, the Directorsbelieve that the Group’s margins could benefit from economies of scale as operations expand. The Groupalso aims to maintain a net debt/equity ratio of 2 to 1 and a backlog/net debt ratio above 2.25 to 1 to enablethe Group to sufficiently cover its outstanding debt commitments.

Pursue fleet growth that is uncorrelated with the oil price cycleThe Directors believe that throughout the Group’s history, it has managed to reach a strong, sizeable platformthat can be used as a foundation for continued growth. However, the Group’s priority is to remain cognizantof the cost of such growth in order to promote profitability. The Group intends to pursue an approach to itsgrowth strategy that is not correlated with the oil price cycle whereby in difficult market conditions the Groupwill seek to maximize growth through acquiring assets from sellers of unutilised and underutilised assets, andin good market conditions the Group will prioritize maintaining strong utilisation of the existing asset baseand renewal of existing contracts and backlog at potentially higher day rates, while deleveraging andpotentially distributing dividends. The Group will continue to scour the market for attractive growthopportunities during good market conditions, however the approach will be more cautious and opportunistic.

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Given the lag between the recovery in oil prices and recovery in day rates and overall recovery in the oil fieldservices industry, the Directors believe that the Group currently has a window of opportunity whereby theshallow water rig market may continue to be over-supplied with a level of stacked rigs that offer attractivegrowth opportunities for the Group.

Leveraging existing product offerings and geographical presence to pursue low-risk growth opportunitiesThe Group’s growth strategy will continue to focus on (i) scaling up existing services in existing markets, (ii)introducing new services in existing markets and (iii) offering existing services in new markets. The Groupplans to continue to opt for gradual growth and avoid introducing new services in new markets, as this wouldincrease the risk profile of growth. Offshore, though the Group intends to expand its operations into highspec rigs and, through a drill-ship joint venture, into deep water operations, the Group expects to maintainits primary focus on shallow water, non-harsh environments as this is the market with the lowest extractioncost per barrel, and therefore the lowest risk in offshore drilling. For more difficult operating environmentsthat require high-spec rigs, or deep water exploration and development activities, that require costly drill-ships,the Group intends to pursue tailored solutions that allows it to provide the service with limited upfront capitalexpenditures. These solutions may include acquisitions or lease arrangements with rig owners. The Directorsbelieve that there are substantial growth opportunities currently available to the business, and that the Groupis strategically situated to successfully capitalize on those opportunities. Accordingly, management intendsto re-invest most of the cash flows expected to be generated by the business over the short to medium termto successfully execute its aforementioned growth strategy, which will necessitate capital expenditure. TheGroup is actively involved in tenders to support this growth strategy. In the longer term, should value accretivegrowth opportunities not be available, the Group expects it would shift to a more dividend focused strategy.

(i) Scale-up operations in existing markets.

The first pillar of the Group’s expansion strategy is to sustain its track record of operational excellence andstrong market position in its existing markets by continuing to grow its fleet in its platform markets. Thisscaling up may be in the form of the deployment of additional units in the Egyptian market and the Groupis currently negotiating potential MOPU contracts in Egypt. The Group intends to deploy MOPUs with newclients and may agree additional MOPU contracts with Petrozenima. In addition, after its successful entryinto the Saudi Arabian offshore market in late 2016, the Group is seeking additional tenders and engagingthrough its broker network to identify suitable rigs that could be acquired from distressed sellers looking toexit the market. Furthermore, the Group is in the process of fully integrating its Saudi Arabian operationsinto its platform and realizing operational synergies. In Algeria, the Group is preparing for the deploymentof its third rig, ADES 1, which it acquired on 30 March 2017. The focus of Algeria’s government ondeveloping its sizeable gas reserves, coupled with the Group’s track record and pre-qualification statuspositions it well to expand its onshore fleet in the country.

(ii) Introduce adjacent service offerings within existing markets.

The Group has identified three potential new service offerings where it anticipates the Group can leverage itsexisting platform to gain a competitive advantage. First, the Group intends to introduce its “asset light model”,where the Group relies on minimal capital expenditures, to expand into deep water opportunities in theMediterranean Sea and other regions. In partnering with an owner of a deep water rig or drill ship, the Groupcan provide its highly qualified and low cost work force, as well as access to pre-qualifications with the relevantgovernmental regulatory bodies, while the partner would provide the drill ship and the management thereof.ADES is in discussions with a potential partner and is currently involved in seeking several tenders in orderto deploy the drill ship in the Eastern Mediterranean basin. This model would allow the Group to tap intothe large potential of deep water gas exploration and development in Egypt without paying the considerableupfront cost typically associated with the acquisition of a drill-ship. Drill-ships are different from jack-uprigs in that they are able to operate in deepwater environments and to self-propel themselves. Second, havingalready established a presence in the Saudi Arabian offshore market, the Group plans to pursue establishinga similar presence in the Saudi Arabian onshore market to diversify its revenue stream from a serviceperspective. Finally, in addition to exploring the acquisition of high spec rigs, the Group is exploring throughongoing discussions with rig owners the potential of expanding its service offering into underutilized highspec rigs by offering the owners of stacked rigs (often banks and shipyards, who are not in the business ofoperating drilling rigs, and who often foreclosed on the assets when original owners defaulted) the opportunityto deploy these rigs on a revenue sharing basis in a manner that would be mutually beneficial to the parties.The Group envisions that the rig owner would get a revenue stream from a rig that is currently not operationaland the Group would be able to obtain contracts and generate additional revenue that it cannot serve with

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its existing asset portfolio but without having to incur the capital expenditure outlay associated withpurchasing a high-spec rig. Compared to standard jack-up rigs, high spec jack-up rigs are capable of operatingat greater water depths, have a higher load capacity and/or are technologically more advanced. However, thesystems for the standard and high spec jack-up rigs are similar and the Group intends to fully operatehigh-spec rigs. In March 2017, ADES signed term sheets with leading South East Asian parties, by virtue ofwhich ADES will be able to market new build offshore jack-up rigs, including high specification rigs, withthe aim of securing client contracts to be entered by ADES. Subject to the execution of a client contract, theparties shall enter into a lease agreement for the respective rig with the option for ADES to purchase the rigduring the term of the lease contract at a pre-determined price.

(iii) Offer existing services in new pre-selected adjacent markets.

In line with its geographic expansion into Algeria and Saudi Arabia in 2015 and 2016, respectively, the Grouphas continued seeking pre-qualification status in pre-selected markets with characteristics that would enablethe Group to heavily leverage its existing platform. One such market the Group has identified is the GCCmarket, especially Kuwait. The GCC market is home to some of the largest oil and gas reserves globally withrelatively steady production levels and low extraction costs. The proximity and the similarity of these GCCmarkets with Saudi Arabia, along with Group’s successful operations with Saudi Aramco may facilitate accessinto these markets. ADES is currently seeking prequalification with Kuwait Oil Company and is vettingpotential opportunities in these markets to offer its existing portfolio of services potentially using high specrigs in those new markets.

Over the medium to long term, develop and deploy the Group’s “enabler model”One of the Group’s longer term strategies is to grow through a non-capital-intensive approach by acting asan enabler in the market that will bridge the gap between single-rig owners and/or banks and shipyards withidle foreclosed upon rigs on their portfolios with limited reach and captive markets with unsatisfied demand.Due to the oversupply of rigs in the market, the Group has identified a novel and potentially sizeable marketwhere its robust longstanding relationships with blue-chip operators, network of brokers and regulators,pre-qualification status in multiple markets and geographic footprint make it exceptionally capable inproviding drilling and workover services by deploying its “asset light enabler model”. The execution of thisstrategy, as the Group currently envisions it, would see ADES lease or charter idle rigs from single-rig ownerswho have been unable to deploy them in their home markets and market them in markets where ADES ispre-qualified. Rig owners with rigs under contract may wish to take advantage of the Group’s low coststructure and replace the cost of operating the rig with an agreed lease rate per month. This would representthe evolution of the “asset light” model involving the potential deepwater joint venture and initial high specrig leases. The Group may also acquire a heavy lifter, the main purpose of which is to transport a rig fromone location to another and also serve as a mobile shipyard for clients potentially eliminating the need totake the unit offsite to a shipyard where maintenance or repairs can commence. This would be a strategicacquisition for the Group as it serves its own transportation needs reducing reliance on third parties. In linewith the Group’s current growth strategy, the enabler model requires minimal capital expenditure for theGroup, which could lay the foundation for a strong financial profile.

Principal MarketsThe Group currently operates in Egypt, Algeria, and the Kingdom of Saudi Arabia, but plans to expand itsoperations through the MEA region and possibly further afield, leveraging its established platform of onshoreand offshore drilling and workover, MOPU (with FSO) and jack-up barge capabilities to facilitategeographical and market expansion.

In its home market of Egypt, the Group is a market leader by number of offshore jack-up rigs, where it hadsix jack-up rigs (of which four were operating under contract), a jack-up barge and a MOPU as of January2017 and over 900 employees. As of 31 December 2016, the Group had backlog of U.S.$218 millionattributable to client contracts for operations in Egypt. In 2016, the Group launched its MOPU service inEgypt, introducing the Group to the mobile production services market. In Egypt the Group plans tocapitalise on recent gas discoveries in the Nile Delta Basin by expanding its operations and services intodeepwater drilling. The Group is currently negotiating a joint venture agreement with a drillship operatorwhereby the Group would jointly operate the partner’s deepwater drill ship in the offshore Mediterraneanbasin. The Group is also currently negotiating the acquisition of an existing onshore rig, ADES 10, which itexpects would operate in Egypt.

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The Group expanded its operations to Algeria in 2015, where it currently has around 45 employees and threeonshore rigs, including ADES 1, which the Group acquired from AMAK on 30 March 2017 and for whichthe Group is currently awaiting results of ongoing tenders in Algeria. Algeria is a natural gas centric marketand the Group provides onshore natural gas drilling and workover services to its clients in Algeria. As of31 December 2016, the Group had backlog of U.S.$41 million attributable to client contracts for operationsin Algeria. The Group intends to expand its onshore drilling and workover operations through the acquisitionof additional new-build onshore rigs.

In late 2016, the Group began operations in the Kingdom of Saudi Arabia with the acquisition of three rigsoperating under contract with Saudi Aramco, the Saudi national oil company. These acquisitions haveintroduced the Group into the Saudi oil services market and into the Gulf Cooperation Council (“GCC”)region more generally. The Group currently has over 250 employees in the Kingdom of Saudi Arabia and, asof 31 December 2016, had backlog of U.S.$242 million attributable to contracts for operations in theKingdom of Saudi Arabia. The Group is currently participating in tenders in relation to onshore and offshorerigs in Kingdom of Saudi Arabia.

PrequalificationCore to the Group’s operations and strategy of regional expansion to other markets is obtainingprequalifications with key national and international oil companies. Being prequalified allows the Group toget invited to future tenders, which the Group’s management believes can enhance its ability to diversifyrevenue streams and reduce client concentration as well as creating opportunities to implement the asset lightmodel to expand into deepwater opportunities and potentially high specification rigs. To facilitate its regionalexpansion to date and to open the door to further potential expansion, the Group has obtained a number ofprequalifications and is seeking further prequalifications. Some key prequalifications are outlined in the tablebelow.

Client or Potential PrequalificationCountry Client Application Status Qualification Date–––––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––– ––––––––––––––––––– –––––––––––––––––

Algeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SONATRACH Qualified June 2014Saudi Arabia . . . . . . . . . . . . . . . . . . . . . . . . . . . Aramco Qualified June 2015India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ONGC Qualified February 2016Iraq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MDOC Qualified November 2014Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pemex Qualified April 2016Algeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Halliburton Qualified September 2016Saudi-Kuwaiti Neutral Zone . . . . . . . . . . . . . . KJO Qualified March 2017Kuwait . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . KOC In progress —Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ENI In progress —Iraq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weatherford In progress —Iraq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schlumberger In progress —United Arab Emirates . . . . . . . . . . . . . . . . . . . . ADNOC In progress —United Arab Emirates . . . . . . . . . . . . . . . . . . . . ADMA In progress —United Arab Emirates . . . . . . . . . . . . . . . . . . . . ZADCO In progress —United Arab Emirates . . . . . . . . . . . . . . . . . . . . BUNDUQ In progress —

Principal Business ActivitiesOverviewThe Group offers onshore and offshore services. The Group’s offshore services include drilling and workoverservices and MOPU production services, as well as accommodation, catering and barge-based project services.The Group’s onshore services primarily encompass drilling and workover services. The Group’s project servicesinvolve outsourcing various operating projects for clients, such as maintenance and repair services.

To provide these services, the Group operates eleven offshore units (of which ten were under contract as ofFebruary 2017), comprising nine jack-up rigs, a MOPU (including FSO) and a jack-up barge. The Grouphas eight units in Egypt, including six jack-up rigs, the MOPU and the jack-up barge and was the leadingoffshore driller by number of jack-up rigs as of January 2017. In Algeria, the Group owns and operates threeonshore drilling rigs, including ADES 1 acquired in March 2017, and in the Kingdom of Saudi Arabia itowns and operates three offshore jack-up rigs.

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Offshore ServicesThe Group’s offshore services include drilling and workover services, as well as accommodation, catering andbarge-based project services.

Offshore Drilling and Workover

The Group currently conducts its offshore drilling and workover services in Egypt and the Kingdom of SaudiArabia through its fleet of “legacy” jack-up rigs. The Group’s offshore drilling and workover operations arecurrently focused mainly in the production phase of the oilfield life cycle and entirely in shallow-waternon-harsh environments. As of January 2017 the Group’s offshore jack-up rigs on contract were leased toclients at operating day rates within the range of U.S.$45,000 to U.S.$65,000 with the Group’s Egyptian rigsfalling in the lower end of that range and the Group’s Saudi Arabian rigs falling within the upper end.

MOPU Services

In addition, the Group owns Admarine I, a MOPU that began operations in February 2016 and is currentlyunder contract to Petrozenima with an operating day rate that is currently within the range of U.S.$65,000to U.S.$75,000. The Group’s MOPU is a modified jack-up rig that has been converted to operate as a mobileoffshore platform and is equipped with production and process facilities in conjunction with an FSO, whichis used as a storage unit. The MOPU currently processes crude oil under contract for Petrozenima, stores itin the adjacent FSO, and offloads it to crude oil tankers. Compared to many alternatives such as platforms,subsea tiebacks and floating production storage and offloading units, which can have protracted design,procurement, construction and commissioning phases, MOPUs typically offer shorter lead times (as theyconsist of existing units that are modified rather than being newly built as are some alternatives) which mayallow more rapid production and earlier cash flow generation, as well as offering operating companies quickcompliance with lease commitments. MOPUs also generally involve lower upfront capital investment,installation costs and abandonment costs and allow for phased field development and investment in additionto more client flexibility.

Pursuant to the terms of the lease agreement, the current MOPU will potentially be acquired by Petrozenimaonce the full contract amount is paid (and the pledge over the rig is removed), and this is factored into theMOPU’s relatively higher day rate. Day rates for MOPUs the Group expects to acquire in the future will varyand might be lower as per the agreed scope of equipment and services.

Jack-up Barge and Project Services

As part of its offshore offerings, the Group also owns an offshore jack-up barge, Admarine II, which iscurrently leased to GUPCO in the Gulf of Suez area with an operating day rate that currently falls withinthe range of U.S. $15,000 to U.S.$25,000. Offshore jack-up barges are used for a wide range of marine tasksand can be equipped with heavy lifting cranes and a firefighting system, or can be used for pipe laying orserve as offshore accommodation. The Group currently uses its jack-up barge to provide offshore supportservices to GUPCO, including barge services, materials, accommodation, equipment and construction supportrelated to well intervention and other projects. Admarine II is chartered to GUPCO at a day rate as a platformfor services. The Group receives additional variable project revenue from GUPCO for construction work,which is performed on behalf of ADES by a third party. Currently, Advansys Project Co., a related party, isengaged to provide these services.

Other services

The Group also provides accommodation, catering and equipment rental to its offshore rig clients, whichrepresented 1.9 per cent. of revenue in 2016. The Group provides catering and accommodation for a specifiednumber of personnel onboard the Group’s units under the terms of its client contracts, and collects additionalrevenue for providing these services for personnel above this number. The Group also rents necessaryequipment to its clients where under the contract it is the client’s obligation to supply that equipment but itneeds or prefers to rent it from the Group.

Offshore FleetThe Group has seven offshore jack-ups, one MOPU, and one jack-up barge operational and under contract.Four of the Group’s offshore jack-up rigs are operating under contract in the shallow water Gulf of Suezarea of Egypt and three are under contract in the Arabian Gulf area of the Kingdom of Saudi Arabia. All

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of the Group’s offshore rigs currently operate in shallow-water, non-harsh environments. The average age ofthe Group’s offshore rigs is 39 years. The Directors believe the Group’s reliance on legacy assets suits themarkets and the environments in which it operates. Proper maintenance helps extend the useful life of legacyrigs and around 41 per cent. of all mobile drilling rigs were aged 30 or older at the start of March 2017according to Clarksons Research. The following table sets out the key specifications of the Group’s offshorefleet:

Acquisition, RefurbishmentYear of Max. working and Mobilisation Costs/Year ABS Class Certificate

Rig Type Manufacture water depth (ft) of Acquisition(6) Issue/Expiry Date(1)

–––––––––––– –––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– –––––––––––––––––––Admarine I MOPU 1982 150 U.S.$51 million(2)/ 2014 Pending renewalAdmarine II Jack-up barge 1983 150 U.S.$20 million(3)/2004 Dec. 2015/April 2017(4)

Admarine III Jack-up rig 1974 250 U.S.$28 million/2012 Dec. 2012/Dec. 2017Admarine IV Jack-up rig 1976 307 U.S.$16 million/2013 Sept. 2014/Sept. 2018Admarine V Jack-up rig 1981 250 U.S.$31 million/2013 Mar. 2014/Mar. 2019Admarine VI Jack-up rig 1976 250 U.S.$36 million/2015 Mar 2017/June 2017(5)

Admarine 88 Jack-up rig 1974 350 U.S.$13 million/2016 May 2016/May 2019Admarine VIII Jack-up rig 1981 300 U.S.$22 million/2015 Pending renewalAdmarine 261 Jack-up rig 1979 250 Nov. 2016/Apr. 2019Admarine 262 Jack-up rig 1982 250 U.S.$65 million for AD 261, Dec. 2016/Oct. 2017Admarine 266 Jack-up rig 1978 250 262, 266/2016 Nov. 2016/Mar. 2018

Notes:(1) Subject to passing annual inspections.(2) Includes the cost of the FSO, in addition to conversions costs.(3) Includes U.S.$7 million in initial refurbishment and mobilisation costs and U.S.$9 million in repair costs after damage incurred

in transportation of Admarine II from Abu Dhabi. See “—Admarine II”.(4) Extension to April 2017 granted in January 27.(5) Interim class certificate to June 2017 granted in March 2017 pending completion of steel repairs.(6) Includes costs of inventory acquired with each rig.

Admarine I

In 2014, ADES acquired Admarine I for U.S.$51 million, including refurbishment and conversion andmobilisation costs and the FSO. Refurbishment for Admarine I took six months before the conversion processand the unit was ready for operation in 2016. Admarine I was a jack-up rig built in 1982, but was convertedby ADES with the help of third party experts, to a MOPU between 2014 and 2016. The time required toconvert a jack-up rig into a MOPU varies depending on the status of the rig, the complexity of the MOPUprocess and the geographical proximity of the rig location, shipyard and deployment location. The Directorsbelieve that the conversion process would likely be shorter on future MOPUs given the know-how the Groupacquired from the conversion of Admarine I.

Admarine I has a heli-deck and can accommodate 88 crewmembers. It has production and process facilities,including a production separator, desalter, heater treater, water treatment unit, chemical injection package,and gas generators, and operates with the FSO which serves as a storage unit. It has a production capacityof 5,000 bpd and to date has had relatively low production costs per barrel.

Since June 2015, Admarine I has been leased to Petrozenima (a joint venture between EGPC and NPC) underwhich it began operations in February 2016 and was production ready in October 2016. Subject to the termsof the charter contract, Petrozenima may acquire the MOPU and FSO at the end of the contract term orany extension thereof subject to payment of the purchase value, however the MOPU is currently pledged assecurity under the Group’s EBRD Syndication, therefore this option is not exercisable prior to the lifting ofthe mortgage. Petrozenima may terminate the MOPU contract (i) for its convenience; (ii) in the event theMuzhil field becomes unproductive or; (iii) for cause, subject to notice, cure and other provisions, under thecontract.

Admarine II

In 2004, ADES acquired Admarine II for U.S.$20 million, including refurbishment and mobilisation costs.The rig began operations in 2007. While initially subject to a sale and leaseback arrangement, the leasebackterminated in as part of ADES’s refinancing and ADES now holds the title.

The Admarine II barge is a jack-up barge, built in 1983, with two pedestal lifting cranes and accommodationfor 124 crewmembers. Since September 2012, the Admarine II jack-up barge has been leased to GUPCO (ajoint venture between EGPC and BP). The jack-up barge provides offshore support services to GUPCO,

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including barge services, materials, accommodation, equipment and construction support related to wellintervention and other projects.

Admarine III

In 2012, ADES acquired Admarine III for U.S.$28 million, including refurbishment and mobilisation costs.The Admarine III is a jack-up rig, built in 1974, with water depth range of up to 250ft. and a maximumdrilling depth of 20,000ft. It can accommodate 107 crewmembers. Since September 2012, the Admarine IIIhas been leased to GPC (which is 100 per cent. owned by EGPC).

Admarine IV

In 2013, ADES acquired Admarine IV for U.S.$16 million, including refurbishment and mobilisation costs.The Admarine IV is a jack-up rig, built in 1976, with a water depth range of up to 300ft. and a maximumdrilling depth of 20,000ft. It can accommodate 100 crewmembers. Since January 2014, Admarine IV has beenleased to GUPCO for drilling works in the Gulf of Suez area, for whom it began operating in June 2014. Therig underwent substantial upgrades in 2014 and maintenance in 2016 and experienced a high number ofstandby days in 2016 due to weather conditions.

Admarine V

In 2013, ADES acquired the Admarine V for U.S.$31 million, including refurbishment and mobilisation costs.The Admarine V is a jack-up rig, built in 1981, with a water depth range of up to 250ft. and a maximumdrilling depth of 20,000ft. It has a heli-deck and can accommodate 116 crewmembers. Since June 2014, theAdmarine V Rig has been leased for drilling works to Petrobel (a joint venture between EGPC and ENI) inthe Gulf of Suez area.

Admarine VI

In 2015, ADES acquired the Admarine VI for U.S.$36 million, including refurbishment and mobilisationcosts. As part of the purchase agreement, the Group agreed not to deploy Admarine VI in jurisdictions wherethe seller operates through 2017; the seller does not operate in Egypt. The Admarine VI is a jack-up rig, builtin 1976, with a water depth range of up to 250ft and a maximum drilling depth of 20,000ft. It has a heli-deckand can accommodate 89 crewmembers. Since December 2014, the Admarine VI Rig has been leased to GPC,for whom it began operations in April 2015 in the Gulf of Suez. The rig underwent significant maintenancein 2015.

Admarine VIII

In 2015, ADES acquired the Admarine VIII for U.S.$22 million, including refurbishment and mobilisationcosts. The Admarine VIII is a jack-up rig, built in 1981, with a water depth up to 300ft. and a maximumdrilling depth of 25,000ft. It has a heli-deck and can accommodate 102 crewmembers. Currently Admarine8 is warm stacked, pending commencement of a contract with Petrozenima. This contract gives the Groupthe option of using Admarine VIII or Admarine 88 to fulfil its obligations under the contract.

Admarine 88

In 2016, ADES acquired the Admarine 88 for U.S.$13 million, including refurbishment and mobilisationcosts. The Admarine 88 is a jack-up rig, built in 1974, with a water depth range up to 350ft. and a maximumdrilling depth of 25,000ft. It has a heli-deck and can accommodate 91 crewmembers. Admarine 88 is currentlywarm stacked and being tendered for contracts in Egypt, pending its possible use under a contract withPetrozenima giving Petrozenima the option to lease either Admarine VIII or Admarine 88 for a period ofthree months, with optional six month extension. The Group estimates that Admarine 88 will require anadditional U.S.$1 million of capital expenditure prior to deployment. The Group expects Admarine 88 tobegin a contract around December 2017.

Admarine 261

In 2016, the Group acquired Admarine 261, 262 and 266 for U.S.$65 million, including inventory acquiredwith the rigs of about U.S.$5.3 million. The rigs required no refurbishment. The Admarine 261 is a jack-uprig, built in 1979, with a water depth range of up to 250ft. and a maximum drilling depth of 20,000ft. It hasa heli-deck and can accommodate 88 crewmembers. Since March 2008, the Admarine 261 has been leased to

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Saudi Aramco (the Saudi national oil company). The existing contract between Hercules Offshore and SaudiAramco was novated to ADES in November 2016. The Group anticipates Admarine 261 will stop forscheduled maintenance for two months in 2017 in relation to client requirements.

Admarine 262

The Admarine 262 is a jack-up rig, built in 1982, with a water depth range of up to 250ft. and a maximumdrilling depth of 20,000ft. It has a heli-deck and can accommodate 97 crewmembers. Since March 2008, theAdmarine 262 Rig has been leased to Saudi Aramco. The existing contract between Hercules Offshore andSaudi Aramco was novated to ADES in November 2016. Admarine 262 will stop for scheduled maintenancefor two months in 2018 in relation to client requirements.

Admarine 266

The Admarine 266 is a jack-up rig, built in 1978, with a water depth range of up to 250ft. and a maximumdrilling depth of 20,000ft. It has a heli-deck and can accommodate 84 crewmembers. Since March 2012, theAdmarine 266 Rig has been leased to Saudi Aramco. The existing contract between Hercules Offshore andSaudi Aramco was novated to ADES in November 2016 and renewed for an additional five years in December2016 at a slight discount to its previous rate. Admarine 266 will stop for scheduled maintenance for twomonths in 2017 in relation to client requirements.

Onshore ServicesThe Group’s onshore services primarily encompass drilling and workover services. Onshore drilling is amechanical process where a well is drilled on land through underlying bedrock to explore for and subsequentlyextract oil or natural gas. As with offshore drilling, the onshore drilling process typically involves exploration,development, and production phases. Workover jobs comprise the maintenance, repair, and/or anyenhancement of a well’s production. Currently, 100 per cent. of the Group’s onshore services are provided toclients in the production phase and are primarily workover services for natural gas wells. As of January 2017,the Group’s onshore rigs had operating day rates that fall within the range of U.S.$20,000 to U.S.$30,000.

Onshore FleetThe Group has grown its onshore fleet through acquisitions of new-build rigs rather than legacy rigs. Newonshore rigs typically have a relatively low investment cost compared to offshore rigs. The following table setsout the key specifications of the Group’s onshore rigs:

Year OperatingRig Type Constructed Area Acquisition and Start-up Costs/Year of Acquisition–––––––––– –––––––––––––– –––––––––––– –––––––––––––– –––––––––––––––––––––––––––––––––––––––––––ADES 2 Onshore drilling 2015 Algeria U.S.$13 million(1)/2015ADES 3 Onshore drilling 2016 Algeria U.S.$11 million(2)/2016ADES 1 Onshore drilling 2007 Tendering process U.S.$5.0 million(3)

Notes:(1) Includes acquisition cost, plus costs of worker camps.(2) Includes acquisition cost, plus costs of worker camps.(3) Acquisition price only.

ADES 2

In 2015, the Group purchased ADES 2, a new-built rig from a Chinese contractor, for U.S.$13 million,including construction of worker camps. ADES 2 was delivered to the Group in April 2015. It consists of a1,000 horse-power onshore drilling rig with a rated drilling depth of 10,500 ft. Since March 2015, ADES 2has been leased to SH-FCP (a joint venture of ENI and Sonatrach operating in Algeria). Mobilisationcommenced in November 2015 and operations started in December 2015 in Algeria chartered to First CalgaryPartners Ltd., an ENI subsidiary.

ADES 3

In 2016, the Group purchased ADES 3, a new-built rig, from a Chinese manufacturer for U.S.$11.0 million,including construction of worker camps. ADES 3 was delivered to the Group in July 2016. It consists of 1,000horsepower onshore drilling rig, with a rated drilling depth of 10,500 ft. Since April 2016, ADES 3 has beenleased to Groupement Sonatrach AGIP (a Sonatrach joint venture with AGIP, an ENI subsidiary), for whomit began operations in October 2016.

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ADES 1

The Group acquired an additional onshore rig, ADES 1, from AMAK in March 2017 for U.S.$5 million, tobe paid during 2017, and for which the Group is currently awaiting results of ongoing tenders in Algeria.

Other

The Group is also currently negotiating a lease to purchase agreement with a bank to lease an existingnewbuild high specification onshore rig, ADES 10. The Group expects ADES 10 would begin operating inEgypt around Q3 2017.

Asset Acquisition ProcessThe Group’s overall business model involves four key competencies—marketing and contract procurement,asset acquisition and supply chain management, financing and operations. These functions operate in tandemin the Group’s business model.

Marketing and Contract Procurement

The Group’s management studies potential markets and performs feasibility studies on new opportunities.The Group looks both at its “target” markets and at potential new markets where opportunities may arise inthe future. The Group evaluates the required technical specifications of new projects, and, to facilitate futurebidding, may pursue prequalification with potential clients. The Group also gathers market intelligence anddoes an analysis of the competitive challenges in bidding for and executing a project. When the Group iscomfortable with its competitive position and has satisfied any applicable prequalification rules, it will submittender documents as required by the potential client.

Asset Acquisition and Supply Chain

The Group relies on a network of rig manufacturers, vendors and brokers to identify potential assetacquisitions that may be suitable for new projects. The Group evaluates assets from technical and commercialstandpoints through site visits and by obtaining refurbishment estimates from its in-house team and otherthird party experts as needed, and reaches out to asset owners and/or manufacturers to begin negotiations.

The Group generally aims to acquire rigs under either a “buy to contract” model or a “contract acquisitionmodel.” Under the buy to contract model, the Group seeks to identify, bid for and secure a drilling contractfor a rig before or concurrently with finalising the acquisition. The Group adopted this approach with respectto its acquisitions of Admarine III, IV, V (here there was around a seven month gap between acquisition andcontracting) and VI (around a four month gap between acquisition and contracting) and ADES 2 and 3, andis currently tendering in relation to its planned acquisition of ADES 1. This approach does not guaranteethat a rig will be contracted at the time of purchase and there is sometimes a gap between the time ofacquisition and the securing or commencement of a contract, during which time a rig does not generaterevenue, but the Directors believe a focused buy to contract approach can help to reduce uncertainty and idletime around an acquisition. Under the contract acquisition model, the Group aims to acquire rigs withongoing contracts that can be novated to the Group. The Group adopted this approach with respect to itsacquisitions of Admarine 261, 262, and 266. This approach may entail certain transition costs, particularlywith regard to maintaining existing employees on operational rigs who may be more expensive than theGroup’s own workforce, but the Directors believe this approach can also help reduce idle time and uncertaintyaround acquisitions. The Group also strategically purchases additional uncontracted rigs before successfullytendering for a contract for the rig. It adopted this approach with respect to Admarine I, II, VIII and 88.While the latter approach entails greater financial risk, the Directors believe that strategic uncontractedacquisitions can help position the Group to realise opportunities as they become available.

In the case of legacy rigs, once a rig is acquired, the Group then uses its own crew or, in the case of certaintypes of work, third parties to upgrade and refurbish the rigs as necessary to bring them in line withinternational standards and make them operational, and maintains and repairs the rigs through a mix ofin-house and third party maintenance.

Financing

Concurrently with its evaluation of potential acquisitions, the Group’s finance team performs profitabilityand returns analysis on potential assets and advises on financing. It prepares financial forecasts based on

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anticipated day rates and runs scenarios to determine the Group’s debt capacity and is involved in negotiatingany refinancing agreements and obtaining any necessary approvals for such agreements from existing lenders.

Operations

The Group’s operations team works with the financing team to advise on crew, maintenance, inventory, andthird-party supply requirements with respect to potential and existing rigs. The team is responsible forrecruiting, training and mobilising crews, identifying and sourcing local services, office space, and suppliers,finalising legal and commercial agreements with third party providers and implementing compliance withclient requirements and the Group’s operational standards.

Refurbishment and MaintenanceThe Group’s maintenance and refurbishment team manages initial refurbishment and reactivation of rigsand their ongoing maintenance. The team comprises 20 members who undergo training sessions and representa breadth and depth of industry experience. The team relies on third party contractors to conduct some ofthe refurbishment and maintenance processes, particularly where significant steel and metal replacement workis required, and conducts some of the processes internally. The team works across three main stages in the riglifecycle—acquisition and refurbishment, recurring maintenance and work related to periodic ABScertification inspections. During the asset acquisition phase, the team inspects and conducts detailed duediligence of each asset before acquisition. The required time and cost to repair is determined by theexperienced in-house team and using the support of third parties where needed for verification. The team’sactivities across phases are divided into five main categories—mechanical, electrical, power generation, wellcontrol, and preventative maintenance.

Outsourcing is case specific. As the Group grows, it expects to grow its responsibility for refurbishment andto be able to benefit from increased economies of scale and purchasing power with shipyards, vendors andservice providers for example through establishing master service contracts.

Some maintenance activities such as replacement of steel and essential equipment, cannot be performed otherthan by a shipyard. The Directors believe other maintenance activities can generally be taken over by thein-house team as it expands its expertise and grows its team base to accommodate for volume, as this willlikely always present a cost saving opportunity. The operating of new unit types also enables the team to gainknowledge as it goes. All certification processes must be done fully or jointly through a third party, thecertification body.

Key ClientsThe Group maintains strong, long-standing relationships with many leading NOCs, IOCs and independentoperators. In Egypt, clients are predominantly joint ventures with EGPC, with whom ADES has beenprequalified since 2005.

As of 31 December 2016, the Group’s key clients for offshore drilling activities in Egypt include GUPCO (ajoint venture between BP and EGPC), Petrozenima (a joint venture between EGPC and NPC, a related party),and Petrobel (a joint venture between ENI and EGPC), as well as the GPC. The Group’s only current clientfor offshore drilling in Kingdom of Saudi Arabia is Saudi Aramco. The Group’s clients for onshore drillingin Algeria are SH-FCP (an ENI joint venture with Sontrach) and Groupement Sonatrach AGIP (a Sonatrachjoint venture with AGIP, an ENI subsidiary). See Part II: “Risk Factors—Risks relating to the Group’s

Business—The Group relies on a relatively small number of clients and the loss of a significant client could have

a material adverse effect on the Group”; “Risk Factors— Risks relating to the Group’s Business—The Group’s

drilling contracts with national oil companies or their affiliates may expose the Group to greater risks than it

would assume in drilling contracts with non-governmental clients.”

Major ContractsThe Group provides drilling or other services to its clients on a “day rate” contract basis. Under such dayrate contracts, the Group provides one of its rigs, jack-up barge, or MOPU and rig crews and receives a fixedremuneration per day, as set out in the customer contract, for drilling a well or providing other drilling,workover or mobile production services. The Group currently has contracts for the use of its rigs with Saudi

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Aramco, SH-FCP, AGIP and several oil and gas producing and operating companies wholly or partiallyowned by the EGPC.

The Group’s contracts provide for it to supply, operate and maintain offshore and onshore drilling rigs andrelated equipment necessary for its services. Contracts are generally awarded following a competitive biddingprocess, though in some cases existing contracts in Egypt can be renewed without the need for a tender biddingprocess, as the Group has successfully done with certain clients.

Contract Terms and Day Rates

Contract terms vary from client to client but typically include the following or similar terms:

• contracts are typically of one- or two-year duration, with the possibility of a one-year extension at theclient’s option (and, in the case of EGPC affiliates, with EGPC’s approval), though renewal terms maybe longer on some rigs; the Group’s rigs currently contracted to Saudi Aramco have five-year contracts;

• different daily rates are typically provided for with respect to: (i) drilling activities; (ii) standby time; (iii)paid maintenance days; and (iv) when a force majeure event has taken place; in addition, the Grouptypically receives a fee for mobilisation and demobilisation of the rigs and either a fee (for onshore rigs)or a specified day rate for movement of the rigs once operations have begun. In the case of AdmarineV, the day rate is linked to the oil price, with higher or lower day rates applicable depending on whetheroil prices are above or below specified thresholds;

• total amount due is denominated in U.S. Dollars;

• payments typically to be made either in U.S. Dollars entirely as in current contracts with Saudi Aramcoor partly in U.S. Dollars and partly in local currency as in most contracts in Egypt and Algeria; incontracts in Egypt, typically between 25 per cent. and 100 per cent. of the contract value is to be paidin U.S. Dollars and in contracts in Algeria typically between 70 and 75 per cent. of the contract valueis to be paid in U.S. Dollars; however, on a case-by-case basis the Group may change the currency ofpayment terms in a rig contract or allow customers to make payments in local currency to retain acontract or expedite payment on accounts;

• payment terms specified in client contracts typically range from 30-60 days;

• the Group provides unconditional, irrevocable letters of guarantee to the client typically representingup to 5 per cent. of the value of each contract as a performance guarantee and various insuranceundertakings; and

• contracts may provide for early termination for specific reasons, such as: (i) if the rig has not arrived atthe specified location by a certain date; (ii) in case of loss or damage of the rig; (iii) in the event of aforce majeure; (iv) in the event of a breach by the Group of its material obligations; (v) in the event ofthe Group’s bankruptcy or liquidation; and (vi) in certain cases, at a client’s discretion, whether or notthe Group is in default, by the settlement of all payments between both parties up to the date oftermination and in some cases with notice to the Group. In the event a client terminates for cause, theGroup under its contracts may forfeit its performance guarantee and have to repay the client for aportion of the fees received.

Clients may seek to change the terms of their existing contracts at the time of negotiations around optionalextensions provided for under client contracts. Also upon extension, or sometimes during the course of acontract, the Group may offer discounts on previously contracted day rates to help retain client business.

The Group’s operating day rates as of January 2017 were between approximately U.S.$45,000 and U.S.$65,000for its offshore jack-up rigs, with its jack-up rigs in Egypt falling in the lower end of that range and its jack-uprigs in Kingdom of Saudi Arabia towards the upper end of the range. The operating day rate for the MOPUwas within the range of U.S.$65,000 to U.S.$75,000 and the operating day rate for the jack-up barge waswithin the range of U.S$15,000 to U.S.$25,000, excluding the Group’s margin received for additional projectservices contracted to third parties. Day rates for the Group’s two onshore rigs fell within the range ofU.S.$20,000 to U.S$30,000.

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Below is a table outlining the current contract status of the Group’s offshore and onshore rigs:

Current StandardContract Optional

Start(1)/End RenewalCharterer Location Project Type Date Terms Prior Renewals

–––––––––––––– –––––––––––– –––––––––––––– ––––––––––– ––––––––––– –––––––––––––Admarine I Petrozenima Gulf of Suez Oil production Feb. 2016/ Not specified None

Feb. 2021Admarine II GUPCO Gulf of Suez Barge services Jun. 2016/ 1 year 4 renewals

Dec. 2017Admarine III GPC Gulf of Suez Drilling & Aug. 2016/ 1 year 2 renewals

workover Aug. 2017Admarine IV GUPCO Gulf of Suez Drilling & Jun. 2016/ 1 year(2) 4 renewals

workover Dec. 2017Admarine V Petrobel Gulf of Suez Drilling & Jun. 2015/ 1 year 2 renewals

workover Jun. 2017Admarine VI GPC Gulf of Suez Drilling Mar. 2017/ 2 years 2 renewals

Mar. 2018Admarine VIII Petrozenima(3) Gulf of Suez Drilling & May 2016/

Workover TBD(4) — —Admarine 88 None(3) Gulf of Suez — — — —Admarine 261 Saudi Aramco Arabian Gulf Drilling & Sept. 2014/ 5 years 1 renewal(5)

workover Sept. 2019Admarine 262 Saudi Aramco Arabian Gulf Drilling & Nov. 2014/ 5 years 1 renewal(5)

workover Nov. 2019Admarine 266 Saudi Aramco Arabian Gulf Drilling & Dec. 2016/ 5 years 2 renewals(5)

workover Dec. 2021ADES 2 SH-FCP Onshore Algeria Workover and Mar. 2015/ 1 year 1 renewal

related services Sep. 2017ADES 3 AGIP-Sonatrach Onshore Algeria Workover and Oct. 2016/ 1 year N/A

related services Oct.2018

Notes:(1) Indicates effective date of contract, not date of commencement of work.(2) Subject to mutual agreement.(3) Admarine 8 and Admarine 88 are warm stacked pending commencement of work under a contract. The Group has signed a

contract with Petrozenima with a three-month term and optional six-month extension, but is awaiting instruction to begin work.Under the contract, the Group may choose to use either Admarine VIII or Admarine 88 at the same specified day rate.

(4) As per note (3), though the contract has been signed, its end date will depend on when work commences.(5) Under contract with the rigs’ prior operator, except in the case of Admarine 266, where one such renewal was with ADES.

BacklogThe Group estimates the value of backlog for each rig based on the total amount payable to the Group duringthe remaining term of an existing contract plus any optional client extension provided for in such contract,assuming the contracted rig will operate (and thus receive an operating day rate) for all calendar days bothin the remaining term and in the optional extension period. This calculation assumes that the client willexercise its option to extend its existing contract at the current day rate and under the contracted termsregarding currency of payment. Backlog also includes move fees and lump sum mobilisation anddemobilisation payments as applicable under the contract. Backlog includes amounts remaining on contractsnovated to the Group from certain rigs’ previous owners. The Group’s backlog calculations as of 31 December2016 assumed a weighted average tenor of contracts, including optional extensions, of around three years(weighting by share of estimated backlog multiplied by assumed duration of the contract plus any optionalextension on each rig).

The table below sets out the composition of the Group’s estimated backlog by region as of 31 December2016:

(U.S.$ ‘000)2017E 2018E 2019E 2020E 2021E Total

–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––

Egypt . . . . . . . . . . . . . . . . . . . . . . . 106,888 53,508 29,584 25,913 2,124 218,017Kingdom of Saudi Arabia . . . . . . 68,565 68,565 59,375 22,674 22,612 241,791Algeria . . . . . . . . . . . . . . . . . . . . . . 20,420 10,884 10,106 — — 41,410

–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––

Total . . . . . . . . . . . . . . . . . . . . . . . . 196,873 132,957 99,065 48,587 24,736 501,218–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––––––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––

The Group estimated that offshore services comprised about 69 per cent., production about 21 per cent.,onshore services 8 per cent. and barge services 2 per cent. of the Group’s estimated backlog as of 31 December

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2016. The Group estimated that expected U.S. dollar payments accounted for around 83 per cent. of itsestimated backlog as of 31 December 2016, while Egyptian Pound payments accounted for 15 per cent. andAlgerian Dinar for 2 per cent. The estimated currency breakdown may be subject to change as, among otherfactors, the Group may choose to accept payments with respect to other rigs in local currencies in place ofU.S. dollars.

The Group’s backlog estimates are subject to a number of assumptions and should not be relied on as anindication of future revenues, but reflect the Group’s estimate of possible revenues should such assumptionsprove true and absent any other unforeseen developments. Among these, it is important to note that certainof the Group’s rig contracts provide for variable operating day rates or rates that may be subject to change.Accordingly, the actual revenue generated by a rig may differ from the revenue assumed for that rig in theGroup’s backlog calculation. For instance, the underlying contract on one of the Group’s rigs provides for avariable operating day rate depending on the market spot price per barrel of Brent crude oil. Another of theGroup’s contracts, currently pending commencement, provides for a special offer whereby the client may electat the beginning of the contract to pay one fixed operating day rate under the contract or a lower fixedoperating day rate plus a conditional bonus day rate payable retroactively should the drilling activity resultin a commercial discovery (for exploratory wells) or a producing well (for development wells). The backlogfigure also assumes that one contract on which the Group has not yet begun work will be commenced aroundQ2 2017 and that there will be no stoppage of operation of Admarine II as a result of the rig’s ABScertification expiration. Other assumptions may apply. See Part II: “Risk Factors—The Group’s current backlog

of contract revenue may not be fully realised and may decline significantly in the future, which may have a material

adverse effect on the Group’s financial position, results of operations or cash flows.”

Supplier SelectionIn selecting suppliers for spare parts and other equipment, the Group follows a process based on detailedpolicies designed to mitigate the risks involved in the procurement process. In particular, the Group appliesqualification criteria in its evaluation and selection of suppliers and the Group maintains records regardingthe evaluation and performance of its suppliers. Typically, priority is given to suppliers who have the mostefficient and effective approach to deliver outputs at a competitive cost. Factors considered in the appointmentof suppliers include financial stability, quality, production capacity and similar experience. The Group,however, has successfully managed to mix-and-match critical components, such as engines and top drivesfrom European suppliers with other less critical components from reliable Chinese suppliers, in order to reducethe costs of the refurbishment, repair and overhaul of its rigs. Purchased materials or services from suppliersare verified by the Group to ensure that they meet specified purchase requirements.

See Part II: “Risk Factors—Risks relating to the Group’s Business— Significant part or equipment shortages,

supplier capacity constraints, supplier production disruptions, supplier quality and sourcing issues or price

increases could increase the Group’s operating costs, decrease its revenues and adversely impact its operations.”

Licenses and RegulationEgypt

With respect to its operations in Egypt, the Group is required to obtain a license from the Free Zone Authority,being a free zone company established under the Investment Law. Moreover, the Group is required to obtainapprovals from the Ministry of Defence, as well as coordinating with several national security authorities, toaccess and operate in the relevant work locations in Egyptian territory. The Group also holds certain lettersof authorisation and licences from the Egyptian Authority for Maritime Safety, the NationalTelecommunications Regulatory Agency with respect to radio equipment and the Minister of Civil Aviationin respect of helipads on the Group’s jack-up barge and rigs. The Group must further abide by relevantenvironmental regulations in relation especially to its marine activities as set out in Egyptian environmentallaw and executive regulations.

Kingdom of Saudi Arabia

With respect to its operations in the Kingdom of Saudi Arabia the Group has established the Saudi Branchas a foreign office branch of ADES incorporated in the Kingdom of Saudi Arabia. Saudi law provides thatADES has unlimited joint and several liability for the obligations of the Saudi Branch. The Saudi Branchholds (i) a valid temporary foreign investment license from the Saudi Arabian General Investment Authoritypursuant to the Saudi foreign investment regulations and (ii) a valid commercial registration certificate from

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the Saudi Ministry of Commerce and Investment, which regulates companies operating in the Kingdom ofSaudi Arabia.

The Group may also be required to hold certain ancillary approvals and licenses, including an environmentallicense from the Saudi General Authority of Meteorology and Environmental Protection, permits to operatehelicopters from the Saudi General Authority for Civil Aviation in respect of helipads on the jack-up rigsand the use of drones, a license from the Saudi Communications and Information Technology Commissionin respect of the use of radio equipment and a certificate from the Saudi High Commission for IndustrialSecurity in respect of security, safety and fire prevention. Water vessels travelling to the offshore jack-up rigsin the Kingdom of Saudi Arabia do so under the jurisdiction of the Saudi Coastguard. See Part II: “Risk

Factors—Risks Relating to the Group’s Business—If the Group or its clients are unable to acquire or renew

permits and approvals required for drilling or other operations, the Group may be forced to suspend or cease

operations, and its profitability may be reduced.”

Other

In addition, all of the Group’s offshore rigs, its MOPU and its jack-up barge are required to be certified bythe ABS, an independent global provider of safety, risk, integrity and management services. ABS certificationis considered an industry standard for such certifications. ABS or similar certification is typically required inorder to obtain insurance on the rigs. The Group’s counterparties in offshore drilling contracts also generallyrequire ABS certification and insurance in awarding a particular contract, and ABS or other certification isgenerally required to maintain flag registrations on the rigs. ABS verifies that marine vessels and offshorestructures comply with the rules that reflect the industry standard of strength, stability, machinery, safetyequipment and pollution. ABS class certification is typically valid for a period of five years, subject to annualsurveys. Every five years, prior to renewal of class certification, a comprehensive survey is conducted. ABSsurveys typically can be carried out during operations provided the rig is in good condition, though if steelor essential equipment replacement is necessary the survey process may require off-hire time (typically aroundone to two months) and, depending on the condition of the rig, expenditure on renewal work. In the eventthat a rig requires off-site work that is not urgent or critical, ABS may permit extensions of certification atthree-month intervals for up to nine months. The ABS certification for Admarine II, for example, is due toexpire in April 2017 and the Group is assessing internally and consulting with ABS regarding any renewalwork required, which would likely require off-hire time and offsite work during which the rig would cease tooperate. The Group also procures certificates of compliance as required for all major equipment, includingdrilling and well control.

The Group, as is the case with other drilling contractors, is also required to be pre-qualified by national oilcompanies, such as EGPC in Egypt, Sonatrach in Algeria, and Saudi Aramco in the Kingdom of SaudiArabia. ADES has been pre-qualified for providing drilling services in Egypt since 2005 and in Algeria since2014. In 2015, the Group obtained pre-qualification approval for bids with Saudi Aramco in Kingdom ofSaudi Arabia.

Quality Management Systems, Environmental Policy and Health and Safety MattersQuality Management SystemsThe Directors believe that part of its success in project execution and quality is based on its commitment toits quality management systems, policies and procedures and compliance with best quality standards andpractices. The Group’s comprehensive operational assessment program is built around monitoring five keyfactors—safety review, employee turnover and retention, performance review, financial assessment, and theclient relationship. The Directors believe that regular monitoring and assessment can help the Group maintainachieve operational excellence and client satisfaction.

The Group has implemented integrated management systems (“IMS”) to ensure an efficient, systematic andorganised framework to enable the Group to provide the highest standards of service. The Group’s IMS isoutlined in ten manuals covering subjects ranging from corporate, quality, technical support, health safetyand environment (“HSE”), supply chain, human resources, commercial, finance, operations and marine. TheVice President of Operations (“VPOP”) is in charge of daily operation of the Group’s offshore and onshoreunits respectively and for operational planning and budget management. The VPOP ensures that client andstakeholder requirements are complied with. The Group’s HSE management team is comprised of the HSEDirector, the HSE Supervisor, the Senior HSE Engineer and the Offshore Rigs and Safety TrainingCo-ordinator.

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ADES is certified to ISO 9001:2015 (quality management systems) and ISO TS 29001:2010 (petroleum,petrochemical and natural gas industries—sector specific quality management systems), both until June 2018.The Group is also seeking certification to ISO 14001:2004 (environmental management systems) and OHSAS18001 (occupational health and safety management systems). The Group also plans to implement therequirements of the ISPS Marine Security Code with respect to its offshore units within the next three years.

Throughout the performance of its contracts, the Group monitors and measures its quality managementsystem. The Group’s audit regime includes environmental audits, monthly self-review, external audits, annualaudits, pre-ABS audits and audit follow-up. The rigs are subject to a number of surveys and inspections,including monthly inspection by the rig team and a monthly rig visit by the rig manager who performs anddocuments a mini-audit. Internal Quality Health Safety Security and Environment (“QHSSE”) audits areperformed jointly by a team from Quality Management System (“QMS”) and the group’s internal audit andHSE departments.

Environmental PolicyEgypt

The Group is committed to complying with all applicable international and local legislation and ensuringthat the Group’s personnel and third-party personnel working on board or visiting the Group’s facilities areaware of the Group’s environmental policy and that they are required to comply with it. The Group has issueda comprehensive health, safety and environment manual, which was last updated in January 2015, to all ofits employees. The Egyptian Environmental Affairs Agency is the regulatory authority that monitorscompliance with Egyptian environmental law. In addition to said Agency, other authorities have jurisdictionwith respect to protection of the marine environment, including the Egyptian Marine Safety Agency, theGeneral Egyptian Organization for Protection of the Coast and EGPC.

The Group’s operations are subject to laws and regulations relating to air quality and air emissions, liquideffluent discharges to the marine environment, noise emissions and ambient noise levels, solid wastemanagement, hazardous waste management, operation management (health and safety, air quality and noiselevels), construction management and other environmental management issues. Environmental laws andregulations specifically applicable to the Group’s business activities could impose significant liability on it fordamages, clean-up costs, fines and penalties in the event of oil spills or similar discharges of pollutants orcontaminants into the environment or improper disposal of hazardous waste generated in the course of itsoperations, which may not be covered by contractual indemnification or insurance and could have a materialadverse effect on the Group’s financial position, operating results and cash flows. To date, such liability, finesand penalties have not had a material adverse effect on the Group’s operating results, and the Group has notexperienced an accident that has exposed it to material liability arising out of or relating to discharges ofpollutants into the environment.

The International Convention on Oil Pollution Preparedness, Response and Cooperation, Marpol 73/78 andthe Egyptian Environmental Law No 4 of 1994 and its Executive Regulations, as amended (the “EnvironmentalLaw”), address oil spill prevention, reporting and control and significantly expand liability, fine and penaltyexposure across many segments of the oil and gas industry. Such statutes and related regulations impose avariety of obligations on the Group related to the prevention of oil spills, disposal of waste and liability forresulting damages. For example, the Environmental Law imposes a number of obligations regarding theprevention, reduction and prompt notification of oil spills and the disposal of hazardous wastes. Moreover,the Environmental Law requires a company falling within its scope of application, to maintain certain registersincluding environmental and hazardous waste registers in order to record all information relating to theimpact of the relevant activities on the environment and the hazardous wastes and disposal methods of suchwastes. Failure to comply with these statutes and regulations may subject the Group to civil or criminalenforcement action, which may not be covered by contractual indemnification or insurance and could havea material adverse effect on the Group’s financial position, operating results and cash flows.


With respect to its operations in the Kingdom of Saudi Arabia, the Group is committed to complying withall applicable international and local legislation and ensuring that the Group’s employees and third-partypersonnel working on board or visiting the Group’s facilities are aware of, and required to comply with, theGroup’s environmental policy. The Group has issued a Saudi environmental management plan and aHercules-based supplemental schedule in November 2016 to all of its Saudi-based employees. The Saudi

ESMA para 28

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General Authority for Meteorology and Environmental Protection is the regulatory authority responsible forensuring compliance with Saudi environmental law. Other regulatory authorities with competence in themarine environment sector include the Saudi Coast Guard, the Saudi Civil Defense, the Saudi Ministry ofMunicipalities and Rural Affairs, the Saudi Ports Authority, the National Committee to Combat MarinePollution, and Saudi Aramco’s Marine Department and Environmental Protection Department.

The Saudi Environmental Law address oil spill prevention, reporting and control and imposes liability (withassociated fines and penalties) for breaches of the applicable oil and gas regulatory framework. Thisframework imposes a variety of obligations on the Group related to the prevention of oil spills, disposal ofwaste and liability for resulting damages. See Part II: “Risk Factors—Risks Relating to the Group’s

Business—The Group’s operations subject it to environmental regulations, non-compliance with which could result

in severe fines, increased costs, and suspension or permanent shut down of activities.”

Other

In relation to its loan agreements with EBRD, in November 2014 the Group entered a covenant to implementan Environmental and Social Action Plan agreed with the EBRD. This plan includes a number of health,safety and environment initiatives which the Group is currently implementing under its 2015 FacilitiesCo-ordination Agreement.

Contingency planning and emergency procedures have been developed for each rig. There is also aGovernment-run pollution prevention facility in Hurghada in the event of an oil spill as part of the nationaloil spill contingency plan. Emergency drills are undertaken, according to the relevant client’s procedures. SeePart II: “Risk Factors—Risks relating to the Group’s Business—The Group’s operations subject it to

environmental regulations, non-compliance with which could result in severe fines, increased costs, and suspension

or permanent shut down of activities.” and “—New laws and government regulations or changes to existing laws

and government regulations may add to costs, limit the Group’s drilling activity or reduce demand for its drilling

services”.

Health and Safety MattersAs described above, the Group is certified to various ISO standards. The Directors believe that suchcertifications demonstrate its commitment to quality and safety. The Group aims to achieve an injury- andaccident-free workplace with the involvement of its management, supervisors and employees.

The Directors believe that the Group has a good safety record in comparison to its peers and the Group hasa low total recordable incident rating. The Group has never had an employee fatality.

Egypt

The Group has implemented a comprehensive health and safety policy to ensure that all worksites are inconformity with applicable laws and regulations, to promote a healthy and safe working environment and toprevent injuries and impairments to the health of its workers. The Group also has an Operational Healthand Safety Committee, which meets on a monthly basis.

The Egyptian labour law is the main legislation regulating occupational health and safety in Egypt. Said lawand related decrees mandate that companies provide all necessary health and safety precautions, equipmentand machinery, as well as ensure the safety of the working environment from several dangers. Egyptian labourlaw and related decrees require that the Health and Safety Department at the Ministry of Manpower andImmigration be notified of the composition of the health and safety committee and the monthly meetingsheld and that the minutes of the meeting be inscribed in a register maintained by the Group’s Health andSafety Department. The Group is also subject to additional health and safety requirements regulated underother laws such as the Environmental Law which requires companies working in the oil and gas industry inter

alia to comply with the controls and procedures derived from the principles of the international oil and gasindustry made available by the competent regulatory authority. The Group’s supervisors are responsible forthe health and safety of all personnel that report to them.


The Saudi labour law and its implementing regulations comprise the primary legislation regulatingoccupational health and safety in the Kingdom of Saudi Arabia. These require businesses operating in the

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Kingdom of Saudi Arabia to provide the necessary equipment and machinery for employees to perform theirfunctions properly and to ensure the safety of the working environment generally, including an obligationfor the Saudi Branch to accept responsibility for the health and safety of its employees.

The Saudi Branch is required to employ a certain minimum percentage of Saudi citizens pursuant to a policyoperated by the government of the Kingdom of Saudi Arabia known as “Saudization”, which seeks toincrease the levels of employment amongst Saudi citizens. The applicable percentages may change from timeto time. The Saudi Branch must sponsor residence permits for its non-Saudi employees.

As the Group provides offshore services as a contractor to larger oil and gas clients, the Group’s environmentand health and safety procedures implemented on each of its rigs are subject to modification at the beginningof each contract. In the event that its clients’ procedures are more stringent than those operated by the Group,bridging documents are developed to amend specific rig environment and health and safety plans to meetclient requirements; in all other cases, the Group’s existing procedures are maintained.

Insurance and Contractual IndemnitiesThe Group is exposed to operating risks at its rigs and jack-up barge. The Group has insurance policies inplace in respect of all of its rigs, including (where applicable):

• marine hull policies for offshore rigs covering loss, damage or expenses;

• protection and indemnity;

• comprehensive general liability (contractual liability).

Coverage for damage to, including total loss or constructive total loss of rigs is based on an agreed amountfor each rig, and has a range of per occurrence deductible amounts. The Group also maintains insurance forpersonal injuries, damage to or loss of equipment and other insurance coverage for various business risks.The Group does not maintain insurance for lost revenue. The Group’s insurance policies typically consist oftwelve-month policy periods, and the next renewal date for its insurance programme is scheduled for April2017 and December 2017.

The Group’s drilling contracts provide for varying levels of indemnification from its clients, including withrespect to well control and subsurface risks. The Group’s insurance programme provides coverage inaccordance with the policies’ terms and conditions, to the extent not otherwise paid by the client under theindemnification provisions of the drilling contract, for liability for well control events and third-party claimsrelating to the Group’s operations, including wrongful death and other personal injury claims by its personnelas well as claims brought on behalf of individuals who are not our employees. Generally, the Group’s hulland machinery insurance provides liability coverage with respect to the offshore rigs of up to U.S.$10 toU.S.$55 million, with a per occurrence deductible of U.S.$0.5 million. The Group also typically has protectionand indemnity cover up to U.S.$100 million, with a minimum per occurrence deductible typically ofU.S.$10,000 (U.S.$100,000 on the KSA rigs). A general policy on the Group’s onshore rigs covers both theequipment and other risks up to a value of approximately U.S.$10 to U.S.$15 million, with a per occurrencedeductible of up to U.S.$250,000. With respect to the offshore rigs, the rights, title and interest of insurancepolicies relating to hull and machinery and certain policies covering protection and indemnity, are assignedto Arab International Bank as a requirement under different borrowings.

Under the Group’s drilling contracts, liability with respect to personnel and property customarily is allocatedso that the Group and its clients each assume liability for their respective personnel and property. However,in certain drilling contracts the Group assumes liability for damage to its clients’ property and the propertyof other contractors resulting from the Group’s negligence, subject to negotiated caps on a per occurrence orper event basis. The Group’s clients typically assume most of the responsibility for and indemnify the Groupfrom any loss, damage or other liability resulting from pollution or contamination arising from operationsunder the contract when the source of the pollution originates from the well or reservoir, including clean-upand removal, third-party damages, and fines and penalties. In some drilling contracts, however, the Groupmay have liability for third-party damages (including punitive damages) resulting from such pollution orcontamination caused by its gross negligence, or, in some cases, ordinary negligence, subject to negotiatedcaps on a per occurrence or per event basis and/or for the term of the contract or the Group’s indemnity maybe limited or unenforceable under applicable law in cases of gross negligence or wilful misconduct.

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The Group generally indemnifies the client for legal and financial consequences of spills of waste oil, fuels,lubricants, motor oils, pipe dope, paint, solvents, ballast, bilge, garbage, debris, sewage, hazardous waste andother liquids, the discharge of which originates from the Group’s rigs or equipment above the surface of thewater and in some cases from our subsea equipment. The Group’s contracts generally provide that, in theevent of any such spill from its rigs, its client is responsible for any fines and penalties.

The above description of the Group’s insurance programme and the indemnification provisions of its drillingcontracts is only a summary as of the date hereof and is general in nature. In addition, the Group’s drillingcontracts are individually negotiated, and the degree of indemnification it receives from operators againstthe liabilities discussed above can vary from contract to contract, based on market conditions and clientrequirements existing when the contract was negotiated and the interpretation and enforcement of applicablelaw when the claim is adjudicated. Notwithstanding a contractual indemnity from a client, there can be noassurance that the Group’s clients will be financially able to indemnify the Group or will otherwise honourtheir contractual indemnity obligations.

The Group’s insurance cost is U.S. dollar denominated; the Group has sought to leverage the growth of itsfleet to increase its buying power with insurance providers to try to limit growth in costs per rig.

See Part II: “Risk Factors—Risks relating to the Group’s Business—The Group’s business involves operating

hazards, and its insurance and indemnities from the Group’s clients may not be adequate to cover potential losses

from its operations”.

Information TechnologyThe Group has established an integrated data centre at its main office to manage its information technologyfunctions and is currently implementing the installation of Oracle’s ERP system. The modules for finance,supply chain, human capital management, and maintenance were live as of January 2017 in the Group’sEgyptian and Algerian units. The next phase of implementation includes setting up the modules for projectsand business intelligence analytics and the Group expects to roll out the system to its Kingdom of SaudiArabian unit during the first half of 2017. The Group also has a wide area network (“WAN”), which integratesthe systems of its main office with its rigs and other business units. The WAN is equipped with intrusionprevention systems and virtual private networking tools for security and remote connectivity purposes. TheGroup’s industry-specific activities are supported by automated software and database applications. TheGroup has not experienced any material information technology security breaches or failures in the last threeyears.

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EmployeesThe following table sets forth the number of employees of the Group, by rig or entity, as at the dates indicated:

As at 31 December––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014––––––––––– ––––––––––– –––––––––––

Admarine I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 58 —Admarine II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 58 53Admarine III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 105 108Admarine IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 103 112Admarine V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 118 120Admarine VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 106 —Admarine VIII and 88(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 — —Admarine 261(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 — —Admarine 262(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 — —Admarine 266(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 — —ADES 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 15 —ADES 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 — —Egypt Head Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 207 139Algeria Head Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 — —KSA Head Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 — —Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,285 770 532

Notes:(1) Admarine VIII and 88 crew figures are presented together because the two rigs are still not operational; once both units become

operational, the Group expects them to have around 100 employees each.(2) Admarine 261, 262, and 266 head counts include 12, 11, and 10 seconded personnel, respectively.

The Group has experienced no material labour disputes or strikes and believes employee relations to be good.As at the date of this Prospectus, the Group does not have any collective bargaining agreements with itsemployees or a trade union.

Training and DevelopmentThe Group is committed to promoting an environment of training and continuing professional developmentfor its employees. The Directors believe that in-house training helps it maintain its low-cost strategy withoutjeopardizing the quality and skill of its staff. The Group provides numerous training courses, some of whichare mandatory, covering, among others subjects, health, safety and environment awareness, emergencymanagement, medical, operational, lifting, drilling, marine, mechanical and electrical courses. The Groupoperates a graduate training programme to train future employees and executives. The Group also conductsannual performance appraisals of all its employees.

The Group is currently developing a new in-house training program in Egypt, ADES Academy. The Groupexpects to incorporate ADES Academy as a new entity within the Group. The Group envisions ADESAcademy as an extension of its existing training program to provide health, safety and environment, wellcontrol and technical and soft skill training both to its own employees and to others in the regional/Egyptianoil and gas sector, where the Directors believe the need for such training is not being fully met. The Groupintends to seek accreditations by industry associations such as IWCF, IADC and NEBOSH and hopeseventually to be able to offer certifications to training program participants. The Directors believe the ADESAcademy program could enhance the training of its own workers and its reputation in the industry, thoughthe Group does not envision this being a significant source of revenue as its principal purpose would be todevelop the Group’s workforce.

ADES has also developed a comprehensive staff retention program that is refined further every year toenhance its ability to retain valuable and contributing employees. Career progression options are defined foreach position within the Group by receiving a handbook upon hiring. Promotions are based on pastperformance and successfully passing an assessment. The Group acknowledges that its employees are its keypillar to success and therefore offers several development programs for its management and key employeesincluding specialized certifications and ongoing training in areas such as technical, soft skills and health,safety and environment. Employees usually receive additional upgraded benefits according to theiremployment grades, including medical coverage that is extended to the employee’s family, life insurance,

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allowances (including for certain travel, transportation, mobile expenses) as well as an annual profit sharingscheme. The Group also maintains a bonus pool of 10 per cent. of employee salaries, distributed quarterly torigs crews, administrative staff and management based on employee performance metrics. The Group alsoworks to motivate its employees through intra-company awards programs, including numerous individualawards, and rig of the month and rig of the year awards.

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PART VIII

MARKET OVERVIEW

The Oil & Gas Industry Value Chain ExplainedThe oil and gas industry value chain consists of two key segments, namely the exploration and production(“E&P”) or upstream segment, and the refining and processing or downstream segment. Exploration andproduction operating companies extract oil and gas resources from the ground and conduct basic processing,allowing for the resources to be transported and stored. The refining and processing operating companiesrefine and process the produced resources into products usable in a wide range of applications, such astransportation, power generation, and chemicals. ADES is a player within the exploration and productionindustry segment.

Three types of companies operate within the exploration and production segment: operating companies,oilfield services companies and equipment manufacturers.

• Operating companies acquire oil and gas resource exploration leases with the objective of finding andextracting oil and gas. Operating companies can also be roughly classified into three different categories:national oil companies, which are majority state owned oil companies that have grown out of largedomestic reserves; international oil companies (“IOCs”), which are typically large, North American andEuropean listed oil companies usually participating across the oil and gas value chain; and independents,which are typically exploration and production focused companies.

• Oilfield services companies provide operating companies with a wide range of specialized services andtechnologies across the life cycle of an oil and gas field. Oilfield services companies include those offeringcontract drilling services, well services, support vessels/tugs, logistics and supply services, engineering,construction and installation, and production and reservoir optimization or consulting services.

• Equipment manufacturers build equipment to support operating companies and oilfield serviceproviders. Equipment manufacturers include those building drilling rigs, platforms, offshore vessels,subsea infrastructure, wellheads, control systems, pipelines, process equipment.

ADES is an oilfield services company currently providing drilling and production services to operatingcompanies in Egypt, Saudi Arabia and Algeria.

The Oil & Gas Field LifecycleThe oil and gas field lifecycle consists of three stages, namely exploration, development and productionoperations and maintenance. Each presents its own set of challenges, risks and cost structure, and thereforeeach has different implications in terms of financial profitability and sustainability for operating companiesand oilfield services companies. The exploration stage requires significant capital investments by the operatingcompany and the chance of declaring commercial fields at this stage is low. Consequently, exploration activityis highly sensitive to oil prices and return on capital calculations. The development stage is less risky than theexploration stage and involves building the infrastructure to produce the resource. The operations andmaintenance stage is the least risky and involves producing the resource and maintaining the infrastructure.The operations and maintenance stage typically requires relatively little capital investment and is thereforethe most sustainable throughout periods of oil price volatility. The majority of the Group’s activities arewithin the production operations and maintenance stage and are therefore, the Directors believe, moresustainable and less susceptible to the termination of contracts than are exploration activities. ADESpredominantly provides services during the production stage of the oil and gas field life cycle.

79

Exploration Development Production

Global oil and gas demand

Oil price levels

Drilling Rig Drilling Rig Drilling Rig

Data acquisition (seismic survey)

Logistics and Supply vessels Logistics and Supply vessels Logistics and Supply vessels

secivreS lleWsecivreS lleW

Construction of production facilities Ongoing Maintenance

Installation

Pipeline EPC

woLmuideMhgiH

Source: Clarkson Research, March 2017

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Cycle

Most fields have continued to

produce. Operations and

maintenance have continued,

although some companies may

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Summary of the key stages of Offshore Field Development


Requirement to monetise

investment in oil and gas fields

sraey 55-5sraey 4-2

Requirement to replenish proven

reserves

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one year lag

Drivers

Description

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Activity due to

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Correction

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Services required

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Collection of survey data.

Analysis and interpretation.

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reserves

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production. Operations and

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may be sensitive to oil prices.

The recent reduction in oil prices

has caused oil companies to

scale back exploration.

Exploration Development Production


Oil price levels

Drilling Rig Drilling Rig Drilling Rig

Data acquisition (seismic survey)

Logistics and Supply vessels Logistics and Supply vessels Logistics and Supply vessels

secivreS lleWsecivreS lleW

Construction of production facilities Ongoing Maintenance

Installation

Pipeline EPC

woLmuideMhgiH

Source: Clarkson Research, February 2017

Length of Typical

Cycle

Most fields have continued to

produce. Operations and

maintenance have continued,

although some companies may

defer maintenance if possible.

Summary of the key stages of Offshore Field Development


Requirement to monetise

investment in oil and gas fields

sraey 55-5sraey 4-2

Requirement to replenish proven

reserves

Oil price levels, with approximate

one year lag

Drivers

Description

Risk of Reduced

Activity due to

Crude Oil Price

Correction

Key Offshore

Services required

3-5 years

Collection of survey data.

Analysis and interpretation.

Identification of oil and gas

reserves

Management of oil and gas

production. Operations and

Maintenance. Retrofit work.

Construction and installation of

production platforms, pipelines and

equipment. Preperation for

production.

Final investment decisions (FIDs)

may be sensitive to oil prices.

The recent reduction in oil prices

has caused oil companies to

scale back exploration.

80

Global E&P TrendsGlobal E&P spending declined by around 25 per cent. in 2015, the largest recorded annual drop, bothpercentage-wise and in nominal terms. The decline in 2016 was over 25 per cent., marking the first time inmore than 30 years with two years of consecutive spending decline. The combined spending reduction overthese two years is unprecedented, and is expected to impact both future supply and existing producing assets.Information on E&P spending for 2017 continues to be announced as oil companies finalise year-end results.This means that it is difficult to determine trends and any current estimates of results remain subject torevision. Furthermore, ascertaining separate figures for onshore and offshore spending by large IOCs isdifficult to calculate with accuracy as such companies do not tend to provide breakdowns of spending.Spending onshore is likely to rise in response to higher oil prices: for example, most US shale oil-focusedcompanies have announced increases in their spending and the onshore rotary count in North America hasgrown from 404 in May 2016 to 789 in March 2017 according to the Baker Hughes North America rotary rigcount report. As regards offshore spending, initial guidance from the largest IOCs in late 2016 suggested thatoffshore spending may decline by approximately 20 per cent. in 2017. However after the oil price rally toabove $50/bbl post-OPEC’s decision to cut production, several companies have made upward revisions tospending plans. The decline in offshore spending in 2017 is currently estimated at approximately 5 per cent.,but this is subject to possible further revision.

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Cost deflation also continues to impact the services supply chain. For example, as rigs complete the terms ofexisting legacy contracts, despite further expected spending reductions in 2017 in nominal terms, there ispotential for increased activity in volume terms. This has allowed ADES to leverage its strong procurementcapabilities to build a highly cost-effective fleet of offshore legacy rigs.

While oil prices remain low, as the graph below illustrates, demand for oil has continued to grow in recentyears, with estimated annual demand growth of 1.4 per cent. in 2016. In addition, 4 to 6m bl/d of newproduction needs to be brought to the market each year going forward in order to meet estimated demandgrowth in the face of supply depletion. This would likely require E&P activity to replace decaying wells andongoing workover and maintenance drilling.

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Global offshore oil production currently accounts for 28 per cent. of global oil supply. Although this figurerepresents a significant part of the supply-side, onshore production still represents the majority of oil supply.Offshore gas production currently stands at 31 per cent. of global gas production. Offshore gas productionis likely to grow at a more rapid rate than offshore oil production in the coming years, helped by a number ofstrategically important projects being prioritised by field operators (including some in the Levantine Basinoff Egypt/Israel). Since the downturn in global oil prices in 2014, the number of oil field development projectsreceiving final investment decisions (“FIDs”) has declined. However, field operators have also been makingefforts to redesign project scopes to make cost savings. This has also happened naturally as competition hasreduced the cost of fabrication/installation services for fixed and subsea production infrastructure. This helpsto reduce the break-even prices that oil companies use to assess the viability of potential field developments.

According to the BP Statistical Review of World Energy of June 2016, the Middle East had approximatelyhalf of the world’s proven oil reserves and accounted for nearly a third of oil production. According toClarksons Research, offshore activity in the MEA region is clustered around three main areas: the ArabianGulf, the Gulf of Suez and the Nile Delta Eastern Mediterranean Basin/Levantine Basin. Both in terms ofoffshore oil and gas production and in terms of rig activity, the Arabian Gulf is the largest of these threeclusters. Total oil production for the countries encompassing the Arabian Gulf (Saudi Arabia, Qatar, Bahrain,UAE, Kuwait and Iran) is around 22m bpd, constituting around 23 per cent. of global oil production (notethat this excludes Iraq, Egypt and other countries with operations in the Mediterranean).

Drilling Types and EnvironmentsAs shown in the figure below, drilling for oil and gas happens onshore and offshore. Onshore drilling takesplace on land and is the least complex form of drilling. Offshore drilling is more complicated due to the more

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83

complex conditions and logistics challenges. Jack-up rigs are used in shallow waters while floaters(semi-submersible rigs and drillships) are used in deepwater and ultradeepwater applications. Jack-up rigs arethe simplest offshore drilling units and include: standard, premium and high specification rigs. The Groupoperates onshore rigs and standard jack-up rigs. The Group generally operates new onshore rigs and legacystandard jack-up rigs which it operates predominantly in benign shallow water environments, on both oil andgas wells. There are no significant differences in rates between oil and gas jobs. The key differentiators arefield specific and depend on many factors such as water depth, required rig specifications such as loading,reservoir temperature and pressure, and level of competition.

Summary of the Roles of Mobile Drilling Units–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Number Water DepthVessel Type of units Order Book Range (feet) Key features

–––––––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––Jack-Up 553 98 Up to 500 A self-elevating drilling platform whose legs rest on the sea

bed when drilling. These are limited to shallow waters.

Semi-submersible 166 18 Up to 12,000 Floating platform that maintains its position over a wellthrough the use of an anchoring system or dynamicpositioning system.

Drillship 120 36 Up to 12,000 Similar to semi-submersibles, but greater capacity andmobility makes drillships well suited to offshore drilling inremote areas.


Legacy Jack-UpsGiven their high general and administrative cost structure and reliance on a costly maintenance approach(which tends to be entirely outsourced), big, global offshore drillers often find it uneconomical to keep oldlegacy assets in their fleet. During times of market oversupply, big global offshore drillers may opt to scraptheir legacy assets in order to structurally balance the market and to fend off competition from legacy assetfocused companies. Some global drillers have spun off separate companies which specialise in older assets;other assets have been sold to specialist legacy drillers, often regionally focused. Low cost, legacy assets-based,offshore drillers, on the other hand, aim to have the requisite cost structure and internal refurbishmentcapabilities and approach to profitability to deploy old legacy assets in the appropriate markets. Althoughnewbuild rigs typically obtain substantially higher day rates and have lower maintenance capital expenditurethan legacy rigs, their acquisition price is also substantially higher than a legacy rig, which can lead to a lowerrate of return.

84

43.1 per cent. of jack-up rigs globally are less than 10 years old; 6.9 per cent. are between 11 and 20 yearsold; 1.3 per cent. are between 21 and 25 years old; 1.8 per cent. are between 26 and 30 years old; and 46.9 percent. are over 30 years old.

The Group understands, based on Clarksons Research, there is expected to be an increase in roll-offs ofnewbuild jack-up contracts in 2017. Around 73 per cent. of the jack-up rigs scheduled to be delivered in 2017are under construction in China and a large volume of them will likely not be delivered or have their deliveryaccepted and may require change of ownership to be marketed effectively.

Global Offshore DrillingIn offshore drilling, the impact of the downturn in oil prices has been severe. Global average fleet utilisationlevels are currently around 64 per cent. for both floaters and jack-ups, with certain sub-segment and regionalvariances, representing the lowest utilisation levels since the post 1986-downturn in oil/oil services. Currentfleet utilisation is also significantly below the typical cyclical low points of previous downturns, which havebeen at around 80 per cent. to 85 per cent.. Currently the offshore drilling market is subject to structural

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overcapacity, implying that a significant supply-side response (stacking, scrapping, newbuild cancellations),in addition to demand recovery, is required to rebalance the market and bring utilisation back to moresustainable levels.

Over the last couple of years there has been a dramatic increase in roll-offs of newbuild jack-ups. This trendis expected to continue. However the Directors believe that most of the new rigs will likely require considerablyhigher day rates as compared to legacy assets in order to generate acceptable economic returns. The Directorsbelieve that the nature of the markets in which the Group operates, i.e. dominated by legacy rigs, shouldmoderate downward pressure on day rates from the delivery of new rigs. The graphs below show the dramaticincrease in the number of cold and ready stacked jackups and floaters since 2008.

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As a result of such market conditions, jack-up day rates have fallen by between 50 and 60 per cent. since 2014,depending on region and specification. Rates for standard specification rigs built in the 1980s build cycle havedropped to levels on a par with the period 2010 to 2011. There have been some signs that 2017 could be amore active year for drilling unit contracts. Negotiations underway as of early 2017 have supported a marginalimprovement in rates assessments shown below. However, it is not certain whether this will be sustained inthe remainder of 2017.

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Since the downturn in the oil price began in late 2014, utilisation of rigs has fallen, and accordingly the numberof cold-stacked drilling rigs has risen to include at least 131 idle offshore rigs, of which 67 are jack-ups and64 are floating rigs. Cold-stacking is a process whereby rigs are parked in a dedicated port or offshore area,de-manned and usually preserved using de-humidifiers and other technologies. The process is designed toreduce operating costs during a period in which the rig is not utilised. In some cases, large amounts of effortwill have gone into ensuring a rig can be reactivated economically if and when it is able to win a drillingcontract. However, certain older rigs may be preserved less well, for instance if the owner deems that they areunlikely to be able to compete against more modern rigs in any future market cycle. In this sense, cold-stackingcan sometimes effectively remove the rig from future supply, whilst delaying actual scrapping of the rig. Thisis something which the Group takes into account in its careful selection of rigs for acquisition. Rigs may alsobe warm-stacked (i.e. kept within an operational state, in their current location and ready for immediatedeployment, using a small lay-up crew to run equipment and carry out preventative maintenance, enablingthe rig to be marketed for contract).

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As the below graph demonstrates, demolition of drilling rigs (or sale for conversion for other purposes, suchas mobile production units) has increased since the oil price downturn. Twelve jack-ups and 28 floating rigswere removed from the fleet either via scrapping or conversion or loss in 2016. This is positive for thesupply-demand balance globally. However, much more would be necessary to balance the market withoutany substantial improvement to global demand. However, demolition is hindered slightly by the low steelvolume in the average rig, particularly in the case of jack-ups. This can make it difficult to scrap rigs, if, forexample, the cost of hiring tugs to relocate the rig to a demolition yard (Turkish yards have been the mostcommon destination) is greater than the realisable scrap steel value from the sale of the rig.

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Middle East Offshore DrillingThe rig count in the Middle East has increased over the long term and while the number of active rigs deployedin the region has decreased each year since 2014, such decreases have been less dramatic than in certain otherregions. The Middle East (as defined in the report) was the only region where there were more active jack-uprigs deployed in 2016 than there were in 2008. Between year start 2009 and February 2017, Clarksons Researchcalculates that the number of jack-ups deployed in the Middle Eastern Gulf region increased by 22 per cent., ascompared to an over 90 per cent. reduction in the U.S. Gulf of Mexico and a 45 per cent. reduction on the UKcontinental shelf. There are currently around 106 rigs operating in the region, with the majority being standardlegacy jack-ups. As has been the case in the rest of the world, both rates and utilisation in the Middle Eastmarket have come down since peak-levels in 2014, but the reduction in activity in MEA has been less dramaticthan in other regions. Overall, offshore rig utilisation in the region is currently slightly above 77 per cent., broadlyin line with levels also seen internationally. The low utilisation mainly seems to be a result of a strongly increasingsupply side, since the drop in active rigs (demand) has been moderate. This contrasts with market developmentsin other regions, where the main driver of low utilisation has been sharply declining demand.

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Rig rates in the Middle East/MEA region are down around 50 per cent. from peak level, broadly in line withthe rate-reductions seen elsewhere. Leading-edge day rates for jack-ups in the region seem to be in theU.S.$60,000 to U.S.$80,000 range, depending on rig specification, contract duration, country, and whetherthe contract is new or part of a “blend-and-extend” deal. The Group’s management estimates that MEAannual offshore rig contracts total about U.S.$5.3 billion considering the number of rigs and estimated dayrates, which may vary across a range of geographies, rig types, and type of work.

The majority of the oil fields and a large share of the gas fields in the region are legacy fields in shallowwaters, mainly in the Arabian Gulf. These fields are highly drilling-intensive due to significant need forredevelopment, enhanced oil recovery (which uses various methods to stimulate additional production froma field, typically involving the injection of gases, chemicals or heat via steam into the reservoir), and drillingof new production wells (infill drilling). At the same time, there are a significant number of fields (mainlygas) scheduled to be developed in the future. Also, all of the countries encompassing the Arabian Gulf havesignalled high future growth ambitions, both for oil and gas. Fields in the region still have generally lowbreak-even levels (with the majority of fields in the Arabian Gulf having break-even levels below USD 20/bbl),although there are a number of fields with higher breakevens – likely a result of more advanced technologiesdeployed in respect of the development undertaken in that area. As a result, it is expected that future demandfor offshore drilling rigs may increase in the coming years. The active rig count could increase if reduceddrilling costs encourage the more rapid progress of the long-term plans of Saudi Arabia or Iran, which wouldinclude additional drilling. The recent lifting of sanctions against Iran, combined with the country’s stronggrowth aspirations, is also expected to underpin this development.

Global Onshore DrillingThe onshore drilling market has also been negatively impacted by the downturn in oil prices. Total numberof onshore rigs has dropped from 1,023 in January 2014 to 727 in January 2017 according to the Baker Hughesinternational rotary rig count report. In November 2016, OPEC agreed to its first production cut in morethan a decade. The majority of this cut is expected to be focussed on Saudi Arabian onshore fields, but othermembers (bar Iran and others facing existing outages such as Nigeria) have also agreed quotas. The OPECcut has boosted the oil price and encouraged spending onshore in the United States, including with regardsto shale. If this results in substantial growth in shale production, there is a risk that this onshore productioncould offset the reduction in output agreed by OPEC. The decline in the number of onshore rigs in the MEAregion has been less significant, declining from 466 in January 2014 to 402 in January 2017 according to theBaker Hughes international rotary rig count report.

The Group’s Core MarketsThe Group’s core markets consist of Egypt, the Kingdom of Saudi Arabia and Algeria. The Group is a marketleader in the Egyptian offshore drilling market and has established itself as an operator in the Saudi offshoredrilling market. The Group has also entered the Algerian onshore drilling market. Below is a brief discussionof each of the core markets.

EgyptAccording to Clarksons Research, total oil production and reserves in Egypt were estimated to be 700,000b/d and 3.5 billion barrels respectively in 2016. Total natural gas production and reserves were estimated tobe 45.6 billion cubic meters and 1.8 trillion cubic meters respectively in 2016.

Egypt is the largest (by volume) offshore oil and gas producing country in the Mediterranean. Offshore activityin Egypt is concentrated in two main areas: the Egyptian Mediterranean/the Nile Delta Basin and the Gulfof Suez. Egyptian offshore oil production is almost entirely located in the Gulf of Suez, whereas theMediterranean offshore activity consists mainly of gas fields. Egypt today produces just in excess of 250kboe/d of offshore oil, derived from 59 producing fields, and slightly above 4,000 mcf/d of offshore gas from40 gas fields. Offshore drilling is carried out mostly by legacy rigs.

Onshore production is primarily in the Western Desert and, to a lesser extent, in the Nile Delta, from mainlymarginal fields next to existing structures.

Oil and gas is a priority sector for Egypt as it is a source of foreign currency and investments. Being a netimporter of oil and gas in various forms (for example, petroleum products and liquefied natural gas) in

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continued economic circumstances where the country is unable to balance such imports against its exports,Egypt is suffering from an ongoing balance of payment crisis.

Egypt’s existing production comes mainly from shallow-water fields. Average production cost in the Gulf ofSuez shallow offshore fields is believed to be on average less than $20/bbl.

Egypt Gulf of Suez: oil & gas fields and drilling rig deployment, Clarksons Research, February 2017

The jack-up rig count in Egypt has been fairly stable over time, fluctuating between 15 and 20 units. Currently,there are 12 active jack-ups in Egypt working on contracts and 6 units are idle (some of which have been coldstacked). As most of the existing production comes from legacy fields which are drilling-intensive, forwarddemand for jack-ups is anticipated to be fairly stable (naturally depending somewhat on oil prices, as in allother regions).

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Significant oil discoveries have been made in recent years in deep waters, with the most significant being ENI’sZohr discovery in 2015 in 1,250 m of water depth. Zohr has an estimated 30,000 bcf reserves and is the largestgas field in the Mediterranean Sea to date. By executive governmental orders, ENI, through its local jointventure (“Petrobel”), has given the field’s development plans high priority, with first gas scheduled for 2019.Phase 1 of the field development has already been initiated with key contracts awarded to Saipem (drillingand SURF), OneSubsea (SPS) and Aker Solutions (umbilicals). Total phase 1 capital expenditure is expectedto be approximately U.S.$ 3.5bn and to consist of at least six subsea ‘Christmas trees (collections ofproduction equipment which sit on the wellhead at the seafloor and control the production of fluids from awell, which are then piped to a remote fixed platform or shore-side hub). Future development phases arelikely to involve significant further investment.

The Zohr discovery is located fairly close to other significant discoveries in Israeli and Cypriot waters,including; Tamar, Leviathan and Aphrodite. This is likely to strengthen interest amongst IOCs for furtherexploration activity in surrounding areas. This is a fairly new region with regard to deepwater activity, andthe combination of field developments (e.g. Zohr and Leviathan) and increasing exploration activity overtime could lead to incremental demand for floater rigs in the longer term.

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Mediterranean Egypt: Mediterranean Oil and Gas Activity and Concession Map 2016, Clarksons Research

Key industry stakeholders include the Ministry of Petroleum and its affiliates EGPC, Egyptian Natural GasHolding Company (“EGAS”) and Ganoub El Wadi Petroleum Holding Company (“GANOPE”) whorepresent the Egyptian government within all concessions in Egypt. There are also a wide range ofinternational and local operating and services companies.

Service companies are required to sign up as a supplier at EGPC, EGAS and GANOPE as well as at eachjoint venture production company in order to participate in tenders and provide any oilfield services.

The largest jack-up contractors in Egypt are ADES and Shelf Drilling. The Group is in an entrenched marketleadership position, operating seven out of the 13 offshore rigs in Egypt with close to a thousand employees.Shelf drilling owns four of the remaining rigs (two on contract), with the rest fragmented amongst single rigowners.

ADES plans to deploy additional offshore rigs and MOPU in line with its focus on shallow water non-harshenvironments, as well as to venture into deep-water opportunities through an asset-light model joint venturewith a deepwater drilling company.

Saudi ArabiaSaudi Arabia is one of the world’s largest petroleum producers and by far the largest producer in the MiddleEast. It is a largely oil and gas reliant economy with the sector accounting for around 42 per cent. of GDP in2016. The country’s oil reserves were estimated to be 266 billion barrels in 2015. According to OPEC, Saudi’scrude oil production was around 9.98m bbl/d (as of February 2017), although the agreement by OPEC tocut production is likely to result in a reduction of output, primarily from older onshore fields. Including leasecondensates and natural gas liquids (short-chain hydrocarbons which typically emerge from the well as gasesdissolved in the crude oil), total oil production in Saudi Arabia in 2015 was 12.4 mbl/d and is estimated togrow slightly in 2016. Average production cost in Saudi Arabia is believed to be on average less than $10/bbl,the lowest breakeven production costs globally in 2016. Saudi Arabia’s natural gas production and reserveswere estimated to be 106.4 billion cubic meters and 8.3 trillion cubic meters respectively in 2016.

A recent OPEC agreement with Saudi Arabia has resulted in a production cut of 0.5 mbbl/d in 2017 in aneffort to boost prices while maintaining current market share expected to come from onshore fields. SaudiAramco aims to grow production by 20-30 per cent. for the longer term and Saudi Arabia is focused ondeveloping natural gas reserves by investing U.S.$10 billion in gas exploration to reach 17.8 bcfd by 2020.

The majority of Saudi’s oil production is onshore. However, the offshore component has increased graduallyfrom around 24 per cent. in 1980 to just short of 30 per cent. currently, implying a steady offshore activityincrease.

Saudi Arabia’s offshore fields are largely shallow water, non-harsh environments. The country’s four largestoffshore fields are Safaniya, Manifa, Berri and Marjan, discovered in 1951, 1957, 1964 and 1967, respectively.These legacy fields are still subject to heavy usage of offshore drilling rigs, and it is anticipated that this willcontinue also going forward, as continued redevelopment work to support production volumes is continued.

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Middle Eastern oil & gas fields and drilling rig development, February 2017.

Saudi Arabia has steadily been growing its active offshore (jack-up) rig count since 2000, with very stronggrowth in the period from mid-2005 to late-2008 and mid-2011 to mid-2014. Demand for additional offshoredrilling off Saudi Arabia has come from two sources. The first of these has been demand connected to Saudi’sreconditioning and reactivation of offshore fields which were partially or fully shut-in during the 1980s and1990s in response to previous market cycles. The prime example of this is the offshore Manifa field, whichwas restarted to provide additional crude oil feedstock volumes to recent additions to Saudi Arabia’s refiningcapacity, in keeping with the country’s aim to increase its exports of refined oil products. The second majordriver of additional rig demand has been the Wasit gas project, a major project to add to the country’s offshore

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production of gas. This project involves the development of the Arabiyah and Hasbah fields. It is intendedto increase Saudi Arabia’s gas production by more than 20 per cent., primarily to provide additional gas forpower generation, which has historically required large volumes of inefficient direct crude oil burning. Thedevelopment of these two fields boosts Saudi Arabia’s requirements for drilling and maintenance on fields inoperation going forward.

From February 2011 to peak level in October 2014, Saudi grew its rig-count by 109 per cent.. Since thebeginning of the downturn, active rig count is only down marginally (Feb 2011 to September 2016 growthwas still 95 per cent.), and in recent periods, the country’s rig count has even grown slightly from low levelsin spring/summer 2016. Currently, there are 43 jack-ups in Saudi Arabia, of which 41 are active. This ismarginally down, from a peak level of 47 units.

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Offshore rig utilisation remains high in Saudi Arabia, although this is somewhat supported by the fact thatrigs that are idle due to repair/survey work or otherwise off-hire are typically mobilized to yards in the UAEor Qatar, thus supporting the utilisation figures for Saudi Arabia.

Saudi Arabia has set ambitious production growth targets both for oil and gas, aiming to grow productionbetween 20 to 30 per cent. for the longer term (2020 to 2030). Targeted production levels are subject to revisionand to political conditions, as well as global supply-demand balance and Saudi’s desired oil politics/role inOPEC. Nevertheless, ambitious growth targets combined with a large share of production coming fromdrilling-intensive legacy assets, could lead to a continued strong demand for offshore drilling. If Saudi is toincrease its production in line with indicated longer term goals, this would likely necessitate strong growth inthe country’s active rig count.

The Saudi rig market is also one of very few (if any) markets in the world where rig fixing activity has remainedhigh through the downturn. Both through 2015 and 2016, numerous rig fixtures were entered into by Aramco,mainly for long term contracts (with a typical average contract duration is of approximately three years). Dayrates have declined in Saudi Arabia (as has been the case globally), but to a somewhat lesser extent thanelsewhere. Saudi Aramco has strict sourcing requirements, and requires more than ten years of operationaltrack record to be qualified as a supplier. As such, the Saudi rig market has some barriers to entry, makingcompetition more limited than in other regions/countries. The largest rig contractors in Saudi today (bynumber of active rigs) are Rowan, Ensco, Shelf Drilling and Noble.

Key industry stakeholders include Saudi Aramco, the national oil company and the direct descendent of theChevron subsidiary that won the concession in Saudi Arabia back in 1933. Now the world’s largest oilcompany, and with the largest reserves, it is recognised as a professional, well run organisation with strongonshore and shallow offshore technical expertise. Aramco has oil and gas production capacity of c.12mboe/dand combined reserves of 313bn boe.

AlgeriaAlgeria is the leading natural gas producer in Africa, with the 11th largest natural gas reserves globally; it isthe second-largest natural gas supplier to Europe, and is one of the top three oil producers in Africa accordingto the EIA. Algeria also holds the third-largest proven crude oil reserves in Africa, all of which are locatedonshore because there has been limited offshore exploration. The country also has the third largest recoverableshale gas resources.

Algeria is a net energy exporter and its economy is heavily reliant on revenues generated from its hydrocarbonsector, which account for about 30 per cent. of the country’s gross domestic product, more than 95 per cent.of export earnings, and 60 per cent. of budget revenues.

Algeria’s proven oil reserves stood at 12.2bn barrels in 2016. Total oil production from the country in 2016 isestimated to have been 1.56m bpd. The country’s natural gas production and reserves were 83.0 billion cubicmeters and 4.5 trillion cubic meters respectively in 2016. According to Sonatrach, the national oil company,roughly two-thirds of Algerian territory remains underexplored or unexplored. Most of these areas are inthe north and offshore. In December 2016, Sonatrach announced plans to increase output of natural gas by20 per cent. over the next four years.

The bulk of production in Algeria takes place in maturing fields, which face heavy rates of decline. However,its territory remains relatively underexplored, with potential in both known and frontier basins and offshore.The three largest oil fields, Hassi Messaoud, Ourhoud, and Hassi Berkine contribute to about half of totalcrude oil production and are among the largest fields in Algeria.

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Additionally Algeria is believed to hold vast recoverable shale gas resources, around 19.8tcm according tothe EIA, along with substantial shale oil resources, which are estimated at 5.7bn bbl.

Key industry stakeholders include Sonatrach, Algeria’s NOC. Sonatrach, dominates the country’shydrocarbon sector, owning roughly 80 per cent. of all hydrocarbon production. By law, Sonatrach is givenmajority ownership of oil and gas projects in Algeria. More than eight international operating companiesoperate in partnership with Sonatrach.

The government recently approved amendments to Algeria’s hydrocarbon law that included fiscal incentivesfor foreign companies to invest in untapped exploration areas, particularly offshore and in areas believed tocontain unconventional resources. Target production by 2020 is 2 million bbl/day.

There are currently approximately 100 operating onshore rigs in Algeria. Sonatrach, through its subsidiaries,ENTP—Entreprise Nationale des Travaux aux Puits and ENAFOR—Entreprise Nationale de Forage, is alsoa provider of drilling services.

The Group operates two onshore rigs in Algeria and acquired ADES I in March 2017 bringing its total rigcount in Algeria to three, with further investment in onshore rig scale-up contemplated in the near future.

KuwaitKuwait’s production of oil and gas is primarily onshore. There was one sub-commercial discovery madeoffshore in the 1960s, but otherwise production within Kuwait itself is onshore. Output of oil from fieldswithin Kuwait is estimated to have been 2.84m bpd in 2016, whilst the country also produced 1.51bn cubic

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feet per day of gas output. Kuwait’s proven reserves, including reserves in the Neutral Zone, were estimatedby the Oil & Gas Journal to be 102 billion barrels (2016), placing it sixth, in terms of reserves, globally. Thebulk of Kuwaiti production comes from the large (onshore) Burgan field, which is understood still to producein excess of 1.5m bpd, despite the fact that it initially began production in 1948. Although this is one ofseveral Kuwaiti onshore fields discovered in the first half of the twentieth century, there has been more recentexploration activity. Baker Hughes reports 52 land rigs working onshore Kuwait as of January 2017, up from33 at the start of 2013. The additional exploration activity met success with reports in March 2016 of an“encouraging” new discovery at Al-Jathathil, according to the Kuwait National Oil Company.

Kuwait also takes a share of production from the neutral zone between Saudi Arabia and Kuwait. There isone large producing discovery offshore the neutral zone (the al-Khafji field, a northern extension of thereservoir of Saudi Arabia’s giant Safaniya field) and two smaller producing fields, Hout and Dorra. Onshore,production in the neutral zone is primarily from the Chevron-operated Wafra field. However, disputes haveresulted in the closure of neutral zone fields since early 2015, with zero production, although resumption ofproduction may commence soon.

The Kuwait National Oil Company (“KNOC”) is the upstream NOC in the country and controls theoperations of fields onshore in Kuwait. The offshore neutral zone fields are managed by al-Khafji jointoperating company, a 50-50 joint venture with Saudi Aramco.

New development in Kuwait has historically been minimal because of a ban on foreign ownership of fields.Kuwait has tentatively proposed “Project Kuwait,” a plan to attract greater foreign investment and raisepotential production capacity to 4mbpd. This was first mooted back in 1997, but has been held up for severalyears by the national assembly. If this issue were to be overcome, such could potentially facilitate more rapiddevelopment of recent onshore discoveries such as al-Jathathil, Sabriya or Umm Niqa. Foreign companiesare permitted as service providers to KNOC to provide drilling or enhanced oil recovery services.

Key onshore rig contractors in Kuwait include Burgan Drilling, Weatherford Drilling, Grey WolfInternational, ADMASCO, and NDSC.

CompetitionThe offshore and onshore contract drilling industry is highly competitive. Drilling contracts are, for the mostpart, awarded on a competitive bid basis. Price competition is often the primary factor in determining whichcontractor is awarded a contract, although quality of service, operational and safety performance, equipmentsuitability and availability, location of equipment, reputation and technical expertise also are factors.

While the Group’s offshore rigs currently operate in shallow water non-harsh environment markets wherestandard specification rigs are common, the Group’s standard specification rigs lack certain capabilities andtechnology that can be found on higher specification rigs and that may increase the operating parametersand efficiency of higher specification drilling rigs to make them compatible with the environments in whichthey operate. Moreover, many of the Group’s competitors have fleets that include high specification rigs, andmay be more operationally diverse if also suited to other, more demanding environments than those in whichthe Group operates and where they are likely able to command a higher day rate. If the demand for offshoredrilling rigs were to continue to decrease for a prolonged period of time, it is possible that higher specificationrigs would begin to compete with standard specification rigs for the same contracts. In that case, higherspecification rigs would have an advantage over standard specification rigs in securing those contracts anddemand for and utilisation of standard specification rigs may decrease. Conversely, the higher initialinvestment required to acquire a higher specification rig may limit return on investment.

Competition in the onshore drilling market can be more rigorous as compared with the offshore drillingmarket as onshore drilling is less complicated in terms of operations and has lower barriers to entry. Hence,a wider range of players, including affiliates of national oil companies, local private companies andinternational companies, compete for onshore drilling contracts as compared with the offshore drilling market.

The Group also competes against affiliates of NOCs such as EDC (an affiliate of EGPC) in Egypt, Sonatrachin Algeria, some Saudi Aramco operated rigs in the Kingdom of Saudi Arabia, and, in the future, maycompete against rigs operated by a recently announced drilling joint venture between Saudi Aramco andRowan Companies in the Kingdom of Saudi Arabia. To the extent such companies may enjoy preference inbidding, the Group may be at a competitive disadvantage.

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The Group’s principal competitors in jack-up rig offshore drilling in Egypt included as of January 2017 (i)Shelf Drilling, which operated four rigs; (ii) EODC, which operated two rigs; (iii) Egyptian Drilling, a jointventure between EGPC and Maersk, which operated one rig; (iv) KS Energy Systems, which operated one rig;(v) Pyramid Drilling Int., which operated one rig; (vi) Saipem, which operated one rig; Shiv-Vani, whichoperated one rig; and (vii) Sino-Tharwa, a joint venture between EGPC and Sinopec, which operated one rig.

The Group’s principal competitors in jack-up rig offshore drilling in the Kingdom of Saudi Arabia includedas of January 2017: (i) Rowan, which operated ten rigs; (ii) Shelf Drilling, which operated six rigs; (iii) Ensco,which operated five rigs; (iv) Seadrill, which operated four rigs; (v) Nabors, which operated four rigs; (vi)Noble, which operated four rigs; (vii) Arabian Drilling, which operated four rigs; (viii) EDC, which operatedtwo rigs; (ix) Saipem, which operated two rigs; and Saudi Aramco, which operates two rigs itself.

The Group’s principal competitors in onshore drilling in Algeria include Entreprise Nationale des Travauxaux Puits (ENTP), Entreprise Nationale de Forage (ENAFOR), Nabors, KCA Deutag and Sinopec.

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PART IX

OPERATING AND FINANCIAL REVIEW

The following discussion and analysis is intended to assist in the understanding and assessment of the trendsand significant changes in the Group’s results of operations and financial condition. Historical results maynot indicate future performance. Some of the information in this section, including information in respectof the Group’s plans and strategies for the business and expected sources of financing, containforward-looking statements that involve risk and uncertainties and are based on assumptions about theGroup’s future business. Actual results could differ materially from those contained in such forward-lookingstatements as a result of a variety of factors, including the risks discussed in Part II: “Risk Factors” includedelsewhere in this Prospectus. Potential investors should read Part V: “ImportantInformation—Forward-Looking Statements” for a discussion of the risks and uncertainties related to thosestatements and should also read Part II: “Risk Factors” for a discussion of certain factors that may affectthe business, results of operations, or financial condition of the Group.

The following discussion and analysis should be read in conjunction with Part X: “Historical FinancialInformation of the Group” and the related notes thereto, included elsewhere in this Prospectus. The historicalfinancial information in Part X has been prepared in accordance with International Financial ReportingStandards (“IFRS”). The financial information set out below and referred to in this section has beenextracted without material adjustment from the Historical Financial Information or has been extractedwithout material adjustment from the Group’s accounting records, which formed the underlying basis of thefinancial information included in the Historical Financial Information, unless indicated otherwise.

This section also contains non-IFRS financial measures and operational key performance indicators Thesemeasures are used by the Group’s management to monitor the underlying performance of the business andthe operations. The non-IFRS financial measures are not measurements of performance or liquidity underIFRS or any other generally accepted accounting principles. Investors should not place undue reliance onthese non-IFRS financial measures and should not consider these measures as: (a) an alternative tooperating income or net profit as determined in accordance with IFRS, or as measures of operatingperformance; (b) an alternative to cash flows from operating, investing or financing activities, as determinedin accordance with IFRS, or a measure of the Group’s ability to meet cash needs; or (c) an alternative toany other measures of performance under IFRS. These measures are not indicative of the Group’s historicaloperating results, nor are they meant to be predictive of future results. Since all companies do not calculatethese measures in an identical manner, our presentation may not be consistent with similar measures usedby other companies. The Group’s method of calculating certain operational key performance indicatorsdiffer from the method used by others in its industry, including the calculations referred to in the industryand market reports relied on in Part VIII: “Market Overview” in this Prospectus, and so may not becomparable to such other key performance indicators.

Unless otherwise indicated, in this section changes or differences in figures are calculated in U.S. dollars,then rounded to the nearest tenth of a million U.S. dollars.

OverviewThe Group together with its subsidiaries, including its primary operating company, ADES, is a leading oiland gas drilling and production services provider in the Middle East and Africa (“MEA”), that focuses oncreating value for its clients by offering competitive rates for services through leveraging its low cost businessmodel. The Group’s evolving portfolio of services primarily includes offshore and onshore contract drillingor workover and production services. The Group currently operates in Egypt, Algeria and the Kingdom ofSaudi Arabia and has its registered office in Dubai, UAE. The Group has a total workforce of over1,200 employees. The Group operates a fleet of nine jack-up offshore drilling rigs, three onshore drilling rigs,a jack-up barge, and a mobile offshore production unit (“MOPU”), which includes a floating storage andoffloading unit (“FSO”).

The Group’s current business model relies largely on legacy offshore assets that the Group has generallypurchased and refurbished and that the Directors believe are suitable for the shallow water, non-harshenvironments in which the Group currently operates and the needs of the clients the Group serves. The Groupalso benefits from leveraging a lean and low cost operating model, relying on a skilled, low cost, primarily

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Egyptian workforce, local suppliers and low cost operational headquarters that make administrative expensescompetitive. As a result of these factors, the Group has been able to maintain robust profitability and levelsof financial returns whilst offering competitive rates to its clients.

The Group’s clients include Saudi Aramco in the Kingdom of Saudi Arabia, SH-FCP (an ENI joint venturewith Sonatrach, operating in Algeria) and Groupement Sonatrach AGIP (a Sonatrach joint venture withAGIP, an ENI subsidiary, operating in Algeria), the Egyptian state-owned General Petroleum Company(“GPC”) and BP, ENI and NPC joint venture companies with the Egyptian General Petroleum Corporation(“EGPC”). The Group provides drilling and related services to its clients on a “day rate” contract basis. Undersuch contracts, the Group provides a drilling rig and rig crews and receives a set amount of remuneration foreach day that the rig is operating, on standby, and (in some cases) for certain days when the rig is undergoingmaintenance. In addition, the Group may receive a day rate or fixed sum for days when the rig is being moved.The Group focuses on contracts in the operations and maintenance segment of the oilfield cycle in operationaland developing oil fields, where it believes there is a relatively steady requirement for workover services.The Group’s estimated total backlog was U.S.$501.2 million as of 31 December 2016, as compared toU.S.$224.5 million as of 31 December 2015, and U.S.$117 million as of 31 December 2014. This representsa compound annual growth rate (“CAGR”) of 107 per cent.

The Group has significantly grown its offshore rig fleet since 2012 primarily through acquisition andrefurbishment of legacy rigs for offshore services and the purchase of new-build rigs for onshore services.The Group has grown its fleet from one jack-up barge in 2011, to one jack-up barge and three offshore rigsin 2014, to one jack-up barge, one MOPU, nine offshore rigs and three onshore rigs as of the date of thisProspectus. The Group acquired its third onshore rig, ADES 1, from AMAK on 30 March 2017 for whichthe Group is currently awaiting results of ongoing tenders in Algeria. The Group is also currently negotiatinga lease to purchase agreement with a bank under which it would lease an existing high specification onshorerig, ADES 10; the Group expects this rig would operate in Egypt beginning in Q3 2017. In 2016, the Groupsigned a term sheet regarding a joint venture with a deepwater drilling company whereby the Group wouldjointly operate the partner’s drill ship in the Eastern Mediterranean and is in current discussions with thepotential partner. In March 2017, ADES signed term sheets with leading South East Asian parties, by virtueof which ADES will be able to market new build offshore jack-up rigs, including high specification rigs, withthe aim of securing client contracts to be entered by ADES. Subject to the execution of a client contract, theparties shall enter into a lease agreement for the respective rig with the option for ADES to purchase the rigduring the term of the lease contract at a pre-determined price.

The Group’s total revenue was U.S.$134.1 million in the twelve months ended 31 December 2016, as comparedto U.S.$101.0 million in the twelve months ended 31 December 2015, and U.S.$75.2 million in the twelvemonths ended 31 December 2014. This represents a CAGR of 34 per cent. The Group’s EBITDA wasU.S.$72.0 million in the twelve months ended 31 December 2016, as compared to U.S.$42.0 million in thetwelve months ended 31 December 2015, and U.S.$32.4 million in the twelve months ended 31 December2014. This represents a CAGR of 49 per cent.

Factors Affecting Results of Operations and LiquidityThe primary factors that have affected the Group’s results of operations during the years ended 31 December2016, 2015 and 2014 and that can be expected to affect the Group’s results of operations in the future, are:(i) day rates and utilisation rates; (ii) acquisitions and the number of fleet assets; (iii) currency volatility andthe availability of U.S. dollars; (iv) the Group’s cost base; (v) expiration and renegotiation of existing contracts;(vi) growth of receivables and aging of accounts with respect to some clients.

Day rates and utilisation ratesThe main driver of revenue for oil and gas drilling service providers, such as the Group, is the ability of suchproviders to maximise both the day rates paid by clients and the utilisation rates of the rigs and otherequipment.

Day rates are generally linked to specific markets and types of oil fields and can fluctuate widely, dependingon the market where the equipment is operating. Operating day rates generally differ from client to client andfrom market to market. As of January 2017, the Group’s operating day rates for its offshore jack-up rigs werewithin the range of U.S.$45,000 to U.S.$65,000, with rates for its Egyptian rigs generally towards the lowerend of that range and rates for its rigs in the Kingdom of Saudi Arabia towards the upper end; operating day

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rates for the Group’s two onshore rigs were within the range of U.S.$20,000 to U.S.$30,000; the operatingday rate for the Group’s MOPU was within the range of U.S.$65,000 to U.S.$75,000; and the operating dayrate for the Group’s jack-up barge was within the range of U.S.$15,000 to 25,000. The Group has experienceda decline in operating day rates from 2014 to 2016. The decline in operating day rates was a result largely oftwo factors. First, the Group introduced onshore drilling and workover services in 2016. The Group’s onshoredrilling operations are typically billed at lower day rates, which reduced the average operating day rate for theGroup’s fleet as a whole. The second key factor was the introduction of client discounts in day rates for theGroup’s offshore drilling and workover services for the purpose of lengthening contract terms with existingclients and to accommodate for recent oil market conditions. In current market conditions, certain of theGroup’s clients have sought to lock in contracts with lower day rates, and the Directors believe thatmaintaining a slight discount to overall market rates may help the Group maintain its competitive advantageso long as it can be supported through a low cost structure. While the Company’s overall revenue in 2014 to2016 grew, such growth was primarily attributable to the increased number of assets acquired and operated,whereas on a per rig basis those rigs with declining day rates saw a decrease in revenue attributable to thatasset (except in cases of increased utilisation).

Between 2014 and 2016, the Group maintained a total utilisation rate above 90 per cent. in respect of itsoperational rigs under contract. In order to be able to maintain this high utilisation rate for its contracted,operating rigs, the Group combines regular maintenance upkeep, inventory stacking of essential operatingspare parts and consistent monitoring of rig performance as a lead indicator for unforeseen stoppage time.On the days the rig is operational, or utilised, the Group can charge its applicable day rate. Therefore,utilisation is directly correlated to the Group’s ability to generate revenue. In 2014 and 2016, the Group’sutilisation rate was 96 per cent. and 98 per cent., respectively, indicating the Group’s ability to generate morerevenue under its existing contracts, which it believes makes its estimated backlog more achievable. The higherutilisation of contracted rigs was linked with increased efforts with regard to spare part stocking, continuousscheduled maintenance, and continuous monitoring to reduce downtime. The Group’s utilisation measuredoes not include rigs that were idle and not under contract or that were undergoing initial refurbishmentsduring the reference periods; it is a performance measure only of operational, contracted rigs during suchperiods and not a measure of the overall utilisation of the Group’s fleet.

Acquisitions and the number of fleet assetsSince 1 January 2014, the Group has made a number of acquisitions and entered into arrangements that havehad a significant impact on its financial results.

The following table sets out the key details of the Group’s completed rig acquisitions from 1 January 2014 to31 December 2016:

Year of Acquisition, Refurbishment and MobilisationRig Type Manufacture Cost/Year of Acquisition(1)

––––––––––––––––––––––––––––––––––––– –––––––––– ––––––––––– –––––––––––––––––––––––––––––––––––––––––––––Admarine I . . . . . . . . . . . . . . . . . . . . . . . . . MOPU 1981 U.S.$51 million(2)/2014Admarine VI . . . . . . . . . . . . . . . . . . . . . . . . Jack-up rig 1976 U.S.$36 million/2015ADES 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Onshore rig 2015 U.S.$13 million(3)/2015Admarine 88 . . . . . . . . . . . . . . . . . . . . . . . . Jack-up rig 1974 U.S.$13 million/2016Admarine VIII . . . . . . . . . . . . . . . . . . . . . . . Jack-up rig 1981 U.S.$22 million/2015AD 261 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jack-up rig 1979AD 262 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jack-up rig 1982AD 266 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jack-up rig 1978 U.S.$65 million combined for AD 261, 262, 266/2016ADES 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Onshore rig 2016 U.S.$11(3) million/2016

Notes:(1) Does not include acquisition of ADES 1, completed in March 2017. See“—Current Trading,” below. Includes cost of inventory

acquired with each rig.(2) Refurbishment and mobilisation costs for converting Admarine I into a MOPU include the purchase and refurbishment of an FSO,

which currently provides storage capabilities for the oil extracted by the MOPU. Because the Group views the FSO as an integralpart of its MOPU service, it groups the FSO with the MOPU as a single asset.

(3) Includes cost of constructing worker camp near drill site as well as mobilisation expense to the area of operation.

Each acquisition has had, and future acquisitions are expected to have, a significant impact on, among otheritems, the Group’s revenue and finance costs, staff costs (particularly crew salaries) and depreciation. Forexample, in 2015, revenues grew to U.S.$101.0 million, in part due to introduction of the offshore unit,Admarine VI in April of that year, as well as the full year operation of Admarine V, and the first onshoreunit in Algeria, which operated for 21 days. In 2016, revenues reached U.S.$134.1 million in part due to theintroduction of ADES 3, the Group’s second onshore unit in Algeria, in October, three new offshore units in

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the Kingdom of Saudi Arabia in November 2016, the commencement of operations for the MOPU inFebruary 2016, and the full year operation of Admarine VI and ADES 2. The Group has yet to realise thefull-year potential of its 2016 acquisitions. The Group also plans to add a number of additional onshore andoffshore units, including MOPUs, to its fleet through the asset light model or through acquisitions in 2017and thereafter as well as the introduction of the first deep sea drill ship under a lease contract and expectssuch acquisitions or other arrangements to increase its revenue as well as its cost of revenue.

Correspondingly, the Group’s finance costs, staff costs and depreciation have increased in line with itsacquisitions, as the Group has had to raise financing to purchase new rigs, hire additional staff to refurbishand operate the new rigs and the Group’s assets subject to depreciation have increased. The Group expectsits finance costs, staff costs and depreciation, among other items, to continue to increase in line with its futurefleet additions. Finance costs increased by U.S.$2.0 million or 83.6 per cent. from 2014 to 2015, largely dueto the acquisitions of ADES 2 and Admarine VI, each of which was approximately 80 per cent. debt financedand which collectively increased the Group’s borrowings by U.S.$38.7 million. In November 2015, the Groupentered into a syndicated facility led by EBRD of U.S.$170 million, with U.S.$80 million dedicated torefinancing its existing debt with the remainder to general corporate purposes, U.S.$40 million as a workingcapital facility, and U.S.$50 million to be used for asset acquisitions; this facility was utilised in part for thepurchase of Admarine VIII in 2015 and Admarine 88 and ADES 3 in 2016. See “—Liabilities andIndebtedness” and Part XV: “Additional Information—Material Contracts.” The new facility helped increasefinance costs in 2016 by 113.6 per cent. to U.S.$9.4 million from U.S.$4.4 million in 2015.

Acquisitions have also increased the Group’s staff costs. In 2015, staff costs increased from U.S.$7.1 millionto U.S.$10.8 million, or by 51.8 per cent., which was primarily driven by the full-year operation of AdmarineV which had commenced operations in June 2014 and the operation of new units, Admarine VI in April andADES 2 for 21 days in December. In 2016, staff costs increased by 45.1 per cent. largely as a result ofcommencement of operation of Admarine I and the full-year operation of ADES 2 and the introduction ofthe Kingdom of Saudi Arabia units for two months. It is significant to note that labour costs are relativelyhigher in the Kingdom of Saudi Arabia, and to a lesser extent in Algeria, than in Egypt, such that acquisitionsof new assets in these markets typically has a greater effect initially on crew salary than acquisitions andoperations in Egypt. Within these markets’ localisation limits, the Group will aim to source senior crewmembers, such as managers and supervisors, mostly from Egypt in the near to medium term to replace theexisting predominantly expat crew members and minimise the negative effect on cost of revenue ofacquisitions by the Group in these markets with higher labour costs.

Acquisitions have also increased the Group’s depreciation charge under cost of revenue. In 2014, depreciationwas U.S.$6.7 million. In 2015, after the introduction of one further offshore unit mid-year and one onshoreunit towards the end of the year, depreciation for the year for property and equipment increased toU.S.$10.4 million. In 2016, the Group introduced Admarine I (MOPU) which it depreciates over a useful lifeof 5 years instead of the 15 years for the Group’s other rigs. This, therefore, had a significant impact on theGroup’s depreciation expense for 2016. In addition, in the final two months of 2016 the three Kingdom ofSaudi Arabia units became operational. These factors combined to increase depreciation to U.S.$18.5 millionin 2016.

Currency volatility and the availability of U.S. dollarsAll client contracts are denominated in U.S. dollars, but are payable to the Group in a predetermined currencymix agreed upon with the client. The currency mix specified in the client contract states a percentage of theamounts due from the client that are payable in U.S. dollars, and the remaining percentage is payable in localcurrency. The Group’s current contracts in the Kingdom of Saudi Arabia provide for payment exclusively inU.S. dollars. The amount payable in Egyptian Pounds by clients under their contracts with the Group hassince 3 November 2016, in accordance with the EGPC rules, been based on the U.S. dollar to Egyptian Poundexchange rate of the National Bank of Egypt on the date of payment. The Group thus benefits from a naturalhedge against Egyptian Pound volatility, as the amount due under the contract is denominated in U.S. dollarsand the portion of amounts due in Egyptian Pounds under the contract will be payable in Egyptian Poundsat the prevailing rate on the day of payment. The rate from Algerian Dinar to U.S. dollars for the portionpayable in Algerian Dinar under the Group’s Algerian contracts is the average buying/selling rate in Algierspublished by the Banque Exterieure d’Algerie on the first working day of the month that the invoice is issued.

As noted above, under its client contracts, the Group collects a portion of its revenues in U.S. dollars and aportion in local currency (with the exception of contracts in the Kingdom of Saudi Arabia and the Admarine I

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(MOPU) contract in Egypt, which are paid exclusively in U.S. dollars). The ability of the clients to make certainpayments in local currency, particularly Egyptian Pounds, provides them with flexibility and often permitsclients to pay the Group sooner. Since the political instability that occurred in Egypt, and the resulting shortageof hard currency in the country due to reduced foreign direct investment (“FDI”) and U.S. dollar inflows; thoseof the Group’s Egyptian clients that had no IOC joint partner, such as the GPC (solely owned by the EGPC),faced delays in payments for U.S. dollar obligations, which led to a build- up of accounts receivable. Thiscontributed to the aging of the Group’s accounts with GPC and certain other clients in 2016. The Group has,in certain circumstances, accepted Egyptian Pound payments in place of some U.S. dollar payments providedfor under existing contracts in order to help the client minimize the late payment (and to decrease the Group’soutstanding receivables). The Group may do so as it helps to cover Egyptian Pound based operating expensessuch as head office salaries and Egyptian crew salaries. This situation has to date only significantly affectedEgyptian clients and relates to current market conditions faced in Egypt. In the future, as the Group furtherdiversifies its assets into neighbouring countries, it does not expect such cooperative methods will have asignificant impact. In addition, the floatation of the Egyptian pound against the U.S. dollar on 3 November2016 and the execution of a U.S.$12 billion IMF loan to the Egyptian government are intended to facilitateFDI and U.S. dollar inflows and ease the currency shortage going forward.

The currency of the Group’s operating expenditure is generally determined by contracts related to theoperating expenses. Some contracts, such as Egyptian labour contracts and catering contracts, aredenominated and payable in local currency. Others, such as vendors for maintenance and insurance, aregenerally denominated in U.S. dollars and typically state what share of the value of the contract is payable inU.S. dollars and what share is payable in local currency. Crew salaries are primarily in Egyptian Pounds (exceptwith respect to the Group’s Saudi Arabian rigs, which are in U.S. dollars and Saudi riyal); accordingly adecrease in the value of the Egyptian Pound against the U.S. dollar favourably affects the Group’s crew salaryexpense in U.S. dollar terms, though significant U.S. dollar denominated salary expense on the Group’s rigsin Kingdom of Saudi Arabia will moderate this effect until the Group manages to deploy local labour toreduce its U.S. dollar salary cost there. In addition, the majority of the Group’s debt interest payments aredenominated and payable in U.S. dollars. Accordingly, fluctuations in the Egyptian Pound/U.S. dollarexchange rate may affect the Group’s profit and loss statements, which are presented in U.S. dollars, and itsresults of operations.

The Group’s financials are presented in U.S. dollars. The Group experienced net foreign exchange losses ofU.S.$575,322 in 2014 and U.S.$27,523 in 2015, and a net foreign exchange gain of U.S.$3.4 million in 2016as a result of exchange rate developments.

The Group’s cost baseThe Group’s primary strategy to-date has been to purchase legacy offshore drilling rigs—which are existingrigs (ideally under contract), typically being sold by other drilling operators for strategic reasons or morerecently in distressed sales. The Group has generally been able to acquire such rigs for substantially less thanit would cost to build a new offshore unit. In the current market, where demand for drilling rigs (especiallynewbuild rigs) has decreased along with oil prices and exploration and development activity in many markets,there are more rigs available at cheaper acquisition costs. For example, in 2012, the Group acquiredAdmarine III for $20 million (excluding refurbishment costs) a year when the average daily spot price ofBrent Crude was U.S.$111.68 per barrel (according to data from Bloomberg), while the Group was able toacquire Admarine VIII, a rig of similar specification, in 2015 for U.S.$10 million (excluding refurbishmentcosts), at a time when the average daily spot price of Brent Crude was at U.S.$53.60 per barrel (according todata from Bloomberg). The Group has thus operated at what it believes to be relatively low capital expenditurelevels and accordingly lower depreciation costs. The Group’s in-house refurbishment and maintenancecapabilities are also central to its cost strategy, as the Directors believe these help keep refurbishment costsand ongoing maintenance costs down and reduce rig downtime.

In addition, the Group’s policy to employ primarily Egyptian and local workers for rig operations,maintenance and repairs—typically both less expensive and more flexible than a more international workforcedue to the lower wage structures and other personnel costs for such employees—has allowed the Group tomaintain relatively low operating expenditures and support its margins. With the Group’s recent entry intothe Saudi Arabian market, however, the Group has seen an increase in its operating costs in 2016 due primarilyto crew salaries (the largest single component of operating expenditures), which are substantially higher inthe Kingdom of Saudi Arabia than in Egypt. The Group expects to continue to implement its low cost basebusiness model in target markets in which it intends to expand operation, however its ability to maintain low

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capital and operating costs will depend primarily on the availability of offshore legacy assets, or its ability toinnovate on its low cost asset model, and the Group’s ability to maintain lower wage structures and otherpersonnel costs in such markets.

Expiration or termination of existing contractsGiven the concentration of the Group’s business with a small number of existing customers, the expirationor termination of a client contract can have a substantial impact on the Group’s results in any given year,particularly if the Group is unable to re-contract those units with another client.

The average remaining term on the Group’s existing customer contracts as of 31 December 2016 was 1.96 years,or 2.1 years counting optional extension periods. The terms of six contracts (including one pending contractfor Admarine VIII) are due to end in 2017, and two are due to end in each of 2018, 2019, and 2021. Otherthan with respect to the MOPU, the Group expects all of these contracts to be extended based on its priortrack record of extensions with these clients. Such renewals may be subject to possible changes in day ratesand other terms depending in part on the then prevailing market conditions. However, should any of theGroup’s customer contracts expire and not be renewed or terminate, such event may negatively affect theGroup’s results of operations as revenue with respect to such rigs would decrease unless and until the rigs werecontracted to another client. In the event a rig was uncontracted, the Group would still be required to makecertain operational expenditures related to the rig, particularly costs associated with warm-stacking the rig.

Growth of receivables from and aging of accounts with respect to some clientsAs of 31 December 2016, the Group’s accounts receivable was U.S.$50.8 million compared to U.S.$16.8 millionat 31 December 2015, a 201.6 per cent. increase. In addition, the average total age of the Group’s accountsreceivable, calculated based on the average of opening and closing receivables balance for the reference perioddivided by the revenue generated within that period and multiplied by the count of days within that samereference period, increased from 62 days at 31 December 2015 to 92 days at 31 December 2016. These changesoccurred principally because two of the Group’s clients, GPC and Petrozenima, fell behind on certain paymentsdue to the Group in 2016. GPC fell behind in 2016 on payments due to the Group for drilling and workoverservices on Admarine III and Admarine VI. The Group understands that since GPC is solely owned by theEgyptian government, without an international partner, they experienced difficulty in 2016 in obtaining U.S.dollars as a result of the U.S. dollar shortage in Egypt and therefore were not able to timely pay U.S. dollaramounts due to the Group in 2016. In 2017, as a gesture of goodwill and to facilitate collections, the Groupagreed to modify the currency split on the collection of payments from GPC with respect to Admarine VI andaccept 100 per cent. payment in Egyptian pounds for the remainder of the GPC’s current extension. Amountsdue in respect of the Group’s contract with GPC on Admarine III remain 70 per cent. payable in U.S. dollars.The Group is in discussions with GPC regarding settlement and expects that GPC will be able to repay amountsdue once it obtains its currently progressing financing. As at March 2017, GPC had paid approximatelyU.S.$3 million of the outstanding receivables due to the Group. Petrozenima fell behind in 2016 on paymentsdue to the Group for MOPU services. The Group understands this was a result of delays in ramping upproduction for the client’s first concession due to unattractive oil prices and project implementation delays onthe side of the client. Petrozenima has, however, been producing near target level since October 2016. As ofApril 2017, U.S.$7.7 million of the outstanding receivable from Petrozenima had been paid, 100 per cent. inU.S. dollars, and the Group expects a further U.S.$8 million to follow in respect of both past due and newaccounts receivable. The Group expects the client will thereafter be able to pay amounts as they come due,bringing collection terms in line with contract terms. Because the Group expects payment to be received in fullbased on historical collection trends, client communication and credibility and payments received to date, theGroup has not made any specific invoice related provision towards these accounts, but has set a provision forimpairment of trade receivables of U.S.$2.4 million for 2016 in the Historical Financial Information.

Some increase in the Group’s total accounts receivable also resulted from organic growth in the Group’srevenues as it has expanded its operations. Excluding the accounts of GPC and Petrozenima, the Group’saccounts receivable as of 31 December 2016 were U.S.$16.5 million, compared to U.S.$9.8 million at31 December 2015 and U.S.$13.7 million at 31 December 2014.

Factors Affecting Comparability of Results of OperationsBelow is a selection of certain important factors which, among others, may affect the comparability of theresults of the Group’s operations across historic and future periods.

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Segment InformationThe Group provides segment financial information in the Historical Financial Information for fourgeographical segments, Egypt, Algeria, the Kingdom of Saudi Arabia and the United Arab Emirates,reflecting its current consideration of the business from a geographic perspective. Management monitors theoperating results of its segments separately for the purpose of making decisions about resource allocationand performance assessment. The Group did not recognise significant revenue from Algeria until late 2015,when the Group acquired its first rig in Algeria, or from the Kingdom of Saudi Arabia until late 2016, whenthe Group acquired its first rigs in Kingdom of Saudi Arabia. As of 31 December 2016, the Group did nothave any active drilling operations in the United Arab Emirates, where the Company maintains its registeredoffice.

In 2014, revenue from Egypt was U.S.$75.2 million, or 100 per cent. of Group revenue, as compared to revenueof U.S.$99.0 million in 2015, representing 98.0 per cent. of Group revenue, and revenue of U.S.$108.5 millionin 2016, representing 80.9 per cent. of Group revenue. In 2015, the Group expanded its operations into Algeriaand revenue from operations in Algeria was U.S.$2.1 million, representing 2.0 per cent. of Group revenue(and the only non-Egypt related revenue for the Group). Revenue from Algerian operations grew to U.S.$14.1million in 2016, representing 10.5 per cent. of Group revenue, as 2016 was the first full year of operations inAlgeria. In late 2016, the Group expanded its operations into the Kingdom of Saudi Arabia and revenuefrom Kingdom of Saudi Arabia was U.S.$11.6 million, or 8.6 per cent. of Group revenue, in the period fromthe Group’s commencement of operations there in November 2016 until the end of the year. The Grouprecognised no revenue from the United Arab Emirates in 2014, 2015 or 2016.

As at 31 December 2016, the Group’s total assets in Egypt were U.S.$285.0 million, with total assets in Algeriaof U.S.$30.0 million, total assets in Kingdom of Saudi Arabia of U.S.$83.5 million, and total assets in theUnited Arab Emirates of U.S.$254,608. As at 31 December 2016, the Group’s total liabilities for its Egyptianoperations were U.S.$282.3 million as compared to U.S.$6.0 million with respect to its Algerian operations,U.S.$5.6 million with respect to its operations in Kingdom of Saudi Arabia, and U.S.$26,327 with respect toits operations in the United Arab Emirates. The total liabilities ascribed to Egypt in this breakdown includesdebt related to the Group’s entire fleet, across geographic segments, as it is ADES and not ADES’s localbranches that holds the related debt. Total liabilities ascribed to the other segments includes only liabilitiesrelated to such segments’ operations, mainly trade payables.

The capital expenditures attributable to each of the Group’s segments corresponded with the Group’s entryinto and expansion of services and operating assets in that related market. Capital expenditure in Egypt wasU.S.$58.4 million, or 43.5 per cent. of total capital expenditure, in the year ended 31 December 2016, ascompared to U.S.$85.3 million in the year ended 31 December 2015 and U.S.$29.4 million in the year ended31 December 2014. Capital expenditure in Algeria was U.S.$10.6 million, or 7.9 per cent. of total capitalexpenditure, in the year ended 31 December 2016 as compared to U.S.$12.7 million in the year ended31 December 2015 and U.S.$0 recognised capital expenditure in the year ended 31 December 2014. Capitalexpenditure in the Kingdom of Saudi Arabia was U.S.$65.2 million, or 48.6 per cent. of total capitalexpenditure, in the year ended 31 December 2016, as compared to U.S.$0 recognised capital expenditure inthe years ended 31 December 2015 and 31 December 2014.

The Group intends to expand its operations into new geographic markets and as it does so the geographicsegmentation of its business may change.

Entry into the Saudi Arabian and Algerian marketsAs noted above, the Group began onshore drilling and workover operations in Algeria at the end of 2015and began offshore drilling and workover operations in the Kingdom of Saudi Arabia in late 2016. The Groupfurther intends to expand its onshore operations in Algeria in 2017 and to both expand its offshore operationsand begin onshore drilling and workover operations in the Kingdom of Saudi Arabia. Entry into these newmarkets has had and will continue to have a substantial effect on, among other matters, the Group’s revenue,costs of revenue (particularly staff costs), average day rates for the rigs, and tax liabilities. These effects haveaffected the comparability of the results of the Group’s operations in 2015 and 2016 and will affect thecomparability of results for future periods and results for historical periods.

The Group expects its operations in both markets to contribute substantially to Group revenues in futureperiods, and the Group intends to expand on these established platforms in each country. In addition, typicalday rates for the Group’s operations in these and other new markets may differ from the typical day rates in

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Egypt reflected in pre-2015 figures. Revenue and expenses for the rigs may also differ in the mobilisation andset up phases of drilling in new markets. Such factors affected the overall typical day rate for the Group’sfleet as a whole in 2015 and 2016 and will continue do so in the future. In 2015, the Group’s first Algerianonshore rig, ADES 2, operated for 21 days and in 2016, ADES 2 operated for 12 months and ADES 3 for69 days at a substantially lower operating day rate than the Group’s offshore jack-up rigs which is typical foronshore rigs in this market. In 2016, the Group acquired three rigs in the Kingdom of Saudi Arabia, whichoperated for two months in 2016 at operating day rates about 25 per cent. higher than the operating day rateson the Group’s Egyptian offshore jack-up rigs. Going forward, day rates in Algeria and the Kingdom ofSaudi Arabia, and in future new markets, will continue to affect day rates for the Group’s fleet and, thereby,the Group’s revenues.

The Group’s operations in Algeria and the Kingdom of Saudi Arabia will affect the Group’s overall costs ofrevenue, particularly with regard to staff costs, as crew salaries are substantially higher in the Kingdom ofSaudi Arabia (and to a lesser extent in Algeria) than in Egypt.

The Group’s Egyptian operating company, ADES, is not currently subject to Egyptian corporate income tax(though is subject to a 1 per cent. free zone fee) on revenues from all of ADES’s operations. Earnings fromADES branches in Algeria and the Kingdom of Saudi Arabia are subject to corporate income tax and possiblyother taxes and fees in those jurisdictions. This additional tax liability will impact, among other matters, theafter-tax cash flows generated by the rigs in Algeria and Saudi Arabia as compared to the rigs operating inEgypt. Such tax liability may also introduce additional Group administrative costs and expose the Group toreporting obligations and potential civil or criminal penalties for failure to comply with local tax laws.

The Group’s intended entry into new operating markets will also impact the Group’s business, results andfinancial position in the future.

Entry into the onshore market, acquisition of the MOPU and potential expansion into deepwater and otherservicesThe Group’s expansion into the onshore market in Algeria in 2015 and 2016 and the beginning of MOPUoperations in 2016 have affected the Group’s revenues and costs and will continue to do so. The onshore unitsare significant for the move revenue included in their contracts, which is much higher than the offshore units’move day rate. However, the Algeria crew salary costs are higher than in Egypt, though the company is hiringan Egyptian and local workforce to operate the units to combat this higher cost. For the majority of 2016,the MOPU operated at a reduced operating day rate during its initial set-up phase and ramp-up of production.From October 2016, production rates were at planned levels and it generated an operating day rate, which isthe highest in the Group’s fleet. The operating cost levels of the MOPU are similar to the offshore jack-uprigs. While a full year of operating expenses related to the MOPU are expected in 2017, with the MOPU nowachieving a full operating day rate the Group expects the full year operations of the MOPU to contribute toan improvement in its profit margins over 2016 levels. In addition, possible expansion into new operatingactivities such as deepwater drilling may also affect revenues and costs. The Group intends to introduce anew business line through a joint venture with a deepwater drilling company that will offer deepwater drillshipservices using the partner’s drillship operated jointly by the partner and the Group, which the Group expectsto be reflected on its financial statements with recognition of revenues and costs associated with the endeavour.

2015 refinancing of the Group’s debt and increased debt levels to fund acquisitions.In November 2015, the Group entered into a syndicated facility of U.S.$170 million, with U.S.$80 milliondedicated to refinancing its existing debt and for general corporate purposes, U.S.$40 million as a workingcapital facility, and U.S.$50 million for asset acquisition. The new facility increased finance costs in 2016 by113.6 per cent. to U.S.$9.4 million from U.S.$4.4 million in 2015. The refinancing also had the Group incurone-off professional and legal fees associated with the deal, as well as prepayment penalty fees due toprepaying its older facilities. This accordingly increased the level of operational expenditures in 2015 relativeto 2014 and 2016.

The Group’s total non-current loans and borrowings increased from U.S.$25.1 million as at 31 December2014 to U.S.$130.8 million as at 31 December 2015, an increase of U.S.$105.7 million or 420.7 per cent. TheGroup’s total non-current loans and borrowings increased from U.S.$130.8 million as at 31 December 2015to U.S.$189.9 million as at 31 December 2016, an increase of U.S.$59.2 million or 45.2 per cent. These

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increases occurred as a result of increased borrowing by the Group to fund new acquisitions, related to theKingdom of Saudi Arabia units purchased in November 2016.

Changes in depreciation chargesThe Group’s acquisitions of new rigs and other assets over the period under review increased the Group’soverall depreciation charges and reduced the gross profit indicated in the Historical Financial Information.The Group depreciates the cost, including any refurbishment costs or other capitalised costs, of its onshoreand offshore rigs across an assumed useful life of 15 years, except for the MOPU, which is depreciated acrossan assumed useful life of five years. The Directors believe that these depreciation assumptions are soundbased on its operating experience and its ability to maintain and extend the life of the rigs through regularinspections and maintenance.

Current TradingDeepwater drilling partnershipADES is in discussions and has signed a term sheet with an owner of a deep water drill ship to potentiallypartner with ADES to provide offshore deep water drilling services to clients in Egypt’s Mediterranean.Through the potential partnership the Group would provide its work force, as well as access topre-qualifications with the relevant governmental regulatory bodies, while the partner would provide the drillship and the senior technical management thereof. The Group is currently involved in seeking several tendersin order to deploy the drill ship in Egypt’s Mediterranean.

ADES 1The Group acquired an additional onshore rig, ADES 1, from AMAK in March 2017. The Group is currentlyawaiting results of ongoing tenders in Algeria.

ADES 10The Group is also currently negotiating a lease to purchase agreement with a bank under which it would leasean existing high specification onshore rig, ADES 10; the Group expects this rig would operate in Egyptbeginning around mid-2017.

High specification rig chartersIn March 2017, ADES signed term sheets with leading South East Asian parties, by virtue of which ADESwill be able to market new build offshore jack-up rigs, including high specification rigs, with the aim ofsecuring client contracts to be entered by ADES. Subject to the execution of a client contract, the partiesshall enter into a lease agreement for the respective rig with the option for ADES to purchase the rig duringthe term of the lease contract at a pre-determined price.

2017 increase in authorised share capitalOn 6 February 2017, the Selling Shareholder resolved to increase the authorised share capital of the Companyfrom U.S.$10.0 million to U.S.$60.0 million. The Selling Shareholder subsequently approved a further increaseof the authorised share capital of the Company to U.S.$1.5 billion on 22 March 2017.

2017 change in issued share capitalThe Selling Shareholder carried out an increase in the issued and paid up share capital of the Company inthe amount of U.S.$30.9 million, which was approved on 16 March 2017 and subsequently registered withthe DIFC registrar. Following the share capital increase, the total issued share capital of the Company wasU.S.$31.9 million.

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Descriptions of Principal Income Statement ItemsDescriptions of certain principal income statement items are set forth below.

RevenueThe Group principally derives its revenue from the operation of its offshore and onshore drilling rigs orbusiness units, which it terms as revenue derived from units operations. Units operations revenue is generatedfrom the operation of the onshore and offshore rigs, MOPU, and jack-up barge to the Group’s clients. TheGroup also derives a portion of its revenue from other sources, including catering services, projects income,and other services. The Group historically also derived a portion of its revenue from ROV services, thoughthese activities were discontinued in 2015 due to undesirable profitability levels.

Units Operations

Revenue from offshore and onshore drilling activities includes revenue derived from operation of the Group’sexisting fleet of onshore and offshore rigs, MOPU, and barge. The price for leasing offshore and onshore rigs(excluding the MOPU) is determined on a contract-by-contract basis. For offshore rigs, contracts typicallyset out operating, move, standby and paid maintenance day rates and may provide for mobilisation anddemobilisation fees. Reduced day rates may apply for re-drilling or remedial work necessary or where a rig isoperating at a reduced efficiency due to Group actions or equipment issues. For onshore rigs, contractstypically set out operating, standby and paid maintenance day rates and may provide for move fees,mobilisation, and demobilisation fees. The rates and fees can be summarised as follows:

• Operating day rate: represents revenue from rigs fixed in place and operating under contract within thecontractually specified scope of work, such as drilling or workover. The Group’s operating day ratesgenerally differ among markets, clients and rigs. As of January 2017 operating day rates for the Group’soffshore jack-up rigs were within the range of U.S.$45,000 and U.S.$65,000, with rates on the Group’sEgyptian rigs falling towards the lower end of that range and rates on the Group’s Saudi Arabian rigsfalling towards the upper end of that range; operating day rates for the onshore rigs were within therange of U.S.$20,000 and U.S.$30,000; the operating day rate for the MOPU was within the range ofU.S.$65,000 to U.S.$75,000, pursuant to the terms of the lease agreement; and the operating day ratefor the jack-up barge was within the range of U.S.$15,000 to U.S.$25,000.

• Standby rate: represents revenue from rigs fixed in place, ready to start the drilling process, but whensuch drilling has not yet commenced or is not yet required by the client. Standby rates for rigs aregenerally stated as 90 to 98 per cent. of the operating rate.

• Movement rate or fee: represents revenue from the movement of rigs according to client needs andrequirements. For offshore rigs, the day rates for rigs are generally stated as 90 to 100 per cent. of theoperating rate. For onshore rigs, the Group typically receives a set fee on a per move basis (with anaverage payment typically around U.S.$250,000 per move and with each move typically taking aboutthree days, though fee and time may vary) with a typical average of eleven moves per year.

• Paid maintenance rate: represents revenue from the repair of the rigs. The Group’s contracts typicallyprovide for a specified number of paid maintenance days under the contract. This is typically a few daysper month for each offshore jack-up and onshore rig, and is zero days for the jack-up barge and MOPU.Where paid maintenance days are provided for, the Group can cease operations for the number of daysper month specified in the contract for repair and charge a repair rate during this time; if operations areceased for more than the maintenance days specified in the contract in any given month, the client isnot obliged to pay any amount until the rig has been repaired. Regular day rates resume upon resumptionof operations. The paid maintenance rate for rigs is generally stated as 90 to 95 per cent. of the operatingrate, though is 50 per cent. for the Group’s Saudi rigs; beyond paid maintenance rates, the Groupgenerally receives no further compensation for maintenance.

• Other special services: represents revenue from special services requested by clients, such asaccommodation and catering or the lease of additional equipment; and

• Mobilisation and demobilisation: Clients under offshore contracts typically pay a lump sum amount,payable up front or on instalments to the Group for mobilising and demobilising the rig and crew. Clientsunder onshore contracts typically pay lump sum mobilisation and demobilisation fees on normalcontract terms at the start and end of the contract.

Contracts also typically provide for a force majeure rate of 50 per cent. to 90 per cent. of the operating rate.All contracts provide for clients to bear additional costs such as for fuel, equipment or spare parts such asdrill bits, cement and additives, or drill pipes.

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For the MOPU, three possible day rates currently apply—an operating day rate, a charter day rate, and adowntime day rate. The operating rate represents the day rate the client pays to the Group to operate theMOPU at intended capacity. The charter day rate represents the charter rate at which the client leases theMOPU from the Group. Downtime represents a reduced charter rate in the event the client is unable to operatethe MOPU at intended capacity due to gross negligence on the part of the Group.

Revenue from Other Sources – Catering, Projects and Other Revenue

The Group also derives revenue from catering and the provision of project services, which are performed onbehalf of ADES by a third party. Currently, Advansys Project Co., a related party, is engaged by the Groupto perform these services. Catering revenue is derived from catering and accommodating client personnelonboard the Group’s units, when the number of client personnel onboard is greater than the permissiblecount under each contract. Admarine II is the largest contributor to the Group’s catering revenue due to thelarge accommodation services provided by the barge. Projects revenue is derived from the client hiring theGroup to perform construction work on other offshore vessels. Admarine II is chartered as a platform, andreceives additional variable revenue for additional construction work. The Group sub-contracts the projectwork to a third party, while retaining a margin typically set at 15 per cent. (though this may vary under theterms of the contract). The Group recognizes the full revenue of the project service conducted by the thirdparty, and expenses amounts payable to third parties leaving it with its specified margin. Third party personnelare housed and supported by equipment on the Admarine II barge, for the use from which the Group collectsa separate day rate from the client. Other revenue includes the rental of essential operating equipment thatthe client was responsible for providing under its contract but which the client chooses to rent from the Group’savailable equipment for the client’s operations. Historically, the Group also derived revenue from remoteoperated vehicle (“ROV”) and marine vessel services, though these services were discontinued in 2015.

Cost of RevenuesCost of revenues include project direct costs, maintenance costs (including subcontracts costs), staff costs(for rig crews, and including performance bonuses, fixed allowance, external travel, social insurance, medicalinsurance, casual labour and employee benefits), rental equipment costs, insurance, depreciation and othercosts. (Until 2015, cost of revenue also included ROV direct costs.) Other costs include a number of items,such as move costs, transportation costs, training expenses, tools and supplies, crew accommodation, cateringcosts, permits and yard costs among other items. The largest item in other costs included U.S.$2.1 million ofmove and mobilisation costs in 2015 and U.S.$ 3.0 million of move and mobilisation costs in 2016. Beyondother costs and depreciation expense, the largest single item in cost of revenue is typically staff costs, whichaccounted for 24.8 per cent. of cost of revenue in 2016. Crew salary varies as a proportion of cost of revenueacross rigs and regions. In 2016, crew salaries represented on average 26 per cent. of cost of revenues on theEgyptian rigs, compared to 21 per cent. in Algeria and 60 per cent. in the Kingdom of Saudi Arabia. Thishowever may not be indicative of future percentages, especially for the Kingdom of Saudi Arabia where unitswere operational for two months in 2016, and as such did not accumulate many expenses relating to operationsother than (mainly) crew salaries which are fixed.

General and Administrative ExpensesGeneral and administrative expenses includes staff costs (administrative staff, as distinct from rig crews, andincludes related benefits), depreciation and amortisation (including that related to office furniture and officeIT software), professional fees, business travel, free zone expenses, rental expenses (including office rental,denominated in U.S. dollars, and company rental vehicles), other expenses, and net foreign exchange gain orloss. Other expenses comprise numerous costs, including bank charges, transportation, communication,training, utilities, marketing costs and other administrative costs. As a company incorporated in theAlexandria Free Zone, ADES, the Group’s primary operating company is not subject to Egyptian corporateincome tax, but is required to pay an annual fee of 1 per cent. of its revenues, reflected in general andadministrative expenses.

As part of its corporate and social responsibility program, ADES also maintains a policy that allows it, atthe discretion of its board, to disburse up to 5 per cent. of net profit as charitable expenses, which arecontributed to Al Joud Charity Foundation, a non-profit arm of the Abbas family, the majority ultimateshareholders of the Group, which provides medical, educational and social support to communities. This isincluded under other expenses in general and administrative expenses.

112

Provision for Impairment of Trade ReceivablesAn estimate of the collectible amount of trade receivables is made when collection of the full amount is nolonger probable. For individually significant amounts, this estimation is performed on an individual basis.Amounts which are not individually significant, but which are past due, are assessed collectively and aprovision applied according to the length of time past due, based on historical recovery rates. The Companymakes a provision equal to 10 per cent. of amounts overdue between 120 and 180 days and 20 per cent. ofamounts more than 180 days overdue. Any difference between the amounts actually collected in future periodsand the amount expected are recognised in the consolidated statement of profit or loss.

Impairment of Assets Under ConstructionImpairment of assets under construction represents amounts spent in respect of a contemplated unit, whichwere historically treated as a project under construction. The rig was being marketed by ADES on an exclusivebasis for the unit owner, but the deal did not subsequently go through and the Group now reports thisexpenditure under impairment of assets under construction for 2016.

ProvisionsProvisions principally represent provisions for tax authority claims from inspection employee and withholdingtaxes borne by the Group.

Finance CostsFinancing costs represent interest on bank credit facilities and loans used to finance the purchase of theGroup’s rigs and operational needs. The arrangement fees are typically capitalised on the Group’s assets orset as a contra-account against its liabilities and amortised over the period of the loan.

Loss on Disposal of Property and EquipmentLoss on disposal of property and equipment is derived from the sale or disposal of an asset found withinproperty and equipment, when the sale value is less than the book value stated in the balance sheet in propertyand equipment for that asset.

Other IncomeOther Income is derived from activities unrelated to the company’s normal course of business.

Dividends IncomeInvestment income derives from dividends received by the Group through its 48.75 per cent. ownership inECDC.

Income Tax ExpenseThe Group operates in jurisdictions which are subject to tax at higher rates than the statutory corporate taxrate of 0 per cent. that applies to ADES’ Egyptian operations. In Algeria and Kingdom of Saudi Arabia, theapplicable tax rate is 26 per cent. and 20 per cent. respectively. In addition, the operations in Algeria are alsosubject to 15 per cent. Branch tax on accounting profit.

Egyptian corporations are normally subject to corporate income tax at a statutory rate of 22.5 per cent.however the Company has been registered in a Free Zone in Alexandria under the Investment Law No 8 of1997 which allows exemption from corporate income tax.

Results of Operations for the Year Ended 31 December 2016 compared to the Year Ended 31 December 2015RevenueRevenue increased from U.S.$101.0 million in the year ended 31 December 2015 to U.S.$134.1 million in theyear ended 31 December 2016, an increase of U.S.$33.1 million, or 32.7 per cent. This increase was primarilydue to the introduction of Admarine I in February, ADES 3 in October and three offshore unitsAdmarine 261, 262, and 266 in November, as well as the full-year operation of ADES 2, compared to only21 days in 2015.

ESMA para 28ESMA para 30ESMA para 31

113

The following table sets forth the components of the Group’s revenue for the years indicated:

For the year ended 31 December–––––––––––––––––––––––––––––––––––––––––––

2016 2015 % Change–––––––––––– –––––––––––– –––––––––––

US$–––––––––––––––––––––––––––– –––––––––––

Units operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,713,864 90,607,349 36.5Catering services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,537,195 1,864,199 36.1Remote operating vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,741,125 —Projects income * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,295,711 5,666,202 28.8Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569,346 160,531 254.7

–––––––––––– –––––––––––– –––––––––––

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,116,116 101,039,406 32.7–––––––––––– –––––––––––– ––––––––––––––––––––––– –––––––––––– –––––––––––

* Projects income represents services relating to outsourcing various operating projects for clients such as maintenance and repair services.

Revenue from Units Operations

Revenue from Units Operations increased from U.S.$90.6 million in the year ended 31 December 2015 toU.S.$123.7 million in the year ended 31 December 2016, an increase of U.S.$33.1 million, or 36.5 per cent., primarilydue to the introduction of Admarine I in February, ADES 3 in October and three offshore units Admarine261, 262, and 266 in November, as well as the full-year operation of ADES 2, compared to only 21 days in2015.

Revenue from Other Sources—Catering Services, Projects Income, ROV and Others

Revenue from Catering Services increased from U.S.$1.9 million in the year ended 31 December 2015 toU.S.$2.5 million in the year ended 31 December 2016, an increase of U.S.$0.7 million, or 36.1 per cent. Thisincrease was primarily the result of an increase in catering services related to the increase in operational unitsand the related increase in personnel on those units. ROV services were discontinued in June 2015.Accordingly, revenue from ROV services decreased from U.S.$2.7 million in the year ended 31 December 2015to U.S.$0 in the year ended 31 December 2016, a decrease of U.S.$2.7 million, or 100 per cent.

Revenue from Projects Income increased from U.S.$5.7 million in the year ended 31 December 2015 toU.S.$7.3 million in the year ended 31 December 2016, an increase of U.S.$1.6 million, or 28.1 per cent. Thisincrease was primarily a result of additional client work requests relating to services on new and existing rigs.Others Revenue increased from U.S.$0.2 million in the year ended 31 December 2015 to U.S.$0.6 million inthe year ended 31 December 2016, an increase of U.S.$0.4 million, or 200 per cent. This increase was primarilya result of an increase in rental services required by clients.

Cost of RevenuesCost of revenues increased from U.S.$52.3 million in the year ended 31 December 2015 to U.S.$63.3 millionin the year ended 31 December 2016, an increase of U.S.$11.0 million, or 21.0 per cent., primarily as a resultof increased depreciation expense in relation to the MOPU being depreciated over a useful life of five years,increased crew salary due to full year operation of ADES 2 and the inclusion of the Kingdom of Saudi Arabiarigs’ higher wages in the last two months of the year.

114

The following table sets forth the components of the Group’s cost of revenues for the years indicated:


2016 2015 % Change–––––––––––– –––––––––––– –––––––––––

US$–––––––––––––––––––––––––––– –––––––––––

Remote operating vehicles direct costs . . . . . . . . . . . . . . . . . . . . — 2,104,377 —Project direct costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,615,569 4,087,186 61.9Maintenance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,079,605 5,937,674 2.4Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,666,367 10,793,189 45.2Rental equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,483,465 3,755,222 (33.9)Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,958,675 2,581,367 14.6Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,296,945 10,350,670 76.8Other costs(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,172,770 12,678,955 (11.9)

–––––––––––– –––––––––––– –––––––––––

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,273,396 52,288,640 21.0–––––––––––– –––––––––––– ––––––––––––––––––––––– –––––––––––– –––––––––––

(1) Other costs include a number of items, such as move costs, transportation costs, training expenses, tools and supplies, crewaccommodation, catering costs, permits and yard costs among other items. The largest cost items included U.S.$2.1 million incombined move and mobilisation costs in 2015 and U.S.$3.0 million of move and mobilisation costs in 2016.

The Group’s discontinuation of ROV services between 2015 and 2016 reduced the ROV direct cost to nearzero. An increase in project direct costs coincides with the increased usage of project services by clients during2016. Maintenance costs, combined with subcontracts costs, have remained at roughly the same levels. Thestaff costs witnessed an increase primarily attributable to the introduction of the three offshore units operatingin the Kingdom of Saudi Arabia, where crew salaries are more costly, as well as the full year operation ofADES 2 and the late introduction of ADES 3 in October.

Gross ProfitAs a result of the foregoing, gross profit increased from U.S.$48.8 million in the year ended 31 December 2015to U.S.$70.8 million in the year ended 31 December 2016, an increase of U.S.$22.1 million, or 45.3 per cent.

General and Administrative ExpensesThe following table sets forth the components of the Group’s General and Administrative Expenses for theyears indicated:


2016 2015 % Change–––––––––––– –––––––––––– –––––––––––

US$–––––––––––––––––––––––––––– –––––––––––

Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,046,238 7,693,097 30.6Depreciation and amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 162,641 106,351 52.9Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,988,492 2,178,384 (8.7)Business travel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255,517 487,013 (47.5)Free zone expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,405,381 1,072,585 31.0Rental expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 546,832 388,316 40.8Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,053,245 4,814,929 (15.8)Net foreign exchange (gain)/loss . . . . . . . . . . . . . . . . . . . . . . . . . (3,402,151) 27,523 —

–––––––––––– –––––––––––– –––––––––––

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,056,195 16,768,198 (10.2)–––––––––––– –––––––––––– ––––––––––––––––––––––– –––––––––––– –––––––––––

General and administrative expenses decreased from U.S.$16.8 million in the year ended 31 December 2015 toU.S.$15.1 million in the year ended 31 December 2016, a decrease of U.S.$1.7 million, or 10.2 per cent. Thedecrease in costs is primarily due to a net foreign exchange gain of U.S.$3.4 million, resulting from the floatationof the Egyptian pound in 2016 which restated its Egyptian pound based liabilities at a lower rate in U.S. dollarterms. Excluding the net foreign exchange gain, other costs increased for the year. This was principally a resultof increase in staff costs. Staff costs increased from U.S.$7.7 million in the year ended 31 December 2015 toU.S.$10.0 million in the year ended 31 December 2016, an increase of U.S.$2.4 million, or 30.6 per cent.,primarily as a result of the increase in staff salaries relating to increased office headcount of 45 furtheremployees. Depreciation and amortization increased from U.S.$106,351 in the year ended 31 December 2015

115

to U.S.$162,641 in the year ended 31 December 2016, an increase of U.S.$56,290, or 52.9 per cent., primarilyas a result of an increase in office furniture and IT infrastructure, for the purpose of new offices, toaccommodate for increased headcount. Business travel decreased substantially in 2016, as 2015 travel costshad been exceptionally large due to management travel related to a contemplated initial public offering in 2015.Free zone expenses, reflecting the 1 per cent. Alexandria Free Zone fee payable by ADES on its revenueincreased roughly in line with growth in revenues. Rental expense increase reflects the addition of new officespace to accommodate increased staff headcount. Other expenses decreased substantially, largely as a resultof the absence of one-off items present in 2015, particularly prepayment penalty fees related to the Group’s2015 refinancing and marketing and other expenses in connection with the aborted initial public offering.

Provision for Impairment of Trade ReceivablesThe charge under Provision for Impairment of Trade Receivables increased from U.S.$1.7 million for the yearended 31 December 2015 to U.S.$2.4 million for the year ended 31 December 2016. This was primarily theresult of applying the company policy to assess amounts that are not individually significant, but which arepast due, and make provision for impairment a certain percentage of amounts that are overdue by a certainnumber of days, taking into account historical collection trends of the client, and in some cases specific clientsituations.

The movement in impairment of trade receivables is as follows:

For the year ended 31 December–––––––––––––––––––––––––––

2016 2015–––––––––––––––––––––––––––

US$–––––––––––––––––––––––––––

As at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 752,454 1,041,269Charge for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,362,197 1,666,026Used during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1,954,841)

–––––––––––– –––––––––––

As at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,114,651 752,454–––––––––––– ––––––––––––––––––––––– –––––––––––

As at 31 December, the aging analysis of un-impaired trade receivables is as follows:

Neither past Past due but not impaired––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––due nor

impaired <30 days 30-60 days 61-90 days >90 days Total–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

US$–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

2016 . . . . . . . . . . . . . . 9,749,411 11,792,203 4,858,481 3,967,213 20,421,805 50,789,113 ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

2015 . . . . . . . . . . . . . . 13,177,564 50,425 278,709 101,257 3,233,375 16,841,330 ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

Impairment of Assets Under ConstructionImpairment of assets under construction increased from U.S.$0 at 31 December 2015 to U.S.$765,291 at31 December 2016. This was primarily the result of amounts spent in respect of a contemplated unit (AD VII),which were historically treated as a project under construction. The rig was being marketed by ADES on anexclusivity basis for the unit owner, but the deal did not subsequently go through and the Group now reportsthis expenditure under impairment of assets under construction for 2016.

ProvisionsProvisions increased from U.S.$1.5 million in the year ended 31 December 2015 to U.S.$2.0 million in theyear ended 31 December 2016, an increase of U.S.$0.5 million, or 35.1 per cent. This was primarily the resultof further study of possible claims in relation to employee and withholding taxes, conducted by a third partyresearch report, and amounts are updated based on ongoing study.

Operating ProfitAs a result of the foregoing, operating profit increased from U.S.$28.8 million in the year ended 31 December2015 to U.S.$50.6 million in the year ended 31 December 2016, an increase of U.S.$21.8 million, or 75.7 per cent.

ESMA para 34

116

Finance CostsFinance Costs consisting of interest on bank credit facilities and loans increased from U.S.$4.4 million in theyear ended 31 December 2015 to U.S.$9.4 million in the year ended 31 December 2016, an increase of U.S.$5.0million, or 113.6 per cent., primarily due to the increase in the Group’s debt following its 2015 refinancingvia a new syndicated facility of U.S.$170 million and interest incurred on the EFG syndicated loan in the lasttwo months of the year.

Loss on disposal of property and equipmentLoss on disposal of property and equipment increased from U.S.$0 in the year ended 31 December 2015 toU.S.$7,537 in the year ended 31 December 2016. This was the result of a sale of company cars at less thanbook value, resulting in a loss upon disposal of assets within property and equipment.

Other incomeOther income increased from U.S.$0 in the year ended 31 December 2015 to U.S.$100,794 in the year ended31 December 2016. This was the result of a refund from the Misr for Central Clearing, Depository andRegistry, for fees paid by the company for the contemplated IPO in 2015.

Dividend IncomeDividend income decreased from U.S.$1.2 million in the year ended 31 December 2015 to U.S.$0 in the yearended 31 December 2016, a decrease of U.S.$1.2 million, or 100 per cent., because the Group recogniseddividends of U.S.$1.2 million from ECDC during the year ended 31 December 2015, but no dividends duringthe year ended 31 December 2016. The Group acquired the 48.75 per cent. ownership investment in ECDCon 30 March 2015 from AMAK.

Profit for the Year Before Income TaxAs a result of the foregoing, profit for the year before income tax increased from U.S.$25.6 million in the yearended 31 December 2015 to U.S.$41.3 million in the year ended 31 December 2016, an increase ofU.S.$15.7 million, or 61.1 per cent.

Income Tax ExpenseIncome tax expense increased from U.S.$0 in the year ended 31 December 2015 to U.S.$3.3 million in theyear ended 31 December 2016. This was the result of income tax liabilities incurred on the Group’s operationsin Algeria and Kingdom of Saudi Arabia.

For 2016, the income tax expense relates to the tax payable on the profit earned by the subsidiary branchesin Algeria and Kingdom of Saudi Arabia, as adjusted in accordance with the taxation laws and regulationsof the countries in which the Group operates. The tables below set forth the Group’s income tax expense forthe year indicated.


2016 2015–––––––––––––––––––––––––––

US$–––––––––––––––––––––––––––

Consolidated statement of profit or loss:Current income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,284,273 —Consolidated statement of financial position:Current liabilities:Balance at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —Charge for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,284,273 —Paid during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (427,210) —

–––––––––––– –––––––––––

Balance at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,857,063 —–––––––––––– ––––––––––––––––––––––– –––––––––––


117


2016 2015–––––––––––––––––––––––––––

US$–––––––––––––––––––––––––––

Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,296,996 25,627,818Tax at the domestic rates applicable to profits in the country concerned . . . . . . 2,650,811 —Tax effect of expenses that are not deductible for tax purpose . . . . . . . . . . . . . . 218,060Other taxes at lower rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415,402 —

–––––––––––– –––––––––––

Income tax expense recognised in the consolidated statement of profit or loss . . . 3,284,273 —–––––––––––– ––––––––––––––––––––––– –––––––––––

Profit for the YearAs a result of the foregoing, Profit for the Year increased from U.S.$25.6 million for the year ended31 December 2015 to U.S.$38.0 million for the year ended 31 December 2016, an increase of U.S.$12.4 million,or 48.3 per cent.

Total Comprehensive IncomeThe Group recognised zero in Other Comprehensive Income for the years ended 31 December 2015 and31 December 2016. As a result, the Group’s Total Comprehensive Income was U.S.$38.0 million for the yearended 31 December 2016, as compared to U.S.$25.6 million for the year ended 31 December 2015 an increaseof U.S.$12.4 million, or 48.3 per cent.

Results of Operations for the Year Ended 31 December 2015 compared to the Year Ended 31 December 2014RevenueRevenue increased from U.S.$75.2 million in the year ended 31 December 2014 to U.S.$101.0 million in theyear ended 31 December 2015, an increase of U.S.$25.9 million, or 34.4 per cent. This increase was primarilydue to the introduction of Admarine VI in April, as well as the full year operation of Admarine V, which hadbegun its contract in July 2014.

The following table sets forth the components of the Group’s revenue for the years indicated:


2016 2015 % Change–––––––––––– –––––––––––– –––––––––––

US$–––––––––––––––––––––––––––– –––––––––––

Units operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,607,349 60,868,288 48.9Catering services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,864,199 1,096,134 70.1Remote operating vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,741,125 7,654,768 (64.2)Projects income(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,666,202 5,321,192 6.5Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,531 231,264 (30.6)

–––––––––––– –––––––––––– –––––––––––

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,039,406 75,171,646 34.4–––––––––––– –––––––––––– ––––––––––––––––––––––– –––––––––––– –––––––––––

(1) Projects income represents services relating to outsourcing various operating projects for clients such as maintenance and repairservices.

Revenue from Units Operations

Revenue from Units Operations increased from U.S.$60.9 million in the year ended 31 December 2014 toU.S.$90.6 million in the year ended 31 December 2015 an increase of U.S.$29.7 million, or 48.9 per cent.,primarily due to the introduction of Admarine VI in April, as well as the full year operation of Admarine V,which had begun its contract in July 2014.

Revenue from Other Sources—Catering Services, ROV, Projects Income and Others

Revenue from Catering Services increased from U.S.$1.1 million in the year ended 31 December 2014 toU.S.$1.9 million in the year ended 31 December 2015, an increase of U.S.$0.8 million, or 70.0 per cent. Thisincrease was primarily a result of an increase in catering services related to personnel on new operationalunits. Revenue from ROV services decreased from U.S.$7.7 million in the year ended 31 December 2014 toU.S.$2.7 million in the year ended 31 December 2015, a decrease of U.S.$4.9 million, or 64.2 per cent. This

118

decrease was primarily a result of the Group’s decision to discontinue its ROV services in June 2015 due toits low profitability levels. Revenue from Projects Income increased from U.S.$5.3 million in the year ended31 December 2014 to U.S.$5.7 million in the year ended 31 December 2015, an increase of U.S.$.3 million,or 6.5 per cent., reflecting a slight increase in client work requests. Others revenue decreased from U.S.$231,264in the year ended 31 December 2014 to U.S.$160,531 in the year ended 31 December 2015, a decrease ofU.S.$70,733, or 30.6 per cent., reflecting a reduced need for client rental services.

Cost of RevenuesCost of revenues increased from U.S.$39.0 million in the year ended 31 December 2014 to U.S.$52.3 millionin the year ended 31 December 2015, an increase of U.S.$13.3 million, or 34.0 per cent., primarily as a resultof an increase of one additional rig Admarine VI and the full year operation of Admarine V, as reflected inincreased depreciation expenses and increased crew salary costs. Another factor was increased maintenancecost associated with Admarine III and Admarine IV in 2015, as well as the increased equipment rental fordrill pipes needed for Admarine IV and Admarine V, which were needed to maintain utilisation while rigupgrades took place.

The following table sets forth the components of the Group’s cost of revenues for the years indicated:


2015 2014 % Change–––––––––––– –––––––––––– –––––––––––

US$–––––––––––––––––––––––––––– –––––––––––

Remote operating vehicles direct costs . . . . . . . . . . . . . . . . . . . . 2,104,377 6,257,975 (66.4)Project direct costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,087,186 3,351,464 22.0Maintenance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,937,674 3,338,999 77.8Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,793,189 7,108,617 51.8Rental equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,755,222 1,584,840 136.9Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,581,367 2,684,606 (3.8)Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,350,670 6,652,957 55.6Other costs(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,678,955 8,046,963 57.6

–––––––––––– –––––––––––– –––––––––––

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,288,640 39,026,421 34.0–––––––––––– –––––––––––– ––––––––––––––––––––––– –––––––––––– –––––––––––

(1) Other costs include a number of items, such as move costs, transportation costs, training expenses, tools and supplies, crewaccommodation, catering costs, permits and yard costs among other items. The largest cost item included U.S.$0.6 million intransportation costs, U.S.$0.7 million for customs clearance cost, and U.S.$0.7 million for training courses in 2014 and U.S.$2.1million of move and mobilisation costs in 2015.

Gross ProfitAs a result of the foregoing, gross profit increased from U.S.$36.1 million in the year ended 31 December 2014to U.S.$48.8 million in the year ended 31 December 2015, an increase of U.S.$12.6 million, or 32.3 per cent.

General and Administrative ExpensesThe following table sets forth the components of the Group’s general and administrative expenses for theyears indicated:


2015 2014 % Change–––––––––––– –––––––––––– –––––––––––

US$–––––––––––––––––––––––––––– –––––––––––

Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,693,097 6,121,988 25.7Depreciation and amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . 106,351 99,110 7.3Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,178,384 323,259 573.9Business travel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487,013 202,706 140.3Free zone expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,072,585 803,023 33.6Rental expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388,316 270,898 43.3Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,814,929 1,817,196 165.0Net foreign exchange (gain)/loss . . . . . . . . . . . . . . . . . . . . . . . . . 27,523 575,322 (95.2)

–––––––––––– –––––––––––– –––––––––––

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,768,198 10,213,502 64.2–––––––––––– –––––––––––– ––––––––––––––––––––––– –––––––––––– –––––––––––

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General and administrative expenses increased from U.S.$10.2 million in the year ended 31 December 2014to U.S.$16.8 million in the year ended 31 December 2015, an increase of U.S.$6.6 million, or 64.2 per cent.This increase was due in part to a large increase in professional fees associated with ADES’ 2015 refinancingand a contemplated initial public offering. Other expenses increased from U.S.$1.8 million in the year ended31 December 2014 to U.S.$4.8 million in the year ended 31 December 2015, an increase of U.S.$3.0 million.This includes several items related to the Group’s 2015 refinancing, including a $1.2 million prepaymentpenalty for early payment of existing debts with the proceeds of the refinancing facility, U.S $0.7 million forbank services charges for the syndication loan and U.S $0.75 million consisting of marketing fees related tothe previous offering transaction and corporate and social responsibility contributions.

Staff cost increased from U.S.$6.1 million in the year ended 31 December 2014 to U.S.$7.7 million in the yearended 31 December 2015, an increase of U.S.$1.6 million, or 25.7 per cent., primarily as a result of increasesin employee salaries and increased head office head count by 68 additional employees from 2014 and employeebenefit distributions amounting to U.S.$1.6 million for dividends declared for 2014 net profit. Depreciationand amortization increased modestly in 2016 as a result of the addition of new vehicles, telecommunicationsdevices, computers, and other head office items. Professional fees increased from U.S.$323,259 in the yearended 31 December 2014 to U.S.$2.2 million in the year ended 31 December 2015, an increase of U.S.$1.9million, primarily as a result of costs relating to the syndication loan and a contemplated public offeringtransaction. Business travel increased from U.S.$202,706 in the year ended 31 December 2014 to U.S.$487,013in the year ended 31 December 2015, an increase of U.S.$284,307, primarily as a result of increased travelrelated to starting the Group’s Algeria operations and to a contemplated public offering. Free zone expensesincreased from U.S.$803,023 in the year ended 31 December 2014 to U.S.$1.1 million in the year ended31 December 2015, an increase of U.S.$269,562, or 33.6 per cent., reflecting revenue growth. Rental expensesincreased from U.S.$270,898 in the year ended 31 December 2014 to U.S.$388,316 in the year ended31 December 2015, an increase of U.S.$117,418, or 43.3 per cent., primarily as a result of the increase in thenumber of head office units and storage units (mainly for office supplies and accounting records) in Cairofrom 2014 to 2015. Other expenses increased from U.S.$1.8 million in the year ended 31 December 2014 toU.S.$4.8 million in the year ended 31 December 2015, an increase of U.S.$3.0 million or 165.0 per cent. Thiswas primarily the result of the Group’s 2015 refinancing, including a $1.2 million prepayment penalty forearly payment of existing debts with the proceeds of the refinancing facility, U.S $0.7 million for bank servicescharges for the syndication loan and U.S $0.75 million consisting of marketing fees related to theaforementioned contemplated public offering transaction. For the year ended 31 December 2015 the Grouprealised a net foreign exchange loss of U.S.$27,523 as compared to a net foreign exchange loss of U.S.$575,322for the year ended 31 December 2014, a decrease of U.S.$547,799 or 95.2 per cent.

Provision for Impairment of Trade ReceivablesThe charge under Provision for Impairment of Trade Receivables increased from U.S.$300,000 for the yearended 31 December 2014 to U.S.$1.7 million for the year ended 31 December 2015, an increase ofU.S.$1.4 million. This was primarily the result of applying the company policy to assess amounts that arenot individually significant, but which are past due, and make provision for impairment a certain percentageof amounts that are overdue by a certain number of days, taking into account historical collection trends ofthe client, and in some cases specific client situations.


As at 31 December–––––––––––––––––––––––––––

2015 2014––––––––––– –––––––––––

US$–––––––––––––––––––––––––––

As at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,041,269 920,639Charge for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,666,026 300,000Used during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,954,841) (179,370)

––––––––––– –––––––––––

As at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 752,454 1,041,269––––––––––– –––––––––––––––––––––– –––––––––––

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As at 31 December, the aging analysis of un-impaired trade receivables is as follows:

Neither past Past due but not impaired––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––due nor

impaired <30 days 30-60 days 61-90 days >90 days Total–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

US$–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

2015 . . . . . . . . . . . . . . 13,177,564 50,425 278,709 101,257 3,233,375 16,841,330–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

2014 . . . . . . . . . . . . . . 7,819,986 6,048,505 1,490,242 833,158 1,409,440 17,601,331–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––––––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

Impairment of Assets Under ConstructionThe Group recognised U.S.$0 impairment of assets under construction for the years ended 31 December 2015or 31 December 2014.

ProvisionsProvisions increased from U.S.$0 in the year ended 31 December 2014 to U.S.$1.5 million in the year ended31 December 2015, due to an expected tax liability on the basis of a report from the Group’s tax advisorrelated to payroll and withholding tax.

Operating ProfitAs a result of the foregoing, operating profit increased from U.S.$25.6 million in the year ended 31 December2014 to U.S.$28.8 million in the year ended 31 December 2015, an increase of U.S.$3.2 million, or 12.4 percent.

Finance CostsFinance costs consisting of interest on bank credit facilities and loans increased from U.S.$2.4 million in theyear ended 31 December 2014 to U.S.$4.4 million in the year ended 31 December 2015, an increase ofU.S.$2.0 million, 83.6 per cent., primarily due to early repayment of the interest of existing loans after the2015 refinancing syndication.

Loss on Disposal of Property and EquipmentThe Group recognised zero in loss on disposal of property and equipment in the years ended 31 December2014 and 31 December 2015.

Other incomeThe Group recognised zero in Other Income in the years ended 31 December 2014 and 31 December 2015.

Dividend incomeThe Group recognised dividends of U.S.$1.2 million from ECDC during the year ended 31 December 2015.The Group recognised no dividend income in the years ended 31 December 2014. The Group acquired the48.75 per cent. ownership investment in ECDC on 30 March 2015 from AMAK.

Profit for the Year before Income TaxAs a result of the foregoing, profit for the year before income tax increased from U.S.$23.2 million in the yearended 31 December 2014 to U.S.$25.6 million in the year ended 31 December 2015, an increase of U.S.$2.4million, or 10.3 per cent.

Income Tax ExpenseThe Group recognised zero in income tax expense in the years ended 31 December 2015 and 31 December2014.

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Profit for the YearAs a result of the foregoing, Profit for the Year increased from U.S.$23.2 million for the year ended31 December 2014 to U.S.$25.6 million for the year ended 31 December 2015, an increase of U.S.$2.4 million,or 10.3 per cent.

Total Comprehensive Income

The Group recognised zero in Other Comprehensive Income in the years ended 31 December 2014 or31 December 2015. As a result, the Group’s Total Comprehensive Income was U.S.$25.6 million for the yearended 31 December 2015 as compared to U.S.$23.2 million for the year ended 31 December 2014, an increaseof U.S.$2.4 million, or 10.3 per cent.

Liquidity and Capital ResourcesCapital ResourcesThe Group’s primary source of liquidity has historically been cash flows provided from operating activitiesand the Group expects that this will continue to be its principal source of liquidity in the future. The Group’sshort-term credit facilities consist of overdraft facilities as described below (see “—Liabilities and

Indebtedness”). The Group also enters into working capital facilities in order to manage its working capitalthroughout the year. In addition, as of 31 December 2016, the Group had outstanding interest bearing loansand borrowing of U.S.$235.7 million, whose proceeds were used to finance the acquisition and refurbishmentof additions to the Group’s fleet, acquisition of operating units, and other operational needs.

Cash Flows for the Years Ended 31 December 2016, 2015 and 2014The following table sets forth the principal items of the statement of cash flows for the years indicated:


2016 2015 2014–––––––––––– –––––––––––– –––––––––––

US$–––––––––––––––––––––––––––––––––––––––––––

Net cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . 35,260,543 39,761,547 27,608,607Net cash flows used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . (134,151,569) (99,930,138) (29,373,927)Net cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . 78,733,531 71,862,806 11,367,059Net (decrease)/increase in cash and cash equivalents . . . . . . . . . . . . . . . (20,157,495) 11,694,215 9,601,739Cash and cash equivalents at the end of the year . . . . . . . . . . . . . . . . . . 5,192,864 25,350,359 13,656,144

Net cash flows from operating activities

In the year ended 31 December 2016, net cash flows from operating activities were U.S.$35.3 million ascompared to U.S.$39.8 million in the year ended 31 December 2015, a decrease of U.S.$4.5 million or 11.3 percent. This decrease was primarily attributable to an increase of U.S.$36.3 million in the trade receivablesbalance due to several factors such as the lockup of cash due to two clients, one of whose accounts have beenpartially settled in the subsequent period. However, the Group’s EBITDA increased from U.S.$42.0 millionfor the year ended 31 December 2015 to U.S.$72.0 million for the year ended 31 December 2016. This changeresulted from several factors, including cost savings from supplier and insurance discounts and replacingcertain foreign vendors with local vendors; increased EBITDA from rigs in the Kingdom of Saudi Arabia,ADES 3 and the MOPU, and full-year operation of ADES 2 and Admarine VI compared to 2015.

In the year ended 31 December 2015, net cash flows from operating activities were U.S.$39.8 million as comparedto U.S.$27.6 million in the year ended 31 December 2014, an increase of U.S.$12.2 million, or 44.0 per cent.This increase was primarily attributable to an increase in EBITDA from U.S.$32.3 million for the year ended31 December 2014 to U.S.$42.0 million for year ended 31 December 2015. This increase is mainly due to thefull-year operation of Admarine V and the addition of Admarine VI and ADES 2 revenue streams.

Net cash flows used in investing activities

In the year ended 31 December 2016, net cash flows used in investing activities were U.S.$134.2 million, ascompared to U.S.$99.9 million in the year ended 31 December 2015, an increase of U.S.$34.2 million, or34.2 per cent. The increase was primarily attributable to an increase in expansion capital expenditure (thatinvested in new rigs and operating assets) to U.S$130.5 million and total maintenance capital expenditure

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(including equipment and other assets ) to U.S.$3.6 million in the year ended 31 December 2016. The mainexpansion capital expenditure items in 2016 were the acquisitions of the rigs in the Kingdom of Saudi Arabiaand of ADES 3.

In the year ended 31 December 2015, net cash flows used in investing activities were U.S.$99.9 million, ascompared to U.S.$29.4 million in the year ended 31 December 2014, an increase of U.S.$70.6 million, or240.2 per cent. The increase was attributable to an increase in expansion capital expenditure (that invested innew rigs and operating assets) to U.S.$93.6 million and total maintenance capital expenditure (equipmentand other assets) to U.S.$4.4 million in the year ended 31 December 2015 and investment in ECDC of U.S.$2.0million. The main expansion capital expenditure items were the acquisition and refurbishment of AdmarineVI and the refurbishment and conversion of the MOPU and purchase of ADES 2. See “—Factors Affecting

Results of Operations and Liquidity—Acquisitions”.

Net cash flows from financing activities

In the year ended 31 December 2016, net cash flows from financing activities was U.S.$78.7 million ascompared to U.S.$71.9 million in the year ended 31 December 2015, an increase of U.S.$6.9 million, or 9.6 percent. This increase was primarily attributable to the drawdown of U.S $35 million from the $170 millionsyndication loan and the receipt of a U.S $55 million syndication loan by the end of October 2016.U.S.$9.4 million interest was paid during 2016 as compared to U.S.$4.4 million in 2015. The Group drewU.S.$31.4 million on a revolving overdraft facility of which it repaid U.S.$21.4 million during the same period.During 2016, there was a dividend paid of U.S.$13.6 million for the unpaid dividends amount from the prioryear and the paid portion for the dividends declared for the year.

In the year ended 31 December 2015, net cash flows from financing activities was U.S.$71.9 million ascompared to U.S.$11.4 million in the year ended 31 December 2014, an increase of U.S.$60.5 million or532.2 per cent. This increase was primarily attributable to the receipt of U.S.$200 million that includedworking capital facilities and loans during 2015. The Group paid U.S.$4.4 million interest during 2015 ascompared to U.S.$2.4 million in 2015. The Group repaid U.S.$118.7 million worth of outstanding loans in2015, in addition to arrangement fees relating to the U.S.$170 million 2015 refinancing. During 2015, therewas a dividend distribution of U.S.$5.7 million for unpaid dividends amount from the prior year and the paidportion for the dividends declared for the year.

In 2014, shareholders subscribed for additional issued and paid in capital in ADES in the amount of U.S.$10million, resulting in a total paid in capital of ADES of U.S.$32 million with a par value per share of U.S.$10.

Contractual CommitmentsAs at 31 December 2016, the Group and its affiliates had U.S.$317.1 million in total undiscounted financialliabilities, which included interest-bearing loans and borrowings, trade and other payables and amounts dueto related parties. See “—Liquidity Risk—Financial Liabilities”.

The table below summarises the maturity profile of the Group’s financial liabilities as at 31 December 2016based on contractual undiscounted payments.

Less than 3 to 12 1 to 5 Over3 months months years 5 years Total

–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––US$

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

As at 31 December 2016Interest-bearing loans and borrowings . . 9,793,808 33,612,574 218,413,360 — 261,819,742Trade and other payables . . . . . . . . . . . . 43,805,477 7,351,816 — — 51,157,293Due to related parties . . . . . . . . . . . . . . . 4,081,532 — — — 4,081,532

–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

Total undiscounted financial liabilities . . 57,680,817 40,964,389 218,413,360 — 317,058,567–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––––––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

Capital ExpendituresCapital expenditure is defined as expenditure relating on acquiring or maintaining of property and equipment,which includes expansion capex and maintenance capex. Expansion capex means expenditure relating topurchase, upgrade, improve, or extend the life of long-term assets. Maintenance capex means the purchase

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of essential equipment and the overhaul expense relating to installing that equipment; this is capex that iscapitalised onto the relevant operating unit. In the year ended 31 December 2016, the Group’s capitalexpenditure totalled U.S.$134.2 million, compared to U.S.$98.0 million in the year ended 31 December 2015and U.S.$29.4 million in the year ended 31 December 2014. Maintenance capex for the year ended31 December 2016 was U.S.$3.6 million, compared to U.S.$4.4 million for the year ended 31 December 2015and U.S.$5.8 million for the year ended 31 December 2014. Expansion capex was U.S.$121.3 million for theyear ended 31 December 2016 (excluding the value of inventory from acquired rigs), compared to U.S.$93.6million for the year ended 31 December 2015 and U.S.$23.6 million for the year ended 31 December 2014.

Liabilities and IndebtednessOver the last three years, the Group has raised significant amounts through short-term and long-termborrowings to supplement the net cash generated by its operating activities in order to fund the capitalexpenditures required to develop and expand its operations. As at 31 December 2016, the Group’s totalliabilities were U.S.$293.9 million. As of 31 December 2016, the Group had interest bearing loans andborrowings of U.S.$235.7 million, of which U.S.$45.8 million was due to mature within 12 months andU.S.$189.9 million was due to mature after 12 months.

The following table sets forth the interest bearing loans and borrowings of the Group as at the dates indicated:

As at 31 December–––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014–––––––––––– –––––––––––– –––––––––––

US$–––––––––––––––––––––––––––––––––––––––––––

Balance as at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136,208,434 54,237,005 47,225,893Borrowings drawn during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,899,330 200,662,457 20,751,652Borrowings repaid during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,373,845) (118,691,028) (13,740,540)Balance as at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235,733,919 136,208,434 54,237,005Maturing within 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,804,082 5,441,934 29,122,855Maturing after 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189,929,837 130,766,500 25,114,150

––––––––––– ––––––––––– –––––––––––

Balance as at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235,733,919 136,208,434 54,237,005––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– –––––––––––

Bank Loans and Credit Facilities

As of 31 December 2016, the Group had the following bank loans and credit facilities:

• Facilities Co-ordination Agreement. A five-year, U.S.$170 million facility agreed in November 2015between ADES, EBRD as arranger, Arab International Bank (“AIB”), as conventional facility agent,security agent and global agent, Islamic Corporation for the Development of the Private Sector, asoriginal murabaha participant and the financial institutions listed therein as the original conventionallenders. The agreement specifies portions of the facility to be used for refinancing existing debt, newworking capital and acquisitions, refinancing existing working capital, and corporate purposes. Thesecurity package for the loan under the Facilities Co-ordination Agreement includes (i) assignment ofproceeds of customers’ contracts; (ii) mortgage over the rigs ADMARINE I, II, III, IV, V, VI and VIII;(iii) pledge in respect of collection accounts and insurance accounts and; (iv) promissory notes. Withrespect to the Conventional Facility, the interest rate per annum is equal to LIBOR plus a margin of4.50 per cent. (except for the tranche made available by AIB, regarding which please see “—AIB Facility”,below). As to the Murabaha Facility, the mark-up (equivalent to interest rate under the ConventionalFacility) is capped at 20 per cent. per annum. ADES also pays certain other fees and costs, including acommitment fee on the available commitment fees to each agent, security agent and arranger. Thefacilities agreement is due to terminate with the final repayment instalment 60 months after theagreement (except for the tranche made available by AIB, regarding which please see “—AIB Facility”,below). As of 30 March 2017, ADES had fully utilised the funds made available under the Facilities.See Part XV: “Additional Information—Material Contracts—Facilities Co-ordination Agreement.”

• EFG Hermes Syndicated Loan. A five-year, U.S.$55 million term loan facility agreed in October 2016between ADES, EFG Hermes Advisory as arranger, Arab International Bank, as agent and offshoresecurity agent, Al Ahli Bank of Kuwait K.S.C.P, as onshore security agent and the financial institutionslisted therein as the original lenders for the purpose of partially financing the purchase price of the rigsADMARINE 261, 262 and 266 and payment of pre-operating expenses. The security package for theloan under EFG Syndicated Loan includes (i) charter assignment; (ii) mortgage; (iii) general assignment


124

of insurances, earnings and requisition compensation; (iv) pledge over collection accounts and;(v) assignment of insurances, all in respect of rigs Admarine 261, 262 and 266. The interest rate perannum applicable to the loans under the facility, except with respect to the portion described below, isequal to LIBOR plus a margin of 5.5 per cent. per annum. ADES also pays certain other fees includingfees payable to the agent and the security agent. The loans under facility are scheduled to be fully repaidby November 2021 The facility includes U.S.$25 million contributed by EFG Hermes with an interestrate of 11.0 per cent. + 3M LIBOR, which tranche is currently in the process of being transferred to anew lender at a rate of 5.5 per cent. + 3M LIBOR, in line with the rest of the loan. As of 30 March2017, ADES had fully utilised the facility. See Part XV: “Additional Information—Material

Contracts—EFG Syndicated Loan.”

• AIB Facility. A facility agreement dated November 12, 2015, as amended, with AIB (the “AIB FacilityAgreement”). Under the AIB Facility Agreement an amount of U.S.$25 million is made available toADES, as part of the Facilities Co-ordination Agreement and particularly the Conventional facility.The facilities available under the AIB Facility Agreement are divided as follows: (i) Tranche A line ofcredit facility up to U.S.$ 10 million and; (ii) Tranche B revolving term loan of up to (a) U.S.$12,500,000and; (b) the equivalent of U.S.$2,500,000 in EGP at the exchange rate of U.S.$1 to EGP 16. The purposeof the facilities is the financing, with respect to Tranche B, of operational costs of the assets and anyother assets acquired after the signing date and, with respect to Tranche A, the contingent liabilities forthe opening of bid bonds and performance bonds. The security package for the facilities under the AIBFacility Agreement is the same as the one provided under the Facilities Co-ordination Agreement(subject to the terms and conditions of the Intercreditor Agreement). The AIB Facility Agreement isgoverned by Egyptian law. The interest rate per annum applicable to facilities made under the AIBFacility Agreement is equal to (i) LIBOR plus a margin of 5.50 per cent. per annum with respect to U.S.dollar amounts of the revolving loan and; (ii) Corridor Lending Rate announced by the Central bankof Egypt plus a margin of 2.50 per cent. with respect to EGP amounts of the revolving loan. ADESalso pays certain other fees, costs and commissions. The facility is renewable at AIB’s discretion. As of30 March 2017, ADES had utilised U.S.$8.2 million under Tranche A and U.S.$12.4 million andEGP40.0 million under Tranche B of the funds made available under the AIB Facility Agreement. TheTranche A credit facility of U.S.$10 million under the AIB Facility Agreement is scheduled to be fullyrepaid within twelve (12) months from 11 November 2016, the date of the amendment to the AIBFacility Agreement. Each utilisation of the Tranche B revolving term loan facilities are to be repaidwithin 180 days of drawdown and the entire Tranche B is in any case to be repaid within twelve (12)months from 11 November 2016, the date of the amendment to the AIB facility Agreement. See PartXV: “Additional Information—Material Contracts—AIB Facility Agreement”

• EGB Overdraft. An overdraft credit facility with Egyptian Gulf Bank (“EGB”) valid from 1 October2016 until September 30, 2017 (the “EGB Overdraft”). The EGB Overdraft grants ADES an overdraftfacility limited to EGP 45 million renewable upon EGB’s approval, for the purpose of funding theoperational costs of the rigs in Egypt. EGB Overdraft is governed by Egyptian law. The overdraft issubject to an annual interest rate equal to Corridor Lending Rate announced by the Central bank ofEgypt (15.75 per cent. at the date of the agreement) plus a margin of 1.25 per cent. As of 30 March2017, ADES had borrowed EGP 42.9 million under the overdraft. ADES must repay any withdrawnamounts by September 30, 2017. EGB may, at its sole discretion, cancel or amend the amounts availableunder EGB Overdraft or require mandatory prepayment by giving a notice. To secure the repayment,ADES issued a promissory note covering the amount of the overdraft. The provisions of this agreementare standard and do not include unusual provisions for transactions of this nature. Moreover, ADEShas undertaken that the leverage ratio shall remain 2:1 during the term of the facility. See Part XV:“Additional Information—Material Contracts—EGB Overdraft Facility Agreement.”

• AIB Overdraft. A facility agreement dated January 23, 2017, with AIB (the “AIB Overdraft”). The AIBOverdraft grants ADES a revolving, overdraft facility limit amounting to EGP 80 million renewable atAIB’s discretion, for the purpose of financing the operational costs of the rigs owned by ADES in Egypt.To secure the repayment, ADES issued a promissory note covering the amount of the overdraft. AIBOverdraft is governed by Egyptian law. The overdraft is subject to an annual interest rate equal toCorridor Lending Rate plus a margin of 2.50 per cent. and a commission of 0.075 per cent. on thehighest monthly debit balance. As of 30 March 2017, ADES had borrowed EGP 79.5 million under theoverdraft. ADES must withdraw the amounts and repay them within the same year two times andrepayment of withdrawn amounts must be repaid within 180 days from each drawdown date. In anyevent, any outstanding balance (including principal, interest, commission and expenses) under the

125

overdraft facility must be fully repaid within one (1) year from the signing date. See Part XV: “Additional

Information—Material Contracts—EGB Overdraft Agreement.”

• EGB Letter of Guarantee Facility. ADES has a credit facility with Egyptian Gulf Bank valid from1 October 2016 until September 30, 2017 (the “EGB LG”) for the issuance of preliminary and finalletters of guarantee locally with a limit of U.S.$13,895,000, renewable upon EGB’s approval. EGB LGis governed by Egyptian law. The letters of guarantee are subject to a commission of 3/1000 and 6/1000with respect to preliminary and final letters of guarantee respectively, paid quarterly. As at the date ofthis Prospectus, EGB issued to ADES certain letters of guarantee with an amount of U.S.$12.9 million.ADES must repay any outstanding balance under the facility by September 30, 2017. ADES undertakesthat it shall fully cover from its own resources the letters of guarantee (i) issued from 12 months withrespect to preliminary letters of guarantee and; (ii) issued from a period exceeding 3 years with respectto final letters of guarantee. Moreover, ADES undertakes that the leverage ratio shall remain 2:1 duringthe term of the facility. As a security package, ADES signed a promissory note covering the amount ofthe facility. This agreement is subject to the same terms and conditions applicable to EGB Overdraft.

All of the Group’s debt is held by ADES; the Company has no debt.

See Part II: “Risk Factors—Risks relating to the Group’s Business—The Group has a significant level of debt,

and could incur additional debt in the future. The Group’s debt could have significant consequences for its business

and future prospects” and “Risk Factors—The Group is required to comply with certain financial and other

restrictive covenants.”

For more information on the Group’s bank loans and credit facilities and the financial and other covenantsapplicable thereunder, see Part XV: “Additional Information—Material Contracts” and Note 18 inPart X:“Historical Financial Information of the Group”.

Off-Balance Sheet ArrangementsAs at 31 December 2016, the Group had no off-balance sheet arrangements beyond those specified in Note27 to the Historical Financial Information of the Group for the years ended 31 December 2016, 2015 and2014, included in the Prospectus. The Group reports all recognised contingent liabilities and commitmentsas provisions, or otherwise discloses them in its financial statements.

Contingent liabilities and commitmentsUnder its client contracts, the Group typically provides unconditional, irrevocable letters of guarantee to theclient representing 5 per cent. of the value of each contract as a performance guarantee and various insuranceundertakings.

The table below sets for the Group’s contingent liabilities as of the dates indicated.

As at 31 December––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014––––––––––– ––––––––––– –––––––––––

US$––––––––––––––––––––––––––––––––––––––––––

Contingent liabilities

Letter of guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,839,083 21,540,428 6,885,270––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– –––––––––––

Contingent liabilities represent letters of guarantee issued in favour of General Authority for Investment,Petrobel Group, Egyptian General Petroleum Corporation, Petro Gulf of Suez, Suze Abu Zenima PetroleumCompany (Petrozenima) and Association Sonatrach—First Calgary Petroleum. The cover margin on suchguarantees amounted to U.S.$3.5 million as of 31 December 2016, compared to U.S.$4.7 million as of31 December 2015 and U.S.$1.6 million as of 31 December 2014.

126

Quantitative and Qualitative Disclosures about Market RiskThe Group’s principal financial liabilities, comprise creditors, due to related parties, interest bearing loansand borrowings and other credit balances. The main purpose of these financial liabilities is to finance theGroup’s operations and to provide support to its operations. The Group’s principal financial assets includecash in hand and at banks, accounts receivable, due from related parties and other debit balances that arrivedirectly from its operations.

The Group is exposed to credit risk, market risk (foreign exchange and interest rate risks), and liquidity risk.Below is information about the Group’s exposure to each of the above risks, the Group’s objectives, policiesand processes for measuring and managing risk, and the Group’s management of capital. The Group’s currentfinancial risk management framework is a combination of formally documented risk management policiesin certain areas and informal risk management policies in other areas.

Credit RiskCredit risk is the risk that counterparty will not meet its obligations under a financial instrument or customercontract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarilyfor trade receivables and due from related parties) and from its financing activities, including letter ofguarantees with banks, foreign exchange transactions and other financial instruments. As at 31 December2016, the top three debtors of the Group represent 66 per cent. compared to 57 per cent. as at 31 December2015 and 69 per cent. as at 31 December 2016 of the total trade receivables while 48 per cent. of the totaltrade receivables are from government entities as compared to 44 per cent. in 2015 and 24 per cent. in 2014.

Trade receivables

Customer credit risk is managed by the Group’s established policy, procedures and controls relating tocustomer credit risk management. Credit quality of the customer is assessed based on a credit rating policyand individual credit limits are defined in accordance with this assessment. Outstanding customer receivablesare regularly monitored.

The requirement for impairment is analysed at each reporting date on an individual basis for major clients.Additionally, a large number of minor receivables are grouped into homogenous groups and assessed forimpairment collectively. The calculation is based on actual incurred historical data. The maximum exposureto credit risk at the reporting date is the carrying value of each class of financial assets. The Group does nothold collateral as security. The Group evaluates the concentration of risk with respect to trade receivables aslow, as its wide number of customers operates in highly independent markets. In addition, instalment duesare monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

Other financial assets and bank balances

Credit risk from balances with banks and financial institutions is managed by the Group’s treasury departmentin accordance with the Group’s policy. Counterparty credit limits are reviewed by the Group’s Board ofDirectors on an annual basis, and may be updated throughout the year subject to approval of the Group’ssenior management. The limits are set to minimise the concentration of risks and therefore mitigate financialloss through potential counterparty’s failure to make payments. The Group’s exposure to credit risk for thecomponents of the consolidated statement of financial position is the carrying amounts of these assets. TheGroup limits its exposure to credit risk by only placing balances with international banks and reputable localbanks. Management does not expect any counterparty in failing to meet its obligations.

Due from related parties

Due from related parties relates to transactions arising in the normal course of business with minimal creditrisk, with a maximum exposure equal to the carrying amount of these balances.

Market riskMarket risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate becauseof changes in market prices, such as interest rate risk and currency risk. Financial instruments affected bymarket risk include: loans and borrowings. The Group neither designate hedge accounting or hold or issuederivative financial instruments.

[ESMA para 37](if includes debtand loans)

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Interest Rate RiskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuatebecause of changes in market interest rates. The Group’s exposure to the risk of changes in market interestrates relates primarily to the Group’s long-term debt obligations with floating interest rates.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on loans andborrowings. With all other variables held constant, the Group’s profit is affected through the impact onfloating rate borrowings, as follows:

Increase/decrease Effect on profitin basis points before income tax

––––––––––––––– –––––––––––––––US$

31 December 2016USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +100 (1,044,883)USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –100 1,044,88331 December 2015USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +100 (588,449)USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –100 588,44931 December 2014USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +100 (209,474)USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –100 209,474

Foreign Currency RiskForeign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuatebecause of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchangerates relates primarily to the Group’s operating activities (when revenue or expense is denominated in adifferent currency from the Group’s functional currency).

The following tables demonstrate the sensitivity to a reasonably possible change in USD exchange rates, withall other variables held constant. The impact on the Group’s profit is due to changes in the value of monetaryassets and liabilities. The Group’s exposure to foreign currency changes for all other currencies is not material.

Change in Effect on profitUSD rate before income tax

––––––––––––––– –––––––––––––––US$

31 December 2016EGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +10% 586,006EGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –10% (586,006)31 December 2015EGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +10% 533,912EGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –10% (533,912)31 December 2014EGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +10% 57,532EGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –10% (57,532)

Liquidity RiskThe cash flows, funding requirements and liquidity of the Group are monitored by Group management. TheGroup’s objective is to maintain a balance between continuity of funding and flexibility through the use ofbanks overdraft and bank loans. The Group assessed the concentration of risk with respect to refinancing itsdebt and concluded it to be low. Access to sources of funding is sufficiently available and debt maturing within12 months can be rolled over with existing lenders.

For a summary of the maturity profile of the Group’s financial liabilities for 2014-2016 based on contractualundiscounted payments, see Note 25 in “Part X—Historical Financial Information of the Group”.

ESMA para 33

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Capital managementCapital includes share capital, share application money and retained earnings.

The primary objective of the Group’s capital management is to ensure that it will be able to continue as agoing concern while maintaining a strong credit rating and healthy capital ratios in order to support itsbusiness and maximise shareholder value. The Group’s strategy remains unchanged since inception. TheGroup manages its capital structure and makes adjustments to it in light of changes in economic conditionsand the requirements of the financial covenants. To maintain or adjust the capital structure, the Group mayadjust the dividend payment to shareholders or return capital to shareholders. The Group monitors capitalusing a gearing ratio, which is net debt divided by total capital plus net debt. The Group’s policy is to keepthe gearing ratio between 30 per cent. and 80 per cent. The Group includes within net debt, interest bearingloans and borrowings, trade and other payables, less cash and cash deposits, excluding discontinuedoperations.

As at 31 December–––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014–––––––––––– –––––––––––– ––––––––––––

US$–––––––––––––––––––––––––––––––––––––––––––

Interest—bearing loans and borrowings(1) . . . . . . . . . . . . . . . . . . . 235,733,919 136,208,434 54,237,005Bank balance and cash(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,192,864) (25,350,359) (13,656,144)Net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,541,055 110,858,075 40,580,861Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,908,383 83,616,467 73,828,649

–––––––––––– –––––––––––– ––––––––––––

Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335,449,438 194,474,542 114,409,510–––––––––––– –––––––––––– –––––––––––––––––––––––– –––––––––––– ––––––––––––

Gearing ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69% 57% 35%

Notes:(1) See Note 18 in Part X: “Historical Financial Information of the Group”.(2) See Note 11 in Part X: “Historical Financial Information of the Group”.

Related Party Transactions and BalancesFor information regarding transactions with related parties, see Part XV: “Additional Information—Related

Party Transactions” and Note 24 to the Historical Financial Information included in Part X: “Historical

Financial Information of the Group”.

Significant Accounting PoliciesThe historical financial information in Part X has been prepared in accordance with International FinancialReporting Standards. The preparation of the Historical Financial Information in accordance with IFRSrequires the Group’s management to make estimates and assumptions that affect the reported amounts ofassets, liabilities, revenue and expenses during the financial year. Actual results could differ from theseestimates. Set forth below are summaries of certain of the most significant accounting policies used by theGroup’s management. See Note 2 to the Historical Financial Information included in Part X: “Historical

Financial Information on the Group”.

Significant Accounting Estimates, Judgments and AssumptionsJudgmentsThe preparation of the Group’s consolidated Historical Financial Information requires management to makejudgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets,liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty aboutthese assumptions and estimates could result in outcomes that require a material adjustment to the carryingamount of the asset or liability affected in future periods.

In the process of applying the Group’s accounting policies, management has made certain judgments,estimates and assumptions in relation to the accounts receivable, customer credit periods and doubtful debtsprovisions, creditors’ payment period, useful lives and impairment of property and equipment, income taxesand various other policy matters. These judgments have the most significant effects on the amounts recognisedin the Historical Financial Information.

129

Finance lease commitments—Group as lessee

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classifiedas operating leases. Operating lease payments are recognised as an expense in the consolidated incomestatement on a straight line basis over the period of the lease. Lease incentives, typically rent free period, isrecognised in the same manner as operating lease rentals.

Estimates and assumptionsImpairment of trade receivables

An estimate of the collectible amount of trade receivables is made when collection of the full amount is nolonger probable. For individually significant amounts, this estimation is performed on an individual basis.Amounts which are not individually significant, but which are past due, are assessed collectively and aprovision applied according to the length of time past due, based on historical recovery rates. At 31 December2016, gross trade receivables were U.S.$53,903,764, compared to U.S.$17,593,784 at 31 December 2015 andU.S.$18,642,600 at 31 December 2014 and the provision for impairment in trade receivables wasU.S.$3,114,651 as compared to U.S.$752,454 in 2015 and U.S.$1,041,269 in 2014. Any difference between theamounts actually collected in future periods and the amounts expected will be recognised in the consolidatedstatement of profit or loss.

Taxes

The Group is exposed to income taxes in certain jurisdictions. Significant judgement is required to determinethe total provision for taxes. Uncertainties exist with respect to the interpretation of complex tax regulations,changes in tax laws, and the amount and timing of future taxable income. Given the wide range ofinternational business relationships and the long-term nature and complexity of existing contractualagreements, differences arising between the actual results and the assumptions made, or future changes tosuch assumptions, could necessitate future adjustments to tax income and expense already recorded. TheGroup establishes provisions, based on reasonable estimates, for possible consequences of audits by the taxauthorities of the respective counties in which it operates. The amount of such provisions is based on variousfactors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxableentity and the responsible tax authority. Such differences in interpretation may arise for a wide variety ofissues depending on the conditions prevailing in the respective domicile of the Group companies. At31 December 2016, income tax payable was U.S.$2,857,063, compared to U.S.$0 at 31 December 2015 andU.S.$0 at 31 December 2014.

Impairment of non-financial assets

The Group assesses whether there are any indicators of impairment for all non-financial assets at eachreporting date. The non-financial assets are tested for impairment when there are indicators that the carryingamounts may not be recoverable. When value in use calculations are undertaken, management estimates theexpected future cash flows from the asset or cash-generating unit and chooses a suitable discount rate in orderto calculate the present value of those cash flows.

Useful lives of property, plant and equipment

The Group’s management determines the estimated useful lives of its property, plant and equipment forcalculating depreciation. This estimate is determined after considering the expected usage of the asset orphysical wear and tear. Management reviews the residual value and useful lives annually and futuredepreciation charge would be adjusted where the management believes the useful lives differ from previousestimates.

Impairment of inventories

Inventories are held at the lower of cost and net realisable value. When inventories become old or obsolete,an estimate is made of their net realisable value. At 31 December 2016, gross inventories were U.S.$17,777,071as compared to U.S.$7,167,386 at 31 December 2015 and U.S.$4,843,570 at 31 December 2014, with noprovisions for slow moving items as compared to U.S.$0 in 2015 and 2014. Any difference between theamounts actually realised in future periods and the amounts expected will be recognised in the consolidatedstatement of profit or loss.

130

Certain Other Non-IFRS MeasuresThe table and accompanying notes below describe certain non-IFRS measures referred to in this Prospectus.

As at and for year ended 31 December–––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014–––––––––––– –––––––––––– ––––––––––––

(U.S.$ unless indicated)–––––––––––––––––––––––––––––––––––––––––––

Non-IFRS MeasureEBIT(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,725,290 30,041,542 25,631,723EBITDA(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,977,171 41,998,563 32,383,790EBITDA margin(2) (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54% 42% 43%

Adjusted EBITDA(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,843,960 42,467,112 33,259,112Adjusted EBITDA margin(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53% 42% 44%

Average total capital employed(4) . . . . . . . . . . . . . . . . . . . . . . . . . . 280,233,602 173,945,278 109,404,386Return on average capital employed (RoACE)(4) (%) . . . . . . . . . . 18% 17% 23%

Average equity(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,262,425 78,722,558 58,672,937Return on average equity (RoAE)(5) (%) . . . . . . . . . . . . . . . . . . . . 40% 33% 40%

Net debt (as at 31 December)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,541,055 110,858,075 40,580,861Net debt to EBITDA ratio(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.20 2.64 1.25

Net debt to equity ratio(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.20 1.33 0.55

Capital expenditure(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,169,024 97,980,138 29,373,927Expansion capex(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130,537,870 93,578,762 23,618,794

Maintenance capex(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,631,154 4,401,376 5,755,133

Adjusted Gross profit margin (%)(8) . . . . . . . . . . . . . . . . . . . . . . . . 66.5% 58.5% 56.9%Effective cost of funding (%)(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 4.6 4.7

Notes:(1) EBIT is defined as earnings before interest and tax. The following table sets out a reconciliation of EBIT to the IFRS measure

for the periods indicated:

For year ended 31 December–––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014–––––––––––– –––––––––––– ––––––––––––


Profit for the year before income tax . . . . . . . . . . . . . . . . . . . . . . . 41,296,996 25,627,818 23,228,670Add back

Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,428,294 4,413,724 2,403,053EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,725,290 30,041,542 25,631,723

Notes:(2) EBITDA is defined as profit before interest, tax, depreciation and amortization, provisions and impairment for assets under

construction. EBITDA margin is defined as EBITDA divided by revenue. The following table sets out a reconciliation of EBITDAto the IFRS measure for the periods indicated:


2016 2015 2014–––––––––––– –––––––––––– ––––––––––––


Profit for the year before income tax . . . . . . . . . . . . . . . . . . . . . . . 41,296,996 25,627,818 23,228,670Add back

Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,428,294 4,413,724 2,403,053Depreciation and amortization expense . . . . . . . . . . . . . . . . . . 18,459,586 10,457,021 6,752,067Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,027,004 1,500,000 –Impairment of assets under construction . . . . . . . . . . . . . . . . . 765,291 – –

EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,977,171 41,998,563 32,383,790

Notes:(3) Adjusted EBITDA means operating profit for the year before depreciation and amortization, foreign exchange (gain)/loss,

provision for impairment of accounts receivable, provisions and impairment of assets under construction. Adjusted EBITDAmargin means adjusted EBITDA divided by revenue.

131


2016 2015 2014–––––––––––– –––––––––––– ––––––––––––


Operating profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,632,033 28,816,542 25,631,723Add back

Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,459,586 10,457,021 6,752,067Foreign exchange (gain)/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,402,151) 27,523 575,322Provision for impairment of accounts receivable . . . . . . . . . . . . . 2,362,197 1,666,026 300,000Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,027,004 1,500,000 –Impairment of assets under construction . . . . . . . . . . . . . . . . . . . 765,291 – –

–––––––––––– –––––––––––– ––––––––––––

Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,843,960 42,467,112 33,259,112–––––––––––– –––––––––––– –––––––––––––––––––––––– –––––––––––– ––––––––––––

Notes:(4) Average total capital employed is defined as the average (opening balance plus the ending balance divided by two) of the total

equity and total debt (comprising of bank overdraft and current and non-current portion of the long term debt). Return onaverage capital employed (RoACE) is defined as EBIT divided by the average total capital employed.

(5) Average equity has been arrived at by adding the total equity at the beginning and end of the relevant period and dividing by 2.Return on average equity (RoAE) is defined as the net profit for the year divided by the average equity.

(6) Net debt is defined as at any time, the aggregate amount of all debt (comprising of bank overdraft and current and non-currentportion of the long term debt) of the deducting the aggregate amount of cash and cash equivalents held by the Company at thattime and including finance leases obligations (if any) at that time. Net debt to EBITDA ratio is defined as Net Debt divided byEBITDA. Net debt to equity ratio means Net Debt divided by total Equity.

(7) Capital expenditure is defined as expenditure relating on acquiring or maintaining of Property and equipment, which includesexpansion capex and maintenance capex. Expansion Capex means expenditure relating to purchase, upgrade, improve, or extendthe life of long-term assets. Maintenance Capex means the purchase of essential equipment and the overhaul expense relating toinstalling that equipment; this is capex that is capitalised onto the relevant operating unit.

(8) Adjusted Gross profit margin is defined as gross profit excluding depreciation in the cost of revenue divided by revenues.


2016 2015 2014–––––––––––– –––––––––––– ––––––––––––


Gross profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,842,720 48,750,766 36,145,225Add back

Depreciation expense in cost of revenue . . . . . . . . . . . . . . . . . . . . 18,296,945 10,350,670 6,652,957–––––––––––– –––––––––––– ––––––––––––

Adjusted Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,139,665 59,101,436 42,798,182–––––––––––– –––––––––––– –––––––––––––––––––––––– –––––––––––– ––––––––––––

Notes:(9) Effective cost of funding is defined as interest expense divided by the year’s average (Opening loan balance plus ending loan

balance divided by two) loan balance.

132

PART X

HISTORICAL FINANCIAL INFORMATION OF THE GROUP

Section A – Accountant’s report on the Historical Financial Information of the Group

The Directors 9 May 2017ADES International Holding LtdUnit 517, Level 5, Index TowerDubai Financial CentrePO Box 507118Dubai, United Arab Emirates

Dear Sirs

ADES International Holding LtdWe report on the financial information of ADES International Holding Ltd (the “Company”) and itssubsidiary (the “Group”) for the years ended 31 December 2016, 2015 and 2014 set out in Part X Section BHistorical Financial Information of the Group (the “Historical Financial Information”). The HistoricalFinancial Information has been prepared for inclusion in the prospectus dated 9 May 2017 of ADESInternational Holding Ltd on the basis of the accounting policies set out in Note 2. This report is requiredby item 20.1 of Annex I of Commission Regulation (EC) 809/2004 and is given for the purpose of complyingwith that item and for no other purpose.

Save for any responsibility arising under Prospectus Rule 5.5.3R (2) (f) to any person as and to the extentthere provided, to the fullest extent permitted by law we do not assume any responsibility and will not acceptany liability to any other person for any loss suffered by any such other person as a result of, arising out of,or in connection with this report or our statement, required by and given solely for the purposes of complyingwith item 23.1 of Annex I to Commission Regulation (EC) 809/2004, consenting to its inclusion in theprospectus.

ResponsibilitiesThe Directors of the Company are responsible for preparing the Historical Financial Information inaccordance with International Financial Reporting Standards.

It is our responsibility to form an opinion on the Historical Financial Information and to report our opinionto you.

Basis of opinionWe conducted our work in accordance with Standards for Investment Reporting issued by the AuditingPractices Board in the United Kingdom. Our work included an assessment of evidence relevant to theamounts and disclosures in the Historical Financial Information. It also included an assessment of significantestimates and judgments made by those responsible for the preparation of the Historical FinancialInformation and whether the accounting policies are appropriate to the entity’s circumstances, consistentlyapplied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which we considerednecessary in order to provide us with sufficient evidence to give reasonable assurance that the financialinformation is free from material misstatement whether caused by fraud or other irregularity or error.

133

Our work has not been carried out in accordance with auditing or other standards and practices generallyaccepted in other jurisdictions and accordingly should not be relied upon as if it had been carried out inaccordance with those standards and practices.

OpinionIn our opinion, the Historical Financial Information gives, for the purposes of the prospectus dated 9 May2017, a true and fair view of the state of affairs of ADES International Holding Ltd and its subsidiary as atthe dates stated and of its profits, cash flows and changes in equity for the periods then ended in accordancewith International Financial Reporting Standards.

DeclarationFor the purposes of Prospectus Rule 5.5.3R (2) (f) we are responsible for this report as part of the prospectusand declare that we have taken all reasonable care to ensure that the information contained in this report is,to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import.This declaration is included in the prospectus in compliance with item 1.2 of Annex I of CommissionRegulation (EC) 809/2004.

Yours faithfully

For Ernst & Young Middle East (Dubai Branch)

134

For the year ended 31 December ––––––––––––––––––––––––––––––––––––––––––

Notes 2016 2015 2014 –––––– ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 134,116,116 101,039,406 75,171,646Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 (63,273,396) (52,288,640) (39,026,421) ––––––––––––– ––––––––––––– –––––––––––––

GROSS PROFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,842,720 48,750,766 36,145,225

General and administrative expenses . . . . . . . . . . . . . . . . . 7 (15,056,195) (16,768,198) (10,213,502)Provision for impairment of trade receivables . . . . . . . . . . 13 (2,362,197) (1,666,026) (300,000)Impairment of assets under construction . . . . . . . . . . . . . . 15 (765,291) — —Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 (2,027,004) (1,500,000) — ––––––––––––– ––––––––––––– –––––––––––––

OPERATING PROFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,632,033 28,816,542 25,631,723

Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (9,428,294) (4,413,724) (2,403,053)Loss on disposal of property and equipment . . . . . . . . . . . (7,537) — — Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,794 — — Dividends income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 — 1,225,000 — ––––––––––––– ––––––––––––– –––––––––––––

PROFIT FOR THE YEAR BEFORE INCOME TAX . . . 41,296,996 25,627,818 23,228,670

Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 (3,284,273) — — ––––––––––––– ––––––––––––– –––––––––––––

PROFIT FOR THE YEAR . . . . . . . . . . . . . . . . . . . . . . . . . 38,012,723 25,627,818 23,228,670

OTHER COMPREHENSIVE INCOMEOther comprehensive income to be reclassified

to profit or loss in subsequent periods . . . . . . . . . . . . . . . — — —Other comprehensive income not to be reclassified

to profit or loss in subsequent periods . . . . . . . . . . . . . . . — — — ––––––––––––– ––––––––––––– –––––––––––––

TOTAL COMPREHENSIVE INCOME . . . . . . . . . . . . . 38,012,723 25,627,818 23,228,670 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Earnings per share – basic and diluted (USD per share) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 1.19 0.80 1.04

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

The accompanying notes 1 to 28 form an integral part of these historical financial information.

135

Section B – Historical Financial Information of the Group

ADES INTERNATIONAL HOLDING LTD AND ITS SUBSIDIARY

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

As at 31 December –––––––––––––––––––––––––––––––––––––––––

Notes 2016 2015 2014 –––––– ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

ASSETSNon-current assetsProperty and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 15 290,661,449 184,953,863 98,364,116Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 15,265 24,375 31,485Available for sale financial asset . . . . . . . . . . . . . . . . . . . . 10 1,950,000 1,950,000 — ––––––––––––– ––––––––––––– –––––––––––––

Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 292,626,714 186,928,238 98,395,601 ––––––––––––– ––––––––––––– –––––––––––––

Current assetsInventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 17,777,071 7,167,386 4,843,570Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 50,789,113 16,841,330 17,601,331Due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . 24 277,117 198,863 1,735,565Prepayments and other receivables . . . . . . . . . . . . . . . . . . 14 32,152,163 14,937,013 7,806,274Bank balance and cash . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 5,192,864 25,350,359 13,656,144 ––––––––––––– ––––––––––––– –––––––––––––

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,188,328 64,494,951 45,642,884 ––––––––––––– ––––––––––––– –––––––––––––

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398,815,042 251,423,189 144,038,485 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

EQUITY AND LIABILITIESEquityShare capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 1,000,000 — — Share application money . . . . . . . . . . . . . . . . . . . . . . . . . . 20 30,900,000 — — Merger reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1&21 (6,520,807) 32,000,000 32,000,000Legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 4,481,408 2,999,264 1,728,176Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,047,782 48,617,203 40,100,473 ––––––––––––– ––––––––––––– –––––––––––––

Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,908,383 83,616,467 73,828,649 ––––––––––––– ––––––––––––– –––––––––––––

LiabilitiesNon-current liabilitiesInterest-bearing loans and borrowings . . . . . . . . . . . . . . . 18 189,929,837 130,766,500 25,114,150 ––––––––––––– ––––––––––––– –––––––––––––

Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 189,929,837 130,766,500 25,114,150 ––––––––––––– ––––––––––––– –––––––––––––

Current liabilitiesTrade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . 17 51,157,293 28,199,971 15,818,358Interest-bearing loans and borrowings . . . . . . . . . . . . . . . 18 45,804,082 5,441,934 29,122,855Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2,933,915 1,513,641 13,641Due to related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 4,081,532 1,884,676 140,832 ––––––––––––– ––––––––––––– –––––––––––––

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,976,822 37,040,222 45,095,686 ––––––––––––– ––––––––––––– –––––––––––––

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293,906,659 167,806,722 70,209,836 ––––––––––––– ––––––––––––– –––––––––––––

Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 398,815,042 251,423,189 144,038,485 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––


136


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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137

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For the year ended 31 December –––––––––––––––––––––––––––––––––––––––––

Notes 2016 2015 2014 –––––– ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

OPERATING ACTIVITIESProfit for the year before income tax . . . . . . . . . . . . . . . . 41,296,996 25,627,818 23,228,670Adjustments for:Depreciation of property and equipment . . . . . . . . . . . . 15 18,450,476 10,447,911 6,727,796 Amortisation of intangible assets . . . . . . . . . . . . . . . . . . 16 9,110 9,110 24,271Provision for impairment of trade receivables . . . . . . . . 13 2,362,197 1,666,026 300,000Impairment of property and equipment . . . . . . . . . . . . 15 765,291 — — Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2,027,004 1,500,000 — Interest on bank credit facilities and loans . . . . . . . . . . . 8 9,428,294 4,413,724 2,403,053Loss on disposal of property and equipment . . . . . . . . . 7,537 170,000 —

–––––––––––––– ––––––––––––– –––––––––––––

74,346,905 43,834,589 32,683,790Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,389,006) (1,553,336) (1,644,939)Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36,309,980) (906,025) (4,811,048)Due from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . (78,254) 1,536,702 4,370,194 Prepayments and other receivables . . . . . . . . . . . . . . . . . (17,215,150) (7,130,739) (3,042,957)Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . 23,552,958 2,236,512 (35,583)Due to related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,612,990) 1,743,844 89,150 –––––––––––––– ––––––––––––– –––––––––––––

Cash flows from operations . . . . . . . . . . . . . . . . . . . . . . . 36,294,483 39,761,547 27,608,607Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 (427,210) — — Provisions paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 (606,730) — —

–––––––––––––– ––––––––––––– –––––––––––––

Net cash flows from operating activities . . . . . . . . . . . . . . 35,260,543 39,761,547 27,608,607 –––––––––––––– ––––––––––––– –––––––––––––

INVESTING ACTIVITIESPurchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . 16 — (2,000) (4,000)Proceeds from disposal of property and equipment . . . . 17,455 — — Purchase of property and equipment . . . . . . . . . . . . . . . . 15 (134,169,024) (97,978,138) (29,369,927)Investment in available for sale financial asset . . . . . . . . . — (1,950,000) — –––––––––––––– ––––––––––––– –––––––––––––

Net cash flows used in investing activities . . . . . . . . . . . . . (134,151,569) (99,930,138) (29,373,927) –––––––––––––– ––––––––––––– –––––––––––––

FINANCING ACTIVITIESProceeds from interest-bearing loans and borrowings . . . 18 120,899,330 200,662,457 20,751,652 Repayment of interest-bearing loans and borrowings . . . 18 (21,373,845) (118,691,028) (13,740,540)Proceeds from increase in share capital and share

application money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 31,900,000 — 10,000,000Cash to shareholders on reorganisation of the Group,

net of obligation assumed . . . . . . . . . . . . . . . . . . . . . . . 1 (29,710,961) — — Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,552,699) (5,694,899) (3,241,000)Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (9,428,294) (4,413,724) (2,403,053) –––––––––––––– ––––––––––––– –––––––––––––

Net cash flows from financing activities . . . . . . . . . . . . . . . 78,733,531 71,862,806 11,367,059 –––––––––––––– ––––––––––––– –––––––––––––

Net (decrease)/increase in cash and cash equivalents . . . . . (20,157,495) 11,694,215 9,601,739Cash and cash equivalents at the beginning of the year . . . 11 25,350,359 13,656,144 4,054,405 –––––––––––––– ––––––––––––– –––––––––––––

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 5,192,864 25,350,359 13,656,144

–––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––– ––––––––––––– –––––––––––––


138


CONSOLIDATED STATEMENT OF CASH FLOWS

1 BACKGROUNDADES International Holding Ltd (the “Company”) was incorporated and registered in the Dubai InternationalFinancial Centre (DIFC) on 22 May 2016 with registered number 2175 under the Companies Law - DIFC LawNo. 2 of 2009 (and any regulations thereunder) as a private company limited by shares. The Company’s registeredoffice is at level 5, Index tower, Dubai International Financial Centre, PO Box 507118, Dubai, United ArabEmirates. The principal business activity of the Company is to act as a holding company and managing office.The Company and its subsidiary (see below) constitute the Group (the “Group”). The Company is owned byADES Investments Holding Ltd., a company incorporated on 22 May 2016 under the Companies Law, DIFCLaw no. 2 of 2009.

The Company owns Advanced Energy System (ADES) (S.A.E.) (the “Subsidiary”) that was established asan Egyptian joint stock company in Egypt and whose shares are not publicly traded.

The Group is a leading oil and gas drilling and production services provider in the Middle East and Africa.The Group services primarily include offshore and onshore contract drilling and production services. TheGroup currently operates in United Arab Emirates, Egypt, Algeria and the Kingdom of Saudi Arabia. TheGroup’s offshore services include drilling and workover services and Mobile Offshore Production Unit(MOPU) production services, as well as accommodation, catering and other barge-based support services.The Group’s onshore services primarily encompass drilling and workover services. The Group also providesprojects services (outsourcing various operating projects for clients, such as maintenance and repair services).

In 2016, pursuant to a reorganisation plan (the “Reorganisation”) the ultimate shareholders of the Subsidiary:

(i) established the Company as a new holding company with share capital of USD 1,000,000 and madean additional capital contribution of USD 30,900,000 for additional shares that were allotted on23 March 2017.

(ii) transferred their shareholdings in Advanced Energy System (ADES) (S.A.E.) to the Company for atotal consideration of USD 38,520,807 comprising of cash of USD 29,710,961 and the assumption ofshareholder obligation of USD 8,809,846.

2 SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of PreparationThe Reorganisation is not a business combination as it did not result in any change of economic substance.Accordingly, the Historical Financial Information of the Group is a continuation of the existing businessand reflects the carrying values of the Subsidiary as if the Subsidiary had always been consolidated from theearliest period presented even though the Company was not in existence before 22 May 2016. Any differencebetween the consideration paid and nominal value of the share capital of the Subsidiary is recorded as amerger reserve (Note 21).

The Historical Financial Information have been prepared under the historical cost basis.

The Historical Financial Information have been prepared for inclusion in the prospectus of the Companydated 9 May 2017 in compliance with item 20.1 of Annex I to the Commission Regulation (EC) No 809/2004and in accordance with International Financial Reporting Standards (IFRS) as issued by the InternationalAccounting Standards Board (IASB). The Historical Financial Information have been prepared in UnitedStates Dollars (USD), which is the Company’s functional and presentation currency.

Subsidiaries The Historical Financial Information comprise the historical financial information of the Company and itssubsidiary as at 31 December 2016, 2015 and 2014. Control is achieved when the Group is exposed, or hasrights, to variable returns from its involvement with the investee and has the ability to affect those returnsthrough its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

139


NOTES TO THE HISTORICAL FINANCIAL INFORMATION

2 SIGNIFICANT ACCOUNTING POLICIES (Continued)(a) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities

of the investee)

(b) Exposure, or rights, to variable returns from its involvement with the investee, and

(c) The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights results in control. To support thispresumption and when the Group has less than a majority of the voting or similar rights of an investee,the Group considers all relevant facts and circumstances in assessing whether it has power over aninvestee, including:

(a) The contractual arrangement with the other vote holders of the investee

(b) Rights arising from other contractual arrangements

(c) The Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there arechanges to one or more of the three elements of control. Consolidation of a subsidiary begins when theGroup obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets,liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in theHistorical Financial Information from the date the Group gains control until the date the Group ceases tocontrol the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holdersof the parent of the Group and to the non-controlling interests, even if this results in the non-controllinginterests having a deficit balance. When necessary, adjustments are made to the Historical FinancialInformation of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions betweenmembers of the Group are eliminated in full on consolidation. Subsidiaries are fully consolidated from thedate of acquisition or incorporation, being the date on which the Group obtains control, and continue to beconsolidated until the date when such control ceases. The Historical Financial Information of the subsidiariesare prepared for the same reporting period as the Group, using consistent accounting policies.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equitytransaction. If the Group loses control over a subsidiary, it:

• Derecognises the assets (including goodwill) and liabilities of the subsidiary

• Derecognises the carrying amount of any non-controlling interests

• Derecognises the cumulative translation differences recorded in equity

• Recognises the fair value of the consideration received

• Recognises the fair value of any investment retained

• Recognises any surplus or deficit in profit or loss

• Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retainedearnings, as appropriate, as would be required if the Group had directly disposed of the related assetsor liabilities

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NOTES TO THE HISTORICAL FINANCIAL INFORMATION (Continued)

2 SIGNIFICANT ACCOUNTING POLICIES (Continued)

Business combinationThe Group applies the acquisition method to account for business combinations. The considerationtransferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurredto the former owner of the acquiree and the equity interests issued by the Group. The consideration transferredincludes the fair value of any asset or liability resulting from a contingent consideration arrangement.Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination aremeasured initially at their fair values at the acquisition date.

The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis,either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts ofacquiree’s identifiable net assets. Acquisition related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’spreviously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gain orlosses arising from such re-measurement are recognised in profit or loss. Any contingent consideration to betransferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fairvalue of the contingent consideration that is deemed to be an asset or liability is recognised in accordancewith IAS 39 in profit or loss.

Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement isaccounted for within equity. The excess of the consideration transferred, the amount of any non-controllinginterest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree overthe fair value of the identifiable net assets acquired is recorded as goodwill. If the total of considerationtransferred, non-controlling interest recognised and previously held interest measured is less than the fairvalue of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recogniseddirectly in the statement of profit or loss.

Associates and joint venturesAn associate is an entity over which the Group has significant influence. Significant influence is the power toparticipate in the financial and operating policy decisions of the investee, but is not control or joint controlover those policies. A joint venture is a type of joint arrangement whereby the parties that have joint controlof the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreedsharing of control of an arrangement, which exists only when decisions about the relevant activities requireunanimous consent of the parties sharing control.

The considerations made in determining significant influence or joint controls are similar to those necessaryto determine control over subsidiaries.

2.3 Standards issued but not yet effectiveThe standards and interpretations that are issued, but not yet effective, up to the date of issuance of theGroup’s Historical Financial Information are disclosed below. The Group intends to adopt these standards,if applicable, when they become effective. The Group is currently assessing the impact of these new standardson the Historical Financial Information.

IFRS 2 Classification and Measurement of Share-based Payment Transactions – Amendments to IFRS 2The IASB issued amendments to IFRS 2 Share-based Payment that address three main areas: the effects ofvesting conditions on the measurement of a cash-settled share-based payment transaction; the classificationof a share-based payment transaction with net settlement features for withholding tax obligations; andaccounting where a modification to the terms and conditions of a share-based payment transaction changesits classification from cash settled to equity settled. On adoption, entities are required to apply the amendmentswithout restating prior periods, but retrospective application is permitted if elected for all three amendmentsand other criteria are met. The amendments are effective for annual periods beginning on or after 1 January2018, with early application permitted.

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IFRS 9 Financial InstrumentsIn July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 FinancialInstruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together allthree aspects of the accounting for financial instruments project: classification and measurement, impairmentand hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with earlyapplication permitted. Except for hedge accounting, retrospective application is required but providingcomparative information is not compulsory. For hedge accounting, the requirements are generally appliedprospectively, with some limited exceptions.

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate orJoint VentureThe amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of asubsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that the gainor loss resulting from the sale or contribution of assets that constitute a business, as defined in IFRS 3,between an investor and its associate or joint venture, is recognised in full. Any gain or loss resulting fromthe sale or contribution of assets that do not constitute a business, however, is recognised only to the extentof unrelated investors’ interests in the associate or joint venture. The IASB has deferred the effective date ofthese amendments indefinitely, but an entity that early adopts the amendments must apply them prospectively.

IFRS 15 Revenue from Contracts with Customers IFRS 15 was issued in May 2014 and establishes a five-step model to account for revenue arising fromcontracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the considerationto which an entity expects to be entitled in exchange for transferring goods or services to a customer. Thenew revenue standard will supersede all current revenue recognition requirements under IFRS. Either a fullretrospective application or a modified retrospective application is required for annual periods beginning onor after 1 January 2018. Early adoption is permitted.

IFRS 16 Leases IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining whether anArrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance ofTransactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition,measurement, presentation and disclosure of leases and requires lessees to account for all leases under a singleon-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes tworecognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal computers) and short-termleases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee willrecognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to usethe underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separatelyrecognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., achange in the lease term, a change in future lease payments resulting from a change in an index or rate usedto determine those payments). The lessee will generally recognise the amount of the remeasurement of thelease liability as an adjustment to the right-of-use asset.

Lessor accounting under IFRS 16 is substantially unchanged from today’s accounting under IAS 17. Lessorswill continue to classify all leases using the same classification principle as in IAS 17 and distinguish betweentwo types of leases: operating and finance leases. IFRS 16 also requires lessees and lessors to make moreextensive disclosures than under IAS 17.

IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted,but not before an entity applies IFRS 15. A lessee can choose to apply the standard using either a fullretrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs.

142




IAS 7 Disclosure Initiative – Amendments to IAS 7 The amendments to IAS 7 Statement of Cash Flows are part of the IASB’s Disclosure Initiative and requirean entity to provide disclosures that enable users of Historical Financial Information to evaluate changes inliabilities arising from financing activities, including both changes arising from cash flows and non-cashchanges. On initial application of the amendment, entities are not required to provide comparativeinformation for preceding periods. These amendments are effective for annual periods beginning on or after1 January 2017, with early application permitted.

IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses – Amendments to IAS 12 The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profitsagainst which it may make deductions on the reversal of that deductible temporary difference. Furthermore,the amendments provide guidance on how an entity should determine future taxable profits and explainthe circumstances in which taxable profit may include the recovery of some assets for more than theircarrying amount.

2.4 Summary of significant accounting policies

Current versus non-current classificationThe Group presents assets and liabilities in the consolidated statement of financial position based oncurrent/non-current classification. An asset is current when it is:

• Expected to be realised or intended to be sold or consumed in the normal operating cycle;

• Held primarily for the purpose of trading;

Expected to be realised within twelve months after the reporting period;

Or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at leasttwelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in the normal operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after the reporting period;

Or

• There is no unconditional right to defer the settlement of the liability for at least twelve months afterthe reporting period.

The Group classifies all other liabilities as non-current

Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group andthe revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured atthe fair value of the consideration received or receivable, taking into account contractually defined terms ofpayment and excluding taxes or duty. The Group assesses its revenue arrangements against specific criteriain order to determine if it is acting as principal or agent. The Group has concluded that it is acting as aprincipal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements,has pricing latitude, and is also exposed to credit risk.

143



2 SIGNIFICANT ACCOUNTING POLICIES (Continued)The following specific recognition criteria must also be met before revenue is recognised:

Rendering of services

Revenue arising from service contracts is recognised, net of discount, in accordance with the terms of thecontracts when the services are performed.

Dividends

Revenue is recognised when the Group’s right to receive the payment is established, which is generally whenshareholders approve the dividend.

Interest income

Interest income is recognised as the interest accrues using the effective interest rate method, under which therate used exactly discounts, estimated future cash receipts through the expected life of the financial asset tothe net carrying amount of the financial asset.

Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of an asset that necessarilytakes a substantial period of time to get ready for its intended use or sale are capitalised as part of the costof the asset. All other borrowing costs are expensed in the period in which they incurred. Borrowing costsconsist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Cash and cash equivalents For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash inhand and at banks.

Income taxCurrent income tax assets and liabilities are measured at the amount expected to be recovered from or paidto the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enactedor substantively enacted, at the reporting date in the countries where the Group operates and generates taxableincome. Management periodically evaluates positions taken in the tax returns with respect to situations inwhich applicable tax regulations are subject to interpretation and establishes provisions where appropriate.The Group is not subject to income tax in accordance with the Egyptian tax law (Egypt) and DIFC law(UAE). The Subsidiary’s Branches are subject to income tax in accordance to Kingdom of Saudi Arabia Lawand Algeria Law.

Deferred taxDeferred tax is provided using the liability method on temporary differences between the tax bases of assetsand liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred taxliabilities are recognised for all taxable temporary differences, except:

• When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in atransaction that is not a business combination and, at the time of the transaction, affects neither theaccounting profit nor taxable profit or loss

• In respect of taxable temporary differences associated with investments in subsidiaries, associates andinterests in joint arrangements, when the timing of the reversal of the temporary differences can becontrolled and it is probable that the temporary differences will not reverse in the foreseeable future

144



2 SIGNIFICANT ACCOUNTING POLICIES (Continued)Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused taxcredits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable thattaxable profit will be available against which the deductible temporary differences, and the carry forward ofunused tax credits and unused tax losses can be utilised, except:

• When the deferred tax asset relating to the deductible temporary difference arises from the initialrecognition of an asset or liability in a transaction that is not a business combination and, at the timeof the transaction, affects neither the accounting profit nor taxable profit or loss

• In respect of deductible temporary differences associated with investments in subsidiaries, associatesand interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probablethat the temporary differences will reverse in the foreseeable future and taxable profit will be availableagainst which the temporary differences can be utilized

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it isno longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assetto be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to theextent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year whenthe asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted orsubstantively enacted at the reporting date.

Foreign currenciesThe Company’s and it Subsidiary functional currency is USD. Transactions in foreign currencies are initiallyrecorded at the date the transaction. Monetary assets and liabilities denominated in foreign currencies aretranslated at the functional currency spot rates of exchange at the reporting date. Differences arising onsettlement or translation of monetary items are recognised in profit or loss. Non- monetary items that aremeasured in terms of historical cost in a foreign currency are translated using the exchange rates at the datesof the initial transactions. Non-monetary items measured at fair value in a foreign currency are translatedusing the exchange rates at the date when the fair value is determined.

InventoriesInventories are initially measured at cost and subsequently at lower of cost using weighted average methodor net realisable value.

Property and equipmentAssets under construction, property and equipment are stated at cost, net of accumulated depreciation and/oraccumulated impairment losses, if any. Such cost includes the cost of replacing parts of the property andequipment and borrowing costs for long-term construction projects if the recognition criteria are met. Whensignificant parts of property and equipment are required to be replaced at intervals, the Group recognisessuch parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when amajor inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as areplacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised inthe profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

Years

Rigs 5-15Furniture and fixtures 10Drilling pipes 5Tools 5Computers and equipment 5Motor vehicles 5Leasehold improvements 5

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2 SIGNIFICANT ACCOUNTING POLICIES (Continued)Rigs include overhaul, environment and safety costs that are capitalised and depreciated over 5 years. Nodepreciation is charged on assets under construction. The useful lives and depreciation method are reviewedannually to ensure that the method and period of depreciation are consistent with the expected pattern ofeconomic benefits from these assets. Expenditure incurred to replace a component of an item of propertyand equipment that is accounted for separately is capitalised and the carrying amount of the component thatis replaced is written off. Other subsequent expenditure is capitalised only when it increases future economicbenefits of the related item of property and equipment. All other expenditure is recognised in the consolidatedstatement of profit or loss as the expense is incurred.

Property and equipment are reviewed for impairment whenever events or changes in circumstances indicatethat the carrying amount of property and equipment may not be recoverable.

Whenever the carrying amount of property and equipment exceeds their recoverable amount, an impairmentloss is recognised in the consolidated statement of profit or loss. The recoverable amount is the higher of fairvalue less costs to sell of property and equipment and the value in use. The fair value is the price that wouldbe received to sell an asset or paid to transfer a liability in an orderly transaction between market participantsat the measurement date. While value in use is the present value of estimated future cash flows expected toarise from the continuing use of property and equipment and from its disposal at the end of its useful life.

Reversal of impairment losses recognised in the prior years are recorded when there is an indication that theimpairment losses recognised for the property and equipment no longer exist or have reduced.

An item of property and equipment is derecognised upon disposal or when no further economic benefits areexpected from its use or disposal. Any gain or loss arising on de recognition is included in the consolidatedstatement of profit or loss.

Intangible assetsIntangible assets acquired separately are measured on initial recognition at cost. After initial recognition,intangible assets are carried at cost less any accumulated amortisation and any accumulated impairmentlosses. Internally generated intangible assets are not capitalised and expenditure is reflected in the consolidatedprofit and loss in the year in which the expenditure is incurred. The useful lives of intangible assets are assessedas either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life andassessed for impairment whenever there is an indication that the intangible asset may be impaired. Theamortisation period and the amortisation method for an intangible asset with a finite useful life is reviewedat least at each financial year end. Intangible assets are amortised using the straight-line method over theirestimated useful lives (5 years).

Financial instrumentsA financial instrument is any contract that gives rise to a financial asset of one entity and a financial liabilityor equity instrument of another entity. Financial assets are initially measured at fair value, plus transactioncosts. All recognised financial assets are subsequently measured at amortised cost except for available for salefinancials assets which are measured at fair value:

(i) Bank balances and cash

Bank balances and cash in the consolidated statement of financial position comprise cash in hand and at banks.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. After initial measurement, such financial assets are subsequently measured atamortised cost using the effective interest rate (EIR) method, less impairment. Interest income is recognisedby applying the EIR, except for short-term receivables when the recognition of interest would be immaterial.The EIR amortisation is included in finance income in the consolidated statement of profit or loss. The lossesarising from impairment are recognised in the consolidated statement of profit or loss when there is objectiveevidence that an asset is impaired. This category generally applies to trade and other receivables. For moreinformation on receivables, refer to Note 13.

146




(iii) Available for sale (AFS) financial assets

AFS financial assets include equity investments and debt securities. Equity investments classified as AFS arethose that are neither classified as held for trading nor designated at fair value through profit or loss. Debtsecurities in this category are those that are intended to be held for an indefinite period of time and that maybe sold in response to needs for liquidity or in response to changes in market conditions. After initialmeasurement, AFS financial assets are subsequently measured at fair value with unrealised gains or lossesrecognised in OCI and credited to the AFS reserve until the investment is derecognised, at which time, thecumulative gain or loss is recognised in other operating income, or the investment is determined to beimpaired, when the cumulative loss is reclassified from the AFS reserve to the consolidated statement of profitor loss in finance costs.

De recognition of financial assets

A financial asset (or, when applicable, a part of a financial asset or part of a group of similar financial assets)is derecognised when:

• The rights to receive cash flows from the asset have expired, or

• The Group has transferred its rights to receive cash flows from the asset or has assumed an obligationto pay the received cash flow in full without material delay to a third party under a ‘pass-through’arrangement, and either:

– The Group has transferred substantially all the risks and rewards of the asset, or

– The Group has neither transferred nor retained substantially all the risks and rewards of the asset,but has transferred control of the asset.

When the Group has transferred its right to receive cash flows from an asset or has entered into a pass-througharrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When ithas neither transferred nor retained substantially all the risks and rewards of the asset nor transferred controlof the asset, the Group continues to recognise the transferred asset to the extent of the Group’s continuinginvolvement. In that case, the Group also recognises an associated liability. The transferred asset and theassociated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lowerof the original carrying amount of the asset and the maximum amount of consideration that the Group couldbe required to repay.

Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset or agroup of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impairedif, and only if, there is objective evidence of impairment as a result of one or more events that has occurredafter the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on theestimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.Evidence of impairment may include indications that the debtors or a group of debtors is experiencingsignificant financial difficulty, default or delinquency in interest or principal payments, the probability thatthey will enter bankruptcy or other financial reorganisation and where observable data indicates that there isa measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditionsthat correlate with defaults.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measuredas the difference between the financial assets carrying amount and the present value of estimated future cashflows. The present value of the estimated future cash flows is discounted at the financial assets original effectiveinterest rate.

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2 SIGNIFICANT ACCOUNTING POLICIES (Continued)For financial assets carried at amortised cost, the carrying amount is reduced through the use of an allowanceaccount and the amount of the loss is recognised in the consolidated statement of profit or loss.

Financial asset together with the associated allowance are written off when there is no realistic prospect offuture recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequentyear, the amount of the estimated impairment loss increases or decreases because of an event occurring afterthe impairment was recognised, the previously recognised impairment loss is increased or decreased byadjusting the allowance account. If a future write-off is later recovered, the recovery is recognised in theconsolidated statement of profit or loss.

Financial liabilities and equity instruments issued by the GroupDebt and equity instruments are classified as either financial liabilities or as equity instruments in accordancewith the substance of the contractual agreements.

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profitor loss, loans and borrowings, or as derivative instrument as appropriate. The Group determines theclassification of its financial liabilities at the initial recognition.

(i) Trade and other payables

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether billedby the supplier or not.

(ii) Loans and borrowings

All loans and borrowings are initially recognised at the fair value less directly attributable transaction costs.After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised costusing the effective interest rate method. Gains and losses are recognised in the consolidated statement ofprofit or loss when the liabilities are derecognised as well as through the amortisation process.

(iii) Other financial liabilities

Other financial liabilities are initially measured at fair value, net of transaction costs and are subsequentlymeasured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and ofallocating interest expense over the relevant period. The effective interest rate is the rate that exactly discountsestimated future cash payments through the expected life of the financial liability, or, where appropriate, ashorter period.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged,cancelled or they expire. Where an existing financial liability is replaced by another from the same lender onsubstantially different terms, or the terms of an existing liability are substantially modified, then the differencein the respective carrying amounts is recognised in the consolidated statement of profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statementof financial position if there is a currently enforceable legal right to offset the recognised amounts and thereis an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

148




Impairment of non-financial assetsThe Group assesses at each reporting date whether there is an indication that a non-financial asset may beimpaired. If any indication exists, or when annual impairment testing for an asset is required, the Groupestimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s orcash-generating units (CGU) fair value less costs to sell and its value in use and is determined for an individualasset, unless the asset does not generate cash inflows that are largely independent of those from other assetsor groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the assetis considered impaired and is written down to its recoverable amount. In assessing value in use, the estimatedfuture cash flows are discounted to their present value using a pre-tax discount rate that reflects current marketassessments of the time value of money and the risks specific to the asset. In determining fair value less coststo sell, an appropriate valuation model is used. Impairment losses of continuing operations are recognised inthe consolidated statement of profit or loss in those expense categories consistent with the function of theimpaired asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognisedimpairment losses may no longer exist or may have decreased. If such indication exists, the Group estimatesthe asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment loss is reversedonly if there has been a change in the assumptions used to determine the asset’s recoverable amount since thelast impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does notexceed its recoverable amount, nor exceed the carrying amount that would have been determined, net ofdepreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognisedin the consolidated statement of profit or loss.

LeasesThe determination of whether an arrangement is, or contains a lease is based on the substance of thearrangement at inception date and whether the fulfilment of the arrangement is dependent on the use of aspecific asset or assets or the arrangement conveys a right to use the asset.

Group as a lessee

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor, areclassified as operating leases. Payments including prepayments, made under operating leases (net of anyincentives received from the lessor) are recognised as expenses in the consolidated statement of profit or lossin accordance with the terms of the lease contracts over the lease term based on a straight line basis.

ProvisionsProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of a pastevent, it is probable that an outflow of resources embodying economic benefits will be required to settle theobligation, and the amount can be reliably estimated. When the Group expects some or all of a provision tobe reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement isvirtually certain. The expense relating to any provision is presented in the consolidated statement of profit orloss net of any reimbursement. Provisions are measured at the present value of the expenditures expected tobe required to settle the obligation at the end of the reporting period, using a rate that reflects current marketassessments of the time value of money and the risks specific to the obligation. Provisions are reviewed ateach statement of financial position date and adjusted to reflect the current best estimate. If it is no longerprobable that an outflow of resources embodying economic benefits will be required to settle the obligation,the provision is reversed.

ContingenciesContingent liabilities are not recognised in the Historical Financial Information. They are disclosedunless the possibility of an outflow of resources embodying economic benefits is remote. A contingent assetis not recognised in the Historical Financial Information but disclosed when an inflow of economic benefitsis probable.

149




Legal reserveAccording to the Subsidiary’s articles of association, 5% of the net profit for the prior year of the Subsidiaryis transferred to a legal reserve until this reserve reaches 20% of the issued capital. The reserve is used upon adecision from the general assembly meeting based on the proposal of the Board of Directors of the Subsidiary.

Fair value measurementFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date. The fair value measurement is based onthe presumption that the transaction to sell the asset or transfer the liability takes place either in the principalmarket for the asset or liability or the most advantageous market for the asset or liability. The fair value ofan asset or a liability is measured using the assumptions that market participants would use when pricing theasset or liability, assuming that market participants act in their economic best interest. A fair valuemeasurement of a non-financial asset takes into account a market participant’s ability to generate economicbenefits by using the asset in its highest and best use or by selling it to another market participant that woulduse the asset in its highest and best use. For assets traded in an active market, fair value is determined byreference to quoted market bid prices. The fair value of interest-bearing items is estimated based on discountedcash flows using interest rates for items with similar terms and risk characteristics. For unquoted assets, fairvalue is determined by reference to the market value of a similar asset or is based on the expected discountedcash flows. The Group uses valuation techniques that are appropriate in the circumstances and for whichsufficient data are available to measure fair value, maximising the use of relevant observable inputs andminimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the Historical Financial Informationare categorised within the fair value hierarchy, described as follows, based on the lowest level input that issignificant to the fair value measurement as a whole:

• Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities

• Level 2 – Valuation techniques for which the lowest level input that is significant to the fair valuemeasurement is directly or indirectly observable

• Level 3 – Valuation techniques for which the lowest level input that is significant to the fair valuemeasurement is unobservable

Cash dividend and non-cash distribution to equity holders of the parentThe Group recognises a liability to make cash or non-cash distributions to equity holders of the parent whenthe distribution is authorised and the distribution is no longer at the discretion of the Group. A distributionis authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.Non-cash distributions are measured at the fair value of the assets to be distributed with fair valueremeasurement recognised directly in equity. Upon distribution of non-cash assets, any difference betweenthe carrying amount of the liability and the carrying amount of the assets distributed is recognised in theconsolidated statement of profit or loss.

3 SIGNIFICANT ACCOUNTING ESTIMATES, JUDGEMENTS AND ASSUMPTIONS

JudgmentsThe preparation of the Group’s consolidated Historical Financial Information requires management to makejudgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets,liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty aboutthese assumptions and estimates could result in outcomes that require a material adjustment to the carryingamount of the asset or liability affected in future periods.

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3 SIGNIFICANT ACCOUNTING ESTIMATES, JUDGEMENTS AND ASSUMPTIONS (Continued)In the process of applying the Group’s accounting policies, management has made certain judgments,estimates and assumptions in relation to the accounts receivable, customer credit periods and doubtful debtsprovisions, creditors’ payment period, useful lives and impairment of property and equipment, income taxesand various other policy matters. These judgments have the most significant effects on the amounts recognisedin the Historical Financial Information.

Finance lease commitments – Group as lessee

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classifiedas operating leases. Operating lease payments are recognised as an expense in the consolidated incomestatement on a straight line basis over the period of the lease. Lease incentives, typically rent free period, isrecognised in the same manner as operating lease rentals.

Estimates and assumptions

Impairment of trade receivables

An estimate of the collectible amount of trade receivables is made when collection of the full amount is nolonger probable. For individually significant amounts, this estimation is performed on an individual basis.Amounts which are not individually significant, but which are past due, are assessed collectively and a provisionapplied according to the length of time past due, based on historical recovery rates. At the consolidatedstatement of financial position date, gross trade receivables were USD 53,903,764 (2015: USD 17,593,784 and2014: USD 18,642,600) and the provision for impairment in trade receivables was USD 3,114,651 (2015: USD752,454 and 2014: USD 1,041,269) Any difference between the amounts actually collected in future periodsand the amounts expected will be recognised in the consolidated statement of profit or loss.

Taxes

The Group is exposed to income taxes in certain jurisdictions. Significant judgement is required to determinethe total provision for taxes. Uncertainties exist with respect to the interpretation of complex tax regulations,changes in tax laws, and the amount and timing of future taxable income. Given the wide range ofinternational business relationships and the long-term nature and complexity of existing contractualagreements, differences arising between the actual results and the assumptions made, or future changes tosuch assumptions, could necessitate future adjustments to tax income and expense already recorded. TheGroup establishes provisions, based on reasonable estimates, for possible consequences of audits by the taxauthorities of the respective counties in which it operates. The amount of such provisions is based on variousfactors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxableentity and the responsible tax authority. Such differences in interpretation may arise for a wide variety ofissues depending on the conditions prevailing in the respective domicile of the Group companies. At theconsolidated statement of financial position date, income tax payable was USD 2,857,063 (2015: USD Niland 2014: USD Nil).

Impairment of non-financial assets

The Group assesses whether there are any indicators of impairment for all non-financial assets at eachreporting date. The non-financial assets are tested for impairment when there are indicators that the carryingamounts may not be recoverable. When value in use calculations are undertaken, management estimates theexpected future cash flows from the asset or cash-generating unit and chooses a suitable discount rate in orderto calculate the present value of those cash flows.

Useful lives of property, plant and equipment

The Group’s management determines the estimated useful lives of its property, plant and equipment forcalculating depreciation. This estimate is determined after considering the expected usage of the asset orphysical wear and tear. Management reviews the residual value and useful lives annually and futuredepreciation charge would be adjusted where the management believes the useful lives differ fromprevious estimates.

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3 SIGNIFICANT ACCOUNTING ESTIMATES, JUDGEMENTS AND ASSUMPTIONS (Continued)

Impairment of inventories

Inventories are held at the lower of cost and net realisable value. When inventories become old or obsolete,an estimate is made of their net realisable value. At the consolidated statement of financial position date,gross inventories were USD 17,777,071 (2015: USD 7,167,386 and 2014: USD 4,843,570), with no provisionsfor slow moving items (2015: USD Nil and 2014: USD Nil). Any difference between the amounts actuallyrealised in future periods and the amounts expected will be recognised in the consolidated statement of profitor loss.

4 SEGMENT INFORMATIONManagement has determined the operating segments based on the reports reviewed by the Chief ExecutiveOfficer (CEO) that are used to make strategic decisions. The CEO considers the business from a geographicperspective and has identified four geographical segments. Management monitors the operating results of itssegments separately for the purpose of making decisions about resource allocation and performanceassessment. Segment performance is evaluated based on profit or loss before intersegment charges.

Kingdom of United ArabSegment Egypt Algeria Saudi Arabia Emirates Total ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– USD USD USD USD USD

For the year ended 31 December 2016Revenue . . . . . . . . . . . . . . . . . . . . . . . 108,501,995 14,062,376 11,551,745 — 134,116,116 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Gross profit . . . . . . . . . . . . . . . . . . . . 59,740,283 5,454,019 5,648,418 — 70,842,720 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Finance costs. . . . . . . . . . . . . . . . . . . 8,722,886 61,520 643,888 — 9,428,294 Income tax expense . . . . . . . . . . . . . . — 2,927,210 357,063 — 3,284,273 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Profit/(loss) . . . . . . . . . . . . . . . . . . . . 31,164,856 2,892,499 4,076,059 (120,691) 38,012,723 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total assets as at 31 December 2016 . . . . . . . . . . . . . 285,031,429 30,001,212 83,527,793 254,608 398,815,042

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total liabilities as at 31 December 2016 . . . . . . . . . . . . . 282,332,927 5,994,104 5,553,301 26,327 293,906,659

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

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4 SEGMENT INFORMATION (Continued) Kingdom of United ArabSegment Egypt Algeria Saudi Arabia Emirates Total ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– USD USD USD USD USD

For the year ended 31 December2016Other segment information:Capital expenditure. . . . . . . . . . . . . . 58,383,993 10,568,232 65,216,799 — 134,169,024Intangible assets expenditure . . . . . . — — — — — ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total . . . . . . . . . . . . . . . . . . . . . . . . . 58,383,993 10,568,232 65,216,799 — 134,169,024 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Depreciation and amortisation. . . . . 16,832,604 962,046 664,936 — 18,459,586Impairment of property and

equipment . . . . . . . . . . . . . . . . . . . 765,291 — — — 765,291 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

For the year ended 31 December 2015Revenue . . . . . . . . . . . . . . . . . . . . . . . 98,972,720 2,066,686 — — 101,039,406 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Gross profit . . . . . . . . . . . . . . . . . . . . 47,433,348 1,317,418 — — 48,750,766 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Finance costs. . . . . . . . . . . . . . . . . . . 4,413,724 — — — 4,413,724 Income tax expense . . . . . . . . . . . . . . — — — — — ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Profit . . . . . . . . . . . . . . . . . . . . . . . . . 24,381,047 1,246,771 — — 25,627,818 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total assets as at 31 December 2015 . . . . . . . . . . . . . 235,337,243 16,085,946 — — 251,423,189

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total liabilities as at 31 December 2015 . . . . . . . . . . . . . 166,500,800 1,305,922 — — 167,806,722

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Other segment information:Capital expenditure. . . . . . . . . . . . . . 85,261,660 12,716,478 — — 97,978,138 Intangible assets expenditure . . . . . . 2,000 — — — 2,000 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total . . . . . . . . . . . . . . . . . . . . . . . . . 85,263,660 12,716,478 — — 97,980,138 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Depreciation and amortisation. . . . . 10,457,021 — — — 10,457,021 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

153



4 SEGMENT INFORMATION (Continued) Kingdom of United ArabSegment Egypt Algeria Saudi Arabia Emirates Total ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– USD USD USD USD USD

For the year ended 31 December 2014Revenue . . . . . . . . . . . . . . . . . . . . . . . 75,171,646 — — — 75,171,646 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Gross profit . . . . . . . . . . . . . . . . . . . . 36,145,225 — — — 36,145,225 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Finance costs. . . . . . . . . . . . . . . . . . . 2,403,053 — — — 2,403,053Income tax expense . . . . . . . . . . . . . . — — — — — ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Profit . . . . . . . . . . . . . . . . . . . . . . . . . 23,228,670 — — — 23,228,670 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total assets as at 31 December 2014 . . . . . . . . . . . . . 144,038,485 — — — 144,038,485

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total liabilities as at 31 December 2014 . . . . . . . . . . . . . 70,209,836 — — — 70,209,836

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Other segment information:Capital expenditure. . . . . . . . . . . . . . 29,369,927 — — — 29,369,927 Intangible assets expenditure . . . . . . 4,000 — — — 4,000 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total . . . . . . . . . . . . . . . . . . . . . . . . . 29,373,927 — — — 29,373,927 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Depreciation and amortisation. . . . . 6,752,067 — — — 6,752,067 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

5 REVENUE For the year ended 31 December ––––––––––––––––––––––––––––––––––––––––– 2016 2015 2014 ––––––––––– ––––––––––– ––––––––––– USD USD USD

Units operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,713,864 90,607,349 60,868,288Catering services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,537,195 1,864,199 1,096,134Remote operating vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,741,125 7,654,768Projects income * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,295,711 5,666,202 5,321,192Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569,346 160,531 231,264 ––––––––––––– ––––––––––––– –––––––––––––

134,116,116 101,039,406 75,171,646 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

* Projects income represents services relating to outsourcing various operating projects for clients such as maintenance andrepair services.

154



6 COST OF REVENUE For the year ended 31 December ––––––––––––––––––––––––––––––––––––––––– 2016 2015 2014 ––––––––––– ––––––––––– ––––––––––– USD USD USD

Remote operating vehicles direct costs . . . . . . . . . . . . . . . . . . . — 2,104,377 6,257,975 Project direct costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,615,569 4,087,186 3,351,464 Maintenance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,079,605 5,937,674 3,338,999 Staff costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,666,367 10,793,189 7,108,617 Rental equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,483,465 3,755,222 1,584,840 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,958,675 2,581,367 2,684,606 Depreciation (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,296,945 10,350,670 6,652,957 Other costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,172,770 12,678,955 8,046,963 ––––––––––––– ––––––––––––– –––––––––––––

63,273,396 52,288,640 39,026,421 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

7 GENERAL AND ADMINISTRATIVE EXPENSES For the year ended 31 December ––––––––––––––––––––––––––––––––––––––––– 2016 2015 2014 ––––––––––– ––––––––––– ––––––––––– USD USD USD

Staff costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,046,238 7,693,097 6,121,988Depreciation and amortisation (Notes 15, 16) . . . . . . . . . . . . . 162,641 106,351 99,110Professional fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,988,492 2,178,384 323,259Business travel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255,517 487,013 202,706Free zone expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,405,381 1,072,585 803,023Rental expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 546,832 388,316 270,898Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,053,245 4,814,929 1,817,196Net foreign exchange (gain)/ loss. . . . . . . . . . . . . . . . . . . . . . . . (3,402,151) 27,523 575,322 ––––––––––––– ––––––––––––– –––––––––––––

15,056,195 16,768,198 10,213,502 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

8 FINANCE COSTS For the year ended 31 December ––––––––––––––––––––––––––––––––––––––––– 2016 2015 2014 ––––––––––– ––––––––––– ––––––––––– USD USD USD

Interest on bank credit facilities and loans . . . . . . . . . . . . . . . . 9,428,294 4,413,724 2,403,053 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

155



9 INCOME TAX For the year ended 31 December ––––––––––––––––––––––––––––––––––––––––– 2016 2015 2014 ––––––––––– ––––––––––– ––––––––––– USD USD USD

Consolidated statement of profit or loss:Current income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,284,273 — — ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Consolidated statement of financial position:Current liabilities:Balance at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — Charge for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,284,273 — — Paid during the year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (427,210) — — ––––––––––––– ––––––––––––– –––––––––––––

Balance at 31 December (Note 17) . . . . . . . . . . . . . . . . . . . . . . 2,857,063 — — ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

For the year ended 31 December ––––––––––––––––––––––––––––––––––––––––– 2016 2015 2014 ––––––––––– ––––––––––– ––––––––––– USD USD USD

Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,296,996 25,627,818 23,228,670 Tax at the domestic rates applicable to profits

in the country concerned . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,650,811 — — Tax effect of expenses that are not deductible

for tax purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218,060 — —Other taxes at lower rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415,402 — — ––––––––––––– ––––––––––––– –––––––––––––

Income tax expense recognised in the consolidatedstatement of profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,284,273 — —

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

The Group operates in jurisdictions which are subject to tax at higher rates than the statutory corporate taxrate of 0%, which is applicable to profits in Algeria and Kingdom of Saudi Arabia where applicable tax rateis 26% and 20% respectively. In addition to statutory corporate tax rate of 26%, the operations in Algeria arealso subject to 15% Branch tax on accounting profit.

Egyptian corporations are normally subject to corporate income tax at a statutory rate of 22.5% however theCompany has been registered in a Free Zone in Alexandria under the Investment Law No 8 of 1997 whichallows exemption from corporate income tax.

10 AVAILABLE FOR SALE FINANCIAL ASSET As at 31 December ––––––––––––––––––––––––––––––––––––––––– Country of incorporation Ownership 2016 2015 2014 ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– USD USD USD

Egyptian Chinese Drilling Company . . . . . . . . . . . . . . . . . Egypt 48.75% 1,950,000 1,950,000 —

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

The Group acquired the investment on 30 March 2015 from AMAK Drilling and Petroleum Services Co. (arelated party) at par value. Egyptian Chinese Drilling Company is a Joint Stock Company operating in storingand renting machinery and all needed equipment to the petroleum industry.

The Group recognised dividends of USD 1,225,000 from Egyptian Chinese Drilling Company during theyear ended 31 December 2015.

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10 AVAILABLE FOR SALE FINANCIAL ASSET (Continued)This investment is measured at cost less any impairment as its fair value cannot be reliably measured. TheGroup has treated this investment as available for sale as the legal formalities for change in the articles ofassociation is not complete and accordingly, has no representation on the Board. The completion of theseformalities will result in the accounting of this investment from available for sale financial asset to an associate/joint arrangement.

Fair value hierarchy

31 December 2016 and 2015 Level 1 Level 2 Level 3 ––––––––––––––– ––––––––––– ––––––––––– ––––––––––– USD USD USD USD

1,950,000 — — 1,950,000 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

11 BANK BALANCES AND CASH As at 31 December ––––––––––––––––––––––––––––––––––––––––– 2016 2015 2014 ––––––––––– ––––––––––– ––––––––––– USD USD USD

Cash in hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,656 130,550 1,319Bank balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,169,208 25,219,809 13,654,825 ––––––––––––– ––––––––––––– –––––––––––––

5,192,864 25,350,359 13,656,144 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Bank balances and cash comprise of the following:

As at 31 December ––––––––––––––––––––––––––––––––––––––––– 2016 2015 2014 ––––––––––– ––––––––––– ––––––––––– USD USD USD

United States Dollar (USD) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,813,324 24,522,643 12,055,029Saudi Riyal (SAR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,686,404 — — Egyptian Pound (EGP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,338,380 298,532 1,600,972United Arab Emirates Dirham (AED) . . . . . . . . . . . . . . . . . . . 8,492 — — Great British Pound (GBP) . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,285 10 127Euro (EUR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (51) 28,017 16Algerian Dinar (DZD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323,027 501,157 — Kuwaiti Dinar (KWD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 — — ––––––––––––– ––––––––––––– –––––––––––––

5,192,864 25,350,359 13,656,144 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Cash and cash equivalents comprise of cash in hand and at banks.

157



12 INVENTORIES As at 31 December ––––––––––––––––––––––––––––––––––––––––– 2016 2015 2014 ––––––––––– ––––––––––– ––––––––––– USD USD USD

Spare parts forJack Up Rig Admarine (I) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,408 — — Drilling Barge Admarine (II). . . . . . . . . . . . . . . . . . . . . . . . . . . 252,953 219,354 443,157Jack Up Rig Admarine (III) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,859,621 1,223,891 1,453,289Jack Up Rig Admarine (IV) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,094,650 1,026,483 1,441,428Jack Up Rig Admarine (V) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,628,081 3,993,419 1,505,696Jack Up Rig Admarine (VI) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,308,961 704,239 — Jack Up Rig Admarine (VIII) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,931,522 — — Jack Up Rig Admarine (88). . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,321,311 — — Onshore Rig ADES 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366,715 — — Onshore Rig ADES 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161,397 — — Jack Up Rig Admarine 261 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,941,572 — — Jack Up Rig Admarine 262 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,746,536 — — Jack Up Rig Admarine 266 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,684,284 — — Spare parts in warehouseInventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347,060 — — ––––––––––––– ––––––––––––– –––––––––––––

17,777,071 7,167,386 4,843,570 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Inventories mainly represent spare parts.

13 ACCOUNTS RECEIVABLE As at 31 December ––––––––––––––––––––––––––––––––––––––––– 2016 2015 2014 ––––––––––– ––––––––––– ––––––––––– USD USD USD

Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,903,764 17,593,784 18,642,600Provision for impairment in trade receivables. . . . . . . . . . . . . . (3,114,651) (752,454) (1,041,269) ––––––––––––– ––––––––––––– –––––––––––––

50,789,113 16,841,330 17,601,331 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days after which tradereceivables are considered to be past due. Unimpaired trade receivables are expected on the past experienceto be fully recoverable. It is not the practice of the Group to obtain collateral over receivables and the vastmajority are, therefore, unsecured.


As at 31 December ––––––––––––––––––––––––––––––––––––––––– 2016 2015 2014 ––––––––––– ––––––––––– ––––––––––– USD USD USD

As at 1 January. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 752,454 1,041,269 920,639Charge for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,362,197 1,666,026 300,000Used during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1,954,841) (179,370) ––––––––––––– ––––––––––––– –––––––––––––

As at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,114,651 752,454 1,041,269 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

158



13 ACCOUNTS RECEIVABLE (Continued)As at 31 December, the aging analysis of un-impaired trade receivables is as follows:

Neither Past due but not impaired past due ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

nor <30 30 – 60 61 – 90 >90 impaired days days days days Total ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– USD USD USD USD USD USD

2016 . . . . . . . . . . . . . 9,749,411 11,792,203 4,858,481 3,967,213 20,421,805 50,789,113––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

2015 . . . . . . . . . . . . . 13,177,564 50,425 278,709 101,257 3,233,375 16,841,330––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

2014 . . . . . . . . . . . . . 7,819,986 6,048,505 1,490,242 833,158 1,409,440 17,601,331––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

14 PREPAYMENTS AND OTHER RECEIVABLES As at 31 December ––––––––––––––––––––––––––––––––––––––––– 2016 2015 2014 ––––––––––– ––––––––––– ––––––––––– USD USD USD

Advances to contractors and suppliers . . . . . . . . . . . . . . . . . . . 3,225,691 1,816,210 4,890,029Advances to employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,626 12,118 14,731Advances payments under dividends distribution . . . . . . . . . . — 2,914,763 — Accrued revenue*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,587,148 713,237 — Margin deposits (Note 27). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,511,930 4,731,064 1,631,054Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,225,000 1,225,000 — Other receivables and deposits**. . . . . . . . . . . . . . . . . . . . . . . . 6,588,768 3,524,621 1,270,460 ––––––––––––– ––––––––––––– –––––––––––––

32,152,163 14,937,013 7,806,274 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

* Accrued revenue represents services rendered but not yet billed at the reporting date.** Other receivables and deposits mainly includes prepaid insurance and deposits.

159



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—

(56

5,39

8)

—

(22

,570

)

(16

,360

)

—

(6,

727,

796)

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

As

of 3

1 D

ecem

ber

2014

. . .

. . .

(15,

238,

580)

(132

,941

)—

(1,

644,

675)

—

(15

8,18

7)

(51

,179

)

(70

,038

)

(17,

295,

600)

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

Net

boo

k va

lue:

As

of 3

1 D

ecem

ber

2014

. . .

. . .

81,2

40,6

4238

0,34

8—

5,

410,

014

11,1

63,1

92

110

,378

59,

541

1

98,3

64,1

16

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

–––––––––––––

162

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)

15 PROPERTY AND EQUIPMENT (Continued)Depreciation charge is allocated as follows: For the year ended 31 December –––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014 ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

Cost of revenue (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,296,945 10,350,670 6,652,957General and administrative expenses (Note 7) . . . . . . . . . . . . . . . 153,531 97,241 74,839 ––––––––––––– ––––––––––––– –––––––––––––

Total depreciation charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,450,476 10,447,911 6,727,796 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Assets under constructionAssets under construction represent the amounts that are incurred for the purpose of acquiring property andequipment until it is ready to be used in the operation. Included in property and equipment at 31 December 2016was, an amount of USD 50,127,812 (2015: USD 51,911,665 and 2014: USD 11,163,192) mainly relating toexpenditure for the assets under construction. Assets under construction will be in ‘Rigs’ and ‘Tools’ of theproperty and equipment after completion. Borrowing cost capitalised in assets under construction during theyear ended 31 December 2016 amounted to USD 1,441,466 (2015: USD 787,516 and 2014: USD 573,441). Assetspurchased from related parties amounted to USD 7,940,000 (2015: USD Nil and 2014: USD Nil) (Note 24).

* All rigs are pledged to the lenders (banks) against loans and borrowings (Note 18) except for ADES 2, ADES 3 and ADM 88.

16 INTANGIBLE ASSETS 2016 2015 2014 ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

Cost:As at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167,980 165,980 161,980Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,000 4,000 ––––––––––––– ––––––––––––– –––––––––––––

As at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167,980 167,980 165,980 ––––––––––––– ––––––––––––– –––––––––––––

Accumulated amortisation:As at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (143,605) (134,495) (110,224)Amortisation charge for the year . . . . . . . . . . . . . . . . . . . . . . . . . (9,110) (9,110) (24,271) ––––––––––––– ––––––––––––– –––––––––––––

As at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (152,715) (143,605) (134,495) ––––––––––––– ––––––––––––– –––––––––––––

Net carrying amountAs at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,265 24,375 31,485 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Intangible assets represent computer software and the related licenses.

17 TRADE AND OTHER PAYABLES As at 31 December –––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014 ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,766,226 14,228,665 11,670,852Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,218 — 100,000Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,438,635 124,020 829,077Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,616,446 660,000 206,330Income tax payable (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,857,063 — — Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,179,671 2,585,553 2,555,467Dividends payable (Note 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,149,034 10,601,733 456,632 ––––––––––––– ––––––––––––– –––––––––––––

51,157,293 28,199,971 15,818,358 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

163



18 INTEREST-BEARING LOANS AND BORROWINGS As at 31 December –––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014 ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

Balance as at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136,208,434 54,237,005 47,225,893Borrowings drawn during the year . . . . . . . . . . . . . . . . . . . . . . . . . 120,899,330 200,662,457 20,751,652 Borrowings repaid during the year . . . . . . . . . . . . . . . . . . . . . . . . (21,373,845) (118,691,028) (13,740,540) ––––––––––––– ––––––––––––– –––––––––––––

Balance as at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235,733,919 136,208,434 54,237,005 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Maturing within 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,804,082 5,441,934 29,122,855Maturing after 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189,929,837 130,766,500 25,114,150 ––––––––––––– ––––––––––––– –––––––––––––

Balance as at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235,733,919 136,208,434 54,237,005 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

As at 31 December –––––––––––––––––––––––––––––––––––––––––––

Type Interest rate % Latest maturity 2016 2015 2014––––––––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

USD USD USDCurrent interest-bearing loans and borrowingsLoan 1 4.00% + 6 Month LIBOR 3 years — — 5,666,667Loan 2 5.25% + 6 Month LIBOR 4 years — — 3,469,537Loan 3 5.50% + 6 Month LIBOR 4 years — — 5,000,000Loan 4 5.50% + 6 Month LIBOR 4 years — — 1,710,000

Loan 1 Syndication Tranche A 4.5% + 3 Month LIBOR 5 years 16,000,000 — —Tranche C 5,000,000 — —Tranche D 3,800,000 — —

Loan 2 SyndicationTranche A 5.5% + 3 Month LIBOR 5 years 5,555,556 — —Credit facility 1 4.50% + 3 Month LIBOR 1 year/

renewable 11,791,608 2,378,522 8,985,055Credit facility 2 5.75% + 6 Month LIBOR Renewable — 22 2,827,490Credit facility 3 3.50% + 6 Month LIBOR Renewable — 563,999 1,464,096Credit facility 4 1.25% + Corridor Renewable (223) 2,499,391 10Credit facility 5 1.25% + Corridor Renewable 2,571,426 — —Credit facility 6 1.25% + Corridor Renewable 1,085,715 — — ––––––––––––– ––––––––––––– –––––––––––––

Total current interest-bearing loans and borrowings 45,804,082 5,441,934 29,122,855 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Non-current interest-bearing loans and borrowingsLoan 1 4.00% + 6 Month LIBOR 3 years — — 2,833,331Loan 2 5.25% + 6 Month LIBOR 4 years — — 4,760,819Loan 3 5.50% + 6 Month LIBOR 4 years — — 10,000,000Loan 4 5.50% + 6 Month LIBOR 4 years — — 7,520,000

Loan 1 Syndication Tranche A 4.5% + 3 Month LIBOR 5 years 60,686,926 75,766,500 —Tranche B 40,000,000 40,000,000 —Tranche C 20,000,000 15,000,000 —Tranche D 21,200,000 — —

Loan 2 Syndication Tranche A 5.5% + 3 Month LIBOR 5 years 43,042,911 — —Tranche B 5,000,000 — — ––––––––––––– ––––––––––––– –––––––––––––

Total non-current interest-bearing loans and borrowings 189,929,837 130,766,500 25,114,150 ––––––––––––– ––––––––––––– –––––––––––––

Total interest-bearing loans and borrowings 235,733,919 136,208,434 54,237,005 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

164



18 INTEREST-BEARING LOANS AND BORROWINGS (Continued)The Group has secured interest-bearing loans and borrowings as follows:

Bank credit facilities1. Credit facility 1 is granted by the Arab International bank (AIB) with an overdraft facility limit

amounting to USD 10,000,000 which is automatically renewable and increased by USD 2,500,000 duringthe year 2016 to be USD 12,500,000 and is secured by the assignment of proceeds under the umbrellaof Loan 1 syndication.

2. Credit facility 2 is granted by the Societe Arabe Internationale de Banque (SAIB) with an overdraftfacility limit amounting to USD 3,000,000 which is automatically renewable and is secured by theassignment of proceeds under the umbrella of Loan 2.

3. Credit facility 3 is granted by the Arab Bank with an overdraft facility limit amounting to USD 1,500,000or EGP 10,500,000 which is automatically renewable and is secured by promissory note and insurance policy.

4. Credit facilities 4 is granted by the Qatar National Bank Alahli with an overdraft facility limit amountingto EGP 20,000,000 secured by promissory note and insurance policy which is automatically renewable.

5. Credit facilities 5 is granted by the Egyptian Gulf Bank (EGB) with an overdraft facility limit amountingto EGP 45,000,000 which is secured by promissory note.

6. Credit facilities 6 is granted by the Arab International Bank (AIB) with an overdraft facility limitamounting to EGP 40,000,000 which is secured by promissory note and by the assignment of proceedsunder the umbrella of Loan 1 syndication.

Bank loans1. Loan 1 is financed by the AIB signed on 16 September 2013 amounting to USD 17,000,000 with interest

rate of 4% + 6 months LIBOR, which matures after 3 years. Loan 1 is secured by the Rig – AdmarineIII and all related collection bank accounts and insurance proceeds collection bank accounts, byaccounting and managing them under the bank’s control.

2. Loan 2 is financed by SAIB and AIB signed on 18 March 2013 amounting to USD 13,000,000 withinterest rate of 5.25% + 6 Month LIBOR, which mature after 4 years. Loan 2 is secured by the Rig –Admarine II and all related collection bank accounts and insurance proceeds collection bank accounts,by accounting and managing them under the banks’ control.

3. Loan 3 is financed by SAIB and AIB signed on 3 November 2013 till 2 November 2017, amounting toUSD 20,000,000, with interest rate of 5.50% + 6 Month LIBOR, which mature after 4 years. Loan 3 issecured by the Rig – Admarine IV and all related collection bank accounts and insurance proceedscollection bank accounts, by accounting and managing them under the banks’ control.

4. Loan 4 is financed by SAIB and AIB signed on 15 October 2014 amounting to USD 9,230,000, withinterest rate of 5.50% + 6 Month LIBOR, which mature after 4 years. Loan 4 is secured by the Rig –Admarine I and all related collection bank accounts and insurance proceeds collection bank accounts,by accounting and managing them under the banks’ control.

165



18 INTEREST-BEARING LOANS AND BORROWINGS (Continued)

Loan 1 – Syndication:On 12 November 2015 the Group has signed a syndication loan agreement arranged by EBRD with totalamount of USD 170 million divided over eight banks. The loan is divided into four tranches, the purposeand use of each facility is described as follows:

a) Tranche AFor refinancing certain existing financial indebtedness in full (including the payment of the fees, costs andexpenses incurred under or in connection with the transaction documents) the remaining amount for generalcorporate purposes.

b) Tranche BNew working capital purposes and to refinance certain existing working capital facilities.

c) Tranche CCapital expenditure for the acquisition of the new rigs and mobile offshore production units.

d) Tranche D “Murabaha Participant”The Group shall apply the amount of all utilisations under the Murabaha Facility towards the capitalexpenditure for the acquisition of the new rigs and mobile offshore production units.

The Medium-term loan over 5 years includes15 months grace period and is paid quarterly in un-equalinstalments starting from 23 February 2017 and the last instalment will be on 23 November 2020.

Loan 1 – Syndication is secured by the rigs Admarine I, Admarine II, Admarine III, Admarine IV, AdmarineV, Admarine VI, and Admarine VIII and all related collection bank accounts and insurance proceedscollection bank accounts.

Loan 2 – Syndication:On 25 October 2016 the Group has signed a syndication loan agreement arranged by EFG Hermes AdvisoryInc. with total amount of USD 55 million divided over four banks. The loan is divided into two tranches, thepurpose and use of each facility is described as follows:

a) Facility ATo partially finance the purchase price of the rigs.

b) Facility BFor the purpose of paying pre-operating expense including but not limited to insurance, office and yardexpense. Agent and crew salaries and the payment of the fees, costs and expense incurred or may be incurredunder or in connection with the financing.

The Medium-term loan over 5 years includes 9 month grace period and is paid quarterly in equal instalmentsexcept the last instalment starting from 25 July 2017 and the last instalment will be at 25 October 2021.

Loan 2 – Syndication is secured by the rigs ADM 261, ADM 262, and ADM 266 and all related collectionbank accounts and insurance proceeds collection bank accounts.

166



19 PROVISIONS Charged As at during Used during As at 1 January the year the year 31 December ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

USD USD USD USD

2014

Other tax provisions* . . . . . . . . . . . . . . . . . . . . . . . 13,641 — — 13,641 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

2015

Other tax provisions* . . . . . . . . . . . . . . . . . . . . . . . 13,641 1,500,000 — 1,513,641 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

2016

Other tax provisions* . . . . . . . . . . . . . . . . . . . . . . . 1,513,641 2,027,004 (606,730) 2,933,915 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

* Other tax provisions mainly represents provision made for employees taxes and withholding taxes which are borne by the Group.

20 SHARE CAPITALShare capital of the Company comprise:

As at 31 December –––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014 ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

Authorised shares* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 — — Issued shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 — — Shares par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00 — — ––––––––––––– ––––––––––––– –––––––––––––

Issued and paid up capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 — — ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Share application money** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,900,000 — — ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

The Company was incorporated and registered in the DIFC on 22 May 2016.

The shareholding structure at 31 December 2016 is:

No. of Shareholder Shareholding % shares Value ––––––––––––– ––––––––––––– ––––––––––––– USD

ADES Investment Holding Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . 100 1,000,000 1,000,000 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

* Subsequent to the year ended 31 December 2016, the authorised share capital of the Company was increased to USD 1,500,000,000comprising of 1,500,000,000 shares.

** During the year ended 31 December 2016, the Shareholder has introduced share application money to issue additional sharesamounting to USD 30,900,000 which was subsequently registered as share capital on 23 March 2017.

21 RESERVES

Legal reserveAs required by Egyptian Companies’ Law and the Subsidiary’s Articles of Association, 5% of the net profitfor the year of which the dividends is paid amounting to USD 1,482,144 (2015: USD 1,271,088 and 2014:USD 1,037,840) is transferred to legal reserve. The Subsidiary may resolve to discontinue such annual transferswhen the reserve totals 20% of the issued share capital of the Subsidiary.

167



21 RESERVES (Continued)

Merger reserveAs disclosed in Note 1, pursuant to a reorganisation plan, the shareholders reorganised the Group byestablishing the Company as a new holding company (refer Note 1). Merger reserve represents the differencebetween the consideration paid to the shareholders under the reorganisation plan and the nominal value ofthe Subsidiary shares. Prior to the reorganisation, the merger reserve comprise of the share capital and shareapplication money of the Subsidiary.

22 EARNINGS PER SHAREBasic earnings per share (EPS) amounts are calculated by dividing the profit for the year attributable to theordinary equity holders by the weighted average number of ordinary shares outstanding during the year.

Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding assumingconversion of all dilutive potential ordinary shares.

The earnings per share calculation has assumed that the number of ordinary shares issued in connection withthe reorganisation have been in issue throughout the three years ended 31 December 2014, 2015 and 2016adjusted for the capital increase in 2014.

The information necessary to calculate basic and diluted earnings per share is as follows:

For the year ended 31 December –––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014 ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

Profit attributable to the ordinary equity holders for basic and diluted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,012,723 25,627,818 23,228,670

––––––––––––– ––––––––––––– –––––––––––––

Weighted average number of ordinary shares – basic and diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,900,000 31,900,000 22,286,301

––––––––––––– ––––––––––––– –––––––––––––

Earnings per share – basic and diluted (USD per share) . . . . . . . 1.19 0.80 1.04 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

23 DIVIDENDS DECLARED AND PAID For the year ended 31 December –––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014 ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

Dividends declared and paid during the year:Declared:To shareholders (deducted from retained earnings) . . . . . . . . . . . 10,100,000 15,840,000 2,917,245To employees “Employee benefits” (charged to

consolidated statement of profit or loss) . . . . . . . . . . . . . . . . . . 5,323,933 4,015,061 2,193,043 ––––––––––––– ––––––––––––– –––––––––––––

Declaration for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,423,933 19,855,061 5,110,288Unpaid dividends from prior years . . . . . . . . . . . . . . . . . . . . . . . . 10,601,733 456,632 780,387 ––––––––––––– ––––––––––––– –––––––––––––

26,025,666 20,311,693 5,890,675Paid during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18,876,632) (9,709,960) (5,434,043) ––––––––––––– ––––––––––––– –––––––––––––

Dividends payable (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,149,034 10,601,733 456,632 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

The above dividends represent dividends of the Subsidiary which was paid prior to the reorganisation.

168



24 RELATED PARTIES TRANSACTIONS AND BALANCES

Related party transactionsDuring the year, the following were the significant related party transactions in the consolidated statementof profit or loss:


2016 2015 2014 ––––––––––––– ––––––––––––– –––––––––––––

General and administrative expenses ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

Other related parties

Advansys Creative Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 104,895Advansys Project Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,499 — 1,610Apetco Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 823 — 1,078Advansys Telecom Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4,642 — Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 7,917 ––––––––––––– ––––––––––––– –––––––––––––

10,322 4,642 115,500 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Assets purchased from a related party, AMAK for Drilling & Petroleum Services Co. (other related party)amounted to USD 7,940,000 (2015: USD Nil and 2014: USD Nil) (Note 15).

Other major related party transactions are:

• Advances paid on behalf of the Group by AMAK for Drilling & Petroleum Services Co. (other relatedparty) during the year ended 31 December 2016 amounted to USD 3,947,300 (2015: USD 386,752 and2014: USD Nil).

• Payments on behalf of the Group by Misr El Mahrousa (other related party) during the year ended 31December 2016 amounted to USD Nil (2015: USD 148,920 and 2014: USD 215,295).

Related party balancesSignificant related party balances included in the consolidated statement of financial position are as follows:

As at 31 December –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014 Due from Due to Due From Due to Due from Due to

––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

USD USD USD USD USD USD

Shareholder

ADES Investment Holding Ltd....... — 26,327 — — — — Ultimate ShareholderSky Investment Holding Ltd. .......... 60,000 — — — — — Into Investment Holding Ltd. ......... 60,000 — — — — — Other related parties

Misr El Mahrousa ........................... — 207,065 — 207,065 — 58,145Advansys Project ............................. 9,499 — — — — — Apetco Co. ...................................... 1,115 — — 345 — 5,688Advansys Creative Solutions ........... 26,212 — 26,212 1,677,266 — 20,609AMAK for Drilling & Petroleum

Services Co. .................................. — 3,848,140 144,560 — 1,707,807 — Advansys Telecom Co. .................... — — — — — 4,642 Intro for Trading & Contracting Co. ... 29,291 — 28,091 — 27,758 — Others.............................................. 91,000 — — — — 51,748

––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

277,117 4,081,532 198,863 1,884,676 1,735,565 140,832 ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

169



24 RELATED PARTIES TRANSACTIONS AND BALANCES (Continued)

Compensation of key management personnelThe remuneration of key management personnel during the year was as follows:


2016 2015 2014 ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

Short-term benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 840,000 1,284,937 2,497,987 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Terms and conditions of transactions with related partiesOutstanding balances at the year-end are unsecured, interest free and settled in cash. There have been noguarantees provided or received for any related party receivables or payables. For the year ended 31 December2016, the Group has not recorded any impairment of receivables relating to amounts owed by related parties(2015 and 2014: USD Nil). This assessment is undertaken each financial year by examining the financialposition of the related party and the market in which the related party operates.

25 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

OverviewThe Group’s principal financial liabilities, comprise creditors, due to related parties, interest bearing loansand borrowings and other credit balances. The main purpose of these financial liabilities is to finance theGroup’s operations and to provide support to its operations. The Group’s principal financial assets includecash in hand and at banks, accounts receivable, prepayments, due from related parties and other debit balancesthat arrive directly from its operations.

The Group is exposed to market risk, credit risk and liquidity risk. The Board of Directors of the Companyoversees the management of these risks.

The Board of Directors of the Company are supported by senior management that advises on financial risksand the appropriate financial risk governance framework for the Group. The Group’s senior managementprovides assurance to the Board of Directors of the Group’s financial risk activities are governed byappropriate policies and procedures and that financial risks are identified, measured and managed inaccordance with Group policies and Group risk appetite. The Board of Directors reviews and agrees policiesfor managing each of these risks, which are summarised below.

The Group has exposure to the following risks from its use of financial instruments:

a) Credit risk,

b) Market risk:

i. Interest rate risk

ii. Foreign currency risk

c) Liquidity risk.

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives,policies and processes for measuring and managing risk, and the Group’s management of capital. The Group’scurrent financial risk management framework is a combination of formally documented risk managementpolicies in certain areas and informal risk management policies in other areas.

170



25 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

Credit riskCredit risk is the risk that counterparty will not meet its obligations under a financial instrument or customercontract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarilyfor trade receivables and due from related paries) and from its financing activities, including letter ofguarantees with banks, foreign exchange transactions and other financial instruments. As at 31 December2016, the top three debtors of the Group represent 66% (2015: 57% and 2014: 69%) of the total tradereceivables while 48% of the total trade receivables are from government entities (2015: 44% and 2014: 24%)

Trade receivablesCustomer credit risk is managed by the Group’s established policy, procedures and controls relating tocustomer credit risk management. Credit quality of the customer is assessed based on a credit rating policyand individual credit limits are defined in accordance with this assessment. Outstanding customer receivablesare regularly monitored.

The requirement for impairment is analysed at each reporting date on an individual basis for major clients.Additionally, a large number of minor receivables are grouped into homogenous groups and assessed forimpairment collectively. The calculation is based on actual incurred historical data. The maximum exposureto credit risk at the reporting date is the carrying value of each class of financial assets. The Group does nothold collateral as security. The Group evaluates the concentration of risk with respect to trade receivables aslow, as its wide number of customers operates in highly independent markets. In addition, instalment duesare monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

Other financial assets and bank balancesCredit risk from balances with banks and financial institutions is managed by the Group’s treasury departmentin accordance with the Group’s policy. Counterparty credit limits are reviewed by the Group’s Board ofDirectors on an annual basis, and may be updated throughout the year subject to approval of the Group’ssenior management. The limits are set to minimise the concentration of risks and therefore mitigate financialloss through potential counterparty’s failure to make payments. The Group’s exposure to credit risk for thecomponents of the consolidated statement of financial position is the carrying amounts of these assets. TheGroup limits its exposure to credit risk by only placing balances with international banks and reputable localbanks. Management does not expect any counterparty in failing to meet its obligations.

Due from related partiesDue from related parties relates to transactions arising in the normal course of business with minimal creditrisk, with a maximum exposure equal to the carrying amount of these balances.

Market riskMarket risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate becauseof changes in market prices, such as interest rate risk and currency risk. Financial instruments affected bymarket risk include: loans and borrowings. The Group neither designate hedge accounting or hold or issuederivative financial instruments.

Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuatebecause of changes in market interest rates. The Group’s exposure to the risk of changes in market interestrates relates primarily to the Group’s long-term debt obligations with floating interest rates.

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Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on loans andborrowings. With all other variables held constant, the Group’s profit is affected through the impact onfloating rate borrowings, as follows:

Effect Increase/ on profit decrease in before basis points income tax ––––––––––––– –––––––––––––

31 December 2016USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +100 (1,044,883)USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -100 1,044,883

31 December 2015USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +100 (588,449)USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 100 588,449

31 December 2014USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +100 (209,474)USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 100 209,474 ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Foreign currency riskForeign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuatebecause of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchangerates relates primarily to the Group’s operating activities (when revenue or expense is denominated in adifferent currency from the Group’s functional currency).

The following tables demonstrate the sensitivity to a reasonably possible change in USD exchange rates, withall other variables held constant. The impact on the Group’s profit is due to changes in the value of monetaryassets and liabilities. The Group’s exposure to foreign currency changes for all other currencies is not material.

Effect on profit before Change in income tax USD rate USD ––––––––––––– –––––––––––––

31 December2016EGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +10% 586,006EGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10% (586,006)

31 December2015EGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +10% 533,912EGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10% (533,912)

31 December2014EGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +10% 57,532EGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10% (57,532) ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

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Liquidity riskThe cash flows, funding requirements and liquidity of the Group are monitored by Group management. TheGroup’s objective is to maintain a balance between continuity of funding and flexibility through the use ofbanks overdraft and bank loans. The Group assessed the concentration of risk with respect to refinancing itsdebt and concluded it to be low. Access to sources of funding is sufficiently available and debt maturing within12 months can be rolled over with existing lenders.

The table below summarises the maturity profile of the Group’s financial liabilities based on contractualundiscounted payments.

Financial liabilities Less than 3 3 to 12 1 to 5 Over months months years 5 years Total

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

USD USD USD USD USD

As at 31 December 2016Interest-bearing loans and

borrowings..................................... 9,793,808 33,612,574 218,413,360 — 261,819,742Trade and other payables ................. 43,805,477 7,351,816 — — 51,157,293Due to related parties ....................... 4,081,532 — — — 4,081,532

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total undiscounted financial liabilities ........................................ 57,680,817 40,964,389 218,413,360 — 317,058,567 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Less than 3 3 to 12 1 to 5 Over months months years 5 years Total

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

USD USD USD USD USD


borrowings .................................... 2,015,903 6,752,623 194,761,901 — 203,530,427Trade and other payables ................. 20,552,241 7,647,730 — — 28,199,971Due to related parties ....................... 1,884,676 — — — 1,884,676

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total undiscounted financial liabilities........................................ 24,452,820 14,400,353 194,761,901 — 233,615,074 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Less than 3 3 to 12 1 to 5 Over months months years 5 years Total

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

USD USD USD USD USD


borrowings .................................... 18,412,700 20,010,881 50,459,851 — 88,883,432Trade and other payables ................. 6,832,157 8,986,201 — — 15,818,358Due to related parties ....................... 140,832 — — — 140,832

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total undiscounted financial liabilities........................................ 25,385,689 28,997,082 50,459,851 — 104,842,622 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

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Capital managementCapital includes share capital, share application money and retained earnings.

The primary objective of the Group’s capital management is to ensure that it will be able to continue as agoing concern while maintaining a strong credit rating and healthy capital ratios in order to support itsbusiness and maximise shareholder value. The Group’s strategy remains unchanged since inception. TheGroup manages its capital structure and makes adjustments to it in light of changes in economic conditionsand the requirements of the financial covenants. To maintain or adjust the capital structure, the Group mayadjust the dividend payment to shareholders or return capital to shareholders. The Group monitors capitalusing a gearing ratio, which is net debt divided by total capital plus net debt. The Group’s policy is to keepthe gearing ratio between 30% and 80%. The Group includes within net debt, interest bearing loans andborrowings, less cash and cash deposits, excluding discontinued operations.

As at 31 December –––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014 ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

Interest – bearing loans and borrowings (Note 18) . . . . . . . . . . . . 235,733,919 136,208,434 54,237,005 Bank balance and cash (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . (5,192,864) (25,350,359) (13,656,144) ––––––––––––– ––––––––––––– –––––––––––––

Net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,541,055 110,858,075 40,580,861 Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,908,383 83,616,467 73,828,649 ––––––––––––– ––––––––––––– –––––––––––––

Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335,449,438 194,474,542 114,409,510 ––––––––––––– ––––––––––––– –––––––––––––

Gearing ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69% 57% 35% ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

26 FAIR VALUE OF FINANCIAL INSTRUMENTSFinancial instruments comprise financial assets and financial liabilities. Financial assets of the Group includebank balances and cash, accounts receivable, due from related parties, other receivables and available for salefinancial asset. Financial liabilities of the Group include trade payables, due to related parties, loans andborrowings and other payables. The fair values of the financial assets and liabilities are not materially differentfrom their carrying value unless stated otherwise.

27 CONTINGENT LIABILITIES AND COMMITMENTS As at 31 December –––––––––––––––––––––––––––––––––––––––––––

2016 2015 2014 ––––––––––––– ––––––––––––– ––––––––––––– USD USD USD

Contingent liabilities

Letter of guarantees (Note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,839,083 21,540,428 6,885,270 ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Contingent liabilities represents letters of guarantee issued in favour of General Authority for Investment,Petrobel Group, Egyptian General Petroleum Corporation, Petro Gulf of Suez, Suze Abu Zenima PetroleumCompany (Petro Zenima) and Association Sonatrach - First Calgary Petroleum. The cover margin on suchguarantees amounted to USD 3,511,930 (2015: USD 4,731,064 and 2014; USD 1,631,054) (Note 14).

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28 SUBSEQUENT EVENTS

• Subsequent to the year ended 31 December 2016, the authorised share capital of the Company wasincreased to USD 1,500,000,000 comprising of 1,500,000,000 shares (Note 20).

• Subsequent to the year ended 31 December 2016, the share application money amounting to

USD 30,900,000 was registered as share capital on 23 March 2017 (Note 20).

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PART XI

CAPITALISATION AND INDEBTEDNESS

The table below sets out the Group’s capitalisation and indebtedness as at 31 December 2016. Investors shouldread this table together with Part X: “Historical Financial Information on the Group” of this Prospectus.

There has been no material change since the last published financial information as at 31 December 2016.

As at 31 December 2016 –––––––––––––

(U.S.$)Current debtGuaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,232,656Unguranteed/unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,571,426 –––––––––––––

Total current debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,804,082Non-current debtGuaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189,929,837Unguranteed/unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — –––––––––––––

Total non-current debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189,929,837Shareholders’ equityShare capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,900,000Legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,481,408Other reserves(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,520,807) –––––––––––––

Total share holders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,860,601 –––––––––––––

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265,594,520 ––––––––––––– –––––––––––––

(1) Other reserves include merger reserve.

The table below sets out the Group’s net indebtedness as at 31 March 2017. This statement of indebtednesshas been extracted without material adjustment from the Group’s unaudited management accounts.

As at 31 March 2017 –––––––––––––

(U.S.$)Cash and cash equivalentsCash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,532,115Cash equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — –––––––––––––

Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,532,115 –––––––––––––

Current financial receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — –––––––––––––

Current bank debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,730,343 —

–––––––––––––

Current portion of non-current debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Other current financial debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Current Financial Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,730,343 –––––––––––––

Net Current Financial Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,198,228 –––––––––––––

Non-current bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189,929,837 –––––––––––––

Bonds Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Other non-current loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Non-current Financial Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189,929,837 –––––––––––––

Net Financial Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227,128,065 ––––––––––––– –––––––––––––

ESMApara 127III 3.2

176

As at 31 March 2017, Contingent liabilities amounting U.S.$21,006,083 represents letters of guarantee issuedin favour of General Authority for Investment, Petrobel Group, Egyptian General Petroleum Corporation,Petro Gulf of Suez, Suez Abu Zenima Petroleum Company (Petro Zenima) and Association Sonatrach – FirstCalgary Petroleum. The cover margin on such guarantees amounted to U.S.$3,428,630.

As at 31 March 2017, there is no indirect indebtedness.

177

PART XII

DIRECTORS, SENIOR MANAGEMENT AND CORPORATE GOVERNANCE

1. Directors

Board of Directors

The Board is responsible for, and has the authority to determine, all matters relating to the strategicdirection, policies and practices of the Group and establishing goals for Senior Management and theoperation of the Group.

The Company’s board of directors consists of 6 Board Members. Board Members are elected for a 3 yearterm, renewable for a further term of 3 years, without prejudice to the rights of the general meeting ofshareholders to remove a Board Member during his term of office or to reappoint a Board Member whoseterm of office has expired. Board Members are each appointed at a general meeting of shareholders. Theduties and authority of each Board Member are regulated by the Company’s Articles of Association.

The Directors are as follows:

Name Position––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––

Ayman Abbas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ChairmanDr. Mohamed Farouk Abdelkhalek . . . . . . . . . . . . . . . . . Managing DirectorMohamed Walid Cherif . . . . . . . . . . . . . . . . . . . . . . . . . . . Independent Board MemberNabil Kassem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Independent Board MemberYasser Hashem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Independent Board MemberUlf Henriksson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Independent Board Member

Director ProfilesChairman

Mr. Ayman Mamdouh Abbas (Chairman)Mr. Abbas has been a member of the Company’s board since the Company’s inception on 22 May 2016. Hehas held management positions in the oil and gas industry since 1998, when he co-founded and served asmanaging director and board member of the Egyptian Chinese Drilling Company (ECDC). Mr. Abbas hasbeen Chairman of ADES Group in 2003 and has played a key role in transforming the company into aregional player. He was also a board member of Advansys Systems, a group focusing on the provision ofsolutions for the oil and gas industry.

Beyond oil and gas, Mr. Abbas has led investments in industries including real estate, trading and commercialrepresentation, food and agriculture, and control and automation engineering. He was previously ManagingPartner at Invensys for Engineering and Services Egypt, a joint venture established in 2004 with InvensysSystems (IES), an FTSE 100 company focusing on outsourcing technology and engineering servicesworldwide. Mr. Abbas was also managing partner of financial investment firm Compass Capital and a partnerat 10 Ramadan for Pharmaceutical Industries and Diagenetic Reagents (Rameda) SAE. In 2015, he assumedthe role of Chairman of the Board for Advansys Engineering Service & Consultancy.

Managing Director

Dr. Mohamed Farouk Abdelkhalek (Managing Director)Dr. Farouk has been a member of the Company’s Board since the Company’s inception on 22 May 2016 andhas served as chief executive officer since 2012, during which time he has led the Company’s expansion intonew markets and services as ADES transforms into a leading global rig operator. Dr. Farouk joined the Groupfrom Invensys Operations Management (IOM), a FTSE 100 company, where he was most recently senior vicepresident for global delivery and operations based in Texas. He served earlier with Invensys as Director ofInvensys Global Engineering Excellence Centres in Egypt, India, China and Argentina, prior to which hewas the General Manager of Invensys Engineering and Services in Egypt. He began his career in 1991 as aProject Engineer at ConiSys Egypt, a provider of control and instrumentation systems technology.

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178

Dr. Farouk holds a PhD in systems engineering and control from Case Western Reserve University of Ohio,USA. He was subsequently an associate professor of electrical engineering at Cairo University. His pastdirectorships include service to the board Schneider Electric for Process Systems; he is currently theNon-Executive Chairman of Invensys Engineering and Services Egypt.

Non-Executive Directors

Mr. Mohamed Walid CherifMr. Cherif is the founder of the private debt business at Gulf Capital where he has headed the debt platformsince he joined in 2011. Mr. Cherif has more than 22 years of experience in international finance in emergingmarkets. He has participated in raising more than U.S.$600 million of commitments for mezzanine and equityfunds as well as structuring and executing several junior debt and structured equity transactions on theinvestment and divestment sides. Before joining Gulf Capital, he was the head of the NBK Capital MezzanineFund (a subsidiary of National Bank of Kuwait) where he made several mezzanine investments in companiesoperating in the Middle East and Turkey. He currently sits on the investment committee of both funds andon the board of several portfolio companies in the Middle East. Prior to joining NBK Capital in 2007,Mr. Cherif spent ten years at the International Finance Corporation – The World Bank Group in Washington,D.C., Dubai and Istanbul. Mr. Cherif holds a Master in Business Administration in Finance and InternationalBusiness from George Washington University in the USA, and a Bachelor of Business Administration fromthe Institut Supérieur de Gestion, University of Tunis III.

Mr. Nabil KassemMr. Kassem has been an independent director of the Company since 1 March 2017. Mr. Kassem is currentlythe Managing Director, Private Equity, at Gulf Capital; the founder, CEO and managing partner ofexcellenceO2; and the executive chairman, founder and CEO of Optimind Corporation. From 2000 to 2005,Mr. Kassem was vice president of global sales for Schlumberger Oilfield Services and the vice president andgeneral manager for the Middle East & Asia Pacific region for Schlumberger Information Solutions. He laterassumed the role of VP and Managing Director at Invensys Operations Management for the MENA andAsia-Pacific regions, after which he established his industrial consulting firm, Optimind. Parallel to his workat Optimind, Mr. Kassem founded excellenceO2, an operations consultancy serving clients across a numberof industries. In 2011, Mr. Kassem joined Gulf Capital in 2011 and holds a number of directorships.Mr. Kassem earned a BS in mechanical engineering from Birmingham University, an M.Eng in controlsystems from Sheffield University, and a diploma from Sloan School of Management.

Mr. Yasser HashemMr. Hashem joined the Company’s Board of Directors as an independent member on 1 March 2017. He hasbeen Managing Partner of Zaki Hashem & Partners, Attorneys at Law, since 1996, where his primary areasof expertise include corporate, M&A, capital markets and telecommunications law. In more than 27 years ofprofessional practice, Mr. Hashem has advised on corporate structure and restructuring for both foreign anddomestic companies and continues to provide counsel to foreign and domestic investors on the most efficientstructures through which to do business in Egypt. Mr. Hashem has been lead counsel on numerous M&Aand capital market transactions, a number of which are among the largest to have taken place in Egypt inrecent years. Mr. Hashem was admitted before the Egyptian Court of Cassation in 2007 and is member ofthe Egyptian Society of International Law and the Licensing Executive Society. He holds an LL.B. fromCairo University’s Faculty of Law.

Mr. Ulf HenrikssonMr. Ulf Henriksson joined the Board on 1 March 2017 as an independent member. He has demonstratedability to lead people in challenging and complex business environments and brings to the Board experiencein industrial products and markets. He was most recently the president and chief executive officer of DematicGroup, the global engineering and logistics company operating in 35 countries, where he served from April2012 to November 2016. During his tenure at Dematic, he delivered substantial equity investors a returnfollowing their divestment to KION Group in 2016. Ulf spent six years as CEO of Invensys plc (2005 to2011). He was also previously a Board Member of Hexagon AB from 2007 to May 2013 and a senior advisorto TPG Capital from September 2011 to December 2012.

Senior ManagementSenior management is responsible for the day to day running of the business and the implementation of theBoard’s strategies and policies. The senior management includes the following:

179

Name Position––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––

Leadership TeamDr. Mohamed Farouk Abdelkhalek . . . . . . . . . . . . . . . . . Chief Executive Officer Mohamed Khalil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VP OperationsAhmed Mohy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Client Care DirectorAli Makhlouf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GM International MarketsIbrahim Sallam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chief Financial OfficerOmar Saleh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chief Strategy OfficerHussein Badawy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investor Relations officerMorcos Ekladious . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . General Counsel and Company Secretary

Senior Management Profiles (non-Board)Leadership Team

Mohamed Khalil (Offshore Vice President)Mr. Mohamed Khalil has held the position of Offshore Vice President of ADES Group since September2012, leveraging his over forty years of experience in the oil and gas industry. Prior to joining the Company,Mr. Khalil was a Branch Manager at offshore oil and gas drilling company Northern Offshore Drilling from2010 to 2012. He held numerous positions at GlobalSantaFe, both before and after the company merged in2007 with Transocean to become a leading international provider of offshore contract drilling services.Mr. Khalil was an integral part of the company for over 30 years, using his extensive experience in rigmechanics, operations and subsea engineering to hold numerous positions ranging from Rig Manager,Operations Manager, and finally Middle Manpower & Workforce Planning Manager at both its Middle Eastand International divisions. Mr. Khalil holds a B.Sc. in Mechanical Engineering from Cairo University.

Ahmed Mohy (Client Care Director)Mr. Ahmed Mohy assumed the role of Client Care Director at ADES Group in 2013, having been with theCompany for over seven years prior to that. Mr. Mohy has over 20 years of experience in electronicsengineering and offshore rig management, having started his career at ADES Group as Engineer andMaintenance Team Leader in 2006 and working his way to Operation Manager in 2010 and Operation &Marketing Manager in 2011. Prior to his successful career at ADES Group, Mr. Mohy had long-standingprofessional experience as an Electronics Engineer with numerous prominent companies and organizations,including Egypt’s Ministry of Defence from 2004 to 2006, Misr Shipping Company and Zakher Marine from1996 to 2004, and the Armed Forces’ Military Intelligence Service from 1994 to 1996. Mr. Mohy holds a B.Sc.in Electronics Engineering from Menoufia University.

Ali Makhlouf (International Markets General Manager)Mr. Ali Makhlouf is International Markets General Manager for the Group, having previously served asSales and Business Development Director upon joining the Company in 2014. He brings a breadth ofexperience from diverse industries including oil and gas, telecommunications and technology; and a depth ofknowledge from working in engineering, operations, sales, business development and general managementcapacities. Mr. Makhlouf began his career as a Field Engineer at Badr El Din Petroleum Company (Bapetco),a Shell Global joint venture in Egypt. He subsequently held senior positions in project management atMotorola KSA, after which he became a Business Unit Manager at Summit Technology Solutions, anOrascom and Sumitomo Corporation joint venture. Prior to joining the Group, Mr. Makhlouf was OperationsManager for Invensys Operations Management (IOM), a FTSE 1000 company. In 1990, Mr. Makhlouf earneda BSc of Electronics and Telecommunications from Alexandria University.

Ibrahim Sallam (Chief Financial Officer)Mr. Ibrahim Sallam joined ADES Group as Chief Financial Officer in 2010, having also held the position ofFinancial Manager at the Company since 2007. Mr. Sallam has over 18 years of professional experience inaccounting and financial services, having previously spent eight years as Audit Manager at RSM International- Arab Chartered Accountants, a private company operating within the commercial and professional servicessector. As a Certified Public Accountant with Egypt’s Ministry of Finance, Mr. Sallam is a Level 2 CMAholder and Level 4 CFM. He graduated in 1999 with a B.Sc. in Commerce, with a specialization inAccounting, from Cairo University.

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Omar Saleh (Chief Strategy Officer)Mr. Omar Saleh is Chief Strategy Officer for the Group. As an executive with both multinational andentrepreneurial experience, he brings a valuable diversity of business experience to the Company. Prior tojoining ADES in 2016, Mr. Saleh was Founder and Chief Executive Officer of Power Bridge Resources GroupLTD, a mid-stream energy company providing technology-driven small scale natural gas solutions. Mr. Salehbegan his career as a Commissioning Lead Projects Engineer with BG Group plc, an oil and gas companynow part of Royal Dutch Shell plc. Subsequently, he worked at the Dow Chemical Company as SeniorCommercial Manager Africa. Mr. Saleh holds a BSc in Chemical Engineering from Cairo University. He hasalso earned a Masters of Business Administration (MBA) from Stanford University Graduate School ofBusiness in the US.

Hussein Badawy (Investor Relations Officer)Mr. Hussein Badawy joined the Company in February 2016 and holds the position of Investor RelationsOfficer with the Group. Mr. Badawy’s background in finance and marketing bring key experience to his role.Prior to joining the Company, he had been a Relationship Manager in the Corporate & Investment BankingGroup of the Arab International Bank, a multilateral bank. Earlier in his career, Mr. Badawy was a RealEstate Agent with ERA Egypt, a branch for ERA International, one of the world’s leading real estate agencies.In 2008, he earned a Bachelor’s Degree in International Business Administration from Sadat Academy forManagement Sciences in Egypt in, in collaboration with University of New Brunswick in Canada. Hispost-graduate certifications include Advanced Financial Modeling and Banking Credit & Credit RiskManagement.

Morcos Ekladious (General Counsel and Company Secretary)Mr. Morcos Ekladious joined the Company in July 2015 and holds the position of General Counsel andCompany Secretary for the Group. He brings 13 years of knowledge and experience in diverse business sectorsspanning maritime, telecommunications, media, technology, real estate and now oil and gas. Prior to joiningthe company, Mr. Ekladious had been Head of Legal Affairs at Orascom Telecom Media and TechnologyHolding. Mr. Ekladious also served as Principal Lawyer for Mobinil, now Orange Egypt; and as InternationalCorporate Lawyer and Manager for Muriya Tourism Development Company, a joint enterprise with OrascomDevelopment Holding and Omani master developer Omran. Earlier in his career, he worked as a SeniorLawyer with local firms specializing in maritime law. In 2004, Mr. Ekladious received a Bachelor of Law fromthe University of Alexandria, Faculty of Law English Department; and in 2008, a Master’s Degree in Lawfrom the Arab Academy for Science, Technology and Maritime Transport.

2. Remuneration and Benefits

Remuneration Strategy & Aim

Overall Aim

The aim of the Company’s remuneration policy for its Executive Directors and Senior Management is toprovide a reward framework which ensures that key value drivers are appropriately attracted, retained andmotivated and which is fit for purpose in the markets in which the Company operates and where it and itspeer group are listed.

Remuneration StrategyThe Company’s remuneration strategy for its Executive Directors and Senior Management is to provide aremuneration package which rewards them fairly and responsibly for their contributions and aims to deliversuperior remuneration for superior performance. It is essential that the remuneration package for an ExecutiveDirector incorporates appropriate compensation for the business and economic issues faced in the dischargeof duties which come as a natural consequence of operating in the Company’s environment.

The Executive Directors’ total reward package will consist of elements such as base salary, annual performancebonuses and other benefits as set out below. The Remuneration Committee’s policy is to provide a base salaryrelative to an appropriate benchmark, considering organisations of broadly similar size and complexity inthe exploration and production sector on appointment to the Board.

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The Remuneration Committee will review on an annual basis whether its remuneration policy remains appropriatefor the relevant financial year. Factors taken into account by the Remuneration Committee will include:

• business strategy over the period;

• overall corporate performance;

• the geographic and economic challenges facing a company operating in the MEA region;

• market conditions affecting the Company;

• the recruitment market;

• changing practice in the international and MEA markets; and

• changing views of institutional shareholders and their representative bodies.

The Remuneration Committee may obtain professional advice from a recognised remuneration consultantwhen designing and structuring remuneration policy and packages.

The Board as a whole is responsible for setting the remuneration of the Non-Executive Directors, other than theChairman whose remuneration is determined by the Remuneration Committee and recommended to the Board.

(a) Executive DirectorsAt Admission, the Company has set an aggregate total remuneration of U.S.$4,000,000 (including base salary,annual performance bonuses and other benefits) shared equally between the Executive Chairman and theManaging Director. The Remuneration Committee is able to review the aggregate total remuneration fromtime to time in its discretion.

(i) Executive ChairmanMr. Abbas was appointed as the Executive Chairman of the Company since the Company’s inception on22 May 2016. Mr. Abbas is employed by the Company pursuant to a service agreement with the Company,dated 1 March 2017. Mr. Abbas’ service agreement will continue until terminated. The notice period requiredto terminate the service agreement is not less than twelve months by the Company and 60 days by Mr. Abbas.Mr Abbas has agreed to confidentiality obligations, without limitation as to time.

Mr Abbas is eligible to participate in an annual bonus scheme, with the potential to receive bonus paymentsof such amounts as the Board may determine, subject to such conditions and KPI targets. Mr Abbas is eligibleto participate in a discretionary annual bonus scheme, with the potential to receive bonus payments of suchamounts as the Board may determine, subject to such conditions and KPI targets.

(ii) Managing DirectorDr. Farouk was appointed as Managing Director of the Company since the Company’s inception on22 May 2016. Dr. Farouk is employed by the Company pursuant to a service agreement with the Company,dated 1 March 2017. Dr. Farouk’s service agreement will continue until terminated. The notice periodrequired to terminate the service agreement is not less than twelve months by the Company and 60 daysby Dr. Farouk. Dr Farouk has agreed to confidentiality obligations, without limitation as to time.

Dr. Farouk’s is eligible to participate in an annual bonus scheme, with the potential to receive bonus paymentsof such amounts as the Board may determine, subject to such conditions and KPI targets.

(c) Non-Executive DirectorsOverview

There are four Non-Executive Directors as follows:

Name Title Appointment date––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––– –––––––––––––––

Mohamed Walid Cherif . . . . . . . . . . . . . . . Independent Board Member 1 March 2017Nabil Kassem . . . . . . . . . . . . . . . . . . . . . . . Independent Board Member 1 March 2017Yasser Hashem . . . . . . . . . . . . . . . . . . . . . Independent Board Member 1 March 2017Ulf Henriksson . . . . . . . . . . . . . . . . . . . . . Independent Board Member 1 March 2017

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Fees

The fees for the Non-Executive Directors are as follows:

Basic fee Additional Total Fees Name (£) fees (£) Details (£)––––––––––––––––––––––––––––––– ––––––––– ––––––––– –––––––––––––––––––––––––––––––––––––––––– –––––––––

Mohamed Walid Cherif . . . . 50,000 — Member of the Audit 50,000Committee, Member of the Remuneration Committee, Member of the Nomination Committee

Nabil Kassem . . . . . . . . . . . . 50,000 — Chairman of the Audit Committee, 50,000Member of the Remuneration Committee, Member of the Nomination Committee

Yasser Hashem . . . . . . . . . . . 50,000 — Member of the Audit Committee 50,000Ulf Henriksson . . . . . . . . . . . 50,000 — Member of the Nomination Committee 50,000

The appointment of each of the Non-Executive Directors as Directors of the Company commenced on1 March 2017 and will continue until the Company’s first annual general meeting. Each appointment is foran initial term of three years, subject to being re-elected as a director at each annual general meeting, savethat a Non-Executive Director or the Company may terminate the appointment at any time upon one month’swritten notice, or the Non-Executive Director may be required to resign at any time in accordance with theArticles or for any regulatory reason. These appointments are otherwise subject to the provisions of theArticles and the terms of reference of the Board committees.

The Non-Executive Directors are subject to certain restrictive covenants during the appointment and, withrespect to the undertaking not to disclose or use confidential information, at any time thereafter. The relevantagreements contain provisions relating to confidentiality, share dealings and conflicts of interest. TheNon-Executive Directors are required to devote sufficient time to the affairs of the Company as is necessaryto perform their respective duties. The Non-Executive Directors are not permitted to take up any office oremployment with, or have any direct or indirect interest in any firm or company which is in direct or indirectcompetition with the Company. Upon termination of the appointment, and where such termination is forany reason other than due to the Non-Executive Director’s gross misconduct, material breach of the termsof the appointment, act of fraud or dishonesty or wilful neglect of the Non-Executive Director’s duties, theNon-Executive Director will be paid a pro rated amount of his fees in respect of the period between thebeginning of the quarter in which termination took place and the termination date. Otherwise, none of theNon-Executive Directors is entitled to any damages for loss of office and no fee shall be payable in respect ofany unexpired portion of the term of the appointment.

For Non-Executive Directors, fee levels are reviewed annually and reflect market conditions and the complexnature of the Company’s business and geographic environment and are intended to be sufficient to attractindividuals with appropriate knowledge and experience.

The Non-Executive Directors are also entitled to reimbursement of reasonable expenses. The Non-ExecutiveDirectors are otherwise not entitled to participate in the Company’s executive remuneration programmes orpension arrangements.

(d) Senior ManagementThe aggregate remuneration paid and benefits in kind granted to Senior Management by the Company forthe financial year ended 31 December 2016 was EGP 12,939,165 million.

3. Directors’ indemnityThe Articles of Association provide for the Directors to be indemnified, to the extent permitted by law (andsubject to certain exemptions), against any liability, demands, costs or expenses incurred in connection withany proceeding, debt, claim, action, demand, suit, judgment, decree or obligation.

The Company is in the process of procuring an insurance policy for its Directors’ and senior managementduring the financial year ending 31 December 2017. In broad terms, this policy protects, inter alia, privateassets of directors and senior managers against financial losses from legal liability claims filed against such

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directors or senior managers arising out of alleged wrongful acts or omissions, either committed or attemptedin the capacity as director or senior manager of the Company. However, this type of policy does not typicallycover claims relating to securities claims, arising out of or in connection with a public offer of securities and,therefore, the Company concludes stand-alone insurance policies.

4. Directors’ and Senior Managers’ Interests

4.1 Directors’ ShareholdingsThe interests of the Directors and of members of Senior Management (and of persons connected with them)in the share capital of the Company (all of which are beneficial unless otherwise stated) as at the LatestPracticable Date and as they are expected to be immediately following Admission are as follows, assumingthat the Over-allotment Option is not exercised (not including options disclosed below):


––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––

As a As a percentage of percentage of No. of Offer total Offer No. of Offer total Offer Name Shares Shares in issue Shares Shares in issue––––––––––––––––––––––––––––––––––––––– ––––––––––––––– ––––––––––––––– ––––––––––––– –––––––––––––––

Ayman Abbas . . . . . . . . . . . . . . . . . . . . . 0 0% 0 0%Dr. Mohamed Farouk Abdelkhalek . . . 0 0% 0 0%Mohamed Walid Cherif . . . . . . . . . . . . . 0 0% 0 0%Nabil Kassem . . . . . . . . . . . . . . . . . . . . . 0 0% 0 0%Yasser Hashem . . . . . . . . . . . . . . . . . . . . 0 0% 0 0%Ulf Henriksson(1) . . . . . . . . . . . . . . . . . . 0 0% 36,364 0.214%Senior Management . . . . . . . . . . . . . . . . 0 0% 0 0%

(1) Mr Henriksson has agreed to purchase U.S.$600,000 of Offer Shares in this Global Offer at the Offer Price.

As at the Latest Practicable Date, there were no outstanding loans granted by the Company to any Directoror member of Senior Management, nor by any Director or member of Senior Management to the Company,nor was any guarantee which had been provided by the Company for the benefit of any Director or memberof Senior Management, or by any Director or member of Senior Management for the benefit of theCompany, outstanding.

4.2 Management Incentive PlanThe principal features of the ADES Investments Long Term Incentive Plan (the “LTIP”) are outlined below.

The LTIP was adopted by the board of the Selling Shareholder on 8 May 2017 (the “Adoption Date”). Thepurpose of the LTIP is to retain and incentivise senior executives of the Group. Employees and executivedirectors of the Group are eligible to be selected for participation in the LTIP. The Board (in consultationwith the Selling Shareholder) has discretion to select the participants in the LTIP (the “Participants”).

The terms specifically applicable to the LTIP are outlined below.

Form of Award

An “Award” is a conditional right to receive a specified number of Ordinary Shares at the end of a specifiedperiod (the “Performance Period”). The Performance Period shall be the period of three years from the date ofgrant of each Award, unless the Board determines at grant that a different period shall apply.

The Selling Shareholder may, prior to the date on which the Board resolves to grant an Award, decide thatthe Award shall be satisfied by payment by, or on behalf of, the Selling Shareholder of an equivalent amountin cash. The cash amount (subject to any withholding) must be equal to the market value of the OrdinaryShares that would otherwise have been transferred to the Participant where all conditions had been met orotherwise waived.

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Grants

Grants under the LTIP may only be made during:

(a) the period of 42 days after the Adoption Date; and

(b) any period of 42 days immediately following the end of a Closed Period; and

(c) any other period in which the Board has decided Options should be granted due to exceptionalcircumstances that justify such a decision.

Awards may not be granted:

(a) at any time when that grant would be prohibited by, or in breach of any:

• law; or

• the Market Abuse Regulation or any other regulation with the force of law; or

• rule of an investment exchange on which Ordinary Shares are listed or traded, or any othernon-statutory rule that binds the Company or with which the Board has resolved to comply; or

(b) after the tenth anniversary of the Adoption Date.

Plan limits

(i) Numerical Limit

The maximum number of Ordinary Shares which may be granted subject to any Award under the LTIPcannot exceed 3 per cent. of the Company’s issued share capital on Admission (to be provided by theSelling Shareholder), unless prior authorisation has been obtained from the Selling Shareholders.

For the purpose of the overall numerical limit applying to the LTIP, any Award which has been released,cancelled or lapsed without any underlying Ordinary Shares having been transferred or otherwise issuedto any Participant shall be ignored.

(ii) Variation of share capital

If there is a variation of the share capital of the Company then, subject always to prior authorisationhaving been obtained from the Selling Shareholders, the numerical limit may be adjusted to take accountof the variation.

Performance conditions

When granting an Award, the Board may make the delivery of Ordinary Shares or cash (as the case may be)pursuant to that Award conditional on the satisfaction of one or more objective conditions linked to theperformance of the Group. The Selling Shareholder may waive or change a performance condition inaccordance with its terms or as the Selling Shareholder considers appropriate. The Selling Shareholder mustalso specify the period in respect of which the performance conditions shall apply.

To the extent any performance condition is not satisfied by the end of the Performance Period (or such otherperiod as may be specified at the date of grant), the Award will lapse, unless otherwise specified in theperformance condition. If an Award lapses under the LTIP, a Participant has no further rights in respect ofit nor in relation to any shares or cash under the Award.

Share rights

A Participant may not transfer, assign or otherwise dispose of an Award, or any rights in respect of it, exceptin the case of the transmission of an Award on the death of a Participant to his personal representatives orwhere the Award is assigned as required by law or is transferred by operation of law.

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Delivery of Offer Shares

Except where shares may be transferred earlier pursuant to the rules of the LTIP, within 30 days of the later of:

(a) the third anniversary of the date of grant of an Award; and

(b) the satisfaction or waiver of all performance conditions,

the Board will arrange (subject to any applicable withholding for tax and social security) for the transferfrom the Selling Shareholder to the Participant of the number of Ordinary Shares in respect of whichthe Award has vested.

Termination of Employment

Except in the event of a Participant’s death, an Award will normally lapse on the date the Participant ceasesfor any reason to be an employee or director of any Group Member irrespective of the extent to which anyperformance condition has at that time been satisfied or waived.

If a Participant dies, the Board shall procure the delivery of Ordinary Shares subject to that Award within60 days from the date of death, but only to the extent that any performance condition has been satisfied as atthe date of death. The Award will then lapse as to the balance.

Variations in share capital, demergers and special distributions

If there is (i) a variation in the equity share capital of the Company, including a capitalisation or rights issue,sub-division, consolidation or reduction of share capital, (ii) a demerger (in whatever form) or (iii) a specialdividend or distribution, the Selling Shareholder may adjust the number or class of Ordinary Sharescomprised in an Award. The Board shall notify Participants of any such adjustment.

Takeovers and Restructurings

Where a person (or a group of persons acting in concert) obtains control of the Company as a result ofmaking an offer to acquire Shares, the Board will determine (in consultation with the Selling Shareholder)whether and to what extent an Award “vests” on the date the person obtains control, taking into account allrelevant facts and circumstances including, but not limited to, the performance of the Company, the periodof time which has elapsed since the relevant date of grant and the interests of the Company’s shareholders.The Award lapses as to the balance unless exchanged (see below).

However, an Award will not vest in these circumstances if (i) an offer to exchange Awards is made andaccepted by a Participant, or (ii) the Board (in consultation with the Selling Shareholder and with the priorconsent of the “Acquiring Company”) decides before that person obtains control that the Awards will beautomatically exchanged.

Demerger or other corporate event

If the Board becomes aware that the Company is, or is expected to be, affected by any demerger, distribution(other than an ordinary dividend) or other transaction or arrangement not comprising a general offer toacquire Offer Shares which, in the opinion of the Board (in consultation with the Selling Shareholder), wouldaffect the current or future value of any Award, the Board may allow an Award to “vest” but only to theextent that any performance condition has been satisfied as determined by the Board (in consultation withthe Selling Shareholder).

Malus and clawback

The Selling Shareholder may decide, at any time prior to the date on which the Award is satisfied by thedelivery of Ordinary Shares (or cash), that the Award shall be reduced if there are exceptional circumstances,which include:

(a) fraud, misconduct or serious error by the relevant Participant; and

(b) a significant downturn in the financial performance of the Company or a division in which theParticipant works.

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The Selling Shareholder may at any time after the date on which the Award is satisfied by the delivery ofOrdinary Shares or cash require, in exceptional circumstances, the Participant to transfer to it (or such otherparty as it may determine) some or all of (i) the shares transferred in satisfaction of an Award, or (ii) the saleproceeds of such shares, or (iii) cash due before withholding to the Participant on such vesting. Theexceptional circumstances include:

(a) material misstatement in the published results of the Company;

(b) discovery of an error in assessing the performance conditions; and

(c) fraud, misconduct or serious error on the part of the Participant.

Administration

The Board (acting through the Remuneration Committee) has responsibility for the ongoing operation andsupervision of the LTIP, subject to the rules of the LTIP.

The Board shall have full authority, consistent with the rules of the LTIP, to administer the LTIP, includingauthority to interpret and construe any provision of the Plan and to adopt regulations for administering thePlan. Decisions of the Board shall be final and binding on all parties.

Withholding

The Selling Shareholder and the Group, or any agent of either, may withhold any amount or make anyarrangements which it considers necessary to satisfy any liability to tax, social security, social tax and similarcontributions which may arise from the grant, payment, transfer, release or cancellation of Awards grantedto a Participant.

Power to amend

Subject always to prior consultation with the Selling Shareholder, the Board may at any time discontinue thegrant of further Awards and may amend the provisions of the LTIP in any way it thinks fit except that:

(a) a subsisting Award may not be cancelled except where the Participant shall have agreed in writing tosuch cancellation; and

(b) no amendment may materially affect a Participant as regards a subsisting Award prior to the amendmentbeing made.

4.3 Other directorshipsName Current directorship/partnership Previous directorship/partnership–––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––

Ayman Abbas . . . . . . . . Chairman of ADES Group, Board Member and Shareholder ofChairman of Advansys Engineering Compass Capital for FinancialService & Consultancy Investments S.A.E.Chairman and Shareholder of Tenth of Ramadan for Pharmaceutical Industries and Diagnostic Reagents (Rameda) S.A.E.Chairman and Shareholder of Rameda for Pharmaceutical Trade S.A.E.Shareholder of Environ AdaptBoard Member and Shareholder of Hills Integrated Construction ServicesBoard Member and Shareholder of M2 for Facility ManagementChairman, Managing Director and Shareholder of EL FAGR Board Member and Shareholder of Advansys Technology

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Name Current directorship/partnership Previous directorship/partnership

Ayman Abbas (continued) Board Member and Shareholder of Advanced Systems — AdvansysChairman and Shareholder of Advansys of Integrated ProjectsManaging Director of Invensys Engineering and Services S.A.E.Board Member and Shareholder of Intro Solar EnergyBoard Member and Shareholder of Intro for Trading and ContractingBoard Member of Egyptian Chinese Drilling CompanyBoard Member of Intro Investments Holding Ltd.Board Member of ADES International Holding Ltd.Board Member of ADES Investments Holding Ltd.

Dr. Mohamed Farouk Abdelkhalek . . . . . . . Board Member of ADES

International HoldingBoard Member of Intro Investments HoldingBoard Member of Compass CapitalNon-executive Chairman of Invensys EngineeringBoard Member of TechnoscanBoard Member of ECDCBoard Member of AMAKBoard Member of Schneider Electric for Process Systems.Board Member of Advansys HoldingManaging Director of Advanced Energy Systems S.A.EBoard Member of ADES Investments HoldingBoard Member of Advansys for Engineering services and consultancy

Mohamed Walid Cherif Managing Director of Gulf Capital Pvt JSCDirector of AMAK DPS

Nabil Kassem . . . . . . . . Managing Director, Private Equity, Managing Director of Invensys of Gulf Capital Operations Management for MENA and Executive Chairman and Chief Asia-Pacific Executive Officer of Optimind Vice President and Business Manager of Corporation Schlumberger Oilfield ServicesManaging Partner of excellenceO2Independent Director of Wooden Spoon LLCIndependent Director of ReachExecutive Chairman of MetamedIndependent Director of Larsen & Toubro Electrical and Automation

Yasser Hashem . . . . . . . Managing Partner of Zaki Hashem Non-executive Director of GB Auto & Partners, Attorneys at Law S.A.E.Non-executive Board Member of Non-executive Director at Alumisr Raya Holding For Financial S.A.E.

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Name Current directorship/partnership Previous directorship/partnership

Yasser Hashem (continued) InvestmentNon-executive Board Member of Johnson WaxNon-executive Board Member of Commercial International BankNon-executive Board Member of Nile Company for Hotels and TourismBoard Secretary of Vodafone Egypt Telecommunications S.A.E.

Ulf Henriksson . . . . . . . Partner of KUKRA LLC Director of Hexagon AB (Sweden)CI Investment LLC CEO/Board Member of DH ServicesC Services LLC Luxembourg Holding S.à.r.l. Shareholder/Director of CEI LLC

5. Corporate governance5.1 OverviewAs a company with a listing on the standard listing segment of the Official List, the Company will not berequired to comply with the requirements of the UK Corporate Governance Code issued by the FinancialReporting Council, as amended from time to time (the “Governance Code”), following Admission. However,the Board acknowledges the importance of good corporate governance and has put in place a frameworkwhich enables the Company to voluntarily comply with many aspects of the Governance Code that the Boardconsiders appropriate taking into account the size of the Company and nature of its business.

As envisaged by the Governance Code, the Board has established committees to assist its decision-making,including an audit committee, a remuneration committee and a nomination committee.

Details on the composition of each committee are set out below at section 5.3.

The members of the committees are members of the Board and are appointed by the Board. Each committeeproduces regular reports on its deliberations, findings and recommendations and has its own rules which areapproved by the Board.

The Governance Code recommends that at least half of the board of directors of a UK-listed company,excluding the chairperson, should comprise non-executive directors determined by the board to beindependent in character and judgement and free from relationships or circumstances which may affect, orcould appear to affect, the director’s judgement. The Board considers that the Company complies with therecommendation of the Governance Code in this respect, and it intends to continue doing so going forward.

5.2 Board CharterThe Board has formally adopted a board charter to assist directors in fulfilling their responsibilities. It detailsthe functions and responsibilities of the Board and the Board committees and the matters specifically reservedfor the Board. It covers the scope of the Board’s authority, strategy and management.

5.3 Board CommitteesCommittee Chairman Members––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––– ––––––––––––––––––––––––––––––

Audit Committee . . . . . . . . . . . . . . . Mr Nabil Kassem Mr Yasser Hashem Mr Walid Cherif

Remuneration Committee . . . . . . . . Dr Mohamed Farouk Mr Nabil Kassem Mr Mohamed Walid Cherif

Nomination Committee . . . . . . . . . . Mr Ayman Abbas Dr Mohamed FaroukMr Ulf HenrikssonMr Mohamed Walid CherifMr Nabil Kassem

Details of the roles and responsibilities of each of these committees are detailed below:

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Audit CommitteeThe Audit Committee is appointed by the Board and consists of a minimum of three non-executive Boardmembers. The current members of the Audit Committee are set out above. The chairman of the AuditCommittee is appointed by the Board for a period of one year. The Audit Committee meets on a quarterlybasis and holds a meeting with the external auditors at least once a year without the presence of any executivemember. The role of the Audit Committee is to assist the Board with regard to internal control of theCompany’s operational and financial activities. Some of the specific duties of the Audit Committee includethe following:

• to establish written procedures for the appointment and working principles of the independent auditingcompany and its relevant auditors;

• to ascertain whether the Group accounting policies and reporting procedures and methods are inaccordance with legal requirements and agreed ethical practices;

• to oversee the Group’s financial situation, cash flow, obligations and the overall key financial indicators;

• to analyse audit reports and any other periodical and/or on-demand reports; and

• to review the effectiveness of the Group’s accounting system, internal audit and internal controls.

Remuneration CommitteeThe members of the Remuneration Committee are appointed by, and act at the discretion of, the Board. TheRemuneration Committee consists of a minimum of two members of the Board. The current members ofthe Remuneration Committee are set out above. The Remuneration Committee meets at least once a year.

The Remuneration Committee is responsible for reviewing and approving, on behalf of the Board, the amountand types of compensation to be paid to each member of the Board and executive management.

The remuneration policy lays down the principles governing remuneration, and provides general guidelinesfor incentive pay to the members of the Board and senior management. The overall object of the remunerationpolicy is to attract, motivate and retain qualified members of the Board and senior management, as well asto ensure that the Board, senior management and shareholders have common interests in achieving theCompany’s goals. Members of the Board receive an annual fixed remuneration. The remuneration must bereasonable considering the amount of work required by the Board members and the extent of their liabilityand should reflect market terms. The remuneration paid to the chairman and the deputy chairman is usuallyhigher than the amount paid to the ordinary board members.

Nomination CommitteeThe Nomination Committee is appointed by the Board and consists of a minimum of two non-executiveBoard members. The current members of the Nomination Committee are set out above. The mainresponsibilities of the Nomination Committee are reviewing the structure, size and composition (includingthe skills, knowledge, experience and diversity) of the Board and making recommendations with regard toany changes as well as succession planning for both Executive and Non-Executive Directors. TheNomination Committee identified and nominates key personnel and senior management of the Group. Italso identifies and nominates, for the approval of the Board, candidates to fill vacancies on the Board. Indoing so, they evaluate the balance of skills, knowledge, experience and diversity (including gender).Meetings are held at least twice a year and as often as the chairman considers appropriate.

5.4 Directors’ and Senior Managers’ confirmationsExcept as disclosed in this section entitled “Directors’ and Senior Managers’ confirmations”, within the periodof five years preceding the date of this Prospectus, none of the Directors or Senior Managers:

(a) has had any convictions in relation to fraudulent offences;

(b) has been a director or senior manager of any company at the time of bankruptcy, receivership orliquidation of such company; or

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(c) has received any official public incrimination and/or sanction by any statutory or regulatory authoritiesor has been disqualified by a court from acting as a director of a company or from acting in themanagement or conduct of the affairs of a company.

None of the Directors or Senior Managers has any potential conflicts of interest between their duties to theCompany and their private interests or other duties.

None of the Directors or Senior Managers was selected to act as a member of the administrative, managementor supervisory bodies or member of senior management pursuant to any arrangement or understanding withany major shareholder, client, supplier or other person having a business connection with the Group.

As at the date of this document, no restrictions have been agreed by any Director or Senior Manager on thedisposal within a certain time period of their holding of their Offer Shares.

No Director has or has had any interest in any transactions which were unusual in nature or conditions orwere significant to the business of the Company and which were effected during the current or previousfinancial year or during an earlier financial year and which remain outstanding or unperformed in any aspect.

5.5 Relationship agreementOn 8 May 2017, the Company entered into a relationship agreement with ADES Investment (the “RelationshipAgreement”), which will, conditional upon Admission, regulate the degree of control that ADES Investmentand its respective associates may exercise over the management of the Company.

Under the Relationship Agreement, ADES Investment has undertaken, for so long as it is a SignificantShareholder, amongst other things:

(a) to conduct all transactions and relationships with any member of the Group at arm’s length and onnormal commercial terms;

(b) not to conduct itself in such a way as will preclude or inhibit the Company or any subsidiary fromcarrying on its business independently of it and its respective associates;

(c) not to take any action (or omit to take any action) that would have the effect of preventing the Companyfrom complying with its obligations under the Listing Rules or the Disclosure and Transparency Rules;

(d) not to take any action (or omit to take any action) that would have the effect of preventing the Companyfrom complying with its memorandum and Articles; and

(e) not to take any action which precludes or inhibits the Company from operating and making decisionsfor the benefit of its shareholders as a whole, or independently of the other parties to the RelationshipAgreement at all times.

The Relationship Agreement will continue until the earlier to occur of:

(a) ADES Investment ceasing to be a Significant Shareholder; or

(b) the Offer Shares ceasing to be listed on the Official List and trading on the London Stock Exchange.

Under the terms of the Relationship Agreement, for so long as ADES Investment remains a SignificantShareholder, then it shall have the right to nominate one director of the Company.

ADES Investment has agreed with the Company that, during the period commencing from the date of theresignation or removal of a Director nominated by ADES Investments (or the loss of the right of ADESInvestments to appoint such a Director) and ending 180 days thereafter, they will not (subject to certainexceptions) directly or indirectly sell or dispose of (or agree to sell or dispose of) any Offer Shares.

“Significant Shareholder” is defined in the Relationship Agreement as meaning such shareholders, togetherwith any of its associates, has an interest (direct or indirect) or is able to exercise, or procure the exercise of,voting rights attaching to 10 per cent. or more of the issued Offer Shares from time to time.

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5.6 Anti-bribery and corruptionThe Group has adopted an anti-bribery and corruption policy applicable across all of the Group’s businessactivities. The Group has developed its anti-bribery and corruption policy consistent with the applicablelegislation in the DIFC and the UK Bribery Act 2010, as well as the laws (described below) that are applicablein Egypt. The Group is currently in the process of carrying out applicable training for its staff andimplementing corresponding procedures.

The policy specifically addresses facilitation payments or “kickbacks”, gifts and hospitality, dealing withpublic officials, political donations, lobbying and charitable donations, and includes notification andwhistle-blowing provisions, as well as provisions regarding disciplinary action following a breach of the policy.The policy requires that new and existing staff be trained and that the Group’s approach to anti-bribery andcorruption is communicated to business partners.

Further, in order to prevent bribery, fraud and corruption, the Group has implemented due diligenceprocedures across the Group when entering into agreements with third parties for ensuring compliance withapplicable anti-corruption legislation.

Doing business in the MEA region brings with it inherent risks associated with fraud, bribery and corruption.UAE and Egyptian anti-corruption legislation, contain requirements similar to those contained ininternational anti-corruption laws.

Offences under UK, UAE and Egyptian anti-bribery legislation may include:

• corruptly giving or agreeing to give or offer a gift or consideration as an inducement or reward;

• corruptly accepting or obtaining, agreeing to accept, or attempting to obtain a gift or consideration asan inducement or reward;

• the giving of, asking for, offering of, agreeing to, promising of, attempting of and receiving of bribes bypublic officers;

• providing false information to a public officer;

• retention of the proceeds of economic or financial crime;

• possession, use or acquisition of property derived from an offence;

• conversion or transfer of property derived from an offence;

• concealment of the nature, source, location or rights with respect to, or ownership of property derivedfrom, an offence;

• gratification of a public official (gratification is defined to include money, donations, gifts, propertygiven or promised to a person with the intent to influence such a person in the performance ornon-performance of his duties; any agreement to give employment; any valuable consideration of anykind; any offer, undertaking or promise whether conditional or unconditional; any service or favoursuch as protection from any penalty or disability; any payment, release, discharge or liquidation of anyloans or other obligation; and any offer, undertaking or promise of any of the aforementioned);

• failure to report any of the above; and

• counselling or procuring any of the above.

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PART XIII

TERMS AND CONDITIONS OF THE GLOBAL OFFER

1. Summary of the Global OfferThe Global Offer will comprise an offering of (i) 10,303,030 New Shares which are to be issued by theCompany, representing 24.41 per cent. of the issued ordinary share capital of the Company immediatelyfollowing Admission and (ii) the sale of 4,453,228 Sale Shares which are to be sold by the Selling Shareholder,representing 10.55 per cent. of the issued ordinary share capital of the Company immediately followingAdmission (assuming that the Over-allotment Option is not exercised).

Pursuant to the Global Offer, the Company will receive net proceeds of approximately U.S.$164,535,714 fromthe offering of New Shares in the Global Offer, after the deduction of underwriting commissions and otherestimated fees and expenses of approximately U.S.$5,464,286 in respect of the sale of the New Shares in theGlobal Offer.

The Global Offer will be effected by means of an offering of Offer Shares (a) to qualified investors in certainMember States, including to certain institutional investors in the United Kingdom and elsewhere outside theUnited States, and (b) in the United States only to Qualified Institutional Buyers in reliance on an exemptionfrom, or in a transaction not subject to, the registration requirements of the U.S. Securities Act.

Certain restrictions that apply to the distribution of this Prospectus and the Offer Shares being issued andsold under the Global Offer in jurisdictions are described below.

The Global Offer is subject to satisfaction of the conditions set out in the Underwriting Agreement, includingAdmission occurring and becoming effective by no later than 8.00 a.m. (London time) on 12 May 2017 orsuch later time and/or date as the Company, the Selling Shareholder and the Global Co-ordinator (on behalfof the Joint Bookrunners) may agree, and to the Underwriting Agreement not having been terminated inaccordance with its terms.

The Offer Shares to be made available pursuant to the Global Offer will, on Admission, rank pari passu in allrespects with the existing Offer Shares in issue and will rank in full for all dividends and other distributionsthereafter declared, made or paid on the share capital of the Company.

Immediately following Admission, a minimum of 25 per cent. of the Company’s issued Ordinary Share capitalwill be held in public hands (within the meaning of paragraph 14.2.2R of the UK Listing Rules).

2. Reasons for the Global Offer and Use of ProceedsThe Company expects to receive net proceeds of approximately U.S.$164,535,714 from the offering of NewShares in the Global Offer, after deduction of underwriting commissions and estimated fees and expensesrelated thereto.

The estimate of total expenses of the Global Offer is U.S.$9,000,000, and will be borne by the Company andthe Selling Shareholder pro rata according to the proportion that the number of Offer Shares issued or soldby each bears to the total of Offer Shares offered in the Global Offer.

The Company intends to use the net proceeds of the offering of New Shares in the Global Offer as follows:

• approximately U.S.$76 Million to fund capital expenditures to expand the Group’s operations in Egypt,Algeria and the Kingdom of Saudi Arabia;

• approximately U.S.$43 million to fund capital expenditures in other new MEA markets;

• approximately U.S.$10 million to fund capital expenditure on enhancement of the Group’s in-houserefurbishment and maintenance capabilities; and

• the balance to fund general corporate purposes and working capital.

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3. Stabilisation and Over-allotmentIn connection with the Global Offer, Citigroup Global Markets Limited, as Stabilising Manager, or any ofits agents on behalf of itself and the Joint Bookrunners, may (but will be under no obligation to), to theextent permitted by applicable law, over-allot Offer Shares or effect stabilisation transactions with a view tosupporting the market price of the Offer Shares at a higher level than that which might otherwise prevail inthe open market. The Stabilising Manager is not required to enter into such transactions and such stabilisationtransactions may be effected on any securities market, over-the-counter market, stock exchange or otherwiseand may be undertaken at any time during the period commencing on the date of the commencement ofconditional dealings in the Offer Shares on the London Stock Exchange and ending no later than 30 calendardays thereafter. However, there will be no obligation on the Stabilising Manager or any of its agents to effectstabilising transactions and there is no assurance that stabilising transactions will be undertaken. Suchstabilisation, if commenced, may be discontinued at any time without prior notice. In no event will measuresbe taken to stabilise the market price of the Offer Shares above the Offer Price. Except as required by law orregulation, neither the Stabilising Manager nor any of its agents intends to disclose the extent of anyover-allotments made and/or stabilisation transactions conducted in relation to the Global Offer.

In connection with the Global Offer, the Stabilising Manager may, for stabilisation purposes, over-allot OfferShares up to a maximum of 15 per cent. of the total number of Offer Shares comprised in the Global Offer.For the purposes of allowing the Stabilising Manager to cover short positions resulting from any suchover-allotments and/or from sales of Offer Shares effected by it during the stabilising period, the SellingShareholder has granted to it the Over-allotment Option, pursuant to which the Stabilising Manager mayprocure purchasers for or purchase additional Offer Shares up to a maximum of 15 per cent. of the totalnumber of Offer Shares comprised in the Global Offer at the Offer Price. The Over-allotment Option shallbe exercisable in whole or in part on one or more occasions, upon notice by the Stabilising Manager (onbehalf of the Joint Bookrunners), at any time on or before the 30th calendar day after the commencement ofconditional dealings of the Offer Shares on the London Stock Exchange. Any Over-allotment Shares madeavailable pursuant to the Over-allotment Option will rank pari passu in all respects with all other Offer Shares,including for all dividends and other distributions declared, made or paid on the Offer Shares, will bepurchased on the same terms and conditions as the Offer Shares being issued in the Global Offer and willform a single class for all purposes with the Company’s other Offer Shares.

It is expected that the sale of additional Offer Shares by the Company to purchasers procured by theStabilising Manager or to the Stabilising Manager pursuant to the exercise of the Over-allotment Optionwill be effected by means of an “on-exchange” transaction for the purposes of the rules of the LondonStock Exchange.

In connection with the Over-allotment Option and any stabilisation transactions, Citigroup Global MarketsLimited (as Stabilising Manager) will enter into the Stock Lending Agreement with the Selling Shareholderpursuant to which the Stabilising Manager will be able to borrow up to 2,213,439 Offer Shares, equivalentto 15 per cent. of the Global Offer, from the Selling Shareholder for the purposes, among other things, ofallowing the Stabilising Manager to settle, at Admission, over-allotments, if any, made in connection withthe Global Offer. If the Stabilising Manager borrows any Offer Shares pursuant to the Stock LendingAgreement, it will be required to return equivalent shares to the Selling Shareholder in accordance with theterms of the Stock Lending Agreement, less the number of Over-allotment Shares for which theOver-allotment Option is exercised.

4. Consequences of a Standard ListingApplication will be made for the Ordinary Shares to be admitted to listing on the Official List of the FCApursuant to Chapter 14 of the UK Listing Rules, which sets out the requirements for Standard Listings. TheCompany intends to comply with the Premium Listing Principles, in addition to the Listing Principles, setout in Chapter 7 of the UK Listing Rules notwithstanding that they only apply to companies which obtaina Premium Listing on the Official List of the FCA. The Company is not, however, formally subject to suchPremium Listing Principles and will not be required to comply with them by the UK Listing Authority.

In addition, while the Company has a Standard Listing, it is not required to comply with the provisions of,among other things:

• Chapter 8 of the UK Listing Rules regarding the appointment of a listing sponsor to guide the Companyin understanding and meeting its responsibilities under the UK Listing Rules in connection with certain

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matters. The Company has not and does not intend to appoint such a sponsor in connection with theGlobal Offer;

• Chapter 10 of the UK Listing Rules relating to significant transactions;

• Chapter 11 of the UK Listing Rules regarding related party transactions;

• Chapter 12 of the UK Listing Rules regarding purchases by the Company of its Offer Shares; and

• Chapter 13 of the UK Listing Rules regarding the form and content of circulars to be sent toShareholders.

It should be noted that the UK Listing Authority will not have the authority to (and will not) monitor theCompany’s compliance with any of the UK Listing Rules which the Company has indicated herein that itintends to comply with on a voluntary basis, nor to impose sanctions in respect of any failure by the Companyso to comply.

5. Underwriting AgreementOn 9 May 2017, the Company, the Selling Shareholder and the Directors entered into the UnderwritingAgreement with the Global Coordinator and the Underwriters. Pursuant to the Underwriting Agreement,the Underwriters have agreed, severally and not jointly, subject to certain conditions, to procure subscribersor purchasers for the Offer Shares, failing which, to purchase the Offer Shares themselves. All suchsubscriptions and purchases will be at the Offer Price.

The Global Coordinator and the Underwriters may terminate the Underwriting Agreement (and thearrangements associated with it) at any time prior to Admission in certain circumstances. If this right isexercised, the Global Offer and these arrangements will lapse and any moneys received in respect of theGlobal Offer will be returned to applicants without interest. The Underwriting Agreement provides for theGlobal Coordinator and the Underwriters to be paid commissions in respect of the Offer Shares and theOver-allotment Shares sold pursuant to the Global Offer. Any commissions received by the GlobalCoordinator and the Underwriters may be retained, and any Offer Shares acquired by them may be retainedor dealt in by them, for their own benefit. The Global Offer is conditional upon Admission becoming effectiveand the Underwriting Agreement becoming unconditional in accordance with its terms. Further details ofthe terms of the Underwriting Agreement are set out in Part XV: “Additional Information”, of this Prospectus.

6. Dealing ArrangementsApplication has been made to the FCA for the Ordinary Shares to be admitted to the Official List of theFCA and to the London Stock Exchange for such Ordinary Shares to be admitted to trading on the LondonStock Exchange’s main market for listed securities.

Prior to Admission, it is expected that dealings in the Ordinary Shares will commence on a conditional basis onthe London Stock Exchange at 8.00 a.m. on 9 May 2017. All dealings between the commencement of conditionaldealings and the commencement of unconditional dealings will be on a “when issued basis” and at the risk of theparties concerned. If the Admission does not become unconditional, these dealings will be of no effect.

The Admission is expected to take place and unconditional dealings in the Ordinary Shares are expected tocommence on the London Stock Exchange at 8.00 a.m. on 12 May 2017.

It is expected that Offer Shares allocated to prospective investors pursuant to the Global Offer will be deliveredin uncertificated form and settlement will take place through CREST on Admission. If applicable, definitiveshare certificates will be dispatched by the Registrar. No temporary documents of title will be issued.

Dealings in advance of crediting of the relevant CREST stock account shall be at the risk of the personconcerned.

On Admission, Shareholders will be able to hold and transfer interests in the Ordinary Shares within CRESTpursuant to a depositary interest arrangement established by the Company. The Ordinary Shares will notthemselves be admitted to CREST, rather, the Depositary will issue the Depositary Interests in respect of

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underlying Offer Shares. The Depositary Interests are independent securities constituted under English lawwhich are held and transferred directly through the CREST system. Depositary Interests have the same ISINas the underlying Ordinary Shares and do not require a separate admission to trading on the London StockExchange. The Depositary Interests were created and issued pursuant to a deed poll issued and executed bythe Depositary.

When admitted to trading, the Ordinary Shares will be registered with ISIN AEDFXA1EN018 and SEDOLnumber BZ0XLG6.

7. CRESTCREST is a paperless settlement system enabling securities to be transferred from one person’s CRESTaccount to another’s without the need to use share certificates or written instruments of transfer. Securitiesissued by non-UK companies, such as the Company, cannot be held or transferred electronically in theCREST system. To enable investors to settle the Offer Shares through the CREST system, the Company hasentered into a depositary interest arrangement whereby the Depositary or its Custodian will hold the OrdinaryShares and issue dematerialised Depositary Interests representing the underlying Ordinary Shares, which willbe held on trust for the Depositary Interest Holders. The Depositary Interests will be independent securitiesconstituted under English law which may be held and transferred through the CREST system. Prospectiveinvestors should note that it is the Depositary Interests which will be admitted to and settled through CRESTand not the Ordinary Shares. With effect from Admission, CREST members will be able to hold and transferDepositary Interests pursuant to a depositary agreement dated 4 May 2017 between the Company and theDepositary (the “Depositary Agreement”). The Depositary Interests will be created pursuant to and issuedon the terms of the deed poll executed on 4 May 2017 by the Depositary in favour of Depositary InterestHolders (the “Deed Poll”).

On Admission, the Articles will permit the holding of Ordinary Shares under the CREST system. TheCompany has applied for the Ordinary Shares in the form of Depositary Interests to be admitted to CRESTwith effect from Admission. Accordingly, settlement of transactions in the Ordinary Shares in the form ofDepositary Interests following Admission may take place within the CREST system if any Shareholder sowishes. CREST is a voluntary system and holders of Offer Shares who wish to receive and retain sharecertificates will be able to do so.

Further details of the Depositary Interest arrangements, together with a summary of the principal terms ofthe Depositary Agreement and the Deed Poll, are set out in paragraph 13 of Part XV: “Additional

Information” of this Prospectus.

8. Lock-up ArrangementsPursuant to the Underwriting Agreement, the Company has agreed that, subject to certain exceptions, duringa period expiring 180 days after the date of Admission, neither it nor any of its subsidiaries or affiliates,without the prior written consent of the Global Co-ordinator (on behalf of the Joint Bookrunners), willissue, offer, sell or contract to sell, or otherwise transfer or dispose of, or create and encumbrance over, directlyor indirectly, any Ordinary Shares (or any interest therein) or enter into any transaction with the sameeconomic effect, or agree to, or publicly announce any intention to enter into, as any of the foregoing.

Pursuant to the Underwriting Agreement, the Selling Shareholder has agreed that, subject to certainexceptions, (i) during a period expiring 24 months after the date of Admission, it will not effect any sale,contract to sell, grant or sale of options over, purchase of any option or contract to sell or otherwise dispose ofany Ordinary Shares or agree to, or make any announcement or other publication of the intention to do anyof the foregoing, and (ii) during a period expiring 12 months after the date of Admission, it will not effect anyoffer, sale, contract to sell, grant or sale of options over, purchase of any option or contract to sell, transfer,charge, pledge, grant any right or warrant to purchase or otherwise dispose, transfer or lend any OrdinaryShares or any securities convertible into or exchangeable for or substantially similar to Ordinary Shares orany security or financial product whose value is determined by reference to the price of the Ordinary Shares,or the entry into of any swap or other agreement that transfers, in whole or in part, any of the economicconsequences of ownership of Ordinary Shares whether any such transaction described above is to be settledby the delivery of Ordinary Shares or such other securities, in cash or otherwise, or any other disposal or anyagreement to dispose of any Ordinary Shares, or any transaction with the same economic effect as, or agreeto, or make any announcement or other publication of the intention to do any of the foregoing.

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Pursuant to the Underwriting Agreement, the Locked-up Parties have agreed that, subject to certainexceptions, during a period expiring 180 days after the date of Admission, they will not directly or indirectly,offer, sell, contract to sell, grant or sell any options over, purchase any option or contract to sell, transfer,charge, mortgage, assign, pledge, grant any right or warrant to purchase, lend or otherwise transfer or disposeof any Ordinary Shares or any securities convertible or exchangeable into or exercisable for, or substantiallysimilar to, Ordinary Shares or any security or financial product whose value is determined directly or indirectlyby reference to the price of the Ordinary Shares, or enter into any swap or other agreement that transfers, inwhole or in part, directly or indirectly, any of the economic consequences of ownership of Ordinary Shares,or any transaction with the same economic effect as, or agree to, or publicly announce any intention to do,any of such things.

Further details of the Underwriting Agreement are set out in Part XV: “Additional Information”, of thisProspectus.

9. Selling and Transfer RestrictionsThe distribution of this Prospectus and the Global Offer of Offer Shares in certain jurisdictions may berestricted by law and therefore persons into whose possession this Prospectus comes should inform themselvesabout and observe any such restrictions, including those that follow. Any failure to comply with theserestrictions may constitute a violation of the securities laws of any such jurisdiction.

No action has been taken or will be taken by the Company, the Selling Shareholder or the Joint Bookrunnersin any jurisdiction that would permit a public offering or sale of the Offer Shares, or possession or distributionof this Prospectus (or any other offering or publicity material relating to Offer Shares), in any country orjurisdiction where action for that purpose is required or doing so may be restricted by law.

None of the Offer Shares may be offered for subscription, sale or purchase or be delivered, and this Prospectusand any other offering material in relation to the Offer Shares may not be circulated, in any jurisdiction whereto do so would breach any securities laws or regulations of any such jurisdiction or give rise to an obligationto obtain any consent, approval or permission or to make any application, filing or registration.

Persons into whose possession this Prospectus comes should inform themselves about and observe anyrestrictions on the distribution of this Prospectus and the Global Offer contained in this Prospectus. Anyfailure to comply with these restrictions may constitute a violation of the securities laws of any suchjurisdiction.

No Offer Shares have been marketed to, nor are they available for purchase in whole or in part by, the publicin the United Kingdom or elsewhere in conjunction with the Global Offer. This Prospectus does not constitutea public offer or the solicitation of a public offer in the United Kingdom to subscribe for or buy any securitiesin the Company or any other entity.

9.1 European Economic AreaIn relation to each Member State of the EEA which has implemented the Prospectus Directive (2003/71/EC)(each, a “Relevant Member State”) an offer to the public of any Offer Shares may not be made in that RelevantMember State, except that the Offer Shares may be offered to the public in that Relevant Member State atany time under the following exemptions under the Prospectus Directive, if they have been implemented inthat Relevant Member State:

(a) to any legal entity which is a qualified investor as defined under the Prospectus Directive;

(b) by the Joint Bookrunners to fewer than 100 or, if the Relevant Member State has implemented therelevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualifiedinvestors as defined in the Prospectus Directive) subject to obtaining the prior consent of the JointBookrunners for any such offer; or

(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of Offer Shares shall result in a requirement for the publication by the Companyor any Joint Bookrunner of a prospectus pursuant to Article 3 of the Prospectus Directive and each person

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who initially acquires Offer Shares or to whom any offer is made will be deemed to have represented,warranted and agreed to and with the Bookrunners and the Company that it is a “qualified investor” withinthe meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the ProspectusDirective.

For the purposes of this provision, the expression “an offer to the public of any Offer Shares” in relation toany Offer Shares in any Relevant Member State means the communication in any form and by any means ofsufficient information on the terms of the Global Offer and the Offer Shares to be offered so as to enable aninvestor to decide to purchase or subscribe for the Offer Shares, as the same may be varied in that MemberState by any measure implementing the Prospectus Directive in that Member State. The expression“Prospectus Directive” means Directive 2003/71/EC (and any amendments thereto, including the 2010 PDAmending Directive, to the extent implemented in the Relevant Member State) and includes any relevantimplementing measure in each Relevant Member State and the expression “2010 PD Amending Directive”means Directive 2010/73/EU.

In the case of any Offer Shares being offered to a financial intermediary as that term is used in Article 3(2)of the Prospectus Directive each financial intermediary will be deemed to have represented, warranted andagreed that the Offer Shares acquired by it in the Global Offer have not been acquired on a non-discretionarybasis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstanceswhich may give rise to an offer of any Offer Shares to the public other than their offer or resale in a RelevantMember State to qualified investors as so defined or in circumstances in which the prior consent of the JointBookrunners has been obtained to each such proposed offer or resale.

The Company, the Selling Shareholder, the Joint Bookrunners and their affiliates, and others will rely uponthe truth and accuracy of the foregoing representation, acknowledgement and agreement. Notwithstandingthe above, a person who is not a qualified investor and who has notified the Joint Bookrunners of such factin writing may, with the consent of the Joint Bookrunners, be permitted to purchase Offer Shares in theGlobal Offer.

9.2 United StatesThe Offer Shares have not been and will not be registered under the U.S. Securities Act or under any applicablestate securities laws of the United States, and, subject to certain exceptions, may not be offered or sold withinthe United States. Accordingly, the Joint Bookrunners may offer the Offer Shares: (A) only through theirU.S. registered broker-dealer affiliates to persons reasonably believed to be Qualified Institutional Buyers inreliance on the exemption from the registration requirements of the U.S. Securities Act provided by Rule 144Aor another exemption from, or a transaction not subject to, the registration requirements of the U.S. SecuritiesAct; and (B) in compliance with Regulation S.

In addition, until 40 days after the commencement of the Global Offer, an offer of Offer Shares within theUnited States by a dealer (whether or not participating in the Global Offer) may violate the registrationrequirements of the U.S. Securities Act if such offer or sale is made otherwise than in accordance withRule 144A.

Each purchaser of Offer Shares in the United States will be deemed to have represented and agreed that:

(a) it is (i) a Qualified Institutional Buyer, (ii) acquiring the Offer Shares for its own account or for theaccount of one or more Qualified Institutional Buyers with respect to whom it has the authority tomake, and does make, the representations and warranties set forth in paragraphs (a) through (g),(iii) acquiring the Offer Shares for investment purposes, and not with a view to further distribution ofsuch Offer Shares, and (iv) aware, and each beneficial owner of the Offer Shares has been advised, thatthe sale of the Offer Shares to it is being made in reliance on Rule 144A or in reliance on anotherexemption from, or in a transaction not subject to, the registration requirements of the U.S. SecuritiesAct;

(b) it understands and agrees that the Offer Shares have not been and will not be registered under the U.S.Securities Act or with any securities regulatory authority of any state, territory or other jurisdiction ofthe United States and may not be offered, resold, pledged or otherwise transferred except (A) (i) to aperson whom the purchaser and any person acting on its behalf reasonably believes is a QualifiedInstitutional Buyer purchasing for its own account or for the account of a Qualified Institutional Buyer

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in a transaction meeting the requirements of Rule 144A, (ii) in an offshore transaction complying withRule 903 or Rule 904 of Regulation S, (iii) pursuant to an exemption from the registration requirementsof the U.S. Securities Act provided by Rule 144 thereunder (if available), or (iv) pursuant to an effectiveregistration statement under the U.S. Securities Act and (B) in accordance with all applicable securitieslaws of any state, territory or other jurisdiction of the United States;

(c) it acknowledges that the Offer Shares (whether in physical, certificated form or in uncertificated formheld in CREST) are “restricted securities” within the meaning of Rule 144(a)(3) under the U.S. SecuritiesAct, that the Offer Shares are being offered and sold in a transaction not involving any public offeringin the United States within the meaning of the U.S. Securities Act and that no representation is madeas to the availability of the exemption provided by Rule 144 for resales of Offer Shares;

(d) it understands that in the event Offer Shares are held in certificated form, such certificated Offer Shareswill bear a legend substantially to the following effect:

“THE SECURITY EVIDENCED HEREBY HAS NOT BEEN AND WILL NOT BEREGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED(THE “U.S. SECURITIES ACT”), ANY STATE SECURITIES LAWS IN THE UNITED STATESOR THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND MAY NOT BEOFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) IN ATRANSACTION IN ACCORDANCE WITH RULE 144A UNDER THE U.S. SECURITIES ACTTO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALFREASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, (B) IN ANOFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OFREGULATION S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO AN EXEMPTIONFROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT PROVIDEDBY RULE 144 UNDER THE U.S. SECURITIES ACT (IF AVAILABLE) OR (D) PURSUANT TOAN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, INEACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANYSTATE OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THEAVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE U.S.SECURITIES ACT FOR RESALES OF THIS SECURITY. EACH PURCHASER OF THISSECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BERELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE U.S.SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER AND EACH PURCHASERWILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASEROF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.EACH HOLDER, BY ITS ACCEPTANCE OF THIS SECURITY, REPRESENTS THAT ITUNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS.”;

(e) notwithstanding anything to the contrary in the foregoing, it understands that Offer Shares may not bedeposited into an unrestricted depositary receipt facility in respect of Offer Shares established ormaintained by a depositary bank unless and until such time as such Offer Shares are no longer “restrictedsecurities” within the meaning of Rule 144(a)(3) under the U.S. Securities Act;

(f) it acknowledges that the Company, the Selling Shareholder, the Joint Bookrunners and others will relyupon the truth and accuracy of the foregoing acknowledgements, representations and agreements andagrees that, if any of such acknowledgements, representations or agreements deemed to have been madeby virtue of its purchase of Offer Shares are no longer accurate, it will promptly notify the Company,and if it is acquiring any Offer Shares as a fiduciary or agent for one or more Qualified InstitutionalBuyers, it represents that it has sole investment discretion with respect to each such account and that ithas full power to make the foregoing acknowledgements, representations and agreements on behalf ofeach such account; and

(g) it agrees that it will give to each person to whom it transfers Offer Shares notice of any restrictions ontransfer of such Offer Shares. Prospective purchasers are hereby notified that the Company and thesellers of the Offer Shares may be relying on the exemption from the provisions of Section 5 of the U.S.Securities Act provided for by Rule 144A or another exemption from the registration requirements ofthe U.S. Securities Act.

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The Company, the Registrar, the Joint Bookrunners and their affiliates, and others will rely upon the truthand accuracy of the foregoing acknowledgments, representations and agreements.

9.3 EgyptOffer Shares may not be offered or sold in any form of general solicitation or general advertising or in apublic offering in Egypt, unless the pre-approval of the EFSA and/or EGX has been obtained. Offer Sharesmay only be offered or sold in Egypt through a private placement to Egyptian QIBs, Professional High NetWorth Investors, or Professionally Experienced Investors (each as defined below) whose ordinary activitiesinvolve them in acquiring, holding, managing or disposing of investments for the purposes of their businessand only in accordance with the Public Subscription Notice and the applicable Egyptian law and regulationsincluding the applicable provisions of the Capital Market Law, its Executive Regulations as amended, theEGX Listing Rules and the provisions of the Capital Market Authority’s (EFSA predecessor) Directives no.31 for the year 2002 concerning private placements.

Each purchaser of Offer Shares in Egypt will be deemed to have represented that it is either an Egyptian QIB,a Professional High Net Worth Investor or a Professionally Experienced Investor within the meaning of theEFSA Directives no. 31 for the year 2002 concerning private placements.

An Egyptian QIB is an institutional investor having: (i) a minimum asset book value of EGP 20.0 million;(ii) a minimum equity book value of EGP 10.0 million; (iii) a minimum investment in securities (excludingsecurities acquired in the Global Offer) of EGP 5.0 million as of the date of the placement; or (iv) a licenceto undertake a security related activity and permitted to acquire securities within its objects and permittedactivities.

A Professional High Net Worth Investor is an individual investor: (i) who owns assets with a minimum valueof EGP 2.0 million; (ii) with a minimum annual income of EGP 500,000; (iii) with a minimum bank savingsaccount balance of EGP 500,000; or (iv) who, as of the placement date, holds securities in two joint stockcompanies (excluding securities acquired in the Global Offer) with a minimum value of EGP 2.0 million.

A Professionally Experienced Investor is an individual who has experience in stock markets and capitalmarkets locally and globally for a period of 5 years, which period may be reduced to 4 years for an individualwho passed EFSA-approved training courses in the field of capital markets.

9.4 United Arab EmiratesThis Prospectus is strictly private and confidential and is being distributed in the UAE to a limited numberof investors and must not be provided to any person other than the original recipient, and may not bereproduced or used for any other purpose. If you are in any doubt about the contents of this Prospectus, youshould consult an authorised financial adviser.

By receiving this Prospectus, the person or entity to whom it has been issued understands, acknowledges andagrees that this Prospectus has not been approved by or filed with the UAE Central Bank, the UAE Securitiesor Commodities Authority (the “SCA”) or any other authorities in the UAE, nor have the Joint Bookrunnersreceived authorisation or licencing from the UAE Central Bank, SCA or any other authorities in the UAE tomarket or sell securities or other investments within the UAE. No marketing of any financial products orservices has been or will be made from within the UAE other than in compliance with the laws of the UAEand no subscription to any securities or other investments may or will be consummated within the UAE. Itshould not be assumed that any of the Joint Bookrunners are a licenced broker, dealer or investment advisorunder the laws applicable in the UAE, or that any of them advise individuals resident in the UAE as to theappropriateness of investing in or purchasing or selling securities or other financial products. The Offer Sharesmay not be offered or sold directly or indirectly to the public in the UAE. This does not constitute a publicoffer of securities in the UAE in accordance with the Companies Law or otherwise.

Nothing contained in this Prospectus is intended to constitute investment, legal, tax, accounting or otherprofessional advice. This Prospectus is for your information only and nothing in this Prospectus is intendedto endorse or recommend a particular course of action. Any person considering acquiring securities shouldconsult with an appropriate professional for specific advice rendered based on their respective situation.

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9.5 Dubai International Financial CentreThe Offer Shares have not been offered and will not be offered to any persons in the Dubai InternationalFinancial Centre except on the basis that an offer is:

(a) an “Exempt Offer” in accordance with the Markets Rules (MKT) module of the Dubai FinancialServices Authority (the “DFSA”); and

(b) made only to persons who meet the Professional Client criteria set out in Rule 2.3.2 of the DFSAConduct of Business Module.

9.6 Abu Dhabi Global MarketThe Offer Shares have not been offered and will not be offered to any persons in the Abu Dhabi GlobalMarket except on the basis that an offer is:

(a) an “Exempt Offer” in accordance with the Markets Rules (MKT Module) of the Financial ServicesRegulatory Authority (the “FSRA”) rulebook; and

(b) made only to persons who meet the Professional Client criteria set out in Rule 2.4 of the FSRA Conductof Business (COBS) Module of the FSRA rulebook.

9.7 LebanonThis Prospectus does not constitute or form part of any offer or invitation to sell or issue, or any solicitationof any offer to purchase or subscribe for, any Offer Shares in the Company in the Lebanese territory, norshall it (or any part of it), nor the fact of its distribution, form the basis of, or be relied on in connectionwith, any subscription.

The Company has not been, and will not be, authorised or licenced by the Central Bank of Lebanon and itsOffer Shares cannot be marketed and sold in Lebanon. No public offering of the Offer Shares is being madein Lebanon and no mass-media means of contact are being employed. This Prospectus is aimed at institutionsand sophisticated, high net worth individuals only, and this Prospectus will not be provided to any person inLebanon except upon the written request of such person.

Recipients of this Prospectus should pay particular attention to the section titled Part II: “Risk Factors” inthis Prospectus. Investment in the Offer Shares is suitable only for sophisticated investors with the financialability and willingness to accept the risks associated with such an investment, and said investors must beprepared to bear those risks.

9.8 OmanThis Prospectus does not constitute a public offer of securities in the Sultanate of Oman, as contemplated bythe Commercial Companies Law of Oman (Royal Decree No. 4/1974) or the Capital Market Law of Oman(Royal Decree No. 80/1998) and Ministerial Decision No. 1/2009 or an offer to sell or the solicitation of anyoffer to buy non-Omani securities in the Sultanate of Oman.

This Prospectus is strictly private and confidential. It is being provided to a limited number of sophisticatedinvestors solely to enable them to decide whether or not to make an offer to the Company to enter intocommitments to invest in the Offer Shares outside of the Sultanate of Oman, upon the terms and subject tothe restrictions set out herein and may not be reproduced or used for any other purpose or provided to anyperson other than the original recipient.

Additionally, this Prospectus is not intended to lead to the making of any contract within the territory orunder the laws of the Sultanate of Oman.

The Capital Market Authority and the Central Bank of Oman take no responsibility for the accuracy of thestatements and information contained in this Prospectus or for the performance of the Company with respectto the Offer Shares nor shall they have any liability to any person for damage or loss resulting from relianceon any statement or information contained herein.

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9.9 BahrainThe Offer Shares have not been offered or sold, and will not be offered or sold to any person in the Kingdomof Bahrain except on a private placement basis to persons who are “accredited investors”.

For this purpose, an “accredited investor” means:

(a) an individual holding financial assets (either singly or jointly with a spouse) of USD 1,000,000 or more;

(b) a group, partnership, trust or other commercial undertaking which has financial assets available forinvestment of not less than USD 1,000,000; or

(c) a government, supranational organisation, central bank or other national monetary authority or astate organisation whose main activity is to invest in financial instruments (such as a state pensionfund).

9.10 KuwaitThe Offer Shares have not been and will not be offered, sold, promoted or advertised in Kuwait except on thebasis that an offer is made in compliance with Decree Law No. 31 of 1990 and the implementing regulationsthereto, as amended, and Law No. 7 of 2010 and the bylaws thereto, as amended governing the issue, offeringand sale of securities. No private or public offering of the Offer Shares is being made in Kuwait, and noagreement relating to the sale of the Offer Shares will be concluded in Kuwait. No marketing or solicitationor inducement activities are being used to offer or market the Offer Shares in Kuwait.

9.11 QatarThe Offer Shares have not been offered or sold, and will not be offered or sold or delivered, directly orindirectly, in the State of Qatar including the Qatar Financial Centre, other than on the basis that an offer ismade: (i) in compliance with all applicable laws and regulations of the State of Qatar including the QatarFinancial Centre; and (ii) through persons or corporate entities authorised and licenced to provide investmentadvice and/or engage in brokerage activity and/or trade in respect of foreign securities in the State of Qatar.

9.12 JordanAny marketing of the Offer Shares to Jordanian investors shall be done by way of private placement only.The Offer Shares are being offered in Jordan on a cross border basis based on one-on-one contacts to nomore than 30 potential investors and accordingly the Offer Shares will not be registered with the JordanianSecurities Commission and a local prospectus in Jordan will not be issued.

9.13 South AfricaThe Global Offer does not constitute an “offer to the public” (as such expression is defined in the SouthAfrican Companies Act, No. 71 of 2008 (as amended)) (“South African Companies Act”) in South Africaand this Prospectus does not, nor is it intended to, constitute a “registered prospectus” (as that term is definedin the South African Companies Act) prepared and registered under the South African Companies Act.

To the extent that the Offer Shares are offered for subscription or sale in South Africa, such Global Offer ismade: (i) only to persons described in section 96(1)(a) of the South African Companies Act; and/or (ii) interms of section 96(1)(b) of the South African Companies Act such that the total acquisition cost of theshares for any single addressee acting as principal is equal to or greater than South African Rand 1,000,000.

Accordingly, the Global Offer made in terms of this Prospectus does not constitute an “offer to the public orany section of the public” within the meaning of the South African Companies Act.

9.14 Kingdom of Saudi ArabiaThis Prospectus may not be distributed in the Kingdom of Saudi Arabia except to such persons as arepermitted under the Offers of Securities Regulations issued by the Capital Market Authority of the Kingdomof Saudi Arabia.

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The Capital Market Authority does not make any representations as to the accuracy or completeness of thisProspectus, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in relianceupon, any part of this Prospectus. Prospective investors should conduct their own due diligence on theaccuracy of the information relating to the Offer Shares. If a prospective investor does not understand thecontents of this Prospectus he or she should consult an authorised financial adviser.

9.15 Brazil The Offer Shares have not and will not be registered with the Brazilian Securities Commission (CVM –

Comissão de Valores Mobiliários). The Offer Shares may not be offered or sold in the Federative Republic ofBrazil, except in circumstances that do not constitute a public offering or distribution under Brazilian lawsand regulations.

9.16 CanadaThis offering in Canada constitutes an offering of the Offer Shares only in those jurisdictions and to thosepersons where and to whom they may be lawfully offered for sale, and therein only by persons permitted tosell such Offer Shares. This document is not, and under no circumstances is to be construed as, a prospectus,an advertisement or a public offering of the Offer Shares described herein in Canada. No securitiescommission or similar authority in Canada has reviewed or in any way passed upon this document or themerits of the Offer Shares described herein, and any representation to the contrary is an offence.

Information contained herein has not been prepared with regard to matters that may be of particular concernto Canadian investors and accordingly, should be read with this in mind. All monetary amounts used hereinare not stated in Canadian dollars. The Offer Shares are not denominated in Canadian dollars. The value ofthe Offer Shares to a Canadian investor, therefore, will fluctuate with changes in the exchange rate betweenthe Canadian dollar and the currency of the Offer Shares. Investing in the Offer Shares involves certain risks.Canadian investors should refer in particular to the disclosure under the headings “Forward-looking Statements”and “Risk Factors” for additional information. Canadian investors are advised to review carefully thisProspectus in its entirety and to consult their own legal, tax and other professional advisers in order to assessthe legal, tax and other aspects of an investment in the Offer Shares.

Resale Restrictions

The distribution of the Offer Shares in Canada is being made on a private placement basis exempt from therequirement that the Company prepare and file a prospectus with the applicable securities regulatoryauthorities. The Company is not a reporting issuer in any province or territory in Canada and its securitiesare not listed on any stock exchange in Canada and there is currently no public market for the Offer Sharesin Canada. The Company currently has no intention of becoming a reporting issuer in Canada, filing aprospectus with any securities regulatory authority in Canada to qualify the resale of the Offer Shares to thepublic, or listing its securities on any stock exchange in Canada. Accordingly, any resale of the Offer Sharesmust be made: (i) through an appropriately registered dealer or in accordance with an exemption from thedealer registration requirements of applicable provincial securities laws; and (ii) in accordance with, orpursuant to an exemption from, or in a transaction not subject to, the prospectus requirements of applicableprovincial securities laws. These Canadian resale restrictions may in some circumstances apply to resales madeoutside of Canada. Purchasers of the Offer Shares are advised to seek Canadian legal advice prior to anyresale of the Offer Shares, both within and outside of Canada.

By purchasing the Offer Shares in Canada and accepting delivery of a purchase confirmation a purchaser isdeemed to represent to the Company and the Underwriter from whom the purchase confirmation is receivedthat such purchaser: (i) is a resident of Canada and is entitled under applicable provincial securities laws topurchase the Offer Shares without the benefit of a prospectus qualified under those securities laws as it is an“accredited investor” as defined under Section 73.3(1) of the Securities Act (Ontario) or National Instrument45-106 – Prospectus Exemptions, as the case may be, and if not an individual, was not established solely orprimarily for the purpose of acquiring the Offer Shares, in reliance on an exemption from applicableprospectus requirements; (ii) is a “permitted client” as defined in National Instrument 31-103 – Registration

Requirements, Exemptions and Ongoing Registrant Obligations; (iii) is either purchasing the Offer Shares asprincipal for its own account, or is deemed to be purchasing the Offer Shares as principal by applicable law;(iv) certifies that none of the funds being used to purchase the Shares are, to its knowledge, proceeds obtainedor derived, directly or indirectly, as a result of illegal activities. The funds being used to purchase the Shares

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and advanced by or on behalf of the purchaser to the Issuer will not represent proceeds of crime for thepurpose of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), or equivalentlegislation in any other jurisdiction to which such purchaser may be subject; and (v) the purchaseracknowledges and consents to the provision of specified information concerning the purchase of the OfferShares as described below to the regulatory authority that by law is entitled to collect the information,including certain personal information.

Canadian Income Tax Considerations

No representation or warranty is made as to the tax consequences to a Canadian resident of an investmentin the Offer Shares. Canadian residents are advised that an investment in such securities may give rise toparticular tax consequences affecting them. Prospective investors in the Offer Shares are advised to consulttheir own tax advisers with respect to the Canadian federal, provincial and local tax consequences in theirparticular circumstances of the purchase, ownership and disposition of the Offer Shares, as well as anyconsequences under the laws of any foreign taxing jurisdiction prior to acquiring the Offer Shares.

Enforcement of Legal Rights

All of the Company’s directors and officers named herein may be located outside of Canada and, as a result,it may not be possible for Canadian investors to effect service of process within Canada upon the Companyor those persons. All or a substantial portion of the Company’s assets and the assets of those persons maybe located outside of Canada and, as a result, it may not be possible to satisfy a judgement against theCompany or those persons in Canada or to enforce a judgement obtained in Canadian courts against theCompany or those persons outside of Canada.

Collection of Information

By purchasing the Offer Shares, the purchaser acknowledges that the Company, its agents and advisers mayeach collect, use and disclose its name and other specified personally identifiable information (the“Information”), including the amount of Offer Shares that it has purchased for purposes of meeting legal,regulatory and audit requirements and as otherwise permitted or required by law or regulation. The purchaserconsents to the disclosure of that Information. By purchasing the Offer Shares, the purchaser acknowledgesthat Information concerning the purchaser: (A) will be disclosed to the relevant Canadian securities regulatoryauthorities and may become available to the public in accordance with the requirements of applicable securitiesand freedom of information laws and the purchaser consents to the disclosure of the Information; (B) is beingcollected indirectly by the applicable Canadian securities regulatory authority under the authority grantedto it in securities legislation; and (C) is being collected for the purposes of the administration and enforcementof the applicable Canadian securities legislation. By purchasing the Offer Shares, the purchaser shall bedeemed to have authorized such indirect collection of personal information by the relevant Canadian securitiesregulatory authorities. Questions about such indirect collection of Information by the Ontario SecuritiesCommission should be directed to the Administrative Support Clerk, Ontario Securities Commission, Suite1903, Box 55, 20 Queen Street West, Toronto, Ontario M5H 3S8 or to the following telephone number (416)593-3684 and questions about such indirect collection of information by the British Columbia SecuritiesCommission should be directed to telephone number (604) 899-6500 or 1-800-373-6393 (toll free access acrossCanada) or by facsimile at (604) 899-6581 or in person or writing at P.O. Box 10142, Pacific Centre, 701 WestGeorgia Street, Vancouver, British Columbia, V7Y 1L2.

Language of Documents

Upon receipt of this document, each Canadian investor hereby confirms that it has expressly requested thatall documents evidencing or relating in any way to the sale of the securities described herein (including forgreater certainty the subscription price any purchase confirmation or any notice) be drawn up in the Englishlanguage only. Par la réception de ce document, chaque investisseur canadien confirme par les présentes qu’il a

expressément exigé que tous les documents faisant foi ou se rapportant de quelque manière que ce soit à la vente

des valeurs mobilières décrites aux présentes (y compris, pour plus de certitude, de contrat de souscription toute

confirmation d’achat ou tout avis) soient rédigés en anglais exclusivement.

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10. Other relationshipsThe Joint Bookrunners are full service financial institutions engaged in various activities, which may includesecurities trading, commercial and investment banking, financial advisory, investment management, principalinvestment, hedging, financing and brokerage activities. The Joint Bookrunners and their respective affiliateshave in the past performed commercial banking, investment banking and advisory services for the Groupfrom time to time for which they have received customary fees and reimbursement of expenses and may, fromtime to time, engage in transactions with and perform services for the Group in the ordinary course of theirbusiness for which they may receive customary fees and reimbursement of expenses. In the ordinary courseof their various business activities, the Joint Bookrunners and their respective affiliates may make or hold abroad array of investments and actively trade debt and equity securities (or related derivative securities) andfinancial instruments (which may include bank loans and/or credit default swaps) for their own account andfor the accounts of their customers and may at any time hold long and short positions in such securities andinstruments. Such investment and securities activities may involve the Group’s securities and instruments.

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PART XIV

TAXATION

Certain Egyptian Tax ConsiderationsThe statements herein regarding taxation are based on the laws in effect in Egypt as of the date of thisProspectus, including the Income Tax Law No. 91 of 2005, as amended by Law No. 53 of 2014 and Law No.96 of 2015 and its Executive Regulations issued by virtue of Ministerial Decree No. 991 of 2005 as amended(together, the “Income Tax Law”). The statements are subject to any changes of law occurring after such date,which changes may be made on a retroactive basis. There can be no assurance that the tax authorities willnot take differing interpretations or applications of the statements described below.

Investors should seek independent tax advice with respect to their tax position arising out of trading of theShares.

Dividend Withholding TaxAccording to the Income Tax Law, dividends distributed by Egyptian companies to non-residents are subjectto a withholding tax of 10 per cent., without deducting any costs or expenses. Dividends in the form of freeshares (i.e. stock dividends) are not subject to such withholding tax.

The withholding tax rate is reduced to 5 per cent., without deducting any costs or expenses, provided that thenon-resident shareholder (i) holds more than 25 per cent. of the company’s capital or voting rights, and (ii)holds such shareholding for at least two years.

A relevant double taxation treaty may reduce the withholding tax rate applicable on dividends paid by anEgyptian company to its non-resident shareholders.

The Investment Law exempts entities that are established under the free zone system from being subject toEgyptian tax laws, including Income Tax Law. ADES should be entitled to an exemption with respect to itsprofits, being a free zone entity. Moreover, dividends paid by ADES to the Company would not be subject todividend withholding tax.

In addition, based on Egypt-UAE Tax Treaty, dividends paid by ADES to the Company would not be subjectto withholding tax in Egypt provided that the Company is the beneficial owner of ADES and it is not deemedto have a permanent establishment in Egypt. To maintain its non-Egyptian tax resident status, the Companymust not be deemed as having its effective place of management in Egypt. The effective place of managementis determined in light of a number of criteria set forth under the Income Tax Law as follows: (i) dailymanagement decisions are taken in Egypt; (ii) meetings of the board of directors or managers are held inEgypt; (iii) at least 50 per cent. of the managers or board of directors are resident in Egypt and; (iv)shareholders owning more than 50 per cent. of the capital/voting rights are resident in Egypt. In case two (2)of the foregoing criteria are met, the Company could be viewed as an Egyptian resident entity and maybecome subject to Egyptian tax laws on its worldwide income, which could have a material adverse effect onthe Issuer’s business, financial condition, results of operations and prospects.

Taxation of Capital GainsAccording to the Income Tax Law, capital gains realised by an Egyptian resident juristic persons (i.e. legalentities) on disposal of securities, whether realised in Egypt or abroad, are subject to tax at the applicableincome tax rate of 22.5 per cent.. Also, the sale of Egyptian shares by a non-resident shareholder should besubject to capital gains tax at the applicable tax rate 22.5 per cent. for juristic persons and a maximum of22.5 per cent. for individuals. Gains realised from the sale of securities listed on the Egyptian Exchange aresubject to a 10 per cent. withholding tax, which has however been suspended for two years starting May 17,2015, being the date of official announcement by the Cabinet of Ministers of such exemption. On November2, 2016, the Egyptian Higher Committee of Investment, with the chairmanship of President El Sisi, decidedin its first meeting to extending the exemption of listed shares from capital gains tax for another three (3)years starting, in an attempt to attract foreign investment. However, said decision is not yet enforceable as ithas not been promulgated by an amendment to the Income Tax Law.

I 9.2.3III 4.11

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With respect to a disposal of ADES shares, the capital gains realized by the Company should be only taxablein the UAE based on Egypt- UAE Tax Treaty.

Certain Dubai International Financial Centre Tax ConsiderationsThe following is intended as a general overview of material DIFC tax consequences relating to the ownership,

acquisition and disposal of Shares. This overview is of a general nature and is based upon legislation relating to

taxation in the DIFC as at the date of this Prospectus and is not intended as a complete analysis of all potential

tax effects which may be relevant to an investor in the Shares. Subsequent legislative, judicial or administrative

changes may be forthcoming which may materially alter the position set out below, and such changes may be

retrospective in their effect. Investors are advised to seek their own tax advice from their advisors as to the tax

consequences which may arise in the DIFC or any other jurisdiction in light of their individual circumstances as

a result of the ownership, acquisition or disposal of the Shares.

Taxes relating to investorsNo taxes currently apply to the holders of the Shares in the DIFC, including dividend tax, capital gains tax,stamp duty or other tax.

Taxes relating to the CompanyAs a closed-ended investment company domiciled in the DIFC, the Company is subject to a zero rate ofcorporate income tax for 50 years commencing from 13 September 2004, including the income tax relating tothe Company’s business operations in the DIFC. This zero tax rate also applies to transfers of assets, profitsor salaries in any currency to any party outside the DIFC for 50 years beginning from 13 September 2004.

It is expected that Value Added Tax (VAT) will be implemented in the UAE by January 2018 at a standardrate of 5 per cent. levied on goods and services. The VAT regime is going to be implemented in the UAEfollowing a Gulf Cooperation Council (GCC) level framework agreement.

As the UAE’s VAT legislation has not been issued as at the date of this Prospectus, the impact of VAT onentities located in UAE free trade zones (including the DIFC where the Company is established) is uncertain.Therefore, upon publication of the VAT legislation, Shareholders should review the new law and the potentialtax implications of VAT on the Company’s business. See the risk entitled “Changes in UAE tax laws or their

application could materially adversely affect the Group’s business, financial condition and results of operation”in Part II: “Risk Factors” section of this Prospectus.

The tax and/or Zakat implications on dividend income paid to each eligible Shareholder are the responsibilityof the Shareholder and may vary according to the jurisdiction where the Shareholder is located.

Certain US Federal Income Tax ConsiderationsThe following is a description of certain US federal income tax consequences to the US Holders describedbelow of owning and disposing of Offer Shares, but it does not purport to be a comprehensive description ofall tax considerations that may be relevant to a particular person’s decision to acquire the Offer Shares. Thisdiscussion applies only to a US Holder that acquires Offer Shares in this Offering and holds them as capitalassets for US federal income tax purposes. In addition, it does not describe all of the tax consequences thatmay be relevant in light of the US Holder’s particular circumstances, including alternative minimum taxconsequences or the Medicare contribution tax on net investment income, and tax consequences applicableto US Holders subject to special rules, such as:

• certain financial institutions;

• dealers or certain traders in securities;

• certain expatriates;

• persons holding Offer Shares as part of a “straddle” or integrated transaction or similar transaction;

• persons whose functional currency for US federal income tax purposes is not the US dollar;

CIR 14.4.2(l)

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• entities classified as partnerships for US federal income tax purposes;

• tax-exempt entities;

• persons that own or are deemed to own 10 per cent. or more of the Company’s voting stock; or

• persons holding the Offer Shares in connection with a trade or business outside the United States.

If an entity that is classified as a partnership for US federal income tax purposes owns Offer Shares, the USfederal income tax treatment of a partner will generally depend on the status of the partner and the activitiesof the partnership. Partnerships owning Offer Shares and partners in such partnerships should consult theirtax advisers as to the particular US federal income tax consequences of owning and disposing of the OfferShares.

This discussion is based on the US Internal Revenue Code of 1986, as amended (hereinafter, in this section,the “Code”), administrative pronouncements, judicial decisions, and final, temporary and proposed TreasuryRegulations, all as of the date hereof and changes to any of which subsequent to the date of this Prospectusmay affect the tax consequences described herein (possibly with retroactive effect).

US Holders should consult their tax advisers concerning the US federal, state, local, and foreign taxconsequences of owning and disposing of Offer Shares in their particular circumstances.

Except as specifically described below, this discussion assumes that the Company was not, and will notbecome, a PFIC.

Taxation of DistributionsDistributions paid on Offer Shares (including the amount of any foreign taxes withheld therefrom), otherthan certain pro rata distributions of ordinary shares to all shareholders, generally will be treated as dividendsto the extent paid out of the Company’s current or accumulated earnings and profits (as determined underUS federal income tax principles). Because the Company does not maintain calculations of its earnings andprofits under US federal income tax principles, it is expected that distributions generally will be reported toUS Holders as dividends.

Dividends will be treated as foreign-source income for foreign tax credit purposes and will not be eligible forthe dividends-received deduction generally available to US corporations under the Code. Dividends paid tocertain non-corporate US Holders are not expected to be eligible for taxation as “qualified dividend income”and therefore would be taxable at ordinary income tax rates rather than at the rates applicable to long termcapital gains. Dividends will generally be included in a US Holder’s income on the date of the US Holder’sreceipt of the dividend.

Sale or Other Taxable Disposition of Offer Shares US Holders will generally recognize taxable gain or loss on a sale or other taxable disposition of Offer Sharesequal to the difference between the amount realized on the sale or other taxable disposition and the USHolder’s tax basis in such Offer Shares, in each case as determined in US dollars. This gain or loss generallywill be long-term capital gain or loss if at the time of sale or disposition the US Holder has owned the OfferShares for more than one year. Any gain or loss generally will be US-source gain or loss for foreign tax creditpurposes. The deductibility of capital losses is subject to limitations.

If a US Holder receives foreign currency upon a sale, exchange or other disposition of the Offer Shares, theamount realized generally will be the US dollar value of the payment received determined on the date ofdisposition. If the Offer Shares are traded on an “established securities market”, a cash basis US Holder or,if it so elections, an accrual basis taxpayer, will determine the US dollar value of the amount realized bytranslating the amount received at the spot rate of exchange on the settlement date of the sale. A US Holderwill have a tax basis in the foreign currency received equal to the amount realized. If the foreign currency isconverted into US dollars on the settlement date, a cash basis or electing accrual basis US Holder will notrecognize foreign currency gain or loss on the conversion. Any currency gain or loss realized on a subsequentconversion or sale or other disposition of the foreign currency into US dollars for a different amount generallywill be treated as ordinary income or loss from sources within the United States.

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Passive Foreign Investment Company Rules In general, a non-US corporation is a PFIC for US federal income tax purposes for any taxable year in which(i) 75 per cent. or more of its gross income consists of passive income or (ii) 50 per cent. or more of theaverage quarterly value of its gross assets consists of assets that produce, or are held for the production of,passive income. For purposes of the above calculations, a non-US corporation that owns directly or indirectlyat least 25 per cent. by value of the shares of another corporation is treated as if it held its proportionateshare of the assets of the other corporation and received directly its proportionate share of the income of theother corporation. Passive income generally includes dividends, interest, and certain gains, royalties and rents.

Based on the nature of the Company’s business, the Company does not expect to be a PFIC for its currenttaxable year or in the foreseeable future. However, a Company’s PFIC status is a factual determination thatis made on an annual basis and depends on the composition and character of the company’s income andassets and the market value of its assets (which may be determined, in part, based on the market value of itsShares). It is possible that the Company could become a PFIC due to changes in the composition of its assetsor income or in its market capitalization. Therefore, no assurance is given that the Company that the Companywill not be a PFIC for any taxable year.

In general, if the Company were a PFIC for any taxable year during which a US Holder owned Offer Shares,gain recognized by a US Holder on a sale or other disposition (including certain pledges) of the Shares, wouldbe allocated rateably over the US Holder’s holding period for the Shares. The amounts allocated to the taxableyear of the sale or other disposition and to any year before the Company became a PFIC would be taxed asordinary income. The amount allocated to each other taxable year would be subject to tax at the highest ratein effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would beimposed on the tax on such amounts. Further, to the extent that any distribution received by a US Holder onits Shares exceeds 125 per cent. of the average of the annual distributions on the Shares received during thepreceding three years or the US Holder’s holding period, whichever is shorter, that distribution would besubject to taxation in the same manner as gain, described immediately above. Certain elections may beavailable that would result in alternative treatments (such as a mark-to-market treatment) of the Offer Shares.The Company does not, however, intend to provide US Holders with the information that would be necessaryfor such holders to make a qualified electing fund (“QEF”) election. US Holders should consult their taxadvisers to determine whether any of these elections would be available if the Company is a PFIC for anytaxable year and, if so, what the consequences of the alternative treatments would be in their particularcircumstances.

If the Company were a PFIC for any taxable year during which a US Holder owns Offer Shares, the Companywill generally continue to be treated as a PFIC with respect to the US Holder for all succeeding years duringwhich the US Holder owns Shares, even if the Company ceases to meet the threshold requirements for PFICstatus. If the Company were a PFIC, a US Holder would be subject to annual information reportingrequirements.

US Holders should consult their tax advisers regarding the application of the PFIC rules to their investmentin the Offer Shares.

Information Reporting and Backup Withholding Payments of dividends and sales proceeds that are made within the United States or through certainUS-related financial intermediaries generally will be subject to information reporting and backup withholdingunless (i) the US Holder is a corporation or other exempt recipient or (ii) in the case of backup withholding,the US Holder provides a correct taxpayer identification number and certifies that it is not subject to backupwithholding. Any amounts withheld under the backup withholding rules will be allowed as a refund or creditagainst the US Holder’s US federal income tax liability, provided that the required information is timelyfurnished to the Internal Revenue Service.

Transfer reporting requirements

In certain circumstances, a US Holder that subscribes for Offer Shares may be required to file Form 926 withthe IRS if the subscription price paid by the US Holder, when aggregated with all transfers of cash made bythe US Holder (or any related person) to the Company within the preceding twelve-month period, exceeds$100,000 (or its foreign currency equivalent). Failure by a US Holder to timely comply with such reporting

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requirements may result in substantial penalties. US Holders should consult their tax advisers to determinewhether this reporting requirement is applicable to them.

Information with respect to Foreign Financial AssetsCertain US Holders who are individuals (and certain entities closely-held by individuals) may be required toreport information relating to their ownership of Offer Shares, unless the Offer Shares are held in accountsat certain US financial institutions. US Holders should consult their tax advisers regarding their reportingobligations with respect to the Offer Shares.

Certain UK Tax ConsiderationsThe following statements are intended only as a general guide to current United Kingdom tax law and to the

current practice of HM Revenue & Customs (“HMRC”) and may not apply to certain shareholders in the

Company, such as dealers in securities, insurance companies and collective investment schemes. They relate

(except where stated otherwise) to persons who are resident only in the United Kingdom for United Kingdom

tax purposes (and, if individuals, who are domiciled in the United Kingdom), who are beneficial owners of Offer

Shares and who hold their Offer Shares as an investment (and not as employment-related securities or through

an individual savings account). They are based on current United Kingdom law and the current practice of

HMRC as at the date of this document, both of which may change, possibly with retroactive effect.

Any person who is in any doubt as to his or her tax position, or who is subject to taxation in any jurisdictionother than that of the United Kingdom, should consult his or her own professional advisers immediately.

Taxation of DividendsThe Company is not required to withhold United Kingdom tax when paying a dividend. Liability to UnitedKingdom tax on dividends received will depend upon the individual circumstances of a shareholder.

United Kingdom resident individual shareholders

With effect from 6 April 2016, a new system of taxation for dividends applies to United Kingdom residentindividual shareholders. Dividend income no longer carries a United Kingdom tax credit, and instead newrates of tax apply. These include a nil rate of tax for the first £5,000 of dividend income in any tax year (the“Nil Rate Band” which the United Kingdom Government announced in the Spring Budget 2017 will decreaseto £2,000 with effect from 6 April 2018) and different rates of tax for dividend income that exceeds the NilRate Band.

In determining the income tax rate or rates applicable to an individual shareholder’s taxable income, dividendincome is treated as the highest part of such shareholder’s income. Dividend income that falls within the NilRate Band will count towards the basic or higher rate limits (as applicable) which may affect the rate of taxdue on any dividend income in excess of the Nil Rate Band.

To the extent that an individual shareholder’s dividend income for the tax year exceeds the Nil Rate Bandand, when treated as the top slice of such shareholder’s income, falls above such shareholder’s personalallowance but below the basic rate limit, such a shareholder will be subject to tax on that dividend income atthe dividend basic rate of 7.5 per cent.. To the extent that such dividend income falls above the basic ratelimit but below the higher rate limit, such a shareholder will be subject to tax on that dividend income at thedividend higher rate of 32.5 per cent.. To the extent that such dividend income falls above the higher ratelimit, such a shareholder will be subject to tax on that dividend income at the dividend additional rate of38.1 per cent.

United Kingdom resident corporate shareholders

Holders of the Offer Shares within the charge to United Kingdom corporation tax which are not smallcompanies within the meaning of section 931S of Part 9A of the Corporation Tax Act 2009 will not be subjectto United Kingdom tax on dividends so long as the dividends fall within an exempt class and certainconditions are met. In general, dividends paid on non-redeemable shares that do not carry any present orfuture preferential rights to dividends or to the company’s assets on its winding up should fall within anexempt class.

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Holders of the Offer Shares within the charge to United Kingdom corporation tax which are small companiesare generally not expected to be subject to United Kingdom tax on dividends received from the Company, solong as certain conditions are met.

Chargeable gainsShareholders who are resident in the United Kingdom for tax purposes and who dispose of their Offer Sharesat a gain will generally be liable to United Kingdom taxation on chargeable gains, subject to any availableexemptions or reliefs. The gain will be calculated as the difference between the sale proceeds and any allowablecosts and expenses, including the original acquisition cost of the Offer Shares.

Shareholders who are not resident in the United Kingdom for tax purposes but who carry on a trade,profession or vocation in the United Kingdom through a branch, agency or permanent establishment in theUnited Kingdom may be liable to United Kingdom taxation on chargeable gains on any gain on a disposalof their Offer Shares if those Offer Shares are or have been held, used or acquired for the purposes of thattrade, profession or vocation or for the purposes of that branch, agency or permanent establishment.

In the case of United Kingdom resident corporate shareholders, indexation allowance may reduce the amountof chargeable gain that is subject to United Kingdom corporation tax, but may not create or increase anyallowable loss on the disposal of the Offer Shares.

If an individual shareholder ceases to be resident in the United Kingdom and subsequently disposes of OfferShares, in certain circumstances any gain on that disposal may be liable to United Kingdom capital gains taxupon that shareholder becoming once again resident in the United Kingdom.

Stamp duty and Stamp Duty Reserve Tax (“SDRT”)The statements below are intended as a general guide to the current position under United Kingdom tax law andthey apply whether or not a holder of Offer Shares is resident or domiciled in the United Kingdom. They do notapply to certain intermediaries or to persons connected with depository arrangements or clearance services (ortheir nominees or agents).

No United Kingdom stamp duty or SDRT will arise on the issue of Offer Shares.

As the central management and control of the Company takes place outside the United Kingdom and theregister of shareholders is maintained outside the United Kingdom, following admission of the Offer Sharesto the Official List and to trading on the London Stock Exchange’s main market for listed securities, anyagreement to transfer Depositary Interests should not attract SDRT. Provided that the register of shareholderscontinues to be maintained outside the United Kingdom, there will be no SDRT on any agreement to transferthe Offer Shares themselves.

No stamp duty will be payable on the transfer of Depositary Interests, provided that they are transferredwithout any written instrument of transfer. No stamp duty will be payable on the transfer of the Offer Sharesthemselves, provided that any instrument of transfer is not executed in the United Kingdom and does notrelate to any property situated, or to any matter or thing done or to be done, in the United Kingdom.

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PART XV

ADDITIONAL INFORMATION

1. ResponsibilityThe Company and its Directors, whose names are set out in the section entitled “Directors” in this Part XV:“Additional Information”, accept responsibility for the information contained in this document. To the bestof the knowledge and belief of the Company and the Directors (who have taken all reasonable care to ensurethat such is the case) the information contained in this document is in accordance with the facts and does notomit anything likely to affect the import of such information.

2. Incorporation and Registered Office2.1 ADES International Holding Ltd is a company limited by shares with its registered office at Unit 517,

Level 5, Index Tower, Dubai International Financial Centre, Dubai, 507118, United Arab Emirates.

2.2 The Company was incorporated in the Dubai International Financial Centre under the DIFCCompanies Law on 22 May 2016 with company number 2175.

2.3 The Company’s principal place of business is at Unit 517, Level 5, Index Tower, Dubai InternationalFinance Centre, Dubai, 507118, United Arab Emirates.

2.4 The principal laws and legislation under which the Company operates are the laws of the DIFC, KSA,United Arab Emirates, England, the Arab Republic of Egypt and Algeria.

2.5 The Company’s auditors are Ernst & Young (Dubai Br.), whose address is at 28th Floor, Al Saqr BusinessTower Sheikh Zayed Road, P.O. Box 9267 Dubai, United Arab Emirates.

3. Share Capital3.1 As at 5 May 2017 (being the Latest Practicable Date prior to the publication of this document), issued,

called up and fully paid share capital of the Company consisted of 31,900,000 Ordinary Shares, eachwith a par value of U.S.$1.00.

3.2 As at 12 May 2017 (being the date of Admission), the issued, called up and fully paid share capital ofthe Company immediately following Admission is expected to be 42,203,030 Ordinary Shares, each witha par value of U.S.$1.00.

3.3 The Ordinary Share capital of the Company in issue on the following dates was as follows:

Balance at Share Capital ––––––––––––––––––––––––––––––––– –––––––––––––

22 May 2016 (Incorporation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 31 December 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 31 March 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,900,000

4. Articles of AssociationThe following is a summary of the rights under the Articles of Association of the Company to take effectfrom Admission (“New Articles”) and the DIFC Companies Law which attach to the Offer Shares.

In the following description of the rights attaching to the Offer Shares, a holder of the Offer Shares and ashareholder is, in both cases, the person registered in the register of shareholders as the holder of the relevantOffer Shares.

4.1 ObjectivesAs set out in article 1.4 of the New Articles, the principal business activities are that of:

(a) a holding company and managing office; and

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(b) in general, to engage in any lawful act or activity for which companies may be organised under the DIFCCompanies Law.

The objects for which the Company is established are unrestricted and the Company shall have full powerand authority to carry out any object not prohibited by the DIFC Companies Law.

4.2 Share CapitalAll Offer Shares rank in all respects equally with other Offer Shares. Whenever the share capital is dividedinto different classes of shares, all or any of the rights for the time being attached to any class of shares inissue may from time to time (whether or not the Company is being wound up) be varied in such manner asthose rights may provide or (if no such provision is made) either with the consent in writing of the holdersof a majority in nominal value of the issued shares of that class or with the authority of a special resolutionpassed at a separate general meeting of the holders of those shares.

Subject to the DIFC Companies Law and to the rights conferred on the holders of any Offer Shares, newshares may be allotted or issued with, or have attached to them, such rights or restrictions as the Companymay by ordinary resolution decide, or, if no such resolution is in effect or so far as any pertinent resolutiondoes not make specific provision, as the board may decide.

The shares may be issued, or existing non-redeemable shares may be converted, on the terms that they are tobe redeemed or, at the option of the Company’s or the holder, are liable to be redeemed. All shares must befully paid when allotted and the Company may not take a lien over any of the shares except as authorised byan ordinary resolution.

Subject to the DIFC Companies Law and to the rights conferred on the holders of any existing shares, theCompany may by ordinary resolution purchase, or agree to purchase in the future, its own shares (includingany redeemable shares).

4.3 Pre-emption RightsThe New Articles of the Company to take effect from Admission (the “New Articles”) provide that theCompany is not permitted to allot for cash “equity securities” (which include the allotment and issue of OfferShares or right to subscribe for, or convert securities into, Offer Shares), unless it has made an offer to eachperson who holds Offer Shares in the Company to allot to him on the same or more favourable terms aproportion of those securities that is as nearly as practicable equal to the proportion in number held by himof the Ordinary Share capital of the Company, and the (at least 21-day) period for acceptance of such offerhas expired or the Company has received notice of acceptance or refusal of every offer made. Thesepre-emption rights may be excluded or modified by special resolution of the holders of Offer Shares. Subjectto these pre-emption rights, the Directors have power to issue further Offer Shares.

By a shareholders written resolution of the Company, passed on 9 May 2017, the Company has disappliedand excluded the pre-emption rights set out in the New Articles in relation to the allotment or issue of anumber of Ordinary Shares equal to 5 per cent. of the aggregate number of Ordinary Shares in issue at thetime of Admission. This disapplication and exclusion will expire on the earlier of (i) the conclusion of thefirst annual general meeting of the Company in the year 2018 and (ii) twelve months from the date of theresolution. The Company intends to seek the renewal of this authority above from the shareholders on anannual basis.

4.4 Share CertificatesEvery person (except a person to whom the Company is not required by law to issue a certificate) whose nameis entered on the register as a holder of certificated shares is entitled, without charge, to receive within 14 daysof allotment or lodgment with the Company of a transfer to him of those shares one certificate for all thecertificated shares of a class registered in his name or, in the case of certificated shares of more than one classbeing registered in his name, to a separate certificate for each class of shares. Where a shareholder transferspart of his shares comprised in a certificate he is entitled, without charge, to one certificate for the balance ofcertificated shares retained by him.

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Where a certificate is worn out, defaced, lost or destroyed, the Board may require the certificate to be deliveredto the Company together with payment for any exceptional out-of-pocket expenses incurred by the Companybefore issuing a replacement and cancelling the original on such terms as to the provision of evidence andindemnity as the Directors shall determine.

4.5 Untraced ShareholdersThe Company may sell the share of a shareholder or of a person entitled by transmission at the best pricereasonably obtainable at the time of sale, if:

(a) during a period of not less than seven years before the date of publication of the advertisements referredto below (or, if published on two different dates, the first date) (the “relevant period”) at least three cashdividends (whether interim or final) have become payable in respect of the share and no dividend duringthat period has been claimed;

(b) throughout the relevant period no cheque, warrant or money order payable on the share has been cashedand the Company has not at any time during the relevant period received any communication from theholder of, or person entitled by transmission to, the share;

(c) on expiry of the relevant period, the Company has given notice of the Company’s intention to sell theshare by advertisement in a national newspaper in the UAE and the UK and in a newspaper circulatedin the area of the address of the holder of, or person entitled by transmission to, the share shown in theregister; and

(d) the Company has not, during a further period of three months after the date of such advertisementsand before the exercise of the power of sale, received a communication from the holder of, or personentitled by transmission to, the share.

The Company shall be indebted to the shareholder or other person entitled by transmission to the share forthe net proceeds of the sale and shall carry any amount received on sale to a separate account. No trust shallbe created in respect of the debt and such net proceeds may be employed in the Company’s business or investedas the Board may think fit

4.6 Changes in Share CapitalThe Company may by special resolution:

(a) increase its authorised share capital by creating new shares;

(b) consolidate and divide all or any of its shares (whether allotted or not) into shares representing a largervalue than its existing shares;

(c) sub-divide all or any of its shares into shares of a smaller amount;

(d) redenominate all or any of its share capital and reduce its share capital in connection with suchredenomination; or

(e) cancel shares which, at the date of the passing of the resolution to cancel them, have not been taken oragreed to be taken by any person and diminish the amount of its authorised share capital by the amountof the shares so cancelled.

Subject to the DIFC Companies Law and the DIFC Dematerialised Investments Regulations (as amendedfrom time to time, including any provisions of or under the relevant DIFC laws which amend or replace suchregulations), any fractions of shares resulting from a consolidation and division or sub-division of shares maybe dealt with by the Directors on behalf of the shareholders as they think fit.

Subject to the DIFC Companies Law, the Company may by special resolution reduce its share capital, anycapital redemption reserve, share premium account or other undistributable reserve in any way.

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4.7 DividendsSubject to the provisions of the DIFC Companies Law, the Company may by ordinary resolution declaredividends in accordance with the respective rights and interests of the shareholders, but no dividend shallexceed the amount recommended by the Board.

Subject to the provisions of the DIFC Companies Law, the Board may declare and pay interim dividends asappear to the Board to be justified by the profits available to the Company for distribution. If the share capitalis divided into different classes, no interim dividend may be paid on shares carrying deferred or non-preferredrights if, at the time of payment, any preferential dividend is in arrears.

The Board may, with the prior authority of an ordinary resolution of the Company, direct that payment ofa dividend be satisfied wholly or in part by the distribution of specific assets and, in particular, of paid upshares or the debentures of any other company.

A dividend unclaimed by a shareholder for a period of seven years from the date it was declared or becamedue for payment shall be forfeited and shall cease to remain owing by the Company.

4.8 Transfer of SharesA shareholder may transfer all or any of his certificated shares by instrument of transfer in writing in anyform approved by the Board where the instrument is executed by or on behalf of the transferor.

Subject to the provisions of the DIFC Companies Law, the registration of transfers may be suspended atsuch times and for such periods (not exceeding 30 days in any year) as the Board may decide in their discretionand either generally or in respect of a particular class of shares as determined by them.

The Company may not charge any fee for registering the transfer of a share and may retain any instrumentof transfer which is registered.

4.9 Company’s Power to Investigate Interests in Offer SharesThe Company (or a person authorised by it) may at any time give written notice to any person whom theCompany (or such authorised person) knows or has reasonable cause to believe to be, or in the previous threeyears to have been, interested in the Company’s shares, requiring him to confirm or deny such interest and togive such further information as may be requested.

4.10 General MeetingsThe Company must hold an annual general meeting at least once every year in accordance with the DIFCCompanies Law. The Directors may call general meetings when they think fit, provided that there must notbe a gap of more than 15 months between the date of one annual general meeting and the next and not morethan six months shall elapse between the end of the financial year of the Company and its next annual generalmeeting. All Company’s general meetings other than annual general meetings are called general meetings.

4.11 Voting RightsAt a general meeting every shareholder present in person or by proxy has one vote and every shareholderpresent in person or by proxy has on a poll vote one vote for every share of which he is the holder.

In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or byproxy, shall be accepted to the exclusion of the vote or votes of the other joint holder or holders, and seniorityis determined by the order in which the names of the holders stand in the register.

An instrument appointing a proxy shall be in writing in any usual form (or in another form approved by theBoard) executed under the hand of the appointer or his duly authorised agent or, if the appointer is acorporation, under its seal or under the hand of its duly authorised officer or agent or other person authorisedto sign. The signature must be witnessed.

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4.12 Proceedings at General MeetingsThe chairman of the Board or, in his absence, the deputy chairman (if any) shall preside as chairman at ageneral meeting. If there is no chairman or vice chairman, or if at a meeting neither is present and willingand able to act within five minutes after the time fixed for the start of the meeting, the Directors present shallselect one of their number to be chairman. If only one director is present and willing and able to act, he shallbe chairman. In default, the shareholders present in person and entitled to vote shall choose one of theirnumber to be chairman.

A resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on thedeclaration of the result of the show of hands) a poll is demanded by:

(a) the chairman of the meeting;

(b) at least five members present in person or by proxy having the right to vote on the resolution; or

(c) a member or members present in person or by proxy representing in aggregate not less than 5 per cent.of the total voting rights of all the members having the right to vote on the resolution.

A demand for a poll by a person as proxy for a member shall be as valid as if the demand were made by themember himself.

In the case of an equality of votes whether on a show of hands or on a poll, the chairman of the meeting atwhich the poll takes place shall be entitled to a casting vote in addition to any vote to which he is entitled asa shareholder

4.13 Powers and Duties of the Board of DirectorsSubject to the DIFC Companies Law and the Articles of Association and to directions given by the Companypursuant to special resolutions, the Company’s business and affairs shall be managed by the Board whichmay exercise all the powers of the Company whether relating to the management of the business or not.

The Directors may delegate to such person or to a committee consisting of one or more persons (whether amember or members of the Board or not) any of its powers, authorities and discretions for such time and onsuch terms and conditions as it thinks fit

4.14 Decision-making by DirectorsThe quorum for directors’ meetings will be fixed by the Board provided that no quorum shall be present at ameeting of the Board without the presence of at least the chairman and the managing director of theCompany.

The chairman (or in his absence, the managing director) shall have a casting vote if the number of votes forand against a proposal are equal. However, this does not apply if, in accordance with the New Articles, thechairman or other director is not to be counted as participating in the decision-making process for quorumor voting purposes.

4.15 AppointmentThe Company may by ordinary resolution appoint any person who is willing to act as director.

Unless otherwise determined by ordinary resolution, the Directors (but not alternate Directors) are entitledfor their services an annual fixed sum of fees (inclusive of expenses) as the Board decides. The fees will bedivided equally among the Directors unless the Directors decide otherwise

4.16 Directors’ InterestsA Director shall declare the nature of his interest in any contract, arrangement, transaction or proposal withthe Company before the Company enters into any contract, arrangement, transaction or proposal or as soonas is reasonably practicable at the first opportunity at a meeting of the Board after he knows he is or hasbecome interested or by writing to the Directors as required by the DIFC Companies Law.

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4.17 Directors’ RemunerationThe Directors shall receive such remuneration and payment of expenses incurred in association with thecarrying out of their duties as directors, as shall be determined by the Board.

4.18 Indemnity of Directors The Company shall indemnify each of the Directors in respect of any liability, demands, costs or expensesincurred in connection with any proceeding, debt, claim, action, demand, suit, judgment, decree or obligation,to the extent allowed by law.

4.19 Distributions on Liquidation to ShareholdersOn a voluntary winding-up of the Company, the liquidator may, on obtaining any sanction required by law,divide among the shareholders in kind the whole or any part of the Company’s assets, whether or not theassets consist of property of one kind or of different kinds, and vest the whole or any part of the assets intrustees upon such trusts for the benefits of the shareholders as he, with the like sanction, shall determine.For this purpose, the liquidator may set the value he deems fair on a class or classes of property, and maydetermine on the basis of that valuation and in accordance with the then existing rights of shareholders howthe division is to be carried out between shareholders or classes of shareholders. The liquidator may not,however, distribute to a shareholder, without his consent, an asset to which there is attached a liability orpotential liability for the owner

5. Mandatory takeover bids, squeeze-out and sell-out rules5.1 Since the Company has its registered office in the DIFC and the Offer Shares are proposed to be listed

on a regulated market in the United Kingdom, neither the United Kingdom nor the DIFC takeoverprotection regimes are applicable to the Company. The Company’s shares are subject to the SqueezeOut provisions set out in the DIFC Companies Law. Under these provisions, any offeror making atakeover offer which, within four months of making the offer, has been approved by the holders of notless than 90 per cent. in value of the shares to which the offer relates, is entitled to acquire compulsorilyfrom dissenting shareholders those shares which have not been acquired or contracted to be acquiredon the same terms as under the offer.

5.2 Save for ADES Investments Holding Ltd, the Company is not aware of any person who either as at thedate of this Prospectus or immediately following Admission exercises, or could exercise, directly orindirectly, jointly or severally, control over the Company.

6. Directors Name Current or Prospective ––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––

Ayman Abbas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current Dr. Mohamed Farouk Abdelkhalek . . . . . . . . . . . . . . . . . . . . . . . . . Current Mohamed Walid Cherif . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current Nabil Kassem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current Yasser Hashem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current Ulf Henriksson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current

7. Directors’ service contracts/letters of appointment

7.1 Directors’ service contractsPlease refer to Part XII: “Directors, Senior Management and Corporate Governance” of this Prospectus.

7.2 Directors’ loans and guaranteesThere are no outstanding loans granted by the Company or any member of the Group to any of the Directors,nor has any guarantee been provided by the Company or any member of the Group for their benefit.

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8. Major interests in sharesAs at 5 May 2017, being the Latest Practicable Date, and immediately following Admission, the followingpersons held or are expected to hold an interest which represents 3.0 per cent. or more of the voting sharecapital of the Company:


–––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––

As a percentage of As a percentage of No. of Ordinary total Ordinary No. of Ordinary total OrdinaryName Shares Shares in issue Shares Shares in issue––––––––––––––––––––––––––––––––––––––– –––––––––––––– ––––––––––––––– –––––––––––––– –––––––––––––––

ADES Investments Holding Ltd(1)(2) .......... 31,900,000 100% 25,233,333 59.79%

–––––––––––––––––––––––––––––––––––––––

Notes:

(1) ADES Investments Holding Ltd is, prior to Admission, the sole holder of Ordinary Shares in the Company.

(2) ADES Investments Holding Ltd is owned 67 per cent. by Intro Investments Holding Ltd (which is owned by the Abbas family)and 33 per cent. by Sky Investments Holding Ltd (which is owned by the Hussein family)

9. Organisational Structure9.1 The Company’s subsidiaries and undertakings are as follows:

Abbreviation % shares Nature of Activity ––––––––––––––– ––––––––––––– –––––––––––––––

Entity directly owned by the Company: Advanced Energy Systems ADES S.A.E .................. ADES 99.99% Operating Branches directly owned by ADES: ADES Algeria Branch.............................................. ADES Algeria 100% Operating branch ADES KSA Branch ................................................. ADES KSA 100% Operating branch

10. EmployeesAs at 31 December 2016, the number of employees of the Group in Egypt, the KSA and Algeria was 951,289 and 45 respectively.

As at 31 December 2016, the Group had a total of 1,285 employees.

11. PropertyThe Group leases its registered office in the DIFC and office spaces in Cairo. The Group also leases a numberof storage facilities in Cairo, a crew rest house in Abou Redis, heavy equipment storage facilities in RasGharib, and a free zone yard in the Alexandria Free Zone. In the Kingdom of Saudi Arabia, the Group leasesan office in Khobar, three living quarters as housing for expatriate workers, and land used as a yard andrented from Bin Quraya Establishment in Dammam Highway, Dhahran. In Algeria, the Group leases anoffice in Hasy Mauood.

12. Underwriting AgreementPlease refer to the section in this Part XV entitled “Underwriting Agreement” in Part XIII: “Terms and

Conditions of the Global Offer” for details of the Underwriting Agreement, and in the section entitled,“Material Contracts” below for key terms of the Underwriting Agreement.

13. CREST and Depositary Interests

13.1 OverviewThe Articles are consistent with CREST membership in respect of Depositary Interests and the holding andtransfer of Depositary Interests in uncertified form. Under DIFC law, companies are not prohibited fromissuing shares in book-entry form but shareholders have the right to require the companies to issue physicalcertificates. The Board has passed a resolution authorising the issuance of the Offer Shares in book-entry form.

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If a holder of Offer Shares so requests, its Offer Shares will be transferred to an account of the Depositaryor the Custodian and the Depositary will issue Depositary Interests to participating CREST members. EachDepositary Interest will be treated as one Share for the purposes of determining, for example, eligibility forany dividends.

The Depositary Interests will have the same ISIN as the underlying Offer Shares and do not require a separateadmission to the London Stock Exchange’s main market. The Depositary Interests can then be traded andsettlement will be within the CREST system in the same way as any other CREST securities. Application hasbeen made for the Depositary Interests to be admitted to CREST with effect from Admission. ProspectiveDepositary Interest Holders should note that they will have no rights against Euroclear UK and IrelandLimited (the operators of CREST) or its subsidiaries in respect of the underlying Offer Shares or theDepositary Interests representing them.

13.2 Deed PollThe Deed Poll was executed on 4 May 2017 by the Depositary and contains, among other things, the followingprovisions:

(a) the Depositary will hold (itself or through the Custodian), as bare trustee, the underlying Offer Sharesand all and any rights and other securities, property and cash attributable to the underlying Offer Sharesfor the time being held by the Depositary or Custodian pertaining to the Depositary Interests for thebenefit of the holders of the relevant Depositary Interests as tenants in common. The Depositary willre-allocate securities or Depositary Interests distributions allocated to the Depositary or Custodianpro rata to the Offer Shares held for the respective accounts of the Depositary Interest Holders but willnot be required to account for fractional entitlements arising from such re-allocation;

(b) Depositary Interest Holders warrant, among other things, that the securities in the Company transferredor issued to the Depositary or Custodian on behalf of the Depositary for the account of the DepositaryInterest Holders are free and clear of all liens, charges, encumbrances or third party interests and thatsuch transfers or issues are not in contravention of the Company’s constitutional documents or anycontractual obligation, or any applicable law or regulation binding or affecting such Depositary InterestHolder, and Depositary Interest Holders agree to indemnify the Depositary against any liability incurredas a result of any breach of any such warranty;

(c) the Depositary and any Custodian shall pass on to the Depositary Interest Holders and, so far as theyare reasonably able, exercise on behalf of the relevant Depositary Interest Holder(s) all rights andentitlements received by them or to which they are entitled in respect of the underlying Offer Shareswhich are capable of being passed on or exercised. rights and entitlements to cash distributions, toinformation, to make choices and elections and to call for, attend and vote at meetings shall, subject tothe Deed Poll, be immediately (and in any event within three working days) passed on to the relevantDepositary Interest Holder(s) in the form in which they are received by the Custodian, together withamendments and additional documentation necessary to effect such passing-on or, as the case may be,exercised in accordance with the Deed Poll. If arrangements are made which allow a Depositary InterestHolder to take up rights in the Company’s securities requiring further payment, the Depositary InterestHolder must put the Depositary in cleared funds before the relevant payment date or other date notifiedby the Depositary if it wishes the Depositary to exercise such rights;

(d) the Depositary will be entitled to cancel Depositary Interests and treat the Depositary Interest Holdersthereof as having requested a withdrawal of the underlying Offer Shares in certain circumstances,including where a Depositary Interest Holders fails to furnish to the Depositary such certificates orrepresentations as to material matters of fact, including his identity, as the Depositary deemsappropriate;

(e) the Depositary warrants that it is an authorised person under FSMA and is duly authorised to carryout custodian and other activities under the Deed Poll. It also undertakes to maintain that status andauthorisation;

(f) the Deed Poll contains provisions excluding and limiting the Depositary’s liability. For example, theDepositary shall not be liable to any Depositary Interest Holders or any other person for liabilities inconnection with the performance or non-performance of obligations under the Deed Poll or otherwise

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except as may result from its negligence or wilful default or fraud or that of any person for whom it isvicariously liable, provided that the Depositary shall not be liable for the negligence, wilful default orfraud of any Custodian or agent which is not a member of its group unless it has failed to exercisereasonable care in the appointment and continued use and supervision of such Custodian or agent.Except in the case of personal injury or death, any liability incurred by the Depositary to a holder underthe Deed Poll is limited to the lesser of:

(i) the value of the Offer Shares that would have been properly attributable to the Depositary Intereststo which the liability relates; and

(ii) that proportion of GBP 10 million which corresponds to the portion which the amount theDepositary would otherwise be liable to pay to the holder bears to the aggregate of the amountsthe Depositary would otherwise be liable to pay to all such Depositary Interest Holders in respectof the same act, omission, or event which gave rise to such liability or, if there are no such amounts,GBP 10 million;

(g) the Depositary is entitled to charge Depositary Interest Holders fees and expenses notified from time totime for the provision of its services under the Deed Poll;

(h) each Depositary Interest Holder is liable to indemnify the Depositary and any Custodian (and theirrespective agents, officers and employees), and hold each of them harmless from and against, and shallreimburse each of them for, any and all liabilities arising from or incurred in connection with, or arisingfrom any act related to, the Deed Poll so far as they relate to the property held for the account of thatDepositary Interest Holder, other than those caused by or resulting from the wilful default, negligenceor fraud of (i) the Depositary; or (ii) the Custodian or any agent if such Custodian or agent is a memberof the Depositary’s group or if, not being a member of the same group, the Depositary shall have failedto exercise reasonable care in the appointment and continued use of such Custodian or agent;

(i) the Depositary is entitled to make deductions from the deposited property or any income or capitalarising there from, or to sell such deposited property and make deductions from the sale proceedsthereof, in order to discharge the indemnification obligations of Depositary Interest Holders;

(j) the Depositary may terminate the Deed Poll either in its entirety or in respect of one or more series ofDepositary Interests by giving not less than 30 days’ notice to the Depositary Interest Holdersconcerned. During such notice period, Depositary Interest Holders shall be obliged to cancel theirDepositary Interests and withdraw their deposited property and, if any Depositary Interests remainoutstanding after termination, the Depositary shall, as soon as reasonably practicable, and amongstother things, (i) deliver the deposited property in respect of the Depositary Interests to the relevantDepositary Interest Holders or, at the Depositary’s discretion; and (ii) sell all or part of such depositedproperty. It shall, as soon as reasonably practicable, deliver the net proceeds of any such sale, afterdeducting any sums due to the Depositary, together with any other cash held by it under the Deed Pollpro rata to the Depositary Interest Holders in respect of their Depositary Interests; and

(k) the Depositary or the Company may require from any Depositary Interest Holder (i) information as tothe capacity in which Depositary Interests are owned or held by such Depositary Interest Holder andthe identity of any other person who then has or previously has had any interest of any kind in suchDepositary Interests or the underlying Offer Shares and the nature and amounts of such interests; (ii)evidence or declaration of nationality or residence of the legal or beneficial owner(s) of DepositaryInterests and such information as is required to transfer the relevant Offer Shares to the DepositaryInterest Holder; and (iii) such other information as is necessary or desirable for the purposes of theDeed Poll or CREST system, and Depositary Interest Holders are bound to provide such informationrequested. The Depositary Interest Holders consent to the disclosure of such information by theDepositary, Custodian or the Company to the extent necessary or desirable to comply with theirrespective legal or regulatory obligations in any jurisdiction or any provision of the Articles.

It should also be noted that Depositary Interest Holders may not have the opportunity to exercise allof the rights and entitlements available to holders of Offer Shares, including, for example, the ability tovote on a show of hands. In relation to voting, it will be important for Depositary Interest Holders togive prompt instructions to the Depositary or its nominated Custodian, in accordance with any votingarrangements made available to them, to vote the underlying Offer Shares on their behalf or, to the

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extent possible, to take advantage of an arrangements enabling Depositary Interest Holders to vote suchOffer Shares as a proxy of the Depositary or its nominated Custodian.

13.3 Depositary AgreementThe Depositary Agreement was entered into between the Company and the Depositary on 4 May 2017. TheCompany appoints the Depositary to constitute and issue from time to time, upon the terms of the DeedPoll, a series of Depositary Interests representing Offer Shares and to provide certain other services (includingdepositary services, custody services and dividend services) in connection with such Depositary Interests.

The Depositary Agreement contains, among other things, the following provisions:

(a) the Depositary agrees that it will comply, and shall procure that certain other persons comply, with theterms of the Deed Poll and that it and they will perform their responsibilities and obligations withreasonable skill and care. The Depositary assumes certain specific obligations, including, for example,to arrange for the Depositary Interests to be admitted to CREST as participating securities and providecopies of, and access to, the register of Depositary Interests;

(b) the Company agrees to provide such assistance, information and documentation to the Depositary as isreasonably required by the Depositary for the purposes of performing its duties, responsibilities andobligations under the Deed Poll and the Depositary Agreement. In particular, the Company is to supplythe Depositary with all documents that it intends to send to Shareholders so that the Depositary candistribute the same to all Depositary Interest Holders;

(c) subject to earlier termination, the appointment of the Depositary shall continue for a fixed period ofone year and shall automatically renew for successive periods of 12 months thereafter until terminatedin accordance with the terms of the Depositary Agreement;

(d) the Company may terminate the Depositary Agreement immediately on written notice if an Event ofDefault (as defined in the Depositary Agreement) occurs in relation to the Depositary or if it commitsan irremediable material breach of the Depositary Agreement or the Deed Poll or if the Depositarycommits a material breach of Depositary Agreement or the Deed Poll and fails to remedy such breachwithin 30 days of being required to do so by written notice given by the Company. The Company mayalso terminate the Depositary Agreement by giving not less than 45 days’ written notice to theDepositary, such notice to be capable of being served at any time but not to expire earlier than the expiryof the initial one year period;

(e) the Depositary may terminate the Depositary Agreement immediately on written notice if an Event ofDefault (as defined in the Depositary Agreement) occurs in relation to the Company, if any of thewarranties given by the Company no longer apply or if it commits an irremediable material breach ofthe Depositary Agreement or if the Company commits a material breach of Depositary Agreement andfails to remedy such breach within 30 days of being required to do so by written notice given by theDepositary. The Depositary may also terminate the Depositary Agreement at any time by giving notless than 45 days’ written notice to the Company;

(f) either party may terminate the Depositary Agreement by giving not less than three months’ notice inwriting should the parties not reach an agreement regarding any increase in fees. The DepositaryAgreement will also automatically terminate at any time and with immediate effect on the terminationof the Deed Poll;

(g) the Depositary will not be obliged to accept transfers of Depositary Interests where it is not obliged todo so under the Deed Poll or if the transfer would place the Depositary in breach of any law orregulation. If such circumstances were to occur the Depositary will discuss this with the Company assoon as is reasonably practicable in order to review how to proceed;

(h) the Depositary Agreement sets out the procedures to be followed where the Company is to pay or makea dividend or other distribution;

(i) the Company is to pay to the Depositary an annual fee for the services. The Company shall pay a fixedfee for the deposit, cancellation and transfer of the Depositary Interests and the compilation of the

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initial Depositary Interests register. The Company shall in addition reimburse the Depositary within30 days of receipt of the Depositary’s invoice for all out-of-pocket expenses incurred by it in connectionwith the provision of the services under the Depositary Agreement up to a capped amount;

(j) the Company will indemnify the Depositary in respect of any losses, damages, claims, costs and expensesor other liabilities incurred by the Depositary in the event that the Company is in breach of certainwarranties it has given to the Depositary under the Depositary Agreement. The Company will alsoindemnify the Depositary from and against all losses suffered by the Depositary as a result of any claimmade against the Depositary by any Depositary Interest Holder, or any person having any direct orindirect interest in any Depositary Interest held by any Depositary Interest Holder or the underlyingOffer Shares, which arises out of the performance of the Depositary’s obligations under the DepositaryAgreement and the Deed Poll (including, without limitation, all network charges and CREST messages),other than those caused by or resulting from the wilful default, negligence or fraud of the Depositary;

(k) the Depositary is to indemnify the Company against any claim made against the Company by anyDepositary Interest Holder, or any person having any direct or indirect interest in any DepositaryInterests held by the Depositary Interest Holder or the underlying Offer Shares, which arises out of anybreach of the terms of the Deed Poll or any trust declared or arising thereunder, other than thoseresulting from the fraud, negligence or wilful default of the Company; and

(l) the aggregate liability of the Depositary to the Company (however so arising) shall be limited to thelesser of (a) GBP 500,000; and (b) an amount equal to 5 times the total annual fee payable to theDepositary under the Depositary Agreement.

14. Material contractsThe following are the only contracts (not being contracts entered into in the ordinary course of business)which have been entered into by the Group within two years immediately preceding the date of this Prospectusor which are expected to be entered into on the date of this Prospectus and which are, or may be, material orwhich have been entered into by the Group and which contain any provision under which the Group has anyobligation or entitlement, which is, or may be, material to the Group as at the date of this Prospectus:

Facilities Co-ordination AgreementADES entered into a facilities co-ordination agreement dated 12 November 2015, as amended on October13, 2016 (the “Facilities Co-ordination Agreement”) between ADES, EBRD as arranger, Arab InternationalBank, as conventional facility agent, security agent and global agent, Islamic Corporation for theDevelopment of the Private Sector, as original murabaha participant and the financial institutions listedtherein as the original conventional lenders.

The Facilities Co-ordination Agreement makes available an aggregate amount of U.S.$170 million dividedas follows: (i) U.S.$145 million conventional facility made available under the Conventional FacilityAgreement for the purpose of refinancing certain existing financial indebtedness in full, new working capitaland acquisition of new rigs and mobile offshore production units, corporate purposes and refinancing existingworking capital (the “Conventional Facility”); and (ii) U.S.$25 million murabaha facility under the MasterMurabaha Agreement for the purpose of acquiring new rigs and mobile offshore production units (the“Murabaha Facility” and together with the Conventional Facility (the “Facilities”)). The FacilitiesCo-ordination Agreement and its ancillary agreements are governed by English law.

The Facilities Co-ordination Agreement sets out the common terms and conditions applicable to the Facilities(such as representations, warranties, undertakings and events of default). While the Conventional Facilitywith the conventional lenders and a Murabaha Facility with the original murabaha participant, set out themechanical provisions relating to utilizations, interest periods, repayment, prepayment and cancellationmechanics for the Conventional Facility and Murabaha Facility, respectively.

With respect to the Conventional Facility, the interest rate per annum is equal to LIBOR plus a margin of4.50 per cent. (except for the tranche made available by Arab International Bank, please see “—AIB Facility

Agreement”, below). As to the Murabaha Facility, the mark-up (equivalent to interest rate under theConventional Facility) is capped at 20 per cent.. ADES also pays certain other fees and costs, including acommitment fee on the available commitment fees to each agent, security agent and arranger.

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As of the date of this Prospectus, ADES had fully utilized the funds made available under the Facilities.

The Facilities Co-ordination Agreement will terminate with the final repayment instalment 60 months afterits date, except with regard to the AIB Facility, regarding which see “—AIB Facility Agreement”, below).

Subject to certain conditions ADES may voluntarily prepay and/or permanently cancel all or part of the loanmade available under the Facilities by giving not less than ten business days’ prior notice (or such shorterperiod as the majority financial institutions may agree).

In addition to voluntary prepayments, the Facilities Co-ordination Agreement requires mandatorycancellation, and if applicable, prepayment in full or in part in certain circumstances, including:

• with respect to any lender, if it becomes unlawful for such lender to perform any of its obligations underthe Facilities Co-ordination Agreement;

• if ADES sells or otherwise disposes of all or substantially of all of its business or assets whether assingle transaction or a series of transactions;

• applying the insurance proceeds towards mandatory early payment of outstanding loans;

• if ADES becomes ineligible to EBRD financing; and

• upon the occurrence of a Change of Control.

With respect to the Murabaha Facility (unlike the Conventional Facility) an early prepayment of the fixedelement portion (equivalent to principal under the Conventional Facility) does not automatically result inreduction of the variable component (equivalent of the interest in the Conventional Facility). Given the natureand structure of the Murabaha Facility and due to Sharia restrictions, the murabaha participant has in itsabsolute discretion the ability to provide a rebate (representing a portion of the variable component due andpayable), which is a standard provision and approach in transactions of this nature.

For the purposes of the Facilities Co-ordination Agreement, a “Change of Control” means the Shareholders(or their respective heirs) or any of them ceases directly or indirectly to:

(a) have the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:

i. cast, control the casting of , more than 50 per cent. of the maximum number of votes that mightbe cast at a general meeting of ADES;

ii. appoint or remove all, or the majority, of the directors or other equivalent officers of the ADES;or

iii. give directions with respect to the operating and financial policies of the ADES with which thedirectors or other equivalent officers of the ADES are obliged to comply; or

(b) hold beneficially more than 50 per cent. of the issued share capital of ADES (excluding any art of thatissued share capital that carries no right to participate beyond a specified amount in a distribution ofeither profits or capital.

For the purposes of the Facilities Co-ordination Agreement, “Shareholder” means (i) Ayman MamdouhMohamed Fathy Abbas; (ii) Mamdouh Mohamed Fathy Abbas; Mohamed Mamdouh Mohamed FathyAbbas; (iii) Magda Abdel Aziz Taha; (iv) Nevine Mamdouh Mohamed Fathy Abbas; (v) Mohamed FaroukMohamed Abdel Maguid; and (vi) the Company (ADES International).

The Facilities Co-ordination Agreement contains standard covenants and undertakings for a transaction ofthis nature in addition to the following (subject to certain agreed exceptions and materiality carve outs): (i)negative pledge in relation to security assets; (ii) restrictions on disposal of assets; (iii) restriction to enter intoany transaction with any person except in the ordinary course of business and on arm’s length terms; (iv)undertakings with respect to financial indebtedness; (v) not to incur or allow to remain outstanding anyguarantee or indemnity in respect of any obligation or any person; (vi) restrictions on distribution of dividends

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and share redemption; (vii) restrictions on mergers and acquisitions (viii) undertakings pertaining to customercontracts; (ix) to maintain insurances on and in relation to its business and assets; (x) to validly register,manage maintain all tangible security assets and operate them in accordance with the applicable laws; (xi) toensure that the working capital credit facilities are available in a minimum aggregate amount of U.S.$5 million:(xii) not to enter into any derivative transaction; (xiii) not to issue any shares or grant any option, warrant orother right with respect to any share

The covenants include the following financial covenants (all terms are as defined in the FacilitiesCo-ordination Agreement):

• the Corporate Debt Service Coverage Ratio is 1.15:1 in respect of any Debt Service Coverage RatioObservation Period;

• Deal Debt Service Coverage Ratio is 1.5:1 in respect of any Debt Service Coverage Ratio ObservationPeriod;

• Loan to Value is at all times equal to or less than 75 per cent.;

• Leverage will not exceed 3.50:1 in respect of any Relevant Period ending on or before the first anniversaryof the date of the Facilities Co-ordination Agreement; (ii) 3.25:1 in respect of any Relevant Periodending after the first anniversary of the date of the Facilities Co-ordination Agreement but on or beforethe second anniversary of its date and; (iii) 3.00:1 in respect of any Relevant Period ending after thesecond anniversary of the date of the Facilities Co-ordination Agreement.

• Current Ratio shall not be less than 1.2:1 at last day of any Relevant Period;

• Gearing shall not exceed 4.00:1 at last day of any Relevant Period; and

• Net Worth shall not be less than U.S.$50,000,000 in respect of the Financial year ending 31 December2015; and (ii) U.S.$70,000,000 in respect of any Relevant Period ending thereafter.

These financial covenants (except for loan to value ratio) are tested by reference to each financial statementsdelivered and/or each compliance certificate delivered.

In this relation, the Shareholders signed an undertaking at the date of the Facilities Co-ordination Agreement,whereby the Shareholders are obliged to (subject to certain agreed exceptions) re-invest any amounts paid byADES and the maximum amount needed to be applied as an equity injection in order to cure any breach ofthe financial covenants.

The security package for the loan under the Facilities Co-ordination Agreement includes (i) assignment ofproceeds of customers’ contracts; (ii) mortgage over the rigs Admarine I, II, III, IV, V, VI and VIII; (iii) pledgein respect of collection accounts and insurance accounts and; (iv) promissory notes.

The Facilities Co-ordination Agreement contains customary events of default for transactions of this naturein to the following (subject in certain cases to agreed grace periods, thresholds and other qualifications): (i)the amendment or enactment of any foreign exchange law that may prohibit or restrict or delay in any materialrespect any payment under the transaction documents (this event is tested by reference to the opinion of themajority financial institutions) and; (ii) with respect to the Issuer (a) failure to pay certain financialindebtedness is a cross default; (b) if declared insolvent or unable to pay its debt; (c) any judgement is givenin relation to inter alia suspension of payments, winding-up, dissolution; arrangement with any creditor;appointment of liquidator or similar officer; or enforcement of any security over its assets; (d) expropriation,attachment or otherwise affecting its assets; (e) if it, or any of its subsidiaries, creates or permits to subsistany security over any of the security assets and; (f) any substantial change is made to the general nature ofits business.

AIB Facility AgreementADES has entered into a facility agreement dated 12 November 2015, as amended, with Arab InternationalBank (the “AIB Facility Agreement”). Under the AIB Facility Agreement an amount of U.S.$25 million ismade available to ADES, as part of the Facilities Co-ordination Agreement and particularly the Conventional

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facility. The facilities available under the AIB Facility Agreement are divided as follows: (i) Tranche A line ofcredit facility up to U.S.$10 million and; (ii) Tranche B revolving term loan of up to (a) U.S.$12.5 millionand; (b) the equivalent of U.S.$2,500,000 in EGP at the exchange rate of U.S.$1 to EGP 16. The purpose ofthe facilities is the financing of operational costs of the assets and any other assets acquired after the signingdate and the contingent liabilities for the opening of bid bonds and performance bonds. The AIB FacilityAgreement is governed by Egyptian law. The facility is renewable at AIB’s discretion.

The interest rate per annum applicable to facilities made under the AIB Facility Agreement is equal to (i)LIBOR plus a margin of 5.50 per cent. per annum with respect to U.S. Dollar amounts of the revolving loanand; (ii) Corridor Lending Rate announced by the Central bank of Egypt plus a margin of 2.50 per cent.with respect to EGP amounts of the revolving loan. ADES also pays certain other fees, costs and commissions.

As of 30 March 2017, ADES had utilised U.S.$8.2 million under Tranche A and U.S.$12.4 million andEGP 40.0 million under Tranche B of the funds made available under the AIB Facility Agreement.

The Tranche A credit facility of U.S.$10 million under the AIB Facility Agreement is scheduled to be fullyrepaid within twelve (12) months from 11 November 2016, the date of the amendment to the AIB FacilityAgreement. Each utilisation of the Tranche B revolving term loan facilities are to be repaid within 180 daysof drawdown and the entire Tranche B is in any case to be repaid within twelve (12) months from 11 November2016, the date of the amendment to the AIB facility Agreement.

ADES may voluntarily prepay all or part of the facilities under the AIB Facility Agreement by giving at leastforty five (45) days’ prior notice to the proposed prepayment date.

In addition to voluntary prepayments, the AIB Facility Agreement requires mandatory prepayment in full orin part in certain circumstances, including:

• if it becomes unlawful for Arab International Bank to perform any of its obligations under the AIBFacility Agreement ; and

• applying any insurance proceeds to repay any unpaid sums.

Moreover, Arab International bank may, at its sole discretion, cancel all or part or amend the amountsavailable under the revolving facility by giving forty five (45) days’ prior notice.

The AIB Facility Agreement contains customary information and negative covenants in addition to othercovenants that are substantially similar to those set forth under the Facilities Co-ordination Agreement(subject to certain agreed exceptions).

The AIB Facility Agreement contains customary affirmative covenants for transactions of this nature.

The security package for the facilities under the facility Agreement is same as the one provided under theFacilities Co-ordination Agreement (subject to the terms and conditions of the Intercreditor Agreement).

The AIB Facility Agreement includes standard events of default (subject in certain cases to agreed graceperiods and other qualifications) in addition to an event of default is declared under the FacilitiesCo-ordination Agreement.

EFG Syndicated LoanADES has entered into a term loan facility agreement in October 2016 (the “EFG Syndicated Loan”) betweenADES, EFG Hermes Advisory as arranger, Arab International Bank, as agent and offshore security agent,Al Ahli Bank of Kuwait K.S.C.P, as onshore security agent and the financial institutions listed therein as theoriginal lenders. Under EFG Syndicated Loan an amount of U.S.$55 million was made available for thepurpose of partially financing the purchase price of the rigs Admarine 261, 262 and 266 and payment ofpre-operating expenses. The EFG Syndicated Loan is governed by English law.

The interest rate per annum applicable to loans made under EFG Syndicated Loan is equal to LIBOR plusa margin of 5.5 per cent. per annum. ADES also pays certain other fees including fees payable to the agentand the security agent.

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As of the date of this Prospectus, ADES had fully utilized the term loan under the EFG Syndicated Loan.

The loans under EFG Syndicated Loan are scheduled to be fully repaid by November 2021.

Subject to certain conditions ADES may voluntarily prepay and/or permanently cancel all or part of the loanunder EFG Syndicated Loan by giving not less than twenty (20) business days’ prior notice (or such shorterperiod as the majority lenders may agree).

In addition to voluntary prepayments, EFG Syndicated Loan requires mandatory cancellation, and ifapplicable, prepayment in full or in part in certain circumstances, including:

• with respect to any lender, if it becomes unlawful for such lender to perform any of its obligations underEFG Syndicated Loan; and

• upon the occurrence of a Change of Control.

For the purposes of EFG Syndicated Loan, a “Change of Control” occurs when:

(c) the interests of Ahmed Ayman Ahmed Fathy Hussein, Alia Ayman Ahmed Fathy Hussein, LamiaMohamed Roushdy Ahmed Sakr, Ahmed Hussein Ashraf Ahmed Fathy Hussein, Ali Hussein AshrafAhmed Fathy Hussein, his immediate family and their respective heirs and successors, including trustsof similar arrangements of which they are individual or collective beneficiaries, and

(d) the interests of Mamdouh Mohamed Fathy Abbas, Ayman Mamdouh Mohamed Fathy Abbas, MagdaAbdel Aziz Taha, Mohamed Mamdouh Mohamed Fathy Abbas, Nevieen Mamdouh Mohamed FathyAbbas, Mohamed Farouk Mohamed Abdel Magiud, his immediate family and their respective heirsand successors, including trusts of similar arrangements of which they are individual or collectivebeneficiaries,

(i) cease (directly or indirectly) to collectively (i) maintain legal and beneficial ownership of at least51 per cent. of the issued share capital, and (ii) control, of ADES; or

(ii) appoint or remove all, or the majority, of the directors or other equivalent officers of ADES.

The security package for the loan under EFG Syndicated Loan includes (i) charter assignment; (ii) mortgage;(iii) general assignment of insurances, earnings and requisition compensation; (iv) pledge over collectionaccounts and; (v) assignment of insurances, all in respect of rigs ADMARINE 261, 262 and 266.

EFG Syndicated Loan contains standard covenants and undertakings for a transaction of this nature inaddition to the following (subject to certain agreed exceptions and materiality carve outs): (i) any dividend orother distribution declared or paid on or respect if the share capital will not exceed an aggregated limit of 50per cent. of retained earnings per annum; (ii) dealing with the rigs, their condition and operation; (iii)chartering undertakings imposing restrictions to inter alia amending or terminating charter documents; (iv)maintain an insurance coverage for the rigs against inter alia fire and usual marine risks with an amount ofat least its minimum hull cover and no less than the market value and; P&I risks for the highest amount inthe insurance market for similar vessels (and for an amount U.S.$100 million in relation to oil pollution) and;(v) submit a valuation of each mortgaged rig every two years and provide an additional security in case thesecurity’s value falls below the minimum value.

The covenants include the following financial covenants (all terms are as defined in EFG Syndicated Loan):

• the Corporate Debt Service Coverage Ratio is 1.15:1 at any Relevant Period;

• Deal Debt Service Coverage Ratio is 1.15:1 at any Relevant Period;

• Leverage Ratio: 3.50:1 until the end of 2016; 3.25:1 until the end of 2017 and; 3.00:1 thereafter.

• Current Ratio shall not be less than 1.2:1 at any Relevant Period;

• Gearing shall not exceed 4.00:1 at any Relevant Period; and

• Net Worth shall not be less than U.S.$80 million.

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These financial covenants are tested by reference to each financial statements delivered and/or eachcompliance certificate delivered.

EFG Syndicated Loan contains customary events of default for transactions of this nature in addition to thefollowing (subject in certain cases to agreed grace periods, thresholds and other qualifications): (i)non-compliance with minimum security value; (ii) arrest of any of the mortgaged rigs; (iii) cancellation ortermination or non-renewal of a rig registration; (iv) political risks; and (v) charter cancellation, rescissionor frustration or; withdrawal of rig before the expiry of its charter.

AIB Overdraft AgreementADES has entered into a facility agreement dated 23 January 2017, with AIB (the “AIB Overdraft”). AIBOverdraft grants ADES a revolving overdraft facility limit amounting to EGP 80 million renewable at AIB’sdiscretion, for the purpose of financing the operational costs of the rigs owned by ADES in Egypt. AIBOverdraft is governed by Egyptian law.

The overdraft is subject to an annual interest rate equal to Corridor Lending Rate plus a margin of 2.50 percent. and a commission of 0.075 per cent. on the highest monthly debit balance.

As of 30 March 2017, ADES had borrowed EGP 79.5 million under the overdraft.

ADES must withdraw the amounts and repay them within the same year two times and repayment ofwithdrawn amounts must be repaid within 180 days from each drawdown date. In any event, any outstandingbalance (including principal, interest, commission and expenses) under the overdraft facility must be fullyrepaid within one (1) year from the signing date.

AIB Overdraft requires mandatory prepayment in full of the debit balance (including interest, commissionsand expenses):

• at AIB’s discretion by giving a notice; and

• in case of disposal of any rig.

Moreover, AIB may, at its sole discretion, cancel all or amend the amounts available under AIB Overdraft bygiving a notice.

AIB Overdraft contains standard covenants and undertakings for a transaction of this nature in addition tothe following: (i) restrictions to obtain any loan without the prior written consent of AIB; (ii) restrictions ondisposal of rigs until full repayment of the borrowed amounts; (iii) restrictions on distribution of dividendsin any given year except after the settlement of any due payment (including principal, interest and commission)and; (iv) the operation of rigs is restricted to geographic areas where they are covered by insurance.

To secure the repayment, ADES issued a promissory note covering the amount of the overdraft.

AIB Overdraft includes standard events of default in addition to the following: (i) amendment of ADESarticles of association or a change in law, that could, in AIB’s opinion, affect its ability to perform itsobligations; (ii) obtaining any loan without the prior written approval of AIB.

EGB Overdraft AgreementADES has an overdraft credit facility with Egyptian Gulf Bank valid from 1 October 2016 until 30 September2017 (the “EGB Overdraft”). EGB Overdraft grants ADES an overdraft facility limit amounting to EGP45 million renewable upon EGB’s approval, for the purpose of funding the operational costs of the rigs ownedby ADES in Egypt. EGB Overdraft is governed by Egyptian law.

The overdraft is subject to an annual interest rate equal to Corridor Lending Rate announced by the Centralbank of Egypt (15.75 per cent. at the date of the agreement) plus a margin of 1.25 per cent.. The agreementalso indicates that the interest rate may be increased at any time upon notice to ADES.

• As 30 March 2017, ADES had borrowed EGP 42.9 million under the overdraft.

• ADES must repay any withdrawn amounts by 30 September 2017.

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EGB may, at its sole discretion, cancel or amend the amounts available under EGB Overdraft or requiremandatory prepayment by giving a notice.

To secure the repayment, ADES issued a promissory note covering the amount of the overdraft.

The provisions of this agreement are standard and do not include unusual provisions for transactions of thisnature. Moreover, ADES in a separate undertaking has undertaken that the leverage ratio shall remain 2:1during the term of the facility.

EGB Letter of Guarantee FacilityADES has a credit facility with Egyptian Gulf Bank valid from 1 October 2016 until September 30, 2017(the “EGB LG”) for the issuance of preliminary and final letters of guarantee locally with a limit ofU.S.$13,895,000, renewable upon EGB’s approval. EGB LG is governed by Egyptian law.

The letters of guarantee are subject to a commission of 3/1000 and 6/1000 with respect to preliminary andfinal letters of guarantee respectively, paid quarterly.

As at the date of this Prospectus, EGB issued to ADES certain letters of guarantee with an amount ofU.S.$12.9 million.

ADES must repay any outstanding balance under the facility by 30 September 2017.

ADES undertakes that it shall fully cover from its own resources the letters of guarantee (i) issued from12 months with respect to preliminary letters of guarantee and; (ii) issued from a period exceeding 3 yearswith respect to final letters of guarantee. Moreover, ADES undertakes that the leverage ratio shall remain2:1 during the term of the facility.

As a security package, ADES signed a promissory note covering the amount of the facility.

This agreement is subject to the same terms and conditions applicable to EGB Overdraft.

Underwriting AgreementThe Company, the Selling Shareholder, the Global Coordinator and the Underwriters and the Directorsentered into the Underwriting Agreement on 9 May 2017. Pursuant to the Underwriting Agreement:

(a) the Company has agreed, subject to certain conditions, to allot and issue, at the Offer Price, the NewShares to be issued in connection with the Global Offer;

(b) the Selling Shareholder has agreed, subject to certain conditions, to sell, at the Offer Price, the SaleShares in connection with the Global Offer;

(c) the Underwriters have agreed, subject to certain conditions, to procure purchasers for, or failing which,themselves to purchase the Offer Shares offered pursuant to the Global Offer at the Offer Price;

(d) the Offer Price is determined by the Company and the Selling Shareholder in agreement with the GlobalCoordinator and the Underwriters;

(e) the Company and the Selling Shareholder have agreed that the Global Coordinator and the Underwritersmay deduct from the proceeds of the Global Offer aggregate fees and commissions of U.S.$7,000,000;

(f) the obligations of the Underwriters to procure purchasers, or, failing which, to purchase themselves, forOffer Shares on the terms of the Underwriting Agreement are subject to certain conditions that arecustomary for an agreement of this nature. These conditions include, amongst other things, delivery ofcustomary comfort packages, the absence of a material adverse change in relation to the Company andapproval of various offering documents having been received;

(g) the Global Coordinator and the Underwriters may terminate the Underwriting Agreement on the basisof its assessment of the state of the financial markets and upon the occurrence of certain stated events,such as any breach of representation or warranty under the Underwriting Agreement or the application

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for Admission being refused. In addition, the Global Coordinator has the right to terminate theUnderwriting Agreement, exercisable in certain circumstances prior to Admission;

(h) the Stabilising Manager has been granted an Over-allotment Option, pursuant to which the StabilisingManager may require the Selling Shareholder to make available additional Offer Shares of up to 15 percent. of the aggregate number of Offer Shares available in the Global Offer (before the exercise of theOver-allotment Option) at the Offer Price to cover over-allotments, if any, made in connection with theGlobal Offer. The Over-allotment Option may be exercised, in whole or in part, at any time during theperiod from the commencement of conditional dealings of Offer Shares on the London Stock Exchangeand ending 30 calendar days thereafter. Save as required by law, the Stabilising Manager does not intendto disclose the extent of any over-allotments made and/or any stabilisation transactions carried out. Ifany Over-allotment Shares are acquired pursuant to the Over-allotment Option, the Stabilising Managerwill be committed to pay to the Selling Shareholder, or procure payment is made to them of, an amountequal to the Offer Price multiplied by the number of Over-allotment Shares sold by the SellingShareholder, less expenses;

(i) the Company and the Selling Shareholder have agreed on to pay or cause to be paid (together with anyapplicable VAT) all costs, charges, fees and expenses of or arising in connection with, or incidental to,the Global Offer on a pro rata basis according to the proportion that the number of Offer Shares issuedor sold by each bears to the total number of Offer Shares offered in the Global Offer;

(j) the Company and the Selling Shareholder have given customary representations, warranties,undertakings and indemnities to the Global Coordinator and the Underwriters;

(k) the Directors have given certain representations, warranties and undertakings to the Global Coordinatorand the Underwriters; and

(l) the parties to the Underwriting Agreement have given certain covenants to each other regardingcompliance with laws and regulations affecting the making of the Global Offer in relevant jurisdictions.

15. Related party transactionsThe Company and Group have entered into in the past, and will continue to enter into, transactions withcertain shareholders, directors and affiliated companies. While the Directors believe that each of the Group’srelated party transactions has been entered into on arm’s length terms in the ordinary course of business andin accordance with normal business practice, there has been no formal process for independent assessmentof the appropriateness of the terms of such transactions. For further information on certain of the Group’srelated party transactions, see Note 10 to the Historical Financial Information included in Part X: “Historical

Financial Information of the Group”.

Relationship AgreementOn 8 May 2017, the Company entered into a relationship agreement with ADES, conditional upon Admission,which will regulate the degree of control that ADES Investment and its respective associates may exerciseover the management of the Company. Further details of the terms of the Relationship Agreement are setout in Part XII: “Directors, Senior Management and Corporate Governance—Corporate

Governance—Relationship Agreement”, of this Prospectus.

Management Services AgreementsOn the 1 March 2017, the Company entered into management service agreements with Mr. Ayman Abbas,as Executive Chairman of the Company, and Dr. Farouk, as the Managing Director of the Company. Eachservice agreement will continue until terminated. Each service agreement sets out the terms and conditionsassociated with the employment of Mr. Ayman’s and Dr. Farouk’s respectively. Further details of the termsof each of the service agreements are set out in Part XII: “Directors, Senior Management and CorporateGovernance—Remuneration and Benefits—Remuneration Strategy”, of this Prospectus.

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Investment in ECDCOn 30 March 2015, ADES purchased shares as an investment in ECDC in the amount of 48.75 per cent. ofthe total share capital of ECDC from AMAK. The shares were acquired at par value. The Group recogniseddividends of U.S.$1,225,000 from ECDC during the year ended 31 December 2015. For further details, seeNote 10 to the Historical Financial Information included in Part X: “Historical Financial Information of the

Group”.

Project ServicesIn June 2015, ADES entered into a services agreement with Advansys Projects (“Advansys”) wherebyAdvansys provides maintenance services for offshore platforms/onshore facilities. The services are providedwith respect to Admarine II, the Group’s jack-up barge has been leased to GUPCO. The services agreementis subject to Egyptian law.

Fees payable to Advansys are calculated on a daily rate basis (subject to any discount given by ADES toGUPCO) and paid on a back to back basis by ADES to Advansys, upon receipt by ADES of payment fromGUPCO. Advansys receives 85 per cent. of the fees paid to ADES by GUPCO within ten days of ADESreceiving such payment on monthly basis. The remaining 15 per cent. of the fees are retained by ADES.

The term of this agreement is one year in addition to any further period of extension of contract with GUPCOas it may approve. As the relevant contract with GUPCO was renewed until 31 December 2017, the servicesagreement has been extended for the same period. ADES may terminate this agreement at any time by a30 days prior written notice.

Equipment PurchaseIn September 2016, ADES acquired from AMAK certain equipment including top drive, CAT engine, mudpump and drilling pipes for a total consideration of U.S.$7,940,000. As at 31 December 2016, ADES owed aremaining balance of U.S.$3.8 million to AMAK in respect of the purchase of the equipment. The relevantsale and purchase agreement is subject to Egyptian Law.

The sale and purchase agreement was preapproved by an ordinary shareholders’ resolution of ADES datedSeptember 22, 2016, being a related party transaction, in accordance with Egyptian law.

Purchase of ADES 1In March 2017, ADES acquired from AMAK Drilling & Petroleum Services an onshore rig for a totalconsideration of U.S.$ 5.0 million. The purchase price is payable in five equal monthly instalments from thedate of the agreement. The relevant sale and purchase agreement is subject to Egyptian Law.

Should ADES fail to pay the monthly instalments, AMAK may terminate the agreement and repossess therig by immediate notice to ADES.

ReorganizationIn October 2016, the Company acquired 210 million shares in ADES from AMAK for a total considerationof U.S.$25.2 million of which U.S.$16.3 million was paid in cash and U.S.$8.8 million comprised obligationsof AMAK to ADES that were assumed by the Company in the transaction. The payment and transfer ofshares was evidenced in transfer notices issued by the Egyptian Stock Exchange.

Shareholder Equity Issuances Since the Reorganization through the Latest Practicable Date, the Company has raised its the issued sharecapital from U.S.$1 million to U.S.$31.9 million through issuance of additional equity to ADES Investments,the sole shareholder of the Company. The ordinary shares were issued and sold at par value.

Current Accounts and Administrative ExpensesThere are current accounts established between the Company and each of the entities noted in the table below,which are either owned by members of the Abbas Family, who are also ultimate shareholders of the Company,by Intro Storage Egypt, an entity owned by members of the Abbas Family, or as otherwise described below,

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which ADES funds on an as needed basis pursuant to invoices received and the counterparty repays theamount to ADES on a short-term basis.

Related Party Relationship––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

AMAK for Drilling & Petroleum Services Co. Entity owned by Intro Storage Egypt and Sky InvestmentsEgypt, which are owned by members of the Abbas andHussein families, respectively. AMAK was a shareholder ofADES until November 2016.

Intro for Trading and Contracting Co Entity owned by Abbas Family

Advansys Creative Solutions Entity owned by individual members of the Abbas Family

Advansys Project Entity in part owned by individual members of the AbbasFamily

Apetco Co. Entity owned by AMAK until 2015 at which time AMAKsold its shares and the entity is currently not a related party

Misr El Mahoursa Entity owned by Abbas family and Sky Investments

Sky Investments Holding Ltd (DIFC) Indirect shareholder of ADES and the Issuer.

Intro investments Holding Ltd (DIFC) Indirect shareholder of ADES and the Issuer.

ADES Investments Holding Ltd (DIFC) Sole shareholder of the Company since August 2016 andthe Issuer in the Offering.

Total payments by ADES funding the current account of AMAK, during the year ended 31 December 2016amounted to U.S.$3.9 million (including part of the purchase price for the equipment purchased, as describedabove), as compared to U.S.$0.4 million in 2015 and Nil in 2014, and total payments by ADES funding thecurrent account of Misr El Mahrousa during the year ended 31 December 2016 were Nil, compared toU.S.$0.1 million in 2015 and U.S.$0.2 million in 2014. Amount funded by ADES to other current accountswere not material in any of fiscal year ended 31 December 2016, 2015 and 2014.

In addition, ADES pays de minimis administrative expenses of certain of the related parties listed in theabove table related to telephone bills and communications services in connection with such parties’ businesswith ADES.

For details on the total amounts due to related parties as at 31 December 2016, see Note 10 to the HistoricalFinancial Information included in Part X: “Historical Financial Information of the Group”.

Participation in the OfferingMr Ulf Henriksson, a non-executive member of the Board of Directors, has agreed to purchaseU.S.$0.6 million of Offer Shares in the Global Offer at the Offer Price.

16. LitigationThere are no governmental, legal or arbitration proceedings (including any such proceedings which arepending or threatened of which the Company / Group is aware) which may have, or have had during the 12months preceding the date of this Prospectus, a significant effect on the Company’s and/or Group’s financialposition or profitability.

17. Mandatory bids and compulsory acquisition rules relating to sharesThe Takeover Code does not apply to the Company. There are no rules or provisions relating to mandatorybids relating to the Company.

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17.1 Squeeze-outAny offeror making a takeover offer which, within four months of making the offer, has been approved bythe holders of not less than 90 per cent. in value of the shares to which the offer relates, is entitled to acquirecompulsorily from dissenting shareholders those shares which have not been acquired or contracted to beacquired on the same terms as under the offer.

17.2 Sell-outThere are no sell out rules relating to the Company.

18. Working CapitalIn the opinion of the Company, taking into account the net proceeds receivable by the Company from theGlobal Offer and the bank and other facilities available to the Group, the Group has sufficient working capitalfor its present requirements that is for at least the next 12 months following the date of this Prospectus.

19. ConsentsErnst & Young Middle East (Dubai Br.) has given and has not withdrawn its written consent to the inclusionof its report in Part X: “Historical Financial Information on the Group”, in the form and context in which itappears and has authorised the contents of that part of this Prospectus which comprise its report for thepurposes of Rule 5.5.3R(2)(f) of the Prospectus Rules. As the Offer Shares have not and will not be registeredunder the U.S. Securities Act, EY has not filed and will not file a consent under the U.S. Securities Act.

20. Significant changeThere has been no significant change to the trading or financial position of the Group since 31 December2016, the date to which the latest financial information of the Group was published.

21. Sources of financial informationUnless otherwise stated, all financial information disclosed in this document has been extracted withoutmaterial adjustment from the Historical Financial Information.

22. Documents available for inspectionCopies of the following documents may be inspected at the Company’s registered office at Unit 517, Level 5,Index Tower, Dubai International Financial Centre, Dubai, 507118, United Arab Emirates during usualbusiness hours on any weekday (not including Saturdays, Sundays or any public holidays in the UAE, UnitedKingdom or Egypt) from the date of this Prospectus up to and including the date of Admission:

(a) New Articles;

(b) Historical Financial Information of the Group for the years ended 31 December 2016, 31 December2015 and 31 December 2014; and

(c) this Prospectus.


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DEFINITIONS AND INTERPRETATION

2010 PD Amending Directive means Directive 2010/73/EU;

ADES Advanced Energy Systems ADES S.A.E.;

Admission the proposed admission of the Ordinary Shares to (i) the UKLA tobe admitted to the standard segment of the Official List, and (ii) theLondon Stock Exchange to be admitted to trading on the LondonStock Exchange’s main market for listed securities;

AFS means available for sale;

AIB Arab International Bank;

AIB Facility Agreement a facility agreement dated November 12, 2015, as amended, betweenAIB and ADES;

Articles of Association the articles of association of the Company in force from time to time;

Audit Committee the audit committee of the Board;

Board the board of directors of the Company;

Board Member a Director of the Company;

Business Day a day on which banks are open for business in London (excluding forthe avoidance of doubt, Saturdays, Sundays and public holidays);

CAGR means compound annual growth rate;

CGU means cash-generating units;

Closed Period has the meaning given in Article 19(11) of the Market AbuseRegulation;

Companies Act the UK Companies Act 2006 (as amended);

Company ADES International Holding Ltd;

Conventional Facility means the conventional facility made available under theConventional Facility Agreement;

Conventional Facility Agreement means the facility agreement dated 12 November 2015 between,amongst others, ADES as borrower, AIB as agent, and the originalconventional lenders (as defined in the Facilities Co-ordinationAgreement);

CREST the system for paperless settlement of trades in listed securities andthe holding of uncertificated securities, of which Euroclear is theoperator;

CREST Manual the rules governing the operation of CREST, consisting of theCREST Reference Manual, CREST International Manual, CRESTCentral Counterparty Security Manual, CREST Rules, RegistrarsService Standards, Settlement Discipline Rules, CCSS OperationsManual, Daily Timetable, CREST Application Procedures andCREST Glossary of Terms promulgated by Euroclear on 15 July 1996and as amended since);

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CREST Member a person who has been admitted by Euroclear as a system member(as defined in the CREST Regulations);

CREST Regulations the Uncertified Securities Regulations 2001 (SI 2001 No. 3755);

Deed Poll the deed poll executed on 4 May 2017 by the Depositary in favour ofthe holders of the Depositary Interests from time to time;

Depositary Capita IRG Trustees Limited, whose registered office is The Registry,34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom;

Depositary Agreement the agreement between the Company and the Depositary dated4 May 2017;

Depositary Interest a depositary interest representing an underlying Ordinary Share;

Depositary Interest Holders holders of Depositary Interests from time to time;

DFSA means the Dubai Financial Services Authority;

DIFC Dubai International Financial Centre;

Directors the Executive Directors and the Non-Executive Directors;

DTR the disclosure guidance and transparency rules made by the FCAunder section 73A of FSMA;

E&P means exploration and production;

EEA State each state of the European Economic Area;

EGB LG a credit facility between Egyptian Gulf Bank and ADES valid from1 October 2016 until 30 September 2017;

EGB Overdraft an overdraft credit facility between Egyptian Gulf Bank and ADESvalid from 1 October 2016 until 30 September 2017;

EGPC Egyptian General Petroleum Company;

Egyptian Pound, E£, or EPB Egyptian pound, the lawful currency of the Egypt;

EIR means effective interest rate;

EU the European Union;

European Commission the executive body of the European Union, responsible for, amongstother things, proposing legislation and its day-to-day management;

European Economic Area or EEA the European Union, Iceland, Norway and Liechtenstein;

Executive Directors the Directors of the Company who hold the position of executivedirector, and each an “Executive Director”, being Mr. Abbas andDr. Farouk;

Expansion Capex means expenditure relating to purchase, upgrade, improve, or extendthe life of long-term assets;

EY Ernst & Young Middle East (Dubai Br.);

FCA Financial Conduct Authority of the United Kingdom;

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FDI means foreign direct investment;

FSMA the Financial Services and Markets Act 2000, as amended andsupplemented from time to time;

FSO Floating Storage and Offloading Unit;

Global Co-ordinator means EFG Hermes U.A.E. Limited;

Global Offer the global offer of Offer Shares by the Company and the SellingShareholder on the terms set out in this document;

GPC General Petroleum Company;

Group the Company and all of its direct or indirect subsidiaries;

Headroom has the meaning given to it in the CREST Manual;

Historical Financial Information The audited consolidated historical financial information for theGroup for the years ended 31 December 2014, 31 December 2015,and 31 December 2016.

HMRC Her Majesty’s Revenue and Customs;

HSE means health safety and environment;

IASB International Accounting Standards Board;

IAS International Accounting Standards;

IFRS the International Financial Reporting Standards as issued by theInternational Accounting Standards Board (IASB) andinterpretations issued by the IFRS Interpretations Committee;

IMF International Monetary Fund;

IOC means international oil companies;

ISIN the international securities identification number;

Joint Bookrunners means EFG Hermes U.A.E. Limited, EFG Hermes Promoting andUnderwriting and Citigroup Global Markets Limited;

KNOC Kuwait National Oil Company;

Latest Practicable Date means 5 May 2017;

Liability or Liabilities any debt, liability or obligation whatsoever whether it is present,future, prospective or contingent, whether or not its amount is fixedor undetermined, whether or not it involves the payment of moneyor the performance of an act or obligation and whether it arises atcommon law, in equity or by statute, in England and Wales or in anyother jurisdiction, or in any other manner whatsoever;

LIBOR London Interbank Offered Rate;

Listing Principles the listing principles and premium listing principles made by the FCAand set out under Listing Rule 7.2 (as amended from time to time);

Listing Rules the listing rules made by the FCA under Part VI of the FSMA (asamended from time to time);

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Locked-up Parties Means the Selling Shareholders, the Executive Directors and theNon-Executive Directors;

London Stock Exchange London Stock Exchange plc;

Maintenance Capex means the purchase of essential equipment and the overhaul expenserelating to installing that equipment;

Market Abuse Regulation Regulation (EU) No 596/2014 of the European Parliament and ofthe Council of 16 April 2014 on market abuse;

MEA Middle East and North Africa;

Member States member states of the EEA;

MOPU Mobile Offshore Production Unit;

New Shares the new Offer Shares to be issued by the Company pursuant to theGlobal Offer;

NOC National Oil Company;

Nomination Committee the committee of the Board which, among other roles, reviews thestructure, size and composition of the Board;

Non-Executive Directors the Directors of the Company who hold the position of non-executivedirector and each a “Non-Executive Director”, being Mr. Cherif, Mr.Kassem, Mr. Hashem and Mr. Henriksson;

OCI means other comprehensive income;

Offer Price U.S.$16.50 per Ordinary Share;

Offer Shares ordinary shares of par value U.S.$1.00 each in the capital of theCompany;

Official List the official list of the UKLA;

the Order the Financial Services and Markets Act 2000 (Financial Promotion)Order 2005;

OPEC Organisation of Petroleum Exporting Countries;

Over-allotment Option the option granted by the Selling Shareholder to the StabilisingManager to acquire up to 2,213,439 Offer Shares for the purposes ofallowing the Stabilising Manager to cover any over-allotment of OfferShares in the Global Offer;

Participant ID the identification code or membership number used in CREST toidentify a particular CREST Member or CREST Participant;

pence pence, the lawful currency of the United Kingdom;

Pound, £, sterling or GBP pound sterling, the lawful currency of the United Kingdom;

Prospectus this prospectus relating to the Global Offer dated 9 May;

Prospectus Directive means Directive 2003/71/EC;

Prospectus Rules the prospectus rules made by the FCA under Part VI of the FSMA(as amended from time to time);

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Qualified Institutional Buyers (QIBs) qualified institutional buyers;

Qualified Investors means “qualified investors” within the meaning of Article 2(1)€ ofthe Prospectus Directive;

Receiving Agent or Registrar Link Market Services, whose registered address is at Office No. 35,Level 15, the Gate Building, Dubai International Finance Centre, POBox 506875, Dubai, UAE;

Regulation S Regulation S under the U.S Securities Act;

Regulatory Information Service any information service authorised from time to time by the FCA forthe purpose of disseminating regulatory announcements;

Relationship Agreement the relationship agreement entered into by the Company with theSelling Shareholder on 8 May 2017 in order to comply with theListing Rules relating to controlling shareholders;

Relevant Member State means a Member State of the EEA which has implemented theProspectus Directive (2003/71/EC);

Remuneration Committee the committee of the Board which among other roles, reviews theremuneration policy;

ROV means remote operated vehicle;

Rule 144A means Rule 144A of the U.S. Securities Act;

Sale Shares the existing Offer Shares to be sold by the Selling Shareholderpursuant to the Global Offer;

Saudi Branch means the foreign office branch of ADES established in the Kingdomof Saudi Arabia;

Saudi Environmental Law means The International Convention on Oil Pollution Preparedness,Response and Cooperation, Marpol 73/78, 1978, the Kuwait RegionalConvention for Co-Operation on the Protection of the MarineEnvironment from Pollution, Kuwait, 04/1978, the National Plan toCombat Marine Pollution and Harmful Substances, and the SaudiEnvironmental Law promulgated pursuant to Royal Decree no. M/34dated 10/2001 and its Implementing Regulations, as may be amendedfrom time to time;

SCA the United Arab Emirates Commodities Authority;

SEC US Securities Exchange Commission;

Selling Shareholder ADES Investments Holding Ltd;

Senior Managers / Senior Management the senior management of the Company from time to time, being Dr.Farouk, Mr. Mohamed Khalil, Mr. Ahmed Mohy, Mr. Ali Makhlouf,Mr. Ibrahim Sallam, Mr. Omar Saleh, Mr. Hussein Badawy and Mr.Morcos Ekladious;

SFA means Securities and Futures Act, Chapter 289 of Singapore;

Shareholder a holder of Offer Shares;

South African Companies Act means the South African Companies Act, No.71 of 2008;

Stabilising Manager Citigroup Global Markets Limited;

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Standards the Admission and Disclosure Standards of the LondonStock Exchange;

Stock Lending Agreement the Stock Lending Agreement dated 9 May 2017 between theUnderwriters and the Selling Shareholder;

subsidiary has the same meaning as in section 1159 of the Companies Act;

Takeover Code the City Code on Takeovers and Mergers;

UK or United Kingdom the United Kingdom of Great Britain and Northern Ireland;

UKLA or UK Listing Authority the FCA acting in its capacity as the competent authority for thepurposes of Part VI of FSMA;

UK Listing Rules the rules of the UK Listing Authority;

uncertified or in uncertificated form in relation to a share or other securities, a share or other security titleto which is recorded on the relevant register of the share or securityconcerned as being held in uncertificated form in CREST and title towhich, by virtue of the CREST Regulations, may be transferred bymeans of CREST;

Underwriters EFG Hermes Promoting and Underwriting and Citigroup GlobalMarkets Limited;

Underwriting Agreement the agreement dated 9 May 2017 between the Company, the SellingShareholder, the Directors, the Global Co-ordinator and theUnderwriters pursuant to which the Underwriters agree to underwritethe Global Offer;

U.S. Exchange Act means the US Securities Exchange Act of 1934;

US or United States United States of America, its territories and possessions, any state ofthe United States of America and the District of Columbia;

U.S. Securities Act the United States Securities Act of 1933, as amended;

USD, U.S.$ or US Dollar United States dollars and cents, the lawful currency of theUnited States.

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Perivan Financial Print 244802

244802 Project Quint Cover Spread.indd All Pages 09/05/2017 03:47