“Record Performance Building on Altrad’s Strong and Diversified Service Offering.”

Altrad Group, a global leader in industrial maintenance services across
multiple sectors, is pleased to report its Full-Year Results for the
fiscal year ended 31 August 2018.

HIGHLIGHTS

• Strong growth in all financial KPIs following successful integration
  of Cape acquisition
• Revenue at €3,419m (2017: €2,159m)
• EBITDA of €443m (2017: €325m)
• Net profit of €201m (2017: €138m)
• Net debt to EBITDA ratio of 1.53x compared with approx. 2x in FY16
• At the end of August, the Group had a services order book at €2,531m
• Successful rebranding to Altrad Services in certain core markets
• Positive outlook supported by growth drivers for Altrad’s core sectors
  and markets

Commenting on the Results, CEO Louis Huetz said:

“These record full-year results reflect the transformative evolution
that the Group has undertaken in recent years. The strategic
rationale to diversify Altrad’s service offering and expand our
geographical footprint has provided the Group with a significantly
stronger and more balanced business. The breadth of our services ensures
we have the scale and capabilities to meet the exacting demands of our
enviable blue-chip client-base across our various sectors and
geographies. Following the successful integration of Cape
throughout this year, we have firmly established ourselves as an
undisputed world leader in services to large industry and equipment for
access to the construction and maintenance of the world’s largest
facilities. We are employing strategies to consolidate this
position further by leveraging the operating efficiencies and new
opportunities that present themselves to us on account of our increasing
scale and profile within the industry.”

OVERVIEW

Altrad has delivered a record financial performance this fiscal year by
building on the strong and diversified service offering assembled
through organic and acquisitive means in recent years. The largest
contributor to this performance was the successful integration of Cape
into the Group, resulting in a step-change in revenue and profitability
on account of the operating efficiencies and synergies associated with
that transaction.

As highlighted at the time of the acquisition of Cape in September last
year, the transaction significantly expanded and diversified Altrad’s
service offering, with a greater weighting towards Services and better
exposure to a number of long-term growth sectors, particularly in Oil
and Gas. This strategic focus on Services is guided by the desire to
underpin the business with the longer-term, lower-risk,
higher-visibility revenues associated with multi-year maintenance
contracts. Today, Services represents 81% of the overall revenue of the
business, with the remaining revenue generated from Equipment.

One of the core initiatives throughout the year has been on the
alignment of the businesses under Altrad’s Services umbrella, with an
initial focus on the core Services markets within the UK. A number of
wholly owned subsidiaries, including Cape and Hertel, have been
successfully rebranded as Altrad Services in the UK market. The concept
of rebranding the businesses was to achieve greater operating
efficiencies through economies of scale and to forge a one-team cohesive
cultural among our staff. The challenge for the Group has been to phase
out well-known, respected brands with an established reputation in their
respective industries and create a new identity for the collective
division that becomes synonymous with being a leading service provider
within this core market. Pleasingly, the transition has been successful
and the feedback from existing and potential new customers has been
consistently positive as they recognise the benefits to their own
businesses of having these services all under one roof and one brand.

The creation of an experienced executive committee for the UK, comprised
of senior management from the subsidiary companies, has enabled the
seamless transition into Altrad Services, and the Group is benefitting
from a collaborative knowledge-share and expanded network of customers.
Altrad Services has firmly established itself as a market leader across
the UK and is expected to deliver a strong performance as it continues
to streamline activity and leverage the deeper service offering across
its blue-chip client base.

Alongside Services, Altrad’s traditional Equipment business continues to
perform well. The Equipment division contributes approximately 19% of
Group Revenue, and maintains healthy margins enabling the division to
generate 27% of the Group’s EBITDA.

Overall, Altrad’s business is diversified and balanced across a number
of sectors, markets and geographies, which is underpinning growth of the
business whilst simultaneously mitigating risk by reducing exposure to
cyclical or vulnerable sectors and markets.

Over one third of Altrad’s activity now takes place outside of Europe,
giving the Group exposure to both mature and emerging markets in regions
including Pacific, Middle East, Asia and Africa. Continental Europe
represents 38% of group revenue, and the UK represents 27%.

Altrad provides support in all these markets to majors and
multinationals that are leaders in their respective sectors including
EDF, Total, Shell, BP, ExxonMobil, Chevron, Equinor, Dow, Samsung Heavy
Industries, Sonatrach and Saudi Aramco.

Altrad also benefits from a balanced sales mix between Oil and Gas
(43%), Construction (30%), Power Process Industries (18%) and Power
(9%), providing protection from any downturns that may occur in each
sector.

FINANCIALS

The Group generated record revenue of €3,419 million during the fiscal
year, ahead of expectation at the time of the acquisition of Cape Plc.
Of note, over 70% of the Services revenue, which represents 81% of the
Group revenue, is a recurring revenue profile from multi-year
maintenance contracts.

The Group has achieved a solid level of profitability, with EBITDA
margin of 13% trending positively from 12.2% figure provided in the Half
Yearly Results as the Group successfully extracted synergies associated
with the acquisition of Cape.

The Group generated EBITDA of €443 million with a net profit of €201
million. Pleasingly, the Group achieved a conversion of free cash-flow
to EBITDA of 66% compared with 59% in 2017.

At year end, Altrad’s Order Book stood at €2.5 billion, providing decent
coverage for the anticipated activity for the coming year. The order
book shows a significant decrease from the figure reported at Half-Year
due mainly to the completion of large projects in Australia and major
maintenance contracts coming for renewal in UK. The Group expects to
secure major order intake in the coming year to provide more order book
cover and stronger visibility on revenue.

Net debt at period end was €678 million, giving a net debt to EBITDA
ratio of 1.53, comfortably below Altrad’s preferred gearing ratio of 2x
EBITDA over a 12-month rolling period..

MARKET CONDITIONS

Oil and Gas

The Oil & Gas sector represents the largest sector for Altrad in terms
of revenue. Cape’s exposure to Upstream and Downstream activity in core
global markets such as North Sea, MENA and LNG projects in APAC, was a
core rationale for Altrad’s acquisition of the business.

With supportive long-term fundamentals suggesting that demand is
forecast to grow at around 1.3% per annum up until 2040, Altrad sees
significant long-term opportunities in the sector and has recently been
awarded a number of material Services contracts. These include contracts
with ADNOC in the UAE and with the Sadara Chemical Company, a JV with
Saudi Aramco and the Dow Chemical Company.

The market saw signs of a recovery through 2018 in line with an oil
price recovery. That said, the weakness of the oil price in Q4 showed
the fragility of the market and the requirement for Operators to align
themselves with value-add and innovative service companies. In offshore,
Altrad is increasingly offering more efficient and economic solutions to
provide maintenance to ageing assets and is well placed to benefit from
industry’s focus on this trend.

LNG

The LNG market continues to grow, and for the third consecutive year the
industry set a record for consumption, reaching 293.1 million tonnes.
This volume, the second largest ever, was driven by increased supply,
especially out of Australia from large scale projects such as Gorgon,
Wheatstone and Ichthys for which Altrad has been a supplier of services.

With LNG suppliers anticipating a shortfall of supply in the early
2020s, significant FID approvals on major projects are anticipated in
the near term to enable supply to match demand for projected LNG
requirements. With specific experience and expertise in LNG, Altrad
remains well positioned to benefit from the expected growth in this
market, and is positioning itself for new build activity, as well as
converting the recently completed large-scale construction projects in
Australia into recurring maintenance-based activity.

Nuclear

The nuclear industry is currently experiencing global investment into
new and existing facilities, particularly in UK, China, France and UAE.
We expect this to continue as New Nuclear gains traction, with projects
being considered in Africa and Eastern Europe. As a leader with specific
expertise in maintenance and new build of nuclear facilities, Altrad is
well positioned to benefit from the opportunities of new projects. In
September 2018, Altrad became a member of Hinkley Point MEH Alliance, a
Joint Venture formed at the request of client EDF. The collaboration is
intended to form a blueprint for the delivery of Hinkley Point C, the
UK’s first new nuclear power station in 20 years, and other new nuclear
plants that may be built. Other opportunities are presented by the
continuing markets for late life extensions and decommissioning
activities.

Equipment

The Equipment business continues to perform well and deliver healthy
margins, benefitting from a recovery in Construction activities across
continental Europe. The Group continues to work closely with its
customers to innovate through new product development. As a recognised
developer of one of the best scaffolding systems in the world, the
Group’s modular scaffolding system is becoming a genuine standard for
reliable quality.

Altrad Services’ wide geological footprint presents opportunities for
expansion of Equipment, with a presence in countries with a growing
demand for scaffolding. By leveraging the extensive customer
relationships and local knowledge, the Group expects to drive business
development of Equipment, and traction is already being achieved in this
regard with sales of scaffolding and construction equipment in Middle
East and Asia.

To facilitate the anticipated growth in demand, the Group is currently
implementing the necessary industrial investments to ensure capacity for
growth and the constant innovation of product development to meet
customers’ requirements.

OUTLOOK

Market conditions vary between sectors and geographies. Oil & Gas, the
sector to which Altrad has most exposure, is experiencing uncertainty
following a sharp retraction of crude pricing in Q4’18. Whilst this is
impacting industry spend and pricing, the Group’s principal focus on
maintenance activities provides a certain level of protection against
this volatility.

Bidding activity across the Group remains high and a number of key
multi-year maintenance contracts are due for renewal this coming year.
As a result, the management has confidence that it will gradually build
out the order book through 2019 as it replaces the revenue from
completed LNG projects in Australia. The first quarter of the current
fiscal year has already seen a number of significant contract wins
across different sectors and markets and the Group expects to continue
this momentum throughout the year.

With over one quarter of Group revenue derived from UK, the Group
continues to ensure contingency plans are in place for the various
potential outcomes of Brexit. At present the Group’s activities in UK
are showing good resilience, despite the significant uncertainties
associated with the Brexit process. It is however unclear what the
effect of the transition period and ultimate Brexit will be on the
demand for the Group’s products and services in this market.

The Group is cautiously optimistic that it will deliver another year of
growth in EBITDA, as it has delivered consistently for the past 20
years. The Group expects to extract further synergistic operating
efficiencies from its expanded business platform and continues to assess
complementary inorganic opportunities in line with its stated growth
strategy.

ANNUAL REPORT

For further detail on the Group’s activities and operations, please
access the Annual Report from the following link: https://www.altrad.com/en/publications-and-press-releases.html

ABOUT ALTRAD GROUP

Altrad is a global leader in the provision of industrial services,
generating high added value solutions principally for the Oil & Gas,
Energy, Power Generation, Process, Environment and Construction sectors.
The group is also a recognised leader in the manufacturing of equipment
dedicated to the Construction and Building market. Altrad’s
multidisciplinary services range from engineering and technical services
to maintenance, access solutions and specialised services for industry
leaders. The Group, headquartered in France, employs around 40,000
people and owns established international brands including Cape, Hertel
and Prezioso Linjebygg.

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