Lamprell plc. Interim results presentation - H1 2012

Transcription

1 Interim results presentation - H

2 Interim results presentation - H Agenda Financial summary Operational summary Operational highlights Operational and growth initiatives Markets and business development Financial review Conclusion Appendices 2

3 Financial Summary 3

4 Financial summary for H Revenue increased to $ 528m (H1 2011: $ 384m) Operating loss $ 34m (H1 2011: $ 22m profit) Revenue $ 528m Net loss $ 47m (H1 2011: $ 19m profit) EPS (fully diluted) (18.10) cents (H1 2011: 8.55 cents) No interim dividend proposed (H1 2011: 4.00 cents) Net debt $ 36m (31 Dec 2011: $ 102m) Cash and bank balances 30 June 2012 $ 134m of which restricted cash was $ 101m (31 December 2011: $ 149m of which restricted cash was $ 106m) Bank covenant waivers for 30 June 2012 received Covenants to be restructured during Q ahead of year end testing Net loss $ 47m EPS (18.10) cents No interim dividend proposed IFRS definitions no adjustments to numbers for exceptional items 4

5 Operational summary 5

6 Operational summary As disclosed, delays on Windcarrier 1 & 2 resulted in significant additional costs and liquidated damages, totalling $ 46m of gross contract losses in the period Supply chain delays relating to major components for new build jackups resulting in under utilisation of labour. Delivery dates to Lamprell s customers maintained Order book remains at a historically high level of $ 1,475m* New contract awards $ 743m Order book $ 1,475m Major new contract awards totalling $ 743m* Successful delivery of Hull 108, Seajacks Zaratan, two new land rigs, NDC Makasib and several rig refurbishment projects Yard capacity 925,000 m² LTI frequency rate LTI frequency rate per million man hours of 0.05 compared to UK construction industry average of 2.83 Significant focus on operational remedial actions *at 31 July

7 Windcarrier project issues Vessels are of a complex prototype nature Development of the concept design did not proceed as scheduled due to the prototype nature of these vessels Consequently, production of the detailed engineering overran its forecast schedule and delayed the construction timetable High levels of complexity, predominately related to the vessels integrated power system and the vessels control & automation systems, resulted in commissioning delays Windcarrier 1 delivery Q Windcarrier 2 delivery Q Windcarrier 2 Bold Tern 7

8 Initiatives remedial actions Focus area Actions Project Management Project management structure reorganised to strengthen project cost accountability and visibility Creation of a project control group Engineering re-organisation New head of engineering has been appointed Centralised structure to replace current facility based model Systems improvement ERP review is ongoing to ensure the selected solution is best aligned to manage the business Cost reduction programme Significant focus on timely alignment of cost base to latest revenue forecasts. Cost reduction programme commenced in second quarter Synergy savings delivered in excess of $ 11m target, with further cost reductions anticipated to deliver an additional $ 15m of savings 8 Aligning structure and cost base to latest utilisation levels

9 Project summary Project Type Facility Delivery Seajacks - Zaratan GustoMSC NG-5500c Hamriyah DELIVERED Seajacks - Hydra GustoMSC NG-2500x Hamriyah Q NDC 1 - Makasib Le Tourneau S116E Hamriyah DELIVERED NDC 2 - Muhayimat Le Tourneau S116E Hamriyah Q NDC 3 Le Tourneau S116E Hamriyah Q NDC 4 Le Tourneau S116E Hamriyah Q NDC 5 Le Tourneau S116E Hamriyah Q NDC 6 Le Tourneau S116E Hamriyah Q Eurasia Drilling Company Le Tourneau S116E Hamriyah Q International drilling contractor Le Tourneau S116E Hamriyah Q Greatships Le Tourneau S116E Hamriyah Q Jindal Le Tourneau S116E Hamriyah Q Peforadora Mexico F& G Super M2 Sharjah DELIVERED Leighton Topsides & jackets Sharjah Q Hochtief Liftboat legs Sharjah DELIVERED Fred. Olsen - Brave Tern ('WC 1') GustoMSC NG-9000 Jebel Ali Q Fred. Olsen - Bold Tern ('WC 2') GustoMSC NG-9000 Jebel Ali Q North Sea operator 4,700 tonne utility platform Jebel Ali Q Nexen 4,000 tonne wellhead deck Jebel Ali Q Nexen 10,000 tonne PUQ deck Jebel Ali Q Weatherford 2 x 3000 HP land rigs Jebel Ali DELIVERED 9 Key deliveries during Q3 and Q4 are WC1 and WC2

10 $m Lamprell plc Major new contract awards in 2012 Lamprell has secured major new contract awards during 2012 amounting to $ 743m, including 2 Le Tourneau Super 116E jackup rigs for National Drilling Company (Abu Dhabi) $ 227m Le Tourneau Super 116E jackup rig for an international drilling contractor Major new contract awards $ 743m Seajacks 4 modified Gusto MSC NG 2500X lift boat Two jackets and topsides for Leighton Newbuild Jack Ups Newbuild Lift Boats Platforms 10

11 $m Lamprell plc Order book Order book $ 1,475m* key clients National Drilling Company Eurasia Drilling Company Fred. Olsen Windcarrier Seajacks Greatship Jindal Nexen Leighton Rowan Noble Nabors Saipem 1,200 1, Order book $ 1,475m High level of repeat business 0 Newbuild Jack Ups Newbuild Lift Boats Platforms Rig Refurb Others Rig refurbishment reflects short bid to award cycle Others includes service businesses with a short bid to award cycle *at 31 July Order book at a historically high level $ 1,475m*

12 $m Lamprell plc Bid pipeline Key bid activity includes New build jackups Offshore platforms Liftboats New build land rigs Pressure vessels E&C projects Increased opportunities within the regional platforms market 2,500 2,000 1,500 1,000 Bid pipeline of $ 4,402m Focus on: Payment surety Terms for new contracts taking into account the learning of the Windcarrier projects Newbuild Jack Ups Newbuild Lift Boats Platforms Rig Refurb Land rigs Others 12 Strong bid pipeline of $ 4,402 m

13 Initiatives - growth Focus area Actions Operations and Maintenance ( O&M ) expansion Significant increase in O&M division to capitalise on internal and external opportunities within the region Retention of margin within the Group and greater control over the labour resource and costs Saudi Arabia ( KSA ) expansion Phased expansion into KSA land rig and services sector Utilising existing strong relationships with established Saudi partners Springboard for broader regional growth Kurdish region of northern Iraq ( KRG ) expansion Expansion of our existing KRG operations to incorporate our broader E&C offering Low risk entry model that aligns investment with project awards 13 Phased regional growth and strong O&M expansion

14 Group strategy and markets 14

15 Our key medium term strategic objectives Medium term strategic objectives Core Enhancement of cost control and visibility Increased focus on aligning our cost base to activity levels and strengthening of project controls Capability enhancement Continue the transition to a turnkey provider aligned to our clients needs throughout the complete asset life cycle Capability Continued expansion of our specialist service businesses Continued strong growth into higher margin and lower risk service offerings, and optimise cross selling to maximise margin retention Extend geographic reach Geographic expansion Significant expansion in target growth Middle East markets 15 Extend position as a leading E&C and service company

16 Upstream offshore - markets The market Continued strength in new build jackup market High utilisations and increasing day rates support order growth Lamprell continues to build its market share in the sub-350ft class Demand for larger and more complex rigs Move towards greater drilling capacity and versatility in harsher environments Strong refurbishment demand Aging fleet supports strong refurbishment growth Global New build orders (water depth 0-350ft) Other 36% Dalian 8% ABG 11% Lamprell 28% Keppel Fels 17% Source: ODS-Petrodata Module fabrication demand strengthening* FPSO market returning to growth 134 installations and $68bn spend forecast (81% increase on spend) Services and O&M Strong regional demand continues across the Group s service lines *Source: Douglas-Westwoods World floating production market report 16 Continued strength in the outlook for upstream markets Source: Pareto E&P Survey 2012

17 Services Service division Description Market Position INSPEC Heat treatment, non-destructive testing, mechanical testing, chemical analysis and calibration services Strong demand and scarcity of supply Leading regional provider with excellent reputation Engineering Complete engineering solutions - concept, design and detailed engineering Internal and external opportunities for growth Focused on enhancing capability and risk management Safety solutions for offshore and onshore operations Strong market demand supporting product and service diversification Regional market leader for H2S services Operations & Maintenance Manpower, equipment and materials to support oil and gas assets throughout their full life cycle Consistent demand and strong geographic expansion opportunities Established service provider with strong opportunities for regional expansion 17 Combined Services revenue set to reach $100m in 2013

18 Financial review 18

19 Financial Review summary P&L 38% increase in revenue to $ 528m (H1 2011: $ 384m) primarily driven by new build activity and service businesses Net loss* of $ 47m with a net margin of (8.9)% (H1 2011: net profit $ 19m at a net margin 4.8%) Revenue ($m) $528m $384m Movement in margins driven primarily by: As disclosed, issues on Windcarrier projects resulting in additional costs and liquidated damages ($ 46m of gross contract losses in the period) Component delays resulting in under utilisation of labour Decline in margins on EDC project EBITDA* $ (24) m (H1 2011: $ 25m) No interim dividend (H1 2011: 4.00 cents) H1-12 H1-11 $25m EBITDA ($m) and margin % 6.6% (4.6%) ($24m) H1-12 H1-11 $19m Net earnings ($m) and margin % 4.8% (8.9%) ($47m) H1-12 H *IFRS definitions no adjustments to numbers for exceptional items

20 Financial Review balance sheet Total non-current assets decreased to $ 406.2m (YE 2011: $ 417.1m) Cash and bank balances at 30 June 2012 totalled $ 134.0m (YE 2011: $ 149.4m) Period end net debt was $ 35.7m (YE 2011: $ 101.7m), the reduction reflecting the delivery of Hull 108 and Seajacks Zaratan Net debt comprised $ 134.0m of cash and bank balances of which restricted cash was $101.4m (YE 2011: $149.4m cash and bank balances, $105.5 m restricted cash) and gross debt of $169.7m (YE 2011: $251.1m) Trade and other receivables decreased to $ 637.6m (YE 2011: $ 668.8m) primarily reflecting the deliveries of Hull 108 and Seajacks Zaratan Bank covenant waivers received for 30 June 2012 Balance sheet H $ m $ m Non current assets Current assets Current liabilities (696.3) (689.5) Net current assets Total assets less current liabilities Non current liabilities (36.3) (39.6) Net assets/ equity Net debt/ (cash) Restructure covenants during Q ahead of year end testing 20

21 Financial Review cash flow Net cash inflow from operations of $ 92.9m (H1 2011: $ 21.7m outflow) Working capital movements driven primarily by receipt of final lump sum payments on Hull 108 and Seajacks Zaratan Net cash used in financing activities totalled $ 135.9m (H1 2011: $ 193.5m generated from financing activities) reflecting: Repayment of Tranches A and B of the MIS acquisition facility Partially offset by proceeds from borrowings Dividend payments Finance costs Cash flow H H $ m $ m Net earnings (46.8) 18.6 Depreciation & amortisation Working capital movements (51.5) Others Cash generated from operations 92.9 (21.7) Net finance costs (13.0) (3.0) Margin deposits Net capital expenditure (13.6) (28.0) Dividends (20.8) (19.0) Proceed from related party Borrowings (112.6) - Proceeds from issue of share capital Other Net cash flow (42.6)

22 Conclusion Disappointing performance in H1 Focus on delivery of Windcarrier 1 & 2 in H2 Remedial actions being undertaken to strengthen project management, engineering, processes and systems Forecasting 2012 full year loss 2013 will be a transition year 22

23 Appendices 23

24 Group capacity 24