Half Year Results 2018

Transcription

1 Half Year Results September East Anglia One

2 Disclaimer This presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/ or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words believes, expects, predicts, intends, projects, plans estimates, aims, foresees, anticipates, targets and similar expressions. The forward-looking statements, contained in this document, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are uncertain and subject to risks. A multitude of factors can cause actual events to differ significantly from any anticipated development. Neither the Company nor any of its officers or employees guarantees that the assumptions underlying such forward-looking statements are free from errors nor does any of the foregoing accept any responsibility for the future accuracy of the opinions expressed in this document or the actual occurrence of the forecasted developments. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither the Company nor any of its subsidiary undertakings nor any such person s officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. 2

3 Agenda 1 Highlights 2 Operational Review 3 Financial Review 4 Strategy and Outlook 5 Appendices 3

4 Highlights Christopher McDonald, CEO 4 Master Marine

5 Highlights Foundations for growth UAE-based construction on East Anglia One project complete with remaining work now focused in Europe. Costs in line with previous guidance Bid pipeline increasing: more activity in oil & gas, assessing competitive potential in new geographies for renewables Backlog at $61.7 million, preferred bidder on opportunities worth nearly $500 million (subject to client final investment decision) IMI maritime yard construction progressing, subcontract for 2 rigs expected in Q Net cash supporting growth through period of low activity Best safety performance since listing Revenue $155.1m Net loss $(21.9)m Net Cash $167.8m Bid Pipeline $4.1bn Safety 0.21 TRIR * * Total Recordable Injury Rate 5

6 Operational Review Christopher McDonald, CEO 6 Hamriyah quayside

7 Operational review Major project completions reduce yard activity to refurb only Top-tier TRIR of TRIR of 0 on Master Marine project Master Marine delivered on time and on budget Backlog ($m) (HY 2017) Rig refurbishment trends indicate industry recovery: 21 completed to date in ongoing 12 stacked East Anglia One 92% complete as of today: All UAE-works completed 42 jackets delivered to Vlissingen for installation and undergoing final inspection 18 flat packs delivered to Belfast for assembly Focus on supervision of safe and timely delivery of product by the subcontractor Cost within guidance 33.4 $61.7m (YE 2017: $137.9m) 28.3 Backlog growth from 2H 2018 Renewables Oil and gas 7

8 Bid pipeline Bid pipeline quality improved Oil and gas: Saudi Aramco s LTA a major priority, but also other opportunities in the region Niche opportunities in new build jackup rigs emerging Timing of awards is Q onwards Bid pipeline $4.1bn* (2017: $3.6bn) Renewables 83% 17% $1.7bn Oil and gas* Renewables: Experience with East Anglia One driving bidding strategy and approach Timing of awards is Q onwards Rigs EPCI 21% 17% $2.4bn 62% *Excluding LTA Rigs EPCI Contracting services 8

9 Financial Review Tony Wright, CFO Rowan Mississippi rig 9

10 Key Financials Performance in line with expectations Revenue in line with forecast Profitability affected by low revenue levels and zero margin on East Anglia One project Strong contribution from rig refurbishment Net cash reduction in line with forecast ($m, unless stated otherwise) HY 2018 HY 2017 Reported results Revenue EBITDA (6.2) 11.5 EBITDA margin (4.0)% 7.2% Profit/(loss) from continuing operations after income tax (21.9) 1.1 Reported diluted earnings/(loss) per share (6.42) 0.30 (US cents) Net cash as at 30 June * *$257.0m as at 31 December 2017 Revenue by segment HY2018 $m 10 HY2017 $m Rigs EPC(I) Contracting services

11 Income statement Margin pressure as a result of East Anglia One loss New Build Rig market challenges Service companies perform well Master Marine project delivered on target IMI start up losses in line with expectations 11

12 Net cash Maintain robust net cash position Cash outflow as per forecast, includes payment for Cameron kits, East Anglia One and other project Working Capital Net cash will continue to reduce moderately in 2H Limited maintenance Capex continues 12

13 Balance sheet Cash investment supports strategy Gearing at low levels Investment in strategic assets Revolver cancelled to reduce costs Strong asset base maintained Current banking facilities expire August 19 Debt package HY18 $m FY17 $m Term loan Working capital facility Revolver Total funded facilities Committed bonding - 50 Balance sheet HY18 $m FY17 $m Strategic investments Project assets evolution New pipe shop Rig kit inventory IMI capital Other Assets Gross Cash Total Assets Tangible Net Assets

14 Financial summary Positioned for growth Losses in line with expectations Successful cost reduction Strong banking syndicate (21.9) H Cost control maintained (18.1) Low gearing Cash to trend downwards in 2H IMI investment US$39m Rig kit inventory US$22m ,084.9 Well positioned for the future Adjusted Net Profit/(Loss) (USD million) Revenue (USD million) Overheads (USD million) 14

15 Strategy and Outlook Christopher McDonald, CEO 15 Stacking area

16 Strategic priorities Derisking exposure to a single market Strengthen position in core markets: Investment in Saudi Maritime Yard strengthens our position in new build jackup market for next decade and beyond Continue to invest in existing UAE facilities Implement EPC(i) strategy Focused effort with installation partner to ascend to the LTA JV with select partners to access complex offshore projects Expand into new markets and geographies Renewables North Sea, Baltic Sea Digitalization Market sectors Lamprell core services Investment Oil & Gas Renewables Rigs Technology Services Facilities EPC(I) People 16

17 Strategic update: Renewables & EPC(I) Renewables (offshore wind): Derisking exposure to oil price Pipeline at $1.7 bn Predominantly European opportunities, with new markets slowly emerging Stronger dialogue with potential clients in the sector due to experience with EA1 Sector may face fabrication capacity shortage Addressable market $3 bn EPC(I) Complex, high-margin work with efficient yard space utilisation Significant upgrade in in-house expertise due to LTA bid work Emerging opportunities outside LTA Addressable market $3 bn 17

18 Strategic update: Saudi Arabia Maritime Yard Construction continues EPC contracts have been awarded Rephasing/optimization of individual zones with overall completion date unchanged Progressing subcontract for the first two rigs at Lamprell s UAE yards award expected later 2018 LTA LTA selection process nearing completion Other opportunities LJ 43 design Established Lamprell Saudi Arabia, a JV servicing the In-Kingdom Value programme 18 18

19 Strategic update: Technology Leveraging core competency to diversify markets and customer base Proprietary rig design: Digital technology development: LJ43 developed with GustoMSC Reduces supply chain risk Selected as preferred rig design for the 20 rigs contracted through ARO Drilling for construction at the IMI Marketing for further opportunities Examining how technology can make us more competitive in executing work in our yards Assessing market needs for big data and digital technology Reviewing partnership options to deliver digital solutions in the market 19

20 Outlook Return to Growth 2018 revenue range $ m Focus on completing the East Anglia 1 project and rebuilding backlog Bid pipeline growth driven by strategic transformation and market recovery 2019 revenue growth $ m underpinned by preferred bidder status/loi on approximately $500 million* *subject to client final investment decision 20

21 Appendices 21 Ensco sail away

22 Financial summary Amounts in $m HY 2018, $m Underlying/ Reported HY 2017 $m Underlying/ Reported Revenue Cost of sales (147.9) (138.5) Gross profit Gross margin % (4.6%) 13.0% G&A (22.7) (18.5) Operating (loss)/ profit (15.7) 2.2 Finance costs - net* (1.8) (3.1) Share of (loss)/ profit in investments accounted using the equity method (3.3) 2.0 (Loss)/ profit before income tax (20.9) 1.2 Income tax expense (1.1) (0.1) (Loss)/ profit for the period (21.9) 1.1 Total profit / (loss) attributable to equity holders (21.9) 1.1 * Represents the net balance of finance costs and finance income 22

23 Revenue split by business streams New build jackups, refurbishment and land rigs Process modules Platforms Foundations Pressure Vessels 9.9 HY 2018 Operations and maintenance, site work and safety services 2.9 HY

24 Safety Focus Cornerstone to attract tier 1 clients 24