Friday 2 August 2019

Lamprell announced the following update on its performance in the year to date.

Operational update

The Belfast-based assembly of the final jackets for the East Anglia One project has now completed. All 60 jackets have been installed by the client and the parties are in discussions around commercial close out of the project.

Fabrication on the Moray East project is progressing well, safely and in line with the schedule announced in the Group’s Full Year Results on 21 March 2019. Steel cutting commenced in June and welding works are now well underway. Yard activities for this project are benefiting from the recent incremental capital investments made to improve project efficiencies and throughput for jackets in the renewables sector.

The rig refurbishment segment continues to attract a good flow of work. In the first six months of 2019, Lamprell completed nine refurbishment projects and received eight rigs in their yards for various refurbishment works, as well as adding two new contracts which are due to arrive in their yards during the second half of the year. Lamprell are currently stacking 12 rigs in Sharjah and Hamriyah, the majority are warm stacked and they see a gradual, albeit small, increase in the scope of work performed.

Construction at the IMI yard in Saudi Arabia is progressing. Dredging and all other ground improvement works have been completed with the site now handed over to EPC contractors for construction works. All four of the fabrication zones at the yard are expected to be commissioned for operation in late 2022.

Lamprell continue to engage with the client on the specifics of the two newbuild jackup rigs from the IMI joint venture.

Balance Sheet update

Net cash has reduced to approximately US$50 million as at 30 June, subject to audit, but is likely to improve in the second half of 2019 due to timing of payments on current projects.

Lamprell’s existing debt facility is due to expire in August 2019 and they have secured an extension to the current facility until mid December 2019 as they negotiate a new facility with a syndicate of local and international banks to provide sufficient headroom for the business.

Outlook

Due to the delays with a number of awards, Lamprell narrow their revenue guidance for 2019 to US$275-350 million. They currently have coverage for 100% of the bottom end of the range, with the high end of the range being contingent on new awards. Despite the improving outlook, Lamprell will not see a year on year improvement in the financial performance of the business due to a combination of the previously mentioned delays in contract awards and the retention of capability to execute the expected pipeline of new business.

At US$6.3 billion, the bid pipeline is strong in their target sectors and in line with previously reported figures. Proposal activity remains high although the pace of new awards remains slow. Bidding in the renewables industry continues to be buoyant where they are targeting a number of opportunities which they expect will come to fruition later in 2019 and 2020. Lamprell have seen early interest from the Middle East customer base in both jackup and land rigs, which supports previously announced output growth plans from the region in the medium term.

Lamprell will announce its 2019 interim financial results on 19 September 2019.