TIDMLAM
RNS Number : 8487H
Lamprell plc
19 March 2015
19 March 2015
LAMPRELL PLC
("Lamprell" and with its subsidiaries the "Group")
2014 FINANCIAL RESULTS
Strong operational performance drives record financial results
for 2014
Lamprell (ticker: LAM), a leading provider of fabrication,
engineering and contracting services to the onshore and offshore
energy industry, announces its Financial Results for the year ended
31 December 2014.
2014 FINANCIAL RESULTS
2014 2013(1)
(US$ million, unless stated)
Revenue* 1,084.9 1,072.8
Operating profit/(loss)* 109.1 58.7
Profit/(loss) after income tax and before exceptional
items* 93.2 45.1
Profit/(loss) after income tax and after exceptional
items* 93.2 36.7
Profit/(loss) from discontinued operations 24.8 (0.2)
Profit/(loss) after income tax 118.1 36.4
Diluted earnings/(loss) per share (US Cents) 37.4 12.7
Net cash as at 31 December* 272.6 183.8
Dividend per share (US Cents) Nil Nil
(1) Financial results for the year 2013 have been re-presented
due to IFRS 5 (discontinued operations) and further details are
provided in the notes to the Financial Statements.
*For the years 2014 and 2013, the financial results shown above
are from the Group's continuing operations.
Note, exceptional items during 2013 relate to the costs of the
debt refinancing (US$ 8.4 million).
Highlights
Exceptional financial results
-- Excellent financial results driven by robust operational
performance, favourable phasing of project cycles and supported by
early savings from productivity improvements
-- Revenues broadly flat against FY 2013 as expected
-- Record profit levels for 2014, only two years after the challenges of 2012
-- Rights issue and refinancing successfully completed, putting
the Company in a position of relative strength during current
period of industry and market weakness
Strong operational performance and project execution
-- Delivered nine major projects in a single year, a record for the Group
-- Delivery of three further jackup rigs to largest client,
National Drilling Company, strengthening client relationship and
leading to additional jackup orders in November 2014
-- Record-breaking 13,200 tonne production utilities and
quarters deck delivered to Nexen with ten million manhours
completed without a day away from work case
-- Orders for six new build jackup rigs won during 2014 with top tier clients
-- Backlog of US$ 1.2 billion at year-end (31 December 2013: US$
0.9 billion) with bid pipeline at approximately US$ 5.2 billion at
31 December 2014 (31 December 2013: US$ 4.7 billion)
Delivering on our strategic objectives
-- World-class safety performance, achieving highest safety standards in Company's history
-- Leveraging our key strengths to diversify client base with
major awards from new top tier clients
-- Project Evolution progressing well with initial savings realised
-- Organisational restructuring implemented generating overhead reductions
-- Maintaining our focus on core markets, with long-term goal of broadening addressable markets
-- Disposal of a non-core service business completed with a second nearing completion
Current trading and outlook
-- Oil price decline has led to falling oil & gas and renewable energy capex
-- Focus remains on conversion of bid pipeline, with awards for some projects delayed
-- Six new build jackup rig orders, a large piperack module
project and a number of minor refurbishment projects currently
underway and progressing well
-- Options for additional rigs from Ensco and NDC extended to Q4 2015 and Q2 2015 respectively
-- Adjusted revenue coverage at approximately 80% for the year,
affirming earlier guidance for 2015
John Kennedy, Non-Executive Chairman for Lamprell, said:
"2014 was a year of outstanding performance. Record financial
results were driven by strong project execution and cost savings,
and some exceptional factors such as the favourable phasing of the
construction cycles. The successful completion of the rights issue
and refinancing during the year provide the Group with a strong
basis to deliver on our strategy. Lamprell started the New Year in
a position of relative strength, with good revenue coverage for
2015, a solid bidding pipeline and a firm financial platform. The
Board is mindful of the challenges facing the industry in a lower
oil price environment and affirms the revised guidance given in
January."
James Moffat, Chief Executive Officer for Lamprell, said:
"2014 was a year of record operational and business performance
on every level. We completed nine major projects during the year,
including the largest rig conversion and a record-breaking deck for
Nexen. With all the legacy projects now behind us, we were pleased
to secure best ever figures for new orders from clients. Our
performance was further enhanced by early gains from our programme
of productivity improvements and cost efficiencies, which is well
underway. Our safety record reached an industry-leading level and
all these elements, in combination with the stronger balance sheet,
make Lamprell a leaner, fitter and overall stronger business.
With continuing low oil prices, securing new work remains
challenging as the industry adjusts to the new realities. We remain
in a position of relative strength with a strong balance sheet and
high backlog, and will continue to focus on maintaining our
competitive position in the sector."
A presentation for analysts and investors will be held at 9.00
am (UK time) today at JP Morgan Cazenove, 60 Victoria Embankment,
London, EC4Y 0JP and a live webcast will be made available on
Lamprell's website:
http://lamprell.com/investors-centre/reports-and-presentations/2014.aspx
- Ends -
Enquiries:
Lamprell plc
James Moffat, Chief Executive Officer +971 (0) 4 803 9308
Tony Wright, Deputy Chief Financial
Officer +971 (0) 4 803 9308
Natalia Erikssen, Investor Relations +44 (0) 7885 522989
Tulchan Communications, London
Martin Robinson +44 (0) 207353 4200
Martin Pengelley
Chairman's Statement
2014 was a successful year for Lamprell. I am pleased to report
on the significant progress achieved operationally and financially.
Following its return to profitability in 2013, the Group completed
its recovery process in delivering an exceptional financial
performance and a number of major operational milestones. These
results have been driven by strong project execution and major
business improvements, allowing the Group to deliver improved
returns.
Delivering strong performance
This improved performance has been possible as a result of
robust project execution and the implementation of important
structural changes. A strong cost discipline has been established,
with significant reductions achieved. This is being monitored
closely by the Board. The safety and quality standards in our yards
are paramount and in 2014 achieved world-class levels. The Company
has disposed of a non-core business in order that the management
team may focus on its core markets. Lamprell is now leaner, fitter
and stronger, and aiming to accomplish more.
Strategy
Beyond operational performance, Lamprell's overall success is
highly geared to its ability to win new business. In the first half
of 2014, we took steps to overhaul our strategy and the business
development function to ensure that the Group remains competitive.
The Board reviewed the strategy and concluded that there was a need
to focus on our core markets in the short to medium term. Our long
term goal is to broaden our offering into related markets such as
the modular plant and FPSO markets where we have already been
successful and have a proven track record. In doing this we will
leverage the Group's proven expertise in project execution to
diversify our client base. Key strategic principles are: focus on
high quality clients, on improved margin projects and on bids with
a higher probability of winning.
Financial platform and stakeholders
A strong financial platform was put in place in 2014 to enable
the management team to implement our strategy. The rights issue and
refinancing allowed us to ensure there is now a strong balance
sheet and sufficient cash resources to support the strategy
implementation.
In line with our commitment to best practice in corporate
governance, we maintained clear controls and looked to enhance
certain processes such as risk management. Our primary focus was on
greater communication and transparency with our investors when we
explained the drivers behind the rights issue and refinancing; we
appreciate the overwhelming support we received for these
transactions.
Markets
In the final quarter of 2014 we saw a significant deterioration
in the oil & gas markets and reductions in industry capital
expenditure programmes following a steep decline in oil prices. In
a period of uncertain market environment, the Board has ensured
that the management team's remuneration targets are stretching and
closely linked to the Company's strategic objectives. Our
management team is measured against every pillar of our strategy
for success, including Lamprell's safety record, cost management,
delivery of operational efficiencies and financial performance.
John Kennedy
Non-Executive Chairman
Chief Executive Officer's Review
2014 was a year of strong operational delivery for Lamprell,
which led to exceptional financial performance. We have seen
significant improvements across the board, completing the recovery
from prior difficulties and building a strong platform for the
future delivery of our strategy.
Maintaining strong operational performance
Our operational performance in 2014 was consistently strong
throughout the year. We delivered nine major projects, a record for
the Group. We delivered all projects as planned and on budget and
as a result made a number of savings, allowing the Company to
benefit from the release of contingencies and early results from
our programme of productivity improvements and cost efficiencies,
Project Evolution. This had a positive impact on our financial
performance.
This year has seen some major achievements in our yards. The
Nexen production, utilities and quarters ("PUQ") deck made it into
the Guinness World Book of Records. We completed our largest rig
conversion project to date, the "MOS Frontier", without a single
day away from work case. We also delivered the last of the
problematic projects, the "Mercury" Caspian Sea rig, which was a
challenging project with remote operations. We secured three
contracts to build six new jackup rigs, two for Ensco, two for
Shelf Drilling and two more for our largest client, National
Drilling Company ("NDC"). We concluded the year with the delivery
of "Shuwehat", the third rig delivered in 2014 to one client, NDC,
another record for Lamprell.
Safety is paramount to the success of our business and in 2014
we continued to improve the track-record, with world-class
performance reached at the end of the year. Under the helm of a new
VP HSESQ we have cut our total recordable incident rate to 0.28 in
2014, less than half of the figure of 0.67 in 2013.
Delivering on our strategy
The return to profitability in 2013 allowed us to review the
debt and equity structure of the Company from a position of renewed
strength. Having recognised the need for additional financial
firepower to fund our near-term plans and longer-term ambitions,
Lamprell approached its banks and investors for an equity injection
through a rights issue and for a full debt refinancing. The plans
were met with overwhelming support from all parties and resulted in
a fully underwritten rights issue of USD 120 million and new debt
facilities of USD 350 million.
This strengthened balance sheet allowed us to implement the key
elements of our strategy: commencing a major capital investment
programme for our facilities which will improve our operational
performance and strengthen our competitive position by reducing our
costs. This consequently will enable us to broaden our addressable
markets.
Strengthening our competitive position
With the implementation of Project Evolution, Lamprell has been
able to identify a number of measures which will result in a better
layout and a higher degree of automation in our yards, leading to
more efficient and cost effective operations. This formed a key
component of our strategy and half of the funds raised in the
rights issue were directed towards the funding of these measures.
Project Evolution has been under way since mid-2014 and is expected
to reach the full savings runrate in 2016.
Whilst Lamprell remained strong in winning orders based on our
existing key strengths including high standards of safety, quality
and reliability, some of its competitors leveraged the commercial
advantage to offer back-ended payments. The debt refinancing
package secured in the summer of 2014 enables us to offer this
option which effectively levelled the playing field. This
significantly broadened our addressable market and has already
contributed to us securing additional contract wins, albeit without
having to draw on the funding facility.
Market Overview, Current Trading and Outlook
Our financial performance in 2014 was exceptional. We will
maintain the high standards of operational performance which was a
key factor to the results of 2014, however in 2015 our ongoing
projects are at different stages in their construction cycles. In
addition, the wider market environment is weak due to the steep
decline in the oil price in late 2014.
Lamprell entered 2015 in a position of relative strength with a
robust balance sheet and a strong cash position, with a high
proportion of this year's revenue secured and a good bid pipeline.
The sharp market deterioration at the end of the year has brought
significant uncertainty around 2015. Our business has a certain
degree of flexibility built in and we will look to mitigate the
impact on Lamprell but pressure on margins and the inevitable
slowdown is likely to affect everyone.
Our focus will be on maintaining the highest standards of
project execution and using our competitive position to convert our
pipeline into contract wins. Our approach to winning business has
been restructured and improved further with the hire of a new Chief
Commercial Officer and a VP Business Development strengthening our
broader commercial team. The new approach developed by the team
resulted in us winning a record number of awards during 2014. With
a backlog in line with seasonal norms at USD 1.2 billion and a
strong pipeline of nearly USD 5.2 billion, we believe that Lamprell
is well positioned to face the challenges of 2015.
Jim Moffat
Chief Executive Officer
Financial Review
2014 was a year of exceptional financial performance. It was
driven by strong project execution, as well as some cost savings
and exceptional gains. We finished the year with a solid balance
sheet and a strong net cash position.
Results from operations
The Group continued on its path to financial recovery started in
2013. Lamprell's strong operational performance was the main driver
behind our exceptional financial results in 2014.
The Group's total revenue for the year was USD 1,084.9 million,
in line with earlier guidance. The revenue was mainly driven by the
new build segment with a contribution from rig refurbishment,
partially offset by weaker revenues in the offshore and onshore
construction market. The good performance in the refurbishment
business was supported by the large-scale rig conversion project
for MOS which was delivered in 2014. We had 10 refurbishment
projects, albeit of significantly smaller scale.
In 2014, the Group completed a record number of major projects
with some projects being delivered ahead of time and also ahead of
budget. As a result of this improved performance, the project
contingencies were not utilised delivering enhanced margins. This
was also supported by some early savings from Project Evolution
being implemented across the Group, and by our efforts to reduce
overheads.
As a result the Group's gross margin significantly increased
over the previous year to USD 182.1 million from USD 120.0 million.
Lower offshore/onshore construction revenues had a negative mix
impact on margins but this was more than offset by a material
improvement in margins in our new build jackup rig business. This
was partially driven by a more favourable phasing of the
construction cycle, but mainly resulted from the Group's continuing
improvement in project execution. As referred to earlier, initial
procurement savings and productivity gains also contributed to our
strong profitability. Our Land Rig Services and our Engineering
& Construction business units have also contributed to the
improvement in margins.
EBITDA excluding discontinued operations and exceptional items
for the period was USD 137.0 million (2013: USD 84.4 million). The
Group's EBITDA margin increased from 7.9% in 2013 to 12.6% in 2014,
reflecting the improved operating performance of the business.
Finance costs and financing activities
Net finance costs in the period decreased to USD 18.3 million
(2013: USD 22.0 million). Interest costs were USD 1.7 million lower
due to the lower cost of debt following the refinancing in the
summer.
Net profit after exceptional items and earnings per share
The Group recorded a profit for 2014 attributable to the equity
holders of USD 118.1 million (2013: USD 36.4 million), including a
USD 31.3 million gain from the disposal of Inspec. The fully
diluted earnings per share for the year were 37.38 cents (2013:
12.67 cents).
Capital expenditure
The Group's capital expenditure in 2014 increased to USD 22.5
million (2013: USD 14.6 million). The main area of investment
consisted of additions to operating equipment with the major items
being new cranes, a new panel line, welding facilities and
equipment as part of Project Evolution and to a lesser extent
infrastructure. We also continue to invest in our new ERP system,
Oracle, a proven top tier solution that has helped us realign our
processes with best practices and ensure accurate assessment of our
financial performance. The major capital investment programme
enabled by the rights issue has reduced operating costs in 2014,
and will continue to reduce these costs with the major part of the
investment being committed over the course of 2015.
Cash flow and liquidity
The Group's net cash flow from operating activities for 2014
reflected a net outflow of USD 39.8 million (2013: net inflow of
USD 117.7 million) primarily driven by increased working capital
due to the natural cycle of major projects.
Cash and bank balances increased by USD 27.1 million during the
year, resulting from the net proceeds from the rights issue and the
disposal of Inspec, less a net repayment of debt and net cash
outflow from operations.
Borrowing and debt refinancing
In 2013, the Group concluded a refinancing through a syndicate
of banks for an aggregate amount of USD 181.0 million. In May 2014,
the Group agreed with a range of banks a new set of funded
facilities on substantially more favourable terms amounting to USD
350 million replacing the previous facilities. It comprised (a) a
USD 100 million term loan; (b) USD 50 million for general working
capital purposes; and (c) USD 200 million of working capital for
project financing. In addition, the lending banks committed a USD
250 million bonding facility that may be used by the Group for
project bonding requirements in connection with new contract awards
funded by the working capital project financing facility. Along
with greater financial flexibility, the new facilities have
generated initial savings at the end of 2014 and are expected to
deliver lower bonding costs on future projects.
Our borrowings were USD 99.0 million at 31 December 2014 (31
December 2013: USD 160.8 million).
Going concern
After reviewing its cash flow forecasts for a period of not less
than 12 months from the date of signing these financial statements,
the Directors have a reasonable expectation that the Group will
have adequate resources to continue in operational existence for
the foreseeable future. The Group therefore continues to adopt the
going concern basis in preparing its financial statements.
Dividends
The repayment of the balance of term loan facility B under the
2013 debt facility agreement removed the restriction on the payment
of dividends. Given the ambitious investment programme to be funded
by the proceeds of the rights issue in 2014, as well as the
uncertain market environment, the Directors do not currently
support the payment of a final dividend for 2014. However, the
Directors recognize the importance of dividends and remain
optimistic about the future of the Group and will seek to review
and restore the payment of a dividend at the most appropriate
time.
Tony Wright
Deputy Chief Financial Officer
Consolidated income statement
Year ended 31 December Year ended 31 December
2014 2013
Pre-exceptional Exceptional Pre-exceptional Exceptional
Items items items items
Note USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Continuing
operations
Revenue 5 1,084,890 - 1,084,890 1,072,811 - 1,072,811
Cost of sales 6 (902,810) - (902,810) (952,817) - (952,817)
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Gross profit 182,080 182,080 119,994 - 119,994
Selling and
distribution
expenses 7 (1,773) - (1,773) (1,591) - (1,591)
General and
administrative
expenses 8 (72,700) - (72,700) (61,278) - (61,278)
Other
gains/(losses)
- net 11 1,456 - 1,456 1,535 - 1,535
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Operating
profit 109,063 - 109,063 58,660 - 58,660
Finance costs 10 (20,516) - (20,516) (14,545) (8,414) (22,959)
Finance income 10 2,166 - 2,166 975 - 975
-------------------- --------------------- -------------------- -------------------- -------------------- --------------------
Finance costs -
net (18,350) - (18,350) (13,570) (8,414) (21,984)
Share of profit
of investments
accounted for
using
the
equity method 2,991 - 2,991 1,110 - 1,110
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Profit before
income
tax 93,704 - 93,704 46,200 (8,414) 37,786
Income tax
expense (484) - (484) (1,091) - (1,091)
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Profit for the
year from
continuing
operations 93,220 - 93,220 45,109 (8,414) 36,695
Discontinued
operations
Loss for the
year
from
discontinued
operations 17 (6,433) - (6,433) (252) - (252)
Gain on
disposal
of subsidiary 31,270 31,270 - - -
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Profit for the
year
attributable
to the equity
holders of the
Company 118,057 - 118,057 44,857 (8,414) 36,443
========= ========= ========= ========= ========= =========
Earnings per
share
attributable
to
the equity
holders of the
Company 12
Basic 37.41c 12.67c
========== =========
Diluted 37.38c 12.67c
========== ==========
Consolidated statement of comprehensive income
2014 2013
Note USD'000 USD'000
Profit for the
year 118,057 36,443
Other
comprehensive
loss
Items that will
not be
reclassified
to profit or
loss:
Remeasurement of
post-employment
benefit
obligations 21 (3,742) (737)
Items that may
be reclassified
subsequently
to profit or
loss:
Currency
translation
differences (372) (66)
_________ __________
Other
comprehensive
loss for the
year (4,114) (803)
_______________________________________________________________________________________________________ _______________________________________________________________________________________________________
Total
comprehensive
income for the
year 113,943 35,640
======== ========
Total
comprehensive
income/(loss)
for the
year
attributable to
the equity
holders
of
the Company
arises from:
Continuing
operations 120,363 35,536
Discontinued
operations 17 (6,420) 104
======== ========
Consolidated balance sheet
As at 31 December
2014 2013
Note USD'000 USD'000
ASSETS
Non-current assets
Property, plant and equipment 13 139,343 148,323
Intangible assets 14 204,726 213,026
Investment accounted for using
the equity method 5,118 5,615
Trade and other receivables 15 4,932 -
Derivative financial instruments 22 55 -
Cash and bank balances 16 12,517 -
------------------------ ------------------------
Total non-current assets 366,691 366,964
------------------------ ------------------------
Current assets
Inventories 14,560 11,685
Trade and other receivables 15 398,687 327,318
Derivative financial instruments 22 14 161
Cash and bank balances 16 359,108 344,573
------------------------ ------------------------
772,369 683,737
Assets of disposal group classified
as held for sale 17 15,228 23,843
------------------------ ------------------------
Total current assets 787,597 707,580
------------------------ ------------------------
Total assets 1,154,288 1,074,544
------------------------ ------------------------
LIABILITIES
Current liabilities
Borrowings 25 (20,136) (56,493)
Trade and other payables 23 (317,603) (424,702)
Derivative financial instruments 22 (269) -
Provision for warranty costs
and other liabilities 24 (15,812) (5,400)
Current tax liability (167) (57)
------------------------ ------------------------
(353,987) (486,652)
Liabilities of disposal group
classified as held for sale 17 (10,546) (4,832)
------------------------ ------------------------
Total current liabilities (364,533) (491,484)
------------------------ ------------------------
Net current assets 423,064 216,096
------------------------ ------------------------
Non-current liabilities
Borrowings 25 (78,843) (104,258)
Provision for employees' end
of service benefits 21 (38,752) (36,046)
------------------------ ------------------------
Total non-current liabilities (117,595) (140,304)
------------------------ ------------------------
Total liabilities (482,128) (631,788)
------------------------ ------------------------
Net assets 672,160 442,756
========== ==========
EQUITY
Share capital 19 30,346 23,552
Share premium 19 315,995 211,776
Other reserves 20 (18,655) (22,133)
Retained earnings 344,474 229,561
------------------------ ------------------------
Total equity attributable to
the equity holders of the Company 672,160 442,756
========== ==========
Consolidated statement of changes in equity
Share Share Other Retained
capital premium reserves earnings Total
Note USD'000 USD'000 USD'000 USD'000 USD'000
At 1 January 2013 23,552 211,776 (22,069) 192,808 406,067
---------------- ------------------ ------------------ ------------------ ------------------
Profit for the year - - - 36,443 36,443
Other comprehensive income:
Re-measurement of post-employment
benefit obligations - - - (737) (737)
Currency translation
differences 20 - - (66) - (66)
---------------- ------------------ ------------------ ------------------ ------------------
Total comprehensive income
for the year - - (66) 35,706 35,640
---------------- ------------------ ------------------ ------------------ ------------------
Transactions with owners:
Share-based payments:
* value of services provided - - - 1,049 1,049
Transfer to legal reserve 20 - - 2 (2) -
---------------- ------------------ ------------------ ------------------ ------------------
Total transactions with
owners - - 2 1,047 1,049
---------------- ------------------ ------------------ ------------------ ------------------
At 31 December 2013 23,552 211,776 (22,133) 229,561 442,756
---------------- ------------------ ------------------ ------------------ ------------------
Profit for the year - - - 118,057 118,057
Other comprehensive income:
Re-measurement of post-employment
benefit obligations - - - (3,742) (3,742)
Currency translation
differences 20 - - (372) - (372)
---------------- ------------------ ------------------ ------------------ ------------------
Total comprehensive income
for the year - - (372) 114,315 113,943
---------------- ------------------ ------------------ ------------------ ------------------
Transactions with owners:
Share-based payments:
* value of services provided - - - 1,084 1,084
Treasury shares purchased 19 - - - (486) (486)
Proceeds from shares
issued (net) 19 6,794 104,219 - - 111,013
Disposal of a subsidiary 17 - - 3,850 - 3,850
---------------- ------------------ ------------------ ------------------ ------------------
Total transactions with
owners 6,794 104,219 3,850 598 115,461
---------------- ------------------ ------------------ ------------------ ------------------
At 31 December 2014 30,346 315,995 (18,655) 344,474 672,160
======== ======== ======== ======== ========
Lamprell plc
Consolidated cash flow statement
2014 2013
Note USD'000 USD'000
Operating activities
Cash (used
in)/generated from
operating
activities 28 (39,433) 118,869
Tax paid (374) (1,178)
____________________________________________________________________________________________ ____________________________________________________________________________________________
Net cash (used
in)/generated from
operating
activities (39,807) 117,691
____________________________________________________________________________________________ ____________________________________________________________________________________________
Investing activities
Additions to
property, plant and
equipment (18,947) (12,007)
Proceeds from sale
of property, plant
and equipment 317 367
Additions to
intangible assets 14 (3,595) (2,615)
Finance income 10 2,166 975
Dividend received
from joint ventures 3,488 174
Proceeds from
disposal of a
subsidiary
- net 17 59,312 -
Movement in deposit
with original
maturity of more
than
three months 16 5,633 (10,276)
Movement in
margin/short-term
deposits
under lien 3,249 56,381
____________________________________________________________________________________________ ____________________________________________________________________________________________
Net cash provided by
investing
activities 51,623 32,999
____________________________________________________________________________________________ ____________________________________________________________________________________________
Financing activities
Proceeds from shares
issued (net of
expenses) 19 111,013 -
Treasury shares
purchased 19 (486) -
Proceeds from
borrowings 100,000 160,000
Repayments of
borrowings (160,000) (137,510)
Finance costs (21,014) (22,421)
Dividends paid (18) -
____________________________________________________________________________________________ ____________________________________________________________________________________________
Net cash generated
from financing
activities 29,495 69
____________________________________________________________________________________________ ____________________________________________________________________________________________
Net increase in cash
and cash
equivalents 41,311 150,759
Cash and cash
equivalents,
beginning
of the year from
continued
operations 275,479 126,372
Cash and cash
equivalents,
beginning
of the year from
discontinued
operations 1,586
Exchange rate
translation (372) (66)
____________________________________________________________________________________________ ____________________________________________________________________________________________
Cash and cash
equivalents, end of
the year 318,004 277,065
======= =======
Cash and cash
equivalents from
continuing
operations 16 312,352 275,479
Cash and cash
equivalents from
discontinued
operations 5,652 1,586
____________________________________________________________________________________________ ____________________________________________________________________________________________
Total 318,004 277,065
======= =======
Lamprell plc
Notes to the financial statements for the year ended 31 December
2014
1 Legal status and activities
Lamprell plc ("the Company") and its subsidiaries ("the Group")
are engaged in the upgrade and refurbishment of offshore jackup
rigs; fabrication; assembly and new build construction for the
offshore oil and gas sector and renewable sector, including jackup
rigs and lift boats; Floating Production, Storage and Offloading
("FPSO") and other offshore and onshore structures; and oilfield
engineering services, including the upgrade and refurbishment of
land rigs.
2 Basis of preparation
The Group is required to present its annual consolidated
financial statements for the year ended 31 December 2014 in
accordance with EU adopted International Financial Reporting
Standards ("IFRS"), International Financial Reporting
Interpretations Committee ("IFRIC") interpretations and those parts
of the Isle of Man Companies Acts 1931-2004 applicable to companies
reporting under IFRS.
This financial information set out in this preliminary
announcement does not constitute the Group's statutory accounts for
the year ended 31 December 2014. The financial information has been
extracted from the consolidated financial statements for the year
ended 31 December 2014 approved by the Board of Directors on 18
March 2015 upon which the auditors' opinion is not modified, and
did not contain a statement under section 15(4) or 15(6) of the
Isle of Man Companies Act 1982.
The financial information comprises the Group balance sheets as
of 31 December 2014 and 31 December 2013 and related Group income
statement, statement of comprehensive income, cash flows, statement
of changes in equity and related notes for the twelve months then
ended, of Lamprell plc. This financial information has been
prepared under the historical cost convention except for the
measurement at fair value of share options, financial assets at
fair value through profit or loss and derivative financial
instruments.
The preliminary results for the year ended 31 December 2014 have
been prepared in accordance with the Listing Rules of the London
Stock Exchange.
The preparation of financial information in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Group financial
information are disclosed in Note 4.
3 Accounting policies
The accounting policies used are consistent with those set out
in the audited financial statements for the year ended 31 December
2013 and reviewed interim financial information for the period
ended 30 June 2014, which are available on the Company's website,
www.lamprell.com.
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances. The Group makes estimates and assumptions concerning
the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are as follows:
Revenue recognition
The Group uses the percentage-of-completion method in accounting
for its contract revenue. Use of the percentage-of-completion
method requires the Group to estimate the stage of completion of
the contract to date as a proportion of the total contract work to
be performed in accordance with the accounting policy. As a result,
the Group is required to estimate the total cost to completion of
all outstanding projects at each period end. The application of a
10% sensitivity to management estimates of the total costs to
completion of all outstanding projects at the year-end would result
in the revenue and profit increasing by USD 4.4 million (2013: USD
28.3 million) if the total costs to complete are decreased by 10%
and the revenue and profit decreasing by USD 4.4 million (2013: USD
29.7 million) if the total costs to complete are increased by
10%.
Estimated impairment of goodwill
The Group tests goodwill for impairment annually or more
frequently if events or changes in circumstances indicate a
potential impairment. Goodwill is monitored by management at the
'cash generating unit relating to upgrade and refurbishment of
offshore jackup rigs, fabrication, assembly and new build
construction for the offshore oil and gas and renewables sectors,
including FPSO and other offshore and onshore structures, oilfield
engineering services, including the upgrade and refurbishment of
land rigs' ("CGU(1) ").
The recoverable amount of CGU(1) is determined based on
value-in-use calculations. These calculations require the use of
estimates.
The amount of headroom is USD 290.6 million (2013: 187.1
million).
If the revenue growth rate used was to differ by 0.5% from
management's estimates, in isolation, there would be a reduction of
USD 5.7 million (2013: USD 3 million) in the headroom if the
revenue growth rate was lower or the headroom would be higher by
USD 5.7 million (2013: USD 3 million) if the revenue growth rate
was higher.
If the discount rate used was to differ by 0.5% from
management's estimates, in isolation, there would be a reduction in
the headroom of USD 55.2 million (2013: USD 27.6 million) if the
discount rate was to increase or an increase in the headroom by USD
63.5 million (2013: USD 31.2 million) if the discount rate was to
decrease.
If the net profit as a percentage of revenue used was to differ
by 0.5% from management's estimates, in isolation, there would be
an increase of USD 62.1 million (2013: USD 56.1 million) in the
headroom if the net profit was to increase or there would be an
reduction in the headroom of USD 62.1 million (2013: USD 56.1
million) in the headroom if the net profit was to decrease.
If the terminal value growth rate used was to differ by 0.5%
from management's estimates, in isolation, there would be a
reduction in the headroom of USD 43.4 million (2013: USD 19.9
million) if the terminal value growth rate was lower or an increase
in the headroom of USD 49.8 million (2013: USD 22.5 million) if the
terminal value growth rate was higher.
Employees' end of service benefits
The rate used for discounting the employees' post-employment
defined benefit obligation should be based on market yields on high
quality corporate bonds. In countries where there is no deep market
for such bonds, the market yields on government bonds should be
used. In the UAE, there is no deep market for corporate bonds and
no market for government bonds and therefore, the discount rate has
been estimated using the US AA-rated corporate bond market as a
proxy. On this basis, the discount rate applied was 3.5% (2013:
4.25%). If the discount rate used was to differ by 0.5 points from
management's estimates, the carrying amount of the employee's end
of the service benefits provision at the balance sheet date would
be an estimated USD 1.5 million (2013: USD 1.3 million) lower or
USD 1.6 million (2013: USD 1.4 million) higher. If the salary
growth rate used was to differ by 0.5 points from management's
estimates, the carrying amount of the employee's end of the service
benefits provision at the balance sheet date would be an estimated
USD 1.5 million (2013: USD 1.5 million) higher or USD 1.6 million
(2013: USD 1.4 million) lower.
5 Segment information
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker has been identified as the
Executive Directors who make strategic decisions. The Executive
Directors review the Group's internal reporting in order to assess
performance and allocate resources. Management has determined the
operating segments based on these reports.
The Executive Directors consider the business mainly on the
basis of the facilities from where the services are rendered.
Management considers the performance of the business from Sharjah
("SHJ"), Hamriyah ("HAM") and Jebel Ali ("JBA") in addition to the
performance of Land Rig Services ("LRS"), Sunbelt, Engineering and
Construction ("E&C") and Operations and Management
("O&M").
SHJ, HAM, JBA and LRS are reported as a single segment (Segment
A). Services provided from Sunbelt, E&C and O&M do not meet
the quantitative thresholds required by IFRS 8, and the results of
these operations are included in the "all other segments"
column.
The reportable operating segments derive their revenue from the
upgrade and refurbishment of offshore jackup rigs, fabrication,
assembly and new build construction for the offshore oil and gas
and renewables sectors, including FPSO and other offshore and
onshore structures, oilfield engineering services, including the
upgrade and refurbishment of land rigs.
Sunbelt derives its revenue from safety and training services,
E&C derives its revenue from site works, compression and
chemicals and O&M derives its revenue from the labour supply
and other operations and maintenance services.
All other
Segment A segments Total
USD'000 USD'000 USD'000
Year ended 31
December
2014
Total segment
revenue 1,009,582 87,898 1,097,480
Inter-segment
revenue - (12,590) (12,590)
_______________________________________________________________________________________________________ _______________________________________________________________________________________________________ _______________________________________________________________________________________________________
Revenue from
external
customers 1,009,582 75,308 1,084,890
======== ======== ========
Gross operating
profit 199,000 36,803 235,803
======== ======== ========
Year ended 31
December
2013
Total segment
revenue 1,009,818 71,082 1,080,900
Inter-segment
revenue (525) (7,564) (8,089)
_______________________________________________________________________________________________________ _______________________________________________________________________________________________________ _______________________________________________________________________________________________________
Revenue from
external
customers 1,009,293 63,518 1,072,811
======== ======== ========
Gross operating
profit 127,881 31,665 159,546
======== ======== ========
Sales between segments are carried out on agreed terms. The
revenue from external parties reported to the Executive Directors
is measured in a manner consistent with that in the consolidated
income statement.
The Executive Directors assess the performance of the operating
segments based on a measure of gross profit. The staff, equipment
and certain subcontract costs are measured based on standard cost.
The measurement basis excludes the effect of the common expenses
for yard rent, repairs and maintenance and other miscellaneous
expenses. The reconciliation of the gross operating profit is
provided as follows:
2014 2013
USD'000 USD'000
Gross operating
profit for the
reportable
segment as
reported to the
Executive
Directors 199,000 127,881
Gross operating
profit for all
other
segments as
reported to the
Executive
Directors 36,803 31,665
Unallocated:
Under-absorbed
employee and
equipment
costs (11,841) (9,819)
Repairs and
maintenance (21,776) (13,168)
Yard rent and
depreciation (15,249) (9,600)
Others (4,857) (6,965)
_______________________________________________________________________________________________________ _______________________________________________________________________________________________________
Gross profit 182,080 119,994
_______________________________________________________________________________________________________ _______________________________________________________________________________________________________
Selling and
distribution
expenses (Note
7) (1,773) (1,591)
General and
administrative
expenses
(Note 8) (72,700) (61,278)
Other
gains/(losses)
- net (Note 11) 1,456 1,535
Finance costs
(Note 10) (20,516) (22,959)
Finance income
(Note 10) 2,166 975
Others 2,507 19
_______________________________________________________________________________________________________ _______________________________________________________________________________________________________
Profit for the
year from
continuing
operations 93,220 36,695
======== ========
Information about segment assets and liabilities is not reported
to or used by the Executive Directors and accordingly, no measures
of segment assets and liabilities are reported.
The breakdown of revenue from all services is as follows:
2014 2013
USD'000 USD'000
New build
activities -
oil and gas 715,946 580,200
New build
activities -
renewables 32,445 95,070
Upgrade and
refurbishment
activities 172,016 122,529
Offshore
construction 81,902 195,619
Others 82,581 79,393
_______________________________________________________________________________________________________ _______________________________________________________________________________________________________
1,084,890 1,072,811
======== ========
The Group's principal place of business is in the UAE. The
revenue recognised in the UAE with respect to services performed to
external customers is USD 1,075.2 million (2013: USD 1,057.3
million), and the revenue recognised from the operations in other
countries is USD 9.7 million (2013: USD 15.5 million).
Certain customers individually accounted for greater than 10% of
the Group's revenue and is shown in the table below:
2014 2013
USD'000 USD'000
External
customer
A 275,026 332,792
External
customer
B 155,768 147,830
External
customer
C 144,952 112,967
_______________________________________________________________________________________________________ _______________________________________________________________________________________________________
575,746 593,589
======== ========
The revenue from these customers is attributable to Segment A.
The above customers in 2014 are not necessarily the same customers
in 2013.
6 Cost of sales
2014 2013
USD'000 USD'000
Materials and
related
costs 420,939 410,149
Subcontract
costs 187,357 223,406
Staff costs
(Note 9) 163,614 186,638
Subcontract
labour 38,394 54,887
Equipment
hire 19,252 17,849
Depreciation 23,979 16,991
Repairs and
maintenance 21,776 13,167
Yard rent 6,707 5,966
Warranty
costs - net
(Note 24) 6,989 5,400
Others 13,803 18,364
____________________________________________________________________________________________ ____________________________________________________________________________________________
902,810 952,817
======= =======
7 Selling and distribution expenses
2014 2013
USD'000 USD'000
Travel 1,055 945
Advertising
and marketing 480 498
Entertainment 144 96
Others 94 52
____________________________________________________________________________________________ ____________________________________________________________________________________________
1,773 1,591
======= =======
8 General and administrative expenses
2014 2013
USD'000 USD'000
Staff costs
(Note 9) 38,519 31,934
Legal,
professional
and
consultancy
fees 5,067 5,306
Depreciation 3,627 5,068
Amortisation
of intangible
assets (Note
14) 11,895 9,416
Utilities and
communication 718 634
Provision for
impairment of
trade
receivables,
net of
amounts
recovered 6,871 1,804
Bank charges 286 252
Others 5,717 6,864
____________________________________________________________________________________________ ____________________________________________________________________________________________
72,700 61,278
======= =======
9 Staff costs
2014 2013
USD'000 USD'000
Wages and
salaries 116,490 127,572
Employees' end
of service
benefits (Note
21) 6,229 5,872
Share based
payments -
value of
services
provided 1,084 1,001
Other benefits 78,330 84,127
____________________________________________________________________________________________ ____________________________________________________________________________________________
202,133 218,572
======= =======
Staff costs are
included in:
Cost of sales
(Note 6) 163,614 186,638
General and
administrative
expenses (Note
8) 38,519 31,934
____________________________________________________________________________________________ ____________________________________________________________________________________________
202,133 218,572
____________________________________________________________________________________________ ____________________________________________________________________________________________
Number of
employees at
31 December 6,912 7,482
======= =======
10 Finance costs - net
2014 2013
USD'000 USD'000
Finance
costs
Bank
guarantee
charges 11,232 5,906
Interest on
bank
borrowings 6,006 7,693
Facility
fees - 36
Commitment
fees 1,728 431
Others 1,550 8,893
____________________________________________________________________________________________ ____________________________________________________________________________________________
20,516 22,959
======= =======
Finance income
Finance income comprises interest income on bank deposits of USD
2.17 million (2013: USD 0.98 million).
11 Other gains/(losses) - net
2014 2013
USD'000 USD'000
Exchange
gain/(loss) -
net 1,164 468
Profit/(loss)
on disposal
of property,
plant
and equipment 162 (385)
Fair value
gain on
derivatives (156) 501
Others 286 951
____________________________________________________________________________________________ ____________________________________________________________________________________________
1,456 1,535
======= =======
12 Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the profit
attributable to the equity holders of the Company by the weighted
average number of ordinary shares in issue during the year,
excluding ordinary shares purchased by the Company and held as
treasury shares (Note 19).
(b) Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. For the free
share awards, options under the executive share option plan and the
performance share plan, a calculation is performed to determine the
number of shares that could have been acquired at fair value
(determined as the average annual market share price of the
Company's shares) based on the monetary value of the subscription
rights attached to outstanding share awards/options. The number of
shares calculated as above is compared with the number of shares
that would have been issued assuming the exercise of the share
awards/options.
2014 2013
USD'000 USD'000
The calculations of earnings per share
are based on the following profit and numbers
of shares:
Profit for the year 118,057 36,443
----------------------- -----------------------
Weighted average number of shares for basic
earnings per share 315,591,024 287,546,196
Adjustments for:
Assumed exercise of the free share awards 3,640 65,725
Assumed vesting of the performance share
plan 242,361 38,419
----------------------- -----------------------
Weighted average number of shares for diluted
earnings per
share 315,837,025 287,650,340
----------------------- -----------------------
Weighted average number of shares for basic
earnings per share (previously stated) 260,348,415
Impact of bonus element of the rights issue 27,546,196
-----------------------
Weighted average number of shares for basic
earnings per share (revised) 287,546,196
===========
Earnings per share:
Basic 37.41c 12.67c
=========== ===========
Diluted 37.38c 12.67c
=========== ===========
Earnings per share from continued operations:
Basic 29.54c 12.76c
Diluted 29.52c 12.76c
=========== ===========
Earnings/(loss) per share from discontinued
operations:
Basic 7.87c (0.09)c
Diluted 7.86c (0.09)c
=========== ===========
On 26 June 2014, the Company announced a rights issue of five
shares for every sixteen shares held at a discounted price of 88
pence per share resulting in the issue of 81,363,469 new ordinary
shares (Note 19). The calculation of the weighted average number of
ordinary shares for the current period was affected by the issue of
the new ordinary shares. The Group has treated the discount element
of the rights issue as if it were a bonus issue, using the
theoretical ex-rights price of 132 pence per share. The effect of
this is to increase the weighted average number of shares reported
in the prior period, with a resulting reduction in the reported
basic and diluted earnings per share for the previous period. The
adjustment factor, to effect the increase in the weighted average
number of shares, has been calculated by dividing the share price
immediately before the shares were quoted ex-rights (146p) with the
theoretical ex-rights price (132p), giving an adjustment factor of
1.104. These adjustments to the comparative EPS calculations do not
impact the consolidated income statement and consolidated balance
sheet previously reported.
13 Property, plant and equipment
Fixtures Capital
Buildings
& Operating and office Motor work-in-
infrastructure equipment equipment vehicles progress Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Cost
At 1 January
2013 109,304 128,134 15,999 4,671 11,909 270,017
Additions 5,547 2,054 792 300 3,314 12,007
Transfers 10,359 416 314 13 (11,102) -
Assets of
disposal
group
classified
as held for
sale
(Note 17) (1,303) (10,030) (871) (1,577) (432) (14,213)
Other
disposals (675) (3,721) (27) (885) - (5,308)
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
At 31
December
2013 123,232 116,853 16,207 2,522 3,689 262,503
Additions 1,991 8,842 1,978 1,113 4,944 18,868
Transfers 1,445 1,332 154 315 (3,246) -
Assets of
disposal
group
classified
as held for
sale
(Note 17) - - (820) (95) - (915)
Other
disposals (48) (643) (109) (766) - (1,566)
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
At 31
December
2014 126,620 126,384 17,410 3,089 5,387 278,890
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Depreciation
At 1 January
2013 21,551 67,136 12,208 3,273 - 104,168
Charge for
the
year 6,542 14,413 2,502 527 - 23,984
Accumulated
depreciation
of disposal
group
classified
as
held for
sale
(Note 17) (465) (7,191) (716) (1,021) - (9,393)
Other
disposals (356) (3,544) (24) (655) - (4,579)
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
At 31
December
2013 27,272 70,814 13,970 2,124 - 114,180
Charge for
the
year 9,042 14,052 3,485 1,075 - 27,654
Accumulated
depreciation
of disposal
group
classified
as
held for
sale
(Note 17) - - (781) (95) - (876)
Other
disposals (41) (588) (88) (694) - (1,411)
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
At 31
December
2014 36,273 84,278 16,586 2,410 - 139,547
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Net book
value
At 31
December
2014 90,347 42,106 824 679 5,387 139,343
======== ======== ======== ======== ======== ========
At 31
December
2013 95,960 46,039 2,237 398 3,689 148,323
======== ======== ======== ======== ======== ========
14 Intangible assets
Trade Customer Leasehold Work-in-
Goodwill name relationships rights Softwares progress Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Cost
At 1 January
2013 180,539 22,335 19,323 8,338 1,536 - 232,071
Additions - - - - - 2,615 2,615
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
At 31
December
2013 180,539 22,335 19,323 8,338 1,536 2,615 234,686
Additions - - - - 56 3,539 3,595
Transfers - - - - 2,777 (2,777) -
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
At 31
December
2014 180,539 22,335 19,323 8,338 4,369 3,377 238,281
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Amortisation
At 1 January
2013 - 4,129 7,045 899 171 - 12,244
Charge for
the
year (Note
8) - 2,641 4,831 579 1,365 - 9,416
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
At 31
December
2013 - 6,770 11,876 1,478 1,536 - 21,660
Charge for
the
year (Note
8) - 3,765 7,447 488 195 - 11,895
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
At 31
December
2014 - 10,535 19,323 1,966 1,731 - 33,555
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Net book
value
At 31
December
2014 180,539 11,800 - 6,372 2,638 3,377 204,726
======== ======== ======== ======== ======== ======== ========
At 31
December
2013 180,539 15,565 7,447 6,860 - 2,615 213,026
======== ======== ======== ======== ======== ======== ========
15 Trade and other receivables
2014 2013
USD'000 USD'000
Trade
receivables 48,622 158,161
Other
receivables
and
prepayments 21,620 16,068
Advance to
suppliers 6,533 811
Receivables
from a
related
party (Note
18) 68 197
__________________________________________________________________________ __________________________________________________________________________
76,843 175,237
Less:
Provision
for
impairment
of trade
receivables (11,622) (7,715)
__________________________________________________________________________ __________________________________________________________________________
65,221 167,522
Amounts due
from
customers on
contracts 185,476 57,557
Contract work
in progress 152,922 102,239
__________________________________________________________________________ __________________________________________________________________________
403,619 327,318
======= =======
Non-current
portion:
Advance to
suppliers 4,932 -
__________________________________________________________________________ __________________________________________________________________________
Current
portion 398,687 327,318
__________________________________________________________________________ __________________________________________________________________________
Amounts due
from
customers on
contracts
comprise:
Costs
incurred to
date 1,042,589 618,302
Attributable
profits 190,090 113,562
_______________________________________----------------------------------------___________________________________ ____________________________________________________-----------------------______________________
1,232,679 731,864
Less:
Progress
billings (1,047,203) (674,307)
_______________________________________-------------------------------------------___________________________________ ___________________________________________________-------------------_______________________
185,476 57,557
========= ========
16 Cash and bank balances
2014 2013
USD'000 USD'000
Cash at bank and
on hand 82,945 48,738
Term deposits and
margin
deposits-Current 276,163 295,835
__________________________________________________________________________ __________________________________________________________________________
Cash and bank
balances 359,108 344,573
Term deposits and
margin
deposits-Non
current 12,517 -
Less:
Margin/short
term deposits
under
lien (12,312) (16,500)
Less: Deposits
with original
maturity
of more than 3
months (46,961) (52,594)
__________________________________________________________________________ __________________________________________________________________________
Cash and cash
equivalents (for
the purpose
of the cash flow
statement) 312,352 275,479
======= =======
17 Non-current assets held for sale and discontinued operations
Discontinued operations
Profit/(loss) from discontinued operations comprises:
2014 2013
Inspec Litwin Total Inspec Litwin Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Revenue 3,008 16,385 19,393 20,842 18,960 39,802
Cost of sales (2,080) (21,082) (23,162) (13,821) (23,701) (37,522)
General and
administrative
expenses (193) (2,550) (2,743) (1,421) (1,009) (2,430)
Other
gains/losses
- net 2 280 282 110 1 111
Finance costs -
net - (203) (203) (3) (210) (213)
__________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________
Profit from
discontinued
operations 737 (7,170) (6,433) 5,707 (5,959) (252)
Re-measurement
of
post-employment
benefit
obligations - 13 13 (260) 616 356
__________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________
Total
comprehensive
income arising
from
discontinued
operations 737 (7,157) (6,420) 5,447 (5,343) 104
==== ===== ===== ===== ===== =====
The main elements of the cash flows are as follows:
2014 2013
Inspec Litwin Total Inspec Litwin Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Operating
cash
flows 2,954 5,315 8,269 6,336 1,287 7,623
Investing
cash
flows (74) 30 (44) (1,645) (840) (2,485)
Financing
cash
flows - (203) (203) (4,753) (210) (4,963)
__________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________
Total cash
flows 2,880 5,142 8,022 (62) 237 175
====== ===== ====== ====== ===== ======
Inspec
During 2013, the Group decided to dispose of one of its
subsidiaries (Inspec). This transaction was completed on 3 March
2014.
Litwin
During the year, the Group decided to dispose of one of its
subsidiaries (Litwin), which at the balance sheet date, meets the
criteria for assets held for sale and discontinued operations as
per IFRS 5. On 1 December 2014 the Group entered into a share
purchase agreement with the potential buyer to sell this entity.
This transaction is not complete as at the date of signing of
financial statements.
Disposal group
The major classes of assets and liabilities of disposal group
are as follows:
2014 2013
Inspec Litwin Total Inspec Litwin Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Assets
classified
as held for
sale
Property,
plant
and
equipment
(Note
13) - 39 39 4,820 - 4,820
Inventories - - - 460 - 460
Trade and
other
receivables
(net
of provision
for
impairment
of trade
receivables) - 8,543 8,543 16,922 - 16,922
Cash and bank
balances - 6,646 6,646 1,641 - 1,641
__________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________
- 15,228 15,228 23,843 - 23,843
===== ====== ====== ====== ===== ======
Liabilities
classified
as held for
sale
Provision for
employees'
end of
service
benefits
(Note
21) - 333 333 1,487 - 1,487
Trade and
other
payables - 10,213 10,213 3,345 - 3,345
__________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________
- 10,546 10,546 4,832 - 4,832
===== ====== ====== ===== ===== =====
The commitments of disposal group are as follows:
2014 2013
Inspec Litwin Total Inspec Litwin Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Operating lease
commitments - - - 107 - 107
===== ===== ===== ===== ===== =====
Capital commitments
for purchase of
operating equipment - - - 127 - 127
===== ===== ===== ===== ===== =====
Bank guarantees - 9,395 9,395 23 - 23
===== ===== ===== ===== ===== =====
Net cash inflow on the subsidiary disposed during the year is as
follows:
Inspec
USD'000
Property, plant and equipment 4,618
Inventories 459
Trade and other receivables 18,246
Cash and cash equivalents 4,522
Provision for employees' end of service benefits (1,568)
Trade and other payables (3,920)
__________________________________________________________
Net assets 22,357
Merger reserve (Note 20) 3,850
Provision for minimum purchase obligations (Note
24) 3,423
Expenses on disposal 2,411
Provision for impairment of trade receivables 1,934
Provision for warranty 1,000
Gain on disposal 31,270
__________________________________________________________
Cash consideration on disposal 66,245
Less: Expenses on disposal (2,411)
Less: Cash and cash equivalents transferred as a
part of disposal (4,522)
__________________________________________________________
Net cash inflow for the purpose of consolidated cash
flow statement 59,312
======
18 Related party balances and transactions
Related parties comprise LHL (which owns 33% of the issued share
capital of the Company), certain legal shareholders of the Group
companies, Directors and key management personnel of the Group and
entities controlled by Directors and key management personnel. Key
management includes the Directors (Executive and Non-Executive) and
members of the executive committee. Related parties, for the
purpose of the parent company financial statements, also include
subsidiaries owned directly or indirectly and joint ventures. Other
than those disclosed elsewhere in the financial statements, the
Group entered into the following significant transactions during
the year with related parties at prices and on terms agreed between
the related parties:
2014 2013
USD'000 USD'000
Key management compensation 8,746 7,074
======= =======
Legal and professional services 730 1,221
======= =======
Sales to joint ventures 267 416
======= =======
Purchases from joint ventures 350 249
======= =======
Sponsorship fees and commissions paid
to legal
shareholders of subsidiaries 866 382
======= =======
Key management compensation comprises:
Salaries and
other employee
benefits 6,537 6,875
Share based
payments -
value of
services
provided 435 -
Post-employment
benefits 1,774 199
____________________________________________________________________________________________ ____________________________________________________________________________________________
8,746 7,074
======= =======
Due from/due to related parties
Due from related parties
2014 2013
USD'000 USD'000
Maritime Industrial Services Arabia Co.
Ltd. (current) 68 197
======= =======
19 Share capital and share premium
Issued and fully paid ordinary shares
Share
Equity share capital premium
Number USD'000 USD'000
At 1 January
2013 and 31
December
2013 260,363,101 23,552 211,776
Add: New
shares
issued
during the
period 81,363,469 6,794 112,785
Less:
Transaction
costs
relating
to the
rights
issue - - (8,566)
---------------------------------------------------------------------------------------- --------------------------------------------------------
__________________________________________________________ __________________________________________________________ ---------------------------------------------------__________________________________________________________
At 31
December
2014 341,726,570 30,346 315,995
========= ======= =======
The total authorised number of ordinary shares is 400 million
shares (2013: 400 million shares) with a par value of 5 pence per
share (2013: 5 pence per share).
During the year, the Company successfully carried out a fully
underwritten rights issue. The rights issue offered five new
ordinary shares for every sixteen ordinary shares held by each
shareholder at an issue price of 88 pence per new ordinary share.
The rights issue was fully subscribed and paid up as at 30 June
2014. The Company issued 81,363,469 new ordinary shares through the
rights issue and received proceeds amounting to USD 119.6
million.
The paid-in capital from the rights issue is split between the
par value of the shares issued (USD 6.8 million) and the share
premium at the date of issue (USD 112.8 million) less any directly
attributable transaction costs (USD 8.6 million). These new
ordinary shares will rank pari passu in all respects with the
existing ordinary shares, including the right to all future
dividends and other distributions declared, made or paid.
During 2014, Lamprell plc employee benefit trust ("EBT")
acquired 189,111 shares (2013: Nil) of the Company. The total
amount paid to acquire the shares was USD 0.49 million (2013: Nil)
and has been deducted from the consolidated retained earnings.
During 2014, 187,580 shares (2013: Nil) amounting to USD 0.50
million (2013: Nil) were issued to employees on vesting of the free
shares and 16,217 shares (31 December 2013: 14,686 shares) were
held as treasury shares at 31 December 2014. The Company has the
right to reissue these shares at a later date. These shares will be
issued on the vesting of the free shares/performance shares/share
options granted to certain employees of the Group.
20 Other reserves
Merger Translation Total
Legal reserve reserve reserve
USD'000 USD'000 USD'000 USD'000
At 1 January 2013 96 (22,422) 257 (22,069)
Currency translation differences - - (66) (66)
Transfer from retained
earnings 2 - - 2
------------------ ------------------ ------------------ ------------------
At 31 December 2013 98 (22,422) 191 (22,133)
Currency translation differences - - (372) (372)
Disposal of a subsidiary
(Note 23) - 3,850 - 3,850
------------------ ------------------ ------------------ ------------------
At 31 December 2014 98 (18,572) (181) (18,655)
======== ======== ======== ========
Legal reserve
The Legal reserve relates to subsidiaries (other than the
subsidiaries incorporated in free zones) in the UAE and the State
of Qatar. In accordance with the laws of the respective countries,
the Group has established a statutory reserve by appropriating 10%
of the profit for the year of such companies. Such transfers are
required to be made until the reserve is equal to, at least, 50%
(UAE) and 33.3% (State of Qatar) of the issued share capital of
such companies. The legal reserve is not available for
distribution.
Merger reserve
On 11 September 2006, the Group acquired 100% of the legal and
beneficial ownership of Inspec from LHL for a consideration of USD
4 million. This acquisition was accounted for using the uniting of
interests method and the difference between the purchase
consideration (USD 4 million) and the share capital of Inspec (USD
0.2 million) was recorded in the Merger reserve. On the disposal of
Inspec during the period, this reserve has been recycled to the
consolidated income statement and presented as part of the gain on
disposal of a subsidiary (Note 23).
On 25 September 2006, the Company entered into a share for share
exchange agreement with LEL and LHL under which it acquired 100% of
the 49,003 shares of LEL from LHL in consideration for the issue to
LHL of 200,000,000 shares of the Company. This acquisition has been
accounted for using the uniting of interests method and the
difference between the nominal value of shares issued by the
Company (USD 18.7 million) and the nominal value of LEL shares
acquired (USD 0.1 million) has been recorded in the Merger
reserve.
21 Provision for employees' end of service benefits
In accordance with the provisions of IAS 19, management has
carried out an exercise to assess the present value of its
obligations at 31 December 2014 and 2013 using the projected unit
credit method, in respect of employees' end of service benefits
payable under the Labour Laws of the countries in which the Group
operates. Under this method, an assessment has been made of an
employee's expected service life with the Group and the expected
basic salary at the date of leaving the service. The obligation for
end of service benefit is not funded.
The movement in the employees' end of service benefit liability
over the year is as follows:
2014 2013
USD'000 USD'000
At 1 January 36,046 38,095
Current
service
cost 4,739 5,287
Interest
cost 1,701 1,198
Actuarial
losses 3,742 737
Benefits
paid (7,143) (7,784)
Liabilities
of disposal
group
classified
as held for
sale (Note
17) (333) (1,487)
____________________________________________________________________________________________ ____________________________________________________________________________________________
At 31
December 38,752 36,046
======= =======
22 Derivative financial instruments
2014 2013
---------------------------------------------- ------------------------------------------------
Notional Notional
contract contract
amount Assets Liabilities amount Assets Liabilities
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Derivatives held
at fair value
through profit
or loss 2,899 - 269 1,654 161 -
Interest rate
swaps 100,000 69 - - - -
---------------- ------------ ------------ ---------------- ------------ ------------
Total 102,899 69 269 1,654 161 -
======== ====== ====== ======== ====== ======
Less non-current
portion:
Interest rate
swaps 80,000 55 - - - -
---------------- ------------ ------------ ---------------- ------------ ------------
Current portion 22,899 14 269 1,654 161 -
---------------- ------------ ------------ ---------------- ------------ ------------
During 2014, the Group entered into an interest rate swap to
switch floating interest rate to fixed interest rate on the Group's
borrowings. This derivative did not qualify for hedge accounting
and is carried at fair value through profit or loss. The notional
principal amount at the date of inception of these contracts was
USD 100 million. This contract matures in various instalments
within fifty seven months from the date of inception. The fair
value at the 31 December 2014 of this derivative was USD 0.07
million.
During 2012, the Group entered into a forward contract to sell
USD for Euros. This derivative did not qualify for hedge accounting
and is carried at fair value through profit or loss. The notional
principal amount at the date of inception of these contracts was
EUR 20.8 million. This contract matured in various instalments
within twenty two months from the date of inception. The fair value
at the 31 December 2013 of this derivative was USD 0.2 million. The
fair value gain on derivative is recorded in 'other gains/(losses)
- net' in the consolidated income statement.
This risk is monitored on an ongoing basis with reference to the
current fair value, a proportion of the notional amount of the
contracts and the liquidity of the market. To control the level of
credit risk taken, the Group assesses counterparties, using the
same techniques as for other counterparties.
23 Trade and other payables
2014 2013
USD'000 USD'000
Trade
payables 30,754 31,247
Accruals 138,169 203,497
Amounts due
to
customers
on
contracts 148,680 189,940
Dividend
payable - 18
____________________________________________________________________________________________ ____________________________________________________________________________________________
317,603 424,702
======= =======
Amounts due
to
customers
on
contracts
comprise:
Progress
billings 477,583 1,116,466
Less: Cost
incurred
to date (299,010) (883,808)
Less:
Recognised
profits (29,893) (42,718)
____________________________________________________________________________________________ ____________________________________________________________________________________________
148,680 189,940
======= =======
24 Provision for warranty costs and other liabilities
Minimum
Warranty purchase
costs obligations Total
USD'000 USD'000 USD'000
At 1 January 2013 - - -
Charge during the
year 5,400 - 5,400
__________________________________________________________ __________________________________________________________ __________________________________________________________
At 31 December
2013 5,400 - 5,400
Charge during the
year 9,000 3,423 12,423
Released/utilised
during the year (2,011) - (2,011)
______________________-----------------____________________________________ ______________________--------------------____________________________________ ------___________________________________________________
At 31 December
2014 12,389 3,423 15,812
====== ====== ======
Warranty costs charged during the year relates to management's
assessment of potential claims under contractual warranty
provisions.
25 Borrowings
2014 2013
USD'000 USD'000
Bank term loans 98,979 160,751
======= =======
The bank borrowings are repayable as follows:
Current (less than
1 year) 20,136 56,493
Non-current (2 to 5
years) 78,843 104,258
____________________________________________________________________________________________ ____________________________________________________________________________________________
98,979 160,751
======= =======
26 Commitments
(a) Operating lease commitments
The Group leases land and staff accommodation under various
operating lease agreements. The remaining lease terms of the
majority of the leases are between four to twenty years and are
renewable at mutually agreed terms.
The future minimum lease payments payable under operating leases
are as follows:
2014 2013
USD' 000 USD' 000
Not
later
than
one
year 7,570 7,528
Later
than
one
year
but
not
later
than
five
years 10,912 11,625
Later
than
five
years 39,236 42,002
____________________________________________________________________________________________ ____________________________________________________________________________________________
57,718 61,155
======= =======
(b) Other commitments
2014 2013
USD' 000 USD' 000
Letters of credit for purchase of materials
and operating
equipment - 1,062
======= =======
Capital commitments for construction of
facilities 4,219 2,241
======= =======
Capital commitments for purchase of operating
equipment
and computer software 14,966 1,954
======= =======
27 Bank guarantees
2014 2013
USD' 000 USD' 000
Performance/bid
bonds 90,063 115,140
Advance payment,
labour visa and
payment
guarantees 276,757 321,052
____________________________________________________________________________________________ ____________________________________________________________________________________________
366,820 436,192
======= =======
The various bank guarantees, as above, were issued by the
Group's bankers in the ordinary course of business. Certain
guarantees are secured by 100% cash margins, assignments of
receivables from some customers and in respect of guarantees
provided by banks to the Group companies, they have been secured by
parent company guarantees. In the opinion of the management, the
above bank guarantees are unlikely to result in any liability to
the Group.
28 Cash generated from operating activities
Year ended 31 December
2014 2013
Notes USD'000 USD'000
Operating activities
Profit before income tax including discontinued
operations 118,541 37,534
Adjustments for:
Share based payments - value of services
provided 1,084 1,049
Depreciation 27,935 23,984
Amortisation of intangible assets 14 11,895 9,416
Share of profit from investment in joint
ventures (2,991) (1,110)
Provision for warranty costs 5,989 5,400
(Profit)/loss on disposal of property,
plant and equipment (162) 362
Provision for slow moving and obsolete
inventories 24 (678)
Provision for impairment of trade receivables,
net of amounts recovered 5,278 1,172
Provision for employees' end of service
benefits 6,560 6,485
Gain on disposal of a subsidiary 17 (31,270) -
Loss/(gain) on derivative financial
instruments 11 156 (501)
Finance costs 20,719 23,172
Finance income 10 (2,166) (975)
-------------- ---------------
Operating cash flows before payment
of employees' end of service benefits
and changes in working capital 161,592 105,310
Payment of employees' end of service
benefits (7,182) (7,784)
Changes in working capital:
Inventories before movement in provision (2,898) 1,758
Derivative financial instruments 22 205 1,492
Trade and other receivables before movement
in provision for impairment of trade
receivables (94,857) 52,937
Trade and other payables, excluding
movement in dividend payable (96,293) (34,844)
-------------- ---------------
Cash (used in)/generated from operating
activities (39,433) 118,869
======= =======
29 Statutory Accounts
This financial information is not the statutory accounts of the
Company and the Group, a copy of which is required to be annexed to
the Company's annual return to the Companies Registration Office in
Isle of Man. A copy of the statutory accounts in respect of the
year ended 31 December 2014 will be annexed to the Company's annual
return for 2014. Consistent with prior years, the full financial
statements for the year ended 31 December 2014 and the audit report
thereon will be circulated to shareholders at least 20 working days
before the AGM. A copy of the statutory accounts required to be
annexed to the Company's annual return to the Companies
Registration Office in respect of the year ended 31 December 2013
has been annexed to the Company's annual return for 2013.
30 Directors' responsibilities statement
We confirm that to the best of our knowledge:
The financial statements, have been prepared in accordance with
the applicable set of accounting standards, give a true and fair
view of the assets, liabilities and financial position and profit
or loss of the company and the undertakings included in the
consolidation taken as a whole; and,
This announcement includes a fair review of the development and
performance of the business and the position of the company and the
undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face.
Further information is available on the Company's website,
www.lamprell.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LIFFSVFIALIE
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