TIDMLAM
RNS Number : 9657S
Lamprell plc
23 March 2016
23 March 2016
LAMPRELL PLC
("Lamprell" and with its subsidiaries the "Group")
2015 FINANCIAL RESULTS
Financial performance in line with expectations
Margins maintained despite challenging environment
2015 FINANCIAL RESULTS
2015 2014
(USD million, unless stated)
Revenue 871.1 1,084.9
EBITDA 90.0 137.0
EBITDA margin 10.3% 12.6%
Profit from continuing operations after
income tax 66.5 93.2
Reported diluted earnings/per share (US
cents) 18.9 37.4
Net cash as at 31 December 210.3 272.6
Dividend per share (US Cents) Nil Nil
Financial highlights
-- Profit of USD 66.5 million ahead of market expectations on
the back of strong operational performance and contribution from
efficiency and productivity measures
-- Revenues of USD 871.1 million, slightly below earlier
guidance due to the impact of the market downturn
-- EBITDA margin down from the exceptional level of 12.6% in
2014 to a more normalised level of 10.3%, with pricing pressure
partly offset by positive impact of higher productivity and cost
efficiencies
-- Robust cash position of USD 210.3 million maintained despite
spending on Project Evolution and the working capital cycle
Operational highlights
-- High levels of activity with our yards close to full capacity in 2H and into 2016
-- Strong operational performance with three major projects
delivered safely, on time, on budget and to high quality
standards
-- Option with NDC for a new jackup converted in April; further
awards from Petrofac for additional modules, now totalling 45 units
for the landmark Upper Zakum project, Abu Dhabi
-- Backlog of USD 740 million (31 December 2014: USD 1.2
billion) of which 90% is attributable to 2016, with bid pipeline
slightly higher at approximately USD 5.4 billion (31 December 2014:
USD 5.2 billion)
-- Safety remains a high priority, with an outturn total recordable incident rate of 0.31
-- Phase 2 of Project Evolution, our programme of productivity
improvements and cost efficiencies, commenced
Strategy in place
-- Strategy reviewed and refined during the year in light of the prolonged market downturn
-- Prospects pipeline assessed and composition refocused to
maximise overall likelihood of awards
-- Near-term business development efforts shifted towards more
resilient markets such as the Middle East where we have a
competitive position
-- Strategic alliances targeted to enable involvement in large projects
-- Memorandum of Understanding relating to potential
participation in a Maritime Yard in Saudi Arabia signed in January
2016
Current trading and outlook
-- Four major deliveries expected during the course of 2016, with all projects progressing well
-- Bid pipeline of USD 5.4 billion remains extensive, however
delays in awards continue to affect conversion rate; 90% of backlog
attributable to 2016
-- Challenging market environment expected to affect the industry throughout 2016
-- Revenues for FY2016 currently expected to be around 5% below 2015 levels
-- Maintaining business flexibility with overhead cost
reductions and further cost and productivity improvements from
additional opportunities identified through Project Evolution
-- Continuing efforts to leverage Lamprell's regional expertise and competitive advantage
John Kennedy, Executive Chairman for Lamprell, said:
"2015 was a challenging year for the global energy industry and
Lamprell began the year in a position of relative strength, with a
high level of backlog and a strengthened balance sheet, which
allowed the Group to deliver a robust performance. Although we have
been affected by the slow-down in new awards worldwide as companies
have delayed project sanctions, Lamprell has shown resilience and
has been quick to react and adapt. We have refined our strategy and
structured our operations so as to remain competitive and to be
well-prepared for another challenging year in 2016. At the same
time, we have not lost sight of our strategic objectives by
building a foundation for longer-term growth. We continue to
diversify our bid pipeline, pursue strategic alliances and have
recently announced early stage discussions regarding our potential
participation in the Maritime Yard in Saudi Arabia. In the
meantime, our cost advantages and strong balance sheet will help us
to compete in a very challenging market as the downturn is expected
to continue through 2016."
James Moffat, Chief Executive Officer for Lamprell, said:
"Lamprell's operational performance has been consistently strong
over the past few years and I am pleased to see that continuing
throughout 2015, resulting in financial performance in line with
expectations in the face of market headwinds. Having successfully
implemented Project Evolution, the benefits from this programme of
cost efficiencies and productivity improvements have proven to be
key to both our operational and our financial results in 2015 and
that will continue in 2016. We have been able to maintain our
competitiveness in a market with significant downward pressure on
pricing. As a result, not only have we maintained healthy margins,
but this also helped us win one of only three rigs awarded globally
in 2015. It seems unlikely that the markets will return to full
recovery in 2016 and so we currently expect our full year revenues
for 2016 to be around 5% below 2015 levels. Our business retains a
high degree of flexibility leaving us sufficient room to undertake
further measures to adapt to the market environment and preserve
our long term future."
The management team will hold a presentation for research
analysts at 9.00am at Holborn Bars (138-142 Holborn, London EC1
2NQ). The live webcast will be accessible on Lamprell's website and
on the following link:
http://webcasting.brrmedia.co.uk/broadcast/56e1a8234f1d147d54d0fc36.
The Company will hold its 2016 annual general meeting on 15 May
2016 in Dubai, United Arab Emirates.
- Ends -
Enquiries:
Lamprell plc
John Kennedy, Executive Chairman +971 (0) 4 803 9308
James Moffat, Chief Executive Officer +971 (0) 4 803 9308
Tony Wright, Chief Financial Officer +971 (0) 4 803 9308
Natalia Erikssen, Investor Relations +44 (0) 7885 522 989
Tulchan Communications, London +44 (0) 207 353 4200
Martin Robinson
Martin Pengelley
Notes to editors
Lamprell, based in the United Arab Emirates ("UAE") and with
over 40 years' experience, is a leading provider of fabrication,
engineering and contracting services to the offshore and onshore
oil & gas and renewable energy industries. The Group has
established leading market positions in the fabrication of
shallow-water drilling jackup rigs, liftboats, land rigs, and rig
refurbishment projects, and it also has an international reputation
for building complex offshore and onshore process modules and fixed
platforms.
Lamprell employs more than 9,000 people across multiple
facilities, with its primary facilities located in Hamriyah,
Sharjah and Jebel Ali, all of which are in the UAE. In addition,
the Group has facilities in Saudi Arabia (through a joint venture
agreement). Combined, the Group's facilities cover approximately
1,000,000 m2 with 2 km of quayside.
Lamprell is listed on the London Stock Exchange (symbol
"LAM").
Chairman's statement
Challenging market backdrop
Contrary to the predictions of many market participants, oil
prices continued to slide throughout 2015. Oil and gas companies
around the world reacted by gradual, and in some cases drastic,
cuts to their capital expenditure.
Lamprell is not immune to the oil sector headwinds but we are
pleased to report on our demonstrated ability to withstand these
challenges. Along with other energy industry contractors, we have
seen delays in contract awards but we have taken steps to adapt by
changing our approach to new business development.
Maintaining a competitive position
In difficult times, companies often make the mistake of losing
focus on their long -term goals. Lamprell's strong position allowed
us to withstand the storm without compromising our future growth
plans. We managed to remain competitive and continue to implement
our strategy.
Similar to most of our peers, our pipeline conversion was
affected by project delays and cancellations. Nevertheless our
bid-to-win ratio remained healthy by industry standards and this is
an important factor indicating Lamprell's strong competitive
position. It gives comfort about our ability to recover from the
difficult contracting environment.
We also judge our strength by our ability to compete without
undermining Lamprell's financial performance or commercial
position. In the context of increased pricing pressure, where
numerous market players saw gradual margin erosion, we have been
able to remain profitable. The gains delivered through Project
Evolution allowed us to protect our normalised margins whilst
enabling us to offer attractive propositions in a tough market.
This business flexibility and our strong client relationships have
helped us maintain leadership in the jackup market, with a win of
the ninth rig from National Drilling Company ("NDC"), one of only
three jackup rig orders placed worldwide in 2015.
Focus on the future
(MORE TO FOLLOW) Dow Jones Newswires
March 23, 2016 03:00 ET (07:00 GMT)
Whilst we are taking steps to ensure we successfully weather the
current storm in the sector, we anticipate a recovery in the energy
markets, as do most industry experts, and so we are also continuing
to focus on our future. We have reviewed our strategy for
robustness, redirecting our marketing efforts from slower
international regions around the world to the Middle East where we
can leverage our position of strength.
As a Board, we have also spent considerable time assessing our
medium-term positioning in the market and potential sources of
growth for Lamprell. With this in mind, we have identified
strategic partnerships as a potential route to a step-change in the
scale of projects to target. In line with this plan, in January
2016 we announced a Memorandum of Understanding with Saudi Aramco,
Bahri and Hyundai Heavy Industries regarding a potential
partnership for collaboration on the Maritime Complex in Saudi
Arabia. The discussions are still at an early stage, but this could
become a sizeable business opportunity for Lamprell. I took on the
responsibility of Executive Chairman to identify opportunities for
strategic initiatives and other means to grow the business in an
outward facing role. Our work on potential alliances continues, and
we will update our shareholders on progress as appropriate.
Strong Board
In this endeavour, I have benefited from the support of a strong
Board. Following the departure of Michael Press and the passing of
Peter Whitbread during 2015, Lamprell has enhanced the Board's
independence and composition with the addition of two Directors
with impressive experience and Ellis Armstrong's appointment as
Senior Independent Director. Debra Valentine brings significant
industry knowledge coupled with expertise in corporate
transactions. Mel Fitzgerald is a seasoned executive with 30 years
of industry experience. It was also pleasing to promote from
within, with the appointment of Tony Wright to the Board in the
role of Chief Financial Officer.
Lamprell's Board will be completed with the recruitment of a new
CEO following Jim Moffat's announced retirement from the full-time
CEO position in 2016. Lamprell will continue to benefit from Jim's
expertise for a year following his retirement but I would like to
take this opportunity to thank him and the wider senior management
team for their dedication and drive to secure a strong future for
the Group.
I would also like to thank our shareholders for their support
through these challenging times. The Board will continue to work
tirelessly to deliver the strategy firm in our belief in Lamprell's
future.
John Kennedy
Executive Chairman
Chief Executive Officer's Review
After a year of exceptional financial results in 2014, Lamprell
has maintained a strong operational performance and built on the
strong business position towards long-term growth. The focus is now
on executing our strategy.
2015 will certainly be remembered as a difficult year for the
industry, but for Lamprell it was an important turning point. After
a year of recovery in 2013 and the exceptional performance in 2014,
this year has shown the underlying robustness of Lamprell's
business, with its ability to be flexible and adapt to the changing
environment. In 2015, we demonstrated that Lamprell is resilient
enough to return to normalised performance, even in the context of
a challenging market.
Maintaining high activity levels
Overall, our performance across the key metrics was strong. We
focused on the elements under our control, which allowed us to
manage the impact of the external environment. Operationally, we
have done well, delivering three major projects on time, on budget
and to high safety and quality standards. We have seen an extension
in scope of the project we are fabricating for Petrofac, a
testament to our performance. Our yards remained full throughout
the second half of the year.
The strength of our client relationships is a key driver of our
performance, and we continued to develop these through our
collaborative approach. Having awarded Lamprell a contract for the
ninth in a series of jackup rigs, NDC subsequently extended its
options with Lamprell to a current total of three options. We also
offered the service of stacking client rigs in our facilities in
the spirit of current and future cooperation.
New build jackup rigs were the largest contributor to our
revenue this year, with offshore/onshore construction suffering
from a slow-down in the market downturn. The challenging
environment has also significantly impacted the contribution from
our walk-in business, with rig refurbishment revenue reduced by
more than half compared to 2014, which is the reason behind our
total revenue being slightly below our earlier guidance. Our land
rigs business unit performed broadly in line with our expectations,
albeit reflecting the slow-down in the industry, and completed 13
projects in total during 2015.
Maximising operational performance through improvements
During the course of the year we improved significantly our
efficiency and productivity in the yards. The implementation of
Project Evolution was almost entirely completed by the end of the
year, with a new panel line fully operational and significant
improvements in automation.
We started to see the benefits in terms of productivity almost
immediately upon completion of each component of the project. As
you would expect with the introduction of new equipment and
training requirements, some of the initiatives took time to ramp up
to their full run-rate but we have benefited from the improvements
throughout the year. For example welding, which constitutes a major
component in fabrication with approximately 30% of total manhours,
has seen a dramatic step up as we modernised our processes. The
beam-cutting robots cut beams to exact size many times faster and
more accurately than a human can.
We have also optimised painting, crane and scaffolding services,
as well as our use of yard space and assets. As a result, we have
been able to accommodate the construction of seven concurrent
jackup rigs in our Hamriyah yard, a record for the Group.
At the time of the start of Project Evolution, we expected full
payback within three to four years. While this remains appropriate
guidance, we delivered better savings than first anticipated during
2015, whilst also implementing the Project within budget and the
timeframe specified originally. The savings and efficiencies
generated by Project Evolution allowed us to protect our margins
whilst at the same time remaining competitive in a market with
increased pricing pressure. With the recent appointment of Niall
O'Connell as COO a strong focus will be on driving these
operational improvements even further. Phase 2 of Project Evolution
has commenced with the approval of a new pipeshop.
Our safety record throughout the year was stable with a total
recordable incident rate around 0.3. The Jebel Ali and Dubai
facilities also achieved a major milestone, having now operated for
three years without a day away from work case, a significant
achievement given the nature of our business. We have set new
improvement goals and are looking at new ways to strengthen the
safety culture further within the workforce and prevent all
avoidable incidents.
Focus on remaining competitive in a challenging market
environment
As drilling programmes started to be scaled back in response to
weak oil prices, the pace of the contract awards has slowed down
across the whole supply chain. Along with our peers, we suffered
from this and this is reflected in the lack of major awards during
the second half of the year. The slow-down in order intake has
however had an impact on our backlog, which stood at USD 740
million at period end and provides reasonable revenue coverage for
the current year with approximately 90% attributable to 2016.
In the first half of the year, we were successful in converting
one of the jackup rig options with NDC and we saw an award of
additional modules on the Abu Dhabi project for our client,
Petrofac, with the total now standing at 45 preassembled racks,
units and modules. We have also seen a number of smaller contract
awards across our businesses, including a contract award for
suction caps and buoyancy tanks from a new client. In our drive to
expand our offering, we also built our first land rig of Lamprell's
proprietary design, which we started marketing towards the end of
the year. The initial feedback from potential customers has been
positive and we believe it will be an attractive product for Middle
East clients, having been specifically designed for the region.
Despite a healthy bid-to-win rate being maintained, the
conversion rate of our pipeline suffered from a slow-down in awards
across the global markets. Whilst bidding activity levels are high
and our bidding pipeline is extensive, we continue to be affected
by the industry-wide trend of projects drifting to the right. In
response to this slow-down we have continued to improve our
approach to business development and, specifically, we dynamically
adapted the composition of our bid pipeline throughout the year to
address the changing circumstances. We regularly reassess the
likelihood of sanction or proactively replace the delayed projects
with new bids more likely to be awarded in the near future. Our bid
pipeline currently stands at USD 5.4 billion, which is at
comparable level to last year's, whilst its composition has
changed. In practice, this was driven by a conscious shift away
from the quieter international markets to more buoyant regional
markets such as the Middle East, which maintains higher activity
levels in the current environment. The Company, due to its
geographic location, believes it is relatively well placed to
capitalise on this comparative market strength.
(MORE TO FOLLOW) Dow Jones Newswires
March 23, 2016 03:00 ET (07:00 GMT)
In our effort to minimise the impact of the downturn on our near
and medium term performance, we have streamlined the organisational
structure with efficiencies and overhead reductions and we expect
to generate further efficiencies this year. The high activity
levels to date have meant that despite maintaining flexibility,
Lamprell did not have to adjust its operations to a quieter market,
unlike many other companies in our sector, however we continuously
review our ability to react to a significant drop in activity
should action be required. We value this additional room for
flexibility, particularly this far into the market downturn, as an
important competitive advantage for Lamprell.
Outlook
The strong foundations laid over the last 18 months have created
a structure for us to be competitive and deliver a strong
operational performance consistently. With our ongoing bidding
efforts, we expect to be able to persevere through the downturn and
then emerge from it in a strong position for growth to deliver our
strategy. With this in mind, we believe our ability to win large
projects could be enhanced by forming strategic alliances. In early
2016 we signed a Memorandum of Understanding regarding Lamprell's
potential participation in the Maritime Complex in eastern Saudi
Arabia. We have also agreed to work with Dubai Drydocks to identify
opportunities for cooperation on FPSO/FPU projects in the context
of Dubai's aspiration to become a strategic location for such
projects. We will continue to scrutinise the market for other
value-added alliances.
There is a lot of uncertainty in the current markets but
Lamprell's focus for 2016 is on demonstrating resilience and its
ability to progress towards future growth despite the industry
challenges. We remain confident in our ability to deliver on our
strategy, which we believe is the right path to long term success.
Despite our confidence in the long term future, this does not leave
us immune from the market downturn and we expect the challenges to
continue impacting our performance in 2016.
The Board currently expects the revenues for 2016 to be around
5% below Lamprell's performance in 2015 as the overall market
downturn continues to have an impact on the Company. In the
meantime, the management team will continue its focus on protecting
margins benefiting from cost efficiencies and productivity
improvements. The Group remains firmly focused on influencing the
factors under its control by improving performance, streamlining
the business and shifting its focus to the Middle East region.
James Moffat
Chief Executive Officer
Lamprell plc
Financial Review
Results from operations
We are pleased to deliver healthy and steady financial
performance in 2015 following a year of exceptional financial
results in 2014. The combination of strong operational execution
and savings achieved as a result of Project Evolution allowed us to
deliver good margins despite global headwinds in the sector.
The Group's total revenue for the year was USD 871.1 million,
slightly below our earlier guidance due to the impact of the market
downturn on our walk-in business. Our other businesses performed in
line with expectations. The new build jackup segment remained the
main source of revenue for Lamprell, with a record number of seven
concurrent rigs under construction in the yard. Our revenues for
2015 were heavily weighted to the second half of the year due to
the phasing of construction, as several of our projects were at the
early stages in their build schedules in the six months to 30 June
2015.
The additional awards by Petrofac have provided a significant
contribution to our module business.
Whilst we are seeing repeat business from our clients, the
general weakness across the sector has driven a reduction in
revenues from our rig refurbishment business. We delivered 11
refurbishment projects in 2015. We also took on high quality
projects, with a number of wins for important clients albeit of
fairly modest value, in our E&C business unit.
Margin performance
The Group completed the major part of the investment under
Project Evolution, with the realised savings partly utilised to
protect Lamprell's margins whilst retaining our competitive
position in an environment of increased pricing pressure. This
investment programme allowed the Group to maintain its normalised
margins despite the industry difficulties which impacted the
financial performance of its sector.
The Group's gross margin decreased to USD 123.5 million from USD
182.1 million in the previous year primarily due to lower revenues,
project phasing and a return to normalised performance. The drop in
rig refurbishment revenue in the current environment had a minor
negative impact on margins, whilst our new build jackup business
managed to maintain stable margins at normalised levels. The main
reason for this was the savings and productivity gains delivered by
the Project Evolution initiatives.
EBITDA excluding discontinued operations and exceptional items
for the period was USD 90.0 million (2014: USD 137.0 million). The
Group's EBITDA margin decreased from 12.6% in 2014 to 10.3% in
2015, reflecting the absence of the 2014 exceptional items,
partially offset by certain one off events in 2015 such as bad debt
recoveries.
Finance costs and financing activities
Net finance costs in the period decreased to USD 12.0 million
(2014: USD 18.4 million). Gross finance costs were USD 5.9 million
lower due to reduced interest margins and lower bonding costs,
partially offset by increased commitment fees on our facilities
following the refinancing in 2014. Finance income has increased by
USD 0.5 million as a result of higher cash deposits.
Net profit after exceptional items and earnings per share
The Group recorded a profit for 2015 attributable to the equity
holders of USD 64.7 million (2014: USD 118.1 million). The fully
diluted earnings per share for the year was 18.84 cents (2014:
37.38 cents), based on strong underlying performance in the absence
of the exceptional items reported in 2014.
Capital expenditure
The Group's capital expenditure in 2015 increased to USD 59.5
million (2014: USD 22.5 million). The main area of investment was
yard improvement under Project Evolution, which included the
purchase of new equipment including the new panel line , beam
cutting robots and some yard infrastructure enhancements. The major
part of the investment under Project Evolution is now complete,
with the second phase of Project Compass live across the Group
since 1 October 2015.
Cash flow and liquidity
The Group's net cash flow from operating activities for 2015
reflected a net outflow of USD 0.8 million (2014: net outflow of
USD 39.8 million) arising predominantly from the Group's EBITDA and
offset by increased working capital requirements due to the natural
cycle on major projects.
Cash and bank balances decreased by USD 82.0 million, resulting
from a net cash outflow from investing activities attributable to
the major capital investment programme and an outflow from
financing activities. The Group's net cash position remains strong
at USD 210.3 million (2014: USD 272.6 million), a decrease in line
with expectations due to capital spend on Project Evolution and the
phasing of the construction cycle on our projects.
Balance sheet
The Group maintained a strong balance sheet, providing
flexibility and security in a challenging environment for the
industry.
The Group's total current assets at the period-end were USD
725.3 million (2014: USD 780.7 million). Trade and other
receivables increased to USD 428.3 million (2014: USD 403.6
million) due to unfavourable timing on milestone payments as well
as advance payments to suppliers to secure favourable terms for
equipment procured.
Shareholders' equity increased from USD 672.2 million to USD
737.6 million at 31 December 2015. The movement mainly reflects
increased retained earnings of USD 410.4 million (2014: USD 344.5
million).
The Group's debt/equity ratio of 10.8% at 31 December 2015
(2014: 14.7%) emphasises our low levels of leverage and balance
sheet strength.
Borrowings and debt
In 2015, following the major debt refinancing the previous year,
the Group's facilities comprised (a) a USD 100 million term loan
amortised over five years, of which USD 20 million was repaid over
the course of the year; (b) USD 50 million for general working
capital purposes which remained undrawn; and (c) USD 200 million of
working capital for project financing, which has not been taken up
by our clients to date. Lamprell continued to market this facility
as part of a number of bids and the aim remains to leverage it in
future projects.
In addition, the related USD 250 million committed bonding
facility, which is available for use in connection with new
contract awards funded by the working capital facility detailed in
(c) above, remained undrawn in 2015 and the Group has been able to
leverage its bilateral bonding facilities for better commission
rates.
The outstanding borrowings were USD 79.3 million as at 31
December 2015 (2014: USD 99.0 million).
Change of auditors
Following a formal tender process in line with market best
practice, the Audit & Risk Committee made a recommendation for
the appointment of Deloitte LLP as the external auditor for the
Company, which the Board approved. Deloitte LLP has expressed its
willingness to act as external auditor and a resolution to appoint
Deloitte LLP will be proposed at the forthcoming AGM for their
services in respect of the 2016 financial year.
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 Directors have concluded therefore that
it is appropriate for the Group to continue to adopt the going
concern basis in preparing its financial statements.
Dividends
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March 23, 2016 03:00 ET (07:00 GMT)
Given the challenging market environment and the Group's
strategy to retain a strong net cash position and balance sheet,
the Directors do not recommend the payment of a dividend for the
current financial year ending 31 December 2015. In the future the
Directors will continue to review this position in light of market
conditions at the relevant time.
Antony Wright
Chief Financial Officer
Lamprell plc
Consolidated income statement
Year ended 31 December
2015 2014
Note USD'000 USD'000
Continuing operations
Revenue 5 871,058 1,084,890
Cost of sales 6 (747,538) (902,810)
Gross profit 123,520 182,080
Selling and distribution expenses 7 (1,771) (1,773)
General and administrative expenses 8 (44,318) (72,700)
Other gains/(losses) - net 11 260 1,456
Operating profit 77,691 109,063
Finance costs 10 (14,647) (20,516)
Finance income 10 2,679 2,166
Finance costs - net (11,968) (18,350)
Share of profit of an investment accounted
for using the equity method 1,318 2,991
Profit before income tax 67,041 93,704
Income tax expense (541) (484)
Profit for the year from continuing operations 66,500 93,220
Discontinued operations
Loss for the year from discontinued operations 18 (1,866) (6,433)
Gain on disposal of subsidiary 66 31,270
Profit for the year attributable to the equity
holders of the Company 64,700 118,057
Earnings per share for profit from continuing
operations attributable to the equity holders
of the Company 12
Basic 19.46c 29.54c
Diluted 19.36c 29.52c
Earnings per share attributable to the equity
holders of the Company 12
Basic 18.93c 37.41c
Diluted 18.84c 37.38c
Lamprell plc
Consolidated statement of comprehensive income
2015 2014
Note USD'000 USD'000
Profit for the year 64,700 118,057
Other comprehensive loss
Items that may be reclassified to profit
or loss:
Currency translation differences 21 (489) (372)
Items that will not be reclassified to profit
or loss:
Re-measurement of post-employment benefit
obligations 22 (1,988) (3,742)
Other comprehensive loss for the year (2,477) (4,114)
Total comprehensive income for the year 62,223 113,943
Total comprehensive income/(loss) for the
year attributable to equity holders of the
Company arises from:
Continuing operations 64,023 89,106
Discontinued operations (1,800) 24,837
Lamprell plc
Consolidated balance sheet
2015 2014
Note USD'000 USD'000
ASSETS
Non-current assets
Property, plant and equipment 13 175,286 139,343
Intangible assets 14 205,884 204,726
Investment accounted for using the equity method 5,285 5,118
Trade and other receivables 16 12,712 11,876
Derivative financial instruments 23 - 55
Cash and bank balances 17 8,950 12,517
Total non-current assets 408,117 373,635
Current assets
Inventories 15 29,066 14,560
Trade and other receivables 16 415,614 391,743
Derivative financial instruments 23 - 14
Cash and bank balances 17 280,668 359,108
725,348 765,425
Assets of disposal group classified as held
for sale 18 - 15,228
Total current assets 725,348 780,653
Total assets 1,133,465 1,154,288
LIABILITIES
Current liabilities
Borrowings 26 (20,136) (20,136)
Trade and other payables 24 (264,943) (317,603)
Derivative financial instruments 23 (4) (269)
Provision for warranty costs and other liabilities 25 (8,334) (15,812)
Current tax liability (451) (167)
(293,868) (353,987)
Liabilities of disposal group classified as
held for sale 18 - (10,546)
Total current liabilities (293,868) (364,533)
Net current assets 431,480 416,120
Non-current liabilities
Borrowings 26 (59,163) (78,843)
Derivative financial instruments 23 (14) -
Provision for employees' end of service benefits 22 (42,863) (38,752)
(MORE TO FOLLOW) Dow Jones Newswires
March 23, 2016 03:00 ET (07:00 GMT)
Total non-current liabilities (102,040) (117,595)
Total liabilities (395,908) (482,128)
Net assets 737,557 672,160
EQUITY
Share capital 20 30,346 30,346
Share premium 20 315,995 315,995
Other reserves 21 (19,144) (18,655)
Retained earnings 410,360 344,474
Total equity attributable to the equity holders
of the Company 737,557 672,160
Lamprell plc
Consolidated statement changes of equity
Share Retained
capital Share premium Other reserves earnings Total
Note USD'000 USD'000 USD'000 USD'000 USD'000
At 1 January 2014 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 22 - - - (3,742) (3,742)
Currency translation
differences 21 - - (372) - (372)
Total comprehensive
income for the year - - (372) 114,315 113,943
Disposal of subsidiary 21 - - 3,850 - 3,850
Transactions with owners:
Proceeds from shares
issued (net) 20 6,794 104,219 - - 111,013
Share based payments:
* value of services provided - - - 1,084 1,084
Treasury shares purchased 20 - - - (486) (486)
Total transactions with
owners 6,794 104,219 - 598 111,611
At 31 December 2014 30,346 315,995 (18,655) 344,474 672,160
Profit for the year - - - 64,700 64,700
Other comprehensive
income:
Re-measurement of post-employment
benefit obligations 22 - - - (1,988) (1,988)
Currency translation
differences 21 - - (489) - (489)
Total comprehensive
income for the year - - (489) 62,712 62,223
Transactions with owners:
Share based payments:
* value of services provided - - - 3,174 3,174
Total transactions with
owners - - - 3,174 3,174
At 31 December 2015 30,346 315,995 (19,144) 410,360 737,557
Lamprell plc
Consolidated cash flow statement
Year ended 31 December
2015 2014
Note USD'000 USD'000
------------------------- -----------------------
Operating activities
Cash used in operating activities 29 (522) (39,433)
Tax paid (257) (374)
------------------------- -----------------------
Net cash used in operating activities (779) (39,807)
------------------------- -----------------------
Investing activities
Additions to property, plant and equipment (55,681) (18,947)
Proceeds from sale of property, plant and equipment 543 317
Additions to intangible assets 14 (3,782) (3,595)
Finance income 10 2,679 2,166
Dividend received from a joint venture 1,151 3,488
Proceeds from disposal of a subsidiary - net 18 2,091 59,312
Movement in deposit with an original maturity
of more than three months 17 (6,706) 5,633
Movement in margin/short-term deposits under
lien 1,519 3,249
Net cash (used in)/generated from investing
activities (58,186) 51,623
------------------------- -----------------------
Financing activities
Proceeds from shares issued (net of expenses) 20 - 111,013
Treasury shares purchased 20 - (486)
Proceeds from borrowings - 100,000
Repayments of borrowings (20,000) (160,000)
Finance costs (14,386) (21,014)
Dividends paid - (18)
Net cash (used in)/generated from financing
activities (34,386) 29,495
------------------------- -----------------------
Net (decrease)/ increase in cash and cash equivalents (93,351) 41,311
Cash and cash equivalents, beginning of the
year from continued operations 312,352 275,479
Cash and cash equivalents, beginning of year
from discontinued operations 5,652 1,586
Exchange rate translation (489) (372)
Cash and cash equivalents, end of the year 224,164 318,004
Cash and cash equivalents from continuing operations 17 224,164 312,352
Cash and cash equivalents from discontinued
operations - 5,652
Total 224,164 318,004
Lamprell plc
Notes to the financial statements
1 Legal status and activities
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Lamprell plc ("the Company") and its subsidiaries (together
referred to as "the Group") are engaged in the assembly and new
build construction for the offshore oil and gas and renewable
sectors; fabricating packaged, pre-assembled and modularised units;
constructing accommodation and complex process modules for onshore
downstream projects; construction of complex living quarters,
wellhead decks, topsides, jackets and other offshore fixed
facilities; rig refurbishment; land rig services; engineering and
construction and operations and maintenance.
2 Basis of preparation
The Group is required to present its annual consolidated
financial statements for the year ended 31 December 2015 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 2015. The financial information has been
extracted from the consolidated financial statements for the year
ended 31 December 2015 approved by the Board of Directors on 22
March 2016 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 2015 and 31 December 2014 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 2015 have
been prepared in accordance with the Listing Rules of the London
Stock Exchange.
After reviewing its cash flow forecasts for a period of not less
than 12 months from the date of signing of 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. Therefore, the Group
continues to adopt the going concern basis in preparing its
financial statements.
The preparation of financial statements 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 consolidated and
parent company financial statements, 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
2014 and reviewed interim financial information for the period
ended 30 June 2015, 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 30.5 million (2014: USD
4.4 million) if the total costs to complete are decreased by 10%
and the revenue and profit decreasing by USD 28.5 million (2014:
USD 4.4 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) "). This CGU also represents the operating
segment UAE for the Group (Note 5).
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 311.6 million (2014: USD 290.6
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 3.9 million (2014: USD 5.7 million) in the headroom if the
revenue growth rate was lower or the headroom would be higher by
USD 3.9 million (2014: USD 5.7 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 48.0 million (2014: USD 55.2 million) if the
discount rate was to increase or an increase in the headroom by USD
54.2 million (2014: USD 63.5 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 66.4 million (2014: USD 62.1 million) in the
headroom if the net profit was to increase or there would be an
reduction in the headroom of USD 66.4 million (2014: USD 62.1
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 35.5 million (2014: USD 43.4
million) if the terminal value growth rate was lower or an increase
in the headroom of USD 40.8 million (2014: USD 49.8 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% (2014:
3.5%). If the discount rate used was to differ by 0.5 points from
management's estimates, the carrying amount of the employees' end
of the service benefits provision at the balance sheet date would
be an estimated USD 1.0 million (2014: USD 1.5 million) lower or
USD 1.4 million (2014: USD 1.6 million) higher. If the salary
growth rate used was to differ by 0.5 points from management's
estimates, the carrying amount of the employees' end of the service
benefits provision at the balance sheet date would be an estimated
USD 1.4 million (2014: USD 1.5 million) higher or USD 1.0 million
(2014: USD 1.6 million) lower.
5 Segment information
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
at the reporting date. 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.
In prior periods, the business reported on the basis of the
facility from where the services were rendered. With effect from 1
January 2015, the business was reorganised into business units on
the basis of services rendered. Segment comparatives are restated
to reflect the organisational changes that have occurred since the
prior reporting period to present a like-for-like view.
The Executive Directors manage the business on the basis of the
business units from which the services are rendered. Management
considers the performance of the business from New Build Jack up
Rigs ("NBJR"), Modules, ("MOD"), Offshore Platforms ("OP") and Oil
and Gas Contracting Services ("OGCS").
NBJR derives its revenue from assembly and new build
construction for the offshore oil and gas and renewables sectors;
MOD derives its revenue from fabricating packaged, pre-assembled
and modularised units and constructing accommodation and complex
process modules for onshore downstream projects; OP derives its
revenue from construction of complex living quarters, wellhead
decks, topsides, jackets and other offshore fixed facilities; and
OGCS derives its revenue from rig refurbishment, land rig services,
engineering and construction and operations and maintenance.
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These business units are viewed by the management as three
operating segments - United Arab Emirates "UAE", Qatar "QTR" and
Kazakhstan "KZK" based on common pool of resources and ability to
execute the projects on an interchangeable basis.
UAE is reported as a single segment (Segment A). Services
provided from QTR and KZK do not meet the quantitative thresholds
required by IFRS 8 and the results of these operating segments are
included in the "all other segments" column.
All other
Segment A segments
Year ended 31 December 2015 USD'000 USD'000 Total USD'000
Revenue from external customers 865,802 5,256 871,058
Gross operating profit 173,179 1,696 174,875
All other
Segment A segments
Year ended 31 December 2014 USD'000 USD'000 Total USD'000
Revenue from external customers 1,077,921 6,969 1,084,890
Gross operating profit 233,292 2,511 235,803
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 profit is provided as
follows:
2015 2014
USD'000 USD'000
Gross operating profit for the reportable segments
as reported to the Executive Directors 173,179 233,292
Gross operating profit for other segments as
reported to the Executive Directors 1,696 2,511
Unallocated:
Employee and equipment costs (14,523) (11,841)
Repairs and maintenance (18,636) (21,776)
Yard rent and depreciation (12,667) (15,249)
Others (5,529) (4,857)
Gross profit 123,520 182,080
Selling and distribution expenses (Note 7) (1,771) (1,773)
General and administrative expenses (Note 8) (44,318) (72,700)
Other gains/(losses) - net (Note 11) 260 1,456
Finance costs (Note 10) (14,647) (20,516)
Finance income (Note 10) 2,679 2,166
Others 777 2,507
Profit for the year from continuing operations 66,500 93,220
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 business units is as
follows:
2015 2014
USD'000 USD'000
New build jackup rigs 675,821 748,391
Oil and Gas contracting services 136,216 253,870
Modules 47,121 4,636
Offshore platforms 11,900 77,993
871,058 1,084,890
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 865.8 million (2014: USD 1,077.9
million), and the revenue recognised from the operations in other
countries is USD 5.3 million (2014: USD 7.0 million).
Certain customers individually accounted for greater than 10% of
the Group's revenue and are shown in the table below:
2015 2014
USD'000 USD'000
External customer A 275,296 275,026
External customer B 196,462 155,768
External customer C 147,251 144,952
619,009 575,746
The revenue from these customers is attributable to Segment A.
The above customers in 2015 are not necessarily the same customers
in 2014.
6 Cost of sales
2015 2014
USD'000 USD'000
Materials and related costs 445,461 420,939
Subcontract costs 77,561 187,357
Staff costs (Note 9) 150,979 163,614
Subcontract labour 20,968 38,394
Equipment hire 5,136 19,252
Depreciation (Note 13) 16,818 23,979
Repairs and maintenance 18,636 21,776
Yard rent 6,754 6,707
Warranty costs and other liabilities - net (4,000) 6,989
Others 9,225 13,803
747,538 902,810
7 Selling and distribution expenses
2015 2014
USD'000 USD'000
Travel 628 1,055
Advertising and marketing 359 480
Entertainment 143 144
Others 641 94
1,771 1,773
8 General and administrative expenses
2015 2014
USD'000 USD'000
Staff costs (Note 9) 34,054 38,519
Legal, professional and consultancy fees 3,346 5,067
Depreciation (Note 13) 2,560 3,627
Amortisation of intangible assets (Note 14) 2,624 11,895
Utilities and communication 932 718
(Release)/provision for impairment of trade
receivables - net (6,100) 6,871
Bank charges 184 286
Others 6,718 5,717
44,318 72,700
9 Staff costs
2015 2014
USD'000 USD'000
Wages and salaries 120,611 116,490
Employees' end of service benefits (Note
22) 6,313 6,229
Share based payments - value of services
provided 3,174 1,084
Other benefits 54,935 78,330
185,033 202,133
Staff costs are included in:
Cost of sales (Note 6) 150,979 163,614
General and administrative expenses (Note8) 34,054 38,519
----------------------- ------------------------
185,033 202,133
Number of employees at 31 December 7,736 6,912
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Staff costs capitalised during the year and not included above
amount to USD 7.5 million (2014: USD 0.5 million).
10 Finance costs - net
2015 2014
USD'000 USD'000
Finance costs:
Bank guarantee charges 5,300 11,232
Interest on bank borrowings 3,588 6,006
Commitment fees 3,829 1,728
Others 1,930 1,550
14,647 20,516
Finance income
Finance income comprises interest income of USD 2.7 million
(2014: USD 2.2 million) from bank deposits.
11 Other gains/(losses) - net
2015 2014
USD'000 USD'000
Exchange (loss)/gain - net (16) 1,164
Profit on disposal of assets 315 162
Net loss on derivatives (780) (156)
Others 741 286
260 1,456
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 20).
(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 executive share option plan and 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.
The calculations of earnings per share are based on the following
profit and numbers of shares:
2015 2014
USD'000 USD'000
Profit for the year 64,700 118,057
Weighted average number of shares for basic
earnings per share 341,710,302 315,591,024
Adjustments for:
* Assumed exercise of the free share awards 51,331 3,640
* Assumed vesting of performance share plan 1,683,467 242,361
Weighted average number of shares for
diluted earnings per share 343,445,100 315,837,025
Earnings per share:
Basic 18.93c 37.41c
Diluted 18.84c 37.38 c
Earnings per share from continued operations:
Basic 19.46c 29.54 c
Diluted 19.36c 29.52 c
(Loss)/earnings per share from discontinued
operations:
Basic (0.53c) 7.87 c
Diluted (0.52c) 7.86 c
The 340,855 options (2014: 340,855 options) granted on 18
November 2014 are not included in the calculation of diluted
earnings per share because they are antidilutive for the year ended
31 December 2014 and 2015. These options could potentially dilute
basic earnings per share in future.
13 Property, plant and equipment
Fixtures Capital
Operating Buildings and office work-in-
equipment & infrastructure equipment Motor vehicles progress Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Cost
At 1 January 2014 116,853 123,232 16,207 2,522 3,689 262,503
Additions 8,842 1,991 1,978 1,113 4,944 18,868
Transfers 1,332 1,445 154 315 (3,246) -
Assets of
disposal
group classified
as held for sale
(Note 18) - - (820) (95) - (915)
Other disposals (643) (48) (109) (766) - (1,566)
At 31 December
2014 126,384 126,620 17,410 3,089 5,387 278,890
Additions 25,104 10,793 2,121 1,372 16,159 55,549
Other disposals (1,760) (370) (3,118)) (295) - (5,543)
Transfers 3,597 1,088 129 83 (4,897) -
At 31 December
2015 153,325 138,131 16,542 4,249 16, 649 328,896
Depreciation
At 1 January 2014 (70,814) (27,272) (13,970) (2,124) - (114,180)
Charge for the
year (14,052) (9,042)) (3,485) (1,075) - (27,654)
Accumulated
depreciation
of disposal
group
classified as
held
for sale (Note
18) - - 781 95 - 876
Other disposals 588 41 88 694 - 1,411
At 31 December
2014 (84,278) (36,273) (16,586) (2,410) - (139,547)
Charge for the
year (10,906) (7,209) (803) (460) - (19,378)
Other disposals 1,723 331 3,001 260 - 5,315
At 31 December
2015 (93,461) (43,151) (14,388) (2,610) - (153,610)
Net book amount
At 31 December
2015 59,864 94,980 2,154 1,639 16,649 175,286
At 31 December
2014 42,106 90,347 824 679 5,387 139,343
14 Intangible assets
Trade Customer Leasehold Work-in-
Goodwill name relationships rights Software progress Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Cost
At 1 January
2014 180,539 22,335 19,323 8,338 1,536 2,615 234,686
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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
Additions - - - - 6 3,776 3,782
Transfers - - - - 7,153 (7,153) -
At 31 December
2015 180,539 22,335 19,323 8,338 11,528 - 242,063
Amortisation
At 1 January
2014 - 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
Charge for the
year (Note 8) - 1,804 - 488 332 - 2,624
At 31 December
2015 - 12,339 19,323 2,454 2,063 - 36,179
Net book amount
At 31 December
2015 180,539 9,996 - 5,884 9,465 - 205,884
At 31 December
2014 180,539 11,800 - 6,372 2,638 3,377 204,726
15 Inventories
2015 2014
USD'000 USD'000
Raw materials and consumables 21,917 16,301
Work in progress 9,604 -
Less: Provision for slow moving and obsolete
inventories (2,455) (1,741)
29,066 14,560
16 Trade and other receivables
2015 2014
USD'000 USD'000
Trade receivables 94,146 48,622
Other receivables and prepayments 30,206 21,620
Advance to suppliers 19,435 6,533
Receivables from a related party (Note 19) 13 68
143,800 76,843
Less: Provision for impairment of trade receivables (5,220) (11,622)
138,580 65,221
Amounts due from customers on contracts 133,487 185,476
Contract work in progress 156,259 152,922
428,326 403,619
Non-current portion:
Advance to suppliers - 4,932
Prepayments 12,712 6,944
Current portion 415,614 391,743
During 2015, the Group paid an amount of USD 8.5 million to
Sharjah Electricity and Water Authority for construction,
installation and maintenance of an electric mainline at its
Hamriyah facility. The Group has decided to amortise this amount
over the remaining period of the leasehold rights for the
facility.
Amounts due from customers on contracts comprise:
2015 2014
USD'000 USD'000
Costs incurred to date 1,098,234 1,042,589
Attributable profits 204,586 190,090
1,302,820 1,232,679
Less: Progress billings (1,169,333) (1,047,203)
133,487 185,476
As required under our current contracts with Ensco, we note that
all related materials and equipment and the vessel itself being
constructed under these contracts are the exclusive property of
Ensco.
17 Cash and bank balances
2015 2014
USD'000 USD'000
Cash at bank and on hand 92,301 82,945
Term deposits and margin deposits - current 188,367 276,163
Cash and bank balances 280,668 359,108
Term deposits and margin deposits - non-current 8,950 12,517
Less: Margin/short-term deposits under lien (11,787) (12,312)
Less: Deposit with original maturity of more than
three months (53,667) (46,961)
Cash and cash equivalents (for the purpose of
cash flow statement) 224,164 312,352
18 Assets held for sale and discontinued operations
Discontinued operations
Profit/(loss) from discontinued operations comprises:
Inspec 2015 Inspec 2014
USD'000 Litwin USD'000 Total USD'000 USD'000 Litwin USD'000 Total USD'000
Revenue - 1,640 1,640 3,008 16,385 19,393
Cost of sales - (1,763) (1,763) (2,080) (21,082) (23,162)
General and
administrative
expenses - (1,849) (1,849) (193) (2,550) (2,743)
Other
gains/losses
- net - 165 165 2 280 282
Finance costs
- net - (59) (59) - (203) (203)
Profit/(loss)
from
discontinued
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operations - (1,866) (1,866) 737 (7,170) (6,433)
Re-measurement
of
post-employment
benefit
obligations - - - - 13 13
Total
comprehensive
income arising
from
discontinued
operations - (1,866) (1,866) 737 (7,157) (6,420)
The main elements of the cash flows are as follows:
Inspec 2015 Inspec 2014
USD'000 Litwin USD'000 Total USD'000 USD'000 Litwin USD'000 Total USD'000
Operating
cash
flows - 702 702 2,954 5,315 8,269
Investing
cash
flows - (123) (123) (74) 30 (44)
Financing
cash
flows - (59) (59) - (203) (203)
Total cash
flows - 520 520 2,880 5,142 8,022
Inspec
During 2013, the Group decided to dispose of Inspec. This
transaction was completed on 3 March 2014.
Litwin
During 2014, the Group decided to dispose of Litwin. This
transaction was completed on 21 April 2015.
Disposal group
At 31 December 2014, the major classes of assets and liabilities
of a disposal group (Litwin) were as follows:
2014
USD'000
Assets classified as held for sale
Property, plant and equipment 39
Trade and other receivables (net of provision for impairment
of trade receivables) 8,543
Cash and bank balances 6,646
15,228
Liabilities classified as held for sale
Provision for employees' end of service benefits 333
Trade and other payables 10,213
10,546
The commitments of disposal group were as follows:
Bank guarantees 9,395
Litwin
Net cash inflow on the subsidiary disposed during the year is as
follows:
2015
USD'000
Property, plant and equipment 163
Trade and other receivables 7,315
Cash and cash equivalents 749
Provision for employees' end of service benefits (298)
Trade and other payables (3,906)
Net assets 4,023
Accruals 1,362
Net assets retained (2,611)
Expenses on disposal 500
Gain on disposal 66
Cash consideration on disposal 3,340
Less: Expenses on disposal (500)
Less: Cash and cash equivalents transferred as a part
of disposal (749)
Net cash inflow for the purpose of consolidated cash flow
statement 2,091
19 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:
2015 2014
USD'000 USD'000
Key management compensation 7,099 8,746
Legal and professional services - 730
Sales to joint ventures 315 267
Purchases from joint ventures 342 350
Sponsorship fees and commissions paid to legal
shareholders of subsidiaries 294 866
Key management compensation comprises:
2015 2014
USD'000 USD'000
Salaries and other short-term benefits 5,075 6,537
Share based payments - value of services provided 1,832 435
Post-employment benefits 192 1,774
7,099 8,746
The terms of the employment contracts of the key management
include reciprocal notice periods of between three to twelve
months.
Due from/due to related parties
Due from related parties
2015 2014
USD'000 USD'000
Maritime Industrial Services Arabia Co. Ltd.
(current) 13 68
Due to a related party
2015 2014
USD'000 USD'000
Maritime Industrial Services Arabia Co. Ltd.
(current) 122 364
20 Share capital
Issued and fully paid ordinary shares
Equity Share capital Share premium
Number USD'000 USD'000
At 1 January 2014 260,363,101 23,552 211,776
Add: New shares issued during the
year 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
At 31 December 2015 341,726,570 30,346 315,995
The total authorised number of ordinary shares is 400 million
shares (2014: 400 million shares) with a par value of 5 pence per
share (2014: 5 pence per share).
During 2014, the Company successfully carried out a fully
underwritten rights issue. The rights issue offered five new
ordinary shares for every 16 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 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.
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During 2015, Lamprell plc employee benefit trust ("EBT")
acquired 51 shares (2014: 189,111 shares) of the Company. The total
amount paid to acquire the shares was USD Nil (2014: USD 0.5
million) and has been deducted from the consolidated retained
earnings. During 2015, no shares (2014: 187,580 shares amounting to
USD 0.5 million) were issued to employees and 16,268 shares (31
December 2014: 16,217 shares) were held as treasury shares at 31
December 2015. The Company has the right to reissue these shares at
a later date. These shares will be issued on vesting of the free
shares/performance shares/share options granted to certain
employees of the Group.
21 Other reserves
Translation
Legal reserve Merger reserve reserve Total
USD'000 USD'000 USD'000 USD'000
At 1 January 2014 98 (22,422) 191 (22,133)
Currency translation
differences - - (372) (372)
Disposal of a
subsidiary - 3,850 - 3,850
At 31 December 2014 98 (18,572) (181) (18,655)
Currency translation differences - (489) (489)
--------------------- ----------------- ------------------ --------------------
At 31 December 2015 98 (18,572) (670) (19,144)
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
interest method.
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 interest method.
22 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 2015 and 2014, 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 periods is as follows:
2015 2014
USD'000 USD'000
At 1 January 38,752 36,046
Current service cost 4,871 4,739
Interest cost 1,442 1,701
Remeasurements 1,988 3,742
Benefits paid (4,190) (7,143)
Liabilities of disposal group classified
as held for sale (Note 18) - (333)
At 31 December 42,863 38,752
--------------------------------- -----------------------
23 Derivative financial instruments
Notional 2015 Notional 2014
contract Assets Liabilities contract Assets Liabilities
amount USD'000 USD'000 USD'000 amount USD'000 USD'000 USD'000
Derivatives
held at
fair value
through
profit or
loss - - - 2,889 - 269
Interest
rate swaps 80,000 - 18 100,000 69 -
Total 80,000 - 18 102,889 69 269
Non-current
portion 60,000 - 14 80,000 55 -
Current
portion 20,000 - 4 22,889 14 269
During 2014, the Group entered into an interest rate swap to
switch floating interest rates to fixed interest rates 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 liability at the 31 December 2015 of this derivative
was USD 0.2 million (2014: USD 0.7 million)
24 Trade and other payables
2015 2014
USD'000 USD'000
Trade payables 44,065 30,390
Accruals 127,155 138,169
Payables to a related party (Note 19) 122 364
Amounts due to customers on contracts 93,601 148,680
264,943 317,603
Amounts due to customers on contracts comprise:
Progress billings 357,154 477,583
Less: Cost incurred to date (226,975) (299,010)
Less: Recognised profits (36,578) (29,893)
93,601 148,680
25 Provision for warranty costs and other liabilities
Minimum purchase
Warranty costs obligations
USD'000 USD'000 Total USD'000
At 1 January 2014 5,400 - 5,400
Charged 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
Charge during the year 1,200 - 1,200
Released/utilised during the
year (5,489) (3,189) (8,678)
At 31 December 2015 8,100 234 8,334
Warranty costs charged during the year relates to management's
assessment of potential claims under contractual warranty
provisions.
26 Borrowings
2015 2014
USD'000 USD'000
Bank term loans 79,299 98,979
The bank borrowings are repayable as follows:
Current (less than 1 year) 20,136 20,136
Non-current (2 to 5 years) 59,163 78,843
79,299 98,979
27 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 seventeen years and are
renewable at mutually agreed terms.
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