TIDMLAM
RNS Number : 2554X
Lamprell plc
27 August 2015
27 August 2015
LAMPRELL PLC
("Lamprell" and with its subsidiaries the "Group")
INTERIM FINANCIAL RESULTS
FOR SIX MONTHS TO 30 JUNE 2015
Half year results in-line with expectations
Lower year-on-year due to construction phasing and exceptional
performance in 2014
1H 2015 FINANCIAL RESULTS
1H 2015 1H 2014
(USD million, unless stated)
Revenue 351.4 632.3
Gross margin 11.6% 13.6%
EBITDA 31.8 66.2
Profit from continuing operations after
income tax and after exceptional items 20.3 46.1
Reported diluted earnings/per share (US
cents) 5.9 26.9
Net cash as at 30 June 316.3 280.6
Financial highlights
-- First half results in line with expectations due to continued
strong project execution coupled with contribution from efficiency
and productivity measures
-- Revenues of USD 351.4 million, lower than comparative period
in 2014 which was an exceptional result due to phasing of
construction activity
-- Gross margins of 11.6% in 1H 2015, down from an exceptional
13.6% in 2014 to a more normalized level, with market pressure
offset by benefits of cost savings
-- Robust cash position maintained, enabling continued investment in business improvement
Operational highlights
-- Strong operational performance in core markets: three major
projects delivered safely, on time, on budget and with high
quality
-- New rig contract awarded in April by largest client NDC;
further awards from Petrofac for additional modules to be deployed
in Abu Dhabi
-- As at 30 June 2015, backlog of USD 1.2 billion (31 December
2014: USD 1.2 billion) with bid pipeline maintained at
approximately USD 5.2 billion (31 December 2014: USD 5.2
billion)
-- Continued world class safety record with a total recordable incident rate of 0.27
-- Project Evolution, a programme to deliver material
productivity improvements and cost efficiencies, is progressing
well with cutting machines, dedicated utilities pipelines and a
panel line already installed and operational
Post-period board changes
-- Jim Moffat retiring as CEO in June 2016; recruitment process underway
-- John Kennedy will be Executive Chairman until 2016 AGM to facilitate the handover process
-- Tony Wright appointed as CFO and Board director
-- Mel Fitzgerald and Debra Valentine appointed to the Board as Non-executive Directors
-- Ellis Armstrong appointed as Senior Independent Director
following resignation of Michael Press for personal reasons
Current trading and outlook
-- All ongoing projects progressing well; seven new build jackup rigs under construction
-- Order book maintained at steady level and now extends out to Q2 2017
-- Options outstanding with NDC and Ensco for two jackups each
-- Significant revenue coverage, with over 90% covered for 2015
and over 60% covered for 2016; slightly higher than the comparative
coverage levels at same time in 2014
-- Continued focus on competitiveness to win further projects in our core markets
-- As previously announced, revenue for FY2015 expected to be in
line with previous guidance with significantly fewer major project
completions during the year and a heavy weighting towards 2H 2015
reflecting the phasing of construction cycles
-- Full year outturn anticipated to be in line with
expectations, with solid performance and savings providing relative
protection of margins despite heightened pricing pressure in the
sector
-- Revenue for FY2016 expected to be broadly flat on FY2015 with
more major projects in late stages of construction compared to
FY2015
-- Drive to achieve further reductions in overheads progressing as planned
-- Ongoing process to refine the Group's strategy and ensure it
remains appropriate in challenging industry environment
John Kennedy, Executive Chairman for Lamprell, said:
"The global energy markets have experienced a significant shift
during the last nine months and this has impacted all contractors
operating in the sector. These challenging market conditions are
now expected to last longer than originally envisaged by the
industry. With a strong balance sheet and cash position and a
market-leading operational performance, the Group is well
positioned to weather this difficult climate. In addition, the
Board is undertaking a thorough review of our strategy to ensure it
is robust in the face of industry challenges. We remain confident
that Lamprell has a clear path for targeting those clients and
markets where we see the best opportunities during the downturn and
for developing the business in the longer term."
James Moffat, Chief Executive Officer for Lamprell, said:
"Operationally we have had a steady start to the year following
the record performance in 2014 and we have continued to deliver
according to plan in a difficult environment. Lamprell has a
competitive offering and this was reflected with the further rig
order from our largest client, NDC, which demonstrates our client's
faith in our ability to deliver a high quality, good value product.
We will continue to focus on our strong project execution and
delivery, whilst ensuring that efficiency measures result in a
competitive advantage in an increasingly challenging market. We
remain focused on converting our extensive bid pipeline into
backlog."
The management team will hold a presentation for research
analysts at 12.30pm 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/140136.
- 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 35 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
899,000 m2 with 2.1 km of quayside.
Lamprell is listed on the London Stock Exchange (symbol
"LAM").
Chief Executive Officer's Review
After Lamprell's impressive operational performance generated
exceptional financial results in 2014, the Company was forced to
adjust its outlook in early 2015 in light of the challenging market
environment due to the sharp oil price decline in the second half
of 2014. We have pressed on with implementation of our business
improvement measures and focused on maintaining our competitive
position by leveraging our client relationships and maintaining the
Group's proven track record for safety, quality and delivery. At
the halfway point in 2015, we have made good progress towards
achieving those goals with continuing reliable project execution
and a further rig contract award in the year to date.
Operational strength benefiting from improvements
The Group is in the process of implementing our programme of
productivity improvements and costs efficiencies known as Project
Evolution. Project Evolution was a key component of the Company's
2014 rights issue and forms a cornerstone of our drive to reduce
our costs and hence improve our competitiveness, particularly in
the current climate. An integral part of the measures is the
investment in automation for parts of our facilities and we have
made significant progress in installing the necessary equipment.
New fabrication areas, cutting machines and a beam fabrication
system have all been installed over the past few months, in order
to increase the level of automation and reduce construction times.
The new panel line was officially launched in our Hamriyah facility
in early July and there are also ongoing works to connect the
facility to the ring main, thereby putting an end to our reliance
on generating our own electricity and reducing the cost of power to
the yard. This project is scheduled to be completed early in
2016.
We delivered three jackup drilling rigs during the first half of
the year, all on budget and on time; currently there are seven
jackup rigs being built in the Hamriyah facility, almost all of
which have been in relatively early stages of construction in 1H
2015. This included steel cutting on the three jackup rigs which
are under construction for National Drilling Company (NDC). This
provides good visibility on 2H performance but contributes
significantly to the imbalance between the 1H and 2H results as the
Group ramps up its operations to accommodate this number of rig
projects running in tandem. All the projects will benefit, to
varying extent, from the Project Evolution measures being
implemented in the Hamriyah yard.
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The construction of piperack modules for Petrofac, for a
landmark project in Abu Dhabi, is progressing well in our Jebel Ali
facility. It is a testament to our high quality and reliable
project execution that the client has awarded further modules to us
this year for this project, which follows our strong performance on
the Laggan Tormore project in the North Sea where we were also
engaged by Petrofac. Initial modules will be delivered later this
year and will then be delivered in shipments over the coming
months, with the final shipment expected to be handed over in Q3
2016.
We have also seen steady progress in other core markets during
the first half of 2015. The land rig services business unit has
completed 10 projects (either for the refurbishment of land rigs,
fabrication of component parts of land rigs or the provision of
services in support of onshore drilling activities), in the year to
date and has worked on three projects for a new client based in
Kuwait.
After a strong start this year with the Group working on 10
concurrent projects earlier this year, the rig refurbishment
business has seen a slow-down in recent months. We are seeing some
clients stacking jackup rigs until market conditions improve and we
are assisting various clients with this stacking activity. We
currently have six rigs stacked in our facilities in Sharjah and
Hamriyah.
The Group is successfully maintaining its world-class safety
performance, which has been top priority for the management team
over the last two years. Notably, the Abu Dhabi modules project has
surpassed 1.5 million man-hours without a day away from work case
(DAFWC) and the Jebel Ali facility has now gone for over 2.5 years
since its last DAFWC. The safety record on the two new build jackup
rigs for Ensco, a key client, has been solid to date, with the
Group passing a combined milestone of over 3 million manhours
without a DAWFC on these projects.
Corporate activities
Following the announcement on 2 December 2014, the Group
completed the disposal of one of its smaller non-core service
businesses, Litwin PEL LLC, in April.
In July, the Group launched phase two of its enterprise
resources planning system with completion scheduled to take place
by the end of September. We have been particularly pleased with the
implementation process, which has been progressing as planned and
on budget. This achievement has only been possible with the
significant input and participation of many personnel throughout
the Group.
Post-period Board changes
In August, the Company announced a number of changes to the
Board composition. Following Jim Moffat's decision to retire as CEO
in June 2016, the search to identify a suitable candidate has
started. During the transition period, John Kennedy will be
Executive Chairman until the 2016 annual general meeting. In order
to facilitate a due handover process, Jim Moffat agreed to remain
with Lamprell in a consultancy role for up to a year following his
retirement.
Following 10 months in the role of Deputy CFO, Tony Wright was
promoted to CFO and has joined the board as an Executive
Director.
In line with the Company's commitment to maintain strong
corporate governance and ensure a broad range of key skillsets on
the Board, Lamprell has appointed Mr Mel Fitzgerald and Ms Debra
Valentine as Non-executive Directors. Ellis Armstrong has been
appointed Senior Independent Director following the resignation of
Michael Press from the Board for personal reasons. The Board is
revising the composition of the principal Board committees.
Market overview, order book and bid pipeline
As has been widely noted in the industry, the fall in commodity
prices in late 2014 has created challenging market conditions for
all contractors operating in the oil and gas industry. Many oil
& gas companies have delayed project awards for capital
expenditure in some instances; for sanctioned projects, there has
been intense competition for a significantly reduced number of
opportunities. Despite these challenges, our bidding pipeline
remains strong at USD 5.2 billion of projects although it might be
anticipated that volatile market conditions may result in delays.
We now have a greater focus on regional activity where there
continue to be prospects for new orders, particularly in the Middle
East where the Group has a strong track record and a competitive
advantage with its close proximity to the projects.
Overall intake levels have been relatively stable as compared to
revenue levels during 1H 2015 in line with our expectations. As a
result, our backlog has remained at USD 1.2 billion at period end
and the Group now has a high level of coverage with over 90% of
revenue covered for FY2015 and over 60% covered for 2016. In April,
we were successful in converting one of the jackup rig options with
NDC, the ninth in a series of such rigs, with the remaining two NDC
options due to expire in Q3 2015. It was reassuring that our win
rate over the last 18 months has been positive and our business
model has enabled us to win further awards from NDC, particularly
in the context of few new rig awards so far in 2015.
In our other core markets, there have been a number of smaller
contract awards, notably the additional modules for Petrofac and a
contract award for suction caps and buoyancy tanks from a new
client. The land rig services business unit has been able to win
contracts with both new and existing clients and is now in
discussions with a number of clients for the sale of its first new
build land rig which is being built according to the Group's
in-house design specifically adapted for the Middle East.
Construction is expected to be completed early in the fourth
quarter.
Following a number of awards early in the year, there has been a
recent slow-down in the rig refurbishment market and so we expect
contribution from this business unit to 2015 revenue to be lower
than usual. However, our client base in this market is diverse
within the region and we are targeting the prospects where the
Group can offer a differentiated service based around its reliable
track record for delivery on time. Rig refurbishment and conversion
projects will remain a core market for the Group although we
anticipate that the Group will only take on projects which include
a balanced and reasonable level of risk and reward.
The Board expects that 2015 and 2016 revenues will continue to
depend heavily on new build jackup rigs in line with the contract
awards over the last 18 months, whilst commercial efforts have been
successful at diversifying the Group's pipeline into major projects
for our offshore/onshore construction business unit. The management
team remains focused on developing prospects from our bid pipeline
into backlog. As part of Lamprell's efforts to broaden its
addressable markets, the Company has recently submitted or is in
the process of submitting bids for large offshore and onshore
projects. The current pipeline reflects this commercial push into
non-jackup areas, however project sanctions represent a risk in
this current market environment. We continue discussions with
prospective clients about upcoming projects.
In the context of the prolonged market weakness, the Board is
undertaking an in-depth review of the earlier announced strategy to
ensure that it is sufficiently robust to withstand the current
industry challenges. The Board remains confident the Group is well
positioned to leverage growth opportunities in the medium to long
term, whilst maintaining a competitive position in the short
term.
Outlook
The Company maintains its revenue guidance for 2015. As
previously indicated, the Group's results for 2015 will be heavily
weighted towards the second half of the year reflecting the phasing
of construction cycles, with a number of new major projects ramping
up during 2H 2015 and into 2016. In addition, the Group continues
its programme of overhead costs reduction in its drive to realise
savings across the business.
Looking ahead, the Board believes that 2016 revenues for the
year will be broadly flat on 2015. The management team will
continue its focus on protecting margins with the support of its
productivity improvements and costs efficiencies which are expected
to be operating at full run-rate from early 2016. Coverage for 2016
is slightly higher at the current time than it has been at the
comparative times in previous years at over 60%. We remain focused
on converting our extensive bid pipeline into backlog.
James Moffat
Chief Executive Officer
Lamprell plc
Financial Review
Results from operations
The first half of the year saw the Group maintain its strong
balance sheet and achieve expected results despite the uncertainty
in the market due to low oil prices. The Group executed well in the
first half with a solid operational performance delivering 1H 2015
financial results in line with expectations, with contributions
from cost savings delivered by the programme of productivity
improvements and cost efficiencies and the collection of old
debts.
The Group's total revenue for the six-month period ended 30 June
2015 was USD 351.4 million, in line with our expectations (1H 2014:
USD 632.3 million). The revenue was mainly driven by the new build
jackup rig segment with contributions from our other core markets,
namely rig refurbishment, offshore/onshore construction (including
our E&C business unit) and land rig services segments.
There was a similar number of jackup rigs under construction in
both 1H 2015 and 1H 2014. However, due to the phasing of
construction, we saw a higher percentage of completion on four rigs
and accelerated build schedule on two rigs during 1H 2014, whereas
the six months to 30 June 2015 delivered lower revenues than the
same period the previous year because several of our projects were
at early stages in their build schedules.
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Gross margin decreased to USD 40.8 million from the USD 85.8
million reported in the corresponding period in 2014. Our gross
margin percentage has declined to 11.6% in 1H 2015 from 13.6% in 1H
2014. The decrease is as a result of the lower revenue earned in
the new build jackup rig segment during the period as a result of
the favourable phasing of the construction cycle described above in
1H 2014. Declining oil prices and uncertainty in the market
resulted in lower onshore/offshore construction activities, which
had a negative impact on margins. This was, however, partially
offset by the cost savings and some productivity gains from
efficiencies derived from implementation of Project Evolution
across the Group.
EBITDA, excluding discontinued operations and exceptional items
for the period, was USD 31.8 million (1H 2014: USD 66.2 million).
The Group's EBITDA margin decreased from 10.5% in 2014 to 9.1% in
2015 benefiting from the sustained operating performance of the
business.
Finance costs and financing activities
Net finance costs in the period decreased to USD 7.1 million (1H
2014: USD 7.9 million). Gross finance costs were USD 0.3 million
lower due to reduced costs of our bank guarantees. Finance income
has increased by USD 0.5m as a result of higher cash on
deposit.
Net profit after exceptional items and earnings per share
The Group recorded a profit for the six-month period ended 30
June 2015 attributable to the equity holders of USD 20.2 million
(1H 2014: USD 77.7 million), including a USD 0.1 million gain from
the disposal of Litwin. The fully diluted earnings per share for
the six-month period ended 30 June 2015 were 5.90 cents (1H 2014:
26.86 cents).
Capital expenditure
The Group's capital expenditure during the six-month period
ended 30 June 2015 increased to USD 44.9 million (1H 2014: USD 9.7
million). The main area of investment consisted of additions to
capital work-in- progress, USD 29.1 million of which related to
cost saving initiatives as part of Project Evolution and our new
enterprise resource planning system, Oracle. The major capital
investment programme enabled by the 2014 rights issue continued to
reduce costs with the major part of the investment being committed
over the remainder of 2015.
Cash flow and liquidity
The Group's net cash flow from operating activities for the
period ended 30 June 2015 reflected a net inflow of USD 88.2
million (1H 2014: net outflow of USD 52.3 million) primarily driven
by decreased working capital requirements due to inflows from
customers on milestone payments and the natural cycle on major
projects. Prior to working capital movements, the Group's net cash
inflow was USD 33.7 million (1H 2014: inflow of USD 81.6 million),
arising predominately from the Group's EBITBA in the period.
Cash and bank balances increased by USD 33.7 million to USD
405.4 million during the first half of the year resulting from net
cash inflow from operations less repayment of debt and a net cash
outflow from investing activities. Net cash is expected to trend
slightly downwards by the end of the year but remain strong.
Balance sheet
The Group's total non-current assets at 30 June 2015 were USD
396.1 million (31 December 2014: USD 366.7 million). This increase
is mainly attributable to the purchase of Property, Plant and
Equipment during the period of USD 39.3 million (31 December 2014:
USD 18.7 million) partially offset by depreciation amounting to USD
9.0 million (31 December 2014: USD 27.7 million).
The Group's total current assets at the period-end were USD
763.1 million (31 December 2014: USD 787.6 million). Trade and
other receivables decreased to USD 357.7 million (31 December 2014:
USD 398.7 million) due to improved collection over the period and
on the collection of final milestone payments on completed
projects. As at 30 June 2015 the Group had an improved net cash
position of USD 316.3 million (31 December 2014: USD 280.6 million)
as a result of management effort to recover payments from customers
past due and a favourable collection period.
Shareholders' equity increased from USD 672.2 million at 31
December 2014 to USD 693.9 million at 30 June 2015. The movement
mainly reflects increased retained earnings of USD 366.0 million
(31 December 2014: USD 344.5 million).
Borrowing and debt refinancing
The refinancing that was completed in 2014 has generated savings
during the six-month period ended 30 June 2015 from reduced
interest margins and lower bonding costs on future projects. These
savings have been offset by increased commitment fees on the
unutilised facilities that are available to support project
financing. Our borrowings were USD 89.0 million at 30 June 2015 (31
December 2014: USD 99.0 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
Given the on-going investment programme to improve productivity,
as well as the uncertain market environment, the Directors do not
recommend the payment of an interim dividend for the current
financial year ending 31 December 2015. The Directors will continue
to review this position in light of market conditions at the
relevant time.
Principal risks and uncertainties
For details of the principal risks and uncertainties faced by
the Group, please refer to the Notes to Financial Statements in the
Company's 2014 Annual Report as well as the Risk Report in the same
document.
Tony Wright
Chief Financial Officer
Lamprell plc
Independent review report to Lamprell plc
Introduction
We have been engaged by Lamprell plc ('the Company') to review
the condensed consolidated interim financial information in the
interim financial report for the half year ended 30 June 2015,
which comprises the condensed consolidated interim income
statement, the condensed consolidated interim statement of
comprehensive income, the condensed consolidated interim balance
sheet, the condensed consolidated interim statement of changes in
equity, the condensed consolidated statement of cash flows and
related notes. We have read the other information contained in the
interim financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed consolidated interim financial
information.
Directors' responsibilities
The interim financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the interim financial report in accordance with the
Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
As disclosed in note 2.1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed consolidated interim financial
information included in this interim financial report has been
prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting", as adopted by the European
Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed consolidated interim financial information in the
interim financial report based on our review. This report,
including the conclusion, has been prepared for and only for the
Company for the purpose of the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in producing this report, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the International Auditing and Assurance Standards Board.
A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated interim
financial information in the interim financial report for the half
year ended 30 June 2015 is not prepared, in all material respects,
in accordance with International Accounting Standard 34 as adopted
by the European Union and the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
PricewaterhouseCoopers LLC
Chartered Accountants
Douglas, Isle of Man
26 August 2015
a) The maintenance and integrity of Lamprell Plc's website is
the responsibility of the directors; the work carried out by the
auditor does not involve consideration of these matters and,
accordingly, the auditor accepts no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the website.
b) Legislation in the Isle of Man governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Lamprell plc
Condensed consolidated interim income statement
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Six months ended 30 June
2015 2014
USD'000 USD'000
Note (Unaudited) (Unaudited)
Continuing operations
Revenue 5 351,416 632,334
Cost of sales (310,630) (546,558)
======== ========
Gross profit 40,786 85,776
Selling and distribution expenses (642) (879)
General and administrative expenses (15,465) (32,306)
Other gains/(losses) - net 6 2,197 804
======== ========
Operating profit 26,876 53,395
Finance costs (8,298) (8,590)
Finance income 1,202 718
======== ========
Finance costs - net (7,096) (7,872)
Share of profit of investment accounted for using the equity method 661 1,012
======== ========
Profit before income tax 20,441 46,535
Income tax expense (102) (423)
======== ========
Profit for the period from continuing operations 20,339 46,112
======== ========
-
Discontinued operations
(Loss)/profit from discontinued operations for the period 14 (223) 291
Gain on disposal of a subsidiary 66 31,270
======== ========
(Loss)/profit for the period from discontinued operations (157) 31,561
======== ========
Profit for the period 20,182 77,673
======== ========
Profit for the period attributable to the equity holders of the Company 20,182 77,673
======== ========
Earnings/ per share attributable to the equity holders of the Company during the
period
Basic 7 5.91c 26.87c
======== ========
Diluted 7 5.90c 26.86c
======== ========
Condensed consolidated interim statement of comprehensive
income
Six months ended 30 June
Note 2015 2014
USD'000 USD'000
(Unaudited) (Unaudited)
Profit for the period 20,182 77,673
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Currency translation differences 212 (196)
-------------- --------------
Other comprehensive income/(loss) for the period 212 (196)
-------------- --------------
Total comprehensive income for the period 20,394 77,477
======= =======
Total comprehensive income for the period attributable to the equity
holders of the Company
arises from:
Continuing operations 20,551 45,916
======= =======
Discontinued operations (157) 31,561
======= =======
Condensed consolidated interim balance sheet
At 30 June At 31 December
Note 2015 2014
USD'000 USD'000
(Unaudited) (Audited)
ASSETS
Non-current assets
Property, plant and equipment 9 173,731 139,343
Intangible assets 10 204,949 204,726
Investment accounted for using
the equity method 11 5,200 5,118
Trade and other receivables 12 3,010 4,932
Derivative financial instruments 19 - 55
Cash and bank balances 13 13,252 12,517
------------------------ ------------------------
Total non-current assets 400,142 366,691
------------------------ ------------------------
Current assets
Inventories 15,550 14,560
Trade and other receivables 12 329,524 398,687
Derivative financial instruments 19 - 14
Cash and bank balances 13 392,118 359,108
------------------------ ------------------------
737,192 772,369
Assets of disposal group classified
as held for sale 14 - 15,228
------------------------ ------------------------
Total current assets 737,192 787,597
------------------------ ------------------------
Total assets 1,137,334 1,154,288
------------------------ ------------------------
LIABILITIES
Current liabilities
Borrowings 22 (20,202) (20,136)
Trade and other payables 20 (298,667) (317,603)
Derivative financial instruments 19 (38) (269)
Provision for warranty costs
and other liabilities 21 (15,812) (15,812)
Current tax liability (60) (167)
------------------------ ------------------------
(334,779) (353,987)
Liabilities of disposal group
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classified as held for sale 14 - (10,546)
------------------------ ------------------------
Total current liabilities (334,779) (364,533)
------------------------ ------------------------
Net current assets 402,413 423,064
------------------------ ------------------------
Non-current liabilities
Borrowings 22 (68,843) (78,843)
Derivative financial instruments 19 (152) -
Provision for employees' end
of service benefits 18 (39,615) (38,752)
------------------------ ------------------------
Total non-current liabilities (108,610) (117,595)
------------------------ ------------------------
Total liabilities (443,389) (482,128)
------------------------ ------------------------
Net assets 693,945 672,160
========== ==========
EQUITY
Share capital 16 30,346 30,346
Share premium 16 315,995 315,995
Other reserves 17 (18,443) (18,655)
Retained earnings 366,047 344,474
----------------------- -----------------------
Total equity attributable to
the equity holders of the Company 693,945 672,160
========== ==========
Condensed consolidated interim statement of changes in
equity
Share Share Other Retained
Note capital premium reserves earnings Total
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 period - - - 77,673 77,673
Other comprehensive income:
Currency translation
differences - - (196) - (196)
-------------- ----------------- -------------- ---------------- -----------------
Total comprehensive income
for the period ended
30 June 2014 - - (196) 77,673 77,477
-------------- ----------------- -------------- ---------------- -----------------
Transactions with owners:
Share based payments:
- value of services provided - - - 243 243
Treasury shares purchased 16 - - - (327) (327)
Proceeds from shares
issued (net) 16 6,794 104,219 - - 111,013
Disposal of a subsidiary - - 3,850 - 3,850
-------------- ----------------- -------------- ---------------- -----------------
Total transactions with
owners 6,794 104,219 3,850 (84) 114,779
-------------- ----------------- -------------- ---------------- -----------------
At 30 June 2014 (unaudited) 30,346 315,995 (18,479) 307,150 635,012
-------------- ----------------- -------------- ---------------- -----------------
Profit for the period - - - 40,384 40,384
Other comprehensive income:
Re-measurement of post-employment
benefit obligations 18 - - - (3,742) (3,742)
Currency translation
differences - - (176) - (176)
-------------- ----------------- -------------- ---------------- -----------------
Total comprehensive income
for the period ended
31 December 2014 - - (176) 36,642 36,466
-------------- ----------------- -------------- ---------------- -----------------
Transactions with owners:
Share based payments:
- value of services provided - - - 841 841
Treasury shares purchased 16 - - - (159) (159)
-------------- ----------------- -------------- ---------------- -----------------
Total transactions with
owners - - - 682 682
-------------- ----------------- -------------- ---------------- -----------------
At 31 December 2014 (audited) 30,346 315,995 (18,655) 344,474 672,160
======= ======== ======= ======== ========
Profit for the period - - - 20,182 20,182
Other comprehensive income:
Currency translation
differences - - 212 - 212
-------------- -------------- -------------- -------------- --------------
Total comprehensive income
for the period ended
30 June 2015 - - 212 20,182 20,394
-------------- -------------- -------------- -------------- --------------
Transactions with owners:
Share based payments:
* value of services provided - - - 1,391 1,391
-------------- ----------------- -------------- --------------- -----------------
Total transactions with
owners - - - 1,391 1,391
-------------- ----------------- -------------- ---------------- -----------------
At 30 June 2015 (unaudited) 30,346 315,995 (18,443) 366,047 693,945
======= ======== ======= ======== ========
Condensed consolidated statement of cash flows
Six months ended 30
Note June
2015 2014
USD'000 USD'000
(Unaudited) (Unaudited)
Cash flows from operating activities
Cash generated from/(used in) operating
activities 26 88,238 (51,946)
Tax paid (209) (332)
---------------- ----------------
Net cash generated from/(used in) operating
activities 88,029 (52,278)
---------------- ----------------
Cash flows from investing activities
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Additions to property, plant and equipment 9 (43,451) (9,697)
Proceeds from sale of property, plant
and equipment 293 42
Additions to intangible assets 10 (1,474) (1,216)
Dividend received from a joint venture (579) -
Finance income 1,202 718
Proceeds from disposal of a subsidiary
- net 14 2,034 59,312
Movement in deposits with an original
maturity of more than three months 13 (4,735) 3,364
Movement in margin deposits/short term
deposits under lien (453) (1,500)
---------------- ----------------
Net cash (used in)/provided by investing
activities (47,163) 51,023
---------------- ----------------
Cash flows from financing activities
Proceeds from shares issued (net of
expenses) - 111,013
Treasury shares purchased - (327)
Repayment of borrowings (10,000) (81,130)
Finance costs (8,173) (7,484)
---------------- ----------------
Net cash (used in)/generated from financing
activities (18,173) 22,072
---------------- ----------------
Net increase in cash and cash equivalents 22,693 20,817
Cash and cash equivalents, beginning
of the period from continued operations 13 312,352 275,479
Cash and cash equivalents, beginning
of the period from discontinued operations 5,652 1,586
Exchange rate translation 212 (196)
---------------- ----------------
Cash and cash equivalents at end of
the period 340,909 297,686
======== ========
Cash and cash equivalents from continued
operations 13 340,909 294,217
Cash and cash equivalents from discontinued
operations 14 - 3,469
---------------- ----------------
Total 340,909 297,686
======== ========
Notes to the condensed consolidated interim financial
information
1 Legal status and activities
Lamprell plc ("the Company/the parent company") was incorporated
and registered on 4 July 2006 in the Isle of Man as a public
company limited by shares under the Isle of Man Companies Acts with
the registered number 117101C; and is listed on the London Stock
Exchange ("LSE") main market for listed securities. The address of
the registered office of the Company is Fort Anne, Douglas, Isle of
Man and the Company is managed from the United Arab Emirates
("UAE"). The address of the principal place of the business is PO
Box 33455, Dubai, UAE.
The principal activities of the Company and its subsidiaries
(together referred to as "the Group") are: the upgrade and
refurbishment of offshore jackup rigs; fabrication; assembly and
new build construction for the offshore oil and gas and renewable
sector, including jackup rigs and liftboats; Floating Production,
Storage and Offloading ("FPSO") and other offshore and onshore
structures; and oilfield engineering services, including the
upgrade and refurbishment of land rigs.
This condensed consolidated interim financial information has
been reviewed, not audited.
2 Summary of significant accounting policies
2.1 Basis of preparation
The condensed consolidated interim financial information for the
six months ended 30 June 2015 have been prepared in accordance with
the Disclosure and Transparency Rules ("DTR") of the United
Kingdom's Financial Conduct Authority ("FCA") and with
International Accounting Standard ("IAS") 34, "Interim Financial
Reporting" as adopted by the European Union ("EU"). The
consolidated interim financial information should be read in
conjunction with the annual financial statements for the year ended
31 December 2014, which have been prepared in accordance with IFRSs
as adopted by the EU.
2.2 Accounting policies
The accounting policies applied in the preparation of the
condensed consolidated interim financial information are consistent
with those of the annual financial statements for the year ended 31
December 2014 except for the adoption of new standards and
interpretations effective as of 1 January 2015. The Group has not
early adopted any other standard, interpretation or amendment that
has been issued but is not yet effective. The annual financial
statements for the year ended 31 December 2014 are available on the
Company's website (www.lamprell.com).
The preparation of consolidated interim financial information
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, are disclosed in Note
4.
Other amendments to IFRS effective for the financial year ending
31 December 2015 are not expected to have a material impact on the
Group.
(a) The following new standards, amendments to standards and
interpretations are mandatory for the first time for the financial
year beginning 1 January 2015, but do not have a material impact to
the Group or are not currently relevant for the Group.
-- IAS 19,'Employee benefits', amendments regarding defined
benefit plans (effective from 1 February 2015);
-- Annual improvements 2010 - 2012. It includes changes to, IFRS
2, 'Share based payments'; IFRS 3, 'Business Combinations'; IFRS 8,
'Operating segments'; 'IAS 16, 'Property plant and equipment' and;
IAS 24, 'Related Party Disclosures'; and
-- Annual improvements 2011 - 2013. It includes changes to, IFRS
3, 'Business Combinations'; IFRS 13, 'Fair Value Measurement' and;
IAS 40, 'Investment Property', effective from January - February
2015.
(b) The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial year beginning 1 January 2015 and have not been early
adopted:
-- IFRS 9, 'Financial instruments', (effective 1 January 2018), subject to EU endorsement;
-- IFRS 11, 'Joint arrangements', amendments relating to
acquisition of an interest in a joint operation, (effective 1
January 2016), subject to EU endorsement;
-- IFRS 14, 'Regulatory deferral accounts', (effective 1 January
2016), subject to EU endorsement;
-- IFRS 15, 'Revenue from contracts with customers', (effective
1 January 2017), subject to EU endorsement;
-- IFRS 10, 'Consolidated Financial Statements' and IAS 28
'Investments in Associates and Joint Ventures, amendments on
investment entities applying the consolidation exception,
(effective 1 January 2016), subject to EU endorsement;
-- IAS 1, 'Presentation of financial statements', amendments on
the disclosure initiative, (effective 1 January 2016), subject to
EU endorsement;
-- IAS 16, 'Property, Plant and Equipment, amendments relating
to method of depreciation, (effective 1 January 2016), subject to
EU endorsement;
-- IAS 16, 'Property, Plant and Equipment', and IAS 41,
'Agriculture', amendments, regarding bearer plants (effective 1
January 2016), subject to EU endorsement;
-- Amendments to IAS 27, 'Separate financial statements' on the
equity method, (effective 1 January 2016), subject to EU
endorsement;
-- IAS 38, 'Intangible Assets', amendments relating to method of
amortisation (effective 1 January 2016), subject to EU endorsement;
and
-- Annual improvements 2014 - 2015. It include changes to, IFRS
5, 'Non-current assets held for sale and discontinued operations'
regarding methods of disposal; IFRS 7, 'Financial instruments:
Disclosures', (with consequential amendments to IFRS 1) regarding
servicing contracts; IAS 19, 'Employee benefits' regarding discount
rates, and ; IAS 34, 'Interim financial reporting' regarding
disclosure of information effective from 1 July 2016.
3 Financial risk management
3.1 Financial risk factors
The Group's activities expose it to a variety of financial
risks: market risk (including foreign exchange and cash flow
interest rate risk), credit risk and liquidity risk. These risks
are evaluated by management on an ongoing basis to assess and
manage critical exposures.
The condensed consolidated interim financial information does
not include all financial risk management information and
disclosures required in the annual financial statements; they
should be read in conjunction with the Group's annual financial
statements as at 31 December 2014. There have been no changes in
any risk management policies since the year ended 31 December
2014.
3.2 Capital risk management
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The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and to maintain an optimal capital
structure to reduce the cost of capital. There have been no changes
in capital risk management policies since the year ended 31
December 2014.
3.3 Fair value estimation
The table below analyses financial instruments carried at fair
value, by valuation method. The different levels have been defined
as follows:
a. Quoted prices (unadjusted) in active markets for identical
assets or liabilities (Level 1);
b. Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (Level
2); and Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level
3).
There are no assets at 30 June 2015 measured at fair value. The
following table presents the Group's assets that are measured at
fair value at 31 December 2014:
Level 1 Level 2 Level 3 Total
USD'000 USD'000 USD'000 USD'000
Derivative financial
instruments - 69 - 69
========== ========== ========== ==========
The following table presents the Group's liabilities that are
measured at fair value:
Level 1 Level 2 Level 3 Total
USD'000 USD'000 USD'000 USD'000
30 June 2015
Derivative financial
instruments
(Note 19) - 190 - 190
========== ========== ========== ==========
30 June 2014
Derivative financial
instruments
(Note 19) - 269 - 269
========== ========== ========== ==========
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. These
valuation techniques maximise the use of observable market data
where it is available and rely as little as possible on entity
specific estimates. If all significant inputs required to fair
value an instrument are observable, the instrument is included in
level 2. If one or more of the significant inputs is not based on
observable market data, the instrument is included in level 3.
There were no transfers between level 1, 2 and 3 during the
period.
There were no changes in valuation techniques during the
periods.
4 Critical accounting estimates and judgements
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements
for the year ended 31 December 2014.
Revenue recognition
The Group uses the percentage-of-completion method for
accounting 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 Group's
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 period end would result in an increase in revenue
and profit by USD 16 million (H1 2014: increase in revenue and
profit by USD 23 million) if the total costs to completion are
decreased by 10% and a decrease in revenue and profit by USD 14
million (H1 2014: decrease in revenue and profit by USD 22 million)
if the total costs to completion 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. Testing for impairment was performed on 31
December 2014 and is detailed in the annual financial statements
for the year ended 31 December 2014.
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
in such bonds, the market yields on government bonds should be
used. In the UAE there is no deep market either for corporate or
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 were to differ by 0.5 points from
management's estimates, the carrying amount of the employees' end
of service benefits provision at the balance sheet date would be an
estimated USD 1.5 million (2014: USD 1.2 million) lower or USD 1.6
million (2014: USD 1.3 million) higher.
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(st) January 2015 the business was reorganized into Business Units
on the basis of services rendered. Segment comparatives are
restated to reflect the organizational changes that have occurred
since the prior reporting period to present a like-for-like
view.
The Executive Directors view the business categorised in
business units on the basis of services rendered. Management
considers the performance of the business from New Build Rigs
("NBR"), Rig refurbishment ("RR"), Offshore/Onshore Construction
("O&OC") and Land Rig Services ("LRS") in addition to the
performance of Engineering and Construction ("E&C"), Operations
and Management ("O&M") and Sunbelt. These business units
qualify as the operating segments of the Group.
NBR derives its revenue from assembly and new build construction
for the offshore oil and gas and renewables sectors; RR derives its
revenue from the refurbishment, upgrade and conversion of jackup
rigs; O&OC derives its revenue from FPSO and other offshore and
onshore structures for oil and gas sector; LRS derives its revenue
from assembly, construction, upgrade and refurbishment of land
rigs.
Sunbelt derives its revenue from safety and training services;
E&C derives its revenue from minor fabrication, site works,
compression and chemicals; O&M derives its revenue from the
labour supply and other operations and maintenance services.
NBR, RR, O&OC and LRS are aggregated and reported as a
single segment (Segment A) as all of these activities are carried
out from common facilities located in the UAE with respect to oil
and gas rigs for the same customer base of rig owners. Also these
operating segments share the common pool of equipment, labour and
working capital finances. 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.
All other
Segment A segments Total
USD'000 USD'000 USD'000
Six months
ended 30 June
2015
Total segment
revenue 319,211 47,663 366,874
Inter-segment
revenue - (15,458) (15,458)
_________________________________________________________________________________________________ ________________________________________________________________________________________________ __________________________________________________________________________________________________
Revenue from
external
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customers 319,211 32,205 351,416
========= ========= =========
Gross operating
profit 60,206 13,256 73,462
========= ========= =========
Six months
ended 30 June
2014
Total segment
revenue 593,157 44,504 637,661
Inter-segment
revenue - (5,327) (5,327)
_________________________________________________________________________________________________ _______________________________________________________________________________________________ ___________________________________________________________________________________________________
Revenue from
external
customers 593,157 39,177 632,334
========= ========= =========
Gross operating
profit 90,576 21,749 112,325
========= ========= =========
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 operating 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:
Six months ended 30 June
2015 2014
USD'000 USD'000
Gross operating profit for the reportable
segments as
reported to the Executive Directors 60,206 90,576
Gross operating profit for other segments
as reported to the Executive Directors 13,256 21,749
Unallocated:
Under-absorbed employee and equipment
costs (18,705) (14,064)
Repairs and maintenance (8,436) (9,407)
Yard rent and depreciation (6,355) (4,112)
Others 820 1,034
-------------- --------------
Gross profit 40,786 85,776
-------------- --------------
Selling and distribution expenses (642) (879)
Provision for impairment of trade receivables 7,361 (3,702)
Other General and administrative expenses (22,826) (28,604)
Other gains/(losses) - net 2,197 804
Finance costs (8,298) (8,590)
Finance income 1,202 718
Others 559 589
------------ ------------
Profit for the period from continuing operations 20,339 46,112
====== ======
(Loss)/profit for the period from discontinued
operations (157) 31,561
====== ======
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:
Six months end 30 June
2015 2014
USD'000 USD'000
New Build Rigs 244,883 420,082
Rig Refurbishment 36,692 87,500
Onshore/Offshore Construction 19,924 61,895
Land Rig Services 17,712 23,680
All other segments 32,205 39,177
________ _________
351,416 632,334
========== ==========
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 125,587 186,543
External customer B 65,757 78,086
External customer C 30,624 65,806
________ _________
221,968 330,435
========= ==========
6 Other gains/(losses) - net
Six months ended 30 June
2015 2014
USD'000 USD'000
Profit on disposal of property, plant and
equipment 203 38
Exchange (loss)/gains - net (200) 308
Others 2,194 458
---------------- ----------------
2,197 804
======== ========
7 Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the period
excluding ordinary shares purchased by EBT and held as treasury
shares (Note 16).
(b) Diluted
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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.
Six months ended 30 June
2015 2014
USD'000 USD'000
The calculations of earnings per share
are based on the
following profit and numbers of shares:
Profit for the period 20,182 77,673
------------------------- -------------------------
Weighted average number of shares for
basic
earnings per share 341,710,353 289,037,555
Adjustments for:
* Assumed vesting of performance share plan 385,939 104,738
* Assumed vesting of free share plan 74,463 -
------------------------- -------------------------
Weighted average number of shares for
diluted earnings
per share 342,170,755 289,142,293
------------------------- -------------------------
Earnings per share:
Basic 5.91c 26.87c
=========== ===========
Diluted 5.90c 26.86c
=========== ===========
Earnings per share from continuing operations:
Basic 5.95c 15.95c
Diluted 5.94c 15.95c
=========== ===========
(Loss)/earnings per share from discontinued
operations:
Basic (0.04)c 10.92c
Diluted (0.04)c 10.91c
=========== ===========
8 Operating profit
Operating profit (from continuing operations) is stated after
charging:
Six months ended 30 June
2015 2014
USD'000 USD'000
Depreciation 8,973 10,567
====== ======
Operating lease rentals - land and buildings 8,813 8,906
====== ======
9 Property, plant and equipment
USD'000
Net book amount at 1 January 2014 148,323
Additions 9,620
Net assets of disposal group classified as
held for sale (Note 14) (59)
Net book amount of disposals (4)
Depreciation (10,567)
--------------
Net book amount at 30 June 2014 147,313
Additions 9,248
Net assets of disposal group classified as
held for sale (Note 14) 20
Net book amount of disposals (151)
Depreciation (17,087)
---------------
Net book amount at 31 December 2014 139,343
Additions 43,451
Net book amount of disposals (90)
Depreciation (8,973)
--------------
Net book amount at 30 June 2015 173,731
=======
The additions of USD 43.5 million during the current period
comprise USD 38.3 million of additions to capital work-in-progress,
USD 3.5 million of additions to operating equipment, USD 0.8
million of additions to buildings and infrastructure and USD 0.9
million of additions to other fixed assets.
10 Intangible assets
Goodwill Others Total
USD'000 USD'000 USD'000
Net book amount at 1 January
2014 180,539 32,487 213,026
Additions - 1,216 1,216
Amortisation - (5,611) (5,611)
--------------- --------------- ----------------
Net book amount at 30 June 2014 180,539 28,092 208,631
Additions - 2,379 2,379
Amortisation - (6,284) (6,284)
--------------- --------------- ---------------
Net book amount at 31 December
2014 180,539 24,187 204,726
Additions - 1,474 1,474
Amortisation - (1,251) (1,251)
--------------- --------------- ----------------
Net book amount at 30 June 2015 180,539 24,410 204,949
======= ====== =======
Management is in the process of reviewing the allocation of
goodwill based on the change in operating segments.
11 Investment accounted for using the equity method
Investment in a joint venture
At 30 June At 31 December
2015 2014
USD'000 USD'000
Balance as at 1 January 5,118 5,615
Dividend received during the period/year (579) (3,488)
Share of profit for the period/year 661 2,991
------------------ ------------------
Closing balance 5,200 5,118
======== ========
Details of the Group's joint ventures during the period and at
the balance sheet date is as follows:
Place of incorporation Proportion
Name of the joint venture and operation of ownership Status
Maritime Industrial Operational
Services Arabia Co. Jubail, Kingdom
Ltd. ('MISA')* of Saudi Arabia 30%
* Production, manufacturing and erection of heat exchangers,
pressure vessels, tanks, structural steel, piping and other related
activities.
Summarised financial information in respect of the Group's joint
ventures is set out below:
MISA
At 30 June At 31 December
2015 2014
USD'000 USD'000
Total non-current assets 5,272 5,450
Total current assets 22,532 24,684
Total non-current liabilities (2,448) (2,152)
Total current liabilities (excluding
income tax payable) (7,358) (8,117)
------------------ ------------------
Net assets (excluding income tax payable) 17,998 19,865
Income tax payable (501) (1,232)
------------------ ------------------
Net assets 17,497 18,633
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======== ========
Group's share of joint venture's net
assets (excluding income tax payable)
- 30% 5,399 5,960
Group's share of joint venture's income
tax payable (199) (842)
------------------ ------------------
Group's share of joint venture's net
assets (net of Group's share of income
tax) 5,200 5,118
======== ========
Six months ended Year ended
30 June 31 December
2015 2014
USD'000 USD'000
Revenue 14,155 39,824
Expenses (11,282) (27,037)
------------------ ------------------
Profit before tax 2,873 12,787
======== ========
Group's share of joint venture's net
profit - net of Group's share of income
tax 661 2,991
======== ========
MISA is a private company and there is no quoted market price
available for its shares.
The Group has the following contingencies and commitments
relating to Group's interest in the joint venture.
At 30 June At 31 December
2015 2014
USD'000 USD'000
Letters of guarantee 1,672 1,695
======== ========
Operating lease commitments 31 187
======== ========
12 Trade and other receivables
At 30 June At 31 December
2015 2014
USD'000 USD'000
Trade receivables 97,878 48,622
Other receivables and prepayments 22,886 21,620
Advances to suppliers 4,181 6,533
Receivable from a related party (Note 15) 234 68
--------------- ---------------
125,179 76,843
Less: Provision for impairment of trade
receivables (4,246) (11,622)
--------------- ---------------
120,933 65,221
Amounts due from customers on contracts 41,947 185,476
Contract work in progress 169,654 152,922
--------------- ---------------
332,534 403,619
======= =======
Non-current portion:
Advances to suppliers 3,010 4,932
--------------- ---------------
Current portion 329,524 398,687
======= =======
Amounts due from customers on contracts comprise:
At 30 June At 31 December
2015 2014
USD'000 USD'000
Costs incurred to date 976,388 1,042,589
Attributable profits 151,642 190,090
--------------------- ---------------------
1,128,030 1,232,679
Less: Progress billings (1,086,083) (1,047,203)
--------------------- ---------------------
41,947 185,476
========== ==========
13 Cash and bank balances
At 30 June At 31 December
2015 2014
USD'000 USD'000
Cash at bank and on hand 116,096 82,945
Term deposits and margin deposits 276,022 276,163
--------------- ---------------
Cash and bank balances - current 392,118 359,108
Term deposits and margin deposits-non-current 13,252 12,517
--------------- ---------------
405,370 371,625
Less: Margin/short term deposits under
lien (12,765) (12,312)
Less: Deposits with an original maturity
of more than three months (51,696) (46,961)
-------------- --------------
Cash and cash equivalents (for purpose
of the cash flow statement) 340,909 312,352
======= =======
At 30 June 2015, the cash at bank and term deposits were held
with 15 banks (31 December 2014: 15 banks). The effective average
interest rate earned on term deposits was 0.24% (31 December 2014:
0.51%) per annum. Margin and short term deposits of USD 12.8
million (31 December 2014: USD 12.3 million) and deposits with an
original maturity of more than 3 months amounting to USD 42.0
million (31 December 2014: USD 37.3 million) are held under lien
against guarantees issued by the banks (Note 25).
14 Discontinued operations and disposal groups
Discontinued operations
(Loss)/profit from discontinued operations comprises:
Six months ended Six months ended
30 June 2015 30 June 2014
Litwin Inspec Litwin Total
USD'000 USD'000 USD'000 USD'000
Revenue 1,640 3,008 13,025 16,033
Cost of sales (1,763) (2,080) (12,307) (14,387)
General and
administrative
expenses (206) (193) (1,305) (1,498)
Other
gains/losses -
net 165 2 237 239
Finance costs -
net (59) - (96) (96)
---------------- ----------------- ----------------- -----------------
(Loss)/profit
from
discontinued
operations (223) 737 (446) 291
======= ======= ======= =======
The main elements of the cash flows are as follows:
Six months ended Six months ended
30 June 2015 30 June 2014
Litwin Inspec Litwin Total
USD'000 USD'000 USD'000 USD'000
Operating
cash
flows 702 2,954 2,067 5,021
Investing
cash
flows (123) (74) - (74)
Financing
cash
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flows (59) - (131) (131)
----------------- ----------------- ----------------- -----------------
Total cash
flows 520 2,880 1,936 4,816
======= ======= ======= =======
Inspec
During 2013, the Group decided to dispose Inspec. This
transaction was completed on 3 March 2014.
Litwin
During 2014, the Group decided to dispose Litwin. This
transaction was completed on 21 April 2015.
Disposal group
At 31 December 2014, the major classes of assets and liabilities
of disposal group (Litwin) were as follows:
At 31 December 2014
USD'000
Assets classified as held for sale
Property, plant and equipment (Note 9) 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 (Note 18) 333
Trade and other payables 10,213
-----------------
10,546
=======
The commitments of disposal group are as follows:
Bank guarantees 9,395
=======
Litwin
Net cash inflow on the subsidiary disposed during the period is
as follows:
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 (806)
---------------
Net cash inflow for the purpose of consolidated cash
flow statement 2,034
======
15 Related party balances and transactions
Related parties comprise Lamprell Holdings Limited ("LHL")
(which owns 33% of the issued share capital of the Company),
certain legal shareholders of Group companies, Directors and key
management personnel of the Group and entities controlled by
Directors and key management personnel. Key management includes
directors (executive and non-executive) and members of the
executive committee. Other than disclosed elsewhere in the
condensed consolidated interim financial information, the Group
entered into the following significant transactions during the
period with related parties at prices and on terms agreed between
the related parties.
Six months ended 30 June
2015 2014
USD'000 USD'000
Key management compensation 3,289 3,342
====== ======
Legal and professional services 174 248
====== ======
Sales to a joint venture 81 221
====== ======
Purchases from a joint venture 208 -
====== ======
Sponsorship fees and commissions paid to
legal shareholders of subsidiaries 257 462
====== ======
Key management compensation comprises:
Six months ended 30 June
2015 2014
USD'000 USD'000
Salaries and other short term benefits 2,433 2,914
Share based payments - value of services
provided 757 336
Post-employment benefits 99 92
------------- -------------
3,289 3,342
====== ======
The terms of the employment contracts of the key management
include reciprocal notice periods of between six to twelve
months.
Due from a related party
At 30 June At 31 December
2015 2014
USD'000 USD'000
Current
MISA (Note 12) 234 68
===== =====
16 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
period 81,363,469 6,794 112,785
Less: Transaction costs relating
to the rights issue - - (8,566)
------------------------ ---------------- ----------------
At 30 June 2014, 31 December 2014
and 30 June 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 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 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 2015, Lamprell plc employee benefit trust ("EBT")
acquired no shares (2014: 189,111 shares) of the Company. The total
amount paid to acquire the shares was Nil (2014: USD 0.49 million)
and has been deducted from the consolidated retained earnings.
During 2015, no shares (2014: 187,580 shares amounting to USD 0.50
million) were issued to employees on vesting of the free shares and
16,217 shares (31 December 2014: 16,217 shares) were held as
treasury shares at 30 June 2015. The Company has the right to
reissue these shares at a later date. These shares will be issued
on vesting of free shares/performance shares/share options granted
to certain employees of the Group.
17 Other reserves
Legal Merger Translation
reserve reserve reserve Total
USD'000 USD'000 USD'000 USD'000
At 1 January 2014 98 (22,422) 191 (22,133)
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------------- -------------- -------------- --------------
Currency translation differences - - (196) (196)
Disposal of a subsidiary - 3,850 - 3,850
------------- -------------- -------------- --------------
At 30 June 2014 (Unaudited) 98 (18,572) (5) (18,479)
Currency translation differences - - (176) (176)
------------- -------------- -------------- --------------
At 31 December 2014 (Audited) 98 (18,572) (181) (18,655)
Currency translation differences - - 212 212
------------- -------------- -------------- --------------
At 30 June 2015 (Unaudited) 98 (18,572) 31 (18,443)
======== ======== ======== ========
18 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, 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:
USD'000
At 1 January 2014 36,046
Current service cost 2,694
Interest cost 564
Liabilities of disposal group classified
as held for sale (540)
Payments during the period (2,578)
--------------
At 30 June 2014 36,186
Current service cost 2,045
Interest cost 1,137
Actuarial losses 3,742
Liabilities of disposal group classified
as held for sale 207
Payments during the period (4,565)
------------
At 31 December 2014 38,752
Current service cost 2,562
Interest cost 587
Payments during the period (2,286)
------------
At 30 June 2015 39,615
======
The amounts recognised in the consolidated income statement are
as follows:
USD'000
Current service cost 2,694
Interest cost 564
------------
At 30 June 2014 3,258
------------
Current service cost 1,932
Interest cost 1,039
------------
At 31 December 2014 2,971
------------
Current service cost 2,562
Interest cost 587
------------
At 30 June 2015 3,149
======
The charge for the six months period ended 30 June 2015 is based
on the estimates provided in the actuarial report as at 31 December
2014. There has been no change in principal actuarial assumptions
used as at 31 December 2014.
19 Derivative financial instruments
2015 2014
----------------------------------------------- -----------------------------------------------
Notional amount Assets Liabilities Notional 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
Interest rate
swaps 100,000 - 190 100,000 69 -
---------------- ------------ ------------ ---------------- ------------ ------------
Total 100,000 - 190 102,899 69 269
======== ====== ====== ======== ====== ======
Non-current
portion:
Interest rate
swaps 80,000 - 152 80,000 55 -
---------------- ------------ ------------ ---------------- ------------ ------------
Current portion 20,000 - 38 22,899 14 269
---------------- ------------ ------------ ---------------- ------------ ------------
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 30 June 2015 of this derivative was USD 0.19 million
(2014: USD 0.07 million).
20 Trade and other payables
At 30 June At 31 December
2015 2014
USD'000 USD'000
Trade
payables 32,287 30,754
Accruals 116,820 138,169
Amounts
due to
customers
on
contracts 149,560 148,680
------------------------------------------------------- -------------------------------------------------
298,667 317,603
======= =======
Amounts due
to
customers
on
contracts
comprise:
Progress
billings 424,425 477,583
Less: Costs
incurred
to date (233,060) (299,010)
Less:
Recognised
profits (41,805) (29,893)
------------------------------------------------------- -------------------------------------------------
149,560 148,680
======= =======
21 Provision for warranty costs and other liabilities
Warranty Minimum
costs purchase
obligations Total
USD'000 USD'000 USD'000
At 1 January 2014 5,400 - 5,400
Charge during the period 7,500 3,423 10,923
--------------- --------------- ---------------
At 30 June 2014 12,900 3,423 16,323
Charge during the period 1,500 - 1,500
Released/utilised during the
period (2,011) - (2,011)
--------------- --------------- ---------------
At 31 December 2014 and 30
June 2015 12,389 3,423 15,812
======= ======= =======
22 Borrowings
At 30 June At 31 December
2015 2014
USD'000 USD'000
Bank term loans 89,045 98,979
======= =======
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