TIDMLAM
RNS Number : 5013R
Lamprell plc
22 September 2017
22 September 2017
LAMPRELL PLC
("Lamprell" and with its subsidiaries the "Group")
INTERIM FINANCIAL RESULTS
FOR SIX MONTHS TO 30 JUNE 2017
Robust balance sheet and discipline in a challenging market
Transformational joint venture in Saudi Arabia progressing as
planned
Financial highlights
-- Revenue of USD 159.2 million, broadly in line with our expectations
-- Net profit of USD 1.1 million
-- Strong balance sheet maintained; robust net cash position of
USD 305.9 million strengthened due to rig deliveries in 1H;
moderate net cash reduction expected in 2H due to initial
investment in the Maritime Yard in Saudi Arabia and increased
working capital requirements
-- Gross margin of 13.0% achieved in 1H 2017 due to successful
close-out of three remaining jackup rig projects and HMC Kaombo
project; two major projects ongoing with delivery in 2018
Operational highlights
-- Total recordable incident rate (TRIR) for the period of 0.41
(31 December 2016: 0.29), safety and quality remain management
priorities
-- Three remaining jackup rigs delivered successfully, two to
National Drilling Company (NDC) and one to Shelf Drilling, on
schedule and on budget
-- Buoyancy tanks for HMC Kaombo and final modules for UZ750
project all delivered and both projects now completed
-- Construction phase commenced on the East Anglia One offshore
windfarm project, consisting of 60 foundations
-- Master Marine major upgrade project in respect of the mobile
operating unit "Haven" for use offshore Norway progressing to
schedule
-- New contract award for two land rigs for Schlumberger
-- As at 30 June 2017, backlog of USD 300 million (31 December 2016: USD 393 million)
Strategic and corporate highlights
-- John Malcolm appointed as new Non-Executive Chairman with effect from 20 September 2017
-- Transformational joint venture agreement signed with Saudi
Aramco, Bahri and Hyundai Heavy Industries (HHI) for major maritime
yard development in Saudi Arabia and approved by shareholders on 26
June 2017; formation activities for the joint venture company well
under way
-- Pre-qualification process for Long Term Agreement (LTA) with Saudi Aramco ongoing
-- Growing profile in renewables sector following award of East
Anglia One windfarm project, resulting in new bidding
opportunities
Current trading and outlook
-- Maintain strong balance sheet and disciplined approach in a challenging market
-- Strategic business review continues with a focus on bid
optimisation, further operational efficiencies and geographical and
sector diversification
-- Revenue for FY2017 expected to be in the range of USD 370-390
million, marginally below previous guidance due primarily to the
continuing low levels of walk-in work reflecting market
conditions
-- FY2018 outlook remains challenging with revenue currently
expected to be around 10% lower than FY2017 levels, contingent on
the timing of potential contract awards
-- Continued margin pressure anticipated at these revenue levels
as we look to retain our core competitive strengths and upskill our
workforce to implement our strategic initiatives. Focus on
disciplined cost control unchanged.
-- Bid pipeline increased to USD 3.1 billion (31 December 2016: USD 2.5 billion), underpinned by opportunities in core markets as well as new strategic initiatives in the renewables and EPC sectors; while the increased levels of bidding activity are encouraging, we do not expect to see revenue growth from potential contract awards until 2019.
1H 2017 FINANCIAL RESULTS 1H 2017 1H 2016
(USD million, unless stated)
Revenue 159.2 451.3
Gross margin 13.0% 6.1%
Underlying gross margin 13.0% 13.1%
EBITDA 13.5 10.0
Profit/(Loss) from continuing
operations after income tax and
after exceptional items 1.1 (4.4)
Reported diluted earnings/(loss)
per share (US cents) 0.30 (1.27)
Net cash as at 30 June 305.9 151.5
Christopher McDonald, Chief Executive Officer said:
"The business continues to deliver solid results broadly in line
with our expectations despite the challenging market environment.
Our balance sheet remains robust due to the combination of the
efficiency measures we have taken over the past two years and our
tight cost control measures. This places us in a good position to
be cost competitive and maintain our discipline in bidding for new
work. Lamprell continues to be well positioned with a strong
balance sheet, and our strategy is designed to support near-term
resilience and secure long-term sustainable growth.
In particular, I am delighted that we secured an unprecedented
opportunity to partner with Saudi Aramco, Bahri and Hyundai Heavy
Industries to create a major new maritime yard in Saudi Arabia,
establishing a significant long-term foothold in the largest and
one of the most dynamic oil and gas markets. The project will
further strengthen our position in the region and will provide
exposure to significant new opportunities in a key market for the
energy industry."
The management team will hold a presentation on 22 September at
9.30am at Holborn Bars (138-142 Holborn, London EC1 2NQ). The live
webcast will be accessible on Lamprell's website or on the
following link:
http://webcasting.brrmedia.co.uk/broadcast/59a942e1d1178550cf77404b
or through conference call dial in: +44 (0)330 336 9411 (UK local),
with confirmation code: 4224850.
- Ends -
Enquiries:
Lamprell plc
Christopher McDonald, Chief
Executive Officer +971 (0) 4 803 9308
Tony Wright, Chief Financial
Officer +971 (0) 4 803 9308
Maria Babkina, Investor Relations +44 (0) 7852 618 046
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 5,000 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
828,000 m2 with 1.9 km of quayside.
Lamprell is listed on the London Stock Exchange (symbol
"LAM").
Chief Executive Officer's Review
As expected, 2017 is proving to be challenging as the Company
experiences a prolonged period of lower activity levels across the
industry. As a result, Group revenues in the first half of 2017
were significantly lower than during the comparative period in the
prior year. However, we are encouraged by increased levels of
bidding activity resulting from implementation of our strategic
initiatives although due to the timing of potential contract
awards, we do not expect to see revenue growth from them until
2019. Lamprell is now focused on harnessing the combined results
from its recent cost control measures, internal restructuring and
strong cash management efforts to be competitive in targeting new
business opportunities in Saudi Arabia as well as in the renewables
and EPC sectors.
Operational performance in 1H
The Group delivered three jackup drilling rigs in the first half
of the year. We completed our largest ever project comprising nine
jackup rigs built over the course of eight years with the delivery
of the "Al Hudairiyat" and the "Al Lulu" jackup rigs to NDC in
February and April respectively. We delivered the third rig of the
year in Q2 2017 to Shelf Drilling, which has been deployed
alongside its previously-constructed sister rig operating offshore
Thailand. Our operational team showed great determination and
resilience to deliver all three rigs on schedule and on budget,
overcoming the technical issues experienced in 2016. In addition,
the modules fabrication project for Petrofac also completed in
April 2017, having delivered a total of 45 modules for use on the
Upper Zakum project in Abu Dhabi.
Project completions and the slow pace of new contract awards
have brought yard activities to a relatively low level, but
fabrication work has commenced on our flagship renewables contract
for ScottishPower Renewables in relation to the East Anglia One
project. The major upgrade of the 'Haven' mobile operating unit for
Master Marine is progressing well and is on track for completion of
construction works in our Hamriyah facility later in 2017, with
installation in Norway scheduled in 1H 2018.
As announced in August 2017, we reached an amicable settlement
with Cameron, a subsidiary of Schlumberger, in respect of the
issues associated with their jacking equipment in 2016, which
impacted both our financial and operational performance in 2016. We
are pleased to have successfully resolved the issues. Lamprell has
preserved a strong relationship with Schlumberger, which has
commissioned Lamprell to fabricate two land rigs according to the
client's 'rig of the future' design. This opportunity further
strengthens Lamprell's credentials in the land rig sector.
In the first six months of 2017, our rolling TRIR increased to
0.41, driven by unsatisfactory safety processes at an external site
which contracted the services of some of our workers. We have taken
the necessary measures to protect our workforce and terminated the
contractual relationship with the site. Our focus on safety remains
unchanged and, with the appointment of a new VP of HSESQ (Health,
Safety, Environment, Security and Quality), we are continuing our
internal efforts to ensure that the health and wellbeing of our
employees remains a top priority and that our safety track record
returns to our historic strong performance levels.
Saudi Maritime Joint Venture
On 31 May 2017, the Group signed a joint venture agreement with
Saudi Aramco, Bahri and HHI to establish and operate a maritime
yard in the Kingdom of Saudi Arabia through a joint venture company
("JVCo"). The joint venture was approved by our shareholders on 26
June 2017 and we anticipate satisfaction of all conditions
precedent by the end of year including the formation of the
JVCo.
Once commissioned, the maritime yard will become one of the
largest yards in the Arabian Gulf with 4.1km of quayside and
640,000 m(2) of workshops. Lamprell will be the technical partner
in two zones focusing on construction of jackup drilling rigs as
well as maintenance, repair and overhaul ("MRO") services for
jackup drilling rigs and commercial vessels, with HHI taking
responsibility for the two zones focusing on the construction and
MRO services for offshore support vessels and the construction of
commercial vessels. The yard is expected to be partially
operational by 2019 with full functionality reached by 2021.
As part of the project documents for the joint venture, Saudi
Aramco and JVCo will sign an offtake agreement for construction of
20 offshore jackup drilling rigs over a 10-year period as well as
provision of MRO services for jackup drilling rigs. The offtake
agreement allows Saudi Aramco to nominate its newly-formed Saudi
drilling joint venture between Saudi Aramco and Rowan as the
offtaker. Until the maritime yard is operational, JVCo is expected
to subcontract some of this work, with significant component parts
of the first two jackup drilling rigs expected to be subcontracted
to Lamprell's yards in the UAE in 2018.
Work on the project is progressing well with the first contract
for dredging works at the yard awarded during the summer and
further construction contracts expected to be placed by year-end.
We will update the market on major milestones as the development
progresses.
Board changes
On 11 September, we announced the appointment of John Malcolm as
Lamprell's new Non-Executive Chairman to take effect following John
Kennedy's retirement on 20 September 2017. John Malcolm has been an
independent Non-Executive Director of the Company since 27 May 2013
and the Board determined that his strong industry experience and
deep knowledge of the Company presented an excellent candidate for
the Chairman role from existing Board members. On behalf of
everyone at Lamprell, I would like to thank John Kennedy for his
contribution to the Group's development and transformation over the
last five years.
Market overview and bid pipeline
We recognised the key marketing needs: to expand the Company's
business development ("BD") function, to maintain a competitive and
attractive offering, and to broaden Lamprell's addressable markets.
With this in mind, in 1H 2017 we recruited a new VP of BD and our
risk-based, structured approach to bidding ensures that we only
pursue opportunities that fit well with our skillset, experience
and growth ambition whilst generating satisfactory margins. This
approach is designed to ensure that reward is aligned with the risk
profile for any given project. Despite the widely reported market
downturn in 2017, there are early indications of a potential market
recovery. We are seeing improved bidding levels, both in our core
markets and especially in the renewables sector, and our bid
pipeline has grown to USD 3.1 billion from USD 2.5 billion at the
end of 2016. The 2016 contract award in the renewables sector for
the East Anglia One project has positioned Lamprell as an important
participant in that market. As we move through project execution,
we are on a learning curve with start-up costs and inefficiencies
which we are working through. Although this will impact our margins
on this first project, it has reinforced our view of the
significant potential that the renewables market presents to the
growth of the Group. Furthermore, and given our experience in
constructing complex jackup windfarm installation vessels, we are
seeing an increase in bid requests for both foundations and
installation vessels.
One of the key Group priorities is the strategic partnership
with Saudi Aramco, one of the few oil and gas majors still
committed to rig commissioning in the current market. The joint
development of a major maritime facility in the Middle East region
will provide new revenue streams for Lamprell and the Group is also
in the process of pre-qualifying to bid for a long-term agreement
with Saudi Aramco. The outcome of this highly competitive process
is expected to be announced in the coming six months. If
successful, Lamprell would have access to a significant project
pipeline of non-rig work - awards under the long-term agreements
with existing contractors amounted to USD 4 billion in 2016
alone.
We are also determined to build on our credentials in EPC
projects within the energy industry and we are reviewing partnering
options to help access this market. We are currently progressing
discussions with a small number of established and reputable
partners to bid for much larger scale projects in new geographies.
Converting the pipeline into contract awards requires significant
ongoing effort, but we are investing in our capabilities for this
market, both by developing our infrastructure and attracting
specialist talent to support our core competenices and expertise.
Consequently, we are hiring various specialists with extensive
expertise in EPC projects to support and complement our existing
competencies and are currently installing a state-of-the-art
pipeshop near our Hamriyah facility.
Outlook
We continue to expect 2017 to be a difficult year. Top-line
performance will remain subdued as a result of the slow pace of the
new major contract awards that we have seen over the past 24
months. We do not expect to see the potential improvement in market
conditions impacting our business in 2018 due to the lag between
improved market conditions and project awards in our business
streams. In the meantime, we remain focused on the immediate
challenges facing the business and on implementing our growth
strategy for the medium term. The slow pace of contract awards (for
walk-in work in particular) has resulted in our adjusting the
revenue guidance for the full year to USD 370-390 million, with
revenue weighted towards 2H 2017 as the major projects enter their
high activity phases of construction. Our revenue expectations for
2018 are around 10% lower than 2017 and are conditional upon the
timing of potential contract awards. We are encouraged by increased
levels of bidding activity but do not expect to see revenue growth
until 2019 on the basis of such awards in late 2018. Our investment
in a skilled workforce will help to ensure delivery of our projects
and, in combination with our bidding strategies, to convert a
robust pipeline of profitable projects in existing business streams
and in the renewables and EPC sectors. While this may result in
near-term margin pressure, we consider that this is an important
investment for our future as we implement our strategy.
Christopher McDonald
Chief Executive Officer
Lamprell plc
Financial Review
The Group's financial performance was broadly in line with our
expectations. Reduced levels of new contract awards in prior years
have affected revenue levels as compared to 1H 2016, but successful
closure of various major projects drove strong margins for the
reporting period. In addition, the balance sheet remains robust
with healthy cash reserves.
Results from operations
The Group's total revenue for the six-month period ended 30 June
2017 was USD 159.2 million, significantly lower than the USD 451.3
million reported for the same period last year. The reduction
reflects the adverse market conditions, particularly in the new
build jackup rig sector and low levels of contract awards in 2016
and 2017 to date.
Revenue breakdown reflects current industry activity with new
build jackup rigs representing just over 31% of total Group revenue
for the period or USD 49.4 million, significantly down on the
previous year.
Revenues from oil and gas contracting services and offshore
platforms have improved, contributing USD 42.3 million and USD 40.2
million respectively as Master Marine and the Scottish Power
project activity intensifies.
Our services businesses, particularly the manpower segment, have
performed well contributing revenues of USD 24.3 million.
Modules revenues decreased to USD 3.0 million from USD 22.6
million during the comparative period in the prior year as we
completed the Petrofac UZ750 project.
Margin performance
Gross profit decreased to USD 20.6 million compared to USD 27.5
million during the comparative period.
Gross margin was 13.0%, an increase on the figure of 6.1%
reported for the same period last year, and in line with the 13.1%
underlying margin before the impact of the Ensco settlement in
2016. The gross margin in 1H 2017 was driven by the succeesful
completion of the three new build jack up rigs and the HMC Kaombo
project. These project completions offset the impact that the low
revenue levels had on recovery of the Group's fixed cost base.
Further cost reduction measures, announced in March 2017, have
led to a reduction in overheads as we continue to align the
business with the market outlook. Our overheads in 1H have reduced
accordingly by USD 14.5 million in line with our expectations.
EBITDA, from continuing operations and including exceptional
items for the period, was USD 13.5 million (1H 2016: USD 10.0
million). The Group's EBITDA margin was 8.5% reflecting the stable
gross margin and reduction in overhead.
Finance costs and financing activities
Net finance costs in the first half of 2017 decreased further to
USD 3.1 million (1H 2016: USD 5.5 million) due to the lower levels
of debt, facility commitment fees and bonding commissions.
Net profit/loss after exceptional items and earnings per
share
The Group generated a net profit of USD 1.1 million (1H 2016:
net loss of USD 4.4 million). The diluted earnings per share for
the six-month period ended 30 June 2017 was USD 0.30 cents (1H
2016: diluted loss per share of USD 1.27 cents).
Capital expenditure
The Group's capital expenditure on tangible assets during the
six-month period ended 30 June 2017 was USD 13.7 million, largely
similar with 1H 2016, as we continue to improve yard efficiencies
and invest in the pipe shop. We expect capital expenditure on our
existing yards to be broadly flat over the the rest of the
year.
The Group will also make the initial investment in the Saudi
Maritime Yard of USD 20 million in the second half of the year.
This represents the first instalment of our capital injection into
the joint venture and JVCo will use the monies to fund the joint
venture formation. Further instalments are expected to be required
from the joint venture partners by the Saudi Maritime Yard on an
annual basis over the coming years. We expect to fund this project
from our balance sheet.
Lamprell retains significant flexibility in capital expenditure
on its existing operations and our current commitments reflect the
strength of the balance sheet and our net cash position.
Cash flow and liquidity
The Group's net cash flow from operating activities for 1H 2017
reflected a net inflow of USD 56.7 million (1H 2016: net outflow of
USD 38.2 million), which was driven primarily by decreased working
capital requirements as milestone payments on completed projects
were collected. Prior to working capital movements and the payment
of employees' end of service benefits, the Group's net cash inflow
was USD 20.0 million (1H 2016: inflow of USD 17.1 million).
Cash and bank balances increased by USD 20.6 million to USD
355.2 million during the first half of the year resulting from net
cash inflow from operations, repayment of debt and a net cash
outflow from investing activities. Net cash is expected to trend
downwards moderately by the end of the year as we invest in the
continuing efficiency improvements in our yard facilities, make the
initial investment in the Saudi Maritime yard joint venture and
complete the acquisition of two S116E kits which we initiated the
purchase of in 2015 from Cameron LeTourneau to secure our supply
chain.
Balance sheet
The Group's net cash increased further to USD 305.9 million in
line with our expectations as milestone payments on delivery of the
three new build jack up rigs were collected (31 December 2016: USD
275.2 million).
The Group's total current assets at the period-end were USD
588.5 million (31 December 2016: USD 616.8 million). Trade and
other receivables decreased to USD 196.5 million (31 December 2016:
USD 275.3 million).
Shareholders' equity remained relatively unchanged at USD 559.3
million (31 December 2016: USD 555.4 million).
Borrowings
Borrowings at the end of the first half of 2017 were USD 49.3
million (31 December 2016: USD 59.5 million).
At 30 June 2017, the Group's facilities comprised (a) a USD 100
million term loan amortised over five years, of which USD 50
million had been repaid by the end of the reporting period; (b) USD
50 million for general working capital purposes which remained
unutilised; and (c) USD 100 million of working capital for project
financing (reduced from USD 200 million), also undrawn. During 1H,
the USD 150 million committed bonding facility (which had been
reduced from USD 250 million in 2016) to be used in connection with
new contract awards funded by the above working capital facility,
was reduced by a further USD 100 million as it was replaced by
lower cost bilateral bonding facilities. The Group's debt to equity
ratio at the 30 June 2017 was low at 8.8%.
Amendments to debt facility covenants
The Group's balance sheet remains strong with USD 305.9 million
in net cash. The Board believes that maintaining significant
liquidity is beneficial to the Group. As a result, during 1H the
Group obtained debt facility amendments from its lenders in
relation to certain of the financial covenants, to provide
financial flexibility. These include a waiver of the ratio of
EBITDA to Debt Service covenant up to the period ended 31 December
2018 and the ratio of Borrowings to EBITDA covenant for the periods
ended 31 December 2017 and 30 June 2018. Securing these waivers
further demonstrates the strong, continuing support that the Group
receives from its lender group.
Going concern
After reviewing its cash flow forecasts for a period of not less
than 12 months from the date of signing these half-yearly 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
In the context of ongoing market challenges, the low revenue
levels in 2017 and the investment for future growth in the Saudi
Maritime Yard, the Directors do not recommend the payment of an
interim dividend for the period in relation to current financial
year ending 31 December 2017. The Directors will continue to review
this position in light of market conditions at the relevant
time.
Principal risks and uncertainties
Principal risks are a risk or combination of risks that, given
the Group's current position, could seriously affect the
performance, future prospects or reputation of the Group. They
include those risks that could materially threaten the Company's
business model, performance, solvency or liquidity, or prevent it
from meeting its strategic objectives.
In terms of identifying and managing the principal risks and
uncertainties, the Group has an established risk management
framework which requires all risk owners to identify, evaluate and
monitor risks and take steps to reduce, manage or eliminate the
risk. The Board has oversight of enterprise risk management.
Responsibility for monitoring and reviewing the integrity and
effectiveness of the Group's overall systems of risk management and
internal controls is delegated to the Audit & Risk
Committee.
For details of the principal risks and uncertainties faced by
the Group, please refer to the Notes to Financial Statements in the
Company's 2016 Annual Report as well as the Risk Report on pages 14
to 17 in the same document. The Audit & Risk Committee and the
Board as a whole have continued to review the Group's risks
throughout the first half of 2017 and the directors consider that,
in addition to the principal risks and uncertainties included in
the Annual Report for the year ended 31 December 2016, there is an
additional risk arising from project execution in light of the
Group's movement into the renewables and EPC sectors, consistent
with its strategy. One example is the East Anglia One project in
the renewables sector, discussed above in the Chief Executive
Officer's Review.
Tony Wright
Chief Financial Officer
Lamprell plc
Lamprell plc
Condensed consolidated interim income statement
Six months ended 30 June 2017 Six months ended 30 June 2016
Note Pre-exceptional Exceptional Total Pre-exceptional Exceptional Total
items items items Items
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue 4 159,169 - 159,169 451,334 - 451,334
Cost of sales (138,525) - (138,525) (423,799) - (423,799)
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Gross profit 20,644 - 20,644 27,535 - 27,535
Selling and
distribution
expenses (262) - (262) (326) - (326)
General and
administrative
expenses 5 (18,529) - (18,529) (25,896) (680) (26,576)
Other gains -
net 394 - 394 126 - 126
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Operating profit 2,247 - 2,247 1,439 (680) 759
Finance costs (4,919) - (4,919) (7,024) - (7,024)
Finance income 1,841 - 1,841 1,554 - 1,554
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Finance costs -
net (3,078) - (3,078) (5,470) - (5,470)
Share of profit
of investment
accounted for
using the
equity method 10 1,991 - 1,991 506 - 506
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Profit /(loss)
before income
tax 1,160 - 1,160 (3,525) (680) (4,205)
Income tax
expense (93) - (93) (162) - (162)
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Profit /(loss)
for the period 1,067 - 1,067 (3,687) (680) (4,367)
======== ========= ======== ======== ======== ========
Profit /(loss)
for the period
attributable to
the equity
holders of the
Company 1,067 - 1,067 (3,687) (680) (4,367)
========= ========= ========= ======== ======== ========
Earnings/(loss)
per share
attributable to
the equity
holders of the
Company during
the period
Basic 7 0.31c (1.27)c
======== ========
Diluted 7 0.30c (1.27)c
======== ========
Condensed consolidated interim statement of comprehensive
income
Six months ended 30 June
Note 2017 2016
USD'000 USD'000
(Unaudited) (Unaudited)
Profit /(loss) for the period 1,067 (4,367)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Currency translation differences 16 14 (39)
Net gain on cash flow hedges 16 1,913 28
-------------- --------------
Other comprehensive income/(loss) for the period 1,927 (11)
-------------- --------------
Total comprehensive income/(loss) for the period 2,994 (4,378)
======= =======
Total comprehensive income/(loss) for the period attributable to the equity
holders of the
Company 2,994 (4,378)
======= =======
Condensed consolidated interim balance sheet
At 30 June At 31 December
Note 2017 2016
USD'000 USD'000
(Unaudited) (Audited)
ASSETS
Non-current assets
Property, plant and
equipment 8 174,840 172,328
Intangible assets 9 32,755 24,951
Investment accounted
for using the equity
method 10 9,220 7,229
Trade and other receivables 11 1,690 10,905
Term and margin deposits 12 13,297 6,777
Derivative financial
instruments 20 110 115
------------------------ ------------------------
Total non-current assets 231,912 222,305
------------------------ ------------------------
Current assets
Inventories 13 51,001 24,415
Trade and other receivables 11 194,811 264,417
Derivative financial
instruments 20 726 58
Cash and bank balances 12 341,928 327,893
------------------------ ------------------------
Total current assets 588,466 616,783
------------------------ ------------------------
Total assets 820,378 839,088
------------------------ ------------------------
LIABILITIES
Current liabilities
Borrowings 21 (20,003) (20,321)
Trade and other payables 18 (170,710) (180,021)
Derivative financial
instruments 20 - (465)
Provision for warranty
costs and other liabilities 19 (8,454) (7,958)
Current tax liability (223) (223)
------------------------ ------------------------
Total current liabilities (199,390) (208,988)
------------------------ ------------------------
Net current assets 389,076 407,795
------------------------ ------------------------
Non-current liabilities
Borrowings 21 (29,323) (39,163)
Derivative financial
instruments 20 - (794)
Provision for employees'
end of service benefits 17 (32,288) (34,745)
------------------------ ------------------------
Total non-current liabilities (61,611) (74,702)
------------------------ ------------------------
Total liabilities (261,001) (283,690)
------------------------ ------------------------
Net assets 559,377 555,398
========== ==========
EQUITY
Share capital 15 30,346 30,346
Share premium 15 315,995 315,995
Other reserves 16 (18,766) (20,693)
Retained earnings 231,802 229,750
----------------------- -----------------------
Total equity attributable
to the equity holders
of the Company 559,377 555,398
========= =========
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 2016 30,346 315,995 (19,144) 410,360 737,557
-------------- ----------------- -------------- ---------------- -----------------
Loss for the period - - - (4,367) (4,367)
Other comprehensive
income:
Currency translation
differences 16 - - (39) - (39)
Net gain on cash
flow hedges - - - 28 28
-------------- ----------------- -------------- ---------------- -----------------
Total comprehensive
loss for the period
ended 30 June 2016 - - (39) (4,339) (4,378)
-------------- ----------------- -------------- ---------------- -----------------
Transactions with
owners:
Share based payments:
- value of services
provided - - - 1,666 1,666
Treasury shares
purchased - - - (504) (504)
-------------- ----------------- -------------- ---------------- -----------------
Total transactions
with owners - - - 1,162 1,162
-------------- ----------------- -------------- ---------------- -----------------
At 30 June 2016
(unaudited) 30,346 315,995 (19,183) 407,183 734,341
-------------- ----------------- -------------- ---------------- -----------------
Loss for the period - - - (179,948) (179,948)
Other comprehensive
income:
Re-measurement of
post-employment
benefit obligations 17 - - - 1,523 1,523
Currency translation
differences 16 - - (251) - (251)
Net loss on cash
flow hedges 16 - - (1,287) - (1,287)
Reclassification
of loss on cash
flow hedges 16 - - 28 (28) -
-------------- ----------------- -------------- ---------------- -----------------
Total comprehensive
loss for the period
ended 31 December
2016 - - (1,510) (178,453) (179,963)
-------------- ----------------- -------------- ---------------- -----------------
Transactions with
owners:
Share based payments:
- value of services
provided - - - 1,059 1,059
Treasury shares
purchased - - - (39) (39)
-------------- ----------------- -------------- ---------------- -----------------
Total transactions
with owners - - - 1,020 1,020
-------------- ----------------- -------------- ---------------- -----------------
At 31 December 2016
(audited) 30,346 315,995 (20,693) 229,750 555,398
======= ======== ======= ======== ========
At 1 January 2017 30,346 315,995 (20,693) 229,750 555,398
-------------- -------------- -------------- -------------- --------------
Profit for the
period - - - 1,067 1,067
Other comprehensive
income:
Currency translation
differences 16 - - 14 - 14
Net gain on cash
flow hedges 16 - - 1,913 - 1,913
-------------- -------------- -------------- -------------- --------------
Total comprehensive
income for the
period ended 30
June 2017 - - 1,927 1,067 2,994
-------------- -------------- -------------- -------------- --------------
Transactions with
owners:
Share based payments:
* value of services provided - - - 985 985
-------------- --------------- -------------- --------------- -----------------
Total transactions
with owners - - - 985 985
-------------- --------------- -------------- ---------------- -----------------
At 30 June 2017
(unaudited) 30,346 315,995 (18,766) 231,802 559,377
======= ======= ======= ======= ========
Condensed consolidated interim statement of cash flows
Six months ended
Note 30 June
2017 2016
USD'000 USD'000
(Unaudited) (Unaudited)
Operating activities
Cash generated from/(used in)
operating activities 26 56,826 (38,087)
Tax paid (93) (67)
---------------- ----------------
Net cash generated from/(used
in) operating activities 56,733 (38,154)
---------------- ----------------
Investing activities
Additions to property, plant
and equipment 8 (13,669) (13,404)
Proceeds from sale of property,
plant and equipment 109 825
Additions to intangible assets 9 (9,396) (2,024)
Finance income 1,841 1,554
Movement in deposits with an
original maturity of more than
three months (5,105) 2,124
Movement in margin deposits/short
term deposits under lien 2,101 (2,751)
---------------- ----------------
Net cash used in investing
activities (24,119) (13,676)
---------------- ----------------
Financing activities
Treasury shares purchased 15 - (504)
Repayment of borrowings 21 (10,000) (10,000)
Finance costs (5,077) (7,082)
---------------- ----------------
Net cash used in financing
activities (15,077) (17,586)
---------------- ----------------
Net increase/(decrease) in
cash and cash equivalents 17,537 (69,416)
Cash and cash equivalents,
beginning of the period 12 245,514 224,164
Exchange rate translation 14 (39)
------------------ ------------------
Cash and cash equivalents at
end of the period 12 263,065 154,709
========= =========
Notes to the condensed consolidated interim financial
information
1 Legal status and activities
There has been no change in the legal status or principal
activities of the Company during the current period.
During the period, Lamprell Saudi Arabia Company ("LSAC"), a
fully owned subsidiary, was incorporated but is not yet
operational. Other than this, there are no changes to the Company
and its subsidiaries (together referred to as "the Group") since
the publication of our most recent annual financial statements.
This condensed consolidated interim financial information has
been reviewed, not audited. The information for the year ended 31
December 2016 do not constitute statutory accounts as defined in
the Isle of Man Companies Act. A copy of the statutory accounts for
that year has been delivered to the Registrar of Companies. The
auditor's report on those accounts was not qualified and did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying the report.
2 Summary of significant accounting policies
2.1 Basis of preparation
The condensed consolidated interim financial information for the
six months ended 30 June 2017 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 2016, 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 2016 except for the adoption of new standards and
interpretations effective as of 1 January 2017. 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 2016 are available on the
Company's website (www.lamprell.com).
(a) New and amended standards adopted by the Group
-- IAS 12 (amendments), 'Income Taxes' - Recognition of Deferred
Tax Assets for Unrealised Losses.
-- IFRS 12 (amendments) 'Disclosure of Interests in Other
Entities' - Annual Improvements to IFRSs 2014-2016 Cycle.
These amendments have had no impact on the Group as they clarify
existing standards.
3 Critical accounting judgements and key sources of estimation uncertainty
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.
3.1 Critical judgements in applying the Group's accounting policies
During the period there were no critical judgements made
applying the Group's accounting policies.
3.2 Key sources of estimation uncertainty
The significant judgements made by management in applying the
Group's key sources of estimation uncertainty were the same as
those that applied to the consolidated financial statements for the
year ended 31 December 2016, except as stated otherwise below.
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 assets by
USD 2.6 million (H1 2016: USD 18.2 million) if the total costs to
completion are decreased by 10% and a decrease liabilities by USD
2.1 million (H1 2016: USD 17.2 million) if the total costs to
completion are increased by 10%.
4 Segment information
The Group is organised into business units, which are the
Group's operating segments and are reported to the Board of
Directors, the chief operating decision maker. These operating
segments are aggregated into two reportable segments - 'Fabrication
& Engineering' and 'Services' based on similar nature of the
products and services, type of customer and economic
characteristics.
The Fabrication & Engineering segment contains business from
New Build Jack up Rigs ("NBJR"), Modules, ("MOD"), Offshore
Platform ("OP") and Oil and Gas Contracting Services
("OGCS") excluding that from the Operations & Maintenance
manpower business. The Services segment contains business from
Operations & Maintenance and safety services.
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. Operations & maintenance derives
its revenue from manpower supply and safety services.
Fabrication Services Total
& Engineering
USD'000 USD'000 USD'000
Six months ended 30
June 2017
Revenue from external
customers 134,873 24,296 159,169
========= ========= =========
Gross operating profit 38,917 8,599 47,516
========= ========= =========
Segment comparatives are restated to reflect the organisational
changes that have occurred since the prior interim reporting period
to present a like-for-like view.
Six months ended 30 June 2016
(restated)
Revenue from external
customers 432,356 18,978 451,334
========= ========= =========
Gross operating profit 41,498 9,014 50,512
========= ========= =========
Segment comparatives as previously stated are as below.
Segment A All other Total
segments
Six months ended 30
June 2016
Revenue from external
customers 449,150 2,184 451,334
========= ========= =========
Gross operating profit 49,596 916 50,512
========= ========= =========
Sales between segments are carried out on agreed terms. The
revenue from external parties reported to the Board of Directors is
measured in a manner consistent with that in the consolidated
income statement.
The Board of Directors assesses 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 of gross profit 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
Note 30 June
2017 2016
USD'000 USD'000
Gross operating profit for the
Fabrication & Engineering
segment as reported to the Board
of Directors 38,917 41,498
Gross operating profit for the
Services segments as
reported to the Board of Directors 8,599 9,014
Unallocated:
Employee and equipment costs (13,783) (11,011)
Repairs and maintenance (2,531) (4,860)
Yard rent and depreciation (6,401) (6,814)
Others (4,157) (292)
-------------- --------------
Gross profit 20,644 27,535
-------------- --------------
Selling and distribution expenses (262) (326)
General and administrative expenses
5 (18,529) (26,576)
Other gains - net 394 126
Finance costs (4,919) (7,024)
Finance income 1,841 1,554
Share of profit of investment
accounted for using the
equity method 10 1,991 506
--------------- ---------------
Profit/(loss) for the period
before tax 1,160 (4,205)
======= =======
Information about segment assets and liabilities is not reported
to or used by the Board of Directors and accordingly no measures of
segment assets and liabilities are reported.
The breakdown of revenue from all services is as follows:
Six months ended
30 June
2017 2016
USD'000 USD'000
Fabrication & Engineering
New build jackup rigs 49,398 375,508
Oil and gas contracting services 42,294 22,946
Offshore platforms 40,221 11,253
Modules 2,960 22,649
Services
Operations & Maintenance manpower
supply and safety services 24,296 18,978
--------------------- ---------------------
159,169 451,334
========== ==========
Certain customers individually accounted for greater than 10% of
the Group's revenue and are shown in the table below:
2017 2016
USD'000 USD'000
External customer A 34,131 204,821
External customer B 30,330 105,987
External customer C 20,357 64,737
________ _________
84,818 375,545
========= ==========
The revenue from these customers is attributable to Fabrication
& Engineering. The above customers in 2017 are not necessarily
the same customers in 2016.
5 General and administrative expenses
Six months ended
30 June
2017 2016
USD'000 USD'000
Staff costs 9,885 16,740
Legal, professional and consultancy
fees 1,783 1,585
Depreciation 1,463 1,475
Amortisation of intangible assets
(Note 9) 1,592 1,563
Office rent and maintenance 817 728
Non-executive director fees 763 856
Utilities and communication 679 1,457
Release of impairment of trade
receivables - net (22) (917)
Bank charges 62 101
Potential partnership expenses
(Note 6) - 1,489
Others 1,507 1,499
---------------- ----------------
18,529 26,576
======== ========
6 Investment in Maritime Yard
The Group's proposed investment in the Maritime Yard within the
King Salman International Complex for Maritime Industries &
Services ('Maritime Yard') was approved by the Shareholders at an
extraordinary general meeting held on 26 June 2017. The circular
('Proposed Joint Venture') detailing the investment is available on
the Company's website (www.lamprell.com).
As at 30 June 2017, other than certain costs incurred in
connection with the preparatory steps no direct investment had been
made by the Group pending formation of the Company that will
operate the Maritime Yard. It is intended that a new limited
liability company will be established under the laws of the Kingdom
by the partners to operate, maintain and manage the Maritime
Yard.
The Group's investment commitments for the Maritime Yard are
disclosed in Note 23.
7 Earnings/(loss) per share
The calculation of the basic and diluted earnings/(loss) per
share is based on the following data:
Six months ended
30 June
2017 2016
USD'000 USD'000
The calculations of earnings/(loss)
per share are based on the
following profit/(loss) and
numbers of shares:
Profit/(loss) for the period 1,067 (4,367)
------------------------- -------------------------
Weighted average number of
shares for basic earnings/(loss)
per share 341,710,302 341,710,302
Adjustments for:
* Assumed vesting of performance share plan 3,811,566 -
* Assumed vesting of retention share plan 1,000,806 -
------------------------- -------------------
Weighted average number of
shares for diluted earnings/(loss)
per share 346,522,674 341,710,302
------------------------- -------------------
Earnings/(loss) per share:
Basic 0.31c (1.27)c
=========== ===========
Diluted 0.30c (1.27)c
=========== ===========
During the prior period, assumed vesting of performance and
retention share plans amounting to 1,672,494 shares and 67,548
shares respectively were anti-dilutive and therefore excluded.
8 Property, plant and equipment
USD'000
Net book amount at 1 January 2016 175,286
Additions 13,404
Net book amount of disposals (422)
Depreciation (11,888)
--------------
Net book amount at 30 June 2016 176,380
Additions 9,467
Net book amount of disposals (306)
Depreciation (13,213)
---------------
Net book amount at 31 December 2016 172,328
Additions 13,669
Net book amount of disposals (4)
Depreciation (11,153)
--------------
Net book amount at 30 June 2017 174,840
=======
A depreciation expense of USD 9.7 million has been charged to
cost of sales and USD 1.5 million to general and administrative
expenses.
9 Intangible assets
During the period, Sharjah Electricity and Water Authority
completed the construction and installation of an electric mainline
to the Group's Hamriyah facility. The Group has right of use and
the cost incurred by the Group of USD 8.6 million has been
capitalised as an intangible asset and will be amortised over the
remaining period of the leasehold rights of the facility (17
years). Other than these and amortisation of USD 1.6 million there
has been no change in the composition of intangible assets reported
at the year ended 31 December 2016.
10 Investment accounted for using the equity method
The Group's share of profit for the period amounting to USD 2.0
million arises from its interests in Maritime Industrial Services
Arabia Co. Ltd. ("MISA"). There were no changes in investments held
during the six months ended 30 June 2017.
11 Trade and other receivables
At 30 At 31 December
June
2017 2016
USD'000 USD'000
Trade receivables 92,893 89,431
Other receivables and prepayments 37,723 38,244
Advances to suppliers 1,344 17,556
Receivable from a related party 166 109
--------------- ---------------
132,126 145,340
Less: Provision for impairment
of trade receivables (5,466) (5,488)
--------------- ---------------
126,660 139,852
Amounts due from customers on
contracts 30,224 127,809
Contract work in progress 39,617 7,661
--------------- ---------------
196,501 275,322
Non-current portion:
Prepayments 1,690 10,905
--------------- ---------------
Current portion 194,811 264,417
======= =======
12 Cash and bank balances
At 30 June At 31 December
2017 2016
USD'000 USD'000
Cash at bank and on hand 117,841 88,491
Term and margin deposits 224,087 239,402
--------------- ---------------
Cash and bank balances - current 341,928 327,893
Term and margin deposits -
non-current 13,297 6,777
Less: Margin/short term deposits
under lien (8,882) (10,983)
Less: Deposits with an original
maturity of more than three
months (83,278) (78,173)
-------------- ----------------
Cash and cash equivalents
(for purpose of the cash flow
statement) 263,065 245,514
======= ========
13 Inventories
At 30 June At 31 December
2017 2016
USD'000 USD'000
Raw Materials, Consumables
and Finished Goods 27,793 27,989
Work in Progress 26,253 -
Less: Provision for slow moving
and obsolete inventories (3,045) (3,574)
------------- -------------
51,001 24,415
====== ======
14 Related party balances and transactions
The Group entered into the following transactions during the
period with related parties at prices and on terms agreed between
the related parties.
Six months ended
30 June
2017 2016
USD'000 USD'000
Key management compensation 2,077 4,599
====== ======
Legal and professional services 64 -
====== ======
Sales to a joint venture 166 -
====== ======
Purchases from a joint venture 64 77
====== ======
Sponsorship fees and commissions
paid to legal shareholders of
subsidiaries 159 186
====== ======
15 Share capital
There is no movement in issued and fully paid ordinary shares
and share premium for the period ending 30 June 2017 and year ended
31 December 2016.
During 2017, Employee Benefit Trust ('EBT') acquired nil shares
(2016: 321,691 shares) of the Company. The total amount paid to
acquire the shares was USD nil (2016: USD 504,000) and has been
deducted from the consolidated retained earnings. During 2017, nil
shares (2016: 321,691 shares) were issued to employees on vesting
of the performance shares and 16,268 shares (31 December 2016:
16,268 shares) were held as treasury shares at 30 June 2017.
16 Other reserves
Legal Merger Hedge reserve Translation
reserve Reserve reserve Total
USD'000 USD'000 USD'000 USD'000 USD'000
At 1 January 2016 98 (18,572) - (670) (19,144)
Currency translation
differences - - - (39) (39)
------------- ---------------- ------------- ------------- ----------------
At 30 June 2016 (Unaudited) 98 (18,572) - (709) (19,183)
Currency translation
differences - - - (251) (251)
Loss on cash flow hedges - - (1,287) - (1,287)
Reclassification of loss on
cash flow hedges - - 28 - 28
------------- ---------------- ------------- ------------- ----------------
At 31 December 2016 (Audited) 98 (18,572) (1,259) (960) (20,693)
Currency translation
differences - - - 14 14
Gain on cash flow hedges - - 1,913 - 1,913
------------- ---------------- ------------- ------------- ----------------
At 30 June 2017 (Unaudited) 98 (18,572) 654 (946) (18,766)
======== =========== ======== ======== ==========
17 Provision for employees' end of service benefits
The end of service benefits obligation as at 30 June 2017 is
calculated on a year to date basis, using the latest actuarial
valuation as at 31 December 2016. There have not been any
significant fluctuations or onetime events since that time that
would require adjustments to the actuarial assumptions as at 31
December 2016.
18 Trade and other payables
At 30 June At 31 December
2017 2016
USD'000 USD'000
Trade
payables 61,194 31,662
Accruals 87,048 111,022
Payables
to a
related
party 292 228
Amounts
due to
customers
on
contracts 22,176 37,109
---------------------------------------------------- ------------------------------------------------------
170,710 180,021
======= =======
19 Provision for warranty costs and other liabilities
During the period, the Group has incurred a charge of USD 1.0
million for estimated warranty costs on completed projects. This is
partly offset by release of previous provisions amounting to USD
0.5 million.
20 Derivative financial instruments
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
c. Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level
3).
The following table presents the Group's assets that are
measured at fair value at:
Level Level Level Total
1 2 3
USD'000 USD'000 USD'000 USD'000
At 30 June 2017
Derivative financial - 836 - 836
instruments ========== ========== ========== ==========
At 31 December 2016
Derivative financial - 173 - 173
instruments ========== ========== ========== ==========
There are no liabilities at 30 June 2017 measured at fair
value.
The following table presents the Group's liabilities that are
measured at fair value at:
Level Level Level Total
1 2 3
USD'000 USD'000 USD'000 USD'000
At 31 December 2016
Derivative financial - 1,259 - 1,259
instruments ========== ========== ========== ==========
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
period.
21 Borrowings
Repayments of borrowings amounting to USD 10.0 million were made
during the period. As at 30 June 2017, the Group's borrowings
amount to USD 49.3 million.
At 30 June 2017, the Group has banking facilities of USD 1,049
million (31 December 2016: USD 1,362 million) with commercial
banks. The facilities include bank overdrafts, letters of
guarantees, letters of credit and short-term loans and there has
been no significant change in the nature of security pledged
against these facilities as at 30 June 2017.
During the six months end 30 June 2017, the Group obtained debt
facility amendments from its lenders in relation to certain of the
financial covenants, to provide financial flexibility. These
include a waiver of the ratio of EBITDA to Debt Service covenant up
to the period ended 31 December 2018 and the ratio of Borrowings to
EBITDA covenant for the periods ended 31 December 2017 and 30 June
2018.
22 Dividends
There were no dividends declared or paid during the six months
period ended 30 June 2017.
23 Commitments
(a) Operating lease commitments
The Group leases land and staff accommodation under various
operating lease agreements. The future minimum lease payments
payable under operating leases are as follows:
At 30 June At 31 December
2017 2016
USD'000 USD'000
Not later than one year 8,658 6,528
Later than one year but not
later than five years 24,229 23,997
Later than five years 80,892 76,264
------------- -------------
113,779 106,789
====== ======
(b) Maritime yard commitments
As stated in Note 6, the Group has entered into commitments
associated with the establishment of a Maritime yard, at Ras Al
Khair, in eastern Saudi Arabia. Under the Shareholders' Agreement,
the Group will invest up to a maximum of USD 140.0 million in
relation to its commitment over the course of construction of the
Maritime Yard between 2017 and 2022. The forecast contributions are
as follows:
At 30 June At 31 December
2017 2016
USD'000 USD'000
Not later than one year 20,000 -
Later than one year but not
later than four years 120,000 -
------------- -------------
140,000 -
====== ======
(c) Other commitments
At 30 June At 31 December
2017 2016
USD'000 USD'000
Capital commitments for purchase
of operating
equipment and computer software 958 345
====== ======
Capital commitments for construction
of facilities 13,221 10,347
====== ======
Purchase commitments 41,199 51,659
====== ======
24 Bank guarantees
At 30 June At 31 December
2017 2016
USD'000 USD'000
Performance/bid bonds 124,730 163,812
Advance payment, labour visa
and payment guarantees 47,613 240,383
--------------- -----------------------
172,343 404,195
======= ========
The various bank guarantees, as above, were issued by the
Group's bankers in the ordinary course of business. Certain
guarantees are secured by cash margins, assignments of receivables
from some customers and in respect of guarantees provided by banks
to the Group companies, some have been secured by parent company
guarantees. In the opinion of the management, the above bank
guarantees are unlikely to result in any liability to the
Group.
25 Events after the balance sheet date
On 14 August 2017 the Group reached an amicable settlement with
Cameron International Corporation ("Cameron"), a subsidiary of
Schlumberger Limited ("Schlumberger") in respect of the issues
associated with the jacking equipment supplied by Cameron in
2016.
The settlement results in the Group receiving a proportion of
the remedial costs incurred in rectifying the issues associated
with the jacking equipment. After taking account of the outstanding
payment to Cameron in respect of the jacking equipment and the
settlement, the Group anticipates its current net cash position
will be largely unchanged.
26 Cash flow from operating activities
Note Six months ended
30 June
2017 2016
USD'000 USD'000
(Unaudited) (Unaudited)
Operating activities
Profit/(loss) for the period
before income tax 1,160 (4,205)
Adjustments for:
Depreciation 8 11,153 11,888
Amortisation of intangible
assets 9 1,592 1,563
Share of profit from investment
in a joint venture 10 (1,991) (506)
Share based payments value
of services provided 985 1,666
Release of excess tax provision - (260)
Profit on disposal of property,
plant and equipment (105) (403)
Provisions/(release) for
warranty costs(net) 19 496 (370)
Provision for slow moving
and obsolete inventories (529) (187)
Release of impairment of
trade receivables, net (22) (917)
Provision for employees'
end of service benefits 17 2,271 3,325
Finance costs 4,919 7,024
Finance income (1,841) (1,554)
Net gain on cash flow hedges 16 1,913 28
------------- -------------
Operating cash flows before
payment of employees'
end of service benefits and
changes in working capital 20,001 17,092
Payment of employees' end
of service benefits 17 (4,728) (5,513)
Changes in working capital:
Inventories before movement
in provision (26,057) (2,855)
Derivative financial instruments (1,922) 640
Trade and other receivables
before movement in provision
for impairment of trade receivables 78,843 5,954
Trade and other payables (9,311) (53,405)
------------- -------------
Net cash generated from/(used
in) operating activities 56,826 (38,087)
--------------- ---------------
Alternative performance measures
As set out in our most recent annual report, we use a range of
financial and non-financial measures to assess our performance. The
tables below set out the definitions of such measures,
reconciliations to amounts presented in the interim financial
statements and the reason for their inclusion in the report. The
metrics presented are consistent with those presented in our
previous annual report and there has been no changes to the bases
of calculation.
EBITDA
In addition to measuring financial performance of the group
based on operating profit, we also measure performance based on
EBITDA and underlying EBITDA (also referred to as adjusted EBITDA).
EBITDA is defined as the profit/(loss) for the period from
continuing operation before depreciation, amortisation, interest on
bank borrowings, finance income and taxation. Underlying EBITDA is
defined as EBITDA before non-recurring items or certain accounting
adjustments that do not reflect changes in performance.
We consider EBITDA and underlying EBITDA to be useful measures
of our operating performance because they approximate the operating
cash flow of the Group by eliminating depreciation and
amortisation. EBITDA and underlying EBITDA are not direct measures
of our liquidity, which is shown by our cash flow statement, and
need to be considered in the context of our financial
commitments.
A reconciliation from profit/(loss) for the period from
continuing operation, the most directly comparable IFRS measure, to
reported and underlying EBITDA, is set out below:
Six month ended 30 June:
2017 2016 2015
------------------------------ -------- ---------- ---------
USD'000 USD'000 USD'000
------------------------------ -------- ---------- ---------
Profit/(loss) for the period
from continuing
operations 1,067 (4,367) 20,339
------------------------------ -------- ---------- ---------
Exceptional items - 680 -
------------------------------ -------- ---------- ---------
Depreciation (Note 8) 11,153 11,888 8,973
------------------------------ -------- ---------- ---------
Amortisation (Note 9) 1,592 1,563 1,251
------------------------------ -------- ---------- ---------
Interest on bank borrowings 1,418 1,637 2,383
------------------------------ -------- ---------- ---------
Finance income (1,841) (1,554) (1,202)
------------------------------ -------- ---------- ---------
Tax 93 162 102
------------------------------ -------- ---------- ---------
EBITDA 13,482 10,009 31,846
------------------------------ -------- ---------- ---------
Settlement agreement with - 35,000 -
Ensco
------------------------------ -------- ---------- ---------
Underlying EBITDA 13,482 45,009 31,846
------------------------------ -------- ---------- ---------
Underlying EBITDA margin* 8.5% 9.4% 9.1%
------------------------------ -------- ---------- ---------
*Underlying EBITDA margins are calculated as underlying EBITDA
shown above as a percentage of the Group's revenue.
Net cash
This performance measure indicates financial health after
deduction of liabilities such as borrowings. A reconciliation from
the cash and cash equivalents per the consolidated cash flow
statement, the most directly comparable IFRS measure, to reported
net cash, is set out below:
30 June 31 December 31 December
2017 2016 2015
---------------------------------
USD'000 USD'000 USD'000
---------------------------------
Cash and cash equivalents
(Note 12) 263,065 245,514 224,164
---------------------------------
Margin/short-term deposits
under lien (Note 12) 8,882 10,983 11,787
---------------------------------
Deposits with original maturity
of more than 3
months (Note 12) 83,278 78,173 53,667
---------------------------------
Borrowings (Note 21) (49,326) (59,484) (79,299)
--------------------------------- --------- ------------ ------------
Net cash 305,899 275,186 210,319
--------------------------------- --------- ------------ ------------
Underlying gross profit
Underlying gross profit is defined as gross profit before
non-recurring items or certain accounting adjustments that can mask
underlying changes in performance. A reconciliation from gross
profit, the most directly comparable IFRS measure, to reported and
underlying gross profit, is set out below:
Six month ended 30 June:
2017 2016 2015
----------------------------------
USD'000 USD'000 USD'000
----------------------------------
Gross profit 20,644 27,535 40,786
----------------------------------
Settlement agreement with Ensco* - 35,000 -
----------------------------------
Underlying gross profit 20,644 62,535 40,786
---------------------------------- -------- -------- --------
Normalised underlying margins** 13.0% 13.1% 11.6%
---------------------------------- -------- -------- --------
*Refer to prior year interim financial statements Note 4 for an
explanation of the agreement.
**Normalised underlying margins are calculated as underlying
gross profit shown above as a percentage of the Group's
revenue.
Underlying profitability
Underlying profitability is defined as profit for the period
from continuing operation before non-recurring items or certain
accounting adjustments that do not reflect changes in performance.
A reconciliation from profit/(loss) for the period from continuing
operations, the most directly comparable IFRS measure, to reported
and underlying profitability, is set out below:
Six month ended 30 June:
2017 2016 2015
----------------------------------
USD'000 USD'000 USD'000
----------------------------------
Profit/(loss) for the period
from continuing operations 1,067 (4,367) 20,339
----------------------------------
Exceptional items - 680 -
----------------------------------
Settlement agreement with Ensco* - 35,000 -
----------------------------------
Underlying profitability 1,067 31,313 20,339
---------------------------------- -------- -------- --------
*Refer to prior year interim financial statements Note 4 for an
explanation of the agreement.
Statement of Directors' responsibilities
The directors confirm that, to the best of their knowledge, this
condensed consolidated interim financial information has been
prepared in accordance with IAS 34 as adopted by the EU. The
interim management report includes a fair review of the information
required by Disclosure and Transparency Rules 4.2.7R and 4.2.8R,
namely:
-- an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed consolidated interim financial information, and a
description of the principal risks and uncertainties for the
remaining six months of the financial year; and
-- material related party transactions in the first six months
of the financial year and any material changes in the related party
transactions described in the last annual report.
The Directors of Lamprell plc are listed in the Lamprell plc
Annual Report for 31 December 2016. A list of current directors is
maintained on the Lamprell plc website www.lamprell.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKDDQFBKDNCB
(END) Dow Jones Newswires
September 22, 2017 02:00 ET (06:00 GMT)
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