Full Year Results 2017 22 March 2018 1 East Anglia One - - PowerPoint PPT Presentation

full year results 2017
SMART_READER_LITE
LIVE PREVIEW

Full Year Results 2017 22 March 2018 1 East Anglia One - - PowerPoint PPT Presentation

Full Year Results 2017 22 March 2018 1 East Anglia One www.lamprell.com Disclaimer This presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/ or the industry


slide-1
SLIDE 1

1

East Anglia One

Full Year Results 2017

22 March 2018

www.lamprell.com

slide-2
SLIDE 2

Disclaimer

2

This presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/ or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “believes”, “expects, “predicts”, ”intends”, “projects”, “plans” “estimates”, “aims”, “foresees”, anticipates”, “targets” and similar expressions. The forward-looking statements, contained in this document, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are uncertain and subject to

  • risks. A multitude of factors can cause actual events to differ significantly from any anticipated
  • development. Neither the Company nor any of its officers or employees guarantees that the

assumptions underlying such forward-looking statements are free from errors nor does any of the foregoing accept any responsibility for the future accuracy of the opinions expressed in this document

  • r the actual occurrence of the forecasted developments.

No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither the Company nor any of its subsidiary undertakings nor any such person’s officers

  • r employees accepts any liability whatsoever arising directly or indirectly from the use of this

document.

slide-3
SLIDE 3

Agenda

3

1 Year in Review 2 Operational Review 3 Financial Review 4 Strategy and Outlook 5 Appendices

slide-4
SLIDE 4

4

East Anglia One Load out

Year in Review

Christopher McDonald, CEO

slide-5
SLIDE 5

Year in Review

5

▪ $80m loss on East Anglia One project ▪ 5 large scale projects delivered, 2 ongoing ▪ Solid net cash position to support strategic growth ▪ Bid pipeline increasing, with focus on KSA, Renewables and EPC(I) ▪ Backlog at historical lows ▪ Strategy progress: solidifying position in core rig markets ▪ International Maritime Industries JV established, construction of maritime yard in Saudi Arabia commenced ▪ Organisational changes and strict compliance to newly updated bidding process as a result of East Anglia One shortcomings

$3.6bn

Bid Pipeline

0.30 TRIR*

Safety

$257.0m

Net Cash

$370.4m

Revenue

* Total Recordable Injury Rate

Strategic progress despite temporary challenges

$(98.1)m

Net loss

slide-6
SLIDE 6

6

Operational Review

Christopher McDonald, CEO

Master Marine Departure from Hamriyah

slide-7
SLIDE 7

94.8 43.1

Renewables Oil and gas

Yard activity levels at historical low

▪ Significant improvement in safety performance in 2H ▪ Major projects delivered on time and on budget

  • NDC 8 & 9
  • Shelf Drilling “Krathong”
  • Petrofac UZ750
  • 2 Schlumberger land rigs

▪ Uptick in rig refurbishment segment:

  • 14 rigs currently stacked in our yards
  • 4 rigs under refurbishment

▪ Master Marine major upgrade for “Haven” progressing well and to schedule ▪ East Anglia One 73% complete as of today

2H dominated by East Anglia One

Backlog ($m) (FY 2017)

$137.9m

(YE 2016: $393m)

7

slide-8
SLIDE 8

East Anglia One: progress update

8

Project status: ▪ All 182 piles delivered to the client ▪ 8 jackets delivered to European marshalling yard ▪ 12 pre-fabricated jackets delivered to Harland & Wolff in Belfast ▪ Delivering to client’s expectations but LD exposure remains if delays arise Root cause analysis: ▪ Poor understanding of scope and requirements at bidding stage ▪ Inexperienced project management team (did not set the right price and did not match specific sector requirements) ▪ Delays in addressing welding issues due to labour market challenges ▪ Transportation and logistics issues

East Anglia package 3 movement

Primary focus on delivering to client schedule and expectations

slide-9
SLIDE 9

14% 86%

Rigs EPCI

Bidding approach matches strategic goals: ▪ Capture broader energy markets for long-term growth ▪ Address EPC(I) market for higher value projects ▪ Strategic partnerships to expand sector and geographical footprint Higher levels of bidding activity: ▪ Refocused sector targeting resulted in increased levels of bidding ▪ Major focus on KSA, Renewables and EPC(I) ▪ Timing of awards is Q4 2018 at the earliest

9

Improving bid pipeline

Solidifying position in core expansion markets

Bid pipeline $3.6bn* (2016: $2.5bn) $1.8bn

80% 15% 5%

Rigs EPCI Contracting services

$1.8bn Renewables Oil and gas*

*Excluding LTA

slide-10
SLIDE 10

10

Schlumberger land rigs

Financial Review

Tony Wright, CFO

slide-11
SLIDE 11

Key Financials

11

Significant loss driven by East Anglia One project

($m, unless stated otherwise) FY 2017 FY 2016 Reported results Revenue 370.4 705.0 EBITDA (70.5) 28.7 EBITDA margin (19.0)% 4.1% Loss from continuing operations after income tax and exceptional items (98.1) (182.2) Reported diluted earnings/(loss) per share (US cents) (28.7) (53.9) Net cash as at 31 December 2017 257.0 275.2 Revenue by segment $m FY2016 $m New build jackup rigs 49.4 567.6 O&G contracting services 131.3 47.6 Offshore platforms 140.6 12.8 Modules 3.0 40.8 Services 46.1 36.2

▪ East Anglia loss booked in 2017. Zero margin on $98m project revenue in 2018, net cash outflow estimated at $30m ▪ Revenues affected by market-driven backlog pressure ▪ Delivered overhead reduction for sixth consecutive year; $16m YoY reduction ▪ Robust cash position of $257m ▪ $20m strategic investment made into International Maritime Industries JV ▪ Amendments to loan agreement secured with bank syndicate

slide-12
SLIDE 12

Income statement

12

▪ Reduction in New build jackup revenue severely impacts profitability ▪ Significant loss on East Anglia One ▪ Project completions and settlements delivered in 1H ▪ Focus on cost control to mitigate losses continues

Loss driven by drop in revenue from core business segment and EA1 costs

slide-13
SLIDE 13

Net cash to underpin future growth

13

Benefit from working capital conversion on 1H project completions

▪ Net cash in line with forecast despite operational issues ▪ $50m of East Anglia losses reflected in net cash, $30m cash funding in 2018 ▪ Well-positioned to fund ongoing business and investment in Saudi Arabia ▪ Investment in IMI reflected in increased tangible assets

slide-14
SLIDE 14

Balance sheet

14

Balance sheet FY17 $m FY16 $m

Strategic investments Project evolution assets 39.6 28.7 New pipeshop 19.6 8.3 IMI capital 18.9

  • Other Assets

368.2 467.4 Gross Cash 296.4 334.7 Total Assets 742.7 839.1 Tangible Net Assets 429.1 530.4

▪ Net cash remains strong ▪ Gearing continues to be low ▪ Considerable investment in strategic assets ▪ Working capital facility and revolver available in line with amended debt agreement ▪ Committed bonding line cancelled to reduce costs Debt package FY17 $m FY16 $m

Term loan 40 59 Working capital facility 50 50 Revolver 100 200 Total funded facilities 190 309 Committed bonding 50 150

Tangible asset base remains

slide-15
SLIDE 15

Financial summary and outlook

▪ East Anglia One loss taken in 2017 – dilutes margins in 2018 ▪ Net cash to trend downwards: ▪ Investment in IMI JV $38m ▪ Cameron kits payment $41m ▪ East Anglia One $30m ▪ Further cash pressure will arise from low revenues in 2018 and investment in new resources ▪ Balance sheet strength remains intact

15

Maintaining liquidity for growth

Master Marine Haven upgrade

slide-16
SLIDE 16

16

East Anglia One

Strategy and Outlook

Christopher McDonald, CEO

slide-17
SLIDE 17

Business in transformation

17

Upskilling: building capability to support growth markets

▪ Continued investment in hiring personnel with EPC(I) and LTA experience ▪ New hires include personnel for key positions across the organization: ▪ Project management ▪ Commercial ▪ Engineering ▪ Procurement ▪ Transportation & installation ▪ Hook up & commissioning ▪ BD, Proposals & Estimating

Key strategic hires

slide-18
SLIDE 18

What we are doing differently

18

▪ Bidding in strict compliance with business strategy ▪ Engage and target rather than respond ▪ Focused marketing in addressable sectors ▪ Bidding teams with relevant experience ▪ Over 20 new hires to support ongoing bids ▪ Increased involvement from

  • perations project managers at

bidding stage

Transforming the bidding process

Project assessed for strategic fit Initial proposal to ExCom ExCom approval for bids above $10m Weekly progress review by ExCom

Comprehensive evaluation process: scope & terms, risk, capability, financials, win strategy

Bid team: business development, risk, engineering, procurement, HR

slide-19
SLIDE 19

What we are doing differently

19

Organisational changes, investment in strategic hires & new rig design

▪ Restructured organization to better serve our targeted end markets of Oil & Gas and Renewables via: ▪ Rigs ▪ EPC(I) ▪ Services ▪ Dedicated leadership teams for each core service offering in place ▪ Invest throughout 2018 in hiring the right people with the right skillset and experience, particularly with regards to EPC(I) and/or LTA ▪ Launched the Lamprell Jackup (LJ43),

  • ur new design developed with

GustoMSC

Renewables Oil & Gas Rigs EPC(I)

Services

Technology People

Investment Lamprell core services Market sectors

Facilities

slide-20
SLIDE 20

What we need to deliver growth

20

Rigs EPC(I)

Renewables

Track Record

27 NBJU’s and multiple Land Rigs completed

EA1 Foundation Project and 4 Jackup Installation Vessels

Partnered with companies that complement own skillset (i.e., T&I)

Clients

✓ ✓ ✓

Facilities/ Assets

✓ ✓ ✓

Installation assets via partner

Execution Capability

✓ ✓

Leadership teams in place/ $10m to be invested in new hires and bidding

Technology/ Know how

Launched LJ43

Relationships with HV engineering design firms to access HVDC/AC projects

Relationships with experienced speciality engineering firms

Local Content

Uniquely positioned in core markets of UAE (ICV) and Saudi (IKTVA)

Partner with local yards as required

Uniquely positioned in core markets of UAE (ICV) and Saudi (IKTVA) for LTA

slide-21
SLIDE 21

Strategic focus: Saudi Arabia

Maritime Yard ▪ International Maritime Industries JV formed ▪ Progressing subcontract for the first two rigs at Lamprell’s UAE yards (expected in 2018) ▪ Selected rig design LJ43 jointly developed by Lamprell and GustoMSC ▪ First major construction contracts awarded ▪ SIDF loan approved LTA ▪ LTA selection process continues: decision in H2 2018 ▪ Continue regular dialogue and engagement Local content ▪ In-Kingdom Value and similar programmes of increasing importance in the region – Lamprell uniquely positioned to take advantage

21

20

New build jackup rigs

  • ver 10 years

$414bn

Saudi Aramco 10-year Capex forecast

$140m

Lamprell in-Kingdom investment 21

slide-22
SLIDE 22

Strategic focus: Renewables

22

Renewables (offshore windfarms)

  • pportunity:

▪ Committed to sector despite significant challenges on first contract ▪ Scope to include foundations, HVAC/DC platforms, and wind installation jackup vessels ▪ Addressable market in excess of $3 billion per annum, gaining pace ▪ 17 new sites commissioned in 2017 in Europe ▪ Average capacity of commissioned farms 5.9MW, average capacity under construction 493MW ▪ Current UK capacity: 5.26GW/ 27 sites, increasing to 24GW by 2025 ▪ €9bn investment in European offshore wind sector expected in 2018 ▪ Knowing what we know today, we are confident the market can generate attractive returns

European project pipeline

Source: Renewables UK: Offshore wind project timelines Wind Europe: Offshore wind in Europe key trends and statistics

slide-23
SLIDE 23

Strategic focus: EPC(I)

23

EPC(I) opportunity: ▪ EPC(I) opportunities 50% of bid pipeline ▪ High value and margin work – addressable market of $3 billion per annum ▪ LTA opportunity not included in bid pipeline (approximately $3 billion per annum)

Leveraging core competency to diversify markets and customer base

Delivery through: ▪ Project management team already in place ▪ Partnerships ▪ Earlier and more intensive engagement with clients on major project developments ▪ Investment in people

slide-24
SLIDE 24

Outlook

▪ 2018 revenue range $225-300m ▪ Increase in quantity and quality of bid pipeline is very encouraging ▪ Circa $10m investment in people and bids required in 2018 to position for EPC(I)

  • pportunity set

▪ Bid pipeline conversion from end 2018 ▪ IMI progress ▪ Extremely well positioned in home markets of UAE and Saudi ▪ Return to revenue growth in 2019

24

Pressure throughout 2018, growth from 2019

slide-25
SLIDE 25

Q&A

25

If you are listening to the presentation remotely please log your questions via the webcast

slide-26
SLIDE 26

26

Appendices

Sharjah stacking area

slide-27
SLIDE 27

LJ43

27

▪ Developed with GustoMSC, highly experienced leader in engineering and design of offshore mobile units ▪ Specifications are based on drilling in Saudi waters meeting schedule G requirements ▪ Provides the added capability to access fields with shallow water gas wells ▪ Rig legs are derived from proven Gusto designs with a custom designed hull and living quarters by Lamprell ▪ The rig will feature efficient technology through Gusto’s proven XY cantilever and a newly designed BOP handling system that allows dual BOP handling without any downtime ▪ Pipe handling technology for efficient process

  • f loading from the main deck and offline stand

building capability within the derrick

slide-28
SLIDE 28

Financial summary

28 Amounts in $m FY 2017, $m Underlying and as reported FY 2016 $m Underlying One-off charges FY 2016, As reported Revenue* 370.4 730.0 (25) 705.0 Cost of sales (420.6) (630.2) (17.6) (647.8) Gross (loss)/ profit* (50.2) 99.8 (42.6) 57.2 Gross margin % (13.6%) 13.6% (5.5%) 8.1% G&A (40.2) (48.4) (3.4) (51.8) Non-cash goodwill impairment

  • (180.5)

(180.5) Operating (loss)/ profit* (90.2) 52.5 (226.5) (174.0) Finance costs - net** (5.1) (9.9)

  • (9.9)

(Loss)/ profit before income tax (97.9) 44.5 (183.9) (181.9) Income tax expense (0.2) (0.3)

  • (0.2)

(Loss)/ profit for the period (98.1) 42.8 (183.9) (182.2) Loss on disposal of subsidiary

  • (2.1)
  • (2.1)

Total profit / (loss) attributable to equity holders (98.1) 40.7 (183.9) (184.3)

* Relating to continuing operations ** Represents the net balance of finance costs and finance income

slide-29
SLIDE 29

Revenue split by business streams

www.lamprell.com 29

2017 2016 2015 2014 New build jackup 49.4 567.6 675.8 748.4 Oil and Gas contracting 131.2 47.6 93.3 210.0 Modules 3.0 40.8 47.1 4.6 Offshore Platforms 140.7 12.8 11.9 78.0 Operations & Maintenance, manpower supply and safety services 46.1 36.2 42.9 43.9 370.4 705.0 871.0 1,084.9 2017 2016 2015 2014 Rigs 160.8 600.5 755.1 926.1 EPC/EPC(I) 154.1 54.4 64.0 87.8 Energy Contracting Services 55.6 50.0 52.0 71.0 370.4 705.0 871.1 1,084.9

The table below illustrates the revenue by business streams based on the revised organisation structure adopted by the Group with effect from Feb 2018

slide-30
SLIDE 30

Solid base: world-class safety record

30

Cornerstone to attract tier 1 clients