Interim Results 29 August 2013 New build jackup rig: Jindal Star 0 - - PowerPoint PPT Presentation

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Interim Results 29 August 2013 New build jackup rig: Jindal Star 0 - - PowerPoint PPT Presentation

Interim Results 29 August 2013 New build jackup rig: Jindal Star 0 0 www.lamprell.com Disclaimer This presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/ or


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SLIDE 1

Interim Results

29 August 2013

www.lamprell.com

New build jackup rig: Jindal Star

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SLIDE 2

Disclaimer

www.lamprell.com 1

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.

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SLIDE 3

Overview

2

James Moffat, CEO

Rig refurbishment: Noble rig

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SLIDE 4

Agenda

www.lamprell.com 3

1 Overview 2 Financial Review 3 Operational Review and Strategy 4 Summary and Outlook 5 Appendices

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SLIDE 5

Overview

www.lamprell.com 4

 Problem projects delivered or on track  New senior management team and structure established and new ERP system being implemented  Stabilised financial position; Refinancing secured  Supply chain improving and actively managed  Strong operational performance and world class safety record Solid improvement in H1 results and full year outlook ahead of expectations

Recovery on track

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SLIDE 6

World class facilities strategically well located in the Gulf Good health and safety record with HSE a core value across the Group Strong track record of successful project execution in our core competencies First class build quality that meets all national and international standards >30 years offshore expertise in the Gulf and the region’s leading rig market service provider

Leading footprint Safety first approach Leading market position Reputation for quality Technical expertise

Fundamentally strong and sustainable business

www.lamprell.com 5

Consistent partner of choice for long term clients

Client satisfaction Lamprell’s core strengths are hard to replicate

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SLIDE 7

Financial Review

Frank Nelson, CFO

6

Liftboats: Seajacks Zaratan

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SLIDE 8

Highlights

  • Revenue broadly flat at $521m (H1 2012: revenue $528m)
  • Profit before tax $10.1m* (H1 2012: loss before tax $50.8m*)
  • Net cash $151.1m (H1 2012: net debt $35.7m)
  • Average monthly net cash of $115.7m
  • Successful refinancing with new $181m facility secured
  • Current favourable working capital profile will partially unwind in H2

www.lamprell.com

* Prior to exceptional items

7

H1 results ahead of expectations

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SLIDE 9

Summary P&L

www.lamprell.com 8

H1 2013 H1 2012

$m $m

Revenue 521.0x 528.0x Gross margin 8.2%x (3.0%)x Operating profit / (loss)* 14.7x (37.8)x Profit / (loss) before tax* 10.1x (50.8)x Tax (0.5)x (0.3)x Exceptional costs (2.3)x 0.0x Net profit / (loss) 7.3x (51.1)x Diluted EPS (pre exceptional) 3.7c (19.7)c Diluted EPS (post exceptional) 2.8c (19.7)c

* Profit / (loss) stated before income tax and before exceptional items

Return to profitability

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SLIDE 10

Balance sheet

www.lamprell.com 9

H1 2013 H1 2012 $m $m Total net assets

413.8

467.8 Tangible net assets

197.9

239.3 Gross cash

274.5

134.0 Free cash

197.8

32.6 Net cash/(debt)

151.1

(35.7)

Land Rig Services

Significant improvement in liquidity

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SLIDE 11

Refinancing

www.lamprell.com 10

  • $181m facility maturing in June 2016
  • $100m term loan ('Facility A')
  • $60m term loan ('Facility B')
  • $21m revolving credit facility ('RCF')
  • Common set of financial covenants across the debt structure
  • More suitable covenants: gross debt/EBITDA, interest cover, minimum tangible net

worth and maximum capital expenditure

  • Reduced number of syndicate banks
  • Restrictions on paying dividends until balance outstanding on Facility B cleared
  • Blended average interest margin of 6.7% for Facility A, Facility B and the RCF
  • Facility B interest costs increase incrementally from July 2014
  • Upon repayment of Facility B, the margins in Facility A and the RCF will reduce, as will

potential future bonding costs

Refinancing provides security to 2016

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SLIDE 12

Financial summary

  • Refinancing secured
  • Robust reporting and financial planning in

place

  • Improved liquidity management
  • Strong cash performance
  • Financial performance ahead of expectations

for full year

www.lamprell.com 11

A stable platform for sustainable growth

Offshore platforms: North Sea operator

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SLIDE 13

Operational Review and Strategy

12

James Moffat, CEO

Offshore platforms: North Sea operator

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SLIDE 14

H1 2013 operational highlights

  • Strong performance in offshore construction
  • Several key projects successfully delivered:

– Windcarrier “Bold Tern” – Greatships jackup rig – Two major offshore structures

  • Three major projects to be delivered in H2
  • Over 15 upgrade and refurbishment projects

during the period

  • Order book of $1.1bn¹
  • Bid pipeline of $4.6bn¹

www.lamprell.com

¹As at 30 June 2013

13

High activity levels in H1 and strong execution

New build jackup rig: Greatdrill Chaaya

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SLIDE 15

Current activity

  • 2013 contract awards:

– New build jackup for Jindal Group – 3 major rig refurbishment projects

  • Current major project activity:

– 8 jackups under construction – 3 rig refurbishment projects – 4 offshore construction projects – 1 lift boat (1st generation)

  • Positive contract growth in offshore

construction and refurbishment

www.lamprell.com 14 58% 14% 7% 21% New Build Jackups Rig Refurbishment Land Rigs Others

Key contract awards / extensions $0.38bn¹

¹Wins since 1st Jan 2013 as at 30th June 2013

Contract awards expected to accelerate in H2

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Bid pipeline

www.lamprell.com 15 400 800 1,200 1,600 2,000 2,400 2,800 Newbuild Jack Ups Offshore Const. Rig Refurb Land rigs Others

Current pipeline of $4.6bn¹

2

¹ As at 30 June 2013 ²Refurbishment value stream has short bid to award profile and therefore limited order book / pipeline values

  • Increasing bid pipeline in core

markets (Dec 12: $4.1bn)

  • Strong focus on pipeline conversion

in H2 2013

  • Creating a balanced portfolio is a

strong focus for 2014 and beyond Increased pipeline in our core markets

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SLIDE 17

Core markets offer significant opportunities

www.lamprell.com 16

OFFSHORE RIGS

  • Strong forecast drilling activity and global fleet metrics

continues to drive rig new build and refurbishment

  • Jackup market has tightened through 2013
  • Utilisations and day rates continue to increase
  • Tender activity strong
  • Acceleration in attrition rate of older rigs

Two thirds of global jackup fleet over 25 years old Half of global fleet in Middle East and Asia

OFFSHORE CONSTRUCTION

  • Increasing global E&P capex inc. FPSOs, LNG
  • Demand for broader range of process modules
  • Quality is a key differentiator
  • Strong track record in complex North Sea projects

LAND RIGS

  • Exceptionally strong global and regional demand
  • Growth increased by potential for unconventional

drilling

  • Cost barriers to rig relocation strengthen Middle East

build programme

  • Versatile design enhancements to broaden market

Source: Pareto / ODS Petrodata

<10 10-25 25-35 >35 Middle East Mexico W Africa NW Europe SE Asia US GOM Indian Ocean Far East Other

Safety, quality, technical and operational capabilities are key differentiators

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SLIDE 18

Focusing on our core competencies

www.lamprell.com 17

New build jackups

  • Established new build jackup rig capability
  • Leading non-Asian yard for <= 350ft rig class
  • Larger rigs well within Group’s core

capabilities

Land rigs

  • Full land rig refurbishment services
  • API accreditation
  • Regional expansion

Offshore construction

  • Proven strength in a range of high quality

process module fabrication

  • Specialism in North Sea projects
  • Well placed for significant regional
  • pportunities

Refurbishment

  • Regional market leader in offshore rig

refurbishment

  • Strong track record across all refurbishment

disciplines

  • Full refurbishment, upgrade and conversion

capabilities Service businesses are non-core and are under strategic review

Established market positions and strong track record

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SLIDE 19

Returns Service Focus Efficiency HSEQ

Long term value drivers

www.lamprell.com 18

Maintain our reputation for build quality and strong safety focus

  • World class approach to HSE
  • Execution excellence

Capitalise on significant opportunities in our core markets

  • Core market pipeline conversion initiatives
  • Utilise core capabilities and enhance differentiation
  • Enhanced risk management and no prototype projects

Best in class customer focus and responsiveness

  • On schedule and on budget every time
  • Client and supplier partnerships to enhance overall service delivery

Improve procurement process and labour productivity

  • Enhanced production planning and efficiency
  • Cost flexibility and procurement enhancement

Deliver sustainably higher returns with improved earnings visibility and reduced project risk

Leveraging our core strengths to deliver sustainable growth

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SLIDE 20

Summary and outlook

  • Refinancing secured
  • New organisation in place
  • Operational and process improvements

evidenced in H1

  • High level of tendering activity
  • Significant opportunity to create value in our

core markets

  • Continued refinement of strategy whilst

focusing on implementation

  • Outlook for full year ahead of expectations

www.lamprell.com 19

2013 recovery on track

New Build Greatship Chaaya

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SLIDE 21

Appendices

20

Rig refurbishment: Noble rig

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SLIDE 22

Strategic timeline

www.lamprell.com 21 21

Oct-12

Departure of executive team Appointment of Peter Whitbread Announcement of unquantified deterioration in full year forecast

Nov-12

Announced expected $105m loss for the year Strategic options review commenced

Nov-12 Feb-13

Windcarrier II delivered in line with revised schedule

Jun-13

H1 return to profitability New ERP project commenced Review of strategic

  • ptions completed

Jan-13 Mar-13

Divisional review commenced Jim Moffat joins as CEO

Mar-13

Term sheet signed with lenders

Jun-13

Strategic timeline

Project risk review and refinancing Independent business review Operational and strategic review Jul-13

Completion of refinancing New INEDs appointed

May-13

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SLIDE 23

Order book and bid pipeline

400 800 1,200 1,600 2,000 2,400 2,800 Newbuild Jack Ups Offshore Const. Rig Refurb Land rigs Others www.lamprell.com 22 100 200 300 400 500 600 700 800 900 Newbuild Jack Ups Newbuild Lift Boats Offshore Const. Rig Refurb

Current pipeline of $4.6bn¹ Current order book of $1.1bn¹

2 2

¹ As at 30 June 2013 ²Refurbishment value stream has short bid to award profile and therefore limited order book / pipeline values

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Current project summary

Project Type Facility Delivery North Sea operator 5,217 tonne utility platform Jebel Ali Delivered – Q1 2013 Nexen 5,353 tonne wellhead deck Jebel Ali Delivered – Q2 2013 EDC1 (Caspian Sea) Le Tourneau S116E Hamriyah Q3 2013 North Sea contractor 15 process modules Jebel Ali Q4 2013 Jindal Star Le Tourneau S116E Hamriyah Q4 2013 NDC 3 Le Tourneau S116E Hamriyah Q1 2014 Leighton Topside & jackets Sharjah Q1 2014 NDC 4 Le Tourneau S116E Hamriyah Q2 2014 Seajacks - Hydra Gusto MSC NG-2500X Hamriyah Q2 2014 Nexen 13,700 tonne PUQ deck Jebel Ali Q2 2014 EDC2 (Caspian Sea) Le Tourneau S116E Hamriyah Q4 2014 NDC 5 Le Tourneau S116E Hamriyah Q4 2014 Dev Drilling Le Tourneau S116E Hamriyah Q1 2015 NDC 6 Le Tourneau S116E Hamriyah Q1 2015

www.lamprell.com 23

$1.1bn order book

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SLIDE 25

New lending covenants

www.lamprell.com 24

Gross debt/EBITDA 4.5x decreasing to 1.5xx Interest cover 1.75x increasing to 3.5x Minimum tangible net worth $160m increasing to $250m Capex levels sufficient for business plan

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SLIDE 26

Lamprell facilities

www.lamprell.com 25

  • 1. Hamriyah –

Sharjah, UAE

  • 2. Port Khalid –

Sharjah, UAE

  • 3. Jebel Ali –

Dubai, UAE

  • 4. Dubai

Investments Park – Dubai, UAE

  • 5. Jubail – Saudi

Arabia*

  • 6. West Shuaiba
  • Kuwait

Leading footprint in the Gulf

* MISA Joint Venture