TIDMLAM
RNS Number : 3272H
Lamprell plc
03 August 2021
03 August 2021
LAMPRELL PLC
("Lamprell" and with its subsidiaries the "Group")
TRADING UPDATE
Lamprell announces the following update on its performance for
the first six months of the year to 30 June 2021*.
-- Against the backdrop of COVID-19 and related supply chain
bottlenecks, the Group continues to make solid progress on all
projects
-- Revenue of USD 175 million, with USD 295 million secured for H2 2021
-- Full year EBITDA expectations remain at broadly breakeven levels
-- Net cash decreased to USD 81.1 million as projects enter
critical working capital phase, with USD 55.0 million restricted on
project bonds and guarantees
-- Bid pipeline increased 15% to USD 6.9 billion, momentum in
renewables opportunities continues to improve
-- A number of decisions on current renewables bidding opportunities expected in Q3 and Q4 2021
-- Working capital schedule actively managed to allow additional
time for the debt and/or equity funding to be secured
-- Final discussions with three banks on USD 90 million working
capital facilities for the completion of two IMI rigs, expected to
be comprised of two equal tranches (first anticipated to be
available in August and second in Q4 2021, consistent with working
capital requirements)
-- Planned potential equity raise of USD 30-60 million to
complete in Q4 2021, instead of Q3 2021, subject to market
conditions
*All numbers are subject to review
Operational update
Although COVID-19 restrictions remain in place in UAE and
elsewhere, Lamprell made solid progress on all of its ongoing
projects, with our yards operating throughout the pandemic, albeit
with additional incremental cost. We currently have four major
projects in Hamriyah. Health and safety is a core priority for us
and for our clients and during the pandemic we have taken special
measures to protect the health and wellbeing of our employees, with
88% of our workforce now vaccinated with two doses.
Renewables
Seagreen, the Group's third major renewables project, has
commenced delivery to client with the first batch of five jackets
now handed over at quayside in Hamriyah. By the end of 2021
Lamprell will have fabricated nearly 150 jacket foundations for
three of the UK's biggest renewables projects. The incremental
investment made earlier in the year to design and fabricate a
lifting frame is now translating into improved efficiencies during
the final stages of the project.
Oil & Gas
The IMI new build jackup rigs are entering peak fabrication
phase with major equipment packages being delivered to site for
installation. Our first contract win on the Saudi Aramco Long-Term
Agreement Programme (LTA), the first direct contract from the Saudi
oil major in Lamprell's history, is currently in final stages of
engineering with first cut of steel scheduled for September. Our
second EPCI project for Saudi Aramco LTA, awarded in April 2021, is
well underway with engineering and procurement activities. Rig
refurbishment continues to perform well, and we are reporting a
similarly encouraging level of engagement with our customers in the
region, as we also saw in 2020.
Digital
Our Digital business unit has made a number of strategic steps
this year. We have secured crucial partnerships with leading
digital investors and developers, Injazat/G42 and Akselos, and are
progressing a number of ventures - from cost solutions in our own
yards, to differentiated digital service offerings for our clients
across the energy industry. We commenced the deployment of complex
robotic welding on the Seagreen project, delivering noticeable
efficiency improvements. We also created a first digital twin for
our proprietary lifting frame, another critical asset in renewables
fabrication. The digital twin provides us with critical data
enabling us to maximise asset performance and reduce maintenance
time and cost. It also allows us to better demonstrate the
technology, its potential and transferability to offshore energy
assets to our clients.
Financial performance
Subject to review, revenues in the first six months of 2021
amounted to USD 175 million. USD 295 million is secured for H2
2021, and EBITDA in H1 was slightly negative. Much of the revenue
for the full year will be affected by the minimal margin IMI rig
projects as well as additional COVID-19 disruption costs. The Group
has delivered sustainable overhead reductions in recent years and
remains committed to a programme of fiscal discipline and cost
control. Full year cash overhead for 2021 will remain at similar
levels to 2020. This, along with the expected completion of
Seagreen as well as progress on the two IMI rigs in the second half
of the year, allows the Group to reiterate its expectation of a
broadly breakeven EBITDA for the full year.
Net cash has reduced from USD 112.4 million at 31 December 2020
to USD 81.1 million at 30 June 2021, as expected.
Current backlog stands at USD 433 million.
Balance Sheet recapitalisation update
On 29 June 2021, Lamprell announced its plans to complete new
funding arrangements of USD 120-150 million through a combination
of debt and/or equity.
The Group has reviewed its working capital schedule to manage
the phasing of cashflows. The current funding requirement schedule
is as follows:
- Approximately USD 90 million of working capital for the two
IMI rigs, with USD 45 million required by early Q4 2021 and USD 45
million in late Q4 2021
- IMI equity contribution of USD 17 million required in Q4 2021
- Targeted investment in renewables fabrication facilities, as
well as incremental investment in Digital business unit funding
from Q4 2021
The Group currently expects to secure two Export Credit Agency
backed working capital facilities for the IMI rigs of USD 45
million each. Final terms negotiations with three potential lending
banks are expected to conclude in August 2021 for the first rig and
90 days later for the second rig. Having reviewed the timing of
milestone payments on major ongoing projects and taking into
account the advanced stage of debt negotiations for the IMI rigs
working capital requirements, the Group now expects to raise a
minimum of USD 30 million through equity in Q4 2021, later than
previously announced. The details of any potential equity raise are
subject to market conditions and will be announced in due
course.
If the Group is unsuccessful in concluding the working capital
facility with the banks, the Group plans to raise capital through
equity in the amount of USD 120-150 million in order for it to:
- meet the working capital requirements of the IMI rig projects.
Once delivered, the final milestone payments will be invested in
our facilities to increase efficiency and capacity to grow in
particular our renewables business unit;
- fund the outstanding equity investment in the IMI joint venture in Saudi Arabia; and
- invest in the significant opportunities in developing our Digital business unit.
Outlook
We continue to see positive dynamics in our end markets of
renewables and oil and gas. Thanks to our successful
diversification into the renewables industry and access to the oil
and gas opportunities in Saudi Arabia and the Middle East, bidding
levels are currently at the highest point since the Group commenced
its transformative strategic journey five years ago. Our bid
pipeline has grown by nearly USD 1 billion to USD 6.9 billion since
the beginning of the year, with the majority of added projects from
the renewables industry. We continue to see further renewables
projects entering the pipeline post period, as expected. Renewables
opportunities comprised approximately 50% of the pipeline as at
30(th) June. We are expecting decisions on a number of renewables
opportunities in Q3 and Q4 2021.
Secured revenue for 2021 is USD 470 million, enabling us to
demonstrate another year of revenue growth. A large proportion of
the secured revenue for 2021 is attributable to the IMI rigs, which
were bid at minimal margins to enable the monetisation of USD 70
million of equipment that had been purchased in 2015. However, we
expect to deliver improved margin performance on projects in our
current pipeline through a combination of continued cost
discipline, improving margins in the renewables industry, as well
as strategic yard investment to increase throughput and
efficiencies in renewables fabrication.
Christopher McDonald, CEO of Lamprell said: "Our strategy is now
fully aligned with the broader energy transition. The Renewables
business unit is benefiting from the growth in global opportunities
and limited fabrication capacity and we are encouraged by the level
and quality of engagement with current and prospective clients. Our
credentials in the oil and gas business enable us to access the
opportunities available in the Middle East and we are actively
seeking to transition our Oil and Gas business unit to Saudi
Arabia. Our Digital business unit is developing rapidly with the
right financial and technical partnerships in place. The work in
recent years to reposition the business, reduce overheads and
develop a strong track record in renewables has transformed
Lamprell and provides us with an improving outlook."
- Ends -
Enquiries:
Lamprell plc
Maria Babkina, Investor Relations +44 (0) 7852 618 046
Tulchan Communications, London +44 (0) 207 353 4200
Guy Bates
Martin Pengelley
Notes to editors
Lamprell is a leading provider of services to the international
energy sector. Driving strategy and growth through its Renewables,
Oil & Gas and Digital business units, underpinned by almost
half a century of expertise, the Group has worked hard to establish
its reputation for delivering projects safely, on time and to
budget.
The Group has firmly established its international credentials
in the renewables sector as well as continuing to build on its
traditional oil and gas credentials. We are recognised for building
complex offshore and onshore process modules and platforms,
fabricating and refurbishing jack-up rigs and liftboats.
Lamprell employs more than 5,000 people across multiple
facilities, with its primary facilities located in Hamriyah, in the
UAE. Combined, the Group's facilities cover approximately 800,000m2
with over 1.5 km of quayside. In addition, the Group has facilities
in Saudi Arabia (through a joint venture agreement). Lamprell is
listed on the London Stock Exchange (symbol "LAM")."
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