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lamprell.com
Full yearresults 2019
13 May 2020
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 or 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 or employees accepts any liability
whatsoever arising directly or indirectly from the use of this document.
Core priorities
2019 Highlights
Operational review
Financial review
Strategy update
Appendices
123456
Agenda
3
Core prioritiesChristopher McDonald
CEO
l a m p r e l l . c o m
Mora
y E
ast
transiti
on p
iece l
iftin
g
▪ Operations adapted to crisis, able to avoid major delays
▪ Additional short term cost cutting measures implemented
Positioning for recovery
5
▪Focused the business on diversified growth in the evolving energy industry
Oil and Gas
▪ Established presence and high local content
scores in the region with lowest cost reserves
▪ Offshore capex in Saudi Arabia and UAE
will continue
▪ Strategic partnerships and long standing
relationships in both markets
Renewables
▪ Developing expertise in an industry with
rapid global growth
▪ Requirement for 3000 foundations in the
next 5 years
▪ Few yards with the right capacity, set-up and
solid delivery track record
▪Protecting net cash and improving our liquidity
▪ Significant cost reduction from a major operational restructuring in 2020
▪ EA1 settlement and release of restricted cash
▪ Deferring equity contribution into IMI until 2021
▪ Capex reduction
▪ Actively pursuing various funding options
▪ Track record in renewables improves access to funding
▪Working through COVID-19 to deliver for our clients
2020 Achievements
6
▪ Contract secured for two new build jackup rigs from IMI
with initial milestone payment of $88m received
▪ Debt free from 11 March 2020
▪ East Anglia One contract closed out
▪ Moray East deliveries progressing
▪ Overhead reduction programme implemented – 21%
saving in 2020 equating to $22m
▪ COVID-19 25% payroll cut saving $10m (overhead
element $4m) in 2020 in addition to self help
7
Operational restructuring
▪ Operations to be consolidated within one
yard (Hamriyah) with potential increase in
yard space if required:
▪ Reduces cost base
▪ Delivers operational efficiencies
▪ Flexible capacity to deliver the
pipeline
▪ Jebel Ali facility mothballed, exit Sharjah
facility upon completion of Moray East
project
▪ Significant headcount reductions took
place in Q1
▪ Spending and allowance thresholds
reduced/ work week extended
▪ Retained capacity and skillset to deliver
strategic initiatives
▪ Total overhead reduction of $22m for FY
2020
8
COVID-19
Impact on operations
▪ Increased health screening
▪ UAE industrial work continues, close
collaboration with government authorities
▪ Work in the yards continues with moderate
impact on productivity and cost
▪ Current projects progressing in line with
schedule
Impact on supply chain
▪ Working closely with suppliers and
potential clients to mitigate impact on
ongoing and future work
Temporary cost reduction
▪ Salary reductions of 25% for 6 months
▪ Reduced working hours where possible
▪ Redundancies
▪ Anticipated saving of $10m for FY 2020
9
2019 HighlightsChristopher McDonald
CEO
l a m p r e l l . c o m
Ham
riyah
2019 Overview
1 0
$6.2bnBid Pipeline*
$470.1mBacklog*
$42.5mNet Cash*
$260.4mRevenue
$(183.5)mNet loss
***Total recordable injury rate
* As at 31 December 2019
$(64.6)mEBITDA
0.19TRIR***
One-off impacts
▪Share of EA1 loss: $28.8m
▪Non-cash impairment: $79.3m
▪31 March 2020:
$77m**
▪Balance sheet
supports backlog
▪Modest YoY growth
▪ Several awards deferred
into 2020▪Commendable
performance in line with
industry best practice
▪ High-quality pipeline
with opportunities in both
end markets
** Including $35m restricted cash
OperationalreviewChristopher McDonald
CEO
l a m p r e l l . c o m
Mora
y E
ast
pre
para
tion f
or
load o
ut
1 2
Moray East
▪ Project progressing as planned
▪ Significant improvement in efficiencies as a result of incremental
yard infrastructure investment
▪ Up-ending and load out campaign underway
▪ Final deliveries in early Q3 2020
▪ Project provides strong platform for future wins
Rig refurbishment
▪ 13 completed in 2019
▪ 8 stacked
▪ 1 larger scope project arrived at the yard
▪ Active major upgrade interest from the region
Operational review
13
IMI: New contract award
Project scope
▪ Two new build jack up rigs for ARO Drilling
▪ To be built mainly in Lamprell’s facilities, with
final commissioning in Saudi Arabia
▪ Lamprell’s share of the project amounting to
circa $350m
▪ Received initial milestone payment of $88m
in January 2020
▪ Project will utilize jacking kits from existing
inventory, which will convert approximately
$70m of inventory into cash over the project’s
execution
IMI Maritime Yard progress
▪ Dredging, reclamation and marine structures
nearly completed, commenced yard facilities
construction
▪ Lamprell’s investment to date - $59m (of
$140 total committed).
▪ Discussions to defer 2020 investment of
$26m commenced
IMI DELIVERABLES TO DATE
▪ Investment in yard provides significant boost
to IKTVA score – a key requirement for
contracts
▪ IKTVA score was a key decision maker in
LTA inclusion
▪ First two IMI jackup rigs are the only global
awards in 5 years
*IKTVA – In-Kingdom Total Value Added
14
Saudi Aramco LTA
Saudi Aramco LTA programme
▪ Bidding continues, do not anticipate current LTA
projects to be affected by the announced
Capex cut
▪ 10 CRPOs submitted since joining LTA in
November 2018 (3 awarded, none to new
entrants)
▪ 3 active bids ongoing
▪ Looking at ways to further increase local
content commitment
*LTA - Long-Term Agreement
CRPO – Contract Release and Purchase Order
Jacket Topside
Replacement deck module
CRPO SCOPE EXAMPLE
15
Renewables
▪ Bidding levels remain robust with significant
growth anticipated over the decade
▪ COVID-19 affected timing of decision on several
projects
Oil and gas
▪ Discussions with regional clients continue, with
encouraging interest in new build and major rig
upgrades
▪ Saudi Aramco’s LTA programme to be extended to
major packages on a major project
Bid pipeline $6.2bn*
(FY 2018: $6.4bn)
*Including LTA; as per 31 December
2019
$1.4bn
$4.8bn
RenewablesOil and gas
Bid pipeline
FinancialreviewTony Wright
CFO
l a m p r e l l . c o m
Mora
y E
ast
pro
ject
constr
uctio
n i
n H
am
riyah
Facility
▪ YoY revenue increase driven by ramp-up on Moray East project
▪ Non-cash impairment charges of $79.3m a significant contributor to losses in the year
▪ Revenue below break even point and EA1 settlement also contribute to losses
▪ 2019 overhead increase in line with guidance, targeting 20% reduction in 2020 as a
result of self help measures
▪ Retained net cash position, debt free as of 11 March 2020, refinancing options in
progress, EA1 settlement improves liquidity
Key Financials
Income statement
($m, unless stated otherwise)FY 2019 FY 2018
Revenue 260.4 234.1
EBITDA (64.6) (35.1)
EBITDA margin (24.8)% (15.0)%
Loss from continuing operations after
income tax(183.5) (70.7)
Loss from continuing operations after
income tax and excluding impairments(104.2)
Balance sheet
($m)
Net cash as at 31 December 42.5 80.0
Tangible net assets 211.4 363.0
Revenue by
segmentFY2019$m FY2018$m
Rigs 24.8 76.0
EPC(I) 167.2 99.8
Contracting
services68.4 58.3
17
18
EBITDA
Amounts in US$m
(35.1)
(64.6)
18.4 28.8
7.7
10.0
1.4
(70)
(60)
(50)
(40)
(30)
(20)
(10)
-
2018 EBITDA Impact of MorayFirth contribution
in 2019
Impact of EA1 in2019
Impact of reducedrevenues and
margin in othervalue streams
Increase inOverheads
Other 2019 EBITDA
19
Cost structure
*Non cash: Depreciation, amortization, finance lease costs
Delivered overhead savings in Q1 2020
▪ Target overheads of $82m in 2020
▪ Cash overheads to be reduced by 28%
▪ Major reductions in corporate overheads,
mainly driven by reduction in headcount
▪ Yard consolidation drives operational
overhead reductions
▪ One off restructuring costs of $8m excluded
Impact of COVID-19 savings on overhead
▪ Cash overheads reduced by a minimum of a
further 8%
▪ Critical to preserving liquidity
-
10
20
30
40
YardOverhead
OperationalSupport
Overhead
Business UnitOverhead
CorporateOverhead
AssetManagement
Overhead
Cash overheads
2019 2020
70.6
33.3
Cost Structure 2019 $m
Cash Non Cash*
20
Net cash
Amounts in US$m
80.0
40.7 45.6
20.9
11.7
42.5
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
110.0
120.0
130.0
Net Cash as at31st
December 2018
Movement inworking capital
Operating cashflows
Asset additions Other Net Cash as at31st December
2019
21
Capex & Spending Overview
Operational capital expenditure
▪ Capital expenditure in 2019 amounted to
$21m
▪ Modest 2020 capital expenditure
anticipated
Strategic investments
▪ No investment was called for by IMI in
2019
▪ IMI investment of $26m under discussion
for deferral to 2021
20
40
0
26
35
19
140
2017 2018 2019 2020 2021 2022 2023 Total
ANNUAL IMI EQUITY INVESTMENTS ($ m)
22
Financial summaryFocus on overhead reduction and future project funding
▪ Balance sheet continues to support current projects
▪ Strong asset base to support future growth
▪ Tight control of strategic spend in 2020
▪ Debt free as of 11 March 2020 but regional credit market,
the global health crisis and the oil price volatility makes
conventional term debt challenging
▪ Alternative sources of funding under consideration
▪ Overhead reductions to preserve our cash position
Strategy updateChristopher McDonald
CEO
l a m p r e l l . c o m
Sta
cked
rig
s -
Ham
riyah
24
Strategic FocusAdapting to the evolving energy industry
Solidify position in core
markets
Maintain continuity of renewables work and secure new
build and refurbishment work for our offshore and
onshore rig divisions
Move up the value chain in
EPC(I)
Enter new geographies and
markets
Leverage our position in renewables and on Saudi
Aramco’s LTA programme to move further into EPC(I)
execution
Build on entry into Saudi Arabian market by securing
new contract awards; pursue prospects in the
renewables market, either with new clients or in new
geographies
Improve our business through
innovation and digital
technologies
Leverage Lamprell’s core fabrication and project
execution skill set into digital product offerings
25
0
50
100
150
200
250
300
350
2018 2025E 2030E 2040 E
GW
EU China US RoW
▪ Annual offshore wind capacity is set to double over
the next five years and increase almost 15x by 2040
▪ Europe leading the way but strong international
growth, supported by government policies
▪ Over 3000 foundations anticipated to be installed
over 5 years (Lamprell’s fabrication focus on
foundations - ca 20% of capex)
▪ Assessing market for transition piece packages for
monopiles
Offshore Wind
OFFSHORE WIND TO GROW ~15x BY 2040
Note: Estimate based on IEA Stated Policies Scenario, further upside based on IEA Sustainable Development Scenario
Sources: Fearnley Securities, IEA Offshore Wind Outlook 2019
~ 15x
~ 3.5x
~ 8x
FIXED FOUNDATIONS
Gravity-
basedMonopile Tripile Tripod Jacket
Lamprell
focus
Transition piece
26
Oil & Gas
▪ Saudi Aramco announced substantial
offshore investments related to the LTA
programme
▪ ADNOC announced a major rig fleet
expansion in support of its 2030 smart
growth plan – dozens of land and offshore
rigs to be ordered by 2025
▪ Potential for major offshore rig upgrade
work as ADNOC seeks to utilize available
rigs
▪ Lamprell maintains one of the highest
local content scores in both markets
▪ Traditional fuels will remain part of the
energy mix for the foreseeable future
presenting an opportunity for disciplined
and highly skilled contractors
27
Digital Transformation
▪ Use innovation to improve our operations
and develop new revenue streams:
▪ Increased use of digital solutions on site
(health performance metrics, face
recognition, etc) to improve labour
efficiencies
▪ Development of robotic solutions
▪ Asset integrity, digital twins and remote
operations controls
▪ Two partnerships established to advance
digital strategy:
▪ JV with Injazat (Mubadala), regional digital
leader
▪ MOU with Akselos, a specialist in digital
twin solutions
28
OutlookFocused on protecting the business
Guiding principles
▪ Health & Safety of our employees
▪ Protocols in place in line with WHO and UAE govt
▪ Protect net cash and improve liquidity
▪ Self help measures implemented to lower EBITDA
breakeven level
▪ Settled EA1
▪ Discussions underway to defer IMI equity injection until
2021
▪ Net cash position
▪ Debt free with over $200m in unencumbered assets
▪ Alternative sources of funding under consideration
▪ Strategy remains unchanged
▪ 2020 secured revenue of $275m
Appendix
l a m p r e l l . c o m
Mora
y E
ast
pro
ject
sail
aw
ay
30
Financial summary
Amounts in $mFY 2019, $m
Reported
FY 2018 $m
Reported
Revenue 260.4 234.1
Cost of sales (288.0) (243.2)
Gross loss (27.6) (9.1)
Gross margin % (10.6%) (3.9%)
G&A : (140.3) (45.2)
- Impairment of PPE and intangibles (79.3) -
- Other G&A expenses (61.0) (45.2)
Operating loss (169.1) (55.4)
Finance costs - net* (7.3) (3.5)
Share of loss in investments accounted using
the equity method (7.9) (10.6)
Loss before income tax (184.4) (69.5)
Income tax expense 0.9 (1.2)
Loss for the period (183.5) (70.7)
Total loss attributable to equity holders (183.5) (70.7)
* Represents the net balance of finance costs and finance income
31
Financial Cycle
Phase 1:
Start Up
Phase 2:
Execution
Phase 3:
CompletionMonths 1-8:
Low revenue recognition
period/no profit until 20%
progress achieved
Months 9-20:
High revenue recognition period with a
gradual release of contingencies
Months 21-30:
Contribution to profit from
final contingencies release
0
Neg
ative
Positiv
e
Cumulative CF of a
renewable project
Revenue recognized
Cumulative CF of an LTA
project
CF of a jackup project
top related