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

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pre

para

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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

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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