LAM.L Regulatory News (LAM)

26 March 2012

LAMPRELL PLC

("Lamprell")

2011 PRELIMINARY RESULTS

Lamprell (ticker: LAM), a leading provider of diversified engineering and contracting services to the onshore and offshore oil & gas and renewable energy industries, is pleased to announce its Preliminary Results for the year ended 31 December 2011.

2011 FINANCIAL RESULTS

·; Revenue: US$ 1,147.9 million, up 127.8% (2010: US$ 503.8 million)

·; Adjusted operating profit: US$ 90.2 million, up 29.8%* (2010: US$ 69.5** million)

·; Adjusted net profit: US$ 73.8 million, up 10.8%* (2010: US$ 66.6** million)

·; Proposed final dividend: 8.00 cents (5.03 pence) per ordinary share (2010: 9.50 cents)

·; Adjusted EPS fully diluted: 30.88 cents, up 0.7%* (2010: 30.67*** cents)

·; Net debt as at 31 December 2011 of US$ 101.7 million (31 December 2010: net cash US$ 210.2 million)

·; Order book at 31 December 2011 of US$ 1.2 billion (31 October 2011: US$ 1.2 billion)

* For the current year stated before exceptional charges arising from the MIS acquisition amounting to US$ 10.5 million.

** Includes one-off US$ 20.4 million gain on Riginvest and excludes one-off US$ 1.4 million loss on the closure of Lamprell Asia Limited.

*** Earnings per share has been restated for the bonus element of the 2011 rights issue.

2011 OPERATIONAL HIGHLIGHTS

·; A record US$ 1.1 billion of contracts awarded to the Group in 2011, with a year end backlog of US$ 1.2 billion.

·; The acquisition of Maritime Industrial Services Co. Ltd. Inc. completed in July 2011, increasing Lamprell's yard space to 925,000 m2 and quayside to 2.2 km, and expanding the Group's service offering, customer base and geographical range.

·; Key MIS acquisition milestones delivered including sale of Hulls 108 and 106.

·; 43 jackup rig upgrade and refurbishment projects were undertaken in 2011 for clients including Millennium Offshore Services, Nabors Drilling International Ltd., National Drilling Company, Noble International Ltd., and RDC Arabia Drilling INC.

·; Contracts secured for an additional five jackup rigs in 2011, resulting in the Group having eight rigs under construction at the year end.

CURRENT MAJOR PROJECTS

·; The first of two Gusto MSC NG-9000 design self-elevating and self propelled offshore wind turbine installation vessels under construction was successfully loaded out in February 2012 and will be delivered in Q2 2012. The second vessel will be delivered in Q3 2012.

·; Construction activities in connection with "Seajacks Zaratan", a GustoMSC NG-5500C design self-elevating and self-propelled offshore wind turbine installation vessel, valued at US$129 million, continued at Lamprell's Hamriyah facility during 2011 and will be delivered in Q2 2012.

·; The engineering and procurement phase of the contract valued at US$ 317 million and signed in July 2010 with National Drilling Company to construct two LeTourneau S116E jackup drilling rigs is now substantially complete. Construction at Lamprell's Hamriyah facility is well advanced, with delivery on schedule and on budget for 2012.

·; The first of four shipments to the Caspian of the hull modules commenced in March 2012 in connection with the contract signed with Eurasia Drilling Company Limited in November 2010 for the construction and delivery of a LeTourneau Super 116E jackup rig, valued US$ 210 million, with delivery scheduled for 2013.

·; The engineering and procurement phase of the contract with Greatship Global Energy Services Pte. Ltd. for the construction and delivery of a completely outfitted and equipped, LeTourneau designed, self-elevating Mobile Offshore Drilling Platform of a Super 116E Class design is well advanced and construction is proceeding at Lamprell's Hamriyah facility with delivery scheduled for Q4 2012.

·; Following the contract award from Compañia Perforadora Mexico S.A.P.I. DE C.V. in December 2011, work recommenced on Hull 108, a Friede & Goldman designed Super M2 jackup rig previously under construction by MIS. Delivery is scheduled for Q2 2012.

·; The construction phase of the two contracts awarded in November 2011 to Lamprell by Nexen Petroleum UK Limited for a wellhead deck and production, utilities and quarters deck has commenced on schedule in the Jebel Ali facility.

·; In March 2011 Lamprell was awarded a contract by Weatherford Drilling International (BVI) Ltd for two 3000 HP land drilling rigs. The rigs were constructed at the Jebel Ali facility.

Commenting on the full year results Nigel McCue, Chief Executive Officer, Lamprell said:

"2011 was a very positive year for the Company, with contract awards totalling US$ 1.1 billion together with a backlog of US$ 1.2 billion at the year-end. The transformational acquisition of Maritime Industrial Services Co. Ltd. Inc. significantly contributed to consolidating our position as a market leader in the provision of contracting products and services in the oil & gas and renewables industry together with increasing our reach into new regional markets. Ongoing strength in the oil price has also helped to bolster a record bid pipeline and we ended the year with unprecedented levels of enquiries and bid activity.

We also continue to focus on delivering best in class execution of projects, and once again in 2011 we saw the benefits of this delivery-led strategy as repeat business contributed significantly to revenues.

We continue to see high levels of enquiries for our services in most sectors of our business. While remaining vigilant with regard to the risks posed by the volatile global economic climate, the Board remains optimistic that the long term prospects of the Group continue to be promising."

Enquiries:

CHIEF EXECUTIVE OFFICER'S STATEMENT

2011 was a very positive year for the Company, with contract awards totalling US$ 1.1 billion together with a backlog of US$ 1.2 billion at the year-end. The transformational acquisition of Maritime Industrial Services Co. Ltd. Inc.("MIS") significantly contributed to consolidating our position as a market leader in the provision of contracting products and services in the oil & gas and renewables industry together with increasing our reach into new regional markets. Ongoing strength in the oil price has also helped to bolster a record bid pipeline and we ended the year with unprecedented levels of enquiries and bid activity.

The results for the year were very pleasing with revenues totalling US$ 1,148 million, resulting in an adjusted net profit for the year of US$ 73.8 million (US$ 63.3 million after exceptional charges) reinforcing the firm commercial foundations of the business.

Our longstanding strategy of maintaining a strong balance sheet has continued to underpin our disciplined fiscal approach to our business even as markets became more active, and this rigorous control remains central to our activities.

We also continue to focus on delivering best in class execution of projects, and once again in 2011 we saw the benefits of this delivery-led strategy as repeat business contributed significantly to revenues.

The Group maintains a substantial order book extending to Q2 2014 which at the end of 2011 was US$ 1.2 billion, comprising US$ 914 million from new build marine projects, US$ 220 million from offshore construction projects, including offshore wellhead platforms, floating production storage and offloading units and accommodation modules, US$ 17 million from land rig services, US$ 14 million from jackup rig refurbishment projects, and US$ 50 million from the Group's other fabrication activities and subsidiary operating companies.

The Company continues to place great emphasis on the development and application of practices designed to provide a workplace that is both safe and which minimises environmental impact. We are proud of our safety record; in 2011 the lost-time injury frequency was 0.27, significantly below the UK construction industry average for similar businesses.

There remains widespread uncertainty regarding the macro economic climate, although we have seen negligible impact on our business. Continued strength in the oil price has ensured that operator activity and investment remains high, and sentiment throughout the industry supply chain is positive. However, we can never be complacent about this situation given the prevailing macro economic issues and we continue to keep a close watch on our costs and ability to remain flexible throughout the business.

The year was a very strong one for contract wins, with awards being boosted by contracts for new build jackup, newbuild offshore and land rig services.

Significant project milestones during the year included the contract award from Greatship Global Energy Services, Singapore, announced in February 2011. This award was an early indicator of the strength of the jackup rig market throughout the year, strength that was further demonstrated both by the exercise by the National Drilling Company, Abu Dhabi, of its option for the construction by Lamprell of two LeTourneau Super 116E Class jackup rigs valued at US$333 million and the contract award by Jindal Pipes (Singapore) also for a LeTourneau Super 116E Class jackup rig.

The US$ 41 million contract with Weatherford Drilling International, announced in March 2011, for the engineering, construction and delivery of two 3000 HP land drilling rigs, was the largest yet for our land rig services business, demonstrating the exciting opportunity to develop Lamprell's offering in this emerging regional market. Delivery of the rigs is scheduled for Q1 2012; and construction is almost complete at our Jebel Ali facility.

We were also pleased to announce in November 2011 the award, by Nexen Petroleum U.K. Limited, of two platform deck construction contracts for the Golden Eagle Development in the UK North Sea. The offshore fixed platform market remains strong and the Company is well positioned to benefit from that strength both regionally and internationally.

Acquisition of MIS

The acquisition of MIS, for a total consideration of NOK 1,869 million (US$ 338 million), was completed on 13th July 2011, and was a transformational step for the Group. The acquisition expanded the breadth and depth of our service offering, our customer base, the geographical range of our operations and consolidated Lamprell's position as a regional leader in the new build jackup rig market. Additionally, the significant increase in resources and expertise also further enhances our position for future profitable growth.

The acquisition of MIS was compelling both financially and operationally. We believe that this transaction will rapidly create value for our shareholders, and we anticipate that the transaction will be substantially earnings accretive in the first full year of ownership. As the enlarged Group moves forward we see both new business opportunities and operational and financial synergies, with cost synergies of US$11 million per year expected to be realised as planned. Lamprell now has over 925,000 m2 of yard space and 2.2 km of quayside, making the Company one of the largest players within the Middle East region.

The strong complementary fit between Lamprell and MIS has enhanced our in-house engineering capabilities, providing extra capacity and key resources and adding a number of established businesses in target geographies. Lamprell is now able to pursue new opportunities through its enhanced resource and technical competence.

We see real competitive advantage in the Company's newly combined engineering offering and our ability to offer a vertically integrated service to our clients through conceptual engineering, process design engineering and detailed engineering. This will help increase margins by removing the need to outsource process design engineering, and the enlarged Group now has greater access to new business in the downstream and onshore sectors.

Management initiated a detailed integration plan with an integration committee appointed involving senior representatives from both Lamprell and MIS in order to identify and maximise synergies. Following meetings of the committee the organisational structure of the enlarged Group was finalised and savings identified. Integration of the two companies has been largely completed, with the operational structure finalised and in place.

The physical relocation of the MIS management and finance teams has taken place and operationally the integration of yards is complete. Notably, the MIS facility in Sharjah has been integrated with the adjacent Lamprell yard.

The acquisition added over 4,000 people to our workforce which now totals 14,000 including labour supply personnel, and it is to the great credit of all our staff that the integration process has proceeded smoothly.

The Board

In April, Jonathan Cooper was appointed as Chief Financial Officer, bringing with him extensive experience in the oil and gas sector. Jonathan took up his position in October, and I am certain he will make a very valuable contribution in the coming years. I am pleased that Scott Doak, Jonathan's predecessor, has decided to remain with the Company in the new role of Integration and Development Director.

We were delighted to welcome Chris Hand, Chief Operating Officer, to the Board in January 2011.

Market Overview

The Company has a record bid pipeline which at the end of February 2012 amounted to US$ 5.2 billion. The increase in activity levels in the new build jackup rig market that was seen in 2010 continued into 2011, and that market segment remains buoyant. With eight jackup rigs currently under construction Lamprell has become one of the leading builders in the world. As the search for oil and gas becomes increasingly more technically demanding, rigs that can drill horizontal wells more cost effectively in deeper, harsh environment, waters will demand higher day-rates and hence will help drive the new build rig construction market. In this regard, the Company is actively looking to construct the next generation of much larger, higher specification, jackup rigs to meet these technological challenges.

As previously reported, we experienced a slowdown in the rig refurbishment market in the second half of 2010 but there are now encouraging signs of renewed activity triggered by a significant upturn in the Saudi Arabian market. We continue to see significant potential for Lamprell in the liftboat market for both the oil & gas and renewables sectors in the medium and longer term and aim to build on our early leadership position in this part of our business.

The Company is actively pursuing a number of exciting prospects for its land rig services business including new build land rigs, refurbishment projects and equipment overhaul and is confident that new business for this segment can be secured in the coming months.

The current trend in high oil prices, underpinned by persistent supply side concerns and exacerbated by geo-political production constraints continues to support significant investment in offshore development projects internationally and particularly in the Middle East region. Lamprell with its experience and well established track record in offshore process fabrication is well positioned to take advantage of the opportunities that will arise in this sector.

Dividend

The Board of Directors is recommending a final dividend payment of 8.00 cents per ordinary share. This will be payable, when approved, on 22 June 2012 to eligible shareholders on the register at 25 May 2012.

Outlook

We continue to see high levels of enquiries for our services in most sectors of our business. While remaining vigilant with regard to the risks posed by the volatile global economic climate, the Board remains optimistic that the long term prospects of the Group continue to be promising.

To underline our growth record it is worth highlighting that this is the first time in the Company's history that the annual revenue has exceeded US$ 1 billion, in fact totalling US$ 1.15 billion. Ten years ago in 2002 the Company turned over US$ 80 million and in 2006, the year of our AIM Listing, we turned over US$ 330 million; percentage increases of 1,333% and 248% respectively. With the business opportunities currently available to us we look forward to continued growth with confidence.

Finally, I would again like to take this opportunity to express my personal thanks, together with those of the Board of Directors, to all of our management, staff and employees for their hard work and dedication which they have given throughout the year. Following the acquisition of MIS, Lamprell now has over 14,000 employees including labour supply personnel, and everyone has played their part in the success of the Company. On a final note I would like to thank, as ever, our founder and President, Steven Lamprell, for his continuing encouragement and support.

Nigel McCue

Chief Executive Officer

OPERATING REVIEW

The successful acquisition of MIS in July and the large number of major project awards made 2011 a transformational year for Lamprell from an operating perspective. Post acquisition the Group's facility capacity increased by 68% to over 925,000 m2 including 2.2 km of quayside. In addition the enlarged Group employs over 14,000 people, including labour supply personnel, including management, administration, operational personnel and field staff. This enlarged capacity and increased resource enables the Group to improve operational efficiency and positions the company for continued growth.

Lamprell continues to place the highest priority on maintaining high standards of project execution, with a particular emphasis on safety, high quality standards and delivering projects on time and on budget.

This focus on project execution, as well as client satisfaction, both ensures that Lamprell maintains and strengthens relationships with existing customers and enables Lamprell to expand its customer base.

Post the acquisition a great deal of focus has been placed on the successful integration of the enlarged Group's facilities and business. As well as the physical integration of the extended Sharjah facility this process has focused on the organisation structure, the implementation of the Company's management systems, marketing and business development, the extension of the on-going ERP implementation programme and securing planned synergies. The integration process has proceeded extremely well and will be completed in 2012.

Throughout 2011 and the start of 2012 the Group has maintained its focus on Health, Safety and Environmental ("HSE") issues. The Group has the following HSE certification which is founded on a Group HSE policy and detailed procedures:

·; ISO 14001:2007 for the Jebel Ali Facility 

·; OHSAS 18001:2007 for the Jebel Ali Facility 

·; OHSAS 18001:2007 for the Hamriyah Free Zone Facility- obtained in 2011

·; OHSAS 18001:2007 for the Sharjah Facility

Lamprell has a Group Quality department with quality assurance and quality control personnel located at each facility. The Lamprell Group is certified to ISO 9001:2008 Quality Management System standard and various American Petroleum Institute ("API") and American Society of Mechanical Engineers ("ASME") standards.

Lamprell's Hamriyah, Sharjah & Jebel Ali facilities are certified to ISO 9001:2008 standard and the Land Rig Services group is certified to ISO 9001:2008, ISO 29001, API Q1, monogram licence for API Spec 2B, 2C, 4F, 5CT, 6A, 7-1, 7K, 8C, 16A, 16C & 16D. Compliance with these standards assures our customers that we have the capability to execute projects in accordance with their specifications and requirements and the Company was successfully audited in 2011 to ensure that we are adhering to these standards.

The strength of Lamprell's operations is reflected in the order book which was at a record high of US$ 1,215 million at the year end and included US$ 489 million from new customers and US$ 726 million from repeat customers.

The principal markets in which Lamprell operates, and the principal services provided are:

·; Oil & Gas

·; New build jackup drilling rigs

·; New build offshore

·; Engineering and construction

·; Rig refurbishment

·; Land rig services

·; Renewable energy

·; Wind farm installation vessels

·; Services

·; Inspec (NDT, mechanical & calibration services)

·; Engineering services

·; Sunbelt (H2S safety services)

·; Operations and maintenance

The operational aspects of these business activities are reviewed as follows:

NEW BUILD OFFSHORE DRILLING RIGS

At the beginning of the year Lamprell was executing three new build offshore drilling rig projects and subsequently secured contracts for an additional five units. Therefore at the close of the year the Group was constructing a total of eight jackup rigs.

These projects are under construction at the Hamriyah and Sharjah facilities.

NDC S116E jackup drilling rigs

Lamprell signed the contract with the National Drilling Company, Abu Dhabi ("NDC") to construct two LeTourneau S116E jackup drilling rigs in July 2010. The engineering and procurement phases of this contract are now substantially complete and the construction of both units at the Hamriyah facility is well advanced.

The first rig, "Makhasib", was loaded out in October 2011 and the cantilever and remaining leg sections have subsequently been installed. The rig is now undergoing final commissioning and will be delivered in Q2 2012.

Construction of the second rig, "Muhaiyimat", is also proceeding to plan and the rig was loaded out in January 2012. Construction and subsequently final commissioning will continue until delivery later in 2012.

In October 2011 NDC exercised options for two further LeTourneau Super 116E rigs. Engineering and procurement activities are on-going and both rigs will be constructed at the Hamriyah facility with delivery scheduled in 2014.

Eurasia Drilling Company Limited ("EDC") S116E jackup drilling rig

Lamprell signed a contract with EDC in November 2010 for a new build LeTourneau S116E jackup drilling rig to be delivered to EDC in the Caspian Sea. The construction plan for this project is to build the rig hull in modules which, together with other primary rig components including the legs and cantilever, will be transported to the Caspian Sea through the Volga-Don canal.

The modules and other rig components have been under construction throughout 2011 at the Hamriyah facility and the first of four shipments to the Caspian Sea commenced in March 2012.

The rig will be assembled at a facility in Astrakhan, Russia and delivery is scheduled for 2013.

Greatship Global Energy Services Pte. Ltd ("Greatship") S116E jackup drilling rig

The first new build jack up award of 2011 was secured with Greatship in February to build a LeTourneau designed rig to operate in water depths of up to 350 feet.

The engineering and procurement phase of the project is well advanced and the construction is proceeding at the Hamriyah facility. The rig will be loaded out in Q3 and delivered during Q4 2012.

Jindal Pipes (Singapore) Pte. Limited ("Jindal") S116E jackup drilling rig

Lamprell was awarded a new contract in November 2011 from Jindal for the construction and delivery of a completely outfitted and equipped, LeTourneau Super 116E design rig. The rig is designed to operate in water depths of up to 350 feet and will have a rated drilling depth of 30,000 feet.

The engineering and procurement phase of the project is well advanced and the construction is proceeding at the Hamriyah facility. The rig will be delivered in Q4 2013.

Compañía Perforadora Mexico S.A.P.I. DE C.V. ("PEMSA") Hull 108 Super M2 jackup drilling rig

In December Lamprell successfully negotiated a contract with PEMSA, a subsidiary of Grupo Mexico, for the construction and delivery of Hull 108, a completely outfitted and equipped, Friede & Goldman designed Super M2 self-elevating Mobile Offshore Drilling Platform.

Hull 108 had been partially constructed by MIS at the time of its acquisition by Lamprell in July 2011 and the project had been suspended pending a contract award. Lamprell will complete the construction of the jackup rig at the Sharjah facility, with delivery scheduled in Q2 2012.

NEW BUILD OFFSHORE

The new build offshore segment of Lamprell operations covers a wide range of projects including:

·; Liftboats;

·; Tender assist drilling barges;

·; MOPUs and process barges;

·; Offshore drilling rig components and accessories;

·; Floating offshore facilities;

·; Living quarters;

·; Offshore hook-up;

·; Process modules;

·; Offshore fixed structures; and

·; Mooring systems and turrets.

In Q1 2011 the group delivered the final Aquila process module for Saipem Energy Services S.p.A. and two offshore wellhead platforms with associated jackets and piles were also delivered to a leading Indian oil and gas operator. These projects were executed at the Jebel Ali facility.

Offshore topside structure

Work continues in Jebel Ali on the construction of an offshore topside structure comprising of a two level utility deck and five level accommodation module for 38 personnel for a leading integrated energy provider. The project is being constructed to North Sea standards and is currently scheduled for delivery alongside the Jebel Ali quay in Q2 2012.

Nexen Petroleum U.K. Limited ("Nexen") wellhead deck and Production, Utilities and Quarters ("PUQ") deck

In November, Lamprell announced that it had been awarded two new construction contracts by Nexen in relation to the Golden Eagle Development in the UK North Sea, with a total contract value in excess of USD 200 million.

The first contract comprises a two level wellhead deck, measuring approximately 50 metres by 50 metres and weighing 4,000 tonnes. The wellhead deck will be constructed at Lamprell's Jebel Ali yard, and is scheduled for completion in Q2 2013.

The second contract is for a three level Production, Utilities and Quarters ("PUQ") Deck, measuring 85 metres by 40 metres and weighing 10,000 tonnes. The PUQ Deck will also be constructed at Lamprell's Jebel Ali facility and is scheduled for completion in Q2 2014. The construction phase of both contracts has commenced and is proceeding to schedule.

Leighton Offshore Pte Ltd ("Leighton") topsides and jackets

In February 2012 Lamprell was awarded a USD 62 million contract by Leighton, a Singapore based company, for the fabrication of two topsides and jackets with metering skid and associated piping in connection with the Iraq crude oil export facility reconstruction.

The works will be performed at Lamprell's enlarged Sharjah facility and are currently scheduled for delivery in Q4 2012.

ENGINEERING AND CONSTRUCTION ("E&C")

Lamprell E&C offers the combined expertise of Lamprell and MIS, providing fully integrated engineered solutions to the onshore and offshore oil & gas and renewable energy sectors. The group is structured to deliver projects in the UAE, GCC, Iraq and North Africa.

Onshore projects include the development and upgrade of gas plants / refineries and production facilities and offshore projects include jackets and decks, as well as process modules.

A number of projects were executed in 2011 including both onshore and offshore site works for clients including Rak Petroleum Oman Ltd, Apina Middle East, Geo Energi, Petrofac and Ras Gas.

In addition the group engineered, constructed and delivered multiple pressure vessels and columns from its Sharjah facility.

Lamprell believes there is an opportunity to significantly expand the scope and scale of the E&C business and this is an area of strategic focus in 2012.

UPGRADE AND REFURBISHMENT OF OFFSHORE JACKUP RIGS

Lamprell worked on a total of 43 jackup rigs throughout the year, for clients including Millennium Offshore Services, Nabors Drilling International Ltd., National Drilling Company, Noble International Ltd., and RDC Arabia Drilling INC., and these projects have included work scopes covering the full range of our upgrade and refurbishment services.

Projects have been shared between our UAE facilities, with the Hamriyah facility working on 17 jackups and the Sharjah facility working on 26 rigs.

Refurbishment and upgrade projects such as these vary greatly in scope from project to project and depend on the existing condition of each rig and the owner's upgrade requirements. A minor project can have a work schedule lasting a few days, whereas a major upgrade project with a significant engineering requirement can last for 12 months or more. Typical upgrade and refurbishment projects include some of the following work scopes:

·; Leg extensions and/or strengthening;

·; Conversion of slot rigs to cantilever mode;

·; Living quarters extension, upgrade and refurbishment;

·; Engine replacement and repower works;

·; Mud process system upgrade and/or refurbishment;

·; Helideck replacement, upgrade and/or refurbishment; and

·; Condition-driven refurbishment, including structural steel and piping replacement and painting.

Land rig services

Land rig services include all projects and services related to onshore drilling rigs, oilfield service companies and drilling equipment refurbishment for land and offshore rigs. The land rig services group operates from API accredited facilities in Hamriyah, Jebel Ali, Dubai Investment Park and Kuwait and also provides field services as required. Project types include:

·; New build land rigs;

·; Land rig refurbishment, upgrade and recertification;

·; Land and offshore drilling rig rotary equipment inspection and overhaul;

·; Engineering and fabrication of structural and piping packages, machined items and BOP testing and recertification;

·; Land camp construction and refurbishment; and

·; Site deployment of personnel.

Weatherford Drilling International (BVI) Ltd ("Weatherford") 3000 HP land drilling rigs

In March 2011 land rig services secured the largest contract awards to date for the business, as Weatherford, signed contracts for the engineering, construction and delivery of two 3000HP land drilling rigs, with a total contract value of US$ 41 million.

Lamprell constructed the rigs at its facility in Jebel Ali.

Wind farm installation vessels

In October 2011, having substantially completed the detailed design phase of the fixed price wind farm installation vessel projects, two for Fred Olsen Windcarrier and one for Seajacks 3 Ltd ("Seajacks"), the Company made a provision amounting in aggregate to US$ 14.3 million based on a detailed cost to complete exercise. The prototype nature of these vessels and the resulting evolution of the design and detailed engineering was identified as the primary cause of the increased costs. This issue was restricted to these projects and similar issues do not affect other on-going projects.

Fred Olsen Windcarrier

Construction of the two GustoMSC NG-9000 design self-elevating and self-propelled offshore wind turbine installation vessels, ordered by Fred Olsen Windcarrier in February 2010 continued at the Jebel Ali facility throughout 2011. The first vessel 'Bold Tern' was successfully loaded out in February 2012 and will be delivered in Q2 2012. The load out weight of 12,200 tonnes is the heaviest vessel land move ever to take place in the Middle East and one of a few worldwide. The second vessel 'Brave Tern' will be delivered in Q3 in 2012.

Seajacks

Following the successful delivery on time and on budget in 2009 of the wind farm installation vessels, 'Seajacks Kraken' and 'Seajacks Leviathan', Lamprell secured a US$ 129.0 million contract award in June 2010 from Seajacks 3 LTD for the delivery of 'Seajacks Zaratan', a GustoMSC NG-5500C design self-elevating and self-propelled offshore wind farm installation vessel. Construction continued throughout 2011 and the rig was successfully loaded out in January 2012 with delivery scheduled in Q2 2012.

SERVICE BUSINESSES

Lamprell operates a number of service businesses that provide services to external clients and throughout the Group.

International Inspection Services Ltd. ("Inspec")

Inspec is predominantly engaged in the supply of inspection personnel and equipment for heat treatment and non-destructive testing services to the oil & gas, district cooling and other infrastructure-intensive industries including desalination and energy. Inspec also provides mechanical and chemical analysis and calibration services. Inspec employs over 600 operatives and its primary markets of operation are currently the UAE, Oman, Bahrain, Saudi Arabia and Kurdistan.

Engineering Services

Lamprell's engineering services group provide a range of engineering solutions from concept engineering, front end engineering and design, design engineering to detailed and construction engineering. These services are delivered by a team of experienced multi-discipline engineers and designers using the latest engineering software and 3D modelling techniques. The Group offers services including process, mechanical, electrical & instrumentation, piping and structural engineering.

This service is provided by Lamprell's core engineering team and Litwin PEL, which is established in Abu Dhabi and was acquired as part of the MIS acquisition. Litwin offers E&C and multi-disciplinary engineering services to the oil & gas industry and to the chemical & petrochemical sectors. In addition, Litwin provides technical assistance to many of the national operating companies in Abu Dhabi and to a considerable number of private companies in the oil and gas industry throughout the Middle East.

Recent projects executed by the engineering services group include engineering services for ADCO (Abu Dhabi Co. for Onshore Oil Operations) and BOROUGE (Abu Dhabi Polymers Company Limited).

Sunbelt

Lamprell's Sunbelt H2S safety services group provides complete safety solutions to its clients through a range of specialised products and services. As an authorised distributor for a number of safety equipment manufacturers, Sunbelt ensures that it offers products that adhere to British, European and US standards. Sunbelt also provides technical consultancy services and support specialised in the detection and handling of the highly toxic H2S gas.

In 2011 Sunbelt undertook contracts in a number of countries including the United Arab Emirates, Qatar, Saudi Arabia, Iraq and Kazakhstan.

Operations and Maintenance ("O&M")

Lamprell's O&M business has a proven record of excellent performance and service, with a core workforce of over 500 tradesmen and administrative personnel supplemented by field staff from the Lamprell Group.

O&M provides man-power, equipment and materials supply services to a diverse customer base at oil & gas and petrochemical facilities and plants, drilling rigs, offshore facilities, marine docks and marine vessels.

Contracts in 2011 included the provision of man-power and equipment rental to customers including Dubai Natural Gas Co. (Dugas) and Dubai Petroleum Est. (DPE).

MIS Arabia Co. Ltd ("MISA")

Lamprell is pleased to support its joint venture facilities in Jubail Industrial City in the Kingdom of Saudi Arabia.

MISA focuses on the fabrication of process equipment and the provision of operation and maintenance services.

2011 was a busy and successful year for MISA and we look forward to ongoing success in 2012.

HUMAN RESOURCES

The enlarged Group employs over 14,000 people, including management, administration, labour supply personnel, operational and field staff and the integration of over 4,000 MIS personnel was a key objective for Lamprell in 2011 and remains an area of focus in 2012.

Attracting, developing and retaining talented staff is of paramount importance to the success of Lamprell as a business. At Lamprell we consider our employees to be an important asset and the continuous development and multi-skilling of our staff remains a focus for our success. The Human Resources ("HR") Department has developed policies and best practices for effective employee management enabling managers to capitalise on the strengths of the employees and their ability to contribute to the accomplishment of work. It is recognised that successful employee management helps employee motivation, development and retention.

We aim to provide a safe and supportive work environment to our employees, who are from diverse cultural backgrounds, and to do so in an environment that provides a competitive compensation programme that is affordable to the Company. We believe this continues to be a market differentiator and will strengthen our position as an employer of choice.

Lamprell continues to provide purpose-built accommodation and transportation for the labour force and this enhances our ability to attract and retain our workforce, and dramatically improves the quality and work/life balance expectations of the employees.

The HR department continues to work closely with senior business leaders on strategy execution, in particular designing HR systems and processes that address strategic business issues, organisational and people capability-building, as well as longer term resource and succession management planning.

OPERATING FACILITIES

The structured capital investment program at all facilities continued throughout 2011. The primary aims of this investment include higher levels of safety and productivity, as well as improving the working environment for both operational and administrative personnel.

The acquisition of MIS substantially increased yard space capacity, adding 375,000 m2 of yard capacity and 400 meters of quayside, with the enlarged Group now operating from 925,318 m2 of yard space and 2.2 kilometers of quayside.

The main facilities added by the acquisition are in Sharjah and Dubai. The 174,000 m2 Sharjah facility has been integrated with Lamprell's existing Sharjah facility, and is equipped with extensive open and covered fabrication areas, support facilities and workshops. The additional yard space provided by the acquisition is of material value to Lamprell as it would take a number of years and significant capital expenditure to develop such a facility organically. The 30,000 m2 facility in Dubai Investment Park is currently used to service land drilling rig contracts.

Improvements to the Hamriyah facility continued during 2011 and, following over three years of construction and an investment of over US$ 75 million, the facility was officially inaugurated in October. The event was attended by Lamprell's customers, partners and dignitaries, including His Highness Sheikh Dr. Sultan bin Mohammed Al Qassimi, Supreme Council Member and Ruler of Sharjah and Mr. Steven Lamprell.

With an area covering 365,000 m² and a quayside of over 1.4 kilometres, the Hamriyah facility is one of the region's foremost facilities for the manufacture of oil & gas assets, with capacity to accommodate more than 10 jack up rigs simultaneously at the quayside and multiple new build rigs and structures in various stages of construction within the yard itself.

The facility will continue to focus on the construction of new build jackup rigs, wind farm installation vessels, liftboats and rig refurbishment projects. The facility is fully API-accredited and hosts a main administration building which accommodates over 700 administration staff, a client office, several workshops and warehouse space.

Chris Hand

Chief Operating Officer

FINANCIAL REVIEW

Selected Financial Data

(1) Before US$ 10.5 million of exceptional charges.

(2) Includes US$ 20.4 million one-off gain in relation to Riginvest and excludes one-off US$ 1.4 million loss arising from the closure of Lamprell Asia Limited.

Results for the year from operations

Group revenue increased by 127.8% to US$ 1,147.9 million (2010: US$ 503.8 million) reflecting an increase in activity from the prior year. The increase was largely driven by a higher level of revenue generated from the new build activity, and to a lesser extent an increase in the revenues from upgrade and refurbishment activities and from its service business.

Revenue generated from new build projects increased by 282.3% to US$ 789.7 million (2010: US$ 206.6 million). Revenue in 2011 largely reflects the ongoing work on eight new build jackups, three liftboats for the offshore wind farm installation sector and two land rigs. The contract award from PEMSA for the construction of Hull 108 in December 2011 allowed the Group to transfer this asset from inventory to contract work in progress, and to recognise revenue and profit in line with the percentage of completion of the project. This revenue and profit had not been previously recognised, despite the high level of completion of the project, as Hull 108 was not contracted to a customer. Revenue from jackup rig upgrade and refurbishment activity increased over the prior year, with a higher average level of average expenditure per rig.

Revenue from land rig services, related to the refurbishment and construction of land rigs, reflected an increase over the prior year predominantly resulting from the ongoing work building two 3000HP land drilling rigs for Weatherford. Other revenue increased to US$ 114.6 million (2010: US$ 16.5 million) primarily due to the addition of the Group's new revenue streams including E&C activities and service business.

Gross profit increased by 66.8% to US$ 132.9 million (2010: US$ 79.7 million) resulting in a gross margin of 11.6% (2010: 15.8%). The decline in gross margin was primarily due to the performance of the Group's three fixed price windfarm liftboat projects. A provision of US$ 14.3 million was taken against these projects as previously announced. The gross margin on rig refurbishment was in line with the margin achieved in 2010.

The adjusted operating profit for the year increased by 29.8% to US$ 90.2 million (2010: US$ 69.5 million), before exceptional charges of US$ 10.5 million. Exceptional charges in 2011 reflect certain transaction costs associated with the acquisition of MIS of US$ 10.5 million including financial advisory, due diligence and legal fees and a one-off post acquisition charge for the MIS employee share options that were bought out as part of the MIS acquisition. The 2011 adjusted operating profit margin was 7.9% compared to the prior year margin of 13.8%. This decline in year on year adjusted operating profit margin before exceptional charges largely due to the impact of the negative margin arising from the liftboat projects, an additional US$ 3.8 million of amortisation relating to the MIS intangible assets that were identified and fair valued post acquisition, and the inclusion of a one-off net gain in 2010 related to the cancellation of the contract with Riginvest G.P. amounting to US$ 20.4 million.

Adjusted EBITDA, before exceptional charges, increased to US$ 100.8 million (2010: US$ 78.4 million) a rise of 28.5% over the prior year. The adjusted EBITDA margin before exceptional charges declined from 15.6% to 8.8% in 2011 reflecting the operating performance of the business.

Adjusted net profit, before exceptional charges, increased by 10.8% to US$ 73.8 million (2010: US$ 66.6 million) in line with the operating profit and also reflects increased net finance costs in the current year of US$ 16.2 million (2010: US$ 2.9 million). These largely arise as a result of increased facility and interest charges related to the MIS acquisition facilities and increased facility and guarantee charges related to new contract awards in the year. The adjusted net profit margin, before exceptional charges, of 6.4% (2010: 13.2%) reflects the increased net finance costs and the operational performance of the business.

Net profit for the year attributable to equity shareholders was US$ 63.3 million (2010: US$ 65.2 million), a decrease of 2.9%.

Interest income

Interest income of US$ 1.8 million (2010: US$ 2.2 million) relates mainly to bank interest earned on surplus funds, margin deposits and fixed deposits maintained against guarantees. The decrease reflects a lower level of average cash balances during the year when compared to 2010.

Taxation

The tax charge of US$ 0.2 million arising in 2011 is in respect of tax on the Group's service operations in Kazakhstan and Qatar. The Group is not currently subject to income tax in respect of its operations carried out in the United Arab Emirates, and does not anticipate any liability to income tax arising on these operations in the foreseeable future. The Company, which is incorporated in the Isle of Man, has no income tax liability for the year ended 31 December 2011 as it is taxable at 0% in line with local Isle of Man tax legislation.

Earnings per share

Fully diluted adjusted earnings per share, before exceptional charges, amounts to 30.88 cents for 2011 (2010: 30.67 cents) reflecting the operational performance of the Group for the year. The comparative figures for earnings per ordinary share have been restated for the bonus element of the June 2011 rights issue in line with IAS 33.

Operating cash flow and liquidity

The Group's net cash flow from operating activities for the year reflected a net outflow of US$ 54.7 million (2010: US$ 232.8 million net inflow). Prior to working capital movements the Group's net cash inflow was US$ 105.2 million (2010: US$ 65.9 million). The negative working capital movement was largely driven by an increase in trade and other receivables, and was offset to a lesser extent by a decrease in trade and other payables and a reduction in inventory as a result of the contract award for Hull 108. The significant increase in trade and other receivables largely arose from increased amounts due from customers at 31 December 2011 amounting to US$ 386.2 million (2010: US$ 58.0 million). This reflects the increase in the number of ongoing EPC projects at the year end and, in particular, two new build projects where the majority of the payment will be received upon delivery in 2012.

Net cash used in investing activities totaled US$ 408.8 million (2010: US$ 99.4 million), primarily comprising the MIS purchase consideration (net of cash acquired) of US$ 322.2 million (2010: Nil), US$ 55.5 million (2010: US$ 29.7 million) of fixed asset additions, and US$ 32.1 million (2010: US$ 63.8 million) of margin deposits and deposits greater than 3 months. The fixed asset additions were mainly in relation to the ongoing development at the Hamriyah facility that was formally opened in October 2011, and the purchase of operating equipment.

Net cash generated from financing activities reflected an amount of US$ 371.1 million (2010: US$ 46.3 million used in financing activities). This largely arose from net proceeds from the issue of share capital of US$ 216.6 million (2010: nil) and an increase in borrowings of US$ 199.4 million (2010: US$ 22.5 million decrease) both used to finance the MIS acquisition, increased finance costs of US$ 18.0 million (2010: US$ 5.1 million) largely arising as a result of facility and guarantee charges related to new contact awards in the year and dividend payments of US$ 29.3 million (2010: US$ 15.2 million).

Capital expenditure

Capital expenditure on property, plant and equipment during the year amounted to US$ 55.5 million (2010: US$ 29.7 million). The main area of expenditure was the investment in buildings and related infrastructure at Group facilities amounting to US$ 40.7 million (2010: US$ 20.2 million), including capital work-in-progress, with additional committed expenditure amounting to US$ 18.7 million, reflecting the development of the infrastructure of the Group at all facilities but primarily expenditure at the new Hamriyah facility. Further expenditure on operating equipment amounted to US$ 9.9 million (2010: US$ 8.6 million) to support the growth in activities experienced during the year and to replace hired equipment, where this was deemed cost effective, and to upgrade a semi-submersible barge acquired during the year.

Balance sheet

Total non-current assets increased to US$ 417.1 million (2010: US$ 125.1 million), driven by US$ 62.1 million increase in property, plant and equipment and a US$ 228.4 million increase in identified intangible assets. The increase in intangible assets arose primarily on the MIS acquisition, of which goodwill accounts for US$ 180.5 million and intangible assets represent US$ 50.0 million. Trade and other receivables increased to US$ 668.8 million (2010: US$ 251.1 million), this reflects the increase in the number of ongoing new build projects at the year end and, in particular, the two new build projects, Zaratan and Hull 108, where the majority of the payment will be received upon delivery in 2012.

The year end net debt was US$ 101.7 million (2010: net cash US$ 210.2 million) arising as a result of the borrowings required to finance the MIS acquisition and the additional utilisation of facilities to fund the increased number of new build projects. Upon delivery of Zaratan and Hull 108, expected during 2012, the Group is required to use a proportion of the final payments to retire some of the MIS acquisition facilities.

Shareholders' equity increased from US$ 284.0 million at 31 December 2010 to US$ 533.9 million at 31 December 2011. The movement arises as a result of total comprehensive income for the year of US$ 61.4 million (2010: US$ 65.8 million) and total transactions with shareholders of US$ 188.5 million (2010: decrease of US$ 16.6 million), which mainly includes proceeds from shares issued of US$ 216.6 million, partly offset by dividend payments of US$ 29.3 million.

Dividends

For the year ended 31 December 2011, the Board of Directors of the Group having duly considered the current market conditions, profit earned, cash generated during the year and taking note of the capital commitments for the year 2012, recommends a final dividend of 8.00 cents per share. If approved this will be paid to shareholders on 22 June 2012 provided they were on the register on 25 May 2012.

Jonathan Cooper

Chief Financial Officer

Lamprell plc

Consolidated income statement

* Earnings per share disclosure has been restated for the bonus element of the 2011 rights issue (Note 14).

Lamprell plc

Consolidated statement of comprehensive income

Lamprell plc

Consolidated balance sheet

Lamprell plc

Consolidated statement of changes in equity

 Lamprell plc

Consolidated statement of changes in equity (continued)

Lamprell plc

Consolidated cash flow statement

Notes to the financial statements for the year ended 31 December 2011

1 Legal status and activities

Lamprell plc ("the Company") and its subsidiaries ("the Group") are engaged in the upgrade and refurbishment of offshore jackup rigs; fabrication; assembly and new build construction for the offshore oil and gas sector and renewable sector, including jackup rigs and lift boats; Floating Production, Storage and Offloading ("FPSO") and other offshore and onshore structures; and oilfield engineering services, including the upgrade and refurbishment of land rigs.

During the year, the group acquired 100% of the shares in Maritime Industrial Services Company Ltd Inc. ("MIS") through its wholly owned subsidiary Lamprell Investments Holding Limited. MIS is registered in Panama and has operations in the Middle East and Kazakhstan. The principal activities of MIS are the upgrade and refurbishment of offshore jackup rigs; fabrication; assembly and new build construction for the offshore oil and gas sector; engineering and construction; safety and training services and other operating and maintenance services. At the time of acquisition, MIS was listed on the Norwegian Stock Exchange and was subsequently delisted in September 2011.

2 Basis of preparation

The Group is required to present its annual consolidated financial statements for the year ended 31 December 2011 in accordance with EU adopted International Financial Reporting Standards ("IFRS"), International Financial Reporting Interpretations Committee ("IFRIC") interpretations and those parts of the Isle of Man Companies Acts 1931-2004 applicable to companies reporting under IFRS.

This financial information has been extracted from the consolidated financial statements for the year ended 31 December 2011 approved by the Board of Directors on 23 March 2011. The financial information comprises the Group balance sheets as of 31 December 2011 and 31 December 2010 and related Group income statement, statement of comprehensive income, cash flows, statement of changes in equity and related notes for the twelve months then ended, of Lamprell plc. This financial information has been prepared under the historical cost convention except for the measurement at fair value of share options, financial assets at fair value through profit or loss and derivative financial instruments.

The preliminary results for the year ended 31 December 2011 have been prepared in accordance with the Listing Rules of the London Stock Exchange.

The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group financial information are disclosed in Note 4.

3 Accounting policies

The accounting policies used are consistent with those set out in the audited financial statements for the year ended 31 December 2010 and reviewed interim financial information for the period ended 30 June 2011, which are available on the Company's website, www.lamprell.com.

4 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

4.1 Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:

Revenue recognition

The Group uses the percentage-of-completion method in accounting for its contract revenue. Use of the percentage-of-completion method requires the Group to estimate the stage of completion of the contract to date as a proportion of the total contract work to be performed in accordance with the accounting policy. As a result, the Group is required to estimate the total cost to completion of all outstanding projects at each period end. The application of a 10% sensitivity to management estimates of the total costs to completion of all outstanding projects at the year end would result in the revenue and profit increasing by USD 32.9 million (2010: USD 12.1 million) if the total costs to completion are decreased by 10% and the revenue and profit decreasing by USD 24.3 million (2010: USD 10.7 million) if the total costs to completion are increased by 10%.

Employees' end of service benefits

The rate used for discounting the employees' post-employment defined benefit obligation should be based on market yields on high quality corporate bonds. In countries where there is no deep market in such bonds, the market yields on government bonds should be used. In the UAE, there is no deep market either for corporate or government bonds and therefore, the discount rate has been estimated using the US AA-rated corporate bond market as a proxy. On this basis, the discount rate applied was 4.25% (2010: 5.25%). If the discount rate used was to differ by 0.5 points from management's estimates, the carrying amount of the employees' end of the service benefits provision at the balance sheet date would be an estimated USD 1.4 million (2010: USD 0.6 million) lower or USD 1.5 million (2010: USD 0.7 million) higher.

5 Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Executive Directors who make strategic decisions. The Executive Directors review the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.

The Executive Directors consider the business mainly on the basis of the facilities from where the services are rendered. Management considers the performance of the business from Sharjah (SHJ), Hamriyah (HAM) and Jebel Ali (JBA) in addition to the performance of Land Rig Services (LRS) and International Inspection Services Limited (Inspec).

SHJ, HAM, JBA and LRS meet all the aggregation criteria required by IFRS 8 and are reported as a single segment (Segment A). Services provided from Inspec do not meet the quantitative thresholds required by IFRS 8, and the results of these operations are included in the "all other segments" column.

The reportable operating segments derive their revenue from the upgrade and refurbishment of offshore jackup rigs, fabrication, assembly and new build construction for the offshore oil and gas and renewables sectors, including FPSO and other offshore and onshore structures, oilfield engineering services, including the upgrade and refurbishment of land rigs.

Inspec derives its revenue from various services such as non-destructive pipeline testing, ultrasonic testing and heat treatment.

During the year, the company through its wholly owned subsidiary, LIH, acquired MIS (Note 24). The revenue of MIS is mainly derived from the upgrade and refurbishment of offshore jackup rigs, fabrication, assembly and new build construction for the offshore oil and gas sector, engineering and construction. The Executive Directors consider these services to be similar to the services provided by Lamprell from SHJ, HAM, JBA and LRS and hence been considered under the reporting segment (Segment A). Additionally, MIS also provides safety and training services (Sunbelt) and other operating and maintenance services (O&M). As services provided by Sunbelt and O&M do not meet the quantitative thresholds required by IFRS 8, the results of these operations are included in the "all other segments" column.

Sales between segments are carried out on agreed terms. The revenue from external parties reported to the Executive Directors is measured in a manner consistent with that in the consolidated income statement.

The Executive Directors assess the performance of the operating segments based on a measure of gross profit. The staff, equipment and certain subcontract costs are measured based on standard cost. The measurement basis excludes the effect of the common expenses for yard rent, repairs and maintenance and other miscellaneous expenses. The reconciliation of the gross profit is provided as follows:

Information about segment assets and liabilities is not reported to or used by the Executive Directors and accordingly, no measures of segment assets and liabilities are reported.

The breakdown of revenue from all services is as follows:

The entity is domiciled in the UAE. The total revenue from external customers in respect of services performed in the UAE is USD 1,139.3 million (2010: USD 495 million), and the total revenue from external customers for work performed in other countries is USD 8.6 million (2010: USD 9 million).

Certain customers individually accounted for greater than 10% of the Group's revenue, shown in the table below:

The revenue from these customers is attributable to Segment A. The above customers in 2011 are not necessarily the same customers in 2010.

6 Other operating income

Other operating income in 2010 of USD 23.9 million represents a gain on the cancellation of a contract with a customer during the prior year.

7 Cost of sales

8 Selling and distribution expenses

9 General and administrative expenses

During 2010, the Group incurred total expenditure of USD 1.4 million for the closure of the LAL operations in Thailand, of which USD 0.8 million is included in general and administrative expenses and USD 0.6 million in 'Other gains/(losses)'

Items that are material either because of their size or their nature or that are non-recurring are presented within their relevant consolidated income statement category, but highlighted separately in the consolidated income statement. The separate reporting of exceptional items helps provide a better picture of the Group's underlying performance.

An analysis of the amounts presented as exceptional items in these financial statements which relates to costs incurred in relation to the acquisition of MIS (Note 24) is given below:

10 Staff costs

11 Other gains/(losses) - net

12 Finance costs

13 Dividends

During the year (on 25 March 2011 and 26 August 2011), the Board of Directors of the Company approved dividends of USD 29.3 million comprising USD 19 million (post - rights issue US cents 8.7 per share: pre rights issue US cents 9.5 per share relating to 2010) and an interim dividend of USD 10.3 million for 2011 relating to 2011 (US cents 4 per share). At 31 December 2011, unpaid dividends amounted to USD 12,000 (Note 22) and were in relation to the shares held by EBT.

During 2010 (on 26 March 2010 and 20 August 2010), the Board of Directors of the Company approved dividends of USD 15.2 million comprising USD 7.6 million (US cents 3.8 per share) relating to 2009 and an interim dividend of USD 7.6 million (US cents 3.8 per share) for 2010. At 31 December 2010, unpaid dividends amounted to USD 51,000 (Note 22) and were in relation to the shares held by EBT.

14 Earnings per share

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to the equity holders of the Company by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased by the Company and held as treasury shares (Note 20).

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. For the free share awards, options under executive share option plan and performance share plan, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share awards/options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share awards/options.

On 19 May 2011, the Company announced a rights issue of three shares for every ten shares held at a discounted price of 232 pence per share resulting in the issue of 60,083,792 new ordinary shares. The calculation of the weighted average number of ordinary shares for the current year was affected by the issue of the new ordinary shares. The Group has treated the discount element of the rights issue as if it was a bonus issue, using the theoretical ex-rights price of 324 pence per share. The effect of this is to increase the weighted average number of shares reported in the prior year, with a resulting reduction in the reported basic and diluted earnings per share for the previous year. The adjustment factor, to effect the increase in the weighted average number of shares, has been calculated by dividing the share price immediately before the shares were quoted ex-rights (351.3p) with the theoretical ex-rights price (323.77p), giving an adjustment factor of 1.085. These adjustments to the comparative earnings per share calculations do not impact the previously reported consolidated income statement or consolidated balance sheet.

15 Intangible assets

16 Due from related party

17 Trade and other receivables

18 Financial asset at fair value through profit or loss

The amount at 31 December 2011 represents the fair value of the Group's investment (held through MIS) in 8.7% of the equity in Middle East Jack-up Ltd (MEJU), which owned a jack-up rig built by MIS. This rig was sold by MEJU in January 2012 following the successful delivery of the rig by the Group in the last quarter of 2011.