17 Jan 2019 07:00
17 January 2019
LAMPRELL PLC("Lamprell" and with its subsidiaries the "Group")
PRE-CLOSE TRADING UPDATE
Lamprell announces the following update on its performance for 2018 and an update on its current trading and outlook ahead of publication of the Group's 2018 financial results on 21 March 2019.
Operational highlights
Performance is in line with previous revenue guidance, with strong strategic progress and developing pipeline, while delivering the best safety performance in our corporate history with a record total recordable incident rate (TRIR) of 0.15.
Given the ongoing, difficult energy industry backdrop, the Group was pleased to end the year with two significant contract wins. The USD200+ million contract award from GeoSea Procurement & Shipping for the fabrication of 48 foundations for the Moray East wind farm project underpins Lamprell's commitment to the renewables market, which is one of our strategic growth areas. We also secured a Letter of Intent from IMI for the contract to construct two jackup drilling units ultimately for use in Saudi Arabia.
Our position in Saudi Arabia, a key growth market for Lamprell, was further strengthened by our joining Saudi Aramco's LTA programme. Although this has not translated into backlog at this stage, the programme is key to our growth and recovery and we anticipate the first opportunities to materialise in 2019 and beyond.
On the East Anglia One project, Lamprell's project team is working with Harland & Wolff, its subcontractor in Belfast, to complete the assembly of the remaining 18 jackets. Given the recent announcement by Harland & Wolff regarding its restructuring, Lamprell has had to allocate additional resources to the Belfast-based part of the East Anglia One project and has actively managed the assembly of the outstanding jackets to ensure overall project performance stays in line with the previously announced guidance. The forecasted project completion remains on track to meet the installation campaign set by ScottishPower Renewables.
The rig refurbishment segment continues to demonstrate strong results in a challenging market - in 2018 we completed refurbishment on a record number of 23 jackup rigs, compared to 13 refurbishment projects completed the previous year.
Financial position and outlook
Net cash has trended down in 2H 2018, as anticipated, and we expect to have a year-end net cash position of around USD 80 million, subject to audit. This cash position reflects the impact of our ongoing investment in the IMI yard, rig kit inventory and general working capital requirements but does not include significant downpayment receivables on the recently-won major projects. Our backlog has increased from USD 61.7 million at the end of H1 2018 to around USD 540 million as at 31 December 2018.
Supported by the investment in our bidding teams over the past 18 months, the bid pipeline has increased to approximately USD 6.4 billion (30 June 2018: USD 4.1 billion), reflecting the broad range of bids that are currently being pursued in the oil & gas and renewables market segments and the new prospects expected in the LTA programme.
The Company's balance sheet continues to be solid, underpinned by very low debt and leverage, and a broad asset base. In line with our normal forward planning, Lamprell has already engaged its lenders in refinancing discussions well ahead of the expiry of the current debt facility in Q3 2019.
The Company expects revenues for 2018 to be consistent with previous guidance at around USD 235 million. Margin pressure at these revenue levels as well as no margin contribution from the East Anglia One project in 2018, will result in a net loss of approximately USD 71 million, subject to audit, for the year ending 31 December 2018.
Lamprell has continued to make good progress in relation to its strategic initiatives and, as we move through 2019, we remain optimistic in respect of continuing realisation of our strategy and business recovery: 2019 revenues are expected to increase year-on-year, in line with the announced guidance range of USD 250-400 million. Our expectations for 2019 are supported by the recent awards on the Moray East offshore wind farm project and the two jackup rigs from the IMI joint venture, as well as the Company's inclusion on the LTA programme with Saudi Aramco.
Whilst the market continues to be highly competitive, we remain focussed on converting our pipeline of opportunities into contract wins, executing them successfully and continuing to make progress towards our strategic objectives.
Christopher McDonald, Chief Executive Officer said:
"Despite the challenges of the market environment in 2018, we have delivered against the objectives that we set out earlier in the year. We finished the year with a major renewables project added to our order book and two new build jackup rigs committed for construction at Lamprell's yards in the UAE. The quality and size of our bid pipeline is improving and we look forward to adding further significant projects as part of Saudi Aramco's LTA programme during the course of the year. Given the ongoing uncertainty in the industry, this reconfirms our confidence that Lamprell's strategy will deliver growth for the business from 2019 onwards."
Lamprell will announce its full year 2018 financial results on 21 March 2019. Lamprell will hold its annual general meeting on 21 May 2019.
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Notes to editors
Lamprell PLC, based in the United Arab Emirates ("UAE") and with over 40 years' experience, is a leading provider of fabrication, engineering and contracting services to the offshore and onshore oil & gas and renewable energy industries. The Group has established leading market positions in the fabrication of shallow-water drilling jackup rigs, liftboats, land rigs, and rig refurbishment projects, and it also has an international reputation for building complex offshore and onshore process modules and fixed platforms.
Lamprell employs more than 3,000 people across multiple facilities, with its primary facilities located in Hamriyah, Sharjah and Jebel Ali, all of which are in the UAE. In addition, the Group has facilities in Saudi Arabia (through a joint venture agreement). Combined, the Group's facilities cover approximately 812,000 m2 with 1.6 km of quayside.
Lamprell is listed on the London Stock Exchange (symbol "LAM").