16 Jan 2014 07:00
16 January 2014
LAMPRELL PLC("Lamprell" and with its subsidiaries the "Group")
TRADING STATEMENT
Lamprell (ticker: LAM), a leading provider of diversified engineering and contracting services to the onshore and offshore oil & gas and renewable energy industries, today announces a trading update ahead of its results for the year ended 31 December 2013.
Summary and outlook
In light of continued good progress made by the Group, the Company expects performance for the year ending 31 December 2013 to be ahead of our previous expectations. As we move into 2014, we remain focussed on the conversion of our pipeline of opportunities into contract wins and on delivering sustainable growth. While market conditions remain competitive and delays in project awards remain a feature of the industry at the present time, we are in active dialogue with a number of prospective clients for new orders and the level of our tendering remains positive.
As of 31 December 2013, the Group's order book was valued at US$0.9 billion (31 December 2012: US$1.2 billion) and the bid pipeline, reflecting the broad range of bids and prospects that are currently being pursued, at approximately US$4.7 billion (31 December 2012: US$ 4.0 billion).
Operational highlights
We have made significant improvements to our project execution throughout 2013 and this has continued during the last few months. All projects are progressing well, on budget, and are expected to achieve timely deliveries. The Group's primary activities at present relate to the construction of eight new build jackup rigs in our Hamriyah facility, the new major rig conversion project at our facility in Sharjah and the production, utilities and quarters deck project in our Jebel Ali yard.
Order intake during 2013 was lower than in previous years due to delays in project awards as stated above and the new management's focus on delivery of existing projects and re-positioning the business for a return to profitability. However, we secured major orders from our existing clients including repeat orders from the Jindal Group and the Greatship Group, the rig conversion of the MOS Frontier as well as a number of smaller contracts, notably in our land rig services business. The Group has a well-established and proven track record in these areas, all of which form part of the Group's core competencies, and we are in dialogue with a number of prospective clients for new orders.
Financial position
The Group's net cash position at the end of December 2013 was around US$180 million, significantly ahead of our expectations. This came as a result of a combination of hitting project milestones early and the timing of supplier payments. Consequently we are currently experiencing a stronger working capital position but we anticipate that this will unwind in the coming months and the net cash position will trend downwards towards the end of the first quarter of 2014 in line with the normal project cycles.
Jim Moffat, Chief Executive of Lamprell, commented:
"2013 has proven to be an important year for Lamprell with the business returning to profitability. We now anticipate that the outturn for the full year will be ahead of our previous expectations as a result of the continuing improvement in project execution in the last few months. We are focussed on our core strengths of a first class safety performance, high build quality, client satisfaction and our commitment to reliability. Against a competitive market backdrop we are playing to these strengths and are in dialogue with a number of prospective clients for new orders.
The business made great strides in 2013 and we need to build on this in 2014, developing our strategy to ensure that Lamprell is competitively positioned for sustainable growth over the long term. Our focus will continue to be strong execution, maximising efficiency and productivity and investing resources in those areas where we see growth opportunities for Lamprell."
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