LAM.L Regulatory News (LAM)

 3 October 2012

Lamprell

("Lamprell" or the "Group")

TRADING UPDATE

Lamprell (ticker: LAM), a leading provider of diversified engineering and contracting services to the onshore and offshore oil & gas and renewable energy industries, makes the following announcement:

In the Company's Trading Update of 26 July 2012 it was announced that the delivery of the Windcarrier 1 and 2 projects had been delayed. On 1 October 2012 Windcarrier 1, the Brave Tern, was delivered to Fred. Olsen. As a consequence of late delivery and other contract-related matters Lamprell has incurred further additional costs on both the Windcarrier 1 and Windcarrier 2 construction projects, which will adversely impact the forecast loss for the year ending 31 December 2012.

Furthermore, a delay in client deliverables on a separate construction project has resulted in a deferral of revenue and profit from 2012 to 2013. There has been no deterioration in the project's expected financial performance, but the deferral will impact the 2012 financial results.

Having identified and been made aware of these and other issues, the Board intends to instruct the Company to appoint external advisors to provide an independent assessment of the full extent of their financial impact. As a result of internal work in estimating their likely combined extent, the Company now anticipates that the loss for the year will be significantly greater than previously expected. The order book currently stands at approximately US$1.5 billion.

In light of these recent developments the Chairman, with the fullest support of the non-executive directors, considers that changes to the leadership and senior management team are required to ensure Lamprell begins to rebuild its reputation with both investors and customers. Further announcements will be made regarding such changes in the near term.

The Company will provide a further update to the market when it has greater clarity on the detailed financial impact of these issues.

The Company remains in discussions with its lending banks regarding its covenants and remains confident that it will have sufficient cash flow to fund its ongoing activities and debt repayments.

John Kennedy, Chairman, Lamprell, commented: 

"Lamprell's position in the refurbishment market remains pre-eminent. After three months with the Company I believe the fundamentals of the business continue to be sound and the order book and new contract pipeline remain strong. However, I am extremely disappointed in the need to make this latest trading update and feel that a refreshed management team will bring a more focused sense of delivery to all our stakeholders."

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