18 Jul 2018 07:00
18 July 2018
LAMPRELL PLC("Lamprell" and with its subsidiaries the "Group")
TRADING UPDATE
Lamprell announces the following update on its performance in the year to date.
Operational update
We have made good progress on the East Anglia One offshore windfarm project (EA1 Project) with costs trending within our previous guidance. Earlier this week the last remaining fully-assembled jackets were loaded out from our yards in the United Arab Emirates and are currently on vessels being transported to the ScottishPower's marshalling facility. This completes shipments to ScottishPower from Lamprell's yards in the UAE. Meanwhile, our subcontractor in Belfast continues to progress assembly of the part-fabricated jackets which are scheduled to be delivered later this year.
Our other projects have been proceeding as planned. In April, we successfully completed the major upgrade to the mobile operating unit Haven and delivered it to our client, Master Marine, on time and on budget.
We have also recently completed a minor project for fabrication of mud systems for use by a key client on their land rigs.
We continue to see a steady flow of smaller rig refurbishment projects through our yards, having completed a total of 16 such projects in the year to date with a further six ongoing currently. We view this as indicative of a positive trend for the jackup rig market in the Middle East region as clients look to de-stack their rigs and renovate them prior to redeployment.
As per the Company's recent announcement, the development of our local capabilities and presence in Saudi Arabia remain a key focus for management. The IMI yard project is making progress towards construction phase and we will provide a more detailed update at the time of our half-year results.
Financial position and outlook
We maintain our previous guidance range for revenue projections in 2018. There have been good levels of walk-in work which has resulted in 95% coverage for the bottom of the US$225-300 million range. Therefore we expect to deliver an outturn for the year in-line with this guidance, although results for 2018 will be significantly weighted to the first half of the year due to the scheduling of current projects and timing of new awards.
Our financial position remains solid, supported by the Company's robust balance sheet, and we expect to have a net cash position in the region of US$165 million at the end of the half-year period, subject to audit. In line with our guidance, the cash position has trended downwards since the start of the year. This is as a result of the expected working capital draw by our projects and the planned inventory investment during the period. Net cash will continue to trend moderately downwards during the second half of 2018 as a result of the anticipated capital investment in the IMI yard for this year, the final payment for inventory as well as lower activity levels.
Although the market environment remains highly competitive, tendering activity has increased significantly during the period as we are currently bidding a number of major opportunities in both of our targeted end markets of oil & gas and renewables, and we are actively engaged in discussions with different potential clients for new projects in our key markets. Our investment in new people with extensive experience and skills has supported our ability to access new potential customers in those markets. While this is indicative of an improved outlook for the energy industry, we continue to not expect revenue growth until 2019.
Christopher McDonald, Chief Executive Officer said:
"I am pleased with the way that we have been confronting and addressing the challenges of 2018. We are heavily focused on rebuilding the backlog and delivering a successful outcome for our client on the East Anglia One project. With the good bidding activity levels and our ability to nurture key relationships with our partners, I remain confident that Lamprell is well positioned for growth as the wider energy market recovers."
Lamprell will announce its 2018 interim financial results on 20 September 2018.
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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 4,000 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 828,000 m2 with 1.6 km of quayside.
Lamprell is listed on the London Stock Exchange (symbol "LAM").