Full year results 2019 13 May 2020 lamprell.com
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Agenda 1 Core priorities 2 2019 Highlights 3 Operational review 4 Financial review 5 Strategy update 6 Appendices 3
Moray East transition piece lifting Core priorities Christopher McDonald CEO l a m p r e l l . c o m
Positioning for recovery ▪ Protecting net cash and improving our liquidity ▪ Significant cost reduction from a major operational restructuring in 2020 ▪ EA1 settlement and release of restricted cash ▪ Deferring equity contribution into IMI until 2021 ▪ Capex reduction ▪ Actively pursuing various funding options ▪ Track record in renewables improves access to funding ▪ Focused the business on diversified growth in the evolving energy industry Oil and Gas Renewables ▪ Established presence and high local content ▪ Developing expertise in an industry with scores in the region with lowest cost reserves rapid global growth ▪ Offshore capex in Saudi Arabia and UAE ▪ Requirement for 3000 foundations in the will continue next 5 years ▪ Strategic partnerships and long standing ▪ Few yards with the right capacity, set-up and relationships in both markets solid delivery track record ▪ Working through COVID-19 to deliver for our clients ▪ Operations adapted to crisis, able to avoid major delays ▪ Additional short term cost cutting measures implemented 5
2020 Achievements ▪ Contract secured for two new build jackup rigs from IMI with initial milestone payment of $88m received ▪ Debt free from 11 March 2020 ▪ East Anglia One contract closed out ▪ Moray East deliveries progressing ▪ Overhead reduction programme implemented – 21% saving in 2020 equating to $22m ▪ COVID-19 25% payroll cut saving $10m (overhead element $4m) in 2020 in addition to self help 6
Operational restructuring ▪ Operations to be consolidated within one yard (Hamriyah) with potential increase in yard space if required: ▪ Reduces cost base ▪ Delivers operational efficiencies ▪ Flexible capacity to deliver the pipeline ▪ Jebel Ali facility mothballed, exit Sharjah facility upon completion of Moray East project ▪ Significant headcount reductions took place in Q1 ▪ Spending and allowance thresholds reduced/ work week extended ▪ Retained capacity and skillset to deliver strategic initiatives ▪ Total overhead reduction of $22m for FY 2020 7
COVID-19 Impact on operations ▪ Increased health screening ▪ UAE industrial work continues, close collaboration with government authorities ▪ Work in the yards continues with moderate impact on productivity and cost ▪ Current projects progressing in line with schedule Impact on supply chain ▪ Working closely with suppliers and potential clients to mitigate impact on ongoing and future work Temporary cost reduction ▪ Salary reductions of 25% for 6 months ▪ Reduced working hours where possible ▪ Redundancies ▪ Anticipated saving of $10m for FY 2020 8
Hamriyah 2019 Highlights Christopher McDonald CEO l a m p r e l l . c o m 9
2019 Overview Net Cash* EBITDA Net loss Revenue $(64.6)m $(183.5)m $42.5m $260.4m ▪ Modest YoY growth ▪ 31 March 2020: One-off impacts ▪ Share of EA1 loss: $28.8m $77m** ▪ Non-cash impairment: $79.3m ▪ Balance sheet supports backlog Backlog* Bid Pipeline* TRIR*** $470.1m $6.2bn 0.19 ▪ Several awards deferred ▪ Commendable ▪ High-quality pipeline into 2020 performance in line with with opportunities in both end markets industry best practice * As at 31 December 2019 ** Including $35m restricted cash ***Total recordable injury rate 1 0
Moray East preparation for load out Operational review Christopher McDonald CEO l a m p r e l l . c o m
Operational review Moray East ▪ Project progressing as planned ▪ Significant improvement in efficiencies as a result of incremental yard infrastructure investment ▪ Up-ending and load out campaign underway ▪ Final deliveries in early Q3 2020 ▪ Project provides strong platform for future wins Rig refurbishment ▪ 13 completed in 2019 ▪ 8 stacked ▪ 1 larger scope project arrived at the yard ▪ Active major upgrade interest from the region 1 2
IMI: New contract award Project scope IMI DELIVERABLES TO DATE ▪ Two new build jack up rigs for ARO Drilling ▪ To be built mainly in Lamprell’s facilities, with ▪ Investment in yard provides significant boost to IKTVA score – a key requirement for final commissioning in Saudi Arabia contracts ▪ Lamprell’s share of the project amounting to ▪ IKTVA score was a key decision maker in circa $350m LTA inclusion ▪ Received initial milestone payment of $88m ▪ First two IMI jackup rigs are the only global in January 2020 awards in 5 years ▪ Project will utilize jacking kits from existing inventory, which will convert approximately $70m of inventory into cash over the project’s execution IMI Maritime Yard progress ▪ Dredging, reclamation and marine structures nearly completed, commenced yard facilities construction ▪ Lamprell’s investment to date - $59m (of $140 total committed). ▪ Discussions to defer 2020 investment of $26m commenced *IKTVA – In-Kingdom Total Value Added 13
Saudi Aramco LTA CRPO SCOPE EXAMPLE Saudi Aramco LTA programme Topside Jacket ▪ Bidding continues, do not anticipate current LTA projects to be affected by the announced Capex cut ▪ 10 CRPOs submitted since joining LTA in November 2018 (3 awarded, none to new entrants) ▪ 3 active bids ongoing ▪ Looking at ways to further increase local Replacement deck module content commitment *LTA - Long-Term Agreement 14 CRPO – Contract Release and Purchase Order
Bid pipeline Renewables Bid pipeline $6.2bn* ▪ Bidding levels remain robust with significant (FY 2018: $6.4bn) growth anticipated over the decade ▪ COVID-19 affected timing of decision on several projects $1.4bn Oil and gas ▪ Discussions with regional clients continue, with $4.8bn encouraging interest in new build and major rig upgrades ▪ Saudi Aramco’s LTA programme to be extended to Renewables Oil and gas major packages on a major project *Including LTA; as per 31 December 15 2019
Moray East project construction in Hamriyah Facility Financial review Tony Wright CFO l a m p r e l l . c o m
Key Financials ▪ YoY revenue increase driven by ramp-up on Moray East project ▪ Non-cash impairment charges of $79.3m a significant contributor to losses in the year ▪ Revenue below break even point and EA1 settlement also contribute to losses ▪ 2019 overhead increase in line with guidance, targeting 20% reduction in 2020 as a result of self help measures ▪ Retained net cash position, debt free as of 11 March 2020, refinancing options in progress, EA1 settlement improves liquidity Income statement FY 2019 FY 2018 ($m, unless stated otherwise) Revenue 260.4 234.1 EBITDA (64.6) (35.1) EBITDA margin (24.8)% (15.0)% Revenue by FY2019$m FY2018$m Loss from continuing operations after segment (183.5) (70.7) income tax Rigs 24.8 76.0 Loss from continuing operations after (104.2) 99.8 EPC(I) 167.2 income tax and excluding impairments Balance sheet Contracting 68.4 58.3 ($m) services Net cash as at 31 December 42.5 80.0 17 Tangible net assets 211.4 363.0
EBITDA - (10) 18.4 28.8 (20) (30) (35.1) (40) 7.7 10.0 (50) (60) 1.4 (64.6) (70) 2018 EBITDA Impact of Moray Impact of EA1 in Impact of reduced Increase in Other 2019 EBITDA Firth contribution 2019 revenues and Overheads in 2019 margin in other value streams 18 Amounts in US$m
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