Full Year Results 2014 19 March 2015 Nexen PUQ and wellhead 0 0 - PowerPoint PPT Presentation

Full Year Results 2014 19 March 2015 Nexen PUQ and wellhead 0 0 www.lamprell.com

Disclaimer This presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/ or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “believes”, “expects, “predicts”, ”intends”, “projects”, “plans” “estimates”, “aims”, “foresees”, anticipates”, “targets” and similar expressions. The forward-looking statements, contained in this document, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are uncertain and subject to risks. A multitude of factors can cause actual events to differ significantly from any anticipated development. Neither the Company nor any of its officers or employees guarantees that the assumptions underlying such forward-looking statements are free from errors nor does any of the foregoing accept any responsibility for the future accuracy of the opinions expressed in this document or the actual occurrence of the forecasted developments. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither the Company nor any of its subsidiary undertakings nor any such person’s officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. www.lamprell.com 1

Agenda Highlights 1 2 Financial Review 3 Operational Review and Market Environment 4 Summary and Outlook Appendices 5 www.lamprell.com 2

Highlights Jim Moffat, CEO Offshore platforms: Jalilah B

2014: a year of significant progress on every level Strong financial position: Net profit*  Exceptional financial performance $93.2m  Improved underlying margins on the back of strong operational performance Net Cash  Significantly strengthened balance sheet $272.6m Strategy implementation:  Improved pipeline as a result of new marketing strategy Bid Pipeline  Significant contract awards, from new clients and repeat $5.2bn orders  Project Evolution delivering early savings Safety Important operational milestones: 0.28 TRIR **  Record number of major deliveries  Strong project execution  All legacy projects now completed  World-class safety performance * From the Group’s continuing operations ** Total Recordable Injury Rate www.lamprell.com 4

Financial Review Tony Wright, Deputy CFO Greatdrill Chaaru 5 www.lamprell.com

2014 Financial highlights Strong profitability driven by operational performance  Flat revenue at $1,085m (2013: $1,073m)  EBITDA almost doubled to $137m (2013: $76m)  Significantly improved EBITDA margin of 12.6% (2013: 7.1%)  Underlying net profit of $93.2m (2013: $36.7m)  Adjusted for exceptionals, total profit attributable to equity holders of $118.1m (2013: $36.4m)  Earnings per share tripled to $37.4c ($12.7c)  Strong balance sheet as a result of the rights issue and refinancing  Net cash of $272.6m (2013: $183.8m) EDC “Mercury” Year of exceptional financial performance www.lamprell.com 6

Outstanding financial performance Material improvement in profitability FY 2013 to FY 2014  Strong project execution resulted in improved margins  Cost savings from overhead reductions and early results of Project Evolution  Exceptionally high margins not expected to be maintained in 2015 due to project phasing, exceptionals and market environment 19.5 93.2 100 90 25.2 80 22.1 18.7 70 60 8.4 50 36.7 40 30 20 10 - 2013 Net Profit Exceptional items Impact of EDC 2 One off expenses Project profit Lower overheads 2014 Net Profit in 2013 in 2014 improvements www.lamprell.com 7

Strong cash position Significant contribution from the rights issue and sale of Inspec  At working capital sweet spot at end 2013; draw on working capital in 2014 due to phasing  Cash position to improve in H1 before trending downwards  Ongoing investment of Rights Issue proceeds in Project Evolution (majority in 2015) 400 (193.8) 111.0 161.6 (49.3) 350 272.6 300 59.3 250 183.8 200 150 100 50 - Net cash as at 31 Proceeds from Proceeds from Movement in Operating cash Asset additions / Net cash as at 31 Dec 2013 disposal of rights issue working capital flows other Dec 2014 Inspec www.lamprell.com 8

Significantly strengthened balance sheet Financial firepower to support strategy implementation  Proceeds from Rights Issue to fund Project Evolution (underway)  Committed facilities enable greater commercial flexibility  Significant headroom to support growth  $20 million term loan repayment due in 2015 31 Dec 14 31 Dec 13 Debt package $m $m $m Term loan 100 Total assets 1,154.3 1,074.6 Working capital facility Net assets 50 672.2 442.8 Revolver 200 Gross cash 371.6 344.6 Available cash* 299.8 275.5 Total funded facilities 350 Net cash 272.6 183.8 Committed bonding 250 * Gross cash less cash deposits under lien, less cash deposits with maturity >3 months. www.lamprell.com 9

Financial Summary Robust financial position in challenging times  Strong financial performance in 2014 with earnings ahead of initial expectations  Improved operational performance a major driver  FY closing backlog of $1.2bn (Dec 13: $0.9bn)  Approximately 80% of 2015 revenue covered  Significantly improved balance sheet and liquidity to help maintain competitive position Nexen PUQ www.lamprell.com 10

Operational Review and Market Environment James Moffat, CEO Offshore platforms: Leighton topsides & jackets 11 www.lamprell.com

High levels of activity in 2014 Improved operational performance and business development Order book (bn)  Nine major orders delivered: As at 31 December 2014 • Largest rig conversion completed • All legacy projects now delivered  Land rigs and E&C performed well $1.2  Lower activity levels in offshore construction (2013: $0.9)  6 jackup orders won • Major repeat order from NDC, with three options • Orders from new clients (Ensco, Shelf) • Focus on key target clients  Current major project activity: Our order book ($m) As at 31 December 2014 • 6 jackups under construction • 1 more jackup to start in May • 8 rig refurbishment projects • 1 onshore construction project www.lamprell.com 12

Bid pipeline remains strong Extensive pipeline of $5.2bn at 31 December 2014 New awards in 2014 (bn)  Extensive pipeline, diversified across regions and products  Clear evidence of market softening affecting bidding $1.4 and awards (2013: $0.9)  Potential project delays  Continued major business development drive across core markets: Bid pipeline (bn) • Greater emphasis on strategic approach to bidding As at 31 December 2014 • Strict targeting strategy • exceptional conversion rate in 2014 $5.2 (2013: $4.7) www.lamprell.com 13

Challenging market environment Long-term fundamentals remain strong  Oil price slide impacted capex budgets globally Ageing current global jackup fleet  The full impact remains unclear: Approximately 30% of the global jackup fleet will be over 35 years old by 2017. This is • Intensifying competition expected to reflect positively on the demand for new build jackup rigs and rig refurbishment • Impact of new jackup supply unknown projects. • Expected pressure on pricing • NOCs relatively resilient  Shallow water drilling expected to be less affected: • 84% utilisation in global jackup fleet (Dec 2014) • Slow-down in offshore construction globally • Opportunities remain in Middle East  Underlying fundamentals remain strong, driven by growing energy demand <35 years old Focus on maintaining a competitive position >= 35 years old www.lamprell.com 14

Well positioned to weather the storm Culture of continuous improvement  Ahead of the game to stay competitive:  Project Evolution conceived last year, with implementation progressing well  Early rewards from cost savings programme before the onset of low oil prices  Streamlined organisational structure delivering reduction in overheads  Geographical location as competitive advantage  Significant flexibility to adjust to new realities:  Full runrate of savings from Evolution in 2016  Further savings to be realised from overhead reductions  Adaptability through flexible workforce structure Rig refurbishment: EDC Rig 49 www.lamprell.com 15