Interim Results 29 August 2013 New build jackup rig: Jindal Star 0 - PowerPoint PPT Presentation

Interim Results 29 August 2013 New build jackup rig: Jindal Star 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

Overview James Moffat, CEO Rig refurbishment: Noble rig 2

Agenda Overview 1 2 Financial Review 3 Operational Review and Strategy 4 Summary and Outlook 5 Appendices www.lamprell.com 3

Overview Recovery on track  Problem projects delivered or on track New senior management team and structure established and new ERP system  being implemented  Stabilised financial position; Refinancing secured  Supply chain improving and actively managed  Strong operational performance and world class safety record Solid improvement in H1 results and full year outlook ahead of expectations www.lamprell.com 4

Fundamentally strong and sustainable business Lamprell’s core strengths are hard to replicate Good health and safety record with HSE a core value across Safety first approach the Group Leading market Strong track record of successful project execution in our core position competencies First class build quality that meets all national and Reputation for quality international standards >30 years offshore expertise in the Gulf Technical expertise and the region’s leading rig market service provider Client satisfaction Consistent partner of choice for long term clients Leading footprint World class facilities strategically well located in the Gulf www.lamprell.com 5

Financial Review Frank Nelson, CFO Liftboats: Seajacks Zaratan 6

Highlights H1 results ahead of expectations  Revenue broadly flat at $521m (H1 2012: revenue $528m)  Profit before tax $10.1m* (H1 2012: loss before tax $50.8m*)  Net cash $151.1m (H1 2012: net debt $35.7m)  Average monthly net cash of $115.7m  Successful refinancing with new $181m facility secured  Current favourable working capital profile will partially unwind in H2 * Prior to exceptional items www.lamprell.com 7

Summary P&L Return to profitability H1 2013 H1 2012 $m $m 528.0x Revenue 521.0x Gross margin 8.2%x (3.0%)x Operating profit / (loss)* 14.7x (37.8)x Profit / (loss) before tax* 10.1x (50.8)x Tax (0.5)x (0.3)x Exceptional costs (2.3)x 0.0x Net profit / (loss) 7.3x (51.1)x Diluted EPS (pre exceptional) 3.7c (19.7)c Diluted EPS (post exceptional) 2.8c (19.7)c * Profit / (loss) stated before income tax and before exceptional items www.lamprell.com 8

Balance sheet Significant improvement in liquidity H1 2013 H1 2012 $m $m Total net assets 413.8 467.8 Tangible net assets 197.9 239.3 274.5 Gross cash 134.0 197.8 Free cash 32.6 Net cash/(debt) 151.1 (35.7) Land Rig Services www.lamprell.com 9

Refinancing Refinancing provides security to 2016  $181m facility maturing in June 2016  $100m term loan ('Facility A')  $60m term loan ('Facility B')  $21m revolving credit facility ('RCF')  Common set of financial covenants across the debt structure  More suitable covenants: gross debt/EBITDA, interest cover, minimum tangible net worth and maximum capital expenditure  Reduced number of syndicate banks  Restrictions on paying dividends until balance outstanding on Facility B cleared  Blended average interest margin of 6.7% for Facility A, Facility B and the RCF  Facility B interest costs increase incrementally from July 2014  Upon repayment of Facility B, the margins in Facility A and the RCF will reduce, as will potential future bonding costs www.lamprell.com 10

Financial summary A stable platform for sustainable growth  Refinancing secured  Robust reporting and financial planning in place  Improved liquidity management  Strong cash performance  Financial performance ahead of expectations for full year Offshore platforms: North Sea operator www.lamprell.com 11

Operational Review and Strategy James Moffat, CEO Offshore platforms: North Sea operator 12

H1 2013 operational highlights High activity levels in H1 and strong execution  Strong performance in offshore construction  Several key projects successfully delivered: – Windcarrier “Bold Tern” – Greatships jackup rig – Two major offshore structures  Three major projects to be delivered in H2  Over 15 upgrade and refurbishment projects during the period  Order book of $1.1bn¹  Bid pipeline of $4.6bn¹ New build jackup rig: Greatdrill Chaaya ¹ As at 30 June 2013 www.lamprell.com 13

Current activity Contract awards expected to accelerate in H2  2013 contract awards: Key contract awards / extensions $0.38bn¹ – New build jackup for Jindal Group – 3 major rig refurbishment projects  Current major project activity: 21% – 8 jackups under construction 58% – 3 rig refurbishment projects 7% – 4 offshore construction projects – 1 lift boat (1 st generation) 14%  Positive contract growth in offshore construction and refurbishment New Build Jackups Rig Refurbishment Land Rigs Others ¹Wins since 1 st Jan 2013 as at 30 th June 2013 www.lamprell.com 14

Bid pipeline Increased pipeline in our core markets  Increasing bid pipeline in core Current pipeline of $4.6bn ¹ markets (Dec 12: $4.1bn) 2,800 2,400  Strong focus on pipeline conversion in H2 2013 2,000 1,600  Creating a balanced portfolio is a strong focus for 2014 and beyond 1,200 800 400 0 Newbuild Offshore Rig Land rigs Others 2 Jack Ups Const. Refurb ¹ As at 30 June 2013 ²Refurbishment value stream has short bid to award profile and therefore limited order book / pipeline values www.lamprell.com 15

Core markets offer significant opportunities Safety, quality, technical and operational capabilities are key differentiators OFFSHORE RIGS OFFSHORE CONSTRUCTION   Strong forecast drilling activity and global fleet metrics Increasing global E&P capex inc. FPSOs, LNG continues to drive rig new build and refurbishment  Demand for broader range of process modules  Jackup market has tightened through 2013 - Utilisations and day rates continue to increase  Quality is a key differentiator - Tender activity strong - Acceleration in attrition rate of older rigs  Strong track record in complex North Sea projects Two thirds of global jackup Half of global fleet in LAND RIGS fleet over 25 years old Middle East and Asia  Exceptionally strong global and regional demand Other >35 Far East  Middle East Growth increased by potential for unconventional <10 drilling Indian Ocean Mexico US GOM  Cost barriers to rig relocation strengthen Middle East 25-35 W Africa 10-25 build programme NW Europe SE Asia  Versatile design enhancements to broaden market Source: Pareto / ODS Petrodata www.lamprell.com 16

Focusing on our core competencies Established market positions and strong track record New build jackups Land rigs   Full land rig refurbishment services Established new build jackup rig capability   API accreditation Leading non-Asian yard for <= 350ft rig class   Larger rigs well within Group’s core Regional expansion capabilities Offshore construction Refurbishment  Regional market leader in offshore rig  Proven strength in a range of high quality refurbishment process module fabrication  Strong track record across all refurbishment  Specialism in North Sea projects disciplines  Well placed for significant regional  Full refurbishment, upgrade and conversion opportunities capabilities Service businesses are non-core and are under strategic review www.lamprell.com 17