Lamprell announces the following update on its performance for the first six months of the
year to 30 June 2021*.
• Against the backdrop of COVID-19 and related supply chain bottlenecks, the Group
continues to make solid progress on all projects
• Revenue of USD 175 million, with USD 295 million secured for H2 2021
• Full year EBITDA expectations remain at broadly breakeven levels
• Net cash decreased to USD 81.1 million as projects enter critical working capital
phase, with USD 55.0 million restricted on project bonds and guarantees
• Bid pipeline increased 15% to USD 6.9 billion, momentum in renewables
opportunities continues to improve
• A number of decisions on current renewables bidding opportunities expected in Q3
and Q4 2021
• Working capital schedule actively managed to allow additional time for the debt
and/or equity funding to be secured
• Final discussions with three banks on USD 90 million working capital facilities for the
completion of two IMI rigs, expected to be comprised of two equal tranches (first
anticipated to be available in August and second in Q4 2021, consistent with working
capital requirements)
• Planned potential equity raise of USD 30-60 million to complete in Q4 2021, instead
of Q3 2021, subject to market conditions
*All numbers are subject to review
Operational update
Although COVID-19 restrictions remain in place in UAE and elsewhere, Lamprell made solid
progress on all of its ongoing projects, with our yards operating throughout the pandemic,
albeit with additional incremental cost. We currently have four major projects in Hamriyah.
Health and safety is a core priority for us and for our clients and during the pandemic we have
taken special measures to protect the health and wellbeing of our employees, with 88% of our
workforce now vaccinated with two doses.
Renewables
Seagreen, the Group’s third major renewables project, has commenced delivery to client with
the first batch of five jackets now handed over at quayside in Hamriyah. By the end of 2021
Lamprell will have fabricated nearly 150 jacket foundations for three of the UK’s biggest
renewables projects. The incremental investment made earlier in the year to design and
fabricate a lifting frame is now translating into improved efficiencies during the final stages of
the project.
Oil & Gas
The IMI new build jackup rigs are entering peak fabrication phase with major equipment
packages being delivered to site for installation. Our first contract win on the Saudi Aramco
Long-Term Agreement Programme (LTA), the first direct contract from the Saudi oil major in
Lamprell’s history, is currently in final stages of engineering with first cut of steel scheduled for
September. Our second EPCI project for Saudi Aramco LTA, awarded in April 2021, is well
underway with engineering and procurement activities. Rig refurbishment continues to perform
well, and we are reporting a similarly encouraging level of engagement with our customers in
the region, as we also saw in 2020.
Digital
Our Digital business unit has made a number of strategic steps this year. We have secured
crucial partnerships with leading digital investors and developers, Injazat/G42 and Akselos,
and are progressing a number of ventures - from cost solutions in our own yards, to
differentiated digital service offerings for our clients across the energy industry. We
commenced the deployment of complex robotic welding on the Seagreen project, delivering
noticeable efficiency improvements. We also created a first digital twin for our proprietary lifting
frame, another critical asset in renewables fabrication. The digital twin provides us with critical
data enabling us to maximise asset performance and reduce maintenance time and cost. It
also allows us to better demonstrate the technology, its potential and transferability to offshore
energy assets to our clients.
Financial performance
Subject to review, revenues in the first six months of 2021 amounted to USD 175 million. USD
295 million is secured for H2 2021, and EBITDA in H1 was slightly negative. Much of the
revenue for the full year will be affected by the minimal margin IMI rig projects as well as
additional COVID-19 disruption costs. The Group has delivered sustainable overhead
reductions in recent years and remains committed to a programme of fiscal discipline and cost
control. Full year cash overhead for 2021 will remain at similar levels to 2020. This, along with
the expected completion of Seagreen as well as progress on the two IMI rigs in the second
half of the year, allows the Group to reiterate its expectation of a broadly breakeven EBITDA
for the full year.
Net cash has reduced from USD 112.4 million at 31 December 2020 to USD 81.1 million at
30 June 2021, as expected.
Current backlog stands at USD 433 million.
Balance
Sheet recapitalisation update
On 29 June 2021, Lamprell announced its plans to complete new funding arrangements of
USD 120-150 million through a combination of debt and/or equity.
The Group has reviewed its working capital schedule to manage the phasing of cashflows.
The current funding requirement schedule is as follows:
- Approximately USD 90 million of working capital for the two IMI rigs, with USD 45
million required by early Q4 2021 and USD 45 million in late Q4 2021
- IMI equity contribution of USD 17 million required in Q4 2021
- Targeted investment in renewables fabrication facilities, as well as incremental
investment in Digital business unit funding from Q4 2021
The Group currently expects to secure two Export Credit Agency backed working capital
facilities for the IMI rigs of USD 45 million each. Final terms negotiations with three potential
lending banks are expected to conclude in August 2021 for the first rig and 90 days later for
the second rig. Having reviewed the timing of milestone payments on major ongoing projects and taking into account the advanced stage of debt negotiations for the IMI rigs working capital
requirements, the Group now expects to raise a minimum of USD 30 million through equity in
Q4 2021, later than previously announced. The details of any potential equity raise are subject
to market conditions and will be announced in due course.
If the Group is unsuccessful in concluding the working capital facility with the banks, the Group
plans to raise capital through equity in the amount of USD 120–150 million in order for it to:
- meet the working capital requirements of the IMI rig projects. Once delivered,
the final milestone payments will be invested in our facilities to increase
efficiency and capacity to grow in particular our renewables business unit;
- fund the outstanding equity investment in the IMI joint venture in Saudi Arabia;
and
- invest in the significant opportunities in developing our Digital business unit.
Outlook
We continue to see positive dynamics in our end markets of renewables and oil and gas.
Thanks to our successful diversification into the renewables industry and access to the oil and
gas opportunities in Saudi Arabia and the Middle East, bidding levels are currently at the
highest point since the Group commenced its transformative strategic journey five years ago.
Our bid pipeline has grown by nearly USD 1 billion to USD 6.9 billion since the beginning of
the year, with the majority of added projects from the renewables industry. We continue to see
further renewables projects entering the pipeline post period, as expected. Renewables
opportunities comprised approximately 50% of the pipeline as at 30th June. We are expecting
decisions on a number of renewables opportunities in Q3 and Q4 2021.
Secured revenue for 2021 is USD 470 million, enabling us to demonstrate another year of
revenue growth. A large proportion of the secured revenue for 2021 is attributable to the IMI
rigs, which were bid at minimal margins to enable the monetisation of USD 70 million of
equipment that had been purchased in 2015. However, we expect to deliver improved margin
performance on projects in our current pipeline through a combination of continued cost
discipline, improving margins in the renewables industry, as well as strategic yard investment
to increase throughput and efficiencies in renewables fabrication.
Christopher McDonald, CEO of Lamprell said: “Our strategy is now fully aligned with the
broader energy transition. The Renewables business unit is benefiting from the growth in
global opportunities and limited fabrication capacity and we are encouraged by the level and
quality of engagement with current and prospective clients. Our credentials in the oil and gas
business enable us to access the opportunities available in the Middle East and we are actively
seeking to transition our Oil and Gas business unit to Saudi Arabia. Our Digital business unit
is developing rapidly with the right financial and technical partnerships in place. The work in
recent years to reposition the business, reduce overheads and develop a strong track record
in renewables has transformed Lamprell and provides us with an improving outlook.” If
