Lamprell Q2 2013 results presentation


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Lamprell Q2 2013 results presentation

  1. 1. 0 Interim Results 29 August 2013 0 New build jackup rig: Jindal Star
  2. 2. Disclaimer 1 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.
  3. 3. Overview 2 James Moffat, CEO Rig refurbishment: Noble rig
  4. 4. Agenda 3 1 Overview 2 Financial Review 3 Operational Review and Strategy 4 Summary and Outlook 5 Appendices
  5. 5. Overview 4  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 Recovery on track
  6. 6. World class facilities strategically well located in the Gulf Good health and safety record with HSE a core value across the Group Strong track record of successful project execution in our core competencies First class build quality that meets all national and international standards >30 years offshore expertise in the Gulf and the region’s leading rig market service provider Leading footprint Safety first approach Leading market position Reputation for quality Technical expertise Fundamentally strong and sustainable business 5 Consistent partner of choice for long term clientsClient satisfaction Lamprell’s core strengths are hard to replicate
  7. 7. Financial Review Frank Nelson, CFO 6 Liftboats: Seajacks Zaratan
  8. 8. Highlights  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 7 H1 results ahead of expectations
  9. 9. Summary P&L 8 H1 2013 H1 2012 $m $m Revenue 521.0x 528.0x 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 Return to profitability
  10. 10. Balance sheet 9 H1 2013 H1 2012 $m $m Total net assets 413.8 467.8 Tangible net assets 197.9 239.3 Gross cash 274.5 134.0 Free cash 197.8 32.6 Net cash/(debt) 151.1 (35.7) Land Rig Services Significant improvement in liquidity
  11. 11. Refinancing 10  $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 Refinancing provides security to 2016
  12. 12. Financial summary  Refinancing secured  Robust reporting and financial planning in place  Improved liquidity management  Strong cash performance  Financial performance ahead of expectations for full year 11 A stable platform for sustainable growth Offshore platforms: North Sea operator
  13. 13. Operational Review and Strategy 12 James Moffat, CEO Offshore platforms: North Sea operator
  14. 14. H1 2013 operational highlights  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 ¹As at 30 June 2013 13 High activity levels in H1 and strong execution New build jackup rig: Greatdrill Chaaya
  15. 15. Current activity  2013 contract awards: – New build jackup for Jindal Group – 3 major rig refurbishment projects  Current major project activity: – 8 jackups under construction – 3 rig refurbishment projects – 4 offshore construction projects – 1 lift boat (1st generation)  Positive contract growth in offshore construction and refurbishment 14 58% 14% 7% 21% New Build Jackups Rig Refurbishment Land Rigs Others Key contract awards / extensions $0.38bn¹ ¹Wins since 1st Jan 2013 as at 30th June 2013 Contract awards expected to accelerate in H2
  16. 16. Bid pipeline 15 0 400 800 1,200 1,600 2,000 2,400 2,800 Newbuild Jack Ups Offshore Const. Rig Refurb Land rigs Others Current pipeline of $4.6bn¹ 2 ¹ As at 30 June 2013 ²Refurbishment value stream has short bid to award profile and therefore limited order book / pipeline values  Increasing bid pipeline in core markets (Dec 12: $4.1bn)  Strong focus on pipeline conversion in H2 2013  Creating a balanced portfolio is a strong focus for 2014 and beyond Increased pipeline in our core markets
  17. 17. Core markets offer significant opportunities 16 OFFSHORE RIGS  Strong forecast drilling activity and global fleet metrics continues to drive rig new build and refurbishment  Jackup market has tightened through 2013 - Utilisations and day rates continue to increase - Tender activity strong - Acceleration in attrition rate of older rigs Two thirds of global jackup fleet over 25 years old Half of global fleet in Middle East and Asia OFFSHORE CONSTRUCTION  Increasing global E&P capex inc. FPSOs, LNG  Demand for broader range of process modules  Quality is a key differentiator  Strong track record in complex North Sea projects LAND RIGS  Exceptionally strong global and regional demand  Growth increased by potential for unconventional drilling  Cost barriers to rig relocation strengthen Middle East build programme  Versatile design enhancements to broaden marketSource: Pareto / ODS Petrodata <10 10-25 25-35 >35 Middle East Mexico W Africa NW Europe SE Asia US GOM Indian Ocean Far East Other Safety, quality, technical and operational capabilities are key differentiators
  18. 18. Focusing on our core competencies 17 New build jackups  Established new build jackup rig capability  Leading non-Asian yard for <= 350ft rig class  Larger rigs well within Group’s core capabilities Land rigs  Full land rig refurbishment services  API accreditation  Regional expansion Offshore construction  Proven strength in a range of high quality process module fabrication  Specialism in North Sea projects  Well placed for significant regional opportunities Refurbishment  Regional market leader in offshore rig refurbishment  Strong track record across all refurbishment disciplines  Full refurbishment, upgrade and conversion capabilities Service businesses are non-core and are under strategic review Established market positions and strong track record
  19. 19. Returns Service Focus Efficiency HSEQ Long term value drivers 18 Maintain our reputation for build quality and strong safety focus  World class approach to HSE  Execution excellence Capitalise on significant opportunities in our core markets  Core market pipeline conversion initiatives  Utilise core capabilities and enhance differentiation  Enhanced risk management and no prototype projects Best in class customer focus and responsiveness  On schedule and on budget every time  Client and supplier partnerships to enhance overall service delivery Improve procurement process and labour productivity  Enhanced production planning and efficiency  Cost flexibility and procurement enhancement Deliver sustainably higher returns with improved earnings visibility and reduced project risk Leveraging our core strengths to deliver sustainable growth
  20. 20. Summary and outlook  Refinancing secured  New organisation in place  Operational and process improvements evidenced in H1  High level of tendering activity  Significant opportunity to create value in our core markets  Continued refinement of strategy whilst focusing on implementation  Outlook for full year ahead of expectations 19 2013 recovery on track New Build Greatship Chaaya
  21. 21. Appendices 20 Rig refurbishment: Noble rig
  22. 22. Strategic timeline 21 21 Oct-12 Departure of executive team Appointment of Peter Whitbread Announcement of unquantified deterioration in full year forecast Nov-12 Announced expected $105m loss for the year Strategic options review commenced Nov-12 Feb-13 Windcarrier II delivered in line with revised schedule Jun-13 H1 return to profitability New ERP project commenced Review of strategic options completed Jan-13 Mar-13 Divisional review commenced Jim Moffat joins as CEO Mar-13 Term sheet signed with lenders Jun-13 Strategic timeline Project risk review and refinancing Independent business review Operational and strategic review Jul-13 Completion of refinancing New INEDs appointed May-13
  23. 23. Order book and bid pipeline 0 400 800 1,200 1,600 2,000 2,400 2,800 Newbuild Jack Ups Offshore Const. Rig Refurb Land rigs Others 22 0 100 200 300 400 500 600 700 800 900 Newbuild Jack Ups Newbuild Lift Boats Offshore Const. Rig Refurb Current pipeline of $4.6bn¹Current order book of $1.1bn¹ 2 2 ¹ As at 30 June 2013 ²Refurbishment value stream has short bid to award profile and therefore limited order book / pipeline values
  24. 24. Current project summary Project Type Facility Delivery North Sea operator 5,217 tonne utility platform Jebel Ali Delivered – Q1 2013 Nexen 5,353 tonne wellhead deck Jebel Ali Delivered – Q2 2013 EDC1 (Caspian Sea) Le Tourneau S116E Hamriyah Q3 2013 North Sea contractor 15 process modules Jebel Ali Q4 2013 Jindal Star Le Tourneau S116E Hamriyah Q4 2013 NDC 3 Le Tourneau S116E Hamriyah Q1 2014 Leighton Topside & jackets Sharjah Q1 2014 NDC 4 Le Tourneau S116E Hamriyah Q2 2014 Seajacks - Hydra Gusto MSC NG-2500X Hamriyah Q2 2014 Nexen 13,700 tonne PUQ deck Jebel Ali Q2 2014 EDC2 (Caspian Sea) Le Tourneau S116E Hamriyah Q4 2014 NDC 5 Le Tourneau S116E Hamriyah Q4 2014 Dev Drilling Le Tourneau S116E Hamriyah Q1 2015 NDC 6 Le Tourneau S116E Hamriyah Q1 2015 23 $1.1bn order book
  25. 25. New lending covenants 24 Gross debt/EBITDA 4.5x decreasing to 1.5xx Interest cover 1.75x increasing to 3.5x Minimum tangible net worth $160m increasing to $250m Capex levels sufficient for business plan
  26. 26. Lamprell facilities 25 1. Hamriyah – Sharjah, UAE 2. Port Khalid – Sharjah, UAE 3. Jebel Ali – Dubai, UAE 4. Dubai Investments Park – Dubai, UAE 5. Jubail – Saudi Arabia* 6. West Shuaiba - Kuwait Leading footprint in the Gulf * MISA Joint Venture