TIDMLAM
RNS Number : 6415L
Lamprell plc
14 January 2021
14 January 2021
LAMPRELL PLC
("Lamprell" and with its subsidiaries the "Group")
STRATEGIC REORGANISATION AND TRADING UPDATE
-- Improving financial performance and trading continues to be
in line with the Board's expectations
-- 2020 revenue expected to be USD 340 million (2019: USD 260.4 million)(1)
-- Net cash increased to USD 112 million from USD 71.4 million at 30 June 2020
-- Bid pipeline increased to USD 6 billion (30 June 2020: 5.5 billion)
-- Strategic reorganisation into three new business units: Renewables, Digital and Oil & Gas
(1) All financials remain subject to audit.
Lamprell today announces a strategic reorganisation of its
business to increase the Group's focus on renewables and the energy
transition, increase alignment with customers and enable the Group
to take full advantage of the significant opportunities in its core
markets. Lamprell also provides an update on its trading
performance ahead of the publication of its audited financial
results for the year ended 31 December 2020 on 25 March 2021.
Improving trading performance in-line with the Board's
expectations
Lamprell has managed the challenges of the COVID-19 pandemic
effectively and delivered a very strong operational performance in
2020. Furthermore, despite the multitude of challenges posed by the
global pandemic, all of our ongoing projects have made good
progress throughout the year. Our positive operational performance,
alongside committed cost control and high quality bid pipeline,
allowed us to deliver a strong set of financial results in a
challenging market environment. We expect to demonstrate another
year of good revenue growth, with 2020 revenue expected to be USD
340 million (2019: USD 260.4 million). As a result the Company
continues to trade in line with the Board's expectations. The Board
believes the trading performance provides a solid basis for further
progress in 2021.
The Group's key operational highlights are as follows:
-- Moray East offshore windfarm project operationally completed
in September and all jackets have now been installed offshore
Scotland.
-- An expansion of our Hamriyah facility, allowing us to further
improve our efficiencies and capacity in renewables fabrication as
we progress with Seagreen, our next major renewables project.
-- The two IMI jack up rigs are progressing with fabrication of
hull, cantilever and leg sections well under way. The Mahani gas
field in Sharjah is nearing completion with first gas introduced on
time, marking a key milestone for one of our key regional clients,
Sharjah National Oil Company.
-- Rig refurbishment has had a strong year, with a number of
large scope projects arriving in our yard. A total of 16 rig
refurbishment projects were completed in 2020 with other
refurbishment projects under way.
Net cash has increased to USD 112 million from USD 71.4 million
at 30 June 2020. Net cash will trend downwards through 2021 as
projects progress and draw working capital as part of the normal
project cycle. Backlog has increased year-on-year to USD 520
million (31 December 2019: 470 million) with USD 455 million
scheduled to run off in 2021. Following the rapid development of
global offshore wind opportunities, our bid pipeline has increased
to USD 6 billion (30 June 2020: 5.5 billion).
Strategic reorganisation - positioning Lamprell for the energy
transition
In recent years, Lamprell has established a track record as one
of the leading providers of fabrication services to the renewables
industry. Since 2017, the Group has fabricated over 100 foundations
for the UK's flagship offshore wind farms, with serial production
for renewables projects becoming a core area of expertise for
Lamprell.
At the same time, the Group has accelerated its focus on digital
innovation and continued to advance its traditional business of
providing jack-up rigs and related energy infrastructure to the oil
& gas industry, with a strong competitive position in the
Arabian Gulf.
Reflecting the Group's evolution and to ensure a lean and agile
organisation to maximise opportunities across these markets,
Lamprell today announces a strategic reorganisation of the Group
into three distinct business units: Renewables, Digital and Oil
& Gas.
Lamprell Renewables
The Renewables business comprises the Group's existing projects
providing wind turbine generator foundation fabrication services to
offshore wind. Renewables opportunities currently make up USD 2.5
billion (c. 40%) of the Group's bid pipeline with the increase
attributable to US renewables entering the pipeline. We expect to
see continued strong growth in renewables opportunities in the
coming years, driven by rapid expansion in core markets and by the
commercialisation of floating wind which is expected to provide
significant opportunities mid-decade onwards. Lamprell's
experience, expertise and central geographic location provide the
Group with a strong position to access the expansion of offshore
wind globally, an industry forecast to require over USD300 billion
of capex in the next five years alone.
Lamprell Renewables will accelerate the Group's focus on
renewables projects, building on its track record in foundations
and expanding Lamprell's addressable market to product and market
adjacencies where the Group's skills have high relevance, such as
base structures for floating offshore wind, HVDC & HVAC
platforms and floating/offshore hydrogen production facilities.
Lamprell Renewables will also explore opportunities for the Group
to collaborate with others so as to increase our execution capacity
and support the local content objectives of our clients, as well as
to move up the renewables value chain over time, consistent with
the Group's strategic focus on EPC(I).
Lamprell Digital
The Digital business encompasses the technology and IP
development teams that have successfully implemented a range of
technologies in the Group's yards, such as the deployment of
adaptive robotic welding, facial recognition technology and a
proprietary digital quality management system. It also comprises
Lamprell's partnerships with Injazat/G42, which is considered to be
the region's leading digital developer backed by Mubadala
Investment Company, and Akselos, a leading developer of simulation
technologies.
Lamprell Digital will continue to advance proprietary
technologies for industrial application, in areas such as asset
integrity, engineering design, smart non-destructive testing,
predictive maintenance and robotics. By combining the Group's
in-depth knowledge of engineering and construction processes with
cutting edge technology development, Lamprell Digital aims to
provide a differentiated digital offer applicable to clients in its
core markets and beyond.
Lamprell Oil & Gas
The Oil & Gas business comprises the Group's traditional
activities in rig fabrication, rig refurbishment, onshore EPC and
other services, as well as our planned expansion into Offshore EPCI
under the Saudi Aramco LTA. Central to the Group's Oil & Gas
strategy is Lamprell's differentiated positions in the UAE and
Saudi Arabia. Lamprell is committed to the IMI joint venture, which
provided the Group with a contract for two newbuild jackup rigs in
2020 as well as an engineering design contract for further rigs,
supporting its commitment to fleet expansion over the next
decade.
Lamprell Oil & Gas recognises the continuing role of
hydrocarbon development during the energy transition. Oil & Gas
remains a significant part of the Group's bidding pipeline in 2021
and demand is expected to increase in the medium-term as markets
recover, with these projects continuing to support the development
of Lamprell's Renewables and Digital business units which have
strong, structural long-term growth prospects.
The three business units have different priorities and needs,
from their distinct customer bases, bidding processes, yard
requirements and capital requirements. This strategic
reorganisation will enable the Group to place greater focus on
maximising the significant opportunities for each of the three
business units. In the context of this strategic re-organisation,
the Group continues to explore how best to finance these business
units going forward.
Further information on the strategic reorganisation will be
provided with the Group's 2020 Full Year Results. While the Group's
reporting lines for this announcement are not affected, Lamprell's
intention is to align the Group's reporting to the new business
unit structure at a future date. The Group remains focused on costs
and the strategic reorganisation is expected to be cost
neutral.
Christopher McDonald, CEO, Lamprell, said:
"In the four years since I joined Lamprell we have been
reimagining the business for the future. Today we set out the shape
of Lamprell as it looks forward, taking its long and proud history
of providing services to the energy industry and accelerating its
focus on renewables and digital technologies. This evolved
structure will provide the business with greater focus as we seek
to take full advantage of the many opportunities we see across our
end markets.
As the Group emerges from what we hope is the worst of the
COVID-19 pandemic in good shape, the time is right for us to be
positioning the Group for the next phase of its growth. I am very
proud of the way our people have managed the challenges of 2020,
and the Group's improving financial performance is thanks to their
discipline, dedication and hard work. Lamprell has an exciting
future and we have a great platform on which to build."
- Ends -
Enquiries:
Lamprell plc
Maria Babkina, Investor Relations +44 (0) 7852 618 046
Tulchan Communications, London +44 (0) 207 353 4200
Martin Robinson
Martin Pengelley
Notes to editors
Lamprell, based in the United Arab Emirates ("UAE") and with
over 40 years' experience, is a leading provider of fabrication,
engineering and contracting services to the offshore and onshore
oil & gas and renewable energy industries. The Group has
established leading market positions in the fabrication of
shallow-water drilling jackup rigs, liftboats, land rigs, and rig
refurbishment projects, and it also has an international reputation
for building complex offshore and onshore process modules and fixed
platforms.
Lamprell employs more than 4,000 people across multiple
facilities, with its primary facilities located in Hamriyah, in the
UAE. Combined, the Group's facilities cover approximately 800,000m2
with over 1.5 km of quayside. In addition, the Group has facilities
in Saudi Arabia (through a joint venture agreement).
Lamprell is listed on the London Stock Exchange (symbol
"LAM").
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