19 September 2019 LAMPRELL PLC ("Lamprell" and with its subsidiaries the “Group”) INTERIM FINANCIAL RESULTS FOR SIX MONTHS TO 30 JUNE 2019 1H results in line with expectations Strong bid pipeline, progressing towards awards Financial highlights • Revenue of USD 106.4 million • Net cash of USD 50.2 million expected to improve moderately in 2H 2019 • Gross margin of (12.2%) • Net loss of USD 51.9 million • Backlog of USD 441 million (31 December 2018: USD 540 million) • Negotiating a new debt facility, current facility extended until mid-December 2019 to allow for time to agree terms of new agreement • Borrowings USD 40.3 million Operational highlights • World class 12-month rolling total recordable incident rate (TRIR) of 0.16 • East Anglia One project – all 60 jackets installed by the client, discussions around commercial close out of the project ongoing • Moray East project progressing to schedule and within budget • Reliable flow of rig refurbishment work, with 12 rigs stacked at present Strategic update • Actively bidding for multiple projects on Saudi Aramco’s LTA, awards anticipated from early 2020 • Progressing discussions regarding monetising equipment in inventories on the balance sheet • IMI discussing the commercial and technical terms, and timing of the first two new build jackup rigs, with their client • Continuing enthusiasm for the growth prospects in the offshore renewables sector • Continuing focus on the UAE as a strategic geography given the significant opportunity set which is developing Current trading and outlook • 2019 Revenue guidance range maintained at USD 275-350 million, with 100% coverage for the bottom end secured • Extent of 2020 revenue growth contingent on pace of awards over the next six months • The timing of contract awards remains challenging and represents a material uncertainty • Bid pipeline steady at USD 6.3 billion, focus on oil and gas opportunities in the Middle East and offshore wind farm projects in Europe
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19 September 2019
LAMPRELL PLC
("Lamprell" and with its subsidiaries the “Group”)
INTERIM FINANCIAL RESULTS
FOR SIX MONTHS TO 30 JUNE 2019
1H results in line with expectations
Strong bid pipeline, progressing towards awards
Financial highlights
• Revenue of USD 106.4 million
• Net cash of USD 50.2 million expected to improve moderately in 2H 2019
• Gross margin of (12.2%)
• Net loss of USD 51.9 million
• Backlog of USD 441 million (31 December 2018: USD 540 million)
• Negotiating a new debt facility, current facility extended until mid-December 2019 to allow for
time to agree terms of new agreement
• Borrowings USD 40.3 million
Operational highlights
• World class 12-month rolling total recordable incident rate (TRIR) of 0.16
• East Anglia One project – all 60 jackets installed by the client, discussions around commercial
close out of the project ongoing
• Moray East project progressing to schedule and within budget
• Reliable flow of rig refurbishment work, with 12 rigs stacked at present
Strategic update
• Actively bidding for multiple projects on Saudi Aramco’s LTA, awards anticipated from early
2020
• Progressing discussions regarding monetising equipment in inventories on the balance sheet
• IMI discussing the commercial and technical terms, and timing of the first two new build jackup
rigs, with their client
• Continuing enthusiasm for the growth prospects in the offshore renewables sector
• Continuing focus on the UAE as a strategic geography given the significant opportunity set which
is developing
Current trading and outlook
• 2019 Revenue guidance range maintained at USD 275-350 million, with 100% coverage for the
bottom end secured
• Extent of 2020 revenue growth contingent on pace of awards over the next six months
• The timing of contract awards remains challenging and represents a material uncertainty
• Bid pipeline steady at USD 6.3 billion, focus on oil and gas opportunities in the Middle East and
offshore wind farm projects in Europe
1H 2019 FINANCIAL RESULTS
1H 2019 1H 2018
(USD million, unless stated)
Revenue 106.4 155.1
Gross margin (12.2%) 4.6%
EBITDA (29.6) (6.2)
(Loss) from continuing operations after income tax (51.9) (21.9)
Reported diluted (loss)/earnings per share (US cents) (15.20) (6.42)
Net cash as at 30 June 50.2 167.8
For the definitions of EBITDA and net cash, please refer to the ‘Alternative performance measures’ in the notes to
interim financial information.
Christopher McDonald, Chief Executive Officer said:
“I am pleased to see work returning to our yards with both Moray East project ramping up and the rig
refurbishment segment providing a steady flow of projects. Our focus and effort in delivering strategic
opportunities in Saudi Arabia has intensified since being added to Saudi Aramco’s LTA list and I am
confident that, despite delays, we will see results from this effort. The renewables industry continues to
demonstrate encouraging growth and we are also beginning to see early but solid interest in the newbuild
jackup rig market. These developments will underpin our gradual recovery over the coming years.”
The management team will hold a presentation on 19 September 2019 at 9.30am at the London Stock
Exchange (10 Paternoster Square, London EC4M 7LS). The live webcast will be accessible on our
company website, at www.lamprell.com or on the following link:
In the first half of 2019 we completed fabrication and assembly of the foundations for the East Anglia One
project. We have embedded the lessons learned from that first offshore windfarm project and successfully
commenced fabrication on our second renewables project as planned. Despite delays in a number of core
strategic opportunities and the ongoing market uncertainties, we continue to see a good flow of bidding
activity from Saudi Arabia, the UAE and in the renewables sector.
Operational performance in 1H
We continue to deliver exemplary results in safety performance, with a 12-month rolling TRIR of 0.16 at
the period end. Robust safety systems and culture are core to our operational success and our ability to
work with top tier clients and our focus on maintaining high standards in this area remains intact as the
activity level ramps up in our yards for the Moray East project.
All fabrication and assembly works on the East Anglia One project completed in July, and all 60 jackets
have been installed by the client in the field offshore United Kingdom. The parties are in discussions
around commercial close out of the project.
Our second renewables project, Moray East, is progressing safely, in line with budget and schedule. Earlier
this year we made incremental investment in yard set up to improve efficiencies for the jackets throughput.
Steel cutting commenced in June and welding works are now well underway.
The rig refurbishment segment continues to demonstrate reliably good activity levels. To date, we have
completed nine refurbishment projects and received eight rigs in our yards for various new works, as well
as adding three new contracts which are due to arrive in our yards during the second half of the year. We
are currently stacking 12 rigs in Sharjah and Hamriyah, the majority are warm stacked and we see a gradual,
albeit small, increase in the scope of work performed.
The IMI yard in Saudi Arabia, of which Lamprell is a 20% joint venture partner, has now progressed to
the construction phase. All four of the fabrication zones at the yard are expected to be commissioned for
operation in late 2022. Lamprell continues to support the IMI management team as it develops its technical
capabilities in anticipation of full start-up.
Strategic initiatives
With the number of significant offshore windfarm projects expected to be sanctioned over the coming 5-
10 years growing each year, Lamprell continues to make incremental investments into equipment and
operational set-up of the Hamriyah facility, to be more efficient and productive. These improvements will
help to make Lamprell more competitive when bidding on new projects in the renewables sector and ensure
better control throughout the complex execution process.
In December 2018, Lamprell received a Letter of Intent for the subcontract of two newbuild jackup rigs
from IMI as part of the offtake agreement between the IMI yard and its client, ARO Drilling. Due to the
prolonged downturn in the oil and gas industry and specifically the slow pace of recovery for day rates in
the drilling industry, IMI continues to review exact technical and commercial requirements and the timing
for an award of the first two rigs with its client, and we will update the market as and when awarded.
Since being added to Saudi Aramco’s Long-Term Agreement programme (LTA) in November 2018, we
have submitted multiple bids and continue to progress with further bids due for submission shortly. As a
new entrant to the programme, we expect any initial awards to be of smaller scope as client gains
confidence in our capabilities. Whilst we have no visibility or influence on timing of awards, we anticipate
to see some news flow from early 2020 onwards.
Market overview and bid pipeline
The bid pipeline at 30 June 2019 was USD 6.3 billion (31 December 2018: USD 6.4 billion).
Approximately two thirds of the pipeline originates from the Middle East as supported by recent growth
forecasts from the region. Accordingly, interest in both land rigs and newbuild jackup rigs is beginning to
improve although progress to awards remains slow.
The renewables project pipeline is progressing to plan and as at 30 June 2019 represented USD 2.0 billion
of total bid pipeline. This year we have submitted two bids, which are expected to be awarded in early
2020. The Contract for Difference auction in the UK is expected to result in a number of new projects
reaching final investment decision over the coming months so we expect bidding to remain at similar levels
in the near term. We continue to target projects of similar scope and profile to Moray East to ensure we
retain sufficient yard capacity for LTA projects, new build jackup rig work and other EPCI projects.
Outlook
Our current backlog is USD 441 million (31 December 2018: USD 540 million). As previously announced,
due to ongoing delays with a number of core project awards, our 2019 revenue guidance was narrowed to
USD275-350 million, with 100% of the bottom end of the range covered. The high end of the range is
contingent on new awards. Further details relating to the uncertainties are set out in Note 2.1. We
anticipate further year-on-year revenue growth in 2020 and will be in a position to provide a revenue
forecast range as we gain more clarity on awards in the next six months.
Christopher McDonald
Chief Executive Officer
Lamprell plc
Financial Review
The Group's financial performance in 1H 2019 was in line with our expectations, with revenue levels
weighted to the second half of the year. Our profitability has been affected by 53% of our revenue in 1H
not contributing any project margin. Net cash has trended downwards in line with forecast, with the balance
sheet continuing with low levels of debt.
Results from operations
Total revenue for the the six-month period ended 30 June 2019 was USD 106.4 million (1H 2018: USD
155.1 million), of which 47% is attributed to the oil & gas business stream and 53% to renewables. The
acceleration of progress on the Moray East renewables project will result in a stronger revenue generation
in the second half of the year.
The EPCI segment, which currently includes the East Anglia One and Moray East projects, generated USD
61.9 million.
Revenue from rig refurbishment projects amounted to USD 13.2 million. The contracting services
businesses contributed USD 31.3 million to total Group revenue.
Margin performance
The Company made a gross loss of USD 13.0 million (1H 2018: gross profit of USD 7.2 million) driven
primarily by a combination of lower revenues and zero margin contribution from a significant proportion
of the revenues generated in the period. The early phases on the Moray East project and completion of the
East Anglia One project together constituted 53% of the revenues (USD 56.9 million) but contributed no
margin. The Moray East project will have significantly progressed by 2H 2019 and will contribute margin
from that point in accordance with our revenue and accounting policies.
General and Administrative expenses have increased slightly to USD 29.3 million and operational
overheads to USD 19.0 million as per our previous guidance. The increases reflect investments to retain
and upskill our staff and to improve our focus on delivering strategic objectives, as well as moderate
investment in yard efficiencies.
The gross loss coupled with cost pressures at current revenue levels resulted in a negative EBITDA from
continuing operations of USD (29.6) million (1H 2018: USD (6.2) million), with an EBITDA margin of
(27.8)%, down from (4.0)% in the comparative period in 2018.
Finance costs and financing activities
As previously announced, net finance costs in the first half of 2019 increased to USD 4.1 million largely
as a result of IFRS 16 lease adoption (1H 2018: USD 1.8 million).
Net loss and loss per share
The Group generated a net loss of USD 51.9 million (1H 2018: net loss of USD 21.9 million) which equates
to a loss per share of (15.20)c (1H 2018: loss per share of (6.42)c).
Capital expenditure
Capital expenditure in the 1H 2019 amounted to USD 9.6 million and is largely associated with yard
improvements in our Hamriyah facility to increase productivity.
IMI equity contributions
There was no equity contribution to the IMI joint venture during the reporting period. To date, total
contribution to the IMI joint venture amounts to approximately USD 59.0 million, out of a USD 140.0
million total maximum commitment. The Company’s share of the losses for the IMI joint venture in 1H
2019 was USD 4.9 million. Ongoing construction activities are sufficiently funded and we currently do
not expect to make further contributions in 2019.
Cash flow and liquidity
We report a net cash outflow from operating activities of USD 16.3 million, which was driven
predominantly by our negative EBITDA and working capital requirements of the Moray East project in
the period, offset by focussed collections of receivables.
The Group's net cash is expected to improve moderately in 2H 2019 due to receipts from current projects
but will be lower than our net cash reported as at 31 December 2018.
Balance sheet
The Group’s net cash decreased to USD 50.2 million from USD 80.0 million as at 31 December 2018. This
reflects our cash outflow from operating activities and USD 9.6 million of capital expenditure primarily on
yard improvements in our Hamriyah facility. The working capital position on the Moray East project is
expected to reverse in 2H 2019 and we also expect to receive final payment on the East Anglia One project,
which is expected to result in a moderately improved net cash position by the end of the year.
The Group’s total assets at the period-end were USD 572.5 million (31 December 2018: USD 556.4
million). Inventories on the balance sheet amount to USD 88.6 million. This includes approximately USD
81.7 million for equipment inventory which includes our proprietary LAM2K land rig and two Super 116E
rig kits purchased ahead of the market downturn, which we continue to market actively.
Shareholders’ equity reduced to USD 343.4 million (31 December 2018: USD 393.0 million).
Borrowings
Borrowings at the end of the reporting period were USD 40.3 million (31 December 2018: USD 19.8
million), following the repayment of the term loan and drawdown of the revolving facility under the
existing debt facility.
At 30 June 2019 the Group's existing debt facilities comprised (a) a USD 100 million term loan amortised
over five years, which had been fully repaid by the end of the reporting period; and (b) a USD 50
million revolving facility usable for general working capital purposes, of which USD 40 million was drawn
during the reporting period. The debt facility was due to expire in August 2019 and we have agreed an
extension until mid-December 2019 while we progress with debt refinancing negotiations for a new
facility.
The Group's debt to equity ratio at 30 June 2019 was 11.73% (31 December 2018: 5.03%).
Going concern
The Group's interim financial statements have been prepared on a going concern basis, notwithstanding
the material uncertainty as further discussed in Note 2.1.
Dividends
In the context of the low revenue levels in 2019, the delays in major project awards and the investment for
future growth in IMI, the Directors do not recommend the payment of an interim dividend for the period
in relation to current financial year ending 31 December 2019. The Directors will continue to review this
position in light of market conditions at the relevant time.
Principal risks and uncertainties
Principal risks are a risk or combination of risks that could materially threaten the Company’s business
model, performance, solvency or liquidity, or prevent it from meeting its strategic objectives. The Group
has an established risk management framework which requires all risk owners to identify, evaluate and
monitor risks and take steps to reduce, manage or eliminate the risk. This framework is overseen by the
Audit & Risk Committee and the Board as a whole, but is implemented and actioned by the executive team.
For details of the Group’s principal risks and uncertainties, please refer to the Notes to Financial Statements
and the Risk Report in the Company’s 2018 Annual Report (which is available on our website at
www.lamprell.com). During 1H 2019, the Audit & Risk Committee undertook a number of deep dives
into key risks to the Company with the risk owners and subsequently reported back to the Board on these
risks and the Group's risk mitigation activities, confirming that no significant changes or new risks had
been identified.
Antony Wright
Chief Financial Officer
Lamprell plc
Condensed consolidated interim income statement
Note Six months ended 30 June 2019 2018 USD’000 USD’000 (Unaudited) (Unaudited)
Revenue 5 106,412 155,111
Cost of sales (119,399) (147,912)
-------------------- --------------------
Gross (loss)/profit (12,987) 7,199
Selling and distribution expenses (531) (417)
General and administrative expenses 6 (29,267) (22,682)
Other gains – net 1,075 184
-------------------- -------------------- Operating loss (41,710) (15,716)
Finance costs 24 (4,729) (3,197)
Finance income 664 1,367
-------------------- --------------------
Finance costs – net (4,065) (1,830)
Share of loss of investments accounted for using the
equity method
9
(6,104)
(3,307)
-------------------- --------------------
Loss before income tax (51,879) (20,853)
Income tax expense (65) (1,092)
-------------------- -------------------- Loss for the period (51,944) (21,945)
========= =========
Loss for the period attributable to the equity holders
of the Company
(51,944)
(21,945)
========= =========
Loss per share attributable to the equity holders of
the Company during the period
Basic 7 (15.20)c (6.42)c
========= ========= Diluted 7 (15.20)c (6.42)c
========= =========
Condensed consolidated interim statement of other comprehensive income
Six months ended 30 June
Note 2019 2018
USD’000 USD’000
(Unaudited) (Unaudited)
Loss for the period (51,944) (21,945)
Other comprehensive income:
Items that may be reclassified subsequently to profit
or loss:
Currency translation differences 16 (17) 54
Net movement on cash flow hedges 16 - (1,360)
-------------- --------------
Other comprehensive loss for the period (17) (1,306)
-------------- --------------
Total comprehensive loss for the period (51,961) (23,251)
======= =======
Total comprehensive loss for the period attributable
to the equity holders of the Company
(51,961) (23,251)
======= =======
Condensed consolidated interim balance sheet
At 30 June At 31 December
Note 2019 2018
USD’000 USD’000
(Unaudited) (Audited)
ASSETS
Non-current assets
Property, plant and equipment 8 214,422 159,462
Intangible assets 28,640 29,945
Investment accounted for using the equity method 9 46,311 53,321
Term and margin deposits 12 425 333 ------------------------ ------------------------ Total non-current assets 289,798 243,061 ------------------------ ------------------------ Current assets
Inventories 13 88,621 90,623
Trade and other receivables 10 40,303 68,050
Contract assets 11 63,611 54,931
Derivative financial instruments 19 66 218
Cash and bank balances 12 90,094 99,471 ------------------------ ------------------------ Total current assets 282,695 313,293 ------------------------ ------------------------ Total assets 572,493 556,354 ------------------------ ------------------------ LIABILITIES
Current liabilities
Borrowings 20 (40,288) (19,768)
Trade and other payables 17 (82,796) (83,892)
Contract liabilities 18 (11,549) (26,539)
Lease liabilities 2.3 (2,461) -
Current tax liability (1,078) (1,114) ------------------------ ------------------------ Total current liabilities (138,172) (131,313) ------------------------ ------------------------ Net current assets 144,523 181,980
------------------------ ------------------------
Non-current liabilities
Lease liabilities 2.3 (58,080) -
Provision for employees’ end of service benefits (32,854) (32,088) ------------------------ ------------------------ Total non-current liabilities (90,934) (32,088) ------------------------ ------------------------
Total liabilities (229,106) (163,401)
------------------------ ------------------------
Net assets 343,387 392,953
========== ==========
EQUITY
Share capital 15 30,346 30,346
Share premium 15 315,995 315,995
Other reserves 16 (19,660) (19,643)
Retained earnings 16,706 66,255 ----------------------- ----------------------- Total equity attributable to the equity holders of the
Company 343,387 392,953
========= =========
Condensed consolidated interim statement of changes in equity
Note
Share capital
Share premium
Other reserves
Retained earnings
Total
USD’000 USD’000 USD’000 USD’000 USD’000
At 1 January 2018 30,346 315,995 (18,123) 132,594 460,812
Net gain on cash flow hedges - - (1,360) - (1,360) -------------- -------------- -------------- -------------- -------------- Total comprehensive loss for the period ended 30 June 2018 - - (1,306) (21,945) (23,251)
-------------- ----------------- -------------- ---------------- ----------------- Total comprehensive loss for the period ended 31 December 2018 - - (214) (47,860) (48,074)
The revenue from these customers is attributable to the EPC(I) and contracting services segment. The above customers in 2019 are not necessarily the same customers as in 2018.
5 Disaggregation of revenue
Six months ended 30 June 2019 Six months ended 30 June 2018
time 13,171 61,919 31,322 106,412 51,991 74,673 28,447 155,111
There was no revenue recognised at a point in time during the six months period ended 30 June 2019
and 30 June 2018.
The transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied), to be recognised over time, as at 30 June 2019 are, as follows:
Depreciation expense of USD 10.6 million has been charged to cost of sales and USD 1.2 million
to general and administrative expenses. This includes a depreciation charge on right-of-use assets
of USD 2.4 million. Additions include USD 0.4 million pertaining to right-of-use asset recognised
during the year. See note 2.3 for details regarding initial application of IFRS 16.
9 Investments accounted for using the equity method At 30 June At 31 December
2019 2018
USD’000 USD’000
At 1 January 53,321 25,908 Dividend received during the period (906) (1,113) Investment in an associate - 39,102 Share of loss of investments accounted for using the
equity method – net
(6,104)
(10,576)
_------------- _------------- 46,311 53,321
======== ========
Breakdown of the investment carrying amount is as follows
* Investment has been accounted to nil as share of losses exceed investment value.
10 Trade and other receivables At 30 June At 31 December
2019 2018
USD’000 USD’000
Trade receivables 28,174 46,737
Other receivables and prepayments 11,510 22,217
Advances to suppliers 309 2,410
Receivable from related parties 3,738 875
--------------- --------------- 43,731 72,239
Less: Provision for impairment losses (3,428) (4,189)
--------------- ---------------
40,303 68,050 ========= =========
11 Contract Assets
At 30 June
At 31 December
2019 2018
USD’000 USD’000
Amounts due from customers on contracts 37,844 48,081
Contract work in progress 25,767 6,850
--------------- ---------------
63,611
=======
54,931
=======
12 Cash and bank balances At 30 June At 31 December
2019 2018
USD’000 USD’000
Cash at bank and on hand 52,646 26,557
Term and margin deposits 37,448 72,914
---------------- ----------------
Cash and bank balances – current 90,094 99,471
Term and margin deposits – non-current 425 333
Less: Margin/short-term deposits under lien (with
original maturity less than three months) (2,612) (3,800)
Less: Margin deposits – under lien (with original
maturity more than three months) (34,775)
(46,987)
Less: Deposits with an original maturity of more than
three months (486)
(10,333)
---------------- ----------------
Cash and cash equivalents (for purpose of the cash
flow statement) 52,646 38,684
======= ========
13 Inventories At 30 June At 31 December
2019 2018 USD’000 USD’000
Raw materials, consumables and finished goods 22,350 23,996
Inventory relating to elevating kits 69,146 69,343
Less: Provision for slow moving and obsolete inventories (2,875) (2,716)
----------------- ----------------
88,621 90,623
======= ========
The cost of inventories recognised as an expense amounts to USD 4.1 million (30 June 2018: USD
8.2 million) and this includes USD 2.5 million (30 June 2018: USD 3.1 million) in respect of
write-down of inventory to net realisable value.
14 Related party transactions The Group entered into the following transactions during the period with related parties at prices and on terms agreed between the related parties. Six months ended 30 June
2019 2018
USD’000 USD’000
Key management compensation 4,090 3,685
====== ======
Sales to a joint venture 784 363
====== ======
Purchases from a joint venture 225 -
====== ======
Re-chargeable expenses to a joint venture 10,974 5,080
====== ======
Sponsorship fees and commissions paid to legal
shareholders of subsidiaries 184 168
====== ======
15 Share capital
There is no movement in issued and fully paid ordinary shares and share premium for the period
ending 30 June 2019 and year ended 31 December 2018.
During 2019, Employee Benefit Trust (‘EBT’) acquired 54,972 shares (31 December 2018:
353,828 shares) of the Company. The total amount paid to acquire the shares was USD 43,658
(31 December 2018: USD 222,420) and has been deducted from the consolidated retained
earnings. During 2019, 54,972 shares (31 December 2018: 353,828 shares) were issued to
employees on vesting of the performance shares and 16,268 shares (31 December 2018: 16,268
shares) were held as treasury shares at 30 June 2019.
16 Other reserves
Legal reserve
Merger reserve
Hedge reserve
Translation reserve
Total
USD’000 USD’000 USD’000 USD’000 USD’000
At 1 January 2018 (Audited) 98 (18,572) 1,360 (1,009) (18,123)
At 30 June 2019 (Unaudited) 98 (18,572) - (1,186) (19,660) ======== =========== ======== ======== ==========
17 Trade and other payables
At 30 June At 31 December 2019
2018
USD’000 USD’000 Trade payables 24,134 23,572 Accruals and other payables 58,013 59,897 Payables to a related party 649 423 ---------------------------------------------------- ----------------------------------------------------
82,796 83,892 ======= =======
18 Contract liabilities At 30 June At 31 December 2019
2018
USD’000 USD’000 Provision for warranty cost and other liabilities 5,685 4,166 Amounts due to customers on contracts 5,864 22,373 ---------------------------------------------------- ----------------------------------------------------
11,549 26,539 ======= =======
19 Derivative financial instruments
The table below analyses financial instruments carried at fair value, by valuation method. The
different levels have been defined as follows:
a. Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
b. Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level
2); and
c. Inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs) (Level 3).
The following table presents the Group’s assets that are measured at fair value at:
There were no liabilities as at 30 June 2019 and 31 December 2018 measured at fair value.
The fair value of financial instruments that are not traded in an active market is determined by
using valuation techniques. These valuation techniques maximise the use of observable market
data where it is available and rely as little as possible on entity-specific estimates. If all significant
inputs required to fair value an instrument are observable, the instrument is included in Level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is
included in Level 3.
There were no transfers between Level 1, 2 and 3 during the period.
There were no changes in valuation techniques during the period.
20 Borrowings
Repayments of borrowings amounting to USD 20.0 million were made during the period. Draw-down during the period amounted to USD 40.0 million. As at 30 June 2019, the Group borrowings amount to USD 40.3 million. At 30 June 2019, the Group has banking facilities of USD 435.9 million (31 December 2018: USD 540.1 million) with commercial banks. The facilities include bank overdrafts, letters of guarantees, letters of credit and short-term loans. These are summarised below: 30 June 2019 Facility Amount utilised Amount available
to be used
USD’000 USD’000 USD’000
Funded facilities
Revolving credit facility 50,000 40,000 10,000
Unfunded facilities
Letters of credit/guarantees 385,900 132,500 253,400
--------------- --------------- ---------------
Total 435,900 172,500 263,400 ======== ======== ========
The Group facilities were scheduled to expire in August 2019. However, on 30 July 2019, the Group secured an extension to these facilities to 11 December 2019 and negotiations are ongoing with a syndicate of one local and one international banks to secure a new facility.
21 Dividends
There were no dividends declared or paid during the six months period ended 30 June 2019.
22 Commitments
(a) Operating lease commitments
At the reporting date, the Group had outstanding commitments under short-term operating leases,
which fall due as follows:
At 30 June At 31 December
2019 2018
USD’000 USD’000
Not later than one year 5,979 5,583
Later than one year but not later than five years - 23,774
Later than five years - 84,369
-------------------- --------------------
5,979 113,726
========= =========
Effective 1 January 2019, Operating lease commitments other than short-term leases have been
accounted and disclosed as per IFRS 16. See note 2.3 for details.
(b) International Maritime Industries’ commitments
In 2017, the Group has entered into commitments associated with the investment in International
Maritime Industries. Under the Shareholders’ Agreement, the Group will invest up to a maximum
of USD 140.0 million in relation to its commitment over the course of construction of the Maritime
Yard between 2017 and 2022 with USD 59.0 million already paid to date. The forecast
contributions are as follows: At 30 June At 31 December 2019 2018 USD’000 USD’000
Not later than one year - 31,456 Later than one year but not later than four years 80,966 49,510 ------------- ------------- 80,966 80,966 ====== ======
(c) Other commitments At 30 June At 31 December 2019 2018 USD’000 USD’000
Capital commitments for purchase of operating equipment and computer software 6,716 3,273 ====== ====== Capital commitments for construction of facilities 123 1,198 ====== ======
23 Bank guarantees
At 30 June At 31 December
2019 2018
USD’000 USD’000
Performance/bid bonds 97,272 75,269
Advance payment, labour visa and payment guarantees 21,726 31,905
--------------- ---------------
118,998 107,174
======= ========
The various bank guarantees, as above, were issued by the Group’s bankers in the ordinary course
of business. Certain guarantees are secured by cash margins, assignments of receivables from
some customers and in respect of guarantees provided by banks to the Group companies, some
have been secured by parent company guarantees. In the opinion of the management, the above
bank guarantees are unlikely to result in any liability to the Group.
24 Finance costs
At 30 June At 30 June
2019 2018
USD’000 USD’000
Interest expense on leases 2,341 -
Others 796 962
Interest on bank borrowings 698 1,103
Bank guarantee charges 472 233
Commitment fees 422 899
_-----------------
_-----------------
4,729 3,197
======= =======
25 Events after the balance sheet date
On 30 July 2019, the Group secured from lenders an extension to the maturity date of its current
facilities until 11 December 2019 as negotiations continue to finalise a new facility with a
syndicate of one local and one international banks to provide sufficient headroom for the business.
Refer to note 20.
26 Cash flow from operating activities
Note Six months ended 30 June 2019 2018 USD’000 USD’000
(Unaudited) (Unaudited) Operating activities Loss for the period before income tax (51,879) (20,853) Adjustments for: Depreciation 8 11,839 9,692 Amortisation of intangible assets 1,937 1,872 Share of loss from investment accounted for using
equity method
9
6,104
3,307
Share-based payments value of services provided 2,440 1,707 (Gain)/ loss on disposal of property, plant and
equipment
(44)
3 Provision/ (Release) for warranty costs and other
liabilities
18
1,519
(1,405) Provision for slow moving and obsolete inventories 159 (92) Release of provision for impairment losses
(761)
(4) Provision for employees’ end of service benefits 2,185 3,498 Finance costs 4,729 3,197 Finance income (664) (1,367) Release of cash flow hedges 16 - (1,360) ------------- ------------- Operating cash flows before payment of employees’
end of service benefits and changes in working capital
(22,436)
(1,805) Payment of employees’ end of service benefits (1,419) (4,301) Changes in working capital: Inventories before movement in provision 1,843 (15,251) Derivative financial instruments 152 1,278 Trade and other receivables before movement in
provision for impairment losses
28,213
(18,524) Contract assets (8,680) 27,125 Trade and other payables 2,671 (71,651) Contract liabilities (16,509) 303
------------- ------------- Cash used in operating activities (16,165) (82,826) --------------- ---------------
Alternative performance measures
As set out in our most recent annual report, we use a range of financial and non-financial measures
to assess our performance. The tables below set out the definitions of such measures,
reconciliations to amounts presented in the interim financial statements and the reason for their
inclusion in the report. The metrics presented are consistent with those presented in our previous
annual report and there have been no changes to the bases of calculation.
EBITDA
In addition to measuring financial performance of the Group based on operating profit, we also
measure performance based on EBITDA. EBITDA is defined as the Group (loss)/profit for the
period from continuing operation before depreciation, amortisation, interest on bank borrowings,
finance income and taxation.
We consider EBITDA to be useful measures of our operating performance because they
approximate to operating cash flow of the Group by eliminating depreciation and amortisation.
EBITDA is not a direct measures of our liquidity, which is shown by our cash flow statement, and
need to be considered in the context of our financial commitments.
Reconciliation from the (loss)/profit for the period from continuing operations, the most directly
comparable IFRS measure, to reported and EBITDA, is set out below:
Six month ended 30 June:
2019 2018
USD’000 USD’000
Loss for the period from continuing operations (51,944) (21,945)
Depreciation (Note 8) 11,839 9,692
Amortisation 1,937 1,872
Interest on bank borrowings and interest expense on
leases
3,039
1,103
Finance income (664) (1,367)
Tax
Share of loss of investment accounted for using the
equity method
65
6,104
1,092
3,307
EBITDA (29,624) (6,246)
EBITDA margin (27.8%) (4.0%)
Net cash
Net cash measures financial health after deduction of liabilities such as borrowings. A
reconciliation from the cash and cash equivalents per the consolidated cash flow statement, the
most directly comparable IFRS measure, to reported net cash, is set out below:
30 June
2019
31 December
2018
USD’000 USD’000
Cash and cash equivalents (Note 12) 52,646 38,684
Margin deposits – under lien (with original
maturity less than three months) (Note 12)
2,612
3,800
Margin deposits – under lien (with original
maturity more than three months) (Note 12)
34,775
46,987
Deposits with original maturity of more than 3
months (Note 12)
486
10,333
Borrowings (40,288) (19,768)
Net cash 50,231 80,036
Overheads
Overheads are costs required to run our business but which cannot be directly attributed to any
specific project or service. A reconciliation from unallocated expenses per the segment note in
the consolidated financial statements to reported overheads, is set out below: Six months ended 30 June
2019 2018
USD’000 USD’000
General and administrative expenses (Note 6) 29,267 22,682
Selling and distribution expenses 531 417
Direct overheads included in cost of sales:
Unallocated operational overheads 9,849 8,598
Yard rent and maintenance 5,420 6,639
Repairs and maintenance 1,465 1,790
Other 2,258 2,989
Overheads 48,790 43,115
An analysis of overheads is as follows:
2019 2018
Overhead nature: USD’000 USD’000
Fixed 14,854 16,377
Semi variable 2,043 2,509
Variable 31,893 24,229
Overheads 48,790 43,115
Statement of Directors’ responsibilities
The directors confirm that, to the best of their knowledge, this condensed consolidated interim
financial information has been prepared in accordance with IAS 34 as adopted by the EU. The
interim management report includes a fair review of the information required by Disclosure and
Transparency Rules 4.2.7R and 4.2.8R, namely:
• an indication of important events that have occurred during the first six months of the
financial year and their impact on the condensed consolidated interim financial information,
and a description of the principal risks and uncertainties for the remaining six months of the
financial year; and
• material related party transactions in the first six months of the financial year and any
material changes in the related party transactions described in the last annual report.
The Directors of Lamprell plc are listed in the Lamprell plc Annual Report for 31 December 2018.
A list of current directors is maintained on the Lamprell plc website www.lamprell.com.