Lamprell Cites Significant Revenues, Earnings Growth in 2008
Lamprell, a leading provider of specialist engineering services to the international oil & gas industry based in the UAE, announces its Preliminary Results for the year ended December 31, 2008.
2008 FINANCIAL PERFORMANCE
- Revenue: US $740.8 million up 58.5% (2007: US $467.3 million)Adjusted operating profit: US $92.5 million up 12.8%* (2007: US $82.0 million)*
- Adjusted net profit: US$ 95.5 million up 10.8%* (2007: US $86.2 million)*
- Adjusted EPS (fully diluted): 47.58 cents up 10.6%* (2007: 43.04 cents)*
- Proposed final dividend: 3.15 cents (2.18 pence) per ordinary share (2007: 12.25 cents)
- Net cash and bank balances as at 31 December 2008 of US$ 97.8 million (2007: US $159.1 million) with no long term debt.
The statutory results for the year ended December 31, 2008, after reflecting the exceptional charges noted above, are as follows:
- Operating profit: US $82.5 million up 22.6% (2007: US $67.3 million)
- Net profit: US $85.5 million up 19.6% (2007: US $71.5 million)
- EPS (fully diluted): 42.59 cents up 19.2% (2007: 35.72 cents)
*For the current year stated before reflecting exceptional charges for share based payments of US $6.6 million (2007: US $ 4.7 million) granted to certain directors and selected management personnel pre IPO, and before reflecting various legal and professional charges amounting to US$ 3.4 million (2007: US$ nil) incurred in connection with the admission of Lamprell plc to the Main Market of the London Stock Exchange plc.
PROJECTS COMPLETED IN 2008
- The upgrade and refurbishment of the Transocean jackup rig, the C.E. Thornton, was completed on schedule in October 2008 and the rig subsequently mobilised to India to resume its contract with Reliance and ONGC.
- Hercules jackup rigs 261 & 262 arrived at Lamprell's Sharjah facility in June 2008. The rigs were transported on a heavy lift vessel from the Gulf of Mexico after Hercules secured drilling contracts with Saudi Aramco. The works scope included spud can repairs, accommodation upgrades including the fabrication and installation of additional modules, leg repairs and the installation of a fifth generator. The works were successfully completed in November 2008.
- The construction of six process modules for Saipem. These modules were designed and constructed for the Gimboa Floating Production, Storage and Offloading ("FPSO") unit to suit typical production of around 60,000 barrels of oil per day. The modules were delivered to Saipem ready for installation onto the FPSO and Lamprell thereafter provided assistance with that installation. The FPSO is now working for Sonangol in Angola.
- In March 2008 Lamprell loaded out and delivered the third Kashagan flash gas compression barge to Single Buoy Moorings Inc. following the completion of a modification work scope including the addition of further access platforms to the barge.
- In September 2008 Oilfield Engineering delivered the first of four new build LeTourneau design fast moving land rigs.
- Completion of the commissioning and delivery of the Seajacks Kraken new build self propelled liftboat to Seajacks International Limited in March 2009, on time and in budget. The construction phase of the second liftboat, the Seajacks Leviathan, has significantly advanced during 2008 and the unit will be launched later in the year awaiting final completion and commissioning.
- The construction phases of the new build jackup rig projects for Scorpion Offshore Limited have significantly advanced during 2008 and the first rig, the Offshore Freedom, is on target for delivery in April 2009, with the Offshore Mischief planned to be launched later in the year awaiting final completion and commissioning.
- The Al Ghallan jackup drilling rig refurbishment project for National Drilling Company ("NDC") was completed in March 2009. This project, with an estimated final contract value of US $59 million is part of the NDC strategic Rig Integrity Assurance Program ("RIAP"), and has been completed successfully and delivered on time and on budget. The project is the second contract awarded under the RIAP program and follows the successful completion of the NDC Junana upgrade project in 2007.
- The new build jackup rig project with Riginvest GP for the construction and delivery of a completely outfitted and equipped, LeTourneau designed, self-elevating Mobile Offshore Drilling Platform of a Super 116E (Enhanced) Class design is continuing and now planned for completion in November 2010.
- The construction phase of the lump sum turnkey construction contract with BassDrill Limited ("BassDrill") for a self erecting tender assist drilling unit with living accommodation and a modular mast equipment package, is progressing on target for completion later this year.
NEW CONTRACT AWARDS IN 2009
- New contract award with Master Marine ASA ("Master Marine") with a value of US $16.9 million. The contract is for the construction of spud cans for Master Marine's jackup "JackTel" which has recently been awarded a contract by ConocoPhillips to operate as an accommodation platform in the Ekofisk field in the Norwegian sector of the North Sea. Delivery is scheduled for early 2010.
- New contract award with Noble Drilling with a contract value of US $8.6 million. The contract is for the upgrade and refurbishment of jackup rig Noble Roy Rhodes. The contract work scope includes cantilever and sub-base modifications, drilling equipment upgrades and accommodation refurbishment. The rig arrived at Lamprell's Sharjah facility in March 2009 and the work schedule is anticipated to last for 5 months.
Despite the uncertain economic environment, our operational developments are continuing as planned, however, we continue to review the phasing of investment in the new facilities and where it is considered that capital expenditure can be deferred without impacting the operational capability of the facilities, the expenditure has been delayed. We believe our expansion is essential so that Lamprell is well placed to harness future business streams once the financial markets have improved and we see an upturn once more in activity levels.
The construction of our new 250,000m² facility in the Hamriyah free zone is continuing. The dredging work is now complete and the 1.25km quay wall is close to completion, with the inner basin having been completed in early 2009. In addition, the construction of the main office, client office and main workshops are all ongoing and several construction areas have been completed. As planned we now expect that the first jackup drilling rig will undergo refurbishment work at the quayside during April 2009.
The Company's new 47,000m² facility with 158 meters deep water quay side in Sattahip, Thailand is now complete and our first revenue generating project commenced in the first quarter of 2009. In addition, the Board of Investment privileges for the new Thailand operation were granted on 4 December 2008 providing amongst other benefits, certain corporate tax and import duty exemptions.
At a Board meeting held on March 27, 2009 Jonathan Silver was appointed to the role of Non-Executive Chairman with immediate effect. Jonathan is a qualified lawyer who has been working in the United Arab Emirates since 1980. In 1989 he was appointed Head of Clyde & Co's operations in the region. Jonathan chairs Clyde & Co's regional management board and represents the region on the firm's global management board. Throughout his career in the legal profession, Jonathan has advised the boards of public and private companies from around the world extensively on their obligations, responsibilities and governance arrangements. Jonathan has been associated with the Lamprell Group for more than 20 years, providing legal advice to the Company. He was actively involved in the Company's listing on the Alternative Investment Market and with the listing of its entire issued ordinary share capital on the Official List of the UK Listing Authority and admission to trading on London Stock Exchange plc's main market for listed securities. Jonathan joined the Board of Lamprell plc on August 24, 2007 as a Non-Executive Director.
Peter Whitbread will be stepping down from the position as Chief Executive Officer ("CEO") with effect from May 1, 2009. The intent to step down was initially advised to the Market at the time of the initial offering in October 2006 and Peter will be taking over a role more outwardly focused on the long term strategic development of the Company. Peter will assume the role of Director of International Development and will focus on the development and maintenance of client relationships and on the longer term strategic positioning of the Company. Peter is a valued member of Lamprell's Executive team having served with the Company since 1992 in the position of CEO and he played an instrumental role in bringing the Group to market in 2006.
Nigel McCue has been appointed CEO with effect from May 1, 2009. Nigel was appointed to the Board on July 7, 2006 as a Non-Executive Director prior to being appointed to the Executive position of Chief Operating Officer in May 2008. Nigel has over 30 years of experience in the petroleum industry and, prior to being appointed Chief Operating Officer of Lamprell, he was a Director and the Chief Executive Officer of Jura Energy Corporation, a company listed on the Toronto Stock Exchange, and is now the Chairman and a member of the Compensation Committee of that company. He is also a Director of Nemmoco Petroleum Limited, a private exploration and production company. Prior to this, he was a Director and the Chief Financial Officer of Lundin Petroleum AB. Nigel has also held various positions with Chevron Overseas Inc. and Gulf Oil Corporation. Nigel is the Senior Independent Non-Executive Director, within the definition of the FRC Combined Code, of Dragon Oil plc, where he is the Chairman of its Audit Committee and a member of the Remuneration and Nomination Committees.
The Board is cautious in the short term market for new build construction and although FPSO related activities were significant in the first half of 2008, there was a slow down in the second half of the year due to a general reduction of capex budgets and the weakening oil price. Notwithstanding this fact, the Board remains confident in the long term viability of the offshore construction market both for fixed and floating structures.
Activities relating to land rigs have continued at a consistent level and progress on the four new build API 2000 HP fast moving land rigs continues on schedule. There have been a number of land rigs which have been temporarily laid up in the first quarter of 2009, reflecting a sharp reaction to the sudden drop in the oil price and the impact of the world wide financial uncertainty. However, because of the regional dynamics of the Middle Eastern market, a market which we have operated in for over thirty years, we anticipate a strong recovery in land drilling activities in the Middle East in the second half of 2009.
In the rig refurbishment market we remain busy currently but expect a slowdown in the second half of the year. On Mar. 20, we announced that as a result of that change we expected the out turn for 2009 to be below the market's expectations at that time. However, our order book remains significant despite this recent slowdown in business.
Commenting on this announcement, Peter Whitbread, CEO of Lamprell said, "In 2008 we delivered significant revenue and earnings growth, exceeding all targets set at the beginning of the year and we continue to operate with a substantial order book extending into late 2010.
We are pleased to announce today that on March 27, 2009 the Board appointed Jonathan Silver as Non-Executive Chairman. Jonathan's detailed knowledge of the Group and the Middle East region means he is the ideal candidate for the role and the Board is delighted he has agreed to become the Chairman of Lamprell plc. In addition it has been confirmed by the Board that on May 1, 2009 I will be stepping down from the position of CEO which I have held for the past 17 years. The intent to step down was initially advised to the market at the time of the initial offering in October 2006 and I am delighted that Nigel McCue is stepping into this position. I am confident that Nigel has the right level of experience and knowledge to successfully take the Company forward.
"These are challenging times for the sector as a whole but I believe Lamprell is taking the steps necessary to position itself both to withstand the current period of uncertainty and take advantage of new opportunities when the market does improve. Our track record of on time and on budget project execution remains central to our offering and underpins our confidence in our long term prospects, which remain promising as we seek to build a strong platform for future growth."
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