UAE: Lamprell Reports H1 Net Loss of USD 47.1 Million

Lamprell, a leading provider of specialist engineering services to the international oil & gas and renewable industry based in the UAE, announces its Interim Results for the six month period to 30 June 2012.

H1 2012 financial results:

• Revenue: US$ 528.1 million (H1 2011: US$ 383.6 million).
• Operating loss: US$ 33.8 million (H1 2011: US$ 21.6 million profit).
• Net loss: US$ 47.1 million (H1 2011: US$ 18.6 million profit).
• Diluted EPS: negative 18.10 cents (H1 2011: 8.55 cents).
• No interim dividend proposed (H1 2011: 4.00 cents).
• Cash and bank balances as at 30 June 2012 US$ 134.0 million, including restricted cash of US$ 101.4 million. (YE 2011: US$ 149.4 million, including restricted cash of US$ 105.5 million).
• Net debt at 30 June 2012: US$ 35.7 million (YE 2011: US$ 101.7 million).
• Banking waivers received following certain covenant breaches at 30 June. The Group`s banking covenants will be tested again at 31 December 2012, ahead of which the Group will seek to restructure its covenants on a long term basis to avoid a year end breach.

Regarding the results, Nigel McCue, Lamprell CEO, said:

“The Company reported revenues of US$ 528.1 million for the first half of 2012, with a net loss of US$ 47.1 million. As previously disclosed the results reflect the negative impact of additional costs arising from the delayed deliveries of the Windcarrier 1 and 2 projects (gross contract losses amounting to US$ 46.2 million in the period), delays in key specialised supplier equipment deliveries for new build jackup projects and the slippage in the timing of expected new project awards.

Revenue for 2012 is still anticipated to be approximately US$ 1.1 billion, however, the Company anticipates a loss for the year in the range of US$ 12 million to US$ 17 million.

These results are undoubtedly a disappointment to the Board and our Shareholders. After an extended period of sustained growth and profitability, the performance in the 6 month period to 30 June 2012 comes as a setback to the Group.

Management is addressing the causes which have given rise to the under performance in the first half year. Changes are being introduced across the business, which include management re-organisation and the implementation of improved processes, systems and controls.”

Wind Farm Installation Vessels

In May, the Company delivered the offshore wind turbine installation vessel Seajacks “Zaratan”, a Gusto MSC NG-5500 design.

The first of the two Fred. Olsen Windcarrier self-elevating and self-propelled offshore wind turbine installation vessels, the “Brave Tern”, was loaded out at the Company’s Jebel Ali Facility in February 2012. The vessel, a Gusto MSC NG-9000 prototype design, suffered engineering delays which in turn caused delays in construction. Following the load out, the Company experienced significant challenges relating primarily to the completion of the vessel’s integrated power management, automation and control systems, all of which have resulted in the Company incurring additional costs and liquidated damages. It is expected the vessel will be delivered to Fred. Olsen during Q3 2012.

The second vessel, the “Bold Tern” was successfully loaded out at the Jebel Ali facility in August 2012. The major outstanding work, post load out, comprises the installation of the vessel’s 800 tonne main crane and the remaining cylindrical leg sections, the completion and subsequent commissioning of the vessel’s integrated power management, automation and control systems. Delivery of the vessel has been delayed and is now expected in Q4 2012. The anticipated additional costs associated with this delay have been provided for in these financial statements.

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Offshore WIND staff, August 28, 2012; Image: lamprell