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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Lamprell Plc | LSE:LAM | London | Ordinary Share | GB00B1CL5249 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 8.88 | 8.78 | 9.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2021 to Apr 2024
TIDMLAM
RNS Number : 5535D
Lamprell plc
29 June 2021
29 June 2021
LAMPRELL PLC
("Lamprell" and with its subsidiaries the "Group")
2020 ANNUAL REPORT AND ACCOUNTS
Following the release of the Company's preliminary full year results announcement for the year ended 31 December 2020 (the "Preliminary Announcement") earlier today, Lamprell announces it has published its Annual Report and Accounts for this period (the "2020 Annual Report and Accounts").
The Preliminary Announcement included a set of condensed financial statements and a fair review of the development and performance of the business and position of the Company and its group.
In accordance with Disclosure Guidance and Transparency Rule 6.3.5(2)(b), additional information is set out in the appendices to this announcement. This information is extracted in full unedited text from the Annual Report and Accounts. Reading this announcement and/or the Preliminary Announcement should not be a substitute for reading the full 2020 Annual Report and Accounts. This announcement, the Preliminary Announcement and a copy of the 2020 Annual Reports and Accounts are available to view on the Company's website: www.lamprell.com
In accordance with Listing Rule 9.6.1, a copy of the Annual Report and Accounts have been submitted to the Financial Conduct Authority via the National Storage Mechanism and will be available for viewing shortly at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
The Company is planning to hold its 2021 annual general meeting on 8 August 2021 in the United Arab Emirates. Further details of this meeting and publication of the notice of meeting will be announced in due course.
- 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 5,000 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").
Appendices
Appendix A: Risk and risk management
We have identified 10 principal risks and uncertainties facing Lamprell. These risks, mitigations and changes during the year ended 31 December 2020 are summarised in the table below. They are set out in the order of priority as determined by the Board of Directors. Further information on risk and risk management are set out on pages 44 to 49 of the Annual Report and Accounts.
Hot Features
Premium
Risk impact and likelihood
H - High
M - Medium
L - Low
Risk Description Business implication Mitigation
1. Ability to finance
business
Risk category: Financial
risks
Lack of available funding Successful implementation
options threatens our of business goals
ability to continue depends on a reasonable
as a going concern and/or level of working
deliver our strategic capital and there
objectives has been a significant
reduction in our
Risk impact: net assets due to
losses in recent
years. Also, conventional
debt funding is not
readily available
in the region due
to tough market conditions,
without additional
equity funding. If
we cannot raise capital
through the planned
debt and/or equity
financing by the
end of Q3 2021, this
threatens the near-term
liquidity and the
long-term viability
of the business.
Strategy Business
H model M
Risk likelihood H
Risk owner: * Capital raise of USD 120-150 million planned for Q3
Chief Financial Officer 2021
Risk change from last
year:
Unchanged * We use effective cash management processes to
Link to strategy: maintain strength in our balance sheet
Funding for companies
operating in the renewables
space far exceeds that * Ability to stretch the supply chain, improving the
for oil & gas contractors. Group's cash inflows and outflows
* Following the strategic reorganisation, we continue
to explore how best to finance each of the new
business units going forward
* Aligning the cost base with our revenue levels as we
pulled levers to become cash generative
* Strong relationships with financial advisors to
evaluate and access funding options
2. Ability to win work
Risk category: Strategic
risks
Failure to provide Our potential inability
reliable, on- time, to offer a competitive
competitive solutions product or service
for new projects. could negatively
affect our reputation
amongst current and
Risk impact: target clients. We
are dependent on
a relatively small
number of contracts
at any given time
and our ability to
retain current clients
and compete successfully
depends on our ability
to provide on-time,
low-cost, high-quality
products and services.
If we fail to do
so, both technically
and commercially,
we will not win new
awards. Success in
contract awards is
also currently threatened
by COVID-19 and by
our balance sheet,
which could constrain
the supply chain
or restrict our operations.
Strategy Business
H model M
Risk likelihood H
Risk owner: * Reorganised our business to align with customer needs
Vice President of Business and energy transition
Development
Risk change from last
year: Unchanged * Bid pipeline expanded into new geographies
Link to strategy:
Opportunities in our
key markets are targeted * An experienced and customer-focused BD team targets
by multiple, competitive our key clients and markets
bidders.
* We use benchmarking data and estimating tools to
provide market- competitive pricing
* Re-strengthen balance sheet through new capital raise
and a controlled overhead cost base
* We leverage the benefits of a strong culture, core
values and governance regime
* Lessons learned as well as digitalisation
opportunities embedded into project processes to
enhance overall efficiency
* Chances of meeting project objectives enabled by
effective risk management assessment
3. Economic conditions
Risk category: Strategic
Risks
Energy price volatility, Project awards may
market uncertainties be significantly
and COVID-19 could lead delayed and/or cancelled
to cancellation of bid due to the prolonged
pipeline prospects. downturn seen in
the oil & gas market
Risk impact: which continued throughout
2020 following the
early oil price collapse.
The threat to the
broader market has
been exacerbated
by the ongoing impact
of the COVID-19 global
pandemic. Such instability
leads to clients
reassessing how and
when to sanction
capex on new projects,
particularly in the
markets which are
heavily dependent
on hydrocarbon extraction
for revenues.
Strategy Business
H model H
Risk likelihood H
Risk owner: * Alignment of our organisation with market dynamics
Vice President of Business and customer needs
Development
Risk change from last
year: Unchanged * Bid pipeline of USD 6 billion covers a diversified
Link to strategy: portfolio and has increased significantly in the
Demand for our products rapidly-growing renewables sector
and services underpins
the entire business.
* Our experienced BD team, with strong capabilities and
a broad network, are sourcing targeted oil & gas
opportunities in the UAE and Saudi Arabia where
capital expenditure is continuing
* Client engagement activities continued online to
generate new prospects and improve customer
relationships
* Active investigation of potential
partnerships/alliances expands our offerings and
diversification of territories
* Self-help measures implemented in 2020 to help
maintain our competitiveness on future bids
4. Counterparty risk
Risk category: Financial
risks
The entire supply chain Clients may impose
is under pressure due onerous payment terms
to tough market conditions or even stop payments
amplified by the pandemic because of their
impact. own cashflow issues.
This may result in
Risk impact: Lamprell suffering
losses or reduced
revenues, as it would
need
to fund the working
capital from its
own balance sheet
which requires new
financing, or be
at risk of disputes
with suppliers who
are exposed to liquidity
issues too. The entire
supply chain is under
immense pressure
and there is an increased
risk of companies
taking on contracts
at poor margins
or not delivering
to the required standards.
This risk is heightened
in a market where
all parties are working
to conserve cash,
as the Company is
doing, and to protect
themselves against
the global economic
deterioration caused
by COVID-19.
Strategy Business
M model L
Risk likelihood H
Risk owner: * Take on and execute projects with experienced,
Chief Financial Officer reputable and financially sound counterparties, based
Risk change from last on reasonable and balanced contract terms
year:
Increased
Link to strategy: * Enhanced due diligence undertaken on counterparties
Contractors depend on to assess project and financial risks
timely payment for working
capital.
* Request clients and suppliers to provide financial
security measures or guarantees for new projects
* Enforce contract terms through proactive contract
management
* Effectively manage supply chain payments, combined
with regular project reviews to highlight
counterparty risks and threats of delay to payment of
invoices
* Proactively work through project schedule issues in
collaboration with clients and suppliers
5. Project execution
Risk category: Operational
risks
Failure to deliver Failure to execute,
projects on time and project manage and
on budget, in accordance deliver a project
with the contract requirements, per contractual
as a result of poor terms and conditions
performance or external may expose us to
factors such as COVID-19. additional costs,
damage to reputation,
Risk impact: losses or reduced
revenues. This is
particularly relevant
as we diversify into
new markets and product
offerings where additional
execution risks can
arise or further
investment is required.
The spread of the
COVID-19 virus could
affect our ability
to execute our projects,
directly with our
workforce
or through the supply
chain. Poor execution
may also negatively
impact our reputation
with clients and
the wider stakeholder
base
Strategy Business
H model M
Risk likelihood M
Risk owner: * BD team works to better understand clients' needs
Chief Operations Officer resulting in projects which are well-aligned with our
Risk change from last capabilities
year:
Unchanged
Link to strategy: * All new prospects undergo detailed review and robust
Our clients expect safe risk assessment during the bidding phase
delivery of high-quality,
on-time products and
services. * Continuous improvement cycle to capture all lessons
learned from previous projects are fed into new bids
and/or execution of new projects
* Regular toolbox talks to yard labour, drawing
attention to key aspects of their day-to-day working
lives and how to improve performance
* Implement an extensive series of high-quality
self-help measures to contain/respond to the COVID-19
threat
* Training and development of employees is a
cornerstone of sustainability objectives, to ensure
high standards are maintained and the likelihood of
risks is reduced
6. Cyber threats
Risk category: Operational
risks
IT systems could be Our business and
disrupted by successful operations both rely
cyber-attacks or outdated heavily on our IT
infrastructure. network and systems
including, in particular,
Risk impact: the enterprise resource
planning software
and engineering design
software provided
by third parties.
These could fail
to operate effectively
or be subject to
disruption/cyberattacks;
there are also inherent
disruption risks
as the IT infrastructure
becomes outdated
and/ or we migrate
some IT systems to
the cloud. Without
effective, updated
and efficient IT
network and systems,
we would not be able
to execute our projects
and would suffer
reputational and
financial damage
accordingly.
Strategy Business
M model M
Risk likelihood M
Risk owner: * We actively conduct risk identification, mitigation
Chief Financial Officer and management throughout a project lifecycle, from
Risk change from last initial bid, through project handover and until
year: completion
Increased
Link to strategy:
Digitalisation is a * Our project risk analyses are reviewed from a
strategic objective qualitative perspective and are also based on a
to improve efficiency quantitative Monte Carlo assessment
and generate new revenues.
* During project execution, weekly and monthly project
review meetings with management for effective
oversight
* Use of mitigation or risk management strategies,
including use of insurance, guarantees and/or
flowdowns of liabilities to the supply chain
* Implementation of the lessons learned on previous
projects aims to avoid repeats of any identified
inefficiencies
7. Contractual commitments
Risk category: Legal/compliance
risks
Onerous contract terms The continuing market
delay or prevent the downturn has led
execution of a project. to clients adopting
an increasingly firm
Risk impact: line on contractual
terms, meaning that
we may be obliged
to take on additional
risks under the contract
which historically
have been negotiated
away. If we then
fail to properly
mitigate this contractual
liability in other
ways, it could lead
to us incurring additional
costs or losses,
which could affect
our overall financial
performance.
Strategy Business
H model M
Risk likelihood H
Risk owner: * Experienced IT security specialist responsible for
General Counsel the Group IT infrastructure
Risk change from last
year:
Unchanged * Migration of many of our IT systems to external
Link to strategy: service provider with access to latest cyber
Implementation of our detection and protection technologies
strategy depends on
our ability to manage
contract risks and meet * Regular IT security training for employees throughout
client expectations the year
around project deliveries.
* Awareness campaigns about information security/cyber
threats
* Regular upgrades to our IT security software and
internal controls, reinforcing layers of protection
and segregation of duties
* Our data is micro-segmented and stored on the cloud,
which helps to contain any attacks
* Enterprise resource planning software is run by a
leading service provider, Oracle
* Penetration testing and phishing exercises run by
internal and external teams to ensure that employees
are alive to cyber risks
8. Third-party alliances
Risk category: Legal/compliance
risks
Ineffectual or poor To conduct business
relationship management in certain jurisdictions,
with business partners. we rely on key relationships
with local partners,
Risk impact: agents and the members
of joint ventures
and consortia. If
we are unable to
work collaboratively
or poorly manage
these relationships,
or our partners are
unable to provide
effective support
to our business,
this could leave
us exposed to additional
contractual and/or
execution liability,
or make our operations
in certain jurisdictions
uncompetitive.
Strategy Business
M model M
Risk likelihood M
Risk owner: * We chose business partners based on a due diligence
Executive Committee exercise to understand their capabilities, culture
Risk change from last and goals, to ensure alignment on strategic
year: objectives
Unchanged
Link to strategy:
To move up the value * Management regularly reports to the Board on all
chain, we need to rely proposed and current joint venture/consortium
on our partners to provide initiatives, assessing progress against our strategic
complementary offerings. objectives
* We work to build and maintain strong partner
relations at management level
* Agreements are drafted and negotiated based on an
agreed set of principles, describing the strategic
goals, and may include exit provisions where
appropriate
* We may obtain advice from external expert advisors,
either during contract negotiation or as alliances
are being built
9. Failure to invest
Risk category: Strategic
risk
Returns from the business In order to fund
require initial capital its reorganised business
investment. structure and to
stay competitive
Risk impact: on new and existing
projects, the Group
has to spend additional
capital funds improving
its yard processes/layout,
upgrading IT
infrastructure/operating
systems, funding
joint ventures and
investing in its
digital initiatives,
failing which the
Group may not be
sufficiently competitive
to win new projects
or to achieve the
necessary margins
to improve overall
profitability to
the required level.
Strategy Business
H model L
Risk likelihood M
Risk owner: * Reorganised our business to align with customer needs
Executive Committee and energy transition
Risk change from last
year:
Unchanged * We are already deploying certain digital initiatives
Link to strategy: in our yards as proof-of-concept, justifying further
The strategic objectives investment
are dependent on making
a return from capital
employed. * The Board approves capital investment for any item
valued in excess for USD 2 million, based on a
detailed justification
* Experienced BD team conducts in-depth analysis and
review of the market conditions/dynamics and
projections
* All investments are linked directly to the Company's
strategy and visible/actual projects
* A phased approach to investing wherever possible, to
minimise immediate exposure
* The digital business unit is progressing in
collaboration with major partners like Injazat/G42 to
de-risk the opportunity
10. Mergers and acquisitions
Risk category: Strategic
risks
An opportunistic transaction With the prolonged
could significantly downturn, the delayed
alter the intended strategic award of projects
direction of the Group. and low levels of
backlog, we could
Risk impact: see an opportunistic
approach for purchase
at a suppressed price.
This could override
current strategic
objectives or result
in a loss of traction
in the marketplace.
Strategy Business
H model L
Risk likelihood L
Risk owner: * The Company's share price has rebounded on the back
Board of Directors of improved financial performance and a clear set of
Risk change from last strategic objectives
year:
Decreased
Link to strategy: * Our objectives are measured and progress is reported
Change in ownership to the Board and shareholders
structure can result
in a change in strategy.
* Increased bid pipeline of USD 6 billion, with robust
growth in the renewables sector and continuing
bidding activity in the LTA programme and the UAE
* Lamprell's largest shareholders could act as a veto
to hostile approaches based on unreasonably low
valuations
* Professional advisory and broking team actively
advising the Board and senior management
For further information on the financial risks see note 3 to the consolidated financial statements in the Annual Report and Accounts (pages 116 to 118).
Appendix B: Directors' responsibility statement
Lamprell's Annual Report and Accounts for the period ended 31 December 2020 contains the following statements regarding responsibility for the financial statements and the annual report in compliance with DTR 4.1.12 (page 89). This responsibility statement is repeated here (below) solely for the purposes of complying with Disclosure Guidance and Transparency Rule 6.3.5. It is not connected to the extracted information presented in the preliminary results announcement or this announcement.
Responsibility statement
We confirm that to the best of our knowledge:
-- The financial statements, prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole
-- The Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face
-- The Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy
This responsibility statement was approved by the Board of Directors on 28 June 2021 and is signed on its behalf by:
Alex Ridout
Company Secretary
By order of the Board
The Directors comprising the Board of Directors are as follows (and their biographical details are set out on pages 52 and 53 of the Annual Report and Accounts):
Dr John Malcolm
Christopher McDonald
Tony Wright
Debra Valentine
James Dewar
Mel Fitzgerald
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END
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