Lamprell plc Annual Report & Accounts 2012 Lamprell plc Annual Report & Accounts 201 2

104 Pages·2013·2.58 MB·English

Lamprell plc L
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Registered Office: p
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Fort Anne ll p
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Douglas n
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Isle of Man al R
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IM1 5PD p
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Operations: o
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PO Box 33455 s 2
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1
Dubai 2
United Arab Emirates
Tel: [phone]
Fax: [phone]
Email: [email protected]
www.lamprell.com
Lamprell plc
Annual Report & Accounts 2012
Lamprell is a leading provider of diversified
engineering and contracting services to
the onshore and offshore oil & gas and
renewable energy industries.
Lamprell Business
Oil & Gas Renewable Energy Services
New Build Jackup Wind Farm
Engineering Services
Drilling Rigs Installation Vessels
Transformer Stations INSPEC (NDT, Mechanical &
New Build Offshore
(AC & HVDC) Calibration Services)
Sunbelt H S
Rig Refurbishment Wind Turbine Foundations 2
Safety Services
Engineering &
Operations & Maintenance
Construction
Land Rig Services
UAE Other
Saudi
Facilities Hamriyah Sharjah Jebel Ali Dubai Arabia* Kuwait Total
Land (m2) 365,000 210,000 178,849 30,000 131,469 10,000 925,318
Quayside (m) 1,440 760 – – – – 2,200
* JV
Lamprell is listed on the London Stock Exchange (symbol “LAM”).
CompOavnery view BusinReesvsi ew CorpoGroavtee rnanceFinanSctiaatl ements
Company Overview
Highlights
Company Overview > Order book of USD 1.3bn as at
01 Highlights
02 Lamprell at a Glance 28 February 2013
04 Lamprell Businesses
> New contract awards USD 1.1bn from
Business Review
06 Chairman’s Statement January 2012 to 28 February 2013
08 Chief Executive’s Review
12 Operational Highlights > A year of exceptional challenges and
16 Risk Assessment
20 Financial Review changes within the organisation
Corporate Governance > Delivery of six major projects in the period
24 Board of Directors
26 Directors’ Report > Good health and safety track record
29 Corporate Governance Report
37 Directors’ Remuneration Report
49 Corporate Social Responsibility
Financial Statements
50 Independent auditor’s report to the
members of Lamprell plc 1,045 (105.0)
51 Consolidated income statement
52 Consolidated statement of USD m USD m
comprehensive income
53 Consolidated balance sheet
Revenue Loss before income tax and
54 Company balance sheet
exceptional items
55 Consolidated statement of changes
in equity
56 Company statement of changes in equity (110.5)
57 Consolidated cash flow statement USD m
58 Company cash flow statement
59 Notes to the financial statements
99 Definitions Loss for the year
Net profit (loss) before income tax and
EBITDA before exceptional items USD m exceptional items USD m
20124 20124
20113 20113
20101 20101
(120) (80) (40) 0 40 80 120 (120) (80) (40) 0 40 80 120
Net profit (loss) USD m Earnings per share – Diluted cents
2012 2012
2011 2011
2010 20102
(120) (80) (40) 0 40 80 120 (120) (80) (40) 0 40 80 120
Previous years’ figures have been normalised in line with current year presentation of results to include exceptional
items for all years.
1 Exceptional items during 2010 relate to Lamprell Asia Limited liquidation costs.
2 EPS has been restated for the bonus element of the 2011 rights issue.
3 Exceptional items during 2011 relate to MIS acquisition costs.
4 Exceptional items during 2012 relate to regulatory fine and related charges.
01 Lamprell plc Annual Report & Accounts 2012
Company Overview
Lamprell at a Glance
Delivering our
expertise
Lamprell, based in the
United Arab Emirates
(“UAE”), and with
operations throughout
the region, has played
a prominent role in the
development of the
offshore industry in
the Arabian Gulf for
over 30 years and is the
regional market leader
in the rig market.
Lamprell is a leading provider of Lamprell operates across multiple
diversified engineering, construction facilities in the UAE, Saudi Arabia
and contracting services to the (through a joint venture structure)
onshore and offshore oil & gas and and Kuwait, with a combined total
renewable energy industries. area of over 925,000m² and over
2km of quayside.
Lamprell employs over 11,000 people
(including labour personnel) across
multiple facilities.
02 Lamprell plc Annual Report & Accounts 2012
CompOavnery view BusinReesvsi ew CorpoGroavtee rnanceFinanSctiaatl ements
Iraq
6 Kuwait Iran
Arabian
Gulf
5 1
2
3
4
Saudi Arabia UAE
Oman
Yemen
Primary facilities
1 Hamriyah Free Zone, 4 Dubai Investments Park,
Sharjah, UAE Dubai, UAE
Purpose‑built for new build Focused on the Land Rig Services
construction and refurbishment of division of the Group.
offshore drilling rigs, land drilling rigs,
wind farm installation vessels and oil & 5 Saudi Arabia
gas structures. MIS Arabia’s facility in Jubail is
dedicated to the manufacture of
2 Port Khalid, Sharjah, UAE process vessels, equipment and large
Well suited for Lamprell’s upgrade components. Also, a new facility* is
and refurbishment projects as well as being built to cater to the refurbishment
new build jackup drilling rigs. and upgrade of land rigs in‑country.
3 Jebel Ali, Dubai, UAE 6 Kuwait
Purpose‑built in mid‑2002 and ideally Part of the Land Rig Services division
suited to new build offshore structures and caters to drilling and oilfield
and platforms. service contractors in West Shuaiba,
Kuwait and other surrounding areas.
* A three‑way JV between Lamprell, Shoaibi Group and
AYTB.
03 Lamprell plc Annual Report & Accounts 2012
Company Overview
Lamprell Businesses
Land Rig Services
Land Rig Services covers all projects
and services related to onshore
drilling rigs, oilfield service companies
and drilling equipment refurbishment
for land and offshore rigs. The Land
Rig Services group operates from
facilities in Hamriyah, Jebel Ali, Dubai
Investments Park and Kuwait and also
provides field services as required.
Renewable Energy
Wind Farm Installation Vessels
Lamprell’s strategic goal of becoming
the fabricator of choice in the growing
Oil & Gas Rig Refurbishment wind farm installation market is
New Build Jackup Drilling Rigs Since 1990, Lamprell has completed endorsed by the experience and
Lamprell is firmly established as one over 300 rig refurbishment projects. expertise that the Group has gained
of the world’s leading facilities for the The rig refurbishment scope varies with the new build construction
construction of new build jackup with every project and can range of wind turbine installation vessels
drilling rigs. from a simple repair to a major for Seajacks and Fred. Olsen
docking lasting several months for Windcarrier; two major companies
With a highly sophisticated engineering the upgrade or replacement of older in this expanding marketplace.
capability and custom‑built construction and sometimes damaged equipment
and load out facilities, Lamprell has and machinery. The offshore wind sector provides
gained a reputation as a reliable and Lamprell with the opportunity
professional builder of state‑of‑the‑art The Company has successfully to utilise its engineering skills in a
drilling rigs. The Group has successfully completed numerous refurbishment sector where there is a recognised
delivered several LeTourneau 116E projects for drilling contractors, lack of installation capacity. Having
and Friede & Goldman Super M2 including Arabian Drilling Company, constructed five high tech, specialised
jackup rigs to international and regional Ensco, Japan Drilling Company, vessels for the European market and
drilling operators. Nabors, National Drilling Company, with one more currently under
Noble Drilling, Rowan, Saipem construction, Lamprell has the right
New Build Offshore and Transocean. skills and experience in this market.
Lamprell’s expertise in the new build
offshore segment extends beyond Engineering & Construction
jackup drilling rigs and covers a Lamprell Engineering & Construction
wide range of offshore fixed and (”E&C”) offers a full scope of service
floating facilities. This includes the from wellhead to delivery and beyond,
construction of process modules extending to all areas of onshore and
for floating production, storage and offshore design and construction.
offloading units (“FPSOs”) and floating
storage and regasification units With a strong regional presence,
(“FSRUs”), tender assist drilling excellent project execution track
barges, mobile offshore production record, certified systems & processes
units (“MOPUs”), turrets, process & and strong engineering capabilities
utility decks, living quarters (“LQ”), (providing engineering services from
wellhead decks (“WH”) and other concept design to commissioning),
offshore fixed structures. Lamprell’s Lamprell E&C delivers fully integrated
New Build Offshore centre of engineered solutions to the onshore
excellence is one of the few facilities and offshore oil & gas and renewable
in the MENA region that has both the energy sectors.
expertise and the capability in building
large‑scale complex process decks
(+10,000 tonnes).
04 Lamprell plc Annual Report & Accounts 2012
CompOavnery view BusinReesvsi ew CorpoGroavtee rnanceFinanSctiaatl ements
INSPEC (NDT, Mechanical & also provides technical consultancy,
Calibration Services) services and support specialised in
International Inspection Services Ltd. the detection and handling of the
(“INSPEC”) provides high quality highly toxic H S gas.
2
inspection services to several
countries within the Middle East and Operations & Maintenance
Africa. Established in 1993, INSPEC Lamprell’s Operations & Maintenance
is predominantly engaged in the (“O&M”) business has a proven record
supply of inspection personnel and of excellent performance and service
equipment for heat treatment and with a core workforce of over 500
Non‑Destructive Testing (“NDT”) tradesmen and administrative
services to the oil & gas, district personnel who are supported by a
cooling and other infrastructure‑ larger base of skilled field staff from
Services intensive industries including the various divisions of the Lamprell
Engineering Services desalination and energy. Its primary Group. O&M provides manpower,
Lamprell’s Engineering Services markets of operation are the UAE, equipment and materials services
provides a range of engineering Oman and Bahrain with projects also to a diverse customer base at oil &
solutions from conceptual engineering completed in other parts of the Middle gas and petrochemical facilities and
and FEED through to detailed and East and Africa. plants, drilling rigs, offshore facilities,
construction engineering including marine docks and marine vessels.
offshore drilling rigs, land rigs, Sunbelt H2S Safety Services
onshore and offshore Engineering, Lamprell’s Sunbelt H2S safety
Procurement & Construction services division provides complete
projects, pipelines, pressure safety solutions to its clients through
vessels, skids, modules, decks and a range of specialised products and
jackets. This is delivered by a team services. As an authorised distributor
of experienced multi‑discipline for a number of safety equipment
engineers and designers using the manufacturers, Sunbelt ensures that it
latest engineering software and 3D offers products that adhere to British,
modelling techniques. European and US standards. Sunbelt
05 Lamprell plc Annual Report & Accounts 2012
Business Review
Chairman’s Statement
A challenging year for Lamprell maintained its competitive position
At the time I took over as Lamprell’s and support from its customers
Non-Executive Chairman in the by winning new contracts with an
middle of June 2012, the Company aggregate value in excess of USD 930
had already announced that there million during 2012. Notably in our
were significant operational difficulties recent statement on 6 February 2013,
and delays in delivery of the wind farm we were pleased to announce that
installation vessel Windcarrier 1 Brave the Jindal Group had awarded
Tern. Unfortunately, as the Summer a new contract to Lamprell for one
progressed, it became clear that the confirmed, together with one optional,
scale of these issues was far greater jackup rig.
than previously anticipated, and that it
affected other key contracts, including In another positive development,
notably the Windcarrier 2 Bold Tern Lamprell signed a joint venture
and the Caspian Sea jackup project. agreement for the fabrication,
2012 was unquestionably refurbishment and repair of land
the most challenging year On 3 October, the Board made the drilling rigs in Saudi Arabia, enhancing
difficult but necessary decision to our strong presence in that market.
in Lamprell’s history. After
replace the entire senior management We plan to leverage on our long-term
years of sustained growth team and directed the newly relationships with our Saudi partners
appointed, interim management team and our well-established expertise in
and profitability, the
to reassess Lamprell’s business in the land rig sector.
Company experienced light of the deteriorating financial
a number of significant position. At the same time the Board Board and management changes
appointed PricewaterhouseCoopers It has been a very busy year with
operational and reporting
to conduct an independent review changes both at the Board and at the
issues, which resulted of the financial performance of the management levels, some planned
underperforming projects. The results and others required in response to the
in substantial financial
of this comprehensive assessment events of 2012.
losses prompting the were announced on 19 November,
Board to make major revealing total projected losses far in In October, Nigel McCue, Jon Cooper
excess of what had been previously and Chris Hand stood down from
changes to the way in
anticipated or announced. their respective positions as Chief
which the business is Executive Officer, Chief Financial
Despite the disappointing update, the Officer and Chief Operating Officer.
structured and managed.
Board worked closely with the interim At the same time, Peter Whitbread,
management team to address the who had previously served as
problems facing the business as Lamprell’s Chief Executive from 1992
efficiently and effectively as possible. to 2009, was appointed to the Board
During the following months, we as Interim Chief Executive Officer.
made excellent progress in mitigating In November, Frank Nelson was
the losses from the underperforming appointed as Interim Chief Financial
key projects and stabilising the Officer. Their efforts have ensured a
Group’s financial position. With smooth transition of the stabilised
support from Lamprell’s lenders, business to the new management
we also began the process of team led by James (Jim) Moffat,
restructuring the Group’s financial whose appointment as the new Chief
arrangements which is expected to Executive Officer was announced
be completed in Q2 2013. in early December. I am absolutely
delighted that someone of Jim’s
In spite of the setbacks of 2012, the expertise and calibre has agreed
durability of our industrial franchise to join our team. He assumed his
continues to prove strong and responsibilities on 1 March 2013, and
our clients, especially our existing will bring the highest standards of
clients, have continued to place their leadership, engineering and project
trust in our ability to perform to high execution to Lamprell.
standards. As a result, Lamprell has
06 Lamprell plc Annual Report & Accounts 2012
CompOavnery view BusinReesvsi ew CorpoGroavtee rnanceFinanSctiaatl ements
It was also pleasing that, after From early in 2012, Lamprell’s Despite continued global
stepping down from his interim CEO financial performance began to macroeconomic uncertainty, demand
role, Peter Whitbread has agreed deteriorate due to operational issues for our products and services remains
to stay on as a Director to support and to delays in completing key strong in the midst of a robust and
Jim and his team in rebuilding the projects. It became clear that the expansive oil and gas industry. In
business and positioning it for Company’s systems did not allow particular, we see a steady stream of
future success. management to assess fully the new build and refurbishment projects
impact of these operational issues. in our home market of the Middle
Other Board changes in 2012 Lamprell was, therefore, unable to East as well as increased activity in
included the retirement of Richard update the market in a timely manner the North Sea. In recent years there
Raynaut and resignation of Brian as to its financial performance. When have been significant changes in our
Frederick as Directors, and the the extent of the financial deterioration competitive landscape, in particular
appointment of Deena Mattar as a was recognised, the FSA concluded the entry of Asian players who can
Non-Executive Director with effect that Lamprell did not act sufficiently offer very competitive financial
from 1 April 2012. Jonathan Silver quickly to update the market or to incentives to clients. However, we
stepped down from the position prevent employees from continuing are confident that Lamprell’s strong,
of Chairman to become Deputy to deal in its shares once the inside historic track record of delivery and
Chairman, followed closely by information regarding the poor continued commitment to quality
my appointment on 15 June as financial performance had been positions the Company well to benefit
Non-Executive Chairman. recognised. The steps that the from continued growth in the oil
Company has taken to improve its and gas industry. Our current order
Further Board changes will be taking systems and controls are set out in book of USD 1.3 billion and the bid
place during the next few months. the Corporate Governance report. pipeline of USD 4.1 billion collectively
As a result of the considerable time represent a solid foundation for the
commitment required of the Non- Dividends business to grow in the coming years.
Executive Directors during the past Given the post-tax losses in 2012,
year, Colin Goodall and Deena Mattar Lamprell will not pay a dividend In light of the above, I sincerely believe
have informed the Board that they will for the year. We look into the future that Lamprell can look forward to
not be standing for re-election at the with optimism, and will review our 2013 and beyond with renewed
forthcoming Annual General Meeting. dividend policy once the business confidence. During 2013, we will be
A search is underway for additional returns to profitability. focusing on our traditional areas of
independent Non-Executive Directors. strength, namely new build jackup
Outlook rigs, rig refurbishment and offshore
As a Board, it is our objective to As a result of the events of 2012, platform construction. With the strong
deliver long-term, sustainable success the Company has been forced to bidding activity across the business
for the benefit of all Lamprell’s re-evaluate its business structure in these areas, we expect this year to
stakeholders. While there have been and the projects that it wishes to show signs of stability returning with
many changes at the most senior pursue. We have had to make many the first shoots of growth appearing
levels in the Company, I consider that significant changes to the business, towards the end of the year.
the Board has reasserted its position to return to our core activities, but it
to provide a clear direction and strong is important to reaffirm the underlying On behalf of the Board, I would like
and effective leadership for the future strength of the Company’s franchise to thank all of Lamprell’s stakeholders
of the business. and its sustainable competitive and in particular our employees for
advantages in the marketplace. As their continued trust and support
FSA investigation previously mentioned, the continued during these challenging times.
In November 2012, Lamprell and ongoing support of our customers
announced an investigation by the has been particularly heartening. John Kennedy
Financial Services Authority (“FSA”) On behalf of all the employees and Chairman of the Board
into the Company’s handling of inside Directors of Lamprell, I would like to Lamprell plc
information. Having completed the express our appreciation.
investigation, the FSA imposed a fine
of approximately USD 3.7 million on
Lamprell for failing in its obligations as
a listed company to keep the market
fully informed of its deteriorating
financial position during early 2012.
07 Lamprell plc Annual Report & Accounts 2012
Business Review
Chief Executive’s Review
The challenges that Lamprell
experienced in 2012 led to major
changes within the Company, including
a complete change of leadership
and a comprehensive review of our
projects and operations. With a new
Consolidating management team in place and a
number of improvements to our
business processes underway, we are
now confident that Lamprell is well
our position placed to overcome these challenges
and leverage its leading market position
to return to profitability.
2012 challenges/overview
Starting in mid‑2012, Lamprell
Although our yards remained busy throughout 2012 experienced significant delays
on several of its largest projects,
and generated revenues for the year of USD 1,045
including the wind farm installation
million, the Group suffered a loss before tax and vessels Windcarrier 1 and 2 for Fred
exceptional items of USD 105 million as a result Olsen, as well as the jackup rig that
was built in modular form in the UAE
of a series of operational hurdles, the failure to
and is being assembled at a facility
appreciate certain project risk and project delays. in Astrakhan, Russia. As the year
progressed, it became clear that
these delays would result in material
financial losses. However, the
previous management team struggled
to quantify the losses or prevent the
situation from deteriorating further.
As a result of the departure of the
previous senior management team
in October 2012, Lamprell’s Board
asked me to rejoin on an interim basis
to assess the full extent of the issues
08 Lamprell plc Annual Report & Accounts 2012