Underperforming contracts underpin revenue decline at Lamprell

Revenue contracted by nine per cent in the year ended December 31st at diversified engineering and contracting services provider Lamprell, financial results have shown.

Revenue declined to $1,045m from $1,147.9m in the preceding year as the group said it faced an "exceptional year of challenges" including underperforming key contracts.

An operating loss of $84.5m was reported compared to an operating profit of $90.2m in the previous year.

A loss before income tax and before exceptional items of $105m was reported compared to a profit of $74m a year earlier and a loss after income tax of $110.5m was posted compared to a profit after income tax of $63.3m in 2011.

The diluted loss per share was 42.4 cents compared to earnings per share of 26.5 cents one year earlier.

However, the group's net cash as of December 31st had improved substantially to $104.1m from a debt of $101.7m one year earlier.

Challenges: Underperforming key contractsUnderpinning the results were a number of challenges, including underperforming key contracts, a deteriorating financial position and an investigation by the Financial Services Authority (FSA), the group said.

Changes were made at the board level and within the management structure to address the issues and Lamprell said that challenges had been successfully overcome or were being addressed.

Since January 1st 2012 to date, the group reported that it had delivered multiple projects including four new build jackup rigs, two prototype wind farm installation vessels and one non-prototype wind farm installation vessel.

In addition, it said that it had two new build land rigs and numerous upgrade and refurbishment projects, relating both to jackup and land rigs.

Contracts secured since the start of 2012 included four new build jackups, with an option for a further one, a Seajacks "Hydra" windfarm vessel, North Sea process modules, multiple jackup and land rig refurbishment projects.

Non-Executive Chairman: 2013 will be "recovery year"John Kennedy, Non-executive Chairman for Lamprell, said: "2012 was unquestionably the most challenging year in Lamprell's history. After years of sustained growth and profitability, the company experienced a number of significant, unexpected operational issues, which resulted in substantial financial losses and a refreshment of the management team."

He added: "We were forced to re-evaluate the projects that we wanted to pursue and we have made many significant changes to the business structure with a view to focus on our core capabilities."

Overall, he said that outlook was positive with the board expecting 2013 to be a "recovery year", with stable revenues as compared to 2012 and a gradual return to profitability during the year.

Lamprell's share price was down 1.06% to 139.75p at 08:32 on Thursday.

MF