Lamprell has issued a going concern warning following some tricky contracts that have left it underwater.
The company reported a total project loss of $118.2 million on the East Anglia One offshore windfarm, which was completed in April. Work on another windfarm, Moray East, is “progressing”, it said.
Lamprell’s future seems uncertain. The company said that for it to continue to be a going concern it would require both a major renewables contract win in the first half of the year and to secure refinancing within the next 12 months.
Absent these, it would need to carry out significant cost cutting and restructuring in order to maintain liquidity.
Despite these worries, the company said there had been a “robust start” to the year. It has won awards for new rigs and carried out a major operational restructuring.
Revenue for 2019 was $260.4mn, up from $234.1mn, although it reported a net loss of $183.5mn, with a non-cash impairment of $79.3mn being a major contributor.
The backlog of work at the end of 2019 was $470.1mn, down from $540mn.
Last year was challenging for the industry, Lamprell’s CEO Christopher McDonald said, with the company suffering from low revenues and one-off losses.
“It is nonetheless a year in which Lamprell continued to demonstrate its resilience as we adapted to the changing energy landscape by rapidly developing expertise in the renewables industry and pursuing new solutions in the digital space, as well as making progress with contracts in our traditional areas of expertise,” McDonald said.
During 2019, Lamprell said there had been a strong flow of refurbishment work, with 13 rigs worked on. Progress has also been reported at its IMI joint venture, with a formal contract award on two new jack-up rigs, worth $350mn.
The rigs will be built at Lamprell’s facilities with final commissioning in Saudi Arabia. The IMI venture received a $87.9mn down payment in January.
The company has also said it is in talks to defer the investment of $25.6mn it is due to make in IMI in 2020. This is one of the points highlighted by the company in its going concern worries.
Cost cuts have taken centre stage at Lamprell, with a reduction of at least 20% in 2020. It carried out a “significant” reduction in employee numbers in the first quarter and will shut its Sharjah yard once the Moray East project has been completed.
The company is “committed to our goals and are particularly encouraged by the growth forecasts in the renewables industry. In these uncertain times and given that the company’s financial position remains very challenging, our immediate goal is to protect our net cash position and improve liquidity for the group, to ensure the future of the business,” said Lamprell’s non-executive chairman John Malcolm.
Signing up conventional debt refinancing is “challenging”, Lamprell said, so it is considering “opportunities for alternative sources of debt until the group returns to a cash generative position”.
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