Since 2014, Lamprell (LAM) has watched the market for its jack-up drilling rigs bleed dry. In that time, shareholder equity has dropped 42 per cent and revenues have fared even worse, leaving the services group flailing for a strategy.
Full-year results for 2018 again suggest any rebound will be hard-won. The disastrous East Anglia One offshore windfarm project is now 99 per cent complete, but further losses on the contract failed to arrest the rate of cash burn, leading net cash to fall $177m (£134m) in the year. Weak revenue levels and a stubborn cost base will lead to further losses this year, sparking the need for a new debt facility, which Lamprell expects to sign in the next three months.
Given the recent track record, investors shouldn’t expect that financing to come cheap, although management is convinced that balance sheet repair will help the business return to growth. Indeed, the future isn’t entirely bleak.
Outstanding orders increased from $61.7m to $540m in the last six months of the year, thanks to progress in contract wins in the renewables market. And while winning a place on Saudi Aramco’s long-term offshore programme is hardly a rare honour among Middle East-facing services companies, the award has more than doubled the overall bid pipeline to $6.4bn.
On average, analysts expect a 2019 adjusted loss per share of 12.4¢, moving to a loss of 0.2¢ in 2020.
| LAMPRELL (LAM) | ||||
| ORD PRICE: | 54p | MARKET VALUE: | £188m | |
| TOUCH: | 53.9-54.4p | 12-MONTH HIGH: | 105p | LOW: 51p |
| DIVIDEND YIELD: | NIL | PE RATIO: | N/A | |
| NET ASSET VALUE: | 113¢* | NET CASH: | $80m | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2014 | 1.08 | 94 | 29.5 | nil |
| 2015 | 0.87 | 67 | 19.5 | nil |
| 2016 | 0.70 | -182 | -53.3 | nil |
| 2017 | 0.37 | -97.9 | -28.7 | nil |
| 2018 | 0.23 | -69.5 | -20.7 | nil |
| % change | -37 | - | - | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
| £1=$1.32. | ||||
