Lamprell (152p and 3% of JIC Portfolio)
I have today bought a new holding in Lamprell. Early adopters of the JohnsInvestmentChronicle website will remember that I held this stock back in 2012 but got out, by the skin of my teeth, just before a profits warning which was the start of a pretty terrible six months or so for the Company. Simply, it got into trouble over a number of oil rig construction contracts which overran both in time and costs.
Since then there have been a number of changes at the Dubai based Company. The first step, in June 2012, was the appointment of a new non-executive chairman, John Kennedy, who brought with him a wealth of relevant experience having previously been executive Chairman of Wellstream Holdings. This was followed by further board changes with both a new Chief Executive and Finance Director, again with impeccable pedigrees, being appointed. The Company took the hit on the chin and eventually worked its way through the loss making contracts whilst putting in place a far more rigorous approach to contract management and costing. It also decided to focus on its core competencies going forward of rig refurbishment and upgrades. The problems of 2012 lead to losses for the year of £68m and the balance sheet took quite a hammering, requiring its bankers to waive certain conditions on its covenants. In August this year it was able to announce that it had “satisfied the conditions for utilisation on its new banking facilities and that it had now drawn down on these facilities”.
It has been a pretty challenging 12 months but it looks to have come out the other side. First half results to 30th June, issued on August 29th were ahead of expectations and were accompanied by pretty bullish outlook statements from both the Chairman and Chief Executive; “performance for the full year was expected to be ahead of our expectations” was the best bit!
1H 2013 FINANCIAL RESULTS
1H 2013 |
1H 20121 |
|
(US$ million, unless stated) |
||
Revenue |
521.0 |
528.1 |
Operating profit/(loss) |
14.7 |
(37.8) |
Profit/(loss) before income tax and before exceptional items |