TIDMPFC
RNS Number : 3262K
Petrofac Limited
28 August 2019
PETROFAC LIMITED
RESULTS FOR THE SIX MONTHSED 30 JUNE 2019
-- Solid operational performance in all our businesses
-- Business performance net profit (1)(2) of US$154 million
-- Reported net profit (2) of US$139 million
-- New order intake (3) of US$2.0 billion year to date
-- Net cash of US$69 million
-- Interim dividend of 12.7 US cents per share
Six months ended 30 June Six months ended 30 June
2019 2018*
US$m Business Exceptional Total Business Exceptional Total
performance items and performance items and
certain certain
re-measurements re-measurements
------------- ----------------- ------ ------------- ----------------- ------
Revenue 2,821 - 2,821 2,785 - 2,785
------------- ----------------- ------ ------------- ----------------- ------
EBITDA 305 n/a n/a 334 n/a n/a
------------- ----------------- ------ ------------- ----------------- ------
Net profit/(loss)
(2) 154 (15) 139 191 (208) (17)
------------- ----------------- ------ ------------- ----------------- ------
* Re-presented due to the reclassification of an item from
exceptional items and certain re-measurements to business
performance as set out in note 6 to the interim condensed
consolidated financial statements.
Ayman Asfari, Petrofac's Group Chief Executive, commented:
"Petrofac has delivered good results that reflect solid
operational performance across the business.
"New order intake year to date has been impacted by recent
challenges in Saudi Arabia and Iraq. Looking forward, the Group has
a busy tendering pipeline with around US$13 billion of bid
opportunities due for award in the second half of the year.
"We remain committed to our strategy of delivering best-in-class
execution for our clients and enhancing returns for our
shareholders by reducing costs, driving digitalisation, increasing
local content, improving cash conversion and divesting non-core
assets. These ongoing initiatives will improve our competitiveness
in core and growth markets, as well as best position the business
for a return to growth in the medium-term."
DIVISIONAL HIGHLIGHTS
Engineering & Construction (E&C) (4)
Solid results reflecting project phasing and mix
-- US$1.6 billion of new order intake year to date, including
awards in Algeria, Oman and the Netherlands
-- Steady progress delivering our portfolio of projects
o RAPID project ready for start-up
o Central island handover on Upper Zakum Field Development
o Jazan North tank farm and Fadhili projects nearing mechanical
completion
o Pre-commissioning activities well progressed on KNPC Clean
Fuels project
o Water introduced into the Lower Fars Heavy Oil plant
o Power transmission commenced from BorWin 3 offshore grid
connection project in North Sea
o Al Taweelah Alumina Refinery started up
o Rabab Harweel Integrated Project commenced gas production
-- Revenue up 2% to US$2.3 billion, principally reflecting project phasing and variation orders
-- Net margin down 1.4 ppts to 6.5%, driven by project mix, cost overruns and higher tax
-- Net profit down 16% to US$148 million
Engineering & Production Services (EPS) (4)
Strong growth in Projects offset by a decline in margins
-- US$0.4 billion of awards year to date, predominantly in the UK, Oman, UAE and Iraq
-- Revenue of US$0.4 billion, up 4% driven by strong growth in Projects
-- Net margin down 1.2 ppts to 5.1% reflecting a decline in
contract margins, higher overheads and higher tax
-- Net profit down 15% to US$23 million
Integrated Energy Services (IES)
Good growth in underlying profitability
-- Revenue of US$99 million, down 27% (up 5% excluding asset sales)
o Higher average realised price (5) of US$69/boe (1H 2018:
US$56/boe)
o Equity production up 8% to 1.0 mmboe (net) excluding asset
sales
o Lower PEC tariff income and cost recovery
-- EBITDA down 19% to US$58 million (up 31% excluding asset sales)
o Higher contribution from equity production excluding asset
sales
o Lower net cost recovery from Magallanes and Arenque PECs
o Increase in associate income
-- Net profit down 56% to US$7 million (up 147% excluding asset sales)
Exceptionals and certain re-measurements
The reported net profit of US$139 million (2018: US$17 million
net loss) was impacted by exceptional items and certain
re-measurements of US$15 million (2018 re-presented: US$208
million) largely relating to Group reorganisation and redundancy
costs, SFO related legal fees and JSD6000 disposal costs.
NET CASH AND LIQUIDITY
Net cash was US$69 million at 30 June 2019 (31 December 2018:
US$90 million net cash), reflecting better than expected working
capital inflows at the period end, the phasing of tax and dividend
payments, and the purchase of the Company's shares by the Employee
Benefit Trust. Free cash flow was US$123 million (30 June 2018:
US$126 million outflow). The Group retained strong liquidity of
US$1.8 billion at 30 June 2019 (31 December 2018: US$1.9 billion)
following the repayment and retirement of US$0.2 billion of
facilities during the period.
DIVID
The Board has declared an interim dividend of 12.7 US cents per
share (2018: 12.7 US cents). The interim dividend will be paid on
18 October 2019 to eligible shareholders on the register at 20
September 2019 (the 'record date'). Shareholders who have not
elected to receive dividends in US dollars will receive a sterling
equivalent. Shareholders can elect by close of business on the
record date to change their dividend currency election.
OUTLOOK
We remain well positioned for the remainder of the year, with
backlog of US$8.6 billion at 30 June 2019 (31 December 2018: US$9.6
billion) and US$2.6 billion of secured revenue for the second half
of 2019.
Backlog (4)(6) 30 June 2019 31 December
2018
US$ billion US$ billion
Engineering & Construction 7.3 8.0
Engineering & Production Services 1.3 1.6
Group 8.6 9.6
We continue to expect Engineering & Construction results for
the full year to be in line with management guidance, with revenues
expected to be around US$4.5 billion and net margins at the low end
of guidance. Overall Group profitability in 2019 is expected to be
first half weighted, principally reflecting a decline in EPS
margins and lower oil prices in the second half. Looking further
forward, revenues are expected to decrease in 2020 reflecting low
new order intake in recent years.
In line with the Group's strategy, we continue to target
best-in-class delivery for our clients and to maintain our
competitive advantage. The Group has a busy tendering pipeline with
around US$13 billion of bid opportunities due for award in the
second half of the year. The strength of our pipeline is indicative
of the improving market outlook. Consequently, the Group is
committed to invest in maintaining bench strength and technical
capability in anticipation of a return to growth in the
medium-term.
We are also committed to maintaining a strong balance sheet and
capital discipline. Group capital expenditure is expected to be
around US$125 million in 2019 (2018: US$98 million). We are
reviewing options for our remaining non-core assets, consistent
with our strategic objective to enhance returns.
SFO INVESTIGATION
No charges have been brought against Petrofac, or any officers
or current employees. Petrofac continues to engage with the SFO and
will respond to any further developments as appropriate. We are
focused on bringing this matter to closure as quickly as possible
and believe this is in the best interests of all stakeholders.
NOTES
(1) Business performance before exceptional items & certain
re-measurements. This measurement is shown by Petrofac as a means
of measuring underlying business performance.
(2) Attributable to Petrofac Limited shareholders.
(3) New order intake comprises new contract awards and
extensions, net variation orders and the rolling increment
attributable to EPS contracts which extend beyond five years.
(4) On 1 January 2019, the engineering, procurement and
construction management (EPCm) business was reclassified from EPS
to E&C. The EPCm business is presented within E&C in prior
period comparative figures.
(5) Average net realised price is net of royalties and hedging
gains or losses. It is based on sales volumes, which may differ
from production due to under/over-lifting in the period.
(6) Backlog consists of: the estimated revenue attributable to
the uncompleted portion of Engineering & Construction division
projects; and, for the Engineering & Production Services
division, the estimated revenue attributable to the lesser of the
remaining term of the contract and five years.
Click on, or paste the following link into your browser, to view
the Group's financial statements for the six months ended 30 June
2019:
http://www.rns-pdf.londonstockexchange.com/rns/3262K_1-2019-8-27.pdf
PRESENTATION
Our half year results presentation will be held at 9.30am today
and will be webcast live via:
https://webcast.merchantcantoscdn.com/webcaster/dyn/4000/7464/16532/115796/Lobby/default.htm
ENDS
Disclaimer:
This announcement contains forward-looking statements relating
to the business, financial performance and results of Petrofac and
the industry in which Petrofac operates. These statements may be
identified by words such as "expect", "believe", "estimate",
"plan", "target", or "forecast" and similar expressions, or by
their context. These statements are based on current knowledge and
assumptions and involve risks and uncertainties. Various factors
could cause actual future results, performance or events to differ
materially from those described in these statements and neither
Petrofac nor any other person accepts any responsibility for the
accuracy of the opinions expressed in this presentation or the
underlying assumptions. No obligation is assumed to update any
forward-looking statements.
For further information contact:
Petrofac Limited
+44 (0) 207 811 4900
Jonathan Low, Head of Investor Relations
jonathan.low@petrofac.com
Aaron Clark, Investor Relations & Communications Manager
aaron.clark@petrofac.com
Alison Flynn, Group Head of Communications
alison.flynn@petrofac.com
+44 (0) 207 811 4913
Tulchan Communications Group
+44 (0) 207 353 4200
petrofac@tulchangroup.com
Martin Robinson
LEI 2138004624W8CKCSJ177
NOTES TO EDITORS
Petrofac is a leading international service provider to the oil
and gas production and processing industry, with a diverse client
portfolio including many of the world's leading integrated,
independent and national oil and gas companies. Petrofac is quoted
on the London Stock Exchange (symbol: PFC).
Petrofac designs and builds oil and gas facilities; operates,
maintains and manages facilities and trains personnel; enhances
production; and, where it can leverage its service capability,
develops and co-invests in upstream and infrastructure projects.
Petrofac's range of services meets its clients' needs across the
full life cycle of oil and gas assets.
With around 11,250 employees, Petrofac operates out of seven
strategically located operational centres, in Aberdeen, Sharjah,
Abu Dhabi, Woking, Chennai, Mumbai and Kuala Lumpur and has a
further 24 offices worldwide.
For additional information, please refer to the Petrofac website
at www.petrofac.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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of this information may apply. For further information, please
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END
IR UBSBRKOAWUAR
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August 28, 2019 02:00 ET (06:00 GMT)
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