Lamprell Plc

Lamprell 
reimagined

L

A

M

P

R

E

L

L

P

L

C

A

N

N

U

A

L

R

E

P

O

R

T

A

N

D

A

C

C

O

U

N

T

S

2

0

2

0

LAMPRELL PLC  
ANNUAL REPORT AND ACCOUNTS 2020

 
 
 
 
 
 
Lamprell reimagined 
With nearly half a century of  
experience and expertise in complex 
energy engineering and fabrication 
projects, we deliver high-quality  
onshore and offshore solutions to  
our clients through our three business 
units — renewables, oil & gas and  
digital. Based on our commitment  
to completing our projects safely, 
efficiently and cost-effectively, we  
work to generate value for all of  
our stakeholders.

Lamprell’s purpose is to provide competitive project 
services and solutions to the energy industry for the 
benefit of all stakeholders. 

We deliver this through the implementation of our 
strategic objectives, underpinned by our culture 
and core values.

  Read more on =>> 54

Front cover 
Lamprell’s theme for our 2020 report is ‘Lamprell 
reimagined’ and our cover represents our three 
transformed business units: renewables, oil & gas and 
digital. As a business working in the energy industry, 
we are fully aligned with the transition taking place 
in this sector and the desire for more sustainable and 
differentiated solutions. With that in mind we have acted, 
adjusted our strategy, and Lamprell reimagined was born. 

Online shareholder information 
To keep shareholders fully up-to-date, we have 
comprehensive financial and Company information 
on our website. Our shareholders can access all the 
information they require, 24 hours a day. This report 
will be freely available on our website for at least 10 
years and can be downloaded in the ‘Investor Centre’ 
section under ‘reports and presentations’.

www.lamprell.com

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

1

Highlights

Revenue (USD m)

EBITDA* (USD m)

338.6

2019: 260.4

3.9

2019: (64.6)

Net loss (USD m)

Loss per share, diluted (US cents)

(53.4)

2019: (183.5) 

Net cash*  
(USD m)

112.4

2019: 42.5

GHG emissions  
(tonnes CO2e gross)

(15.63)

2019: (53.71)

Safety TRIR*  
(Rate per 200,000 hours)

0.15

2019: 0.19

Training  
(‘000 hours)

26,304

2019: 19,903

218.7

2019: 440.9

•  USD 120-150 million capital raise planned 

for Q3 2021 to strengthen balance sheet and 
address current liquidity challenges, building on 
improvement in financial performance in 2020

•   Signed two major contracts worth USD 550 million

•   World-class safety performance with a TRIR of 0.15

•    Effective management of COVID-19 pandemic to 
keep our workforce safe and deliver our projects

STRATEGIC REPORT
01 
02 
03 
04 

Highlights
Chairman’s introduction
Lamprell reimagined 
 Delivering sustainable growth 
– Renewables
 Delivering world-class projects 
– Oil & gas
 Delivering innovative solutions 
– Digital

06 

08 

10  Our response to COVID-19
 At a glance
12 
 Chief Executive Officer’s review
14 
16 
 Market review
18   Our business model
20  Our strategy
24  Our key performance indicators
26  Our people
28 
30 
37 
38  Operational review
Financial review
40 
43  
Viability statement
44   Risk and risk management
46  

Engaging with our stakeholders
Sustainable business review
Non-financial information statement

Principal risks

GOVERNANCE 
50 

Report on corporate governance
50 

 Chairman’s introduction  
to corporate governance

52  Our Board of Directors
 Board leadership and  
54 
Company purpose
 What the board did in 2020
57 
58 
 Stakeholder engagement
60  Division of responsibilities
 Composition, succession  
62 
and evaluation
 Nomination and Governance 
Committee report

64 

66  Audit, risks and internal control
 Audit and Risk Committee report
68 
 Remuneration and Development 
Committee report
Report on Directors’ Remuneration
 Statutory information and  
Directors’ statements

70 

81 
88 

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

FINANCIAL STATEMENTS
90 

 Independent auditor’s report  
to the members of Lamprell plc
Consolidated income statement
 Consolidated statement of 
comprehensive income

•  Key new contracts announced in 1H 2021 under 

Saudi Aramco’s Long Term Agreement programme

98 
99 

•  Unrestricted cash of USD 56.8 million at year-end, 

reducing to USD 18.6 million by May 2021

•  Strategic reorganisation into three business units

* 

Throughout the Annual Report we use a range of financial and non-financial measures to assess our 
performance. A number of the financial measures, including total shareholder return, overheads, EBITDA, 
EBITDA margin and net cash are not defined under IFRS, and are termed ‘APMs’. Management uses these 
measures to monitor the Group’s financial performance alongside IFRS measures because they help evaluate 
the ongoing financial performance and position of the Group. We have defined and explained the purpose 
of each of these measures on =>> 144 and 145 where we provide more detail, including reconciliations to 
the closest equivalent measure under IFRS. These APMs should be considered in addition to, and not as a 
substitute for, or as superior to, measures of financial performance, financial position or cash flows reported 
in accordance with IFRS. APMs are not uniformly defined by all companies, including those in the Group’s 
industry. Accordingly, APMs may not be comparable with similarly titled measures and disclosures by other 
companies. However, we consistently apply the definition of these measures year-on-year.

100  Consolidated balance sheet
101  Company balance sheet
102 

 Consolidated statement of changes in 
equity

103  Company statement of changes  

in equity

104  Consolidated cash flow statement
105  Company cash flow statement
106  Notes to the consolidated  
financial statements

OTHER INFORMATION
143  Glossary
144  Additional information

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2

STRATEGIC REPORT

Chairman’s introduction 
Evolving with the energy transition

“ Despite the shockwaves of the pandemic crippling 
industries across the globe, Lamprell looks back on 
2020 as a year of solid strategic progress and 
improved performance. Our immediate goal is to 
raise significant capital and strengthen our balance 
sheet in order to navigate short term liquidity 
challenges, complete ongoing projects and 
convert our growing bid pipeline.”

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

3

Over the past four years, Lamprell 
has made remarkable progress in its 
strategic journey: we successfully 
broadened our addressable markets 
geographically and by industry, and 
now have a strong foothold in both 
the global renewables sector and the 
world’s most prolific oil & gas region 
=>> 12. 
We transformed the way we operate to become 
one of the early movers in serial fabrication for 
offshore windfarm projects, securing a reputation 
in an emerging industry as it enters a period 
of tremendous growth. Using our experience 
and expertise, we are developing cutting edge 
digital solutions for our clients. 2020 was a year 
of reassessment for many. As the world worked 
through the impacts of COVID-19, we sharpened 
our focus on near-term cost control, working 
capital management and on the long-term future 
of the business. It became clear that our business 
needed to undergo an operational reorganisation, 
downsizing our footprint to improve efficiencies 
and deliver sustainable overhead reductions. 
These measures translated into an improved 
financial position by year-end =>> 40 and I would 
like to thank our employees for their exemplary 
effort in delivering such positive results despite 
the tumult across our peer group. 

During the year, we listened to our shareholder 
and client views, and the energy transition 
is playing out as we expected, meaning that 
Lamprell is well-positioned to move to the 
next phase. We reorganised to maximise 
opportunities across our addressable markets. 
The decision to create three distinct business 
units of renewables, oil & gas and digital, aligns 
our strategy with the evolution of the energy 
industry. We are a key link in the supply chain, and 
bring our expertise to the developing offshore 
wind industry to help clients in the green energy 
market to meet their ambitious growth targets. 
We will continue to deliver high-quality assets 
to the hydrocarbon industry, which will remain 
a major energy source for several decades. We 
are also rapidly advancing several digital ventures 
aimed at improving performance in both these 
end markets. The way the world produces and 
consumes energy is transforming, and we look 
forward to playing an integral part in this. In 2021, 
the pandemic continues to affect the industry 
and debt markets. Against this backdrop and 
with the current liquidity challenges facing the 
business, a material uncertainty exists in respect 
of the Company’s going concern position. As 
a result, the Board concluded that the business 
urgently requires additional capital, through debt 
and/or equity. This will strengthen the balance 
sheet as we deliver ongoing major projects 
for our partners and make further strategic 
investments to take Lamprell through the next 
step in its transformation. Until this funding is 
secured, the Group will need to manage working 
capital carefully including agreeing extended 
credit terms with some suppliers.

John Malcolm
Chairman

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Lamprell 
reimagined 

‘Lamprell reimagined’ has been the most inclusive strategic 
business review we have undertaken to date. We invited 
workstream teams across the organisation to contribute 
their views and challenge each other on solutions for a 
better, more efficient Lamprell. We looked at the requirements 
of our customers, shareholders, investors and lenders, 
considered the interests of our partners, communities and 
workforce, and created a platform that will help maximise 
value for each of our core expertise areas.

Our renewables, oil & gas and digital business units are intrinsically linked 
with the energy transition, however, each has a different opportunity 
set as well as varying bidding processes, and operational and capital 
requirements. We remain an organisation driven by the same values 
and purpose, but one that allows each of the businesses to maximise 
operational efficiency, enhance engagement with clients and tailor 
capital allocation to specific needs. 

Renewables 
The renewables business will focus on 
foundation fabrication and other services 
to offshore wind projects. Our bid pipeline 
and expertise in this segment has grown 
continuously over the past four years. 

  See more =>> 4

Oil & gas 
Oil & gas comprises our activities in 
EPC(I), rig construction/refurbishment and 
other services in this industry, including 
our participation in Saudi Aramco’s LTA 
programme and Lamprell’s investment in 
the IMI joint venture in Saudi Arabia. 

  See more =>> 6

Digital 
In our newest business unit, we are 
developing proprietary digital products 
through our strategic partnerships with 
Injazat/G42 and Akselos. Our core focus 
includes asset integrity, engineering design, 
smart non-destructive testing, predictive 
maintenance and robotics. 

  See more =>> 8

 
 
 
 
4

STRATEGIC REPORT

Delivering
sustainable 
growth

Renewables

Introduction
We have seen a continuing evolution 
from traditional energy sources towards 
the renewables sector with an increasing 
emphasis on its importance in supporting the 
global energy transition. Lamprell has been 
one of the pioneer companies working in the 
renewables arena since its first award in this 
sector in 2007 with a contract to build two 
self-propelled windfarm installation vessels. 

Building on this, since 2016 we have 
successfully built over 100 high-quality wind 
turbine generator substructures, including 
jackets, pin piles and transition pieces. Our 
proven track record in this market continues 
with the award in 2020 of our third renewables 
project for the construction of 30 jackets and 
suction caissons for use in a North Sea based 
offshore windfarm. 

Jackets fabricated by Lamprell en route to the Moray 
East wind farm in the North Sea.

USD 48 million 

Middle East’s first green trade finance facility  
issued to Lamprell by HSBC

108

jackets safely delivered to our clients

30

foundation substructures currently under 
construction in our Hamriyah yard

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

5

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Our renewables 
growth strategy 
Lamprell is actively targeting its 
addressable market in the growing 
renewables industry with strong 
bidding activity in its traditional 
European markets as well as new 
geographies including the US and 
Asia, which are gaining traction.

While Lamprell’s historical focus 
has been around building multi-
purpose liftboats and jacket-
based foundations, we also seek 
opportunities to leverage our 
fabrication capacity to move up the 
value chain into a wider EPC(I) role, 
in partnership with design companies 
and/or transportation and installation 
providers operating in this field. 
Due to the commercialisation of 
floating wind, we expect significant 
opportunities in the near future.

For the past four years we have seen 
a steady flow of offshore windfarm 
fabrication projects through our 
yards, each adding to our track record 
and expertise as we embed lessons 
learned from each project to enhance 
our capabilities and to improve our 
build quality and safety in subsequent 
projects. We are aiming to build on 
our reputation as a leader in this 
market where we see rapid global 
growth in the coming years. 

The future 
Our renewables bid pipeline at 
31 December 2020 was USD 2.5 billion. 
It has almost doubled over the last 
three years and now includes a 
number of active bids in Europe, 
Asia and most recently the US. 

We currently fabricate the entire 
jacket component of offshore wind 
turbine structures including the 
transition pieces and suction 
caissons or piles. We also work  
with our partners to offer a full 
EPCI capability for HVAC platforms.

Further complementing our 
renewables portfolio, to date 
we have delivered a total of six 
wind farm installation vessels 
for the renewables industry.

The scale of offshore renewables 
projects continues to grow to 
achieve economies of scale, and we 
see opportunities to increase our 
revenue per project accordingly. In 
combination, Lamprell’s experience, 
capabilities and central geographic 
location provide the Group with a 
strong position to access the expansion 
of offshore wind globally, an industry 
forecast to require over USD 300 billion 
of capex in the next five years alone. 
We expect our renewables pipeline to 
continue to grow in the medium term.

Lamprell builds foundations for offshore windfarm structures

30m

50m

>50m

Monopiles and 
transition pieces

Jackets

Floating

USD 48 million 

Middle East’s first green trade finance facility  

issued to Lamprell by HSBC

jackets safely delivered to our clients

108

30

foundation substructures currently under 

construction in our Hamriyah yard

 
 
 
 
6

STRATEGIC REPORT

Delivering
world-class 
projects

Oil & gas

Introduction
Lamprell’s credentials and experience in the 
oil & gas sector span nearly half a century. 
We have one of the world’s leading facilities, 
which includes a deepwater quayside, for the 
construction of new build jackup drilling rigs. 
Additionally, we build land rigs and provide a full 
suite of refurbishment services for both offshore 
and onshore rigs including recertification, 
conversions and major upgrades. 

We also offer contracting services which 
provide project support for onshore plants 
and terminals, and smaller-scale fast-track 
EPC construction projects. 

Finally, we have experience constructing and 
providing maintenance solutions for complex 
process modules, living quarters, wellhead 
decks, topsides, FPSO units and various other 
offshore fixed facilities. 

 2

new build jackup rigs currently under 
construction in Hamriyah

28

new build jackup rigs delivered since 2006

17

rig refurbishment projects awarded in 2020 
and 16 delivered in the year

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

7

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Our oil & gas growth strategy 
Our oil & gas strategy is focused 
primarily on the Middle East, the 
region with the lowest hydrocarbon 
lifting costs globally. 

Lamprell is particularly proud of the 
progress we have made to date in 
relation to our Saudi strategy. Our 
efforts and investment helped us 
to establish a strong foothold in the 
Kingdom and in 2017, we formed 
a joint venture partnership in the 
IMI yard in Ras Al Khair. We actively 
support Saudi Arabia’s In Kingdom 
Total Value Add and Saudisation 
programmes, which both form 
part of the Saudi Vision 2030. 

In 2018, Lamprell was accepted as a 
contractor onto Saudi Aramco’s LTA 
programme, which includes large 
scale EPCI projects. That year the 
Lamprell Saudi Arabia joint venture 
was formed to support our efforts 
to bid on the LTA programme and 
in 1H 2021, we were delighted to 
be awarded with two CRPO awards 
under the LTA. 

We also continue to pursue 
opportunities in the UAE with 
major clients such as ADNOC, with 
whom we have a long history of 
successfully delivering major projects. 
More recently we have successfully 
completed a project for SNOC.

With our well-established presences 
in both the UAE and Saudi Arabia, 
we have generated a high local 
content score which is a key metric 
for success in winning new awards 
from the NOCs of these countries. 
Investing and operating in these 
countries helps to create a sustainable 
cycle of new project awards and 
further investment.

In addition to rigs, we have 
fabricated multiple offshore fixed 
facilities including process modules, 
living quarters, wellhead decks, 
FPSO units and topsides.

We have built and delivered a total 
of 11 new build land rigs to clients 
across the Middle East.

The future
Our efforts in the Middle East continue 
to deliver revenue-generating 
opportunities. Approximately USD 3.5 
billion of our USD 6 billion pipeline 
originates from oil & gas projects in the 
Middle East, with the LTA component 
remaining strong. We are in active 
discussions with a number of clients 
for potential projects in the oil & gas 
market. In 2020, in collaboration 
with IMI, we initiated an apprentice 
programme for young Saudi nationals 
looking to enter the workplace, 
supporting Saudisation and the Saudi 
Vision 2030. The apprentices are 
actively working alongside our teams 
and will continue to do so for the 
foreseeable future. 

Lamprell fabricates various structures for the oil & gas market

Offshore platforms

Jackup rigs

Land rigs

Process modules

 
 
 
 
8

STRATEGIC REPORT

Delivering
innovative 
solutions

Digital

Introduction
Arising from our experience in both the 
renewables and oil & gas industries, Lamprell 
identified the need for innovative digital 
solutions which have the potential to enhance 
our business strategy, and improve our 
efficiency and quality, creating further value for 
our shareholders. In 2018 we started piloting 
several digital initiatives encompassing robotics, 
facial recognition and real-time analytics that 
optimise how we utilise assets and human 
capital across our business. Following this, 
Lamprell started working with Injazat/G42 to 
develop digital concepts and turn them into 
commercial ventures. This has recently been 
converted into a full joint venture dedicated to 
commercialising digital opportunities. 

Also in 2020, Lamprell and Akselos signed an 
exclusive distributor agreement which allows 
us to provide customers with unique digital 
twin technology, to assist them with their 
asset management activities.

Tracking real-time data, statistics 
and yard movements via our 
mission control centre

Robotic innovation underway 
to improve production

Strategic collaborations in place 
with Injazat/G42 and Akselos

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

9

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

We use face-ID technology which helps 
us to optimise how we utilise assets 
and human capital across our business 
making much of our manual entry a 
thing of the past.

The future
Clients are seeking to work with 
innovative companies that are 
committed to helping them improve 
their capital investment business cases 
and lower the cost of operations. 
The energy industry is working to 
realise the benefits of collecting and 
using electronic data to improve 
performance and Lamprell is adopting 
digitalisation measures to make our 
offerings even more attractive.

Lamprell’s vision is to develop new 
digital prospects so they can be 
investable, stand-alone and self-
supporting businesses, based on 
limited capital investment. We also 
plan to continue to implement new 
digital technologies into our business 
to reduce our ongoing cost base, 
improving our overall competitiveness.

Our digital growth strategy
Part of our Lamprell reimagined 
strategy is to improve our business 
through innovation and digital 
technologies. With the global 
pandemic crisis accelerating the drive 
for improvements in digitalisation, 
we are redoubling our efforts to 
realise the opportunities that we have 
identified in this new business unit. 

Lamprell has partnered with leading 
experts in both the digital and 
artificial intelligence fields to provide 
cost-efficient and highly effective 
solutions, primarily to the energy 
industry, which can be transferred 
to other industries, particularly in the 
fields of construction and fabrication. 

Our timely focus on digital solutions 
will also ensure that we are capable 
of not only addressing our clients’ 
emerging requirements and 
delivering innovative solutions for 
the global energy industry, but also 
opening up new revenue streams to 
the Group. 

We view digitalisation as a key enabler 
for growth and a differentiator that 
will enhance our competitiveness in 
renewables and oil & gas projects.

We are developing proprietary 
digital twin technology with our 
partner Akselos for use in the 
renewables industry with a current 
focus on jacket fabrication.

 
 
 
 
10

STRATEGIC REPORT

Our response to COVID-19 
Proud of our ‘we care’ culture

COVID-19 has forced changes in 
industrial businesses and, at Lamprell 
specifically, at a pace nobody could 
have possibly foreseen. The dedication 
and resilience of our personnel have 
been a shining beacon as we have 
adapted, time and again, to respond 
to multiple, constantly-changing and 
complex challenges resulting from 
the pandemic affecting every aspect 
of our supply chain. We express our 
sincere sympathies to those of our 
colleagues that have suffered from 
COVID-19.
The beginning of the journey
As countries around the world began 
responding to the impact of the virus at the 
start of 2020, Lamprell quickly mobilised a 
COVID-19 crisis management team to lead 
the organisation’s response to the pandemic 
with the goal of protecting the welfare of its 
employees and many stakeholders. 

The legislative landscape in the UAE, where 
most of the Group’s workforce and operations 
are located, was being updated rapidly as the 
local authorities worked to contain the spread 
of the virus. We had to react equally swiftly. 
With robust regional lockdowns and global 
travel restrictions in place from early on in 
the year, the challenges were multi-faceted. 

Our immediate actions 
We took an early decision requiring all staff to 
work from home unless they were working on 
essential business activities, as was the case for 
some of our ongoing major projects such as 
Moray East which was entering a critical phase 
in early 2020. We took measures to increase 
social distancing between our workers by 
securing extra employee accommodation 
units and leasing more buses; we heightened 
awareness of the importance of hand-washing 
and mask-wearing with the purchase of 
industrial volumes of hand sanitiser and face 
masks, and we installed disinfection chambers 
across our facilities. 

While these were just some of the measures we 
put in place, we also educated our workforce 
about the risks arising from the virus; this was 
reinforced by the publication of a detailed 
COVID-19 protocol document. We did not just 
comply with the laws relating to COVID-19, we 
implemented measures which went far beyond 
this and were instrumental in our response. 

As a result, Lamprell was able to keep operating 
throughout the pandemic while at the same 
time keeping our people safe and controlling 
the spread of the virus among our staff. 

Our response
It is a testament to the resilience of all 
our employees that they have performed 
extremely well during this unprecedented 
period. Whether working inside our facilities 
or at home, people have shown amazing 
courage and strength. Key to our overall 
response regime has been our rigorous 
quarantine protocols, and contact tracing 
and testing programme. If an employee felt 
unwell, we took action without waiting for 
COVID-19 test results – immediate steps were 
taken to quarantine that person along with any 
close contacts. If the test result was positive, 
the individual was given appropriate medical 
support, with all close contacts remaining in 
quarantine and being tested. If the outcome 
was negative, our trained medical personnel 
cleared the individual as fit for work.

Employees travelling to the UAE must be tested 
in their home countries before departure, 
retested on arrival in the UAE and complete 
ten days of quarantine before being permitted 
to attend the workplace. Further, for our 
large group of camp-based employees, we 
undertake an additional test on the sixth day 
of their quarantine as an additional mitigation 
measure. This has been highly effective and 
essential for mobilising the large numbers of 
yard workers that the Group hired in 2020, 
where at a peak we employed around 5,000.

Where we are now
Until the virus is fully under control and the 
UAE’s vaccination programme has been fully 
rolled out, we will continue to operate with the 
same robust, risk-assessed measures that we 
set in place during 2020, underpinned by the 
legislative framework in the UAE. In January 
2021, Lamprell started working closely with 
the UAE authorities to roll out a voluntary 
vaccination programme across its entire 
workforce. 

Close to 3,500 personnel participated during 
our first stage on-site vaccination campaign 
in mid-January comprising our employees 
and several of our on-site stakeholders, with 
second vaccinations received in the following 
weeks. We have continued to support the roll-
out of the vaccination programme in the UAE. 
At the time of going to press approximately 
83% of Lamprell’s workforce have received 
both doses of the vaccination.

Case study: 
The medical response 
Our Company doctor and a team of 
paramedics have been providing 24/7 
medical support through our on-site 
medical facility. We are conscious 
that COVID-19 has affected both the 
physical and emotional well-being 
of our staff. Extra paramedics were 
recruited during the year to provide 
medical support across all our 
accommodation units and the yard 
facilities, and we have been running 
multiple COVID-19 education and 
awareness sessions to help support 
the mental and emotional well-being 
of our employees.

The containment response
A consistent theme of our COVID-19 
response has been our team’s 
innovative ways of enhancing the 
sterilisation measures within our 
facilities. Living our values of ‘safety’ 
and ‘teamwork’ through and through, 
our asset management team came 
up with the idea of constructing 
bespoke disinfection tunnels at the 
many entrance points to our facilities. 
All employees and anyone visiting 
pass through the tunnels on arrival 
and departure. We also invested in 
the purchase of several disinfection 
machines which are being used 
proactively across our buses, offices 
and employee accommodation.

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

11

Our people

Our clients

Resilient and courageous
We could not have had a more testing twelve months. Our yard 
employees have been required to go through vigorous health 
checks, in particular when the pandemic first hit and also during 
2H when construction on the Seagreen offshore wind and IMI 
rig projects started in earnest. Where an employee was found to 
either have COVID-19 or have been in close contact with someone 
who has it, we undertook rigorous testing and tracing, established 
isolation blocks and requiring affected staff, as well as their close 
contacts, to undergo strict quarantine periods to ensure their safety 
and that of those around them. 

We maintained open lines of communication from management 
to our workforce through weekly communications from our 
CEO, regular COVID-19 newsletters and toolbox talks. We took 
accountability by providing training and education around 
COVID-19, and our teams came up with innovations such as foot-
operated door handles and disinfection tunnels, as well as mats 
and perspex barriers to reduce potential virus exposure. Our staff 
attrition rate also improved by 1.29% compared to 2019. United by 
our values, we acted decisively and responded collaboratively. All 
of our employees should be immensely proud of their efforts to 
manage this global threat.

Creating trust through teamwork
We managed to maintain strong relationships, even when our 
people and clients suddenly found themselves operating from 
home. Lamprell’s employees quickly stepped up to the challenge 
and through our strong value of teamwork, supported one another 
and implemented various new ways to communicate. Since the 
start of the pandemic, there has been a massive increase in the 
use of video-conferencing and we are focused on understanding 
our clients’ needs through virtual face-to-face meetings, webinars, 
podcasts and more. And our efforts have proven successful. 
Starting in May and through into 2H 2020, while lockdowns were in 
place globally, Lamprell secured the Seagreen renewables project 
and two oil & gas projects, namely the EPIC Mahani project in 
Sharjah and the IMI 2030 rig design engineering contract. 

The pandemic has accelerated the clean energy transition and 
we have started bidding for many new renewables projects with 
potential clients in new geographic locations who have recognised 
our experience and track record.

Our response to 
COVID-19

Our projects

Our partners

In the face of adversity, we keep delivering
Managing contracts effectively and working collaboratively with 
clients to overcome the issues presented by COVID-19 during 
2020 was critical. Our project and yard teams had to react quickly 
to constantly changing local restrictions and new social distancing 
requirements. Despite the challenges presented, our projects 
progressed well. While our Moray East project was entering its 
critical delivery phase of six batches of foundations right in the 
middle of the pandemic, our team still managed to deliver the 
project as planned by September 2020, with congratulations 
from the ultimate client. We also successfully delivered the Mahani 
project as planned in early 2021. Our two major rig projects, and 
the new IMI engineering contract and renewables project are all 
progressing well. Most impressively however, we completed 16 
rig refurbishment projects during the year, which required timely 
completion to meet client needs.

Our project teams have performed very well in 2020, evidencing 
that our systems, execution processes and procedures are effective 
and adaptable enough to be able to respond to the ever-changing 
legislative landscape caused by COVID-19, as well as the pressures 
on the supply chain and the transportation delays, all of which 
were disruptive.

Responding to COVID-19 has strengthened 
our relationships
Lamprell works with many business partners — a key stakeholder 
group — and the challenges of 2020 placed additional burden on 
these relationships, where we had to work ever more closely with 
our partners than previously. 

We focused on areas such as how best to support our subcontractors 
and suppliers, working collaboratively with them to get through 
multiple issues presented by the pandemic. The Company had 
recognised the risk of counterparty failure, as the pandemic was 
putting immense strain on the supply chain and threatening the 
existence of some of our partners. Our supply chain management 
team worked hard to create optionality in procuring project 
materials by ensuring we had a wide network of suppliers on 
whom we could rely to help us deliver our projects on time. 

We also worked very closely with the local authorities in the UAE and, 
particularly, with the Hamriyah Free Zone to implement new local 
travel restrictions and social distancing requirements while keeping 
yards operational. Most recently we have worked closely with local 
authorities to support the global COVID-19 vaccination campaign 
with thousands of employees and other stakeholders participating. 

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
12

STRATEGIC REPORT

At a glance 
Our business

Our new geographic markets of the US and 
Asia account for nearly 25% of our bid pipeline 
and our central location in the heart of the 
world’s largest energy region gives us ease 
of access to our key and potential customers.

2020 highlights 

Renewables

•  Seagreen windfarm project awarded for the 
UK North Sea with 30 jackets and suction 
buckets currently under construction 

•  Moray East project operationally complete 

and fully handed over to client 

•  Completed contract settlement on East 

Anglia ONE project 

•  Increased bid pipeline and geographies

  Oil & gas 

•   Secured two new build jackup rig contracts 

in 2020 for our client, IMI

•  Detailed engineering contract for new 

generation jackup rig ‘IMI 2030’ also awarded 
by IMI

•  Mahani gas field project awarded by SNOC  

in 2020 and completed in early 2021 

•  Steady stream of awards from rig 

refurbishment segment throughout 2020 
with 17 new arrivals and 16 departures

•  Awarded first LTA contract by Saudi Aramco 

in early 2021

  Digital 

•  Continued digital initiative development with 
partner Injazat/G42 and formed joint venture 
in early 2021

•  Distributor agreement signed with Akselos 

to develop digital twin market

•  Welding robots currently being tested and 
deployed for use on the Seagreen project 
•  Three additional welding robots procured 
and on order for use on other projects

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

13

Current geographies 
Northern European seas
Lamprell has successfully fabricated and delivered 
major projects for use in the Northern European 
seas including oil & gas platforms and foundations 
for windfarm projects.

Middle East
Lamprell has worked in the Middle East region for well 
over 40 years with prominent clients, delivering a wide 
array of projects including rigs, modules and other 
services. Our investment in Saudi Arabia continues 
through our joint venture partnership in IMI and our 
recent LTA award.

Bid pipeline for current geographies 
as at 31 December 2020

USD 4.6 billion

Active bidding opportunities  
as at 31 December 2020

35

Renewables

Oil & gas

15

USD 1.1 billion

20

USD 3.5 billion

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

New geographies 
Lamprell is pursuing opportunities in new markets, with 
a focus on renewables projects in Northern Europe, the 
US and Taiwan. Our bid pipeline will continue to grow 
rapidly as we expand into building monopile transition 
pieces, and as floating wind projects emerge across 
these and other geographic areas.

Bid pipeline for new geographies 
as at 31 December 2020

USD 1.4 billion

Active bidding opportunities  
as at 31 December 2020

7 Renewables 

 
 
 
 
14

STRATEGIC REPORT

Chief Executive Officer’s review 
Lamprell reimagined 

“ Since 2016, against major economic headwinds, Lamprell has established a 
new footing in a changing energy landscape. We entered 2021 with a focus 
on three core growth areas and are well-positioned to evolve with the 
energy transition. Diligent cost control, excellent operational performance 
and a dedicated team have helped us to deliver improved results and gain 
access to markets with significant growth outlooks. Following the planned 
capital reorganisation, we will be able to navigate the near term liquidity 
challenges faced by the Group and be ready to enter the next phase in our 
strategic journey.”

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

15

Challenge and response were the 
key modes of operation across the 
world in 2020 as we navigated the 
impacts of the COVID-19 pandemic 
and assessed its long-term effect on 
the wider industry and on our 
business. For Lamprell, it has been 
a year of reimagining itself, a natural 
step alongside the global energy 
transition. 
Operational excellence
I am pleased to report that in this challenging 
year we continued to deliver our projects 
safely, with a world-class TRIR of 0.15 at 
the end of 2020. This is a testament to our 
uncompromising commitment to safety and 
quality. We continued to operate throughout 
the worst of the pandemic, protecting our 
employees with timely tests, health checks, 
vaccinations and increased social distancing 
measures. 

Early in the year we commenced work on the 
two new build jackup rigs contracted through 
the IMI joint venture =>> 39. It is a significant 
award for Lamprell, the first for rigs in the 
market over the past five years, and a signal 
of long-term oil & gas fundamentals in the 
Middle East region =>> 16. It is an industry in 
which we have built unparalleled expertise 
over decades. Project flow from the region 
was then boosted by the EPIC contract for the 
Mahani gas field in Sharjah and we were very 
pleased to welcome seven rigs for large scope 
refurbishment from ADNOC later in the year. 

Much of the year was also dedicated to 
delivering our second major renewables 
project, Moray East, where we demonstrated 
a strong operational performance, utilising 
recent upgrades in our yards despite 
challenges presented by the pandemic, 
which was spreading rapidly as the project 
entered the critical delivery phase. With our 
activities on Moray East further expanding our 
experience in serial foundation fabrication, 
we were pleased to secure another 30-jacket 
offshore wind project, Seagreen =>> 39. 
Our credentials in the renewables industry 
are growing and by the end of 2021, we will 
have fabricated nearly 150 jacket foundations 
for three of the UK’s biggest offshore 
wind projects. 

Some of the new efficiencies we achieved 
on Moray East and continue to deploy on 
the Seagreen project are the result of our 
focused and timely entry into digital solutions. 
We have made significant progress in robotic 
technology and, crucially, in establishing 
strategic partnerships with Injazat/G42, one 
of the region’s leading digital developers 
backed by Mubadala Investment Company 
and Silver Lake Partners; and Akselos, a leading 
developer of simulation technologies. 

Resilience, perseverance, progress
Over the past few years of the oil industry 
downturn, which spiralled into new lows 
through the COVID-19 pandemic, Lamprell 
continued to focus on the delivery of its 
strategic objectives. Entering new markets 
in a period of volatility requires discipline 
and perseverance. I am therefore pleased 
to report delivery against all our strategic 
goals =>> 20 and an improved financial 
performance of positive EBITDA despite the 
significant headwinds and working through 
ongoing projects with lower margins. The 
management team was collectively driven to 
manage our cashflows and we ended the year 
in a much stronger cash position than when 
we started it. 

We continued to win and execute new 
projects both in renewables and oil & gas, 
where our regional clients continue to see us 
as a trusted partner. We forged new strategic 
partnerships in the digital segment that will 
allow us to remain competitive while also 
offering innovative solutions to our clients and 
providing us with additional revenue streams. 

Playing a part in the energy transition
The developments in the energy industry 
over the past few months have reinforced 
our commitment to offshore wind, where in 
less than five years, we have gone through 
a steep learning curve to build a solid global 
standing. We are now looking at a rapidly-
growing global opportunity set and potential 
to broaden our involvement and move up 
the value chain. The industry is on the verge 
of explosive growth with multiple large-scale 
projects in the US and Asia about to join the 
continuing European offshore wind expansion 
=>> 17. The technology and scale of this 
evolving sector are also changing, and our 
focus on jacket fabrication has the potential to 
expand to base structures for floating offshore 
wind and central platforms. 

Our timely entry into digital ventures is 
providing us with a differentiated offering 
in this area of vast opportunities. We have 
already commenced successful deployment 
of robotic welding technologies =>> 8 on 
some of our projects and we are developing 
proprietary technologies in asset integrity, 
engineering design, smart non-destructive 
testing, predictive maintenance and robotics, 
all of which have broad applications across the 
energy industry. 

We are proud of our reputation, expertise 
and relationships with clients in the oil & gas 
sector, specifically our growing presence in 
Saudi Arabia, and we recognise the continuing 
role of hydrocarbon development during the 
energy transition. With our oil & gas projects 
continuing to support the strong, structural 
long-term growth prospects in our other 
business units, we look forward to playing 
a role in hydrocarbon development in the 
region over the next few decades. 

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Key drivers  
during 2020

•  Protecting the safety and welfare 

of our workforce

•  Managing cash and improving 

liquidity of the business

•  Implementing our strategy to 

evolve with the energy transition

Outlook for 2021 and liquidity
We see significant opportunities in all our 
addressable markets in 2021. Our bid pipeline is 
at USD 6 billion, based on strict bidding criteria, 
and includes approximately USD 2.5 billion of 
prospective renewables projects. The sector 
continues to receive focused support from 
governments around the world and is seeing 
rapid growth; we anticipate over USD 6 billion 
of new renewables projects to enter the bid 
pipeline over the next 12 months. Our backlog 
at 31 December 2020 was USD 522 million, 
with approximately USD 457 million scheduled 
to run off in 2021. However, 2021 is a key year 
for our major projects with significant, near-
term working capital requirements, which have 
put severe pressure on our balance sheet and 
require additional funding to complete. A raise 
of capital in Q3 2021 is required to strengthen 
the Group’s balance sheet. Until this injection 
of funding is secured, a level of extended credit 
from suppliers will continue to be required to 
maintain liquidity. 

We are also focused on creating a lean and 
agile organisation that enables us to extract 
maximum value from our expertise and 
market potential with a strategic reorganisation 
into three new business units — renewables, oil 
& gas and digital =>> 4. Each business unit has 
different priorities and needs, and the Group 
must improve its liquidity headroom by raising 
additional capital now, supporting disciplined 
execution and investing to maximise returns 
from its existing capabilities. These steps will 
provide the Group with improved financial 
resilience and a more appropriate balance 
sheet structure to ensure ongoing project 
deliveries, pursue larger contracts and also 
ensure that we maintain a suitable capital 
structure for the markets in which we operate. 

While we are optimistic about Lamprell’s 
future and our secured backlog indicates 
further year-on-year revenue growth, we will 
make every effort to control costs, manage 
working capital and demonstrate to investors 
that an improved liquidity position (through the 
new debt and equity capital raise) will allow us 
to access the many attractive opportunities 
in our chosen markets. We are encouraged 
by bidding dynamics in our end markets and 
we are confident of our ability to build on the 
2020 results in the coming years.

Christopher McDonald
Chief Executive Officer

 
 
 
 
16

STRATEGIC REPORT

Market review 
Global impact of the COVID-19 
pandemic

COVID-19 has fundamentally 
changed the way the world works. 
Over a year on from the start of the 
pandemic, global economies have 
just started to climb from the depths 
reached in 2020. Recovery remains 
fragile and the future trajectory of 
energy markets will depend on the 
speed of successful vaccine 
deployment across the world.

Renewables
The global offshore wind market remained 
strong throughout 2020 and is forecast 
to continue a steep upward trajectory of 
investment over the coming decades1. 
Opportunities continue to grow in our core 
European market but it is the rapid emergence 
of the US market, particularly on the East 
Coast, that brings an additional opportunity 
set into focus. In January 2021 the new US 
President committed to doubling US offshore 
wind to 41GW by 20302 and it is this market 
that represents the increase in our pipeline.

Oil & gas
The collapse in demand for hydrocarbons in 
2020 was unprecedented in quantum and 
speed, with a decline of 12 MMbpd in 20203, 
and in April 2020 we briefly experienced a truly 
remarkable event with the first ever negative 
oil-futures price4. The oil price has recovered 
somewhat but great uncertainty remains 
about the ability of energy prices to move 
back to and remain above the pre-pandemic 
level of USD 60/bbl5.

Digital 
Digital transformation is not a choice but a 
must and companies across different sectors 
and markets need to have a clear strategy 
in place for how they will adapt to a rapidly 
digitising world. Lamprell has embraced this 
with the formation of its new digital arm =>> 8.

Market trends

Energy transition 
accelerates in 2020

Regional NOCs 
spending constrained

Growth in renewables 

and offshore wind

Investment flows into 

the green economy 

Years of digitisation 

compressed into months

The global pandemic has accelerated the 
move away from hydrocarbons and it is 
possible that peak oil may be behind us. 
Government lockdowns across the world 
demonstrated that a significant portion of the 
workforce could work from home productively 
and this change is expected to continue after 
the pandemic ends, reducing demand for 
transportation fuels. While there will be some 
offset with the energy demand growth in the 
developing world, the direction of travel for 
reduced demand for hydrocarbons is clear.

Like most energy companies, following 
the collapse of energy prices in 1H 2020, 
Saudi Aramco and ADNOC limited major 
capital awards, preferring to preserve cash 
and delay projects until the immediate 
impact of the global pandemic was better 
understood. As the oil price recovered 
in 2H, both companies continued to 
tender their project portfolios and we 
anticipate that a number of these will 
be awarded as from 2021 since they are 
needed to replace declining production 
and meet future targets set by national 
governments. 

How we are responding

We have a proven track record and expertise in 
delivering products and services intended for 
use in traditional oil & gas projects, as well as in 
the offshore wind sector. Our business model, 
diversified portfolio and strategic location in the 
Middle East allow us to participate extensively in 
both sectors.

The Middle East has the lowest cost of 
hydrocarbon production in the world 
and regional NOCs will continue to invest 
as they support government spending 
needs. We have a strong relationship with 
Saudi Aramco under the LTA and have 
invested nearly USD 85 million in the IMI 
joint venture. Our high In-Country Value 
score in the UAE gives us a preferential 
bidding position with ADNOC. 

Link to strategy

•   Diversified range of services in renewables 

and oil & gas markets

•  Bid pipeline is at USD 6 billion with large 

increase in renewables projects

•  Lamprell awarded CRPO 61 and CRPO 67 
under the Saudi Aramco LTA programme

Link to principal risks

•   We maintain a strong relationship 
with our Middle Eastern clients
•  Building local content elements 
through the IMI joint venture and 
our facilities in the UAE

•  Award of IMI rig contracts, 17 rig 
refurbishment projects and two 
Saudi Aramco LTA CRPO contracts

In January 2021, the US once again signed 

Investment is rapidly being deployed 

The pandemic immediately forced 

up to the Paris Accord to limit global 

away from oil & gas and into clean energy. 

the world to adopt online working 

warming to 1.6C6. Investment continues 

Over 100 globally significant financial 

practices, with vast numbers of people 

to flow into offshore wind projects as 

institutions8 have announced moves away 

suddenly having to work remotely away 

investors and lenders recognise the 

from hydrocarbons (including Norwegian 

from traditional business locations. In 

long-term value of renewables, and listen 

Pension Funds, Asian Development Bank, 

addition, companies recognised the 

to wider sentiment for ethical investing. 

Barclays, EBRD, The World Bank) as they 

ability of digital innovations to improve 

Governments are seeking to commit 

seek to align their portfolios with the 

business efficiencies and generate new 

large sums into infrastructure spending to 

Paris Accord.

meet climate objectives and to help their 

economies recover from the ravages of 

the pandemic. Offshore wind will benefit 

greatly from this, driving ever faster the 

increase in the current 335GW7 global 

portfolio.

Many international oil companies, including 

BP, Shell and Total, are also pivoting into 

renewables projects and in particular 

offshore fixed and floating wind, leveraging 

their balance sheets and offshore expertise 

to decarbonise their portfolios and improve 

long-term shareholder returns. 

revenue streams. These rapid changes in 

working practices are unprecedented and 

have demonstrated the value of digital 

technology. It is certain that many changes 

will remain. Virtual interactions with 

customers, automated buying decisions 

and many industrial activities are moving 

to a digital platform.

We demonstrated our competitive offering 

Lamprell reorganised into three business 

We have launched a joint venture with 

in offshore wind with the award of our 

units – renewables, oil & gas and digital – to 

Injazat/G42, a leading regional digital 

third major project, for the delivery of 30 

increase our focus on the energy transition, 

developer, and are building on our 

foundations to Seaway 7 on the Seagreen 

increase customer alignment and enable 

partnership with Akselos, a major developer 

project. We improved the capacity and 

us to take advantage of the opportunities 

of simulation technologies, to offer a range 

efficiencies of our facility and we expanded 

in our core markets. On the back of the 

of digital products. In addition, we have 

our bidding activity to the fast-growing 

Seagreen award and in collaboration with 

already successfully implemented digital 

US market.

HSBC, we issued the first ‘green’ trade 

technologies in our facilities, including 

finance facility in the Middle East to support 

adaptive robotic welding and a proprietary 

execution.

quality management system, to enhance 

productivity. 

•  Growing reputation for offshore wind 

•   Strategic reorganisation into three 

•   Work with key partners to offer digital 

with new clients and expanding bidding 

business units; need for a major 

activity into new geographies

refinancing 

products, improving efficiencies and 

generating revenue streams in our new 

•  Developing partnerships to allow us to 

•  Expanded and robust bid pipeline in 

business unit

move up the value chain on renewables 

offshore fixed and floating wind projects, 

•  Embrace remote working to be more 

projects

to ensure new and repeat business

competitive and to attract talent

1

3

6

1

5 10

1

2

5

9

10

1

2

7 10

5

7

8

9

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

17

1.  Global offshore wind report 2020: https://gwec.net/global-offshore-wind-report-2020/ 
2.  Windpower monthly article: https://www.windpowermonthly.com/article/1705783/biden-commits-doubling-offshore-wind
3.  Rystad webinar: January 2021
4.  Global Risk Insights website article: https://globalriskinsights.com/2020/05/making-history-coronavirus-and-negative-oil-prices/#:~:text=April%2020th%2C%202020%20was%20

the,where%20oil%20recorded%20negative%20prices.

5.  The Wallstreet Journal article: https://www.wsj.com/articles/oil-demand-recovery-set-to-fall-short-of-pre-pandemic-levels-this-year-11610626800
6.  The Independent article: https://www.independent.co.uk/climate-change/news/biden-paris-agreement-rejoin-executive-order-b1789555.html
7.  RCG Global Offshore Wind Annual Report October 2020
IEEFA article: https://ieefa.org/finance-exiting-oil-and-gas
8. 

Energy transition 

accelerates in 2020

Regional NOCs 

spending constrained

Growth in renewables 
and offshore wind

Investment flows into 
the green economy 

Years of digitisation 
compressed into months

In January 2021, the US once again signed 
up to the Paris Accord to limit global 
warming to 1.6C6. Investment continues 
to flow into offshore wind projects as 
investors and lenders recognise the 
long-term value of renewables, and listen 
to wider sentiment for ethical investing. 
Governments are seeking to commit 
large sums into infrastructure spending to 
meet climate objectives and to help their 
economies recover from the ravages of 
the pandemic. Offshore wind will benefit 
greatly from this, driving ever faster the 
increase in the current 335GW7 global 
portfolio.

Investment is rapidly being deployed 
away from oil & gas and into clean energy. 
Over 100 globally significant financial 
institutions8 have announced moves away 
from hydrocarbons (including Norwegian 
Pension Funds, Asian Development Bank, 
Barclays, EBRD, The World Bank) as they 
seek to align their portfolios with the 
Paris Accord.

Many international oil companies, including 
BP, Shell and Total, are also pivoting into 
renewables projects and in particular 
offshore fixed and floating wind, leveraging 
their balance sheets and offshore expertise 
to decarbonise their portfolios and improve 
long-term shareholder returns. 

The pandemic immediately forced 
the world to adopt online working 
practices, with vast numbers of people 
suddenly having to work remotely away 
from traditional business locations. In 
addition, companies recognised the 
ability of digital innovations to improve 
business efficiencies and generate new 
revenue streams. These rapid changes in 
working practices are unprecedented and 
have demonstrated the value of digital 
technology. It is certain that many changes 
will remain. Virtual interactions with 
customers, automated buying decisions 
and many industrial activities are moving 
to a digital platform.

We demonstrated our competitive offering 
in offshore wind with the award of our 
third major project, for the delivery of 30 
foundations to Seaway 7 on the Seagreen 
project. We improved the capacity and 
efficiencies of our facility and we expanded 
our bidding activity to the fast-growing 
US market.

Lamprell reorganised into three business 
units – renewables, oil & gas and digital – to 
increase our focus on the energy transition, 
increase customer alignment and enable 
us to take advantage of the opportunities 
in our core markets. On the back of the 
Seagreen award and in collaboration with 
HSBC, we issued the first ‘green’ trade 
finance facility in the Middle East to support 
execution.

We have launched a joint venture with 
Injazat/G42, a leading regional digital 
developer, and are building on our 
partnership with Akselos, a major developer 
of simulation technologies, to offer a range 
of digital products. In addition, we have 
already successfully implemented digital 
technologies in our facilities, including 
adaptive robotic welding and a proprietary 
quality management system, to enhance 
productivity. 

•  Growing reputation for offshore wind 

with new clients and expanding bidding 
activity into new geographies

•   Strategic reorganisation into three 
business units; need for a major 
refinancing 

•  Developing partnerships to allow us to 

•  Expanded and robust bid pipeline in 

•   Work with key partners to offer digital 
products, improving efficiencies and 
generating revenue streams in our new 
business unit

move up the value chain on renewables 
projects

offshore fixed and floating wind projects, 
to ensure new and repeat business

•  Embrace remote working to be more 

competitive and to attract talent

Market trends

The global pandemic has accelerated the 

Like most energy companies, following 

move away from hydrocarbons and it is 

the collapse of energy prices in 1H 2020, 

possible that peak oil may be behind us. 

Saudi Aramco and ADNOC limited major 

Government lockdowns across the world 

capital awards, preferring to preserve cash 

demonstrated that a significant portion of the 

and delay projects until the immediate 

workforce could work from home productively 

impact of the global pandemic was better 

and this change is expected to continue after 

understood. As the oil price recovered 

the pandemic ends, reducing demand for 

in 2H, both companies continued to 

transportation fuels. While there will be some 

tender their project portfolios and we 

offset with the energy demand growth in the 

anticipate that a number of these will 

developing world, the direction of travel for 

be awarded as from 2021 since they are 

reduced demand for hydrocarbons is clear.

needed to replace declining production 

and meet future targets set by national 

governments. 

How we are responding

We have a proven track record and expertise in 

The Middle East has the lowest cost of 

delivering products and services intended for 

hydrocarbon production in the world 

use in traditional oil & gas projects, as well as in 

and regional NOCs will continue to invest 

the offshore wind sector. Our business model, 

as they support government spending 

diversified portfolio and strategic location in the 

needs. We have a strong relationship with 

Middle East allow us to participate extensively in 

Saudi Aramco under the LTA and have 

both sectors.

invested nearly USD 85 million in the IMI 

joint venture. Our high In-Country Value 

score in the UAE gives us a preferential 

bidding position with ADNOC. 

Link to strategy

•   Diversified range of services in renewables 

•   We maintain a strong relationship 

and oil & gas markets

with our Middle Eastern clients

•  Bid pipeline is at USD 6 billion with large 

•  Building local content elements 

increase in renewables projects

through the IMI joint venture and 

•  Lamprell awarded CRPO 61 and CRPO 67 

our facilities in the UAE

under the Saudi Aramco LTA programme

•  Award of IMI rig contracts, 17 rig 

refurbishment projects and two 

Saudi Aramco LTA CRPO contracts

Link to principal risks

1

3

6

1

5 10

1

2

5

9

10

1

2

7 10

5

7

8

9

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
18

STRATEGIC REPORT

Our business model 
Continuing to grow strongly

 Our inputs

Our business units

 Our key differentiators

Creating value for our stakeholders

People
Internationally diverse, experienced 
labour force, united by a strong 
culture of honesty and curiosity, 
as well as high safety and quality 
performance.

Financial assets
No debt and positive cash. Plan to 
raise capital funding through debt 
and/or equity by the end of Q3 
2021, to address current liquidity 
challenges and to support strategy 
implementation and fund growth of 
business units.

Infrastructure
Modern, world-class facilities 
centrally-located in the Middle East 
region, deploying digitalisation and 
optimisation to execute multiple 
large projects concurrently and 
more efficiently.

Business development
Network of both new clients and 
long-standing, strategic relationships 
that allow us to source new prospects, 
build the sales pipeline and convert 
opportunities into new awards.

Suppliers
Global supply chain reach with a 
network of proven regional and 
international high-quality suppliers 
and contractors.

Processes
Robust, embedded processes and 
procedures, all based on continuous 
improvement as we embed lessons 
learned from prior projects to bid 
and execute future projects more 
competitively and effectively.

Intellectual property
Over four decades of know-how in 
energy industry projects, including 
proprietary rig designs and new 
digitalisation propositions.

R   V A L U E   T O STAKEHOLDER

S

U

O

O U R   C O RE VALUES

S
N
TIO

U
L
O
S
E
V

I
T

O R K

W
M
A
E
T

U

O

I

T
E
P
M

A
C

C

O

O

C

U

N

T

A

B

I
LI

T

Y

E

N

H

A

N

C

I

N
G

R
E
P
U
T
A
T
I
O
N

S

A

F

E

T

Y

Y
T
I

L
I
B
I
S
N
O
P

F IS C AL RES

R   B U S I NESS U

N

I
T

S

RENEWABLES

OIL & GAS

DIGITAL

INTEGR I T Y

SUSTAINAB I L I T Y

Renewables 
Having delivered six wind 
farm installation vessels 
and over 100 wind farm 
jacket foundations for the 
renewables industry, and 
with 30 further jackets 
currently under construction 
in our yards, Lamprell is well-
placed to continue providing 
its expertise and services 
to this fast-growing global 
market. 

Oil & gas 
We have nearly five decades 
of experience fabricating 
onshore and offshore 
structures such as rigs, 
modules, wellhead decks, 
living quarters and FPSO 
units for the oil & gas 
industry, and we build these 
projects either in our yards in 
the Middle East or construct 
them on location. 

Digital 
Lamprell is working with 
strategic partners to develop 
our yards and digital solutions 
for its clients in a rapidly 
changing world. With a 
focus on proprietary product 
development, asset integrity, 
engineering design, smart 
non-destructive testing, 
predictive maintenance and 
robotics, our digital business 
unit aims to service the 
renewables and oil & gas 
markets, as well as other 
industries and sectors. 

First-class safety and quality

With a new proprietary quality management system which 

is aligned with all major international standards and a world-

class TRIR of 0.15 in 2020, our Board and entire workforce 

Customers

We seek to provide our clients with quality products that meet 

their expectations, with reliability of delivery, which allows 

them to generate energy safely, securely and cost-efficiently. 

are committed to executing projects safely throughout their 

We value long-term multi-contract relationships.

lifecycles and producing an end product to the highest 

standards of quality.

Value for money

We deliver Tier 1 quality fabrication and EPC services to 

recognised international standards, frequently delivering 

against exacting schedules with a strong focus on cost 

competitiveness. We are implementing optimisation and 

new digital technologies in our yards which will improve 

efficiencies and realise value for all our stakeholders. 

Client satisfaction

Integrity and accountability are two of our core values. We 

Shareholders

Fiscal responsibility is a core value and providing a return to our 

shareholders through increases in the value of their holdings 

and/or dividends in the longer term is a top priority for us. 

Management remuneration includes share schemes which are 

based on key perf.ormance indicators to closely align drivers 

for shareholders and staff alike.

Employees

Our people are our most important asset and we are committed 

to their well-being and to ensuring that everyone goes home 

safely every day. We treat our staff fairly and ethically using a 

believe that repeat customers are the foundation of long-term 

‘just culture’ methodology. We create value for our employees 

success and we are committed to meeting client expectations 

through investment in training and development to improve 

on quality, safety, schedule and cost.

Skilled workforce

skills, by keeping them safe through robust procedures and 

through a compensation and benefits package which meets 

or exceeds regional norms.

We have a core workforce of long-standing employees in both 

yard and project management. Our in-house training school 

Business partners 

helps to ensure that the staffing needs are met in order to 

Reliable, proven business partners underpin our ability to 

execute our projects and to unlock the potential of our higher 

evaluate, win and deliver complex projects with aggressive 

performers.

Strategic location

We are located in the heart of the world’s largest energy-

producing region with close proximity and ease of access to 

our key customers. Our central position allows us to leverage 

our low-cost base to deliver competitively to international 

work together.

Communities 

markets.

Embracing technology 

Lamprell recognises the importance of embedding 

digitalisation into the way that operations are performed 

and its new digital business unit encompasses technology 

developments to make us more efficient, reduce the risk 

in various activities and also to provide differentiated digital 

offerings to our clients.

schedules. During bidding and at contract award, we align 

closely with our partners and suppliers, treating them fairly and 

transparently, working collaboratively to establish long-lasting, 

mutually rewarding relationships on the projects where we 

We invest in the communities we work in, sourcing employee 

benefits such as medical care, schooling and housing from 

within the local community. Based on the criteria in our social 

investment strategy we may extend support to the home 

countries of our employees including charitable support in 

those locations.

  Read more =>> 4

  Read more =>> 6

  Read more =>> 8

  Read more on how we engage with our stakeholders =>> 28

Underpinned by our robust governance and risk framework

  Read about our principal risks =>> 46

Underpinned by our strategic priorities

  Read about our strategic priorities =>> 20

 
 
LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

19

Our business model adapts to changing circumstances 
and is designed to be flexible and resilient to support our 
broad and international customer base. With our robust 
strategy and dedicated management, we are committed 
to working collaboratively and transparently, to deliver 
predictable, sustainable and profitable performance over 
the long term.

Our business units

 Our key differentiators

Creating value for our stakeholders

First-class safety and quality
With a new proprietary quality management system which 
is aligned with all major international standards and a world-
class TRIR of 0.15 in 2020, our Board and entire workforce 
are committed to executing projects safely throughout their 
lifecycles and producing an end product to the highest 
standards of quality.

Value for money
We deliver Tier 1 quality fabrication and EPC services to 
recognised international standards, frequently delivering 
against exacting schedules with a strong focus on cost 
competitiveness. We are implementing optimisation and 
new digital technologies in our yards which will improve 
efficiencies and realise value for all our stakeholders. 

Client satisfaction
Integrity and accountability are two of our core values. We 
believe that repeat customers are the foundation of long-term 
success and we are committed to meeting client expectations 
on quality, safety, schedule and cost.

Skilled workforce
We have a core workforce of long-standing employees in both 
yard and project management. Our in-house training school 
helps to ensure that the staffing needs are met in order to 
execute our projects and to unlock the potential of our higher 
performers.

Strategic location
We are located in the heart of the world’s largest energy-
producing region with close proximity and ease of access to 
our key customers. Our central position allows us to leverage 
our low-cost base to deliver competitively to international 
markets.

Embracing technology 
Lamprell recognises the importance of embedding 
digitalisation into the way that operations are performed 
and its new digital business unit encompasses technology 
developments to make us more efficient, reduce the risk 
in various activities and also to provide differentiated digital 
offerings to our clients.

Customers
We seek to provide our clients with quality products that meet 
their expectations, with reliability of delivery, which allows 
them to generate energy safely, securely and cost-efficiently. 
We value long-term multi-contract relationships.

Shareholders
Fiscal responsibility is a core value and providing a return to our 
shareholders through increases in the value of their holdings 
and/or dividends in the longer term is a top priority for us. 
Management remuneration includes share schemes which are 
based on key perf.ormance indicators to closely align drivers 
for shareholders and staff alike.

Employees
Our people are our most important asset and we are committed 
to their well-being and to ensuring that everyone goes home 
safely every day. We treat our staff fairly and ethically using a 
‘just culture’ methodology. We create value for our employees 
through investment in training and development to improve 
skills, by keeping them safe through robust procedures and 
through a compensation and benefits package which meets 
or exceeds regional norms.

Business partners 
Reliable, proven business partners underpin our ability to 
evaluate, win and deliver complex projects with aggressive 
schedules. During bidding and at contract award, we align 
closely with our partners and suppliers, treating them fairly and 
transparently, working collaboratively to establish long-lasting, 
mutually rewarding relationships on the projects where we 
work together.

Communities 
We invest in the communities we work in, sourcing employee 
benefits such as medical care, schooling and housing from 
within the local community. Based on the criteria in our social 
investment strategy we may extend support to the home 
countries of our employees including charitable support in 
those locations.

 Our inputs

People

Internationally diverse, experienced 

labour force, united by a strong 

culture of honesty and curiosity, 

as well as high safety and quality 

performance.

Financial assets

No debt and positive cash. Plan to 

raise capital funding through debt 

and/or equity by the end of Q3 

2021, to address current liquidity 

challenges and to support strategy 

implementation and fund growth of 

business units.

Infrastructure

Modern, world-class facilities 

centrally-located in the Middle East 

region, deploying digitalisation and 

optimisation to execute multiple 

large projects concurrently and 

more efficiently.

Business development

Network of both new clients and 

long-standing, strategic relationships 

that allow us to source new prospects, 

build the sales pipeline and convert 

opportunities into new awards.

Suppliers

Global supply chain reach with a 

network of proven regional and 

international high-quality suppliers 

and contractors.

Processes

Robust, embedded processes and 

procedures, all based on continuous 

improvement as we embed lessons 

learned from prior projects to bid 

and execute future projects more 

competitively and effectively.

Intellectual property

Over four decades of know-how in 

energy industry projects, including 

proprietary rig designs and new 

digitalisation propositions.

Renewables 

Oil & gas 

Digital 

Having delivered six wind 

We have nearly five decades 

Lamprell is working with 

of experience fabricating 

strategic partners to develop 

farm installation vessels 

and over 100 wind farm 

jacket foundations for the 

renewables industry, and 

with 30 further jackets 

onshore and offshore 

structures such as rigs, 

modules, wellhead decks, 

living quarters and FPSO 

our yards and digital solutions 

for its clients in a rapidly 

changing world. With a 

focus on proprietary product 

development, asset integrity, 

currently under construction 

units for the oil & gas 

in our yards, Lamprell is well-

industry, and we build these 

engineering design, smart 

placed to continue providing 

projects either in our yards in 

non-destructive testing, 

its expertise and services 

the Middle East or construct 

predictive maintenance and 

to this fast-growing global 

them on location. 

robotics, our digital business 

market. 

unit aims to service the 

renewables and oil & gas 

markets, as well as other 

industries and sectors. 

  Read more =>> 4

  Read more =>> 6

  Read more =>> 8

  Read more on how we engage with our stakeholders =>> 28

Underpinned by our robust governance and risk framework

  Read about our principal risks =>> 46

Underpinned by our strategic priorities

  Read about our strategic priorities =>> 20

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
20

STRATEGIC REPORT

Our strategy 
Strategic reorganisation focused on 
the energy transition and digital world

Lamprell has established a track 
record as one of the leading 
providers of fabrication services 
to the renewables industry. 

The Group has also accelerated its focus on 
digital innovation and continued to advance 
its traditional business of providing jackup rigs 
and related energy infrastructure to the oil & 
gas industry. Reflecting the Group’s evolution 
and to ensure a lean and agile organisation to 
maximise opportunities across these markets, 
Lamprell has strategically reorganised into 
three distinct business units: renewables, 
oil & gas and digital. This reorganisation 
increases the Group’s focus on renewables 
and the energy transition, aligns well with 
our customers and enables us to take full 
advantage of the significant opportunities 
in our core markets.

2020 strategic goals

2020 targeted priorities

Our progress in 2020

1 Solidify core business and financial position

Refinance the business and 
maintain continuity of work in our 
renewables and oil & gas markets, 
to ensure the Company’s 
sustainability

•  Progress a major refinancing option 

to completion

•  Convert a 2019 renewables proposal into 
a full contract award, and progress other 
renewables bids towards future awards

•  Sign IMI rigs 1 and 2 contracts and 
commence execution; support IMI 
rig project team

2 Move up the value chain in EPC(I)

Leverage our position in renewables 
and on Saudi Aramco’s LTA 
programme to move further into 
EPCI execution

•  Continue to selectively bid on LTA 

projects and win one or more EPCI 
contract(s)

•  Continue to bid on renewables projects 

where possible in consortium with 
installation partners, and convert a major 
contract in 2020 or 2021

•  Qualify as a bidder on EPCI projects in 

another target market

3 Enter new geographies and markets

Build on our entry into the Saudi 
Arabian market by securing new 
contract awards; pursue prospects 
in the renewables market, either 
with new clients or for new 
geographies

•  Define optimal timing for equity 
investment into IMI joint venture

•  Secure EPCI work under the LTA and 

implement our local content programme 
during execution

•  Secure contract in the renewables 

market, either with a new client or for 
a new geography

4 Innovate through digital technologies

Leverage Lamprell’s fabrication 
and project execution skill set 
into one or more digital product 
offerings

•  Secure stakeholder alignment and 

financing to enter into development 
phase for new digital ventures

•  Take up to four of the businesses into 

development so they can be investable, 
stand-alone and self-supporting 
companies, based on limited capital 
investment

•  Bid for ADNOC new build jackup rig(s) 

•  Access to capital financing constrained 

•  No tender by ADNOC for new build 

when tendered

•  Create fit-for-purpose overhead 

due to COVID-19 pandemic; discussions 

jackup rig(s) in 2020; refocussed efforts 

with potential lenders ongoing =>> 41

on rig refurbishment projects

cost model, including consolidated 

•  Third offshore windfarm contract for 

•  All operations consolidated into Hamriyah 

yard space

the delivery of 30 foundations to the 

yard; exited Sharjah yard and Jebel Ali 

Seagreen project secured

yard mothballed

•  Contracts for IMI rigs 1 and 2 signed in 

•  Year-on-year overhead reduction of 

January 2020 and construction well 

USD 29.7 million (excluding one-off 

under way

items) achieved

•  Reduce overhead costs throughout 

•  Multiple LTA bids submitted but no LTA 

•  Lamprell participated in top-line EPCI 

the business to align with new reality 

in market conditions

awards in 2020 due to crash in energy 

markets driven by COVID-19 pandemic

bidding but the bids were not successful, 

or are still in the pipeline

•  In June client awarded Lamprell a very 

•  Strategic reorganisation into three 

large1 contract for the construction 

of foundations on the UK’s Seagreen 

business units, to align with customer 

needs and energy transition

•  Develop Lamprell Saudi Arabia’s resources 

•  IMI equity contribution of USD 26 million 

•  Secured the foundation contract for the 

and competencies, and market our 

commitment to local Saudi content

made in November 2020 

Seagreen offshore windfarm project

•  Major oil & gas clients deferred all major 

•  Collaborated with our local partner to 

contract awards in 2020 due to crash in 

build capabilities in Saudi Arabia, as we 

energy markets caused by pandemic

targeted LTA wins in 2021

windfarm project

•  The bid pipeline has grown from USD 

5.5 billion to USD 6 billion, partly due to 

growth in renewables in the US

•  Lamprell won 17 rig refurbishment 

projects, including seven for ADNOC, 

as clients looked to maximise returns 

on existing assets

•  Continue to implement new digital 

•  Progressed discussions for new digital 

•  Proprietary technology development 

technologies into our business to 

joint venture with Injazat, which was 

continued in asset integrity, engineering 

reduce costs and generate future new 

acquired by G42 as part of the Abu Dhabi 

design, testing, predictive maintenance 

revenue streams

government’s drive to make the UAE a 

and robotics

leading hub for digital innovation

•  Adaptive robotic welding technology and 

•  Signed exclusive distributor agreement 

a proprietary digital quality management 

system deployed to improve operational 

efficiencies

with Akselos enabling Lamprell to 

offer leading high fidelity engineering 

simulations for optimised design and 

maintenance of assets

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

21

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

2020 strategic goals

2020 targeted priorities

Our progress in 2020

1 Solidify core business and financial position

Refinance the business and 

maintain continuity of work in our 

renewables and oil & gas markets, 

to ensure the Company’s 

sustainability

•  Progress a major refinancing option 

to completion

•  Convert a 2019 renewables proposal into 

a full contract award, and progress other 

renewables bids towards future awards

•  Sign IMI rigs 1 and 2 contracts and 

commence execution; support IMI 

rig project team

2 Move up the value chain in EPC(I)

Leverage our position in renewables 

and on Saudi Aramco’s LTA 

programme to move further into 

EPCI execution

•  Continue to selectively bid on LTA 

projects and win one or more EPCI 

contract(s)

•  Continue to bid on renewables projects 

where possible in consortium with 

installation partners, and convert a major 

contract in 2020 or 2021

•  Qualify as a bidder on EPCI projects in 

another target market

3 Enter new geographies and markets

Build on our entry into the Saudi 

Arabian market by securing new 

contract awards; pursue prospects 

in the renewables market, either 

with new clients or for new 

geographies

•  Define optimal timing for equity 

investment into IMI joint venture

•  Secure EPCI work under the LTA and 

implement our local content programme 

during execution

•  Secure contract in the renewables 

market, either with a new client or for 

a new geography

4 Innovate through digital technologies

Leverage Lamprell’s fabrication 

and project execution skill set 

into one or more digital product 

offerings

•  Secure stakeholder alignment and 

financing to enter into development 

phase for new digital ventures

•  Take up to four of the businesses into 

development so they can be investable, 

stand-alone and self-supporting 

companies, based on limited capital 

investment

•  Bid for ADNOC new build jackup rig(s) 

•  Access to capital financing constrained 

•  No tender by ADNOC for new build 

when tendered

•  Create fit-for-purpose overhead 

cost model, including consolidated 
yard space

due to COVID-19 pandemic; discussions 
with potential lenders ongoing =>> 41
•  Third offshore windfarm contract for 
the delivery of 30 foundations to the 
Seagreen project secured

•  Contracts for IMI rigs 1 and 2 signed in 
January 2020 and construction well 
under way

jackup rig(s) in 2020; refocussed efforts 
on rig refurbishment projects

•  All operations consolidated into Hamriyah 
yard; exited Sharjah yard and Jebel Ali 
yard mothballed

•  Year-on-year overhead reduction of 
USD 29.7 million (excluding one-off 
items) achieved

•  Reduce overhead costs throughout 
the business to align with new reality 
in market conditions

•  Multiple LTA bids submitted but no LTA 
awards in 2020 due to crash in energy 
markets driven by COVID-19 pandemic
•  In June client awarded Lamprell a very 
large1 contract for the construction 
of foundations on the UK’s Seagreen 
windfarm project

•  The bid pipeline has grown from USD 

5.5 billion to USD 6 billion, partly due to 
growth in renewables in the US

•  Lamprell participated in top-line EPCI 

bidding but the bids were not successful, 
or are still in the pipeline

•  Strategic reorganisation into three 

business units, to align with customer 
needs and energy transition

•  Develop Lamprell Saudi Arabia’s resources 

•  IMI equity contribution of USD 26 million 

and competencies, and market our 
commitment to local Saudi content

made in November 2020 

•  Major oil & gas clients deferred all major 
contract awards in 2020 due to crash in 
energy markets caused by pandemic

•  Lamprell won 17 rig refurbishment 

projects, including seven for ADNOC, 
as clients looked to maximise returns 
on existing assets

•  Secured the foundation contract for the 
Seagreen offshore windfarm project
•  Collaborated with our local partner to 
build capabilities in Saudi Arabia, as we 
targeted LTA wins in 2021

•  Continue to implement new digital 
technologies into our business to 
reduce costs and generate future new 
revenue streams

•  Progressed discussions for new digital 
joint venture with Injazat, which was 
acquired by G42 as part of the Abu Dhabi 
government’s drive to make the UAE a 
leading hub for digital innovation

•  Signed exclusive distributor agreement 

with Akselos enabling Lamprell to 
offer leading high fidelity engineering 
simulations for optimised design and 
maintenance of assets

•  Proprietary technology development 

continued in asset integrity, engineering 
design, testing, predictive maintenance 
and robotics

•  Adaptive robotic welding technology and 
a proprietary digital quality management 
system deployed to improve operational 
efficiencies

1.  Lamprell defines a very large contract as having a value in excess of USD 150 million.

 
 
 
 
22

STRATEGIC REPORT

Our strategy continued

Our 2021 
strategic goals 
and priorities

1 Lamprell reimagined

Strategic reorganisation 
to increase the Group’s focus 
on renewables and the energy 
transition, increase alignment 
with customers’ needs, and 
enable optimum access to 
opportunities in our core 
markets.

2021 priorities 

•  Conclude a critical capital raise process 

in Q3 2021 to address liquidity 
challenges and build a solid financial 
platform to implement strategy
•  Strategic reorganisation into three 

business units: renewables, oil & gas 
and digital

•  Maintain discipline in overhead cost 

structure

•  Further optimise and invest in Hamriyah 
facility as our centre of excellence for 
construction

•  Build a flexible execution model to 

take advantage of the remote working 
digital revolution

Link to principal risks:

1, 2, 3, 9 =>> 46 to 49

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

23

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

2  Renewables 

Lamprell Renewables will 
deliver fixed and floating wind 
turbine generator foundations 
for global renewables projects 
and expand into adjacent 
products including HVAC/HVDC 
platforms and floating hydrogen, 
as well as moving up the EPCI 
value chain 

Link to principal risks:
1, 3, 4, 5, 7 =>> 46 to 48

2021 priorities 
•  Invest in our Hamriyah yard to increase 
capacity and broaden our product 
offering to include transition pieces 
and floating wind structures, subject 
to availability of funding

•  Secure a role on an HVAC/HVDC project 
•  Participate in UK and US bidding rounds 

and secure major award(s) for 2022

•  Secure a role on a floating wind 

opportunity in 2021

3 Oil & gas 

Lamprell Oil & Gas will build on 
our strong regional position in 
Saudi Arabia and the UAE to 
secure EPCI offshore, new build 
jackup rig and refurbishment 
projects while continuing to 
support its smaller contracting 
services business

Link to principal risks:
1, 3, 4, 5, 7 =>> 46 to 48 

2021 priorities 
•  Secure one or more EPCI CRPO awards 

on Saudi Aramco’s LTA programme
•  Support IMI in the execution of future 
rigs under its offtake agreement with 
Saudi Aramco

•  Support ADNOC’s rig acquisition 
programme by executing at least 
one major rig upgrade and further 
refurbishment projects on their behalf

•  Build on our Saudi Arabia local 
content plan and develop local 
execution capability

4 Digital 

Lamprell Digital will advance 
and commercialise proprietary 
technologies for industrial 
application in asset integrity, 
engineering design, smart 
non-destructive testing, 
predictive maintenance and 
robotics, selling such products 
unconstrained by yard space 
or geography

Link to principal risks:
6, 8, 9 =>> 48 to 49

2021 priorities 
•  Conclude stakeholder roles and 

investment to commercialise digital 
asset integrity and products

•  Digitalise yard operations in Hamriyah 
and market proven digital products to 
third parties

•  Build on strategic digital relationship with 
Akselos to market and commercialise 
digital twin models to customers

 
 
 
 
24

STRATEGIC REPORT

Our key performance indicators 
Measuring our progress

To help the Group measure our 
performance and to assess the 
business’ ability to deliver against 
its strategic goals, we use a 
number of key performance 
indicators. The Board monitors 
and assesses performance 
against these targets on a regular 
basis. Some of these are linked to 
long-term incentives for the 
remuneration of the executive 
team (these are marked with  $  ).

Operational

Bid pipeline
(USD billion)

2020

2019

2018

2017

2016

6.2

6.4

3.6

2.5

Financial

Revenue
(USD billion)

2020

2019

2018

2017

2016

260.4

234.1

370.4

705.0

Definition: 
Total value of commercial bids and/or 
prospects at various phases, measured 
as at the end of the reporting period. 

Strategic relevance: 
Our growth potential depends on a robust 
bid pipeline, which includes realistic and 
profitable prospects matching our core 
expertise and allowing us to expand into 
new strategic sectors or target new clients 
=>> 13. 

Definition: 
Reflects the value of operating activities, 
derived primarily from the progress achieved 
in satisfying performance obligations under 
our client contracts. 

Strategic relevance: 
Measures the ability of the Company to grow 
and generate sufficient working capital for 
new contracts over the long term; revenue 
growth is reflective of an improving energy 
market and the Company’s effective strategy. 

Relevance to risk  1

3

8

Relevance to risk  1

2

3

Backlog
(USD million)

2020

2019

2018

2017

2016

EBITDA
(USD million)

2020

470.1

2019

-64.6

540.0

2018

-35.1

137.9

393.4

2017

-70.5

2016

30.6

Definition: 
Total value of current uncompleted works 
and contractual commitments by clients, 
measured at the end of the reporting period. 

Strategic relevance: 
Our backlog provides short- to medium-
term visibility of our financial position and 
prospects, as it indicates the likely revenues 
during that period.

Relevance to risk  1

2

3

Definition: 
Group loss or profit for the year from 
continuing operations before depreciation, 
impairment, amortisation, net finance 
expense and taxation. See =>> 144 for more 
details on the EBITDA methodology.

Strategic relevance: 
Positive EBITDA indicates our effective cost 
management measures worked in 2020, 
helped by our operational efficiency and 
revenue growth. 

  Read more on our principal risks =>> 46

Relevance to risk  4

5

7

Relevance to risk  1

9

10

Net (loss)/profit 

(USD million)

2019

-183.5

2020

2018

2017

2016

-184.3

Definition: 

and other expenses.

Strategic relevance: 

-70.7

-98.1

Net cash

(USD million)

2019

42.5

80.0

2020

2018

2017

2016

Sustainability

Safety TRIR 

(Rate per 200,000 hours)

257.0

275.2

0.19

0.15

0.30

0.29

Total earnings during the reporting period 

Cash less borrowings at the end of the 

after cost of sales, overheads, interest, taxes 

period. See =>> 144 for more details on 

The number of incidents per 200,000 

man-hours worked, including any injury 

Definition: 

Definition: 

the net cash methodology. This includes 

that requires more than first aid treatment 

both free cash and restricted cash =>> 41.

or causes days away from work. 

Profitability is a key indicator of business 

Strategic relevance: 

Strategic relevance: 

efficiency and cost management, and a 

Net cash is a core indicator of capital and 

Safe operations are efficient operations. 

major requirement for business growth 

balance sheet management. Without 

Our goal is zero harm and we are 

and long-term sustainability of our 

robust unrestricted cash levels, as seen 

operations; the net losses have declined 

currently, we will be unable to remain 

committed to maintaining a strong safety 

culture at all our sites =>> 31. Our safety 

as the business recovers from a prolonged 

competitive, satisfy working capital needs 

track record is often reviewed by our 

downturn in the energy market.

or make capital investments for strategic 

current and prospective clients as part 

Relevance to risk  4

5

7

growth.

of a contract award process. 

Relevance to risk  2

5

7

Relevance to risk  5

6

Total shareholder return

2019

-36.1

(%)

2020

2018

2017

2016

-21.8

-16.8

-3.4

Definition: 

The combined value of share price 

appreciation and dividends paid 

to shareholders. 

Strategic relevance: 

Total awards

(USD million)

2020

2019

2018

202.5

2017

114.8

2016

359.0

Definition: 

the reporting period. 

Strategic relevance: 

GHG emissions

(tonnes CO2e gross)

639.2

19,903

21,335

Total value of all contracts awarded during 

Total GHG emissions from Company 

35,038

52,005

Definition: 

operations. 

Strategic relevance: 

Maximising shareholder value is a key 

awards ensures sustainable operation 

warming. Sustained reduction in both gross 

metric for the Board to consider when 

of our business. The constituents of 

addressing the Group’s strategy and our 

this metric will change as we look to 

emissions and emissions intensity are a 

key element in the Company’s strategic 

negative returns have been driven by the 

generate new revenue streams outside 

approach to sustainable operations =>> 32. 

Converting the bid pipeline into contract 

GHG emissions are a key driver of global 

continuing annual losses in the business, 

our traditional sectors. 

which the Board is working to turn around. 

Relevance to risk  1

3

4

Relevance to risk  3

5

2020

2019

2018

2017

2016

2020

2019

2018

2017

2016

6.0338.6-53.4112.40.15522.03.926.9550.026,304 
LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

25

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Operational

Bid pipeline

(USD billion)

2020

2019

2018

2017

2016

3.6

2.5

Financial

Revenue

(USD billion)

2020

2019

2018

2017

2016

6.2

6.4

260.4

234.1

370.4

Net (loss)/profit 
(USD million)

2020

2019

-183.5

2018

2017

-70.7

-98.1

705.0

2016

-184.3

Net cash
(USD million)

2020

2019

42.5

80.0

2018

2017

2016

Sustainability

Safety TRIR 
(Rate per 200,000 hours)

2020

2019

2018

2017

2016

257.0

275.2

0.19

0.15

0.30

0.29

Definition: 

Total value of commercial bids and/or 

prospects at various phases, measured 

as at the end of the reporting period. 

Strategic relevance: 

Definition: 

Reflects the value of operating activities, 

derived primarily from the progress achieved 

in satisfying performance obligations under 

our client contracts. 

Our growth potential depends on a robust 

Strategic relevance: 

bid pipeline, which includes realistic and 

profitable prospects matching our core 

expertise and allowing us to expand into 

Measures the ability of the Company to grow 

and generate sufficient working capital for 

new contracts over the long term; revenue 

new strategic sectors or target new clients 

growth is reflective of an improving energy 

=>> 13. 

market and the Company’s effective strategy. 

Relevance to risk  1

3

8

Relevance to risk  1

2

3

Backlog

(USD million)

2020

2019

2018

2017

2016

137.9

Definition: 

470.1

2019

-64.6

540.0

2018

-35.1

393.4

30.6

EBITDA

(USD million)

2020

2017

-70.5

2016

Definition: 

Total value of current uncompleted works 

Group loss or profit for the year from 

and contractual commitments by clients, 

continuing operations before depreciation, 

measured at the end of the reporting period. 

impairment, amortisation, net finance 

Strategic relevance: 

Our backlog provides short- to medium-

expense and taxation. See =>> 144 for more 

details on the EBITDA methodology.

term visibility of our financial position and 

Strategic relevance: 

prospects, as it indicates the likely revenues 

Positive EBITDA indicates our effective cost 

during that period.

Relevance to risk  1

2

3

management measures worked in 2020, 

helped by our operational efficiency and 

revenue growth. 

Relevance to risk  4

5

7

Definition: 
Total earnings during the reporting period 
after cost of sales, overheads, interest, taxes 
and other expenses.

Strategic relevance: 
Profitability is a key indicator of business 
efficiency and cost management, and a 
major requirement for business growth 
and long-term sustainability of our 
operations; the net losses have declined 
as the business recovers from a prolonged 
downturn in the energy market.

Relevance to risk  4

5

7

Definition: 
Cash less borrowings at the end of the 
period. See =>> 144 for more details on 
the net cash methodology. This includes 
both free cash and restricted cash =>> 41.

Strategic relevance: 
Net cash is a core indicator of capital and 
balance sheet management. Without 
robust unrestricted cash levels, as seen 
currently, we will be unable to remain 
competitive, satisfy working capital needs 
or make capital investments for strategic 
growth.

Definition: 
The number of incidents per 200,000 
man-hours worked, including any injury 
that requires more than first aid treatment 
or causes days away from work. 

Strategic relevance: 
Safe operations are efficient operations. 
Our goal is zero harm and we are 
committed to maintaining a strong safety 
culture at all our sites =>> 31. Our safety 
track record is often reviewed by our 
current and prospective clients as part 
of a contract award process. 

Relevance to risk  2

5

7

Relevance to risk  5

6

Total shareholder return
(%)

2020

2019

-36.1

2018

2017

2016

-21.8

-16.8

-3.4

Total awards
(USD million)

2020

2019

2018

202.5

2017

114.8

2016

359.0

639.2

GHG emissions
(tonnes CO2e gross)

2020

2019

2018

2017

2016

19,903

21,335

35,038

52,005

Definition: 
The combined value of share price 
appreciation and dividends paid 
to shareholders. 

Strategic relevance: 
Maximising shareholder value is a key 
metric for the Board to consider when 
addressing the Group’s strategy and our 
negative returns have been driven by the 
continuing annual losses in the business, 
which the Board is working to turn around. 

Relevance to risk  1

9

10

Definition: 
Total value of all contracts awarded during 
the reporting period. 

Definition: 
Total GHG emissions from Company 
operations. 

Strategic relevance: 
Converting the bid pipeline into contract 
awards ensures sustainable operation 
of our business. The constituents of 
this metric will change as we look to 
generate new revenue streams outside 
our traditional sectors. 

Relevance to risk  1

3

4

Strategic relevance: 
GHG emissions are a key driver of global 
warming. Sustained reduction in both gross 
emissions and emissions intensity are a 
key element in the Company’s strategic 
approach to sustainable operations =>> 32. 

Relevance to risk  3

5

6.0338.6-53.4112.40.15522.03.926.9550.026,304 
 
 
 
 
26

STRATEGIC REPORT

Our people 
People are at the heart  
of our business

Our employees are at the heart of 
what we do. How they embrace 
our values, apply their skills and help 
shape our culture are what helps to 
differentiate us. 

We are committed to developing all our 
workforce, enabling everyone to perform 
and realise their full potential, in a supportive 
and forward-thinking environment. We invest 
in communicating to ensure our people are 
engaged in every step of our journey, work 
towards our strategic goals and understand 
our culture. We focus on their well-being, 
emotional and physical, and their professional 
development at every level of the organisation. 
Our people are central to what we do. 

Communicating and connecting
With turmoil in the energy sector during 
2020, as well as the global pandemic to 
contend with, and many employees working 
from home, our philosophy has been: 
‘communicate, communicate, communicate’. 

Culturally we believe in speaking openly and 
honestly with our workforce. It starts at the 
top: throughout the year and continuing 
today, our CEO produces a weekly business 
update, covering all manner of subject 
matters. It can encompass celebrating a 
team living our values, a project milestone, 
HSES performance, our actions to mitigate 
the impact of the virus; to name a few. This 
communication philosophy has been further 
underpinned by regular, virtual CEO town 
halls where the forum is balanced and two-
way, allowing plenty of time to hear what 
employees want to say and ask. 

Our HSES team has also focused on providing 
frequent, detailed COVID-19 bulletins to keep 
all our employees, as well as on-site clients 
and contractors, informed of developments. 
Crucially, transparency is at the heart of all our 
communicating. 

Training 
We ask our staff to be curious in their daily 
activities. From our side, we offer training and 
development opportunities for employees 
wanting to progress. The foundation of 
successful yard operations is Lamprell’s 
Assessment and Training Centre, which has 
seen one of its busiest years during 2020, 
not least due to the need to keep everyone 
socially distanced and safe via our COVID-19 
protocols. 

During 2020 we have continued to make 
significant improvements in how we assess 
our technical trades through LATC. With 
English as our main language of operation, 
we have engaged a full-time English language 
tutor with whom we have developed detailed 
learning modules for our yard employees. 
We’ve continued to focus on succession 
planning at the executive and senior 
leadership levels, with senior leadership 
undertaking ongoing engagement following 
on from the programme we initiated in 2019. 

218,693

training hours in trade, supervisory, quality, 
HSES and English programmes completed 
in 2020

Health, safety and security
With safety as a core value, the area of health, 
safety and security is a top priority for us at all 
times, especially during 2020 with COVID-19 
so very much in our midst. Keeping people 
safe, and more importantly making sure they 
feel safe, secure and supported has been at 
the forefront of our minds at all times. Keeping 
abreast of changing rules and ensuring 
protocols are followed has been a valuable 
learning experience. We have recognised the 
strain on emotional well-being and health as 
a result of the ongoing crisis. During 2020 we 
ran a series of seminars addressing this subject 
in collaboration with a number of our medical 
service providers. 

Our values
With the world ‘stress-tested’ through having 
to deal with a global pandemic, more than 
ever the importance of our values has shone 
through. We have looked to our employees 
to go the extra mile whether that is working 
inside our facilities to keep our projects on 
track, or working from home where that 
is possible. 

We’ve applauded teams going above and 
beyond to keep our people safe and our 
operations on track, particularly those involved 
in the COVID-19 management protocols: 
camp bosses who care for our circa 4,000 
yard employees, our medical team, our 
catering crews and our asset management 
team. They have all worked long hours to 
protect our people, and we thank them all 
for their sacrifices and efforts.

Our collaboration 
with the SmartLife 
Foundation
With more than 200 employees 
participating in our English 
SmartReading programme, delivered 
by the SmartLife Foundation, 2020 
saw us celebrating their successful 
graduation. Held with the strictest 
of protocols in place for COVID-19 
management and mitigation, our yard 
employees were able to attend their 
graduation ceremonies and celebrate 
their achievements. SmartLife, a 
not-for-profit NGO, aligns fully 
with Lamprell’s social investment 
aspirations which have education as 
a foundation, and we are delighted 
to be continuing our journey 
with them. To that end, Lamprell 
commenced a new programme 
in 2020, SmartComputers. The 
objective of the initiative is to give our 
yard employees access to a laptop 
and increase their computer literacy, 
teaching them the basics of Microsoft 
Office applications such as Word, 
Excel and PowerPoint. 

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

27

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Employee engagement
Having made good progress during 2019, in 
2020 our Directors continued to dedicate 
time engaging with the workforce at all levels. 
Given the virtual nature of the connection, 
through necessity resulting from restrictions 
associated with COVID-19, this has been a 
great success. 

The Board has spent time getting closer 
to our yard employees, right at the heart 
of our operations; through participation in 
online employee welfare committees and 
understanding the issues of the day. They have 
also given their time to get to know members 
of our senior leadership team and our high 
potential performers better through a series 
of virtual ‘chat with the Chair’ gatherings. Each 
session is chaired by a Board member along 
with the CEO and VP of HR and Corporate 
Services in attendance. In 2021 we aim to do 
this and more. 

Our employee welfare committee meetings 
and ‘chat with the chair’ programme will 
continue and, with the support of the Board, 
we will also introduce a Lamprell workforce 
assembly. 

The workforce assembly will allow participants 
to engage with senior management and 
Board members on several key topics 
including, but not limited to, Lamprell’s 
vision and values, culture, diversity, talent 
management and development, workplace 
conditions, innovation, digital development, 
operating model, corporate responsibility 
and business opportunities. 

The assembly will enable the Board and 
executive management to better understand 
the views and perspectives of the workforce 
and take them into consideration during their 
discussions and decision-making. 

Diversity
With over 35 nationalities working for the 
organisation we are proud of our approach 
to diversity in Lamprell. Everyone has fair and 
equitable access to opportunities starting 
with the hiring process and throughout the 
employment life cycle. The richness and 
variety that come through having such an 
international workforce differentiate us and 
make us stronger. In keeping with our values 
and culture, we believe diversity brings 
multiple benefits for all the stakeholder 
groups we work with. 

We want our workforce to be connected, 
to perform consistently to a high standard 
and to reflect the many different areas 
in which we work. Keeping an open and 
receptive mind, and bringing different ideas 
to a forward-thinking culture is what helps 
us innovate, mitigates our risks and supports 
sustainable growth in the long term. Inclusivity 
means living our values for all: safety, fiscal 
responsibility, integrity, accountability and 
teamwork. 

Diversity and inclusion are integral to our 
culture at Lamprell. We promote meritocracy, 
openness, fairness and transparency. This 
supports the very fabric of our business. 

Engaging our 
workforce in 
wellness 
During 2020, workforce engagement 
has been increasingly important to us, 
particularly with respect to COVID-19 
education. To ensure our employees 
understand what is expected of them, 
and what they can expect from the 
organisation, our employee welfare 
and medical teams have rolled 
out numerous socially-distanced 
workshops and online webinars. 
The focus of these workshops has 
concentrated on personal well-being 
both outside of working hours, as 
well as whilst our people are engaged 
on our projects. Health awareness 
topics delivered include the dangers 
of alcoholism and sun exposure 
and the benefits of a healthy diet, as 
well as how to protect oneself from 
COVID-19 and other illnesses. 

Board members attended

Gender profile of 
administrative employees

Gender profile of manager 
level and above

3 ‘chat with the Chair’ senior 

leadership sessions

3 employee welfare 

committee meetings

Female
8%

Male
92%

Female
6%

Male
94%

Age profile of admin employees

Designation profile of admin employees

13%

34%

2%

1%

31%

59%

39%

12%

7%

2%

<30

30-39

40-49

50-59

60+

Executive

Management

Professional

Supervisory

Support

0

20

40

60

80

100

 
 
 
 
28

STRATEGIC REPORT

Engaging with our stakeholders 
How we listen and respond

Stakeholder engagement 
at Lamprell
Our key stakeholders include the Group’s 
customers, employees, shareholders, 
communities and business partners, and 
we interact with them daily. Knowing what 
our stakeholders want, what each of their 
respective key drivers are, helps the Board 
and management to make better decisions 
for the Company as a whole.

How the Board has discharged 
its section 172 duties
The UK Corporate Governance Code 
anticipates that the Board will apply the 
considerations set out in Section 172(1) of 
the UK’s Companies Act 2006 when making 
decisions. It imposes a general duty on every 
company director to act, in good faith, in 
the way they consider would be most likely 
to promote the success of the Company for 
the benefit of its shareholders and to also 
have regard to how the Group’s activities and 
decisions taken by the Board will impact on 
its stakeholders. Our Board has taken steps 
which they believe will promote the continued 
success of the Company, for the benefit of its 
members and stakeholders as a whole, as set 
out opposite.

Customers

Employees

Interests
•  Ability to deliver
•  Financial stability
•  Health and safety
•  Cost and quality
•  Reliability 
•  Customer service
•  Company reputation
•  Innovation
•  Collaboration
•  Timely responsiveness
•  Sustainability 
•  Environmental impact

Associated risks 1, 3, 4, 5 =>> 46 to 48

How we engage 
•  Our BD team including our C-Suite engages 

Interests
•  Company purpose, values and culture
•  Rewards and benefits
•  Health, safety and well-being
•  Career development
•  Sustainability and environmental matters
•  Equal rights
•  Flexible working 
•  Job security
•  Company performance

Associated risks 5, 7 =>> 48

How we engage
•  Induction process including welcome 

handbooks for staff 

•  Employment contract explaining detailed 

remuneration package

with customers through meetings, emails and 
phone calls 

•  LamprellConnect intranet communications 

including weekly CEO briefing email 

•  Chairman and CEO engaged with key 

•  Regular email communications from HSES, 

customers in 2020 

Quality and executive management

•  Regular virtual and face-to-face meetings are 

•  Staff briefings for yard employees via daily 

also held through our BD team

•  Press releases 
•  Company marketing material including 

bulletins, brochures and leaflets 

•  Contract bidding, negotiation and execution
•  Exhibitions and conferences (virtual in 2020)
•  Lamprelltimes magazine
•  Website and LinkedIn

Outcomes of engagement 
•  Contract for two new build jackup rigs 

signed with IMI in early 2020, followed by 
an engineering contract; work currently 
in progress

•  17 rig refurbishment projects awarded in 2020, 
with seven from key regional repeat customer 
ADNOC, and 16 deliveries in total

toolbox talks
•  Training via LATC 
•  Apprentice and work experience programmes 
•  Lamprelltimes magazine
•  Website and LinkedIn
•  Performance development reviews
•  Employee welfare committee 
•  Whistleblowing hotline
•  Annual photography competition 
•  Online wellness talks 
•  Regular CEO town hall briefings

Outcomes of engagement
•  Broad range of measures implemented to 

mitigate the threat of COVID-19 

•  Around 4,000 employees participated in the 

COVID-19 vaccine campaign 

•  Award of Seagreen offshore windfarm 

•  Board participation in employee welfare 

foundations project 

committee meetings

•  Award of EPIC contract for Mahani oil & gas 

project in Sharjah 

•  Ongoing bidding on multiple tenders for 

•  ‘Chat with the Chair’ programme rolled out to 
enable regular interaction between Directors 
and employees

our renewables and oil & gas business units

•  Phased roll back of 25% COVID-19 salary 

•  Healthy USD 6 billion bid pipeline of 

solid prospects 

•  Assurance in our visible and proactive 
commitment to COVID-19 mitigation 
and management

•  On-site clients and contractors participated 

in COVID-19 vaccine programme

reduction for lower-paid employees
•  Introduction of a Lamprell workforce 

assembly in 2021

•  Senior leadership undertaking ongoing 
development training following on from 
earlier programme 

•  Rolling out refreshed and user-friendly 

employee handbook in 2021

•  Full-time English language course tutor for 

our yard employees

•  Over 200,000 training hours completed 

at LATC in 2020

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

29

‘The finest steel has to go through the hottest 
tapestry’ (Liju Thomas)
Showcasing the hidden talent that lies within the organisation, and striking a note of 
good cheer, Lamprell succeeded in rolling out its annual photography competition 
for employees, Lamprell through the Lens. Hundreds of entries were received, with 
employees and a panel of judges selecting the winning photographs. Pictured here 
is our overall winner.

Shareholders

Communities

Business partners

Interests
•  Financial performance 
•  Company strategy 
•  Dividend policy
•  Company reputation
•  Director remuneration
•  Business risks 
•  Succession planning 
•  Corporate governance
•  Company purpose, culture and values
•  ESG matters
•  Innovation 

Associated risks 2, 3, 9, 10 =>> 46, 47 
and 49

How we engage
•  CEO leads discussions with major shareholders, 

with support from Chairman and other 
Directors 

•  Day-to-day investor relations managed 

by Lamprell’s investor relations team and 
corporate brokers 

•  Regulatory announcements and press 

releases

•  Annual Report
•  Regular roadshows
•  Results presentations
•  Annual General Meeting
•  Webcasts
•  Conference calls
•  Analyst briefings
•  Lamprelltimes magazine
•  Website and LinkedIn

Outcomes of engagement
•  Strategic objectives pivoting towards 

renewables and new geographies/markets 
and digital initiatives 

•  Metrics/targets for management’s 

remuneration packages linked closely 
to the delivery of strategic objectives
•  Regular communications with investors, 

whose views are fed back to the full Board 
for consideration

•  Roadshows with CEO/CFO after full-year and 
interim financial results including an extensive, 
two-way question and answer session

•  Feedback report from results presentations 

prepared by external IR firm and presented to 
the Board 

•  Report on proxy advisors’ views on corporate 
governance matters presented by Company 
Secretary to the Board

Interests
•  Health, safety and well-being
•  Sustainability and environmental matters
•  Supply chain opportunities 
•  Use of local labour
•  Supporting local causes
•  Positive impact on communities
•  Compliance with local laws and Free Zone 

regulations 

Associated risks 3, 8 =>> 47 and 49

How we engage
•  Ongoing and frequent engagement with key 
bodies such as the Free Zone authorities 
•  Commitment to local content programmes 
•  Press releases 
•  Exhibitions
•  Supporting charities and sponsoring events
•  Signing ceremonies with local authorities
•  Lamprelltimes magazine
•  Website and LinkedIn
•  Providing work experience

Outcomes of engagement
•  High scores in UAE and Saudi local content 

programmes

•  Establishment of a formal Sustainability 

Committee responsible for all ESG matters

•  Annual sustainability month kicked off in 

October 2020

•  Local content drive: IMI apprenticeship 

programme implemented 

•  Third annual beach clean-up held in the UAE
•  Online sustainability awareness training 
•  Virtual children’s drawing competition with 

the theme ‘climate change’

Interests
•  Health, safety and well-being
•  Collaborative relationship
•  Steady stream of work
•  Prompt payment
•  Fair treatment
•  Training and learning opportunities
•  Ability to deliver
•  Cost and quality
•  Company reputation
•  Local community
•  Sustainability and environmental matters

Associated risks 1, 4, 5, 7, 9 =>> 46 to 49

How we engage
•  Regular engagement between managers and 
key business partners, online and face-to-face

•  Subcontractor sustainability engagement
•  Supply chain management processes and 

bidding procedures

•  Contract negotiation and management
•  Email and telephone
•  Press coverage
•  Exhibitions and conferences 
•  Workshops 
•  Marketing material
•  Toolbox talks
•  Whistleblowing hotline

Outcomes of engagement
•  Commitment of supply chain to Lamprell’s 

core values 

•  Online partner sustainability sessions
•  Supporting local content programme – Saudi 
Aramco’s In-Kingdom Total Value Add and 
ADNOC’s In-Country Value

•  Office recycling programme and awareness 

•  Actively supporting Saudisation through 

session

apprenticeship programme 

•  Board approved Akselos as digital partner
•  Key corporate advisors appointed by 

the Board

•  Focus area in 2020 – reliance on business 
partners being identified as a principal risk, 
and opportunity to manage

•  Dedicated, experienced Lamprell staff 

regularly interact and engage with specific 
business partners

•  Regular reports to the Board regarding the 

status of key partnerships

•  Presentations from broking advisory team 
to the Directors on corporate matters/
relationships

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
30

STRATEGIC REPORT

Sustainable business review 
Acting responsibly for all  
of our stakeholders

Our approach to sustainability
Our commitment to sustainability forms part 
of our overall Group strategy =>> 22 and 
encompasses ESG aspects of our activities. 
Sustainability is required for the long-term 
success of the business and is underpinned 
by our culture, our values and the Company 
management system, as well as defined goals 
which are actioned by individuals. Following 
review by the Board of our forward plans, we 
reorganised our business into three business 
units – renewables, oil & gas and digital – as 
a means to diversify our product offerings 
and align our plans with the energy sector 
transition and longer-term market dynamics 
=>> 4. In addition, we recently established 
a Sustainability Committee as a means to 
oversee all sustainability activities and report 
progress to the Board. The Chair of our 
Nomination and Governance Committee 
will be the Board representative attending 
these meetings.

Environment
We recognise that climate change, energy 
usage, environmental legislation and access 
to resources can impact our operations. 
How we respond to that will determine 
our success and continuing sustainability. 
Our action plan for addressing these issues 
includes the development of a sustainability 
roadmap which will specify standards and 
activities to ensure compliance with the 
recommendations from the TCFD. 

Social
We take social issues such as labour practices, 
talent management and data security 
seriously. We have a dedicated IT security 
and infrastructure team which ensures the 
safety of Lamprell’s data. We have a strong 
HR team which manages a large and diverse 
workforce of more than 5,000 employees 
from over 35 nationalities and we aim to be an 
employer of choice providing fair employment 
benefits for our staff. We also engage with 
our key stakeholders =>> 28 as a means to 
understand what matters most to them, 
and take that feedback into account during 
decision-making. 

Our sustainability pillars

Key achievements in 2020

Resource  
conservation

  Read more =>> 34

Environmental 
protection

  Read more =>> 32

Employee  
welfare

  Read more =>> 26

Stakeholder 
engagement

  Read more =>> 28

Information  
technology

  Read more =>> 8

Financial  
performance

  Read more =>> 40

•   18% reduction in electricity usage intensity
•  2% reduction in water usage intensity

•   Zero non-compliance environmental infringements
•  Zero major environmental pollution events
•  B company rating from the Carbon Disclosure 

Project for climate change 

•  B company rating from the Carbon Disclosure 

Project for supplier engagement

•  Recertification to ISO 14001 latest international 

environmental management standard 

•   Continued to build on Board and worker 

engagement across the organisation through 
‘chat with the Chair’ sessions and employee 
welfare committee meetings

•  Broadened our well-being programmes to include 

aspects such as good financial health

•  Continued to promote emotional wellness through 

webinars and online engagement

•  Rolled out COVID-19 vaccination programme in 

early 2021

•  TRIR of 0.15 for 2020, equalling our Group record 

•   Consolidated review of stakeholder engagement 

priorities

•  Actively engaged with major shareholders 

throughout the year

•  Materiality assessment initiated to focus on ESG 

priorities for key stakeholder groups

•   Upgrades to our IT infrastructure under way
•  New digital business unit created, to realise 
complementary opportunities in this fast 
growing sector

•  Signed strategic distribution arrangement with 
Akselos, a leading developer of simulation 
technologies aimed at increasing operational 
efficiencies

•  Successful implementation of a range of new 

technologies in our operations 

•   Debt-free at the end of 2020
•  Net cash position of USD 112.4 million (of which 
USD 56.8 million was unrestricted) compared to 
USD 42.5 million at the end of 2019

•  2020 EBITDA of USD 3.9 million
•  Overhead costs reduced by 25% year on year

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

31

Governance
Our strong track record of responsible 
behaviour and our rigorous governance 
regime helps to underpin effective 
sustainability performance. Our governance 
practices are owned and approved by our 
Board, while the supporting management 
systems are owned and implemented by our 
Executive Committee and relevant Group 
functional managers. We are also guided 
by a range of supporting key policies, as 
summarised in our Non-Financial Information 
Statement =>> 37. In addition, our risk 
management procedures help us to avoid 
and/or mitigate the risks that might otherwise 
prevent us from achieving our sustainability 
objectives.

  Read more in our corporate governance report =>> 52

Our Sustainability Committee 
and its priorities 
As an output from our annual sustainability 
month, we established a Sustainability 
Committee, which will focus on the 
continuing improvement of sustainability 
standards and initiatives within Lamprell. 

Our approach is in line with the aims of the 
UN SDGs (see opposite) and the Sustainability 
Committee will take a leading role in guiding 
the development of our sustainability strategy, 
policy and targets, as well as proposing new 
activities and monitoring implementation of 
the same. The Committee comprises key 
personnel from across the Group and will be 
chaired by our VP of HR & Corporate Services. 
Crucially, it will have one of our independent 
NEDs as a member, thereby ensuring direct 
access and ongoing involvement of the Board 
of Directors in this key initiative for the Group.

We have a clear understanding of our role 
in the global energy transition, given our 
proven track record in renewables projects. 
We are looking to shape our sustainability 
strategy around our ESG material issues. 
The recent materiality assessment =>> 37 
helps to ensure that we understand the most 
important impacts Lamprell can have on 
the environment, society, and the economy. 
Having completed this assessment, we will 
finalise and publish our sustainability plan, 
which will guide our sustainability objectives 
and framework for the coming years.

Our safety performance 
Lamprell’s safety performance in 2020 was world-class and we hit a record for the second 
time =>> 25 in our corporate history with a TRIR of 0.15. Safety is a core value at Lamprell 
and upholding our excellent performance is crucial. We care about our people and those 
stakeholders working alongside us. We will continue our efforts to maintain and improve on this 
performance through the implementation of new behaviour-based safety programmes as well as 
industry best-practice safety in design and project operational safety management approaches.

HSES performance – 12 month rolling (2020)

0.15

0.15

0.16

0.16

0.17

0.17

0.16

0.16

0.15

0.20

0.19

0.19

0.18

2020 TRIR TARGET 0.15

0.15

0.10

0.05

0.04

0.04

0.02

0.02

0.02

0.02

0.02

0.04

0.03

0.03

0.03

0.03

0.00

Jan 

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

TRIR TARGET

TRIR

DAFWCF

Number of incidents per 200,000 man-hours worked, including injuries that require more than first aid treatment or cause days 
away from work.

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

How we’re working  
to the UN SDGs
Lamprell recognises the significance 
that sustainable development will 
have on future generations and on 
the Earth’s various ecosystems. 
We are actively working to promote 
attainment on a range of the UN SDGs, 
both within our organisation and also 
in our wider stakeholder network. 

SDG goal

Lamprell’s response
We arrange physical and 
mental welfare initiatives for 
everyone working on-site 
every year, as safety is a 
cornerstone of our culture and 
our success. These initiatives 
involve health awareness 
sessions conducted by either 
our in-house medical team or 
third-party health experts.

High-quality training and 
development for our 
employees is crucial as this 
helps to improve efficiencies 
and generates higher 
performance. In 2020, we 
achieved our key performance 
indicator of 1.65 training hours 
per 100 man-hours worked.

We recruit and promote 
strictly on a merit basis and 
actively seek to improve the 
gender balance in all levels of 
our organisation.

We are leaders in construction 
of offshore wind projects, 
with a dedicated renewables 
business unit aligned to the 
needs of the energy transition. 

We provide good working 
conditions and competitive 
remuneration packages 
for our employees, which 
contributes to their well-being 
and ultimately to Lamprell’s 
financial performance. 

We implement sustainable 
procurement guidelines for 
non-project materials, which 
provide a framework for 
responsible consumption and 
production, as well as taking 
steps to maximise recycling 
from our yards.

In 2020 our Carbon Disclosure 
Project score was B, the first 
time we have achieved this and 
an improvement over 2019. 
We have also reduced the 
GHG emissions intensity of our 
operations by 27% since 2016.

We implement rigorous 
environmental assessment, 
polices and procedures 
to organise our yards and 
minimise the risk and/or 
impact of any environmental 
incident.

 
 
 
 
32

STRATEGIC REPORT

Sustainable business review continued

Environment

A sustainable environment 
is critical to Lamprell’s 
operations. Implementing 
TCFD recommendations, 
improving our sustainability 
reporting and continuing to  
roll-out environmental protection 
and enhancement programmes  
is a top priority for us. 

Working towards 
full disclosure on 
climate change
•  Develop and implement the 

Group sustainability road map 
and compliance with TCFD 
recommendations

•  Ensure climate risks and 

opportunities are incorporated 
in the corporate risk register 
and within strategic plans for 
the wider Group

•  Recommend and implement 
appropriate environmental 
initiatives that will reduce Lamprell’s 
greenhouse gas emissions and 
overall environmental footprint, 
in line with the UN SDGs

•  Improve environmental awareness 
within the Group through training 
programmes and communications 
through bulletins

•  Full risk analysis of climate change 
as a risk and potential wider impact 
on the Company

Our action plan for TCFD implementation 

The formation of the renewables business 
unit =>> 4 as part of our refreshed strategy 
=>> 22 is one of the ways we intend to 
transit further into supporting a low-carbon 
economy. Fulfilment of all applicable 
requirements within this emerging market 
segment, including the recommendations 
from the TCFD, is paramount to us as 
a Company. 

A detailed gap analysis was conducted 
on our current practice against TCFD 
recommendations. Action plans are being 
developed for the implementation of TCFD 
recommendations in the coming years, 
including annual reporting of progress  
towards TCFD standard compliance. 

Timeframe

2020

Establish a baseline

2021

Plan and implement

2022

Compliance with TCFD

Action

Analysed gaps – understood 
our current disclosures and 
how they compared to TCFD 
recommendations. 

Defined objectives – understood 
where Lamprell needs to be 
positioned and developed a plan 
to achieve this.

Implement plan – initiate actions 
such as governance review, 
materiality assessment, scenario 
analysis and integrating climate risk 
into an existing risk management 
framework.

Materiality assessment – conduct 
a materiality assessment to 
determine important areas of ESG/
climate monitoring and reporting 
for Lamprell.

Report – disclose Lamprell’s 
progress in the journey towards 
meeting TCFD recommendations.

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

33

Our action plan for TCFD implementation 

Environmental programmes

Our environmental programmes 
are geared towards identifying 
opportunities to continuously 
reduce our carbon footprint and 
impact across all project locations.

GHG emissions 
Our approach and performance in 2020
Lamprell is committed to improving energy 
efficiency and conservation to reduce GHG 
emissions from our operations. Our gross 
GHG emissions and emissions intensity rose 
in 2020 for the first time since 2014. This 
increase is attributable to a methodology 
change in the way in which our GHG Scope 2 
emissions from grid electricity and water are 
calculated. This methodology change was the 
outcome of a third-party limited assurance 
audit on our GHG emissions and operational 
energy consumption, in accordance with 
ISO 14064-3:2019. 

Goals for 2021 and the longer term
•  Implement improved GHG emissions 
management and reporting standards 
as part of a new sustainability framework 
following the IPCC and TCFD standards

•  Achieve consistent yearly reduction in 

GHG emissions intensity by continually 
seeking ways to improve energy efficiency 
and conservation, and reducing the 
overall environmental footprint of our 
operations. A consistent reduction in GHG 
emissions intensity across our operations 
is key to our commitment in aligning with 
the recommendations of the IPCC and 
the TCFD

Environmental incidents  
and compliance obligations 
Our approach and performance in 2020
As part of our environmental management 
efforts, we implement policies to reduce the 
risk of environmental incidents occurring at 
our facilities and we have established robust 
mechanisms to mitigate environmental 
pollution arising from our operations. Over the 
years, we have consistently been achieving 
our set annual targets for reduction in our 
environmental incident frequency rate and 
2020 was no exception. 

Lamprell greenhouse gas emissions 

100,000

80,000

0.00295

0.00291

0.00280

0.00253

s
s
o
r
g
e
2
O
C
s
e
n
n
o
T

60,000

40,000

20,000

0.00226

0.00222

0.00198

0.00199

0

2013

2014

2015

2016

2017

2018

2019

2020

Total emissions

Emissions per man-hour

The GHG protocol categorises a company’s GHG footprint into three 
different scopes: Scope 1, 2 and 3.

0.0032

0.0028

0.0024

0.0020

0.0016

0.0012

0.0008

0.0004

0

T
o
n
n
e
s
C
O
2
e

p
e
r

m
a
n
-
h
o
u
r

Scope 1
Emissions are direct 
emissions from owned  
or controlled sources.

Scope 2
Emissions are indirect 
emissions from the 
generation of purchased 
energy.

UPSTREAM

DOWNSTREAM

Scope 3
Emissions are all indirect emissions 
(not included in Scope 2) that occur 
in the value chain of the reporting 
company, including both upstream  
and downstream.

Total emissions 
(tonnes CO2e)
Scope 1
Scope 2
Scope 3

2020

2019

2018

2017

2016

26,304

12,965

9,866

3,473

19,903

7,171

8,977

3,755

21,335

14,490

3,803

3,042

35,038

24,850

6,457

3,731

52,005

46,701

2,911

2,393

Environmental incident frequency rate
Our environmental incident rate is calculated per 200,000 man-hours and includes uncontrolled 
pollution events to land, sea and air.

0.19

0.16

0.15

0.12

0.1

0.08

0.07

0.04

0.03

0.03

2016

2017

2018

2019

2020

EIFR target

EIFR achieved

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
 
 
 
 
 
 
34

STRATEGIC REPORT

Sustainable business review continued

Environmental programmes continued

Clean coastline
The global pandemic did not deter 
volunteers from our annual UAE clean 
coastline beach clean-up event, which 
took place in November 2020 as part 
of Lamprell’s sustainability month. With 
participants adhering to social distancing 
and other COVID-19 mitigation protocols, 
we removed a total of 350 kilogrammes 
of waste from Umm Al Quwain beach 
near the Hamriyah Free Zone facility. 
This initiative helps keep the marine 
environment litter-free, whilst ensuring 
the protection of the local marine 
ecosystem.

•  Implement a Behavioural Based 

•  Considering the importance of water 

Environmental Programme which 
encourages a positive behavioural 
change towards environmental 
stewardship by all employees 

Resource conservation
Our approach and performance in 2020
Resource conservation is one of our 
sustainability pillars and focuses on efficient 
energy usage and water conservation. We 
reduced water usage intensity by 2% over 
2019 while our year-on-year electricity 
consumption intensity reduced by 18%, 
despite generating more operational man-
hours in 2020. These reductions are a result 
of initiatives being implemented during our 
sustainability campaign, such as the installation 
of water-efficient taps across all our facilities, 
sustainability awareness training to staff and 
subcontractors, and the optimisation of 
electrical conservation in our yards. In addition, 
product life-cycle analysis was completed 
across applicable operations to help us better 
understand our cradle to grave environmental 
impacts. This process has now been 
incorporated as part of our approach to best-
practice environmental management.

Goals for 2021 and the longer term
•  The development of a power consumption 
plan to reduce electricity usage by 30-40%. 
This will be aimed at ensuring a significant 
reduction in our GHG emissions, and 
consequently reducing power demand 
across all operational facilities 

globally and the shortages of this essential 
natural resource in some parts of the world, 
conservation will become paramount and 
we will continue to strive to further reduce 
our operational consumption intensity by 
20% in the long term

Water, electricity and diesel intensity
2.2

2.07

1.96

0.68

0.74

1.49

0.77

0.75

2016

2017

1.75

1.75

0.32

1.78

0.20

2019

2020

1.09

0.43

2018

Water intensity (gallons per man-hour)

Electrical intensity (litres per man-hour)

Diesel intensity (KwH per man-hour)

The increases in the intensity of electricity 
usage in 2018 was due to the connection of 
the Lamprell Hamriyah facility onto the UAE 
electrical grid, resulting in a drop in the 
intensity of diesel consumption in the same 
year. The principal objective for Lamprell is to 
improve the efficient use of all these resources 
over the long term and, in doing so, reduce 
the environmental footprint of the 
organisation.

Compliance obligations
Compliance with all applicable laws and 
regulations is fundamental to our business, 
and as such we routinely review these to 
ensure compliance is maintained. We again 
achieved the status of zero environmental 
compliance infringements for 2020 due to 
the vigilant and proactive work undertaken 
in this area. 

Goals for 2021 and the longer term
•  Maintain 100% environmental compliance
•  Our long-term goal is to achieve zero 
environmental incidents across all our 
operational facilities while our short- to 
medium-term goal is to improve upon 
our annual EIFR rate

Waste management
Our approach and performance in 2020
We take steps and employ significant resources 
to manage waste generated from our facilities 
and either recycle it or dispose of it in an 
appropriate manner. In 2020, 91% of waste was 
diverted away from landfill. A detailed waste 
stream analysis was completed in the reporting 
year to further identify additional waste streams 
that can be recycled and reused to improve 
this waste diversion rate.

Goals for 2021 and the longer term
•  The business will continue to strive to 

improve its waste diversion rate to at least 
95% for the short to medium term and 100% 
in the long term

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

35

Social

How we approach social matters

Lamprell’s primary investment in social 
matters is through internal activities for our 
workforce and in collaboration with key 
external stakeholders or the local communities. 
Our current and future success is underpinned 
by our ability to recruit, retain and motivate 
a high quality, skilled workforce. If we fail to 
do so, this could undermine our operational 
capabilities, management effectiveness 
and, ultimately, our long-term profitability. 
In this context, we strive to provide a working 
environment that offers equal opportunities, 
safe working conditions, competitive terms 
of employment and quality learning and 
development experiences. 

We do not conduct our operations or 
business in isolation. Our activities can 
potentially affect stakeholders including in 
particular the governmental authorities for 
the locations where we operate. In turn, these 
stakeholders could potentially affect our 
success in achieving our business goals or 

strategic objectives. In this context, we strive to 
avoid and/or minimise any potential negative 
impacts and to maximise our positive impacts 
across a range of issues, and thereby maintain 
a strong reputation in the local communities. 
This includes our commitment to delivering 
economic value to society; cooperating 
transparently and constructively with local 
governments; and respecting the human 
rights of stakeholders across society.

Core to our philosophy around social 
investment is our focus on education 
initiatives. Education is a key focus area of the 
strategy because it links to Lamprell’s training 
and skills development, and that ultimately 
creates career development prospects for 
our employees. As of 31 December 2020, 
we had over 1,600 employees working for 
the Lamprell Group for more than 10 years, 
roughly 30% of the total workforce. That is an 
incredible achievement and demonstrates 
our willingness to invest in the development 

of our employees. Also, our future growth 
and sustainability require an expanding 
number of talented engineers across all levels 
of the business. It is in Lamprell’s interests 
to encourage more people, especially 
from different backgrounds, to enter the 
energy industry. 

We will support innovative programmes which 
focus on areas that address both our business 
and societal needs. We will build long-term 
strategic relations with recognised and 
respected partners and where possible work 
collaboratively with clients. 

Where agreed, we will encourage and support 
employees who wish to volunteer their time 
to participate in initiatives in line with the 
focus areas and approach outlined here. Any 
monetary grants, regardless of their value, 
are subject to the guidelines contained within 
Lamprell’s Business Code of Conduct.

Our key achievements in 2020

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

COVID-19 response
We committed extensive resources to protect 
the welfare of our employees against the 
impact of the global pandemic from February 
2020 throughout the rest of the year. This had 
the symbiotic benefit of keeping our yards 
open and progressing our projects, and of 
keeping our workforce employed at a time 
when many people around the world were 
losing their employment. 

SmartLife
Our engagement with local not-for-profit 
NGO SmartLife, whose focus is on bringing 
a variety of educational programmes to ‘blue-
collar’ workers across the UAE, is important 
to us. They provide continuing employee 
welfare activities specifically for our large yard 
audience. Our relationship with SmartLife 
began in 2019 and in 2020 we were proud 
to see: 

Sandooq Al Watan
Aligned with the UAE’s vision to be a 
technology-enabled nation, we are supporting 
the local social initiative Sandooq Al Watan 
which focuses on UAE directives that call for 
sustainable development, a decent life, and a 
bright future for all. Our engagement provides 
funding to a student in their UAE coder 
programme.

•  The graduation of Lamprell’s SmartReading 
students whose efforts focused on written 
and spoken English

•  The launch of SmartComputers, an initiative 
teaching our yard employees how to use 
a laptop effectively, using basic software 
packages to produce documents

 
 
 
 
36

STRATEGIC REPORT

Sustainable business review continued

How we approach social matters continued

Our focus for 2021
To engage with at least one further SmartLife 
initiative for our yard employees and to build 
on the early 2020 engagement with Sandooq 
Al Watan to ensure that our relationship is 
meaningful and sustainable for the long term, 
ensuring that both projects deliver results for 
the students. 

Social sustainability focal areas for 2021 will be:

Health
•  Continue with our actions to respond 

to and prevent the spread of COVID-19, 
including the promotion of vaccination 
uptake for all personnel working on-site in 
our facilities

•  Seminars and emotional well-being support
•  Drive health campaigns for the business 
to keep employees aware of relevant self-
improvement programmes highlighting 
the risks associated with unhealthy lifestyle 
habits

•  Coordinate with specialists from hospitals, 
health centres and wellness providers to 
deliver awareness sessions to employees

•  Improve health appreciation and 

knowledge, especially associated with 
COVID-19 post vaccination, driving the 
required behaviours

Social
•  Monitor the socio-political developments 
within the region and across the UAE as a 
whole

•  Encourage volunteering from employees, 
clients and subcontractors in relevant 
programmes within the organisation and 
the community at large which champions 
the ethos of corporate social responsibility 
and investment; aligned with our focus 
on science technology engineering and 
mathematics education

•  Engage the Group in at least one annual 

not-for-profit activity

•  Continue to develop and implement 

internal social involvement programmes 
for the Company

Careers
•  As part of our annual performance appraisal 

process, ensure each functional area is 
identifying personnel training/development 
needs that will ensure career progression 
and inform the succession planning process

•  Ongoing employee engagement 

programme with the Board, alongside 
leadership talks from executive and 
operational management

•  Continuing identification and development 

of high potential individuals

•  Facilitate progressive employment policies 

and practices within the Group 

•  Enshrine informal learning and engagement 

opportunities within departments to 
foster continuous growth in knowledge 
within their own or other departments; 
encouraging career mobility

Board visits  
Hamriyah facility 
Following two days of meetings 
held in Dubai in early 2020 and 
before we all felt the impact of the 
COVID-19 restrictions, Lamprell’s 
Board of Directors participated in 
a tour of the Hamriyah office and 
yard where they got to see first hand 
some of the improvement initiatives 
that have been rolled out across the 
facility. The state-of-the-art facial 
recognition technology, which has 
been implemented across our yards, 
is improving the way we manage 
our business including our people, 
processes, materials and, more 
importantly, safety and security. A 
walk through the large Moray East 
renewables project site and a visit to 
the warehouse where the welding 
robots were in action allowed the 
Board to personally witness the 
yard optimisation efforts that will 
drive significant efficiencies within 
Lamprell’s production.

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

37

Non-financial information statement

Our governance structures are transparent and effective, along with our wider-reaching controls and standards. These 
include our Code of Business Conduct, Modern Slavery and Human Trafficking Policy statements, HSES framework 
and Social Investment guidelines. These influence and guide the decisions we make and the actions we take.

Clients
With a diverse portfolio of clients and partners across our 
renewables, oil & gas and digital businesses, we pride 
ourselves on understanding their many varying priorities 
and demands. Safe delivery of projects, underpinned by the 
highest levels of integrity, and engaging with clients to build 
strong relationships are a top priority for us. 

Employees
Our employees are at the heart of all that we do. They shape 
our culture. As we continue to evolve in support of the energy 
transition our people need to be adaptable and forward thinking. We 
endeavour to recruit, train and reward such that we can organise our 
business optimally and cost efficiently. It is important to us that all our 
employees feel they can make a difference and want to be part of 
Lamprell’s evolution. 

  Read more =>> 28

  Read more =>> 26

Environment
We are determined to operate responsibly 
to protect the environment. We assess 
and consider the impact of all our activities 
and how the local environment might be 
affected at all times. We are constantly 
seeking ways to improve and make a 
positive contribution. We set ourselves 
meaningful environmental targets which 
meet and often exceed regulatory 
expectations, improving our positive impact.

Social matters
We recognise the importance of 
education particularly in the areas of 
science, technology, engineering and 
mathematics. This is the foundation of 
any social investment we make whether 
through local not-for-profit NGOs, as with 
our SmartLife engagement, or other more 
formally established institutions such as 
our new relationship with Sandooq Al 
Watan.

Human rights
We focus on areas where human rights 
are critical to how we work and where we 
see the highest risk for potential impact 
on the same: labour rights and supply 
chains. Our approach applies to all our 
employees and contractors. Human 
rights due diligence is embedded into 
our existing processes and frameworks 
such as our Modern Slavery and Human 
Trafficking Policy. 

  Read more =>> 32

  Read more =>> 35

  Read more =>> 66

Anti-corruption and anti-bribery
We have zero tolerance for bribery, corruption and other 
forms of financial crime. This position is strongly reinforced 
by our Business Code of Conduct. We require those who 
deliver services to us, or who act on our behalf, to abide by the 
Code and meet the requirements of specific business ethics 
and compliance clauses in their contracts. Before awarding 
contracts, we conduct risk-based third-party due diligence to 
assess risks related to ownership structure, anti-bribery and 
corruption, human rights and labour conditions.

Policy implementation
Through our strong focus on corporate governance as well as a 
robust quality management system, all our activities are underpinned 
with rigorous adherence to Lamprell’s corporate processes. They 
are a ‘must do’ for everyone and are routinely audited to ensure they 
remain fit for purpose.

  Read more =>> 66

  Read more =>> 70

Materiality assessment 
Early in 2021, we undertook a materiality assessment to identify 
and prioritise our most significant sustainability issues. It is not 
an audit or a performance evaluation but rather, in line with the 
Global Reporting Initiative Standards, it identifies the ESG issues 
of greatest relevance to Lamprell and its stakeholders, including 
those where the business already has a strong management 
approach. The objectives are to confirm that the ESG issues 
Lamprell is managing now are the correct ones, to identify 
additional issues where further action may be needed, and 
to increase transparency of these issues in Lamprell’s external 
reporting. This materiality assessment was the first such review 
conducted by Lamprell and so it followed a streamlined 
approach which recommended issues for Lamprell to prioritise, 
manage, measure and report on, and they have been grouped 
for reporting purposes as set out in this sustainability report.

Findings from the assessment
The next step is to conduct a gap analysis to confirm which of the 
most material issues are already well-managed, and where there is 
potential to put in place additional measures to strengthen Lamprell’s 
approach. Some of the key findings include the following:

•  Increased impact of energy transition and climate change, 

reflecting growing investor focus on the strategic, long-term nature 
of the challenges facing the industry and society more broadly
•  Need for heightened cyber security, which remains a key risk to 
the business given ongoing instances of cyber-attack against 
multinational companies

•  Ensuring that Lamprell operations are aligned to the market 

dynamics and needs of our customers and entire stakeholder base, 
which we addressed with our reorganisation into three distinct 
business units =>> 4

It will take time to build a long-term approach that ensures all 
material issues are fully managed, risks mitigated, and stakeholder 
expectations met. In the short term, we are targeting ‘quick wins’, 
where action can be taken swiftly and cost-effectively while longer-
term measures are in development.

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
38

STRATEGIC REPORT

Operational review 
Streamlining our operations

“ Despite the dual headwinds of a global pandemic and 
instability in the oil industry, Lamprell’s operations team 
was kept busy with the consolidation of our facilities into 
one yard, completion of the Moray East project, and 
startup works on several significant new contracts.”

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

39

In early 2020 we took the decision to 
consolidate our operations for the 
time being into Hamriyah, our largest 
yard. The Jebel Ali facility was 
mothballed and, following 
completion of the Moray East 
project, we closed the Sharjah 
facility. At Hamriyah, we expanded 
acreage by adding 127,000m2 of yard 
space, an increase of around 25%. 
These steps allowed us to grow 
fabrication volumes gradually while 
significantly improving efficiency 
and reducing our cost base. 

In 2020, we completed the Moray East project, 
started work on two of the new build jackups 
destined for Saudi Arabia and commenced 
work on the Seagreen renewables project. 
Once again, we saw a steady stream of rig 
refurbishments throughout the year and 
offsite, we completed work on the EPIC 
contract for the Mahani project. Matching our 
best performance in the Company’s history 
in 2018, we were delighted to achieve a year-
end TRIR of 0.15 for the second time =>> 25. 
Considering the circumstances surrounding 
COVID-19 and how busy our yards were in 
2020 as we ramped up on new projects, this 
is an outstanding achievement.

Renewables
In June 2020, we received a contract from 
Seaway 7, the renewables business unit of 
Subsea 7, for the procurement, fabrication 
and delivery of 30 wind turbine generator 
substructures, which comprised the jackets, 
transition pieces and suction caissons. 
Seagreen is the third major European offshore 
wind project that Lamprell has been awarded 
in this fast-growing renewables market. In 
April 2020, we reached a final commercial 
settlement on the East Anglia ONE project. 
We also successfully completed the Moray 
East project. Moray East, which included 
the delivery of 45 jacket foundations for 
wind turbine generator substructures and 
three jackets for offshore substations, was 
operationally completed in September 2020. 
The team did extremely well to navigate the 
various complexities thrown our way by the 
arrival of the COVID-19 pandemic, including 
those felt by our global supply chain partners 
and our yard workers who rose to the 
challenges, continuing to deliver during very 
stressful times. With more than 100 jackets 
in our renewables portfolio today and a new 
project underway, Lamprell is forging ahead 
as a market leader in this area.

As the Group has researched ways to improve 
throughput in our yard, we have invested in 
a new, bespoke lifting frame with over 2,000 
of tonnes of capacity, which is being used 
to upend our jackets prior to load-out. A 
lifting frame upends the foundations more 
efficiently. The frame was commissioned in 
1H 2021 for use on the Seagreen project.

Oil & gas
Early 2020 saw Lamprell sign a contract with 
its joint venture partner IMI for the fabrication 
and delivery of two jackup drilling units, 
the first award of this kind to anyone in the 
industry for over five years. The rigs are being 
built collaboratively between IMI and Lamprell. 
Later in the year, IMI awarded an engineering 
contract to us for the design of future state-
of-the-art jackup rigs, demonstrating IMI and 
Lamprell’s commitment to support Aramco’s 
fleet expansion over the next decade. 
Extending over the next three years, the work 
will be undertaken in two parts: an initial phase 
incorporating detailed design engineering, 
followed by the production design phase. 

We welcomed the first groups of IMI Saudi 
apprentices in early 2021 as part of the 
ongoing Saudisation development 
programme. One group of engineering 
apprentices will work alongside our 
experienced engineers on the rigs, while the 
second group of technical trainees will be 
working in our yard learning trades skills.

Our rig refurbishment division had a strong 
2020. It started the year with 13 rigs in our 
yards from the prior year. In the subsequent 
12 months, a total of 17 new rig refurbishment 
contracts were awarded and by the close 
of 2020, we had successfully redelivered 16 
while the remaining rigs either continued 
undergoing refurbishment work into 2021 or 
were stacked in our yard. Impressively, seven 
of our rig refurbishment projects came from 
our trusted UAE partner and valued repeat 
client ADNOC. 

Our site services business received a contract 
award from Sharjah National Oil Corporation 
to undertake a medium-sized EPIC project 
associated with the newly discovered Mahani 
gas and condensate field in Sharjah, UAE. 
Lamprell’s scope of work included hook-up 
and installation at the well, existing systems 
upgrade, associated tie-ins and a new 23km 
export pipeline. The project was successfully 
completed in early 2021 as planned and 
handed over to a very satisfied client. 

Finally, in 1H of 2021, we were delighted to be 
formally awarded two significant LTA contracts 
by Saudi Aramco. While these contract wins 
in our oil & gas business unit cement our 
reputation in this business, raising additional 
capital to support operations is key, and 
without this, we may be faced with significant 
challenges to ensure that we can deliver on 
our contractual obligations =>> 41.

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Digital 
Research and development is an important 
evolution for Lamprell given its focus on 
industrial operations. Our new digital team 
had a busy 2020, successfully implementing 
a range of technologies in our operations 
including the deployment of adaptive robotic 
welding onto our projects, facial recognition 
technology and a proprietary digital quality 
management system. We are looking to 
develop and embed such opportunities into 
our business, to improve productivity and also 
generate new revenue streams =>> 8.

In 2021, provided that we have access to 
new capital, we will continue to progress 
the development of two types of robotic 
technologies. These will allow us to enhance 
our operational efficiencies and de-risk 
potential constraints with labour supply. The 
first is adaptive robotic welding which had 
previously been tested and proven on the 
Moray East project and is now being deployed 
on our Seagreen project. The second will be 
used for complex TKY joints and is currently 
part way through ‘proof-of-concept’ testing. 

Through the joint initiative with our digital 
partner Injazat/G42, we are developing a 
platform that uses AI technology, which will 
help us to gain detailed insights into workforce 
and equipment movement, which we believe 
will, in turn, enable us to become safer, more 
productive and efficient. The platform will be 
tested in our yards. 

Another major digital initiative being explored 
is the use of Akselos’ engineering software 
which has the potential to significantly improve 
our constructability input and enhance future 
designs. It will allow us to build physics-based 
models for our clients that will serve as a 
true reflection of their assets’ utilisation and 
reaction in the field. We anticipate that this will 
generate considerable value for our clients 
in the renewables market as we transfer our 
knowledge from fixed foundations into future 
floating foundations. The technology will 
help us gain unprecedented insights on cost 
reduction opportunities for our clients, the 
ultimate asset owners. We are in the process 
of testing this software on our new lifting 
frame which represents an excellent proof of 
concept for the technology. 

Hani El Kurd
Chief Operating Officer

 
 
 
 
40

STRATEGIC REPORT

Financial review 
Resilient performance  
in a year of uncertainty

“ Fiscal discipline was our primary focus in 2020, which, together 
with growing annual revenues, allowed us to improve financial 
performance to deliver positive EBITDA. Although we ended the 
year debt-free and with a solid net cash position, completion of 
a new capital funding arrangement is the top priority for 2021 
and crucial to the ongoing viability of the business, given current 
liquidity challenges.”

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

41

We are pleased to report improving financial 
performance despite significant challenges 
presented by the COVID-19 pandemic. 
Our revenues increased for the second 
consecutive year to USD 338.6 million 
(2019: 260.4 million) as we worked through 
three major projects – the IMI rigs, Moray 
East and Seagreen. Revenues from the 
rigs segment with contribution from two 
IMI rigs, the Mahani EPIC projects and rig 
refurbishment, amounted to USD 128.7 
million. Rig refurbishment has had another 
strong year; we were awarded 17 rigs, seven 
of which were marked for large scopes from 
our largest and major UAE client, and a total 
of 16 rigs were delivered. USD 150.3 million 
is attributable to the EPC(I) segment, where 
we completed fabrication on Moray East and 
progressed Seagreen. Renewables have been 
a strong revenue contributor over the past four 
years and are now considered a core offering, 
which is reflected in the reorganised structure 
of three business units from 2021.

Our contracting services segment, which 
focuses on the provision of personnel and 
other services to the renewables and oil & gas 
industries, was noticeably impacted by the 
lockdowns and generated USD 59.6 million 
in 2020, down from USD 68.5 million in 2019. 
This segment showed good recovery in the 
second half of the year, and we look forward 
to it returning to full performance in due 
course. Despite improvements in revenues 
and EBITDA, the Group is facing severe short 
term liquidity challenges. More information 
on the Group’s plans to mitigate this issue is 
provided within this section.

Margin performance
Despite the challenges of the global pandemic 
throughout most of 2020, we report an 
improved margin performance for the year, 
with a gross profit of USD 14.6 million for the 
year (2019: gross loss of USD 27.6 million). The 
improved performance is attributed to strong 
project execution, the overhead reduction 
programme which included the downsizing 
of our operational footprint, and consolidating 
our operations into one yard, as well as 
temporary cost reduction measures to offset 
the impact of COVID-19. The Group will not 
see the full benefit of past actions to improve 
profitability until it completes the ongoing 
work on the legacy low/zero margin projects.

EBITDA from continuing operations in 
2020 was USD 3.9 million, a significant 
improvement on the prior year (2019: USD 
(64.6) million), representing an EBITDA margin 
of 1.2% (2019: (24.8)%). 

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Balance sheet
Net cash increased from USD 42.5 million at 
31 December 2019 to USD 112.4 million at 
31 December 2020, of which USD 55.6 million 
was restricted through project guarantees and 
bonds. Key drivers for the improved net cash 
position included the milestone payments on 
the two IMI rigs and Seagreen major projects in 
the final quarter. Net cash has trended down in 
1H 2021 and will continue to trend downwards 
through 2021 as projects progress and in 
particular the IMI rig projects draw working 
capital as part of the normal project cycle.

The Group’s total current assets at 
31 December 2020 were USD 286.4 million 
(31 December 2019: USD 229.7 million). 
Trade and other receivables increased 
to USD 73.9 million (31 December 2019: 
USD 37.4 million). Contract assets increased 
to USD 85.4 million (31 December 2019: 
USD 40.4 million). The increase in trade 
and other receivables and contract assets is 
attributable to contract work in progress and 
billing on ongoing projects.

Shareholders’ equity reduced to USD 160.4 million 
(31 December 2019: USD 211.4 million). 

Borrowings
Following the repayment of a USD 30 million 
debt facility in March 2020, the Group holds 
minimal levels of debt at USD 0.9 million. 

Balance sheet recapitalisation plans
We have been successful in securing project 
financing for the Seagreen project via a 
green bond from HSBC, and our balance 
sheet allows us to execute ongoing work 
and continue bidding for new contracts. As 
highlighted previously, the Group has been 
assessing its funding options, in terms of 
meeting near-term working capital needs and 
its strategic objectives. Despite a committed 
programme of overhead reductions aimed 
at preserving liquidity, in 2021, a number 
of major projects will have substantial 
working capital requirements thereby putting 
significant pressure on the balance sheet in 
Q2 and Q3 2021. Unrestricted cash available 
to the Group fell from USD 56.8 million at 
December 2020 to USD 18.6 million in May 
2021. Consequently, to fulfil its near-term 
working capital needs and to then meet its 
medium term strategic objectives, the Group 
will undertake a balance sheet recapitalisation 
programme for an amount of USD 120–150 
million, either through a combination of debt 
and equity, or equity for the full amount, to 
be completed by the end of Q3 2021. Further 
details of the plans are included in the section 
below titled “Going concern”.

Finance cost and financing activities
Following the repayment of outstanding debt 
on 11 March 2020, the Group is currently 
debt-free. Net finance cost (excluding interest 
expense on leases) therefore reduced to a 
neutral position (2019: USD 3.0 million). 

We are assessing a number of options for 
funding to mitigate current liquidity challenges 
as well as future funding of our strategic 
objectives as a key priority for the Company 
in 2021, further details of which are included 
in the section below titled “Balance sheet 
recapitalisation plans”.

Net loss
Net loss for the year ended 31 December 
2020 was USD 53.4 million (2019: loss of 
USD 183.5 million). The loss is driven by the 
continued low revenue levels and the minimal 
margin on the IMI Rigs projects coupled with 
USD 5.6 million of one-off expenses related to 
the overhead restructuring programme and 
non-cash impairments of USD 4.6 million. 
The diluted loss per share for the year was 
15.63 US cents (2019: diluted loss per share – 
53.71 US cents).

Capital expenditure
One of our priorities in 2020 was preserving 
liquidity, particularly given the unknown 
duration and extent of the impact of the 
COVID-19 virus. As a result, non-essential 
capital expenditure was put on hold. Capital 
expenditure for the year ended 31 December 
2020 was USD 14.2 million and largely focused 
on investments to improve efficiencies in serial 
renewables fabrication.

During the fourth quarter of 2020, we made 
a USD 26 million equity contribution to 
the IMI joint venture. To date, Lamprell has 
invested USD 85 million of the USD 140 million 
committed. This followed a review of the 
Group’s near-term cash flow and improved 
project working capital position on the two 
IMI jackup rigs. The next equity contribution 
amounting to around USD 17 million to the 
IMI, a key strategic investment in maintaining 
the Group’s relationships in the Kingdom, is 
scheduled for Q3 2021 and will be one of the 
uses of proceeds of the proposed equity raise.

Cash flow and liquidity
The Group’s net cash flow from operating 
activities for the year ended 31 December 
2020 reflected a net inflow of USD 113.3 million 
which was driven by savings from the 
reduction in cash overheads, and the final 
settlement payment from the East Anglia 
One contract, as well as milestone receipts 
and effective cash management on major 
projects. Prior to working capital movements 
and the payment of employees’ end-of-
service benefits, the Group’s net cash inflow 
was USD 5.8 million. Cash, together with 
bank, term and margin deposits, increased 
by USD 50.7 million to USD 113.3 million.

 
 
 
 
42

STRATEGIC REPORT

Financial review continued

Strategic reorganisation
In January 2021, the Group took the decision 
to reorganise into three business units: 
renewables, oil & gas and digital. We intend 
to align Group financial reporting with this 
structure for the full year 2021. 

Going concern
The Group’s consolidated financial statements 
have been prepared on a going concern basis 
as further discussed in Note 2.1. In performing 
their assessment of going concern, the 
Directors have considered the forecast cash 
flows for the 15 months to 30 September 2022 
and reviewed the progress against the key 
assumptions discussed below:

Planned capital raise
As highlighted previously, the Group has been 
assessing its funding options, both in terms of 
meeting near-term working capital challenges 
and meeting its strategic objectives. Despite 
a committed programme of overhead 
reductions aimed at preserving liquidity, in 
2H 2021, a number of major projects will have 
substantial working capital requirements, 
in particular the IMI rigs, thereby putting 
significant pressure on the balance sheet in 
Q3 2021.

To fulfil its near-term working capital needs 
and to then meet its medium-term strategic 
objectives, the Group must complete a new 
funding arrangement of USD 120–150 million 
by the end of Q3 2021, either through a 
combination of debt and equity, or via a larger 
equity raise. At the date of publication, the 
Group is in advanced stages of negotiation 
with certain relationship banks to secure 
project finance facilities, which will be secured 
by the proceeds of specifically identified 
projects, of up to USD 90 million, backed by 
export credit agency support. While approval 
is expected by the Board, there can be no 
certainty of the project finance facilities being 
concluded. If the Group is unsuccessful in 
concluding the project finance facility which 
enables the Group to fund the payment of 
its debts as they fall due, the Group will need 
to raise capital through equity for the full 
amount of USD 120–150 million. Should these 
funding options not be executed successfully, 
the Group is unlikely to be able to maintain 
sufficient liquidity in order to continue trading. 

In aggregate, the capital proceeds from 
the funding routes being pursued will then 
be used to fund initially the working capital 
requirements of the IMI Rig Projects, which 
draw their peak working capital requirement in 
2H 2021 and the outstanding final committed 
and contractual equity contributions to the 
IMI joint venture in Saudi Arabia. Following 
receipt of the final milestone payments on 
the IMI rig projects, expected in October 
2022, the proceeds will then be used to make 
further operational investment in efficiency 
and capacity growth, notably for renewables 
projects (which may be accelerated 

depending on the structure and quantum of 
the equity raise); and invest in the significant 
opportunities in developing the Digital 
business unit.

The timing and quantum of the equity 
raise is critical and dependent upon market 
conditions and the outcome of the Group’s 
negotiations with the banks for project 
finance. Should the Group be unable to secure 
the capital raise, either through the project 
related debt and/or equity there is significant 
risk that the Group will be unable to meet its 
contractual obligations as they fall due. 

Deferral of creditor payments
A key part of the Group’s strategy to address 
current liquidity challenges is the extension 
of credit terms with certain suppliers, and 
the deferral of payments. This activity must 
continue until the proceeds of the new 
funding arrangements are received, and 
should the timing or quantum be different to 
forecast, will need to increase to a point that 
may not be sustainable. The group’s ability 
to do this is critical and dependent on the 
reaction of key suppliers, which is outside the 
Group’s control. Should the Group be unable 
to sustain this, there is a significant risk that the 
Group will be unable to meet its contractual 
obligations as they fall due.

Further key assumptions included in the 
forecast cash flows are summarised as follows 
and explained in further detail at Note 2.1:

•  conversion of a portion of the bid pipeline 
to contract awards in line with our strategy;

•  release of restricted cash relating to the 
Bank Guarantees provided to our client 
on the EA1 project;

•  execution of existing major projects in 
accordance with agreed milestones, 
forecast costs and payment receipts in 
accordance with the contract;

•  revenues from our Contracting Services 

segment and Rig Refurbishment business 
unit continue in line with those achieved in 
prior periods; and

•  the commercial close out of the Moray East 
project in line with current forecasts and 
resulting final payments.

The COVID-19 pandemic continues to affect 
our ability to make forecasts and increases 
uncertainty around all of these assumptions, 
particularly the timing of new funding 
arrangements, new major contract awards, 
our ability to meet project milestones and 
also vendors’ ability to accept extended credit 
periods. In view of this, the Directors have 
considered downside sensitivities to the key 
assumptions which include no new significant 
contract wins in the going concern period 
and the inability of the Group to secure new 
funding arrangements. The Directors have 
concluded that, in aggregate, such matters 
beyond management’s control represent a 
significant judgement on the entity’s ability 
to continue as a going concern.

Significant disruption to the timing or realisation 
of the anticipated cash flows could result in 
the business being unable to realise its assets 
and discharge its liabilities in the normal 
course of business. The Directors have 
considered the realistic availability and likely 
effectiveness of drastic and severe mitigating 
actions that they could take to avoid or 
reduce the impact or likelihood of a significant 
deterioration in the cash flows, along with 
the Group’s ability to carry out those actions. 
These include: continued fiscal discipline 
and targets for managing working capital 
particularly with respect to the delivery of the 
two IMI rigs which draw their peak working 
capital requirement in 2H 2021. This includes 
extending credit periods with vendors in the 
months where our cash requirements are 
significant; delaying planned contributions to 
our IMI joint venture; deferring implementation 
of the ‘Lamprell reimagined’ strategy until a 
time the funding can be secured; self-help 
measures including extending periods of 
reductions in overheads, fees, salaries and 
allowances for the Board, senior management 
and professional staff, use of a deferred salary 
savings scheme and where operationally 
feasible, placing staff on reduced working 
hours or unpaid leave; reduced levels of 
capital expenditure and digital spend; and 
sale of non-core businesses or assets. 

Following consideration of these actions, the 
Directors are satisfied they have appropriate 
available mitigating actions in place to ensure 
that the Group remains liquid in the short 
term. However, the Directors highlight that 
these mitigating actions are severe and will 
require support from vendors to manage 
working capital requirements for the business. 
Assumptions in management’s forecasts 
regarding the Group’s plans to raise capital, 
and its ability to continue to defer payment 
to certain suppliers as set out above, which 
are outside their control, represent a material 
uncertainty that may cast significant doubt on 
the group’s and company’s ability to continue 
as a going concern.

Dividend
The Group made progress in returning 
to profitability in 2020. However, current 
revenues remain at insufficient levels to 
cover existing overheads, and the COVID-19 
pandemic continues to cast major uncertainty 
on markets and industries. As a result, the 
Directors do not recommend the payment 
of a dividend for the period in relation to the 
financial year ended 31 December 2020. The 
Directors will continue to review this position 
in light of market conditions and Group 
performance at the relevant time. 

Post balance sheet events
See Note 40 on =>> 141 for events that have 
taken place post the balance sheet date.

Tony Wright
Chief Financial Officer

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

43

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Viability statement

In accordance with the UK Corporate 
Governance Code 2018, the Directors have 
assessed the prospects of the Company 
over a longer period than the 12 months 
required for the going concern statement. 
In preparing this assessment of viability the 
Board has considered the principal risks faced 
by the Group, relevant financial forecasts and 
sensitivities and the availability of adequate 
funding.

Assessment period
The Board conducted this review for a period 
of three years to 30 June 2024, which was 
selected for the following reasons: 

•  At least annually, the Board considers 

the Group’s forecast projections over a 
three-year period

•  The strategic review covers a period with 

visibility on likely prospects for the coming 
two to three years

•  Most major projects undertaken by the 
Group last for up to two years meaning 
that the Company has a reasonable ability 
to evaluate its likely backlog for a period of 
two to three years

•  The long-term incentive awards for 
management are structured around 
a three-year performance period

Consideration of principal risks
The nature of the Group’s operations exposes 
the business to a variety of risks =>>44 and 
the Board regularly reviews the principal 
risks and assesses the appropriate controls 
and further actions =>>46. Lamprell’s 
strategy and business model are central to 
an understanding of its future prospects and 
mitigation of risks. Its business model =>>18 
has proven to be resilient in previous project 
cycles but it remains under severe pressure 
due to circumstances at the macro and 
micro level. The energy industry continues 
to be challenging in light of the impact of the 
transition from hydrocarbons to renewables 
and the added risks caused by COVID-19, 
both of which continue to have a detrimental 

effect on the broader economy and capital 
investment decisions by clients. Specific to 
Lamprell, while the Board is excited by the 
significant opportunities in its addressable 
markets, the Group needs to complete a new 
funding arrangement of USD 120–150 million 
by the end of Q3 to fulfil its near-term working 
capital needs and meet its strategic objectives.

Assumptions
In assessing the long-term viability of the 
Group, the strategy reflects the Directors’ 
best estimate of the Group’s prospects and 
is based on the certain base assumptions in 
the financial forecasts, reflecting the overall 
strategy and which are as set out opposite 
in the going concern statement =>>42 (the 
‘Projections’).

The Board has considered that those principal 
risks could potentially impact Lamprell’s 
ability to deliver on its strategy or threaten its 
financial projections in the assessment period, 
as detailed in the table below. The Directors 
recognise that future assessments are subject 
to a level of uncertainty that increases with 
time and, therefore, future outcomes cannot 
be guaranteed or predicted with certainty. 
As such, they have considered the realistic 
availability and likely effectiveness of mitigating 
actions, some of which are severe, that they 
could take to avoid or reduce the impact or 
likelihood of a significant deterioration in the 
cash flows including:

•  Capital raising of USD 120-150 million 

through debt and/or equity
•  Negotiations with the other IMI 

shareholders regarding the deferral of the 
next instalment of our strategic capital 
expenditure in the Saudi maritime yard 
scheduled for this year

•  Effective cash management in the supply 

chain to improve cash inflows and outflows 

•  Self-help measures including reduction 
and delays in payment of salaries and 
allowances, headcount and other non-staff 
overheads, use of deferred salary savings 

scheme and where operationally feasible, 
placing staff on reduced working hours or 
unpaid leave

•  Minimal level of capital expenditure 
including deferring implementation 
of the ‘Lamprell reimagined’ strategy

The Board has considered the risk mitigation 
strategy as set out for each of the risks and 
believes that the above Projections would be 
sufficient to ensure that the Group should be 
able to remain viable during the three-year 
period. However, the Board also considered 
a downside case for the Projections which 
anticipates that the new capital raise options 
(through debt and equity) are all unsuccessful 
as this is the risk causing greatest sensitivity to 
the financial performance and prospects of 
the Company – in such instance, it is highly 
unlikely that the Group would have sufficient 
headroom to continue to be viable, even in 
spite of all other, severe mitigation measures 
being enacted by management.

Conclusion
The Directors’ assessment has been made 
with reference to the Group’s current position 
and prospects, the Group’s strategy and 
availability of funding, the Board’s risk appetite 
and the Group’s principal risks and how these 
are managed, as detailed in the Strategic 
Report. The Directors have also considered the 
availability of actions within their control in the 
event of plausible negative scenarios occurring 
and the expectation that the Projections will 
complete. While the Board believes that there is 
a reasonable prospect of the Company being 
able to address the individual risks, significant 
disruption to the timing or realisation of the 
fundraising noted above would likely result 
in the business being unable to discharge 
its liabilities as they fall due, meaning that it 
is unlikely that the Group would be viable or 
would be able to continue in operation and 
meet its liabilities as they fall due over the three-
year assessment period.

Principal risks

Base assumption

Downside scenario

Ability to finance business

USD 150 million equity raise

Capital raise is unsuccessful

Economic conditions

Gradual improvement over time

No improvement in market conditions

Counterparty risk

Short term extended credit terms

Prolonged extended credit terms

Project execution

N/A

No reasonably plausible financial exposure 
has been modelled

 
 
 
 
44

STRATEGIC REPORT

Risk and risk management

Lamprell has a comprehensive approach to risk management. We recognise that 
effectively managing risks and opportunities is essential to our long-term success 
and is fundamental in helping us achieve our strategic objectives and protecting 
long-term shareholder value. 

Our approach to risk management 
We employ a systematic process to identify, 
assess, monitor and communicate the risks 
facing the Group. Together, our organisational 
structures, processes, standards, values and 
behaviours form a robust integrated internal 
control system that helps proactively manage 
our risks. The Board is responsible for the 
Group’s risk management processes and for 
oversight of how risks and opportunities are 
addressed. The Board considers the level of 
risk that is deemed acceptable in pursuit of 
strategic objectives, balanced against the 
need for business development and the 
pursuit of growth opportunities which may 
have an inherently higher degree of risk.

The Directors have carried out a robust 
assessment of the emerging and principal 
risks facing the Company, including those that 
would threaten its business model =>> 18, 
future performance, solvency or liquidity, as 
required by the Code. 

Risk management is conducted using both 
bottom-up and top-down approaches to 
cross-check results. Business objectives and 
risk action plans are agreed and executed 
by the relevant functional leadership team. 
Project risk management is executed by 
the project management teams, with 
comprehensive risk identification, analysis 
and reporting activities being undertaken 
regularly. Our functional leadership teams 
and the Executive Committee undertake 
a comprehensive review of corporate risks 
every quarter to ensure they are understood, 
managed and appropriately mitigated before 
they are reported to the Audit and Risk 
Committee on a biannual basis. 

Our risk management framework 
and process
A matrix of risk likelihood versus impact is 
used to help analyse and communicate risks 
throughout the Company. The risk matrix 
facilitates the consideration of risk inter-
dependency and the amalgamation of similar 
specific risks across the organisation. Risks are 
categorised according to level and escalated 
as appropriate. 

Risk governance process

Board

Audit and Risk Committee
Biannual review of top Company risks  
by the Audit and Risk Committee

  Read more =>> 68

Q2 and Q4 of each year

Executive Committee
Quarterly update of functional risk registers 
and review by the Executive Committee

End of each quarter

Functions and projects
Continuous monitoring and management 
of functional and project risks

All year

Lamprell’s risk management process closely 
aligns to the ISO 31000 risk management 
methodology.

Lamprell’s risk management framework, 
under the oversight of the Board, is 
implemented through two key risk 
management procedures: at the project 
level, the project managers use a risk 
management procedure which covers 
activities for both proposals and active 
projects; at the corporate level, each of 
our support departments deploys a risk 
management procedure governing risks 
arising from their respective departments 
to business objectives. Acting as a focal 
point for all risk management assessments, 
we have a commercial and risk management 
department which monitors the effectiveness 
of the framework to ensure it remains fit for 
purpose. In addition, Lamprell’s internal audit 
department undertakes individual audits to 
independently assess the effectiveness of 
internal controls and implementation of the 
overall framework.

Whether it is at the project level or in the 
support departments, the initial stages of the 
risk management process are similar: our 
teams consider the context, scope of work, 
or activity upon which the risk assessment is 
based in order to focus on risk identification. 
Identified risks are analysed in terms of 
probability of occurrence and impact, and 
on a ‘gross’ (i.e. pre-mitigation) and a ‘net’ (i.e. 
post-mitigation) basis. Possible risk treatments 
are then evaluated, and detailed risk response 
plans are developed, and specific actions 
allocated to staff to address. The relevant 
team monitors and reviews its risk register 
regularly, with risk profiles also being reported 
to management regularly. 

The network of embedded risk focal points 
is key to ensuring effective management 
and internal communication of risks. All 
corporate, project and proposal risk registers 
are stored in our risk management information 
system, which is the central depository for 
risk management information. The system 
enables us to assess the position of our 
business and project risks at any given time, 
and the system provides a valuable audit trail.

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

45

An evolving, learning journey
We recognise that the risk management 
process offers opportunities to improve key 
aspects of the business in our journey to 
implement our 2021 strategic goals =>> 22. 

There was a major overhaul of Lamprell’s 
bidding and estimation processes, as well as the 
identification and quantification of risks in 2018. 
But all processes and procedures continue to 
be reviewed and refreshed on an iterative basis, 
as we complete other projects and compare 
ourselves against peer companies. 

Lessons learned from the East Anglia ONE 
wind farm project were embedded into the 
organisation and onto the Moray East project 
with great success. These, along with other 
lessons learned from Moray East, are being 
implemented on the Seagreen windfarm 
project =>> 39. Given the expected significant 
growth in the renewables sector over the 
coming decade and more =>> 16, we are 
taking the process improvements from earlier 
renewables projects and using them to remain 
competitive. This is all the more important as 
we look to achieve our strategic goal of moving 
up the value chain by taking a broader role in 
such projects. 

By way of example, we identified counterparty 
risk in the supply chain as a key emerging risk 
in 2020 because of the combined pressure of 
the highly-competitive energy markets and the 
constraints caused by the global pandemic. We 
have therefore enhanced and expanded our 
due diligence procedures and activities for key 
suppliers on projects – in this way we obtain 
greater reassurance about the longer-term 
ability of suppliers to take on new work. This 
allows us to outsource significant proportions 
of new projects where suppliers can complete 
those works more efficiently and competitively. 

Similarly, there was significant effort expended 
in reviewing our risk management processes 
in light of the impact of the pandemic. This 
placed additional strain on all aspects of the 
organisation, whether our personnel, our 
projects or clients. As a result, the project 
management and health and safety teams 
worked very closely and coordinated 
efforts to conduct frequent reviews of any 
additional risks posed by the virus to ensure 
the achievement of schedule, cost, HSE and 
quality objectives. They developed, monitored 
and tracked completion of related risk 
management action plans.

Lamprell’s approach to risk management 
is decentralised. As with all aspects of 
good governance, the effectiveness of risk 
management and internal control depends 
heavily on the individuals responsible for 
operating the systems that are put in place. 
The commercial and risk management 
department has provided training on the use 
and implementation of risk management 
processes. In addition to the Group’s regular 
risk review meetings, the Executive Committee 
meets regularly to discuss safety, compliance, 
operational, commercial and finance matters, 
with changes and opportunities being 
identified and addressed as appropriate.

Opportunities
As well as risks, we have spent considerable 
time reviewing the significant, available 
opportunities which feed into our strategy 
and the sustainability of the business. The 
energy transition has been accelerated by 
the impact of the pandemic and this has 
resulted in new prospects in renewables (and 
in particular offshore windfarm projects) and 
digitalisation =>> 16. The Board has taken this 
on board during the strategy review process 
which resulted in the reorganisation into three 
distinct business units — Renewables, Oil & 
Gas and Digital =>> 3. 

Our risk management framework

Top-down
Directors monitor how key risks might impact implementation  
of the Company’s strategy

Continual 
improvement

Framework 
designed and 
reviewed

Risk  
management  
as per  
procedures

Monitor and 
review 
effectiveness

Bottom-up
Individual project and departmental risks are assessed by likelihood and impact 

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Emerging risks
In last year’s report, we identified the impact of 
the COVID-19 virus and the financial pressures 
on Lamprell’s supply chain as emerging risks. 
These risks have grown significantly over the 
course of the last 12 months as the global 
pandemic has continued. As such, the impacts 
of these emerging risks have been embedded 
into the principal risks and uncertainties facing 
the business (and mitigation steps taken by the 
Group), as set out on the following pages.

In the 2019 risk report, we also recognised 
climate change as a potential emerging risk and 
assessed it as low risk to Lamprell at that time. 
Over the course of 2020, the Board identified 
it as capable of posing an increased risk with 
potential impacts from evolving policy and 
regulation and taxes related to climate change, 
enhanced disclosure requirements, as well 
as accelerating demand towards renewable 
sources of energy. As such the profile of this risk 
is increasing and, following Board discussions 
in late 2020, we set up Lamprell’s Sustainability 
Committee =>> 31 which is responsible for 
overseeing and reporting on all sustainability 
matters. Our environmental team has been 
tasked with actioning a plan for implementation 
of TCFDs. Given that we have pivoted the 
business more clearly towards renewables 
projects, climate change also offers significant 
opportunities and management has been 
tasked with capturing them. The Group will need 
additional funding to implement the actions and 
fully realise these potential opportunities.

The renewables industry is relatively immature 
and expected to grow at a significant rate 
=>> 16; at present, it is unclear which renewables 
technologies will be preferred to meet energy 
demands, and/or the extent to which Lamprell 
will be able to include them in our offerings. 
Further, it is clear that local content will play 
a more prominent role in new projects as 
countries look to generate local capabilities and 
employment. Lamprell’s area of expertise is our 
construction of foundation substructures and 
its operations are based in the UAE from where 
it delivers products on a modularised basis. Our 
business development team is working closely 
with clients to unde rstand customer needs, and 
provided that we have access to new capital, 
we plan to invest in new technologies and local 
content to maximise our participation in tenders 
for upcoming projects.

Following the Board’s strategy review late 
in 2020, Lamprell created a distinct digital 
business unit =>> 8 which will continue to 
advance proprietary technologies for industrial 
application, in areas such as asset integrity, 
smart non-destructive testing and robotics. 
These opportunities will require some limited 
investment and, given the increased importance 
of digitalisation in the energy sector, Lamprell is 
committed to promoting these technologies. 
However, there is no guarantee that these will be 
successful ventures or that we will have access 
to the necessary funding unless the planned 
capital raise is successful.

 
 
 
 
46

STRATEGIC REPORT

Principal risks

Risk impact and likelihood:

High

Medium

Low

Risk description

Business implication

Mitigation

1 Ability to finance business
Risk category: Financial risks

Lack of available funding options 
threatens our ability to continue as 
a going concern and/or deliver our 
strategic objectives.

Risk impact:  
Strategy 

  Business model 

Risk likelihood 

Risk owner:  
Chief Financial Officer

Risk change from last year:  
Unchanged

Link to strategy: 
Funding for companies operating in the 
renewables space far exceeds that for  
oil & gas contractors.

2 Ability to win work
Risk category: Strategic risks

Failure to provide reliable, on-
time, competitive solutions  
for new projects.

Risk impact:  
Strategy 

  Business model 

Risk likelihood 

Risk owner:  
Vice President of Business Development

Risk change from last year:  
Unchanged

Link to strategy:  
Opportunities in our key markets are targeted 
by multiple, competitive bidders.

Successful implementation of business 
goals depends on a reasonable level 
of working capital and there has been 
a significant reduction in our net 
assets due to losses in recent years. 
Also, conventional debt funding is 
not readily available in the region due 
to tough market conditions, without 
additional equity funding. If we cannot 
raise capital through the planned debt 
and/or equity financing by the end of 
Q3 2021, this threatens the near-term 
liquidity and the long-term viability of 
the business.

•  Capital raise of USD 120-150 million planned for Q3 2021
•  We use effective cash management processes to maintain strength in 

our balance sheet

•  Ability to stretch the supply chain, improving the Group’s cash inflows 

and outflows

•  Following the strategic reorganisation, we continue to explore how 

best to finance each of the new business units going forward

•  Aligning the cost base with our revenue levels as we pulled levers to 

become cash generative 

•  Strong relationships with financial advisors to evaluate and access 

funding options

Our potential inability to offer a 
competitive product or service could 
negatively affect our reputation 
amongst current and target clients. 
We are dependent on a relatively small 
number of contracts at any given time 
and our ability to retain current clients 
and compete successfully depends 
on our ability to provide on-time, 
low-cost, high-quality products and 
services. If we fail to do so, both 
technically and commercially, we 
will not win new awards. Success 
in contract awards is also currently 
threatened by COVID-19 and by our 
balance sheet, which could constrain 
the supply chain or restrict our 
operations.

•  Reorganised our business to align with customer needs and energy 

transition

•  Bid pipeline expanded into new geographies
•  An experienced and customer-focused BD team targets our key 

clients and markets

•  We use benchmarking data and estimating tools to provide market-

competitive pricing

•  Re-strengthen balance sheet through new capital raise and a 

controlled overhead cost base

•  We leverage the benefits of a strong culture, core values and 

governance regime

•  Lessons learned as well as digitalisation opportunities embedded into 

project processes to enhance overall efficiency

•  Chances of meeting project objectives enabled by effective risk 

management assessment

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

47

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Risk description

Business implication

Mitigation

3 Economic conditions
Risk category: Strategic risks

Energy price volatility, market 
uncertainties and COVID-19 could 
lead to cancellation of bid pipeline 
prospects.

Risk impact:  
Strategy 

  Business model 

Risk likelihood 

Risk owner:  
Vice President of Business Development

Risk change from last year:  
Unchanged

Link to strategy:  
Demand for our products and services 
underpins the entire business. 

4 Counterparty risk
Risk category: Financial risks

The entire supply chain is under 
pressure due to tough market 
conditions amplified by the pandemic 
impact.

Risk impact:  
Strategy 

  Business model 

Risk likelihood 

Risk owner:  
Chief Financial Officer

Risk change from last year:  
Increased

Link to strategy:  
Contractors depend on timely payment for 
working capital.

Project awards may be significantly 
delayed and/or cancelled due to the 
prolonged downturn seen in the 
oil & gas market which continued 
throughout 2020 following the early 
oil price collapse. The threat to the 
broader market has been exacerbated 
by the ongoing impact of the 
COVID-19 global pandemic. Such 
instability leads to clients reassessing 
how and when to sanction capex 
on new projects, particularly in the 
markets which are heavily dependent 
on hydrocarbon extraction for 
revenues.

•  Alignment of our organisation with market dynamics and 

customer needs

•  Bid pipeline of USD 6 billion covers a diversified portfolio and has 
increased significantly in the rapidly-growing renewables sector
•  Our experienced BD team, with strong capabilities and a broad 

network, are sourcing targeted oil & gas opportunities in the UAE 
and Saudi Arabia where capital expenditure is continuing

•  Client engagement activities continued online to generate new 

prospects and improve customer relationships

•  Active investigation of potential partnerships/alliances expands our 

offerings and diversification of territories

•  Self-help measures implemented in 2020 to help maintain our 

competitiveness on future bids

•  Take on and execute projects with experienced, reputable and 

financially sound counterparties, based on reasonable and balanced 
contract terms

•  Enhanced due diligence undertaken on counterparties to assess 

project and financial risks

•  Request clients and suppliers to provide financial security measures 

or guarantees for new projects

•  Enforce contract terms through proactive contract management
•  Effectively manage supply chain payments, combined with regular 

project reviews to highlight counterparty risks and threats of delay to 
payment of invoices

•  Proactively work through project schedule issues in collaboration with 

clients and suppliers

Clients may impose onerous payment 
terms or even stop payments because 
of their own cashflow issues. This may 
result in Lamprell suffering losses or 
reduced revenues, as it would need 
to fund the working capital from its 
own balance sheet which requires 
new financing, or be at risk of disputes 
with suppliers who are exposed to 
liquidity issues too. The entire supply 
chain is under immense pressure and 
there is an increased risk of companies 
taking on contracts at poor margins 
or not delivering to the required 
standards. This risk is heightened in a 
market where all parties are working 
to conserve cash, as the Company 
is doing, and to protect themselves 
against the global economic 
deterioration caused by COVID-19.

 
 
 
 
48

STRATEGIC REPORT

Principal risks continued

Risk impact and likelihood:

High

Medium

Low

Risk description

Business implication

Mitigation

5 Project execution
Risk category: Operational risks

Failure to deliver projects on time and 
on budget, in accordance with the 
contract requirements, as a result of 
poor performance or external factors 
such as COVID-19.

Risk impact:  
Strategy 

  Business model 

Risk likelihood 

Risk owner:  
Chief Operations Officer

Risk change from last year:  
Unchanged

Link to strategy:  
Our clients expect safe delivery of high-quality, 
on-time products and services.

6 Cyber threats
Risk category: Operational risks

IT systems could be disrupted by 
successful cyber-attacks or outdated 
infrastructure.

Risk impact:  
Strategy 

  Business model 

Risk likelihood 

Risk owner:  
Chief Financial Officer

Risk change from last year:  
Increased

Link to strategy:  
Digitalisation is a strategic objective to improve 
efficiency and generate new revenues.

Failure to execute, project manage 
and deliver a project per contractual 
terms and conditions may expose us to 
additional costs, damage to reputation, 
losses or reduced revenues. This is 
particularly relevant as we diversify into 
new markets and product offerings 
where additional execution risks can 
arise or further investment is required. 
The spread of the COVID-19 virus 
could affect our ability to execute our 
projects, directly with our workforce 
or through the supply chain. Poor 
execution may also negatively impact 
our reputation with clients and the 
wider stakeholder base.

•  BD team works to better understand clients’ needs resulting in 

projects which are well-aligned with our capabilities

•  All new prospects undergo detailed review and robust risk assessment 

during the bidding phase

•  Continuous improvement cycle to capture all lessons learned 

from previous projects are fed into new bids and/or execution of 
new projects

•  Regular toolbox talks to yard labour, drawing attention to key aspects 
of their day-to-day working lives and how to improve performance
•  Implement an extensive series of high quality self-help measures to 

contain/respond to the COVID-19 threat

•  Training and development of employees is a cornerstone of 

sustainability objectives, to ensure high standards are maintained 
and the likelihood of risks is reduced

Our business and operations both 
rely heavily on our IT network and 
systems including, in particular, the 
enterprise resource planning software 
and engineering design software 
provided by third parties. These could 
fail to operate effectively or be subject 
to disruption/cyberattacks; there are 
also inherent disruption risks as the IT 
infrastructure becomes outdated and/
or we migrate some IT systems to 
the cloud. Without effective, updated 
and efficient IT network and systems, 
we would not be able to execute our 
projects and would suffer reputational 
and financial damage accordingly.

•  Experienced IT security specialist responsible for the Group IT 

infrastructure

•  Migration of many of our IT systems to external service provider with 

access to latest cyber detection and protection technologies
•  Regular IT security training for employees throughout the year
•  Awareness campaigns about information security/cyber threats
•  Regular upgrades to our IT security software and internal controls, 

reinforcing layers of protection and segregation of duties

•  Our data is micro-segmented and stored on the cloud, which helps to 

contain any attacks

•  Enterprise resource planning software is run by a leading service 

provider, Oracle

•  Penetration testing and phishing exercises run by internal and external 

teams to ensure that employees are alive to cyber risks

7 Contractual commitments
Risk category: Legal/compliance risks

Onerous contract terms delay or 
prevent the execution of a project.

Risk impact:  
Strategy 

  Business model 

Risk likelihood 

Risk owner:  
General Counsel

Risk change from last year:  
Unchanged

Link to strategy:  
Implementation of our strategy depends on our 
ability to manage contract risks and meet client 
expectations around project deliveries.

The continuing market downturn has 
led to clients adopting an increasingly 
firm line on contractual terms, 
meaning that we may be obliged 
to take on additional risks under the 
contract which historically have been 
negotiated away. If we then fail to 
properly mitigate this contractual 
liability in other ways, it could lead to 
us incurring additional costs or losses, 
which could affect our overall financial 
performance.

•  We actively conduct risk identification, mitigation and management 

throughout a project lifecycle, from initial bid, through project 
handover and until completion

•  Our project risk analyses are reviewed from a qualitative perspective 

and are also based on a quantitative Monte Carlo assessment
•  During project execution, weekly and monthly project review 

meetings with management for effective oversight

•  Use of mitigation or risk management strategies, including use 
of insurance, guarantees and/or flowdowns of liabilities to the 
supply chain

•  Implementation of the lessons learned on previous projects aims to 

avoid repeats of any identified inefficiencies

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

49

T
R
O
P
E
R
C

I

G
E
T
A
R
T
S

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Risk description

Business implication

Mitigation

8 Third-party alliances
Risk category: Legal/compliance risks

Ineffectual or poor relationship 
management with business partners.

Risk impact:  
Strategy 

  Business model 

Risk likelihood 

Risk owner:  
Executive Committee 

Risk change from last year:  
Unchanged

Link to strategy:  
To move up the value chain, we need to rely 
on our partners to provide complementary 
offerings. 

9 Failure to invest
Risk category: Strategic risks

Returns from the business require 
initial capital investment.

Risk impact:  
Strategy 

  Business model 

Risk likelihood 

Risk owner:  
Executive Committee

Risk change from last year:  
Unchanged

Link to strategy:  
The strategic objectives are dependent on 
making a return from capital employed.

To conduct business in certain 
jurisdictions, we rely on key 
relationships with local partners, 
agents and the members of joint 
ventures and consortia. If we are 
unable to work collaboratively or 
poorly manage these relationships, 
or our partners are unable to provide 
effective support to our business, this 
could leave us exposed to additional 
contractual and/or execution liability, 
or make our operations in certain 
jurisdictions uncompetitive.

•  We chose business partners based on a due diligence exercise to 

understand their capabilities, culture and goals, to ensure alignment 
on strategic objectives

•  Management regularly reports to the Board on all proposed and 

current joint venture/consortium initiatives, assessing progress against 
our strategic objectives

•  We work to build and maintain strong partner relations at 

management level

•  Agreements are drafted and negotiated based on an agreed set 
of principles, describing the strategic goals, and may include exit 
provisions where appropriate

•  We may obtain advice from external expert advisors, either during 

contract negotiation or as alliances are being built

In order to fund its reorganised 
business structure and to stay 
competitive on new and existing 
projects, the Group has to spend 
additional capital funds improving 
its yard processes/layout, upgrading 
IT infrastructure/operating systems, 
funding joint ventures and investing 
in its digital initiatives, failing which 
the Group may not be sufficiently 
competitive to win new projects or 
to achieve the necessary margins to 
improve overall profitability to the 
required level.

•  Reorganised our business to align with customer needs and energy 

transition

•  We are already deploying certain digital initiatives in our yards as 

proof-of-concept, justifying further investment

•  The Board approves capital investment for any item valued in excess 

for USD 2 million, based on a detailed justification

•  Experienced BD team conducts in-depth analysis and review of the 

market conditions/dynamics and projections

•  All investments are linked directly to the Company’s strategy and 

visible/actual projects

•  A phased approach to investing wherever possible, to minimise 

immediate exposure

•  The digital business unit is progressing in collaboration with major 

partners like Injazat/G42 to de-risk the opportunity

10 Mergers and acquisitions
Risk category: Strategic risks

An opportunistic transaction could 
significantly alter the intended 
strategic direction of the Group.

Risk impact:  
Strategy 

  Business model 

Risk likelihood 

Risk owner:  
Board of Directors

Risk change from last year:  
Decreased

Link to strategy:  
Change in ownership structure can result in a 
change in strategy.

With the prolonged downturn, the 
delayed award of projects and low 
levels of backlog, we could see an 
opportunistic approach for purchase at 
a suppressed price. This could override 
current strategic objectives or result in 
a loss of traction in the marketplace.

•  The Company’s share price has rebounded on the back of improved 

financial performance and a clear set of strategic objectives

•  Our objectives are measured and progress is reported to the Board 

and shareholders

•  Increased bid pipeline of USD 6 billion, with robust growth in 

the renewables sector and continuing bidding activity in the LTA 
programme and the UAE

•  Lamprell’s largest shareholders could act as a veto to hostile 

approaches based on unreasonably low valuations

•  Professional advisory and broking team actively advising the Board 

and senior management

 
 
 
 
50

CORPORATE GOVERNANCE

Report on corporate governance  
Chairman’s introduction to  
corporate governance

“ We are committed to maintaining high 
standards of corporate governance, 
underpinned by a culture of 
transparency and constructive 
dialogue. These are fundamental in 
helping us to navigate the ongoing 
significant challenges facing the Group.”

Dear Shareholders
The threat of the COVID-19 global pandemic and the oil price collapse 
in 2020 presented us with significant challenges to the way that our 
business operated. The Board remained committed to maintaining high 
standards of corporate governance notwithstanding the impact of these 
events, as this would help the Company to function and progress. As a 
result, the Board and senior management focused on a three-pronged 
response to address these issues – taking steps to ensure the welfare 
of our employees, improving the financial position of the Company 
and enhancing our strategy to ensure that it remains aligned with our 
customer needs and market dynamics.

At the same time, the Board had to be nimble in its processes and 
adapt the way it functioned. I am proud to say that the Board, the 
management and the entire Lamprell workforce responded well to 
these events. Lamprell is subject to the principles and provisions of 
good governance in the Code. Responsibility for compliance with 
the Code rests with the Board and this report demonstrates how our 
robust governance framework enabled the Board to lead the Company 
through these turbulent events and sets out its activities in 2020.

For the year ended 31 December 2020, the Board considers that the 
Company has complied with the Code and this governance report 
details how the principles of the Code have been applied – see opposite 
for relevant cross-references. 

Impact of COVID-19 on our governance framework
Our foremost priority throughout the year was the health and safety 
of our employees. As we became increasingly aware of the scope 
and scale of the virus, the Company had to respond to the constantly-
changing restrictions being enacted by governmental authorities in the 
various locations where our staff work, notably in the UAE. 

A decision was taken early in March 2020 that staff would work from 
home save in case of business-essential requirements; however, 
with certain projects at critical stages, many project-related staff 
continued to function at our facilities and the Board oversaw the many 
measures and mitigation efforts to protect against the impact of the 
virus =>> 10 while we continued to progress our ongoing projects. 

All Board and Committee meetings were conducted through video-
conference remotely from March onwards. The Board created a special 
Subcommittee of the Board to take decisions in the case that the full 
Board was not quorate.

The Audit and Risk Committee recognised that, with most people 
working from home, there was an increased risk to the Company’s 
internal controls framework or of fraud. It therefore refocused the role 
of our Internal Audit team to work with partners within the business to 
ensure that the internal controls remained functioning and effective. 
COVID-19 also impacted our reporting plans. We had planned to issue 
our 2019 financial statements by the end of March 2020. The regulatory 
authorities requested listed companies to delay publication of financial 
statements, enabling the Committee to work closely with our auditors 
to complete additional testing requirements around the going concern 
statement. 

There were also impacts on remuneration issues due to the impact of the 
pandemic. The Remuneration and Development Committee reviewed 
how the market was responding to the evolving situation and decided to 
hold back from issuing the 2020 incentives until there was more stability. 
It also monitored closely how the Company performed against the 
agreed metrics for the annual bonus in spite of the virus =>> 70.

Efforts to improve our liquidity
The Board was disappointed not to be able to progress the Company’s 
financing plans to the extent that it planned to do so. However the 
pandemic and depressed global economic markets impacted contract 
awards and access to capital severely. Accordingly, the Board was forced 
to take some tough decisions in the first half of 2020, particularly with 
regard to the 25% deduction in salaries and fees due to COVID-19, but 
these self-help measures were integral for the Company to preserve 
its immediate liquidity needs and to navigate the pathway through this 
unexpected difficulty. 

Following an assessment of the liquidity position of the Company 
early in 2020, the Board made net cash and EBITDA key performance 
indicators for management’s annual incentive programme and received 
monthly solvency reports to assess performance against those drivers. 

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

51

The Company’s going concern assessment was scrutinised heavily over 
a prolonged period in conjunction with the Audit and Risk Committee 
and our external auditors, and management has worked to address each 
of the assumptions in that statement. Our decisions contributed to a 
significant improvement in the financial condition of the Company over 
the course of 2020, with net cash having increased and the Company 
returning a positive EBITDA.

However, liquidity remains a significant concern for the Group. The 
Board proposes to raise new capital to strengthen the Company’s 
balance sheet, after five years of losses, by way of debt and/or equity 
=>> 41, and this will be placed before shareholders in Q3 2021. The 
Board considers that this would be the first critical step on the pathway 
to financial security and would enable the Company to satisfy its 
immediate working capital requirements as well as implementing its 
medium term strategic goals. Approval of the proposal would be crucial 
to the ongoing viability of the Company.

Our strategy is aligned with our purpose and culture
Over the course of October and November 2020, our management 
team conducted the most comprehensive and all-inclusive review of our 
strategy since I joined the Company in 2013 and I was pleased to chair 
the discussions culminating from that review process with a detailed 
review by the Board in November. Lamprell has been evolving with the 
energy transition over the last 4-5 years but the Board recognised that we 
needed to reorganise our business strategically to increase the Group’s 
focus on renewables and the transition away from hydrocarbons, to 
increase alignment with customers and to enable the Group to take full 
advantage of the significant opportunities in our core markets. Reflecting 
our evolution and to ensure a lean and agile organisation to maximise 
opportunities across these markets, we established three distinct business 
units – renewables, oil & gas and digital. 

As part of the strategy review, we approached various internal and 
external stakeholder groups for their perception of Lamprell and its 
brand. There appeared to be a strong alignment between the groups 
around Lamprell’s reputation as a reliable, resilient business but it was 
clear that we needed to draw greater attention to our proven track 
record in the renewables sector, and this was fed back into the process 
which contributed to the decision to reorganise the business structure. 

Moving ahead
As we look ahead to 2021 and beyond, our immediate priority is the 
need to raise capital through a combination of the planned working 
capital facility and/or equity raise. We will action this to re-establish a 
solid financial foundation for the business and meet current liquidity 
challenges. In addition, we cannot ignore the ongoing impact of the 
global pandemic and what it means with regard to how we operate 
our business. For this reason, we have rolled over some of our Board 
priorities into this year =>> 63, notably our commitment to taking all 
reasonable measures to protect our people and our ongoing focus 
on fiscal discipline. As Chairman, it is my responsibility to ensure that 
Lamprell is governed and managed not only in accordance with the 
Code, but more importantly, in the best interests of our stakeholders 
as we move forward. 

On behalf of the Board, I would like to extend our thanks to our 
investors, our business partners and above all to the Lamprell workforce 
for their dedication and continued support of Lamprell through such 
turbulent times. There may be challenges but I am confident that my 
colleagues on the Board and our management team are capable of 
rising to them and overcoming them.

John Malcolm
Non-Executive Chairman

28 June 2021

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

2018 UK Corporate Governance Code

The Directors present their report on the affairs of the 
Company and the Group together with the financial 
statements and the auditor’s report for the year ended 
31 December 2020. In respect of the year ended 
31 December 2020, Lamprell Plc was subject to compliance 
with the 2018 UK Corporate Governance Code (available 
from www.frc.org.uk) (the ‘Code’). Further information on 
these governance matters within Lamprell can be found 
as follows:

Principal risks and 
uncertainties

Our risk management 
processes ensure that key 
risks to our strategic 
objectives are identified, 
assessed, appropriately 
communicated and 
ultimately managed.

Composition, succession  
and evaluation (Section 3 
of the Code)

We aim to refresh Board 
membership to bring 
new experience and 
independence, as well as 
assess our effectiveness as 
the leadership body within 
Lamprell regularly.

  Read more =>> 44

  Read more =>> 62

Board of Directors

Each Director is 
experienced and skilled, 
and possesses a good 
understanding of the key 
drivers and strategic 
objectives for the business.

Audit, risk and internal 
control (Section 4 of the 
Code)

We have developed strong 
links between risk 
management, internal 
control and audit activities 
to ensure that governance 
systems and processes 
within the business 
continue to be robust.

  Read more =>> 52

  Read more =>> 66

Board leadership and  
Company purpose 
(Section 1 of the Code)

The Board takes a leading 
role in directing the business 
according to high standards 
of corporate governance as 
per the Code.

Remuneration, including 
Directors’ Remuneration 
Report (Section 5 of the 
Code)

Our Remuneration Policy 
provides a compensation 
framework which is 
measurable and is aligned 
with our strategic objectives.

  Read more =>> 54

  Read more =>> 70

Division of responsibilities 
(Section 2 of the Code)

Statutory information and 
Directors’ statements

We have a clear division of 
responsibilities between 
each role, and roles are 
clearly defined and quite 
distinct from one another.

We are responsible for 
preparing the Annual 
Report and the 2020 
financial statements in 
accordance with all 
applicable law and 
regulations.

  Read more =>> 60

  Read more =>> 84

 
 
 
 
52

CORPORATE GOVERNANCE

Report on corporate governance continued

Our Board of Directors

John Malcolm 
Non-Executive Chairman  
Appointed: May 2013

N

Christopher McDonald 
Chief Executive Officer  
Appointed: October 2016

Tony Wright 
Chief Financial Officer  
Appointed: August 2015

Contribution to Company’s success: 
strong background of leadership of energy 
businesses, particularly in the Middle East 
region; experienced in renewables.

Experience: After 25 years with Shell, 
John Malcolm retired in 2010 to become 
an independent consultant to the energy 
industries. During his tenure at Shell, he held 
several senior positions including Managing 
Director for Petroleum Development Oman. 
In 2015 he joined Oman Oil Co. Exploration 
and Production as Executive Managing 
Director. John is a Chartered Engineer with 
the UK Engineering Council and has a PhD 
in Process Control Systems from Heriot-Watt 
University which he obtained in 1975.

External appointments: Owner of JMLM 
Consulting SPC.

Contribution to Company’s success:  
acted in senior executive management 
roles for many years, with a strong focus 
on business development, strategy 
and innovation; highly capable in the 
implementation of the Company’s 
strategic goals.

Experience: Christopher McDonald has nearly 
30 years of experience in the energy industry. 
Before joining Lamprell, he held the position 
of Executive Vice President with Petrofac. 
From 2007 to 2010, Christopher co-founded 
and helped to run a boutique private equity 
firm in London. Prior to that he spent 18 years 
with Halliburton/KBR, starting his career in 
engineering and then a sales function before 
becoming Vice President with responsibility 
for the KBR Development Co. and the KBR/
JGC gas alliance, during which time he served 
on the board of MW Kellogg Ltd. Christopher 
has a Bachelor’s degree in Mechanical 
Engineering from Cornell University.

Contribution to Company’s success: 
has financial acumen and experience 
with contracting companies and in a listed 
company environment; worked extensively 
in the Middle East with a wide network of 
contacts.

Experience: Tony Wright joined Lamprell in 
January 2013 as Vice-President, Finance and 
in November 2014 he stepped into the role 
of Deputy CFO, followed by a promotion to 
Chief Financial Officer in August 2015. Tony is 
a Fellow of the Chartered Institute of Certified 
Accountants with over 20 years’ experience 
working in the energy and construction 
industries. From 2010 he worked with 
Leighton Holdings Group in Malaysia and the 
UAE, and thereafter with the Habtoor Leighton 
Group. Prior to joining Leighton, he spent five 
years as Group CFO with Dubai-based oilfield 
EPC firm, Global Process Systems. When in 
the UK, Tony held senior finance positions 
with Input/Output Inc. and the Expro Group.

External appointments: Director/owner of 
DTTW Ltd.

Board composition

Tenure

Gender

Non-Executive 
Directors 3

17%

Non-Executive
Chairman 1

50%

0–4 years 2

33%

Female 1

17%

33%

Executive
Directors 2

67%

5–8 years 4

83%

Male 5

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

53

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Debra Valentine 
Senior Independent Director  
Appointed: September 2015

AN

R

Mel Fitzgerald 
Non-Executive Director  
Appointed: August 2015

AN

R

James Dewar 
Non-Executive Director  
Appointed: November 2017

AN

R

Contribution to Company’s success:  
a leader in legal and compliance matters, 
as well as risk management, in corporate and 
regulatory context; expert in public companies 
– all are required elements as Lamprell 
navigates through current challenges and 
through the energy transition.

Contribution to Company’s success: 
proven track record in a C-suite role for EPCI 
companies operating in the energy sector; 
deep knowledge of risk management in 
operations – these allow for strong challenge 
to, and ability to act as mentor for, the senior 
operational managers.

Experience: Debra Valentine has experience 
in heavy industries having led government 
relations, governance, risk and legal functions 
across global jurisdictions. She also has 
expertise in competition and anti-trust 
issues. Debra worked at United Technologies 
Corporation and as a partner with the law 
firm O’Melveny and Myers, as well as serving 
as general counsel at the US Federal Trade 
Commission from 1997 until 2001. Most 
recently, she was Group Executive, Legal 
and Regulatory Affairs for Rio Tinto. Debra 
has an AB magna cum laude from Princeton 
University, a JD from Yale University, and is 
a member of the District of Columbia Bar, 
the Council on Foreign Relations and the 
American Law Institute.

Experience: Mel Fitzgerald has over 30 years’ 
experience in the energy industry. He served 
as CEO and Board Director at Subsea 7 for 
seven years until 2012 and has a Bachelor of 
Engineering from the University of Ireland and 
an MBA from the University of Kingston. Mel is 
also a chartered engineer. In July 2015 he was 
awarded an honorary doctorate in Business 
Administration (HonDBA) by Robert Gordon 
University in Aberdeen in recognition for his 
contribution to the UK oil & gas industry.

External appointments: Director/shareholder 
of Cathx Ocean; Director of Control Cutter.

Board strengths

International energy

Leadership

Middle East operations

EPC

0
Risk management

20

Public companies

66%

66%

60

50%

40

83%

83%

83%

Contribution to Company’s success: 
a recognised leader in financial and 
accounting matters for public companies in 
energy markets – acts as a counterbalance 
and also a support to the CFO, as the 
Company rebuilds its balance sheet.

Experience: James Dewar spent nearly 
30 years working in the oil & gas industry, 
notably as VP Transformation and VP Global 
Financial Systems for BP, and as Group CFO 
for Dana Gas PJSC. James retired in 2011 
to take up Board and advisory positions for 
companies operating in the energy sector 
including PICO International Petroleum 
Corporation and Cheiron Petroleum in 
Egypt, Equus Petroleum PLC in London and 
Kazakhstan, and Viking International in the 
UAE. In many cases he acted as chair of 
their audit committees, driving world-class 
corporate governance at board committee 
level. James has a Bachelor’s degree in 
Accountancy and Marketing from Strathclyde 
University and is a member of the Institute of 
Chartered Accountants of Scotland.

External appointments: Non-Executive 
Director for Cheiron Holdings Egypt Ltd, 
Director/shareholder in Dewar Board Advisory 
Ltd, Director/shareholder in Brookfield Place 
(Cobham) Management Co. Ltd.

Committee Chair

A Audit and Risk Committee

R Remuneration and Development Committee

N Nomination and Governance Committee

 
 
 
 
54

CORPORATE GOVERNANCE

Report on corporate governance continued

Board leadership and Company purpose

We have a clearly-established purpose, culture and core values that complement one another and support the 
implementation of our strategy.

Our purpose

The Company’s purpose is to provide best-in-class project services and solutions for the 
energy industry. 

Our culture

Our culture plays an essential role in implementing a strategy which is aligned with the needs 
and expectations of our stakeholders, and the long-term sustainable success of the business. 
Lamprell’s culture is defined through its core values and its Business Code of Conduct 
(available on our website), and is sourced from communications with our workforce, HSES 
data, training data and staff turnover among other things.

We ask our employees to act with integrity, to be curious about issues that they face and 
to aim for the highest performance that they can deliver. The Board aims to set the tone 
from the top by acting with honesty in its practices and encouraging transparency in 
communications. 

We source insights about the success of our culture through a variety of means – employee 
engagement initiatives; health, safety and well-being activities; training and HR data such as 
attrition; and corporate communications.

Our culture is also visible through our assessment against defined performance metrics. We 
aim for high performance, especially in terms of safety and quality, as this is what our clients 
and other business partners expect. We regularly assess the state of our culture, through 
performance reviews and compliance reporting; and we address behaviours if they fall 
short of our expectations.

Our core values

Our core values are at the heart of all of Lamprell’s activities, with good corporate 
governance providing a sound framework to embed them into the business.

Safety 
We deliver world-class safety performance and leave nothing to chance so everyone goes 
home safely.

Fiscal responsibility 
Because every employee influences our costs, we are all accountable to ensure that we 
achieve the most cost-effective solutions.

Integrity 
We conduct our business honestly, with professional integrity, fairness and transparency, 
and we are open and ethical in our day-to-day dealings with all stakeholders.

Accountability 
We deliver what we say we will.

Teamwork 
We strive to work together with our stakeholders and believe great teams can achieve 
incredible things.

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

55

How we are governed
How the Board operates
The Directors are collectively responsible for the strategic direction 
of the Company, which is implemented within a robust governance 
framework. We believe the strategy will create value for shareholders, 
provide rewarding careers for employees and will benefit the wider 
stakeholder group including the communities and environments 
Lamprell operates in – see our stakeholder engagement report for 
how we generate value =>> 28.

The Board ordinarily makes decisions based on recommendations 
from management or one of its principal Committees. It is therefore 
important that reports to the Board are comprehensive, requests for 
approval are clear, and that the Board has visibility of both the relevant 
risks and the views of stakeholders in respect of the subject matter. The 
Code anticipates that the Board will take into account the considerations 
set out in section 172 of the UK Companies Act 2006 when making 
decisions. While this law does not directly apply to the Company as an 
Isle of Man company, our Board has taken steps which they believe will 
promote the continued success of the Company, for the benefit of its 
members and stakeholders as a whole, in the following ways:

•  Each year the Board reviews its long-term strategy and the steps 

required to implement the same. The steps have enabled progress 
in recent years but, in light of the energy transition and following the 
strategy review in late 2020, the Board decided to reorganise the 
business into three business units – renewables, oil & gas and digital 
– to align more closely with customer needs and enable us to take 
advantage of significant opportunities in our core markets. Applying 
Provision A of the Code, the Board considers that this revised structure 
best positions the business to be successful in the coming years, as 
well as generating value for shareholders and contributing to wider 
society

•  The Board aims to ensure that our employees work in a safe 

environment, that they receive appropriate training and are fairly 
rewarded for their efforts

•  Over the years we have fostered long-standing relationships with 

our customers, our suppliers and our external advisors. We base our 
philosophy on sharing our core values with our supply chain and by 
understanding our client requirements

•  As a company manufacturing products for the energy industries, we 
monitor the impact of our activities on the environment and strive to 
reduce our overall carbon footprint =>> 32

•  As a Board, we endeavour to operate responsibly and with honesty, 
and to make carefully considered decisions, taking account of views 
of our stakeholders

In terms of process, the Board has had to be highly adaptable this year 
because of the travel restrictions caused by COVID-19. Ordinarily, the 
Board has five meetings ‘in person’ in the United Arab Emirates and a 
number of ad hoc meetings in between; however, this has not been 
possible with Directors unable to travel to the Middle East. Instead all 
meetings have been held virtually through video conference, save for 
the meeting in January 2020 which occurred before the full impact of 
the pandemic was known. An unintended consequence arose from 
quorum requirements set out in the Company’s Articles of Association 
which limited the number of Directors who could be present when 
located in the United Kingdom. 

Recognising that this could have negative consequences if the Board 
needed to approve any matters, the Board established a formal 
Subcommittee of the Board (comprising Debra Valentine, James Dewar, 
Christopher McDonald and Tony Wright), which was fully empowered to 
take decisions if so required. However, the other Directors would typically 
attend the meetings of the Subcommittee in the capacity of observers 
=>> 61, to keep abreast of decisions being taken and ensure an effective 
working relationship between all the Directors. 

In addition to this new special Subcommittee, the Board continues to 
be well-supported by its other principal Committees (as well as various 
management level committees) =>> 56. There were also frequent 
discussions outside scheduled Board meetings, particularly between 
the Chairman and the CEO, as well as between the Chairman and the 
NEDs, to progress key matters or to allow constructive discussion of 
sensitive matters.

Conflicts of interest/integrity
Under the Code, throughout 2020 at least half of the Board (excluding 
the Chairman) comprised independent NEDs who are free from 
any relationships that could materially interfere with the exercise of 
their independent judgement in respect of Company business. In 
February 2020, Nicholas Garrett stepped down from the Board which 
improved the ratio of independent NEDs. At the beginning of every 
year, each of the independent NEDs (Debra Valentine, James Dewar 
and Mel Fitzgerald) confirms their independence to the Company. 
The Board considers that each of them has been and continues to 
be independent, as defined by the Code.

Integrity is a Company core value and the Board insists on a strong 
‘tone from the top’ in this regard. Each Director works to avoid any 
actual or potential conflict of interest and will promptly declare such 
conflict if one arises. This enables the Board to assess the possible 
impact of any conflict and take appropriate and timely action. The 
following procedures are in place for dealing with conflicts:

•  Any new Director is required to provide information on any conflicts 

of interest by means of a questionnaire prior to appointment

•  Conflicts are declared and addressed during Board meetings and 

noted in the minutes

•  For conflicts arising between Board meetings, these are submitted 

to the Chairman for consideration prior to deliberation at the 
next meeting

No conflicts of interest were noted from the Directors during 2020 
save that each Director was excluded from any decisions around 
his or her remuneration. All conflict management procedures were 
adhered to and operated effectively. In addition, a number of key 
policies and procedures support the core value of integrity, notably 
the Business Code of Conduct, the Anti-Bribery and Corruption Policy 
and the Company’s Whistleblowing Policy. There is also a multi-lingual, 
secure whistleblowing hotline which enables any employee to report 
ethical breaches, irregularities or simply concerns on a confidential 
basis without any fear of recrimination. The Audit and Risk Committee 
receives regular reports on any investigations into whistleblower reports 
and makes a report to the Board on the same.

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
56

CORPORATE GOVERNANCE

Report on corporate governance continued

Governance structure

i

s
e
c
i
l

o
p

l
a
b
o
g

l

,
t
c
u
d
n
o
C

f
o
e
d
o
C
s
s
e
n
i
s
u
B

,
s
e
u
l
a
v
,

n
o
i
s
i
v
,

e
r
u
t
l
u
C

The Board
Has ownership of the global policies. Provides leadership and direction for the Group. Sets overall strategy and 
oversees its implementation. Ensures appropriate systems and processes are in place to monitor and manage 
Group risk. Responsible for financial performance and corporate governance

Board committees
Support the Board in its work with specific review and oversight. Each Committee is responsible for reviewing and 
overseeing activities within its particular terms of reference. The chair of each Committee provides a summary at 
each scheduled Board meeting of any Committee meeting held since the previous meeting

Nomination 
and Governance 
Committee
Takes primary 
responsibility for 
succession planning 
and Board composition

Audit and Risk 
Committee
Monitors the integrity  
of the Company’s 
financial statements 
and its financial  
and regulatory 
compliance, and 
oversees risk 
management

Remuneration 
and Development 
Committee
Sets Remuneration 
Policy and 
compensation levels 
for members of 
senior management 
and drives talent 
development for wider 
management

Ad-hoc Board 
committees
Set up for defined tasks, 
ordinarily with a NED 
as chair

Special Subcommittee
Responsible for taking 
decisions when the 
Board was not quorate, 
due to the impact of 
the pandemic

  Read more =>> 66

  Read more =>> 70

  Read more =>> 72

Chief Executive Officer
Primarily responsible for running the business with 
the objective of creating shareholder value

Chief Financial Officer
Responsible for the financial stewardship and control 
activities of the Group as well as for investor relations

Management-level committees
Responsible for the communication and implementation of decisions, administrative matters and matters for 
recommendation to the Board and its Committees

Executive 
Committee 

Disclosure 
Committee

Bid Approval 
Committee

Quality and 
HSES 
Management 
Review

Sustainability 
Committee

l

G
o
b
a
l
m
a
n
d
a
t
o
r
y
p
r
o
c
e
d
u
r
e
s

Project managers
Responsible for executing and delivering projects

Function managers
Departmental heads for enterprise-wide 
support services

Project teams
Structured around project execution

Function teams
Departmental policy and procedures

p
o

i

l
i
c
e
s
a
n
d
p
r
o
c
e
d
u
r
e
s

L
o
c
a
l

j

i

u
r
i
s
d
c
t
i
o
n
a
l

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

57

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

What the Board did in 2020

Consistent with the focus on employee welfare, liquidity of the business and 
pursuit of the Company’s 2020 strategic objectives =>> 20, the Board agenda 
is structured to cover key subjects, as well as standing agenda items, and 
strategic topics for discussion at relevant times of the year or as a result 
of current business requirements. 

Leadership and people

•  Visited the Hamriyah yard, to meet the Moray East 
team and view the progress being made on the 
welding robots

•  With COVID-19 rising from an emerging to key 
enterprise risk, oversaw management’s efforts 
to implement measures to mitigate impact

•  Approved the consolidation into the Hamriyah 

•  Aligned remuneration for management 

yard and other self-help measures

to market dynamics by approving the 25% 
deduction of fees and salaries to improve 
liquidity and delaying award of the long-term 
incentives

•  Monitored safety performance to deliver 

another record TRIR outcome

•  Considered the results from the annual 
Board evaluation process and approved 
the actions and Board priorities for financial 
year 2020

Financial matters

•  Considered in depth the Group’s financial 
performance and prospects of the Group, 
including the impact of COVID-19 on the 
liquidity of the Company by way of a monthly 
solvency report

•  Received presentations from and worked 

closely with the Company’s auditors around 
significant judgments, impairment reviews 
and the going concern assessment, in light 
of the Financial Conduct Authority’s request 
for the Company to defer its release of the 
FS2019 financial statements

•  Received frequent updates on refinancing 

options available to the Company including, 
in particular, ‘green bonds’

•  Approved the 2020 budget and monitored 
performance against budget, forecast and 
market expectations

•  Approved the Group’s full-year and half-year 

financial statements and determined they were 
fair, balanced and understandable

Strategy and business performance

•  Reviewed progress against the strategy during 

•  Considered the bid pipeline and wider 

•  Received detailed operational updates on 

regular Board meetings and defined the Board’s 
expectations for the Company arising out of the 
formal strategy day

industry conditions in light of the energy 
transition and new US renewables 
opportunities 

•  Following the formal strategy day, reorganised 

•  Received presentations on strategic 

the business into three business units aligned with 
market dynamics and customer requirements

opportunities in the digital and 
renewables sectors

ongoing projects including the Moray East, 
the IMI rigs and Seagreen projects in particular

•  Considered and approved all key or strategic 
matters in line with our delegated authority 
framework

Governance and risk

•  Adapted to travel restrictions with the use of 

•  Amended Articles of Association to enable 

•  Through the Nomination and Governance 

virtual Board meetings, creation of empowered 
Subcommittee and simplified AGM process

•  Through the Audit and Risk Committee, refocused 

Internal Audit on internal control framework, 
in light of heightened fraud risk as staff worked 
from home

hybrid future AGMs

•  Reviewed and approved the enterprise 
risk management report and mitigation 
plans, with deep dives on key areas 
such as execution of LTA contracts and 
financing options

Committee, increased focus on environmental 
and sustainability matters impacting the 
business

•  Reviewed and approved the Group’s Modern 

Slavery and Human Trafficking Policy 
Statement, for publication and commitment 
to compliance across the business

Stakeholder views and consideration

•  Employee engagement a key focus, given 

increased challenges to deliver projects against 
backdrop of global pandemic – NED attendance 
at yard employee welfare forums and creation of a 
Lamprell workforce assembly

•  Sought views from key stakeholders especially 
around brand value, and fed comments into 
strategy review process

•  Discussed feedback from meetings between 
various major shareholders held with the 
Chairman, CEO and CFO, including repeated 
engagement with the largest shareholder

•  Followed up with major shareholder in 

connection with large dissenting vote at the 
2020 AGM, to understand concerns, and 
considered feedback in Board discussions 
around succession planning and our strategy 
for Saudi Arabia

•  Presentation by our brokers and company 

lawyers on investors’ views of the Company 
and the changing regulatory environment

 
 
 
 
58

CORPORATE GOVERNANCE

Report on corporate governance continued

Stakeholder engagement

Shareholder communications in 2020

January

February 

March

April

May

June

July

August

September

October

November

December

Pre-close trading 
statement

Financial Conduct 
Authority request to 
defer full year results, 
due to COVID-19 
impact

AGM attended  
online by all  
Directors

Preliminary results 
announced

Sell-side and buy-
side roadshow

Annual Report 
published

Pre-close trading 

statement

Interim results 

announced

Sell-side and 

buy-side roadshow

Although the Board is committed to maintaining good communications 
and building positive relationships with our stakeholders and this was 
originally a priority for the Directors in 2020, it was challenging to 
implement in practice last year because of the impact of COVID-19. 
Nevertheless this remains a key building block for a sustainable and 
successful business in the future.

Engagement with shareholders
Shareholders are a key stakeholder group and the Board seeks to obtain 
feedback and understand their views throughout the year. Investor 
relations activities are primarily handled by the CEO and CFO, with the 
support of a dedicated investor relations team and the Company’s 
corporate brokers, Investec Bank plc, as well as our financial PR advisors, 
Tulchan. We were sad to note that our other broker (JP Morgan 
Cazenove) decided to step back from broking services as it looked to 
refocus its client base, after nearly 15 years of representing the Company. 

Shareholder views are provided to the Directors at each Board meeting. 
In addition, equity analyst opinions are obtained after the full-year and 
half-year financial results, following investor/analyst roadshows and in 
the regular course of Company announcements and business updates, 
and these are summarised to the Board. Given the reorganisation 
into three business units, we followed up with investors after that 
announcement and the Board was pleased to note that there was 
very strong support for this change. Shareholders commented that 
the future strategy was clear, well-articulated and demonstrated an 
increased commitment to focus on major renewables opportunities, 
while recognising that the offerings to traditional oil & gas clients 
remained a core product.

As an example of the Board applying Principle D of the Code, the Board 
sought to engage with representatives from a major shareholder to 
understand their concerns resulting in the 21% dissenting vote against 
resolutions 2, 14 and 15 at the 2020 AGM. In the lead-up to the AGM 
and in subsequent meetings, the Chairman and CEO had engaged with 
the shareholder to understand better its views and to respond to the 
shareholder’s key areas of focus:

•  Historic financial performance of the Company: while there had 

been major losses in recent years, the Company has demonstrated 
a significantly-improved financial performance with positive EBITDA, 
against a very challenging macro industry backdrop and the impact 
of the COVID-19 global pandemic.

•  The remuneration structure for Directors: as from 1 April 2020, the 
Company temporarily made a deduction to the fees, salaries and 
allowances for its Directors, senior management and all professional 
staff by 25% for a period of six months, to ensure that the remuneration 
structure was appropriate in the circumstances. From 1 October 2020, 
the deductions have continued at broadly the same level until further 
notice, albeit tiered to lessen the impact on lower salaried employees.

•  The need for a strong, diverse Board aligned with the Company’s 
strategic objectives: this issue remains consistent with the Board’s 
own priorities. Since early 2020, the Nomination and Governance 
Committee had been considering how best to enhance the 
capabilities of the Board, by way of a formal succession plan, with 
two specific goals: identification of NED candidates, potentially with 
suitable Middle East regional experience; and adoption of a process 
to align the long-term Board composition with the Company’s 
strategic goals =>> 65.

Since the AGM in June 2020, the Chairman, the CEO and other 
Company representatives have communicated with the shareholder’s 
representatives on multiple occasions and drawn their attention to the 
progress made by the Company during 2020, both operationally and 
financially. The Company will continue to engage with this shareholder, 
and all key stakeholders in the business, for their views. The Board 
appreciates feedback from all stakeholders and has a robust stakeholder 
engagement plan =>> 28. This report satisfies the requirements of 
Provision 4 of the Code. 

Significant shareholders
As at 28 June 2021, being the latest practicable date prior to publication, 
the significant interests in the voting rights of the Company’s issued 
ordinary shares, based on the last request for confirmation as to the 
beneficial ownership of voting rights in the Company (at or above 5%), 
were as follows:

Lamprell Holdings Limited

Blofeld Investment Management

Schroders plc

Voting rights 
attaching to 
issued ordinary 
shares

113,182,291

79,575,164

49,698,377

Lombard Odier Asset Management (UK)

26,375,560

% of total 
voting rights

33.12

23.29

14.54

7.72

Lamprell Holdings Limited and its ultimate owner, Steven Lamprell, are 
considered as ‘controlling shareholders’ for the purposes of the UK 
Listing Rules and so were required to enter into an agreement with the 
Company to ensure compliance with the independence provisions 
set out in the Listing Rules (Controlling Shareholder Agreement). This 
agreement regulates the ongoing relationship between the Company 
and these controlling shareholders, and represents a key component 
of the Company’s corporate governance structure. The Company 
has complied with the independence and all other provisions in the 
Controlling Shareholder Agreement. So far as the Company is aware, 
the controlling shareholders have also complied with the independence 
and all other provisions in the agreement.

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

59

Key to communications with our shareholders

 Corporate presentations, market announcements including trading updates 
and contract wins, and other Company information on our website at www.lamprell.com

  Regular, ongoing dialogue and phone calls with major shareholders and analysts

  Regular press releases regarding the Company’s business

January

February 

March

April

May

June

July

August

September

October

November

December

Pre-close trading 

statement

Financial Conduct 

Authority request to 

defer full year results, 

due to COVID-19 

impact

Preliminary results 

AGM attended  

online by all  

Directors

announced

Sell-side and buy-

side roadshow

Annual Report 

published

Pre-close trading 
statement

Interim results 
announced

Sell-side and 
buy-side roadshow

Annual general meetings
With the evolving COVID-19 situation and in light of international travel 
restrictions, the Board recommended that shareholders not attend the 
2020 AGM in person, which was held in the UAE. The health and well-
being of our shareholders, as well as our employees, was and remains 
of paramount importance and so the Company complied with the legal 
requirements to hold the AGM to pass essential shareholder resolutions, 
but otherwise the meeting was purely functional and comprised only 
the formal votes without any business update. The Board, however, 
strongly encouraged all shareholders to vote on the resolutions by 
submitting proxy votes in advance of the meeting. There was also only 
limited Company representation at the meeting although all Directors 
dialled in virtually and were up for re-election, as required by the Code. 

All resolutions were passed (for more details on the AGM results, please 
see our website) but the Board noted the large dissenting votes against 
resolutions 2, 14 and 15 which was predominantly as a result of the 
voting by a major shareholder =>> 58 for details. The Board is not 
complacent on such matters and has followed up with the shareholder 
to understand their views and consider them in future Board decisions.

The Company plans to hold its next AGM on 8 August 2021. Due to 
the continuing threat of the COVID-19 virus and the consequential 
travel restrictions, attendance will be limited to the minimum number 
of members required to form a legally quorate meeting. Similar to 
2020, shareholders are strongly advised to adhere to the government 
guidelines and not attend the meeting in person this year. It is also 
expected that there will be limited Company attendance at the AGM 
for the same reasons. Shareholders are also encouraged to submit 
their votes by proxy, which will be the basis for approving resolutions 
at the AGM. In addition, any shareholder wishing to submit questions 
for consideration by the Directors is invited to submit these to 
investorrelations@lamprell.com and they will be addressed by the Board. 
Per the Code, all Directors have submitted themselves for re-election. 

Full details are set out in the Notice of Meeting which will be published 
and posted to shareholders, and made available on our website, in 
July 2021.

Engagement with other key stakeholders
The Board has a robust plan for identification of and engagement with 
the key stakeholder groups =>> 28; however in 2020, the top priority 
was engagement with the employee workforce. The NEDs have 
continued with their participation in the regular Lamprell employee 
welfare committee forum – traditionally a primary conduit for the yard 
staff to voice concerns about specific welfare matters. Having taken into 
account feedback from employee leaders and management, the Board 
has also approved the creation of the Lamprell workforce assembly 
which will focus on wider-ranging topics affecting all staff. 

Before the extent of the global pandemic was known, at the start of last 
year, the Directors were able to visit our Hamriyah facility. This included 
a walkthrough of the Moray East project site, where project managers 
demonstrated the recent efficiency improvements in the yard and the 
welding robotics technology that is being evaluated and developed.

In April 2020, the Board took the difficult decision to reduce the fees, 
salaries and allowances for our Board, senior management and all of 
our professional staff by 25% to conserve cash and protect the business 
during this period of unprecedented market conditions. However, it 
became clear that this reduction was causing undue pressure on some 
employees, so in October 2020 we restored the salaries for those in 
the lowest paid tiers to better balance the needs of the business and its 
employees. 

There are a number of other means by which the Board and 
management communicate with the workforce, and relay changes 
in its decisions on key issues, particularly those raised by employees. 
The NEDs have had informal, virtual meetings with high-potential 
employees – this is essential to create a sustainable talent pipeline 
within the business. The Executive Directors cascade key messages 
down the organisation regularly via many channels, as well as through 
electronic communication campaigns coordinated by the Corporate 
Communications team and directly by way of the CEO townhall 
meetings. The townhalls are typically held after the release of the 
financial results but in 2020 were more frequent and held virtually, 
due to the increase in administration staff working from home. The 
CEO summarises key developments affecting the business and the 
Company’s strategic objectives, followed by a question and answer 
session for staff to voice issues directly to the CEO. In 2020, the primary 
focus was on health and safety issues with details of the various 
measures that the Company was implementing to mitigate the impact 
of the virus. In addition, we publish Lamprelltimes, an internal newsletter, 
which highlights business developments. All of these activities, as well 
as matters such as assessment of attrition data and exit interviews, 
contribute to and help us to monitor the Company’s culture.

Given the Company’s purpose =>> 54 and strategy =>> 20, Lamprell 
occupies an important position in the energy industry’s supply chain 
and therefore engages significantly with two other key stakeholder 
groups frequently – its customers and its suppliers. The VPs for the 
business development and supply chain management departments 
are the primary interfaces for them and their feedback is given to the 
Directors, to help with decision-making processes affecting these 
stakeholder groups.

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
 
60

CORPORATE GOVERNANCE

Report on corporate governance continued

Division of responsibilities

We have clear segregation of responsibilities between the leadership of our 
Board, which is overseen by the Chairman, and the leadership of our business, 
which is managed by the CEO.

Chairman

•  Provides effective leadership for the Board, sets 
each meeting agenda and ensures the Board 
receives accurate, timely and clear information 
to enable informed decision-making 

•  Responsible for ensuring the integrity and 

effectiveness of the Executive/Non-Executive 
relationship including meetings solely with 
the NEDs

•  Promotes a culture of open debate, effective 
contribution and challenge for all Directors
•  Communicates regularly with the CEO and 
the Company Secretary to stay informed
•  Ensures effective communication with key 

stakeholders, for Directors to understand their 
views, and the section 172 Companies Act 
2006 factors, in Board discussions

Chief Executive Officer

•  Responsible for the leadership of the Group 

•  Chairs the Executive Committee and 

and day-to-day management of the business, 
including the execution of the Group’s strategic 
objectives, its business plans and setting attainable 
goals and priorities

•  Acting as the primary conduit for communications 
with the shareholders and other key stakeholder 
groups, including investors, clients and 
government agencies

Chief Financial Officer

leads the management team in running 
the Group’s business and managing its 
enterprise and business risks

•  Leads the processes for communicating 

with, and listening to, the workforce

•  Responsible for ensuring effective Board 

governance and maintaining high standards 
of corporate governance

•  Develops proposals and recommendations 
for consideration by the Board on all areas 
reserved for its judgement and ensures the 
Board is fully informed of all key matters
•  Develops Group policies for approval by 
the Board and ensures implementation

•  Responsible for the financial stewardship and 

•  Oversees investor relations activities for 

•  Maintains relationships with lenders and 

control activities of the Group

the Company

corporate brokers

•  Ensures effective financial reporting, processes 

•  Develops and implements the Group’s 

•  Responsible for the delivery of IT strategies 

and controls are in place

finance strategy and funding

and plans

•  Recommends the annual budget and long-term 

strategic and financial plan

Senior Independent Director

•  Acts as a sounding board for the Chairman
•  Available to shareholders to answer questions 
which cannot be addressed by the Chairman 
or CEO

Non-Executive Directors

•  Ensure an effective counterbalance to executive 

management on the Board

•  Support executive management, whilst providing 

constructive challenge and rigour to all 
recommendations presented to the Board,  
based on their experience and expertise

Company Secretary

•  Appraises the Chairman’s performance 

•  Acts as an intermediary for the other Directors

annually

•  Review the integrity of financial information, 
controls and risk management processes
•  Review the succession plans for the Board 
and key members of senior management

•  Contribute to the development of and monitor 
the progress of the strategy implementation
•  Bring sound judgement and objectivity to the 

Board’s decision-making process

•  Set the Remuneration Policy and packages for 

senior executives and the Chairman

•  Acts as Secretary to the Board and its Committees
•  Provides the Directors with advice and assistance on 
all governance, legislation and regulatory matters

•  Ensures that all Board materials and other 
resources are delivered in a timely and 
confidential manner, to assist the Directors 
with effective decision-making

•  Facilitates the Board evaluation, induction 

and development processes

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

61

Roles and responsibilities
Each role is clearly defined and is quite distinct, which ensures a 
continuing robust governance framework and a decision-making 
process that no single individual can dominate. At the date of 
publication, the Board has six Directors comprising the Chairman, 
three independent NEDs and two Executive Directors; their biographies 
are available on =>> 52. There is an appropriate combination of 
Executive and Non-Executive Directors, such that no individual or 
small group of individuals dominates the decision-making process.

Overall effectiveness of the Company
Each year the Board reviews its effectiveness as required under the 
Code, both formally as part of the annual performance evaluation 
process, and also informally during each Board meeting as appropriate. 
The formal evaluation review was undertaken internally. It covered the 
Board, individual Directors and each of the principal Board Committees, 
and examined Board activities, interaction and processes. The Board has 
concluded that it remains effective in its processes and performance.

Board meetings and attendance

Ordinarily the Directors will agree a planned set of meetings in person but in 2020 the Board was only able to have one meeting in person 
and the rest were held by video conference, due to COVID-19. The newly-established Subcommittee only required a limited number of 
Directors in order to formally approve matters discussed previously by all the Directors, in compliance with the Company’s Articles. At times 
Directors were ineligible to participate in meetings if they were located in the UK but were often invited to observe. On such occasions, 
they cannot be included in the quorum of the meeting and do not participate in the formal business, but are able to keep abreast of 
developments and deliberations around key agenda items. Whether meetings were held in person or virtually, all Directors were provided 
with full papers for review in advance of each meeting. Management team members will often attend parts of a Board meeting, delivering 
presentations and making recommendations in respect of certain operational or business matters. In this way, each Director is able to gain 
an in-depth understanding of business-critical functions as well as the direct views of the presenting managers supplementing the views of 
the CEO and/or the CFO.

Name of Director

John Malcolm

Christopher McDonald

Tony Wright

James Dewar1

Debra Valentine

Mel Fitzgerald

Nick Garrett2

Board meetings 
attended

Special 
Subcommittee  
meetings 
attended

Acting in  
capacity  
as observer 

Strategy sessions 
attended

6 (6)

6 (6)

6 (6)

4 (6)

6 (6)

6 (6)

1 (1)

N/A

6 (6)

6 (6)

6 (6)

6 (6)

N/A

N/A

6

N/A

N/A

N/A

N/A

6

N/A

2 (2)

2 (2)

2 (2)

2 (2)

2 (2)

2 (2)

0

1.  Please also refer to the Audit and Risk Committee Report for additional information regarding the attendance of James Dewar.
2.  Nick Garrett stood down from the Board on 10 February 2020.

Number in brackets shows meetings in which the Director was eligible to participate.

Principal Board Committees
Ordinarily the Company has three principal Board Committees – 
the Audit and Risk Committee, the Nomination and Governance 
Committee, and the Remuneration and Development Committee 
– but, as noted above, the Board created a special Subcommittee to 
formally approve matters discussed previously by all the Directors where 
there were quorum concerns. 

The Board ordinarily delegates specific aspects of its authority to 
each principal Committee but it retains final responsibility for all 
Company matters. In cases where a Committee is unable to operate 
in accordance with its terms of reference, for example due to the 
travel restrictions in 2020, the Board or special Subcommittee may 
take on the responsibilities for that Committee, as was the case when 
the external auditors presented to the Subcommittee, rather than the 
Audit and Risk Committee as would normally have been the case. This 
is expected to continue until the relevant Committee can be quorate 
and is able to resume its full responsibilities. Further, on occasion Debra 
Valentine was appointed to act as the chair for a particular Board or 
Committee meeting in lieu of the presiding chairperson.

Much of the Board oversight of the executive management team is 
conducted by delegation through the three principal Committees. 
The Committee members discuss and approve matters transparently, 
in an environment of trust and using delegated responsibilities where 
that is more efficient. The terms of reference for each Committee are 
reviewed annually and made available on the Company’s website.

The Company makes timely and accurate disclosure of all information 
in accordance with the Market Abuse Regulation and the regulatory 
requirements arising from its listing on the London Stock Exchange. This 
is overseen by the Company’s Disclosure Committee, comprising the 
CEO, CFO and Company Secretary although, as per the schedule of 
matters reserved to the Board, key announcements will be considered 
and approved by the Directors.

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
62

CORPORATE GOVERNANCE

Report on corporate governance continued

Composition, succession  
and evaluation

Appointments to the Board and induction
The Nomination and Governance Committee leads a formal, rigorous 
and transparent process for any new Board appointments, which would 
typically also draw on the expertise of external search consultants. In 
2020, there were no new appointments to the Board because of the 
current cost constraints but the Company appointed Spencer Stuart 
and Eton Bridge Partners, specialist recruitment consultants (neither 
of whom have any other relationship with Lamprell), to support the 
Company’s search for new NEDs, aligned with its strategic objectives, 
such as a NED with Middle Eastern, renewables or digital experience. In 
addition, the Committee completed a gap analysis for the existing Board 
members, which helped to identify capabilities in candidates for other 
potential new roles.

Gap analysis/scoping candidate requirements
The Committee identifies the capabilities and experience of 
potential new NEDs, considering current Board composition 
and the future business needs, to drive the future success 
of the Company. Diversity is considered to be a key factor 
in any decision.

Search process
The process is led by the Committee chair, with support from 
our external search agencies and the VP of HR & Corporate 
Services. The Committee will consider the longlist of 
candidates and agree a shortlist of candidates to interview.

Interviews
The Chairman and Committee members will interview 
the shortlisted candidates, but all Directors will interview a 
candidate that is selected by the Committee as most likely 
to be appointed.

New Non-Executive Directors appointed 

All interviewers provide feedback on the candidates to the 
Committee. The Committee discusses the relative merits 
of each candidate based on the pre-agreed criteria for 
each appointment.

Induction programme
Newly-appointed Directors undergo a tailored induction 
programme including visits to the Group’s main facility (subject 
to COVID-19 restrictions), presentations from key managers 
and a meeting with the Chairman and Company Secretary to 
discuss governance and regulatory matters.

Board composition
Through the conduit of the Nomination and Governance Committee 
=>> 66, the Board assesses its structure, composition and breadth of 
experience regularly. It currently considers that there continues to be 
a strong combination of industry, regional, financial and operational 
experience among the Directors, enhanced by the diverse professional 
competencies of each Board member.

The Board aims to refresh its membership on a regular and phased basis 
in order to bring relevant experience and independence to the Board 
while at the same time ensuring continuity and stability. In support of 
our strategy, the Board has identified that it could potentially benefit in 
the future from a new Director with skills or experience closely aligned 
with our strategic objectives and so is actively looking for potential 
candidates that may satisfy these criteria.

Service agreements and letters of appointment
Executive Directors are employed under Directors’ service contracts 
with termination notice periods of not more than 12 months. 

NEDs are engaged pursuant to letters of appointment which do not 
have fixed terms, but they are subject to re-election by the Company’s 
shareholders at intervals of not more than three years. All NEDs currently 
serving were re-elected at the 2020 AGM. All existing Directors and any 
new Directors will be proposed for election by the shareholders at the 
2021 AGM.

Annual evaluation process
The Board considered using an external firm to facilitate our annual 
Board performance evaluation process but, particularly given COVID-19, 
concluded that its internally-driven evaluation process, conducted 
under the stewardship of the Nomination and Governance Committee, 
continues to be effective, delivers useful insights and helps the Board 
to improve its performance. The evaluation included a review of the 
Board’s activities, performance and teamwork and made use of an online 
questionnaire to provide feedback from the Directors and key managers.

The Company Secretary summarised the results from the 2020 
evaluation process in an aggregated and confidential report, which 
was used by the Board to assess the performance in 2020 and set the 
Board priorities for 2021. The Chairman held separate sessions with 
each Director to review their respective performances and the Senior 
Independent Director conducted a similar review with the Chairman on 
his performance. This was an opportunity for each director to engage 
with the process and to discuss with the Chairman whether any action 
was required to address development needs.

Once again, the results demonstrated that the Directors had approached 
the challenges of 2020 in a constructive and collaborative way. The Board 
also finds it useful to step back and assess its performance in a more 
immediate way at each round of Board meetings.

Notwithstanding the significant practical challenges and financial 
limitations in 2020, there was still good progress by the Company on 
its 2020 priorities, as detailed throughout this Corporate Governance 
Report. The Board was particularly pleased with the growth in the bid 
pipeline comprising significant opportunities in the US renewables sector, 
which is a new geography for potential projects. The Board took into 
consideration the continuing impact of the global pandemic in reaching 
a decision around the 2021 priorities, which are set out opposite. 

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

63

Board priorities for 2021

Board priority

Observation

Actions to deliver on priority

Oversee the change of the 
business structure to align with 
the revised strategic objectives

The Group’s processes and management 
teams are structured to deliver against the 
previous strategy and this will inhibit effective 
and timely achievement of the updated 
strategic goals =>> 22.

Implement detailed action plan to re-
organise the business structure into the 
three new business units and amend the 
reporting mechanisms similarly; incentive 
plans to incorporate elements which 
motivate management to deliver on 
the plan.

In refreshing the Board, ensure 
alignment between Board 
composition and strategic and 
diversity objectives

The current Board composition is narrow in 
diversity and most Directors originate from 
a background and experience in Lamprell’s 
traditional markets, rather than reflecting the 
updated strategy.

During the process to refresh the Board and 
building on the gap analysis conducted in 
2020, look to appoint new Directors from 
a pool with greater diversity and having 
experience in renewables or digital projects.

Oversee ESG priorities including 
refining environmental targets, 
ensuring the safety of the 
workforce during COVID-19 and 
continued interactions with key 
stakeholders

Climate change impact and stakeholder 
engagement are high priorities for investors 
and a company’s strong ESG credentials are 
increasingly important for investors when 
making a decision where to invest their 
funds.

Monitor and drive implementation of the 
sustainability initiatives through Board 
participation in the Sustainability Committee 
and by including ESG priorities into the 
management incentive plans.

Diversity and Inclusion Policy

The Nomination and Governance Committee maintains its continuing 
emphasis on the richness of Lamprell’s diversity and inclusivity, both 
of which are underpinned by our core values. It continues to focus 
on ways to improve the Company’s gender diversity and has adopted 
a detailed Diversity and Inclusion Policy. This policy underpins our 
philosophy in the hiring of new talent which is strictly based on merit 
and with the accompanying range of relevant skills and experience, 
regardless of background, age or gender.

Lamprell is committed to building and evolving the diversity of the 
organisation as a long-term objective and thereby ensuring we have a 
dynamic and creative environment which contributes to our progress 
and sustainability. Diversity was a key component of the Board’s strategy 
review content both in terms of the wider workforce and its own 
succession planning and broader Board composition.

Looking ahead as the Group grows and as new positions become 
available, our Diversity and Inclusion Policy statement commits the 
Group to:

•  A culture which hires candidates on merit based on the most 

appropriate range of skills and experience for a role, and offers equal 
opportunities for all employees, regardless of gender, ethnic origin, 
background or physical abilities =>> 54

•  Secure senior leadership commitment to the diversity agenda and 
to raise awareness about the benefits and richness of a diverse 
workforce

•  Continue to require our external recruitment consultants to discuss 
their diversity policies with the Group before taking on any specific 
Board or executive management search

•  Ensure that external consultants submit candidate shortlists reflecting 

an appropriate ethnic and gender balance, relative to the target 
recruitment market, for consideration by the Nomination and 
Governance Committee

•  Nurture a pipeline of high-potentials covering a broad representation 

across the diversity spectrum

•  Maintain at least one female Director on the Board and aim to 

increase gender diversity at the Board and management levels as 
opportunities become available

•  An annual review by the Nomination and Governance Committee 

of its progress in complying with the best practice recommendations 
for gender diversity

In keeping with our values, we believe diversity brings about multiple 
benefits for all the stakeholder groups we work with. We want our 
workforce to be connected and reflective of the many different areas 
in which we work. Keeping an open and receptive mind and bringing 
forward different ideas into a forward-thinking culture is what helps us 
innovate, mitigate our risks and support sustainable growth.

The annual evaluation helped each of the Directors to understand the 
Company’s composition and diversity better, and in line with Principle 
L, demonstrated how members should work together to achieve the 
Company’s strategic objectives and the Board’s priorities effectively. 

Diversity and inclusion are integral to our culture at Lamprell. 
We promote meritocracy, openness, fairness and transparency. 
This supports the very fabric of our business.

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
64

CORPORATE GOVERNANCE

Report on corporate governance continued

Nomination and Governance 
Committee report

Committee membership and attendance

Member

Mel Fitzgerald 
(Committee Chair and  
Non-Executive Director)

John Malcolm
(Non-Executive Chairman)

Debra Valentine
(Senior Independent Director)

James Dewar*
(Non-Executive Director)

Meetings attended 
(out of total)

Observer

6 (6)

3 (3)

6 (6)

2 (3)

0

3

0

2

* 

James Dewar was appointed to the Committee in March 2020. Please also refer to the 
Audit and Risk Committee Report regarding attendance by James Dewar.

Rising to the challenges
The Nomination and Governance Committee was faced with 
unexpected challenges due to COVID-19 which impacted how 
it functioned as well as the wider governance framework for the 
Company. James Dewar was appointed to the Committee in March to 
provide greater coverage but the Committee then had to appoint chairs 
for individual Committee meetings to comply with the Company’s 
Articles. The members attended all the Committee meetings where 
they were eligible to attend save for James Dewar*. 

Governance framework impacted by COVID-19
We recognised early on how COVID-19 could impact the Company’s 
governance regime: most administration staff have been working 
remotely, increasing the threat to internal controls and fraud risk; all 
Board and Committee meetings have been virtual since March 2020 
and the Articles restrict the number of Directors who can attend from 
the UK. In addition, we were requested by the UK regulatory authorities 
to delay release of our 2019 financial statements to allow the audit 
firms additional time to scrutinise the impact of the pandemic on the 
Company’s financial position. The Company agreed to this request but 
the delay impacted our reporting processes. 

Notwithstanding these challenges, I am pleased to say that the 
Company’s governance regime continues to be robust. The Board is 
committed to maintaining the high standards of corporate governance 
which are fundamental to the business. The Code has put more 
emphasis on the Company’s purpose, stakeholder engagement 
and corporate culture, all of which were discussed at length by the 
Committee in 2020. The Committee received effective support from 
the Company Secretary and the Group’s VP of HR & Corporate Services, 
both of whom made recommendations relating to the Committee’s 
priorities. 

The Directors are encouraged to keep up-to-date with regulatory 
developments, which assists with understanding new challenges such 
as those faced in 2020. Directors regularly attend corporate governance 
sessions run by the Deloitte Academy and report key learnings to the 
Board. The external auditors presented to the Board on corporate 
reporting matters which the Committee was able to take on board 
in the development of this Corporate Governance Report. The risk 
reporting around COVID-19 and the changes in the area of climate 
change disclosures are two areas of particular focus. 

Key responsibilities of the Committee
•  Making recommendations to the Board regarding 
its succession planning, composition, skillsets and 
independence

•  Driving improved diversity and inclusion policies throughout 

the Group

•  Evaluating the impact of changes to the governance/

regulatory environment and advising the Board accordingly

•  Overseeing the annual Board performance evaluation 

process 

•  Overseeing the Group’s environmental and sustainability 

matters

2020 Committee activities
•  Appointed new external search consultants to support the 

Company’s future succession plans

•  Completed the gap analysis of the skillsets of the existing 
Directors and focused a search for potential Director 
candidates around this

•  Considered the impact of the global pandemic on the 

Company’s governance framework

•  Led the engagement with the major shareholder that had 

voted against resolutions at the 2020 AGM, to feed its views 
back to the Board

•  Received presentations around the Group’s sustainability 

plans and approved the creation of a Sustainability 
Committee

•  Recommended the 2020 Modern Slavery and Human 
Trafficking Policy Statement for approval by the Board 
and publication

Priorities for 2021
•  Monitor implementation of the Group’s sustainability plans 

and in particular the action plan for TCFD recommendations
•  Consider how best to implement the Board succession plan 

with the appointment of a new independent NED and kicking 
off the process for a new Chairman in 2022

•  Chair of the Nomination and Governance Committee 
committed to represent the Board at the Sustainability 
Committee meetings during 2021

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

65

All Directors are entitled to seek independent professional advice 
concerning the affairs of the Company at its expense, as needed. 
Some Directors sought independent advice during the financial year 
in connection with the strategic review process that was undertaken 
in late 2020.

Succession planning
The Committee remained heavily focused on future succession plans 
for the Board. The Committee is committed to ensuring that the 
Board composition is appropriate, fit for purpose and aligned with the 
Company’s strategic objectives. 

Having previously conducted a gap analysis for the experience and skill 
sets of the existing Board, the first priority was the appointment of the 
new external recruitment search consultants following a tender which 
completed in Q1 2020, with the appointment of Spencer Stuart and Eton 
Bridge Partners. They will be focused on Board and senior management 
appointments whereas the Committee also makes use of the McNair 
Partnership for other key positions. None of the firms has any other 
connection with Lamprell but are all highly capable and specialised. 

With the assistance of the VP of HR & Corporate Services and Spencer 
Stuart, the Committee has been running a process to identify and 
appoint a potential, new NED with suitable Middle Eastern experience. 
A number of shortlisted candidates have been interviewed by the 
Committee members. The search for a new independent NED 
continues in 2021.

In addition, looking at longer-term succession planning, the Committee 
recognises per Provision 19 of the Code that the Company’s Chairman, 
John Malcolm, will have completed nine years on the Board by mid-2022 
and is therefore planning to step down by that time, in accordance with the 
Code. Accordingly, the Committee is planning to commence a process to 
identify and appoint a replacement chairperson, which is likely to take into 
account internal candidates from among the existing independent NEDs. 
The Board expects to report on progress later in the year.

Sustainability and the environment
The Board delegated the formal oversight of all Group sustainability 
and environmental matters to the Committee, which was reflected 
in the amended terms of reference for the Committee – available on 
our website). The Committee received presentations in September 
and November from the HSES team on these subjects and discussed 
the action plans for improving both the Company’s understanding 
and impact on climate change and also for embedding broader 
sustainability initiatives within the business. 

A key output was the creation of a new Sustainability Committee which 
is responsible for monitoring progress against the implementation 
of the action plans and reporting to the Committee. Mel Fitzgerald is 
the nominated Board representative on the Sustainability Committee, 
thereby reaffirming the importance of this subject to the workforce but 
also allowing the Directors to have a direct conduit to/from deliberations 
around sustainability and environmental matters =>> 30.

The Committee also considered safety and security matters in greater 
detail based on reports from the HSES team and was delighted to note 
that the Company had achieved another record-equalling result on 
TRIR at 0.15 by year-end. In a year where yard employees increased 
to around 5,000 by year-end, this was an exceptional achievement 
and a testament to the efforts of the workforce, especially against the 
backdrop of the challenges caused by the global pandemic.

Continuing focus on stakeholder engagement
It has been a difficult year to implement extensive engagement plans with 
the wider stakeholder base. The Board chose an alternative arrangement 
for engagement with the workforce than as proposed in the Code 
(Provision 5), instead using NED participation in the employee welfare 
forum as a means to hear employee concerns and views, but there has 
been excellent progress with engagement with employees as a result.

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Areas of NED expertise

5 2
7 3
9 1

133
25
13
156

13

99

9 3

14

14

4

10 4

8

8 1

11 5

12 7
10
11

12 10
4
11

11
12 2
14 7

14 7
8
13

t
r
e
p
x
E

h
g
H

i

i

m
u
d
e
M

w
o
L

12 12

6

106

Low

Medium

High

Expert

NED’s

  John Malcolm
  Mel Fitzgerald

  Debra Valentine
  James Dewar

Expertise

1. International oil & gas
2. Middle East operations
3. Risk management
4. EPC
5. Public company boards
6. Legal
7. Financial and accounting
8. Public markets

9. Leadership
10. Digital
11. Renewables
12. Saudi experience
13. Diversity/inclusion
14. Mergers and acquisitions

The Directors have clear visibility of all stakeholder groups and of 
how the Board as a whole or individual Directors engage with key 
stakeholders =>> 28. Whether listening to employees in a welfare 
forum, speaking to shareholder representatives directly or receiving 
feedback from customers, the Board takes account of their views when 
making decisions on behalf of the Company. The independent NEDs 
attend employee welfare committee forums or virtual meetings with 
high potentials as a means to hear concerns straight from staff, as this 
helps to inform how Board decisions may directly impact them. The 
Board considers that this delivers meaningful, regular dialogue with the 
workforce.

The Lamprell team works hard to develop positive working relationships 
with our customers and the Board provides support to the management 
team in cultivating those relationships or even resolving issues that may 
arise. As we looked to close out the East Anglia ONE project at the start 
of last year, the Chairman and the CEO both met with the client’s CEO 
with a view to drawing the challenging project to a successful close. 
An example of effective management is the discussions we held with 
a major shareholder =>> 58 that voiced particular concerns about the 
Company’s performance and Board composition.

The Committee will continue to refresh and implement engagement 
activity plans, either by management or Directors, with the Group’s 
stakeholder groups, looking at innovative or proactive ways to 
communicate notwithstanding the ongoing impact of COVID-19.

Mel Fitzgerald
Chair of the Nomination  
and Governance Committee

 
 
 
 
66

CORPORATE GOVERNANCE

Report on corporate governance continued

Audit, risks and internal control

Risk management, internal controls and audit work 
The primary function of the Audit and Risk Committee is to monitor the 
links between the Group’s activities around risk management, internal 
controls and internal and external audit work and ensure that these 
processes continue to be robust. That is particularly important at a time 
when the supply chain is constrained due to the prolonged depressed 
oil & gas sector and when individual employees are experiencing 
personal pressure because of the impact of COVID-19 on their working 
life and financial situation.

The Group has an internal control environment designed to protect 
the business from the material risks which have been identified. 
Management is responsible for establishing and maintaining adequate 
internal controls and the Committee has responsibility for ensuring the 
effectiveness of these controls. Both are ably supported by Deloitte 
LLP, our external auditors, which test a number of the Company’s key 
controls, and an internal audit function which assesses the effectiveness 
of the control framework and compliance by the Company’s workforce. 

The Group’s risk assessment process and the way in which significant 
business risks are managed is an area of focus for the Committee. 
The Committee’s activity here was led primarily, but not solely, 
by the Group’s assessment of its principal and emerging risks and 
uncertainties, =>> 45.

The Board retains overall responsibility for ensuring that there are 
adequate procedures to manage risk, to oversee the Group’s internal 
control framework and to determine the nature and extent of the 
principal risks the Company is willing to take in order to achieve its 
long-term strategic objectives. 

Policies/procedures for overseeing the internal  
control framework
The Company has a system of internal controls based around the key 
features set out below. They are collectively designed to assist in the 
achievement of the Group’s business objectives.

Internal control framework key features
•  Our strategy is defined by the Board each year and implemented 

by management

•  A corporate culture and core values which set high standards of 
business practice and are underpinned by Lamprell’s Business 
Code of Conduct

•  Financial planning including annual budgets, quarterly reviews and 

three-year forecasting

•  Policies and procedures which regulate the controls and limitations 
of authority including a schedule of matters reserved for the Board, 
a clear organisation structure and a delegation of authority matrix
•  Oversight and approval of projects and/or contract awards either 
through executive management and/or, where required on major 
projects, the Board 

•  Implementation and use of an integrated enterprise resource 

planning system, linking the various business functions 
and operations

Key policies and procedures aim to embed regulatory requirements 
into the daily lives of the Group’s workforce including the Anti-Bribery 
and Corruption Policy, the Share Dealing Code, the Insider Dealing and 
Market Abuse Policy, the Disclosure Policy, the Modern Slavery and 
Human Trafficking Policy Statement and the Whistleblowing Policy. 
Further details for each are available on the Company’s website. 

There are processes which are designed to define the culture of 
the Company and to educate the workforce on the importance 
of high standards of behaviour and ethics, such as training around 
the Company’s Business Code of Conduct and annual conflict of 
interest declarations for managers and key personnel. In addition, 
our supply chain management department implements and educates 
our suppliers and subcontractors on the terms of our Supplier Code 
of Conduct, to ensure they understand the standards expected of 
them when delivering products or services to Lamprell. Suppliers 
and subcontractors are given training and then expected to certify 
compliance with the Supplier Code. 

The Audit and Risk Committee completed its review of the effectiveness 
of the Group’s system of internal controls, including risk management, 
during the year and up to the date of this Annual Report. The review 
covered all material controls, including financial, operating and 
compliance controls. After refocusing the role of internal audit, the 
Committee was able to confirm that the system of internal control 
operated effectively for the 2020 fiscal year. 

Anti-bribery and corruption policy/whistleblowing
We expect our employees to perform to high standards but also to 
display the core value of integrity in their everyday working lives. We 
have a zero tolerance approach concerning bribery and corruption and 
this is enshrined in our ABC policy. We re-emphasise the importance 
of our ABC policy to our employees regularly, and we educate our 
employees and business partners on it, to ensure that all our business 
is conducted honestly and ethically. If any concerns should arise, 
there is a multilingual, secure whistleblowing hotline which was set 
up to allow staff members to report suspected ethical breaches, 
irregularities or simply concerns on a confidential basis without any 
fear of recrimination.

Policies/procedures for managing risk
In accordance with our schedule of matters reserved for the Board 
and the Code, the Board has primary responsibility for the effectiveness 
of the Group’s internal controls and risk management systems 
but has delegated administration and monitoring to the Audit and 
Risk Committee. 

Each of the Directors acknowledges and accepts that the Board as a 
whole takes responsibility for risk management in line with the Code 
requirements and in particular Principle O which requires the Board 
to establish procedures to manage risk, oversee the internal control 
framework, and determine the nature and extent of the principal risks 
the Company is willing to take in order to achieve its long-term strategic 
objectives. 

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

67

However, the day-to-day responsibility for developing and implementing 
the internal control and risk management procedures resides with 
the executive management team which then reports on risk to the 
Committee. Embedding and institutionalising a robust risk management 
culture is a core objective of the business to ensure our risk management 
performance stays in line with the dynamic risk profile of our business 
=>> 44.

The Group’s key governing document is the department risk 
management procedure which sets out the process for identifying, 
managing and then monitoring each risk or set of risks, on a 
department-by-department basis (facilitated by our commercial risk 
management function). The procedure explains how to assess risk 
and allocates risk based on likelihood and impact ratings, either as a 
Tier 1 (or enterprise) risk, Tier 2 (or departmental) risk and Tier 3 (or 
project) risk, as well as setting out rules whereby risks can be escalated 
through the tiers to ensure that the appropriate level of management 
or the Board is aware of the risk and can react accordingly. There 
are other supporting policies and procedures, such as the project 
risk management procedure, which assist employees in identifying 
emerging risks on a project and managing or mitigating them 
appropriately. Enterprise risks pose the greatest threat to the Group 
and management provided updates on these risks to the Committee 
in September and November last year, as well as during the extended 
process leading to the publication of last year’s Annual Report. 

In addition, at various points in the year, risk owners – typically a 
member of the Executive Committee – presented a deep dive on 
individual enterprise risks, which had been selected by the Committee 
as representing a particularly topical or heightened risk to the business. 
In 2020-21 there were six deep dive presentations with a particular 
focus on strategic aspects of the business such as execution of 
projects under the LTA programme within Saudi Arabia and the new 
renewables Seagreen project, to ensure that the lessons learned on the 
previous offshore wind projects had been embedded into our business 
operations. 

There was also a deep dive on the risk of failing to invest in digital 
opportunities which highlighted the importance of taking the necessary 
steps to implement the strategic objectives to develop our new digital 
business unit =>> 8. We had identified digitalisation as an area which 
could contribute significantly to our future growth; however we are also 
sensitive to the potential capital investment which may be required to 
deliver the ventures. We are therefore approaching this on a phased 
basis in collaboration with partners which will give us enhanced access 
to key customers, thereby de-risking the initiatives from the outset.

This two-way disclosure and monitoring system for enterprise risks 
facing the Group provides the Directors with reasonable (but not 
absolute) assurance against material misstatements and losses. The 
structure of the risk management mechanisms and the results of this 
system can be seen in the information relating to the principal risks and 
uncertainties faced by the Group =>> 46. 

Reporting by Internal Audit 
Lamprell has an IA function that provides assurance to management 
and the Board on the effectiveness and integrity of the Group’s internal 
control framework. There is regular communication between the 
Committee, Deloitte and IA to ensure alignment of objectives and to 
maximise the coverage of the audit activities into key risk areas. 

In 2020 however, with the heightened risk of fraud arising from 
managers working remotely due to COVID-19, the Committee decided 
to refocus IA’s efforts to test key internal controls and areas of potential 
fraud, in collaboration with the control owners, which were typically 
members of the Executive Committee. IA tested the internal controls 
for: financial reporting; IT controls; supply chain function; warehousing; 
asset management; workforce disruption; and overall internal controls 
at the corporate level. IA and the risk owners together reported the 
results from these processes to the Committee which was able to gain 
additional reassurance that the internal control framework continued to 
be effective. 

Where specific areas for improvement were identified, or where 
there was reliance on mitigating or alternative controls, management 
was tasked with implementing further safeguards, which could then 
be retested by the audit team’s processes to ensure sustainable 
remediation. It is expected that, in 2021, IA will revert to a more 
traditional audit role. In such instances IA reports to the Committee 
regarding ongoing audits and close-out of audit observations, and the 
Committee has approved the IA plan for 2021 on that basis (based on 
an assessment of highlighted risk trends within the business and by 
reference to best practice). 

As with the Company’s external auditors, the Committee reviews the 
performance of the IA function regularly and remains satisfied with it. 
Similarly, at least twice per year, it meets with the IA Director, without 
executives present, to discuss any sensitive matters or concerns.

Insurance programme
The efficacy of the consolidated insurance policy is regularly stress-
tested against market conditions and business requirements. The 
insurance market has hardened significantly over the last 12-18 months, 
especially for professional indemnity and Directors’ and Officers’ liability 
insurances. The terms are tougher and premiums have increased 
significantly as insurers gain a better understanding of insured risks. We 
worked closely with our insurance brokers to achieve the best results 
for renewed cover under our consolidated insurance programme. 
Insurance is a risk mitigation measure, covering the Group against 
certain types of insurable risks normally associated with a contracting 
services provider to the energy industries, operating in challenging 
territories.

Each year, the Board also reviews and approves the renewal of the 
Directors’ and Officers’ liability insurance cover to ensure that it is 
appropriate in light of the circumstances, size and risks within the 
business. This is subject to the usual exclusions such as fraud or 
dishonesty by a Director.

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
68

CORPORATE GOVERNANCE

Report on corporate governance continued

Audit and Risk Committee report

Committee membership and attendance

Member

James Dewar*
(Committee Chair and  
Non-Executive Director)

Mel Fitzgerald 
(Independent Non-Executive Director) 

Debra Valentine
(Senior Independent Director)

Meetings attended 
(out of total)

Observer

4 (5)

4 (4)

5 (5)

0

1

Key responsibilities of the Committee
•  Ensure the integrity of the Company’s financial performance 

announcements

•  Make recommendations about the appointment and 

removal of the external auditors

•  Monitor the performance, effectiveness and independence 

of the external and internal audit functions

•  Advise the Board on whether the Annual Report 

and Accounts, taken as a whole, are fair, balanced 
and understandable 

•  Ensure that the policies relating to the internal control 

framework, whistleblower complaints and the enterprise 
risk management system are effective

2020 Committee activities
•  Oversaw management’s effort to forecast and manage 

liquidity through monthly solvency reports

•  Advised the Board on the financial statements for the 

Company and the quality of the disclosures in the Notes
•  Tested going concern statement and assumptions in the 

financial model including the impact of COVID-19, in light 
of direction from the Financial Reporting Council

•  Refocused internal audit on internal controls assessment 

and approved the 2021 audit plan

•  Performed deep dives into key enterprise risks to ensure 

proper identification and mitigation

•  Evaluated independence and effectiveness of the external 
auditors, and completed audit quality review process from 
internal perspective

•  Assessed the effectiveness of the Group’s enterprise risk 
management system, internal controls and internal audit 
function by reference to external benchmarking 

•  Received reports on whistleblowing cases

Priorities for 2021
•  Monitor and test ongoing cashflow requirements and 

funding options of the business

•  Assess the going concern and funding position, as well 
as the continuing impact of COVID-19 and significant 
judgements on the business and financial statements , 
taking note of the reports provided by the auditors 

•  Retender for external audit services for FY2021

*  Mr Dewar has a strong financial background, for the purposes of Provision 24 of the Code. 
In 2020 James had a cardiac arrest and required time off to recover. As such he did not 
participate in Board activities during July and August 2020. Mr Dewar made a full recovery 
and returned to full independent NED duties in September 2020.

Fair, balanced and understandable 
The Committee has assessed whether the Annual Report is fair, 
balanced and understandable and provides the information necessary 
for shareholders to assess the Company’s position and performance, 
business model and strategy. To assist with the review, all Directors were 
given drafts of the Annual Report to enable early input and comment. 
The Committee also reviewed the financial results announcements, 
supported by the work of the Group’s Disclosure Committee. This work 
enabled the Committee to provide positive assurance to the Board to 
assist them in making the statement required by the Code. 

The Committee spent considerable time discussing the various 
significant judgements (see table opposite) during 2020 with the 
auditors around the Company’s liquidity position and its going concern 
statement. The Committee was satisfied that the judgements made 
were reasonable and that appropriate disclosures were included in the 
accounts; in light of the fact that new funding arrangements have not 
yet been put in place, the Committee determined that it was appropriate 
that the material uncertainty to the going concern statement (made 
at the time of interim financial statements) should be repeated and 
updated in the full-year results =>> 42. 

External auditors: effectiveness
The Committee evaluated the independence, performance and 
effectiveness of the external auditors throughout 2020 and formally 
in March and September 2020. This was achieved through dialogue 
with Deloitte and via assessment of its audit work in respect of the 
Company’s financial statements and internal control framework. In 
addition, the Committee closed out the audit quality review process 
of Deloitte’s work, which had been started by the Financial Reporting 
Council in 2019, and was able to take on board the findings as part of 
its annual review of Deloitte’s performance. 

External auditors: independence
The Company’s Policy on Auditor Independence, which is available on 
the Group’s website, is designed to safeguard the independence and 
objectivity of our external auditors. Deloitte may only provide non-audit 
services with the Committee’s approval under certain conditions and 
subject to financial limits to ensure that this does not compromise the 
integrity of their audit work. 

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

69

There was no breach of the policy and in 2020 Deloitte provided non-
audit services with a total value of USD 0 (2019: USD 64,800) compared 
to an annual audit fee including Group audit fees of USD 1,326,000 
(2019: USD 1,289,253, after including agreed fee adjustments associated 
with the extended 2019 audit review period, requested by the regulatory 
authorities).

The Committee considers that the objectivity and independence of 
the external auditors were safeguarded throughout 2020 and up to the 
date of signing the 2020 financial statements, including consideration 
of non-audit services delivered during 2021. After each meeting, the 
Committee met with Deloitte, without executives present, to discuss 
any sensitive matters or concerns. 

Provision of external audit services
The Committee remains satisfied as to Deloitte’s effectiveness and, in 
making this assessment, had due regard to their knowledge of the Group 
and their resourcing capabilities, length of service and independence. 
Following the assessment of Deloitte’s effectiveness as external 
auditors and a recommendation from the Committee, the Board was 
unanimous in its decision to continue with Deloitte as our auditors for 
the 2021 financial statements. Deloitte has expressed its willingness to be 
appointed at the forthcoming 2021 AGM for its services in respect of the 
2021 financial year. 

Deloitte has been in the role as the Company’s external auditors since 
2016. The Code provides that a listed company should tender out its 
external audit contract at least every ten years and, as the Company last 
tendered for such services in 2015, the Committee considers that it would 
be appropriate to retender for the external audit services later in 2021, 
which appointment will be effective for the 2022 financial year onwards. 
The Committee will undertake a formal and structured evaluation of 
potential audit firms, following which the Committee plans to make a 
recommendation for appointment at the 2022 AGM. 

Assessment of the effectiveness of the Committee
Given how rapidly the expectations of the Committee are changing 
and will continue to change, the Deloitte Academy has drawn up an 
‘audit committee effectiveness framework’ to allow an assessment to 
be conducted. It is in the form of a detailed questionnaire with a score 
rating of 1 (an area of focus), or 2 (performing as expected) or 3 (special 
strength). There are 227 questions and, with an expected score of 2 in 
each, a well-functioning committee should score 454. Our actual result, 
based on a fair assessment by the Committee, supported by our CFO 
and our Company Secretary, is slightly higher than this at 456. Within 
the areas of assessment, we identified special strengths in ‘setting up for 
success’ and ‘committee agenda’, and we met expectations in ‘external 
communication’. We have a current shortfall with regard to climate 
change reporting, which as highlighted in our action plan for TCFD 
implementation =>> 32, recognises we have work to do in 2021, to 
report appropriately in 2022.

Risk deep dives
During the year, the Committee conducted six deep dives, involving 
a direct conversation with the risk owners, to better understand 
the nature of the risks and mitigation actions. The focus areas were 
determined by input from each Committee member, plus our CFO and 
Company Secretary, and included matters such as new work execution, 
counterparty credit risk (customers, suppliers and JV partners) and 
digital. The Committee also worked with IA to address the new internal 
control or fraud risks associated with staff working from home and 
refocused the 2020 IA plan accordingly. 

James Dewar
Chair of the Audit and Risk Committee

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Significant accounting  
judgements considered by  
the Committee during 2020

Views/actions of the Committee with respect  
to significant judgements

Going concern basis of accounting (see also Note 2.1)

The Committee reviewed the appropriateness of the going concern 
basis of accounting, including the Company’s forecast cash flows and 
key assumptions disclosed in Note 2.1. The review confirmed the 
acute solvency challenges the business faces in the coming months 
and the need to recapitalize the business - see Chairman’s statement. 
The committee noted that management was actively managing cash 
flows but some assumptions (notably the need for new funding) were 
outside the Company’s control. The Committee concluded that these 
represent a material uncertainty that may cast significant doubt on the 
Company’s ability to continue as a going concern. In arriving at this 
conclusion, the Committee also reviewed the downside case which is 
further sensitised for the potential effects of no new funding and other 
risks as summarised in the viability statement =>> 43.

Revenue recognition and estimated cost to complete  
on major projects including onerous contracts  
(see also Note 4.2)

The Committee reviewed the reasonableness of judgements made 
regarding the cost to complete estimates, recognition of variation 
orders and contractual claims, and the adequacy of contingency 
provisions to mitigate specific project risks, particularly for onerous 
contract terms. It was satisfied that the judgements were reasonable, 
and in line with IFRS requirements and accounting policy, as audited 
by Deloitte.

Review of provisions (see also Note 4.2) 

At each meeting, the Committee considered the appropriateness, 
adequacy and consistency of approach by management in relation 
to material subjective provisions taken in respect of doubtful debts, 
contract accruals, project risks and warranty issues, and challenged 
as appropriate.

Impairment of PP&E and intangibles 

Twice-yearly, the Committee evaluated the results of the impairment 
review of PP&E and intangibles and the appropriateness of the 
assumptions given the challenging financial position of the Company. 
This included a review of the recoverable amount based on the value 
in use assumptions related to revenue, discount and terminal growth 
rate and those used by the independent valuer in determining the fair 
value less disposal costs of the Group’s assets. After discussion and 
input from management and Deloitte, it was satisfied that the 
assumptions and the disclosures in the year-end financial statements 
were appropriate.

Impairment of investments in subsidiaries

The Committee evaluated the results of the impairment review of the 
investments in subsidiaries included in the Company balance sheet. 
This included a review of the net asset value calculation of the 
subsidiaries used to determine the impairment. Based on this review, 
it was satisfied the disclosures in the financial statements were appropriate.

 
 
 
 
70

CORPORATE GOVERNANCE

Remuneration 
Remuneration and Development 
Committee report

Committee membership and attendance

Member

Debra Valentine
Senior Independent Director

James Dewar
Non-Executive Director 

Mel Fitzgerald
Non-Executive Director

Meetings attended 
(out of total)

Observer

6 (6)

4 (4)

5 (5)

0

2

1

Dear Shareholders
I am pleased to introduce the Directors’ Remuneration Report for the 
year ended 31 December 2020. This year, our report has three sections: 
this introductory statement, our Directors’ Remuneration Policy and our 
annual Report on Directors’ Remuneration, that details how our policy 
was implemented in 2020.

At the 2021 AGM, we will be bringing forward several resolutions on 
remuneration matters for shareholders’ approval, and I have sought 
to explain the rationale for each in this introductory statement. The 
resolutions are:

•  The normal annual resolution to approve the Directors’ Remuneration 
Report (that comprises this introductory statement and our annual 
Report on Directors’ Remuneration)

•  A resolution to approve our Directors’ Remuneration Policy, to which 

we are proposing certain amendments for 2021

•  A resolution to renew the Company’s authority to operate its long-

term incentive plan – this authority requires periodic renewal by the 
Company’s shareholders as a ‘business as usual’ matter

•  A resolution to renew our existing Retention Share Plan that will 
typically be operated to make retention-based share awards for 
employees below the main Board level

As we have detailed in our Strategic Report, in 2020 and early 2021, 
our Board’s focus has been on recovery and positioning the business 
strategically to take advantage of new opportunities in our evolving 
markets. Our resilient performance reflects this drive.

The Remuneration and Development Committee has had to consider 
how to structure pay to best support the business on a future trajectory 
that all stakeholders can view as positive. Accordingly, the proposals 
that we are bringing forward to shareholders at the 2021 AGM are, we 
believe, appropriate and proportionate, and specifically they are also 
proposals that emphasise the centrality to our business’ ambition of 
retaining and incentivising our CEO and his team to deliver growth in 
shareholder value in the medium to long-term. 

Key responsibilities of the Committee
•  Design the Company’s Remuneration Policy
•  Ensure compliance with the remuneration section of 

the Code

•  Determine remuneration packages for Executive Directors, 
the Chairman and senior management taking account of 
the Company’s purpose, core values, market conditions and 
long-term strategy 

•  Oversee remuneration levels across the wider workforce

2020 Committee activities
•  Closely monitored the impact of the COVID-19 pandemic 
on UK executive remuneration practices to ensure that the 
Company maintained broad alignment whilst recognising 
business performance

•  Ensured that the Company maintained market-competitive, 

compliant and appropriate rewards and incentives that 
would drive achievement of strategic priorities and serve the 
long-term interests of our shareholders and stakeholders

•  Maintained active oversight of executive performance, 

development and succession

•  Reviewed and monitored development initiatives for 
executive management and other key employees

Priorities for 2021
•  Develop and implement incentive plans that drive stretch 
performance and motivate Executive Directors and senior 
managers whilst navigating the unprecedented global 
market conditions

•  Identify and manage potential succession risks by continuing 

to implement effective senior leadership development 
processes and programmes 

•  Review workforce pay to prevent any gender pay gap 
and explore ways to tie Remuneration Policy to ESG 
strategic goals

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

71

Our proposals can be summarised as follows:

Item

Fixed pay

Details

No changes in policy. Any future salary increases likely to be aligned to employee levels. 
Practical steps taken in 2020 and 2021 include:

•  25% reduction in total salaries from 1 April 2020 as voluntary step by Executive Directors. 

This reduction is continuing into 2021 and subject to periodic review

•  20% permanent reduction in housing allowances

There are no executive pensions beyond the compulsory UAE end of service gratuity plan, 
which has the same proportionate contribution levels for Directors and the general workforce.

For completeness, a 25% temporary reduction was also applied to Non-Executive Directors’ 
fees which continues into 2021, subject to review.

Short-Term Incentive Programme

No changes in quantum (CEO 100% salary max opportunity level and CFO 85%).

LTIP

2020 LTIP – one-off replacement  
by Restricted Stock Award following 
2021 AGM

Metrics will be selected to best support the delivery of the strategy each year. With the 
announced refocus of the business into three distinct units, an element of 2021 bonus 
will be assessed on strategic metrics to reinforce this transformation. 

Reduction in payout level at target performance from 60% to 50%.

From 2021 AGM, CEO’s annual LTIP award increases to 150% of base salary p.a. (from 120%). 
CFO award increases to 120% of base salary (from 100%).

Further incentivises the CEO and executive team to deliver recovery in shareholder value in the 
medium to long term. 

2021 LTIP will have metrics balanced as follows:

•  50% relative TSR (vs FTSE 250 ex IT)
•  20% cumulative net profit
•  20% cumulative revenue
•  10% ESG, growth in revenues from renewables 

Due to prolonged “close periods” caused by corporate activity in 2020, it was not possible to 
make the 2020 annual LTIP award to the CEO, CFO or other senior executives.

Rather than seek to make this 2020 award as a “double” 2021 LTIP award or to take any other 
steps that could be overly complex and risk “windfall” outcomes (such as seeking to credit 
2020’s strong performance against a 2021 LTIP), it is proposed to make a one-off Restricted 
Stock Award following the 2021 AGM with the following terms:

•  Vesting at year three and a two-year post-vesting holding period for all vested shares (net of 

tax) to year five

•  CEO award at 75% of base salary and CFO award at 60% of base salary (in both cases applying 

a 50% discount to new 2021 LTIP policy levels)

•  Vesting underpin – requires Remuneration and Development Committee to consider factors 
including financial performance, enhancing environmental credentials, welfare and working 
culture, including overall safety performance, before vesting can be confirmed

The Retention Share Plan to be renewed at the 2021 AGM may be used for awards to Executive 
Directors on one occasion only following the 2021 AGM; any further awards of restricted stock to 
Lamprell Executive Directors would require further specific approval by Lamprell’s shareholders 
in a general meeting. For completeness, the Retention Share Plan will also be used to make 
retention-based share awards for employees below Executive Director level.

As a Committee, we believe these steps are transparent, fair and will prove to be “good value” for shareholders. We have seen first-hand the work 
that has gone into developing a positive business outlook at Lamprell, and having revised pay arrangements that will provide rewards linked to 
shareholder experience in the long-term will, we believe, help to reinforce the positive steps already taken. We are particularly pleased to introduce 
an “ESG” metric to our 2021 LTIP where we are seeking to encourage growth in our renewables business, which is a central tenet of our strategy 
to reposition Lamprell as an energy services provider for the 21st century, with a business focus that is diversified beyond oil & gas. We also 
realise that talking about pay at Lamprell may seem challenging at a time when the Company is asking its shareholders for further support via a 
fundraising exercise. However, as a Board we feel that the proposals which we are making on pay align with our broader investment proposition 
where with appropriate funding the execution of our new strategy will further our company turnaround, building on the positive performance in 
2020. Accordingly, our pay proposals are, we believe, clearly in our shareholders’ best interests as being appropriate to ensure the retention and 
incentivisation of our CEO and his senior team to deliver the strategy and turnaround. 

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
72

CORPORATE GOVERNANCE

If approved by our shareholders, the Directors’ Remuneration Policy 
will apply for a maximum of three years from the 2021 AGM and will 
replace the policy previously approved at the 2019 AGM. The resolution 
to renew the authority for the LTIP and the resolution to renew the 
Retention Share Plan are separate, routine matters, but each is linked to 
the revised Directors’ Remuneration Policy as explained above.

As Lamprell continues to execute our strategy, the Committee is 
satisfied that our proposals are appropriate and in shareholders’ interests 
as they are focused on retaining and incentivising our high calibre senior 
team. That said, the Committee welcomes all input on remuneration, 
and if you have any comments or questions on any element of the 
report, please email us care of Alex Ridout, Group General Counsel and 
Company Secretary, at companysecretariat@lamprell.com. I hope that 
our shareholders remain supportive of our approach to executive pay at 
Lamprell and vote in favour of the resolutions on remuneration matters 
to be tabled at the 2021 AGM.

On behalf of the Board, I recommend the 2020 Directors’ Remuneration 
Report to you.

Debra Valentine
Chair of the Remuneration  
and Development Committee

28 June 2021

Remuneration continued

Performance and reward in 2020
Despite the unprecedented global market conditions caused by the 
COVID-19 pandemic and continued pressures on the oil & gas sector, 
as reported elsewhere =>> 16, the Group achieved positive EBITDA and 
performed well in the other metrics (backlog and cash) for a short-term 
incentive plan payout, see details on =>> 85.

In determining the level of payout, the Committee took full account 
of i) overall affordability; ii) the external business environment; iii) the 
absence of external subsidies to cover the Group’s salaries and related 
costs and iv) the impact of the permanent 20% reduction in housing 
allowances that was applied from 1 January 2020, and the further 
temporary salary reductions that have applied since 1 April 2020 and 
continue to apply =>> 71. In addition, the Committee recognised 
executive management’s strong performance in delivering against 
challenging targets that were established before the full impact of the 
pandemic had become clear and that were maintained throughout 
2020 for the purpose of executive performance management.

For the LTIP, performance shares that were awarded in April 2018, with 
a three-year performance period ending 31 December 2020, achieved 
above threshold performance in the relative TSR metric but failed to 
achieve threshold performance in the other two metrics (cumulative 
EBITDA and backlog). Accordingly, Christopher McDonald and Tony 
Wright will vest in 160,329 and 78,256 shares respectively on a date to 
be agreed upon following the publication of the Group’s annual results 
=>> 84. 

The Committee considered whether the attainment of performance 
outcomes reflected shareholder experience and overall business 
performance in the year and confirmed that the outcomes attained 
could apply without further moderation. However, as a matter of 
prudence, payments under the short-term incentive plan will be made 
only when the Committee considers it appropriate to do so in the light 
of the Company’s working capital position.

Concluding thoughts
As explained in the introduction to this annual statement, shareholders 
will be asked to approve four resolutions related to Directors’ 
remuneration matters at the 2021 AGM. These resolutions are:

•  To approve the Directors’ Remuneration Report
•  To approve the updated Directors’ Remuneration Policy
•  To renew the 10-yearly authority for our long-term incentive plan 
•  To renew an existing Retention Share Plan

The vote to approve the Directors’ Remuneration Report is the normal 
annual advisory vote on such matters. The proposed vote on the 
Directors’ Remuneration Policy and the changes that we are proposing 
to make are explained in this letter. 

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

73

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Directors’ Remuneration Policy 

This part of the report sets out the Company Directors’ 
Remuneration Policy and has been prepared in accordance 
with the Large and Medium-sized Companies and Groups 
(Accounts and Reports) (Amendment) Regulations 2013 (“the 
DRR Regulations”). The Company intends to comply with the 
DRR Regulations as a matter of good practice, although as a 
non-UK incorporated quoted company, it is not strictly required 
to do so and is not subject to the technical consequences of 
non-compliance with the DRR Regulations. The Remuneration 
Policy also takes into account the principles of the UK 
Corporate Governance Code and the views of our major 
stakeholders. The Directors’ Remuneration Policy will take 
effect, subject to the approval of the shareholders, immediately 
after the 2021 AGM.

Policy overview

The Committee is responsible, on behalf of the Board =>> 52, 
for establishing appropriate remuneration arrangements for the 
Chair, the Executive Directors and other senior management 
in the Group. Our Directors’ Remuneration Policy aims to 
drive continuous improvements in business performance 
and maximise shareholder value by offering remuneration 
packages that are designed to enable the recruitment, retention 
and motivation of high-calibre Executive Directors and 
senior management. In setting the Remuneration Policy, the 
Committee considers the levels of remuneration for the wider 
employee population, policies and practice in the UAE and 
also those in the wider market. The Committee determines 
arrangements that are in the best interests of both the Group 
and its stakeholders, by taking into account the following 
general principles:

•  To attract, retain and motivate the best talent without paying 

more than is necessary

•  To ensure total remuneration packages are simple and fair in 

design and valued by participants

•  To ensure that the fixed element of remuneration is 

determined broadly in line with market rates, taking account 
of individual performance, responsibilities and experience, 
and that a significant proportion of total remuneration is 
linked to performance-related incentives

•  To balance performance pay between achieving financial 
and non-financial targets and delivering sustainable stock 
market outperformance, thus creating a clear line of sight 
between performance, strategy and reward

•  To calibrate performance metrics so that performance 
is incrementally rewarded through stretching targets 
and executives are not inadvertently incentivised to take 
inappropriate business risks

•  To maintain the highest possible health and safety standards 
where any fatality that takes place in a facility operated by the 
Company or any of its subsidiaries may result in discretionary 
withdrawal of incentive eligibility

•  To provide a significant proportion of performance-
linked pay in shares allowing senior management to 
build shareholdings in the business and thereby aligning 
management with shareholders’ interests and the Group’s 
longer-term performance

•  To maintain appropriate governance and risk management 
=>> 44 through the application of holding periods and 
clawback provisions on incentive plan awards

 
 
 
 
74

CORPORATE GOVERNANCE

Remuneration continued

As described earlier in this report, the Committee has undertaken a review of Lamprell’s Remuneration Policy in 
2020 and early 2021 and is proposing some changes to the Remuneration Policy. Details of the proposed changes 
are highlighted in the table below. 

Performance  
framework

Company 
performance  
appraisal process 

Changes from  
previous policy

No changes

Maximum  
opportunity

No prescribed 
minimum or 
maximum annual 
increase. The 
Committee is guided 
by market position, 
and the average 
increase for the 
workforce generally, 
and may recognise 
an increase due 
to, for example, 
assumed additional 
responsibilities or an 
increase in the scale or 
scope of the role 

Actual value of 
benefits provided 

None

No changes. 2020 
implementation action 
applied a permanent 
20% reduction in 
the value of housing 
allowances in UAE

Element of pay

Base salary

Purpose and  
link to strategy

To attract, retain and 
motivate talented 
individuals who are 
critical to the Group’s 
success

Benefits and 
allowances 

To offer a market 
competitive level of 
benefits to ensure the 
Executive Directors’ 
well-being and provide 
additional allowances 
in line with local 
market practice 

Operation

Reviewed annually 
by the Committee or, 
if appropriate, in the 
event of a change in 
an individual’s position 
or responsibilities 

Base salary levels 
set by reference 
to competitive 
market rates, taking 
into account level 
of responsibility, 
individual 
performance, skills 
and experience, Group 
performance and the 
pay and conditions in 
the workforce 

Current benefits 
include a housing 
allowance, private 
medical/life insurance, 
use of a company car 
(or car allowance), 
fuel allowance, 
annual leave airfares, 
children’s education 
and utility expenses. 
Executive Directors will 
be eligible for other 
benefits introduced for 
the wider workforce 
on broadly similar 
terms, and at times 
additional benefits 
might be provided 
if the Committee 
decides payment 
of such benefits is 
appropriate and in line 
with emerging market 
practice 

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

75

Element of pay

Short-Term 
Incentive Plan

Purpose and  
link to strategy

To reward the 
achievement of 
the Group’s annual 
financial and non-
financial objectives 
linked to the delivery 
of the Group’s 
strategic plan 

End-of-service 
gratuity1

To offer Executive 
Directors a retirement 
benefit as required 
under UAE labour law 

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Maximum  
opportunity

Performance  
framework

Changes from  
previous policy

Maximum opportunity 
of 100% of annual base 
salary for all Executive 
Directors 

No changes. 
Clarified that on-
target performance 
produces no more 
than 50% of the 
maximum attainment 
for each metric

At least two-thirds of 
the annual incentive 
will be based on 
Group financial 
performance or other 
key strategic business 
metrics, with the 
remainder dependent 
on the achievement of 
individual performance 
objectives, to provide 
a rounded assessment 
of the Group and 
management’s 
performance 

The financial metrics 
incorporate an 
appropriate sliding 
scale against a 
challenging target. On 
each element, only 
20% of the maximum 
target will pay out for 
achieving threshold 
performance, 
increasing pro-rata 
with 100% pay-out 
on the achievement 
of maximum stretch 
targets 

On-target 
performance 
produces no more 
than 50% of the 
maximum attainment 
for each metric

None

No changes

Company 
contributions are 
limited to two years’ 
base salary by UAE 
labour law

Operation

Normally payable in 
cash

Performance targets 
are approved annually 
by the Committee. 
The Committee 
has the discretion 
to override the 
formulaic outturn 
of the incentive 
and determine 
the appropriate 
level of pay-out if it 
believes exceptional 
circumstances warrant 
it or if it is deemed 
necessary based on 
safety, environmental, 
social and governance 
considerations 

Clawback 
provisions apply for 
overpayments due to 
misstatement, error, 
negligence, fraud, 
serious misconduct 
or other adverse 
circumstances at 
the discretion of the 
Committee 

The Company has no 
Group-wide pension 
scheme 

A lump sum cash 
payment is awarded 
following end of 
service, based on the 
length of service and 
final base salary in 
accordance with UAE 
labour law 

 
 
 
 
76

CORPORATE GOVERNANCE

Remuneration continued

Maximum  
opportunity

Performance  
framework

Changes from  
previous policy

Normal maximum 
opportunity of 150% 
of annual base salary 
for the CEO and 120% 
of annual base salary 
for other Executive 
Directors. Exceptional 
maximum opportunity 
of 250% of base salary

Normal maximum 
opportunity increased 
to 150% of base 
salary for the CEO 
(from 120%), and 
120% of base salary 
for other Executive 
Directors (from 100%). 
Exceptional maximum 
opportunity increased 
to 250% of base salary 
(from 150%)

Performance is 
assessed against 
challenging 
independent metrics 
that may include 
relative or absolute 
TSR, EPS, cumulative 
EBITDA, cumulative 
sales awards and other 
equally challenging 
metrics 

On each element 
only 20% of an 
award will vest for 
achieving threshold 
performance, 
increasing and vesting 
pro-rata with full 
vesting for achieving 
maximum stretch 
performance targets

Element of pay

Long-Term 
Incentive Plan 
(LTIP)

Purpose and  
link to strategy

To balance 
performance 
pay between the 
achievement of strong 
performance and 
delivering sustainable 
stock market 
outperformance 

To encourage 
share ownership 
and alignment with 
shareholder interests

Operation

Annual awards of 
conditional shares 
or nil (or nominal) 
cost options with 
vesting dependent 
on the achievement 
of performance 
conditions over a 
three year period 

An additional 
mandatory holding 
period of two years 
will apply to all vested 
awards (net of tax) 

Performance targets 
and metrics are 
approved annually 
by the Committee 

The Committee has 
the discretion to 
override the formulaic 
outturn and scale back 
(potentially to zero) the 
vesting of any awards 
if it believes the results 
are not an accurate 
reflection of the 
Company’s underlying 
performance 

Clawback 
provisions apply for 
overpayments due to 
error, misstatement, 
negligence, fraud, 
serious misconduct 
or other adverse 
circumstances at 
the discretion of the 
Committee 

Dividends may 
accrue during the 
vesting period and 
will typically be paid in 
shares at the time of 
vesting, to the extent 
that shares vest

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

77

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Element of pay

One-off 
Restricted 
Stock award  
in 2021

Purpose and  
link to strategy

To be in lieu of the 
2020 LTIP award 
which it was not 
possible to make due 
to in-year corporate 
activity

To encourage 
share ownership 
and alignment with 
shareholder interests

Share
ownership
guidelines

To further strengthen 
the long-term 
alignment between 
executives and 
shareholders

Non-Executive 
Directors’ fees

Set to attract, retain 
and motivate talented 
individuals through the 
provision of market 
competitive fees

Operation

The same terms 
will apply as for LTIP 
awards set out above 
regarding:

•  3-year vesting from 

award date

•  2-year post vesting 
holding period for 
all vested shares (net 
of tax)
•  clawback
•  accrual of dividends

May only be awarded 
to Executive Directors 
after 2021 AGM on 
one occasion

Executive Directors are 
required to retain the 
net proceeds of vested 
share awards which 
vest under the Group’s 
discretionary share 
plans until the share 
ownership guidelines 
are reached 

Directors hired after 
1 January 2019 will 
be required to hold 
the lower of shares 
to the value of 200% 
of annual base salary 
or their actual vested 
shareholding at the 
date of employment 
termination until the 
second anniversary of 
their separation from 
the Group

Reviewed periodically 
by the Executive 
Directors and 
Chairman (except 
for his own fee) or, 
if appropriate, in the 
event of a change in 
an individual’s position 
or responsibilities 

Fee levels set 
by reference to 
market rates, taking 
into account the 
individual’s experience, 
responsibility, time and 
travel commitments

Maximum  
opportunity

75% of base salary 
for CEO 

60% of base salary 
for CFO

Awards based on 
post-2021 AGM LTIP 
opportunity levels with 
the application of 50% 
discount

Performance  
framework

Changes from  
previous policy

New one-off element

Vesting underpin – 
requires Remuneration 
and Development 
Committee to 
consider factors 
including financial 
performance, 
enhancing 
environmental 
credentials and welfare 
and working culture, 
including overall 
safety performance, 
before vesting at 
3-year horizon can 
be confirmed

Expected to achieve 
200% of annual base 
salary within five years

None

No changes

Annual evaluation of 
Board performance

No changes

No prescribed 
minimum or 
maximum annual 
increase. The 
Executive Directors 
and Chairman are 
guided by market 
position but may 
recognise an increase 
in, for example, 
assumed additional 
responsibilities or in 
the scale or scope of 
the role

1.  The contribution rates for end-of-service gratuity benefit are the same for Directors and the workforce in general with the only variable relating to years of service, in accordance with 

UAE labour law.

 
 
 
 
78

CORPORATE GOVERNANCE

Remuneration continued

Consideration of stakeholder views 
The Company is committed to maintaining good communications with 
investors, its workforce and other stakeholders around remuneration 
matters. During 2020 the Board held active engagement forums with 
two key stakeholder groups: senior high potential employees through 
‘chat with the chair’ sessions and yard employees, through employee 
welfare meetings. In these sessions the agenda allows for items of a 
broad nature to be raised, including remuneration, with the attending 
Board member/meeting participants. Where appropriate, employees 
are made aware of any proposed changes in Lamprell’s compensation 
structure and are reminded that salaries, which are clearly defined by 
grade/designation, are regularly benchmarked in the market through 
participation in market surveys. During the year, no matters were raised 
by employees that would have any impact on the Remuneration Policy. 
The Committee also considers the AGM to be an opportunity to meet 
and communicate with investors and consider feedback received. 
This feedback, together with additional feedback from shareholder 
representative bodies more generally, is then considered as part of 
the Company’s annual review of its Remuneration Policy. Details of 
the votes cast for and against the resolution to approve last year’s 
Directors’ Remuneration Report are set out in the Report on Directors’ 
Remuneration =>> 77.

Performance metric selection
The STIP is based on key financial and strategic performance indicators 
=>>26, to reflect how well the Group succeeded in managing its 
operations in the current fiscal year and by performance against 
individually determined strategic objectives and annual operational 
targets, including HSE. The LTIP performance measures reward 
significant long-term returns to shareholders and long-term financial 
growth. Targets take account of internal strategic planning and external 
market expectations for the Company, and are set to be appropriate 
to the economic outlook =>> 16 and risk factors =>> 44 prevailing at 
the time, ensuring that such targets remain challenging, whilst realistic 
enough to motivate and incentivise management. Only modest rewards 
are available for achieving threshold performance, with maximum 
rewards requiring substantial out-performance of challenging strategic 
plans =>> 20 approved at the start of each year.

Discretion
In addition to the formulaic assessment of performance against the 
respective plan metrics, the Committee recognises its obligation to 
assess the appropriateness of the STIP and LTIP awards relative to 
the Company’s underlying business performance over the respective 
plans’ performance periods. When determining the final performance 
outcome under the LTIP, the Committee has discretion over the 
number of shares vesting considering other important internal 
or external factors. Any change to the formulaic outcome will be 
reported transparently. The Committee operates the incentive plans in 
accordance with their respective rules, the UK Listing Rules and HMRC 
rules where relevant. The Committee, consistent with market practice, 
retains discretion over several areas. 

These include (but are not limited to) the following:

•  Who participates
•  The timing of the grant of award and/or payment
•  The size of an award (up to plan/policy limits) and/or payment
•  The result indicated by the relative TSR performance condition may 
be scaled back (potentially to zero) in the event that the Committee 
considers that financial performance has been unsatisfactory and/or 
the outcome has been distorted due to the TSR for the Company or 
any comparator company being considered abnormal

•  The measurement of performance in the event of a change of 

control or reconstruction

•  Determination of a good leaver (in addition to any specified 

categories) for incentive plan purposes and the treatment of leavers

•  Adjustments required in certain circumstances (e.g. rights issues, 

corporate restructuring and special dividends)

•  The ability to adjust existing performance conditions for exceptional 

events so that they can still fulfil their original purpose

•  The ability to cash-settle awards where payment in shares is 

impractical for legal or regulatory reasons

•  The ability to disapply, in full or part, the post-employment shareholding 
requirements at the time of departure if the Committee believes it is in 
the best interests of the Company

In approving this Directors’ Remuneration Policy, shareholders give 
the Company authority to honour any commitments entered into 
with current or former Directors (such as the vesting or exercise of 
past share awards).

Relative pay and employment conditions in the Group
The Committee takes account of remuneration levels offered to the 
senior management team in the Group as well as remuneration of the 
wider employee population. When considering the Executive Directors’ 
remuneration structure and levels, the Committee reviews base salary 
and incentive arrangements across the Group to ensure that there is 
a coherent approach. Employees may be eligible to participate in an 
annual bonus arrangement and receive awards under the under the 
prevailing long-term incentive plans. Opportunities and performance 
metrics may vary by workforce level, with specific business metrics 
incorporated where possible. Executive and senior management 
maintain open channels of communication with the wider workforce 
so that employees are clear on the design of pay and incentive 
arrangements and the contribution required from them to achieve an 
appropriate share of any rewards. The Committee seeks to ensure that, 
when setting executive and senior management pay, overall business 
performance and market conditions have a broadly similar impact on 
salary reviews, bonus and incentive arrangements at all levels across 
the organisation. The differences that exist between executive and 
senior management remuneration and that of the general workforce 
are derived mainly from the need to incentivise executives around 
longer-term strategic goals which, in turn, places a greater proportion 
of executive pay at-risk. Consultation about remuneration between 
executive management and the general workforce focuses on how 
at all levels, pay and reward are set by comparisons to industry peers 
and efforts to maintain equity across the same levels in the workforce, 
taking into account experience and performance. In light of the Code, 
the Committee has reviewed appropriate methods of facilitating 
consultation with the wider workforce and NEDs now attend employee 
welfare consultative meetings on a rotational basis and meet regularly 
with high-potential employees.

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

79

Directors’ recruitment and promotions 
When considering changes, the Committee balances the need to 
attract, retain and motivate Executive Directors and senior managers of 
the highest calibre by ensuring close alignment between the interests 
of shareholders and the individuals. If a new Executive Director was to 
be appointed, the Committee would seek to align the remuneration 
package with the approved Remuneration Policy, including discretion 
to award a STIP opportunity of up to 100% of base salary and an 
LTIP award of up to 150% for the CEO and 120% for other Executive 
Directors, with discretion, in exceptional circumstances, to grant an 
award of up to 250% of base salary to any Executive Director. Flexibility 
would be retained to set base salaries at the level necessary to facilitate 
the hiring of candidates of appropriate calibre in external markets. 
The Committee may also make, in respect of deferred remuneration 
forfeited on leaving a previous employer, payments or awards under 
the approved share plans or an award under Listing Rule 9.4.2. In terms 
of remuneration to compensate for forfeited awards, the Committee 
would look to replicate the arrangements being forfeited as closely 
as possible, and in doing so would take account of relevant factors 
including the nature of the remuneration, performance conditions 
and the time over which awards would have vested or been paid. For 
an internal appointment, any incentive amount awarded in respect 
of a prior role may be allowed to vest on its original terms or adjusted 
as relevant to take into account the appointment. Any other ongoing 
remuneration obligations existing prior to appointment may continue. 
The Committee may also agree that the Company will meet certain 
relocation and incidental expenses as appropriate. For the appointment 
of a new Non-Executive Chairperson or NED, the fee arrangement 
would be set in accordance with the approved Remuneration Policy 
at that time.

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Remuneration scenarios for the Executive Directors
The charts below show an estimate of the potential range of 
remuneration payable for the Executive Directors in 2021 at different 
levels of performance. The charts highlight that the performance-
related elements of the package comprise a significant portion of the 
Executive Directors’ total remuneration at maximum performance. 
The charts reflect the temporary deductions from fixed pay that 
were implemented from 1 April 2020 =>> 71 and continue to be 
implemented, subject to periodic review, in 2021. 

Chief Executive Officer
Total remuneration (USD ‘000)

Maximum 2

25%

Maximum 1

30%
Target 2
37%

23%

28%

52%

$3,028

42%

$2,503

17%

46%

$2,048

Target 1                   

43%

20%

36%

$1,733

Minimum
100%

$753

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

Total fixed pay (excluding one-off Restricted Stock award in 2021)

Annual STIP

Long-Term Incentive Plan

Chief Financial Officer
Total remuneration (USD ‘000)

Maximum 2
31%
Maximum 1
36%

Target 2

44%
Target 1                   
51%

Minimum

22%

26%

47%

$1,568

37%

$1,322

16%

40%

$1,099

18%

31%

$951

100%

$482

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

Total fixed pay (excluding one-off Restricted Stock award in 2021)

Annual STIP

Long-Term Incentive Plan

Assumptions:
1.  As explained elsewhere, a temporary 25% deduction has been applied due to COVID-19 

measures against fixed pay (base salary and allowances), with the exception of school fees 
which remain unchanged =>> 71. This temporary deduction will be reviewed periodically 
throughout 2021 to determine if or when reinstatement is appropriate. Otherwise, benefits 
are estimated, based on the annualised value for the year ended 31 December 2020.

2.  The end-of-service gratuity is estimated based on the accrual for the year ended 

31 December 2020.

3.  Minimum performance assumes no award is earned under the STIP and no vesting is 
achieved under the LTIP; at on-target, typically 50% of the maximum is earned under 
STIP and typically 60% vesting is achieved under the LTIP; and at maximum full vesting 
is achieved under both plans.
‘Maximum 2’ and ‘Target 2’ reflect the estimated impact on the LTIP values of a 50% 
increase in share price.

4. 

5.  Given its one-off nature, the above charts do not reflect the proposed 2021 Restricted 

Stock award.

 
 
 
 
80

CORPORATE GOVERNANCE

Remuneration continued

Executive Directors’ service agreements  
and payments for loss of office 
The Committee reviews the contractual terms of the service 
agreements to ensure these reflect best practice. The Executive 
Directors are employed on indefinite term service agreements, with 
no expiry date, that are terminable on up to a maximum of 12 months’ 
notice. In circumstances of termination on notice, the Committee will 
determine an equitable compensation package, having regard to the 
particular circumstances of the case but not beyond the contractual 
entitlements. The Committee has the discretion to require notice to be 
worked or to make payment in lieu of notice or to place the Director on 
garden leave for the notice period. In case of payment in lieu or garden 
leave, base salary, benefits and end-of-service gratuity will be paid for 
the period of the notice served on garden leave or paid in lieu. The 
Committee also has the discretion to pay for outplacement services 
if it considers them appropriate and to settle legal fees or outstanding 
legal claims which it considers have a reasonable prospect of success. 
If the Committee believes it would be in shareholders’ interests, the 
Company may elect to make payments in three separate tranches: 50% 
within seven working days of the termination date; 25% three months 
after the termination date; and 25% six months after the termination 
date. The STIP may be payable in respect of the period of the incentive 
plan year worked by the Director. There is no provision for an amount in 
lieu of incentive pay-out to be payable for any part of the notice period 
not worked. In such circumstances, the incentive pay-out will be scaled 
back pro-rata for the period of the incentive year worked by the Director 
and will still be payable at the normal payment date.

Long-term incentives
Long-term incentives granted under the LTIP will be determined by 
the plan rules, which contain discretionary good leaver provisions 
for designated reasons (e.g. participants who leave early on account 
of injury, retirement, disability or ill health, or any other reason at the 
discretion of the Committee). In these circumstances, a participant’s 
awards will not be forfeited on cessation of employment and instead 
will vest on the normal vesting date. In exceptional circumstances, the 
Committee may decide that the participant’s award will vest early on 
the termination date. In either case, the extent to which the awards will 
vest depends on the extent to which the performance conditions have 
been satisfied and a pro-rata reduction of the awards will be applied 
by reference to the time of cessation (although the Committee has 
the discretion to vary time pro-rating if the circumstances warrant it). 
In the case of death of the participant, the award will vest at that time, 
irrespective of whether or not any performance conditions have been 
satisfied, and the award will not be time pro-rated.

In the event of a change of control, all unvested awards under the 
long-term incentive arrangements would vest, to the extent that any 
performance conditions attached to the relevant awards have been 
achieved. The awards will, other than in exceptional circumstances, be 
scaled back pro-rata (although the Committee has the discretion to vary 
time pro-rating if the circumstances warrant it).

The principles stated above for long-term incentives regarding treatments 
on cessation of employment and on a change of control will also apply 
to awards of Restricted Stock made to Executive Directors, with the 
consideration of the underpin vesting condition for the Restricted Stock 
awards replacing consideration of the performance condition for LTIP 
awards where appropriate.

Service contracts for Executive Directors
The table below sets out the details of the Executive Directors’ service 
contracts:

Director

Tony Wright

Christopher McDonald

Date of contract

13 August 2015

2 August 2016

The service contracts are available for inspection during normal 
business hours at the Company’s registered office, and are available 
for inspection before and at the AGM. Remuneration payments under 
all service contracts are enforceable only insofar as they fall within a 
shareholder-approved Remuneration Policy.

Non-Executive Directors’ terms of engagement
NEDs are engaged pursuant to letters of appointment which do not 
have fixed terms, but they are subject to re-election by the Company’s 
shareholders at intervals of not more than three years. All NEDs currently 
serving were re-elected at the 2020 AGM. All existing Directors will be 
proposed for election by the shareholders at the 2021 AGM. 

Upon termination or resignation, NEDs are not entitled to compensation 
and no further fee is payable. 

Currently, three NEDs are considered to be independent of the Company. 

The following table shows the effective date of appointment for each NED:

Non-Executive Director

Date of appointment

John Malcolm

Mel Fitzgerald1

Debra Valentine1

James Dewar1

27 May 2013

13 August 2015

1 September 2015

1 November 2017

1.  Mel Fitzgerald, Debra Valentine and James Dewar are considered to be independent NEDs 

of the Company. 

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

81

Report on Directors’ Remuneration

This report has been prepared in accordance with Part 3 of the Large and Medium-sized Companies and Groups 
(Accounts and Reports) (Amendment) Regulations 2013 and 9.8.6R of the UK’s Listing Rules, as well as applying the 
remuneration principles set out in the Code. The Report on Directors’ Remuneration will be put to an advisory 
shareholder vote at the 2021 AGM. The information on =>> 82 to =>> 87, save where indicated, has been audited.

Shareholder voting at AGM 
At last year’s AGM held on 25 June 2020, the Directors’ Remuneration 
Report for 2019 received the following votes from shareholders:

Directors’ Remuneration Report

Total number of votes

% of votes cast

204,614,733

55,866,972

260,481,705

1,000

260,482,705

78.6%

21.4%

100%

N/A

N/A

For

Against

Total votes cast  
(for and against)

Votes withheld¹

Total votes cast  
(including withheld 
votes)

1.  A vote withheld is not a vote in law and is not counted in the calculation of the proportion 

of votes cast ‘For’ and ‘Against’ a resolution.

As explained elsewhere =>> 58, the Board sought to engage with 
representatives from a major shareholder to understand their concerns 
resulting from the 21% dissenting vote against certain resolutions at 
the AGM.

The Committee’s terms of reference are available for review on the 
Company’s website.

External advice received
During the year, the Committee received independent advice on 
remuneration matters from the London office of Aon (formerly 
New Bridge Street) and, from November 2020, FIT Remuneration 
Consultants LLP. In September, the Company received notification 
from Aon that it intended withdrawing from the remuneration 
sector. As such, the Company opted to invite proposals from several 
prospective providers and, after a comprehensive review of three 
alternatives, appointed FIT as its external advisor from 1 November 
2020. Neither Aon nor FIT provided other services to the Group during 
the year under review and there is no other connection between 
Aon or FIT and the Company or the Directors. The Committee also 
received independent advice from John Macdonald, the Company’s 
former Vice-President (HR and Administration), who attends meetings 
on a regular basis and was engaged to provide ongoing advice. Mr 
Macdonald also provided general remuneration consulting support 
on an ad-hoc basis. The Committee considers Mr Macdonald’s advice 
to be independent and he has no other ongoing connection with 
the Company or Directors save as disclosed here. The Committee 
also consulted with the CEO, CFO and Non-Executive Chairman (but 
not in relation to their own remuneration), as well as the Company 
Secretary (who acted as the secretary to the Committee) and the VP 
of HR & Corporate Services, as well as the Audit and Risk Committee 
in establishing incentive plan performance measures. Both Aon and 
FIT are signatories to the Remuneration Consultants’ Code of Conduct 
and adhere to its voluntary Code of Conduct in relation to executive 
remuneration consulting in the UK. The Committee has reviewed the 
operating processes in place at both Aon and FIT and is satisfied that 
the advice it receives is objective and independent. The fees paid to Aon 
during the year were GBP 34,000, with GBP 10,350 paid to FIT. The fees 
paid to John Macdonald in respect of Committee support during the 
year were AED 46,899. All external advisors’ fees were chargeable on 
the basis of time provided and, from 1 May 2020, the advisors agreed to 
a 25% reduction in standard fees in recognition of the COVID-19 related 
cost reduction measures throughout the Group.

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
82

CORPORATE GOVERNANCE

Report on Directors’ Remuneration continued

Implementation of the  
Remuneration Policy for 2021
The Committee is satisfied that the Directors’ Remuneration Policy 
is implemented in accordance with Provision 40 of the UK Corporate 
Governance Code as follows:

Clarity – Our policy is well-understood by our senior executive team 
and has been clearly articulated to our shareholders. 

Simplicity – The Committee is mindful of the need to avoid overly 
complex remuneration structures which can be misunderstood 
and deliver unintended outcomes. Therefore, a key objective of the 
Committee is to ensure that our executive remuneration policies and 
practices are straightforward to communicate and operate. 

Risk – Our policy has been designed to ensure that inappropriate risk-
taking is discouraged and will not be rewarded via: (i) the balanced use 
of both annual incentives and LTIPs which employ a blend of financial, 
non-financial and shareholder return targets; (ii) the significant role 
played by shares in our incentive plans (together with in employment 
and post cessation shareholding guidelines); and (iii) malus and 
clawback provisions within all our incentive plans. 

Predictability – Our incentive plans are subject to individual caps, with 
our share plans also subject to market standard dilution limits. The 
weighting towards use of shares within our incentive plans means 
that actual pay outcomes are highly aligned to the experience of our 
shareholders. 

Proportionality – There is a clear link between individual awards, delivery 
of strategy and our long-term performance. In addition, the significant 
role played by incentive/‘at-risk’ pay, together with the structure of the 
Executive Directors’ service contracts, ensures that poor performance 
is not rewarded. 

Alignment to culture – Our executive pay policies are fully aligned to 
Lamprell’s culture through the use of metrics in both the annual bonus 
and LTIP that measure how we perform against key aspects of our 
strategy, and this accordingly incentivises our leadership team to pursue 
appropriately those initiatives which our Board believes will best deliver 
shareholder value in the long term and to deliver sustainable growth in 
both revenues and profits.

Base salary (unaudited)
In setting base salaries for 2021, the Committee continued to 
benchmark against external market data and internal alignment, as 
well as the overall market environment that has driven the continued 
need for overhead cost reductions. The substantive base salaries of the 
Executive Directors in 2021 will remain the same for the fifth successive 
year but remain subject to a temporary voluntary deduction of 25% 
from 1 April 2020 as follows:

Substantive 
base salary 
from  
1 January 
2020

Substantive 
base salary 
from  
1 January 
2021

Temporary 
voluntary 
base salary 
from 1 April 

2020 (% decrease)

USD 700,000 USD 700,000 USD 525,000

(25%)

Christopher 
McDonald

Tony Wright

USD 410,000 USD 410,000 USD 307,500

(25%)

Allowances (unaudited)
As reported elsewhere, following a permanent 20% reduction in 
housing allowances, total allowances (excluding school fees) were 
subject to a further 25% temporary reduction from 1 April 2020 that 
will continue to apply in 2021, subject to periodic review.

STIP 2021 (unaudited)
For 2021, the annual incentive plan will be structured as follows:

Executive Director

Maximum opportunity 
(% of base salary)

Metrics/ Weights

Christopher McDonald 100%

Tony Wright

85%

EBITDA (30%)
Strategic developments (30%)
Backlog (20%)
Personal goals (20%)

The Committee considers any disclosure of certain financial targets 
to be commercially sensitive; however, full retrospective disclosure of 
targets and performance against them will be disclosed in next year’s 
Annual Report on Remuneration.

LTIP incentive awards (unaudited)
Subject to compliance with the Listing Rules, awards will be made at the 
appropriate time in 2021 and the maximum LTIP potential will be 150% 
of base salary for the CEO and 120% for the CFO. The performance 
conditions for these awards are structured around the following metrics 
and targets: 

•  50% relative TSR (vs FTSE 250 ex IT) – median to upper quartile
•  20% cumulative net profit – commercially sensitive 
•  20% cumulative revenues – USD 1.75 to USD 2.25 billion
•  10% ESG, growth in revenues from renewables – USD 300 to 

USD 450 million

One-off Restricted Stock award in 2021 
As explained in the Remuneration and Development Committee 
Chair’s introductory statement =>> 70 and as further detailed in the 
Directors’ Remuneration Policy, it is proposed to make a one-off award 
of Restricted Stock to the CEO and CFO after the 2021 AGM with the 
following terms:

•  Vesting at year three and two-year holding period for all vested shares 

(net of tax) to year five

•  CEO award over shares worth 75% of base salary and CFO award over 

shares worth 60% of base salary (applying a 50% discount to new 
2021 policy level LTIP annual awards)

•  Vesting underpin: requires Remuneration and Development 

Committee to consider factors including financial performance, 
enhancing environmental credentials, welfare and working culture, 
including overall safety performance, before vesting at three-year 
horizon can be confirmed

End-of-service gratuity
As required under UAE labour law, the Company contributes to the end-
of-service gratuity fund on behalf of the Executive Directors, whereby 
the gratuity shall be 21 days’ base salary for each year of the first five 
years of employment and 30 days’ base salary for each additional 
year of employment thereafter, on the condition that the total gratuity 
does not exceed two years’ base salary. The gratuity is payable upon 
termination of employment. These contribution levels are the same for 
Directors and the entire workforce.

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

83

Directors’ contracts
The service contracts of both Executive Directors, Christopher McDonald and Tony Wright, are currently terminable subject to six months’ 
contractual notice in both cases. 

Outside appointments (unaudited)
The Board allows Executive Directors to accept appropriate external, commercial NED appointments provided the aggregate commitment is 
compatible with their duties and does not cause a conflict of interest with the role of an Executive Director. Executive Directors may retain fees 
paid for these services, which will be subject to approval by the Board. The Executive Directors do not currently hold any outside appointments 
save as disclosed =>> 52 and 53.

Performance conditions for outstanding LTIPs
For the sake of completeness, the Company discloses the performance conditions which are attached to the awards of LTIPs in 2018 and 2019 
as follows:

LTIP 2018

Threshold

Maximum

Performance condition

Weight

% vesting

Performance

% vesting

Performance

End measurement 
point

TSR vs. FTSE World Oil Equipment  
and Services Index

Cumulative EBITDA

End-of-period backlog

50%

25%

25%

20

20

20

Median

USD 10m

USD 600m

100

100

100

Upper quintile

31 December 2020

USD 75m 31 December 2020

USD 1.0bn

31 December 2020

The outcome of the performance conditions applicable to the 2018 LTIP awards is shown below:

Performance condition

TSR vs. FTSE World Oil Equipment and Services Index

Cumulative EBITDA

End-of-period backlog

Accordingly, the overall vesting outcome for the 2018 plan was 20% =>> 84.

LTIP 2019

Outcome

% Vesting

Above median

(USD 95.7m)

USD 522m

40%

0%

0%

Threshold

Maximum

Performance condition

Weight

% vesting

Performance

% vesting

Performance

End measurement 
point

TSR vs. FTSE World Oil Equipment  
and Services Index

TSR vs. FTSE 250 Index

Cumulative net profit

Cumulative sales awards

25%

25%

25%

25%

20

20

20

20

Median

Median

See Note 1

USD 2.0bn

100

100

100

100

Upper quintile

31 December 2021

Upper quintile

31 December 2021

See Note 1

31 December 2021

USD 3.5bn

31 December 2021

1.  The Committee considers any disclosure of certain financial targets to be commercially sensitive; however, full retrospective disclosure of targets and performance against them will be 

disclosed in next year’s annual Report on Remuneration.

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
84

CORPORATE GOVERNANCE

Report on Directors’ Remuneration continued

Fees for the Chairman and NEDs
The Non-Executive Chairman’s remuneration is determined by the Committee and the NEDs’ remuneration is determined by the Executive Directors 
and the Chairman, all of which are based on the responsibility and time committed to the Group’s affairs and appropriate market comparisons. 
Individual NEDs do not take part in discussions regarding their own fees. NEDs receive no other benefits. As reported elsewhere =>> 67, Non-
Executive Directors’ fees were subject to a 25% temporary reduction from 1 April 2020 subject to periodic review in 2021. A summary of the fees 
for 2021 are as follows:

Non-Executive Chair

Senior Independent Director

Base fee

Committee Chair fee

Substantive fee at 
1 January 2020 
£’000

Substantive fee at 
1 January 2021 
£’000

Temporary fee at  
1 April 2020 
£’000

(% decrease)

180

80

65

8

180

80

65

8

135

60

48.75

6

(25%)

(25%)

(25%)

(25%)

Directors’ remuneration earned in 2020 (after COVID-19 deductions)
The table below summarises Directors’ remuneration received in 2020, after COVID-19 related deductions, with comparisons, where appropriate, 
to 2019.

Base salary  
and fees1 
USD’000

Benefits and 
allowances2 
USD’000

End-of-service 
gratuity3 
USD’000

Total 
fixed pay
USD’000

Short-term 
incentives4 
USD’000

Long-term 
incentives5 
USD’000

Total  
variable pay
USD’000

Total  
remuneration 
USD’000

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

Executive 
Directors

Christopher 
McDonald

569

700

190

244

Tony Wright

333

410

157

215

Non-Executive 
Directors

John Malcolm

188

Debra Valentine

Mel Fitzgerald

James Dewar

Nicholas Garrett6

90

76

76

9

229

115

93

93

83

47

33

42

806

986

521

31

523

656

259

–

–

136

27

657

27

1,463

1,014

66

–

325

–

848

657

188

90

76

76

9

229

115

93

93

83

1.  All Directors’ pay is reported above in USD. Christopher McDonald’s pay is determined in USD and paid in AED. Tony Wright is remunerated in AED. Debra Valentine’s remuneration is 

determined in GBP and paid in USD, and the remuneration of John Malcolm, Mel Fitzgerald, Nicholas Garrett and James Dewar is determined and paid in GBP.

2.  Benefits and allowances include housing, private medical insurance, life insurance, club membership, the use of a company car, private fuel card, airfare tickets, children’s schooling and utility 

expenses. The table below summarises the main benefits and allowances.

3.  End-of-service gratuity is the provision accrued during the year. In accordance with the provisions of IAS 19, the present value of Directors’ end-of-service gratuity obligations under UAE labour 
law have been valued using the projected unit credit method, as at 31 December 2020 and 2019. Under this method an assessment has been made of a Director’s expected service with the 
Group and the expected base salary on the date of termination. As part of the valuation we have assumed an average base salary increment of 2% p.a. (2019: 2%). The expected liability on the 
date of termination has been discounted to its net present value using a discount rate of 1.7% p.a. (2019: 2.8% p.a). The end of service gratuity calculation was not impacted by the COVID-19 
deductions.

4.  Details of STIP pay-outs are provided on =>> 85.
5.  As reported elsewhere =>> 83, the LTIP 2018 awards, with a performance period that ended on 31 December 2020, resulted in a vesting outcome whereby Christopher McDonald vests 

in 160,329 performance shares, at a vesting share price of £0.62 and an exchange rate of $1.37/£1.00 delivering a value of USD 136,183. On the same basis, Tony Wright vests in 78,256 
performance shares delivering a value of USD 66,471. At the date of grant (9 October 2018), the face value of Mr McDonald’s vested shares was USD 168,000 and Mr Wright’s vested shares 
was USD 82,000 based on the share price of £0.74 and exchange rate of USD 1.412/£1.00.

6.  Nicholas Garrett stepped down as Director in February 2020.

Summary of benefits and allowances (after COVID-19 deductions)

Christopher McDonald

Tony Wright

Housing 
USD’000

Vehicle 
USD’000

Children’s 
education 
USD’000

Annual leave 
tickets 
USD’000

81

68

27

17

20

19

29

31

Medical  
and life 
insurance 
USD’000

23

14

Other 
USD’000

Total 
USD’000

10

8

190

157

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

85

Short-Term Incentive Plan 2020: Performance against targets
CEO and CFO

Metric

EBITDA1

Net cash2

Backlog3

Personal goals – CEO

Personal goals – CFO

Weighting as %  
of maximum 
annual 
opportunity

30%

25%

20%

25%

25%

Stretch target

USD 12m

USD 65m

USD 656m

N/A

N/A

Actual 
performance

USD 3.9m

USD 112.4m

USD 522m

80%

80%

Pay-out  
outcome as % of 
maximum annual 
opportunity

13.8%

25%

15.6%

20%

20%

1.  EBITDA targets were in the range of USD 0m (threshold) to USD 6m (target) and USD 12m (stretch). Failure to have achieved threshold performance in EBITDA would have prevented any plan 

pay-out.

2.  Net cash targets were in the range of USD 43m (threshold) to USD 55m (target) and USD 65m (stretch).
3.  Backlog targets were in the range of USD 281m (threshold) to USD 407m (target) and USD 656m (stretch).

Given the above performance levels, the formulaic outcome generated a pay-out of 74.4% of maximum for Christopher McDonald (USD 521,010) 
and 74.4% of maximum for Tony Wright (USD 259,389). At ‘target’ performance in all metrics, the pay-outs would have been USD 420,000 for 
Christopher McDonald and USD 209,100 for Tony Wright. At threshold performance, the pay-outs would have been USD 140,000 for Christopher 
McDonald and USD 69,700 for Tony Wright. The outcome of achievement against the personal goals of the CEO and CFO was as follows:

CEO

Personal goal

Weighting

Performance outcome

Pay-out outcome as a % of maximum

HSE including COVID-19 preparedness

25%

Strategic initiatives

Financial

Team development

CFO

Personal goal

35%

35%

5%

25%

30%

20%

5%

6.25%

7.5%

5%

1.25%

Weighting

Performance outcome

Pay-out outcome as a % of maximum

HSE including COVID-19 preparedness

20%

Strategic initiatives

Financial 

Team development

25%

45%

10%

20%

25%

25%

10%

5%

6.25%

6.25%

2.5%

Long-term incentive awards granted during the year
As reported elsewhere =>> 71, the operation of the 2020 Performance Share Plan was deferred whilst the Company monitored the impact of the 
COVID-19 pandemic on its ability to set meaningful and sufficiently challenging long-term targets. As such and, as reported elsewhere =>> 71, it is 
proposed to make a one-off restricted award in lieu of the regular 2020 awards of performance shares.

Directors’ interests in share plan awards
The Directors hold interests in long-term incentive awards under the Company’s incentive plans as at 31 December 2020 as set out below. Awards 
normally vest on the third anniversary of the date of grant of the awards, subject to any applicable performance conditions having been satisfied. 
Further details on the targets are set out above =>> 82 and 83. The following table sets out the interests of the Executive Directors in relation to 
performance and retention shares:

Executive Directors

At 1 January 2020

Awarded in 2020

Date of vesting

Vested in 2020

Lapsed in 2020

At 31 December 
2020

Christopher McDonald

Tony Wright

2,909,528

1,392,746

0

0

N/A

N/A

0

0

705,484

344,343

2,204,044

1,048,403

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
86

CORPORATE GOVERNANCE

Report on Directors’ Remuneration continued

Directors’ interests in ordinary shares
The Committee has adopted a formal policy requiring the Executive Directors to build and maintain, through the award of shares by the Company, a 
shareholding in the Company equivalent to 200% of base salary. Until such time as this threshold is achieved there is a requirement for executives to 
retain the net proceeds of all vested share awards. Mr McDonald and Mr Wright have not currently achieved these guidelines. In accordance with the 
Listing Rules, the Company discloses the beneficial interests of the Directors in the share capital of the Company as at 31 December 2020 as set out 
below. There were no changes to the interests of the Directors in the ordinary shares of the Company in the period from 1 January 2021 to 28 June 
2021, being the last practicable date that the Company is able to report on Directors’ interests:

Executive Directors

Christopher McDonald

Tony Wright

Non-Executive Directors

John Malcolm

Debra Valentine

Nicholas Garrett

James Dewar

Mel Fitzgerald

Beneficially 
owned at  
31 Dec 2020

Beneficially 
owned at  
31 Dec 2019

Ordinary 
shares held

Outstanding 
awards 
(retention 
only)

Outstanding 
awards 
(subject to 
conditions)

Share- 
holding as  
% of base 
salary1

Share- 
holding 
requirement 
met? 

2,945,539

3,651,023

1,089,788

1,434,131

741,495

41,385

0

0

0

0

0

0

0

0

0

40,000

11,700

40,000

11,700

40,000

11,700

0

0

–

–

–

–

–

2,204,044

1,048,403

91.3%

8.7%

–

–

–

–

–

–

–

–

–

–

No

No

–

–

–

–

–

1.  Calculated at a share price of £0.62 and exchange rate of $1.39/£1.00.
2.  Nicholas Garrett stepped down from the Board on 10 February 2020.

Full details of the Directors’ shareholdings and share allocations are given in the Company’s Register of Directors’ Interests, which is available for 
inspection at the Company’s registered office during business hours.

Payments to former Directors
There were no payments made to former Directors during the year.

Payments for loss of office
There were no payments for loss of office during the year.

Percentage change in remuneration levels
The table below shows the movement in base salary, benefits and STIP (or equivalent) for the CEO and other Directors between the 2020 and 2019 
financial years, compared to that for the average employee of the Group. 

Base salary/fees (after COVID-19 deduction)1

Benefits (after COVID-19 deduction)3

CEO

All 
employees

- 18.7%

See note 2

- 17.1%

See note 2

STIP

See note 4

See note 5

See note 4

CFO

Chairman

SID Other NEDs

- 18.7%

- 22.7%

- 18.7%

- 18.7%

- 18.7%

N/A

N/A

N/A

N/A

N/A

N/A

1.  As reported elsewhere =>> 82, the base salaries and fees of the CEO, CFO, the Chairman, SID and all NEDs were reduced temporarily by 25% effective 1 April 2020 and continue to be reduced 

going forward into 2021, subject to review.

2.  The percentage change in remuneration for “All employees” is complicated by the fact that the COVID-19 deductions, whilst applied equally on 1 April, were reinstated on a phased basis at 
different levels on 1 October 2020. The deductions described in note 1 above were applied in the same way to the ExCom, senior and middle management groups and continue to apply. 
The percentage changes for these groups, therefore, aligned with the CEO and other Directors. However, below middle management, deductions to base salaries and benefits were reinstated 
on a sliding scale basis according to employee levels effective 1 October 2020.

3.  As reported elsewhere =>> 82, benefits and allowances were subject to the same COVID-19 deductions as applied to base salaries, effective 1 April 2020, with an additional permanent 

20% reduction in housing allowances from 1 January 2020. These deductions are reflected in the percentage changes for the CEO and CFO. For “All employees”, the deductions and 
reinstatements described in note 2 above applied in the same way to benefits and allowances.

4.  As reported elsewhere =>> 84, the CEO and CFO received STIP 2020 pay-outs of USD 521,010 and USD 259,389 respectively compared to nil pay-outs in 2019. The 2020 pay-outs 

represented 74.4% of their maximum opportunity levels.

5.  STIP (or equivalent) pay-outs for “All employees” were broadly aligned with the CEO and CFO relative to maximum opportunity levels compared to nil pay-outs in 2019.

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

87

Relative importance of the spend on pay
The table below shows the spend on staff costs in the financial year, compared to dividends and share buybacks (of which there were none):

Staff costs

Dividends

2020  
USD’000

2019  
USD’000

123,575

124,580

–

–

% change

-0.80%

0.00%

Performance graph and CEO pay
The graph below shows the growth in value of a notional £100 invested in the Company compared to the FTSE World Oil Equipment and Services 
Index, which is used as the basis for one of the Company’s LTIP metrics and the FTSE 250 Index, as a broad pan-sector comparator. The graph 
covers the time period 31 December 2010 to 31 December 2020.

Share price performance Dec 2010 to Dec 2020

250

200

150

100

50

0
Dec 10

Dec 11

Dec 12

Dec 13

Dec 14

Dec 15

Dec 16

Dec 17

Dec 18

Dec 19

Dec 20

Lamprell

FTSE 250

FTSE World Oil Equipment and Services

The total remuneration figures for the CEO during the last ten financial years are shown in the table below. Consistent with the calculation 
methodology for the single figure of total remuneration, the total remuneration figure includes the total STIP award based on that year’s 
performance and the long-term incentive award based on the three-year performance period ending in the relevant year. The annual STIP 
pay-out and long-term incentive award vesting level as a percentage of the maximum opportunity are also shown for each year.

CEO Remuneration table

2020

2019

2018

2017

2016

2016

2015

2014

2013

2013

2012

2012

2011

CEO

McDonald McDonald McDonald McDonald McDonald1

Moffat2

Moffat

Moffat

Moffat Whitbread3 Whitbread

McCue4

McCue

Annual remuneration

1,463

1,014

1,285

1,564

Annual STIP %

LTIP vesting %

74.5%

19.4%

0%

35.6%

3.8%5

7.4%5

0%

0%

262

0%

0%

891

0%

100%

1,349

1,716

1,652

1,504

45%

0%

91%

0%

99%

0%

0%

0%

352

0%

0%

2,739

0%

100%

2,094

72.3%

100%

Year ending 31 December (USD’000)

1.  Christopher McDonald was appointed as CEO on 1 October 2016.
2.  James Moffat was appointed as CEO on 1 March 2013 and stepped down on 30 September 2016.
3.  Peter Whitbread was appointed as interim CEO on 4 October 2012 and his employment ceased on 30 June 2013.
4.  Nigel McCue’s employment ceased on 3 October 2012.
5.  Vesting of shares granted in recruitment awards.

Approval of the Directors’ Remuneration Report
The Directors’ Remuneration Report was approved by the Board on 28 June 2021.

Debra Valentine
Chair of the Remuneration  
and Development Committee

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

 
 
 
 
88

CORPORATE GOVERNANCE

Statutory information  
and Directors’ statements

“ We are committed to maintaining 
high standards of corporate 
governance and a culture of 
transparency and constructive 
dialogue, as they are fundamental 
to help navigate the business 
through the current challenges.”

The Directors present their report together with the 
audited consolidated financial statements for the year 
ended 31 December 2020. This report has been prepared 
in accordance with applicable regulatory requirements, 
including Disclosure Guidance and Transparency Rule 4. 
This statutory information forms part of the Directors’ 
report by reference and the other elements of the 
Directors’ report can be found elsewhere in this report, in 
the Strategic Report =>> 1 and the Corporate Governance 
Report =>> 52.

Memorandum and Articles of Association
The Company’s Memorandum of Association sets out the objectives 
and powers of the Company. The Articles of Association detail the rights 
attaching to each share class, the method by which the Company’s 
shares can be purchased or reissued and the provisions which apply 
to the holding of and voting at general meetings. The Articles also 
set out the rules relating to Directors (including by way of example, 
their appointment, election, retirement, duties and powers). The 
shareholders approved an updated version of the Articles of Association 
which permitted hybrid AGMs and increased the issued share capital of 
the Company.

Capital structure and corporate authorities
Details of the authorised and issued share capital together with details 
of movements in share capital during the year are included in Note 26 
to the financial statements. The Company has one class of shares in 
issue, ordinary shares of 5 pence each, all of which are fully paid. Each 
ordinary share in issue carries equal rights including one vote per share 
on a poll at general meetings of the Company, subject to the terms of 
the Articles and applicable laws. There are no restrictions on the transfer 
of shares.

Details of the Company’s employee share schemes are disclosed in the 
Report on Directors’ Remuneration =>> 77 and in Note 9 to the financial 
statements. The awards under the Lamprell plc Free Share Award Plan, 
Retention Share Plan and Long-Term Incentive Plan are granted at nil (or 
nominal) cost. 

Pursuant to the Company’s share schemes, the Employee Benefit 
Trust as at the year end held a total of 16,268 (2019: 16,268) ordinary 
shares of 5 pence, representing less than 0.01% (2019: < 0.01%) of the 
issued share capital. If another company takes control of the Company, 
the employee share schemes have set change of control provisions 
whereby, in certain circumstances and approved proportions, they are 
allowed to vest early or to be exchanged for awards of equivalent value 
in the acquiring company. 

Lamprell plc Free Share Award Plan

Lamprell plc Retention Share Plan 

Lamprell plc Executive Share Option Plan 

Lamprell plc Long-Term Incentive Plan 

Granted

2020*

Nil

Nil

Nil

Nil

2019

Nil

2,279,117

Nil

5,364,598

Outstanding

2020*

2019 and before

Nil

Nil

Nil

Nil

Nil

4,662,130

Nil

6,674,856

*  The Remuneration and Development Committee concluded in 1H 2020 that the incentive awards that would normally be made in April 2020 would be postponed until a later date, when the 

market volatility due to COVID-19 had settled. =>> 70. 

LAMPRELL PLC

ANNUAL REPORT AND ACCOUNTS 2020

89

At the 2020 AGM, the shareholders approved the following authorities: 
(i) for the Company to make market purchases of up to 33,000,000 
ordinary shares, representing approximately 10% of the Company’s 
then issued ordinary share capital; (ii) for the Directors to allot unissued 
shares up to a maximum nominal amount of £4,900,000 (representing 
approximately 30% of the Company’s current issued ordinary share 
capital) to existing shareholders; and (iii) for the Directors to issue equity 
securities of the Company for cash to persons other than existing 
shareholders, under certain conditions, up to an aggregate nominal 
value of £825,000 (representing approximately 5% of the current issued 
ordinary share capital).

These authorities will expire at the 2021 AGM when new authorities will 
be sought from shareholders on similar terms. Details of the requested 
authorities are set out in the Notice of AGM which accompanies this 
Annual Report.

Contracts of significance
In 2017, the Group entered into a joint venture agreement for the 
establishment of a major new maritime yard in Saudi Arabia. This 
agreement commits the Company to invest up to USD 140 million in 
equity in this new yard over the course of the coming 5-6 years (of 
which approximately USD 86 million has already been invested) and 
includes certain provisions which could impact the Company’s fair 
market value upon a change of control in the Company. Details are 
available on the Company’s website and were approved by shareholders 
at the extraordinary general meeting in mid-2017.

Apart from the joint venture agreement and the Controlling Shareholder 
Agreement, the Company or Group does not have contractual or other 
arrangements which are significant to its business with any person. 

Going concern/viability
The Company’s business activities, together with the factors likely to 
affect its future development, performance and competitive position, 
are set out in the Strategic Report =>> 1.

The financial position of the Company, its cash flows, liquidity position 
and borrowing facilities are described in the Financial Review =>> 40.

The Group’s consolidated financial statements have been prepared on 
a going concern basis as described in the Operational and Financial 
Review and further discussed in Note 2.1.

The Directors have published their viability statement for the Company 
on =>> 43.

Directors’ responsibility statements
The Directors are responsible for preparing the Annual Report and the 
financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for 
each financial year. Under that law the Directors are required to prepare 
the Group financial statements in accordance with IFRS as adopted by 
the EU and have also chosen to prepare the parent company financial 
statements under IFRS as adopted by the EU. Under company law, the 
Directors must not approve the accounts unless they are satisfied that 
they give a true and fair view of the state of affairs of the Company and 
of the profit or loss of the Company for that period. 

In preparing these financial statements, International Accounting 
Standard 1 requires that the Directors:

•  Properly select and apply accounting policies
•  Present information, including accounting policies, in a manner 
that provides relevant, reliable, comparable and understandable 
information

•  Provide additional disclosures when compliance with the specific 

requirements in IFRS as adopted by the EU, are insufficient to enable 
users to understand the impact of particular transactions, other 
events and conditions on the entity’s financial position and financial 
performance

•  Make an assessment of the Company’s ability to continue as a going 

concern

The Directors are responsible for keeping accounting records that 
are sufficient to show and explain the Company’s transactions and 
disclose with reasonable accuracy at any time the financial position of 
the Company, and enable them to ensure that the financial statements 
comply with the Companies Act 2006. They are also responsible 
for safeguarding the assets of the Company and hence for taking 
reasonable steps for the prevention and detection of fraud and other 
irregularities.

The Directors are responsible for the maintenance and integrity of 
the corporate and financial information included on the Company’s 
website. Legislation in the UK governing the preparation and 
dissemination of financial statements may differ from legislation 
in other jurisdictions.

Responsibility statement
We confirm that to the best of our knowledge:

•  The financial statements, prepared in accordance with IFRS as 

adopted by the EU, give a true and fair view of the assets, liabilities, 
financial position and profit or loss of the Company and the 
undertakings included in the consolidation taken as a whole

•  The Strategic Report includes a fair review of the development and 
performance of the business and the position of the Company and 
the undertakings included in the consolidation taken as a whole, 
together with a description of the principal risks and uncertainties that 
they face

•  The Annual Report and financial statements, taken as a whole, are fair, 
balanced and understandable and provide the information necessary 
for shareholders to assess the Company’s position and performance, 
business model and strategy

This responsibility statement was approved by the Board of Directors on 
28 June 2021 and is signed on its behalf by:

T
R
O
P
E
R
C
G
E
T
A
R
T
S

I

E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C

S
T
N
E
M
E
T
A
T
S

I

L
A
C
N
A
N
I
F

I

N
O
T
A
M
R
O
F
N

I

R
E
H
T
O

Alex Ridout
Company Secretary 
By order of the Board

 
 
 
 
90

Independent auditor’s report to the members 
of Lamprell plc

Report on the audit of the financial 
statements
1.  Opinion
In our opinion, the financial statements of Lamprell plc (the ‘Parent 
Company’) and its subsidiaries (the ‘Group’)
•  give a true and fair view of the state of the Group’s and of the Parent 
Company’s affairs as at 31 December 2020 and of the Group’s loss 
for the year then ended;

•  have been properly prepared in accordance with International 

Financial Reporting Standards (IFRSs) as adopted by the European 
Union; and

•  have been prepared in accordance with the requirements of the Isle 

of Man Companies Acts 1931 to 2004.

We have audited the financial statements which comprise:

•  the consolidated income statement;
•  the consolidated statement of comprehensive income;
•  the consolidated and Parent Company balance sheets;
•  the consolidated and Parent Company statements of changes 

in equity;

•  the consolidated and Parent Company cash flow statements;
•  the related notes 1 to 41.

The financial reporting framework that has been applied in the 
preparation of the Parent Company and Group financial statements 
is applicable law and IFRSs as adopted by the European Union. 

2.  Basis for opinion
We conducted our audit in accordance with International Standards on 
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under 
those standards are further described in the auditor’s responsibilities 
for the audit of the financial statements section of our report. 

We are independent of the Group and the Parent Company in 
accordance with the ethical requirements that are relevant to our 
audit of the financial statements in the UK, including the Financial 
Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to 
listed public interest entities, and we have fulfilled our other ethical 
responsibilities in accordance with these requirements. The non-audit 
services provided to the Group and Parent Company for the year are 
disclosed in Note 15(b) to the financial statements. We confirm that the 
non-audit services prohibited by the FRC’s Ethical Standard were not 
provided to the Group or the Parent Company.

We believe that the audit evidence we have obtained is sufficient and 
appropriate to provide a basis for our opinion.

3.  Material uncertainty relating to going concern
We draw attention to Note 2.1 in the financial statements, concerning 
the Group’s and Parent Company’s ability to continue as a going 
concern. The Directors have identified events and conditions that 
indicate a material uncertainty exists that may cast significant doubt 
on the Group’s and the Parent Company’s ability to continue as a 
going concern. The most significant factors that have led to this 
determination are:

•  Financing 

The Group needs to raise a significant level of additional capital 
through an equity raise and debt financing. While an equity raise 
of up to USD 150 million is planned, alongside securing debt 
financing currently under negotiation, the quantum, timing and 
probability of success of these measures are uncertain and not 
wholly within management’s control.
•  Ability to execute mitigating actions 

During the period before the proceeds from the equity raise are 
received, significant payments to suppliers are forecast to be 
deferred and credit terms extended. Should the proceeds from 
the equity raise be lower than forecast, this activity will need to 
increase significantly alongside other mitigating actions including 
cost reductions and reduced capital expenditure which may not 
be sustainable over the longer term.

In performing their assessment of going concern, the Directors have 
considered forecast cash flows to September 2022. Our evaluation of 
the Director’s assessment of the Group’s and Parent Company’s ability 
to continue to adopt the going concern basis of accounting included:

•  obtaining an understanding of the relevant controls relating to the 

going concern assessment; 

•  with the assistance of restructuring specialists, challenging the 
appropriateness of management’s key assumptions in the cash 
flow forecasts as described in Note 2.1 by reviewing supporting 
and contradictory evidence in relation to these key assumptions 
and assessing management’s consideration of downside sensitivity 
analyses. This included assessing the feasibility of mitigating actions 
within management’s control; 

•  engaging in regular discussions with the Directors with regard to 
the status of negotiations in respect of new financing options;
•  discussing the nature, timing and feasibility of refinancing options, 
particularly the planned equity raise, with the brokers appointed to 
advise the Group;

•  assessing and challenging key assumptions and mitigating 

actions planned, and in particular assessing the reasonableness 
of assumptions regarding payment of creditors, with reference 
to management’s board reporting on the subject and comparing 
the current and forecast levels of stretch against industry and 
local averages; 

•  assessing and challenge the forecast timings of cash inflows and 
outflows associated with major ongoing contracts such as Moray 
East, Seagreen and IMI Rigs 1 & 2; 

•  evaluating and challenging the bid pipeline and the related 
future cash flows in the model. For each key cash flow we 
assessed the risks associated with the cash flow and inspected 
bid documentation, communications with potential customers 
and held discussions with the bid development team;

FINANCIAL STATEMENTS91

•  challenging management’s assumptions regarding further cash 

contributions forecast to be made to fund the Industrial Maritime 
Services (IMI) joint venture within the going concern period 
and considered the potential contractual consequences of 
deferral of this;

As stated in note 2.1, these events or conditions, along with the other 
matters as set out in that note to the financial statements, indicate 
that a material uncertainty exists that may cast significant doubt on 
the Group’s and the Parent Company’s ability to continue as a going 
concern. Our opinion is not modified in respect of this matter. 

•  with the assistance of modelling specialists, testing the 

mathematical accuracy and functionality of the model used 
to prepare the forecasts;

•  assessing the historical accuracy of forecasts prepared by 

management;

•  considering the consistency of management’s forecasts with 

other areas of the audit, including the forecasts used to prepare 
the viability statement =>> 43;

•  assessing the nature and extent of management’s disclosure 

of these matters throughout the Annual Report and Accounts; and

•  assessing the extent to which various scenarios under sensitised 
assumptions represent realistic alternatives to ceasing trading.

In auditing the financial statements, we have concluded that 
the Directors’ use of the going concern basis of accounting in 
the preparation of the financial statements is appropriate.

In relation to the reporting on how the Group has applied the UK 
Corporate Governance Code, we have nothing material to add or 
draw attention to in relation to:

•  the Directors’ statement in the financial statements about whether 
the Directors considered it appropriate to adopt the going concern 
basis of accounting; and

•  the Directors’ identification in the financial statements of the 

material uncertainty related to the Group’s and Parent Company’s 
ability to continue as a going concern over a period of at least 
twelve months from the date of approval of the financial statements.

Our responsibilities and the responsibilities of the Directors with 
respect to going concern are described in the relevant sections 
of this report.

4.  Summary of our audit approach

Key audit matters

The key audit matters that we identified in the current year were:
•  Going concern (see material uncertainty relating to going concern section above);
•  Estimation of project revenues and costs – IMI Rigs 1 and 2; 
•  Estimation of project revenues with respect to unapproved claims and liquidated damages – Moray East; and
•  Recoverability of non-current assets: PP&E.

Within this report, key audit matters are identified as follows:

  Newly identified

Increased level of risk

Similar level of risk

Decreased level of risk

Materiality

Scoping

Significant changes  
in our approach

The materiality that we used for the Group financial statements was USD 5 million, which equated to 1.5% of 
revenue. Our benchmark of revenue has remained consistent with the prior year.

We performed full scope audit procedures on components comprising 99% of the Group’s net assets and 99%  
of the Group’s revenue.

Changes to key audit matters in the current year were:

•  Developments in the East Anglia ONE project have reduced the level of estimation uncertainty associated  

with the warranty provision and hence this is no longer considered a key audit matter; 

•  Project delays on IMI Rigs 1 and 2 have resulted in judgements around contract revenue recorded, treatment  
of contract claims and the estimated costs to complete for, leading to this item being considered a key audit 
matter; and

•  The level of judgement around estimation of contract revenue with respect to unapproved contract claims 

and liquidated damages for the Moray East project have resulted in this being recognised as a key audit matter.

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT92

Independent auditor’s report to the members  
of Lamprell plc continued

5.  Key audit matters
Key audit matters are those matters that, in our professional 
judgement, were of most significance in our audit of the financial 
statements of the current period and include the most significant 
assessed risks of material misstatement (whether or not due to fraud) 
that we identified. These matters included those which had the 
greatest effect on: the overall audit strategy, the allocation of resources 
in the audit; and directing the efforts of the engagement team.

5.1  Estimation of project costs and project revenues IMI Rigs 1 and 2 

These matters were addressed in the context of our audit of the 
financial statements as a whole, and in forming our opinion thereon, 
and we do not provide a separate opinion on these matters. In 
addition to the matter described in the material uncertainty relating to 
going concern section, we have determined matters described below 
to be the key audit matters to be communicated in our report.

Key audit matter  
description

How the scope of our 
 audit responded to the  
key audit matter

The IMI Rigs 1 and 2 projects were contracted at lower than usual projected margins and since project 
commencement have been subject to some delays. This exposes the Group to the possibility of liquidated 
damages (LDs) being charged by the customer, as well as increases to the forecast cost to complete which,  
given the low levels of margin on the projects, could result in the contracts becoming onerous. Delays in 
contract delivery also give rise to greater levels of uncertainty over forecast costs to complete.

No LDs have been provided for, despite delays in contract delivery to date, and claims income has been 
recognised despite it not being formally agreed by the customer. 

Management has disclosed this as a critical judgement in Note 4.1.2, and has included the cost to complete 
as a key source of estimation uncertainty at Note 4.2.1.

The accounting for IMI Rigs 1 and 2 was considered by the Audit and Risk Committee as set out on =>> 69.

We performed the following procedures in assessing revenue recognised, forecast costs to complete and 
estimation of potential LD claims:

•  obtained an understanding of relevant controls over the recognition of contract revenue, forecast costs 
and forecast margin (including by attending project review meetings where project status, estimates and 
forecasts are discussed by finance and operational personnel);

•  read the original contracts and variations thereto, and verified the details of expected revenue, costs and 

critical dates of project deliverability milestones;

•  met with operational project management and senior management to understand contract performance 
and the risks, probability of the risks materialising and the quantification of these risks within forecast costs 
to complete for each project;

•  obtained claim documentation and other communication between the Group, its immediate customer and 

the ultimate customer on the status of the projects and with the assistance of specialists assessed the nature of 
the impact of delay events on the project position including with respect to LDs and the award of an extension 
of time in quantum and time;

•  assessed and independently recalculated the risk and opportunities schedule for the projects to test whether 

management’s estimates are reasonable and supported by appropriate evidence; 

•  agreed the costs to complete to supporting evidence and assessed the completeness and accuracy of the 
costs through analysis, inquiries, sub-contract agreements and detailed review of project management’s 
forecast schedules. As part of this work, we specifically considered the impact of delays experienced to date 
on costs to complete. Based on this, we recalculated revenue recognised for the period;
•  assessed management’s accounting treatment against the requirements of IFRS 15; and
•  considered the impact of COVID-19 on project execution and completion deadlines. 

Key observations

Based on procedures performed we are satisfied that the revenue recognised, estimated costs to complete 
and management’s assessment of potential LDs for the IMI Rigs 1 and 2 projects are reasonable. 

FINANCIAL STATEMENTS 
93

5.2  Estimation of project revenue with respect to unapproved contract claims and liquidated damages for the Moray East project 

Key audit matter  
description

The Moray East project is substantially complete with all jackets being completed and delivered to the customer. 
There are therefore minimal costs remaining to be incurred, but claims and counterclaims in respect of delays 
remained under negotiation at the year end.

How the scope of our  
audit responded to the  
key audit matter

Key observations

Management has assessed that there is no exposure to LDs and accordingly none have been recognised, and 
claims income has been recognised despite it not being formally agreed by the customer. Management has 
disclosed this as a critical judgement in Note 4.1.1.

The accounting for Moray East was considered by the Audit and Risk Committee as set out on =>> 69.

For the Moray East project, we have:

•  obtained an understanding of relevant controls over the estimation of contract revenue with respect to 

unapproved claims and LDs;

•  met operational project management, as well as senior management to understand contract performance, 

progress of commercial close-out of the project and final developments through recent communication with 
the customer on unapproved claims and potential LDs;

•  obtained and read signed contract finalisation documentation agreed to date;
•  understood the basis for and obtained evidence in respect of management’s judgements on LDs and claims 

income recognised, including customer correspondence and claim documentation; and

•  involved our internal claim specialists to specifically assess and independently evaluate the entitlement, 

quantum and likelihood of recovery relating to the claim position recorded by management and to evaluate 
the claims submitted and the risk of LDs being incurred.

Based on procedures performed we are satisfied with the recognition of part of the claim submitted as highly 
probable of being received, and that appropriate mitigations exist to support that LDs for Moray East should not 
be recognised.

5.3  Recoverability of non-current assets: PP&E 

Key audit matter  
description

How the scope of our  
audit responded to the  
key audit matter

The Group has property, plant and equipment ‘PP&E’ that is material to the Group’s balance sheet. Due to the 
low levels of activity, limited bidding success in the year and slow recovery in the market as a result of the impact 
of the COVID-19 pandemic, the Group identified impairment indicators for non-current assets in the United 
Arab Emirates (UAE) cash generating unit (CGU). Management performed an impairment assessment as at 
31 December 2020, in accordance with IAS 36 Impairment of assets. 

As disclosed in Note 4.2.2, where indicators exist, an impairment test is undertaken which requires management 
to estimate the recoverable amount of its assets, being the higher of the value in use (VIU) and the fair value less 
costs of disposal (FVLCD).

For the year end assessment, management assessed that FVLCD would be higher than VIU and accordingly 
estimated FVLCD of the PP&E with the assistance of external experts in the valuation of plant and equipment and 
real estate. 

Key assumptions in the valuations included assessment of the existence of an active market for the assets, and 
consideration and estimation of dismantling/installation costs. We consider this estimate to be a key audit matter 
because of the level of judgment and estimation uncertainty associated with these assumptions.

Based on the exercise completed by management, an impairment loss of USD 3.3 million (31 December 2019: 
USD 79.3 million) has been recorded against PP&E during the year. 

The resultant carrying amounts at 31 December 2020 of PP&E was USD 158.8 million (2019: USD 160.1 million).

The impairment assessment was considered by the Audit and Risk Committee as set out on page 69.

We performed the following procedures on the FVLCD estimate: 

•  Obtained an understanding of the controls around management’s valuation process, including their use of 

valuation experts;

•  considered and challenged the approach adopted by management’s valuation experts to derive the fair value 

of items of PP&E, including that an active market exists for sale of the items;

•  together with internal specialists, met with management’s valuation experts and challenged assumptions 

included within the valuations of the PP&E assets;

•  together with our specialists, evaluated the competence, capabilities and objectivity of management’s 

valuation experts and the appropriateness of their work as audit evidence;

•  challenged management’s valuation experts on the dismantling and installation costs that were required to be 

considered in the FVLCD exercise; and

•  considered the costs to dispose determined by management by benchmarking to industry standards and 

developed an estimate to determine if management’s valuation experts’ conclusions fell within a reasonable range.

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT94

Independent auditor’s report to the members  
of Lamprell plc continued

Key observations

Based on our work performed we consider the impairment charge and resultant carrying value of non-current 
assets recorded to be reasonable. 

6.  Our application of materiality
6.1  Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions 
of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work 
and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Materiality

USD 5 million (2019: USD 5 million)

USD 2.9 million (2019: USD 4.7 million)

Group financial statements

Parent Company financial statements

Basis for determining 
materiality

Rationale for the  
benchmark applied

The Group materiality that we used in the current year 
was based on 1.5% of revenue. 2019 materiality was 
based on 1.9% of revenue.

Consistent with 2019 we continue to use revenue 
as an appropriate benchmark for materiality, given 
its relative stability compared to other potential 
benchmarks.

The Parent Company materiality was determined 
based on 3% of Parent Company net assets.

In our professional judgement we believe that use of net 
assets is appropriate for a holding company. 

6.2  Performance materiality
We set performance materiality at a level lower than materiality to 
reduce the probability that, in aggregate, uncorrected and undetected 
misstatements exceed the materiality for the financial statements 
as a whole. Group performance materiality was set at 70% of 
Group materiality for the 2020 audit (2019: 70%). Parent Company 
performance materiality was set at 70% of Parent Company materiality 
for the 2020 audit (2019: 70%). In determining performance materiality 
we considered factors including our risk assessment and our 
assessment of the Group’s overall control environment.

6.3  Error reporting threshold
We agreed with the Audit and Risk Committee that we would report 
to the Committee all audit differences in excess of USD 0.25 million 
(2019: USD 0.25 million), as well as differences below that threshold 
that, in our view, warranted reporting on qualitative grounds. We also 
report to the Audit and Risk Committee on disclosure matters that 
we identified when assessing the overall presentation of the financial 
statements.

7.  An overview of the scope of our audit
7.1  Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of 
the Group and its environment, and assessing the risks of material 
misstatements at the Group level. 

The Group audit team performed a full scope audit of the Group’s 
UAE operations. 

In addition, we engaged one component audit team (a non-DTTL 
firm) who performed a full scope audit on the Group’s IMI associate 
in the Kingdom of Saudi Arabia (KSA). 

In total our full scope audit work comprises 99% of the Group’s 
revenue and 99% of net assets.

We also tested the consolidation process and carried out analytical 
procedures to confirm our conclusion that there were no significant 
risks of material misstatement of the aggregated financial information.

7.2  Working with other auditors
We issued the component auditor in KSA with referral instructions and 
received reporting on the results of their work. In addition to regular 
update calls to supervise and direct their work, a senior member of the 
Group audit team performed a file review remotely in the absence of 
a visit to the KSA component auditor during the year, in light of travel 
restrictions due to the pandemic.

7.3  Controls approach
We have obtained an understanding of the Group’s system of internal 
controls and undertaken a combination of procedures, all of which are 
designed to target the Group’s identified risks of material misstatement 
in the most effective manner possible. We tested operating effectiveness 
of controls for the payroll and expenditure cycles.

FINANCIAL STATEMENTS95

8.  Other information
The other information comprises the information included in the 
Annual Report, other than the financial statements and our auditor’s 
report thereon. The Directors are responsible for the other information 
contained within the Annual Report.

Our opinion on the financial statements does not cover the other 
information and, except to the extent otherwise explicitly stated in our 
report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, 
consider whether the other information is materially inconsistent with 
the financial statements or our knowledge obtained in the course of 
the audit, or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material 
misstatements, we are required to determine whether this gives rise 
to a material misstatement in the financial statements themselves. If, 
based on the work we have performed, we conclude that there is a 
material misstatement of this other information, we are required to 
report that fact.

We have nothing to report in this regard.

9.  Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, 
the Directors are responsible for the preparation of the financial 
statements and for being satisfied that they give a true and fair view, 
and for such internal control as the Directors determine is necessary 
to enable the preparation of financial statements that are free from 
material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for 
assessing the Group’s and the Parent Company’s ability to continue 
as a going concern, disclosing as applicable, matters related to going 
concern and using the going concern basis of accounting unless the 
Directors either intend to liquidate the Group or the Parent Company 
or to cease operations, or have no realistic alternative but to do so.

10.  Auditor’s responsibilities for the audit of the 
financial statements
Our objectives are to obtain reasonable assurance about whether the 
financial statements as a whole are free from material misstatement, 
whether due to fraud or error, and to issue an auditor’s report 
that includes our opinion. Reasonable assurance is a high level 
of assurance, but is not a guarantee that an audit conducted in 
accordance with ISAs (UK) will always detect a material misstatement 
when it exists. Misstatements can arise from fraud or error and are 
considered material if, individually or in the aggregate, they could 
reasonably be expected to influence the economic decisions of 
users taken on the basis of these financial statements.

A further description of our responsibilities for the audit 
of the financial statements is located on the FRC’s website at:  
www.frc.org.uk/auditorsresponsibilities. This description forms 
part of our auditor’s report.

11.  Extent to which the audit was considered capable 
of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance 
with laws and regulations. We design procedures in line with our 
responsibilities, outlined above, to detect material misstatements 
in respect of irregularities, including fraud. The extent to which our 
procedures are capable of detecting irregularities, including fraud 
is detailed below. 

11.1  Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect 
of irregularities, including fraud and non-compliance with laws and 
regulations, we considered the following:

•  the nature of the industry and sector, control environment 

and business performance including the design of the Group’s 
remuneration policies, key drivers for Directors’ remuneration, 
bonus levels and performance targets;

•  results of our enquiries of management, internal audit and the Audit 
and Risk Committee about their own identification and assessment 
of the risks of irregularities; 

•  any matters we identified having obtained and reviewed the Group’s 

documentation of their policies and procedures relating to:
 − identifying, evaluating and complying with laws and regulations and 

whether they were aware of any instances of non-compliance;
 − detecting and responding to the risks of fraud and whether they 

have knowledge of any actual, suspected or alleged fraud;
 − the internal controls established to mitigate risks of fraud or 

non-compliance with laws and regulations;

•  the matters discussed among the audit engagement team including 

the component audit team and relevant internal specialists, 
including valuations, pensions, IT and industry specialists regarding 
how and where fraud might occur in the financial statements and 
any potential indicators of fraud.

As a result of these procedures, we considered the opportunities 
and incentives that may exist within the organisation for fraud and 
identified the greatest potential for fraud in the following areas: 
estimation of project costs and revenue recognition in respect of 
major contracts including Seagreen, IMI Rigs and Moray East and the 
recoverability of non-current assets. In common with all audits under 
ISAs (UK), we are also required to perform specific procedures to 
respond to the risk of management override.

We also obtained an understanding of the legal and regulatory 
frameworks that the Group operates in, focusing on provisions 
of those laws and regulations that had a direct effect on the 
determination of material amounts and disclosures in the financial 
statements. The key laws and regulations we considered in this 
context included the Isle of Man Companies Act and UK Listing Rules.

In addition, we considered provisions of other laws and regulations 
that do not have a direct effect on the financial statements but 
compliance with which may be fundamental to the group’s ability 
to operate or to avoid a material penalty.

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT96

Independent auditor’s report to the members  
of Lamprell plc continued

11.2  Audit response to risks identified
As a result of performing the above, we identified accounting for 
revenue and costs to complete for IMI Rigs 1 and 2, accounting for 
contract claims/LDs on Moray East and recoverability of non-current 
assets as key audit matters related to the potential risk of fraud. The key 
audit matters section of our report explains the matters in more detail 
and also describes the specific procedures we performed in response 
to those key audit matters. 

In addition to the above, our procedures to respond to risks identified 
included the following:

•  reviewing the financial statement disclosures and testing to supporting 
documentation to assess compliance with provisions of relevant 
laws and regulations described as having a direct effect on the 
financial statements;

•  enquiring of management, the Audit and Risk Committee and 

in-house legal counsel concerning actual and potential litigation 
and claims;

•  performing analytical procedures to identify any unusual or 
unexpected relationships that may indicate risks of material 
misstatement due to fraud;

•  reading minutes of meetings of those charged with governance, 
reviewing internal audit reports and reviewing correspondence 
with relevant regulatory authorities; 

•  in addressing the risk of fraud through management override 
of controls, testing the appropriateness of journal entries and 
other adjustments; assessing whether the judgements made in 
making accounting estimates are indicative of a potential bias; and 
evaluating the business rationale of any significant transactions that 
are unusual or outside the normal course of business.

We also communicated relevant identified laws and regulations and 
potential fraud risks to all engagement team members including 
internal specialists, and remained alert to any indications of fraud or 
non-compliance with laws and regulations throughout the audit.

Report on other legal and 
regulatory requirements
12.  Corporate governance statement
The Listing Rules require us to review the Directors’ statement in 
relation to going concern, longer-term viability and that part of the 
Corporate Governance Statement relating to the Group’s compliance 
with the provisions of the UK Corporate Governance Code specified 
for our review.

Based on the work undertaken as part of our audit, we have 
concluded that each of the following elements of the corporate 
governance statement is materially consistent with the financial 
statements and our knowledge obtained during the audit: 

•  the Directors’ statement with regards to the appropriateness of 

adopting the going concern basis of accounting and any material 
uncertainties identified set out on =>> 42;

•  the Directors’ explanation as to its assessment of the Group’s 

prospects, the period this assessment covers and why the period is 
appropriate set out on =>> 43;

•  the Directors’ statement on fair, balanced and understandable set 

out on =>> 68;

•  the board’s confirmation that it has carried out a robust assessment 

of the emerging and principal risks set out on =>> 43;

•  the section of the Annual Report that describes the review of 

effectiveness of risk management and internal control systems set 
out on =>> 44; and

•  the section describing the work of the Audit and Risk Committee 

set out on =>> 68.

13.  Matters on which we are required to report 
by exception
Under the Isle of Man Acts 1931 to 2004 we are required to report to 
you if, in our opinion:

•  we have not received all the information and explanations which, to 
the best of our knowledge and belief, are necessary for our audit; or

•  proper books of account have not been kept by the Parent 

Company and that proper returns adequate for our audit have not 
been received from branches not visited by us; or

•  the Parent Company financial statements are not in agreement with 

the books of account and returns; or

•  certain disclosures of Directors’ loans and remuneration specified by 

law are not being complied with.

We have nothing to report in respect of these matters.

FINANCIAL STATEMENTS97

14.  Other matters which we are required to address
14.1  Auditor tenure
Following the recommendation of the Audit and Risk Committee, 
we were appointed at the AGM in May 2016 to audit the financial 
statements for the year ending 31 December 2016 and subsequent 
financial periods. The period of total uninterrupted engagement 
including previous renewals and reappointments of the firm 
is five years, covering the years ended 31 December 2016 to 
31 December 2020. 

14.2  Consistency of the audit report with the additional report 
to the Audit and Risk Committee
Our audit opinion is consistent with the additional report to the 
Audit and Risk Committee we are required to provide in accordance 
with ISAs (UK).

15.  Use of our report
This report is made solely to the company’s members, as a body, in 
accordance with Section 15 of the Isle of Man Companies Act 1982. 
Our audit work has been undertaken so that we might state to the 
company’s members those matters we are required to state to them 
in an auditor’s report and for no other purpose. To the fullest extent 
permitted by law, we do not accept or assume responsibility to anyone 
other than the Company and the Company’s members as a body, for 
our audit work, for this report, or for the opinions we have formed.

Dean Cook, MA, FCA 
(Senior statutory auditor) 

For and on behalf of Deloitte LLP 
Statutory Auditor 
London, UK

28 June 2021

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT 
98

Consolidated income statement
for the year ended 31 December 2020

Revenue

Cost of sales

Gross profit/(loss)

Selling and distribution expenses

General and administrative expenses*

Other gains – net

Operating loss

Finance costs

Finance income

Finance costs – net

Share of loss of investments accounted for using the equity method – net

Loss before income tax

Income tax (expense)/gain

Loss for the year

Loss per share attributable to the equity holders of the Company during the period

Basic

Diluted

*  General and administrative expenses include:

Notes

6

7

8

10

13

12

12

20

14

2020
USD’000

338,623

(324,073)

14,550

(298)

2019
USD’000

260,448

(288,052)

(27,604)

(1,502)

(47,215)

(140,324)

1,009

(31,954)

(5,980)

370

(5,610)

(15,697)

(53,261)

(125)

286

(169,144)

(8,327)

1,023

(7,304)

(7,934)

(184,382)

868

(53,386)

(183,514)

(15.63)c

(15.63)c

(53.71)c

(53.71)c

 −

 −

an impairment charge of USD 4.6 million (31 December 2019: 79.3 million) (Note 41) recognised in respect of property, plant and equipment, intangible assets and an investment 
accounted for using the equity method; and
restructuring costs of USD 5.6 million (31 December 2019: nil) (Note 29) relating to staff redundancies and costs of closing down the Sharjah Khalid port yard.

The Notes on pages 106 to 142 form an integral part of these financial statements.

FINANCIAL STATEMENTS99

Consolidated statement of comprehensive income
for the year ended 31 December 2020

Loss for the year 

Other comprehensive income:

Items that will not be reclassified subsequently to profit or loss:

Remeasurement of post-employment benefit obligations

Share of other comprehensive loss of equity accounted investments

Items that may be reclassified subsequently to profit or loss:

Currency translation differences

Other comprehensive loss for the year

Total comprehensive loss for the year

The Notes on pages 106 to 142 form an integral part of these financial statements.

Notes

2020
USD’000

2019
USD’000

(53,386)

(183,514)

28

20

27

(1,676)

(352)

43

(1,985)

(55,371)

(3,074)

(215)

308

(2,981)

(186,495)

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT100

Consolidated balance sheet 
at 31 December 2020

ASSETS

Non-current assets

Property, plant and equipment

Intangible assets

Investments accounted for using the equity method

Term and margin deposits

Total non-current assets

Current assets

Inventories

Trade and other receivables

Contract assets

Cash and cash equivalents 

Term and margin deposits

Total current assets

Total assets

LIABILITIES

Current liabilities

Borrowings

Trade and other payables

Contract liabilities

Lease liabilities

Current tax liabilities

Provision for warranty costs 

Total current liabilities

Net current assets

Non-current liabilities

Lease liabilities

Provision for employees’ end of service benefits

Total non-current liabilities

Total liabilities

Net assets

EQUITY 

Share capital

Share premium

Other reserves

Retained losses

Total equity attributable to the equity holders of the Company

Notes

2020
USD’000

2019
USD’000

17

18

20

24

21

22

23

24

24

33

30

31

38

32

38

28

26

26

27

162,024

160,077

82

55,888

447

–

44,420

432

218,441

204,929

14,252

73,890

85,426

57,625

55,193

286,386

504,827

(880)

(70,866)

(159,991)

(2,136)

(253)

(3,555)

89,758

37,431

40,384

26,162

35,922

229,657

434,586

(20,058)

(93,469)

(3,826)

(1,985)

(177)

(11,440)

(237,681)

(130,955)

48,705

98,702

(68,849)

(37,848)

(106,697)

(344,378)

160,449

30,346

315,995

(19,292)

(166,600)

160,449

(55,388)

(36,863)

(92,251)

(223,206)

211,380

30,346

315,995

(19,335)

(115,626)

211,380

The financial statements on pages 98 to 142 were approved and authorised for issue by the Board of Directors on 28 June 2021 and signed on its 
behalf by:

Christopher McDonald 
Chief Executive Officer and Director 

Antony Wright
Chief Financial Officer and Director

FINANCIAL STATEMENTSCompany balance sheet 
at 31 December 2020

ASSETS

Non-current assets

Investment in subsidiaries

Due from related parties

Total non-current assets

Current assets

Other receivables

Cash and bank balance

Total current assets

Total assets

LIABILITIES

Current liabilities

Accruals

Due to related parties

Total current liabilities

Net current assets

Non-current liabilities

Provision for employees’ end of service benefits

Total liabilities

Net assets

EQUITY 

Share capital

Share premium

Retained losses

Total equity attributable to the equity holders of the Company

101

Notes

2020
USD’000

2019
USD’000

19

25

25

28

26

26

82,022

18,214

86,858

15,530

100,236

102,388

188

42

230

109

377

486

100,466

102,874

(1,185)

(481)

(1,666)

(1,436)

(492)

(2,158)

98,308

30,346

315,995

(139)

(481)

(620)

(134)

(380)

(1,000)

101,874

30,346

315,995

(248,033)

(244,467)

98,308

101,874

The financial statements on pages 98 to 142 were approved and authorised for issue by the Board of Directors on 28 June 2021 and signed on its 
behalf by:

Christopher McDonald 
Chief Executive Officer and Director 

Antony Wright
Chief Financial Officer and Director

The Notes on pages 106 to 142 form an integral part of these financial statements.

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT102

Consolidated statement of changes in equity 

At 1 January 2019

Loss for the year

Other comprehensive income:

Remeasurement of post-employment benefit obligations

Share of other comprehensive loss accounted for using the 
equity method

Currency translation differences

Total comprehensive loss for the year

Transactions with owners:

Share-based payments:

 − value of services provided

 − treasury shares purchased

Total transactions with owners

At 31 December 2019

Loss for the year

Other comprehensive income:

Remeasurement of post-employment benefit obligations

Share of other comprehensive loss accounted for using the 
equity method

Currency translation differences

Total comprehensive loss for the year

Transactions with owners:

Share-based payments:

 − value of services provided

Total transactions with owners

At 31 December 2020

Notes

Share capital
USD’000

Share 
premium
USD’000

Other 
reserves
USD’000

Retained 
earnings/
(losses)
USD’000

Total
USD’000

30,346

315,995

(19,643)

66,255

392,953

28

20

27

9

28

20

27

9

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

308

308

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

43

43

–

–

(183,514)

(183,514) 

(3,074)

(3,074)

(215)

–

(215)

308

(186,803)

(186,495)

4,993

(71)

4,922

(53,386)

4,993

(71)

4,922

211,380

(53,386)

(1,676)

(1,676)

(352)

–

(352)

43

(55,414)

(55,371)

4,440

4,440

4,440

4,440

30,346

315,995

(19,335)

(115,626)

30,346

315,995

(19,292)

(166,600)

160,449

The Notes on pages 106 to 142 form an integral part of these financial statements.

FINANCIAL STATEMENTS103

Company statement of changes in equity

At 1 January 2019

Loss for the year

Other comprehensive income:

Remeasurement of post-employment benefit obligations

Total comprehensive loss for the year

Transactions with owners:

Share-based payments:

 − value of services provided

 − investment in subsidiaries

 − treasury shares issued

Transferred to retained earnings

Total transactions with owners

At 31 December 2019

Loss for the year

Other comprehensive income:

Remeasurement of post-employment benefit obligations

Total comprehensive loss for the year

Transactions with owners:

Share-based payments:

 − value of services provided

 − investment in subsidiaries

Total transactions with owners

At 31 December 2020

Notes

Share capital
USD’000

Share 
premium
USD’000

Other 
reserve
USD’000

Retained 
earnings/
(losses)
USD’000

Total
USD’000

30,346

315,995

189,052

36,610

572,003

28

9

19

28

9

19

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

(189,052)

(189,052)

30,346

315,995

–

–

–

–

–

–

–

–

–

–

–

–

30,346

315,995

–

–

–

–

–

–

–

–

(475,023)

(475,023)

(27)

(27)

(475,050)

(475,050)

1,298

3,694

(71)

189,052

193,973

1,298

3,694

(71)

–

4,921

(244,467)

101,874

(7,974)

(7,974)

(32)

(8,006)

(32)

(8,006)

1,202

3,238

4,440

1,202

3,238

4,440

(248,033)

98,308

The Notes on pages 106 to 142 form an integral part of these financial statements.

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT104

Consolidated cash flow statement
for the year ended 31 December 2020

Operating activities

Cash generated from/(used in) operating activities

Tax paid

Net cash generated from/(used in) operating activities

Investing activities

Purchases of property, plant and equipment

Proceeds from sale of property, plant and equipment

Additions to intangible assets

Increase in investment in an associate 

Dividend received from an associate

Finance income

Inflows from deposits with original maturity of more than three months 

Inflows from margin deposits under lien (with original maturity more than three months)

Outflows from margin deposits under lien (with original maturity more than three months)

Inflows from margin deposits under lien (with original maturity less than three months)

Outflows from margin deposits under lien (with original maturity less than three months)

Net cash (used in)/generated from investing activities

Financing activities

Repurchase of treasury shares

Proceeds from borrowings

Repayments of borrowings

Finance costs

Repayment of interest expense on leases

Repayment of lease liabilities

Net cash used in financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of the year

Exchange rate translation

Cash and cash equivalents, end of the year from continuing operations

The Notes on pages 106 to 142 form an integral part of these financial statements.

Notes

2020
USD’000

2019
USD’000

39

113,303

(49)

113,254

17

18

20

20

12

33

33

38

38

24

(13,906)

381

(288)

(25,814)

–

370

–

5,285

(24,074)

–

(497)

(58,543)

–

880

(20,000)

(1,411)

(2,142)

(618)

(23,291)

31,420

26,162

43

57,625

(7,739)

(69)

(7,808)

(19,817)

82

(1,012)

–

901

1,023

10,333

15,987

(2,811)

1,257

–

5,943

(71)

40,000

(40,000)

(3,715)

(4,322)

(2,857)

(10,965)

(12,830)

38,684

308

26,162

FINANCIAL STATEMENTSCompany cash flow statement
for the year ended 31 December 2020

Operating activities

Loss for the year 

Adjustments for:

Impairment of investment in subsidiary

Share-based payment – value of services provided

Provision for employees’ end of service benefits 

Operating cash flows before payment of employees’ end of service benefits and changes in working capital

Changes in working capital:

 − Other receivables

 − Accruals

 − Due from related parties

 − Due to related parties

Net cash (used in)/generated from operating activities

Financing activities

Repurchase of treasury shares

Net cash used in financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents, beginning of the year

Cash and cash equivalents, end of the year 

The Notes on pages 106 to 142 form an integral part of these financial statements.

105

Notes

2020
USD’000

2019
USD’000

34

19

9

28

25

25

(7,974)

(475,023)

8,074

1,202

80

1,382

(79)

1,046

(2,684)

–

(335)

–

–

(335)

377

42

475,191

1,298

73

1,539

81

(354)

(713)

(306)

247

(71)

(71)

176

201

377

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT106

Notes to the consolidated financial statements 
for the year ended 31 December 2020

1  Legal status and activities
Lamprell plc (“the Company”/“the Parent Company”) was incorporated and registered on 4 July 2006 in the Isle of Man as a public company 
limited by shares under the Isle of Man Companies Acts with the registered number 117101C. The Company acquired 100% of the legal 
and beneficial ownership in Lamprell Energy Limited from Lamprell Holdings Limited, under a share for share exchange agreement dated 
25 September 2006 and this transaction was accounted for in the consolidated financial statements using the uniting of interest method 
(Note 27). The Company was admitted to the Alternative Investment Market of the London Stock Exchange with effect from 16 October 2006. 
From 6 November 2008, the Company moved from the Alternative Investment Market and was admitted to trading on the London Stock 
Exchange plc’s main market for listed securities. The address of the registered office of the Company is First Names House, Victoria Road, 
Douglas, IM2 4DF, Isle of Man and the Company is managed from the United Arab Emirates. The address of the principal place of the business 
is PO Box 33455, Dubai, UAE.

The principal activities of the Company and its subsidiaries (together referred to as “the Group”) are: assembly and new build construction for the 
onshore/offshore renewables and oil & gas sectors; fabricating packaged, pre-assembled and modularised units; constructing accommodation 
and complex process modules for onshore downstream projects; construction of complex living quarters, wellhead decks, topsides, jackets and 
other offshore fixed facilities; rig refurbishment; land rig services; engineering and construction; and operations and maintenance. 

The Company has either directly or indirectly the following subsidiaries:

Name of the subsidiary

Lamprell Energy Limited (“LEL”)

Lamprell Investment Holdings Ltd. (“LIH”)

Lamprell Dubai LLC (“LD”)

Lamprell Sharjah WLL (“LS”)

Maritime Offshore Limited (“MOL”)

Maritime Offshore Construction Limited (“MOCL”)

Cleopatra Barges Limited (“CBL”)

Lamprell plc Employee Benefit Trust (“EBT”)

Maritime Industrial Services Co. Ltd. Inc (“MIS”)

Maurlis International Ltd. Inc (“MIL”)

Rig Metals LLC (“RIM”)

Maritime Industrial Services Co. Ltd. & Partners (“MISCLP”)

Global Investment Co. Ltd. Inc (“GIC”)

Sunbelt Safety Services Co. Ltd. Inc. (“SSS”)

MIS Qatar LLC (“MISQWLL”)

Lamprell Kazakhstan LLP (“LAK”)

Lamprell Energy (UK) Limited (“LUK”)

Sunbelt Safety Services LLC (“SSSL”) 

Percentage 
of legal 
ownership
%

Percentage 
of beneficial 
ownership
%

Place of 
incorporation

100

100

49*

49*

100

100

100

100

 100

 100

 49*

 70*

 100

 100

 49*

100

100

70*

100

Isle of Man

100 British Virgin Islands

100

100

100

100

UAE

UAE

Isle of Man

Isle of Man

100 British Virgin Islands

†

Unincorporated

100 Republic of Panama

100 Republic of Panama

100

100

UAE

Sultanate of Oman

100 Republic of Panama

100 Republic of Panama

100

100

100

100

Qatar

Kazakhstan

England and Wales

Sultanate of Oman

*  The remaining legal ownership in each case is registered in the name of a GCC national/entities owned by a GCC national, who has assigned all the economic benefits attached to their 

shareholdings to the Group entity. The Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power 
over the entity via management agreements and, accordingly, these entities are consolidated as wholly owned subsidiaries in these consolidated financial statements. These shareholders 
receive sponsorship fees from the Group (Note 25).

† 

The beneficiaries of the EBT are the employees of the Group. 

FINANCIAL STATEMENTS107

2  Summary of significant accounting policies 
The principal accounting policies applied in the preparation of these consolidated and Parent Company financial statements are set out below. 
These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1  Basis of preparation 
The consolidated financial statements of the Group and the financial statements of the Parent Company have been prepared in accordance with 
IFRS and the Isle of Man Companies Acts 1931 to 2004. In accordance with the provisions of the Isle of Man Companies Act 1982, the Company 
has not presented its own statement of comprehensive income.

Going concern 
These financial statements have been prepared on a going concern basis which assumes that the Group will continue to have adequate 
resources to continue in operational existence for the foreseeable future notwithstanding the pandemic and material uncertainty discussed 
below.

The Group incurred a loss before tax of USD 53.4 million during the year ended 31 December 2020 (31 December 2019: USD 183.5 million) and 
was in a Net Cash position of USD 112.4 million at 31 December 2020 (2019: Net Cash position of USD 42.5 million). This improvement in its 
financial results and resources is mainly attributable to the self-help measures implemented in Q1 2020, negotiating extended payables credit 
terms and the Net Cash inflows generated from operating activities of USD 113.3 million.

Of the Net Cash position at 31 December 2020, USD 55.6 million was restricted. The level of net unrestricted cash at 31 December 2020 was 
therefore USD 56.8 million (2019: USD 6.1 million). 

As at 31 May 2021, net unrestricted cash has fallen to USD 18.6 million, as our ongoing projects have drawn working capital through the first half 
of 2021. The Group now faces acute solvency challenges in the coming months.

The Directors have performed a going concern assessment for the 15 months to 30 September 2022 and detailed below are the key assumptions 
included in the forecast cash flows:

Planned capital raise
As highlighted previously, the Group has been assessing its funding options, both in terms of meeting near-term working capital challenges and 
meeting its strategic objectives. Despite a committed programme of overhead reductions aimed at preserving liquidity, in 2H 2021, a number of 
major projects will have substantial working capital requirements, in particular the IMI rigs, thereby putting significant pressure on the balance 
sheet in Q3 2021.

To fulfil its near-term working capital needs and to then meet its medium-term strategic objectives, the Group must complete a new funding 
arrangement of USD 120–150 million by the end of Q3 2021, either through a combination of debt and equity, or via a larger equity raise. 

At the date of publication, the Group is in advanced stages of negotiation with certain relationship banks to secure project finance facilities, 
which will be secured by the proceeds of specifically identified projects, of up to USD 90 million, backed by export credit agency support. While 
approval is expected by the Board, there can be no certainty of the project finance facilities being concluded. If the Group is unsuccessful in 
concluding the project finance facility which enables the Group to fund the payment of its debts as they fall due, the Group will need to raise 
capital through equity for the full amount of USD 120–150 million. Should these funding options not be executed successfully, the Group is 
unlikely to be able to maintain sufficient liquidity in order to continue trading. 

In aggregate, the capital proceeds from the funding routes being pursued will then be used to fund initially the working capital requirements 
of the IMI Rig Projects, which draw their peak working capital requirement in 2H 2021 and the outstanding final committed and contractual 
equity contributions to the IMI joint venture in Saudi Arabia. Following receipt of the final milestone payments on the IMI rig projects, expected in 
October 2022, the proceeds will then be used to make further operational investment in efficiency and capacity growth, notably for renewables 
projects (which may be accelerated depending on the structure and quantum of the equity raise); and invest in the significant opportunities in 
developing the Digital business unit.

The timing and quantum of the equity raise is critical and dependent upon market conditions and the outcome of the Group’s negotiations with 
the banks for project finance. Should the Group be unable to secure the capital raise, either through the project related debt and/or equity there is 
significant risk that the Group will be unable to meet its contractual obligations as they fall due.

Deferral of creditor payments
A key part of the Group’s strategy to address current liquidity challenges is the extension of credit terms with certain suppliers, and the deferral 
of payments. This activity must continue until the proceeds of the new funding arrangements are received, and should the timing or quantum 
be different to forecast, will need to increase to a point that may not be sustainable. The group’s ability to do this is critical and dependent on the 
reaction of key suppliers, which is outside the Group’s control. Should the Group be unable to sustain this, there is a significant risk that the Group 
will be unable to meet its contractual obligations as they fall due.

Further key assumptions included in the forecast cash flows are as follows: 

•  conversion of a portion of the bid pipeline to contract awards in line with our strategy: This includes opportunities from the renewables and oil 
and gas markets. We have demonstrated strong progress on our strategy through the award of the Seagreen project in June 2020 and two LTA 
projects in February and April 2021. We continue to bid on selective quality projects in these markets which match our capabilities;

•  release of restricted cash relating to the Bank Guarantees provided to our client on the EA1 project: a portion was released in June 2021 with 

the balance expected early Q3 2021;

•  execution of existing major projects in accordance with agreed milestones, forecast costs and payment receipts in accordance with the 

contract: despite the wide-ranging effects of Covid-19, all our on-going projects are tracking in line with their current customer approved 
schedules which form the basis of the forecast cash flow assumptions. Upon achieving milestones, we do not anticipate delays in receipt of 
payments, based on historical payment receipts with these customers;

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT108

2  Summary of significant accounting policies (continued)
2.1  Basis of preparation (continued)
Going concern (continued) 
•  revenues from our Contracting Services segment and Rig Refurbishment business unit continue in line with those achieved in prior periods: 

these business units continue to deliver good financial performance, and we have seen a steady flow of work from our clients. The Rig 
Refurbishment business unit has also benefited from slow rig deployment by our clients, with completed projects going through additional 
scopes as they await commissioning; and

•  the commercial closeout of the Moray East project in line with current forecasts and resulting final payments.

The COVID-19 pandemic continues to affect our ability to make forecasts and increases uncertainty around all of these assumptions, particularly 
the timing of new funding arrangements, new major contract awards, our ability to meet project milestones and also vendors’ ability to accept 
extended credit periods.

In view of this, the Directors have considered downside sensitivities to the key assumptions which include no new significant contract wins in the 
going concern period and the inability of the Group to secure new funding arrangements. The Directors have concluded that, in aggregate, such 
matters beyond management’s control represent a significant judgement on the entity’s ability to continue as a going concern.

Significant disruption to the timing or realisation of the anticipated cash flows could result in the business being unable to realise its assets and 
discharge its liabilities in the normal course of business. 

The Directors have considered the realistic availability and likely effectiveness of drastic and severe mitigating actions that they could take to avoid 
or reduce the impact or likelihood of a significant deterioration in the cash flows, along with the Group’s ability to carry out those actions. These 
include:

•  continued fiscal discipline and targets for managing working capital particularly with respect to the delivery of the two IMI rigs which draw their 
peak working capital requirement in 2H 2021. This includes extending credit periods with vendors in the months where our cash requirements 
are significant;

•  delaying planned contributions to our IMI joint venture;
•  deferring implementation of the ‘Lamprell reimagined’ strategy until a time the funding can be secured;
•  self-help measures including extending periods of reductions in overheads, fees, salaries and allowances for the Board, senior management 
and professional staff, use of a deferred salary savings scheme and where operationally feasible, placing staff on reduced working hours or 
unpaid leave;

•  reduced levels of capital expenditure and digital spend; and
•  sale of non-core businesses or assets.

Following consideration of these actions, the Directors are satisfied they have appropriate available mitigating actions in place to ensure that the 
Group remains liquid in the short term. However, the Directors highlight that these mitigating actions are severe and will require support from 
vendors to manage working capital requirements for the business. 

Assumptions in management’s forecasts regarding the Group’s plans to raise capital, and its ability to continue to defer payment to certain 
suppliers as set out above, which are outside their control, represent a material uncertainty that may cast significant doubt on the group’s and 
company’s ability to continue as a going concern.

Basis of accounting 
The financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires 
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree 
of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated and Parent Company financial 
statements are disclosed in Note 4.

(a)  New and amended standards adopted by the Group 
IAS 1 and IAS 8 (amendments), ‘Definition of material’, The Group has adopted the amendments to IAS 1 and IAS 8 for the first time in the 
current year. The amendments make the definition of material in IAS 1 easier to understand and are not intended to alter the underlying concept 
of materiality in IFRS Standards. The concept of ‘obscuring’ material information with immaterial information has been included as part of the new 
definition. The threshold for materiality influencing users has been changed from ‘could influence’ to ‘could reasonably be expected to influence’. 
The definition of material in IAS 8 has been replaced by a reference to the definition of material in IAS 1. The application of these amendments has 
had no effect on the Group’s consolidated financial statements.

IFRS 3 (amendments), ‘Definition of a business’, The Group has adopted the amendments to IFRS 3 for the first time in the current year. The 
amendments clarify that while businesses usually have outputs, outputs are not required for an integrated set of activities and assets to qualify as 
a business. To be considered a business an acquired set of activities and assets must include, at a minimum, an input and a substantive process 
that together significantly contribute to the ability to create outputs. The amendments introduce an optional concentration test that permits a 
simplified assessment of whether an acquired set of activities and assets is not a business. The application of these amendments has had no 
effect on the Group’s consolidated financial statements but may impact future periods should the Group enter into any business combinations.

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS109

IFRS 16 (amendments), COVID-19 related rent concessions, On 28 May 2020, the International Accounting Standards Board issued COVID-19-
related rent concessions – amendment to IFRS 16 Leases. The amendments provide relief to lessees from applying IFRS 16 guidance on lease 
modification accounting for rent concessions arising as a direct consequence of the COVID-19 pandemic. As a practical expedient, a lessee may 
elect not to assess whether a COVID-19 related rent concession from a lessor is a lease modification. A lessee that makes this election accounts 
for any change in lease payments resulting from the COVID-19 related rent concession the same way it would account for the change under IFRS 
16, if the change were not a lease modification. The amendment applies to annual reporting periods beginning on or after 1 June 2020. Earlier 
application is permitted. The application of these amendments has had no material effect on the Group’s consolidated financial statements as the 
lease concessions the Group has benefited from during the year are not material.

(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2020 and not early adopted 
IAS 1 (amendments), ‘Classification of liabilities as current or non-current’, The amendments to IAS 1 affect only the presentation of liabilities 
as current or non-current in the statement of financial position and not the amount or timing of recognition of any asset, liability, income or 
expenses, or the information disclosed about those items. The amendments clarify that the classification of liabilities as current or non-current 
is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether 
an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the 
reporting period, and introduce a definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity 
instruments, other assets or services. The amendments are effective for annual periods beginning on or after 1 January 2023. The Group does 
not anticipate that the application of the amendments in future will have an impact on the Group’s consolidated financial statements.

IFRS 3 (amendments), ‘Reference to the conceptual framework’, The amendments update IFRS 3 so that it refers to the 2018 Conceptual 
Framework instead of the 1989 Framework. They also add to IFRS 3 a requirement that, for obligations within the scope of IAS 37, an acquirer 
applies IAS 37 to determine whether at the acquisition date a present obligation exists as a result of past events. For a levy that would be within 
the scope of IFRIC 21 Levies, the acquirer applies IFRIC 21 to determine whether the obligating event that gives rise to a liability to pay the levy 
has occurred by the acquisition date. The amendments are effective for business combinations for which the date of acquisition is on or after the 
beginning of the first annual period beginning on or after 1 January 2022. The Group does not anticipate that the application of the amendments 
in future will have an impact on the Group’s consolidated financial statements.

IFRS 10 and IAS 28 (amendments), deal with situations where there is a sale or contribution of assets between an investor and its associate or 
joint venture. The amendments state that the gains or losses resulting from the loss of control of a subsidiary that does not contain a business 
in a transaction with an associate or joint venture that is accounted for using the equity method are recognised in the parent’s profit or loss to 
the extent of the unrelated investor’s interests in that associate or joint venture. Similarly, gains and losses resulting from the remeasurement of 
investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to 
fair value are recognised in the former parent’s profit or loss only to the extent of the unrelated investors’ interests in the new associate or joint 
venture. The effective date of the amendment has yet to be set by the International Accounting Standards Board. The Group does not anticipate 
that the application of the amendments in future will have an impact on the Group’s consolidated financial statements.

IAS 16 (amendments), ‘Property, plant and equipment – proceeds before intended use’, The amendments prohibit deducting from the 
cost of an item of property, plant and equipment any proceeds from selling items produced before that asset is available for use, i.e. proceeds 
while bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. 
Consequently, an entity recognises such sales proceeds and related costs in profit or loss. The entity measures the cost of those items in 
accordance with IAS 2 Inventories. The amendments are effective for annual periods beginning on or after 1 January 2022. The Group does 
not apply such deductions and therefore, application of the amendments in future will not have an impact on the Group’s consolidated 
financial statements.

IFRS 17 ‘Insurance contracts’, establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts 
and supersedes IFRS 4 Insurance Contracts. IFRS 17 outlines a general model, which is modified for insurance contracts with direct participation 
features, described as the variable fee approach. The general model is simplified if certain criteria are met by measuring the liability for remaining 
coverage using the premium allocation approach. The amendments are effective for annual periods beginning on or after 1 January 2023. The 
Group does not anticipate that the application of the amendments in future will have an impact on the Group’s consolidated financial statements 
as this standard is not applicable to the Group.

IAS 37 (amendments), ‘Onerous contracts – cost of fulfilling a contract’, The amendments specify that the ‘cost of fulfilling’ a contract 
comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract consist of both the incremental costs of fulfilling 
that contract (examples would be direct labour or materials) and an allocation of other costs that relate directly to fulfilling contracts (an example 
would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The amendments 
are effective for annual periods beginning on or after 1 January 2022. The Group does not anticipate that the application of the amendments in 
future will have an impact on the Group’s consolidated financial statements as this is consistent with our existing policies.

2.2  Revenue recognition
Contract revenue 
The Group reviews lump-sum construction contracts and allocates revenue to each performance obligation of the contract depending on 
whether the contract is viewed as containing a single or multiple performance obligations. Revenue from each performance obligation is 
recognised either over time or at a point in time depending on the nature and timing of when the performance obligation is satisfied. 

In the case of a performance obligation satisfied over time, contract revenue is recognised under the input method by measuring the proportion 
of costs incurred for work performed to total estimated costs. 

When the contract is at an early stage and its outcome cannot be reliably estimated, due to its uncommon nature, risk profiling, including first-
of-a-kind projects, the Group recognises revenue to the extent of cost incurred up to the year-end which is considered recoverable. For these 
contracts, the Group recognises gross margin only when progress towards complete satisfaction of the performance obligation can be measured 
reliably. This is mainly the case with respect to fixed price construction contracts with an expected contract duration of 18 months or greater.

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT110

2  Summary of significant accounting policies (continued)
2.2  Revenue recognition (continued) 
Contract revenue (continued)
Revenue related to variation orders is recognised when it is highly probable that a significant reversal in the amount of cumulative revenue 
recognised will not occur and the amount of revenue arising from the variation can be reliably measured. If revenue cannot be reliably measured, 
the Group defers revenue recognition until the uncertainty is resolved. Such provisions give rise to variable consideration under IFRS 15 and are 
required to be estimated at contract inception. The estimated variable consideration, is however, constrained to prevent over-recognition of 
revenue. The Group continues to assess individual contracts to determine the estimated variable consideration and related constraint.

Contract modification is accounted for as a separate contract only if the scope of contract changes due to the addition of the promised goods 
or services that are distinct; and the price of the contract increases by an amount of consideration that reflects a stand-alone selling price. 

Claims are accounted for as variable consideration. They are included in contract revenue using the expected value or most likely amount 
approach (whichever is more predictive of the amount the entity expects to be entitled to receive) and it is highly probable that a significant 
reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the claim is subsequently resolved.

Losses on contracts are assessed on an individual contract basis and provision is made for the full amount of the anticipated losses, including 
any losses relating to future work on a contract, in the period in which the loss is first foreseen.

The aggregate of the costs incurred and the profit/loss recognised on each contract is compared against progress billings at each reporting 
period. Where the sum of the costs incurred and recognised profit or recognised loss exceeds the progress billings, the balance is shown under 
contract assets as amounts due from customers on contracts. 

Where the progress billings exceed the sum of costs incurred and recognised profit or recognised loss, the balance is shown under contract 
liabilities as amounts due to customers on contracts.

In determining contract costs incurred up to the reporting date, any amounts incurred, including advances paid to suppliers and advance 
billings received from subcontractors relating to future activity on a contract, are excluded and are presented under contract assets as contract 
work-in-progress.

Products and services 
Revenue from sale of products and services is recognised in the accounting period in which the control is transferred or the service is rendered 
net of value added tax.

Interest income
Interest income is recognised on a time proportion basis using the effective interest rate method.

2.3  Consolidation
(a)  Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is 
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over 
the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date 
that control ceases. 

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition 
of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owner of the acquiree and the equity interests issued 
by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. 
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at 
the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value 
or at the non-controlling interest’s proportionate share of the recognised amount of the acquiree’s identifiable net assets. Acquisition-related 
costs are expensed as incurred.

The excess of the consideration transferred over the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of 
any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. 
If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly 
in the consolidated statement of comprehensive income. Business combinations involving entities under common control do not fall within the 
scope of IFRS 3. Consequently, the Directors have a responsibility to determine a suitable accounting policy. The Directors have decided to follow 
the uniting of interests method to account for business combinations involving entities under common control.

Under the uniting of interest method, there is no requirement to fair value the assets and liabilities of the acquired entities and hence no goodwill 
is recorded as balances remain at book value. Consolidated financial statements include the profit or loss and cash flows for the entire year (pre- 
and post-merger) as if the subsidiary had always been part of the Group. The aim is to show the combination as if it had always been combined.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also 
eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed or adjustments 
have been made to the financial statements of subsidiaries, where necessary, to ensure consistency with the policies adopted by the Group.

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS111

(b)  Disposal of subsidiaries
When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the 
change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purpose of subsequently accounting 
for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive 
income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that 
amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(c)  Joint arrangements
The Group has applied IFRS 11 to all joint arrangements. Under IFRS 11, investments in joint arrangements are classified as either joint operations 
or joint ventures depending on the contractual rights and obligations of each investor. The Company has assessed the nature of its joint 
arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method. Under the equity method of 
accounting, interest in joint ventures is initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition 
profits or losses in the consolidated income statement. When the Group’s share of losses in a joint venture equals or exceeds its interest in the 
joint venture (which includes any long-term interest that, in substance, forms part of the Group’s net investment in the joint venture), the Group 
does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture.

(d)  Associates 
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% 
and 50% of the voting rights. 

Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially 
recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee 
after the date of acquisition. The Group’s investment in associates includes goodwill identified on acquisition.

The Group’s share of post-acquisition profit or loss is recognised in the consolidated income statement, and its share of post-acquisition 
movements in other comprehensive income is recognised in the consolidated statement of comprehensive income with a corresponding 
adjustment to the carrying amount of the investment. 

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the 
Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is 
the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying 
value and recognises the amount adjacent to ‘share of profit/(loss) of an associate’ in the consolidated income statement.

2.4  Investment in subsidiaries
In the Company’s separate financial statements, the investment in subsidiaries is stated at cost less provision for impairment. Cost is the amount 
of cash paid or the fair value of the consideration given to acquire the investment. Income from such investments is recognised as a dividend in 
the statement of comprehensive income.

2.5  Foreign currency translation 
(a)  Functional and presentation currency 
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment 
in which the entity operates (“the functional currency”). The Group’s activities are primarily carried out from the UAE, whose currency, the UAE 
Dirham, is pegged to the United States Dollar and is the functional currency of all the entities in the Group (except MISCLP whose functional 
currency is the Omani Riyal, MISQWLL whose functional currency is the Qatari Riyal, LAK whose functional currency is the Kazakh Tenge and EBT 
and LUK whose functional currency is the Great British Pound). The consolidated and Parent Company financial statements are presented in USD. 

(b)  Transactions and balances 
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. 
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of 
monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated income statement, except when deferred 
into other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to cash and cash equivalents are presented in the consolidated income statement within 
‘finance income or costs’. All other foreign exchange gains and losses are presented in the consolidated income statement within ‘other gains/
(losses) – net’.

(c)  Group companies 
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional 
currency different from the presentation currency are translated into the presentation currency as follows:

•  assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
•  income and expenses for each income statement are translated at average exchange rates for the year; and
•  all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive 
income. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the 
consolidated statement of comprehensive income as part of the gain or loss on sale.

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT112

2  Summary of significant accounting policies (continued)
2.6  Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation. The cost of property, plant and equipment is the purchase cost, 
together with any incidental expenses of acquisition. Depreciation is calculated on a straight-line basis over the expected useful economic lives 
of the assets as follows:

Buildings and infrastructure

Operating equipment

Fixtures and office equipment

Motor vehicles

Years

3 – 25

3 – 20

3 – 5

 5

The assets’ residual values, if significant, and useful lives are reviewed and adjusted if appropriate, at each balance sheet date. 

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that 
future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All repairs and 
maintenance are charged to the consolidated income statement during the financial period in which they are incurred.

Capital work-in-progress is stated at cost. When commissioned, capital work-in-progress is transferred to property, plant and equipment and 
depreciated in accordance with Group policies.

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount 
(Note 2.20). 

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within ‘other gains/
(losses) – net’ in the consolidated income statement.

2.7  Intangible assets
(a)  Trade name 
A trade name acquired as part of a business combination is capitalised, separately from goodwill, at fair value at the date of acquisition if the 
asset is separable or arises from contractual or legal rights and its fair value can be measured reliably. Amortisation is calculated on a straight-line 
method to allocate the fair value at acquisition over its estimated useful life. The useful life of a trade name is reviewed on an annual basis. 

(b)  Leasehold rights
Intangible assets representing operating leasehold rights are carried at cost (being the fair value on the date of acquisition where intangibles 
are acquired in a business combination) less accumulated amortisation and impairment, if any. Amortisation is calculated using the straight-line 
method to allocate the cost of the leasehold right over its estimated useful life. 

(c)  Software 
Directly attributable costs that are capitalised as part of the software product include the software development employee costs. Other 
development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised 
as an expense are not recognised as an asset in a subsequent period. Computer software development costs recognised as assets are amortised 
over their estimated useful lives. 

(d)  Development and patents 
Development expenditures and patent fee are recognised as an intangible asset when the Group can demonstrate:

•  The technical feasibility of completing the asset
•  Its intention to complete and its ability and intention to use or sell the asset
•  How the asset will generate future economic benefits
•  The availability of resources to complete the asset
•  The ability to measure reliably the expenditure during development

Following initial recognition of the development expenditure and patent fee as an asset, the asset is amortised over the period of expected future 
benefit and carried at cost less any accumulated amortisation. 

(e)  Work-in-progress
Work-in-progress pertains to assets in the course of development and is stated at cost. When commissioned, work-in-progress is transferred to 
intangible assets in accordance with Group policies.

2.8  Inventories
Inventories comprise raw materials, finished goods, work-in-progress and consumables which are stated at the lower of cost and net realisable 
value. Cost is determined on the weighted average basis and comprises direct purchase, direct labour and other costs incurred in bringing the 
inventories to their present location and condition.

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS113

2.9  Trade receivables
Trade receivables are amounts receivable from customers for billing in the ordinary course of business. If collection is expected in one year or 
less, they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognised initially at fair value 
and subsequently measured at amortised cost using the effective interest method, less provision for impairment losses. The Group measures 
the loss allowance for trade receivables based on the expected credit loss model using a provision matrix by reference to past default experience 
of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtor and general economic 
conditions of the industry in which the debtor operates. The Group writes off a trade receivable when there is information indicating that the 
debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has 
entered into bankruptcy proceedings. The amount of the provision is the difference between the asset’s carrying amount and the present value of 
estimated future cash flows, discounted at the effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the 
consolidated income statement within ‘general and administrative expenses’. When a trade receivable is uncollectible, it is written off against the 
allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against ‘general and administrative 
expenses’ in the consolidated income statement.

2.10  Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts 
payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade 
payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.11  Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow 
of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate of the amount of the obligation can 
be made. 

2.12  Employee benefits
(a)  Provision for staff benefits 
A provision is made for the estimated liability for performance related bonuses and employees’ entitlements to annual leave and air fare as a result 
of services rendered by the employees up to the balance sheet date. This provision is disclosed as a current liability and included in trade and 
other payables.

Labour laws in the countries in which the Group operates require the Group to provide for other long-term employment benefits. Provision is 
made, using actuarial techniques, for the end of service benefits due to employees, for their periods of service up to the balance sheet date. The 
provision relating to end of service benefits is disclosed as a non-current liability. Actuarial gains and losses arising from experience adjustments 
and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. The 
current service cost and interest cost is recognised in the income statement in ‘employees’ end of service benefits’.

(b)  Share-based payments
The Group operates a number of equity-settled, share-based compensation plans. The fair value of the employee services received in exchange 
for the grant of the shares/options is recognised as an expense. The total amount to be expensed over the vesting period is determined by 
reference to the fair value of the shares/options granted, excluding the impact of any non-market vesting conditions (for example, profitability and 
sales growth targets). Non-market vesting conditions are included in assumptions about the number of shares/options that are expected to vest. 
At each balance sheet date, the entity revises its estimates of the number of shares/options that are expected to vest. It recognises the impact of 
the revision to original estimates, if any, in the consolidated income statement, with a corresponding adjustment to retained earnings.

The Company has granted rights to its equity instruments to the employees of subsidiary companies conditional upon the completion of 
continuing service with the Group for a specified period. The total amount of the grant over the vesting period is determined by reference 
to the fair value of the equity instruments granted and is recognised in each period as an increase in the investment in the subsidiary with a 
corresponding credit to retained earnings. 

In the separate financial statements of the subsidiary, the fair value of the employee services received in exchange for the grant of the equity 
instruments of the Company is recognised as an expense with a corresponding credit to equity.

2.13  Leases
At the inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract 
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. For a contract that is, or contains, 
a lease, the Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract. 
The Group determines the lease term as the non-cancellable period of a lease, together with both:
a)  periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and 
b)  periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.

The Group as a lessee
For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration 
in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone 
price of the non-lease components. 

The relative stand-alone price of lease and non-lease components is determined on the basis of the price the lessor, or a similar supplier, would 
charge an entity for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Group 
estimates the stand-alone price, maximising the use of observable information. The non-lease components are accounted for in accordance 
with the Group’s policies.

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT114

2  Summary of significant accounting policies (continued)
2.13  Leases (continued)
The Group as a lessee (continued) 
For determination of the lease term, the Group reassesses whether it is reasonably certain to exercise an extension option, or not to exercise a 
termination option, upon the occurrence of either a significant event or a significant change in circumstances that: 
a) 
b) 

is within the control of the Group; and 
 affects whether the Group is reasonably certain to exercise an option not previously included in its determination of the lease term, or not 
to exercise an option previously included in its determination of the lease term. 

At the commencement date, the Group recognises a right-of-use asset and a lease liability under the lease contract.

Lease liability 
Lease liability is initially recognised at the present value of the lease payments that are not paid at the commencement date. The lease payments 
are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the 
Group uses its incremental borrowing rate.

After initial recognition, the lease liability is measured by (a) increasing the carrying amount to reflect interest on the lease liability; (b) reducing the 
carrying amount to reflect the lease payments made; and (c) remeasuring the carrying amount to reflect any reassessment or lease modifications 
or to reflect revised in-substance fixed lease payments. Where (a) there is a change in the lease term as a result of reassessment of certainty to 
exercise an exercise option, or not to exercise a termination option as discussed above; or (b) there is a change in the assessment of an option to 
purchase the underlying asset, assessed considering the events and circumstances in the context of a purchase option, the Group remeasures 
the lease liabilities to reflect changes to lease payments by discounting the revised lease payments using a revised discount rate. 

The Group recognises the amount of the remeasurement of lease liability as an adjustment to the right-of-use asset. Where the carrying amount 
of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Group recognises any 
remaining amount of the remeasurement in profit or loss.

The Group accounts for a lease modification as a separate lease if both:
a) 
b) 

the modification increases the scope of the lease by adding the right-of-use of one or more underlying assets; and
 the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any 
appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

The revised discount rate is determined as the interest rate implicit in the lease for the remainder of the lease term, if that rate can be readily 
determined, or the lessee’s incremental borrowing rate at the effective date of the modification, if the interest rate implicit in the lease cannot 
be readily determined.

Short-term leases and leases of low-value assets 
The Group applies the short-term lease recognition exemption to its short-term leases of property, plant and equipment (i.e. those leases that 
have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-
value assets recognition exemption to leases of property, plant and equipment that are considered of low value (i.e. below USD5,000). Lease 
payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term in the 
cost of sales or general and administration expenses line items of the consolidated income statement.

Right-of-use assets 
The right-of-use asset is initially recognised at cost comprising: 
a)    amount of the initial measurement of the lease liability; 
b)    any lease payments made at or before the commencement date, less any lease incentives received; 
c)    any initial direct costs incurred by the Group; and 
d)     an estimate of costs to be incurred by the Group in dismantling and removing the underlying asset, restoring the site on which it is located 
or restoring the underlying asset to the condition required by the terms and conditions of the lease. These costs are recognised as part of 
the cost of the right-of-use asset when the Group incurs an obligation for these costs. The obligation for these costs is incurred either at the 
commencement date or as a consequence of having used the underlying asset during a particular period. 

For assets that meet the definition of property, plant and equipment, the right-of-use asset is amortised over the term of the lease.

2.14  Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, current accounts with banks less margin deposits, other short-term highly liquid investments 
with original maturity of three months or less and bank overdrafts. 

2.15  Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any 
difference between the proceeds (net of transaction costs) and the repayment value is recognised in the consolidated statement of income over 
the period of the borrowings using the effective interest method. The Group capitalises general and specific borrowing costs directly attributable 
to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. All other borrowing costs are recognised in the 
consolidated income statement in the period in which they are incurred.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan. The fee is capitalised and amortised over the 
period of the facility to which it relates. 

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS115

2.16  Dividend distribution
Dividend distributions are recognised as a liability in the Group’s consolidated and Parent Company financial statements in the period in which 
the dividends are approved by the shareholders.

2.17  Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief 
operating decision-maker, who is responsible for allocating resources, assessing the performance of the operating segments, and making 
strategic decisions, has been identified as the Executive Directors. 

2.18  Financial assets 
The Group classifies its financial assets in the following categories: at amortised cost or FVTOCI and FVTPL. The basis of classification depends 
on the entity’s business model and the contractual cash flow characteristics of the financial asset. The Group’s financial assets are held to collect 
as the cash flows will result from collecting contractual cash flows. The Group applies the IFRS 9 simplified approach to measuring expected 
credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets. 

(a)  Financial assets at amortised cost 
The Group measures financial assets at amortised cost if both of the following conditions are met:

•  The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and 
•  The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the 

principal amount outstanding. 

Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses 
are recognised in profit or loss when the asset is derecognised, modified or impaired. 

On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the 
consideration received and receivable is recognised in profit or loss.

(b)  Financial assets at fair value through profit or loss
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are measured at FVTPL. 

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses presented in the 
consolidated income statement to the extent they are not part of a designated hedging relationship within ‘other gains/(losses) – net’ in the period 
in which they arise. Transaction costs directly attributable to the acquisition of financial assets at fair value through profit or loss are recognised 
immediately in the consolidated income statement.

(c)  Impairment of financial assets
In relation to the impairment of financial assets, the Group applies a simplified approach in calculating expected credit losses. Therefore, the 
Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime expected credit losses at each reporting 
date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors 
specific to the debtors and the economic environment.

The Group considers financial assets to be in default when internal or external information indicates that the Group is unlikely to receive the 
outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. In doing so, the Group also 
takes into account the days the contractual payments are past due. 

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic 
prospect of recovery.

(d)  Financial liabilities
Financial liabilities are subsequently carried at amortised cost using the effective interest method, except for contingent consideration and 
financial liability under option arrangements recognised in a business combination which is subsequently measured at fair value through profit 
and loss. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due 
to the short maturity of these instruments.

2.19  Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. 
The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the 
nature of the item being hedged. The Group designates certain derivatives as hedges of a particular risk associated with a recognised asset or 
liability, or a highly probable forecast transaction (cash flow hedge).

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk 
management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge 
inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in 
fair values or cash flows of hedged items.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss 
existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the consolidated 
income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is 
immediately transferred to the consolidated income statement within ‘other gains/(losses) – net’.

The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months 
and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. 

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT116

2  Summary of significant accounting policies (continued)
2.19  Derivative financial instruments and hedging activities (continued)
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other 
comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the consolidated income statement 
within ‘other gains/(losses) – net’.

Amounts accumulated in equity are reclassified to profit or loss in the periods when the item affects profit or loss (for example, when the forecast 
sale that is hedged takes place). The gain or loss relating to the ineffective portion is recognised in the consolidated income statement within 
‘other gains/(losses) – net’. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, 
contracts work-in-progress or fixed assets), the gains and losses previously deferred in equity are transferred from equity and included in the initial 
measurement of the cost of the asset. The deferred amounts are ultimately recognised in cost of goods sold in the case of contracts work in 
progress or in depreciation in the case of fixed assets.

2.20  Impairment of non-financial assets
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying 
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable 
amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and its value in use. For the purposes of assessing 
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial 
assets are reviewed for possible reversal of the impairment at each reporting date. Any impairment loss or reversal is recognised in the 
consolidated income statement and separately disclosed (Note 41).

2.21  Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a 
deduction, net of tax, from the proceeds. The excess of proceeds received net of any directly attributable transaction costs over the par value 
of the shares are credited to the share premium.

Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly 
attributable incremental costs (net of income taxes), is deducted from equity attributable to the Company’s equity holders until the shares are 
cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental 
transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

3  Financial risk management 
3.1  Financial risk factors 
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange and cash flow interest rate risk), credit risk and 
liquidity risk. These risks are evaluated by management on an ongoing basis to assess and manage critical exposures. The Group’s liquidity and 
market risks are managed as part of the Group’s treasury activities. Treasury operations are conducted within a framework of established policies 
and procedures. 

(a)  Market risk – foreign exchange risk
The Group has foreign exchange risk primarily with respect to balances in Euro, Great British Pound, Omani Riyal, Qatari Riyal and Saudi Riyal 
with certain suppliers. During the year ended 31 December 2020, if foreign exchange rates on foreign balances had been 10% higher/lower, the 
exchange difference would have been higher/lower by USD 0.1 million (2019: USD 0.2 million).

(b)  Market risk – cash flow interest rate risk
The Group holds its surplus funds in short-term bank deposits. During the year ended 31 December 2020, if interest rates on deposits had been 
0.5% higher/lower, the interest income would have been higher/lower by USD 0.2 million (2019: USD 0.2 million).

(c)  Credit risk
The Group’s exposure to credit risk is detailed in Notes 16, 22 and 24. The Group has a policy for only dealing with customers with an appropriate 
credit history. The Group has policies that limit the amount of credit exposure to any financial institution.

Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, deposits with banks, financial assets carried at fair value 
through profit or loss, trade and other receivables, contract assets, related party balances and derivative financial instruments. The Group has a 
formal procedure of monitoring and follow up of customers for outstanding receivables. For banks and financial institutions, only independently 
rated parties with the equivalent of investment grade and above are accepted unless if the bank is situated in a frontier market where minimal 
balances are held. 

The Group assesses internally the credit quality of each customer, taking into account its financial position, past experience and other factors. An 
impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based 
on the days past due for groupings of various customer segments. The calculation reflects the probability weighted outcome and reasonable and 
supportable information that is available at the reporting date about past events, current conditions and forecast of future economic conditions.

To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics 
and the days past due with reference to past default experience of the debtor, an analysis of the debtor’s current financial position and general 
current and forecast economic conditions of the industry in which the debtor operates. As the Group’s historical credit loss experience does not 
show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further 
distinguished between the Group’s different customer segments.

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS117

31 December 2020

Expected credit loss rate 

Gross carrying amount 

Loss allowance

31 December 2019

Expected credit loss rate 

Gross carrying amount 

Loss allowance

Contract 
assets
USD’000

Current 
USD’000

Up to 3 
months
USD’000

3 to 6 
months 
USD’000

Over 6 
months 
USD’000

Total 
USD’000

Trade receivables

–

85,426

– 

43,760

– 

5,690

–

–

– 

– 

– 

– 

40,384

–

10,481

– 

6,676

– 

– 

1,143

– 

– 

326

– 

72%

4,682

3,372

68.8%

5,045

3,469

140,701

3,372

62,912

3,469

Balances in over 6 months have objective evidence of impairment and hence have been individually assessed. All other aging categories have 
been collectively assessed as the expected credit losses are not material.

The following table shows the rating and balance of the 13 major counterparties at the balance sheet date:

Counterparty

Bank A

Bank B

Bank C

Bank D

+   Based on Fitch’s long-term ratings.

Customer 1 

Customer 2 

Customer 3 

Customer 4

Customer 5

Customer 6

Customer 7

Customer 8

Customer 9

2020

External 
rating +

A+

A+

AA-

A+

USD’000

44,998

40,064

24,083

2,151

111,296

2019

External 
rating +

USD’000

AA-

A+

A+

A+

23,760

23,359

10,426

2,200

59,745

2020

2019

Internal 
rating ++

Group B

Group B

Group B

Group C

Group A

Group C

Group C

Group C

Group B

USD’000

32,906

5,067

4,697

2,079

1,995

1,073

1,045

582

376

49,820

Internal 
rating ++

Group B

Group A

Group B

Group A

Group C

Group B

Group B

Group C

Group B

USD’000

8,027

1,684

1,225

1,106

1,045

903

797

577

526

15,890

++  Refer to Note 16 for the description of internal ratings.

The above represents 90% (2019: 70%) of trade receivables of USD 55.3 million (2019: USD 22.5 million) (Note 22).

The counterparties in 2020 are not necessarily the same counterparties in 2019. 

The customers in 2020 are not necessarily the same customers in 2019.

Management does not expect any losses from non-performance by these counterparties.

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT 
118

3  Financial risk management (continued)
3.1  Financial risk factors (continued)
(d)  Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed 
credit facilities. The Group is currently financed from shareholders’ equity and borrowings. 

The following table analyses the Group’s other financial liabilities into relevant maturity groupings based on the remaining period at the balance 
sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

31 December 2020

Trade and other payables (Note 30)

Borrowings (Note 33)

31 December 2019

Trade and other payables (Note 30)

Borrowings (Note 33)

Carrying 
amount
USD’000

 Contractual 
cash flows
USD’000

Less than 
1 year
USD’000

Between 
1 and 5 years
 USD’000

70,866

880

71,746

70,866

880

71,746

70,866

880

71,746

93,469

20,058

93,469

20,187

93,469

20,187

113,527

113, 656

113, 656

–

–

–

–

–

–

3.2  Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for 
shareholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, or issue new shares to 
reduce debt.

The Group monitors capital on the basis of the gearing ratio. In doing so, consideration is given of capital relative to the needs of the business 
and its strategic objectives. The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including 
current and non-current borrowings as shown in the balance sheet) less cash and bank balances. Total capital is calculated as “equity” as shown 
in the balance sheet plus net debt. 

At the balance sheet date, the Group has net cash position and was therefore un-geared.

3.3  Fair value estimation
The Group has no derivative financial instruments to be measured at fair value as of 31 December 2020 and 31 December 2019. Property, plant 
and equipment has been measured at fair value – see Note 41.

4  Critical accounting judgements and key sources of estimation uncertainty
The Group makes judgements, estimates and assumptions concerning the future. These are continually evaluated and are based on historical 
experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting 
accounting estimates will, by definition, seldom equal the related actual results. The judgements, estimates and assumptions that have a 
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:

4.1  Critical judgements in applying accounting policies
Apart from those involving estimation (see Note 4.2), the Group has made the following critical judgements in applying accounting policies in the 
process of preparing these consolidated financial statements. 

4.1.1  Contract claims
A claim is an amount that the Group seeks to collect from the customer or another party as reimbursements for costs not included in the 
contract price. A claim may arise from, for example, customer caused delays, prolongation cost, cost of acceleration of project, programme 
errors in specifications or design, and disputed variations in contract work. The measurement of the amounts of revenue arising from claims 
is subject to a high level of uncertainty and often depends on the outcome of negotiations. Therefore, claims are only included in contract 
revenue when the amount has been accepted by the customer or the customer’s representative, there is a clear contractual entitlement, and/or 
negotiations have reached a stage that it is highly probable that a significant reversal of revenue will not occur. 

As at 31 December 2020, the balance due from customers on construction contracts includes an amount of unapproved contract claims as 
negotiations continue with our clients on the Moray East and IMI projects.

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS119

4.1.2  Liquidated damages
The Group recognises liquidated damages where there have been significant delays against defined contractual delivery dates or unfulfilled 
contractual obligations and it is considered probable that the customer will successfully pursue these penalties. This requires management to 
estimate the amount of liquidated damages payable under the contract based on a combination of an assessment of the contractual terms, the 
reasons for any delays and evidence of cause of the delays to assess who is liable under the contract for the delays and consequently whether 
the Group is liable for the liquidated damages or not.

While certain contracts have been subject to delays and/or unfulfilled contractual obligations in 2020, based on a review of the status of and 
risk on ongoing projects, the current status of discussions with customers and information at hand, no provision for LDs have been made in the 
financial statements as at 31 December 2020.

4.2  Key sources of estimation uncertainty 
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period 
that may have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year.

4.2.1  Revenue and margin recognition
The Group uses the input method in accounting for its contract revenue. Use of the input method requires the Group to estimate the stage of 
completion of the contract to date as a proportion of the total contract work to be performed in accordance with the Group’s accounting policy. 
As a result, the Group is required to estimate the total cost to completion of all outstanding projects at each period end. 

If the estimated total costs to completion of all outstanding projects were to decrease by 10% this would either result in contract assets increasing 
by USD 11.7 million (2019: USD 6.8 million) or contract liabilities decreasing by USD 11.7 million (2019: USD 6.8 million). 

If the estimated total costs to completion of all outstanding projects were to increase by 10%, contract assets would either decrease by USD 10.9 
million (2019: USD 5.2 million) or contract liabilities would increase by USD 10.9 million (2019: USD 5.2 million). For certain large projects where 
the margin is lower than average, increasing forecast costs to completion by 10% would result in an onerous contract provision of USD 21.2 
million being recorded.

5  Segment information 
The Group is organised into business units, which are the Group’s operating segments and are reported to the Executive Directors, the chief 
operating decision-maker. These operating segments are aggregated into three reportable segments – ‘Rigs’, ‘EPC(I)’ and ‘Contracting Services’ 
based on strategic objectives, similar nature of the products and services, type of customer and economic characteristics.

The rigs segment contains business from new build jackup rigs, land rigs and refurbishment. The EPC(I) segment contains business from 
foundations, process modules, offshore platforms, pressure vessels and engineering and construction (excluding site works). The contracting 
services segment comprises site works, operations and maintenance, manpower supply and safety services.

Subsequent to the year end, the Group announced a strategic reorganisation of its business into Renewables, Oil & Gas and Digital segments, 
which future segment reporting will be based upon – see Note 40.

Year ended 31 December 2020

Revenue from external customers

Gross operating profit before absorptions

Year ended 31 December 2019

Revenue from external customers

Gross operating profit/(loss) before absorptions

Rigs
USD’000

EPC(I) 
USD’000

Contracting 
services
USD’000

Total
USD’000

128,727

8,869

150,311

21,262

59,585

16,461

338,623

46,592

24,766

3,579

167,230

(8,160)

68,452

27,702

260,448

23,121

The Group uses the standard costing method for recording labour, project management and equipment cost on projects. Standard cost is based 
on an estimated or predetermined cost rates for performing an operation under normal circumstances. Standard costs are developed from 
historical data analysis adjusted with expected changes in the future circumstances. The difference between total cost charged to the projects 
at standard rate and the actual cost incurred are reported as under or over absorption.

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT120

5  Segment information (continued)
The reconciliation of the gross operating profit is provided as follows:

Gross operating profit for rigs segment as reported to the Executive Directors 

Gross operating profit/(loss) for the EPC(I) segment as reported to the Executive Directors

Gross operating profit for the contracting services segment as reported to the Executive Directors 

Gross operating profit before absorptions

Under-absorbed employee and equipment costs

Provision for slow moving and obsolete inventories 

Release/(provision) for impairment losses shown as part of operating profit (Note 10)

Project related bank guarantee charges shown as part of operating profit 

Gross operating profit

Unallocated:

Unallocated operational overheads

 − Repairs and maintenance 

 − Yard rent and depreciation

 − Others

Add back:

Provision/(release) for impairment losses shown as part of general and administrative expenses (Note 10)

Project related bank guarantee charges shown as part of finance costs

Gross profit/(loss)

Selling and distribution expenses (Note 8)

General and administrative expenses – excluding impairment and restructuring costs (Note 10)

Other gains – net (Note 13)

Finance costs (Note 12)

Finance income (Note 12)

Share of loss of investment accounted for using the equity method (Note 20) 

Impairment (Note 41)

Restructuring costs (Note 29)

Loss before income tax 

The breakdown of revenue from all services is as disclosed in Note 6.

2020
USD’000

2019
USD’000

8,869

21,262

16,461

46,592

(2,893)

(294)

97

(1,237)

42,265

(10,743)

(3,464)

(7,323)

(7,325)

(97)

1,237

14,550

(298)

(37,070)

1,009

(5,980)

370

(15,697)

(4,548)

(5,597)

3,579

(8,160)

27,702

23,121

(10,526)

(395)

(41)

(770)

11,389

(20,167)

(2,947)

(10,574)

(6,116)

41

770

(27,604)

(1,502)

(61,023)

286

(8,327)

1,023

(7,934)

(79,301)

–

(53,261)

(184,382)

Sales between segments are carried out on agreed terms. The revenue from external parties reported to the Executive Directors is measured in a 
manner consistent with that in the consolidated income statement.

Information about segment assets and liabilities is not reported to or used by the Executive Directors and, accordingly, no measures of segment 
assets and liabilities are reported.

The Executive Directors assess the performance of the operating segments based on a measure of gross profit. The labour, project management 
and equipment costs are measured based on standard cost. The measurement basis excludes the effect of the common expenses for yard rent, 
repairs and maintenance and other miscellaneous expenses.

The Group’s principal place of business is in the UAE. The revenue recognised in the UAE with respect to external customers is USD 336.5 million 
(2019: USD 258.1 million), and the revenue recognised from other countries is USD 2.1 million (2019: USD 2.3 million). 

Certain customers individually accounted for greater than 10% of the Group’s revenue and are shown in the table below:

External customer A 

External customer B 

External customer C 

2020
USD’000

99,156

87,193

51,152

2019
USD’000

129,401

41,435

31,584 

237,501

202,420

The revenue from these customers is attributable to the EPC(I) and rigs segment. The above customers in 2020 are not necessarily the same 
customers as in 2019.

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS121

6  Disaggregation of revenue
Strategic markets

Renewables

Oil & gas

Major value streams 

Year ended 31 December 2020

Year ended 31 December 2019

Rigs
USD’000

EPC(I)
USD’000

–

150,312

128,727

128,727

–

150,312

Contracting 
services
USD’000

Total
USD’000

 Rigs
 USD’000

EPC(I)
USD’000

–

59,585

59,585

150,312

188,312

338,624

 –

 24,766

 24,766

160,985

6,245

167,230

Contracting 
services
USD’000

–

68,452

68,452

Total
USD’000

160,985

99,463

260,448

Rigs
USD’000

EPC(I)
USD’000

Contracting 
services
USD’000

Total
USD’000

 Rigs
 USD’000

EPC(I)
USD’000

Contracting 
services
USD’000

Total
USD’000

New build jackups, 
refurbishment and land rigs

128,727

Platforms

Foundations

Operations and maintenance, 
site work and safety services

–

–

–

–

–

150,312

–

128,727

150,312

Timing of revenue recognition 

–

–

–

59,585

59,585

128,727

 24,766

–

150,312

59,585

338,624

–

6,245

160,985

– 

–

 –

 – 

 24,766

167,230

–

–

–

68,452 

68,452

24,766

6,245

160,985

68,452 

260,448

Recognised over time

Rigs
USD’000

128,727

EPC(I)
USD’000

150,312

Contracting 
services
USD’000

59,585

Total
USD’000

338,624

 Rigs
 USD’000

24,766

EPC(I)
USD’000

167,230

Contracting 
services
USD’000

68,452

Total
USD’000

260,448

There was no revenue recognised at a point in time during the years ended 31 December 2020 and 31 December 2019.

The transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied), to be recognised over time, as at 
31 December are, as follows:

Performance obligations (unsatisfied) 

Rigs
USD’000

252,770

64,760

317,530

EPC(I)
USD’000

142,872

–

142,872

Contracting 
services
USD’000

61,562

–

61,562

Total
USD’000

 Rigs
 USD’000

457,204

64,760

521,964

103,806

259,796

 363,602

EPC(I)
USD’000

94,395

–

94,395

Contracting 
services
USD’000

12,069

–

12,069

Total
USD’000

210,270

259,796

470,066

Within one year

More than one year

7  Cost of sales

Materials and related costs

Staff costs (Note 11)

Subcontract costs – including warranty provisions

Depreciation (Note 17)

Subcontract labour

Equipment hire

Write-down of inventory to net realisable value (Note 21)

Utilities

Repairs and maintenance

Warranty provision released

Recruitment costs

Others

2020
USD’000

2019
USD’000

131,921

107,692

30,803

17,986

16,376

9,620

6,934

3,439

3,464

(9,039)

555

4,322

81,633

96,409

62,187

21,265

7,795

6,284

2,500

3,069

2,956

(1,525)

1,657

3,822

324,073

288,052

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT 
 
 
 
122

8  Selling and distribution expenses

Travel

Advertising and marketing

Entertainment 

Others

9  Share-based payments 
Group

Amount of share-based charge (Note 11):

 − relating to retention share plan

 − relating to performance share plan

Company

Amount of share-based charge:

 − relating to retention share plan

 − relating to performance share plan

2020
USD’000

2019
USD’000

214

72

11

1

298 

1,312

107

62

21

1,502

2020
USD’000

2019
USD’000

1,230

3,210

4,440

1,878

3,115

4,993

2020
USD’000

2019
USD’000

–

1,202

1,202 

11

1,287

1,298

Retention share plan
The Company awarded shares to selected Directors, key management personnel and employees under the retention share plan that provides 
an entitlement to receive these shares at no cost. These retention shares are conditional on the Directors/key management personnel/employees 
completing a specified period of service (the vesting period). The awards do not entitle participants to dividend equivalents during the vesting 
period and some of the awards have a performance condition. The fair value of the share awards made under this plan is based on the share 
price at the date of the grant, less the value of the dividends foregone during the vesting period. 

The details of the shares granted under this scheme are as follows:

Grant date

2017

2018

2019

Number
of shares

Vesting
period

Fair value
per share

Expected
withdrawal 
rate

1,229,929

36 months

24,972

11,825

37,032

1,303,758

17 months

30 months

5 months

2,903,073

36 months

10,000

10,000

30,000

2,953,073

34 months

22 months

10 months

1,720,724

36 months

558,390

36 months

2,279,114

£0.90

£0.90

£0.90

£0.90

£0.77

£0.77

£0.77

£0.77

£0.60

£0.60

–

–

–

–

–

–

–

–

–

–

A charge of USD 1,230,454 (2019: USD 1,877,590) related to this scheme is recognised as staff costs in the consolidated income statement for the 
year with a corresponding credit to consolidated retained earnings. This includes a charge under staff costs recognised in the income statement 
of the Company with a corresponding credit to retained earnings of USD nil (2019: USD 11,358).

The Group has no legal or constructive obligation to settle the retention share awards in cash.

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTSAn analysis of the number of shares granted, vested during the year and expected to vest in future periods is provided below:

Shares expected to vest in future periods at 1 January 2019

Shares granted under the retention share awards

Shares vested during the year

Shares lapsed during the year

Shares expected to vest in future periods at 31 December 2019

Shares vested during the year

Shares lapsed during the year

Shares expected to vest in future periods at 31 December 2020

123

Number of 
shares

4,552,116

2,230,724

(71,783)

(651,480)

6,059,577

(1,012,183)

(385,264)

4,662,130

Performance share plan
The Company granted share awards to Directors, key management personnel and selected employees that give them an entitlement to receive 
a certain number of shares subject to the satisfaction of a performance target and continued employment. The performance target is assessed 
against financial metrics that may include relative or absolute total shareholder return, cumulative EBITDA and end of period backlog. The fair 
value of the share awards made under this plan is based on the share price at the date of the grant less the value of the dividends foregone during 
the vesting period. 

The details of the shares granted under this scheme are as follows:

Grant date

2017

2 October 2017

2 October 2017

2018

9 April 2018

9 April 2018

2019

5 April 2019

5 April 2019

Number
of shares

Vesting
period

Fair value
per share

Dividend
entitlement

Expected
withdrawal 
rate

1,049,827

36 months

1,527,295

36 months

2,577,122 

1,192,924

36 months

1,410,937

36 months

2,603,861 

2,059,523

36 months

3,305,075

36 months

5,364,598

£0.76

£0.76

£0.77

£0.77

£0.52

£0.52

No

No

No

No

No

No

–

–

–

–

–

–

Accordingly, a charge of USD 3,209,602 (2019: USD 3,114,601) is recognised in the consolidated income statement for the year with 
a corresponding credit to consolidated retained earnings. This includes a charge recognised in the income statement of the Company 
with a corresponding credit to retained earnings of USD 1,202,394 (2019: USD 1,286,594).

The Group has no legal or constructive obligation to settle the retention share awards in cash.

An analysis of the number of shares gifted/granted, vested during the year and expected to vest in future periods is provided below:

Shares expected to vest in future periods at 1 January 2019

Shares granted under performance share plan

Shares lapsed due to non-satisfaction of vesting conditions

Shares expected to vest in future periods at 31 December 2019

Shares vested under performance share plan

Shares lapsed due to non-satisfaction of vesting conditions

Shares expected to vest in future periods at 31 December 2020

Number of 
shares

8,049,793

5,425,565

(3,480,706)

9,994,652

–

(3,319,796)

6,674,856

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT124

10  General and administrative expenses

Staff costs (Note 11)

Restructuring costs (Note 29)

Impairment of non-financial assets (Note 41)

Legal, professional and consultancy fees

Depreciation (Note 17)

IT support and maintenance

Utilities and communication

Insurance

Non-Executive Director fees

Digital initiatives

Office maintenance

Bank charges

Amortisation of intangible assets (Note 18)

(Release)/provision for impairment losses, net of amounts recovered

Others

11  Staff costs

Wages and salaries 

Employees’ end of service benefits (Note 28)

Share-based payments – value of services provided (Note 9)

Other benefits

Staff costs are included in:

Cost of sales (Note 7)

General and administrative expenses (Note 10)

Number of employees at 31 December 

Subcontracted employees at 31 December 

Total number of employees (staff and subcontracted) at 31 December 

2020
USD’000

25,574

5,597

4,548

3,452

2,045

1,543

1,135

916

551

550

513

105

9

(97)

774

2019
USD’000

37,708

–

79,301

4,958

2,462

1,906

1,451

869

613

2,746

1,535

97

3,891

41

2,746

47,215

140,324

2020
USD’000

100,209

5,251

4,440

23,366

133,266

107,692

25,574

133,266

5,346

1,275

6,621

2019
USD’000

103,625

4,544

4,993

20,955

134,117

96,409

37,708

134,117

6,029

1,202

7,231

Staff costs for the year ending 31 December 2020 is net of the COVID-19 savings realised from payroll deductions implemented at the onset 
of the pandemic amounting to USD 7.7 million (31 December 2019: nil). This contributes USD 5.4 million to cost of sales and USD 2.3 million 
to general and administrative expenses. 

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS125

Total 
2020
USD’000

Total 
2019
USD’000

2,142

1,168

1,874

1,059

188

76

90

9

76

229

93

115

83

93

Directors’ remuneration comprises:

Salary 
2020
USD’000

Fees 
2020
USD’000

Allowances 
and 
benefits 
2020
USD’000

COVID-19 
deduction 
2020
USD’000

Share-
based 
payments 
value of 
services 
provided 
2020
USD’000

Post-
employ-
ment 
benefits 
2020
USD’000

Bonus
USD’000

Executive Directors

Christopher McDonald

Antony Wright

Non-Executive Directors

John Malcolm

Mel Fitzgerald

Debra Valentine 

Nicholas Garrett*

James Dewar

700

410

–

–

–

–

–

1,110

–

–

231

93

111

9

93

537

218

182

–

–

–

–

–

(159)

(103)

(43)

(17)

(21)

–

(17)

815

387

–

–

–

–

–

521

259

–

–

–

–

–

47

33

–

–

–

–

–

400

(360)

1,202

780

80

3,749

3,546

The emoluments of the highest paid Director were USD 2.1 million (2019: USD 1.9 million) and these principally comprised salary, share-based 
payment, bonus and benefits. 

*   Resigned as Non-Executive Director with effect from 10 February 2020.

12  Finance costs and income

Finance costs

Interest expense on leases (Note 38)

Bank guarantee charges

Interest on bank borrowings

Commitment fees

Others

Finance income
Finance income comprises interest income of USD 0.4 million (2019: USD 1.0 million) from bank deposits.

13  Other gains – net

Exchange loss – net

Profit on disposal of assets

Others

Loss on derivative financial instruments

Release of provision related to discontinued operations

2020
USD’000

2019
USD’000

4,627

1,147

129

42

35

5,980

4,322

890

1,607

535

973

8,327

2020
USD’000

(454)

267

1,196

–

–

1,009

2019
USD’000

(1,298)

83

906

(218)

813

286

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT126

14  Loss per share
(a)  Basic
Loss per share is calculated by dividing the loss attributable to the equity holders of the Company by the weighted average number of ordinary 
shares in issue during the year excluding ordinary shares purchased by the Company and held as treasury shares (Note 26).

(b)  Diluted
Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive 
potential ordinary shares. For the retention share awards, and options under the executive share option plan and performance share plan, a 
calculation is performed to determine the number of shares that could have been acquired at fair value (determined as the average annual market 
share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share awards/options. The 
number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share 
awards/options. 

The calculations of loss per share are based on the following loss and numbers of shares:

Loss for the year

Weighted average number of shares for basic loss per share

Adjustments for:

 − Assumed vesting of performance share plan

 − Assumed vesting of retention share plan

Weighted average number of shares for diluted loss per share

2020
USD’000

2019
USD’000

(53,386)

(183,514)

341,710,302

341,710,302

–

–

–

–

341,710,302

341,710,302

Assumed vesting of performance and retention share plans amounting to 3,199,269 (2019: 6,180,302) shares and 2,880,301 (2019: 2,466,979) 
shares respectively have been excluded in the current period as these are anti-dilutive.

Loss per share:

Basic 

Diluted

15  Operating loss
(a)  Operating loss
Operating loss is stated after charging/recognising:

Depreciation (Note 17)

Impairment (Note 41)

Operating lease rentals – land and buildings

Write-down of inventory to net realisable value (Note 21)

(b)  Auditor’s remuneration
Services provided by the Group’s auditor and its associates comprised:

Audit of Parent Company and consolidated financial statements

Audit of Group companies pursuant to legislation

Interim review of Parent Company and consolidated financial statements

Other audit related service

Non-audit related service

(15.63)c

(15.63)c

(53.71)c

(53.71)c

2020
USD’000

20,031

4,548

179

6,934

2020
USD’000

966

71

289

–

–

2019
USD’000

23,726

79,301

253

2,500

2019
USD’000

1,085

68

124

12

65

1,326

1,354

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS127

16  Financial instruments by category
The accounting policies for financial instruments have been applied to the line items below:

Group
Assets as per balance sheet

Trade receivables – net of provision (Note 22)

Other receivables excluding prepayments

Due from related parties (Note 25)

Cash and bank balances (Note 24)

Liabilities as per balance sheet

Accruals and other payables (Note 30)

Trade payables (Note 30)

Provision for warranty costs and other liabilities (Note 32)

Due to a related party (Note 25)

Borrowings (Note 33)

Company
Assets as per balance sheet

Due from related parties (Note 25)

Cash and bank balance

Other receivables

Liabilities as per balance sheet

Due to related parties (Note 25)

Accruals 

Classification

Amortised cost

Amortised cost

Amortised cost

Amortised cost

Classification

Liabilities at amortised cost

Liabilities at amortised cost

Liabilities at amortised cost

Liabilities at amortised cost

Liabilities at amortised cost

Classification

Amortised cost

Amortised cost

Amortised cost

Classification

Liabilities at amortised cost

Liabilities at amortised cost

2020
USD’000

2019
USD’000

51,903

10,871

8,602

113,265

184,641

19,059

5,804

3,973

62,516

91,352

2020
USD’000

2019
USD’000

44,163

26,586

3,555

117

880

75,301

52,693

40,127

11,440

649

20,058

124,967

2020
USD’000

18,214

42

188

2019
USD’000

15,530

377

109

18,444

16,016

2020
USD’000

2019
USD’000

481

1,185

1,666

481

139

620

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT128

16  Financial instruments by category (continued)
Credit quality of financial assets
Group
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to historical information about 
counterparty default rates:

Trade receivables

Group A

Group B

Group C

Group A – Last six months average debtor days is less than 45.

Group B – Last six months average debtor days is between 46 and 90.

Group C – Last six months average debtor days is above 90.

Cash at bank and short-term bank deposits 

Fitch’s ratings

A+

AA-

BB-

A

A-

B-

BB+

Not rated

Cash in hand

Cash and bank balances and term and margin deposits (Note 24)

Company

Due from related parties (Note 25)

Due from related parties is neither past due nor impaired.

Cash at bank 

Fitch’s ratings

A+

2020
USD’000

2019
USD’000

2,498

40,837

425

43,760

3,117

6,674

690

10,481

2020
USD’000

2019
USD’000

87,561

24,083

395

72

1

–

–

298

112,410

855

113,265 

36,390

24,214

–

115

–

428

395

203

61,745

771

62,516 

2020
USD’000

18,214

2019
USD’000

15,530

2020
USD’000

2019
USD’000

42

377

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS129

Total
USD’000

355,374

57,477

20,218

(1,125)

(1,120)

–

430,824

27,475

(6,810)

(1,824)

–

449,665

(195,912)

(23,726)

(52,234)

1,125

(270,747)

(20,031)

(3,559)

6,696

(287,641)

17  Property, plant and equipment

Buildings and
infrastructure 
USD’000

Operating
equipment
USD’000

Fixtures
and office
equipment
USD’000

Motor
vehicles
USD’000

Right-of-
use assets
USD’000

154,241

153,099

18,441

–

5,241

–

–

13,282

172,764

337

(95)

–

–

–

8,657

(959)

–

12,754

173,551

5,705

(6,367)

–

4,825

173,006

177,714

–

958

(18)

–

36

19,417

173

(1)

–

102

19,691

(68,498)

(7,842)

(46,256)

–

(122,596)

(4,264)

(311)

68

(107,549)

(17,157)

(10,343)

(5,876)

959

(122,809)

(10,648)

(3,172)

6,281

(778)

(102)

18

(18,019)

(872)

(76)

–

–

(26,072)

Capital
work-in-
progress
USD’000

26,235

–

4,941

–

–

5,104

7,691

–

–

(4,927)

7,868

–

–

–

–

–

–

–

–

–

3,358

–

20

(148)

–

–

3,230

–

(347)

–

–

–

57,477

401

–

(1,120)

56,758

13,569

–

(1,824)

–

2,883

68,503

(2,708)

(377)

–

148

(2,937)

(149)

–

347

–

(4,386)

–

–

(4,386)

(4,098)

–

–

Cost

At 1 January 2019

Adjustment on transition to IFRS 16

Additions

Disposals 

Remeasurements

Transfers 

At 31 December 2019

Additions

Disposals 

Remeasurements

Transfers

At 31 December 2020

Depreciation

At 1 January 2019

Charge for the year

Impairment (Note 41)

Disposals

At 31 December 2019

Charge for the year

Impairment (Note 41)

Disposals

At 31 December 2020

Net book value

At 31 December 2020

At 31 December 2019

(127,103)

(130,348)

(18,967)

(2,739)

(8,484)

45,903

50,168

47,366

50,742

724

1,398

144

293

60,019

52,372

7,868

5,104

162,024

160,077

Buildings have been constructed on land, leased on a renewable basis from various government authorities. The remaining lives of the leases 
range between two and 21 years. 

Property, plant and equipment with a carrying amount of USD 58.4 million (2019: USD 59.2 million) is under lien against the bank facilities 
(Note 33).

A depreciation expense of USD 18.0 million (2019: USD 21.3 million) has been charged to cost of sales; plus USD 2.0 million (2019: USD 2.5 
million) to general and administrative expenses (Notes 7 and 10). This includes a depreciation charge on right-of-use assets of USD 4.1 million 
(2019: USD 4.4 million). An impairment loss of USD 3.6 million (2019: USD 52.2 million) has been recorded based on the impairment tests 
performed at year end. Refer to Note 41 for details of the impairment assessments performed at year end and key assumptions. 

Capital work-in-progress represents the cost incurred towards construction and upgrade of infrastructure and operating equipment. 

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT130

18  Intangible assets

Cost

At 1 January 2019 

Additions

Transfers

At 31 December 2019

Additions

Transfers

At 31 December 2020

Amortisation

At 1 January 2019

Charge for the year (Note 10)

Impairment (Note 41)

At 31 December 2019

Charge for the year (Note 10)

Impairment (Note 41)

At 31 December 2020

Net book value

At 31 December 2020

At 31 December 2019

Trade name 
USD’000

Leasehold 
rights
USD’000

Software 
USD’000

Development 
and patents
USD’000

Work-in- 
progress
USD’000

Total
USD’000

22,335

17,032

–

–

–

–

22,335

17,032

–

–

–

–

15,957

5

1,351

17,313

210

–

22,335

17,032

17,523

(17,751)

(1,804)

(2,780)

(22,335)

–

–

(4,771)

(1,000)

(11,261)

(17,032)

–

–

(4,804)

(1,077)

(11,432)

(17,313)

–

(128)

(22,335)

(17,032)

(17,441)

–

–

–

–

82

–

–

3

556

559

78

–

637

–

(10)

(549)

(559)

(9)

(69)

(637)

–

–

1,948

1,004

(1,907)

1,045

–

–

57,272

1,012

–

58,284

288

–

1,045

58,572

–

–

(1,045)

(1,045)

–

–

(27,326)

(3,891)

(27,067)

(58,284)

(9)

(197)

(1,045)

(58,490)

–

–

82

–

Trade name represented the expected future economic benefit to be derived from the continued use of the MIS trade name acquired through 
the acquisition of MIS. 

Leasehold rights represented a favourable operating right acquired upon the acquisition of MIS and existing leasehold rights in the books of MIS 
on acquisition of Rig Metals LLC in 2008. The value of the intangible assets has been determined by calculating the present value of the expected 
future economic benefits to arise from the favourable lease terms of 10 to 17 years. 

Development cost and patent represented the costs incurred on patent fee and in developing the Group’s proprietary designs. 

The Group amortises intangible assets with a limited useful life using the straight-line method over the following periods:

Software

Development cost and patents

Years

15

10 

The Group carries out an impairment review whenever events or changes in circumstance indicate that the carrying value of intangible 
assets may not be recoverable. Management performs the review at the CGU relating to an operating segment’s assets located in a 
particular geography.

As at 31 December 2020, the Group has recorded impairment of USD 0.2 million (2019: 27.1 million) based on the impairment tests performed 
during the year and detailed in Note 41. 

19  Investment in subsidiaries

Balance at 1 January

Share-based payments to employees of subsidiaries in accordance with IFRS 2

Impairment during the year

Balance at 31 December

2020
USD’000

2019
USD’000

86,858

3,238

(8,074)

82,022 

558,355

3,694

(475,191)

86,858

The recoverable amount of the investment in subsidiaries is determined based on net asset value of the subsidiaries. Net asset value of the 
subsidiaries is calculated based on the subsidiaries’ total assets less total liabilities as at 31 December 2020.

Based on these calculations, an impairment charge of USD 8.1 million (2019: 475.2 million) has been recorded during the year in the Company 
balance sheet. The investment was accounted for using the uniting of interests method for business combinations.

The Company granted retention and performance shares to employees of its subsidiaries under various plans (Note 9). These shares have 
a vesting period of 36 months. Accordingly, the proportionate share-based charge for the year of USD 3.2 million (2019: USD 3.7 million) has 
been recorded as an increase in investment in subsidiaries with a corresponding credit to retained earnings.

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS20  Investment accounted for using the equity method
Group

At 1 January

Dividend received during the year

Increase in investment in an associate 

Share of loss of investments accounted for using the equity method – net 

Impairment (Note 41)

Excess loss reclassified to other liabilities (MISA)

Excess loss reclassified to other liabilities (LSAL)

Share of other comprehensive loss accounted for using the equity method 

At 31 December

131

2020
USD’000

44,420

–

25,814

(15,697)

(792)

2,123

372

(352)

2019
USD’000

53,321

(901)

–

(7,934)

–

–

149

(215)

55,888

44,420

Details of the associates and joint venture during the year and at the balance sheet date are as follows:

Name of company

Place of incorporation and operation

Maritime Industrial Services Arabia Co. Ltd. (“MISA”) *

Jubail, Kingdom of Saudi Arabia

International Maritime Industries (“IMI”)**

Ras Al Khair, Kingdom of Saudi Arabia

Lamprell Saudi Arabia LLC (“LSAL”)***

Riyadh, Kingdom of Saudi Arabia

Proportion of 
ownership

30%

20%

50%

Classification Status

Associate

Associate

Operational

Operational

Joint venture Operational

*  Production, manufacturing and erection of heat exchangers, pressure vessels, tanks, structural steel, piping and other related activities. 

**  Establishment, development and operation of a maritime yard for the construction, maintenance and repair of offshore drilling rigs and marine vessels.

***  Commissioning works, industrial works, oil & gas piping works, marine works and installation services.

Investment in an associate – MISA

At 1 January

Dividend received during the year

Share of loss for the year 

Excess loss reclassified to other liabilities

Impairment (Note 41)

Share of other comprehensive loss accounted for using the equity method

At 31 December

MISA is a private company and there is no quoted market price available for its shares.

2020
USD’000

2019
USD’000

2,013

–

(3,344)

2,123

(792)

–

–

4,764

(901)

(1,677)

–

(173)

2,013

During the year, the Directors approved the disposal of the investment for a nominal value and this process is ongoing. As a result, an impairment 
of USD 0.8 million has been recorded to bring its book value to nil.

Investment in an associate – IMI

At 1 January

Investment made during the year

Share of loss for the year 

Adjustment to previously reported share of loss

Share of other comprehensive loss accounted for using the equity method

At 31 December

2020
USD’000

42,407

25,814

(11,981)

–

(352)

55,888

2019
USD’000

48,492

–

(8,400)

2,357

(42)

42,407

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT132

20  Investment accounted for using the equity method (continued)
Summarised financial information in respect of the Group’s associate is set out below:

Total non-current assets 

Total current assets 

Total non-current liabilities

Total current liabilities 

Net assets 

Group’s share of associate’s net assets – 20%

Acquisition cost capitalisation

Carrying amount at 31 December 

Revenue

Expenses 

Loss for the year

Group’s share of associate’s net loss

IMI is a private company and there is no quoted market price available for its shares. 

Investment in a joint venture – LSAL

At 1 January

Share of loss for the year 

Excess loss reclassified to other liabilities

At 31 December

Summarised financial information in respect of the Group’s joint venture is set out below:

Total current assets 

Total current liabilities 

Net liabilities

Group’s share of joint venture’s net liabilities – 50%

Expenses 

Loss for the year

Group’s share of joint venture’s net loss

LSAL is a private company and there is no quoted market price available for its shares.

21  Inventories

Raw materials, consumables and finished goods

Work-in-progress

Less: Provision for slow moving and obsolete inventories

2020
USD’000

281,614

288,012

(145,896)

(161,166)

262,564

52,513

3,375

55,888

156,289

(216,195)

(59,906)

(11,981)

2019
USD’000

183,230

71,831

(1,117)

(58,785)

195,159

39,032

3,375

42,407

506

(42,506)

(42,000)

(8,400)

2020
USD’000

2019
USD’000

–

(372)

372

–

65

(214)

149

–

2020
USD’000

2019
USD’000

3

(1,082)

(1,079)

(540)

(744)

(744)

(372)

66

(364)

(298)

(149)

(428)

(428)

(214)

2020
USD’000

16,995

–

(2,743)

14,252

2019
USD’000

22,741

69,605

(2,588)

89,758

The cost of inventories recognised as an expense amounts to USD 19.6 million (2019: USD 10.8 million) and this includes USD 6.9 million (2019: 
2.5 million) in respect of write-down of inventory to net realisable value due to the current downturn in oil and gas market. The net realisable value 
was determined by an independent expert based on a fair valuation of the components making up the finished goods.

The work in progress inventories at 31 December 2019, were including two rig kits which have been utilised in newly awarded Rig contracts.

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS22  Trade and other receivables

Trade receivables

Other receivables and prepayments

Advance to suppliers

Receivables from a related party (Note 25)

Less: Provision for impairment losses

An analysis of trade receivables is as follows:

Fully performing 

Past due 

Impaired

133

2020
USD’000

2019
USD’000

55,275

13,191

194

8,602

77,262

(3,372)

73,890

22,528

14,268

131

3,973

40,900

(3,469)

37,431

2020
USD’000

2019
USD’000

43,760

8,143

3,372

55,275

10,481

8,578

3,469

22,528

At 31 December 2020, trade receivables of USD 8.1 million (2019: USD 8.6 million) were past due but not impaired. These relate to a number 
of independent customers for whom the Group is not expecting any credit losses. The Group considers that the carrying amount of trade 
receivables approximates to their fair value. 

Up to 3 months

3 to 6 months

Over 6 months

2020
USD’000

2019
USD’000

5,690

1,143

1,310

8,143

6,676

326

1,576

8,578

At 31 December 2020, trade receivables of USD 3.4 million (2019: USD 3.5 million) were impaired and provided for. The individually impaired 
receivables mainly relate to customers who are in a difficult economic situation. The ageing analysis of these trade receivables is over six months.

The carrying amounts of the Group’s trade and other receivables are primarily denominated in USD or UAE Dirhams, which are pegged to the USD.

Movements on the provision for impairment losses are as follows:

At 1 January

Provision for impairment losses 

Amounts recovered during the year

Receivables written off during the year as uncollectable

At 31 December

2020
USD’000

3,469

27

(124)

–

3,372

2019
USD’000

4,189

41

–

(761)

3,469

The creation and release of the provision for impairment losses have been included in general and administrative expenses in the consolidated 
income statement (Note 10). 

Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash. The other 
classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the 
carrying value of each class of receivables mentioned above. The carrying value of trade receivables approximates to their fair value.

Refer to Note 3.1(c) for an assessment of expected credit losses.

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT134

23  Contract assets

Amounts due from customers on contracts

Contract work-in-progress

Amounts due from customers on contracts comprise:

Costs incurred to date

Attributable profit/(loss)

Less: Progress billings

2020
USD’000

2019
USD’000

30,859

54,567

85,426

26,318

14,066

40,384

2020 
USD’000

2019 
USD’000

228,178

30,179

258,357

(227,498)

30,859

401,548

(102,029)

299,519

(273,201)

26,318

The Group does not expect any credit losses from contract assets due to the history of payment from these customers. Refer to Note 3.1(c) for an 
assessment on expected credit losses.

24  Cash and bank balances 
(a)  Cash and cash equivalents

Group

Cash at bank and on hand

(b)  Term and margin deposits

Group

Margin deposits – under lien (with original maturity less than three months)

Margin deposits – under lien (with original maturity more than three months)

Term and margin deposits

Non-current 

Current

2020
USD’000

57,625

2019
USD’000

26,162

2020
USD’000

2019
USD’000

3,040

52,600

55,640

447

55,193

55,640

2,543

33,811

36,354

432

35,922

36,354

At 31 December 2020, the cash at bank and short-term deposits were held with eleven banks (2019: thirteen banks). The effective interest rate on 
short-term deposits was 0.77% (2019: 2.11%) per annum. Margin and short-term deposits of USD 3.0 million (2019: USD 2.5 million) and deposits 
with an original maturity of more than three months amounting to USD 52.6 million (2019: USD 33.8 million) are held under lien against bank 
guarantees (Note 37). 

Cash and cash equivalents are assessed to have low credit risk as further detailed in Note 3.1c. Therefore, management does not estimate the loss 
allowance on cash and cash equivalents at the end of reporting period as material.

Company
The cash and bank balance comprises cash held with one bank (2019: one bank).

25  Related party balances and transactions 
Related parties comprise LHL (which owns 33.12% of the issued share capital of the Company), certain legal shareholders of the Group 
companies, Directors and key management personnel of the Group and entities controlled by Directors and key management personnel. Key 
management includes the Directors and members of the executive committee. Related parties, for the purpose of the Parent Company financial 
statements, also include subsidiaries owned directly or indirectly and joint ventures. Other than those disclosed elsewhere in the financial 
statements, the Group entered into the following significant transactions during the year with related parties at arm’s length prices:

Group

Key management compensation

Sales to associates*

Purchases from associates

Rechargeable expenses to associates

Sponsorship fees and commissions paid to legal shareholders of subsidiaries (Note 1)

2020
USD’000

2019
USD’000

8,002

90,351 

 117 

2,369 

329

8,195

6,948

225

8,398

316

* 

Sales to associates includes contract revenue earned from the IMI rigs USD 88.2 million (2019: nil). Contract liabilities on the balance sheet includes an amount of USD 97.3 million related to 
these rigs in line with IFRS 15 accounting.

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTSCompany

Key management compensation

Revenue (management fees charged to subsidiaries)

Key management compensation comprises:

Group

Salaries and other short-term benefits

Bonus and share-based payments – value of services provided

Post-employment benefits

Company

Salaries and other short-term benefits

Bonus and share-based payments – value of services provided

Post-employment benefits

135

2020
USD’000

2019
USD’000

3,310

5,130 

2,933

4,903

2020
USD’000

2019
USD’000

3,912

3,874

216

8,002

5,013

2,971

211

8,195

2020
USD’000

2019
USD’000

1,248

1,983

79

3,310

1,571

1,289

73

2,933

The terms of the employment contracts of the key management personnel include reciprocal notice periods of between three and 12 months.

Due from/due to related parties
Due from related parties

Group (Note 22)

MISA (in respect of sales to associate) 

IMI (in respect of expenses on behalf of associate)

LSAL (in respect of expenses on behalf of joint venture)

Mada Al Sharq Company LLC (in respect of investment in joint venture)

Company

MIS *

MOL #
LEL~
EBT^

2020
USD’000

2019
USD’000

698

6,852

1,049

3

8,602

1,870

1,681

354

68

3,973

2020
USD’000

2019
USD’000

11,370

3,372

3,346

126

18,214

11,370

3,372

662

126

15,530

*   Primarily comprises a receivable in respect of management fees charged by the Company.

#   Primarily comprises a receivable in respect of expenses incurred for IMI.

~   Primarily comprises a receivable in respect of expenses incurred on behalf of the Company.

^  Primarily comprises payments made for treasury shares acquired by EBT on behalf of the Group.

Furthermore, the Company has provided performance guarantees on behalf of its subsidiary. These guarantees, issued in the normal course of 
business, are outstanding at the year end and no outflow of resources embodying economic benefits in relation to these guarantees is expected 
by the Company.

Due to a related party

Group

MISA (in respect of purchases) (associate) (Note 30)

Company

CBL (in respect of expenses incurred on behalf of the Company)

2020
USD’000

2019
USD’000

117 

649

2020
USD’000

481

2019
USD’000

481

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT136

26  Share capital and share premium

Issued and fully paid ordinary shares
Group/Company

At 1 January 2019 and 31 December 2019

At 1 January 2020 and 31 December 2020

Equity
number

341,726,570

341,726,570

Share 
capital
USD’000

30,346 

30,346 

Share 
premium
USD’000

315,995

315,995

The total authorised number of ordinary shares is 500 million shares (2019: 400 million shares) with a par value of 5 pence per share (2019: 
5 pence per share).

During 2020, Lamprell plc EBT acquired no shares (2019: 101,783 shares) of the Company. The total amount paid to acquire the shares was 
nil (2019: USD 71,023) and has been deducted from consolidated retained earnings. During 2020, no shares (2019: 101,783) were issued to 
employees and 16,268 shares (31 December 2019: 16,268 shares) were held as treasury shares at 31 December 2020. The Company has the right 
to reissue these shares at a later date. These shares will be issued on vesting of the retention shares/performance shares/share options granted to 
certain employees of the Group.

27  Other reserves 
Group

At 1 January 2019

Currency translation differences

At 31 December 2019

Currency translation differences

At 31 December 2020

Legal 
reserve
USD’000

98

–

98

–

98

Merger 
reserve
USD’000

(18,572)

–

(18,572)

–

(18,572)

Translation 
reserve
USD’000

Total
USD’000

(1,169)

(19,643)

308

(861)

43

(818)

308

(19,335)

43

(19,292)

Legal reserve
The legal reserve relates to subsidiaries (other than the subsidiaries incorporated in Free Zones) in the UAE and the State of Qatar. In accordance 
with the laws of the respective countries, the Group has established a statutory reserve by appropriating 10% of the profit for the year of such 
companies. Such transfers are required to be made until the reserve is equal to, at least, 50% (UAE) and 33.3% (State of Qatar) of the issued share 
capital of such companies. The legal reserve is not available for distribution.

Merger reserve
On 11 September 2006, the Group acquired 100% of the legal and beneficial ownership of Inspec from LHL for a consideration of USD 4 million. 
This acquisition was accounted for using the uniting of interests method. 

On 25 September 2006, the Company entered into a share for share exchange agreement with LEL and LHL under which it acquired 100% of the 
49,003 shares of LEL from LHL in consideration for the issue to LHL of 200,000,000 shares of the Company. This acquisition has been accounted 
for using the uniting of interests method. 

28  Provision for employees’ end of service benefits 
In accordance with the provisions of IAS 19, management has carried out an exercise to assess the present value of its obligations at 31 December 
2020 and 2019, using the projected unit credit method, in respect of employees’ end of service benefits payable under the labour laws of the 
countries in which the Group operates. Under this method, an assessment has been made of an employee’s expected service life with the Group 
and the expected basic salary at the date of leaving the service. The obligation for end of service benefit is not funded. 

The movement in the employees’ end of service benefit liability over the periods is as follows:

Group

At 1 January

Current service cost

Interest cost

Remeasurements

Benefits paid

At 31 December

2020
USD’000

2019
USD’000

36,863

4,308

943

1,676

(5,942)

37,848

32,088

3,391

1,153

3,074

(2,843)

36,863

Remeasurements consist of actuarial gain from a change in financial assumptions of USD 0.5 million (2019: loss of USD 2.0 million) and an 
actuarial loss from a change in other experiences of USD 2.2 million (2019: loss of USD 1.1 million).

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTSCompany

At 1 January

Current service cost

Interest cost

Remeasurements

At 31 December

Group
The amounts recognised in the consolidated income statement are as follows:

Current service cost

Interest cost

Total (included in staff costs) (Note 11)

The above charges are included in cost of sales and general and administrative expenses. 

Company

Current service cost

Interest cost

Total (included in staff costs)

The above charge of USD 0.1 million (2019: USD 0.1 million) is included in general and administrative expenses.

The principal actuarial assumptions used were as follows:

Discount rate

Future salary increases:

Management and administrative employees

Yard employees

137

2020
USD’000

2019
USD’000

380

74

6

32

492

280

64

9

27

380

2020
USD’000

2019
USD’000

4,308

943

5,251

3,391

1,153

4,544

2020
USD’000

2019
USD’000

74

6

80

2020

1.70%

2.00%

2.00%

64

9

73

2019

2.80%

2.00%

2.00%

The rate used for discounting the employees’ post-employment defined benefit obligation should be based on market yields on high quality 
corporate bonds. In countries where there is no deep market for such bonds, the market yields on government bonds should be used. In the 
UAE, there is no deep market for corporate bonds and no market for government bonds and therefore, the discount rate has been estimated 
using the US AA-rated corporate bond market as a proxy. On this basis, the discount rate applied was 1.7% (2019: 2.8%).

The rates used for future salary increases are long-term assumptions which take into account inflation, relevant factors in the employment market 
and the Group’s own expectations. 

Due to the nature of the benefit, which is a lump sum payable on exit for any cause, a combined single decrement rate has been used as follows:

Yard employees:

20 – 34 years

35 – 64 years

65 years and above

Management and administrative employees:

20 – 34 years

35 – 64 years

65 years and above

Executive Directors:

35 – 39 years

40 – 64 years

65 years and above

Percentage of employees 
at each age exiting the 
plan per year

2020

2019

15%

10%

100%

16%

12%

100%

10%

7%

100%

15%

10%

100%

16%

12%

100%

10%

7%

100%

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT138

29  Restructuring costs
During January 2020, the Group undertook a major review of its current operational footprint against medium term fabrication requirements and 
decided to consolidate its operations within one yard in order to streamline operations and achieve significant overhead reductions. As a result 
of this review, the Jebel Ali facility was mothballed in January 2020 and the Sharjah Yard handed over to the landlord in October 2020. These 
measures have also resulted in headcount reductions which have already been implemented.

The Hamriyah yard, being the largest facility, will continue to operate and gives the opportunity to expand our yard capacity. These actions allow 
for the Group to gradually grow fabrication volumes whilst significantly improving efficiency and reducing its cost base. 

The total one-off charge/exceptional item amounts to USD 5.6 million. These expenses pertain to staff redundancies and costs of closing down 
Sharjah. Capital commitments related to the restructuring programme amount to USD 1.3 million (Note 36).

30  Trade and other payables

Trade payables

Accruals and other payables

Payables to a related party (Note 25)

The Group considers that the carrying amount of trade payables approximates to their fair value.

31  Contract liabilities

Amounts due to customers on contracts

Amounts due to customers on contracts comprise:

Progress billings

Less: Cost incurred to date

Less: Recognised profit

32  Provision for warranty costs and other liabilities

At 1 January 2019

Charge during the year

Released/utilised during the year

At 31 December 2019

Charge during the year

Released/utilised during the year (Note 7)

At 31 December 2020

2020
USD’000

2019
USD’000

26,586

44,163

117

70,866 

40,127

52,693

649

93,469

2020
USD’000

159,991

2019
USD’000

3,826

343,734

(168,790)

(14,953)

159,991

312,310

(270,947)

(37,537)

3,826

Warranty 
costs 
USD’000

4,166

8,799

(1,525)

11,440

1,154

(9,039)

3,555

Warranty costs charged during the year relates to management’s assessment of potential claims under contractual warranty provisions. The 
charge during the year is included in subcontract cost in Note 7. During the year ended 31 December 2020, an amount of USD 0.6 million (2019: 
USD 0.3 million) was utilised and USD 8.4 million (2019: USD 1.2 million) released against the provision for warranty costs.

33  Borrowings

Trade credit facility

Term loan

The bank borrowings are repayable as follows:

Current (less than 1 year)

2020
USD’000

880

–

880

2019
USD’000

–

20,058

20,058

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS139

At 31 December 2020, the Group has separate bilateral unfunded facilities of USD 321.3 million (2019: USD 305.9 million) with commercial banks. 
The facilities include letters of guarantees and letters of credit and there has been no change in the nature of security pledged against these 
facilities as at 31 December 2020. These are summarised below:

31 December 2020

Funded facilities 

Trade credit facility

Unfunded facilities

Bank guarantees (Note 37)

Total 

Facility
USD’000

Amount 
utilised
USD’000

Amount 
available to 
be used
USD’000

880

880

–

329,619

330,499

96,141

97,021

233,478

233,478

Repayments of borrowings amounting to USD 20.0 million were made during the year. A new trade credit facility draw-down during the year 
amounted to USD 0.8 million. As at 31 December 2020, the Group borrowings amount to USD 0.8 million.

Bank facilities are secured by liens over term deposits of USD 55.6 million (2019: USD 36.4 million) (Note 24), the Group’s counter indemnities for 
guarantees issued on their behalf, the Group’s corporate guarantees, letter of undertakings, letter of credit payment guarantees, cash margin held 
against letters of guarantees, shares of certain subsidiaries, certain property, plant and equipment, movable assets, leasehold rights for land and 
certain contract related receivables. 

As at 31 December 2020, the Group had arranged for bank facilities amounting to USD 2.7 million (2019: nil) in the form of letters of credit.

The borrowings include accrued interest of nil (2019: accrued interest of USD 0.1 million).

The carrying amounts of borrowings in the year approximated to their fair value and were denominated in USD or UAE Dirhams, which are 
pegged to the USD. 

Reconciliation of liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities 
arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s consolidated cash flows 
as cash flows from financing activities. 

Year ended 31 December 2020

Trade credit facility

Term loan

Lease liabilities

Year ended 31 December 2019

Term loans 

Lease liabilities

Draw-down 
during the 
year (cash)
 USD’000

Repayment 
during the 
year (cash)
USD’000

1 January 
USD’000

Accrued interest/
additions to lease 
liabilities 
(non-cash)
USD’000

Remeasurements/ 
finance cost 
(non-cash)
USD’000

31 December 
USD’000

–

20,058

57,373

77,431

19,768

60,949

80,717

880

–

–

880

40,000

–

40,000

–

(20,058)

(618)

(20,676)

(40,000)

(2,857)

(42,857)

–

–

13,569

13,569

290

402

692

–

–

661

661

–

(1,121)

(1,121)

880

–

70,985

71,865

20,058

57,373

77,431

34  Loss of the Company
The loss of USD 8.0 million (2019: loss of USD 475.0 million) in respect of the Company is included in these consolidated financial statements. 

35  Dividends 
There were no dividends declared or paid during the year ended 31 December 2020 or 31 December 2019.

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT140

36  Commitments

(a) International Maritime Industries commitments
In 2017, the Group entered into commitments associated with the investment in International Maritime Industries. Under the Shareholders’ 
Agreement, the Group will invest up to a maximum of USD 140.0 million in relation to its commitment over the course of construction of the 
Maritime Yard between 2017 and 2023 with USD 84.8 million already paid to date. The forecast contributions are as follows:

Within one year

Later than one year but not later than four years

(b)  Other commitments

Capital commitments for restructuring programme

Capital commitments for construction of facilities

Capital commitments for purchase of operating equipment and computer software

37  Bank guarantees

Performance/bid bonds

Advance payment, labour visa and payment guarantees

2020
USD’000

2019
USD’000

17,000

38,200

55,200

–

80,966

80,966

2020
USD’000

2019
USD’000

1,304

883

2,433

–

110

7,919

2020
USD’000

84,673

8,754

93,427

2019
USD’000

88,284

13,599

101,883

The various bank guarantees, as above, were issued by the Group’s bankers in the ordinary course of business. Certain guarantees are secured by 
cash margins, assignments of receivables from some customers and in respect of guarantees provided by banks to the Group companies, they 
have been secured by Parent Company guarantees (Note 33). In the opinion of the management, the above bank guarantees are unlikely to result 
in any liability to the Group.

38  Lease liabilities
The following is the movement in lease liabilities during the year ended 31 December 2020:

At 1 January 

Additions during the year

Interest expense on leases

Repayment of lease liability 

Repayment of interest expense on leases

Remeasurements

At 31 December 

Non-current

Current

2020
USD’000

57,373

13,569

4,627

(618)

(2,142)

(1,824)

70,985

68,849

2,136

70,985

2019
USD’000

60,949

402

4,322

(2,857)

(4,322)

(1,121)

57,373

55,388

1,985

57,373

During the year, the Group has taken additional space on lease at Hamriyah yard as part of its restructuring programme. 

The table below provides details regarding the contractual maturities of lease liabilities as at 31 December 2020 on an undiscounted basis:

Not later than one year

Later than one year but not later than five years

Later than five years

2020
USD’000

2019
USD’000

7,085

28,827

83,683

119,595

5,826

26,131

63,868

95,825

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTS39  Cash generated from/(used in) operating activities

Operating activities

Loss before income tax

Adjustments for:

Share-based payments – value of services provided

Depreciation 

Amortisation of intangible assets

Impairment of non-financial assets

Share of loss of investments accounted for using the equity method – net

(Release)/provision for warranty costs and other liabilities – net 

Profit on disposal of property, plant and equipment

Provision/(release) for slow moving and obsolete inventories

(Release)/provision for impairment of trade receivables, net of amounts recovered

Provision for employees’ end of service benefits 

Finance costs

Finance income

Operating cash flows before payment of employees’ end of service benefits and changes in working capital

Payment of employees’ end of service benefits

Changes in working capital:

Inventories before movement in provision

Derivative financial instruments 

Trade and other receivables before movement in Provision for impairment losses

Contract assets

Trade and other payables

Contract liabilities

Cash generated from/(used in) operating activities

141

Year ended 31 December

Notes

2020
USD’000

2019
USD’000

(53,261)

(184,382)

9

17

18

41

20

32

21

28

12

12

21

22

23

30

31

4,440

20,031

9

4,548

15,697

(7,885)

(267)

155

(97)

5,251

5,980

(370)

(5,769)

(5,942)

75,351

–

(36,362)

(45,042)

(25,098)

156,165

113,303

4,993

23,726

3,891

79,301

7,934

7,274

(83)

(128)

41

4,544

8,327

(1,023)

(45,585)

(2,843)

993

218

30,283

14,547

13,195

(18,547)

(7,739)

40  Events after the balance sheet date
Strategic reorganisation
In January 2021, the Group took the decision to reorganise into three business units of Renewables, Oil & Gas, and Digital. We intend to align 
Group financial reporting with this structure for the full year 2021.

Joint venture agreement with Injazat
During May 2021, the Group has signed a joint venture agreement with Injazat Data Systems LLC (“Injazat”), the UAE’s leader in digital 
transformation, to create and market innovative digital solutions focusing predominantly on the renewables and oil & gas industries. 
The initial funding of USD 7 million will be split equally between the partners and invested in 2021.

Balance sheet recapitalisation programme
On 29 June 2021 the Group announced that it will be seeking to raise new funding of USD 120 – 150 million either through a combination of 
debt and equity. The amount is dependent on the outcome of current negotiations with certain relationship banks in relation to the project 
financing. For more information see note 2.1.

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT142

41  Impairment of non-financial assets
Group

Impairment comprises the following:

Impairment of property, plant and equipment (Note 17)

Impairment of intangible assets (Note 18)

Impairment of an investment accounted for using the equity method (Note 20)

2020
USD’000

2019
USD’000

3,559

197

792

4,548

52,234

27,067

–

79,301

The Group determines at the end of the reporting period whether there are indicators of impairment in the carrying amount of its property, plant 
and equipment, intangible assets and other non-financial assets. Where indicators exist, an impairment test is undertaken for the assets which 
requires management to estimate the recoverable amount based on the higher of its value in use and its FVLCD. 

Management performs the review at the CGU relating to an operating segment’s assets located in a particular geography. An indicator of impairment 
exists at the reporting date that predominantly arose from the ongoing COVID-19 pandemic and low oil prices which continue to impact NOC 
budgets and spending. This has had an impact on our backlog and utilisation of our assets attributable to the United Arab Emirates CGU.

Based on this review, an impairment loss of USD 3.8 million (2019: USD 79.3 million) has been recorded during the year largely as a result of 
operating equipment valuation reductions. Refer to Note 17 and 18. The recoverable amount is based on fair value less costs of disposal except 
for intangible assets where value in use has been used given the nature of the assets.

In addition, an impairment of USD 0.8 million has been recorded in respect of an investment accounted for using the equity method based on 
the decision to dispose of the investment for a nominal value (Note 20).

FVLCD represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market 
participants at the measurement date net of costs of disposal e.g. dismantling costs, brokerage and legal fees. The fair value of the Group’s 
property, plant and equipment at 31 December 2020 has been arrived at based on a valuation carried out at that date by Cavendish Maxwell Real 
Estate Valuation Services LLC (“Cavendish Maxwell”), independent valuers not connected with the Group. The valuation conforms to International 
Valuation Standards and was determined as follows:
•  Buildings and infrastructure, right-of-use assets and leasehold rights – based on the market comparable approach that reflects recent 
transaction prices for similar properties. Adjustments are made where the ‘sale comparable’ differs from the subject property. These 
adjustments are made on a percentage basis and are applied to the price per square metre of the subject. The fair values used have been 
categorised as Level 2 in the fair value hierarchy as the valuation has been performed based on available market and transactional evidence as 
well as the valuers’ general market knowledge of such assets.

•  Operating equipment, fixtures and office fittings and motor vehicles – The depreciated replacement cost method has been used to derive 

the market value of the assets adjusted for dismantling costs. This is calculated based on the gross current replacement cost of a new asset, 
adjusted, where necessary, in respect of technical and functional obsolescence and installation costs determined with reference to historical 
data for similar assets. This is then depreciated to reflect age, wear and tear and other relevant factors, including any residual value at the 
end of the assets economic working life. The dismantling costs are based on historical data for similar assets. The fair values used have been 
categorised as Level 3 in the fair value hierarchy as the valuation has been done based on available market and transactional evidence as well as 
the valuers’ general market knowledge of such assets.

Right of use assets pertain to lease land where buildings and infrastructure are located. Therefore, these have been fair valued as part of the 
buildings and infrastructure. The fair values is based on IFRS 16 less lease liabilities pertaining to right of use assets which would be transferred to 
the buyer in the event of a disposal.

The costs of disposal have been determined with reference to transaction fees of the market in which the assets are located as well as the costs 
to dismantle based on historical data for similar assets.

The carrying amount of property, plant and equipment at 31 December 2020 was USD 162.0 million (31 December 2019: USD 160.1 million). 
The carrying amount of intangible assets at 31 December 2020 was USD 0.1 million (31 December 2019: nil).

Notes to the consolidated financial statements continuedFINANCIAL STATEMENTSGlossary

ABC
ADNOC
AED
AGM

Anti-bribery and corruption 
Abu Dhabi National Oil Company
Arab Emirates Dirham
Annual General Meeting 

BD

Business Development 

Chief Executive Officer
Cash Generating Unit 
Chief Financial Officer
UK Corporate Governance Code 2018

CEO
CGU
CFO
Code
Company Lamprell plc
CRPO

Contract Release Purchase Orders

DRR

Directors Remuneration Report 

EA1
EBITDA

EBT
EPC
EPC(I)
EPIC
EPS
ESG
EU

East Anglia ONE
Earnings before Interest, Taxes, Depreciation and 
Amortisation
Lamprell plc Employee Benefit Trust
Engineering, Procurement, Construction
Engineering, Procurement, Construction and Installation
Engineering Procurement Installation and Commissioning
Earnings Per Share
Environmental Social Governance 
European Union

FPSO
FTSE
FVTOCI
FVTPL

Floating Production Storage and Offloading
Financial Times Stock Exchange
Fair Value Through Other Comprehensive Income
Fair Value Through Profit or Loss

GBP
GCC
GHG

HMRC
HR
HSE
HSES
HVAC/ 
HVDC

Pound Sterling
Gulf Cooperation Council 
Greenhouse Gas 

Her Majesty’s Revenue & Customs 
Human Resources 
Health Safety & Environment 
Health Safety Environment & Security
High Voltage Alternating Current/ 
High Voltage Direct Current 

143

IA
IAS
IFRIC

IFRS
IMI
IPCC
ISO
IT

Internal Audit
International Accounting Standards
International Financial Reporting Interpretations 
Committee
International Financial Reporting Standards
Industrial Maritime Industries
Intergovernmental Panel on Climate Change 
International Organisation for Standardisation
Information Technology

JD

Juris Doctor

LATC
LD’s
LEL
LHL
LSAL
LTA
LTIP

MBA
MIS
MISA

NED
NGO
NOC

Lamprell Assessment and Training Centre
Liquidated Damages
Lamprell Energy Limited
Lamprell Holdings Limited
Lamprell Saudi Arabia LLC
Long Term Agreement
Long-Term Incentive Plan

Master of Business Administration
Maritime Industrial Services Co. Ltd. Inc.
Maritime Industrial Services Arabia Co. Ltd.

Non-Executive Director 
Non-governmental organisation
National Oil Company 

PP&E

Property, Plant and Equipment

SNOC
STIP

Sharjah National Oil Corporation
Short-Term Incentive Plan

TCFD
TRIR
TSR

Task Force on Climate-related Financial Disclosures
Total Recordable Injury Rate
Total Shareholder Return 

UAE
UK
UN SDG
US
USD

United Arab Emirates 
United Kingdom 
United Nations Sustainable Development Goals
United States 
United States Dollar 

VIU
VP

Value In Use
Vice-President

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT144

Additional information

Alternative performance measures
We use a range of financial and non-financial measures to assess our performance. The tables below set out the definitions of such measures, 
reconciliations to amounts presented in the financial statements and the reason for their inclusion in the report. The metrics presented are 
consistent with those presented in our previous Annual Report and there has been no change to the bases of calculation.

EBITDA
In addition to measuring financial performance of the Group based on operating profit, we also measure performance based on EBITDA. EBITDA 
is defined as the Group profit/(loss) for the year from continuing operations before depreciation, amortisation, impairment, net finance expense, 
taxation, one-off items and share of loss of investments accounted for using the equity method. 

We consider EBITDA to be a useful measures of our operating performance because it approximates the operating cash flow by eliminating 
depreciation and amortisation. EBITDA is not a direct measure of our liquidity, which is shown by our cash flow statement, and needs to be 
considered in the context of our financial commitments.

Reconciliation from Group loss for the year, the most directly comparable IFRS measure, to EBITDA is set out below:

Year ended 31 December

Loss for the year 

Depreciation (Note 17)

Amortisation (Note 18)

Interest on bank borrowings and leases (Note 12)

Finance income (Note 12)

Income tax expense/(gain)

Impairment (Note 41)

One-off item – Inventory write down (Note 21)

Restructuring costs (Note 29)

Share of loss of investments accounted for using the equity method – net (Note 20)

EBITDA

EBITDA margin

2020
USD’000

(53,386)

20,031

9

4,756

(370)

125

4,548

6,934

5,597

15,697

3,941

1.2%

2019
USD’000

(183,514)

23,726

3,891

5,929

(1,023)

(868)

79,301

–

–

7,934

(64,624)

(24.8%)

Net cash
Net cash measures financial health after deduction of liabilities such as borrowings. A reconciliation from the cash and cash equivalents per the 
consolidated cash flow statement, the most directly comparable IFRS measure, to reported net cash, is set out below:

Cash and cash equivalents (Note 24)

Margin deposits – under lien (with original maturity less than three months) (Note 24)

Margin deposits – under lien (with original maturity more than three months) (Note 24)

Borrowings (Note 33)

Net cash

Of net cash at 31 December 2020, USD 55.6 million is restricted (31 December 2019: USD 36.4 million).

2020
USD’000

2019
USD’000

57,625

3,040

52,600

(880)

112,385

26,162

2,543

33,811

(20,058)

42,458

OTHER INFORMATION145

Overheads
Overheads are costs required to run our business, which cannot be directly attributed to any specific project or service. A reconciliation from 
unallocated expenses per the segment note in the consolidated financial statements to reported overhead, is set out below:

General and administrative expenses – excluding digital initiatives impairment loss, restructuring costs and COVID-19 related 
salary reductions (Note 10)

Selling and distribution expenses (Note 8)

Direct overheads included in cost of sales:

Unallocated operational overheads – excluding COVID-19 related salary reductions (Note 5)

Yard rent and depreciation (excluding impairment) (Note 5)

Repairs and maintenance (Note 5)

Interest expense on leases (Note 12)

Other

Underlying overheads

Restructuring costs (Note 29)

Impairment (Note 41)

COVID-19 related salary reductions

Overheads

An analysis of overhead nature is as follows:

Overhead nature:

Fixed

Semi-variable

Variable

Underlying overhead

An analysis of overhead types is as follows:

Overhead type:

Cash

Non-cash

Underlying overhead

2020
USD’000

2019
USD’000

38,824

298

16,175

7,323

3,464

4,627

7,333

78,044

5,597

4,548

(7,736)

80,453

58,277

1,502

20,167

10,574

2,947

4,322

6,117

103,906

–

79,301

–

183,207

2020
USD’000

2019
USD’000

27,169

6,167

44,708

78,044

2020
USD’000

53,016

25,028

78,044

34,804

5,824

63,278

103,906

2019
USD’000

70,606

33,300

103,906

LAMPRELL PLCANNUAL REPORT AND ACCOUNTS 2020OTHER INFORMATIONFINANCIAL STATEMENTSCORPORATE GOVERNANCESTRATEGIC REPORT146

OTHER INFORMATIONLamprell plc

Registered office
First Names House 
Victoria Road 
Douglas 
Isle of Man 
IM2 4DF

Operations
PO Box 33455 
Dubai 
United Arab Emirates 
Tel +971 6 528 2323 
Fax +971 6 528 4325 
Email lamprell@lamprell.com

www.lamprell.com

L

A

M

P

R

E

L

L

P

L

C

A

N

N

U

A

L

R

E

P

O

R

T

A

N

D

A

C

C

O

U

N

T

S

2

0

2

0

 
 
 
 
 
 
This report is printed on paper certified in accordance with the FSC® 
(Forest Stewardship Council®) and is recyclable and acid-free. 

Pureprint Ltd is FSC certified and ISO 14001 certified showing that it 
is committed to all round excellence and improving environmental 
performance is an important part of this strategy. 

Pureprint Ltd aims to reduce at source the effect its operations have on  
the environment and is committed to continual improvement, prevention 
of pollution and compliance with any legislation or industry standards. 

Pureprint Ltd is a Carbon / Neutral® Printing Company.

Designed and produced by Instinctif Partners 
www.creative.instinctif.com