Lamprell warns of going concern doubts as loss widens

Lamprell warned there were material doubts about its position as a going concern as the oil rig builder's annual loss more than doubled.

The net loss for the year to the end of December widened to $183.5m from $70.7m a year earlier as revenue rose to $260.4m (£211m) from $234.1m. Lamprell's pretax loss widened to $184.3m from $69.5m.

Lamprell's results were hit by a $79.3m impairment charge related to the reduced value of assets such as property, plant and equipment and other costs. General and administrative expenses more than tripled to $140.3m from $45.1m. It withdrew guidance for 2020.

The company said it had identified material uncertainties that threatened its ability to realise assets, meet liabilities and continue as a going concern. To be a going concern the company needs to arrange new financing and sign a major renewables contract in the first half and execute existing contracts in line with milestones.

Lamprell said current conditions, with oil and gas prices hammered by the Covid-19 crisis, could make achieving these goals difficult. In that case it could be forced to cut more costs and sell assets. Net cash almost halved to $42.5m from $80m a year earlier.

The company's shares fell 12.8% to 9.2p at 10:36 BST. The shares have lost more than three-quarters of their value in 2020.

The company has cut overheads by at least 20% in 2020, including through job cuts and spending restrictions. Measures to save $10m during the Covid-19 crisis include salary and director fee reductions of 25% for six months, reduced working hours and redundancies, it said.

Chairman John Malcolm said: "In these uncertain times and given that the company's financial position remains very challenging, our immediate goal is to protect our net cash position and improve liquidity for the group to ensure the future of the business."

The company was affected by a dearth of projects in the oil and gas market even before the Covid-19 crisis caused demand and oil prices to plummet, forcing operators to slash budgets. Lamprell said it had a bid pipeline of $6.2bn but market turmoil was likely to cause further delays to new contracts.