30 August 2016
Half year results for the six months ended 30 June 2016
Six months ended 30 June 2016
Six months ended 30 June 2015
Exceptional items and certain re-measurements
Exceptional items and certain re-measurements
Net profit/(loss) before losses on Laggan-Tormore project
EBITDA before losses on Laggan-Tormore project
Strong growth in revenue to US$3.9 billion (2015: US$3.2bn) with record activity levels
Strong growth in net profit and EBITDA reflecting the phasing of profit recognition
Expect to deliver net profit in 2016 in line with expectations: consensus net profit approximately US$440m(4) before recognising the final charge on Laggan-Tormore and excluding IES
Exceptional items and certain re-measurements of US$123 million post-tax, primarily non-cash items related to IES; net book value of IES portfolio stands at US$1.6 billion(5)
Robust balance sheet with net debt(6) of US$877 million at 30 June 2016 (31 December 2015: US$686m); interim dividend maintained at 22.00 cents per share (2015: 22.00 cents)
- Group order intake of US$1.0 billion in 1H 2016; strong bidding pipeline for Engineering & Construction for 2H 2016 and 2017
Group backlog(7) stood at US$17.4 billion at 30 June 2016 (31 December 2015: US$20.7bn), giving excellent revenue visibility for 2H 2016 and 2017
Good progress on delivering cost efficiencies from Group reorganisation and operational excellence initiatives
Ayman Asfari, Petrofac’s Group Chief Executive commented on the results:
“We have delivered a positive set of results for the first half of the year, reflecting good project execution. We are on track to meet expectations for the full year 2016 and our high level of backlog gives us excellent revenue visibility for 2017.
“While there have been few project awards in our core markets in the year to date, we have a strong pipeline of bidding opportunities and we are actively bidding on a large number of projects. We have one of the most cost-competitive delivery capabilities in our industry, enabling us to maintain our bidding discipline while delivering value for our clients.
“We have made good progress towards reducing the capital intensity of the business and we remain committed to delivering value from the IES portfolio.”
Engineering & Construction (E&C)
- Fully demobilised from the Laggan-Tormore project site and provisional acceptance certificate received from client, confirming completion of project
- Delivered good performance on our portfolio of lump-sum engineering, procurement and construction (EPC) projects
- Currently actively bidding on a large number of projects where award is expected in 2H 2016 or 1H 2017
Engineering & Production Services (EPS)
- Delivered improved performance from our reimbursable and engineering, procurement and construction management (EPCm) projects
- Secured US$500 million of new contracts and extensions in the UK North Sea, including: a Service Operator contract with Anasuria Operating Company Limited, a Duty Holder contract with BP and a 3-year contract extension for Total E&P UK
- In July, secured two major contracts with Repsol Sinopec for the provision of engineering support services and onshore and offshore personnel
Integrated Energy Services (IES)
Agreement reached with PETRONAS for cessation of the Berantai Risk Service Contract which will result in accelerated reimbursement of outstanding capital and operational expenditures(8)
FPF1 floating production facility now on location on the Stella field having completed onshore commissioning
Production from the Chergui gas plant in Tunisia has been shut-in for most of the year to date due to civil unrest in the country
Continue to work towards migration of our Production Enhancement Contracts (PECs) to Production Sharing Contracts (PSCs) in Mexico
Formally exited Ticleni PEC in Romania in August 2016
In what is a challenging period for the industry, we are well-positioned. We remain focused on our core proposition: strong project execution, clear geographic focus, a disciplined approach to bidding and a sustainable, cost-effective structure.
Our backlog stands at high levels, giving us excellent revenue visibility for 2H 2016 and 2017 and our overall portfolio is in good shape. We have a strong pipeline of bidding opportunities and we are actively bidding on a large number of projects in our core markets.
We continue to drive cost optimisation and operational excellence to improve upon our already very cost-effective structure. We have one of the most cost-competitive delivery capabilities in our industry, enabling us to maintain our bidding discipline while delivering value for our clients.
We have made good progress towards reducing the capital intensity of the business and we remain committed to delivering value from the IES portfolio. We continue to manage the balance sheet to support the dividend and deliver shareholder value.
(1) Business performance is used as a means of measuring the underlying performance of the business (see the interim condensed consolidated income statement and note 2 to the financial statements).
(2) Profit/(loss) for the period attributable to Petrofac Limited shareholders.
(3) EBITDA means earnings before interest, tax, depreciation and amortisation and is calculated as profit before tax, net finance costs, exceptional items and certain re-measurements, but after our share of results of associates (as per the interim condensed consolidated income statement), adjusted to add back charges for depreciation and amortisation (as per note 3 to the consolidated financial statements).
(4) Company compiled consensus net profit for the Group, before recognising the final charge on the Laggan-Tormore project of US$101 million (as announced on 6 May 2016) and excluding IES, is approximately US$440 million. Including IES, consensus net profit is approximately US$410 million.
(5) Includes oil and gas assets (within property, plant and equipment), other financial assets in respect of the Berantai Risk Service Contract and Greater Stella Area development (note 15 to the financial statements), our investment in Seven Energy (note 14 to the financial statements), investment in associates PetroFirst Infrastructure Limited and Petrofac FPF1 Limited (note 13 to the financial statements), and the FPSO Opportunity (within oil and gas facilities in property, plant and equipment). Excludes oil and gas facilities held under finance leases and working capital balances.
(6) Cash and short-term deposits less interest-bearing loans and borrowings.
(7) Backlog consists of the estimated revenue attributable to the uncompleted portion of lump-sum engineering, procurement and construction contracts and variation orders plus, with regard to engineering, operations, maintenance and Integrated Energy Services contracts, the estimated revenue attributable to the lesser of the remaining term of the contract and five years. Backlog will not be booked on Integrated Energy Services contracts where the Group has entitlement to reserves. Integrated Energy Services’ backlog of US$2.8 billion relates to four Production Enhancement Contracts in Mexico. We will stop recognising backlog in respect of these contracts upon completion of their migration to Production Sharing Contracts. The Group uses this key performance indicator as a measure of the visibility of future revenue. Backlog is not an audited measure.
(8) Less an impairment charge of US$26 million post-tax. See note 6 to the financial statements.
View the Group's financial statements for the six months ended 30 June 2016.
Our half year results presentation for analysts and investors will be held at 9.30am today, which will be webcast live via:
This announcement contains forward-looking statements relating to the business, financial performance and results of Petrofac and the industry in which Petrofac operates. These statements may be identified by words such as “expect”, “believe”, “estimate”, “plan”, “target”, or “forecast” and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions and involve risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from those described in these statements and neither Petrofac nor any other person accepts any responsibility for the accuracy of the opinions expressed in this presentation or the underlying assumptions. No obligation is assumed to update any forward-looking statements.