22 August 2011
Interim Results for the Six Months Ended 30 June 2011
Petrofac Limited (Petrofac, the group or the Company), a leading international provider of facilities solutions to the oil & gas production and processing industry, today announces its interim results for the six months ended 30 June 2011.
Download the 2011 interim results in PDF format
- Revenue up 25.2% to US$2,711.1 million (2010 restated(1): US$2,165.8 million)
- Net profit(2) up 6.6% to US$246.3 million (2010 restated(1): US$231.0(3) million)
- Earnings per share (diluted) up 6.7% to 71.84 cents (2010 restated(1): 67.31(3) cents)
- Interim dividend up 26.1% to 17.40 cents (10.54 pence(4)) per share (2010: 13.80 cents)
- Backlog(5) US$11.4 billion at 30 June 2011 (31 December 2010: US$11.7 billion; 30 June 2010: US$6.9 billion)
- Gross cash balances at 30 June 2011 of US$1.8 billion (31 December 2010: US$1.1 billion)
Ayman Asfari, Petrofac’s group chief executive commented on the interim results:
“We have had a successful year to date, with good operational performance across our portfolio of projects and encouraging progress against our recently announced Integrated Energy Services strategy. We are well on course to deliver like-for-like(6) net profit growth in 2011 of at least 15% and in-line with current market expectations(7).
“With a strong financial position, a differentiated and competitive offering and a proven track record in project execution, we remain confident of achieving our medium-term growth target of more than doubling our recurring 2010 earnings by 2015.”
Engineering & Construction
- Order intake(8) in the year to date of US$1.6 billion with new awards in Algeria, Iraq and Malaysia
- Good progress on South Yoloten development, in Turkmenistan: substantially completed construction of temporary facilities and placed the majority of orders for procurement items
- Completed the Jihar gas plant in Syria and the In Salah Gas compression facilities and power generation in Algeria
Offshore Engineering & Operations
- Secured a number of new contracts and extensions, including a contract to provide maintenance services on the Rumaila oilfield in Iraq for BP
- Record activity, including on the SEPAT development and upgrade of the FPSO Berantai (formerly the East Fortune) in Malaysia (both being undertaken jointly with E&C)
Engineering, Training Services and Production Solutions
- Opened a third Indian office, in Delhi, to support growth in activity levels across the group
- Entered into an MOU for a technical training partnership with PETRONAS to develop competency-based training for operations and maintenance personnel in Malaysia
- Good progress on Ticleni in Romania, improving production through optimising pump settings, working over wells and bringing back on-stream the first five of many shut-in wells
- Agreed to invest up to a further US$75 million in Seven Energy taking our interest up to 24.5%(9)
- Selected bidder on Magallanes and Santuario Production Enhancement Contracts in Mexico
- Secured first Risk Service Contract (RSC) in Malaysia, for development of the Berantai field
- Acquired FPF3 (formerly the Jasmine Venture), deployed on the Jasmine field in the Gulf of Thailand and leased to Pearl Energy, a subsidiary of Mubadala, and now operated by Offshore Engineering & Operations
- Pre-invested in field infrastructure in readiness for future developments, including the acquisition of FPF4 (formerly the Cossack Pioneer)
- Cendor phase 2 in Block PM304, offshore Malaysia, progressing to schedule and entered into an MOU with PETRONAS to accelerate the third phase of Block PM304, West Desaru
We are confident that we can continue the good progress that we have achieved in Engineering & Construction in the year to date. With high levels of backlog, we have outstanding revenue visibility which should ensure that we report strong growth in our full year revenues and we expect full year net margins to be in line with our medium-term guidance at around 11%.
While Offshore Engineering & Operations activity levels and revenues are expected to continue at record levels, net profit is expected to be lower in the second half of the year, as the first half benefited from significant progress on the SEPAT development and a provision release following completion of a long-term maintenance services contract. Net margins for the full year are expected to be substantially higher than in the prior year.
The second half performance of the Engineering, Training Services and Production Solutions reporting segment is expected to be broadly in line with the first half of the year, albeit with a greater contribution from Production Solutions, as we expect a general improvement in our consultancy and technology businesses and a positive contribution from the Ticleni Production Enhancement Contract.
In Energy Developments, our operational assets are expected to continue to perform broadly in line with the first half, with the exception of the Ohanet RSC, which ends, as expected, in October. On the Berantai field development, we expect the FPSO Berantai to mobilise to the field in early 2012, with first gas from the field expected shortly thereafter.
With a strong financial position, a differentiated and competitive offering and a proven track record in project execution, we are confident that we will continue to deliver superior value for our customers and sector-leading returns for our shareholders.
Following on from the creation of the Integrated Energy Services division announced in June, with effect from 1 January 2012, Marwan Chedid, currently Managing Director of Engineering & Construction Ventures, will become Chief Executive of the Engineering, Construction, Operations & Maintenance (ECOM) division, and will report to Ayman Asfari, Group Chief Executive. The ECOM division will comprise the following three business units:
- Onshore Engineering & Construction: formed by bringing together the existing Engineering & Construction and Engineering & Construction Ventures business units
- Offshore Projects & Operations (currently known as Offshore Engineering & Operations)
- Engineering & Consulting Services (currently known as Engineering Services)
We also note, in accordance with paragraph LR 9.6.11R(3) of the Listing Rules of the UK Listing Authority, that with effect from 1 January 2012, Maroun Semaan will be appointed President, having been Group Chief Operating Officer since 1 January 2009. Maroun will lead the development of a number of major strategic initiatives and will act as executive sponsor for programmes in the areas of business and strategic relationship development, cost optimisation, technical improvement and organisational capability. Maroun’s role on the Petrofac Limited Board and executive management committees will remain unchanged.
(1) The following restatements were made in the 2010 comparatives:
• the directors have re-considered the nature of the contractual commitments to a joint venture on a lump sum construction contract in the Engineering & Construction reporting segment and as a result, US$13,426,000 included in non-controlling interests in the statement of financial position at 1 January 2010 was reclassified to trade and other payables (US$9,226,000) and other reserves (US$4,200,000). In addition, US$3,662,000 of profit for the period in the 2010 income statement and US$5,381,000 shown within other comprehensive income as attributable to non-controlling interests has been shown as attributable to Petrofac. US$4,811,000 in the statement of financial position has been reclassified as trade and other payables
• a variation order on a contract in the Engineering & Construction reporting segment was agreed in the first half of 2010 but was not reflected in the interim results, leading to an understatement in revenue (US$35,200,000), cost of sales (US$3,170,000) and income tax expense (US$5,977,000). Furthermore, the group’s income tax expense was adjusted by US$1,436,000 to reflect the impact of this adjustment on the interim group tax charge
(2) Net profit for the period attributable to Petrofac Limited shareholders.
(3) Excluding the gain on the EnQuest demerger in April 2010.
(4) The group reports its financial results in US dollars and, accordingly, will declare any dividends in US dollars together with a Sterling equivalent. Unless shareholders have made valid elections to the contrary, they will receive any dividends payable in Sterling. Conversion of the 2011 interim dividend from US dollars into Sterling is based upon an exchange rate of US$1.6510:£1, being the Bank of England Sterling spot rate as at midday on 19 August 2011.
(5) 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 services and facilities management contracts, the estimated revenue attributable to the lesser of the remaining term of the contract and, in the case of life-of-field facilities management contracts, five years. The group uses this key performance indicator as a measure of the visibility of future earnings. Backlog is not an audited measure.
(6) Like-for-like net profit growth excludes the gain of US$124.9 million on the EnQuest demerger and the trading net profit from Energy Developments’ demerged assets of US$2.1 million for the year ended 31 December 2010.
(7) The current market expectations for Petrofac’s net profit for the year ending 31 December 2011 are based on forecasts provided to Petrofac by 21 equity analysts since publication of the group’s 2010 Final Results in March 2011. The average of those forecasts is US$514 million.
(8) Order intake comprises new contracts awarded, growth in scope of existing contracts and the rolling increment attributable to contracts which extend beyond five years. Order intake is not an audited measure.
(9) On a fully diluted basis assuming the full conversion of all convertible securities and exercise of all outstanding warrants and options.