Petrofac Limited ( PFC) Petrofac Limited: RESULTS FOR THE YEARED
31 DECEMBER 2022 27-Apr-2023 / 07:00 GMT/BST
-----------------------------------------------------------------------------------------------------------------------
PETROFAC LIMITED
RESULTS FOR THE YEARED 31 DECEMBER 2022
-- Challenges in E&C partially offset by strong performance
in Asset Solutions and IES
-- Business performance EBIT loss of USUSD(205) million(1)
-- Reported net loss of USUSD(310) million(2) inclusive of
separately disclosed items
-- Healthy total Group pipeline of USUSD51 billion scheduled for
award in the period to June 2024
-- Net debt of USUSD349 million(3) and liquidity of USUSD506
million (4) at 31 December 2022
-- Bank facilities extended to October 2024
-- Backlog of USUSD3.4 billion at 31 December 2022
-- Share of EUR13 billion TenneT framework agreement and first
contract award secured in Q1 2023
Year ended 31 December 2022 Year ended 31 December 2021(5)
USUSDm Business Separately disclosed Reported Business Separately disclosed Reported
performance items performance items
Revenue 2,591 n/a 2,591 3,038 n/a 3,038
EBITDA (126) (12) (138) 56 (142) (86)
EBIT (205) (7) (212) (12) (177) (189)
Net loss(2) (284) (26) (310) 3 (248) (245)
Tareq Kawash, Petrofac's Group Chief Executive since 1 April
2023, commented:
"Petrofac's performance for 2022 was severely impacted by the
challenges in the Group's legacy E&C portfolio, which continues
to feel the direct and indirect effects of pandemic delays. We are
working resolutely to put these challenges behind us, and to
rebuild our backlog - such as the recent multi-year, multi-platform
Framework Agreement in support of TenneT's 2GW offshore wind
programme. Meanwhile, IES is performing well and Asset Solutions
continues to provide us with attractive growth opportunities.
"I joined Petrofac because I see the business is a trusted
project delivery partner, with significant opportunity for growth
and value creation. I have known the business for many years and
believe strongly in the business model and Petrofac's
differentiated competitive position. We have an exceptional
Engineering, Procurement, Construction and Operations capability
that is well positioned to deliver and support critical energy
infrastructure. In an increasingly active market, we must be
selective and disciplined as we grow our order book over the coming
years. I am impressed by the people at Petrofac and I'm excited to
work together to deliver the Group's potential." DIVISIONAL
HIGHLIGHTS Engineering & Construction (E&C)
2022 was another challenging year for E&C as we progressed
with the completion of many of the legacy Covid-19 affected
projects in the portfolio and new industry awards were further
delayed. As a result, financial performance was adversely affected
by unrecovered cost overruns and delays to the realisation of
working capital balances.
Cost overruns related principally to two areas: the Thai Oil
Clean Fuels contract and other legacy contracts completed or
substantially completed in the year (6).
On the Thai Oil Clean Fuels contract, due to the scale and
complexity of this project and the schedule delays suffered during
the pandemic, the additional work required to complete the project
and recover lost time led to additional costs. Going forward, we
expect to recover a portion of these additional costs, however, in
the meantime, we remain focussed on working with our client and
partners to safely and successfully deliver this unique
project.
In addition, in a challenging commercial environment, we have in
some cases suffered adverse outcomes on commercial settlements in
the remaining portfolio of contracts to release working
capital.
Following the impact of these challenges, E&C reports the
following financial results for the 12 months ended 31 December
2022 (1)
-- Revenue down 33% to USUSD1.3 billion (2021 restated(5):
USUSD2.0 billion)
-- EBIT loss of USUSD299 million (2021 restated(5): USUSD62
million)
-- EBIT margin down to (22.8)% (2021 restated(5): (3.2)%)
Industry awards were lower than expected again in 2022, and, as
a result, E&C's new order intake for the year was lower than
prior years at USUSD0.5 billion (2021: USUSD1.2 billion),
comprising an EPC contract in Algeria and net variation orders.
In June 2022, Petrofac and Hitachi Energy entered into a
collaboration to provide joint grid integration and associated
infrastructure to support the rapidly growing offshore wind market.
This collaboration led, subsequent to the year end, to the award of
our largest ever Framework Agreement with TenneT, in support of its
2GW offshore wind programme. Worth approximately EUR13 billion to
the partnership, the multi-year Framework Agreement was accompanied
by the first platform contract award which was added to backlog in
Q1 2023.
The market outlook for the remainder of 2023 and beyond remains
positive. Following a decade of underinvestment, a renewed focus in
the sector on secure, affordable, sustainable energy provides a
backdrop for awards in the short and medium-term. E&C's
addressable pipeline remains healthy, with a potential USUSD40
billion in customer opportunities scheduled for award in the period
to June 2024. This includes bids in the proposal process of
approximately USUSD12 billion and a further USUSD1.5 billion where
we remain at preferred bidder stage. Asset Solutions
Asset Solutions delivered another robust performance in 2022, in
line with guidance, with a strong book-to-bill ratio of 1.2x for
the year, with each of the service lines (Asset Operations, Asset
Development and Well Engineering & Decommissioning) delivering
growth. We maintained our core 40% market share in the UK and
renewal rate of 80% for operations and maintenance contracts.
Internationally, we have expanded our operations within new and
existing geographies, with awards across each service line. In
particular, 2022 saw great success in driving forward our late-life
asset management and decommissioning service offerings, with
significant awards in Australia and the Gulf of Mexico.
Operational performance has continued to remain robust, with
healthy margins, albeit reduced compared with the prior year due to
the roll-off of certain historic high-margin contracts and the
impact of an increased proportion of pass-through revenue.
Asset Solutions reports the following financial results for the
12 months ended 31 December 2022(1)
-- Revenue up 4% to USUSD1.2 billion
-- EBIT of USUSD60 million (2021: USUSD74 million)
-- EBIT margin of 5.2% (2021: 6.7%)
-- USUSD1.4 billion of awards (2021: USUSD1.0 billion),
representing a book-to-bill of 1.2x
The strong momentum we have gained over the last two years in
new energies continued in 2022, with a series of early-stage awards
and strategic alliances with technology providers. This leaves us
well positioned over the medium-term to secure engineering,
procurement and construction scopes and other execution phase
project work, as projects reach final investment decision.
Integrated Energy Services (IES)
IES delivered strong financial performance in the year,
reflecting the increased production and higher oil prices realised.
Net production reflected a full year's production from the East
Cendor development, which commenced in June 2021, the reinstatement
of the main Cendor field production and other well workovers. IES
generated positive free cash flow in the year as a result of Block
PM304 performance, as well as receiving USUSD98 million of
consideration from the divestments of the Greater Stella Area and
the Mexico operations.
IES reports the following financial results for the 12 months
ended 31 December 2022(1)
-- Revenue up 174% to USUSD137 million? Average realised oil
price up 49% to USUSD112/boe ? Net production up 97% to
1,261kboe
-- EBITDA up USUSD88 million to USUSD109 million SEPARATELY
DISCLOSED ITEMS (7)
The reported net loss of USUSD310 million (2021 restated(5):
USUSD245 million) includes a net charge of USUSD26 million (2021:
USUSD248 million). This predominantly related to:
-- USUSD(5) million impairment reversal (net) primarily
resulting from a review of the carrying amount of theinvestment in
Block PM304 in Malaysia
-- USUSD(10) million of positive fair value re-measurements
(net), primarily resulting from the improved finalsettlement
relating to the divestment of the Group's operations in Mexico
-- USUSD18 million financing related fair value loss associated
with the embedded derivative in respect of theRevolving Credit
Facility
-- USUSD10 million of cloud ERP software implementation
costs
-- Other net separately disclosed items of USUSD13 million
including: restructuring and redundancy costs, aloss on the sale of
the deferred consideration in relation to the divestment of the
Greater Stella Area operations,and professional service fees in the
Corporate reporting segment CASH FLOW, NET DEBT AND LIQUIDITY
Free cash outflow for the year of USUSD188 million principally
reflected the net cash outflow used in operating activities - which
included the payment of the USUSD104 million SFO court penalty -
and higher interest payments, partially offset by higher divestment
proceeds.
Net debt, excluding net finance leases, increased to USUSD349
million at 31 December 2022 (2021: USUSD144 million), driven by the
free cash outflow in the year.
The Group had USUSD506 million of liquidity(4) available at 31
December 2022 (2021: USUSD705 million).
In the short term, the Group is reliant on a small number of
relatively high value collections in respect of the conclusion of
historical contracts, settlements and new awards. Based on the
recent progress made, the Directors are confident that the expected
timing and realisation of these collections are reasonable and
reflect their assessment of the most likely outcome. However, as
the resolution of these matters is not wholly within Petrofac's
control, there remains a level of uncertainty which is disclosed
within note 2.5 to the consolidated financial statements. EXTENSION
OF DEBT FACILITIES
Following the capital raise and the refinancing completed in
2021, the Group extended its banking facilities in April 2023. The
Group therefore now has facilities consisting of USUSD600 million
of senior secured notes (due 2026), a USUSD162 million revolving
credit facility and two bilateral loan facilities totalling USUSD90
million all of which mature in October 2024. DIVID
The Board recognises the importance of dividends to shareholders
and aims to reinstate them in due course, once the Company's
performance has improved. ORDER BACKLOG
The Group's backlog decreased 15% to USUSD3.4 billion at 31
December 2022 (2021 restated(5): USUSD4.0 billion), reflecting low
new order intake in E&C due to industry delays to awards,
partially offset by strong order intake in Asset Solutions.
31 December 2021
31 December 2022
(restated) 5)
USUSD billion USUSD billion
Engineering & Construction 1.6 2.4
Asset Solutions 1.8 1.6
Group backlog 3.4 4.0 OUTLOOK
The outlook for new awards in E&C remains robust, supported
by high energy demand and increased focus on energy security and
the energy transition. E&C is well positioned on a number of
other near-term prospects as evidenced by the recent multi-year,
multi-platform Framework Agreement award in support of TenneT's 2GW
offshore wind programme. It has USUSD1.5 billion of opportunities
at preferred bidder stage, and a further USUSD3 billion of bids
submitted. Bidding activity remains high, with a total pipeline
scheduled for award by June 2024 of approximately USUSD40 billion,
of which USUSD23 billion is scheduled for award in 2023.
E&C has secured revenue of USUSD0.9 billion for 2023.
Approximately half of this revenue comes from contracts with no
future margin contribution. Furthermore, new awards secured in 2023
are not expected to contribute to margins until next year. Coupled
with the adverse operating leverage due to the small portfolio of
active contracts, we expect a small EBIT loss in E&C in 2023.
Our healthy pipeline and projected order intake in 2023 mean that
we remain confident of delivering a return to profitability and
positive cash flow in 2024 and significant growth in E&C over
the medium term.
Asset Solutions has USUSD2.5 billion of bids submitted as part
of a USUSD11 billion pipeline of opportunities scheduled for award
by June 2024, with USUSD8 billion scheduled for award in 2023.
Asset Solutions has secured revenue of USUSD1.2 billion for
2023. The business is expected to continue to grow, with revenue
growth driven by focused geographic expansion and new order intake
in Well Engineering & Decommissioning in 2022. We expect a
healthy EBIT in 2023 albeit lower than 2022, reflecting the further
roll-off of certain high-margin contracts and a higher proportion
of pass-through revenue.
IES is expected to deliver another robust production performance
in 2023, with production marginally lower than 2022. At USUSD85/bbl
oil price, EBITDA is expected to be in the range USUSD65 million to
USUSD75 million, taking into account hedging.
At Group level, we expect cash flow to be broadly neutral in
2023, with upside potential depending on the progress made in
unwinding working capital balances. Included in the underlying cash
flows are capex of USUSD25-35 million, tax payments of USUSD70-80
million (relating to prior periods) and interest costs of USUSD80
million.
The near-term objectives for the Group are clear: to leverage
our healthy pipeline of opportunities to increase backlog; and to
release existing working capital to support liquidity. Good
progress has been made in the year to date with the TenneT award,
an extension of bank debt facilities and efforts to release working
capital. BOARD CHANGES
Further to the announcement made on 22 November 2022, the
Company welcomed Tareq Kawash as Group Chief Executive and
Executive Director, succeeding Sami Iskander, with effect from 1
April 2023. NOTES 1. Business performance before separately
disclosed items. This measurement is shown by Petrofac as a meansof
measuring underlying business performance (see note 4 to the
consolidated financial statements). 2. Attributable to Petrofac
Limited shareholders. 3. Net debt comprises interest-bearing loans
and borrowings less cash and short-term deposits (i.e. excludesIFRS
16 lease liabilities). 4. Gross liquidity of USUSD506 million on 31
December 2022 consisted of USUSD450 million of gross cash and
USUSD56million of undrawn committed facilities. Gross cash included
USUSD12 million held in certain countries whose exchangecontrols
significantly restrict or delay the remittance of these amounts to
foreign jurisdictions. It also includedUSUSD203 million in joint
operation bank accounts which are generally available to meet the
working capitalrequirements of those joint operations, but which
can only be made available to the Group for its general
corporateuse with the agreement of the joint operation partners. 5.
As referenced in the Trading Update on 12 April 2023, the
consolidated financial statements include prior year adjustments
including one relating to the Thai Oil Clean Fuels project. This
adjustment reduces the 2021EBIT comparator by USUSD48 million. The
full details of the prior year adjustments are detailed in note 2.9
to theconsolidated financial statements. 6. Completed and
substantially completed contracts: contracts where (i) a
Provisional Acceptance Certificate(PAC) has been issued by the
client, or (ii) transfer of care and custody (TCC) to the client
has taken place, or(iii) PAC or TCC are imminent, and no
substantive work remains to be performed by Petrofac. 7. Further
information in relation to the separately disclosed items is
detailed in note 6 to theconsolidated financial statements.
PRESENTATION
Our full year results presentation will be held at 8.30am today
and will be webcast live via: https://
broadcaster-audience.mediaplatform.com/#/event/6436bcfd9455ad2bacfa0dfc
SEGMENTAL PERFORMANCE AND FINANCIAL REVIEW
Click on, or paste the following link into your web browser, to
view our Segmental performance and Financial review for the year
ended 31 December 2022
https://www.petrofac.com/media/f1kpv0rs/petrofac-fy-2022-segmental-performance-financial-review.pdf
GROUP FINANCIAL STATEMENTS
Click on, or paste the following link into your web browser, to
view the Group financial statements of Petrofac Limited for the
year ended 31 December 2022
https://www.petrofac.com/media/zaulcl20/petrofac-fy-2022-financial-statements.pdf
The linked documents are extracts from the Group's Annual Report
and Accounts for the year ended 31 December 2022. Page number
references refer to the full Annual Report when available.
S
Disclaimer:
This announcement contains forward-looking statements relating
to the business, financial performance and results of Petrofac and
the industry in which Petrofac operates. These statements may be
identified by words such as "expect", "believe", "estimate",
"plan", "target", or "forecast" and similar expressions, or by
their context. These statements are 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 expressed in these
statements and neither Petrofac nor any other person accepts any
responsibility for the accuracy of the opinions expressed in this
presentation or the underlying assumptions. No obligation is
assumed to update any forward-looking statements.
For further information contact:
Petrofac Limited
+44 (0) 207 811 4900
James Boothroyd, Head of Investor Relations
James.boothroyd@petrofac.com
Sophie Reid, Group Head of Communications
Sophie.reid@petrofac.com
Teneo (for Petrofac)
+44 (0) 207 353 4200
petrofac@teneo.com
Martin Robinson
LEI 2138004624W8CKCSJ177
NOTES TO EDITORS
Petrofac
Petrofac is a leading international service provider to the
energy industry, with a diverse client portfolio including many of
the world's leading energy companies.
Petrofac designs, builds, manages and maintains oil, gas,
refining, petrochemicals and renewable energy infrastructure. Our
purpose is to enable our clients to meet the world's evolving
energy needs. Our four values - driven, agile, respectful and open
- are at the heart of everything we do.
Petrofac's core markets are in the Middle East and North Africa
(MENA) region and the UK North Sea, where we have built a long and
successful track record of safe, reliable and innovative execution,
underpinned by a cost effective and local delivery model with a
strong focus on in-country value. We operate in several other
significant markets, including India, South East Asia and the
United States. We have 7,950 employees based across 31 offices
globally.
Petrofac is quoted on the London Stock Exchange (symbol:
PFC).
For additional information, please refer to the Petrofac website
at www.petrofac.com
-----------------------------------------------------------------------------------------------------------------------
Dissemination of a Regulatory Announcement, transmitted by EQS
Group. The issuer is solely responsible for the content of this
announcement.
-----------------------------------------------------------------------------------------------------------------------
ISIN: GB00B0H2K534
Category Code: ACS
TIDM: PFC
LEI Code: 2138004624W8CKCSJ177
OAM Categories: 1.1. Annual financial and audit reports
Sequence No.: 239839
EQS News ID: 1618383
End of Announcement EQS News Service
=------------------------------------------------------------------------------------
Image link:
https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=show_t_gif&application_id=1618383&application_name=news
(END) Dow Jones Newswires
April 27, 2023 02:00 ET (06:00 GMT)
Petrofac (LSE:PFC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Petrofac (LSE:PFC)
Historical Stock Chart
From Apr 2023 to Apr 2024
