Pathways to

growth

Lamprell plc Annual Report and Accounts 2021

Lamprell is transforming its business

to thrive in the energy transition.

We have gained a foothold in energy

markets with significant barriers to

entryand continue to evolve the

business to deliver more sustainable

and differentiated solutions. We are

committed to working to generate

valuefor all of our stakeholders.

Front cover

The front cover is a graphic representation

depicting Lamprell’s three business units:

Renewables, Oil&Gas and Digital. We

continue toevolve our strategy with the

developing needs of the energy industry.

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.

www.lamprell.com

Highlights

Record safety performance despite ongoing COVID-19 challenges with

TRIR of 0.10

Solid operational delivery against a backdrop of widespread distress in

the supply chain

Renewables segment grown to over 50% of total bid pipeline

First two Saudi Aramco LTA projects awarded

Digital business unit making notable progress founded on solid financial

and industry partnerships

Board recommended all-cash offer by two major shareholders to

acquire Lamprell, as this represents a viable solution for immediate

severe liquidity challenges

Successful completion of debt and equity fund raise in Q4 2021

* 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, adjusted EBITDA, adjusted 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 =>> 150 and 151 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 the 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.

** USD 47m is restricted (2020: USD 56m).

*** Our greenhouse gas emissions increased in 2021 due to diesel consumption for an expanded operational area we

acquired in 2020 =>> 32.

Strategic report

Highlights 01

Chair’s statement 02

At a glance 04

Chief Executive Officer’s review 06

Our business model 08

Renewables 10

Oil & Gas 14

Digital 18

Our key performance indicators 22

Engaging with our stakeholders 24

Sustainability 28

Non-financial information statement 41

Financial review 42

Viability statement 45

Risk and risk management 46

Principal risks 48

Governance

Report on corporate governance 52

Introduction by the Chair

to corporate governance 52

Board of Directors 54

Board leadership and

Company purpose 56

What the Board did in 2021 59

Stakeholder engagement 60

Division of responsibilities 62

Composition, succession and evaluation 64

Nomination and Governance

Committee report 66

Audit, risks and internal control 68

Audit and Risk Committee report 70

Remuneration and Development

Committee report 72

Directors’ remuneration report 74

Directors’ report 88

Financial statements

Independent auditor’s report

to the members of Lamprell plc 90

Consolidated income statement 100

Consolidated statement

of comprehensive income 101

Consolidated balance sheet 102

Company balance sheet 103

Consolidated statement

of changes in equity 104

Company statement

of changes in equity 105

Consolidated cash flow statement 106

Company cash flow statement 107

Notes to the consolidated

financial statements 108

Other information

Additional information 150

Glossary 152

Revenue (USD m)

388.8

2020: 338.6

Adjusted EBITDA* (USD m)

(19.9)

2020: 3.9

Net (loss)/profit (USD m)

(60.0)

2020: (53.4)

(Loss)/EPS diluted (cents)

(16.98)

2020: (15.63)

Net cash* (USD m)

53.0**

2020: 112.4

Training (000 hours)

288.8

2020: 218.7

GHG emissions*** (tonnes CO

e gross)

44,847

2020: 26,304

Safety TRIR (rate per 200,000 hours)

0.10

2020: 0.15

Renewables

=>> 10

Oil & Gas

=>> 14

Digital

=>> 18

Lamprell plc Annual Report and Accounts 2021 01

OIL & GASRENEWABLES DIGITAL

Chair’s statement

Pathways to growth

Lamprell is firmly aligned with the

energy transition with a foothold

in significant growth markets of

offshore wind and oil & gas.

John Malcolm

Chair

Dear Shareholders

Thank you for your continued support as

Lamprell delivers on its strategic priorities

against the continuing COVID-19 disruptions.

The Group has transformed noticeably over

the past five years and, having announced a

strategic reorganisation in early 2021, is now

on course, subject to resolving its acute

liquidity and funding requirements, for an

even closer alignment with the energy

transition. The transformation has not been

straightforward and we, like everyone in the

energy landscape, have fought the COVID-19

pandemic headwinds and their impacts on

our productivity, new awards and financial

performance. Multiple lockdowns, severe

travel restrictions, self-isolation requirements

and, more noticeably, the loss of productivity

in our supply chain were the main drivers of

our USD 19.9 million adjusted EBITDA loss.

The Group net loss was USD 60.0 million.

I would like to commend everyone at

Lamprell for another year of excellent safety

performance. In a period of strict COVID-19

restrictions and a multitude of impacts on

daily operations, the uncompromising effort

to deliver our projects safely really stands out.

I am also pleased with the progress made by

our Sustainability Committee in setting out

our priorities for responsible operations =>>

28. We started the year by announcing that

we would drive the Group towards three

distinct business units – Renewables, Oil &

Gas and Digital – as a means to implement

our strategic goals. Our roots as a Middle

Eastern regional rig builder are valued by our

long-standing customers and recognised by

new and prospective clients. Today Lamprell

firmly stands as a global energy partner with

aclear growth strategy and a foothold in

markets with significant barriers to entry. Our

capacity and track record in serial renewables

fabrication have earned us solid credentials in

an industry with double-digit annual growth

rates. Our investment in Saudi Arabia and our

four-decade history in serving our clients in

the Middle East have enabled us to become

one of the select few partners on Saudi

Aramco’s LTA programme. With the

development of our digital business, Lamprell

is aiming to ensure it remains a quality partner

to its clients, one that is able to address their

growing need for new technology and unlock

its significant value.

Our renewables business has seen steady

growth in its bid pipeline since we took on

ourfirst offshore wind project in 2016.

In2021, as net zero carbon targets and the

energy transition dominated the headlines,

our pipeline of renewables projects grew

from USD 2.5 billion to USD 4.6 billion,

exceeding the value of prospective oil &

gasprojects for the first time in our history.

This isthe beginning of a significant increase

in opportunity as offshore wind is set to

rampup commissioned capacity through the

coming decade. There are currently around

adozen yards globally that can provide

adequate facilities and demonstrate proven

experience for the complex serial work that

Lamprell specialises in. With nearly 10,000

foundations required over the next ten years,

global fabrication capacity will be put under

significant pressure. Lamprell, with its track

record in jacket fabrication for the UK’s

leading offshore wind farms, is well

positioned to benefit from this growth.

The oil & gas industry has experienced some

of the most dramatic shockwaves over the last

eight years, only to see a steep recovery in oil

prices recently =>> 14 as the energy crisis

unravelled to expose significant

underinvestment and the global supply

squeeze was amplified by the war in Ukraine.

Hydrocarbons will continue to play a critical

role in supplying the world with energy for

many years and will therefore remain a core

pillar of Lamprell’s operations in the near term.

Our Board too has evolved to better match

our strategic ambition. We welcomed

Motassim Al Maashouq as an independent

Non-Executive Director =>> 55. Motassim

brings nearly four decades of experience at

Saudi Aramco, and his insight has been

extremely helpful in progressing the strategy

for our Oil & Gas business unit. We were also

pleased to broaden our Board credentials

with the appointment of Jean Marc Lechene

=>> 55 a former renewables executive. James

Dewar has decided to step down from his role

as a Non-Executive Director after more than

four years on the Board and as Chair of our

Audit and Risk Committee. We had

commenced a process to find a replacement

but this process has been put on hold

pending outcome of the offer process

detailed below. In the meantime, Debra

Valentine has agreed to step into the role

onan interim basis.

In 2021 the primary focus for Lamprell was

toensure our business development goals

were matched by a funding strategy. In Q4,

we were pleased to receive the support of

ourshareholders and lenders during the first

phase of this strategy when we raised USD

30.1 million of equity and a USD 45 million

working capital facility, which helped alleviate

the immediate pressure on our ongoing

working capital requirements. Management

then continued to pursue a number of

financing and strategic options with a view

tofinalising these in Q2 2022. In the absence

of adequate debt finance solutions, the

Groupmanagement and Board consulted

extensively with the major shareholders to

gauge their support foran equity raise as a

means to meet its USD120-150 million

balance sheet and growth funding target.

Inlight of the challenging equity markets and

the acute liquidity pressure, this option did not

receive sufficient support from shareholders.

The Group then received a combined all cash

offer to acquire the entire issued and to be

issued share capital of Lamprell PLC from

Blofeld Investment Management, a 25%

shareholder, and AlGihaz Holding Closed

Joint-Stock Company a 19.7% shareholder.

The offer includes a Bridge Loan Facility to

assist with immediate working capital and

capital expenditure requirements. Without an

agreement on an equity-based financing

solution, and mindful of the acute liquidity

needs of the Group, the Board views this offer

as a viable pathway to resolve the immediate

funding obligations and severe liquidity

concerns. In the absence of any alternatives,

the Group will not be in the position to trade

solvently should this offer not proceed to

completion. On 21 July 2022, Thunderball

Investments Limited (a newly formed

company owned by Blofeld Investment

Management Limited and AlGihaz Holding

Closed Joint-Stock Company) and

(collectively referred to as “Thunderball”)

Lamprell’s Board of Directors announced

theterms of a recommended cash offer

tobemade by Thunderball to acquire the

issuedand to be issued share capital of

Lamprell PLC. Further details are set out

onthe Company website and its impact on

goingconcern, including the related material

uncertainty, are set out in the going concern

section of the Financial Review =>> 43.

Energy market fundamentals have

demonstrated significant growth both in

renewables and oil & gas in recent months

and the Board is confident in the increasing

opportunity set that lies ahead for Lamprell.

The Group’s credentials and experience

coupled with a timely funding strategy will

enable it to deliver returns on this opportunity

in the near to medium term.

John Malcolm

Chair

The early years

The Lamprell family established the business

in 1976 during the oil & gas boom

> Establishes itself as a fabricator

specialising in onshore and offshore

oil&gas projects

> Forms rig refurbishment division servicing

land and offshore jackup rigs

> Wins contracts to build and deliver its first land

rig, then its first new build offshore jackup rig

> Lists on the London Stock Exchange (FTSE 250)

in2006

> Enters renewables market delivering its

first wind farm installation vessels

> Wins three major wind farm foundations

projects in four years

> Joins a strategic partnership with IMI, and

enters Saudi Aramco’s LTA programme

> Initiates first Hamriyah yard reconfigurations to

improve serial fabrication

> Forms a partnership with Injazat/G42

to develop digital concepts

> Begins a partnership with a leader in

cutting edge simulation technology,

Akselos

> Wins its first two Saudi Aramco LTA

construction projects

> Signs a capacity reservation agreement for the

Moray West offshore wind farm

> ‘Lamprell reimagined’ is born with

the establishment of three distinct

business units:

A proud

history and

apurposeful

future

Lamprell

reimagined

Our energy transition begins

Lamprell diversifies its offering by entering

therenewables market

A new decade with new directions

Lamprell continues to expand by forming strategic

partnerships in the technology industry

Strategic report

02 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 03

At a glance

Over 45 years’ experience

delivering world-class projects

What we do

Where we operateWho we are

Lamprell is a leading provider of services to the international

energy sector. Driving strategy and growth through its

Renewables, Oil & Gas and Digital business units, underpinned

by almost half a century of expertise, the Group has worked hard

to establish its reputation for delivering projects safely, on time

and to budget. The Company employs more than 4,000 people,

with its primary facilities located in Hamriyah, in the UAE.

Combined, the Group’s facilities cover approximately 800,000m

with over 1.5 km of quayside. In addition, Lamprell has facilities

in Saudi Arabia through a joint venture agreement.

Our purpose

Lamprell’s purpose is to provide

best-in-class project services and

execution solutions for the energy

industry. Wedeliver this through

theimplementation of our strategic

objectives, underpinned by our

cultureand core values.

We are developing innovative

proprietary digital products through

our strategic partnerships.

Key 2021 highlights

Injazat and Lamprell announce

digital joint venture AiFlux =>> 20

Digital twin technology can

reduce materials by up to

30percent =>> 20

Early client discussions and first

digital twin pilots being deployed

Read more =>> 10

Renewables Oil & Gas

Oil & Gas

Our addressable oil & gas markets are predominantly in the Middle East,

the region with the lowest hydrocarbon lifting costs globally. With our

well-established presence in the UAE and our plans to move the centre

ofgravity for this business unit to Saudi Arabia, we are able to maximise

our local content which is a key factor in the award of new projects in

theregion.

Bid pipeline (USD billion)

3.3

as at 31 December 2021

(USD 3.5 billion in 2020)

Renewables

Our three major renewables projects have all been fabricated for the

North Sea and Lamprell has actively targeted the growing renewables

industry in its traditional European markets in recent years. In 2021, the

Company placed a larger focus on new geographies, including the USA,

which continues to gain traction.

Bid pipeline (USD billion)

4.6

as at 31 December 2021

(USD 2.5 billion in 2020)

Over the past five years, Lamprell’s management team has transformed the Company, pursuing a strategy aligned with the energy

transition from oil & gas to renewables and significantly expanding growth opportunities for the business.

Lamprell reimagined

2016 2021

Predominantly a rig builder focused on the oil & gas market

No direct exposure to Saudi Aramco

Bid pipeline of USD 2.5 billion comprising few renewables opportunities

Celebrated 40 years of service

Solid track record in the fabrication of jackup drilling rigs, land rigs

and rig refurbishment projects for the oil & gas industry

Three newly formed business units: Renewables, Oil & Gas andDigital

Saudi Aramco LTA partner with two contract wins

Bid pipeline of USD 7.9 billion with renewables component at USD 4.6 billion

Track record as one of the leading fabricators of wind turbine generator

foundations to the renewables industry

Recognised as a key player in the energy markets

Strategic report

Lamprell plc Annual Report and Accounts 2021 0504 Lamprell plc Annual Report and Accounts 2021

Chief Executive Officer’s review

Operational and strategic

delivery against COVID-19

headwinds

Dear Shareholders

As we complete our second year of working

with COVID-19, I am pleased to report solid

operational results, year-on-year revenue and

bid pipeline growth and, more importantly, a

number of significant milestones as we deliver

our growth strategy. 2021 marked a significant

reorganisation for Lamprell that put us on a

firm course towards the energy transition.

Lamprell is a transformed business, not only as

a result of a significant shift in its addressable

markets, but also as a result of continuing

investment in people, our yard and the

intense commercial focus. In 2021 alone,

ourbid pipeline grew by over 30% to USD

7.9billion, with the renewables component

growing by a remarkable 85% to provide USD

4.6 billion of opportunities. Only five years

ago, we would not have been in the position

to bid on over 90% of the projects in our

current pipeline. In that timeframe, we built

asolid track record in complex serial

renewables fabrication that can be matched

by few yards globally. We also invested in and

secured partnerships in Saudi Arabia, where

Lamprell had no direct involvement previously.

And we recognised the significant potential of

digital solutions for the energy industry, again

establishing strategic partnerships to develop

this high-potential business unit.

COVID-19 and safety

I would like to thank our operational team for

another year of excellent safety performance

and delivering a Total Recordable Injury Rate

(TRIR) of 0.10, another historic result. This

performance is particularly noteworthy in the

context of the ongoing COVID-19 pandemic,

which once again affected our productivity

and financial results. Our yards operated

throughout the year without any outages to

deliver for our clients, but it came at a cost

and the Group made an adjusted EBITDA loss

of USD 19.9 million and a net loss of USD

60.0million =>> 42.

Renewables

I am highly encouraged by the bidding

dynamics and the continuous upward

adjustments for the outlook in the

renewablesindustry. Presently there is circa

35 GW of installed offshore wind capacity

across the globe. This is expected to reach

200 GW by the end of the decade =>> 10.

For context, 1GW represents approximately

100 jacket foundations, or over one year of

Lamprell’s current capacity. We recognise the

significant fabrication capacity crunch the

industry is likely to face in the near and

medium term. Inrecent months we have seen

a clear preference for reservation agreements,

contracts reserving yard capacity ahead of

fullaward, as our prospective clients try to

address the limited global fabrication capacity

in offshore wind. That is why Lamprell has

continuously adapted its operational set-up to

improve efficiencies to ensure we are capable

of executing larger projects within shorter

timeframes. With these factors in mind, we

approved, subject to securing the necessary

funding, the construction of a renewables

production line as a capex priority for 2022.

This critical change to our yard will

significantly increase our revenue-generating

capacity by allowing us to access monopile

projects and, in future, compete for larger-

scale components for floating foundations.

Oil & Gas

Our oil & gas legacy business, and specifically

our proximity to the low-cost producers, has

provided us with exceptional operational

expertise and crucial strategic partnerships.

We are currently working on three major

projects worth over USD 500 million, all

directly or indirectly commissioned by Saudi

Aramco, our partner in the IMI joint venture.

In2021 we were successful in securing our

first two awards from Aramco’s selective LTA

programme. We continue to bid on circa

USD3 billion of opportunities within this

programme and are starting to notice a

ramp-up in bidding activity due to the

favourable oil price environment. Around the

turn of the year, we saw circa USD 10 billion

contracts awarded by major oil producers in

the MENA region to develop some of the

largest projects. We were not bidding on

these projects but crucially these awards will

take up much of the available yard capacity

and so we are confident of our competitive

standing on future awards.

Our IMI joint venture is progressing despite

aperiod of disruptions during the pandemic,

and we anticipate the commissioning of

certain zones to commence in 2022. Lamprell

invested USD 85 million out of its USD 140

million commitment in the joint venture to

date. Our shareholding in IMI has opened up

anumber ofopportunities for Lamprell: it has

enabled usto join the exclusive Saudi Aramco

LTA programme, it has been an effective

conduit of dialogue with major influencers in

the Kingdom to develop a relocation strategy

for Lamprell Oil & Gas, and it has provided us

with revenue opportunities at a time when

much of the oil & gas industry was recovering

from a crisis.

Developing our ESG strategy

With a key focus on renewables

and the energy transition, we

recognise the significance

ofsustainability for global

economies and businesses. Our

commitment to sustainability

=>> 28 forms part of our overall

Group strategy and we are

committed to operating

responsibly in all aspects of our

activities. In 2021, we took a

number of steps towards

developing our ESG strategy:

• Established a Sustainability

Committee to prioritise our ESG

matters, track progress and report

tothe Board

• Performed a materiality assessment

to prioritise the most relevant issues

for Lamprell and its stakeholders

• Received the Green Economy Mark

from the London Stock Exchange for

our 2020 performance =>> 13

What makes us different

First-class safety and quality

Value for money

Client satisfaction

Skilled workforce

Strategic location

Embracing technology

See more on our differentiators at

www.lamprell.com

Our track record and investment

provide us with an excellent

position to access growth

opportunities in our end markets.

Christopher McDonald

Chief Executive Officer

Digital

Since 2019, Lamprell has been actively

developing commercial digital solutions to

improve efficiencies in our business and for

itsclients across the energy industry. We were

pleased to have secured strategic financial

and technical partnerships with Injazat/G42

and Akselos =>> 20 to complement our

fabrication and engineering know-how.

TheDigital business unit, through its joint

venture partners and independently, is

currently focusing on four core areas of

dynamic digital twin technology, asset

integrity, the connected worker, and robotic

welding. Over the next few years, we plan to

invest in the development of specific digital

solutions and anticipate seeing positive

contribution to Group financial performance

from 2024.

Funding our future

Our business requires funding and we have

been severely cash-constrained for several

years; we have pursued several options to

alleviate these acute liquidity pressures and

deliver a funding strategy with a view to raise

USD 120-150 million to strengthen our

balance sheet, assist with major legacy

projects working capital requirements and

invest in our yard to deliver significant growth.

As we look ahead at the significant growth in

our opportunity set and the increasing scopes,

complexity and value within our bid pipeline

and also our near-term working capital

requirements, we realise the need for a much

stronger balance sheet. In late 2021, we

successfully completed the first stage of our

funding strategy by securing a circa USD 45

million working capital facility and raising

USD30 million through an oversubscribed

placing of shares =>> 42. Since then, the

Group has explored a number of alternative

financing and strategic options, including

asset monetisation, debt financing and/or

additional equity to deliver its funding strategy.

Working capital needs and the working capital

facility repayment schedule required us to

deliver these options by the end of July 2022.

Bearing in mind the uncompromising time

pressure to improve our liquidity position and

in the absence of viable funding options,

theBoard of Directors unanimously

recommended to accept a takeover offer

from two of its major shareholders, Blofeld

and AlGihaz which included a USD 145 million

bridge financing loan, which has been

partially drawn at the end of July 2022 =>> 44.

The new ownership structure can assist in

delivering Lamprell’s capital-intensive growth

strategy, whilst securing a future for its

employees, delivering some cash value for

itsshareholders and honouring its many

otherstakeholder obligations.

Christopher McDonald

Chief Executive Officer

Strategic report

06 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 07

Our business model

Evolving with the

energy transition

People

An internationally diverse,

experienced labour force, united

byastrong culture of honesty and

curiosity, aswell as high safety and

quality performance.

Financial assets

Working capital facility for the rig

projects. Completed fund raise in

Q42021 and Group received a

combined all cash offer from two

major shareholders, which included a

bridge loan facility, 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

A network of both new clients and

long-standing, strategic relationships

that allow us to understand client

needs, 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 instil 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 provide a

high barrier to entry for competitors,

and we are now tying up this

expertise with new propositions

inthe digital sector.

Customers

We aim to provide our clients with

high-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 performance

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.

Through our social investment strategy

we may extend support to the home

countries of our employees including

charitable support in those locations.

Our purpose

Lamprell’s purpose is to provide

best-in-class project services and

solutions for the energy industry.

Wedeliver this through the

implementation of our strategic

objectives, underpinned by our

culture and core values.

Our values

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.

Our strategy

We have undergone a strategic

reorganisation to increase the

Group’s focus on renewables and the

energy transition, aligning with our

customers’ needs and enabling

optimum access to opportunities

inour core markets.

Creating valueLamprell reimagined Our inputs Our business units

Renewables is a relatively new sector with

a short history compared to oil & gas. It

can take longer to convince clients of our

credentials and there is no ‘normal’ project

structure – it could be full EPCI,

procurement and construction or

fabrication only. This will affect project

durations, pricing and risk allocation.

Goals

Improving efficiencies to support our

Renewables and Oil & Gas business

units

Digitalising our systems, processes and

fabrication to increase margins on

ongoing projects

Creating new revenues for Lamprell by

collaborating with digital partners such

as Injazat/G42 and Akselos

Our rig refurbishment and EPCI projects operate according to different business models.

Funding: Typically fixed.

The key drivers: safety and quality; value

for money, although some clients opt for

‘low-cost’ models which can be risky; risk

allocation is being pushed down the

supply chain; having a robust global supply

chain network; willingness to build on

lessons learned as the industry matures.

Renewables

Digital

Oil & Gas

How we deliver

Through data management, integration

and productivity throughput

By having technology built into PPE to

ensure that we have the right people in

the right place at the right time

By creating digital twins for large assets

Through teaching welding robots to

weld complex joints

Through data gathering and analysis on

a digital platform to improve NDT and

inspection results

Factors to consider: these initiatives are at

an embryonic stage, and each has a large

existing addressable market. Lamprell

Digital’s business model will vary from

revenue stream to stream, for example,

sales or rentals of products, long-term

service contracts, subscription fees for

using the platform and so forth.

Key drivers: innovation and technology;

adding value to client business models;

personnel expertise; scalability.

Rig refurb projects

Bid duration

3 6 129

Weeks

Project

timeframe

months

Renewables offshore

wind projects

24 36 48

Months

Project

timeframe

18-24

months

or longer, depending

on how much

EPCI work is

undertaken

EPCI projects

Bid duration

Project

timeframe

18-24

months

See more on our stakeholders on =>> 24

Read more about Lamprell Renewables =>> 10

Funding: Most are on a ‘time and materials’

basis, and the contract price willgrow

during execution; however, there may be

alump sum element.

The key drivers: the ability to complete the

project on time and reliably, ensuring

clients get their assets back to work

quickly; having specialists on the job –

increasingly rarer as fewer shipyards work

on rigs; being innovative and coming up

with timely solutions to issues found

during execution.

Funding: Typically fixed lump sum projects

with the contractor holding most of the

risks, which can be factored into the price.

Risks are understood due to deep industry

experience and risk management

processes in the business.

The key drivers: a proven track record

inlarge projects with good references;

low-cost solutions through an efficient,

skilled workforce and/or strong processes;

strategic location – building locally in the

Gulf is viewed positively for projects in the

UAE and KSA; excellent safety record.

Read more about Lamprell Oil & Gas =>> 14

Read more about Lamprell Digital =>> 18

Bid duration

3 6 9

Months

See Sustainability on =>> 28

See Risks on =>> 48

See Governance on =>> 52

Strategic report

08 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 09

Market environment

Major opportunities

in global wind

market

Our strategy

Lamprell Renewables will deliver fixed and floating

wind turbine generator foundations, broadening

ouroffering by investing in a world-class renewables

production line in our Hamriyah yard in the UAE to

produce up to 150 transition pieces per year. We will

look for opportunities to move up the value chain

into EPCI, as well as seeking local content solutions

for floating wind projects based in our target

markets.

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

2021 progress

• Investment decision made to build a world-class transition

piece and monopile serial production facility in our Hamriyah

yard, capable of producing circa 150 transition pieces per year,

with start-up scheduled for the end of 2022

• Lamprell signed a capacity reservation agreement for the

Moray West offshore wind farm and has a MOU in place with

NOV for the Cerulean Wind Farm project

• Working closely with several floating wind farm customers to

secure our first order

Link to principal risks:

Key market trends

The tremendous global growth in offshore wind

continues, at a CAGR 13.5%, with an additional

200GW to be brought on stream by 2030 and a

further 128GW by 2035

Lamprell’s core markets of the UK, Europe and the US

East Coast make up over 60% of the global pipeline

Floating wind accelerates, boosted by the success of

the 2022 Scotwind Auction with 15GW of floating

wind granted seabed rights, double initial

expectations

Harnessing opportunities

Lamprell will leverage our track record in serial production and

broaden our foundation offerings to include transition pieces and

monopiles. We will support our customers in developing fixed and

floating wind projects in Europe and the US, helping them to select

technologies and deliver local content solutions.

Mitigating risks

The opportunities in foundation supply are numerous, so we will

become more selective about the projects we are able to support.

Wewill focus on key customers and geographies where we have a

track record and/or clear differentiation, using our rigorous bid-no-

bid process to screen opportunities with more attractive returns for

the Group.

1. 4C Offshore market overview report Dec 2021.

2. https://www.offshorewind.biz/2022/01/18/scotlands-new-floating-wind-projects-

what-we-know-so-far/.

SCALE

Strategic report

10 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 11

Strategy in action

Renewables

128

jackets safely delivered to our clients by year

end with the final ten delivered in H12022

First

green trade finance facility in the Middle East

awarded to Lamprell in 2021

LSE

award

Lamprell received the London Stock

Exchange’s Green Economy Mark

Introduction

Lamprell Renewables is an industry leader in

building foundations for the offshore wind

market. We have been awarded circa 140

jacket foundations since our first foundation

contract in 2016, which is in addition to the six

new build jackup installation vessels we have

delivered for the wind industry. We continue

to invest in our facilities in the UAE to broaden

our foundation offering to include transition

pieces and monopiles, as well as floating

foundations as this market segment rapidly

develops. We aim to collaborate with other

leading partners to deliver larger scopes of

work as well as move up the EPCI value chain.

Year in review

In 2021 our Hamriyah yard was focused on

building 30 jackets and suction buckets for

the Seagreen project, our third successive

wind farm project for the UK. This was a

major undertaking since the jackets were

some of the largest we have built to date,

witheach fully assembled structure weighing

2,000 tonnes or circa 60,000 tonnes overall.

It was also the first project where we

deployed our proprietary lifting frame

technology to up end fully assembled jackets

vertically. This technology has exceeded our

expectations by removing bottlenecks in the

yard to increase throughput, allowing us to

execute more work at grade (building

horizontally instead of vertically at height),

which contributed significantly to Lamprell’s

best-ever safety record in 2021 =>> 22, and

byreducing the overall jacket cost.

Despite the COVID-19 pandemic, which was

at its peak during the Seagreen project, we

successfully completed the project in Q2

2022, which is a fantastic achievement when

contrasted with how other major yards have

been impacted in Asia and globally.

As we closed 2021, we were well placed with

a number of clients that are planning to award

major contracts in 2022, and we expect to

secure a backlog of work into 2023/24. In

addition, we are supporting many floating

wind clients with technologies that are

moving into commercialisation, and we

expect this to yield significant work in the

coming decade.

Strategic future outlook

The strategic outlook for the renewables

industry and for the building of wind turbine

generator foundations is very strong and is

expected to improve month-on-month as

more wind farm developers come to market

for foundations. The strength of the market is

reflected in the significant increase in the bid

pipeline from USD 2.5 billion at the end of

2020, to USD 4.6 billion at the end of 2021,

with further growth expected over the

coming one to two years. Climate change is

amajor driver for the energy transition and

Lamprell is well placed to take advantage of

these many new prospects. For this reason,

Lamprell is adopting a ‘renewables first’

approach in the implementation of its

‘Lamprell reimagined’ strategy.

Lamprell builds offshore windfarm

foundation structures

30m 50m >50m

Evolving and strengthening our

Board to support our strategic

vision in renewables

When implementing ‘Lamprell reimagined’ =>> 2, the

importance of aligning our Board with that strategy, and in

particular the need for deeper renewables experience, was

highlighted. With the help of specialist recruitment consultants,

Lamprell looked around the market to identify candidates who

could bring renewables experience and further diversity to

ourBoard.

In December 2021, Lamprell welcomed Jean Marc Lechene,

who has a solid renewables background, as a new Director on

Lamprell’s Board. A French national, Jean Marc brings with him

a wealth of experience gained over 40 years and diversity of

thought from a European background. With his impressive

credentials =>> 55, comprising international leadership

experience in multiple areas of interest, he will undoubtedly

help support and shape the organisation’s continuing evolution.

Middle East’s first green trade

finance facility issued by HSBC

toLamprell

Lamprell was delighted to receive HSBC’s first green trade

finance facility in the Middle East and North Africa region.

Thebank raised USD 48 million to support our Seagreen

project’s execution. HSBC was the sole arranger for the

innovative facility, which was also the first green guarantee in

the MENA region. While funding for oil & gas projects is limited

and rather complex, there is a large pool of ‘green funding’

available in the market, and this was a very auspicious first step

to access capital for the Group.

Lamprell expects renewable energy projects to comprise an

increasingly large percentage of our revenue so it is important

for the Company to have access to this type of financing,

which is not only aligned with our green agenda but is also

structured efficiently. It is vital that banks and corporates work

together to further deepen the green finance market in the

Middle East, supporting the global and regional transition to

alow-carbonfuture.

We are also proud to have been part of the HSBC-sponsored

‘Living Business’ sustainability programme =>> 28.

Green Economy Mark

awardedtoLamprell

Lamprell is being recognised for its work to become a key

player in the green economy. In recent years, shareholders

aregetting serious about sustainability and have publicised

theneed for listed companies to prove their green credentials.

In July 2021, Lamprell was awarded a Green Economy Mark

bythe London Stock Exchange. First introduced in 2019,

thisclassification was created to highlight companies and

investment funds listed on all segments of the London Stock

Exchange’s Main Market and AIM that are driving the global

green economy. To qualify for the Mark, companies and funds

must generate 50% or more of their total annual revenues

fromproducts and services that contribute to the global

greeneconomy.

Thanks to our recent projects and large renewables bid

pipeline, this award helps us to deliver the message that we

have transformed from a rig builder to a modern company

which is aligned with the future of energy.

Case studies

Lamprell plc Annual Report and Accounts 2021 1312 Lamprell plc Annual Report and Accounts 2021

Strategic report

Market environment

Oil & Gas business

focused in the

Middle East region

Our strategy

Lamprell Oil & Gas will build on its strong regional

position, global supply chain and high local content

scores 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.

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

2021 progress

• Lamprell was awarded two CRPOs under the LTA to build and

install five jackets and two production deck modules

• In peak fabrication phases for IMI rigs 1 and 2 with delivery in

late 2022

• We secured 11 rig refurbishment contracts during the year,

including four from ADNOC and one major rig conversion

from BW Energy

• As part of our recent CRPO awards, we have 13 Saudi

graduates working in our UAE facilities

• We announced plans to move centre of gravity for this

business unit to Saudi Arabia; this is being implemented

in2022

Link to principal risks:

Key market trends

Global oil & gas demand has recovered strongly

fromthe COVID-19 lows of 2020

Strong demand, supply constraints due to lack of

investment and geopolitical tensions have driven

oilprices to highs not seen since 2014, with no

expectations of a decrease in the mid-term

1,2

The recovery in the oil price has improved bidding

dynamics in the Gulf, and there have been a number

of large-scale offshore awards in the Middle East

totalling circa USD 10 billion in Q1 2022 alone

Harnessing opportunities

Lamprell is a partner with Saudi Aramco in the IMI joint venture,

andwe are appointed to Saudi Aramco’s prestigious LTA programme

withan annual EPCI offshore bid pipeline of USD 3-4 billion per year,

where we expect to secure our share of awards. Lamprell is a key

provider of rig refurbishment services, and in 2021 we were awarded

with 11 new projects, with strong demand expected to continue.

Mitigating risks

The LTA bidding environment remained highly competitive

throughout 2021, although Lamprell did secure two awards during

the period =>>16. A number of LTA contractors have recently

received major awards and this is expected to cause capacity

constraints in construction yards for 2022-24, improving the bidding

environment for Lamprell.

1. https://www.reuters.com/business/energy/oil-rises-more-than-7-year-high-mideast-

tensions-2022-01-18/.

2. https://www.reuters.com/business/energy/jp-morgan-sees-oil-prices-hitting-125-

2022-150bbl-2023-2021-12-02/.

DE VELOP

Strategic report

14 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 15

Strategy in action

Oil & Gas

jackup rigs currently under construction

inLamprell’s Hamriyah yard

Saudi Aramco LTA projects awarded in 2021;

currently under construction

major rig conversion under construction

Introduction

Lamprell Oil & Gas has first-class construction

yards strategically located in the world’s most

dynamic energy region. They allow Lamprell

to deploy a full-service EPCI offering on our

offshore production and jackup rig projects as

we service the world’s largest company, Saudi

Aramco, and key national oil company,

ADNOC. Through our extensive investments

in KSA and the UAE, we are able to achieve

high IKTVA and ICV targets which are used,

inpart, to preferentially award major contracts

in these countries.

Year in review

We had a successful start to 2021 with

Lamprell’s first-ever EPCI contract awards

from Aramco under the LTA programme.

Theawards are the result of a two-year

bidding process as we worked to establish

strategies for cost-effective execution in the

Kingdom and to overcome any learning curve

challenges that are inevitably faced with

winning and executing a new project for a

major new client.

In addition to the LTA work, in the UAE, we

areover halfway towards completion on rigs 1

and 2 for ARO Drilling in KSA, working as a

subcontractor for International Maritime

Industries where Lamprell is a 20%

shareholder. Aside from the Saudi Aramco

rigwork, in Q4 2021 Lamprell was awarded a

large contract by BW Offshore to convert the

drilling rig Hibiscus Alpha to a mobile offshore

production unit. The rig order is one of the

largest conversion scopes that Lamprell has

seen in recent years, and we are progressing

the project well with expected completion in

2H2022.

Rounding out a busy year, we also successfully

completed the large EPC onshore Mahani

project for SNOC, who were delighted with

our performance. This project has multiple

phases and we are looking forward to

working with this client again in the future.

Strategic future outlook

Saudi Aramco and ADNOC have the lowest

lifting costs in the world, and they will

continue to invest strongly to support

expanding production to fill the voids left by

the lack of investment by IOCs and other

NOCs in recent years. Lamprell has invested

in the IMI yard in Saudi Arabia, which will build

the next generation of jackup rigs for the

Kingdom. Lamprell is also a key part of the

prestigious Aramco LTA programme where

projected capex spend is set to continue with

around USD 3 to 4 billion per annum.

Lamprell will work with its partners in the

IMIto determine the best way to realise value

from that investment and, in the meantime,

has decided to transition the centre of gravity

of our oil & gas business to Saudi Arabia over

time. This strategic goal will ensure that this

business unit will be closer to its expected

primary source of future revenues.

Offshore platforms

Jackup rigs

Land rigs Process modules

Lamprell fabricates various structures for the oil & gas market

Evolving and strengthening

our Board to support our

strategic vision in oil & gas

One of the key components of ‘Lamprell reimagined’ =>> 2

isthe migration of its Oil & Gas business unit to Saudi Arabia,

aregion with one of the lowest hydrocarbon lifting costs

globally and also home to the largest energy company in the

world, Saudi Aramco. To that end, Lamprell announced the

appointment of Motassim Al Maashouq, a Saudi national, as

anIndependent Non-Executive Director in September 2021.

With his in-depth knowledge of both the Kingdom and

specifically Aramco, Motassim will help Lamprell with the

process of advancing its oil & gas strategy.

Mr Al Maashouq also has a keen interest in our renewables and

digital business; his credentials =>> 55 speak for themselves,

and his contributions to the Board will be invaluable as we

continue to evolve the business both in the near and long term.

First Saudi Aramco LTA

project awards steer our

strategic journey

Securing two major contracts in 2021 under our LTA with

SaudiAramco was transformational for the business and

brought our strategic aspirations sharply into focus. They are

aclear demonstration of us moving up the value chain into

large EPCI project execution with a top-tier client.

For the first time, Lamprell will install offshore jackets

andproduction decks using LTA experienced installation

subcontractors working under our direction. The transport,

installation and logistics will be contracted by our In-Kingdom

joint venture partner, LKSA, thus building on our strategic intent

to invest in capacity and capability in Saudi Arabia.

The awards speak volumes to our oil & gas strategy and

intention to support growth inside the Kingdom, expanding

ourregional reach and building our EPCI capabilities.

We’vealso expanded our talent pool to ensure our execution

preparedness, and we’ve welcomed Saudi trainees into our

facilities as part of our CRPO execution.

ECI-backed working

capital facility granted

for oil & gas business

Lamprell was delighted to be granted a new working capital

debt facility in 2021 for the two IMI jackup drilling rig projects

we’re constructing in the UAE. This debt facility is an innovative

funding instrument because it has the novel feature of an

insurance policy backing from the Etihad Credit Insurance,

theUAE Federal export credit company. This was a hugely

significant milestone because it not only helped to address

liquidity concerns for the business =>> 42, but it is also directly

linked to our Oil & Gas business unit, which the lending

community undoubtably still supports. One of the biggest

spenders in this area is our long-standing and largest client

ADNOC, emphasising the continuing importance of our

presence in the UAE, and our client and partner in the IMI yard,

Saudi Aramco, who will continue spending in KSA, a key

territory for us.

Case studies

Lamprell plc Annual Report and Accounts 2021 1716 Lamprell plc Annual Report and Accounts 2021

Strategic report

Market environment

Lamprell’s digital

transformation

Our strategy

Lamprell Digital will be divided into two distinct

butcomplementary arms: one will focus on the

enhancements that digital products will make to

Lamprell’s core business, and the second will be

executed by way of a venture capitalist approach.

2021 priorities

• Conclude stakeholder roles and investment to commercialise

digital asset integrity and products

• Digitalise yard operations in Hamriyah and market these

proven digital products to third parties

• Build on strategic digital relationship with Akselos to market

and commercialise digital twin models to customers

2021 progress

• Injazat joint venture start-up AiFlux incorporated in Abu Dhabi

Global Market, the city’s international financial centre

• First tranche of funding released to AiFlux

• Proof of concept for robotic welding continued

• Connected worker productivity platform proof of concept

kicked off

• First commercial project undertaken utilising Akselos software

shows promising results =>> 21

• Completed an EU-backed offshore wind foundation design

optimisation =>> 20

Future outlook (2022)

• Continued development of digital solutions to reduce

Lamprell’s cost base

• Release of minimum viable product for asset integrity digital

platform and acquire first customer

• Execution of Saudi Aramco digitalisation requirements on

existing LTA project, giving us an opportunity to showcase our

health and safety monitoring product and present AiFlux’s

wider capabilities

Link to principal risks:

Key market trends

Acceleration of digital transformation within the

energy sector in support of next generation

industrypractices

Data will become standardised where all users can

access the same relevant information in the right

context at the right time. Future work will be built

onfully connected digital experiences

Harnessing opportunities

Leveraging our access to large volumes of data from our core

business activities and building on our multiple client relationships in

renewables and oil & gas, Lamprell Digital will develop technologies

inasset integrity, structural digital twins, connected worksites and

robotic welding. This will improve our efficiency and competitiveness

and enable us to commercialise digital products for wider

industryuse.

Mitigating risk

Data for each of the technologies will be collected, classified, securely

stored and analysed through one single interface rather than several,

which will enable more informed and real-time decision-making.

Inaddition, our robotic welding solution will address the ever-

increasing skills shortage in the welding of complex, high-grade

material weld joints.

EX PLORE

Lamprell plc Annual Report and Accounts 2021 19

Strategic report

18 Lamprell plc Annual Report and Accounts 2021

Strategy in action

Digital

Introduction

Lamprell Digital is developing proprietary

digital products through strategic partnerships

with Injazat/G42 and Akselos. Our core focus

includes asset integrity, engineering design,

smart non-destructive testing, predictive

maintenance and robotics. Our vision is to

develop new digital prospects so they can

bescalable, stand-alone and self-supporting

businesses based on limited capital

investment. We will also continue to

implement new digital technologies into our

business to reduce our ongoing cost base.

Year in review

AiFlux – a partnership between

LamprellandInjazat

AiFlux is now fully incorporated in Abu Dhabi

Global Market. Branding has been completed

and we are actively marketing the business to

key target clients. The CEO is Lamprell’s

former COO, providing strong continuity and

experience in Lamprell’s existing business,

and key technical roles have been filled. AiFlux

has two main products, Ai

and SiteFlux:

is a digital asset integrity platform that uses

artificial intelligence to collate, store and

manage asset data. It monitors assets through

machine learning and has the ability to link

tostructural digital twins for asset health

monitoring to support timely decision-

making. The product concept has received

client validation and AiFlux has concluded the

prototyping of the minimum viable product.

The team is deep into product development,

with the release of the first version scheduled

in 2022. We remain engaged in a proof of

concept initiative with a client for a gas plant

associated with a solar plant in Abu Dhabi and

are also completing due diligence on a smart

NDT partner opportunity.

Digital twin

First

digital joint venture with partner Injazat,

fullyoperational

operational digital twin developed for use

onLamprell’s lifting frame

30%

potential savings on offshore wind foundation

design by using digital twin software

welded joints successfully performed on live

projects using robotic welding

SiteFlux

SiteFlux is a platform that connects workers,

equipment and sites using various devices and

cameras with the purpose of increasing safety

and productivity in a yard environment. AiFlux

has been contracted to provide hardware and

develop analytics platforms for a ‘worker

productivity’ proof of concept initiative in

Lamprell’s Hamriyah facility. We collect

worker productivity data and then analyse the

results on one of our IMI new build jackup rig

projects. A proof of concept for health and

safety monitoring is scheduled to be

undertaken in Hamriyah in 2022.

Structural digital twins – a Lamprell

andAkselos initiative

Following the creation of its first digital twin

(see case study opposite), Lamprell Digital

hasengineers dedicated to monitoring the

Akselos software used to create the twin.

Weannounced the reduction of steel weights

and associated costs by up to 30% on an

EU-backed wind foundation design project,

proving that predictive digital twin technology

can unlock value from existing designs. In

2018, the EU awarded Akselos 1.4 million

euros to conduct the research and pilot

project GODESS – Global Optimal Design of

Support Structures. The GODESS philosophy

was used as the basis of our findings.

We also undertook our first commercial

project on an offshore tripod structure in

Vietnam, which confirmed the fatigue life

ofthe tubular joint and the strength of the

grout connection in 50% of the time when

compared with traditional engineering

software. We continue to feed data from

thesensors on our lifting frame back into the

model and have identified further cost-saving

opportunities.

Robotic welding

Following successful proof of concept

testingconducted over the last two years,

weare in the process of developing a formal

partnership to market two types of robotic

welding technology to the energy market.

The ‘adaptive robotic welder’ and ‘TKY robotic

welder’ will not only help combat the

shortage of welders experienced across the

industry today, but will also allow companies

to perform complex structural weld joint

configurations more efficiently and safely.

Lamprell creates first

operational digital

twin, replicating our

lifting frame

In partnership with Akselos and using proprietary technology,

Lamprell created a digital twin of a lifting frame which is being

used in our Hamriyah facility. Our 75m high lifting frame has

been swiftly upending all our jackets for the Seagreen project,

having been commissioned in the middle of 2021. With a lifting

capacity of up to 2,400t assisted by our 750t heavy lift crane, it

can accommodate jackets 40m wide and ~100m high. A digital

twin is a virtual representation of a physical structure or process

that takes real-time data as inputs and produces functional and

operational predictions as output.

We completed structural health monitoring during lifting

operations of multiple offshore wind farm jackets. Critical

components with sensors gather real-time data about the

condition and position of the asset. A cloud-based system

receives, stores and analyses the data so that the digital twin

simulates the physical asset, in this case, a lifting frame. The

continuous real-time monitoring provides insights that enable

fast decision-making and swift action to avert downtime and

reduce risks. This analysis also highlights how the design is

performing, and we are currently seeing only 60% utilisation

against the standard based design. Once proven, we estimate

that this will demonstrate a 10:1 return for similar offshore

windassets.

Robotic welding

to address global

welder shortage

There is a growing global welder shortage that will be

compounded by the huge number of major new offshore wind

farm projects being awarded from 2022 onwards and by the

increase in demand for local content. This shortage is leading

to an increased need for automated welding. Jacket foundation

structures for offshore wind farms have some of the most

complex structural weld joint configurations that Lamprell has

encountered through our many years of operation. With these

joints being made up from large diameter tubulars, heavy plate

thicknesses and high-grade materials, a consistent and reliable

welding method must be utilised to minimise human error and

maximise efficiencies. Lamprell is conducting two robotic

welding proof of concepts for both adaptive (circular) and TKY

joints. The study has highlighted potential savings of up to 60%

of welding man-hours, and once concluded, could be used to

improve Lamprell’s overall competitiveness.

Case studies

Digital twin

Lamprell plc Annual Report and Accounts 2021 2120 Lamprell plc Annual Report and Accounts 2021

Strategic report

Measuring our progress

Our key performance indicators

We use a number of key performance indicators to measure our

performance and toassess the business’ ability to deliver against

itsstrategic goals; some of these indicators arelinked to short or

long-term incentives for the remuneration of the executive team

(these aremarked with

). Targets have not been disclosed due

tothe context of the recommended offer as described on =>> 73.

Key to risks

Ability to finance business

Ability to win work

Economic conditions

Counterparty risk

Project execution

See Risks on =>> 48

Cyber threats

Contractual commitments

Third-party alliances

Failure to invest

Increasing scarcity of skilled

personnel

Operational

Financial

Sustainability

Bid pipeline

(USD billion)

2021

2019

2018

2017

2020

7.9

6.0

6.2

6.4

3.6

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.

Relevance to risk

Backlog

(USD million)

2021

2019

2018

2017

2020

343.0

522.0

470.1

540.0

137.9

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

Definition:

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. Our safety track

record is often reviewed by our

current and prospective clients as

part of the contract award process.

Relevance to risk

Definition:

Total GHG emissions from

Company operations, including

scopes 1, 2 and 3.

Strategic relevance:

GHG emissions are a key driver

ofglobal warming. Sustained

reduction in both gross and

intensity emissions are a key

element in the Company’s

strategic approach to

sustainableoperations.

Relevance to risk

Definition:

Total GHG emissions (scope 1, 2

and 3) per revenue generated.

Strategic relevance:

Emissions intensity is a key

measure of organisational

sustainability, regardless of size or

output and Lamprell will strive to

reduce this year-on-year.

Relevance to risk

Safety TRIR (Rate per 200,000 hours)

2021

2019

2018

2017

2020

0.10

0.15

0.19

0.15

0.30

GHG emissions

(tonnes CO₂

e gross)

2021

2019

2018

2017

2020

44,847

26,304

19,903

21,335

35,038

Revenue

(USD million)

2021

2019

2018

2017

2020

389.0

338.6

260.4

234.1

370.4

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.

Relevance to risk

Adjusted EBITDA (USD million)

2021

2019

2018

2017

2020

-19.9

3.9

-64.6

-35.1

-70.5

Definition:

Group loss or profit for the year

from continuing operations

beforedepreciation, impairment,

amortisation, net finance expense,

taxation and share of loss from

associates/JVs. =>> 150 for more

details on the EBITDA methodology.

Strategic relevance:

EBITDA indicates the effectiveness

of cost management as well as

operational efficiency and revenue

growth.

Relevance to risk

Net (loss)/proﬁt

(USD million)

2021

2019

2018

2017

2020

-60.0

-53.4

-183.5

-70.7

-98.1

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 the long-term sustainability

ofour operations.

Relevance to risk

Total shareholder return

(%)

2021

2019

2018

2017

2020

-29.2

26.9

-36.1

-21.8

-16.8

Definition:

The combined value of share price

appreciation and dividends paid to

shareholders divided by the share

price.

Strategic relevance:

Shareholders are a key stakeholder

group for the business and so

maximising shareholder value is a

key metric for the Board to consider

when addressing Group strategy.

Relevance to risk

Net cash*

(USD million)

2021

2019

2018

2017

2020

53.0

112.4

42.5

80.0

257.0

Definition:

Cash less borrowings at the end of

the period. =>> 150 for more details

on the net cash methodology.

Strategic relevance:

Net cash is a core indicator of

capital and balance sheet

management. A strongbalance

sheet allows the business to remain

competitive without compromising

on margin as well as address capital

requirements for strategic growth.

Relevance to risk

Total awards

(USD million)

2021

2019

2018

2017

2020

135.2

550.0

202.5

639.2

114.8

Definition:

Total value of all contracts awarded

during the reporting period.

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

GHG intensity

(tCO

e/$ revenue) x (million)

2021

2019

2018

2017

2020

115

77.68

76.43

91.14

94.60

* See Note 30 for effect of deferral

ofcreditor payments on Net Cash.

Strategic report

22 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 23

Customers

Business partners

Communities

Shareholders

Employees

Engaging with our stakeholders

How we listen and report

Our engagement process

Lamprell believes in building strong, constructive

relationships through regular stakeholder engagement.

Open and transparent communication is central

tohow we do business. We welcome the different

perspectives of our diverse stakeholder groups

andstrive to ensure the effective delivery ofour

strategy, taking into account their needs.

2 3

Listen and learn

To deliver our strategy successfully

andcreate value for our stakeholders,

itisimportant to understand what

matterstothem. We understand their

needs through listening. Considering their

insights and opinions enables robust

andsustainable decision-making at

boththe executive and

Board levels.

Plan and strategise

Knowing what our stakeholders want,

whateach of their fundamental drivers are,

helps the Board and management make

better decisions for the Company. Once

we understand the needs and wants of our

stakeholders, we work within our internal

teams to plan and strategise how, when

and to what extent we can execute

theaction plan.

Execute and

feed back

Lamprell is focused on driving long-

termsuccess by executing projects of

allkinds ina way which aims to deliver

sustainable, predictable, high-quality

performance for the benefit of all our

stakeholders. We provide feedback to

them through daily interactions with

clientsand suppliers, regular

engagementwith the investor

communityand extensivetwo-

waycommunications with

our workforce.

Customers Shareholders

Why it’s important to engage

Lamprell believes in clear, consistent,

open and honest communication with

its customers. Customer opinions and

insights are especially valuable in the

early stages of the planning and

development processes as they allow

for enhancements in cost efficiencies

and delivery of safe and on-time

projects, as well as improved risk

management.

How we engage

Through meetings, emails and

phone calls

Our CEO engages with senior

management at key customers

By holding virtual and face-to-face

meetings while adhering to

COVID-19 safety protocols

Through press releases

Via Company marketing material

including bulletins, brochures

andleaflets

Through contract bidding,

negotiation and execution

At exhibitions and conferences

Via our website and LinkedIn page

Through

Lamprelltimes

magazine

Outcomes of engagement

Two EPCI contracts awarded

bySaudi Aramco under the LTA

programme

A major rig conversion contract

awarded by BW Energy

Seagreen project successfully

delivered in 2022

11 rig refurbishment projects

awarded during the year, including

one major rig conversion from

BWEnergy

Production start-up at Mahani gas

field in early 2021

Increased bid pipeline to USD 7.9

billion of solid prospects, with USD

4.6 for renewables and USD 3.3 for

oil & gas

Signed a capacity reservation

agreement for the Moray West

offshore wind farm and have an

MOU in place with NOV for the

Cerulean Wind Farm project

Why it’s important to engage

We engage with our shareholders to

pinpoint their particular views on the

market trends, their investment drivers

and the vision of the organisation’s

future growth prospects. Investors

want to know their investments are in

capable hands and that the companies

they invest in have robust corporate

governance mechanisms in place.

How we engage

There are direct discussions with

major shareholders by our Chair,

CEO and the other Directors

Lamprell’s investor relations team

and corporate brokers manage

day-to-day investor relations

Through regulatory announcements

and press releases

Via our Annual Report

We hold regular roadshows

including a major roadshow leading

up to the fundraise in Q4 2021

Via results presentations

Through AGM or EGM meetings

Through analyst briefings

Via our website and LinkedIn page

Through

Lamprelltimes

magazine

Outcomes of engagement

‘Lamprell reimagined’ strategy

wellsupported

Successful and over subscribed

equity placing for USD 30.1 million

inQ4 2021

Two new Directors whose

backgrounds are closely aligned

tostrategy

Remuneration targets aligned with

strategic goals

Regular dialogue between key

investors and the Directors

Built up bid pipeline significantly

since 2016 with more than 50%

nowcoming from renewables

Engagement with all major

shareholders in respect of potential

capital raise and recommended offer

from two major shareholders

Section 172

The UK Corporate Governance Code 2018

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 its

stakeholders. Our Board has taken steps that

they believe will promote the Company’s

continued success for the benefit of its

members and stakeholders as a whole.

How does the Board engage

withstakeholders?

As an international construction company

with over 4,000 employees, Lamprell has a

diverse range of stakeholders, whose interests

and views the Board must take into account

when making decisions. It employs different

methods to engage with the different

stakeholder groups, and some will be more

direct than others. In particular, our Directors

work to have closer and more personal

engagement with our workforce, whether

through participation in our Employee Welfare

Forum or a ‘Chat with the Chair’. This has been

very challenging with the continuing impact

of COVID-19 but the virtual environment

hasafforded our Directors opportunities to

engage regularly; this is likely to continue

tosome degree even after the pandemic

recedes because it provides a considerable

degree of flexibility and regular interaction.

How are stakeholder interests

considered?

As part of the regular updates to the

Directorsin Board meetings, the CEO and

CFO will provide feedback from the different

stakeholder groups, whether employees,

customers, shareholders or otherwise. In

thisway the Board is able to understand the

respective drivers for stakeholder positions on

key issues and to take account of them in its

decision-making. A prime example in 2021

was the capital raise, combining the new debt

facility and new equity issuance, for which the

Board had to consider the expectations of

ourinvestors and lending banks, as well as

theinterests of the business as a whole, to

determine the preferred deal structure.

Strategic report

24 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 25

Engaging with our stakeholders continued

Business partners Communities

Why it’s important to engage

As a lead contractor, we rely heavily

onour suppliers when executing

ourprojects and failure by a supplier

typically impacts Lamprell as well.

Therefore, we encourage a culture of

‘we win, you win’ with our supply chains.

We work to establish deep-rooted

relationships with all our business

partners as this can create unique

business opportunities, often through

joint ventures such as the AiFlux

digitalbusiness.

How we engage

Regular engagement between

managers and key business partners,

online and face-to-face

Through office sharing

Via subcontractor sustainability

engagement

Effective supply chain management

processes

Via contract negotiation and

management

Working together on press releases

and media coverage

At exhibitions and conferences

At workshops

Exchanges of marketing materials

Through toolbox talks

Through the ‘Speaking Up’ hotline

Via our website and LinkedIn page

Through

Lamprelltimes

magazine

Outcomes of engagement

Lamprell formed digital joint venture

‘AiFlux’ with Injazat, a leading

regional digital enterprise

New working capital facility for USD

45 million, to fund IMI rig projects

Received the London Stock

Exchange’s Green Economy Mark

Awarded the Middle East’s first green

trade finance facility from HSBC

Improved skills base by training

employees and third-party workers

through LATC

Why it’s important to engage

With the rise in public engagement

globally, community collaboration has

become pivotal for companies. We

strive to build broad relationships with

local community and authorities, which

is critical to both the success of our

projects and to our efforts to develop

local content and capabilities. We have

always had high standards of ethics and

employee welfare, and we have now

committed to a net zero carbon target

for the benefit of our local communities

and beyond.

How we engage

Ongoing and frequent engagement

with key regulatory bodies such as

the Free Zone authorities

Activities to improve local amenities

and environment

Social welfare activities

Investment in local content

programmes

Via press releases

At exhibitions and conferences

By supporting local charities and

sponsoring events

At signing ceremonies with

localauthorities

Via our website and LinkedIn page

Through

Lamprelltimes

magazine

Outcomes of engagement

Fourth annual beach clean-up

eventheld

Sustainability month campaign

incorporating tree planting and

children’s drawing competition

Trained 67 Saudi apprentices as part

of our IMI projects

Relationship with Don Bosco Mondo

Foundation

Employee discounts at local outlets

Continued support of Saudi

Aramco’s In-Kingdom Total Value

Add and ADNOC’s In-Country Value

Our engagement in action

Approach to

climate change

Lamprell has been an early adopter when it comes to transitioning

into the renewables industry, having delivered six multi-purpose

vessels and over a hundred wind turbine foundations to date.

Importantly, we have also been transforming the business to reflect

the energy transition and have now launched our new zero carbon

target =>> 32, all of which demonstrates our commitment to the

reflecting needs of our stakeholders. Advancing our commitment

and progress towards net zero underpins our sustainability agenda.

Workforce engagement

In 2021 two significant milestones were honoured in the UAE.

Aswell as marking its 50th anniversary, the country has been

celebrating on the world stage at Expo 2020, which was held

inDubai.

Where we can, giving something to our communities is important

tous. Through Expo 2020’s social investment initiatives, Lamprell

took around 1,000 of its yard employees to visit the Expo in 2021.

Developing local talent

Developing local talent through our projects is not just best practice;

it is a ‘win-win’ for everyone. With our two rigs for IMI in Saudi Arabia,

to date we have been able to second 67 Saudi apprentices through

LATC and into our Hamriyah yard for on-the-job training. Once

completed, the apprentices graduate and return to Saudi to continue

their training and development.

Employees

Why it’s important to engage

Our employees are the backbone of

our business. Regular engagement

reinforces the Company culture,

reduces staff turnover, increases

productivity, cascades our core values

down the organisation and ultimately

creates a profitable business. Well-

informed and highly-motivated

employees perform better, as

evidenced in 2021 with Lamprell

delivering its best-ever safety result.

How we engage

Through ‘Chats with the Chair’

Directly at our Employee Welfare

Committee or the newly launched

Workforce Assembly

Via our induction process, welcome

handbooks and employment

contracts

Through our intranet, website and

LinkedIn page

Via a weekly CEO business briefing

email and regular CEO town

hallmeetings

With the yard workers through daily

toolbox talks or training at LATC

At performance and development

reviews

Through the ‘Speaking Up’ hotline

Via initiatives like employee surveys,

our annual photography competition

and online wellness talks

Via our website and LinkedIn page

Through

Lamprelltimes

magazine

Outcomes of engagement

Continued with measures to mitigate

the threat of COVID-19 and protect

employee health

98% of our workforce fully

vaccinated

Record TRIR of 0.10

288,829 hours of training conducted

by L ATC

20 employee well-being and

development events held during year

Training 14 Saudi nationals at

ourfacilities as part of our CRPO

projects

Online TRACE anti-bribery training

course rolled out

Strategic report

26 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 27

Sustainability

Making a difference for

all of our stakeholders

Our commitment to sustainability

forms part of our overall Group

strategy and also encompasses the

ESG aspects of our activities.

Our approach to sustainability

Sustainability is required for the long-term

success of the business and is strengthened

by our culture, our values and the supporting

framework of the Company’s management

system. In 2021, Lamprell’s sustainability

journey stepped up a gear following the

launch of its Sustainability Committee as

ameans to oversee and drive the

implementation of our sustainability activities

and report progress to the Board. Historically

the business has tackled these initiatives on

adecentralised basis; bringing them together

under the Committee’s purview helps to

ensure consistency in their implementation,

more efficient allocation of resources and an

enhanced profile within the organisation.

Our Sustainability Committee

This committee is chaired by our Group HSES

Manager and attended by Mel Fitzgerald,

Non-Executive Director and Chair of the

Nomination and Governance Committee,

thereby providing the Board withdirect line of

sight on its activities. Underpinned by its terms

of reference as wellas a clearly articulated

strategy, the Committee meets quarterly to

discuss progress on a number ofkey targets

for the year under its Careers, Health,

Environment and Social pillars.

Our sustainability pillars

andalignment with

UnitedNationsSDGs

Lamprell’s strategic sustainability

management plan provides information

on how sustainability supports the

business strategy and sets improvement

targets for future performance. Our

sustainability pillars of Careers, Health,

Environment and Social have been

detailed with material issues derived from

a third-party assessment which align with

applicable United Nations Sustainable

Development Goals. Each pillar has several

commitments and targets which are

monitored quarterly by the Sustainability

Committee (see opposite).

Materiality assessment

Following the materiality assessment we

undertook at the beginning of 2021, we

prioritised several ESG issues relevant to

Lamprell and its stakeholders and aligned

with global sustainability reporting

standards. We then undertook a gap

analysis to confirm which material issues

were well managed and where there

waspotential to put in place additional

measures. Some of the key findings from

the assessment included:

• The increased impact from the energy

transition and climate change, reflecting

growing investor focus on long-term

challenges facing the industry and

society

• The need for heightened cybersecurity,

which remains a key risk to the business,

given ongoing instances of cyber-attacks

• Ensuring that Lamprell is aligned to the

market dynamics, needs of our

customers and entire stakeholder base,

which we addressed with our

reorganisation into three distinct

business units

COVID-19

Our response to COVID-19 continued during

2021 with the same commitment that we

applied in 2020. The measures maintained in

relation to keeping our employees and all

those who work with us safe have served

uswell: high vaccination take-up, booster

programmes, PCR testing, contact tracing

and mandatory quarantine/isolation. It is

testimony to everyone and not least the

efforts of the HR and HSES teams that we

have been able to achieve high levels of

success. While it is clear that this is an evolving

situation given the emergence of highly

transmissible multiple variants of the virus, we

are proud of our robust response efforts and

are equally proud to be playingour part in the

UAE’s response tothepandemic.

98%

employees double vaccinated with 61%

having receivedCOVID-19 booster shots as

at28February 2022

Sustainability Committee meetings held

in2021

ESG issues identified as material from

ourmateriality assessment

Living business programme

Our Sustainability Committee

submitted an application showcasing

its ESG achievements in the HSBC-

sponsored Living Business Programme

2021, an initiative that has further

propelled us on our ESG journey.

Lamprell’s entry was shortlisted in the

corporate category and presented to

judges in the UK pavilion of Dubai’s

Expo 2020. While not the overall

winner, the fact we made it this far,

from over 120 MENA entries, is

testimony to our evolving ESG

journey.You can watch our video

submission on our website at

www.lamprell.com/media-centre/videos.

The issues which we defined as material for Lamprell and our stakeholders include:

Our strategic goals Our material issues Our response in 2021 Our target in 2022

Environment

Minimise our

environmental impact

and contribute to a

greener environment

Link to UN SDG:

Link to sustainability pillar:

Environment

Energy transition and

GHG emissions

• Corporate commitment to net zero carbon

emissions by 2050 finalised in alignment with

the UAE’s own commitment

• Developed organisational decarbonisation plan

to achieve net zero carbon emissions by 2050

• Promoted a decrease in land pollution

through waste reduction initiatives

• Start implementing action plan towards

‘netzero carbon by 2050’ commitment

• Increase proportion of revenues from

Renewables business unit

• Maintain certification of all operational sites

toISO 14001:2015

• Zero severe environmental incidents

Water stewardship • Promoted efficient use of water resources

through conservation measures to achieve a

30% annual reduction in water use intensity

• Evaluate 100% of our new major suppliers in

our environmental engagement programme

to assess their water impact and wider

sustainability programmes

Biodiversity • Total Environmental Incident Rate (TEIR)

target of zero major pollution incidents

successfully achieved

• Continued TEIR of zero major pollution incidents

• Conduct environmental engagement events

with external stakeholders to promote

environmental awareness and protection

efforts in the UAE

Social

Engage regularly and

create a balanced

working environment

Link to UN SDG:

Link to sustainability pillar:

Environment

Careers

Health

Social

Health and safety • Achieved a 2021 TRIR result of 0.10 against a

target of 0.13

• Maintained a healthy and safe work

environment for all employees through robust

COVID-19 protection measures

• Established a Workforce Assembly where

issues associated with our sustainability pillars

are discussed, with a Director contributing

• Maintain world-class TRIR levels

• Further develop robust offshore HSES system

framework for EPCI projects

• Maintain certification of all operational sites

toISO 45001:2018

• To hold at least two Employee Workforce

Assembly meetings and report back to the

Board with outcomes

Diversity and inclusion • We operate based on equity and fairness for all

• We have zero tolerance for discrimination

• We promote diversity and inclusion within

theworkplace

• All positions are remunerated fairly and

equitably, and we encourage diversity of

applicants in our recruitment processes

• Strong focus on the diversity of ideas through

our employee engagement programmes

• Improve the overall diversity within the

organisation

• Engage in at least one not-for-profit activity

• Employ at least five apprentices from the Don

Bosco Mondo Foundation in India

Recruitment

and retention

• STIP/LTIP reward programmes designed to

retain key talent and incentivise based on

strategic growth

• Market Lamprell as an employer of choice

through a combination of development and

competitive compensation packages

• Focus on SMART objectives that motivate and

retain talent, supporting our strategic goals

Employee and skills

development

• LATC completed 288,829 training hours (an

average of four days training per Lamprell

employee) across technical competency,

HSES, quality and professional development

courses

• In our annual appraisal process, each

functional area identified personnel training/

development needs

• ‘Future fit’ our teams to ensure that they have

the necessary skills for new projects

• Further develop core skills training across the

organisation through review of training needs

analysis programme

* exact details remain confidential

for commercial sensitivity

purposes

Local sourcing and

value creation*

• Achieved strong ICV target in 2021 for local

goods and services

• Improve on 2021 achievement in 2022

Emergency preparedness • Expanded emergency response capability

through purchase of new equipment and

training our emergency response teams

• Invested in ECG heart health checks for

high-risk personnel accessing operational areas

• Conduct business continuity emergency

exercise drills in the UAE and KSA

• Conduct offshore emergency rescue

planning and mitigation

Governance

Follow and adhere to the

new guidelines set by

relevant authorities

Link to UN SDG:

Link to sustainability pillar:

Environment

Careers

Health

Social

Anti-bribery and

corruption

• 100% admin employees completed the

TRACE certification programme

• Promoted Lamprell’s compliance culture and

protected the business from corruption risks,

including through our supply chain

• Extend TRACE certification programme to

yard staff through compliance toolbox talks

• Train all employees on compliance through

the Business Code of Conduct

Human rights and

labour relations

• All yard employee contracts were translated

into key languages

• Refreshed ‘Speaking Up’ programme to

promote awareness of whistleblowing

• Implementation of changes to UAE labour

laws including specific provisions around

human rights

• Communication of human rights

expectations through all teams

Data privacy and security • IT services outsourced to Injazat in 2021 to

reduce cost and to improve data privacy and

security

• Zero IT system breaches during the year

• Invest in updated hardware to retire all

obsolete machines

• Zero IT system breaches during the year

Our stakeholders

Business partners CommunitiesEmployeesCustomers Shareholders

Strategic report

28 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 29

Sustainability continued

Environment

Our key priorities for 2021 Our key achievements for 2021 Focus for 2022

• Identification of energy

conservation measures

• Protection of the environment

by preventing pollution to

water, soil and air; efficient use

of energy and resources;

reducing emissions and

avoiding biodiversity disruption

• Reduction of greenhouse

gasemissions

• Diversion of the majority of

operational waste away from

landfill

• Implementation of energy

conservation measures and

renewable energy sources to

partially power site operations

• Reduction in the environmental

incident frequency rate

• A third-party audit of GHG

emissions monitoring and

reporting framework

• Reduction in GHG intensity

emissions

• 30% decrease in water use

intensity across our operations

• 91% of operational waste

recycled/reused

• Environmental incident

frequency rate of 0.04 per

200,000 man-hours

• 100% of new major suppliers

screened for sustainability/

environmental performance

17%

reduction in operational CO

e intensity

emissions from 2015 baseline year

14%

decrease in electrical consumption intensity

when compared with 2020 data

91%

of waste diverted from landfill and we

reduced waste per man-hour by 28%

Keeping our

coastlines clean

Lamprell conducted its fourth

annual ‘UAE Clean Coastline’ event

as part of its sustainability month

campaign. Participants at the

beach clean-up collected around

420kg of waste from a popular

family beach. Lamprell staff also

cleaned the marine waterways

near its Hamriyah facility

throughout the year. These

initiatives helped remove waste

that would otherwise have

threatened local marine and

terrestrial biodiversity.

As such, we ensure all our

operationallocations are certified to

the ISO 14001:2015 environmental

management system, which

governsthe way we manage our

environmental impact.

Protection of the environment

through preventing pollution is

enshrined within our HSES policy.

One of the most effective ways of

protecting the environment within

an organisation is establishing

systems that prevent pollution.

Partnering with local schools

In 2021 we partnered with local

schools to plant UAE native trees

topromote biodiversity and raise

environmental awareness in school-

age children. In unison with this

programme, we conducted online

biodiversity awareness sessions on the

importance of protecting critically

endangered species.

Strategic report

30 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 31

2021 2020 2019 2018 2017 2016 2015

Total emissions , , , , , , ,

Scope 1 , , , , , , ,.

Scope 2 , , , , , , ,.

Scope 3 , , , , , , ,.

Lamprell Group greenhouse gas emissions

100,000 0.0032

0.0028

0.0024

0.0020

0.0016

0.0012

0.0008

0.0004

Tonnes CO₂e (Gross)

Tonnes CO₂e (Intensity)

80,000

60,000

40,000

20,000

2015 2016 2017 2018 2019 2020 2021

Our GHG emissions increased in 2021 due to diesel consumption for an expanded operational area we acquired in 2020. Power was predominantly provided using

diesel generators in the new area due to the non-availability of electricity from the grid. Consequently, our intensity emissions increased by 16%.

Lamprell Plc sustainability data

2.50

Consumption/Man hour

Water (Gal)

2.00

1.50

1.00

0.50

2015 2016 2017 2018 2019 2020 2021

Electricity (KwH)

Diesel (L)

The completion of our power consumption plan review as part of our

overarching decarbonisation plan is yielding positive results, as our electricity

intensity consumption reduced by 14% in 2021.

Environmental incident frequency rate

20172016 2018 2019 2020 2021

EIFC Target

0.19

0.16

0.15

0.12

0.10

0.08

0.07

0.04

0.03

0.04

0.03

EIFC Achieved

Sustainability | Environment continued

Governance

Recommended disclosure: Describe the Board’s

oversight of climate-related risks and opportunities.

The Board is responsible for the Group’s risk management processes,

addressing risks and opportunities, overseeing Lamprell’s strategic

approach to the energy transition and climate-related matters, and is

updated quarterly on progress by the Sustainability Committee. In 2021,

climate-related issues were included on the agenda at every Board

meeting; discussions included Lamprell’s commitment to net zero,

investor correspondence on Lamprell’s risks and opportunities, and

compliance to TCFD recommendations. The Board also takes into

consideration climate-related issues when reviewing and guiding

onmajor strategic and investment decisions. The Chair for our

Nominations and Governance Committee, Mel Fitzgerald, is the

Board’srepresentative at our Sustainability Committee meetings.

Recommended disclosure: Describe management’s

role in assessing and managing climate-related risks

and opportunities.

The Group HSES Manager chairs the Sustainability Committee. The

Sustainability Committee is responsible for oversight of the Group’s

day-to-day sustainability practices, including assessing and managing

climate-related issues and reporting findings to the Chief Executive

Officer. The Committee’s goal is to improve the value of Lamprell by

implementing initiatives that bring environmental, social and financial

benefits to the organisation and its stakeholders.

Lamprell’s ESG governance structure

TCFD recommendation

Disclose the organisation’s governance around climate-related

issues and opportunities.

Sustainability Committee

Responsible for empowering our stakeholders and embedding responsible business practices

within Lamprell to create a low-carbon and circular economy

Business units and departments

Execute plans set by the net zero emissions and social activity development committees

Lamprell Board

Executive Leadership

Steering Committees

Nomination and

Governance Committee

Oversees activities of the

Sustainability Committee

Chief Executive Officer

Primarily responsible for sustainability

issues including climate-related risks

andopportunities

Net Zero Emissions Committee

Responsible for delivering the net zero target by implementing our

2050 emissions plan

Chief Financial Officer

Responsible for the financial stewardship

on climate-related risks and opportunities

Group HSES Manager

Chairs the Sustainability Committee

Employee Workforce Assembly

The Assembly will seek to discuss and ensure workforce mechanisms

are operating effectively and sustainably across the organisation

Audit and Risk Committee

Oversees climate risks

andopportunities

Remuneration and

Development Committee

Oversees employee

development which positively

influences views on sustainability

issues

Ad-hoc Board

Committees

Provide support as required

TCFD compliance

Lamprell has complied with the requirements of LR 9.8.6R by including climate-related financial disclosures consistent with the TCFD

recommendations and recommended disclosures.

Our net zero 2050 commitment and roadmap

Our commitment is to reach the net zero carbon emissions target by 2050. As such, we have developed a roadmap that guides our steps

towards the decarbonisation of our facilities and operations. Lamprell senior management and the Board will conduct annual reviews on

progress, and amendments will be made accordingly to reflect current practices, update goals, targets and initiatives. Further details are

available on our website.

A journey of a thousand

miles begins with a

single step

The energy industry is

responsible for 40% of global

carbon emissions. It is our

responsibility to reduce these

and actively contribute to a

sustainable future. Lamprell’s

GHG reporting journey started

in 2013; however, in line with

the science-based target, our

baseline emissions towards

net zero will begin from 2015

with a total of 56,682 tCO

scope 1 and 2 emissions.

2015 20502021 to 2030

50%

reduction by 2030

80%

reduction by 2040

2030 to 2040

Decarbonisation

commencement

Transitioning to a net zero energy

system is crucial for protecting

human health, mitigating climate

change and revitalising the

economy. Lamprell is accelerating

our decarbonisation plan to

achieve our net zero target within

the shortest period.

Our milestones

Reduction in emissions by 50%

through maximising energy

efficiency, switching to lower

emissions fuel sources, implementing

renewable energy options and

retrofitting our buildings to a

more sustainable design.

Decarbonisation

intensification

We will invest in new technologies

and improve the modus operandi

of our business to meet our net

zero plan.

Our milestones

Target of 80% renewable electricity

in all our sites by 2040 and

implementation of new

technologies to reduce

embedded emissions.

Path to zero emissions by 2050

Business as usual

Target achieved

Our commitment to net zero

emissions is achieved while residual

emissions are removed through

certified natural carbon sink

projects such as conservation

projects for the world’s tropical

forests.

Our milestones

Source 100% of steel from

sustainability-oriented suppliers

by 2050 and 100% reduction of

emissions from generators and

mobile air compressors by 2050.

Net zero

by 2050

Graphic used for illustrative purposes only

Strategic report

32 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 33

Recommended disclosure: Describe the impact

ofclimate-related risks and opportunities on the

organisation’s businesses, strategy, and financial

planning.

Our operations may be impacted positively or negatively by

government-signed agreements within the locations in which we

operate, which intend to control or limit carbon emissions. For instance,

the recent net zero commitments made by the UAE and KSA. In addition,

the shift in consumer preference to low-carbon solutions may have an

effect upon our medium-term oil & gas bid pipeline. It is important that

we remain positioned to be part of a sustainable future and understand

the opportunities embedded within any risks. Our ‘Lamprell reimagined’

strategy is structured to realise these.

Our immediate business strategy is to decarbonise our operations,

starting with energy efficiency. We will be switching to renewable

energy where possible and extending these practices to our value chain

through a robust supplier sustainability engagement programme. In the

medium term, we aim to be a leading digital solution provider to the

energy market, and in the long term, we plan to ensure sustainable

business continuity through innovative business solutions and strategic

plans driven by our Board and executive leadership.

A business continuity plan has been developed for all our operations

which addresses physical risks that we are vulnerable to, such as storms,

heat, and extremely high humidity. The Board validates the strategy

annually to ensure it remains relevant and resilient.

Climate risks and opportunities may impact on our revenues and

capitalexpenditures; therefore, our financial planning process, such as

forecasting, revenue planning, capital and operating cost planning and

expenditure, have incorporated these into our short-term budgeting

process, where required.

Recommended disclosure: Describe the resilience of

the organisation’s strategy, taking into consideration

different climate-related scenarios, including a 2°C or

lower scenario.

We conducted climate scenario analysis in accordance with TCFD

recommendations which requires selecting a minimum of two

scenarios. We selected Sustainable Development Scenario (SDS), a

wellbelow 2°C pathway and Stated Policies Pathway (STEPS) from the

International Energy Agency (IEA) for Transition risks and Representative

Concentration Pathway (RCP) 8.5 for Physical risks. The climate

scenario analysis was used as a tool in assessing the long-term business

impacts from transition and physical risks. Understanding these risks

and opportunities, and incorporating the material ones into our

enterprise risk management register where they are reviewed quarterly

by the Board and executive management team, ensures the long-term

resilience of the business.

The timeframe for the climate scenario analysis extends to 2050 under

both pathways SDS and STEPS, covering our domestic operations

within the UAE. For the scenario analysis, we made the assumptions as

noted below.

SDS: We assumed that in this period up until 2050, there is universal

access to affordable, reliable, and sustainable energy services, and

substantial action is being taken to combat climate change by the

international community. A carbon price of USD 44 per tonne of CO

was assumed based on a proposal from the Carbon Border Adjustment

Mechanism.

STEPS: We assumed this scenario reflects current policy settings, which

are less ambitious, and therefore the impact from physical risks will

potentially manifest more.

The risks were screened and prioritised qualitatively using our existing

enterprise risk management process. Our analysis shows that without

any concrete action, both pathways present potential financial risks

toLamprell. The Board and Executive leadership are aware of these

financial risks and can mitigate them by developing counter-measures

for the financial impact. The financial risks do not require a change in

our business model but can be managed based on formulated

counter-measures.

The most significant impact from transition risks under the SDS scenario

is on our oil & gas business when the global oil demand is reduced by

47% by 2050 compared to 2020, based on the 2021 IEA report. In

contrast, under STEPS, there is a 15% surge in demand in the same

period. The most important part of our medium and long-term strategy

for the Oil & Gas business unit will be to provide digital solutions to assets

within the oil & gas market and redefine how work is done. Lamprell’s

Digital business unit will have a key role in supporting our journey.

Recommended disclosure: Describe the

organisation’s processes for identifying and assessing

climate-related risks.

All business risks, including climate risks, are identified, assessed,

managed and monitored per our corporate risk management process

using both bottom-up and top-down approaches =>> 47. A matrix of

risk likelihood versus impact in both qualitative and quantitative terms

isused to analyse and communicate risk within Lamprell.

Recommended disclosure: Describe how processes

for identifying, assessing, and managing climate-

related risks are integrated into the organisation’s

overall risk management.

The Sustainability Committee is responsible for monitoring and

assessing climate change related risks and opportunities and cascading

those relevant to the corporate risk management team.

Functional and executive leadership reviews these risks quarterly.

Executive leadership also monitors action plans implemented to

mitigate risk at the enterprise level, ensuring that these are appropriately

dealt with before reporting to the Audit and Risk Committee on a

biannual basis.

Recommended disclosure: Describe the

organisation’s processes for managing

climate-related risks.

Climate change is considered an emerging risk with potential impacts

from evolving policies, regulations, taxes and enhanced disclosure

requirements. As such, it is closely monitored. Our material climate risks

are transition based such as carbon tax exposure, increase in electric

vehicle penetration and demand for low-carbon/net zero emissions

technology. The physical risks are mainly extreme weather events

locally and overseas affecting our supply chain. These were identified

during our climate scenario analysis.

Strategy continued

Risk management

TCFD recommendation

Disclose how the organisation identifies, assesses and manages

climate-related risks is material.

Strategy

Recommended disclosure: Describe the climate-related risks and opportunities the organisation

has identified over the short, medium, and long term.

In developing our strategy, the risks and opportunities were identified based on short-term (< 5 years), medium-term (5-15 years)

and long-term (>15 years) periods.

TCFD recommendation

Disclose the actual and potential impacts of climate-related risks

and opportunities on the organisation’s business, strategy and

financial planning where such information is material.

Risk description Business impact Time horizon

Transitional

Exposure to carbon tax in key markets

andsectors

Increase in operational costs Medium term

Increase in the use of low-carbon

technology including electric vehicles

The reduced demand for fossil fuel may result in fewer new oil & gas projects, although

Lamprell’s oil & gas division is focused in the Middle East region, where we do

anticipate oil & gas opportunities to continue for the foreseeable future through our

partners Saudi Aramco and ADNOC

Medium term

Increased demand for low-carbon/net zero

technology within the energy market

Reduced revenue for the Digital business unit if it cannot meet the technological needs

of the energy market

Medium term

Poor ESG ratings from rating agencies Difficulty in securing funding and or increase in lending rate from financial stakeholders Medium term

Shift in investors interest from fossil fuel to

green energy

Less funding from investors for oil & gas business Short term

Cost for implementing initiatives towards

net zero by 2050

Initial increase in cost for renewable energy initiatives, prior to savings realised through

associated operational overhead reductions

Medium term

Physical

Disruption of material transportation routes

due to extreme weather events

Delay in project execution and delivery leading to liquidated damages Medium term

Overseas extreme weather events such as

floods and storms affecting suppliers

Increase in project execution cost due to impacts to project material suppliers Medium term

Extreme weather events such as flood,

storm, heat and humidity within Lamprell’s

facilities

Loss of productivity as a result of the temporary closure of our facilities Medium term

Materiality of climate risks

Focus Areas Business impact Time horizon

Opportunities

Energy efficiency Reduce operational costs through energy efficiency of operational assets such as

compressors, buildings etc.

Short term

Renewable energy Reduce 100% dependency on electricity grid for source of power by deploying solar

panels within our facilities

Short term

Switch to biodiesel/natural gas Reduce emissions from diesel consumption with the use of biodiesel and natural gas Short term

Provision of low-carbon solutions Increased revenue from Renewables and Digital business units Short term

Explore new energy markets such as carbon

capture, utilisation and storage, hydrogen,

waste to energy

Increased revenue from Renewables business unit Medium term

Materiality of climate opportunities

Sustainability | Environment continued

Strategic report

34 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 35

Total recordable incident rate

Incident per 200,000 work hours

20182017 2019 2020 2021

0.35

0.30

0.25

0.20

0.15

0.10

0.05

Social

Continual improvements to how Lamprell

engages with its workforce was a cornerstone

in achieving our safety performance this

year.This included an increased focus

onpractical safety behaviour training,site

safety inspections and regular management

walkthroughs across our facilities and projects.

key employee engagement platforms: ‘Chat

with the Chair’, Employee Welfare Committee

and our newly launched Workforce Assembly

target candidates to be recruited via

DonBosco Mondo Foundation

separate wellness sessions held during 2021,

supported by our local partners, including

SmartLife Foundation and many hospital

providers

Safety performance

2021 delivered the best safety performance

inthe Company’s history with a TRIR of

0.10across all business units. By utilising

robust risk management and safety planning

processes, we identify and mitigate safety

risks and ensure our projects’ safe and

successful execution. Lamprell’s safety

objectives are set annually and tracked

through leading and lagging KPIs, which

arecommunicated to our stakeholders

monthly. Engagement with our clients and

subcontractors is a fundamental element of

Lamprell’s safety management system. We

regularly involve them in operational safety

processes to ensure that everyone goes

home safely.

In 2021, we maintained our ISO 45001

certification, which is fundamental to our

ability to bid on energy projects with

international clients. An element of the

ISOcertification includes conducting

thorough audits of safety standards inside

ouroperations and that of our supply

chainpartners.

Our key priorities for 2021 Our key achievements for 2021 Focus for 2022

Investment in people

development

• An average of four days of training per

employee in LATC

• The introduction of new training

programmes, including basic and

advanced English language courses

and Microsoft Office training for

supervisory personnel

• Expand English language training

programme to a broader group of

employees

• Develop core skills competency

training programmes for production

engineering and supervisory

personnel

Labour rights and relations

• Increased employee engagement

• Workforce Assembly set up, with the

first meeting in February 2022 set to

discuss: (a) training and upskilling;

(b)gender balance and how this can

beimproved; (c) Company culture and

(d)digital enhancements

• Employee Welfare Committee met

three times in 2021

• ‘Chat with the Chair’ for high-potential

employees

• Continued collaboration with

SmartLife, resulting in SmartReading,

SmartWellness, SmartComputer and

SmartFinance programmes being

made available to our yard workforce

with around 100 employees

successfully participating to completion

• Embed Employee Workforce

Assembly into the culture of the

business

• Consolidate all human rights issues

and matters under a single,

stand-alone human rights policy

forthe Lamprell Group and its

supplychain

Diversity and inclusion

• Renewed our collaboration with

DonBosco Mondo Foundation,

whichsupports disadvantaged youth

worldwide by providing welding

training opportunities

• Hire up to five candidates in year one

via Don Bosco Mondo, training and

employing them in Lamprell

Sustainability | Environment continued

Recommended disclosure: Disclose the metrics used by the organisation to assess climate-related risks and

opportunities in line with its strategy and risk management process. Describe the targets used by the

organisation to manage climate-related risks and opportunities, and performance against targets.

Key climate-related risks and opportunities – metrics and targets

Metrics and targets

TCFD recommendation

Disclose the metrics and targets used to assess and manage

relevant climate-related risks and opportunities where such

information is material.

Recommended disclosure: Disclose scope 1, scope 2, and, if appropriate, scope 3 greenhouse gas emissions,

and the related risks.

Metrics Targets 2021 progress

Environment

GHG emissions 30% reduction in CO

e emissions intensity by 2025 from 2015 baseline data 17%

Water use intensity 20% reduction in water use intensity by 2025 from 2015 baseline data 17%

Supplier engagement Engage 100% of our Tier 1 (high environmental impact) suppliers on efficient

and effective environmental management by 2023

Hazardous waste intensity 90% reduction in hazardous waste intensity by 2025 from 2015 baseline data 88%

Waste diversion 95% waste diversion from all our operational facilities within the UAE by 2025 91%

Renewable energy 7% of electricity supply from renewable sources by 2025 0%

Category 2017 2018 2019 2020 2021

Operational energy consumption (kWh)

Operational energy consumed for activities within

scope 1 & 2 (diesel and electricity)

,, ,, ,, ,, ,,

GHG emissions

Gross emissions scope 1 (MT CO

eq) , , , , ,

Gross emissions scope 1 intensity revenue (MT CO

USD revenue (million))

. . . . .

Gross emissions scope 2 (MT CO

eq) – Location based , , , , ,

Gross emissions scope 2 intensity revenue (MT CO

USD revenue (million))

. . . . .

Scope 3 emissions (MT CO

eq) , , , , ,

Gross emissions scope 3 intensity revenue (MT CO

USD revenue (million))

  . . 

Fuel and energy related activities (MT CO

eq) ,. , , , ,.

Waste generated in operations (MT CO

eq) .   . .

Business travel (MT CO

eq) , , , . .

The scope 3 parameters shown above are currently calculated as part of Lamprell’s GHG reporting framework. Parameters not presently

included but under consideration include purchased goods and services, capital goods, upstream transportation and employee commuting.

We define our GHG reporting boundary using the operational control approach, per the Streamlined Energy and Carbon Reporting

requirements and Greenhouse Gas Protocol.

Strategic report

36 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 37

Gender*

Administrative employees

Female

Male

1139

Managerial employees

Female

Male

Age proﬁle of admin employees

<30

30 to 39

40 to 49

50 to 59

60+

14%

40%

34%

11%

(169)

(493)

(422)

(135)

(16)

Designation proﬁle of admin

employees

Executive

Management

Professional

Supervisory

Support

32%

56%

(10)

(92)

(394)

(46)

(693)

* With fabrication and construction being a core part

ofour business, we work in a very male-dominated

industry in the Middle East. Our Diversity and Inclusion

Policy sets out our philosophy in this regard and we are

constantly aiming to make in-roads to address gender

balance. We will always recruit the best candidate for

the job.

Talent and succession

Having the right people in the right place at

the right time is fundamental to what we do;

we need high-quality frontline workers

constructing our projects and being led by a

strong project management team. Succession

planning deep dives were held twice during

the year with functional leaders to ensure

thetalent pipeline has remained current and

reflects the evolving nature of our employees’

aspirations. We’ve actively advertised all our

vacant positions internally, allowing us to have

valuable conversations with employees to

understand more about their aspirations. We

are passionate about promoting from within

the organisation where we can. Our

succession planning efforts also extended to

the Board where we saw the appointments of

Motassim Al Maashouq =>> 55 and Jean Marc

Lechene =>> 55 whose respective expertise is

aligned with our strategic objectives.

Supporting our local talent

‘Lamprell through the Lens’ is our

annual calendar photography

competition which moved into

itsthird edition in 2021. Every

employee in the business is invited

to participate in what has become

a hugely popular event. We moved

completely online in 2020 to

ensure our competition credentials

continue to be environmentally

friendly and sustainable. Winning

images are celebrated and

displayed throughout the year via

our computer desktop

environment, and published in

Lamprelltimes

. Samal Mohamad

Sidhik was our 2021 overall winner

with his image (pictured) aptly

named “tough times don’t last,

tough teams do.” Celebrating his

win, he was awarded the prize of a

personal laptop with pre-installed

windows and office applications.

Our core values

With the world continuing to be ‘stress-tested’

through dealing with a global pandemic, the

importance of our values has continued to

shine through. We have asked our employees

to go the extra mile, whether 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.

Sustainability | Social continued

Health and well-being

More than ever before, during the pandemic,

we have been conscious of the many

inevitable challenges faced by employees

based on their individual and personal

circumstances. This, in turn, has taken a toll

on the mental well-being and resilience of

many. Throughout the year, a holistic

approach towards wellness was adopted to

support employee mental well-being while

keeping varied individual priorities and

challenges in mind. This included an

increased focus on our regular programmes

of physical, emotional, financial, social and

self-development initiatives. We integrated

these into an overall employee well-being and

development programme with 20 separate

events held across the year supported by

many of our regular partners, including local

hospitals and SmartLife Foundation. Over 220

yard workers participated in various SmartLife

initiatives, around 1,000 attended the Dubai

Expo, and around 1,400 of all employees

opted for free flu vaccinations. One of our

most popular events was in relation to

emotional and mental well-being, attracting

more than 250 participants virtually.

Training and development

The foundation of successful yard operations

is LATC which has, in 2021, seen another busy

year. We ask our staff to be curious about their

daily activities, in order to identify better or

more efficient ways of completing tasks. From

our side, we offer training and development

opportunities for employees wanting to

progress both in technical and soft skills.

We’ve trained our employees, our Saudi

interns, and many of our third-party labour

supply providers. During 2021 we continued

to make significant improvements in assessing

our technical trades through LATC. With

English as our main language of operation,

our full-time English language tutor has made

great strides since his appointment in 2020

and has developed detailed learning and

assessment modules for our yard employees.

Celebrating our COVID-19 heroes

During the world’s ongoing battle against COVID-19 in

2021, there have been millions of unsung heroes working

tirelessly to keep everybody safe. Everyone in Lamprell has

played their part and continues to do so. However, we

celebrated an outstanding achievement for our camp

bosses, who were recognised for an award under

‘Honouring the Excellence of COVID-19 Heroes’ through a

SmartLife Foundation initiative in association with ICAI

Dubai. From around 250 entries, our team were

appreciated with a COVID-19 heroes award. Overcoming

their own concerns, they were there 24/7 for around 4,000

employees, helping to keep them supported and safe. A

video dedicated to this initiative can be found on our

website: www.lamprell.com/media-centre/videos.

Strategic report

38 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 39

Gover nance

Committed to the highest

standards of integrity

With a robust values framework, Lamprell’s

culture and purpose is built around mutual

trust and respect amongst all our

stakeholders; employees, customers,

suppliers, investors and the communities in

which we work. We never underestimate our

responsibilities and take our commitment

seriously, investing in our people, processes

and products to ensure that we continue to

live up to our values.

We are proud of our values =>> 8, and they

are the mirror for our behaviours, reflecting

everything that we stand for – past, present

and future. With 2021 being the fiftieth year

ofthe United Arab Emirates, we reflect on the

wise words of the UAE’s founding father, the

late Sheikh Zayed: “A nation without a past is

anation without a present or a future.” That is

exactly how we interpret our values,

respectfully, transparently, and they

continually serve as building blocks to ensure

we can always do better. They sit comfortably

alongside our uncompromising commitment

to safety and ethical business practices.

Ethical conduct, underpinned by robust

compliance and good governance, is integral

to our ESG framework’s governance pillar.

Strong business ethics is one issue that is

highly important to our stakeholders.

In 2021 we made sure the governance section

of our website was more visible to our multiple

stakeholder groups, supported by the many

policies we have in place.

100%

admin employees received anti-bribery

andcorruption training

discrimination cases raised

key governance policies are now on live our

website for all our stakeholders to access

Good governance is living our

values. Integrity; doing the

right thing because it’s the

right thing to do

The transfer of scrap and waste

products out of our yards is significant

and, in many instances, of high value.

Making sure such items are properly

accounted for in terms of inventory

management, weight, and thus

monetary value is crucial for both

Lamprell and the third party handling

the disposal. In 2021 an alert employee

brought to our attention that they had

observed untoward practices taking

place in this area for personal gain. The

compliance team undertook a detailed

investigation which concluded in

disciplinary warnings, lost employment

and changes to our scrap management

procedure. Through our ‘Speaking Up’

channels, we encourage everyone who

works for us or alongside us to report

anything they consider to be unusual.

We will always investigate. We will

always do the right thing.

Our key priorities for 2021 Our key achievements for 2021 Focus for 2022

• Refresh Board composition

toalign with strategy and

increase diversity

• Business continuity planning

preparedness

• Anti-bribery and corruption

awareness campaign

• Enhance awareness of the

‘Speaking Up’ facility

• Continue evolution of Board

composition towards strategy

• Training exercise to stress-test

business continuity plans

• Extend anti-bribery and

corruption training to include

all yard employees and refresh

again for all admin staff

• Focused communications

campaign for ‘Speaking Up’

channels

• Appointment of two new

independent NEDs, with Saudi

and renewables expertise

• All admin employees

completed TRACE certified

training programme

• All functional areas have

detailed business continuity

plans in place

• 12 ‘Speaking Up’ cases

investigated and concluded

in2021

• Updated governance section

on our website to make it more

prominent and user-friendly

Non-financial information statement

Environmental

matters

Social matters

Employees

Anti-bribery and

corruption

Human rights

We are determined to operate

responsibly to protect the

environment. We assess the impact

of our activities and how it affects

others. We seek ways to improve

and make a positive contribution

and set meaningful environmental

targets which meet and often

exceed regulatory expectations,

improving our positive impact.

Related policies

• Code of Business Conduct

• HSES Policy

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

established institutions such as

theDon Bosco Mondo Foundation.

Related policies

• ESG initiatives

• Diversity and Inclusion Policy/

Statement

• Code of Business Conduct

• Social Investment Philosophy

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 to organise our

business optimally and cost-

efficiently.

Related policies

• HR Manual

• Competitive remuneration

policies and practices

• Code of Business Conduct

• Share Dealing Code

We have zero tolerance for bribery,

corruption and other forms of

financial crime. We require those

who deliver services to us or act on

our behalf to abide by our 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.

Related policies

• Anti-Bribery and Corruption

Policy

• Speaking Up

• Anti-Bribery and Corruption

framework

We focus on areas where human

rights are critical to how we work

and where we see the highest risk

for potential impact: labour rights

and supply chains. Our approach

applies to all our employees and

contractors.

Related policies

• Modern Slavery and Human

Trafficking Policy

• Speaking Up

• Code of Business Conduct

• HR Manual

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.

Compliance with sections 414CA

and 414CB of the 2006 Companies Act

See more on =>> 37

See more on =>> 29 See more on =>> 40 and 68

See more on =>> 37 See more on =>> 30

Sustainability continued

Strategic report

40 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 41

Financial review

Funding future growth

Liquidity update

2021 presented major challenges across

oursupply chain and, although Lamprell

continued to deliver operationally, additional

costs associated with COVID-19 disruptions

significantly affected our financial

performance. In 2021, the Group was

successful in securing a USD 45 million

working capital facility for the delivery of the

two IMI rig contracts and raising USD 30.1

million before expenses through a placing of

shares. This assisted with some of the working

capital requirements on our legacy low

margin projects but in order to continue

tomeet its obligations to customers and

creditors, and deliver its strategic capital

expenditure programme, the Group total

funding requirement was previously estimated

to be in the range USD of 120-150 million. Of

that amount, the Group was required to meet

funding obligations of USD 95 million by the

end of July 2022. Over the past 18 months,

the Group has been focused on a number of

financing options in order to meet this funding

requirement, including asset monetisation,

project-specific financing, hybrid facilities

andadditional equity. However, none of the

funding alternatives set out above were

capable of delivering a solution to the urgent

and severe liquidity constraints within the

timerequired. As a result and in order to avoid

implementing alternatives which seek to

protect the interests of financial creditors,

commercial counterparties and employees

atthe cost of no value being attributed to the

existing equity, on 21 July 2022 the Board

recommended an offer for Lamprell’s entire

issued and to be issued share capital, from

Thunderball. Theoffer included a Bridge Loan

Facility allowing Lamprell to resolve the

immediate liquidity pressure and continue

todeliver its transformational yard capex

programme. See going concern section

opposite for further details of the Offer and

Bridge Loan Facility.

Revenues

In 2021 the Group generated USD 388.8

million in revenues, delivering a 15% increase

compared to the previous year and a third

year of continuous revenue growth (2020:

USD 338.6 million). Throughout the year we

experienced a number of significant impacts

on productivity and cost as we worked

around lockdowns and continuous COVID-19

restrictions. Much of our labour is deployed

from India, where the emergence of the Delta

variant affected workforce availability early in

the year. Ongoing self-isolation requirements

further impacted our ability to deploy staff

effectively in the UAE and caused significant

disruptions to our supply chain. Lamprell

continued to manage these disruptions

effectively; however, reduced productivity

and rephasing of work have impacted

revenue recognition and profitability in 2021.

Revenues from the Renewables business unit,

which focused on the Seagreen project,

amounted to USD 141.3 million. The Oil & Gas

business unit, with contribution from the two

IMI new build jackup rigs, two Saudi Aramco

Revenue (USD m)

388.8

2020: 338.6

Net (loss)/profit (USD m)

(60.0)

2020: (53.4)

COVID-19 and low margin projects

affected our financial performance

and put significant pressure on

ourliquidity.

Tony Wright

Chief Financial Officer

Adjusted EBITDA* (USD m)

(19.9)

2020: 3.9

Net cash* (USD m)

53.0

2020: 112.4

* see page 150 to 151 for definition of APMs

LTA projects, as well as our operations and

maintenance business and rig refurbishment,

generated USD 247.5 million in revenues.

Total new contract awards during the year

amounted to USD 135 million and we

closedthe period with a backlog of

USD342.9 million.

Margin performance

The Group remains focused on cost discipline

following the significant overhead reduction

programme in 2020. Overheads for the year

amount to USD 69.0 million of which

USD35.5 million pertains to general and

administrative expenses and the balance

attributable to direct overheads included in

cost of sales. In 2021, much of the temporary

COVID-19 cost cutting measures, including

remuneration reductions introduced in 2020,

also remained in place. Nonetheless, our

margin performance was affected by loss of

productivity and additional costs associated

with COVID-19 measures, as well as low

margin contribution from ongoing major

projects in the Oil & Gas business unit. We

report a gross loss of USD 0.8 million for the

year (2020: gross profit of USD 14.6 million),

with a negative adjusted EBITDA from

continuing operations of USD 19.9 million.

Finance cost

In Q4 2021, the Group secured a

USD45million working capital facility

forthedelivery of the two IMI rigs and

subsequently raised USD 30.1 million

througha placing of shares. Net finance cost

(excluding interest expense on leases) for the

full year 2021 amounted to USD 2.1 million

(2020: USD 1.4 million).

Net loss

Net loss for the year ended 31 December

2021 was USD 60.0 million (2020: loss of

USD53.4 million). The loss is driven by the

lowrevenue levels which did not generate

sufficient margin contribution to cover the

Group’s overhead of USD 69.0 million and our

share of loss of investments accounted for

using the equity method of USD 17.0 million.

The diluted loss per share for the year was

16.98 US cents (2020: diluted loss per share

15.63 US cents).

Capital expenditure

We continued to make incremental

investment in our yard with a particular focus

on improving throughput and efficiencies

inserial renewables fabrication. Capital

expenditure in 2021 was USD 13.3 million

(2020: USD 14.2 million) and is largely

attributable to the construction of a

proprietary lifting frame and the additional

yard taken in Hamriyah. Investments in digital

amounted to USD 1.8 million. The Group did

not make any equity contributions to the

IMIjoint venture in 2021. To date, Lamprell

hasinvested USD 85 million of the USD 140

million committed.

Cash flow and liquidity

The Group’s net cash flow from operating

activities for the year ended 31 December

Income statement

($m, unless stated otherwise) FY 2021 FY 2020

Revenue . .

Renewables . .

Oil & Gas . .

Adjusted EBITDA (.) .

Adjusted EBITDA margin (.%) .%

Loss from continuing operations after income tax (.) (.)

Balance sheet ($m)

Net cash as at 31 December .* .**

Net assets . .

* Restricted cash USD 47 million.

** 30 June 2021.

2021 reflected a net outflow of USD 56.1

million which was driven by the substantial

working capital draw, as well as delays in

certification of variations and resolution of

claims, on ongoing projects. Prior to working

capital movements and the payment of

employees’ end-of-service benefits, the

Group’s net cash outflow was USD 11.9

million. Cash, together with bank, term and

margin deposits, decreased by USD40.5

million to USD 72.8 million, of which USD 47

million is cash restricted in project bonds

andguarantees.

Balance sheet

Net cash at 31 December 2021 was

USD53million, of which USD 6 million

isunrestricted. The Group’s total current

assets at 31December 2021 were USD

244.4million (31 December 2020: USD

286.4million). Trade and other receivables

decreased to USD59.4 million (31 December

2020: USD73.9 million). Contract assets

increased to USD99.4 million (31 December

2020: USD85.4 million) and this is attributable

to contract work in progress on ongoing

projects. Trade and other payables increased

by USD 100.9 million to USD 171.8 million as

the Group continued deferral of creditor

payments in view of the liquidity challenges

summarised in the going concern Note 2.1.

Shareholders’ equity reduced to USD

128.8million (31 December 2020:

USD160.4million).

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 cashflows for the Group for the 15

months to 31 October 2023 which include

the key assumptions detailed below.

Balance sheet recapitalisation

In 2021, the Group launched a balance sheet

recapitalisation programme to fulfil its

near-term working capital needs and to meet

medium term strategic objectives with the

intention of completing a new funding

arrangement of USD 120 -150 million by the

end of Q3 2021. In order to temporarily

address the most immediate capital

requirements, the Group entered a USD 45

million Export Credit Agency (“ECA”) backed

revolving trade loan facility (“ECI Facility”)

withtwo regional banks in October 2021

andraised gross proceeds of approximately

USD30.1 million through a placing of new

Lamprell shares. The Group intended to

secure further capital, in the form of a second

working capital facility of USD 45 million by

the end of Q1 2022, with additional funding

tobe put in place by the end of H1 2022.

Accordingly, during H1 2022 the Directors

continued to explore a number of potential

financing and strategic options, including

equity financing, debt financing, the potential

sale of the Group’s oil & gas business, asset

monetisation and project-specific financing

with a view to delivering the required funding

by the end of H1 2022 in line with the Group’s

working capital requirements. Despite

significant efforts by the Group to secure this

additional finance, prior to the developments

outlined below these discussions had not

resulted in new financing for the Group. As a

result, the Group now faces urgent and severe

liquidity constraints and in the absence of

reaching an immediate alternative funding

solution, the Group will not be able to meet its

funding obligations.

Recommended Cash Offer for Lamprell plc

(“the Offer”)

On 21 July 2022, the Board of Directors of

theCompany and the Board of Directors of

Thunderball announced a recommended

all-cash offer of 9p per share to be made by

Thunderball for the Company’s issued share

capital. The Offer includes provision of a

secured USD 145 million Bridge Loan Facility

on the terms and conditions summarised

below.

Bridge Loan Facility

On 21 July 2022, the Group entered into the

bridge loan facility agreement (the “Bridge

Loan Facility Agreement”) with Maverick

Investment Holding Ltd (“Maverick”), a

company under the control of a member

ofthe AlSayed family, and AlGihaz Holding

Closed Joint-Stock Company (“AlGihaz”).

Pursuant to this Maverick and AlGihaz each

agreed to make available a total loan facility

ofup to USD 145 million to the Group. The

Bridge Loan Facility is available for drawdown

in tranches, of which USD 85 million has

already been drawn down and a further USD

10 million has been requested and is expected

to be paid on or around 8 August 2022.

Further amounts of USD 35 million and USD

Strategic report

42 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 43

15 million are forecast to be drawn down

attheend of August and September 2022

respectively. The Bridge Loan Facility is

secured on the majority of the Group’s assets.

The Bridge Loan Facility is being made

available (i) to repay the ECI Facility described

above in full, which occurred on 4 August

2022; and (ii) to fund expenditures projected

to fall due after 21 July 2022, in accordance

with a schedule of expenditures agreed

between the parties. The Bridge Loan Facility

is repayable on the earlier of (i) the date falling

three months after the date on which the

Offer becomes wholly unconditional; or

(ii)the date falling three months after the date

onwhich the Offer lapses or is withdrawn.

Interest will accrue at the rate of 12 per cent

per annum. The Directors believe the Offer

and Bridge Loan Facility are the only viable

funding solutions available to the Group and

as a result this forms the basis of the forecast

cash flows used in performing their

assessment of going concern. The key

assumptions are detailed below:

The Offer proceeds to completion: The

Offer is subject to more than 50 per cent of

shareholders approving the Offer. Based on

the current shareholdings of Thunderball,

which in aggregate represent approximately

45.18% of the Company’s issued share

capital, and irrevocable undertakings by

certain other shareholders to vote in favour

of the Offer representing an additional

4.82% of issued share capital, the Directors

have forecast that the Offer will be accepted

by the Shareholders. The Offer is subject to

certain additional conditions precedent

which are considered usual and customary

for this type of transaction.

Sufficiency of the Bridge Loan Facility:

TheDirectors have assumed that the Bridge

Loan Facility will be timely paid following

draw-down requests and sufficient to cover

the funding requirements for the time

required to conclude the Offer. After

repayment of the ECI facility, USD 101

million of the Bridge Loan Facility remains

to pay the Group’s other creditors, which

amounted to USD 176 million as of 30 June

2022, and to partially meet the ongoing

funding requirements of the Group. A

significant proportion of the Group’s

creditors at 30 June 2022 were many

months overdue and, whilst it is anticipated

that the Bridge Loan Facility will enable a

number of these to be settled in the period

prior to the completion of the Offer, the

Directors expect payment to certain

overdue key suppliers on the IMI Rigs

projects (who were owed USD 51 million at

30 June 2022) will need to be extended in

line with the expected timing of milestone

receipts on these projects in late 2022 and

early 2023. The Directors have assumed

that the Group will be able to achieve this

based on its track record of doing so, but

it’s ability to dothis is critical and dependent

on the reaction of the key suppliers as the

payables are unsecured and contractual

credit terms are exceeded, which is outside

the Group’s control. The level of creditor

deferral in the period prior to completion of

the Offer is also dependent on the

outcome of contract claims and the extent

of new contract awards as discussed

below.

Post completion funding: The Directors do

not have visibility of Thunderball’s plans for

the business after the Offer is completed,

including the extent and terms of any

funding that will be provided post

completion. The intentions statement in

the 21 July announcement indicates that

Thunderball is aware that Lamprell must be

recapitalised and that this would be most

effectively undertaken after the Company’s

shares are de-listed such that Lamprell can

execute its strategy, with appropriate

support, capital and assistance from

Thunderball. The Directors have therefore

assumed that upon conclusion of the Offer,

Thunderball continues to support the

business, and in particular:

that Thunderball will extend or waive the

repayment of the Bridge Loan Facility as

the Group will be unable to repay the

loan when it falls due (which is forecast

to be in December 2022).

that significant additional funding will be

provided by Thunderball during the 15

months to October 2023 in order that

the business may continue to trade. The

level and timing of funding required will

depend on a number of factors,

including the outcome of Thunderball’s

review of the business, successful

execution of the Group’s ongoing

contracts, the speed with which they are

required to settle overdue creditors, and

(as discussed below) the outcome of

contract claims and extent of new

contract awards, but may be up to

approximately USD 100 million.

Contract claims: The Directors assume that

settlement of contract claims on certain

major contracts will result in significant

cash inflows in the forecast period. These

are not yet agreed and the amount and

timing of such settlements is not wholly

within the control of the Directors.

New contract awards: The Directors

assume conversion of a portion of the bid

pipeline in line with the expected timing of

awards, including achieving similar

historical levels of revenue for the

contracting services and rig refurbishment

businesses. These contract awards are not

committed and there is therefore some

uncertainty as to their commencement.

In preparing the forecasts, the Directors have

further considered broader economic factors

including the ongoing pandemic, conflict in

Ukraine and the effects of climate change.

Technological improvements or innovations

that support the transition to a lower carbon

economy, and customer preferences or

regulatory incentives that alter fuel or power

choices, could impact demand for oil & gas.

Financial review continued Viability statement

In accordance with provision 31 of the UK

Corporate Governance Code, the Directors

have assessed the prospects of the Company

over an appropriate period. The Directors

have previously determined that a period of

three years was the appropriate viability

assessment period, for the following reasons:

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

Given the acute liquidity challenges faced

bythe Group and the material uncertainty

surrounding the successful and timely

execution of the assumptions as detailed

inthe going concern statement detailed

opposite (most notably the recommended

offer to acquire the Company and the

implementation of the Bridge Loan Facility),

inassessing viability the Directors are not able

to form a reasonable expectation that the

Group and Company will have the ability to

continue in operation and meet its liabilities

asthey fall due beyond the going concern

period. Therefore the Directors have

concluded that it is necessary to shorten the

viability assessment period to October 2023,

to align to the going concern period. While it

is not possible for the Directors to form a

reasonable assessment of the Company’s

longer-term ability to continue in operation,

the Directors believe in the quality and

attractiveness of the Company’s and Group’s

capabilities and credentials to take advantage

of the strong fundamentals in their

addressable markets in the coming years.

In coming to that belief, the Board has

considered and regularly reviews the Group’s

exposure to a variety of risks =>>48, and

related controls and mitigating actions.

Lamprell’s strategy and business model =>>8

are central to an understanding of its future

prospects and mitigation of risks. Its business

model 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 global markets are

challenging in light of the potential impact of

the increased inflation rates and higher supply

chain costs, both of which may have a

detrimental effect on the broader economy

and capital investment decisions by clients.

Specific to Lamprell, the Directors believe the

offer and Bridge Loan Facility =>>43 are the

only viable funding solutions available to the

Group and as a result this forms the basis to

resolve the immediate funding obligations

and severe liquidity demands of the business.

The Directors recognise that future

assessment and assumptions 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 which includes

the following assumptions:

the recommended offer to acquire the

Company will be accepted by our

shareholders and the Bridge Loan Facility

will be timely drawn and sufficient to cover

the Group’s operational requirements

on conclusion of the offer, while the

Directors do not have visibility of the

acquiror’s post-completion funding for the

Group, it is expected that the acquiror will

extend or waive the repayment terms of

thebridge loan facility and/or will provide

such additional capital as may be needed

by the business

payment to certain key suppliers on the

IMIrigs will need to be extended in line with

the expected timing of the final milestone

payments for the rigs

a portion of the bid pipeline is converted in

line with the expected timing of awards

assumed in the forecast cash flows

Further details of these and other key

assumptions are included in the going

concern statement opposite. The Board has

considered the risk mitigation strategies for

each of the above assumptions as well as

downside sensitivity cases and has concluded

that these actions would be inadequate

without the offer proceeding to successful

completion. If the offer does not proceed to

completion and the Bridge Loan Facility falls

due for repayment within its current terms,

there can be no guarantee that the Group

willbe able to implement alternatives in the

available timeframe and, the Group would

beunable to continue to operate as a going

concern, resulting in the appointment of

liquidators or administrators, as appropriate.

Accordingly, the Directors consider that

completion of the offer represents the only

executable funding solution available to the

Group and that is a fundamental assumption

for the continuing viability of the Company

and the Group.

Post balance sheet events

See Note 41 on =>> 149 for events that took

place post the balance sheet date.

Principal risks Base assumption Downside scenario

Ability to finance business

Offer to acquire Company is

successful and funding provided

Offer to acquire Company is

unsuccessful; funding not

provided

Economic conditions

Strong fundamentals in

addressable markets

Market conditions do not

improve

Counterparty risk

Short-term extended

credit terms by key suppliers

Prolonged extended

credit terms

Project execution Projects executed as planned

No reasonably plausible financial

exposure has been modelled

Depending on the nature and speed of any

such changes and our response, these

changes could increase costs, reduce our

profitability, reduce demand for certain

products, limit our access to new

opportunities, require us to write down

certain assets or curtail or cease certain

operations, and affect investor sentiment, our

access to capital markets, our competitiveness

and financial performance. On the contrary,

these risks provide a significant opportunity

toour Renewables segment which would

benefit from the increased demand and

accelerated award of projects to meet the net

zero emission targets. If the Offer does not

proceed and the Bridge Loan Facility falls due

for repayment within its current terms, there

can be no guarantee that the Group will be

able to implement any alternative funding in

the available timeframe. In such an event, the

Directors believe that the Group will be unable

to meet its financial commitments as they

falldue and consequently will be unable to

continue to operate as a going concern

resulting in the appointment of receivers,

liquidators or administrators. Accordingly, the

Directors consider that the Offer represents

the only executable funding solution available

to the Group given that Thunderball has

procured the Bridge Loan Facility and there

isno present viable alternative. The Directors

believe that: (1) the risk that the Offer does not

complete; (2) the requirement for significant

levels of ongoing creditor deferral during the

period prior to the completion of the Offer;

and (3) the lack of visibility of Thunderball’s

plans for the business after the Offer is

completed, all of which depend on factors

outside management’s control, constitute

inaggregate a material uncertainty that may

cast significant doubt upon the Group’s and

Company’s ability to continue as a going

concern. The financial statements do not

include the adjustments that would result

ifthe Group and Company were unable to

continue as a going concern.

Dividend

The Group made progress in delivering its

strategy in 2021, however, due to the current

financing requirements coupled with

prevailing COVID-19 uncertainties, the

Directors do not recommend the payment

ofa dividend for the period in relation to

financial year ending 31 December 2021.

TheDirectors will continue to review this

position in light of market conditions and

Group performance at the relevant time.

Tony Wright

Chief Financial Officer

Strategic report

44 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 45

Risk governance process

Board

Q1 Q2 Q3 Q4

Q2 and Q4 of

each year

Q1 Q2 Q3 Q4

End of each quarter

Q1 Q2 Q3 Q4

All year

Audit and Risk

Committee

Biannual review

of top Company

risks

Executive

Committee

Quarterly

update of

functional risk

registers and

review by the

Executive

Committee

Functions and

projects

Continuous

monitoring and

management of

functional and

project risks

Risk management framework

Our risk management framework is

used as a guideline to identify,

eliminate and minimise risks.

Top-down

Directors monitor how key risks

might impact implementation of

the Company’s strategy

Bottom-up

Individual project and

departmental risks are assessed by

likelihood and impact

Continual

improvement

Framework designed

and reviewed

Risk management as per

procedures

Monitor and review

effectiveness

Risk and risk management

Lamprell continued its commitment

to risk management throughout

2021. Identifying and managing

risksand opportunities is key to the

successful delivery of our strategy.

We operate in challenging

environments and understand

thatrisk management is an inherent

part of ourbusiness.

Our approach to risk management

Lamprell maintained its approach to holding

quarterly risk reviews across the departments

and the Executive Committee to highlight and

interrogate the range of risks that the Group

faces and ensure cross-department

management and mitigation actions. The

latest update highlighted 91 risks across the

Group which are being monitored by

management. The Audit and Risk Committee

is updated on a biannual basis and asked to

challenge the management’s views on risks.

The project teams perform risk management

within Lamprell across the three business

units: Renewables, Oil & Gas, and Digital.

They produce biweekly reviews of all project

risks and monitor them for mitigation,

quantification and communication. With the

formal emergence of the three business units,

project teams can build on the established

project proposal, start-up, and lifecycle risks

to better understand the risks that each unit

faces within its industry while collaborating to

ensure risks are learned from across the

Group. The respective risk champions analyse

the project risks within each team. Feedback

to the department heads allows for the

inclusion of recurring or high-level risks to be

fed into the quarterly corporate review of

business risks.

Our risk management

frameworkand process

Lamprell operates under a risk management

framework mandated by the Board. The

framework uses two key procedures: (i) the

project-level risk management procedure,

which includes proposals and lifecycle project

risk management; and (ii) a corporate

management procedure. Each department is

governed by the risk management procedure,

which ensures that departments are aware of

the business objectives and risks which can

impact them. Acting as a focal point for all risk

management assessments, we have a

commercial and risk management

department that monitors the framework’s

effectiveness to ensure it remains fit for

purpose. Lamprell’s internal audit department

independently audits the implementation of

the framework. Lamprell’s risk management

process closely aligns with the ISO 31000 risk

management methodology.

In the initial stages of the risk management

process, efforts are made to understand the

context, scope of work or activity upon which

the risk assessment is based to focus on risk

identification. Identified risks are analysed in

terms of probability of occurrence and

impact, and on a gross pre-mitigation and a

net post-mitigation basis. Possible risk

treatments are then evaluated depending on

the severity of the risk, and detailed risk

response plans are developed where

necessary. Finally, risk registers are monitored

and reviewed regularly, with functional and

project risk profiles being reported to

management regularly.

Risk management as a

businessimprovement tool

Risk management is an ongoing process and

allows Lamprell to develop and learn

continually to ensure the ability to meet our

2022 business objectives.

Building on the 2018 overhaul of the

processes used for risk management within

Lamprell, the procedures and implementation

processes are reviewed by internal audit to

ensure best practice and continued correct

implementation, so Lamprell remains

competitive within our strategic markets.

Continual learning is evidenced in renewable

projects from East Anglia One, Moray East,

and Seagreen, all of which are used to ensure

competitiveness in future bids. Oil & gas

projects awarded to Lamprell on the Saudi

Aramco LTA utilised the best practice of

associated recent risks from the renewables

projects and the extensive catalogue of oil &

gas project risks available from Lamprell’s

long history in that sector. Our Digital

business unit =>> 18 has begun its risk

management learning journey and will

continue to develop its list of business risks,

building on learnings from the risks to the

Group’s IT framework and systems.

Lamprell’s approach to risk management is

decentralised. As with all aspects of good

governance, risk management and internal

control effectiveness depend heavily on

theindividuals responsible for operating

thesystems.

The commercial risk management

department continually trains existing and

newly-hired Lamprell employees on the

importance and practical elements of risk

management. Hence, Lamprell continues its

strong showing as an organisation that

proactively tackles project risks, and evolves

to identify and manage new risks to the

business.

Our approach to

risk management

Opportunities

As part of regular reporting on risks, our

teams also consider opportunities. The

opportunity aspects of project risks help to

deliver on margin expectations and/or

operational enhancements on ongoing

projects, as well as providing additional value

to our clients. Our Digital business unit has

been looking at using robotic welding to

improve efficiencies and safety standards; this

is an ongoing process and in the meantime

we have worked with a new supplier, Welmax,

to deploy automated linear welding for some

of the products on the Seagreen project. This

has been proven to be effective and to save

costs, so we are looking to use similar

technologies on other projects; we have also

worked with the supplier to improve the

methods for using such technologies in a

symbiotic way. Another major opportunity

forLamprell is the migration of our IT

environment across to the Injazat cloud-

based systems – this is a work in progress

butallows Lamprell not only to benefit from

Injazat’s leading-edge expertise in the digital

space and the latest security measures to

protect its data but also to strengthen the

business relationship with a strategic partner.

Emerging risks

In last year’s report, the impact of the

COVID-19 virus and financial pressures on

Lamprell’s supply chain was evident; these

risks have continued to impact the Group

through 2021; as the global pandemic

continues in differing waves, the impact and

mitigation of these risks are set out on the

following pages.

Climate change remains and increases in

importance as an ever-growing impact on the

business; Lamprell’s environmental team

continued to work on sustainability matters,

with increased volume due to our increasing

presence in the renewables market.

Companies will need to demonstrate their

energy transition and associated strategies to

remain competitive and socially acceptable to

customers. With the expectation of increased

and accelerated changes in international

energy policies, legislation, regulations and

minimum expectations when invited to bid on

future opportunities, it is crucial we adjust our

sustainability strategy =>> 28 accordingly.

The funding requirements of the Lamprell

Group have been and remain a top risk that

require a recapitalisation of the balance sheet.

The 2021 equity raise and new debt facility

=>> 42 have mitigated some of the liquidity

pressures on the business but the Group

required an urgent USD 120-150 million

injection to restrengthen its balance sheet to

meet its immediate working capital and capex

plans. In light of the challenging equity

markets and the acute liquidity pressure, there

was insufficient support from existing

shareholders for this option and so the Board

recommended to accept a combined all cash

offer to acquire the entire issued and to be

issued share capital of the Company from two

major shareholders. Without an agreement

on an equity-based financing solution, and

mindful of the acute liquidity needs of the

Group, the Board views this offer as a viable

pathway to resolve the immediate funding

obligations and severe liquidity demands of

the business.

With the upward trends in our addressable

markets and the recent major awards by

NOCs in the Middle East, we have started to

experience a drain on our resources as

employees join other companies for

increased compensation amounts. Lamprell

has a skilled workforce and as such its

employees are in high demand from our

competitors. This drain on resources may

threaten our ability to win or execute new

projects unless we can match remuneration

packages. As a minimum initial step and

recognising this risk, our Board has decided to

remove the COVID-19 deduction by

1June2022.

The above resourcing risk is just one example

of potential inflationary pressures that we are

seeing in the market; others include

workforce compensation expectations,

commodity prices (which have escalated

significantly in the last 18 months, notably

steel prices) and especially in the availability of

transportation vessels and subcontractor

yardspace. All of these are likely to increase

the cost base for Lamprell which may make

us less competitive or unable to provide the

necessary resources to execute new projects

at the predicted margins. We are already

taking steps to mitigate this risk by engaging

with our global supply chain and seeking to

build strategic relationships.

Finally, the most recent emerging risk is the

ongoing conflict between Russia and Ukraine.

While Lamprell does not have any business

connection with either country, this conflict

could have knock-on consequences for the

wider supply chain, pushing up commodity

prices and/or causing delays in deliveries. It

has already caused oil & gas prices to spike

dramatically over the course of a matter of a

few weeks in late February/early March 2022

and, if this volatility continues, this may cause

customers to delay project awards until the

market stabilises. In the worst case where the

conflict spills over into other countries where

Lamprell does have business relationships,

this could jeopardise our supply chain for our

ongoing or future projects.

Strategic report

46 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 47

Principal risks

Lamprell faces various risks, which change depending

on market factors. Our principal list of risks follows.

They are primarily in alignment with the previous risk

profiles, which includes the principal risks that

Lamprell is exposed to and considered the most

significant due to their likelihood, magnitude of

potential consequence, and nature.

Principal risks and

uncertainties

Risk Risk description Mitigation Link to strategy

1. Ability to finance business

Inability to fund implementation

of our strategic objectives.

Risk impact

Strategy:

Business model:

Risk likelihood:

Risk owner

Chief Financial Ocer

Risk change from last year

Increased

Successful implementation of

business goals depends on a

reasonable level of working capital,

and there has been a reduction in our

net assets due to recent losses.

• The Group was not successful in raising new

debt or equity in H1 2022 but received an all

cash offer for all issued and to be issued share

capital

• Successful capital raise through new USD 45

million debt facility and equity raise of USD

30.1 million in Q4 2021

• Agreed USD 145 million bridge financing

package with potential acquirors to provide

funding during period of completion of

transaction

Funding options in the oil &

gas market are becoming

more limited, funding for

renewables projects looks

more promising =>> 10.

2. Ability to win work

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

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.

Our ability to retain current clients and

compete successfully depends on

providing on-time, low-cost,

high-quality products and services. If

we fail to do so technically and

commercially, we will not win new

awards. Success in contract awards is

also 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

• The bid pipeline expanded into new

geographies =>> 5

• An experienced and customer-focused BD

team targets our key clients and markets

• We use benchmarking data and estimating

tools to provide competitive market pricing

• Restrengthen balance sheet through new

capital and a controlled overhead cost base

• Agreed USD 145 million bridge financing

package with potential acquirors to provide

funding during period of completion of

transaction

• Signed reservation agreement for Moray

Westproject, to give better visibility on

futurebacklog

Opportunities in our key

markets are targeted by

multiple competitive

bidders.

3. Economic conditions

Energy price volatility, market

uncertainties, and COVID-19

could cancel bid pipeline

prospects.

Risk impact

Strategy:

Business model:

Risk likelihood:

Risk owner

Vice President of

Business Development

Risk change from last year

Unchanged

While energy prices have recovered,

there continue to be delays in project

awards by clients due to market

uncertainties, concerns over viability

of contractors and increases in

commodity prices (driven most

recently by the conflict in Ukraine).

The threat of COVID-19 also continues

to impact the broader market. Such

instability leads to clients reassessing

how and when to sanction new capital

projects. A more recent development

is the risk around climate change,

where clients may not award projects

to companies without a clear strategy

for dealing with this risk.

• Apparent capacity crunch in available

yardspace improves Lamprell’s prospects

• Bid pipeline of USD 7.9 billion covers a

diversified portfolio and has increased

significantly in the rapidly-growing

renewables sector =>> 10

• Our experienced Business Development

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

=>>14

• Client engagement activities have given

clients reassurance on Lamprell’s future

viability and ability to commit to new projects

• Strategic partnerships expand our offerings

and diversification of territories

• Announcement of Lamprell’s net zero carbon

target and action plan

Demand for our products

and services underpins the

entire business.

Risk impact and likelihood

High

Medium

Low

Risk Risk description Mitigation Link to strategy

4. Counterparty risk

The entire supply chain is under

pressure due to challenging

market conditions and

resourcing constraints, amplified

by the pandemic impact.

Risk impact

Strategy:

Business model:

Risk likelihood:

Risk owner

Chief Financial Ocer

Risk change from last year

Increased

Clients may impose onerous payment

terms or even stop payments for

various reasons. This may result in

Lamprell suffering losses or reduced

revenues. Lamprell 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. 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 Lamprell is doing

bydeferring payments to supply

chainpartners.

• Take on projects with reputable and financially

sound counterparties based on reasonable

and balanced contract terms

• Negotiated extended credit payment terms

with major suppliers, to reduce the near-term

cash requirements

• Enhanced due diligence on counterparties

toassess the project and financial risks

• Request clients and suppliers to provide

financial security guarantees for new projects

• Enforce contract terms through proactive

contract management

• Regular project reviews to highlight

counterparty risks, risks of delayed invoice

payments and cashflow forecasts

• Proactively work through project schedule

issues in collaboration with clients and

suppliers

Supply chain partners

depend on regular work

and timely payment for

working capital on existing

projects.

5. Project execution

Failure to deliver projects on

time and on budget, as per

contract requirements, due to

poor performance, lack of

resources or external factors

such as COVID-19.

Risk impact

Strategy:

Business model:

Risk likelihood:

Risk owner

Operations

Risk change from last year

Unchanged

Failure to execute, manage, and deliver

a project following 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 other

execution risks arise. This extends to

effective subcontract management

where we have experienced

challenges on previous projects and

where we are at risk before our clients

due to failures by subcontractors. This

may also negatively impact our

reputation with clients and the broader

stakeholder base.

• Stakeholder engagement to understand

better clients’ needs and supply chain’s

available resources and capabilities

• All new prospects undergo a robust risk

assessment during the bidding phase

• Continuous improvement cycle to feed all

lessons learned from previous projects 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 of employees is a cornerstone of

sustainability objectives =>> 38 to maintain

high standards of safety, quality and execution

Our clients expect delivery

of high-quality, on-time

products and services.

6. Cyber threats

IT systems could be disrupted by

successful cyberattacks or

outdated infrastructure.

Risk impact

Strategy:

Business model:

Risk likelihood:

Risk owner

Chief Financial Ocer

Risk change from last year

Unchanged

Our business and operations both rely

heavily on our IT network and systems,

including our enterprise resource

planning system and engineering

design software provided by third

parties. These could fail to operate

effectively or be subject to disruption/

cyberattacks (which is heightened

while the conflict in Ukraine continues

in light of the known Russian use of

cyberwarfare against foreign

companies); there are also inherent

disruption risks as IT infrastructure

becomes outdated and/or we migrate

some IT systems to the cloud. Without

an effective, updated and efficient IT

environment and systems, we would

not be able to execute our projects

and could suffer reputational and

financial damage.

• Migration of many of our IT systems to

Inajazat service provider with access to the

latest cyber detection and protection

technologies

• Annual IT security training and awareness

campaigns about information security/cyber

threats for all employees

• 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

• A leading service provider, Oracle, runs

enterprise resource planning software

• Penetration testing and phishing exercises run

to highlight potential weaknesses and ensure

that employees are alert to cyber risks

Digitalisation aims to

improve efficiency and

generate new revenues.

Strategic report

48 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 49

Risk Risk description Mitigation Link to strategy

7. Contractual commitments

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

Over the last few years, contractual

terms have progressed to be

favourable to clients, meaning that we

may be obliged to take on additional

risk under a contract that historically

may have been negotiated away.

Similarly, contracts with strategic

partners may contain terms which are

unbalanced but are necessary in order

to establish the binding relationship. If

we then fail to mitigate any of these

contractual liabilities in other ways

properly, it may lead to us incurring

additional costs or losses, which could

affect our overall financial

performance.

• Active risk identification, mitigation and

management throughout project lifecycles

from the initial bid, through project handover

and until completion

• Risk analyses include a Monte Carlo

assessment and this factors into project

contingencies

• Weekly and monthly project review meetings

are held with management for effective

oversight and constructive challenges on

project management decisions

• Use of mitigation or risk management

strategies, such as insurance, guarantees and/

or flow down of liabilities to the supply chain

• Lessons learned procedure aims to avoid

repeats of any identified inefficiencies

Strategic objectives must

adapt to reflect market

conditions and client

expectations around

contracts.

8. Third-party alliances

Poor relationship management

or weak corporate governance

with business partners.

Risk impact

Strategy:

Business model:

Risk likelihood:

Risk owner

Executive Committee

Risk change from last year

Unchanged

To conduct business in certain

jurisdictions, we rely on key

relationships with local partners,

agents or our partners in joint ventures

and consortia. If we are unable to work

collaboratively or manage these

relationships poorly, or our partners

are unable to provide adequate

support to our business, this could

leave us exposed to additional

contractual and/or execution liability

or make our operations in certain

jurisdictions uncompetitive. This is

particularly relevant for the IMI joint

venture where there may be different

drivers for each of the partners and

execution of the LTA projects where

we will be heavily reliant on our

installation partner.

• Business partners are chosen based on a

duediligence exercise to understand their

capabilities, culture and goals, to ensure

alignment on strategic objectives

• Regular reports to the Board on all proposed

and current joint ventures/consortia,

assessing progress against our objectives

• We work to build and maintain strong partner

relations at the 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

To move up the value

chain, we need to rely on

our partners to provide

complementary offerings.

9. Failure to invest

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

To fund its reorganised business

structure and 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. This

includes the investment on the new

production line, to improve

throughput in serial renewables

projects. The Group may not be

sufficiently competitive to win new

projects or achieve the necessary

margins to improve overall profitability

to the required level without investing

in itself.

• Board recommended to accept a combined

all cash offer to acquire the Company – offer

is a viable pathway to resolve the immediate

funding obligations and severe liquidity

demands of the business

• Already deploying certain digital initiatives in

our yards as a proof of concept =>> 21

• In Q4 2021, the Board approved initial capital

investment into the renewables production

line which will increase capacity and

throughput in our renewables projects

• All investments are linked directly to the

Company’s strategy and visible/actual

projects

• A phased approach to investing is taken where

possible to minimise immediate exposure

• Linking with strategic partners like Injazat and

Saudi Aramco de-risks the potential

opportunities

The strategic objectives

aredependent on making

areturn from capital

employed.

Risk Risk description Mitigation Link to strategy

10. Increasing scarcity of skilled personnel

Skilled and experienced

personnel are required to run

thebusiness, build relationships

and execute projects.

Risk impact

Strategy:

Business model:

Risk likelihood:

Risk owner

Executive Committee

Risk change from last year

New

We may face significant challenges

inattracting and retaining sufficient

numbers of skilled personnel including

Directors, management or in the yards,

meaning that it may not be possible

tobring in or keep the right person

with the right skills at the right time

fora particular project or role. This

includes the risk of having insufficient

competent resources to successfully

prepare bids and execute projects.

Anyof these issues could severely

impact strategy implementation and

project execution.

• Market Lamprell as employer of choice

because of competitive pay, positive welfare

culture and opportunities for growth

• Regular engagement with workforce to

understand concerns and factor these into

decisions

• Appropriate management incentives

• Succession planning and career development

to promote from within and reward high

performers

• Regular market reviews by Human Resources

Director to understand market trends, with

guidance from Nominations and Governance

Committee

• Manpower planning gives improved visibility

on future yard workforce requirements

• ‘Future fit’ assessment by VPs to focus

attention on timing of business-critical

appointments

Lamprell’s workforce is its

most valuable asset and

experienced people are

required to drive the three

business units forward.

Principal risks continued

Climate-related risks

Link to strategy:

See more details around climate-related risks with cross-references to the

TCFD disclosures in the Sustainability Report =>> 28.

Climate change remains and increases in importance as an ever-growing

impact on the business; it does not pose an immediate risk to our business

model and as such sits outside of the above-mentioned principal risks and

uncertainties. However, this is a potentially broad-ranging and long-term risk

which could impact Lamprell in a number of different ways. Accordingly,

Lamprell’s team continues to work on sustainability matters and in particular

understand the impact of climate change on our assets and our involvement

in the renewables industry where we are seeing increased volume due to our

expanding presence. Companies will need to demonstrate their energy

transition and associated strategies to remain competitive and socially

acceptable to customers. With the expectation of increased and accelerated

changes in international energy policies, legislation, regulations and

minimum expectations when invited to bid on future opportunities, it is

crucial we adjust our sustainability strategy.

Strategic report

50 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 51

Report on corporate governance

Introduction by the Chair

to corporate governance

Dear Shareholders

On behalf of the Board, I am pleased to present the Company’s

corporate governance report for the year ended 31 December 2021,

which will be my last report as your Chair. One of the significant

aspects of my role as Chair is to ensure that our Group’s governance

isrobust and enables the Company to progress towards its strategic

goals. The Board plays a critical role in ensuring that every part of our

Group conducts its business in a manner that is consistent with the

highest standards of corporate governance. A sound corporate

governance framework is key to ensuring sustainable long-term

success; the Board must operate effectively as it works to address

thenear-term challenges and implements a solid foundation for

implementing the ‘Lamprell reimagined’ strategy =>> 4 that we

launched at the beginning of 2021.

Strong governance supports strategic progress

2021 has been characterised by significant strategic progress and a

focus on dealing with the increasingly acute liquidity issues facing the

Group. The world in which we live is changing rapidly, and COVID-19

has served to accelerate the energy transition towards the renewables

sector. It has also presented us with operational and governance

challenges. During the year, the Board has engaged with shareholders

and other key stakeholders to gauge their views of the updated

strategy. Following receipt of positive feedback, the Board has

overseen initial steps to implement it, including a dramatic expansion

in our renewables bid pipeline, both in quantum and also in scopes

now including floating offshore wind. At the end of the year, we

madethe initial investment into a renewables production line in our

Hamriyah facility which will transform our ability to improve

throughput and efficiencies, diversify our fabrication capability

beyondjacket foundations and significantly increase our annual

revenue generation and margin performance.

We also approved the new digital joint venture, AiFlux =>> 20, where

Lamprell’s track record in heavy industry will complement the digital

expertise of Injazat, as we look to establish a new business that will

build digital products and services to improve efficiencies in Lamprell’s

current business and also service its clients. I was delighted to see that

our former COO, Hani El Kurd, moved into the chief executive role at

AiFlux – his passion for this project and knowledge of the construction

of major, complex projects for the energy industry will surely help to

ensure the success of the venture.

Your Board continues to believe that the Oil & Gas business unit will

continue play a significant part in generating value for our shareholders

but, to achieve this, it needs to be more closely aligned with our key

customers in the Middle East. We have previously made a major

financial commitment with our participation in the IMI joint venture

inthe Kingdom of Saudi Arabia and we have been working with our

partners in Saudi Arabia to determine the optimal way to move the

centre of gravity for our oil & gas unit to the Kingdom. Lamprell has

applied to participate in various Saudi Aramco programmes which

facilitate the establishment of local businesses and would make it

easier for us to operate the business. Lamprell won its first two major

projects with Saudi Arabia in Q1 2021, and we are targeting further

contract awards, which will be made easier with a more localised

presence and access to these programmes.

Responding to liquidity challenges

Last year was not without its challenges, and the first among these

wasthe increasingly acute cash constraints. Following several years

oflosses and with current projects at low margins, this has negatively

impacted our balance sheet and put – and has continued to put – the

business under severe pressure. While the team has worked hard to

manage cashflows, such constraints have inevitably obliged the Board

to make some difficult decisions, most obviously being the continuing

imposition of the 25% deduction on many employees’ salaries. In light

of the apparent upward trend in both the oil & gas and the renewables

industries, the knock-on consequence of this decision has placed

pressure on our resources, both in terms of holding on to our skilled

personnel and hiring new people for the planned new awards. It is for

this reason that the Board approved the discontinuance of the

COVID-19 deduction as from 1 June 2022.

Responding to these significant cash concerns, we took steps to

restrengthen the Company’s balance sheet and improve the business’s

liquidity position. In Q4 2021, we successfully secured a USD 45 million

working capital facility to deliver the two IMI rigs in line with project

working capital requirements. We also successfully raised USD 30.1

million through an oversubscribed placing of shares. We continued

topursue a number of financing and strategic options as a means to

meet the Company’s USD 120-150 million funding target. In the

absence of adequate debt finance solutions, we consulted extensively

with the major shareholders to gauge their support for an equity raise

but, in light of the challenging equity markets and our acute liquidity

pressures, this option did not receive sufficient support. The Company

then received a combined all cash offer to acquire the Company from

two of largest shareholders and, in particular taking account of the

above factors, the Board views this offer as a viable pathway to resolve

the immediate funding obligations and severe liquidity demands of

thebusiness. On 21 July 2022, we announced the terms of a

recommended cash offer to be made by Thunderball Investments

Limited to acquire the issued and to be issued share capital of Lamprell

plc, details of which are set out on our website. The offer included a

USD 145 million bridge financing loan which is critical to address the

immediate working capital requirements of the Group.

Maintaining high standards of corporate

governance and ensuring that the

management of our business continues

to be aligned with our purpose, strategy

and values proved to be more

important than ever last year.

John Malcolm

Chair

Board changes

Last year we planned to refresh the composition of the Board to be

further aligned with our strategy, and I was delighted to welcome

Motassim Al Maashouq and Jean Marc Lechene to join the Board as

Non-Executive Directors in September and December 2021

respectively. Motassim has extensive experience in the global energy

industry and Saudi Arabia in particular; Jean Marc is a seasoned

renewables executive with a deep understanding of the drivers for this

industry. In addition, James Dewar stepped down from the Board in

December 2021, for personal reasons. I appreciate his valuable

contribution during his four years on the Board, particularly in his role

as Chair of the Audit and Risk Committee, and I wish him all the best

for the future. With James’ departure, this means that we do not have

an individual on the Committee who has recent and relevant financial

experience, contrary to Provision 24; however in light of the above-

mentioned recommended offer to acquire the Company, the Board

has suspended the process to find a replacement Chair of the Audit

and Risk Committee. Similarly, recognising that I have served the

recommended maximum of nine years on the Board in May 2022, the

Board has determined that it is in the best interests of the Company

forme to remain as Chair and a Director until the acquisition process

has completed and a replacement Chair is appointed.

Sustainability

Good progress has been made to articulate our sustainability

ambitions, including forming the Sustainability Committee and

implementing various measures which demonstrate how the Group is

making ESG part of our everyday working lives =>> 28. As announced

in this Annual Report, we are taking that a step further with clear, net

zero carbon targets. Our strategy and business model =>> 8 aim to

deliver sustainable growth for all stakeholders, including the

communities we support, and that includes making decisions that

limitany negative contribution to climate change. It will take many

years to achieve this target, and you can read more about our journey

towards our net zero greenhouse gas emissions on =>> 32.

Looking ahead

At the start of the year, the Board’s priorities for 2022 had been

focusedaround the implementation of the ‘Lamprell reimagined’

strategy, succession planning and, most importantly, restrengthening

of the Company’s balance sheet. However, events have overtaken

these priorities, with the receipt of the offer to acquire the entire issued

and to be issued share capital of the Company and the Board’s

recommendation to accept the same. The Board has noted the strong

fundamentals in the renewables and oil & gas markets and remains

confident of the Group’s ability to benefit from the available

opportunities in the coming years, based on our track record and the

funding strategy through the recommended offer.

It has been a privilege to serve as your Chair, and I would like to

thankmy fellow Directors and all my Lamprell colleagues for their

contributions and support. I am proud of what we have achieved

during my tenure, particularly the realigning of the business with the

energy transition. I look forward to following the Company’s progress

over the years ahead.

John Malcolm

Non-Executive Chair

7 August 2022

Our purpose

The Company’s purpose is to

provide best-in-class project

services and solutions for the

energy industry

Our core values

Our core values are at the heart

of all of Lamprell’s activities

Fiscal responsibility

Because every employee influences our costs,

we are all accountable to ensure that we

achieve the most cost-effective solutions.

Safety

We deliver world-class safety performance and

leave nothing to chance so everyone goes

home safely.

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

Governance

52 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 53

Composition

Non-Executive

Directors

Non-Executive

Chair

Executive Directors

Tenure

7-9 years

0-3 years

4-6 years

Gender

Female

Male

Experience

International energy

Leadership

Middle East operations

EPC

Risk management

Public companies

86%

71%

57%

43%

71%

Irish

Saudi

American

British

French

Board of Directors

1. John Malcolm

Non-Executive Chair

Appointed: May 2013

Key strengths: strong leadership

background in energy businesses,

particularly the Middle East;

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. Between 2015-2019 he

worked at 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.

2. Christopher McDonald

Chief Executive Officer

Appointed: October 2016

Key strengths: strong focus on

business development, strategy

andinnovation; highly capable in

theimplementation of strategic

Company 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 that time, he

served on the board of MW Kellogg

Ltd. Christopher has a Bachelor’s

degree in Mechanical Engineering

from Cornell University.

Committee Chair (* interim basis)

Audit and Risk Committee

Remuneration and Development Committee

Nomination and Governance Committee

Report on corporate governance continued

3. Tony Wright

Chief Financial Officer

Appointed: August 2015

Key strengths: solid financial acumen

and experience with contracting

companies and in a listed

environment; particularly in

theMiddle East.

Experience: Tony Wright joined

Lamprell in January 2013 as Vice

President of Finance. In November

2014, he stepped into the role of

Deputy CFO, followed by a promotion

to Chief Financial Officer in August

2015. Mr Wright is a qualified

chartered certified accountant with

over 15 years’ experience working

inthe oil & gas and construction

industries. From 2010 Mr Wright

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.

4. Debra Valentine

Senior Independent Director

Appointed: August 2015

Key strengths: a leader in legal

andcompliance matters, risk

management, in corporate and

regulatory context; expert in public

companies.

Experience: Debra Valentine has

experience in heavy industries,

leading government relations,

governance, risk and legal functions

across global jurisdictions. She also

has expertise in competition and

anti-trust issues. Ms Valentine worked

at United Technologies Corporation

and as a partner with the law firm

O’Melveny and Myers. She also served

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. Ms Valentine

hasan AB magna cum laude from

Princeton University, and a JD from

Yale University. She is the Board Chair

for the Touchstones Discussion

Project and a member of the Council

on Foreign Relations and the

American Law Institute.

A N

7. Jean Marc Lechene

N R

Non-Executive Director

Appointed: December 2021

Key strengths: solid renewables

background with strong knowledge

ofEuropean markets, and specifically

wind turbine structures.

Experience: Jean Marc Lechene has

40 years’ international experience

with deep expertise in the renewables

industry. In his last executive role as

COO of Vestas, one of the global

leaders in wind turbines, he oversaw

various processes within a global

footprint covering Europe, US, China,

India and Brazil. Prior to Vestas, Jean

Marc held senior management roles

at Michelin and Lafarge. Jean Marc

has extensive international business

experience, from strategy to

operations to change management.

Jean Marc graduated from Ecole de

Mines Paris in 1981 with an MSc in

Engineering and holds an MBA

fromINSEAD.

External appointments:

Non-Executive Chair, Norican Group

A/S; Non-Executive Chair, Tresu A/S;

Non-Executive Independent Director

Velux A/S, Head of the advisory board

of Baettr GmbH; Non-Executive

Director for McPhyLimited.

6. Motassim Al Maashouq

N R

Non-Executive Director

Appointed: September 2021

Key strengths: expert in Saudi market,

Saudi Aramco and extensive

experience of debt and equity capital

markets.

Experience: Motassim Al Maashouq

has over 35 years’ experience in the

energy sector with a career forged in

Saudi Aramco and its international

joint ventures. Prior to retiring from

Saudi Aramco in 2020, Motassim held

key corporate positions, including

Vice President of New Business

Development; Vice President of

Corporate Planning; Group Treasurer,

and led the company team preparing

for the IPO. Motassim was also the

President and CEO for Petrolube in

Saudi Arabia and Petron Corporation

in the Philippines. He holds an MA in

Area Studies (Economics, Politics and

Law) from the University of London’s

School of Oriental and African Studies.

External appointments: Director at

AlBorg Company.

5. Mel Fitzgerald

Non-Executive Director

Appointed: August 2015

Key strengths: proven track record in

a C-suite role for EPCI companies in

the energy sector; deep knowledge

ofrisk management in operations.

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 to recognise his contribution

to the UK oil & gas industry.

External appointments: Director/

shareholder of Cathx Ocean; Director

of Control Cutter.

A R

Nationality

Board diversity

Governance

54 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 55

Compliance with the Code

This statement of compliance summarises how the Company has implemented the principles and provisions

ofthe 2018 UK Corporate Governance Code (the “Code”). The Code is available at www.frc.org.uk. The Board

considers that the Group has complied in all material respects with the principles and provisions of the Code

during 2021 except as specifically identified in this report.

1. Board leadership and Company purpose

See more on =>> 58

A. Board’s role

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. A formal schedule of matters reserved for the Board sets

out the structure under which the Board manages its responsibilities and discharges or delegates its authority. The key focus of the Board’s

activities during the year is described on =>> 59.

B. Purpose and culture

The Board takes a leading role in assessing and monitoring culture in the business, to ensure that workforce policies, practices and behaviours are

aligned with the Group’s purpose, values, and strategy =>> 10, 14 and 18.

C. Resources and controls

The Board works closely with the CEO and CFO to ensure that the business has the necessary resources in place to meet the strategic objectives

and to measure performance against them. There is a framework of prudent and effective controls that enable risks to be assessed and managed;

information about our risk management structure can be found on =>> 46.

D. Stakeholder engagement

Shareholders are a key stakeholder group, and the Board seeks to obtain feedback and understand their views throughout the year. We have a

robust plan for identifying and engaging with our key stakeholder groups =>> 25; however we spend most time trying to understand the views

ofour employee workforce, through regular Employee Welfare Committee Forums and via ‘Chats with the Chair’ =>> 26. In addition, our Board

chose an alternative arrangement for engagement with the workforce other than as proposed in the Code (Provision 5), instead using direct

Non-Executive Director participation in the Employee Welfare Forum as a means to hear employee concerns and feed their views back to the

Board.

E. Workforce policies and practice

We review and approve all enterprise-wide policies, such as the anti-bribery and speaking up policies. This is crucial given the international nature

of our business. The multilingual, secure speaking up hotline allows any employee to report ethical breaches, irregularities or simply concerns on

a confidential basis without any fear of recrimination.

2. Division of responsibilities

See more on =>> 62

F. The role of the Chair

John Malcolm is the Board Chair, and he works closely with the CEO to set the agenda for Board meetings, focusing on strategy, performance,

risk management, culture and key stakeholders. He shapes the culture in the boardroom and promotes openness, challenge and debate from

allattendees. The Chair represents the Company in discussions with certain major shareholders and, as a member of the Nominations and

Governance Committee, has been a key contributor to driving succession planning. The Chair is responsible for overall Board effectiveness,

andhe was independent on the date of his appointment.

G. Composition of the Board

The Board aims to refresh its membership on a regular and phased basis to bring relevant experience and independence to the Board while at

thesame time aiming to provide continuity and stability. The capabilities and experience of the two new Non-Executive Directors, Motassim Al

Maashouq and Jean Marc Lechene, are highly complementary with the skillset of the existing Directors towards achieving the Company’s

strategic goals.

H. Role of Non-Executive Directors

The Non-Executive Directors ensure an effective and independent counterbalance to executive management on the Board. The Senior

Independent Director is Debra Valentine, who is available to shareholders and acts as a sounding board for the Chair and as an intermediary for

the other Directors with the Chair. The role includes responsibility for the Chair’s appraisal.

Letters of appointment for Non-Executive Directors do not set out a fixed time commitment for Board attendance and duties but give an

indication of the likely time required. It is anticipated that the time required by Directors will fluctuate depending on the demands of the Group

and other events.

I. Role of the Company Secretary

The Company Secretary is secretary to the Board and all Committees and ensures that all members receive accurate and timely information via

asecure and electronic portal. Directors have access to the advice of the Group Company Secretary and independent professional advice at the

expense of the Group. The role is an important channel for Board and Committee communications and a link between the Board and

management. The appointment and removal of the Company Secretary are matters reserved to the whole Board.

3. Composition, succession and evaluation

See more on =>> 64

J. Appointments to the Board

The Nominations 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. The Committee is chaired by Mel Fitzgerald and comprises only Non-Executive

Directors, including the Chair. In 2021, two Non-Executive Directors were appointed to the Board, following an extensive market search using the

services of Spencer Stuart, based on the needs of the Company and taking account of the Company’s Diversity and Inclusion Policy. Inaddition,

last year James Dewar stepped down after four years on the Board. For more details on the 2021 activities of the Committee =>> 66.

K. Skills, experience and knowledge of the Board and its Committees

The Board’s composition will continue to evolve to ensure that the Group has the appropriate experience and skills to support its strategy and

operations. Full details of the Board evaluation can be found in the Nominations and Governance Committee Report =>> 66. However with

thedeparture of James Dewar in December 2021, the Audit & Risk Committee has been lacking a member with recent and relevant financial

experience, which is a departure from Provision 24 of the Code, with the process to address this suspended as a result of the recent offer to

acquire the Company.

L. Board 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. Full details are available =>> 64.

4. Audit, risk and internal control

See more on =>> 68

M. Internal and external audit

The Audit and Risk Committee, comprising four independent Non-Executive Directors, monitors the independence and effectiveness of the

Company’s external auditor and its internal audit function and receives regular reports from both. They help to provide assurance to management

and the Board on the effectiveness and integrity of the Group’s internal control framework and procedures. Refer to the Committee’s Report

=>>70 for details of its responsibilities and activities during the year.

N. Fair, balanced and understandable assessment

The Board takes responsibility to ensure that the Group’s position and prospects are assessed and presented in a fair, balanced and

understandable manner, both within the Annual Report and Accounts and all publicly available financial information.

O. Risk management and internal control framework

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 and has delegated administration and monitoring to the Audit and Risk Committee.

See =>> 68 for further information.

5. Remuneration

See more on =>> 72

P. Remuneration policies and practices

Our Remuneration Policy sets out a remuneration structure and incentives which reward fairly and responsibly with a clear link to corporate

andindividual performance. The policy is designed to promote sustainable performance by offering remuneration packages that are designed

toenable the recruitment, retention and motivation of high-calibre Directors and senior management. In setting the Remuneration Policy, the

Remuneration and Development Committee considers the levels of remuneration for the wider employee population, policies and practice in

the UAE and also those in the wider market. Shareholders approved the Remuneration Policy at the 2021 AGM, albeit by a lower percentage than

we would have liked, and this is available on the Group’s website www.lamprell.com.

Q. Procedure for developing the Remuneration Policy

The Remuneration and Development Committee is responsible for determining the remuneration of the Executive Directors, Chair and senior

management. Executive remuneration is set with regard to the wider workforce and through market benchmarking. Refer to the detailed

Remuneration Policy =>> 74 for details.

R. Exercising independent judgement

The Remuneration and Development Committee is composed of four independent Non-Executive Directors who seek independent advice from

FIT Remuneration and Ashursts LLP on remuneration issues. It determines compensation outcomes by assessing performance against defined

criteria, as set out in the Remuneration and Development Committee report =>> 72.

Report on corporate governance continued

Board leadership and Company purpose

Governance

56 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 57

What the Board

did in 2021

Aligning the

business with the

energy transition

Our governance role:

The Board reviews the

implementation of the

Group’s strategy and the

actions required to ensure

the business becomes

profitable and sustainable

for the future.

Improving our

financial position

Our governance role:

We are accountable for

ensuring that the Group’s

financial statements are

fair, balanced and

understandable.

Driving the ESG

agenda

Our governance role:

We listen to the views of all

stakeholders, factor them

into the decisions that we

take and oversee the

implementation of any

resulting actions.

Governance structure

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

Culture, vision, values, Business Code of Conduct, global policies

Global mandatory procedures

Local jurisdictional

policies and procedures

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

Management-level Committees

Responsible for the communication and implementation of decisions, administrative

matters and matters for recommendation to the Board and its Committees

Nomination and

Governance

Committee

Takes primary responsibility

for succession planning

and Board composition

What we did in 2021

• Launched ‘Lamprell reimagined’,

reviewed progress and refined it during

two strategy sessions later in the year

• Established the AiFlux joint venture, led

by our former COO, to deliver digital

offerings

• Received regular updates from the CEO

on the bid pipeline and industry-wide

conditions to test and seek assurance

that we were focused on the right

opportunities

• Refreshed the Board composition to

welcome new Directors with expertise

in Saudi Arabia and renewables projects

• Approved the first stage of an

investment for a new renewables

production line at our main UAE facility,

aimed at increasing revenue generation

and improving margin performance

What we did in 2021

• Oversaw management’s efforts to

manage cashflows and to complete the

2021 capital raise through a mix of debt

and equity

• Considered the impact of COVID-19

and market conditions on the financial

performance and prospects of the

Group at each meeting

• Worked closely with Deloitte around

significant judgments, impairment

reviews and the going concern

assessment, to test the ongoing

liquidity position of the business

• Continued to apply the 25% deduction

on fees and salaries for Directors and

management to assist with liquidity and

align with market dynamics

• Received presentations from our

corporate brokers regarding market

views on available refinancing options

What we did in 2021

• Monitored safety performance to

deliver TRIR of 0.10, a historic low

• Received reports from Mel Fitzgerald

asthe Non-Executive Director

participating in regular workforce

engagement activities

• Discussed feedback from meetings

between major shareholders and the

Chair, CEO and CFO, particularly inthe

lead-up to the equity raise in H22021

• ESG strategy enhanced to ensure full

disclosure and reporting against the

TCFD recommendations in FY2022 and

to create action plan around proposed

net zero carbon target

• Assessed the enterprise risks facing the

Group through the lens of the ongoing

impact of COVID-19

Section 172 factors

The Code anticipates that we will take the considerations set out in

Section 172 of the UK Companies Act 2006 into account when making

decisions. While this law does not directly apply to the Company as an

Isle of Man company, we believe that our decisions and actions should

atall times aim to promote the longer-term success of the Company,

forthe benefit of its members and stakeholders as a whole:

At the start of 2021, we approved the launch of the ‘Lamprell

reimagined’ strategy, which will have long-term consequences as it

hasaligned the Groupto the energy transition. It has opened Lamprell

to significant future opportunities across our three business units of

Renewables, Oil & Gas and Digital. The Group is now in the process

ofimplementing the strategy.

We are focused on the interests of our employees as a key stakeholder

group, and so we created the Workforce Assembly as a means to hear

their views on key issues such as the measures to protect them against

COVID-19 and the remuneration levels in the employment

marketplace, which are starting to pickup.

Lamprell is a key player in the supply chain for the energy industry,

andwe aim to foster long-standing relationships with our customers,

suppliers and all business partners. We receive frequent updates from

management on the status of ongoing projects and bids for new

awards, as well as developments in our supply chain.

With the move towards renewable energy sources, we have seen our

bid pipeline for offshore windfarm projects grow to USD4.6 billion and

calculate our performance against defined environmental measures

while reporting against them.

We set the tone from the top, whereby all Lamprell personnel,

including Directors, are expected to conduct our business responsibly

and honestly, make carefully considered decisions, and be accountable

for them.

Finally, we listen to the views of our shareholders and strive to

communicate effectively on the future plans for the business, which

resulted in the successful completion of the oversubscribed equity

raise in Q4 2021.

How we function as a Board

Our Board is composed of highly skilled individuals who bring a range

ofskills and corporate experience to the table =>> 54. Our role is to

leadand direct theGroup, promote its long-term sustainable success,

generate value for shareholders, and contribute to wider society. We have

a structured calendar forthe year, ensuring that we have enough time to

consider all relevant matters, either at the Board level or by the principal

Committees =>> 60. At each Board meeting, we set aside sufficient time

for Committee chairs to report on their discussions, put forward

recommendations that require approval, and take action. Similarly, we

willmake decisions arising from proposals from management based

oncomprehensive reports that take account of the relevant risks and

stakeholders’ views.

We encountered similar problems in 2021 as we had done in 2020 due

toCOVID-19, such that there were no Board meetings in person last year,

but we meet regularly through virtual Microsoft Teams meetings, either

as a Board or as the Special Subcommittee (where necessary to meet the

quorum requirements in the Company’s Articles of Association which

limits the number of Directors who could be present when located in the

United Kingdom). With James Dewar stepping down in late 2021, the

membership of the Special Subcommittee has been updated to comprise

John Malcolm, Debra Valentine, Christopher McDonald and Tony Wright.

As a group, the Directors speak frequently between meetings and

JohnMalcolm and Christopher McDonald speak at least weekly to

ensurea strong relationship and good understanding of progress on

keymatters between the Chair and theCEO.

We structure the Board agenda between standing agenda items,

governance requirements and areas of operational and strategic focus.

Here are some of the key focus areas and activities during the year.

Report on corporate governance continued

Board leadership and Company purpose continued

Executive

Committee

Chief Executive Officer

Primarily responsible for running the business with the objective

of creating shareholder value

Project managers

Responsible for executing and delivering projects

Project teams

Structured around project execution

Audit and Risk

Committee

Monitors the integrity of

the Company’s financial

statements and its financial

and regulatory compliance,

and oversees risk

management

Disclosure

Committee

Remuneration and

Development

Committee

Sets Remuneration Policy

and compensation levels

for members of senior

management and drives

talent development for

wider management

Bid Approval

Committee

Chief Financial Officer

Responsible for the financial stewardship and control activities of

the Group as well as for investor relations

Function managers

Departmental heads for enterprise-wide support services

Function teams

Departmental policy and procedures

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

Quality and HSES

Management

Review

Sustainability

Committee

See more on =>> 66 See more on =>> 70 See more on =>> 72

Governance

58 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 59

Stakeholder engagement

Having learned from 2020, we were able to engage more effectively

with our various stakeholders despite the ongoing impact of

COVID-19. We recognise that a strong communication plan and

working to understand stakeholder drivers is a cornerstone for a robust

decision-making process and the long-term success of Lamprell.

Our culture plays a central role in both our strategy implementation

and how we engage with our stakeholders. We source information by

way of various cultural indicators, which provides us with feedback on

the effectiveness of our communications. Above all, we expect our

employees to act with integrity, be curious about issues they face, and

aim for the highest performance that they can deliver. We seek to

understand the state of our culture through annual performance

evaluations, and we address poor behaviours by making employees

accountable for their actions.

Our employees

We use a number of initiatives to engage with the workforce, with

regular Director participation in the Employee Welfare Committee

forum. Last year, we helped to kick off the Workforce Assembly as

ameans for staff to voice major issues about the business and the

Sustainability Committee, which is focused on taking practical actions

to promote the long-term success of the Group. We ramped up the

number of ‘Chats with the Chair’ whereby high-potential employees

engaged directly with John Malcolm, our Board Chair, and the other

Non-Executive Directors, helping to create a sustainable talent pipeline

within the business. While all the activities were conducted virtually

due to COVID-19, we hope these engagement activities will be more

frequent and in person during2022.

Our management team has a corporate communications department

that manages the engagement channels within Lamprell to maximise

the reach of any key messages across the organisation. We publish

aninternal newsletter called

Lamprelltimes

. We have an internal

communications network called LamprellConnect, which provides all

employees with information on the business and is a repository for key

materials and an automated way to manage employment matters such

as leave and working hours.

Our CEO held a series of virtual town hall meetings after the release

ofthe financial results and reported to the other Directors any key

feedback from employees. We consider the town halls and similar

virtual gatherings to be an effective way to update employees on key

developments affecting the business, especially around the business’s

strategy and financing. Understandably, given the impact of the

pandemic on our business and the resulting decision in mid-2020

toreduce the fees, salaries and allowances for our Board, senior

management and some of our professional staff by up to 25% to

conserve cash, these were the items of particular interest in the Q&A

sessions. Similarly, we have listened to our employees and the wider

market feedback on this issue. Market conditions are changing quickly,

and as such, there is increasing competition for high-quality workers.

With that in mind, we decided in early 2022 to lift the salary deduction

by 1 June 2022, as a means to ensure that we retain our skilled and

experience personnel. We also regularly communicate the numbers of

employees with COVID-19 or in isolation as close contacts – this helps

the workforce understand the severity of the issue and help combat it

during our daily working lives.

• Trading update meetings

• 2020 full year results roadshow

• Trading update meetings

• Canaccord annual growth conference

• Remuneration consultation with shareholders

• Annual General Meeting

• 2021 half year results roadshow

• Engagement with investors ahead of the capital raise

• Extraordinary General Meeting

• Fearnleys renewables conference

• Jefferies offshore wind contractor summit

Key shareholder activities Our investor community

We worked closely with our investor community in 2021, particularly

around the time of the release of our 2020 financial statements and

our AGM, and in the lead-up to the completion of the equity raise in

Q4 2021. Our Executive Directors lead the investor relations activities

with support from a dedicated investor relations team, including our

brokers, Investec Bank plc, and our financial PR advisors, Tulchan.

OurCFO provides regular updates on investor feedback to us and

shares the equity analyst reports, which help us better understand

shareholder views and build them in our decisions. These activities

were particularly important as we sought to understand the likely

support from shareholders for the capital raise, and we were pleased

to note that it was over subscribed.

Led by Debra Valentine as Chair of the Remuneration and

Development Committee, we have taken steps to engage with

shareholders and understand their concerns on remuneration matters

following the 28% dissenting vote against resolutions 2, 18 and 19 at

the 2021 AGM. We are conscious of the fact that this is the second year

in a row that we have had votes of more than 20% against certain

remuneration-related resolutions. However, we also note that the

investors voting against the resolutions were different in 2021

compared to 2020, and their drivers were also different. In both cases,

we have taken on board the views of all dissenting shareholders and

will factor this into the execution of our Remuneration Policy and

practices. Further details are available in the Directors’ Remuneration

Report =>> 75, in applying Principle D and satisfying Provision 4 of

theCode.

As at 7 August 2022, being the latest practicable date before

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:

Name of major shareholder

Voting rights

attaching to issued

ordinary shares

% of total

voting rights

Lamprell Holdings Limited ,, .%

Blofeld Investment Management ,, .%

AlGihaz ,, .%

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 agreement’s

independence and all other provisions.

Our lenders

We have experienced severe liquidity issues for the last 12-18 months

for a variety of reasons, and so we have focused on ways to improve

our financial position and strengthen the balance sheet. Therefore, we

were pleased to sign a USD 45 million revolving trade loan facility

withtwo of our key lenders, First Abu Dhabi Bank and Emirates

Development Bank. The facility has helped with the working capital

requirements of the two IMI newbuild jackup rigs currently under

construction at the Group’s Hamriyah yard.

Cultural indicators

People

• training data

• staff turnover/attrition

• employee engagement activities

• exit interviews

Health and safety

• total recordable incident rate

• safety walks and results

• COVID-19 infection and quarantine data

• health, safety and well-being initiatives

Ethics and integrity

• business Code of Conduct

• internal audit reports

• annual certifications of compliance

• speaking up statistics

Clients and suppliers

• due diligence exercises

• customer feedback reports

• client/supplier audits

• quality performance

Sustainability

• greenhouse gas emissions

• waste reduction

• water efficiency measures

• local sustainability initiatives

Report on corporate governance continued

Governance

60 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 61

Our Board

Segregation of duties

We have a clear division of responsibilities between the leadership of our Board, which is overseen by the Chair, and the leadership of our

business, which is managed by the CEO.

Board Chair

Chief Financial Officer

Senior Independent Director Company Secretary

Chief Executive Officer

Non-Executive Directors

Key responsibilities

• provides effective leadership for the Board, sets each meeting

agenda focusing on strategy, performance, value creation, risk

management, culture, stakeholders and accountability

• shapes the culture in the boardroom to promote open debate,

effective contribution and challenge

• responsible for ensuring effectiveness in the Executive/Non-

Executive relationship, including meetings solely with the NEDs

• ensures effective communication with key stakeholders, for Directors

to understand their views on governance and performance against

strategy

• responsible for ensuring effective Board governance and maintaining

high ethical standards

• fosters relationships based on trust, mutual respect and open

communication inside and outside the boardroom

Key responsibilities

• responsible for the financial stewardship and control activities of the

Group

• ensures effective financial reporting, processes and controls are in

place

• recommends the annual budget and long-term financial plan to the

Board

• oversees investor relations activities for the Company

• develops and implements the Group’s finance strategy and funding

• maintains relationships with lenders and corporate brokers

• responsible for the delivery of IT strategies and plans

Key responsibilities

• supports the Chair in the delivery of objectives and acts as a

sounding board

• acts as an alternative contact for shareholders, providing a means of

raising concerns other than with the Chair or senior management

• appraises the Chair’s performance annually

• acts as an intermediary for the other Directors

Key responsibilities

• acts as Secretary to the Board and its Committees

• operates as a channel for Board-level communications and a link

between the Board and management

• advises the Board on legal and corporate governance matters and

supports the Board in applying the Code and complying with UK

listing obligations

• ensures that all materials are delivered in a timely and confidential

manner to assist with effective decision-making

• facilitates the Board evaluation, induction and development

processes

Key responsibilities

• leads day-to-day management of the Group, including the execution

of its strategic objectives, its business plans and setting attainable

goals and priorities

• acts as primary conduit for communications with the shareholders

and other key stakeholder groups, including investors, clients and

government agencies

• chairs the Executive Committee and 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

• develops proposals and recommendations for consideration by the

Board on all key matters on a timely basis

• responsible for cultivating relationships with major JV partners

• develops Group policies for approval by the Board and ensures

implementation

Key responsibilities

• ensure an effective counterbalance to executive management on

theBoard

• support executive management while providing constructive

challenge and rigour to all recommendations presented to the Board,

based on their experience and expertise

• 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 Chair

Report on corporate governance continued

Division of responsibilities

Board meetings and attendance in 2021

At the date of publication, the Board has seven Directors comprising the Chair, four independent Non-Executive Directors and two Executive

Directors; their biographies are available on =>> 54. Similar to 2020, the Board was unable to meet in person due to COVID-19, and all meetings

were held by video conference. The Special Subcommittee, with a limited number of Directors required to formally approve matters, was again

used in certain instances. When certain Directors were ineligible to participate in meetings due to their UK location, they were invited to observe

in order to keep updated on key developments and deliberations. On every occasion, full papers were distributed in advance for review.

Management team members will often attend parts of a Board meeting to deliver presentations on certain operational or business matters. Each

Director gains an in-depth understanding of business-critical matters as well as the direct views of the presenting managers which supplement

the views of the Executive Directors.

No. in brackets shows meetings in which the Director was eligible to participate

Name of Director

Board meetings

attended

Special Subcommittee

meetings attended

Acting in capacity

as observer

Strategy sessions

attended

John Malcolm  () N/A N/A  ()

Christopher McDonald  ()  () N/A  ()

Tony Wright  ()  () N/A  ()

Motassim Al Maashouq*  () N/A N/A  ()

Jean Marc Lechene** N/A N/A N/A N/A

Debra Valentine  ()  () N/A  ()

Mel Fitzgerald  () N/A   ()

James Dewar***  ()  ()   ()

* Motassim Al Maashouq joined the Board on 14 September 2021.

** Jean Marc Lechene joined the Board on 9 December 2021.

*** James Dewar stepped down from the Board on 9 December 2021.

Role of the Committees

The Company currently has four principal Board Committees –

theAudit and Risk Committee, the Nomination and Governance

Committee, the Remuneration and Development Committee and

aSpecial Subcommittee to approve matters where there may be

quorum concerns. In addition, Debra Valentine, as Senior Independent

Director, was appointed to act as the Chair for a particular Board or

Committee meeting in lieu of the presiding Chairperson, as a matter

ofdue process. Each Committee oversees certain matters delegated

to it by the Board in accordance with its terms of reference (which are

available on the Company’s website) and each Committee Chair

provides regular reports to the full Board in respect of the same. Similar

to the Board meetings, members of the leadership team may present

to a Committee on key agenda items within its purview, and this will be

included in the Committee report to the Board, as a matter of good

and transparent governance.

There is also a 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, unless something is required to be released urgently in

accordance with the Company’s regulatory disclosure requirements.

Roles and managing conflicts

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. 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 =>> 62.

Throughout 2021 at least half of the Board (excluding the Chair)

comprised independent NEDs as determined by the Board, by

reference to Provision 10 of the Code. On the appointment of

Motassim Al Maashouq, the Board considered his previous

employment by Saudi Aramco but determined that this did not and

would not materially interfere with the exercise of his independent

judgement in respect of Company business. At the beginning of every

year, all independent NEDs (currently Debra Valentine, Motassim Al

Maashouq, Jean Marc Lechene and Mel Fitzgerald) confirm their

independence to the Company. The Board considers that each of

them has been and continues to be independent.

Integrity is a core value for the Lamprell Group, and led by the Chair,

each Director is expected to avoid any actual or potential conflict of

interest. If such conflict was to arise, the Board would assess the

possible impact and take appropriate and timely action per the

following due process:

any new Director is required to provide information on any conflicts

of interest by means of a questionnaire prior to appointment

Directors must comply with key integrity policies, notably the

Business Code of Conduct, the Anti-Bribery and Corruption Policy,

the Anti-Money Laundering Policy and the Speaking Up Policy

conflicts are declared and addressed during Board meetings and

noted in the minutes

for potential conflicts arising between meetings, these are submitted

to the Chair for consideration and determination, with advice from

the Company Secretary

Last year, no conflicts of interest were noted from the Directors save

that each Director was excluded from any decisions around his or her

remuneration, and conflict management procedures were adhered to

and operated effectively.

Overall effectiveness of the Board

Each year the Board reviews its effectiveness as required under the

Code, both formally as part of the annual performance evaluation

process =>> 64 and also informally during each Board meeting as

appropriate. A key finding from the formal evaluation review was that the

Board should review its performance more regularly but nevertheless it

concluded that it remains effective in its processes and performance.

Governance

62 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 63

Appointments to the Board

We had a busy 2021 with excellent progress in our Board succession

plans, which had been flagged as a priority for several years. We

welcomed Motassim Al Maashouq and Jean Marc Lechene as

independent Non-Executive Directors in September and December

2021 respectively. Their extensive experience and expertise in the

Middle East energy markets and offshore windfarms will complement

our capabilities as we drive the strategy forward both in the near and

long term. Both were appointed following a formal, rigorous and

transparent process involving Spencer Stuart, leading external search

consultants, and overseen by the Nomination and Governance

Committee. We also use Eton Bridge Partners as specialist recruitment

consultants, and neither Spencer Stuart nor Eton Bridge Partners has any

other relationship with Lamprell or any individual Director. We anticipate

further changes to the Board composition, as discussed below.

The challenge of onboarding during a pandemic

Recruiting and inducting personnel during the last year has proved

tobe an unusual experience. We want to make sure that all newly-

appointed Directors are inducted quickly and efficiently into the

Lamprell business based on a tailored induction programme. The

pandemic has led us to reconsider how these processes can be

conducted effectively. At a high level, this comprises of three parts:

theprovision of all relevant key documentation, including copies of the

most recent strategy slides and various regulatory materials; one-to-

one meetings with each of the members of the Executive Committee

to understand their views on Lamprell and potential risks and

opportunities facing the Group; and visits to the Group’s main facilities

in the UAE. Customarily there would have been face-to-face meetings.

Instead, the induction plan was conducted via Microsoft Teams; both

Motassim Al Maashouq and Jean Marc Lechene have undergone this

process, but all meetings with the members of the Executive

Committee have been virtual and to date Jean Marc has been unable

to visit the UAE facilities. This has been unavoidable due to the

pandemic but the visit remains a key component of any induction

programme. It enables the Director to gain insights into the Group’s

operations and meet other personnel working at the facilities. We are

aiming for Mr Lechene’s to visit the facility and meet our workforce as

early as possible in 2022.

Annual evaluation process

For 2021, we decided to continue using the internally driven evaluation

process that we had used in recent years, due to cost drivers and the

impact of COVID-19. As required by Provision 21, we considered

whether or not to use an external firm to facilitate our annual Board

performance evaluation process, but we were comfortable that the

current process is effective, delivers useful insights and helps us to

improve based on a review of our activities, performance and

processes.

Under the direction of the Chair of the Nomination and Governance

Committee, we asked the Company Secretary to collect feedback from

each Director and certain key managers via an online questionnaire

and then summarise the results in an aggregated and confidential

report. Hepresented them to the Committee, which considered the

results and made recommendations around steps for improvement

tothe Board, including the Board priorities for 2022. In addition, we

had individual sessions with the Chair to discuss each Director’s

performance and any issues, and Debra Valentine, as the Senior

Independent Director, conducted a similar review with the Chair on

hisperformance. This was an opportunity for each Director to engage

with the process and to discuss with the Chair whether any action was

required to address development needs. It should be noted that Jean

Marc Lechene was not asked to participate in the evaluation process

ashe joined the Board so late in the year.

We discussed the evaluation results in the Board meeting in January

2022, and there was a constructive and collaborative discussion

around both the positives and the areas for improvement. There was

very positive feedback about the changes to the Board composition

where we had seen good progress and which was now well-aligned

with our strategy. We also reviewed progress against our 2021 priorities

and noted our significant achievements in areas such as measures to

protect the health of our workforce against COVID-19 and refreshing

the Board composition. Where we felt that there were areas which

needed our attention, we built them into our 2022 priorities =>> 66.

This includes rebuilding the Group’s resources to enable the ‘Lamprell

reimagined’ strategy and actioning our ESG priorities within the

business, including adopting a net zero carbontarget.

Building our Board

Gap analysis/scoping candidate requirements

The Committee does a gap analysis for the Board

to identify the required capabilities and experience

of potential new NEDs, taking into account the

current composition and future business needs, to

drive the Company’s future success. Diversity is a

critical factor in any decision.

Search process

Led by the Committee Chair with support from

Spencer Stuart or Eton Bridge Partners and the

Human Resources Director, the Committee

considers the longlist of candidates and agrees

ashortlist of candidates to interview.

Interviews

Out of the shortlisted candidates, ordinarily, all

Directors will interview the candidate that is

selected by the Committee as most likely to be

appointed and will circulate feedback to the

Committee.

Due diligence

Assuming that the candidate interviews well, the

Company will complete various due diligence and

regulatory formalities on the candidate and

answer any requests for information that he/she

might have.

New Director appointed

The Committee discusses the relative merits of

each candidate based on the pre-agreed criteria

and makes a recommendation to the Board, for

approval of the appointment.

Report on corporate governance continued

Composition, succession and evaluation

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 organisation’s

diversity as a long-term objective and thereby ensuring we have a

dynamic and creative environment that contributes to our progress

and sustainability. Diversity was a key component of the Board’s

strategy review, 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 that 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

secure senior leadership commitment to the diversity agenda and

toraising 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

Board priority Observation Actions to deliver on priority

Oversee the implementation of the

‘Lamprell reimagined’ strategy to ensure

the business, its three business units and

its objectives succeed, consistent with

the macro energy transition

The ‘Lamprell reimagined’ strategy has

been well received by stakeholders but

the implementation process will take

considerable time and effort to realise.

1. Appoint an external firm which is

experienced in restructuring

businesses to implement the three

business units

2. Re-structure the business to

address the severe liquidity

constraints

Develop and action ESG priorities within

the business, including adopting a net

zero carbon target, ensuring the safety of

the workforce during COVID-19, working

to improve the Group’s governance

processes and providing direct support

for implementation through the

Sustainability Committee

Given the broader energy transition away

from fossil fuels and the increasing

reporting requirements, the Group has a

responsibility to ensure that its ESG

priorities are fit for purpose and will help

to deliver improved value for all

stakeholders in the business.

1. Build a detailed, long-term action

plan to implement the net zero

carbon target

2. Empower the Sustainability

Committee to drive ESG priorities

across the organisation

Develop closer relationships with key

stakeholders (particularly investors,

financial institutions, customers and

business partners) in line with ‘Lamprell

reimagined’ and the energy transition,

and feed their views into the Board’s

decision-making

In order to successfully restrengthen the

Company’s balance sheet and to lead the

business back to profitability, the Board

needs to understand key drivers for all

stakeholders and factor them into key

decisions

1. Engage with stakeholders to allow

access to additional funding for the

business’s immediate working

capital needs and future capex

plans

2. Collaborate with supply chain to bid

competitively on new renewables

tenders

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 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.

Governance

64 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 65

Nomination and Governance

Committee report

The Nomination and Governance Committee had a busy year as we

were tasked to oversee progress in two key governance areas for the

business. These included the changes to the Board composition, to

align with ‘Lamprell reimagined’ and the broader energy transition, and

our action plans in the field of sustainability. Climate change presents

both a risk to our business and an opportunity given our track record

inthe renewables sector and the significant number of new tenders

being run for new offshore windfarm projects. We also had to action

these key initiatives while still having to contend with the ongoing

impact of COVID-19 on our governance structure, so I am pleased

tobe able to report on the significant progress that has been made.

Aligning the Board with the energy transition

My colleagues on the Board are experienced business leaders who

bring a wealth of knowledge from different sectors and countries.

However, last year, we acknowledged that the Board composition

needed to be broader in diversity and reflect the updated strategy.

Sowe looked to build on the earlier gap analysis to appoint new

Directors from a pool with greater diversity and having experience in

renewables or digital projects. This would support our plans on the

strategic, operational and sustainability issues which affect the

Company today or may do so in the future.

After extensive reviews of potential candidates with our search

consultants, we were pleased to see the arrival of Motassim Al

Maashouq as an independent Non-Executive Director in September

2021. His extensive experience and expertise in the global energy

industry and in Saudi Arabia will complement the current Board’s

capabilities in driving the Company’s strategy forward both in the

nearand long term. In December 2021, the Company announced the

appointment of Jean Marc Lechene as an independent Non-Executive

Director. Jean Marc has 40 years’ international experience, from

strategy to operations to change management, with deep expertise

inthe renewables industry, which the Directors believe will be valuable

to the Group.

We have seen substantial progress in the make-up of the Board with

the appointment of these two independent Non-Executive Directors.

The Committee also recommended to the Board that they be

appointed to all three principal Board Committees, which the Board

approved in early 2022. We felt that this would give Motassim and Jean

Marc maximum exposure to the various aspects of the business and

the challenges that it is currently facing. It is important that they should

get up to speed on the inner workings of the business quickly, as we

implement our ‘renewables first’ approach to the ‘Lamprell reimagined’

strategy in 2022.

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

• Overseeing the annual Board performance evaluation process

• Overseeing the Group’s environmental and sustainability

matters

2021 Committee activities

• Led the process for the appointment of the two new

independent Non-Executive Directors and ensured that their

expertise are aligned with the Company’s strategic plans

• Approved the terms of reference for the Sustainability

Committee and ensured Director participation in its meetings

• Received presentations from the management team on

environmental and sustainability matters in anticipation of the

TCFD reporting requirements for FY2021

• Kicked off the process for replacing the Chair in consultation

with Spencer Stuart

Priorities for 2022 (subject to the 21 July offer)

• Empower the Sustainability Committee to develop a detailed

action plan to deliver on the net zero carbon target and

monitor implementation of the same

• Ensure that the Company continues to report fully and properly

against the TCFD recommendations

• Continue with changes to the Board composition, including the

appointment of a new NED based on a recommendation from

a major shareholder and a new Chair for the Audit and Risk

Committee

• Ensure that the process for appointing a new Chair is

completed in 2022

Committee membership and attendance

Member

Meetings

attended

(out of total) Observer

Mel Fitzgerald

Committee Chair and

Non-Executive Director

 () 

John Malcolm

Non-Executive Chair

 () 

Debra Valentine

Senior Independent Director

 () 

Motassim Al Maashouq*

Non-Executive Director

N/A

Jean Marc Lechene*

Non-Executive Director

N/A

* Motassim Al Maashouq and Jean Marc Lechene were appointed to the Committee

in January 2022.

However, we cannot rest on our laurels, and there remains significant

work to be done in refreshing the composition of the Board. With

James Dewar stepping down in late 2021, the Board had intended

tomake other appointments and was already well-advanced in the

process to look for a replacement Chair for the Audit and Risk

Committee, as that Committee is lacking someone with recent and

relevant financial experience. However, with the Board accepting the

recent offer to acquire the issued and to be issued share capital of the

Company, this process has been put on hold pending outcome of the

offer process. In the meantime, Debra Valentine has agreed to step

into the role on an interim basis, for the same reason.

Finally, the Chair’s tenure as a Board member reached nine years in

May 2022 and in accordance with Provision 9 of the Code, John

Malcolm would ordinarily be expecting to step down shortly while we

sought a replacement Chair. However, much as with the process to

replace the Chair for the Audit and Risk Committee, the search for a

replacement Chair has also been delayed pending the outcome of the

offer to acquire the Company by its two major shareholders =>>44.

We are content that John remains independent and he has agreed that

in light of the offer process, he should remain in the role while that

process is ongoing, to assist with a smooth and efficient handover,

assuming that the acquisition is completed.

Responding to climate change

We had several presentations from our HSES management team

asthey updated the Committee on the agreed action plan for

implementing the TCFD recommendations within the Group’s

operations =>> 33 and the activities of the newly-established

Sustainability Committee. As the Board’s representative on this new

committee, I was able to see first-hand what it aims to achieve and

toreport to the Board on progress. The Committee has approved

multiple sustainability initiatives in four sectors – Careers, Health,

Environment and Social – and at each quarterly meeting, progress is

measured by reference to performance goals and metrics. By way of

example, on the social side, we have reactivated our relationship with

Don Bosco Mondo, a foundation in India that supports disadvantaged

youths worldwide. Lamprell has committed to employing at least five

people from the foundation, and we expect to welcome individuals

into the welder training academy during 2022.

Most recently, the Committee received a recommendation from the

Sustainability Committee for Lamprell to adopt a ‘net zero carbon by

2050’ target. The Committee noted that this was in consistent with the

energy transition and the broader direction of travel in the market but

discussed how this would work in the near and longer term. Following

this review, we endorsed the proposal for approval by the Board

whichwas received in January 2022. There have been important

sustainability developments for Lamprell in 2021. They demonstrate

our commitment to respond to climate change in terms of how we

operate and expand the business, how it could impact our projects,

and how Lamprell is already taking action steps to reduce its

environmental footprint for the better. We recognise however that

thisis a marathon and not a sprint, so there remains a great deal of

work to be done in the coming years on this matter.

Ensuring the safety and well-being of our workforce

We have successfully managed the ongoing challenges of COVID-19

and taken measures to protect the well-being of our staff. We were

hopeful in Q3 that we were starting to see the end of the pandemic

but, with the arrival of the Omicron variant, we saw further spikes in

cases which caused 1,200 people to be in quarantine at one point.

However, the yards continued to operate throughout the period

despite the impacts of these issues, albeit less efficiently. The Group

made progress on all of its ongoing projects while demonstrating

excellent safety performance as our TRIR for the year was 0.10, the

best result in the Group’s history. The Committee received health and

safety updates and was delighted with this incredible performance.

Pushing on into 2022

It is clear to me that as a Committee, in 2021, we made great strides in

the key governance priorities delegated to us to oversee but also that

this is a work in progress, in the same way that ‘Lamprell reimagined’

isa journey that will take several years to complete. We support the

development of boardroom diversity while evaluating the balance

ofskills, experience, and independence necessary for our future

succession planning and strategic goals. We will play our part to ensure

that the team delivers on the Company’s ESG goals, all within a robust

corporate governance framework. Strong corporate governance

supports our continued strategy execution, business resilience and

contribution to societies in which we operate.

Mel Fitzgerald

Chair of the Nomination

and Governance Committee

Report on corporate governance continued

Governance

66 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 67

Risk management, internal

controls and audit work

The Audit and Risk Committee monitors the links between the Group’s

activities around risk management, internal controls and internal and

external audit work and ensures that these processes continue to be

robust. For its part, the Board retains overall responsibility for ensuring

that there are adequate procedures to manage risk, oversee the

Group’s internal control framework, and determine the nature and

extent of the principal risks the Company is willing to take to achieve

itslong-term strategic objectives.

We have seen direct consequences of failures in governance caused

by the extreme pressure the supply chain is under, which has caused

industry contractors and subcontractors to take on projects at very low

margins and then fail to deliver as promised. We must ensure that

Lamprell does not take on unnecessary risk or exposure, either as a

contractor or customer, and the Committee acts as a line of defence

against such a threat.

1st line of defence

• Executive Committee

• Internal controls and annual self-assessments

• Internal policies and training

2nd line of defence

• Financial control

• Health, safety and environment

• Technology

• Risk management

• Internal audit

• Legal

3rd line of defence

Audit and Risk Committee

Audit and Risk Committee Monitors the integrity of the

Company’s financial statements, reviews financial and

regulatory compliance and overseas risk management

Management is responsible for establishing and maintaining adequate

internal controls, and the Committee has responsibility for ensuring

the effectiveness of these. Both are ably supported by Deloitte LLP, our

external auditor, which tests a number of the Company’s key controls,

and an internal audit function that assesses the effectiveness of the

control framework and compliance by the Company’s workforce. The

Group’s risk assessment process and how significant business risks are

managed are areas of focus for the Committee. The Committee’s

activity here was led primarily by the Group’s assessment of its

principal and emerging risks and uncertainties =>> 48.

Policies/procedures for overseeing the internal

controlframework

The Group has an internal control environment designed to protect

the business from material risks which have been identified, based on

the key features set out below.

Internal control framework key features

Our strategy is defined by the Board and implemented by management

A corporate culture and values which set high standards and are

underpinned by Lamprell’s Business Code of Conduct

Financial planning

Policies and procedures which regulate the limitations of authority

Oversight and approval of projects and/or contract awards

Implementation and use of an integrated enterprise resource

planning system, linking business functions and operations

The Audit and Risk Committee completed its review of the Group’s

internal controls system’s effectiveness, 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. After refocusing the role of internal audit, the Committee

confirmed that the system of internal control operated effectively for

FY2021.

Key policies and procedures

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, Anti-Money Laundering Policy

and the Speaking Up Policy. Further details for each are available on

the Company’s website.

We have a zero-tolerance approach concerning bribery and

corruption, and we educate our employees and business partners on

this to ensure that all our business is conducted honestly and ethically.

If any concerns should arise, a multilingual, secure speaking up hotline

allows staff members to report ethical breaches. The Audit and Risk

Committee receives regular reports on any whistleblower

investigations and shares these with our Board.

Policies/procedures for managing risk

Per Principles C and O of the Code, the Board has primary

responsibility for the effectiveness of the Group’s internal controls and

risk management systems. Each of the Directors acknowledges and

accepts that the Board as a whole takes responsibility for risk

management in line with the Code, and has reported on the nature

and extent of the principal risks and uncertainties.

Still, our Board has delegated administration and monitoring risks to

the Audit and Risk Committee. Enterprise risks pose the greatest threat

to the Group and management updates the Committee on these risks

biannually and during the process leading to the publication of the

Annual Report. 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.

Report on corporate governance continued

Audit, risks and internal control

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).

At various points in the year, risk owners – typically a member of the

Executive Committee – presented a deep dive on individual enterprise

risks, which the Committee had selected as representing a particularly

topical or heightened risk to the business. Inlast year’s Annual Report,

we highlighted various deep dives which were conducted around the

turn of the year, with a particular focus on strategic aspects of the

business, such as the execution of projects under the LTA programme

within Saudi Arabia. Further deep dives were conducted later in 2021

around counterparty risk, both up and down the supply chain, the

concern being – as highlighted above – that contractors and

subcontractors have been forced to take on projects for which they

may be under-resourced or incapable of executing technically, or at

very low margins simply to continue operating. Lamprell represents an

important cog in the supply chain machine, and we are equally at risk if

other parts of the engine fail.

This two-way disclosure and monitoring system for enterprise risks

provides the Directors with reasonable (but not absolute) assurance

against material misstatements and losses. The results of this system

can be seen in the information relating to the principal risks and

uncertainties faced by the Group =>> 48.

Reporting by Internal Audit (IA)

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.

Throughout 2021, IA conducted audits on the following areas:

counterparty credit reviews of vendors; pricing and execution of

projects under the LTA programme; implementation of non-

destructive testing assurance procedure; review of critical vendor

selection process and due diligence; yard labour recruitment

processes. IA reports twice-yearly to the Committee on the results of

the audits, which provides additional reassurance that the internal

control framework continues to be effective.

IA also reports to the Committee regarding closeout of prior audit

observations and asks for approval for the IA plan for 2022 based on

anassessment of highlighted risk trends within the business and by

reference to best practice. As with the Company’s external auditor, 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

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. The efficacy of the consolidated insurance policy is regularly

stress-tested against market conditions and business requirements.

The insurance market remains challenging, especially for professional

indemnity and Directors’ and Officers’ liability insurances. The terms

are tougher, and premiums have increased even further as insurers

understand insured risks better. We worked closely with our insurance

brokers to achieve the best results for renewed cover under our

consolidated insurance programme.

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 business’ circumstances, size, and risks.

Thisis subject to the usual exclusions such as fraud or dishonesty by

aDirector.

External auditor

The Committee assisted the Board in discharging its responsibilities

concerning monitoring the integrity of external and internal audits and

controls, including advising on the reappointment and independence

of external auditors and assessing the quality of their services. Twice in

the year, the Committee assessed the external auditor’s performance,

effectiveness, and independence. The Committee discussed its views

directly with Deloitte based on the review and audit work they

undertook regarding the interim and full-year financial statements,

respectively. The Committee were satisfied with Deloitte’s

effectiveness and, in making this assessment, it had due regard to their

knowledge of the Group and their resourcing capabilities, length of

service and independence. During each Committee meeting, the

members set aside time to meet with Deloitte, without executives

present, to discuss any sensitive matters or concerns.

Based on the Company’s Policy on Auditor Independence (available on

our website), the Committee tested the independence and objectivity

of our external auditor. Based on the policy, 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. The policy is being

updated to reflect the FRC’s guidance in the Revised Ethical Standard

2019 which establishes a “whitelist” of permitted non-audit services.

The Committee noted that in 2021 Deloitte provided various non-audit

services to the Company including reporting accountant services

relating to the 2021 capital raise. The Committee and Deloitte

considered these services to be appropriate due to their urgent nature

and Deloitte obtained a derogation from the FRC to breach the usual

70% ratio. Accordingly it was noted that the non-audit services had a

total value of USD 1,048,000 (2020: USD 289,000) compared to an

annual audit fee including Group audit fees of USD 1,377,000 (2020:

USD 1,037,000). Notwithstanding the level of non-audit fees, the

Committee was satisfied that the objectivity and independence of the

external auditor was safeguarded throughout 2021 and up to the date

of signing the 2021 financial statements.

Governance

68 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 69

Audit and Risk Committee report

Dear Shareholders

I am pleased to present the Committee’s report for the year ended

31December 2021. The Directors’ responsibility statement in respect

of the Annual Report can be found on =>> 89. The Committee has

maintained its focus on the robustness of financial forecasts used by

management in assessing going concern, viability and carrying value

of assets and the associated disclosures. We tested management’s

assumptions and judgements made in the preparation of the forecasts

and the potential range of outcomes for each scenario, cognisant of

the ongoing impact of COVID-19. We also challenged management’s

annual review of the Group’s risks, especially regarding COVID-19.

We continued to play a key role within the Group’s governance

framework to support the Board in matters relating to financial

reporting, internal control and risk management. We have worked

closely with our external auditor, Deloitte LLP, over the last 12 months

to ensure that the interests of stakeholders are properly protected

inrelation to the Group’s financial reporting and internal control

arrangements and to provide challenges to the decisions and

approaches taken by management relating to the content and

disclosures within the Company’s financial reports. The Code calls for

the Board to ‘present a fair, balanced and understandable assessment

of the Company’s position and prospects’ and the Board has

performed that task with the support and advice of the Committee.

With the liquidity challenges faced by the Company in 2021 and

into2022, we spent considerable time evaluating the significant

judgements (see table opposite) with the auditor. The Company’s

going concern assessment was scrutinised heavily over a prolonged

period in conjunction with our external auditor, and management has

worked to address each of the assumptions in that statement. We were

satisfied that the judgements made were reasonable and that

appropriate disclosure had been included in the accounts although we

also concluded that it was appropriate that the material uncertainty to

the going concern statement should be included. This was despite the

capital raise and debt facility that was successfully put in place in Q4

2021 for the reasons as detailed extensively earlier in this Annual

Report =>>42.

Provision of external audit services

Deloitte has been the Company’s auditor since 2016, and it is fair to

saythat there have been challenging times during that period, not

leastthat COVID-19 has been in existence and impacting auditor and

companies alike. Deloitte has advised us that the audit for the 2021

financial statements will be its final audit in this tenure as the

Company’s auditor. We would like to thank Deloitte for their hard work

and considerable support during their tenure as external auditors and

especially during the unprecedented times of the last two years.

Key responsibilities of the Committee

• Advise the Board on whether the Annual Report and Accounts,

taken as a whole, are fair, balanced and understandable

• Ensure the integrity of the Company’s financial performance

announcements

• Make recommendations about the appointment and removal

of the external auditor

• Monitor the performance, effectiveness and independence

ofthe external and internal audit functions

• Ensure that the policies relating to the internal control

framework, whistleblower complaints and the enterprise risk

management system are effective

2021 Committee activities

• Oversaw efforts to forecast and manage liquidity through regular

updates from management and monthly solvency reports

• Advised the Board on the financial statements for the Company

and the quality of the disclosures in the Notes

• Tested the going concern statement and significant judgments

in the financial model

• Advised the Board on the interim financial statements in the

lead-up to the launch of the capital raise in Q4 2021

• Performed deep dives into key enterprise risks to ensure proper

identification and mitigation =>>69

• Evaluated independence and effectiveness of the external and

internal auditor =>>69

• Assessed the effectiveness of the Group’s enterprise risk

management system and key risks to the business =>>69

• Received reports on speaking up cases

Priorities for 2022 (subject to the 21 July offer)

• Continue to monitor and test ongoing cashflow requirements

and funding options of the business

• Focus in early 2022 for FY2021 reporting on TCFD including

testing our assets for climate-related risks in the impairment

review

• 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 auditor

• Retender for external audit services for FY2022

Committee membership and attendance

Member

Meetings

attended

(out of total) Observer

Debra Valentine

Senior Independent Director

 () 

Motassim Al Maashouq*

Non-Executive Director

N/A

Mel Fitzgerald

Independent Non-Executive Director

 () 

Jean Marc Lechene*

Non-Executive Director

N/A

* Motassim Al Maashouq and Jean Marc Lechene were appointed to the Committee

in January 2022.

As disclosed in last year’s Annual Report, we had been planning to

retender for an external audit contract as a matter of good governance

and so, with Deloitte deciding not to continue as the Company’s

auditor, we commenced the process for a formal and structured

evaluation of potential audit firms at the end of 2021. The audit tender

process has been ongoing but the decision around the appointment

ofa new auditor has been delayed due to the delay in issuing the 2021

financial statements and this Annual Report. In addition, with the

recommended offer to acquire the Company in process =>>61, it

would be premature to appoint a new auditor until the outcome of that

process has completed. Accordingly the Directors plan to recommend

to the shareholders at the 2022 AGM that the appointment of a new

auditor is based on the recommendation of the Audit and Risk

Committee following completion of the audit tender.

Changes in Committee composition

In December 2021, James Dewar, the previous Committee Chair,

decided to step down from the Board for personal reasons. With his

departure, only Mel Fitzgerald and I remained as members of the Audit

and Risk Committee. While we are experienced Non-Executive

Areas of significant accounting

judgement and estimation How each was addressed by the Committee

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 recapitalise the business – see Chair’s statement =>> 2. The Committee

noted that management was actively managing cash flows and 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 took into consideration the recent offer to acquire the Company as summarised in the viability statement =>> 45.

Revenue recognition and estimated

cost to complete on major projects

including onerous contracts (see also

Note 4.1 and 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.

Review of provisions

(see also Note 4.1)

At each meeting, the Committee considered the appropriateness, adequacy and consistency of the 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

(see also Note 39)

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 fair value assumptions used by the independent valuer in determining the fair value less

disposal costs of the Group’s assets. Consideration is also given as to how climate change could impact the recoverable

amount (see Note 39). 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.

Directors, we do not have the same level of financial expertise or

experience that James Dewar had. As such, in early January 2022,

theBoard decided to appoint two new independent Non-Executive

Directors – Motassim Al Maashouq and Jean Marc Lechene – to the

Committee. This improved the levels of constructive challenge to

financial and management reporting within the Group, particularly in

light of Motassim’s extensive experience in financial forecasting and

financial statements. In order to comply with the Corporate

Governance code, the Board had commended a search process for

anew Non-Executive Director with a pure finance background but,

asnoted in the report from the Nominations and Governance

Committee, that process is on hold pending completion of the

recommended offer process =>>44.

Debra Valentine

Chair of the Audit and Risk Committee

Significant accounting judgements considered by the Committee during 2021

The Committee is responsible for considering the significant areas of complexity, management judgement and estimation concerning the

financial statements. The table below describes how it has gained assurance that these have been appropriately addressed.

Report on corporate governance continued

Governance

70 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 71

Committee membership and attendance

Member

Meetings

attended

(out of total) Observer

Debra Valentine

Senior Independent Director

8 (8)

Motassim Al Maashouq*

Non-Executive Director

N/A 2

Mel Fitzgerald

Independent Non-Executive Director

5 (5)

Jean Marc Lechene*

Non-Executive Director

N/A

* Motassim Al Maashouq and Jean Marc Lechene were appointed to the Committee

in January 2022.

Remuneration

Remuneration and Development

Committee report

Dear Shareholders

I am pleased to introduce the Directors’ Remuneration Report for the

year ended 31 December 2021. This year, our report has two sections:

this introductory statement and our annual Directors’ Remuneration

Report that details how our Directors’ Remuneration Policy was

implemented in 2021. Our Directors’ Remuneration Policy (as

approved by shareholders at our 2021 AGM) is included as an appendix

to the Directors’ Remuneration Report for information.

Our 2021 AGM

As a first item, I would like to reassure all of our shareholders that the

Remuneration and Development Committee was both disappointed

and concerned that the resolutions to approve our 2021 Directors’

Remuneration Policy and to renew our LTIP and Retention Shares Plan

were each approved by only 71.6% of shareholder votes cast on the

relevant resolutions at our 2021 AGM. These results were somewhat

balanced by the positive 96.9% approval for our 2020 Directors’

Remuneration Report, but nonetheless, these votes remain matters

ofconcern.

To better understand the issues behind the 2021 AGM voting patterns

and to gather broader views on pay at Lamprell, early in 2022, we

initiated an “open agenda” listening exercise with our major shareholders

and the leading proxy advisory firms to better understand their views

on remuneration at Lamprell. This has proved a worthwhile exercise

for the Committee.

Key responsibilities of the Committee

• Design the Company’s Remuneration Policy

• Ensure compliance with the remuneration section of the Code

• Determine remuneration packages for the Chair and executive

management, taking account of the Company’s purpose, core

values, market conditions and strategy

• Oversee remuneration levels across the wider workforce

2021 Committee activities

• Monitored the ongoing impact of COVID-19 on UK executive

remuneration practices to ensure that the Company

maintained broad alignment while recognising business

performance

• Ensured that the Company maintained market-competitive,

compliant and appropriate 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

• Assessed development initiatives for executive management

and other key employees

Priorities for 2022 (subject to the 21 July offer)

• Develop and implement incentive plans that drive stretch

performance and motivate Executive Directors and senior

managers as we navigate the energy transition

• Identify and manage potential succession risks by continuing

toimplement effective senior leadership development

programmes

• Ensure the process initiated in 2021 to link remuneration

structures effectively to our ‘Lamprell reimagined’ strategy

continues

We are very grateful for all of the feedback which we have received

from shareholders, and we appreciate the continued willingness of

many shareholders to support the broad direction being taken on

senior executive pay at Lamprell.

As ever in any engagement exercise, our shareholders expressed a

broad range of views. However, we were pleased that a majority of

shareholders continued to appreciate the balance which we had

sought between incentivisation and retention in 2021’s Directors’

Remuneration Policy.

Performance and reward in 2021

With regards to performance against our originally set 2021 STIP

scorecard:

our main profit metric (EBITDA) was not attained at the threshold

level: this reflected several trading headwinds including COVID-19

impacts on supply chains and the impact on our workforce of UAE

travel bans and extensive quarantine requirements.

strong progress was, however, made on the future-focused metrics

within our STIP scorecard:

our “backlog” measure which considers our forward orderbook

was attained above expected stretch levels.

our strategic metrics based on attainment of priorities for

‘Lamprell reimagined’ were fully met.

combined with good outcomes on personal metrics, the indicative

scorecard outcome was accordingly 66.5% and 64.5% of maximum

bonus for the CEO and CFO respectively.

notwithstanding these formulaic outcomes, the Committee

determined that in the overall circumstances the outcomes for 2021

STIP should be nil.

For the LTIP performance shares that were awarded in April 2019, with

a three-year performance period ending 31 December 2021, Lamprell

achieved threshold performance in the relative TSR metric measured

against the FTSE World Oil & Gas group (25% weighting) but failed to

achieve threshold performance in the other three metrics (relative TSR

vs FTSE 250, cumulative EBITDA and backlog). Accordingly, only 5% of

the total award vested and in line with this Christopher McDonald and

Tony Wright will vest in 70,120 and 32,856 shares respectively on a

dateto be agreed upon following the publication of the Group’s

annual results.

Operation of our remuneration policy in 2022

With the announcement of the offer for the Company by Thunderball

Investments Limited on 21 July 2022, the Committee determined that,

should the offer proceed, it would be most appropriate for the

measures and targets for the 2022 annual STIP and the form of 2022

long-term incentives to be determined by Thunderball Investments

after conclusion of the offer process.

However, should Lamprell continue in its current ownership structure,

our intention is to continue to operate our remuneration policy in 2022

in a way that is closely aligned with how our policy was applied in 2021.

This will involve the continued operation of our STIP annual bonus and

our LTIP at the levels approved by shareholders at our 2021 AGM. In

both cases, the STIP and LTIP would be subject to appropriate

performance metrics.

Any determinations to be made by the Committee in connection

withthe offer will be consistent with contractual obligations and

ourDirectors’ Remuneration Policy and will consider the relevant

performance conditions prior to the completion of the transaction.

Concluding thoughts

The resolution which will be proposed at our 2022 AGM to approve

the Directors’ Remuneration Report is the normal annual advisory vote

on such matters.

The Committee welcomes all input on remuneration, and if you

haveany comments or questions on any element of the Directors’

Remuneration Report, please email us care of Alex Ridout, Group

General Counsel and Company Secretary, at aridout@lamprell.com.

On behalf of the Board, I recommend the 2021 Directors’

Remuneration Report to you.

Debra Valentine

Chair of the Remuneration and Development

Committee

7 August 2022

Governance

72 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 73

Directors’ remuneration report

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 Directors’ Remuneration Report will be put to an advisory

shareholder vote at the AGM. The information on =>> 75 to 81, save where indicated, has been audited.

TheDirectors’ 2022 Remuneration Policy, as approved by the Company’s shareholders at the 2021 AGM, is included

for information at Appendix 1 to this report but does not form part of the 2021 Directors’ Remuneration Report.

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 FIT Remuneration Consultants LLP. FIT did

not provide other services to the Group during the year under review

and there is no other connection between 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 was engaged periodically to provide ongoing

advice. 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 Chair (but not in

relation to their own remuneration), as well as the Company Secretary

(who acted as the secretary to the Committee), the Human Resources

Director, as well as the Audit and Risk Committee in establishing

incentive plan performance measures. FIT is a signatory to the

Remuneration Consultants’ Code of Conduct and adheres 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 FIT and is satisfied that the advice it receives is

objective and independent. The fees paid to FIT during the year were

GBP 91,417. The fees paid to John Macdonald in respect of Committee

support during the year were AED 22,166. 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.

Shareholder voting at AGM

At last year’s AGM held on 8 August 2021, the Directors’ Remuneration

Report for 2020 and the Remuneration Policy received the following

votes from shareholders:

Remuneration Policy

Directors’

Remuneration Report

Total

number of

votes

votes cast

Total

number of

votes

votes cast

For ,, . ,, .

Against ,, . ,, .

Total votes

cast (for and

against) ,,  ,, 

Votes withheld

, – , –

Total votes

cast (including

votes withheld) ,, – ,, –

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 =>> 72, the Board sought to engage with

representatives from major shareholders to understand their concerns

resulting from the 28.4% dissenting vote against certain resolutions at

the AGM. It is understood that these concerns related to the quantum

of the one-off Restricted Stock award made in lieu of 2020 LTIPs

which were not granted.

Remuneration continued

Implementation of the

RemunerationPolicy for 2022

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 the 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. This incentivises our leadership team to pursue initiatives

which our Board believes will best deliver shareholder value in the

longterm and sustainable growth in both revenues and profits.

Base salary (unaudited)

In setting base salaries for 2022, 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 2022 will remain the same for the sixth

successive year and also were subject to a temporary voluntary

reduction of 25% from 1 April 2020 until 1 June 2022, as follows:

Substantive

base salary

from

1 January

2021

Substantive

base salary

from

1 January

2022

Temporary

voluntary

base salary

from 1 April

2020

Temporary %

decrease

until 1 June

2022

Christopher

McDonald USD , USD , USD , (%)

Tony Wright USD , USD , USD , (%)

Allowances (unaudited)

Following a permanent 20% reduction in housing allowances on

1January 2020, total allowances (excluding school fees) were subject

to a further 25% temporary reduction effective 1 April 2020, which will

continue to apply until 1 June 2022, subject to review.

STIP 2022 (unaudited)

For 2022, the STIP metrics will be determined by Thunderball

Investments Limited should its offer for Lamprell proceed. Should

Lamprell remain within the current ownership structure, the

Committee will determine appropriate metrics and targets for the 2022

STIP which will be disclosed in the Directors’ Remuneration Report for

2022 in due course.

LTIP incentive awards (unaudited)

As disclosed in the Committee Chair’s letter introducing this report,

no2022 LTIP awards are being proposed at the current time due to

theoffer for Lamprell by Thunderball Investments Limited. Should

Lamprell remain within the current ownership structure, the

Committee will determine appropriate metrics and targets for 2022

LTIP awards which will be disclosed in the Directors’ Remuneration

Report for 2022 in due course.

End-of-service gratuity (unaudited)

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.

Directors’ contracts (unaudited)

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 =>> 54 and 55.

Governance

74 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 75

Fees for the Chair and NEDs (unaudited)

The Non-Executive Chair’s remuneration is determined by the Committee and the NEDs’ remuneration is determined by the Executive Directors

and the Chair, 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 last year, Non-Executive

Directors’ fees were subject to a 25% temporary reduction from 1 April 2020, subject to periodic review. This ended on 1 June 2022; a summary

of the fees for 2022 are as follows:

Substantive fee at

1 January 2021

£’000

Substantive fee at

1 January 2022

£’000

Temporary

fee from

1 April 2020

£’000

Temporary %

decrease until

1 June 2022

Non-Executive Chair    (%)

Senior Independent Director    (%)

Base fee   . (%)

Committee Chair fee    (%)

Directors’ remuneration earned in 2021 (after COVID-19 reductions)

The table below summarises Directors’ remuneration received in 2021, after COVID-19 related reductions, with comparisons, where appropriate,

to2020.

Base salary

& fees

USD’000

Benefits &

allowances

USD’000

End-of-service

gratuity

USD’000

Total fixed

pay

USD’000

Short-term

incentives

USD’000

Long-term

incentives

USD’000

Total

variable pay

USD’000

Total

remuneration

USD’000

2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

Executive

Directors

Christopher

McDonald                ,

Tony Wright                

Non-Executive

Directors

John Malcolm    

Debra Valentine    

Mel Fitzgerald    

James Dewar

   

Motassim Al

Maashouq

 –  –

Jean Marc Denis

Lechene

 –  –

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. The remuneration of John Malcolm, Mel Fitzgerald and James Dewar is determined and paid in GBP. Motassim Al Maashouq’s remuneration is

determined in GBP and paid in Saudi Riyals and Jean Marc Denis Lechene’s remuneration is determined in GBP and paid in Euro. These are then converted to USD using the rates of

exchange applied in this report.

2. Benefits and allowances include, where appropriate, 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 on the next page 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 2021 and 2020. 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. (2020: 2%). The expected

liability on the date of termination has been discounted to its net present value using a discount rate of 2.3% p.a. (2020: 1.7% p.a). The end of service gratuity calculation was not impacted

by the COVID-19 reductions.

4. Details of STIP payouts are provided on =>> 78.

5. As reported elsewhere =>> 79, the LTIP 2019 awards, with a performance period that ended on 31 December 2021, resulted in a vesting outcome whereby, on 4 April 2022, Christopher

McDonald vested in 70,120 performance shares, at a vesting share price of £0.275 and an exchange rate of $1.315/£1.00 delivering a value of USD 25,357. On the same basis, Tony Wright

vested in 32,856 performance shares delivering a value of USD11,881. At the date of grant 5 April 2019, the face value of Mr McDonald’s vested shares was USD 52,518 and Mr Wright’s

vested shares was USD 24,608 based on the share price of £0.57 and exchange rate of USD 1.314/£1.00.

6. James Dewar stepped down as a Director on 9 December 2021.

7. Motassim Al Maashouq was appointed to the Board on 14 September 2021.

8. Jean Marc Denis Lechene was appointed to the Board on 9 December 2021.

Summary of benefits and allowances (after COVID-19 reductions)

Housing

USD’000

Vehicle

USD’000

Children’s

education

USD’000

Annual leave

tickets

USD’000

Medical

and life

insurance

USD’000

Other

USD’000

Total

USD’000

Christopher McDonald       

Tony Wright   –    

Short-term incentive plan 2021: performance against targets

CEO and CFO

Metric

Weighting as %

of maximum

annual

opportunity

Threshold

(20% of max)

Stretch target

(100% of max)

Actual

performance

Pay-out

outcome as % of

maximum annual

opportunity

EBITDA

% USD  USD .m (USD .m) %

Backlog

% USD m USD m USD m %

Strategic initiatives

% N/A % %

Personal goals – CEO % N/A .% .%

Personal goals – CFO % N/A .% .%

1. EBITDA targets were in the range of USD 0m (threshold) to USD 5.6m (target) and USD 11.2m (stretch).

2. Backlog targets were in the range of USD 150m (threshold) to USD 260m (target) and USD 320m (stretch).

3. Strategic initiatives (30% weighting) required attainment of three priorities linked to the pillars of ‘Lamprell reimagined’ (each 10% weighting)

– Digital: creation of the AiFlux joint venture with initial funding secured.

– Renewables: expansion of product offering to include monopile transition piece and floating.

– Oil & Gas: development of strategic detailed business plan to take account of Saudi pivot and improve profitability of the business unit.

Short-term incentive plan 2021

CEO

Personal goal Weighting

Performance

outcome

Payout outcome

as a % of maximum

HSE (including COVID-19 mitigation measures) % % %

ESG metrics % % %

Financial % .% .%

Org and team development % % %

CFO

Personal goal Weighting

Performance

outcome

Payout outcome

as a % of maximum

HSE (including COVID-19 mitigation measures) % % %

ESG metrics % .% .%

Financial % % %

Org and team development % % %

At target performance, the payouts for the CEO and CFO would have been at 50% of maximum and at threshold performance, the payouts would

have been at 20% of maximum. The formulaic outcomes were 66.5% and 64.5% of maximum for the CEO and CFO respectively. However, the

Committee determined that notwithstanding the formulaic outcomes, in the overall circumstances the outcomes for 2021 STIP should be nil.

Remuneration continued

Governance

76 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 77

Long-term incentive awards granted during the year

In lieu of the regular LTIP 2020 awards, which could not be made in early 2020 due to close periods, a one-off Restricted Stock Award was made

in November 2021. Assuch,Christopher McDonald and Tony Wright were awarded 995,199 and 466,322 shares respectively at a face value of

USD 525,000 andUSD246,000 respectively. In addition, the regular LTIP 2021 awards were made in November 2021. As such Christopher

McDonald and TonyWright were awarded 1,990,398 and 932,644 performance shares respectively at a face value of USD 1,050,000 and

USD492,000 respectively.

One-off restricted stock award

As reported last year and elsewhere =>> 73, 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. Instead, a one-off Restricted Stock Award was made in November 2021 on the following basis:

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 (face value USD525,000) and CFO award at 60% of base salary (face value USD 246,000) (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, overall safety performance and whether vesting outcomes reflect windfall gains arising from the share prices used to

calculate the numbers of shares subject to awards, before vesting can be confirmed.

Performance shares award

Threshold Maximum

Performance condition Weight % vesting Performance % vesting Performance

End

measurement

point

Cum revenue % % USD .bn % USD .bn  December 

Cum profit % % See Note  % See Note   December 

TSR relative to FTSE 250 Index % % Median % Upper quartile  December 

ESG – 2023 group revenues from renewables % % USD m % USD m  December 

Note 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 at the end of the performance period.

LTIP 2021 awards are also subject to a vesting underpin for which the matters described above for Restricted Stock Awards will be considered.

Inaddition, absolute TSR growth is required for the TSR element to vest.

Performance conditions for outstanding LTIPs

For the sake of completeness, the Company discloses the performance conditions which are attached to the awards of LTIP in the 2019 plan as

set out below. As reported in the 2020 DRR, no LTIP awards were made under the regular Performance Share Plan in 2020.

LTIP 2019

Threshold Maximum

Performance condition Weight % vesting Performance % vesting Performance

End

measurement

point

TSR vs. FTSE World Oil Equipment

and Services Index %  Median  Upper quintile  December 

TSR vs. FTSE 250 Index %  Median  Upper quintile  December 

Cumulative net profit %  (USD m)  USD   December 

Cumulative sales awards %  USD .bn  USD .bn  December 

The outcome of the performance conditions applicable to the 2019 LTIP awards is shown below:

Performance condition Performance % vesting

TSR vs. FTSE World Oil Equipment

and Services Index Median 

TSR vs. FTSE 250 Index Below Median 

Cumulative net profit (USD m) 

Cumulative sales awards USD m 

Accordingly, the overall vesting outcome for the 2019 plan was 5% =>> 74.

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 2021 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. The following table sets out the interests of the Executive Directors in relation to

performance and retention shares:

Executive Directors At 1 January 2021 Awarded in 2021 Date of vesting Vested in 2021 Lapsed in 2021

At 31 December

2021

Christopher McDonald ,, ,,  Nov.   , ,,

Tony Wright ,, ,,  Nov.   , ,,

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 2021 as set out below, as well as the changes to the interests of the Directors in the ordinary shares of the Company in the period

from 1 January 2022 to 7 August 2022, being the last practicable date that the Company is able to report on Directors’ interests:

Beneficially

owned at 31

December

2020

Beneficially

owned at 31

December

2021

Beneficially

owned at

7August

2022

Ordinary

heldat 31

December

2021

Ordinary

shares held

at 7 August

2022

Outstanding

awards

(retention

only)

Outstanding

awards

(subject to

conditions)

Share-

holding

as a %

of base

salary

Share-

holding

requirement

met?

Executive Directors

Christopher McDonald ,, ,, ,, , , , ,, .% No

Tony Wright ,, ,, ,, , , , ,, .% No

Non-Executive

Directors

John Malcolm – , , , , – – – –

Debra Valentine – , , , , – – – –

Motassim Al Maashouq

– – – – – – – – –

Jean Marc Lechene

– – – – – – – – –

Mel Fitzgerald , , , , , – – – –

James Dewar

, , , , , – – – –

1. Calculated at a share price of £0.09 and exchange rate of USD 1.23/£1.00.

2. Motassim Al Maashouq was appointed to the Board on 14 September 2021.

3. Jean Marc Lechene was appointed to the Board on 9 December 2021.

4. James Dewar stepped down from the Board on 9 December 2021.

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.

Remuneration continued

Governance

78 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 79

Percentage change in remuneration levels (unaudited)

The table below shows the movement in base salary, benefits and STIP (or equivalent) for the CEO and other Directors between the 2021 and

2020 financial years, compared to that for the average employee of the Group.

CEO

All

employees CFO Chair SID Other NEDs

Base salary/fees (after COVID-19 deduction)

.% See note  .% .% .% .%

Benefits (after COVID-19 deduction)

.% See note  .% .% .% .%

STIP See note  See note  See note  N/A N/A N/A

1. As reported elsewhere =>> 76, the base salaries and fees of the CEO, CFO, the Chair, SID and all NEDs were reduced temporarily by 25% effective 1 April 2020 and continue to be reduced

going forward until 1 June 2022, subject to review.

2. The reductions described in note 1 above were applied in the same way to the ExCom, senior and middle management groups and, in the case of ExCom, senior and middle

management, continue to apply until 1 June 2022, subject to review. Thepercentage changes for these groups, therefore, aligned with the CEO and other Directors.

3. As reported elsewhere =>> 76, benefits and allowances were subject to the same COVID-19 reductions as applied to base salaries, effective 1 April 2020, with an additional permanent 20%

reduction in housing allowances from 1 January 2020. These reductions are reflected in the percentage changes for the CEO and CFO. For “All employees”, the reductions described in

note 2 above applied in the same way to benefits and allowances.

4. As reported elsewhere =>> 77, the CEO and CFO received a nil STIP 2021 payout, compared to payouts of USD 521,010 and USD 259,389 respectively in 2020.

5. STIP payouts for senior and middle management groups were broadly aligned with the levels and methodology applied to the CEO and CFO compared to payouts averaging 75% of

maximum opportunity levels in 2020. For the wider workforce, priority has been given to reducing the temporary reductions and restoring full salaries.

Relative importance of the spend on pay (unaudited)

The table below shows the spend on staff costs in the financial year, compared to dividends and share buybacks (of which there were none):

2021

USD’000

2020

USD’000 % change

Staff costs , , +.%

Dividends – – .%

Performance graph and CEO pay (unaudited)

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 2011 to 31 December 2021.

100

150

200

250

Share price performance Jan 2012 to Jan 2022 (unaudited)

Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Jan 19 Jan 20

Jan 22

Jan 21

Lamprell

FTSE 250

FTSE All-World Oil

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

payoutand long-term incentive award vesting level as a percentage of the maximum opportunity are also shown for each year.

CEO remuneration table (unaudited)

Year ending 31 December (USD’000)

2021 2020 2019 2018 2017 2016 2016 2015 2014 2013 2013 2012 2012

CEO

McDonald McDonald McDonald McDonald McDonald McDonald



Moffat



Moffat Moffat Moffat Whitbread



Whitbread McCue



Annual remuneration  , , , ,   , , , ,  ,

Annual STIP % % .% % .% % % % % % % % % %

LTIP vesting % % .% .%



.%



% % % % % % % % %

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 7 August 2022.

Debra Valentine

Chair of the Remuneration and Development Committee

Governance

80 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 81

Remuneration continued

Appendix 1

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 was put to a binding shareholders’

vote at the 2021 AGM.

Policy overview

The Remuneration and Development Committee is responsible, on

behalf of the Board =>> 54, 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 Remuneration

Policy and 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 =>> 46

through the application of holding periods and clawback provisions

on incentive planawards.

The full policy as approved by shareholders at the 2021 AGM is available as part of the 2020 Directors’ Remuneration

Report which is within the Company’s Annual Report for 2020 and can be found on the Company’s website at

www.lamprell.com

The Appendix contains a summary ofthe policy as it will apply in 2022.

Details of the shareholder-approved policy are set out in the table below.

Element of pay

Purpose and

link to strategy Operation

Maximum

opportunity

Performance

framework

Base salary

To attract, retain and motivate

talented individuals who are

critical to the Group’s success

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

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

Company performance

appraisal process

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

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

Actual value of benefitsprovided None

Short-term

incentive plan

(STIP)

To reward the achievement of

the Group’s annual financial and

non-financial objectives linked to

the delivery of the Group’s

strategic plan

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 payout 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

Maximum opportunity of 100%

ofannual base salary for all

Executive Directors

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% payout on the

achievement of maximum stretch

targets

On-target performance produces

no more than 50% of the maximum

attainment for each metric

End-of-

service

gratuity

To offer Executive Directors a

retirement benefit as required

under UAE labour law

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

Company contributions are

limited to two years’ base salary

by UAE labourlaw

None

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.

Remuneration continued

Governance

82 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 83

Element of pay

Purpose and

link to strategy Operation

Maximum

opportunity

Performance

framework

Long-term

incentive plan

(LTIP)

To balance performance pay

between the achievement of

strong financial performance and

delivering sustainable stock

market outperformance

To encourage share ownership

and alignment with shareholder

interests

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

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

Performance is assessed against

challenging independent

financial 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

ownership

guidelines

To further strengthen the

long-term alignment between

executives and shareholders

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

Expected to achieve 200%of

annual base salary

withinfiveyears

None

Non-

Executive

Directors’ fees

Set to attract, retain and motivate

talented individuals through the

provision of market-competitive

fees

Reviewed periodically by the

Executive Directors and Chair

(except for their 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

No prescribed minimum or

maximum annual increase.

TheExecutive Directors and

Chair 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

Annual evaluation of

Boardperformance

Consideration of stakeholder views

The Company is committed to maintaining good communications with

investors, its workforce and other stakeholders around remuneration

matters. During 2021 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.

As part of the Company’s continued focus on employee engagement,

it is establishing, in Q1 2022, an Employee Workforce Assembly that will

be chaired by a management representative with a Board representative

attending each meeting. 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. In addition, as described in the Chair’s introductory letter

=>>73, early in 2022, the Board initiated an “open agenda” forum with

major shareholders and proxy advisors as a result of the shareholder

voting at the 2021 AGM. Details of the votes cast for and against the

resolution to approve last year’s Directors’ Remuneration Report are

setout in the Directors’ Remuneration Report =>> 74.

Performance metric selection

The STIP is based on key financial performance indicators =>> 22,

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 and risk factors =>> 46 prevailing at the time,

ensuring that such targets remain challenging, while 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

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 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 attend employee welfare consultative meetings

on a rotational basis and meet regularly with high-potential employees.

Remuneration continued

Governance

84 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 85

Remuneration scenarios for the Executive Directors

The charts below show an estimate of the potential range of

remuneration payable for the Executive Directors in 2022 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 substantive base salaries and benefits applicable

in the absence of the COVID-19 related reductions that have applied

since 1 April 2020 and which are expected to be reinstated on 1 June

2022, subject to review.

Target 2

Target 1

28% 42%

20% 36%

$3,028

$2,048

$753

$2,503

23% 52%

$1,733

30%

37%

100%

25%

43%

46%

Maximum 1

Minimum

Maximum 2

$500 $1,000 $1,500 $2,000 $2,500 $3,000

Total ﬁxed pay

Annual STIP

LTIP

$3,500

Chief Executive Ocer Total remuneration (USD ‘000)

17%

Target 2

Target 1

26% 37%

18% 31%

$1,568

$1,099

$482

$1,322

22% 47%

$951

36%

44%

100%

31%

51%

40%

Maximum 1

Minimum

Maximum 2

$200 $400 $600 $800 $1,000 $1,200

Total ﬁxed pay

Annual STIP

LTIP

$1,400

Chief Financial Ocer

Total remuneration (USD ‘000)

16%

$1,600

Assumptions:

1. Benefits are estimated based on the annualised value for the year ended

31December2021.

2. The end-of-service gratuity is estimated based on the accrual for the year ended

31December 2021.

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.

4. ‘Maximum 2’ and ‘Target 2’ reflect the estimated impact on the LTIP values of a 50%

increase in shareprice.

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 Non-Executive

Director, the fee arrangement would be set in accordance with the

approved Remuneration Policy atthattime.

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 payout to be payable for any part of the notice period not

worked. In such circumstances, the incentive payout 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 disapply 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 for the period of the incentive year worked by the

Director (although the Committee has the discretion to disapply time

pro-rating ifthe circumstances warrant it).

The principles stated opposite 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 Date of contract

Tony Wright 13 August 2015

Christopher McDonald 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

Non-Executive Directors 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. John Malcolm, Debra Valentine and Mel Fitzgerald

were re-elected at the 2021 AGM. All existing Directors will be

proposed for election by the shareholders at the 2022 AGM.

Upon termination or resignation, NEDs are not entitled to

compensation and no further fee is payable. Currently, four

Non-Executive Directors are considered to be independent

oftheCompany.

The following table shows the effective date of appointment for

eachNon-Executive Director:

Non-Executive Director Date of appointment

John Malcolm 27 May 2013

Mel Fitzgerald

13 August 2015

Debra Valentine

1 September 2015

Motassim Al Maashouq

14 September 2021

Jean Marc Lechene

9 December 2021

James Dewar

1 November 2017

1. Mel Fitzgerald, Debra Valentine, Motassim Al Maashouq and Jean Marc Lechene are

considered to be independent Non-Executive Directors of the Company.

2. James Dewar was considered to be an independent Non-Executive Director and he

stood down from the Board on 9 December 2021.

Remuneration continued

Governance

86 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 87

The Directors present their report together with the audited

consolidated financial statements for the year ended 31 December

2021. 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 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 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.

Annual general meetings (AGM)

As was the case in 2020, the 2021 AGM was conducted in a way

suchthat the Company complied with the legal requirements to

passessential shareholder resolutions. Still, the meeting was purely

functional and comprised only the formal votes without any business

update, as well as limited physical Director attendance. There was a

high level of proxy voting by shareholders, as recommended by the

Board, and all resolutions were passed (for more details on the AGM

results, please see www.lamprell.com). For resolutions 2, 18 and 19,

more than 20% of votes cast were against the resolutions, and so the

Board has complied with the Code by its disclosures on =>> 61.

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.

Alex Ridout

Company Secretary

Directors’ report

Please see the Notice of Meeting which has been issued with this

Annual Report and/or our website www.lamprell.com for further

details on the 2022 AGM. As of the date of publication, it is expected

that a similar structure as used in 2020 and 2021 will apply to this AGM.

However the Board is monitoring the situation andmay decide to

revert to an in-person AGM if it is adjudged to be safe for physical

attendance. Per the Code, all Directors will submit themselves for

re-election at the 2022 AGM. 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 April 2022.

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

Directors’ Remuneration Report =>> 74 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 (2020:

16,268) ordinary shares of 5 pence, representing less than 0.01% (2020:

< 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.

At the 2021 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 2022 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.

Granted Outstanding

2021 2020 2021

2020 &

prior

Lamprell plc Free Share

Award Plan Nil Nil Nil Nil

Lamprell plc Retention

Share Plan ,, Nil* ,, ,,

Lamprell plc Executive

Share Option Plan Nil Nil Nil Nil

Lamprell plc Long-Term

Incentive Plan ,, Nil* ,, ,,

* There were no awards of any incentives in 2020 due to the impact of COVID-19.

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.

Service agreements and letters of appointment

Executive Directors are employed under service contracts with

termination notice periods of not more than 12 months. Non-

Executive Directors 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 existing Directors and any new Directors will be proposed for

election by the shareholders at the 2022 AGM.

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 =>> 42.

The Group’s consolidated financial statements have been prepared

ona going concern basis, although with a material uncertainty,

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 =>> 45.

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United Kingdom adopted International Accounting Standards and

IFRS as issued by the IASB and have also chosen to prepare the parent

company financial statements under United Kingdom adopted

International Accounting Standards. 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 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 Isle of Man Companies Act 1931 to 2004. 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 United

Kingdom International Accounting Standards, 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 7 August 2022 and is signed on its behalf by:

Alex Ridout

Company Secretary

By order of the Board

Governance

88 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 89

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

2021 and of the group’s loss for the year then ended;

the group financial statements have been properly prepared in

accordance with United Kingdom adopted International Accounting

Standards and International Financial Reporting Standards (IFRSs) as

issued by the IASB;

the parent company financial statements have been properly

prepared in accordance with United Kingdom adopted International

Accounting Standards and as applied in accordance with the

provisions of the Companies Act 2006; and

the financial statements 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;

he consolidated and parent company balance sheets;

the consolidated and parent company statements of changes

inequity;

the consolidated and parent company cash flow statements; and

the related notes 1 to 41.

The financial reporting framework that has been applied in the

preparation of the group financial statements is applicable law,

UnitedKingdom adopted International Accounting Standards and

IFRSs as issued by the IASB. The financial reporting framework that

hasbeen applied in the preparation of the parent company financial

statements is applicable law and United Kingdom adopted International

Accounting Standards and as applied in accordance with the provisions

of the Companies Act 2006.

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, and the operation of the 70% fee cap

in respect of non-audit services on page 69 of the annual report. We

confirm that we have not provided any non-audit services prohibited

by the FRC’s Ethical Standard 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. Whilst the directors consider that the Offer by Thunderball

Investments Limited (“Thunderball”) to acquire the entire issued and

tobe issued share capital of the parent company (“the Offer”) and the

provision of a Bridge Loan Facility (as described in note 2.1 to the

financial statements) provide a realistic alternative to ceasing trading,

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:

Completion of the Offer: The Offer is subject to the approval

ofmore than 50 per cent of shareholders. Based on the current

shareholdings of Thunderball and irrevocable undertakings by

certain other shareholders to vote in favour of the Offer, the Directors

have forecast that the Offer will be accepted by the shareholders.

Sufficiency of the Bridge Loan Facility: The Directors have assumed

that the Bridge Loan Facility will be timely drawn and sufficient to

cover the funding requirements for the time required to conclude

the Offer. After repayment of the ECI facility, USD 101 million of the

Bridge Loan Facility will remain to pay the group’s other creditors,

which amounted to USD 176 million as of 30 June 2022, and to

partially meet the ongoing funding requirements of the group.

Asignificant proportion of the group’s creditors at 30 June 2022

were many months overdue and, whilst it is anticipated the Bridge

Loan Facility will enable a number of these to be settled in the period

prior to the completion of the Offer, the Directors expect payment

to certain overdue key suppliers on the IMI Rigs projects (who were

owed USD51 million at 30 June 2022) will need to be extended in

line with the expected timing of milestone receipts on these projects

in late 2022 and early 2023. The Directors have assumed that the

group will be able to achieve this based on its track record of doing

do, but its ability to do this is critical and dependent on the reaction

of the key suppliers as the payables are unsecured and contractual

credit terms are exceeded, which is outside the group’s control.

Thelevel of creditor deferral in the period prior to completion of the

Offer is also dependent on the outcome of contract claims and the

extent of new contract awards as discussed below.

Post completion funding: The Directors do not have visibility of

Thunderball’s plans for the business after the Offer is completed,

including the extent and terms of any funding that will be required

post completion. The Directors have taken into consideration the

intentions statement in the 21 July 2022 Offer announcement by

Thunderball and assumed that upon conclusion of the Offer,

Thunderball continues to support the business, and in particular:

That Thunderball will extend or waive the repayment terms of the

Bridge Loan Facility as the Group will be unable to repay the loan

when it falls due (which is forecast to be in December 2022).

That significant additional funding will be provided by Thunderball

during the 15 months to October 2023 in order that the business

may continue to trade. The level and timing of funding will

depend on a number of factors, as outlined further in note 2.1,

butmay be up to approximately USD 100 million.

Contract claims: The Directors assume that settlement of contract

claims on certain major contracts will result in significant cash

inflows in the forecast period. These are not yet agreed and the

amount and timing of such settlements is not wholly within the

control of the Directors.

New contract awards: The Directors assume conversion of a

portion of the bid pipeline in line with the expected timing of

awards, including achieving similar historical levels of revenue for

the contracting services and rig refurbishment businesses. These

contract awards are not committed and there is therefore some

uncertainty as to their commencement

If the Offer does not proceed and the Bridge Loan Facility falls due for

repayment within its current terms, there can be no guarantee that the

group will be able to implement any alternative funding in the available

timeframe. In such an event, the Directors believe that the group will

be unable to meet its financial commitments as they fall due and

consequently will be unable to continue to operate as a going concern

resulting in the appointment of receivers, liquidators or administrators.

As stated in note 2.1, (1) the risk that the Offer does not complete;

(2)the requirement for significant levels of ongoing creditor deferral

during the period prior to the completion of the Offer; and (3) the lack

of visibility of Thunderball’s plans for the business after the Offer is

completed, along with the other matters as set out in that note to the

financial statements, indicate in aggregate 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.

In performing their assessment of going concern, the Directors have

considered forecast cash flows to 31 October 2023. Our evaluation of

the directors’ 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;

engaging in regular discussions with the directors and their advisers

with regard to the status of negotiations in respect of the Offer and

the Bridge Loan Facility and other financing options;

reading the terms of the Offer from Thunderball, as set out in the

announcement dated 21 July 2022, and obtaining an understanding

of the current status of the conditions precedent to completion of

this transaction;

reading the Bridge Loan Facility agreement, and with the assistance

of internal restructuring specialists, understanding the key terms of

the Facility and any potential restrictions to its availability in the period

prior to completion of the Offer;

discussing the terms of the 2.7 Offer and the Bridge Finance Facility

agreement with the company’s external legal counsel, to understand

the risk of the Offer not completing or the Facility not being available

in the period prior to the Offer completion;

agreeing cash received to date under the Bridge Finance Facility to

bank, and obtaining and reading correspondence confirming the

termination of the ECI Facility;

with the assistance of internal restructuring specialists, challenging

the appropriateness of the directors’ 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 the directors’ consideration of downside sensitivity

analyses. This included assessing the feasibility of mitigating actions

within the directors’ control;

assessing and challenging key assumptions and mitigating actions

planned, and in particular assessing the reasonableness of

assumptions regarding payment of creditors, with reference to

board reporting on the subject and comparing the current and

forecast levels of stretch against industry and local averages;

assessing and challenging the forecast timings of cash inflows and

outflows associated with major ongoing contracts such as Seagreen

and Industrial Maritime Services (“IMI”) Rigs 1&2 and assessing the

extent to which significant forecast cashflows in respect of

settlement of claims are supported by the latest correspondence;

evaluating and challenging the bid pipeline and the related future

cash flows in the model, through inspection of bid documentation,

communications with potential customers and holding discussions

with the bid development team;

challenging the level of cash flows in relation to recurring business

by reviewing historical trends;

with the assistance of internal modelling specialists, testing the

mathematical accuracy and functionality of the model used to

prepare the forecasts;

understanding the process being followed to monitor the group’s

solvency, including reading the legal advice obtained by the directors;

assessing the historical accuracy of forecasts prepared by the group;

assessing the nature and extent of the directors’ disclosure of these

matters throughout the annual report and accounts; and

considering whether completion of the Offer, the ability to continue

deferring creditors in the period prior to completion and the

assumption that Thunderball provide appropriate levels of funding

post completion 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.

Financial statements

90 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 91

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);

IMI Rigs 1&2 – estimation of project revenues and costs;

Seagreen – estimation of project revenues and costs; and

Recoverability of non-current assets: property plant and equipment (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

The materiality that we used for the group financial statements was USD 4.5 million, which equated to

1.2% of revenue. Our benchmark of revenue has remained consistent with the prior year.

Scoping

We performed full scope audit procedures on components comprising 99% of the group’s net assets and

99% of the group’s revenue.

Significant changes in our approach

Changes to key audit matters in the current year were:

Settlement was reached on the Moray East project in respect of the unapproved claims and liquidated

damages and therefore this is no longer considered a key audit matter; and

Project delays on Seagreen have resulted in judgements around contract revenue recorded, treatment

of variable consideration in respect of contract variations and claims and the estimated costs to

complete, leading to this item being considered a new key audit matter.

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.

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 the matters described below to be the key audit matters to be communicated in our report.

5.1. IMI Rigs 1&2 – Estimation of project revenues and costs

Key audit matter description

The IMI Rigs 1&2 projects were contracted at lower than usual projected margins and since project

commencement have been subject to 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 (and

uncertainty associated with those costs) which, given the low levels of margin on the projects, could result

in the contracts becoming onerous.

No LDs have been provided for, despite delays in contract delivery to date, and a material level of claims

income has been recognised despite it being only partially formally agreed by the customer.

As forecast costs to complete would only need to increase by 3% to result in these two projects becoming

onerous (i.e. loss making), we have also concluded that there is a potential fraud risk in this area.

The directors have disclosed the recognition of variable consideration in respect of unapproved contract

variations and claims and the decision not to record provisions for LDs as critical judgements in notes 4.1.1

and 4.1.2 respectively, and have included the cost to complete as a key source of estimation uncertainty in

note 4.2.1.

The accounting for IMI Rigs 1&2 was considered by the Audit and Risk Committee as set out on page 71.

How the scope of our audit

responded to the key audit matter

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 through attending management’s project review meeting where project

status, estimates and forecasts are discussed by finance and operational personnel);

read the original contracts and variations thereto, to assess 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 communications between the group, its immediate customer

and the ultimate customer on the status of the projects during the period and after the period end up to

the date of approval of the financial statements. With the assistance of internal capital project specialists

we assessed the likelihood of unapproved contract claims being awarded as well as 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 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 technical assessment papers and forecast schedules and actual costs incurred after the

period end. As part of this work, we specifically considered the impact of delays experienced to date on

costs to complete. Based on this, we recalculated the revenue and margin recognised for the period;

assessed the 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 the directors’ assessment of potential LDs for the IMI Rigs 1&2 projects are reasonable.

Independent auditor’s report to the members

ofLamprell plc continued

Financial statements

92 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 93

5. Key audit matters continued

5.2. Seagreen – Estimation of project revenues and costs

Key audit matter description

The Seagreen project was substantially complete at year end with the remaining jackets being completed

and delivered to the customer in early 2022. There is therefore limited estimation risk in relation to forecast

costs to complete. However, the project was subject to delays which exposes the group to the possibility of

LDs being payable. Negotiations with the customer in respect of both LDs and potential associated claims

for additional variable consideration are ongoing.

No LDs have been provided for and a material level of variable consideration in respect of unapproved

contract claims has been recognised. The directors have disclosed the recognition of unapproved contract

claims and the decision not to record provisions for LDs as critical judgements in notes 4.1.1 and 4.1.2

respectively.

The accounting for Seagreen was considered by the Audit and Risk Committee as set out on page 71.

How the scope of our audit

responded to the key audit matter

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 through attending management’s project review meeting where project

status, estimates and forecasts are discussed by finance and operational personnel);

read the original contracts and variations thereto, to assess 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;

obtained claim documentation and other communications between the group and the customer on

thestatus of the project during the period and after the period end up to the date of approval of the

financial statements. With the assistance of internal capital project specialists we assessed the likelihood

of unapproved contract claims being awarded as well as 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;

met with the legal firm engaged by the group to understand their assessment on claim submissions and

legal entitlement under the contract;

assessed and independently recalculated the Risk and Opportunities schedule for the projects to test

whether 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 and actual costs incurred since the period end. As part of this work,

we specifically considered the impact of delays experienced to date on costs to complete. Based on this,

we recalculated the revenue and margin recognised for the period;

assessed the accounting treatment against the requirements of IFRS 15; and

considered the impact of COVID-19 on project execution and completion deadlines.

Key observations

The revenue recorded in the period includes an unapproved variation order with limited supporting

documentation which we concluded does not comply with the requirements of IFRS 15. However the

corresponding amount was not material and overall, based on the procedures performed, we are satisfied

that the revenue recognised, estimated costs to complete and the directors’ assessment of potential LDs

forthe Seagreen project are reasonable.

5.3. Recoverability of non-current assets: PP&E

Key audit matter description

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 the decline in the share price, the Group identified

impairment indicators for non-current assets in the United Arab Emirates (“UAE”). The directors performed

an impairment assessment as at 31 December 2021, in accordance with IAS36 Impairment of assets.

As disclosed in note 39, where indicators exist, an impairment test is undertaken which requires the

directors to estimate the recoverable amount of it’s the group’s assets, being the higher of the value in use

(“VIU”) and the fair value less costs of disposal (“FVLCD”).

For the year end assessment, the directors 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. The directors have

considered the potential impact of climate change on the valuation, in particular for the operating

equipment which was valued based on depreciated replacement cost, and concluded it would not be

material as explained in note 39.

Based on the exercise completed by the directors, a net impairment reversal of USD 0.4 million (2020: an

impairment loss of USD 3.3 million) has been recorded against PP&E during the year, comprising impairment

charges of USD 3.2 million and impairment reversals of USD 3.6 million.

The resultant carrying amount of PP&E at 31 December 2021 was USD 158.9 million (2020: USD 162.0 million).

The impairment assessment was considered by the Audit and Risk Committee as set out on page 71.

How the scope of our audit

responded to the key audit matter

We performed the following procedures on the FVLCD estimate:

obtained an understanding of the relevant controls around the valuation process, including their use of

valuation experts;

with the assistance of internal valuation specialists, considered and challenged the methodology adopted

by the group’s valuation experts to derive the fair value of items of PP&E, including their assessment that

an active market exists for sale of the items;

with internal valuation specialists, held discussions with the group’s valuation experts and challenged

assumptions included within the valuations of the PP&E assets;

together with internal valuation specialists, evaluated the competence, capabilities and objectivity of the

group’s valuation experts and the appropriateness of their work as audit evidence;

together with internal valuation specialists, challenged the group’s valuation experts on the dismantling

and installation costs that were required to be considered in the FVLCD exercise;

considered the effects of climate change on the valuation; and

considered the costs to dispose determined by the directors by benchmarking to industry standards

anddeveloped an estimate to determine if the group’s valuation experts’ conclusions fell within a

reasonable range.

Key observations

Based on our work performed we consider the impairment charges and reversals and resultant carrying

value of non-current assets recorded to be reasonable.

Independent auditor’s report to the members

ofLamprell plc continued

Financial statements

94 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 95

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:

Group financial statements Parent company financial statements

Materiality USD 4.5 million (2020: USD 5 million) USD 2.25 million (2020: USD 2.9 million)

Basis for determining

materiality

The group materiality that we used in the current year

was based on 1.2% of revenue. 2020 materiality was

based on 1.5% of revenue.

The Parent Company materiality was determined based

on 2% (2020: 3%) of parent company net assets

Rationale for the

benchmarkapplied

Consistent with 2020 we have used revenue as an

appropriate benchmark for materiality, given its relative

stability compared to other potential benchmarks.

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 financial statements Parent company financial statements

Performance materiality 60% (2020: 70%) of group materiality 60% (2020: 70%) of parent company materiality

Basis and rationale for

determining performance

materiality

In determining performance materiality, we considered the following factors which led to the level of performance

materiality in the current period:

our risk assessment and our assessment of the group’s overall control environment; and

our past experience of the audit, including the value and quantum of corrected and uncorrected misstatements

in prior periods and our expectation of the likelihood of misstatements recurring in the current period.

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 0.225 million (2020:

USD 0.250 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,to perform 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, which is consistent with the prior year.

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. Our consideration of climate-related risks

In planning our audit, we have considered the potential impact of

climate change on the group’s business and its financial statements.

The directors have considered climate change as part of their risk

assessment process. Their considerations in this area are set out in the

Strategic Report, including the section on TCFD compliance on page33

and the principal risks set out on page 48, as well as in note 4.3 of the

financial statements.

As a part of our audit, we have obtained the group’s climate-related risk

assessment and held discussions with management and the directors

to understand the process of identifying climate-related risks, the

determination of mitigating actions and the impact on the group’s

financial statements. As explained in note 4.3, the most significant

impact on the financial statements was considered to be the risk that

the energy transition could shorten useful economic lives in relation

toproperty, plant and equipment (PP&E) and thereby adversely impact

the annual depreciation charge or the estimates used for impairment

calculations, especially for the operating equipment as the recoverable

amount is based on depreciated replacement cost. However, the

directors ultimately concluded that this did not represent a key source

of estimation uncertainty, as explained further in note 4.3 and note 39

of the financial statements.

We performed our own qualitative risk assessment of the potential

impact of climate change on the group’s account balances and classes

of transaction and did not identify any reasonably possible risks of

material misstatement. In reaching this conclusion we considered

thepotential impact of climate change on the recoverability of PP&E,

as noted in the related key audit matter in section 5.3 above. Our

procedures were performed with the involvement of internal climate

change and sustainability specialists and included reading disclosures

in the Strategic Report including the TCFD statement, to consider

whether they are materially consistent with the financial statements

and our knowledge obtained in the audit.

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 controls for the

following cycles: payroll and expenditure.

7.4. 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.

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.

Independent auditor’s report to the members

ofLamprell plc continued

Financial statements

96 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 97

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 in KSA and relevant internal specialists,

including valuations, capital projects, 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, taking into

consideration the severe liquidity constraints facing the group, and

identified the greatest potential for fraud in the following areas:

estimation of project costs and revenue recognition in respect of the

IMI Rigs 1&2 contracts and also the cash flow projections used for the

going concern assessment. 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.

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. The key laws and regulations

weconsidered in this context included Isle of Man and UAE Insolvency

law, and the group’s disclosure obligations under the UK Listing Rules.

11.2. Audit response to risks identified

As a result of performing the above, we identified IMI Rigs 1&2 –

Estimation of project revenues and costs and going concern as key audit

matters related to the potential risk of fraud. The key audit matters and

material uncertainty relating to going concern sections of our report

explain these matters in more detail and also describe 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 and external 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; and

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. Opinion on other matter prescribed by our

engagement letter

In our opinion the part of the Directors’ Remuneration Report to be

audited has been properly prepared in accordance with the provisions

of the UK Companies Act 2006 as if that Act had applied to the

company.

13. 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 page 43;

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 page 45;

the directors’ statement on fair, balanced and understandable set

out on page 89;

the board’s confirmation that it has carried out a robust assessment

of the emerging and principal risks set out on page 46;

the section of the annual report that describes the review of

effectiveness of risk management and internal control systems

setout on page 68; and

the section describing the work of the Audit and Risk Committee

setout on page 70.

14. Matters on which we are required to report

byexception

Under the Isle of Man Companies 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; 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.

15. Other matters which we are required to address

15.1. Auditor tenure

Following the recommendation of the Audit and Risk Committee, we

were initially 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 6 years,

covering the years ended 31 December 2016 to 31 December 2021.

The 31 December 2021 audit will be our last year of engagement as the

group’s external auditor as detailed on page 70 of the Annual Report.

15.2. 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).

16. 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/or those matters we have expressly agreed to

report to them on in our engagement letter 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.

As required by the Financial Conduct Authority (FCA) Disclosure

Guidance and Transparency Rule (DTR) 4.1.14R, these financial

statements form part of the European Single Electronic Format (ESEF)

prepared Annual Financial Report filed on the National Storage

Mechanism of the UK FCA in accordance with the ESEF Regulatory

Technical Standard (‘ESEF RTS’). This auditor’s report provides no

assurance over whether the annual financial report has been prepared

using the single electronic format specified in the ESEF RTS.

David Paterson ACA

(Senior statutory auditor)

For and on behalf of Deloitte LLP

Statutory Auditor

London, UK

7 August 2022

Independent auditor’s report to the members

ofLamprell plc continued

Financial statements

98 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 99

Financial statements

Consolidated income statement

for the year ended 31 December 2021

Notes

2021

USD’000

2020

USD’000

Revenue 6 388,808 338,623

Cost of sales 7 (389,561) (324,073)

Gross (loss)/profit (753) 14,550

Selling and distribution expenses 8 (239) (298)

General and administrative expenses

10 (35,531) (47,215)

Other gains – net 13 687 1,009

Operating loss (35,836) (31,954)

Finance costs 12 (7,122) (5,980)

Finance income 12 51 370

Finance costs – net (7,071) (5,610)

Share of loss of investments accounted for using the equity method – net 20 (17,013) (15,697)

Loss before income tax (59,920) (53,261)

Income tax expense 40 (128) (125)

Loss for the year (60,048) (53,386)

Loss per share attributable to the equity holders of the Company during the period 14

Basic (16.98)c (15.63)c

Diluted (16.98)c (15.63)c

* General and administrative expenses include a net reversal of impairment losses of USD 0.5 million (31 December 2020: impairment charge USD 4.6 million) recognised in respect of

property, plant and equipment as a result of year end assessments – refer Note 39.

The notes on pages 108 to 149 form an integral part of these financial statements.

Consolidated statement of comprehensive income

for the year ended 31 December 2021

Notes

2021

USD’000

2020

USD’000

Loss for the year (60,048) (53,386)

Other comprehensive income:

Items that will not be reclassified subsequently to profit or loss:

Remeasurement of post-employment benefit obligations 28 305 (1,676)

Share of other comprehensive loss of equity accounted investments 20 – (352)

Items that may be reclassified subsequently to profit or loss:

Currency translation differences 27 (12) 43

Other comprehensive income/(loss) for the year 293 (1,985)

Total comprehensive loss for the year (59,755) (55,371)

The notes on pages 108 to 149 form an integral part of these financial statements.

Financial statements

100 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 101

Financial statements

Consolidated balance sheet

as at 31 December

Notes

2021

USD’000

2020

USD’000

ASSETS

Non-current assets

Property, plant and equipment 17 158,835 162,024

Intangible assets 73 82

Investments accounted for using the equity method 20 40,950 55,888

Term and margin deposits 24 530 447

Total non-current assets 200,388 218,441

Current assets

Inventories 21 13,228 14,252

Trade and other receivables 22 59,427 73,890

Contract assets 23 99,392 85,426

Cash and cash equivalents 24 25,860 57,625

Term and margin deposits 24 46,443 55,193

Total current assets 244,350 286,386

Total assets 444,738 504,827

LIABILITIES

Current liabilities

Borrowings 33 (19,942) (880)

Trade and other payables 30 (171,817) (70,866)

Contract liabilities 31 (15,149) (159,991)

Lease liabilities 18 (2,297) (2,136)

Current tax liabilities 40 (336) (253)

Provision for warranty costs 32 (4,489) (3,555)

Total current liabilities (214,030) (237,681)

Net current assets 30,320 48,705

Non-current liabilities

Lease liabilities 18 (63,411) (68,849)

Post-employment benefits liabilities 28 (38,455) (37,848)

Total non-current liabilities (101,866) (106,697)

Total liabilities (315,896) (344,378)

Net assets 128,842 160,449

EQUITY

Share capital 26 34,904 30,346

Share premium 26 338,094 315,995

Other reserves 27 (19,304) (19,292)

Retained losses (224,852) (166,600)

Total equity attributable to the equity holders of the Company 128,842 160,449

The financial statements on pages 100 to 149 were approved and authorised for issue by the Board of Directors on 7 August 2022 and signed on

its behalf by:

Christopher McDonald

Chief Executive Officer and Director

Antony Wright

Chief Financial Officer and Director

The notes on pages 108 to 149 form an integral part of these financial statements.

Company balance sheet

as at 31 December

Notes

2021

USD’000

2020

USD’000

ASSETS

Non-current assets

Investment in subsidiaries 19 75,617 82,022

Due from related parties 25 43,558 18,214

Total non-current assets 119,175 100,236

Current assets

Other receivables 730 188

Cash and bank balance 37 42

Total current assets 767 230

Total assets 119,942 100,466

LIABILITIES

Current liabilities

Accruals (577) (1,185)

Due to related parties 25 (481) (481)

Total current liabilities (1,058) (1,666)

Net current liabilities (291) (1,436)

Non-current liabilities

Post-employment benefits liabilities 28 (556) (492)

Total liabilities (1,614) (2,158)

Net assets 118,328 98,308

EQUITY

Share capital 26 34,904 30,346

Share premium 26 338,094 315,995

Retained losses (254,670) (248,033)

Total equity attributable to the equity holders of the Company 118,328 98,308

The financial statements on pages 100 to 149 were approved and authorised for issue by the Board of Directors on 7 August 2022 and signed on

its behalf by:

Christopher McDonald

Chief Executive Officer and Director

Antony Wright

Chief Financial Officer and Director

The notes on pages 108 to 149 form an integral part of these financial statements.

Financial statements

102 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 103

Consolidated statement of changes in equity

Notes

capital

USD’000

premium

USD’000

Other

Reserves

(Note 27)

USD’000

Retained

earnings/

(losses)

USD’000

Total

USD’000

At 1 January 2020 30,346 315,995 (19,335) (115,626) 211,380

Loss for the year – – – (53,386) (53,386)

Other comprehensive income:

Remeasurement of post-employment benefit obligations 28 – – – (1,676) (1,676)

Share of other comprehensive loss accounted for using the

equity method 20 – – – (352) (352)

Currency translation differences 27 – – 43 – 43

Total comprehensive loss for the year – – 43 (55,414) (55,371)

Transactions with owners:

Share-based payments:

– value of services provided 9 – – – 4,440 4,440

Total transactions with owners – – – 4,440 4,440

At 31 December 2020 30,346 315,995 (19,292) (166,600) 160,449

Loss for the year – – – (60,048) (60,048)

Other comprehensive income:

Remeasurement of post-employment benefit obligations 28 – – – 305 305

Share of other comprehensive loss accounted for using the

equity method 20 – – – – –

Currency translation differences 27 – – (12) – (12)

Total comprehensive loss for the year – – (12) (59,743) (59,755)

Transactions with owners:

Issue of share capital 26 4,558 22,099 – – 26,657

Share-based payments:

– value of services provided 9 – – – 2,410 2,410

– treasury shares purchased – – – (919) (919)

Total equity transactions 4,558 22,099 – 1,491 28,148

At 31 December 2021 34,904 338,094 (19,304) (224,852) 128,842

The notes on pages 108 to 149 form an integral part of these financial statements.

Company statement of changes in equity

Notes

capital

USD’000

premium

USD’000

Other

reserve

USD’000

Retained

earnings/

(losses)

USD’000

Total

USD’000

At 1 January 2020 30,346 315,995 – (244,467) 101,874

Loss for the year – – – (7,974) (7,974)

Other comprehensive income:

Remeasurement of post-employment benefit obligations 28 – – – (32) (32)

Total comprehensive loss for the year – – – (8,006) (8,006)

Transactions with owners:

Share-based payments:

– value of services provided 9 – – – 1,202 1,202

– investment in subsidiaries 19 – – – 3,238 3,238

Total transactions with owners – – – 4,440 4,440

At 31 December 2020 30,346 315,995 – (248,033) 98,308

Loss for the year – – – (8,148) (8,148)

Other comprehensive income:

Remeasurement of post-employment benefit obligations 28 – – – 20 20

Total comprehensive loss for the year – – – (8,128) (8,128)

Transactions with owners:

Issue of share capital 26 4,558 22,099 – – 26,657

Share-based payments:

– value of services provided 9 – – – 567 567

– investment in subsidiaries 19 – – – 1,843 1,843

Treasury share purchase – – – (919) (919)

Total equity transactions 4,558 22,099 – 1,491 28,148

At 31 December 2021 34,904 338,094 – (254,670) 118,328

The notes on pages 108 to 149 form an integral part of these financial statements.

Financial statements

104 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 105

Consolidated cash flow statement

for the year ended 31 December 2021

Notes

2021

USD’000

2020

USD’000

Operating activities

Cash (used in)/generated from operations 38 (56,088) 113,303

Tax paid 40 (45) (49)

Net cash (used in)/generated from operations (56,133) 113,254

Investing activities

Purchases of property, plant and equipment 17 (11,771) (13,906)

Proceeds from sale of property, plant and equipment 58 381

Additions to intangible assets – (288)

Investment in associates 20 (1,750) (25,814)

Finance income 12 51 370

Inflows from margin deposits under lien (with original maturity more than three months) 19,447 5,285

Outflows from margin deposits under lien (with original maturity more than three months) (6,976) (24,074)

Inflows from margin deposits under lien (with original maturity less than three months) 432 –

Outflows from margin deposits under lien (with original maturity less than three months) (4,236) (497)

Net cash used in investing activities (4,745) (58,543)

Financing activities

Proceeds on issue of shares – net of transaction costs 26 26,657 –

Purchase of treasury shares (919) –

Proceeds from borrowings 33 19,924 880

Cost of raising debt finance (3,274) –

Repayments of borrowings 33 (880) (20,000)

Finance costs (2,157) (1,411)

Repayment of interest expense on leases 18 (7,434) (2,142)

Repayment of lease liabilities 18 (2,792) (618)

Net cash generated/(used) in financing activities 29,125 (23,291)

Net (decrease)/increase in cash and cash equivalents (31,753) 31,420

Cash and cash equivalents, beginning of the year 57,625 26,162

Exchange rate translation (12) 43

Cash and cash equivalents, end of the year 24 25,860 57,625

The notes on pages 108 to 149 form an integral part of these financial statements.

Company cash flow statement

for the year ended 31 December 2021

Notes

2021

USD’000

2020

USD’000

Operating activities

Loss for the year 34 (8,148) (7,974)

Adjustments for:

Impairment of investment in subsidiary 19 8,248 8,074

Share-based payment – value of services provided 9 567 1,202

Charge for employees’ end of service benefits 28 84 80

Operating cash flows before changes in working capital 751 1,382

Changes in working capital:

Other receivables (542) (79)

Accruals (608) 1,046

Due from related parties 25 (25,344) (2,684)

Net cash used in operating activities (25,743) (335)

Financing activities

Proceeds on issue of shares – net of transaction costs 26 26,657 –

Purchase of treasury shares (919) –

Net cash generated from financing activities 25,738 –

Net decrease in cash and cash equivalents (5) (335)

Cash and cash equivalents, beginning of the year 42 377

Cash and cash equivalents, end of the year 37 42

The notes on pages 108 to 149 form an integral part of these financial statements.

Financial statements

106 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 107

Notes to the consolidated financial statements

for the year ended 31 December 2021

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 1931 to 2004 with the registered number 117101C. The Company acquired 100% of the

legal andbeneficial ownership in Lamprell Energy Limited (“LEL”) from Lamprell Holdings Limited (“LHL”), 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 AIM (formerly the Alternative Investment market) of the London Stock Exchange with effect

from 16October 2006. From 6 November 2008, the Company moved from AIM and was admitted to trading on the London Stock Exchange

(“LSE”) 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 (“UAE”). 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 oil and gas and renewable 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, operations and maintenance and proprietary

technologies for industrial application – refer to Note 5.

The Company has either directly or indirectly the following subsidiaries:

Name of the subsidiary

Percentage

of legal

ownership

Percentage

of beneficial

ownership

% Place of incorporation

Lamprell Energy Limited (“LEL”) 100 100 Isle of Man

Lamprell Investment Holdings Ltd. (“LIH”) 100 100 British Virgin Islands

Lamprell Dubai LLC (“LD”) 49* 100 UAE

Lamprell Sharjah WLL (“LS”) 49* 100 UAE

Maritime Offshore Limited (“MOL”) 100 100 Isle of Man

Maritime Offshore Construction Limited (“MOCL”) 100 100 Isle of Man

Cleopatra Barges Limited (“CBL”) 100 100 British Virgin Islands

Lamprell plc Employee Benefit Trust (“EBT”) 100 † Unincorporated

Maritime Industrial Services Co. Ltd. Inc (“MIS”) 100 100 Republic of Panama

Maurlis International Ltd. Inc (“MIL”) 100 100 Republic of Panama

Rig Metals LLC (“RIM”) 49* 100 UAE

Maritime Industrial Services Co. Ltd. & Partners (“MISCLP”) 70* 100 Sultanate of Oman

Global Investment Co. Ltd. Inc (“GIC”) 100 100 Republic of Panama

Sunbelt Safety Services Co. Ltd. Inc. (“SSS”) 100 100 Republic of Panama

MIS Qatar LLC (“MISQWLL”) 49* 100 Qatar

Lamprell Kazakhstan LLP (“LAK”) 100 100 Kazakhstan

Lamprell Energy (UK) Limited (“LUK”) 100 100 England and Wales

Sunbelt Safety Services LLC (“SSSL”) 70* 100 Sultanate of Oman

Sunbelt Middle East Safety Services LLC 49* 100 UAE

* According to statutory requirements, the remaining legal ownership in each case is registered in the name of a Gulf Cooperation Council (“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.

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

United Kingdom adopted international accounting standards, International Financial Reporting Standards (“IFRS”) as issued by the IASB 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 at least the next twelve months from the date of approval of these consolidated financial

statements notwithstanding the material uncertainty discussed below.

The Group incurred a loss before tax of USD 59.9 million during the year ended 31 December 2021 (31 December 2020: USD 53.4 million) and

was in a Net Cash position of USD 52.9 million on 31 December 2021 (2020: Net Cash position of USD 112.4 million). Of the Net Cash position

on31 December 2021, USD 47.1 million was restricted. The level of net unrestricted cash on 31 December 2021 was therefore USD 5.8 million

(2020: USD 56.8 million). At 30 June 2022 the level of net unrestricted cash was USD 6.5 million and the Group faces acute liquidity challenges

asoutlined further below.

Balance sheet recapitalisation

In 2021, the Group launched a balance sheet recapitalisation programme to fulfil its near-term working capital needs and to meet medium term

strategic objectives with the intention of completing a new funding arrangement of USD 120 -150 million by the end of Q3 2021.

In order to temporarily address the most immediate capital requirements, the Group entered a USD 45 million Export Credit Agency (“ECA”)

backed revolving trade loan facility (“ECI Facility”) with two regional banks in October 2021 and raised gross proceeds of approximately USD 30.1

million through a placing of new Lamprell shares.

The Group intended to secure further capital in the form of a second working capital facility of USD 45 million by the end of Q1 2022, with

additional funding to be put in place by the end of H1 2022.

Accordingly, during H1 2022 the Directors continued to explore a number of potential financing and strategic options, including equity financing,

debt financing, the potential sale of the Group’s oil and gas business, asset monetisation and project-specific financing with a view to delivering

the required funding by the end of H1 2022 in line with the Group’s working capital requirements.

Despite significant efforts by the Group to secure this additional finance, prior to the developments outlined below these discussions had not

resulted in new financing for the Group. As a result, the Group now faces urgent and severe liquidity constraints and in the absence of reaching

an immediate alternative funding solution, the Group will not be able to meet its funding obligations.

Recommended Cash Offer for Lamprell plc (“the Offer”)

On 21 July 2022, the Board of Directors of the Company and the Board of Directors of Thunderball Investments Limited (a newly formed

company owned by Blofeld Investment Management Limited and AlGihaz Holding Closed Joint-Stock Company) (collectively referred to as

“Thunderball”) announced a recommended all-cash offer of 9p per share to be made by Thunderball for the Company’s issued share capital.

TheOffer includes provision of a secured USD 145 million Bridge Loan Facility on the terms and conditions summarised below.

Bridge Loan Facility

On 21 July 2022, the Group entered into the bridge loan facility agreement (the “Bridge Loan Facility Agreement”) with Maverick Investment

Holding Ltd (“Maverick”), a company under the control of a member of the AlSayed family, and AlGihaz Holding Closed Joint-Stock Company

(“AlGihaz”). Pursuant to this Maverick and AlGihaz each agreed to make available a total loan facility of up to USD 145 million to the Group. The

Bridge Loan Facility is available for drawdown in tranches, of which USD 85 million has already been drawn down and a further USD 10 million has

been requested and is expected to be paid on or around 8 August 2022. Further amounts of USD 35 million and USD 15 million are forecast to be

drawn down at the end of August and September 2022 respectively. The Bridge Loan Facility is secured on the majority of the Group’s assets.

The Bridge Loan Facility is being made available (i) to repay the ECI Facility described above in full, which occurred on 4 August 2022; and (ii) to

fund expenditures projected to fall due after 21 July 2022, in accordance with a schedule of expenditures agreed between the parties. The Bridge

Loan Facility is repayable on the earlier of (i) the date falling three months after the date on which the Offer becomes wholly unconditional; or (ii)

the date falling three months after the date on which the Offer lapses or is withdrawn. Interest will accrue at the rate of 12 per cent per annum.

Financial statements

108 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 109

Notes to the consolidated financial statements

continued

2 Summary of significant accounting policies continued

2.1 Basis of preparation continued

Going concern continued

The Directors believe the Offer and Bridge Loan Facility are the only viable funding solutions available to the Group and as a result this forms the

basis of the forecast cash flows used in performing their assessment of going concern. The Directors have considered the forecast cashflows for

the Group for the 15 months to October 2023 which include key assumptions detailed below:

The Offer proceeds to completion: The Offer is subject to more than 50 per cent of shareholders approving the Offer. Based on the current

shareholdings of Thunderball, which in aggregate represent approximately 45.18% of the Company’s issued share capital, and irrevocable

undertakings by certain other shareholders to vote in favour of the Offer representing an additional 4.82% of issued share capital, the Directors

have forecast that the Offer will be accepted by the Shareholders. The Offer is subject to certain additional conditions precedent which are

considered usual and customary for this type of transaction.

Sufficiency of the Bridge Loan Facility: The Directors have assumed that the Bridge Loan Facility will be timely paid following draw-down

requests and sufficient to cover the funding requirements for the time required to conclude the Offer. After repayment of the ECI facility, USD

101 million of the Bridge Loan Facility remains to pay the Group’s other creditors, which amounted to USD 176 million as of 30 June 2022, and

to partially meet the ongoing funding requirements of the Group. A significant proportion of the Group’s creditors at 30 June 2022 were many

months overdue and, whilst itis anticipated that the Bridge Loan Facility will enable a number of these to be settled in the period prior to the

completion of the Offer, the Directors expect payment to certain overdue key suppliers on the IMI Rigs projects (who were owed USD 51

million at 30 June 2022) will need to be extended in line with the expected timing of milestone receipts on these projects in late 2022 and early

2023. The Directors have assumed that the Group will be able to achieve this based on its track record of doing so, but it’s ability to do this is

critical and dependent on the reaction of the key suppliers as the payables are unsecured and contractual credit terms are exceeded, which is

outside the Group’s control. The level of creditor deferral in the period prior to completion of the Offer is also dependent on the outcome of

contract claims and the extent of new contract awards as discussed below.

Post completion funding: The Directors do not have visibility of Thunderball’s plans for the business after the Offer is completed, including

the extent and terms of any funding that will be provided post completion. The intentions statement in the 21 July announcement indicates

that Thunderball is aware that Lamprell must be recapitalised and that this would be most effectively undertaken after the Company’s shares

are de-listed such that Lamprell can execute its strategy, with appropriate support, capital and assistance from Thunderball. The Directors have

therefore assumed that upon conclusion of the Offer, Thunderball continues to support the business, and in particular:

That Thunderball will extend or waive the repayment of the Bridge Loan Facility as the Group will be unable to repay the loan when it falls

due (which is forecast to be in December 2022).

That significant additional funding will be provided by Thunderball during the 15 months to October 2023 in order that the business may

continue to trade. The level and timing of funding required will depend on a number of factors, including the outcome of Thunderball’s

review of the business, successful execution of the Group’s ongoing contracts, the speed with which they are required to settle overdue

creditors, and (as discussed below) the outcome of contract claims and extent of new contract awards, but may be up to approximately

USD100 million.

Contract claims: The Directors assume that settlement of contract claims on certain major contracts will result in significant cash inflows in

the forecast period. These are not yet agreed and the amount and timing of such settlements is not wholly within the control of the Directors.

New contract awards: The Directors assume conversion of a portion of the bid pipeline in line with the expected timing of awards, including

achieving similar historical levels of revenue for the contracting services and rig refurbishment businesses. These contract awards are not

committed and there is therefore some uncertainty as to their commencement.

In preparing the forecasts, the Directors have further considered broader economic factors including the ongoing pandemic, conflict in Ukraine

and the effects of climate change. Technological improvements or innovations that support the transition to a lower carbon economy, and

customer preferences or regulatory incentives that alter fuel or power choices, could impact demand for oil and gas. Depending on the nature

and speed of any such changes and our response, these changes could increase costs, reduce our profitability, reduce demand for certain

products, limit our access to new opportunities, require us to write down certain assets or curtail or cease certain operations, and affect investor

sentiment, our access to capital markets, our competitiveness and financial performance. On the contrary, these risks provide a significant

opportunity to our Renewables segment which would benefit from the increased demand and accelerated award of projects to meet the net

zero emission targets.

If the Offer does not proceed and the Bridge Loan Facility falls due for repayment within its current terms, there can be no guarantee that the

Group will be able to implement any alternative funding in the available timeframe. In such an event, the Directors believe that the Group will be

unable to meet its financial commitments as they fall due and consequently will be unable to continue to operate as a going concern resulting

inthe appointment of receivers, liquidators or administrators. Accordingly, the Directors consider that the Offer represents the only executable

funding solution available to the Group given that Thunderball has procured the Bridge Loan Facility and there is no present viable alternative.

The Directors believe that: (1) the risk that the Offer does not complete; (2) the requirement for significant levels of ongoing creditor deferral

during the period prior to the completion of the Offer; and (3) the lack of visibility of Thunderball’s plans for the business after the Offer is

completed, all of which depend on factors outside management’s control, constitute in aggregate a material uncertainty that may cast significant

doubt upon the Group’s and Company’s ability to continue as a going concern. The financial statements do not include the adjustments that

would result if the Group and Company were unable 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

IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (amendments), ‘Interest Rate Benchmark Reform – Phase 2’ The amendments provide temporary

reliefs which address the financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest

rate (RFR). The amendments include the following practical expedients:

A practical expedient to require contractual changes, or changes to cash flows that are directly required by the reform, to be treated as changes

to a floating interest rate, equivalent to a movement in a market rate of interest

Permit changes required by IBOR reform to be made to hedge designations and hedge documentation without the hedging relationship being

discontinued

Provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR instrument is designated as a

hedge of a risk component

The application of these amendments has had no effect on the Group’s consolidated financial statements as the Group has no hedging

relationships currently.

IFRS 16 (amendments), ‘COVID-19 Related Rent Concessions’ 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. In the current financial year, the Group has applied the amendment to IFRS 16 (as

issued by the Board in May 2021) in advance of its effective date. The amendment was intended to apply until 30 June 2021, but as the impact of

the COVID-19 pandemic is continuing, on 31 March 2021, the IASB extended the period of application of the practical expedient to 30 June 2022.

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 2021 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 investors interest 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 IASB. The Group does not anticipate that the application of the

amendments in future will have an impact on the Group’s consolidated financial statements.

Financial statements

110 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 111

Notes to the consolidated financial statements

continued

2 Summary of significant accounting policies continued

2.1 Basis of preparation continued

Basis of accounting continued

(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2021 and

not early adopted continued

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.

IAS 1 and IFRS Practice Statement 2 (amendments), ‘Disclosure of Accounting Policies’ The amendments change the requirements in IAS 1

withregard to disclosure of accounting policies. The amendments replace all instances of the term ‘significant accounting policies’ with ‘material

accounting policy information’. Accounting policy information is material if, when considered together with other information included in an

entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements

make on the basis of those financial statements. The Board has also developed guidance and examples to explain and demonstrate the application

of the ‘four-step materiality process’ described in IFRS Practice Statement 2. The amendments to IAS 1 are effective for annual periods beginning

on or after 1 January 2023. The Group is currently assessing the impact of the amendments to determine the impact they will have on the

Group’s accounting policy disclosures.

IAS 8 (amendments), ‘Definition of Accounting Estimates’ The amendments replace the definition of a change in accounting estimates with a

definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject

to measurement uncertainty”. The definition of a change in accounting estimates was deleted. 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.

IAS 12 (amendments), ‘Deferred Tax related to Assets and Liabilities arising from a Single Transaction’ The amendments introduce a further

exception from the initial recognition exemption. Under the amendments, an entity does not apply the initial recognition exemption for

transactions that give rise to equal taxable and deductible temporary differences. Depending on the applicable tax law, equal taxable and

deductible temporary differences may arise on initial recognition of an asset and liability in a transaction that is not a business combination and

affects neither accounting nor taxable profit. Following the amendments to IAS 12, an entity is required to recognise the related deferred tax asset

and liability, with the recognition of any deferred tax asset being subject to the recoverability criteria in IAS 12. 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.

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 their 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 are 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

more, which is the average period for completing a project.

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 modifications are 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 standalone 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.

Financial statements

112 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 113

Notes to the consolidated financial statements

continued

2 Summary of significant accounting policies continued

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 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.

(b) Disposal of subsidiaries

When the Group ceases to have control, any retained interest in the entity is re-measured 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 related asset or liabilities. This may mean that amounts

previously recognised in other comprehensive income are reclassified to profit or loss.

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 are 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 ventures (which includes any long-term interest that, in substance, forms part of the Group’s net investment in the joint ventures), the Group

does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.

(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 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 (“USD”) 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 and for 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’.

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.

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:

Years

Buildings and infrastructure 3 – 25

Operating equipment 3 – 20

Fixtures and office equipment 3 – 5

Motor vehicles 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.

Financial statements

114 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 115

Notes to the consolidated financial statements

continued

2 Summary of significant accounting policies continued

2.7 Intangible assets

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 using the straight-line method over a period of fifteen years.

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.

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 – refer Note 2.18(d). 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) Staff benefits liability

An accrual is made for the estimated liability for performance related bonus 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 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.

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) is within the control of the Group; and

b) 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 re-measures 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 re-measurement 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 re-measurement in profit or loss.

The Group accounts for a lease modification as a separate lease if both:

a) the modification increases the scope of the lease by adding the right-of-use one or more underlying assets; and

b) 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 cost of sales or

general and administration expenses line items of the consolidated income statement.

Financial statements

116 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 117

Notes to the consolidated financial statements

continued

2 Summary of significant accounting policies continued

2.13 Leases continued

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 right-of-use asset when the Group incurs an obligation for these costs. The obligation for these costs are 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, right-of-use asset is amortised over the term of the lease. The right-of-use

assets are presented within property, plant and equipment in the consolidated statement of financial position.

2.14 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, current accounts with banks less margin deposits and other short-term highly liquid

investments with original maturity of three months or less. Term and margin deposits are presented separately in the consolidated statement

offinancial position.

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

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.

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 and assessing performance of the operating segments, has been identified

as the Executive Directors that makes strategic decisions.

2.18 Financial assets

The Group classifies its financial assets in the following categories: at amortised cost or fair value through other comprehensive income

(“FVTOCI”) and fair value through P&L (“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 (“EIR”) 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 other comprehensive income (“FVTOCI”)

A debt investment is measured at FVTOCI if it meets both of the following conditions and is not designated as at FVTPL:

it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount

outstanding.

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.

(d) Impairment of financial assets

In relation to the impairment of financial assets, the Group applies a simplified approach in calculating expected credit losses (ECLs). Therefore,

the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs 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.

(e) Financial liabilities

Financial liabilities are subsequently carried at amortized 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 re-measured 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.

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.

The Group currently does not hold any hedge relationships.

Financial statements

118 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 119

Notes to the consolidated financial statements

continued

2 Summary of significant accounting policies continued

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 indicators of 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 39).

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 the retained earnings 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 the retained earnings.

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. Market risk exposures are measured using sensitivity analysis. During the year ended 31 December 2021, if foreign

exchange rates on foreign balances had been 10% higher/lower, the exchange difference would have been higher/lower by USD 0.3 million

(2020:USD0.1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 2021, if interest rates on deposits had been

0.5% higher/lower, the interest income would have been higher/lower by USD 0.3 million (2020: USD 0.2 million).

The Group’s interest rate risk arises from borrowings. Borrowings at variable rates expose the Group to cash flow interest rate risk. During the year

ended 31 December 2021, if interest rates on borrowings had been 0.5% higher/lower, the interest expense would have been higher/lower by

USD 0.1 million (2020: USD 0.1 million).

The Group’s exposure to credit risk is detailed in Notes 16, 22, 23 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, considering its financial position, past experience and other factors. An

impairment analyses 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 grouping 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 debtors operate. 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.

Trade Receivables

Contract

assets

Current

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

31 December 2021

Expected credit loss rate – – – – 71%

Gross carrying amount 99,392 21,126 3,927 636 4,544 129,625

Loss allowance – – – – 3,223 3,223

31 December 2020

Expected credit loss rate – – – – 72%

Gross carrying amount 85,426 43,760 5,690 1,143 4,682 140,701

Loss allowance – – – – 3,372 3,372

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:

Cash and cash equivalents and deposits

Counterparty

2021 2020

External

rating+ USD’000

External

rating+ USD’000

Bank A A+ 46,156 A+ 44,998

Bank B AA– 11,783 A+ 40,064

Bank C A+ 8,407 AA– 24,083

Bank D A+ 4,951 A+ 2,151

71,297 111,296

+ Based on Fitch’s long-term ratings.

Trade receivables

2021 2020

Internal

rating++ USD’000

Internal

rating++ USD’000

Customer 1 Group B 10,185 Group B 32,906

Customer 2 Group A 4,334 Group B 5,067

Customer 3 Group A 2,798 Group B 4,697

Customer 4 Group A 2,656 Group C 2,079

Customer 5 Group A 1,860 Group A 1,995

Customer 6 Group C 1,045 Group C 1,073

Customer 7 Group B 975 Group C 1,045

Customer 8 Group C 796 Group C 582

Customer 9 Group A 657 Group B 376

25,306 49,820

++ Refer to Note 16 for the description of internal ratings.

The above represents 84% (2020: 90%) of trade receivables of USD 30.2 million (2020: USD 55.3 million) (Note 22).

The counterparties in 2021 are not necessarily the same counterparties in 2020.

The customers in 2021 are not necessarily the same customers in 2020.

Management does not expect any losses from non-performance by these counterparties.

The majority of contract assets are with the same customers as indicated in the receivables table (Note 23).

Financial statements

120 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 121

Notes to the consolidated financial statements

continued

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. When liquidity is constrained the Group seeks to

address the working capital deficits by deferring supplier payments to match with the expected inflows from the projects. See Note 2.1 for a

detailed discussion on creditor deferrals.

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.

Carrying

amount

USD’000

Contractual

cash flows

USD’000

Less than

1year

USD’000

Between

1to5 years

USD’000

31 December 2021

Trade payable, other payables and accruals (Note 30) 171,817 171,817 171,817 –

Borrowings (Note 33) 19,942 19,942 19,942 –

191,759 191,759 191,759 –

31 December 2020

Trade payable, other payables and accruals (Note 30) 70,866 70,866 70,866 –

Borrowings (Note 33) 880 880 880 –

71,746 71,746 71,746 –

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 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. In the absence of funding, the Group makes

use of creditor payment deferrals to manage its working capital – see Note 2.1.

The Group monitors capital based on 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 a 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 2021 and 31 December 2020. Property, plant

and equipment has been measured at fair value less cost of disposal– see Note 39.

4 Critical accounting judgements and key sources of estimation uncertainty

The Group makes certain critical 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 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, program 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 2021, the balance due from customers on construction contracts includes an amount of USD 22.1 million (2020: USD 5.0

million) unapproved contract claims as negotiations continue with our clients on the Seagreen and IMI projects.

4.1.2 Liquidated damages (LDs)

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 make

a judgement where the amount of liquidated damages payable under the contract will be incurred 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 2021, 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 2021 (2020: nil).

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 based on costs incurred as a proportion of the total contract costs that will be incurred over the life of the

contract. As a result, the Group is required to estimate the total cost to completion of all outstanding projects at each period end. These cost

estimates will often include a contingency relating to identified risks which are adjusted throughout the life of a project to reflect the remaining

risk profile.

The Group uses a 5% sensitivity to assess the effect a change in estimate of this magnitude would have on the revenue and margin recognised.

A3% cost increase is considered to be the minimum figure that could turn a project onerous where margins are low.

If the estimated total costs to completion of all outstanding projects were to decrease by 5% this would either result in contract assets increasing

by USD 6.8 million (2020: USD 5.4 million) or contract liabilities decreasing by USD 6.8 million (2020: USD 5.4 million).

If the estimated total costs to completion of all outstanding projects were to increase by 5%, contract assets would either decrease by USD 7.8

million (2020: USD 5.8 million) or contract liabilities would increase by USD 7.8 million (2020: USD 5.8 million). Based on this scenario, contract

liabilities would include an onerous contract provision of USD 4.2 million on the Group’s two newbuild projects where the margin is lower than

average, as they were bid at competitive levels to monetise existing inventory.

4.3 Climate change

Transitioning to a net-zero energy system is crucial for protecting human health, mitigating climate change and revitalising the economy. The

Group is accelerating its decarbonisation plan to achieve its net-zero target by 2050 and its operations may be impacted positively or negatively

by government actions within the locations it operates as further discussed in the strategic report. In relation to the Group’s financial position at

31December 2021, the most significant potential impact is considered to be the risk that the energy transition could shorten useful economic

lives in relation to property, plant and equipment and thereby adversely impact the annual depreciation charge or the estimates used for

impairment calculations especially for the operating equipment as the recoverable amount is based on depreciated replacement cost – see

Note39. However, based on the analysis shown in Note 39, we do not currently believe this represents a key source of estimation uncertainty.

Financial statements

122 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 123

Notes to the consolidated financial statements

continued

5 Segment information

In January 2021, as part of the Lamprell reimagined strategy the Group was re-organised into three strategic markets it seeks to address i.e., ‘Oil

and Gas’, ‘Renewables’ and ‘Digital’. Accordingly, this has changed how the business is reported and viewed by the Executive Directors, the chief

operating decision-maker, and therefore the make up of the reportable segments.

The segments are based on strategic objectives, similar nature of the products and services, type of customer and economic characteristics.

During 2020, the segments were reported as Rigs, EPC(I) and Contracting services and as a result, comparatives have been restated.

The Oil and Gas segment contains business from New Build Jack Up rigs, land rigs, refurbishment and engineering and construction (excluding

site works) used by customers operating in the Oil and Gas business. The Renewables segment contains business from foundations and offshore

platforms mainly used by customers operating offshore wind power projects. The Digital segment comprises business from use of proprietary

technologies for industrial application.

Oil and Gas

USD’000

Renewables

USD’000

Digital

USD’000

Total

USD’000

Year ended 31 December 2021

Revenue from external customers 247,467 141,341 – 388,808

Gross operating profit before absorptions 27,447 6,244 – 33,691

Year ended 31 December 2020 (restated)

Revenue from external customers 188,311 150,312 – 338,623

Gross operating profit before absorptions 25,330 21,262 – 46,592

The Executive Directors assesses the performance of the operating segments based on a measure of gross profit. The labour, project

management and equipment costs in this gross profit measure are measured based on standard cost. 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. The measurement basis excludes the effect of the common expenses for yard rent,

repairs and maintenance and other miscellaneous expenses.

The reconciliation of the gross operating profit is provided as follows:

2021

USD’000

2020

USD’000

Gross operating profit for Oil and Gas segment as reported to the Executive Directors 27,447 25,330

Gross operating profit for the Renewables segments as reported to the Executive Directors 6,244 21,262

Gross operating profit for the Digital segments as reported to the Executive Directors – –

Gross operating profit before absorptions 33,691 46,592

Under absorbed employee and equipment costs (5,544) (2,893)

Provision for slow moving and obsolete inventories (21) (294)

Reversal of impairment losses shown as part of operating profit (Note 10) 148 97

Project related bank guarantee charges shown as part of operating profit (1,500) (1,237)

Gross operating profit 26,774 42,265

Unallocated:

Unallocated operational overheads (6,497) (10,743)

Repairs and maintenance (5,006) (3,464)

Yard rent and depreciation (6,969) (7,323)

Others (10,408) (7,325)

Add back:

Reversal of impairment losses shown as part of general and administrative expenses (Note 10) (148) (97)

Project related bank guarantee charges shown as part of finance costs 1,500 1,237

Gross (loss)/profit (753) 14,550

Selling and distribution expenses (Note 8) (239) (298)

General and administrative expenses- excluding impairment and restructuring costs (Note 10) (34,282) (37,070)

Other gains – net (Note 13) 687 1,009

Finance costs (Note 12) (7,122) (5,980)

Finance income (Note 12) 51 370

Share of loss of investment accounted for using the equity method (Note 20) (17,013) (15,697)

Reversal/(charge) of impairment losses – net (Note 39) 471 (4,548)

Restructuring costs (Note 29) (1,720) (5,597)

Loss before income tax (59,920) (53,261)

The breakdown of revenue from all services is as disclosed in Note 6.

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 Group’s principal place of business is in the UAE. The revenue recognised in the UAE with respect to external customers is USD 386.3 million

(2020: USD 336.5 million), and the revenue recognised from other countries is USD 2.5 million (2020: USD 2.1 million).

Certain customers individually accounted for greater than 10% of the Group’s revenue and are shown in the table below:

2021

USD’000

2020

USD’000

External customer A 148,542 99,156

External customer B 140,491 87,193

External customer C 28,069 51,152

317,102 237,501

In 2021, revenue from customers A and C is attributable to the Oil and Gas segment, and revenue from customer B to the Renewables segment,

whereas in 2020, revenue from customers A and C relates to Renewable segment and customer B to the Oil and Gas segment. Customers A, B

and C are not the same in the two years presented.

6 Disaggregation of revenue

Major value streams

Year ended 31 December 2021 Year ended 31 December 2020 (restated)

Oil and Gas

USD’000

Renewables

USD’000

Total

USD’000

Oil and Gas

USD’000

Renewables

USD’000

Total

USD’000

New build jackups, refurbishment and land rigs 186,221 – 186,221 128,727 – 128,727

Platforms 7,448 – 7,448 – – –

Foundations – 141,341 141,341 – 150,312 150,312

Operations and maintenance, site work and safety services 53,798 – 53,798 59,584 – 59,584

247,467 141,341 388,808 188,311 150,312 338,623

Timing of revenue recognition

Year ended 31 December 2021 Year ended 31 December 2020 (restated)

Oil and Gas

USD’000

Renewables

USD’000

Total

USD’000

Oil and Gas

USD’000

Renewables

USD’000

Total

USD’000

Recognised over time 247,467 141,341 388,808 188,311 150,312 338,623

There was no revenue recognised at a point in time during the years ended 31 December 2021 and 31 December 2020.

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)

Year ended December 2021 Year ended December 2020 (restated)

Oil and Gas

USD’000

Renewables

USD’000

Total

USD’000

Oil and Gas

USD’000

Renewables

USD’000

Total

USD’000

Within one year 326,978 14,317 341,295 314,332 142,872 457,204

More than one year 1,596 – 1,596 64,760 – 64,760

328,574 14,317 342,891 379,092 142,872 521,964

Financial statements

124 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 125

Notes to the consolidated financial statements

continued

7 Cost of Sales

2021

USD’000

2020

USD’000

Materials and related costs 147,324 131,921

Staff costs (Note 11) 124,708 107,692

Subcontract labour 38,295 16,376

Subcontract costs – including warranty provisions 33,958 30,803

Depreciation (Note 17) 14,858 17,986

Equipment hire 14,071 9,620

Write-down of inventory to net realisable value (Note 21) – 6,934

Utilities 6,122 3,439

Repairs and maintenance 5,006 3,464

Warranty provision released (257) (9,039)

Recruitment costs 499 555

Others 4,977 4,322

389,561 324,073

8 Selling and distribution expenses

2021

USD’000

2020

USD’000

Advertising and marketing 162 72

Travel 48 214

Entertainment 21 11

Others 8 1

239 298

9 Share-based payments

Group

2021

USD’000

2020

USD’000

Amount of share-based charge (Note 11):

– relating to retention share plan 896 1,230

– relating to performance share plan 1,514 3,210

2,410 4,440

Company

2021

USD’000

2020

USD’000

Amount of share-based charge:

– relating to performance share plan 567 1,202

567 1,202

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/employee

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

Number

of shares

Vesting

period

Fair value

per share

Expected

withdrawal

rate

2018 2,903,073 36 months £0.77 –

10,000 34 months £0.77 –

10,000 22 months £0.77 –

30,000 10 months £0.77 –

2,953,073

2019 1,720,724 36 months £0.60 –

558,390 36 months £0.60 –

2,279,114

2021 1,461,521 36 months £0.35 –

5,014,779 36 months £0.35 –

825,000 36 months £0.35 –

7,301,300

A charge of USD 0.9 million (2020: USD 1.2 million) related to this scheme is recognised as staff costs in the consolidated income statement for

the year with a corresponding credit to the 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 (2020: USD Nil).

The Group has no legal or constructive obligation to settle the retention share awards in cash.

An analysis of the number of shares granted, vested during the year and expected to vest in future periods is provided below:

Number of

Shares expected to vest in future periods at 1 January 2020 6,059,577

Shares vested during the year (1,012,183)

Shares lapsed during the year (385,264)

Shares expected to vest in future periods at 31 December 2020 4,662,130

Shares granted during the year 7,301,300

Shares vested during the year (2,352,923)

Shares lapsed during the year (547,886)

Shares expected to vest in future periods at 31 December 2021 9,062,621

Financial statements

126 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 127

Notes to the consolidated financial statements

continued

9 Share-based payments continued

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 at no cost 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 net profit performance, ESG

performance and cumulative revenue performance. 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

Number of

Vesting

period

Fair value

per share

Dividend

entitlement

Expected

withdrawal

rate

2018

9 April 2018 1,192,924 36 months £ 0.77 No –

9 April 2018 1,410,937 36 months £ 0.77 No –

2,603,861

2019

5 April 2019 2,059,523 36 months £ 0.52 No –

5 April 2019 3,305,075 36 months £ 0.52 No –

5,364,598

2021

29 November 2021 2,923,042 36 months £ 0.34 No –

29 November 2021 3,165,301 36 months £ 0.34 No –

6,088,343

Accordingly, a charge of USD 1.5 million (2020: USD 3.2 million) is recognised in the consolidated income statement for the year with a

corresponding credit to the consolidated retained earnings. This includes a charge recognised in the income statement of the Company with

acorresponding credit to retained earnings of USD 0.6 million (2020: USD 1.2 million).

The Group has no legal or constructive obligation to settle the performance 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:

Number of

Shares expected to vest in future periods at 1 January 2020 9,994,652

Shares granted under performance share plan –

Shares lapsed due to non-satisfaction of vesting conditions (3,319,796)

Shares expected to vest in future periods at 31 December 2020 6,674,856

Shares granted during the year 6,088,343

Shares vested during the year (468,346)

Shares lapsed due to non-satisfaction of vesting conditions (2,122,808)

Shares expected to vest in future periods at 31 December 2021 10,172,045

10 General and administrative expenses

2021

USD’000

2020

USD’000

Staff costs (Note 11) 18,959 25,574

Legal, professional and consultancy fees 4,504 2,126

Depreciation (Note 17) 1,950 2,045

Auditor’s remuneration (Note 15) 2,425 1,326

IT support and maintenance 1,857 1,543

Restructuring costs (Note 29) 1,720 5,597

Insurance 1,422 916

Utilities and communication 1,279 1,135

Non-executive director fees 452 439

Office maintenance 450 513

Bank charges 101 105

Amortisation of intangible assets 9 9

Digital initiatives – 550

Reversal of impairment losses, net of amounts recovered (148) (97)

(Reversal)/charge of impairment losses of non-financial assets – net (Note 39) (471) 4,548

Others 1,022 886

35,531 47,215

11 Staff costs

2021

USD’000

2020

USD’000

Wages and salaries 112,404 100,209

Employees’ end of service benefits (Note 28) 4,618 5,251

Share-based payments – value of services provided (Note 9) 2,410 4,440

Other benefits 24,235 23,366

143,667 133,266

Staff costs are included in:

Cost of sales (Note 7) 124,708 107,692

General and administrative expenses (Note 10) 18,959 25,574

143,667 133,266

Number of employees at 31 December 5,688 5,346

Sub-contracted employees at 31 December 1,060 1,275

Total number of employees (staff and subcontracted) at 31 December 6,748 6,621

Staff costs for the year ending 31 December 2021 is net of the COVID-19 savings realised from payroll deductions implemented at the onset of

the pandemic amounting to USD 8.7 million (31 December 2020: 7.7 million). This contributes USD 6.2 million (31 December 2020: USD5.4million)

to cost of sales and USD 2.5 million (31 December 2020: USD 2.3 million) to general and administrative expenses.

The other benefits primarily consist of non-cash benefits for employees such as insurance, air fare, VISA costs and rental of villas and apartments.

During the year, the average head count for administrative employees was 5,780 (2020: 5,552) while the average head count for subcontracted

employees was 1,875 (2020: 717).

Financial statements

128 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 129

Notes to the consolidated financial statements

continued

11 Staff costs continued

Directors’ remuneration comprises:

Salary

2021

USD’000

Fees

2021

USD’000

Allowances &

benefits

2021

USD’000

COVID-19

deduction

2021

USD’000

Share-based

payments

value of

services

provided

2021

USD’000

Post-

employment

benefits

2021

USD’000

Total

2021

USD’000

Total

2020

USD’000

Executive Directors

Christopher McDonald 700 – 218 (212) 424 50 1,180 2,142

Antony Wright 410 – 153 (135) 200 34 662 1,168

Non-Executive Directors

John Malcolm – 248 – (62) – – 186 188

Mel Fitzgerald – 101 – (26) – – 75 76

Debra Valentine – 118 – (30) – – 88 90

James Dewar

– 101 – (26) – – 75 76

Nicholas Garrett – – – – – – – 9

Motassim Al Maashouq

– 27 – (7) – – 20 –

Jean Marc Lechene

– 6 – (2) – – 4 –

1,110 601 371 (500) 624 84 2,290 3,749

The emoluments of the highest paid Director were USD 1.2 million (2020: USD 2.1 million) and these principally comprised salary, share-based

payment and benefits.

# Resigned as Non-Executive Director with effect from 10 December 2021.

^ Appointed as Non-Executive Director with effect from 14 September 2021.

~ Appointed as Non-Executive Director with effect from 9 December 2021.

12 Finance costs and income

Finance costs

2021

USD’000

2020

USD’000

Interest expense on leases (Note 18) 4,949 4,627

Bank guarantee charges 1,526 1,147

Interest on bank borrowings 34 129

Commitment fees – 42

Others 613 35

7,122 5,980

Finance income

Finance income comprises interest income of USD 0.1 million (2020: USD 0.4 million) from bank deposits.

13 Other gains – net

2021

USD’000

2020

USD’000

Exchange loss – net (140) (454)

(Loss)/profit on disposal of assets (73) 267

Discounts received – 892

Insurance claim received against previous year expenses 723 –

Others 177 304

687 1,009

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 and performance share plans, 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 share awards.

2021

USD’000

2020

USD’000

The calculations of loss per share are based on the following loss and numbers of shares:

Loss for the year (60,048) (53,386)

Weighted average number of shares for basic loss per share 353,506,890 341,710,302

Adjustments for:

– Assumed vesting of performance share plan – –

– Assumed vesting of retention share plan – –

Weighted average number of shares for diluted loss per share 353,506,890 341,710,302

Assumed vesting of performance and retention share plans amounting to 3,813,324 (2020: 3,199,269) shares and 1,817,370 (2020: 2,880,301)

shares respectively have been excluded in the current period as these are anti-dilutive.

Loss per share:

Basic (16.98)c (15.63)c

Diluted (16.98)c (15.63)c

15 Operating loss

(a) Operating loss

Operating loss is stated after charging/recognising:

2021

USD’000

2020

USD’000

Depreciation (Note 17) 16,808 20,031

(Reversal)/charge of impairment losses – net (Note 39) (471) 4,548

Write-down of inventory to net realisable value (Note 21) – 6,934

(b) Auditor’s remuneration

Services provided by the Group’s auditor and its associates comprised:

2021

USD’000

2020

USD’000

Audit of parent company and consolidated financial statements 1,306 966

Audit of Group companies pursuant to legislation 71 71

Total audit fee 1,377 1,037

Interim review of parent company and consolidated financial statements 554 289

Corporate finance services 494 –

Total non-audit fee 1,048 289

The above fees exclude non-recoverable UK VAT amounting to USD 0.3 million.

Financial statements

130 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 131

Notes to the consolidated financial statements

continued

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

Classification

2021

USD’000

2020

USD’000

Trade receivables – net of provision (Note 22) Amortised cost 27,010 51,903

Other receivables (Note 22) Amortised cost 12,609 10,871

Due from related parties (Note 25) Amortised cost 13,470 8,602

Cash and bank balances (Note 24) Amortised cost 72,833 113,265

125,922 184,641

Liabilities as per balance sheet

Classification

2021

USD’000

2020

USD’000

Trade payables (Note 30) Liabilities at amortised cost 112,943 26,586

Other payables (Note 30) Liabilities at amortised cost 9,090 1,353

Accruals (Note 30) Liabilities at amortised cost 49,549 42,810

Due to a related party (Note 25) Liabilities at amortised cost 235 117

Borrowings (Note 33) Liabilities at amortised cost 19,942 880

191,759 71,746

Company

Assets as per balance sheet

Classification

2021

USD’000

2020

USD’000

Due from related parties (Note 25) Amortised cost 43,558 18,214

Cash and bank balance Amortised cost 37 42

Other receivables Amortised cost 730 188

44,325 18,444

Liabilities as per balance sheet

Classification

2021

USD’000

2020

USD’000

Due to related parties (Note 25) Liabilities at amortised cost 481 481

Accruals Liabilities at amortised cost 577 1,185

1,058 1,666

Credit quality of financial assets

Group

The credit quality of financial assets that are fully performing can be assessed by reference to historical information about counterparty

defaultrates:

2021

USD’000

2020

USD’000

Trade receivables

Group A 10,584 2,498

Group B 10,219 40,837

Group C 323 425

21,126 43,760

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.

2021

USD’000

2020

USD’000

Cash at bank and short-term bank deposits

Fitch’s ratings

A+ 59,706 87,561

AA- 11,783 24,083

BB- 395 395

A 73 72

A- – 1

Not rated 298 298

72,255 112,410

Cash in hand 578 855

Cash and bank balances and term and margin deposits (Note 24) 72,833 113,265

Company

2021

USD’000

2020

USD’000

Due from related parties (Note 25) 43,558 18,214

Due from related parties are fully performing.

2021

USD’000

2020

USD’000

Cash at bank

Fitch’s ratings

A+ 37 42

Other financial instruments in the Company are not material.

Financial statements

132 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 133

Notes to the consolidated financial statements

continued

17 Property, plant and equipment

Buildings &

infrastructure

USD’000

Operating

Equipment

USD’000

Fixtures

andoffice

Equipment

USD’000

Motor

Vehicles

USD’000

Right of

useassets

USD’000

Capital

work-in-

Progress

USD’000

Total

USD’000

Cost

At 1 January 2020 172,764 173,551 19,417 3,230 56,758 5,104 430,824

Additions 337 5,705 173 – 13,569 7,691 27,475

Disposals (95) (6,367) (1) (347) – – (6,810)

Remeasurements – – – – (1,824) – (1,824)

Transfers – 4,825 102 – – (4,927) –

Retirements* (27,166) (6,428) (10,279) (39) – – (43,912)

At 31 December 2020 145,840 171,286 9,412 2,844 68,503 7,868 405,753

Additions 2,321 7,567 905 – – 2,486 13,279

Disposals (122) (862) (3) (25) – – (1,012)

Remeasurements – – – – – – –

Transfers 4,925 2,693 128 – – (7,746) –

At 31 December 2021 152,964 180,684 10,442 2,819 68,503 2,608 418,020

Depreciation

At 1 January 2020 (122,596) (122,809) (18,019) (2,937) (4,386) – (270,747)

Charge for the year (4,264) (10,648) (872) (149) (4,098) – (20,031)

Impairment (Note 39) (311) (3,172) (76) – – – (3,559)

Disposals 68 6,281 – 347 – – 6,696

Retirements* 27,166 6,428 10,279 39 – – 43,912

At 31 December 2020 (99,937) (123,920) (8,688) (2,700) (8,484) – (243,729)

Charge for the year (3,746) (8,004) (782) (63) (4,213) – (16,808)

Impairment reversal/(charge) – net (Note 39) (2,225) 2,708 (12) – – – 471

Disposals 122 732 2 25 – – 881

At 31 December 2021 (105,786) (128,484) (9,480) (2,738) (12,697) – (259,185)

Net book value

At 31 December 2021 47,178 52,200 962 81 55,806 2,608 158,835

At 31 December 2020 45,903 47,366 724 144 60,019 7,868 162,024

Buildings have been constructed on land, leased on a renewable basis from various Government Authorities. The remaining lives of the leases

range between two to twenty-one years.

Property, plant and equipment with a carrying amount of USD 39.3 million (2020: USD 58.4 million) are under lien against the bank facilities

(Note33).

A depreciation expense of USD 14.9 million (2020: USD 18.0 million) has been charged to cost of sales; USD 1.9 million (2020: USD 2.0 million)

togeneral and administrative expenses (Notes 7 and 10). This includes depreciation charge on right-of-use assets of USD 4.2 million (2020:

USD4.1million). A net reversal of an impairment loss of USD 0.5 million (2020: impairment charge USD 3.6 million) has been recorded based

onthe impairment tests performed at year end. Refer to Note 39 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.

*It relates to the retirement of assets associated with the Sharjah yard, which was vacated during 2020 as part of the Group’s restructuring plan.

18 Lease liabilities

The following is the movement in lease liabilities during the year ended 31 December 2021:

2021

USD’000

2020

USD’000

At 1 January 70,985 57,373

Additions during the year – 13,569

Interest expense on leases 4,949 4,627

Repayment of lease liability (2,792) (618)

Repayment of interest expense on leases (7,434) (2,142)

Remeasurements – (1,824)

At 31 December 65,708 70,985

Non-current 63,411 68,849

Current 2,297 2,136

65,708 70,985

The table below provides details regarding the contractual maturities of lease liabilities as at 31 December 2021 on an undiscounted basis:

2021

USD’000

2020

USD’000

Not later than one year 7,085 7,085

Later than one year but not later than five years 29,800 28,827

Later than five years 76,009 83,683

112,894 119,595

The following are the amounts recognised in profit or loss:

2021

USD’000

2020

USD’000

Depreciation (included in cost of sales) – Note 7 4,213 4,098

Interest expense (included in finance cost) – Note 12 4,949 4,627

Short-term lease expenses (included in cost of sales and general and administrative expenses) 203 179

9,365 8,904

19 Investment in subsidiaries

2021

USD’000

2020

USD’000

Balance at 1 January 82,022 86,858

Share-based payments to employees of subsidiaries in accordance with IFRS 2 1,843 3,238

Impairment during the year (8,248) (8,074)

Balance at 31 December 75,617 82,022

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 2021.

Based on these calculations, an impairment of USD 8.2 million (2020: 8.1 million) has been recorded during the year in the Company balance

sheet. The investment was accounted for using the uniting of interest 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 thirty-six months. Accordingly, the proportionate share-based charge for the year of USD 1.8 million (2020: USD 3.2 million)

hasbeen recorded as an increase in investment in subsidiaries with a corresponding credit to retained earnings.

Financial statements

134 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 135

Notes to the consolidated financial statements

continued

20 Investment accounted for using the equity method

Group

2021

USD’000

2020

USD’000

At 1 January 55,888 44,420

Investment in associate and joint venture 1,750 25,814

Share of loss of investments accounted for using the (17,013) (15,697)

equity method – net

Impairment (Note 39) – (792)

Excess loss reclassified to other liabilities (MISA) – 2,123

Excess loss reclassified to other liabilities (LSAL) 325 372

Share of other comprehensive loss accounted for using the equity method – (352)

At 31 December 40,950 55,888

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

Proportion of

ownership Classification Status

Maritime Industrial Services Arabia Co. Ltd. (“MISA”) * Jubail, Kingdom of Saudi Arabia 30% Associate Operational

International Maritime Industries (“IMI”)** Ras Al Khair, Kingdom of Saudi Arabia 20% Associate Operational

Lamprell Saudi Arabia LLC (“LSAL”)*** Riyadh, Kingdom of Saudi Arabia 50% Joint venture Operational

AiFlux Limited (“AiFlux”)# Abu Dhabi, United Arab Emirates 50% 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 and gas piping works, marine works and installation services.

# Innovative digital solutions focusing predominantly on the renewables and oil & gas industries.

Investment in an associate – MISA

The Group’s investment in MISA is held at nil value as at 31 December 2021 as it was fully impaired in 2020 following a decision to dispose of the

investment. On 30 January 2022, the Group finalised the Sale and Purchase Agreement of its shareholding to the associate’s major shareholder,

Al Yusr Industrial and Contracting Co which concludes the Group’s disposal of this investment.

Investment in an associate – IMI

2021

USD’000

2020

USD’000

At 1 January 55,888 42,407

Investment made during the year – 25,814

Share of loss for the year (16,114) (11,981)

Share of other comprehensive loss accounted for using the equity method – (352)

At 31 December 39,774 55,888

Summarised financial information in respect of the Group’s associate is set out below:

2021

USD’000

2020

USD’000

Total non-current assets 387,307 281,614

Total current assets 406,268 288,012

Total non-current liabilities (293,072) (145,896)

Total current liabilities (250,508) (161,166)

Net assets 249,995 262,564

Group’s share of associate’s net assets – 20% 49,999 52,513

Adjustment for deferred equity contribution* (13,600) –

Acquisition cost capitalisation 3,375 3,375

Carrying amount at 31 December 39,774 55,888

Revenue 179,654 156,289

Expenses (260,220) (216,195)

Loss for the year (80,566) (59,906)

Group’s share of associate’s net loss (16,114) (11,981)

IMI is a private company and there is no quoted market price available for its shares.

* During the year IMI called for an additional equity contribution of USD 85.0 million. In total, USD 68.0 million was received from the other shareholders, whilst the Group chose to defer

payment of its share of USD 17.0 million. As a result, an adjustment has been made to exclude the Group’s share in additional capital contributions made by the other partners.

Investment in a joint venture – LSAL

2021

USD’000

2020

USD’000

At 1 January – –

Share of loss for the year (325) (372)

Excess loss reclassified to other liabilities 325 372

At 31 December – –

Summarised financial information in respect of the Group’s joint venture is set out below:

2021

USD’000

2020

USD’000

Total non-current assets 153 –

Total current assets 9,997 3

Total non-current liabilities (11) –

Total current liabilities (11,825) (1,082)

Net liabilities (1,686) (1,079)

Group’s share of joint venture’s net liabilities – 50% (843) (540)

Revenue 7,448 –

Expenses (8,098) (744)

Loss for the year (650) (744)

Group’s share of joint venture’s net loss (325) (372)

LSAL is a private company and there is no quoted market price available for its shares.

Investment in a joint venture – AiFlux

During the year, the Group along with its partner, Injazat Data Systems LLC, formed a joint venture – AiFlux Limited. The investment has been

accounted by the Group as a joint venture and the details are as follows:

2021

USD’000

At 1 January –

Investment during the year 1,750

Share of loss for the year (574)

At 31 December 1,176

AiFlux is a private company and there is no quoted market price available for its shares.

21 Inventories

2021

USD’000

2020

USD’000

Raw materials, consumables and finished goods 15,710 16,995

Work in progress – –

Less: Provision for slow moving and obsolete inventories (2,482) (2,743)

13,228 14,252

The cost of inventories recognised as an expense amount to USD 18.7 million (2020: USD 19.6 million) and this includes nil (2020: 6.9 million) in

respect of write-down of inventory to net realisable value. The net realisable value for finished goods was determined by an independent valuer

based on a fair valuation of the components making up the finished goods.

Financial statements

136 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 137

Notes to the consolidated financial statements

continued

22 Trade and other receivables

2021

USD’000

2020

USD’000

Trade receivables 30,233 55,275

Other receivables 12,609 10,871

Prepayments 6,062 2,320

Advance to suppliers 277 194

Receivables from a related party (Note 25) 13,470 8,602

62,651 77,262

Less: Provision for impairment losses (3,224) (3,372)

59,427 73,890

An analysis of trade receivables is as follows:

2021

USD’000

2020

USD’000

Fully performing 21,126 43,760

Past due 5,884 8,143

Impaired 3,223 3,372

30,233 55,275

At 31 December 2021, trade receivables of USD 5.9 million (2020: USD 8.1 million) were past due but not impaired. These relate to a few

independent customers for whom Group is not expecting any credit losses. The Group considers that the carrying amount of trade receivables

approximates to their fair value

2021

USD’000

2020

USD’000

Up to 3 months 3,927 5,690

3 to 6 months 636 1,143

Over 6 months 1,321 1,310

5,884 8,143

At 31 December 2021, trade receivables of USD 3.2 million (2020: USD 3.4 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:

2021

USD’000

2020

USD’000

At 1 January 3,372 3,469

Provision for impairment losses 47 27

Amounts recovered during the year (196) (124)

At 31 December 3,223 3,372

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 and other receivables approximates to their fair value.

Refer to Note 3.1(c) for an assessment on expected credit losses.

Other receivables includes USD 3.3 million in respect of the costs of obtaining the revolving trade loan facility (refer note 33), which are being

amortised over the term of the facility.

23 Contract Assets

2021

USD’000

2020

USD’000

Amounts due from customers on contracts 26,211 30,859

Contract work in progress 73,181 54,567

99,392 85,426

Amounts due from customers on contracts comprise:

2021

USD’000

2020

USD’000

Costs incurred to date 204,552 228,178

Attributable profit 14,501 30,179

219,053 258,357

Less: Progress billings (192,842) (227,498)

26,211 30,859

The Group does not expect any credit losses from contract assets due to 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

2021

USD’000

2020

USD’000

Cash at bank and on hand 25,860 57,625

(b) Term and margin deposits

Group

2021

USD’000

2020

USD’000

Margin deposits – under lien (with original maturity less than three months) 6,844 3,040

Margin deposits – under lien (with original maturity more than three months) 40,129 52,600

Term and margin deposits (restricted cash) (Note 33) 46,973 55,640

Non-Current 530 447

Current 46,443 55,193

46,973 55,640

At 31 December 2021, the cash at bank and short-term deposits were held with ten banks (2020: eleven banks). The effective interest rate on

short-term deposits was 0.10% (2020: 0.77%) per annum. Margin and short-term deposits of USD 6.8 million (2020: USD 3.0 million) and deposits

with an original maturity of more than three months amounting to USD 40.1 million (2020: USD 52.6 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 (2020: one bank).

Financial statements

138 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 139

Notes to the consolidated financial statements

continued

25 Related party balances and transactions

Related parties comprise of substantial shareholders who own 10% or more of the issued share capital and voting rights 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 the following significant transactions during the year with related parties at arm’s length

prices. The Group’s other related party transactions were the remuneration of Non-Executive Directors – refer Note 10.

Group

2021

USD’000

2020

USD’000

Key management compensation 5,419 8,441

Sales to associates* 146,904 90,351

Purchases from associates 118 117

Re-chargeable expenses to associates 1,638 2,369

Sponsorship fees and commissions paid to legal shareholders of subsidiaries (Note 1) 337 329

* Sales to associates includes contract revenue earned from the IMI rigs USD 141.9 million (2020: USD 88.2 million). Contract liabilities on the balance sheet includes an amount of USD 8.2

million (2020: USD 97.3 million) related to these rigs in line with IFRS 15 accounting.

Company

2021

USD’000

2020

USD’000

Key management compensation 2,233 3,749

Revenue (management fees charged to subsidiaries) 4,987 5,130

Key management compensation comprises:

Group

2021

USD’000

2020

USD’000

Salaries and other short-term benefits 3,380 3,912

Bonus and share-based payments – value of services provided 1,374 3,874

Post-employment benefits 217 216

Non-Executive Directors fee (Note 11) 448 439

5,419 8,441

Company

2021

USD’000

2020

USD’000

Salaries and other short-term benefits 1,134 1,248

Bonus and share-based payments – value of services provided 567 1,983

Post-employment benefits 84 79

Non-Executive Directors fee (Note 11) 448 439

2,233 3,749

The terms of the employment contracts of the key management include reciprocal notice periods of between three to twelve months.

Due from/due to related parties

Due from related parties

Group (Note 22)

2021

USD’000

2020

USD’000

MISA (in respect of sales to associate) 1,006 698

IMI (In respect of expenses on behalf of associate) 4,411 6,852

LSAL (In respect of expenses on behalf of joint venture) 8,050 1,049

Mada Al Sharq Company LLC (in respect of joint venture expenses) 3 3

13,470 8,602

Company

2021

USD’000

2020

USD’000

MIS* 11,370 11,370

MOL

3,372 3,372

LEL

28,684 3,346

EBT^ 132 126

43,558 18,214

* Primarily comprises a receivable in respect of management fees charged by the Company.

# Primarily comprises of a receivable in respect of expenses incurred for IMI.

~ Primarily comprises of a receivable in respect of expenses incurred on behalf of the Company.

^ Primarily comprises of 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

2021

USD’000

2020

USD’000

MISA (in respect of purchases) (associate) (Note 30) 235 117

Company

2021

USD’000

2020

USD’000

CBL (in respect of expenses incurred on behalf of the Company) 481 481

26 Share capital and share premium

Issued and fully paid ordinary shares

Group/Company

Equity

Number

capital

USD’000

premium

USD’000

At 1 January 2021 341,726,570 30,346 315,995

Shares issued during the year 68,345,313 4,558 24,608

Share issue costs – – (2,509)

At 31 December 2021 410,071,883 34,904 338,094

The total authorised number of ordinary shares is 500 million shares (2020: 500 million shares) with a par value of 5 pence per share (2020:

5pence per share).

During the year, the Company successfully carried out a non-pre-emptive placing through an accelerated bookbuild and the direct subscription

with the Company by certain Directors (together, the “Capital Raising”). The capital raising represented 19.99% of the Company’s issued share

capital at the time equal to 68,345,313 ordinary shares at an issue price of 32 pence per share. An aggregate of 67,900,313 shares were placed

with institutional investors, while the remaining 445,000 shares were directly subscribed by the directors. The gross proceeds from the capital

raising amounted to USD 29.2 million.

During 2021, Lamprell plc employee benefit trust (“EBT”) acquired 1,005,358 shares (2020: nil shares) of the Company. The total amount paid

toacquire the shares was USD 0.9 million (2020: nil) and has been deducted from the consolidated retained earnings. During 2021, 1,005,358

(2020: no shares) were issued to employees and 16,268 shares (31 December 2020:16,268 shares) were held as treasury shares at 31 December

2021. The Company has the right to reissue these shares later. These shares will be issued on vesting of the retention shares/performance shares/

share options granted to certain employees of the Group.

Financial statements

140 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 141

Notes to the consolidated financial statements

continued

27 Other reserves

Group

Legal

reserve

USD’000

Merger

reserve

USD’000

Translation

reserve

USD’000

Total

USD’000

At 1 January 2020 98 (18,572) (861) (19,335)

Currency translation differences – – 43 43

At 31 December 2020 98 (18,572) (818) (19,292)

Currency translation differences – – (12) (12)

At 31 December 2021 98 (18,572) (830) (19,304)

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 interest 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 interest method.

28 Post-employment benefits liabilities

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

2021 and 2020, 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

2021

USD’000

2020

USD’000

At 1 January 37,848 36,863

Current service cost 4,046 4,308

Interest cost 572 943

Remeasurements (305) 1,676

Benefits paid (3,706) (5,942)

At 31 December 38,455 37,848

Remeasurements consist of actuarial gain from a change in financial assumptions USD 1.2 million (2020: loss of USD 2.2 million) and an actuarial

loss from a change in other experiences USD 0.9 million (2020: gain of USD 0.5 million).

Company

2021

USD’000

2020

USD’000

At 1 January 492 380

Current service cost 76 74

Interest cost 8 6

Remeasurements (20) 32

At 31 December 556 492

Group

The amounts recognised in the consolidated income statement are as follows:

2021

USD’000

2020

USD’000

Current service cost 4,046 4,308

Interest cost 572 943

Total (included in staff costs) (Note 11) 4,618 5,251

The above charges are included in cost of sales and general and administrative expenses.

Company

2021

USD’000

2020

USD’000

Current service cost 76 74

Interest cost 8 6

Total (included in staff costs) 84 80

The above charge of USD 0.1 million (2020: USD 0.1 million) is included in general and administrative expenses.

The principal actuarial assumptions used were as follows:

2021 2020

Discount rate 2.30% 1.70%

Future salary increases:

Management and administrative employees 2.00% 2.00%

Yard employees 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 2.3% (2020: 1.7%).

The rates used for future salary increase 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:

Percentage of employees at

each age exiting the plan per

year

2021 2020

Yard employees:

20 – 34 years 15% 15%

35 – 64 years 10% 10%

65 years and above 100% 100%

Management and administrative employees:

20 – 34 years 16% 16%

35 – 64 years 12% 12%

65 years and above 100% 100%

Executive Directors:

35 – 39 years 10% 10%

40 – 64 years 7% 7%

65 years and above 100% 100%

If the discount rate were to increase by 0.5% there would be a decrease in the post-employment benefits liabilities by USD 0.9 million and if the

discount rate were to decrease by 0.5% there would be an increase in the liabilities by USD 1.1 million.

If the salary increase rate were to increase by 0.5% there would be an increase in the post-employment benefits liabilities by USD 1.1 million and

ifthe discount rate were to decrease by 0.5% there would be a decrease in the liabilities by USD 0.9 million.

Financial statements

142 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 143

Notes to the consolidated financial statements

continued

29 Restructuring costs

As part of the reorganisation mentioned in Note 5, the Group restructured some of its functional departments and has outsourced IT services

toan external party. A one-off charge of USD 1.7 million (2020: USD 5.6 million) relating to process transitions and staff redundancies has been

recorded because of these changes and are included in General and Administrative expenses. Previous year expenses were related to staff

redundancies and costs of closing down Sharjah yard.

30 Trade and other payables

2021

USD’000

2020

USD’000

Trade payables 112,943 26,586

Other payables 9,090 1,353

Accruals 49,549 42,810

Payables to a related party (Note 25) 235 117

171,817 70,866

The Group considers that the carrying amount of trade and other payables approximates to their fair value. The increase in trade payables is due

to deferral of creditors payments – see Note 2.1. As at 31 December 2021, Trade payables amounting to USD 97.1 million (2020: USD 15.1 million)

were not within current aging.

31 Contract Liabilities

2021

USD’000

2020

USD’000

Amounts due to customers on contracts 15,149 159,991

Amounts due to customers on contracts comprise:

Progress billings 271,287 343,734

Less: Cost incurred to date (248,111) (168,790)

Less: Recognised profit (8,027) (14,953)

15,149 159,991

32 Provision for warranty costs and other liabilities

USD’000

At 1 January 2020 11,440

Charge during the year 1,154

Released/utilised during the year (9,039)

At 31 December 2020 3,555

Charge during the year 1,191

Released/utilised during the year (Note 7) (257)

At 31 December 2021 4,489

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 2021, an amount of USD 0.2 million (2020:

USD 0.6 million) was utilised and USD 0.1 million (2020: USD 8.4 million) released against the provision for warranty costs. These provisions are

expected to be utilised if claims are received within the warranty periods which can range between one to five years. If not utilised, these are

released at the end of the warranty periods.

33 Borrowings

2021

USD’000

2020

USD’000

Trade credit facility – 880

Revolving trade loan facility 19,942 –

The borrowings are payable within one year (2020: within one year).

At 31 December 2021, the Group has separate bilateral unfunded facilities of USD 38.8 million (2020: USD 321.3 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 2021. These are summarised below:

Facility

USD’000

Amount

utilised

USD’000

Amount

available to

be used

USD’000

Funded facilities

Trade loan facility 45,006 19,942 25,064

Unfunded facilities

Bank guarantees (Note 37) 124,627 85,787 38,840

Total 169,633 105,729 63,904

During the year, the Group secured a USD 45 million UAE Export Credit Agency backed revolving trade loan facility from First Abu Dhabi Bank

andEmirates Development Bank (the “Initial Facility”). The Initial Facility will assist with the working capital requirements on the IMI rigs which are

currently under construction at the Group’s Hamriyah yard. As part of the terms of the Initial Facility, there is an option of an additional accordion

facility of USD 45 million subject to the provision of additional security to the banks similar to that for the Initial Facility.

The facility is repayable in stages linked to the timing of milestone receipts under the IMI rigs contracts and will terminate two business days after

the milestone three payment is received, or on 31 December 2022, whichever comes first. The facility has been fully repaid subsequent to the

balance sheet date – refer Note 41.

The Group’s debt facility is subject to covenant clause, whereby the Group must ensure that its net worth, calculated as net tangible assets, does

not fall below USD 100 million at any time.

The revolving trade loan facility carries interest at EIBOR plus margins, which must be paid on maturity/rollover dates. The borrowings include

accrued interest of USD 0.1 million (2020: Nil).

Bank facilities are secured by liens over term deposits of USD 47.0 million (2020: USD 55.6 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 movable assets and certain contract related receivables.

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 2021

1 January

USD’000

Draw-down

during the

year (cash)

USD’000

Repayment

during the

year (cash)

USD’000

Additions to

lease liabilities

(non-cash)

USD’000

Remeasurements/

Finance cost

(non-cash)

USD’000

31 December

USD’000

Trade credit facility 880 – (894) – 14 –

Trade loan facility – 19,924 – – 18 19,942

Lease liabilities 70,985 – (10,226) – 4,949 65,708

71,865 19,924 (11,120) – 4,981 85,650

Year ended 31 December 2020

Trade credit facility – 880 – – – 880

Term loans 20,058 – (20,058) – – –

Lease liabilities 57,373 – (2,760) 13,569 2,803 70,985

77,431 880 (22,818) 13,569 2,803 71,865

Financial statements

144 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 145

Notes to the consolidated financial statements

continued

34 Profit/Loss of the Company

The loss of USD 8.1 million (2020: USD 8.0 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 2021 or 31 December 2020.

36 Commitments

(a) International Maritime Industries Commitments

In 2017, the Group entered commitments associated with the investment in International Maritime Industries. Under the Shareholders’ Agreement,

the Group, via its subsidiary Maritime Offshore Limited, 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:

2021

USD’000

2020

USD’000

Within one year 37,000 17,000

Later than one year but not later than four years 18,200 38,200

55,200 55,200

As part of this investment, the Company provided a guarantee, of the obligations, commitments, undertakings, representations, warranties,

indemnities and covenants of Maritime Offshore Limited under the Shareholders’ Agreement (capped at its aggregate maximum commitment

ofUSD 140 million). Should the Group not be in the position to honour its outstanding investment commitments, it is likely that this would result

in the Group’s stake in the IMI joint venture being diluted below 20 percent.

(b) Other commitments

2021

USD’000

2020

USD’000

Capital commitments for restructuring programme 60 1,304

Capital commitments for construction of facilities 85 883

Capital commitments for purchase of operating equipment and computer software 258 2,433

37 Bank guarantees

2021

USD’000

2020

USD’000

Performance/bid bonds 81,935 84,673

Advance payment, labour visa and payment guarantees 3,818 8,754

85,753 93,427

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 Cash (used in)/generated from operations

Notes

Year ended

31 December

2021

USD’000

2020

USD’000

Operating activities

Loss before income tax (59,920) (53,261)

Adjustments for:

Share-based payments – value of services provided 9 2,410 4,440

Depreciation 17 16,808 20,031

Amortisation of intangible assets 9 9

(Reversal)/charge of impairment losses of non-financial assets – net 39 (471) 4,548

Share of loss of investments accounted for using the equity method – net 20 17,013 15,697

Provision/(release) for warranty costs and other liabilities – net 32 934 (7,885)

Loss/(profit) on disposal of property, plant and equipment 73 (267)

(Release)/provision for slow moving and obsolete inventories 21 (261) 155

Release for impairment of trade receivables, net of amounts recovered (148) (97)

Charge for employees’ end of service benefits 28 4,618 5,251

Finance costs 12 7,122 5,980

Finance income 12 (51) (370)

Operating cash flows before payment of employees’ end of service benefits and changes in working capital (11,864) (5,769)

Payment of employees’ end of service benefits (3,706) (5,942)

Changes in working capital:

Inventories before movement in provision 21 1,285 75,351

Trade and other receivables before movement in Provision for impairment losses 22 17,885 (36,362)

Contract assets 23 (13,966) (45,042)

Trade and other payables 30 99,120 (25,098)

Contract liabilities 31 (144,842) 156,165

Cash (used in)/generated from operations (56,088) 113,303

39 Impairment of non-financial assets

Group

Impairment comprise of the following:

2021

USD’000

2020

USD’000

Impairment of property, plant and equipment (Note 17) 3,163 3,559

Impairment of intangible assets – 197

Impairment of an investment accounted for using equity method (Note 20) – 792

Reversal of an impairment loss (Note 17) (3,634) –

(471) 4,548

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 which requires

management to estimate the recoverable amount of its assets determined as the higher of value in use or fair value less costs of disposal

(“FVLCD”).

At 31 December 2021, delays and cancellation of awards due to the history of lower oil prices in the recent years and the effect of the COVID-19

pandemic have had a negative impact on the Group’s backlog and utilisation of its assets. As a result, an impairment indicator has been identified

for the Group’s property, plant and equipment.

Financial statements

146 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 147

Notes to the consolidated financial statements

continued

39 Impairment of non-financial assets continued

The Group carried out a review of the recoverable amount of its property, plant and equipment. This led to the recognition of a net impairment

reversal of USD 0.5 million (2020: Impairment loss of USD 3.8 million). It was estimated that the value in use of property, plant and equipment

would not materially exceed FVLCD, therefore the recoverable amount was determined based on FVLCD for each asset individually.

2021 2020

Impairment

charge/

(reversal)

USD’000

Recoverable

amount*

USD’000

Impairment

charge/

(reversal)

USD’000

Recoverable

amount*

USD’000

Buildings and infrastructure 2,225 4,705 311 7,450

Operating equipment (2,708) 38,480 3,172 23,186

Fixtures and office equipment 12 916 76 170

Intangible assets – – 197 –

Total (471) 44,101 3,756 30,806

* Recoverable amount pertains to assets for which an impairment charge or reversal of impairment charge has been recorded.

The impairment charges and reversals shown above by class of asset consist of a number of individually immaterial asset impairments and

reversals. The only individually significant impairment entry is an impairment charge of USD 2.2million in relation to the Hamriyah yard extension,

which has a related recoverable amount of USD 4.7 million.

As the Group does not manage its assets on a segmental basis any related impairment charges or reversals are also not allocated by segment.

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 2021 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 & 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 differ 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 (“DRC”) 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, but also incorporates a number of inputs that are not based on observable market data.

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 13 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.

Climate change impacts the Group’s business in a number of ways as set out in the strategic report of the Annual Report. In relation to our

financial results for the year, the most significant potential impact is in relation to the carrying value and useful lives of our property, plant and

equipment (PP&E). The useful lives of PP&E impact both the depreciation charge for the year and also the value in use (and hence potentially

therecoverable amount) of the related assets. Whilst a number of our property, plant and equipment facilities which support the Oil and Gas

segment are of a long-term nature, none are being depreciated over a period that extends beyond 2050. At current rates of depreciation the

average remaining depreciable life of our assets is 11 years for movable assets and 12 years for immovable assets.

Given the above and that most of these assets service both oil and gas and renewables activity, we do not currently believe that climate change

and the energy transition require any shortening in the assets useful lives which could materially impact either the annual depreciation charge

orthe recoverable amount of the related assets. Furthermore, given that the recoverable amount has been determined by Cavendish Maxwell

using FVLCD and not value in use, the effects of climate change on forecast assumptions has been considered in determining the fair values as

at31December 2021. In doing so the valuer considered the use of the assets in as far as their ability to service both Renewable and Oil and Gas

segments and whether this impacted the useful life used in DRC calculations.

The carrying amount of property, plant and equipment at 31 December 2021 was USD 158.8 million (31 December 2020: USD 162.0 million).

Thecarrying amount of intangible assets at 31 December 2021 was USD 0.1 million (31 December 2020: 0.1 million).

40 Income tax expense

2021

USD’000

2020

USD’000

Current tax expense:

Current year charge 128 125

Adjustments in respect of prior years – –

Income tax expense as reported in consolidated income statement 128 125

Corporate income tax is not applicable in the UAE where the Group’s principal place of business is located. The Group accounts for corporate tax

for its operations in Qatar and Kurdistan.

Providing the product of the consolidated accounting profit multiplied by the applicable tax rates is therefore not meaningful. The Group’s

consolidated loss has been adjusted to arrive at the adjusted profit subject to income tax as a meaningful measure.

The reconciliation between the total tax expense and accounting profit can be explained as follows:

2021

USD’000

2020

USD’000

Loss before income tax (59,920) (53,261)

Loss not subject to income tax (61,084) (54,313)

Adjusted profit subject to income tax 1,164 1,052

Income tax expense for the year 128 125

Effective tax rate 11% 12%

The Group has not recognised deferred tax assets or liabilities considering that temporary differences arising between the tax bases of assets and

liabilities and their carrying amounts in the consolidated financial statements are not significant.

The applicable tax rates in the regions in which the Group operates are set out below:

Countries

Applicable

tax rates

Qatar 10%

Kurdistan 15%

41 Events after the balance sheet date

Recommended Cash Offer for Lamprell plc (“the Offer”)

On 21 July 2022, the Board of Directors of Lamprell plc ‘the Company” and the Board of Directors of Thunderball Investments Limited (a newly

formed company owned by Blofeld Investment Management Limited and AlGihaz Holding Closed Joint-Stock Company) (collectively referred to

as “Thunderball”) announced a recommended all-cash offer of 9p per share to be made by Thunderball for the Company’s issued and to be issued

share capital. It is intended that the Offer will be implemented by way of a takeover offer – refer Note 2.1.

Bridge Loan Facility

On 21 July 2022, the Group entered into the bridge loan facility agreement (the “Bridge Loan Facility Agreement”) with Maverick Investment

Holding Ltd (“Maverick”), a company under the control of a member of the AlSayed family, and AlGihaz Holding Closed Joint-Stock Company

(“AlGihaz”). Pursuant to this Maverick and AlGihaz each agreed to make available a total loan facility of up to USD145 million to the Group – refer

Note 2.1.

Repayment of ECI facility

On 4 August 2022, the Group repaid the full amount outstanding on the ECI facility amounting to USD 44 million as of that date.

Capacity reservation agreement for major renewables contract

On 22 March 2022, the Group signed a capacity reservation agreement for the Moray West Offshore Wind Farm for a very large contract.

Thereservation agreement secures capacity in Hamriyah yard for the work as the project moves towards financial close and full contract award.

Thebase scope of work is for the supply of 62 transition pieces, which includes 60 wind turbine generator transition pieces and two transition

pieces for the two offshore substations, as well as for the shipping of the 62 transition pieces to a marshalling harbour in the UK.

Limited Notice to Proceed pending new contract award (“LNTP”)

On 18 February 2022, the Group received a limited notice to proceed from the Saudi-based contractor, Bas Global Marine Services (BGMS), in

anticipation of the full award in H2 2022. The full scope of work on this contract relates to the delivery and construction of multiple jack-up lift

barges to BGMS. The scope of work under the LNTP is for early works, including the procurement of materials and mobilisation of the Group’s

project management team. All project activities will be undertaken in the Group’s Hamriyah facilities and work will start immediately, with project

completion planned for 2H 2023.

Financial statements

148 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 149

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.

Adjusted EBITDA

In addition to measuring financial performance of the Group based on operating profit, we also measure performance based on adjusted

EBITDA. Adjusted EBITDA is defined as the Group profit/(loss) for the year from continuing operation 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 adjusted EBITDA to be a useful measure of our operating performance because it provides an indication of our ability to generate cash

from profit by excluding non-cash items and one-off items that are non-recurring in nature, such as restructuring costs (Note 29). Adjusted 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. Adjusted EBITDA margin is calculated as a percentage of revenue.

Reconciliation from Group loss for the year, the most directly comparable IFRS measure, to adjusted EBITDA is set out below:

Year ended 31 December

2021

USD’000

2020

USD’000

Loss for the year (60,048) (53,386)

Depreciation (Note 17) 16,808 20,031

Amortisation 9 9

Interest on bank borrowings and leases (Note 12) 4,983 4,756

Finance income (Note 12) (51) (370)

Income tax expense 128 125

(Reversal)/charge of impairment losses – net (Note 39) (471) 4,548

Inventory write down (Note 21) – 6,934

Restructuring costs (Note 29) 1,720 5,597

Share of loss of investments accounted for using the equity method – net (Note 20) 17,013 15,697

Adjusted EBITDA (19,909) 3,941

Adjusted EBITDA margin (5.1%) 1.2%

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:

2021

USD’000

2020

USD’000

Cash and cash equivalents (Note 24) 25,860 57,625

Margin deposits – under lien (with original maturity less than three months) (Note 24) 6,844 3,040

Margin deposits – under lien (with original maturity more than three months) (Note 24) 40,129 52,600

Borrowings (Note 33) (19,942) (880)

Net cash 52,891 112,385

Of net cash at 31 December 2021, USD 47 million is restricted (31 December 2020: USD 55.6 million) – see Note 24.

Overheads

Overheads are costs required to run our business, but 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 overheads, is set out below:

2021

USD’000

2020

USD’000

General and administrative expenses (Note 10) 35,531 47,215

Selling and distribution expenses (Note 8) 239 298

Direct overheads included in cost of sales:

Unallocated operational overheads (Note 5) 6,497 10,743

Yard rent and depreciation (Note 5) 6,969 7,323

Repairs and maintenance (Note 5) 5,006 3,464

Interest expense on leases (Note 12) 4,949 4,627

Other 9,842 6,783

Overheads 69,033 80,453

Restructuring costs (Note 10) (1,720) (5,597)

Reversal/(charge) of impairment losses – net (Note 39) 471 (4,548)

COVID-19 related salary reductions 8,684 7,736

Underlying overheads 76,468 78,044

An analysis of overheads nature is as follows:

Overhead nature:

2021

USD’000

2020

USD’000

Fixed 27,741 27,169

Semi variable 9,848 6,167

Variable 38,879 44,708

Underlying overhead 76,468 78,044

An analysis of overheads types is as follows:

Overhead type:

2021

USD’000

2020

USD’000

Cash 58,312 53,214

Non-cash 18,156 24,830

Underlying overhead 76,468 78,044

Other information

150 Lamprell plc Annual Report and Accounts 2021 Lamprell plc Annual Report and Accounts 2021 151

Glossary

AED Arab Emirates Dirham

AGM Annual General Meeting

AIM Alternative Investment Market

APM Alternative performance measure

CAGR Compound Annual Growth Rate

CEO Chief Executive Officer

CFO Chief Financial Officer

Code UK Corporate Governance Code 2018

Company Lamprell plc

COO Chief Operating Officer

CRPO Contract Release Purchase Order

DRR Directors Remuneration Report

EBITDA Earnings before Interest, Taxes, Depreciation

andAmortisation

EBT Employee Benefit Trust

EGM Extraordinary General Meeting

EPC Engineering, Procurement, Construction

EPCI Engineering, Procurement, Construction and Installation

EPS Earnings Per Share

ESG Environmental Social Governance

EU European Union

FRC Financial Reporting Council

FTSE Financial Times Stock Exchange

FVLCD Fair Value Less Costs of Disposal

GBP Pound Sterling

GCC Gulf Cooperation Council

GHG Greenhouse Gas

GODESS Global Optimal Design of Support Structures

GW Gigawatt

HMRC Her Majesty’s Revenue & Customs

HR Human Resources

HSES Health Safety Environment & Security

HVAC/ High Voltage Alternating Current/

HVDC High Voltage Direct Current

IA Internal Audit

IAS International Accounting Standards

IASB International Accounting Standards Board

ICV In Country Value

IEA International Energy Agency

IFRIC International Financial Reporting Interpretations

IFRS International Financial Reporting Standards

IKTVA In-Kingdom Total Value Add

IMI Industrial Maritime Industries

IOC International Oil Company

IPO Initial Public Offering

ISO International Organisation for Standardisation

IT Information Technology

JD Juris Doctor

JV Joint Venture

KSA Kingdom of Saudi Arabia

LATC Lamprell Assessment and Training Centre

LD Liquidated Damages

LEL Lamprell Energy Limited

LHL Lamprell Holdings Limited

LSAL Lamprell Saudi Arabia LLC

LSE London Stock Exchange

LTA Long Term Agreement

LTIP Long-Term Incentive Plan

MENA Middle East North Africa

MT Metric Tonne

NDT Non-Destructive Testing

NED Non-Executive Director

NGO Non-governmental organisation

NOC National Oil Company

PCR Polymerase Chain Reaction

PP&E Property, Plant and Equipment

PR Public Relations

RCP Representative Concentration Pathway

SDS Sustainable Development Scenario

SID Senior Independent Director

SMART Specific, Measurable, Achievable, Relevant, Time-bound

SNOC Sharjah National Oil Corporation

STEPS Stated Policies Pathway

STIP Short-Term Incentive Plan

TCFD Task Force on Climate-related Financial Disclosures

TEIR Total Environmental Incident Rate

TRIR Total Recordable Injury Rate

TSR Total Shareholder Return

UAE United Arab Emirates

UK United Kingdom

UN SDG United Nations Sustainable Development Goals

US United States

USD United States Dollar

VP Vice President

152 Lamprell plc Annual Report and Accounts 2021