LOC Group – First Half Year Trading Update
Targeting long term growth on the back of strong current performance
LOC Group, the premier international marine and engineering consulting firm, is pleased to provide the following trading update, for the first half of the year to 30 June 2020.
The year to date has seen a strong performance, despite the testing macro environment. This performance is reflected in the growing orderbook, innovation in the service offer and delivery, and careful management of operations, which combined to maintain and strengthen the bottom line.
This performance also demonstrates the Company’s underlying-strength, with exposure to multiple revenue streams, a highly skilled, versatile workforce with an expanding global presence, and an entrepreneurial culture that allows it to adapt to rapid changes in the market. This is underpinned by over 40 years’ of building a trusted and well recognised brand across our markets. Combined, these factors support LOC’s continued ability to drive long-term cashflows and EBITDA growth.
The strong performance in Renewables comes on the back of investments made to build momentum in that sector, combined with continued growth in that market as the transition to renewable forms of energy gathers pace. It is also a reflection of the continued development of the industry in Asia.
In April, LOC opened a further office in Taiwan, bringing the Group’s total representation in the region to 11 offices. The Taiwanese office was opened on the back of a series of contract wins in recent years, to support projects in the Taiwanese offshore windfarm market. Having an international footprint has also allowed the Company to combine the experience and contacts gained in the European offshore wind market, with local expertise and understanding.
Recent key contract wins in the offshore wind market include the provision of Marine Warranty Survey support to the Jieyang I and II and Zhangjiang Wailou Offshore Windfarms in China. In Vietnam, LOC also won contracts to provide MWS support on the Dong Hai I and Hoa Binh Phase 1 offshore windfarm developments.
Alongside windfarms, Innosea, an LOC Group company focused on marine renewable energies, has built expertise in floating solar energy, which has the potential to be a significant growth market. Work has included contributing engineering and design support to 15 projects, across six countries in Europe and Asia, involving more than 690MWp.
LOC’s Oil & Gas activities continued with vigour, which is a solid achievement, coming on the back of significant volatility in the price of oil. Projects included supporting INPEX Operations Australia P/L, to provide MWS work on Ichthys LNG, and ongoing support to Equinor’s development of the Johan Sverdrup field in the North Sea. A contract to support the North Sea Blythe & Vulcan Satellites Development also reflects the Group’s ability to work with different operators and newer entrants to a region.
In April this year, LOC announced the expansion of its operation in the Middle East, developing its footprint in Qatar, with the recent appointment of Captain Jaimie Jones as Marine Manager to LOC Doha. This investment saw a rapid return with contract wins, including a Master Service Agreement by Seafox Qatar LLC, to provide Rig Move Master Services and Geotechnical Services.
With significant experience, LOC is well placed to provide independent support to decommissioning, allowing operators to make the most cost-effective solution, while meeting required safety and environmental standards. Recent decommissioning work has centred on the North American market, but we expect to see development across other markets, including Asia and India.
In the shipping sector, LOC has continued to innovate, with the application of technology, where it creates cost, efficiency, environmental and riskbenefit to clients. This approach resulted in the launch of remote surveying, including for DP trials, that have allowed vessel operators to meet their compliance requirements regardless of circumstance, including the complications of COVID-19. In Canada, LOC has developed 3D scanning tools for the risk assessment and vessel inspection training of vessels of concern, while in Australia, remote training for port pilots is being developed, using imaging and drone technology.
In response to the increased focus on shipping emissions and the introduction of the Poseidon Principles, LOC, has developed the TritΩn platform. TritΩn is a simple and secure means for vessel owners and financiers to track the carbon footprint of multi-vessel fleets, allowing the reporting requirements of the Poseidon Principles to be easily met.
Alongside these innovations, the shipping team has also expandedits in-house expertise in decarbonisation and alternative fuels, hybrid-propulsion systems and fuel-cell technology, with the recent appointment of Dr Julius Partridge as Snr. Electrical Engineer. LOC, along with its group company, Longitude, continuesto develop their work in the engineering of green power systems in new-build vessel design or in vessel modifications.
Engineering & design, represented by Group companies Longitude and Innosea, has had an encouraging start to the year, with revenue ahead of budget and considerably up on the prior year period.
Longitude has continued to develop its specialist capabilities in various engineering and design fields this year, expanding its geoscience team in Newcastle and with the placement of one of its engineers in the Norwegian market. Longitude’s expertise in customised design work for the renewable energy sector and for clean oceans initiatives is also reflected in recent vessel design and conversion work. These include concept design for the Woen Jinn Cable Lay vessel and a custom design for a vessel to recover plastics from rivers, supporting cleans oceans.
The Group’s shipping teams have also been bolstered with a series of strategic hires in Hull & Machinery, Dynamic Positioning and Marine Casualty Investigation in Middle East, North America and China.
Commenting, R V Ahilan, CEO of LOC Group, commented:
“The Company’s performance in the first half of the year reflects its underlying strength. We have shown our ability to continue to deliver sales and strong cashflows, despite headwinds presented by the pandemic, commodity price volatility and geopolitical uncertainty. We have managed to deliver an unparalleled service for our clients by being flexible, seeking innovative solutions and having a long-standing track record of excellence which I believe augurs well for the future.”