TIDMHARL
RNS Number : 7864L
Harland & Wolff Group Holdings PLC
08 September 2023
This announcement contains inside information.
8 September 2023
Harland & Wolff Group Holdings plc
("H&W" or the "Company" or the "Group")
Unaudited interim results for the six months ended 30 June 2023
& business update
Harland & Wolff Group Holdings plc (AIM: HARL), the UK
quoted company focused on strategic infrastructure projects and
physical asset lifecycle management , is pleased to present its
unaudited interim results for the six-month period ended 30 June
2023 ("H1 23") and business update.
Key highlights:
-- Revenues of GBP25.53 million; a 65% increase from the
previous year (30 June 2022: GBP15.41 million).
-- Gross margin of 19.4%, for the portfolio of contracts
delivered in the period; cost pressures around labour, energy and
inflation feeding into cost of sales.
-- EBITDA loss GBP15.92 million (30 June 2022: loss of GBP12.71
million) predominantly on account of investment in headcount in
preparation for delivery of the Fleet Solid Support contract and
other contracts.
-- Net debt for the Group stood at GBP88.53 million as at 30
June 2023 (30 June 2022: GBP19.74 million) reflecting the upsized
Riverstone Credit Facility from $35 million in March 2022 to $100
million as at 30 June 2023.
-- Group corporate credit facility of $70 million ($35 million
committed plus $35 million uncommitted accordion) signed in March
2022 upsized to $100 million (fully committed) in March 2023 with
drawdowns being utilised to fund ongoing working capital
requirements.
-- Advanced negotiations regarding a new GBP200 million credit
facility along with the UK Export Finance (UKEF) guarantee, which
is expected to close in Q4'23.
-- Fleet Solid Support Manufacture Subcontract executed with
Navantia in February 2023; expected to generate total revenues of
between GBP700 million and GBP800 million for the Company from this
multi-year contract.
-- Company's backlog (contracted revenues) now sits at circa
GBP1 billion for the next seven years, an increase of GBP100
million since March 2023.*
-- Directors believe that trading remains on track to achieve
FY23 Group revenues of GBP100 million, subject to various design
completions and procurement permissions with revenues from the FSS
and M55 contracts expected to increase significantly in the second
half.
-- The Company reiterates its revenue guidance for FY24 of GBP200 million.
Post period end highlights:
-- Notice to Proceed for the mid-life upgrade and dry docking of
a large vessel, expected to be in the region of GBP60 million -
GBP70 million revenues.
-- First contract win for heavy lift vessel at Belfast worth GBP1.50 million.
-- Favourable outcome of Islandmagee Gas Project judicial review in the High Court
* These figures as at 30 June 2023 in addition to previously
reported figures in the Company's 2022 Annual Report are
management's best estimates. The Board remains comfortable with the
estimates relating to the Company's markets, prospects and
pipeline. They should be understood as the Board's views and should
not be attributed to the author of the Independent Business Review
Report or any other third party.
John Wood, Chief Executive Officer of Harland & Wolff Group
Holdings plc comments:
"These are increasingly exciting times at Harland and Wolff -
not just from a broad company perspective - but for each of our
yards, the communities that they serve and of course, our
workforce. The award this year of the FSS contract provides a
substantial baseload over the next five years and will result in a
transformation at Belfast which will become one the most modern
shipyards from both a national and global perspective. Its
facilities - as well as the Group's skill base - are already
attracting global clients especially with large and complex vessels
dry docking in the Belfast Dock, demonstrated by both orders won
and those in the pipeline. The opportunities within the energy and
renewables markets are also substantial and will benefit all of the
Group's yards with their strategic locations and their ability to
flex and scale production. The Group's workforce has scaled rapidly
and now totals some 780 employees and the Group is proud to be
putting British shipbuilding back on the map.
Like all businesses, we face challenges - from procurement
cycles to wage and energy inflation - but the worst of the
inflationary effects would appear now to be behind us, and we look
forward to increasing our margins as we build out our rapidly
growing order book. We have our foot hard on the pedal and are
intent on delivering the goals we have laid out. It is full steam
ahead at Harland and Wolff."
Operational Review
Cruise & Ferry Market
The ferry market continues to be buoyant and operational
recovery post the pandemic is well underway. Whilst the Company
continues to undertake ferry repair works on a regular basis, for
both planned and emergency dry dockings, there are new enquiries
also coming in for ferry refits. These refit contracts are in the
range of GBP5 million - GBP15 million and the Company is engaged in
commercial conversations with ferry owners to find the best
solutions. The Company has a deep supply chain in Belfast and
Scotland to offer these services and it continues to grow its
in-house capabilities and expertise in tandem.
The cruise market has undergone a fundamental change in recent
months as a new era of monetary policy unfolds. The construction of
new ships has stagnated and we are seeing cruise operators
increasingly decommissioning old vessels and refurbishing other
vessels as part of their mid-life upgrades. As a result of COVID
regulations and lessons learned from the pandemic, the cruise
industry is seeing an increasing number of major interior
refurbishment projects to reduce the number of cabins and create
more open spaces. The Company's optimal capability is in the cruise
refurbishment market and therefore expects to benefit from this
trend. The Company's newly opened Southampton and Miami offices are
being staffed with personnel who have decades of experience in the
cruise market and with extensive relationships in the industry.
These hires were made with a view to increasing the number of major
cruise vessel dry dockings in 2024 from enhanced sales leads.
Defence
The Company formally executed the Manufacture Subcontract for
the Fleet Solid Support Programme (FSS Programme) in February 2023.
The FSS Programme is transformational for the Company and will
enable the regeneration of Belfast and Appledore over the next 18
months. At its peak, the Company expects to employ approximately
1,500 personnel on this contract alone across its various sites.
The contract value attributable to the Company is expected to be
between GBP700 million - GBP800 million (adjusted for inflation)
over the duration of this multi-year contract, with fabrication to
commence at the end of 2024 / early 2025 and targeted completion of
the contract by 2031. Over the next 18 months, the Company will
continue to undertake major renovations of the Belfast facility
including the acquisition of sophisticated robotics, transporters,
new buildings, plant and machinery. Once completed, the Belfast
yard will be the most modern and sophisticated yard in the UK. As
previously announced, GBP77 million has been allocated for the
capital expenditure in Belfast of which GBP45 million will come
from the project. The balance will be funded through a number of
mechanisms such as landlord contributions, levelling up funding in
Northern Ireland and long-term asset financing for which
discussions are ongoing.
In addition to the FSS Programme, the Company has been actively
seeking further sub-contract work from other large and prominent
prime contractors based in the UK. The Company has been successful
in winning contracts worth circa GBP7 million in Q4'22 and Q1'23 to
begin its sub-contracting journey with such prime contractors. As
the Company deepens its relationship with the prime contractors,
the value of the future sub-contracts is likely to increase in size
and expand in the nature of work being undertaken. For instance,
discussions are on-going for the building of blocks in Appledore
and Methil in relation to certain prime contractors' ongoing
programmes with the Ministry of Defence.
The M55 Regeneration Programme at Appledore continues at pace.
All equipment and supplies have now been delivered with sea trials
expected to commence in Q1'24 and vessel delivery anticipated in
Q2'24. The project remains on schedule and on budget.
Looking ahead, with the establishment and maturing of the
National Shipbuilding Office, several tenders are set to be
released in the forthcoming months for the fabrication of
government vessels (defence and civilian), anticipated in 2025. The
Company will be actively engaged in the bidding process, the
outcomes of which will be determined in the second half of next
year.
Energy
The energy market has shown immense resilience over the last few
years. Whilst the energy transition away from traditional fossil
fuels is well underway, the UK economy will continue to have both
traditional fuels and new energy within its energy mix for the next
few decades. The ongoing Russia-Ukraine conflict has magnified the
need for energy security in relation to the country's energy
supplies and, accordingly, several government programmes have been
launched to increase national resilience. Energy, as a core target
market for the Company, has now emerged as one of the key markets
that will fuel near-term revenue growth.
North Sea developers have commenced new exploration programmes,
alongside developing plans to extend the life of existing fields
and supporting the renewables markets through modifications of
existing infrastructure. The Company recently announced (post
period end) that it has received a Notice to Proceed for the
mid-life upgrade of a large vessel for circa GBP60 million - GBP75
million revenues in 2024. The contract for this project is due to
be executed in the next few weeks. Additionally, the Company is in
advanced negotiations with other North Sea developers for the
refurbishment and new build of offshore platforms. The Company is
also actively involved in discussions with owners of oil tankers,
LNG carriers and FPSOs for dry docking of these vessels in Belfast.
Recognising the growing importance of the energy market, the
Company has recently established offices in Aberdeen, the UK's
energy capital. This will enable the Company to be in close
proximity to its potential clients and deepen relationships with
the aim of securing further contracts.
Renewables
The Company has previously stated that there is typically an
18-24-month period required from the award of a sea-bed licence to
commencement of fabrication for a wind farm project. During this
period, the developer needs to take a number of steps; completion
of planning and consenting, environmental impact assessments,
obtaining a marine licence and firming up the design specifications
of the project in line with seabed and other offshore conditions.
Since the Scotwind auction award announcement in April 2022, the
Company has been actively engaged with a large number of the
awardees, both for fixed and floating wind structures.
There is a very clear commitment from the developers to enhance
the value of local content and to strengthen the supply chain.
Importantly, fabrication for a project includes not only the
structures but also the ancillary equipment and ships, such as
Service Operating Vessels (SOVs) and Crew Transfer Vessels (CTVs)
to name a couple. The Company has been working alongside these
awardees to identify the commercial pathway for these projects and
ensure that the fabrication for these projects is de-risked as much
as possible.
Along with strengthening the supply chain, the Company has been
looking at how to increase its footprint in Belfast, Arnish and
Methil with a view to accommodating the fabrication, assembly and
load-out of large floating structures. A number of initiatives on
capital expenditure are being explored such as co-investment in the
yards, long term capacity bookings and joint ventures with the
awardees.
The renewables market is substantial and growing, and the
Company believes that the best way to monetise the opportunity is
to enter into a series of partnerships (in various commercial
forms) as opposed to securing standard fabrication contracts.
Whilst the Company continues to negotiate with its clients on
standard fabrication contracts for smaller pieces of work ranging
between GBP1 million and GBP5 million, the Company is engaged in
strategic partnership discussions for larger and longer-terms
contracts. The Company believes that large material contracts
should start getting executed at the back end of 2024 and has
therefore budgeted for smaller prototype fabrication projects next
year with more meaningful contracts commencing from 2025
onwards.
Commercial
The commercial market has opened up globally for the Company.
The directors believe that the Company has an established a
reputation of delivering complex and large projects on time and on
budget. Testament to this is the fact that vessel owners from North
America have been making the journey across the Atlantic to seek
dry docking and repair works in Belfast. The large dry docks and an
experienced team in Belfast lend themselves to be the facility of
choice for large vessels such as 'The Sunshine', a heavy lift
vessel of Korean origin, which is currently in Belfast undergoing
repair work.
More locally, the Company successfully completed the fabrication
for a mining project in Greenland and has delivered all the
fabricated components to the client. The Cory contract which
involves the fabrication and build of 23 barges continues at pace
with the barges now being fabricated in Belfast and Methil. This
contract has underpinned the rejuvenation of the fabrication halls
in Belfast and following a steady ramping-up, both yards are now
well-positioned to deliver at least one barge every four to five
weeks.
Moreover, as work gathers pace to modernise UK's electricity and
energy infrastructure, the Company continues to have discussions
with developers and key contactors in the nuclear and
electrification markets. These are large projects that are now at
the Final Investment Decision (FID) stage and the Company is
bidding on work relating to the contracting for significant
component and structural steel work in Methil and Arnish.
Islandmagee Gas Storage Project (Islandmagee Project)
The judicial review for the Islandmagee Project was held in the
first week of May 2023 with the judgment finally issued on 31
August 2023. The Company is delighted to report that the case was
formally dismissed by the High Court in Northern Ireland with all
grounds on which the applicants had challenged the issuance of the
marine construction licence, abstraction licence and discharge
consent comprehensively dismissed. The marine licence issued to the
project in November 2021, therefore, stands.
The Islandmagee Project represents a strategic asset both for
the island of Ireland and mainland UK, underpinned by a recent
independent study (the Large-Scale Hydrogen Concept Study)
confirming that the Islandmagee Project is technically suitable to
store, blend, process and introduce hydrogen into the network. The
hydrogen market is rapidly evolving, and the Company believes that
this project will stimulate the growth and monetisation of hydrogen
production and consumption. This has the potential to add enormous
value in the transition from natural gas to hydrogen, with the
recent study emphasising the viability of the business case and
economic model. Accordingly, the Company will be seeking to appoint
a technical consultant to conduct a Front-End Engineering and
Design (FEED) study for hydrogen storage as well as amend its
existing permissions to incorporate the storage of hydrogen.
Whilst the Company is currently reviewing the details of the
High Court judgement, the judgement has created the opportunity to
evaluate several potential strategic options for the asset
including:
-- Trade sale of the project;
-- Government funding (either in full or on a matched basis)
through the National Infrastructure Bank or similar entity via a
commercial mechanism such as a Contract for difference (CfD) or
Regulated Asset Base (RAB) model; and
-- Traditional farm-out model with the Company retaining a minority stake in the project.
The Company will fully assess its options in respect of the
Islandmagee Project to ensure any future decision on this project
is in the best interest of shareholders.
Financial overview
For the period ended 30 June 2023, the Company's revenues were
GBP25.53 million (30 June 2022: GBP15.41 million) representing a
65% increase from the comparative period last year. The gross
profit for the period was GBP4.95 million (30 June 2022: GBP3.38
million) representing a gross margin percentage of 19.4% reflecting
a highly volatile cost environment in which the Company was not
able fully to pass on labour and energy related cost increases to
all clients.
As we move into the next phase of the Company's growth, with the
onset of large fabrication contracts, our goal is to develop an
optimum blend and mix of work across the four sites, in order to
increase our gross margin to our target of between 24% - 27% One
critical cost consideration is steel and we are, as far as
possible, reducing our exposure to the volatility in steel prices
by requesting for client delivered materials. Where we are required
to acquire steel, our contracts are normally structured on a
floating price with the actual costs being passed to the clients.
Our ability to negotiate such terms is key to securing the right
work at the right price.
The net loss for the period was GBP31.50 million (30 June 2022:
GBP17.65 million). This widened loss versus the same period last
year largely reflects the investment in personnel and general
overheads to service a growing workload, along with increased
financing costs.
Net debt as at 30 June 2023 was GBP88.53 million (30 June 2022:
GBP19.74 million) reflecting the upsizing of the Riverstone Credit
Facility from $35 million in March 2022 to $100 million as at 30
June 2023. As reported previously, we are now at an advanced stage
of refinancing a new GBP200 million credit facility from UK Export
Finance (UKEF). Having completed significant due diligence in the
first half of 2023, we are now in the process of negotiating with
the high-street banks and Astra Asset Management to structure a
syndicate of commercial and private debt along with the UKEF
guarantee. We expect to close this facility in Q4'23. Further
announcements will be made at completion
Outlook for 2023 (FY23) and 2024 (FY24)
As stated previously, the Company expects to generate revenues
of circa GBP100 million for FY23 and circa GBP200 million for FY24.
The Company currently estimates these revenues would have the
following mix:
Market vertical 2023 (GBPm) 2024 (GBPm)
Defence 60 63
------------ ------------
Energy 20 84
------------ ------------
Commercial 12 18
------------ ------------
Cruise and ferry 7 20
------------ ------------
Renewables 1 15
------------ ------------
Revenues for FY23 will be significantly second half weighted
reflecting that the FSS Programme was contracted in February 2023
and that deliveries of equipment for the M55 Regeneration Programme
were received in Q1 2023. The FSS-related revenues, and a number of
other contracts signed in the current financial year, are subject
to a number of procurement activities defined by clients and, in
the case of FSS, are controlled by the UK Government. The Company
continues to liaise closely with its various counterparties to
ensure that procurement remains on target to achieve revenue
recognition in 2023. As a result of the processes involved in
setting up supply chains and seeking a number of security
clearances, bench overheads and additional administration expenses
will be incurred in the short term. Therefore, the EBITDA loss for
FY2023 is expected to be in the region of GBP22 million - GBP25
million.
For FY24, the Company already has a significant backlog
(contracted revenues) of GBP145 million providing good visibility,
and the Company continues to progress a number of identified
contract prospects.
For further information, please visit www.harland-wolff.com or contact:
Harland & Wolff Group Holdings plc +44 (0)20 3900
John Wood, Chief Executive Officer 2122
Arun Raman, Chief Finance Officer investor@harland-wolff.com
media@harland-wolff.com
Cenkos Securities plc (Nominated Adviser &
Broker)
Stephen Keys / Callum Davidson / Dan Hodkinson
(Corporate Finance) +44 (0)20 7397
Michael Johnson (Sales) 8900
----------------------------
Liberum Capital Limited (Joint Broker) +44 (0)20 3100
Nicholas How / Edward Mansfield 2000
----------------------------
Radnor Capital Partners (Investor Relations) +44 (0) 20 3897
Neville Harris / Joshua Cryer 1838
----------------------------
About Harland & Wolff
Harland & Wolff is a multisite fabrication company,
operating in the maritime and offshore industry through five
markets: commercial, cruise and ferry, defence, energy and
renewables and six services: technical services, fabrication and
construction, decommissioning, repair and maintenance, in-service
support and conversion.
Its Belfast yard is one of Europe's largest heavy engineering
facilities, with deep water access, two of Europe's largest
drydocks, ample quayside and vast fabrication halls. As a result of
the acquisition of Harland & Wolff (Appledore) in August 2020,
the company has been able to capitalise on opportunities at both
ends of the ship-repair and shipbuilding markets where there will
be significant demand.
In February 2021, the company acquired the assets of two
Scottish-based yards along the east and west coasts. Now known as
Harland & Wolff (Methil) and Harland & Wolff (Arnish),
these facilities will focus on fabrication work within the
renewables, energy and defence sectors.
In addition to Harland & Wolff, it owns the Islandmagee gas
storage project, which is expected to provide 25% of the UK's
natural gas storage capacity and to benefit the Northern Irish
economy as a whole when completed.
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2023
Six months Six months
to to
30 June 30 June
2023 2022
Unaudited Unaudited
Notes GBP GBP
Continuing operations
Revenue 25,532,712 15,413,527
Cost of sales (20,577,625) (12,031,833)
------------------------ ------------------------
Gross profit 4,955,087 3,381,694
Management and administrative expenses (21,133,404) (16,432,799)
Other operating income 250,192 337,960
Depreciation and amortisation (1,756,530) (1,354,540)
Operating loss (17,684,655) (14,067,685)
Finance income 597 -
Finance costs (13,819,604) (3,580,205)
Loss before taxation (31,503,662) (17,647,890)
Taxation - -
------------------------ ------------------------
Loss for the period (31,503,662) (17,647,890)
======================== ========================
Total comprehensive loss for the
period attributable
to:
Owners of the company (31,503,662) (17,647,890)
------------------------ ------------------------
Earnings Per Share
Basic and diluted 2 (18.21)p (10.83)p
------------------------ ------------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
30 June 30 June
2023 2022
Unaudited Unaudited
Notes GBP GBP
Non-current assets
Intangible assets 3 12,579,193 12,055,457
Property, plant and equipment 4 26,670,074 24,437,365
Right of use assets 5 17,575,541 12,580,662
Total non-current assets 56,824,808 49,073,484
-------------------- ------------------
Current assets
Inventories 4,042,617 9,005,144
Trade and other receivables 6 14,070,797 10,637,686
Cash and cash equivalents 6,742,640 2,290,311
Total current assets 24,856,054 21,933,141
-------------------- ------------------
Current liabilities
Trade and other payables 7 (43,836,149) (29,783,847)
Loans and borrowings 8 (98,303,054) (8,401,946)
Total current liabilities (142,139,203) (38,185,793)
-------------------- ------------------
Net current liabilities (117,283,149) (16,252,652)
Non-current liabilities
Loans and borrowings 8 (19,214,540) (29,017,760)
Financial liability 8 (200,000) (200,000)
-------------------- ------------------
Total non-current liabilities (19,414,540) (29,217,760)
-------------------- ------------------
Net liabilities (79,872,881) 3,603,072
==================== ==================
Shareholders' funds
Share capital 12,546,328 12,444,734
Share premium 59,360,117 58,736,711
Merger reserve 8,988,112 8,988,112
Share based payment reserve 392,058 379,904
Revaluation reserve 6,074,895 6,074,895
Retained earnings (167,234,391) (83,021,284)
-------------------- ------------------
Total equity (79,872,881) 3,603,072
==================== ==================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
Share based
Share Share Revaluation Merger payment Retained Total
capital premium Reserve reserve reserve earnings equity
GBP GBP GBP GBP GBP GBP GBP
Balance at 1
January 2022
(Audited) 12,444,734 58,736,711 6,074,895 8,988,112 360,501 (65,373,396) 21,231,557
Loss for the
period - - - - - (17,647,890) (17,647,890)
------------------ ----------------- ------------------- --------------- -------------------- ------------------ ---------------
Total
comprehensive
expense
for the
period - - - - - (17,647,890) (17,647,890)
Transactions
with owners
recorded
directly in
equity:
Share option
expense - - - - 19,403 - 19,403
Balance at 30
June 2022
(Unaudited) 12,444,734 58,736,711 6,074,895 8,988,112 379,904 (83,021,286) 3,603,070
================== ================= =================== =============== ==================== ================== ===============
Balance at 1
January 2023
(Audited) 12,546,328 59,360,117 6,074,895 8,988,112 392,058 (135,730,729) (48,369,219)
Loss for the
period - - - - - (31,503,662) (31,503,662)
------------------ ----------------- ------------------- --------------- -------------------- ------------------ ---------------
Total
comprehensive
expense
for the
period - - - - 392,058 (31,503,662) (31,503,662)
Transactions
with owners
recorded
directly in
equity:
Share option - - - - - - -
expense
Balance at 30
June 2023
(Unaudited) 12,546,328 59,360,117 6,074,895 8,988,112 392,058 (167,234,391) (79,872,881)
================== ================= =================== =============== ==================== ================== ===============
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2023
Six months Six months
to to
30 June 30 June
2023 2022
Unaudited Unaudited
GBP GBP
Cash flows from operating activities
Loss for the period (31,503,662) (17,647,890)
Adjustments to cash flows from non-cash
items:
Depreciation and amortisation 1,756,530 1,354,540
Foreign exchange (gain)/loss (18,684) 101,337
Finance income (597) -
Finance costs 13,819,604 3,580,205
Share option expense - 19,403
(15,946,809) (12,592,405)
Working capital adjustments:
Increase in inventories (2,308,053) (7,828,503)
Increase in trade and other receivables (6,223,884) (3,811,742)
Increase in trade and other payables 13,496,186 7,673,315
Net cash outflows from operating activities (10,982,560) (16,559,335)
------------- -------------
Cash flows from investing activities
Interest received 597 -
Acquisitions of property, plant and equipment (3,366,687) (680,716)
Acquisitions of intangible assets (117,364) (133,813)
Net cash outflows from investing activities (3,483,454) (814,529)
------------- -------------
Cash flows from financing activities
Proceeds from borrowings, net of debt
issuance costs 20,940,803 20,155,203
Repayment of borrowings and lease liabilities (1,340,272) (4,549,580)
Interest paid (371,702) (1,219,450)
Net cash inflows from financing activities 19,228,829 14,386,173
------------- -------------
Net increase/(decrease) in cash and
cash equivalents 4,762,815 (2,987,691)
Cash and cash equivalents at the start
of the period 1,979,825 5,278,002
Cash and cash equivalents at the end
of the period 6,742,640 2,290,311
============= =============
NOTES TO THE INTERIM RESULTS
For the six months ended 30 June 2023
1. Accounting policies
Basis of preparation
The interim financial information in this report has been
prepared using accounting policies consistent with International
Financial Reporting Standards (IFRS) as adopted by the European
Union (EU). IFRS is subject to amendment and interpretation by the
International Accounting Standards Board (IASB) and the IFRS
Interpretations Committee and there is an ongoing process of review
and endorsement by the European Commission. The financial
information has been prepared on the basis of IFRS that the
Directors expect to be adopted by the European Union and applicable
as at 30 June 2023.
Non-statutory accounts
Financial information contained in this document does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006.
A copy of the statutory accounts of the Company for the 12-month
period ended 31 December 2022 has been delivered to the Registrar
of Companies. The audit report on these accounts is unqualified and
did not contain a statement under Sections 498(2) or (3) of the
Companies Act 2006.
The financial information for the six months ended 30 June 2023
and 30 June 2022 is unaudited.
The Group has chosen not to adopt IAS 34 "Interim Financial
Statements" in preparing the interim financial information'.
The interim report does not include all the notes of the type
normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the annual report for the
12-month period ended 31 December 2022, which was prepared under
IFRS as adopted by the EU, and any public announcements made by
Harland & Wolff Group Holdings plc during the interim reporting
period.
Accounting policies
The interim financial information has been prepared under the
historical cost convention except for certain items that are shown
at fair value as disclosed in the accounting policies.
The same accounting policies, presentation and methods of
computation are followed in preparing the interim financial
information as were applied in preparation of the Group's financial
statements for the 12-month period ended 31 December 2022.
The financial statements are presented in Sterling which is the
functional currency of the Group, and all values are rounded to the
nearest Pound Sterling (GBP).
Basis of consolidation
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.
Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised
losses are also eliminated. When necessary, amounts reported by
subsidiaries have been adjusted to conform with the Group's
accounting policies.
NOTES TO THE INTERIM RESULTS
For the six months ended 30 June 2023
1. Accounting policies (continued)
Going concern
The interim results have been prepared on a going concern basis.
The Group's assets are now generating revenue following the
acquisitions of assets in Belfast, Appledore, Methil and Arnish
under the Harland & Wolff umbrella. Operating cash outflows
have been incurred in the period and an operating loss has been
recorded in the profit and loss account for the period. There is a
baseload level of work flowing through the shipyard in Belfast with
continuous ship repair and refurbishment activities in the Belfast
Repair Dock. In addition, the Group has been able to win smaller
fabrication contracts in Appledore, Methil and Arnish in addition
to the multi-year M55 Regeneration Programme worth GBP55 million
and the fabrication of 23 barges for the Cory group worth GBP18
million. In February 2023, the Group executed the Fleet Solid
Support Manufacture Subcontract with Navantia UK Limited
(Navantia).
This Subcontract is expected to generate total revenues of
between GBP700 million and GBP800 million for the Company over a
seven-year period that provides a baseload of revenues over the
next few years. Additionally, there is a strong pipeline of
opportunities across the five markets that the Group is involved in
that management seeks to convert into firm contracts. .
The directors have a reasonable expectation that the Group has
access to adequate resources to continue in operational existence
for the foreseeable future. Thus, they continue to adopt the going
concern basis of accounting in preparing the interim results for
the six months ended 30 June 2023. Should the Group be unable to
continue trading, adjustments would have to be made to reduce the
value of the assets to their recoverable amounts, to provide for
further liabilities which might arise and to classify fixed assets
as current.
The Company is in advanced discussions with potential lenders
along with a UK Export Finance (UKEF) guarantee to raise GBP200
million. Whilst there is no indication at the date of issuing the
interim results that this financing will not be forthcoming, there
can be no certainty that it will be successful. Should the Company
not be successful in raising these additional funds and continues
to retain its current cost base, a material uncertainty exists that
may cast significant doubt on the group's ability to continue as a
going concern.
The auditors have included material uncertainty in relation to
going concern in the audit opinion of the Group's financial
statements for the 12-month period ended 31 December 2022.
2. Earnings per share
Six months Six months
to to
30 June 30 June
2023 2022
Unaudited Unaudited
GBP GBP
The loss for the purposes of basic and
diluted earnings per share being the net
loss attributable to equity shareholders
Continuing operations (31,503,662) (17,647,890)
--------------------- ---------------------
Number of shares
Weighted average number of ordinary shares
for the purpose of:
Basic earnings per share 173,047,211 162,887,840
Basic and diluted earnings per share
Continuing operations (18.21)p (10.83)p
--------------------- ---------------------
NOTES TO THE INTERIM RESULTS
For the six months ended 30 June 2023
3. Intangible assets
Computer Development Gas storage Project
Artefacts Trademarks software costs development costs Total
GBP GBP GBP GBP GBP GBP
Cost
At 1 January
2023 647,395 1,013,192 181,273 55,000 10,433,973 184,177 12,515,010
Additions - - 6,631 - 110,733 - 117,364
------------ ------------- ----------- -------------- -------------- -------- -----------
At 30 June
2023 647,395 1,013,192 187,904 55,000 10,544,706 184,177 12,632,374
------------ ------------- ----------- -------------- -------------- -------- -----------
Amortisation
At 1 January
2023 - - 25,846 7,833 - - 33,679
Amortisation
charge - - 18,127 1,375 - - 19,502
------------ ------------- ----------- -------------- -------------- -------- -----------
At 30 June
2023 - - 43,973 9,208 - - 53,181
------------ ------------- ----------- -------------- -------------- -------- -----------
Net book value
At 30 June
2023 647,395 1,013,192 143,931 45,792 10,544,706 184,177 12,579,193
============ ============= =========== ============== ============== ======== ===========
At 31 December
2022 647,395 1,013,192 155,427 47,167 10,433,973 184,177 12,481,331
============ ============= =========== ============== ============== ======== ===========
4. Property, plant and equipment
Land and Office Motor vehicles Plant and Total
buildings equipment machinery
GBP GBP GBP GBP GBP
Cost or valuation
At 1 January 2023 11,946,019 813,723 554,517 16,493,425 29,807,684
Additions 25,517 - - 3,341,170 3,366,687
------------ ------------ ----------------- ------------ -----------
At 30 June 2023 11,971,536 813,723 554,517 19,834,595 33,174,371
------------ ------------ ----------------- ------------ -----------
Depreciation
At 1 January 2023 1,310,069 283,628 175,006 3,668,652 5,437,355
Charge for the period 214,064 77,681 28,082 747,115 1,066,942
------------ ------------ ----------------- ------------ -----------
At 30 June 2023 1,524,133 361,309 203,088 4,415,767 6,504,297
------------ ------------ ----------------- ------------ -----------
Carrying amount
At 30 June 2023 10,447,403 452,414 351,429 15,418,828 26,670,074
============ ============ ================= ============ ===========
At 31 December 2022 10,635,950 530,095 379,511 12,824,773 24,370,329
============ ============ ================= ============ ===========
NOTES TO THE INTERIM RESULTS
For the six months ended 30 June 2023
5. Right of use assets
Property
GBP
Cost or valuation
At 1 January 2023 20,833,652
Additions -
------------------
At 30 June 2023 20,833,652
------------------
Depreciation
At 1 January 2023 2,588,025
Charge for the period 670,086
------------------
At 30 June 2023 3,258,111
------------------
Carrying amount
At 30 June 2023 17,575,541
==================
At 31 December 2022 18,245,627
==================
6. Trade and other receivables
30 June 30 June
2023 2022
Unaudited Unaudited
GBP GBP
Trade receivables 5,183,693 2,411,008
Accrued Income 6,047,093 5,532,511
Other receivables 1,032,211 1,060,560
Prepayments 1,807,800 1,633,607
14,070,797 10,637,686
=========== ============
7. Trade and other payables
30 June 30 June
2023 2022
Unaudited Unaudited
GBP GBP
Trade payables 8,532,133 17,814,372
Social security and other taxes 1,059,753 2,707,543
Outstanding defined contribution pension
costs 85,178 118,092
Other payables 4,030,099 153,560
Accruals and deferred income 30,128,986 8,990,280
43,836,149 29,783,847
=========== ===============
NOTES TO THE INTERIM RESULTS
For the six months ended 30 June 2023
8. Loans and borrowings
30 June 30 June
2023 2022
Unaudited Unaudited
GBP GBP
Current liabilities:
Lease liabilities - right of use 3,034,804 1,499,946
Other borrowings 95,268,250 6,902,000
98,303,054 8,401,946
============== ==============
Non-current liabilities:
Lease liabilities - right of use 19,214,540 13,891,686
Other borrowings - 15,126,074
Financial liability 200,000 200,000
19,414,540 29,217,760
============== ==============
Other borrowings
Riverstone Credit Partners LLC ("RCP")
On 9 March 2022, the Company entered into a group-wide $70
million Green Term Loan Facility (the "Facility") with affiliates
of Riverstone Credit Partners, LLC ("RCP"). The Company upsized the
Facility on 1 March 2023 to a total of $100 million, with the
entire Facility maturing on 31 December 2024. The Facility will
attract an interest rate of the published 90 day Secured Overnight
Financing Rate (the "SOFR") plus 9% per annum, with the floor of
the SOFR set at 1%. The Facility will be securitised against
substantially all the assets of the Company, including land,
property, plant and machinery and receivables.
Financial liability
Moyle Investments
In December 2017, the Company's wholly owned subsidiary,
InfraStrata UK Limited increased its ownership in Islandmagee
Energy Limited from 90% to 100% by acquiring the remaining interest
from Moyle Energy Investments Limited at par value. In recognition
of the support by Moyle of the gas storage project at Islandmagee,
Harland & Wolff Group Holdings plc will pay Moyle GBP200,000 on
first gas storage.
9. Seasonal trend analysis
The Company normally observes a seasonal trend of ferry and
cruise repairs being conducted over the winter period in
preparation for summer sailings. There are no particular seasonal
variations observed within the other markets.
10. Dividend
The Directors do not recommend payment of a dividend for the
period to 30 June 2023.
11. Publication of the interim report
This interim report is available on the Company's website
https://www.harland-wolff.com
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END
IR UBVKROUUKRAR
(END) Dow Jones Newswires
September 08, 2023 02:00 ET (06:00 GMT)
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