REG - Harland & Wolff - Unaudited Preliminary Results
01/07/2024 07:00
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RNS Number : 4829U Harland & Wolff Group Holdings PLC 01 July 2024
This announcement contains inside information
1 July 2024
Harland & Wolff Group Holdings plc
("Harland & Wolff" or the "Company")
Unaudited Financial Results and Temporary Suspension
Harland & Wolff Group Holdings plc (AIM: HARL), the UK quoted company
focused on strategic infrastructure projects and physical asset lifecycle
management, releases its unaudited financial results for the financial year
ended 31 December 2023.
Key highlights:
· Revenues of £86.91 million (2022: £27.75 million)
· Operating loss of £24.71 million (2022: £58.51 million)
· Loss of £43.08 million (2022: £70.80 million)
· Key contract wins:
o Fleet Solid Support Programme ("FSS") £750 million (adjusted for
inflation)
o SeaRose Midlife Extension £61 million; over 50% upgrade to the base
contract value
· Directors believe that Company remains on track to achieve
revenue of £200 million for FY24
Trading performance for FY23
Having secured the FSS Subcontract in February 2023, the Company has been
actively engaged in the programme's regeneration plan. Accordingly, the
Company has placed orders for several major CAPEX items, including but not
limited to, one of Europe's largest robotic welding panel lines, plasma
cutters and transporters. in addition to commencing construction works to
expand Belfast's fabrication halls by another 5,000 square metres. Work
continues in relation to the procurement of long lead and critical path
equipment for the three vessels.
In October 2023, the Company was awarded a contract for the midlife upgrade of
the SeaRose FPSO. Preparatory works commenced in October 2023 and works
commenced on the vessel from 17 February 2024. This is a highly time
constrained project with the vessel expected to leave Belfast in August 2024.
Following an increase to the initial scope of work to be undertaken by Harland
and Wolff on this contract, the Company expects a significant increase of over
50% from the base contract value of £61 million.
The Company's yards have been busy through the year with multiple contracts
being fulfilled. Solid progress has been made on the M55 Regeneration
Programme in the Appledore facility during FY23 and delivery of the vessel is
now expected in Q3'24. The Company continues to fulfil its 33-barge contract
with the Cory Group and, thus far, 16 barges have been delivered. The balance
of 17 barges is expected to be delivered by Q1'25. The Company is utilising
Belfast, Methil and Arnish for this programme and the Company is targeting the
completion of all the remaining barges by the end of FY24.
Across the Group, several smaller contracts were executed and completed
through FY23. These spanned across the five markets that the Company is
involved in, demonstrating that the five-market strategy continues to work and
develop over time. The Company will continue to pursue opportunities in all
these markets in order to reduce its reliance on Government contracts and as
part of its commitment to the National Shipbuilding Strategy.
The Company continues to increase its core personnel in preparation for first
cut of steel for the FSS programme in Q1'25. As at 31 December 2023, the Group
headcount was 1,010 personnel which has now gone up to 1,512 with an increase
in work undertaken in all the yards. The Company remains committed to its
social value commitments under the FSS Programme and more widely. Accordingly,
the number of apprentices has risen from 85 at the end of FY23 to 142 as at
end-June 2024. The Company continues to engage in a meaningful manner with the
local communities, in which its facilities are located, promoting employment,
further education, apprenticeships and upskilling.
Financial performance for FY23
The Company's revenues grew to £86.91 million, a 213% increase over its FY22
revenues of £27.75 million. The Company was able to reduce its operating loss
in FY by 136% to £24.71 million compared to its FY22 operating loss of
£58.51 million. Loss attributable to shareholders for FY23 stood at £43.08
million, a 39% reduction from the FY22 loss of £70.80 million. Whilst the
decrease in loss is movement in the right direction towards break-even and
profitability, the Company's interest burden increased from £12.29 million in
FY22 to £18.37 million in FY23. The Company upsized its credit facility with
Riverstone Credit Partners through FY23 and Q1'24 from $35 million to $115
million as at end-June 2024. Accordingly, net debt as at 31 December 2023
stood at £92.38 million (2022: £81.13 million). This credit facility matures
on 31 December 2024 and the Company continues to have discussions with UK
Export Finance and other counterparties to refinance the Riverstone credit
facility and obtain further working capital for the Company's growing
contracted order book.
Under IFRS15 Revenue from Contracts with Customers, we have been unable to
recognise £13.06 million in FY23 on one of our multi-year contracts. This
value of revenue already received in cash has been treated as deferred revenue
and will be recognised in future periods.
Refinancing
As previously announced, the Company has been in discussions with UK Export
Finance since Q3'22 for a proposed £200 million facility. During FY23, a
significant amount of work was done and, accordingly, an announcement was made
on 29 December 2023 stating that the facility was approved subject to a
Commercial Rate Review and ministerial consents. Further work continues on
this facility and the Company expects UK Government to reach a decision after
the General Election. Should there be any material delays to securing the
facility post the General Election, the Company's ability to execute new and
large contracts would be adversely affected. The Company continues to engage
with UK Government and will make an announcement in due course.
Suspension of the Company's shares on AIM
The Company has not been able to publish its audited financial statements and
Annual Report on or before 1 July 2024.
As previously announced, given the multi-year and complex nature of some of
the contracts under which the Company is working, the Company has been in
extensive discussions with its auditors to agree the method of accounting for
revenues throughout the duration of a build programme. Accordingly, the
Company has spent a considerable amount of time in determining its accounting
treatment for revenues arising from long-term contracts in compliance with
IFRS15. This is especially relevant in the context of the FSS Subcontract that
is set to last for the next seven years. Equally, it is important for the
Company to have an agreed position on the treatment of revenues for future
long-term contracts, in accordance with IFRS15 and to the satisfaction of the
auditors. The assessment of the split in revenues between current year's
revenues and deferred revenues has caused a delay to the audit process and
hence the publication of the Company's Annual Report and audited financial
statements. Now that the Company and its auditors agree with the treatment of
revenues in the financial statements, the Company will progress to complete
the audit quickly and prepare its financial statements and issue its Annual
Report. The Company expects to release its audited financial statements for
the year ended 31 December 2023 during the week commencing 8 July 2024. Whilst
the Company expects to make some adjustments to the final audited numbers,
these changes are not expected to be material.
Outlook for FY24
The Company now has an agreed position on its treatment of revenues from long
term contracts. The majority of revenues from the SeaRose contract will be
realised in FY24. The M55 Regeneration Programme and Cory barge contract are
due to be completed in FY24 with revenues realised in the current financial
year. The Belfast facility has been busy with refurbishment contracts for its
cruise clients; Margaritaville at Sea and Villa Vie Residences. The Company
continues to be in advanced negotiations with other cruise clients to welcome
additional cruise vessels in Q4'24. Given the momentum in the order book, and
revenues realised to date, the Company expects to meet its forecasted revenues
of £200 million for FY24.
Arun Raman, Group Chief Finance Officer, Harland & Wolff comments: "I am
highly encouraged by the growth in revenues from FY22 to FY23 as we seek to
achieve the critical mass required to get to cash break-even at EBITDA levels.
Our financing costs are high, exacerbated by the rises in the base rate in
FY23 and. it is crucial to close the UKEF facility as soon as possible in
order to provide the stable long-term working capital needed for securing
large, multi-year contracts. Our engagement with UK Government continues in
order to bring this deal to closure."
For further information, please visit www.harland-wolff.com
(http://www.harland-wolff.com/) or contact:
Harland & Wolff Group Holdings plc +44 (0)20 3900 2122
John Wood, Chief Executive Officer investor@harland-wolff.com (mailto:investor@harland-wolff.com)
Arun Raman, Chief Finance Officer media@harland-wolff.com (mailto:media@harland-wolff.com)
h2Radnor (Investor Relations) +44 (0) 20 3897 1838
Neville Harris
Cavendish Capital Markets Limited (Nominated Adviser & Broker) +44 (0)20 7397 8900
Stephen Keys / Callum Davidson / Dan Hodkinson (Corporate Finance)
Michael Johnson (Sales)
Liberum Capital Limited (Joint Broker) +44 (0)20 3100 2000
Nicholas How / Edward Mansfield
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.
Harland & Wolff Group Holdings Plc
Consolidated Income Statement for the Year Ended 31 December 2023
12 months to RESTATED
31 December
2023 12 months to
£
31 December
2022
£
Continuing operations
Revenue 86,914,499 27,754,776
Cost of sales (62,001,347) (22,445,824)
Gross profit 24,913,152 5,308,952
Other operating expenses (3,023,155) (10,403,264)
Management and administrative expenses (46,604,943) (53,415,507)
Operating loss (24,714,946) (58,509,819)
Net finance costs (18,372,478) (12,293,865)
Loss before tax (43,087,424) (70,803,684)
Taxation - -
Loss for the year (43,087,424) (70,803,684)
Loss attributed to:
Equity owners of the parent company (43,087,424) (70,803,684)
Earnings Per Share
Basic and (23.99)p (43.00)p
diluted
Other comprehensive income, net of tax:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations. (3,159) -
Other comprehensive income, net of tax (3,159) -
Total comprehensive loss (43,090,583) (70,803,684)
Harland & Wolff Group Holdings Plc
(Registration number: 06409712)
Consolidated Statement of Financial Position as at 31 December 2023
RESTATED
31 December 31 December
2023
2022
£
£
Non-current assets
Intangible assets 12,498,611 12,481,331
Property, plant and equipment 35,604,630 24,370,329
Right of use assets 16,905,456 18,245,627
Total non-current assets 65,008,697 55,097,287
Current assets
Inventories 1,039,815 1,094,805
Trade and other receivables 23,032,256 8,251,110
Cash and cash equivalents 25,414,588 1,979,825
Restricted cash 3,002,373 -
Total current assets 52,489,032 11,325,740
Current liabilities
Trade and other payables (93,667,630) (30,576,120)
Lease liabilities (2,991,901) (3,028,842)
Loans and borrowings (94,163,317) (61,886,189)
Total current liabilities (190,822,848) (95,491,151)
Net current liabilities (138,333,816) (84,165,411)
Non-current liabilities
Lease liabilities (18,683,971) (19,458,325)
Other financial liability (200,000) (200,000)
Total non-current liabilities (18,883,971) (19,658,325)
Net liabilities (92,209,090) (48,726,449)
Capital and reserves
Share capital 12,546,328 12,546,328
Share premium 59,360,117 59,360,117
Other reserves 15,059,848 15,455,065
Retained earnings (179,175,383) (136,087,959)
Total equity (92,209,090) (48,726,449)
Harland & Wolff Group Holdings Plc
Consolidated Statement of Changes in Equity for the Year Ended 31 December
2023
Share Share Revaluation reserve Merger Share based payment Currency translation reserve Retained earnings Total equity
£
£
£
capital premium reserve reserve £
£
£
£
£
At 1 January 2023 12,546,328 59,360,117 6,074,895 8,988,112 392,058 - (136,087,959) (48,726,449)
Loss for the year - - - - - - (43,087,424) (43,087,424)
Other comprehensive loss - - - - - (3,159) - (3,159)
Total comprehensive loss for the year - - - - - (3,159) (43,087,424) (43,090,583)
Share based payment reserve release - - - - (392,058) - - (392,058)
At 31 December 2023 12,546,328 59,360,117 6,074,895 8,988,112 - (3,159) (179,175,383) (92,209,090)
RESTATED Share Share Revaluation reserve Merger Share based payment Currency translation reserve Retained earnings Total equity
£
£
£
capital premium reserve reserve £
£
£
£
£
At 1 January 2022 12,444,734 58,736,711 6,074,895 8,988,112 360,501 - (65,284,275) 21,320,678
Loss for the year - - - - - - (70,803,684) (70,803,684)
Total comprehensive loss for the year - - - - - - (70,803,684) (70,803,684)
Shares issued 101,594 623,406 - - - - - 725,000
Share option expense - - - - 31,557 - - 31,557
Total transactions with owners recorded directly in equity 101,594 623,406 - - 31,557 - - 756,557
At 31 December 2022 12,546,328 59,360,117 6,074,895 8,988,112 392,058 - (136,087,959) (48,726,449)
Harland & Wolff Group Holdings Plc
Consolidated Statement of Changes in Equity for the Year Ended 31 December
2023 (continued)
Revaluation reserve
This represents the difference between the carrying value and fair value of
certain assets.
Merger reserve
The merger reserve represents the difference between the nominal value of the
shares issued and the combined share capital and share premium in issue at the
date of an historic corporate restructuring.
Share-based payment reserve
The employee benefit reserve is used to record the value of equity-settled
share-based payments provided to employees.
Currency translation reserve
The currency translation reserve represents the currency translation
differences arising from the consolidation of foreign operations.
Retained Earnings
This represents the accumulated losses of the business since inception.
Harland & Wolff Group Holdings Plc
Consolidated Statement of Cash Flows for the Year Ended 31 December 2023
12 months to RESTATED
31 December
2023 12 months to
£
31 December
2022
£
Cash flows from operating activities
Loss before taxation (43,087,424) (70,803,684)
Adjustments to cash flows from non-cash items:
Depreciation and amortisation 3,555,423 3,460,651
Impairment of intangibles 184,177 -
Foreign exchange (gain) / loss (3,869,845) 938,942
Finance income (146,961) (943)
Finance costs 22,110,092 12,294,808
Share-based payment expense (392,058) 31,557
(21,646,596) (54,078,669)
Working capital adjustments: - -
Increase in inventories 54,990 81,836
Increase in trade and other receivables (14,781,146) (1,425,166)
Increase in trade and other payables 62,945,057 8,532,552
Net cash inflow / (outflow) from investing activities 26,572,305 (46,889,447)
Cash flows from investing activities
Interest received 146,961 943
Purchase of property, plant and equipment (13,409,911) (1,825,781)
Purchase of intangible assets (241,097) (586,909)
Net cash outflow from investing activities (13,504,047) (2,411,747)
Cash flows from financing activities
Proceeds from issue of shares, net of share issue costs - 725,000
Proceeds from borrowings, net of debt issuance costs 20,815,144 54,336,234
Repayment of borrowings - (3,867,000)
Payments of lease liabilities (2,868,034) (1,450,690)
Restricted cash held for performance bonds (3,002,373) -
Interest paid (4,670,879) (3,740,527)
Net cash inflow from financing activities 10,273,858 46,003,017
Net increase / (decrease) in cash and cash equivalents 23,342,116 (3,298,177)
Cash and cash equivalents at the beginning of the period 1,979,825 5,278,002
Net foreign exchange differences on cash, cash equivalents and restricted cash 92,647 -
Cash and cash equivalents at the end of the period 25,414,588 1,979,825
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