Trading Update and Notice of Results

RNS Number : 7590G

Harland & Wolff Group Holdings PLC

31 March 2022

 

31 March 2022

Harland & Wolff Group Holdings plc

("Harland & Wolff" or the "Company")

Trading Update and Notice of Results

Harland & Wolff Group Holdings plc (AIM: HARL), the UK quoted company focused on strategic infrastructure projects and physical asset lifecycle management, provides a trading update in relation to the 17-month period ended 31 December 2021 and for the first quarter of 2022.

As detailed in its announcement dated 16 April 2021, the Company secured its first major fabrication contract with Saipem Limited for the manufacture of eight wind turbine jacket structures for the NNG Project (the "Project"), carrying a contract value of approximately £26 million. Subsequent to the execution of the contract, Harland and Wolff experienced delays in receipt of client supplied materials required to commence fabrication of the jackets as a result of supply chain issues affecting the wider global economy, thus also resulting in the materials requiring more work after they were delivered. Whilst the Company achieved a significant amount of pre-fabrication, component assembly and engineering works on the jackets in 2021, such delays have resulted in the majority of fabrication occurring in 2022. Accordingly, in consultation with the Company's auditors during the current audit process, the board has taken a prudent approach to revenue recognition and determined that a material portion of revenue, which had been expected to be recognised in 2021, will now be recognised in 2022. As a result, gross revenues for the Company are expected to be between £18 million and £20 million for the 17-month period, subject to completion of the audit.

The Company is pleased to announce that it now has sufficient materials released at the correct stage of prefabrication by the client to scale up on fabrication. Accordingly, Harland & Wolff (Methil) has recruited over 245 employees in Q1'22 and has established a night shift. The Company remains aligned with the client and looks forward to completing this first contract. The Company now expects phase I of the Project to be substantially completed in the second half of the financial year.

As regards current trading, the Company is pleased to report that the first quarter of 2022 has been an extremely busy period, especially for the Belfast facility. The Repair Dock in Harland & Wolff (Belfast) has been full since the first week of January welcoming over 15 vessels to undertake a number of repair works. Harland & Wolff (Appledore) has been scaling up on the pontoon build for RNLI in addition to welcoming several smaller vessels (dredgers, offshore support vessels and smaller fishing vessels etc.). Finally, Harland & Wolff (Arnish) has been busy with the contract that it signed last year and continues its fabrication at pace. Additionally, Harland & Wolff (Arnish) has signed an additional contract along with a variation to its existing contract that extends its scope and works, thereby generating additional revenues for the site.

As we move into Q2, the Company is involved in a number of advanced negotiations that it believes should come to fruition over the course of the next few weeks and months. Further contract announcements will be made in due course.  The Company remains confident in its ability to meet the 2022 guidance previously provided and is now very close to having all five of its key markets commercialised.

The Company expects to announce its results for the 17-month period ended 31 December 2021 in April 2022.

John Wood, Group CEO of Harland & Wolff, comments:

"Global supply chain problems have clearly impacted our business, as they have impacted others. This was the primary reason we opted for our client (Saipem) to provide the materials for our first renewables project. However, I am encouraged that these problems have now been substantially resolved in relation to our existing contracts. Looking ahead, whilst we remain in a challenging environment, I am confident that we will successfully navigate our way through a balanced backlog of projects across our sites as our continued exposure to five markets and six service sectors is beginning to reap rewards. We are seeing significant movement within the cruise and renewables markets and are at advanced stages of negotiations on several potential contracts. Whilst the defence market tends to have a longer gestation period prior to contract award, we continue to make good progress on various fronts. The issuance of the National Shipbuilding Strategy as well as the successful outcome of the Scotwind licensing round bodes well for the decade ahead and fits perfectly into our strategic vision set out at the start of the Harland and Wolff journey twenty-four months ago. I look forward to making some contract announcements over the course of the next quarter."

This announcement contains inside information.

For further information, please visit  www.harland-wolff.com  or contact:

Harland & Wolff Group Holdings plc John Wood, Chief Executive Officer Seena Shah, Head of Marketing & Communications	[phone] [e-mail]   [e-mail]
Cenkos Securities plc (Nominated Adviser & Broker) Stephen Keys / Callum Davidson / Dan Hodkinson (Corporate Finance) Michael Johnson (Sales)	[phone]

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.

 

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