TIDMHARL
RNS Number : 6346E
Harland & Wolff Group Holdings PLC
30 June 2023
30 June 2023
Harland & Wolff Group Holdings plc
("Harland & Wolff" or the "Company")
Audited Financial Results for the Financial Year Ended 31
December 2022
Harland & Wolff Group Holdings plc (AIM: HARL), the UK
quoted company focused on strategic infrastructure projects and
physical asset lifecycle management, is pleased to release its
audited financial results for the financial year ended 31 December
2022. These financial results are for the twelve-month period ended
31 December 2022 whilst the financial year 2021 comparative is for
a seventeen-month period from 1 August 2020 to 31 December
2021.
Key highlights:
-- Revenues of GBP27.96 million (2021: GBP18.51 million)
-- Loss for the year of GBP70.35 million (2021: GBP25.50 million)
-- 769 core employees at year end 2022 (2021: 410) and apprentices at 64 (2021: 37)
-- First ever corporate debt facility of $35 million entered
into in March 2022 and upsized to $100 million by the end of the
year
-- Appledore deferred consideration paid in full
-- Key contract wins:
o M55 Regeneration Programme GBP55 million
o Cory Barges contract GBP18 million
-- Preferred Bidder status achieved in November 2022 for the
GBP1.60 billion Fleet Solid Support (FSS) Programme; Subcontract
with Navantia executed in February 2023 with the Company's share
estimated at GBP750 million (adjusted for inflation)
The full annual report has been published today and is now
available to view on the Company's website:
https://www.harland-wolff.com and will shortly be posted to
shareholders who have requested a physical copy.
John Wood, Group Chief Executive Officer, Harland & Wolff
Group Holdings plc comments: "The Company has made significant
progress in 2022 in its revenue generation and contracted backlog
which now sits at approximately GBP900 million. Having completed
the third year of our turnaround strategy at the end of FY 2022, we
have started on a strong foot at the beginning of FY 2023 with the
award of the subcontract for the FSS Programme. Whilst the FSS
subcontract is a game-changing contract win for the Company, it
will take several years to deliver and we still have a lot to
achieve over the next two years in order to turn this Company into
a target GBP500 million per annum business. We believe this is a
wholly achievable goal and our maturing presence across five
markets will fuel the growth that we are targeting by the time we
end the fifth year (FY 2025) of our turnaround strategy.
Chairman's Statement
Our collective achievements during 2022 are a credit to everyone
at Harland & Wolff but particularly to the vision and
dedication of our outstanding executive leadership team.
Building our business involves many parts, but the most pleasing
for me to witness are the expanding orderbook and the wealth of
talent now joining us. All the effort of recent years is beginning
to bear fruit as we win orders across five markets, notably of
course the securing of the Royal Navy's Fleet Solid Support (FSS)
Programme.
As Chairman of this growing enterprise, I am fortunate to have
the support of wise and engaged Board colleagues, a strong and
forward-thinking executive team, and a high calibre workforce
working with dedication to deliver on our vision to redefine our
industry and pioneer twenty-first century offshore and maritime
engineering with daring ingenuity.
During 2022, the team secured a $70 million Green Term Loan
Facility with an affiliate of Riverstone Partners, which was
subsequently upsized to $100 million. Securing this facility has
been instrumental in meeting the Group's growing capital needs as
further investment was made to support the winning and execution of
a wider range of fabrication contacts. The two barge fabrication
contracts that Belfast secured from the Cory Group have set the
fabrication halls in Belfast in motion and are preparing the
workforce for the FSS fabrication programme. The award of the M55
Regeneration Programme marked a watershed moment for the Group as
our first and formal entry into the defence market. These events
are a clear demonstration of the capabilities of the Group and I am
delighted that all the hard work put in over the last few years is
finally yielding results. We aim to finish 2023 in a much stronger
position and with a sizeable orderbook going into 2024.
Strong Foundations
Over the last year, our team has secured and delivered on
projects at the sites we acquired in 2019 (Belfast), 2020
(Appledore) and 2021 (Methil & Arnish) and taken the key steps
necessary to ensure we are prepared for the long-term through
investment in the yards, in skills and in building a backlog in the
orderbook. Whilst further advancing our original Islandmagee gas
storage project, vital to UK gas supply, we have all the while been
building Harland & Wolff into a fully functioning four-site
fabrication and ship repair business. In addition to filling the
Belfast shipyard with increasingly complex dockings, the team is
bringing shipbuilding back to Methil with the Cory barge contract
split between Belfast and Methil; is fabricating mining
infrastructure and exporting in Arnish; and delivering valuable
defence projects in Appledore.
Our Future
As vessel dockings increase in complexity and major fabrication
projects are secured across all markets in the medium term, we are
well placed to continue moving the business forward, and
significantly ramping up our revenue generation. With our strategy
of serving five markets across six services encompassing the
complete lifecycle of an asset, I am confident that we will achieve
formidable growth in the medium-term and sustain a vibrant business
in the long run. Proud of our history, we are also nimble
proponents of change. I am particularly keen to see us further
extend our environmental, social and governance (ESG) efforts.
Sterling work is being done to ensure diversity and inclusion
across the business, and you will see in this year's report for the
first time, that we report on TCFD. Among other initiatives where
we are already having an impact for good, we are proud of our
apprenticeship programme which continues to grow, providing solid
high-quality career paths for people in parts of our country that
are in the vanguard for levelling-up.
Post the balance sheet date, we secured the manufacture
subcontract for the FSS which will see a GBP77 million investment
into technology in our Belfast yard, making it the most state of
-the -art shipyard in the UK, also bringing a ramp up of 1,200
shipyard jobs across Belfast and Appledore. This contract award is
a game -changer for the company and will allow us to rekindle and
modernise worldclass shipbuilding skills and trades that were
otherwise dying out. FSS has enabled us to build a legacy that will
provide secure and sustainable high-quality employment for decades
to come.
I would like to place on record my thanks to the hard-working
and dedicated team who helped to secure this contract and to our
close partners, Navantia and BMT. It is thanks to all of you that
we have been able to bring complex shipbuilding back to
Belfast.
Board of Directors
During the year, we welcomed Katya Zotova to the Board. Katya
brings over 25 years of experience in strategy and business
development, investment banking and private equity, and has already
contributed greatly to the ongoing success of Harland & Wolff.
Further development of our Board will take place alongside the very
significant commercial expansion that is already underway.
Committed to serving all our stakeholders, we are clear in our
vision and firm in our purpose. Buoyed always by your unstinting
support, we are confident of building a brilliant future.
Malcolm Groat
Chairman
Chief Executive Officer's Statement
Harland & Wolff has continued to grow at a pace, having
secured major contract wins such as the Fleet Solid Support (FSS)
Programme and M55 regeneration programme, it is now well on its
journey to revitalising shipbuilding and fabrication skills at all
it sites.
Looking over 2022, I am proud of how the Group has successfully
navigated the impacts of the COVID-19 pandemic, a war in Ukraine,
rapid inflation increases, and supply chain delays. Inevitably,
some of these challenges will persist through 2023, but we continue
to deliver on projects won, be awarded new contracted works and
build our backlog in order to secure a financially strong
performing business for our shareholders.
Harland & Wolff has continued to progress in 2022. We have
taken ourselves from a one-project non-revenue generating company
in 2019 to a Group that has one of the largest fabrication
footprints in the UK, from zero revenues in December 2019 to
GBP27.96 million by the end of 2022, and from securing contracts
worth just thousands in 2021 to securing the FSS manufacture
contract worth an expected cGBP750 million over a seven-year period
(adjusted for inflation).
Our revenues for the period ended 31 December 2022 stood at
GBP27.96 million representing a material increase over the GBP18.51
million achieved over a 17-month period to 31 December 2021. By any
standards, we still have much to achieve. Given the contracted
revenue flow already generated in 2023 for FY3 and FY24, we can
reasonably expect FY23 revenues to be in the region of
cGBP100-GBP115 million, consistent with market guidance. Our
contracted revenues for FY24 have already exceeded GBP70 million at
the date of this report. We are seeing significant traction in
contract fruition going into Q3'23 and beyond, giving us confidence
of achieving further growth as I have outlined in March of this
year.
We have seen very healthy growth to our business since 2021 and
key achievements include:
1. Contracted backlog increase from GBP110 million to GBP900
million (based on management estimates)
2. Largest single contract size increased from GBP55 million to GBP750 million
3. The workforce has grown to 769 personnel
4. Debt facility moving from $35 million to $100 million, with
negotiations ongoing to complete a GBP200 million refinancing
facility with UK Export Finance guarantees and a syndicate of
private lenders and commercial banks, expected to complete in early
autumn 2023
5. Uncontracted weighted pipeline of opportunities increased
from GBP1.36 billion to over GBP2.50 billion over a five-year
period
6. Securing our first export contract
7. Securing our first defence contract
8. Securing our first large commercial fabrication contract
We are confident of the above trends continuing and we continue
to pursue opportunities aggressively yet with the pragmatism of
picking and choosing carefully the projects on which we bid. To
that extent, we have introduced a new Client Relationship
Management (CRM) system that is used across the group to track
opportunities and convert them to executed contracts.
We have worked tirelessly at converting our pipeline of
opportunities into contracts. Our goal is to become a GBP500
million per annum turnover company within five years and aspire to
maintain a blended gross margin of 24%-27%. This clock started
ticking in 2020/21 and we are now in our third year of this
turnaround strategy. I have firm belief that we can achieve this
ambition given our growing backlog as well as pipeline of
opportunities. We are deeply involved in two "sunrise markets" -
defence and renewables. Whilst contracts in both these markets
admittedly have long gestation periods to fruition, once
contracted, they lend themselves to multi-year stable revenues that
provide a solid baseline from where to grow. The cruise & ferry
market is set to be buoyant from 2024 onwards given the level of
inquiries and bid submissions that are leaving our door. We
welcomed our first major cruise repair contract in the summer of
2022 - the Queen Victoria. With the successful redelivery of this
vessel to the client, we have now grown to become a credible
shipyard for cruise clients.
We were delighted to be awarded Preferred Bidder status for the
prestigious three-ship Fleet Solid Support (FSS) Programme in
November 2022. The relationship with the Ministry of Defence and
Navantia was crystallised in February 2023 with the formal
execution of the Sub-contract with Navantia. Following its
execution, we have now embarked upon a GBP77 million regeneration
programme in Belfast in preparation for fabrication of the first
ship commencing in 2025. The FSS Programme will not only provide a
baseload revenue line for the next seven years but will also enable
us to make Belfast one of the most modern, efficient and
cost-effective shipyards in the UK and Europe. Notwithstanding the
increased levels of productivity and optionality that this
regeneration programme will provide to the Group, it will
significantly enhance our social value outcomes across some of the
most deprived communities in the UK. We have embarked on an
aggressive apprenticeship programme and are reskilling / upskilling
our workforce who will embrace the latest shipbuilding technologies
along with utilising decades of experience that they already carry.
The world is changing and we are changing too; embracing new
technologies, introducing a flexible work culture and creating
stimulating opportunities for the next generation of Harland &
Wolff employees are things that will enable us to grow and thrive
in an increasingly competitive and volatile global environment. We
are delighted to be partnering with Navantia and BMT on the FSS
Programme and look forward to a mutually fruitful relationship in
the years to come.
There is a substantial opportunity within our five markets, our
biggest operational inhibitor is an appropriately skilled workforce
to secure and execute on the growth opportunity. To address this
the Group has a fast-growing apprenticeship scheme. We employed our
first intake of 37 apprentices in 2021 and to see this increase to
64 in 2022. We will continue to increase our total number of
apprentices to over 100 during the next academic year. We are
building for the future and taking this path is critical to ensure
enough skills are available as we continue to grow the
business.
One of the keys to achieving our growth objectives is ensuring
that we have enough working capital and a calibrated capital
investment programme to meet the growing needs of the facilities.
Whilst we have undertaken several equity raises over the past few
years, our growing reputation, sizeable contract wins and a track
record of delivery have all enabled us to explore other options of
financing the business. Our first ever corporate debt facility for
$35 million was entered into in March 2022 and was upsized to $100
million at the end of year. We will continue to seek larger levels
of financing at lower cost as we continue to win new contracts and
stabilise the business.
Our Islandmagee gas storage project has been effectively future
proofed with a pre-FEED study conducted for the storage of hydrogen
making it of strategic importance. The Group continues to work on
the judicial review after having been awarded the marine licence
and expect to receive the outcome of this in the second half of
2023. Having sought legal opinion, we have been advised that the
application has limited chance of success. We will continue to
explore several funding options for this project with ongoing
engagement from interested parties. Alongside exploring the
development of the project the Group has also received interest to
sell the project in its entirety. The Board will review the options
available to the Group with a view to securing a commercial
solution that is in the best interests of shareholders.
Whilst a lot has been achieved, there remains a tremendous
volume of work that still requires to be undertaken to deliver on
our strategic plan. With this in mind, we will be looking to
strengthen our senior leadership team over the course of 2023 to
ensure we have the appropriate experience and talent in place to
achieve our vision. Our workforce is the bedrock of our success,
and we will look to keep upskilling them and growing these numbers
as we move forward.
I wish to thank the Ministry of Defence and the National
Shipbuilding Office for their unstinting support and guidance
through the year. I also wish to thank all our clients and the
ever-growing supply chain for the confidence that they have shown
in us over the last year. I look forward to working closely with
them in the coming months and years. Finally, I wish to place my
thanks to all our shareholders and wider stakeholder group for the
support that they have provided to Harland & Wolff.
Our aim is to capitalise on this massive growth opportunity and
to build a large and sustainable business that delivers value for
all of our stakeholders and I look forward to reporting on our
successes over the course of 2023 and beyond.
John Wood
Group Chief Executive Officer
Chief Financial Officer's Statement
I am pleased to write to shareholders and stakeholders to share
my views on the year gone past and the outlook for the future.
Having emerged from the COVID-19 pandemic that ravaged the
global economy, we were struck by two new challenges, once again,
that had global ramifications; rapid inflation caused predominantly
by a very stretched supply chain and the onset of the
Russia-Ukraine war. High inflation rates across the world persisted
throughout 2022 and has continued into 2023. Whilst we believe that
it has now peaked, it remains unclear how long it will take to
unwind. The rate of inflation has caught everybody by surprise and
there are very limited tools to counter it. Consistent hikes in the
base rates by central banks around the world have caused an
increase in the cost of capital. For a high growth company like
Harland & Wolff, that has growing capital needs, this has
proven to be a difficult path to go down, as evidenced by higher
financing costs recorded at the year-end. The Russia-Ukraine
conflict continues to weigh on the global economy. Whilst energy
prices peaked in Q3/Q4 last year but mitigated to some extent with
the onset of summer, a combination of energy supply volatility and
transitioning into renewables and green energy could well see
energy prices on the upswing post-summer. Whilst we have been able
to contain our energy costs through a series of fixed price
contracts over winter, our energy consumption is a function of the
volume of work going through our yards. For the months in which we
receive or conduct a large volume of additional works the Group has
to buy energy on the spot market leaving us exposed to prevailing
energy prices that sit outside of our hedged position. We are in a
business that competes globally, therefore, whilst increased costs
are shared with clients, we need to be mindful of the quantum of
such pass-through. Whilst we aim to maintain a blended gross margin
of between 24%- 27% in the medium term, we expect to see a drop in
these margins in the short term before they recover, as evidenced
from the gross margins achieved in FY 2022. The mitigating measure
for a loss in the gross margin rate is to drive larger volumes of
work through the yard and we continue to do so in 2023 and for
2024.
For the 12-month period to 31 December 2022, we generated
revenues of GBP27.96 million (2021: GBP18.51 million), a
significant increase over the previous period given that the
previous reporting period was a 17-month period. Gross profits were
GBP5.75 million (2021: GBP5.22 million) and we achieved a gross
margin of 20.57% (2021: 28.21%). For the financial year 2022, we
expected to see a drop in the gross margins on account of wage and
energy inflation as well as a change in the nature of contracts
within our portfolio, i.e., expanding our portfolio from
predominantly cruise and ferry to commercial fabrication (Cory) and
defence (M55). It has also taken time for incremental costs to flow
into contracts which allow for cost escalation. Looking ahead, we
have put in place a number of cost mitigation measures such as
group bulk procurement for consumables, energy hedges, steel price
exposure to clients' account and inflation indexation clauses on
multi-year contracts. As these measures feed into the system, we
expect margin improvements in FY 2023 and future years.
Operating losses stood at GBP58.06 million (2021: GBP22.37
million), and a substantial proportion of this was related to the
recruitment of personnel across the board in preparation for
bidding on large value contracts across the five markets. A large
number of personnel were hired in preparation for key contracts
such as the M55 Regeneration Programme, Cory barges and for FSS.
Delays to the formal execution of contracts in order to commence
work on these programmes have caused the workforce to be "benched"
in 2022 and this should reverse itself out in 2023. Having said
that, it is imperative that we keep growing our team and build key
skills in-house. Whilst this strategy has an adverse short-term
impact of skewing operating costs, over the longer term, we believe
it will lead to significant cost savings by avoiding the excessive
use of external consultants, who are typically more expensive than
an inhouse skilled workforce. We expect to keep building this core
base of skilled personnel in 2023 whilst we prepare for the FSS
programme and other large contracts that we expect to win in the
short term. Inevitably, we will go through the "benching" process
in FY 2023 as well which we believe should correct itself in FY
2024.
I am delighted to report that we signed our first significant
corporate debt deal with Riverstone Credit Partners, a New York
based private credit fund. From an initial committed amount of $35
million, we have upsized the facility to $100 million during FY
2022. This deal has put us firmly in the corporate debt market. In
order to bring down the cost of capital, we expect to refinance
Riverstone out of the Company in 2023. As part of the refinancing
process, we are engaged with UK Export Finance (UKEF) and other
high street lenders with a view to achieving two objectives;
bringing down the overall cost of capital and further upsizing our
facility to GBP200 million. As part of this process, we were
subject to a highly detailed five-month due diligence process
conducted by Grant Thornton on behalf of UK Export Finance. The
Independent Business Review Report (IBR) was formally published by
Grant Thornton at the end of May and validated our strategy of
operating in five markets and six services as well as confirming
the substantial addressable markets and weighted pipeline that we
have been building since 2020. The report also highlights
criticality of human and capital resources to take this business to
a GBP500 million p.a. company. We recognise the challenge and are
gearing up on both fronts in a methodical manner.
We are now at an advanced stage in our negotiations with UKEF
and our lending consortium and expect the refinancing to be
completed in early autumn 2023. This is a five-year deal and it is
important that we get the economics right. Our current cashflows
allow us to take the time and get the best possible deal for the
Company and its shareholders. We will be making announcements on
this deal as it matures and comes to fruition.
As we become more mature as an organisation and pick up higher
levels of debt, one of the important metrics that we will be
reporting on is the net debt level at periodic intervals.
Accordingly, our net debt as at the end of FY 2022 stood at
GBP82.51 million (2021: GBP14.05 million). This highlights the fact
that we are under-capitalised and would need to balance our capital
stack in due course.
Total loss for the year stood at GBP70.35 million (2021:
GBP25.50 million) which was reflective of increased borrowing costs
and an increase in the size of our core workforce from 410 to 769.
We also incurred additional legal, professional and consulting fees
of GBP4.50 million (2021: GBP1.95 million) which further reinforces
our position of acquiring in-house skills. We absorbed further
costs of GBP6.38 million as a result of incurring non-capital
development costs and increased labour costs to provide the Company
with the ability to ramp up as quickly as possible for extensions
to existing contracts and in anticipation of new contracts.
Looking ahead, FY 2023 and FY 2024 are years of growth and
consolidation. We will continue to make investments across the
Group especially in preparation for the FSS Programme. A GBP77
million capital expenditure has been approved for the refurbishment
of Belfast, which is expected to convert Belfast into one of the
most modern and productive yards in Europe. We will also be making
investments in our other sites to improve productivity and
cross-yard optionality with a view to driving economies of scale
and increasing margins. The impacts of these investments may not be
felt immediately within the financial year but will reap long term
rewards. The goal is set; GBP500 million per annum by the time we
get to the end of our 5-year turnaround strategy. We are now in our
third year of our five-year strategy.
Finally, I would like to thank all our shareholders, internal
and external stakeholders for their unstinting support. We are on a
journey and with each passing month, we are making progress on all
fronts.
Arun Raman
Group Chief Financial Officer
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
Seena Shah, Head of Marketing & Communications 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)
Nicholas How / Edward Mansfield / Lucas +44 (0)20 3100
Bamber / Antonia Brown 2000
----------------------------
Harland & Wolff Group Holdings Plc
Consolidated Income Statement for the Year Ended 31 December
2022
12 months 17 months
to to
31 December 31 December
2022 2021
Note GBP GBP
Continuing operations
Revenue 3 27,969,837 18,518,239
Cost of sales (22,214,534) (13,293,198)
------------ ------------
Gross profit 5,755,303 5,225,041
Other operating expenses 4 (10,847,232) (3,372,861)
------------ ------------
(5,091,929) 1,852,180
Management and administrative expenses 4 (53,415,507) (24,718,895)
Other operating income 5 443,968 495,220
------------ ------------
Operating loss (58,063,468) (22,371,495)
Net finance costs 6 (12,293,865) (3,136,775)
------------ ------------
Loss before tax (70,357,333) (25,508,270)
Taxation 11 - -
------------ ------------
Loss for the year (70,357,333) (25,508,270)
============ ============
Total comprehensive loss for the year (70,357,333) (25,508,270)
------------ ------------
Total comprehensive loss for the period
attributable to:
Owners of the Company (70,357,333) (25,508,270)
============ ============
Earnings Per Share
Basic and diluted 12 (42.73)p (26.59)p
============ ============
Harland & Wolff Group Holdings Plc
(Registration number: 06409712)
Consolidated Statement of Financial Position as at 31 December
2022
31 December 31 December
2022 2021
Note GBP GBP
Non-current assets
Intangible assets 13 12,481,331 11,923,019
Property, plant and equipment 14 24,370,329 24,734,782
Right of use assets 15 18,245,627 12,955,693
------------- ------------
Total non-current assets 55,097,287 49,613,494
------------- ------------
Current assets
Inventories 17 1,734,564 1,176,641
Trade and other receivables 18 7,846,913 6,825,944
Cash and cash equivalents 19 1,979,825 5,278,002
------------- ------------
Total current assets 11,561,302 13,280,587
------------- ------------
Current liabilities
Trade and other payables 20 (30,454,452) (22,288,777)
Loans and borrowings 21 (64,915,031) (3,167,287)
------------- ------------
Total current liabilities (95,369,483) (25,456,064)
------------- ------------
Net current liabilities (83,808,181) (12,175,477)
------------- ------------
Non-current liabilities
Loans and borrowings 21 (19,458,325) (16,006,460)
Financial liability 21 (200,000) (200,000)
------------- ------------
Total non-current liabilities (19,658,325) (16,206,460)
------------- ------------
Net (liabilities)/assets (48,369,219) 21,231,557
============= ============
Shareholders' funds
Share capital 22 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 392,058 360,501
Revaluation reserve 6,074,895 6,074,895
Retained earnings (135,730,729) (65,373,396)
------------- ------------
Total equity (48,369,219) 21,231,557
============= ============
Under the Companies Act 2006, s454, on a voluntary basis, the
directors can amend these financial statements if they subsequently
prove to be defective.
These financial statements were approved and authorised for
issue by the board on 30 June 2023 and signed on its behalf by:
Mr J M Wood
Director
Harland & Wolff Group Holdings Plc
(Registration number: 06409712)
Company Statement of Financial Position as at 31 December
2022
31 December 31 December
2022 2021
Note GBP GBP
Non-current assets
Intangible assets 13 184,177 184,177
Property, plant and equipment 14 62,213 46,763
Right of use assets 15 1,385,153 1,904,585
Investments in subsidiaries 16 100 -
------------ ------------
Total non-current assets 1,631,643 2,135,525
------------ ------------
Current assets
Trade and other receivables 18 92,605,100 45,903,326
Cash and cash equivalents 19 1,897,599 233,277
------------ ------------
Total current assets 94,502,699 46,136,603
------------ ------------
Current liabilities
Trade and other payables 20 (2,245,667) (1,385,945)
Loans and borrowings 21 (62,616,189) (680,000)
------------ ------------
Total current liabilities (64,861,856) (2,065,945)
------------ ------------
Total current assets 29,640,843 44,070,658
============ ============
Non-current liabilities
Loans and borrowings 21 (1,206,445) (1,716,824)
Financial liability 21 (200,000) (200,000)
------------ ------------
Total non-current liabilities (1,406,445) (1,916,824)
------------ ------------
Net assets 29,866,041 44,289,359
============ ============
Shareholders' funds
Share capital 22 12,546,328 12,444,734
Share premium 59,360,117 58,736,711
Merger reserve 8,466,827 8,466,827
Share based payment reserve 392,058 360,501
Retained earnings (50,899,289) (35,719,414)
------------ ------------
Total equity 29,866,041 44,289,359
============ ============
The loss for the year dealt with in the financial statements of
Harland & Wolff Group Holdings Plc was GBP15,179,875 (17 months
to 31 December 2021: GBP4,385,684). As provided by s408 of the
Companies Act 2006, no statement of comprehensive income is
presented in respect of Harland & Wolff Group Holdings Plc, the
company.
These financial statements were approved and authorised for
issue by the board on 30 June 2023 and signed on its behalf by:
Mr J M Wood
Director
Harland & Wolff Group Holdings Plc
Consolidated Statement of Changes in Equity for the Year Ended
31 December 2022
Share based
Revaluation payment Retained
Share capital Share premium reserve Merger reserve reserve earnings Total equity
GBP GBP GBP GBP GBP GBP GBP
At 1 August
2020 11,457,457 33,923,172 6,074,895 8,988,112 125,673 (39,865,126) 20,704,183
Loss for the
period - - - - - (25,508,270) (25,508,270)
------------- ------------- ----------- -------------- -------------- ------------ ------------
Total
comprehensive
expense - - - - - (25,508,270) (25,508,270)
Transactions
with
owners recorded
directly
in equity:
Shares issued,
net
of issue costs 987,277 24,813,539 - - - - 25,800,816
Share option
expense - - - - 234,828 - 234,828
------------- ------------- ----------- -------------- -------------- ------------ ------------
Total
transactions
with owners
recorded
directly in
equity 987,277 24,813,359 - - 234,828 - 26,035,644
------------- ------------- ----------- -------------- -------------- ------------ ------------
At 31 December
2021 12,444,734 58,736,711 6,074,895 8,988,112 360,501 (65,373,396) 21,231,557
============= ============= =========== ============== ============== ============ ============
Share based
Revaluation payment Retained
Share capital Share premium reserve Merger reserve reserve earnings Total equity
GBP GBP GBP GBP GBP GBP GBP
At 1 January
2022 12,444,734 58,736,711 6,074,895 8,988,112 360,501 (65,373,396) 21,231,557
Loss for the
year - - - - - (70,357,333) (70,357,333)
------------- ------------- ----------- -------------- -------------- ------------- ------------
Total
comprehensive
expense - - - - - (70,357,333) (70,357,333)
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 (135,730,729) (48,369,219)
============= ============= =========== ============== ============== ============= ============
Harland & Wolff Group Holdings Plc
Consolidated Statement of Changes in Equity for the Year Ended
31 December 2022 (continued)
Share capital: This represents the nominal value of equity
shares in issue.
Share premium: This represents the premium paid above the
nominal value of shares in issue.
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 on the demerger and
the combined share capital and share premium of Harland & Wolff
Group Holdings Plc at the date of the demerger.
Share-based payments reserve: This represents the value of
share-based payments provided to employees and Directors as part of
their remuneration as part of the consideration paid. The reserve
represents the fair value of options and performance share rights
recognised as an expense. Upon exercise of options or performance
share rights, any proceeds received are credited to share capital
and share premium.
Retained earnings: This represents the accumulated profits and
losses since inception of the business and adjustments relating to
options and warrants.
Harland & Wolff Group Holdings Plc
Company Statement of Changes in Equity for the Year Ended 31
December 2022
Share based Retained
Share capital Share premium Merger reserve payment reserve earnings Total equity
Company GBP GBP GBP GBP GBP GBP
At 1 August 2020 11,457,457 33,423,172 8,466,827 125,673 (31,333,730) 22,139,399
Loss for the period - - - - (4,385,684) (4,385,684)
------------- ------------- -------------- ---------------- ------------ ------------
Total comprehensive
expense - - - - (4,385,684) (4,385,684)
Shares issued, net of
issue costs 987,277 25,313,539 - - - 26,300,816
Share option expense - - - 234,828 - 234,828
------------- ------------- -------------- ---------------- ------------ ------------
Total transactions with
owners
recorded directly in
equity 987,277 25,213,539 - 234,828 - 26,535,644
------------- ------------- -------------- ---------------- ------------ ------------
At 31 December 2021 12,444,734 58,736,711 8,466,827 360,501 (35,719,414) 44,289,359
============= ============= ============== ================ ============ ============
Share based Retained
Share capital Share premium Merger reserve payment reserve earnings Total equity
Company GBP GBP GBP GBP GBP GBP
At 1 January 2022 12,444,734 58,736,711 8,466,827 360,501 (35,719,414) 44,289,359
Loss for the year - - - - (15,179,875) (15,179,875)
------------- ------------- -------------- ---------------- ------------ ------------
Total comprehensive
expense - - - - (15,179,875) (15,179,875)
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 8,466,827 392,058 (50,899,289) 29,866,041
============= ============= ============== ================ ============ ============
Harland & Wolff Group Holdings Plc
Consolidated Statement of Cash Flows for the Year Ended 31
December 2022
12 months 17 months
to to
31 December 31 December
2022 2021
Note GBP GBP
Cash flows from operating activities
Loss for the year (70,357,333) (25,508,270)
Adjustments to cash flows from non-cash
items:
Depreciation and amortisation 4 3,460,651 3,372,861
Foreign exchange loss 938,942 3,702
Finance income 6 (943) (278)
Finance costs 6 12,294,808 3,137,053
Share option expense 31,557 234,828
------------ ------------
(53,632,318) (18,760,104)
Working capital adjustments:
Increase in inventories 17 (557,923) (845,176)
Increase in trade and other receivables 18 (1,020,969) (4,815,927)
Decrease in deferred income - 678,278
Increase in trade and other payables 20 8,321,763 9,249,933
------------ ------------
Net cash outflows from operating activities (46,889,447) (14,492,996)
------------ ------------
Cash flows from investing activities
Interest received 6 943 278
Acquisitions of property, plant and
equipment 14 (1,825,781) (15,652,972)
Acquisition of intangible assets 13 (586,909) (719,017)
------------ ------------
Net cash outflows from investing activities (2,411,747) (16,371,711)
------------ ------------
Cash flows from financing activities
Proceeds from issue of shares, net
of share issue costs 725,000 25,800,816
Proceeds from borrowings, net of debt
issuance costs 54,336,234 6,235,973
Repayment of borrowings and lease liabilities (5,317,690) (1,615,143)
Interest paid 6 (3,740,527) (1,002,173)
------------ ------------
Net cash inflows from financing activities 46,003,017 29,419,473
------------ ------------
Net decrease in cash and cash equivalents (3,298,177) (1,445,234)
Cash and cash equivalents at the beginning
of the period 5,278,002 6,723,236
------------ ------------
Cash and cash equivalents at the end
of the period 1,979,825 5,278,002
============ ============
Harland & Wolff Group Holdings Plc
Company Statement of Cash Flows for the Year Ended 31 December
2022
12 months 17 months
to to
31 December 31 December
2022 2021
Note GBP GBP
Cash flows from operating activities
Loss for the year (15,179,875) (4,385,684)
Adjustments to cash flows from non-cash
items:
Depreciation and amortisation 4 536,836 752,241
Foreign exchange loss 693,999 392
Finance income 6 - (51)
Finance costs 6 9,742,161 440,051
Share option expense 31,556 234,828
------------ ------------
(4,175,323) (2,958,223)
Working capital adjustments:
Increase in trade and other receivables 18 (46,417,859) (28,815,716)
Increase in trade and other payables 20 859,725 61,762
------------ ------------
Net cash outflows from operating activities (49,733,457) (31,712,177)
------------ ------------
Cash flows from investing activities
Interest received 6 - 51
Acquisitions of property plant and
equipment 14 (38,354) (35,404)
Acquisition of intangible assets 13 - (162,445)
------------ ------------
Net cash outflows from investing activities (38,354) (197,798)
------------ ------------
Cash flows from financing activities
Proceeds from issue of shares, net
of share issue costs 725,000 26,300,816
Proceeds from borrowings, net of debt
issuance costs 54,336,234 -
Repayment of borrowings and lease liabilities (680,000) (778,000)
Interest paid 6 (2,945,101) (65,621)
------------ ------------
Net cash inflows from financing activities 51,436,133 25,457,195
------------ ------------
Net increase/(decrease) in cash and
cash equivalents 1,664,322 (6,452,780)
Cash and cash equivalents at the beginning
of the period 233,277 6,686,057
------------ ------------
Cash and cash equivalents at the end
of the period 1,897,599 233,277
============ ============
Harland & Wolff Group Holdings Plc
Notes to the Financial Statements for the Year Ended 31 December
2022
1 General information
The company is a public company limited by share capital,
incorporated and domiciled in the UK. The address of its registered
office is:
Fieldfisher LLP
Riverbank House 2 Swan Lane London
EC4R 3TT
United Kingdom
The company's ordinary shares are traded on the Alternative
Investment Market (AIM) of the London Stock Exchange under the
ticker symbol HARL.
The principal activities of the Group throughout the year were
the development of sub-surface gas storage facility together with
that of shipbuilding, heavy engineering, ship repair and
refurbishments as well as fabrication of wind turbine generator
jackets for offshore wind farms. The Group has one of the largest
heavy engineering and fabrication physical footprints in the UK as
at the date of this report. The assets of the Group include the
largest dry docks in the UK (Belfast), the largest fully undercover
dry dock in the UK (Appledore) and vast fabrication halls in its
Belfast and Methil facilities.
As at 31 December 2022, the Group was organised into 6 segments:
Cruise & Ferry, Commercial, Energy, Defence, Renewables and
other being Head Office related. The segmental analysis for the
year ended 31 December 2022 is shown in note 3.
2 Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with
UK adopted international accounting standards and with the
requirements of the Companies Act 2006. The financial statements
have been prepared under historical cost accounting, modified,
where applicable, by the measurement at fair value.
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) unless otherwise stated.
Summary of significant accounting policies and key accounting
estimates
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
Changes to accounting policies, disclosures, standards and
interpretations
(a) New and amended standards adopted by the Group
There were no new International Financial Reporting Standards
that were applicable for the current reporting period that
materially impacted the Group.
(b) New standards not yet adopted
There are no new International Financial Reporting Standards and
Interpretations issued but not effective for the reporting period
ending 31 December 2022 that will materially impact the Group.
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 to the group's
accounting policies.
Going concern
The financial statements 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 year and an operating loss has been
recorded in the profit and loss account for the year. 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 throughout
the year 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. Post the balance sheet date, the Group
has announced that it has secured the Fleet Solid Support Programme
under a Subcontract with Navantia UK Limited (Navantia). This
Subcontract will yield circa GBP750 million (inflation adjusted)
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 over the
course of the next twelve months. However, given the uncertainty
surrounding bid success and the relative lack of bid to success
history, management has prepared a worst-case scenario for a period
of twelve months from the date of the signing of these financial
statements in respect of their going concern assumptions. This
assumes no bid contract wins and that the sole revenue generated by
the Group will arise from the existing contracts that are currently
being fulfilled at the various facilities within the Group. The
scenario includes all expected costs associated with such works as
well as the repayment of all liabilities that fall due within this
twelve-month period and takes into account all cost savings and
process efficiencies considered achievable.
Based on this worst case forecast scenario 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 annual financial statements for the
year ended 31 December 2022. 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 funders
(both debt and equity) to raise additional funds. Whilst there is
no indication at the date of signing of these financial statements
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.
Revenue
Revenue represents income derived from contracts for the
provision of goods and services, over time or at a point in time,
by the Group to customers in exchange for consideration in the
ordinary course of the Group's activities.
Performance Obligations
Upon approval by the parties to a contract, the contract is
assessed to identify each promise to transfer either a distinct
good or service or a series of distinct goods or services that are
substantially the same and have the same pattern of transfer to the
customer. Goods and services are distinct and accounted for as
separate performance obligations in the contract if the customer
can benefit from them either on their own or together with other
resources that are readily available to the customer, and they are
separately identifiable in the contract.
The Group provides warranties to its customers to give them
assurance that its products and services will function in line with
agreed upon specifications. Warranties are not provided separately
and, therefore, do not represent performance obligations.
Transaction price
At the start of the contract, the total transaction price is
estimated as the amount of consideration to which the Group expects
to be entitled in exchange for transferring the promised goods and
services to the customer, excluding sales taxes. Variable
consideration, such as price escalation, is included based on the
expected value or most likely amount only to the extent that it is
highly probable that there will not be a reversal in the amount of
the cumulative revenue recognised. The transaction price does not
include estimates of consideration resulting from contract
modifications, such as change orders, until they have been approved
by parties to the contract. The total transaction price is
allocated to the performance obligations identified in the contract
in proportion to their relative stand-alone selling prices. Given
the nature of many of the Group's products and services, which are
designed and/or manufactured under contract to customers'
individual specifications, there are typically no observable
stand-alone selling prices. Instead, stand-alone selling prices are
typically estimated based on expected costs plus contract margin
consistent with the Group's pricing principles.
Whilst payment terms vary from contract to contract, an element
of the transaction price may be received in advance of delivery.
The Group may therefore have contract liabilities depending on the
contracts in existence at a period end. The Group's contracts are
not considered to include significant financing components on the
basis that there is no difference between the consideration and the
cash selling price.
Revenue recognition
Revenue is recognised as performance obligations are satisfied
as control of the goods and services is transferred to the
customer.
For each performance obligations within a contract the Group
determines whether it is satisfied over time or at a point in time.
Performance obligations are satisfied over time if one of the
following criteria is satisfied:
-- The customer simultaneously receives and consumes the
benefits provided by the Group's performance as it performs;
-- The Group's performance creates or enhances an asset that the
customer controls as the asset is created or enhanced; or
-- The Group's performance does not create an asset with an
alternative use to the Group and it has an enforceable right to
payment for performance completed to date.
The Group has determined that most of its contracts satisfy the
overtime criteria, either because the customer simultaneously
receives and consumes the benefits provided by the Group's
performance as it performs or the Group's performance does not
create an asset with an alternative use to the Group and it has an
enforceable right to payment for performance completed to date.
For each performance obligation recognised over time, the Group
recognises revenue using an input method, based on costs incurred
in the period. Revenue and attributable margin are calculated by
reference to reliable estimates of transaction price and total
expected costs, after making suitable allowances or technical and
other risks. Revenue and associated margin are therefore recognised
progressively as costs are incurred, and as risks have been
mitigated or retired. The Group has determined that this method
appropriately depicts the Group's performance in transferring
control of the goods and services to the customer.
If the overtime criteria for revenue recognition is not met,
revenue is recognised at the point in time that control is
transferred to the customer which is usually when legal title
passes to the customer and the business has the right to
payment.
When it is expected that total contract costs will exceed total
contract revenue, the expected loss is recognised immediately as an
expense.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
("CODM") as required by IFRS 8 "Operating Segments". The chief
operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has
been identified as the executive board of Directors.
Government grants
Government grants are recognised only when there is reasonable
assurance that the Group will comply with the conditions attaching
to the grant and that the grants will be received. The amounts
received are reported under other income in the financial
statements. The income is reported in the period that the relief
relates to.
Foreign currency transactions and balances
In preparing the Financial Statements, transactions in
currencies other than the entity's functional currency (foreign
currencies) are recorded at the rates of exchange prevailing on the
dates of the transactions. At each reporting date, monetary assets
and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the reporting date.
Non-monetary items carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at the
date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are not retranslated. Exchange differences
arising, if any, are recognised in profit or loss.
Translation from functional currency to presentational
currency
When the functional currency of a Group entity is different from
the Group's presentational currency (GBPGBP), its results and
financial position are translated into the presentational currency
as follows:
-- Assets and liabilities are translated using exchange rates
prevailing at the balance sheet date.
-- Income and expense items are translated at average exchange
rates for the year, except where the use of such average rates does
not approximate the exchange rate at the date of a specific
transaction, in which case the transaction rate is used.
-- All resulting exchange differences are recognised in other
comprehensive income and presented in the translation reserve in
equity and are reclassified to profit or loss in the period in
which the foreign operation is disposed of.
Tax
Tax expense represents the sum of the tax currently payable and
any deferred tax. The taxable result differs from the net result as
reported in the statement of comprehensive income because it
excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable
or deductible. The Group's liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by
the statement of financial position date. Deferred tax is the tax
expected to be payable or recoverable on differences between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation
of taxable profit and is accounted for using the liability method.
Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable
profit nor the accounting profit. Deferred tax liabilities are
recognised for taxable temporary differences arising on investments
in subsidiaries, except where the Group is able to control the
reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each
statement of financial position date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled, or the asset
realised.
Deferred tax is charged or credited to the statement of
comprehensive income, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current assets and liabilities on a net basis.
Capitalisation and impairment of Intangible Assets
Costs of development of gas storage facilities are capitalised
as intangible assets once it is probable that future economic
benefits that are attributable to the assets will flow to the Group
and until consent to construct has been awarded, at which time the
capitalised costs are transferred to plant and equipment provided
there being reasonable certainty of construction proceeding. The
nature of these costs includes all direct costs incurred in project
development, including any directly attributable finance costs. No
amortisation or depreciation is provided until the storage facility
is available for use.
An impairment test is performed annually and whenever events or
circumstances arising during the development phase indicate that
the carrying value of a development asset may exceed its
recoverable amount. The aggregate carrying value is compared
against the expected recoverable amount of the cash generating
unit, generally by reference to the present value of the future net
cash flows expected to be derived from storage revenue. The present
value of future cash flows is calculated on the basis of future
storage prices and cost levels as forecast at the statement of
financial position date.
The cash generating unit applied for impairment test purposes is
generally an individual gas storage facility. Where the carrying
value of the facility is greater than the present value of its
future cash flows a provision is made. Any such provisions are
charged to the profit and loss account as an impairment cost.
Amortisation
Amortisation is provided on intangible assets so as to write off
the cost, less any estimated residual value, over their useful
economic lives as follows:
Asset Class Amortisation method and rate
----------------- ------------------------------
Storage facility None until facility available
to use
----------------- ------------------------------
Harland Heritage Project
Project costs related to Harland Heritage are capitalised as
incurred. The Harland Heritage Project is a project that seeks to
celebrate the history and heritage of Harland & Wolff. The plan
for this project broadly consists of developing a visitor centre in
the Belfast shipyard and creating an immersive experience for
visitors which includes, inter alia, and subject to planning and
health and safety regulations, a walk around a fully operating
shipyard, crane lifts, hiring out of designated zones for social
functions, a museum with historic artefacts and the sale of Harland
& Wolff branded merchandise. On the basis that the Harland
Heritage Project will be a standalone business that will be
generating income and have its own funding sources, management
believes that this project should be treated like an operating
business in the future. Accordingly, all pre-development and
developments costs associated with this project will be capitalised
and then amortised as soon as the project has been commercialised.
Where management determine that the project should not proceed to
commercialisation, the capitalised costs will be written off
immediately to the profit and loss account.
Amortisation
Amortisation is provided on intangible assets so as to write off
the cost, less any estimated residual value, over their expected
useful economic life as follows:
Asset class Amortisation method and rate
-------------------------------- ------------------------------
Artefacts Not depreciated
-------------------------------- ------------------------------
Trademarks Not depreciated
-------------------------------- ------------------------------
Software Over 5 Years Straight line
basis
-------------------------------- ------------------------------
Gas storage facility None until facility available
for use
-------------------------------- ------------------------------
Developments Costs Over 20 Years Straight line
basis
-------------------------------- ------------------------------
Harland Heritage Project None until facility available
for use
-------------------------------- ------------------------------
Floating Storage Regasification None until facility available
Project for use
-------------------------------- ------------------------------
Tangible assets
Property, plant and equipment
Property, plant and equipment is stated in the statement of
financial position at cost, less any subsequent accumulated
depreciation and subsequent accumulated impairment losses.
The cost of property, plant and equipment includes directly
attributable incremental costs incurred in their acquisition and
installation.
Depreciation
Depreciation is charged so as to write off the cost of assets,
other than land and properties under construction over their
estimated useful lives, as follows:
Asset Class Depreciation method and
rate
----------------------------- ----------------------------
Freehold land Not depreciated
----------------------------- ----------------------------
Leasehold land and buildings Over 50 years Straight line
basis
----------------------------- ----------------------------
Modular buildings Over 20 years Straight line
basis
----------------------------- ----------------------------
Right of use Over the lease term
----------------------------- ----------------------------
Plant and machinery Over 10 years Straight line
basis
----------------------------- ----------------------------
Motor vehicles Over 5 years Straight line
basis
----------------------------- ----------------------------
Office equipment Over 5 years Straight line
basis
----------------------------- ----------------------------
Investments
Investments in subsidiaries are stated at cost less provision
for impairments.
Financial Instruments
Financial assets and liabilities are recognised in the Company's
statement of financial position when the Company becomes a party to
the contractual provisions of the instrument. The Company currently
does not use derivative financial instruments to manage or hedge
financial exposures or liabilities.
Financial Assets
The financial assets currently held by the Group and Company are
classified as financial assets held at amortised cost. These assets
are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are
initially recognised at fair value plus transaction costs that are
directly attributable to their acquisition or issue, and are
subsequently carried at amortised cost using the effective interest
rate method, less provision for impairment under the expected
credit loss model.
The group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss
allowance for all financial assets.
The amount of the expected credit loss is measured as the
difference between all contractual cash flows that are due in
accordance with the contract and all the cash flows that are
expected to be received (i.e. all cash shortfalls), discounted at
the original effective interest rate (EIR).
The carrying amount of the asset is reduced through use of
allowance account and recognition of the loss in the Statement of
Comprehensive Income. Allowances for credit losses on financial
assets are assessed collectively. Collectively assessed impairment
allowances cover credit losses inherent in portfolios of financial
assets with similar credit risk characteristics when there is
objective evidence to suggest that they contain impaired financial
assets, but the individual impaired items cannot yet be
identified.
In assessing collective impairment, the Group uses information
including historical trends in the probability of default (although
this is limited given the relatively short trading history of the
Group), timing of recoveries and the amount of expected loss,
adjusted for
management's judgement as to whether current economic and credit
conditions are such that the actual losses are likely to be greater
or less than suggested by historical evidence. Default rates, loss
rates and the expected timing of future recoveries are regularly
benchmarked against actual outcomes to ensure that they remain
appropriate.
IFRS 9 suggests the use of reasonable forward-looking
information to enhance ECL models. The Group incorporates relevant
forward-looking information into the loss provisioning model.
Financial assets at amortised cost comprise trade and other
receivables and cash and cash equivalents in the statement of
financial position.
Cash and cash equivalents include cash in hand and amounts held
on short term deposit. Any interest earned is accrued monthly and
classified as finance income. Short term deposits comprise deposits
made for varying periods of between one day and three months.
For the purposes of the statement of cash flows, cash and cash
equivalents consist of cash and cash equivalents as defined
above.
Derecognition of Financial Assets
The Group and Company derecognise a financial asset when the
contractual rights to the cash flows from the asset expire, or it
transfers the asset and substantially all the risk and rewards of
ownership of the asset to another entity.
Financial Liabilities
The Group and Company classify their financial liabilities into
one category, being other financial liabilities measured at
amortised cost. The Group's accounting policy for the other
financial liabilities category is as follows:
Trade payables and other short-term monetary liabilities are
initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method. All interest
and other borrowing costs incurred in connection with the above are
expensed as incurred and reported as part of financing costs in
profit or loss. The Group and Company derecognise financial
liabilities when, and only when, the obligations are discharged,
cancelled or they expire.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call
deposits, and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Trade receivables
Trade receivables are amounts due from customers for goods sold
or services performed in the ordinary course of business.
If collection is expected in one year or less (or in the normal
operating cycle of the business if longer), they are classified as
current assets. If not, they are presented as non-current
assets.
Trade receivables are recognised when the group has a right to
consideration that is unconditional (subject only to the passage of
time before the payment is due). Trade receivables do not carry
interest and are stated at initial cost reduced by appropriate
allowances for expected credit losses.
The group applies the simplified approach to measurement of
expected credit losses in respect of trade receivables, which
requires expected lifetime losses to be recognised from initial
recognition of the receivables, estimated by reference to past
experience and forward-looking factors.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the first-in, first-out (FIFO)
method.
The cost of finished goods and work in progress comprises direct
materials and, where applicable, direct labour costs and those
overheads that have been incurred in bringing the inventories to
their present location and condition. At each reporting date,
inventories and work in progress are assessed for impairment. If
inventory or work in progress is impaired, the carrying amount is
reduced to its selling price less costs to complete and sell; the
impairment loss is recognised immediately in profit or loss.
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 (or in the normal
operating cycle of the business if longer). If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at the transaction price
and subsequently measured at amortised cost using the effective
interest method.
Borrowings
All borrowings are initially recorded at the amount of proceeds
received, net of transaction costs. Borrowings are subsequently
carried at amortised cost, with the difference between the
proceeds, net of transaction costs, and the amount due on
redemption being recognised as a charge to the income statement
over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective
interest method and is included in finance costs.
Borrowings are classified as current liabilities unless the
group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
Leases
Definition
A lease is a contract, or a part of a contract, that conveys the
right to use an asset or a physically distinct part of an asset
("the underlying asset") for a period of time in exchange for
consideration. Further, the contract must convey the right to the
group to control the asset or a physically distinct portion
thereof. A contract is deemed to convey the right to control the
underlying asset if, throughout the period of use, the group has
the right to:
-- Obtain substantially all the economic benefits from the use of the underlying asset, and;
-- Direct the use of the underlying asset (e.g. direct how and
for what purpose the asset is used)
Where contracts contain a lease coupled with an agreement to
purchase or sell other goods or services (i.e., non-lease
components), the group has made an accounting policy election, by
class of underlying asset, to account for both components as a
single lease component.
Initial recognition and measurement
The group initially recognises a lease liability for the
obligation to make lease payments and a right-of-use asset for the
right to use the underlying asset for the lease term.
The lease liability is measured at the present value of the
lease payments to be made over the lease term. The lease payments
include fixed payments, purchase options at exercise price (where
payment is reasonably certain), expected amount of residual value
guarantees,
termination option penalties (where payment is considered
reasonably certain) and variable lease payments that depend on an
index or rate.
The right-of-use asset is initially measured at the amount of
the lease liability, adjusted for lease prepayments, lease
incentives received, the group's initial direct costs (e.g.,
commissions) and an estimate of restoration, removal and
dismantling costs.
Subsequent measurement
After the commencement date, the group measures the lease
liability 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) Re-measuring the carrying amount to reflect any reassessment
or lease modifications or to reflect revised in substance fixed
lease payments or on the occurrence of other specific events.
Interest on the lease liability in each period during the lease
term is the amount that produces a constant periodic rate of
interest on the remaining balance of the lease liability. Interest
charges are presented separately as non-operating /included in
finance cost in the income statement, unless the costs are included
in the carrying amount of another asset applying other applicable
standards. Variable lease payments not included in the measurement
of the lease liability, are included in operating expenses in the
period in which the event or condition that triggers them
arises.
The related right-of-use asset is accounted for using the Cost
model in IAS 16 and depreciated and charged in accordance with the
depreciation requirements of IAS 16 Property, Plant and Equipment
as disclosed in the accounting policy for Property, Plant and
Equipment. Adjustments are made to the carrying value of the right
of use asset where the lease liability is re-measured in accordance
with the above. Right of use assets are tested for impairment in
accordance with IAS 36 Impairment of assets as disclosed in the
accounting policy in impairment.
Lease modifications
If a lease is modified, the modified contract is evaluated to
determine whether it is or contains a lease. If a lease continues
to exist, the lease modification will result in either a separate
lease or a change in the accounting for the existing lease.
The modification is accounted for as a separate lease if
both:
-- The modification increases the scope of the lease by adding
the right to use one or more underlying assets; and
-- 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.
If both of these conditions are met, the lease modification
results in two separate leases, the unmodified original lease and a
separate lease. The group then accounts for these in line with the
accounting policy for new leases.
If either of the conditions are not met, the modified lease is
not accounted for as a separate lease and the consideration is
allocated to the contract and the lease liability is re-measured
using the lease term of the modified lease and the discount rate as
determined at the effective date of the modification.
For a modification that fully or partially decreases the scope
of the lease (e.g., reduces the square footage of leased space),
IFRS 16 requires a lessee to decrease the carrying amount of the
right-of-use asset to reflect partial or full termination of the
lease. Any difference between those adjustments is recognised in
profit or loss at the effective date of the modification.
For all other lease modifications which are not accounted for as
a separate lease, IFRS 16 requires the lessee to recognise the
amount of the re-measurement of the lease liability as an
adjustment to the corresponding right-of-use asset without
affecting profit or loss.
Short term and low value leases
The group has made an accounting policy election, by class of
underlying asset, not to recognise lease assets and lease
liabilities for leases with a lease term of 12 months or less
(i.e., short-term leases).
The group has made an accounting policy election on a
lease-by-lease basis, not to recognise lease assets on leases for
which the underlying asset is of low value.
Lease payments on short term and low value leases are accounted
for on a straight line basis over the term of the lease or other
systematic basis if considered more appropriate. Short term and low
value lease payments are included in operating expenses in the
income statements.
Leases are recognised as a right-of-use asset and a
corresponding lease liability at the date at which the leased asset
is available for use by the Group.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- Fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
-- Variable lease payment that are based on an index or a rate,
initially measured using the index or rate as at the commencement
date;
-- Amounts expected to be payable by the Group under residual value guarantees;
-- The exercise price of a purchase option if the Group is
reasonably certain to exercise that option; and
-- Payments of penalties for terminating the lease, if the lease
term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the Group, the lessee's
incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security and
conditions.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease
period.
Right-of-use assets are measured at cost which comprises the
following:
-- The amount of the initial measurement of the lease liability;
-- Any lease payments made at or before the commencement date
less any lease incentives received;
-- Any initial direct costs; and
-- Restoration costs.
Right-of-use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on a straight-line
basis. If the Group is reasonably certain to exercise a purchase
option, the right-of-use asset is depreciated over the underlying
asset's useful life.
Share based payment transactions
Employees (including senior executives) of the Group receive
part of their remuneration in the form of share-based payment
transactions, whereby employees render services as consideration
for equity instruments (equity settled transactions).
The cost of equity settled transactions is recognised, together
with a corresponding increase in equity, over the period in which
the performance and or service conditions are fulfilled, ending on
the date on which the relevant employees become fully entitled to
the award (the vesting date). The cumulative expense recognised for
equity settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period has
expired and the Group's best estimate of the number of equity
instruments that will ultimately vest. The statement of
comprehensive income charge or credit for a period represents the
movement in cumulative expense recognised as at the beginning and
end of that period. No expense is recognised for awards that do not
ultimately vest, except for awards where vesting is conditional
upon a market condition, which are treated as vesting irrespective
of whether or not the market condition is satisfied, provided that
all other performance conditions are satisfied.
Where an equity settled award is cancelled, it is treated as if
it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a
new award is substituted for the cancelled award, and designated as
a replacement award on the date that is granted, the cancelled and
new awards are treated as if they were a modification of the
original award, as described in the previous paragraph.
Defined contribution pension obligation
The Company has a defined contribution plan which requires
contributions to be made into an independently administered
fund.
The amount charged to the statement of comprehensive income in
respect of pension costs reflects the contributions payable in the
year. Differences between contributions payable during the year and
contributions actually paid are shown as either accrued liabilities
or prepaid assets in the statement of financial position.
Critical accounting judgements and key sources of estimation
uncertainty
Judgements in applying accounting policies and key sources of
estimation uncertainty
Amounts included in the financial statements involve the use of
judgement and/or estimation. These estimates and judgements are
based on management's best knowledge of the relevant facts and
circumstances, having regard to previous experience, but actual
results
may differ from the amounts included in the financial
statements. Information about such judgements and estimation is
contained in the accounting policies and/or the notes to the
financial statements, and the key areas are summarised below.
Judgements
Capitalisation of gas storage costs - Note 13
The assessment of whether costs incurred on gas storage
development should be capitalised or expensed involves
judgement.
Any expenditure where it is not probable that future economic
benefits will flow to the Group are expensed. Management considers
the nature of the costs incurred and the stage of project
development and concludes whether it is appropriate to capitalise
the costs. The key assumptions depend on whether it is probable
that the expenditure will result future economic benefits that are
attributable to the assets.
In relation to the Islandmagee gas storage project, management
costs incurred on gas storage development as those that will
provide future economic benefit. There is a structural shortage of
gas storage in the UK, as demonstrated by extreme price
fluctuations and volatility in the spot gas markets and along the
forward curve. The Islandmagee gas storage facility is a fast
cycling gas store that will derive its economic value from the
winter-summer spreads as well as from the optimisation of gas flows
from and into the gas store in the spot market. This is in sharp
contrast to medium and long range gas stores that derive economic
value only from seasonal spreads and not from spot gas price
volatility. Management believes that a combination of the two
revenue streams will ultimately provide significant economic
benefit to the project, once it has been commercialised. With a
renewed global focus on climate change and measures to mitigate
global warming globally, the UK economy is transitioning from a gas
led economy to a renewables and hydrogen based economy. Green
hydrogen is expected to be produced from excess power generated by
offshore wind farms and will be consumed principally for heating
and transportation. The value chain in a hydrogen economy must
consist of mid-stream storage assets that are capable of storing
hydrogen in periods of peak supply and then releasing the molecules
during periods of peak demand, very similar to gas storage. The
Islandmagee gas storage can be future proofed to accommodate this
transition from natural gas storage to hydrogen storage subject to
variations to the licences that have been currently granted for the
storage of natural gas. Management believes that there is
significant economic benefit during this transition process and,
further out, in the storage of hydrogen as a liquid traded market
for hydrogen develops and matures over time.
Estimates
Carrying value of gas storage project asset - Note 13
The assessment of capitalised project costs for any indications
of impairment involves judgement. When facts or circumstances
suggest that impairment exists, a formal estimate of recoverable
amount is performed, and an impairment loss recognised to the
extent that the carrying amount exceeds recoverable amount.
Recoverable amount is determined to be the higher of fair value
less costs to sell and value in use. The key assumptions are the
net income expected to be generated from the facilities, the cost
of construction and the date from which the facilities become
operational. Management assigns values and dates to these inputs
after taking into account market information, engineering design
costing and the project programme. A discount rate of 8% (2021: 8%)
is applied in determining gas storage project net present values.
Notwithstanding the current inflation rates and rising interest
costs, the Islandmagee gas storage project has a typical life of 40
years and beyond. This project is capable of generating steady
cashflows over its lifetime and suitable investors include pension
funds and long-life infrastructure funds. These institutions are
attracted by the cashflow profile of the project and given the
length of time of the project's life, the benchmark threshold
discount rates tend to be lower than private equity. Management,
therefore, believes that an assumed discount rate of 8% is
appropriate to determine the net present value of future cashflows.
Salt cavern gas storage projects are long term investments and cash
flows are therefore projected over periods greater than 5 years.
Engineering design provides for a project life of 40 years (2021:
40 years). It is assumed that 100% (2021: 100%) of the project's
capacity will be sold from the date that the capacity becomes
operational. The Islandmagee gas storage facility has a working
volume of circa 500 million cubic metres and is classified as a
mid-sized gas store. Given the long-standing structural shortage of
gas storage in the UK and the optionality that the caverns can
offer to a capacity offtaker, it lends itself to being utilised or
sold on a 100% basis. Moreover, from an engineering standpoint, the
seven caverns are serviced by common above ground installations
(compressors, dehydration plant, pipelines etc.), therefore, the
most feasible mechanism would be a 100% capacity offtake by a
client. Finally, given the nature of potential clients, each of
them has a very large gas trading book that can very easily absorb
all the capacity of the project.
The Islandmagee gas storage project has been effectively future
proofed with a pre-FEED study conducted for the storage of
hydrogen. This pre-FEED study has concluded that the project has
the technical capability to store large volumes in the seven
caverns once Northern Ireland and the UK transition from natural
gas to hydrogen. The salt caverns will be created using the
existing drilling and leaching methodologies and will retain their
integrity when hydrogen is injected into and withdrawn from them.
The only changes to the project would be in relation to the above
ground installations where hydrogen compliant compressors,
dehydrators and pipelines would need to be installed.
Valuation of assets, including receivables from related parties
- Note 14
Management make judgements in respect of the valuation and
carrying value of assets used in operations. A revaluation exercise
was undertaken at the time of acquiring the assets in Belfast,
Appledore, Methil and Arnish. This revaluation was undertaken based
on valuations provided by third party independent valuation
experts. At the year-end management made a judgement that the basis
for revaluations remained and that on the basis on future expected
work there were no indications of impairment. Following the
acquisition of assets, the Company has recorded further revenues
for the period ended 31 December 2022. From a post balance sheet
perspective, the Company has announced that it has formally
executed the Subcontract with Navantia UK Limited (the
"Subcontract").Under the terms of the Subcontract, the Company will
be responsible for delivering works which are expected to generate
revenues of between GBP700 million and GBP800 million to the
Company by the time the final vessel is delivered. This is a
significant win for Harland & Wolff and will propel the Company
to the next stage of its development. Current gross margins are
running at between 25% and 27% depending on the type of contract
and the market attributable to such a contract.
Management, therefore, believe that the carrying value of the
assets a true and fair reflection of the assets that are currently
being used in operations and there are no indications of
impairment.
Harland & Wolff Group Holdings Plc
Notes to the Financial Statements for the Year Ended 31 December
2022 (continued)
3 Revenue
(a) Revenue streams
The analysis of the group's revenue for the year from continuing
operations is as follows:
12 months 17 months
to to
31 December 31 December
2022 2021
GBP GBP
Rendering of services 16,247,109 18,384,712
Sale of goods 11,722,728 133,527
------------ ------------
27,969,837 18,518,239
============ ============
All revenue above is recognised over time and is wholly
generated in the UK.
Two customers individually account for over 10% of the group's
revenue during the year.
(b) Segmental revenue
As at 31 December 2022, the Group was organised into 6 segments:
Cruise & Ferry, Commercial, Energy, Defence, Renewables and
other being Head Office related.
The segmental analysis for the period ended 31 December 2022 is
as follows:
12 months to 17 months to
31 December 31 December
2022 2021
GBP GBP
Cruise & Ferry 5,752,137 9,561,467
Commercial 5,814,674 2,522,476
Renewables 8,085,249 6,426,796
Energy 1,081,854 -
Defence 7,235,923 -
Head Office - 7,500
------------ ------------
27,969,837 18,518,239
============ ============
4 Expenses
(a) Other operating expenses
The analysis of the group's other operating expenses for the
year is as follows:
12 months 17 months
to to
31 December 31 December
2022 2021
GBP GBP
Costs for discontinued contracts 6,389,791 -
Depreciation of owned assets 2,190,234 2,307,445
Depreciation of right of use assets 1,241,821 1,062,588
Amortisation expense 28,596 2,828
Training costs 719,381 -
Stock write down adjustments 157,409 -
Warranty provisions 120,000 -
------------ ------------
10,847,232 3,372,861
During the year GBP6,389,791 was incurred in Methil in relation
to non-capital development costs and increased labour costs to
provide the Company with the ability to ramp up as quickly as
possible for extensions to existing contracts and in anticipation
of new contracts. Those costs whose potential benefits will accrue
in future years, have been booked in the current financial year. A
further sum of GBP719,381 was incurred in Belfast as preparatory
works and training of a larger workforce for the FSS Programme. A
warranty provision of GBP120,000 has been booked for works
completed in Belfast.
(b) Management and administrative expenses
The analysis of the group's management and administrative
expenses for the year is as follows:
12 months 17 months
to to
31 December 31 December
2022 2021
GBP GBP
Staff Costs 27,116,209 12,749,339
Premises and vehicle costs 5,488,637 988,602
Maintenance 9,873,822 1,729,986
Legal and professional 4,212,646 1,114,105
Insurance 1,591,999 1,595,268
Other expenses 5,132,194 6,541,596
53,415,507 24,718,896
5 Other operating income
The analysis of the group's other operating income for the year
is as follows:
12 months 17 months
to to
31 December 31 December
2022 2021
GBP GBP
Government grants 185,394 235,410
Other income 258,574 259,810
------------ ------------
443,968 495,220
============ ============
6 Finance income and costs
12 months 17 months
to to
31 December 31 December
2022 2021
GBP GBP
Finance income
Interest income on bank deposits 943 278
------------ ------------
Total finance income 943 278
------------ ------------
Finance costs
Interest expense on other financing liabilities (10,195,452) (1,001,781)
Other finance costs (2,099,356) (2,135,272)
------------ ------------
Total finance costs (12,294,808) (3,137,053)
------------ ------------
Net finance costs (12,293,865) (3,136,775)
============ ============
7 Staff costs
Group
The aggregate payroll costs (including directors' remuneration)
were as follows:
12 months 17 months
to to
31 December 31 December
2022 2021
GBP GBP
Wages and salaries 28,334,239 9,637,047
Social security costs 3,177,407 1,676,705
Other short-term employee benefits 147,647 66,910
Pension costs, defined contribution scheme 651,557 416,010
Redundancy costs 236,587 -
Share-based payment expenses 31,557 234,828
32,578,994 12,031,500
============ ============
The average monthly number of persons employed by the group
(including directors) during the year, analysed by category was as
follows:
12 months 17 months
to to
31 December 31 December
2022 2021
No. No.
Management 30 29
Operations 582 202
Administration and support 26 36
------------ ------------
638 267
============ ============
Company
The aggregate payroll costs (including directors' remuneration)
were as follows:
12 months 17 months
to to
31 December 31 December
2022 2021
GBP GBP
Wages and salaries 1,658,291 2,264,214
Social security costs 225,374 281,925
Other short-term employee benefits 74,465 701
Pension costs, defined contribution scheme 95,497 70,877
Share-based payment expenses 31,557 234,828
2,085,184 2,852,545
============ ============
7 Staff costs (continued)
The average monthly number of persons employed by the company
(including directors) during the year, analysed by category was as
follows:
12 months 17 months
to to
31 December 31 December
2022 2021
No. No.
Management 13 5
Administration and support 4 -
------------ ------------
17 5
============ ============
8 Directors' remuneration
The directors' remuneration for the year was as follows:
Salary Bonus Pension Total
& Fees
Year ended 31 December 2022 GBP GBP GBP GBP
Executive Directors
John Wood 369,288 - 30,046 399,335
Arun Raman 352,791 - 32,879 385,671
Non-Executive Directors -
Malcolm Groat 11,000 - 440 11,440
Judith Tweed 42,000 - 1,680 43,680
Jonathon Band 45,000 - - 45,000
Katya Zotova (appointed 1(st)
September 2022) 15,000 - - 15,000
835,079 - 65,045 900,126
=============== ====== ======== ========
Salary & Bonus Pension Total
Fees
17 months to 31 December GBP GBP GBP GBP
2021
Executive Directors
John Wood 498,154 - 18,292 516,446
Arun Raman 469,224 - 17,378 486,602
Non-Executive Directors
Clive Richardson (Resigned
24 September 2021) 72,917 - - 72,917
Deborah Saw (Resigned 27 August
2020) 3,000 - - 3,000
Malcolm Groat 10,333 - 413 10,746
Judith Tweed 51,000 - 2,040 53,040
Jonathon Band 15,000 - - 15,000
1,119,628 - 38,123 1,157,751
========== ====== ======== ==========
Auditors' remuneration
9
12 months
to 17 months to
31 December 31 December
2022 2021
GBP GBP
For the audit of these financial statements 97,500 81,000
------------ ------------
Other fees to auditors
For the audit of the subsidiaries 65,000 54,000
------------ ------------
Total Remuneration 162,500 135,000
============ ============
10 Share-based payments
Scheme details and movements
A share-based payment plan was created in the year ended 31 July
2008. All directors and employees are entitled to a grant of
options subject to the Board of Directors' approval. The options do
not have a cash settlement alternative. The options granted were
Enterprise Management Incentive share options for qualifying
employees. These options have now lapsed following the departure of
these employees.
The following table illustrates the number and weighted average
exercise prices (WAEP) of, and movements in, share options during
the year.
2022 2022 2021 2021
Number WAEP Number WAEP
GBP GBP
Outstanding at the beginning
of the year 79,458,597 0.0088 79,458,597 0.0088
Granted during the year - - - -
Forfeited during the year - - - -
----------- ------- ------------ -------
Outstanding at the end
of the year 79,458,597 0.0088 79,458,597 0.0088
=========== ======= ============ =======
Exercisable at the end
of the year 26,486,199 0.0088 26,486,199 0.0088
----------- ------- ------------ -------
During the period, no options were granted.
After the reporting period no options lapsed.
Options are exercisable annually or in one tranche at the end
of the grant period noted above with estimated dates ranging
from January 2020 through to end 2027 at an average price of
0.0088p per share. The options will expire after five years.
The weighted average remaining option life for the share options
outstanding at 31 December 2022 is 2 years (2021: 3 years).
The fair value of equity settled options granted is estimated
as at the date of the grant using a Black-Scholes model, taking
into account the terms and conditions upon which the options
were granted and the following inputs: share price volatility
of 85%, risk free interest rate of 0.93%, no dividends to be
paid over the options lives, and early exercise is not applicable.
The total share-based payment charge for the year is GBP31,557.
11 Income tax
The tax on profit before tax for the year is the same as the
standard rate of corporation tax in the UK (2022 - the same as the
standard rate of corporation tax in the UK) of 19% (2022 -
19%).
The differences are reconciled below:
12 months 17 months
to to
31 December 31 December
2022 2021
GBP GBP
Loss before tax (70,357,333) (25,508,270)
============ ============
Corporation tax at standard rate (13,367,893) (4,846,571)
(Decrease)/increase from effect of capital
allowances depreciation (423) 31,480
Increase from effect of expenses not deductible
in determining taxable loss 1,620,368 34,422
Increase from effect of unrelieved tax
losses carried forward - 5,041,908
Increase from effect of unrelieved tax
losses 11,918,958 -
Other tax effects for reconciliation between
accounting profit and tax income (171,010) (261,239)
------------ ------------
Total tax credit - -
============ ============
11 Income tax (continued)
No tax charge/ credit arises in 2022 or in 2021 due to expenses
not permitted for tax purposes and losses carried forward.
Factors that may affect the future tax charge
The Group has trading losses of GBP62,732,366 (2021:
GBP28,145,431) which may reduce future tax charges. Future tax
charges may also be reduced by capital allowances on cumulative
capital expenditure.
No deferred tax asset has been recognised due to uncertainty as
to when profits will be generated against which to realise said
asset.
12 Earnings per Share
2022 2021
GBP GBP
Loss
The loss for the purposes of basic and
diluted loss per share being the net
loss attributable to equity shareholders
Continuing Operations (70,357,333) (25,508,270)
-------------------------------- ---------------------
Number of shares
Weighted average number of ordinary
shares for the purpose of:
Basic earnings per share 164,647,988 95,905,732
Basic and diluted earnings per share
Continuing Operations (42.73)p (26.59)p
-------------------------------- ---------------------
Harland & Wolff Group Holdings Plc
Notes to the Financial Statements for the Year Ended 31 December
2022 (continued)
13 Intangible assets
Group
Computer Gas Storage Project
Artefacts Trademarks Software Development development Costs Total
GBP GBP GBP GBP GBP GBP GBP
Cost
At 1 August 2020 647,395 863,192 - 55,000 9,621,766 21,732 11,209,085
Additions - 150,000 - - 406,572 162,445 719,017
---------- ----------- ---------- ------------ ------------- -------- -----------
At 31 December
2021 647,395 1,013,192 - 55,000 10,028,338 184,177 11,928,102
---------- ----------- ---------- ------------ ------------- -------- -----------
At 1 January 2022 647,395 1,013,192 - 55,000 10,028,338 184,177 11,928,102
Additions - - 181,273 - 405,635 - 586,908
---------- ----------- ---------- ------------ ------------- -------- -----------
At 31 December
2022 647,395 1,013,192 181,273 55,000 10,433,973 184,177 12,515,010
---------- ----------- ---------- ------------ ------------- -------- -----------
Amortisation
At 1 August 2020 - - - 2,255 - - 2,255
Amortisation charge - - - 2,828 - - 2,828
---------- ----------- ---------- ------------ ------------- -------- -----------
At 31 December
2021 - - - 5,083 - - 5,083
---------- ----------- ---------- ------------ ------------- -------- -----------
At 1 January 2022 5,083 5,083
Amortisation charge - - 25,846 2,750 - - 28,596
---------- ----------- ---------- ------------ ------------- -------- -----------
At 31 December
2022 - - 25,846 7,833 - - 33,679
---------- ----------- ---------- ------------ ------------- -------- -----------
Net Book Value
At 31 December
2022 647,395 1,013,192 155,427 47,167 10,433,973 184,177 12,481,331
========== =========== ========== ============ ============= ======== ===========
At 31 December
2021 647,395 1,013,192 - 49,917 10,028,338 184,177 11,923,019
========== =========== ========== ============ ============= ======== ===========
13 Intangible assets (continued)
Intangible assets carried at revalued amounts
The fair value of the group's Artefacts was revalued on 30 June
2019 by Hilco Valuation services.
Had this class of asset been measured on a historical cost
basis, their carrying amount would have been GBP200,000.
The revaluation surplus (gross of tax) recognised in profit and
loss amounted to GBP447,395.
The revaluation surplus (gross of tax) recognised in other
comprehensive income amounted to GBP447,395.
The fair value of the group's Trademarks was revalued on 30 June
2019 by Hilco Valuation Services.
Had this class of asset been measured on a historical cost
basis, their carrying amount would have been GBP170,000.
The revaluation surplus (gross of tax) recognised in profit and
loss amounted to GBP693,192.
The revaluation surplus (gross of tax) recognised in other
comprehensive income amounted to GBP693,192.
Company
Project costs
GBP
Cost or valuation
At 1 August 2020 21,732
Additions 162,445
-------------
At 31 December 2021 184,177
-------------
At 1 January 2022 184,177
-------------
At 31 December 2022 184,177
-------------
Carrying amount
At 31 December 2022 184,177
=============
At 31 December 2021 184,177
=============
14 Property, plant and equipment
Group
Land and Office Motor
buildings equipment vehicles Plant & machinery Total
GBP GBP GBP GBP GBP
Cost or valuation
At 1 August 2020 6,603,708 238,464 670,520 4,816,239 12,328,931
Additions 5,347,811 36,511 11,680 10,256,970 15,652,972
Transfers - - (127,683) 127,683 -
---------- ---------- --------- ----------------- ----------
At 31 December 2021 11,951,519 274,975 554,517 15,200,892 27,981,903
---------- ---------- --------- ----------------- ----------
At 1 January 2022 11,951,519 274,975 554,517 15,200,892 27,981,903
Additions - 537,798 - 1,292,533 1,830,331
Reclassification (5,500) 5,500 - - -
Disposals - (4,550) - (4,550)
---------- ---------- --------- ----------------- ----------
At 31 December 2022 11,946,019 813,723 554,517 16,493,425 29,807,684
---------- ---------- --------- ----------------- ----------
Depreciation
At 1 August 2020 276,050 63,865 55,478 544,283 939,676
Charge for period 605,890 72,559 63,364 1,565,632 2,307,445
---------- ---------- --------- ----------------- ----------
At 31 December 2021 881,940 136,424 118,842 2,109,915 3,247,121
---------- ---------- --------- ----------------- ----------
At 1 January 2022 881,940 136,424 118,842 2,109,915 3,247,121
Charge for the year 428,129 147,204 56,164 1,558,737 2,190,234
---------- ---------- --------- ----------------- ----------
At 31 December 2022 1,310,069 283,628 175,006 3,668,652 5,437,355
---------- ---------- --------- ----------------- ----------
14 Property, plant and equipment (continued)
Land and Office Motor
buildings equipment vehicles Plant & machinery Total
GBP GBP GBP GBP GBP
Carrying amount
At 31 December 2022 10,635,950 530,095 379,511 12,824,773 24,370,329
========== ========== ========= ================= ==========
At 31 December 2021 11,069,579 138,551 435,675 13,090,977 24,734,782
========== ========== ========= ================= ==========
Included within the net book value of plant and machinery is
GBP2,965,352 (2021: GBP3,267,466) in respect of assets under
construction which has been capitalised.
14 Property, plant and equipment (continued)
Revaluation
The fair value of the group's Land and buildings was revalued on
30 June 2019 by Hilco. Had this class of asset been measured on a
historical cost basis, their carrying amount would have been
GBP5,506,046. The revaluation surplus (gross of tax) amounted to
GBP3,066,738.
The fair value of the group's Furniture, fittings and equipment
was revalued on 30 June 2019 by Hilco Valuation Services. Had this
class of asset been measured on a historical cost basis, their
carrying amount would have been GBP61,726. The revaluation surplus
(gross of tax) amounted to GBP25,972.
The fair value of the group's Motor vehicles was revalued on 30
June 2019 by Hilco Valuation Services. Had this class of asset been
measured on a historical cost basis, their carrying amount would
have been GBP670,520. The revaluation surplus (gross of tax)
amounted to GBP373,464.
The fair value of the group's Plant and machinery was revalued
on 30 June 2019 by Hilco Valuation Services. Had this class of
asset been measured on a historical cost basis, their carrying
amount would have been GBP4,212,621. The revaluation surplus (gross
of tax) amounted to 2,346,331.
14 Property, plant and equipment (continued)
Company
Land and Office
buildings equipment Total
GBP GBP GBP
Cost or valuation
At 1 August 2020 - 31,775 31,775
Additions 5,500 29,904 35,404
---------- ---------- -------
At 31 December 2021 5,500 61,679 67,179
---------- ---------- -------
At 1 January 2022 5,500 61,679 67,179
Additions - 37,404 37,404
Reclassification (5,500) 5,500 -
Disposals - (4,550) (4,550)
---------- ---------- -------
At 31 December 2022 - 100,033 100,033
---------- ---------- -------
Depreciation
At 1 August 2020 - 4,037 4,037
Charge for period - 16,379 16,379
---------- ---------- -------
At 31 December 2021 - 20,416 20,416
---------- ---------- -------
At 1 January 2022 - 20,416 20,416
Charge for the year - 17,404 17,404
---------- ---------- -------
At 31 December 2022 - 37,820 37,820
---------- ---------- -------
Carrying amount
At 31 December 2022 - 62,213 62,213
========== ========== =======
At 31 December 2021 5,500 41,263 46,763
========== ========== =======
15 Right of use assets
Group
Property
GBP
Cost or valuation
At 1 August 2020 14,302,132
Disposals (235)
----------
At 31 December 2021 14,301,897
----------
At 1 January 2022 14,301,897
Additions 6,531,755
----------
At 31 December 2022 20,833,652
----------
Depreciation
At 1 August 2020 283,616
Charge for period 1,062,588
----------
At 31 December 2021 1,346,204
----------
At 1 January 2022 1,346,204
Charge for the year 1,241,821
----------
At 31 December 2022 2,588,025
----------
Carrying amount
At 31 December 2022 18,245,627
==========
At 31 December 2021 12,955,693
==========
15 Right of use assets (continued)
Company
Property
GBP
Cost or valuation
At 1 August 2020 2,770,305
----------
At 31 December 2021 2,770,305
----------
At 1 January 2022 2,770,305
----------
At 31 December 2022 2,770,305
----------
Depreciation
At 1 August 2020 129,858
Charge for period 735,862
----------
At 31 December 2021 865,720
----------
At 1 January 2022 865,720
Charge for the year 519,432
----------
At 31 December 2022 1,385,152
----------
Carrying amount
At 31 December 2022 1,385,153
==========
At 31 December 2021 1,904,585
==========
16 Investments
Group subsidiaries
Details of the group subsidiaries as at 31 December 2022 are as
follows:
Proportion of
ownership interest
and voting rights
Name of subsidiary Principal activity Registered office held
2022 2021
Fieldfisher Riverbank
Intermediate holding House
and gas storage 2 Swan Lane
InfraStrata UK project research London EC4R 3TT
Limited* company England and Wales 100% 100%
8 Portmuck Road
Gas storage and Islandmagee
energy infrastructure County Antrim
Islandmagee Energy development and BT40 3TW
Limited operation Northern Ireland 100% 100%
16 Investments (continued)
Proportion of
ownership interest
and voting rights
Name of subsidiary Principal activity Registered office held
2022 2021
8 Portmuck Road
Islandmagee
County Antrim
Islandmagee Energy BT40 3TW
Hub Limited Dormant Northern Ireland 100% 100%
Fieldfisher Riverbank
House
2 Swan Lane
InfraStrata Energy London EC4R 3TT
UK Limited Dormant England and Wales 100% 100%
Fieldfisher Riverbank
House
Ship building, 2 Swan Lane
Harland and Wolff ship repair and London EC4R 3TT
(Appledore) Limited maintenance England and Wales 100% 100%
C/o Donaldson Legal
Consulting Llp
Shipbuilding, Shore Studios
heavy engineering, 18c Shore Road
Harland and Wolff ship repair and Holywood, BT18 9HX
(Belfast) Limited maintenance Northern Ireland 100% 100%
C/o Donaldson Legal
Consulting Llp
Shore Studios
Harland and Wolff 18c Shore Road
Technical Services Holywood, BT18 9HX
Limited Dormant Northern Ireland 100% 100%
Fieldfisher Riverbank
House
2 Swan Lane
London
Harland & Wolff EC4R 3TT
Holdings Limited* Holding company England and Wales 100% 100%
Fieldfisher Riverbank
House
2 Swan Lane
London
Harland and Wolff EC4R 3TT
(Methil) Limited Fabrication England and Wales 100% 100%
16 Investments (continued)
Proportion of
ownership interest
and voting rights
Name of subsidiary Principal activity Registered office held
2022 2021
Fieldfisher Riverbank
House
2 Swan Lane
London
Harland and Wolff EC4R 3TT
(Arnish) Limited Fabrication England and Wales 100% 100%
Fieldfisher Riverbank
House
2 Swan Lane
Harland and Wolff London
(People & Skills) EC4R 3TT
Limited Recruitment England and Wales 100% 100%
* indicates direct investment of the company
16 Investments (continued)
Company
31 December
2022
GBP
Investments in subsidiaries 100
============
Subsidiaries GBP
Cost
At 1 August 2020 15,247,011
Revaluation (15,247,011)
------------
At 31 December 2021 -
------------
At 1 January 2022 15,247,011
Additions 100
Revaluation (15,247,011)
------------
At 31 December 2022 100
------------
Net book value
At 31 December 2022 100
============
At 31 December 2021 -
============
17 Inventories
Group Company
31 December 31 December 31 December 31 December
2022 2021 2022 2021
GBP GBP GBP GBP
Raw materials and
consumables 109,427 34,279 - -
Work in progress 1,054,693 715,850 - -
Other inventories 570,444 426,512 - -
----------- ----------- ----------- ------------
1,734,564 1,176,641 - -
=========== =========== =========== ============
The write-down of inventories recognised in other operating
expenses is disclosed in Note 4.
18 Trade and other receivables
Group Company
31 December 31 December 31 December 31 December
2022 2021 2022 2021
Current GBP GBP GBP GBP
Trade receivables 1,868,096 2,310,323 - -
Receivables from
related parties - - 92,107,734 45,549,667
Accrued income 3,877,015 2,084,519 - -
Prepayments 520,214 1,327,773 78,395 91,997
Other receivables 1,581,588 1,103,329 418,971 261,662
----------- ----------- ----------- -----------
7,846,913 6,825,944 92,605,100 45,903,326
=========== =========== =========== ===========
The group's exposure to credit and market risks, including
maturity analysis, relating to trade and other receivables is
disclosed in note 26 "Financial risk review".
19 Cash and cash equivalents
Group Company
31 December 31 December 31 December 31 December
2022 2021 2022 2021
GBP GBP GBP GBP
Cash at bank 1,979,825 5,278,002 1,897,599 233,277
=========== =========== =========== ===========
Included within cash and cash equivalents for the group at 31
December 2021 is GBP4 million pledged as a collateral provision in
relation to the Saipem contract.
20 Trade and other payables
Group Company
31 December 31 December 31 December 31 December
2022 2021 2022 2021
GBP GBP GBP GBP
Trade payables 19,538,846 7,897,251 808,472 1,137,817
Social security and
other taxes 2,823,460 4,779,356 246,681 113,829
Outstanding defined
contribution pension
costs 107,299 60,510 20,065 28,376
Other payables 1,475,811 491,437 34,377 21,566
Accruals and deferred
income 6,509,036 9,060,223 1,136,072 84,357
----------- ----------- ----------- -----------
30,454,452 22,288,777 2,245,667 1,385,945
=========== =========== =========== ===========
The group's exposure to market and liquidity risks, including
maturity analysis, relating to trade and other payables is
disclosed in note 26 "Financial risk review".
21 Loans and borrowings
Group Company
31 December 31 December 31 December 31 December
2022 2021 2022 2021
GBP GBP GBP GBP
Current loans and borrowings
Lease liabilities
- right of use 3,028,842 1,390,287 730,000 680,000
Other borrowings 61,886,189 1,777,000 61,886,189 -
----------- ----------- ----------- -----------
64,915,031 3,167,287 62,616,189 680,000
=========== =========== =========== ===========
Group Company
31 December 31 December 31 December 31 December
2022 2021 2022 2021
GBP GBP GBP GBP
Non-current loans and borrowings
Lease liabilities
- right of use 19,458,325 13,916,460 1,206,445 1,716,824
Other borrowings - 2,090,000 - -
Financial liability 200,000 200,000 200,000 200,000
----------- ----------- ----------- -----------
19,658,325 16,206,460 1,406,445 1,916,824
=========== =========== =========== ===========
Lease payments for the Group during the year amounted to
GBP1,595,598.
21 Loans and borrowings (continued)
Group
Other borrowings
Riverstone Credit Partners LLC (RCP)
On 9 March 2022, the Company announced that it has entered into
a group-wide $70 million Green Term Loan Facility (the "Facility")
with affiliates of Riverstone Credit Partners, LLC ("RCP") , a
dedicated credit investment platform managed by Riverstone Holdings
LLC ("Riverstone") and focused on entities engaged in building
infrastructure and providing infrastructure services to generate,
transport, store and distribute both renewable and conventional
sources of energy, as well as entities focused on or otherwise
engaged in the energy transition from fossil-based, to a
zero-carbon economy. The Facility will be used to support growth in
the business and supplement the Company's working capital
requirements.
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 has been structured as a Green Loan following the
Green Loan Principles published by the LMA, APLMA, and LSTA and a
Sustainability-Linked Loan with performance indicators focused on
social responsibility. The Company is incentivised to upscale its
group-wide apprenticeship programme aimed at the local communities
in which Harland & Wolff operates. Harland & Wolff plans to
build on its success to-date and seeks further contracts within the
renewables and "green maritime" sectors, such as fabrication
contracts for offshore wind and hydrogen projects, new vessel
builds, retrofits with sustainability credentials and other such
contracts that would promote the UK Government's agenda to
achieving Net Zero by 2050.
The Facility will be securitised against substantially all the
assets of the Company, including land, property, plant and
machinery and receivables.
Riverfort Global Opportunities PCC Limited Loan
Harland & Wolff (Belfast) Ltd ("HWB") obtained an unsecured
short term loan amounting to GBP530,000. The loan had an interest
rate of 1.5% per month. The loan balance remaining at 31 December
2021 of GBP27,000 was repaid in full by February 2022.
HWB also secured a new loan of GBP2,000,000 from Riverfort
Global Opportunities PCC Limited at a fixed interest rate of 1.5%
per month and a guarantee was provided by the ultimate parent,
Harland & Wolff Group Holdings Plc. As at 31 December 2021
GBP1,750,000 remained outstanding. This loan was repaid in full on
9 March 2022.
Portnum Capitis Ltd Loan
HWB obtained a term loan amounting to GBP2,090,000 and was
secured by Portnum Capitis Ltd by way of a debenture over the
assets of HWB and a guarantee was provided by Harland & Wolff
Group Holdings Plc.
The Portnum Capitis Ltd loan was an interest only loan and was
repaid in full by February 2022. The loan had a fixed interest rate
of 13.2% per annum. This loan was repaid in full and debenture, as
well as guarantee, discharged on 9 March 2022.
Moyle Investments
In December 2017, The Company's wholly-owned subsidiary,
InfraStrata UK Limited increased its ownership in IMEL 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, InfraStrata plc
will pay Moyle GBP200,000 on first gas storage.
The group's exposure to market and liquidity risks, including
maturity analysis, relating to loans and borrowings is disclosed in
note 26 "Financial risk review".
22 Share capital
Allotted, called up and fully paid shares
31 December 31 December
2022 2021
No. GBP No. GBP
Ordinary shares 1p
of GBP0.01 each 173,047,211 1,730,472 162,887,840 1,628,878
Deferred shares 1p
of GBP0.01 each 895,424,391 8,954,244 895,424,391 8,954,244
Second deferred shares
0.01p of GBP0.00 each 18,616,118,301 1,861,612 18,616,118,301 1,861,612
19,684,589,903 12,546,328 19,674,430,532 12,444,734
============== =========== ============== ============
New shares allotted
During the year 10,159,371 Ordinary shares 0.01p having an
aggregate nominal value of GBP101,594 were allotted for an
aggregate consideration of GBP725,000
Authorised share capital
The Company's articles do not specify an authorised share
capital.
Objectives, policies and processes for managing capital
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
achieve its operational objectives.
The Group defines capital as being share capital plus reserves.
The Board of Directors monitors the level of capital as compared to
the Group's forecast cash flows and long-term commitments and when
necessary issues new shares. Dilution of existing shareholder value
is considered during all processes which may result in an
alteration of share capital in issue.
Ordinary share capital in issue is managed as capital.
The Group is not subject to any externally imposed capital
requirements and there are no restrictions in place over the
different types of shares.
Deferred share capital
On 21 January 2015, following approval at the Company's AGM, the
existing ordinary shares of 10p each were subdivided into one new
Ordinary share of 1p and nine Deferred shares of 1p each. The
Deferred shares do not carry any rights to vote or any dividend
rights. The Deferred shares will not be admitted to AIM and holders
will only be entitled to a payment on return of capital or winding
up of the Company after each of the holders of the Ordinary shares
has received a payment of GBP10,000,000 on each such share.
23 Pension and other schemes
Defined contribution pension scheme
The group operates a defined contribution pension scheme. The
pension cost charge for the year represents contributions payable
by the group to the scheme and amounted to GBP651,557 (17 months to
31 December 2021: GBP416,009).
Contributions totalling GBP107,299 (17 months to 31 December
2021: GBP60,509) were payable to the scheme at the end of the year
and are included in creditors.
24 Warrants
As at the date of this report, the Company has the following
warrants outstanding that remain to be exercised and converted into
Company's ordinary shares:
Number of Strike price Value
Expiry date warrants GBP per share GBP
08/03/2025 1,754,386 0.1425 250,000
08/03/2025 8,665,380 0.0623 540,590
08/03/2025 8,573,044 0.0565 484,377
----------- ----------
Total 18,992,810 1,274,967
=========== ==========
25 Financial Instruments
Group Company
31 December 2022 31 December 2021 31 December 2022 31 December 2021
GBP GBP GBP GBP
Trade and other receivables 7,846,913 6,825,944 497,366 353,659
Due from subsidiary undertakings - - 92,107,734 45,549,667
Cash and Cash Equivalents 1,979,825 5,278,002 1,897,599 233,277
================= ================= ================= =================
Financial liabilities at amortised cost
Group Company
31 December 31 December 31 December 31 December
2022 2021 2022 2021
GBP GBP GBP GBP
Current liabilities
Trade and other payables 30,454,452 22,288,777 2,245,667 1,385,945
Lease liabilities - right of use 3,028,842 1,390,287 730,000 680,000
Other Borrowings 61,886,189 1,777,000 61,886,189 -
------------ ------------ ------------ ------------
95,369,483 25,456,064 64,861,856 2,065,945
============ ============ ============ ============
Non-current liabilities
Lease liabilities - right of use 19,458,325 13,916,460 1,206,445 1,716,824
Other borrowings - 2,090,000 - -
Moyle investments 200,000 200,000 200,000 200,000
------------ ------------ ------------ ------------
19,658,325 16,206,460 1,406,445 1,916,824
============ ============ ============ ============
Accretion interest on the lease liabilities - right of use at 31
December 2022 is GBP2,203,074 to be recognised within one year and
GBP82,631,916 to be recognised after more than one year. The
figures above include a land lease with an expiration term of 47
years.
26 Financial risk review
Foreign exchange risk
The Company's contracts are predominantly GBP denominated and,
therefore, there is limited forex risk on the realisation of
receivables. As the Company expands its supply chain, especially
for the FSS Programme, outside the UK, the Company will be buying
equipment and supplies of higher values. These contracts are likely
to be in Euros. In order to mitigate against currency fluctuations,
the Company tends to fix the foreign exchange rate at the time of
contract execution an either creates a hedge with its corporate
bank or has the supplier take forex risk on the transaction. The
Company's largest forex exposure is towards the corporate loan
facility with Riverstone Credit Partners. The forex risk is
currently unhedged and payments are made by converting GBP to USD
in the spot market. The Company maintains a deposit in an interest
reserve account in USD so that interest payments are made directly
in USD without the need for any spot conversion.
Liquidity risk
The total carrying value of Group and Company financial
liabilities is disclosed in note 25 (Financial instruments) and in
note 20 (Trade and other payables). The Company seeks to issue
share capital, gain loan funding and/or dispose of assets when
external funds are required. The reconciling items between the
contractual maturities presented below and that presented in notes
25 and 20 are taxes and accruals.
The following table shows the contractual maturities of the
Group's and Company's financial liabilities, all of which are
measured at amortised cost.
Group Company
31 December 31 December 31 December 2022 31 December 2021
2022 2021
Trade & other payables
(Note 20)
Within one month 22,169,062 2,883,495 1,109,595 189,898
More than one month
less than one year 8,285,390 5,012,371 1,136,072 947,102
Financial liability
(Note 21)
Within one month 504,806 - 60,833 -
More than one month
less than one year 64,410,225 6,607,287 62,555,356 -
More than one year 19,658,325 18,316,460 1,406,445 200,000
------------ ------------ ----------------- -----------------
The Group's trade receivables are all denominated in UK Sterling
and the ageing of gross trade receivables is as follows:
Group Company
31 December 31 December 31 December 31 December
2022 2021 2022 2021
0-2 months 1,868,096 1,169,359 - -
2-3 months - - - -
Over 3 months - 1,140,964 - -
------------ ------------ ------------ ------------
1,868,096 2,310,323 - -
============ ============ ============ ============
26 Financial risk review (continued)
Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
achieve its operational objectives.
The Group defines capital as being share capital plus reserves.
The Board of Directors monitors the level of capital as compared to
the Group's forecast cash flows and long-term commitments and when
necessary issues new shares. Dilution of existing shareholder value
is considered during all processes which may result in an
alteration of share capital in issue.
Ordinary share capital in issue is managed as capital. The Group
is not subject to any externally imposed capital requirements and
there are no restrictions in place over the different types of
shares.
27 Related party transactions
During the course of the year, the Company utilised the services
of Arrow Marine Management Limited ("AMM"), in which John Wood is
sole director, for various survey works and studies required to be
undertaken in order to update the necessary environmental
information required for the marine licence in relation to the
Islandmagee gas storage project. The total fees paid for
utilisation of the survey boat and personnel by the Company was
GBP43,614 (17 months to 31 December 2021: GBP185,760) and the
balance outstanding at 31 December 2022 was GBPNil (2021:
GBPNil).
Details of directors' remuneration is disclosed in Note 8.
28 Control of the Group
There is no ultimate controlling party of Harland and Wolff
Group Holdings Plc.
29 Capital commitments
Amounts contracted for but not provided in the financial
statements at 31 December 2022 amounted to GBP500,660 (2021:
GBPNil). These commitments relate to plant and machinery.
30 Post Balance Sheet Events
Fleet Solid Support Programme - Contract Win
On 1 February 2023, the Company announced that it has formally
executed the Subcontract with Navantia UK Limited (the
"Subcontract").
Under the terms of the Subcontract, the Company will be
responsible for delivering works which are expected to generate
revenues of between GBP700 million and GBP800 million to the
Company by the time the final vessel is delivered. This is a
significant win for Harland & Wolff and will propel the Company
to the next stage of its development.
The Subcontract is for a duration of seven years commencing in
2023 and ending in 2031. As part of this Programme, the Company
will be responsible for the fabrication of various blocks including
some mega blocks (i.e., a block incorporating several standard
sized blocks) as well as the procurement of a number of items of
equipment to be installed on each vessel in Belfast. Given
Appledore's experience in the fabrication of the bow sections for
the Queen Elizabeth Class aircraft carriers - HMS Queen Elizabeth
and the Prince of Wales, all three bow sections for this Programme
will be fabricated in Appledore prior to being transported to
Belfast. The three vessels will have all the blocks assembled,
consolidated, fully integrated and commissioned before proceeding
to sea trials from the Belfast facility, marking a return to
shipbuilding in Belfast after over twenty years.
Full scale fabrication is due to commence in 2025 with the
vessels due to be delivered to meet the MOD's objective to bring
three ships into service by 2032. However, the Company expects to
generate approximately GBP25 million in revenues from
pre-fabrication works in 2023, and a similar sum in 2024. The
Programme's gross margins are expected to maintain the Group's
previously advised overall blended gross margins.
The Belfast and Appledore facilities will benefit from a GBP77
million capital investment programme ("Recapitalisation Plan")
during the next 24 months., In Belfast, an extension to the
fabrication halls will be undertaken to facilitate a highly dynamic
material and sub-structure production flow along with a highly
efficient manufacturing and production process. Investments will be
made in technologically advanced robotic and autonomous equipment
that includes material movement, marking, plate cutting, panel
lines and robotic welding. In addition, new larger paint buildings
will be constructed to facilitate larger and more efficient block
painting. The investments in this site will ensure that the Company
has one of the most technologically advanced marine fabrication
facilities in the United Kingdom with the latest state-of-the-art
machinery and production flows. Appledore will benefit from
upgrades to the shipyard roof along with investments in additional
automated machinery that includes the relocation of the existing
micro panel line from Belfast.
This Subcontract will be a significant and historic step change
to Harland and Wolff's capabilities and will make the Company an
important participant in the international shipbuilding industry.
Specifically, with modern shipyards and a proven track record post
FSS, the Company will be able to capitalise on further
multi-billion-pound fabrication and heavy engineering opportunities
within the defence, renewables and commercial maritime markets
globally. Following the planned investments and upgrades to its
sites, the Company hopes to capitalise on the significant number of
floating wind projects for which fabrication is expected to
commence between 2024 and 2030, which would diversify and
complement the Company's revenues from FSS. Work has been ongoing
in relation to the Recapitalisation Plan with Mott McDonald acting
as consultant and owner's engineer, whilst Royal Haskoning, a
specialist shipyard designer, has been engaged to define the
production flow as well as plant & machinery requirements. The
Company's partnership with Navantia will further lead to invaluable
transfer of technology over the next seven years. Pre-planning
applications have already been submitted and demolition works are
expected to start shortly in Belfast, with the new facility coming
to life over the next two years.
30 Post Balance Sheet Events
The UK government has implemented the National Ship Building
Strategy to, inter alia, improve productivity rates in UK
shipbuilding & fabrication, reduce waste and to drive the
transition to Net Zero. In line with this strategy, the Company has
been working with numerous parties to maximise investments in the
shipyard to achieve these goals alongside delivering projects on
time and on budget. The Company will be receiving a significant
proportion of the investment required for the Recapitalisation Plan
from the project directly. The Company will also look to capitalise
on production savings with new plant and equipment. It is envisaged
that GBP32m will be financed through additional long term leasehold
improvements, medium term asset finance and the Company's proposed
new enlarged debt facility with Astra, which is expected to be
completed by the end of Q1 2023. Further, there may be
opportunities to access other external funding such as new
technology grants and carbon reduction grants that the Company will
be working through over the next twelve months in order to maximise
funding and optimise the Group's capital stack.
In collaboration with its partners in Team Resolute, Navantia
and BMT, the Company will continue to engage as a team in future
phases of this Programme as well as on other opportunities in the
UK and globally. Further announcements will be made in due course
should any of these opportunities materialise.
The Company will be measured on its social value contribution
through the life of the Programme. This will include, inter alia,
deepening and strengthening of the UK supply chain, taking on
graduates and apprentices as the next generation of ship-builders
and crucial technology transfer between Navantia and the Company.
At the peak of the Programme, the Company will be providing
employment to over 1,200 personnel (900 in Belfast and 300 in
Appledore) and over 100 graduates and apprentices in Belfast and
Appledore generating substantial social value across the UK. This
Programme not only provides the Company with a significant baseload
revenue line for the next seven years, but also enables the Company
to leave a positive and lasting legacy in communities across the
UK.
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END
FR EAKKEDSFDEFA
(END) Dow Jones Newswires
June 30, 2023 12:56 ET (16:56 GMT)
Harland & Wolff (AQSE:HARL.GB)
過去 株価チャート
から 4 2024 まで 5 2024
Harland & Wolff (AQSE:HARL.GB)
過去 株価チャート
から 5 2023 まで 5 2024