Harland & Wolff (AIM:HARL) Half-year Report

Unaudited interim results for the six months ended 30 June 2023 & business update

Harland & Wolff Group Holdings plc (AIM: HARL), the UK quoted company focused on strategic infrastructure projects and physical asset lifecycle management , is pleased to present its unaudited interim results for the six-month period ended 30 June 2023 (“H1 23”) and business update.

Key highlights:

·      Revenues of £25.53 million; a 65% increase from the previous year (30 June 2022: £15.41 million).

·      Gross margin of 19.4%, for the portfolio of contracts delivered in the period; cost pressures around labour, energy and inflation feeding into cost of sales.

·      EBITDA loss £15.92 million (30 June 2022: loss of £12.71 million) predominantly on account of investment in headcount in preparation for delivery of the Fleet Solid Support contract and other contracts.

·      Net debt for the Group stood at £88.53 million as at 30 June 2023 (30 June 2022: £19.74 million) reflecting the upsized Riverstone Credit Facility from $35 million in March 2022 to $100 million as at 30 June 2023.

·      Group corporate credit facility of $70 million ($35 million committed plus $35 million uncommitted accordion) signed in March 2022 upsized to $100 million (fully committed) in March 2023 with drawdowns being utilised to fund ongoing working capital requirements.

·      Advanced negotiations regarding a new £200 million credit facility along with the UK Export Finance (UKEF) guarantee, which is expected to close in Q4’23.

·      Fleet Solid Support Manufacture Subcontract executed with Navantia in February 2023; expected to generate total revenues of between £700 million and £800 million for the Company from this multi-year contract.

·      Company’s backlog (contracted revenues) now sits at circa £1 billion for the next seven years, an increase of £100 million since March 2023.*

·      Directors believe that trading remains on track to achieve FY23 Group revenues of £100 million, subject to various design completions and procurement permissions with revenues from the FSS and M55 contracts expected to increase significantly in the second half.

·      The Company reiterates its revenue guidance for FY24 of £200 million.

Post period end highlights:

·      Notice to Proceed for the mid-life upgrade and dry docking of a large vessel, expected to be in the region of £60 million – £70 million revenues.

·      First contract win for heavy lift vessel at Belfast worth £1.50 million.

·      Favourable outcome of Islandmagee Gas Project judicial review in the High Court

* These figures as at 30 June 2023 in addition to previously reported figures in the Company’s 2022 Annual Report are management’s best estimates. The Board remains comfortable with the estimates relating to the Company’s markets, prospects and pipeline. They should be understood as the Board’s views and should not be attributed to the author of the Independent Business Review Report or any other third party.

John Wood, Chief Executive Officer of Harland & Wolff Group Holdings plc comments:

“These are increasingly exciting times at Harland and Wolff – not just from a broad company perspective – but for each of our yards, the communities that they serve and of course, our workforce. The award this year of the FSS contract provides a substantial baseload over the next five years and will result in a transformation at Belfast which will become one the most modern shipyards from both a national and global perspective. Its facilities – as well as the Group’s skill base – are already attracting global clients especially with large and complex vessels dry docking in the Belfast Dock, demonstrated by both orders won and those in the pipeline. The opportunities within the energy and renewables markets are also substantial and will benefit all of the Group’s yards with their strategic locations and their ability to flex and scale production. The Group’s workforce has scaled rapidly and now totals some 780 employees and the Group is proud to be putting British shipbuilding back on the map.

Like all businesses, we face challenges – from procurement cycles to wage and energy inflation – but the worst of the inflationary effects would appear now to be behind us, and we look forward to increasing our margins as we build out our rapidly growing order book. We have our foot hard on the pedal and are intent on delivering the goals we have laid out. It is full steam ahead at Harland and Wolff.”

Operational Review

Cruise & Ferry Market

The ferry market continues to be buoyant and operational recovery post the pandemic is well underway. Whilst the Company continues to undertake ferry repair works on a regular basis, for both planned and emergency dry dockings, there are new enquiries also coming in for ferry refits. These refit contracts are in the range of £5 million – £15 million and the Company is engaged in commercial conversations with ferry owners to find the best solutions. The Company has a deep supply chain in Belfast and Scotland to offer these services and it continues to grow its in-house capabilities and expertise in tandem.

The cruise market has undergone a fundamental change in recent months as a new era of monetary policy unfolds. The construction of new ships has stagnated and we are seeing cruise operators increasingly decommissioning old vessels and refurbishing other vessels as part of their mid-life upgrades. As a result of COVID regulations and lessons learned from the pandemic, the cruise industry is seeing an increasing number of major interior refurbishment projects to reduce the number of cabins and create more open spaces. The Company’s optimal capability is in the cruise refurbishment market and therefore expects to benefit from this trend. The Company’s newly opened Southampton and Miami offices are being staffed with personnel who have decades of experience in the cruise market and with extensive relationships in the industry. These hires were made with a view to increasing the number of major cruise vessel dry dockings in 2024 from enhanced sales leads.


The Company formally executed the Manufacture Subcontract for the Fleet Solid Support Programme (FSS Programme) in February 2023. The FSS Programme is transformational for the Company and will enable the regeneration of Belfast and Appledore over the next 18 months. At its peak, the Company expects to employ approximately 1,500 personnel on this contract alone across its various sites. The contract value attributable to the Company is expected to be between £700 million – £800 million (adjusted for inflation) over the duration of this multi-year contract, with fabrication to commence at the end of 2024 / early 2025 and targeted completion of the contract by 2031. Over the next 18 months, the Company will continue to undertake major renovations of the Belfast facility including the acquisition of sophisticated robotics, transporters, new buildings, plant and machinery. Once completed, the Belfast yard will be the most modern and sophisticated yard in the UK. As previously announced, £77 million has been allocated for the capital expenditure in Belfast of which £45 million will come from the project. The balance will be funded through a number of mechanisms such as landlord contributions, levelling up funding in Northern Ireland and long-term asset financing for which discussions are ongoing.

In addition to the FSS Programme, the Company has been actively seeking further sub-contract work from other large and prominent prime contractors based in the UK. The Company has been successful in winning contracts worth circa £7 million in Q4’22 and Q1’23 to begin its sub-contracting journey with such prime contractors. As the Company deepens its relationship with the prime contractors, the value of the future sub-contracts is likely to increase in size and expand in the nature of work being undertaken. For instance, discussions are on-going for the building of blocks in Appledore and Methil in relation to certain prime contractors’ ongoing programmes with the Ministry of Defence.

The M55 Regeneration Programme at Appledore continues at pace. All equipment and supplies have now been delivered with sea trials expected to commence in Q1’24 and vessel delivery anticipated in Q2’24. The project remains on schedule and on budget. 

Looking ahead, with the establishment and maturing of the National Shipbuilding Office, several tenders are set to be released in the forthcoming months for the fabrication of government vessels (defence and civilian), anticipated in 2025. The Company will be actively engaged in the bidding process, the outcomes of which will be determined in the second half of next year.


The energy market has shown immense resilience over the last few years. Whilst the energy transition away from traditional fossil fuels is well underway, the UK economy will continue to have both traditional fuels and new energy within its energy mix for the next few decades. The ongoing Russia-Ukraine conflict has magnified the need for energy security in relation to the country’s energy supplies and, accordingly, several government programmes have been launched to increase national resilience. Energy, as a core target market for the Company, has now emerged as one of the key markets that will fuel near-term revenue growth.

North Sea developers have commenced new exploration programmes, alongside developing plans to extend the life of existing fields and supporting the renewables markets through modifications of existing infrastructure. The Company recently announced (post period end) that it has received a Notice to Proceed for the mid-life upgrade of a large vessel for circa £60 million – £75 million revenues in 2024. The contract for this project is due to be executed in the next few weeks. Additionally, the Company is in advanced negotiations with other North Sea developers for the refurbishment and new build of offshore platforms. The Company is also actively involved in discussions with owners of oil tankers, LNG carriers and FPSOs for dry docking of these vessels in Belfast. Recognising the growing importance of the energy market, the Company has recently established offices in Aberdeen, the UK’s energy capital. This will enable the Company to be in close proximity to its potential clients and deepen relationships with the aim of securing further contracts


The Company has previously stated that there is typically an 18-24-month period required from the award of a sea-bed licence to commencement of fabrication for a wind farm project. During this period, the developer needs to take a number of steps; completion of planning and consenting, environmental impact assessments, obtaining a marine licence and firming up the design specifications of the project in line with seabed and other offshore conditions. Since the Scotwind auction award announcement in April 2022, the Company has been actively engaged with a large number of the awardees, both for fixed and floating wind structures.

There is a very clear commitment from the developers to enhance the value of local content and to strengthen the supply chain. Importantly, fabrication for a project includes not only the structures but also the ancillary equipment and ships, such as Service Operating Vessels (SOVs) and Crew Transfer Vessels (CTVs) to name a couple. The Company has been working alongside these awardees to identify the commercial pathway for these projects and ensure that the fabrication for these projects is de-risked as much as possible.

Along with strengthening the supply chain, the Company has been looking at how to increase its footprint in Belfast, Arnish and Methil with a view to accommodating the fabrication, assembly and load-out of large floating structures. A number of initiatives on capital expenditure are being explored such as co-investment in the yards, long term capacity bookings and joint ventures with the awardees.

The renewables market is substantial and growing, and the Company believes that the best way to monetise the opportunity is to enter into a series of partnerships (in various commercial forms) as opposed to securing standard fabrication contracts. Whilst the Company continues to negotiate with its clients on standard fabrication contracts for smaller pieces of work ranging between £1 million and £5 million, the Company is engaged in strategic partnership discussions for larger and longer-terms contracts. The Company believes that large material contracts should start getting executed at the back end of 2024 and has therefore budgeted for smaller prototype fabrication projects next year with more meaningful contracts commencing from 2025 onwards.   


The commercial market has opened up globally for the Company. The directors believe that the Company has an established a reputation of delivering complex and large projects on time and on budget. Testament to this is the fact that vessel owners from North America have been making the journey across the Atlantic to seek dry docking and repair works in Belfast. The large dry docks and an experienced team in Belfast lend themselves to be the facility of choice for large vessels such as ‘The Sunshine’, a heavy lift vessel of Korean origin, which is currently in Belfast undergoing repair work.

More locally, the Company successfully completed the fabrication for a mining project in Greenland and has delivered all the fabricated components to the client. The Cory contract which involves the fabrication and build of 23 barges continues at pace with the barges now being fabricated in Belfast and Methil. This contract has underpinned the rejuvenation of the fabrication halls in Belfast and following a steady ramping-up, both yards are now well-positioned to deliver at least one barge every four to five weeks.

Moreover, as work gathers pace to modernise UK’s electricity and energy infrastructure, the Company continues to have discussions with developers and key contactors in the nuclear and electrification markets. These are large projects that are now at the Final Investment Decision (FID) stage and the Company is bidding on work relating to the contracting for significant component and structural steel work in Methil and Arnish.

Islandmagee Gas Storage Project (Islandmagee Project)

The judicial review for the Islandmagee Project was held in the first week of May 2023 with the judgment finally issued on 31 August 2023. The Company is delighted to report that the case was formally dismissed by the High Court in Northern Ireland with all grounds on which the applicants had challenged the issuance of the marine construction licence, abstraction licence and discharge consent comprehensively dismissed. The marine licence issued to the project in November 2021, therefore, stands.

The Islandmagee Project represents a strategic asset both for the island of Ireland and mainland UK, underpinned by a recent independent study (the Large-Scale Hydrogen Concept Study) confirming that the Islandmagee Project is technically suitable to store, blend, process and introduce hydrogen into the network. The hydrogen market is rapidly evolving, and the Company believes that this project will stimulate the growth and monetisation of hydrogen production and consumption.  This has the potential to add enormous value in the transition from natural gas to hydrogen, with the recent study emphasising the viability of the business case and economic model. Accordingly, the Company will be seeking to appoint a technical consultant to conduct a Front-End Engineering and Design (FEED) study for hydrogen storage as well as amend its existing permissions to incorporate the storage of hydrogen.

Whilst the Company is currently reviewing the details of the High Court judgement, the judgement has created the opportunity to evaluate several potential strategic options for the asset including:

·      Trade sale of the project;

·      Government funding (either in full or on a matched basis) through the National Infrastructure Bank or similar entity via a commercial mechanism such as a Contract for difference (CfD) or Regulated Asset Base (RAB) model; and

·      Traditional farm-out model with the Company retaining a minority stake in the project.

The Company will fully assess its options in respect of the Islandmagee Project to ensure any future decision on this project is in the best interest of shareholders.

Financial overview

For the period ended 30 June 2023, the Company’s revenues were £25.53 million (30 June 2022: £15.41 million) representing a 65% increase from the comparative period last year.  The gross profit for the period was £4.95 million (30 June 2022: £3.38 million) representing a gross margin percentage of 19.4%  reflecting a highly volatile cost environment in which the Company was not able fully to pass on labour and energy related cost increases to all clients. 

As we move into the next phase of the Company’s growth, with the onset of large fabrication contracts, our goal is to develop an optimum blend and mix of work across the four sites, in order to increase our gross margin to our target of between 24% – 27% One critical cost consideration is steel and we are, as far as possible, reducing our exposure to the volatility in steel prices by requesting for client delivered materials. Where we are required to acquire steel, our contracts are normally structured on a floating price with the actual costs being passed to the clients. Our ability to negotiate such terms is key to securing the right work at the right price.

The net loss for the period was £31.50 million (30 June 2022: £17.65 million). This widened loss versus the same period last year largely reflects the investment in personnel and general overheads to service a growing workload, along with increased financing costs.

Net debt as at 30 June 2023 was £88.53 million (30 June 2022: £19.74 million) reflecting the upsizing of the Riverstone Credit Facility from $35 million in March 2022 to $100 million as at 30 June 2023. As reported previously, we are now at an advanced stage of refinancing a new £200 million credit facility from UK Export Finance (UKEF). Having completed significant due diligence in the first half of 2023, we are now in the process of negotiating with the high-street banks and Astra Asset Management to structure a syndicate of commercial and private debt along with the UKEF guarantee. We expect to close this facility in Q4’23. Further announcements will be made at completion

Outlook for 2023 (FY23) and 2024 (FY24)

As stated previously, the Company expects to generate revenues of circa £100 million for FY23 and circa £200 million for FY24. The Company currently estimates these revenues would have the following mix:

Market vertical

2023 (£m)

2024 (£m)










Cruise and ferry






Revenues for FY23 will be significantly second half weighted reflecting that the FSS Programme was contracted in February 2023 and that deliveries of equipment for the M55 Regeneration Programme were received in Q1 2023. The FSS-related revenues, and a number of other contracts signed in the current financial year, are subject to a number of procurement activities defined by clients and, in the case of FSS, are controlled by the UK Government.  The Company continues to liaise closely with its various counterparties to ensure that procurement remains on target to achieve revenue recognition in 2023. As a result of the processes involved in setting up supply chains and seeking a number of security clearances, bench overheads and additional administration expenses will be incurred in the short term. Therefore, the EBITDA loss for FY2023 is expected to be in the region of £22 million – £25 million.  

For FY24, the Company already has a significant backlog (contracted revenues) of £145 million providing good visibility, and the Company continues to progress a number of identified contract prospects.

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

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