Delayed Audit and Awaiting Government Decision Challenges Harland & Wolff

The famed shipbuilder Harland & Wolff reported continued progress in its efforts to rebuild the business but faces new challenges due to delays with its year-end audit and the continued discussions with the government for a new credit facility. While the issues with the audit were resolved, the company cautions delays in securing the credit facility would adversely affect its ability to execute new and large contracts.

Harland & Wolff released its unaudited year-end financial reports for 2023 today showing strong progress. The company nearly tripled revenues to nearly £87 million ($110 million) and reduced its operating loss by more than half to £24.7 million ($31.2 million). This was achieved while they also continued to invest in infrastructure upgrades including one of Europe’s largest robotic welding panel lines, plasma cutters and transports, and expansion of its fabrication hall in Belfast ahead of the government contract awarded in 2023. They report the first steel cut for the Royal Naval auxiliary vessels is scheduled for the first quarter of 2025. Employment has increased by 50 percent to 1,500 personnel.

The company, however, was required to publish its 2023 Annual Report by June 30, 2024. They failed to do so which means trading in its stock is now suspended until it completes the filing, which they expect will happen sometime next week. 

Harland & Wolff cites discussions with its auditors regarding revenue recognition relating to the multi-year and complex nature of some of the contracts under which the company is working as causing the delay. Its auditors have recently agreed on the treatment of revenues in the financial statements and the split in revenues between the current year's revenues and deferred revenues so that the audit is now underway. The company expects to publish its 2023 Annual Report during the week commencing July 8, and then trading in the stock will resume.

This week’s general election in the UK however is the next looming issue as Harland & Wolff awaits ministerial consent for a new £200 million ($253 million) credit facility. Its currently $115 million facility with Riverstone Capital Partners comes due at the end of December and it is looking to replace it with a new facility. Harland & Wolff is saying that the commercial banks are lined up for the deal but it requires government consent to provide a loan guarantee so that it can access lower interest rates.

The company highlights that it has been touring government officials to show off the work at the yards and efforts at rehabilitating the three facilities in Northern Ireland and Scotland. The yard is building new vessels for the first time, including barges and a cable barge to be used at the Royal Naval facility in Portsmouth. Refurbishment contracts included the conversion of the former cruise ship Costa Atlantica into the Margaritaville at Sea Islander and the nearly completed conversion of the former Fred. Olsen Braemar to the Villa Vie Residences cruise ship as well as a government project to overhaul a former Royal Navy mine hunter which is going to the Lithuanian government.

Harland & Wolff says it remains on track to achieve revenues of £200 million (US$253 million) in 2024. However, there have been reports of dissent in the government to provide the loan guarantee. The UK’s general election is on July 4 and the company says it is confident the deal can be completed after that. They report remaining in discussions with the government and are confident that a decision will be announced soon after the election.