InfraStrata said it has built ‘a firm set of foundations’ to capitalise on
(INFA ) has hailed its results for the six-month period ended 31 January 2021 as it reported a ten-fold revenue increase from 2020 as it continues to make “huge progress” in its quest to reach a level of steady revenues and to eventually achieve profitability.
The Group secured revenues of over £5m during the period, a five-fold increase from its annual results of 31 July 2020 and a ten-fold increase from the half-year results of 31 January 2020, while it says momentum continues to build going into this year’s second half.
The gross margin for the period stood at £1.18m (31 January 2020: £0.084m), a gross margin percentage of 23%. Whilst the margins remain in line with expectations for achieving levels of c.25%, the Group said it has had to reduce its margins slightly in light of the pandemic so it can keep vessels moving through the yard and bringing in repeat business.
Operating loss for the period stood at £6.20m (31 January 2020: £2.67m) as a result of an increase in the number of personnel and overall overheads, given that, for the period, the Company had three asset bases to provide for, i.e, Belfast, Appledore and London.
Arun Raman, InfraStrata’s Chief Financial Officer highlighted to investors: "I am encouraged by the increase in revenues across the Group between interims 2020 and interims 2021 as well as between our annual results as at 31 July 2020 and our current interims.”
Raman commented, “Much work remains to be done but we have made huge progress in our quest to take the Company to a level of steady revenues and achieve profitability.”
InfraStrata said it has built “a sizeable, weighted pipeline of opportunities across our five markets” since the Company acquired Harland & Wolff (Belfast) back in December 2019.
It saw over 30 vessels welcomed into Harland & Wolff (Belfast) during the lockdown period which it said is testament to both its commitment to its clients and to the dedication of its workforce who have tried to maintain normal operations during these ‘challenging times.’
The Company also completed the first two phases of reactivation at the yard, which has one of Europe's largest heavy engineering facilities and the largest drydock capability in the UK and second largest in Europe, after the Group proposed a change in strategy for the site.
Contract values have increased over the year with average contract values being in the region of £0.6m to £1m. As the lockdown restrictions ease off, the Group expects similar, if not greater, values as clients commit to levels of spending over and above bare necessities.
InfraStrata secured the assets of Harland & Wolff (Appledore), a key strategic shipyard in England with an established pedigree of shipbuilding and fabrication, in August 2020. The Group sees this as a “significant opportunity” to build a prominent presence in mainland UK.
“Having studied several smaller facilities, the Directors believe that Harland &Wolff (Appledore) is, by far, the most suitable, from a locational, strategic and operational point of view and is well positioned to win contracts in this sector,” the Company told investors.
InfraStrata believes it can achieve a dominant position at two distinct ends of the shipyard market; the lower end of the market at less than 119m of dock length (with Appledore) and the upper end of the market, requiring dock lengths of 300+m (with Belfast).
“Our strategy is aligned with Government policy to promote growth, increase employment and kick-start a post-COVID recovery. With our investments in people and systems across the Group, we are better placed than ever before to bid for, and win, larger long-term contracts that we intend will provide significant returns for shareholders,” said Raman.
The Company highlighted to investors that it is developing and actively progressing a strong pipeline of contracts across its five distinct markets. In particular, the Group said it has seen “significant traction” built in the cruise & ferry, wind farm fabrication and defence markets.
Post-period, in February 2021, the Group unveiled that it had acquired substantially all of the assets of Burntisland Fabrication Limited (the "Burntisland Acquisition"), thereby providing it with increased capacity across two sites in prime locations in Scotland.
Last week, InfraStrata secured a contract worth over £26m for the fabrication of 8 wind turbine generator jackets for Saipem, the single largest contract awarded it has won to date.
Raman added that this recent contract award “validates our business strategy and provides the ideal platform to secure similar, if not larger, fabrication contracts across all our sites."
The Group said it believes that it has “a firm set of foundations” that it is ready to capitalise on and that it expects to see clients increasing their contract spend as the world opens up, ‘leading to larger contract values and enabling it to achieve a baseload level of revenues.’
Following “steady progress" in the first months of its financial year, InfraStrata recently said it expects ‘major renewable and fabrication projects’ to come into fruition in the months ahead.
The company noted that it now has the largest fabrication footprint in the UK, ‘with the capacity and capability of attracting large fabrication contracts by offering clients optimised delivery schedules, spreading fabrication risk across four sites and significant cost savings.’
Shares in InfraStrata have increased by over 15% in value over the past two weeks. The stock was trading 2.92% lower this morning at 46.6p following the announcement.
Reasons to INFA
InfraStrata is a London-listed firm focused on the development, commercialisation and operation of advanced high-value strategic infrastructure facilities across the globe.
Energy Storage
The group holds a salt cavern gas storage project at Islandmagee in County Antrim, Northern Ireland is a pioneering low-cost fast cycle facility that it believes will provide ‘safe, secure and flexible gas storage that will in time serve the island of Ireland and the UK mainland.’
In May 2020, the company entered into a term sheet with West Face Long Term Opportunities Global Master L.P to acquire Meridian Holdings Co., under which sits the proposed Floating Storage and Regasification Unit Project (“FSRU Project”), located in North West England.
The Project will be the UK’s first to be developed and commercialised. Since more than 30% of the UK’s natural gas supplies arrive via LNG (liquified natural gas) cargoes, the FSRU is positioned to take advantage of LNG arriving in the UK seeking storage and regasification.
The estimated CAPEX for the FSRU Project will be circa £350m-£450m with further CAPEX optimisation planned through value engineering. The CAPEX for the FSRU Project is expected to be funded by putting together a consortium of partners at the project level. Estimated project revenues come to £80-£100mm annually with a 25-30 year project life.
Discussions with key partners have commenced with a consortium consisting of globally recognised companies involved in the development, construction, operations and commercialisation of regasification terminals worldwide will be formed in due course.
Shipbuilding
In August 2020, the Group completed the acquisition of substantially all the assets of Appledore Shipyard in North Devon, enabling InfraStrata to compete from a ‘dominant position at two distinct ends of the shipyard market’ being the lower end of the market at less than 119 metres of dock length, with H&W - Appledore and the upper end of the market, requiring dock lengths of 300+ metres with H&W - Belfast.
The group signed a Letter of Intent (“Lol”) with Triumph Subsea Services to build two Windfarm Development Vessels ("WDV”) at a length of 200m and a beam of 35m.
The vessels will be built with diesel-electric hybrid engines that will eventually transition into hydrogen fuel cells, offering what management considers to be the ‘greenest’ solutions to wind farm developers.
The WDVs will be used for fixed and floating wind farm installations and sub-sea cable laying and providing marine services for offshore carbon capture and green hydrogen projects.
Significant Forward Pipeline
As the Group stands today, the Directors of INFA have identified a potential weighted pipeline of “£2 billion in contract opportunities between now and 2025” and believe there are near term revenue opportunities of £80.5 million and up to £825 million in the medium term.
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