So these new articles of association were signed on 21st May, three days after JW claimed that it was already ring fenced on 18th May? What utter claptrap. They’ve messed up (again) tried to pull wool over eyes (again) and tried to fix retrospectively in the hope no one notices (again).
If we are to believe that 90% of 2024 revenues are already secured then I find it bizarre that we know more about 2024 revenues than 2023 revenues.
All we have on 2023 is the Trading Statement from November, advising that they were asking auditors to look into how revenue is recorded (no update on what the auditor outcome in that is/was). Full text below.
My expectation is that *if* 90% of 2024 is in the bag, a portion of this is going to be made up of deferred 2023 income, which will be revealed in the full year accounts (that the BOD are hoping will be post-finance so no one remembers 2023).
“Given the multi-year and complex nature of some of the contracts under which the Company is working, the Company has commenced discussions with its auditors at an early stage to ensure that all parties are in agreement with the method of accounting for revenues throughout the duration of a build programme. The Company believes that it is taking a prudent approach to revenue recognition and remains comfortable with the market's expectation of £100m revenue for this financial year. However, the Company notes that a different approach to revenue recognition, whilst not changing the overall value of the contract, could lead to a range of £80m-£100m of revenue for this financial year, with any balance deferred until 2024. The Company will make a further announcement when the audited position for revenue recognition has been settled.”
The rules regarding communicating during an election are one thing, but what some haven’t seemed to consider, is that the way politicians and political parties behave during elections change fundamentally - irregardless of the rules. They are simply thinking about the short term and what is best for them now.
Does getting the UKEF deal over the line on the last two days benefit the Tories, coming across as the great saviours? Of given the extent of talk of a ‘row’ does agreeing a deal now just feel like they have rushed a policy through, despite concerns. Does that in fact make them look weak, not strong?
What happens if no deal and working capital becomes an issue as highlighted in that FT piece? I have no doubt that HARL will not be allowed to fail, but what is the mechanism? Further extend loan from Riverstone? Nationalisation? Fire sale to a competitor? Gov’t would probably be happy with any of those.
The last two might sound extreme, but I’m trying to make the point that IMO, bets are off as the rules of engagement have changed. I wouldn’t be surprised if an election has caused an additional headache for JW and Co. But equally, wouldn’t be surprised by UKEF announcing going ahead at any point before the 4th July, as they are arms length.
As for ‘purdah’ - the period where comms and policy announcements are severely restricted, that started at midnight Friday:
General elections have a number of implications for the work of departments and civil servants. These arise from the special character of government business during an election campaign, and from the need to maintain, and be seen to maintain, the impartiality of the Civil Service, and to avoid any criticism of an inappropriate use of official resources. This guidance takes effect from 00:01 on 25 May 2024 at which point the 'election period' begins. The Prime Minister will write separately to Ministers advising them of the need to adhere to this guidance and to uphold the impartiality of the Civil Service.
Source: https://assets.publishing.service.gov.uk/media/664f56b74f29e1d07fadcdd3/GENERAL_ELECTION_GUIDANCE_2024.pdf
Four figures when I bought in, anyway… :/
Yes, a holder (low four figures, does that disqualify my opinion?).
Does anyone have a transcript (or highlights) of what our great leader had to say in his speech today?
Re: General Election, pros and cons. Tories won’t want to appear soft by agreeing with a deal (some at least) have reservations about, but it must be tempting to just sign off support and make it Labour’s problem.
GLA.
Maybe it’ll come down to some accounting quirk then as I can’t see much interest in a trade sale for a company that is leasing a ship, outsourcing crew, has no record of income generation, and significant unanswered questions about its business case and viability.
X - I’m not twisting anything and I don’t even think we’re really disagreeing all that much on the points we made.
I wish you well.
If you properly read my post I didn’t say that we ‘owe Riverstone £200m’. I am well aware of what the current finance deal is and the ball-park of what is to be repaid. So a substantial portion of what HARL is asking UKEF to underwrite will go on paying back Riverstone, which is entirely compatible what my post.
And it doesn’t matter that the Oxford dictionary definition is of ‘subsidy’ it matters what the U.K. Government’s (and other’s) lawyers interpretation of subsidy is in this context.
There seems to be a trend creeping in on this thread that ‘we don’t need UKEF’ - well we do if we want a reasonable loan interest repayment rate. Are others really happy to pay a much higher commercial rate because of some vague promise of returns on a passenger ferry service at some unspecified point in the future?
Didn’t think so.
I think what is concerning a lot of people (myself included) is that despite having ‘ring fenced’ a separate company on paper, how do you in any meaningful way decouple the two businesses if one is reliant on the other. Is the ferry business going to continue trading if HARL folds? No. Therefore, ring fenced or not, the ferry business is reliant on UKEF funding. There’s been a lot of bravado and bluster on this board, but no one has adequately addressed that question and presumably that’s one of the reasons why treasury is getting itchy.
On the guarantee being for ‘general working capital that must be related to helping win export orders’ I think the proposal was to use it to pay back riverstone? To me that is stretching the definition, although UKEF being a Govt agency they might turn a blind eye to this.
So how can it be ring fenced if the subsidiary is completely reliant on the parent?
I get that they are separate legal entities and why it has been done like that (sensible), but the fact remains that if state aid helps the parent then by definition, it helps the subsidiary, ring fenced or not. The subsidiary doesn’t just carry on, after the whole shebang has collapsed.
Do we even know how much cash has been splashed on JW’s toy boat project? Or has there ever been a rationale given about why a shipbuilder wants to build a passenger service? Or when we’ll start seeing any returns? Or any potential impact assessment on the wider brand from reputational damage when they let people down (start any consumer facing business and there will be unhappy customers). Or even a business plan and cash-flow projections? Or as usual, will we have to wait until the accounts come out, middle of next year?
If the point of law is that straightforward, and the issue of state aid was first (publicly) known about from the Times article on Tuesday (let’s be honest H&W and their lawyers would have been informed well before) then why hasn’t it been put to bed already? I’d assume the treasury have lawyers too and they have reasons for their concerns. This hasn’t just appeared out of nowhere.
And meanwhile, the most important weekend of the company’s history and JW’s MIA playing with his Facebook friends.
Too many unanswered questions.
Glad you asked that Broomtree as I’ve been reading what people have to say (with much interest) thinking the same. Are there any corporate lawyers in the group who can help? Surely without H&W Group Holdings, there is no H&W (Scilly Ferries) Ltd, much in the same way that without refinancing there is no H&W? So from a purely practical point of view, whether money is ring fenced or not, U.K. Government aid will allow them to continue their Scilly Ferries venture? All above my pay grade, I’m afraid. As ever DYOR.
Glad I’m not the only one who has been pondering overnight about all of this. Somethings just not adding up though.
HARL comment to Telegraph yesterday was (exact quote): ‘A spokesman said: "These issues have not been identified to us as a barrier to securing
the loan guarantee.”’
JW on social media today (exact quote) ‘Everything we are doing in relation to Isles of Scilly is ring fenced as we suspected this may happen.’
Either you expected it or you didn’t. The statements don’t reconcile to me. Whether the legal issue is valid or not, Harland and Wolff should have been all over this from the start. To say ‘it’s not been identified as an issue’ is just negligent.
If JW spent as much time thinking about updating shareholders as he did about engaging with Scilly islanders over his cornflakes on Facebook, maybe we’d all know what the grand plan is and why operating a ferry service is so important to the potential detriment of a £1.6billion contract.
For those with an interest, I’d encourage you to get copies for the Telegraph and FT who have also now published similar stories to the Times (preferably before trading tomorrow). This is a doozie in the FT.
“The group is also engaged in pay negotiations with staff and “needs the money” to meet payroll, one person with knowledge of the business said.”
No. But newspapers often copy a scoop from another publisher citing them as a primary source.
They did ask the company for comment hence why HARL was quoted in the original article saying it was “inaccurate speculation” (the last paragraph in the article).
Which begs the question, if HARL knew that this was going to drop (would have been given a few hours to comment at least, but probably overnight), why they weren’t they quicker off the mark with the RNS.
If you’re not ahead of the story, whatever is published becomes truth. The Mail have now published similar, all based on the original Times story. Not sure about sacking the board but time to sack the advisors.
Probably interested in how the company’s money is being spent. If they hd 400 bookings for May, that equates to around five passengers per journey on a craft with capacity for 400. Maybe one or two of them would have been locals using their free trips, so Harl would have been looking at about £150 revenue per trip. Big hill to climb now they’ve spent more money on helicopter tickets and another jet RIB.
it’s on facebook.
https://www.********************471788599637917/permalink/2837736199709800/
The company doesn’t decide what crewing requirements are, the MCA and countless other safety bodies do. I don’t think some people on this page realise how little control H&W have over any of this. To be fair, I’m not convinced JW does either.
If they are going after the Calmac work (which would be sensible if looking to get into ferries market) then it sends an odd message to state in the video that they are looking to operate further services in the Scottish Islands (and Channel Islands). They could be a competitor to Calmac rather than a supplier, but I guess they have form with that as they started out as a potential supplier to ISSC. What strikes me is how starting these services complements their existing business. The boats they've purchased are all built in different (competitor?) shipyards, so doesn't in any way show off their credentials. Watching with interest.