InfraStrata (INFA ) told investors in a trading update for 1Q21 that it has built “significant growth momentum” over the past few months, with further growth expected this year. 

The Group, which is focused on strategic infrastructure projects and physical asset lifecycle management, has been making ‘steady progress’ since the start of the new financial year. 

It said revenues in the eight-month period to 31 March 2021 stood at around £6.50m, a ‘significant growth’ from its year-end results where it reported revenues at around £1.4m. 

The group previously outlined its strategy of building its business, Harland & Wolff, across five core markets, viz, cruise & ferry, commercial fabrication, oil & gas, defence and renewables. It acquired the Harland & Wolff shipyard in Belfast from administrators in 2019. 

To date, Harland & Wolff has achieved a cash break-even position within the cruise & ferry market since October last year and continues to maintain a similar position through 1Q21. 

It said contract values within the cruise and ferry market have seen a quarter-on-quarter increase, with average contract values now in the range of between £0.6m and £1m. 

While the pandemic has had an adverse impact on passenger and cargo movements, a rebound in client spend is expected as the economy opens up and lockdown restrictions are further lifted. The group said it has seen repeat business from its clients, and that it expects contract values to increase further over time, as confidence in its skills and expertise grows. 

With the UK Government's decision to allow cruising to commence around the UK from May onwards, the company said it has also seen a rise in the level of inquiries for dry-docking of cruise vessels ahead of their sailings. Subject to continued buoyancy in the cruise industry, InfraStrata also expects to see a number of dry-docking contracts signed in 2Q and 3Q. 

InfraStrata acquired the assets of Burntisland Fabrications in February 2021, along with the leases on its Methil and Arnish sites which are located to service the wind farm fabrication sector that is currently witnessing ‘significant growth momentum.’ The sites in Belfast, Appledore and Methil are now fully operational with Arnish expected to be ready in June.  

Commenting on the trading update, John Wood, Chief Executive of InfraStrata said: "We believe that we have now built significant growth momentum over the past few months that will lead to large contract wins across the five core markets within which we operate. 

With the gradual lifting of lockdown restrictions, we anticipate larger spending patterns that will eventually lead to higher revenues across the second half of the calendar year.” 

He said, “We have set ourselves up in strategic locations, which are in close proximity to major renewable and fabrication projects that will come to fruition in the months ahead. 

We continue to pursue defence related work and have made significant inroads with the Ministry of Defence on a number of defence and quasi-defence contracts. Defence contracts tend to take longer to be awarded but will be a key market within our portfolio.” 

Following “steady progress" in the first months of its financial year, InfraStrata 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 35% in value since the beginning of November 2020. The stock was trading 5.13% higher this morning at 41p following the announcement. 

Reasons to Follow 

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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