17 Feb 2023 07:00
17 February 2023
Harland & Wolff Group Holdings plc
("Harland & Wolff" or the "Company")
Harland & Wolff Group Holdings plc (AIM: HARL), the UK quoted company focused on strategic infrastructure projects and physical asset lifecycle management, announces that, further to the announcement made on 30 December 2022 in relation to the termination of the Saipem project, negotiations have now successfully concluded with Saipem. The contract value has been finalised at £16m, representing approximately 70% of the contract value as per the deed of variation signed in September 2022 as part of descoping from eight jackets to four. The entire amount has now been paid in full and final settlement of the contract.
Further to additional contract wins and workload emerging in the Belfast facility's fabrication halls, some of the fabrication work for the Cory Barges contract will now be moved across to Methil. It is expected, subject to client approval, that Methil will commence fabrication on four barges in tandem within the next two weeks, in line with the Company's strategy of operating across multiple facilities and balancing work as well as skill sets between the yards.
Having completed the contract settlement with Saipem in its entirety, the Company will undertake a process of rationalising the Methil facility's workforce to approximately 115 core personnel in order to align the Company's resources and cost base with the level of work being undertaken at the site whilst protecting its margins. Given the typical longer-term nature of contracts within the renewables and defence, the Company continues to ensure that its workforce is appropriately positioned to execute on near term requirements.
As the Company sets it sights on 2024 and beyond, Harland & Wolff expects the renewables market to demand more local fabrication capacity in the UK than is currently available. The Company considers that the lead time to secure contracts in the renewables space takes approximately 12 - 36 months and a number of such tenders have already been submitted for additional work at Methil over the mid-to longer term. Meanwhile, the Company is also advancing on a pipeline of nearer term smaller projects which it expects to undertake over the coming months.
John Wood, Group Chief Executive Officer of Harland & Wolff comments:
"The Saipem project was the first project to arrive in Methil after our acquisition of the facility. With the previously announced delays and the changed economic position of this project, it was in the Company's best interests to draw the project to a mutually acceptable close. The project has been a helpful learning curve for the business in this environment and we will take the lessons learnt forward into our next major project. In the meantime, the teams are focusing on constructing barges whilst contract discussions and negotiations advance foranother large project. In the interim, the Company is focused on progressing the Company's pipeline of opportunities across its different sites and markets and remains steadfast in its approach to executing on contracts which maintain strong and attractive margins."
This announcement contains inside information.
Harland & Wolff Group Holdings plc
John Wood, Chief Executive Officer
Seena Shah, Head of Marketing & Communications
+44 (0)20 3900 2122
Cenkos Securities plc (Nominated Adviser & Broker)
Stephen Keys / Callum Davidson / Dan Hodkinson (Corporate Finance)
Michael Johnson (Sales)
+44 (0)20 7397 8900
Liberum Capital Limited (Joint Broker)
Nicholas How / Edward Mansfield / Lucas Bamber / Antonia Brown
+44 (0)20 3100 2000
About Harland & Wolff
Harland & Wolff is a multisite fabrication company, operating in the maritime and offshore industry through five markets: commercial, cruise and ferry, defence, energy and renewables and six services: technical services, fabrication and construction, decommissioning, repair and maintenance, in-service support and conversion.
Its Belfast yard is one of Europe's largest heavy engineering facilities, with deep water access, two of Europe's largest drydocks, ample quayside and vast fabrication halls. As a result of the acquisition of Harland & Wolff (Appledore) in August 2020, the company has been able to capitalise on opportunities at both ends of the ship-repair and shipbuilding markets where there will be significant demand.
In February 2021, the company acquired the assets of two Scottish-based yards along the east and west coasts. Now known as Harland & Wolff (Methil) and Harland & Wolff (Arnish), these facilities will focus on fabrication work within the renewables, energy and defence sectors.
In addition to Harland & Wolff, it owns the Islandmagee gas storage project, which is expected to provide 25% of the UK's natural gas storage capacity and to benefit the Northern Irish economy as a whole when completed.