30 Aug 2023 07:00
30 August 2023
Harland & Wolff Group Holdings plc
("Harland & Wolff" or the "Company")
Isles of Scilly - Proposed Ferry Build & Operate Programme
Harland & Wolff Group Holdings plc (AIM: HARL), the UK quoted company focused on strategic infrastructure projects and physical asset lifecycle management is pleased to announce that it is reaching the conclusion of a full business case (technical, operational and financial) in relation to the build and operation of two ferries on the Penzance to Scilly ferry route as well as one inter-island vessel commencing spring 2025.
With the Government's levelling up funding requiring local content, the Company has been considering the opportunity to build and operate ferries its own right. Having spent three years working on and developing its own specific design and costing model for these vessels, the Company is now at an advanced stage of pursuing this opportunity more fully. Accordingly, the Company will be seeking to make an application for levelling up funding, in conjunction with approved partners (including local councils) for the build of the vessels and will, in addition, seek a licence to operate on the Penzance to Scilly ferry route. In the short term, the Company will continue to refine its ferry design. The Company will be seeking to operate the vessels on an initial five-year period, with an option to operate for a further five years if Government prescribed performance targets are met. These types of arrangements are normal on ferry routes and are designed to provide the best value for taxpayer money. If a competing proposal utilises commercial debt, rather than levelling up funding, the Company believes that the end-user costs over the lifetime of the proposed vessels may rise and adversely impact the services being offered.
The remoteness of the Isles of Scilly and the reliance that the islanders place on these ferries as essential transport links on a day-to-day basis make it imperative that these ferries are technically suitable for the route and ensure seamless operation through the harsher winter months. The Company's proposal seeks to provide these services in the most cost-effective manner, not only to the islanders but also to the summer tourist trade which will provide substantial economic benefit to the islands.
For the avoidance of doubt, there is no certainty at this point that this opportunity will proceed to financial close. In order to build and present as robust an operational and commercial case as possible, the Company has engaged with relevant stakeholders and will be undertaking a consultation on the islands to ensure it provides ships that are not only innovative and pioneering but also environmentally friendly. One of the key differentiating features of the Company's vessels would be the provision of a set of enhanced on-board facilities and amenities rather than simply being a replacement of the existing vessels. The current passenger vessel in operation, the Scillonian III, that has served this route for many years was built in the Company's Appledore shipyard and is well known for her technical and operational robustness.
John Wood, Group Chief Executive Officer of Harland & Wolff, comments:
"We have a large number of colleagues in Appledore and across the group who are vastly experienced in the build and operation of passenger vessels. In my view, it is clear that, given the current cost of capital, access to and acceptance of levelling up funding will provide a very cost competitive model to operate either alongside the incumbents or on a stand-alone basis. This is a fantastic opportunity and we believe competition on this route is the right thing to ensure value for money for the residents and tourists of the islands."
For further information, please visit www.harland-wolff.com or contact:
Harland & Wolff Group Holdings plc
John Wood, Chief Executive Officer
Arun Raman, Chief Finance Officer
+44 (0)20 3900 2122
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.