REG - Harland & Wolff - Methil Update

Harland & Wolff groupAnnouncement

17/02/2023 07:00

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RNS Number : 2187Q  Harland & Wolff Group Holdings PLC  17 February 2023

 

17 February 2023

Harland & Wolff Group Holdings plc

("Harland & Wolff" or the "Company")

Methil Update

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                                        +44 (0)20 3900 2122

 John Wood, Chief Executive Officer                                        investor@harland-wolff.com (mailto:investor@harland-wolff.com)

 Seena Shah, Head of Marketing & Communications                            media@harland-wolff.com (mailto:media@harland-wolff.com)

 Cenkos Securities plc (Nominated Adviser & Broker)                        +44 (0)20 7397 8900

 Stephen Keys / Callum Davidson / Dan Hodkinson (Corporate Finance)

 Michael Johnson (Sales)

 Liberum Capital Limited (Joint Broker)                                    +44 (0)20 3100 2000

 Nicholas How / Edward Mansfield / Lucas Bamber / Antonia Brown

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.

 

 

 

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