GCIHarland & Wolff proposes to build and operate ferries to Isles of Scilly
() the marine engineering specialist, said it is finalising a business case in relation to the build and operation of two ferries on the Penzance to Scilly route and one inter-island vessel, to commence in spring 2025.
Harland said it has been considering building and operating its own ferries to meet the Government's Levelling Up requirement for local content. The marine engineer has spent the past 3 years working and developing its own design and costing model for the vessels, and is now moving to the next stage of the business plan, including technical, operational, and financial details.
Harland is expected to apply for Levelling Up funding in conjunction with approved partners for the build of the ferries, as well as a licence to operate on the Penzance to Scilly ferry route. The company will seek to operate the vessels for an initial 5-year period, with an option to extend for a further 5 years if Government-prescribed performance targets are met.
The shipbuilder clarified that there is no certainty at this point that the opportunity will proceed to financial close, as it is pending abovementioned applications and talks with stakeholders to finalise an operational and commercial case.
View from Vox
Harland makes a strong financial case for owning and operating ferries to the Isles of Scilly off the Cornish coast of Britain. The company has substantial experience in the passenger vessels business already, both in terms of engineering and operation. Utilising Levelling Up funding for the project is also sensible given the current cost of capital and the public transit nature of the project. The ferry routes should offer good value to the taxpayer and competitive quality of service to passengers and tourists while putting pressure on incumbent operators.
The announcement added to a string of positive news from Harland over the past month that have driven shares 67% higher since July 21 2023. shares are up 43% in the past year. In late July, the shipbuilder won a large £60-70m contract for the mid-life refurbishment of a large undisclosed vessel, to be completed in early 2024.
In its recently issued audited final results for FY22 ended 31 December 2022, Harland detailed significant progress in the period, with revenue growth of 51% to £27.96m, and a contracted backlog of £900m, compared to £100m in FY21. Late last year, a Harland-led consortium was awarded the massive £1.6bn contract for the Royal Navy's Fleet Solid Support (FSS) Programme, prompting a large jump in share price, which has since consolidated. Later in FY23, Harland was awarded its subcontract for the project, yielding several years of significant revenue visibility.
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