GCIHarland & Wolff wins £8.5m contract and acquires military ship
(HARL ) announced today that it has won an initial contract worth around £8.5 million with Riverside
Resource Recovery for the fabrication of eleven barges which will be used to transport London’s recyclable and non-recyclable waste on the River Thames, and that the firm has acquired the former HMS Atherstone from the Ministry of Defence (MOD).
Riverside Resource Recovery is part of Cory, one of the UK’s leading waste management and recycling companies which operates one of the largest energy from waste facilities in the UK.
Cory, which utilises its river-based infrastructure on the Thames for delivering waste, will use the eleven barges to transport London’s recyclable and non-recyclable waste on the Thames.
The programme schedule will allow for four barges to be built in tandem, with the entire build programme ending around 2Q23. The fabrication process will take place at the Harland & Wolff site in Belfast with an aim to cut the first steel within approximately eight weeks’ time.
Fully fabricated barges will be sequentially delivered to Cory with the client taking delivery on the River Thames. Cory currently works directly with eight London Boroughs, including Hammersmith and Fulham, Lambeth, Wandsworth,
Bexley, Tower Hamlets, the Royal Borough of Kensington and Chelsea, Barking and Dagenham, and the City of London.
In 2021, it was reported that Cory diverted 782,000 tonnes of non-recyclable waste from landfill, saving in total 170,000 tonnes of CO2 from being released into the atmosphere.
The Company made £141.4m in underlying revenue in 2021, with £73.6m in EBITDA.
Looking ahead, Cory says it is planning to invest more than £800 million in its operations and river infrastructure over the coming years. This will include the planned Riverside 2 energy from waste facility next to the company’s existing energy from waste facility in Belvedere.
CEO of Harland & Wolff, John Wood, commented: “With this material contract, we shall be opening up our vast undercover fabrication halls in Belfast and making optimal use of our new robotic welding panel line. This contract gives us the opportunity to optimise our production flows in readiness for other fabrication programmes in our plans and it demonstrates the variety of fabrication work that our facilities are ideally placed to execute upon.”
In a separate announcement, Harland said it has acquired the former HMS Atherstone from the MOD, a mine hunting class vessel that is no longer in service, with a view to refurbishing it for non-military uses, discussions for which have already commenced with interested parties.
Harland said it believes the acquisition will “significantly de-risk” the M55 regeneration programme given that the two vessels share a number of spare parts and components.
Should the company be awarded the regeneration programme for the M55, such spare parts and components on the HMS Atherstone will be used in M55’s regeneration programme.
Harland & Wolff expects negotiations with the MOD on the M55 regeneration programme to be completed in the next few weeks with an announcement to be made thereafter, it noted.
Wood told investors: “We now can significantly de-risk the M55 regeneration programme by utilising spares and component parts common to the two vessels, which has been recognised by MOD and will certainly help in closing out the negotiations over the next few weeks.
Secondly, we also can utilise this platform as the basis for other clients’ projects, which will be a valuable revenue stream for 2023. I am pleased that we have generated a lot of interest for the repurposing of the former HMS Atherstone, and I expect to make announcements in this regard as soon as we have executed a refurbishment contract with a counterparty.”
View from Vox
In its FY21 results, Harland & Wolff said it had made good progress across the markets where it operates and that the group has “an attractive pipeline of tangible commercial opportunities” despite rising energy prices and ongoing supply chain issues in the wake of the Ukraine crisis.
Harland & Wolff Group, the Belfast shipyard owner, has told inventors that it is guiding towards FY22 revenues in a range of £65m-£75m, compared to £70m-75m previously.
At a closer look, Harland & Wolff Group’s cash flow statement consists of £16,371m worth of investments, implying an underlying operating loss of £6m when compared to £9m in FY20.
It said this as a result of issues such as the war in Ukraine and its effect on energy prices as well as the continuing supply-chain issues, which have raised raw-material prices globally. Due to a lengthening impact on sales cycles, clients are more cautious to commit.
Whilst the Company achieved a significant amount of prefabrication, component assembly and engineering works on the jackets in 2021, delays as a result of supply chain issues affecting the global economy have resulted in the majority of fabrication occurring in 2022.
Accordingly, in consultation with its auditors in the current audit process, the board said it has taken a prudent approach to revenue recognition and determined that a material portion of revenue, which had been expected to be recognised in 2021, will now be recognised in 2022.
While acknowledging that it remains in a challenging environment, Harland has reiterated its confidence that it can navigate its way through a balanced backlog of projects across all sites “as its continued exposure to five markets and six service sectors begins to reap the rewards.”
Despite a current climate that has made clients act cautiously in terms of commiting to orders, Harland believes the firm’s pipelines remain healthy, particularly in renewables and retrofitting.
John Wood, CEO of the Harland & Wolff Group said: “Whilst we appear to be battling the next global crisis as soon as the previous one has ended, I am certain that our strategic presence and work in the sunrise sectors of defence and renewables will be increasingly valuable.”
He commented: “All our five markets are key to us” - that’s commercial, cruise and ferry, defence, energy and renewables - thus “allowing for a healthy mix and diversity of contracts within the overall portfolio and distribution of our capital cost base across the five sectors.”
He said this dynamic should reduce the overall cost of bidding for projects and help win the more price sensitive ones. As a result, Wood said he expects Harland to complete one of its biggest milestones by the end of H1 / early Q3'22 “so as to have all key markets fully active.”
Follow News & Updates from :
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.