LONDON: InfraStrata plc, company focused on strategic infrastructure projects and physical asset lifecycle management, announced the acquisition of substantially all the assets of Appledore Shipyard located in Bideford, North Devon, to be renamed H&W (Appledore).
InfraStrata has agreed to pay a total Consideration of £7million for the acquisition of substantially all the assets of Appledore.
Since the Company acquired H&W (Belfast) in December 2019 and announced its maiden revenues, H&W(Belfast) has welcomed a number of vessels, including but not limited to, ferries, cruise vessels and offshore support vessels. H&W (Belfast’s) core competence lies in vessels that require a dock length in excess of 300 metres.
With two dry docks at 356 metres and 556 metres in length respectively, H&W (Belfast) has the largest drydock capability in the UK, the second largest in Europe and, therefore, puts it in a unique position in relation to larger vessels.
The Company considers the mid-sector space of shipyards having dock lengths between 120 metres and 300 metres to be busy, crowded and highly competitive. The Company believes that entering the market of mid-sized shipyards would not lead to any significant competitive advantage, vis-à-vis other established players and this will not be an area of focus for the Company at this time.
H&W (Appledore), on the other hand, will focus on the smaller end of the market, with a dock length of 119 metres. There are very few shipyards in the UK that can offer this type of undercover building dock and repair facility and, given the number of sovereign vessels required in this category over the next ten years, the Company believes that this is a market segment that cannot be ignored.
Having studied several smaller facilities, the Directors believe that H&W (Appledore) is, by far, the most suitable, from a locational, strategic and operational point of view and is well positioned to win contracts in this sector.
With this Acquisition, the Company believes that it can achieve a dominant position at two distinct ends of the shipyard market; the lower end of the market at less than 119 metres of dock length (with H&W (Appledore)) and the upper end of the market, requiring dock lengths of 300+ metres (with H&W (Belfast)). With less competition at both ends of the market, the Company believes that it is now in a unique situation to attract, win and retain business specifically targeting both ends of the size spectrum.
H&W (Appledore) is strategically situated in North Devon and the Company believes that it is ideally placed to win and service contracts across the five key markets that the Company has laid out as its strategy for the future: ferry, defence, commercial fabrication, oil & gas and renewables.
As with H&W (Belfast), H&W (Appledore) will offer the Company’s six core services to each of these markets that include technical services, fabrication & construction, repairs & maintenance, in-service support, conversions and decommissioning. Given H&W (Appledore’s) size and capabilities, the Company believes that it will be the “go-to” yard in the region for small vessel requirements across these five markets and six sectors.
Just like H&W (Belfast), H&W (Appledore) enjoys the advantage of an existing and robust supply chain and a skilled workforce in the area. Whilst the yard has been dormant in recent months and the Acquisition therefore only comes with one employee (who is the current site manager), the Company believes that the workforce can be very quickly ramped up upon execution of contracts, discussions for which are already being undertaken with both Government and private vessel owners. There was no turnover attributable to the assets over the last 12 months.
H&W(Belfast) has been involved in the bidding process for a number of large contracts and, should they come to fruition, the facilities would have limited room for incremental business. H&W (Appledore) would be ideally placed to handle any spill-over of work from H&W (Belfast) in addition to tendering and bidding for its own set of contracts. Whilst the two yards are completely distinct in terms of their respective sizes, both have a number of common capabilities that are expected to create operating synergies and economies of scale.
The Company envisages each yard to be a standalone business unit in its own right, i.e., each yard will have its own profit and loss account, balance sheet, business contracts and lines of financing. H&W (Belfast’s) contracts will tend to be large and spread over a number of months and years, given the scale of the business that it is currently negotiating. H&W (Appledore’s) contractual profile, on the other hand, is expected to consist of smaller contracts and will tend to be fast-moving in addition to larger new build contracts that will be spread over several years.
The Government’s policy in relation to levelling up, “build, build, build” and, most importantly, the rolling out of its national shipbuilding policy, are further drivers to the success of Appledore in due course. The Company has always taken a position that it will not be reliant on Ministry of Defence (MoD) contracts for the long-term sustainability of its business.
However, with Appledore’s strategic presence in mainland UK, it offers the MoD and other government departments such as the Home Office and Department for Transport an exciting and cost-effective domestic option for a number of smaller vessel builds that are in the pipeline in the months to come. In addition, a number of wind farm projects in the surrounding areas are planned in the near future and they will require UK fabrication with load-out capacity. Whilst Government policy stipulates the requirement for a substantial proportion of locally fabricated content, the availability of such fabrication capability across the UK is highly limited.
As such, the Company believes that H&W (Appledore) is ideally positioned to fill that gap and bid for these fabrication contracts. Discussions have already commenced with wind farm developers and the Company hopes to make tangible progress in due course.
Leave a Reply