Havyard Group reported profit before tax of Nkr481MFoll (US$51M) in the group’s annual report for 2019
The figures represent a fall in revenue for the group, which attributed this to negative results suffered by subsidiary Havyard Ship Technology (HST) and the effect this has had on the other group companies Havyard Design & Solutions AS and Norwegian Electric Systems AS.
Havyard said HST suffered setbacks in its newbuilding projects throughout 2019. Postponed deliveries and extra labour costs negatively impacted two prototype projects, in particular, a live fish carrier and a pelagic trawler.
The projects’ setbacks led to HST suspending payments on 17 November 2019 and started the process of renegotiating agreements with shipowners, banks and guarantors. The move aimed to secure construction loan financing for the active shipbuilding contracts HST had when the suspension of payments was introduced.
In December, the group’s long-time chief executive Geir Johan Bakke left his post and on 11 February 2020, following its inability to settle obligations to creditors, HST requested public debt negotiations. In connection with the renegotiation of the shipbuilding contracts and the debt negotiations in HST, the subsidiaries had to take major losses, which affected both profit and equity in these companies.
The Group said it has succeeded in renegotiating agreements and construction loan financing for all projects through the transfer of fixed assets and employees and parts of the contract portfolio to a new subsidiary of HST, New Havyard Ship Technology. In addition, the Group’s warranty is reduced. Work on renegotiating the contracts has also meant the significant warranty responsibilities Havyard Group had undertaken have been renegotiated to reduce the exposure and risk under warranty.
The Group’s subsidiaries had large deliveries linked to the shipbuilding contracts and the renegotiation thus largely ensured the activity and turnover contained in these deliveries.
HST has now delivered six of the seven ships that were under construction at the yard when the financial issues arose. The last ship, a fully electric ferry, will be delivered from HST to Fjord1 in August 2020.
The contracts for the last six projects, three live fish carriers to Norsk Fisketransport and three offshore wind turbine service vessels to Esvagt, were transferred to New Havyard Ship Technology. Two of the vessels are being outfitted at the shipyard, and four hulls are under construction at the hull yard in Turkey. The last ship will be delivered in mid-2021.