The Cammell Laird shipyard obtained a further £16.2m bailout from parent company Peel Group due to losses suffered on the £200m RRS Sir David Attenborough. Reporting by Tony McDonough
Birkenhead shipyard Cammell Laird has secured a bailout from its parent company Peel Group for the second year in a row and now owes its owner £27.4m.
According to company accounts, just published in Companies House, Peel Ports invested £16.2m in Cammell Laird in the 12 months to 31 March 2021. This followed a £8.6m bailout. sterling the previous year.
In the accounts, Cammell Laird CEO David McGinley says that 2020 and 2021 have been “some of the most challenging times in the group’s history”. His problems stem from the losses incurred in the construction of the £200 million polar research vessel. RRS Sir David Attenborough.
Shipyard workers began building the vessel in October 2016 for the Natural Environment Research Council (NERC). It was, said Mr. McGinley, “one of the most complex ever made at the shipyard”.
Delays due to COVID-19, as well as “further engineering and design challenges” meant that the ship’s formal handover to NERC did not take place until November 27, 2020. Work on the ship continued at the shipyard until which left Mersey in July. 1, 2021.
It has successfully returned from its first visit to Antarctica and, Mr McGinley added in the report, “customer feedback on performance has been positive”.
However, he added: “A number of design, production and supply chain issues have arisen on the project that have resulted in a significant increase in actual and projected costs.
“Therefore, the group has recorded an additional contract loss in the accounts for the year ended March 31, 2021, which has contributed to the current year loss. No additional costs are expected to be incurred in connection with the construction of the vessel beyond those already foreseen.”
In last year’s accounts, Cammell Laird said he “didn’t pay enough attention to risk transfer between the customer and the supply chain” during the contract.
For the 12-month period, Cammell Laird saw a marginal increase in revenue to £126.7 from £125.7m a year earlier. However, due to continuous radioactive fallout from the RRS Sir David Attenborough project, the pre-tax loss was £7.5 million. This was lower than the £8.5m loss recorded in 2020 and significantly lower than the £43m loss in 2019.
As a result of the Peel Ports bailouts, Cammell Laird now owes its parent company more than £27m.
In March 2021, Cammell Laird began a restructuring process admitting that it was “inefficient and uncompetitive”. In May 2021, this led to 146 dismissals from a workforce of more than 600 workers. All redundancies were voluntary and cost the company more than £4 million.
However, the firm has continued to hire trainees in multiple areas of the business. As of September 2021, 36 apprentices have been hired and another 44 are planned for September 2022.
Cammell Laird’s order book remains strong. In 2018 she began work on a 10-year contract for the maintenance of Royal Fleet Auxiliary (RFA) ships. The RFA is a fleet of civilian-manned ships servicing Royal Navy ships. That contract is worth £619m.
During the year Surge RFA entered the shipyard for the first time for a major refurbishment after being built in Korea. And it has worked in readiness to support Carrier Strike Group 21, in particular by ensuring the readiness of strong victory Y tidal spring.
Cammell Laird is also doing work for BAE Systems on the Dreadnought Submarine programme. That is expected to continue for the next 10 years.
After a six-month delay, the first of six Type 45 destroyers arrived in May 2020, departing in June 2022 after a refit. This is part of the Energy Improvement Program of the Ministry of Defense.
In the commercial market, work included dry docking for CalMac Ferries, Isle of Man Dream Packet Group, Seatruck Ferries, Merseytravel, Irish Ferries and Svitzer Marine. Irish Sea Pioneer, a platform servicing UK offshore energy platforms, continues to dock annually.
In October 2021, LBN reported that, following a cost and overhead review conducted in January 2021, “significant misappropriation of funds” was discovered and that the matter was being investigated.
It involved a high level individual “acting in isolation” who had left the company and was associated with money paid to him and other parties “for his personal benefit” over a number of years. In the latest accounts, Cammell Laird said: “No further information has come to light and an external investigation is ongoing.”
Cammell Laird also confirmed that Peel had acquired the remaining shares held by former CEO John Syvret. Mr. Syvret took a temporary leave of absence from the company on November 8, 2019 for a period of six months.
He subsequently resigned as CEO and President on April 9, 2020, effective immediately and without compensation. He had been chief executive since 2012. Peel Group purchased his 5,066 shares on December 1, 2020, after which he resigned from Cammell Laird’s board.