Cammell Laird cuts losses, but required £8.6m loan on troubled Polar ship contract
Birkenhead shipbuilder and repairer, Cammell Laird, saw annual revenues soar and losses lessen – but still required an £8.6m loan from parent company Peel Ports to cover losses on its high-profile £200m RRS Sir David Attenborough contract.
Its latest accounts filed at Companies House also show an investigation is under way regarding a “significant misappropriation of funds”.
In January 2021, the company undertook a review of its costs and overheads and uncovered the issue.
It said this involved “a senior individual who had left the company and related to monies paid directly to him over a number of years.”
The directors’ report in the accounts said an investigation into the extent and nature of these payments is ongoing.
Company accounts for the year to March 31, 2020, filed at Companies House, showed Cammell Laird achieved a turnover of £125.772m, up from £88.585m the previous year.
A pre-tax loss of £8.439m compared with a pre-tax loss of £43.394m in 2019.
The company said the reporting period had been “some of the most challenging times in the group’s history”, despite marking the first year of two 10-year contracts to support the Royal Fleet Auxiliary worth an estimated £619m.
However, one of its most high profile contracts has proved a drain on its finances.
Laird built the Polar research vessel, RRS Sir David Attenborough, for the Natural Environment Research Council (NERC), culminating in the official naming ceremony in September 2019, attended by the Duke and Duchess of Cambridge, and world-renowned naturalist Sir David Attenborough.
But work was delayed on the vessel, due to the COVID-19 pandemic, and further design and engineering challenges meant the ship wasn’t handed over to the NERC until the end of November, 2020.
Further contractual works continued into this year, but as at August 2021, the vessel is now, substantially, complete.
However, the extra work required pushed up construction costs even further, and the yard made a loss on the overall contract.
The report in the accounts revealed that former chief executive and chairman, John Syvret, had the right to enter into commercial contracts on behalf of the company, and he was responsible for the RRS Sir David Attenborough deal.
The report said: “The unexpected advserse financial impact of undertaking this contract illustrates that the company failed to give sufficient attention to the transfer of risk between the customer and the supply chain, the resources that would be required to execute the contract and ensuring that appropriate project controls and governance were put in place at the commencement of the build.”
It added: “As a consequence, there were no early warnings of both current and potential future difficulties that were encountered whilst the project was being undertaken and the company was unable to take appropriate action to mitigate operational and commercial issues at the time they arose.
“The material losses incurred on this project have had a major impact on the financial performance of the group and it has required significant financial and operational support from its parent company over the period.”
The report reveals Mr Syvret took temporary leave of absence as chief executive on November 8, 2019, for six months and then resigned as chief executive and chairman on April 9, 2020, with immediate effect and without compensation.
David McGinley was subsequently appointed as chief executive and Thomas Allison as chairman.