Shipyard records lower annual loss but bailout from Peel doubles to £16m
Birkenhead shipyard, Cammell Laird, has been bailed out by Peel Ports once more, following losses on its flagship construction project, RRS Sir David Attenborough.
Accounts filed at Companies House by the shipyard show revenues of £126.773m in the year to March 31, 2021, compared with £125.772m the previous year.
Its pre-tax loss of £7.544m was less than the previous year’s pre-tax loss of £8.439m. By comparison, it made a pre-tax loss of £43.394m in 2019.
But the business had to rely on further financial support from parent company, Liverpool-based Peel Ports.
In the financial year for 2020 the yard relied on an £8.6m bailout from Peel, but the latest accounts show Peel provided £16.2m of financial aid.
The accounts show the total amount the group owes to its parent is £27.45m, up from £11.2m in 2020.
Chief executive, David McGinley, said in his strategic report, that the year, and the subsequent year, “have been some of the most challenging times in the group’s history.”
He added: “This was the second full year of the two 10-year contracts to support the Royal Fleet Auxiliary (RFA), which on signing were estimated to generate £619m of revenue, however these activities have been overshadowed by the continuing financial performance of the business.”
He said work began on the Polar research vessel, RRS Sir David Attenborough, in October 2016, a large scale project “and one of the most complex ever undertaken in the shipyard”.
Due to COVID delays “and further design and engineering challenges” she was not handed over until 27 November, 2020. She left the shipyard on July 1, 2021.
Mr McGinley said: “A number of design production and supply issues have arisen on the project which have resulted in a significant increase in the actual and projected costs. The group has, therefore, recorded a further loss on the contract in the accounts … which has contributed to part of the loss in the current year.”
He added: “It is not expected to incur any further costs in relation to the build of the vessel, above those already provided for.”
Other work has involved the RFA vessels and work for BAE Systems on the Dreadnought Submarine programme, which is expected to continue for the next 10 years.
In March 2021 the yard launched a redundancy exercise to cut costs which led to 146 redundancies from a workforce of more than 600.
The business continues to invest in its apprentice scheme, but Mr McGinley admitted: “The group relies on temporary skilled labour to meet the peaks and troughs of customer demands. Following Brexit and the COVID-19 pandemic the ability to source this labour has become increasingly difficult.”
However, looking forward, he said: “With the completion of work on the RRS Sir David Attenborough the focus of the business will be on the RFA Cluster Support Contract, the Dreadnought Programme, delivering a successful Type-45 programme and winning new long term agreements with customers to provide regular maintenance and refits on a recurring basis for multiple vessels.
“On the 10 March, 2022, Prime Minister, Boris Johnson, and the Defence Secretary, Ben Wallace, announced plans to secure the future of shipbuilding in the UK for the next 30 years during a visit to the Cammell Laird shipyard.
“The directors and management team look forward to the future with confidence.”