Merseyside shipbuilder Cammell Laird needed an £8.6m bailout after losing money on the building of the £200m RRS Sir David Attenborough. It is also investigating a ‘significant misappropriation of funds’. Tony McDonough reports
Merseyside shipyard Cammell Laird required an £8.6m bailout from parent company Peel Ports after losing money on the construction of the £200m RRS Sir David Attenborough polar research vessel.
In its latest annual accounts for the year to March 31, 2020, Birkenhead-based Cammell Laird admitted the 12-month period covered by the accounts, and the subsequent period, provided “the most challenging times in the group’s history”.
Cammell Laird also said that, following a review of costs and overheads carried out in January 2021, a “significant misappropriation of funds” was discovered and that an investigation into the matter was ongoing.
In the report it added: “This involved a senior individual who had left the company and related to monies paid to him over a number of years. The investigation into the extent and nature of these payments is ongoing.”
And the company said the review also “highlighted the absence of cost controls around travel and corporate hospitality / entertaining extending back over many years”.
However, it was the “material losses” incurred on the RRS Sir David Attenborough contract that had a “major impact” on the financial performance of the group. In May last year the company confirmed 146 voluntary redundancies from its workforce.
The accounts, filed at Companies House, reveal Cammell Laird secured funds totalling £8.6m from its parent company, Port of Liverpool operator Peel Ports. During the previous year Peel Ports had put £2.6m into the business. As of March 31 2020 Cammell Laird owed Peel Ports £11.2m.
In July 2021 the Peel Ports Holdings, registered in the Isle of Man, acquired the majority shareholding in Cammell Laird from Peel Ports Investments.
The accounts show a pre-tax loss for the 12-month period to March 31, 2020, of just under £8.5m. This was against a pre-tax loss of more than £43m for the previous year. That loss was also blamed on the RRS Sir David Attenborough project. Turnover for the year was £125.7m, up from £88.6m in 2019.
Cammell Laird described the RRS Sir David Attenborough project, carried out on behalf of the Natural Environment Research Council (NERC), as “one of the most complex ever undertaken in the shipyard”. The four-year build of the 15,000-tonne ship involved more than 1,300 people, including 70 apprentices, as well as many hundreds of specialist subcontractors and suppliers.
The naming ceremony for the vessel, almost called Boaty McBoatface after a public poll, was attended by the naturalist and BBC presenter Sir David Attenborough himself as well as the Duke and Duchess of Cambridge.
Work was delayed on the vessel due to the COVID-19 pandemic and further design and engineering challenges meant that the formal handover to NERC did not take place until November 2020. Works continued into 2021 and in August this year the vessel was declared “substantially complete”.
It was the then chief executive of Cammell Laird, John Syvret, who recommended to the board in November 2016 that the company should bid for the polar research vessel contract. That bid was successful following a competitive tender.
But a number of design, production and supply chain issues surfaced on the contract which resulted in a “significant increase in the actual and projected costs”. It meant that Cammell Laird sustained an overall loss on the contract.
The annual report states: “The unexpected adverse 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 the appropriate project controls and governance were put in place at the commencement of the build.
“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.”
Mr Syvret took a temporary leave of absence from the business on November 8, 2019, for a period of six months. He subsequently resigned as both chief executive and chairman on April 9, 2020, with immediate effect and without compensation. He had been chief executive since 2012.
Mr Syvret was credited with helping to bring Cammell Laird back from the dead when it went into receivership in 2001. It suffered financial difficulties due to the late withdrawal from a £50m refit contract for the cruise ship Costa Classica.
He helped relaunch the business on the banks on the Mersey in Birkenhead as Northwestern Shiprepairers and Shipbuilders, with the Cammell Laird name returning to the company by 2008. He oversaw the delivery of contracts including building sections of the UK’s two new aircraft carriers, HMS Prince of Wales and HMS Queen Elizabeth.
Following his departure Thomas Allison and David McGinley were appointed chairman and chief executive of Cammell Laird respectively. Mr Syvret retained a minor shareholding in the company until December 2020 when this was acquired by Peel Ports Holdings.
On a brighter note, the period also saw the start of the two 10-year contracts, worth £619m, to support the Royal Fleet Auxiliary with the maintenance of its vessels. The accounts also reported the continuing success of the apprenticeship programme with 180 trainees either still in training or fully qualified.