Ferguson Marine has lost nearly an additional £8m building three vessels, on top of the two delayed and over budget CalMac ferries, according to its annual accounts.
The Port of Glasgow yard was tasked with the construction of an oil barge and two fish farm work boats, which started before it was nationalised by the Scottish Government in 2019.
The government committed to completing the building of five vessels when it acquired the yard.
Ferguson Marine's annual accounts revealed that this caused losses of £7.8m, with construction completing in 2021 for the two work boats, Helen Rice and Kallista Helen, for Inverlussa Marine Services in Mull.
The third was an air cushion barge, the Caspian Sea, completed last year for CMI Offshore.
“Those contracts only had £3.4m of revenue remaining to be invoiced, but the projected project costs for completion were estimated at £6m,” the accounts read. “Part of the loss was recognised in the period based on costs incurred and revenue recognised for progress on the vessels.”
The total funding committed to Ferguson Marine by the Scottish Government for the accounting period from April 2020 to March 2021 was £21.8m.
Total financial liabilities were £29.5m for the year, while the loss from contracts in progress was £23.8m in March 2021 compared with £962,065 in March 2020.
However, the £23.8m cash advance will be returned to the Scottish Government, with the balance being repaid from the regular contact payments submitted in April 2021.
Unused tax losses for the group were £13.5m, compared to £5.4m August 2019 to March 2020, which can be offset against future profits. The net trading loss was £1.2m in March 2021.
The accounts also revealed that the Scottish Government and Ferguson Marine drew up a new contract that enabled the group to release the previous contract loss provisions for Caledonian MacBrayne ferry hulls 801 and 802, for £90.7m.
It states that the “new build contracts put in place with Scottish Ministers, given that those contracts contain pricing that fully cover the projected costs to completion”.
The statement conceded that impact from the pandemic offset the contracts' loss provisions being released, and as a result, Ferguson Marine made a net income of £82.2m, compared to previous period, when it made a loss of £100m.
This is a part of the “revised funding mechanism” in the two new shipbuilding contracts.
Tim Hair, Ferguson Marine's turnaround director, who is leaving in February, said in his final accounts that the business was on course, despite delays to deliver the ferries at the new pricings of £110 to £114m.
But the overall cost of the vessels, since construction started five years ago, has doubled to more than £200m. The two ferries for CalMac were supposed to have been completed by 2018 in a £97m contract.
The first ship, known as the Glen Sannox, will service the Ardrossan to Arran service and is slated to be delivered between July and September this year.
The second ship, known only as Hull 802, is slated to be delivered between April and July next year. It will serve the route connecting Uig on the Isle of Skye to Tarbert on the Isle of Harris and Lochmaddy on North Uist.
Ferguson Marine said the delays in service were due to the pandemic and shortage in labour supplies, which resulted in the group having to hire foreign workers, as it struggled to hire from the UK.
A spokesperson Ferguson Marine said: “The decision to complete contracts was undertaken with suitable due diligence, the contracts were originally placed with Ferguson Marine Engineering and the vessels were under construction when Ferguson Marine (Port Glasgow) took control of the yard.”
A Scottish Government spokesperson said: “All Scottish Government investments in private companies must follow the guidance contained within the Scottish public finance manual and be supported by an appropriate level of commercial advice and due diligence.”
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