Margaret Taylor Business correspondent/Columnist
A FIFE engineering business that was bailed out by the Scottish Government
to the tune of £35 million saw a pre-tax profit of £3.8m turn into a loss
of £48.7m in the year to December 2017.
The extent of the financial difficulties faced by fabrication business
BiFab, which specialises in making large-scale components for the renewable
energy sector, have been revealed in its accounts for the year, which have
just been filed at Companies House.
Despite the company’s turnover rising by 65 per cent, from £61.3m to £101m,
during the year, its operations director Martin Adam wrote in the accounts
that the business was tipped into loss-making territory “as a result of
contractual difficulties with one contract”.
It is understood that was the £100m contract BiFab secured to assemble 26
turbines for the Beatrice Offshore Windfarm. While that work had sustained
the business until the early part of this year, the accounts reveal that
BiFab’s 2017 figures were impacted by the inclusion of an estimated loss of
£35.8m over the lifetime of “one particular contract”.
BiFab’s problems first came to light last November, when the business
confirmed it was preparing to file for administration after experiencing
cashflow problems. The accounts reveal that the company had moved from
having £5.5m of net cash at the end of 2016 to a having negative cash from
operations of £12.1m a year later. Its current liabilities, meanwhile,
exceeded its assets by £30.8m at the end of 2017.
After hundreds of BiFab workers marched on Holyrood to highlight the
company’s plight, the Scottish Government lent the business £15m on
commercial terms in late November and brokered further cash injections from
key BiFab associates. Beatrice part-owner SSE lent the company £6m while
its then majority shareholder JCE Group, a Swedish business, put up a loan
of £2m.
The Government also had a hand in securing BiFab’s eventual buyout by
Canadian business DF Barnes, a subsidiary of JV Driver, in April this year.
The accounts reveal that the Government loan, which had been extended to
£35m and was fully drawn down, converted to equity at the time of the buyout.
Since then, however, Bifab has laid off most of its workforce as a result
of being unable to secure any new work.
“Recognising the challenges to date, and to ensure the cost base was
reduced until new contracts commenced, the directors had no alternative
other than to put the BiFab facilities into temporary care and maintenance
from July 2018 until these contracts are secured,” Mr Adam wrote in the
accounts. “Significant reductions to the permanent workforce have occurred.”
Mr Adam said the firm remained confident of winning new work towards the
end of this year as a result of “tendering a number of major projects for
the renewables sector”, though warned that uncertainty in the sector as a
whole could further negatively impact on the business.
“We are confident that as one of the leading UK suppliers of jackets for
the offshore wind industry, we should be in a reasonably strong position to
be awarded new projects during 2018,” he wrote.
“However, as a business we remain very cautious regarding the uncertainty
and continual delay in offshore wind projects regarding planning consents
and the way forward for the offshore wind industry beyond 2020.
“It is essential that there is a clear pipeline of projects and market
confidence before the industry can take major investment decisions.”
During 2017 BiFab directly employed an average of 224 people, although that
number rose to around 1,400 when contract workers it took on to work on
Beatrice contract are factored in. All temporary workers were let go but it
is not clear how many people remain directly employed by the business,
which did not respond to a request for comment.
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