LERWICK PORT AUTHORITY ANNUAL REVIEW 2019-20 DALES VOE BASE BRITAIN’S PROJECT SUPPORT & Offshore Decommissioning ‘TOP’ PORT

LERWICK PORT AUTHORITY ANNUAL REVIEW 2019-20 DALES VOE BASE BRITAIN’S PROJECT SUPPORT & Offshore decommissioning ‘TOP’ PORT

Scrap metal recycling and decommissioning Open storage and laydown sites

SHETLAND ISLANDS COUNCIL INCINERATOR Waste-to-energy plant Recycling plant CONTENTS

GREENHEAD BASE DREDGED TO 9.0m Project support & offshore decommissioning

COVID-19 (CORONAVIRUS) UPDATE ...... 4

Salmon processing MISSION AND VALUES ...... 6

DREDGED TO 9.0m HEOGAN FISHMEAL CHAIRMAN’S STATEMENT ...... 8 & OIL FACTORY GREMISTA QUAY CHIEF EXECUTIVE’S STATEMENT ...... 10 Pelagic fish processing 2019 AT A GLANCE...... 12 LERWICK NORTH MARINA HARBOUR OUR BUSINESS ...... 13

OUR BOARD ...... 14 MAIR’S PIER BRESSAY NEW FISHMARKET OUR PEOPLE ...... 18

HEALTH, SAFETY, ENVIRONMENT AND QUALITY.... 20 RO-RO TERMINAL BUNKERING HOLMSGARTH QUAY OBJECTIVES AND TARGETS UPDATE...... 24 Livestock & cargo operations

DREDGED TO 9.0m FE SECTOR HIGHLIGHTS ...... 28 R R Y MORRISON DOCK T O SPOTLIGHT ON: DECOMMISSIONING ...... 30 K IR SHEARER’S QUAY Ice plant K W A COMMUNITY & STAKEHOLDERS ...... 32 L L / Bunkering A B RY TO BRESSAY MARYFIELD ship repair E FER KEY PERFORMANCE INDICATORS 2019 ...... 34 LAURENSON QUAY R FERRY TERMINAL LERWICK D E E ALEXANDRA WHARF N FINANCIAL PERFORMANCE AND ANALYSIS ...... 36 Harbour office INNER ANCHORAGE ALBERT WHARF FINANCIAL STATEMENTS ...... 38 VICTORIA PIER Yacht pontoon SMALL DOCK Lifeboat station

SOUTH

HARBOUR BRESSA

COASTGUARD Y SOUND STATION

BREI WICK The Knab

SOUTH ANCHORAGE

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 2 3 COVID-19 (CORONAVIRUS) UPDATE

The emergence of Covid-19 Within the main sectors at Oil & gas traffic through and the subsequent disruption Lerwick, the roll-on/roll-off the port has significantly in 2020 is having a significant passenger and freight sector reduced, with the crash in impact on trading at Lerwick initially dropped significantly, oil prices bringing further Harbour during the first part of with only essential travel and challenges for all companies the year and this is ongoing. reduced sailings. The service involved in this sector. is expected to show signs During the period, we have soon of a return to more The cruise sector is being put in place, and are following, normal levels, although the severely impacted, with plans to ensure that we protect vessels continue to operate cruise lines unable to sail and our stakeholders, staff, port at lower passenger capacity. undertake operations. There is users and the community while a strong outlook in this market continuing to operate in a safe Fish landings initially fell by beyond 2020, but the recovery and efficient manner. Lerwick large amounts. However, the of this important industry Port Authority continues to fishmarket has remained is currently very uncertain prepare for recovery, albeit operational throughout. and likely to be lengthy. with reduced revenue streams. Landings are now returning to better levels, but will be The remainder of 2020 will unlikely to recover fully during June 2020 bring many more challenges the remainder of 2020. to the port, our colleagues, customers and islanders.

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 4 5 MISSION VISION VALUES MISSION The Port Authority is entrusted to manage, Our Stakeholders Helpfulness maintain and regulate the port and harbour Provide modern, self-funded, port services to Delivery of quality services in a professional, of Lerwick, in an efficient and safe way international standards, and strive for excellence. friendly manner, our actions make a difference. AND for the benefit of all stakeholders. Our Customers Skill and dependability It is required to satisfy customers’ needs in Delivery of a quality service is innate; we create We are adept, experienced and versatile. VALUES the delivery of competitive port services practical and innovative solutions to any challenge. and be proactive in identifying new Safety and Environmental awareness opportunities which will sustain and grow Our People Embedded into our way of working. the Shetland economy and community. Custodians of the Authority, our Board Members and staff are engaged and determined to succeed. Engagement With more than 140 years of experience, Listening and recognising when action is required, it is tasked to ensure the port and its Our Partners we do the right things for the right reasons. infrastructure remain relevant to future We have high expectations and continue to shipping generations and play a key role support partner organisations to grow. Commitment in the economic life of the islands. Taking pride in our service and investing for the future to sustain the Authority for coming generations.

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 6 7 CHAIRMAN’S STATEMENT

I am delighted to present Work towards completion on Lerwick, being one of the my third Annual Report our new whitefish market was first UK ports to achieve and as Chairman of Lerwick a personal highlight during maintain the international Port Authority though, as the year. The development, standards of ISO 9001, I have been writing this which is to be completed ISO 14001 and ISO 45001, statement, we are all facing in August 2020, will bring is a testament to the the challenges relating to the significant benefits to the dedication, management Covid-19 pandemic, with all expanding sector at the and implementation of our areas of the our operation port. With doubled landing safety culture throughout being severely affected. capacity and a design based the organisation. on efficiency and a reduced Reviewing 2019, Lerwick’s environmental impact, this A new constitutional Harbour strong position of having a investment will maintain the Revision Order, which diverse customer base from port at the forefront of the has taken the port in line different sectors operating important fishing industry. with standard Trust Port to-and-from the port has guidance on the recruitment again paid dividends, with Financial support from of Board Members, is in steady landings of whitefish, Bank of Scotland, European place, with experienced ongoing decommissioning Maritime and Fisheries Fund appointees in 2019 giving a projects and continued and Highland and Islands knowledgeable contribution. growth in the cruise sector. Enterprise has been crucial to the port’s success, with I would like to thank all the Future investment by the continued backing vital to members of the Board and Port Authority for the our future achievements. port colleagues for their hard decommissioning industry work and the great service will allow Lerwick to maintain Health, safety and they provide our stakeholders, and develop our position at environmental management especially so during this the centre of this growing has remained at the core of unprecedented time. sector, including the largest all port activities. Our safety decommissioning project yet to culture is a key focus for the be handled at Lerwick, due in Board, and we continue to RONNIE GAIR summer, 2020. The topside of be satisfied that the harbour Chairman / June 2020 the Ninian Northern platform meets the requirements of is to be delivered to Dales Voe the Port Marine Safety Code. Base in a single piece, and will provide long-term employment for many within the supply chain based in Shetland.

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 8 9 CHIEF EXECUTIVE’S STATEMENT

I am pleased to have the While the number of whitefish Decommissioning continues opportunity to write this report boxes landed reduced in 2019, we to be a growth strand of the for the 2019 Annual Review for are optimistic of increased future oil & gas sector at Lerwick. Lerwick Port Authority. It is, opportunity with the extra capacity The decommissioning of the of course, overshadowed by the replacement fishmarket will former Buchan Alpha floating the Covid-19 pandemic, which allow. Whitefish landings in the port production unit continued is affecting all of our lives as were down by 8.0% on the 2018 throughout 2019. Preparations we progress through 2020. record, with 230,081 boxes in 2019. were underway, including further investment by the Authority Throughout 2019, we continued Overall gross tonnage of shipping in a new decommissioning to receive support from our wide showed a slight decrease of 1.8% pad at our Dales Voe Base, in range of port users, resulting in to 12.6m gross tonnes, and overall preparation for the arrival of the year producing improved vessel arrivals were down to 5,068, the Ninian Northern platform financial figures for the Authority, a decrease of 3.0% on 2018. topside in 2020. The recently- with turnover increasing to £11.65m extended quayside at Dales Voe, from £10.90m in 2018. Profit- The cruise sector at Lerwick designed to take the very large after-tax for 2019 increased to continued to grow, with a record loadings associated with a single- £2.97m from £1.78m in 2018. 99 cruise vessels arriving in 2019, lift structure being transferred up from 91 in 2018. However, to shore, was a catalyst for the We continue to deliver on the passenger numbers declined from success of this contract award to capital programme established in previous records in 2018 to 76,233. the Veolia/Peterson partnership. 2014 with funding from Bank of Scotland, with 2019 being focused 2019 saw a recovery of activity on completion of a new whitefish in the oil & gas sector. Vessel CAPTAIN CALUM GRAINS market. Construction progress numbers and tonnage increased Chief Executive / June 2020 by local contractor, Tulloch in comparison to 2018, with 369 Developments Ltd, remained ship arrivals. Cargo worked by good throughout the year, with a the sector through the port rose planned opening during August by 48.7%, indicating the efficient 2020. This significant investment and competitive offering being underpins our strategy to be at the recognised by the industry. forefront of the fishing industry, offering state-of-the-art facilities.

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 10 11 2019 AT A GLANCE OUR BUSINESS 5,068 885,759 12.6M – – – VESSEL TONNES GROSS TONNES ARRIVALS CARGO OF SHIPPING

225,170 40,629 148,937 At the crossroads of the North Sea and North-east As a Trust Port, the harbour is operated – Atlantic, Lerwick Harbour is Britain’s ‘Top’ Port – the commercially by the Port Authority which, – – TONNES most northerly commercial harbour in the country. although not publicly funded, is accountable PASSENGERS RO-RO PASSENGERS FISH LANDED to the wider Shetland community, as well as With modern, versatile facilities serving a wide harbour users. A self-financing business, it variety of users, it is a key component in the depends, like any commercial concern, on cash Shetland economy, stimulating trade and economic flows and profits for its successful operation. £45.7M 123 206 benefits for customers and the local community. – – – The Trust Port status also means all profits Lerwick Port Authority was established in 1877 as are reinvested in the maintenance and VALUE OF TENANTS PROPERTIES Lerwick Harbour Trust by an Act of Parliament. development of the harbour to ensure the FISH LANDED RENTED This Act constituted the Trust Port to manage, wide-ranging requirements of customers maintain and regulate the Port of Lerwick. continue to be met. Over £120m has been The promotion of the Act was funded by the invested in port assets over the years. merchants of the town who established a Board 1,054 139,072 76,233 of Trustees. The first task of the newly created Mindful of the wider community, the – – – Trust was to build Victoria Pier, opened in 1886. Authority also provides stakeholder benefits PILOTAGE LARGEST VESSEL CRUISE through leisure and amenity improvements MOVEMENTS GROSS TONNES PASSENGERS and involvement in community events.

52 £11.6M £5.7M – – – MEMBERS GROSS ANNUAL EBITDA OF STAFF TURNOVER

4,574 12.5 130,000m2 metres metres – – – OF LAYDOWN OF QUAYS MAXIMUM WATER DEPTH ALONGSIDE

9 nautical 3 nautical miles miles – – SIZE OF HARBOUR SIZE OF HARBOUR (NORTH TO SOUTH LIMITS) (INNER HARBOUR)

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 12 13 OUR MEMBERS BOARD The current Board Members of the Authority are:

Ronnie Gair CHAIRMAN

Appointed Chairman in 2019. A non-executive Board Member since Meeting monthly, Lerwick Port Authority is 2011. He is a long-standing member of the business community directed by eleven Board Members. within the motor trade and a former Justice of the Peace.

The Chief Executive and Senior Commercial Executive of the Authority TERM OF APPOINTMENT TO JULY 2021 are ex-officio Board Members, holding responsibility for controlling and overseeing all areas of operations and providing support to senior managers through appropriate training, mentoring and guidance.

The Chairman and Deputy Chairman appointments are made annually, selected by Board Members from amongst their number. Members John Henderson are un-salaried and receive an attendance allowance for meetings. DEPUTY CHAIRMAN Leadership is provided through the ongoing review of all business activities and setting of strategic objectives and targets. The Board Appointed Deputy Chairman in 2019. A non-executive Board Member since provides governance of all aspects of the Authority’s activities. 2015. John is Managing Director of Ocean Kinetics Limited, with experience across several sectors, including oil & gas, marine and engineering. APPOINTMENTS

The Lerwick Harbour Revision (Constitution) Order 2019 updated TERM OF APPOINTMENT TO JULY 2021 the Authority’s constitution in regard to the recruitment of Board Members. The new system broadens the catchment for potential membership by removing sectoral appointments and follows the Modern Trust Ports for Scotland: Guidance for Good Governance. Captain Calum A S Grains A decision was taken in April 2020 to defer the recruitment of CHIEF EXECUTIVE new Board Members due to Covid-19 restrictions, with all existing Board Members serving an additional year of service until the A Harbour Pilot at Lerwick from 1997-2000 before leaving to take his Master’s recruitment process could resume again in future years. ticket, Captain Grains returned to the Authority as Deputy Harbourmaster in 2003. Promoted Harbourmaster in 2007, he became an Executive Board Under normal circumstances, recruitment of non-executive Board Member on appointment as Deputy Chief Executive in 2014, then Chief Members occurs annually, drawing on vital skills, experience and expertise Executive in November 2018. He is a Director of Pelagia Shetland Ltd. from candidates, to obtain a Board that is independent and fit for purpose, rather than representative of particular interests. Non-executive Board Members serve a three-year term, with a rolling programme EX-OFFICIO of one-third of the Board standing down in consecutive years.

STRATEGY & RISK MANAGEMENT Victor Sandison SENIOR COMMERCIAL EXECUTIVE The Board implements a Strategic Business Risk Assessment. The principal outcome of this review is to have the ability to reliably understand, predict, Appointed to the Board in July 2019, Victor has over 13 years’ experience working influence and react to the factors affecting the Authority. Fundamental as part of the senior management team at Lerwick Port Authority. He is a past to the Assessment is the identification of risks to the business. Chairman of Cruise Scotland and the Authority’s nominated Director on Shetland Seafood Auctions Limited. He also has an interest in Sail Training Shetland.

EX-OFFICIO

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 14 15 George Anderson Gary Robinson BOARD MEMBER BOARD MEMBER

Skipper of pelagic trawler Adenia and a shareholder in the company owning the vessel. Re-appointed to the Board in 2019. Gary is Chairman of NHS Shetland, Adenia is a member vessel in the Scottish Pelagic Fishermen’s Association Limited; serving a four year term. Gary was Political Leader of Shetland Islands Shetland Fish Producers’ Organisation and Shetland Fishermen’s Association. Council from 2012-2017 during which time he was instrumental in influencing the needs of the islands at UK and European level.

TERM OF APPOINTMENT TO 2022 TERM OF APPOINTMENT TO JULY 2023

James Anderson Steven Hutton BOARD MEMBER BOARD MEMBER

Shareholder of Alison Kay Fishing Company and skipper of whitefish A non-executive Board Member appointed to the Board of Lerwick trawler Alison Kay, James is a past Chairman of the Shetland Fishermen’s Port Authority in July 2017 from the business community, he Association which promotes its interests in the political arena in the UK and has experience in facilities management and hospitality. EU. James is also a member of the Shetland Fish Producers’ Organisation.

TERM OF APPOINTMENT TO JULY 2022 TERM OF APPOINTMENT TO 2022

Peter Campbell Colin Nicholson BOARD MEMBER BOARD MEMBER

Re-appointed to the Board in July 2019, as an elected member of Shetland Colin was appointed to the Board in July 2019 under the new Harbour Revision Islands Council for Lerwick South. Peter is the Chair of Shetland College Board Order. Coming from the oil & gas industry, he has 35 years’ experience in and a member of the University of the Highlands and Islands. He also has both offshore and onshore roles. Colin also sits on the Hjaltland Housing interests in voluntary organisations, The Swan Trust and Sail Training Shetland. Association Board and is Chairman of the Shetland Classic Car Show.

TERM OF APPOINTMENT TO 2023 TERM OF APPOINTMENT TO JULY 2023

Bobby Polson BOARD MEMBER

Bobby is skipper of pelagic trawler Serene and a shareholder in the company owning the vessel and also has whitefish vessel interests. Serene is a member vessel of Shetland Fish Producers’ Organisation and Shetland Fishermen’s Association.

TERM OF APPOINTMENT TO JULY 2022

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 16 17 OUR PEOPLE

MANAGEMENT TEAM OUR STAFF CULTURE STRUCTURE

The Management Team is The Authority directly employs Below are the standards that responsible for providing strong 51 FTE staff members who create the culture of the Authority leadership; visible and active contribute to the effective, to be reflected throughout BOARD MEMBERS support to staff members and smooth running of the port. all areas of the business: demonstrating commitment to the Board’s strategic objectives. The dedicated and long-serving Respect

workforce has a wealth of experience Treat others as you like CHIEF EXECUTIVE The Board regularly receives updates in various operations, including to be treated yourself from the team, who oversee day-to- maintenance, engineering/electrical/ Integrity and trust day services on the implementation joinery, marine and administration. Be honest, trustworthy of strategic objectives, financial and fair in all that you do SENIOR and administrative processes Staff training continues, with a Ethical COMMERCIAL HARBOURMASTER EXECUTIVE and business development. high standard of health, safety and Be non-discriminatory environmental compliance across and even-handed During 2019, the Authority’s all departments. Successful roll-out to show equality

management team welcomed Neil of online health & safety training Commitment and engagement CRUISE AND CHIEF FINANCE ADMINISTRATION HSEQ DEPUTY MARKETING SUPERINTENDENTS OFFICER MANAGER MANAGER HARBOURMASTER Arthur as Deputy Harbourmaster. has provided more flexibility for Do the right thing, be a team MANAGER staff undertaking courses around player and professional in the port’s busy operations, resulting your approach

in time- and cost-savings. The Proactive PILOT/ASSISTANT annual training programme now Be confident that it can be HARBOURMASTERS (3) also encompasses Mental Health done and will be done, in a First Aid, equipping line managers safe and efficient manner and staff with the knowledge and Responsible expertise to support their colleagues. Take ownership and FINANCE ADMINISTRATION HSEQ PORT SKIPPERS PERSONNEL PERSONNEL ASSISTANT CONTROLLERS accountability of for (4) (3) (2) (1) (5) your actions Communication A two-way process, be OPERATIONS BOAT CREW responsible for your PERSONNEL (8) (15) communication and ask, listen and contribute Attitude A positive attitude based on confidence and learned through gaining knowledge and understanding of yourself and others

From back left to front right: Melanie Henderson, Cruise & Marketing Manager; Neil Arthur, Deputy Harbourmaster; Stuart Wadley, HSEQ Manager; Alexander Simpson, Harbourmaster; Jolene Robertson, Administration Manager; Victor Sandison, Senior Commercial Executive; Captain Calum Grains, Chief Executive; Kristen Jeromson, Chief Finance Officer

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 18 19 HEALTH, SAFETY, 180,796kg 1025 Hours – – OF SHIPS’ TRAINING COMPLETED ENVIRONMENT WASTE DISPOSED AND QUALITY 40,165 litres 8 – – MENTAL HEALTH OF WASTE OIL RECYCLED FIRST AIDERS TRAINED A key component of the Authority’s strategy is the A Management Review process drives high continual improvement of all harbour services to standards and levels of efficiency, to ensure: respond to changing user requirements through the implementation of integrated management systems. Safe, efficient, cost-effective sustainable harbour operations 9,940kg In 2018, the Authority was the first Scottish port An ongoing commitment to minimising 19 – – to achieve early certification to the tripartite of environmental impact OILY RAGS/FILTERS DEPARTMENTAL standards for Quality Assurance - BS EN ISO Business activities are carried out in a responsible FOR RECYCLING/ MEETINGS HELD 9001:2015, Environment - BS EN ISO 14001:2015 manner to prevent injury and ill-health to SAFE DISPOSAL and the new Occupational Health & Safety - BS employees, port users and others EN ISO 45001: 2018 when it was first introduced. Safe provision of services and the efficient discharge of duties are not undermined by Occupational Health and Safety and compliance with commercial pressures ISO 45001 are at the heart of the Authority’s business Workplace processes, assisting with hazard identification Maintaining certification to these key international Tree Planting – – and risk management, facilitating continual standards requires significant scrutiny of the TRANSPORT TO OFFSET PAPER USAGE improvement, exposing the business to external business activities which comprise the HSEQ POLICY SHARED audit and improving senior management and Board Management System. A rigorous audit programme involvement. It encourages a particular emphasis keeps the Authority’s services, processes and on risk-based thinking – requiring management to procedures current, effective and customer- integrate occupational health and safety policy with focused, whilst at the same time meeting legislative organisational strategy – and on the key themes requirements and stakeholder needs. Both the of leadership and worker engagement. This leads internal and external audit processes relating to 1 17 the Authority through a systematic process for harbour activities guide ongoing compliance. – – consultation and participation with workers. MAIB REPORTABLE INTERNAL AUDITS BSI standards certification is an investment INCIDENT COMPLETED that will help sustain the Authority for coming generations, differentiating it from competitor ports, and strengthening its resilience and reputation. The accreditations complement matching standards seen in the 4 decommissioning and oil & gas industries, at a Zero – time of further developments in both sectors. – EXTERNAL AUDITS RIDDOR ACCIDENTS

KIMO 15 – – FISHING FOR LITTER H&S INSPECTIONS SCHEME SUPPORTED CARRIED OUT

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 20 21 PORT MARINE SAFETY CODE Maintaining records of INTERNATIONAL SHIP all commercial vessel AND PORT SECURITY CODE AIDS TO NAVIGATION Across all marine operations, there movements within the port. is a commitment to implementing The Authority recognises its Lerwick Port Authority is the Local Lighthouse periodically audited by the National Lighthouse the good practice of the Port Preparing, publishing and responsibility to comply with Authority and as such must meet statutory Authority, namely the Northern Lighthouse Marine Safety Code (PMSC) to regularly testing emergency the International Ship and duties associated with those responsibilities. Board, and a full audit took place within the improve safety and management response plans to ensure Port Security Code (ISPS) and A report into the availability of the Authority’s reporting period. The audit was passed, and of processes to nationally- effective management of any maintains a Port Facility Security various Aids to Navigation is therefore prescribed all points for action have been completed. agreed standards. Significant marine related incident within Plan. The Port Facility Security by regulation. Performance is monitored and safety risks are identified and its area of jurisdiction. Officer works closely with the evaluated and suitable control Department for Transport, Category No. of Aids Target Availability % Availability % measures are put in place to Conducting conservancy Border Force and with security CAT1 4 99.80 100.00 manage them. An external audit, inspections and hydrographic contractors, conducting regular CAT2 32 99.00 99.78 undertaken against the Port Marine surveys to ensure safe marine security inspections, particularly Safety Code in 2019, endorsed assets and efficient navigation when cruise vessels are in port. CAT3 3 97.00 100.00 a high level of compliance. within the areas of jurisdiction.

The Authority’s fully integrated Publicising effectively HSEQ Management System navigational, tidal, hydrographic covers processes for navigational and other relevant safety, environmental protection information to port users. and conservancy in its area of jurisdiction. In doing so the Ensuring that hydrographic data Authority maintains an effective is distributed and made available navigational Safety Management to the UK Hydrographic Office for System (SMS) based on a formalised onward circulation to mariners. risk assessment process which is kept under continuous review. Undertaking duties of a Local Lighthouse Authority and Key processes include: providing necessary aids to navigation within port limits, Regularly reviewing the to include navigation buoys, effectiveness of, and if beacons and lighthouses, necessary seeking amendment as per Northern Lighthouse to, its legal powers in respect Board requirements. of navigational safety. Marine navigational Providing an experienced and operations to ensure their competent pilotage service, as continued effectiveness. required by the Pilotage Act 1987. Consulting with port users and 24-hour port management other relevant stakeholders system. on navigational safety issues and proposed changes Regularly inspecting, which affect procedures, reviewing and improving the guidelines and powers. performance of surveillance systems through technical enhancement and development of staff and management.

Capturing all radar and VHF communications to aid incident investigation.

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 22 23 OBJECTIVES AND TARGETS UPDATE

FROM ANNUAL REVIEW 2018/19 WITH NEW TARGETS FOR 2020 FROM ANNUAL REVIEW 2018/19 WITH NEW TARGETS FOR 2020

TARGET OUTCOME TARGET OUTCOME

Management, maintenance and regulation of Lerwick Harbour Invest in new port facilities where a need is identified. Diversify the portfolio of investments and sources of income, especially where it also supports and strengthens core harbour activity Review implementation of performance Review complete and process updated management system Continue to explore opportunities relating to ultra- Discussions have taken place with HIE, Scottish Monitor regulatory developments in the ports Plans and procedures updated and approved deep water quay and support for the project Government and other partners to progress funding and sector, particularly Covid-19 or Brexit impacts to incorporate any new requirements design of new quay, as included in Islands Growth Deal

Professional development of existing Board training sessions attended; induction now Monitor fishmarket construction project Weekly technical meetings attended; on site and new Board Members includes mandatory training requirements visits and inspections; project completion delayed due to Covid-19 impacts Complete review of pensions provision Local Government Pension Scheme closed to new entrants and alternative Investigate applying for any available external funding Funding secured towards new scheme offered to new employees that can assist in the delivery of capital projects decommissioning pad at Dales Voe Complete registration of the Authority’s Land estate now showing on Land Register of Scotland estate on Land Register of Scotland Monitor market requirements for future infrastructure Feedback gathered from attendance at various projects on the Authority’s capital projects list engagements and events throughout the year to NEW TARGET maintain knowledge on industry requirements

Explore options for management of ongoing pension liablity Install electric vehicle charge points at Electric charge points installed at Fishmarket, Victoria strategic locations on port estate Pier and Albert Building with potential for additional Procurement, allocation and control of financial resources within parameters of Bank facility to manage charge point at Holmsgarth Ferry Terminal recovery from Covid-19 impacts

Construct new decommissioning pad at Dales Voe Construction commenced October 2019 To conduct all business activities in a responsible manner, which assures the prevention of injury by Tulloch Developments Ltd and ill-health to employees, port users and others, preservation of the environment and quality of service and to promote the development of an efficient, cost-effective sustainable port NEW TARGETS

Progress potential investment towards the Ultra Deep Water Quay through the Islands Growth Deal Maintain accreditation to ISO standards Successful external audit completed by BSI during the Track progress on completion of Dales Voe decommissioning pad in order to accept delivery of Ninian 9001, 14001 and 45001 year and accreditations maintained Northern topside Carry out Health and Safety inspections Inspections undertaken and staff encouraged to carry out inspections to give a wider overview Review Mental Health first aid provision Number of staff trained in mental health first aid during the year

NEW TARGETS

Dialogue with stakeholders to promote and emphasise standards within the port environment to be met across all activities

Maintain processes and systems in compliance with current requirements during Covid-19 pandemic

Identify and promote carbon reduction across port operations

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 24 25 OBJECTIVES AND TARGETS UPDATE

FROM ANNUAL REVIEW 2018/19 WITH NEW TARGETS FOR 2020 FROM ANNUAL REVIEW 2018/19 WITH NEW TARGETS FOR 2020

TARGET OUTCOME TARGET OUTCOME

Attract new business and ensure continued satisfaction of existing customers and users, Maintain existing buildings, plant and equipment and harbour facilities in a safe and serviceable order and to defend the port against unfair competition and anti-competitive practices

Maintain and promote Lerwick’s identity Decommissioning trade shows, exhibitions and seminars Explore options for replacement Investment deferred in the short term pending as a decommissioning port attended by officials of Kebister harbour vessel consolidation of finance

Marketing to the oil & gas sector, with emphasis Exhibitor stand and delegate attendance Undertake planned maintenance and/or renewal Programme for repairs and renewals on efficiency and cost-effectiveness of port at Offshore Europe 2019 of existing property and quay infrastructure followed and implemented

Promotion of new fishmarket Market completion delayed due to Covid-19; Carry out repairs required to Heogan piers Programme of works underway facilities to the fishing sector publicity and official opening event postponed Roll-out of new port management system System in place and working well Engagement with and marketing of Seatrade, CLIA, Cruise Scotland and Cruise facilities to cruise sector Europe events attended throughout the year NEW TARGETS

Input to consultations and forums on any new port Regular attendance at ZetTrans meetings Fully integrate property records and maintenance scheduling into new property management software infrastructure required to service new ferry contract and engagement with new north isles ferry Undertake replacement and renewal of existing cathodic protection contractor. Tender awarded to existing service provider, therefore no new requirements Repurpose vacant properties to meet new tenant requirements

Launch the Authority’s new website Site coded and new content in progress

NEW TARGETS

Diversify use of deep water infrastructure to realise opportunities in the renewables sector, particularly onshore and floating offshore wind

Completion of replacement Fishmarket and implementation of new systems and HACCP procedures

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 26 27 SECTOR

Top 5 British Isles & Western Europe HIGHLIGHTS

Cruise Destination

OIL & GAS The number of oil industry-related vessels using the port’s extensive facilities was up 7.3% on 2018 at 369, which includes a 27.9% rise in supply and anchor handling ships, and the overall tonnage was up 26.9%. The upturn in this important activity was driven by the gradual recovery across the sector during 2019, including subsea decommissioning support – one of the port’s specialisms – and more seismic research.

CRUISE A positive cruise season ended with an all-time high of 99 ships calling, although a greater percentage of small- to mid- sized ships through the summer, meant records for tonnages and passenger numbers were less than the previous year.

Double accolades achieved in 2019 shone a spotlight on the isles’ flourishing tourism sector. Shetland was named one of the Top 10 destinations in Europe, the only UK location to feature. Later in the year consumer ratings site ‘Cruise Critic’ further endorsed the isles’ popularity with cruise passengers, ranking Lerwick one of the top five in the British Isles and Western Europe cruisers’ choice category.

FISHING 230,081 boxes were landed for 2019, slightly less than 2018. However, weight and value of whitefish landings in 2019 remained the second highest on record. Excellent progress was made on the construction of the new fishmarket. Opening in August 2020, it will provide much-needed additional landing capacity for the fleet and numerous environmental improvements.

Three new pelagic vessels, Adenia, Charisma and Zephyr, joined the local fleet in 2019, reflecting the strong confidence in markets for mackerel and herring whilst making the process of catching and landing as efficient as possible. The new generation of pelagic vessels using Lerwick benefit from high-capacity shore power points to meet their power needs when berthed. Future planning includes expanding shore power options to other commercial vessels.

FERRIES AND FREIGHT The number of ferry passengers on the Aberdeen and Kirkwall routes increased by 10.2% to 148,937, reflecting the positive impacts of the Road Equivalent Tariff introduced in 2018, with the total footfall including cruise passengers, steady at 225,170.

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 28 29 Lerwick Harbour’s involvement as a leading location for decommissioning offshore structures reached another SPOTLIGHT ON: significant milestone with the arrival of a platform from the Southern North DECOMMISSIONING Sea in July 2019.

Spirit Energy’s Markham Field ST-1 topsides and jacket were removed in a single lift, and shipped to the port’s deep- water Dales Voe Base where the structure was lifted onto the quayside. Dismantling and disposal has been undertaken by joint venture partnership, Veolia/Peterson.

As well as providing employment in Shetland, successful handling of this project demonstrated for the first time that, with the use of cost-effective crane vessels, rather than barge transfers, to move offshore topsides and jackets, Lerwick can compete well-outside its immediate markets in the central North Sea and northern waters.

The ST-1 project strengthens the case the Authority and others have made for Lerwick to become the location for the UK’s Ultra- Deep-Water decommissioning facility, using this technique.

Throughout the year, the port supported a number of other decommissioning projects, including Buchan Alpha, Dunlin and Leadon.

NEW DECOMMISSIONING CAPABILITY AT DALES VOE

During October 2019, work started on the construction of a fully-licensed quayside decommissioning pad at Dales Voe by contractor Tulloch Developments Ltd. To be operational in late summer, 2020, the new facility is specifically designed for single-lift loads and will be operated by Veolia/Peterson.

Delivery of the platform topside from the Ninian Northern installation in August will be the first project to use the new facility. The platform’s accommodation, drilling and production topside will be removed and delivered from the northern North Sea to Dales Voe Base as a single lift by the world’s largest construction vessel, Pioneering Spirit.

Dismantling and disposal of Ninian’s 14,200 tonne structure will be the port’s largest decommissioning project yet, taking advantage of deep water, the high strength and capacity of the quay, the new pad, and experienced contractors. The site offers a significant work area, with adjacent laydown and storage facilities. An impermeable surface will collect waste liquids from around the topside work to an interceptor system, to ensure the highest standards of environmental management during dismantling.

The decommissioning pad is complementary to the port’s future plans to create an ultra-deep-water quay, which is progressing with Highlands and Islands Enterprise and Scottish Government support. Planning for further investigatory and engineering works is to be undertaken to refine the design to meet user requirements.

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 30 31 COMMUNITY & £16,101 – OF CHARITABLE STAKEHOLDERS DONATIONS IN 2019

As a Trust Port, the Authority carefully Support goes beyond financial manages its assets for the benefit donations or sponsorship and often of all its stakeholders and actively involves benefits in kind, such as staff supports local community activities. time and other resources, contributing to many maritime causes. Throughout the year, engagements were hosted with interested groups, including Examples of charitable and community customers from various sectors, activities assisted in 2019 include: politicians and the Shetland community. For example, the Authority partnered Free berthing for tall ships with Highlands and Islands Enterprise on Lerwick Lifeboat Open Day an event for cruise stakeholders to give at Victoria Pier an insight on how to engage with this Bergen-Shetland yacht race important, growing sector and create Shetland Fiddlers at Royal opportunities for servicing this market. Edinburgh Military Tattoo These occasions provide a framework Annual donations to marine to gain valuable feedback and the charities: Shipwrecked Mariners; strength of ongoing relationships is RNLI and RNMDSF central to the Authority’s future success. Jarl Squad appearances for cruise calls Natwest Island Games – swimming, The active role in the community athletics and sailing includes relevant events and Free berthing for Lerwick Lifeboat consultations, including hosting school Charitable donations for visits and work experience students calendar photography annually. The Authority’s marketing BBC Radio Shetland Children- and digital strategy helps maintain in-Need Appeal the profile of the harbour and good Bressay History Group communications with its customers and Da Voar Redd Up stakeholders. The contribution to the RNMDSF Shetland Fish Trades Golf Cup local economy is well-communicated. Herring and Whitefish Trades Golf Alliance Providing stakeholder benefits is an Shetland Inter Club Yachting integral part of the business. As a Association, Inter Club Regatta Trust Port, we have a responsibility Sail Training Shetland to support the community that The Swan Trust we are proud to be a part of. Up Helly Aa Defibrillator for Marina Business Park Trees for Schools Shetland Boat Week CLAN Cancer Support, Light the North Art Trail (reprogrammed to 2021)

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 32 33 KEY PERFORMANCE INDICATORS 2019

VESSELS CARGO MOVEMENTS Tonnes Number Tonnes

2019

2019

The cargo movement through Lerwick in 2019 increased for the first time in a number of years. The number of vessels visiting in 2019 was down 3.0% on 2018, with 12.6m gross tonnes of During 2019 the oil & gas activity increased and cargo movements for this sector were up by shipping. While the tonnage of oil & gas vessels increased, the overall drop in tonnage was due to 48.7%. The roll-on/roll-off ferry service is the main carrier of domestic cargo overall and levels for a fall in cruise ship tonnage. Despite 2019 being a record year for cruise ship arrivals, there was a 2019 increased for another year. larger proportion of the mid-tier sized ships.

PASSENGERS INCOME SPLIT BY SECTOR Number Value (£GBP) Value

2019

2019

Passenger numbers using the roll-on/roll-off ferry service have increased, as expected, due to the introduction of lower ferry fares during 2018 while cruise passengers have decreased. Overall footfall for 2019 remained constant at 225,000.

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 34 35 FINANCIAL PERFORMANCE AND ANALYSIS

TURNOVER PORT COMPETITIVENESS PENSIONS INTEREST RATE RISK TAXATION

Turnover for 2019 was £11.65m, up The Authority works hard to provide The Authority provides two The Authority decided to take The tax on profit has been positively 6.4%. The port has seen an increase a competitive, cost-effective harbour pension schemes for employees, advantage of the low interest rates impacted by a net decrease in the in oil & gas-related activity in 2019 with as high a capacity as possible. a defined contribution scheme available and “lock in” a significant deferred tax provision, primarily due to decommissioning work It is the aim of the Authority to keep through the Ensign Retirement portion of its borrowings to a low due to the reduction in the net continuing and a number of smaller harbour charges as competitive Plan, and a defined benefit scheme rate, using an interest rate swap book value of assets compared to projects being supported from as possible and for 2019 the as an admitted body to the in 2017. This maintains certainty their tax written down value. In Lerwick. In 2019, the oil & gas sector core harbour charges increases Shetland Islands Council’s Local over the cost of repayment of the Statement of Comprehensive accounted for 20% of turnover, were again limited to inflation. Government Pension Scheme borrowings and continues to Income, the deferred tax is also down from a high of 39% in 2014. (LGPS). In line with many defined hedge against the risk of any reduced in line with a reduction The Authority will continue to benefit schemes in recent years, future interest rate increases. in the overall liability. While turnover from the cruise market the port as a cost-effective the contribution levels have been sector declined, income from the oil solution for users. This is enabled increasing significantly and the There is also an adjustment for & gas, fishing and ro/ro sectors all due to the strategic location in level of the deficit accruing in the FRS 102 accounting standards showed modest rises in the year. the heart of the northern North scheme continues to be uncertain. to take account of the fair value Sea and west of Shetland oil & gas of the hedge at the year end. PROFIT fields and rich fishing grounds. The Authority has continued The movement in valuation has throughout the year to work increased during 2019. A fall in the Operating profit for the year was a BANK FACILITIES with professional advisors and forward curve which is used to healthy £3.8m, up on the previous continues a dialogue with the value the hedge fell in 2019. This year. The main factor for the increased With the support of Bank of scheme managers. The LGPS had a resulting negative impact operating profit was the rise in income. Scotland, the Authority has scheme was closed to new entrants on the profit and loss account of invested significantly in quayside from 1 April 2019 and the pension £146,000. In 2018, the movement infrastructure in recent years. scheme deficit is currently £6.4m. had a positive impact of £186,000. Construction of the replacement fishmarket is the final project in The FRS 102 accounting standards the harbour’s current programme that the Authority’s accounts of capital investment. are prepared under require an adjustment to be included to take Lerwick Port Authority has a long- account of the movement in the term and close working relationship pension scheme liability at the year with Bank of Scotland and the end. This has had a negative impact facility provided was tailored to of £491,000 on profit-before-tax suit the planned investments. The and for 2018 was £493,000. development phase of the bank facility continued throughout 2019. At the end of the availability period following completion of the replacement fishmarket, the facility will be converted into a term loan.

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 36 37 FINANCIAL STATEMENTS INCOME STATEMENT OF STATEMENT FINANCIAL POSITION For the year ended 31 December 2019 As at 31 December 2019

2019 2018 2019 2018 £000 £000 £000 £000 £000 £000

TURNOVER 11,653 10,895 FIXED ASSETS Tangible assets 81,374 77,989 Cost of sales (6,558) (6,672) Investments 1,661 1,656 GROSS PROFIT 5,095 4,223 83,035 79,645 Administrative expenses (1,276) (1,122) CURRENT ASSETS Debtors falling due OPERATING PROFIT 3,819 3,101 3,149 2,325 within one year Fair value (losses)/gains on (146) 186 Debtors falling due financial instruments after more than 369 135 Interest receivable and 1 677 one year similar income Cash at bank 1,882 1,464 Interest payable (862) (968) and in hand Impairment of fixed asset investment - (530) 5,400 3,924 CREDITORS PROFIT ON ORDINARY 2,812 2,466 Amounts falling due (6,950) (4,516) ACTIVITIES BEFORE TAXATION within one year Taxation 157 (691) NET CURRENT (1,550) (592) PROFIT ON ORDINARY ACTIVITIES 2,969 1,775 LIABILITIES AFTER TAXATION AND PROFIT FOR THE YEAR TOTAL ASSETS LESS The operating profit for the year arises from the 81,485 79,053 Group’s continuing operations. CURRENT LIABILITIES

CREDITORS Amounts falling due after more than (14,868) (16,700) one year STATEMENT OF PROVISIONS FOR COMPREHENSIVE INCOME - (565) LIABILITES For the year ended 31 December 2019 DEFERRED INCOME (9,641) (8,396) 2019 2018 NET ASSETS £000 £000 EXCLUDING PENSION 56,976 53,392 LIABILITY RETAINED PROFIT FOR THE YEAR 2,969 1,775 Pension liability (6,406) (5,186) OTHER COMPREHENSIVE INCOME NET ASSETS Actuarial gains on defined benefit INCLUDING PENSION 50,570 48,206 (729) 4,827 pension scheme LIABILITY CAPITAL AND Tax relating to other 124 (820) RESERVES comprehensive income Savings fund 70 70 (605) 4,007 Profit and loss TOTAL COMPREHENSIVE 55,817 52,440 2,364 5,782 account INCOME FOR THE YEAR Pension reserve (5,317) (4,304)

TOTAL EQUITY 50,570 48,206

ANNUAL REVIEW 2019-20 ANNUAL REVIEW 2019-20 38 39 LERWICK PORT AUTHORITY www.lerwick-harbour.co.uk

FS32544 EMS524100 OHS692088

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