P Port of Milford Haven o r t o f M Business Review 2012 i l f o r d H a v e n B u s i n e s s R e v i e w 2 0 1 2 Sustainability through diversification Port of Milford Haven Business Review 2012 The Port at a Glance 2 Chairman’s statement 5 Chief executive’s review 9 Deep Sea Port 11 Short Sea Port 11 Pembroke Port 12 Milford Dock 14 Milford Dock Master Plan 16 Cruise 17 Community Engagement 18 Liddeston Ridge Solar Park 21 The Haven Economy 22 Haven Waterway Enterprise Zone 24 Trading Subsidiaries Mustang Marine 26 Marimatech 27 Health, Safety, Security and Environment Report 29 Trust Port 32 Stakeholder Engagement 35 Port Objectives 37 Port Strategy 38 Governance 39 Board Members (Non-Executive) 40 Board Members (Executive) 43 Senior Management Team 44 Financial Performance 46 1 Port of Milford Haven Annual Review 2012 The Port at a glance 2 Port of Milford Haven Annual Review 2012 3 Port of Milford Haven Business Review 2012 i 3of th0e UK% ’s gas demand can be supplied by Milford Haven 4 Port of Milford Haven Business Review 2012 Chairman’s Report Group turnover and pre-tax profit for 2012 were £22.7m and £4.1m “ respectively compared with £29.5m and £8.1m in 2011. The reduction in Capital expenditure in turnover and profit in the year was primarily due to the very significant 2012 was £3.5m and included the installation reduction in revenue arising from LNG cargoes handled through the port: of solar panels on a 71 LNG cargoes were received in 2012 compared to 128 cargoes in 2011. number of Port buildings The UK has multiple sources of gas, both from include a corresponding recovery payment to the Pilots and investment into pipeline and LNG and therefore is a relatively National Pension Fund, which will have to be funded for the competitive and flexible market. However, foreseeable future. In 2012, 28% of the cash generated by the operational assets at countries in the Far East with little or no business was used to support pension obligations. Pembroke Port and alternative gas supplies command higher Notwithstanding these significant challenges, the Group has prices. Markets have also reacted to short Milford Dock maintained a substantial investment programme. Capital term events such as the shutdown of nuclear expenditure in 2012 was £3.5m and included the installation power generation capacity in Japan. These of solar panels on a number of Port buildings and investment international energy market factors led to into operational assets at Pembroke Port and Milford Dock. In lower shipments of LNG to the UK in 2012. addition, approximately £2.5m was invested in trade assets and Anticipating continued difficult trading as cash into Mustang Marine, as well as a smaller investment in conditions, the Group set out to reduce Marimatech - a long-standing key supplier to the Group of high costs - where this could be achieved technology navigation systems used by our marine pilots. without reducing the capacity of the business. Like any commercial business, the Group pays UK corporation Costs for 2012 were £2.5m lower than in 2011, tax. On its own behalf and on behalf of employees, the Group which included certain one-off cost reductions remitted to HMRC and Pembrokeshire County Council a total that will not recur in future years. of just under £5m in tax, national insurance and business rates In 2010 the Group successfully introduced a during 2012. Career Average Revalued Earnings (CARE) The Group ended the year with total liquid cash and investment pension scheme for most of its employees. The resources of £14.8m and net assets of £59.4m compared with contribution rate in respect of current service is £56.1m at the end of 2011. The Port’s combined share of expected to reduce over time, but the business has pension deficits is approximately £14.7m. Return on Capital to continue funding substantial pension deficits Employed for the year was 9.3%, below the target of 12%. which have worsened over the past year, primarily due to the impact of low interest rates on how Health, Safety and the Environment future liabilities are calculated. Costs include a The business continued to achieve a low incident rate in terms £500k per annum recovery payment to the Port’s of injuries and pollutions. The Group invests heavily in systems own Retirement Benefit Scheme and from and procedures to ensure that the Port is operated safely. The 2013 onwards the Port will need to rate of injuries to members of staff continued at a low rate, with 5 Port of Milford Haven Business Review 2012 i 6shipp,in6g m5ove1 ments in 2012 6 Port of Milford Haven Business Review 2012 one lost time accident during the year. In close put in place a strong, commercially focused cooperation with shipping and terminal team with a specific mix of skills and expertise “ “ operators, who are key customers on the to contribute to the continued development I have never failed to The business is well Haven, the Port continues to have a very low of the Port. Just as I am pleased to welcome be impressed by the placed to make a number of pollution incidents. five new Board members, I would like first and foremost to pay great tribute to our departing commitment and substantial and growing Port Marine Safety Code directors, in particular Danny Fellows and John professionalism of all contribution to With particular reference to marine Allen-Mirehouse both of whom, as operations, I am pleased to confirm on behalf longstanding leaders and representatives our staff who are fully Pembrokeshire’s and of the Board, which is the duty holder under within the Pembrokeshire community, have dedicated to providing Wales’ economic the terms of the Port Marine Safety Code, our provided extraordinary and valued service to continued full compliance with that Code. the Port of Milford Haven over many years. I the best possible service growth and vitality would also like to thank Anne Hughes, Paddy Community Engagement to our customers Walsh and Jan Reed for the great contributions During the year the Port held its second they have made to the evolution of the Port open-forum Annual Consultative Meeting of Milford Haven as a successful business. which was well attended by a wide group of In May 2013 the Port announced, together opportunities that lie ahead, supported by stakeholders. The Port’s website was also re- with the Department for Transport, that the good cash flow and a strong balance sheet, the launched to support consultations, in time had come to seek a new chairman. By business is well placed to make a substantial particular for the emergent Milford Dock the end of July 2013 I will have served six and growing contribution to Pembrokeshire’s Master Plan. The Port continues to make years as chairman, six years which have and Wales’ economic growth and vitality. significant financial commitments in support of undoubtedly been an eventful period for the the wider community, including a commitment As a final word, it has been my undoubted Port. A highlight was in 2009 when two new to fund most of the annual operating costs of privilege to have been associated with the Port LNG terminals came on stream, transforming the publicly accessible pontoons along the of Milford Haven. Much has been achieved and the Port’s scale of operations and bringing waterway, and to provide ongoing financial much remains to be done, but throughout I with it increased responsibilities for ensuring support for important community projects have never failed to be impressed by the safe navigation for all users, whilst ensuring such as the Sunderland Trust, Pembrokeshire commitment and professionalism of all our that the new fleets of vessels can access the Coastal Forum, and an extensive range of staff who are fully dedicated to providing the Port day in, day out and without interruption. smaller charitable donations. best possible service to our customers, and As well as within the Board, there has been who have always done so with a full measure The Board substantial change within the top of charm and wit. I shall miss you all, both as After a long period of gestation, the Port’s management of the Port, who are now friends and colleagues, and wish each one of Harbour Revision Order to alter the basis set bringing forward exciting new plans for you all the success for the future. out in its constitution for the appointment of Pembroke Port and Milford Dock. This will be Board members, was finally enacted and the Port’s main focus for new investment and became law on 24 th May 2012. For the first jobs growth over the next four to five years. time the Port became responsible for the With a new Board, and soon a new chairman, appointment of its own directors and has since clearly focused and working on the David Benson 7 Port of Milford Haven Business Review 2012 iCash generated from operations was £5.3m and the Group ended the year with £14.8m of cash and liquid assets 8 Port of Milford Haven Business Review 2012 Chief Executive’s Review The Port of Milford Haven’s cargo throughput in “ 2012 was 39.9 million tonnes. Although this was The Port committed iIn September 2012 18.2% down on 2011, the Port remains the UK’s to invest over £7m in VLCC Evgenia 1 third largest port by volume and is well-known the early part of was the largest crude for its role in the energy business, a sector 2013, laying a oil carrier to be seen that is vital to the competitiveness and foundation for on the Waterway for resilience of the UK economy.