Annual Report and Accounts 2005 - Chairman's Statement
- Cargo handled up again - to 53.8 million tonnes
- PLA operating profit of £1.24 million (£1.07m in 2004)
- Cultural change producing below inflation price increases
- Environmental standard ISO 14001 achieved further investment for the benefit of river users
The diversity of trades and cargoes within the Port of London enables me to report an overall growth in tonnage through the Port to 53.8 million tonnes, thus maintaining London as one of the United Kingdom’s leading ports. It is interesting to note that the number of ships calling at the Port fell by 4.25% reflecting the increasing size of vessel being used on our trades. Within this volume, a small increase over 2004, unitised cargo continued to rise as did aggregates while crude oil volumes fell back. With the difficulties being experienced in the retail market at present there is some uncertainty about the growth prospects for 2006.
Over the last five years we have been pursuing a programme of changing the culture of the PLA into that of a customer-facing organisation which we believe will enhance our ability to undertake our regulatory and other obligations. Progress was made during 2005 with a detailed analysis of the costs of providing our services and I am pleased to report that as a result we were able to announce that conservancy charges for 2006 would rise somewhat less than the rate of inflation. We are committed to pursuing this programme which will continue to enhance the competitiveness and sustainability of the Port without compromising safety and the quality of the services we provide.
The PLA achieved an operating profit for 2005 of £1.24 million (2004 £1.07m). This result included £2.29m income from landfill royalties (£3.00m) and an exceptional charge in connection with one of our pension funds, consequent upon its actuarial revaluation, of £0.90m (£Nil). Additionally, an amount of £0.53m was charged as additional depreciation, mainly in respect of our floating cruise-liner landing stage in order to bring its value into line with its likely revenue generation. The overall surplus for the year on ordinary activities after taxation was £2.15m (£1.75m). Our operations generated cash of £6.65m (£4.19m) which translated into a net increase in cash and liquid resources combined of £5.03m (£0.71m) after taking into account investment in maintaining and enhancing port infrastructure, tax, interest and payments in respect of loans and leases.
The surplus for the year reflected the increasing success of our objective of generating revenue beyond our regulatory income and is essential if we are to be able to continue to fund essential capital projects and give us protection against the risks posed by the various pension funds where we have potential liabilities.
Our investment programme during 2005 was smaller than in recent years but no less important in enhancing the margin of safety on the river. Projects included further incremental improvements to the vessel traffic display system following the major upgrade in 2004, the procurement of state of the art hydrographic equipment for our survey teams and the replacement of main engines in a number of the PLA craft. Reflecting the increasing awareness of the potential threat from terrorism, we enhanced the resilience of our key operational and business systems. Importantly, we completed the design work on the Thames Automatic Identification System (AIS) which will enhance safety in Central London where radar surveillance is impracticable due to the number of bridges and their proximity to each other. The programme to have this system fitted on all vessels will commence during 2006. At the end of 2005, we let the contract to build a new shed and offices at Denton replacing our existing life expired facilities which, when completed, will enhance operational efficiencies.
Port users continued to show confidence in the future by embarking on major capital projects. To name but a few, Tilbury
Port completed a new technologically advanced paper handling warehouse for Stora Enso, Tilbury Power Station enlarged its coal handling pier thus allowing larger ships to be discharged and Tilbury Container Services erected additional gantries.
LONDON GATEWAY PORT
The potential redevelopment by P&O of the former oil refinery site at Shell Haven has been a regular feature of this statement for the last seven years. It is extremely disappointing to note that approval has yet to be received from the Planning Authorities although some progress was seen in July 2005 when the First Secretary of State and the Secretary of State for Transport both stated that they were minded to agree that the project should be approved. It is common ground that new container port facilities are required in South East England if the economic health of this nation is to be preserved and the extended delays in the consideration of such projects is proving highly detrimental. Since the “minded to approve” announcement, work has been undertaken by P&O to satisfy the requirements and all parties involved have made a further three rounds of submissions and we urge the Government to approve this project without further delay.
The Department for Transport has announced that it will be undertaking a Ports Policy Review later this year and whatever else is considered the manner in which major port infrastructure projects are assessed and how the planning approval process can be speeded up must be given a very high priority.
THE MIDDLE AND UPPER RIVER
It has been said that for Londoners the River Thames is London’s best kept secret and yet, on two occasions during 2005, it entered the public consciousness. I am pleased to be able to report that the plan created by London Resilience for the Thames to be used in the event of a terrorist attack proved successful on the 7 July when an estimated 20,000 people who had either been advised through pre-planning or through public announcements on the day made their way to the river for transportation in the direction of their homes when all land-based public transport came to a halt. I congratulate the boat operators who provided this assistance in what must have been very difficult circumstances with no-one knowing quite what was going to happen next.
On a happier note, the re-enactment of the Nelson Flotilla on 16 September created a spectacle on the river which had not been seen for many years and was witnessed by thousands of onlookers on the banks and the bridges. It was heartening to see that an event on the river could capture the public imagination to such an extent and as part of our role of promoting the river and Port, we will be looking at how we can build on this.
Considerable progress was also made in the level of safety surrounding the rowing activities. Following the undertaking of a Safety Risk Assessment, we are consulting with the rowing fraternity and other interested parties on the issues arising therefrom. We have also embarked on a new programme of communicating with river users through area-based public meetings the first of which was held in the upper reaches in May and the second at the Museum in Docklands in October.
I am delighted to report that the ill-conceived European Directive on Port Services which was resuscitated by the out-going European Commissioner following its earlier defeat, has been abandoned following concerted pressure from a wide variety of different sources. This Directive would have been highly detrimental to the United Kingdom’s ports industry.
I am also pleased to report that the arguments as to the dangers from offshore windfarms both to safety of navigation and
commercial interests put forward by the ports industry to Government seem to have been taken into account with safeguards being introduced into the legislation and research being undertaken by the Maritime Coastguard Agency as to the effect of the interference with radar and VHF that windfarms will create.
Environmental matters continue to play an increasingly important part in the way that the PLA goes about its business and we have achieved certification to the European Standard Ports Environmental Review System as a precursor to us becoming certified to ISO 14001 which we achieved in March 2006. We remain disappointed however that dogma rather than pragmatism appears to be the watchword of the environmental authorities and we continue to make the case that there has to be a proper balance between environmental and commercial considerations. Although we are not directly responsible for the cleanliness of the River Thames, we are making a major contribution both in terms of time and finance to the new Thames21 Charity which is making considerable progress in its objective of keeping our London waterways as clean as possible. We continue to be concerned about foul water contamination which affects the river following torrential downpours and we urge the Government to proceed swiftly with the plans proposed by Thames Water to alleviate the problem.
At the end of 2005, Pamela Castle retired after 8 years as a member and I should like to thank her for the contribution she has made particularly in the environmental area. Subsequent to the year end, I am pleased to advise that Dr Peter Matthews, a well-respected Environmental Scientist has joined the Board, and that Mr Pommy Sarwal, an expert in the financial structure of the ports industry, will be joining from June 2006. These appointments were made under the new arrangements arising from the Harbour Revision Order adopted late in 2005 whereby responsibility for the appointment of Board Members is now divided equally between the Secretary of State for Transport and the PLA.
As I have mentioned above, the PLA is undertaking a programme of change to its culture and change is often unsettling. As one would expect from employees who are as dedicated and as skilled as we have, there has been a magnificent response. There is however much still to do and I have no doubt that the challenges will be addressed with enthusiasm. On behalf of the Board I should like to say thank you.
SIMON P SHERRARD
29 March 2006