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Chairman's Annual Report

to 31 March 2011

CONTENTS

Overview

1. Board Appointments
2. Major Developments
3. Business Performance
4. Main Trading Sectors
5. Other Trading Sectors
6. Marketing
7. Safety, Security & Environmental
8. Staff & Training
9. Conclusion

  

OVERVIEW

 

It is a pleasure to present my report and to review another significant year for the Trust.   

The past year has seen the Trust make substantial progress in a number of directions:        

• The funding, procurement and consenting work necessary to allow the Phase I redevelopment of the Old Fishmarket Pier and Tanker Berth. This progress laid the foundation for the award of the construction contract this summer and the physical works beginning in August.

• Despite difficult trading and economic conditions overall financial performance continued to be strong.

• The Trust continues its marketing efforts to the oil, renewables and cruise sectors. The future prospects for each sector are encouraging offering significant economic benefit for the Caithness and North Sutherland economy.

 

 

 

 

1. BOARD APPOINTMENTS

 

The Board would like to thank the members of the Appointing Body for their diligent work in their selection of prospective Board Members for endorsement at the AGM (item 3 of the agenda). 

The Appointing Body members were William Calder, Trust Chairman; William Thomson, Trust Body Member and Rob Gibson MSP, Independent Person.

2. MAJOR DEVELOPMENTS

 

The major focus during financial year 2010-11 and beyond was progression of the procurement, funding and consents associated with the Phase I re-development of the Old Fishmarket Pier and Tanker Berth.  

Procurement: The process, involving three bidders, to identify a single preferred contractor began in October 2010 using the Negotiated Procedure in the Utilities Contract (Scotland) Regulations 2006. The preferred contractor is responsible for the design and delivery of the development works. The final bidder submissions were received and evaluated in May 2011. RJ McLeod (Contractors) Ltd was subsequently awarded the contract.  

Funding: Despite the difficult economic conditions and scarcity of public finance, the Trust has been able to assemble a multi-partner funding package, and bank facilities, to finance the Phase 1 development. This emphasises the strategic importance of Scrabster and robustness of the development strategy. 

Grant funding has been secured from Highlands & Islands Enterprise (HIE), European Regional Development Fund (ERDF), European Fisheries Fund (EFF) and the Nuclear Decommissioning Authority (NDA). Bank facilities are in place with Clydesdale Plc.  

The Trust would wish to express its gratitude to all the agencies and their officers involved for delivering the funding package.  

Consents:  The applications for the consents necessary to allow the development works to proceed were progressed during 2010-11 and concluded during the summer period.   The Scrabster (Deep Inner Berth) Harbour Revision Order 2011 came into force on 28 June 2011.  

The Phase 1 development works began at the beginning of August 2011 with an expected completion date of 27 July 2012.   

The strategic focus moves now to progressing the plans for the 32 acres owned at Scrabster Farm and feasibility studies on the Phase 2 development of the deep-water basin.  This is reinforced by the recent news that BP has been given the go ahead to proceed with a new £4.5bn oil project west of the Shetland Islands.  The BP scheme is an extension of the existing Clair oil field, and will also include investment by fellow oil firms Shell, ConocoPhillips and Chevron – a massive boost for jobs and growth.  (October 2011).

  

3. BUSINESS PERFORMANCE

 

In common with many ports and other sectors, the trading performance for 2010-11 was down compared to previous years; however, overall profitability and financial health remain satisfactory.    

Total GRT through the port for the financial year to 31 March 2011 was 9.258M, a 5% reduction compared to the previous year.  

Turnover for the year amounted to £2.1 million, a 10% reduction compared to the 2009-10 figure. However the profit before tax amounted to £333,266 compared with  the previous year’s figure of £139,083.   

Our balance sheet continues to show strength with net current assets amounting to £2.077 million at the balance sheet date. This has provided the solid financial platform to underpin the funding applications needed for the development programme.

  

4. MAIN TRADING SECTORS:

 

I shall now take each of the four main business sectors namely Ferry, Fishing, Oil Related and Renewables, and Cruise Ships in turn.

4.1. Ferry

The port continues to enjoy an extremely good working relationship with Northlink Ferries. Overall ferry revenues fell by 2.7% compared with 2009-10.  The Trust made submissions to the  review of the Northern Isles Ferry Service and Scottish Ferry Services in the autumn of 2010. The Trust put forward a robust case that services from Scrabster should be at least maintained if not expanded. 

The Trust will provide appropriate support and engagement for the formal Pentland Firth tender process when it begins in November 2011.

 

4.2. Fishing

 

The fishing sector has had a particularly difficult trading year.  The volume of landings fell by 25% in comparison to the previous year.  The landings from foreign vessels (Faroese and Spanish) have particularly reduced.  Overall fish revenues fell by 20%.  There has, however, been an increase in landings from the Scottish fleet and it is pleasing to report an 18% growth in landings through the market.

The position confirms the need for Scrabster to be able to offer improved facilities for the fishing sector. The Phase 1 development includes refrigeration of the fishmarket, improved fuel services and access for the specific benefit of the fishing fleet.

 

4.3 Oil Related and Renewables

 

In common with other sectors there was a fall in oil and renewable related revenues and vessel arrivals in 2010-11.  However activity over the period since year end has been particularly buoyant reflecting increased oil and gas activity West of Shetland and marine renewable activity at the Emec testing centre in Orkney.  

Prospects West of Shetland are very encouraging with substantial investment having been formally sanctioned by the major players.  Scrabster’s location continues to prove a major factor for the oil companies in making their operational logistics decisions and this will be further strengthened by the announcement of the £4.5bn Clair Ridge scheme (mentioned earlier) which followed plans revealed earlier this year, by BP and its partners, for a £3bn redevelopment of the Schielhallion and Loyal fields, which are also west of the Shetland Islands.   

The Trust again  exhibited  at the Offshore Europe Exhibition in September 2011, both marketing to new customers and maintaining relationships with existing companies.    

Scrabster continues its discussions with the renewable energy sector to ensure that the port meets the demands required for the servicing and support of the Pentland Firth developments.   

Phase I is seen by the Trust as being essential to enable the early stages of developments in the Pentland Firth to take place, however it is still recognised that a further Phase II shall be required to satisfy the greater requirements when full scale development takes place. 

The Phase 1 Development will continue to improve the range of facilities which oil and renewable companies demand and will provide safe, sheltered berths for their service and supply vessels.  The provision of high speed fuel and water deliveries shall also be a major improvement to the range of services offered at Scrabster.

4.4 Cruise Ships

 The Trust is now entering its 6^th year of marketing to the cruise industry. The 5 year strategy of growing cruise had by the end of 2010 attracted 9,192 passengers to visit our local area.  Cruise activity continues to grow, with 9 vessels, carrying a total of 2,157 passengers calling at the port during 2010 and of the 9 vessel arrivals, 5 were making their inaugural visit to the port.  The summer of 2011 saw record cruise tonnage, and passenger numbers visiting Scrabster.    

Scrabster’s membership of Cruise Scotland and Cruise Europe continues to prove effective, with Cruise Scotland now becoming a recognised marketing force by the cruise lines.  Scrabster is now regarded as a recognised port by the larger cruise lines.

 

 

 

5. OTHER TRADING SECTORS

 

5.1 General and Other Cargo

 

General Cargo tonnage and revenues remained constant in 2010-11 with the main commodities being salt and fertilizer imports and timber exports.

5.2. Pleasure Craft

This year is showing a slight increase in the number of visiting yachts from 59 to 67.   This sector continues to be viewed as a limited income generator, but is an important social aspect of harbour activities and is not ignored in the port development.  Pontoon berthing for some 20 plus vessels is included as part of our Phase 1 construction works.  

 

6. MARKETING

 

Scrabster has continued its strong marketing efforts in all sectors by attendance at the cruise exhibitions at Miami in March and Hamburg in September 2011.  Both exhibitions have proved vital in establishing and maintaining contact with the cruise line executives and as stated earlier, the cruise business at Scrabster continues its steady growth.  The Trust also exhibited at Offshore Europe in September 2011, updating the oil industry in the port developments, which were received very positively.   

As previously the Trust also attended the All Energy Exhibition in Aberdeen as part of the Caithness Chamber of Commerce delegation.  The Chamber brought companies from all sectors together and presented a united approach from the county which was also very well received.  

In addition to marketing efforts, the Trust has also had representation at various renewables events, promoting the port’s proposed development and speaking to prospective developers.  We also continue to meet with and participate in regular meetings with various relevant organisations such as HIE, the NDA, CASVAG, Caithness Transport Forum, Dounreay Stakeholder Group, Port Skills and Safety Ltd and the British Ports Association (Scrabster played host to the Scottish Ports meeting in June 2011).

 

7. SAFETY, SECURITY AND ENVIRONMENTAL

 

Scrabster continues to regard health and safety as a vital element in ensuring the safe and efficient operation of the port.  Compliance with the Port Marine Safety Code remains a top priority of the Board and health and safety is a standing item on the agenda at the Board’s monthly meetings.  Staff training and competency standards are continuously reviewed, with new and refresher training being undertaken as considered necessary. 

Scrabster continues to meet the security standards required under the International Ship and Port Facility Security (ISPS) code and the Port Security Committee meets 6 monthly to discuss current issues and the meetings are normally attended by senior inspectors from TRANSEC who oversee port security across the UK.

The port’s Oil Spill Contingency Plan was approved in July 2010 revalidating the plan for 5 years.

 

In compliance with the Port Marine Safety Code, Scrabster Harbour Trust continues to meet the targets set by the international Association of Lighthouse Authorities for the provision of Local Aids to Navigation.

 

In the year from 22 October 2010 to 22 October 2011, SHT achieved 100% performance of its Category 1 lights against the required target of 99.8% and 99.53% performance for its Category 2 lights against the required target of 99%. 

  

8. STAFF AND TRAINING

 

 The Board continues to recognise the need for continuous professional and personal development of all members of staff.  As a consequence there is an ongoing training programme with both in-house and external courses available to all members of staff where appropriate.

  

9. CONCLUSION

 

In conclusion, I would like to thank the Board and members of staff for their significant contribution in delivering the Phase 1 development and implementing the port’s strategic and operational objectives throughout the year.  

Over the past year we have continuously and robustly made the strong business case for Scrabster and have secured a significant amount of support allowing our infrastructure plans from the drawing board to tangible works.  

The profile of the Port is increasing and we are attracting considerable interest and enquiries for many sectors. This interest combined with the support assembled to deliver the Phase 1 confirms the robustness of our strategy and the need to continue to drive the port forward. 

I am confident that the Board and the staff will meet these exciting challenges and will continue to manage and develop the business of the Trust in the best interests of all stakeholders.

 

 

 

WILLIAM CALDER
CHAIRMAN

October 2011