THE PORT OF MILFORD HAVEN has published its 2017 Annual Report and Accounts, revealing a £3m fall in profits alongside a 2.8m tonne decrease in throughput for the year.

The Port feels this was due mostly to the ongoing volatility in the Liquefied Natural Gas industry which saw record low shipments in 2017, and in part to an additional £1m pension service charge due to changes in long term interest rates.

The report also records an increase in the number of employee concerns and incidents over the past year, with the Port suggesting this is merely a result of the updated complaint mechanism.

To illustrate the volatility of the Gas Industry, in 2011 the port handled 126 LNG vessels. In 2013 this had fallen to 54, rising again to 91 in 2015, before falling to a low of 36 in 2017-just over one quarter of the throughput in  2011.

This volatility is driven by the differential in the price of wholesale gas in the UK market compared to other markets such as the Far East and Latin America.

This is not due to Brexit, nor low oil prices, but is due to the balance of supply and demand in the gas wholesale markets, not only in the UK, but also across the globe.

The global market for LNG is heavily influenced by the regularly fluctuating price, with increased demand in locations such as China and India seeing it sold there rather than being transported to Milford Haven.

In 2016’s report, the Port recorded a 26% reduction in the volume of LNG handled and they had anticipated this headline trade being substantially lower again in 2017.

Chris Martin, Chair of Board conceded that the significant reduction in LNG activity supports the need to diversify the Port’s revenues into new areas of business, reducing the impact of oil and gas market influences or the loss of a major customer.

A major investment was completed last year which saw the acquisition of Havens Head Retail Park. The retail park will complement the Port’s extensive property portfolio and become a key part of the Milford Waterfront development, creating close to 600 new jobs in Milford Haven. The first construction element is now underway.

Pension costs in 2017 were, at £2.3m, nearly £1m higher than in the preceding year. This additional charge taken through the profit and loss account is based on a technical calculation driven by accounting standards of the true annual cost to the port of funding pension obligations.

The calculation is highly dependent on current long term interest rates which reduced significantly in 2016 and which led to the £6.6m reversal of the Port’s scheme into a 10% deficit position shown in 2016’s accounts.

The accounting entries serve to underline why, in terms of employee benefits, it is now almost universally the case that businesses have moved substantially towards offering defined contribution schemes only.

The Port’s policy is to provide employee pay and benefits in line with the median market and therefore it is currently consulting on a move to a  defined contribution scheme for new employees.

In the past year the Port has set up an Assurance Framework (AF) to provide a mechanism for reporting incidents, near misses and concerns, whether they are minor or major in nature.

Employees are encouraged to submit AF reports, which resulted in the number rising from 247 in 2016 to 318 in 2017.

During the year the number of near misses fell from 81 to 20, concerns increased from 67 to 124 and incidents rose from 99 to 174.

The Port were however able to record zero lost time accidents in 2017.