PORT OF TYNE ANNUAL REVIEW 2011

ANNUAL REVIEW 2011CONTENTSINTRODUCTIONCHAIRMAN’S STATEMENT ......................................................... 2THE PORT OF TYNE AT A GLANCE ............................................. 4CHIEF EXECUTIVE’S REVIEW .................................................... 6PERFORMANCE AT A GLANCE .................................................. 8BUSINESS AREASCONVENTIONAL AND BULK CARGOES .................................... 10CAR TERMINALS .................................................................... 12CRUISE AND FERRY ................................................................ 14LOGISTICS .............................................................................. 16ESTATES ................................................................................. 18MARINE SERVICES ................................................................. 20BUSINESS IMPACTSHEALTH AND SAFETY ............................................................. 22ENVIRONMENT ....................................................................... 24MAKING A DIFFERENCE IN THE REGION ................................. 26BUSINESS OPERATIONA FOCUS ON OUR PEOPLE ...................................................... 28FINANCIAL PERFORMANCE .................................................... 30MEMBERS OF THE BOARD ...................................................... 3201

ANNUAL REVIEW 2011CHAIRMAN’SSTATEMENT“WE HAVE MADE SIGNIFICANTFURTHER PROGRESS IN THECONTINUED TRANSFORMATIONOF THE BUSINESS... AND THEFRUITS OF THAT ARE NOWCOMING THROUGH.”2011 HIGHLIGHTS2011 HAS BEEN ANEXCEPTIONAL YEAR FOR THEPORT OF TYNE, DELIVERINGTHE BEST RESULTS IN THEPORT’S HISTORY.NOT ONLY HAVE WEDELIVERED SUBSTANTIALGROWTH IN BOTH TURNOVERAND PROFIT, BUT WEHAVE MADE SIGNIFICANTFURTHER PROGRESSIN THE CONTINUEDTRANSFORMATION OFTHE BUSINESS. THIS IS ARESULT OF THE CHANGESWE HAVE MADE TO THEPORT’S OPERATION AND THEINVESTMENT WE HAVE MADEIN OUR PEOPLE AND IN OURINFRASTRUCTURE.As well as having its own economicsuccess, the Port has continued toplay its vital role as a key economicdriver for the region. Our activitieshave added £467 million to theregion’s GVA, which in turn supportsalmost 9,500 jobs across the NorthEast. We continue to support business,the arts and communities in the Port’soperating area, with a programmeof community engagement andsponsorship that has benefited around50 local organisations in 2011.After a number of years of intensivework, we are delighted to haveachieved Investors in People status,as well as maintaining the nationalstandard of ISO 14001 for bestenvironmental practice. Early in 2012we have also achieved the nationalhealth and safety standard OHSAS18001, a particularly satisfyingachievement in view of the highpriority given by the Board to all theseaspects of our work. These awardsmean that our activities are nowinternationally benchmarked and it isa great tribute to all our managementand staff that we have made so muchprogress in the drive to change theculture of the organisation.Our aim is a simple one – to createa vibrant and sustainable Port ofTyne. 2011 has made a very positivecontribution to this aim and weare looking forward to an equallysuccessful year in 2012. Our successthis year is entirely thanks to theemployees of the Port of Tyne: byembedding the values of customerfocus, people focus and future focusin all they do, they have securedan exceptional year and I thankthem for their considerable effortsand commitment.The growth in business in 2011 haslead to a 5% increase in our workforcesince the beginning of the year,creating a total of 22 new jobs andapprenticeships. 2011 has also beenthe second year of our profit sharingscheme, a major step change in thePort’s relationship with its employees,which enables them to share in thesuccess of the business that theyhave generated.During the year there was onechange on the Board. I would like tothank Neil Mundy who served as avery effective Chairman of our AuditCommittee and who has retiredthis year. He has been replaced byMaxine Pott who was appointed asNon-Executive Director with effectfrom September 2011.In June 2012 I shall be standing downas Chairman of the Board, havingbeen a member for almost ten years,seven of them as Chairman. It hasbeen an exhilarating time. There havebeen many challenges, but we havemade enormous progress in drivingthe Port ahead into the 21st Century,and the fruits of that are now comingthrough. I am optimistic about thePort’s future and all the staff andeveryone associated with it havemy very best wishes.I am delighted that I shall be replacedby Sir Les Elton. I am sure hisknowledge of the area, as the formerChief Executive of Gateshead Council,and his knowledge of the Port, as theDeputy Chairman for the past fiveyears, will ensure that the progressof recent years is continued.Sir Ian WrigglesworthChairman£467MADDED TO THEREGION’S GVA9,500JOBS SUPPORTED5.3MTOTAL TONNAGE OFRIVER VOLUMES03

ANNUAL REVIEW 2011THE PORT OF TYNEAT A GLANCE250HECTARESOF LAND1INTERNATIONALCRUISE ANDFERRY TERMINAL184TRUCKS ANDTRAILERS INTHE FLEET56kSQ METRES OFWAREHOUSINGTHE PORT OF TYNE IS A VITAL COG IN THE ECONOMY OF NOTJUST THE NORTH EAST REGION, BUT OF THE UK AS A WHOLE.IT IS A GATEWAY TO A WORLD OF TRADE AND IS A MAJOR LINKIN KEEPING GOODS – AND PROSPERITY – MOVING AROUNDTHE COUNTRY AND THE GLOBE.FROM BULK CARGOES OF RENEWABLE FUELS TO THESHIPPING, STORING AND DISTRIBUTION OF GOODS FOR AWEALTH OF NATIONAL AND INTERNATIONAL COMPANIES, THEPORT PROVIDES AN EVER-INCREASING RANGE OF SERVICESTO HELP BUSINESSES GROW, COMPETE AND SUCCEED.1,713METRES OFPORT OF TYNEQUAYSIDE3CAR TERMINALSSTRUCTURE ANDGOVERNANCESTRATEGICAIMVALUESAll the Port’s activities are informed bya set of key values.BUSINESS AREASThe operation of the Port is focussed aroundfive distinct business areas.MARINE SERVICESThe Port of Tyne is a Trust Port – a statutory bodythat is governed by legislation and controlled byan independent board. There are no shareholdersor owners and any surplus that the Port makes isploughed back into the organisation for the benefitof its stakeholders, who principally consist of itscustomers (including all river users), employees, thegovernment, businesses and the local community.The Port of Tyne has statutory responsibility forconservancy and safe navigation of a 24 milestretch of the River Tyne, comprising 21 miles ofriver and three miles of sea outside the piers.The organisation’s principal activities are theprovision of cargo and passenger handling services,alongside storage and distribution services.The aim of the organisation is to create a vibrant andsustainable Port of Tyne. By making the most ofavailable opportunities in existing and new markets,investing in infrastructure and making more efficientuse of resources, the overarching aim is for the Portto continue to enable and drive the economic growthof the North East region as well as making a majorcontribution to the economy of the UK.CUSTOMER FOCUSUnderstanding the needs of customers andidentifying where value can be added tomutual benefit.PEOPLE FOCUSRecognising the vital role of people within theorganisation and training, developing and rewardingall who work for the Port in a challenging, supportiveand safe environment.FUTURE FOCUSDeveloping the business and investing in its longtermfuture and sustainability.CONVENTIONAL ANDBULK CARGOESThe Port of Tyne is internationally renowned asa handler of energy products as well as handlingother cargoes such as grain, steel, scrap metal androadstone. Its accessibility at all states of the tide,plus the depth of its river channel, means that it canaccommodate 83% of the world’s bulk carrier fleet.CAR TERMINALSThe Port of Tyne is recognised as one of the mostversatile and efficient car handling terminals inthe country and currently exports more vehiclesthan any other UK port. With three individual carterminals, one on the north side of the Tyne andtwo on the south side, the Port of Tyne exports over660,000 vehicles to destinations across the globe.CRUISE AND FERRIESLOGISTICSThe Port of Tyne’s logistics operation offerscustomers a one-stop shop for integrated shipping,storage and distribution activities. Regular shippingservices connect the Port to Felixstowe, Rotterdam,Hamburg, Gdynia and beyond and its state-of-theartcontainer terminal handles goods from ship towarehouse and then onwards via the Port’s fleet ofdistribution trucks.ESTATESThe Port’s land and property portfolio covers over250 hectares and includes commercial premises,ranging from office accommodation and commercialunits to industrial sites, all within the boundary of thesecure port estate. The Port also has land availablefor commercial development, with 38.8 hectaresof this designated as part of the North East’s LocalEnterprise Partnership Enterprise Zone.The Port of Tyne is responsible for the safenavigation of vessels on the river and three milesout to sea. Within Port limits, it oversees andmonitors shipping movements 24 hours a day.Marine Services provides pilotage and informationfor all river users, including docking instructions,berth availability, shipping movements and weatherand visibility forecasts.The Port operates the Port of Tyne InternationalPassenger Terminal on the north side of the river,which provides both a port of call and turnaroundport for cruise vessels and a regular ferry service todestinations such as Holland, Norway and Sweden.It was voted the UK’s Best Port of Call in 2011 byCruisecritic.com.05

ANNUAL REVIEW 2011CHIEFEXECUTIVE’SREVIEWIT HAS BEEN AN EXCELLENTYEAR FOR THE PORT OFTYNE, WITH THE GROWTHIN VOLUMES OF CARGOESHANDLED REFLECTEDIN THE BUSINESS’SFINANCIAL PERFORMANCE.THE INVESTMENTS MADEIN RECENT YEARS HAVEFACILITATED THIS GROWTHAND HELPED SECUREFUTURE BUSINESS.Turnover during the year increasedby 30% to £59.2 million as a result ofincreased activity levels across severalbusiness areas with performance fromConventional and Bulk Cargoes, CarTerminals and Logistics all at or nearrecord levels.This also translated into a record levelof EBITDA being reported in 2011,increasing by 61% to £15.5 million.As a percentage of turnover, EBITDAwas 26%, increasing from 21% in theprevious year. Profit before Tax morethan doubled to £9 million from£4.4 million in 2010 and the NetCash Flow from Operating Activitiesincreased by 83% from £8.9 millionto £16.4 million.The Port has continued to invest in thedevelopment of its infrastructure tosecure future business opportunities.Capital expenditure incurred in 2011totalled £10.2 million, the main itemsof which were the major dredgingworks to both deepen the riverchannel and increase the depth of thePort’s Riverside Quay berths, furtherinvestment in wood pellet handlinginfrastructure and a new ploughdredger, the Sir Bobby Robson.Looking forward, we continue to planfor future growth, not just for thePort but for the region as a whole.The creation of the NELEP EnterpriseZone has added additional momentumto the initiatives we are taking toattract renewable energy industriessuch as offshore wind and biomass.We aim to deliver continued supportfor Nissan across a number of ouroperational areas, facilitating theirgrowth by enabling them to get theirproducts to market effectively and atgood value.None of this success could havebeen achieved without the continuedtransformation of the businesswhich has been both supported byand delivered by our employees.The ongoing programme of culturechange has been key to deliveringthe business’s success to date andremains a vital component of thefuture growth and development thatwill continue to deliver enhanced valueto our stakeholders.I would like to record my thanks to ouremployees who have demonstratedtheir commitment and support forthis programme and I look forwardto continued progress and growthof the business.The remaining pages of this reviewoutline the business performance inmore detail across our business areas,highlighting the key achievementsin each area.Andrew MoffatChief Executive Officer“NONE OF THIS SUCCESS COULD HAVE BEEN ACHIEVEDWITHOUT THE CONTINUED TRANSFORMATION OF THEBUSINESS WHICH HAS BEEN BOTH SUPPORTED BYAND DELIVERED BY OUR EMPLOYEES.”PERFORMANCE HIGHLIGHTS 201166%INCREASE IN TOTALRIVER VOLUMES103%INCREASE IN PROFITBEFORE TAX TO £9m20%INCREASE IN NUMBEROF CARS HANDLED61%INCREASE INEBITDA * TO £15.5m63%INCREASE IN BULKCARGO TURNOVER25%INCREASE IN CONTAINERVOLUMES (TEU’S)*earnings before interest, taxes, depreciation, and amortisation07

ANNUAL REVIEW 2011PERFORMANCEAT A GLANCECARGO VOLUMES2011: 5.3M TONNES4%4%TURNOVER BY BUSINESS AREA2011: £59.2m3% 3%92%33%47%KEY FINANCIAL INDICATORS2011: £59.2m2010: £45.5m30%2011: £15.5m61%INCREASE IN TURNOVER 2010: £9.6mINCREASE IN EBITDA *2010: 3.2M TONNES5%9%2010: £45.5m4%3%10%3%2011: £9m2010: £4.4m103%INCREASE INPROFIT BEFORE TAX2011: 26%26%2010: 21%EBITDA/TURNOVER %86%39%5%12%38%2011: £6.4m2010: £2.8m130%INCREASE INPROFIT AFTER TAX2011: £16.4m2010: £8.9m83%INCREASE IN CASH FLOWFROM OPERATING ACTIVITIES2011 2010PORT OF TYNE BERTHS 4.89m 2.75mPORT OF TYNE BERTHS OPERATED 0.19m 0.17mBY THIRD PARTIESTHIRD PARTY BERTHS 0.25m 0.29m2011 2010CONVENTIONAL & BULK CARGOES £27.9m £17.1mCAR TERMINALS £6.3m £5.4mCRUISE AND FERRY £2.1m £2.1mLOGISTICS £19.3m £17.7mESTATES £1.6m £1.5mTHIRD PARTY ACTIVITIES £2.0m £1.7m*earnings before interest, taxes, depreciation, and amortisation09

ANNUAL REVIEW 2011CONVENTIONALAND BULK CARGOES63%INCREASE IN TURNOVERON CONVENTIONAL ANDBULK CARGOES116%INCREASE IN TOTAL TONNAGEOF CARGOES HANDLED BYTHE PORT OF TYNE – UP TO3,507k TONNES“The £23m investment that the Port has madein wood pellet storage and handling facilitieshas made it the leading port in Europe for theimport of this vital renewable energy fuel.”Conventional & Bulk cargoes 2011 2010 Change Change%Turnover £27.9m £17.1m +£10.8m +63%Total volumes (tonnes) 3,507k 1,625k +1,882k +116%£23MINVESTMENT IN BIOMASSHANDLING FACILITIES£5MINVESTED IN A CAPITALDREDGE OF THE RIVERDEVELOPMENTS IN THE ENERGY SECTOR REMAIN CENTRALTO THE PORT OF TYNE’S BUSINESS DEVELOPMENT AND THERECORD-BREAKING PERFORMANCE IN THE CONVENTIONALAND BULK CARGOES AREA OF THE BUSINESS HAS BEENFUELLED BY SIGNIFICANT UPLIFTS IN COAL ANDBIOMASS IMPORTS.A number of key strategic investmentshave been instrumental in deliveringthis improved performance. The £5mcapital dredge of the Tyne hasmade the river channel deeper thanever before, allowing the Port toaccommodate 83% of the world’sbulk carrier fleet. This has helped todrive up coal import volumes, whichincreased by 175% in the year up to2.1m tonnes. The increase in coalimports has also been driven byfavourable movements in the price ofcoal relative to the other fuels used bythe Port’s power generation customers.The handling and transportation ofcoal cargoes has also been improvedby significant investment in railinfrastructure, with additional capacitycreated during the year with the reopeningof the section of line knownas the Boldon East Curve. This nowallows traffic leaving the Port to berouted more efficiently to the EastCoast Main Line, making onwardtransportation to the Port’s powergeneratingcustomers faster andmore cost effective.The investment that the Port has madein wood pellet storage and handlingfacilities has made it the leading portin Europe for the import of this vitalrenewable energy fuel. Tonnage hasincreased by over 600,000 tonnes,which reflects the first full yearof operation of the new facilities.The Port has a 10-year agreement inplace with Drax Power and in its firstfull year this has covered the handlingof 800,000 tonnes of wood pellets.A further £2.2m investment in twopurpose-designed mobile hoppersat the end of 2011 takes the Port’stotal investment in this new area ofbusiness to in excess of £23m.The Port is currently at the leadingedge of operation in this sector anda number of enquiries have beenreceived from both existing andnew customers who will requirethe extension of the facilities andinfrastructure. New developments areanticipated for 2012 in order to fulfilthese customer requirements and fullyexploit this new business opportunity.11

ANNUAL REVIEW 2011CAR TERMINALSTHE PORT OF TYNE’SCAR TERMINALS BUSINESSHAS SHOWN SIGNIFICANTGROWTH IN 2011,RECORDING ITS BEST-EVER TRADING LEVELS.Between its three car terminal sites,the Port has handled a record numberof 667,000 cars in 2011. The mainfactors driving this improvementin performance have been thegrowth in exports from the Nissancar production plant in Sunderlandand the first full year of the HöeghNorthern transhipment terminal.This strong performance has helpedthe Port maintain its position as theUK’s number one car exporting portand has improved its position in theEuropean rankings to 5th, up from7th in 2010.The outlook for the Port’s car terminalsbusiness continues to look favourable.Following its record-breaking year in2011, Nissan’s growth continues withits success in winning new modelssuch as the latest Qashqai and therecently announced Invitation. It willalso be undertaking the manufactureof the electric battery for thecompany’s first electric car, the Leaf,as well as assembling the car itselffrom 2013. The global demand forNissan’s new electric vehicle is likelyto increase car exports through thePort of Tyne even further.As well as the export of cars, the Portsupports the car-making industry inthe North East in a number of otherways, from the import, storage anddistribution of car parts to the onwarddistribution of vehicles around theUK. The diversity and effectivenessof the Port of Tyne’s car industryrelatedoperations will undoubtedlyincrease with the continued growthin importance of this industry tothe region.No 1UK CAR EXPORT RANKINGNo5EUROPEAN CAREXPORT RANKING667KTOTAL NUMBER OFCARS HANDLED20%INCREASE IN NUMBEROF CARS HANDLEDOVER 2010 LEVELSCar Terminals 2011 2010 Change Change%Turnover £6.3m £5.4m +£0.9m +16%Number of cars 667k 555k +112k +20%“The global demand for Nissan’s new electricvehicle is likely to increase car exports throughthe Port of Tyne even further.”13

ANNUAL REVIEW 2011CRUISE AND FERRYNo1PORT OF TYNE’S POSITIONAS UK’S BEST PORT OF CALL*20NUMBER OF CRUISEVISITS IN 2011THE PORT OF TYNECONTINUES TO BE A MAJORGATEWAY TO THE REGIONFOR VISITORS AND A KEYDRIVER FOR THE REGION’SVISITOR ECONOMY.Additional marketing to cruiseoperators led to 20 cruise visits in2011 and a record 37 vessels arebooked for 2012, with an additional28 bookings already placed for 2013.The Port of Tyne’s success in 2011 inwinning the cruisecritic.com award of“UK’s Best Port of Call” has providedfurther business developmentopportunities with an uplift in demandand enquiries from both existing andnew cruise operators.The welcome return of ThomsonCruises to the Tyne in 2012 will bringa significant increase in the numberof turnaround cruises, up from 10to 17, and development discussionsregarding new ferry routes from theTyne are continuing with significantinterest in and support for thedevelopment of a new route to Norway.37NUMBER OF CRUISESBOOKED FOR 2012Cruise and Ferry 2011 2010 Change Change%Turnover £2.1m £2.1m 0 0Passenger numbers 2011 2010 Change Change%Cruise 32k 32k 0 0%Ferry 563k 555k +8k +1%Total 595k 587k +8k +1%Vessel numbers 2011 2010 Change Change%Cruise 20 20 0 0%Ferry 344 363 -19 -5%Total 364 383 -19 -5%* www.cruisecritic.com15

ANNUAL REVIEW 2011LOGISTICSTHE PORT OF TYNE’S LOGISTICS BUSINESS HAS SEEN AHEALTHY UPLIFT IN BUSINESS IN 2011, WITH INCREASESCOMING FROM BOTH EXISTING AND NEW CUSTOMERS.The container element of the Port’slogistics business had a recordyear, handling 71,000 TEUs, anincrease of 25% on the previous year.This is partly as a result of extendingits reach in terms of routes available.An agreement with feeder operatorUnifeeder has opened up new importand export opportunities within theBaltic States of Estonia, Latvia andLithuania as a result of access for thefirst time to the Polish port of Gdynia.Another influencing factor has beenthe further extension of businesswith Nissan. The Sunderland-basedmanufacturer has increased itsimports of car parts in containers andalso leases two warehouses on thePort estate.The anticipated growth in Nissan’sactivities, the opening up of newroutes to the Baltic States and theplanned investment in an additionalgantry crane will all provide potentialfor additional growth in the containerarea of the business.Warehousing and distributionoperations benefited from the firstfull year of operation of JML, theglobal supplier of innovative consumerproducts, which relocated its entireUK logistics business to the Portof Tyne in 2010. There was also aseasonal uplift in demand from retailcustomers during the autumn, andsignificant increase in containerexports of recyclables, such as paperand plastics.9%INCREASE IN TURNOVER25%INCREASE IN CONTAINERVOLUMES (TEUs*)Turnover 2011 2010 Change Change%Logistics £19.3m £17.7m +£1.6m +9%Volumes 2011 2010 Change Change%Containers/TEUs* 71k 57k +14k +25%“An agreement with feeder operator Unifeederhas opened up new import and exportopportunities within the Baltic States ofEstonia, Latvia and Lithuania.”*twenty-foot equivalent unit17

ANNUAL REVIEW 2011ESTATESFish QuayWALKERHAVING LAND AVAILABLE FOR COMMERCIAL DEVELOPMENT ISWALLSEND KEY TO THE PORT OF TYNE’S ABILITY TO TAKE ADVANTAGE OFTHE NEW BUSINESS OPPORTUNITIES ASSOCIATED WITH THEEMERGING RENEWABLE ENERGY SECTOR.The infilling of the Tyne DockSwan continued Hunterduring 2011, and oncecompleted will yield 5.6 hectares ofnew land for further development.Further settlement and thesurcharging of the land have resultedin the need for additional Hebburn fill material, Quaybut it is anticipated that sections of theland will be available for operationaluse during 2012.Since the announcement in January2010 by the Crown Estate of the awardof development rights for Round 3of offshore wind farm development,the Port has been working to takeadvantage of this opportunity. Around9GW of offshore wind energy plantwill be sited in Dogger Bank, an areaclose to the North East of Englandcoastline, which makes the Port ideallylocated to host the manufacturing,maintenance and support businessesthat are a vital part of the offshorewind industry supply chain.During 2011, the Port continued topromote its estate on the north bankof the Tyne as an ideal location forpotential manufacturers of offshorewind turbines. The appeal of thePort to this type of industry hasbeen further increased by the factthat the North East Local EnterprisePartnership (NELEP) has designateda site comprising an area of the northbank of the Tyne, the A19 corridor andBlyth as an Enterprise Zone.The Port owns 38.8 hectares of theEnterprise Zone site on the TyneHEBBURNand since the Government hassubsequently identified five EnterpriseZones as Centres for OffshoreRenewable Engineering (CORE),this status is anticipated to havean additional beneficial effectin attracting both offshore windmanufacturers and the associatedsupply chain businesses.AREA OF PORT OF TYNE NORTH ESTATEINCLUDED IN NELEP ENTERPRISE ZONENORTHSHIELDSRiverside QuaySOUTHSHIELDSEstates 2011 2010 Change Change%Turnover £1.6m £1.5m +£0.1m +3%Bill Quay3NORTH SEA OFFSHOREWIND ZONES WITHIN REACHOF THE PORT OF TYNE250PELAWHECTARES OF LAND INTHE PORT OF TYNE’S LANDAND PROPERTY PORTFOLIO38.8HECTARES OF PORTLAND IN THE NELEPENTERPRISE ZONELeft: Beatrice Wind Farm demonstrator project off the east coast of Scotland(Talisman Energy (UK) Ltd and SSE)Right: Sheringham Shoal Offshore Wind Farm (CHPV for Scira Offshore Energy)19

ANNUAL REVIEW 2011MARINE SERVICESRESPONSIBLE FOR THE SAFE NAVIGATION OF VESSELS ONTHE TYNE AND UP TO THREE MILES OUT TO SEA, THE PORT OFTYNE OVERSEES AND MONITORS SHIPPING MOVEMENTS24 HOURS A DAY.During 2011, the total number ofshipping movements on the riverincreased by 10% to 4,732, withvessel arrivals increasing by 11% to2,081 and gross tonnage of all vesselsarriving at the Tyne up by 14% to29,351k tonnes.As well as its standard maintenancedredging, in 2011 the Port hascompleted the most extensive dredgeof the river in the last 50 years,increasing the channel depth to arecord of 10 metres, and a record13 metres at its main RiversideQuay berth.This ‘capital dredge’ representeda one-off investment of £5m andsignificantly increased the volumesof material removed from the riverin 2011, up by 379k m 3 to 695k m 3 .Some of this material was reused inthe infilling of the Tyne Dock, a projectthat will deliver 5.6 hectares of usableland on the Port estate.To support the business’s dredgingoperations the Port has procureda new plough dredger, named theSir Bobby Robson, which arrived fortrials and crew training in December2011. This replaced the previousgrab dredger, the Hedwin, which wasdecommissioned after almost 50 yearsof service.10%INCREASE IN VESSELMOVEMENTS ON THE RIVERVessel movements on the Tyne 2011 2010 Change Change%Total vessel movements* 4,732 4,318 +414 +10%Total vessel arrivals 2,081 1,876 +205 +11%Total vessel gross tonnage (000s)* 29,351 25,808 +3,542 +14%Material dredged from the River Tyne 2011 2010 Change Change%Maintenance dredging (m 3 000’s) 249 157 +92 +59%Capital dredging (m 3 000’s) 446 159 +287 +180%Total 695 316 +379 +120%Destination of dredged material 2011 2010 Change Change%At sea 660 175 +485 +277%In river** - 141 -141 n/aTo shore*** 35 - +35 n/aTotal 695 316 +379 +120%*Figures exclude vessels under 30m in length and dredging vessels**This material was dredged from the mouth of the River for use in the construction of Tyne Tunnel 2***This material was used in the Tyne Dock infill project120%INCREASE IN AMOUNTOF MATERIAL DREDGEDFROM THE RIVER10mDEPTH OF THERIVER CHANNEL21

ANNUAL REVIEW 2011HEALTH & SAFETY18%REDUCTION IN NUMBEROF INJURIES RECORDEDIN 201155%INCREASE IN NEAR-MISSREPORTING IN 2011MAKING SURE THAT EVERY ASPECT OF THE PORT OFTYNE’S OPERATION COMPLIES WITH THE HIGHESTINTERNATIONALLY-RECOGNISED SAFETY STANDARDSIS THE ORGANISATION’S NUMBER ONE PRIORITY.In 2011, the Port placed increasedemphasis on the awareness of healthand safety issues across all areas ofthe business, focussing on reporting,incident investigations and training.This resulted in the organisation’ssuccessful achievement of OHSAS18001 certification in February 2012.The increased awareness of healthand safety issues has led to significantincreases in the number of incidentsrecorded in 2011, up 50% to 891partly as an improvement in the levelof near miss reporting which has goneup to 55% in 2011, from 38% in 2010.Identifying incidents and near missesand the reasons why they occur hashelped to improve the systems andprocedures operating at the Port andthis has been a key factor in achievingthe OHSAS 18001 certification.Whilst the number of injuries recordedin 2011 at 69 was 18% lower than in2010, the related number of workingdays lost at 168 was 47% greaterthan in the previous year. There hasalso been a rise, from three to ten, inreportable injuries to the Health andSafety Executive (HSE) or the Marineand Coastguard Agency (MCA).There is a requirement to report anyincident where the number of workingdays lost as a result of a particularincident is in excess of three.As part of its drive to improve healthand safety standards, the Port of Tynehas also adopted the official guidelineswithin the Port Marine Safety Code,which has been developed to improvesafety in UK ports and to enableharbour authorities to manage marineoperations to nationally agreedstandards. It provides the standardagainst which the policies, proceduresand the performance of harbourauthorities such as the Port of Tynecan be measured.The Port of Tyne’s compliance withthe Code is assured by the operationand audit, both internal andexternal, of the Port’s Marine SafetyManagement System.23

ANNUAL REVIEW 2011ENVIRONMENTAS A MAJOR BUSINESSAND EMPLOYER THE PORTOF TYNE HAS A RANGE OFRESPONSIBILITIES WHENIT COMES TO MANAGINGAND MONITORING ITSENVIRONMENTAL IMPACT.7,500TONNES: TARGET REDUCTIONIN CARBON EMISSIONSFOR 2012Having successfully achievedISO 14001 for environmentalmanagement in 2010, the Port hasretained the certification for 2011,demonstrating that the organisationhas an effective environmentalmanagement system in place.The certification also verifies thatthe Port is compliant with allrelevant environmental legislation,is committed to the prevention ofpollution and is implementing aprogramme of continual improvementand environmental monitoring.As part of ensuring that the Portmeets the rigorous standards of ISO14001, the business has undertakenextensive audit and engagement withemployees, customers, tenants, localresidents and contractors during thelast year. Conscious of the potentialimpact of operations on local residents,work to assess the impact of the Port’soperation on the local area has beencommissioned and will report in 2012.Other environmental initiativesundertaken during the year includedthe purchase of new aerodynamicallyshapeddistribution trailers for thePort’s fleet of trucks, with improvedfuel-efficient tyres and cab roofmouldings to minimise drag andimprove fuel efficiency.The Clean Tyne Project, which is beingundertaken with the various localauthorities on the river, has continuedin 2011 and the Clearwater, a vesseloperated by the Port, has beendeployed to ensure that the river isclear of floating debris. In addition, thePort has taken a leading role in litterclearingevents on the river banks.For 2012, the Port is looking to reduceits carbon emissions by over 7,500tonnes compared to 2010 and isactively exploring new initiatives suchas installing solar panels for energyproduction, replacing existing streetlighting with more energy-efficientmodels and trialling electric vehicles.Internally, environmental ‘champions’are being recruited from each ofthe different business areas in orderto encourage all Port of Tyne staffto become more environmentallyaware. This will become increasinglyimportant as the Port will be requiredto pay for carbon allowances from2012 to cover the level of carbonemissions it generates.£2.2MINVESTED IN IMPROVINGENVIRONMENTAL CONTROLOF BIOMASS CARGOES52MPHSPEED LIMITATION OFDISTRIBUTION VEHICLES25

ANNUAL REVIEW 2011MAKING A DIFFERENCEIN THE REGION£45MTOURISM SPEND RESULTINGFROM PASSENGERS USINGTHE PORT’S INTERNATIONALPASSENGER TERMINAL7%INCREASE IN PORT-RELATEDJOBS IN THE COMMUNITYUP TO 9,425 FROM 8,836IN 201011%INCREASE GVA OF THE PORTON THE REGION’S ECONOMY:UP TO £467 MILLION FROM£421 MILLION IN 201024%INCREASE IN STAKEHOLDERBENEFIT UP TO £8.3 MILLIONFROM £6.7 MILLION IN 2010THE PORT OF TYNE PLAYSA MAJOR ROLE IN BOTHTHE ECONOMY AND THECOMMUNITY LIFE OF THENORTH EAST REGION.For the Port to be successful the localcommunity needs to be successfultoo, so there is an emphasis placedon supporting the communityand generating tangible benefitsfor our stakeholders in everythingwe do. From the commitmentto apprenticeships and makingenvironmental improvements tothe river and its surroundings tosupporting events and activities thatbring life to the local community, it’sall part of creating a vibrant andsustainable Port of Tyne.THE PORT’SECONOMIC IMPACTBENEFITS FORSTAKEHOLDERSThe impact of the Port of Tyne on theregional economy is measured on anannual basis through an EconomicImpact Assessment undertaken byexternal consultants ARUP.For 2011, they have reported that theGross Value Added (GVA) by the Portof Tyne to the regional economy hasincreased by 11% to £467 million(2010 - £421 million). This includesthe significant impact of £45 millionin visitor spend resulting frompassengers using the Port’sInternational Passenger Terminalthat facilitates the DFDS Newcastleto Amsterdam ferry service and thedeveloping cruise business. The reportalso highlights that the Port supports9,425 (2010 – 8,836) full time portrelatedjobs in the wider community,including those directly employed atthe Port of Tyne.The total value of goods passingthrough the Port in 2011 wasestimated as £9.5 billion, of which£5.9 billion (59%) was exports and£3.9 billion (41%) was imports.The Port’s stakeholders are itsemployees, the Government,customers, businesses and the localcommunity. Stakeholder benefitsdelivered by the Port increasedsignificantly in 2011, up 24% to£8.3 million (2010 - £6.7 million).This is made up of taxation, directinvestment and ‘in kind’ support.£7.6 million was generated in taxreceipts for the Government andcharged against income in theyear, relating to employee taxation,company taxation and business rates(2010 - £6.0 million).Investments in stakeholder benefitwhich are included in operating profitwithin the Port’s financial statementsamounted to £0.7m (2010 – £0.6m).Employees benefited from thecompany’s Profit Share Scheme whichis now in its second year of operation.The Port meets the cost ofoperating and maintaining the SwingBridge, a scheduled monument, andalso supports the North Shields FishQuay Company. The Swing Bridge andthe Port’s other heritage assets, suchas the North and South piers, areopen to the public on Heritage OpenDays and other special occasions.The Port has continued itsproactive support of regional andnational business partners throughsubscription and membership oforganisations that include the CBIRegional Council, the North EastChamber of Commerce, the EEFRegional Council, Business in theCommunity, the NewcastleGatesheadInitiative and the Institute of Directors.Support of the local communityincluded events and activities suchas the Mouth of the Tyne Festival,the Tyne Tunnel 2k wheelchairevent, the Pride of South TynesideAwards, the Port’s Writer in Residenceprogramme and the annual ‘Reflect’photography and film awards.In addition, £30k was allocatedfor donations from the Port of Tynecharitable fund, administered by theCommunity Foundation.27

ANNUAL REVIEW 2011A FOCUS ON OUR PEOPLE446NO OF PORT OF TYNEEMPLOYEES IN 201116%INCREASE IN RESPONSESTO ANNUAL STAFF SURVEY4%STAFF PROFIT SHARE IN2011 AS A % OF SALARYTHE PORT OF TYNE RELIES ON THE COMMITMENT ANDDRIVE OF ITS EMPLOYEES FOR ITS COMMERCIAL SUCCESS.BY ACTIVELY WORKING TO ENGAGE STAFF MORE DIRECTLY INTHE VISION AND VALUES OF THE ORGANISATION, THE PORT ISENCOURAGING THEM TO TAKE GREATER OWNERSHIP OF THEBUSINESS MOVING FORWARD.One of the key drivers of thisincreased engagement has been thePort’s journey towards Investors inPeople (IIP) accreditation, which wasachieved in December 2011 after twoyears of work in improving employeeengagement. This has included anumber of major internal initiatives,such as improved performancemanagement processes, theintroduction of personal developmentreviews for every member of theworkforce and an overhaul ofemployee communications.The achievement of IIP is one ofthe key milestones in the Port’sprogramme of transformation, whichaims to make the whole organisationmore commercially-focussed whilstat the same time driving the culturalchange that will improve the Port’sperformance by investing greaterresources in training, developingand rewarding its people. This hasincluded the introduction in December2010 of the employee profit sharescheme, based on the wellestablishedJohn Lewis Partnershipmodel, which rewards employeesbased on the performance of thebusiness. The first award, made inrespect of 2010 business performancewas equivalent to 2% of individualemployee remuneration, and for 2011,the total award was 4%.The increased levels of employeeengagement were demonstrated by a16% increase in the number of returnsin the annual employee survey in 2011.The results of this survey have guideda number of actions in 2011, includingimproving the level of communicationwith employees through a completeoverhaul of the internal staff magazine,Tyne Crier.The major successes enjoyed by thebusiness this year are down to thehard work and commitment of thePort of Tyne staff and they are to becommended for their efforts.29

ANNUAL REVIEW 2011FINANCIALPERFORMANCECONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 20112011£mFixed assets 130.0 125.1Current assets 19.1 15.82010£mTotal Assets(Current liabilities)149.1 140.9(15.8) (12.7)Total Assets less current liabilities 133.3 128.2Long Term Creditors & Liabilities (23.8) (25.4)Deferred income (8.7) (9.3)Pension (Liability) / Asset (1.1) (1.0)Net Assets 99.7 92.5ReservesProfit and loss account 71.0 64.6Revaluation reserves 28.7 27.9Total Reserves 99.7 92.5Return on Net Assets (based on Profits before Tax) % 9.0% 4.8%CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 DECEMBER 2011Turnover 59.2 45.6Operating costs(40.3) (32.2)Gross profit 18.9 13.4Administrative expenses 8.8 7.8Operating profit 10.1 5.6Interest & other expenses (1.1) (1.2)Profit before taxation 9.0 4.4Taxation charge (2.6) (1.6)KEY FINANCIAL RATIOSEBITDA £15.5m £9.6mEBITDA / Turnover % 26% 21%Profit before tax / Turnover % 15% 10%2011£mProfit for the financial year 6.4 2.82010£mThe Port’s achievement in generatingstronger revenues and profits from itsinfrastructure in 2011 has resulted inthe Return on Net Assets, based onProfits before Tax, increasing to 9.0%(2010, 4.8%) during the year.CONSOLIDATED CASH FLOWFOR THE YEAR ENDED 31 DECEMBER 20112011£mNet cash flow from operating activities 16.4 8.92010£mReturns on investments and servicing of finance (1.1) (0.9)Taxation (2.0) 0.4Capital payments (7.0) (17.1)Operating cash inflow/(outflow) 6.3 (8.7)Management of liquid resources — —Turnover during the year increasedby 30% to £59.2m as a result ofincreased activity levels across severalbusiness areas with performancefrom Conventional and Bulk Cargoes,Car Terminals and Logistics all at ornear record levels.This also translated into a record levelof EBITDA being reported in 2012,increasing by 61% to £15.5m. As apercentage of turnover, EBITDA was26%, increasing from 21% in theprevious year.Profit before Tax more than doubledto £9m from £4.4m in 2010.Financing (1.1) 4.9Increase/(decrease) in cash in the year 5.2 (3.8)Improved trading performance hasresulted in Cash Inflow from OperatingActivities increasing significantly by£7.5m to £16.4m.After Capital Payments, includingsignificant investment in deepeningboth the river channel and the Port’sown berths, expenditure on woodpellet handling equipment andpurchase of a new plough dredger, anOperating Cash Inflow of £6.3m hasbeen reported.31

ANNUAL REVIEW 2011MEMBERS OF THE BOARDDuring the year there was one change to the Board. Neil Mundy retired thisyear, and Maxine Pott was appointed as Non-Executive Director with effectfrom September 2011.The Executive Management Team comprises the Executive Directors of theBoard and Ian Gibson, Director of Logistics, Geoff Gillon, Director of HumanResources, Captain Mike Nicholson, Harbour Master, and Susan Wear, Directorof Corporate Affairs.CHAIRMANSIR IAN WRIGGLESWORTH DL(UNTIL JUNE 2012)Sir Ian Wrigglesworth joined the Board in 2003 and became Non-ExecutiveChairman in 2005. Sir Ian is CEO of his own company, Bluehall Properties, andwas Chairman of UK Land Estates from 1995 to 2008. He is a former Chairmanof the Northern CBI and the founder Chairman of the Northern BusinessForum and the NewcastleGateshead Initiative. He was Deputy Chairman ofthe Governors of the University of Teesside until 2002 and was MP for Teesside,Thornaby and Stockton between 1974 and 1987. Prior to that, Sir Ian workedin the City at National Giro Bank and in Middlesbrough at the Midland Bank.CHIEF EXECUTIVE OFFICERANDREW MOFFATAndrew Moffat was appointed Chief Executive Officer in 2008, having previouslybeen Financial and Commercial Director. He has been a Board member since2007 and is a member of the Finance Committee. Andrew joined the Port in2007 from 3UK, a telecoms subsidiary of the Hong Kong-based multi-nationalconglomerate Hutchison Whampoa, where he was Chief Finance Officer.Prior to this he held several senior financial and commercial positions withinOrange plc, including that of UK Director of Strategy, where his direction andsupport in the development of business strategies resulted in the growth andsuccess of the Orange Group.NON-EXECUTIVE DIRECTORSDEPUTY CHAIRMANSIR LES ELTON DL(APPOINTED CHAIRMAN FROM JULY 2012)Sir Les Elton qualified as a solicitorin 1971 and enjoyed a successfulcareer as a senior manager in localgovernment, culminating as ChiefExecutive of Gateshead Council.He was appointed to the Board in2004 and in 2007 was appointedDeputy Chairman. He is Chairmanof the Finance Committee and theRemuneration Committee.SIMON BEECHINORSimon Beechinor is a qualified MasterMariner with extensive experienceof the shipping industry. He wasappointed to the Board in 2007 and isa member of the Audit Committee.HILARY FLOREKHilary Florek established her PR andMarketing consultancy, HFPR, inNewcastle upon Tyne in 2000.She was appointed to the Board in2006 and is a member of theFinance Committee and theRemuneration Committee.DR JON W HARGREAVES CBEJon Hargreaves joined the Boardin November 2010. He is a Non-Executive Director of BritishWaterways and Chairman of BritishWaterways Scotland. He was the ChiefExecutive Officer of Scottish Waterfrom 2002 to 2007.NEIL MUNDY(UNTIL SEPTEMBER 2011)Neil Mundy has a background inaccountancy, property rating andvaluation, and economic development.A Director of NF Holdings Ltd, he wasappointed to the Board in 2004 andwas Chairman of the Audit Committee.MAXINE POTT(FROM SEPTEMBER 2011)Maxine Pott, a Chartered Accountantand Partner of RMT Accountants andBusiness Advisors in Newcastle uponTyne, has over 20 years’ experiencein accountancy and businessmanagement. She is a former Non-Executive Director of the UniversalBuilding Society and NewcastleBuilding Society.CHRISTOPHER ROBSONChris Robson is Managing Partner ofRyecroft Glenton, a Newcastle firmof Chartered Accountants. He wasappointed to the Board in 2005 and isa member of the Finance committeeand the Remuneration Committee.DR ALAN G RUTHERFORD OBEDr Alan Rutherford joined the Boardin November 2010 and was previouslyNon-Executive Chairman of theNational Renewable Energy Centre(Narec). He is currently Chairman ofthe Energy Leadership Council forNorth East England.EXECUTIVE DIRECTORSCHIEF FINANCIAL OFFICERDR JOHN HUDSONDr John Hudson was appointed ChiefFinancial Officer and joined the Boardin 2009. He qualified as a CharteredAccountant with Deloitte & Touche in1998 and his career includes seniorroles within Black & Decker and theIdeal Stelrad Group.CHIEF TECHNICAL OFFICERBRIAN REEVEBrian Reeve is a Chartered CivilEngineer with particular expertisein heavy engineering and portmanagement. He joined Port ofTyne in 2004 and has responsibilityfor engineering services andinfrastructure development.CHIEF OPERATING OFFICERSTEVEN HARRISONSteven Harrison was previouslyManaging Director of H J Banks(Mining) Limited before joiningthe Port in June 2009 as ChiefOperating Officer, responsible for theConventional and Bulk Cargo, Cruiseand Ferries, Car Terminals andEstates business areas. He joinedthe Board in January 2010.

Port of TyneMaritime HouseTyne DockSouth ShieldsTyne and WearNE34 9PTT. +44 (0) 191 455 2671www.portoftyne.co.ukCONVENTIONAL & BULK CARGO CAR TERMINALS CRUISE & FERRIES LOGISTICS ESTATESWWW.PORTOFTYNE.CO.UK