The Directors submit their annual report together with the audited financial statements of the Company for the year ended 31 December 2009.
Financial Statements
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable Irish law and Generally Accepted Accounting Practice in Ireland including the accounting standards issued by the Accounting Standards Board and published by the Institute of Chartered Accountants in Ireland.
Irish Company law requires the Directors to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:
| • | select suitable accounting policies and then apply them consistently; |
| • | make judgements and estimates that are reasonable and prudent; |
| • | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. |
The Directors confirm that they have complied with the above requirements in preparing the financial statements.
The Directors are responsible for keeping proper books of account, which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements are prepared in accordance with accounting standards generally accepted in Ireland and comply with the Harbours Act, 1996 and the Companies Acts, 1963 to 2009. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Legal Status
Dublin Port Company is a limited liability company established pursuant to the Harbours Act, 1996. On 3 March 1997 the Company became the successor entity to Dublin Port & Docks Board, the former statutory entity with responsibility for the Port of Dublin. On that date Dublin Port Company took over the functions and acquired the assets and liabilities of the predecessor organisation at valuations agreed with the then Minister for Communications, Marine and Natural Resources. In consideration for the assets and liabilities, the Company issued share capital in the amount of €7.648m to the then Minister for Communications, Marine and Natural Resources.
With effect from 26 July 1997 the Company became the pilotage authority for Dublin Bay.
Responsibility for the Commercial Port Sector was transferred from the Minister for Communications, Marine and Natural Resources to the Minister for Transport with effect from 1 January 2006.
Principal Activities
The business purpose of Dublin Port Company is to facilitate the movement of goods and passengers, and attendant information flows through the Port.
The Company provides the infrastructure, facilities, services and hard standing to meet the needs of customers for the efficient transfer of goods and passengers between land and sea transport modes.
Revenue in connection with the provision of these facilities is generated from vessel dues, goods dues, rent and key services provided, such as towage and pilotage.
Going Concern
The Directors are satisfied that the Company has adequate resources to continue in business for the foreseeable future. For this reason, the financial statements are prepared on the going concern basis.
Books of Account
The Directors have taken measures to ensure compliance with the Company’s obligations under S.202 of the Companies Act 1990 with regard to keeping proper books of account. The measures taken are the use of appropriate systems and procedures and the employment of competent accounting personnel. The books of account are kept at the Company’s registered office, Port Centre, Alexandra Road, Dublin 1.
Business Review
Details of the profit for the year, together with comparative figures for 2008, are set out in the Profit and Loss Account on page 31 and the related notes.
Throughput fell by 10.4% from 29.6 million tonnes in 2008 to 26.5 million tonnes in 2009. Despite this fall in throughput, 2009 remained a strong financial year for the Company.
Turnover for the year amounted to €62.9m, a decrease of 11% on the previous year (2008: €70.6m). In recognition of the financial difficulties being experienced by Dublin Port Company customers, the Directors approved a 5% credit on 2009 cargo dues. This credit amounted to €1.8m. Turnover fell by 8.4% excluding this credit provision. Total Operating Costs fell to €37.2m in 2009 from €43.6m in 2008. This was mainly due to cost reductions in discretionary spend items, in particular the Company’s Non-Routine Maintenance programme and professional fees.
Operating Profit decreased to €25.6m in 2009 from €27m in 2008 resulting in an Operating Margin of 40.8% (2008: 38.2%). The underlying Operating Profit Margin, before Exceptional Operating Items, for 2008 was 39.8%.
Net financing costs increased to €3.9m in 2009 from €1.3m in 2008. This was mainly due to increased pension fund deficit financing cost arising from a lower expected return on pension scheme assets.
Profit retained for the financial year was €9.2m (2008: €18.4m). The 2009 figure reflects a charge of €3.9m in respect of a permanent diminution in value of an Investment Property held by the Company. The 2008 figure reflects a gain of €1.8m, net of related Capital Gains Tax of €0.4m, arising from the disposal of a site to Dublin City Council in respect of the Waste to Energy facility proposed for the Poolbeg Peninsula.
The Profit and Loss Reserve increased from €207.9m at 31 December 2008 to €224.9m and Shareholders’ Funds increased from €219.0m to €238.3m during the same period.
The Company has a target throughput of 27 million tonnes for 2010. Throughput of 26.5 million tonnes was achieved in 2009, which was 4% down on its target of 27.6 million tonnes.
Environmental Matters
Dublin Port Company is committed to the highest standards in environmental performance and is accredited under ISO 14001 and to EcoPorts through PERS certification. Environmental Matters are reported under separate disclosure within the Annual Report on pages 18 to 19.
Employee Matters
The Company’s review of several areas of organisational activity continued towards completion during 2009. These reviews will be used as a basis for our focus on continuous improvement.
Membership of the Defined Contribution Pension Scheme continues to grow with over 10% of our employees now members of this scheme.
The Company reaffirmed its commitment to our Corporate Codes of Conduct by reissuing these to our Employees and Directors during 2009.
The Company will continue our focus on Training & Development and our review of policies & procedures in order to reflect best practice.
Principal risks and Uncertainties
The principal uncertainty facing the Company is with regard to the proposal to expand the Port at the North Eastern perimeter (the Dublin Gateway Proposal). A detailed planning application and Environmental Impact Statement was submitted to An Bord Pleanála in August 2008 under the Strategic Infrastructure Act. This application was planned by the Company to address long term capacity shortfalls. A public Oral Hearing took place during 2009 and the Company awaits the decision of the Planning Authority.
As evidenced by the fall in trade in the latter half of 2008 and continuing into 2009 the Company is exposed, through the normal course of its operations, to the impact of an economic slowdown on Port activities. The Company however experienced a stabilisation in trade in the second half of 2009 reaching levels of approximately 2.2 million tonnes per month and it is hoped that this stabilisation will continue.
The Company is committed to successfully managing its exposure to risk and to minimising its impact on the achievement of business objectives. The Company’s Risk Management Policy has been approved by the Audit Committee. This Policy is to adopt best practice in the identification, assessment and control of risks to ensure that they are eliminated or reduced to an acceptable level.
The Company has put in place a Risk Management Framework comprising of the following components;
| • | Processes for identifying, prioritising and categorising risks, |
| • | Ongoing assessment and measurement of risks, |
| • | Monitoring and reporting of risks to the Audit Committee as a sub-committee of the Board. |
In addition overall business performance risk is managed through the following measures;
| • | The preparation of an Annual Budget and Five Year Financial Plans, |
| • | Monthly Reporting and Variance Analysis, |
| • | Financial Controls, |
| • | Key Performance Indicators and |
| • | Detailed Policies, Standards and Guidelines to support the control and mitigation of risks. |
Financial Risk Management
The Company’s operations expose it to a variety of financial risks that include foreign exchange risk, interest rate risk, credit risk and liquidity and cash flow risk. Policies to protect the Company from financial risks are kept under regular review. The Directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the Board. The Policies are set out by the Board of Directors and are implemented by the Company’s Finance Department.
Foreign Exchange Risk:
The Company transacts the majority of its business in Euro and therefore has limited exposure to foreign currency movement. The Company also borrows directly in Euro.
Interest Rate Risk:
In order to manage the Company’s exposure to significant adverse interest rate movements, the Company has a policy of maintaining a minimum of 60 per cent (2008: 60 per cent) of its debt at fixed interest rates. In order to achieve this objective, the Company has in place interest rate swap/cap agreements.
Credit Risk:
The Company is exposed to credit risk in the course of trading and to manage this risk it carries out appropriate credit checks on potential customers and trades only with recognised creditworthy third parties.
Liquidity and Cash Flow Risk:
The Company maintains a mix of short and medium term debt finance to ensure sufficient funds are available for planned capital investment. At the end of 2009 the Company had in place un-drawn committed facilities of €20 million. The Company has put in place a new borrowing facility during 2009 to replace and extend the Company’s debt. This facility is due for repayment in September 2012.
The Company’s policy is to maximise investment return by placing surplus cash balances on low risk cash deposit on a short term basis. The Company has treasury mandates in place with a number of financial institutions for this purpose.
Post Balance Sheet Events
There have been no events between the Balance Sheet date and the date on which the financial statements were approved by the Board.
Future Developments
The Company has a budgeted Capital Investment Programme of €10.4m for 2010. The planned Capital Investment Programme includes:
| • | Berth 50 Development; |
| • | Dublin Gateway Project; |
| • | New Berth Harbour Operations. |
Results and Dividends
The Company’s profit for the financial year amounted to €14.5m. The Directors’ allocations and recommendations in respect of this amount were as follows:
| €’000 | |
| Interim Dividend of €0.458 per share paid | 5,300 |
| Increase in Profit Retained | 9,192 |
| Profit for the Financial Year | 14,492 |
The Directors do not propose to declare a final dividend.
Directors’ and Secretary’s Interests
The Directors and Secretary and their families had no beneficial interest in the share capital of the Company at 31 December 2009 and 2008.
There were no contracts or arrangements of any significance in relation to the Company’s business or that of its related Company in which the Directors and Secretary of the Company or their families had any interest, as defined in the Companies Act, 1990.
Joint Venture
Details of our interest in a Joint Venture are set out in note 11 to the financial statements.
Prompt Payments Act
It is Company policy to pay suppliers in accordance with the terms of the European Communities (Late Payments in Commercial Transactions) Regulations, 2002 and the Prompt Payments of Accounts Act, 1997.
To this end, the Company’s payment routines are designed to provide reasonable assurance against material non-compliance with the terms of the Regulations. The standard credit period is 30 days unless otherwise specified in contractual arrangements. Substantially all payments by number and value were made within the appropriate credit period as required. Consequently, the Directors are satisfied that the Company has complied with the requirements of the Act.
Directors
The names of the persons who were Directors at any time during the year ended 31 December 2009 are set out below. Unless otherwise indicated they served as Directors for the entire year.
Lucy McCaffrey (Appointed 23 December 2009)
J Burke (Resigned 29 January 2009)
E Connellan (Retired 8 December 2009)
P Bourke (Term of office expired 9 September 2009)
C Bryce (Resigned 1 October 2009)
K Humphreys (Term of office expired 9 September 2009)
T Hussey
B W Kerr
J Kiersey
P Magner
J Moore
C Rochfort
T Stafford (Term of office expired 12 June 2009)
Following the enactment of the Harbours (Amendment) Act, 2009 the number of Directors is reduced from 12 to 8.
Relations with Shareholders
The Chairperson, Chief Executive and management maintain an ongoing dialogue with the Company’s shareholders on trading performance, future plans and strategic issues. Certain specified matters require the approval of the Minister for Transport and/or the Minister for Finance and ongoing communication with the relevant Minister is maintained through their respective departments. The Chairperson reports to the Minister for Transport as required under Section 28 of the Harbours Act, 1996 and as required under the Code of Practice for the Governance of State Bodies.
Corporate Governance
Dublin Port Company is committed to maintaining the highest standards of corporate governance and has adopted the principles of corporate governance and the Code of Practice for the Governance of State Bodies issued by the Department of Finance in May 2009.
The Company also complies with its obligations under the Ethics in Public Office Act, 1995 and the Standards in Public Office Act, 2001.
The majority of Directors are non-executive and are appointed by the Minister. The Board meets formally on a monthly basis and has a formal schedule of matters specifically reserved to it for decision. The Board has access to the advice and services of the Company Secretary and can take independent professional advice as and when deemed necessary.
The Board established an Audit Committee in 1997 under formal terms of reference. The members of the Committee during the year were Mr. B. W. Kerr (Chairman), and Mr. P. Magner.
Mr. B.W. Kerr was appointed Chairman of the Audit Committee on 29 October 2009 following the resignation of Ms. C. Bryce on 1 October 2009. Mr. P. Magner was appointed to the Audit Committee on 29 October 2009. A further vacancy exists on the Audit Committee and the Directors intend to fill this vacancy as soon as possible.
Attendance at Meetings
There were 11 General Board Meetings during the year ended 31 December 2009.
The attendance of Directors at meetings of the Board was as follows:
| Attended | Eligible to Attend | |
| J Burke | 1 | 1 |
| E Connellan | 11 | 11 |
| P Bourke | 4 | 7 |
| C Bryce | 6 | 8 |
| K Humphreys | 5 | 7 |
| T Hussey | 10 | 11 |
| B W Kerr | 11 | 11 |
| J Kiersey | 8 | 11 |
| P Magner | 8 | 11 |
| J Moore | 11 | 11 |
| C Rochfort | 10 | 11 |
| T Stafford | 4 | 5 |
Directors’ Expenses
Expenses in the amount of €2,205 have been paid to the Board during the year in respect of car mileage expenses.
Internal Controls
The Board has overall responsibility for the Company’s systems of internal control, which have been designed to give reasonable assurance that transactions are executed in accordance with management’s authorisation, that assets are safeguarded, that fraud is prevented and that proper financial records are maintained. To ensure the effective application of the Company’s internal controls, the services of qualified personnel have been secured and duties properly allocated among them.
The systems of internal control include the following:
| • | The process of identifying business risks and the evaluation of their financial implications is carried out through regular reviews of the Company’s strategic plan. The latest strategic plan for the period 2007 to 2011 was adopted by the Board in January 2007; |
| • | An annual budget approved by the Board and monthly consideration of actual results compared with budget forecasts; |
| • | An Audit Committee which has been established to review and discuss, with the internal and external auditors, the Company’s internal accounting controls, Internal Audit function, choice of accounting policies, internal and external audit plans, statutory auditors’ report, financial reporting and other related matters; |
| • | An Internal Audit function which reviews key business processes and controls; |
| • | Formal codes of conduct for Directors and employees; |
| • | Procurement policies and procedures. These ensure, firstly, that procurement activities are carried out so as to provide value for money in terms of overall lifecycle costs and, secondly, that all relevant State Guidelines and EU Directives applicable to Public Utilities are complied with. |
The Board through the Audit Committee is responsible for reviewing the effectiveness of the systems of internal control.
A review of the effectiveness of the system of internal financial control was undertaken by the Internal Auditor, Deloitte, and no significant control weaknesses which pose a significant risk of financial loss or operational disruption, that requires immediate attention at Board level, were revealed.
Auditors
The auditors, PricewaterhouseCoopers, will be re-appointed in accordance with section 160(2) of the Companies Act, 1963.
On Behalf of the Board
L McCaffrey
B W Kerr
25 March 2010