After spending a couple years in turbulent financial waters, the local port authority’s cash position has improved and the government-controlled agency is now making a substantial annual operating profit, Cayman Islands auditors said.
Figures show the port turning a $1.9 million profit as of June 30, 2014 – the latest records available. The data were made public last week in the agency’s annual report.
The port authority leadership expected “conservatively” to turn a $1.5 million profit in the government financial year that ended on June 30, 2015.
“The increase in cargo volumes over the past two fiscal years has reversed the trajectory of declining performance at the port authority,” the statements read.
The $1.9 million profit as of mid-2014, was an improvement over the profit of about $375,000 the year before, auditors said.
However, auditors note that the port still has some financial problems to work through. Despite the operating profit recorded in 2014, the agency’s total liabilities exceeded its assets by nearly $1 million.
Auditors hope to see this deficit reduced within the next two years, with continued improvements in both cruise passenger arrivals and cargo volumes.
In 2013, Cayman had one of its weakest years in the past decade for cruise passenger arrivals, with fewer than 1.4 million visitors. In 2014, the number of cruise visitors rose to more than 1.6 million, and this year cruise arrivals have increased again.
However, auditors also noted that a significant revenue source of the port, cruise passenger tender fees, remained uncollected during 2012/13 because of a dispute with the cruise lines.
“The authority amended its tender fees in March 2010, along with other fees, but before the implementation of those fees, it was realized that the charges to the tender company will only be passed on to the cruise lines,” auditors stated. “The fees conflicted with the Florida-Caribbean Cruise Association agreement and were never charged.”
The loss of anticipated port revenue from the tender fees was estimated at more than $500,000 per year for the 2011/12 and 2012/13 government budgets. In testimony before the Legislative Assembly’s Public Accounts Committee this spring, port officials noted that cargo shipments also dropped off by half between 2005 and 2013, while operational costs during that period stayed roughly the same.
Port managers expected the issue identified with the tender/cruise passenger fees to remain until the port pays off its existing loans taken out for improvements to the Royal Watler cruise terminal. That was expected to occur in September 2017.