Portsmouth council’s shipping firm MMD is set for cash injection of £50m over 20 years

A LOSS-MAKING council company is set for an injection of £50m over the next 20 years.
MMD in PortsmouthMMD in Portsmouth
MMD in Portsmouth

Cabinet members of Portsmouth City Council are set to consider options for the future of shipping company MMD at a meeting on Tuesday (Feb 26), with a recommendation to retain the business and provide a £15m loan for it.

This cash was approved at the council's budget on February 12, and is needed to make the company profitable the year after next.

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A report compiled for cabinet suggested that a further £35m will be needed to keep the company on the up although not all of this would come from the council, and some could come from profits raised by MMD.

It comes after concerns that the company is expected to run at a loss of £1m in the 2019/20 financial year, following a £5.8m loss at the end of 2018/19.

The council's head of economic development, Councillor Ben Dowling, was optimistic that any investment into the company would benefit the city. He said: 'It is important for people to understand that any investment into MMD will bring in greater investment over a period of time.

'Any investment the council makes in MMD is on the basis there's a clear return that can be then used for public services.'

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It is thought some of the losses came as a result of losing fruit importer Geest last year, however, the report also contributed this to 'staff inefficiencies'.

Director of MMD, Mike Sellers, explained how this had been tackled. 'Through restructuring we are now operating much more efficiently, and the appointment of a new senior management team has given us strategic focus towards how contracts are managed,' he said.

'The £15m loan for MMD is crucial in driving forward the first phase of the 20-year business plan. Industry specialist consultants were used by Portsmouth City Council to ensure the investment proposal was of value as they identified the company’s potential subject to appropriate investment.

'This includes plans to relocate the head office to a prominent location, which improves access for customers and staff, creating additional container space to handle an increase in cargo, significant restructuring of the site layout using automation to manage freight effectively, and improved quayside space for handling a variety goods and larger ships.

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'While MMD has always paid back  loans to the council with interest, it is the intention that following this investment MMD funds its own capital projects through profits.'

If councillors agree to retain MMD and provide the £15m loan the company is expected to return to profit in 2020/21.

Other options detailed in the report include liquidating MMD and renting out the land for industrial use.