Profits fall at Forth Ports

Mar 17 2008

Profits at Forth Ports fell from £55.6m to £32.3m last year partly as a result of its decision not to carry out property disposals.

Chief executive Charles Hammond remained upbeat, saying 2007 had been a very good year for the group with a strong underlying performance in ports and the successful achievement of milestones in property.

Its ports which include Leith, Grangemouth, Dundee, Methil, Burntisland and Rosyth saw underlying operating profits grow by 13 per cent to £38.7m.

The total volume of traffic through the ports division increased by 12 per cent to reach 46.3m tonnes in 2007 compared with 41.3m tonnes in 2006.

The biggest hit to overall profits was due to a £7.7m writedown on the value of the Ocean Terminal Shopping centre in Edinburgh, which is held in a joint venture with the Bank of Scotland.

They were also hit by amortisation costs from the £46m acquisition of the Nordic Group, a recycling business, in June 2007.

Hammond said in common with the property sector generally, the value of the Ocean Terminal Shopping Centre at December 31, 2007 declined, with a market value of £130m gross.

"This was a reduction of nearly 11 per cent in value of which the Group's share was £7.7m," he said.

However he said rental income at the centre grew and the valuation adjustment was solely as a result of a shift in yields reflecting general market conditions.

"Several new tenants commenced trading during 2007 and tenant interest remains strong," he said.

Its overall property development assets were independently valued at £282m compared to £277m last time.

Hammond said milestones had been set to achieve planning approvals for developments at the Hub and Leith Docks over the course of the next few years whilst, at the same time, laying down the infrastructure for the further development of Western Harbour and Granton.

The proposed masterplan for the Hub, which incorporates two "villages" around the Ocean Terminal Shopping Centre in the areas known as Waterfront Plaza and Britannia Quay, had been further refined by masterplanning architects RTKL for the group.

They plan to submit a planning application in the first half of 2008.

"The timescale is long but the rewards for shareholders are significant and continued progress should result in growth in value," he said.

A new revision to the masterplan at Western Harbour is being taken forward to change the mix of the residential development to give more townhouses and fewer flats in keeping with current market demands. Further land areas around Western Harbour are being considered for reclamation.

Hammond also revealed the group had been looking at how it could exploit its asset base further in developing and distributing renewable energy.

Within the ports of Tilbury and Leith, it already has major electrical ring mains as part of its utility infrastructure which provide electricity not just for port usage but also for its tenants.

It engaged a consultancy firm to carry out a study to look at the generation of green energy, both for its own use and for commercial sale. This confirmed the commercial viability of producing energy from waste/bio-products, onshore wind and offshore wind.

It has now submitted a planning application at Tilbury for onshore wind energy which it said could easily be applied to Scotland, both onshore and offshore.

Investors will receive a 5.8 per cent increase in their final dividend to 31.95p a share.