Forth Ports' land value is dropping

Published on Monday 17 March 2008 21:34

FORTH Ports is to maintain a freeze on major land sales despite reporting a loss at its property division and slashing the value of its stake in Ocean Terminal.

The port and property development company, which has major land holdings around Leith in prime development locations, reported a 9 per cent fall in underlying profits to 27.6 million in 2007.

A strong performance in its port division was offset by a slowing in the appreciation of its property assets and a drop in income after it ceased sales during 2006, opting to develop the assets itself.

Forth's property business made a loss of 1.3m in 2007, compared to a profit of 4.2m a year earlier.

Much of the loss came after the value of shopping centre Ocean Terminal, a joint venture with Bank of Scotland, was cut by 11 per cent, reducing Forth Ports share of the value by 7.7m.

Overall estimated "calculation of worth" of Forth Ports' property assets – the value of the land once it is developed – rose by 3 per cent to 408m.

The small rise came after reaching a number of key milestones, including the confirmation of funding for the tram line linking Leith to central Edinburgh.

Chief executive Charles Hammond said yesterday that despite the loss the company had narrowed the gap in the value of its property assets compared to the rest of the Edinburgh area.

He added: "It's not going to lead to any change in strategy at all." Hammond said that funding for the tram network and the submission of "master plan" for Leith docks would not create a sudden jump in valuation.

"The fact that we have grown our valuation in a declining market has got to be good news."

Ocean Terminal's revaluation was prompted by "short term yield trends", and there was increased letting interest at the centre, Hammond said.

Forth Ports reported its core port operation business had shown "very strong" growth, with revenue up 14 per cent to 165m and underlying operating profits up 13 per cent to 38.7m.

Performance also improved strongly at Tilbury, the port closest to the site of the 2012 London Olympics, and across its six Scottish ports. Hammond said the group was feeling no impact from an economic slowdown.

Shares in Forth Ports dropped 2.8 per cent to 1,905p, despite the company increasing its total dividend by 5.5 per cent to 47.7p.

TILBURY A WINNER

FORTH Ports' only English port, Tilbury, on the River Thames in Essex, is the closest major port to the site of the 2012 London Olympics.

More than four years ahead of the event, the Scottish company is already winning business from directly related projects. Hughes Associates has recently started an operation to barge bricks from the port up the Thames to the Olympic site for construction projects.

Since London was announced as the venue, Forth has said it is in line to win related business, and the company confirmed yesterday that inquiries about the use of its facilities continued to grow.