Chief of Forth Ports Charles Hammond is happy to keep bidders waiting

AS HE puts the final touches to what may be the last set of results he presents as chief executive of Forth Ports, Charles Hammond and his fellow directors will be paying close attention to a number of specific areas that could swing the company's future.

• Charles Hammond

Having rebuffed two bids for coming in "far short" of what the board believes the firm is worth, Hammond insisted that the would-be buyers – a consortium that includes some already weighty investors – have to wait. Talks on price won't even start until the port operator's results come out before the end of the month.

The Northstream consortium – which includes Peel Holdings, infrastructure fund manager Arcus and the RREEF infrastructure investment arm of Deutsche Bank Asset Management – are said to be keen for further information about some of the Edinburgh company's lesser-performing operations.

But another focal point, the valuation of Forth Ports' property portfolio, will likely play in Hammond's favour. Having been knocked down in price significantly in 2008, these are likely to be revised upwards in the latest annual review.

Problem children coming under scrutiny at Forth Ports include the Nordic operation at the Chatham Dockyard in Kent, as it has struggled in recent months amid tough market conditions. In a trading update issued in October, Forth Ports said Nordic's full-year performance would likely be below forecasts because tonnages for recycling had been lower than expected. The business posted a 10 per cent decline in underlying pre-tax profits for the first half of the year.

Another point of contention will centre on the performance of Tilbury Container Services (TCS), the deep sea container terminal in Essex that is jointly owned by Forth, DP World and Associated British Ports.

Forth Ports said in December that the full-year performance at TCS would be "down significantly" on what the company described as an excellent performance in 2008. However, there was a hint that things could be improving at the operation, in which Forth holds a one third stake: "Volumes remain low but TCS has won new business for 2010."

If these businesses turn in a poorer than expected performance, or if Hammond and his fellow executives fail to outline an adequate strategy for the future of these operations, this would provide ammunition for the lower prices of Northstream's unsolicited takeover approach.

In Forth Ports' favour is the pending review of the valuation on its property portfolio. Forth Ports has done this on an annual basis for the past few years since taking the strategic decision to develop its own surplus property, rather than selling it off at a cheaper price.

Last year, Forth Ports slashed its land bank to a market value of 60 million, down from 282m 12 months earlier. Industry observers say although the collapse in the property market demanded that the value be cut, the lower figure could now prove over-pessimistic.

A research note issued last week by analysts from Arbuthnot Securities highlighted the fact that the 2008 valuation would have been depressed by the poor state of the markets.

"Equally, the 2007 valuation reflected the bullish prevailing market outlook," the note said. "A medium-term approach to valuation would probably yield a figure in between the two values."

This fact won't be lost upon John Whittaker, the 67-year-old founder and head of Peel Holdings. The billionaire, who resides on the tax-friendly Isle of Man, is regarded as a shrewd property investor with the ability to pick up assets at a keen price.

As such, Whittaker's eye for detail will probably also be drawn to other elements within Forth's results announcement, such as the size of the company's pension scheme liabilities and the extent of its capital expenditure commitments. At the half-year stage, Forth Ports reported a pension scheme deficit of 29.1m, though capital expenditure outlays were down dramatically.

Analysts say the success of any potential firm offer by Northstream will hinge upon the price offered, as investors will have to weigh up the short-term benefits of cash on the table against the longer-term possibility of a bigger upside from Forth Ports' property interests, as well as its renewable energy joint venture with Scottish & Southern Energy. For his part, Hammond has led Forth Ports' board in a firm rejection of two offers from Northstream: the first at 1,285p per share, the second at 1,340p.

"The board is of the unanimous view that these proposals fall far short of the value of Forth Ports," the company said at the time the approach was revealed. However, Forth Ports did concede that it would meet the Northstream consortium in their role as shareholders after the results announcement on 22 March.

"It is very difficult to say who is driving the process and who has the most control within the consortium," says one industry observer. "We won't really know until they decide – and if they decide – to disclose that."

The name many people would recognise is that of Clydeport-owner Peel Holdings, the infrastructure, transport and real estate group whose assets amount to more than 5 billion. It is headed by media-shy Whittaker, who began building up the business in the early 1970s from the base of his family's quarrying operation in Lancashire.

Peel acquired Clydeport in 2002, dampening intermittent but long-standing speculation as to whether the Glasgow ports business and its Edinburgh counterpart might some day strike their own merger deal. However, Australian-based Babcock & Brown revived takeover talk when it purchased a 20 per cent stake in Forth Ports in January 2008.

That shareholding, which now stands at 23.5 per cent, is controlled by Arcus Infrastructure, the institutional fund management group formed when former managers bought out Babcock's multi-billion pound European infrastructure fund in July last year. The group is now headed by senior partner Simon Gray and managing partner Toto Lo Bianco, both of whom keep well clear of the public limelight.

The other major player in Northstream, RREEF, does not directly control a significant amount of Forth Ports' stock. However, it does retain a 49.9 per cent stake in Peel Ports, which it purchased for a rumoured 775m in 2006.

Should a deal go through, it would bring two of the largest urban regeneration projects currently underway in Scotland under communal ownership. Forth Ports is in the opening stages of a 30-year plan to develop nine so-called "urban villages" along Edinburgh's waterfront, including the construction of nearly 16,000 flats and homes. Peel's Clydeport, meanwhile, is an active player in Glasgow's Clyde Waterfront redevelopment.

Though there is as yet no suggestion that a takeover deal would be detrimental to either of these projects, city officials in Edinburgh are keen to ensure that work along the city's so-called "blue belt" progresses whatever the ownership situation. Councillor Tom Buchanan, head of the city's Economic Development Service, says the city would be looking for early discussions with any group that might take over Forth Ports.