Forth Ports announces freeze on land sales

FORTH Ports, the Edinburgh port and property development company, is stopping land sales for several years to cut the value gap between its land holding and the rest of the city.

The UK's last remaining listed port operator, which is developing 400 acres of surplus land two miles from the city centre, said that, with substantial infrastructure work required, it planned to make no sales over the next few years aside from some affordable housing.

Forth Ports has been moving industrial operations away from Leith and is progressing plans to develop an ocean liner terminal at the port to make it more attractive for commercial and residential development.

The decision was welcomed by the business community, with the development believed to be of fundamental importance to the city's economy.

Ron Hewitt, chief executive of Edinburgh Chamber of Commerce, said: "PLC's are rarely able to take a long-term view in this way because of pressures to get returns. Long may they continue."

In 2006, property income fell by more than 20 per cent to 13.3 million because of reduced sales on the previous year. Chief executive Charles Hammond said it focused on land value, pointing to a new independent valuation claiming that the land, once developed, would be worth an estimated 402m, 11 per cent more than a year ago.

Hammond denied that commissioning of annual valuations was a tactic to reduce the risk of private equity making a fast profit from buying undervalued assets. However, analysts agreed it was important for the market to be kept aware of the value of the assets, with Forth Ports plagued by takeover rumours towards the end of last year.

Dresdner Kleinwort's Mark McVicar: "They know what they are, the last listed UK port company and they don't have any God given right to be independent. But the one thing they don't want is to end up being vulnerable because they haven't given shareholders the information that they need."

The announcement was made as Forth Ports reported pre-tax profits had fallen by 5 per cent to 55.6m, blamed both on a cut in land sales and a "challenging" year in its Scottish ports operation, when several scheduled maintenance shuts by its clients coincided, meaning operating profits were cut. This did not stop the final dividend being raised 5 per cent to 45.2p. Shares rose 10p to 2,010p.

Meanwhile, the company refused to comment on controversial proposals by SPT Marine to allow ship-to-ship oil transfers in the Forth of Forth.

Forth Ports is still to decide on its application, but there has been intense criticism from environmental campaigners, both of the plan itself and the role of Forth Ports, which stands to profit if the transfer scheme is allowed.