Ocean Terminal soars in value

FORTH PORTS has seen the value of its Ocean Terminal shopping centre soar by £25 million in the past year - meaning its flagship Leith site has finally begun to deliver a significant return.

The seafront complex cost 110m to build, but by the end of 2002 had dropped in value due to slow occupancy. Now, after adding 12 new tenants in a year, its value is around 140m.

Ocean Terminal is at the centre of the group’s property arm, which is focused on the Leith redevelopment project now known as Edinburgh Forthside. The division boosted its operating profit by 11 per cent to 25.2m in 2004, a rate faster than the group’s overall jump of 8 per cent to 59.3m.

The latter figure includes the performance of the group’s ports division, which improved 14 per cent in the second half of the year after a dismal opening six months. Underlying profits rose 2 per cent to 34.7m, based on higher outputs at Grangemouth and Dundee but lower activity at Leith docks.

Charles Hammond, chief executive, said: "We see this as a solid year financially, but with a number of strategic decisions that should help boost long-term growth."

The full year dividend was hiked 10 per cent to 39.9p, and finance director Wilson Murray said he was committed to raising the pay-out to shareholders above the rate of inflation.

Looking ahead, the group’s key Thames-side paper distribution project is due to start trading in July, while the North Sea - seen as a lag on the group by some analysts - has seen a "more positive outlook".

Meanwhile, the group said it wanted to double the capacity of its first overseas investment - a €20m (14m) move into Multi-Link Terminals - based in Finland and St Petersburg. Hammond said he was likely to look at more opportunities, but would initially focus on its existing investment.

On the property division, the chief executive was defiant on the success of Ocean Terminal, which came in for some criticism in its early years before hosting the MTV Europe music awards in November 2003.

He said the property market had now "accepted that the investment was working well", and pointed to the arrival of fashion and lifestyle stores such as Esprit and Lush.

He predicted that property could grow to 50-50 status with the ports division in terms of profit, from a current split of 60-40. The next step is to develop the Waterfront Plaza complex, while Hammond indicated that a casino could also be built.

He said: "If the legislation goes through, the chances are that Scotland will get one major site - but that is most likely to be in Glasgow. However, there is a case that a regional casino is located in Edinburgh."

Oriel analyst Gerald Khoo said the results were "encouraging", although the group’s shares fell 2 per cent, or 28p, to 1,412p. The stock has rallied from 1,015p since August - based on the potential of the property side and consolidation elsewhere in the industry.

Hammond is set to become chairman of Scottish Enterprise Edinburgh & Lothian.