Property slump sees Forth Ports assets fall £222m

FORTH Ports yesterday unveiled a massive writedown on its property assets but predicted that its finances would be sustained by its traditional docks business, which is set to benefit from work on the London Olympics.

Forth reported a £30.7 million pre-tax loss for 2008 and property consultants DTZ slashed the market value of its assets by £222m to just £60m, warning that 80 per cent of its land currently had no development value.

But Charles Hammond, the chief executive of the Leith-based firm, yesterday claimed that the valuation of its portfolio was "irrelevant" because its property sales were on hold.

And he maintained that the ports business – Forth's chief revenue driver, which increased its operating profits by 23 per cent to £47.6m last year – would continue to sustain the company.

Despite a major downturn in consumer spending, the ports business has continued to hold up in 2009, with most of its volumes coming from the export of oil and gas and dry commodities.

In Scotland, where the company owns seven ports in the Forth of Firth and in Dundee, export volumes rose 11 per cent in 2008, which Hammond said was "probably the best performance of any port terminals in the UK".

Forth Ports is also beginning to see an increase in bookings related to the Olympics at Tilbury on the River Thames. Forth's only English port, Tilbury is the closest deep water terminal to the Olympics site.

The firm reported yesterday that companies were now booking space to transfer construction materials on to barges there to the East London Olympics site.

Hammond explained: "What we've seen is that a lot of customers have signed up to facilities ahead of time, basically because they want to be positioned for Olympics activity."

After buying additional land next to Tilbury, Hammond said he was confident Forth could cope with the demand. He added: "Capacity would not be an issue for us for the Olympics at all."

The performance of the ports business was in stark contrast to its property arm. Forth has hundreds of acres of disused dock land in Leith that is now earmarked for development.

Hammond claimed DTZ's cut in the valuation of the firm's land, particularly in Leith, did not diminish his faith in the value of the assets.

He said: "Clearly the valuation adjustment is a reflection of today's market, but what it doesn't do is reflect the potential the site has to contribute to the Scottish economy and to the expansion of Edinburgh.

"In a sense it's irrelevant because we weren't looking to sell anyway."

Hammond revealed that the company was now focused on reducing spending and had stripped "several million" from its cost base, mainly through a reduction in the use of external consultants.

The company also rebased its annual return to shareholders to a more conservative level, with a total dividend in 2008 of 28.6p, a 40 per cent fall on 2007.