RNS Number:1151R
Forth Ports PLC
12 September 2005
Forth Ports plc
12th September 2005
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2005
Forth Ports today announces interim results for the six months ended 30th June
2005.
These results are prepared under International Financial Reporting Standards
("IFRS") and the 2004 comparatives have been restated accordingly. An
explanation of the Group's transition to IFRS can be found at
www.forthports.co.uk
Property Strategy
* Change of emphasis in property to maximise asset value
* External valuation of assets has been carried out
* Market Value of #285m for development property assets with a Calculation
of Worth 35% higher
* Market Value of #559m for port assets
Financial Highlights
* Group revenue up 8% to #63.2m (2004: #58.7m)
* Underlying port operating profit up 10% to #15.2m (2004: #13.8m)
Port operating profit up 1.5% to #13.6m (2004: #13.4m)
* Group profit before tax #10.8m (2004: #10.7m)
* Basic earnings per share 16.5p (2004: 16.5p)
* 7.5% increase in interim dividend to 14.3p (2004: 13.3p)
Forecast increase of 7.8% in full year dividend to 43p (2004: 39.9p)
Ports
* Secure and valuable income stream which complements property business
* Good performance in line with expectations
* Tilbury, including Tilbury Container Services, achieved best ever first
half throughput at 5.5 million tonnes
* Improved performance from Scottish ports
* Stronger outlook for ports in second half
Charles Hammond, Group Chief Executive, said:
"The change of emphasis towards maximising asset value is a natural and logical
evolution of our property strategy. It will provide greater visibility of our
assets and ensure that we make the most of this unique opportunity to develop a
large part of Edinburgh's waterfront.
The continued growth in our ports' business provides a secure and valuable
income stream that complements the property business and will enable us to
deliver growing dividends to our shareholders".
Enquiries:
Charles Hammond, Group Chief Executive Forth Ports PLC Tel: 0207 404 5959 on
12.09.05
Wilson Murray, Group Finance Director Thereafter 0131 555 8700
Jon Coles/Kate Miller Brunswick Tel: 0207 404 5959
An interview with Charles Hammond in video/audio and text is now available on
http://www.forthports.co.uk and http://www.cantos.com
Notes to Editors:
Forth Ports PLC owns and operates seven commercial ports in the UK - Tilbury on
the Thames, Dundee on the Tay Estuary and five in the Firth of Forth - Leith,
Grangemouth, Rosyth, Methil and Burntisland. It has a 50% equity stake in
Multi-Link Terminals Limited, a container terminal operator in Helsinki and
Kotka in Finland and St. Petersburg in Russia.
Within and around the Forth and Tay Estuaries, Forth Ports manages and operates
an area of 280 square miles of navigable waters, including two specialised
marine terminals for oil and gas export and provides other marine services, such
as towage and conservancy.
The Group also has significant property interests which it continues to develop
as part of its commitment to increase shareholder value.
CHAIRMAN'S AND GROUP CHIEF EXECUTIVE'S REPORT
In the first half of the year, Group revenue increased by 8% to #63.2m (2004 -
#58.7m). Group operating profit reduced by #0.9m to #13.3m, reflecting a port
operating profit of #13.6m (2004 - #13.4m) offset by a loss of #0.3m from the
property division (2004 - profit of #0.8m). The profit before tax amounted to
#10.8m (2004 - #10.7m). Basic earnings per share amounted to 16.5p (2004 -
16.5p). For the first time, these results have been prepared under International
Financial Reporting Standards ("IFRS") and the 2004 comparative figures have
been restated accordingly.
At the same time as the interim results, the Group is also announcing an
evolution of its property strategy which will involve a change of emphasis
towards a greater focus on the maximisation of asset value, as opposed to the
realisation of annual profits from plot disposals. The Board believes that this
evolution is in the best interests of shareholders and further details are
provided below.
Having regard to this evolution of strategy and the Group's expectations for the
port operations, the Board intends to pursue a policy of real annual dividend
per share growth. For the six months ended 30th June 2005, the Board has decided
to increase the interim dividend by 7.5% to 14.3p per share (2004 - 13.3p). The
interim dividend will be paid on 4th November 2005 to shareholders on the
register at 14th October 2005. Subject to unforeseen circumstances, it is the
Board's intention to recommend a final dividend of 28.7p per share giving a full
year dividend of 43p per share for 2005, an increase of 7.8% on 2004.
Property Strategy
As the owner of over 400 acres of waterfront land only 2 miles to the North of
the centre of Edinburgh, the Group has a unique opportunity to develop Leith
into an outstanding waterfront environment on the shoreline of one of Europe's
most beautiful and vibrant cities. In turn, the Board believes that this has the
potential to create sustainable long-term value for the Group's shareholders.
Whilst the Group has successfully increased values and, at the same time, grown
profitability from its property assets over the last five years, the Board
believes that it is appropriate for there to be a change of emphasis in the
Group's future property strategy.
The primary aim of any property and regeneration business should be that of
creating and maximising asset value rather than realising short-term profits at
the expense of this primary aim.
Background
In 2000, the Group published a Market Value and a Calculation of Worth for its
then property assets of #150m and #205m respectively. (The valuation was
undertaken by DTZ Debenham Tie Leung ("DTZ") in accordance with The Appraisal
and Valuation Manual issued by the Royal Institution of Chartered Surveyors
("the Red Book"). Definitions of the terms Market Value and Calculation of Worth
are given in Appendix IV.)
Since then, the Group has pursued a strategy of seeking to increase the value of
its property assets in a number of ways: obtaining planning consents for surplus
land; identifying further surplus property assets; selling land to house
builders at increasing unit values; managing growth in value at the Ocean
Terminal Shopping Centre; and exploiting opportunities for the development of
commercial property. Over the five year period, these actions have resulted in
increases in the levels of reported property profits.
In 2002, the Group brought in Bellhouse Joseph Leith Limited as a 10% equity
shareholder for its then identified property development sites. The subscription
price for that shareholding implied a market value of the Group's property
assets at that time of approximately #200m, an increase of #50m over the Market
Value in 2000. The Group has realised significant further value in the last
three years by continuing the above strategy.
The grant of Supplementary Planning Guidance for the Leith Docks Development
Framework and the launch of the Edinburgh Forthside brand now allow the Group to
adopt a co-ordinated long-term approach to transform a unified and extensive
landbank into an exciting urban regeneration business.
Valuation
As part of its review of strategy, the Group instructed DTZ to carry out a
valuation and review of its property development assets as at 31st August 2005.
DTZ has reported a Market Value of #285m and a Calculation of Worth which is
approximately 35% higher than the Market Value.
The Market Value reflects the value which would be realised if the property
development assets were sold at the valuation date, whereas the Calculation of
Worth represents the present value to the Group of retaining and managing them
with a view to maximising value. For the actual definitions, see Appendix IV. In
future, the Group intends to publish only the Market Value for its property
development assets on an annual basis at each financial year end, commencing in
2006.
The Group also instructed DTZ to undertake a Market Value of the assets in its
port businesses. This has been arrived at by assessing the income streams
attributable to the port assets. The methodology used is shown in Appendix IV.
DTZ has advised that the Market Value of these assets is #559m.
Taken together, DTZ has advised that the aggregate value for the Group's
property development assets and income stream from all the assets in the port
business (excluding the value of the Group's port investments in associates and
joint ventures) amounts to #844m on a Market Value basis. This value, calculated
as at 31st August 2005, takes no account of the Group's current net debt
position. The uplift implied by this Market Value has not been incorporated
within the Group's Balance Sheet as at 30th June 2005 as the property
development assets and the assets in the port business relate principally to
assets which are held at cost within the Balance Sheet. Where the assets are
already classified for accounting purposes as investment property (principally
comprising tenanted land and buildings within and adjacent the port estates)
they are already recorded at fair value, based on the last market valuation
exercise.
Future Strategy
The Board believes that the Group's property strategy should, in future,
include:
* A greater level of balanced investment in infrastructure and public
realm in advance of the realisation of sales;
* A rate of release of housing and apartment units to meet natural levels
of demand and therefore, achieve higher values;
* Further recruitment to establish an experienced and dedicated Property
Team to maximise asset value; and
* Participation, where appropriate, in development opportunities to add
value to our property portfolio.
At the core of the Group's property strategy is a desire to maintain a
significant influence in the design and implementation of developments to ensure
that Edinburgh Forthside evolves in a coherent and sympathetic way with the rest
of the City and is at the heart of delivering lasting economic value to the
metropolitan city region. Building on the relationships established to date with
the City Council, the local community and other key stakeholders, the Group
intends to do this through continued involvement in the planning and economic
development processes as different sites are released.
One of the major benefits of the Group's future strategy will be the flexibility
afforded to be able to take advantage of commercial or market opportunities,
depending on the prevailing conditions or specific circumstances.
We believe that the shift in emphasis will create a sustainable long-term
property business whose value will be more visible to, and will create greater
value for, shareholders.
Financial and Current Trading Implications
The Group continues to make progress on development opportunities for Waterfront
Plaza, a significant site which was identified for disposal to generate property
profits in 2005. In light of the change of approach, and advice that the Group
has received about the strategic value of this site, it is unlikely that the
Group will choose to dispose of Waterfront Plaza in 2005, notwithstanding the
levels of interest already shown in that site. If the site were not to be sold
in 2005, this would have a material impact on the reported trading profits for
the current year.
Discussions between Asda and the planning officials are also progressing on the
proposed supermarket site, although the timescale for the grant of planning
approval remains to be determined. At Dundee, progress is being made on the sale
of the major residential sites which should be concluded by the end of the year.
Looking to the medium term, the change in primary focus towards maximising asset
value is likely to lead to the reported level of property trading profits being
significantly lower in some years than levels of profit historically reported.
Notwithstanding the above, and taking into account the Group's financial
flexibility (benefiting from the income streams from the ports' business and the
inflow of cash from previous land sales), the Group expects still to be able to
fund:
* Capital expenditure to maintain and grow income from port operations;
* Investment in infrastructure to increase the value of the Group's
property development assets; and
* Real rates of annual dividend per share growth.
The Board will continue to review the most appropriate organisational, financial
and tax structures for the component parts of the Group.
Review of Ports' Business
Revenue increased by 9% to #62.4m (2004 - #57m). Operating profit was #13.6m
after absorbing a net #1.6m of one off costs principally comprising past service
pension costs, tug repair costs, training costs for new employees at the Stora
Enso distribution facility and severance costs. After adjusting for these
factors, underlying operating profit growth in ports was 10%. Total tonnage
increased marginally to 21.8 million tonnes with a 5% increase in dry cargo
tonnage to 6.1 million tonnes and a 1% decrease in piped cargo tonnage to 15.7
million tonnes.
Tilbury
Good progress was made at Tilbury in the first half of the year with an improved
financial performance on a tonnage which was 4% lower at 3.6 million tonnes.
Tonnages of paper were down compared with 2004 but this reflected, in part, the
Finnish paper industrial dispute. Grain tonnages were up on the first half of
2004. The total throughput at Tilbury, including Tilbury Container Services
("TCS"), amounted to 5.5 million tonnes, the best ever first half throughput at
Tilbury.
Container volumes through the short sea division increased marginally and TCS
saw a significant increase in volume in the first half of 2005 compared with the
equivalent period in 2004 which improved its operating profit to #1.3m compared
with #0.8m in 2004.
The new Stora Enso distribution facility was completed in June and was open for
business on 1st July. Unfortunately, the Finnish dispute disrupted the
terminal's initial commissioning period which resulted in a slower and more
challenging transfer of the business than expected. The outlook for the terminal
and its operations, given the contract underpinning and quality of the facility,
remains positive.
The second half of the year will benefit from the start-up of the Stora Enso
distribution business together with consequential third party business back to
Finland and Sweden. TCS should continue with a similar level of performance in
the second half of the year with any further improvements dependent upon vessel
scheduling and utilisation on the North-South trade routes. In addition, the
short sea container business should show an increase in volume in the second
half following the decision by Samskip to deploy larger vessels at Tilbury to
accommodate the merged Geest-Seawheel business. Cargill announced the closure of
their plant at Tilbury with effect from the end of October 2005. Given the
significant level of guaranteed tonnage committed under a long-term contract,
this should not have a major effect on the trading position of Tilbury's grain
business.
Scottish Ports
There was an improved performance from the Scottish Ports in the first half of
2005 which would have been stronger but for the increased costs of electricity
and fuel of #0.2m and a one off cost of #0.4m to repair a tug. The total
throughput increased by 8% to 6.1 million tonnes, with dry cargo increasing by
22% to
2.5 million tonnes.
Grangemouth
The first half of the year saw an increase in container volumes to just under
62,000 boxes which was an increase over last year of 2.5%. Revenue per box,
however, showed a greater level of increase. Timber tonnages were below their
peak of 2004 but iron and steel tonnages increased from 32,000 tonnes to 66,000
tonnes in the first half reflecting an improvement in North Sea oil related
activities.
This year has seen a significant improvement in the operational efficiency at
the container terminal where the throughput in June was the highest ever
recorded. Container operations benefited from the following:
* The new straddle carrier fleet is working well and approval has recently
been given to purchase a further five straddle carriers at a cost of #2.5m
which will replace the Sisu operation allowing greater efficiencies to be
achieved in the container operation;
* A new Liebherr container crane has been ordered and is scheduled to be
operational early in 2006. This will enable the port to handle larger
container vessels; and
* The container terminal has also benefited from the introduction of the
Integrated Port Operating System for recording container movements. This
has resulted in improved revenue capture and increased the revenue per box.
Progress has been made in examining and marketing Grangemouth's potential to
become a leading distribution hub in Scotland. A site of about 80 acres has been
identified which will become a distribution park offering value added
opportunities to complement the businesses which are contributing to the growth
of the container terminal. We are in discussions with the Scottish Enterprise
network about facilitating infrastructure connections to open up the site.
The outlook for the second half is one of higher growth in container throughputs
together with the prospect of an additional customer at the container terminal.
Leith
After a difficult first half in 2004, there was a significant improvement in the
first half of 2005 which saw a near doubling in dry cargo tonnage to nearly 0.7
million tonnes. This increase arose from a large increase in throughput from
Bredero Shaw where tonnages increased from 8,000 tonnes in the first half of
2004 to 0.3 million tonnes in 2005, and from newly-won coal traffic which
produced just under 0.1 million tonnes of business.
The outlook for the second half at Leith is encouraging. The medium term
prospects for Bredero Shaw for succeeding years remain positive. Although the
new coal contract is only for an initial one year period, the prospects are good
for this to continue beyond 2006.
Dundee
The overall operating performance at Dundee was marginally down on 2004 albeit
with a 20% reduction in dry cargo tonnage in 2005 compared with 2004. Both
agripods and fertilisers recorded significant reductions in tonnage with the
latter reflecting a high level of stock at the beginning of the year which has
now reduced to zero. Piped cargo increased by 30,000 tonnes to 280,000 tonnes at
the half year. During the first half of 2005, we handled three trial shipments
of pulp cargo for Star Shipping which it is hoped will continue.
Rosyth and Fife Ports
The financial performance was steady but reflected the fact that no coal was
handled directly by the Group in 2005. There was a 16% increase in the volume of
freight carried by the Superfast service from Rosyth to Zeebrugge and there were
also significant increases in timber tonnages.
Piped Cargo
The piped cargo at Braefoot Bay increased by 0.2 million tonnes to reach 1.8
million tonnes at the half year whereas the Hound Point tonnages amounted to
10.3 million tonnes, a reduction of 0.4 million tonnes. Whilst the outlook for
Braefoot is positive for the second half of the year, at Hound Point, it is
unlikely that tonnages will increase until the last quarter of 2006 when it is
expected that the Buzzard Field in the North Sea will come on stream.
The ship-to-ship transfer discussions with the Marine and Coastguard Agency are
nearing a conclusion. It is hoped that a positive decision will be made on this
new business within the next few months which could allow the business to
commence by the end of this year.
Multi-Link Terminals Limited Group ("MLT")
MLT saw significantly increased volumes at Litke Bay, St. Petersburg over 2004.
As expected, volumes at Helsinki were lower than 2004, with the increased depth
of water at Litke Bay facilitating direct calls rather than trans-shipment from
Helsinki. This was compounded by vessel availability and scheduling issues
within the Containerships' fleet. New business at Kotka for Mediterranean
Shipping Company was won at the beginning of the year. Overall MLT throughputs
were at a similar level to 2004.
The extension to the quay at Litke Bay was completed at the end of 2004 and the
new container compound areas should be completed shortly thus increasing
capacity significantly. A new mobile harbour crane and two new rubber tyred
gantry cranes have been purchased and there is a strong level of market interest
in utilising these facilities.
Finance
This is the first set of interim results issued under IFRS. The Group issued a
press release to the London Stock Exchange on 12th August 2005 which explained
how the transition to IFRS had affected the reported financial position,
financial performance and cash flows of the Group. A summary of this is shown in
Appendix III. Full details of this press release are available through the
Investor Relations section on the Forth Ports PLC website -
www.forthports.co.uk. This information includes reconciliations for the
comparative periods reported under UK GAAP to those reported for the same
periods under IFRS.
Under IFRS, the Group's long-term property debtors have to be stated at
amortised cost. There is no retrospective adjustment made to the figures prior
to 1st January 2005. The adjustments required at 1st January 2005 are shown in
Appendix II. As a result, the reserves at that date have been reduced by #5m
which represents the difference between the carrying value of the long-term
debtors at 31st December 2004 and their amortised cost. This difference of #5m
will be released to the Income Statement over the period in which the cash is
received which is generally no more than three years. In the six months ended
30th June 2005, the amount so released was #1.6m.
The Group has also had to measure its zero coupon loan stock ("ZCLS") loan to a
joint venture company at amortised cost. This results in a reduction of #11.2m
in the carrying value of the ZCLS at 1st January 2005, as shown in Appendix II.
Going forward, this will be shown as an interest expense through the Group's
share of joint venture company results and as a corresponding credit through the
Group's finance income line in the Income Statement over the life of the loan;
there is no effect on profit in the Group accounts. The reduction in Group
retained earnings of #11.2m is offset by an equal and opposite uplift in the
investment in joint ventures as a result of the joint venture company valuing
its ZCLS at amortised cost.
The pension schemes' actuarial deficit increased from #22.5m to #40.7m at 30th
June 2005 (before the related deferred tax asset) reflecting principally the
change in the discount rate used between 31st December 2004 and 30th June 2005
and a change in the asset investment returns. Such actuarial gains and losses
are charged through the Statement of Recognised Income and Expense ("SORIE"). In
addition, there was an increase in the costs charged through the Income
Statement amounting to #0.8m which principally reflected past service costs
recognised in the period.
Under UK GAAP, the Group's tenanted land and buildings (now reclassified as
investment property) were the subject of an independent valuation at three and
five yearly intervals. The last independent valuation was carried out as at 31st
December 2003; a new valuation is currently being carried out which will be
reflected in the year end Balance Sheet with any increase or decrease in market
value going through the Income Statement.
The rate of corporation tax for the year is expected to be approximately 29.5%
(2004 - 31.5%).
During the half year, the Trustee of the Employee Share Option Trust purchased
nearly 444,000 shares at a net cost of #5.4m, from which it satisfied options
for 118,932 shares in favour of the Executive Directors under the existing
Executive Share Option Scheme (58,720 shares) and under the 2002 Long Term
Incentive Plan ("LTIP") (60,212 shares). The balance of shares held at 30th June
2005 by the Employee Share Option Trust amounted to just over 329,000 shares.
The cash inflow generated from operations amounted to #17.3m (2004 - #8.9m). An
amount of #10m was spent on property infrastructure costs during the half year.
With the completion of the Stora Enso distribution project in June of this year,
the cash outflow on capital expenditure amounted to #16.3m compared with #18.8m
in 2004.
The gearing level at 30th June 2005, as measured against total invested capital
(equity and net debt), amounted to 47% (2004 - 38%) which reflected an invested
capital position of #403m including net debt of #190m. Interest cover, measured
on net interest payable excluding the effects of the unwinding of discount on
ZCLS and long-term debtors, was 3.2 times covered (2004 - 5 times covered).
Prospects
The outlook for ports in the second half is stronger with the benefit of the
Stora Enso distribution facility coming on stream, higher container volumes and
the benefit of increased coal volumes. Trading since the end of the half year
has been satisfactory.
In property, the Board has set out its strategy which recognises that there is
significant potential to enhance the asset value of the Group's property assets
by concentrating on longer term value creation as opposed to short-term
profitability. As noted above, it is unlikely that Waterfront Plaza will be sold
in the current financial year, which will have a material effect on reported
property profits, but not on the overall value of the Group's property assets.
The Group is well positioned to continue to pursue its strategy for growth by
investing in port operations to capitalise on commercial opportunities and
investing in infrastructure to maximise the value of its property development
assets. We look forward to the future with confidence.
Christopher Collins Charles Hammond
CHAIRMAN GROUP CHIEF EXECUTIVE
12th September 2005
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Unaudited
six months six months year
to 30.6.05 to 30.6.04 to 31.12.04
Notes #m #m #m
Group revenue 2 63.2 58.7 162.2
Cost of sales (40.2) (35.5) (87.7)
-------------------------------- ----- ----------- ----------- -----------
Gross profit 23.0 23.2 74.5
Administrative expenses (9.7) (9.0) (17.7)
Profit on disposal of investment
property - - 1.2
-------------------------------- ----- ----------- ----------- -----------
Operating profit 2 13.3 14.2 58.0
Finance income 2,3 2.4 0.2 0.3
Finance costs 2,3 (4.4) (3.0) (7.0)
Share of results of joint 2,4 (1.2) (1.2) 10.0
ventures
Share of results of associates 2,5 0.7 0.5 1.3
-------------------------------- ----- ----------- ----------- -----------
Profit before tax 6 10.8 10.7 62.6
Taxation 7 (3.3) (3.2) (15.2)
-------------------------------- ----- ----------- ----------- -----------
Profit for the period 7.5 7.5 47.4
================================ ===== =========== =========== ===========
(Loss)/profit attributable to
minority interest (0.0) (0.0) 1.5
Profit attributable to equity
shareholders 7.5 7.5 45.9
-------------------------------- ----- ----------- ----------- -----------
7.5 7.5 47.4
================================ ===== =========== =========== ===========
Earnings per share
Basic earnings per share 8 16.5p 16.5p 100.7p
Diluted earnings per share 8 16.4p 16.4p 100.2p
There were no discontinued operations during the period.
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Unaudited Unaudited Unaudited
six months six months year
to 30.6.05 to 30.6.04 to 31.12.04
#m #m #m
Fair value movement on cash flow hedge (0.3) - -
Deferred tax movement on defined
benefit pension scheme deficits 5.5 (1.5) (1.3)
Actuarial gains/(losses) in defined
benefit pension schemes (17.7) 4.8 (0.1)
--------------------------------------- ---------- ---------- ----------
Income/(expense) recognised directly
in equity (12.5) 3.3 (1.4)
Profit for the period 7.5 7.5 45.9
--------------------------------------- ---------- ---------- ----------
Total recognised income/(expense) for
the period (5.0) 10.8 44.5
--------------------------------------- ---------- ---------- ----------
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Unaudited
as at as at as at
30.6.05 30.6.04 31.12.04
Notes #m #m #m
ASSETS
Non-current assets
Property, plant and equipment 205.9 170.2 193.8
Investment property 109.5 112.8 109.5
Intangible assets 3.9 2.8 3.5
Investment in joint ventures 24.1 0.8 16.1
Investment in associates 6.4 4.9 5.7
Trade and other receivables 42.4 44.7 66.9
Deferred tax assets 12.2 6.5 6.7
----------------------------------- ----- ---------- ---------- ---------
404.4 342.7 402.2
Current assets
Inventories 45.2 38.4 40.7
Trade and other receivables 53.0 49.0 52.1
Cash and cash equivalents 11 5.9 4.5 7.3
----------------------------------- ----- ---------- ---------- ---------
104.1 91.9 100.1
----------------------------------- ----- ---------- ---------- ---------
Total assets 508.5 434.6 502.3
----------------------------------- ----- ---------- ---------- ---------
LIABILITIES
Non-current liabilities
Borrowings 11 (196.2) (137.0) (169.1)
Investment in joint ventures - (9.5) (0.1)
Deferred tax liabilities (23.1) (18.0) (23.1)
Retirement benefit obligations (40.7) (21.7) (22.5)
Provisions (0.6) (0.7) (0.6)
----------------------------------- ----- ---------- ---------- ---------
(260.6) (186.9) (215.4)
Current liabilities
Trade and other payables (32.1) (28.6) (41.2)
Current tax liabilities (2.5) (4.6) (3.4)
Borrowings 11 (0.0) (0.1) (0.0)
Provisions (0.5) (0.5) (0.5)
----------------------------------- ----- ---------- ---------- ---------
(35.1) (33.8) (45.1)
----------------------------------- ----- ---------- ---------- ---------
Total liabilities (295.7) (220.7) (260.5)
----------------------------------- ----- ---------- ---------- ---------
Total assets less total liabilities 2 212.8 213.9 241.8
----------------------------------- ----- ---------- ---------- ---------
SHAREHOLDERS' EQUITY
Ordinary shares 22.8 22.8 22.8
Share premium 18.2 18.2 18.2
Own shares held (5.4) (0.0) (0.0)
Fair value and other reserves 16.0 18.0 18.0
Retained earnings 156.8 150.6 178.4
----------------------------------- ----- ---------- ---------- ---------
Total shareholders' equity 208.4 209.6 237.4
Minority interest 4.4 4.3 4.4
----------------------------------- ----- ---------- ---------- ---------
Total equity 9 212.8 213.9 241.8
----------------------------------- ----- ---------- ---------- ---------
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Unaudited
six months six months year
to 30.6.05 to 30.6.04 to 31.12.04
Notes #m #m #m
Cash flows from operating
activities
Cash generated from operations 10 17.3 8.9 30.1
Interest paid (5.1) (3.0) (7.5)
Interest received 0.2 0.2 0.3
Tax paid (4.2) (6.0) (14.1)
Dividends received from joint
venture and associated companies - 1.2 2.2
----------------------------------- ----- ---------- ---------- ---------
Net cash from operating activities 8.2 1.3 11.0
Cash flows from investing
activities
Purchase of property, plant and
equipment (16.3) (18.8) (45.8)
and intangibles
Loan to joint venture company (0.5) (0.5) (2.0)
Purchase of interest in joint
venture undertaking (2.1) - (9.4)
Sale of property, plant and
equipment 1.3 4.1 4.5
Sale of investment property - 0.2 5.0
----------------------------------- ----- ---------- ---------- ---------
Net cash used in investing
activities (17.6) (15.0) (47.7)
Cash flows from financing
activities
Loan drawdowns 27.0 138.0 170.0
Arrangement fees for new loans - (1.5) (1.5)
Loans repaid - (111.0) (111.0)
Capital element of finance leases - (0.1) (0.2)
Minority interest dividends paid (1.5) (1.5) (1.5)
Equity dividends paid (12.1) (11.0) (17.1)
Proceeds from sale of own shares
held 0.4 - -
Purchase of own shares held (5.8) - -
----------------------------------- ----- ---------- ---------- ---------
Net cash from financing activities 8.0 12.9 38.7
(Decrease)/increase in cash and
cash equivalents 10 (1.4) (0.8) 2.0
----------------------------------- ----- ---------- ---------- ---------
Cash and cash equivalents at start
of period 7.3 5.3 5.3
----------------------------------- ----- ---------- ---------- ---------
Cash and cash equivalents at end of
period 5.9 4.5 7.3
----------------------------------- ----- ---------- ---------- ---------
NOTES:
1. Basis of preparation
These interim financial statements have been prepared on a basis consistent with
those IFRS in issue that are effective or available for early adoption at the
Group's first annual reporting date, 31st December 2005, but do not include all
the disclosures in IAS 34 on interim reporting as it does not become mandatory
until 2007. Based on these IFRS, the Directors have made assumptions about the
accounting policies expected to be adopted when the first IFRS annual financial
statements are prepared for the year ending 31st December 2005. The interim
financial statements require management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of
assets and liabilities, income and expenses.
The IFRS that will be effective or available for voluntary early adoption in the
annual financial statements for the year ending 31st December 2005 are subject
to change and to further interpretation and therefore cannot be determined with
certainty. Accordingly, the accounting policies are consistent with those that
the Directors intend to use in the next annual financial statements. The
significant accounting policies are shown in Appendix I.
The interim results have been prepared on the assumption that all current IFRS,
including the interpretations of both the Standing Interpretations Committee
("SIC") and the International Financial Reporting Committee, issued by the
International Accounting Standards Board as being effective for the Group's 2005
reporting, will in due course be endorsed by the European Commission. As at the
date of this report, not all of these standards have been endorsed by the
European Commission. In particular, the Group has adopted the option in IAS 19
that allows actuarial gains and losses to be recognised in the Statement of
Recognised Income and Expense, although this amendment has not, at present, been
endorsed by the European Commission.
If there are further developments in the interpretation of these standards or a
decision by the European Commission not to endorse all of these standards in
time for the publication of the Group's 2005 results, this could result in
changes to the accounting for, or presentation of, some financial information
reported in this document. There may, therefore, be further changes required to
this information.
2. Segmental analysis
Unaudited Unaudited Unaudited
six months six months year
to 30.6.05 to 30.6.04 to 31.12.04
#m #m #m
Revenue
Port operations - group and share of
joint venture 64.7 57.0 118.3
- joint venture -
acquisition (2.3) - -
Investment property and property
development
- group and share of joint ventures 2.3 5.5 49.2
- joint ventures (1.5) (3.8) (5.3)
-------------------------------------- ----------- ----------- -----------
63.2 58.7 162.2
Operating profit/(loss)
Port operations 13.6 13.4 31.6
Investment property and property
development (0.3) 0.8 26.4
-------------------------------------- ----------- ----------- -----------
13.3 14.2 58.0
Finance income
Port operations 0.3 0.2 0.3
Investment property and property
development 2.1 0.0 0.0
-------------------------------------- ----------- ----------- -----------
2.4 0.2 0.3
Finance costs
Port operations (2.9) (2.2) (4.6)
Investment property and property
development (1.5) (0.8) (2.4)
-------------------------------------- ----------- ----------- -----------
(4.4) (3.0) (7.0)
Share of results of joint ventures
Port operations 0.0 - -
Investment property and property
development (1.2) (1.2) 10.0
-------------------------------------- ----------- ----------- -----------
(1.2) (1.2) 10.0
Share of results of associates
Port operations 0.7 0.5 1.4
Investment property and property
development (0.0) (0.0) (0.1)
-------------------------------------- ----------- ----------- -----------
0.7 0.5 1.3
-------------------------------------- ----------- ----------- -----------
Profit before tax 10.8 10.7 62.6
-------------------------------------- ----------- ----------- -----------
Assets less non-interest bearing
liabilities
Port operations - group 290.6 276.5 309.8
- joint venture 22.3 - 21.6
Investment property and property
development - group 88.4 78.7 77.8
- joint ventures 48.1 30.3 40.5
-------------------------------------- ----------- ----------- -----------
449.4 385.5 449.7
Net interest bearing liabilities
Port operations - group (137.6) (94.4) (124.5)
- joint venture (7.8) - (7.1)
Investment property and property
development - group (52.7) (38.2) (37.3)
- joint ventures (38.5) (39.0) (39.0)
-------------------------------------- ----------- ----------- -----------
Total assets less total liabilities 212.8 213.9 241.8
-------------------------------------- ----------- ----------- -----------
Revenue is generated in the UK, with the exception of the port operations joint
venture company which operates in Finland and Russia.
3. Finance costs - net
Finance income and costs analysed by business segment are as follows:
Unaudited Unaudited Unaudited
six months six months year
to 30.6.05 to 30.6.04 to 31.12.04
#m #m #m
Finance income
Port operations
- on bank and other deposits 0.3 0.2 0.3
Investment property and property
development
- on bank and other deposits 0.0 0.0 0.0
- unwinding of discount on zero coupon
loan stock at amortised cost 0.5 - -
- unwinding of discount on long-term
debtors at amortised cost 1.6 - -
-------------------------------------- ----------- ----------- -----------
Total finance income 2.4 0.2 0.3
-------------------------------------- ----------- ----------- -----------
Finance costs
Port operations
- on bank loans (2.8) (2.2) (4.5)
- on other loans (0.0) (0.0) (0.0)
- on finance leases (0.0) (0.0) (0.0)
- amortisation of loan arrangement
fees (0.1) (0.0) (0.1)
Investment property and property
development
- on bank loans (1.5) (0.8) (2.4)
-------------------------------------- ----------- ----------- -----------
Total finance costs (4.4) (3.0) (7.0)
-------------------------------------- ----------- ----------- -----------
Net finance costs
Port operations (2.6) (2.0) (4.3)
Investment property and property
development 0.6 (0.8) (2.4)
-------------------------------------- ----------- ----------- -----------
(2.0) (2.8) (6.7)
-------------------------------------- ----------- ----------- -----------
4. Share of results of joint ventures
Unaudited Unaudited Unaudited
six months six months year
to 30.6.05 to 30.6.04 to 31.12.04
#m #m #m
Port operations - acquisition
Operating profit 0.2 - -
Finance costs (0.2) - -
Taxation (0.0) - -
-------------------------------------- ----------- ----------- -----------
Group's share of results 0.0 - -
-------------------------------------- ----------- ----------- -----------
Investment property and property
development
- continuing operations
Operating profit 0.8 0.3 12.7
Finance costs (2.0) (1.7) (2.9)
Taxation (0.0) 0.2 0.2
-------------------------------------- ----------- ----------- -----------
Group's share of results (1.2) (1.2) 10.0
-------------------------------------- ----------- ----------- -----------
Share of results of joint ventures -
total (1.2) (1.2) 10.0
-------------------------------------- ----------- ----------- -----------
5. Share of results of associates
Unaudited Unaudited Unaudited
six months six months year
to 30.6.05 to 30.6.04 to 31.12.04
#m #m #m
Port operations
Operating profit 1.3 0.8 2.4
Finance costs (0.2) (0.1) (0.4)
Taxation (0.4) (0.2) (0.6)
-------------------------------------- ----------- ----------- -----------
Group's share of results 0.7 0.5 1.4
-------------------------------------- ----------- ----------- -----------
Investment property and property
development
Operating loss (0.0) (0.0) (0.1)
Finance costs - (0.0) (0.0)
Taxation - 0.0 0.0
-------------------------------------- ----------- ----------- -----------
Group's share of results (0.0) (0.0) (0.1)
-------------------------------------- ----------- ----------- -----------
Share of results of associates - total 0.7 0.5 1.3
-------------------------------------- ----------- ----------- -----------
6. Profit before tax
Profit before tax is stated after charging/(crediting):
Unaudited Unaudited Unaudited
six months six months year
to 30.6.05 to 30.6.04 to 31.12.04
#m #m #m
Severance costs 0.1 0.6 0.6
Training costs - Project Enterprise 0.3 - -
Gain on disposal of investment
property - - (1.2)
Group's share of revaluation uplift of
investment - - (12.3)
property in joint venture company
Retirement benefit costs in respect of
past service cost 1.0 - -
Repair costs to tug 0.4 - -
Gains on disposal of operational
assets
- insurance claims (0.2) (0.2) (0.4)
7. The taxation charge for the six months to 30th June 2005 has been provided on
the basis of the estimated effective tax rate for the year to 31st December 2005
being 29.5%.
8. The basic earnings per share calculation is based on the weighted average of
Ordinary Shares in issue in the six months ended 30th June 2005 of 45.5 million
(2004 - 45.6 million). The diluted earnings per share figure is based on the
weighted average of Ordinary Shares in issue adjusted for potential dilutive
Ordinary Shares in the six months ended 30th June 2005 of 45.8 million (2004 -
45.7 million).
9. Consolidated statement of changes in shareholders' equity
Attributable to equity holders of the Company Minority Total
interest equity
-------------------------
Fair
value
Own and
Ordinary Share shares other Retained
shares premium held reserves earnings
#m #m #m #m #m #m #m
Balance at 1st
January 2004 22.8 18.2 (0.0) 18.0 150.7 4.3 214.0
---------------------- ------ ------ ------ ------ -------- ------ ------
Deferred tax movement
on defined benefit
pension scheme
deficits - - - - (1.5) - (1.5)
Actuarial gains and
losses in defined
benefit
pension schemes - - - - 4.8 - 4.8
---------------------- ------ ------ ------ ------ -------- ------ ------
Net income/(expense)
recognised directly
in equity - - - - 3.3 - 3.3
Profit for the period - - - - 7.5 (0.0) 7.5
---------------------- ------ ------ ------ ------ -------- ------ ------
Total recognised
income for the period - - - - 10.8 (0.0) 10.8
LTIP shares - value
of services provided - - - - 0.1 - 0.1
Dividends - - - - (11.0) - (11.0)
---------------------- ------ ------ ------ ------ -------- ------ ------
Balance at 30th June
2004 22.8 18.2 (0.0) 18.0 150.6 4.3 213.9
---------------------- ------ ------ ------ ------ -------- ------ ------
Balance at 1st July
2004 22.8 18.2 (0.0) 18.0 150.6 4.3 213.9
---------------------- ------ ------ ------ ------ -------- ------ ------
Deferred tax movement
on defined benefit - - - - 0.2 - 0.2
pension scheme
deficits
Actuarial gains and
losses in defined
benefit - - - - (4.9) - (4.9)
pension schemes
---------------------- ------ ------ ------ ------ -------- ------ ------
Net income/(expense)
recognised directly
in equity - - - - (4.7) - (4.7)
Profit for the period - - - - 38.4 1.5 39.9
---------------------- ------ ------ ------ ------ -------- ------ ------
Total recognised
income for the period - - - - 33.7 1.5 35.2
LTIP shares - value
of services provided - - - - 0.1 - 0.1
SAYE scheme - value
of services provided - - - - 0.1 - 0.1
Share of gain on sale
of investment
property - - - - - 0.1 0.1
Dividends - - - - (6.1) (1.5) (7.6)
---------------------- ------ ------ ------ ------ -------- ------ ------
Balance at 31st
December 2004 22.8 18.2 (0.0) 18.0 178.4 4.4 241.8
---------------------- ------ ------ ------ ------ -------- ------ ------
Adoption of IAS 32
and IAS 39 - - - (1.7) (5.0) - (6.7)
---------------------- ------ ------ ------ ------ -------- ------ ------
Balance at 1st
January 2005 22.8 18.2 (0.0) 16.3 173.4 4.4 235.1
---------------------- ------ ------ ------ ------ -------- ------ ------
Fair value movement
on cash flow hedge - - - (0.3) - - (0.3)
Deferred tax movement
on defined benefit
pension scheme
deficits - - - - 5.5 - 5.5
Actuarial gains and
losses in defined
benefit - - - - (17.7) - (17.7)
pension schemes
---------------------- ------ ------ ------ ------ -------- ------ ------
Net income/(expense)
recognised directly
in equity - - - (0.3) (12.2) - (12.5)
Profit for the period - - - - 7.5 (0.0) 7.5
---------------------- ------ ------ ------ ------ -------- ------ ------
Total recognised
income for the period - - - (0.3) (4.7) - (5.0)
LTIP shares - value
of services provided - - - - 0.1 - 0.1
SAYE scheme - value
of services provided - - - - 0.1 - 0.1
Consideration
received for own
shares held - - 0.4 - - - 0.4
Consideration paid
for own shares held - - (5.8) - - - (5.8)
Dividends - - - - (12.1) - (12.1)
---------------------- ------ ------ ------ ------ -------- ------ ------
Balance at 30th June
2005 22.8 18.2 (5.4) 16.0 156.8 4.4 212.8
---------------------- ------ ------ ------ ------ -------- ------ ------
10. Reconciliation of profit before tax to cash generated from operations
Unaudited Unaudited Unaudited
six months six months year
to 30.6.05 to 30.6.04 to 31.12.04
#m #m #m
Profit before tax 10.8 10.7 62.6
Adjustments for:
- net finance costs 2.0 2.8 6.7
- share of results of joint ventures 1.2 1.2 (10.0)
- share of results of associates (0.7) (0.5) (1.3)
- depreciation of property, plant and
equipment and 4.8 4.6 9.3
amortisation of intangibles
- unrealised profit eliminations (0.1) - (0.0)
- gain on sale of property, plant and
equipment (0.1) (0.2) (0.7)
- gain on sale of investment property - (0.2) (1.2)
- increase in provisions 0.0 0.1 0.0
- increase/(decrease) in retirement
benefit obligations 0.5 (0.2) (4.3)
Movements in working capital:
Increase in inventories (4.5) (4.0) (6.3)
Decrease/(increase) in receivables 8.9 5.6 (18.3)
Decrease in payables (5.5) (11.0) (6.4)
------------------------------------- ---------- ---------- ----------
Cash generated from operations 17.3 8.9 30.1
------------------------------------- ---------- ---------- ----------
Reconciliation of (decrease)/increase in cash and cash equivalents to movement
in net debt
(Decrease)/increase in cash and cash
equivalents (1.4) (0.8) 2.0
Cash inflow from increase in
borrowings and arrangements fees (27.0) (25.4) (57.3)
------------------------------------- ---------- ---------- ----------
Change in net debt resulting from
cash flows (28.4) (26.2) (55.3)
Amortisation of loan arrangement fees (0.1) (0.0) (0.1)
------------------------------------- ---------- ---------- ----------
Movement in net debt (28.5) (26.2) (55.4)
Opening net debt (161.8) (106.4) (106.4)
------------------------------------- ---------- ---------- ----------
Closing net debt (190.3) (132.6) (161.8)
------------------------------------- ---------- ---------- ----------
11. Analysis of changes in net debt
Cash Other
At 1.1.05 flow movement At 30.6.05
#m #m #m #m
Cash at bank and on deposit 7.3 (1.4) - 5.9
Debt due outwith one year (169.1) (27.0) (0.1) (196.2)
Borrowings - finance leases (0.0) - - (0.0)
--------------------------- --------- ---------- ---------- ----------
Total net debt (161.8) (28.4) (0.1) (190.3)
--------------------------- --------- ---------- ---------- ----------
The other movement of #0.1m related to the amortisation of arrangement fees for
bank facilities.
12. Dividends per share
Unaudited Unaudited Unaudited
six months six months year
to 30.6.05 to 30.6.04 to 31.12.04
Dividends per share pence pence pence
Final dividend 2004 26.6 - -
Final dividend 2003 - 24.2 24.2
Interim dividend 2004 - - 13.3
---------------------------------- ----------- ----------- -----------
26.6 24.2 37.5
---------------------------------- ----------- ----------- -----------
Total paid in respect of dividends #m #m #m
Final dividend 2004 12.1 - -
Final dividend 2003 - 11.0 11.0
Interim dividend 2004 - - 6.1
---------------------------------- ----------- ----------- -----------
12.1 11.0 17.1
---------------------------------- ----------- ----------- -----------
A dividend of 14.3p per share totalling #6.5m is proposed as the interim
dividend for 2005. This has not been provided for in the interim accounts.
13. The interim accounts are unaudited but have been formally reviewed by the
Auditors and their report to the Company is set out on page 20. The financial
information contained in this statement does not comprise statutory accounts
within the meaning of the phrase as referred to in section 240 of the Companies
Act 1985. Full accounts for the year ended 31st December 2004 have been filed
with the Registrar of Companies. The report of the Auditors on these accounts
was unqualified and did not contain a statement under either section 237(2) or
section 237(3) of the Companies Act 1985.
The maintenance and integrity of the Forth Ports PLC website is the
responsibility of the Directors; the work carried out by the Auditors does not
involve consideration of these matters and, accordingly, the Auditors accept no
responsibility for any changes that may have occurred to the Interim Report
since it was initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of
financial information may differ from legislation in other jurisdictions.
14. The interim statement will be posted to shareholders on 15th September 2005.
Copies will be available from the Company's registered office, Forth Ports PLC,
1 Prince of Wales Dock, Leith, Edinburgh EH6 7DX.
INDEPENDENT REVIEW REPORT TO FORTH PORTS PLC
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30th June 2005 wh
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