RNS Number:1778Q
Forth Ports PLC
17 March 2008
17th March 2008
RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2007
Financial Highlights
* Group revenue up 7% to �165m (2006 - �153.6m)
* Group EBITDA up 5% to �51.7m (2006 - �49.2m)
* Underlying* port operating profit up 13% to �38.7m (2006 - �34.1m)
* Reported profit before tax - �32.3m (2006 - �55.6m) **
* Underlying* earnings per share - 46.1p (2006 - 47p)
* Reported basic earnings per share - 55.3p (2006 - 90.5p) **
* 5.8% increase in final dividend to 31.95p (2006 - 30.2p)
Operational Highlights
Ports
* Strong performance from ports - underlying operating profit up 13%
* Hound Point tonnages up 32% to 22.6 million tonnes
* Tonnage increase and Olympic related demand at Tilbury
* New customer contracts for Tilbury and Scotland
* Acquisition of Nordic Group earnings positive
Property
* Increase in value of development assets to �282m (2006 - �277m)
* Calculation of Worth increased to �408m (2006 - �402m)
* Leith Docks outline planning application submitted on schedule
* Hub masterplanning on target for first half 2008
* Tram funding to link Edinburgh City Centre and Waterfront confirmed
Other
* Renewable energy initiatives
* Strong project pipeline
* Underlying figures exclude the impact of revaluation of investment
properties, gain on disposal of joint venture (2006), one-off costs and
amortisation costs arising from acquisition where appropriate.
** The reported figures include non-trading adjustments and one-off costs.
These figures also include the comparator effect of the Group's decision not
to carry out property disposals in 2007.
Outlook
Charles Hammond, Group Chief Executive, said:
"2007 has been a very good year for the Group, with a strong underlying
performance in ports and the successful achievement of milestones in property.
The updated valuation demonstrates the resilience of the value of the Group's
property assets, even in a more uncertain commercial and residential property
environment. With strong underlying demand in ports and a clear roadmap for the
development of our property assets, we remain well placed to deliver further
growth and value for shareholders."
Enquiries:
Charles Hammond,
Group Chief Executive Forth Ports PLC Tel: 0207 404 5959 on 17.3.08
Wilson Murray, Thereafter 0131 555 8700
Group Finance Director
Jon Coles/Kate Miller Brunswick Tel: 0207 404 5959
Notes to Editors:
Forth Ports PLC owns and operates seven commercial ports in the UK - Tilbury on
the Thames, Dundee in the Firth of Tay and five in the Firth of Forth - Leith,
Grangemouth, Rosyth, Methil and Burntisland. We also operate out of Chatham in
Kent under the Nordic banner.
Within and around the Firths of Forth and Tay, 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 and Group Chief Executive's Report
2007 was a successful year for Forth Ports. The underlying financial performance
of the ports division at operating profit level increased by 13%. Yet again, the
quality of our assets resulted in an increase in the value of our port
investment properties. We acquired the Nordic Group of companies ("Nordic") on
29th June for �46m. The property division met all of its principal milestones
and drove forward its development plans for the Waterfront. It also produced an
increase in the annual independent valuation of our development assets. In all
areas of our business, we are well placed to deliver further growth and value
for our shareholders.
Financial
Group revenue increased by 7% to �165m (2006 - �153.6m). Group EBITDA* increased
by 5% to �51.7m and underlying port operating profit grew strongly by 13% to
�38.7m (2006 - �34.1m). The profit before tax amounted to �32.3m (2006 - �55.6m)
after taking account of a lower revaluation surplus, no gain from the sale of a
joint venture and our share of a reduction in the valuation of the Ocean
Terminal Shopping Centre. The underlying profit before tax reduced to �27.6m
(2006 - �30.4m), reflecting the reduction from the contribution by the property
division where there was an underlying operating loss of �1.3m compared with an
underlying operating profit of �4.2m in 2006 (see Note 14 for the definition of
"underlying"). Profit after tax amounted to �24.9m (2006 - �41.1m) and included
the benefit of a reduction in the deferred tax liability of �2.7m arising from
the forthcoming change in the rate of corporation tax. Basic earnings per share
amounted to 55.3p (2006 - 90.5p). Underlying earnings per share amounted to
46.1p (2006 - 47p).
Dividend
The Directors propose a final dividend up 5.8% at 31.95p per share giving a
total dividend for the year of 47.7p per share. This is an increase of 5.5% for
the full year and is in line with the Board's policy of pursuing real levels of
dividend per share growth. If approved by the shareholders at the Annual General
Meeting, the final dividend will be paid on 9th May 2008 to all shareholders on
the register as at 11th April 2008.
Ports
The ports business performed strongly, with the ports underlying EBITDA
increasing to �53.0m (2006 - �46.8m). Both Tilbury and Scotland contributed to
the strong financial performance through a mix of increasing volumes and
operating efficiencies. After the disappointing performance from liquid bulks in
2006, there was a strong turnaround at Hound Point which increased its
throughput by 32%.
Tilbury continues to receive requests from customers for more facilities,
particularly in relation to the forthcoming London Olympics. While it has been
possible to move customers around the port to provide space for additional
business up to now, this has become more challenging. We took the opportunity,
therefore, to acquire 65 acres of land just outside the port which we expect to
be able to develop for port use in the medium term.
At Grangemouth, there was a good performance from the container business which,
after a slow start in the first half of the year, increased its overall volumes
marginally. However, the new working patterns, together with our investment in
modern craneage and straddle carriers, resulted in a strong financial
performance.
The Nordic acquisition was earnings positive in its first six months. The
Tilbury Materials Recycling Facility ("MRF") was commissioned in October and met
its performance specification.
The value of our port investment properties increased to �178.8m from �161.8m
last year which reflects a modest increase in Scotland and a large increase at
Tilbury.
Our ports business has a secure, growing revenue base with a breadth of
different commodities which offer a variety of investment opportunities.
Property
As stated in our pre-close trading statement, two plots for affordable housing
were offered for sale in 2007 which contributed cash towards our infrastructure
costs. As a result, the property division recorded an underlying operating loss
of �1.3m in 2007 compared with an underlying operating profit of �4.2m in 2006
when two development sites were sold.
The Market Value of the property development assets (as defined in Note 14)
amounted to �282m at 31st December 2007 an increase of 3% compared with �275m on
a like for like basis; the Calculation of Worth (as defined in Note 14) at the
end of 2007 amounted to �408m compared with �402m in 2006. The above figures
incorporate the Group's share (�7.7m) of the Ocean Terminal valuation reduction
and reflect positively on the work carried out throughout the year to manage the
development infrastructure spend and future profile through a combination of
greater cost certainty and value engineering together with progress in achieving
key milestones. The key aspects of this were:
* Remasterplanning the residential content at Western Harbour
* Progress and control of infrastructure spend
* Submission of the Outline Planning Application ("OPA") documentation
for Leith Docks
* Confirmation of funding for the Tram
We were pleased to show the First Minister Alex Salmond round our waterfront
sites at the end of February 2008. We believe that there is much that the
Scottish Government, City of Edinburgh Council ("CEC") and Forth Ports can do
together to provide a world class waterfront for Edinburgh.
Renewable Energy
We have been examining ways in which we can exploit our asset base further in
creating energy generation and distribution opportunities from renewable
sources. Having completed a desk top study covering energy from waste/
bio-products, onshore and offshore wind opportunities, we now intend to examine
those potentially significant opportunities in more detail with an experienced
partner.
Prospects
During 2007, we instituted a formal project list for capital expenditure
projects throughout the Group to help assess the likely capital requirements
over the next few years. The project stack for ports covers many projects which
total over �50m of potential spend. Although not all the projects will come to
fruition, we are encouraged by their number and variety which should form the
foundation of future investment growth. With improved returns from existing
investments, returns from future investments and further operating efficiencies,
we believe that there are good growth prospects in the ports business.
In property, the milestones have been set to achieve planning approvals for the
Hub and Leith Docks over the course of the next few years whilst, at the same
time, laying down the infrastructure for the further development of Western
Harbour and Granton. The timescale is long but the rewards for shareholders are
significant and continued progress should result in growth in value.
Trading for the first two months is well ahead of last year. The Board looks
forward with confidence to an improved operating performance in 2008.
Christopher Collins Charles Hammond
CHAIRMAN GROUP CHIEF EXECUTIVE
17th March 2008
Business Review
GROUP
Forth Ports performed strongly in 2007, delivering growth in all four key
financial performance indicators:
* Growth in underlying port operating profits
* Growth in the value of property assets
* Growth in the value of the port assets
* Growth in dividend per share
Group revenue increased to �165m from �153.6m in 2006. Port revenue increased by
14% to �159.5m
(2006 - �140.3m). Property revenue amounted to �5.5m compared with �13.3m in
2006.
The underlying port operating profit amounted to �38.7m compared with �34.1m in
2006, an increase of 13%. The revaluation increase in the port investment
properties amounted to �12.2m compared with �23.8m last year.
With no commercial plot sales in 2007 compared with two in 2006, the underlying
property operating loss amounted to �1.3m (2006 - underlying operating profit of
�4.2m).
Good progress has been made with the integration of the Nordic Group ("Nordic")
since its acquisition in June 2007.
Ports
The total volume of traffic through the ports division increased by 12% to reach
46.3 million tonnes in 2007 compared with 41.3 million tonnes in 2006. Dry cargo
tonnages amounted to 14.2 million tonnes (2006 - 14.5 million tonnes). Liquid
bulk tonnages increased to 32.1 million tonnes, an increase of 20% over the
previous year.
At the end of 2007, the Directors valued the Group's port investment properties
at �178.8m compared with �161.8m in 2006. The Tilbury port investment properties
benefited from an increase in the underlying rent per acre combined with an
improvement in the yield reflecting the underlying demand and scarcity of land.
Tilbury
There was a strong financial performance from the business at Tilbury with
throughput up 4% at 8.3 million tonnes; volumes grew across a range of
commodities and sectors. Ro-ro traffic achieved 42,000 units moved during 2007
of which over 18,000 units were moved in the second half of 2007 compared with
13,000 in the second half of 2006. Grain tonnages were up over 10% at 648,000
tonnes with a positive change in the mix which favoured imports. Short sea
container volumes were up by 5% at 152,900 units.
Good progress has been made by Cemex on its new blending and milling facility
which should be operational in the second half of 2008. We have also reached
agreement with Cemex to provide an additional land area for the project on a
long-term basis.
During 2007, the port was heavily involved in presentations to various parties
on the benefits of using Tilbury as a multi-modal distribution hub for the
Olympic games. In January 2008, it was announced that the port had been
shortlisted to tender for the East London Logistics Centre for the Olympics.
Independently of this, Tilbury received a number of enquiries from existing and
potential customers interested in utilising Tilbury's geographical location for
the supply and distribution of construction materials to the Olympic site. This
resulted in a number of new and restructured contracts. As part of this, Hughes
Associates/Green Barge have established a dedicated barging service to the site.
At the end of December, the port submitted a planning application to erect four
large wind turbines within the port to provide electricity for its own and third
party use as part of our drive to lower our carbon energy footprint. The
planning process is expected to take several months.
Prior to the year end, we exchanged contracts for the purchase of 65 acres of
land just outside the port. Although this land is currently designated as
greenbelt, a significant proportion of it is zoned for industrial use in the
draft Thurrock Local Development Plan ("TLDP"). This transaction was completed
in February 2008.
Work has also progressed on a mixed-use regeneration Scheme around the cruise
liner landing stage at Tilbury. This project should gain more momentum during
the course of 2008 when we intend to select a development partner. It is also to
be included in the TLDP.
Tilbury Green Power, on behalf of one of our port tenants, Cargill, has
submitted a planning application to the Thurrock and Thames Gateway Development
Corporation to build a waste to energy plant within the Port. Extensive public
consultation has already been carried out. It is expected that it may take up to
two years to go through the planning process.
Tilbury Container Services Limited ("TCS") contributed an operating profit of
�3.7m to the Group compared with �3.2m in 2006. Container volumes increased by
8% to reach over 306,500 boxes. TCS has benefited from winning new business
including the EPIC 2 service (Pakistan/India) and further business for Hapag
Lloyd/Hamburg Sud (Trident service). It also won temporary business from another
port due to congestion at that port. In February 2008, a new Far Eastern service
operated by ZIM Lines started which will increase the volume significantly this
year.
Nordic Group
Following the acquisition of Nordic at the end of June 2007 at a cost of �46m,
the second half of the year has seen the integration of that business into Forth
Ports. The financial performance of Nordic is in line with the plan at the time
of acquisition. The Group's knowledge base has assisted in improving traffic
flows and productivity within the Forest Products Terminal at Chatham and also
in the completion of the commissioning process of the new MRF at Tilbury. The
MRF, which has increased Nordic's recycling capacity by over 50%, became
operational in October 2007 and had already, by January 2008, started a two
shift system with the resulting processed waste being exported. This capital
expenditure was undertaken with the benefit of a long-term contract with Holmen
of Sweden, a large paper customer at Chatham.
Nordic has made a small investment in a recycling joint venture in Lincoln which
could result in another MRF being built, subject to planning approval. In
addition, Nordic is looking at the best location for a MRF at one of our
Scottish Ports. Nordic has a number of opportunities for expansion and growth
within the Group.
Scottish Ports and Marine
The business in Scotland produced a strong growth in operating profit in 2007.
Grangemouth benefited from the new working arrangements and new container
equipment. Volumes increased by nearly one third at Hound Point with a full
year's throughput from the Buzzard Field. Braefoot Bay tonnages, as expected,
were down marginally.
It was announced during 2007 that the Mossmoran petrochemical complex which
services the Braefoot Bay Terminal was to be upgraded to accommodate product
from the new Norwegian wet gas deal signed between the UK and Norway. This
should enable volumes through Braefoot Bay to remain at or around the 3 million
tonne level for many years.
We announced in February that we were not proceeding with an application for
ship-to-ship (STS) oil transfers in the Firth of Forth. An Appropriate
Assessment exercise was prepared which was one of the most thorough and
comprehensive ever carried out and demonstrated that STS is feasible in the
Firth of Forth and could be undertaken without any adverse impact on the
integrity of the environment, a paramount factor in any such exercise. However,
given the uncertainty surrounding the scope of the proposed project, we decided
that this application was not in the best interests of the Company and its
shareholders.
Grangemouth
After a weak first half in which container volumes declined by 4%, the second
half of the year saw an increase in container volumes of 5% giving an overall 1%
increase in the year to reach 141,300 boxes. The service levels throughout the
year were excellent and the financial performance of the Terminal improved
significantly. One new service was started towards the end of the year between
Grangemouth and the Continent bringing to 14 the total number of sailings
weekly.
We have assisted INEOS in their plans to create a new biodiesel facility at
their Grangemouth operation. Commercial terms have been agreed and planning
consent for the development has been granted. A decision by INEOS to proceed is
awaited.
We are in discussions with a customer who is looking to provide a new warehouse
facility for the whisky industry at Grangemouth.
Dry cargo through Grangemouth was marginally lower than in 2006 with reductions
in timber, paper and pulp and iron and steel. After a period of destocking
during 2007, Vallourec Mannesman are hopeful that imports will improve in 2008.
As part of a Scottish dry cargo review, the Board has agreed to the purchase of
four hydraulic handling machines at a cost of �3.1m which will improve the
productivity and overall efficiency of our bulk handling operations. Delivery of
these machines will commence in July and they should be fully commissioned by
the end of 2008.
Leith
The total throughput amounted to 2 million tonnes which was approximately 13%
less than that handled in 2006. Coal tonnages amounted to 1.3 million tonnes,
the same as in 2006. We have recently signed a new three year contract with
Scottish Power to supply its Cockenzie Power Station. As expected, steel pipe
and iron ore tonnages from Bredero Shaw were negligible in 2007 compared with
300,000 tonnes in 2006. Grain tonnages were marginally down. Cement imports were
ahead of last year, however, there were little or no cement exports which
resulted in total cement traffic declining by 20% to 218,000 tonnes.
Further work was carried out on the proposed cruise liner berth which will
require public sector funding but would provide significant additional income
from tourism for Edinburgh and Scotland.
Dundee
Although overall tonnage at Dundee reduced from 1.2 million tonnes to 1 million
tonnes, the port performed well financially. Timber tonnages increased by over
50% to reach 66,000 tonnes. Agripod/agricultural commodities were marginally up
on last year. A new five year grain drying contract was concluded with J. P.
Simpson of Berwick which involved the purchase of a new grain drier and
associated facilities. Dundee is well placed to take advantage of increased
market opportunities in agriculture and value added facilities for the
distilling and brewing industries.
This year, a 60 acre site at the east end of the port is being released and
marketed in partnership with Dundee City Council as one of Scotland's leading
renewable energy facilities. We are in discussions with two potential tenants
for most of this area. One possible customer is looking for a renewable energy
project and the other is looking to utilise an existing inter-connector site
within the port for the production of electricity.
Rosyth and Fife Ports
Tonnage through Rosyth and the Fife Ports amounted to 0.6 million tonnes last
year, with coal, timber and plasterboard being the main imports. Coal traffic
ceased at Rosyth in March 2007. Good cost control and improved ancillary revenue
contributed to an improving financial position at the ports.
We have agreed terms, in principle, to lease Oceaneering Multiflex UK an
additional 16 acres at the port of Rosyth for a fifteen year period. This will
not only bring in additional business through the port but will also increase
employment and add value to the port which will have created over 1,000 jobs
since 1995.
Property
The milestones set for the property team for 2007 were achieved. The outline
planning application ("OPA") for Leith Docks was submitted in September 2007 and
the masterplan for the Hub is currently on schedule to be submitted as an OPA in
the first half of 2008. A substantial amount of work has gone into the
preparation of these two projects. Infrastructure works have been progressed at
Western Harbour with the infill of the site well ahead of programme. In
addition, confirmation that the tram project in Edinburgh is to proceed enabled
the initial diversion of utilities to take place in and around the dock estate.
This was achieved with considerable assistance and good co-operation between
Transport Initiatives Edinburgh ("Tie"), the tram developer, and members of our
property team.
Following confirmation of funding for the tram by the Scottish Parliament, the
second half of the year saw the initial utilities diversion works being carried
out along part of the dock estate. This should be completed during 2008. An
agreement has been reached to release land and forward fund road diversion works
with Tie which should enhance the development of the Hub.
The OPA for the Leith Docks Planning Application was submitted to the City of
Edinburgh Council ("CEC") on 4th September. The interim statement, sent out in
September 2007, detailed the masterplan content. Since then, there has been a
constructive dialogue with the planning officials on the OPA and it is hoped
that a positive recommendation will go before the Planning Committee in the
first half of 2008.
The proposed masterplan for the Hub, which incorporates two "villages" around
the Ocean Terminal Shopping Centre in the areas known as Waterfront Plaza and
Britannia Quay, has been further refined by RTKL, the masterplanning architects.
This masterplan has recently been considered by the Board with a view to its
submission as a planning application in the first half of 2008 which is in line
with the milestones set for this year.
During 2007, two plots were sold for social housing at Western Harbour. As a
result, we are now well in advance of our obligation to provide affordable
housing plots under the Section 75 Agreement.
Within Western Harbour, infrastructure works around the new Southgate Junction
have taken place with the completion of roads, utilities and street lighting.
The surcharging of the ground for the crescent road around the park is well
advanced. Large quantities of demolished material are being brought on to site
during the first half of 2008 to complete the reclamation which is significantly
ahead of programme.
A new revision to the masterplan at Western Harbour is being taken forward to
change the mix of the residential development to give more townhouses and fewer
flats in keeping with current market demands. Further land areas around Western
Harbour are being considered for reclamation.
At Newhaven, the refurbishment of the listed building was completed earlier in
2007. The first two units were let to Loch Fyne Restaurants and the third unit
has recently been let to Prezzo PLC, for an Italian restaurant.
In common with the property sector generally, the value of the Ocean Terminal
Shopping Centre at 31st December 2007 declined, with a market value of �130m
gross. This was a reduction of nearly 11% in value of which the Group's share
was �7.7m. Rental income grew and the valuation adjustment was solely as a
result of a shift in yields reflecting general market conditions. Several new
tenants commenced trading during 2007 and tenant interest remains strong.
During the year we completed a major marketing study which has helped inform us
on the way forward for Ocean Terminal. With the benefit of a tram stop outside
the main entrance of Ocean Terminal from 2011, we are now close to concluding
our review of the different options to create a new entrance and to reconfigure
parts of the building internally. This will result in a planning application
being submitted in the first half of this year. It is encouraging that we now
have a high level of interest in some of the larger units on the top floor of
Ocean Terminal for retail use.
Some time ago we submitted a revised masterplan for Granton to allow for a
greater mix of townhouses rather than flats. In tandem with these discussions,
CEC has aspirations for a wide boardwalk stretching from Cramond in the West to
Portobello in the East. Whilst the Group is supportive of the concept, there are
many details which require to be resolved by both parties. As a result, the
revised masterplan is now expected to be concluded late in 2008.
The Company is delighted to announce that it has formed a joint venture with
Applecross Properties Limited, a leading Edinburgh developer, to construct up to
179 units on four plots at Western Harbour. It is hoped that planning approval
will be granted this year with a commencement on site before the end of the
year. The development will be a statement of quality which will set the tone for
the remainder of the development.
Renewable Energy
We have been examining how we can exploit our asset base further in creating
energy generation and distribution opportunities from renewable sources. Within
the ports of Tilbury and Leith, we already have major electrical ring mains as
part of our utility infrastructure which provide electricity not just for port
usage but also for our tenants. We engaged a consultancy firm to carry out a
renewable energy desk top study to look at the generation of green energy for
self consumption and for commerical sale; this study confirmed the commercial
viability of the following opportunities:-
1. Energy from waste/bio-products.
2. Onshore wind.
3. Offshore wind.
We have established a project team to examine these commercial opportunities in
more detail with an experienced partner. Work carried out to date indicates that
this initiative has major potential for the Group.
At Tilbury, we have submitted a planning application for onshore wind energy
which can easily be applied to Scotland, both onshore and offshore. Through
various approaches at Tilbury and Scotland, we are aware of various proposals
for the generation of power. We are in a unique position to carry forward a
variety of renewable energy projects as part of the broad portfolio of
opportunities in our ongoing business.
Finance
Group revenue amounted to �165m (2006 - �153.6m). Group operating profit
amounted to �49.8m (2006 - �60.6m). Within these figures the operating profit
from the ports division amounted to �50.5m compared with �56.1m in 2006. The
underlying port operating profit amounted to �38.7m (2006 - �34.1m) as shown
below:-
2007 2006
�m �m
Underlying port operating profit 38.7 34.1
Adjusted for:-
investment property revaluation 12.2 23.8
one-off items (0.0) (1.8)
Amortisation arising from acquisition (0.4) -
------- -------
Total 50.5 56.1
======= =======
Taxation
The effective rate of tax for the Group for the year was 18.7% compared with
25.6% in 2006, excluding joint ventures and associates. As reported in the
Interim Statement, the rate is lower than the standard rate of corporation tax
because it incorporates the effect on the Group's deferred tax liability
position of the change in the rate in corporation tax from 30% to 28% with
effect from 1st April 2008. The net effect of this change amounted to a credit
of �2.7m in the Income Statement.
The Chancellor of the Exchequer also announced his intention to withdraw
Industrial Buildings Allowances progressively over the next three years. If this
measure is approved by Parliament in 2008, then the Group's deferred tax
liability will increase by �26.3m. This charge to the Income Statement will be
reflected in the 2008 accounts as and when the legislation is substantially
enacted. As this increase in liability relates to long life assets which are
unlikely to be sold, there should be no major cash effect from this change
although it will increase the cash tax paid to HM Revenue & Customs by
approximately �2.0m annually.
Cash Flow
The Group operating Cash Flow amounted to �65.8m (2006 - �40.4m). The property
debtors contributed �22.4m towards the cash inflow during 2007 leaving �14.0m to
be collected.
Capital expenditure spend in 2007 amounted to �13.4m compared with over �20m in
2006. Just under 50% of the 2007 spend related to investment expenditure, the
balance being stay in business expenditure. The major items of capital
expenditure incurred during the year related to paving and infrastructure works
(�2.3m), completion of the MRF (�1.1m), work on an additional area for the Ro Ro
facility (�1.7m) and continuation of the works for the Cemex facility (�1.6m)
all of which were at Tilbury. In Scotland, a new grain drier was commissioned at
a cost of �0.5m and further works carried out on the Container Compound at
Grangemouth (�0.6m).
A net sum of �26.3m was paid to acquire Nordic. A further �13.9m was used to
repay its borrowings and �4.2m to repay the loan notes issued on acquisition.
Pension Scheme
The gross actuarial deficit within The Forth Ports Group Pension Scheme ("the
Scheme") amounted to �0.5m compared with �18.1m at 31st December 2006. The
reduction in the deficit reflects an improvement in the discount rate used to
calculate the liabilities, increased payments made into the Scheme by the Group
together with a good investment return on the assets. During the year, one of
the Fund Managers was replaced by Lazard Asset Management ("LAM"). The funds
held by the previous Fund Manager were distributed approximately 50% to LAM and
50% to Legal & General. Overall, the allocation of the assets has not changed
from the prior year with approximately 60% of the assets being invested in
equities and 40% in Government gilts/corporate bonds.
The total cash payments made by the Group into the Scheme amounted to �9.5m
(2006 - �9.5m). This payment included the second of three additional special
payments of �3m which the Group agreed to pay in over the period 2006-2008. The
cash rate contribution by the Company to the Scheme remained at 21.9% of
pensionable salaries together with the additional special payment. The triennial
valuation of the Scheme will take place as at 5th April 2008.
Debt and Gearing
The Company has 45.6 million shares in issue with a nominal value of 50p per
share. During the year, 53,620 shares were issued as part of the acquisition of
Nordic. The net debt at 31st December 2007 amounted to �205.5m (2006 - �176.6m);
this net debt has increased principally as a result of the Nordic acquisition.
The level of gearing as measured by total net debt divided by total
shareholders' equity amounted to 70% compared with 65% at 31st December 2006.
The Company has committed banking facilities of �250m (2006 - �250m). �125m is
covered by a ten year term loan taken out in 2004. Repayments commence in June
2010 and continue until the loan is repaid in 2014. The Company also has a
revolving credit facility for �100m (2006 - �100m) which is due for repayment in
2009. The balance of the facility is a �25m working capital facility. The bank
funding is on an unsecured basis. The banking covenants cover tangible net
worth, gearing and interest cover. The Company is well within the covenanted
ratios. Should the Group, for any reason, refinance its borrowings with another
financial institution then the bank has the right to demand a pre-payment fee
equal to 1% of the amount prepaid and/or cancelled.
The Group's business is not particularly seasonal in nature, however, its
cashflow requirements may be affected by the timing of major capital expenditure
projects and the receipt of cash from property sales. In 2007, the peak
borrowing requirement (net of cash) was �213m in June with a minimum requirement
of �154m in April.
Property Valuations
At the end of the year, DTZ carried out its annual valuation of the Group's
property development assets which produced a Market Value at 31st December 2007
of �282m. Separately, the Directors, on advice from Bidwells, valued the Group's
investment properties at �182.9m, an increase of �18.8m since 31st December
2006. The investment properties largely comprise port related properties located
within the dock estate.
Consolidated Income Statement
For the Year ended 31st December 2007
2007 2006
Notes �m �m
Group revenue 2 165.0 153.6
Cost of sales 3 (102.6) (95.3)
------------------------------------------------------------------------------
Gross profit 62.4 58.3
Administrative expenses 3 (25.4) (21.8)
Other income 4 12.8 24.1
------------------------------------------------------------------------------
Group operating profit 2 49.8 60.6
Finance income 2,6 3.1 3.4
Finance costs 2,7 (13.4) (11.6)
Share of results of joint ventures 2 (9.7) (3.0)
Gain on disposal of investment in joint venture 2,5 - 4.2
Share of results of associates 2 2.5 2.0
------------------------------------------------------------------------------
Profit before tax 3 32.3 55.6
Taxation (7.4) (14.5)
------------------------------------------------------------------------------
Profit for the year 2,10 24.9 41.1
==============================================================================
(Loss)/profit attributable to minority interest (0.2) 0.1
Profit attributable to equity shareholders 25.1 41.0
------------------------------------------------------------------------------
24.9 41.1
==============================================================================
Earnings per share
Basic earnings per share 9 55.3p 90.5p
Diluted earnings per share 9 54.9p 89.9p
All activities relate to continuing activities.
Consolidated Statement of Recognised Income and Expense
For the Year ended 31st December 2007
2007 2006
Notes �m �m
Share of joint venture's movement on cash flow hedge 10 0.2 1.0
Share of associate's movement on cash flow hedge 10 0.0 0.1
Revaluation of investment property transferred
from operational land and buildings 10 5.7 -
Deferred tax on revaluation 10 (1.1) -
Actuarial gain in defined benefit pension scheme 10 12.6 14.0
Deferred tax on actuarial gain 10 (3.5) (4.2)
Effect of tax rate change for deferred tax on
actuarial gain 10 (0.6) -
Share of associate's actuarial (loss)/gain in
defined benefit pension scheme 10 (0.3) 1.0
Deferred tax on associate's actuarial (loss)/gain 10 0.1 (0.3)
Effect of tax rate change for deferred tax on
associate's actuarial (loss)/gain 10 (0.0) -
-------------------------------------------------------------------------------
Income recognised directly in equity 13.1 11.6
Profit for the year 10 24.9 41.1
-------------------------------------------------------------------------------
Total recognised income for the year 10 38.0 52.7
-------------------------------------------------------------------------------
Attributable to:
Minority interest 10 (0.2) 0.1
Equity shareholders 10 38.2 52.6
-------------------------------------------------------------------------------
38.0 52.7
-------------------------------------------------------------------------------
Consolidated Balance Sheet
At 31st December 2007
2007 2006
Notes �m �m
ASSETS
Non-current assets
Property, plant and equipment 223.1 213.3
Investment property 182.9 164.1
Intangible assets 41.6 3.7
Investment in joint ventures 0.0 9.5
Investment in associates 9.3 7.7
Trade and other receivables 21.3 20.0
Deferred tax assets 0.1 5.4
------------------------------------------------------------------------------
478.3 423.7
Current assets
Inventories 50.7 43.2
Trade and other receivables 47.9 65.9
Cash and cash equivalents 7.3 4.9
------------------------------------------------------------------------------
105.9 114.0
------------------------------------------------------------------------------
LIABILITIES
Current liabilities
Trade and other payables (27.4) (20.3)
Current tax liabilities (3.3) -
Borrowings (0.1) (0.0)
Provisions (1.2) (0.9)
------------------------------------------------------------------------------
(32.0) (21.2)
------------------------------------------------------------------------------
Net current assets 73.9 92.8
------------------------------------------------------------------------------
Non-current liabilities
Borrowings (212.7) (181.5)
Investment in joint ventures (0.5) (0.5)
Deferred tax liabilities (42.8) (38.5)
Retirement benefit obligations (0.5) (18.1)
Provisions (0.4) (0.4)
------------------------------------------------------------------------------
(256.9) (239.0)
------------------------------------------------------------------------------
Total assets less total liabilities 295.3 277.5
------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Share capital 10 22.8 22.8
Share premium 10 19.2 18.2
Own shares held 10 (5.2) (5.3)
Fair value and other reserves 10 17.7 17.5
Retained earnings 10 238.3 220.0
------------------------------------------------------------------------------
Total shareholders' equity 292.8 273.2
Minority interest in equity 10 2.5 4.3
------------------------------------------------------------------------------
Total equity 10 295.3 277.5
------------------------------------------------------------------------------
Consolidated Cash Flow Statement
For the Year ended 31st December 2007
2007 2006
Notes �m �m
Cash flows from operating activities
Cash generated from operations 11 65.8 40.4
Interest paid (12.8) (10.6)
Interest received 1.0 0.5
Tax paid (2.3) (6.1)
Dividend received from associated company 0.7 -
------------------------------------------------------------------------------
Net cash generated from operating activities 52.4 24.2
Cash flows from investing activities
Purchase of property, plant and equipment
and intangibles (13.4) (20.7)
Purchase of investment property (0.6) -
Acquisition of subsidiary (27.1) -
Cash acquired with subsidiary 0.8 -
Repayment of subsidiary's borrowings (13.9) -
Purchase of interest in subsidiary
(formerly joint venture) - (0.0)
(Expenses of)/proceeds from sale of interest in
joint venture (0.2) 19.1
Loan to joint venture company - (1.5)
Sale of property, plant and equipment 0.1 1.9
------------------------------------------------------------------------------
Net cash used in investing activities (54.3) (1.2)
------------------------------------------------------------------------------
Net cash (outflow)/inflow before financing activities (1.9) 23.0
------------------------------------------------------------------------------
Cash flows from financing activities
Loan drawdowns/(repayments) 31.0 (3.0)
Capital element of finance leases (0.1) (0.0)
Minority interest dividend paid (1.6) -
Equity dividends paid (20.9) (19.9)
Proceeds from sale of own shares held 0.1 0.1
Repayment of loan notes (4.2) -
------------------------------------------------------------------------------
Net cash generated from/(used in) financing activities 4.3 (22.8)
Increase in cash and cash equivalents 11,12 2.4 0.2
------------------------------------------------------------------------------
Cash and cash equivalents at start of year 12 4.9 4.7
------------------------------------------------------------------------------
Cash and cash equivalents at end of year 12 7.3 4.9
------------------------------------------------------------------------------
Notes
1. Basis of preparation
The preliminary results have been prepared in accordance with IFRS as adopted by
the EU and with those parts of the Companies Act 1985 applicable to companies
reporting under IFRS. The consolidated accounts have been prepared under the
historical cost convention as modified by the revaluation of investment
properties at fair value.
The information herein does not constitute the Group's statutory accounts for
the years ended 31st December 2007 or 2006. Statutory accounts for 2006, which
were prepared under IFRS as adopted by the EU, have been delivered to the
Registrar of Companies, and those for 2007, prepared under IFRS as adopted by
the EU, will be delivered in due course. The auditors have reported on those
accounts; their reports were (i) unqualified, (ii) did not include references to
any matters to which the auditors drew attention by way of emphasis without
qualifying their reports and (iii) did not contain statements under section 237
(2) or (3) of the Companies Act 1985.
The preparation of accounts, in accordance with IFRS as adopted by the EU,
requires the use of estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the accounts and the reported amounts
of revenues and expenses during the reporting period. Although these estimates
are based on management's best knowledge of the amount, event or actions, actual
results ultimately may differ from those estimates.
New standards, amendments to standards and interpretations which are mandatory
for the year ended 31st December 2007, and which have been adopted in these
accounts, are as follows:-
* IFRS 7 (Financial Instruments: Disclosures)
* Amendment to IAS 1 (Presentation of Financial Statements - Capital
Disclosures)
The following standards, amendments to standards and interpretations have been
issued but are not effective for 2007 and have not been early adopted.
* IFRS 8 (Operating Segments)
* IFRIC 14, IAS 19 (The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction)
* IFRIC 11, IFRS 2 (Group and Treasury Share Transactions)
* Amendment to IFRS 2 (Share-based Payment)
* IFRS 3 (Business Combinations (Revised))
The Directors anticipate that the adoption of these standards and
interpretations in future periods will have no material impact on the accounts
of the Group.
Notes (continued)
2. Business segments
Primary reporting format - business
For management purposes, the Group is organised into two business segments:- (1)
Port operations; and (2) Property.
The segment results for the year ended 31st December 2007 were as follows:-
Port Total
Operations Property 2007
�m �m �m
Total gross segment revenue 159.7 5.6 165.3
Inter-segment revenue (0.2) (0.1) (0.3)
------- ------- -------
Total revenue 159.5 5.5 165.0
======= ======= =======
Operating profit/(loss)/segment result before 50.7 (0.9) 49.8
elimination of inter-segment charge
Inter-segment charge eliminated (0.2) 0.2 -
------- ------- -------
Operating profit/(loss)/Segment result 50.5 (0.7) 49.8
Finance income (Note 6) 1.0 2.1 3.1
Finance costs (Note 7) (9.8) (3.6) (13.4)
---------------------------------------------------------------------
Share of operating results of joint ventures - (5.5)
Finance costs - (4.2)
Taxation - -
---------------------------------------------------------------------
Net share of results of joint ventures - (9.7) (9.7)
---------------------------------------------------------------------
Share of operating results of associates 3.7 -
Finance costs (0.3) -
Taxation (0.9) -
---------------------------------------------------------------------
Net share of results of associates 2.5 - 2.5
------- ------- -------
Profit/(loss) before tax 44.2 (11.9) 32.3
======= ======= =======
Taxation (7.4)
-------
Profit for the year 24.9
=======
Notes (continued)
2. Business segments (continued)
The segment results for the year ended 31st December 2006 were as follows:-
Port Total
Operations Property 2006
�m �m �m
Total gross segment revenue 140.9 13.3 154.2
Inter-segment revenue (0.6) - (0.6)
------- ------- -------
Total revenue 140.3 13.3 153.6
======= ======= =======
Operating profit/segment result before 56.6 4.0 60.6
elimination of inter-segment charge
Inter-segment charge eliminated (0.5) 0.5 -
------- ------- -------
Operating profit/Segment result 56.1 4.5 60.6
Finance income (Note 6) 0.4 3.0 3.4
Finance costs (Note 7) (7.8) (3.8) (11.6)
---------------------------------------------------------------------
Share of operating results of joint ventures 0.6 0.4
Finance costs (0.5) (3.5)
Taxation (0.0) -
--------------------------------------------------------------------
Net share of results of joint ventures 0.1 (3.1) (3.0)
Gain on disposal of investment in joint venture 4.2 - 4.2
--------------------------------------------------------------------
Share of operating results of associates 3.2 (0.0)
Finance costs (0.3) -
Taxation (0.9) 0.0
--------------------------------------------------------------------
Net share of results of associates 2.0 (0.0) 2.0
------- ------- -------
Profit before tax 55.0 0.6 55.6
======= =======
Taxation (14.5)
-------
Profit for the year 41.1
=======
Inter-segment transfers and transactions are entered into under the normal
commercial terms and conditions that would also be available to unrelated third
parties.
Other segment items included in the Income Statement are as follows:-
Port Total Port Total
Operations Property 2007 Operations Property 2006
�m �m �m �m �m �m
Increase in fair value
of investment property
(Note 3) 12.2 0.6 12.8 23.8 0.3 24.1
Depreciation of
property, plant and
equipment (Note 3) (14.0) (0.0) (14.0) (12.4) (0.0) (12.4)
Amortisation of
intangibles (Note 3) (1.5) - (1.5) (1.0) - (1.0)
Amortisation of
capital grants (Note 3) 0.8 - 0.8 0.7 - 0.7
Impairment of trade
receivables (0.7) (0.0) (0.7) (0.1) (0.0) (0.1)
Impairment of property,
plant and equipment
(Note 3) - - - (0.8) - (0.8)
Notes (continued)
2. Business segments (continued)
The segment assets, liabilities and capital expenditure were as follows:-
Port Total
Operations Property 2007
�m �m �m
Assets
Segment assets 486.1 88.8 574.9
Joint ventures - 0.0 0.0
Associates 9.3 - 9.3
------- ------- -------
Total assets 495.4 88.8 584.2
======= ======= =======
Liabilities
Segment liabilities 188.4 53.9 242.3
Income tax liabilities 45.7 0.4 46.1
Joint ventures - 0.5 0.5
------- ------- -------
Total liabilities 234.1 54.8 288.9
======= ======= =======
Capital expenditure
Property, plant and equipment 12.6 0.0 12.6
Investment property 0.1 - 0.1
Intangible assets 0.1 - 0.1
------- ------- -------
Total capital additions 12.8 0.0 12.8
======= ======= =======
Port Total
Operations Property 2006
�m �m �m
Assets
Segment assets 416.9 103.6 520.5
Joint ventures - 9.5 9.5
Associates 7.7 - 7.7
------- ------- -------
Total assets 424.6 113.1 537.7
======= ======= =======
Liabilities
Segment liabilities 157.2 64.0 221.2
Income tax liabilities 37.6 0.9 38.5
Joint ventures - 0.5 0.5
------- ------- -------
Total liabilities 194.8 65.4 260.2
======= ======= =======
Capital expenditure
Property, plant and equipment 18.2 - 18.2
Investment property 0.5 - 0.5
Intangible assets 0.5 - 0.5
------- ------- -------
Total capital additions 19.2 - 19.2
======= ======= =======
Secondary reporting format - geographical segments
The Group operates principally in the UK.
Notes (continued)
3. Profit before tax
Profit before tax has been arrived at after charging/(crediting):
2007 2006
�m �m
Depreciation
- owned assets (cost of sales) 13.5 11.9
- owned assets (administrative expenses) 0.4 0.4
- assets held under finance leases and hire purchase
contracts (cost of sales) 0.1 0.1
Amortisation
- intangible assets - customer relationships (cost of sales) 0.4 -
- intangible assets - other (cost of sales) 0.0 0.0
- intangible assets - other (administrative expenses) 1.1 1.0
- capital grants (cost of sales) (0.8) (0.7)
Impairment of property, plant and equipment (cost of sales) - 0.8
(Profit)/loss on disposal of property, plant and equipment
(cost of sales) (0.1) 0.1
Repairs and maintenance expenditure on property, plant and 7.4 7.4
equipment (cost of sales)
Property rentals (revenue) (17.7) (16.5)
Other operating lease rentals payable
- plant and equipment (cost of sales) 4.3 4.1
- plant and equipment (administrative expenses) 0.3 0.3
Inventories
- cost of inventories recognised as an expense (property
cost of sales) 7.7 7.6
- write off of obsolete materials and spare parts (cost of
sales) 0.1 -
Employee costs
- cost of sales 36.2 36.5
- administrative expenses 14.5 11.9
Foreign exchange (gains)/losses (administrative expenses) (0.0) 0.0
Increase in fair value of investment properties (other
income) (12.8) (24.1)
Auditors' remuneration (administrative expenses)
- fees payable to the Company's auditor for audit of the
Company's annual accounts 0.3 0.3
- other services pursuant to legislation 0.1 0.0
- tax services - compliance work 0.0 0.1
- other services not covered above 0.1 0.1
Notes (continued)
3. Profit before tax (continued)
Other items represent costs/(charges) against operating profit which may be
regarded as irregular and therefore require specific comment to give a true like
for like comparison or because of their size year on year.
2007 2006
Other items �m �m
-----------
Severance costs
- cost of sales 0.0 0.4
- administrative expenses 0.0 0.2
Asset impairment (cost of sales) - 0.8
Write off of shed (cost of sales) - 0.2
Training costs (cost of sales) - 0.2
------- -------
0.0 1.8
======= =======
Tax effect
----------
Current taxation:
Severance costs (0.0) (0.2)
Asset impairment - -
Write off of shed - -
Training costs - (0.0)
------- -------
(0.0) (0.2)
------- -------
Severance costs relate principally to a reduction in administrative staff in the
property division. Severance costs in 2006 related principally to reductions in
operational staff at Leith, Dundee and Tilbury. The asset impairment cost arose
on the closure of the Imperial Grain Silo at Leith. The write off of the shed
occurred at Tilbury where it was necessary to demolish a storage shed to make
space for a new Cemex facility. The training costs were incurred in training new
operational staff at Grangemouth.
4. Other income
2007 2006
�m �m
Increase in fair value of investment properties 12.8 24.1
====== ======
Tax effect:
Deferred taxation thereon (0.6) (5.7)
====== ======
5. Gain on disposal of investment in joint venture
2006
�m
Proceeds of sale 19.1
Investment at cost including goodwill (14.5)
Share of post acquisition profits (0.2)
Costs of disposal (0.2)
-------
4.2
=======
Notes (continued)
6. Finance income
2007 2006
�m �m
Interest received on overpaid corporation tax 0.2 0.1
Write down of loan notes to amortised cost 0.1 -
Interest receivable on bank and other deposits 0.8 0.4
Unwinding of discount on zero coupon loan stock at amortised
cost 1.3 1.1
Unwinding of discount on long-term receivables at amortised cost 0.7 1.8
------ ------
3.1 3.4
====== ======
7. Finance costs
2007 2006
�m �m
Interest payable:
On bank loans and overdrafts 13.0 10.6
On other loans 0.0 0.0
On loan notes 0.1 -
Finance leases and hire purchase contracts 0.0 0.0
Amortisation of loan arrangement fees 0.2 0.2
Write down of zero coupon loan stock to amortised cost - 0.5
Write down of long-term receivables to amortised cost - 0.3
Unwinding of discount on loan notes 0.1 -
------- ------
13.4 11.6
======= ======
During 2007, no borrowing costs were capitalised in the cost of qualifying
assets (2006 - �nil).
8. Dividend per share
The final dividend of 31.95p per share, if approved by the shareholders, will be
paid on 9th May 2008 to all shareholders on the register at 11th April 2008. An
interim dividend of 15.75p was paid to shareholders on 2nd November 2007.
Notes (continued)
9. Earnings per share
Basic earnings per share is calculated by dividing the profit for the year
attributable to shareholders by the weighted average number of shares in issue
during the year, excluding those held by the ESOP Trust which are treated as
cancelled.
For diluted earnings per share, the weighted average number of shares in issue
is adjusted to assume conversion of all dilutive potential ordinary shares. The
Group has two categories of dilutive potential ordinary shares, being those
share options granted to employees under a SAYE share option scheme and the
contingently issuable shares under the LTIP schemes.
Underlying earnings are as defined in the Glossary. Underlying earnings per
share divides underlying earnings attributable to shareholders by the weighted
average number of shares in issue during the year as per the calculation for
basic earnings per share.
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below:
Continuing operations 2007 2006
Weighted Weighted
Average Earnings Average Earnings
Number of per Number of per
Earnings Shares Share Earnings Shares Share
�m 000 Pence �m 000 Pence
Profit attributable
to equity holders of
the Company 25.1 41.0
Total shares issued - 45,620 - 45,593
Shares held by ESOP
Trust - (261) - (309)
------ ------ ------ ------
Basic EPS 25.1 45,359 55.3 41.0 45,284 90.5
Effect of dilutive
securities (share
options) - 364 - 326
------ ------ ------ ------
Diluted EPS 25.1 45,723 54.9 41.0 45,610 89.9
------ ------
Group's share of
movement in fair
value of investment
property in joint
venture 7.7 1.3
Gain on sale of
investment in joint
venture - (4.2)
Increase in fair
value of investment
property
less tax effect (12.2) (18.4)
Amortisation charge
arising from
acquisition less tax
effect 0.3 -
Other items less tax
effect (Note 3) 0.0 1.6
------ ------
Underlying EPS 20.9 45,359 46.1 21.3 45,284 47.0
------ ------ ------ ------
Notes (continued)
10. Statement of changes in shareholders' equity
Attributable to equity holders of the Company Minority Total
interest equity
---------------------------------------------
Fair
value
Own and
Share Share shares other Retained
capital premium held reserves earnings
�m �m �m �m �m �m �m
Balance at 1st
January 2006 22.8 18.2 (5.4) 16.4 187.7 4.2 243.9
-------------------------------------------------------------------------------
Share of joint
venture's movement
on cash flow hedge - - - 1.0 - - 1.0
Share of associate's
movement on cash
flow hedge - - - 0.1 - - 0.1
Actuarial gains in
defined benefit
pension schemes - - - - 14.0 - 14.0
Deferred tax on
actuarial gain - - - - (4.2) - (4.2)
Share of associate's
actuarial gains in
defined benefit
pension scheme - - - - 1.0 - 1.0
Deferred tax on
associate's
actuarial gain - - - - (0.3) - (0.3)
-------------------------------------------------------------------------------
Net income recognised
directly in equity - - - 1.1 10.5 - 11.6
Profit for the year - - - - 41.0 0.1 41.1
-------------------------------------------------------------------------------
Total recognised
income for the year - - - 1.1 51.5 0.1 52.7
LTIP shares - value
of services provided - - - - 0.4 - 0.4
SAYE scheme - value
of services provided - - - - 0.2 - 0.2
Consideration
received for own
shares held - - 0.1 - - - 0.1
Dividends - - - - (19.8) - (19.8)
-------------------------------------------------------------------------------
Balance at 31st
December 2006 22.8 18.2 (5.3) 17.5 220.0 4.3 277.5
-------------------------------------------------------------------------------
Share of joint
venture's movement
on cash flow hedge - - - 0.2 - - 0.2
Share of associate's
movement on cash
flow hedge - - - 0.0 - - 0.0
Revaluation of
investment property
transferred from
operational land and
buildings - - - - 5.7 - 5.7
Deferred tax on
revaluation - - - - (1.1) - (1.1)
Actuarial gain in
defined benefit
pension scheme - - - - 12.6 - 12.6
Deferred tax on
actuarial gain - - - - (3.5) - (3.5)
Effect of tax rate
change for deferred
tax on actuarial gain - - - - (0.6) - (0.6)
Share of associate's
actuarial loss in
defined benefit
pension scheme - - - - (0.3) - (0.3)
Deferred tax on
associate's
actuarial loss - - - - 0.1 - 0.1
Effect of tax rate
change for deferred
tax on associate's
actuarial loss - - - - (0.0) - (0.0)
-------------------------------------------------------------------------------
Net income
recognised directly
in equity - - - 0.2 12.9 - 13.1
Profit/(loss) for
the year - - - - 25.1 (0.2) 24.9
-------------------------------------------------------------------------------
Total recognised
income for the year - - - 0.2 38.0 (0.2) 38.0
New shares issued 0.0 1.0 - - - - 1.0
LTIP shares - value
of services provided - - - - 0.9 - 0.9
SAYE scheme - value
of services provided - - - - 0.2 - 0.2
Consideration
received for own
shares held - - 0.1 - - - 0.1
Dividends - - - - (20.8) (1.6) (22.4)
-------------------------------------------------------------------------------
Balance at 31st
December 2007 22.8 19.2 (5.2) 17.7 238.3 2.5 295.3
-------------------------------------------------------------------------------
The share premium, own shares held, fair value and other reserves are
non-distributable.
Notes (continued)
11. Reconciliation of profit before tax to cash generated from operations
2007 2006
�m �m
Profit before tax 32.3 55.6
Adjustments for:
- increase in fair value of investment properties (12.8) (24.1)
- net finance costs 10.3 8.2
- gain on disposal of joint venture - (4.2)
- share of results of joint ventures 9.7 3.0
- share of results of associates (2.5) (2.0)
- depreciation of property, plant and equipment and
amortisation of intangibles 14.7 12.7
- impairment of property, plant and equipment - 0.8
- (gain)/loss on sale of property, plant and equipment (0.1) 0.1
- transfer from joint venture to subsidiary - 0.1
- increase/(decrease) in provisions 0.3 (0.7)
- decrease in retirement benefit obligations (3.8) (2.9)
- transfer of property, plant and equipment from
inventories - (2.1)
- transfer from investment properties to inventories - 2.0
- transfer to investment properties from inventories (1.2) (4.6)
- share based payment 1.1 0.6
Movement in working capital:
Increase in inventories (7.5) (3.6)
Decrease in receivables 24.8 6.9
Increase/(decrease) in payables 0.5 (5.4)
------- -------
Cash generated from operations 65.8 40.4
======= =======
Reconciliation of increase in cash and cash equivalents to
movement in net debt:
Increase in cash and cash equivalents 2.4 0.2
Cash (inflow)/outflow from (increase)/decrease in
borrowings (26.7) 3.0
------- -------
Change in net debt resulting from cash flows (24.3) 3.2
Loan notes issued (4.2) -
Borrowings acquired on purchase of subsidiary (0.2) -
Amortisation of loan arrangement fees (0.2) (0.2)
------- -------
Movement in net debt (28.9) 3.0
Opening net debt (176.6) (179.6)
------- -------
Closing net debt (205.5) (176.6)
======= =======
Major non-cash transactions
As part of the consideration for the purchase of the Nordic Group (see Note 13),
Forth Ports PLC issued 53,620 Ordinary Shares with a value of �1.0m and loan
notes with a nominal value of �4.2m. The loan notes were subsequently redeemed
prior to 31st December 2007.
Notes (continued)
12. Analysis of net debt
On
Acquisition
of Cash Other
At 1.1.07 Subsidiary Flow Movement At 31.12.07
�m �m �m �m �m
Cash at bank and on deposit 4.9 0.8 1.6 - 7.3
Debt due within one year - (4.2) 4.2 - -
Debt due outwith one year (181.5) - (31.0) (0.2) (212.7)
Borrowings - finance leases (0.0) (0.2) 0.1 - (0.1)
------- ------- ------- ------- -------
Total net debt (176.6) (3.6) (25.1) (0.2) (205.5)
======= ======= ======= ======= =======
The other movement of �0.2m related to the amortisation of arrangement fees for
bank facilities.
13. Acquisition of Nordic Group
On 29th June 2007, the Group acquired the whole share capital of Nordic Limited,
the holding company of the Nordic Group for �32.3m including expenses. The
assets and liabilities as at 29th June arising from the acquisition are as
follows:-
Fair Acquiree's
Value Carrying Amount
�m �m
Property, plant and equipment 9.4 9.4
Customer relationships (intangible assets) 11.4 -
Inventories 0.0 0.0
Trade and other receivables 7.1 7.1
Cash and bank balances 0.8 0.8
Current tax liabilities (0.3) (0.3)
Trade and other payables (6.6) (6.6)
Borrowings (0.2) (0.2)
Deferred tax liabilities (3.3) (0.1)
------- -------
Net assets 18.3 10.1
Goodwill 27.9 =======
-------
Total purchase consideration 46.2
=======
Total purchase consideration 46.2
Less: shares issued as consideration at fair value (1.0)
loan notes issued as consideration (4.2)
repayment of borrowings (13.9)
Purchase consideration settled in cash 27.1
Cash and bank balances acquired with subsidiary (0.8)
-------
Cash outflow on acquisition 26.3
=======
Nordic's revenue for the period from the date of acquisition to 31st December
2007 was �12.4m and net profit was �0.0m. If the acquisition had occurred on 1st
January 2007, Group revenue would have been �175.9m and profit for the year
would have been �25.1m.
Notes (continued)
14. Glossary
1. The DTZ Valuations dated 31st August 2005, 31st December 2006 and 31st
December 2007 include the terms "Market Value" and "Calculation of Worth" which
are defined in The Appraisal and Valuation Manual issued by the Royal
Institution of Chartered Surveyors ("the Red Book") as:
Market Value
"The estimated amount for which a property should exchange on the date of
valuation between a willing buyer and a willing seller in an arms-length
transaction after proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion".
Calculation of Worth
"The value of a property to a particular investor, or a class of investors, for
identified investment objectives. This subjective concept relates specific
property to a specific investor, group of investors, or entity with identifiable
investment or operational objectives and/or criteria".
2. The "property development assets" which DTZ have valued include the
undernoted assets:
* Land at the Port of Leith covered by the Group's Leith Docks
Development Framework proposals;
* The development sites called Britannia Quay, Waterfront Plaza, Granton
Harbour and Western Harbour, all of which are in Leith;
* Development sites at Grangemouth, Burntisland and Methil; and
* The Ocean Terminal Shopping Centre.
3. The definition of the word "underlying" in the context of an adjustment to a
reported number is as follows:-
1) Underlying group/port/property operating profit refers to the reported
group/port/property operating profit adjusted to exclude the effect
of any revaluation of the investment properties, amortisation charge
arising from acquisitions and any one-off significant costs.
2) Underlying profit before tax, underlying profit after tax and
underlying earnings per share refer to reported profit before tax,
reported profit after tax and reported basic earnings per share
adjusted as above in 3(1) together with an adjustment for any
revaluation of JV investment property.
General
15. The principal accounting policies adopted in the preparation of this report
are as set out in the Annual Report and Accounts 2007 which will be available at
www.forthports.co.uk.
16. The annual Accounts will be posted to shareholders on 1st April 2008. Copies
will be available from the Company's registered office, Forth Ports PLC, 1
Prince of Wales Dock, Leith, Edinburgh EH6 7DX.
* Earnings before interest, tax, depreciation and amortisation
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GUUPUWUPRGQC
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