The two conditional offers Forth Ports received from a consortium of shareholders earlier this month meant its results were closely watched. Management said at the time that the second indicative bid of 1,340p fell "far short of the value of Forth Ports", but nonetheless agreed to meet the bidders, as shareholders, after the publication of its results.
Chief executive Charles Hammond confirms the meeting is going ahead, but stresses the consortium will receive exactly the same treatment as other shareholders. The potential bidders will have to up their price if they want privileged access to the books.
The results came in just ahead of analysts' expectations. The downturn in global trade dented top and bottom lines alike after a record 2008 in the group's core port operations. Don't be fooled by the apparent upswing in profits; last year's reported losses, like the massive profits in 2005, are attributable to the property portfolio. Strip out valuation write-downs and other exceptionals and profits are actually down nine per cent.
Property prices have now stabilised, and Forth Ports' valuers think its brownfield riverside assets in Edinburgh are worth £74m, up from £60m at the end of 2008. The big news in the property division last year was the purchase of the remaining 50 per cent of the Ocean Terminal shopping centre, which sits in the middle of the group's development site, from Bank of Scotland. This portfolio, which may now be undervalued, is one reason why investors, such as the bidding consortium, like Forth Ports.
The other reason is the relative predictability of its earnings. Compared to the savage reduction in shipping volumes, the contraction in the group's underlying earnings last year was mild and its margins, at 21 per cent, remain attractive.
Broker Arbuthnot expects adjusted pre-tax profits next year of £35m and EPS of 55.8p (£33.2m and 56.2p in 2009).
FORTH PORTS (FPT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,386p | MARKET VALUE: | £633m | |
| TOUCH: | 1,382-1,393p | 12-MONTH HIGH: | 1,413p | LOW: 870p |
| DIVIDEND YIELD: | 2% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 500p | NET DEBT: | 110% | |
| Year to 31 Dec 2009 | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 152 | 58.3 | 97.6 | 43.0 |
| 2006 | 154 | 55.6 | 90.5 | 45.2 |
| 2007 | 165 | 32.3 | 55.3 | 47.7 |
| 2008 | 186 | -30.7 | -108.0 | 28.6 |
| 2009 | 174 | 36.3 | 58.2 | 28.6 |
| % change | -6 | - | - | - |
Ex-div: 14 Apr Payment: 7 May | ||||
