Flat result at Ship Canal: Negotiations continue over buyout offer at Manchester firm

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MANCHESTER SHIP Canal, which is preparing to celebrate its centenary next year, saw profits drop pounds 2.1m to pounds 5.7m in the first half of this year, writes John Murray.

Most of the decline was attributable to the absence of exceptional credits taken last year. The company's underlying performance was flat.

Robert Hough, chairman, said that negotiations were still continuing over a bid by the majority shareholder, Peel Holdings, to buy out minority shareholders.

Peel, the company controlled by the property developer and Manchester Olympic bid promoter John Whittaker, owns 82 per cent of MSC. Peel last month offered a cash and loan- note deal worth up to pounds 33.50 a share for the outstanding shares. The figure was six times an original offer made in 1987 and promised to end a decade of wrangling over control of the company. Nicholas Berry, the former owner of the Harraps dictionary business, holds 10 per cent of the ordinary shares and 7 per cent of the preference stock. He would receive pounds 21.6m under the offer.

Mr Hough described the first-half results as satisfactory. Turnover rose marginally to pounds 10.9m ( pounds 10.4m), as did operating profits at pounds 3.4m ( pounds 3.3m). Last time, MSC had the benefit of exceptional credits of pounds 3m from the sale of fixed assets at the Ellesmere Port container terminal.

There was a net exceptional credit this year of pounds 470,000, after the release of a pounds 1.6m provision for dredging the Mersey and redundancy costs of pounds 1.1m.

Operating profits from the canal dropped pounds 250,000 to pounds 2.92m as tonnage declined from 4.07 million to 3.96 million. Mr Hough said traffic in the lower canal was stable but the losses from the upper canal worsened to pounds 1.2m from pounds 840,000. The port workforce is down to 267, following 53 redundancies in the first half, mostly from the disbanding of the canal's police force.

Gross property income was pounds 2.58m ( pounds 2.75m) and MSC recorded a surplus of pounds 630,000 from property sales.

Earnings per share were 121.3p (182.5p) and there is no interim dividend, as is customary for MSC. The shares closed unchanged at pounds 27.75.