Forth shares rise on Edinburgh waterfront re-think

Forth Ports yesterday unveiled a change in strategy which will enable shareholders to cash in on the multi-million pound redevelopment of Edinburgh's waterfront.

The company announced that it had decided to retain the 400 acres of property it owns in Leith, just north of the centre of Edinburgh, rather than sell it off in parcels to maximise long-term value for its investors.

The announcement came as Forth published results of an independent valuation of its property and port assets, giving them a market value of £844m. The valuation, carried out by the surveyors DTZ Debenham Tie Leung, put an open market value of £285m on Forth's property assets but calculated that if these were retained that the value to shareholders would be nearer to £385m.

The previous valuation, made in 2000, put a value of £150m on Forth's property portfolio, since when it has raised £100m in disposals. In 2002, Forth sold a 10 per cent stake in its property development sites to an outside investor, Bellhouse Joseph Leith, putting a value of £200m on the portfolio.

The urban regeneration of the Edinburgh waterfront as a mixed residential, retail and entertainment complex will amount to the biggest expansion of the Scottish capital since the building of the new town two centuries ago

"The board believes that this has the potential to create sustainable long-term value for the group's shareholders," Forth said. The primary aim of any property and regeneration business should be that of creating and maximising value rather than realising short-term profits at the expense of this primary aim."

Shares in Forth, Britain's second biggest ports group, rose 43p to 1308p, valuing the group at £591m, as investors warmed to the new property strategy.

In light of the change in strategy, Forth said it was unlikely that it would sell off its Waterfront Plaza development this year, despite the level of interest shown by potential bidders. This would have a material impact on reported profits.

Pre-tax profits for the first half of the year were flat at £10.8m. Underlying profits from the group's ports business, which consists of five ports in the Firth of Forth, Tilbury in Essex and Dundee on the Tay estuary, rose from £13.8m to £15.2m.

The group said it was planning to turn its Grangemouth port on the Forth into a hub for dispatching goods around Scotland by building a new distribution park on an 80-acre site nearby.