Debt is ‘key risk’ for Peel Ports
THE company that controls Peel Holdings’ ports business has identified its high levels of debt as a key financial risk.
The Peel Ports Shareholder FinanceCo has debts of £1.2bn, with most of this – £1.04bn – in the form of bank loans. In the year to March 31 the group paid £70.4m in interest and other charges, down 5% on the previous year.
This figure exceeded the group’s operating profit but the company said it was confident the debt levels were sustainable. It has fixed the interest on much of the debt until 2013 and offset some of the payments in a complicated index-linked swap arrangement.
In the group’s annual accounts it said: “The directors consider that the combination of the swap instruments, stable trading of the ports business, effective working capital management and the development of the asset base assists in managing the risks arising from the level of debt and the variability of interest rates.”
Peel Ports employs 2,065 staff and owns port assets throughout the UK including the Mersey Docks and Harbour Company as well as the Manchester Ship Canal. The directors said an economic downturn was the key operational risk as it would have an “unavoidable” impact on ports.
Peel’s accounts were filed before the recession took hold. A global downturn in the volume of container shipments is expected to have an impact on next year’s figures.
The accounts show it has net liabilities of £364m but the directors prepared the statement on a “going concern” basis primarily because the group was valued at £1.6bn when Rreef, the real estate investment arm of Deutsche Bank, bought a 49.9% stake in 2006.
In the year to March 31 revenue increased 2.9% to £376m while operating profit dipped 3.4% to £68.2m. Pre-tax profit for the year was £11.4m, up on the previous year when the sale of property assets to another Peel subsidiary netted a one-off profit of £116m and masked a £1.5m loss.
Throughput at the ports dipped 1.4% from 65 million tonnes to £64.1 million, mainly caused by a drop in coal volumes.
