Preliminary Results for Year Ended 31 March 2016

RNS Number : 4071C

Sutton Harbour Holdings PLC

28 June 2016

 

SUTTON HARBOUR HOLDINGS PLC ("the Group")

Preliminary results for the year ended 31 March 2016

Sutton Harbour Holdings plc ("Sutton Harbour", "the Company"), the AIM listed waterfront regeneration and destination specialist, announces preliminary results for the year ended 31 March 2016.

Highlights

·      Resilient trading in line with expectations

·      Re-financing of bank facilities on improved terms

·      Completion of harbour and fisheries infrastructure programme

·      Good progress with advancing current development opportunities

·      Appointed Rothschild to undertake a strategic review of options (21 April 2016) which could include a sale of the Company

Financial

·      Adjusted profit before tax* up 18.2% to £0.410m (2015: £0.347m)

·      Profit before tax £1.590m (2015: £0.861m)

·      Net assets  £40.9m (2015: £40.5m) or 42.4p (2015: 42.0p) per share

·      Year-end net debt £22.2m (2015: £21.5m); gearing: 54.4% (2015: 53.0%)

*Before accounting for impairments and fair value adjustments on investment property and property, plant and equipment

Graham Miller, Chairman, commented:

"Our trading businesses continue to prove resilient and the recent investments we have made in facilities and infrastructure around the harbour underpin our future core profitability. The medium term value growth potential of our portfolio of development sites remains significant.

The recent Brexit vote will cause short term uncertainty for many companies; however we do not believe it diminishes the intrinsic value of our business and we are pleased to have refinanced the Group's debt on improved terms with our incumbent bank."

For further information, please contact

Sutton Harbour Holdings plc Jason Schofield - Chief Executive Natasha Gadsdon - Finance Director	01752 204186
Arden Partners (Nomad and Broker) James Felix Benjamin Cryer	020 7614 5917
Rothschild (Financial Advisor) John Byrne Stephen Griffiths	020 7280 5000
Yellow Jersey (Financial PR) Philip Ranger Aidan Stanley	07768 534641 07584 085670

Chairman and Chief Executive's Statement

Year Ended 31 March 2016

Introduction

During the year the Group has achieved:

·      re-financing of bank facilities on improved terms;

·      the completion of the harbour and fisheries infrastructure programme; and

·      good progress with advancing current development opportunities.

Strategic Review

Since the year end, the Company announced that it has appointed Rothschild to undertake a strategic review of options which could include a sale of the Company. The board resolved to undertake this review to evaluate opportunities to maximise value for the Company's shareholders recognising that even with the successful re-financing that the Company's potential is underexploited by capital funding constraints.

There is currently no further news to report on this process and the Company will update shareholders in accordance with the Takeover Panel rules.

Results and Financial Position

Profit before taxation has increased to £1.590m (2015: £0.861m). The adjusted profit before taxation result (excluding fair value adjustments and impairments) was £0.410m (2015: £0.347m). Improving contribution from the Group's business activities has been partly offset by higher finance charges on higher levels of bank and asset finance debt. The results for the year ended 31 March 2016 include no profits from regeneration activities or sale of land (2015: £nil).

As at 31 March 2016 net assets were £40.869m (2015: £40.459m), representing 42.4p per share (2015: 42.0p per share). This increase incorporates the net fair value adjustment to the investment property portfolios of £1.829m surplus (2015: £0.864m surplus) recognised in profit, downwards revaluation to owner occupied portfolio recognised in profit of £0.377m (2015: upwards revaluation of £0.053m) and revaluation adjustment to the owner occupied portfolio £1.167m deficit (2015: £1.271m surplus). The results also take account of impairments to specific assets where the recoverable amount or value in use is judged to be lower than the book value. The impairment adjustment of £0.272m comprises a further reduction of the recoverable amount from airport equipment of £0.066m due to the passage of time, and a write down to reduce the carrying value of development inventory of £0.206m (2015: total impairment of £0.403m, being £0.100m against airport assets and £0.303m against the King Point Marina asset).

Completion of the two year programme to upgrade harbour and fisheries infrastructure, together with pre-planning expenditure on the Group's principal regeneration projects, resulted in an increase of net debt, including finance leases, to £22.213m (2015: £21.458m), with gearing as at 31 March 2016 at 54.4% (2015: 53.0%).

The Group's bank facilities were renewed in March 2016 with a committed £25m facility expiring in March 2019. Alongside these facilities the Group has entered into a new LIBOR swap over £10m debt, to follow on from the LIBOR hedging agreement which expires in June 2016, through to March 2019.

The Board does not recommend payment of a dividend on the year's results.

Directors and Staff

There have been no changes to the board within the year. Group-wide headcount stood at 38 as at the year end. The Group became subject to Auto Enrolment pension regulation in August 2015, and from that date membership of the company pension scheme (a defined contribution scheme) increased slightly.

Summary

The Group's waterfront land, property and facilities have unique potential to further develop the historic harbour into a leading visitor destination. To unlock these opportunities, the Group is engaged in discussions with potential end users on specific sites. Profitability of the Group's annuity trading businesses continues to prove resilient after benefiting from investment in infrastructure, cost management and new marketing strategies.

Operations Report

Marine

The full grant supported programme of infrastructure works to install a new ice plant, build a new chiller and refit an existing chiller was completed in December 2015. These essential works have increased the volume of fish that can be stored, thus adding handling and throughput capacity. Being newly commissioned, the full benefits, including energy savings, service reliability and revenue potential, have not yet been fully realised.

Last year we reported a record season for landings at Plymouth Fisheries. During the year ended 31 March 2016, strong landing trends continued albeit intermittent periods of poor weather reduced total landings to a normal level. Fuel margins have increased after a prolonged period of slim profits whilst the high oil price persisted.

Overall trading at the two marina facilities at Sutton Harbour and King Point remained steady.  Occupancy at The Marina at Sutton Harbour fell slightly, after the loss of a major customer, which was offset by improving berthing numbers at King Point Marina. Recent improvements at the marinas include the installation of industry standard software, which will help target customers more effectively, and of new WiFi internet connections which greatly improve media connectivity for berthholders.

Just after the year end, the Marina at Sutton Harbour jointly hosted, alongside the local authority, the start of the renowned Transat 'bakerly' yacht race. Further events are due to be hosted at both marinas during this summer.

Real Estate

As at 31 March 2016, the Group recorded a peak of 96.2% occupancy of its real estate portfolio as a result of improving letting performance over recent years. Early in the new financial year the Group is remarketing some recently vacated premises, with encouraging interest.

The valuation of the investment portfolio, achieving a surplus of £1.829m, reflects the benefits of new lettings and lease revisions during the course of the year including Boston Tea Party which opened in Jamaica House in July 2015. The valuer's report also takes account of the increased Stamp Duty Land Tax announced in the last budget, which has had a slightly depressing effect.

Car Parking

The car parking segment has recorded another record year of trading with revenue up 13.8% on the previous year, representing a compound annual growth rate of 12.4% pa over the last 3 years. Card payment pay and display machines and seasonal pricing have improved revenue earning potential of the car parks. To improve ambiance and to reduce power costs, new energy efficiency lighting will be installed at the Harbour multi storey car park this summer.

Regeneration

Former Airport Site

During the year, an active programme of pre-planning work and stakeholder consultation has taken place.  Ahead of the 2015 General Election, the Chancellor announced that a government report into future options for the site would be undertaken. Publication of this report has been delayed until later this year.

In the lead up to the 'Examination in Public' of the proposed planning framework for Plymouth, 'The Plymouth Plan', which will be chaired by an independent government inspector in 2017, the Company has added to the evidence base which comprehensively concludes that the site has no realistic prospects of sustaining commercial viable aviation operations, given environment, technical and economic constraints. The draft Plymouth Plan currently allocates the 113 acre brownfield former airport site for general aviation use although it is unsuitable for this purpose and is contrary to the stated demand for new housing, community facilities and local amenities such as retail space.

Sugar House, East Quay

The Sugar House site comprises c.1.3 acres of vacant harbourside land on the East Quay of Sutton Harbour. A new design team has been instructed to produce drawings and development costing for a scheme with options to accommodate a mix of residential accommodation, student accommodation, private rental sector investment property and ground floor commercial uses, together with integral parking. The scheme options take account of the pre application meetings held with the local authority and the Group is currently marketing the development opportunity to specialist investors/developers.

The 'Boardwalk', Vauxhall Quay

The Group has previously secured planning consent for a 7,800 sq ft scheme, comprising 3 units targeted at food and beverage operators, on a pier structure incorporating a pedestrian walkway which will significantly improve access around the harbour. The Group has now undertaken requisite pre-construction survey work to permit application for Marine Management Organisation licensing, a pre-requisite for works to be undertaken in a marine environment. Delivery of the scheme, which remains subject to finance, has attracted strong interest from quality covenant end users.

Other sites

The Group has regular and active discussions with interested buyers and potential partners for other regeneration opportunities around Sutton Harbour, as articulated in the 'Vision for Sutton Harbour' framework published in July 2014, an updated version of which is planned to be issued later this year.

	As at 31 March 2016	As at 31 March 2015
Total estate portfolio valuation	£46.102m	£44.694m
Owner occupied portfolio valuation	£26.752m	£28.089m
Investment portfolio valuation	£19.350m	£16.605m
Number of investment properties	71	71
Contracted rent (per annum)	£1.605m	£1.433m
Net initial yield	8.30%	8.60%
Reversionary yield	9.20%	9.70%
Occupancy rate	96.2%	93.30%
Estimated rental value (ERV) of vacant units	£0.039m	£0.119m
Average unexpired lease	10.0 years	10.0 years
Gross car parks revenue	£0.478m	£0.422m
Development Inventory
Sites around Sutton Harbour	£8.104m	£7.861m
Portland	£0.200m	£0.406m
Former airport site	£11.721m	£11.568m
Total	£20.025m	£19.835m

Outlook

Our trading businesses continue to prove resilient and the recent investments we have made in facilities and infrastructure around the harbour underpin our future core profitability. The medium term value growth potential of our portfolio of development sites remains significant.

Graham Miller                                                      Jason Schofield

Chairman                                                              Chief Executive

27 June 2016

 

Consolidated Income Statement

For the year ended 31 March 2016

	2016	2015
	£000	£000
Revenue	6,509	6,955
Cost of sales before impairment of assets	(3,960)	(4,528)
Impairment of assets	(272)	(403)
Cost of sales	(4,232)	(4,931)
Gross profit	2,277	2,024
Administrative expenses	(1,082)	(1,153)
Fair value adjustments on investment properties and fixed assets	1,452	917
Operating profit	2,647	1,788
Finance income	2	1
Finance costs	(1,059)	(928)
Net finance costs	(1,057)	(927)
Profit before tax from continuing operations	1,590	861
Taxation charge on profit from continuing operations	(93)	(206)
Profit for the year from continuing operations	1,497	655
Profit for the year attributable to owners of the parent	1,497	655
Basic earnings per share
from continuing operations	1.55p	0.68p
Diluted earnings per share
from continuing operations	1.55p	0.68p

 

Consolidated Statement of Other Comprehensive Income

For the year ended 31 March 2016

		2016	2015
		£000	£000
Profit for the year		1,497	655
Items that will not be reclassified subsequently to profit or loss:
Revaluation of property, plant and equipment		(1,167)	1,271
Items that may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges		80	(21)
Other comprehensive income for the year, net of tax		(1,087)	1,250
Total comprehensive income for the year attributable to owners of the parent		410	1,905

 

Consolidated Balance Sheet

As at 31 March 2016

	2016	2015
	£000	£000
Non-current assets
Property, plant and equipment	27,295	29,479
Investment property	19,350	16,605
	46,645	46,084
Current assets
Inventories	20,097	19,894
Trade and other receivables	2,038	1,527
Cash and cash equivalents	686	239
Tax recoverable	19	17
	22,840	21,677
Total assets	69,485	67,761
Current liabilities
Trade and other payables	1,118	1,241
Finance lease liabilities	105	19
Deferred income	1,542	1,504
Provisions	53	48
Derivative financial instruments	33	-
	2,851	2,812
Non-current liabilities
Bank loans	22,500	21,650
Finance lease liabilities	294	28
Deferred income and deferred government grants	1,214	994
Deferred tax liabilities	1,629	1,536
Provisions	88	129
Derivative financial instruments	40	153
	25,765	24,490
Total liabilities	28,616	27,302
Net assets	40,869	40,459
Issued capital and reserves attributable to owners of the parent
Share capital	16,069	16,069
Share premium	5,368	5,368
Other reserves	13,451	14,538
Retained earnings	5,981	4,484
Total equity	40,869	40,459

 

Consolidated Statement of Changes in Equity

For the year ended 31 March 2016

	Share capital	Share premium	Revaluation reserve	Merger reserve	Hedging reserve	Retained earnings	Total equity
			------------Other reserves------------
	£000	£000	£000	£000	£000	£000	£000
Balance at 1 April 2014	16,069	5,368	9,549	3,871	(132)	3,829	38,554
Comprehensive income/(expense)
Profit for the year	-	-	-	-	-	655	655
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	1,271	-	-	-	1,271
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	(21)	-	(21)
Total other comprehensive income/(expense)	-	-	1,271	-	(21)	-	1,250
Total comprehensive income/(expense)	-	-	1,271	-	(21)	655	1,905
Total balance at 31 March 2015	16,069	5,368	10,820	3,871	(153)	4,484	40,459
Balance at 1 April 2015	16,069	5,368	10,820	3,871	(153)	4,484	40,459
Comprehensive income/(expense)
Profit for the year	-	-	-	-	-	1,497	1,497
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	(1,167)	-	-	-	(1,167)
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	80	-	80
Total other comprehensive income/(expense)	-	-	(1,167)	-	80	-	(1,087)
Total comprehensive income/(expense)	-	-	(1,167)	-	80	1,497	410
Total balance at 31 March 2016	16,069	5,368	9,653	3,871	(73)	5,981	40,869

Consolidated Cash Flow Statement

For the year ended 31 March 2016

	2016	2015
	£000	£000
Cash generated from total operating activities	621	1,158
Tax received	-	-
Net cash generated from total operating activities	621	1,158
Cash flows from investing activities
Proceeds from sale of property, plant and equipment	-	-
Net expenditure on investment property	(8)	(167)
Expenditure on property, plant and equipment	(561)	(1,483)
Interest received	2	1
Net cash used in investing activities	(567)	(1,649)
Cash flows from financing activities
Interest paid	(1,059)	(1,050)
Loan drawdown/(repayment of borrowings)	850	1,220
Finance leases	353	47
Proceeds of government grants	249	308
Net cash generated from/(used in) financing activities	393	525
Net increase in cash and cash equivalents	447	34
Cash and cash equivalents at beginning of the year	239	205
Cash and cash equivalents at end of the year	686	239

 

Notes

Segment Results

Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. 

The Board of Directors considers the business from an operational perspective as the Group has only one geographical segment, with all operations being carried out in the United Kingdom.

The Board of Directors assesses the performance of the operating segments using operating profit. The segment information provided to the Board of Directors for the reportable segments for the year ended 31 March 2016 is as follows:

Year ended 31 March 2016	Marine	Real Estate	Car Parking	Regeneration	Total
	£000	£000	£000	£000	£000
Revenue	4,449	1,580	480	-	6,509
Gross profit prior to non-recurring items	1,255	1,196	276	(178)	2,549
Non-recurring items:
Impairment of plant, property and equipment	-	-	-	(272)	(272)
	1,255	1,196	276	(450)	2,277
Fair value adjustment on investment properties and fixed assets	(229)	1,829	(148)	-	1,452
					3,729
Unallocated:
Administrative expenses					(1,082)
Operating profit					2,647
Financial income					2
Financial expense					(1,059)
Taxation					(93)
Profit for the year from continuing operations					1,497
Depreciation charge
Marine					231
Car Parking					6
Administration					36
					273

Year ended 31 March 2015	Marine	Real Estate	Car Parking	Regeneration	Total
	£000	£000	£000	£000	£000
Revenue	5,020	1,513	422	-	6,955
Gross profit prior to non-recurring items	1,445	971	240	(229)	2,427
Non-recurring items:
Impairment of plant, property and equipment	(303)	-	-	(100)	(403)
Onerous leases
	1,142	971	240	(329)	2,024
Fair value adjustment on investment properties and fixed assets	-	864	53	-	917
					2,941
Unallocated:
Administrative expenses					(1,153)
Operating profit					1,788
Other gains and losses
Financial income					1
Financial expense					(928)
Taxation					(206)
Profit for the year from continuing operations					655
Depreciation charge
Marine					118
Car Parking					7
Administration					18
					143

Assets and liabilities
	2016 £000	2015 £000
Segment assets:
Marine	24,312	26,348
Real Estate	20,014	17,012
Car Parking	3,620	3,577
Regeneration	20,207	20,179
Total segment assets	68,153	67,116
Unallocated assets:
Property, plant & equipment	121	123
Trade & other receivables	525	283
Cash and cash equivalents	686	239
Total assets	69,485	67,761

 

	2016 £000	2015 £000
Segment liabilities:
Marine	2,329	2,058
Real Estate	622	804
Car Parking	78	67
Regeneration	825	933
Total segment liabilities	3,854	3,862
Unallocated liabilities:
Bank overdraft & borrowings	22,500	21,650
Trade & other payables	560	101
Financial derivatives	73	153
Deferred tax liabilities	1,629	1,536
Tax payable	-	-
Total liabilities	28,616	27,302
Additions to property, plant and equipment
Marine	584	1,461
Car Parking	-	3
Unallocated	27	71
Total	611	1,535

Unallocated assets included in total assets and unallocated liabilities included in total liabilities are not split between segments as these items are centrally managed.

Unallocated expenses include central administrative costs that cannot be split between the various business segments because they are incurred in assisting the Group generate revenues across all business segments.

Revenue can be divided into the following categories:

	2016	2015
	£000	£000
Sale of goods	2,063	2,629
Sale of land and property	-	-
Rental income	1,740	1,685
Provision of services	2,706	2,641
	6,509	6,955

No revenues from any one customer represented more than 10% of the Group's revenue for the year.

Going Concern

The Group's forecasts and projections, taking account of reasonably foreseeable possible changes in trading performance, show that the Group should be able to operate within the level of the facilities and covenants over a period of at least twelve months from the date of the announcement.  The covenants measure interest cover, net asset cover and debt to fair value.

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group, therefore, continues to adopt the going concern basis in preparing its financial statements.

Directors' Statement

The preliminary results for the year ended 31 March 2016 and the results for the year ended 31 March 2015
are prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted by the European Union (IFRS). The accounting policies adopted in this preliminary announcement are consistent with the Annual Report for the year ended 31 March 2016.

 

The Board of Sutton Harbour Holdings plc approved the release of this audited preliminary announcement on 27 June 2016.

The preliminary financial information has been extracted from the Annual Report and audited Financial Statements for the year ended 31 March 2016, which will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company.  These audited Financial Statements include the auditors' report which, whilst unqualified, contains reference to the disclosures concerning the potential impact of government reports and future planning permission applications upon the valuation of the airport site, which is held as inventory. The auditors' report does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The report will also be available on the investor relations page of our website (www.suttonharbourholdings.co.uk).  Further copies will be available on request and free of charge from the Company Secretary at Tin Quay House, Sutton Harbour, Plymouth, PL4 0RA.

 

END

 

 

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