Final Results

RNS Number : 5778V

Sutton Harbour Holdings PLC

30 May 2008

 

For Immediate Release

30 May 2008

SUTTON HARBOUR HOLDINGS PLC

Preliminary Results for the year ended 31 March 2008

Enquiries:             Nigel Godefroy, Sutton Harbour Holdings plc, 01752 204 186

                            Natasha Gadsdon, Sutton Harbour Holdings plc, 01752 204 186

                            Bobbie Hilliam, Evolution Securities, 020 7071 4300

Press Enquiries:    Paul Vann, Winningtons, 0117 920 0092

Chairman's Statement

For the year ended 31 March 2008

I am pleased to report that your Company has made significant progress towards a number of strategic objectives in the year under review. Against a backdrop of well documented difficulties in property and aviation sectors and turbulence in the financial markets, your Company has achieved highly creditable results for the year and worked successfully to secure new regeneration projects for the medium term pipeline and has introduced new Air Southwest routes.

These results are presented for the first time under Adopted International Financial Reporting Standards ('Adopted IFRS'). As such comparisons with results from previous years can be less clearly drawn. Under IFRS investment property valuation changes are recorded in the Income Statement. We have commissioned an independent external valuation of our asset portfolio and the resultant revaluation surplus on investment properties is included in this year's financial statements. Due to the nature of our regeneration activities we expect delivery of profits from regeneration projects to be more unevenly recognised. Shareholders are therefore encouraged to appraise our performance on the strength of the project pipeline and growth in valuation of net assets as well as earnings performance of the Group.

Results and dividend

Under Adopted IFRS we report a pre-tax profit of £5.5million, compared with a profit for 2007 of £3.3million. Net assets at the balance sheet date have increased by £4,391,000 to £39,684,000.  

 

Your Board proposes a final dividend of 1.5 pence per share, making 2.4 pence per share in total for the year. This represents a 19% increase over the previous year and follows the Board's decision to improve returns to shareholders. The final dividend will be payable on 22 August 2008 to shareholders on the register on 8 August 2008. The shares are expected to go ex-dividend on 6 August 2008.

 

Since the year end the developer we worked with on the residential element of the East Quays scheme has decided to withdraw due to current economic conditions.  In light of this, £2.13 million cumulative revenue was inappropriately recognised in the UK GAAP accounts for the years ended 31 March 2005, 2006 and 2007 and this has been reversed. We are re-appraising the scheme to increase the commercial space. Since the year end, we intend to reclassify this site as an investment property and it will be subject to revaluation in the current year. 

Regeneration

The revaluation of the Group's investment property assets resulted in a net surplus of £2.8m. This positive uplift demonstrates the strength and quality of the portfolio at a time when property markets are showing signs of weakening. It is the Group's intention to grow the investment property portfolio for stable earnings in the future unless it proves commercially beneficial to sell selected assets.

 

This investment strategy to develop our project pipeline will mean that gearing will increase further in the short to medium term. The group's gearing has increased from 27% to 46% since last year.

 

The development side of our regeneration activities continues to build on our specialism of partnering with public bodies to regenerate brownfield sites and waterfront areas. We have made progress with schemes in Exeter and St Austell and we have worked hard to build the pipeline for the medium term. During the past year we have been appointed by the South West of England Regional Development Agency as the preferred developer on a mixed-use scheme in Portland in readiness for the 2012 Olympic and Paralympic sailing events. We have also been appointed preferred partner by Swansea City Council on a substantial waterfront mixed-use regeneration project. Both these schemes demonstrate our success in extending the Group's geographical reach.

 

Where market conditions are judged favourable, the Group recycles certain property assets to generate cash and to crystallise the value added by the group and then invests into assets with growth potential. During the past year the Group has acquired 13,000 sq ft ground floor office space and two car parks within the harbour environs. The ground floor office space in the DWP building and other surplus land was sold.

The Group exchanged its interest in 'Plymouth Local Improvement Finance Trust' ('Plymouth LIFT') for shares in a new joint venture company. The new joint venture company holds shares in both Plymouth LIFT and East Hampshire LIFT.

Transport

Air Southwest has performed well during the last year with particular success in improving operational performance, load factor and passenger sales yield. We were rewarded for our efforts by being named the most punctual scheduled airline operating from Gatwick during 2007. We have added to our route network with new services out of Plymouth and Newquay to Newcastle, Glasgow, Cork and Dublin which started on 28 April 2008.

 

The underlying airline business remains sound and ticket sales on the new routes have been encouraging. However, we are very mindful of the impact of escalating fuel prices and this will put pressure on airline results during the current year.

 

Many shareholders will be aware from the attendant publicity of the significant agreement we reached with Plymouth City Council during the year. This ground-breaking agreement aims to safeguard the city's aspirations for the current and future development of the airport whilst releasing surplus land for development and addressing environmental concerns. We are currently well advanced with planning submissions for the surplus land and I will provide an update on our progress with the half year results.  

Marine

The modernisation of our main Sutton Harbour Marina is now complete. We have made further improvements to the facilities and I am pleased to report our berths are fully let for the season. 

 

The new lock gates were commissioned in February and harbour operations have restored to normal working after a five month long refit. The new gates, designed to last thirty years, are essential to ensure continued effectiveness of flood defences. These works were disruptive to harbour users during this period and I thank them for their patience during the winter months.

 

The Group, with partners Plymouth City Council and South West of England Regional Development Agency, hosted the Artemis 2008 Transat race start earlier this month. The race village, constructed along the harbour's edge, had 24 race yachts berthed in the harbour and the Barbican Jazz Festival which ran for the week before the race started on 11 May. This event attracted over 100,000 visitors and provided an excellent opportunity for the Group to showcase Sutton Harbour.

Corporate Governance and staff

The Remuneration Report  [in the full Annual Report] has been expanded this year and we have undertaken an external review of remuneration arrangements for senior executives during the year. This review was to ensure that our remuneration policies are fair and competitive such that we continue to attract, retain and motivate good people, capable of growing the business. This has been a particularly challenging year and my thanks go to the management team and all our staff for their efforts, achievements and commitment to the Group.

Outlook

We have made a number of changes to the form and content of the annual report in order to give shareholders a more detailed insight into our objectives, progress and prospects. Going forward, we are operating in an increasingly difficult economic environment and the outlook remains challenging. Despite the underlying strength of our property portfolio we are not immune from the difficulties facing the property sector and we will have to work hard to maximise value from our regeneration projects. Equally, the challenge of high fuel prices and environmental concerns affect our transport sector. 

Your Company has a strong asset base, a good pipeline of projects and an experienced team. I believe our annual report demonstrates that the Group is well placed to continue its progress and deliver further growth in value in the future.

Michael Knight

Chairman

29 May 2008

Consolidated Income Statement

For the year ended 31 March 2008

		2008	2007
		£000	£000
Revenue		29,237	29,259
Cost of sales		(25,527)	(26,319)
Gross profit		3,710	2,940
Other operating income		20	22
Administrative expense		(1,465)	(954)
Other operating expenses		(33)	(59)
Operating profit before gains on investment properties		2,232	1,949
Fair value adjustments of investment property		2,828	2,200
Operating profit		5,060	4,149
Financial income		251	119
Financial expense		(835)	(965)
Net financing costs		(584)	(846)
Unrealised gain on exchange of shares in associate company		1,106	-
Share of loss of associate using the equity accounting method		(125)	(14)
		981	(14)
Profit before tax		5,457	3,289
Taxation		(884)	(787)
Profit for the year attributable to the equity shareholders		4,573	2,502
Basic earnings per share		9.10p	5.13*p
Diluted earnings per share		8.94p	5.02*p

All figures relate to continuing activities.

* Adjusted for the one for one capitalisation issue.

Consolidated Statement of Recognised Income and Expense

For the year ended 31 March 2008

		2008	2007
		£000	£000
Revaluation of property, plant and equipment		(2,036)	-
Tax recognised on income and expenses recognised directly in equity		575	115
Profit for the year		4,573	2,502
Total recognised income and expense for the year attributable to the equity shareholders		3,112	2,617

Consolidated Balance Sheet

As at 31 March 2008

		2008	2007
		£000	£000
Non-current assets
Property, plant and equipment		33,853	33,342
Intangible assets		541	576
Investment property		28,131	15,923
Investment in associate		-	828
Investment in joint venture		2,020	-
Other financial assets		130	130
		64,675	50,799
Current assets
Inventories		5,448	3,898
Trade and other receivables		3,950	4,077
Cash and cash equivalents		6	6
Derivatives		82	14
Tax receivable		481	333
		9,967	8,328
Total assets		74,642	59,127
Current liabilities
Bank overdraft		13,406	6,061
Other interest-bearing loans and borrowings		1,013	1,069
Trade and other payables		6,808	4,463
Deferred income		3,362	3,336
Deferred government grants		20	21
Derivatives		-	7
Provisions		229	-
		24,838	14,957
Non-current liabilities
Other interest-bearing loans and borrowings		3,718	2,293
Deferred government grants		314	333
Provisions		-	40
Deferred tax liabilities		6,088	6,211
		10,120	8,877
Total liabilities		34,958	23,834
Net assets		39,684	35,293
Equity and reserves
Share capital		12,622	6,112
Share premium		3	2,843
Other reserves		9,827	11,288
Retained earnings		17,232	15,050
Total equity		39,684	35,293

                                                                                                                                                Company Balance Sheet under UK GAAP

                                                                                                                                                                                       As at 31 March 2008

		2008	2007
		£000	£000
Fixed assets
Other investments		7,907	3,186
		7,907	3,186
Current assets
Debtors		11,169	6,104
Cash at bank and in hand		7	32
		11,176	6,136
Current liabilities
Creditors: amounts falling due within one year		(4,197)	(30)
Net current assets		6,979	6,106
Total assets less current liabilities		14,886	9,292
Provisions for liability and charges
Deferred taxation		-	(3)
Net assets		14,886	9,289
Capital and reserves
Called up share capital		12,622	6,112
Share premium account		3	2,843
Revaluation reserve		2,019	-
Other reserves		141	97
Profit and loss account		101	237
Equity shareholders funds		14,886	9,289

Consolidated Cash Flow Statement

For the year ended 31 March 2008

		2008	2007
		£000	£000
Cash flows from operating activities
Profit for the year		4,573	2,502
Adjustments for:
Taxation		884	787
Share of loss of associate		125	14
Financial income		(251)	(119)
Financial expense		835	965
Fair value adjustments of investment property		(2,828)	(2,200)
Unrealised gain on exchange of shares in associate company		(1,106)	-
Depreciation and amortisation		723	648
Amortisation of grants		(20)	(22)
Loss on sale of property, plant and equipment		33	59
Equity settled share-based payment expenses		44	74
Operating profit before changes in working capital and provisions		3,012	2,708
(Increase) in loan to associate		-	(124)
(Increase) in inventories		(3,553)	(753)
Decrease/(increase) in trade and other receivables		127	(384)
Increase/(decrease) in trade and other payables		989	(188)
Increase in deferred income		26	86
Increase in provisions		189	40
Cash generated from operations		790	1,385
Tax paid		(578)	(875)
Net cash from operating activities		212	510
Cash flows from investing activities
Proceeds from the sale of non-current assets held for sale		-	13,600
Proceeds from sale of property, plant and equipment		18	174
Acquisition of investment property		(7,088)	(1,272)
Acquisition of property, plant and equipment		(2,402)	(3,546)
Proceeds from the receipt of government grants		-	48
Interest received		162	30
Costs relating to new joint venture company		(40)	-
Net cash (used in)/from investing activities		(9,350)	9,034
Cash flows from financing activities
Proceeds from the issue of share capital		2,427	72
Issue costs relating to the issue of share capital		(94)	-
Proceeds from new loan		2,350	1,669
Interest paid		(812)	(1,025)
Repayment of borrowings		(980)	(9,866)
Dividends paid		(1,098)	(950)
Net cash from/(used in) financing activities		1,793	(10,100)
Net (decrease) in cash and cash equivalents		(7,345)	(556)
Cash and cash equivalents at beginning of the year		(6,055)	(5,499)
Cash and cash equivalents at end of the year		(13,400)	(6,055)

Note 1. Segment results

The Group's primary format for segment reporting is based on business segments. All of the Group's operations are carried out in the United Kingdom. The Group therefore has only one geographical segment.

Business segments:

	Marine Activities		Property and   Regeneration		Transport				Consolidated
	2008	2007	2008	2007	2008	2007			2008	2007
	£000	£000	£000	£000	£000	£000			£000	£000
Total external segment revenue	4,315	4,934	3,710	2,353	21,212	21,972			29,237	29,259
Segment result	1,101	947	5,015	4,028	409	128			6,525	5,103
Unallocated expenses									(1,465)	(954)
Group operating profit									5,060	4,149
Financial income									251	119
Financial expense									(835)	(965)
Profit on sale of share in associate company									1,106	-
Share of loss of associate									(125)	(14)
Taxation									(884)	(787)
Profit for the year									4,573	2,502
Assets and liabilities
Segment assets	21,117	22,422	34,600	21,151	15,933	14,112			71,650	57,685
Investment in equity accounted joint venture									1,930	-
Investment in equity accounted associate									-	828
Unallocated assets									581	281
Tax assets									481	333
Total assets									74,642	59,127
Segment liabilities	1,511	1,475	5,413	1,274	8,184	5,451			15,108	8,200
Unallocated liabilities									13,762	9,423
Tax liabilities									6,088	6,211
Total liabilities									34,958	23,834
	Marine Activities		Property and Regeneration		Transport		Unallocated		Consolidated
	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Other segment information
Capital expenditure:
Property, plant and equipment	1,220	852	-	1,485	1,552	1,150	155	59	2,927	3,546
Investment property	-	-	7,970	1,272	-	-	-	-	7,970	1,272
Depreciation	36	44	-	-	565	489	87	80	688	613
Amortisation	-	-	-	-	35	35	-	-	35	35
Provisions –charge to the income statement	-	-	-	-	189	40	-	-	189	40

Revenue can be divided into the following categories:

	2008	2007
	£000	£000
Sale of goods	3,252	4,031
Sale of land	1,630	-
Provision of services	6,591	5,681
Airline ticket sales	17,764	19,547
	29,237	29,259

 Note 2.   

Since the year end the developer we worked with on the residential element of the East Quays scheme has decided to withdraw in light of current economic conditions. Following a review of the contract terms the group is unlikely to be able to enforce payment of revenue previously accounted under UK GAAP. In light of this £2.13 million cumulative revenue was inappropriately recognised in the years ended 31 March 2005, 2006 and 2007. Of this £930,000 related to year ended 31 March 2007. Taxation provided on the revenue at 30% has been reversed. The overall impact on net assets of the prior year adjustment has been a reduction of £1.491m; this has been corrected as an adjustment to the UK GAAP figures in the reconciliation of the transition to IFRS in the full annual report.  Furthermore, as a result of this adjustment, the IFRS comparatives reported in this preliminary announcement differ from those previously reported in the interim statement for the period ended 30 September 2007.

The effects in 2007 of the adjustment to the comparatives previously reported in the Interim Report 2007 are summarised below:

THE GROUP	2007	2007
Income statement	£000	£000
Revenue as previously stated under UK GAAP	30,688
Prior year adjustment to revenue	(930)
IFRS adjustment	(499)
Restated revenue		29,259
Operating Profit as previously stated under UK GAAP	5,367
Prior year adjustment to operating profit	(930)
IFRS adjustment	(288)
Restated operating profit		4,149
Profit before tax as previously stated under UK GAAP	4,212
Prior year adjustment to profit before tax	(930)
IFRS adjustment	7
Restated profit before tax		3,289
Taxation as previously stated under UK GAAP	(1,266)
Prior year adjustment to taxation	279
IFRS adjustment	200
Restated taxation		(787)
Profit for the year attributable to equity shareholders as previously stated under UK GAAP	2,946
Prior year adjustment to profit for the year	(651)
IFRS adjustment	207
Restated profit for the year attributable to equity shareholders		2,502
Basic earnings per share as previously stated under UK GAAP		*6.05p
Restated basic earnings per share under UK GAAP		*4.71p
Diluted earnings per share as previously stated under UK GAAP		*5.92p
Restated diluted earnings per share under UK GAAP		*4.61p
* adjusted for one for one capitalisation issue

THE GROUP	2007	2007
Balance Sheet	£000	£000
Trade and other receivables as previously stated under UK GAAP	6,377
Prior year adjustment	(1,405)
IFRS adjustment	(895)
Restated trade and other receivables		4,077
Tax payable as previously stated under UK GAAP	306
Prior year adjustment	(639)
Restated tax receivable		333
Trade and other payables as previously stated under UK GAAP	3,778
Prior year adjustment	725
IFRS adjustment	(40)
Restated trade and other payables		4,463
Net assets as previously stated under UK GAAP	40,160
Prior year adjustment	(1,491)
IFRS adjustment	(3,376)
Restated net assets		35,293

Retained earnings as previously stated under UK GAAP	8,366
Prior year adjustment	(1,491)
IFRS adjustment	8,175
Restated retained earnings		15,050

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2008 or 2007. Statutory accounts for 2007, which were prepared under UK GAAP, have been delivered to the registrar of companies. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain statements under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for 2008, which are being prepared under IFRSs as adopted by the EU will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the registrar of companies in due course. 

 

END

 

 

FR SDESESSASELI