Final Results

RNS Number : 8908Q

Sutton Harbour Holdings PLC

23 June 2015

 

23 June 2015

SUTTON HARBOUR HOLDINGS PLC ("the Group")

Preliminary results for the year ended 31 March 2015

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 2015.

Highlights

·      Further lettings of commercial property around Sutton Harbour, increasing the occupancy rate inclusive of The Boston Tea Party letting to 93.3% (2014: 86.4%)

·      Record landings at Plymouth Fisheries with a catch value of £19.4m (2014: £17.3m)

·      Grant supported infrastructure programme underway with completion of new lock walkways and new ice manufacturing plant

·      Operational changes at car parks resulting in 13% increase in revenue compared to previous year

·      First complete operating season at King Point Marina with results exceeding first year trading expectations

·      Detailed planning consent obtained for 'Boardwalk' scheme at Vauxhall Quay

·      Step change in promotion of Sutton Harbour as a destination, Plymouth Fisheries and the Marinas

Financial

·      Like for like revenues (excluding regeneration) up 5.1% to £6.955m (2014: £6.615m)

·      Adjusted profit before tax* up 12.7% to £0.347m (2014: £0.308m)

·      Profit before tax £0.861m (2014: £0.265m)

·      Year-end net debt £21.5m (2014: £20.2m); gearing: 53.0% (2014: 52.5%)

·      Net assets  £40.5m (2014: £38.6m) or 42.0p (2014: 40.0p) per share

*Before accounting for onerous leases, impairments and fair value adjustments on investment property

Graham Miller, Chairman, commented:

"I am pleased to report a year of strong performance by the Group's trading businesses with record revenues achieved by Plymouth Fisheries and the Sutton Harbour Car Parks.  These encouraging results demonstrate that specific strategies to grow revenues have been effective, helped by generally improving trading conditions.  Increased occupancy of the Group's facilities and investment portfolio continues to underpin the value of the asset base of the Company, which shows pleasing growth."

For further information, please contact

Sutton Harbour Holdings plc Jason Schofield - Chief Executive Natasha Gadsdon - Finance Director	01752 204186
Arden Partners James Felix Ciaran Walsh	020 7614 5917
Yellow Jersey Philip Ranger	07768 534641

Chairman and Chief Executive's Statement

Year Ended 31 March 2015

Introduction from Chairman

I am pleased to report a year of strong performance by the Group's trading businesses with record revenues achieved by Plymouth Fisheries and the Sutton Harbour Car Parks.  These encouraging results demonstrate that specific strategies to grow revenues have been effective, helped by generally improving trading conditions.  Increased occupancy of the Group's facilities and investment portfolio continues to underpin the value of the asset base of the Company, which shows pleasing growth as measured by independent valuers at the year end.

Shareholders Overview

Achievements during the year include:

·      Further lettings of commercial property around Sutton Harbour, increasing the occupancy rate to 93.3% (2014: 86.4%)

·      Record landings at Plymouth Fisheries £19.4m catch value (2014: £17.3m)

·      Grant supported infrastructure programme underway with completion of new lock walkways and new ice manufacturing plant

·      Operational changes at car parks resulting in 13% increase in turnover compared to previous year

·      First complete operating season at King Point Marina with results exceeding first year trading expectations

·      Detailed planning consent obtained for 'Boardwalk' scheme at Vauxhall Quay

·      Active promotion of the Sutton Harbour destination, Plymouth Fisheries and the Marinas via frequent social media coverage

Results and Financial Position

Profit before taxation has increased to £0.861m for the year ended 31 March 2015, compared to £0.265m last year.  Excluding fair value adjustments, impairments and provisions, the adjusted profit before tax for the year is £0.347m (2014: £0.308m).  Comparing the results against the comparative year, the improving performance of the core trading activities is evident.  No profits from development were recorded in the reporting year, whilst last year's results included £0.169m from the regeneration business segment.

As at 31 March 2015 net assets were £40.459m, representing 42.0 pence per share, up from £38.554m a year ago, representing 40.0 pence per share.  These results incorporate revaluation of the Group's investment and owner-occupied properties, giving rise to a portfolio surplus of £2.188m (2.2%) compared to 31 March 2014.  Of this surplus, £0.864m is attributable to the investment portfolio and £1.324m attributable to the owner-occupied portfolio (of which £0.053m has been credited to the income statement).  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. This impairment adjustment totalling £403,000 comprises a reduction of the expected recoverable amount from airport equipment by £100,000 due to passage of time and reflects the impairment against the King Point Marina of £303,000 which is expected to recover as the asset and Millbay regeneration area become further established.

Capital investment into new assets and planning work for future developments has resulted in additional debt and the consequent increase in finance charges.  During the year net debt, including finance lease liabilities, has increased from £20.225m to £21.458m, equating to gearing at 31 March 2015 of 53.0% (31 March 2014: 52.5%).  The largest item of expenditure during the year was a final £500,000 payment in respect of the long leasehold interest in the King Point Marina site.  The Group has confirmed banking facilities of £22.5m, expiring in October 2016.  All banking covenant tests during the year were met and the Group expects to enter into a new banking facility agreement before the next year end.

The Board does not recommend payment of a dividend on the year's results but is mindful of the importance of a dividend to many shareholders. Reduction in the Group's debt levels and exposure to financing charges will continue to be major factors in determining future dividend policy.

Directors and Staff

The Group's headcount has remained stable throughout the year at 39 (2014:38), with employees principally deployed in marine operations, maintenance and head office functions.  The board of directors thanks all staff for their individual contributions during the year.  There has been no change to the composition of the board during the past year which is considered appropriate for the current level of operations.

Summary

The Company is following an effective strategy to grow revenues in the short term and to invest to meet future capacity requirements in the medium term.  The comprehensive 'Vision' framework is in place as a plan to create longer term value and the Company is developing a new funding strategy to bring these schemes to fruition, given the lack of certainty over timing of release of value from the inventory of development land and the overall levels of debt that the Company can comfortably support.

Operations Report

Marine

Landings at Plymouth Fisheries amounted to a record auction/sale value of £19.4m, up 12% from last year and exceeding the previous record in year ended 31 March 2012 of £19.0m.  Generally good weather and plentiful fish stocks have encouraged the bumper result and Plymouth Fisheries continues to be a popular auction outlet for fish received by sea and road transported from other ports. To protect this market position and to provide for growth, Plymouth Fisheries successfully applied for match grant funding support to renew and improve infrastructure.  This capital programme saw the construction of a new ice plant and lock walkways in the last year and work to construct a new chiller and refit the existing chiller is due start this summer, with other works to improve lighting, utility metering and other amenities to follow.

The new King Point Marina, in the Millbay area of Plymouth, achieved occupancy above initial expectations during its first full year and competitive pricing has stimulated further demand for the 2015/16 season.  The Marina at Sutton Harbour continued to trade steadily and enjoyed a strong 2014 summer visitor season which followed hosting the start of La Solitaire Du Figaro race in June 2014, albeit, late in the year, the Company received notification that one larger customer would be reducing its berthing requirements for the new season.

Real Estate

The publication of the 'Vision' for Sutton Harbour document last year has assisted with the marketing of vacant units within the Group's investment portfolio.  Voids have reduced from 13.6 % to 6.7% during the year.  Asset management highlights during the year have been:

·      the letting of 4,028 sq ft (374 m²) 3^rd floor of North Quay House to Rame Energy plc for its UK headquarters, confirming the growing reputation of Sutton Harbour as the central business and office district for Plymouth

·      the letting of 3,818 sq ft (354 m²)  prime waterfront Little Vauxhall Quay site to 'The Stable', a popular craft cider and artisan pizza concept bar, which is 51% owned by Fuller, Smith & Turner

·      'The Dock' restaurant at King Point Marina establishing a strong presence after opening in Summer 2014

To emphasise the positive effect of the 'Vision' we are also now looking forward to Boston Tea Party opening its 15^th UK café-restaurant outlet in the 6,909 sq ft (642 sq m) waterfront premises known as Jamaica House later on this summer.  The improving covenant mix and decrease in void properties are having a positive effect on the valuation of the Group's investment portfolio, demonstrated by growth of 5.5% over the year.

Car Parking

The car parks have enjoyed a record year for takings after a number of operational changes were introduced including extended opening hours and the introduction of credit card payment machines. The improving revenue trend over the last few years demonstrates the potential of these assets, particularly as the awareness of Sutton Harbour as a visitor destination grows.

Regeneration

The 'Vision' for Sutton Harbour document, published in July 2014, presented details of approximately 12 potential development sites of varying sizes around the Harbour.  This document includes visuals of indicative development that the sites could deliver, totalling c.350,000 sq ft (32,516 m²) of accommodation.  The 'Vision' incorporates a mix of accommodation for residential, office, retail and restaurant uses, as well as car parking, quality public urban and improved access, with the objective of establishing Sutton Harbour as a destination of regional importance and national significance.  The 'Vision' is a medium to longer term framework but delivery of cornerstone schemes in time for the 400^th Anniversary of the Pilgrim Fathers departing on the 'Mayflower' for America in 2020 is targeted.

A key cornerstone of the 'Vision' is the Sugar House site at East Quay.  This site has been vacant since 2006 and after delays caused by historic contracts and market conditions, the group has re-invigorated its marketing of the prime waterfront site which is ideally suited to mixed residential and ground floor commercial use.  The Group is currently working with interested parties on a reformulated scheme and looks forward to reporting progress with this project later in the year.

In February 2015, the Company reported that planning consent was achieved for the Vauxhall Quay 'Boardwalk' scheme.  This waterfront scheme will provide 7,807 sq ft (725 m²) of prime waterfront restaurant/retail space in three units built on a pier structure which will incorporate a boardwalk facilitating greatly improved public access from the western to northern sides of the Harbour.  The scheme has attracted strong interest from good covenant occupiers and the start of construction will be confirmed subject to financing and marine consents.

	As at 31 March 2015	As at 31 March 2014
Total estate portfolio valuation	£44.694m	£38.475m
Owner occupied portfolio valuation	£28.089m	£22.900m
Investment portfolio valuation	£16.605m	£15.575m
Number of investment properties	71	70
Contracted rent (per annum)	£1.433m	£1.232m
Net initial yield	8.60%	8.90%
Reversionary yield	9.70%	10.56%
Occupancy rate	93.30%	86.40%
Estimated rental value (ERV) of vacant units	£0.119m	£0.250m
Average unexpired lease	10.0 years	9.9 Years
Gross car parks revenue	£0.422m	£0.374m
Development inventory
Sites around Sutton Harbour	£7.861m	£7.687m
Portland	£0.406m	£0.406m
Former airport site	£11.568m	£11.508m
Total	£19.835m	£19.601m

Former Airport Site

We have continued to work towards an exit of the interest in this 113 acre site with the key objective to realise an acceptable value.  The Group has established a detailed evidence base that affirms the lack of prospects for the site to ever be returned to a sustainable aviation facility on economic, commercial and environmental grounds. This information has been updated in the past year.  The Government is to commission another report into the viability or otherwise of re-opening the airport, which is expected to be published within the year.  We look forward to the expected clarity that this report will provide.  The Local Planning Authority is currently in the process of formulating a new planning policy framework to guide Plymouth's planning strategy for the 2017 to 2031 period. The Group has positioned its representations that the former airport site is ideally suited to the delivery of a range of new uses to Plymouth with significant economic, social and employment benefits. At the time of reporting, there is uncertainty about the outcome of the government report and planning process which, subject to the result, could change both the value and exit timing prospects from the interest in this site.

Operations Outlook

Nearing the end of the first quarter of the new financial year, the trading outlook remains generally positive and we are receiving good levels of enquiries for commercial space.  Although not a direct tenant of the Group, Handelsbanken opens its Plymouth office at Salt Quay, Sutton Harbour this summer, again reinforcing Sutton Harbour as the preferred central business district particularly for professional services.  The newly opened 'Stable', and soon to open 'Boston Tea Party', are meeting the objective of providing new occupiers which will improve the general footfall in the area which benefits all businesses as well as reinforcing Sutton Harbour as a major visitor destination.

Graham Miller                                                                     Jason Schofield

Chairman                                                                               Chief Executive

23 June 2015

Consolidated Income Statement

For the year ended 31 March 2015

	2015	2014
	£000	£000
Revenue	6,955	7,045
Cost of sales before impairment of assets	(4,528)	(4,554)
Impairment of assets	(403)	-
Onerous leases	-	(354)
Cost of sales	(4,931)	(4,908)
Gross profit	2,024	2,137
Administrative expenses	(1,153)	(1,324)
Fair value adjustments on investment properties and fixed assets	917	311
Operating profit	1,788	1,124
Finance income	1	1
Finance costs	(928)	(860)
Net finance costs	(927)	(859)
Profit before tax from continuing operations	861	265
Taxation credit on profit/(loss) from continuing operations	(206)	1,058
Profit for the year from continuing operations	655	1,323
Profit for the year attributable to owners of the parent	655	1,323
Basic earnings per share
from continuing operations	0.68p	1.37p
Diluted earnings per share
from continuing operations	0.68p	1.37p

Consolidated Statement of Other Comprehensive Income

For the year ended 31 March 2015

		2015	2014
		£000	£000
Profit for the year		655	1,323
Items that will not be reclassified subsequently to profit or loss:
Revaluation of property, plant and equipment		1,271	993
Deferred taxation on income and expenses recognised directly in the Consolidated  Statement of Comprehensive Income		-	(374)
Items that may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges		(21)	50
Other comprehensive income for the year, net of tax		1,250	669
Total comprehensive income for the year attributable to owners of the parent		1,905	1,992

Consolidated Balance Sheet

As at 31 March 2015

	2015	2014
	£000	£000
Non-current assets
Property, plant and equipment	29,479	27,104
Investment property	16,605	15,575
	46,084	42,679
Current assets
Inventories	19,894	19,688
Trade and other receivables	1,527	1,572
Cash and cash equivalents	239	205
Tax recoverable	17	-
	21,677	21,465
Total assets	67,761	64,144
Current liabilities
Bank loans	-	-
Trade and other payables	1,241	1,369
Finance lease liabilities	19	-
Deferred income	1,504	1,413
Provisions	48	53
Derivative financial instruments	-	-
	2,812	2,835
Non-current liabilities
Bank loans	21,650	20,430
Finance lease liabilities	28	-
Deferred income and deferred government grants	994	706
Deferred tax liabilities	1,536	1,330
Provisions	129	157
Derivative financial instruments	153	132
	24,490	22,755
Total liabilities	27,302	25,590
Net assets	40,459	38,554
Issued capital and reserves attributable to owners of the parent
Share capital	16,069	16,069
Share premium	5,368	5,368
Other reserves	14,538	13,288
Retained earnings	4,484	3,829
Total equity	40,459	38,554

Consolidated Statement of Changes in Equity

For the year ended 31 March 2015

	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 2013	16,069	5,368	8,556	3,871	(182)	2,880	36,562
Comprehensive income/(expense)
Profit for the year	-	-	-	-		1,323	1,323
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	993	-	-	-	993
Deferred taxation on revaluation of property, plant and equipment	-	-	-	-	-	(374)	(374)
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	50	-	50
Total other comprehensive income/(expense)	-	-	993	-	50	(374)	669
Total comprehensive income/(expense)	-	-	993	-	50	949	1,992
Transactions with owners of the parent
Share-based payments - value of employee services	-	-	-	-	-	-	-
Dividends	-	-	-	-	-	-	-
Transactions with owners of the parent	-	-	-	-	-	-	-
Total balance at 31 March 2014	16,069	5,368	9,549	3,871	(132)	3,829	38,554
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
Deferred taxation on revaluation of property, plant and equipment	-	-	-	-	-	-	-
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
Transactions with owners of the parent
Share-based payments - value of employee services	-	-	-	-	-	-	-
Dividends	-	-	-	-	-	-	-
Transactions with owners of the parent	-	-	-	-	-	-	-
Total balance at 31 March 2015	16,069	5,368	10,820	3,871	(153)	4,484	40,459

Consolidated Cash Flow Statement

For the year ended 31 March 2015

	2015	2014
	£000	£000
Cash generated from total operating activities	1,205	361
Tax received	-	-
Net cash generated from total operating activities	1,205	361
Cash flows from investing activities
Proceeds from sale of property, plant and equipment	-	11
Net expenditure on investment property	(167)	(20)
Expenditure on property, plant and equipment	(1,483)	(2,198)
Interest received	1	1
Net cash used in investing activities	(1,649)	(2,206)
Cash flows from financing activities
Interest paid	(1,050)	(1,025)
Loan drawdown/(repayment of borrowings)	1,220	2,580
Proceeds of government grants	308	-
Net cash generated from/(used in) financing activities	478	1,555
Net decrease in cash and cash equivalents	34	(290)
Cash and cash equivalents at beginning of the year	205	495
Cash and cash equivalents at end of the year	239	205

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 2015 is as follows:

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 assets	(303)	-	-	(100)	(403)
Onerous leases
	1,142	971	240	(329)	2,024
Fair value adjustment on investment property	-	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
Real Estate					-
Car Parking					7
Regeneration					-
Administration					18
					143

Year ended 31 March 2014	Marine	Real Estate	Car Parking	Regeneration	Total
	£000	£000	£000	£000	£000
Revenue	4,801	1,440	374	430	7,045
Gross profit prior to non-recurring items	1,024	1,040	258	169	2,491
Non-recurring items:
Onerous leases	-	(354)	-	-	(354)
	1,024	686	258	169	2,137
Fair value adjustment on investment property	-	311	-	-	311
	1,024	997	258	169	2,448
Unallocated:
Administrative expenses					(1,324)
Operating profit					1,124
Other gains and losses					-
Financial income					1
Financial expense					(860)
Taxation					1,058
					1,323
Depreciation charge
Marine					49
Real Estate					-
Car Parking					8
Regeneration					-
Administration					14
					71

Assets and liabilities
	31 March 2015 £000	31 March 2014 £000
Segment assets:
Marine	26,348	23,788
Real Estate	17,012	15,859
Car Parking	3,577	3,421
Regeneration	20,179	20,508
Total segment assets	67,116	63,576
Unallocated assets: Property, plant & equipment                                     Trade & other receivables                                     Cash and cash equivalents	123 283 239	90 273 205
Total assets	67,761	64,144

	31 March 2015 £000	31 March 2014 £000
Segment liabilities:
Marine	2,058	1,930
Real Estate	804	519
Car Parking	67	18
Regeneration	933	1,068
Total segment liabilities	3,862	3,535
Unallocated liabilities: Bank overdraft & borrowings                                          Trade & other payables                                          Financial derivatives	21,650 101 153	20,430 162 132
Deferred tax liabilities Tax payable	1,536 -	1,330 1
Total liabilities	27,302	25,590
Additions to property, plant and equipment
Marine	1,461	2,321
Real Estate	-	-
Car Parking	3	17
Regeneration	-	5
Unallocated	71	-
Total	1,535	2,343

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:

	2015	2014
	£000	£000
Sale of goods	2,629	2,737
Sale of land and property	-	430
Rental income	1,685	1,585
Provision of services	2,641	2,293
	6,955	7,045

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 2015 and the results for the year ended 31 March 2014
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 2014.

The Board of Sutton Harbour Holdings plc approved the release of this audited preliminary announcement on 23 June 2015.

The preliminary financial information has been extracted from the Annual Report and audited Financial Statements for the year ended 31 March 2015, 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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