Half-year Report

RNS Number : 4477Y

Sutton Harbour Holdings PLC

05 December 2017

 

05 December 2017

SUTTON HARBOUR HOLDINGS PLC ("the Group")

Interim results for the six-month period to 30 September 2017

Sutton Harbour Holdings plc ("Sutton Harbour", the "Company"), the AIM-listed marine and waterfront regeneration specialist, announces its interim results for the six-month period to 30 September 2017. 

Financial Highlights

·      Adjusted* profit before tax £0.136m (2016: £0.232m);

·      Loss before tax of £0.702m (2016: loss of £0.038m);

·      Net assets of £39.084m (31 March 2017: £40.141m);

·      Net debt £22.965m (31 March 2017: £22.458m).

*Excluding fair value adjustments

Highlights

·      The Company has concentrated on preparations for the public hearing of the 'Plymouth and South West Devon Joint Local Plan' ("Joint Local Plan") commencing January 2018.

·      Pre-planning work has continued in respect of the Sugar House site and the Harbour Arch Quay site at Sutton Harbour

·      Slower activity at Plymouth Fisheries during first half year off-set with sustained recovery since September 2017.

·      Further infrastructure works underway at Plymouth Fisheries Auction Hall with match grant funding.

Events post six-month period

·      On 23^rd November 2017, the Company and FB Investors LLP jointly announced a Recommended Partial Cash Offer for the Company for up to 70% of the Company plus a Proposed Share Subscription of £2.75m (the "Offer").

·      Further details of the Partial Offer, Share Subscription and General Meeting in relation to the Share Subscription are set out in an Offer Document, Form of Acceptance and Form of Proxy which are being sent to shareholders shortly.

Graham Miller, Chairman, commented:

"The Company is looking forward to taking an active part in the forthcoming public hearing of the 'Joint Local Plan', as well as continuing to promote its proposed regeneration schemes, whilst supporting the trading activities through strategic investment and new initiatives for operational improvements. After the half-year period ended, we were pleased to announce that FB Investors LLP had made a Recommended Partial Cash Offer for the Company. This allows Shareholders the opportunity to realise a significant proportion of their investment in the Company whilst retaining a meaningful stake in future value growth which the Board believes will be enhanced by the proposed share subscription and expertise of the incoming investors."

 For further information, please contact

Sutton Harbour Holdings plc Jason Schofield - Chief Executive Natasha Gadsdon - Finance Director	01752 204186
Arden Partners (Nomad and Broker) John Llewellyn-Lloyd Benjamin Cryer	020 7614 5917
Rothschild (Financial Advisor) John Byrne	020 7280 5000
DCA (Financial PR) Philip Ranger	07768 534641

Chairman and Chief Executive's Statement

INTERIM RESULTS

Excluding fair value adjustments, the adjusted profit before taxation for the six-month period ending 30 September 2017 was £0.136m (2016: £0.232m).

As at 30 September 2017, net assets were £39.084m compared to £40.141m as last reported as at 31 March 2017.  The decrease of £1.057m incorporates the results of the independent property valuation as at 30 September 2017.  This valuation gave rise to a surplus of £25,000 on the investment portfolio.  The deficit of £1,225,000 on the owner occupied property assets resulted primarily from a slow first quarter's trading at Plymouth Fisheries and a capital expenditure reserve.  Since the balance sheet date, trading at Plymouth Fisheries has recovered significantly and the board believes the capital investment programme will underpin future prospects for this business. 

Net debt (comprising net bank debt and outstanding finance leases) stood at £22.965m, up from £22.458m at 31 March 2017 reflecting the normal annual cash cycle which peaks at the start of the year as rents and annual berthing fees are received and lowers until new season berthing fees are paid from the end of the calendar year onwards.  As at 30 September 2017, gearing stood at 58.8%, up from 55.9% as at 31 March 2017.

The board does not recommend payment of an interim dividend.

REGENERATION

During the first half year the Company has continued to prepare for the forthcoming public hearing of the proposed 'Joint Local Plan' which will determine the planning framework for Plymouth and South West Devon until 2034.  This has particular significance for the Former Airport Site, a c.113 acre brownfield site redundant for the last six years, in which the Company has legal interest, and also for further development and improvement of the Sutton Harbour area where the Company holds significant freehold land and property.  On 13 November 2017 the appointed planning inspectors issued a timetable with specific topics for the public hearing which is scheduled to start on 30 January 2018 and anticipated to run until March 2018.

Pre-planning work has been actively progressed for both the Sugar House, East Quays site and for a smaller mixed use building known as Harbour Arch Quay, which is another site fronting the Harbour. MMO licensing for the 'Boardwalk' scheme is expected to be received before the end of the financial year.

TRADING

Whilst marina berthing revenue remained level with last year and car parks revenue increased by 6% compared to the first half of last year, activity at Plymouth Fisheries was unusually slow in the first quarter.  Fisheries trading has significantly strengthened from July 2017 onwards.  During the period the Company expensed £49,000 to remove an abandoned vessel in the harbour which had been the subject of a 13 year-long dispute.  The vessel owner is being pursued for costs.

Investment property occupancy has remained stable during the first three months and the Company continues to actively market vacant office space.

INFRASTRUCTURE

Match grant funded works to undertake essential improvements at Plymouth Fisheries are in progress comprising installation of energy efficient boilers and LED lighting and hygienic wall cladding to the auction hall building.  The Company has made a further grant application to modernise the fuel and utility servery points and associated fuel storage infrastructure.

At King Point Marina the wave gates, which were never commissioned, have now been removed and the installation of an alternative replacement wave mitigation structure, a 'wave break pontoon' is under construction and due for completion by mid-2018.  The cost of these works is being borne by the contractor.

The Company is consulting with lawyers to determine respective responsibilities of the Environment Agency and the Company in agreements in relation to the Sutton Lock and the associated footbridge which date back to the 1990s.  In the meantime, the Company is working with stakeholders, including the Environment Agency, to agree a plan to instigate the repair of the out-of-action footbridge as soon as possible.

RECOMMENDED PARTIAL OFFER BY FB INVESTORS LLP ("FB INVESTORS")

On 23 November 2017, FB Investors and Sutton Harbour jointly announced that they had reached agreement on the terms of a recommended partial cash offer (the "Partial Offer") to be made by FB Investors to acquire up to 70 per cent. of the issued ordinary share capital of Sutton Harbour. In connection with the Partial Offer, FB Investors and Sutton Harbour also have entered into a conditional share subscription agreement (the "Share Subscription") pursuant to which £2.75m of proceeds will be raised by Sutton Harbour, which will be used to assist Sutton Harbour in its regeneration activities as well as provide additional working capital and the payment of costs incurred in relation to the Formal Sales Process.

Further details of the Partial Offer and Share Subscription are set out in an Offer Document, Form of Acceptance and Form of Proxy which are being sent to shareholders shortly. 

This announcement follows the strategic review and formal sales process the Company announced on 21 April 2016 to assess all options to generate value for Sutton Harbour shareholders.

OUTLOOK

As was noted at the time of the announcement on 23 November 2017, with the assistance and investment of FB Investors, Sutton Harbour will seek to continue to deliver the Group's vision for the area in and around Sutton Harbour, with the aim of establishing the Company as a leading waterfront destination in the UK.

FB Investors supports the management team's vision for the former airport site at Plym Vale and will support their long-term aspiration to develop it - the Company is looking forward to taking an active part in the forthcoming public hearing of the 'Joint Local Plan'.  We continue to promote our proposed regeneration schemes and we are supporting our trading activities through strategic investment and new initiatives for operational improvements.

GRAHAM MILLER                                                 JASON SCHOFIELD

Chairman                                                               Chief Executive

Consolidated Statement of Comprehensive Income	Note	6 months to 30 September 2017 (unaudited) £000	6 months to 30 September 2016 (unaudited) £000	Year Ended 31 March 2017 (audited) £000
Revenue	3	3,473	3,633	6,718
Cost of sales before onerous leases		(2,155)	(2,120)	(4,130)
Onerous leases		-	-	(173)
Cost of Sales		(2,155)	(2,120)	(4,303)
Gross Profit		1,318	1,513	2,415
Fair value adjustment on fixed assets and investment property		(838)	(270)	(105)
Administrative expenses		(720)	(770)	(1,300)
Operating profit from continuing operations	3	(240)	473	1,010
Financial income		-	-	-
Financial expense		(462)	(511)	(957)
Net financing costs		(462)	(511)	(957)
(Loss)/profit before tax from continuing operations	3	(702)	(38)	53
Taxation (charge)/credit on profit from continuing operations	4	(27)	7	(13)
(Loss)/profit from continuing operations		(729)	(31)	40
Basic (loss)/earnings per share	6	(0.76)p	(0.03)p	0.04p
Diluted (loss)/earnings per share	6	(0.76)p	(0.03)p	0.04p

		6 months to 30 September 2017 (unaudited) £000	6 months to 30 September 2016 (unaudited) £000	Year Ended 31 March 2017 (audited) £000
(Loss)/profit from continuing operations		(729)	(31)	40
Other comprehensive (expense)/income
Continuing operations:
Revaluation of property, plant and equipment		(374)	(742)	(765)
Deferred taxation on income and expenses recognised directly in the       consolidated statement of comprehensive income		-	-	-
Effective portion of changes in fair value of cash flow hedges		46	(71)	(3)
Total other comprehensive expense		(328)	(813)	(768)
Total comprehensive expense for the period attributable to equity shareholders		(1,057)	(844)	(728)

Consolidated Balance Sheet	Note	As at 30 September 2017 (unaudited) £000	As at 30 September 2016 (unaudited) £000	As at 31 March 2017 (audited) £000
Non-current assets
Property, plant and equipment	7	24,966	26,153	26,289
Investment property	7	19,485	19,460	19,460
		44,451	45,613	45,749
Current assets
Inventories		20,759	20,389	20,569
Trade and other receivables		2,030	1,781	2,060
Cash and cash equivalents	8	281	123	703
Tax recoverable		14	37	13
		23,084	22,330	23,345
Total assets	3	67,535	67,943	69,094
Current liabilities
Other interest-bearing loans and borrowings		-	-	-
Trade and other payables		1,038	1,010	1,173
Finance lease liabilities		111	100	123
Deferred income		1,083	979	1,479
Provisions	9	70	26	71
Derivative financial instruments		-	-	-
		2,302	2,115	2,846
Non-current liabilities
Other interest-bearing loans and borrowings		22,950	22,500	22,800
Finance lease liabilities		185	260	238
Deferred government grants		1,146	1,193	1,169
Deferred tax liabilities		1,670	1,622	1,642
Provisions	9	168	84	182
Derivative financial instruments		30	144	76
		26,149	25,803	26,107
Total liabilities	3	28,451	27,918	28,953
Net assets		39,084	40,025	40,141
Issued capital and reserves attributable to owners of the parent
Share capital		16,069	16,069	16,069
Share premium		5,368	5,368	5,368
Other reserves		12,355	12,638	12,683
Retained earnings		5,292	5,950	6,021
Total equity		39,084	40,025	40,141

Consolidated Statement of Changes in Equity	Share capital	Share premium	Revaluation reserve	Merger reserve	Hedging reserve	Retained earnings	TOTAL
			----------Other Reserves----------
	£000	£000	£000	£000	£000	£000	£000
Balance at 1 April 2016	16,069	5,368	9,653	3,871	(73)	5,981	40,869
Comprehensive income/(expense)
Profit for the period	-	-	-	-	-	(31)	(31)
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	(742)	-	-	-	(742)
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	(71)	-	(71)
Total other comprehensive income/(expense)  - period ended 30 September 2016	-	-	(742)	-	(71)	-	(813)
Total comprehensive income/(expense) - period ended 30 September 2016	-	-	(742)	-	(71)	(31)	(844)
Balance at 30 September 2016	16,069	5,368	8,911	3,871	(144)	5,950	40,025
Balance at 1 October 2016	16,069	5,368	8,911	3,871	(144)	5,950	40,025
Comprehensive income/(expense)
Profit for the period	-	-	-	-	-	71	71
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	(23)	-	-	-	(23)
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	68	-	68
Total other comprehensive income/(expense)  - period ended 31 March 2017	-	-	(23)	-	68	-	45
Total comprehensive income/(expense) - period ended 31 March 2017	-	-	(23)	-	68	71	116
Balance at 31 March 2017	16,069	5,368	8,888	3,871	(76)	6,021	40,141
Balance at 1 April 2017	16,069	5,368	8,888	3,871	(76)	6,021	40,141
Comprehensive income/(expense)
Loss for the period	-	-	-	-	-	(729)	(729)
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	(374)	-	-	-	(374)
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	46	-	46
Total other comprehensive income/(expense)  - period ended 30 September 2017	-	-	(374)	-	46	-	(328)
Total comprehensive income/(expense) - period ended 30 September 2017	-	-	(374)	-	46	(729)	(1,057)
As at 30 September 2017	16,069	5,368	8,514	3,871	(30)	5,292	39,084

Consolidated Cash Flow Statement	Note	6 months to 30 September 2017 (unaudited) £000	6 months to 30 September 2016 (unaudited) £000	Year Ended 31 March 2017 (audited) £000
Cash generated from total operating activities	10	95	99	1,008
Cash flows from investing activities
Net expenditure on investment property		(2)	-	-
Expenditure on property, plant and equipment		(138)	(111)	(296)
Net cash used in investing activities		(140)	(111)	(296)
Cash flows from financing activities
Interest paid		(462)	(512)	(957)
Loan drawdowns/(repayment of borrowings)		150	-	300
Net finance lease (payments)/receipts		(65)	(39)	(38)
Net cash generated from financing activities		(377)	(551)	(695)
Net (decrease)/increase in cash and cash equivalents		(422)	(563)	17
Cash and cash equivalents at beginning of period		703	686	686
Cash and cash equivalents at end of period	8	281	123	703

1.      General information

This consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.  Statutory accounts for the year ended 31 March 2017 were approved by the Board of Directors on 27 June 2017 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and included an 'Emphasis of matter' which referred to the valuation of inventory relating to the former Plymouth Airport site.

Copies of the Group's financial statements are available from the Company's registered office, Tin Quay House, Sutton Harbour, Plymouth, PL4 0RA and on the Company's website www.sutton-harbour.co.uk.

This consolidated interim financial information has not been audited.

2.      Basis of preparation

The consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2016, which have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretation Committee (IFRIC) interpretations as endorsed by the European Union, and those parts of the Companies Acts 2006 as applicable to companies reporting under IFRS.

Accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2017, as described in those annual financial statements.

Adoption of new International Financial Reporting Standards

The following new standards, amendments to standards or interpretations have been issued, but are not effective for the financial year beginning 1 April 2017 and have not been adopted early:

IFRS 15 Revenue from Contracts with Customers: *1 January 2018

IFRS 9 Financial Instruments: * 1 January 2018

* mandatory effective date is periods commencing on or after

Accounting estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.

3.   Segment information

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 having only one geographical segment, with all operations being carried out in the United Kingdom.

The Board of Directors considers the performance of the operating segments using operating profit. The segment information provided to the Board of Directors for the reportable segments for the period ended 30 September 2016 is as follows:

6 months to 30 September 2017	Marine	Real Estate	Car Parking	Regeneration	Total
	£000	£000	£000	£000	£000
Revenue	2,399	765	309	-	3,473
Gross profit prior to non-recurring items	602	573	197	(54)	1,318
Non-recurring items:
Onerous leases	-	-	-	-	-
Segmental Operating Profit before Fair value adjustment and unallocated expenses	602	573	197	(54)	1,318
Fair value adjustment on fixed assets and investment property assets	(861)	23	-		(838)
	(259)	596	197	(54)	480
Unallocated:
Administrative expenses					(720)
Operating profit from continuing operations					(240)
Financial income					-
Financial expense					(462)
Loss before tax from continuing operations					(702)
Taxation					(27)
Loss for the year from continuing operations					(729)
Depreciation charge
Marine					148
Car Parking					8
Administration					28
					184

3.  Segment Information (continued)

6 months to 30 September 2016	Marine	Real Estate	Car Parking	Regeneration	Total
	£000	£000	£000	£000	£000
Revenue	2,529	808	296	-	3,633
Gross profit prior to non-recurring items	761	628	180	(56)	1,513
Non-recurring items:
Onerous leases	-	-	-	-	-
Segmental Operating Profit before Fair value adjustment and unallocated expenses	761	628	180	(56)	1,513
Fair value adjustment on fixed assets and investment property assets	(553)	111	172	-	(270)
					1,243
Unallocated:
Administrative expenses					(770)
Operating profit from continuing operations					473
Financial income					-
Financial expense					(511)
Loss before tax from continuing operations					(38)
Taxation					7
Loss for the year from continuing operations					(31)
Depreciation charge
Marine					142
Car Parking					3
Administration					16
					161

3.  Segment Information (continued)

Year ended 31 March 2017	Marine	Real Estate	Car Parking	Regeneration	Total
	£000	£000	£000	£000	£000
Revenue	4,626	1,609	483	-	6,718
Gross profit prior to non-recurring items	1,207	1,211	291	(121)	2,588
Non-recurring items:
Onerous leases	-	(173)	-	-	(173)
Segmental Operating Profit before Fair value adjustment and unallocated expenses	1,207	1,038	291	(121)	2,415
Fair value adjustment on fixed assets and investment property assets	(428)	110	213	-	(105)
					2,310
Unallocated:
Administrative expenses					(1,300)
Operating profit from continuing operations					1,010
Financial income					-
Financial expense					(957)
Profit before tax from continuing operations					53
Taxation					(13)
Profit for the year from continuing operations					40
Depreciation charge
Marine					308
Car Parking					12
Administration					16
					336

	30 September 2017	30 September 2016	31 March 2017
	£000	£000	£000
Segment assets:
Marine	21,463	22,591	22,865
Real estate	20,259	20,106	20,165
Car Parking	4,182	3,995	4,178
Regeneration	20,802	20,506	20,668
Total segment assets	66,706	67,198	67,876
Unallocated assets:
Property, plant and equipment	94	107	100
Trade & other receivables	454	515	432
Cash & cash equivalents	281	123	686
Total assets	67,535	67,943	69,094

3.  Segment Information (continued)

	30 September 2017	30 September 2016	31 March 2017
	£000	£000	£000
Segment liabilities:
Marine	2,059	2,128	2,361
Real estate	449	387	531
Car Parking	75	64	121
Regeneration	830	843	932
Total segment liabilities	3,413	3,422	3,945
Unallocated liabilities:
Bank overdraft & borrowings	23,246	22,500	23,161
Trade & other payables	92	230	129
Financial Derivatives	30	144	76
Tax payable	-	-	-
Deferred tax liabilities	1,670	1,622	1,642
Total liabilities	28,451	27,918	28,953

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

4. Taxation

The Company has applied an effective tax rate of 20% (2016: 20%) based on management's best estimate of the tax rate expected for the full financial year and is reflected in a movement in deferred tax.

5. Dividends

The Board of Directors do not propose an interim dividend (2016: nil).

6. Earnings per share

	6 months to 30 September 2017 (unaudited) pence	6 months to 30 September 2016 (unaudited) pence	Year Ended 31 March 2017 (audited) pence
Continuing operations
Basic earnings per share	(0.76)	(0.03)	0.04
Diluted earnings per share*	(0.76)	(0.03)	0.04

Basic Earnings per Share:

Basic earnings per share have been calculated using the loss for the period of £729,000 (2016: loss £31,000, year ended 31 March 2017 profit £40,000). The average number of ordinary shares in issue, excluding those options granted under the SAYE scheme, of 96,277,086 (2016: 96,277,086; year ended 31 March 2017: 96,277,086) has been used in our calculation.

Diluted Earnings per Share:

Diluted earnings per share uses an average number of 96,277,086 (2016: 96,277,086; year ended 31 March 2017 96,277,086) ordinary shares in issue, and takes account of the outstanding options under the SAYE scheme in accordance with IAS 33 'Earnings per share'.  There are no outstanding options under expire SAYE schemes.

7. Property valuation

Freehold land and buildings and investment property have been independently valued by Jones Lang LaSalle as at 30 September 2017, in accordance with the Practice Statements in the Valuations Standards (The Red Book) published by the Royal Institution of Chartered Surveyors. 

A further valuation will be commissioned for the year ending 31 March 2018, as in previous years.

8. Cash and cash equivalents

	As at 30 September 2017 (unaudited) £000	As at 30 September 2016 (unaudited) £000	As at 31 March 2017 (audited) £000
Cash and cash equivalents per balance sheet and cash flow statement	281	123	703

9. Provisions

	Onerous leases	Total
	£000	£000
Balance at 1 April 2016	141	141
Provisions made during the year	-	-
Provisions utilised during the year	(31)	(31)
Balance at 30 September 2016	110	110
Provisions made during the year	173	173
Provisions utilised during the year	(30)	(30)
Balance at 31 March 2017	253	253
Provisions made during the year	-	-
Provisions utilised during the year	(15)	(15)
Balance at 30 September 2017	238	238
Current	70	70
Non-current	168	168
	238	238

10. Cash flow statements

	6 months to 30 September 2017 (unaudited) £000	6 months to 30 September 2016 (unaudited) £000	Year Ended 31 March 2017 (audited) £000
Cash flows from operating activities
(Loss)/profit for the period	(729)	(31)	40
Adjustments for:
Taxation	27	(7)	13
Financial income	-	-	-
Financial expense	462	511	934
Fair value adjustment on fixed assets and investment property	838	270	105
Depreciation	184	161	336
Amortisation of grants	(23)	(23)	(45)
Loss on sale of property, plant and equipment	4	11	9
Cash generated from operations before changes in working capital and provisions	763	892	1,392
Increase in inventories	(151)	(332)	(472)
Decrease/(increase) in trade and other receivables	29	240	(18)
(Decrease)/increase in trade and other payables	(135)	(107)	57
Decrease in deferred income	(396)	(563)	(63)
(Decrease)/increase in provisions	(15)	(31)	112
Cash generated from operations	95	99	1,008

11.  Capital Commitments

At 30 September 2017 the Group has engaged contractors to perform £0.2m of work in the Fisheries complex.  Some of this cost will be set off by grant contribution.

12. Post Balance Sheet Events

On 23 November 2017, the Company and FB Investors LLP jointly announced a Recommended Partial Cash Offer for the Company for up to 70% of the Company plus a Proposed Share Subscription of £2.75m (the "Offer").

 

END

 

 

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