Preliminary results for year ended 31 March 2017

RNS Number : 2204J

Sutton Harbour Holdings PLC

27 June 2017

 

27 June 2017

SUTTON HARBOUR HOLDINGS PLC ("the Group")

Preliminary results for the year ended 31 March 2017

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 2017.

Highlights

·      Heads of terms signed with major contractor/developer for the Sugar House (East Quays) site

·      DfT Report on Plymouth Airport supportive of Company position that former airport site cannot deliver viable commercial air services

·      Submission of representations to the public consultation of the Plymouth and South West Devon Joint Local Plan in respect of the former airport site and Sutton Harbour area

·      Record year for Plymouth Fisheries Hub: £19.7m fish throughput value

Financial

·      Solid performance across trading activities

·      Adjusted profit before tax* £0.331m (2016: £0.410m)

·      Net financing costs down 9.5% to £0.96m (2016: £1.06m)

·      Net Assets £40.1m (2016: £40.9m)

·      Year-end net debt £22.5m (2016: £22.2m)

*Before accounting for impairments and fair value adjustments on assets and provisions for onerous leases

Graham Miller, Chairman, commented:

"The Company has made the strongest possible representations to the consultation on the Joint Local Plan in order to progress the stated regeneration strategy. A positive planning allocation outcome will be a key milestone event towards ultimate asset realisation and consequent debt reduction. "

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
Yellow Jersey (Financial PR) Charles Goodwin	07747 788221

Chairman and Chief Executive's Statement

Year Ended 31 March 2017

Shareholders' Overview

Highlights

·      Marketing of the Sugar House, East Quay site for a mixed use scheme. The Group has signed Heads of Terms with a preferred development partner and discussions are underway to formulate the application to be submitted for planning consent.

·      Completion of further capital investments to upgrade the Group's operations and asset base.

·      Submission of representations supported by a detailed evidence base to the public consultation on the proposed new planning framework, the Plymouth and South West Devon Joint Local Plan, which will determine the land use allocation for the Former Airport Site and the area around Sutton Harbour which includes Plymouth Fisheries.

Strategic Review

The strategic review has continued throughout the financial year with the help of Rothschild to explore all options with the objective of maximising value for shareholders. In order to maximise the effectiveness of this strategic review, the Board is conducting this within the context of a formal sale process as set out in Note 2 of Rule 2.6 of the City Code on Takeovers and Mergers.

Results and Financial Position

The adjusted profit before taxation for the year was £0.331m (2016: £0.410m), which excludes non-cash fair value adjustments, the increase in the onerous lease provision (see below) and other impairments. Profit before taxation for the year under review as per the Income Statement, inclusive of the aforementioned adjustments, was £0.053m (2016: £1.590m). 

As at 31 March 2017 net assets were £40.141m (2016: £40.869m), representing 41.7p per share (2016: 42.4p per share). The decrease reflects the fair value adjustment to the investment property portfolios of £0.110m surplus offset by valuation deficit of owner occupied property of £0.215m, a net £0.105m charge to the Income Statement (2016: £1.452m credit) and also the deficit on revaluation of other owner occupied assets of £0.765m (2016: £1.167m deficit) recorded to the Revaluation Reserve. Overall, these valuation movements which were determined by way of an independent valuation, decreased net assets by £0.870m (2016: £0.285m increase in net assets).

The non-cash onerous lease provision was increased by £0.173m to account for the potential future performance of the sub-letting of Salt Quay House until the lease expires in 2021.

During the year net debt (including finance leases) increased in line with expectations to £22.458m, up £0.245m from £22.213m at 31 March 2016, following expenditure on further asset additions and costs in connection with the promotion of the development land inventory. Gearing as at 31 March 2017 was 55.9% (31 March 2016: 54.4%). Finance costs fell from £1.057m (2016) to £0.957m following refinancing in March 2016 on better terms.

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

Directors and Staff

During the year there have been no changes in the Company's directorships and staff numbers have fallen slightly due to consolidation of some roles. Headcount, excluding Non-Executive Directors, as at 31 March 2017 stood at 35 (31 March 2016: 38).

Operations Report

Marine

Trading at Plymouth Fisheries Hub (the "Fisheries Hub") was strong throughout the year, with fish throughput valued at £19.7m, resulting in its most successful year. Fuel sales margins performed satisfactorily as a vital revenue source to the Fisheries Hub's business, although ice revenues were lower following the departure of a fish processing tenant from the Fisheries Hub complex.

During the year, the Company has reviewed the efficiency of the Fisheries Hub, which is now 23 years old. Fish throughput has increased significantly during the life of the facility, resulting in increased articulated vehicle movements, whilst fish processing on-site has largely diminished resulting in underused processing unit space. To address the changing needs of fishing and to improve public accessibility to the area, the Company has submitted proposals for a reconfigured Fisheries 'Hub' complex to the public consultation on the Plymouth and South West Devon Joint Local Plan.

The Marina at Sutton Harbour saw annual berthing occupancy fall slightly compared to the previous season. During the last year wi-fi connectivity at the marina has been significantly improved and a refurbished reception has been relocated to a more prominent position at the front of the existing marina jetty. King Point Marina continued to gain customers during the period.

Real Estate

Early on in the financial year under review, three tenants departed, two being long standing occupiers of premises at the Fisheries Hub and one having occupied a floor of North Quay House. This space, while being actively marketed, currently remains vacant, although occupier interest in the premises has increased in recent months.

Car Parking

The car parks performed strongly in the first half year although revenues flattened in the second half with overall income finishing marginally ahead of last year. The installation of energy efficient lighting has resulted in an energy consumption saving of over 60%. In early 2017, further enhancement works, including clearer signage, have been carried out and automatic number plate recognition equipment has been installed to improve management efficiency.

Regeneration

Former Airport Site

Throughout the year the Company has been co-ordinating the preparation of a detailed evidence base to support representations to three stages of public consultation towards the formulation of the new local planning framework 'The Plymouth and South West Devon Joint Local (formerly 'Plymouth') Plan'. The local planning authority has remained of the view that the site should be safeguarded for general aviation use (such as private aircraft). This is despite a Department for Transport report on Plymouth Airport released in December 2016 that concluded that there is no realistic prospect that commercial passenger services would be economically viable from the site without significant public subsidy which it has been confirmed is not available.

Our evidence based submission includes independent reports on aviation which conclude that there is no financially sustainable case for commercial or general aviation uses, due to technical, environmental and commercial constraints, and presents the case for the best alternative use.  This includes a concept masterplan for a 'Garden Suburb' known as Plym Vale anchored by education, sports, healthcare and employment uses with c.1,500 new homes on the currently redundant brownfield site.

The public hearing of the proposed Plymouth and South West Devon Joint Local Plan is expected to take place in late 2017 with the independent Government Planning Inspector's Report planned to follow in 2018.

Sugar House, East Quay

Following reconfiguration of the proposed scheme to provide a mix of private residential units, student accommodation, car parking and commercial space, the site was re-marketed to targeted investors/developers. The Company has signed Heads of Terms with a preferred bidder and discussions are underway to formulate the application to be submitted for planning consent.

The 'Boardwalk', Vauxhall Quay

During the year the Company commissioned further ecology and geology surveys required by the Marina Management Organisation in order to obtain the requisite licensing to develop in a marine environment, a requirement in addition to planning consent. The licensing consent is currently awaited. This 7,800 sq ft scheme, to be built on a pier like structure and deliver two large restaurants and a small pavilion unit, gained planning consent in 2015.

Outlook

The Company has made the strongest possible representations to the consultation on the Joint Local Plan in order to progress the stated regeneration strategy 'to realise land inventory assets through sale and development' for both the Former Airport Site and the area immediately around Sutton Harbour. A positive planning allocation outcome will be a key milestone event towards ultimate asset realisation and consequent debt reduction.

GRAHAM MILLER                                   JASON SCHOFIELD

CHAIRMAN                                             CHIEF EXECUTIVE

27 June 2017

Consolidated Income Statement

For the year ended 31 March 2017

	2017	2016
	£000	£000
Revenue	6,718	6,509
Cost of sales before impairment of assets and onerous leases	(4,130)	(3,960)
Onerous leases	(173)	-
Impairment of assets	-	(272)
Cost of sales	(4,303)	(4,232)
Gross profit	2,415	2,277
Administrative expenses	(1,300)	(1,082)
Fair value adjustments on investment properties and fixed assets	(105)	1,452
Operating profit	1,010	2,647
Finance income	-	2
Finance costs	(957)	(1,059)
Net finance costs	(957)	(1,057)
Profit before tax from continuing operations	53	1,590
Taxation charge on profit from continuing operations	(13)	(93)
Profit for the year from continuing operations	40	1,497
Profit for the year attributable to owners of the parent	40	1,497
Basic and diluted earnings per share
from continuing operations	0.04p	1.55p

Consolidated Statement of Other Comprehensive Income

For the year ended 31 March 2017

		2017	2016
		£000	£000
Profit for the year		40	1,497
Items that will not be reclassified subsequently to profit or loss:
Revaluation of property, plant and equipment		(765)	(1,167)
Items that may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges		(3)	80
Other comprehensive income for the year, net of tax		(768)	(1,087)
Total comprehensive income for the year attributable to owners of the parent		(728)	410

Consolidated Balance Sheet

As at 31 March 2017

	2017	2016
	£000	£000
Non-current assets
Property, plant and equipment	26,289	27,295
Investment property	19,460	19,350
	45,749	46,645
Current assets
Inventories	20,569	20,097
Trade and other receivables	2,060	2,038
Cash and cash equivalents	703	686
Tax recoverable	13	19
	23,345	22,840
Total assets	69,094	69,485
Current liabilities
Trade and other payables	1,173	1,118
Finance lease liabilities	123	105
Deferred income	1,479	1,542
Provisions	71	53
Derivative financial instruments	-	33
	2,846	2,851
Non-current liabilities
Bank loans	22,800	22,500
Finance lease liabilities	238	294
Deferred income and deferred government grants	1,169	1,214
Deferred tax liabilities	1,642	1,629
Provisions	182	88
Derivative financial instruments	76	40
	26,107	25,765
Total liabilities	28,953	28,616
Net assets	40,141	40,869
Issued capital and reserves attributable to owners of the parent
Share capital	16,069	16,069
Share premium	5,368	5,368
Other reserves	12,683	13,451
Retained earnings	6,021	5,981
Total equity	40,141	40,869

Consolidated Statement of Changes in Equity

For the year ended 31 March 2017

	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 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
Balance at 1 April 2016	16,069	5,368	9,653	3,871	(73)	5,981	40,869
Comprehensive income/(expense)
Profit for the year	-	-	-	-	-	40	40
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	(765)	-	-	-	(765)
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	(3)	-	(3)
Total other comprehensive income/(expense)	-	-	(765)	-	(3)	-	(768)
Total comprehensive income/(expense)	-	-	(765)	-	(3)	40	(728)
Total balance at 31 March 2017	16,069	5,368	8,888	3,871	(76)	6,021	40,141

Consolidated Cash Flow Statement

For the year ended 31 March 2017

	2017	2016
	£000	£000
Cash generated from total operating activities	1,008	621
Cash flows from investing activities
Net expenditure on investment property	-	(8)
Expenditure on property, plant and equipment	(296)	(561)
Interest received	-	2
Net cash used in investing activities	(296)	(567)
Cash flows from financing activities
Interest paid	(957)	(1,059)
Loan drawdown/(repayment of borrowings)	300	850
Net (repayment)/drawdown of capital element of finance leases	(38)	353
Proceeds of government grants	-	249
Net cash generated from/(used in) financing activities	(695)	393
Net increase in cash and cash equivalents	17	447
Cash and cash equivalents at beginning of the year	686	239
Cash and cash equivalents at end of the year	703	686

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 2017 is as follows:

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)
Impairment of plant, property and equipment	-	-	-	-	-
Segmental Operating Profit before Fair value adjustment and unallocated expenses	1,207	1,038	291	(121)	2,415
Fair value adjustment on investment properties and fixed assets	(428)	110	213		(105)
					2,310
Unallocated:
Administrative expenses					(1,300)
Operating profit					1,010
Financial income					-
Financial expense					(957)
Taxation					(13)
Profit for the year from continuing operations					40

Depreciation charge
Marine					308
Car Parking					12
Administration					16
					336

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

Assets and liabilities
	2017 £000	2016 £000
Segment assets:
Marine	22,865	24,312
Real Estate	20,165	20,014
Car Parking	4,178	3,620
Regeneration	20,668	20,207
Total segment assets	67,876	68,153
Unallocated assets:
Property, plant & equipment	100	121
Trade & other receivables	432	525
Cash and cash equivalents	686	686
Total assets	69,094	69,485

	2017 £000	2016 £000
Segment liabilities:
Marine	2,361	2,329
Real Estate	531	622
Car Parking	121	78
Regeneration	932	825
Total segment liabilities	3,945	3,854
Unallocated liabilities:
Bank overdraft & borrowings	23,161	22,500
Trade & other payables	129	560
Financial derivatives	76	73
Deferred tax liabilities	1,642	1,629
Tax payable	-	-
Total liabilities	28,953	28,616
Additions to property, plant and equipment
Marine	175	584
Car Parking	120	-
Unallocated	26	27
Total	321	611

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:

	2017	2016
	£000	£000
Sale of goods	2,265	2,063
Sale of land and property	-	-
Rental income	1,733	1,740
Provision of services	2,720	2,706
	6,718	6,509

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.  The covenants measure interest cover, debt to fair value and capital expenditure.

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 2017 and the results for the year ended 31 March 2016
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 2017.

The Board of Sutton Harbour Holdings plc approved the release of this audited preliminary announcement on 27 June 2017.

The preliminary financial information has been extracted from the Annual Report and audited Financial Statements for the year ended 31 March 2017, 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 by way of emphasis to the disclosures concerning the potential impact of government reports and Plymouth's planning strategy upon the valuation of the former 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.

 

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