Last checked at 30 May 2008 07:00
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.
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