Sutton Harbour Holdings Regulatory News (SUH)

29 Nov 2007 07:00

Sutton Harbour Holdings PLC29 November 2007 Sutton Harbour Holdings plc ("Sutton Harbour" or the "Company") Interim Results for the six months ended 30 September 2007 Sutton Harbour Holdings plc announces its results for the six months ended 30September 2007. These results have been prepared under Adopted IFRS for thefirst time. Chairman's Statement ----------------------------------------------------------------------------- Your Company has progressed well in the first half and has brought a number ofschemes to fruition whilst concluding agreements on a range of new projects.Results show a very satisfactory performance by all divisions in this six monthperiod. Results and dividend These results are presented for the first time under Adopted InternationalFinancial Reporting Standards (Adopted IFRS) whereas previous results werereported under UK GAAP. Adopted IFRS reporting is mandatory for companies listedon the Alternative Investment Market for accounting periods starting on or after1 January 2007. Comparative results have been translated to Adopted IFRSreporting and a full reconciliation of the differences in accounting arepresented in the Transition Statement to Adopted International FinancialReporting Standards (this document is available on our websitewww.sutton-harbour.co.uk). The principal change to our accounts is that under UKGAAP the profit on the sale of the building occupied by Department for Work andPensions ('DWP') was recognised in the second half of the last financial year atthe point it was sold. Under Adopted IFRS, this profit is recognised as a fairvalue adjustment at the point it was ready for use which occurred in the firsthalf of the last financial year. Under Adopted IFRS accounting, whilst totalprofits from our regeneration activities remain unchanged, we may experiencegreater 'lumpiness' in the reporting of such profits and there are a number ofmilestones that need to be achieved in the second half year to continue ourcurrent rate of progress in the months ahead. I am pleased to report a profit before tax of £2.18m compared to £2.00m at thisstage last year (excluding the DWP profit referred to above), an increase of 9%.Earnings per share are up 5% at 3.36p (2006: 3.19p adjusted for the one for onecapitalisation issue made on 27 August 2007 and the removal of the fair valueadjustment of investment properties). In recognition of profits on recentprojects and the Board's confidence in your Company's future prospects, thedirectors propose an interim dividend of 0.9p per share, an increase of 20% onthe interim dividend paid last year (2006: 0.75p per share after adjustment forthe one for one capitalisation issue). The dividend will be paid on 4 January2008 to shareholders on the register on 7 December 2007. The shares are expectedto go ex-dividend on 5 December 2007. Regeneration During the period the pre-let ground floor of the DWP building was sold and thecompletion of the Shepherd's Wharf transaction to Rowe Group was achieved. Thetwo car parks in the harbour environs that we purchased from Plymouth CityCouncil for £2.4m in May 2007, have traded satisfactorily. We have also made good progress on the mixed-use scheme on the former Boatyardsite and adjacent Salt Quay site with the agreements to lease commercialpremises to both the BBC and Foot Anstey solicitors now signed. These twopre-let agreements are for a total of 65,000 sq ft new office accommodationdirectly overlooking Sutton Harbour and these tenants will serve to enhancefurther the overall quality of the harbour environment. The Company has agreed heads of terms with the South West Regional DevelopmentAgency to develop an 8 acre site at Portland for mixed-use in readiness for the2012 Olympic sailing events which will take place nearby. This project is a goodexample of the progress we are making towards our goal of broadening thegeographical spread of our regeneration activities. Additionally, the Companyhas agreed heads of terms with Plymouth City Council to release 22 acres ofsurplus land at Plymouth City Airport for mixed-use development. Work on theseprojects has been time-consuming and highly complex and management are nowworking towards securing planning permission at Portland and master-planning thePlymouth Airport site. We are hopeful of reporting positive progress at the yearend. We continue to bid for other schemes in the region and have invested inadditional professional staff to resource growth of our regeneration activities. Transport Air Southwest's results have improved steadily throughout the period and we areencouraged that our Newquay-Gatwick services have remained popular despite newcompetition on the route. Spare capacity has been used profitably to operatecharter services during the current period and we have recently announced thatwe will be introducing new services from Plymouth and Newquay to Glasgow andNewcastle from April 2008. Additionally new services from Plymouth to Cork andDublin will operate from April 2008 and new services for winter 2008/09 fromPlymouth and Newquay to Chambery are planned. Our commitment to the development of air-links from the Southwest to acomprehensive range of UK destinations follows confirmation of the transition ofNewquay Cornwall Airport from a military to civilian airport and our decision toincrease services out of Plymouth. We continue to be mindful of the future impact of fuel prices as they currentlystand although the Company has hedged much of its commodity price risk for thecurrent financial year. Marine Our marine activities have performed well during the first half year. The SuttonHarbour Marinas continue to be popular after further improvements to facilitieswere completed and additional berthing space was created for larger vessels.Fishing related revenues also showed satisfactory growth in the period. However,we expect results from these activities to be depressed during the second halfyear as a four month long refit of the lock gates is underway. These worksnecessitate closure of the lock gates at times and we have worked hard toprovide alternative berthing and discharge facilities outside the harbour inorder to minimise the disruption to our commercial and leisure customers.Nonetheless, some harbour users have chosen to relocate for the duration ofworks which we expect to be complete by end of January 2008. Staff matters and outlook This has been a particularly challenging period of intense activity for yourCompany and I am grateful to our staff for their continued commitment andenthusiasm. In particular, I thank our staff based at Sutton Harbour who havemanaged the impact of disruption caused by the lock gates' refit; theregeneration team for delivering the successes referred to above; and, to theAir South West team for their support during a challenging time. Due to theenthusiasm for previous employee SAYE share-save schemes we plan to launch a newscheme in January 2008. Jason Schofield joined the Company as Head of Development in June 2007, havingpreviously held senior positions at Hammerson plc and Crest Nicholson. He hasalready made a significant contribution and I am delighted that he will beappointed Executive Director with effect from 1 December 2007. As indicatedpreviously, Tim Bacon stepped down as Executive Director on 31 October 2007 butremains a Non-Executive Director on the Board. Your Company is well placed to continue its progress in the current financialyear with a pipeline of projects due to complete in the second half year and infuture periods. Michael KnightChairman Consolidated Income Statement ----------------------------------------------------------------------------- 6 months to 6 months to Year Ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) Note £000 £000 £000 Revenue 2 17,576 16,628 30,189 Cost of sales (14,436) (13,714) (26,319) Gross profit 3,140 2,914 3,870 Other operating income 9 11 22Administration expenses (603) (503) (954)Other operating expenses (24) (4) (59) Operating profit before gains on investment properties 2,522 2,418 2,879Fair value adjustments of investment property - 2,200 2,200 Operating profit 2 2,522 4,618 5,079 Financial income 6 146 60 119Financial expense 6 (448) (472) (965) Net financing costs (302) (412) (846) Share of loss of associate using the equity accountingmethod (44) (4) (14) Profit before tax 2,176 4,202 4,219 Taxation 3 (492) (1,133) (1,066) Profit for the period attributable to the equityshareholders 1,684 3,069 3,153 Earnings per Share 5 3.36p 6.30*p 6.47*pDiluted Earnings per Share 5 3.31p 6.16*p 6.33*p *Adjusted for the one for one capitalisation issue Consolidated Statement of Recognised Income and Expense ----------------------------------------------------------------------------- 6 months to 6 months to Year Ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) £000 £000 £000 Tax recognised on income and expenses recogniseddirectly in equity 180 41 115Profit for the period 1,684 3,069 3,153Total recognised income and expense for the period 1,864 3,110 3,268 Consolidated Balance Sheet ----------------------------------------------------------------------------- As at As at As at 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) Note £000 £000 £000 Non-current assetsProperty, plant and equipment 33,383 32,684 33,342Intangible assets 559 594 576Investment property 20,102 14,736 15,923Investment in associate 847 799 828Other financial assets 130 130 130 55,021 48,943 50,799 Current assetsInventories 3,922 4,404 3,898Trade and other receivables 5,579 3,719 5,482Cash and cash equivalents 7 5 3 6Non-current assets held for sale - 13,600 -Derivatives 83 - 14 9,589 21,726 9,400 Total assets 64,610 70,669 60,199 Current liabilitiesBank overdraft 7 8,621 7,559 6,061Other interest-bearing loans and borrowings 1,047 1,865 1,069Trade and other payables 3,223 2,587 3,738Deferred income 2,338 2,739 3,336Deferred government grants 21 22 21Tax payable 565 618 306Derivatives 97 - 7 15,912 15,390 14,538 Non-current liabilitiesOther interest-bearing loans and borrowings 1,813 11,120 2,293Deferred government grants 331 373 333Provisions 58 19 40Deferred tax liabilities 6,128 6,881 6,211 8,330 18,393 8,877 Total liabilities 24,242 33,783 23,415 Net assets 40,368 36,886 36,784 Equity and reservesShare capital 8,9 12,621 6,086 6,112Share premium 9 - 2,797 2,843Other reserves 9 11,468 11,214 11,288Retained earnings 9 16,279 16,789 16,541 Total equity 40,368 36,886 36,784 Consolidated Cash Flow Statement ----------------------------------------------------------------------------- 6 months to 6 months to Year Ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) Note £000 £000 £000Cash flows from operating activities:Profit for the period 1,684 3,069 3,153Adjustments for:Taxation 492 1,133 1,066Share of loss of associate 44 4 14Financial income (146) (60) (119)Financial expense 448 472 965Change in value of investment property - (2,200) (2,200)Depreciation and amortisation 433 321 648Amortisation of grants (9) (11) (22)Loss on sale of property, plant andequipment 24 4 59Equity settled share-based paymentexpenses 35 40 74Operating profit before changes inworking capital and provisions 3,005 2,772 3,638(Increase) in loan to associate (63) (85) (124)(Increase) in inventories (692) (1,259) (753)(Increase)/decrease in trade and otherreceivables (97) 449 (1,314)(Decrease) in trade and other payables (520) (1,500) (188)(Decrease)/increase in deferred income (998) (511) 86Increase in provisions 18 19 40Cash generated from/(used in)operations 653 (115) 1,385Tax paid (138) (33) (875)Net cash from/(used in) operatingactivities 515 (148) 510 Cash flows from investing activities:Proceeds from sale of non-currentassets held for sale - - 13,600Proceeds from sale of property, plantand equipment 5 - 174Acquisition of investment property (2,948) (85) (1,272)Acquisition of property, plant andequipment (1,048) (2,281) (3,546)Proceeds from receipt of governmentgrants - 48 48Interest received 73 11 30Net cash (used in)/from investingactivities (3,918) (2,307) 9,034 Cash flows from financing activities:Proceeds from the issue of sharecapital 2,424 - 72Issue costs relating to the issue ofshare capital (94) - -Proceeds from new loan - 1,877 1,669Interest paid (344) (445) (1,025)Repayment of borrowings (500) (450) (9,866)Dividends paid (644) (584) (950)Net cash from/(used in) financingactivities 842 398 (10,100)Net (decrease) in cash and cashequivalents (2,561) (2,057) (556)Cash and cash equivalents at beginningof period (6,055) (5,499) (5,499)Cash and cash equivalents at end ofperiod 7 (8,616) (7,556) (6,055) Notes to Interim Report ----------------------------------------------------------------------------- 1. Basis of preparation The AIM rules require that the next annual consolidated financial statements ofthe Group, for the year ending 31 March 2008, be prepared in accordance withInternational Financial Reporting Standards (IFRSs) as adopted by the EU("Adopted IFRSs"). This interim financial information has been prepared on the basis of therecognition and measurement requirements of IFRSs in issue that are endorsed bythe EU and effective (or available for early adoption) at 31 March 2008, theGroup's first annual reporting date at which it is required to use AdoptedIFRSs. Based on these Adopted IFRSs, the directors have made assumptions aboutthe accounting policies expected to be applied when the first annual AdoptedIFRS financial statements are prepared for the year ending 31 March 2008. Theseaccounting policies are set out in the transition statement available on theGroup's website www.sutton-harbour.co.uk. In particular, the directors have assumed that the following IFRSs issued by theInternational Accounting Standards Board, and IFRIC Interpretations issued bythe International Financial Reporting Interpretations Committee, will be adoptedby the EU in sufficient time that they will be available for use in the annualAdopted IFRS financial statements for the year ending 31 March 2008: IFRIC 12 'Service Concession Arrangements' effective for year ends beginning onor after 1 January 2008 - not going to adopt early. IFRS 8 'Operating Segments' effective for year ends beginning on or after 1January 2009 - not going to adopt early. IAS 23 'Borrowing Costs' (Amended) - not expected to have any major impact. In addition, the Adopted IFRSs that will be effective (or available for earlyadoption) in the annual financial statements for the year ending 31 March 2008are still subject to change and to additional interpretations and thereforecannot be determined with certainty. Accordingly, the accounting policies forthat annual period will be determined finally only when the annual financialstatements are prepared for the year ending 31 March 2008. The accounting policies set out in the transition statement have been appliedconsistently in all periods presented and in preparing the opening balance sheetat the transition date. Accounting estimates and judgements The preparation of financial statements in conformity with Adopted IFRSsrequires management to make judgements, estimates and assumptions that affectthe application of policies and reported amounts of assets and liabilities,income and expenses. The estimates and associated assumptions are based onhistorical experience and various other factors that are believed to bereasonable under the circumstances, the results of which form the basis ofmaking judgements that are not readily apparent from other sources. Actualresults 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 theestimate is revised if the revision affects only that period, or in the periodof the revision and future periods if the revision affects both current andfuture periods. The following are the areas that require the use of estimates and judgement thatmay impact the Group's balance sheet and income statement: a) The stage of completion of construction contracts and project managementcontracts: Judgement has been made in determining the stage of completion of constructioncontracts and project management contracts and therefore the amount of revenueand costs that have been recognised in the income statement. In determining thestage of completion, management make use of the experience of RICS qualifiedemployees and surveys of the work performed. b) The valuation of investment property and property held for use in thebusiness: In determining the fair value of properties, the Board relies on internal andexternal valuations carried out by professionally qualified valuers inaccordance with the Appraisal and Valuation Standards of the Royal Institutionof Chartered Surveyors. The valuation of investment properties uses estimatedrental yields for each property based on market evidence at the date thevaluation is carried out. c) The calculation of deferred tax assets and liabilities: The Group has not recognised deferred tax assets due to a high degree ofuncertainty of the timing of when the asset may be realised. d) The level of provision required for aircraft maintenance overhauls: The Group bases it's estimates on the number of hours flown, the expectedinterval between services, the cost of prior overhauls and industry experience. e) Determining whether a lease is a finance lease or an operating lease: The Board has exercised judgement in considering the potential transfer of risksand rewards in accordance with IAS 17 'Leases' for all property leased totenants and for all property leased by the Group. f) In preparing the interim report, the Group has not applied hedgeaccounting to date. The fair value movement on all hedges has therefore beenrecorded in the income statement as at 30 September 2007. The Group will assesswhether it meets the cash flow hedge accounting criteria at the year end. TheGroup uses derivatives to hedge uncertain future cash flows and intend to takesteps to implement hedge accounting. Publication of Non-Statutory Accounts The comparative figures for the financial year ended 31 March 2007 are not theGroup's statutory accounts for that financial year. Those accounts, which wereprepared under UK GAAP, have been reported on by the Group's auditors anddelivered to the registrar of companies. The report of the auditors was (i)unqualified, (ii) did not include a reference to any matters to which theauditors drew attention by way of emphasis without qualifying their report, and(iii) did not contain a statement under section 237(2) or (3) of the CompaniesAct 1985. Copies of the Group's financial statements are available from the Group'sregistered office, North Quay House, Sutton Harbour, Plymouth, PL4 0RA and onthe Group's website www.sutton-harbour.co.uk. 2. 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 Grouptherefore has only one geographical segment. Business segments: 6 months to 6 months to Year Ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) £000 £000 £000External revenue:Marine activities 2,632 2,836 4,934Regeneration 2,583 2,023 3,283Transport 12,361 11,769 21,972Total external revenue 17,576 16,628 30,189 Total intersegment revenue - - -Total revenue 17,576 16,628 30,189 Segment result:Marine activities 707 573 947Regeneration 1,486 3,946 4,958Transport 932 602 128 3,125 5,121 6,033 Unallocated expenses:Administrative expenses (603) (503) (954)Group operating profit 2,522 4,618 5,079 Financial income 146 60 119Financial expense (448) (472) (965)Share of loss of associate (44) (4) (14)Taxation (492) (1,133) (1,066) Profit for the period 1,684 3,069 3,153 Assets and liabilities Segment assets:Marine activities 22,544 21,935 22,422Regeneration 26,635 33,739 22,556Transport 14,401 13,889 14,112Unallocated assets 1,030 1,106 1,109 Total assets 64,610 70,669 60,199 Segment liabilities:Marine activities 755 781 1,475Regeneration 953 1,505 549Transport 4,350 3,450 5,451Unallocated liabilities 11,491 20,548 9,423Tax liabilities 6,693 7,499 6,517 Total liabilities 24,242 33,783 23,415 3. Taxation The Current Tax charge represents the provision for taxation on the taxableprofits for the period. 6 months to 6 months to Year Ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) £000 £000 £000 Current Tax (329) (300) (834)Deferred Tax (163) (833) (232) (492) (1,133) (1,066) In the recent Chancellor's Budget, the rate of Corporation Tax has been reducedfrom 30% to 28% with effect from 1 April 2008. Current Tax continues to becalculated at 30% for the current financial year. Deferred Tax as at 30September 2007, however, has been recalculated at the reduced 28% rate toreflect the reduced future rate. 4. Dividends 6 months to 6 months to Year Ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) £000 £000 £000 Final Dividend in respect of the year ended 31 March 2007 644 584 584Interim Dividend in respect of the year ended 31 March 2007 - - 366 644 584 950 The interim ordinary dividend of 0.9p (net) per share (2006: 0.75p adjusted forthe one for one capitalisation issue) totalling £454,361 (2006: £366,651) wasapproved by the Board of Directors on 28 November 2007. This interim dividendwill not be provided against profits until paid and will be paid on 4 January2008 to Shareholders on the register on 7 December 2007. 5. Earnings per Share As at As at As at 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) pence pence pence Earnings per Share 3.36p 6.30*p 6.47*pAdjusted Earnings per Share 3.36p 3.19*p 6.47*pDiluted Earnings per Share 3.31p 6.16*p 6.33*pDiluted Adjusted Earnings per Share 3.31p 3.11*p 6.33*p *Adjusted for the one for one capitalisation issue Earnings per share have been calculated using the profit for the period of£1,684,000 (2006: £3,069,000) and the 50,066,411 (2006: 48,684,044 adjusted forthe one for one capitalisation issue) average number of ordinary shares inissue, excluding those options granted under the SAYE scheme. AdjustedEarnings per share have been calculated using the same information as for theBasic Earnings per share but the profit for the six months to 30 September 2006has been adjusted to £1,551,000. This adjusted profit reflects the removal ofthe fair value adjustments to investment properties and the associated deferredtaxation. Diluted Earnings per share uses an average number of 50,933,025(2006: 49,832,480 adjusted for the one for one capitalisation issue) ordinaryshares in issue, and takes account of the outstanding options under the SAYEscheme in accordance with IFRS2 'Share-based Payment'. Diluted AdjustedEarnings per share have been calculated using the same information as for theDiluted Earnings per share but the profit for the six months to 30 September2006 has been adjusted to £1,551,000 as described above. 6. Financial income and financial expense 6 months to 6 months to Year Ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) £000 £000 £000 Interest receivable on loan to associate 58 51 84Other interest receivable 19 9 21Gain on remeasurement of derivative financial instrument to fair value 69 - 14 Financial income 146 60 119 Bank overdraft interest payable 358 472 958Loss on remeasurement of derivative financial instrument to fair value 90 - 7 Financial expense 448 472 965 7. Cash and cash equivalents As at As at As at 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) £000 £000 £000 Cash and cash equivalents per balance sheet 5 3 6Bank overdraft (8,621) (7,559) (6,061) Cash and cash equivalents per cash flow statement (8,616) (7,556) (6,055) 8. Share capital As at As at As at 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (unaudited) £000 £000 £000Authorised: 100,000,000 Ordinary shares of 25p each (2006: 40,000,000Ordinary shares of 25p each) 25,000 10,000 10,000 Allotted, Called Up and Fully Paid:50,484,580 Ordinary shares of 25p each (2006: 24,342,022Ordinary shares of 25p each) 12,621 6,086 6,112 On 18 May 2007, the Company issued 794,600 ordinary 25p shares at £3.05 each tofinance the acquisition of two car parks in the environs of Sutton Harbour. Theissue price included a discount of 15p per share. Following the issue, theshare capital of the Company was 25,136,622 ordinary shares of 25p each. 655 Ordinary shares of 25p each were issued on 2 August 2007 as employeesexercised share options under the Company's Save As You Earn Share OptionScheme. The Company received £1,212 in consideration for the 655 share optionsexercised. At the Annual General Meeting on 11 July 2007, it was agreed to increase theauthorised share capital to £25,000,000 by the creation of 60,000,000 ordinaryshares of 25p each. At the Annual General Meeting on 11 July 2007, the Company resolved to make aone for one capitalisation issue to be met out of a combination of the sharepremium account and retained earnings. On 27 August 2007, the Company issued25,242,290 ordinary shares of 25p each to shareholders at that date on a one forone basis. This resulted in an increase of share capital of £6,311,000, areduction in share premium of £4,974,000 and the capitalisation of £1,337,000 ofretained earnings. Following the one for one capitalisation issue, the sharecapital of the Company was 50,484,580 ordinary shares of 25p each. 9. Reconciliation of movements in equity Share capital Share premium Revaluation Merger reserve Retained reserve earnings ----Other reserves---- £000 £000 £000 £000 £000 At 1 April 2006 6,086 2,797 10,922 251 14,264Deferred taxation on revaluation ofproperty, plant and equipment - - 41 - -Cost relating to share-based paymentschemes - - - - 40Dividends - - - - (584)Profit for the period - - - - 3,069 As at 30 September 2006 6,086 2,797 10,963 251 16,789 Issue of shares 26 46 - - -Deferred taxation on revaluation ofproperty, plant and equipment - - 74 - -Cost relating to share-based paymentschemes - - - - 34Dividends - - - - (366)Profit for the period - - - - 84 As at 31 March 2007 6,112 2,843 11,037 251 16,541 Issue of shares less costs 198 2,131 - - -One for one capitalisation issue 6,311 (4,974) - - (1,337)Deferred taxation on revaluation ofproperty, plant and equipment - - 180 - -Cost relating to share-based paymentschemes - - - - 35Dividends - - - - (644)Profit for the period - - - - 1,684 As at 30 September 2007 12,621 - 11,217 251 16,279 This information is provided by RNS The company news service from the London Stock Exchange