Last checked at 28 Jun 2016 07:00
SUTTON HARBOUR HOLDINGS PLC ("the Group")
Preliminary results for the year ended 31 March 2016
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 2016.
Highlights
· Resilient trading in line with expectations
· Re-financing of bank facilities on improved terms
· Completion of harbour and fisheries infrastructure programme
· Good progress with advancing current development opportunities
· Appointed Rothschild to undertake a strategic review of options (21 April 2016) which could include a sale of the Company
Financial
· Adjusted profit before tax* up 18.2% to £0.410m (2015: £0.347m)
· Profit before tax £1.590m (2015: £0.861m)
· Net assets £40.9m (2015: £40.5m) or 42.4p (2015: 42.0p) per share
· Year-end net debt £22.2m (2015: £21.5m); gearing: 54.4% (2015: 53.0%)
*Before accounting for impairments and fair value adjustments on investment property and property, plant and equipment
Graham Miller, Chairman, commented:
"Our trading businesses continue to prove resilient and the recent investments we have made in facilities and infrastructure around the harbour underpin our future core profitability. The medium term value growth potential of our portfolio of development sites remains significant.
The recent Brexit vote will cause short term uncertainty for many companies; however we do not believe it diminishes the intrinsic value of our business and we are pleased to have refinanced the Group's debt on improved terms with our incumbent bank."
For further information, please contact
Sutton Harbour Holdings plc Jason Schofield - Chief Executive Natasha Gadsdon - Finance Director
| 01752 204186 |
Arden Partners (Nomad and Broker) James Felix Benjamin Cryer
| 020 7614 5917 |
Rothschild (Financial Advisor) John Byrne Stephen Griffiths
| 020 7280 5000 |
Yellow Jersey (Financial PR) Philip Ranger Aidan Stanley | 07768 534641 07584 085670 |
Chairman and Chief Executive's Statement
Year Ended 31 March 2016
Introduction
During the year the Group has achieved:
· re-financing of bank facilities on improved terms;
· the completion of the harbour and fisheries infrastructure programme; and
· good progress with advancing current development opportunities.
Strategic Review
Since the year end, the Company announced that it has appointed Rothschild to undertake a strategic review of options which could include a sale of the Company. The board resolved to undertake this review to evaluate opportunities to maximise value for the Company's shareholders recognising that even with the successful re-financing that the Company's potential is underexploited by capital funding constraints.
There is currently no further news to report on this process and the Company will update shareholders in accordance with the Takeover Panel rules.
Results and Financial Position
Profit before taxation has increased to £1.590m (2015: £0.861m). The adjusted profit before taxation result (excluding fair value adjustments and impairments) was £0.410m (2015: £0.347m). Improving contribution from the Group's business activities has been partly offset by higher finance charges on higher levels of bank and asset finance debt. The results for the year ended 31 March 2016 include no profits from regeneration activities or sale of land (2015: £nil).
As at 31 March 2016 net assets were £40.869m (2015: £40.459m), representing 42.4p per share (2015: 42.0p per share). This increase incorporates the net fair value adjustment to the investment property portfolios of £1.829m surplus (2015: £0.864m surplus) recognised in profit, downwards revaluation to owner occupied portfolio recognised in profit of £0.377m (2015: upwards revaluation of £0.053m) and revaluation adjustment to the owner occupied portfolio £1.167m deficit (2015: £1.271m surplus). The results also take account of impairments to specific assets where the recoverable amount or value in use is judged to be lower than the book value. The impairment adjustment of £0.272m comprises a further reduction of the recoverable amount from airport equipment of £0.066m due to the passage of time, and a write down to reduce the carrying value of development inventory of £0.206m (2015: total impairment of £0.403m, being £0.100m against airport assets and £0.303m against the King Point Marina asset).
Completion of the two year programme to upgrade harbour and fisheries infrastructure, together with pre-planning expenditure on the Group's principal regeneration projects, resulted in an increase of net debt, including finance leases, to £22.213m (2015: £21.458m), with gearing as at 31 March 2016 at 54.4% (2015: 53.0%).
The Group's bank facilities were renewed in March 2016 with a committed £25m facility expiring in March 2019. Alongside these facilities the Group has entered into a new LIBOR swap over £10m debt, to follow on from the LIBOR hedging agreement which expires in June 2016, through to March 2019.
The Board does not recommend payment of a dividend on the year's results.
Directors and Staff
There have been no changes to the board within the year. Group-wide headcount stood at 38 as at the year end. The Group became subject to Auto Enrolment pension regulation in August 2015, and from that date membership of the company pension scheme (a defined contribution scheme) increased slightly.
Summary
The Group's waterfront land, property and facilities have unique potential to further develop the historic harbour into a leading visitor destination. To unlock these opportunities, the Group is engaged in discussions with potential end users on specific sites. Profitability of the Group's annuity trading businesses continues to prove resilient after benefiting from investment in infrastructure, cost management and new marketing strategies.
Operations Report
Marine
The full grant supported programme of infrastructure works to install a new ice plant, build a new chiller and refit an existing chiller was completed in December 2015. These essential works have increased the volume of fish that can be stored, thus adding handling and throughput capacity. Being newly commissioned, the full benefits, including energy savings, service reliability and revenue potential, have not yet been fully realised.
Last year we reported a record season for landings at Plymouth Fisheries. During the year ended 31 March 2016, strong landing trends continued albeit intermittent periods of poor weather reduced total landings to a normal level. Fuel margins have increased after a prolonged period of slim profits whilst the high oil price persisted.
Overall trading at the two marina facilities at Sutton Harbour and King Point remained steady. Occupancy at The Marina at Sutton Harbour fell slightly, after the loss of a major customer, which was offset by improving berthing numbers at King Point Marina. Recent improvements at the marinas include the installation of industry standard software, which will help target customers more effectively, and of new WiFi internet connections which greatly improve media connectivity for berthholders.
Just after the year end, the Marina at Sutton Harbour jointly hosted, alongside the local authority, the start of the renowned Transat 'bakerly' yacht race. Further events are due to be hosted at both marinas during this summer.
Real Estate
As at 31 March 2016, the Group recorded a peak of 96.2% occupancy of its real estate portfolio as a result of improving letting performance over recent years. Early in the new financial year the Group is remarketing some recently vacated premises, with encouraging interest.
The valuation of the investment portfolio, achieving a surplus of £1.829m, reflects the benefits of new lettings and lease revisions during the course of the year including Boston Tea Party which opened in Jamaica House in July 2015. The valuer's report also takes account of the increased Stamp Duty Land Tax announced in the last budget, which has had a slightly depressing effect.
Car Parking
The car parking segment has recorded another record year of trading with revenue up 13.8% on the previous year, representing a compound annual growth rate of 12.4% pa over the last 3 years. Card payment pay and display machines and seasonal pricing have improved revenue earning potential of the car parks. To improve ambiance and to reduce power costs, new energy efficiency lighting will be installed at the Harbour multi storey car park this summer.
Regeneration
Former Airport Site
During the year, an active programme of pre-planning work and stakeholder consultation has taken place. Ahead of the 2015 General Election, the Chancellor announced that a government report into future options for the site would be undertaken. Publication of this report has been delayed until later this year.
In the lead up to the 'Examination in Public' of the proposed planning framework for Plymouth, 'The Plymouth Plan', which will be chaired by an independent government inspector in 2017, the Company has added to the evidence base which comprehensively concludes that the site has no realistic prospects of sustaining commercial viable aviation operations, given environment, technical and economic constraints. The draft Plymouth Plan currently allocates the 113 acre brownfield former airport site for general aviation use although it is unsuitable for this purpose and is contrary to the stated demand for new housing, community facilities and local amenities such as retail space.
Sugar House, East Quay
The Sugar House site comprises c.1.3 acres of vacant harbourside land on the East Quay of Sutton Harbour. A new design team has been instructed to produce drawings and development costing for a scheme with options to accommodate a mix of residential accommodation, student accommodation, private rental sector investment property and ground floor commercial uses, together with integral parking. The scheme options take account of the pre application meetings held with the local authority and the Group is currently marketing the development opportunity to specialist investors/developers.
The 'Boardwalk', Vauxhall Quay
The Group has previously secured planning consent for a 7,800 sq ft scheme, comprising 3 units targeted at food and beverage operators, on a pier structure incorporating a pedestrian walkway which will significantly improve access around the harbour. The Group has now undertaken requisite pre-construction survey work to permit application for Marine Management Organisation licensing, a pre-requisite for works to be undertaken in a marine environment. Delivery of the scheme, which remains subject to finance, has attracted strong interest from quality covenant end users.
Other sites
The Group has regular and active discussions with interested buyers and potential partners for other regeneration opportunities around Sutton Harbour, as articulated in the 'Vision for Sutton Harbour' framework published in July 2014, an updated version of which is planned to be issued later this year.
| As at 31 March 2016 | As at 31 March 2015 |
Total estate portfolio valuation | £46.102m | £44.694m |
Owner occupied portfolio valuation | £26.752m | £28.089m |
Investment portfolio valuation | £19.350m | £16.605m |
Number of investment properties | 71 | 71 |
Contracted rent (per annum) | £1.605m | £1.433m |
Net initial yield | 8.30% | 8.60% |
Reversionary yield | 9.20% | 9.70% |
Occupancy rate | 96.2% | 93.30% |
Estimated rental value (ERV) of vacant units | £0.039m | £0.119m |
Average unexpired lease | 10.0 years | 10.0 years |
Gross car parks revenue | £0.478m | £0.422m |
Development Inventory |
|
|
Sites around Sutton Harbour | £8.104m | £7.861m |
Portland | £0.200m | £0.406m |
Former airport site | £11.721m | £11.568m |
Total | £20.025m | £19.835m |
Outlook
Our trading businesses continue to prove resilient and the recent investments we have made in facilities and infrastructure around the harbour underpin our future core profitability. The medium term value growth potential of our portfolio of development sites remains significant.
Graham Miller Jason Schofield
Chairman Chief Executive
27 June 2016
Consolidated Income Statement
For the year ended 31 March 2016
| 2016 | 2015 |
| £000 | £000 |
|
|
|
|
|
|
Revenue | 6,509 | 6,955 |
|
|
|
Cost of sales before impairment of assets | (3,960) | (4,528) |
Impairment of assets | (272) | (403) |
Cost of sales | (4,232) | (4,931) |
|
|
|
Gross profit | 2,277 | 2,024 |
|
|
|
Administrative expenses | (1,082) | (1,153) |
Fair value adjustments on investment properties and fixed assets | 1,452 | 917 |
|
|
|
Operating profit | 2,647 | 1,788 |
|
|
|
Finance income | 2 | 1 |
Finance costs | (1,059) | (928) |
Net finance costs | (1,057) | (927) |
|
|
|
Profit before tax from continuing operations | 1,590 | 861 |
Taxation charge on profit from continuing operations | (93) | (206) |
Profit for the year from continuing operations | 1,497 | 655 |
|
|
|
Profit for the year attributable to owners of the parent | 1,497 | 655 |
|
|
|
|
|
|
Basic earnings per share |
|
|
from continuing operations | 1.55p | 0.68p |
|
|
|
Diluted earnings per share |
|
|
from continuing operations | 1.55p | 0.68p |
Consolidated Statement of Other Comprehensive Income
For the year ended 31 March 2016
|
| 2016 | 2015 |
|
| £000 | £000 |
|
|
|
|
Profit for the year |
| 1,497 | 655 |
Items that will not be reclassified subsequently to profit or loss: |
|
|
|
Revaluation of property, plant and equipment |
| (1,167) | 1,271 |
Items that may be reclassified subsequently to profit or loss: |
|
|
|
Effective portion of changes in fair value of cash flow hedges |
| 80 | (21) |
|
|
|
|
Other comprehensive income for the year, net of tax |
| (1,087) | 1,250 |
|
|
|
|
Total comprehensive income for the year attributable to owners of the parent |
| 410 | 1,905 |
Consolidated Balance Sheet
As at 31 March 2016
| 2016 | 2015 |
| £000 | £000 |
|
|
|
Non-current assets |
|
|
Property, plant and equipment | 27,295 | 29,479 |
Investment property | 19,350 | 16,605 |
|
|
|
| 46,645 | 46,084 |
|
|
|
Current assets |
|
|
Inventories | 20,097 | 19,894 |
Trade and other receivables | 2,038 | 1,527 |
Cash and cash equivalents | 686 | 239 |
Tax recoverable | 19 | 17 |
|
|
|
| 22,840 | 21,677 |
|
|
|
Total assets | 69,485 | 67,761 |
|
|
|
Current liabilities |
|
|
Trade and other payables | 1,118 | 1,241 |
Finance lease liabilities | 105 | 19 |
Deferred income | 1,542 | 1,504 |
Provisions | 53 | 48 |
Derivative financial instruments | 33 | - |
|
|
|
| 2,851 | 2,812 |
|
|
|
Non-current liabilities |
|
|
Bank loans | 22,500 | 21,650 |
Finance lease liabilities | 294 | 28 |
Deferred income and deferred government grants | 1,214 | 994 |
Deferred tax liabilities | 1,629 | 1,536 |
Provisions | 88 | 129 |
Derivative financial instruments | 40 | 153 |
|
|
|
| 25,765 | 24,490 |
|
|
|
Total liabilities | 28,616 | 27,302 |
|
|
|
Net assets | 40,869 | 40,459 |
|
|
|
Issued capital and reserves attributable to owners of the parent |
|
|
Share capital | 16,069 | 16,069 |
Share premium | 5,368 | 5,368 |
Other reserves | 13,451 | 14,538 |
Retained earnings | 5,981 | 4,484 |
|
|
|
Total equity | 40,869 | 40,459 |
Consolidated Statement of Changes in Equity
For the year ended 31 March 2016
| 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 2014 | 16,069 | 5,368 | 9,549 | 3,871 | (132) | 3,829 | 38,554 |
|
|
|
|
|
|
|
|
Comprehensive income/(expense) |
|
|
|
|
|
|
|
Profit for the year | - | - | - | - | - | 655 | 655 |
Other comprehensive income/(expense) |
|
|
|
|
|
|
|
Revaluation of property, plant and equipment | - | - | 1,271 | - | - | - | 1,271 |
Effective portion of changes in fair value of cash flow hedges | - | - | - | - | (21) | - | (21) |
|
|
|
|
|
|
|
|
Total other comprehensive income/(expense) | - | - | 1,271 | - | (21) | - | 1,250 |
Total comprehensive income/(expense) | - | - | 1,271 | - | (21) | 655 | 1,905 |
|
|
|
|
|
|
|
|
Total balance at 31 March 2015 | 16,069 | 5,368 | 10,820 | 3,871 | (153) | 4,484 | 40,459 |
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 |
Consolidated Cash Flow Statement
For the year ended 31 March 2016
| 2016 | 2015 |
| £000 | £000 |
Cash generated from total operating activities | 621 | 1,158 |
|
|
|
Tax received | - | - |
|
|
|
Net cash generated from total operating activities | 621 | 1,158 |
|
|
|
Cash flows from investing activities |
|
|
Proceeds from sale of property, plant and equipment | - | - |
|
|
|
Net expenditure on investment property | (8) | (167) |
Expenditure on property, plant and equipment | (561) | (1,483) |
Interest received | 2 | 1 |
|
|
|
Net cash used in investing activities | (567) | (1,649) |
|
|
|
Cash flows from financing activities |
|
|
Interest paid | (1,059) | (1,050) |
Loan drawdown/(repayment of borrowings) | 850 | 1,220 |
Finance leases | 353 | 47 |
Proceeds of government grants | 249 | 308 |
|
|
|
Net cash generated from/(used in) financing activities | 393 | 525 |
|
|
|
Net increase in cash and cash equivalents | 447 | 34 |
|
|
|
Cash and cash equivalents at beginning of the year | 239 | 205 |
|
|
|
Cash and cash equivalents at end of the year | 686 | 239 |
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 2016 is as follows:
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 |
Year ended 31 March 2015 | Marine | Real Estate | Car Parking | Regeneration | Total |
| £000 | £000 | £000 | £000 | £000 |
Revenue | 5,020 | 1,513 | 422 | - | 6,955 |
|
|
|
|
|
|
Gross profit prior to non-recurring items | 1,445 | 971 | 240 | (229) | 2,427 |
Non-recurring items: |
|
|
|
|
|
Impairment of plant, property and equipment | (303) | - | - | (100) | (403) |
Onerous leases |
|
|
|
|
|
| 1,142 | 971 | 240 | (329) | 2,024 |
Fair value adjustment on investment properties and fixed assets | - | 864 | 53 | - | 917 |
|
|
|
|
| 2,941 |
Unallocated: |
|
|
|
|
|
Administrative expenses |
|
|
|
| (1,153) |
Operating profit |
|
|
|
| 1,788 |
|
|
|
|
|
|
Other gains and losses |
|
|
|
|
|
Financial income |
|
|
|
| 1 |
Financial expense |
|
|
|
| (928) |
Taxation |
|
|
|
| (206) |
Profit for the year from continuing operations |
|
|
|
| 655 |
|
|
|
|
|
|
Depreciation charge |
|
|
|
|
|
Marine |
|
|
|
| 118 |
Car Parking |
|
|
|
| 7 |
Administration |
|
|
|
| 18 |
|
|
|
|
| 143 |
Assets and liabilities |
|
|
| 2016 £000 | 2015 £000 |
Segment assets: |
|
|
Marine | 24,312 | 26,348 |
Real Estate | 20,014 | 17,012 |
Car Parking | 3,620 | 3,577 |
Regeneration | 20,207 | 20,179 |
Total segment assets | 68,153 | 67,116 |
Unallocated assets: |
|
|
Property, plant & equipment | 121 | 123 |
Trade & other receivables | 525 | 283 |
Cash and cash equivalents | 686 | 239 |
Total assets | 69,485 | 67,761 |
| 2016 £000 | 2015 £000 |
Segment liabilities: |
|
|
Marine | 2,329 | 2,058 |
Real Estate | 622 | 804 |
Car Parking | 78 | 67 |
Regeneration | 825 | 933 |
Total segment liabilities | 3,854 | 3,862 |
Unallocated liabilities: |
|
|
Bank overdraft & borrowings | 22,500 | 21,650 |
Trade & other payables | 560 | 101 |
Financial derivatives | 73 | 153 |
Deferred tax liabilities | 1,629 | 1,536 |
Tax payable | - | - |
Total liabilities | 28,616 | 27,302 |
|
|
|
Additions to property, plant and equipment |
|
|
|
|
|
Marine | 584 | 1,461 |
Car Parking | - | 3 |
Unallocated | 27 | 71 |
Total | 611 | 1,535 |
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:
| 2016 | 2015 |
| £000 | £000 |
|
|
|
Sale of goods | 2,063 | 2,629 |
Sale of land and property | - | - |
Rental income | 1,740 | 1,685 |
Provision of services | 2,706 | 2,641 |
|
|
|
| 6,509 | 6,955 |
No revenues from any one customer represented more than 10% of the Group's revenue for the year.
Going Concern
The Group's forecasts and projections, taking account of reasonably foreseeable possible changes in trading performance, show that the Group should be able to operate within the level of the facilities and covenants over a period of at least twelve months from the date of the announcement. The covenants measure interest cover, net asset cover and debt to fair value.
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group, therefore, continues to adopt the going concern basis in preparing its financial statements.
Directors' Statement
The preliminary results for the year ended 31 March 2016 and the results for the year ended 31 March 2015are 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 2016.
The Board of Sutton Harbour Holdings plc approved the release of this audited preliminary announcement on 27 June 2016.The preliminary financial information has been extracted from the Annual Report and audited Financial Statements for the year ended 31 March 2016, which will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company. These audited Financial Statements include the auditors' report which, whilst unqualified, contains reference to the disclosures concerning the potential impact of government reports and future planning permission applications upon the valuation of the airport site, which is held as inventory. The auditors' report does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The report will also be available on the investor relations page of our website (www.suttonharbourholdings.co.uk). Further copies will be available on request and free of charge from the Company Secretary at Tin Quay House, Sutton Harbour, Plymouth, PL4 0RA.