Sutton Harbour Holdings Regulatory News (SUH)

6 July 2021

SUTTON HARBOUR GROUP PLC ("the Group")

Results for the year ended 31 March 2021

Sutton Harbour Group plc ("Sutton Harbour", "the Company"), the AIM listed owner and operator of Sutton Harbour in Plymouth and specialist in waterfront regeneration projects and operation of waterfront real estate, marinas and Plymouth Fisheries, announces audited results for the year ended 31 March 2021.

Highlights

· Net asset value up by £1.071m (0.92p.share),despite difficult trading conditions resulting from the Covid-19 pandemic and UK Government imposed restrictions.

· Record trading year for the marinas as UK based boating becomes more popular, overall 96% occupancy by June 2021.

· Investment Property occupancy rate of 97% at 31 March 2021 (95% at 31 March 2020)

· Strong recovery parking revenues in summer 2020 after Lockdown ended and same trend now apparent for 2021.

· The first new development project at Sutton Harbour in a decade, Harbour Arch Quay, due to start on site imminently.

Financial Highlights

*Before accounting for fair value adjustments to property asset valuation.

**Comprises investment and owner occupied portfolios.

Excludes land held as development inventory.

Valuation as at 31 March 2021.

Philip Beinhaker, Executive Chairman, commented:

"The Group has used the last year to advance the development projects, invest in a new development site and develop the marketing and operations efficiencies of the marinas business. The Group now wishes to continue its pace of progress. To support the completion of the Harbour Arch Quay development, provide headroom to invest in other strategic sites and support the costs of planning and professional fees the Group accordingly intends to make an open offer for new equity capital to enable existing shareholders to participate in future growth of the Group in the near future."

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Executive Chairman's Statement

For Year Ended 31 March 2021

Introduction

I am pleased to report on the Group's results for the year ended 31 March 2021. These results include the impact of the Covid pandemic and periodic UK Government imposed restrictions during the reporting year.

The Group maintained its trading operations throughout the full year. The Covid crisis most acutely undermined the car parking revenues, an important cash generative activity, and throughput was slowed at Plymouth Fisheries as the market for high quality fish reduced in the wake of closures of restaurants and hospitality businesses. Collection of rentals has been steady throughout the year with some tenants arranging instalment payment plans. Overall 90% rentals falling due have been collected and the Group has continued to achieve lettings of vacant space to new tenants with the occupancy rate at 97% by 31 March 2021. The marinas benefitted from the boom in UK based leisure during Summer 2020, a trend that has continued into the Summer 2021 season giving rise to a marinas occupancy rate of 96% by June 2021.

Sutton Harbour is a destination offering outdoor marine, leisure and hospitality facilities. Visitor activity has now returned to the Harbour area with tenants and other operators now attracting strong footfall. In Summer 2020 after the Lockdown restrictions were relaxed, car parking revenues quickly recovered as visitors returned. Unfortunately this recovery was cut short as two further Lockdowns followed. To date, the recovery of Summer 2021 is proceeding strongly as parking incomes and tenants' businesses improve, allowing the Group to move on from the difficulties of the past 16 months. During the year the Company was exposed to the business failure of Edinburgh Woollen Mill, which occupied a 7,500 sq ft unit.

The Group has made significant progress with its stated regeneration business plans. After further delays resulting from the Covid crisis disruption, construction of the 14 apartment building known as Harbour Arch Quay is due to start this summer. In December 2020, the Company completed the purchase of a site just east of the Harbour on Sutton Road and immediately submitted an application for two residential-led developments on this site.

To provide additional headroom on bank facilities to assure the financial resilience of the Group through the post Lockdown recovery period, the increased facility of £2m above the core facilities of £25m has been successfully extended with National Westminster Bank plc until May 2022.

Results and Financial Position

The adjusted loss before taxation for the year was £0.162m (2020: £0.221m profit before taxation) which excludes non-cash fair value adjustments. In this financial year these adjustments relate to property asset valuation, undertaken by external valuers as at 31 March 2021. The loss before taxation for the year under review as per the Income Statement, inclusive of the aforementioned adjustments, was £2.373m (2020: £0.756m loss). The financial impact of the Covid-19 crisis is evident in the Gross Profit which is down by £0.567m to £1.762m in the year to 31 March 2021 (year to 31 March 2020: £2.329m), attributable to a decline of £0.294m in car parking; £0.146m in marine activities (fisheries and marinas) and £0.117m in real estate/regeneration. The Group companies were not eligible for any Covid-19 related Government grants and full functionality of the harbour (fisheries operations, harbour services and 24 hour lock operations) operated continuously to support users due to its status a statutory harbour authority and as part of the food supply chain infrastructure.

Net debt (including lease liabilities) increased to £26.874m as at 31 March 2021 from £23.549m at 31 March 2020, an increase of £3.325m of which £2.275m is a loan taken out in December 2020 to finance the purchase of the site on Sutton Road. The increase in development property inventory of £4.282m was principally incurred in the purchase of the aforementioned site and costs to prepare the full planning application.

Gearing (Net debt: net assets) as at 31 March 2021 stood at 57.0% (2020: 51.1%). Finance costs of £0.753m in the year (2020: £0.844m) reflect the lower rates of interest.

As at 31 March 2021, net assets were £47.153m (2020: £46.082m), a net asset value of 40.6p per ordinary share (2020: 39.7p per ordinary share). The movement includes the valuation of the Group's property assets which gave rise to an overall valuation surplus of £1.035m, as reconciled in the table below, of which £1.142m deficit relates to the investment property portfolio and £2.176m surplus relates to the owner occupied properties. The investment portfolio and car park valuation movements reflect the market uncertainty caused by the UK Government's restrictions to manage the Covid-crisis as at 31 March 2021, with the marinas' valuation surplus following strengthening in trading performance. During the year the new fuel servery at Plymouth Fisheries was completed and accordingly the net cost of £0.475m was transferred from 'Assets under the Course of Construction' to the Fisheries asset. The current weaker level of trading at Plymouth Fisheries has informed the valuer's lower overall Fisheries asset value resulting in the effective write down of the fuel servery.

*Accounting for the fair value movement between valuations at 31 January 2020 and 31 March 2021 has been accounted in the current year as the movement was materially related to factors that occurred from 1 April 2020.

Taking into account the current level of bank borrowing, the board does not recommend payment of a dividend on the year's results.

Directors and Staff

There have been no other Board changes during the year. Headcount as at 31 March 2021 was 28 (31 March 2020: 30). During the year five staff were furloughed for a very minimal period of time and two redundancies were made. Harbour operations personnel were designated as key workers.

Operations Report

Marine

Sutton Harbour Marina and King Point Marina both enjoyed a record year of annual berth sales with overall annual berth sales up by 5% and overall occupancy up to 92% by 31 March 2021 (80% by 31 March 2020). Total marinas revenue for the year ended 31 March 2021 was slightly up on the previous year, although the overall result was offset by weaker visitor bookings. The current year is set to be another record year with occupancy currently at 96% setting a strong platform for future revenue and valuation growth. Prices have been held this year and will be reviewed as the economy recovers. The marinas have benefited from the renewed popularity of UK based boating since the start of the Covid crisis and it is pleasing to see many first-time boat owners taking up the leisure activity. Demand for berths has justified installation of the final pontoons at a cost of £60,000 at King Point Marina making the facility, which opened in 2013, complete. At Sutton Harbour Marina, provision for jet skis has been increased, which was quickly sold out, and improvements to the business' telephony and customer management software have been undertaken.

Plymouth Fisheries trading slowed during the year with both landings of fish and fuel sales impacted by a combination of uncertainty arising from the Covid-19 crisis and Brexit transition, local competition from other south-west ports and a declining local fleet as fishing licences are concentrated to fewer, larger vessels, some which are too large for Sutton Harbour to accommodate. Fishing remains an important component of the Harbour's vibrancy and supports direct and indirect employment. The Group is working closely with Plymouth City Council and other stakeholders on a plan to stimulate Fisheries-related activity through the provision of new facilities which will better meet future needs of the industry and provide public access to and enjoyment of Plymouth's fishing tradition.

Real Estate and Car Parking

Tenant occupancy by 31 March 2021 stood at 97% (31 March 2020: 95%). Following the period of administration and end of their lease, Edinburgh Woollen Mill vacated the 7,500 sq ft premises at the heart of the Barbican at the end of May 2021. 2,500 sq ft is already reserved for a new high quality tenant subject to lease, and the remainder of the space is now being actively marketed.

Car parking revenues were down by half due to the Lockdowns during the year. The multi-storey Harbour Car Park was closed during Lockdown periods due to lack of use and to save business rates. The Group has also incurred security costs to prevent trespass of the car park. Following each Lockdown, and as footfall returned, car parking revenues recovered with the height of Summer 2020 trading at a similar level to Summer 2019.

Regeneration

Sutton Harbour The Group is working diligently with the Local Authority on the finalisation of planning applications for the two buildings on the Sutton Road site. The Group is hopeful of a start on site with the first of the Sutton Road developments in Summer 2022. The smaller Harbour Arch Quay scheme is due to start construction this summer and is due for completion in a year's time. Since the year end the Group has arranged separate development financing, which is subject to completion, to fund the Harbour Arch Quay scheme. Marketing of the 14 high quality waterfront apartments will soon be underway with good levels of informal interest already reported.

Former Airport Site As previously reported the site is safeguarded from development until 2024. The Group has ready proposals for a deliverable alternative use of the 113 acre site which meet the social and economic needs of Plymouth.

Summary and Outlook

The disruption caused by three Lockdowns and restrictions imposed by the UK Government to contain the spread of Covid-19 was more extensive than we foresaw last summer and there is the potential for further interruptions to trading in the future. The Board is now more optimistic that with the vaccination programme well advanced and with businesses finding ways to adapt to different levels of restriction, the Group is well placed to benefit from the re-popularisation of UK based tourism and staycations. This has already been demonstrated by the growth in marina occupancy, recent increase in new lettings and recovery in parking revenues in the post year end period.

The Group has used the last year to advance the development projects, invest in a new development site and develop the marketing and operations efficiencies of the marinas business. The Group now wishes to continue its pace of progress. To support the completion of the Harbour Arch Quay development, provide headroom to invest in other strategic sites and support the costs of planning and professional fees the Group accordingly intends to make an open offer for new equity capital to enable existing shareholders to participate in future growth of the Group in the near future.

Philip Beinhaker

EXECUTIVE CHAIRMAN

5 July 2021

Consolidated Income Statement

For the year ended 31 March 2021

Segment results

For the year ended 31 March 2021

Profit for the year from continuing operations (988)

Notes to the Consolidated Financial Statements

1. General Accounting Policies

Basis of preparation

The results for the year to 31 March 2021 have been extracted from the audited consolidated financial statements, which are expected to be published by mid-August 2021.

The financial information set out above does not constitute the Company's statutory accounts for the years to 31 March 2021 or 2020 but is derived from those accounts. Statutory accounts for the year ended 31 March 2020 were delivered to the Registrar of Companies following the Annual General Meeting on 22 September 2020 and the statutory accounts for 2021 are expected to be published on the Group's website (www.suttonharbourholdings.co.uk) shortly, posted to shareholders at least 21 days ahead of the Annual General Meeting ("AGM") to be held on 27 September 2021 and, after approval at the AGM, delivered to the Registrar of Companies. 

The auditor, PKF Francis Clark, has reported on the accounts for the year ended 31 March 2021; their report includes a reference to the valuation of Plymouth City Airport (former airport site) to which the auditors drew attention by way of emphasis of matter without qualifying their report.