SUTTON HARBOUR GROUP PLC — Earnings Release 2018

Jun 29, 2018

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RNS Number : 9831S

Sutton Harbour Holdings PLC

29 June 2018

29 June 2018

SUTTON HARBOUR HOLDINGS PLC ("the Group")

Preliminary results for the year ended 31 March 2018

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 2018.

Highlights

·      The Strategic Review culminated in a change in majority ownership with FB Investors LLP acquiring 72.65% of the share capital.

·      The Company awaits the report from the Government Inspector on the proposed Plymouth and South West Devon Joint Local Plan

·      Planning Applications submitted or in progress for three Sutton Harbour area schemes: Harbour Arch Quay, Sugar Quay and Harbour Car Park

·      Another record year for Plymouth Fisheries Hub: £21.0m fish throughput value

Financial

·      Adjusted loss before tax* £0.136m (2017: profit £0.331m)

·      Net financing costs £0.90m (2017: £0.96m)

·      Net Assets £39.3m (2017: £40.1m)

·      Year-end net debt £21.9m (2017: £22.5m)

*Before accounting for costs of change in ownership, fair value adjustments on assets, impairments and provisions for onerous leases

Phil Beinhaker, Chairman, commented:

"The investment in the Company by, and the proven experience of, FB Investors LLP has provided fresh impetus to accelerate making Sutton Harbour a destination of regional importance and national significance, building upon the strengthening of existing activities, with the development of new residential, retail, commercial and leisure amenities."

For further information, please contact

Sutton Harbour Holdings plc Jason Schofield - Chief Executive Natasha Gadsdon - Finance Director	01752 204186
Arden Partners (Nomad and Broker) Paul Shackleton	020 7614 5924

Chairman and Chief Executive's Statement

Year Ended 31 March 2018

Shareholders' Overview

Highlights

·      The Strategic Review culminated in a change in majority ownership following a 'Partial Offer and Acceptance' in January 2018. This resulted in FB Investors LLP acquiring 67,393,960 shares at the offer price of 29.5 pence per share.

·      Shareholders approved the issue of 9,322,034 new ordinary shares to FB Investors LLP at a General Meeting held on 3 January 2018. Following the 'Partial Offer and Acceptance' and subscription to new shares, FB Investors LLP holds 76,715,994 shares, 72.65% of the total issue share capital of the Company.

·      Philip Beinhaker, a Director of FB Investors LLP, was appointed a Director of the Company on 22 January 2018 and he was immediately appointed Chairman with Graham Miller stepping down to Non-Executive Director. Robert De Barr stepped down from the board on 22 January 2018.

·      Jason Schofield, Chief Executive, gave notice of resignation on 23 April 2018 and will leave the Company on 23 July 2018. The Board has begun a review of its composition and structure. The review, led by non-executive Directors, Graham Miller and Sean Swales, will consider the commercial requirements of the business, optimising resources and corporate governance. This may, or may not, lead to a further appointment in due course. In the interim period Philip Beinhaker will act as Executive Chairman.

Results and Financial Position

The adjusted loss before taxation for the year was £0.136m (2017: profit before taxation £0.331m), which excludes non-cash fair value adjustments, impairments, provision for onerous leases and the costs in connection with change of share ownership. Loss before taxation for the year under review as per the Income Statement, inclusive of the aforementioned adjustments, was £2.502m (2017: profit before taxation £0.053m).

As at 31 March 2018 net assets were £39.328m (2017: £40.141m), representing 37.2p per share (2017: 41.7p per share). The decrease incorporates the results of the fair value adjustment to the investment property and fixed asset portfolio of a deficit of £0.626m recorded as a charge to the Income Statement and the owner occupied portfolio of a deficit of £1.624m recorded to the Revaluation Reserve. Overall, these valuation movements which were determined by way of an independent valuation, decreased net assets by £2.250m (2017: £0.870m).

Gearing as at 31 March 2018 stood at 55.6% (2017: 55.9%). Finance costs fell from £0.957m (2017) to £0.897m (2018). The Company's core £25m banking facility was extended in January 2018 to March 2021.

During the year net debt (including finance leases) decreased to £21.858m (March 2017: £22.458m). The new share subscription in January 2018 introduced £2.75m of fresh capital into the Company. Costs of the change in control of £1.553m were expended during the year with a further £0.187m to be paid after the year end. In addition, £0.152m costs were attributable to the new share subscription and debited to the Share Premium Account. Development Inventories increased during the year by £0.721m reflecting the accelerated expenditure in connection with promoting regeneration schemes and in particular, that of Sugar Quay. £0.588m (2017: £0.296m) expenditure during the year relates to infrastructure investment.

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

Directors and Staff

During the year, Robert De Barr stepped down from the board, after 5 years as a Non-Executive Director, Philip Beinhaker was appointed a Non-Executive Director and Chairman and Graham Miller reverted to Non Executive-Director after 4 years as Chairman. Following notice of resignation given by Jason Schofield, Philip Beinhaker has assumed the role of Executive Chairman. Staff numbers have continued to fall slightly as a result of natural wastage, with an increase in contracting out to meet resource requirements. Headcount as at 31 March 2018 was 32 (2017: 33).

Operations Report

MARINE- commercial fishing

Despite a seasonally weaker summer, a bumper autumn season resulted in another strong year for fish throughput at Plymouth Fisheries valued at £21.0m (2017: £19.7m). Fuel sales (marine gasoil) were, however, down 7% by volume reflecting the market's success in attracting fish transported by road from other ports for auction and also competition from other fuel sellers.

Following on from the renewal of the ice plant and chillers during the last couple of years, the grant supported infrastructure programme has continued with investment this year into new efficient boilers, and energy efficient lighting and hygienic wall cladding installed in the auction hall.

The pedestrian bridge across Sutton Lock has been out of action for year whilst investigations into the bearing failure and procurement process have progressed.  The Company is working jointly with the Environment Agency and Plymouth City Council to recommission the bridge as soon as manufacture lead times will allow.

MARINE- leisure marinas

Both marinas, Marina at Sutton Harbour and King Point Marina, have traded steadily throughout the season although occupancy was slightly lower than last year.

REAL ESTATE AND CAR PARKING

Rental occupancy has fallen slightly after some units have become vacant after long tenancies ended and some tenants' businesses failed. This has impacted the profitability of this activity in the current year which is down by 21.9%, before taking fair value adjustments and provisions for onerous leases into account. The Company is actively marketing the vacant space for which interest remains good from prospective tenants. Good year on year growth at the car parks has resulted in profitability of this activity up by 9.3% compared to last year. Taken together, the profitability of these two complementary activities is down 15.9% compared to last year, before taking fair value adjustments and provisions for onerous leases into account

REGENERATION

Former Airport Site

The Company has actively participated in all stages of the public consultation in respect of the Local Planning Authority's proposed adoption of the new Plymouth and South West Devon Joint Local Plan.  Detailed representations, which have taken a number of years to compile, were submitted to the Government Inspectors who conducted the public hearing from January to March 2018. The Company currently awaits the outcome of the hearing and specifically whether the Government Inspectors will uphold Local Planning Authority's proposal to safeguard the Former Airport Site for 5 years for potential general aviation use (which includes private aircraft and other non-commercial passenger services), following which, the local planning authority proposes a review of the policy. The Company maintains that far greater social and economic benefit for the city will result from the development of the site for an appropriate mixture of residential and other uses which can deliver housing (including a substantial contribution to the need of social housing), community and educational facilities and employment space, effectively integrated with the existing surrounding developments.

Sutton Harbour Regeneration Schemes

The Sugar Quay and Harbour Arch Quay development sites are positioned on the East and North East Quays of the harbour respectively and have formerly been referred to as Sugar House/Boatyard and Horsewash. Following the change of control and board changes in January 2018, the scheme proposals for Sugar Quay, as re-worked last year, underwent a detailed review. This review was led by Philip Beinhaker and Jason Schofield and supported by in-house colleagues and specialist consultants. The scheme was subsequently re-designed , incorporating efficient basement parking, retail and leisure space on the ground floor and approximately 175 residential units. The revised scheme is currently being refined in consultation with the local planning authority, prior to full planning submission.

An application for Harbour Arch Quay, located at North East Quay, to create 14 residential units and ground floor commercial accommodation has been submitted for planning approval.

In addition, proposals are due to be submitted at the same time as the Sugar Quay application to extend Harbour Car Park, situated at the Eastern Gateway to the harbour, creating approximately 150 additional spaces.

The Company gained Marine Management Organisation (MMO) licensing consent this year for the 'Boardwalk' scheme (three years after planning consent was granted). The same application has now been re-submitted for planning consent, as the original consent expired in May 2018 which will be effective over the same time period as the MMO licence.

Outlook

The investment in the Company by, and the proven experience of, FB Investors LLP has provided fresh impetus to accelerate making Sutton Harbour a destination of regional importance and national significance, building upon the strengthening of existing activities, with the development of new residential, retail, commercial and leisure amenities.

PHILIP BEINHAKER                                 JASON SCHOFIELD

CHAIRMAN                                             CHIEF EXECUTIVE

29 June 2018

Consolidated Income Statement

For the year ended 31 March 2018

	2018	2017
	£000	£000
Revenue	6,503	6,718
Cost of sales before impairment of assets and onerous leases	(4,367)	(4,130)
Onerous leases	-	(173)
Cost of sales	(4,367)	(4,303)
Gross profit	2,136	2,415
Fair value adjustments on investment properties and fixed assets	(626)	(105)
Administrative expenses	(1,374)	(1,300)
Exceptional costs of change in ownership	(1,741)	-
Operating (loss)/profit	(1,605)	1,010
Finance income	-	-
Finance costs	(897)	(957)
Net finance costs	(897)	(957)
(Loss)/profit before tax from continuing operations	(2,502)	53
Taxation credit/(charge) on profit from continuing operations	304	(13)
(Loss)/profit for the year from continuing operations	(2,198)	40
Profit for the year attributable to owners of the parent	(2,198)	40
Basic and diluted (loss)/earnings per share
from continuing operations	(2.24)p	0.04p

Consolidated Statement of Other Comprehensive Income

For the year ended 31 March 2018

		2018	2017
		£000	£000
(Loss)/profit for the year		(2,198)	40
Items that will not be reclassified subsequently to profit or loss:
Revaluation of property, plant and equipment		(1,624)	(765)
Items that may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges		70	(3)
Other comprehensive income for the year, net of tax		(1,554)	(768)
Total comprehensive income for the year attributable to owners of the parent		(3,752)	(728)

Consolidated Balance Sheet

As at 31 March 2018

	2018	2017
	£000	£000
Non-current assets
Property, plant and equipment	23,973	26,289
Investment property	19,055	19,460
	43,028	45,749
Current assets
Inventories	21,276	20,569
Trade and other receivables	2,170	2,060
Cash and cash equivalents	2,767	703
Tax recoverable	8	13
	26,221	23,345
Total assets	69,249	69,094
Current liabilities
Trade and other payables	1,633	1,173
Finance lease liabilities	117	123
Deferred income	1,434	1,479
Provisions	70	71
Derivative financial instruments	6	-
	3,260	2,846
Non-current liabilities
Bank loans	24,350	22,800
Finance lease liabilities	158	238
Deferred income and deferred government grants	646	1,169
Deferred tax liabilities	1,338	1,642
Provisions	169	182
Derivative financial instruments	-	76
	26,661	26,107
Total liabilities	29,921	28,953
Net assets	39,328	40,141
Issued capital and reserves attributable to owners of the parent
Share capital	16,162	16,069
Share premium	7,872	5,368
Other reserves	10,050	12,683
Retained earnings	5,244	6,021
Total equity	39,328	40,141

Consolidated Statement of Changes in Equity

For the year ended 31 March 2018

	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 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
Balance at 1 April 2017	16,069	5,368	8,888	3,871	(76)	6,021	40,141
Adjustment to opening balance	-	-	(1,079)	-	-	1,421	342
Comprehensive income/(expense)
Profit for the year	-	-	-	-	-	(2,198)	(2,198)
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	(1,624)	-	-	-	(1,624)
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	70	-	70
Total other comprehensive income/(expense)	-	-	(1,624)	-	70	-	(1,554)
Total comprehensive income/(expense)	-	-	(1,624)	-	70	(2,198)	(3,752)
Transactions with owners of the parent
Purchase of shares	93	2,504	-	-	-	-	2,597
Total balance at 31 March 2018	16,162	7,872	6,185	3,871	(6)	5,244	39,328

Consolidated Cash Flow Statement

For the year ended 31 March 2018

	2018	2017
	£000	£000
Cash generated from total operating activities	(886)	1,008
Cash flows from investing activities
Net expenditure on investment property	-	-
Expenditure on property, plant and equipment	(227)	(296)
Proceeds from sale of plant and equipment	12	-
Net cash used in investing activities	(215)	(296)
Cash flows from financing activities
Proceeds from issue of shares	2,750	-
Expenses of share issuance	(152)	-
Interest paid	(897)	(957)
Loan drawdown/(repayment of borrowings)	1,550	300
Net (repayment)/drawdown of capital element of finance leases	(86)	(38)
Net cash generated from/(used in) financing activities	3,165	(695)
Net increase in cash and cash equivalents	2,064	17
Cash and cash equivalents at beginning of the year	703	686
Cash and cash equivalents at end of the year	2,767	703

Reconciliation of financing activities for the  year ended 31 March 2018
	2018	Cash flow	2017
	£000	£000	£000
Bank loans	24,350	1,550	22,800
Finance leases	275	(86)	361
Long term debt	24,625	1,464	23,161

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 2018 is as follows:

Year ended 31 March 2018	Marine	Real Estate	Car Parking	Regeneration	Total
	£000	£000	£000	£000	£000
Revenue	4,578	1,414	511	-	6,503
Gross profit prior to non-recurring items	971	946	318	(99)	2,136
Segmental Operating Profit before Fair value adjustment and unallocated expenses	971	946	318	(99)	2,136
Fair value adjustment on investment properties and fixed assets	(221)	(405)	-	-	(626)
					1,510
Unallocated:
Administrative expenses					(1,374)
Exceptional costs of change in ownership					(1,741)
Operating profit					(1,605)
Financial income					-
Financial expense					(897)
Profit before tax from continuing activities					(2,502)
Taxation					304
Profit for the year from continuing operations					(2,198)

Depreciation charge
Marine					297
Car Parking					12
Administration					16
					325

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)
Profit before tax from continuing activities					53
Taxation					(13)
Profit for the year from continuing operations					40

Depreciation charge
Marine					308
Car Parking					12
Administration					16
					336

Assets and liabilities
	2018 £000	2017 £000
Segment assets:
Marine	20,882	22,865
Real Estate	19,460	20,165
Car Parking	4,233	4,178
Regeneration	21,414	20,668
Total segment assets	65,989	67,876
Unallocated assets:
Property, plant & equipment	78	100
Trade & other receivables	415	432
Cash and cash equivalents	2,767	686
Total assets	69,249	69,094

	2018 £000	2017 £000
Segment liabilities:
Marine	1,858	2,361
Real Estate	705	531
Car Parking	131	121
Regeneration	938	932
Total segment liabilities	3,632	3,945
Unallocated liabilities:
Bank overdraft & borrowings	24,625	23,161
Trade & other payables	320	129
Financial derivatives	6	76
Deferred tax liabilities	1,338	1,642
Tax payable	-	-
Total liabilities	29,921	28,953
Additions to property, plant and equipment
Marine	227	175
Car Parking	-	120
Unallocated	-	26
Total	227	321

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:

	2018	2017
	£000	£000
Sale of goods	2,289	2,265
Sale of land and property	-	-
Rental income	1,547	1,733
Provision of services	2,667	2,720
	6,503	6,718

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 2018 and the results for the year ended 31 March 2017

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 2018.

The Board of Sutton Harbour Holdings plc approved the release of this audited preliminary announcement on 29 June 2018.

The preliminary financial information has been extracted from the Annual Report and audited Financial Statements for the year ended 31 March 2018, 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

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