SUTTON HARBOUR GROUP PLC — Earnings Release 2019

Jul 11, 2019

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RNS Number : 1544F

Sutton Harbour Group PLC

11 July 2019

11 July 2019

SUTTON HARBOUR GROUP PLC ("the Group")

Preliminary results for the year ended 31 March 2019

Sutton Harbour Group plc ("Sutton Harbour", "the Company"), the AIM listed waterfront regeneration and destination specialist, announces preliminary results for the year ended 31 March 2019.

Highlights

·      In November 2018, the Company received planning approval for two new residential schemes at Sutton Harbour: 'Harbour Arch Quay' and 'Sugar Quay' together with approval for a two storey extension to the existing multi-storey Harbour Car Park.

·      In December 2018 the Company held a general meeting at which shareholders approved the issue of 10,344,951 new ordinary shares via an Open Offer to existing shareholders. This issue was fully subscribed and resulted in a fresh equity injection of £3 million (before costs) to be used in the ongoing development of the Company including pre-construction costs in respect of planning consented schemes 'Harbour Arch Quay' and 'Sugar Quay' and to meet capital maintenance costs and other funding requirements across its ordinary and development activities.

·      In March 2019, the Government Inspectors' report concerning the Local Authority's new planning framework was issued which affirmed safeguarding for a period not to exceed five years of the former airport site for possible general aviation use.

·      In April 2019, the Company changed its name to Sutton Harbour Group plc and is currently rolling out its new corporate identity

Financial

·      Adjusted profit before tax* £0.072m (2018: loss £0.136m)

·      Net financing costs £0.901m (2018: £0.897m)

·      Net Assets £45.7m (2017: £39.3m)

·      Valuation of property portfolio** £45.7m (2018: £42.7m)

·      Year-end net debt £21.4m (2017: £21.9m)

*Before accounting for fair value adjustments on assets and costs of change in ownership.

**Comprises investment and owner occupied portfolios. Excludes land held as development inventory.

Philip Beinhaker, Executive Chairman, commented:

"The Company has continued to deliver on its vision to be the leading marine, waterfront regeneration and destination specialist in Southern England in accordance with its stated strategy. We have delivered major new planning consents, completed in-depth reviews of other trading activities and put strategic plans for growth in place".

For further information, please contact

Sutton Harbour Group plc Philip Beinhaker - Executive Chairman Natasha Gadsdon - Finance Director	01752 204186
Arden Partners (Nomad and Broker) Paul Shackleton Benjamin Cryer	020 7614 5900

Executive Chairman's Statement

Year Ended 31 March 2019

Shareholder's Overview

·      In November 2018, the Company received planning approval for two new residential schemes at Sutton Harbour: 'Harbour Arch Quay' and 'Sugar Quay' together with approval for a two storey extension to the existing multi-storey Harbour Car Park.

·      In December 2018 the Company held a general meeting at which shareholders approved the issue of 10,344,951 new ordinary shares via an Open Offer to existing shareholders. This issue was fully subscribed and resulted in a fresh equity injection of £3 million (before costs) to be used in the ongoing development of the Company including pre-construction costs in respect of planning consented schemes 'Harbour Arch Quay' and 'Sugar Quay' and to meet capital maintenance costs and other funding requirements across its ordinary and development activities.

·      In March 2019, the Government Inspectors' report concerning the Local Authority's new planning framework was issued which affirmed safeguarding for a period not to exceed five years of the former airport site for possible general aviation use.

·      In April 2019, the Company changed its name to Sutton Harbour Group plc and is currently rolling out its new corporate identity

Results and Financial Position

The adjusted profit before taxation for the year was £0.072m (2018: £0.135m loss) which excludes non-cash fair value adjustments and the costs in connection with the change of ownership. The profit before taxation for the year under review as per the Income Statement, inclusive of the aforementioned adjustments, was £1.516m (2018: £2.502m Loss before taxation).

As at 31 March 2019, net assets were £45.732m (2018: £39.328m), representing 39.4p per share (2018: 37.2p per share). The increase follows the issue of 10,344,951 new ordinary shares at 29 pence each, providing new capital of £3m, before costs of £73,000, and also the valuation of the Company's property assets which gave rise to an overall valuation surplus of £3.084m. Gearing as at 31 March 2019 stood at 46.7% (2018: 55.6%). Net finance costs increased to £0.901m in the year (2018: £0.897m) as the bank borrowing rate had increased by 0.25% and average borrowing compared year to year was higher.

Net debt (including finance leases) decreased to £21.373m at 31 March 2019 from £21.858m at 31 March 2018. Development Inventories increased by £2.281m reflecting the investment required to progress three schemes to planning consented status and a further £0.303m was invested in the Company's infrastructure asset base.

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

Directors and Staff

Early in the financial year Philip Beinhaker was appointed Executive Chairman and Jason Schofield, Chief Executive left the Company in July 2018. The board has advertised a Chief Operating Officer position and intends to announce a new board appointment in the near future. There have been no other changes at board level during the year.

Headcount as at 31 March 2019 decreased to 30 (31 March 2018: 33) as the Company has continued to outsource certain specialist roles following some voluntary resignations.

Operations Report

MARINE

Overall, the marine segment has performed steadily during the year. The Marinas both achieved modest growth in revenue and occupancy and this encouraging trend has continued into the start of the new 2019/20 berthing season. Results from fishing activities were undermined by a poorer level of fish stocks in local waters with landings of fish by value down 23.5% on the previous financial year. Despite lower revenue from fish landing dues, other revenues including fuel sales, ice sales and rentals of property at the Plymouth Fisheries facility held up well during the year under review.

REAL ESTATE AND CAR PARKING

Focused marketing of vacant property has resulted in the occupancy rate increasing to 94% as at 31 March 2019 from 87% as at 31 March 2018. During the year seven new tenancies have been completed, and the Company has been pleased to see more businesses, in both professional businesses services and restaurant sectors, choose Sutton Harbour as a trading base.

Car Parking revenue increased slightly during the year, compared to the previous year. Parking at the Harbour Car Park continued to be affected by the out of action footbridge which links this car park more directly to the eastern side of the harbour where popular attractions including the Barbican and the Hoe are situated. The bridge was returned to full service on 19 April 2019 after a new bearing was fabricated and the structure recommissioned in time for the busier summer season. Early in 2019 the car parks contract with a third party specialist management company was renewed on improved terms.

REGENERATION

Sutton Harbour

The Company gained planning approval for two new landmark residential led schemes for Sutton Harbour in November 2018. The Harbour Arch Quay development of 14 flats and The iconic Sugar Quay building with 170 apartments are both due to start construction by the end of the year. The two storey Harbour Car Park extension, which will accommodate a further 114 parking spaces, is also due to start late 2019, with the additional parking to be available for use in summer 2020. The Company is engaging with local stakeholders, including Plymouth City Council, on events to be held in 2020 to commemorate the 400th anniversary of the departure of the Pilgrim Fathers on the Mayflower vessel to America. The historic port of Sutton Harbour is the focal point for commemorative events and the Company is making ready for the expected high number of visitors to the area.

Former Airport Site

The Company continues to manage and maintain the Former Airport Site which closed in December 2011. The 113 acre site, which is already surrounded by urban development, is ideally located for mixed urban use, and can deliver a sustainable built environment for the economic and social wellbeing of the people of Plymouth. The safeguard of the site for possible general aviation use is provided for the next five years, after which the Government Inspectors consider a prolonged safeguard to be inappropriate due to the value of the land for urban uses. The Company had prepared an initial masterplan for mixed use development for the site and continues to refine this to ensure its formulation as a development programme is deliverable in phases to meet planning framework policy and an aspiration for a new sustainable urban neighbourhood.

SUMMARY AND OUTLOOK

The Company has continued to deliver on its vision to be the leading marine, waterfront regeneration and destination specialist in Southern England in accordance with its stated strategy. We have delivered major new planning consents, completed in-depth reviews of other trading activities and put strategic plans for growth in place.

PHILIP BEINHAKER                             

Executive Chairman                           

10 July 2019

Consolidated Income Statement

For the year ended 31 March 2019

			2019	2018
			£000	£000
Revenue			6,893	6,503
Cost of sales			(4,686)	(4,367)
Gross profit			2,207	2,136
Fair value adjustments on investment properties and fixed assets			1,444	(626)
Administrative expenses			(1,234)	(1,374)
Exceptional costs of change in ownership			-	(1,741)
Operating profit/(loss)			2,417	(1,605)
Finance income			1	-
Finance costs			(902)	(897)
Net finance costs			(901)	(897)
Profit/(loss) before tax from continuing operations			1,516	(2,502)
Taxation credit on profit/(loss) from continuing operations			315	304
Profit/(loss) for the year from continuing operations			1,831	(2,198)
Profit/(loss) for the year attributable to owners of the parent			1,831	(2,198)
Basic and diluted earnings/(loss) per share
from continuing operations			1.68p	(2.24)p

Consolidated Statement of Other Comprehensive Income for the year ended 31 March 2019
		2019	2018
		£000	£000
Profit/(loss) for the year		1,831	(2,198)
Items that will not be reclassified subsequently to profit or loss:
Revaluation of property, plant and equipment		1,640	(1,624)
Items that may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges		6	70
Other comprehensive income for the year, net of tax		1,646	(1,554)
Total comprehensive income for the year attributable to owners of the parent		3,477	(3,752)

Consolidated Balance Sheet

As at 31 March 2019

	2019	2018
	£000	£000
Non-current assets
Property, plant and equipment	26,632	23,973
Investment property	19,425	19,055
Inventories	12,448
	58,505	43,028
Current assets
Inventories	11,119	21,276
Trade and other receivables	2,283	2,170
Cash and cash equivalents	1,296	2,767
Tax recoverable	(5)	8
	14,693	26,221
Total assets	73,198	69,249
Current liabilities
Trade and other payables	1,496	1,633
Finance lease liabilities	122	117
Deferred income	1,398	1,434
Provisions	70	70
Derivative financial instruments	-	6
	3,086	3,260
Non-current liabilities
Bank loans	22,500	24,350
Finance lease liabilities	47	158
Deferred government grants	646	646
Deferred tax liabilities	1,023	1,338
Provisions	164	169
	24,380	26,661
Total liabilities
	27,466	29,921
Net assets	45,732	39,328
Issued capital and reserves attributable to owners of the parent
Share capital	16,266	16,162
Share premium	10,695	7,872
Other reserves	11,696	10,050
Retained earnings	7,075	5,244
Total equity	45,732	39,328

Consolidated Statement of Changes in Equity

For the year ended 31 March 2019

	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 2017	16,069	5,368	7,809		3,871		(76)		7,442	40,483
Comprehensive income/(expense)
Loss for the year	-	-	-		-		-		(2,198)	(2,198)
Other comprehensive 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 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
Balance at 1 April 2018	16,162	7,872	6,185		3,871		(6)		5,244	39,328
Comprehensive income/(expense)
Profit for the year	-	-	-		-		-		1,831	1,831
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	1,640		-		-		-	1,640
Effective portion of changes in fair value of cash flow hedges	-	-	-		-		6		-	6
Total other comprehensive expense			1,640				6			1,646
Total other comprehensive income/(expense)	-	-	1,640		-		6		1,831	3,477
Transactions with owners of the parent
Purchase of shares	104	2,823	-		-		-		-	2,927
Total balance at 31 March 2019	16,266	10,695	7,825		3,871		-		7,075	45,732

Consolidated Cash Flow Statement

For the year ended 31 March 2019

	2019	2018
	£000	£000
Cash used from total operating activities	(1,181)	(886)
Cash flows from investing activities
Net expenditure on investment property	(60)	-
Expenditure on property, plant and equipment	(243)	(227)
Proceeds from sale of plant and equipment	-	12
Net cash used in investing activities	(303)	(215)
Cash flows from financing activities
Proceeds from issue of shares	3,000	2,750
Expenses of share issuance	(73)	(152)
Interest paid	(958)	(897)
Loan (repayment)	(1,850)	-
Loan drawdown	-	1,550
Cash payments of finance leases	(106)	(86)
Net cash generated from financing activities	13	3,165
Net (decrease) / increase in cash and cash equivalents	(1,471)	2,064
Cash and cash equivalents at beginning of the year	2,767	703
Cash and cash equivalents at end of the year	1,296	2,767

Reconciliation of financing activities For the year ended 31 March 2019
	2019	Cash flow	2018	Cash flow	2017
	£000	£000	£000	£000	£000
Bank loans	22,500	(1,850)	24,350	1,550	22,800
Finance leases	169	(106)	275	(86)	361
Long term debt	22,669	(1,956)	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 2019 is as follows:

Year ended 31 March 2019	Marine	Real Estate	Car Parking	Regeneration	Total
	£000	£000	£000	£000	£000
Revenue	4,896	1,474	523	-	6,893
Segmental Operating Profit before Fair value adjustment and unallocated expenses	1,057	941	350	(141)	2,207
Fair value adjustment on investment properties and fixed assets	1,134	310	-	-	1,444
					3,651
Unallocated:
Administrative expenses					(1,234)
Operating profit					2,417
Financial income					1
Financial expense					(902)
Profit before tax from continuing activities					1,516
Taxation					315
Profit for the year from continuing operations					1,831

Depreciation charge
Marine					314
Car Parking					33
Administration					11
					358

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 loss					(1,605)
Financial income					-
Financial expense					(897)
Loss before tax from continuing activities					(2,502)
Taxation					304
Loss for the year from continuing operations					(2,198)

Depreciation charge
Marine					297
Car Parking					12
Administration					16
					325

Assets and liabilities
	2019 £000	2018 £000
Segment assets:
Marine	23,514	20,882
Real Estate	19,892	19,460
Car Parking	4,456	4,233
Regeneration	23,574	21,414
Total segment assets	71,436	65,989
Unallocated assets:
Property, plant & equipment	61	78
Trade & other receivables	405	415
Cash and cash equivalents	1,296	2,767
Total assets	73,198	69,249

	2019 £000	2018 £000
Segment liabilities:
Marine	1,897	1,858
Real Estate	575	705
Car Parking	130	131
Regeneration	1,085	938
Total segment liabilities	3,687	3,632
Unallocated liabilities:
Bank overdraft & borrowings	22,669	24,625
Trade & other payables	87	320
Financial derivatives	-	6
Deferred tax liabilities	1,023	1,338
Tax payable	-	-
Total liabilities	27,466	29,921

Additions to property, plant and equipment
Marine	183	227
Car Parking	22	-
Unallocated	38	-
Total	243	227

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:

	2019	2018
	£000	£000
Sale of goods	2,357	2,289
Rental income and service recharges	1,614	1,547
Provision of services	2,922	2,667
	6,893	6,503

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 2019 and the results for the year ended 31 March 2018

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 2019.

The Board of Sutton Harbour Group plc approved the release of this audited preliminary announcement on 28 June 2019.

The preliminary financial information has been extracted from the Annual Report and audited Financial Statements for the year ended 31 March 2019, 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 Sutton Harbour Office, Guy's Quay, Sutton Harbour, Plymouth, PL4 0ES.

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 rns@lseg.com or visit www.rns.com.

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