SUTTON HARBOUR GROUP PLC — Interim / Quarterly Report 2015

Dec 1, 2015

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RNS Number : 4361H

Sutton Harbour Holdings PLC

01 December 2015

1 December 2015

SUTTON HARBOUR HOLDINGS PLC ("the Group")

Interim results for the six month period to 30 September 2015

Sutton Harbour Holdings plc ("Sutton Harbour", "the Company"), the AIM listed marine and waterfront regeneration specialist, announces its interim results for the six month period to 30 September 2015. 

Financial Highlights

·      Profit before tax of £1.261m (2014: £0.661m);

·      Adjusted* profit before tax £0.249m (2014: £0.155m);

·      Net assets of £41.530m (31 March 2015: £40.459m);

·      Net assets per share 43.1p (31 March 2015: 42.0p);

·      Net debt £22.256m (31 March 2015: £21.458m).

*Excluding fair value adjustments

Operational Highlights

·      Completion of further lettings around Sutton Harbour boosting occupancy rate to 96.2% (31 March 2015: 93.3%)

·      Grant supported infrastructure programme continuing with new chiller project completed November 2015

·      Confirmed that the 2016 Trans Atlantic Race departs from Plymouth and is to be hosted at Sutton Harbour for the second time

Graham Miller, Chairman, commented:

"The Group has successfully improved the profitability and sustainability of core activities.  The renewal of essential operational infrastructure has been, and will continue to be, a key part of this strategy.  The Group remains focused on work towards realisation of key inventory sites, including the former airport site and Sugar House to facilitate a planned reduction in debt in due course."

For further information, please contact:

Sutton Harbour Holdings plc Jason Schofield - Chief Executive Natasha Gadsdon - Finance Director	01752 204186
Arden Partners James Felix	020 7614 5917
Yellow Jersey Philip Ranger	07768 534641

Chairman and Chief Executive's Statement

Revenues and profitability from the core activities of: marine, real estate, and car parking have progressed satisfactorily in the first six months compared to the same period last year. In addition the Group reports the following highlights:

·      Completion of further lettings around Sutton Harbour boosting occupancy rate to 96.2% (31 March 2015: 93.3%)

·      Grant supported infrastructure programme continuing with new chiller project completed November 2015

·      Confirmed that the 2016 Trans Atlantic Race departs from Plymouth and is to be hosted at Sutton Harbour for the second time

Results and Financial Position

The Group reports profit before taxation of £1.261m (2014:£ 0.861m). Excluding fair value adjustments, the adjusted profit before taxation for the first six month period was £0.249m (2014: £0.155m). These results continue to show stable trading from established businesses, although finance charges have increased to £0.552m (2014: £0.524m) as the Group has drawn further on the bank debt facility to fund infrastructure improvements and pre-planning work for new projects.

As at 30 September 2015, net assets were £41.530m (43.1 pence per share), having increased from £40.459m (42.0 pence per share) at 31 March 2015. This increase of £1.071m over the six month period incorporates the results of the independent external valuation of property assets as at 30 September 2015 which gave rise to an overall £1.015m surplus (2014: £0.563m), of which £1.012m (2014: £0.506m) is attributable to the investment property portfolio.

During the first half year net bank debt increased from £21.411m to £21.806m. Overall bank and lease financing increased by £0.798m between 1 April 2015 and 30 September 2015 to fund capital investment, most notably the new ice plant, and the annual working capital peak in the Autumn.  As at 30 September 2015 gearing stood at 53.6% (31 March 2015: 53.0%).  The Group has confirmed banking facilities of £22.5m until October 2016, with positive re-financing discussions underway towards a new facility.

The Board does not recommend the payment of an interim dividend (2014: £nil).

Marine Businesses

The Plymouth Fisheries business at Sutton Harbour has traded well.  The new ice plant is now installed and providing the anticipated growth in revenues and improvement in quality of ice.

The occupancy of the Marina at Sutton Harbour is slightly less than last year after a major customer downscaled bulk berthing requirements at the start of the season.  At King Point Marina, occupancy has exceeded our expectations for the current season.

Real Estate

Occupancy has improved to 96.2% (31 March 2015: 93.3%) following the letting to Boston Tea Party.  Additionally, improving tenant covenant strength and the work to improve lease terms has assisted the increase in the investment portfolio valuation of £1.012m.

Car Parking

The car parks have achieved improved revenues of £0.279m (2014: £0.251m) and operating profit of £0.171m (2014: £0.159m) as a result of successfully adopting seasonal pricing strategies.

Regeneration

Throughout the first half year the Group has been working through the next stage of each of its principal regeneration projects as follows:

Former Airport Site

The Government's review of the former Plymouth airport, which was announced by the Chancellor in the March 2015 budget statement, is now expected to be published in the New Year. We have made various reports and documents available for scrutiny to the Department for Transport. The local planning authority's work on the new planning framework for Plymouth, the 'Plymouth Plan', is progressing and the Group continues to prepare and submit its detailed representations to the consultation process.  The airport closed in December 2011 after notice of closure on grounds of non-viability was ratified by Plymouth City Council at a full council meeting, and in the intervening four years the Company has worked in accordance with its contractual obligations to pursue best value for the site from alternative use.  Plymouth City Council, in its role as the local planning authority, however, continues to express its desire in the draft 'Plymouth Plan' to safeguard the former airport site for general aviation use.  The Company regards this draft policy as unsound as independent evidence repeatedly demonstrates unsuitability on environmental, physical and commercial grounds.  The Group anticipates that land use allocation of the Former Airport Site will be determined by an independent government 'examination in public' in due course as part of the statutory planning process. The City of Plymouth urgently needs to identify suitable, previously developed,  brownfield sites to address its chronic housing shortage with the Former Airport Site fitting this criteria and capable of delivering up to 10% of the new housing requirements together with much needed jobs.

The Group has recently published independently researched information to demonstrate the socio-economic benefits of developing the former airport site and a similar review of the 'Vision' framework for the significant contribution to the city and regional economy that development around Sutton Harbour could deliver. Realisation of the value carried in the Former Airport Site would accelerate the delivery of the development opportunities around the Harbour

Sugar House, East Quay

The Group is working on a new proposal comprising a mix of residential, student accommodation, car parking and commercial uses for this site. The most marketable and deliverable scheme will be formulated prior to approaching potential funding and delivery partners to optimise the risk/reward profile for the Group.

'The Boardwalk' at Vauxhall Quay

The Group previously reported that this 7,800 sq ft scheme has been granted planning consent.  Pre-construction works are currently in progress to test ground conditions and seabed ecology to gain the necessary additional statutory consents.  The Group has agreed heads of terms with potential occupiers on a pre-let basis.

Outlook

The Group has successfully improved the profitability and sustainability of core activities.  The renewal of essential operational infrastructure has been, and will continue to be, a key part of this strategy.  The Group remains focused on work towards realisation of key inventory sites, including the Former Airport Site and Sugar House to facilitate a planned reduction in debt in due course.

Graham S Miller                                 Jason W H Schofield

Chairman                                             Chief Executive

01 December 2015

Consolidated Statement of Comprehensive Income	Note	6 months to 30 September 2015 (unaudited) £000	6 months to 30 September 2014 (unaudited) £000	Year Ended 31 March 2015 (audited) £000
Revenue	3	3,674	3,837	6,955
Cost of sales before impairment of assets		(2,209)	(2,513)	(4,528)
Impairment of assets		-	-	(403)
Cost of Sales		(2,209)	(2,513)	(4,931)
Gross Profit		1,465	1,324	2,024
Fair value adjustment on investment property		1,012	506	917
Administrative expenses		(664)	(645)	(1,153)
Operating profit from continuing operations	3	1,813	1,185	1,788
Financial income		-	-	1
Financial expense		(552)	(524)	(928)
Net financing costs		(552)	(524)	(927)
Profit before tax from continuing operations	3	1,261	661	861
Taxation charge on profit from continuing operations	4	(252)	(132)	(206)
Profit from continuing operations		1,009	529	655
Basic earnings per share	6	1.05p	0.55p	0.68p
Diluted earnings per share	6	1.05p	0.55p	0.68p

		6 months to 30 September 2015 (unaudited) £000	6 months to 30 September 2014 (unaudited) £000	Year Ended 31 March 2015 (audited) £000
Profit from continuing operations		1,009	529	655
Other comprehensive income
Continuing operations:
Revaluation of property, plant and equipment		3	57	1,271
Deferred taxation on income and expenses recognised directly in the       consolidated statement of comprehensive income		-	-	-
Effective portion of changes in fair value of cash flow hedges		59	29	(21)
Total other comprehensive income		62	86	1,250
Total comprehensive income for the period attributable to equity shareholders		1,071	615	1,905

Consolidated Balance Sheet	Note	As at 30 September 2015 (unaudited) £000	As at 30 September 2014 (unaudited) £000	As at 31 March 2015 (audited) £000
Non-current assets
Property, plant and equipment	7	28,741	27,691	29,479
Investment property	7	18,530	16,055	16,605
		47,271	43,746	46,084
Current assets
Inventories		20,012	19,809	19,894
Trade and other receivables		1,645	1,996	1,527
Cash and cash equivalents	8	154	166	239
Tax recoverable		26	-	17
		21,837	21,971	21,677
Total assets	3	69,108	65,717	67,761
Current liabilities
Other interest-bearing loans and borrowings		-	-	-
Trade and other payables		1,126	1,809	1,241
Finance lease liabilities		103	19	19
Deferred income		981	907	1,504
Provisions	9	44	33	48
		2,254	2,768	2,812
Non-current liabilities
Other interest-bearing loans and borrowings		21,960	21,245	21,650
Finance lease liabilities		347	38	28
Deferred government grants		1,018	767	994
Deferred tax liabilities		1,789	1,463	1,536
Provisions	9	116	164	129
Derivative financial instruments		94	103	153
		25,324	23,780	24,490
Total liabilities	3	27,578	26,548	27,302
Net assets		41,530	39,169	40,459
Issued capital and reserves attributable to owners of the parent
Share capital		16,069	16,069	16,069
Share premium		5,368	5,368	5,368
Other reserves		14,600	13,374	14,538
Retained earnings		5,493	4,358	4,484
Total equity		41,530	39,169	40,459

Consolidated Statement of Changes in Equity	Share capital	Share premium	Revaluation reserve	Merger reserve	Hedging reserve	Retained earnings	TOTAL
			----------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 period	-	-	-	-	-	529	529
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	57	-	-	-	57
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	29	-	29
Total other comprehensive income/(expense)  - period ended 30 September 2014	-	-	57	-	29	-	86
Total comprehensive income/(expense) - period ended 30 September 2014	-	-	57	-	29	529	615
Balance at 30 September 2014	16,069	5,368	9,606	3,871	(103)	4,358	39,169
Balance at 1 October 2014	16,069	5,368	9,606	3,871	(103)	4,358	39,169
Comprehensive income/(expense)
Profit for the period	-	-	-	-	-	126	126
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	1,214	-	-	-	1,214
Deferred tax on revaluation of property, plant and equipment	-	-	-	-	-	-	-
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	(50)	-	(50)
Total other comprehensive income/(expense)  - period ended 31 March 2015	-	-	1,214	-	(50)	-	1,164
Total comprehensive income/(expense) - period ended 31 March 2015	-	-	1,214	-	(50)	126	1,290
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 period	-	-	-	-		1,009	1,009
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	3	-	-	-	3
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	59	-	59
Total other comprehensive income/(expense)  - period ended 30 September 2015	-	-	3	-	59	-	62
Total comprehensive income/(expense) - period ended 30 September 2015	-	-	3	-	59	1,009	1,071
As at 30 September 2015	16,069	5,368	10,823	3,871	(94)	5,493	41,530

Consolidated Cash Flow Statement	Note	6 months to 30 September 2015 (unaudited) £000	6 months to 30 September 2014 (unaudited) £000	Year Ended 31 March 2015 (audited) £000
Cash generated from continuing operating activities	10	17	85	1,205
Cash generated from total operating activities		17	85	1,205
Tax received		-	-	-
Net cash generated from/(used in) operating activities		17	85	1,205
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		-	1	-
Expenditure on investment property		(5)	-	(167)
Expenditure on property, plant and equipment		(292)	(553)	(1,483)
Interest received			-	1
Net cash used in investing activities		(297)	(552)	(1,649)
Cash flows from financing activities
Interest paid		(553)	(524)	(1,050)
Loan drawdowns/(repayment of borrowings)		310	815	1,220
Finance lease receipts		403	57	-
Grants received		35	80	308
Net cash generated from financing activities		195	428	478
Net decrease in cash and cash equivalents		(85)	(39)	34
Cash and cash equivalents at beginning of period		239	205	205
Cash and cash equivalents at end of period	8	154	166	239

1.      General information

This consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.  Statutory accounts for the year ended 31 March 2014 were approved by the Board of Directors on 17 June 2014 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain any statement under section 498 of the Companies Act 2006.

Copies of the Group's financial statements are available from the Company's registered office, Tin Quay House, Sutton Harbour, Plymouth, PL4 0RA and on the Company's website www.sutton-harbour.co.uk.

This consolidated interim financial information has not been audited.

2.      Basis of preparation

The consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2015, which have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretation Committee (IFRIC) interpretations as endorsed by the European Union, and those parts of the Companies Acts 2006 as applicable to companies reporting under IFRS.

Accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2015, as described in those annual financial statements.

Adoption of new International Financial Reporting Standards

The following new standards, amendments to standards or interpretations have been issued, but are not effective for the financial year beginning 1 April 2015 and have not been adopted early:

Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38): *1 January 2016

Amendment to IFRS 11 Joint Arrangements:  *1 January 2016

IFRS 15 Revenue from Contracts with Customers: *1 January 2017

IFRS 9 Financial Instruments: * 1 January 2018

* mandatory effective date is periods commencing on or after

Accounting estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements that are not readily apparent from other sources. Actual results 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 the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.

There have been no significant changes to estimates and judgements since the signing of the financial statements for the year ended 31 March 2015.

3.   Segment information

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 having only one geographical segment, with all operations being carried out in the United Kingdom.

The Board of Directors considers the performance of the operating segments using operating profit. The segment information provided to the Board of Directors for the reportable segments for the period ended 30 September 2014 is as follows:

6 months to 30 September 2015	Marine	Real Estate	Car Parking	Regeneration	Total
	£000	£000	£000	£000	£000
Revenue	2,617	778	279	-	3,674
Gross profit prior to non-recurring items
Non-recurring items:	742	616	171	(64)	1,465
Impairment of assets, onerous leases	-	-	-	-	-
Gross profit					1,465
Fair value adjustment on investment property	-	1,012	-	-	1,012
Unallocated:
Administrative expenses					(664)
Operating profit from continuing operations					1,813
Other gains and losses					-
Financial income					(552)
Financial expense
Profit before tax from continuing operations					1,261
Taxation					(252)
Profit for the year from continuing operations					1,009
Depreciation charge
Marine					112
Real Estate					-
Car Parking					3
Regeneration					-
Administration					8
					123

3.  Segment Information (continued)

6 months to 30 September 2014	Marine	Real Estate	Car Parking	Regeneration	Total
	£000	£000	£000	£000	£000
Revenue	2,773	813	251	-	3,837
Gross profit prior to non-recurring items	712	519	159	(66)	1,324
Non-recurring items:
Onerous leases	-	-	-	-	-
Gross profit	712	519	159	(66)	1,324
Fair value adjustment on investment property	-	506	-	-	506
	712	1,025	159	(66)	1,830
Unallocated:
Administrative expenses					(645)
Operating profit from continuing operations					1,185
Other gains and losses
Financial income					-
Financial expense					(524)
Profit before tax from continuing operations					661
Taxation					(132)
Profit for the year from continuing operations					529
Depreciation charge
Marine					28
Real Estate					-
Car Parking					4
Regeneration					-
Administration					10
					42

3.  Segment Information (continued)

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 assets	(303)	-	-	(100)	(403)
Gross profit	1,142	971	240	(329)	2,024
Fair value adjustment on investment property	-	864	53	-	917
Unallocated:
Administrative expenses					(1,153)
Operating profit from continuing operations					1,788
Other gains and losses
Financial income					1
Financial expense					(928)
Profit before tax from continuing operations					861
Taxation					(206)
Profit for the year from continuing operations					655
Depreciation charge
Marine					118
Real Estate					-
Car Parking					7
Regeneration					-
Administration					18
					143

	30 September 2015	30 September 2014	31 March 2015
	£000	£000	£000
Segment assets:
Marine	25,623	24,763	26,348
Real estate	19,103	16,431	17,012
Car Parking	3,652	3,444	3,577
Regeneration	20,116	20,520	20,179
Total segment assets	68,494	65,158	67,116
Unallocated assets:
Property, plant and equipment	131	90	123
Trade & other receivables	329	303	283
Cash & cash equivalents	154	166	239
Total assets	69,108	65,717	67,761

3.  Segment Information (continued)

	30 September 2015	30 September 2014	31 March 2015
	£000	£000	£000
Segment liabilities:
Marine	1,575	1,741	2,058
Real estate	609	861	804
Car Parking	39	51	67
Regeneration	846	878	933
Total segment liabilities	3,069	3,531	3,862
Unallocated liabilities:
Bank overdraft & borrowings	22,410	21,245	21,650
Trade & other payables	215	205	101
Financial Derivatives	94	103	153
Tax payable	1	1	-
Deferred tax liabilities	1,789	1,463	1,536
Total liabilities	27,578	26,548	27,302

Unallocated assets included in total assets and unallocated liabilities included in total liabilities are not split between segments as these items are centrally managed.

4. Taxation

The Company has applied an effective tax rate of 20% (2014: 20%) based on management's best estimate of the tax rate expected for the full financial year and is reflected in a movement in deferred tax.

5. Dividends

The Board of Directors do not propose an interim dividend (2014: nil).

6. Earnings per share

	6 months to 30 September 2015 (unaudited) pence	6 months to 30 September 2014 (unaudited) pence	Year Ended 31 March 2015 (audited) pence
Continuing operations
Basic earnings per share	1.05	0.55	0.68
Diluted earnings per share	1.05	0.55*	0.68

Basic Earnings per Share:

Basic earnings per share have been calculated using the profit for the period of £1,009,000 (2014: profit £529,000, year ended 31 March 2015 profit £655,000). The average number of ordinary shares in issue, excluding those options granted under the SAYE scheme, of 96,277,086 (2014: 96,277,086; year ended 31 March 2015: 96,277,086) has been used in our calculation.

Diluted Earnings per Share:

Diluted earnings per share uses an average number of 96,277,086 (2014: 96,277,086; year ended 31 March 2015: 96,277,086) ordinary shares in issue, and takes account of the outstanding options under the SAYE scheme in accordance with IAS 33 'Earnings per share'.

* For the 6 months ended 30 September 2015, the year ended 31 March 2015, and the 6 months ended 30 September 2014, there is no adjustment for the effect of all dilutive potential ordinary shares because the exercise prices of the options are greater than the average market price of the shares during the year.

7. Property valuation

Freehold land and buildings and investment property have been independently valued by Jones Lang LaSalle as at 30 September 2015, in accordance with the Practice Statements in the Valuations Standards (The Red Book) published by the Royal Institution of Chartered Surveyors. 

A further valuation will be commissioned for the year ending 31 March 2015, as in previous years.

8. Cash and cash equivalents

	As at 30 September 2015 (unaudited) £000	As at 30 September 2014 (unaudited) £000	As at 31 March 2015 (audited) £000
Cash and cash equivalents per balance sheet and cash flow statement	154	166	239

9. Provisions

	Onerous leases	Total
	£000	£000
Balance at 1 April 2014	210	210
Provisions made during the year	-	-
Provisions utilised during the year	(13)	(13)
Balance at 30 September 2014	197	197
Provisions made during the year	-	-
Provisions utilised during the year	(20)	(20)
Balance at 31 March 2015	177	177
Provisions made during the year	-	-
Provisions utilised during the year	(17)	(17)
Balance at 30 September 2015	160	160
Current	44	44
Non-current	116	116
	160	160

10. Cash flow statement

	6 months to 30 September 2015 (unaudited) £000	6 months to 30 September 2014 (unaudited) £000	Year Ended 31 March 2015 (audited) £000
Cash flows from operating activities
Profit for the period	1,009	529	655
Adjustments for:
Taxation	252	132	206
Financial income	-	-	(1)
Financial expense	552	524	928
Fair value adjustments on owner occupied and investment property	(1,012)	(506)	(864)
Revaluation of property, plant and equipment	-	-	(53)
Depreciation	123	42	143
Amortisation of grants	(8)	(2)	(4)
Impairment of development property	-	-	403
Loss on sale of property, plant and equipment	-	7	9
Cash generated from operations before changes in working capital and provisions	916	726	1,422
Increase in inventories	(118)	(121)	(207)
(Increase)/decrease in trade and other receivables	(126)	(424)	28
(Decrease)/increase in trade and other payables	(115)	440	(78)
(Decrease)/increase in deferred income	(523)	(523)	73
Decrease in provisions	(17)	(13)	(33)
Cash generated from operations	17	85	1,205

11.  Capital Commitments

At 30 September 2015 the Group was contractually committed to construct new and refurbished chillers at a further cost of £197,000.  Grant match funding of up to 50% is available to offset these costs.

This information is provided by RNS

The company news service from the London Stock Exchange

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