SUTTON HARBOUR GROUP PLC — Interim / Quarterly Report 2017

Dec 15, 2016

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RNS Number : 8910R

Sutton Harbour Holdings PLC

15 December 2016

15 December 2016

SUTTON HARBOUR HOLDINGS PLC ("the Group")

Interim results for the six month period to 30 September 2016

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 2016. 

Financial Highlights

·      Adjusted* profit before tax £0.232m (2015: £0.249m);

·      Loss before tax of £0.038m (2015: profit of £1.261m);

·      Net assets of £40.025m (31 March 2016: £40.869m);

·      Net assets per share 41.6p (31 March 2016: 42.4p);

·      Net debt £22.737m (31 March 2016: £22.213m).

*Excluding fair value adjustments

Highlights

·      Further representation submitted to Joint Local Plan public consultation in respect of Former Airport Site and Sutton Harbour

·      Marketing process underway for Sugar House (East Quay)

·      Sutton Harbour hosted the start of the Trans Atlantic Race 2016

·      Appointed Rothschild to undertake a strategic review of options (21 April 2016) which could include a sale of the Company

Graham Miller, Chairman, commented:

"The Group has clear priorities: to pursue vigorously the planning allocation for the Former Airport Site, to accelerate the progress of other regeneration projects and to grow revenue and profits at the marine businesses and the investment property portfolio."

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 Adviser) John Byrne Stephen Griffiths	020 7280 5000
Yellow Jersey Charles Goodwin	07747 788221

Chairman and Chief Executive's Statement

Excluding fair value adjustments, the adjusted profit before taxation for the six month period ending 30 September 2016 was £0.232m (2015: £0.249m). Gross profit generated by the trading activities (excluding impairment of assets) was £1.513m compared with £1.465m for the comparative period in 2015.

As at 30 September 2016, net assets were £40.025m (41.6p per share), having decreased slightly from £40.869m at 31 March 2016 (42.4p per share). The decrease of £0.844m (0.8p per share) incorporates the results of the independent property portfolio valuation as at 30 September 2016 which, despite a valuation adjustment surplus of £0.283m (2015: £1.012m) attributable to the investment property portfolio, gave rise to an overall deficit of £1.012m (2015: surplus £1.015m). This reflects the owner occupied portfolio valuation deficit of £1.295m (2015: surplus: £0.003m) due to more challenging trading conditions for the Marina at Sutton Harbour with general valuation sentiment towards marina assets impacting King Point Marina. The Fisheries valuation was unchanged and car parks showed a surplus in the six-month period since the previous external valuation.

Net debt (comprising net bank debt and outstanding finance leases) at 30 September 2016 increased slightly in the period to £22.737m from £22.213m at 31 March 2016. The increase in debt reflects investment into regeneration projects and also the annual cash cycle. This peaks in March annually when rents and marinas fees paid in advance are received. Gearing stood at 56.8% at 30 September 2016, up from 54.4% at 31 March 2016.

The Board does not recommend the payment of an interim dividend.

Marine Businesses

Plymouth Fisheries at Sutton Harbour has traded well in the first half with landings in line with the same period last year. Trading so far in the second half year continues to be encouraging. Following the completion of the ice plant and chill chain upgrades the Group plans further investment alongside proposed grant funding to ensure Plymouth Fisheries retains its market leading position.

The Marina at Sutton Harbour hosted the start of the Transat race in April 2016 and other events in the summer season. The Group continues to invest in improved facilities for berth holders such as WiFi connectivity at both marinas. Occupancy at King Point Marina continues to grow and additional pontoons will shortly be installed to extend berthing space. The Marina at Sutton Harbour has experienced a modest drop in occupancy and a plan has been put in place in response.

Real Estate

At the start of the year four tenants served notice resulting in occupancy falling to 87%. The vacant premises are being marketed with negotiations in progress for the first new occupation expected early in the New Year. A number of rent reviews for existing tenancies are currently underway and are expected to result in an overall rental uplift.

Car Parking

The car parks showed strong revenue growth during the summer season. Further improvements to overall presentation and signage will take place over the winter months, following the success of the new and efficient LED lighting installation.

Regeneration

An update on the major regeneration projects currently being promoted is as follows:

Former Airport Site

The final Department for Transport Review of the viability of re-opening the former Plymouth Airport is still awaited and the Group will update investors as soon as it is available. The case for alternative uses for the site to create much needed homes, jobs and first class community sports facilities in conjunction with a significant infrastructure upgrade to the University of St Mark and St John is compelling and clearly in the best interests of the people of Plymouth. The Plymouth and South West Devon Joint Local Plan will be subject to an independent Government Inspector's scrutiny at the 'Examination in Public' ("EiP") currently scheduled for Autumn 2017. The Group's case for justifying alternative use of the former airport site will set out clearly before the independent inspector at the EiP.

The Group has freehold and long leasehold legal interests at the site and shareholders can be confident that the Board remains determined to realise the optimum value from this strategic asset.

Sugar House, East Quay

The Group is actively marketing the site to potential joint venture partners for the development of a residential led scheme together with the potential for car parking, retail, restaurant and student accommodation.

'The Boardwalk' at Vauxhall Quay

Following the success in achieving detailed planning permission for 'The Boardwalk' scheme, a pier-like structure arranged as two large restaurant units and a small pavilion unit totalling approximately 7,800 sq ft (724.3m2), the Group is still awaiting final consents from the Marine Management Organisation which it anticipates will be forthcoming during the early part of 2017. Strong interest remains from potential tenants on a pre-let basis.

Outlook

The Board has continued to work with its advisers, Rothschild, on the Strategic Review of Options for the future of the Group. The process remains ongoing and the Board will update shareholders in due course.

The Group has clear priorities: to pursue vigorously the planning allocation for the Former Airport Site, to accelerate the progress of other regeneration projects and to grow revenue and profits at the marine businesses and from the investment property portfolio.

Graham S Miller                                 Jason W H Schofield

Chairman                                             Chief Executive

15 December 2016

Consolidated Statement of Comprehensive Income	Note	6 months to 30 September 2016 (unaudited) £000	6 months to 30 September 2015 (unaudited) £000	Year Ended 31 March 2016 (audited) £000
Revenue	3	3,633	3,674	6,509
Cost of sales before impairment of assets		(2,120)	(2,209)	(3,960)
Impairment of assets		(553)	-	(272)
Cost of Sales		(2,673)	(2,209)	(4,232)
Gross Profit		960	1,465	2,277
Administrative expenses
Fair value adjustment on investment property		283	1,012	1,452
Administrative expenses		(770)	(664)	(1,082)
Operating profit from continuing operations	3	473	1,813	2,647
Financial income		-	-	2
Financial expense		(511)	(552)	(1,059)
Net financing costs		(511)	(552)	(1,057)
(Loss)/profit before tax from continuing operations	3	(38)	1,261	1,590
Taxation credit/(charge) on profit from continuing operations	4	7	(252)	(93)
(Loss)/profit from continuing operations		(31)	1,009	1,497
Basic (loss)/earnings per share	6	(0.03)p	1.05p	0.68p
Diluted (loss)/earnings per share	6	(0.03)p	1.05p	0.68p

		6 months to 30 September 2016 (unaudited) £000	6 months to 30 September 2015 (unaudited) £000	Year Ended 31 March 2016 (audited) £000
(Loss)/profit from continuing operations		(31)	1,009	1,497
Other comprehensive (expense)/income
Continuing operations:
Revaluation of property, plant and equipment		(742)	3	(1,167)
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		(71)	59	80
Total other comprehensive (expense)/income		(813)	62	(1,087)
Total comprehensive (expense)/ income for the period attributable to equity shareholders		(844)	1,071	410

Consolidated Balance Sheet	Note	As at 30 September 2016 (unaudited) £000	As at 30 September 2015 (unaudited) £000	As at 31 March 2016 (audited) £000
Non-current assets
Property, plant and equipment	7	26,153	28,741	27,295
Investment property	7	19,460	18,530	19,350
		45,613	47,271	46,645
Current assets
Inventories		20,389	20,012	20,097
Trade and other receivables		1,781	1,645	2,038
Cash and cash equivalents	8	123	154	686
Tax recoverable		37	26	19
		22,330	21,837	22,840
Total assets	3	67,943	69,108	69,485
Current liabilities
Other interest-bearing loans and borrowings		-	-	-
Trade and other payables		1,010	1,126	1,118
Finance lease liabilities		100	103	105
Deferred income		979	981	1,542
Provisions	9	26	44	53
Derivative financial instruments		-	-	33
		2,115	2,254	2,851
Non-current liabilities
Other interest-bearing loans and borrowings		22,500	21,960	22,500
Finance lease liabilities		260	347	294
Deferred government grants		1,193	1,018	1,214
Deferred tax liabilities		1,622	1,789	1,629
Provisions	9	84	116	88
Derivative financial instruments		144	94	40
		25,803	25,324	25,765
Total liabilities	3	27,918	27,578	28,616
Net assets		40,025	41,530	40,869
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		12,638	14,600	13,451
Retained earnings		5,950	5,493	5,981
Total equity		40,025	41,530	40,869

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 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
Balance at 30 September 2015	16,069	5,368	10,823	3,871	(94)	5,493	41,530
Balance at 1 October 2015	16,069	5,368	10,823	3,871	(94)	5,493	41,530
Comprehensive income/(expense)
Profit for the period	-	-	-	-	-	488	488
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	(1,170)	-	-	-	(1,170)
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	21	-	21
Total other comprehensive income/(expense)  - period ended 31 March 2016	-	-	(1,170)	-	21	-	(1,149)
Total comprehensive income/(expense) - period ended 31 March 2016	-	-	(1,170)	-	21	488	(661)
Balance at 31 March 2016	16,069	5,368	9,653	3,871	(73)	5,981	40,869
Balance at 1 April 2016	16,069	5,368	9,653	3,871	(73)	5,981	40,869
Comprehensive income/(expense)
Loss for the period	-	-	-	-	-	(31)	(31)
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	(742)	-	-	-	(742)
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	(71)	-	(71)
Total other comprehensive income/(expense)  - period ended 30 September 2016	-	-	(742)	-	(71)	-	(813)
Total comprehensive income/(expense) - period ended 30 September 2016	-	-	(742)	-	(71)	(31)	(844)
As at 30 September 2016	16,069	5,368	8,911	3,871	(144)	5,950	40,025

Consolidated Cash Flow Statement	Note	6 months to 30 September 2016 (unaudited) £000	6 months to 30 September 2015 (unaudited) £000	Year Ended 31 March 2016 (audited) £000
Cash generated from continuing operating activities	10	99	17	621
Cash generated from total operating activities		99	17	621
Tax received		-	-	-
Net cash generated from operating activities		99	17	621
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		-	-	-
Net expenditure on investment property		-	(5)	(8)
Expenditure on property, plant and equipment		(111)	(292)	(561)
Interest received				2
Net cash used in investing activities		(111)	(297)	(567)
Cash flows from financing activities
Interest paid		(512)	(553)	(1,059)
Loan drawdowns/(repayment of borrowings)		-	310	850
Net finance lease (payments)/receipts		(39)	403	353
Proceeds of government grants		-	35	249
Net cash generated from financing activities		(551)	195	393
Net (decrease)/increase in cash and cash equivalents		(563)	(85)	447
Cash and cash equivalents at beginning of period		686	239	239
Cash and cash equivalents at end of period	8	123	154	686

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 2016 were approved by the Board of Directors on 27 June 2016 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 2016, 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 2016, 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 2016 and have not been adopted early:

IFRS 15 Revenue from Contracts with Customers: *1 January 2018

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.

The only significant change to estimates and judgements since the signing of the financial statements for the year ended 31 March 2016 is that King point Marina is now carried at an independent external valuation rather than its value in use.

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 2016 is as follows:

6 months to 30 September 2016	Marine	Real Estate	Car Parking	Regeneration	Total
	£000	£000	£000	£000	£000
Revenue	2,529	808	296	-	3,633
Gross profit prior to non-recurring items	761	628	180	(56)	1,513
Non-recurring items:
Impairment of assets	(553)	-	-	-	(553)
Segmental Operating Profit before Fair value adjustment and unallocated expenses	208	628	180	(56)	960
Fair value adjustment on investment properties and fixed assets	-	111	172	-	283
					1,243
Unallocated:
Administrative expenses					(770)
Operating profit from continuing operations					473
Financial income					-
Financial expense					(511)
Loss before tax from continuing operations					(38)
Taxation					7
Loss for the year from continuing operations					(31)
Depreciation charge
Marine					142
Real Estate					-
Car Parking					3
Regeneration					-
Administration					16
					161

3.  Segment Information (continued)

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	742	616	171	(64)	1,465
Non-recurring items:
Impairment of assets, onerous leases	-	-	-	-	-
Segmental Operating Profit before Fair value adjustment and unallocated expenses	742	616	171	(64)	1,465
Fair value adjustment on investment properties and fixed assets	-	1,012	-	-	1,012
					2,477
Unallocated:
Administrative expenses					(664)
Operating profit from continuing operations					1,813
Financial income					-
Financial expense					(552)
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)

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 assets	-	-	-	(272)	(272)
Segmental Operating Profit before Fair value adjustment and unallocated expenses	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 from continuing operations					2,647
Financial income					2
Financial expense					(1,059)
Profit before tax from continuing operations					1,590
Taxation					(93)
Profit for the year from continuing operations					1,497
Depreciation charge
Marine					231
Real estate					-
Car Parking					6
Regeneration					-
Administration					36
					273

	30 September 2016	30 September 2015	31 March 2016
	£000	£000	£000
Segment assets:
Marine	22,591	25,623	24,312
Real estate	20,106	19,103	20,014
Car Parking	3,995	3,652	3,620
Regeneration	20,506	20,116	20,207
Total segment assets	67,198	68,494	68,153
Unallocated assets:
Property, plant and equipment	107	131	121
Trade & other receivables	515	329	525
Cash & cash equivalents	123	154	686
Total assets	67,943	69,108	69,485

3.  Segment Information (continued)

	30 September 2016	30 September 2015	31 March 2016
	£000	£000	£000
Segment liabilities:
Marine	2,128	1,575	2,329
Real estate	387	609	622
Car Parking	64	39	78
Regeneration	843	846	825
Total segment liabilities	3,422	3,069	3,854
Unallocated liabilities:
Bank overdraft & borrowings	22,500	22,410	22,500
Trade & other payables	230	215	560
Financial Derivatives	144	94	73
Tax payable	-	1	-
Deferred tax liabilities	1,622	1,789	1,629
Total liabilities	27,918	27,578	28,616

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% (2015: 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 (2015: nil).

6. Earnings per share

	6 months to 30 September 2016 (unaudited) pence	6 months to 30 September 2015 (unaudited) pence	Year Ended 31 March 2016 (audited) pence
Continuing operations
Basic earnings per share	(0.03)	1.05	1.55
Diluted earnings per share*	(0.03)	1.05	1.55

Basic Earnings per Share:

Basic earnings per share have been calculated using the loss for the period of £31,000 (2015: profit £1,009,000, year ended 31 March 2016 profit £1,497,000). The average number of ordinary shares in issue, excluding those options granted under the SAYE scheme, of 96,277,086 (2015: 96,277,086; year ended 31 March 2016: 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 (2015: 96,277,086; year ended 31 March 20156 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 2016, the year ended 31 March 2016, and the 6 months ended 30 September 2015, 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 2016, 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 2017, as in previous years.

8. Cash and cash equivalents

	As at 30 September 2016 (unaudited) £000	As at 30 September 2015 (unaudited) £000	As at 31 March 2016 (audited) £000
Cash and cash equivalents per balance sheet and cash flow statement	123	154	686

9. Provisions

	Onerous leases	Total
	£000	£000
Balance at 1 April 2015	177	177
Provisions made during the year	-	-
Provisions utilised during the year	(17)	(17)
Balance at 30 September 2015	160	160
Provisions made during the year	-	-
Provisions utilised during the year	(19)	(19)
Balance at 31 March 2016	141	141
Provisions made during the year	-	-
Provisions utilised during the year	(31)	(31)
Balance at 30 September 2016	110	110
Current	26	26
Non-current	84	84
	110	110

10. Cash flow statements

	6 months to 30 September 2016 (unaudited) £000	6 months to 30 September 2015 (unaudited) £000	Year Ended 31 March 2016 (audited) £000
Cash flows from operating activities
(Loss)/profit for the period	(31)	1,009	1,497
Adjustments for:
Taxation	(7)	252	93
Financial income	-	-	(2)
Financial expense	511	552	1,009
Fair value adjustments on owner occupied and investment property	(111)	(1,012)	(1,829)
Revaluation of property, plant and equipment	(172)	-	377
Depreciation	161	123	273
Amortisation of grants	(23)	(8)	(29)
Impairment of development property	553	-	66
Loss on sale of property, plant and equipment	11	-	6
Cash generated from operations before changes in working capital and provisions	892	916	1,461
Increase in inventories	(332)	(118)	(202)
Decrease/(increase) in trade and other receivables	240	(126)	(514)
Decrease in trade and other payables	(107)	(115)	(126)
(Decrease)/increase in deferred income	(563)	(523)	38
Decrease in provisions	(31)	(17)	(36)
Cash generated from operations	99	17	621

11.  Capital Commitments

At 30 September 2016 the Group has no capital commitments.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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