REG - Sutton Harbour Grp - Annual General Meeting Statement

Sutton HarbourAnnouncement

14/09/2022 09:15

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RNS Number : 3222Z  Sutton Harbour Group PLC  14 September 2022

14 September 2022

Sutton Harbour Group plc (the "Company")

Annual General Meeting Statement

The Chairman of Sutton Harbour Group plc will issue the following update to
shareholders attending today's AGM.

Since my last update in the Annual Report published in July 2022, I am pleased
to report that Summer trading has been strong, particularly at our marinas
where annual berthing was fully sold, and at our car parks where usage has
returned to pre-Covid levels. Occupancy of rental property has remained robust
to date, although some office tenants, whose leases are close to expiry, are
reconsidering future requirements and this may present an opportunity for
alternative uses within the Company's estate portfolio.

The construction of Harbour Arch Quay is now well underway with the service
core built to full height and the third floor (of eight) now built. Exchanges
have taken place on two (of fourteen apartments) with a further five
reservations in line to progress to exchange.

The refurbishment of Old Barbican Market building is close to completion with
incoming tenants progressing their fit-out works. It expected that two
tenants, where leases are complete, will start trading from the premises next
month. Once complete, the building at the heart of the historic Barbican will
provide a café/bakery, retail store and bar/restaurant, each of high quality,
to add to the overall amenity of the area.

Following on from these new developments, a pipeline of material projects is
ready to continue the stated strategy of value growth to shareholders.

The Company has been in active consultation with the Local Authority and users
over the redevelopment of the Plymouth Fishmarket resulting in the
'pre-application' submission to the Local Planning Authority, which has
recently been approved in principle. This major project will proceed in line
with the Council's Port Strategy for Plymouth and delivery of the
redevelopment will modernise facilities for the fishing industry, improve
access to the National Marine Aquarium, include the presence of a new retail
fishmarket and enhance the vibrancy for a sustainable Sutton Harbour.

Whilst the 14 apartment Harbour Arch Quay development has provided the Company
with current experience in development around Sutton Harbour after more than a
decade's hiatus, the scale of the consented 170 apartment Sugar Quay
development will be transformative. Sugar Quay will be the landmark presence
at Sutton Harbour with its iconic design over 20 storeys and has the scale for
material development returns.

At the request of the Local Authority, the Company has entered into
discussions regarding valuation of the former Plymouth City airport site, on
which the Company has a long unexpired leasehold interest. The Company
recorded the airport site at historical cost on its balance sheet at £13.2m
as at 31 March 2022. However, the Company has maintained the site and carried
the cost of capital invested for nearly eleven years since it was closed. The
present value of the carried cost is approximately £27m and a valuation of
the land on a development basis, prepared for the Company by an expert valuer,
is considerably higher than the present carried cost.  Whether the former
airport site is realised for the Company through a transaction or ultimate
development, the site is expected by the Board to continue to become more
valuable as demand for land in Plymouth for industrial, residential or other
uses continues to increase.

Realisation of Sugar Quay and whatever ultimate use of the former airport site
would create material value for shareholders together with the public benefits
of bold regeneration in urban Plymouth. The timing of these strategic moves
will be dependent on the overall macro-economic environment and the need for
settling of the current uncertainties of rising inflation and cost of capital.

After an encouraging Summer, the Company has prepared for the upcoming
challenges of the second half year. The Company's current power contract
expires on 30 September and the uncertainty and volatility in the energy
markets has prevented the Company's suppliers and brokers from providing a
firm renewal price. The Company will settle a new contract as soon as
possible, but has prepared for the consequences of a sharp increase in energy
costs. A significant proportion of the Company's energy cost is recharged to
tenants and harbour users.

Interest paid by the Company on its bank debt has been steadily increasing in
line with base rate increases. Other loans, including the development finance
for Harbour Arch Quay and related party loans, announced and drawn down in May
2022, are both at fixed rates of interest. At the present time, the Company
has not entered into any interest rate fixing agreements due to the high cost
of doing so, however this remains under monthly review by the Board. The
Company is in discussions with its bankers regarding the extension or renewal
of its current facilities. The Company has also received expressions of
interest from other banks regarding corporate and real estate finance.

Other costs will be impacted by general inflationary pressures although many
of the key cost inputs, including salaries, are now fixed or contracted for
the remainder of the financial year.

I reported on a six-month long programme to replace the lock cills in my July
report. These works are now rescheduled for the next financial year and the
Company is in active discussions with the Environment Agency and harbour user
groups about a revised works timetable with a longstop date of March 2024.

Post the completion of Old Barbican Market and Harbour Arch Quay, the Company
looks forward to the larger strategic developments to deliver long term value
and revenue growth to shareholders.

The Interim Results for the 6 month period to 30 September 2022 are due to be
published in early December 2022.

Enquiries

 Sutton Harbour Group plc                                                      +44 (0) 1752 204186   Philip Beinhaker, Executive Chairman

                                                                                                     Corey Beinhaker, Chief Operating Officer

                                                                                                     Natasha Gadsdon, Finance Director
 Strand Hanson Limited (Nominated and Financial Adviser and Nominated Broker)  +44 (0) 20 7409 3494  James Dance

                                                                                                     Richard Johnson

 

Notes to Editors

Sutton Harbour Group plc (AIM: SUH) is an AIM quoted company specialising in
marine operations, waterfront regeneration and destination creation in
Plymouth and South West England.

The Company operates Sutton Harbour Marina, King Point Marina and Plymouth
Fisheries. Operational activities include mixed-use lettings, car parking and
support services to harbour users, property management and regeneration and
asset enhancement.

Sutton Harbour is committed to being the leading marine and waterfront
regeneration specialist in Southern England, and to positioning Sutton Harbour
in Plymouth as a destination of national interest.

 

 

 

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