REG - Sutton Harbour Grp - Results for the year ended 31 March 2021
6 July 2021
SUTTON HARBOUR GROUP PLC ("the Group")
Results for the year ended 31 March 2021
Sutton Harbour Group plc ("Sutton Harbour", "the Company"), the AIM listed owner and operator of Sutton Harbour in Plymouth and specialist in waterfront regeneration projects and operation of waterfront real estate, marinas and Plymouth Fisheries, announces audited results for the year ended 31 March 2021.
Highlights
· Net asset value up by £1.071m (0.92p.share),despite difficult trading conditions resulting from the Covid-19 pandemic and UK Government imposed restrictions.
· Record trading year for the marinas as UK based boating becomes more popular, overall 96% occupancy by June 2021.
· Investment Property occupancy rate of 97% at 31 March 2021 (95% at 31 March 2020)
· Strong recovery parking revenues in summer 2020 after Lockdown ended and same trend now apparent for 2021.
· The first new development project at Sutton Harbour in a decade, Harbour Arch Quay, due to start on site imminently.
Financial Highlights
Note
2021
2020
Adjusted (Loss)/profit before tax
*
(£0.162m)
£0.221m
Net financing costs
£0.753m
£0.844m
Net assets
£47.2m
£46.0m
Net asset per share
40.6p
39.7p
Valuation of property portfolio
**
£47.3m
£46.0m
Year-end net debt
£26.9m
£23.5m
*Before accounting for fair value adjustments to property asset valuation.
**Comprises investment and owner occupied portfolios.
Excludes land held as development inventory.
Valuation as at 31 March 2021.
Philip Beinhaker, Executive Chairman, commented:
"The Group has used the last year to advance the development projects, invest in a new development site and develop the marketing and operations efficiencies of the marinas business. The Group now wishes to continue its pace of progress. To support the completion of the Harbour Arch Quay development, provide headroom to invest in other strategic sites and support the costs of planning and professional fees the Group accordingly intends to make an open offer for new equity capital to enable existing shareholders to participate in future growth of the Group in the near future."
For further information, please contact
Sutton Harbour Group plc
Philip Beinhaker - Executive Chairman
Corey Beinhaker - Chief Operating Officer
Natasha Gadsdon - Finance Director
01752 204186
Arden Partners (Nomad and Broker)
Paul Shackleton
Akhil Shah
020 7614 5924
Executive Chairman's Statement
For Year Ended 31 March 2021
Introduction
I am pleased to report on the Group's results for the year ended 31 March 2021. These results include the impact of the Covid pandemic and periodic UK Government imposed restrictions during the reporting year.
The Group maintained its trading operations throughout the full year. The Covid crisis most acutely undermined the car parking revenues, an important cash generative activity, and throughput was slowed at Plymouth Fisheries as the market for high quality fish reduced in the wake of closures of restaurants and hospitality businesses. Collection of rentals has been steady throughout the year with some tenants arranging instalment payment plans. Overall 90% rentals falling due have been collected and the Group has continued to achieve lettings of vacant space to new tenants with the occupancy rate at 97% by 31 March 2021. The marinas benefitted from the boom in UK based leisure during Summer 2020, a trend that has continued into the Summer 2021 season giving rise to a marinas occupancy rate of 96% by June 2021.
Sutton Harbour is a destination offering outdoor marine, leisure and hospitality facilities. Visitor activity has now returned to the Harbour area with tenants and other operators now attracting strong footfall. In Summer 2020 after the Lockdown restrictions were relaxed, car parking revenues quickly recovered as visitors returned. Unfortunately this recovery was cut short as two further Lockdowns followed. To date, the recovery of Summer 2021 is proceeding strongly as parking incomes and tenants' businesses improve, allowing the Group to move on from the difficulties of the past 16 months. During the year the Company was exposed to the business failure of Edinburgh Woollen Mill, which occupied a 7,500 sq ft unit.
The Group has made significant progress with its stated regeneration business plans. After further delays resulting from the Covid crisis disruption, construction of the 14 apartment building known as Harbour Arch Quay is due to start this summer. In December 2020, the Company completed the purchase of a site just east of the Harbour on Sutton Road and immediately submitted an application for two residential-led developments on this site.
To provide additional headroom on bank facilities to assure the financial resilience of the Group through the post Lockdown recovery period, the increased facility of £2m above the core facilities of £25m has been successfully extended with National Westminster Bank plc until May 2022.
Results and Financial Position
The adjusted loss before taxation for the year was £0.162m (2020: £0.221m profit before taxation) which excludes non-cash fair value adjustments. In this financial year these adjustments relate to property asset valuation, undertaken by external valuers as at 31 March 2021. The loss before taxation for the year under review as per the Income Statement, inclusive of the aforementioned adjustments, was £2.373m (2020: £0.756m loss). The financial impact of the Covid-19 crisis is evident in the Gross Profit which is down by £0.567m to £1.762m in the year to 31 March 2021 (year to 31 March 2020: £2.329m), attributable to a decline of £0.294m in car parking; £0.146m in marine activities (fisheries and marinas) and £0.117m in real estate/regeneration. The Group companies were not eligible for any Covid-19 related Government grants and full functionality of the harbour (fisheries operations, harbour services and 24 hour lock operations) operated continuously to support users due to its status a statutory harbour authority and as part of the food supply chain infrastructure.
Net debt (including lease liabilities) increased to £26.874m as at 31 March 2021 from £23.549m at 31 March 2020, an increase of £3.325m of which £2.275m is a loan taken out in December 2020 to finance the purchase of the site on Sutton Road. The increase in development property inventory of £4.282m was principally incurred in the purchase of the aforementioned site and costs to prepare the full planning application.
Gearing (Net debt: net assets) as at 31 March 2021 stood at 57.0% (2020: 51.1%). Finance costs of £0.753m in the year (2020: £0.844m) reflect the lower rates of interest.
As at 31 March 2021, net assets were £47.153m (2020: £46.082m), a net asset value of 40.6p per ordinary share (2020: 39.7p per ordinary share). The movement includes the valuation of the Group's property assets which gave rise to an overall valuation surplus of £1.035m, as reconciled in the table below, of which £1.142m deficit relates to the investment property portfolio and £2.176m surplus relates to the owner occupied properties. The investment portfolio and car park valuation movements reflect the market uncertainty caused by the UK Government's restrictions to manage the Covid-crisis as at 31 March 2021, with the marinas' valuation surplus following strengthening in trading performance. During the year the new fuel servery at Plymouth Fisheries was completed and accordingly the net cost of £0.475m was transferred from 'Assets under the Course of Construction' to the Fisheries asset. The current weaker level of trading at Plymouth Fisheries has informed the valuer's lower overall Fisheries asset value resulting in the effective write down of the fuel servery.
Valuation Surplus/(Deficit)
Accounting*
Owner Occupied Portfolio
- Fisheries
(£1.061m)
Fair valuation adjustment recorded in the Income Statement as no revaluation reserve available to absorb the deficit
- Marinas
£3.563m
Credited to the Revaluation Reserve in the Balance Sheet
- Car Parks
(£0.317m)
Debited to the Revaluation Reserve in the Balance Sheet
Investment Property Portfolio
(£1.150m)
Fair valuation adjustment recorded in the Income Statement
TOTAL
£1.035m
*Accounting for the fair value movement between valuations at 31 January 2020 and 31 March 2021 has been accounted in the current year as the movement was materially related to factors that occurred from 1 April 2020.
Taking into account the current level of bank borrowing, the board does not recommend payment of a dividend on the year's results.
Directors and Staff
There have been no other Board changes during the year. Headcount as at 31 March 2021 was 28 (31 March 2020: 30). During the year five staff were furloughed for a very minimal period of time and two redundancies were made. Harbour operations personnel were designated as key workers.
Operations Report
Marine
Sutton Harbour Marina and King Point Marina both enjoyed a record year of annual berth sales with overall annual berth sales up by 5% and overall occupancy up to 92% by 31 March 2021 (80% by 31 March 2020). Total marinas revenue for the year ended 31 March 2021 was slightly up on the previous year, although the overall result was offset by weaker visitor bookings. The current year is set to be another record year with occupancy currently at 96% setting a strong platform for future revenue and valuation growth. Prices have been held this year and will be reviewed as the economy recovers. The marinas have benefited from the renewed popularity of UK based boating since the start of the Covid crisis and it is pleasing to see many first-time boat owners taking up the leisure activity. Demand for berths has justified installation of the final pontoons at a cost of £60,000 at King Point Marina making the facility, which opened in 2013, complete. At Sutton Harbour Marina, provision for jet skis has been increased, which was quickly sold out, and improvements to the business' telephony and customer management software have been undertaken.
Plymouth Fisheries trading slowed during the year with both landings of fish and fuel sales impacted by a combination of uncertainty arising from the Covid-19 crisis and Brexit transition, local competition from other south-west ports and a declining local fleet as fishing licences are concentrated to fewer, larger vessels, some which are too large for Sutton Harbour to accommodate. Fishing remains an important component of the Harbour's vibrancy and supports direct and indirect employment. The Group is working closely with Plymouth City Council and other stakeholders on a plan to stimulate Fisheries-related activity through the provision of new facilities which will better meet future needs of the industry and provide public access to and enjoyment of Plymouth's fishing tradition.
Real Estate and Car Parking
Tenant occupancy by 31 March 2021 stood at 97% (31 March 2020: 95%). Following the period of administration and end of their lease, Edinburgh Woollen Mill vacated the 7,500 sq ft premises at the heart of the Barbican at the end of May 2021. 2,500 sq ft is already reserved for a new high quality tenant subject to lease, and the remainder of the space is now being actively marketed.
Car parking revenues were down by half due to the Lockdowns during the year. The multi-storey Harbour Car Park was closed during Lockdown periods due to lack of use and to save business rates. The Group has also incurred security costs to prevent trespass of the car park. Following each Lockdown, and as footfall returned, car parking revenues recovered with the height of Summer 2020 trading at a similar level to Summer 2019.
Regeneration
Sutton Harbour The Group is working diligently with the Local Authority on the finalisation of planning applications for the two buildings on the Sutton Road site. The Group is hopeful of a start on site with the first of the Sutton Road developments in Summer 2022. The smaller Harbour Arch Quay scheme is due to start construction this summer and is due for completion in a year's time. Since the year end the Group has arranged separate development financing, which is subject to completion, to fund the Harbour Arch Quay scheme. Marketing of the 14 high quality waterfront apartments will soon be underway with good levels of informal interest already reported.
Former Airport Site As previously reported the site is safeguarded from development until 2024. The Group has ready proposals for a deliverable alternative use of the 113 acre site which meet the social and economic needs of Plymouth.
Summary and Outlook
The disruption caused by three Lockdowns and restrictions imposed by the UK Government to contain the spread of Covid-19 was more extensive than we foresaw last summer and there is the potential for further interruptions to trading in the future. The Board is now more optimistic that with the vaccination programme well advanced and with businesses finding ways to adapt to different levels of restriction, the Group is well placed to benefit from the re-popularisation of UK based tourism and staycations. This has already been demonstrated by the growth in marina occupancy, recent increase in new lettings and recovery in parking revenues in the post year end period.
The Group has used the last year to advance the development projects, invest in a new development site and develop the marketing and operations efficiencies of the marinas business. The Group now wishes to continue its pace of progress. To support the completion of the Harbour Arch Quay development, provide headroom to invest in other strategic sites and support the costs of planning and professional fees the Group accordingly intends to make an open offer for new equity capital to enable existing shareholders to participate in future growth of the Group in the near future.
Philip Beinhaker
EXECUTIVE CHAIRMAN
5 July 2021
Consolidated Income Statement
For the year ended 31 March 2021
2021
2020
£000
£000
Revenue
5,400
6,558
Cost of sales
(3,638)
(4,229)
Gross profit
1,762
2,329
Fair value adjustments on investment properties and fixed assets
(2,211)
(977)
Administrative expenses
(1,171)
(1,264)
Operating (loss)/profit
(1,620)
88
Finance income
-
-
Finance costs
(753)
(844)
Net finance costs
(753)
(844)
(Loss) before tax from continuing operations
(2,373)
(756)
Taxation (charge)/credit on (loss)/profit from continuing operations
198
(232)
(Loss) for the year from continuing operations
(2,175)
(988)
(Loss) for the year attributable to owners of the parent
(2,175)
(988)
Basic (loss)/earnings per share from continuing operations
(1.88p)
(0.85p)
Diluted (loss)/earnings per share from continuing operations
(1.88p)
(0.85p)
Consolidated Statement of Other Comprehensive Income
For the year ended 31 March 2021
2021
2020
£000
£000
(Loss) for the year
(2,175)
(988)
Items that will not be reclassified subsequently to profit or loss:
Revaluation of property, plant and equipment
3,245
1,338
Items that may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges
-
-
Other comprehensive income for the year, net of tax
3,245
1,338
Total comprehensive income for the year attributable to owners of the parent
1,070
350
Consolidated Balance Sheets
As at 31 March 2021
2021
2020
£000
£000
Non-current assets
Property, plant and equipment
29,766
27,958
Investment property
Inventories
17,845
12,962
18,985
12,810
60,573
59,753
Current assets
Inventories
16,359
12,217
Trade and other receivables
2,396
2,595
Tax recoverable
6
5
Cash and cash equivalents
928
792
19,689
15,609
Total assets
80,262
75,362
Current liabilities
Trade and other payables
1,730
1,396
Lease liabilities
141
63
Deferred income
1,819
1,544
Provisions
56
70
3,746
3,073
Non-current liabilities
Bank loans
27,475
24,250
Lease liabilities
186
28
Deferred government grants
646
646
Deferred tax liabilities
1,056
1,254
Provisions
-
29
29,363
26,207
Total liabilities
33,109
29,280
Net assets
47,153
46,082
Issued capital and reserves attributable to owners of the parent
Share capital
16,266
16,266
Share premium
10,695
10,695
Other reserves
16,280
13,034
Retained earnings
3,912
6,087
Total equity
47,153
46,082
Consolidated Statement of Changes
in Equity
For the year ended 31 March 2021
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 2019
16,266
10,695
7,825
3,871
-
7,075
45,732
Comprehensive income
Loss for the year
-
-
-
-
-
(988)
(988)
Other comprehensive income
Revaluation of property, plant and equipment
-
-
1,339
-
-
-
1,339
Total comprehensive income
1,339
-
(988)
350
Balance at 31 March 2020
16,266
10,695
9,164
3,871
-
6,087
46,083
Balance at 1 April 2020
16,266
10,695
9,164
3,871
-
6,087
46,083
Comprehensive income
Loss for the year
-
-
-
-
-
(2,175)
(2,175)
Other comprehensive income
Revaluation of property, plant and equipment
-
-
3,245
-
-
-
3,245
Total comprehensive income
-
-
3,245
-
-
(2,175)
1,070
Balance at 31 March 2021
16,266
10,695
12,409
3,871
-
3,912
47,153
Consolidated Cash Flow Statement
For the year ended 31 March 2021
2021
2020
£000
£000
Cash used from total operating activities
(2,536)
(455)
Cash flows from investing activities
Net expenditure on investment property
(10)
(52)
Expenditure on property, plant and equipment
(161)
(823)
Net cash used in investing activities
(171)
(875)
Cash flows from financing activities
Interest paid
(754)
(844)
Loan drawdown
3,225
1,750
Lease finance received
378
-
Cash payments of lease liabilities
(142)
(78)
Grants received
136
-
Net cash generated from financing activities
2,843
826
Net increase in cash and cash equivalents
136
(504)
Cash and cash equivalents at beginning of the year
792
1,296
Cash and cash equivalents at end of the year
928
792
Reconciliation of financing activities for the year ended 31 March 2021
2021
Cash flow
2020
Cash flow
2019
£000
£000
£000
£000
£000
Bank loans
25,200
950
24,250
1,750
22,500
Other loans
2,275
2,275
-
-
-
Lease liabilities
327
236
91
(78)
169
Long term debt
27,802
3,461
24,341
1,672
22,669
Segment results
For the year ended 31 March 2021
Marine
Real Estate
Car Parking
Regeneration
Total
£000
£000
£000
£000
£000
Revenue
3,509
1,542
349
-
5,400
Segmental Operating Profit before Fair value adjustment and unallocated expenses
770
1,020
110
(138)
1,762
Fair value adjustment on investment properties and fixed assets
(1,061)
(1,150)
-
-
(2,211)
-
Unallocated:
Administrative expenses
(1,171)
Operating profit
(1,620)
Financial income
-
Financial expense
(753)
Profit before tax from continuing activities
(2,373)
Taxation
198
Profit for the year from continuing operations
(2,175)
Depreciation charge
Marine
336
Car Parking
31
Administration
32
399
Year ended 31 March 2020
Marine
Real Estate
Car Parking
Regeneration
Total
£000
£000
£000
£000
£000
Revenue
4,323
1,580
655
-
6,558
Gross profit prior to non-recurring items
916
1,157
404
(148)
2,329
Fair value adjustment on investment properties and fixed assets
(483)
(494)
-
-
(977)
1,352
Unallocated:
Administrative expenses
(1,264)
88
Finance income
-
Finance expenses
(844)
Profit before tax from continuing activities
(756)
Taxation
(232)
Profit for the year from continuing operations (988)
Depreciation charge
Marine
313
Car Parking
26
Administration
1
340
Notes to the Consolidated Financial Statements
1. General Accounting Policies
Basis of preparation
The results for the year to 31 March 2021 have been extracted from the audited consolidated financial statements, which are expected to be published by mid-August 2021.
The financial information set out above does not constitute the Company's statutory accounts for the years to 31 March 2021 or 2020 but is derived from those accounts. Statutory accounts for the year ended 31 March 2020 were delivered to the Registrar of Companies following the Annual General Meeting on 22 September 2020 and the statutory accounts for 2021 are expected to be published on the Group's website (www.suttonharbourholdings.co.uk) shortly, posted to shareholders at least 21 days ahead of the Annual General Meeting ("AGM") to be held on 27 September 2021 and, after approval at the AGM, delivered to the Registrar of Companies.
The auditor, PKF Francis Clark, has reported on the accounts for the year ended 31 March 2021; their report includes a reference to the valuation of Plymouth City Airport (former airport site) to which the auditors drew attention by way of emphasis of matter without qualifying their report.
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