REG - Sutton Harbour Grp - Results for the year ended 31 March 2022
20/07/2022 07:00
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RNS Number : 0396T Sutton Harbour Group PLC 20 July 2022
20 July 2022
SUTTON HARBOUR GROUP PLC (the "Group")
Results for the year ended 31 March 2022
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
2022.
Highlights
· Net asset value up to £56.211m (43.3p per share), from £47.153m
(40.6p per share).
· Record trading year for the marinas with near capacity
occupancy during year ended 31 March 2022 and maintained at 98% occupancy as
of July 2022.
· Investment Property occupancy rate of 89% at 31 March 2022 (97%
at 31 March 2021). One building under refurbishment for three new tenants.
· Strong recovery of parking revenues since summer 2021 and
improving trend in 2022.
· The first new development project at Sutton Harbour in a decade,
Harbour Arch Quay, under construction and due for completion in Spring 2023.
· Updated planning consent and s106 agreement for the 170 apartment
building at Sugar quay secured.
Financial Highlights
Note 2022 2021
Adjusted Profit/(loss) before tax * £0.366m (£0.162m)
Net financing costs £0.789m £0.753m
Net assets £56.2m £47.2m
Net asset per share 43.3p 40.6p
Valuation of property portfolio ** £54.3m £47.3m
Year-end net debt £24.4m £26.9m
*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 2022.
Philip Beinhaker, Executive Chairman, commented:
"The resilience of the Group's property asset portfolio is shown in the
valuation uplift. The strong asset base and annuity incomes provide a secure
platform from which the Company has been able to restart property construction
and develop a new pipeline of consented projects to follow. In time, the
profits and investment revenues achieved by new developments will enable the
Company the flexibility to reduce its borrowings. The Group celebrates the
175(th) anniversary of its core subsidiary this year and the stated strategic
objectives provide a long term plan for the Group's future success."
For further information, please contact
Sutton Harbour Group plc 01752 204186
Philip Beinhaker - Executive Chairman
Corey Beinhaker - Chief Operating Officer
Natasha Gadsdon - Finance Director
Strand Hanson Ltd (Nomad and Broker) 020 7409 3494
James Dance
Richard Johnson
Introduction
I am pleased to report on a successful year's results for the year ended 31
March 2022.
· The year's trading performance reflects the overall resilience of
the mix of business activities and restoration of full operations following
the Lockdowns imposed by the UK Government throughout the previous trading
year. As a result, the Group has achieved record earnings from its marina
and car parking trading businesses and a 22.6% uplift in the valuation of the
owner occupied asset portfolio.
· The broad mix of tenants occupying the Group's investment
properties and focus on the destination leisure property has protected the
Group from void rates associated with other sectors. The Group maintained
its property occupancy rate at 89% and is currently converting the space
vacated by Edinburgh Woollen Mill into three units for new national covenant
tenants, at materially improved £/sq ft rental rates.
· Contract and financing preparations made during the previous year
enabled the Group to press ahead with the construction of the Harbour Arch
Quay development, the first new build by the Group in almost a decade, which
started in February 2022.
· The Group has secured an updated unanimous planning consent for
the 170 apartment Sugar Quay development and agreement to the s106 agreement
by the Local Authority.
· To maintain progress with the development programme, the Company
raised £3.417m net from the issue of 14 million new ordinary shares in August
2021. This equity issue also allowed the purchase of certain development sites
adjacent at Sutton Road, Plymouth.
Results and Financial Position
The adjusted profit before taxation for the year was £0.366m (2021: £0.162m
loss 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 2022. The profit before taxation
for the year under review as per the consolidated income statement, inclusive
of the aforementioned adjustments, was £0.561m (2021: £2.373m loss). The
financial impact of the recovery from the Covid-19 pandemic is evident in the
Gross Profit which is up by £0.586m to £2.348m in the year to 31 March 2022
(year to 31 March 2021: £1.762m).
Net debt (including lease liabilities) decreased to £24.408m as at 31 March
2022 from £26.874m at 31 March 2021, a fall of £2.466m. The net proceeds of
£3.417m from the new equity raise by way of Open Offer in August 2021 were
partly used for the pre-construction costs of development projects and the
purchase of land at Sutton Road, Plymouth. The increase in development
property inventory, including the aforementioned site acquisition, was
£2.586m during the year.
Gearing (net debt: net assets) as at 31 March 2022 stood at 43.4% (2021:
57.0%). Net finance costs of £0.789m in the year (2021: £0.753m) are stated
after capitalisation of interest of £0.343m (2021: £0.138m).
As at 31 March 2022, net assets were £56.211m (2021: £47.153m), a net asset
value of 43.3p per ordinary share (2021: 40.6p per ordinary share). The
movement includes the valuation of the Group's property assets which gave rise
to an overall valuation surplus of £7.208m, as reconciled in the table below,
of which a £0.380m surplus relates to the investment property portfolio and a
net £6.828m surplus relates to the owner-occupied properties. The valuation
surplus' follow further improvement in trading performance and the restoration
of car parks activity after the end of the Lockdowns. The ongoing weaker level
of trading at Plymouth Fisheries has informed the valuer's lower overall
Fisheries asset value.
Valuation Surplus/(Deficit) Accounting*
Owner Occupied Portfolio
- Fisheries (£0.185m) Fair valuation adjustment recorded in the Income Statement as no revaluation
reserve available to absorb the deficit
- Marinas £5.526m Credited to the Revaluation Reserve in the Balance Sheet
- Car Parks £1.487m Credited to the Revaluation Reserve in the Balance Sheet
Investment Property Portfolio £0.380m Fair valuation adjustment recorded in the Income Statement
TOTAL £7.208m
Financing
During the year the Company issued 14 million new ordinary shares each at 25p
and raised £3.417m after costs pursuant to an Open Offer. A loan from a
private finance lender, which was used to purchase land in December 2020, was
repaid after the year end and secured assets were unencumbered. Funds to repay
this loan were made available by way of two unsecured loans from major
shareholders at a lower rate of interest and on more flexible terms.
The full general banking facility with Nat West reduced from £27m to £26.9m
during the year after a repayment was made from the proceeds of a minor
investment property, Unit 1 Penrose House. After the year end the temporary
£2m Covid support facility expired reducing the full committed facility to
£24.9m. This facility expires in December 2023 and the board is actively
considering whether to elect for a twelve month extension, which is allowed
for in the facility agreement, or to enter into a new facility.
In accordance with the Dividend Policy, the board does not recommend payment
of a dividend on the year's results in order to preserve headroom in the bank
facility. The Group regards itself as an asset-based investment with its
opportunities to reduce bank debt and realise value vested in the success of
future development projects.
Directors and Staff
There have been no Board changes during the year. Headcount as at 31 March
2022 was 32 (31 March 2021: 31).
Operations Report
Marine
Sutton Harbour Marina and King Point Marina have enjoyed the busiest ever
season with overall annual berth sales up by 20.3% and overall occupancy up to
98% by 31 March 2022 (92% by 31 March 2021). Overall berthing revenue,
including visitor berthing across both marinas was up by £0.334m compared to
the previous year, with no berthing rate increases. The new season has started
strongly with more early bookings than usual, as available berthing along the
South Coast of England has become scarcer. The outlook for strong revenue
growth is encouraging after berthing rates were increased from 1 April 2022.
Some changes were made to berthing configuration over the Winter and
opportunities to maximise use of the water space are under review for creation
of additional berths in the future. Three new positions have been created in
the marina team to allow the Company to maintain a high level of customer
service to a growing clientele.
Trading at Plymouth Fisheries has returned to a level close to the
pre-pandemic period, although competition from other local ports and a
declining local fleet continue to lower the performance of the port. Against a
backdrop of rising fuel prices, which makes it increasingly difficult for
fishers to make profitable trips to sea, the Company is working with suppliers
to try to improve fuel buying prices and to pass savings on to customers. The
Company's long-standing Harbour Master, Pete Bromley, retired in December 2021
and he has been successfully replaced by Mark Veale.
Starting in Autumn 2022, the Environment Agency will embark on a six-month
programme to replace the cills of the Sutton Harbour lock. These works are
necessary to ensure the proper working of the lock, a flood defence for
Plymouth, and flood protection for a least a decade to come. This will result
in restrictions to harbour users at certain times when passage through the
lock will be constrained. A comprehensive communications programme has been
organised to provide real time information to harbour users such that
activities of the fishing industry, marina and public continue with minimal
disruption. The Group is arranging for interim alternatives to facilitate some
of the landing of fish at a nearby location which can then be transported to
the Plymouth Fisheries complex for auction, processing and distribution, as is
currently the case with c. 50% fish which arrives at the Plymouth Fisheries
auction by road. This approach integrates the lessons learned from the similar
major works that were completed some 13 years ago on the lock gates.
Real Estate and Car Parking
As at 31 March 2022 tenant occupancy across the Company's portfolio of real
estate assets stood at 89% (31 March 2021: 97%). The Company supported some
tenants through the Covid crisis with extended time to pay. These deferred
rents were almost all cleared by 31 March 2022 and with the exception of two
tenant failures, Edinburgh Woollen Mill and a gym operator, tenants restored
normal operations during the year under review, many benefiting from improved
footfall around Sutton Harbour. At the heart of the Sutton Harbour and
Barbican area, the Old Barbican (fish) Market, is undergoing refurbishment and
is due to open during summer 2022 with three new national covenant tenants.
After a slow start in April and May 2021, as visitors to the area increased,
the revenue from car parking returned to the previous peak trading level
recorded before the pandemic. The resumption of local events in Summer 2022,
high marina occupancy and continued popularity of UK based tourism are
conditions which are expected to underpin trading performance in the current
financial year.
Regeneration
Sutton Harbour
The 14 apartment building known as Harbour Arch Quay located on the north
eastern quay of Sutton Harbour is currently under construction with completion
currently due in Spring 2023. The agency and digital marketing campaigns are
in place and to date reservations for five apartments, including one of the
penthouses, all at full asking price, have been received. Contracts are
currently with lawyers pending exchange. The development is being financed by
a £5m development loan from Atelier Finance and partly by the Group.
The Group has secured planning consent and s106 agreement for the updated
plans for the 170 apartment Sugar Quay building. This will be a landmark 20
storey building on the eastern quay of Sutton Harbour. During the forthcoming
year, the Company will prepare pre-construction work and source financing for
this major new development. The intention is to start the building by mid-2023
with completion to follow some 30 months later.
The Group has continued with planning work for the future development of the
Sutton Road site, opening and extending the eastern side of the Harbour and
linking with Plymouth city centre and residential communities to the east of
Gdynia Way. The original plans are now being refined following the purchase
during the year of a small adjacent site which will enable improved road
access and site layout. The Group is working on a wider masterplan for a
comprehensive housing led regeneration of the east of Sutton Harbour area and
has engaged regularly with the Local Planning Authority and potential
partners.
The Plymouth Fisheries complex is now 27 years old and the Group recognises,
as does the industry and Plymouth City Council, that modernisation of the
facility would support the future of fishing in Plymouth and improve the
port's competitive position. Redevelopment of the facility would require state
support in the form of fishery industry and other grants and the Company is
working, together with the local authority, on planning applications and grant
submissions.
Former Airport Site
In 2019, when the new Local plan was agreed, a safeguard of a maximum five
years was supported by Government Planning inspectors. More than three of the
five years have now passed and the Company has continued to refine a
masterplan for the alternative use of the 113 acre brownfield site. The
Company's masterplan illustrates a mixed use development to accommodate
various types of housing, institutional uses, business uses and areas of green
space providing links to integrate with established surrounding neighbourhoods
and institutions.
Financial Outlook
The Company has emerged from the pandemic period with trading results and
asset valuation showing resilience and growth recovery. Like most businesses,
emerging inflationary conditions are beginning to bite. In order to retain and
attract good quality personnel the Company has needed to increase pay and in
some roles by more than 10%. The Company is a major consumer of electricity to
power the Sutton Lock gates, ice making and chilling plant at Plymouth
Fisheries and lighting required for a large estate. Boilers across company
premises are gas powered although consumption is less significant. The current
power contracts expire in September 2022, whereafter the Company will
experience a sharp increase. Much of this consumption is recharged to tenants
and berth-holders, however the Company will need to raise the prices it
charges for some of its services. The Company has already installed power
efficient lighting at some locations, upgraded fisheries boilers and
modernised fisheries plant to assist with consumption efficiency. Other costs
are expected to increase in line with general inflation.
With interest rises to date and the pressure to control inflation with further
interest rate rises, the Company will incur higher interest rate costs in the
coming year. Each additional 1% in bank base rate will cost an additional c.
£263,000 per annum based on average draw on the general banking facility. At
the present time, the Group has not entered into any interest rate swap
agreements to manage exposure to rising rates due to their high cost, however
this a matter for close and monthly review by the board. The development loan
for Harbour Arch Quay and the major shareholders' loan incur interest at fixed
rates.
Summary
The Company has a unique mix of trading businesses concentrated around Sutton
Harbour, a strongly supported visitor destination. Post Covid, the trading
businesses have recovered and continues to improve, providing a growing cash
inflow to the Company. The resilience of the property asset portfolio is shown
in the valuation uplift. The strong asset base and annuity incomes provide a
secure platform from which the Company has been able to restart property
construction and develop a new pipeline of consented projects to follow. In
time, the profits and investment revenues achieved by new developments will
enable the Company the flexibility to reduce its borrowings. The Group
celebrates the 175(th) anniversary of its core subsidiary this year and the
stated strategic objectives provide a long term plan for the Group's future
success.
Philip Beinhaker
EXECUTIVE
CHAIRMAN
19 July 2022
Consolidated Income Statement for
the year ended 31 March 2022
2022 2021
£000 £000
Revenue 7,194 5,400
Cost of sales (4,846) (3,638)
Gross profit 2,348 1,762
Fair value adjustments on investment properties and fixed assets 195 (2,211)
Administrative expenses (1,193) (1,171)
Operating profit/(loss) 1,350 (1,620)
Finance income - -
Finance costs (789) (753)
Net finance costs (789) (753)
Profit/(loss) before tax from continuing operations 561 (2,373)
Taxation (charge)/credit on (loss)/profit from continuing operations (820) 198
(Loss) for the year from continuing operations (259) (2,175)
(Loss) for the year attributable to owners of the parent (259) (2,175)
Basic and diluted earnings/(loss) per share
from continuing operations (0.20p) (1.88p)
Diluted earnings/(loss) per share
From continuing operations (0.20p) (1.88p)
Consolidated Statement of Other Comprehensive Income for
the year ended 31 March 2022
2022 2021
£000 £000
(Loss) for the year (259) (2,175)
Items that will not be reclassified subsequently to profit or loss:
Revaluation of property, plant and equipment 7,016 3,245
Deferred tax in respect of property revaluation (1,116) -
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 5,900 3,245
Total comprehensive income for the year attributable to owners of the parent 5,641 1,070
Consolidated Balance Sheets
As at 31 March 2022
2022 2021
£000 £000
Non-current assets
Property, plant and equipment 36,398 29,766
Investment property 18,195 17,845
Inventories 13,216 12,962
67,809 60,573
Current assets
Inventories 18,734 16,359
Trade and other receivables 1,810 2,396
Tax recoverable 9 6
Cash and cash equivalents 970 928
21,523 19,689
Total assets 89,332 80,262
Current liabilities
Other Loans 2,275 -
Trade and other payables 1,880 1,730
Lease liabilities 165 141
Deferred income 2,225 1,819
Provisions - 56
6,545 3,746
Non-current liabilities
Bank loans 22,863 27,475
Lease liabilities 75 186
Deferred government grants 646 646
Deferred tax liabilities 2,992 1,056
Provisions - -
26,576 29,363
Total liabilities 33,121 33,109
56,211 47,153
Net assets
Issued capital and reserves attributable to owners of the parent
Share capital 16,406 16,266
Share premium 13,972 10,695
Other reserves 22,180 16,280
Retained earnings 3,653 3,912
56,211 47,153
Total equity
Consolidated Statement of Changes
in Equity
For the year ended 31 March 2022
Share Share Revaluation reserve Merger reserve Hedging reserve Retained earnings Total
capital premium equity
------------Other reserves------------
£000 £000 £000 £000 £000 £000 £000
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 1 April 2021 16,266 10,695 12,409 3,871 - 3,912 47,153
Comprehensive income
Loss for the year - - - - - (259) (259)
Other comprehensive income
Share issue 140 3,277 3,417
Revaluation of property, plant and equipment - - 7,016 - - - 7,016
Deferred tax on revaluation (1,116) (1,116)
Total other comprehensive income 140 3,277 5,900 - - (259) 9,058
Total balance at 31 March 2022 16,406 13,972 18,309 3,871 - 3,653 56,211
Consolidated Cash Flow Statement
For the year ended 31 March 2022
2022 2021
£000 £000
Cash generated/(used) from total operating activities 59 (2,536)
Cash flows from investing activities
Net expenditure on investment property (52) (10)
Expenditure on property, plant and equipment (196) (161)
Proceeds from disposal 262 -
Cash generated/ (used) in investing activities 14 (171)
Cash flows from financing activities
Proceeds from issue of share capital 3,417 -
Interest paid (1,033) (754)
Loan (repaid)/drawdown (2,337) 3,225
Lease finance (paid)/received 62 378
Cash payments of lease liabilities (148) (142)
Grants received 8 136
Net cash (used)/ generated from financing activities (31) 2,843
Net increase in cash and cash equivalents 42 136
Cash and cash equivalents at beginning of the year 928 792
Cash and cash equivalents at end of the year 970 928
Reconciliation of financing activities for the year ended 31 March 2022
2022 Cash flow 2021 Cash flow 2020
£000 £000 £000 £000 £000
Bank loans 22,800 (2,400) 25,200 950 24,250
Other loans 2,338 63 2,275 2,275 -
Lease liabilities 240 (87) 327 236 91
Long term debt 25,378 (2,424) 27,802 3,461 24,341
Segment results
For the year ended 31 March 2022
Marine Real Estate Car Parking Regeneration Total
£000 £000 £000 £000 £000
Revenue 4,771 1,427 736 260 7,194
Segmental Operating Profit before Fair value adjustment and unallocated 1,199 922 389 (162) 2,348
expenses
Fair value adjustment on investment properties and fixed assets (185) 380 - - 195
2,543
Unallocated:
Administrative expenses (1,193)
Operating profit 1,350
Financial income
Financial expense (789)
Profit before tax from continuing activities 561
Taxation (820)
Loss for the year from continuing operations (259)
Depreciation charge
Marine 335
Car Parking 40
Administration 17
392
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
Gross profit prior to non-recurring items 770 1,020 110 (138) 1,762
Fair value adjustment on investment properties and fixed assets (1,061) (1,150) - - (2,211)
(449)
Unallocated: (1,171)
Administrative expenses
Operating loss (1,620)
Finance income -
Finance expenses (753)
Loss before tax from continuing activities (2,373)
Taxation 198
Loss for the year from continuing
operations
(2,175)
Depreciation charge
Marine 336
Car Parking 31
Administration 32
399
Notes to the Consolidated Financial Statements
1. General Accounting Policies
Basis of preparation
The results for the year to 31 March 2022 have been extracted from the audited
consolidated financial statements, which are expected to be published by
mid-August 2022.
The financial information set out above does not constitute the Company's
statutory accounts for the years to 31 March 2022 or 2021 but is derived from
those accounts. Statutory accounts for the year ended 31 March 2021 were
delivered to the Registrar of Companies following the Annual General Meeting
on 1 October 2021 and the statutory accounts for 2022 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 14 September 2022 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 2022; 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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