2009 Final Results

RNS Number : 1649T

Sutton Harbour Holdings PLC

02 June 2009

 



For Immediate Release                                                                                                                                       2 June 2009

                                                                  SUTTON HARBOUR HOLDINGS PLC

 Preliminary Results for the year ended 31 March 2009

Progress in a challenging year

Sutton Harbour Holdings plc ('Sutton Harbour'), the AIM listed regeneration, infrastructure and transport specialist, announces preliminary results for the year ended 31 March 2009.

Financial highlights

• Revenues for the year of £29.3 million (2008: £29.2 million).

• Loss before tax and fair value adjustments on investment property of £0.7 million (2008: £2.6 million profit).

• Pre-tax loss for the year of £3.5 million after fair value adjustments on investment property (fair value deficit of £2.8 million); (2008: £5.5 million profit including fair value surplus of £2.8 million).

• Proposed final dividend of 1.0 pence per share (2008: 1.5 pence) making total for year of 1.9 pence per share (2008: 2.4 pence).

• Gearing at year end of 58.2% (2008: 45.7%).

• Net assets at year-end of £35.4 million (2008: £39.7 million).

Operational highlights

• Planning consent granted for mixed-use development on 22 acre site at Plymouth City Airport after the year-end; contracts exchanged with a developer for the sale of the majority of the land. 

• Successful sale of landmark Salt Quay House office development for £8.7 million.

• Challenging conditions for Transport sector; new air routes introduced to London City Airport, Newcastle, Glasgow, Cork and Dublin.

• Marine sector traded well with enhancement and expansion of facilities during the year 

• Following success of hosting start of Artemis 2008 Transat Race, the Group will also host the finish of the 2009 Rolex Fastnet Race at Sutton Harbour.

On current trading and outlook, Chairman, Mr Michael Knight commented:

'Markets remain tough, but we are well balanced with complementary high quality asset-backed regeneration, marine and transport activities coupled with a good pipeline of projects and opportunities to deliver future growth.'  

Enquiries:

Nigel Godefroy, Group Chief Executive 

Sutton Harbour Holdings plc                       Tel: [phone]

Bobbie Hilliam, Evolution Securities            Tel: [phone]

Richard Day, Arden Partners plc                 Tel: [phone]    

Paul Vann, Winningtons Financial               Tel: [phone] or 07768 807631

  SUTTON HARBOUR HOLDINGS PLC

Preliminary results for the year ended 31 March 2009

Chairman's Statement

For the year ended 31 March 2009

Overall, the Group has made good progress in difficult circumstances. Specifically, we have: controlled our borrowings through asset disposals achieved in difficult market conditions; renewed bank facilities with comfortable headroom for an eighteen month period; commenced new routes in Air Southwest; achieved planning consent for development of surplus land at Plymouth City Airport; and, progressed onward sales of this land to a developer to generate revenues in the future. Notwithstanding this, our property operations have been affected by the significant fall in UK property values, and our transport operations have been affected by the recession. As signalled to shareholders in our announcement in March 2009, your Company has incurred an overall loss for the year under review. This is despite the considerable efforts of the management and staff who have responded to these challenges and achieved some notable successes to date in securing the financial stability and future prospects for the Group. 

Results and dividend

We report a pre-tax loss of £0.7 million prior to the fair value adjustments on investment property, compared with a profit for 2008 of £2.6 million. After fair value adjustments on investment property the pre-tax loss amounted to £3.5 million (including fair value deficit of £2.8 million) compared with a profit of £5.5 million for the previous year (including fair value surplus of £2.8 million). Net assets at the balance sheet date were £35.4 million compared to £39.7 million as at 31 March 2008.

This is the second year we have presented the Group's results under International Financial Reporting Standards as adopted by the European Union (IFRS). Under IFRS, investment property valuation changes are recorded in the income statement. The independent external valuation of the Group's investment property portfolio at the balance sheet date has shown a fair value deficit of £2.8 million. Following this write-down in value of our investment property assets, your Company's balance sheet remains secure. Our investment properties, marina assets and our airport property represent an attractive and balanced property portfolio, and with gearing of 58.2%, we remain well positioned in these uncertain markets.

The overriding objective of the Board is to maintain financial stability and, given the outlook for the Group at the half-year stage, we maintained the interim dividend. We aim to be prudent whilst providing a proper reward for our shareholders and notwithstanding this has been a challenging trading period, the Board has taken into account the likely future revenue streams for the Group. Accordingly, the Board has decided to propose a final dividend of 1.0 pence per share (2008: 1.5 pence per share), making 1.9 pence per share (2008: 2.4 pence per share) in total for the year. The final dividend will be paid on 21 August 2009 to shareholders on the register on 7 August 2009. The shares are expected to go ex-dividend on 5 August 2009. The level of future dividends will be kept under review and will have regard to the level of cash generation in the Group.

We continue to believe that investment in the Company's shares qualifies for Business Property Relief, but shareholders should take their own advice before acting on this statement.

Regeneration

The Group's portfolio of property comprises high quality commercial and specialist operating facilities, much overlooking Sutton Harbour, with good covenants and long leases in place. The overall decrease in values of 6% has been far lower than the general decline in UK commercial property of 25% in the twelve months to 31 March 2009, reflecting the quality and strength of our property portfolio.  The long term strategy of the company is to increase our portfolio of good quality investment property but as previously stated, selected assets will be sold where this is judged commercially beneficial. The sale of Salt Quay House was achieved in March 2009 in particularly difficult market conditions and for a very satisfactory £8.7 million which reduced the Group's bank borrowings and gearing. 

I am particularly pleased to report on achieving a resolution to grant planning consent for a mixed-use development on the 22 acres of surplus land at Plymouth City Airport after the year-end. This has been an extremely complex planning application and the project will provide both future property revenues for the Group and enhancements to the airport including environmental improvements.  We have exchanged on the sale of the majority of the land to a developer.  The development of the site will also provide a boost for employment in the area during these difficult economic times. 

Your Company's regeneration pipeline of schemes demonstrates the recognition of our expertise in partnership working and our success in extending the Group's geographical reach. With progress on projects in the short term slowed due to difficult market conditions the Board has reviewed the cost base of the regeneration division and regrettably this has lead to some redundancies as resource is aligned to current activity levels.

As reported in my interim statement, the Group sold its interest in the joint venture through which investments in Local Investment Finance Trust (LIFT) initiatives were held this resulted in a profit of £0.9 million in addition to the profit on the share exchange of £1.1 million, recorded at 31 March 2008. The sale of this investment does not preclude us from involvement in future LIFT opportunities in other parts of the UK and we are delighted to have been shortlisted, with our partners, as an eligible bidder for future projects under the NHS Express LIFT National Framework Agreement. This provides us with financial flexibility as well as revenue-generating opportunities.

Transport

Air Southwest has faced a challenging year given high fuel costs persisting for much of the year, start up costs of our new routes and pressure on revenues, including increased competition. Management has responded vigorously to ensure our costs are controlled consistent with maintaining high safety standards and we have launched new routes to stimulate demand. In April 2008 we commenced flights to Newcastle, Glasgow, Cork and Dublin and the high profile launch of the twice daily service from Newquay and Plymouth to London City Airport in April 2009 has been well received by passengers with strong advance bookings. This service complements services to London Gatwick by providing fast links to the heart of the capital and connectivity to other international airports. We are pleased that Air Southwest has been named the most punctual UK airline for the second year running on flights in and out of London Gatwick Airport. The outlook for airlines is challenging but we benefit from being a tightly-controlled niche operator.

Marine

The marina has traded well during the year and we have continued with upgrading and the enhancement of the facilities. New pontoons have been installed for commercial and fishing vessels and an events pontoon with an additional 31 berths is being installed at West Pier marina. The replacement lock gates, completed in February 2008, which are essential to ensure the continued effectiveness of flood defences, have worked well throughout the period. Fishing activity was initially constrained by high fuel prices during the year although the landings value of fish has been maintained compared to the previous year. The company hosted the start of the Artemis 2008 Transat race in May 2008 in conjunction with Plymouth City Council and South West of England Regional Development Agency. This event attracted over 100,000 visitors to Sutton Harbour with the company able to showcase the excellent facilities that Sutton Harbour has to offer. Following the success of this event Sutton Harbour will host the finish of the 2009 Rolex Fastnet race and other annual events during the coming year.

Corporate Governance 

As reported in my interim statement, Sheridan Brimacombe retired on 1 December 2008 after seven years service as a Director. On behalf of the Board, I would like to express our gratitude for her support during this period. On the same date two new independent non-executive directors were appointed. John Heawood spent 11 years as a group board director of SEGRO plc (formerly Slough Estates plc). Prior to that he spent 20 years advising on all aspects of UK commercial property including 11 at DTZ where he was a director. John Heawood is a chartered surveyor and a past member of the CBI property group and is now managing director of Ashtenne Industrial Fund. Keith Sykes is also appointed as an independent non-executive director. He was chief executive of Watts, Blake, Bearne & Co Plc and a non-executive director of TSW-Television South West Holdings Plc. He is also a long term shareholder in your Company. Both John Heawood and Keith Sykes serve on the remuneration and audit committees. I am also pleased to announce that Tony Everett has been appointed deputy chairman of the Group.

Following a review of the Group's audit and tax compliance services, four firms were invited to take part in a tender process and the board have engaged PricewaterhouseCoopers LLP with a team led from their Bristol office. The Board wishes to thank KPMG Audit Plc for their work and their professional advice since 2002. 

The Board also tendered the nominated broker role during April 2009, with the resultant appointment of Arden Partners plc with effect from 12 May 2009. The Board thanks Blue Oar Securities for their support and advice over their period of engagement. Evolution Securities continue as nominated adviser to the Company.

Summary and Outlook 

This has been a particularly challenging year for our people and I would like to express my thanks to the executive directors and entire team for their hard work, loyalty and, too often, for the long hours they have put in during many hours of negotiation on key projects. 

Our principal objective has been to maintain financial stability and secure adequate financial resources in order to underpin future profit and cash generation. Markets remain tough, but we are well balanced with complementary high quality asset-backed regeneration, marine and transport activities coupled with a good pipeline of projects and opportunities to deliver future growth.

Michael Knight

Chairman

2 June 2009

Consolidated Income Statement

For the year ended 31 March 2009

	2009	2008
	£000	£000
Continuing operations
Revenue	29,262	29,237
Cost of sales	(28,185)	(25,290)
Gross profit	1,077	3,947
Other operating income	19	20
Administrative expenses	(1,428)	(1,702)
Other operating expenses	(10)	(33)
Loss on disposal of investment property	(267)	-
Operating (loss)/profit before fair value adjustments on investment property	(609)	2,232
Fair value adjustments on investment property	(2,787)	2,828
Operating (loss)/profit	(3,396)	5,060
Financial income	95	251
Financial expense	(962)	(835)
Net financing costs	(867)	(584)
Realised gain on disposal of interest in joint venture company	908	-
Unrealised gain on exchange of shares in associate company	-	1,106
Share of loss of joint venture using the equity accounting method	(95)	-
Share of loss of associate using the equity accounting method	-	(125)
	813	981
(Loss)/profit before tax	(3,450)	5,457
Taxation	996	(884)
(Loss)/profit for the year attributable to equity shareholders	(2,454)	4,573
Basic earnings per share	(4.86)p	9.10p
Diluted earnings per share	(4.86)p	8.94p

Consolidated Statement of Recognised Income and Expense

For the year ended 31 March 2009

	2009	2008
	£000	£000
Revaluation of property, plant and equipment	(768)	(2,036)
Deferred taxation on income and expenses recognised directly in equity	11	575
Effective portion of changes in fair value of cash flow hedges	156	-
Net expense recognised directly in equity	(601)	(1,461)
(Loss)/profit for the year	(2,454)	4,573
Total recognised (expense)/income for the year attributable to equity shareholders	(3,055)	3,112

  Consolidated Balance Sheet

As at 31 March 2009

	2009	2008
	£000	£000
Non-current assets
Property, plant and equipment	35,946	33,853
Intangible assets	507	541
Investment property	20,833	28,131
Investment in joint venture	-	2,020
Other financial assets	130	130
	57,416	64,675
Current assets
Inventories	10,390	5,448
Trade and other receivables	3,149	3,950
Cash and cash equivalents	6	6
Derivative financial instruments	1,360	82
Tax receivable	157	481
	15,062	9,967
Total assets	72,478	74,642
Current liabilities
Bank overdraft	19,142	13,406
Other interest-bearing loans and borrowings	1,008	1,013
Trade and other payables	6,068	6,808
Deferred income	3,647	3,362
Deferred government grants	18	20
Derivative financial instruments	752	-
Provisions for other liabilities and charges	291	229
	30,926	24,838
Non-current liabilities
Other interest-bearing loans and borrowings	468	3,718
Deferred government grants	297	314
Deferred tax liabilities	5,093	6,088
Derivative financial instruments	234	-
Provisions for other liabilities and charges	46	-
	6,138	10,120
Total liabilities	37,064	34,958
Net assets	35,414	39,684
Equity and reserves
Share capital	12,640	12,622
Share premium	10	3
Other reserves	9,928	9,827
Retained earnings	12,836	17,232
Total equity	35,414	39,684

   Consolidated Cash Flow Statement

For the year ended 31 March 2009

	2009	2008
	£000	£000
Cash flows from operating activities
(Loss)/profit for the year	(2,454)	4,573
Adjustments for:
Taxation	(996)	884
Share of loss of associate	-	125
Share of loss of joint venture	95	-
Financial income	(95)	(251)
Financial expense	962	835
Fair value adjustments on investment property	2,787	(2,828)
Unrealised gain on exchange of shares in associate company	-	(1,106)
Realised gain on disposal of interest in joint venture company	(908)	-
Loss on remeasurement of derivative financial instruments to fair value	82	-
Gain on ineffective portion of cash flow hedge	(217)	-
Depreciation and amortisation	1,019	723
Amortisation of grants	(19)	(20)
Loss on disposal of investment property	267	-
Loss on sale of property, plant and equipment	10	33
Equity settled share-based payment expenses	(28)	44
Cash generated from operations before changes in working capital and provisions	505	3,012
(Increase) in inventories	(4,672)	(3,553)
Decrease in trade and other receivables	801	127
(Decrease)/increase in trade and other payables	(688)	989
Increase in deferred income	285	26
(Decrease)/increase in provisions*	(183)	189
Cash (used in)/generated from operations	(3,952)	790
Tax received/(paid)	334	(578)
Net cash (used in)/generated from operating activities	(3,618)	212
Cash flows from investing activities
Proceeds from sale of investment property	8,700	-
Proceeds from sale of property, plant and equipment	13	18
Expenditure on investment property	(6,357)	(7,088)
Expenditure on property, plant and equipment	(1,716)	(2,402)
Interest received	95	162
Net proceeds from disposal of interest in joint venture	2,722	-
Equalisation receipt in relation to joint venture	111	-
Costs relating to new joint venture company	-	(40)
Net cash generated from/(used in) investing activities	3,568	(9,350)
Cash flows from financing activities
Proceeds from the issue of share capital	25	2,427
Issue costs relating to the issue of share capital	-	(94)
Proceeds from borrowings	4,857	2,350
Interest paid	(1,244)	(812)
Repayment of borrowings	(8,112)	(980)
Dividends paid	(1,212)	(1,098)
Net cash (used in)/generated from financing activities	(5,686)	1,793
Net decrease in cash and cash equivalents	(5,736)	(7,345)
Cash and cash equivalents at beginning of the year	(13,400)	(6,055)
Cash and cash equivalents at end of the year	(19,136)	(13,400)

* Excluding movement on vacant property provision which is included within loss on disposal of investment property.

 Note 1: Segment results

The Group's primary format for segment reporting is based on business segments. All of the Group's operations are carried out in the United Kingdom. The Group therefore has only one geographical segment.

Business segments:

	Marine   Activities		Regeneration		Transport		Unallocated		Consolidated
	2009	2008	2009	2008	2009	2008	2009	2008	2009	2008
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Total external segment revenue	4,399	4,315	1,420	3,710	23,443	21,212	-	-	29,262	29,237
Segment result prior to fair value adjustments on investment property	1,263	1,101	407	2,187	(851)	646	(1,428)	(1,702)	(609)	2,232
Fair value adjustments on investment property	-	-	(2,787)	2,828	-	-	-	-	(2,787)	2,828
Segment result after fair value adjustments on investment property and operating (loss)/profit	1,263	1,101	(2,380)	5,015	(851)	646	(1,428)	(1,702)	(3,396)	5,060
Financial income									95	251
Financial expense									(962)	(835)
Realised gain on disposal of interest in joint venture company									908	-
Unrealised gain on exchange of shares in associate company									-	1,106
Share of loss of joint venture									(95)	-
Share of loss of associate									-	(125)
Taxation									996	(884)
(Loss)/profit for the year									(2,454)	4,573
Assets and liabilities
Segment assets	21,484	21,117	32,430	34,600	17,687	15,933	720	491	72,321	72,141
Investment in equity accounted joint venture									-	2,020
Tax assets									157	481
Total assets									72,478	74,642
Segment liabilities	1,480	1,511	2,517	5,413	8,408	8,184	19,566	13,762	31,971	28,870
Tax liabilities									5,093	6,088
Total liabilities									37,064	34,958
	Marine   Activities		Regeneration		Transport		Unallocated		Consolidated
	2009	2008	2009	2008	2009	2008	2009	2008	2009	2008
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Other segment information
Capital expenditure including capitalised interest:
Property, plant and equipment	547	1,220	6	-	1,094	1,550	69	155	1,716	2,925
Investment property	-	-	6,532	7,791	-	-	-	-	6,532	7,791
Depreciation	31	36	5	-	863	565	86	87	985	688
Amortisation	-	-	-	-	34	35	-	-	34	35
Provisions -charge to the income statement	-	-	291	-	110	189	-	-	401	189

Unallocated assets include various property, plant and equipment and prepayments that cannot be split between the various business segments because the revenue that the assets generate cannot be matched specifically to one individual segment.

Unallocated liabilities include the bank overdraft of £19,142,000 (2008: £13,406,000) and various accruals and other creditors that cannot be split between the various business segments because the revenue that the liabilities are used to generate cannot be matched specifically to one individual segment.

Revenue can be divided into the following categories:

	2009	2008
	£000	£000
Sale of goods	3,405	3,252
Sale of land and property	-	1,630
Rental income	1,771	1,745
Provision of services	4,069	4,846
Airline ticket sales	20,017	17,764
	29,262	29,237

Directors' Statement

The preliminary results for the year ended 31 March 2009 and the results for the year ended 31 March 2008 
are prepared under International Financial Reporting Standards as adopted by the European Union (IFRS). The
accounting policies adopted in this preliminary announcement are consistent with the Annual Report for the year
ended 31 March 2008.

The financial information set out in this preliminary announcement does not constitute the Company's statutory
accounts for the years ended 31 March 2009 or 31 March 2008. The financial information for the year ended
31 March 2008 is derived from the Annual Report delivered to the Registrar of Companies. The auditors
reported on those accounts; their report was unqualified and did not contain a statement under either section 237(2)
or section 237(3) of the Companies Act 1985.

The Board of Sutton Harbour Holdings plc approved the release of this audited preliminary announcement on 2 June 2009.

The preliminary financial information has been extracted from the Annual Report and Audited Financial Statements for the year ended 31 March 2009, which will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company.  The report will also be available on the investor relations page of our website (www.sutton-harbour.co.uk).  Further copies will be available on request and free of charge from the Company Secretary at North Quay House, Sutton Harbour, Plymouth, PL4 0RA.

 

END

 

 

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