Final results for the year ended 31 March 2021 have been released by AIM-listed Sutton Harbour and these were also accompanied by news of an Open Offer to raise up to £3.5m through the issue of new shares at 25p each. A General Meeting to approve this is scheduled for 30 July. New funds raised will 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 company owns and operates Sutton Harbour in Plymouth, as well as being a specialist in waterfront regeneration projects and involved in the operation of waterfront real estate, marinas and Plymouth Fisheries.
In the last financial year the company suffered an adjusted loss before taxation of £162k versus a profit before taxation of £221k in the prior year. Covid-19 had an obvious impact and car parking, marine activities (fisheries and marinas) and real estate/regeneration were all hit. Group companies were not eligible for any Covid-19 related Government grants and the harbour, covering fisheries operations, harbour services and 24 hour lock operations, has operated continuously to support users. This was due to its status as a statutory harbour authority and as part of the food supply chain infrastructure. Net debt (including lease liabilities) increased to £26.9m as at 31 March 2021, up from £23.5m a year earlier. Of this around £2.3m represents a loan taken out in December 2020 to finance the purchase of a site on Sutton Road. As at 31 March 2021 net assets were £47.15m (2020: £46.08m), which translates into a net asset value of 40.6p per share (2020: 39.7p).
There were some positive developments during the year including record trading for marinas as UK based boating became more popular, resulting in overall 96% occupancy by last month. The occupancy rate in investment property was 97% as at 31 March 2021, up from 95% a year earlier. There was strong recovery in parking revenues in summer 2020 and the same trend is evident this year. The first new development project at Sutton Harbour in a decade, Harbour Arch Quay, is also about to start on site.
The issue of new shares at 25p each could cause a drag on the price in the market in the near term. However, this represents a discount of over 38% to the net asset value and there must be scope for this gap to close looking further ahead. Disruption relating to Covid-19 is likely to hit figures for the current year but from next year onwards there should be a good base from which profits can grow over the longer term. Taking a contrarian view and tucking a few shares away should result in capital growth over the long term. A lack of liquidity means that patience is likely to be required though. Our share tip is a LONG TERM BUY.
