Plymouth property firm Sutton Harbour Holdings has posted a £2.3 million loss in its interim results after a revaluation of its property portfolio saw the value of its assets drop sharply.
Results for the six months to September 30 were announced to the Stock Exchange yesterday morning with the firm's share price dropping from 34p to 29.5p as a result.
The economic downturn has had a major impact on the AIM-listed business, with its loss-making transport arm having had a major drag on previous results.
In the same period last year, the company posted a loss of £983,000.
Chairman Michael Knight said: "During the first half year trading has continued in line with our expectations of challenging trading conditions and we have been implementing specific strategies to build profile and to target new markets."
In light of the drop in the value of commercial property as a result of the recession, Sutton Harbour commissioned valuers DTZ to undertake a review of its property portfolio which resulted in a deficit of £4.9 million.
Despite describing the revaluation result as "disappointing", the firm said it remained confident that values would pick up as redevelopment plans are progressed.
Net assets now stand at £36.9 million – or 38.3p a share – compared to £41.5 million – or 43.1p per share – at the end of March this year.
Having now sold airline Air Southwest and, with the agreement of Plymouth City Council, controversially closed the city's airport, Sutton Harbour has been seeking to return to its core business of marine activities and property regeneration.
It is pushing ahead with plans to develop a new marina at Millbay and, last month, it announced a £75 million plan for the third phase of redeveloping Sutton Harbour which includes a major marketing drive to establish the area as a world class waterfront destination.
Revenue levels from marine activities were down slightly on the same period last year, at £2.6 million, compared to £2.9 million.
Income from real estate and regeneration activities stood at £988,000 and £343,000 respectively, compared to £882,000 and £2.3 million for the same period.
The company said that, as last year, it would not be paying a dividend to shareholders.
In its trading update, the company said that the period had started well with "sustained growth" although marina income is now levelling off, it said.
The firm also said that given the poor economic outlook it was "more cautious about improving property occupancy rates" in the second half of the year.
Sutton Harbour itself has moved premises in the year, vacating North Quay House in favour of nearby Tin Quay House, after a reduction in headcount over the last few years.
Paul Lewis, Exeter branch director of investment firm Charles Stanley, said: "These results are very disappointing and reflect the poor conditions being experienced in the property development sector in these difficult economic times.
"The heavy share price fall is to be expected on such a large revaluation of the existing property portfolio. I am particularly concerned by the comment regarding ongoing occupancy rates and that these should stabilise with greater marketing activity.
"The development of King Point Marina may prove to be a step too far in the short term and the shares remain a hold at best, even after the fall in the share price."
Sutton Harbour said that it was making "significant progress" with its strategy for the future, including the redevelopment of the airport site, at Derriford. It said that it has received "no financially substantiated offers" for the 113 acre site and had therefore drawn up a masterplan for a mixed use development on the site.