2017
ANNUAL REPORT &
FINANCIAL STATEMENTS
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C O N T E N T S
Strategic Report
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The Group at a Glance
The Chairman’s Statement and Chief Executive’s Report
Key Performance Indicators
Financial Review
Managing Business Risks
Governance
10
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15
17
20
21
Directors and Advisors
Directors’ Report
Corporate Governance Report
Corporate, Environmental and Social Responsibility Report
Report on Remuneration
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Consolidated Group Financial Statements under IFRS
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Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Consolidated Financial Statements
Historical Financial Information
Company Financial Statements under UK GAAP
55
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57
Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Company Financial Statements
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 1
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 17
STRATEGIC REPORT
T H E G R O U P
AT A G L A N C E
Sutton Harbour Holdings plc, listed on the Alternative
C U R R E N T B U S I N E S S P L A N S
Investment Market (AIM) of the London Stock
Exchange since 1996, is the parent of a number of
• Growth of earnings from core divisions.
wholly owned subsidiary companies which include:
• Retention of assets and development of new assets
• Sutton Harbour Company, the statutory harbour
for investment and revenue earning potential.
authority company, which operates the Plymouth
• Realisation of inventory assets through sale and
fishmarket (known as Plymouth Fisheries), The
development.
Marina at Sutton Harbour, together with a number of
operations related properties;
• a number of other ‘Sutton Harbour’ group
companies engaged in waterfront property
• Investment in infrastructure to increase capacity,
improve service and enhance quality.
• Adherence to a rigorous cash management plan.
regeneration and investment including King Point
• Improve visibility of the Group’s activities to target
Marina and car park operating activities; and
audiences through the increased use of electronic
• Plymouth City Airport Limited, the company holding
marketing channels.
legal interests in the former airport site.
• Maintain strong reputation for quality and customer
G R O U P V I S I O N
service.
The Group aims to be the leading marine, waterfront
regeneration and destination specialist in Southern
England.
O U R O B J E C T I V E S
• To develop a mix of activities for long-term
sustainable growth and to provide a balanced risk
profile.
• To provide a secure investment proposition in a
profitable company which has a strong asset base.
• To build on the Group’s strength as a specialist in
waterfront destination and regeneration in the South
West region.
• To increase and improve the income earning asset
portfolio of the Group.
• To provide a progressive dividend return to
shareholders in the medium term.
2 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Details of the Group’s operating segments, together
The Group has been active in establishing a business
with a description of current activities and latest
community around the northern side of Sutton
developments are summarised below:
Harbour and has been successful in attracting a number
M A R I N E
Sutton Harbour currently provides berthing for 523
of chartered accountants’ practices, legal firms and
other professional services companies.
vessels and receives a stable, core annual revenue
C A R P A R K I N G
stream in the form of dues, fees and rents from the
The Group has two major car parks at Sutton Harbour,
established fisheries, marinas and property operations.
a 340 space multi storey close to the National Marine
Plymouth Fisheries, the trading name of the fishmarket
in Plymouth, is recognised as the second placed fishing
port in England.
The location of Sutton Harbour, in central Plymouth
and adjoining the historic Barbican quarter, has
undergone two main phases of regeneration over the
past 25 years. The first phase to unlock the potential of
the area was realised when Sutton Lock was installed
Aquarium and a 51 space surface car park in the
Barbican area. Additionally, the Group controls parking
on the fishmarket complex, at the marina and adjoining
various tenanted properties.
R E G E N E R AT I O N
This division focuses on development for revenue and
capital growth and for value realisation through specific
land asset sale.
in 1992 creating a usable depth of water, followed by
SUTTON HARBOUR
the relocation of the fishmarket to the eastern side
The Group has established a track record for the
in 1995. In the second phase the development of high
delivery of six major regeneration schemes around
quality residential and commercial buildings overlooking
Sutton Harbour and a further two schemes in other
the harbour, and improvements to berthing facilities,
locations elsewhere in the South West. A key feature
added to the attractiveness of the area to create a long
of all these schemes was working in partnership with
term sustainable location for business, leisure and living.
other public and private sector bodies. In July 2014, a
The Group is now focused on bringing forward the
new ‘Vision’ framework for future development around
third phase with further regeneration to join together
Sutton Harbour was launched. The ‘Vision’ included
existing key attractions and to position Sutton Harbour
indicative development visuals for twelve waterfront
as a destination of regional importance within the South
schemes including the East Quay site. Planning consent
West which is presented in the ‘Vision’ framework, see
for one cornerstone development, ‘The Boardwalk’ at
‘Regeneration’ below.
KING POINT MARINA
Vauxhall Quay, was gained in February 2015.
FORMER AIRPORT SITE
In June 2011, the Group was selected by the English
In 2000, the Group purchased Plymouth City Airport
Cities Fund (ECf ) to build and operate the new marina
Limited and a long lease of the regional airport site.
in the major urban regeneration area of Millbay in
In 2003 the Group set up and operated the regional
Plymouth. The new King Point Marina received its
airline, Air Southwest which was subsequently sold
first berth-holders in September 2013 and has now
in November 2010 to Eastern Airways International
operated for three complete seasons ending 31 March
Limited (Eastern Airways). On 28 July 2011 Air
2017. The facility currently has 81 berths, with space to
Southwest (under the ownership of Eastern Airways)
install a further 86 berths subject to configuration.
ceased flights in and out of Plymouth City Airport.
R E A L E S TAT E
This division comprises the rentals from investment
properties and is particularly focused on growing its
annual income through asset enhancement.
Whilst property development continues to be
challenging, the Group has continued to invest in and
drive value from its investment portfolio, securing
lettings in vacant premises in the Sutton Harbour
estate.
The Group has a diverse mix of national and regional
businesses as tenants as well as various independent
operators. The National Marine Aquarium, a major
visitor attraction in the region, is also a tenant.
Facing unsustainable losses, in August 2011 Plymouth
City Council agreed to the closure of the airport as of
23 December 2011. The Group is now working towards
options to maximise value from the 113 acre former
airport site through development of a masterplan
for the area to show alternative uses. The Group has
positioned its representations in the area planning
policy debate and has engaged with the Local Planning
Authority as part of the pre-application planning
process. The Group previously achieved planning
consent on 22 acres of surplus airport land which was
sold in tranches to a residential developer between
2009 and 2011.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 3
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 17
STRATEGIC REPORT
T H E C H A I R M A N ’ S
S TAT E M E N T A N D C H I E F
E X E C U T I V E ’ S R E P O R T
S H A R E H O L D E R S O V E R V I E W
H I G H L I G H T S
• Marketing of the Sugar House, East Quay site for a mixed use scheme. The
Group has signed Heads of Terms with a preferred development partner and
discussions are underway to formulate the application to be submitted for
planning consent.
• Completion of further capital investments to upgrade the Group’s operations
and asset base.
• Submission of representations supported by a detailed evidence base to the
public consultation on the proposed new planning framework, the Plymouth and
South West Devon Joint Local Plan, which will determine the land use allocation
for the Former Airport Site and the area around Sutton Harbour which includes
Plymouth Fisheries.
S T R AT E G I C R E V I E W
The strategic review has continued throughout the
recorded to the Revaluation Reserve. Overall, these
financial year with the help of Rothschild to explore
valuation movements which were determined by way
all options with the objective of maximising value for
of an independent valuation, decreased net assets by
shareholders. In order to maximise the effectiveness
£0.870m (2016: £0.285m increase in net assets).
of this strategic review, the Board is conducting this
within the context of a formal sale process as set out in
Note 2 of Rule 2.6 of the City Code on Takeovers and
Mergers.
R E S U LT S A N D F I N A N C I A L
P O S I T I O N
The non-cash onerous lease provision was increased
by £0.173m to account for the potential future
performance of the sub-letting of Salt Quay House until
the lease expires in 2021.
During the year net debt (including finance leases)
increased in line with expectations to £22.458m, up
The adjusted profit before taxation for the year was
£0.245m from £22.213m at 31 March 2016, following
£0.331m (2016: £0.410m), which excludes non-cash fair
expenditure on further asset additions and costs in
value adjustments, the increase in the onerous lease
connection with the promotion of the development
provision and other impairments. Profit before taxation
land inventory. Gearing as at 31 March 2017 was 55.9%
for the year under review as per the Income Statement,
(31 March 2016: 54.4%). Finance costs fell from £1.057m
inclusive of the aforementioned adjustments, was
(2016) to £0.957m following refinancing in March 2016
£0.053m (2016: £1.590m).
on better terms.
As at 31 March 2017 net assets were £40.141m (2016:
The board does not recommend payment of a dividend
£40.869m), representing 41.7p per share (2016:
on the year’s results.
42.4p per share). The decrease reflects the fair value
adjustment to the investment property portfolios of
£0.110m surplus offset by valuation deficit of owner
D I R E C T O R S A N D S TA F F
During the year there have been no changes in the
occupied property of £0.215m, a net £0.105m charge
Company’s directorships and staff numbers have fallen
to the Income Statement (2016: £1.452m credit)
and also the deficit on revaluation of other owner
slightly due to consolidation of some roles. Headcount,
excluding Non-Executive Directors, as at 31 March
occupied assets of £0.765m (2016: £1.167m deficit)
2017 stood at 35 (31 March 2016: 38).
4 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
OPERATIONS REPORT
REGENERATION
MARINE
Trading at Plymouth Fisheries Hub was strong
throughout the year, with fish throughput valued at
£19.7m, resulting in its most successful year. Fuel sales
margins performed satisfactorily as a vital revenue
source to the Fisheries Hub’s business, although ice
revenues were lower following the departure of a fish
processing tenant from the Fisheries Hub complex.
Former Airport Site
Throughout the year the Company has been co-ordinating
the preparation of a detailed evidence base to support
representations to three stages of public consultation
towards the formulation of the new local planning
framework ‘The Plymouth and South West Devon Joint
Local (formerly ‘Plymouth’) Plan’. The local planning
authority has remained of the view that the site should
be safeguarded for general aviation use (such as private
During the year, the Company has reviewed the
aircraft). This is despite a Department for Transport report
efficiency of the Plymouth Fisheries Hub, which is now
on Plymouth Airport released in December 2016 that
23 years old. Fish throughput has increased significantly
concluded that there is no realistic prospect that commercial
during the life of the facility, resulting in increased
passenger services would be economically viable from the
articulated vehicle movements, whilst fish processing
site without significant public subsidy which it has been
on-site has largely diminished resulting in underused
confirmed is not available.
processing unit space. To address the changing needs of
fishing and to improve public accessibility to the area, the
Company has submitted proposals for a reconfigured
Fisheries ‘Hub’ complex to the public consultation on the
Plymouth and South West Devon Joint Local Plan.
Our evidence based submission includes independent
reports on aviation which conclude that there is no
financially sustainable case for commercial or general aviation
uses, due to technical, environmental and commercial
constraints, and presents the case for the best alternative
The Marina at Sutton Harbour saw annual berthing
use. This includes a concept masterplan for a ‘Garden
occupancy fall slightly compared to the previous season.
Suburb’ known as Plym Vale anchored by education, sports,
During the last year wi-fi connectivity at the marina has
healthcare and employment uses with c.1,500 new homes
been significantly improved and a refurbished reception
on the currently redundant brownfield site.
has been relocated to a more prominent position at
the front of the existing marina jetty. King Point Marina
continued to gain customers during the period.
The public hearing of the proposed Joint Local Plan is
expected to take place in late 2017 with the independent
Government Planning Inspector’s Report planned to follow
REAL ESTATE
in 2018.
Early on in the financial year under review, three tenants
departed, two being long standing occupiers of premises
Sugar House, East Quay
Following reconfiguration of the proposed scheme
at the Plymouth Fisheries Hub and one having occupied
to provide a mix of private residential units, student
a floor of North Quay House. This space, while being
accommodation, car parking and commercial space, the
actively marketed, currently remains vacant, although
site was re-marketed to targeted investors/developers.
good occupier interest in the premises has improved in
The Company has signed Heads of Terms with a preferred
recent months.
CAR PARKING
The car parks performed strongly in the first half year
although revenues flattened in the second half with
overall income finishing marginally ahead of last year. The
installation of energy efficient lighting has resulted in an
energy consumption saving of over 60%. In early 2017,
further enhancement works, including clearer signage,
have been carried out and automatic number plate
recognition equipment has been installed to improve
management efficiency.
bidder and discussions are underway to formulate the
application to be submitted for planning consent.
The ‘Boardwalk’, Vauxhall Quay
During the year the Company commissioned further ecology
and geology surveys required by the Marina Management
Organisation in order to obtain the requisite licensing to
develop in a marine environment, a requirement in addition
to planning consent. The licensing consent is currently
awaited. This 7,800 sq ft scheme, to be built on a pier like
structure and deliver two large restaurants and a small
pavilion unit, gained planned consent in 2015.
OUTLOOK
The Company has made the strongest possible representations to the consultation on the Joint Local Plan in order
to progress the stated regeneration strategy ‘to realise land inventory assets through sale and development’ for
both the Former Airport Site and the area immediately around Sutton Harbour. A positive planning allocation
outcome will be a key milestone event towards ultimate asset realisation and consequent debt reduction.
G R A H A M M I L L E R
C H A I R M A N
27 June 2017
J A S O N S C H O F I E L D
C H I E F E X E C U T I V E
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 5
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 17
STRATEGIC REPORT
K E Y P E R F O R M A N C E
I N D I C ATO R S
K E Y P E R F O R M A N C E I N D I C AT O R S
The material Key Performance Indicators relevant to the Group’s business are:
F I N A N C I A L H I G H L I G H T S
Net Assets
Net Asset value per share
Profit before tax from continuing operations
Adjusted Profit before tax excluding fair value
adjustments and impairments to inventory
Profit after tax
Basic Earnings per share
Dividend per share
Net Debt
Gearing (Net Debt/Net Assets)
P R O P E R T Y M E T R I C S
Total estate portfolio valuation
Owner occupied portfolio valuation
Investment portfolio valuation
Number of investment properties
Contracted rent (per annum)
Net initial yield
Reversionary yield
Occupancy rate
Estimated rental value (ERV) of vacant units
Average unexpired lease
Gross car parks revenue
Development Inventory
Sites around Sutton Harbour
Portland
Former airport site
Total
N O T E
2 0 17
£40.141m
41.7p
£0.053m
£0.331m
£0.040m
0.04p
0.0p
£22.458m
55.9%
2 0 16
N O T E
1
£40.869m
42.4p
£1.590m
£0.410m
£1.497m
1.55p
0.0p
£22.213m
54.4%
A S AT 3 1 M A R C H
2 0 17
A S AT 3 1 M A R C H
2 0 16
£45.135m
£25.675m
£19.460m
71
£1.518m
7.90%
8.95%
90.0%
£0.120m
9.8 years
£0.483m
£8.303m
£0.200m
£12.009m
£20.512m
£46.102m
£26.752m
£19.350m
71
£1.605m
8.30%
9.20%
96.2%
£0.039m
10.0 years
£0.478m
£8.104m
£0.200m
£11.721m
£20.025m
1 Includes a charge for fair value adjustments on investment property and property, plant equipment of £0.105m (2016: credit £1.452m), a charge to
increase the onerous lease provision of £0.173m (2016: £ nil) and a charge for asset impairments of £nil (2016: £0.272m).
6 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 17
STRATEGIC REPORT
F I N A N C I A L
R E V I E W
A C C O U N T I N G
(£11.479m) to 31 March 2017 (£12.009m) of
O N E R O U S L E A S E S
The Group’s year end results are presented
under International Financial Reporting Standards
(IFRS) as adopted by the European Union.
£530,000 represents the capitalised costs of
developing the planning intellectual property
less the cost attributed to sales of small plots.
• Net Realisable Value is estimated with
The onerous lease provision was increased
by £0.173m (2016: £ nil) to account for the
expected future performance of the sub-
letting of Salt Quay House until the lease
A S S E T V A L U AT I O N
reference to expected net proceeds for the
expires in 2021.
25% share of the leasehold interest. The
C A S H F L O W A N D F I N A N C I N G
The Company had total borrowing net of cash
and cash equivalents of £22.458m at 31 March
2017 (2016: £22.213m) with a gearing level
of 55.9% (2016: 54.4%). The Company has
operated within its authorised facilities and has
met all bank covenants during the year. The bank
facilities were renewed in March 2016, when the
Company entered into a three year agreement.
This banking agreement provides a maximum
£25.0m committed facility with a revised
confirmed expiry date of March 2019.
Debt servicing costs continue to be a major
expense to the Group. To manage exposure
to LIBOR movements, the Group has hedged
LIBOR rate at 0.8737% on £10m core debt until
March 2019.
TA X AT I O N
The standard rate of tax applicable to the Group
is 19% (2016: 20%). The overall tax charge for the
year is £0.013m (2016: £0.093m). No current tax
is due on the year’s results with the tax charge
resulting from restatement of prior year losses
and a revision in the rate used for deferred tax.
N ATA S H A G A D S D O N
F I N A N C E D I R E C T O R
27 June 2017
During the year, independent valuation of
mechanism for sharing of net proceeds with
the Group’s investment and owner-occupied
the freeholder, Plymouth City Council, is set
portfolio was undertaken at 30 September
out in the lease.
2016 and at 31 March 2017. The valuation at
30 September 2016 gave rise to a net deficit
of £1.012m in the first half year, with further
adjustment in the second half year to give an
overall net deficit for the year of £0.870m. This
deficit is reconciled as £0.110m surplus on the
investment portfolio and £0.980m deficit on the
owner-occupied portfolio.
C A R R Y I N G V A L U E O F F O R M E R
A I R P O R T S I T E
The former airport site, a 113 acre site in
which the Group holds an unexpired 138 year
leasehold interest, is held as development
inventory at a carrying value of £12.009m. At
each balance sheet date, this carrying value is
tested for impairment with the board needing to
satisfy itself that the asset is included in inventory
at the lower of cost and net realisable value,
with net realisable value including developer’s
return where applicable. The carrying value of
£12.009m is derived as follows:
• The land and building asset was independently
valued twice yearly until 31 March 2013, when
the asset was transferred to development
inventory.
• As at 31 March 2013 the land and building
asset was transferred to development
inventory and combined with the pre-existing
inventory total, which included the cost of
building the Link Road and planning intellectual
property costs.
• The auditors, Nexia Smith and Williamson,
included an Emphasis of Matter paragraph
within the 2015, 2016 and 2017 Audit Reports
due to uncertainty about the impact on
Net Realisable Value of the planning process
(Plymouth Plan/Joint Local Plan 2017-2034
currently being formulated) and the outcome
of a Government Report about the future of
Plymouth City Airport.
• In December 2016 the Department for
Transport published the ‘Plymouth Airport
Study Report’, which concluded that a
lack of demand and a short runway mean
commercially viable passenger services could
not be run out of the former Plymouth Airport
site as it would remain “financially vulnerable”
in a “high risk environment”.
• In April 2017, the Company submitted its
representations and detailed evidence base
in support of allocation of the former Airport
Site for alternative use in advance of the
Government Inspector’s public hearing of
proposed new local planning framework. The
Company expects the hearing to take place
during the 2017/18 financial year with the
Inspector’s decision to follow thereafter.
I M P A I R M E N T O F A S S E T S
The Directors have reviewed the carrying values
of inventory in relation to regeneration projects,
taking professional independent advice where
applicable and taking into account the current
• It was agreed at 31 March 2013 that the
market conditions, estimated delivery timescales
transfer was made at valuation, inclusive of
and financial outcomes. In addition, the carrying
historic revaluations. As at 31 March 2013
cost of other fixed assets has been reviewed for
the carrying value of the former airport asset
any potential impairment. In this year the charges
was £11.479m, inclusive of past revaluations
relate to a write down of development inventory
totalling £3.969m. The net increase in former
of £nil (2016: £0.206m) and an impairment of
airport asset valuation from 31 March 2013
airport assets of £nil (2016: £0.066m).
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 7
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 17
STRATEGIC REPORT
M A N A G I N G
B U S I N E S S R I S K S
The Group maintains a register of risks which is updated as business
risks change. The risk register is reviewed regularly by the Board to
ensure that appropriate management processes are in place to manage
business risks. Certain business risks are general to all Group activities
whereas others are pertinent to particular business activities. Key
business risks identified at present are:
G E N E R A L R I S K S R I S K I D E N T I F I E D
R E S P O N S E T O R I S K
Uncertainty of outcome
of Strategic Review
Process
Retention of commitment to
Company from key stakeholders and
employees.
Financing
The availability of adequate
borrowing and other funding
facilities.
Financing
Compliance with bank terms and
covenants
Financing
Interest rate rises
The Board is obliged to manage the process
in the best interests of shareholders and with
full regard to the impact on employees and
other stakeholders.
The Group’s current banking facilities to a
maximum of £25m expire in March 2019.
The Board recognises that the Group is
capital constrained thereby delaying progress
with specific property development.
The Group maintains a regular dialogue with
bankers over progress of the Group and
operates to a business plan to remain within
bank facility terms.
The Group has hedged LIBOR by way of
an interest rate swap over £10m debt until
March 2019.
Negative publicity
Increased use of social media can
heighten the impact of negative
publicity.
Media publicity about the Group is actively
followed and reported where it is misleading
or untrue.
R E A L E S TAT E ,
R E G E N E R AT I O N
A N D C A R
P A R K I N G
D I V I S I O N S
Economic Cycles
Planning
R I S K I D E N T I F I E D
R E S P O N S E T O R I S K
Property markets in provincial
areas such as Plymouth will lag the
improvements achieved in other
major centres.
The Group is developing its plans for various
sites to prepare for new development as mar-
ket conditions allow.
Obtaining viable planning permissions
has become increasingly demanding
resulting in increased cost and delay
to submission of applications. The
new local planning framework is due
for final publication in 2018.
The Group prepares comprehensive repre-
sentations and applications with supporting
reports where required. Public consultation is
frequently undertaken to solicit views about
proposed schemes.
Tenant failure
The Group is exposed to the risk of
loss of revenue and vacant properties
should tenants’ businesses fail.
The Group has a diverse tenant base encom-
passing national and independent occupiers to
avoid high exposure to any single party.
8 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
R E A L E S TAT E ,
R E G E N E R AT I O N
A N D C A R
P A R K I N G
D I V I S I O N S
Key Personnel
R I S K I D E N T I F I E D
R E S P O N S E T O R I S K
The Group is dependent on a limited
number of skilled personnel in key
positions.
The Group ensures that it has adequate staff
with the necessary skills and experience. Com-
petitive and realistic remuneration packages are
paid. External consultants are used to support
the team as necessary.
Financial Resource
Progress with projects is constrained
by availability of financial resources.
Projects may be phased to spread cash flows.
The Group’s assets may suffer value
impairment, thereby reducing the
Group net asset value, if carrying
value not judged recoverable through
use or realisation.
Regular external valuations of assets and value
appraisals on inventory are undertaken The
Group takes action to maintain and add value
by developing property/land use proposals and
seeking viable planning consents. Property as-
sets are maintained to a good state of repair.
The closure of Plymouth City Airport
has been opposed by some local
interest groups. Schemes for other
sites proposed by the Group have
met with some opposition.
The Group takes independent professional
advice to ensure decision and actions are
justifiable on relevant facts. The Group meets
with stakeholder groups and undertakes public
consultation when appropriate.
The regulatory and legislative
environment has continued to
result in additional management and
financial pressures.
The Group takes external advice as necessary
to remain compliant and to assist with planning
for future change.
Continuation of marine activities
is dependent on reliability of lock
operations and the integrity of the
lock structure itself.
Maintenance of the Sutton Harbour lock, a
key flood defence, is the responsibility of the
Environment Agency and it is subject to daily
checks. Lock controls have failsafe systems to
prevent human errors.
The pedestrian swing bridge over
the lock structure is currently out of
service and undergoing engineering
survey to identify the extent of
works required.
A major pollution incident could
result from leakage from a fishing
vessel or fuel supply tanks, or
unlawful discharge into the harbour.
Failure of plant and equipment at
the fishmarket has the potential to
disrupt operations with the resultant
loss of reputation.
All properties remain accessibility by foot,
however in some instances by a less direct
route. Regular public announcements are
made to update the public about access.
Emergency procedures are in place to con-
tain and clear a spillage which includes closure
of the lock gates.
The Group regularly reviews the condition
of infrastructure to plan maintenance and
replacement.
Valuation Risk
Public opinion
External
M A R I N E
A C T I V I T I E S
Lock Operations
Pollution Incident
Continuity of Operations
A P P R O V A L
The Strategic Report from pages 2 to 9 was approved by the Board of Directors on 27 June 2017 and signed on its
behalf by
J A S O N S C H O F I E L D
C H I E F E X E C U T I V E
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 9
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 17
GOVERNANCE
D I R E C TO R S
A N D A D V I S O R S
Company Number
Directors
Secretary
Registered Office
Independent Auditors
Nominated Broker and Nominated Adviser
Financial Advisor
Registrar
Bankers
2425189
Graham S. Miller (Non-Executive Chairman)
Jason W.H. Schofield (Group Chief Executive)
Natasha C. Gadsdon (Finance Director)
Sean J. Swales (Non-Executive Director)
Robert H. De Barr (Non-Executive Director)
Natasha C. Gadsdon
Tin Quay House
Sutton Harbour
Plymouth
PL4 0RA
Tel: 01752 204186
www.suttonharbourholdings.co.uk
Nexia Smith & Williamson
Portwall Place
Portwall Lane
Bristol
BS1 6NA
Arden Partners plc
125 Old Broad Street
London
EC2N 1AR
N M Rothschild & Sons Limited
67 Temple Row
Birmingham
B2 5LS
Computershare Services plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
The Royal Bank of Scotland plc
London
EC2N 3UR
10 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 17
GOVERNANCE
D I R E C TO R S ’
R E P O R T
The Directors present their Directors’ Report and audited
Consolidated Financial Statements for the year ended 31 March 2017.
The review of activities during the year and future developments is
contained in the Strategic Report.
M A J O R S H A R E H O L D I N G S
As at 27 June 2017 the Company’s register of shareholdings showed the following interests in 3% or more of the
Company’s share capital:
%
O R D I N A R Y S H A R E S
Crystal Amber Fund Limited
Mr D.McCauley/Rotolok (Holdings) Limited
Mr T.R and Mrs M.E Winser
BS Pension Fund Trustee Limited
29.27
28.79
4.15
4.24
The Directors are not aware of any other interest in its share capital in excess of 3%.
28,084,178
27,721,970
4,000,000
4,083,052
D I R E C T O R S ’ I N T E R E S T S
The interests of the Directors in the ordinary shares of the Company as at 31 March 2017 are set out below. There
have been no changes in these interests between 1 April 2017 and 27 June 2017.
Graham S. Miller
Jason W.H. Schofield
Natasha C. Gadsdon
Sean J. Swales
Robert H. De Barr
2 0 17
147,000
14,194
104,026
13,400
10,000
2 0 1 6
147,000
14,194
104,026
13,400
10,000
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 11
D I R E C T O R S A N D T H E I R I N T E R E S T S
G R A H A M S . M I L L E R
S E A N J . S W A L E S
Aged 49. Appointed Non-Executive Director in December
2009, he is a Chartered Accountant and Group Managing
Director of Rotolok (Holdings) Limited, the Group’s second
largest shareholder. He is also a member of the Audit and
Remuneration Committees.
R O B E R T H . D E B A R R
Aged 66. Appointed Non-Executive Director in May 2012
and Chairman of the Remuneration Committee in October
2012. He is also a member of the Audit Committee. He is
a Chartered Surveyor and principal of De Barr Associates
which specialises in development consultancy and business
opportunities. He was a senior Executive with Land Securities
for 32 years.
Aged 54. Appointed Non-Executive Director and Chairman
on 23 September 2013. He was appointed Chairman of the
Audit Committee in November 2013 because the Board
of Directors considered him best placed to chair the Audit
Committee. He is also a member of the Remuneration
Committee. He has a strong background in private equity,
having held senior and director positions at Murray
Johnstone Private Equity and 3i plc. Graham currently holds
a number of other directorships.
J A S O N W . H . S C H O F I E L D
Aged 51. Appointed Executive Director in December 2007
and Chief Executive in January 2012. He has been with the
Group since June 2007. He is a Chartered Surveyor and
previously held senior positions at Hammerson Plc and
Crest Nicholson Plc.
N ATA S H A C . G A D S D O N
Aged 47. Appointed Executive Director in July 2004 and
Finance Director in October 2004. She is a Chartered
Accountant and has been with the Group since 1996. She
has also been the Company Secretary since 2001.
In accordance with the Company’s Articles of Association Sean J. Swales and Natasha C. Gadsdon retire by rotation at this year’s Annual General Meeting,
and being eligible, offer themselves for re-election.
D I R E C T O R S A N D O F F I C E R S I N S U R A N C E
The Group maintained a Directors’ and Officers’ liability insurance policy throughout the financial year.
F I N A N C I A L I N S T R U M E N T S
The Group’s financial risk management objectives and policies are given in note 3, with additional information provided in the financial review on page 7.
D I S C L O S U R E O F I N F O R M AT I O N T O A U D I T O R S
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware, there is no relevant audit
information of which the Company’s auditors are unaware, and each Director has taken all the steps that he/she ought to have taken as a Director to make
himself/herself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.
By Order of the Board
N ATA S H A G A D S D O N
F I N A N C E D I R E C T O R
27 June 2017
12 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 17
GOVERNANCE
C O R P O R AT E
G O V E R N A N C E
R E P O R T
The rules of the Financial Reporting Council do not require companies that have securities traded on the Alternative
Investment Market to comply with the UK Corporate Governance Code (the Code). In managing the Group,
the Board has regard to the UK Corporate Governance Code. The Chairmen of the Audit, Remuneration and
Nomination Committees will be available to answer questions at this year’s Annual General Meeting.
The Board continually monitors its procedures for reviewing the effectiveness of its systems of internal controls.
T H E B O A R D
The Board currently comprises three Non-Executive Directors, including the Chairman and two Executive
Directors and is responsible for the proper management of the Company and for reporting the Company’s progress
to Shareholders. The Board has ten scheduled meetings annually for reviewing trading performance, ensuring
adequate funding, monitoring strategy and examining acquisition possibilities. Additional meetings are held as
required. The Board has a formal schedule of matters specifically reserved to it for decision. The roles of Chairman
and Chief Executive are separate. Graham Miller was appointed Chairman on 23 September 2013, and Robert De
Barr is the Senior Independent Non-Executive Director.
C O M M I T T E E S
REMUNERATION COMMITTEE
The Remuneration Committee is chaired by Robert De Barr and its other members are Sean Swales and
Graham Miller. The Committee, within its written terms of reference, determines and agrees with the Board the
employment terms and remuneration packages of the Executive Directors. The Report on Remuneration is set out
on pages 17 to 19. The Executive Directors make recommendations to the Board regarding the remuneration of
Non-Executive Directors. Independent advice on remuneration is taken where considered appropriate.
AUDIT COMMITTEE
The Audit Committee is chaired by Graham Miller and its other members are Sean Swales and Robert De Barr. The
Committee has written terms of reference and provides a forum for reporting by the Group’s external auditors. All
members of the Committee are Non-Executive Directors, although other individuals may be requested to attend
all or part of any meeting as the Committee considers appropriate.
The Audit Committee is responsible for a wide range of financial matters including the half year and annual financial
statements before submission to the Board and monitoring the internal controls and risk management systems
which are in place to ensure the integrity of the financial information reported to the shareholders. The Committee
is also responsible for making recommendations to the Board to be put to shareholders for approval at the AGM,
in relation to the appointment and removal of the Group’s external auditors, determining their remuneration and
monitoring the auditors’ performance and independence.
In relation to non-audit work, the Committee carefully reviews whether it is necessary for the auditors’ firm to carry
out such work and it will only grant approval for them to do so if we are satisfied that the auditors’ independence
is maintained. The Group’s auditors assist in this by ensuring that the partner responsible for the external audit
remains responsible for the audit for no more than five years and that there is a quality review partner who is
involved in planning the audit and in the reviewing of the final accounts including assessing any critical matters
identified in the audit. The auditors have also confirmed to the Audit Committee that they have complied with all
relevant guidance issued by the Financial Reporting Council and have implemented appropriate safeguards including
that non-audit related services are performed by personnel independent of the audit engagement team. The fees
paid to the auditor for audit and non-audit services are disclosed in note 7.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 13
NOMINATION COMMITTEE
Members of the Nomination Committee are Graham Miller and Jason Schofield. The Nomination Committee
is responsible for proposing candidates to the Board having regard to its balance, expertise and structure. The
Nomination Committee is also responsible for making recommendations to the Board regarding appointments to
the Audit and Remuneration Committees.
R E L AT I O N S W I T H S H A R E H O L D E R S
The combined Chairman’s Statement and Chief Executive’s Report on pages 4 to 5 and the Financial Review on
page 7 include a detailed review of the business and future developments. Shareholders are encouraged to pose
questions to the Board at any time of the year and the Board uses the Annual General Meeting to communicate
with all shareholders and welcomes their participation.
I N T E R N A L C O N T R O L
The Directors are responsible for establishing and maintaining the Group’s internal control systems. Internal
control systems are designed to meet the particular needs of the Group and the risk to which it is exposed, and
by their nature can provide reasonable, but not absolute, assurance against material misstatement or loss. The key
procedures which the Directors have established with a view to providing effective internal controls are as follows:
• Corporate Accounting and Procedures:
There are defined authority limits and controls over acquisitions and disposals. There are also clear reporting
lines within the business and risk assessments are undertaken and regularly reviewed in all divisions and at all
levels within the Group. Appropriate internal controls are set for all divisions of the business. Given the size and
nature of the Group, no separate internal audit department is considered necessary.
• Quality of Personnel:
The competence of personnel is ensured through high recruitment standards and subsequent training courses.
High quality personnel are seen as an essential part of the control environment.
• Financial Reporting:
The Group has a comprehensive system for reporting financial results to the Board and monitoring of budgets.
• Investment Appraisal:
Capital expenditure is regulated by authorisation levels. For expenditure beyond specified levels, detailed written
proposals are submitted to the Board. Reviews are carried out after the acquisition is complete and any overruns
are investigated. Due diligence work is carried out if a business is to be acquired.
G O I N G C O N C E R N
The review of the Group’s business activities is set out in the combined Chairman’s Statement and Chief Executive’s
Report on pages 4 to 5 The financial position of the Group, its cash flows and financing position are described in the
Financial Review on page 7. In addition, note 3 to the financial statements gives details of the Group’s financial risk
management.
The Group entered into a new three year banking facility effective from 31 March 2016. The Group’s forecasts and
projections, taking account of reasonably possible changes in trading performance, show that the Group should be
able to operate within the level of the facilities and covenants over a period of at least twelve months from the date of
approval of these financial statements.
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue
in operational existence for the foreseeable future. The Group, therefore, continues to adopt the going concern basis in
preparing its financial statements.
By Order of the Board
N ATA S H A G A D S D O N
C O M P A N Y S E C R E TA R Y
27 June 2017
14 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 17
GOVERNANCE
C O R P O R AT E ,
E N V I R O N M E N TA L
A N D S O C I A L
R E S P O N S I B I L I T Y
R E P O R T
H E A LT H A N D S A F E T Y
The Board of Directors understands its responsibility
to the health and safety of employees, customers and
others who are directly or indirectly affected by the
Group’s operations.
The Group’s Health and Safety Committee is chaired
by Natasha Gadsdon and has representation from all
Group activities. The Health and Safety Committee is
an open forum and minutes of the meetings are made
The environment plays a key role in the continuing
success of the Group and the Group recognises that it
needs to set itself high environmental standards.
We have looked at the areas of our business which
could have both positive and negative impacts on
the environment and have identified the following
policy aims to enhance our overall environmental
performance:
• Reduction of our Carbon Footprint by minimising
available to all staff upon request.
energy use.
Committee meetings are also attended by the
Group’s Health and Safety Officer and an Independent
Health and Safety Consultant. The Committee has a
comprehensive agenda and is briefed on new legislation
or regulation by the Independent Health and Safety
Consultant.
The Group does not undertake direct construction
on site. An excellent Health and Safety management
• Reduction of the amount of waste we create and to
ensure that we maximise the recycling of the waste
that we generate.
• To ensure that we meet, and where possible, exceed
environmental legislative requirements.
• To set a high standard for the prevention of water
pollution in Sutton Harbour.
record is a key criterion in the selection of contractors.
• To review our purchasing requirements so as to make
The Group has a good health and safety record with no
enforcement notices and no prosecutions for breaches
of Health and Safety legislation to report.
P O R T M A R I N E S A F E T Y C O D E
Sutton Harbour Company, a Statutory Harbour
Authority, and a wholly owned subsidiary of the
Company, is committed to undertaking statutory duties
environmentally sound purchasing decisions and to
increase local purchasing.
Independent audits of waste at The Marina at Sutton
Harbour have been carried out and improvements put
in place regarding the recycling of waste.
The Marina at Sutton Harbour has adopted waste
recycling protocols of the National Maritime Recycling
Scheme using standardised waste sorter recycling bags.
in accordance with the standards defined within the
The Group monitors energy consumption at its
Port Marine Safety Code. To ensure full compliance
trading facilities. This information is used to manage
with the code an internal audit of the Sutton Harbour
consumption through practical energy saving measures
Safety Management System is carried out annually. The
and targeted capital investment. The Group has
last external audit carried out by the Maritime and
installed LED energy efficient lighting at the car parks
Coastguard Agency took place in March 2016.
E N V I R O N M E N TA L I S S U E S
The Group’s Green Team Committee is chaired by
Natasha Gadsdon and has representation from all
Group activities. The Board has agreed the following
Environmental Statement:
and plans plans to introduce metered power and
water at the fisheries complex together with further
installations of LED lighting during 2017/18.
Sutton Harbour is equipped to manage accidental fuel
spills to minimise pollution of land and sea. The Marina
at Sutton Harbour is equipped with black water tanks
to facilitate the discharge of foul water.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 15
C O M M U N I T Y E N G A G E M E N T
A N D C H A R I TA B L E I N V O LV E M E N T
The Group has a long established commitment to
the community and its neighbourhood. Throughout
its regeneration work, the Group has undertaken
extensive public consultation exercises which have
led to the reshaping and design of many successful
quality regeneration projects surrounding the historic
waterfront. The Group sees itself as the custodian of
the harbour for future generations and as such believes
that working with the local community is essential to
achieve this aspiration.
N ATA S H A G A D S D O N
F I N A N C E D I R E C T O R
27 June 2017
The area of Sutton Harbour is located in the heart of
Plymouth, adjacent to the historic Barbican quarter and
the City Centre. The Group supports city based arts,
sports, community and tourist initiatives and liaises with
Destination Plymouth, Plymouth City Centre Company,
Plymouth City Council and other relevant public
agencies and associations.
Sutton Harbour has hosted a number of yacht races
in the recent past including the Fastnet finish, the start
of the Transat race on two occasions, La Solitaire Du
Figaro single handed yachting event as well as other
local events. The Group has the twin objectives of
stimulating tourism for the city’s benefit, and also
showcasing the developments around Sutton Harbour
which have created a vibrant centre for leisure,
commercial and residential use.
The Group supports local charities and this year has
supported Young Enterprise.
16 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 17
GOVERNANCE
R E P O R T O N
R E M U N E R AT I O N
R E M U N E R AT I O N C O M M I T T E E A N D R E M U N E R AT I O N P O L I C Y
The members of the Committee during the year were as follows:
Robert H. De Barr - Chairman
Graham S. Miller
Sean J. Swales
The Committee met several times during the year, within its terms of reference, to consider the remuneration
packages of the Executive Directors and to make recommendations to the Board. The overriding objective is to
ensure that salary, benefits and other remuneration is sufficient to attract, retain and motivate executives of high
quality, capable of achieving the Group’s objectives and creating value for our Shareholders. The Committee also
takes into account the scale and complexity of the Group’s operations and seeks independent advice, from specialist
advisers, where appropriate.
C O M P O S I T I O N O F R E M U N E R AT I O N
Executive Directors’ pay comprises basic salary reviewed annually, pension scheme contributions to the Group’s
defined contribution pension scheme, annual bonus based on audited results of the Group, and other benefits in
kind including provision of a company car and private medical healthcare. Salary is paid monthly and the annual
bonus is accrued in the financial year to which it relates. Non-Executive Directors receive fees, do not have service
contracts, are not eligible to join the pension scheme and have no entitlement to annual bonuses. It is a requirement
that Directors purchase shares in the Company, although there is no specified minimum holding.
R E M U N E R AT I O N F O R E X E C U T I V E D I R E C T O R S
Profit share bonuses earned on the achievement of targets agreed by the Remuneration Committee for the year
ended 31 March 2017 were £9,700 in respect of Jason W.H. Schofield (2016: £11,500) and £7,800 in respect of
Natasha C. Gadsdon (2016: £9,250).
N O N - E X E C U T I V E D I R E C T O R S F E E S
The fees for Non-Executive Directors are determined by the Board after taking independent advice.
TA B L E S O F D I R E C T O R S R E M U N E R AT I O N
The total remuneration of the Directors of the Company is as follows:
Fees
Other Emoluments
Pension Contributions
2 0 17
£ 0 0 0
83
276
57
416
2 0 16
£ 0 0 0
83
269
55
407
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 17
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 17
The remuneration, excluding pension contributions, of the individual Directors is as follows:
F O R T H E Y E A R
T O 3 1 M A R C H
2 0 17
Graham S. Miller
Jason W.H Schofield
Natasha C. Gadsdon
Sean J. Swales
Robert H. De Barr
F O R T H E Y E A R
T O 3 1 M A R C H
2 0 1 6
Graham S. Miller
Jason W.H. Schofield
Natasha C. Gadsdon
Sean J. Swales
Robert H. De Barr
Directors’
salaries
£000
Taxable
benefits
£000
Bonus
Payments
£000
Directors’
fees
£000
Total
£000
-
130
95
-
-
225
1
22
9
-
-
32
-
10
8
-
-
18
40
-
-
20
23
83
41
162
112
20
23
358
Directors’
salaries
£000
Taxable
benefits
£000
Bonus
Payments
£000
Directors’
fees
£000
Total
£000
-
127
93
-
-
220
1
19
8
-
-
28
-
12
9
-
-
21
40
-
-
20
23
83
41
158
110
20
23
352
18 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 17
The pension contributions made in respect of the Executive Directors to the Group’s defined contribution
scheme were:
Jason W.H. Schofield
Natasha C. Gadsdon
C O N T R A C T S
2 0 17
£ 0 0 0
27
30
57
2 0 1 6
£ 0 0 0
26
29
55
On 30 August 2011, the Group entered into a service contract with Jason W.H. Schofield. Under this agreement
he is employed as a full time Executive Director with a one year rolling contract. He was appointed Chief
Executive of the Group on 30 January 2012.
On 30 August 2011, the Group entered into a service contract with Natasha C. Gadsdon. Under this agreement
she is employed as a full time Executive Director with a one year rolling contract. She was appointed Finance
Director in October 2004.
The Non-Executive Directors are appointed with one month’s notice and the Chairman has a six month
notice period.
On Behalf of the Board
R O B E R T H D E B A R R
D I R E C T O R A N D C H A I R O F
T H E R E M U N E R AT I O N C O M M I T T E E
27 June 2017
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 19
Statement of Directors’ Responsibilities
For the year ended 31 March 2017
Statement of Directors’ responsibilities in respect of the Annual Report and the financial statements
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group
financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and the Company financial
statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including
Financial Reporting Standard 101 ‘Reduced Disclosure Framework’. Under company law the Directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.
The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities
on the Alternative Investment Market. In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with IFRSs, as adopted by the European Union and applicable UK Accounting Standards,
subject to any material departures disclosed and explained in the Group and Parent Company financial statements respectively;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements
of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published
on the Company’s website, in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which
may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of the financial statements contained therein.
By Order of the Board
N ATA S H A G A D S D O N
C O M P A N Y S E C R E TA R Y
27 June 2017
20
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 Independent Auditor’s Report
For the year ended 31 March 2017
Independent Auditor’s Report to the members of Sutton Harbour Holdings plc
We have audited the financial statements of Sutton Harbour Holdings plc for the year ended 31 March 2017 which comprise the Consolidated Income Statement,
the Consolidated Statement of Other Comprehensive Income, the Consolidated and Parent Company Balance Sheets, the Consolidated Cash Flow Statement, the
Consolidated and Parent Company Statements of Changes in Equity and the related consolidated and parent company notes. The financial reporting framework
that has been applied in the preparation of the consolidated financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted
by the European Union. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and
United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 101 “Reduced Disclosure Framework”, as applied
in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditors
As explained more fully in the Directors’ Responsibilities Statement set out on page 20, the directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s (FRC’s) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the FRC’s website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 March 2017
and of the group’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
• the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter – valuation of inventory
In forming our opinion, which is not modified, we have considered the adequacy of the disclosures made in the financial statements concerning the potential impact
of government reports and Plymouth’s planning strategy upon the valuation of the former airport site, which is held as inventory. The conclusion of these reports
and permissions could potentially lead to a material impairment of the airport asset, which currently has a value of £12m in the consolidated balance sheet. Details
of the circumstances relating to this are described in note 4 to the financial statements.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with those financial statements; and
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material
misstatements in the Strategic Report or the Directors’ Report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Carl Deane
Senior Statutory Auditor, for and on behalf of Nexia Smith & Williamson Statutory Auditor
Chartered Accountants
27 June 2017
Portwall Place
Portwall Lane
Bristol
BS1 6NA
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 21
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2017
Consolidated Income Statement
for the year ended 31 March 2017
Revenue
Cost of sales before impairment of assets and onerous leases
Onerous leases
Impairment of assets
Cost of sales
Gross profit
Administrative expenses
Fair value adjustments on investment properties and fixed assets
Operating profit
Finance income
Finance costs
Net finance costs
Profit before tax from continuing operations
Taxation charge on profit from continuing operations
Profit for the year from continuing operations
Profit for the year attributable to owners of the parent
Basic and diluted earnings per share
from continuing operations
Consolidated Income Statement
for the year ended 31 March 2017
Profit for the year
Items that will not be reclassified subsequently to profit or loss:
Revaluation of property, plant and equipment
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
Total comprehensive income for the year attributable to owners of the parent
The notes on pages 26 to 53 are an integral part of these consolidated financial statements.
22
Note
5
13,18
13,14
5,6
9
9
10
2017
£000
6,718
(4,130)
(173)
-
(4,303)
2,415
(1,300)
(105)
1,010
- 2
(957)
(957)
53
(13)
40
40
2016
£000
6,509
(3,960)
-
(272)
(4,232)
2,277
(1,082)
(1,452)
2,647
(1,059)
(1,057)
1,590
(93)
1,497
1,497
12
0.04p
1.55p
Note
13
(
(
2017
£000
40
(765)
(3)
768)
728)
2016
£000
1,497
(1,167)
80
(1,087)
(410)
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Consolidated Balance Sheet
As at 31 March 2017
Note
13
14
18
19
20
23
24
22
26
16
21
24
22
17
26
16
27
2017
£000
26,289
19,460
45,749
20,569
2,060
703
13
23,345
69,094
1,173
123
1,479
71
-
2,846
22,800
238
1,169
1,642
182
76
26,107
28,953
40,141
16,069
5,368
12,683
6,021
40,141
2016
£000
27,295
19,350
46,645
20,097
2,038
686
19
22,840
69,485
1,118
105
1,542
53
33
2,851
22,500
294
1,214
1,629
88
40
25,765
28,616
40,869
16,069
5,368
13,451
5,981
40,869
Non-current assets
Property, plant and equipment
Investment property
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Tax recoverable
Total assets
Current liabilities
Trade and other payables
Finance lease liabilities
Deferred income
Provisions
Derivative financial instruments
Non-current liabilities
Bank loans
Finance lease liabilities
Deferred government grants
Deferred tax liabilities
Provisions
Derivative financial instruments
Total liabilities
Net assets
Issued capital and reserves attributable to owners of the parent
Share capital
Share premium
Other reserves
Retained earnings
Total equity
The notes on pages 26 to 53 are an integral part of these consolidated financial statements.
The Financial Statements on pages 22 to 53 were approved and authorised by the Board of Directors on 27 June 2017 and were signed on its behalf by:
Jason W.H. Schofield
Director
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 23
Consolidated Statement of Changes in Equity
For the year ended 31 March 2017
Notes
Share
capital
Share
premium
£000
£000
Revaluation
reserve
Hedging
reserve
-------------- --- Other reserves ------------------
£000
Merger
reserve
£000
£000
Retained
earnings
Total
equity
£000
£000
Balance at 1 April 2015
16,069
5,368
10,820
3,871
(153)
4,484
40,459
Comprehensive income/(expense)
Profit for the year
Other comprehensive income/(expense)
Revaluation of property, plant and equipment 13
Effective portion of changes in fair value of
cash flow hedges
Total other comprehensive income/(expense)
Total comprehensive income/(expense)
-
-
-
-
-
-
-
-
-
-
Total balance at 31 March 2016
Balance at 1 April 2016
16,069
16,069
5,368
5,368
Comprehensive income/(expense)
Profit for the year
Other comprehensive income/(expense)
Revaluation of property, plant and equipment 13
Effective portion of changes in fair value of
cash flow hedges
3
Total other comprehensive income/(expense)
Total comprehensive income/(expense)
-
-
-
-
-
-
-
-
-
-
Total balance at 31 March 2017
16,069
5,368
-
(1,167)
-
(1,167)
(1,167)
9,653
9,653
-
(765)
-
(765)
(765)
8,888
-
-
-
-
-
3,871
3,871
-
-
-
-
-
-
-
80
80
80
(73)
(73)
-
-
(3)
(3)
(3)
1,497
1,497
-
-
-
(1,167)
80
(1,087)
1,497
410
5,981
40,869
5,981
40,869
40
40
-
-
-
(765)
(3)
(768)
40
(728)
3,871
(76)
6,021
40,141
The cumulative deferred tax relating to items that are charged to equity is £nil (2016: £nil).
The notes on pages 26 to 53 are an integral part of these consolidated financial statements.
Further information in relation to the other reserves set out within the statement of changes in equity can be found in note 27.
24
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Consolidated Cash Flow Statement
For the year ended 31 March 2017
Cash generated from total operating activities
Cash flows from investing activities
Net expenditure on investment property
Expenditure on property, plant and equipment
Interest received
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Loan drawdown/(repayment of borrowings)
Net (repayment)/drawdown of capital element of finance leases
Proceeds of government grants
Net cash generated (used in)/generated from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
The notes on pages 26 to 53 are an integral part of these consolidated financial statements.
Note
29
20
20
2017
£000
1,008
-
(296)
- 2
(296)
(957)
300
(38)
-
(695)
17
686
703
2016
£000
621
(8)
(561)
(567)
(1,059)
850
353
249
393
447
239
686
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 25
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
1. General information
Sutton Harbour Holdings plc (‘the Company’) and its subsidiaries are together referred to as ‘the Group’. The Group is headquartered at Sutton Harbour,
Plymouth and owns and operates the harbour and its ancillary facilities. The other principal activities of the Group are marine operations, waterfront real
estate regeneration, investment and development and also provision of public car parking.
The Company is a public limited company which is listed on the Alternative Investment Market of the London Stock Exchange, is incorporated
and domiciled in the UK and registered in England and Wales with number 02425189. The address of its registered office is Tin Quay House,
Sutton Harbour, Plymouth, Devon, PL4 0RA.
2. Group accounting policies
Basis of preparation
The Group financial statements consolidate those of the Company and its subsidiaries.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and International Financial
Reporting Interpretation Committee (IFRIC) interpretations as adopted by the European Union, and the Companies Act 2006 applicable to companies
reporting under IFRS.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Group financial statements.
Judgements made by the Directors in the application of these accounting policies that have significant effect on the financial statements and estimates with a
significant risk of material adjustment in the next year are discussed in note 4 to these financial statements.
Going concern
The review of the Group’s business activities is set out in the combined Chairman’s Statement and Chief Executive’s Report on pages 4 to 5. The financial
position of the Group, its cash flows and financing position are described in the Financial Review on page 7. In addition, note 3 to the financial statements
gives details of the Group’s financial risk management.
The Group’s forecasts and projections, taking account of reasonably foreseeable possible changes in trading performance, show that the Group should be
able to operate within the level of the facilities and covenants over a period of at least twelve months. The covenants measure interest cover, debt to fair
value and capital expenditure.
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the
foreseeable future. The Group, therefore, continues to adopt the going concern basis in preparing its financial statements.
Measurement convention
The financial statements are prepared on the historical cost basis as modified by the fair value of share based payments, financial assets and financial
liabilities (including derivative instruments) at fair value through the profit or loss. Investment property and other property are carried at fair value. Non-
current assets held for sale are stated at the lower of previous carrying amount and fair value less costs to sell.
The functional currency of the Group and its subsidiaries is pounds sterling and therefore balances are shown in the financial statements in thousands of
pounds sterling, unless otherwise stated.
Basis of consolidation
The consolidated financial statements include the financial statements of Sutton Harbour Holdings plc and its subsidiaries at each reporting date. Control
exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised profits and losses are also
eliminated.
Property, plant and equipment
Property, plant and equipment can be divided into the following classes:
Land and buildings
Assets in the course of construction
Plant, machinery and equipment
Fixtures and fittings
26
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
Land and buildings
Land and buildings include:
- Freehold and leasehold land. Where a lease has an unexpired term of more than 50 years it is considered to share the same
characteristics as freehold land and is shown as such.
- Properties that are mainly owner-occupied, or that are an integral part of the Group’s trading operations (marina including the lock,
quays, marina buildings, the fishmarket building and car parks).
Owner occupied assets are initially recorded at cost and are subsequently revalued and stated at their fair values. Fair value is based on regular valuations
by an external independent valuer and is determined from market-based evidence by appraisal. Valuations are performed with sufficient regularity (at least
annually) to ensure that the fair value of a revalued asset does not differ materially from its carrying amount.
Where owner occupied assets (such as marinas, the fishmarket and car parks) comprise land, buildings, plant and machinery the valuation is of the asset as a
whole. Any valuation movement is allocated to land and buildings only in proportion to their carrying values: plant and machinery continue to be carried at
cost less accumulated depreciation (see below).
Any revaluation surplus is credited to the revaluation reserve except to the extent that it reverses a decrease in the carrying value of the same asset
previously recognised in the income statement, in which case the increase is recognised in the income statement. Any revaluation deficits are recognised in
the income statement, except to the extent of any existing surplus in respect of that asset in the revaluation reserve.
Assets in the course of construction
Assets in the course of construction are held at cost. Depreciation commences when the asset is fully operational as intended.
Plant, machinery and equipment, fixtures and fittings
Plant, machinery and equipment includes items used in the operation of marina, fishmarket and car park trading operations (such as pontoons, piles,
ice making equipment and chillers, car parking meters). Fixtures and fittings includes building fit outs. Plant, machinery and equipment, fixtures and
fittings are all stated at cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to
the acquisition of the items.
Leased assets
Leases in which the Group assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. Where buildings
are held under finance leases the accounting treatment of leases of any associated land is considered separately from that of the buildings. Leased assets
acquired by way of finance lease are stated initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments
at inception of the lease, less accumulated depreciation and impairment losses. Leased assets are depreciated over the shorter of the lease term and useful
economic life. The lease liability is included in the balance sheet as a finance lease liability. Lease payments are apportioned between finance charges and the
reduction of lease liabilities so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the
income statement. Leased properties are subsequently revalued to their fair value.
The treatment of assets held under operating leases where the lessor maintains the risks and rewards of ownership is described in the operating lease
payments accounting policy below.
Depreciation
Depreciation is charged to the income statement over the estimated useful lives of each part of an item of property, plant, machinery and equipment,
fixtures and fittings. Estimated useful lives and residual values are reassessed annually. Where parts of an item of property, plant, machinery and equipment,
fixtures and fittings have different useful lives, they are accounted for as separate items. Freehold land is not depreciated. The estimated useful lives and
depreciation basis of assets are as follows:
Freehold buildings
Leasehold buildings
Plant, machinery and equipment
Fixtures and fittings
(straight line)
(straight line)
(straight line)
(straight line)
10 to 50 years
50 years or remaining period of lease
4 to 30 years
4 to 10 years
Investment property
Investment properties are properties which are held to earn rental income and/or for capital appreciation. Investment properties are initially measured at
cost and subsequently revalued to fair value which reflects market conditions at the balance sheet date. Any gains or losses arising from changes in fair value
are recognised in the income statement in the period in which they arise. Fair value is the estimated amount for which a property could be exchanged, on
the date of valuation, between a willing buyer and a willing seller, in an arm’s length transaction, after proper marketing, in which both parties had acted
knowledgeably, prudently and without compulsion.
Some properties are held both to earn rental income and for the supply of goods and services and administration purposes. Where the different portions
of the property cannot be sold separately, the property is accounted for as an investment property only if an insignificant portion is held for the production
and supply of goods and services and administration purposes.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 27
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
The portfolio is valued on a six-monthly basis by an external independent valuer, who is RICS qualified. The valuer will also have recent experience in the
location and category of property being valued.
The valuations, which are supported by market evidence, are prepared by considering the aggregate of the net annual rents receivable from the properties
and where relevant, associated costs. A yield which reflects the specific risks inherent in the net cash flows is then applied to the net annual rentals to arrive
at the property valuation.
Rental income from investment property is accounted for as described in the revenue accounting policy.
Investment property that is redeveloped for continued future use as an investment property remains classified as an investment property while the
redevelopment is being carried out. While redevelopment is taking place, the property will continue to be valued on the same basis as an investment
property.
All tenant leases have been examined to determine if there has been any transfer of the risks and rewards of ownership from the Group to the tenant in
accordance with IAS 17 ‘Leases’. All tenant leases were determined to be operating leases. Accordingly, all the Group’s leased properties are classified as
investment properties and included in the balance sheet at fair value.
In accordance with IAS 40 ‘Investment Property’, no depreciation is provided in respect of investment properties.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is based on the first-in first-out principle and includes expenditure incurred in
acquiring the inventories and bringing them to their existing location and condition. Where inventory has been transferred from fixed assets, deemed cost
includes revaluation. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
Inventories – development property
Land identified for development and sale, and properties under construction or development and held for resale, are included in current assets at the lower
of cost and net realisable value. Cost includes all expenditure related directly to specific projects, including capitalised interest, and an allocation of fixed
and variable overheads incurred in the Group’s contract activities based on normal operating capacity. Net realisable value is estimated selling value less
estimated costs of completion and estimated costs necessary to make the sale and includes developer’s return where applicable.
Cash and cash equivalents
Cash in the balance sheet comprises cash at bank and in hand. Bank overdrafts and similar borrowings that are repayable on demand and form an integral
part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Offset
arrangements across Group businesses are applied to arrive at the net cash figure.
Impairment
The carrying amounts of the Group’s assets other than investment property and inventories are considered at each balance sheet date to determine
whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Where the carrying amount of an asset exceeds its recoverable amount it is impaired and is written down to its recoverable amount. Impairment losses are
recognised in the income statement.
The recoverable amount of the Group’s financial assets is calculated as the present value of estimated future cash flows, discounted at an appropriate
effective interest rate taking into account the time value of money and the risks associated with future cash flows. The recoverable amount of non-financial
assets is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less
than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised
as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to
the revised estimate of the recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been
determined if no impairment loss had been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised as
income immediately.
Derivative financial instruments and hedging activities
Derivative financial instruments, comprising interest rate swaps, are initially recognised at fair value on the date a derivative contract is entered into and
are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being hedged.
The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management
objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing
basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows or fair values of hedged items.
28
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
The fair values of various derivative instruments used for hedging purposes are disclosed in note 16. Movements on the hedging reserve in shareholders’
equity are shown in the Statement of Changes in Equity and the Statement of Comprehensive Income. The full fair value of a hedging derivative is classified
as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability when the
remaining maturity of the hedged item is less than 12 months.
The fair values are calculated by reference to active market prices, forward exchange rates and LIBOR rates.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity. The gain or loss
relating to the ineffective portion is recognised immediately in the income statement within cost of sales for any foreign exchange derivatives and fuel
hedging derivatives and within financing costs for any interest rate swaps. Amounts accumulated in equity are recycled to the income statement in the
periods when the hedged item affects profit or loss.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in
equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.
Derivatives at fair value through profit and loss and accounted for at fair value through profit or loss
Where derivative instruments do not qualify for hedge accounting, changes in fair value are recognised immediately in the income statement.
The Group has applied hedge accounting for all hedge contracts entered into in both the current and prior year. The effective part of any gain or loss on the
cash flow hedges is recognised directly in the hedging reserve. Any ineffective portion of the hedge is recognised immediately in the income statement.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing
borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period
of the borrowings on an effective interest basis.
Own shares
Ordinary and Deferred shares are classified as equity. Incremental costs directly attributable to the issue of Ordinary and Deferred shares and share options
are recognised as a deduction from equity.
Revenue
Revenue comprises the fair value of the consideration received or receivable, net of value-added-tax, rebates and discounts. Revenue is recognised once the
value of the transaction can be reliably measured and the significant risks and rewards of ownership have been transferred. The following criteria must also
be met before revenue is recognised:
Rent and marina and berthing fees
Rent from investment property and marina and berthing fees are typically invoiced in advance and are accounted for as deferred income and recorded to
revenue during the period to which they are earned.
Lease incentives and costs associated with entering into tenant leases are amortised over the lease term. These are held in the balance sheet within accrued
income.
Other marine related revenue
Fuel sales, landing dues and other ancillary incomes, are recorded to revenue at the point of sale.
Car park revenue
Car park revenue is recognised at the point that a car parking ticket is paid for.
Property sales
Revenue from property sales is recognised when the significant risks and rewards of ownership and effective control of the asset have passed to the buyer.
This will be at the point of legal completion.
Interest Income
Interest income is recognised as it becomes receivable.
Government grants
Government grants are recognised when there is reasonable assurance that the grant will be received and that the Group will comply with all conditions
associated with the grant. Government grants in respect of capital expenditure are credited to reduce the initial carrying value of the related asset. Grants
of a revenue nature are credited to a deferred income account and released to the income statement so as to match them with the expenditure to which
they relate.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 29
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
Operating lease payments
Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received
are recognised in the income statement as an integral part of the total lease expense over the term of the lease.
Net financing costs
Net financing costs comprise interest payable, commitment fees on unused portion of bank facilities, amortisation of prepaid bank facility arrangement fees,
unwinding of discount on provisions, finance charge component of minimum lease payments made under finance leases and interest receivable on funds
invested. Interest payable and interest receivable are recognised in profit or loss as they accrue, unless capitalised as described under “borrowing costs”
below, using the effective interest method. The fair value movement of derivative financial instruments and any ineffective portion of cash flow hedges are
also included within net financing costs.
Borrowing costs
Borrowing costs are capitalised on qualifying assets. A qualifying asset is one that takes more than twelve months to complete. The borrowing rate applied is
that specifically applied to fund the development. In the case of bank borrowings this is the weighted average cost of debt capital. Capitalisation ceases when
substantially all the activities that are necessary to get the property ready for use are complete.
Employee benefits: defined contribution plans
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred.
Employee benefits: share-based payment transactions
The share option programme allows Group employees to acquire shares of the Company; these awards are granted by the Company. The share-based
payments are all equity-settled and are measured at fair value. The fair value of options granted is recognised as an employee expense with a corresponding
increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the
options. The fair value of the options granted is measured using the Black-Scholes option pricing model, taking into account the terms and conditions upon
which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where
forfeiture is due only to share prices not achieving the threshold for vesting.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is
probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks
specific to the liability.
Taxation
Tax on the profit for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable profit for the year, using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.
Deferred tax is recognised on all temporary differences except on the initial recognition of goodwill or on the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
Dividends
Interim dividends are recognised when paid, final dividends are recognised when approved by the shareholders. Dividends unpaid at the balance sheet date
are only recognised as a liability at that date if they have been approved. Unpaid dividends that have not yet been approved are disclosed in the notes to the
financial statements.
30
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses and whose
results are regularly reviewed by the Board.
The following business segments have been identified:
Marine
Real Estate
Car Parking
Regeneration
Revenue included within each segment is as follows:
Marine:
Marina and commercial berthing fees
Fishmarket landing dues
Other marine related revenue including fuel sales and other ancillary income
Car Parking:
Car park revenue
Real Estate:
Rent
Regeneration:
Property sales
Costs, assets and liabilities are allocated to each business segment based on the revenue that they are used to generate.
Trade Receivables
Trade receivables are amounts due from customers for items sold or services performed in the ordinary course of business. If settlement is expected in one
year or less, they are classified as current assets. If not, they are presented as non-current assets. They are initially recognised at fair value and subsequently
carried at amortised cost.
Trade Payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are
classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented
as non-current liabilities. They are initially recognised at fair value and subsequently carried at amortised cost.
IFRS not yet applied
The following new standards, amendments to standards or interpretations have been issued, but are not effective for the financial year beginning 1 April
2017 and have not been adopted early. The directors are currently considering the impact of these new standards and amendments which are not expected
to be adopted early:
IFRS 16 Leases: * 1 January 2019
IFRS 15 Revenue from Contracts with Customers – Amendments * 1 January 2018
Amendments to existing standards and new standards which may apply to the Group in future accounting periods include:
IAS 40 Transfers of Investment Property – Amendments effective 1 January 2018 (not yet EU endorsed)
IFRS 9 Financial Instruments: Classification and Measurement effective 1 January 2018
IFRS 12 Disclosure of Interests in Other Entities – Amendments effective 1 January 2016
IAS 7 Statement of Cash Flows Disclosure Initiative – Amendments effective from 1 January 2017 (not yet EU endorsed)
* mandatory effective date is periods commencing on or after
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 31
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
3. Financial risk management
Fair values
IFRS 13 requires disclosure of fair value measurements for balance sheet financial instruments by level according to the following measurement hierarchy:
Level 1: Quoted prices unadjusted in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly as prices or indirectly
derived from prices; and
Level 3: Inputs for the asset or liability that are not based on observable market data.
The Group does not hold any Level 1 balance sheet financial instruments.
The fair values together with the carrying amounts of the Group’s financial instruments shown in the balance sheet are as follows:
Fair value
1 April 2016
£000
Income
Statement
£000
Other
Comprehensive
Income
£000
Cash-flow
Total (Level 2)
Movements 31 March 2017
£000
£000
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
-
73
-
-
-
58
-
(55)
-
76
Capital risk management
The capital structure of the Group consists of net debt which includes the borrowings disclosed in notes 20 and 21 and shareholders’ equity comprising
issued share capital, reserves and retained earnings.
The capital structure of the Group is reviewed annually with reference to the costs applicable to each element of capital, future requirements of the Group,
flexibility of capital drawdown and availability of further capital should it be required.
The Group has a target gearing ratio of approximately 50% but gearing may exceed these levels where a project is in final stages before ultimate disposal or
becoming fully operational. The Group structures borrowings into general facilities and secures specific financing for individual property projects as deemed
appropriate.
The Board is not recommending the payment of a dividend for the year ended 31 March 2017.
The gearing ratio at the year end was as follows:
Borrowings and loans
Finance lease liabilities
Cash and cash equivalents
Net debt
Equity
Net debt to equity ratio
2017
£000
(22,800)
(361)
703
(22,458)
40,141
55.9%
2016
£000
(22,500)
(399)
686
(22,213)
40,869
54.4%
Bank borrowing facilities and financial covenants
In March 2016 the Group renewed its banking facilities for three years to 10 March 2019, with two term loans totalling £22.5m and a £2.5m revolving credit
facility. No amounts of any loan are due before 10 March 2019.
The banking facilities include financial covenants, including (i) a measure of EBITDA to interest covenant (ii) a debt to fair value of property valuation
covenant and (iii) a capital expenditure covenant. The Group’s forecasts and projections, taking account of reasonably possible changes in trading
performance, show that the Group will be able to operate within the level of the facilities and covenants over a period of at least twelve months.
32
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
Liquidity risk
The Group uses financial instruments, comprising bank borrowing and various items including trade receivables and trade payables that arise directly from
its operations. The main purpose of these financial instruments is to raise finance for the Group’s operations. The main risk arising from the Group financial
instruments is liquidity risk. The Group seeks to manage liquidity risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash
assets safely and profitably. Short-term flexibility is achieved by overdraft facilities. The Group has the ability to manage its liquidity through the timing of
development projects and also the timing of the sale of assets.
Contractual maturity
The following tables analyse the Group’s financial liabilities and net settled derivative financial liabilities into relevant maturity groupings based on the
remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the tables are the contractual undiscounted cash flows
including principal.
As at 31 March 2017:
Bank loans*
Trade and other payables
Finance lease liabilities*
Derivative financial instruments**
As at 31 March 2016:
Bank loans*
Trade and other payables
Finance lease liabilities*
Derivative financial instruments**
Total
£000
0 to <1 year
£000
1 to <2 years
£000
2 to <5 years
£000
(25,235)
(1,173)
(392)
(76)
(26,876)
(714)
(1,173)
(137)
-
(2,024)
(24,521)
-
(114)
(76)
(24,711)
-
-
(141)
-
(141)
Total
£000
0 to <1 years
£000
1 to < 2 years
£000
2 to <5 years
£000
(24,698)
(1,118)
(437)
(125)
(26,378)
(754)
(1,118)
(121)
(54)
(2,047)
(754)
-
(109)
(37)
(900)
(23,190)
-
(207)
(34)
(23,431)
* financial liabilities at amortised cost
** financial liabilities at fair value
Interest rate risk
Since June 2016, LIBOR rates have been hedged on £10m of borrowings until March 2019.
Credit risk
Many of the Group’s customers are required to pay for services in advance of supply which reduces the Group’s exposure to credit risk. Property rentals
and marina berthing are examples of this. The Group pursues debtors vigorously where credit terms have been exceeded. The credit quality of the Group’s
financial assets can be summarised as follows:
Trade receivables:
New customers (less than 12 months)
Existing customers (more than 12 months) with no defaults in the past
Existing customers (more than 12 months) with some defaults in the past
Total trade receivables net of provision for impairment
2017
£000
33
408
46
487
2016
£000
19
513
34
566
Commodity price risk
The Group experiences volatile fuel prices throughout the year. The Group only acts as a reseller of fuel at the fishmarket and marina.
The sales prices are derived from the price paid for fuel and therefore fuel price exposure is no longer considered a risk.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 33
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
Sensitivity analysis
Interest rates
In managing interest rate risks the Group aims to reduce the impact of short-term fluctuations on the Group’s earnings. Over the longer-term, however,
permanent changes in interest rates would have an impact on consolidated earnings.
At 31 March 2017, it is estimated that a general increase of half a percentage point in interest rates (being the best estimate of future anticipated changes
in interest rates), ignoring hedging, would have decreased the Group’s profit before tax from continuing operations by approximately £110,000 (2016:
£110,000). Net assets would have decreased by the same amount.
Valuation of investment property and property held for use in the business
Land & buildings valuations are complex, require a degree of judgement and are based on data some of which is publicly available and some that is not. We
have classified the valuations of our property portfolio as level 3 as defined by IFRS 13 Fair Value Measurement. Level 3 means that the valuation model
cannot rely on inputs that are directly available from an active market. All other factors remaining constant, an increase in trading income would increase
valuation, whilst an increase in equivalent nominal yield would result in a fall in value and vice versa.
In establishing fair value the most significant unobservable input is considered to be the appropriate yield to apply to the trading income. This is based on a
number of factors including the maturity of the business and trading and economic outlook.
Yields applied across the trading and investment assets are in the range of 4.35% – 10.45% with the average yield being 7.25%. Assuming all else stayed the
same; a decrease of 1.0% in the average yield would result in an increase in fair value of £6.750m. An increase of 1.0% in the average yield would result in a
corresponding decrease in fair value of £5.113m.
These assets were independently valued by Jones Lang LaSalle (“JLL”) at 31 March 2017. The valuation by JLL was in accordance with the Practice Statements
in the Valuations Standards (The Red Book) published by the Royal Institution of Chartered Surveyors, on a market-based evidence approach, which is
consistent with the required IFRS 13 methodology.
4. Accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application
of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements that are not readily
apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate
is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The following are the areas that require the use of estimates and judgement that may impact the Group’s balance sheet and income statement:
The valuation of investment property and property held for use in the business as at 31 March 2017 was £19,460,000 and £25,675,000 respectively; (2016:
£19,350,000 and £26,752,000 respectively). In determining the fair value of properties, the Board relies on external valuations carried out by professionally
qualified independent valuers in accordance with the Appraisal and Valuation Standards of the Royal Institution of Chartered Surveyors. The valuation
of investment properties uses estimated rental yields for each property based on market evidence at the date the valuation is carried out. Judgement
is exercised in determining future rental income or profitability of the relevant properties. Within the valuation of property held for use in the business,
judgment is required to allocate the valuation between land and buildings.
The Board exercises judgement in determining the useful life of fixed assets. The useful lives of fixed assets range from 4 to 50 years and are reviewed
regularly to ensure they continue to be appropriate.
The Board exercises judgement in determining whether properties should be classified as investment property or development inventory and this is done by
reference to criteria including whether the property is being marketed for sale in the ordinary course of business and the nature of the development activity
ongoing (including planning applications and development of proposals for submission to the relevant authorities).
Determining the net realisable value of development property (2017: £20,512,000; 2016: £20,025,000)
The Board has exercised judgement in determining the net realisable value of development property, taking into account expected costs to complete
and future sale proceeds, and hence whether any write-down of development property is required. Incorporated in the appraisal of net realisable value
are judgements about: disposal revenue and/or investment value at completion; project formulation (including mix of development uses and development
density); full development cost; amounts payable to third parties (for example, sharing of proceeds with local authority and repayment of grants in the case
of development of the former airport site); financing costs; time value of money; and, allowance for contingency. Included in development inventory is the
Former Airport Site and the Secretary of State for Transport has commissioned another report into the viability of re-opening the airport, which is expected
to be published within the year. The Local Planning Authority is currently in the process of formulating a new planning policy framework to guide Plymouth’s
planning strategy for the 2017 to 2031 period. The Group has positioned its representations that the former airport site is ideally suited to the delivery of a
range of new uses to Plymouth with significant economic, social and employment benefits. There is uncertainty about the outcome of the government report
and planning strategy which, subject to the result, could affect the value and timing of any development of the site. The current carrying value of the asset is
based on this strategy. Should the board change its strategy with a view to a shorter term alternative, this may have an effect on the carrying value of the
asset. No write down has been included in the current year.
a)
b)
c)
d)
34
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
The second largest development inventory item relates to the Sugar House/East Quay site at Sutton Harbour. At the present time, uncertainty about the
final project formulation, planning status, implications of proceeds sharing with any potential third parties and timing of development delivery in relation
to this site persist.
Impairments
The Board exercises judgement in identifying cash-generating units and utilises assumptions, which are often subject to uncertainty, in determining the
recoverable amount of assets (or cash-generating units) to assess whether an asset (or cash-generating unit) is impaired. In the year fixed assets totalling £nil
(2016: £66,000) and development inventory totalling £nil (2016: £206,000) have been impaired.
The calculation of deferred tax assets and liabilities (2017: Liability of £1,642,000; 2016: Liability of £1,629,000)
The Group has not recognised deferred tax assets in respect of certain properties due to a high degree of uncertainty of the timing of when the asset may
be realised.
The calculation of provisions for onerous leases (2017: £253,000; 2016: Liability of £141,000)
In calculating provisions for onerous leases, the Board has exercised judgment in assessing future rental shortfalls, timing, and the discount rate to be used.
The calculation of provisions for bad and doubtful debts.
In exercising its judgment in whether to provide for bad or doubtful debts the Board considers the nature and amount of the debt as well as the ability of the
debtor to pay.
e)
f)
g)
h)
5. Segment results
Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions.
The Board of Directors considers the business from an operational perspective as the Group has only one geographical segment, with all operations being
carried out in the United Kingdom. Details of the types of revenue generated by each segment are given in note 2.
The Board of Directors assesses performance using segmental operating profit. The segment information provided to the Board of Directors for the
reportable segments for the year ended 31 March 2017 is as follows:
Year ended 31 March 2017
Revenue
Gross profit prior to non-recurring items
Non-recurring items:
Onerous leases
Impairment of plant, property and equipment
Segmental Operating Profit before Fair value
adjustment and unallocated expenses
Fair value adjustment on investment
properties and fixed assets
Marine
£000
4,626
1,207
-
-
1,207
(428)
Real Estate
£000
Car Parking
£000
Regeneration
£000
1,609
1,211
(173)
-
1,038
110
483
291
-
-
291
213
-
(121)
-
-
(121)
Unallocated:
Administrative expenses
Operating profit
Financial income
Financial expense
Taxation
Profit for the year from continuing operations
Depreciation charge
Marine
Car Parking
Administration
Total
£000
6,718
2,588
(173)
-
2,415
(105)
2,310
(1,300)
1,010
-
(957)
(13)
40
308
12
16
336
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 35
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
Year ended 31 March 2016
Marine
£000
Real Estate
£000
Car Parking
£000
Regeneration
£000
Revenue
Gross profit prior to non-recurring items
Non-recurring items:
Impairment of plant, property and equipment
Segmental Operating Profit before Fair value
adjustment and unallocated expenses
Fair value adjustment on investment
properties and fixed assets
4,449
1,255
-
1,255
(229)
1,580
1,196
-
1,196
1,829
480
276
-
276
(148)
-
(178)
(272)
(450)
-
Unallocated:
Administrative expenses
Operating profit
Financial income
Financial expense
Taxation
Profit for the year from continuing operations
Depreciation charge
Marine
Car Parking
Administration
Assets and liabilities
Segment assets:
Marine
Real Estate
Car Parking
Regeneration
Total segment assets
Unallocated assets:
Property, plant & equipment
Trade & other receivables
Cash and cash equivalents
Total assets
36
2017
£000
22,865
20,165
4,178
20,668
67,876
100
432
686
69,094
Total
£000
6,509
2,549
(272)
2,277
1,452
3,729
(1,082)
2,647
2
(1,059)
(93)
1,497
231
6
36
273
2016
£000
24,312
20,014
3,620
20,207
68,153
121
525
686
69,485
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
Segment liabilities:
Marine
Real Estate
Car Parking
Regeneration
Total segment liabilities
Unallocated liabilities:
Bank overdraft & borrowings
Trade & other payables
Financial derivatives
Deferred tax liabilities
Tax payable
Total liabilities
Additions to property, plant and equipment
Marine
Car Parking
Unallocated
Total
2017
£000
2,361
531
121
932
3,945
23,161
129
76
1,642
-
28,953
175
120
26
321
2016
£000
2,329
622
78
825
3,854
22,500
560
73
1,629
-
28,616
584
-
27
611
Unallocated assets included in total assets and unallocated liabilities included in total liabilities are not split between segments as these items are centrally managed.
Unallocated expenses include central administrative costs that cannot be split between the various business segments because they are incurred in assisting the
Group generate revenues across all business segments.
Revenue can be divided into the following categories:
Sale of goods
Sale of land and property
Rental income
Provision of services
No revenues from any one customer represented more than 10% of the Group’s revenue for the year.
2017
£000
2,265
- -
1,733
2,720
6,718
2016
£000
2,063
1,740
2,706
6,509
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 37
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
6. Operating result
The following items are included within operating profit/(loss):
Staff costs
Increase/(decrease) in provisions
Rental income from investment property
Loss on sale of property, plant and equipment
Direct operating expenses of investment properties (including repairs and maintenance)
Gain on remeasurement of investment property to fair value
Loss on remeasurement of fixed assets
Depreciation of property, plant and equipment
Operating lease payments
Release of deferred grant
Impairment of property, plant, and equipment
Write down of inventory
Note
8
26
28
14
13
13
28
22
13
18
2017
£000
1,455
112
(1,588)
9
129
(110)
215
336
224
(45 )
-
-
The impairments reflect the difference between the recoverable amount (based upon fair value less costs to sell and further costs to completion)
and book value.
7. Services provided by the Company’s auditors
During the year the Group obtained the following services from the Company’s auditors:
Fees payable to Company’s auditors for the audit of Parent Company and consolidated financial statements
Fees payable to the Company’s auditors for other services:
The audit of Company’s subsidiaries pursuant to legislation
Tax compliance services
2017
£000
15
15
10
2016
£000
1,372
(36)
(1,582)
6
206
(1,829)
377
273
221
(29)
66
206
2016
£000
7
32
9
38
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
8. Staff numbers and costs and Directors’ remuneration
The average number of persons employed by the Group (including Executive Directors, excluding Non-Executive Directors) during the year, analysed by
category, was as follows:
Number of employees
2016
2017
Marine Activities
Property and Regeneration
Administration
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension costs
Note
25
The total remuneration of the Directors of the Company was as follows:
Fees
Other Emoluments
Pension Contributions
23
3
7 8
33
2017
£000
1,185
117
153
1,455
2017
£000
83
276
57
416
Further details of Directors’ remuneration are given in the Remuneration Report on pages 17 to 19, which forms part of these financial statements.
9. Finance income and finance costs
Other finance income
Finance income
Interest payable on bank loans and overdrafts
Interest payable on finance leases
Unwinding of provisions
Other finance costs
Finance costs
2017
£000
- 2
-
820
17
12
108
957
24
3
35
2016
£000
1,103
116
153
1,372
2016
£000
83
260
55
398
2016
£000
2
897
13
17
132
1,059
Borrowing costs capitalised in the year amounted to £23,000 (2016: £50,000).
The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation was 4.4% (2016: 4.4%).
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 39
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
10. Taxation
Deferred tax
Adjustments in respect of previous years
Origination and reversal of temporary differences
Change in tax rate to 17% (2016: 18%)
Total deferred tax
Total tax in income statement
Note
17
2017
£000
(165)
268
(90)
13
13
2016
£000
(656)
902
(153)
93
93
The reduction in the corporation tax rate to 19% from 1 April 2017 and 17% from 1 April 2020 was enacted on 15 September 2016. As this rate was
enacted at the balance sheet date, and reduces the tax rate expected to apply when temporary differences reverse, it has the effect of reducing the UK
deferred tax balance.
The tax assessed for the year is lower (2016: lower) than the standard rate of corporation tax in the UK of 20% (2016: 20%).
Reconciliation of effective tax rate
Profit before tax
Tax on profit at standard corporation tax rate of 20% (2016:20%)
Expenses not deductible and income not chargeable for tax purposes
Adjustments to tax charge in respect of previous periods – deferred tax
Adjust closing deferred tax to average rate of 17% (2016: 18%)
Total tax credit on continuing operations
2017
£000
53
11
22
71
(91)
13
13
13
2016
£000
1,590
318
(284)
212
(153)
93
93
93
11. Dividends paid on equity shares
During the year ended 31 March 2017 no dividends have been paid in respect of previous periods (2016: £nil) or proposed (2016: £nil).
The Board of Directors does not propose a final dividend for the year ended 31 March 2017 (2016: £nil).
40
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
12. Earnings per share
Continuing operations:
Basic earnings per share
Diluted earnings per share
2017
Pence
0.04
0.04
2016
Pence
1.55
1.55
Basic earnings per share
Basic earnings per share have been calculated using the profit for the year of £40,000 (2016: profit of £1,497,000) for the continuing operations.
The average number of ordinary shares in issue, excluding those options granted under the SAYE scheme, of 96,277,086 (2016: 96,277,086) has been
used in the calculation.
Diluted earnings per share
Diluted earnings per share uses an average number of 96,277,086 (2016: 96,277,086) ordinary shares in issue, and takes account of the outstanding options
under the SAYE scheme in accordance with IAS 33 ‘Earnings per Share’. The weighted average number of ordinary shares outstanding after adjustment for
the effects of all dilutive potential ordinary shares of nil (2016: nil), is calculated as follows:
Weighted average number of shares at 31 March
Effect of share options in issue
Weighted average number of ordinary shares (diluted) at 31 March
2017
2016
96,277,086
- -
96,277,086
96,277,086
96,277,086
There is no adjustment for the effect of all dilutive potential ordinary shares because the exercise prices of the options are greater than the average market
price of the shares during both the current and prior year.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 41
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
13. Property, plant and equipment
Cost or valuation
Balance at 1 April 2015
Additions
Revaluations to income statement
Revaluations
Impairment
Transfers
Transfer to investment property (note 14)
Disposals
Balance at 31 March 2016
Balance at 1 April 2016
Additions
Revaluations to income statement
Revaluations
Impairment
Transfers
Disposals
Balance at 31 March 2017
Accumulated depreciation
Balance at 1 April 2015
Depreciation charge for the year
Impairment
Transfers
Disposals
Balance at 31 March 2016
Balance at 1 April 2016
Depreciation charge for the year
Impairment
Transfers
Disposals
Balance at 31 March 2017
Net book value
At 31 March 2016
At 31 March 2017
Assets in the
course of
Construction
£000
Plant, machinery
equipment,
fixtures and
fittings
£000
Land and
buildings
£000
25,212
419
(377)
(1,167)
-
-
(899)
-
23,188
23,188
132
(215)
(765)
-
-
-
22,340
66
50
-
-
-
116
116
134
-
-
-
250
23,072
22,090
-
-
-
-
-
-
-
-
-
-
71
-
-
-
-
-
71
-
-
-
-
-
-
-
-
-
-
-
-
-
71
6,301
192
-
-
(66)
-
(10)
(16)
6,401
6,401
118
-
-
-
-
(48)
6,471
1,968
223
-
-
(13)
2,178
2,178
202
-
-
(37)
2,343
4,223
4,128
Total
£000
31,513
611
(377)
(1,167)
(66)
-
(909)
(16)
29,589
29,589
321
(215)
(765)
-
-
(48)
28,882
2,034
273
-
-
(13)
2,294
2,294
336
-
-
(37)
2,593
27,295
26,289
Included in Land and Buildings is long leasehold land at a value of £2,200,000 (2016: £2,050,000).
Revaluations
Land and buildings are measured using the revaluation model as set out in note 2. These assets were independently valued by Jones Lang LaSalle (“JLL”) at 31
March 2017. The valuation by JLL was in accordance with the Practice Statements in the Valuations Standards (The Red Book) published by the Royal Institution of
Chartered Surveyors, on a market-based evidence approach.
At 31 March 2017, had the freehold land and buildings been measured using the cost model (historical cost less accumulated depreciation and accumulated
impairment losses), their carrying value would be £24,438,000 (2016: £23,440,000).
42
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
At 31 March 2017, had the leasehold land and buildings been measured using the cost model (historical cost less accumulated depreciation and accumulated
impairment losses), their carrying value would be £919,000 (2016: £919,000).
Assets in the course of construction, plant, machinery and equipment and fixtures and fittings are all measured using the cost model, as set out in note 2.
The Group’s obligations under finance leases are secured by the lessor’s title to the fixed assets. The carrying value of plant, machinery and equipment which is
subject to finance leases is £921,000 (2016: £916,000).
14. Investment property
At fair value:
Balance at the beginning of the year
Additions – arising from capitalised subsequent expenditure
Fair value adjustments
Items transferred from property, plant and equipment
Balance at the end of the year
Notes
13
2017
£000
19,350
- 7
110
-
19,460
2016
£000
16,605
1,829
909
19,350
Investment property is measured using the fair value model as set out in note 2. The fair value of the Group’s investment property at 31 March 2017 has been
determined by a valuation carried out at that date by independent, external valuers, JLL in accordance with the Practice Statements in the Valuation Standards
(The Red Book) published by the Royal Institution of Chartered Surveyors. JLL is a member of the Royal Institution of Chartered Surveyors and have appropriate
qualifications and recent experience in the valuation of properties in the relevant locations. The valuations, which are supported by market evidence, are prepared
by considering the aggregate of the net annual rents receivable from the properties and, where relevant, associated costs. A yield which reflects the specific risks
inherent in the net cash flows is then applied to the net annual rentals to arrive at the property valuation.
All of the Group’s investment property is held under freehold interests with the exception of four (2016: four) properties which are held under long leaseholds.
15. Investments
At 31 March 2017 the Group has the following subsidiaries:
Subsidiaries
Sutton Harbour Company
Sutton Harbour Services Limited
Plymouth City Airport Limited
Sutton Harbour Property and Regeneration Limited
Sutton Harbour Commercial Limited
Sutton Harbour Projects Limited
Sutton Harbour Car Parks Limited
Sutton Harbour Projects (No 2) Limited
Class of Ownership
shares held
2017
2016
Nature of Business
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Harbour Authority
Marine Leisure & Property
Property Developer
Property
Property
Property
Car Park Operator
Investment Company
All of the above companies were incorporated in the United Kingdom and registered in England and Wales and for each the registered address is Tin Quay House,
Sutton Harbour, Plymouth PL4 0RA.
All subsidiaries are included in the Group consolidated financial statements.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 43
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
16. Derivative financial instruments
The Group utilises a hedge of interest payments by interest rate swaps hedging future interest rate risk. All hedges are remeasured to fair value as at the
balance sheet date.
Assets Liabilities
Current
Interest rate swaps – cash flow hedges
Total current derivative financial instruments
Non-current
Interest rate swaps – cash flow hedges
Total non-current derivative financial instruments
2017
£000
-
-
2017
£000
-
-
2016
£000
-
-
2017
£000
-
-
Assets Liabilities
2016
£000
-
-
2017
£000
(76)
(76)
2016
£000
(33)
(33)
2016
£000
(40)
(40)
The fair value of hedges as at 31 March 2017 was as follows:
Hedges of interest payments by interest rate swaps hedging future interest rate risk:
Fair value of financial liability of £76,000, contract for £10.0m at 0.87% based on the GBP LIBOR rate ruling each month between 19 June 2016
and 31 March 2019.
The fair value of hedges as at 31 March 2016 was as follows:
Hedges of interest payments by interest rate swaps hedging future interest rate risk:
Fair value of financial liability of £33,000, contract for £15.0m at 1.45% based on the GBP LIBOR rate ruling each month between 18 June 2013
and 18 June 2016.
Fair value of financial liability of £40,000, contract for £10.0m at 0.87% based on the GBP LIBOR rate ruling each month between 19 June 2016
and 31 March 2019.
44
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
17. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities Net
Property, plant and equipment
Investment property
Employee benefits
Losses carried forward
Tax assets / (liabilities)
Movement in deferred tax during the year
Property, plant and equipment
Investment property
Employee benefits
Losses carried forward
2017
£000
2016
£000
-
-
-
7
7
-
-
-
180
180
1 April
2016
£000
(1,164)
(645)
-
180
(1,629)
2017
£000
(1,208)
(441)
-
-
(1,649)
Change in
deferred
tax rate
£000
65
35
-
(10)
90
2016
£000
(1,164)
(645)
-
-
(1,809)
2017
£000
(1,208)
(441)
- -
7
2016
£000
(1,164)
(645)
180
(1,642)
(1,629)
Recognised
in income
£000
Recognised
in equity
£000
31 March
2017
£000
(109)
169
-
(163)
(103)
-
-
-
-
-
(1,208)
(441)
-
7
(1,642)
The Directors believe the deferred tax asset relating to losses carried forward will be utilised by future taxable profits.
18. Inventories
Stores and materials
Goods for resale
Development property
2017
£000
24
33
20,512
2016
£000
44
28
20,025
20,569
20,097
Included within inventories is £20,512,000 (2016: £20,023,000) expected to be recovered in more than 12 months.
Inventories to the value of £1,855,000 were recognised as an expense in the year (2016: £1,675,000).
Interest capitalised during the year in relation to development property was £23,000 (2016: £35,000).
In the course of the year, £nil of development property inventory was written down (2016: £206,000).
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 45
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
19. Trade and other receivables
Trade receivables
Provision for impairment of trade receivables
Other receivables
Prepayments and accrued income
2017
£000
539
(52)
487
145
1,428
2,060
2016
£000
626
(60)
566
96
1,376
2,038
Included within trade and other receivables is £906,000 (2016: £761,000) expected to be recovered in more than 12 months.
The fair value of trade and other receivables classified as loans and receivables are not materially different to their carrying values.
The Group regularly reviews the ageing profile of trade receivables and actively seeks to collect any amounts that have fallen outside the defined credit
terms. The Group provides, in full, for any debts it believes have become non-recoverable. Movements on the Group specific provision for impairment
of trade receivables are as follows:
As at the beginning of the year
Provision for receivables impairment
Receivables written off during the year as uncollectable
As at the end of the year
The ageing of trade receivables that have not been provided for are:
Not yet due:
0 – 29 days
Overdue:
30 – 59 days
60 – 89 days
90 – 119 days
120 + days
2017
£000
60
24
(32)
52
2017
£000
278
148
- 3
10
51
487
2016
£000
46
14
-
60
2016
£000
333
166
11
53
566
As at 31 March 2016, trade receivables of £210,000 (2016: £233,000) were past due but not impaired (as disclosed in the above table).
These relate to a number of independent customers for whom there is no recent history of default.
46
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
20. Cash and cash equivalents
Cash and cash equivalents per balance sheet
Cash and cash equivalents per cash flow statement
2017
£000
703
703
At 31 March 2017, the Group had an agreed bank facility of £25.0m (2016: £25.0m) which expires on 10 March 2019. The facility incurs interest
charged at rates over LIBOR during the term of the facilities. LIBOR rates have been hedged on £10m of the £25.0m facility until 31 March 2019
by way of interest rate swaps.
Security over the assets of the Group has been given in relation to the bank facilities.
Undrawn facilities:
Expiring within one year
Expiring within one to two years
Expiring between two and five years
21. Bank loans
2017
£000
- -
2,200
-
2,200
2016
£000
686
686
2016
£000
-
2,500
2,500
This note provides information about the contractual terms of the Group’s interest-bearing loans. For more information about the Group’s exposure to
interest rate, see note 3.
Non-current liabilities
Secured bank loans
2017
£000
22,800
22,800
2016
£000
22,500
22,500
Secured bank loans:
The current secured bank loans relate to a facility of £25.0m comprising four loans which incur interest at various rates over LIBOR during the term
of the facilities and fall due for renewal more than 12 months from the Balance Sheet date. LIBOR rates have been hedged on £10.0m of the £25.0m
facility until 31 March 2019 by way of an interest rate swap (see note 16). Assets with a carrying amount of £55.0m (2016: £55.5m) have been
pledged to secure borrowings of the Group.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 47
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
22. Deferred income and deferred government grants
Deferred income classified as current liabilities comprises advance rental income and advance marina fees.
Deferred government grants relate to grants received in relation to the Airport runway and lighting surrounding the runway, fit out of units at the fishmarket,
floating walkways within the lock and for construction of the new ice plant and chill chain. The grant liability relating to the airport runway and lighting will not
be released prior to any future sale of the site.
Deferred
Deferred income government grants
2016
£000
2016
£000
2017
£000
2017
£000
1,542
(1,542)
1,479
1,479
1,479
-
1,479
1,504
(1,504)
1,542
1,542
1,542
-
1,542
1,214
(45)
-
1,169
-
1,169
1,169
2017
£000
770
97
122
184
1,173
2017
£000
578
173
5
5 3
9
770
994
(29)
249
1,214
-
1,214
1,214
2016
£000
754
64
108
192
1,118
2016
£000
516
174
26
35
754
At the beginning of the year
Released to the income statement
Income and grants received and deferred
At the end of the year
Current
Non-current
23. Trade and other payables
Trade payables
Other payables
Other taxation and social security costs
Accruals
The ageing of trade payables is as follows:
Not yet due:
0 – 29 days
Overdue:
30 – 59 days
60 – 89 days
90 – 119 days
120 + days
48
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
24. Finance lease liabilities
Capital element
Minimum lease payments of lease payments
2016
£000
2016
£000
2017
£000
2017
£000
Amounts payable under finance leases:
Within one year
In the second to fifth years inclusive
At the end of the year
Less: future finance charges
Present value of lease obligations
Current
Non-current
137
255
392
(31)
361
121
316
437
(38)
399
123
238
361
n/a
361
123
238
361
105
294
399
n/a
399
105
294
399
It is the Group’s policy to lease certain of its property, plant and equipment under finance leases. The average lease term is 3.1 years (2016: 4.0 years). For
the year ended 31 March 2017, the average effective borrowing rate was 4.5% (2016: 4.6%). Interest rates are fixed at the contract date. All finance leases
are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. All lease obligations are denominated in sterling
and the fair value of the Group’s lease obligations approximates to their carrying amount.
25. Employee benefits
Pension plans
Defined contribution plans
The Group operates a number of defined contribution pension plans. The total expense relating to these plans in the current year was £153,000 (2016: £153,000).
There were no amounts outstanding or prepaid at the year end (2016: £nil).
26. Provisions for other liabilities and charges
Balance at 1 April 2015
Provisions made during the year
Provision utilised during the year
Balance at 31 March 2016
Balance at 1 April 2016
Provisions made during the year
Provisions utilised during the year
Balance at 31 March 2017
Current
Non-current
Onerous
leases
£000
Total
£000
177
-
(36)
141
141
173
(61)
253
71
182
253
177
-
(36)
141
141
173
(61)
253
71
182
253
Onerous leases are those where expected rents payable exceed rents receivable on sub-let office space in respect of two leases expiring in 2021.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 49
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
27. Capital and reserves
Share capital
Ordinary shares Deferred shares Total shares
Thousands of shares
2017
2017
2017
2016
2016
2016
In issue at the beginning and end of
the financial year
- fully paid
Authorised Ordinary share capital
100,000,000 Ordinary shares of 1p each
(2016: 100,000,000
Ordinary shares of 1p each)
Allotted, called up and fully paid
96,277,086 (2016: 96,277,086)
Ordinary shares of 1p each (2016: 1p each)
62,943,752 (2016: 62,943,752)
Deferred shares of 24p each (2016: 24p)
96,277
96,277
62,944
62,944
159,221
159,221
2017
£000
2016
£000
2017
£000
2016
£000
2017
£000
2016
£000
1,000
1,000
963
-
963
963
-
963
-
-
-
-
1,000
1,000
963
963
15,106
15,106
15,106
15,106
15,106
16,069
15,106
16,069
There is no limit to the authorised deferred share capital.
The holders of Ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings
of the Company. On a winding up each Ordinary share shall rank in priority to the Deferred shares.
The holders of Deferred shares are not entitled to receive dividends nor are they entitled to vote at meetings of the Company. On a winding up each
Deferred share shall only be entitled to the nominal capital paid up or credited as paid up after paying the nominal capital paid up or credited as paid
up on the Ordinary shares, the Deferred shares and/or any other shares in issue, together with the sum of £1,000,000 on each Ordinary share.
Other reserves
Share premium account
The share premium account represents premiums paid over the nominal value of share capital issued.
Revaluation reserve
The revaluation reserve relates to the revaluation of land and buildings included within property, plant and equipment.
Merger reserve
The merger reserve was created when Sutton Harbour Company was incorporated into the holding company, Sutton Harbour Holdings plc.
It was further increased when a cash box placing of shares occurred on 4 September 2009, creating an additional £3.6m.
Hedging reserve
The hedging reserve contains the effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges.
Retained earnings
Retained earnings represent retained earnings attributable to owners of the parent.
50
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
28. Operating leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
Greater than five years
2017
£000
225
507
-
732
2016
£000
219
815
98
1,132
During the year £224,000 was recognised in respect of operating leases expense in the income statement (2016: £221,000): £196,000 in cost of sales (2016:
£196,000) and £28,000 in administrative expenses (2016: £25,000).
Included within operating lease rentals is an amount of £880,000 (2016: £1,078,000) due in relation to the lease of part of a property which has been sublet.
Income will therefore be generated to offset some of these lease rental amounts.
Leases as lessor
The Group leases certain properties under operating leases (see notes 13 and 14). The future minimum lease rentals receivable under non-cancellable leases
are as follows:
Investment property:
Less than one year
Between one and five years
More than five years
Owner-occupied properties:
Less than one year
Between one and five years
More than five years
2017
£000
1,490
5,446
26,011
32,947
43
139
222
404
2016
£000
1,446
5,653
27,395
34,494
37
142
257
436
Total contingent rents recognised in the year were £39,000 (2016: £60,000). Contingent rents are determined by reference to specific clauses within the
leases.
During the year ended 31 March 2017 £1,588,000 (2016: £1,582,000) was recognised as rental income in the income statement. Repair and maintenance
expense recognised in cost of sales for the year to 31 March 2017 was £46,000 (2016: £60,000).
Owner-occupied property is classified within property, plant and equipment on the balance sheet, reflecting their principal use in the business.
Operating leases on the properties have terms between 5 years and 125 years in length and cannot be cancelled before the end of the lease, unless there is
a break clause. Rent reviews usually occur at five year intervals.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 51
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
29. Cash flow statements
Cash flows from operating activities
Profit for the year from continuing operations
Adjustments for:
Taxation on loss from continuing activities
Financial income
Financial expense
Fair value adjustments on investment property
Revaluation of property, plant and equipment
Depreciation
Amortisation of grants
Impairment of assets
Loss on sale of property, plant and equipment
Cash generated from continuing operations before changes in working capital and provisions
Increase in inventories
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
(Decrease)/increase in deferred income
Increase/(decrease) in provisions
Cash generated from continuing operations
2017
£000
40
13
-
934
(110)
215
336
(45)
-
9 6
1,392
(472)
(18)
57
(63)
112
1,008
2016
£000
1,497
93
(2)
1,009
(1,829)
377
273
(29)
66
1,461
(202)
(514)
(126)
38
(36)
621
52
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
30. Related parties
The parent of the Group is Sutton Harbour Holdings plc. There is no ultimate controlling party. Transactions between the Company and its subsidiaries, which are
related parties of the Company, have been eliminated on consolidation and are not disclosed in this note.
Transactions with key management personnel:
Executive Directors of the Company and their immediate relatives control 0.12% (2016: 0.12%) of the voting shares of the Company.
The compensation of key management personnel (the Executive and Non Executive Directors) is as follows:
Fees
Short term employee benefits including taxable benefits
Social security costs
Company contributions to money purchase pension schemes
2017
£000
83
276
39
57
455
2016
£000
83
260
36
55
434
Mr D McCauley/Rotolok (Holdings) Limited (“Rotolok”) is the Group’s second largest shareholder, holding 28.79% of the issued share capital of Sutton
Harbour Holdings plc, and also has representation on the Board of Directors by virtue of Sean Swales, the Group Managing Director of Rotolok (Holdings)
Limited. As a consequence, Rotolok is considered to have significant influence over the Group as defined in IAS 24 ‘Related party transaction’ and hence
transactions with Rotolok are required to be disclosed. In the year there were no transactions with Rotolok.
30. Capital commitments
At March 2017 the Group has no capital commitments.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 53
Historical Financial Information
For the year ended 31 March 2017
Net Assets
Revenue
Operating profit before fair value adjustments,
impairments and onerous leases
Fair value adjustments on investment
property and fixed assets
2017
£000
40,141
2016
£000
2015
£000
2014
£000
2013
£000
40,869
40,459
38,554
36,562
6,718
6,509
6,955
7,045
7,039
1,288
1,467
1,274
1,167
1,391
(105)
1,452
917
311
(3,426)
Impairment of assets, onerous leases
(173)
(272)
(403)
(354)
(978)
Operating profit/(loss) after fair value adjustments
and impairments
1,010
2,647
1,788
1,124
(3,013)
Other gains and losses
-
-
-
-
69
Net financing costs (excludes joint ventures/associates)
(957)
(1,057)
(927)
(859)
(735)
Profit/(loss) before tax on continuing activities
Loss from discontinued activities
Profit/(loss) attributable to equity shareholders
Dividends paid
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
53
-
40
-
0.04p
0.04p
1,590
861
265
(3,679)
-
-
-
-
1,497
655
1,323
(2,849)
-
-
-
-
1.55p
0.68p
1.37p
(2.96)p
1.55p
0.68p
1.37p
(2.96)p
Dividends paid and proposed per ordinary share
(adjusted for changes in issued share capital)
-
-
-
-
-
54
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Current liabilities
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Net assets
Capital and reserves
Called up share capital
Share premium account
Merger Reserve
Profit and loss account
Total shareholders’ funds
Company Balance Sheet
As at 31 March 2017
Note
5
6
7
8
9
11
11
11
2017
£000
4,657
4,657
42,953
10
42,963
28
42,935
47,592
19,951
27,641
16,069
5,368
3,620
2,584
27,641
2016
£000
4,657
4,657
41,373
8
41,381
21
41,360
46,017
18,834
27,183
16,069
5,368
3,620
2,126
27,183
The notes on pages 57 to 61 are an integral part of these financial statements. In the year the Company made a profit of £458,000 (2016: profit of £699,000).
The Financial Statements were approved and authorised by the Board of Directors on 27 June 2017 and were signed on its behalf by:
Jason W. H. Schofield
Director
Company number: 2425189
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 55
Company Statement of Changes in Equity
As at 31 March 2017
Called up
capital
£000
Share premium
account
£000
Merger
reserve
£000
Profit and loss
account
£000
Total
£000
26,484
699
27,183
27,183
458
1,427
699
2,126
2,126
458
2,584
27,641
Balance at 1 April 2015
Profit for the year
Balance at 31 March 2016
Balance at 1 April 2016
Profit for the year
Balance at 31 March 2017
16,069
-
16,069
16,069
-
16,069
5,368
-
5,368
5,368
-
5,368
3,620
-
3,620
3,620
-
3,620
56
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Notes to the Company Financial Statements
For the year ended 31 March 2017
1. General information
Sutton Harbour Holdings plc (“the Company”) is a limited company incorporated in the United Kingdom under the Companies Act 2006. These financial
statements cover the financial year from 1 April 2016 to 31 March 2017, with comparatives for the year 1 April 2015 to 31 March 2016 and are compliant
with FRS101.
2. Accounting policies
Basis of preparation
The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 March 2017.
The company has taken advantage of the following disclosure exemptions under FRS 101:
• the requirements of IFRS 7 Financial Instruments: Disclosure;
• the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;
• the requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement,
• the requirement in paragraph 38 of IAS 1 ‘Presentation of Financial Statements’ to present comparative information in respect of paragraph
79(a)(iv) of IAS 1;
• the requirements of paragraphs 10(d), 10(f ), 16,, 38(a), 38(b), 38(c), 38(d), 40(a), 40(b), 40(c), 40(d), 111 and 134-136 of IAS 1 Presentation of
Financial Statements;
• the requirements of IAS 7 Statement of Cash Flows;
• the requirements of paragraph 17 of IAS 24 Related Party Disclosures;
• the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a
group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member ; and
• the requirements of paragraphs 134(d)-134(f ) and 135(c)-135(e) of IAS 36 Impairment of Assets.
Going concern
The Company meets its day to day working capital requirements through intercompany funding and is therefore reliant on bank finance in the form of
Group wide term loan and revolving credit facilities. In March 2016, Sutton Harbour Holdings plc and subsidiary companies (the “Group”) renewed its
banking facilities for three years, with two term loans totalling £22.5m and a £2.5m revolving credit facility.
The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to
operate within the level of the facilities and covenants over a period of at least twelve months from the date of approval of these financial statements.
It has been confirmed that the intercompany balances in place will not be requested for repayment in the foreseeable future.
In light of the above and considering the Group’s forecast covenant compliance, in the Directors’ opinion it remains appropriate to adopt the going concern
basis of preparation for these financial statements.
Measurement convention
The financial statements are prepared on the historical cost basis as modified by the fair value of share based payments, financial assets and financial
liabilities (including derivative instruments) at fair value through the profit or loss. Investment property and other property are carried at fair value. Non-
current assets held for sale are stated at the lower of previous carrying amount and fair value less costs to sell.
The functional currency of the Company is pounds sterling and therefore balances are shown in the financial statements in thousands of pounds sterling,
unless otherwise stated.
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company’s financial
statements:
Cash and cash equivalents
Cash in the balance sheet comprises cash at bank and in hand.
Impairment
The carrying amounts of the Company’s assets are considered at each balance sheet date to determine whether there is any indication of impairment. If any
such indication exists, the asset’s recoverable amount is estimated. Where the asset does not generate cash flows that are independent from other assets,
the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where the carrying amount of an asset exceeds its
recoverable amount it is impaired and is written down to its recoverable amount.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 57
Notes to the Company Financial Statements
For the year ended 31 March 2017
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing
borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period
of the borrowings on an effective interest basis.
Own shares
Ordinary and Deferred shares are classified as equity. Incremental costs directly attributable to the issue of Ordinary and Deferred shares and share options
are recognised as a deduction from equity.
Taxation
Tax on the profit for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable profit for the year, using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.
Deferred tax is recognised on all temporary differences except on the initial recognition of goodwill or on the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
Dividends
Interim dividends are recognised when paid, final dividends are recognised when approved by the shareholders. Dividends unpaid at the balance sheet date
are only recognised as a liability at that date if they have been approved. Unpaid dividends that have not yet been approved are disclosed in the notes to the
financial statements.
Financial instruments
Trade and other debtors, trade and other creditors and all intercompany balances are financial instruments and are carried at amortised cost.
58
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 Notes to the Company Financial Statements
For the year ended 31 March 2017
3. Services provided by the Company’s auditors
During the year the Company obtained the following services from the Company’s auditors:
Current auditors:
Fees payable to Company’s auditor for the audit of Parent Company financial statements
Fees payable to the Company’s auditor for other services:
Tax services
2016
£000
6
2017
£000
6
1 1
For further details on other services provided by the Company’s auditors, see note 7 of the main Group consolidated financial statements.
4. Employees and Directors
The Company has no employees. The Directors are not remunerated for their services to the Company. Remuneration in respect of subsidiary undertakings is
disclosed in note 8 to the consolidated financial statements.
5. Investments
Cost and net book value
As at the beginning and end of the financial year
Subsidiary companies:
At 31 March 2017, the Company has the following investments in subsidiaries:
Investment
in subsidiary
undertakings
£000
Total
£000
4,657
4,657
Subsidiaries
Sutton Harbour Company
Sutton Harbour Services Limited
Plymouth City Airport Limited
Sutton Harbour Property and Regeneration Limited
Sutton Harbour Commercial Limited
Sutton Harbour Projects Limited
Sutton Harbour Car Parks Limited
Sutton Harbour Projects (No 2) Limited
Class of Ownership
shares held
2017
2016
Nature of Business
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Harbour Authority
Marine Leisure & Property
Property Developer
Property
Property
Property
Car Park Operator
Investment Company
All of the above companies were incorporated in the United Kingdom and registered in England and Wales and for each the registered address is Tin Quay House,
Sutton Harbour, Plymouth PL4 0RA.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 59
Notes to the Company Financial Statements
For the year ended 31 March 2017
6. Debtors
Amounts owed by subsidiary undertakings
Deferred tax
Other debtors and prepayments
Total debtors
Amounts owed by subsidiary companies are all due in more than one year.
7. Creditors: amounts falling due within one year
Other creditors
Total creditors
Security over the assets of the Group has been given in relation to the bank facilities.
8. Creditors: amounts falling due after more than one year
Amounts owing to subsidiary undertakings
Bank borrowings
Interest is charged at rates over LIBOR during the term of the bank facilities.
2017
£000
42,604
6
343
42,953
2017
£000
28
28
2017
£000
19,651
300 -
19,951
2016
£000
40,797
126
450
41,373
2016
£000
21
21
2016
£000
18,834
18,834
60
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017
Notes to the Company Financial Statements
For the year ended 31 March 2017
9. Called up share capital
Ordinary Shares Deferred Shares Total
Thousands of shares
2017
2016
2017
2016
2017
2016
In issue at the beginning and end of the
financial year – fully paid
96,277
96,277
62,944
62,944
159,221
159,221
Ordinary Shares Deferred Shares Total
2017
£000
2016
£000
2017
£000
2016
£000
2017
£000
2016
£000
Allotted, called up and fully paid
96,277,086 (2016: 96,277,086) Ordinary shares
of 1p each (2016: 25p each)
62,943,752 (2016: 62,943,752) Deferred shares
of 24p each (2016: 24p each)
Total
963
-
963
963
-
963
-
-
963
963
15,106
15,106
15,106
15,106
15,106
16,069
15,106
16,069
The holders of Ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the
Company.
The holders of Deferred shares are not entitled to receive dividends nor are they entitled to vote at meetings of the Company. On a winding up each
Deferred share shall only be entitled to the nominal capital paid up or credited as paid up after paying the nominal capital paid up or credited as paid up on
the Ordinary shares, the Deferred shares and/or any other shares in issue, together with the sum of £1,000,000 on each Ordinary share.
10. Contingencies
The Company has given an unlimited guarantee in respect of bank borrowings of all subsidiary companies. At 31 March 2017, these borrowings amounted
to £22,800,000 (2016: £22,500,000).
11. Description of reserves
Called up share capital
The called up share capital and share premium accounts represent equity share capital (see note 27 to the consolidated financial statements).
Share premium account
The share premium account represents premiums paid over the nominal value of share capital issued (see note 27 to the consolidated financial statements).
Merger reserve
The merger reserve was created when a cash box placing of shares occurred on 4 September 2009. In the opinion of the Directors, this reserve is
distributable (see note 27 to the consolidated financial statements).
Profit and loss account
The profit and loss account represents retained profits.
12. Ultimate controlling party
Sutton Harbour Holdings plc is the ultimate Parent Company of the Group and there is no separate controlling party. The consolidated financial statements
of the Group headed by Sutton Harbour Holdings plc are presented separately on pages 22 to 53 of this document. The results of the Company are not
consolidated in any other group’s financial statements.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2017 61