2018
ANNUAL REPORT &
FINANCIAL STATEMENTS
C O N T E N T S
1 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Strategic Report
2
4
6
7
8
The Group at a Glance
The Chairman’s Statement and Chief Executive’s Report
Key Performance Indicators
Financial Review
Managing Business Risks
Governance
10
11
13
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
24
25
26
27
28
56
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
57
58
59
Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Company Financial Statements
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 1 8
STRATEGIC REPORT
T H E G R O U P
AT A G L A N C E
Sutton Harbour Holdings plc, is the parent of a number
C U R R E N T B U S I N E S S P L A N S
of 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
fishmarket (known as Plymouth Fisheries), The
Marina at Sutton Harbour, together with a number of
• Realisation of inventory assets through
sale and development.
operations related properties;
• Investment in infrastructure to increase capacity,
• a number of other ‘Sutton Harbour’ group
improve service and enhance quality.
companies engaged in waterfront property
• Growth of earnings from core divisions.
• Maintain strong reputation for quality
and customer service.
regeneration and investment including King Point
Marina and car park operating activities; and
• Plymouth City Airport Limited, the company
holding legal interests in the former airport site.
G R O U P V I S I O N
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 2018
Details of the Group’s operating segments, together
with a description of current activities and latest
developments are summarised below:
M A R I N E
Sutton Harbour currently provides berthing for 523
vessels and receives a stable, core annual revenue
stream in the form of dues, fees and rents from the
established fisheries, marinas and property operations.
Plymouth Fisheries, the trading name of the
fishmarket in Plymouth, is recognised as a top
three 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
in 1992 creating a usable depth of water, followed by
the relocation of the fishmarket to the eastern side
in 1995. In the second phase the development of high
quality residential and commercial buildings overlooking
the harbour, and improvements to berthing facilities,
added to the attractiveness of the area to create a long
term sustainable location for business, leisure and living.
The Group is now focused on bringing forward the
third phase with further regeneration to join together
existing key attractions and to position Sutton Harbour
as a destination of regional importance within the South
West which is presented in the ‘Vision’ framework,
see ‘Regeneration’ below.
The Group has been active in establishing a business
community around the northern side of Sutton
Harbour and has been successful in attracting a number
of chartered accountants’ practices, legal firms and
other professional services companies.
C A R P A R K I N G
The Group has two major car parks at Sutton Harbour,
a 340 space multi storey close to the National Marine
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.
S U T T O N H A R B O U R
The Group has established a track record for the
delivery of six major regeneration schemes around
Sutton Harbour and a further two schemes in other
locations elsewhere in the South West. A key feature
of all these schemes was working in partnership with
other public and private sector bodies. In July 2014, a
new ‘Vision’ framework for future development around
Sutton Harbour was launched. Following the change
of majority control of the Company in January 2018, a
number of scheme proposals articulated in the ‘Vision’
have been reviewed and will be submitted for planning
approval in due course.
K I N G P O I N T M A R I N A
F O R M E R A I R P O R T S I T E
In June 2011, the Group was selected by the English
Cities Fund (ECf ) to build and operate the new marina
in the major urban regeneration area of Millbay in
Plymouth. The new King Point Marina received its
first berth-holders in September 2013 and has now
operated for four complete seasons ending
31 March 2018.
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.
In 2000, the Group purchased Plymouth City Airport
Limited and a long lease of the regional airport site.
In 2003 the Group set up and operated the regional
airline, Air Southwest which was subsequently sold
in November 2010 to Eastern Airways International
Limited (Eastern Airways). On 28 July 2011 Air
Southwest (under the ownership of Eastern Airways)
ceased flights in and out of Plymouth City Airport.
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 submitted
its representations for the site to the public hearing of
the Plymouth and South West Devon Joint Local Plan,
the outcome of which is expected later in 2018. 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 2018 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 1 8
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
•
•
•
The Strategic Review culminated in a change in majority ownership following a ‘Partial Offer and Acceptance’ in January 2018.
This resulted in FB Investors LLP acquiring 67,393,960 shares at the offer price of 29.5 pence per share.
Shareholders approved the issue of 9,322,034 new ordinary shares to FB Investors LLP at a General Meeting held on 3 January
2018. Following the ‘Partial Offer and Acceptance’ and subscription to new shares, FB Investors LLP holds 76,715,994 shares,
72.65% of the total issue share capital of the Company.
Philip Beinhaker, a Director of FB Investors LLP, was appointed a Director of the Company on 22 January 2018 and he was
immediately appointed Chairman with Graham Miller stepping down to Non-Executive Director. Robert De Barr stepped
down from the board on 22 January 2018.
Jason Schofield, Chief Executive, gave notice
costs fell from £0.957m (2017) to £0.897m (2018).
of resignation on 23 April 2018 and will leave
The Company’s core £25m banking facility was
the Company on 23 July 2018. The Board
extended in January 2018 to March 2021.
has begun a review of its composition and
structure. The review, led by non-executive
Directors, Graham Miller and Sean Swales, will
consider the commercial requirements of the
business, optimising resources and corporate
governance. This may, or may not, lead to a further
appointment in due course. In the interim period
Philip Beinhaker will act as Executive Chairman.
RESULTS AND FINANCIAL POSITION
During the year net debt (including finance
leases) decreased to £21.858m (31 March 2017:
£22.458m). The new share subscription in January
2018 introduced £2.75m of fresh capital into
the Company. Costs of the change in control of
£1.553m were expended during the year with a
further £0.187m to be paid after the year end. In
addition, £0.152m costs were attributable to the
new share subscription and debited to the Share
The adjusted loss before taxation for the year was
Premium Account. Development Inventories
£0.135m (2017: profit before taxation £0.331m),
increased during the year by £0.721m reflecting
which excludes non-cash fair value adjustments,
the accelerated expenditure in connection with
impairments, provision for onerous leases and
promoting regeneration schemes. £0.588m (2017:
the costs in connection with change of share
£0.296m) expenditure during the year relates to
ownership. Loss before taxation for the year under
infrastructure investment.
review as per the Income Statement, inclusive of
the aforementioned adjustments, was £2.502m
(2017: profit before taxation of £0.053m).
As at 31 March 2018 net assets were £39.328m
(2017: £40.141m), representing 37.2p per share
(2017: 41.7p per share). The decrease incorporates
the results of the fair value adjustment to the
investment property and fixed asset portfolio
of a deficit of £0.626m recorded as a charge to
the Income Statement and the owner occupied
portfolio of a deficit of £1.624m recorded to the
Revaluation Reserve. Overall, these valuation
movements, which were determined by way of
an independent valuation, decreased net assets
by £2.250m (2017: £0.870m). Gearing as at 31
March 2018 stood at 55.6% (2017: 55.9%). Finance
The board does not recommend payment of a
dividend on the year’s results.
DIRECTORS AND STAFF
During the year, Robert De Barr stepped down
from the board, after 5 years as a Non-Executive
Director, Philip Beinhaker was appointed a Non-
Executive Director and Chairman and Graham
Miller reverted to Non-Executive Director after 4
years as Chairman. Staff numbers have continued
to fall slightly as a result of natural wastage, with
an increase in contracting out to meet resource
requirements. Headcount as at 31 March 2018
was 32 (2017: 33).
4 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
O P E R AT I O N S R E P O R T
M A R I N E C O M M E R C I A L - F I S H I N G
Despite a seasonally weaker summer, a bumper autumn
season resulted in another strong year for fish throughput
at Plymouth Fisheries valued at £21.0m (2017: £19.7m).
Fuel sales (marine gasoil) were, however, down 7% by
volume reflecting the market’s success in attracting fish
transported by road from other ports for auction and also
competition from other fuel sellers.
Following on from the renewal of the ice plant and
chillers during the last couple of years, the grant
supported infrastructure programme has continued
with investment this year into new efficient boilers,
and energy efficient lighting and hygienic wall
cladding installed in the auction hall.
representations, which have taken a number of years to
compile, were submitted to the Government Inspectors who
conducted the public hearing from January to March 2018.
The Company currently awaits the outcome of the hearing
and specifically whether the Government Inspectors will
uphold Local Planning Authority’s proposal to safeguard the
Former Airport Site for 5 years for potential general aviation
use (which includes private aircraft and other non-commercial
passenger services), following which, the local planning
authority proposes a review of the policy. The Company
maintains that far greater social and economic benefit for
the city will result from the development of the site for an
appropriate mixture of residential and other uses which can
deliver housing (including a substantial contribution to the
need of social housing), community and educational facilities
and employment space, effectively integrated with the existing
The pedestrian bridge across Sutton Lock has been out
surrounding developments.
of action for year whilst investigations into the bearing
failure and procurement process have progressed. The
Company is working jointly with the Environment Agency
and Plymouth City Council to recommission the bridge as
soon as manufacture lead times will allow.
M A R I N E L E I S U R E - M A R I N A S
Both marinas, Marina at Sutton Harbour and King Point
S U T T O N H A R B O U R
R E G E N E R AT I O N S C H E M E S
The Sugar Quay and Harbour Arch Quay development sites
are positioned on the East and North East Quays of the
harbour respectively and have formerly been referred to as
Sugar House/Boatyard and Horsewash. Following the change
of control and board changes in January 2018, the scheme
proposals for Sugar Quay, as re-worked last year, underwent
Marina, have traded steadily throughout the season
a detailed review. This review was led by Philip Beinhaker
although occupancy is slightly lower than last year.
and Jason Schofield and supported by in-house colleagues
and specialist consultants. The scheme was subsequently
R E A L E S TAT E A N D C A R P A R K I N G
re-designed, incorporating efficient basement parking, retail
Rental occupancy has fallen slightly after some units
have become vacant after long tenancies ended and
some tenants’ businesses failed. This has impacted the
profitability of this activity in the current year. The
Company is actively marketing the vacant space for
which interest remains good from prospective tenants.
Good year on year growth at the car parks has resulted
and leisure space on the ground floor and approximately 175
residential units. The revised scheme is currently being refined
in consultation with the local planning authority, prior to full
planning submission.
An application for Harbour Arch Quay, located at
North East Quay, to create 14 residential units and
ground floor commercial accommodation has been
in profitability of this activity up by 9.3% compared to
submitted for planning approval.
last year. Taken together, the profitability of these two
In addition, proposals are due to be submitted at the same
complementary activities is down 15.9% compared to last
time as the Sugar Quay application to extend Harbour Car
year, before taking fair value adjustments and provisions
Park, situated at the Eastern Gateway to the harbour, creating
for onerous leases into account.signage, have been carried
approximately 150 additional spaces.
The Company gained Marine Management Organisation
(MMO) licensing consent this year for the ‘Boardwalk’ scheme
(three years after planning consent was granted). The same
application has now been re-submitted for planning consent,
as the original consent expired in May 2018 which will be
effective over the same time period as the MMO licence.
out and automatic number plate recognition equipment
has been installed to improve management efficiency.
R E G E N E R AT I O N
Former Airport Site
The Company has actively participated in all stages of
the public consultation in respect of the Local Planning
Authority’s proposed adoption of the new Plymouth
and South West Devon Joint Local Plan. Detailed
O U T L O O K
The investment in the Company by, and the proven experience of FB Investors LLP has provided fresh impetus to
accelerate making Sutton Harbour a destination of regional importance and national significance, building upon the
strengthening of existing activities, with the development of new residential, retail, commercial and leisure amenities.
P H I L I P B E I N H A K E R
C H A I R M A N
29 June 2018
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 2018 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 1 8
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
(Loss)/profit before tax from continuing operations
Adjusted (loss)/profit before tax excluding fair value
adjustments and impairments to inventory
(Loss)/profit after tax
Basic (loss)/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 by floor area
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 1 8
£39.328m
37.3p
£(2.502)m
£(0.135)m
£(2.198)m
(2.24)p
0.0p
£21.858m
55.6%
N O T E
1
2 0 17
£40.141m
41.7p
£0.053m
£0.331m
£0.040m
0.04p
0.0p
£22.458m
55.9%
A S AT 3 1 M A R C H
2 0 1 8
A S AT 3 1 M A R C H
2 0 17
£42.655m
£23.600m
£19.055m
71
£1.262m
5.84%
6.31%
87%
£0.198m
31.90 years
£0.511m
£8.665m
£0.200m
£12.368m
£21.233m
£45.135m
£25.675m
£19.460m
71
£1.317m
7.90%
8.95%
90%
£0.120m
9.8 years
£0.483m
£8.303m
£0.200m
£12.009m
£20.512m
1 Includes a charge for fair value adjustments on investment property and property, plant equipment of £0.626m (2017: £0.105m), a charge
to increase the onerous lease provision of £nil (2017: £0.173m) and a charge for costs of change in ownership of £1.741m (2017: £nil).
6 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 1 8
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
The Group’s year end results are presented
under International Financial Reporting Standards
(IFRS) as adopted by the European Union.
was £11.479m, inclusive of past revaluations
operated within its authorised facilities and has
totalling £3.969m. The net increase in former
met all bank covenants during the year. The bank
airport asset valuation from 31 March 2013
facilities were renewed in January 2018, when
(£11.479m) to 31 March 2018 (£12.368m) of
the Company entered into an agreement which
£530,000 represents the capitalised costs of
provides a maximum £25.0m committed facility
developing the planning intellectual property
with a confirmed expiry date of March 2021.
A S S E T V A L U AT I O N
less the cost attributed to sales of small plots.
During the year, independent valuation of
• Net Realisable Value is estimated with
the Group’s investment and owner-occupied
reference to expected net proceeds for the
portfolio was undertaken at 30 September
25% share of the leasehold interest. The
2017 and at 31 March 2018. The valuation at
mechanism for sharing of net proceeds
30 September 2017 gave rise to a net deficit
with the freeholder, Plymouth City Council,
of £1.057m in the first half year, with further
is set out in the lease.
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.
adjustment in the second half year to give an
overall net deficit for the year of £2.250m. This
deficit is reconciled as £0.405m deficit on the
investment portfolio and £1.845m 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 137 year
leasehold interest, is held as development
inventory at a carrying value of £12.368m. 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
£12.368m 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.
• It was agreed at 31 March 2013 that the
transfer was made at valuation, inclusive of
historic revaluations. As at 31 March 2013
the carrying value of the former airport asset
• The auditors, Nexia Smith and Williamson,
TA X AT I O N
The standard rate of tax applicable to the Group
is 17% (2017: 19%). The overall tax credit for
the year is £0.304m (2017: charge of £0.013m).
No current tax is due on the year’s results
with the tax charge resulting from movements
in timing differences.
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
29 June 2018
included an Emphasis of Matter paragraph
within the 2015, 2016, 2017 and 2018
Audit Reports due to uncertainty about
the impact on Net Realisable Value of the
planning process (Plymouth and South West
Devon 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 Inspectors’ public hearing of
proposed new local planning framework.
• The public hearing took place in early 2018,
with the Government Inspectors’ report
expected later in the year.
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 £21.858m at 31 March
2018 (2017: £22.458m) with a gearing level
of 55.6% (2017: 55.5%). The Company has
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 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 1 8
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
Financing
The availability of adequate
borrowing and other
funding facilities.
Financing
Compliance with bank terms
and covenants.
Financing
Interest rate rises.
The Group’s current banking facilities to a
maximum of £25m expire in March 2021.
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
Tenant failure
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.
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 is exposed to the risk of
loss of revenue and vacant properties
should tenants’ businesses fail.
The Group is developing its plans for various
sites to prepare for new development as
market conditions allow.
The Group prepares comprehensive
representations and applications with
supporting reports where required. Public
consultation is frequently undertaken to
solicit views about proposed schemes.
The Group has a diverse tenant base
encompassing national and independent
occupiers to avoid high exposure to any
single party.
8 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
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. Recruitment for a new
Chief Executive is in progress.
The Group ensures that it has adequate staff
with the necessary skills and experience.
Competitive 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.
Project finance options to be appraised
for each individual project.
Valuation Risk
Public opinion
External
M A R I N E
A C T I V I T I E S
Lock Operations
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
assets 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.
The pedestrian swing bridge over
the lock structure is currently out of
service and undergoing engineering
survey to identify the extent of
works required.
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.
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.
G E N E R A L R I S K S
Pollution Incident
Continuity of Operations
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.
Emergency procedures are in place to
contain and clear a spillage which includes
closure of the lock gates.
The Group has been undertaking planning
infrastructure renewal of Fisheries plant
over the last three years, with the result of
improved efficiency and reliability
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 29 June 2018 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 2018 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 1 8
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
Registrar
Bankers
2425189
Philip H. Beinhaker (Executive Chairman)
Jason W.H. Schofield (Group Chief Executive)
Natasha C. Gadsdon (Finance Director)
Graham S. Miller (Non-Executive Director)
Sean J. Swales (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
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 2018
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 1 8
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 2018.
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 29 June 2018 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
FB Investors LLP
Crystal Amber Fund Limited
Mr. D.McCauley/Rotolok (Holdings) Limited
72.65
7.64
5.71
76,715,994
8,072,813
6,028,760
The Directors are not aware of any other interest in its share capital in excess of 3%.
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 2018 are set out below.
Graham S. Miller
Jason W.H. Schofield
Natasha C. Gadsdon
Sean J. Swales
Robert H. De Barr (resigned 22 January 2018)
2 0 1 8
31,968
3,088
22,623
2,914
-
2 0 17
147,000
14,194
104,026
13,400
10,000
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 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
P H I L I P B E I N H A K E R
Aged 77. Appointed Non Executive Director and Chairman
on 22 January 2018 following the ‘Partial Offer and
Acceptance’ which precipitated a change in control of the
Company whereby FB Investors LLP acquired a controlling
interest in the Company’s shares. Philip is a Director and
the Chairman of Beinhaker Design Services Limited, which
is a member of FB Investors LLP. He is also a member of the
Audit Committee. Philip served as co-founding partner and
Chief Executive Officer of IBI Group, a world-leading firm in
architecture, engineering and project management from its
formation in 1974 until 2013, continuing as a Senior Director
of the IBI Group Management Partnership.
G R A H A M S . M I L L E R
Aged 55. Appointed Non-Executive Director and Chairman
on 23 September 2013, stepping down from the Chairman
role on 22January 2018. 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 52. Appointed Executive Director in December 2007 and
Chief Executive in January 2012. Jason has been with the Group
since June 2007 and he has given notice of resignation and will
leave the Company on 23 July 2018. 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 48. 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.
S E A N J . S W A L E S
Aged 50. Appointed Non-Executive Director in December
2009, he is a Chartered Accountant and Group Managing
Director of Rotolok (Holdings) Limited, the Group’s third
largest shareholder. He is also a member of the Audit and
Remuneration Committees.
In accordance with the Company’s Articles of Association Graham S. Miller retires by rotation at this year’s Annual General Meeting, and being eligible
offers himself for re-election. Following appointment to the board in January 2018, Philip H. Beinhaker offers himself for 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
29 June 2018
12 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
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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 the Executive Chairman, two Non-Executive Directors 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 Executive
Chairman and Chief Executive are separate, although for a transitionary period after the incumbent Chief Executive
leaves the company on 23 July 2018, the Chairman and Chief Executive roles will both be held by Philip Beinhaker.
Graham Miller stepped down as Chairman on 22 January 2018, remaining a Non-Executive Director and became
the Senior Independent Director. Robert De Barr resigned from the board on 22 January 2018.
C O M M I T T E E S
R E M U N E R AT I O N C O M M I T T E E
The Remuneration Committee is chaired by Philip Beinhaker 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.
A U D I T C O M M I T T E E
The Audit Committee is chaired by Graham Miller and its other members are Sean Swales and Philip Beinhaker. The
Committee has written terms of reference and provides a forum for reporting by the Group’s external auditors. The
Committee may request other individuals 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 9.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 13
NOMINATION COMMITTEE
Members of the Nomination Committee were Philip Beinhaker and Jason Schofield, although the search for a
new Chief Executive is being led by Graham Miller and Sean Swales. 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 and 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 and 5. The financial position of the Group, its cash flows and financing position
are described in the Financial Review on page 6. In addition, note 3 to the financial statements gives details of
the Group’s financial risk management.
The Group extended its banking facility to 31 March 2021. 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
29 June 2018
14 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 1 8
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 available to all staff upon request.
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
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 energy use.
• 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
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
make environmentally sound purchasing decisions
and to increase local purchasing.
The Group monitors energy consumption at its
trading facilities. This information is used to manage
consumption through practical energy saving measures
and targeted capital investment. The Group installed
Sutton Harbour Company, a Statutory Harbour
LED energy efficient lighting at the fisheries complex
Authority, and a wholly owned subsidiary of the
and plans to introduce metered power and water
Company, is committed to undertaking statutory duties
at the fisheries complex together with further
in accordance with the standards defined within the
installations of LED lighting during 2018/19.
Port Marine Safety Code. To ensure full compliance
with the code an independent audit of the Sutton
Harbour Safety Management System is carried out
annually. The last audit carried out by the Maritime
and Coastguard Agency took place in March 2018.
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 and recycling
sorting waste bins.
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:
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 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 supports local charities and this year has
supported Young Enterprise and the Junior Leaders
The area of Sutton Harbour is located in the heart of
Field Gun Crew competition.
Plymouth, adjacent to the historic Barbican quarter and
The Group has a long established commitment to
the City Centre. The Group supports city based arts,
the community and its neighbourhood. Throughout
sports, community and tourist initiatives and liaises with
its regeneration work, the Group has undertaken
Destination Plymouth, Plymouth City Centre Company,
extensive public consultation exercises which have
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
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.
showcasing the developments around Sutton Harbour
which have created a vibrant centre for leisure,
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
commercial and residential use.
29 June 2018
16 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 1 8
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 (resigned 22 January 2018)
Philip H. Beinhaker – Chairman (appointed 22 January 2018)
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; they 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
B O N U S P AY M E N T S T O 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 2018 were £nil in respect of Jason W.H. Schofield (2017: £9,700) and £5,000 in respect of Natasha
C. Gadsdon (2017: £7,800).
C O N T R A C T U A L P AY M E N T S T O E X E C U T I V E D I R E C T O R S
In accordance with the Executive Directors’ service contracts, which were signed by both Jason W. H. Schofield
and Natasha C. Gadsdon in August 2011, in the event of the acquisition of 50 per cent. or more of the issued
share capital of the Company by any individual, corporation, partnership or any concert party of such person(s) (a
‘Specified Event’), the director is entitled to payment of a sum equivalent to one year’s salary (plus bonus and the
value of all other benefits under the service contract) as liquidated damages within 28 days of the Specified Event.
In addition, the director may resign on three months’ written notice provided that such notice expires before the
period of nine months from the date of the Specified Event in which case he/she shall be entitled to payment of a
further sum equivalent to one year’s salary (plus bonus and the value of all other benefits under the service contract).
Jason W. H. Schofield and Natasha C. Gadsdon, both being eligible, were paid the contractual sum due within 28
days of the Specified Event which occurred on 3 January 2018, being £186,921 in respect of Jason W. H. Schofield
and £144,416 in respect of Natasha C. Gadsdon. Jason W. H. Schofield served notice of resignation on 23 April
2018, and a provision for the additional contractual sum due on 23 July 2018 of £179,000 has been made in these
accounts, it being linked to the Specified Event. These payments have been expensed through the Income Statement
as ‘Exceptional costs of change in ownership’.
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
Contractual Payments
Pension Contributions
2 0 1 8
£ 0 0 0
86
268
510
82
946
2 0 17
£ 0 0 0
83
276
-
57
416
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 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 1 8
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 1 8
Directors’
salaries
£000
Taxable
benefits
£000
Bonus
Payments
£000
Contractual
Payments
£000
Directors’
fees
£000
Philip H. Beinhaker (Appointed 22 January 2018)
Graham S. Miller
Jason W.H. Schofield
Natasha C. Gadsdon
Sean J. Swales
Robert H. De Barr (resigned 22 January 2018)
-
-
133
96
-
-
229
-
1
23
10
-
-
34
-
-
-
5
-
-
5
-
-
366
144
-
-
510
8
40
-
-
20
18
86
Total
£000
8
41
522
255
20
18
864
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
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
18 Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 1 8
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 1 8
£ 0 0 0
51
31
82
2 0 17
£ 0 0 0
27
30
57
On 30 August 2011, the Group entered into a service contract with Jason W.H. Schofield. He was appointed
Chief Executive of the Group on 30 January 2012. Jason served notice of resignation to the Company on 23
April 2018 and will leave on 23 July 2018.
On 23 April 2018, Philip H. Beinhaker was appointed Executive Chairman.
On 27 June 2018, the Group entered into a revised service contract with Natasha C. Gadsdon. Under this
agreement she is employed as a full time Executive Director with a one year rolling contract except for a short
notice clause exercisable between January and July 2019. She was appointed a Director in July 2004 and Finance
Director in October 2004.
The Non-Executive Directors are appointed with three months’ notice and the Executive Chairman has a six
month notice period.
On Behalf of the Board
P H I L I P H B E I N H A K E 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
29 June 2018
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 19
Statement of Directors’ Responsibilities
For the year ended 31 March 2018
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
29 June 2018
20
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 Independent Auditor’s Report
For the year ended 31 March 2018
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF SUTTON HARBOUR HOLDINGS PLC
We have audited the financial statements of Sutton Harbour Holdings plc (the
‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 March
2018 which comprise Consolidated Statement of Comprehensive Income,
the Consolidated and Parent Company Balance Sheets, the Consolidated and
Parent Company Statement of Changes in Equity, the Consolidated Statement
of Cash Flows, and the notes to the financial statements, including a summary
of significant accounting policies. The financial reporting framework that has
been applied in the preparation of the group 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 including FRS 101 “Reduced Disclosure
Framework”, (United Kingdom Generally Accepted Accounting Practice).
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 2018 and
of the group’s loss 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 United Kingdom Generally Accepted Accounting Practice;
and
• the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are independent of the group
and parent company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to SME listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to
which the ISAs (UK) require us to report to you where:
• the directors’ use of the going concern basis of accounting in the preparation
of the financial statements is not appropriate; or
• the directors have not disclosed in the financial statements any identified
material uncertainties that may cast significant doubt about the group’s or
the parent company’s ability to continue to adopt the going concern basis of
accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
Emphasis of matter – valuation of inventory
We draw attention to note 4 in the financial statements which describes
the potential impact of government reports and future planning permission
applications upon the valuation of the Plymouth airport site, which is held as
inventory on the Balance Sheet at £12.4m.
The ultimate outcome of these reports and applications cannot be presently
determined and the financial statements do not reflect any impairment that
may be required if the result is unfavourable. Our opinion is not modified in
respect of this matter.
Key audit matters
We have identified the following key audit matters described below. Key audit
matters include the most significant assessed risks of material misstatement,
including those risks that had the greatest effect on our overall audit strategy,
the allocation of resources in the audit and the direction of the efforts of the
audit team.
In addressing these matters, we have performed the procedures below which
were designed to address the matters in the context of the financial statements
as a whole and in forming our opinion thereon. Consequently, we do not
provide a separate opinion on these individual matters.
GOING CONCERN
Key audit matter description
Management and the Board have prepared a budget and cash flow forecast
indicating that the group and parent company can operate as a going concern
for at least 12 months from the date the financial statements are approved.
Cash flow projections are inherently judgemental and subject to fluctuation
with expenditure requirements. Also, further investment is required to continue
development of the Boardwalk Scheme and Sugar Quay, which indicates a risk
in being able to obtain the required additional funding. As a result, the ability of
the group and parent company to operate as a going concern for 12 months
from the date of approval of the financial statements was a key area of audit
focus.
Response to key audit matter
We discussed the detailed forecasts and budgets prepared by management.
The main procedures performed on the model and areas where we challenged
management were as follows:
• Testing the quality of management forecasting by comparing forecasts for
prior periods to actual outcomes.
• Testing the appropriateness of the assumptions that had the most material
impact. In challenging these assumptions actual results, external data and
market conditions were taken into account.
• Performing sensitivity calculations to test the adequacy of available headroom.
• Considering the appropriateness of the disclosures made in the financial
statements in respect of going concern.
VALUATION OF PLYMOUTH CITY AIRPORT
(FORMER AIRPORT SITE)
Key audit matter description
Within development inventory the group holds the Former Airport Site, a
113 acre site with unexpired 138 year leasehold, which at the year end has a
carrying value of £12.4m. Under IAS 2, the carrying value has to be assessed for
impairment with the group 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 Local Planning Authority is
currently in the process of formulating a new planning policy framework to
guide Plymouth’s planning strategy to 2034 and the public hearing took place
in early 2018. The group expects the Government Inspectors’ report on the
Plymouth and South West Devon Joint Local Plan to be issued later in 2018 and
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,
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 21
Independent Auditor’s Report
For the year ended 31 March 2018
social and employment benefits. There is significant uncertainty about the
outcome of the Government Inspector’s report and the 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 development strategy.
Response to key audit matter
The main procedures performed on the valuation assessment and areas where
we challenged management were as follows:
• Discussing with management the Board’s strategy with regard to the airport
site and ensuring it is in line with our understanding and basis
of conclusion to support treating it as inventory.
VALUATION OF DEVELOPMENT SITES – SUGAR QUAY
Key audit matter description
Costs incurred on the Sugar Quay development site stand at £8m as at year
end and are held within inventory. The development is in early stages and
planning permission has yet to be received, and hence uncertainty arises over
the net realisable value of the site. The costs include capitalised interest and an
allocation of overheads incurred, which involves judgement.
Response to key audit matter
The main procedures performed on the valuation assessment and areas where
we challenged management were as follows:
• Obtaining an understanding of the planning permission process and the
• Agreeing the ownership of the airport site to land registry documentation.
likelihood of it being granted.
• Agreeing a sample of costs incurred on the site during the year to supporting
documentation and comparing the nature of the expenditure
to the requirements to classify as inventory according to IAS 2.
• Reviewing a sample of additional costs capitalised within the valuation of the
development site and critically assessing these costs against the capitalisation
criteria of IAS 2.
• Inspection of government reports and assessment of their impact on the
• Reviewing of documentation prepared by management supporting the
ability of the group to apply for planning permission.
expectation for the site and potential sale value.
• Consideration of the potential net realisable value of the site with
• Considering the assumptions used within the calculation of expected cost
reference to comparable land value and potential value post development
discounted at an appropriate rate; sensitivity analysis was then performed
against the value of land per acre to determine headroom over
carrying value.
• Performing scenario analysis in line with the different outcomes expected
from the Government Inspector’s report and determining their
potential impact on the net realisable value of the site.
VALUATION OF INVESTMENT PROPERTIES
AND OWNER OCCUPIED LAND AND BUILDINGS
Key audit matter description
Sutton Harbour Holdings Plc adopts a policy of revaluation for its owner
occupied land and buildings as well as its investment properties with valuation
stated at fair value. Under IFRS 13, fair value measurement is required to be
based on the ‘highest and best use’ and in most cases an entity’s current model
is presumed to be its highest and best use, although consideration needs to
be made on a property by property basis to ensure that market opportunities
and conditions do not suggest otherwise. Investment properties (£19.1m) and
fixed assets (£23.6m) held at valuation stand at £42.7m as at the year end. Due
to the impact that the valuations can have on the financial statements and the
inherently judgemental nature of these valuations, we have considered this area
as a key audit focus.
Response to key audit matter
The main procedures performed on the valuation assessment and areas where
we challenged management were as follows:
• Agreeing the valuations recognised in the accounts to the reports prepared
by a professional third party.
• Assessing the professional valuation firm as independent and sufficiently
competent, with respect to qualifications, experience and reputation.
• Testing the appropriateness of the assumptions that had the most material
impact and key variables included in the valuations, such as Fair Maintainable
Operating Profit, yields and market rates. In challenging these assumptions
actual results, external data and market conditions were taken into account.
• Considering the appropriateness of the disclosures made in the financial
statements in respect of the properties.
and sale value by including sensitivity analysis and determining the impact of
different outcomes.
Materiality
The materiality for the group financial statements as a whole was set at
£1.4m. This has been determined with reference to the benchmark of the
group’s total assets, which we consider to be an appropriate measure for a
group of companies with significant value in investments and development
activities which are fundamental to the current and future trading of the group.
Materiality represents 2% of group’s total assets as presented on the face of the
Consolidated Balance Sheet.
We report to the Audit Committee any corrected or uncorrected identified
misstatements exceeding £69,300 (0.1% of group’s total assets), in addition to
other identified misstatements that warrant reporting on qualitative grounds.
The materiality for the parent company financial statements as a whole was
set at £0.6m. This has been determined with reference to the net assets of the
parent company, which we consider to be one of the principal considerations
for members of the company in assessing the performance of the Group.
Materiality represents 2% of parent company’s net assets as presented on the
face of the Balance Sheet.
An overview of the scope of the audit
Of the Group’s 11 reporting components, we audited individually 3 and
subjected another 4 to audit procedures for Group reporting purposes where
the extent of our audit work was based on our assessment of the risk of
material misstatement and of the materiality of that component. The remaining
components are dormant entities.
The components within the scope of our work covered 89% of Group
revenue, 87% of Group profit before tax and 98% of Group net assets.
Other information
The other information comprises the information included in the Annual
Report and Financial Statements, other than the group and parent company
financial statements and our auditor’s report thereon. The directors are
responsible for the other information. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
22
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Independent Auditor’s Report
For the year ended 31 March 2018
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report
Use of our report
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.
C A R L D E A N E
Senior Statutory Auditor, for and on behalf of
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
Portwall Place
Portwall Lane
Bristol
BS1 6NA
29 June 2018
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the parent company financial statements or a material
misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
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 the financial statements; and
• the strategic report and the directors’ report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and parent
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.
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.
Responsibilities of directors
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, and for
such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group’s and parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the parent company or to cease operations, or have no realistic
alternative but to do so.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 23
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2018
Note
7
15,16
6
7,8
11
11
12
2018
£000
6,503
(4,367)
-
(4,367)
2,136
(626)
(1,374)
(1,741)
(1,605)
-
(897)
(897)
(2,502)
304
(2,198)
(2,198)
2017
£000
6,718
(4,130)
(173)
(4,303)
2,415
(105)
(1,300)
-
1,010
-
(957)
(957)
53
(13)
40
40
14
(2.24p)
0.04p
Note
2018
£000
(2,198)
15
(1,624)
70
1,554)
3,752)
(
(
2017
£000
40
(765)
(3)
(768)
(728)
Consolidated Income Statement
for the year ended 31 March 2018
Revenue
Cost of sales before onerous leases
Onerous leases
Cost of sales
Gross profit
Fair value adjustments on investment properties and fixed assets
Administrative expenses
Exceptional costs of change in ownership
Operating (loss)/profit
Finance income
Finance costs
Net finance costs
(Loss)/profit before tax from continuing operations
Taxation credit/(charge) on profit from continuing operations
(Loss)/profit for the year from continuing operations
(Loss)/profit for the year attributable to owners of the parent
Basic and diluted (loss)/earnings per share
from continuing operations
Consolidated Income Statement
for the year ended 31 March 2018
(Loss)/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 28 to 55 are an integral part of these consolidated financial statements.
24
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Consolidated Balance Sheet
As at 31 March 2018
Note
15
16
20
21
22
25
26
24
28
18
23
26
24
19
28
18
29
2018
£000
23,973
19,055
43,028
21,276
2,170
2,767
8
26,221
69,249
1,633
117
1,434
70
6
3,260
24,350
158
646
1,338
169
-
26,661
29,921
39,328
16,162
7,872
10,050
5,244
39,328
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
12,638
6,021
40,141
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 28 to 55 are an integral part of these consolidated financial statements.
The Financial Statements on pages 24 to 55 were approved and authorised by the Board of Directors on 29 June 2018 and were signed on its behalf by:
Jason W.H. Schofield
Director
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 25
Consolidated Statement of Changes in Equity
For the year ended 31 March 2018
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 2016
16,069
5,368
9,653
3,871
(73)
5,981
40,869
Comprehensive income/(expense)
Profit for the year
Other comprehensive income/(expense)
Revaluation of property, plant and equipment 15
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 2017
Balance at 1 April 2017
Adjustment to opening balances
5
Comprehensive income/(expense)
Loss for the year
Other comprehensive income/(expense)
Revaluation of property, plant and equipment 15
Effective portion of changes in fair value of
cash flow hedges
3
Total other comprehensive income/(expense)
Total comprehensive income/(expense)
Transactions with owners of the parent
Purchase of shares
6,29
Total balance at 31 March 2018
-
-
-
-
-
-
-
-
-
-
16,069
16,069
-
5,368
5,368
-
-
-
-
-
-
-
-
-
-
-
93
16,162
2,504
7,872
-
(765)
-
(765)
(765)
8,888
8,888
(1,079)
-
(1,624)
-
(1,624)
(1,624)
-
-
-
-
-
-
3,871
3,871
-
-
-
-
-
-
-
6,185
3,871
-
-
(3)
(3)
(3)
(76)
(76)
-
-
-
70
70
70
-
(6)
40
40
-
-
-
40
(765)
(3)
(768)
(728)
6,021
40,141
6,021
1,421
40,141
342
(2,198)
(2,198)
-
-
-
(1,624)
70
(1,554)
(2,198)
(3,752)
-
2,597
5,244
39,328
The cumulative deferred tax relating to items that are charged to equity is £nil (2017: £nil).
The notes on pages 28 to 55 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 29.
26
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Consolidated Cash Flow Statement
For the year ended 31 March 2018
Cash generated from total operating activities
Cash flows from investing activities
Net expenditure on investment property
Expenditure on property, plant and equipment
Proceeds from sale of plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Expenses of share issuance
Interest paid
Loan drawdown
Net repayment of capital element of finance leases
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
Reconciliation of financing activities for the year ended 31 March 2018
Bank loans
Finance leases
Long term debt
The notes on pages 28 to 55 are an integral part of these consolidated financial statements.
Note
31
22
22
2018
£000
(886)
-
(227)
12
(215)
2,750
(152)
(897)
1,550
(86)
3,165
2,064
703
2,767
2017
£000
1,008
-
(269)
-
(296)
-
-
(957)
300
(38)
(695)
17
686
703
2018
£000
Cash
flow
2017
£000
24,350
1,550
22,800
275
(86)
361
24,625
1,464
23,161
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 27
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
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 and 5. The financial
position of the Group, its cash flows and financing position are described in the Financial Review on page 6. 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.
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. 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
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).
28
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
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; 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.
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.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 29
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
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 re-measured 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.
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.
30
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
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.
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.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 31
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
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.
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
32
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
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.
Changes in accounting policies and disclosures
New and amended Standards and Interpretations adopted by the Group and Company
The Group has adopted “Amendments to IAS7: Statement of Cash Flows Disclosure Initiative” for the first time this period.
The amendment requires additional disclosures which have been provided on the face of the Consolidated Cash Flow Statement.
New and amended Standards and Interpretations Issued but not effective for the financial year beginning 1 April 2017
At the date of authorisation of these accounts, the following standards and interpretations which have not been applied in these accounts
were in issue but not effective:
• IFRS 9 “Financial instruments” will be effective for the year ending March 2019 onwards, the main impact being the impairment assessment
methodology used to value trade receivables, and it is not expected to have a material impact on the Group accounts.
• IFRS 15 “Revenue from contracts with customers” will be effective for the year ending March 2019 onwards, and it is not expected
to have a material impact on the Group accounts.
• IFRS 16 “Leases” will be effective for the year ending March 2020 onwards and the impact on the accounts will be significant. IFRS 16 requires lessees
to recognise the future liability reflecting the future lease payments and a right-of-use asset for all lease contracts. Therefore, the substantial majority
of the Group’s operating lease commitments (some £541k on an undiscounted basis, as shown in Note 30 of the accounts) would be brought onto
the Consolidated Balance Sheet and amortised and depreciated separately. There will be no impact on cash outflows, although presentation of the
Consolidated Cash Flow Statement will change significantly.
The effect of all other new and amended Standards and Interpretations which are in issue but not yet mandatorily effective is not expected to be material.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 33
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
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 2017
£000
Income
Statement
£000
Other
Comprehensive
Income
£000
Cash-flow
Total (Level 2)
Movements 31 March 2018
£000
£000
Financial liabilities
Derivative financial instruments
76
-
(29)
(41)
6
Capital risk management
The capital structure of the Group consists of net debt which includes the borrowings disclosed in notes 22 and 23 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 2018. 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
2018
£000
(24,350)
(275)
2,767
(21,858)
39,328
55.6%
2017
£000
(22,800)
(361)
703
(22,458)
40,141
55.9%
Bank borrowing facilities and financial covenants
In January 2018 the Group extended its banking facilities until 31 March 2021, with two term loans totalling £22.5m and a £2.5m revolving credit facility.
No amounts of any loan are due before 31 March 2021.
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.
34
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
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 2018:
Bank loans*
Trade and other payables*
Finance lease liabilities*
Derivative financial instruments**
As at 31 March 2017:
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
(24,875)
(1,633)
(294)
(6)
(819)
(1,633)
(127)
(6)
(26,808)
(2,585)
(819)
-
(55)
-
(874)
(23,237)
-
(112)
-
(23,349)
Total
£000
0 to <1 years
£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)
* 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
2018
£000
100
389
75
564
2017
£000
33
408
46
487
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 2018 35
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
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 2018, 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 £112,000 (2017:
£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% – 10.47% with the average yield being 7.44%. Assuming all else stayed the
same; a decrease of 1.0% in the average yield would result in an increase in fair value of £6.148m. An increase of 1.0% in the average yield would result in a
corresponding decrease in fair value of £4.691m.
These assets were independently valued by Jones Lang LaSalle (“JLL”) at 31 March 2018. 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 2018 was £19,055,000 and £23,600,000 respectively; (2017:
£19,460,000 and £25,675,000 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 (2018: £21,233,000; 2017: £20,512,000).
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, contributions to the local authority under section 106 agreements, 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. The Local Planning Authority is currently in the process of formulating a new planning
policy framework to guide Plymouth’s planning strategy to 2034 period and the public hearing took place in early 2018. The Group expects the Government
Inspectors’ report on the Plymouth and South West Devon Joint Local Plan be issued later in 2018. 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 Inspector’s 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 development strategy.
a)
b)
c)
d)
36
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
Should the board change its strategy with a view to an alternative, this may have an effect on the carrying value of the asset. No write down has been included
in the current year.
The second largest development inventory item relates to the Sugar Quay (East Quay) site at Sutton Harbour. At the present time, a planning submission is underway
and it is expected that proceeds will exceed the carrying value of the inventory..
e)
f)
g)
h)
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 (2017: £nil) and
development inventory totalling £nil (2017: £nil) have been impaired.
The calculation of deferred tax assets and liabilities (2018: Liability of £1,338,000; 2017: Liability of £1,642,000).
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 (2018: Liability of £239,000; 2017: Liability of £253,000)
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.
5.Adjustment related to prior years
Grants received for construction of assets between 1993 and 1999 were credited to the revaluation and profit and loss reserves. This was not in accordance
with accounting standards and this has been rectified in the current year, with amounts being transferred from the revaluation and investment revaluation
reserves to the assets funded. The impact of this adjustment to opening balances at 1 April 2017 is as follows:
Property, plant and equipment
Deferred government grants
Revaluation reserve
Retained earnings
6. Change in control of business
Debit
£000
-
523
1,079
-
1,602
Credit
£000
181
-
-
1,421
1,602
On 23 November 2018, FB Investors LLP made a partial cash offer for up to 67,393,960 ordinary shares in the business at a price of 29.5p per share. In
connection with the partial offer, FB Investors LLP and the company entered into a conditional subscription agreement pursuant to which FB Investors LLP
agreed to subscribe for 9,322,034 new shares in the Company at a price of 29.5p per share.
Following the offer being declared unconditional on 3 January 2018, FB Investors LLP purchased 67,393,960 shares and also subscribed for the additional
shares for an aggregate consideration of £2.750m. Costs of £1.893m were incurred by the Company in connection with the transaction of which £0.152m
have been debited to the share premium reserve and £1.741m are considered an exceptional cost in the year and have been shown separately on the face
of the consolidated statement of income and expenditure.
7. 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 2018 is as follows:
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 37
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
Year ended 31 March 2018
Revenue
Gross profit prior to non-recurring items
Segmental Operating Profit before fair value
adjustment and unallocated expenses
Fair value adjustment on investment
properties and fixed assets
Marine
£000
4,578
971
971
(221)
Real Estate
£000
Car Parking
£000
Regeneration
£000
1,414
946
946
(405)
511
318
318
-
-
(99)
(99)
-
Unallocated:
Administrative expenses
Exceptional costs of change in ownership
Operating profit
Financial income
Financial expense
Profit before tax from continuing activities
Taxation
Profit for the year from continuing operations
Depreciation charge
Marine
Car Parking
Administration
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
Profit before tax from continuing activities
Taxation
Profit before tax from continuing activities
Depreciation charge
Marine
Car Parking
Administration
38
Total
£000
6,503
2,136
2,136
(626)
1,510
(1,374)
(1,741)
(1,605)
-
(897)
(2,502)
304
(2,198)
297
12
16
325
Total
£000
6,718
2,588
(173)
-
2,415
(105)
2,310
(1,300)
1,010
-
(957)
53
(13)
40
308
12
16
336
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
Segment assets:
Marine
Real Estate
Car Parking
Regeneration
Total segment assets
Unallocated assets:
Property, plant & equipment
Trade & other payables
Cash and cash equivalents
Total assets
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
2018
£000
20,882
19,460
4,233
21,414
65,989
78
415
2,767
69,249
2018
£000
1,858
705
131
938
3,632
24,625
320
6
1,338
-
29,921
227
-
-
227
2017
£000
22,865
20,165
4,178
20,668
67,876
100
432
686
69,094
2017
£000
2,361
531
121
932
3,945
23,161
129
76
1,642
-
28,953
175
120
26
321
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
2018
£000
2,289
-
1,547
2,667
6,503
2017
£000
2,265
-
1,733
2,720
6,718
No revenues from any one customer represented more than 10% of the Group’s revenue for the year.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 39
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
8. Operating result
The following items are included within operating profit/(loss):
Staff costs
Increase/(decrease) in provisions
Rental income from investment property
(Profit)/loss on sale of property, plant and equipment
Direct operating expenses of investment properties (including repairs and maintenance)
Loss/(gain) on remeasurement of investment property to fair value
Loss on re-measurement of fixed assets
Depreciation of property, plant and equipment
Operating lease payments
Release of deferred grant
9. Services provided by the Company’s auditors
During the year the Group obtained the following services from the Company’s auditors:
Note
10
28
30
16
15
15
30
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
2018
£000
1,687
(14)
(1,382)
(10)
117
405
221
325
228
-
2018
£000
22
22
10
2017
£000
1,455
112
(1,588)
9
129
(110)
215
336
224
(45)
2017
£000
15
15
10
40
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
10. 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
2017
2018
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
27
The total remuneration of the Directors of the Company was as follows:
Fees
Other Emoluments
Contractual Payments
Pension Contributions
23
2
7
32
2018
£000
1,381
147
159
1,687
2018
£000
86
268
510
82
946
23
3
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.
11. Finance income and finance costs
Finance income
Interest payable on bank loans and overdrafts
Interest payable on finance leases
Unwinding of provisions
Other finance costs
Finance costs
2018
£000
2017
£000
-
761
14
25
97
897
-
820
17
12
108
957
Borrowing costs capitalised in the year amounted to £40,000 (2017: £23,000).
The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation was 4.4% (2017: 4.4%).
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 41
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
12. Taxation
Deferred tax
Adjustments in respect of previous years
Origination and reversal of temporary differences
Change in tax rate
Total tax (credit)/charge in income statement
Note
19
2018
£000
-
(304)
-
(304)
2017
£000
(165)
268
(90)
13
Finance Act 2016, which received Royal Assent on 15 September 2016, includes legislation to reduce the main rate of corporation tax from 19% to 17%
from 1 April 2020. Accordingly, as this was enacted at the balance sheet date, deferred tax has been calculated at the tax rate of 17%.
The tax assessed for the year is lower (2017: lower) than the standard rate of corporation tax in the UK of 19% (2017: 20%).
Reconciliation of effective tax rate
(Loss)/profit before tax
Tax on profit at standard corporation tax rate of 19% (2017: 20%)
Expenses not deductible for tax purposes
Tax impact for adjustments made to fixed assets in respect of prior periods
Movement on potential chargeable gain on revaluation
Deferred tax assets not recognised
Adjustments to tax charge in respect of previous periods – deferred tax
Adjust closing deferred tax to average rate of 17% (2017: 17%)
Total tax (credit)/charge on continuing operations
2018
£000
(2,502)
(475)
333
(95)
(172)
105
-
-
(304)
2017
£000
53
11
22
-
-
-
71
(91)
13
13. Dividends paid on equity shares
During the year ended 31 March 2018 no dividends have been paid in respect of previous periods (2017: £nil) or proposed (2017: £nil).
The Board of Directors does not propose a final dividend for the year ended 31 March 2018 (2017: £nil).
42
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
14. Earnings per share
2018
Pence
Continuing operations:
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
Basic earnings per share
Basic earnings per share have been calculated using the loss for the year of £2,198,000 (2017: profit of £40,000) for the continuing operations.
On 11 January 2018 the Group issued 9,322,034 shares and the average number of ordinary shares in issue of 98,320,272 (2017: 96,277,086)
has been used in the calculation.
(2.24)
(2.24)
Diluted earnings per share
Diluted earnings per share uses an average number of 98,320,272 (2017: 96,277,086) ordinary shares in issue 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 (2017: nil), is calculated as follows:
2017
Pence
0.04
0.04
Weighted average number of shares at 31 March
Effect of share options in issue
Weighted average number of ordinary shares (diluted) at 31 March
2018
2017
98,320,272
-
98,320,272
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 2018 43
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
15. Property, plant and equipment
Note
Land and
buildings
£000
Assets in the
course of
Construction
£000
Plant, machinery
equipment,
fixtures and
fittings
£000
Cost or valuation
Balance at 1 April 2016
Additions
Revaluations to income statement
Revaluations to revaluation reserve
Impairment
Transfers
Disposals
Balance at 31 March 2017
Balance at 1 April 2017
Adjustment to opening balances
Additions
Revaluations to income statement
Revaluations to revaluation reserve
Impairment
Transfers
Disposals
Balance at 31 March 2018
Accumulated depreciation
Balance at 1 April 2016
Depreciation charge for the year
Transfers
Disposals
Balance at 31 March 2017
Balance at 1 April 2017
Adjustments to opening balances
Depreciation charge for the year
Transfers
Disposals
Balance at 31 March 2018
Net book value
At 31 March 2017
At 31 March 2018
5
5
23,188
132
(215)
(765)
-
-
-
22,340
22,340
527
1
(221)
(1,624)
-
-
-
21,023
116
134
-
-
250
250
(90)
77
-
-
237
22,090
20,786
-
71
-
-
-
-
-
71
71
-
121
-
-
-
(105)
-
87
-
-
-
-
-
-
-
-
-
-
-
71
87
6,401
118
-
-
-
-
(48)
6,471
6,471
(1,171)
105
-
-
-
(80)
(333)
4,992
2,178
202
-
(37)
2,343
2,343
(373)
248
-
(326)
1,892
4,128
3,100
Total
£000
29,589
321
(215)
(765)
-
-
(48)
28,882
28,882
(644)
227
(221)
(1,624)
-
(185)
(333)
26,102
2,294
336
-
(37)
2,593
2,593
(463)
325
-
(326)
2,129
26,289
23,973
Included in Land and Buildings is long leasehold land at a value of £2,200,000 (2017: £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 2018. 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 2018, 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 £19,104,000 (2017: £19,104,000).
44
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
At 31 March 2018, 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 £956,000 (2017: £956,000).
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 £586,000 (2017: £648,000).
16. Investment property
At fair value:
Balance at the beginning of the year
Fair value adjustments
Balance at the end of the year
Notes
2018
£000
19,460
(405)
19,055
2017
£000
19,350
110
19,460
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 2018 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 (2017: four) properties which are held under long leaseholds.
17. Investments
At 31 March 2018 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
Sutton Harbour SQ No.1 Ltd
Sutton Harbour SQ No.1 Ltd
Class of Ownership
shares held
2018
2017
Nature of Business
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
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
Investment Company
Property Developer
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 2018 45
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
18. 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
2018
£000
-
-
2018
£000
-
-
2017
£000
-
-
2018
£000
(6)
(6)
Assets Liabilities
2017
£000
-
-
2018
£000
-
-
2017
£000
-
-
2017
£000
(76)
(76)
The fair value of hedges as at 31 March 2018 was as follows:
Hedges of interest payments by interest rate swaps hedging future interest rate risk:
Fair value of financial liability of £6,000, 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 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.
46
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
19. 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
2018
£000
2017
£000
-
-
-
33
33
-
-
-
7
7
1 April
2017
£000
(1,208)
(441)
-
7
(1,642)
2018
£000
(1,102)
(269)
-
-
(1,371)
Change in
deferred
tax rate
£000
-
-
-
-
-
2017
£000
(1,208)
(441)
-
-
(1,649)
2018
£000
(1,102)
(269)
-
33 7
2017
£000
(1,208)
(441)
-
(1,338)
(1,642)
Recognised
in income
£000
Recognised
in equity
£000
31 March
2018
£000
106
172
-
26
304
-
-
-
-
-
(1,102)
(269)
-
33
(1,338)
The Directors believe the deferred tax asset relating to losses carried forward will be utilised by future taxable profits.
20. Inventories
Stores and materials
Goods for resale
Development property
2018
£000
19
24
21,233
2017
£000
24
33
20,512
21,276
20,569
Included within inventories is £21,233,000 (2017: £20,512,000) expected to be recovered in more than 12 months.
Inventories to the value of £1,927,000 were recognised as an expense in the year (2017: £1,855,000).
Interest capitalised during the year in relation to development property was £40,000 (2017: £23,000).
In the course of the year, £nil of development property inventory was written down (2017: £nil).
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 47
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
21. Trade and other receivables
Trade receivables
Provision for impairment of trade receivables
Other receivables
Prepayments and accrued income
2018
£000
649
(85)
564
326
1,280
2,170
Included within trade and other receivables is £697,000 (2017: £906,000) 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
2018
£000
52
44
(11)
85
2018
£000
338
113
14
36
63
564
As at 31 March 2018, trade receivables of £438,000 (2017: £210,000) 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.
2017
£000
539
(52)
487
145
1,428
2,060
2017
£000
60
24
(32)
52
2017
£000
278
148
-
10
51
487
48
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
22. Cash and cash equivalents
Cash and cash equivalents per balance sheet
Cash and cash equivalents per cash flow statement
At 31 March 2018, the Group had an agreed bank facility of £25.0m (2017: £25.0m) which expires on 31 March 2021.
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
23. Bank loans
2018
£000
2,767
2,767
2018
£000
-
-
650
650
2017
£000
703
703
2017
£000
-
2,200
-
2,200
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
2018
£000
24,350
24,350
2017
£000
22,800
22,800
Secured bank loans:
The current secured bank loans relate to a facility of £25.0m comprising two 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 18). Assets with a carrying amount of £54.7m (2017: £54.8m) have been
pledged to secure borrowings of the Group.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 49
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
24. 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. 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
2017
£000
2017
£000
2018
£000
2018
£000
Note
5
1,479
-
(1,479)
1,434
1,434
1,434
-
1,434
1,524
-
(1,524)
1,479
1,479
1,479
-
1,479
1,169
(523)
-
-
646
-
646
646
2018
£000
967
85
117
464
1,633
2018
£000
685
240
3
10
29
967
1,214
-
(45)
-
1,169
-
1,169
1,169
2017
£000
770
97
122
184
1,173
2017
£000
578
173
5
5
9
770
At the beginning of the year
Adjustment to opening balances
Released to the income statement
Income and grants received and deferred
At the end of the year
Current
Non-current
25. 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
50
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Notes to the Consolidated Financial Statements
For the year ended 31 March 2017
26. Finance lease liabilities
Capital element
Minimum lease payments of lease payments
2017
£000
2017
£000
2018
£000
2018
£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
127
167
294
(19)
275
137
255
392
(31)
361
117
158
275
n/a
275
117
158
275
123
238
361
n/a
361
123
238
361
It is the Group’s policy to lease certain of its property, plant and equipment under finance leases. The average lease term is 2.9 years (2017: 3.1 years).
For the year ended 31 March 2018, the average effective borrowing rate was 4.6% (2017: 4.5%). 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.
27. 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 £159,000 (2017: £153,000).
There were no amounts outstanding or prepaid at the year end (2017: £nil).
28. Provisions for other liabilities and charges
Balance at 1 April 2016
Provisions made during the year
Provision utilised during the year
Balance at 31 March 2017
Balance at 1 April 2017
Provisions made during the year
Provisions utilised during the year
Balance at 31 March 2018
Current
Non-current
Onerous
leases
£000
Total
£000
141
173
(61)
253
253
-
(14)
239
70
169
239
141
173
(61)
253
253
-
(14)
239
70
169
239
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 2018 51
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
29. Capital and reserves
Share capital
Ordinary shares Deferred shares Total shares
Thousands of shares
2018
2018
2018
2017
2017
2017
In issue at the beginning of
the financial year - fully paid
Issued for cash
In issue at the end of the
financial year – fully paid
Allotted, called up and fully paid
105,599,120 (2017: 96,277,086)
Ordinary shares of 1p each (2017: 1p each)
62,943,752 (2017: 62,943,752)
Deferred shares of 24p each (2017: 24p)
96,277
9,322
105,599
2018
£000
1,056
-
1,056
96,277
-
96,277
2017
£000
963
-
963
62,944
-
62,944
2018
£000
62,944
-
62,944
2017
£000
159,221
9,322
159,221
-
168,543
159,221
2018
£000
2017
£000
-
-
1,056
963
15,106
15,106
15,106
15,106
15,106
16,162
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.
Issue of shares during 2018
On 10 January 2018, Sutton Harbour Holdings plc issued 9,322,034 ordinary shares of 1p each to FB Investors LLP at a price of 29.5p each. Net proceeds
after issue costs were £0.913m and the £2.504m excess of the value of the shares over their nominal value was credited to the Share premium account.
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.
52
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
30. 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
2018
£000
220
321
-
541
2017
£000
225
507
-
732
During the year £228,000 was recognised in respect of operating leases expense in the income statement (2017: £224,000): £196,000 in cost of sales (2017:
£196,000) and £32,000 in administrative expenses (2017: £28,000).
Included within operating lease rentals is an amount of £489,000 (2017: £685,000) 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 15 and 16). 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
2018
£000
1,309
4,474
24,888
30,671
35
139
158
332
2017
£000
1,490
5,446
26,011
32,947
43
139
222
404
Total contingent rents recognised in the year were £74,000 (2017: £39,000). Contingent rents are determined by reference to specific
clauses within the leases.
During the year ended 31 March 2018 £1,382,000 (2017: £1,588,000) was recognised as rental income in the income statement. Repair and maintenance
expense recognised in cost of sales for the year to 31 March 2018 was £56,000 (2017: £46,000).
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 2018 53
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
31. Cash flow statements
Cash flows from operating activities
Profit for the year from continuing operations
Adjustments for:
Taxation on loss from continuing activities
Financial expense
Fair value adjustments on investment property
Revaluation of property, plant and equipment
Depreciation
Amortisation of grants
Loss on sale of property, plant and equipment
Cash generated from continuing operations before changes in working capital and provisions
Increase in inventories
Decrease/(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
2018
£000
(2,198)
(304)
897
405
221
325
-
(10)
(664)
(707)
82
462
(45)
(14)
(886)
2017
£000
40
13
934
(110)
215
336
(45)
9
1,392
(472)
(18)
57
(63)
112
1,008
54
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
32. Related parties
The parent of the Group is Sutton Harbour Holdings plc. The ultimate controlling party is FB Investors LLP, which is owned jointly by Beinhaker Design Services
Limited and 1895 Management Holdings ULC. In the course of the year, Beinhaker Design Services Limited provided services to the value of £67,000 (2017: £nil).
At 10 January 2018, as a result of the acquisition by FB Investors LLP of 72.65% of the increased issued share capital of Sutton Harbour Holdings plc, Philip
Beinhaker joined the Board of Directors as Executive Chairman.
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 72.69% (2017: 0.12%) of the voting shares of the Company. The compensation of key
management personnel (the Executive and Non Executive Directors) is as follows:
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
2018
£000
86
778
147
82
1,093
2017
£000
83
276
39
57
455
Until 10 January 2018, Mr D McCauley/Rotolok (Holdings) Limited (“Rotolok”) was the Group’s second largest shareholder, holding 28.79% of the issued
share capital of Sutton Harbour Holdings plc. From 10 January 2018, Rotolok has held 5.71% of the issued share capital and still 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
had significant influence over the Group as defined in IAS 24 ‘Related party transaction’ until 10 January 2018 and hence transactions with Rotolok until that
date are required to be disclosed. In the year there were no transactions with Rotolok.
33. Capital commitments
At March 2018 the Group has no capital commitments.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 55
Historical Financial Information
For the year ended 31 March 2018
Net Assets
Revenue
2018
£000
39,328
2017
£000
2016
£000
2015
£000
2014
£000
40,483
40,869
40,459
38,554
6,503
6,718
6,509
6,955
7,045
Operating profit before fair value adjustments,
impairments, costs of change in ownership and onerous leases
762
1,288
1,467
1,274
1,167
Fair value adjustments on investment
property and fixed assets
(626)
(105)
1,452
917
311
Impairment of assets, onerous leases
-
(173)
(272)
(403)
(354)
Operating profit/(loss) after fair value adjustments
and impairments
(1,605)
1,010
2,647
1,788
1,124
Net financing costs (excludes joint ventures/associates)
(897)
(957)
(1,057)
(927)
(859)
Profit/(loss) before tax on continuing activities
Loss from discontinued activities
Profit/(loss) attributable to equity shareholders
Dividends paid
(2,502)
-
(2,198)
-
53
-
40
-
1,590
861
265
-
-
-
1,497
655
1,323
-
-
-
Basic earnings/(loss) per share
(2.24)p
0.04p
1.55p
0.68p
1.37p
Diluted earnings/(loss) per share
(2.24)p
0.04p
1.55p
0.68p
1.37p
56
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
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 2018
Note
5
6
7
8
9
11
11
11
2018
£000
11,268
11,268
26,939
2,008
28,947
29
28,918
40,186
11,539
28,647
16,162
7,872
3,620
993
28,647
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
The notes on pages 59 to 63 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 29 June 2018 and were signed on its behalf by:
Jason W. H. Schofield
Director
Company number: 2425189
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 57
Company Statement of Changes in Equity
As at 31 March 2018
Called up
capital
£000
Share premium
account
£000
Merger
reserve
£000
Profit and loss
account
£000
Total
£000
27,183
458
2,126
458
2,584
27,641
2,584
(1,591)
-
27,641
(1,591)
2,597
993
28,647
Balance at 1 April 2016
Profit for the year
Balance at 31 March 2017
Balance at 1 April 2017
Loss for the year
Issue of shares
Balance at 31 March 2018
16,069
-
16,069
16,069
-
93
16,162
5,368
-
5,368
5,368
-
2,504
7,872
3,620
-
3,620
3,620
-
-
3,620
58
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Notes to the Company Financial Statements
For the year ended 31 March 2018
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 2017 to 31 March 2018, with comparatives for the year 1 April 2016 to
31 March 2017 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 January 2018, Sutton Harbour Holdings plc and subsidiary companies (the “Group”) renewed
its banking facilities until March 2021, 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:
Investments
Investments are carried cost less any provision for impairment in value.
Cash and cash equivalents
Cash in the balance sheet comprises cash at bank and in hand.
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 59
Notes to the Company Financial Statements
For the year ended 31 March 2018
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.
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.
60
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018 Notes to the Company Financial Statements
For the year ended 31 March 2018
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
2018
£000
22
1
2017
£000
6
1
For further details on other services provided by the Company’s auditors, see note 9 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
Investments in subsidiary undertakings
Subsidiary companies:
At 31 March 2018, the Company has the following investments in subsidiaries:
2018
£000
2017
£000
11,268
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
Sutton Harbour SQ No. 1 Ltd
Sutton Harbour SQ No. 2 Ltd
Class of Ownership
shares held
2017
2016
Nature of Business
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
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
Investment Company
Property Developer
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 2018 61
Notes to the Company Financial Statements
For the year ended 31 March 2018
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.
2018
£000
26,560
- 6
379
26,939
2018
£000
29
29
2018
£000
9,689
1,850
11,539
2017
£000
42,604
343
42,953
2017
£000
28
28
2017
£000
19,651
300
19,951
9. Called up share capital
Ordinary Shares Deferred Shares Total
Thousands of shares
2018
2017
2018
2017
2018
2017
In issue at the beginning and end of the
financial year – fully paid
Issued for cash
In issue at the end of the financial year – fully paid
96,277
9,322
105,599
96,277
-
96,277
62,944
-
62,944
62,944
-
62,944
159,221
9,322
168,543
159,221
-
159,221
Ordinary Shares Deferred Shares Total
2018
£000
2017
£000
2018
£000
2017
£000
2018
£000
2017
£000
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
105,599,120 (2017: 96,277,086)
62,943,752 (2017: 62,943,752)
Deferred shares of 24p each (2017: 24p each)
Total
6262
1,000
1,000
1,056
-
1,056
963
-
963
-
-
-
-
1,000
1,000
1,056
963
15,106
15,106
15,106
15,106
15,106
16,162
15,106
16,069
Sutton Harbour Holdings plc – Annual Report & Financial Statements 2018
Notes to the Company Financial Statements
For the year ended 31 March 2018
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.
Issue of shares during 2018
On 23 November 2018, FB Investors LLP made a partial cash offer for up to 67,393,960 ordinary shares in the business at a price of 29.5p per share. In
connection with the partial offer, FB Investors LLP and the company entered into a conditional subscription agreement pursuant to which FB Investors LLP
agreed to subscribe for 9,322,034 new shares in the Company at a price of 29.5p per share.
Following the offer being declared unconditional on 3 January 2018, FB Investors LLP purchased 67,393,960 shares and also subscribed for the additional
shares for an aggregate consideration of £2.750m of which £2.504m have been credited to the share premium reserve.
10. Contingencies
The Company has given an unlimited guarantee in respect of bank borrowings of all subsidiary companies. At 31 March 2018, these borrowings amounted
to £24,350,000 (2017: £22,800,000).
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. The ultimate controlling party is FB Investors LLP, which is owned jointly
by Beinhaker Design Services Limited and 1895 Management Holdings ULC, and owns 72.65% of the issued share capital of Sutton Harbour Holdings plc.
The consolidated financial statements of the Group headed by Sutton Harbour Holdings plc are presented separately on pages 24 to 55 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 2018 63
Tin Quay House Sutton Harbour Plymouth PL4 0RA
Telephone 01752 204186 www.suttonharbourholdings.co.uk