C O N T E N T S
1 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Strategic Report
2
4
6
7
8
The Group at a Glance
Executive Chairman’s Statement
Key Performance Indicators
Financial Review
Managing Business Risks
Governance
10
11
13
19
21
24
25
Directors and Advisors
Directors’ Report
Statement of Compliance with QCA Corporate Governance Code
Corporate, Environmental and Social Responsibility Report
Report on Remuneration
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Consolidated Group Financial Statements under IFRS
28
29
30
31
32
60
Consolidated Income Statement
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
61
62
63
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 9
STRATEGIC REPORT
T H E G R O U P
AT A G L A N C E
Sutton Harbour Group plc (formerly Sutton Harbour
O U R O B J E C T I V E S
Holdings plc), listed on the AIM Market of the London
Stock Exchange since 1996, is the parent of a number of
wholly owned subsidiary companies which include:
• Sutton Harbour Company, the statutory harbour
authority company, which operates the Plymouth
fishmarket (known as Plymouth Fisheries), The
• 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.
Marina at Sutton Harbour, together with a
• To build on the Group’s strength as a specialist in
number of operations related properties.
waterfront destination and regeneration in the South
• A number of other ‘Sutton Harbour’ group
West region.
companies engaged in waterfront property
• To increase and improve the income earning asset
regeneration and investment including King Point
portfolio of the Group.
Marina and car park operating activities; and
• To provide a progressive dividend return to
• Plymouth City Airport Limited, the company
shareholders in the medium term.
holding legal interests in the former airport site.
G R O U P V I S I O N
C U R R E N T B U S I N E S S P L A N S
• Retention of assets and development of new assets
The Group aims to be the leading marine,
for investment and revenue earning potential.
waterfront regeneration and destination
specialist in Southern England.
• Realisation of inventory assets through
sale and development.
• Investment in infrastructure to increase capacity,
improve service and enhance quality.
• Growth of earnings from core divisions.
• Maintain strong reputation for quality
and customer service.
2 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
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 an increasing, core annual revenue
stream in the form of dues, fees and rents from the
established fisheries, marinas and property operations.
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, with an approximate total of 50 spaces.
Plymouth Fisheries, the trading name of the
fishmarket in Plymouth, is recognised as a top
three fishing port in England.
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
The location of Sutton Harbour, in central Plymouth
and adjoining the historic Barbican quarter, has
undergone two main phases of regeneration over the
past 3 decades. 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 (three major new
planning permissions were secured in 2018 to deliver
new residential, retail/office space and car parking) to
join together existing key attractions and to position
Sutton Harbour as a destination of regional importance
within the South West region.
K I N G P O I N T M A R I N A
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 five complete seasons ending 31 March
2019. This season 50% of berthings are used for the
high quality yachts of Princess Yachts Limited and 50%
for leisure yachts.
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 and
integration with an increasing variety of activities in
Sutton Harbour.
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.
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.
The new development will add additional value
with high quality retail space on the waterfront
as well as the additional housing.
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. Following the
change of majority control of the Company in January
2018, consent for three planning applications for fully
redesigned development schemes around Sutton
Harbour was granted during 2018. These schemes
include the 14 unit apartment building and a 170
unit apartment building, both with retail/office
space incorporated, and an extension to an existing
multi storey car park owned by the Company.
The company appreciates the renewed relationship
with Plymouth City Council exemplified by the
unanimous approval of the Sugar Quay building
with the 170 units and retail space.
F O R M E R A I R P O R T S I T E
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 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 to benefit the city and
local people. In March 2019, the Government Inspectors
charged with reporting on the Local Authority Joint
Local Plan, a planning framework for development
until 2034, upheld that the former airport site may be
safeguarded for potential general aviation use with the
recommendation that it would be inappropriate to
continue to safeguard the site for more than 5 years. In
accordance with the Government Inspectors’ Report
and in the context of the necessary valuation progress,
the company is advancing the development plan for
alternative use of the site.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 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 9
STRATEGIC REPORT
E X E C U T I V E
C H A I R M A N ’ S
S TAT E M E N 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
•
•
In November 2018, the Company received planning approval for two new residential schemes at Sutton Harbour: ‘Harbour Arch
Quay’ and ‘Sugar Quay’ together with approval for a two-storey extension to the existing multi-storey Harbour Car Park.
In December 2018 the Company held a general meeting at which shareholders approved the issue of 10,344,951 new ordinary
shares via an Open Offer to existing shareholders. This issue was fully subscribed and resulted in a fresh equity injection of £3
million (before costs) to be used in the ongoing development of the Company including pre-construction costs in respect of planning
consented schemes ‘Harbour Arch Quay’ and ‘Sugar Quay’ and to meet capital maintenance costs and other funding requirements
across its ordinary and development activities.
•
In March 2019, the Government Inspectors’ report concerning the Local Authority’s new planning framework was issued which
affirmed safeguarding for a period not to exceed five years of the former airport site for possible general aviation use.
•
In April 2019, the Company changed its name to Sutton Harbour Group plc and is currently rolling out its new corporate identity.
invested in the Company’s infrastructure asset
base. The board does not recommend payment
of a dividend on the year’s results.
DIRECTORS AND STAFF
Early in the financial year Philip Beinhaker
was appointed Executive Chairman and Jason
Schofield, Chief Executive, left the Company in
July 2018. The board has advertised a Chief
Operating Officer position and intends to
announce a new board appointment in the near
future. There have been no other changes at
board level during the year.
Headcount as at 31 March 2019 decreased to
30 (31 March 2018: 33) as the Company has
continued to outsource certain specialist roles
following some voluntary resignations.
RESULTS AND FINANCIAL POSITION
The adjusted profit before taxation for the
year was £0.072m (2018: £0.135m loss) which
excludes non-cash fair value adjustments and
the costs in connection with the change of
ownership. The profit before taxation for
the year under review as per the Income
Statement, inclusive of the aforementioned
adjustments, was £1.516m (2018: £2.502m Loss
before taxation).
As at 31 March 2019, net assets were £45.732m
(2018: £39.328m), representing 39.4p per share
(2018: 37.2p per share). The increase follows
the issue of 10,344,951 new ordinary shares at
29 pence each, providing new capital of £3m,
before costs of £73,000, and also the valuation
of the Company’s property assets which gave
rise to an overall valuation surplus of £3.084m.
Gearing as at 31 March 2019 stood at 46.7%
(2018: 55.6%). Net finance costs increased to
£0.901m in the year (2018: £0.897m) as the
bank borrowing rate had increased by 0.25%
and average borrowing compared year to
year was higher.
Net debt (including finance leases) decreased
to £21.373m at 31 March 2019 from £21.858m
at 31 March 2018. Development Inventories
increased by £2.281m reflecting the investment
required to progress three schemes to planning
consented status and a further £0.303m was
4 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
OPERATIONS REPORT
REGENERATION
MARINE
Overall, the marine segment has performed
steadily during the year. The Marinas both achieved
modest growth in revenue and occupancy and this
encouraging trend has continued into the start of the
new 2019/20 berthing season. Results from fishing
activities were undermined by a poorer level of fish
stocks in local waters with landings of fish by value
down 23.5% on the previous financial year. Despite
lower revenue from fish landing dues, other revenues
including fuel sales, ice sales and rentals of property at
the Plymouth Fisheries facility held up well during the
year under review.
REAL ESTATE AND CAR PARKING
Focused marketing of vacant property has resulted in
the occupancy rate increasing to 94% as at 31 March
2019 from 87% as at 31 March 2018. During the year
Sutton Harbour
The Company gained planning approval for two new
landmark residential led schemes for Sutton Harbour in
November 2018. The Harbour Arch Quay development
of 14 flats and the iconic Sugar Quay building with 170
apartments are both due to start construction by the end
of the year. The two storey Harbour Car Park extension,
which will accommodate a further 114 parking spaces, is
also due to start late 2019, with the additional parking
to be available for use in summer 2020. The Company
is engaging with local stakeholders, including Plymouth
City Council, on events to be held in 2020 to
commemorate the 400th anniversary of the departure
of the Pilgrim Fathers on the Mayflower vessel to
America. The historic port of Sutton Harbour is the
focal point for commemorative events and the
Company is making ready for the expected high
number of visitors to the area.
seven new tenancies have been completed, and the
Former Airport Site
Company has been pleased to see more businesses, in
both professional businesses services and restaurant
sectors, choose Sutton Harbour as a trading base.
The Company continues to manage and maintain the
Former Airport Site which closed in December 2011.
The 113 acre site, which is already surrounded by urban
Car Parking revenue increased slightly during the
development, is ideally located for mixed urban use,
year, compared to the previous year. Parking at the
Harbour Car Park continued to be affected by the out
and can deliver a sustainable built environment for the
economic and social wellbeing of the people of Plymouth.
of action footbridge which links this car park more
The safeguard of the site for possible general aviation
directly to the eastern side of the harbour where
use is provided for the next five years, after which the
popular attractions including the Barbican
Government Inspectors consider a prolonged safeguard
and the Hoe are situated. The bridge was returned
to be inappropriate due to the value of the land for urban
to full service on 19 April 2019 after a new bearing
uses. The Company had prepared an initial masterplan
was fabricated and the structure recommissioned in
for mixed-use development for the site and continues
time for the busier summer season. Early in
to refine this to ensure its formulation as a development
2019 the car parks contract with a third party
programme is deliverable in phases to meet planning
specialist management company was renewed on
framework policy and an aspiration for a new sustainable
improved terms.
urban neighbourhood.
S U M M A R Y A N D O U T L O O K
The Company has continued to deliver on its vision to be the leading marine, waterfront regeneration and destination
specialist in Southern England in accordance with its stated strategy. We have delivered major new planning consents,
completed in-depth reviews of other trading activities and put strategic plans for growth in place.
P H I L I P B E I N H A K E R
E X E C U T I V E C H A I R M A N
10 July 2019
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 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 9
STRATEGIC REPORT
K E Y P E R F O R M A N C E
I N D I C ATO R S
K E Y P E R F O R M A N C E I N D I C AT O R S
The material Key Performance Indicators relevant to the Group’s business are:
F I N A N C I A L H I G H L I G H T S
Net Assets
Net Asset value per share
Profit/(Loss) before tax from continuing operations
Adjusted profit/(loss) before tax excluding fair value
adjustments and costs in connection with change in ownership.
2 0 1 9
£45.732m
39.4p
£1.516m
£0.072m
£1.831m
1.68p
0.0p
£21.373m
46.7%
2 0 1 8
N O T E
1
£39.328m
37.3p
£(2.502)m
£(0.135)m
£(2.198)m
(2.24)p
0.0p
£21.858m
55.6%
Profit/(Loss) after tax
Basic profit/(loss) per share
Dividend per share
Net Debt
Gearing (Net Debt/Net Assets)
P R O P E R T Y M E T R I C S
Total estate portfolio valuation
Owner occupied portfolio valuation
Investment portfolio valuation
Number of investment properties
Contracted rent (per annum)
Net initial yield
Reversionary yield
Occupancy rate
Estimated rental value (ERV) of vacant units
Average unexpired lease
Gross car parks revenue
Development Inventory
Sites around Sutton Harbour
Portland
Former airport site
Total
N O T E
A S AT 3 1 M A R C H
2 0 1 9
A S AT 3 1 M A R C H
2 0 1 8
£45.804m
£26.379m
£19.425m
71
£1.546m
7.15%
7.72%
94.0%
£0.159m
9.0 years
£0.522m
£10.873m
£0.200m
£12.448m
£23.521m
£42.665m
£23.600m
£19.055m
71
£1.262m
5.84%
6.31%
87.0%
£0.198m
9.8 years
£0.511m
£8.665m
£0.200m
£12.368m
£21.233m
1 Includes a credit for fair value adjustments on investment property and property, plant equipment of £1.444m (2018: charge of £0.626m)
and a charge for costs of change in ownership of £nil (2018: £1.741m).
6 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
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 9
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
developing the planning intellectual property
C A S H F L O W A N D F I N A N C I N G
The Group’s year end results are presented
less the cost attributed to sales of small plots.
under International Financial Reporting Standards
• Net Realisable Value is estimated with
(IFRS) as adopted by the European Union.
A S S E T V A L U AT I O N
reference to expected net proceeds for the
25% share of the leasehold interest. The
mechanism for sharing of net proceeds with
the freeholder, Plymouth City Council, is set
During the year, independent valuation of
out in the lease.
The Company had total borrowing net of cash
and cash equivalents of £21.373m at 31 March
2019 (2018: £21.858m) with a gearing level
of 46.7% (2018: 55.6%). The Company has
operated within its authorised facilities and has
met all bank covenants during the year. The bank
facilities were renewed in January 2018, when
the Company entered into an agreement which
provides a maximum £25.0m committed facility
with a confirmed expiry date of March 2021.
Debt servicing costs continue to be a major
expense to the Group and the board regularly
considers the merits of entering into LIBOR
swap arrangements to fix interest on part
of the total debt. None have been taken
out at the present time
• The auditors, Nexia Smith and Williamson,
included an Emphasis of Matter paragraph
within the 2015, 2016, 2017, 2018 and 2019
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, which was
subsequently issued in March 2019) and the
outcome of a Government Report about the
future of Plymouth City Airport.
the Group’s investment and owner-occupied
portfolio was undertaken at 31 January 2019.
This valuation gave rise to a surplus of £3.083m,
reconciled as £0.310m surplus on the investment
portfolio and £2.773m surplus 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 136 year
leasehold interest, with a right to renew for
a further 150 years, is held as development
inventory at a carrying value of £12.448m. 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
£12.448m 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
was £11.479m, inclusive of past revaluations
totalling £3.969m. The net increase in former
airport asset valuation from 31 March 2013
(£11.479m) to 31 March 2017 (£12.009m) of
£969,000 represents the capitalised costs of
• In December 2016 the Department for
TA X AT I O N
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”.
The standard rate of tax applicable to the
Group is 19% (2018: 19%). The overall tax
credit for the year is £0.315m (2018: credit of
£0.304m). 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
10 July 2019
• 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 subsequently issued in March 2019.
The Government Inspectors supported a
‘safeguard’ of the former airport site for five
years to allow time for a potential airport
operator to bring forward a plan for a licensed
general aviation airport. The Inspectors also
advised that a longer safeguarding period
could risk the site being left vacant and unused
and that that would not be appropriate.
The Government Inspectors’ view of the
importance of the site for alternative use, in
absence of an airport operation, affirms the
Company’s view of the value of the land.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 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 9
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
Financing
The availability of adequate
borrowing and other
funding facilities.
The Group’s current banking facilities to a maximum
of £25m expire in March 2021 and will fund
development through specific loans. The company has
raised £5.750m equity finance since January 2018 to
fund projects and capital maintenance expenditure.
Compliance with bank terms
and covenants.
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.
Financing
Interest rate rises.
The Group regularly reviews interest rates and its
exposure. LIBOR swap agreements are entered
into to manage interest risk exposure, if and as
agreed by the board.
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.
External
Risks associated with exit from
the European Union (BREXIT)
The Group does not trade directly with European
markets although could be exposed to any
generalised impacts to the economy, housing
markets and trade negotiations affecting fishing.
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.
The Group is developing its plans for various
sites to prepare for new development as
market conditions allow.
Obtaining viable planning permissions
has become increasingly demanding
resulting in increased cost and delay
to submission of applications.
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 is exposed to the risk of
loss of revenue and vacant properties
should tenants’ businesses fail.
The Group has a diverse tenant base
encompassing national and independent
occupiers to avoid high exposure to
any single party.
8 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
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
Valuation Risk
Public opinion
External
M A R I N E
A C T I V I T I E S
Lock Operations
R I S K I D E N T I F I E D
R E S P O N S E T O R I S K
The Group is dependent on
a limited number of skilled
personnel in key positions.
The Group ensures that it has adequate staff
with the necessary skills and experience.
Competitive and realistic remuneration
packages are paid. External consultants are
used to support the team as necessary.
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 and
vacant sites are managed for safety and security.
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.
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
Continuation of marine activities
is dependent on reliability of lock
operations and the integrity of the
lock structure itself.
Maintenance of the Sutton Harbour lock, a
key flood defence, is the responsibility of the
Environment Agency and it is subject to daily
checks. Lock controls have failsafe systems to
prevent human errors.
Pollution Incident
A major pollution incident could
result from leakage from a fishing
vessel or fuel supply tanks, or
unlawful discharge into the harbour.
Emergency procedures are in place to con-
tain and clear a spillage which includes closure
of the lock gates.
Continuity of Operations
Failure of plant and equipment at
the fishmarket has the potential to
disrupt operations with the resultant
loss of reputation.
The Group regularly reviews the condition
of infrastructure to plan maintenance and
replacement.
A P P R O V A L
The Strategic Report from pages 2 to 9 was approved by the Board of Directors on 10 July 2019
and signed on its behalf by
P H I L I P B E I N H A K E R
E X E C U T I V E C H A I R M A N
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 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 9
GOVERNANCE
D I R E C TO R S
A N D A D V I S O R S
Company Number
2425189
Directors
Philip H. Beinhaker (Executive Chairman)
Natasha C. Gadsdon (Finance Director)
Graham S. Miller (Non-Executive Director)
Sean J. Swales (Non-Executive Director)
Secretary
Natasha C. Gadsdon
Registered Office
Independent Auditors
Nominated Broker and Nominated Adviser
Registrar
Bankers
10 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Sutton Harbour Office
Guy’s Quay Office
Sutton Harbour
Plymouth
PL4 0ES
Tel: 01752 204186
www.suttonharbourgroup.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
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 9
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 2019.
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 10 July 2019 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
10.68
5.71
84,231,428
12,385,779
6,615,690
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 2019 are set out below.
Philip H. Beinhaker
Graham S. Miller
Natasha C. Gadsdon
Sean J. Swales
2 0 1 9
-
273,976
24,839
3,199
2 0 1 8
-
31,968
22,623
2,914
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 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
G R A H A M S . M I L L E R
Age 78. 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 and appointed Executive
Chairman in April 2018. 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.
S E A N J . S W A L E S
Aged 51. 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.
Aged 56. Appointed Non-Executive Director and Chairman
on 23 September 2013, stepping down from the Chairman role
on 22 January 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.
N ATA S H A C . G A D S D O N
Aged 49. Appointed Executive Director in July 2004 and Finance
Director in October 2004. She is a Chartered Accountant and
has been with the Group since 1996. She has also been the
Company Secretary since 2001.
In accordance with the Company’s Articles of Association Sean J. Swales and Natasha C. Gadsdon retire by rotation
at this year’s Annual General Meeting, and being eligible offers themselves for re-election.
D I R E C T O R S A N D O F F I C E R S I N S U R A N C E
The Group maintained a Directors’ and Officers’ liability insurance policy throughout the financial year.
F I N A N C I A L I N S T R U M E N T S
The Group’s financial risk management objectives and policies are given in note 3, with additional information provided in the financial review on page 7.
D I S C L O S U R E O F I N F O R M AT I O N T O A U D I T O R S
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware, there is no relevant audit
information of which the Company’s auditors are unaware, and each Director has taken all the steps that he/she ought to have taken as a Director to make
himself/herself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.
On behalf 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
10 July 2019
12 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
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 9
GOVERNANCE
STATEMENT OF
COMPLIANCE WITH
QC A COR POR ATE
GOVER NANCE CODE
S E N I O R I N D E P E N D E N T D I R E C T O R ’ S I N T R O D U C T I O N
Our vision is to conserve and improve the historic Sutton Harbour and its immediate environs for harbour users,
local residents, businesses, visitors to the area and for the wider stakeholder community in the City of Plymouth.
To achieve this the Board is concerned with setting the strategy to facilitate maintenance of existing land, property
and specialised assets and also the regeneration of underutilised assets to improve the attractiveness of the area
and to ensure it has a sustainable and vibrant future.
The Company’s corporate governance framework manages the decision making processes of the Board having
regard to opportunities and risks of specific strategies and the objective to deliver value growth to shareholders
in the medium-long term.
G R A H A M M I L L E R
S E N I O R I N D E P E N D E N T D I R E C T O R
( N O N - E X E C U T I V E )
P R I N C I P L E
A P P L I C AT I O N A S S E T
O U T B Y T H E Q C A
W H AT T H E C O M P A N Y D O E S T O
U P H O L D T H E P R I N C I P L E
1
Establish a
strategy and
business model
which promote
long-term value
for shareholders
2
Seek to
understand and
meet shareholder
needs and
expectations
The board must be able to express
a shared view of the company’s
purpose, business model and
strategy. It should go beyond the
simple description of products and
corporate structures and set out
how the company intends to deliver
shareholder value in the medium to
long term. It should demonstrate
that the delivery of long-term
growth is underpinned by a clear
set of values aimed at protecting
the company from unnecessary
risk and securing
The Company is the owner and operator of specialist
marine assets (which include two marinas and
a commercial fishmarket), car parks, real estate
investment properties and is the holder of land assets
identified for regeneration.
The Company’s assets and operations are all located
in Plymouth, Devon, primarily at Sutton Harbour.
The Company’s Strategic Vision is to deliver
shareholder value growth through the delivery
of high quality urban development to further
establish Sutton Harbour as a visitor destination and
harbourside lifestyle quarter whilst promoting the
established commercial and leisure marine activities.
The Company is actively working towards the
regeneration of vacant sites to release value, reduce
debt and allow future new investment in the area.
Directors must develop a good
understanding of the needs and
expectations of all elements of the
company’s shareholder base.
The Company maintains an active dialogue with
major institutional investors and annually invites
shareholders to an open day which includes a tour
of the assets.
The board must manage
shareholder’s expectations and
should seek to understand the
motivations behind shareholder
voting decisions.
The board welcomes the participation of
shareholders at the Annual General Meeting
with the opportunity to answers questions
of any board member offered.
The Company Secretary is normally the first point
of contact for any general enquiries or arrangement
regarding shareholder meetings.
Email: n.gadsdon@sutton-harbour.co.uk
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 13
P R I N C I P L E
A P P L I C AT I O N A S S E T
O U T B Y T H E Q C A
W H AT T H E C O M P A N Y D O E S T O
U P H O L D T H E P R I N C I P L E
3 Take into
account wider
stakeholder
responsibilities
and their
implications
for long-term
success
Long-term success relies upon good
relations with a range of different
stakeholder groups both internal
(workforce) and external (suppliers,
customers, regulators and others). The
board needs to identify the company’s
stakeholders and understand their needs,
interests and expectations.
Where matters that relate to the
company’s impact on society, the
communities within which it operates
or the environment have the potential
to affect the company’s ability to deliver
shareholder value over the medium to
long-term, then those matters must be
integrated into the company’s strategy
and business model.
Feedback is an essential part of all control
mechanisms. Systems need to be in place
to solicit, consider and act on feedback
from all stakeholder groups.
Statutory Harbour Authority
Sutton Harbour Company, a wholly owned subsidiary of the Company, is a Statutory
Harbour Authority which confers responsibilities concerning operations of and
obligations to conserve the harbour. The Company employs a Harbour Master who
liaises with the relevant regulators, public bodies and user groups in respect of this
statutory function.
Public Bodies
The Group maintains an active relationship with Plymouth City Council, the Local
Planning Authority, the Environment Agency and other public agencies in connection
with a wide range of issues relating to the land and property assets held by the Group.
Open public consultation is undertaken in relation to proposed applications to the
Local Planning authority.
Customers
The Group maintains a number of websites and social media platforms, to communicate
with different customer groups in addition to direct email and postal communications.
Surveys of marina customer satisfaction are undertaken annually.
Employees
The Group is committed to paying, as a minimum, the living wage as recommended by
the Living Wage Foundation, to its employees. The Group undertakes annual appraisals
for all employees annually, sponsors their essential qualifications and continuing
professional development (as appropriate to role) and has a schedule of monthly
operational meetings with Director presence at each.
4 Embed
effective risk
management,
considering
both
opportunities
and threats
throughout the
organisation
The board needs to ensure that the
company’s risk management framework
identifies and addresses all relevant
risks in order to execute and deliver
strategy; companies need to consider
their extended business, including the
company’s supply chain, from key
suppliers to end-customer.
Setting strategy includes determining
the extent of exposure to the identified
risks that the company is able to bear and
willing to take (risk tolerance and appetite).
Risk Register
The Group maintains a register of risks, split by category, and identifies potential impact
and likelihood, together with the response deployed to manage/mitigate the risk. The
risk register is regularly updated with input from across the Group and external advice
is taken if required.
Reporting
Included in the monthly reports to the Board, new risks are identified together with
proposals to manage/mitigate the risk.
Company Bankers and Insurers are kept appraised of risks and vulnerabilities on an
ongoing basis. Advice from the appointed external Health and Safety Advisor is taken
where appropriate.
Controls
A list of ‘Matters reserved for the Board’ is maintained which governs levels of
authorisation for financial commitment and decision making.
14 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
P R I N C I P L E
A P P L I C AT I O N A S S E T
O U T B Y T H E Q C A
W H AT T H E C O M P A N Y D O E S T O
U P H O L D T H E P R I N C I P L E
5 Maintain the
board as a well-
functioning,
balanced team
led by the chair
6 Ensure that
between them
the directors
have the
necessary
up-to-date
experience,
skills and
capabilities
The board members have a collective
responsibility and legal obligation to
promote the interests of the company,
and are collectively responsible for defining
corporate governance arrangements.
Ultimate responsibility for the quality of,
and approach to, corporate governance
lies with the chair of the board.
The board (and any committees) should
be provided with high quality information
in a timely manner to facilitate proper
assessment of the matters requiring a
decision or insight.
The board should have an appropriate
balance between executive and non-
executive directors and should have at
least two independent non-executive
directors. Independence is
a board judgement.
The board should be supported by
committees (eg audit, remuneration,
nomination) that have the necessary
skills and knowledge to discharge their
duties and responsibilities effectively.
Directors must commit the time
necessary to fulfil their roles.
The board must have an appropriate
balance of sector, financial and public
markets skills and experience, as well
as an appropriate balance of personal
qualities and capabilities. The board
should understand and challenge its own
diversity, including gender balance, as part
of its composition.
The board should not be dominated by
one person or a group of people. Strong
personal bonds can be important but can
also divide a board.
As companies evolve, the mix of skills and
experience required on the board will
change, and board composition will need
to evolve to reflect this change.
The current composition of the board is as follows:
O F F I C E
A P P O I N T E E
C O M M I T T E E R O L E S
Executive Chairman
Philip Beinhaker
Senior independent
Director
(Non-Executive)
Graham Miller
Non - Executive Director
Sean Swales
Finance Director
(Executive)
Natasha Gadsdon
Company Secretary
Natasha Gadsdon
Audit Committee Member
Remuneration Committee
Chair Nomination Committee Chair
Audit Committee Chair
Remuneration Committee Member
Nomination Committee Member
Audit Committee Member
Remuneration Committee Member
Nomination Committee Member
Following the resignation of Chief Executive Officer (who subsequently left the
Company on 23 July 2018) the Board has been undertaking its search for a new
Executive Director. Subject to final selection and satisfaction with regulatory criteria, an
announcement about a new appointment will be made in 2019.
To provide continuity and support during this transitionary period, Philip Beinhaker was
appointed Executive Chairman (previously Non-Executive Chairman) on 23 April 2018.
Board Meetings
The Board has ten scheduled meetings per year where 4 board members attend,
with additional meetings as required, and separate governance committee meetings.
100% attendance by all members at all meetings has been recorded for the year under
review. Agenda and detailed board papers are sent to directors in advance of the
meeting which provide updates on governance matters, projects, trading and finance
and corporate matters. The Board has a formal schedule of matters reserved to it for
decision.
Directors’ Independence
Philip Beinhaker has no personal shareholding in the Company. FB Investors LLP, which
owns 72.65% of the issued share capital, is jointly owned by Beinhaker Design Services
Limited and 1895 Management Holdings UIC Philip is a Director and Chairman of
Beinhaker Design Services Limited.
Graham Miller holds 273,976 shares in the Company and is the Senior Independent
Director on the Board. Graham was appointed a Director in 2013.
Sean Swales holds 3,199 shares in the Company. He is also the corporate representative
of Rotolok (Holdings) Limited which has an interest in 6,615,690 (5.71%) of the
Company’s shares. Sean was appointed a Director in 2009. Until 10 January 2018,
Rotolok (Holdings) Limited was interested in 28.79% of the Company’s shares and was
reported as having significant influence. Sean Swales is now regarded as an independent
Director as Rotolok (Holdings) Limited no longer has significant control and the board
composition has changed. It is noted, however, that Sean has served close to ten years
on the board, which is a further indicator generally used to appraise independence of
Non-Executive Directors.
Natasha Gadsdon holds 24,839 shares in the Company and has been an Executive
Director since 2004.
In summary, the board currently comprises two Executive and two independent
Non-Executive Directors.
Shareholder Relationship Agreement with FB Investors LLP
The Relationship Agreement dated 23 November 2017, addresses amongst other
things, the composition of the SHH Board providing FB Investors with the ability to
appoint up to two directors to the SHH Board (one of whom may be the Chairman
for so long as it holds, directly or indirectly, 50 per cent or more of the issued voting
share capital of the Company). It contains certain restrictions in relation to directors
appointed by FB Investors voting at meetings of the SHH Board on matters in which
FB Investors is interested. Under the Relationship Agreement, FB Investors has
agreed not to vote in relation to any resolution put to SHH Shareholders to cancel
its admission to trading on AIM, pursuant to Rule 41 of the AIM Rules, for a minimum
period of two years following the Partial Offer unless such resolution is recommended
by those Board members of the Board not appointed by FB Investorsv
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 15
P R I N C I P L E
A P P L I C AT I O N A S S E T
O U T B Y T H E Q C A
W H AT T H E C O M P A N Y D O E S T O
U P H O L D T H E P R I N C I P L E
7 Evaluate board
performance
based on clear
and relevant
objectives,
seeking
continuous
improvement
8 Promote a
corporate
culture that
is based on
ethical values
and behaviours
The board should regularly review the
effectiveness of its performance as a unit,
as well as that of its committees and the
individual directors.
The change in majority ownership of the Company in January 2018 has precipitated
board changes with the appointment of Philip Beinhaker who has taken on the role of
Chair from Graham Miller, who continues as Audit Committee Chair and now also the
role of Senior Independent Director.
The board performance review may be
carried out internally or, ideally, externally
facilitated from time to time. The review
should identify development or mentoring
needs of individual directors or the wider
senior management team.
It is healthy for membership of the
board to be periodically refreshed.
Succession planning is a vital task for
boards. No member of the board
should become indispensable.
The board should embody and promote
a corporate culture that is based on
sound ethical values and behaviours
and use it as an asset and a source
of competitive advantage.
The policy set by the board should be
visible in the actions and decisions of
the chief executive and the rest of the
management team. Corporate values
should guide the objectives and strategy
of the company.
The culture should be visible in every
aspect of the business, including
recruitment, nominations, training and
engagement. The performance and reward
system should endorse the desired ethical
behaviours across all levels of the company.
The corporate culture should be
recognisable throughout the disclosures in
the annual report, website and any other
statements issued by the company.
Sean Swales, continues as a Non-Executive Director, with the board continuing to
benefit from his finance and property experience.
The Board expects to announce a new Executive Director appointment in due course
and a full review of the effectiveness of the refreshed administration will be undertaken
within the next 12 months.
Senior Managers are regularly invited to present at Board Meetings and to respond to
questions and this forum sets the cultural tone.
At annual appraisals performance of employees is reviewed against specific targets and
conduct in line with the Company’s standards of conduct as set out in the foreword of
the Employee Handbook.
The Company holds regular Health and Safety meetings (normally two per year) with
representation from all areas of the business together with Director, the Health and
Safety Officer and external Health and Safety Advisor. Annually the Health and Safety
Advisor reports observations formally to the board.
Sutton Harbour Company, a Statutory Harbour Company and wholly owned subsidiary
of the Company is committed to undertaking statutory duties in accordance with the
Port Marine Safety Code.
The environment plays a key role in the continuing success of the Group. The Company
has a daily programme to clean the Harbour with a specialised vessel for the purpose of
debris removal. Operational staff are trained to handle oil spill incidents in the harbour.
The area of Sutton Harbour is located in the heart of Plymouth. The Company
supports various community and tourist initiatives. The Company is a member of the
Mayflower 400 Founders club which is working together with Plymouth City Council
to co-ordinate a comprehensive programme of events to commemorate the 400th
Anniversary of the departure of the Pilgrim Fathers to America.
The Company has a long established commitment to the community and its
neighbourhood. Throughout its regeneration work, the Company has undertaken
extensive public consultation which has led to the reshaping and design of many
successful quality regeneration projects surrounding the historic harbour. The Company
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.
16 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
P R I N C I P L E
A P P L I C AT I O N A S S E T
O U T B Y T H E Q C A
W H AT T H E C O M P A N Y D O E S T O
U P H O L D T H E P R I N C I P L E
9 Maintain
governance
structures
and processes
that are fit for
purpose and
support good
decision-
making by the
board
The company should maintain
governance structures and
processes in line with its
corporate culture and
appropriate to its:
• Size and complexity
• Capacity, appetite and
tolerance for risk
The governance structures should
evolve over time in parallel
with its objectives, strategy and
business model to reflect the
development
The Board
The board composition in undergoing a transition, which started in January 2018 after a change
in majority ownership of the Company. A search and recruitment for a new Executive Director
is currently in progress and the Board expects to announce a new appointment by Autumn 2019.
As the re-formed board settles it is expected that other appointments may be made to provide
balance and succession. At the present time, Philip Beinhaker is appointed Executive Chairman
and presides over the business of the board as well as directing and overseeing the operations of
the Company through the senior management team.
Graham Miller, the previous independent and Non-Executive Chairman, is now the Senior
Independent Non-Executive Director on the board. He is the main contact to handle matters
where other Directors have a conflict of interest.
Sean Swales, a Non-Executive Director since December 2009 and he is the corporate
representative of Rotolok (Holdings) Limited, the third largest shareholder in the Company
which no longer has significant control. Sean Swales is now considered to be an independent
director following the reduction in shareholding of Rotolok (Holdings) plc and the changed
composition of the Board. A Chartered Accountant, he continues to contribute actively to
the Board due to his financial specialism, property investment and development expertise and
regional knowledge. September 2019 will be the ninth anniversary of Sean’s election to the board
by shareholders, and the board will reconsider the composition of the board with regard to the
balance between independent and non-independent directors in the Autumn of 2019.
Natasha Gadsdon, a Chartered Accountant, is appointed Finance Director and Company
Secretary. She is responsible for financial reporting and compliance and oversees risk
management, human resources, corporate responsibility. She is responsible for preparing detailed
monthly reports to the board
The Board is responsible for setting the strategy to deliver shareholder value growth over the
medium to long term. Decisions about financing, acquisitions and disposals, project and capital
expenditure, senior staffing, key third party appointments, budget approval, approval of annual
and interim financial reports, dividend policy, insurances and strategic direction of the trading
businesses are all matters reserved for the Board’s decision.
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.
• 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.
Governance Committees
The composition and role of the board’s governance committees are set out below.
The Remuneration Committee, chaired by Philip Beinhaker, within its terms of reference
determines and agrees with the board the employment terms and remuneration packages of
the Executive Directors. The Executive Directors make recommendations to the board on the
remuneration of Non-Executive Directors. Independent advice on remuneration is taken where
considered appropriate.
The Audit Committee is chaired by Graham Miller and its other members are Sean Swales,
a Chartered Accountant, and Philip Beinhaker. The Committee has written terms of
reference and provides a forum for reporting by the Company’s auditors. The Committee
may request Executive personnel to attend all or part of any meeting as the Committee
considers appropriate.
The Nomination Committee is chaired by Philip Beinhaker and its other members are
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 current
search for a new Executive Director is being led by Graham Miller and Sean Swales.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 17
P R I N C I P L E
A P P L I C AT I O N A S S E T
O U T B Y T H E Q C A
W H AT T H E C O M P A N Y D O E S T O
U P H O L D T H E P R I N C I P L E
See responses to Principles 1 and 2 above where engagement with shareholder and stakeholder
engagement is described.
The Annual Report and Accounts, Interim Reports and other announcements and presentations are
the main formalised communications to shareholders. The Annual General Meeting and Open Day are
opportunities for two-way communication between the board and shareholders
10 Communicate
how the
company is
governed and
is performing
by maintaining
a dialogue with
shareholders
and other
relevant
stakeholders.
A healthy dialogue should exist
between the board and all
of its stakeholders, including
shareholders, to enable all
interested parties to come
to informed decisions about
the company.
In particular, appropriate
communication and reporting
structures should exist between
the board and all constituent
parts of its shareholder base.
This will assist:
• The communication of
shareholders’ views to the
board: and
• The shareholders’ understanding
of the unique circumstances
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
10 July 2019
18 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
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 9
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
E N V I R O N M E N TA L I S S U E S
The Board of Directors understands its responsibility
The Board has agreed the following
to the health and safety of employees, customers and
Environmental Statement:
others who are directly or indirectly affected by the
Group’s operations.
The environment plays a key role in the continuing
success of the Group and the Group recognises that
The Group’s Health and Safety Committee is chaired
it needs to set itself high environmental standards.
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.
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 has
Committee meetings are also attended by the
installed LED energy efficient lighting at the car parks
Group’s Health and Safety Officer and an Independent
and fisheries and will introduce metered power and
Health and Safety Consultant. The Committee has a
water at the fisheries complex during 2019.
comprehensive agenda and is briefed on new legislation
or regulation by the Independent Health and Safety
Consultant.
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
The Group does not undertake direct construction
to facilitate the discharge of foul water and recycling
on site. An excellent Health and Safety management
sorting waste bins.
record is a key criterion in the selection of contractors.
The Group has a good health and safety record with no
enforcement notices and no prosecutions for breaches
of Health and Safety legislation to report.
P O R T M A R I N E S A F E T Y C O D E
Sutton Harbour Company, a Statutory Harbour
Authority, and a wholly owned subsidiary of the
Group, is committed to undertaking statutory duties in
accordance with the standards defined within the 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 2015.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 19
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
other community initiatives.
The area of Sutton Harbour is located in the heart of
The Group has a long established commitment to
Plymouth, adjacent to the historic Barbican quarter and
the community and its neighbourhood. Throughout
the City Centre. The Group supports city based arts,
its regeneration work, the Group has undertaken
sports, community and tourist initiatives and liaises with
extensive public consultation exercises which have
Destination Plymouth, Plymouth City Centre Company,
led to the reshaping and design of many successful
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
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.
10 July 2019
20 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
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 9
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:
Philip Beinhaker – Chairman
Graham S. Miller
Sean J. Swales
The Committee met several times during the year, within its terms of reference, to consider the remuneration
packages of the Executive Directors and to make recommendations to the Board. The overriding objective is to
ensure that salary, benefits and other remuneration is sufficient to attract, retain and motivate executives of high
quality, capable of achieving the Group’s objectives and creating value for our Shareholders. The Committee also
takes into account the scale and complexity of the Group’s operations and seeks independent advice, from
specialist advisers, where appropriate.
C O M P O S I T I O N O F R E M U N E R AT I O N
Executive Directors’ pay comprises basic salary reviewed annually, pension scheme contributions to the Group’s
defined contribution pension scheme, annual bonus based on audited results of the Group, and other benefits in
kind including provision of a company car/car allowance 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 2019 were £3,850 in respect of Natasha C. Gadsdon (2018: £5,000) and £nil in respect of Jason
W.H. Schofield (2018: £nil).
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 then served notice of resignation on 23 April
2018, and a contractual payment of £178,925 was paid on 23 July 2018, the date on which he left the Company.
Being linked to the ‘Specified Event’ and change of ownership which occurred in January 2018, these payments were
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 9
£ 0 0 0
139
159
6
39
343
2 0 1 8
£ 0 0 0
86
268
510
82
946
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 21
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 9
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 9
Philip H. Beinhaker
Graham S. Miller
Jason W.H. Schofield (resigned 23 July 2018)
Natasha C. Gadsdon
Sean J. Swales
Directors’
salaries
£000
Taxable
benefits
£000
Bonus
Payments
£000
Contractual
Payments
£000
Directors’
fees
£000
-
-
44
96
-
140
-
-
4
11
-
15
-
-
-
4
-
4
-
-
6
-
-
6
90
29
-
-
20
139
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
90
29
54
111
20
304
Total
£000
8
41
522
255
20
18
864
22 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
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 9
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 9
£ 0 0 0
8
31
39
2 0 1 8
£ 0 0 0
51
31
82
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. She was appointed
Finance Director in October 2004.
The Non-Executive Directors are appointed with three month’s notice and the 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
E X E C U T I V E C H A I R M A N 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
10 July 2019
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 23
GOVERNANCE
Statement of Directors’ Responsibilities
For the year ended 31 March 2019
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
10 July 2019
24 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
GOVERNANCE
Independent Auditor’s Report
For the year ended 31 March 2019
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF SUTTON HARBOUR GROUP PLC
Opinion
We have audited the financial statements of Sutton Harbour Group plc (the
‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31
March 2019 which comprise Consolidated Income Statement, Consolidated
Statement of Other Comprehensive Income, the Consolidated and Company
Balance Sheets, the Consolidated and Company Statement of Changes in
Equity, the Consolidated Cash Flow Statement, 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 2019 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:
Emphasis of matter – valuation of inventory
We draw attention to note 4 of the consolidated financial statements which
describes the potential impact of government 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 future 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 Harbour Arch and Sugar Quay schemes, 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.
• the directors’ use of the going concern basis of accounting in the preparation
• Performing sensitivity analysis on compliance with funding covenants
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.
• Considering the appropriateness of the disclosures made in the financial
statements in respect of going concern.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 25
GOVERNANCE
Independent Auditor’s Report
For the year ended 31 March 2019
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. Amendments to IAS 40 require
mandatory reassessment on adoption around the transfers between inventory
and investment property. A Department for Transport report, “Plymouth
Airport Study Report”, published in December 2016, concluded that a lack of
demand and short runway mean that passenger services could not be run out
of the airport, but the report did not rule out general aviation purposes. An
Examination in Public resulted in a Government Inspectors’ report issued in
March 2019 which recommended the safeguarding of the former airport site
for five years to allow time for a potential operator to bring forward a proposal
for a licensed general aviation airport. This period of safeguarding impacts the
value and timing of any potential development of the site, which is the basis of
the emphasis of matter paragraph above. 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. Considering
the amendments to IAS 40 “Transfers to Investment Property” and basis of
conclusion to support treating it as inventory.
• 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.
• Agreeing the ownership of the airport site to land registry documentation.
• Inspection of government reports and assessment of their impact on the
ability of the group to apply for planning permission.
• Consideration of the potential net realisable value of the site with 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.
VALUATION OF INVESTMENT PROPERTIES
AND OWNER OCCUPIED LAND AND BUILDINGS
Key audit matter description
The group 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 (£19.4m) and fixed assets (£23.6m)
held at valuation stand at £45.7m 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
The main procedures performed on the valuation assessment and areas where
we challenged management were as follows:
26 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
• 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.
• Considering 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.
• Considering the appropriateness of the disclosures made in the financial
statements in respect of the properties.
VALUATION OF DEVELOPMENT SITES – SUGAR QUAY
Key audit matter description
Costs incurred on the Sugar Quay development site stand at £9.7m as at year
end and are held within inventory. Planning permission has been granted during
the year with construction due to commence by the end of the year. The costs
include capitalised interest plus design and consultancy costs.
Response to key audit matter
The main procedures performed on the valuation assessment and areas where
we challenged management were as follows:
• 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.
• Reviewing of documentation prepared by management supporting the
expectation for the site and potential sale value.
• Considering the assumptions used within the calculation of expected cost
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 £73k (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 7 reporting components, we audited individually 3 and
subjected another 3 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
component is immaterial.
GOVERNANCE
Independent Auditor’s Report
For the year ended 31 March 2019
The components within the scope of our work covered 97% of Group revenue,
100% 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.
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 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.
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 group and parent company or to cease operations, or have no realistic
alternative but to do so.
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.
We have nothing to report in this regard.
Use of our report
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
This report is made solely to the parent 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 parent 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 parent company and
the parent company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
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.
C A R L D E A N E
Senior Statutory Auditor, for and on behalf of
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
Statutory Auditor
Chartered Accountants
Portwall Place
Portwall Lane
Bristol
BS1 6NA
• certain disclosures of directors’ remuneration specified by law are not made;
10 July 2019
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 24, 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.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 27
Consolidated Income Statement
For the year ended 31 March 2019
Revenue
Cost of sales
Gross profit
Fair value adjustments on investment properties and fixed assets
Administrative expenses
Exceptional costs of change in ownership
Operating profit/(loss)
Finance income
Finance costs
Net finance costs
Profit/(loss) before tax from continuing operations
Taxation credit on profit/(loss) from continuing operations
Profit/(loss) for the year from continuing operations
Profit/(loss) for the year attributable to owners of the parent
Basic and diluted earnings/(loss) per share
from continuing operations
Note
5
13,14
5,6
9
9
10
2019
£000
6,893
(4,686)
2,207
1,444
(1,234)
-
2,417
1
(902)
(901)
1,516
315
1,831
1,831
2018
£000
6,503
(4,367)
2,136
(626)
(1,374)
(1,741)
(1,605)
-
(897)
(897)
(2,502)
304
(2,198)
(2,198)
12
1.68p
(2.24)p
Consolidated Statement of Other Comprehensive Income
For the year ended 31 March 2019
Profit/(loss) 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 32 to 59 are an integral part of these consolidated financial statements
Note
13
2019
£000
1,831
1,640
6
1,646
3,477
2018
£000
(2,198)
(1,624)
70
(1,554)
(3,752)
28 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Consolidated Balance Sheet
As at 31 March 2019
Note
13
14
17
17
18
19
22
23
21
25
20
23
21
16
25
26
2019
£000
26,632
19,425
12,448
58,505
11,119
2,283
1,296
(5)
14,693
73,198
1,496
122
1,398
70
-
3,086
22,500
47
646
1,023
164
24,380
27,466
45,732
16,266
10,695
11,696
7,075
45,732
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
Non-current assets
Property, plant and equipment
Investment property
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
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 32 to 59 are an integral part of these consolidated financial statements.
The Financial Statements on pages 32 to 59 were approved and authorised by the Board of Directors on 10 July 2019 and were signed on its behalf by:
Natasha Gadsdon
Director
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 29
Consolidated Statement of Changes in Equity
For the year ended 31 March 2019
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 2017
16,069
5,368
7,809
3,871
(76)
7,442
40,483
Comprehensive income/(expense)
Loss for the year
Other comprehensive expense
Revaluation of property, plant and equipment 13
Effective portion of changes in fair value of
cash flow hedges
Total other comprehensive expense
Total comprehensive income/(expense)
Transactions with owners of the parent)
Issue of shares
Total balance at 31 March 2018
Balance at 1 April 2018
Comprehensive income/(expense)
Profit for the year
Other comprehensive income/(expense)
Revaluation of property, plant and equipment 13
Effective portion of changes in fair value of
cash flow hedges3
Total other comprehensive expense
Total other comprehensive income/(expense)
-
-
-
-
-
-
-
-
-
-
-
-
16,162
16,162
7,872
7,872
-
-
-
-
-
-
-
(1,624)
-
(1,624)
(1,624)
(1,624)
6,185
6,185
-
1,640
-
1,640
Purchase of shares
26
104
2,823
-
-
-
-
-
-
-
3,871
3,871
-
-
-
-
Total balance at 31 March 2019
16,266
10,695
7,825
3,871
The cumulative deferred tax relating to items that are charged to equity is £nil (2018: £nil).
The notes on pages 32 to 59 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 26.
-
-
70
70
70
70
(6)
(6)
-
-
6
6
-
-
(2,198)
(2,198)
-
-
-
(1,624)
70
(1,554)
(2,198)
(3,752)
(2,198)
(3,752)
5,244
39,328
5,244
39,328
1,831
1,831
-
-
-
1,640
6
1,646
2,927
7,075
45,732
30 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Consolidated Cash Flow Statement
For the year ended 31 March 2019
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 (repayment)
Loan drawdown
Cash payments 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
Note
28
14
13
9
19
19
2019
£000
(1,181)
(60)
(243)
-
(303)
3,000
(73)
(958)
(1,850)
-
(106)
13
(1,471)
2,767
1,296
2018
£000
(886)
-
(227)
12
(215)
2,750
(152)
(897)
-
1,550
(86)
3,165
2,064
703
2,767
Reconciliation of financing activities for the year ended 31 March 2019
Bank loans
Finance leases
Long term debt
2019
£000
Cash
flow
£000
22,500
(1,850)
169
(106)
22,669
(1,956)
2018
£000
24,350
275
24,625
Cash
flow
£000
1,550
(86)
1,464
2017
£000
22,800
361
23,161
The notes on pages 32 to 59 are an integral part of these consolidated financial statements.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 31
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
1. General information
Sutton Harbour Group plc, formerly 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 Sutton Harbour Office, Guy’s Quay,
Plymouth, Devon, PL4 0ES.
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 7. In addition, note 3 to the financial statements
gives details of the Group’s financial risk management.
The Group’s forecasts and projections, taking account of reasonably foreseeable possible changes in trading performance, show that the Group should be
able to operate within the level of the facilities and covenants over a period of at least twelve months. The covenants measure interest cover, debt to fair
value and capital expenditure.
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the
foreseeable future. The Group, therefore, continues to adopt the going concern basis in preparing its financial statements.
Measurement convention
The financial statements are prepared on the historical cost basis as modified by the fair value of property and some financial assets and financial liabilities.
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 Group 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).
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
32 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
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 an annual 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 Group plc – Annual Report & Financial Statements 2019 33
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
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.
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 non-current or current
assets, depending on the estimated time of ultimate realisation, 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, were initially recognised at fair value on the date a derivative contract was entered into and
was subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative was 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 were 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 14. 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.
34 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
Derivatives at fair value through profit and 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 in
accordance with the transfer of promised goods or services to customers (i.e. when the customer gain control of ownership that has 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 the tenant had control of the service.
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 on the transfer of goods to the customer.
Car park revenue
Car park revenue is recognised at the point that a car parking ticket is paid for, normally a maximum of one day’s parking Where seasonal parking permits
are sold for longer periods the income is spread over the period the permit relates to.
Property sales
Revenue from property sales is recognised when 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 and is paused when a project pauses.
Employee benefits: defined contribution plans
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 35
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
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.
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 operating segments have been identified:
Marine
Real Estate
Car Parking
Regeneration
Revenue included within each segment is as follows:
Marine:
Marina and commercial berthing fees
Fishmarket landing dues
Other marine related revenue including fuel sales and other ancillary income
Car Parking:
Car park revenue
Real Estate:
Rent
36 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
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 transaction price
determined under IFRS 15.
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
(a) New and amended Standards and Interpretations adopted by the Company
New Standards which have been adopted in these accounts, and which have given rise to changes in the Group’s accounting policies are:
- IFRS 9 “Financial Instruments”; and
- IFRS 15 “Revenue from Contracts with Customers”
The adoption of the above standards did not have a significant effect on the accounts. There were a number of Amendments to Standards adopted in the
current year, but neither of these had a material impact on the Group in the current period.
(b) New and amended Standards and Interpretations issued but not effective for the financial year beginning 1 April 2018.
At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial
statements were in issue but not yet effective:
- IFRS 16 “Leases” will be effective for the year ending 31 March 2020 onwards and the impact on the financial statements will be immaterial.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 37
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
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 2018
£000
Income
Statement
£000
Other
Comprehensive
Income
£000
Cash-flow
Total (Level 2)
Movements 31 March 2019
£000
£000
Financial liabilities
Derivative financial instruments
6
-
-
(6)
-
Capital risk management
The capital structure of the Group consists of net debt which includes the borrowings disclosed in notes 19 and 20 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 2019.
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
2019
£000
(22,500)
(169)
1,296
(21,373)
45,732
46.7%
2018
£000
(24,350)
(275)
2,767
(21,858)
39,328
55.6%
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.
38 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
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 2019:
Bank loans*
Trade and other payables*
Finance lease liabilities*
As at 31 March 2018:
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
(22,500)
(1,510)
(169)
-
(1,510)
(122)
(22,500)
-
(47)
(24,179)
(1,632)
(22,547)
-
-
-
-
Total
£000
0 to <1 years
£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)
* financial liabilities at amortised cost
** financial liabilities at fair value
Interest rate risk
Since June 2016, LIBOR were 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
2019
£000
66
524
40
630
2018
£000
100
389
75
564
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 Group plc – Annual Report & Financial Statements 2019 39
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
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 2019, it is estimated that a general increase of half a percentage point in interest rates (being the best estimate of future anticipated changes
in interest rates), ignoring hedging, would have decreased the Group’s profit before tax from continuing operations by approximately £110,000 (2018:
£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 7.15%. Assuming all else stayed the
same; a decrease of 1.0% in the average yield would result in an increase in fair value of £1.17m. An increase of 1.0% in the average yield would result in a
corresponding decrease in fair value of £1.17m.
These assets were independently valued by Jones Lang LaSalle (“JLL”) at 31 January 2019. 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.
Estimates
The following are the areas that require the use of estimates that may impact the Group’s balance sheet and income statement:
a)
The valuation of investment property and property held for use in the business as at 31 January 2019 was £19,425,000 and £26,275,000 respectively; (2018:
£19,055,000 and £23,600,000 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.
Judgements
The following are the areas that require the use of judgements that may impact the Group’s balance sheet and income statement:
a)
b)
c)
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 2019: £23,514,000 see note 18; (2018: £21,233,000)
• 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 public hearing took place in early
40 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
2018, with the Government Inspectors’ report subsequently issued in March 2019. The Government Inspectors supported a ‘safeguard’ of the former airport
site for five years to allow time for a potential airport operator to bring forward a plan for a licensed general aviation airport. The Inspectors also advised that
a longer safeguarding period could risk the site being left vacant and unused and that that would not be appropriate. The Government Inspectors view of the
importance of the site for alternative use, in absence of an airport operation, affirms the Company’s view of the value of the land.
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.
d)
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 (2018: £nil) and
development inventory totalling £nil (2018: £nil) have been impaired.
e)
The calculation of deferred tax assets and liabilities (2019: Liability of £1,338,000; 2018: Liability of £1,338,000) The Group has not recognised deferred tax assets
in respect of certain properties due to a high degree of uncertainty of when the asset may be realised.
5. Segment results
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:
Year ended 31 March 2019
Revenue
Segmental Operating Profit before fair value
adjustment and unallocated expenses
Fair value adjustment on investment
properties and fixed assets
Marine
£000
4,896
1,057
1,134
Real Estate
£000
Car Parking
£000
Regeneration
£000
1,474
941
310
523
350
-
-
(141)
-
Unallocated:
Administrative expenses
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
Total
£000
6,893
2,207
1,444
3,651
(1,234)
2,417
1
(902)
1,516
315
1,831
314
33
11
358
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 41
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
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
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
42 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
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
2019
£000
23,514
19,892
4,456
23,574
71,436
61
405
1,296
73,198
2019
£000
1,897
575
130
1,085
3,687
22,669
87
-
1,023
-
27,466
183
22
38
243
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
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
Rental income and service recharges
Provision of services
No revenues from any one customer represented more than 10% of the Group’s revenue for the year.
2019
£000
2,357
1,614
2,922
6,893
2018
£000
2,289
1,547
2,667
6,503
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 43
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
6. 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)
(Gain)/loss on remeasurement of investment property to fair value
(Gain)/loss on re-measurement of fixed assets
Depreciation of property, plant and equipment
Operating lease payments
7. Services provided by the Company’s auditors
During the year the Group obtained the following services from the Company’s auditors:
Note
8
25
27
14
13
13
27
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
2019
£000
1,467
(5)
(1,474)
-
71
(310)
(1,133)
385
214
2019
£000
24
22
11
2018
£000
1,687
(14)
(1,382)
(10)
117
405
221
325
228
2018
£000
22
22
10
44 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
8. Staff numbers and costs and Directors’ remuneration
The average number of persons employed by the Group (including Executive Directors, excluding Non-Executive Directors) during the year, analysed by
category, was as follows:
Number of employees
2018
2019
Marine Activities
Property and Regeneration
Administration
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension costs
Note
25
The total remuneration of the Directors of the Company was as follows:
Fees
Other Emoluments
Contractual Payments
Pension Contributions
23
1
6
30
2019
£000
1,215
126
126
1,467
2019
£000
139
159
6
39
343
23
2
7
32
2018
£000
1,381
147
159
1,687
2018
£000
86
268
510
82
946
Further details of Directors’ remuneration are given in the Remuneration Report on pages 21 to 23, which forms part of these financial statements.
9. 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
2019
£000
2018
£000
1
892
10
-
-
902
-
761
14
25
97
897
Finance costs are net of borrowing costs capitalised in the year which amounted to £55,000 (2018: £40,000).
The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation was 4.4% (2018: 4.4%).
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 45
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
10. 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
2019
£000
(318)
3
-
(315)
2018
£000
-
(304)
-
(304)
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 (2018: lower) than the standard rate of corporation tax in the UK of 19% (2018: 19%).
Reconciliation of effective tax rate
Profit/(loss) before tax
Tax on profit at standard corporation tax rate of 19% (2018: 19%)
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
Capital allowances in excess of depreciation
Creation of tax losses
Total tax (credit)/charge on continuing operations
2019
£000
1,516
288
(274)
(315)
-
-
(47)
33
(315)
2018
£000
(2,502)
(475)
333
(95)
(172)
105
-
-
(304)
11. Dividends paid on equity shares
During the year ended 31 March 2019 no dividends have been paid in respect of previous periods (2018: £nil) or proposed (2018: £nil).
The Board of Directors does not propose a final dividend for the year ended 31 March 2019 (2018: £nil).
46 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
12. Earnings per share
2019
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 profit for the year of £1,831,000 (2018: loss of £2,198,000) for the continuing operations.
On 4 December 2018 the Group issued 10,344,951 shares and the average number of ordinary shares in issue of 108,982,966 (2018: 98,320,272)
has been used in the calculation.
1.68
1.68
Diluted earnings per share
Diluted earnings per share uses an average number of 108,982,966 (2018: 98,320,272) 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 (2018: nil), is calculated as follows:
2018
Pence
(2.24)
(2.24)
Weighted average number of shares at 31 March
2019
2018
108,982,966
98,320,272
Weighted average number of ordinary shares (diluted) at 31 March
108,982,966
98,320,272
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 Group plc – Annual Report & Financial Statements 2019 47
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
13. Property, plant and equipment
Assets in the
course of
Construction
£000
Plant, machinery
equipment,
fixtures and
fittings
£000
Land and
buildings
£000
Cost or valuation
Balance at 1 April 2017
Additions
Revaluations to income statement
Revaluations to revaluation reserve
Impairment
Transfers
Disposals
Balance at 31 March 2018
Balance at 1 April 2018
Additions
Revaluations to income statement
Revaluations to revaluation reserve
Impairment
Transfers
Disposals
Balance at 31 March 2019
Accumulated depreciation
Balance at 1 April 2017
Depreciation charge for the year
Transfers
Disposals
Balance at 31 March 2018
Balance at 1 April 2018
Depreciation charge for the year
Transfers
Disposals
Balance at 31 March 2018
Net book value
At 31 March 2018
At 31 March 2019
22,867
1
(221)
(1,624)
-
-
-
21,023
21,023
120
1,133
1,640
-
-
-
23,916
160
77
-
-
237
237
134
-
-
371
71
121
-
-
-
(105)
-
87
87
30
-
-
-
-
-
117
-
-
-
-
-
-
-
-
-
-
20,786
23,545
87
117
5,300
105
-
-
-
(80)
(333)
4,992
4,992
94
-
-
-
-
-
5,086
1,970
248
-
(326)
1,892
1,892
224
-
-
2,116
3,100
2,970
Total
£000
28,238
227
(221)
(1,624)
-
(185)
(333)
26,102
26,102
244
1,133
1,640
-
-
-
29,119
2,130
325
-
(326)
2,129
2,129
358
-
-
2,487
23,973
26,632
Included in Land and Buildings is long leasehold land at a value of £2,200,000 (2018: £2,200,000).
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
January 2019. 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 2019, 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 £19,304,000 (2018: £19,104,000).
At 31 March 2019, 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 (2018: £956,000).
48 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
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 £514,000 (2018: £586,000).
14. Investment property
At fair value:
Balance at the beginning of the year
Additions during the year
Fair value adjustments
Balance at the end of the year
Notes
2019
£000
19,055
60
310
19,425
2018
£000
19,460
-
(405)
19,055
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 2019 has been
determined by a valuation carried out on 31 January 2019 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 (2018: four) properties which are held under long leaseholds.
15. Investments
At 31 March 2019 the Group has the following subsidiaries:
Subsidiaries
Sutton Harbour Company
Sutton Harbour Services Limited
Plymouth City Airport Limited
Sutton Harbour Property and Regeneration Limited
Harbour Arch Quay Limited
Sutton Harbour Projects Limited
Sutton Harbour Car Parks Limited
Sugar Quay Holdings Limited
Sugar Quay Limited
Class of Ownership
shares held
2019
2018
Nature of Business
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%
Harbour Authority
Marine Leisure & Property
Property Developer
Property
Property
Property
Car Park Operator
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 Sutton Harbour
Office, Guy’s Quay, Plymouth PL4 0ES.
All subsidiaries are included in the Group consolidated financial statements.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 49
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
16. 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
2019
£000
2018
£000
-
-
-
38
38
-
-
-
33
33
1 April
2018
£000
(1,102)
(269)
-
33
(1,338)
2019
£000
(785)
(276)
-
-
(1,061)
Change in
deferred
tax rate
£000
-
-
-
-
-
2018
£000
(1,102)
(269)
-
-
(1,371)
2019
£000
(785)
(276)
-
38
2018
£000
(1,102)
(269)
-
33
(1,023)
(1,338)
Recognised
in income
£000
Recognised
in equity
£000
31 March
2019
£000
317
(7)
-
5
315
-
-
-
-
-
(785)
(276)
-
38
(1,023)
The Directors believe the deferred tax asset relating to losses carried forward will be utilised by future taxable profits.
17. Inventories
Stores and materials
Goods for resale
Development property
2019
£000
17
36
23,514
2018
£000
19
24
21,233
23,567
21,276
Included within inventories is £23,514,000 (2018: £21,233,000) expected to be recovered in more than 12 months.
£12,448,000, of the Development Property, being the carrying value of the former airport site, is classified in the
Balance Sheet as a non-current asset as realisation of the asset may be in more than five years’ time.
Inventories to the value of £2,047,000 were recognised as an expense in the year (2018: £1,927,000).
Interest capitalised during the year in relation to development property was £40,000 (2018: £40,000).
In the course of the year, £nil of development property inventory was written down (2018: £nil).
50 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
18. Trade and other receivables
Trade receivables
Provision for impairment of trade receivables
Other receivables
Prepayments and accrued income
2019
£000
655
(25)
630
135
1,518
2,283
2018
£000
649
(85)
564
326
1,280
2,170
Included within trade and other receivables is £634,000 (2018: £697,000) 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
2019
£000
85
2
(62)
25
2019
£000
457
56
6
13
98
630
2018
£000
52
44
(11)
85
2018
£000
338
113
14
36
63
564
As at 31 March 2019, trade receivables of £173,000 (2018: £226,000) 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.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 51
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
19. Cash and cash equivalents
Cash and cash equivalents per Consolidated Balance Sheet
Cash and cash equivalents per cash flow statement
At 31 March 2019, the Group had an agreed bank facility of £25.0m (2018: £25.0m) which expires on 31 March 2021.
The facility incurs interest charged at rates over LIBOR during the term of the facilities.
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
20. Bank loans
2019
£000
1,296
1,296
2019
£000
-
2,500
-
2,500
2018
£000
2,767
2,767
2018
£000
-
650
-
650
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 risk, see note 3.
Non-current liabilities
Secured bank loans
2019
£000
22,500
22,500
2018
£000
24,350
24,350
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. Assets with a carrying amount of £54.70m (2018: £54.70m)
have been pledged to secure borrowings of the Group.
52 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
21. 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
2018
£000
2018
£000
2019
£000
2019
£000
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
22. 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
1,434
-
(1,434)
1,398
1,398
1,398
-
1,398
1,479
-
(1,479)
1,434
1,434
1,434
-
1,434
646
-
-
-
646
-
646
646
2019
£000
1,090
87
112
207
1,496
2019
£000
749
285
56
-
-
1,090
1,169
(523)
-
-
646
-
646
646
2018
£000
967
85
117
464
1,633
2018
£000
685
240
3
10
29
967
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 53
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
23. Finance lease liabilities
Capital element
Minimum lease payments of lease payments
2018
£000
2018
£000
2019
£000
2019
£000
Amounts payable under finance leases:
Within one year
In the second to fifth years inclusive
Less: future finance charges
Present value of lease obligations
Current
Non-current
128
48
176
(7)
169
127
167
294
(19)
275
122
47
169
n/a
169
122
47
169
117
158
275
n/a
275
117
158
275
It is the Group’s policy to lease certain of its property, plant and equipment under finance leases. The average lease term is 2.2 years (2018: 2.9 years).
For the year ended 31 March 2019, the average effective borrowing rate was 4.7% (2018: 4.6%). Interest rates are fixed at the contract date.
All finance leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
All lease obligations are denominated in sterling and the fair value of the Group’s lease obligations approximates to their carrying amount.
24. 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 £126,000 (2018: £159,000).
There were no amounts outstanding or prepaid at the year end (2018: £nil).
54 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
25. Provisions for other liabilities and charges
Balance at 1 April 2017
Provisions made during the year
Provision utilised during the year
Balance at 31 March 2018
Balance at 1 April 2018
Provisions made during the year
Provisions utilised during the year
Balance at 31 March 2019
Current
Non-current
Onerous
leases
£000
Total
£000
253
-
(14)
239
239
-
(5)
234
70
164
234
253
-
(14)
239
239
-
(5)
234
70
164
234
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 Group plc – Annual Report & Financial Statements 2019 55
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
26. Capital and reserves
Share capital
Ordinary shares Deferred shares Total shares
Thousands of shares
2019
2019
2019
2018
2018
2018
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
105,599
10,345
96,277
9,322
62,944
-
62,944
-
168,543
10,345
159,221
9,322
115,944
105,599
62,944
62,944
178,888
168,543
Allotted, called up and fully paid
115,944,071(2018: 105,599,120)
Ordinary shares of 1p each (2018: 1p each)
62,943,752 (2018: 62,943,752)
Deferred shares of 24p each (2018: 24p each)
2019
£000
1,160
-
1,160
2018
£000
1,056
-
1,056
2019
£000
2018
£000
2019
£000
2018
£000
-
-
1,160
1,056
15,106
15,106
15,106
15,106
15,106
16,266
15,106
16,162
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 6 December 2018, Sutton Harbour Group plc issued 10,441,657 ordinary shares of 1p each at a price of 29.0p each. Net proceeds after issue
costs were £2.928m and the £2.823m 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 less transaction costs.
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 Group 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.
56 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
27. 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
During the year £214,000 was recognised in respect of operating leases expense in the income statement (2018: £228,000):
£196,000 in cost of sales (2018: £196,000) and £18,000 in administrative expenses (2018: £32,000).
Included within operating lease rentals is an amount of £293,000 (2018: £489,000) due in relation to the lease of part of a
property which has been sublet. Income will therefore be generated to offset some of these lease rental amounts.
Leases as lessor
The Group leases certain properties under operating leases (see notes 13 and 14).
The future minimum lease rentals receivable under non-cancellable leases are as follows:
Investment property:
Less than one year
Between one and five years
More than five years
Owner-occupied properties:
Less than one year
Between one and five years
More than five years
2019
£000
203
111
-
314
2019
£000
1,511
4,668
24,794
30,973
35
139
123
297
2018
£000
220
321
-
541
2018
£000
1,309
4,474
24,888
30,671
35
139
158
332
Total contingent rents recognised in the year were £74,000 (2018: £74,000). Contingent rents are determined by reference to specific
clauses within the leases.
During the year ended 31 March 2019 £1,474,000 (2018: £1,382,000) was recognised as rental income in the income statement.
Repair and maintenance expense recognised in cost of sales for the year to 31 March 2019 was £60,000 (2018: £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 Group plc – Annual Report & Financial Statements 2019 57
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
28. 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
Loss on sale of property, plant and equipment
Cash generated from continuing operations before changes in working capital and provisions
(Increase) in inventories
(Increase)/ decrease in trade and other receivables
(Decrease)/increase in trade and other payables
(Decrease) in deferred income
(Decrease) in provisions
Cash generated from continuing operations
2019
£000
1,831
(315)
901
(310)
(1,133)
358
-
1,332
(2,236)
(113)
(124)
(35)
(5)
(1,181)
2018
£000
(2,198)
(304)
897
405
221
325
(10)
(664)
(707)
82
462
(45)
(14)
(886)
58 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Consolidated Financial Statements
For the year ended 31 March 2019
29. Related parties
The parent of the Group is Sutton Harbour Group plc. The ultimate controlling party is FB Investors LLP, which is owned jointly by
Beinhaker Design Services Limited and 1895 Management Group ULC. In the course of the year, Beinhaker Design Services Limited
provided services to the value of £321,000 (2018: £67,000).
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 Group plc,
Philip Beinhaker joined the Board of Directors as Chairman and was appointed Executive Chairman in April 2018.
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 72.90% (2018 72.69%) of the voting shares of the Company.
The compensation of key management personnel (the Executive and Non Executive Directors) is as follows:
Fees
Short term employee benefits including taxable benefits
Social security costs
Company contributions to money purchase pension schemes
2019
£000
139
165
25
39
368
2018
£000
86
778
147
82
1,093
30. Capital commitments
As at 31 March 2019 the Group has no capital commitments.
On 8 April 2019 the Group entered into a contract valued at £677,000 to supply a new Fuel Line System and Utilities Dispensary for Plymouth Fisheries.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 59
Historical Financial Information
For the year ended 31 March 2019
Net Assets
Revenue
2019
£000
45,732
2018
£000
2017
£000
2016
£000
2015
£000
39,328
40,483
40,869
40,459
6,893
6,503
6,718
6,509
6,955
Operating profit before fair value adjustments,
impairments, costs of change in ownership and onerous leases
973
761
1,288
1,467
1,274
Fair value adjustments on investment
property and fixed assets
1,444
(626)
(105)
1,452
917
Impairment of assets, onerous leases
-
-
(173)
(272)
(403)
Operating profit/(loss) after fair value adjustments
and impairments
2,417
(1,605)
1,010
2,647
1,788
Net financing costs (excludes joint ventures/associates)
(901)
(897)
(957)
(1,057)
(927)
Profit/(loss) before tax on continuing activities
1,516
(2,502)
53
1,590
861
Profit/(loss) attributable to equity shareholders
1,831
(2,198)
Dividends paid
-
-
40
-
1,497
655
-
-
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
1.68p
1.68p
(2.24)p
0.04p
1.55p
0.68p
(2.24)p
0.04p
1.55p
0.68p
60 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
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 2019
Note
2019
£000
2018
£000
5
6
7
8
9
11
11
11
11,268
11,268
29,003
428
29,431
23
29,408
40,676
8,807
31,869
16,266
10,695
3,620
1,288
31,869
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
The notes on pages 63 to 67 are an integral part of these financial statements. In the year the Company made a profit of £295,000 (2018: loss of £1,591,000).
The Financial Statements were approved and authorised by the Board of Directors on 10 July 2019 and were signed on its behalf by:
N ATA S H A G A D S D O N
D I R E C T O R
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 61
Company Statement of Changes in Equity
As at 31 March 2019
Called up
capital
£000
Share premium
account
£000
Merger
reserve
£000
Profit and loss
account
£000
Total
£000
27,183
(1,591)
2,597
28,647
28,647
295
2,927
2,584
(1,591)
-
993
993
295
-
1,288
31,869
Balance at 1 April 2017
Loss for the year
Issues of shares
Balance at 31 March 2018
Balance at 1 April 2018
Profit for the year
Issue of shares
Balance at 31 March 2019
16,069
-
93
16,162
16,162
-
104
16,266
5,368
-
2,504
7,872
7,872
-
2,823
10,695
3,620
-
-
3,620
3,620
-
-
3,620
62 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Company Financial Statements
For the year ended 31 March 2019
1. General information
Sutton Harbour Group plc, formerly known as 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 2018 to 31 March 2019, with comparatives for the year 1
April 2017 to 31 March 2018 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 2019.
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 Group 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 Group plc – Annual Report & Financial Statements 2019 63
Notes to the Company Financial Statements
For the year ended 31 March 2019
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.
64 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Company Financial Statements
For the year ended 31 March 2019
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
2019
£000
22
1
2018
£000
22
1
For further details on other services provided by the Company’s auditors, see note 7 of the main Group consolidated financial statements.
4. Employees and Directors
The Company has no employees. The Directors are not remunerated for their services to the Company. Remuneration in respect of subsidiary undertakings
is disclosed in note 8 to the consolidated financial statements.
5. Investments
Cost and net book value
Investments in subsidiary undertakings
Subsidiary companies:
At 31 March 2019, the Company has the following investments in subsidiaries:
2019
£000
2018
£000
11,268
11,268
Subsidiaries
Sutton Harbour Company
Sutton Harbour Services Limited
Plymouth City Airport Limited
Sutton Harbour Property and Regeneration Limited
Harbour Arch Quay Limited
Sutton Harbour Projects Limited
Sutton Harbour Car Parks Limited
Sugar Quay Holdings Limited
Sugar Quay Limited
Class of Ownership
shares held
2018
2017
Nature of Business
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%
Harbour Authority
Marine Leisure & Property
Property Developer
Property
Property
Property
Car Park Operator
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
Sutton Harbour Office, Guys’ Quay, Plymouth, PL4 0ES.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 65
Notes to the Company Financial Statements
For the year ended 31 March 2019
6. Debtors
Amounts owed by subsidiary undertakings
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
Total creditors
Interest is charged at rates over LIBOR during the term of the bank facilities.
2019
£000
28,841
162
29,003
2019
£000
23
23
2019
£000
8,807
-
8,807
2018
£000
26,560
379
26,939
2018
£000
29
29
2018
£000
9,689
1,850
11,539
9. Called up share capital
Ordinary Shares Deferred Shares Total
Thousands of shares
2019
2018
2019
2018
2019
2018
In issue at the beginning and end of the
financial year – fully paid
Issued for cash
105,599
10,345
96,277
9,322
In issue at the end of the financial year – fully paid
115,944
105,599
62,944
-
62,944
62,944
-
62,944
168,543
10,345
159,221
9,322
178,888
168,543
Ordinary Shares Deferred Shares Total
2019
£000
2018
£000
2019
£000
2018
£000
2019
£000
2018
£000
Authorised Ordinary share capital
100,000,000 Ordinary shares of 1p each
(2018: 100,000,000 Ordinary shares of 1p each)
Allotted, called up and fully paid
115,944,071 (2018: 105,599,120)
Ordinary shares of 1p each (2018: 1p each)
62,943,752 (2018: 62,943,752)
Deferred shares of 24p each (2017: 24p each)
Total
1,000
1,000
1,160
1,056
-
-
-
-
1,000
1,000
1,160
1,056
-
1,160
-
1,056
15,106
15,106
15,106
15,106
15,106
16,266
15,106
16,162
66 Sutton Harbour Group plc – Annual Report & Financial Statements 2019
Notes to the Company Financial Statements
For the year ended 31 March 2019
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 year ended 31 March 2019
On 10 December 2018, at a general meeting of shareholders, a resolution was passed to issue 10,344,951 new ordinary 1p shares by the Company each at
a price of 29p. The aggregate net consideration of £2.927m (after deducting £73,000 of costs) has been credited as follows: £104,000 to Share Capital and
£2.823m to Share Premium Account.
10. Contingencies
The Company has given an unlimited guarantee in respect of bank borrowings of all subsidiary companies. At 31 March 2019, these borrowings amounted
to £22,500,000 (2018: £24,350,000).
11. Description of reserves
Called up share capital
The called up share capital and share premium accounts represent equity share capital (see note 26 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 26 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 26 to the consolidated financial statements).
Profit and loss account
The profit and loss account represents retained profits.
12. Ultimate controlling party
Sutton Harbour Group 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 Group ULC, and owns 72.65% of the issued share capital of Sutton Harbour Group plc.
The consolidated financial statements of the Group headed by Sutton Harbour Group plc are presented separately on pages 28 to 59 of this document.
The results of the Company are not consolidated in any other group’s financial statements.
Sutton Harbour Group plc – Annual Report & Financial Statements 2019 67
Notes
68 Sutton Harbour Group plc – Annual Report & Financial Statements 2019