2023
ANNUAL REPORT &
FINANCIAL STATEMENTS
C O N T E N T S
Strategic Report
2
3
4
8
10
12
Vision and Objectives
The Group at a Glance
The Executive Chairman’s Report
s172 Report - Promoting the success of the Group for the benefit of its shareholders
Financial Review
Principal Business Risks
Governance
13
14
16
19
20
23
24
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
33
58
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Consolidated Financial Statements
Historical Financial Information
Company Financial Statements under UK GAAP
59
60
61
Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Company Financial Statements
1 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 2 3
STRATEGIC REPORT
V I S I O N A N D
O B J E C T I V E S
Sutton Harbour Group plc, listed on the Alternative
O U R O B J E C T I V E S
Investment Market (AIM) 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 Marina at Sutton Harbour, together with
a number of operations related properties;
• A number of other ‘Sutton Harbour’ group
companies engaged in waterfront property
regeneration and investment including King Point
• To develop a mix of trading activities for medium
to long-term sustainable growth and to provide a
balanced risk profile.
• To provide a secure investment proposition in a
profitable Group which has a strong income
producing asset base by increasing and improving
the income earning asset portfolio of the Group.
• To build on the Group’s strength as a specialist
in waterfront destination and regeneration in the
South West region.
Marina and car park operating activities; and
• To provide asset-based value growth to shareholders
• Plymouth City Airport Limited, the company
holding legal interests in the former airport site.
in the medium term.
G R O U P V I S I O N
The Group is the owner and custodian of a unique
historic harbour asset adjacent to Plymouth city
C U R R E N T B U S I N E S S P L A N S
• Retention of strategic assets and development of
new adjacent assets for investment and revenue
generation until they reach their full potential.
centre to the north and Plymouth Sound to the south,
• Value realisation of inventory assets through
connecting the sea to the South West of England.
development together with the sale of some
The Group owns property assets around the harbour
assets which have attained their full potential.
and directly supports the City’s objective to create
• Investment in infrastructure to increase capacity,
the first National Marine Park, and to assist it to fulfil
improve service and enhance quality.
its ambitions as the Ocean City thereby creating a
prime location for living, working, visiting and hosting
waterside events.
• Growth of earnings from core divisions: marine
(marinas and fisheries), real estate (commercial
lettings), parking and regeneration/development.
• Maintain strong reputation for quality and
customer service.
2 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 2 3
STRATEGIC REPORT
T H E G R O U P
AT A G L A N C E
M A R I N E
Sutton Harbour currently has capacity for
berthing 523 leisure and commercial vessels (as
of June 2023 was accommodating 468 vessels)
and achieves an increasing, core annual revenue
stream in the form of dues, fees and rents from
the established fisheries, marinas and property
operations.
Marinas
Sutton Harbour Marina for leisure berthing is
currently 95% occupied and is trading at close
to capacity.
The King Point Marina, which opened in 2013,
has now transitioned into a mature business with
97% occupancy. The facility has 119 leisure berths
with additional berthing taking approximately a
third of the total space leased to Princess Yachts
until 2028.
Plymouth Fisheries, the trading name of the
fishmarket in Plymouth, is recognised as an
important fishing port in England.
The Group’s subsidiary, Sutton Harbour
Company has been trading since 1847 and
during this long period of operating the harbour
and associated assets have experienced
successive economic cycles. This long history
serves as a guide to continue to develop the
asset for further performance and value
growth in the future.
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 quality residential and commercial buildings
overlooking the harbour, and improvements to
berthing facilities, added to the attractiveness
of the area to create a sustainable location for
business, leisure and living. The Group is now
focused on bringing forward the third phase
with new planning applications secured and in
preparation which will integrate the city centre
to communities east of the Harbour, a long held
aspiration of the City of Plymouth.
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, including office space, retail and
leisure facilities.
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 Old Barbican Market, the former
fishmarket which was converted to retail use in
1998, underwent a major refit in 2022 which was
subsequently let to three high quality national
covenant tenants and now attracts increased
footfall to the Sutton Harbour area.
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. These facilities and operators
attract visitors and citizens of Plymouth,
strengthening the natural attractiveness, leisure
and social enjoyment of the Harbour.
The Group has been active in establishing a
business community around the northern side
of Sutton Harbour and has been successful in
attracting a number of chartered accountants’
practices, legal firms and other professional
services companies.
C A R P A R K I N G
The Group has two major car parks at Sutton
Harbour, a 340 space multi storey close to the
National Marine Aquarium and a 51 space surface
car park in the Barbican area. Additionally,
the Group controls parking on the fishmarket
complex, at the marina, around Sutton Harbour
and adjoining various tenanted properties.
R E G E N E R AT I O N
During 2022 and 2023 the Company has been
constructing its first new building at Sutton
Harbour since 2009 – a 14 unit apartment building
(Harbour Arch Quay). Planning consents are
held for the development of the iconic Sugar
Quay tower of 170 units, with retail/office space
incorporated facing the harbour and the extension
to an existing multi storey car park owned by the
Group is also approved, to be implemented in
parallel with Sugar Quay.
The Group has also been working with the Local
Planning Authority to build significant residential
complexes on the east side of Sutton Road which
will facilitate improved east west linkage across
Sutton Harbour joining the city centre and existing
easterly residential areas.
Former Airport Site
In 2000, the Group purchased Plymouth City
Airport Limited and a long lease of the regional
airport site from Plymouth City Council. The
Group also owns some freehold land on the 113
acre 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.
Plymouth City Council agreed upon the closure
of the former airport as of 23 December
2011, due to withdrawal of flight services and
unsustainable losses. The decision also resulted in
cancellation of the airport operating licence and
cancellation of the air traffic zone. In March 2019,
Plymouth City Council produced a new local plan
which was scrutinised at public hearings and by
Government Planning Inspectors. The plan was
accepted together with the Council’s proposal
This division focuses on development for revenue
to safeguard the former airport site for aviation
and capital growth and for value realisation
through specific land asset sale.
Sutton Harbour
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.
operations but limited to five years. Accordingly,
the Group is working towards options for the
site and developing a masterplan. This strategic
asset will either be redeveloped for a range
of uses (including the possibility of an aviation
component based on emerging new technology
that is sensitive to the environment and does
not require the full extent of the current runway
length) or limited to airport uses only, but in
either case the intrinsic value of the asset is
represented by its potential future uses.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 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 2 3
STRATEGIC REPORT
E X E C U T I V E
C H A I R M A N ’ S R E P O R T
INTRODUCTION
I am pleased to report on a successful year of progress for the year ended 31 March 2023, notwithstanding the material challenges in the economy:
The Company has been engaged in the delivery of two key property projects during the financial year, in line with the strategy to improve the quality, value and
sustainability of the Sutton Harbour area:
Harbour Arch Quay – construction of the waterfront 14 apartment building is due to be substantially completed in August 2023, whereafter occupations of the 12 (of 14)
apartments already exchanged will follow. This is the first new building developed by the Company at Sutton Harbour since 2009.
Old Barbican Market – the historic former fishmarket building has undergone a full refurbishment, including a new roof on the listed structure and separation of the
7,500 sq ft space into three c. 2,500 sq ft retail spaces. All three units are let to higher quality national operators: Cornish Bakery, Pavers and Loungers, stimulating footfall
and adding to the diversity and vibrancy of the area.
Marinas – the marinas achieved another record season with berths occupied effectively to capacity during the year.
The nature of the Company’s operations and level of debt carried has exposed the Company to significant cost increases as a result of rising interest rates and the
extreme energy cost spike in the second half of the year. Energy costs have declined at the start of the current financial year and the Company is securing more effective
contracts and with more stability in supply.
To support repayment of a third party loan, the Company’s progress with active and future property projects and to improve cash headroom Related Party Loans totalling
£2.955m were drawn down from two major shareholders during the year. Post-period end, in May 2023, subscription for new equity shares by the major shareholder
provided £2.923m (before expenses) to further support the Company’s operations and projects in the face of ongoing higher costs and to permit reduction of bank loan
debt .
F I N A N C I A L H I G H L I G H T S
Net Assets
Net Asset value per share
(Loss)/Profit before tax from continuing operations
Adjusted profit/(loss) before tax excluding fair value adjustments
(Loss) after tax
Basic (loss) after tax per share
Dividend per share
Total Comprehensive Income for the year attributable to shareholders
Total Comprehensive Income per share
Net Debt
Gearing (Net Debt/Net Assets)
2 0 2 3
£56.067m
43.1p
(£2.021m)
(£0.096m)
(£2.036m)
(1.57p)
0.0p
(£0.144m)
(0.11p)
£29.259m
52.2%
2 0 2 2
£56.211m
43.3p
£0.561m
(£0.366m)
(£0.259m)
(0.20p)
0.0p
£5.641m
4.33p
£24.408m
43.4%
4 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
R E S U LT S A N D F I N A N C I A L
P O S I T I O N
The adjusted loss before taxation for the year was
£0.096m (2022: £0.366m profit before taxation)
which excludes non-cash fair value adjustments.
In this financial year these adjustments relate to
property asset valuation, undertaken by external
valuers as at 31 March 2023. The loss before
taxation for the year under review as per the
Income Statement, inclusive of the aforementioned
adjustments, was £2.021m (2022: £0.561m profit
before tax). Gross profit for the year was £2.246m
down £0.102m compared to the previous period
to 31 March 2022 (£2.348m), reflecting the impact
of the higher energy costs in the second half year.
Net debt (including lease liabilities) increased to
£29.259m as at 31 March 2023 from £24.408m
at 31 March 2022, an increase of £4.851m. This
includes £2.372m at 31 March 2023 in respect of a
specific development loan (maximum £5m facility)
for the construction of Harbour Arch Quay. The
increase in development property inventory during
the year to £37.048m (31 March 2022: £31.861m),
includes the Harbour Arch Quay development
which amounted to £6.940m at the year end.
Gearing (Net debt: net assets) as at 31 March
2023 stood at 52.2% (31 March 2022: 43.4%).
Net finance costs of £1.150m in the year (2022:
£0.789m) are stated after capitalisation of interest
of £0.555m (2022: £0.343m).
As at 31 March 2023, net assets were £56.067m
(31 March 2022: £56.211m), a net asset value of
43.1p per ordinary share (31 March 2022: 43.3p
per ordinary share). The movement includes
the valuation of the Group’s property assets
which gave rise to an overall valuation surplus
of £0.510m, as reconciled in the table below, of
which a £1.925m deficit relates to the investment
property portfolio and a net £2.435m surplus
relates to the owner-occupied properties. These
valuation results reflect the strength and continued
strong performance of the marina and car park
assets, set against the impact of a general weaker
market sentiment towards office and retail space.
The Company’s investment portfolio has continued
to be well let and with demand for the few
available properties. During the year a 27 year old
office building has been decanted as leases expired
with refurbishment of the building intended.
VALUATION SURPLUS/(DEFICIT)
ACCOUNTING*
Owner Occupied Portfolio
Fisheries
Marinas
Car Parks
-
£2.024m
£0.411m
Credited to the Revaluation Reserve in the Balance Sheet
Credited to the Revaluation Reserve in the Balance Sheet
Investment Property Portfolio
£(1.925)m
Fair valuation adjustment recorded in the Income Statement
TOTAL
£0.510m
Further details on Financial Performance can be found on page 10.
Financing
In May 2022 the Company repaid a third party
loan which had been drawn down in 2020 to
purchase strategic land. Security provided to
the lender was then released. This was funded
by unsecured Related Party Loans from two
major shareholders totalling £2.3m on better
and more flexible terms than could be secured
elsewhere. Later in the financial year (December
2022 and March 2023) the Related Party Loans
were increased by £280,000 and £375,000
respectively to improve cash liquidity. Terms of
the loans allow for interest to be rolled into the
loan principal on a quarterly basis. The Related
Party Loans expire in May 2024.
The Company’s general banking facility has been
extended by one year giving a new expiry date
of December 2024. The committed facilities of
£24.9m reduce to £21.7m by 31 August 2023.
The Company is now preparing to put a new
general banking facility in place within the current
financial year. During the past financial year the
Company met all banking covenant tests as
agreed with the bank.
A £5m development facility was put in place
to fund the construction costs of Harbour
Arch Quay. This facility will be repaid with the
completion of sales of the apartments before the
expiry date of 13 September 2023.
• Deliver profitable redevelopment of existing
sites for sale to improve working capital
headroom and to reduce debt, and/or for rent
to improve revenue, profit and capital
value growth
• Consideration of the sale of non-strategic
assets that have achieved maturity and stability
in value.
• And thus rebalancing the debt : equity ratio
of Company to allow the reduction of debt
and consequent saving of interest.
Taking into account the current level of bank
borrowing, the board does not recommend
payment of a dividend on the year’s results.
During the financial year under review bank
base rate rose from 0.75% as at 1 April 2022 to
4.25% at 31 March 2023. The progressive rises
throughout the year have resulted in material
increases in debt servicing costs. The board has
discussed the merits of fixing the interest rate by
way of a hedge instrument every month, but to
date has not entered into any agreements due
to the high cost of doing so relative to the rate
ruling at the time of obtaining quotes and the
expectation that rates are close to peaking.
Recognising the increasing cost of debt serving
costs, the Company has a strategy to further
reduce debt levels and to improve profitability:
• To continue to improve the attractiveness
of the Sutton Harbour asset to benefit the
Company’s trading profitability and investment
property rentals.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 5
DIRECTORS AND STAFF
The energy price spike that affected the second
North Quay House has been continuously
There have been no Board changes during the
year. Headcount as at 31 March 2023 was 30
(31 March 2022: 32).
OPERATIONS REPORT
MARINE
Both Sutton Harbour Marina and King Point
Marinas achieved record revenues for the year
to 31 March 2023 with respective average
occupancies of 97% and 96%. The Company
saw high demand for berthing following the
trend of the previous year and more customers
paying some 5 months in advance of the start of
the season to secure their preferred berth. In
response to the increased level of business some
additional staffing resource has been introduced
half of the financial year under review which
let to office tenants for 27 years. Following
took hold after the previous fixed price expired
the vacation by most tenants the Company is
increased energy prices to 3.5-4 times as much
reviewing options for the building which would
as previous charged, even after allowing for the
achieve best value for the Company and to
Government energy price relief discount. Since 1
stimulate activity at Sutton Harbour. Demand
April 2023 energy prices have halved from where
for office space in Plymouth has weakened
they were, although this is still close to double
and the Company judges that the cost of
the price as pre October 2022. The Company
refurbishment to modern standard office space
will continue to be a significant energy consumer
is unlikely to generate returns sufficient to justify
to operate the harbour, lock and fisheries plant as
the investment. Following the success of the
well as general heating and lighting consumption
Harbour Arch Quay residential development,
across the estate which is recharged to tenants
the Company now intends to submit a planning
and other users based on meter readings in the
application to convert the building to residential
case of specific supply. To manage the risk of
accommodation with ground floor commercial
volatility in energy prices the Company is in the
space. Subject to planning consent and financing
process of entering into a 5 year capped buying
this development, which could provide 10 high
arrangement for the procurement of gas and
quality apartments over 5 floors together with on
to support the administrative and operational
electricity requirements which offers greater
site parking, could be delivered in 2024.
functions running the marinas.
protection against future price volatility.
The car parks traded successfully throughout the
financial year achieving the best revenues to date.
Prices have been raised in line with inflation and
other local parking facilities for the new season.
The car parks management agreement is due for
renewal at the end of 2023 and discussions with
specialist management companies will take place
over the next few months to secure the best
terms for the Company.
The normal events programme organised, by
the City Council and other stakeholders, for the
waterfront and nearby City Centre areas have
resumed, increasing visitor numbers which in
turn support the trading operations of many of
our tenants. Together with the Company’s new
developments and improvements these events
promote the vibrancy and popularity of the
Sutton Harbour area for visitors, workers and
residents, thereby supporting the sustainability
of the Harbour and values of the Company’s
property assets.
The outlook for the marinas remains strong with
King Point Marina fully let and a new 5 year lease
for approximately one third of the total berthing
space to Princess Yachts completed in June 2023.
The Company has increased fees, in line with
inflation, as have competitor marinas. Berth-
holders at Sutton Harbour Marina have been
offered a discount to reflect the disruption of the
forthcoming lock work and occupancy is slightly
lower this season at 95%. Normal operations
will resume by May 2024 once these works are
complete with the expectation that major lock
works will not be required for another 12-15
years (more information on these works is
given below).
Fisheries trading followed the slow trend of
the last couple of years with high fuel prices,
competition from other south western ports,
intermittent poor weather and lower fish
stocks all contributing to a decline in the trading
position. Landings of fish in value terms were
slightly lower than the previous year although the
volume of fuel sold was up on last year, albeit at
Starting in Autumn 2023 the Environment
Agency will embark on a six month programme
to replace the cills of the Sutton Harbour Lock,
which is a flood defence to protect the City.
These essential works result in restrictions to
harbour users at certain times when passage
through the lock will be constrained. The
Group is arranging for back-up alternatives to
facilitate some of the landing of fish at nearby
locations which can be transported to the Fishery
Complex for fish processing and auction. This
was the same some 13 years previously when
works were undertaken on the lock gates,
however the costs relating to the
works themselves is being funded by the
Environment Agency.
REAL ESTATE AND CAR PARKING
Tenant occupancy by 31 March 2023 stood at
89% (31 March 2022 89%). There has been little
change in the tenants mix over the reporting
year. The main changes have been the decanting
of North Quay House (a 17,750 sq ft 5-floor)
office building and the letting of the refurbished
a lower overall margin charged by the Company
Old Barbican Market.
to support fishermen to go to sea and improve
competitiveness. Against this trading picture,
demand for commercial units at Plymouth
Fisheries has been strong, such that all units are
now let to fisheries related businesses and there
are no void premises. Rental incomes and related
service charges have therefore improved in
the last year.
The Old Barbican Market is fully let with
three new national scale tenants with material
covenants and has visibly stimulated increased
visitor footfall to the area. The sensitive and
complete restoration of the listed historic
building has enhanced the quality of the built
environment and amenity in the Sutton Harbour/
Barbican area for years to come.
6 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
REGENERATION
Harbour Arch Quay
The development construction is due to be
completed by mid August 2023, with occupation
of sold apartments due to take place immediately
thereafter. Of the 14 apartments, including
has been managing the property faithfully. This
will continue to be challenged with higher
management includes the security of the land
energy prices (although these continue to fall
assets against trespassers, groundskeeping and
from the winter peak), general inflation and the
environmental management and site safety, all at
consequential costs resulting from the lock cill
considerable cost to the Company, c £200,000
replacement. Higher interest rates represent the
per annum.
single biggest cost pressure.
2 penthouses, 12 are sold and the remaining
The Company has also collaborated with the
two are being marketed. The Company will
local authority (Plymouth City Council or PCC)
S U M M A R Y A N D O U T L O O K
be relocating its head office to the ground
and other public bodies to enable them to make
floor space of the building. This is the first new
productive use of the property.
development that the Company has delivered at
Some examples are:
Sutton Harbour in 14 years and re-establishes
the Company’s reputation as an active developer.
• Agreement via sublease to enable the PCC to
have a cycle path on the property alongside
North Quay House
some of the adjacent roads;
This asset has been described in more detail
• Agreement with the local authority to enable
further above.
Sugar Quay
the construction contractor of the PCC to
store large reinforced concrete bridge beams
on the property needed for the construction
The Company has consent for a 170 apartment
of a major new highway; and
The Board is pleased with the successful delivery
of new developments to meet objectives of
sustaining and enhancing the attractiveness and
amenity of the Sutton Harbour area and to
create long term value growth from the assets.
The investments made in the past year are
proof that sustainable success is achievable with
improvements to the Harbour environment for
the benefit of visitors, workers and residents.
This positive achievement is set against the
emergence of economic challenges of higher
building on the eastern quay of Sutton Harbour.
Taking into account the market absorption rate
for the Harbour Arch Quay apartments, the
length of the build programme and the current
economic outlook, the Company is now working
on modifying the approved plan for this site that
will allow for the development to be delivered in
three distinct phases.
Former Airport Site
The 5 year safeguard protecting against non-
aviation uses of the site, as recommended by
the Government’s Inspectors of planning policy
when the new Local Plan was determined in
2019, expires in March 2024. Since the airport
closed in December 2011, no funded plan to
resume airport operations from the site has
been received. The Company maintains that the
site could be put to better use for the economic
and social benefit of the City by mixed use
redevelopment to include institutional, business
space and housing provision with the possibility
of an aviation component. The Company
intends to submit a planning application to the
Local Planning Authority setting out the plan for
development later this year.
The Company has a long-term lease on the
Property of the Former Airport site with over
130 years remaining. In addition, the Company
has the right for an extension of the said lease.
Since the closure of the Airport in December
2011 the Company, under the terms of the
agreement with the Plymouth City Council,
• Use of the site by the Police and other public
energy and interest costs which have undermined
security services for various training exercises.
profitability in the past year. Looking to the future,
in order to maintain the momentum with current
Recently, the Company received a request from
strategic plans, the Company is in discussions with
the NHS Derriford Hospital to accommodate
the current development funder, based on the
part of their need for parking of cars on the site.
productive results of the work to date, towards
This need arose from the construction works
securing the additional financing for development
on the hospital site, funded by the National
of the Company’s existing land assets in the
Government, which displaced staff parking. The
coming year. We look forward to updating the
Company approached the local authority as
market in due course.
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
31 July 2023
free-holder of the site for this temporary use for
a few years for the benefit of the NHS/Derriford
Hospital, which request was not granted by
Plymouth City Council.
The Company has more recently been
approached by the construction contractor of
the Hospital works, to use some of the land
on a temporary basis to store construction
related materials, vehicles and equipment with
commitment to return the site in the same state
as before this temporary use. The Company is
making an application to the PCC regarding this
request, notwithstanding the previous temporary
car parking rejection, in the hope that the PCC
will recognise the importance of this need to
deliver the essential hospital improvements.
F I N A N C I A L O U T L O O K
Trading at the start of the new financial year
is steady and consistent with recent trading.
Demand for the Company’s property, services and
facilities continues to be robust. The Company
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 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 2 3
STRATEGIC REPORT
s17 2 R E P O R T - P R O M OT I N G
T H E S U C C E S S O F T H E
G R O U P F O R T H E B E N E F I T
O F I T S S H A R E H O L D E R S
The s172 report explains how the Board has sought to promote the success of the Group for
the benefit of shareholders and highlights the key decisions taken by the Group in the past year.
ENGAGING WITH STAKEHOLDERS
The Group regards its key stakeholders as
its bankers, investors, Plymouth City Council,
Environment Agency,other governance bodies,
customers, staff and trade bodies.
DECISION MAKING
Typically major decision making concerns
financing/funding, strategic business direction, key
contracts and major business transactions, risk
management, human resources and pay matters,
Board appointments and regulatory reporting
matters. Implications of specific decisions are
researched to ensure communications to specific
stakeholder groups make clear the business
reasons, the benefits and the costs, as applicable.
Stakeholders
Marine - Marinas
Marine - Fisheries
Real Estate
Car Parking
Regeneration
Corporate
Service Users /
Customers
Berth-holders
Fishers
Fishing Industry
Trawler Agents
Tenants
General public
National Marine
Aquarium
Finance
Project Financiers
Government &
Regulatory
Marine Management
Organisation
Plymouth City Council
Environment Agency
Marine Management
Organisation
Plymouth City
Council - Planning
Authority
Plymouth City
Council - Planning
Authority
Plymouth City
Council - Planning
Authority
Shareholders
Company Bankers
Corporate Advisors
AIM rules/
London Stock
Exchange compliance
Staff
Trade Bodies
The Group’s board, management team and employed personnel. 3rd party contractors – advisors and operations delivery
British Marine
Industries Federation
Yacht Harbour
Association
The British Ports
Association
British Parking
Association
The Group’s approach is to collaborate
with partners to promote the success of the
Group, balanced proportionately with needs
of collaborators to meet their own criteria for
success.
The Group communicates with investors about
progress at regular reporting intervals and when
other reportable events occur.
The Group works closely with its key
stakeholders being bankers, major investors,
Plymouth City Council, Government
Departments (including the Environment
Agency), other governance and trade bodies and
consults with these parties where appropriate to
ensure the ongoing success of business activities.
After establishing relations with harbour
users, Company management has continued
to meet with stakeholders’ groups to consult
upon the timing, methodology and back up
facilities in connection will the upcoming lock cill
replacement works. The Company has engaged
independent facilitators to assist with this process
and has taken external independent advice
where appropriate to inform the measures to be
put in place.
The Group engages professional advisors to assist
with the formulation of strategies that are best
positioned for success and deliverability and for
advice on technical, legal or special matters.
The Group is available to talk directly to key
customers and tenants as matters arise.
Staff communications are managed informally
and more formally through monthly one to one
meetings and annual appraisals given the small
number of employees (currently 30).
8 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
KEY DECISIONS TAKEN IN THE YEAR
Financing
During the year the Company has required
additional financing to support operations and to
replace expiring loans. In achieving new financing
the board took into account flexible terms,
competitive debt servicing rates, low fees and
professional costs, preference for unsecured debt
and time efficiency to put new financing in place.
Financing decisions during the year resulted in:
• Replacement of a secured third party loan on
better and more flexible terms with unsecured
related party loans provided by two major
shareholders.
• Extensions to related party loans to provide
increased cash headroom to manage energy
and interest cost rises to maintain progress with
property projects.
• Extension of general banking facility by one
year rather than a longer term facility renewal
to allow the Company to consider future debt
structuring requirements, with the objective of
debt reduction by generation of capital from
developments.
• Equity raise by way of subscription to the
majority shareholder (completed after the
year end) using existing authority granted by
shareholders to permit reduction of bank debt
(Summer 2023)
• Development finance drawn down to fund
Harbour Arch Quay reduced by utilising deposits
paid to meet some subcontractors costs and
thereby save interest.
As the leases have expired for space in the North
Quay House office building, the board has been
appraising the financial merits of various options
for the building taking account of market demand
for different forms of accommodation.
Interest – hedging
The board has had monthly discussions about
the merits of hedging interest rates but did not
enter into an agreement due to the high cost of
doing so at each review date compared to the
expectations of rate increases.
Power cost buying arrangements
To avoid the impact of energy price volatility the
board has decided to enter into a 5 year capped
energy buying strategy from 1 October 2023 in
the best interests of controlling the Company’s
costs and direct/indirect charges to customers.
This strategy is expected to result in greater
certainty of future rates and lower costs.
Stakeholder engagement re Lock Works
The Environment Agency is responsible for the
procurement and financing of the upcoming Lock
Cill replacement works. Harbour users, which
include fishers, leisure boat owners and others
have been consulted through a series of meetings
to discuss measures to mitigate the disruption as
far as it practicable to do so.
Staffing and pay
After a larger pay increase for many operational
personnel at the start of 2022, pay increases
effective April 2023 were moderate and were
benchmarked against rates in the locality for
similar roles.
Asset improvement and redevelopment
In line with the board’s decision to become a
development focused company, the Company has
advanced the following projects:
Dividend
The board does not recommend a dividend on
the year’s results in line with its policy stated on
page 11 in the Financial Review.
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
31 July 2023
Throughout the year, the Company has been
engaged in delivery of the new 14 apartment
Harbour Arch Quay building which will be
completed in Summer 2023. This has been the
first new development delivered by the Company
in a decade and is the model for construction and
financing of future projects in lands surrounding
Sutton Harbour. Contracts for 12 of the 14
apartments have been exchanged ‘off-plan’.
The board supported the comprehensive
refurbishment of the Old Barbican Market to
enable the Company to accommodate three new
national covenant tenants to improve the quality
of amenity in the area and consequent footfall.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 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 2 3
STRATEGIC REPORT
F I N A N C I A L
R E V I E W
K E Y P E R F O R M A N C E I N D I C AT O R S
The key performance indicators used to measure performance of the Group are stated below and narrative to these is provided in the Executive
Chairman’s Report.
BUSINESS SEGMENTS
The Group separates its activities into 3 trading
segments: Marine (comprising Fisheries, Harbour
and Marina operations), Real Estate being the
business of renting the portfolio of commercial
premises owned by the Group and Car Parking
which records results from the operation of
two public car parks and various other parking
areas. A fourth regeneration segment is activated
when active construction of new build assets is
underway. Plymouth Fisheries receives its income
from landings dues (a percentage of the value of
the fish determined at auction), the margin on
fuel sales, sales of ice and rental of commercial
space at the Fisheries complex. The Group has
improved its marina results through increases
in overall occupancy. Continued digital targeted
marketing and the renewed popularity of UK
based leisure boating have been key success
factors in stimulating growth.
Property Asset Performance Key Performance
Indicators, which are markers of the portfolio’s
success are reporting as follows:
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
A S AT 3 1 M A R C H
2 0 2 3
A S AT 3 1 M A R C H
2 0 2 2
£55.505m
£38.300m
£17.205m
75
£1.404m
9.42%
9.08%
89%
£0.380m
7.6 years
£0.771m
£23.485m
£0.200m
£13.363m
£37.048m
£54.320m
£36.125m
£18.195m
72
£1.385m
8.46%
8.96%
89%
£0.319m
8.3 years
£0.736m
£18.445m
£0.200m
£13.216m
£31.861m
10 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
The Group assesses the performance of its
pre-construction costs of new regeneration
total debt. There are currently no interest hedge
property assets through annual independent
projects. Other loan financing has been used to
agreements in place due to the high cost of
valuation and monthly review of the property
finance land purchases; in December 2020 a loan
hedge agreements at the time of each review and
metrics as above. Success is measured in terms of
from a private lender was taken out to fund the
the expectation that interest rates are reaching
occupancy rate, the number of vacant properties
purchase of a site on Sutton Road, Plymouth. In
a peak.
available and the rent that letting voids could
May 2022, repayment of this loan was funded by
yield. Car parking cash takings are monitored
two unsecured loans totalling £2.3m which were
The Company is actively working on its future
weekly and are cross referenced to activity
provided major shareholders on less expensive
financing strategy as is referred to in the
levels in the harbour and compared to results
and more flexible terms. These related party
Executive Chairman’s Statement on page 4.
of previous comparative periods. The Group
loans were extended by a further £0.655m
is actively pursuing new planning consents, in
by March 2023 and are due for repayment in
TA X AT I O N
The standard rate of tax applicable to the Group
is 19% (2022: 19%). The overall tax charge for
the year is £0.015m (2022: charge of £0.820m).
D I V I D E N D P O L I C Y
Taking into account the current level of bank
borrowing and consequent debt servicing costs
and the Group’s need for bank facility headroom
to maintain current operations and the planning
stages of future real estate development, the
Board does not recommend a dividend on the
year’s results. The Group regards itself as an
asset-based investment with its opportunities to
reduce bank debt and realise value vested in the
success of future development projects.
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
31 July 2023
addition to the live consents already held, and
May 2024. The financing of the Harbour Arch
cost of the pre-construction work is capitalised
Quay building construction has provider by a
to the carrying value.
development funder with a facility that expires in
October 2023.
R E G E N E R AT I O N P R O J E C T S
Costs incurred in pre-construction projects are
held as development stock and are expensed
against delivery of the project. The construction
of Harbour Arch Quay building is due for
completion in August 2023 and the increased
development inventory balance at 31 March 2023
reflects the position at the year end.
A S S E T V A L U AT I O N
The Group had total borrowing net of cash and
cash equivalents of £29.259m at 31 March 2023
(2022: £24.408m) with a gearing level of 52.2%
5(2022: 43.4%). The Group has operated within
its authorised facilities. The bank facilities were
amended in December 2020 to permit the carve
out of the Sugar Quay site provided as security
to a different lender for the purchase of the
Sutton Road site. The facilities were amended
again in March 2021 to extend the additional
During the year, independent valuation of
£2m RCF until May 2022 and to amend certain
the Group’s investment and owner-occupied
covenants in line with Covid crisis impacted
portfolio was undertaken as at 31 March 2023.
trading expectations. In September 2021 facilities
This valuation gave rise to a net surplus of
were amended to permit the transfer of the land
£0.510m reconciled as (£1.925m) deficit on the
for the Harbour Arch Quay to be transferred
investment portfolio and £2.435m surplus on the
to the subsidiary undertaking the development
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
A full explanation is provided within note 4 on
Accounting estimates and judgements on page 41.
and to allow the development lender to take
security thereon. In March 2023, the facility
was amended to provide an extension of one
year until December 2024 and it was agreed
that term loan debt of £3.2m would be repaid
from the proceeds of the Harbour Arch Quay
development.
C A S H F L O W A N D F I N A N C I N G
With the pipeline of development projects
The Group’s main sources of cash inflow are
commercial property rentals, marina berthing
fees, car parking fees, fish landings dues and fuel
and ice sales income. These incomes cover the
overhead and debt servicing costs and routine
capital infrastructure replacements of the Group.
The bank facility and from time to time, new
equity capital, has been drawn upon to fund
to finance, the Group is having discussions to
put in place funds to progress construction as
conditions allow.
Debt servicing costs continue to be a major
expense to the Group and the board considers
monthly the merits of entering into interest rate
swap arrangements to fix interest on part of the
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 11
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 2 3
STRATEGIC REPORT
P R I N C I PA L
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 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. Principal Risks and Uncertainties are as follows:
P R I N C I P A L
R I S K /
U N C E R TA I N T Y
Financing
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 availability of adequate
borrowing and other
funding facilities
The Company’s current banking facilities to a maximum of £21.7m (after £3.2m repayment of
term loan debt in Summer 2023) expire in December 2024. The company is actively working
on a future financing strategy to have in place by March 2024. Development is and will be
funded through specific loans and equity capital. Major shareholders have demonstrated their
ongoing support through their participation, latterly subscription to new equity issue raising
£2.9m in May 2023 and in the provision of unsecured loans (£2.955m) during the year to
31 March 2023.
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.
Interest rate rises
The Group currently has total bank facility debt exceeding £24m and any further material
increase in interest rates could have a significant impact on debt servicing costs. The
Group regularly reviews interest rates and its exposure. Interest swap agreements may be
entered into to manage interest risk exposure where these are judged to be cost effective,
as agreed by the board.
Reputation
The impact of negative
publicity about the Group, its
operations or stakeholders
The Group retains the advice of public relations specialists to advise on potentially
contentious matters. Key stakeholders are consulted with as appropriate to the matter.
Media publicity about the Group is actively followed and reported where it is misleading
or untrue.
Property Development
Sales risk
Risk – The Company
is undertaking a
development project
of 14 apartments at
Harbour Arch Quay.
12 of the 14 apartments (including the two double size penthouse units) are exchanged
which represents 87.5% of total apartments revenue. Building construction is due to
complete in August 2023 with occupations to follow thereafter.
A P P R O V A L
The Strategic Report from pages 2 to 12 was approved by the Board of Directors on 31 July 2023 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
12 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 2 3
GOVERNANCE
D I R E C TO R S
A N D A D V I S O R S
Company Number
02425189
Directors
Philip H. Beinhaker (Executive Chairman)
Corey B. Beinhaker (Chief Operating Officer)
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 Advisor and Broker
Registrar
Bankers
Sutton Harbour Office
Guy’s Quay Office
Sutton Harbour
Plymouth
PL4 0ES
Tel: 01752 204186
www.suttonharbourgroup.com
PKF Francis Clark
Centenary House
Peninsula Park
Rydon Lane
Exeter
EX2 7XE
Strand Hanson Limited
26 Mount Row
Mayfair
London
W1K 3SQ
Computershare Services plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
National Westminster Bank plc
135 Bishopsgate
EC2M 3UR
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 13
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 2 3
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 2023.
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 31 July 2023 the Group’s register of shareholdings showed the following interests in 3% or more of the
Group’s share capital:
FB Investors LLP
Crystal Amber Fund Limited
Rotolok (Holdings) Limited
%
O R D I N A R Y S H A R E S
75.38
9.78
5.18
107,741,157
13,978,650
7,409,996
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 Group as at 31 March 2023 are set out below.
Philip H. Beinhaker
Corey B. Beinhaker
Graham S. Miller
Natasha C. Gadsdon
Sean J. Swales
There has been no dividend paid or proposed in the year.
2 0 2 3
-
-
610,762
27,838
10,000
2 0 2 2
-
-
610,762
27,838
10,000
14 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
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 H . B E I N H A K E R
G R A H A M S . M I L L E R
Aged 60. 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.
S E A N J . S W A L E S
Aged 55. 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.
N ATA S H A C . G A D S D O N
Aged 53. 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 Group Secretary since 2001.
Aged 82. Appointed Non-Executive Director and Chairman
on 22 January 2018 following the ‘Partial Offer and
Acceptance’ which precipitated a change in control of the
Group whereby FB Investors LLP acquired a controlling
interest in the Group’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 (recently acquired by
Arcadis), 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.
C O R E Y B . B E I N H A K E R
Aged 53. Appointed Executive Director and Chief
Operating Officer on 23 October 2019. Prior to his
involvement with Sutton Harbour Group, Corey Beinhaker
worked for IBIB Group Consultants (Israel) Limited from
2010 to 2017 latterly as its Chief Executive Officer where
he, amongst other things, was contract manager for a
number of significant projects including the Tel Aviv Red
10 Line Underground Station design and the design and
technical specification for the traffic management for the
inter-urban network in Israel. Corey Beinhaker has been
working closely with the Group since January 2018 when
FB Investors LLP acquired a 72.65% holding in the Group’s
share capital, initially through Beinhaker Design Services
Limited (a Company of which he is a Director) and then as
an employee of Sutton Harbour Group from July 2019.
In accordance with the Group’s Articles of Association Corey B Beinhaker retires by rotation at this year’s Annual General Meeting and being eligible offers
himself 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 10.
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 Group’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 Group’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
31 July 2023
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 15
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 2 3
GOVERNANCE
STATEMENT OF COMPLIANCE
WITH QCA CORPOR ATE
GOVERNANCE 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
The Group 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 Group undertakes new developments
on land it owns or redevelops existing assets to realise the value of land holdings or to retain
as investment assets. The Group’s assets and operations are all located in Plymouth, Devon,
primarily at Sutton Harbour.
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
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 TO R ( N O N - E X E C U T I V E )
The Board of Directors
setting the strategy to facilitate maintenance of existing land, property and specialised assets
and also the regeneration of under utilised assets to improve the attractiveness of the area
and to ensure it has a sustainable and vibrant future and to deliver shareholder value growth.
The Group’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.
The board has adopted the QCA Corporate Compliance Code, this being the most suited
to the Group’s size and AIM market listing.
OFFICE
APPOINTEE COMMIT TEE ROLES
AT TENDANCE OF BOARD/
COMMIT TEE MEETINGS
SHAREHOLDING AND
INDEPENDENCE
Executive
Chairman
Philip
Beinhaker
Audit Committee Member
Board Meeting – 9/9
Remuneration Committee Chair
Audit Committee – 2/2
Nomination Committee Chair
Remuneration Committee – 1/1
Nomination Committee - 0/0
Senior
Independent
Director
(Non-
Executive)
Graham
Miller
Audit Committee Chair
Board Meeting – 9/9
Remuneration Committee Member
Audit Committee – 2/2
Nomination Committee Member
Remuneration Committee – 1/1
Nomination Committee – 0/0
Non -
Executive
Director
Sean
Swales
Audit Committee Member
Board Meeting – 9/9
Remuneration Committee Member
Audit Committee – 2/2
Nomination Committee Member
Remuneration Committee – 1/1
Nomination Committee – 0/0
Board Meeting – 9/9
Board Meeting – 9/9
Corey
Beinhaker
Natasha
Gadsdon
Chief
Operating
Officer
(Executive)
Finance
Director
(Executive)
and Group
Secretary
16 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Philip Beinhaker has no personal shareholding in the
Group. FB Investors LLP, which owns 75.38% 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 and his spouse together hold
610,762 shares in the Group and he is the Senior
Independent Director on the Board. Graham was
appointed a Director in 2013.
Sean Swales holds 10,000 shares in the Group. He
is also the corporate representative of Rotolok
(Holdings) Limited which has an interest in
7,409,996 (5.18%) of the Group’s shares. Sean was
appointed a Director in 2009. Until 10 January
2018, Rotolok (Holdings) Limited was interested
in 28.79% of the Group’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. Although
Sean has served twelve years on the board, the
continuity of his experience through the recent
majority shareholder change and board composition
transition is valued.
Corey Beinhaker holds no shares in the Group. FB
Investors LLP, which owns 75.38% of the issued
share capital, is jointly owned by Beinhaker Design
Services Limited and 1895 Management Holdings
UIC. Corey Beinhaker is a Director and 100%
shareholder of Beinhaker Design Services Limited.
Natasha Gadsdon holds 27,838 shares in the Group
and has been an Executive Director since 2004. She
also holds options over 143,340 ordinary shares
exercisable under provisions of the Group Share
Option Plan rules.
S H A R E H O L D E R R E L AT I O N S H I P
A G R E E M E N T W I T H F B
I N V E S T O R S L L P
Corporate Accounting and Procedures:
There are defined authority limits and controls
over acquisitions and disposals. There are also
No changes to the Board’s composition have
occurred in the last year. The Board has
reconsidered its composition during the year and
is satisfied that taking into account the size of the
Group, its AIM listing and its principal interests it
has the appropriate balance of finance, property
development and governance expertise to
manage its affairs efficiently and effectively. The
Board has reviewed its balance of independent
and non-independent directors and is satisfied
that a single Independent Director, Graham Miller
who has now served 9 years on the board, is
acceptable given his experience on other boards.
The Board also notes, that whilst Sean Swales has
served more than 10 years on the Board, that his
long term experience of the Group, knowledge
of property investment and financial specialism
are valuable contributions to the governance of
the Group.
Philip Beinhaker and Corey Beinhaker continue
to be the board appointees nominated by FB
Investors LLP, the majority shareholder in the
Company. It has been agreed by the board that
no decision or meeting would be quorate unless
at least one of the Non-Executive Directors
is present in addition to the FB Investors’
appointees.
Philip Beinhaker is appointed Executive Chairman
(since April 2018, previously Non-Executive
Chairman from January – April 2018) and
presides over the business of the Board as well
as directing and overseeing the operations of the
Group through the senior management team.
The Relationship Agreement updated May 2023,
addresses amongst other things, the composition
of the SHG Board providing FB Investors with
the ability to appoint up to two Directors to the
SHG 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 Group). It contains certain
restrictions in relation to Directors appointed by
FB Investors voting at meetings of the SHG Board
on matters in which FB Investors is interested.
FB Investors has nominated Philip Beinhaker and
Corey Beinhaker to serve as Directors of Sutton
Harbour Group plc.
B O A R D D E C I S I O N
M A K I N G , Q U O R U M A N D
I N T E R N A L C O N T R O L
9 full Board meetings were held in the financial
year to 31 March 2023 (attendances are
summarised in the table above). Prior to each
meeting an agenda together with narrative
business reports and supporting appendices
are circulated to each Board member. Matters
for Board decision are highlighted in advance
of the meeting. The advice of non-board
colleagues and professional advisors is sought
where additional specialist information is
required to inform a decision. Following the
change of majority shareholder in early 2018
and Board level changes, the Board considers
its effectiveness annually and has concluded that
Corey Beinhaker was appointed Chief Operating
its present composition, taking into account the
Officer in October 2019 with a wide-ranging role
size of the Company, its AIM listing, the skills and
focusing on Group operations and regeneration
experience it requires and current diversity of
projects.
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.
Board personnel, is appropriately balanced with
experienced appointees.
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
Sean Swales, a Non-Executive Director since
appointments, budget approval, approval of
December 2009. A Chartered Accountant, he
annual and interim financial reports, dividend
continues to contribute actively to the Board due
policy, insurances and strategic direction of the
to his financial specialism, property investment
trading businesses are all matters reserved for
and development expertise and regional
the Board’s decision. To ensure decisions are
knowledge.
Natasha Gadsdon, a Chartered Accountant, is
appointed Finance Director and Group Secretary.
She is responsible for financial reporting and
made with independent input it has been agreed
that such decisions can only be taken where
either Graham Miller or Sean Swales are present
with Philip Beinhaker and Corey Beinhaker.
compliance and oversees risk management,
The key procedures which the Directors have
human resources, corporate responsibility. She
established with a view to providing effective
is responsible for preparing detailed monthly
internal controls are as follows:
reports to the Board.
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.
G O V E R N A N C E C O M M I T T E E S
The roles of the Board’s governance committees
are set out below.
The Remuneration Committee within its terms
of reference determines and agrees with the
Board the employment terms and remuneration
packages of the Executive Directors and other
senior personnel. 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 has written terms of
reference and provides a forum for reporting
by the Group’s auditors. The Committee may
request Executive personnel to attend all or
part of any meeting as the Committee considers
appropriate. The Audit Committee meets two
or three times a year to review the Interim and
Annual Reports and Accounts, agree the Audit
Plan, confirm the Auditor engagement, review
risk management and insurance provision, assess
the adequacy of the Group’s finance personnel
and any other matters pertaining to financial
management, the statutory audit and tax
compliance.
In accordance with FRC Ethical Standard
prohibiting auditors of AIM listed companies
from offering services to prepare computations
of taxation, the Audit Committee engaged a
different firm of accountants, from the auditors,
to undertake this work.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 17
The Nomination Committee is responsible for
Customers
proposing candidates to the Board having regard
The Group maintains a number of websites and
to its balance, expertise and structure. .
social media platforms, to communicate with
R I S K M A N A G E M E N T
different customer groups in addition to direct
email and postal communications. The Company
has established a communications forum to
The Group maintains a register of risks, split
meet with the local fishing industry on a regular
by category, and identifies potential impact and
basis and organises other user group meetings
likelihood, together with the response deployed
to discuss specific matters as they arise. Surveys
to manage/mitigate the risk. The risk register
of marina customer satisfaction are normally
is regularly updated with input from across the
undertaken annually.
Group and external advice is taken if required.
Included in the monthly reports to the Board,
new risks are identified together with proposals
to manage/mitigate the risk. Group Bankers
and Insurers are kept appraised of business
risks and vulnerabilities on an ongoing basis.
Annual independent health and safety audits
are undertaken with the results reported to
the Board. Advice from the appointed external
Health and Safety Advisor is taken where
appropriate.
S TA K E H O L D E R E N G A G E M E N T
A N D R E S P O N S I B I L I T I E S
Investor Relations
The Group maintains an active dialogue with
Employees
The Group is committed to paying, as a
minimum, the living wage as recommended by
the Living Wage Foundation, to its employees.
Pay reviews are undertaken at least annually
following a detailed review of market rates in
the area to ensure pay remains competitive and
attractive. The Group undertakes appraisals
for all employees annually, arranges monthly or
quarterly contact meetings for all employees
with their line manager, sponsors their essential
qualifications and continuing professional
development (as appropriate to role) and has
a schedule of monthly function meetings with a
Director present at each.
major investors and invites shareholders to open
C O R P O R AT E V A L U E S
days, which are held from time to time depending
on interest levels, which include a tour of the
assets. The Board welcomes the participation
of shareholders at the Annual General Meeting
with the opportunity to answers questions of
any Board member offered. 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
Refer also to the Corporate, Social Responsibility
and Environment Report on page 19 Senior
Managers are invited to present at Board
Meetings from times to time 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 Group’s standards of conduct as set
out in the foreword of the Employee Handbook.
between the Board and shareholders. The Group
Secretary is normally the first point of contact for
any general enquiries or arrangement regarding
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
shareholder meetings.
Email: n.gadsdon@sutton-harbour.co.uk
31 July 2023
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.
18 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 2 3
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
C O R P O R AT E C U LT U R E
P O R T M A R I N E S A F E T Y C O D E
• Review its purchasing requirements and
The Group’s executive management team sets
Sutton Harbour Group, a Statutory Harbour
the tone of professionalism and proactivity.
Authority, and a wholly owned subsidiary of the
Actions are prioritised daily in collaborative
Group, is committed to undertaking statutory
meetings to make the most beneficial use of
duties in accordance with the standards defined
management time to ensure trading progress
within the Port Marine Safety Code. To ensure
and project delivery are on track to achieve
full compliance with the code an independent
performance targets. The Group has made
audit of the Sutton Harbour Safety Management
good use of virtual meeting technology to
System is carried out annually. The Maritime
improve efficiency and inclusiveness of sharing of
and Coastguard Agency audit took place in
information and ideas. This approach has allowed
March 2015.
practices also whenever possible to do so
make environmentally sound purchasing
decisions and increase local purchasing.
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 area of Sutton Harbour is located in the
heart of Plymouth. The Group supports various
community and tourist initiatives. The Group
has a long-established commitment to the
the Group to continue to make good progress
towards its targets.
H E A LT H A N D S A F E T Y
The Board of Directors understands its
responsibility to the health and safety of
employees, customers and others who are
directly or indirectly affected by the Group’s
operations.
The Group’s Health and Safety Committee
is chaired by Natasha Gadsdon and has
representation from all Group activities. The
Health and Safety Committee is an open forum
and minutes of the meetings are made available
to all staff upon request. Committee meetings
are also attended by the Group’s Health and
Safety Officer and an Independent Health
and Safety Consultant. The Committee has a
comprehensive agenda and is briefed on new
legislation or regulation by the Independent
Health and Safety Consultant.
E N V I R O N M E N TA L I S S U E S
community and its neighbourhood. Throughout
The Board has agreed the following
Environmental Statement:
The environment plays a key role in the
continuing success of the Sutton Harbour Group
and the Group recognises that it needs to set
itself achievable environmental standards.
The Group has looked at the areas of its business
which could have both positive and negative
impacts on the environment and has identified
the following policy aims to enhance its overall
environmental performance.
The Group is working to:
its regeneration work, the Group has undertaken
extensive public consultation which has led to
the reshaping and design of many successful
quality regeneration projects surrounding the
historic harbour. 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.
The Group supports local charities and other
community initiatives.
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
• Reduce its Carbon Footprint by minimising
31 July 2023
energy use and cutting out energy waste.
• Minimise the amount of waste it creates and
ensures that it recycles as much of the
waste generated as is feasible.
The Group does not currently undertake direct
• Ensure that it meets and if plausible exceeds
construction on site. An excellent Health and
Safety management 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.
environmental legislative requirements.
• Use and operate sound procedures to avert
water pollution in Sutton Harbour.
• Tackle the issues that arise from car travel by
introducing ways of reducing the impact of
travel to work and business mileage.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 19
F O R T H E Y E A R E N D E D 3 1 M A R C H 2 0 2 3
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 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 Group, 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 2023 were £nil in respect of Corey B. Beinhaker (2022: £5,000) and £3,600 in respect of Natasha
C. Gadsdon (2022: £5,000).
S H A R E O P T I O N S
An Inland Revenue approved Group Share Option Scheme was established in November 2019 for the Remuneration
Committee to make discretionary awards of share options to certain Executive Directors and other Group
personnel to reward performance. On 23 June 2021, Natasha Gadsdon was awarded 12,000 share options with an
exercise price of 25p per share. These options are not expected to vest before 8 July 2023, subject to the scheme
rules. No share options were awarded to any Directors in the year ended 31 March 2023. The credit/expense in
connection with the unexercised share options is calculated using a Black Scholes model and credited/expensed
annually until exercise or lapse of options.
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 Group is as follows:
Fees
Other Emoluments
Pension Contributions
(Credit)/Expense of Unexercised Share
2 0 2 3
£ 0 0 0
144
293
28
(2)
463
2 0 2 2
£ 0 0 0
144
285
32
6
467
20 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
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 2 3
Philip H. Beinhaker
Graham S. Miller
Corey B. Beinhaker
Natasha C. Gadsdon
Sean J. Swales
F O R T H E Y E A R
T O 3 1 M A R C H
2 0 2 2
Philip H. Beinhaker
Graham S. Miller
Corey B. Beinhaker
Natasha C. Gadsdon
Sean J. Swales
Directors’
salaries
£000
Taxable
benefits
£000
Bonus
Payments
£000
Share
Options
£000
Directors’
fees
£000
-
-
166
111
-
277
-
-
-
12
-
12
-
-
-
4
-
4
-
-
-
(2)
-
(2)
101
23
-
-
20
144
Directors’
salaries
£000
Taxable
benefits
£000
Bonus
Payments
£000
Sharel
Options
£000
Directors’
fees
£000
-
-
160
101
-
261
-
-
-
14
-
14
-
-
5
5
-
10
-
-
-
6
-
6
101
23
-
-
20
144
Total
£000
101
23
166
125
20
435
Total
£000
101
23
165
126
20
435
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 21
The pension contributions made in respect of the Executive Directors to the Group’s defined contribution scheme were:
Corey B. Beinhaker
Natasha C. Gadsdon
C O N T R A C T S
2 0 2 3
£ 0 0 0
-
28
28
2 0 2 2
£ 0 0 0
-
32
32
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.
On 23 October 2019, the Group entered into a service contract with Corey B. Beinhaker. Under this agreement he
is employed as a full time Executive Director with a one year rolling contract. He was appointed Chief Operating
Officer in October 2019.
The Non-Executive Directors are appointed with three months’ notice and the Executive Chairman has a six month
notice period.
On behalf of the Board
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
31 July 2023
22 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
GOVERNANCE
Statement of Directors’ Responsibilities
For the year ended 31 March 2023
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 UK adopted International Accounting Standards (UK adopted IAS), and the Parent 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 Parent 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 UK adopted IAS 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 Group and Parent Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with
reasonable accuracy at any time the financial position of the Group 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 Group and the Parent Company 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 Group’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 Group’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
G R O U P S E C R E TA R Y
31 July 2023
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 23
GOVERNANCE
Independent Auditor’s Report
For the year ended 31 March 2023
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
2023 which comprise the Consolidated Income Statement, the Consolidated
Statement of Other Comprehensive Income, the Consolidated and Company
Balance Sheet, the Consolidated and Company Statement of Changes in Equity,
the Consolidated Cash Flow Statement, the Company Balance sheet, the
Company Statement of Changes in Equity and the notes to the Consolidated
and Company 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 UK-adopted
International Accounting Standards (“UK-adopted IAS”). 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:
EMPHASIS OF MATTER – VALUATION OF INVENTORY
We draw attention to the Strategic Report and note 4 of the consolidated
financial statements which describe 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 £13.363m. 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.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
We planned and performed our audit by obtaining an understanding of the
group and its environment, including the accounting processes and controls,
and the industry in which it operates. The group comprises 12 wholly owned
subsidiaries.
• We performed statutory audits on 3 entities (Sutton Harbour Group plc,
Sutton Harbour Company and Plymouth City Airport Limited).
• 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 2023 and of the group’s
loss for the year then ended;
• We performed audit procedures on risk significant balances and transactions
in Sutton Harbour Services Limited, Sutton Harbour Car Parks Limited,
Sutton Harbour Projects Limited and Harbour Arch Quay Limited.
• The group financial statements have been properly prepared in accordance
with UK-adopted IAS;
• We performed analytical review procedures on Sutton East Holdings Limited
and Sutton Harbour Property and Regeneration Limited.
• 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 listed entities, and we have fulfilled our other
ethical responsibilities in accordance with those requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
• Remaining components are dormant.
The components within the scope of audit work covered 98% of group
revenue, 100% of group loss before tax and 97% of group net assets.
KEY AUDIT MATTERS
We have determined the matters described below to be the key audit matters
to be communicated in our report. 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.
24 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
24 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
K E Y A U D I T M AT T E R
R E S P O N S E A N D C O N C L U S I O N
Valuation of investment properties and owner-occupied land and buildings
The group adopts a policy of revaluation for its owner-occupied
land and buildings as well as its investment properties, with all
such properties 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 are held at £17.2m and owner-occupied
land and buildings are held at £38.15m. Due to the significance
of the valuations for the financial statements and their inherently
judgemental nature, we have considered this area as a key audit
matter.
An external valuation has been performed at 31 March 2023
The main procedures performed on the valuation assessment and areas where we
challenged management were as follows:
• Agreeing the valuations recognised in the accounts to the reports prepared by
a professional third party.
• Assessing whether the professional valuers are independent and sufficiently
competent, with respect to qualifications, experience and reputation.
• Using an internal expert as part of our audit procedures.
• Discussing and challenging the valuation directly with the third party valuer.
• Considering the appropriateness of the assumptions that had the most
material impact. Key variables in the valuations include Fair Maintainable
Operating Profit and discount rates in the valuation of owner-occupied
property, and yields and market rates for investment property valuations.
• Considering deferred tax treatment in respect of the valuations in line with IAS 12.
• Considering the appropriateness of the disclosures made in the financial statements,
in particular as regards the judgements and estimates in respect of the fair value
movements through profit and loss and other comprehensive income.
Conclusion
We are satisfied with the Board’s determination of fair values as at 31 March 2023 and are
satisfied that the carrying values of investment properties and owner occupied land and
buildings are materially correct. We are satisfied that deferred tax treatment in respect of
the property valuations is materially accurate and in line with IAS 12. We are satisfied that
sufficient, appropriate disclosure as regards judgements and estimates has been made.
Valuation of Former Plymouth City Airport Site
Our work included
Within development inventory the group holds the former airport
site at a carrying value of £13.363m. IAS 2 requires inventory to be
held at the lower of cost and net realisable value. As detailed in the
Strategic Report and note 4, a Government Inspectors’ Report was
issued in March 2019 which supported a 5 year safeguard period to
allow time for a potential airport operator to bring forward a plan
for a licensed general aviation airport. This is due to expire in March
2024. There has not yet been any decision over the use of the site
for the future. This creates significant uncertainty in the Group’s
ability to realise value of this site.
• Reviewing management’s assessment of the carrying value of the site,
which includes the latest external opinion/appraisals and discussed these with
management to obtain an understanding of the current situation.
• Critically assessing and challenging the assumptions used in these reports.
• Reconfirming ownership of the site.
• Vouching a sample of current year expenditure to source documentation.
• Considering the adequacy of the related disclosures in the financial statements.
Conclusion
Based on our work we are satisfied with the current treatment adopted by the
directors. The safeguarding period until March 2024 impacts the value and timing of
any potential development of the site as detailed in the Strategic Report and note 4 and
demonstrates the need for the Emphasis of Matter paragraph within our audit report.
Valuation Of Development WIP
Our work included
The group has a number of development sites, in particular Sugar
Quay and Harbour Arch Quay, with substantial balances held in
WIP. The developments must be carried at the lower of cost and
net realisable value.
The development of Harbour Arch Quay progressed in the year
ended 31 March 2023 and as at the date of signing, the construction
is nearing completion. No sales had completed within the 2023
financial year and the WIP balance totalled £6.94m as at the
year end.
• Focussing on the material balances within Group inventory, being Sugar Quay
(£11.7m), incorporating Sutton Road acquisition (£3.4m) and
Harbour Arch Quay (£6.94m).
• Reviewing management’s assessment of the carrying values of the key sites,
which includes considering the planning permission obtained, site appraisals
and overall project profitability.
• Critically assessing and challenging the assumptions used in those site
appraisals in the light of available external market data and our experience
of the residential construction sector (appreciating the specialist nature of
these projects).
• Vouching a sample of expenditure to source documentation.
• Reconfirming ownership of the sites.
Specifically for the ongoing development at Harbour Arch Quay
• Reviewing third party reports on the progress of the development up to
June 2023, including agreeing costs incurred per the report to the accounts
and original budget. We have considered the risk of cost overruns and have
confirmed that a significant portion of contracts with subcontractors are fixed
and agreed, reducing the risk in this area.
• We have reviewed and recalculated management’s expected return on the
development. This does not indicate any material impairment at the year-end
based on the information available.
Conclusion
As a result of the procedures performed, we are satisfied that development costs
are stated at the lower of cost and net realisable value.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 25
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 23
OUR APPLICATION OF MATERIALITY
Materiality for the group financial statements as a whole was set at £960,000.
We determined materially by reference to the group’s total assets. We
consider total assets 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 1% 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 £48,000, in addition to
other identified misstatements that warrant reporting on qualitative grounds.
Materiality for the parent company financial statements was set at £396,000.
This has been determined with reference to the total 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 company.
Materiality represents 1% of the parent company’s total assets as presented
on the face of the Balance Sheet. We report to the Audit Committee any
corrected or uncorrected identified misstatements exceeding £19,800, in
addition to other identified misstatements that warrant reporting on qualitative
grounds.
The range of materiality at the two components subject to full scope audit is
£134,000 - £489,000. Materiality was determined by reference to total assets
in both cases.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the directors’ use
of the going concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the directors’ assessment of the
group’s and parent company’s ability to continue to adopt the going concern
basis of accounting included:
• Reviewing and challenging management’s assessment of going concern
and key assumptions (including assessment at the planning stage of the audit
process). Our work included assessing the timing and amount of turnover
and related cashflows in the forecast models.
• Reviewing and assessing the appropriateness of management’s sensitivity
analysis including changes in turnover and related cashflows.
• Reviewing the bank facility agreement dated 27 March 2023 which
confirmed £24.9m (reducing to £21.7m in August 2023) in place until
December 2024.
• Reviewing the funding documentation for the Harbour Arch Quay build
and discussing with management it’s options should there be delays in
completion.
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.
We have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED
BY THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
• The information given in the strategic report and the directors’ report for
the financial year for which the financial statements are prepared is consistent
with the financial statements; and
• The strategic report and the directors’ report have been prepared in
accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE
REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the group and parent
company and its environment obtained in the course of the audit, we have not
identified any material misstatements in the strategic report or the directors’
report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept, 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
• Reviewing documentation in respect of related party loans which are due
for repayment in May 2024 and plans for repayment of these.
• certain disclosures of Directors’ remuneration specified by law are not made;
or
• Assessing the amount of available facilities and other options available to
the group and expected headroom based on the forecast over the next
• we have not received all the information and explanations we require for
our audit
12 months and covenant compliance.
• Evaluating the reliability of the forecast through discussion with management,
review of post year end trading and considering the historic reliability of
forecasts compared to actual results.
• Reviewing going concern related disclosures in the financial statements to
ensure they are appropriate.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or collectively, may
cast significant doubt on the group’s and parent company’s ability to continue as
a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement set out
on page 23, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing
the group’s and parent company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate
the group and parent company or to cease operations, or have no realistic
alternative but to do so
26 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
24 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Because of the inherent limitations of an audit, there is a risk that we will not
detect all irregularities, including those leading to a material misstatement in the
financial statements. This risk increases the further removed non-compliance
with laws and regulations is from the events and transactions reflected in the
financial statements as we are less likely to become aware of instances of non-
compliance. The risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
USE OF OUR REPORT
This report is made solely to the 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.
G L E N N N I C O L
S E N I O R S TAT U T O R Y A U D I T O R
PKF Francis Clark
Statutory Auditor
Centenary House
Peninsula Park
Rydon Lane
Exeter
EX2 7XE
31 July 2023
AUDITORS RESONSIBILITIES 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.
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
We obtained an understanding of the legal and regulatory framework
applicable to the parent company, the group and the industry in which it
operates. We identified the principal risks of non-compliance with laws and
regulations as relating to breaches around health and safety and specifically the
Port Marine Safety Code. We also considered those laws and regulations that
have a direct impact on the preparation of the financial statements such as
financial reporting legislation (including the Companies Act 2006) and relevant
taxation legislation. We considered the extent to which any non-compliance
with these laws and regulations may have a negative impact on the group’s
ability to continue trading and the risk of a material misstatement in the
financial statements.
We evaluated management’s incentives and opportunities for fraudulent
manipulation of the financial statements and determined that the principal
risks related to the misstatement of the result for the year and impairment in
relation to development WIP. We also considered the adequacy of the design
and implementation of internal controls in relation to supplier payments.
Based on this understanding we designed our audit procedures to identify
irregularities. Our procedures involved the following:
• Valuation of development WIP was assessed as a Key Audit Matter and our
work in respect of that is detailed above.
• We made enquiries of senior management as to their knowledge of any
non-compliance or potential non-compliance with laws and regulations
that could affect the financial statements. As part of these enquiries we also
discussed with management whether there have been any known instances
of material fraud.
• We identified the individuals with responsibility for ensuring compliance with
laws and regulations and discussed with them the procedures and policies
in place.
• We obtained and reviewed the annual review of the Port Marine Safety
Code and general health and safety management of Sutton Harbour
performed by an external health and safety consultant.
• We reviewed minutes of meetings of senior management and those charged
with governance.
• We challenged the assumptions and judgements made by management in
its significant accounting estimates.
• We audited the risk of management override of controls, including
through substantively testing journal entries and other adjustments
for appropriateness, and evaluating the business rationale of significant
transactions outside the normal course of business.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 27
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 25
Consolidated Income Statement
For the year ended 31 March 2023
Revenue
Cost of sales
Gross profit
Fair value adjustments on investment properties and fixed assets
Administrative expenses
Operating (Loss)/Profit
Finance income
Finance costs
Net finance costs
(Loss)/Profit before tax from continuing operations
Taxation charge on (loss)/profit from continuing operations
(Loss) for the year from continuing operations
(Loss) for the year attributable to owners of the parent
Basic and diluted (loss) per share
from continuing operations
Diluted (loss) per share
from continuing operations
(Loss) for the year
Items that will not be reclassified subsequently to profit or loss:
Revaluation of property, plant and equipment
Deferred tax in respect of property revaluation
Items that may be reclassified subsequently to profit or loss:
Other comprehensive income for the year, net of tax
Total comprehensive (loss)/income for the year attributable to owners of the parent
The notes on pages 34 to 57 are an integral part of these consolidated financial statements.
28 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
26 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Note
5
14
5,6
9
10
2023
£000
8,161
(5,915)
2,246
(1,925)
(1,193)
(872)
1
(1,150)
(1,149)
(2,021)
(15)
(2,036)
(2,036)
2022
£000
7,194
(4,846)
2,348
195
(1,193)
1,350
-
(789)
(789)
561
(820)
(259)
(259)
12
(1.57p)
(0.20p)
(1.57p)
(0.20p)
Note
13
10
2023
£000
(2,036)
2,245
(543)
1,892
(144)
2022
£000
(259)
1,338
(1,116)
5,900
5,641
Consolidated Statement of Other Comprehensive Income
For the year ended 31 March 2023
(Loss) for the year
Items that will not be reclassified subsequently to profit or loss:
Revaluation of property, plant and equipment
Deferred tax in respect of property revaluation
Items that may be reclassified subsequently to profit or loss:
Other comprehensive income for the year, net of tax
Total comprehensive (loss)/income for the year attributable to owners of the parent
The notes on pages 33 to 57 are an integral part of these consolidated financial statements.
Note
13
10
2023
£000
(2,036)
2,245
(543)
1,892
(144)
2022
£000
(259)
1,338
(1,116)
5,900
5,641
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 29
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 27
Consolidated Balance Sheet
As at 31 March 2023
Non-current assets
Property, plant and equipment
Investment property
Inventories
Current assets
Inventories
Trade and other receivables
Tax recoverable
Cash and cash equivalents
Total assets
Current liabilities
Bank loans
Other loans
Trade and other payables
Lease liabilities
Deferred income
Non-current liabilities
Bank loans
Lease liabilities
Deferred government grants
Deferred tax liabilities
Total liabilities
Net assets
Issued capital and reserves attributable to owners of the parent
Share capital
Share premium
Other reserves
Retained earnings
Total equity
Note
13
14
17
17
18
19
20
22
23
21
20
23
21
16
25
2023
£000
38,540
17,205
13,363
69,108
23,749
2,092
5
1,095
26,941
96,049
3,200
5,477
3,301
66
2,132
14,176
21,600
10
646
3,550
25,806
39,982
56,067
16,406
13,972
24,072
1,617
56,067
2022
£000
36.398
18,195
13,216
67,809
18,734
1,810
9
970
21,523
89,332
-
2,275
1,880
165
2,225
6,545
22,863
75
646
2,992
26,576
33,121
56,211
16,406
13,972
22,180
3,653
56,211
The notes on pages 33 to 57 are an integral part of these consolidated financial statements.
The Financial Statements on pages 28 to 57 were approved and authorised by the Board of Directors on 31 July 2023 and were signed on its behalf by:
P H I L I P B E I N H A K E R
D I R E C T O R
C O M P A N Y N U M B E R 0 2 4 2 5 1 8 9
30 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
28 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Consolidated Statement of Changes in Equity
For the year ended 31 March 2023
Notes
Share
capital
Share
premium
Revaluation
reserve
Merger
reserve
Retained
earnings
Total
equity
-------------- --- Other reserves ------------------
£000
£000
£000
16,266
10,695
12,409
£000
3,871
£000
£000
3,912
47,153
Balance at 1 April 2021
Comprehensive income
Loss for the year
Other comprehensive income
Share issue
Revaluation of property, plant and equipment 13
10
Deferred tax on revaluation
-
140
-
-
-
3,277
-
-
-
-
7,016
(1,116)
Total comprehensive income
140
3,277
5,900
-
-
-
-
-
(259)
(259)
-
-
-
3,417
7,016
(1,116)
(259)
9,058
Balance at 1 April 2022
16,406
13,972
18,309
3,871
3,653
56,211
Comprehensive income
Loss for the year
Other comprehensive income
Share issue
Revaluation of property, plant and equipment 13
10
Deferred tax on revaluation
Total comprehensive income
-
-
-
-
-
-
-
-
-
-
Balance at 31 March 2023
16,406
13,972
-
2,435
(543)
1,892
20,201
-
-
-
-
-
(2,036)
(2,036)
-
-
-
-
2,435
(543)
(2,036)
(144)
3,871
1,617
56,067
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 31
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 29
Consolidated Cash Flow Statement
For the year ended 31 March 2023
Cash (used in)/generated from total operating activities
Cash flows from investing activities
Expenditure on investment property
Expenditure on property, plant and equipment
Proceeds from disposal
Cash generated/ (used) in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Interest paid
Loan drawdown
Loan repaid
Lease finance received
Cash payments of lease liabilities
Grants received
Net cash (used)/generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Note
2023
£000
27
(2,658)
14
13
19
19
(935)
(97)
-
(1,032)
-
(1,009)
7,263
(2,275)
-
(164)
-
3,815
125
970
1,095
2022
£000
59
(52)
(196)
262
14
3,417
(1,033)
(2,337)
-
62
(148)
8
(31)
42
928
970
Reconciliation of financing activities for the year ended 31 March 2023
Bank loans
Other loans
Lease liabilities
Total debt
2023
£000
Cash
flow
£000
2022
£000
Cash
flow
£000
2021
£000
24,800 2,000
22,800 (2,400)
25,200
6,306
76
3,968
(164)
31,182 5,804
2,338
240
25,378
63 2,275
(87)
327
(2,424)
27,802
The notes on pages 33 to 57 are an integral part of these consolidated financial statements.
32 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
30 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
1. General information
Sutton Harbour Group plc, (‘the Group’) 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 Group 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 Group and its subsidiaries.
The consolidated financial statements have been prepared in accordance with UK adopted IAS, 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.
Changes in accounting policies and disclosures
There are no new accounting standards this year. There are no changes to accounting standards expected in the coming 12 months that would have a
material impact on the accounts.
Going concern
The review of the Group’s business activities is set out in the combined Executive Chairman’s Report on pages 4 to 6. The financial position of the Group,
its cash flows and financing position are described in the Financial Review on page 10. 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 from the date of the approval of the accounts. The
covenants measure interest cover, debt to fair value and capital expenditure.
Within the next twelve months, the Company has the following commitments to repayments of loans:
Development finance arranged for funding of the construction of Harbour Arch Quay is scheduled for repayment by 13th September 2023. The Company is
confident that this will be achieved as:
• the building is scheduled for completion in August 2023
• completions of contracts for sale of 12 of the 14 apartments that have exchanged with total value of some £6M and
• final payment and occupation to take place within 5 days of notification of completion.
These receipts will fully satisfy repayment of the development loan which as at 31 March 2023 is £2.371m drawn.
Additionally, the residual funds will be sufficient to repay £1.6m of the term loan to the Company’s bankers as agreed in the facility extension agreement
(March 2023) by 31 August 2023 This follows a repayment, also £1.6m, made in June 2023. Due to delay in the build programme, deferment of the second
half of the agreed term loan repayment to 31 August 2023 was covered by issue of a formal waiver of breach.
The related party loans advanced by major shareholders of the parent company are repayable in May 2024. The Directors are satisfied that these
repayments can be funded from the actions noted above and supplemented, if appropriate, with the issue of new equity capital, which the largest
shareholder has affirmed its support for, at the appropriate time.
In conclusion, after making enquiries, the Directors expect that the Group has adequate resources to continue in operational existence for the foreseeable
future. The Directors have not identified any material uncertainties relating to events or conditions that individually or collectively may cast significant doubt
on the group’s ability to continue as a going concern for a period of at least twelve months from the financial statements are authorised for issue.
Measurement convention
The financial statements are prepared on the historical cost basis as modified by the fair value of property.
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.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 33
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 31
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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.
Intra-Group 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 is 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 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
Leased assets acquired 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. 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 where the lessor maintains the risks and rewards of ownership is described in the 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.
34 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
32 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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.
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 IFRS 16 ‘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 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.
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.
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.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 35
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 33
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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.
Lease payments
The Directors have considered the application of IFRS 16 on its leasing arrangements. The Group has a small number of short term leases and leases of low
value items and therefore continues to recognise payments made under these agreements on a straight line basis 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 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.
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.
Employee benefits: share-based payment transactions
The share option programme allows Group employees to acquire shares of the Group; these awards are granted by the Group. 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.
36 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
34 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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
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 initially measured at the transaction price less impairment. In measuring the impairment, the Group has applied the simplified
approach to expected credit losses as permitted by IFRS9. Expected credit losses are assessed by considering the Group’s historical credit loss experience,
factors specific for each receivable, the current economic climate and expected changes in forecasts of future events. Changes in expected credit losses are
recognised in the Group income statement.
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.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 37
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 35
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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.
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 the final stages, before start of
construction and development refinancing or ultimate disposal. The Group currently has one consented scheme in under construction (Harbour Arch
Quay) and two consented schemes with planning, with preconstruction work underway (Sugar Quay and Harbour Car Park extension). The Group
structures borrowings into general facilities and secures specific financing for individual property projects as deemed appropriate.
The gearing ratio at the year end was as follows:
Borrowings and loans
Lease liabilities
Cash and cash equivalents
Net debt
Equity
Net debt to equity ratio
2023
£000
(30,278)
(76)
1,095
(29,259)
56,067
52.2%
2022
£000
(25,138)
(240)
970
(24,408)
56,211
43.4%
Bank borrowing facilities and financial covenants
The Group had total borrowing net of cash and cash equivalents of £29.259m at 31 March 2023 (2022: £24.408m) with a gearing level of 52.2% (2022:
43.4%). The Group has operated within its authorised facilities and has met all bank covenants during the year. The bank facilities were revised in March
2023, when the Group entered into an agreement which provides a maximum £24.9m reducing to £21.7m committed facility with a confirmed expiry date
of December 2024.
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.
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.
38 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
36 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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 2023:
Bank loans*
Other loans*
Trade and other payables*
Lease liabilities*
As at 31 March 2022:
Bank loans*
Other loans*
Trade and other payables*
Lease liabilities*
* financial liabilities at amortised cost
Total
£000
0 to <1 year
£000
1 to 2 years
£000
2 to <5 years
£000
(24,800)
(5,477)
(3,301)
(76)
(3,200)
(5,477)
(3,301)
(66)
(21,600)
-
-
(10)
(33,654)
(12,044)
(21,610)
-
-
-
-
Total
£000
0 to 1 years
£000
1 to 2 years
£000
2 to 5 years
£000
(22,800)
(2,338)
(1,880)
(240)
(27,258)
-
(2,275)
(1,880)
(165)
(4,320)
(22,800)
(63)
-
(75)
(22,938)
-
-
-
-
-
Interest rate risk
There is currently no SONIA swap in place to fix interest on any of the Group’s bank debt. The Board has considered the merits of an instrument to fix
interest rates at regular intervals during the year but has not entered into any hedging agreement due to the high cost of doing so at each review.
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
2023
£000
96
373
193
662
2022
£000
48
383
127
558
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.
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 2023, it is estimated that a general increase of a percentage point in interest rates (being the best estimate of future anticipated changes in
interest rates), would have decreased the Group’s profit before tax from continuing operations by approximately £228,000 (2022: £263,000). Net assets
would have decreased by the same amount.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 39
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 37
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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 4.85% – 12.45% with the average yield being 8.9%. Assuming all else stayed the
same; a decrease of 1.0% in the average yield would result in an increase in fair value of £1.944m. An increase of 1.0% in the average yield would result in a
corresponding decrease in fair value of £1.551m.
These assets were independently valued by Jones Lang LaSalle (“JLL”) at 31 March 2023. 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 UK adopted IAS 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:
The valuation of investment property and property held for use in the business as at 31 March 2023 was £17,205,000 and £38,300,000 respectively; (2022:
£18,195,000 and £36,125,000 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. In the case of North Quay House, a office building where most tenants have vacated,
the valuation is based on the price a purchaser might pay for the re-development opportunity. Properties held for use in the business (fishmarket, marinas and
car parks) are valued using a discounted cash flow model with recent actuals and budgeted future results (fair maintainable operating profits) generated by the
business activities operated from each owner-occupied property. Judgement is exercised in the preparation of the budgets and also in the discount factors and
yields applied to the fair maintainable operating profit to derive a valuation. Market evidence of values of similar assets is taken into account in the valuation
process. Within the valuation of property held for use in the business, judgment is required to allocate the valuation between land and buildings. Any impact
upon the valuation is therefore unknown at present. Further detail about the property valuation can be found in the Financial Review on page 10.
Judgements
The following are the areas that require the use of judgements that may impact the Group’s balance sheet and income statement:
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 2023: £37,048,000 see note 17; (2022: £31,861,000)
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.
The board has exercised judgement that the Former Airport Site is held as development inventory and that the net realisable value at 31 March 2023
is £13.363m (2022: £13.216m). The former airport site, a 113 acre site of which the Group directly owns c.8 acres and holds c.105 acres through an
unexpired 135 year leasehold interest, with a right to renew for a further 150 years, totalling 285 years, is held as development inventory at a carrying
value of £13.363m. 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
£13.363m is derived as follows:
40 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
38 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
• The land and building asset was independently valued twice yearly until 31 March 2013, when the asset was transferred to development inventory.
The airport closed in December 2011.
• 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 would be 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 2023 (£13.363m) of £1.884m represents the capitalised costs of developing the planning intellectual property less the cost
attributed to sales of small plots. £13.363m represents the historic cost of the airport asset as at 31 March 2023.
• In addition to the net cash expenditure on the airport asset, the former aviation operations, ongoing site maintenance and security, together with interest
costs thereon (Present Value of total cash expended) is more than double the £13.363m.
In December 2016 the Department for Transport published the ‘Plymouth Airport Study Report’, which concluded that a lack of demand and a short
runway mean commercially viable passenger services could not be run out of the former Plymouth Airport site as it would remain “financially vulnerable” in
a “high risk environment”.
PCC prepared its new local plan to for submission to the Government Planning Inspectorate in which they called for the retention of the airport site for a
possible reopening.
In April 2017, the Group 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 a maximum of five years. The Inspectors advised that a safeguarding period longer than five years
would not be appropriate given the strategic value of this brown-field site and based on their determination that five years should be more than enough
time to realize a viable business plan for aviation activity, if such activity was viable.
The Group has continued to prepare its masterplan for alternative use of the site, reflecting the guidance of the Government Planning Inspectors that
presided over the 2019 new Local Plan, for submission to the Local Authority in good time to allow full participation in the forthcoming 5-year review of the
Local Plan.
The Group does not regard the carrying value of the former airport site to be reflective of its value for alternative use, which is in turn significantly less
than the value that can be earnt from redevelopment of this strategic asset. The Group regards the value that can be earned from this strategic asset is
significantly greater than both the carrying value and the Present Value of total cash expended.
The second largest development inventory item relates to the Sugar Quay (East Quay) site at Sutton Harbour which has a live consented scheme.
The scheme appraisal shows recoverability of the development inventory in relation to the site. At the present time, a planning submission is being
considered for the site which will reduce risk through being developed in phases.
Construction of the 14 apartment Harbour Arch Scheme is underway and due to be finished in August 2023, whereafter occupations of the 12 apartments,
already exchanged, will follow. As at 31 March 2023, based on the sales exchanges achieved and independent monitor’s report, the board is satisfied that
no impairment is required.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 41
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 39
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
5. Segment results
Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions.
Details of the types of revenue generated by each segment are given in note 2.
The Board of Directors assesses performance using segmental operating profit. The segment information provided to the Board of Directors for the
reportable segments for the year ended 31 March 2023 is as follows:
Year ended 31 March 2023
Revenue
Segmental Gross Profit before fair value
adjustment and unallocated expenses
Fair value adjustment on investment
properties and fixed assets
Marine
£000
6,016
974
-
Real Estate
£000
Car Parking
£000
Regeneration
£000
1,374
965
(1,925)
771
449
-
-
(142)
-
Total
£000
8,161
2,246
(1,925)
2,543
321
(1,193)
(872)
1
(1,150)
(2,021)
(15)
(2,036)
355
19
16
390
Total
£000
7,194
2,348
-
195
2,543
(1,193)
1,350
-
(789)
561
(820)
(259)
335
40
17
392
Real Estate
£000
Car Parking
£000
Regeneration
£000
1,427
922
380
736
389
-
260
(162)
Segmental Profit
Unallocated:
Administrative expenses
Operating profit
Financial income
Financial expense
Profit before tax from continuing activities
Taxation
Loss for the year from continuing operations
Depreciation charge
Marine
Car Parking
Administration
Year ended 31 March 2022
Revenue
Gross profit prior to non-recurring items
Fair value adjustment on investment
properties and fixed assets
Marine
£000
4,771
1,199
(185)
Segmental Profit
Unallocated:
Administrative expenses
Operating profit
Financial income
Financial expenses
Loss before tax from continuing activities
Taxation
Loss for the year from continuing operations
Depreciation charge
Marine
Car Parking
Administration
42 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
40 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
Assets and liabilities
Segment assets:
Marine
Real Estate
Car Parking
Regeneration
Total segment assets
Unallocated assets:
Property, plant & equipment
Trade & other receivables
Cash and cash equivalents
Total assets
Segment liabilities:
Marine
Real Estate
Car Parking
Regeneration
Total segment liabilities
Unallocated liabilities:
Bank overdraft & borrowings
Trade & other payables
Deferred tax liabilities
Tax payable
Total liabilities
Additions to property, plant and equipment
Marine
Car Parking
Unallocated
Total
2023
£000
32,956
17,656
6,843
37,272
94,727
41
185
1,096
96,049
2023
£000
2,702
415
100
2,298
5,515
30,354
562
3,550
1
39,982
(86)
(1)
(10)
(97)
2022
£000
31,068
18,628
6,428
31,936
88,060
61
241
970
89,332
2022
£000
2,622
464
132
1,234
4,452
25,378
296
2,994
1
33,121
(171)
(1)
(24)
(196)
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
Sale of property
No revenues from any one customer represented more than 10% of the Group’s revenue for the year.
2023
£000
2,818
1,575
3,768
-
8,161
2022
£000
1,869
1,609
3,456
260
7,194
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 43
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 41
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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 re-measurement of investment property to fair value
Loss on re-measurement of fixed assets
Depreciation of property, plant and equipment
7. Services provided by the Group’s auditors
During the year the Group obtained the following services from the Group’s auditors:
Note
8
26
14
13
13
Fees payable to Group’s auditors for the audit of Parent Company and
consolidated financial statements
Fees payable to the Group’s auditors for other services:
The audit of Group’s subsidiaries pursuant to legislation
Tax compliance services
2023
£000
1,554
-
(1,374)
-
409
1,925
(135)
390
2023
£000
30
33
-
2022
£000
1,467
(56)
(1,427)
(1)
547
(380)
183
392
2022
£000
25
31
-
44 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
42 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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
2022
2023
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 24)
The total remuneration of the Directors of the Group was as follows:
Fees
Other Emoluments
Pension Contributions
Expenses of Unexercised Share Options
Details of the highest paid Director are detailed in the Renumeration Report on page 20
9. Finance income and finance costs
Finance income
Interest payable on bank loans and overdrafts
Interest payable on lease liabilities
Finance costs
Finance costs are net of borrowing costs capitalised in the year. See note 17.
24
-
6
30
2023
£000
1,263
140
151
1,554
2023
£000
144
293
28
(2)
463
2023
£000
-
1,035
115
1,150
23
1
6
30
2022
£000
1,172
121
174
1,467
2022
£000
144
285
32
2
463
2022
£000
-
652
137
789
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 45
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 43
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
10. Taxation
Deferred tax
Adjustments in respect of previous years
Origination and reversal of temporary differences
Change in tax rate
Total tax charge/(credit) in income statement
Note
16
2023
£000
67
(43)
(9)
15
The tax assessed for the year uses the standard rate of corporation tax in the UK of 19% (2022: 19%). The deferred tax charge recognised in other
comprehensive income is £543,000 (2022: £1,116,000)
Reconciliation of effective tax rate
(Loss)/Profit before tax
Tax on profit at standard corporation tax rate of 19% (2022: 19%)
Expenses not deductible for tax purposes
Adjustments respect of prior periods
Change in deferred tax rate
Creation of tax losses
Total tax charge/(credit) on continuing operations
11. Share based payment
2023
£000
(2,021)
(384)
168
67
164
-
15
2022
£000
(5)
107
718
820
2022
£000
561
107
6
(6)
718
(5)
820
An Inland Revenue approved Company Share Option plan (CSOP) has been established by Sutton Harbour Group plc whereby the Group may at the
discretion of the Remuneration Committee grant options over ordinary shares in the Group to key management personnel. The options are issued for
nil consideration and are granted in accordance with the Scheme’s rules at the absolute discretion of the Remuneration Committee. Option holders may
exercise options after a minimum 3 year and maximum 10 year holding period, subject to the provisions and exceptions of the scheme rules. There are no
other performance conditions governing the holder’s right to exercise the options after the minimum holding period. Share options may only be exercised
for shares. During the year 30,000 share options were granted with an exercise price of £0.22. The fair value of the options was calculated using the Black
Scholes model and the credit to the income statement for the year ended 31 March 2023 was £6,203 (2022: charge £10,104).
A weight averaged volatility input to the Black Scholes of 48% was applied being the average % fluctuations (positive and negative) of the share price
compared to the grant price of share options issued.
Set out below is a summary of options granted under the CSOP plan:
Grant Date
Expiry Date
Exercise Price
Balance at
start of year
Granted
Exercised
Expired
Balance at
end of year
Life of options
remaining
27 Nov 2019
8 July 2020
23 Jun 2021
20 Jun 2022
26 Nov 2029
8 July 2030
23 Jun 2031
20 Jun 2032
23 Jun 2022
22p
19p
25p
22p
22p
0
102,273
218,063
242,063
102,273
115,790
24,000
30,000
0
0
0
0
0
0
0
0
0
34,091
102,273
218,063
242,063
237,972
2,432 days
2,656 days
3,007 days
3,369 days
-
The weighted average exercise price at 31 March 2023 was 20.83pence (31 March 2022: 20.84 pence).
46 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
44 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
12. Earnings per share
Continuing operations:
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
2023
Pence
(1.57p)
(1.57p)
2022
Pence
(0.20p)
(0.20p)
Basic earnings per share
Basic earnings per share have been calculated using the Loss for the year of £2,036,000 (2022: loss of £259,000) for the continuing operations.
Diluted earnings per share
Diluted earnings per share uses an average number of 130,183,220 (2022: 125,710,426) ordinary shares in issue in accordance with IAS 33 ‘Earnings per Share’
based on a positive earnings per share result.
After the year, 12,994,407 new ordinary shares were issued and options over 20,000 ordinary shares were granted under the Company Share Option scheme.
Refer to note 30.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 47
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 45
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
13. Property, plant and equipment
Assets in the
course of
Construction
£000
Plant, machinery
and equipment,
fixtures and
fittings
£000
Land and
buildings
£000
Cost or valuation
Balance at 1 April 2021
Additions
Revaluations to income statement
Revaluations to revaluation reserve
Transfers
Disposals
Balance at 31 March 2022
Balance at 1 April 2022
Additions
Revaluations to revaluation reserve
Transfers
Disposals
Balance at 31 March 2023
Accumulated depreciation
Balance at 1 April 2021
Depreciation charge for the year
Transfers
Disposals
Balance at 31 March 2022
Balance at 1 April 2022
Depreciation charge for the year
Transfers
Disposals
Balance at 31 March 2023
Net book value
At 31 March 2022
At 31 March 2023
27,674
57
(185)
7,016
-
-
34,562
34,562
63
2,435
-
-
37,060
651
145
-
-
796
796
147
-
-
943
33,766
36,117
75
3
-
-
-
-
78
78
6
-
-
-
84
-
-
-
-
-
-
-
-
-
-
78
84
4,947
135
-
-
-
(41)
5,041
5,041
28
-
-
(11)
5,058
2,279
248
-
(40)
2,487
2,487
243
-
(11)
2,719
2,554
2,339
Total
£000
32,696
195
(185)
7,016
-
(41)
39,681
39,681
97
2,435
-
(11)
42,202
2,930
393
-
(40)
3,283
3,283
390
-
(11)
3,662
36,398
38,540
Included in Land and Buildings is long leasehold land at a value of £2,200,000 (2022: £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 March 2023 (see Strategic Report page 4). 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. Further detail about property revaluation is included in the
Financial Review on page 10.
At 31 March 2023, 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 £23,628,000 (2022: £23,775,000).
At 31 March 2023, 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 £1,110,000 (2022: £1,110,000).
48 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
46 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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 leases are secured by the lessor’s title to the fixed assets. The carrying value of plant, machinery and equipment which is subject
to leases is £76,000 (2022: £519,000).
14. Investment property
At fair value:
Balance at the beginning of the year
Additions during the year
Fair value adjustments
Disposals
Intercompany transfers
Balance at the end of the year
2023
£000
18,195
935
(1,925)
-
-
17,205
2022
£000
17,845
52
380
(232)
150
18,195
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 2023 has been
determined by a valuation carried out on that date by independent, external valuers (see Strategic Report page 4), 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. Further detail
about property valuation is included in the Financial Review on page 10.
All of the Group’s investment property is held under freehold interests with the exception of four (2022: four) properties which are held under long leaseholds.
15. Investments
At 31 March 2023 the Parent company 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
Harbour Arch Quay Management Company Limited
Sutton Harbour Car Parks Limited
Sugar Quay Holdings Limited
Sugar Quay Limited
Sutton East Holdings Limited
Sutton East Developco No1 Limited
Class of Ownership
shares held
2023
2022
Nature of Business
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Harbour Authority
Marine Leisure & Property
Property Developer
Property
Property
Property
Property
Car Park Operator
Investment Company
Property Developer
Property Developer
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 2023 49
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 47
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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
Change in tax rate
Losses carried forward
Tax assets / (liabilities)
Movement in deferred tax during the year
Property, plant and equipment
Investment property
Employee benefits
Losses carried forward
2023
£000
2022
£000
-
-
-
606
606
-
-
-
509
509
1 April
2022
£000
(1,628)
(1,467)
(133)
236
(2,992)
2023
£000
(1,635)
(2,521)
-
-
(4,156)
Change in
deferred
tax rate
£000
2022
£000
(1,561)
(1,940)
-
-
(3,501)
2023
£000
(1,635)
(2,521)
-
606
2022
£000
(1,561)
(1,940)
-
509
(3,550)
(2,992)
Recognised
in income
£000
Recognised
in equity
£000
31 March
2023
£000
-
-
-
-
-
(73)
(557)
-
72
(558)
-
-
-
-
-
(1,701)
(2,024)
(133)
308
(3,550)
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
2023
£000
30
34
37,048
2022
£000
11
78
31,861
37,112
31,950
Included within inventories is £37,048,000 (2022: £31,861,000) expected to be recovered in more than 12 months. £13,363,000 (2022: £13,216,000) 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 £2,587,000 were recognised as an expense in the year (2022: £1,576,000).
Interest capitalised during the year in relation to development property was £555,000 (2022: £343,000). The capitalisation rate used to determine the
amount of borrowing costs eligible for capitalisation was 5.0% (2022: 3.0%).
In the course of the year, £nil of development property inventory was written down (2022: £nil).
50 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
48 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
18. Trade and other receivables
Trade receivables
Provision for impairment of trade receivables
Expected loss rate of trade receivables
Other receivables
Prepayments and accrued income
2023
£000
749
(87)
662
8%
193
1,237
2,092
2022
£000
677
(119)
558
8%
50
1,202
1,810
Included within trade and other receivables is £635,000 (2022: £613,000) 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 provision for impairment of trade receivables is arrived at by using the historic loss rate and adjusting for current expectations, customer base and
economic conditions. With historic and expected future losses being low, the Directors consider it appropriate to apply a single average rate for expected
credit losses to the overall population of trade receivables.
19. Cash and cash equivalents
Cash and cash equivalents per Consolidated Balance Sheet
Cash and cash equivalents per Cash Flow Statement
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
2023
£000
1,095
1,095
2023
£000
-
100
-
100
2022
£000
970
970
2022
£000
-
2,100
-
2,100
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 51
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 49
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
20. Bank loans
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
Current liabilities
Secured bank loans
Property financing secured loan
Unsecured related party loan
2023
£000
2022
£000
21,600
22,800
3,200
2,371
3,106
30,277
-
2,338
-
25,138
Secured bank loans:
The current secured bank loans relate to a maximum facility of £24.9m comprising two loans and a revolving credit facility which incur interest at various
rates over SONIA during the term of the facilities, £3.2m falls due within 1 year and £21.6m falls due in more than 12 months from the Balance Sheet date.
Assets with a carrying amount of £55.355m (2022: £50.705m) have been pledged to secure borrowings of the Group.
The company also has a secured bank loan for the financing of Harbour Arch Quay development, up to a maximum of £4.950m which is due for repayment
by 13 September 2023, drawn at £2.371m at 31 March 2023 (31 March 2022: £0.063m). As at 31 March 2022 the company had a loan for £2.275m, taken
out to fund land purchase, which was repaid in May 2022. In three issues (May 2022, December 2022 and March 2023) the Company took out loans with
Related Parties, Beinhaker Design Services Limited and Rotolok Holdings Limited. These loans are unsecured and repayable by May 2024.
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
2022
£000
2022
£000
2023
£000
2023
£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
2,225
-
(2,225)
2,132
2,132
2,132
-
2,132
1,819
-
(1,819)
2,225
2,225
2,225
-
2,225
646
-
-
-
646
-
646
646
646
-
-
-
646
-
646
646
50 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
52 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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
23. Lease liabilities
2023
£000
1,829
717
152
603
3,301
2023
£000
1,181
555
11
7
75
1,829
2022
£000
1,230
123
196
331
1,880
2022
£000
1,007
160
3
25
35
1,230
Capital element
Minimum lease payments of lease payments
2022
£000
2022
£000
2023
£000
2023
£000
Amounts payable under lease liabilities:
Within one year
In the second to fifth years inclusive
Less: future finance charges
Present value of lease obligations
Current
Non-current
69
13
82
(6)
76
175
85
260
(20)
240
69
7
76
n/a
76
66
10
76
175
65
240
n/a
240
165
75
240
It is the Group’s policy to lease certain of its property, plant and equipment under leases. The average lease term is 1.2 years (2022: 1.9 years). For the year
ended 31 March 2023, the average effective borrowing rate was 5.0% (2022: 3.0%). Interest rates are fixed at the contract date. All 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.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 51
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 53
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
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 £151,000 (2022: £174,000). There were no amounts outstanding or prepaid at the year end (2022: £nil).
25. Capital and reserves
Share capital
Ordinary shares Deferred shares Total shares
Thousands of shares
2023
2023
2023
2022
2022
2022
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
129,944
-
115,944
14,000
62,944
-
62,944
-
192,888
-
178,888
14,000
129,944
129,944
62,944
62,944
192,888
192,888
Allotted, called up and fully paid
129,944,071(2022:129,944,071)
Ordinary shares of 1p each (2022: 1p each)
62,943,752 (2022: 62,943,752)
Deferred shares of 24p each (2022: 24p each)
2023
£000
1,300
-
1,300
2022
£000
1,300
-
1,300
2023
£000
-
15,106
15,106
2022
£000
-
15,106
15,106
2023
£000
2022
£000
1,300
15,106
16,406
1,300
15,106
16,406
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
Group. 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 Group. On a winding up each Deferred
share shall only be entitled to the nominal capital paid up or credited as paid up after paying the nominal capital paid up or credited as paid up on the
Ordinary shares, the Deferred shares and/or any other shares in issue, together with the sum of £1,000,000 on each Ordinary share.
Other reserves
Share premium account
The share premium account represents premiums paid over the nominal value of share capital issued 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 Group was incorporated into the holding Group, 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.
Retained earnings
Retained earnings represent retained earnings attributable to owners of the parent. Retained earnings include £6.308m (2022: £3.873m) in respect of unrealised
valuation surpluses on the Investment property assets.
54 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
52 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
26. Leases
Leases
During the year £nil was recognised in respect of lease rentals in the income statement (2022: £96,000): £nil in cost of sales (2022: £116,000) and £nil
in administrative expenses (2022: £nil).
During the year £7,000 (2022: £8,000) was recognised in the income statement in respect of low value operating leases for photocopiers, telephony
equipment and vending machines.
During the year £96,000 was recognised in respect of lease rentals in the income statement (2021: £191,000): £116,000 in cost of sales (2021: £172,000)
and £nil in administrative expenses (2021: £8,000).
Included within lease rentals is an amount of £nil (2021: £191,000) 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 (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 two years
Between two and three years
Between three and four years
Between four and five years
More than five years
Owner-occupied properties:
Less than one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
More than five years
2023
£000
1,134
1,164
994
961
938
24,107
29,107
15
15
15
8
-
-
53
2022
£000
1,075
847
815
713
670
19,969
24,089
46
46
46
46
39
83
306
During the year ended 31 March 2023 £1,374,000 (2022: £1,427,000) was recognised as rental income in the income statement. Repair and maintenance
expense recognised in cost of sales for the year to 31 March 2023 was £166,000 (2022: £133,000).
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 2023 55
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 53
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
27. Cash flow statements
Cash flows from operating activities
Loss 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
Profit on disposal of Investment property
Amortisation of Grants
Loss on sale of property, plant and equipment
Cash generated from continuing operations before changes in working capital and provisions
(Increase) in inventories
Transfer from Inventories to Investment property
(Increase)/Decrease in trade and other receivables
Increase in trade and other payables
(Decrease)/Increase in deferred income
(Increase)/Decrease in provisions
Cash (outflow)/inflow from continuing operations
2023
£000
(2,036)
15
1,149
1,925
-
390
-
-
-
1,443
(5,162)
-
(282)
1,421
(93)
15
(2,658)
2022
£000
(259)
820
789
(380)
185
392
(28)
(9)
(1)
1,509
(2,629)
93
586
150
406
(56)
59
56 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
54 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
28. 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 £186,000 (2022:
£180,000).
Unsecured Related Party Loans advanced during the year by Beinhaker Design Services Limited and Rotolok (Holdings) Limited of £3,106,000 (including interest
rolled up of £151,000) are due to be paid by May 2024.
During the year Beinhaker Design Services Limited exchanged on the sale of an apartment in Harbour Arch Quay for £435,000. The sale price was at the full
marketed asking price, in line with other apartments in Harbour Arch Quay which had already exchanged.
Transactions between the Group and its subsidiaries, which are related parties of the Group, have been eliminated on consolidation and are not disclosed
in this note.
Transactions with key management personnel:
Executive Directors of the Group and their immediate relatives control 72.91% (2022 72.91%) of the voting shares of the Group, see note 30.
The compensation of key management personnel (the Executive and Non Executive Directors) is set out on the Remuneration Report on page 20.
29. Capital commitments
At 31 March 2023 there were capital commitments of £1,947,000 for the completion of construction work on the Harbour Arch Quay apartments
(31 March 2022: £4,821,000).
30. Events after the reporting period
After the year end, the Group issued 12,994,407 new ordinary shares of 1p each on 5 May 2023 at a share price of 22.5 pence per new ordinary share. The
shares were subscribed by FB Investors LLP, which increased its total shareholding to 107,741,157 ordinary shares, representing 75.38% of the Company’s issued
ordinary shares. Following this share issue Executive Directors and their immediate relatives control 75.83% of the voting shares of the Group.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 57
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 55
Historical Financial Information
For the year ended 31 March 2023
Net Assets
Revenue
2023
£000
56,067
2022
£000
2021
£000
2020
£000
2019
£000
56,211
47,153
46,082
45,732
8,161
7,194
5,400
6,558
6,893
Operating profit before fair value adjustments,
impairments, costs of change in ownership and onerous leases
1,053
1,155
591
1,065
973
Fair value adjustments on investment
property and fixed assets
(1,925)
195
(2,211)
(977)
1,444
Operating profit/(loss) after fair value adjustments
and impairments
(872)
1,350
(1,620)
88
2,417
Net financing costs (excludes joint ventures/associates)
(1,149)
(789)
(753)
(844)
(901)
Profit/(loss) before tax on continuing activities
(2,021)
561
(2,373)
(756)
1,516
Profit/(loss) attributable to equity shareholders
(2,036)
(259)
(2,175)
(988)
1,831
Dividends paid
-
-
-
-
-
Basic earnings/(loss) per share
(1.57p)
(0.20p)
(1.88p)
(0.85p)
1.68p
Diluted earnings/(loss) per share
(1.57p)
(0.20p)
(1.88p)
(0.85p)
1.68p
58 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
56 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Fixed assets
Investments
Current assets
Debtors
Stock
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 2023
Note
2023
£000
2022
£000
5
6
7
8
9
11
11
11
11,268
11,268
27,785
500
76
28,361
723
27,638
38,906
2,400
36,506
16,406
13,972
3,620
2,508
36,506
11,268
11,268
24,558
500
15
25,073
29
25,044
36,312
400
35,912
16,406
13,972
3,620
1,914
35,912
The notes on pages 61 to 65 are an integral part of these financial statements. In the year the Company made a profit of £594,000 (2022:
profit of £127,000).
The Financial Statements were approved and authorised by the Board of Directors on 31 July 2023 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 2023 59
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 57
Company Statement of Changes in Equity
For the year end 31 March 2023
Called up
capital
£000
Share premium
account
£000
Merger
reserve
£000
Profit and loss
account
£000
Total
£000
32,368
127
3,417
35,912
32,912
594
-
1,787
127
-
1,914
1,914
594
-
2,508
36,506
Balance at 1 April 2021
Profit for the year
Issues of shares
Balance at 31 March 2022
Balance at 1 April 2022
Profit for the year
Issue of shares
Balance at 31 March 2023
16,266
-
140
16,406
16,406
-
-
16,406
10,695
-
3,277
13,972
13,972
-
-
13,972
3,620
-
-
3,620
3,620
-
-
3,620
60 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
58 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Company Financial Statements
For the year end 31 March 2023
1. General information
Sutton Harbour Group 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 2022 to 31 March 2023, with comparatives for the year 1 April 2021 to 31 March 2022 and are compliant
with FRS101. No income statement or statement of comprehensive income is presented by the Company as permitted by Section 408 of the Companies
Act 2006.
2. Accounting policies
Basis of preparation
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to
all the years presented, unless otherwise stated.
These financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework. The financial
statements have been prepared under the historical cost convention, and in accordance with the Companies Act 2006.
The preparation of financial statements in conformity with FRS101 requires the use of certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the company’s accounting policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4 of the consolidated accounts.
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 funding and is therefore reliant on bank finance in the form of Group wide term
loan and revolving credit facilities. In March 2023, Sutton Harbour Group plc and subsidiary companies (the “Group”) renewed its banking facilities until
December 2024 with two term loans totalling £22.4m, reducing to £19.2m by 31 August 2023, 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.
Receipts from the sales of apartments by another Group Company, Harbour Arch Quay Limited, will be sufficient to repay £1.6m of the term loan to the
Company’s bankers as agreed in the facility extension agreement (March 2023) by 31 August 2023. This follows a repayment, also £1.6m, made in June
2023. Due to delay in the build programme, deferment of the second half of the agreed term loan repayment to 31 August 2023 was covered by issue
of a formal waiver of breach.
It has been confirmed that the intra-group balances in place will not be requested for repayment in the foreseeable future.
In conclusion, after making enquiries, the Directors expect that the Group has adequate resources to continue in operational existence for the foreseeable
future. The Directors have not identified any material uncertainties relating to events or conditions that individually or collectively may cast significant doubt
on the group’s ability to continue as a going concern for a period of at least twelve months from the financial statements are authorised for issue.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 61
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 59
Notes to the Company Financial Statements
For the year ended 31 March 2023
Functional and presentation currency
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.
Investments
Investments are carried cost less any provision for impairment in value.
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.
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.
Financial instruments
Trade and other debtors, trade and other creditors and all intra-group balances are financial instruments and are carried at amortised cost.
62 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
60 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Company Financial Statements
For the year ended 31 March 2023
3. Services provided by the Company’s auditors
During the year the Company obtained the following services from the Group’s auditors:
Current auditors:
Fees payable to Group’s auditor for the audit of Parent Company financial statements
Fees payable to the Group’s auditor for other services:
Tax services
2023
£000
30
2022
£000
25
-
2
For further details on other services provided by the Group’s auditors, see note 7 to 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 2023, the Company has the following investments in subsidiaries:
2023
£000
2022
£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
Harbour Arch Quay Management Limited
Sutton Harbour Car Parks Limited
Sugar Quay Holdings Ltd
Sugar Quay Ltd
Sutton East Holdings Limited
Sutton East Developco No1 Limited
Class of Ownership
shares held
2023
2022
Nature of Business
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Harbour Authority
Marine Leisure & Property
Property Developer
Property
Property
Property
Property
Car Park Operator
Investment Company
Property Developer
Property Developer
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
Offices, Guy’s Quay, Plymouth PL4 0ES.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 63
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 61
Notes to the Company Financial Statements
For the year ended 31 March 2023
6. Debtors
Amounts owed by subsidiary undertakings
Other debtors and prepayments
Total debtors
Amounts owed by subsidiary undertakings are all due in more than one year.
7. Creditors: amounts falling due within one year
Other creditors and accruals
Unsecured related party loan
Total creditors
Security over the assets of the Company has been given in relation to the bank facilities.
8. Creditors: amounts falling due after more than one year
Bank borrowings
Total creditors
Interest is charged at rates over SONIA during the term of the bank facilities.
9. Called up share capital
2023
£000
27,700
85
27,785
2023
£000
53
670
723
2023
£000
2,400
2,400
2022
£000
24,390
168
24,558
2022
£000
29
-
29
2022
£000
400
400
Ordinary Shares Deferred Shares Total
Thousands of shares
2023
2022
2023
2022
2023
2022
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
129,944
-
129,944
115,944
14,000
129,944
62,944
-
62,944
62,944
-
62,944
192,888
-
192,888
178,888
14,000
178,888
Allotted, called up and fully paid
129,944,071 (2022: 129,944,071)
Ordinary shares of 1p each (2022: 1p each)
62,943,752 (2022: 62,943,752)
Deferred shares of 24p each (2022: 24p each)
1,300
1,300
-
-
1,300
1,300
-
1,300
-
1,300
15,106
15,106
15,106
15,106
15,106
16,406
15,106
16,406
64 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
62 Sutton Harbour Group plc – Annual Report & Financial Statements 2023
Notes to the Company Financial Statements
For the year ended 31 March 2023
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.
10. Contingencies
The Company has given an unlimited guarantee in respect of bank borrowings of all subsidiary companies. At 31 March 2023, these borrowings amounted
to £24,800,000 (2022: £22,800,000).
11. Description of reserves
Called up share capital
The called up share capital account represents equity share capital (see note 25 to the consolidated financial statements).
Share premium account
The share premium account represents premiums paid over the nominal value of share capital issued less transaction costs (see note 25 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 25 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 75.38% 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 1 to 57 of this document.
The results of the Group are not consolidated in any other group’s financial statements.
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 65
Sutton Harbour Group plc – Annual Report & Financial Statements 2023 63
Sutton Harbour Office | Guy’s Quay Office | Sutton Harbour | Plymouth | PL4 0ES
Tel: 01752 204186 | www.suttonharbourgroup.com