REG - Sutton Harbour Grp - Final Results for the year ended 31 March 2024
20/09/2024 07:00
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RNS Number : 9462E Sutton Harbour Group PLC 20 September 2024
20 September 2024
Sutton Harbour Group plc
("Sutton Harbour", the "Company" or, together with its subsidiaries, the
"Group")
Final Results for the year ended 31 March 2024
Sutton Harbour, the AIM quoted owner and operator of Sutton Harbour in
Plymouth and specialist in waterfront regeneration projects and operation of
waterfront real estate, marinas and Plymouth Fisheries, announces its audited
annual results for the year ended 31 March 2024. The statutory accounts and
annual report for 2024 ("Annual Report") are expected to be made available on
the Company's website (www.suttonharbourgroup.com
(http://www.suttonharbourgroup.com) ) later today and sent to shareholders by
the end of the month.
Summary
· Completion of the Harbour Arch Quay development comprising 14
apartments, with all sales completed immediately on completion of
construction, and ground floor space occupied as the Group's head office.
· Lock cill works successfully completed by the Environment Agency,
restoring normal access and egress to Sutton Harbour from March 2024.
· Record trading year for both King Point Marina and the Group's
car park operations
· New banking facility completed providing committed facilities
until December 2026.
· Former Airport site claim ongoing and lock Arbitration Hearing
scheduled for November 2024.
Financial Highlights
Note 2024 2023
Adjusted (loss) before tax * £(3.330)m £(0.096)m
Net financing costs £2.000m £1.150m
Net assets £54.1m £56.1m
Net asset per share 37.8p 43.1p
Valuation of property portfolio ** £54.7m £55.5m
Year-end net debt £24.8m £29.6m
*Excluding fair value adjustments of £0.200m relate to revaluations of
property and exceptional items of £0.855m, as explained in the Chairman's
Statement.
**Comprises investment and owner occupied portfolios. Excludes land held as
development inventory. Valuation as at 31 March 2024.
Philip Beinhaker, Executive Chairman, commented:
"The Company is confident that actions underway will address the principal
risk of unsustainable debt levels whilst current higher interest rates
prevail. The Company is committed to resolve the current challenges, which
once settled, will allow management to bring forward additional new projects
to improvement the attractiveness of the Sutton Harbour area for living,
working and leisure."
For further information, please contact:
Sutton Harbour Group plc +44 (0) 1752 204186
Philip Beinhaker - Executive Chairman
Corey Beinhaker - Chief Operating Officer
Natasha Gadsdon - Finance Director
Strand Hanson Limited (Nominated & Financial Adviser and Broker) +44 (0) 20 7409 3494
James Dance
Richard Johnson
Page number references in this announcement refer to the Annual Report,
available as set out above on the Company's website.
Executive Chairman's Statement
Introduction
Trading by the Group's businesses continued to be steady throughout the
financial year with continuing strong occupancy of the marinas, excellent
performance by the car parks in the second half year and stable occupancy of
investment properties. The results for the full year are, however, reflective
of some material challenges encountered.
· Interest rates have persisted at high levels resulting in a
significant increase in financing costs to £2.0m (2023: £1.1m).
· The Harbour Arch Quay development was successfully completed and
sales of all 14 apartments were finalised immediately following the completion
of construction, permitting repayment of the development lender and £3.2m
repayment to NatWest. The accounting result for the development is, however,
reflective of a number of challenges during construction and additional costs
incurred to expedite the final stages of the development in order to meet
occupation and developer financing deadlines. The development resulted in a
total loss of £2.629m. Further detail is provided later in this Statement.
· Harbour operations have been severely disrupted during the second
half year with two phases of works undertaken by the Environment Agency to
replace the Sutton Harbour lock cills. As a result, the Group has incurred an
exceptional cost of £236,000 to provide back-up fish landing facilities at
another location in Plymouth owned by a third party port authority.
· During the year, the Group has, with its legal advisors, been
preparing for an Arbitration Hearing against the Environment Agency which is
scheduled to take place in November 2024. The dispute, which has been ongoing
for a number of years, concerns responsibility for the ongoing maintenance of
Sutton Harbour Lock, hitherto managed and paid for by the Environment Agency.
The Lock was installed in 1992 as a public flood defence to protect against
tide surges which previously caused regular flooding to the Barbican and
surrounding area. Preparing for the Hearing has resulted in significant legal
expense, particularly in the last twelve months. The Group is confident of its
position and will look to recover its costs should the Hearing find in the
Group's favour. Nonetheless, the costs accumulated to date in relation to the
dispute of £537,000 have been expensed to the Income statement as an
exceptional cost.
· As previously announced by the Company, Plymouth City Council
(PCC) has made a claim that the Group is in breach of its long lease of the
Former Airport Site. The Group has responded strongly and thoroughly setting
out in detail why it believes the subject matter of the claim has been made
wrongfully. A response has been received from Plymouth City Council, after a
number of months, to which the Company has further replied with clarification
on points raised, and reiteration that the claim has been served wrongfully.
The matter remains ongoing. Costs of legal advice in connection with this
matter of £86,000 have been expensed to the Income Statement as exceptional
costs.
The Group has managed the challenges that it has faced proactively.
Appropriate advice and action has been taken to work towards the best outcomes
for the Group and the majority shareholder has been forthcoming with financial
support, by way of new equity and loans (see notes 21 and 26), to assist with
costs and to maintain progress with future projects.
After the year end the Group announced that it had entered into a new credit
facility agreement with NatWest. The new facility provides maximum funding
of £21.7m. The facility is in place until 30 December 2026, and it sets out
debt reduction milestones by way of selected asset sales, certain of which
must be completed by March 2025.
Results and Financial Position
FINANCIAL HIGHLIGHTS 2024 2023
Net Assets £54.091m £56.067m
Net Asset value per share 37.8p 43.1p
(Loss) before tax from continuing operations (£4.385m) (£2.021m)
Adjusted (loss) before tax excluding fair value adjustments and exceptional (£3.330m) (£0.096m)
items*
(Loss) after tax (£3.836m) (£2.036m)
Basic (loss) after tax per share (2.68p) (1.57p)
Dividend per share 0.0p 0.0p
Total Comprehensive loss for the year attributable to shareholders (£4.878m) (£0.144m)
Total Comprehensive loss per share (3.4p) (0.11p)
Net Debt £24.805m £29.259m
Gearing (Net Debt/Net Assets) 45.9% 52.2%
*Fair value adjustments of £0.200m relate to revaluations of investment
property and owner occupied property where there is a reduction in fair value
and no previous surplus in the revaluation reserve (see note 14 and 15) and
exceptional items of £0.855m (see note 10).
Gross profit for the year was £0.004m compared to £2.246m in the previous
year. These results include the loss of £2.629m after interest incurred by
regeneration activities, all which relates to the Harbour Arch Quay
development.
As set out in the table below, contributions earned from the non-regeneration
activities improved by 10% from £2.388m (2023) to £2.633m (2024) supported
by improved trading in both the marinas and car parking business segments. The
decline in revenue from the non-regeneration activities is attributable to the
fall in the gas-oil commodity price and consequent decline in selling price
which is calculated by adding a fixed margin to the buying price. Gas oil is
sold to commercial fishing vessels and to a far lesser extent to leisure boats
and accounted for £2.260m turnover (2023: £2.631m). Volume sold (measured in
litres) increased by 10.2% compared to the previous year.
Marine, Real Estate and Car Parking Activities Regeneration Total 2024 Marine, Real Estate and Car Parking Activities Regeneration Total 2023
Activities Activities
Harbour Arch Quay development
£000 £000 £000 £000 £000 £000
Revenue 8,072 8,281 16,353 8,161 --- 8,161
Cost of Sales (5,439) (10,910) (16,349) (5,773) (142) (5,915)
Gross Profit 2,633 (2,629) 4 2,388 (142) 2,246
The exceptional cost of £0.855m comprises £0.236m in respect of costs to
provide temporary back up facilities during the lock works, £0.537m for legal
advisory costs in preparation for the Arbitration Hearing concerning
responsibility for the maintenance of Sutton Lock and £0.082m of legal costs
associated with the long lease at Plymouth City Airport (see note 10).
Net debt (including lease liabilities) fell to £24.805m as at 31 March 2024
from £29.258m at 31 March 2023, a decrease of £4.453m. The key movements in
net debt during the year include a repayment of the bank loan of £3.2m,
repayment of development finance of £4.5m and an increase in related party
loan financing (including rolled up interest) of £769,000.
Gearing (net debt/net assets) as at 31 March 2024 stood at 45.9% (31 March
2023: 52.2%). Net finance costs of £1.992m in the year (2023: £1.149m) are
stated after capitalisation of interest of £0.427m (2023: £0.555m).
As at 31 March 2024, net assets were £54.091m (31 March 2023: £56.067m), a
net asset value of 37.8p per ordinary share (31 March 2023: 43.1p per ordinary
share). The movement includes the valuation of the Group's property assets
which gave rise to an overall valuation deficit of £1.604m (2023: overall
surplus of £0.510m), as reconciled in the table below, of which a £0.356m
surplus relates to the investment property portfolio and a net £1.960m
deficit relates to the owner-occupied properties. The improvement in the
investment property portfolio incorporates increased valuation of the Old
Barbican Market following complete refurbishment and lettings to quality
covenants. The deficits recorded on the owner occupied properties reflect
higher interest rates, trading performance, general market sentiment and, in
respect of Sutton Harbour Marina, the decommissioning of the Sutton Jetty
structure which has resulted in lost operational and lettable space.
Valuation Surplus/(Deficit) Accounting
Owner Occupied Portfolio
- Fisheries (£0.556m) Fair valuation adjustment recorded in the Income Statement as no revaluation
reserve available to absorb the deficit
- Marinas (£2.816m) Debited to the Revaluation Reserve in the Balance Sheet
- Car Parks £1.412m Credited to the Revaluation Reserve in the Balance Sheet
Investment Property Portfolio £0.356m Fair valuation adjustment recorded in the Income Statement
TOTAL £1.604m
Further details on financial performance can be found in the Financial Review
on page 12.
Financing
During the year the following financing events occurred:
· May 2023 - £2.923m raised by way of share subscription to
support ongoing higher costs and repayment of bank loan.
· July - December 2023 - £3.2m repayment of bank loan.
· October 2023 - repayment of £4.5m development lender's loan
following sale of Harbour Arch Quay apartments.
· March 2024 - drawdown of additional £450,000 Related Party Loan
from Beinhaker Design Services Limited (BDS).
During the year the Group has been exposed to two major cost pressures being
the net financing costs of £1.992m (2023: £1.149m) and the net costs of the
Harbour Arch Quay development.
The Group has reviewed its requirement for further cash liquidity and the need
to reduce debt servicing costs to a more manageable level. During the year the
current Bank of England base rate increased from 4.25% to 5.25% resulting in
the average cost of bank debt of the Group at c.8%. It is not currently
foreseen that rates will fall materially in the near term and through
discussions with the Group's bankers, a managed reduction of the banking
facility from £21.7m (as at 31 March 2024) to £11.8m is targeted within the
current financial year. Accordingly, the Group has placed selected assets for
sale (being six investment properties, and King Point Marina) to assist with
its finance restructuring plan. These items are documented in the new credit
facility completed in August 2024 with the Group's bankers. The new facility
expires on 30 December 2026. Except where deferred and then extinguished
when the new facility was put in place with the Group's bankers, all covenants
were met during the year.
As at 31 March 2024, related party loans, including rolled up interest owed to
shareholders, were as follows:
£
Beinhaker Design Services Limited 2.530m
Rotolok (Holdings) Limited 1.345m
Total 3.875m
After the year end, Beinhaker Design Services Limited agreed to loan the Group
a further £1.970m under the same terms as the existing loans to allow the
Group to meet its ongoing liabilities in advance of completing the finance
restructuring plan. Additionally, Beinhaker Design Services Limited agreed
with Rotolok (Holdings) Limited to purchase Rotolok's loan principal of
£1.150m, a transaction which does not affect the overall debt owed by the
Group nor the cost of servicing the overall Related Party Loan financing.
The accrued capitalised interest on the £1.150m loan principle relating to
the Rotolok (Holdings) Limited of £0.195m at the Balance Sheet date will
continue to accrue rolled up interest at 10% per annum until repaid.
The Group is currently managing the scheduling of new property developments to
take account of the timing of further planning approvals and stabilisation of
the financial position. The Group continues to meet the costs of defending the
Group in the forthcoming Arbitration Hearing and to take appropriate legal
advice in connection with the former airport site lease. Planning costs in
connection with the proposed North Quay House redevelopment and the Former
Airport Site Planning Pre Application have been supported by the recent
related party loan drawdown and progress will be subject to planning approval
and funding.
Taking into account the current level of bank borrowing, the board does not
recommend payment of a dividend on the year's results.
Directors and Staff
There have been no Board changes during the year. Headcount as at 31 March
2024 was 30 (31 March 2023: 30).
Operations Report
Marine
Marinas
For the year under review, occupancies of Sutton Harbour Marina and King Point
Marina were 88% and 86% respectively. King Point Marina achieved a record year
for berthing revenue demonstrating maturity of the asset which was opened in
2013. Berthing pricing for Sutton Marina was frozen for the 2023/2024 season
to recognise the impact of the lock works. At the end of 2023, Sutton Jetty,
the pier structure that accommodated the marina office and amenity facilities,
was closed on the advice of structural engineers. The future of Sutton Jetty
is currently under consideration and for the meantime the office space has
been accommodated within the Group's office and temporary amenity facilities
have been provided in the marina car park. The Group has placed an order for
bespoke amenities housed in a floating unit and has secured asset financing
for the purchase thereof. The new facility, which is due for delivery in
December 2024, will improve accessibility for customers with the unit being
level with the pontoon and comprising 5 wet rooms and 1 disabled access wet
room. To reflect the inconvenience to berthholders of the temporary facilities
and also to compensate for inconvenience of the second phase of the Lock Work,
berthing fees were increased by only a modest amount for the current 2024/2025
season. Following marketing of the berths, the second phase of the Lock Works
was rescheduled to start earlier in January 2024 and was completed by March
2024. Marina fees at Sutton Harbour Marina will be restored to market rates
for the 2025/2026 season.
Fisheries
Despite the disruption caused by the Lock Works, the results from Fisheries
were not noticeably impacted. Landings were on par with last year and volume
of fuel sold was up 10% on the previous year. The cost of the back up landing
facility of £236,000, which comprised rental of quay space, temporary
pontoons, mobile chilled unit, a crane and a chilled vehicle, is recorded as
an exceptional cost. The back up facility was set up after consultation with
harbour users to provide a facility for the landing of fish during the times
that Sutton Harbour was not accessible. The facility primarily served the
local fleet of smaller vessels which could not readily access other ports.
Since the year end, the Fisheries business has encountered a new challenge.
The company which had provided services to the port including fish sorting and
grading, fish auctioning and fisher account settling for 29 years announced
that it would close with just two weeks' notice. Management has had a number
of meetings with various organisations to discuss their proposals to take over
the vacant operating roles. The financial impact to the Group due to the
temporary closure of the fish auction will arise from the loss of fish landing
dues. To date fuel sales have remained broadly in-line with historical
trends.
Real Estate and Car Parking
Tenant occupancy by 31 March 2024 stood at 89% (31 March 2023 89%). There have
been no material changes in occupations of investment properties during the
year. The Old Barbican Market which was fully refurbished in the previous
financial year now has three established tenants and has delivered on the
strategy in increasing footfall to the Sutton Harbour and Barbican area,
proved in the valuation improvement of £400,000 compared to a year ago. We
can measure footfall using the car parks revenue data as a guide to
visitation. Car Parking rates for the year from 1 April 2023 were raised by
11%, yet revenue increased by 22% over the financial year under review.
Regeneration
Harbour Arch Quay
Despite a number of challenges encountered during the construction of the 14
apartment building and the resultant delay in completion, the Company
delivered a high quality new development which was all sold "off plan" prior
to completion of construction. This has stimulated demand for further similar
apartments and gives confidence that the proposed scheme at North Quay House
will be highly marketable.
In my Interim Statement, I reported that the Group expected a project result
just below breakeven, although the overall project would make a loss. The
overall loss on the development was £2.629m, of which £768,000 relates to
historical costs on previous scheme designs for the same site and £625,000
relates to apportionment of internal management and financing costs. The
loss on the development itself was £1,236,000 and materialised as a greater
loss than anticipated as expected recoveries from subcontractors and
professional designers for delays and errors could not be fully achieved.
During the scheme, delays accumulated due to third party boundary
negotiations, construction methodology and regulation change amongst other
factors. Whilst the delays did not always cause additional direct costs, they
did adversely impact the quantum of financing costs and construction
management charges. The final stage interior and exterior finishing costs were
insufficiently budgeted, partly as a result of labour and material shortages.
Additional specialist labour at higher costs was ordered to ensure the
building was finished to meet deadlines for sales completions and financing
repayment.
The Group has reviewed the detailed reasons leading to the loss incurred which
will inform planning and management of future projects. The project was
developed by the Group with direct contracting for the construction work
packages. The construction programme was managed by a specialist construction
management firm. The Group observed a weakness in co-ordination of, and
between, the professional teams and any future development projects will
involve professional project management to ensure effectiveness of the
interface between all professional and construction disciplines. A full
evaluation of the merits of delivery alternatives for future developments will
be made.
Whilst acknowledging the financial impact upon the Group of the Harbour Arch
Quay project, it was viewed in the best interests of stakeholders
(shareholders, suppliers, funders and customers) to complete the development
and realise its sales value to achieve the best possible outcome.
Harbour Arch Quay has been the first new development in Sutton Harbour in 14
years and reinitiates a development programme to invest to uphold and improve
the area. The development project, fully sold "off plan" before completion,
has tested and proved the value of the harbour location and establishes
confidence for the development potential of three other larger sites around
Sutton Harbour. These future schemes at North Quay House, Sugar Quay and
Sutton Road will in due course stimulate value of the public amenity by virtue
of the unique location between the City Centre and the sea to help to further
realise the vision for Plymouth as the Ocean City.
North Quay House
The Group proposes redevelopment of the building, which will be vacant by
Autumn 2024, into 10 high quality apartments each with three bedrooms.
Additionally three ground floor retail/office units and parking space will be
included. The configuration of the apartments is informed by the proven demand
for the Harbour Arch Quay apartments. The Group expects to submit a full
planning application to the Local Planning Authority this year having
addressed key planning matters through the productive 'Pre-Application'
process. In light of the lessons learned from the Harbour Arch Quay
development, procurement methodology is yet to be confirmed. Two specialist
development lenders have expressed strong interest in the project. The
development will only be progressed when the Group has achieved strong
visibility of a satisfactorily profitable outcome.
Sugar Quay
The redesign work to achieve successful development of this site into three
phases is ongoing and is expected to be resubmitted to the Local Planning
authority in 2025.
Former Airport Site - Planning
The five year safeguard as advised by National Planning Directorate expired in
March 2024. Accordingly, the Group submitted a 'Pre Application' masterplan to
the Local Planning Authority setting out a mix of uses that the site could
accommodate. The masterplan was carefully prepared to respect the Local
Planning Authority's policy to see the site protected for another five years
to provide a further opportunity for a viable aviation operations plan for the
site to be brought forward. The plan is therefore divided into three new
phases, which would not disrupt the runway until the final third phase
following a further five years safeguard period. The Local Planning Authority
and the Group have established a process for the evaluation and realisation of
the next phase of development which would retain the possibility of future
aviation operations on part of the site. An agreed schedule of meetings to
consider different aspects of the 'Pre Application' will take place over the
coming months.
Former Airport Site - Lease
Plymouth City Council ratified the Group's application to close the airport at
Council Meeting in August 2011 on grounds of non-viability. The airport was
then closed in December 2011 and in the intervening years no financially
substantiated plans to restart aviation operations have been received by the
Group. In February 2024, the Company received a notice from Plymouth City
Council claiming that the Group was in breach of its lease (130 unexpired
years over c. 100 acres) for not maintaining an airport supplied, equipped,
staffed and licensed. The Group has since written to Plymouth City Council to
strongly refute the claim. In response to a second letter from Plymouth City
Council the Company has clarified certain points raised, and reiterated its
position that the notice has been served wrongfully. In the meantime, as
described previously, the planning process for the site is underway.
The Group continues to maintain and ensure security of the extensive site at
its own cost and has done so responsibly for the past 12 years.
Financial Position and Outlook
Cash flow performance of the business activities is generally stable, although
varies seasonally in accordance with normal trading patterns. The Group has
however been exposed to challenges outside of its control, including economic
conditions, which have led to high costs and pressure on cash flow: higher
interest rates, preparation for the arbitration hearing with the Environment
Agency, costs of the temporary back up fish landing facilities whilst the
Environment Agency undertook works on the lock cill replacement and advice
costs in connection with the claim from Plymouth City Airport regarding the
airport lease.
The level of bank debt servicing payments will reduce significantly as assets
are sold (a 46% reduction in bank debt is targeted in the current financial
year). The corresponding loss of rents, fees and charges from the assets being
marketed will mean that the net cash result will be broadly neutral until
interest rates fall. Contraction of the asset base may allow some cost savings
to the general overheads of the Group. Further information regarding the
Going Concern position of the Group is given in notes 2 and 4 of the Financial
Statements.
Support from the majority shareholder has allowed the Company to progress its
activities and plans for future developments over the past year. The Group
will look to timing the advancement of new projects as the financial
restructuring progresses and the cash position stabilises.
Summary
The Group is confident that actions underway will address the principal risk
of unsustainable debt levels whilst current higher interest rates prevail. The
Group is committed to resolve the current challenges, which once settled, will
allow management to bring forward additional new projects to improvement the
attractiveness of the Sutton Harbour area for living, working and leisure.
Philip Beinhaker
EXECUTIVE
CHAIRMAN
19 September 2024
Consolidated Income Statement for
the year ended 31 March 2024
2024 2023
£000 £000
Revenue 16,353 8,161
Cost of sales (16,349) (5,915)
Gross profit 4 2,246
Fair value adjustments on investment properties and fixed assets (200) (1,925)
Administrative expenses (1,342) (1,193)
Exceptional costs (855) -
Operating (loss)/profit (2,393) (872)
Finance income 8 1
Finance costs (2,000) (1,150)
Net finance costs (1,992) (1,149)
(Loss before tax from continuing operations (4,385) (2,021)
Taxation credit/(charge) on (loss) from continuing operations 549 (15)
(Loss) for the year from continuing operations (3,836) (2,036)
(Loss) for the year attributable to owners of the parent (3,836) (2,036)
Basic and Diluted (loss) per share
from continuing operations (2.71p) (1.57p)
Consolidated Statement of Other Comprehensive Income for
the year ended 31 March 2024
2024 2023
£000 £000
(Loss) for the year (3,836) (2,036)
Items that will not be reclassified subsequently to profit or loss:
Revaluation of property, plant and equipment (1,404) 2,435
Deferred tax in respect of property revaluation 362 (543)
Items that may be reclassified subsequently to profit or loss:
Other comprehensive income for the year, net of tax (1,042) 1,892
Total comprehensive (loss) for the year attributable to owners of the parent (4,878) (144)
Consolidated Balance Sheet
As at 31 March 2024
2024 2023
£000 £000
Non-current assets
Property, plant and equipment 36,890 38,540
Investment property 17,542 17,205
Inventories 13,518 13,363
67,950 69,108
Current assets
Inventories 17,295 23,749
Trade and other receivables 1,310 2,092
Tax recoverable 3 5
Cash and cash equivalents 782 1,095
19,390 26,941
Total assets 87,340 96,049
Current liabilities
Bank Loans 21,700 3,200
Other Loans 3,875 5,477
Trade and other payables 2,194 3,301
Lease liabilities 12 66
Deferred income 2,183 2,132
29,964 14,176
Non-current liabilities
Bank loans - 21,600
Lease liabilities - 10
Deferred government grants 646 646
Deferred tax liabilities 2,639 3,550
3,285 25,806
Total liabilities 33,249 39,982
54,091 56,067
Net assets
Issued capital and reserves attributable to owners of the parent
Share capital 16,536 16,406
Share premium 16,744 13,972
Other reserves 23,030 24,072
Retained earnings (2,219) 1,617
54,091 56,067
Total equity
Consolidated Statement of Changes in Equity
For the year ended 31 March 2024
Share Share Revaluation reserve Merger reserve Retained earnings Total
capital premium equity
£000 £000 £000 £000 £000 £000
Balance at 1 April 2022 16,406 13,972 18,309 3,871 3,653 56,211
Comprehensive income
Loss for the year - - - - (2,036) (2,036)
Other comprehensive income
Share Issue - - - - -
Revaluation of property, plant and equipment - - 2,435 - - 2,435
Deferred tax on revaluation - - (543) - - (543)
Total comprehensive income - - 1,892 - (2,036) (144)
Balance at 1 April 2023 16,406 13,972 20,201 3,871 1,617 56,067
Comprehensive income - - - - (3,836) (3,836)
Loss for the year
Other comprehensive income
Share issue 130 2,772 - - - 2,902
Revaluation of property, plant and equipment - - (1,404) - - (1,404)
Deferred tax on revaluation - - 362 - - 362
Total other comprehensive income 130 2,772 (1,042) - (3,836) (1,976)
Total balance at 31 March 2024 16,536 16,744 19,159 3,871 (2,219) 54,091
Consolidated Cash Flow Statement
For the year ended 31 March 2024
2024 2023
£000 £000
Cash generated from/(used in) total operating activities 4,550 (2,658)
Cash flows from investing activities
Expenditure on investment property (131) (935)
Expenditure on property, plant and equipment (136) (97)
Proceeds from disposal 6 -
Cash (used)/generated in investing activities (261) (1,032)
Cash flows from financing activities
Net Interest paid (2,415) (1,009)
Bank Loan drawdown 100 7,263
Bank Loan repaid (3,200) (2,275)
Related Party Loans 450 -
Development Loan Repaid (4,240) -
Development Loan Drawdown 1,868 -
Cash payments of lease liabilities (66) (164)
Net proceeds from issue of share capital 2,901 -
Net cash (used)/generated from financing activities (4,602) 3,815
Net increase in cash and cash equivalents (313) 125
Cash and cash equivalents at beginning of the year 1,095 970
Cash and cash equivalents at end of the year 782 1,095
Reconciliation of financing activities for the year ended 31 March 2024
2024 Cash flow 2023 Cash flow 2022
£000 £000 £000 £000 £000
Bank loans 21,700 (3,100) 24,800 1,937 22,863
Other loans 3,875 (1,602) 5,477 3,202 2,275
Lease liabilities 12 (64) 76 (164) 240
Total debt 25,587 (4,766) 30,353 4,975 25,378
Basis of preparation
The results for the year to 31 March 2024 have been extracted from the audited
consolidated financial statements, which are expected to be published by end
September 2024.
The financial information set out above does not constitute the Company's
statutory accounts for the years to 31 March 2024 or 2023 but is derived from
those accounts. Statutory accounts for the year ended 31 March 2023 were
delivered to the Registrar of Companies following the Annual General Meeting
on 13 September 2023 and the statutory accounts for 2024 are expected to be
published on the Group's website (www.suttonharbourgroup.com) shortly, posted
to shareholders at least 21 days ahead of the Annual General Meeting ("AGM")
to be held on 7 November 2024 and, after approval at the AGM, delivered to the
Registrar of Companies.
The auditor, PKF Francis Clark, has reported on the accounts for the year
ended 31 March 2024; their report includes a reference to the valuation of
Plymouth City Airport (former airport site) and to the claim made against the
Group by Plymouth City Council, both matters, which the auditors drew
attention by way of emphases of matter, without qualifying their report.
Notes to the Consolidated Financial Statements
1. General information
Sutton Harbour Group plc 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 quoted on the AIM 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 Executive
Chairman's Report on pages 4 to 8. The financial position of the Group, its
cash flows and financing position are described in the Financial Review on
pages 12 and 13. In addition, note 3 to the financial statements gives details
of the Group's financial risk management.
The Group is reliant on bank finance which is conditional on the debt
reductions and other covenants. The Group's forecasts and projections, taking
account of reasonably foreseeable possible changes in trading performance and
on the basis that asset disposals meet the values and timelines agreed with
the bank, 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 12 months, the Group has the following commitments to
repayments of loans:
· The Group has successfully agreed a new banking facility with
Natwest as of 8 August 2024 which extends to 30 December 2026. This new
agreement provides committed facilities of £21.7m and sets out milestone debt
repayments of £3.2m by 31 October 2024, £6m by 28 February 2025 and £0.76m
by 31 March 2025 to reduce bank debt to just over half of its current level.
The interest cover covenant is suspended until 31 March 2025. Thereafter it is
tested on a quarterly basis.
· The debt reduction plan, through the sale of assets, is underway
and the bank is regularly updated on the progress with selected assets placed
for sale. Selection of assets identified for disposal will be based on
market conditions and, to date, progress is encouraging. The board recognises
the challenges that the Group faces to deliver the debt reduction plan to
satisfy the conditions of the banking facility agreement. The board is
satisfied that all necessary actions are being taken to achieve this
objective, whilst recognising the uncertainty that will remain until asset
sales, the timings of which are not within the Group's control, are
achieved.
· The related party loans advanced by the majority shareholder of
the parent company are repayable in May 2025 under the current agreement. The
Directors are satisfied that these repayments can be funded from the actions
noted above, and the majority shareholder has confirmed that it will agree to
deferment if necessary.
The Board has explored options available to it to mitigate the risk of asset
sales not completing in line with the agreed milestone debt repayments. These
mitigating actions are considered significant judgements and have been
disclosed in note 4. The Board has concluded that, whilst there are
uncertainties, the mitigating actions that could be implemented if required
are judged to be sufficient to make the going concern status of the group
appropriate. The Board has therefore concluded that there are no 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 12 months from the date 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 except for investment property which is measured
at fair value and land and buildings which are measured at revalued amount.
The functional currency of the Group and its subsidiaries is pounds sterling
and therefore balances are shown in the financial statements in thousands of
pounds sterling, unless otherwise stated.
Basis of consolidation
The consolidated financial statements include the financial statements of
Sutton Harbour Group plc and its subsidiaries at each reporting date. Control
exists when the Group has the power, directly or indirectly, to govern the
financial and operating policies of an entity so as to obtain benefits from
its activities. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control commences until
the date that control ceases.
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 (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 capable of being operated 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
(straight line) 10 to 50
years
Leasehold buildings
(straight line) 50 years or
remaining period of lease
Plant, machinery and
equipment (straight
line) 4 to 30 years
Fixtures and fittings
(straight
line) 4 to 10 years
Investment property
Investment properties are properties which are held to earn rental income
and/or for capital appreciation. Investment properties are initially measured
at cost and subsequently revalued to fair value which reflects market
conditions at the balance sheet date. Any gains or losses arising from
changes in fair value are recognised in the income statement in the period in
which they arise. Fair value is the estimated amount for which a property
could be exchanged, on the date of valuation, between a willing buyer and a
willing seller, in an arm's length transaction, after proper marketing, in
which both parties had acted knowledgeably, prudently and without compulsion.
Some properties are held both to earn rental income and for the supply of
goods and services and administration purposes. Where the different portions
of the property cannot be sold separately, the property is accounted for as an
investment property only if an insignificant portion is held for the
production and supply of goods and services and administration purposes.
The portfolio is valued on an annual basis by an external independent valuer,
who is RICS qualified. The valuer will also have recent experience in the
location and category of property being valued.
The valuations, which are supported by market evidence, are prepared by
considering the aggregate of the net annual rents receivable from the
properties and where relevant, associated costs. A yield which reflects the
specific risks inherent in the net cash flows is then applied to the net
annual rentals to arrive at the property valuation.
Rental income from investment property is accounted for as described in the
revenue accounting policy.
Investment property that is redeveloped for continued future use as an
investment property remains classified as an investment property while the
redevelopment is being carried out. While redevelopment is taking place, the
property will continue to be valued on the same basis as an investment
property where the Group intends to retain the 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.
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
has 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.
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.
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 20 and 21 and shareholders' equity comprising
issued share capital, reserves and retained earnings.
The capital structure of the Group is reviewed annually with reference to the
costs applicable to each element of capital, future requirements of the Group,
flexibility of capital drawdown and availability of further capital should it
be required.
The Group has a target gearing ratio of approximately 50% but gearing may
exceed these levels where a project is in 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:
2024 2023
£000 £000
Borrowings and loans (25,575) (30,277)
Lease liabilities (12) (76)
Cash and cash equivalents 782 1,095
Net debt (24,805) (29,258)
Equity 54,091 56,067
Net debt to equity ratio 45.9% 52.2%
Bank borrowing facilities and financial covenants
The Group had total borrowing net of cash and cash equivalents of £24.805m at
31 March 2024 (2023: £29.259m) with a gearing level of 45.9% (2023: 52.2%).
The Group has operated within its authorised facilities and has secured
deferrals of covenants during the year when necessary. The bank facilities
were revised in March 2023, when the Group entered into an agreement which
provides a maximum £21.7m committed facility with a confirmed expiry date of
December 2024.
After the year end, in August 2024 the Company entered into a new agreement
with NatWest to initially provide a maximum committed facility of £21.7m
until December 2026. Conditions of the facility are to reduce the total
facility to £11.8m by 31 March 2025 and the Company has embarked on a
programme to dispose selected assets to enable bank loan repayments.
The new banking facilities include financial covenants, including (i) a
measure of EBITDA to interest covenant and from April 2026 a cashflow to
interest coverage test (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.
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 2024:
Total 0 -1year 1 to 2years 2 to 5years
£000 £000 £000 £000
Bank loans* (21,700) (21,700) - -
Other loans* (3,875) (3,875) - -
Trade and other payables* (2,194) (2,194) - -
Lease liabilities* (12) (12) - -
(27,781) (27,781) - -
As at 31 March 2023:
Total 0 to 1years 1 to 2years 2 to 5years
£000 £000 £000 £000
Bank loans* (24,800) (3,200) (21,600) -
Other loans* (5,477) (5,477) - -
Trade and other payables* (3,301) (3,301) - -
Lease liabilities* (76) (66) (10) -
(33,654) (12,044) (21,610) -
* financial liabilities at amortised cost
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:
2024 2023
£000 £000
Trade receivables:
New customers (less than 12 months) 83 96
Existing customers (more than 12 months) with no defaults in the past 482 373
Existing customers (more than 12 months) with some defaults in the past 80 193
Total trade receivables net of provision for impairment 645 662
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 2024, 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 £217,000 (2023: £228,000). Net
assets would have decreased by the same amount.
Valuation of investment property and property held for use in the business
Land & buildings valuations are complex, require a degree of judgement and
are based on data some of which is publicly available and some that is not. We
have classified the valuations of our property portfolio as level 3 as defined
by IFRS 13 Fair Value Measurement. Level 3 means that the valuation model
cannot rely on inputs that are directly available from an active market. All
other factors remaining constant, an increase in trading income would increase
valuation, whilst an increase in equivalent nominal yield would result in a
fall in value and vice versa.
In establishing fair value the most significant unobservable input is
considered to be the appropriate yield to apply to the trading income using a
discounted cashflow. This is based on a number of factors including the
maturity of the business and trading and economic outlook.
Yields applied across the investment assets are in the range of 4.51% - 16.3%
with the average yield being 8.86%. Assuming all else stayed the same; a
decrease of 1.0% in the average yield would result in an increase in fair
value of £1.906m. An increase of 1.0% in the average yield would result in a
corresponding decrease in fair value of £1.906m.
Trading assets are valued using a discounted cashflow model which uses
budgeted cashflows and appropriate discounts rates to reach a valuation.
Market evidence is then considered in determine if the valuation is
appropriate. Discount rates are judgemental and a change in the discount rate
could results to different valuations being reported. An increase of 1% in the
discount rate would result in a decrease in fair value of £2.445m. A decrease
of 1% in the discount rate would result in an increase of the fair value of
£2.666m.
These assets were independently valued by Jones Lang LaSalle ("JLL") at 31
March 2024. 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 2024 was £17,543,000 and £36,352,000 respectively; (2023:
£17,205,000 and £38,300,000 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 at industry
wide rates, varied by sector, 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, an 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 (some costs are reallocated between businesses for the discounted
cashflow, but this has no impact on the overall valuations). Judgement is
exercised in the preparation of the budgets and also in the discount factor
multipliers 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 12.
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 2024:
£30,822,000 see note 18; (2023: £37,048,000)
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 2024 is
£13.518m (2023: £13.363m). 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 130 year leasehold interest, with a right to renew for a further 150
years, totalling 280
years, is held as development inventory at a carrying value of £13.518m. 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 £13.518m is
derived as follows:
· The land and building asset was independently valued twice yearly
until 31 March 2013, when the asset was transferred to development inventory.
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 2024 (£13.518m) of
£2.120m represents the capitalised costs of developing the planning
intellectual property less the cost attributed to sales of small plots.
£13.518m represents the historic cost of the airport asset as at 31 March
2024.
· 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 £13.518m.
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".
Plymouth City Council 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.
In 2024, PCC advised that the 5 year review of the Local Plan had been made
and that the former airport site would continue to be safeguarded for aviation
uses for a further five years. The Group submitted the pre-application for a
masterplan in March 2024 with proposed phased development that respects the
Local Authority's policy. A committee formed of representatives of both the
Group and Plymouth City Council has been engaged in discussions on the plan.
In February 2024, the Group received a notice from Plymouth City Council
claiming that the Group was in breach of its lease. Greater detail is given
in the Chairmans' Statement. After taking senior legal advice the Group has
responded to strongly refute this claim. A further letter was received in
August 2024 to which the Company provided clarification in a letter sent in
September 2024 on some points raised and reiterated its view that the notice
had been served wrongfully and again refuting the claim. At present there is
no indication of the likelihood, nor the resultant cost in connection with
this claim.
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.
Uncertainties in relation to going concern
As explained in the going concern section, the Group has agreed a planned debt
reduction programme with its bankers with set repayment dates up to March
2025. This debt reduction programme is dependent on the realisation of certain
assets within that period. In determining whether the uncertainties over the
Group's ability to meet the conditions of the bank facility are considered
material uncertainties, the board has exercised significant judgement to
consider the relationship with the bank and alternative mitigating actions to
be operable and effective:
· A constructive relationship with the Group's bankers towards
achieving the debt reduction plan and the bank's indicated flexibility over
debt repayment dates subject to evidence of progress with asset sales and
formal agreement from Credit.
· The possibility to dispose of alternative or additional assets,
with flexibility in response to market conditions, to repay debt and/or raise
additional capital
· The availability of alternative funding to refinance part/all of
the bank facility finance
· The confirmed support from the major shareholder for ongoing
company trading operations by way of additional Related Party Loans if
necessary
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 2024 is as follows:
Year ended 31 March 2024 Marine Real Estate Car Parking Regeneration Total
£000 £000 £000 £000 £000
Revenue 5,692 1,450 930 8,281 16,353
Segmental Gross Profit before Fair value adjustment and unallocated expenses 1,151 975 507 (2,629) 4
Fair value adjustment on investment properties and fixed assets (200) (200)
1,151 775 507 (2,629) (196)
Segmental Profit
Unallocated:
Administrative expenses (1,342)
Exceptional costs (855)
Operating loss (2,393)
Financial income 8
Financial expense (2,000)
Loss before tax from continuing activities (4,385)
Taxation 549
Loss for the year from continuing operations (3,836)
Depreciation charge
Marine 383
Car Parking 13
Administration 1
397
Year ended 31 March 2023 Marine Real Estate Car Parking Regeneration Total
£000 £000 £000 £000 £000
Revenue 6,016 1,374 771 - 8,161
Segmental Gross Profit before Fair value adjustment and unallocated expenses 974 965 449 (142) 2,246
Fair value adjustment on investment properties and fixed assets (1,925) - - (1,925)
974 (960) 449 (142) 321
Segmental Profit
Unallocated:
Administrative expenses (1,193)
Operating loss (872)
Financial income 1
Financial expense (1,150)
Loss before tax from continuing activities (2,021)
Taxation (15)
Loss for the year from continuing operations (2,036)
Depreciation charge
Marine 355
Car Parking 19
Administration 16
390
Assets and liabilities
2024 2023
£000 £000
Segment assets:
Marine 29,050 32,956
Real Estate 17,865 17,656
Car Parking 8,179 6,843
Regeneration 31,259 37,272
Total segment assets 86,353 94,727
Unallocated assets:
Property, plant & equipment 32 41
Trade & other receivables 172 185
Cash and cash equivalents 783 1,096
Total assets 87,340 96,049
2024 2023
£000 £000
Segment liabilities:
Marine 2,520 2,702
Real Estate 374 415
Car Parking 51 100
Regeneration 1,474 2,298
Total segment liabilities 4,419 5,515
Unallocated liabilities:
Bank overdraft & borrowings 25,587 30,354
Trade & other payables 603 562
Deferred tax liabilities 2,639 3,550
Tax payable 1 1
Total liabilities 33,249 39,982
Additions to property, plant and equipment
Marine (125) (86)
Car Parking (1) (1)
Unallocated (10) (10)
Total (136) (97)
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:
2024 2023
£000 £000
Sale of goods 2,442 2,818
Rental income and service recharges 1,662 1,575
Provision of services 3,968 3,768
Sale of property 8,281 -
16,353 8,161
No revenues from any one customer represented more than 10% of the Group's
revenue for the year.
6. Operating result
The following items are included within operating profit/(loss):
2024 2023
£000 £000
Staff costs (note 8) 1,571 1,554
Rental income from investment property (note 27) (1,450) (1,374)
Loss on sale of development 2,629 -
Direct operating expenses of investment properties (including repairs and 499 409
maintenance)
(Loss)/ gain on re-measurement of investment property to fair value (note 15) (356) 1,925
Loss on re-measurement of fixed assets (note 14) 556 -
Depreciation of property, plant and equipment (note 14) 397 390
7. Services provided by the Group's auditors
During the year the Group obtained the following services from the Group's
auditors:
2024 2023
£000 £000
Fees payable to Group's auditors for the audit of
Parent company and consolidated financial statements
35 30
Fees payable to the Group's auditors for other services:
Other advisory services 23 -
The audit of Group's subsidiaries pursuant to legislation 33 33
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
2024 2023
Marine Activities 24 24
Administration 6 6
30 30
The aggregate payroll costs of these persons were as follows:
2024 2023
£000 £000
Wages and salaries 1,255 1,263
Social security costs 132 140
Other pension costs (note 25) 184 151
1,571 1,554
The total remuneration of the key management personnel, all of whom are
directors, of the Group was as follows:
2024 2023
£000 £000
Fees 144 144
Other Emoluments 305 293
Pension Contributions 25 28
474 465
Details of the highest paid Director are detailed in the renumeration report
on page 24.
9. Finance income and finance costs
2024 2023
£000 £000
Interest payable on bank loans and overdrafts 1,885 1,035
Bank facility fees 115 115
Finance costs 2,000 1,150
Finance costs are net of borrowing costs capitalised in the year. See note
18.
10. Exceptional costs
Exceptional costs charged to the income statement relate to temporary back up
fish landing facilities during the Environment Agency's work on the lock cills
and expensing of costs in relation to the preparation for the Arbitration
Hearing with the Environment Agency in relation to the future maintenance of
the lock and costs of expert legal advice in connection with a claim made by
Plymouth City Council that the Group is in breach of its long lease of the
Former Airport Site.
2024 2023
£000 £000
Expert lease legal costs 82 -
Temporary fish landing facility costs 236 -
Arbitration hearing costs 537 -
855 -
11. Taxation
2024 2023
£000 £000
Deferred tax
Adjustments in respect of previous years 2 67
Origination and reversal of temporary differences (551) (43)
Change in tax rate - (9)
Total tax charge in income statement (note 17) (549) 15
The tax assessed for the year uses the standard rate of corporation tax in the
UK of 25% (2023: 19%).
The deferred tax (credit)/charge recognised in other comprehensive income is
£(362,000) (2023: £543,000)
Reconciliation of effective tax rate
2024 2023
£000 £000
(Loss) before tax (4,385) (2,021)
Tax on profit at standard corporation tax rate of 25% (2023: 19%) (1,096) (384)
Expenses not deductible for tax purposes 23 168
Adjustments respect of prior periods 21 67
Unrecognised deferred tax assets in respect of losses 300 -
Change in deferred tax rate - 164
Capital gains and losses 203 -
Total tax charge/(credit) on continuing operations (549) 15
12. Share based payment
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 20,000 share options were granted with an exercise
price of £0.20. 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 2024 was £9,676 (2023: credit £6,203). The cumulative charge to
the Income Statement of the CSOP scheme is £11,186 as at 31 March 2024.
A weight averaged volatility input to the Black Scholes of 64% 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 26 Nov 2029 22p 0 102,273 0 0 102,273 2,066 days
8 July 2020 8 July 2030 19p 102,273 115,790 0 0 218,063 2,290 days
23 Jun 2021 23 Jun 2031 25p 218,063 24,000 0 0 242,063 2,640 days
20 Jun 2022 20 Jun 2032 22p 242,063 30,000 0 0 3,003 days
- 23 Jun 2023 22p - - 0 34,091 237,972 -
6 June 2023 6 June 2033 20p 237,972 20,000 0 0 257,972 3,354 days
The weighted average exercise price at 31 March 2024 was 20.78 pence (31 March
2023: 20.83 pence).
13. Earnings per share
2024 2023
Pence Pence
Continuing operations:
Basic earnings/(loss) per share (2.71p) (1.57p)
Diluted earnings/(loss) per share (2.71p) (1.57p)
Basic earnings per share
Basic earnings per share have been calculated using the Loss for the year of
£3,836,000 (2023: loss of £2,036,000) for the continuing operations using
the average number of 141,731,347 ordinary shares (2023: 129,944,071 ordinary
shares) in issue.
Diluted earnings per share
Diluted earnings per share uses an average number of 141,985,767 shares (2023:
130,183,220) ordinary shares in issue in accordance with IAS 33 'Earnings per
Share' based on a positive earnings per share result.
14. Property, plant and equipment
Land and Assets in the course of Construction Plant, machinery and equipment, fixtures and Total
buildings fittings
£000 £000 £000 £000
Cost or valuation
Balance at 1 April 2022 34,562 78 5,041 39,681
Additions 63 6 28 97
Revaluations to revaluation reserve 2,435 - - 2,435
Disposals - - (11) (11)
Balance at 31 March 2023 37,060 84 5,058 42,202
Balance at 1 April 2023 37,060 84 5,058 42,202
Additions 72 64 136
Revaluation to income statement (556) - - (556)
Revaluations to revaluation reserve (1,404) - - (1,404)
Transfers 84 453 41 578
Disposals - - (7) (7)
Balance at 31 March 2024 35,256 537 5,156 40,949
Accumulated depreciation
Balance at 1 April 2022 796 - 2,487 3,283
Depreciation charge for the year 147 - 243 390
Transfers - - - -
Disposals - - (11) (11)
Balance at 31 March 2023 943 - 2,719 3,662
Balance at 1 April 2023 943 - 2,719 3,662
Depreciation charge for the year 136 - 261 397
Disposals - - - -
Balance at 31 March 2024 1,079 - 2,980 4,059
Net book value
At 31 March 2023 36,117 84 2,339 38,540
At 31 March 2024 34,177 537 2,176 36,890
Included in Land and Buildings is long leasehold land at a value of
£2,200,000 (2023: £2,200,000).
Transfers relate to the ground floor unit at Harbour Arch Quay which is being
retained as an owner occupied property for the purpose of the head office.
The cost transferred was made from development property inventory.
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 2024 (see Strategic Report page 5). 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 12.
At 31 March 2024, 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 £23,492,000 (2023:
£23,628,000).
At 31 March 2024, 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 (2023:
£1,110,000).
Assets in the course of construction, plant, machinery and equipment and
fixtures and fittings are all measured using the cost model, as set out in
note 2.
The Group's obligations under 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 £44,000 (2023: £469,000).
15. Investment property
2024 2023
£000 £000
At fair value:
Balance at beginning of the year 17,205 18,195
Additions during the year 131 935
Fair value adjustments 356 (1,925)
Transfers to fixed assets (150) -
Balance at the end of the year 17,542 17,205
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 2024 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 12.
All of the Group's investment property is held under freehold interests with
the exception of four (2023: four) properties which are held under long
leaseholds.
16. Investments
At 31 March 2024 the Parent company has the following subsidiaries:
Class of Nature of Business
shares held
Ownership
2024 2023
Subsidiaries
Sutton Harbour Company Ordinary 100% 100% Harbour Authority
Sutton Harbour Services Limited Ordinary 100% 100% Marine Leisure & Property
Plymouth City Airport Limited Ordinary 100% 100% Property Developer
Sutton Harbour Property and Regeneration Limited Ordinary 100% 100% Property
Harbour Arch Quay Limited Ordinary 100% 100% Property
Sutton Harbour Projects Limited Ordinary 100% 100% Property
Harbour Arch Quay Management Company Limited Ordinary 100% 100% Property
Sutton Harbour Car Parks Limited Ordinary 100% 100% Car Park Operator
Sugar Quay Holdings Limited Ordinary 100% 100% Investment Company
Sugar Quay Limited Ordinary 100% 100% Property Developer
Sutton East Holdings Limited Ordinary 100% 100% Property Developer
Sutton East Developco No1 Limited Ordinary 100% 100% 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.
17. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets Liabilities Net
2024 2023 2024 2023 2024 2023
£000 £000 £000 £000 £000 £000
Property, plant and equipment - - (1,709) (1,635) (1,709) (1,635)
Investment property - - (2,255) (2,521) (2,255) (2,521)
Change in tax rate - - - - - -
Losses carried forward 1,325 606 - - 1,325 606
Tax assets / (liabilities) 1,325 606 (3,964) (4,156) (2,639) (3,550)
Movement in deferred tax during the year
Change in deferred tax rate
1 April Recognised Recognised 31 March
2023 in income statement in equity 2024
£000 £000 £000 £000 £000
Property, plant and equipment (1,701) - (370) 362 (1,709)
Investment property (2,024) - (231) - (2,255)
Employee benefits (133) - - - (133)
Losses carried forward 308 - 1,150 - 1,458
(3,550) - 549 362 (2,639)
The Directors believe the deferred tax asset relating to losses carried
forward will be utilised by future taxable profits.
18. Inventories
2024 2023
£000 £000
Stores and materials 29 30
Goods for resale 51 34
Former Airport Site 13,518 13,363
Development property 17,215 23,685
30,813 37,112
Included within inventories is £30,733,000 (2023: £37,048,000) expected to
be recovered in more than 12 months. £13,518,000 (2023: £13,363,000) 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 £12,878,000 including £10,716,000 for Harbour
Arch Quay were recognised as an expense in the year (2023: £2,587,000).
Interest capitalised during the year in relation to development property was
£427,000 (2023: £555,000). The capitalisation rate used to determine the
amount of borrowing costs eligible for capitalisation was 8.91% (2023: 5.0%).
In the course of the year, £nil of development property inventory was written
down (2023: £nil).
19. Trade and other receivables
2024 2023
£000 £000
Trade receivables 697 749
Provision for impairment of trade receivables (52) (87)
645 662
Expected loss rate of trade receivables 7% 8%
Other receivables 31 193
Prepayments and accrued income 634 1,237
1,310 2,092
Included within other receivables is £555,000 (2023: £635,000) 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.
20. Cash and cash equivalents
2024 2023
£000 £000
Cash and cash equivalents per Consolidated Balance Sheet 782 1,095
Cash and cash equivalents per cash flow statement 782 1,095
Security over the assets of the Group has been given in relation to the bank
facilities.
Undrawn facilities:
2024 2023
£000 £000
Expiring within one year - -
Expiring within one to two years - 100
Expiring between two and five years - -
- 100
21. 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.
2024 2023
£000 £000
Non-current liabilities
Secured bank loans - 21,600
Current liabilities
Secured bank loans 21,700 3,200
Property financing secured loan - 2,371
Unsecured related party loan 3,875 3,106
25,575 30,277
Secured bank loans:
The current secured bank loans relate to a maximum facility of £21.7m
comprising two loans and a revolving credit facility which incur interest at
various rates over SONIA during the term of the facilities, £21.7m falls due
within 12 months from the Balance Sheet date. Assets with a carrying amount of
£53.718m (2023: £55.355m) have been pledged to secure borrowings of the
Group.
After the year end the Group entered into a new facility with NatWest for an
initial single loan facility of £21.7m expiring on 30 December 2026 with
conditions subsequent to make repayments from asset disposals of £3.2m by 31
October 2024, £6.0m by 28 February 2025 and £0.760m by 31 March 2025.
22. Deferred income and deferred government grants
Deferred income classified as current liabilities comprises advance rental
income and advance marina fees.
Deferred government grants relate to grants received in relation to the
Airport runway and lighting surrounding the runway. The grant liability
relating to the airport runway and lighting will not be released prior to any
future sale of the site.
Deferred income Deferred government grants
2024 2023 2024 2023
£000 £000 £000 £000
At the beginning of the year 2,132 2,225 646 646
Adjustment to opening balances - - -
Released to the income statement (2,132) (2,225) - -
Income and grants received and deferred 2,183 2,132 - -
At the end of the year 2,183 2,132 646 646
Current 2,183 2,132 - -
Non-current - - 646 646
2,183 2,132 646 646
23. Trade and other payables
2024 2023
£000 £000
Trade payables 1,164 1,829
Other payables 252 717
Other taxation and social security costs 158 152
Accruals 620 603
2,194 3,301
The ageing of trade payables is as follows:
2024 2023
£000 £000
Not yet due:
0 - 29 days 671 1,181
Overdue:
30 - 59 days 278 555
60 - 89 days 63 11
90 - 119 days 109 7
120 + days 43 75
1,164 1,829
24. Lease liabilities
Minimum lease payments Capital element of lease payments
2024 2023 2024 2023
£000 £000 £000 £000
Amounts payable under lease liabilities:
Within one year 13 69 - 69
In the second to fifth years inclusive - 13 - 7
13 82 - 76
Less: future finance charges (1) (6) - n/a
Present value of lease obligations 12 76 - 76
Current 12 66
Non-current - 10
12 76
It is the Group's policy to lease certain of its property, plant and equipment
under leases. The average lease term is 0.9 years (2023: 1.2years). For
the year ended 31 March 2024, the average effective borrowing rate was 5.0%
(2023: 5.0%). 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.
25. Employee benefits
Pension plans - Defined contribution plans
The Group operates a number of defined contribution pension plans.
The total expense relating to these plans in the current year was £184,000
(2023: £151,000). There were no amounts outstanding or prepaid at the year
end (2023: £nil).
26. Capital and reserves
Share capital
Ordinary shares Deferred shares Total shares
Thousands of shares 2024 2023 2024 2023 2024 2023
In issue at the beginning of the financial year - fully paid 129,944 129,944 62,944 62,944 192,888 192,888
Issued for cash 12,995 - - - 12,995 -
In issue at the end of the financial year - fully paid 142,939 129,944 62,944 62,944 205,883 192,888
2024 2023 2024 2023 2024 2023
£000 £000 £000 £000 £000 £000
Allotted, called up and fully paid
142,938,478 (2023:129,944,071) Ordinary shares of 1p each (2023: 1p each) 1,430 1,300 - - 1,430 1,300
62,943,752 (2023: 62,943,752) Deferred shares of 24p each (2023: 24p each) - - 15,106 15,106 15,106 15,106
1,430 1,300 15,106 15,106 16,536 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 £4.466m (2023: £6.308m) in respect of
unrealised valuation surpluses on the Investment property assets.
27. Leases
Leases
During the year £nil was recognised in respect of lease rentals in the income
statement (2023: £nil): £nil in cost of sales (2023: £nil) and £nil in
administrative expenses (2023: £nil).
During the year £7,000 (2023: £7,000) was recognised in the income statement
in respect of short term and low value operating leases for photocopiers,
telephony equipment and vending machines.
Leases as lessor
The Group leases certain properties (see notes 14 and 15). The future minimum
lease rentals receivable under non-cancellable leases are as follows:
2024 2023
£000 £000
Investment property:
Less than one year 1,184 1,134
Between one and two years 1,106 1,164
Between two and three years 1,073 994
Between three and four years 1,052 961
Between four and five years 996 938
More than five years 23,524 24,107
28,935 29,298
Owner-occupied properties:
Less than one year 37 15
Between one and two years 23 15
Between two and three years 22 15
Between three and four years 22 8
Between four and five years 22 -
More than five years 15 -
141 53
During the year ended 31 March 2024 £1,450,000 (2023: £1,374,000) was
recognised as rental income in the income statement. Repair and maintenance
expense recognised in cost of sales for the year to 31 March 2024 was
£294,000 (2023: £166,000).
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.
28. Cash flow statements
2024 2023
£000 £000
Cash flows from operating activities
Loss for the year from continuing operations (3,836) (2,036)
Adjustments for:
Taxation on loss from continuing activities (549) 15
Net Financial expense 1,992 1,149
Fair value adjustments on investment property (357) 1,925
Revaluation of property, plant and equipment 556 -
Depreciation 397 390
Cash (used)/generated from continuing operations before changes in working
capital and provisions
(1,797) 1,443
Decrease/(Increase) in inventories 6,218 (5,162)
Decrease/(increase) in trade and other receivables 864 (282)
(Decrease)/Increase in trade and other payables (786) 1,421
(Increase/(decrease) in deferred income 51 (93)
Increase/(decrease) in provisions - 15
Cash (outflow)/inflow from continuing operations 4,550 (2,658)
29. Related Parties
The parent of the Group is Sutton Harbour Group plc. The ultimate
controlling party is FB Investors LLP, which is owned jointly by Beinhaker
Design Services Limited and 1895 Management Group ULC. In the course of the
year, Beinhaker Design Services Limited provided services to the value of
£161,000 (2023: £186,000).
Unsecured related party loans, with a revised expiry date of 31 May 2025,
advanced during the year by Beinhaker Design Services Limited and Rotolok
(Holdings) Limited of £3,876,000 (including interest rolled up of £471,000).
Interest is accrued at 10% pa calculated on a quarterly basis, and rolled into
the loan balance owed.
During the year, Beinhaker Design Services Limited completed the purchase of
two apartments in the Harbour Arch Quay development, both at the full market
asking price of £435,000 and £475,000 respectively.
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 75.38%
(2023 72.91%) of the voting shares of the Group, see note 26.
The compensation of key management personnel (the Executive and Non-Executive
Directors) is set out on the Remuneration Report on page 24.
30. Commitments
There are no capital commitments at 31 March 2024. Final costs in respect of
the Harbour Arch Quay development are already accounted for as creditors or
accruals on the Balance Sheet.
Lock Arbitration - an arbitration hearing with the Environment Agency
concerning responsibility for the maintenance of Sutton Lock is scheduled for
November 2024. Costs from 1 April 2024 through to the arbitration hearing
date are estimated at approximately £253,000. At present there is no
indication of the outcome of this hearing, nor of the resultant cost.
Further details are given in the Executive Chairman's Statement in respect
of this matter.
31. Contingent Liabilities
Plymouth City Airport - Plymouth City Council has made a claim against the
Group alleging breach of lease. At present there is no indication of the
likelihood, nor the resultant value of the claim, if any.
Further details are given in the Executive Chairman's Statement in respect of
this matter.
32. Post Balance Sheet Events
Bank Facility - After the year end the Company entered into a new facility
with Nat West Bank expiring December 2026. The initial facility totals
£21.7m with conditions subsequent to reduce debt as asset disposals are
achieved.
Related Party Loan - after the year end the Company agreed with Beinhaker
Services Limited to increase the Related Party Loan by £1.970m on the same
terms as previous Related Party Loan drawdowns. Additionally, it was agreed
between the loan holders that Beinhaker Design Services Limited 'buy-out' the
related party loan principal of £1.150m from Rotolok (Holdings) Limited after
the year end.
After the year end the Group placed a number of investment properties for
sale by agency marketing and auction. Proceeds from sales will be
applied to reducing the bank loan and for working capital purposes. At
the time of finalising the accounts no sales were completed.
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