Final Results for the year ended 31 March 2011

RNS Number : 4485I

Sutton Harbour Holdings PLC

15 June 2011

 



For Immediate Release                                                                                                                                                                    15 June 2011 

Sutton Harbour Holdings plc

Final Results for the year ended 31 March 2011

A return to core activities

Sutton Harbour Holdings plc ("Sutton Harbour"), the AIM listed regeneration and infrastructure specialist, announces final results for the year ended 31 March 2011.

In his statement to shareholders, Chairman Michael Knight said:

"The airline and Plymouth City Airport have recently been a major cash drain for the Group and significant losses have been incurred. Our recent actions will mean that the Group's exposure to cash volatility and the associated business risks will be significantly reduced going forward. We have a clear strategy which means we will be concentrating our resources, time and efforts on marine and regeneration activities where we have proven successes over the years. We have a high quality asset base which is being developed further; some exciting opportunities to extend these activities; and, a good project pipeline for the future."

Financials:

·      Revenues for the period of £12.27m (2010: £17.65m)

·      Operating profit (continuing operations), before fair value adjustments on investment property, of £2.3m (2010: profit of £6.8m)

·      Profit before tax (continuing operations) of £1.71m after fair value adjustment on investment property (fair value surplus of £0.1m) (2010: profit of £6.01m after fair value deficit of £0.5m)

·      Loss for the period from discontinued operations of £8.41m (2010: £2.39m loss) giving loss for the year of £6.45m (2010: £2.10m profit)    

·      Board is not recommending a Final Dividend (2010: 1.9p total dividend per share) due to need to conserve headroom on bank facilities

·      Earnings per share from continuing operations (basic) of 3.11p (2010: 7.79p earnings)

·      Gearing of 58.2% at 31 March 2011 (2010: 35.0%)

·      Net assets at 31 March 2011 of £36.1m (2010: £43.1m) including surplus on revaluation of owner-occupied property of £0.66m (2010: surplus of £0.22m)]

·      Net assets per share at 31 March 2011 of 57.3p (2010: 68.5p) 

·      £25m three year banking facility successfully concluded during the year with RBS

Operations:

·      Sale of Air South West completed  on 30 November 2010

·      Intention to cease operations at Plymouth City Airport as announced in April 2011

·      Good performance from marine activities; Preferred bidder for two marina projects including the 400 berth marina in Cowes and a new 190 berth marina in the Milbay area of Plymouth.

·      Resilient performance from property portfolio; increased rental income and fair value surplus on investment property.

·      Heads of terms signed with Sir Robert McAlpine for procurement of BBC building including 28 residential apartments.

·      Exciting pipeline of development projects in Portland, Exeter and at Sutton Harbour each involving regeneration of urban waterfront.

·      Sale of fourth tranche of surplus airport land expected during current financial year.

Enquiries:

Nigel Godefroy, Group Chief Executive

Sutton Harbour Holdings plc                                               Tel: [phone]

Bobbie Hilliam, Evolution Securities                                  Tel: [phone]

Richard Day, Arden Partners                                               Tel: [phone]

Paul Vann/ Tom Cooper, Winningtons Financial             Tel: [phone] or 07768 807631

SUTTON HARBOUR HOLDINGS PLC ("the Group")

Preliminary results for the year ended 31 March 2011

Chairman's Statement

For the year ended 31 March 2011

During the year the Group has made considerable progress in significantly reducing the exposure to its underperforming businesses and equally in developing the core businesses which will provide a platform for future growth. Following the disposal of the airline, Air Southwest, at a time when regional aviation is facing significant uncertainty, and the recently announced intention to close the loss-making Plymouth City Airport by the end of the calendar year the Group is now able to focus on marine activities and waterfront regeneration in order to target recurring income streams and development profits on asset sales.

Having been confirmed as the preferred bidder for a 400 berth marina in Cowes during the year, the Group is now pleased to announce that it has also been named as preferred bidder for the development and operation of a 190 berth marina in the Millbay area of Plymouth.

The Group also announces that it has signed heads of terms with Sir Robert McAlpine Enterprises Limited for the development of the site at Sutton Harbour for the regional BBC studios, together with retail, office and residential accommodation.

As part of the Group's strategy to focus its core regional activities and traditional areas of expertise the Group is pleased to announce that it has reached agreement to dispose of the health sector related investment in the Cumbria Local Improvement Finance Trust, subject to final approvals.

The core businesses of the Group are performing well. The fishmarket is trading at records levels, and we have secured substantial increases in rentals in our estate, the marinas have good occupancy levels and we are also in the process of selling a number of our trading development assets. Such sales are intended to reduce the Group's gearing which increased as a result of the disposal of the airline. We believe that we have an excellent development pipeline for medium term growth.

Strategy

The Group has at its core a policy of building long-term revenues from its marinas and fishing operations and its high quality waterfront estates. The formation of Air Southwest in 2003 proved beneficial for the Group and, until 2007 its profit contributions were greater than those from our more traditional activities. The more recent combination of adverse competition, economic and environmental factors proved too great for our capital resources and therefore the Board decided the best course of action was to dispose of the business which crystallised a significant loss. These losses and unrealised investments in trading property stock have resulted in reduced headroom in our banking facilities which is being addressed through the intended sale of certain development properties as we rebuild our balance sheet.  Key objectives for the Board going forward are to build sustainable revenues which reduce our dependency on development profits and on providing returns to shareholders.

Results and Dividend

The Group achieved a profit before taxation of £1.711m on continuing activities (2010: £6.021m).  These results are stated after the fair value surplus adjustment of investment property of £103,000 (2010: £539,000 deficit) and the loss on Plymouth City Airport operations of £0.904m.  A loss of £8.407m was sustained in the year from discontinued activities including the loss on the disposal of the entire share capital of Air Southwest.  The Group's loss after taxation, including discontinued activities, for the year was £6.452m (2010: £2.101m profit)

Net assets at 31 March 2011 were £36.1m (31 March 2010: £43.1m) and includes the surplus on revaluation of owner-occupied property of £66,000 (2010: surplus £220,000), giving a consolidated net asset value per share of 57.3p (2010: 68.5p).Gearing expressed as a percentage of net assets at 31 March 2011 was 58.2% (31 March 2010: 35.0%). During the year, the Group renewed its banking facilities for a three year period to December 2013.

The Board does not recommend a dividend for the year (2010: total dividend 1.9p) due to the need to conserve financial headroom on bank facilities whilst the Group is taking major actions to reshape its activity base and to take account that trading property stock realisations have been delayed due to slow property market conditions.  The early resumption of dividend payments is a priority.

Airport

There has been much speculation about the future use of the Plymouth City Airport site.  Following the announcement that the Group intends to cease the operation of Plymouth City airport during the year, Plymouth City Council is currently undertaking a viability study into the airport which it expects to complete in July 2011 which will inform the final decision about the airport's future. The Group has a 143 year unexpired leasehold interest in the land at Plymouth City Airport and in accordance with the terms of the lease we will be  working  with the freeholder, Plymouth City Council, to achieve best value for the site.

Corporate Governance and Staff

Malcolm Pearce, who is a substantial shareholder, has served as a non-executive Director for nine years, will retire following the forthcoming Annual General Meeting. On behalf of all his colleagues, I thank him for his wise counsel during this period. Anthony Everett will succeed Malcolm in the role of senior independent Director. I am aware of the commitment and energy shown by the executive directors through what has been a challenging period and I am grateful for their skill and efforts.

The Group currently has 99 employees (2010: 245 employees). Staff numbers reduced sharply following the disposal of Air Southwest and will fall further if closure of the airport is confirmed. This past year has presented uncertainty for many of our employees but despite these concerns they have continued to offer a professional service. The directors are grateful for the hard work and positive attitude of the Group's workforce during this transitional phase.

Outlook

The airline and Plymouth City Airport have recently been a major cash drain for the Group and significant losses have been incurred. Our recent actions will mean that the Group's exposure to cash volatility and the associated business risks will be significantly reduced going forward. We have a clear strategy which means we will be concentrating our resources, time and efforts on marine and regeneration activities where we have proven successes over the years. We have a high quality asset base which is being developed further; some exciting opportunities to extend these activities; and, a good project pipeline for the future.

Michael Knight

Chairman 

15 June 2011

Chief Executive's Report

For the year ended 31 March 2011

Sutton Harbour has a unique portfolio of high quality assets which drive recurring revenues in the form of rents, fees and trading income. The Group has comprehensive regional knowledge and is focused on creating regeneration solutions for waterfront locations in partnership with other public and private sector organisations.

Asset Management

Whilst property development continues to be challenging, we have continued to invest in and drive value from our investment portfolio. We have secured lettings in vacant premises in the Sutton Harbour estate and, working in partnership with Regus, have established a high quality serviced office facility at Salt Quay House overlooking Sutton Harbour. The continued investment and close management of the portfolio have assisted in achieving increases, if only modest, in the valuation of the property assets.

Property Portfolio	As at 31 March 2011	As at 31 March 2010
Total property portfolio valuation	£49,435,000	£48,230,000
Owner occupied portfolio valuation	£28,650,000	£27,679,000
Investment portfolio valuation	£20,785,000	£20,551,000
Number of investment properties*	69	68
Contracted rent (per annum)*	£1,379,000	£1,177,000
Net Initial Yield*	8.15%	8.20%
Reversionary Yield*	8.94%	9.10%
Vacancy rate*	14.28%	18.0%
Estimated rental value (ERV) of vacant units*	£262,000	£300,000
Average unexpired lease*	9.2 years	9.6 years
Gross car parks revenue	£284,000	£312,000

* Excluding properties at Plymouth City Airport.

Since the year end, further lettings have been agreed. The lease for Jamaica House has become unconditional and the lease for 62 Exeter Street is in the process of being executed. With those lettings complete, the vacancy rate will reduce to 6.63% of total floor area of the portfolio and the ERV of vacant units will reduce by £117,000.

Regeneration

During the last decade the Group has delivered a succession of six major regeneration schemes around Sutton Harbour, some through the Sutton Partnership with Plymouth City Council, the first phase of a mixed use scheme at Exeter Quays and the first phase of another mixed regeneration programme at Portland. These schemes all demonstrate the Group's ability to deliver schemes with the complexities of: partnership working with public sector bodies; design that is sensitive to historic waterfront locations; land assembly; planning consents; and, working with ultimate tenants or investors of the developments. Slow property market conditions have resulted in delays in achieving realisations of projects and over the forthcoming year the Group will continue to balance the need for positive cash flow against achieving the best possible values. In these challenging markets, the Group expects new developments to be pre-sold or substantially pre-let before entering into the construction phase.

Our current projects include the sale of surplus airport land, further phases at both Exeter and Portland and development of sites around Sutton Harbour, including the proposed premises to pre-let to the BBC, further details of which are set out below.

·      Portland comprises a site close to where the Olympic sailing events will be held and has consent for a mix of uses including employment space, a foodstore, residential and retail/hospitality uses. Phases will be sold or developed as conditions permit, including any negotiations required with the successor body to the Regional Development Agency.

·      The Exeter project is made up of a completed ground floor commercial unit overlooking Exeter Quays which is held for resale and further sites designated for commercial, retail and parking space.

·      During the year we sold the third tranche of airport land, with the fourth tranche due to be sold in the current financial year. A further two airport sites, with consents, are available for sale.

·      We have continued to work with the BBC on the East Quays development for their new premises and heads of terms with Sir Robert McAlpine Enterprises Limited have now been signed. There are several other 'Sutton Harbour' sites for development and we are aware of a number of office requirements. These new developments will be brought forward where the Group can achieve a good return and where a pre-let or pre-sale is secure.

As at 31 March 2011, the Group is carrying trading property stock of £13.630m. This comprises:

	£
Sites around Sutton Harbour	£6.515m
Portland	£1.816m
Exeter Quays	£0.639m
Airport Development Property - Surplus land for sale in tranches	£0.888m
Airport Development Property - Current operational site	£3.569m
Other miscellaneous projects	£0.203m
	£13.630m

Marine Activities

The marinas at Sutton Harbour have maintained occupancy rates and have steadily increased visitor berthing. Our marinas offer high quality boutique style facilities at the centre of the South West cruising coastline and we are working to reach a wider audience. We will be hosting the Fastnet race finish at Sutton Harbour for the second time between 14 and 21 August 2011 which showcases the facilities and setting to yachting enthusiasts and the general public.

Sutton Harbour Fisheries has achieved a record 4,700 tonnes of fish landed to the market during the financial year (2010: 3,600 tonnes). However, improved revenues from fish landings have been partially offset by reduced profits on fuel sales to remain competitive in the market.

The Group's Sutton Harbour Marina has benefited from high occupancy levels for many years and over the past five years the number of leisure berths have increased from 250 to 489, which has meant that the capacity for annual revenue has increased from £630,000 in 2006 to £1.3m as the facilities are currently configured. The Sutton Harbour marinas, protected by the Sutton Lock, provide more comfortable berthing conditions during unsettled weather and the high quality amenities are a luxury to the visiting yachtsperson. We have built this business on courteous service, comfort and quality of facilities and to give the berthholder the feeling of belonging. We currently have some vacancies and to return to full occupancy we are working to target our market more effectively. Our objective is to continue to re-invest into our existing facilities and soon to develop our brand into new locations.

We have been working on a project for a new marina at East Cowes with the South East of England Development Agency and we were announced as preferred bidder in October 2010. Discussions have continued positively and we await news of who the successor body will be.  We now have a second exciting opportunity to construct a new marina in Plymouth at Millbay where the Group has been appointed preferred bidder. These schemes are major opportunities for the Group and provide the potential for future growth in annuity income.

Airport

As previously announced, the Board decided that the losses of Plymouth City Airport could not continue to be borne by the Group and with passengers projected to average at less than 100 per day, notice was  served of the intention to cease operations by the end of the calendar year. It is still too early to comment on the eventual outcome of the viability assessment being undertaken by Plymouth City Council, the freeholder, but if the airport is to close we will be working with Plymouth City Council to achieve best value for the land through alternative use.

To service part of the surplus land and importantly to provide core infrastructure into the airport site, construction of a link road from the main trunk road together with highways improvements and installation of utilities will be started during this financial year at a cost of £2.3m.

Future Prospects

The Group has an ambitious and exciting programme as it enters a new era with a clear focus on its marine and regeneration activities. Bank financing may be sought for specific projects which meet specific investment criteria and although we will be seeking to release cash from trading property stock disposals, we recognise that overall we will need to be prudent with our capital resources.

This has been a challenging period for staff and a disappointing year for shareholders as we have taken action to re-shape the Group to provide a stable platform from which to develop our activities. We are enthusiastic about progressing the new projects that we are currently working on.

Nigel Godefroy

Chief Executive

15 June 2011

Consolidated Income Statement

For the year ended 31 March 2011

	2011	2010
	£000	£000
Revenue	12,274	17,655
Cost of sales	(8,606)	(9,456)
Gross profit	3,668	8,199
Other income	37	40
Administrative expenses	(1,404)	(1,422)
Operating profit before fair value adjustments on investment property	2,301	6,817
Fair value adjustments on investment property	103	(539)
Operating profit	2,404	6,278
Finance income	1	4
Finance costs	(644)	(270)
Net finance costs	(643)	(266)
Share of loss of associate using equity accounting method	(50)	-
Profit before tax from continuing operations	1,711	6,012
Taxation credit/(charge) on profit from continuing operations	244	(1,520)
Profit for the year from continuing operations	1,955	4,492
Discontinued Operations
Loss for the year from discontinued operations	(8,407)	(2,391)
(Loss)/profit for the year attributable to equity shareholders	(6,452)	2,101
Basic earnings/(loss) per share
from continuing operations	3.11p	7.79p
from discontinued operations	(13.36)p	(4.15)p
Total basic (loss)/earnings per share	(10.25)p	3.64p
Diluted earnings/(loss) per share
from continuing operations	3.11p	7.79p
from discontinued operations	(13.36)p	(4.15)p
Total diluted (loss)/earnings per share	(10.25)p	3.64p

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2011

	2011	2010
	£000	£000
(Loss)/profit for the year	(6,452)	2,101
Other comprehensive income/(expense):
Revaluation of property, plant and equipment	66	220
Deferred taxation on income and expenses recognised directly in the consolidated statement of comprehensive income	17	(62)
Effective portion of changes in fair value of cash flow hedges	1	(224)
Other comprehensive income/(expense) for the year, net of tax	84	(66)
Total comprehensive (expense)/income for the year attributable to equity shareholders	(6,368)	2,035

Consolidated Balance Sheet

As at 31 March 2011

	2011	2010
	£000	£000
Non-current assets
Property, plant and equipment	29,470	37,971
Intangible assets	-	472
Investment property	20,828	20,551
Investment in associate	43	93
Other financial assets	-	130
	50,341	59,217
Current assets
Inventories	13,996	11,315
Trade and other receivables	2,144	2,580
Cash and cash equivalents	1	7
Derivative financial instruments	-	100
Tax recoverable	233	-
	16,374	14,002
Total assets	66,715	73,219
Current liabilities
Bank borrowings	1,001	14,549
Other interest-bearing loans and borrowings	1,015	431
Trade and other payables	1,424	5,009
Deferred income	1,481	3,733
Deferred government grants	36	39
Derivative financial instruments	-	168
Provisions for other liabilities and charges	2,636	46
Tax Payable	-	427
	7,593	24,402
Non-current liabilities
Other interest-bearing loans and borrowings	19,000	116
Deferred government grants	651	685
Deferred tax liabilities	3,323	4,704
Derivative financial instruments	67	-
Provisions for other liabilities and charges	-	179
	23,041	5,684
Total liabilities	30,634	30,086
Net assets	36,081	43,133
Equity and reserves
Share capital	15,736	15,736
Share premium	12	12
Other reserves	13,566	13,482
Retained earnings	6,767	13,903
Total equity	36,081	43,133

Consolidated Statement of Changes in Equity

For the year ended 31 March 2011

	Share capital	Share premium	Revaluation reserve	Merger reserve	Hedging reserve	Retained earnings	Total equity
			------------Other reserves------------
	£000	£000	£000	£000	£000	£000	£000
Balance at 1 April 2009	12,640	10	9,521	251	156	12,836	35,414
Comprehensive income
Profit for the year	-	-	-	-	-	2,101	2,101
Other comprehensive income
Revaluation of property, plant and equipment	-	-	220	-	-	-	220
Deferred taxation on revaluation of property, plant and equipment	-	-	(62)	-	-	-	(62)
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	165	-	165
Recycled to cost of sales	-	-	-	-	(389)	-	(389)
Total other comprehensive income/(expense)	-	-	158	-	(224)	-	(66)
Total comprehensive income/(expense)	-	-	158	-	(224)	2,101	2,035
Transactions with owners
Proceeds from issue of shares net of costs	3,096	2	-	3,620	-	-	6,718
Share-based payments - value of employee services	-	-	-	-	-	38	38
Dividends	-	-	-	-	-	(1,072)	(1,072)
Transactions with owners	3,096	2	-	3,620	-	(1,034)	5,684
Total balance at 31 March 2010	15,736	12	9,679	3,871	(68)	13,903	43,133
Balance at 1 April 2010	15,736	12	9,679	3,871	(68)	13,903	43,133
Comprehensive income
Loss for the year	-	-	-	-	-	(6,452)	(6,452)
Other comprehensive income
Revaluation of property, plant and equipment	-	-	66	-	-	-	66
Deferred taxation on revaluation of property, plant and equipment	-	-	17	-	-	-	17
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	(67)	-	(67)
Recycled to cost of sales					68		68
Total other comprehensive income/(expense)	-	-	83	-	1	-	84
Total comprehensive income/(expense)	-	-	83	-	1	(6,452)	(6,368)
Transaction with owners
Share-based payments - value of employee services	-	-	-	-	-	(55)	(55)
Dividends	-	-	-	-	-	(629)	(629)
Transaction with owners	-	-	-	-	-	(684)	(684)
Total balance at 31 March 2011	15,736	12	9,762	3,871	(67)	6,767	36,081

Consolidated Cash Flow Statement

For the year ended 31 March 2011

	2011	2010
	£000	£000
Cash generated from continuing operating activities	1,284	4,324
Net cash used in discontinued operating activities	(3,139)	-
Cash (used in)/generated from total operating activities	(1,855)	4,324
Tax (paid)/received	(81)	(280)
Net cash (used in)/generated from total operating activities	(1,936)	4,044
Net cash used in investing activities
Proceeds from sale of property, plant and equipment	1	-
Disposal of discontinued operations net of cash	(1,928)	-
Expenditure on investment in associate	-	(93)
Expenditure on investment property	(174)	(257)
Expenditure on property, plant and equipment	(548)	(3,124)
Interest received	1	11
Net cash generated used in  investing activities	(2,648)	(3,463)
Net cash generated from financing activities
Proceeds from the issue of share capital - Placing	-	7,054
- Other costs	-	(336)
Proceeds from new loan	20,000	117
Interest paid	(801)	(705)
Repayment of borrowings	(206)	(1,045)
Dividends paid	(629)	(1,072)
Cash flow from financing activities in discontinued operations	(238)	-
Net cash generated from financing activities	18,126	4,013
Net increase in cash and cash equivalents	13,542	4,594
Cash and cash equivalents at beginning of the year	(14,542)	(19,136)
Cash and cash equivalents at end of the year	(1,000)	(14,542)

Notes

Segment Results

The Group's primary format  for segment reporting is based on business segments. All of the Group's operations are carried out in the United Kingdom. The Group therefore only has one geographical segment.

Business segments:

	Marine Activities		Regeneration Activities		Transport**		Unallocated		Consolidated
	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Total external segment revenue*	4,789	4,235	4,846	11,901	2,639	1,519	-	-	12,274	17,655
Operating profit/(loss) before fair value adjustments on investment property	1,374	1,430	3,035	7,279	(904)	(470)	(1,204)	(1,422)	2,301	6,817
Fair value adjustments on investment property	-	-	103	(539)	-	-		-	103	(539)
Operating profit/(loss) after fair value adjustments on investment property	1,374	1,430	3,138	6,740	(904)	(470)	(1,204)	(1,422)	2,404	6,278
Financial income									1	4
Financial expense									(644)	(270)
Share of loss of associate									(50)	-
Profit before tax for the year									1,711	6,012
Assets and liabilities
Segment assets	22,888	22,221	33,374	32,872	8,716	17,232	1,461	801	66,439	73,126
Investment in equity accounted associate									43	93
Tax assets									233
Total assets									66,715	73,219
Segment liabilities	1,586	1,502	480	1,073	3,591	6,883	21,654	15,497	27,311	24,955
Tax liabilities									3,323	5,131
Total liabilities									30,634	30,086
	Marine          Activities		Regeneration		Transport		Unallocated		Consolidated
	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Other segment information
Capital expenditure:
Property, plant and equipment	358	325	1	2	164	2,732	214	65	737	3,124
Investment property	-	-	174	257	-	-	-	-	174	257
Depreciation	22	28	4	4	126	1,124	37	75	189	1,231
Amortisation	-	-	-	-	-	35	-	-	-	35
Provisions -charge to the income statement	-	-	284	46	-	179	-	-	284	225

* There is no inter-segment revenue.

** The segmental disclosure has not been changed in nature from prior year as a result of discontinued operations.

Unallocated assets include various property, plant and equipment (£427,000), prepayments (£392,000), trade receivables (£333,000) and other receivables (£309,000) that cannot be split between the various business segments because the revenue that the assets generate cannot be matched specifically to one individual segment.

Unallocated liabilities include the bank borrowings and loans (£21,001,000), various accruals (£144,000), trade payables (£83,000), other payables (£359,000) and derivative financial instruments (£67,000) that cannot be split between the various business segments because the revenue that the liabilities are used to generate cannot be matched specifically to one individual segment.

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:

	2011	2010
	£000	£000
Sale of goods	4,106	2,818
Sale of land and property	3,324	10,410
Rental income	1,793	1,633
Provision of services	3,051	2,794
	12,274	17,655

Revenues of approximately £3,324,000 (2010: £10,286,000) are derived from one external customer (2010: two), representing more than 10% of the Group's revenue for the year. The revenues are attributable to sales of land and property within the Regeneration segment.

Going Concern

In December 2010 the Group renewed its banking facilities with a £25m facility comprising a £15m three year term loan, a £5m two year term loan and a £5m revolving credit facility. As a consequence of the cash outflow to trade Air Southwest to disposal and to fund the negative consideration on disposal, together with the funding of interest and dividend, debt and therefore gearing has increased (from 35.0% to 59.6%).

The banking facilities include financial covenants, including (i) an adjusted measure of EBITDA to interest covenant which increases from 2.0 to 2.25 in March 2012 and 2.50 in September 2012 (and increasing ultimately to 3.0 in September 2013) (ii) a debt to net tangible assets covenant and (iii) a debt to fair value of property valuation. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of the facilities and covenants over a period of at least twelve months. The projections include the proceeds from the disposal of certain properties during that period which the Directors consider to be achievable.

After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its financial statements.

Directors' Statement

The preliminary results for the year ended 31 March 2011 and the results for the year ended 31 March 2010 are prepared under International Financial Reporting Standards as adopted by the European Union (IFRS). The accounting policies adopted in this preliminary announcement are consistent with the Annual Report for the year ended 31 March 2010.

The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 March 2011 or 31 March 2010. The financial information for the year ended 31 March 2010 is derived from the Annual Report delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985.

The Board of Sutton Harbour Holdings plc approved the release of this audited preliminary announcement on 14 June 2011.

The preliminary financial information has been extracted from the Annual Report and audited Financial Statements for the year ended 31 March 2011, which will be posted to shareholders in due course and will be delivered to the Registrar of Companies following the Annual General Meeting of the Company.  These audited Financial Statements include the auditors' report which is unqualified. The auditors' report does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The report will also be available on the investor relations page of our website (www.sutton-harbour.co.uk).  Further copies will be available on request and free of charge from the Company Secretary at North Quay House, Sutton Harbour, Plymouth, PL4 0RA.

 

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