Interim Results

RNS Number : 5581T

Sutton Harbour Holdings PLC

08 December 2011

 



For immediate release                                                                                        8 December 2011

Sutton Harbour Holdings plc

Interim results for the half year period to 30 September 2011

Sutton Harbour Holdings plc ("Sutton Harbour", "the Company"), the AIM listed regeneration and infrastructure specialist, announces interim results for the six month period to 30 September 2011.

HIGHLIGHTS

Financial

·      Revenues increased to £6.89m (2010: £4.07m)

·      Operating profit from core activities was £2.47m (2010: £0.90m)*

·      Reported loss before tax of £1.33m (2010: £0.81m) including provision for expected losses in connection with closure of the airport

·      Trading losses of the airport were £674,000 (2010: £342,000)

·      Net assets at end of period of £34.9m (2010: £33.2m)

·         Net assets per share at 30 September 2011 of 55.4p (2010: 52.8p)

*Before administration costs, losses associated with transport operations, revaluation adjustments and one off staff costs

Operations

·      Continued focus on growing core businesses whilst managing the exit from loss making or more marginal activities

·      Continuing businesses have performed solidly

o  Further lettings reduced voids within asset management activity

o  Good occupancy levels within marinas; Sutton Harbour Fisheries surpasses fish landing records

·      Plymouth City Airport to cease operations by end of 2011

·      Fourth tranche of airport land disposed - £1m on completion and £1.3m early in the New Year

·      Sale of commercial space in Exeter for £400,000

·      Plans to re-configure Sutton Harbour Marinas to accommodate larger vessels

·      Planning application submitted for new 179 berth marina in Millbay area of Plymouth

Michael Knight, Chairman, commented: "We have continued with our strategy to reshape the Company and we are now clearly positioned as a marine and waterfront regeneration specialist.  We have a high quality asset base and a demonstrated track record of developing properties in our region and we are committed to delivering further value for shareholders."

For further information, please contact: 

Sutton Harbour Holdings plc                                                                           01752 204186

Jason Schofield - Acting Chief Executive

Natasha Gadsdon - Finance Director

Arden Partners plc                                                                                            0207 614 5917   

Richard Day

Jamie Cameron

Threadneedle Communications                                                                     020 7653 9850

Graham Herring

Terry Garrett

Chairman's Statement

During the first six months of the year, the Group has continued to implement its strategy to grow the core businesses of the Group, whilst managing the exit from loss making or more marginal activities.  The continuing businesses have performed solidly throughout the period: asset management activity has been successfully focused to reduce voids; the marinas have maintained good occupancy levels and have benefited from the hosting of the Fastnet Race Finish in August 2011; and Sutton Harbour Fisheries has, again, surpassed its fish landing records.  The property markets, however, continue to be weak with provincial areas continuing to experience low activity levels.

Against this backdrop of difficult economic conditions, and as previously announced, the Group has achieved completion for disposal of the fourth tranche of airport land, with £1m received upon completion and a further £1.3m receivable early in the New Year. Construction of the associated new link road has continued to make good progress and is expected to be completed by the Summer.  In addition, we also reported that completion has occurred on the sale of commercial space in Exeter for £400,000.  We anticipate achieving further realisations of non-core trading assets in the second half of the year.

Having served notice of its intention to cease operations at Plymouth City Airport by the end of 2011, the Group is well advanced in its closure programme. Scheduled commercial services have not operated since the end of July 2011 when the owners of Air Southwest withdrew from the airport.

Results and Dividend

The Group achieved an operating profit from core activities of £2.471m (2010: profit £0.902m) before accounting for administration costs, losses associated with transport operations, revaluation adjustments and one off staff costs, demonstrating the strength of the underlying core businesses. The Group sustained a loss before taxation of £1,328,000 (2010: £813,000) for the period, including provision for the expected losses in connection with closure of the airport. The trading losses of the airport for the period of £674,000 (2010: £342,000) are recorded as continuing activities and will be re-classified in the year end results as discontinued activities, once the airport is closed. In addition, the Board has re-assessed the likely recoverability of amounts included in trading stocks in the light of prevailing property market conditions and prospects for economic recovery in the short term. Taking a prudent view, a provision of £970,000, before tax relief of £252,000, has been charged. The loss is also stated after accounting for the fair value deficit on investment property of £380,000 (2010: £45,000).

Net assets at 30 September 2011 were £34.9m (30 September 2010: £33.2m) compared to £36.1m as at 31 March 2011 and include the surplus on revaluation of owner-occupied property of £98,000 and also the deficit on mark to market re-measurement of hedging instruments of £312,000 resulting during the six month period. Gearing, expressed as total debt over net assets is 63.0 per cent as at 30 September 2011 (31 March 2011: 58.2 per cent).

The Board is not recommending payment of an interim dividend (2010: nil), so as to conserve cash resources whilst the business is being reshaped.

Operational Progress

The Group has made steady and encouraging progress in implementing its strategy to improve and extend the core income earning base of the Group and move forward the development of its assets, whilst working to dispose of trading property stock.

Further lettings of void space have been achieved, reducing the void rate to 10.9% (31 March 2011: 14.3%), thereby helping to contain costs of maintaining empty properties. The marinas and car parks have traded on par with last year. As we look forward to the 2012/13 marina season we have re-launched the website and have increased marketing activity, to include attendance at the forthcoming London Boat Show, in order to increase our potential customer base of berth-holders and visitors.

We have a number of exciting opportunities in our pipeline to develop our future income and value growth. We aim to re-configure part of the Sutton Harbour Marinas to accommodate larger vessels and we have now submitted a planning application for the new 179 berth marina in the Millbay area of Plymouth. This new facility will enable the Group to build on its existing marina operations business and to attract more sailing enthusiasts to some of the best cruising waters that the UK has to offer.

The Group has secured the letting of the 705m² (7,585 sq ft) premises on Exeter Street to a gym operator and 577m² (6,212 sq ft) Jamaica House premises to a restaurateur. The Group continues to actively manage the lease renewal process as each falls due.

Directors and Staff

Following recent departures from the Group of Non-Executive Directors, Malcolm Pearce and John Heawood, and also of Group Chief Executive, Nigel Godefroy, who stepped down from the Board for personal reasons on 30 September, the Board is currently undertaking the selection process for his successor.  Anthony Everett succeeds John Heawood as Remuneration Committee Chairman.  

All our staff have shown tremendous loyalty to the Group and, in many cases, shouldered additional responsibilities. In addition, the closure of the airport will result in the loss of a further 39 direct jobs, leaving a Group-wide headcount of 42 staff in the property, marine, estate and central functions. This results in a significant reduction in headcount and Group costs, but we are very mindful that the last year has been a difficult period for airport staff, who faced uncertainty over a long period towards ultimate redundancy. On behalf of the Board, I want to thank the airport team for the many years of professional service that they have given.

Outlook

The Group is now clearly positioned as a marine and waterfront property specialist, by withdrawing from loss making transport activities. The investment proposition to investors is now much simpler, with the Group now focused on growing its annual revenues whilst achieving profits from specific development projects, as economic conditions permit. The Business has a high quality asset base and a demonstrated track record of developing properties in the region and is committed to delivering further value for shareholders.

Michael Knight

Chairman

Consolidated Income Statement

	Note	6 months to 30 September 2011 (unaudited) £000	6 months to 30 September 2010 (unaudited) £000	Year Ended 31 March 2011 (audited) £000
Revenue	3	6,894	4,071	12,274
Cost of sales		(4,827)	(3,511)	(8,606)
Gross Profit		2,067	560	3,668
Administration expenses		(988)	(969)	(1,404)
Impairment of inventories		(970)	-	-
Other operating income		-	-	37
Other operating expense		(517)	-	-
Operating (loss)/profit before fair value adjustments on investment property		(408)	(409)	2,301
Fair value adjustments on investment property	7	(380)	(45)	103
Operating (loss)/profit	3	(788)	(454)	2,404
Financial income		4	-	1
Financial expense		(544)	(359)	(644)
Net financing costs		(540)	(359)	(643)
Share of loss of associate using equity accounting method		-	-	(50)
(Loss)/profit before tax from continuing operations		(1,328)	(813)	1,711
Taxation on loss/(profit) from continuing operations	4	345	228	244
(Loss)/profit for the period from continuing operations		(983)	(585)	1,955
Loss for the period from discontinued operations	10	-	(8,598)	(8,407)
Loss for the period		(983)	(9,183)	(6,452)
Basic (loss)/earnings per share	6
From continuing operations		(1.56)p	(0.93)p	3.11p
From discontinued operations		- p	(13.66)p	(13.36)p
Diluted (loss)/earnings per share	6
From continuing operations		(1.56)p	(0.93)p	3.11p
From discontinued operations		- p	(13.66)p	(13.36)p

Consolidated Statement of Comprehensive Income

		6 months to 30 September 2011 (unaudited) £000	6 months to 30 September 2010 (unaudited) £000	Year Ended 31 March 2011 (audited) £000
Loss for the period		(983)	(9,183)	(6,452)
Other comprehensive income/(expense)
Continuing operations:
Revaluation of property, plant and equipment		98	(119)	66
Deferred taxation on income and expenses recognised directly in the consolidated statement of comprehensive income		-	-	17
Effective portion of changes in fair value of cash flow hedges		(312)	101	1
Discontinued operations:
Effective portion of changes in fair value of cash flow hedges			(128)	-
Total other comprehensive (expense)/income		(214)	(146)	84
Total comprehensive expense for the period attributable to equity shareholders		(1,197)	(9,329)	(6,368)

Consolidated Balance Sheet

	Note	As at 30 September 2011 (unaudited) £000	As at 30 September 2010 (unaudited) £000	As at 31 March 2011 (audited) £000
Non-current assets
Property, plant and equipment	7	29,744	28,994	29,470
Investment property	7	20,646	20,531	20,828
Investment in associate		43	93	43
		50,433	49,618	50,341
Current assets
Inventories		12,457	11,588	13,996
Trade and other receivables		3,278	1,925	2,144
Cash and cash equivalents	8	1	220	1
Tax recoverable		112	-	233
		15,848	13,733	16,374
Assets of disposal group classified as held for sale		-	5,465	-
Total assets		66,281	68,816	66,715
Current liabilities
Bank borrowings	8	2,463	21,673	1,001
Other interest-bearing loans and borrowings		1,516	-	1,015
Trade and other payables		1,669	1,684	1,424
Deferred income		832	915	1,481
Deferred government grants		38	-	36
Derivative financial instruments		-	66	-
Provisions for other liabilities and charges Tax payable	9	2,493 -	1,438 83	2,636 -
		9,011	25,859	7,593
Non-current liabilities
Other interest-bearing loans and borrowings		18,000	31	19,000
Deferred government grants		681	668	651
Deferred tax liabilities		3,322	3,568	3,323
Derivative financial instruments		379	-	67
		22,382	4,267	23,041
Liabilities of disposal group classified as held for sale		-	5,465	-
Total liabilities		31,393	35,591	30,634
Net assets		34,888	33,225	36,081
Equity and reserves
Share capital		15,736	15,736	15,736
Share premium		12	12	12
Other reserves		13,352	13,336	13,566
Retained earnings		5,788	4,141	6,767
Total equity		34,888	33,225	36,081

Consolidated Statement of Changes in Equity

	Share capital	Share premium	Revaluation reserve	Merger reserve	Hedging reserve	Retained earnings	TOTAL
			----------Other Reserves----------
	£000	£000	£000	£000	£000	£000	£000
Balance at 1 April 2010	15,736	12	9,679	3,871	(68)	13,903	43,133
Comprehensive Income/(expense)
Loss for the period	-	-	-	-	-	(9,183)	(9,183)
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	(119)	-	-	-	(119)
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	73	-	73
Recycled to Cost of Sales	-	-	-	-	(100)	-	(100)
Total other comprehensive expense - period ended 30 September 2010	-	-	(119)	-	(27)	-	(146)
Total comprehensive expense  - period ended 30 September 2010	-	-	(119)	-	(27)	(9,183)	(9,329)
Transactions with owners
Share-based payments - value of employee services	-	-	-	-	-	50	50
Dividends	-	-	-	-	-	(629)	(629)
Transactions with owners	-	-	-	-	-	(579)	(579)
As at 30 September 2010	15,736	12	9,560	3,871	(95)	4,141	33,225
Comprehensive income
Profit for the period	-	-	-	-	-	2,731	2,731
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	185	-	-	-	185
Deferred taxation on revaluation of property, plant and equipment	-	-	17	-	-	-	17
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	(140)	-	(140)
Recycled to cost of sales	-	-	-	-	168	-	168
Total other comprehensive income  - period ended 31 March 2011	-	-	202	-	28	-	230
Total comprehensive income - period ended 31 March 2011	-	-	202	-	28	2,731	2,961
Transaction with owners
Share-based payments - value of employee services	-	-	-	-	-	(105)	(105)
Transactions with owners	-	-	-	-	-	(105)	(105)
As at 31 March 2011	15,736	12	9,762	3,871	(67)	6,767	36,081
Comprehensive income/(expense)
Loss for the period	-	-	-	-	-	(983)	(983)
Other comprehensive income/(expense)
Revaluation of property, plant and equipment	-	-	98	-	-	-	98
Effective portion of changes in fair value of cash flow hedges	-	-	-	-	(312)	-	(312)
Total other comprehensive income/(expense)  - period ended 30 September 2011	-	-	98	-	(312)	-	(214)
Total comprehensive income/(expense) - period ended 30 September 2011	-	-	98	-	(312)	(983)	(1,197)
Transactions with owners
Share-based payments - value of employee services	-	-	-	-	-	4	4
Transactions with owners	-	-	-	-	-	4	4
As at 30 September 2011	15,736	12	9,860	3,871	(379)	5,788	34,888

Consolidated Cash Flow Statement

	Note	6 months to 30 September 2011 (unaudited) £000	6 months to 30 September 2010 (unaudited) £000	Year Ended 31 March 2011 (audited) £000
Cash (used in)/generated from continuing operating activities	11	(386)	(1,868)	1,284
Net cash used in discontinued operating activities		-	(3,141)	(3,139)
Cash used in total operating activities		(386)	(5,009)	(1,855)
Tax received/(paid)		466	(22)	(81)
Net cash generated from/(used in) operating activities		80	(5,031)	(1,936)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		9	-	1
Disposal of discontinued operations, net of cash		-	(366)	(1,928)
Expenditure on investment in associate		-	(1)	-
Expenditure on investment property		(198)	(25)	(174)
Expenditure on property, plant and equipment		(276)	(336)	(548)
Interest received		4	-	1
Net cash used in investing activities		(461)	(728)	(2,648)
Cash flows from financing activities
Proceeds from new loan		-	-	20,000
Interest paid		(582)	(363)	(801)
Repayment of borrowings		(499)	(11)	(206)
Dividends paid		-	(629)	(629)
Cash flow from financing activities in discontinued operations		-	(243)	(238)
Net cash (used in)/generated from financing activities		(1,081)	(1,246)	18,126
Net (decrease)/increase in cash and cash equivalents		(1,462)	(7,005)	13,542
Cash and cash equivalents at beginning of period		(1,000)	(14,542)	(14,542)
Cash and cash equivalents at end of period	8	(2,462)	(21,547)	(1,000)

Notes to Interim Report

1.    General information

This consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.  Statutory accounts for the year ended 31 March 2011 were approved by the Board of Directors on 14 June 2011 and delivered to the Registrar of Companies.  The report of the auditors on those accounts was unqualified and did not contain any statement under section 498 of the Companies Act 2006.

Copies of the Group's financial statements are available from the Company's registered office, North Quay House, Sutton Harbour, Plymouth, PL4 0RA and on the Company's website www.sutton-harbour.co.uk.

This consolidated interim financial information has not been audited.

2.    Basis of preparation

The consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2011, which have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretation Committee (IFRIC) interpretations as endorsed by the European Union, and those parts of the Companies Acts 2006 as applicable to companies reporting under IFRS.

Accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2011, as described in those annual financial statements.

Adoption of new International Financial Reporting Standards

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 April 2011, but are not currently relevant for the Group:

-       Amendments to IAS 24, 'Related party disclosures' - not applicable to current activity.

-       Amendment to IFRS 1, 'First time adoption' - no impact as the Group has already adopted IFRS for the first time

-       IFRIC 14, 'Prepayments of a minimum funding requirement' - not applicable to current activity.

-       IFRIC 19, 'Extinguishing financial liabilities with equity instruments' - not applicable to current activity.

-       Annual improvements to IFRS 2 'Share based payments' - no impact on current activities.

-       Annual improvements to IAS 32 'Financial instruments: Presentation on classification of rights issues' - not applicable to current activity

-       IFRIC 15 'Arrangements for construction of real estates' - no impact on current activity

The following new standards, amendments to standards or interpretations have been issued, but are not effective for the financial year beginning 1 April 2011 and have not been adopted early:

-       Amendment to IAS 12 'Income taxes' - not yet endorsed.

-       IFRS 9 'Financial instruments' - no impact on current activities.

Accounting estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

There have been no significant changes to estimates and judgements since the signing of the financial statements for the year ended 31 March 2011.

3.  Segment information

Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. These have changed since 31 March 2011, following the decision to close Plymouth City Airport.

The Board of Directors considers the business from an operational perspective as the Group has only one geographical segment, with all operations being carried out in the United Kingdom.

The Board of Directors considers the performance of the operating segments using operating profit. The segment information provided to the Board of Directors for the reportable segments for the period ended 30 September 2011 is as follows:

Business segments:

	6 months to 30 September 2011	6 months to 30 September 2010	12 months to 31 March 2011
	(unaudited)	(unaudited)	(audited)
	£000	£000	£000
External revenue:
Marine	2,886	2,469	4,646
Property	882	783	1,621
Regeneration	2,292	-	3,368
Transport	834	819	2,639
Total external revenue = total revenue	6,894	4,071	12,274
Segment operating profit/(loss):
Marine	770	708	1,231
Property	367	344	678
Regeneration prior to fair value adjustment of investment property	1,604	(150)	2,700
Impairment of inventories	(970)	-	(200)
Fair value adjustment on investment property	(380)	(45)	103
Regeneration after fair value adjustment on investment property and impairment of inventories	254	(195)	2,603
Transport	(674)	(342)	(904)
	717	515	3,608
Unallocated expenses:
Administrative expenses	(988)	(969)	(1,204)
Other operating expense	(517)	-	-
Group operating (loss)/profit	(788)	(454)	2,404
Financial income	4	-	1
Financial expense	(544)	(359)	(644)
Share of loss of associate	-	-	(50)
Taxation	345	228	244
Transport - discontinued operations	-	(8,598)	(8,407)
Loss for the period	(983)	(9,183)	(6,452)
Assets and liabilities
Segment assets:
Marine	22,999	22,309	22,888
Property	21,966	21,995	21,893
Regeneration	12,250	10,896	13,786
Transport	7,640	7,047	6,411
Transport - assets held for sale	-	5,465	-
Total segment assets	64,855	67,712	64,978
Unallocated assets: Property plant & equipment                                  Investment in associate                                 Trade & other receivables	545 43 838	329 93 682	427 43 1,267
Total assets	66,281	68,816	66,715

3.  Segment Information (continued)

Segment liabilities:
Marine	1,138	950	1,586
Property	2,064	356	281
Regeneration	194	324	199
Transport	1,829	1,188	3,591
Transport - assets held for sale	-	5,465	-
Total segment liabilities	5,225	8,283	5,657
Unallocated liabilities: Bank overdraft & borrowings                                    Trade & other payables	21,973 873	21,673 1,984	21,001 653
Deferred tax liabilities	3,322	3,651	3,323
Total liabilities	31,393	35,591	30,634

Unallocated assets included in total assets and unallocated liabilities included in total liabilities are not split between segments as these items are centrally managed.

4. Taxation

Continuing Operations

The company has applied an effective tax rate of 26% (2010: 28%) based on management's best estimate of the tax rate expected for the full financial year.

Discontinued Operations

In the prior period, the Company applied an effective tax rate of 28% to the trading losses of the discontinued operations.

5. Dividends

	6 months to 30 September  2011 (unaudited) £000	6 months to 30 September 2010 (unaudited) £000	Year Ended 31 March 2011 (audited) £000
Final Dividend in respect of the year ended 31 March 2011 (31 March 2010)	-	629	-
Interim Dividend in respect of the year ended 31 March 2011 (31 March 2010)	-	-	-
	-	629	-

The Board of Directors do not propose an interim dividend (2010: nil).

6. Earnings per share

	6 months to 30 September 2011 (unaudited) pence	6 months to 30 September 2010 (unaudited) pence	Year Ended 31 March 2011 (audited) Pence
Continuing operations
Basic earnings per share	(1.56)p	(0.93)p	3.11p
Diluted earnings per share	(1.56)p*	(0.93)p	3.11p*
Discontinued operations
Basic earnings per share	- p	(13.66)p	(13.36)p
Diluted earnings per share	- p*	(13.66)p*	(13.36)p*

Basic Earnings per Share:

Basic earnings per share have been calculated using the loss for the period of £983,000 (2010: £585,000) for the continuing operations, and the loss for the period of £nil (2010: £8,598,000) for the discontinued operations. The average number of ordinary shares in issue, excluding those options granted under the SAYE scheme, of 62,943,752 (2010: 62,943,752) has been used in our calculation.

Diluted Earnings per Share:

Diluted earnings per share uses an average number of 63,193,851 (2010: 63,514,771) ordinary shares in issue, and takes account of the outstanding options under the SAYE scheme in accordance with IAS 33 'Earnings per share'.

* For the 6 months ended 30 September 2011, the year ended 31 March 2011, and the 6 months ended 30 September 2010, there is no adjustment for the effect of all dilutive potential ordinary shares because the exercise prices of the options are greater than the average market price of the shares during the year.

7. Property valuation

Freehold land and buildings and investment property have been independently valued by Lambert Smith Hampton as at 30 September 2011 in accordance with the Practice Statements in the Valuations Standards (The Red Book) published by the Royal Institution of Chartered Surveyors. 

The basis for determining the property values is as described in the financial statements for the year ended 31 March 2011.

8. Cash and cash equivalents

	As at 30 September 2011 (unaudited) £000	As at 30 September 2010 (unaudited) £000	As at 31 March 2011 (audited) £000
Continuing operations:
Cash and cash equivalents per balance sheet	1	220	1
Bank borrowings	(2,463)	(21,673)	(1,001)
	(2,462)	(21,453)	(1,000)
Assets/(liabilities) of disposal group classified as held for sale:
Cash and cash equivalents per balance sheet	-	5	-
Bank borrowings	-	(99)	-
	-	(94)	-
Cash and cash equivalents per cash flow statement	(2,462)	(21,547)	(1,000)

9. Provisions

	Provision
	2011
	£000
Balance at 1 April 2010	46
Provisions made during the period	1,392
Provisions used during the period	-
Balance at 30 September 2010	1,438
Provisions made during the period	2,590
Provisions used during the year	(1,392)
Balance at 31 March 2011	2,636
Provisions made during the period	788
Provisions used during the period	(931)
Balance at 30 September 2011	2,493
Non-current	-
Current	2,493
	2,493

The total provision of £2,493,000 is made up primarily of provisions for airport works, onerous leases, one off staff costs and airport closure costs. 

10. Discontinued operations and assets held for sale

Sutton Harbour Holdings plc announced on 25 May 2010 its intention to sell the airline subsidiary, Air South West Limited. Contracts for sale and purchase of the airline were exchanged on 17 September 2010 with Eastern Airways International Limited, with the effective date of control passing being 30 September 2010. The sale was completed on 30 November 2010.

The net profit or loss that accrued from 1 October 2010 to 30 November 2010 accrued to Eastern Airways International Limited, in accordance with the terms of the sale and purchase agreement.

The results of the airline to 30 September 2010 and loss on disposal (estimated at 30 September 2010, actual at 31 March 2011) are shown below:

	6 months to 30 September 2011 (unaudited) £000	6 months to 30 September 2010 (unaudited) £000	Year Ended 31 March 2011 (audited) £000
Revenue	-	10,403	10,403
Cost of sales	-	(12,374)	(12,648)
Gross loss	-	(1,971)	(2,245)
Other operating income	-	-	-
Administrative expenses	-	-	-
Operating loss	-	(1,971)	(2,245)
Financial income	-	1	1
Financial expense	-	(5)	(5)
Net financing costs	-	(4)	(4)
Trading loss before tax from discontinued operations	-	(1,975)	(2,249)
Taxation on trading loss from discontinued operations	-	553	561
Trading loss after tax from discontinued operations	-	(1,422)	(1,688)
Pre tax loss on disposal of Air South West Limited	-	(7,176)	(6,719)
Loss after tax from discontinued operations	-	(8,598)	(8,407)

11. Cash flow statements

	6 months to 30 September 2011 (unaudited) £000	6 months to 30 September 2010 (unaudited) £000	Year Ended 31 March 2011 (audited) £000
Cash flows from operating activities
(Loss)/profit for the period	(983)	(585)	1,955
Adjustments for:
Taxation	(345)	(228)	(244)
Financial income	(4)	-	(1)
Financial expense	544	358	644
Fair value adjustments on investment property	380	45	(103)
Depreciation and amortisation	86	89	189
Amortisation of grants	19	(18)	(37)
Impairment of development property	970	-	200
Loss on sale of property, plant and equipment	1	-	7
Equity settled share-based payment expenses	4	12	(55)
Grants received	53	-	-
Cash generated from/(used in) operations before changes in working capital and provisions	725	(327)	2,555
Increase in inventories	(190)	(552)	(456)
Increase in trade and other receivables	(1,134)	(300)	(519)
Increase/(decrease) in trade and other payables	244	(103)	(598)
(Decrease)/Increase in deferred income	(648)	(586)	18
Increase in provisions	617	-	284
Cash (used in)/generated from operations	(386)	(1,868)	1,284

12. Contingencies

On 26 October 2007, the Group entered into an agreement with the BBC to construct a 22,000 sq. ft. office building by a longstop date of December 2012. To date, the Group has not contracted for the construction of this development although it has agreed heads of terms with a developer to deliver a workable scheme, but terms have not been agreed with the BBC. It is not considered appropriate to make any provision in this regard.

Since Plymouth City Council agreed, in August 2011, the closure of the airport on 23 December 2011, the Group is obliged to work with the freeholder to obtain best value for the land through alternative use. In addition, the government grants of £804,000 may be subject to claw-back, settled out of the proceeds on the disposal.

 

END

 

 

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