SUH Sutton Harbour Group Plc

2 February 2024       

Sutton Harbour Group plc

("Sutton Harbour" or the "Company")

 Former Plymouth City Airport Update

Further to the Company's announcement on 25 January 2024, noting the press statement published by Plymouth City Council (the "Council") alleging breaches of covenants on the long lease (the "Lease") of the former Plymouth City Airport site by the leaseholder, Plymouth City Airport Limited ("PCAL"), a wholly owned subsidiary of the Company and the letter from the Council referenced therein. Sutton Harbour categorically rejects the allegations of breaches of the Lease and provides further background and detail in this regard as follows:

Background

·      Sutton Harbour originally acquired PCAL in April 2000.

·     A notice of non-viability of the Plymouth City Airport, per the Lease, was delivered to the Council on 24 December 2010 by the Company and was interrogated by the Council. The decision to accept the notice of non-viability was adopted by the Cabinet of the Council at a meeting of 23 August 2011 and Plymouth City Airport was duly closed with the agreement of the Council during 2011.

·     The approved Joint Local Plan governing development in Plymouth and its surrounding areas for 17 years came into effect in 2019. It was accepted by the Government Planning Inspectors that development of the former Plymouth City Airport site (the "FAS"), which comprises approximately 113 acres of brownfield land, for uses other than aviation operations should be postponed for a maximum of five years, which would allow enough time for a viable aviation proposal to be brought forward, if one was to be forthcoming. A report published by the Planning Inspectors on 18 March 2019 concluded "Aviation operations at the former Plymouth airport site ceased in 2011. The Plan identifies the site as a strategic infrastructure asset and Policies SPT8 and PLY42 seek to safeguard it for re-use as a general aviation airport, until the five-year review of the Plan." Such five-year period is due to expire on 31 March 2024.

·   The Planning Inspectors advised that the site, which is located in close proximity to established surrounding residential neighbourhoods, industrial space, the leading hospital in the southwest region, a university and transport infrastructure, was too valuable to be 'frozen' for a longer period.

Maintaining the Former Airport Site

·     Since December 2011, an agreement (the "Agreement") has governed the mutual understanding and conduct of the Company and the Council in relation to the FAS.  As recorded by the Council in a letter to the Company dated 20 December 2011, "From 24 December 2011 we enter a new phase in terms of the Council's/Sutton Harbour Holding's tenure and management of the land at Plymouth City Airport following the acceptance of the letter of Notice of Non-Viability.  We will move from operational airport management to asset/land management of an area of land that has significant strategic importance to the City...".  The Company has since expended considerable time and capital in respect of its management and safeguarding of the FAS, with the fully informed knowledge and approval of the Council.

·     Over the past 12 years, there have been numerous detailed inspections of the FAS by the Council's representatives and facilitated by the Company, the latest one being on 25 November 2022. The Council has never raised any matters of complaint regarding PCAL's compliance with the terms of the Lease, nor with its management and safeguarding of the FAS, following any such inspections. Since the latest inspection on 25 November 2022, the Company has not received any communication from the Council or their appointed surveyors, in relation to that visit, indicating any concerns; nor has there been a request for any further visit since.

·     The Company confirms that PCAL has, at considerable expense, at all times complied, and will continue to comply, with the covenants in the Lease consistent with the Agreement as recorded in the abovementioned letter from the Council dated 20 December 2011.

·      The present value of total net cash expenditure by the Company on the FAS and former aviation operations since its acquisition amounts to more than £27 million, and the Company continues to expend approximately £200,000 per annum in maintaining and safeguarding the FAS.

·     The Company has sought to defray some of these ongoing costs through permitting Derriford Hospital to make use of parts of the FAS for temporary parking and as a temporary staging site for construction operations. However, the Council has denied permission for any such temporary uses of the FAS, thereby precluding the possibility of the Company earning any revenue from the FAS while managing and safeguarding the site.

·     As advised in various public statements made by the Leader and other members of the Council, the Company had been involved in negotiations with the Council regarding the possibility of PCAL relinquishing the Lease and the subsequent sale of the FAS. The Council ended the discussions because the parties were unable to agree on certain legal issues.. The Company remains of the view that it would be worthwhile for both parties to set aside the legal issues and to engage in discussions regarding the optimum development arrangements for the Site going forwards.

Interim uses of the Former Airport Site

·    ​ Whilst managing and safeguarding the FAS, the Company has collaborated with the Council to facilitate its request to store pre-cast bridge concrete bridge beams on the runway whilst a major flyover bridge link road was constructed in Plymouth during 2021. The sublease granted by PCAL to the Council's contractor was charged at a peppercorn rent of £1.

Possible future aviation operations

·     The Company has received several proposals from bodies that have put forward the possibility of re-starting aviation operations using the site, however none of these proposals have provided a viable commercial proposition, nor demonstrated substantiated evidence of committed capital or operational funding.

·   The Joint Local Plan in its current form, in conjunction with the safeguarding of the FAS until 31 March 2024 confirmed by the Planning Inspectors, has identified the site for possible "general aviation" (private small aircraft and helicopters) but not "commercial aviation" (scheduled public flights and services).

Company's Intentions

·     As detailed above, since 2011 the Company has managed and safeguarded the FAS at its own expense, all with the agreement and to the full knowledge of the Council. 

·    In accordance with its responsibilities under the terms of the Lease, the Company has been working on a pre-submission planning process in anticipation of expiry of the abovementioned five-year period, during which any alternative use of the FAS has been precluded in accordance with the Planning  Inspectors' recommendations. The Company expects to submit a masterplan for a phased development of the FAS to the Council in its capacity as Local Planning Authority in the coming weeks. This masterplan will set out three phases of development whereby phase 1 (over the next three to five years) will preserve the main runway at the FAS, but will propose development for institutional, business and housing development on other areas of the site. This approach will allow further time for a financially viable aviation proposition to materialise. Phases 2 and 3 of the masterplan involving staged reductions of the runway will set out the development strategy for the FAS going forward, should a financially viable aviation proposition not materialise.  Phases 2 and 3 will include an additional mix of uses including a range of social and market housing types.

·    The Company is willing to engage in discussion with the Council in respect of these matters. The Company has maintained its openness and willingness to engage with the Council throughout the safeguarding period.

·     Furthermore, the Company has at all appropriate times taken legal advice regarding PCAL's and its own position with regard to the FAS, and is prepared to robustly defend its PCAL leasehold interest in the FAS should it need to do so.  

The Company will provide further update(s) as appropriate in due course.

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