(''SMH'' or “the Company'')
Final results
Strategic report
The directors present their strategic report for the year ended
The Group continues to develop residential led projects located in
The Group typically undertakes its business within special purpose vehicles and on a joint venture /profit sharing basis with other house builders. This strategy has helped the company to generate profits and increase distributions to shareholders in recent years. The group profits before tax for the current year amount to £383,738 and dividend distributions to shareholders increased by 10% to 5.5p per share.
Our strategic priorities
Following the merger with
We believe the key Group assets are its people, capital base and market listing. Our primary aim is to maximise shareholder value by utilising each of these assets to best effect. We also are committed to the highest standards of sustainability.
People and partnering
We have an intentionally small but experienced team with demonstrable competency in the areas of finance, property development, project appraisal and project delivery. Our strategy is to match those core skills and our capital with partners who can assist with project design, construction and sales. Our people are motivated through a management incentive scheme which aligns their interests with that of the shareholders and only rewards performance after attainment of profit targets linked to the return on shareholders funds.
Capital
The Group commenced 2017 with a capital base just short of £5.8m (2016: £3.9m). We have previously set a performance target to grow that base by a minimum of 5% on opening shareholders funds per annum through organic growth. In 2017 we achieved a pre-tax profit of 6.6% (2016: 16.5 %) on opening shareholders funds.
The Group successfully launched a corporate bond with the assistance of
NEX Exchange Listing
The market mid-price on
We will continue to monitor the effectiveness of the market and as the company grows we may in future consider a move to AIM. In the interim the Board believe the continued expansion of the capital base and the continuation of profit and dividend growth are steps that can broaden investor appeal.
Sustainability
We recognise that there are financial and operational benefits of working sustainably and we are committed to the highest standards of sustainability. While many environmental requirements are embedded within the planning process, sustainability is a broader issue than that and encompasses both Health & Safety and the supply chain.
Health & Safety continues to remain the Group’s first priority and we work with our joint venture partners to attain best practice standards. We are happy to report that there were no reportable incidents on any of our projects during 2017 and we remain committed to the highest standards of Health & Safety.
Having the right supply chain is also crucial to sustainability. We do have long term working relationships with our main suppliers but continue to carefully monitor the financial health of our design teams and main contractors. We aim to pay suppliers to agreed timescales and to work collaboratively with them for the benefit of all.
Project Portfolio
At present we have live joint venture projects on sites in St Margarets,
Completed Developments
St Margarets Waterside, Richmond,
The Company continues to market the final two residential properties on this project. In accordance with our revenue recognition policy we have recognised profits of £ 46,316 (2016: £233,232) and Project Management fees of £13,500 (2016: £54,000) during 2017.
Continuing Development
The Company retains a 40% interest in a development site at
Gwynne Road London SW11:
St Mark has a joint venture interest of 40% in the redevelopment of this site with its development partners. The development is well underway to provide a mixed use development of commercial/retail at ground and mezzanine levels and 33 residential flats above.
Sale contracts have been exchanged on affordable housing element of the scheme. In accordance with our revenue recognition policy we have recognised profits of £123,520 (2016: £nil) and Project Management fees of £43,200 (2016: 10,800) during 2017. Marketing of the development is planned to commence in the third quarter of 2018.
St Mark holds a joint venture interest of 40% in the development of 34 flats in Hounslow with its development partners. Marketing of the scheme is now underway with construction due to be completed in
St Mark has taken a joint venture interest of up to 40% in the development of 40 flats and commercial space in Wembley. Project Management fees of £24,000 were charged during 2017 (2016: £nil).
Future Developments
As capital and profits are released from the current project portfolio the board will seek out further opportunities with similar risk profiles. The group’s schemes have largely been in the outer London Boroughs and it is intended that the group will continue to focus on this geographic area.
Principal risks and uncertainties
The Company is exposed to the usual risks of companies constructing and developing residential property, including construction budget overruns, delays in programme, insolvency of clients, general economic conditions, project availability, uninsured calamities and other factors.
Investments are made in sterling and therefore the Company is not subject to foreign exchange risks. The Company’s credit risk is primarily attributable to its trade debtors. Credit risk is managed by monitoring payments against contractual agreements. The Company also reviews the financial standings of its debtors prior to entering into significant contracts.
Key Performance Indicators
The Company’s long term performance target has been to generate a minimum average annual return on shareholders funds of 5%. During 2017 the annual pre-tax return on shareholders’ funds was 6.6% (2016: 16.5%). Whilst the Company continued to exceed its minimum target returns for shareholders, the Company’s decision to delay the marketing of both the Hounslow and Battersea projects until the projects are further advanced and more marketable in 2018, resulted in a lower return on shareholders’ funds for 2017 as compared to 2016.
The Company also seeks protection from market downturns by committing no more than 50% of its capital to any one project and by requiring projects in which it is a stakeholder to show a minimum return on cost of 15%. During 2017 the maximum exposure of capital to any one project was less than 40% of the Company capital.
Operations have been financed by the issue of shares in the past and retained profits, the cash from which has been invested in short term cash deposits. In addition, various financial instruments such as trade debtors and trade creditors arise directly from the group's operations. The loan notes have been funded by the cash income from previous development projects. Further information on financial instruments is contained in note 22 of the financial statements.
On behalf of the Board
Chief Executive
Date
The Directors of
For further information, please contact:
St Mark Homes Plc Sean Ryan , Finance Director Tel: +44 (0) 20 7903 6777 seanryan@stmarkhomes.comAlfred Henry Corporate Finance Ltd , NEX Exchange Corporate AdviserJon Isaacs /Nick Michaels Tel: +44 (0) 20 7251 3762 www.alfredhenry.com
Consolidated statement of comprehensive income
for the year ended
2017 2016
£ £
Group turnover 120,400 1,336,839
Cost of sales (22,738) (1,255,224)
________ ________
Gross profit 97,662 81,615
Administrative expenses (323,058) (410,751)
Negative goodwill release 99,256 149,876
________ ________
Operating (loss) (126,140) (179,260)
Share of operating profit of joint venture 289,731 610,672
Interest receivable and similar income 249,434 221,147
Interest payable and similar charges (20,287) (175)
________ ________
Profit on ordinary activities before taxation 383,738 652,384
Taxation on ordinary activities (60,564) (100,503)
________ ________
Profit on ordinary activities after taxation 323,174 551,881
Other comprehensive income - -
________ ________
Total comprehensive income 323,174 551,881
________ ________
Earnings per share – basic and diluted
Ordinary shares 7.32p 16.6p
Consolidated Balance sheet
at
2017 2017 2016 2016
£ £ £ £
Non Current assets
Tangible assets 1,052 1,403
Intangible assets (37,993) (137,249)
Investments in joint ventures 728,779 439,048
________ ________
691,838 303,202
Current assets
Debtors 7,195,865 5,520,143
Cash at bank and in hand 513,667 346,327
________ ________
7,709,532 5,866,470
Creditors: amounts falling
due within one year (179,043) (370,281)
________ ________
Net current assets 7,530,489 5,496,189
________ ________
Total assets less current liabilities 8,222,327 5,799,391
Creditors amounts falling due more
than one year (2,342,477) -
________ ________
Net Assets 5,879,850 5,799,391
________ ________
Capital and reserves
Called up share capital 2,206,501 2,206,501
Capital redemption reserve 1,009,560 1,009,560
Other reserve 211,822 211,822
Merger reserve 327,060 327,060
Share premium account 375,246 375,246
Profit and loss account 1,749,661 1,669,202
________ ________
Shareholders’ funds 5,879,850 5,799,391
________ ________
Statement of changes in equity
For the year ended
Share Capital Other Merger Share Profit and Total
Capital Redemption Reserve Reserve Premium loss
Reserve reserves
£ £ £ £ £ £ £
Period ended 1,478,748 1,009,560 211,822 - - 1,246,713 3,946,843
31 December
2015
Profit for - - - - - 551,881 551,881
the year
Shares issued
during the 727,753 - - 327,060 375,246 18,484 1,448,543
year
________ ________ _______ _______ _______ ________ ________
Total
comprehensive 2,206,501 1,009,560 211,822 327,060 375,246 1,817,078 5,947,267
income for
the year
Dividend - - - - - (147,876) (147,876)
________ ________ _______ _______ _______ ________ ________
Period ended
31 December 2,206,501 1,009,560 211,822 327,060 375,246 1,669,202 5,799,391
2016
Profit for - - - - - 323,174 323,174
the year
________ ________ _______ _______ _______ ________ ________
Total
comprehensive 2,206,501 1,009,560 211,822 327,060 375,246 1,992,376 6,122,565
income for
the year
Dividend - - - - - (242,715) (242,715)
________ ________ _______ _______ _______ ________ _________
Balance at 31 2,205,501 1,009,560 211,822 327,060 375,246 1,749,661 5,879,850
December 2017
________ ________ _______ ______ _______ ________ ________
Consolidated statement of cashflows
for the year ended
2017 2017 2016 2016
£ £ £ £
Cash flows from
Operating activities
Cash expended from operations (2,035,718) (425,563)
Interest paid (20,287) (175)
Corporation tax (116,851) (137,187)
________ ________
Net cash outflow from
Operating activities (2,172,856) (562,925)
Investing activities
Interest received 240,434 221,147
________ ________
Net cash generated from investing
activities 240,434 221,147
Financing activities
Shares issued - 689,726
Increase in loans 2,342,477 -
Dividends paid (242,715) (147,876)
________ ________
Net cash generated from
Financing activities 2,099,762 541,850
________ ________
Net increase in cash and cash 167,340 200,072
equivalents
Cash and cash equivalents at
beginning of year 346,327 146,255
________ ________
Cash and cash equivalents at end of
year 513,667 346,327
________ ________
Relating to:
Cash at Bank and in hand 513,667 346,327
________ ________
Notes to Preliminary Results for the Period Ended
1. The financial information set out above does not constitute statutory accounts for the purpose of Section 434 of the Companies Act 2006. The financial information has been extracted from the statutory accounts of
The preliminary announcement of the results for the year ended
2. Earnings per share
Earnings per ordinary share has been calculated using the weighted average number of shares in issue during the financial year. The weighted average number of Ordinary shares in issue was 4,413,002 (2016: 3,324,677) and the earnings being profit after tax attributable to ordinary shares was £323,174 (2016: £551,881).
2017 2016
£ £
Numerator
Earnings used as the calculation of basic and diluted EPS 323,174 551,881
________ ________
Denominator
Weighted average number of ordinary shares used in basic and 4,413,002 3,324,677
diluted EPS
________ ________
There are no share options in issue than can dilute the earnings per share.
