(''SMH'' or “the Company'')
The directors present their strategic report for the year ended
The Group continues to develop residential led projects based 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 were £652,384 and distributions to shareholders increased by 11% to 5p per share.
Our strategic priorities
As a board we are keen to build on this performance and grow the Group into a significant regional house builder. We now have an established and profitable method of operation which could be scaled up should further capital become available to the Group.
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.
The Group commenced 2016 with a capital base of just over £3.9m (2015 -£3.6m). 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 2016 we achieved a pre-tax profit of 16.5 % (2015-15.1%) on opening shareholders funds.
As previously advised we believe that capital availability is a constraining factor for the business and are pleased to report progress in expanding that base during the year. In
The aggregate effect of the acquisition, share offer and retention of profits was to grow the company Balance Sheet to over £5.8m, that is by over 50%, in the year ended
NEX Exchange Listing
ISDX was rebranded as NEX recently and there has been improved liquidity in our shares during the period. The market midprice 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 expansion of the capital base and the continuation of profit and dividend growth are steps that can broaden investor appeal.
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 remains 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 2016 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 in agreed timescales and to work collaboratively with them for the benefit of all.
At present we have live joint venture projects on sites in St Margarets,
The Company entered a joint venture for the development of 26 residential apartments in Mortlake, Richmond in
St Margarets Waterside, Richmond,
Construction was completed on the 21 residential units plus commercial shell and core in
The Company also invested in a regeneration property development venture at
The Board entered into joint venture agreements during the year on the following projects:
Gwynne Road London SW11:
St Mark has taken a joint venture interest of 40% in the redevelopment of a site to provide mixed use involving commercial/retail at ground and mezzanine levels and 33 residential flats.
The site value and construction developments costs have been independently evaluated. The independent valuer has estimated the total project GDV at £15.615m and developers return on cost at 20%. During the year sale contracts have been exchanged on social housing element of the scheme. Given the relatively early stage of development progress we have not recognised our profit share on this exchanged element. Project Management fees of £10,800 were charged during 2016.
St Mark has taken a joint venture interest of up to 40% in this development of 34 flats in Hounslow. The site has also been independently valued and construction developments costs evaluated. The independent valuer has estimated the GDV at £12.75m and developers return on cost at 20%. Project Management fees of £7,200 were charged during 2016. Marketing on the scheme will commence later in 2017.
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, 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 2016 the annual pre-tax return on opening shareholders’ funds was 16.5% (2015: 15.1%). 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 2016 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
The Directors of
For further information, please contact:
St Mark Homes Plc Sean Ryan, Finance Director Tel: +44 (0) 20 7903 6777 email@example.com Alfred Henry Corporate Finance Ltd, NEX Exchange Corporate Adviser Jon Isaacs/ Nick MichaelsTel: +44 (0) 20 7251 3762 www.alfredhenry.com
Consolidated statement of comprehensive income
for the year ended
2016 2015 GBP GBP Group turnover 1,336,839 3,097,000 Cost of sales (1,255,224) (2,803,992) ________ ________ Gross profit 81,615 293,008 Administrative expenses (410,751) (416,177) Negative goodwill release 149,876 - ________ ________ Operating (loss) (179,260) (123,169) Share of operating profit of joint venture 610,672 610,672 Interest receivable and similar income 221,147 221,147 Interest payable and similar charges (175) (40,331) ________ ________ Profit on ordinary activities before taxation 652,384 548,887 Taxation on ordinary activities (100,503) (110,428) ________ ________ Profit on ordinary activities after taxation 551,881 438,459 Other comprehensive income - - ________ ________ Total comprehensive income 551,881 438,459 ________ ________ Earnings per share – basic and diluted Ordinary shares 16.60p 14.83p
Consolidated Balance sheet
2016 2016 2015 2015 GBP GBP GBP GBP Non Current assets Tangible assets 1,403 1,872 Intangible assets (137,249) - Investments in joint ventures 439,048 379,102 ________ _________ 303,202 380,974 Current assets Stock and Work In Progress - 1,095,084 Debtors 5,520,143 3,761,851 Cash at bank and in hand 346,327 146,255 _________ ________ 5,866,470 5,003,190 Creditors: amounts falling due within one year (370,281) (1,437,321) _________ ________ Net current assets 5,496,189 3,565,869 ________ _________ Total assets less current liabilities 5,799,391 3,946,843 ________ _________ Net Assets 5,799,391 3,946,843 ________ ________ Capital and reserves Called up share capital 2,206,501 1,478,748 Capital redemption reserve 1,009,560 1,009,560 Other reserve 211,822 211,822 Merger reserve 327,060 - Share premium account 375,246 - Profit and loss account 1,669,200 1,246,713 ________ _________ Shareholders’ funds 5,799,391 3,946,843 ________ ________
Statement of changes in equity
For the year ended
Capital Profit Share Redemption Other Merger Share and loss Capital Reserve Reserve Reserve Premium reserves Total GBP GBP GBP GBP GBP GBP GBP 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 727,753 - - 327,060 375,246 18,482 1,449,178 during the year ________ ________ _______ _______ ________ ________ ________ Total 2,206,501 1,009,560 211,822 327,060 375,246 1,817,076 5,947,265 comprehensive income for the year Dividend - - - - - (147,876) (147,876) ________ ________ ________ _______ ________ ________ _________ Balance at 31 2,206,501 1,009,560 211,822 327,060 375,246 1,669,200 5,799,391 December 2016 ________ ________ _______ ______ ________ ________ ________
Capital Profit and loss Share Capital Redemption Other reserves Reserve Reserve Total GBP GBP GBP GBP GBP Period ended 31 1,478,748 1,009,560 211,822 941,341 3,641,471 December 2014 Profit for the - - - 438,459 438,459 year ________ ________ ________ ________ ________ Total 1,478,748 1,009,560 211,822 1,379,800 4,079,930 comprehensive income for the year Dividend - - - (133,087) (133,087) _________ ________ ________ _________ _________ Balance at 31 1,478,748 1,009,560 211,822 1,246,713 3,946,843 December 2015 ________ ________ ________ ________ ________
Consolidated statement of cashflows
for the year ended
2016 2016 2015 2015 GBP GBP GBP GBP Cash flows from operating activities Cash generated/(expended) from (425,563) 3,405,016 operations Interest paid (175) (40,331) Corporation Tax (137,187) (41,989) ________ ________ Net cash inflow/(outflow) from operating activities (562,925) 3,322,696 Investing activities Purchase of tangible fixed assets - (541) Interest received 221,147 226,921 ________ ________ Net cash generated from/(used in) investing activities 221,147 226,380 Financing activities Shares issued 689,726 - (Decrease)/Increase in bank loans - (1,212,830) (Decrease)/ Increase in subordinated - (2,171,177) loans Dividend paid (147,875) (133,087) ________ ________ Net cash generated from/(used) in financing activities 541,851 (3,517,094) ________ ________ ________ ________ Net increase in cash and cash 200,072 31,982 equivalents Cash and cash equivalents at beginning of year 146,255 114,273 ________ ________ Cash and cash equivalents at end of year 346,327 146,255 ________ ________ Relating to: Cash at Bank and in hand 346,327 146,255 ________ ________
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
2016 2015 GBP GBP Numerator Earnings used as the calculation of basic and diluted EPS 551,881 438,459 ________ ________ Denominator Weighted average number of ordinary shares used in basic and 3,324,677 2,957,495 diluted EPS ________ ________
There are no share options in issue than can dilute the earnings per share.