(''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 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.
Capital
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.
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 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.
Project Portfolio
At present we have live joint venture projects on sites in St Margarets,
Completed Development
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
Continuing Development
The Company also invested in a regeneration property development venture at
New Projects
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.
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, 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
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
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
at
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.
