ST MARK HOMES PLC - Annual Financial Report PR Newswire

St Mark Homes Plc:

Annual report and financial statements for the year ended 31 December 2015

Strategic Report for the year ended 31 December 2015

The directors present their strategic report for the year ended 31 December 2015.

Strategic Report

The Group continues to target projects based in London, the South East and South Western regions of the United Kingdom.   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 £548,887 and distributions to shareholders increased by 36% to 4.5p 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 2015 with a capital base of just over £3.6m (2014 -£3.2m). 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 2015 we actually achieved a pre-tax profit of 15.1% (2014-18.1%) on opening shareholders funds.

As previously advised we believe that capital availability remains a constraining factor for the business and we continue to explore new opportunities to raise fresh capital. We remain committed to growth and will consider small corporate acquisitions as our current projects mature.

ISDX Growth Market Listing

While the listing should provide improved trading and liquidity opportunities for our shareholders our share price has historically traded at a significant discount to the Group’s net asset value.  The discount to net asset value at the date of this report is circa 22% to the quoted market mid-price. This is significantly less than the historical discount but more than we would like it to be.

We are however making progress and the combined effect of profit growth and a reduced discount to assets was reflected in growth of 68% in the mid-market price of our shares since the 31 December 2014 report. 

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 2015 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 totalling 87 residential units (together with associated commercial space) on sites in Mortlake, St Margarets and Sutton which we anticipate will deliver profits in 2016 and 2017. As these projects are completed we will seek replacement schemes.

Completed Developments

The final sales on the Bulvinos House, Ealing and Palmerston Road, Wimbledon projects were achieved in 2015. The final two sales at Brook House, Cheltenham were completed in February and March 2016.

Forsyth House, Richmond, London:

The Company entered a joint venture for the development of 26 residential apartments in Mortlake, Richmond in December 2014.  Construction was completed in March 2016. Sales have completed on 18 of the 26 units as at 17 May 2016. Sales had exchanged on 33% of the units as at 31 December 2015 and in accordance with our revenue recognition policy we have recognised profits of £81,897 (£81,000 as a Development Management fee) and Project Management fees of £40,500 during 2015.

Current Developments

Sutton High Street, Sutton:

The Company also invested in a regeneration property development venture at Sutton High Street in early 2014.   The development (when completed) is to consist of 40 residential units with ground floor retail space on Sutton High Street, Sutton. Construction is expected to be completed later in Autumn 2016. Sales had exchanged on 60% of the units (by value) as at 31 December 2015 and in accordance with our revenue recognition policy we have recognised profits of £204,185 during 2015.

St Margarets Waterside, Richmond,London:

The Company entered a joint venture for the development of 21 luxury apartments (together with office space) in September 2014.  Construction is expected to be completed in September 2016. Sales had exchanged on 30% of the units (by value) as at 31 December 2015 and in accordance with our revenue recognition policy we have recognised profits of £174,020 and Project Management fees of £40,500 during 2015.

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.  The delay in Governments direction on Permitted Development Rights, now thankfully clarified, did have create uncertainty in appraising future site opportunities in 2015.

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 2015 the annual pre-tax return on shareholders’ funds was 15.1 % (2014:  18.1%). 

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 2015 the maximum exposure of capital to any one project was less than 40% of the Company capital. 

Treasury policy

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 24 of the financial statements.

On behalf of the Board

Barry Tansey

Chief Executive

Date:   18th May 2016

Report of the directors for the year ended 31 December 2015

The directors present their report together with the audited financial statements for the year ended 31 December 2015.

Principal Activity

The principal activity of the Company remained that of a residential contractor and house builder.

Results and dividends

The profit and loss account is set out on page 10 and we are pleased to report a profit before taxation of £548,887 (2014: £579,125) for the year. 

An interim ordinary dividend of 4.5 pence per share was paid in 2015 (2014: 3.3p). This represented an increase of 36 % year on year.

The directors do not recommend the payment of a final ordinary share dividend for the year (2014: £Nil).

Directors

Sean Ryan retired by rotation at the June 2015 Annual General Meeting and, being eligible, for re-election was duly re-elected to the board.

Barry Tansey is to retire by rotation at the next Annual General Meeting and, being eligible, offers himself for re-election.

Directors Interests

The following directors of the Company had interests in the ordinary shares of the Company at 31st December 2015 as follows:

Bernard Tansey   272,000 

Sean Ryan                        72,000

Barry Tansey                     66,500 

Directors Emoluments

During 2014 the Company adopted an incentive / reward system designed to allow the directors of the company to share in the improving profitability of the Company upon achieving a threshold/hurdle return of 5% on opening shareholders funds for the exclusive benefit of the ordinary shareholders. The remuneration committee believe that has acted as an important driver in achieving improved performance for the long term benefit of the Company’s shareholders.

Going Concern

The directors have assessed the Group’s projected business activities and available financial resources together with detailed forecasts for cash flow and relevant security analysis.   The directors believe that the company is well placed to manage its business risks successfully.

After making appropriate enquiries the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly the directors continue to adopt the going concern basis in preparing the annual report and financial statements.

Auditors

In accordance with section 489 of the Companies Act 2006, a resolution proposing that Kingston Smith LLP be reappointed as auditors of the company will be put to a General Meeting.

Statement of disclosure to auditors

Each of the directors in office at the date of approval of this annual report confirms that:

• so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware, and

• the director has taken all the steps that he / she ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

On behalf of the Board

Sean Ryan

Director

Date:    18th May 2016

Directors’ Responsibilities Statement

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that

the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Independent Auditors’ Report to the Members of St Mark Homes PLC

We have audited the consolidated financial statements of St Mark Homes Plc Limited for the year ended 31 December 2015 which comprise the Statement of comprehensive income, the Balance Sheet, the statement of changes in equity, the Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the group and company's affairs as at 31 December 2015 and of its profit for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

                                                                                                              Date:  18th May 2016

Jonathan Seymour (Senior Statutory Auditor)

for and on behalf of Kingston Smith LLP, Statutory Auditor                        Middlesex House

800 Uxbridge Road

Hayes

Middlesex

UB4 0RS


                         St Mark Homes Plc

           Consolidated statement of comprehensive income

                for the year ended 31 December 2015

                                                  2015       2014

                                                    £          £

Group turnover                                   3,097,000    88,750

Cost of sales                                  (2,803,992)  (60,900)

                                                  ________  ________

Gross profit                                       293,008    27,850

Administrative expenses                          (416,177) (457,198)

                                                  ________  ________

Operating profit/(loss)                          (123,169) (429,348)

Share of operating profit of joint venture         485,466 1,029,734

Interest receivable and similar income             226,921       182

Interest payable and similar charges              (40,331)  (21,443)

                                                  ________  ________

Profit on ordinary activities before taxation      548,887   579,125

Taxation on ordinary activities                  (110,428)  (41,226)

                                                  ________  ________

Profit on ordinary activities after taxation       438,459   537,899

Other comprehensive income                               -         -

                                                  ________  ________

Total comprehensive income                         438,459   537,899

                                                  ________  ________

Earnings per share – basic and diluted

Ordinary shares                                     14.83p   18.19 p

All amounts relate to continuing activities.



   


                              St Mark Homes Plc

                         Consolidated Balance sheet

                             at 31 December 2015

                                        2015      2015        2014      2014

                                           £         £           £         £

Non Current assets

Tangible assets                                  1,872                 1,952

Investments in joint ventures                  379,102               890,625

                                              ________              ________

                                               380,974               892,577

Current assets

Stock and Work In Progress         1,095,084             2,289,806

Debtors                            3,761,851             4,143,010

Cash at bank and in hand             146,255               114,273

                                    ________              ________

                                   5,003,190             6,547,089

Creditors: amounts falling

due within one year              (1,437,321)           (3,798,195)

                                    ________              ________

Net current assets                           3,565,869             2,748,894

                                              ________              ________

Total assets less current                    3,946,843             3,641,471
liabilities

                                              ________              ________

Net Assets                                   3,946,843             3,641,471

                                              ________              ________

Capital and reserves

Called up share capital                      1,478,748             1,478,748

Capital redemption reserve                   1,009,560             1,009,560

Other reserve                                  211,822               211,822

Profit and loss account                      1,246,713               941,341

                                             ________              ________

Shareholders’ funds                          3,946,843             3,641,471

                                              ________              ________

The financial statements were approved by the board of directors and
authorised for issue on 18th May 2016.

S Ryan

Director

Company Registration No 03822978



   


                              St Mark Homes Plc

                            Company Balance sheet

                             at 31 December 2015

                                    2015       2015       2014        2014

                                                       as restated as restated

                                      £          £          £           £

Non Current assets

Tangible assets                                  1,872                   1,952

Investments                                          -               2,796,040

                                              ________                ________

                                                 1,872               2,797,992

Current assets

Stock and Work In Progress         1,095,084             2,289,806

Debtors                            4,140,953             5,033,635

Cash at bank and in hand             146,255               114,273

                                    ________              ________

                                   5,382,292             7,437,714

Creditors: amounts falling

due within one year              (1,437,321)           (6,594,235)

                                    ________              ________

Net current assets                           3,944,971                 843,479

                                              ________                ________

Total assets less current                    3,946,843               3,641,471
liabilities

Creditors: amounts falling

due in more than one year                            -                       -

                                              ________                ________

Net assets                                   3,946,843               3,641,471

                                              ________                ________

Capital and reserves

Called up share capital                      1,478,748               1,478,748

Capital redemption reserve                   1,009,560               1,009,560

Other reserve                                  211,822                 211,822

Profit and loss account                      1,246,713                 941,341

                                              ________                ________

Shareholders’ funds                          3,946,843               3,641,471

                                              ________                ________

The financial statements were approved by the board of directors and
authorised for issue on 18th May 2016.

Sean Ryan

Director

Company Registration No 03822978



   


                             St Mark Homes Plc

                      Statement of changes in equity

                    For the year ended 31 December 2015

                Share Capital  Capital    Other   Profit and loss   Total
                              Redemption             reserves
                               Reserve   Reserve


                      £           £         £            £            £

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

                  ________     ________  ________    ________     ________

                Share Capital  Capital    Other   Profit and loss   Total
                              Redemption             reserves
                               Reserve   Reserve


                      £           £         £            £            £

Period ended 31   1,478,748   1,009,560  211,822      497,065     3,197,195
December 2013

Profit for the        -           -         -         537,899      537,899
year

                  ________     ________  ________    ________     ________

Total             1,478,748   1,009,560  211,822     1,034,964    3,735,094
comprehensive
income for the
year

Dividend              -           -         -        (93,623)     (93,623)

                  ________     ________  ________    _________    _________

Balance at 31     1,478,748   1,009,560  211,822      941,341     3,641,471
December 2014

                  ________     ________  ________    ________     ________



   


                               St Mark Homes Plc

                      Consolidated statement of cashflows

                      for the year ended 31 December 2015

                                         2015        2015      2014        2014

                                            £           £         £           £

Cash flows from operating
activities

Cash generated from operations                  3,405,016           (2,954,966)

Interest paid                                    (40,331)              (21,443)

Corporation Tax                                  (41,989)               (4,323)

                                                 ________              ________

Net cash inflow/(outflow) from

operating activities                            3,322,696           (2,980,732)

Investing activities

Purchase of tangible fixed assets       (541)                 (859)

Interest received                     226,921                   182

                                     ________              ________

Net cash generated from/(used in)

investing activities                              226,380                 (677)

Financing activities

(Decrease)/Increase in bank loans (1,212,830)               310,449

(Decrease)/ Increase in           (2,171,177)             1,816,180
subordinated loans

Dividend paid                       (133,087)              (97,623)

                                     ________              ________

Net cash generated from/(used)

in financing activities                       (3,517,094)             2,029,006

                                                 ________              ________

Net increase in cash and cash                      31,982             (952,403)
equivalents

Cash and cash equivalents at                      114,273             1,066,676
beginning of year

                                                 ________              ________

Cash and cash equivalents at end                  146,255               114,273
of year

                                                 ________              ________

Relating to:

Cash at Bank and in hand                          146,255               114,273

                                                 ________              ________



ENDS