(''SMH'' or “the Company'')
Final results
Strategic report
The directors present their strategic report for the year ended
Review of the business
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 Group to generate profits and increase distributions to shareholders in recent years. 2018 has however been difficult with customers being slower to commit to sales and an element of profit on the completed Hounslow scheme therefore deferred into 2019. The Group profit before tax for the current year amounted to £117,442 (2017:£383,738). In spite of a challenging environment for residential developers in our geographic niche dividend distributions to shareholders were maintained at 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 2018 with a capital base just over £5.87m (2017: £5.79m). 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 2018 we achieved a pre-tax profit of 2% (2017: 6.6 %) 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 Group 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 2018 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
Completed Developments
St Margarets Waterside, Richmond,
The Group has completed sale of the final two residential properties on this project. In accordance with our revenue recognition policy we have recognised profits of £35,258 (2017: £46,316) and project management fees of £nil (2017: £13,500) during 2018.
Continuing Developments
The Group retains a 40% interest in a development site at
The Group has a 40% interest in the redevelopment of this site with its joint venture partner. The project was completed after the year end providing a mixed use development of commercial/retail at ground and mezzanine levels and 33 residential flats above.
At 31st December sale contracts have been legally exchanged on the affordable housing element of the scheme. In accordance with our revenue recognition policy we have recognised a loss of £7,643 (2017: £123,520 profit) and project management fees of £43,200 (2017: £43,200) during 2018. Since the year end the entire private residential housing sector of the project has been legally completed and sold.
The Group holds a joint venture interest of 40% in the development of 34 flats in Hounslow with its development partners. The construction works on site were completed at the end of
The Group has a joint venture interest of up to 40% in the development of 40 flats and commercial space in Wembley. Project management fees of £208,000 were recognised during 2018 (2017: £16,000).
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 Group 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 Group is not subject to foreign exchange risks. The Group’s credit risk is primarily attributable to its trade debtors. Credit risk is managed by monitoring payments against contractual agreements. The Group also reviews the financial standings of its debtors prior to entering into significant contracts.
Key Performance Indicators
The Group’s long term performance target has been to generate a minimum average annual return on shareholders funds of 5%. During 2018 the annual pre-tax return on shareholders’ funds was 2% (2017: 6.6%). The sales market has been challenging in 2018 and extended sales periods have impacted profit recognition in 2018. More positively sales progress has been good since the year end with Hounslow and
The Group 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 2018 the maximum exposure of capital to any one project was less than 40% of the Group 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. Loans have been funded by the cash income from previous development projects. In 2017 and 2018 the 6% bond has also funded the loans to joint venture partners. 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 8903 2442 seanryan@stmarkhomes.comAlfred Henry Corporate Finance Ltd , NEX Exchange Corporate AdviserJon Isaacs /Nick Michaels Tel: +44 (0) 20 3772 0021 www.alfredhenry.com
Consolidated statement of comprehensive income
for the year ended
2018 2017
GBP GBP
Turnover 294,400 120,400
Cost of sales (27,079) (22,738)
________ ________
Gross profit 267,321 97,662
Administrative expenses (412,937) (323,058)
Negative goodwill release 37,993 99,256
________ ________
Operating loss (107,623) (126,140)
Share of operating profit of joint ventures 162,318 289,731
Interest receivable and similar income 266,471 240,434
Interest payable and similar charges (203,724) (20,287)
________ ________
Profit on ordinary activities before taxation 117,442 383,738
Taxation on ordinary activities (15,373) (60,564)
________ ________
Profit on ordinary activities after taxation 102,069 323,174
Other comprehensive income - -
________ ________
Total comprehensive income 102,069 323,174
________ ________
Earnings per share – basic and diluted
Ordinary shares 2.31p 7.32p
Consolidated Balance sheet
at
2018 2018 2017 2017
GBP GBP GBP GBP
Non Current assets
Tangible fixed assets 789 1,052
Intangible fixed assets - (37,993)
Investments in joint ventures 374,974 728,779
________ ________
375,763 691,838
Current assets
Debtors 7,881,758 7,195,865
Cash at bank and in hand 1,023,754 513,667
________ ________
8,905,512 7,709,532
Creditors: amounts falling
due within one year (76,914) (179,043)
________ ________
Net current assets 8,828,598 7,530,489
________ ________
Total assets less current 9,204,361 8,222,327
liabilities
Creditors: amounts falling
due in more than one year (3,465,157) (2,342,477)
________ ________
Net assets 5,793,204 5,879,850
________ ________
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 1,609,015 1,749,661
________ ________
Shareholders’ funds 5,793,204 5,879,850
________ ________
Statement of changes in equity
For the year ended
Share Capital Other Merger Share Profit Total
Capital Redemption Reserve Reserve Premium and loss
Reserve reserves
GBP GBP GBP GBP GBP GBP GBP
Balance at 2,206,501 1,009,560 211,822 327,060 375,246 1,669,202 5,799,391
31 December
2016
Profit for - - - - - 323,174 323,174
the year
________ ________ _______ _______ ________ ________ ______
Total - - - - - 323,174 323,174
comprehensive
income for
the year
Dividend - - - - - (242,715) (242,715)
________ ________ _______ _______ ________ ________ ________
Balance at 2,206,501 1,009,560 211,822 327,060 375,246 1,749,661 5,879,850
31 December
2017
Profit for - - - - - 102,069 102,069
the year
________ ________ _______ _______ ________ ________ ________
Total - - - - - 102,069 102,069
comprehensive
income for
the year
Dividend - - - - - (242,715) (242,715)
________ ________ _______ _______ ________ ________ _________
Balance at 2,206,501 1,009,560 211,822 327,060 375,246 1,609,015 5,739,204
31 December
2018
________ ________ _______ ______ ________ ________ ________
Consolidated statement of cashflows
for the year ended
2018 2018 2017 2017
GBP GBP GBP GBP
Cash flows from
operating activities
Cash expended from operations (378,124) (2,035,718)
Interest paid (203,724) (20,287)
Corporation tax (54,501) (116,851)
________ ________
Net cash outflow from
operating activities (636,349) (2,172,856)
Investing activities
Interest received 266,471 240,434
________ ________
Net cash generated from
investing
activities 266,471 240,434
Financing activities
Increase in loans 1,122,680 2,342,477
Dividend paid (242,715) (242,715)
________ ________
Net cash generated from
financing activities 879,965 2,099,762
________ ________
Net increase in cash and cash 510,087 167,340
equivalents
Cash and cash equivalents at
beginning of year 513,667 346,327
________ ________
Cash and cash equivalents at
end of year 1,023,754 513,667
________ ________
Relating to:
Cash at bank and in hand 1,023,754 513,667
________ ________
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 (2017: 4,413,002) and the earnings being profit after tax attributable to ordinary shares was £102,069 (2017: £323,174).
2018 2017
GBP GBP
Numerator
Earnings used as the calculation of basic and diluted EPS 102,069 323,174
________ ________
Number Number
Denominator
Weighted average number of ordinary shares used in basic and 4,413,002 4,413,002
diluted EPS
________ ________
There are no share options or other potentially dilutive equity instruments in issue than can dilute the earnings per share.
