TIDMSMAP
31 May 2018
St Mark Homes Plc
("SMH" or "the Company")
Final results
St Mark Homes (NEX: SMAP), the housebuilder operating mainly in London and the
South East of England, today announces its Final Results for the year ended 31
December 2017.
Strategic report
The directors present their strategic report for the year ended 31 December
2017.
The Group continues to develop residential led projects located in London and
the Southern regions of the United Kingdom. We primarily target the sub GBP1,000
per square foot residential sales market with a particular emphasis on
developing schemes which consist of units that can be made available for sale
under the GBP600,000 London Help to buy limit.
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 GBP383,738 and dividend distributions to shareholders increased by
10% to 5.5p per share.
Our strategic priorities
Following the merger with St Mark Contracts Limited and successful bond raising
in late 2017 / early 2018, the board is keen to grow the Group into a
significant regional house builder. We have an established and profitable
method of operation and with an expanded capital base we intend to participate
in additional projects in the coming years.
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 GBP5.8m (2016: GBP3.9m).
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
Crowdstacker Limited in September 2017. The 30 month, 6% bond raised GBP2.342m
at the year end closing in February 2018 having raised GBP3.465m. The Directors
are delighted with the success of the bond raising which has bolstered the
capital base of the group and has already deployed a significant proportion of
these funds into new project investments.
NEX Exchange Listing
The market mid-price on 17 May 2018 of GBP0.95 represents a discount of 29% to
the net asset value of GBP1.34 per share reported at 31 December 2017. The 2017
dividend yield based on this market mid price is 5.8%.
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,
Sutton, Hounslow, Battersea and Wembley which we anticipate will deliver
profits in 2018, 2019 & 2020. As these projects are completed we will seek
replacement schemes.
Completed Developments
St Margarets Waterside, Richmond, London:
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 GBP 46,316 (2016: GBP233,232) and Project Management fees of GBP13,500
(2016: GBP54,000) during 2017.
Continuing Development
Sutton High Street, Sutton:
The Company retains a 40% interest in a development site at Sutton High Street.
Our joint venture partner submitted an application for a comprehensive
redevelopment of the site with a mixed use (ie residential and commercial) with
ground floor commercial element of the proposed project pre-let (subject to
planning). Planning permission was refused in April 2018. The joint venture
partners intend to appeal that decision and remain confident that consent will
be obtained late in 2018.
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
GBP123,520 (2016: GBPnil) and Project Management fees of GBP43,200 (2016: 10,800)
during 2017. Marketing of the development is planned to commence in the third
quarter of 2018.
London Road, Hounslow, TW3:
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 July 2018. Seven residential units
have exchanged contracts at 31 December 2017. In accordance with our revenue
recognition policy we have recognised profits of GBP119,895 (2016: GBPnil) Project
Management fees of GBP43,200 were also charged during 2017 (2016: GBP7,200).
Heron House, Wembley
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 GBP24,000
were charged during 2017 (2016: GBPnil).
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.
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 22 of the financial
statements.
On behalf of the Board
Barry Tansey
Chief Executive
Date 31 May 2018
The Directors of St Mark Homes PLC accept responsibility for this announcement.
For further information, please contact:
St Mark Homes Plc
Sean Ryan, Finance Director Tel: +44 (0) 20 7903 6777
seanryan@stmarkhomes.com
Alfred Henry Corporate Finance Ltd, NEX
Exchange Corporate Adviser
Jon Isaacs / Nick Michaels Tel: +44 (0) 20 7251 3762
www.alfredhenry.com
Consolidated statement of comprehensive income
for the year ended 31 December 2017
2017 2016
GBP GBP
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 31 December 2017
2017 2017 2016 2016
GBP GBP GBP GBP
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 8,222,327 5,799,391
liabilities
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 31 December 2017
Share Capital Other Merger Share Profit Total
Capital Redemption Reserve Reserve Premium and loss
Reserve reserves
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 the - - - - - 551,881
year 551,881
Shares issued
during the year 727,753 - - 327,060 375,246 18,484 1,448,543
________ ________ _______ _______ _______ ________ ________
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 2016 2,206,501 1,009,560 211,822 327,060 375,246 1,669,202 5,799,391
Profit for the - - - - - 323,174 323,174
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 31 December 2017
2017 2017 2016 2016
GBP GBP GBP GBP
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 240,434 221,147
activities
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 31 December 2017
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 St Mark
Homes plc and is presented using the same accounting policies, which have not
yet been filed with the Registrar of companies, but on which the auditors gave
an unqualified report on 31 May 2018.
The preliminary announcement of the results for the year ended 31
December 2017 was approved by the board of directors on 31 May 2018.
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 GBP
323,174 (2016: GBP551,881).
2017 2016
GBP GBP
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 4,413,002 3,324,677
and diluted EPS
________ ________
There are no share options in issue than can dilute the earnings per
share.
END
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