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DJ St Mark Homes Plc Final Results

 
TIDMSMAP 
 
15 May 2017 
 
                               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 2016. 
 
Strategic report 
 
The directors present their strategic report for the year ended 31 December 
2016. 
 
The Group continues to develop residential led projects based in London and the 
South regions of the United Kingdom. We primarily target the sub GBP1000 per 
square foot residential sales market and in the immediate future intend to 
focus on developing schemes which primarily 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 were GBP652,384 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 GBP3.9m (2015 -GBP3.6m). 
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 July 2016 we acquired St Mark Contracts Ltd through an 
all share offer and in November 2016 raised just over GBP0.7m through an open 
offer to existing shareholders. 
 
The aggregate effect of the acquisition, share offer and retention of profits 
was to grow the company Balance Sheet to over GBP5.8m, that is by over 50%, in 
the year ended 31 December 2016. 
 
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 9 May 2017 of GBP0.90 represents 
a discount of 31% to the net asset value of GBP1.31 per share reported in the 31 
December 2016 Balance Sheet. The 2016 dividend yield based on this market mid 
price is 5.6%. 
 
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, 
Sutton, Hounslow and Battersea which we anticipate will deliver profits in 2017 
and 2018. As these projects are completed we will seek replacement schemes. 
 
Completed Development 
 
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 and all units sold. In accordance with our revenue recognition 
policy we have recognised profits of GBP162,468 (2015: GBP81,897) and Project 
Management fees of GBP10,125 (2015: GBP40,500) during 2016. 
 
St Margarets Waterside, Richmond, London: 
 
Construction was completed on the 21 residential units plus commercial shell 
and core in October 2016. Sales had completed or exchanged on 60% of the units 
(by value) as at 31 December 2016 and in accordance with our revenue 
recognition policy we have recognised profits of GBP233,232 (2015: GBP174,020) and 
Project Management fees of GBP46,125 (2015: GBP40,500) during 2016. 
 
Continuing Development 
 
Sutton High Street, Sutton: 
 
The Company also invested in a regeneration property development venture at 
Sutton High Street. The development (consisting of 40 residential units with 
ground floor retail space completed in Autumn 2016. Sales have completed on all 
residential units and in accordance with our revenue recognition policy we have 
recognised profits of GBP236,624 (2015 - GBP204,185) during 2016. The company has a 
remaining interest in the commercial space and the neighbouring Prince Regent 
Pub site. An application to replace the pub with 38 residential units and 
 
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 GBP 
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 GBP10,800 were 
charged during 2016. 
 
London Road, Hounslow, TW3: 
 
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 GBP12.75m and developers return on cost at 20%. Project Management 
fees of GBP7,200 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. 
 
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:  12 May 2017 
 
The Directors of St Mark Homes PLC accept responsibility for this announcement. 
 
 For further information, please contact: 
 

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DJ St Mark Homes Plc Final Results -2-

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 2016 
 
                                                                    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 31 December 2016 
 
                                       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                     5,799,391               3,946,843 
liabilities 
 
                                               ________               _________ 
 
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 31 December 2016 
 
                              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 the           -          -         -         -         -   551,881      551,881 
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 
                                 Share  Redemption       Other        loss 
                               Capital     Reserve     Reserve    reserves       Total 
 
 
                                   GBP         GBP         GBP         GBP         GBP 
 
Period ended 31 December     1,478,748   1,009,560     211,822     941,341   3,641,471 
2014 
 
Profit for the year                  -           -           -     438,459     438,459 
 
                              ________    ________    ________    ________    ________ 
 
 
Total comprehensive income   1,478,748   1,009,560     211,822   1,379,800   4,079,930 
for the year 
 
 
Dividend                             -           -           -   (133,087)   (133,087) 
 
                             _________    ________    ________   _________   _________ 
 
Balance at 31 December       1,478,748   1,009,560     211,822   1,246,713   3,946,843 
2015 
 
                              ________    ________    ________    ________    ________ 
 
 
Consolidated statement of cashflows 
for the year ended 31 December 2016 
 
                                            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 
 
                                                    ________                ________ 
 
 

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DJ St Mark Homes Plc Final Results -3-

Notes to Preliminary Results for the Period Ended 31 December 2016 
 
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 12th May 2017. 
 
The preliminary announcement of the results for the year ended 31 December 2016 
was approved by the board of directors on 12th May 2017. 
 
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   3,324,677    2,957,495 
and diluted EPS 
 
                                                            ________     ________ 
 
 
There are no share options in issue than can dilute the earnings per share. 
 
 
 
END 
 

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